GENERAL MILLING CORPORATION, petitioner, vs. HON.
GMC, however,
COURT OF APPEALS, GENERAL MILLING CORPORATION
INDEPENDENT LABOR UNION (GMC-ILU), and RITO
MANGUBAT, respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for certiorari assailing the decision[1]
dated July 19, 2000, of the Court of Appeals in CA-G.R. SP No.
50383, which earlier reversed the decision[2] dated January
30, 1998 of the National Labor Relations Commission (NLRC)
in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City,
petitioner General Milling Corporation (GMC) employed 190
workers. They were all members of private respondent
General Milling Corporation Independent Labor Union (union,
for brevity), a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective
bargaining agreement (CBA) which included the issue of
representation effective for a term of three years. The CBA
was effective for three years retroactive to December 1,
1988. Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the
CBA, the union sent GMC a proposed CBA, with a request that
a counter-proposal be submitted within ten (10) days.
As early as October 1991, however, GMC had received
collective and individual letters from workers who stated that
they had withdrawn from their union membership, on
grounds of religious affiliation and personal differences.
Believing that the union no longer had standing to negotiate
a CBA, GMC did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the unions
officers, Rito Mangubat and Victor Lastimoso. The letter
stated that it felt there was no basis to negotiate with a union
which no longer existed, but that management was
nonetheless always willing to dialogue with them on matters
of common concern and was open to suggestions on how the
company may improve its operations.
In answer, the union officers wrote a letter dated December
19, 1991 disclaiming any massive disaffiliation or resignation
from the union and submitted a manifesto, signed by its
members, stating that they had not withdrawn from the
union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a
union member, on the ground of incompetence. The union
protested and requested GMC to submit the matter to the
grievance procedure provided in the CBA.
advised the union to refer to our letter dated December 16,
1991.[3]
Thus, the union filed, on July 2, 1992, a complaint against
GMC with the NLRC, Arbitration Division, Cebu City. The
complaint alleged unfair labor practice on the part of GMC
for: (1) refusal to bargain collectively; (2) interference with
the right to self-organization; and (3) discrimination. The
labor arbiter dismissed the case with the recommendation
that a petition for certification election be held to determine
if the union still enjoyed the support of the workers.
The union appealed to the NLRC.
On January 30, 1998, the NLRC set aside the labor arbiters
decision. Citing Article 253-A of the Labor Code, as amended
by Rep. Act No. 6715,[4] which fixed the terms of a collective
bargaining agreement, the NLRC ordered GMC to abide by
the CBA draft that the union proposed for a period of two (2)
years beginning December 1, 1991, the date when the
original CBA ended, to November 30, 1993. The NLRC also
ordered GMC to pay the attorneys fees.[5]
In its decision, the NLRC pointed out that upon the effectivity
of Rep. Act No. 6715, the duration of a CBA, insofar as the
representation aspect is concerned, is five (5) years which, in
the case of GMC-Independent Labor Union was from
December 1, 1988 to November 30, 1993. All other provisions
of the CBA are to be renegotiated not later than three (3)
years after its execution. Thus, the NLRC held that
respondent union remained as the exclusive bargaining agent
with the right to renegotiate the economic provisions of the
CBA. Consequently, it was unfair labor practice for GMC not
to enter into negotiation with the union.
The NLRC likewise held that the individual letters of
withdrawal from the union submitted by 13 of its members
from February to June 1993 confirmed the pressure exerted
by GMC on its employees to resign from the union. Thus, the
NLRC also found GMC guilty of unfair labor practice for
interfering with the right of its employees to self-
organization.
With respect to the unions claim of discrimination, the NLRC
found the claim unsupported by substantial evidence.
On GMCs motion for reconsideration, the NLRC set aside its
decision of January 30, 1998, through a resolution dated
October 6, 1998. It found GMCs doubts as to the status of the
union justified and the allegation of coercion exerted by GMC
on the unions members to resign unfounded. Hence, the
union filed a petition for certiorari before the Court of
Appeals. For failure of the union to attach the required copies
of pleadings and other documents and material portions of
the record to support the allegations in its petition, the CA
dismissed the petition on February 9, 1999. The same petition
was subsequently filed by the union, this time with the
necessary documents. In its resolution dated April 26, 1999,
the appellate court treated the refiled petition as a motion
for reconsideration and gave the petition due course.
On July 19, 2000, the appellate court rendered a decision the
dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED. The NLRC
Resolution of October 6, 1998 is hereby SET ASIDE, and its
decision of January 30, 1998 is, except with respect to the
award of attorneys fees which is hereby deleted,
REINSTATED.[6]
A motion for reconsideration was seasonably filed by GMC,
but in a resolution dated October 26, 2000, the CA denied it
for lack of merit.
Hence, the instant petition for certiorari alleging that:
I
THE COURT OF APPEALS DECISION VIOLATED THE
CONSTITUTIONAL RULE THAT NO DECISION SHALL BE
RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN
CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON
WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN REVERSING THE DECISION OF THE NATIONAL
LABOR RELATIONS COMMISSION IN THE ABSENCE OF ANY
FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION.
III
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT
APPRECIATING THAT THE NLRC HAS NO JURISDICTION TO
DETERMINE THE TERMS AND CONDITIONS OF A COLLECTIVE
BARGAINING AGREEMENT.[7]
Thus, in the instant case, the principal issue for our
determination is whether or not the Court of Appeals acted
with grave abuse of discretion amounting to lack or excess of
jurisdiction in (1) finding GMC guilty of unfair labor practice
for violating the duty to bargain collectively and/or
interfering with the right of its employees to self-
organization, and (2) imposing upon GMC the draft CBA
proposed by the union for two years to begin from the
expiration of the original CBA.
On the first issue, Article 253-A of the Labor Code, as
amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement. Any
Collective Bargaining Agreement that the parties may enter
into shall, insofar as the representation aspect is concerned,
be for a term of five (5) years. No petition questioning the
majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted
by the Department of Labor and Employment outside of the
sixty-day period immediately before the date of expiry of
such five year term of the Collective Bargaining Agreement.
All other provisions of the Collective Bargaining Agreement
shall be renegotiated not later than three (3) years after its
execution....
The law mandates that the representation provision of a CBA
should last for five years. The relation between labor and
management should be undisturbed until the last 60 days of
the fifth year. Hence, it is indisputable that when the union
requested for a renegotiation of the economic terms of the
CBA on November 29, 1991, it was still the certified collective
bargaining agent of the workers, because it was seeking said
renegotiation within five (5) years from the date of effectivity
of the CBA on December 1, 1988. The unions proposal was
also submitted within the prescribed 3-year period from the
date of effectivity of the CBA, albeit just before the last day of
said period. It was obvious that GMC had no valid reason to
refuse to negotiate in good faith with the union. For refusing
to send a counter-proposal to the union and to bargain anew
on the economic terms of the CBA, the company committed
an unfair labor practice under Article 248 of the Labor Code,
which provides that:
ART. 248. Unfair labor practices of employers. It shall be
unlawful for an employer to commit any of the following
unfair labor practice:
...
(g) To violate the duty to bargain collectively as prescribed by
this Code;
...
Article 252 of the Labor Code elucidates the meaning of the
phrase duty to bargain collectively, thus:
ART. 252. Meaning of duty to bargain collectively. The duty to
bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously
in good faith for the purpose of negotiating an agreement....
We have held that the crucial question whether or not a party
has met his statutory duty to bargain in good faith typically
turn$ on the facts of the individual case.[8] There is no per se
test of good faith in bargaining.[9] Good faith or bad faith is
an inference to be drawn from the facts.[10] The effect of an
employers or a unions actions individually is not the test of
good-faith bargaining, but the impact of all such occasions or
actions, considered as a whole.[11]
Under Article 252 abovecited, both parties are required to
perform their mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of
negotiating an agreement. The union lived up to this
obligation when it presented proposals for a new CBA to GMC
within three (3) years from the effectivity of the original CBA.
But GMC failed in its duty under Article 252. What it did was
to devise a flimsy excuse, by questioning the existence of the
union and the status of its membership to prevent any
negotiation.
It bears stressing that the procedure in collective bargaining
prescribed by the Code is mandatory because of the basic
interest of the state in ensuring lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. The following
procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall
serve a written notice upon the other party with a statement
of its proposals. The other party shall make a reply thereto
not later than ten (10) calendar days from receipt of such
notice. (Underscoring supplied.)
GMCs failure to make a timely reply to the proposals
presented by the union is indicative of its utter lack of
interest in bargaining with the union. Its excuse that it felt the
union no longer represented the workers, was mainly dilatory
as it turned out to be utterly baseless.
We hold that GMCs refusal to make a counter-proposal to the
unions proposal for CBA negotiation is an indication of its bad
faith. Where the employer did not even bother to submit an
answer to the bargaining proposals of the union, there is a
clear evasion of the duty to bargain collectively.[12]
Failing to comply with the mandatory obligation to submit a
reply to the unions proposals, GMC violated its duty to
bargain collectively, making it liable for unfair labor practice.
Perforce, the Court of Appeals did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in
finding that GMC is, under the circumstances, guilty of unfair
labor practice.
Did GMC interfere with the employees right to self-
organization? The CA found that the letters between
February to June 1993 by 13 union members signifying their
resignation from the union clearly indicated that GMC
exerted pressure on its employees. The records show that
GMC presented these letters to prove that the union no
longer enjoyed the support of the workers. The fact that the
resignations of the union members occurred during the
pendency of the case before the labor arbiter shows GMCs
desperate attempts to cast doubt on the legitimate status of
the union. We agree with the CAs conclusion that the ill-
timed letters of resignation from the union members indicate
that GMC had interfered with the right of its employees to
self-organization. Thus, we hold that the appellate court did
not commit grave abuse of discretion in finding GMC guilty of
unfair labor practice for interfering with the right of its
employees to self-organization.
Finally, did the CA gravely abuse its discretion when it
imposed on GMC the draft CBA proposed by the union for
two years commencing from the expiration of the original
CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there exists a
collective bargaining agreement. ....It shall be the duty of
both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing
agreement during the 60-day period [prior to its expiration
date] and/or until a new agreement is reached by the parties.
(Underscoring supplied.)
The provision mandates the parties to keep the status quo
while they are still in the process of working out their
respective proposal and counter proposal. The general rule is
that when a CBA already exists, its provision shall continue to
govern the relationship between the parties, until a new one
is agreed upon. The rule necessarily presupposes that all
other things are equal. That is, that neither party is guilty of
bad faith. However, when one of the parties abuses this grace
period by purposely delaying the bargaining process, a
departure from the general rule is warranted.
In Kiok Loy vs. NLRC,[13] we found that petitioner therein,
Sweden Ice Cream Plant, refused to submit any counter
proposal to the CBA proposed by its employees certified
bargaining agent. We ruled that the former had thereby lost
its right to bargain the terms and conditions of the CBA. Thus,
we did not hesitate to impose on the erring company the CBA
proposed by its employees union - lock, stock and barrel. Our
findings in Kiok Loy are similar to the facts in the present
case, to wit:
petitioner Companys approach and attitude stalling the
negotiation by a series of postponements, non-appearance at
the hearing conducted, and undue delay in submitting its
financial statements, lead to no other conclusion except that
it is unwilling to negotiate and reach an agreement with the
Union. Petitioner has not at any instance, evinced good faith
or willingness to discuss freely and fully the claims and
demands set forth by the Union much less justify its objection
thereto.[14]
Likewise, in Divine Word University of Tacloban vs. Secretary
of Labor and Employment,[15] petitioner therein, Divine
Word University of Tacloban, refused to perform its duty to
bargain collectively. Thus, we upheld the unilateral imposition
on the university of the CBA proposed by the Divine Word
University Employees Union. We said further:
That being the said case, the petitioner may not validly assert
that its consent should be a primordial consideration in the
bargaining process. By its acts, no less than its action which
bespeak its insincerity, it has forfeited whatever rights it
could have asserted as an employer.[16]
Applying the principle in the foregoing cases to the instant
case, it would be unfair to the union and its members if the
terms and conditions contained in the old CBA would
continue to be imposed on GMCs employees for the
remaining two (2) years of the CBAs duration. We are not
inclined to gratify GMC with an extended term of the old CBA
after it resorted to delaying tactics to prevent negotiations.
Since it was GMC which violated the duty to bargain
collectively, based on Kiok Loy and Divine Word University of
Tacloban, it had lost its statutory right to negotiate or
renegotiate the terms and conditions of the draft CBA
proposed by the union.
We carefully note, however, that as strictly distinguished
from the facts of this case, there was no pre-existing CBA
between the parties in Kiok Loy and Divine Word University
of Tacloban. Nonetheless, we deem it proper to apply in this
case the rationale of the doctrine in the said two cases. To
rule otherwise would be to allow GMC to have its cake and
eat it too.
Under ordinary circumstances, it is not obligatory upon either
side of a labor controversy to precipitately accept or agree to
the proposals of the other. But an erring party should not be
allowed to resort with impunity to schemes feigning
negotiations by going through empty gestures.[17] Thus, by
imposing on GMC the provisions of the draft CBA proposed
by the union, in our view, the interests of equity and fair play
were properly served and both parties regained equal
footing, which was lost when GMC thwarted the negotiations
for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as
to the reasonableness of the draft CBA proposed by the union
should not be disturbed since they are supported by
substantial evidence. On this score, we see no cogent reason
to rule otherwise. Hence, we hold that the Court of Appeals
did not commit grave abuse of discretion amounting to lack
or excess of jurisdiction when it imposed on GMC, after it had
committed unfair labor practice, the draft CBA proposed by
the union for the remaining two (2) years of the duration of
the original CBA. Fairness, equity, and social justice are best
served in this case by sustaining the appellate courts decision
on this issue.
WHEREFORE, the petition is DISMISSED and the assailed
decision dated July 19, 2000, and the resolution dated
October 26, 2000, of the Court of Appeals in CA-G.R. SP No.
50383, are AFFIRMED. Costs against petitioner.
FACULTY ASSOCIATION OF MAPUA INSTITUTE OF
TECHNOLOGY (FAMIT), vs HON. COURT OF APPEALS, and
MAPUA INSTITUTE OF TECHNOLOGY,
This is an appeal to reverse and set aside the Decision[1]
dated August 21, 2003 and the Resolution[2] dated June 3,
2004 of the Court of Appeals in CA-G.R. SP No. 71479. The
appellate court had reversed the Decision of the Office of the
Voluntary Arbitrators. It held that the incorporation of the
new faculty ranking to the 2001 Collective Bargaining
Agreement (CBA) between petitioner and private respondent
has been the intention of the parties to the CBA.
The facts in this case are undisputed.
In July 2000, private respondent Mapua Institute of
Technology (MIT) hired Arthur Andersen to develop a faculty
ranking and compensation system. On January 29, 2001, in
the 5th CBA negotiation meeting, MIT presented the new
faculty ranking instrument to petitioner Faculty Association of
Mapua Institute of Technology (FAMIT).[3] The latter agreed
to the adoption and implementation of the instrument, with
the reservation that there should be no diminution in rank
and pay of the faculty members.
On April 17, 2001, FAMIT and MIT entered into a new CBA
effective June 1, 2001.[4] It incorporated the new ranking for
the college faculty in Section 8 of Article V which states that,
A new faculty ranking shall be implemented in June 2001.
However, there shall be no diminution in the existing rank
and the policy same rank, same pay shall apply.[5]
The faculty ranking sheet was annexed to the CBA as Annex B,
while the college faculty rates sheet for permanent faculty
and which included the point ranges and corresponding pay
rates per faculty level was added as Annex C.
When the CBA took effect, the Vice President for Academic
Affairs issued a memorandum to all deans and subject chairs
to evaluate and re-rank the faculty under their supervision
using the new ranking instrument. Eight factors were to be
considered and given their corresponding weights/points
according to levels attained per factor. Among these were: (1)
educational attainment; (2) professional honors received; (3)
relevant training; (4) relevant professional experience; (5)
scholarly work and creative efforts; (6) award winning works;
(7) officership in relevant technical and professional
organizations; and (8) administrative positions held at MIT.[6]
After a month, MIT called FAMITs attention to what it
perceived to be flaws or omissions in the CBA signed by the
parties. In a letter[7] dated July 5, 2001 to FAMIT, MIT
requested for an amendment of the following CBA annexes
Annex B (Faculty Ranking Sheet); Annex C (College Faculty
Rates for Permanent Faculty Only); and Annex D (H.S. Faculty
Rates for Permanent Faculty Only). MIT claimed that with
respect to Annexes C and D, these contained data under the
heading TOTAL POINTS that were not germane to the two
other columns in both annexes. With regard to the Faculty
Ranking Point Range sheet of the new faculty ranking
instrument, MIT avers that this was inadvertently not
attached to the CBA.
FAMIT rejected the proposal. It said that these changes would
constitute a violation of the ratified 2001 CBA and result in
the diminution of rank and benefits of FAMIT college faculty.
It argued that the proposed amendment in the ranking
system for the college faculty revised the point ranges earlier
agreed upon by the parties and expands the 19 faculty ranks
to 23.
Meanwhile, MIT instituted some changes in the curriculum
during the school year 2000-2001 which resulted in changes
in the number of hours for certain subjects. Thus, MIT
adopted a new formula for determining the pay rates of the
high school faculty: Rate/Load x Total Teaching Load = Salary
where total teaching load equals number of classes multiplied
by hours of service per week divided by 3 hours (as practiced,
one unit subject is equal to 3 hours service).
Upon learning of the changes, FAMIT opposed the formula. It
averred that unknown to FAMIT, MIT has not been
implementing the relevant provisions of the 2001 CBA. In
particular, FAMIT cites Section 2 of Article VI, which states as
follows:
ARTICLE VI
General Wage Clause
xxxx
Section 2. The INSTITUTE shall pay the following rate per load
for high school faculty according to corresponding faculty
rank, to wit:
25% increase in per rate/load for all high school faculty
members effective November 2000;
10% increase in per rate/load for all permanent high
school faculty members effective June 2001.[8] (Emphasis
supplied.)
On July 20, 2001, FAMIT met with MIT to settle this second
issue but to no avail. MIT maintained that it was within its
right to change the pay formula used.
Hence, together with the issue pertaining to the ranking of
the college faculty, FAMIT brought the matter to the National
Conciliation and Mediation Board for mediation. Proceedings
culminated in the submission of the case to the Panel of
Voluntary Arbitrators for resolution.
The Panel of Voluntary Arbitrators ruled in favor of the
petitioner. It ordered the private respondent to:
1. Implement the agreed upon point range system with 19
faculty ranks, along with the corresponding pay levels for the
college faculty, consistent with the provisions of Article V,
Section 8 of the 2001 CB[A] and Annex C of the said CBA, and
2. Comply with the provisions of Article VI, Section 2 of the
existing CBA, using past practices or formula in computing the
pay of high school faculty based on rate per load and to pay
the faculty their corresponding rates on this basis,
Both actions of which (sic) should be made concurrent with
the effectivity of the current CBA.
SO ORDERED.[9]
On appeal, the Court of Appeals reversed the ruling of the
Panel of Voluntary Arbitrators and decreed as follows:
WHEREFORE, the petition is hereby GRANTED. The assailed
decision of the voluntary arbitrators is REVERSED.
Accordingly, petitioners proposal to include the faculty point
range sheet in Annex B of the 2001 CBA, as well as to replace
Annex C with the document on the 23-level faculty ranking
instrument and replace the column containing the heading
Total Points which is attached in Annexes C and D of the 2001
CBA with the correct data is also GRANTED.
SO ORDERED.[10]
Hence, the instant petition.
The petitioner enumerated issues for resolution, to wit:
I
WHETHER THE PRIVATE RESPONDENT MAY PROPERLY,
LEGALLY AND VALIDLY ALTER, CHANGE AND/OR MODIFY
UNILATERAL[L]Y PROVISIONS OF THE COLLECTIVE
[BARGAINING] AGREEMENT (CBA) IT HAD NEGOTIATED,
ENTERED INTO AND SIGNED WITH THE PETITIONER AND
SUBSEQUENTLY RATIFIED AND ENFORCED BY THE PARTIES;
AND
II
WHETHER PRIVATE RESPONDENT MAY PROPERLY, LEGALLY
AND VALIDLY CHANGE[,] ALTER AND/OR REPLACE
UNILATERAL[L]Y A PROVISION OR FORMULA EMBODIED IN A
PERFECTED, EXISTING AND ALREADY ENFORCED CBA TO THE
PREJUDICE, OR MORE SPECIFICALLY TO THE DIMINUTION OF
SALARY/BENEFITS AND DOWNGRADING OF RANKS, OF ITS
COLLEGE AND HIGH SCHOOL FACULTY.[11]
Simply put, the issues for our determination are: (1) Is MITs
new proposal, regarding faculty ranking and evaluation,
lawful and consistent with the ratified CBA? and (2) Is MITs
development of a new pay formula for the high school
department, without the knowledge of FAMIT, lawful and
consistent with the ratified CBA?
On the first issue, FAMIT avers that MITs new proposal on
faculty ranking and evaluation for the college faculty is an
unlawful modification, alteration or amendment of the
existing CBA without approval of the contracting parties.
On the other hand, MIT argues that the new faculty ranking
instrument was made in good faith and in the exercise of its
inherent prerogative to freely regulate according to its own
discretion and judgment all aspects of employment.
Considering the submissions of the parties, in the light of the
existing CBA, we find that the new point range system
proposed by MIT is an unauthorized modification of Annex C
of the 2001 CBA. It is made up of a faculty classification that is
substantially different from the one originally incorporated in
the current CBA between the parties. Thus, the proposed
system contravenes the existing provisions of the CBA, hence,
violative of the law between the parties.
As observed by Office of the Voluntary Arbitrators, the
evaluation system differs from past evaluation practices (e.g.,
those that give more weight to tenure and faculty load) such
that the system can lead to a demotion in rank for a faculty
member. A perfect example of this scenario was cited by
FAMIT in its Memorandum:
xxxx
Take the case of a faculty member with 17 years of teaching
experience who has a Phd. Degree. For school year 2000-
2001 his corresponding rank is Professor 3 with 4001-4500
points using the previous CBA. If the college faculty member
is ranked based on the ratified 2001 CBA, his/her
corresponding rank would increase to Professor 5 with 5001-
5500 points.
But if the proposal of private respondent is used, the
professor, would be ranked as Associate Professor 5 with
5001-5749 points, instead of Professor 5 as recognized by the
2001 CBA. True, there may be an increase in points but there
is also a resulting diminution in rank from Professor 3 based
on the previous CBA to Associate Professor 5. This would
translate to a reduction of the salary increase he is entitled to
under the 2001 CBA.[12]
According to FAMIT, this patently is a violation of Section 8,
Article V of the 2001 CBA.
Noteworthy, Article 253 of the Labor Code states:
ART. 253. Duty to bargain collectively when there exists a
collective bargaining agreement.When there is a collective
bargaining agreement, the duty to bargain collectively shall
also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can
serve a written notice to terminate or modify the agreement
at least sixty (60) days prior to its expiration date. It shall be
the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of
the existing agreement during the 60-day period and/or until
a new agreement is reached by the parties.
REVISED PAGE
Until a new CBA is executed by and between the parties, they
are duty-bound to keep the status quo and to continue in full
force and effect the terms and conditions of the existing
agreement. The law does not provide for any exception nor
qualification on which economic provisions of the existing
agreement are to retain its force and effect. Therefore, it
must be understood as encompassing all the terms and
conditions in the said agreement.[13]
The CBA during its lifetime binds all the parties. The
provisions of the CBA must be respected since its terms and
conditions constitute the law between the parties. Those who
are entitled to its benefits can invoke its provisions. In the
event that an obligation therein imposed is not fulfilled, the
aggrieved party has the right to go to court and ask
redress.[14] The CBA is the norm of conduct between
petitioner and private respondent and compliance therewith
is mandated by the express policy of the law.[15]
On the second issue, FAMIT avers that MIT unilaterally
modified the CBA formula in determining the salary of a high
school faculty. MIT counters that it is entitled to consider the
actual number of teaching hours to arrive at a fair and just
salary of its high school faculty.
Again, we are in agreement with FAMITs submission. We rule
that MIT cannot adopt its unilateral interpretation of terms in
the CBA. It is clear from the provisions of the 2001 CBA that
the salary of a high school faculty member is based on a rate
per load and not on a rate per hour basis. Section 2, Article VI
of the 2001 CBA provides:
xxxx
Section 2. The INSTITUTE shall pay the following rate per load
for high school faculty according to corresponding faculty
rank, to wit:
25% increase in per rate/load for all high school faculty
members effective November 2000.
10% increase in per rate/load for all permanent high
school faculty members effective June 2001.[16] (Emphasis
supplied.)
In our view, there is no room for unilateral change of the
Jerico Alipit, Glen Batula, Ser John Hernandez, Rachel
formula by MIT. Needless to stress, the Labor Code is specific
in enunciating that in case of doubt in the interpretation of Novillas, Nimfa Anilao, Rose Subardiaga, Valerie Carbon,
any law or provision affecting labor, such should be Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie
interpreted in favor of labor.[17] The appellate court
Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine
committed a grave error in the interpretation of the CBA
provision and the governing law. Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie

WHEREFORE, the instant petition is GRANTED. The Decision Ann Delos Santos, Juanita Yana, and Suzette Dulay, are all
dated August 21, 2003 and the Resolution dated June 3, 2004 members of the Union.
of the Court of Appeals denying the motion for
In 1999, TSPIC and the Union entered into a Collective
reconsideration are REVERSED and SET ASIDE. The decision of
the Office of the Voluntary Arbitrators is REINSTATED. MITs Bargaining Agreement (CBA)[8] for the years 2000 to 2004. The
unilateral change in the ranking of college faculty from 19 CBA included a provision on yearly salary increases starting
levels to 23 levels, and the computation of high school faculty
January 2000 until January 2002. Section 1, Article X of the
salary from rate per load to rate per hour basis is DECLARED
NULL AND VOID for being violative of the parties CBA and the CBA provides, as follows:
applicable law.
Section 1. Salary/ Wage
Costs against private respondent MIT.
Increases.Employees covered by this
TSPIC CORPORATION, G.R. No. 163419 vs Agreement shall be granted salary/wage
increases as follows:
TSPIC EMPLOYEES UNION (FFW), representing MARIA FE
FLORES a) Effective January 1, 2000, all
employees on regular status and
within the bargaining unit on or
The path towards industrial peace is a two-way street. before said date shall be granted
Fundamental fairness and protection to labor should always a salary increase equivalent to
ten percent (10%) of their
govern dealings between labor and management. Seemingly basic monthly salary as of
December 31, 1999.
conflicting provisions should be harmonized to arrive at an
b) Effective January 1, 2001, all
interpretation that is within the parameters of the law, employees on regular status and
within the bargaining unit on or
compassionate to labor, yet, fair to management. before said date shall be granted
a salary increase equivalent to
twelve (12%) of their basic
In this Petition for Review on Certiorari under Rule 45, monthly salary as of December
petitioner TSPIC Corporation (TSPIC) seeks to annul and set 31, 2000.
c) Effective January 1, 2002, all
aside the October 22, 2003 Decision[5] and April 23, 2004 employees on regular status and
Resolution[6] of the Court of Appeals (CA) in CA-G.R. SP No. within the bargaining unit on or
before said date shall be granted
68616, which affirmed the September 13, 2001 Decision[7] of a salary increase equivalent to
eleven percent (11%) of their
Accredited Voluntary Arbitrator Josephus B. Jimenez in
basic monthly salary as of
National Conciliation and Mediation Board Case No. JBJ- December 31, 2001.
AVA-2001-07-57. The wage salary increase of the first year of
TSPIC is engaged in the business of designing, manufacturing, this Agreement shall be over and above the
wage/salary increase, including the wage
and marketing integrated circuits to serve the communication, distortion adjustment, granted by the
automotive, data processing, and aerospace industries. COMPANY on November 1, 1999 as per
Wage Order No. NCR-07.
Respondent TSPIC Employees Union (FFW) (Union), on the
The wage/salary increases for the years 2001
other hand, is the registered bargaining agent of the rank-and-
and 2002 shall be deemed inclusive of the
file employees of TSPIC. The respondents, Maria Fe Flores, Fe mandated minimum wage increases under
future Wage Orders, that may be issued after
Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir, Wage Order No. NCR-07, and shall be
 considered as correction of any wage regularization increase equivalent to 10% of
distortion that may have been brought about his regular basic salary.
by the said future Wage Orders. Thus the
wage/salary increases in 2001 and 2002 shall Then on October 6, 2000, the Regional Tripartite
be deemed as compliance to future wage Wage and Productivity Board, National Capital Region, issued
orders after Wage Order No. NCR-07.
Wage Order No. NCR-08[10] (WO No. 8) which raised the daily
minimum wage from PhP 223.50 to PhP 250
Consequently, on January 1, 2000, all the regular rank-
effective November 1, 2000. Conformably, the wages of 17
and-file employees of TSPIC received a 10% increase in their
probationary employees, namely: Nimfa Anilao, Rose
salary. Accordingly, the following nine (9) respondents (first
Subardiaga, Valerie Carbon, Olivia Edroso, Maricris
group) who were already regular employees received the said
Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta
increase in their salary: Maria Fe Flores, Fe Capistrano, Amy
Rosete, Janice Nebre, Nia Andrade, Catherine Yaba,
Durias, Claire Evelyn Velez, Janice Olaguir, Jerico Alipit, Glen
Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann
Batula, Ser John Hernandez, and Rachel Novillas.[9]
Delos Santos, Juanita Yana, and Suzette Dulay (second group),
were increased to PhP 250.00 effective November 1, 2000.
The CBA also provided that employees who acquire
regular employment status within the year but after the
On various dates during the last quarter of 2000, the
effectivity of a particular salary increase shall receive a
above named 17 employees attained regular
proportionate part of the increase upon attainment of their
employment[11] and received 25% of 10% of their salaries as
regular status. Sec. 2 of the CBA provides:
granted under the provision on regularization increase

SECTION 2. Regularization Increase.A under Article X, Sec. 2 of the CBA.

covered daily paid employee who acquires
regular status within the year subsequent to
the effectivity of a particular salary/wage
increase mentioned in Section 1 above shall
be granted a salary/wage increase in
proportionate basis as follows:
In January 2001, TSPIC implemented the new wage
rates as mandated by the CBA. As a result, the nine employees
(first group), who were senior to the above-listed recently
regularized employees, received less wages.

Regularization Period Equivalent

Increase
- 1st Quarter 100%
- 2nd Quarter 75%
- 3rd Quarter 50%
- 4th Quarter 25%
Thus, a daily paid employee who becomes a
regular employee covered by this Agreement
only on May 1, 2000, i.e., during the second
quarter and subsequent to the January 1, 2000
wage increase under this Agreement, will be
entitled to a wage increase equivalent to
seventy-five percent (75%) of ten percent
(10%) of his basic pay. In the same manner,
an employee who acquires regular status
on December 1, 2000 will be entitled to a
salary increase equivalent to twenty-five
percent (25%) of ten percent (10%) of his last
basic pay.
On the other hand, any monthly-paid
employee who acquires regular status within
the term of the Agreement shall be granted
On January 19, 2001, a few weeks after the salary increase for
the year 2001 became effective, TSPICs Human Resources
Department notified 24 employees,[12]namely: Maria Fe Flores,
Janice Olaguir, Rachel Novillas, Fe Capistrano, Jerico Alipit,
Amy Durias, Glen Batula, Claire Evelyn Velez, Ser John
Hernandez, Nimfa Anilao, Rose Subardiaga, Valerie Carbon,
Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie
Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine
Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, and
Marie Ann Delos Santos, that due to an error in the automated
payroll system, they were overpaid and the overpayment would
be deducted from their salaries in a staggered basis, starting
February 2001. TSPIC explained that the correction of the
erroneous computation was based on the crediting provision of
Sec. 1, Art. X of the CBA.
 The Union, on the other hand, asserted that there was
no error and the deduction of the alleged overpayment from
employees constituted diminution of pay. The issue was
brought to the grievance machinery, but TSPIC and
the Union failed to reach an agreement.
Consequently, TSPIC and the Union agreed to
undergo voluntary arbitration on the solitary issue of whether
or not the acts of the management in making deductions from
the salaries of the affected employees constituted diminution of
pay.
On September 13, 2001, Arbitrator Jimenez rendered a
Decision, holding that the unilateral deduction made by TSPIC
violated Art. 100[13] of the Labor Code. The fallo reads:
WHEREFORE, in the light of the
law on the matter and on the facts adduced in
evidence, judgment is hereby rendered in
favor of the Union and the named individual
employees and against the company, thereby
ordering the [TSPIC] to pay as follows:
1) to the sixteen (16) newly
regularized employees named
above, the amount of P12,642.24 a
month or a total of P113,780.16 for
nine (9) months or P7,111.26 for
each of them as well as an additional
P12,642.24 (for all), or P790.14 (for
each), for every month after 30
September 2001, until full payment,
with legal interests for every month
of delay;
2) to the nine (9) who were hired
earlier than the sixteen (16); also
named above, their respective
amount of entitlements, according
to the Unions correct computation,
ranging from P110.22 per month (or
P991.98 for nine months) to
P450.58 a month (or P4,055.22 for
nine months), as well as
corresponding monthly entitlements
after 30 September 2001, plus legal
interests until full payment,
3) to Suzette Dulay, the amount of
P608.14 a month (or P5,473.26), as
well as corresponding monthly
entitlements after 30 September
2001, plus legal interest until full
payment,
4) Attorneys fees equal to 10% of all
the above monetary awards.
The claim for exemplary damages is
denied for want of factual basis.
The parties are hereby directed to
comply with their joint voluntary
commitment to abide by this Award and thus,
submit to this Office jointly, a written proof
of voluntary compliance with this
DECISION within ten (10) days after the
finality hereof.
SO ORDERED.[14]
TSPIC filed a Motion for Reconsideration which was denied in
a Resolution dated November 21, 2001.
Aggrieved, TSPIC filed before the CA a petition for
review under Rule 43 docketed as CA-G.R. SP No. 68616. The
appellate court, through its October 22, 2003 Decision,
dismissed the petition and affirmed in toto the decision of the
voluntary arbitrator. The CA declared TSPICs computation
allowing PhP 287 as daily wages to the newly regularized
employees to be correct, noting that the computation conformed
to WO No. 8 and the provisions of the CBA. According to the
CA, TSPIC failed to convince the appellate court that the
deduction was a result of a system error in the automated
payroll system. The CA explained that when WO No. 8 took
effect on November 1, 2000, the concerned employees were
still probationary employees who were receiving the minimum
wage of PhP 223.50. The CA said that effective November 1,
2000, said employees should have received the minimum wage
of PhP 250. The CA held that when respondents became regular
employees on November 29, 2000, they should be allowed the
salary increase granted them under the CBA at the rate of 25%
of 10% of their basic salary for the year 2000; thereafter, the
12% increase for the year 2001 and the 10% increase for the
year 2002 should also be made applicable to them.[15]
TSPIC filed a Motion for Reconsideration which was denied by
the CA in its April 23, 2004 Resolution.
TSPIC filed the instant petition which raises this sole issue for
our resolution: Does the TSPICs decision to deduct the alleged
overpayment from the salaries of the affected members of
the Union constitute diminution of benefits in violation of the
Labor Code?
TSPIC maintains that the formula proposed by the Union,
adopted by the arbitrator and affirmed by the CA, was flawed,
inasmuch as it completely disregarded the crediting provision
contained in the last paragraph of Sec. 1, Art. X of the CBA.
We find TSPICs contention meritorious.
A Collective Bargaining Agreement is the law between the
parties
It is familiar and fundamental doctrine in labor law
that the CBA is the law between the parties and they are obliged
to comply with its provisions.[16] We said so in Honda Phils.,
Inc. v. Samahan ng Malayang Manggagawa sa Honda:
A collective bargaining agreement
or CBA refers to the negotiated contract
between a legitimate labor organization and
the employer concerning wages, hours of
work and all other terms and conditions of
employment in a bargaining unit. As in all
contracts, the parties in a CBA may establish
such stipulations, clauses, terms and
conditions as they may deem convenient
provided these are not contrary to law,
morals, good customs, public order or public
policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between
the parties and compliance therewith is
mandated by the express policy of the law. [17]
Moreover, if the terms of a contract, as in a CBA, are
clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of their stipulations shall
[18]
control. However, sometimes, as in this case, though the
provisions of the CBA seem clear and unambiguous, the parties
sometimes arrive at conflicting interpretations. Here, TSPIC
wants to credit the increase granted by WO No. 8 to the increase
granted under the CBA. According to TSPIC, it is specifically
provided in the CBA that the salary/wage increase for the year
2001 shall be deemed inclusive of the mandated minimum wage
increases under future wage orders that may be issued after
Wage Order No. 7. The Union, on the other hand, insists that
the crediting provision of the CBA finds no application in the
present case, since at the time WO No. 8 was issued, the
probationary employees (second group) were not yet covered
by the CBA, particularly by its crediting provision.
As a general rule, in the interpretation of a contract,
[19]
the intention of the parties is to be pursued. Littera necat
spiritus vivificat. An instrument must be interpreted according
to the intention of the parties. It is the duty of the courts to place
a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and the
purpose which it is intended to serve.[20] Absurd and illogical
interpretations should also be avoided. Considering that the
parties have unequivocally agreed to substitute the benefits
granted under the CBA with those granted under wage orders,
the agreement must prevail and be given full effect.
Paragraph (b) of Sec. 1 of Art. X of the CBA provides for the
general agreement that, effective January 1, 2001, all
employees on regular status and within the bargaining unit on
or before said date shall be granted a salary increase equivalent
to twelve (12%) of their basic monthly salary as of December
31, 2000. The 12% salary increase is granted to all employees
who (1) are regular employees and (2) are within the bargaining
unit.
Second paragraph of (c) provides that the salary increase for the
year 2000 shall not include the increase in salary granted under
WO No. 7 and the correction of the wage distortion for
November 1999.
The last paragraph, on the other hand, states the specific
condition that the wage/salary increases for the years 2001 and
2002 shall be deemed inclusive of the mandated minimum wage
increases under future wage orders, that may be issued after
WO No. 7, and shall be considered as correction of the wage
distortions that may be brought about by the said future wage
orders. Thus, the wage/salary increases in 2001 and 2002 shall
be deemed as compliance to future wage orders after WO No.
7.
Paragraph (b) is a general provision which allows a
salary increase to all those who are qualified. It, however,
clashes with the last paragraph which specifically states that the
salary increases for the years 2001 and 2002 shall be deemed
inclusive of wage increases subsequent to those granted under
WO No. 7. It is a familiar rule in interpretation of contracts that
conflicting provisions should be harmonized to give effect to
all.[21] Likewise, when general and specific provisions are
inconsistent, the specific provision shall be paramount to and
govern the general provision.[22] Thus, it may be reasonably

concluded that TSPIC granted the salary increases under the
condition that any wage order that may be subsequently issued
shall be credited against the previously granted increase. The
intention of the parties is clear: As long as an employee is
qualified to receive the 12% increase in salary, the employee
shall be granted the increase; and as long as an employee is
granted the 12% increase, the amount shall be credited against
any wage order issued after WO No. 7.
Respondents should not be allowed to receive benefits from the
CBA while avoiding the counterpart crediting provision. They
have received their regularization increases under Art. X, Sec.
2 of the CBA and the yearly increase for the year 2001. They
should not then be allowed to avoid the crediting provision
which is an accompanying condition.
Respondents attained regular employment status
before January 1, 2001. WO No. 8, increasing the minimum
wage, was issued after WO No. 7. Thus, respondents rightfully
received the 12% salary increase for the year 2001 granted in
the CBA; and consequently, TSPIC rightfully credited that 12%
increase against the increase granted by WO No. 8.
Proper formula for computing the salaries for the year
2001
Thus, the proper computation of the salaries of
individual respondents is as follows:
(1) With regard to the first group of respondents who
attained regular employment status before the effectivity of WO
No. 8, the computation is as follows:
For respondents Jerico Alipit and Glen Batula:[23]
Wage rate before WO No. 8... PhP 234.67
Increase due to WO No. 8
setting the minimum wage at PhP 250. 15.33
Total Salary upon effectivity of WO No. 8. PhP
250.00
Increase for 2001 (12% of 2000 salary)........... PhP
30.00
Less the wage increase under WO No. 8. 15.33
Total difference between the wage increase
for 2001 and the increase granted under WO No.
8.. PhP 14.67
Wage rate by December 2000..... PhP 250.00
Plus total difference between the wage increase for
2001
and the increase granted under WO No. 8.. 14.67
Total (Wage rate range beginning January 1, 2001) PhP
264.67
For respondents Ser John Hernandez and Rachel Novillas:[24]
Wage rate range before WO No. 8.PhP 234.68
Increase due to WO No. 8
setting the minimum wage at PhP 250.. 15.32
Total Salary upon effectivity of WO No. 8... PhP
250.00
Increase for 2001 (12% of 2000 salary) PhP 30.00
Less the wage increase under WO No. 8.. 15.32
Total difference between the wage increase
for 2001 and the increase granted under WO No. 8. PhP 14.68
Wage rate by December 2000......... PhP 250.00
Plus total difference between the wage increase for
2001
and the increase granted under WO No. 8.. 14.68
Total (Wage rate range beginning January 1, 2001) .. PhP
264.68
For respondents Amy Durias, Claire Evelyn Velez,
and Janice Olaguir:[25]
Wage rate range before WO No. 8.. PhP 240.26
Increase due to WO No. 8
setting the minimum wage at PhP 250 9.74
Total Salary upon effectivity of WO No. 8. PhP
250.00
Increase for 2001 (12% of 2000 salary). PhP 30.00
Less the wage increase under WO No. 8 9.74
Total difference between the wage increase for 2001
and the increase granted under WO No. 8.. PhP 20.26
Wage rate by December 2000. PhP 250.00
Plus total difference between the wage increase for
2001
and the increase granted under WO No. 8.. 20.26
Total (Wage rate range beginning January 1, 2001).. PhP
270.26
For respondents Ma. Fe Flores and Fe Capistrano:[26]
Wage rate range before WO No. 8 PhP 245.85
Increase due to WO No. 8
setting the minimum wage at PhP 250.. 4.15
Total Salary upon effectivity of WO No. 8... PhP
250.00
Increase for 2001 (12% of 2000 salary). PhP 30.00
Less the wage increase under WO No. 8........... 4.15
Total difference between the wage increase for 2001
and the increase granted under WO No. 8. PhP 25.85
 Wage rate by December 2000. PhP 250.00
Plus total difference between the wage increase for
2001
and the increase granted under WO No. 8.. 25.85
Total (Wage rate range beginning January 1, 2001).. PhP
275.85
(2) With regard to the second group of employees, who
attained regular employment status after the implementation of
WO No. 8, namely: Nimfa Anilao, Rose Subardiaga, Valerie
Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon,
Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade,
Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida
Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette
Dulay, the proper computation of the salaries for the year 2001,
in accordance with the CBA, is as follows:
Compute the increase in salary after the implementation of WO
No. 8 by subtracting the minimum wage before WO No. 8 from
the minimum wage per the wage order to arrive at the wage
increase, thus:
Minimum Wage per Wage Order.. PhP 250.00
Wage rate before Wage Order.. 223.50
Wage Increase. PhP 26.50
Upon attainment of regular employment status, the
employees salaries were increased by 25% of 10% of their basic
salaries, as provided for in Sec. 2, Art. X of the CBA, thus
resulting in a further increase of PhP 6.25, for a total of PhP
256.25, computed as follows:
Wage rate after WO No. 8. PhP 250.00
Regularization increase (25 % of 10% of basic
salary). 6.25
Total (Salary for the end of year 2000).. PhP 256.25
To compute for the increase in wage rates for the year
2001, get the increase of 12% of the employees salaries as of
December 31, 2000; then subtract from that amount, the amount
increased in salaries as granted under WO No. 8 in accordance
with the crediting provision of the CBA, to arrive at the increase
in salaries for the year 2001 of the recently regularized
employees. Add the result to their salaries as of December 31,
2000 to get the proper salary beginning January 1, 2001, thus:
Increase for 2001 (12% of 2000 salary)... PhP 30.75
Less the wage increase under WO No. 8. 26.50
Difference between the wage increase
for 2001 and the increase granted under WO No. 8.... PhP 4.25
Wage rate after regularization increase... PhP 256.25
Plus total difference between the wage increase and
the increase granted under WO No. 8. 4.25
Total (Wage rate beginning January 1, 2001). PhP
260.50
With these computations, the crediting provision of the CBA is
put in effect, and the wage distortion between the first and
second group of employees is cured. The first group of
employees who attained regular employment status before the
implementation of WO No. 8 is entitled to receive,
starting January 1, 2001, a daily wage rate within the range of
PhP 264.67 to PhP 275.85, depending on their wage rate before
the implementation of WO No. 8. The second group that
attained regular employment status after the implementation of
WO No. 8 is entitled to receive a daily wage rate of PhP 260.50
starting January 1, 2001.
Diminution of benefits
TSPIC also maintains that charging the overpayments
made to the 16 respondents through staggered deductions from
their salaries does not constitute diminution of benefits.
We agree with TSPIC.
Diminution of benefits is the unilateral withdrawal by
the employer of benefits already enjoyed by the employees.
There is diminution of benefits when it is shown that: (1) the
grant or benefit is founded on a policy or has ripened into a
practice over a long period; (2) the practice is consistent and
deliberate; (3) the practice is not due to error in the construction
or application of a doubtful or difficult question of law; and (4)
the diminution or discontinuance is done unilaterally by the
employer.[27]
As correctly pointed out by TSPIC, the overpayment of its
employees was a result of an error. This error was immediately
rectified by TSPIC upon its discovery. We have ruled before
that an erroneously granted benefit may be withdrawn without
violating the prohibition against non-diminution of benefits.
We ruled in Globe-Mackay Cable and Radio Corp. v. NLRC:
Absent clear administrative guidelines,
Petitioner Corporation cannot be faulted for
 erroneous application of the law. Payment
may be said to have been made by reason of and Mediation Board Case No. JBJ-AVA-2001-07-57 and
a mistake in the construction or application of the October 22, 2003 CA Decision in CA-G.R. SP No. 68616
a doubtful or difficult question of law.
(Article 2155, in relation to Article 2154 of are hereby AFFIRMED with MODIFICATION. TSPIC is
the Civil Code). Since it is a past error that is hereby ORDERED to pay respondents their salary increases in
being corrected, no vested right may be said
to have arisen nor any diminution of benefit accordance with this Decision, as follows:
under Article 100 of the Labor Code may be
said to have resulted by virtue of the
No. of No. of
correction.[28]
Name of Daily Working Months Total
Employee Wage Days in in a Salary
Rate a Month Year for 2001
Nimfa 260.5 26 12 81,276.00
Here, no vested right accrued to individual Anilao
respondents when TSPIC corrected its error by crediting the Rose 260.5 26 12 81,276.00
Subardiaga
salary increase for the year 2001 against the salary increase
Valerie 260.5 26 12 81,276.00
granted under WO No. 8, all in accordance with the CBA. Carbon
Olivia 260.5 26 12 81,276.00
Edroso
Hence, any amount given to the employees in excess Maricris 260.5 26 12 81,276.00
Donaire
of what they were entitled to, as computed above, may be
Analyn 260.5 26 12 81,276.00
legally deducted by TSPIC from the employees salaries. It was Azarcon
Rosalie 260.5 26 12 81,276.00
also compassionate and fair that TSPIC deducted the Ramirez
overpayment in installments over a period of 12 months starting Julieta 260.5 26 12 81,276.00
Rosete
from the date of the initial deduction to lessen the burden on the
Janice Nebre 260.5 26 12 81,276.00
overpaid employees. TSPIC, in turn, must refund to Nia Andrade 260.5 26 12 81,276.00
Catherine 260.5 26 12 81,276.00
individual respondents any amount deducted from their salaries
Yaba
which was in excess of what TSPIC is legally allowed to deduct Diomedisa 260.5 26 12 81,276.00
Erni
from the salaries based on the computations discussed in this
Mario 260.5 26 12 81,276.00
Decision. Salmorin
Loida 260.5 26 12 81,276.00
As a last word, it should be reiterated that though it is
Camullo
the states responsibility to afford protection to labor, this policy Marie Ann 260.5 26 12 81,276.00
Delos Santos
should not be used as an instrument to oppress management and
Juanita Yana 260.5 26 12 81,276.00
capital.[29] In resolving disputes between labor and capital, Suzette 260.5 26 12 81,276.00
Dulay
fairness and justice should always prevail. We ruled
Jerico Alipit 264.67 26 12 82,577.04
in Norkis Union v. Norkis Trading that in the resolution of Glen Batula 264.67 26 12 82,577.04
labor cases, we have always been guided by the State policy Ser John 264.68 26 12 82,580.16
Hernandez
enshrined in the Constitution: social justice and protection of Rachel 264.68 26 12 82,580.16
the working class. Social justice does not, however, mandate Novillas
Amy Durias 270.26 26 12 84,321.12
that every dispute should be automatically decided in favor of Claire 270.26 26 12 84,321.12
labor. In any case, justice is to be granted to the deserving and Evelyn Velez
Janice 270.26 26 12 84,321.12
dispensed in the light of the established facts and the applicable Olaguir
law and doctrine.[30] Maria 275.85 26 12 86,065.20
Fe Flores
WHEREFORE, premises considered, the September 13, Fe 275.85 26 12 86,065.20
2001 Decision of the Labor Arbitrator in National Conciliation Capistrano

The award for attorneys fees of ten percent (10%) of
the total award is MAINTAINED.
LEPANTO CERAMICS, INC.,vs LEPANTO CERAMICS
EMPLOYEES ASSOCIATION,
Before this Court is a Petition for Review on Certiorari under
Rule 45[1] of the 1997 Rules of Civil Procedure filed by
petitioner Lepanto Ceramics, Inc. (petitioner), assailing the: (1)
Decision[2] of the Court of Appeals, dated 5 April 2006, in CA-
G.R. SP No. 78334 which affirmed in toto the decision of the
Voluntary Arbitrator[3] granting the members of the respondent
association a Christmas Bonus in the amount of Three
Thousand Pesos (P3,000.00), or the balance of Two Thousand
Four Hundred Pesos (P2,400.00) for the year 2002, and the (2)
Resolution[4] of the same court dated 13 December 2007
denying Petitioners Motion for Reconsideration.
The facts are:
Petitioner Lepanto Ceramics, Incorporated is a duly organized
corporation existing and operating by virtue of Philippine Laws.
Its business is primarily to manufacture, make, buy and sell, on
wholesale basis, among others, tiles, marbles, mosaics and
other similar products.[5]
Respondent Lepanto Ceramics Employees Association
(respondent Association) is a legitimate labor organization duly
registered with the Department of Labor and Employment. It is
the sole and exclusive bargaining agent in the establishment of
petitioner.[6]
In December 1998, petitioner gave a P3,000.00 bonus to its
employees, members of the respondent Association.[7]
Subsequently, in September 1999, petitioner and respondent
Association entered into a Collective Bargaining Agreement
(CBA) which provides for, among others, the grant of a
Christmas gift package/bonus to the members of the respondent
Association.[8] The Christmas bonus was one of the
enumerated existing benefit, practice of traditional rights which
shall remain in full force and effect.
The text reads:
Section 8. All other existing benefits, practice of traditional
rights consisting of Christmas Gift package/bonus,
reimbursement of transportation expenses in case of breakdown
of service vehicle and medical services and safety devices by
virtue of company policies by the UNION and employees shall
remain in full force and effect.
Section 1. EFFECTIVITY
This agreement shall become effective on September 1, 1999
and shall remain in full force and effect without change for a
period of four (4) years or up to August 31, 2004 except as to
the representation aspect which shall be effective for a period
of five (5) years. It shall bind each and every employee in the
bargaining unit including the present and future officers of the
Union.
In the succeeding years, 1999, 2000 and 2001, the bonus was
not in cash. Instead, petitioner gave each of the members of
respondent Association Tile Redemption Certificates
equivalent to P3,000.00.[9] The bonus for the year 2002 is the
root of the present dispute. Petitioner gave a year-end cash
benefit of Six Hundred Pesos (P600.00) and offered a cash
advance to interested employees equivalent to one (1) month
salary payable in one year.[10] The respondent Association
objected to the P600.00 cash benefit and argued that this was in
violation of the CBA it executed with the petitioner.
The parties failed to amicably settle the dispute. The respondent
Association filed a Notice of Strike with the National
Conciliation Mediation Board, Regional Branch No. IV,
alleging the violation of the CBA. The case was placed under
preventive mediation. The efforts to conciliate failed. The case
was then referred to the Voluntary Arbitrator for resolution
where the Complaint was docketed as Case No. LAG-PM-12-
095-02.
In support of its claim, respondent Association insisted that it
has been the traditional practice of the company to grant its
members Christmas bonuses during the end of the calendar
year, each in the amount of P3,000.00 as an expression of
gratitude to the employees for their participation in the
companys continued existence in the market. The bonus was
either in cash or in the form of company tiles. In 2002, in a
speech during the Christmas celebration, one of the companys
top executives assured the employees of said bonus. However,
the Human Resources Development Manager informed them
that the traditional bonus would not be given as the companys
earnings were intended for the payment of its bank loans.
Respondent Association argued that this was in violation of
their CBA.
The petitioner averred that the complaint for nonpayment of the
2002 Christmas bonus had no basis as the same was not a
demandable and enforceable obligation. It argued that the
giving of extra compensation was based on the companys
available resources for a given year and the workers are not
entitled to a bonus if the company does not make profits.
Petitioner adverted to the fact that it was debt-ridden having
incurred net losses for the years 2001 and 2002 totaling to P1.5
billion; and since 1999, when the CBA was signed, the
companys accumulated losses amounted to over P2.7 billion.
Petitioner further argued that the grant of a one (1) month salary
cash advance was not meant to take the place of a bonus but
was meant to show the companys sincere desire to help its
employees despite its precarious financial condition. Petitioner
also averred that the CBA provision on a Christmas gift/bonus
refers to alternative benefits. Finally, petitioner emphasized that
even if the CBA contained an unconditional obligation to grant
the bonus to the respondent Association, the present difficult
economic times had already legally released it therefrom
pursuant to Article 1267 of the Civil Code.[11]
The Voluntary Arbitrator rendered a Decision dated 2 June
2003, declaring that petitioner is bound to grant each of its
workers a Christmas bonus of P3,000.00 for the reason that the
bonus was given prior to the effectivity of the CBA between the
parties and that the financial losses of the company is not a
sufficient reason to exempt it from granting the same. It stressed
that the CBA is a binding contract and constitutes the law
between the parties. The Voluntary Arbitrator further
expounded that since the employees had already been given
P600.00 cash bonus, the same should be deducted from the
claimed amount of P3,000.00, thus leaving a balance of
P2,400.00. The dispositive portion of the decision states, viz:
Wherefore, in view of the foregoing respondent LCI is hereby
ordered to pay the members of the complainant union LCEA
their respective Christmas bonus in the amount of three
thousand (P3,000.00) pesos for the year 2002 less the P600.00
already given or a balance of P2,400.00.[12]
Petitioner sought reconsideration but the same was denied by
the Voluntary Arbitrator in an Order dated 27 June 2003, in this
wise:
The Motion for Reconsideration filed by the respondent in the
above-entitled case which was received by the Undersigned on
June 26, 2003 is hereby denied pursuant to Section 7 Rule XIX
on Grievance Machinery and Voluntary Arbitration; Amending
The Implementing Rules of Book V of the Labor Code of the
Philippines; to wit:
Section 7. Finality of Award/Decision − The decision, order,
resolution or award of the voluntary arbitrator or panel of
voluntary arbitrators shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or decision
by the parties and it shall not be subject of a motion for
reconsideration.[13]
Petitioner elevated the case to the Court of Appeals via a
Petition for Certiorari under Rule 65 of the Rules of Court
docketed as CA-G.R. SP No. 78334.[14] As adverted to earlier,
the Court of Appeals affirmed in toto the decision of the
Voluntary Arbitrator. The appellate court also denied
petitioners motion for reconsideration.
In affirming respondent Associations right to the Christmas
bonus, the Court of Appeals held:
In the case at bar, it is indubitable that petitioner offered private
respondent a Christmas bonus/gift in 1998 or before the
execution of the 1999 CBA which incorporated the said benefit
as a traditional right of the employees. Hence, the grant of said
bonus to private respondent can be deemed a practice as the
same has not been given only in the 1999 CBA. Apparently,
this is the reason why petitioner specifically recognized the
grant of a Christmas bonus/gift as a practice or tradition as
stated in the CBA. x x x.
xxxx
Evidently, the argument of petitioner that the giving of a
Christmas bonus is a management prerogative holds no water.
There were no conditions specified in the CBA for the grant of
said benefit contrary to the claim of petitioner that the same is
justified only when there are profits earned by the company. As
can be gleaned from the CBA, the payment of Christmas bonus
was not contingent upon the realization of profits. It does not
state that if the company derives no profits, there are no bonuses
to be given to the employees. In fine, the payment thereof was
not related to the profitability of business operations.
Moreover, it is undisputed that petitioner, aside from giving the
mandated 13th month pay, has further been giving its
employees an additional Christmas bonus at the end of the year
since 1998 or before the effectivity of the CBA in September
1999. Clearly, the grant of Christmas bonus from 1998 up to
2001, which brought about the filing of the complaint for
alleged non-payment of the 2002 Christmas bonus does not
involve the exercise of management prerogative as the same
was given continuously on or about Christmas time pursuant to
the CBA. Consequently, the giving of said bonus can no longer
be withdrawn by the petitioner as this would amount to a
diminution of the employees existing benefits.[15]
Not to be dissuaded, petitioner is now before this Court. The
only issue before us is whether or not the Court of Appeals erred
in affirming the ruling of the voluntary arbitrator that the
petitioner is obliged to give the members of the respondent
Association a Christmas bonus in the amount of P3,000.00 in
2002.[16]
We uphold the rulings of the voluntary arbitrator and of the
Court of Appeals. Findings of labor officials, who are deemed
to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even
finality, and bind us when supported by substantial evidence.
This is the rule particularly where the findings of both the
arbitrator and the Court of Appeals coincide.[17]
As a general proposition, an arbitrator is confined to the
interpretation and application of the CBA. He does not sit to
dispense his own brand of industrial justice: his award is
legitimate only in so far as it draws its essence from the
CBA.[18] That was done in this case.
By definition, a bonus is a gratuity or act of liberality of the
giver. It is something given in addition to what is ordinarily
received by or strictly due the recipient. A bonus is granted and
paid to an employee for his industry and loyalty which
contributed to the success of the employers business and made
possible the realization of profits.[19]
A bonus is also granted by an enlightened employer to spur the
employee to greater efforts for the success of the business and
realization of bigger profits.[20]
Generally, a bonus is not a demandable and enforceable
obligation. For a bonus to be enforceable, it must have been
promised by the employer and expressly agreed upon by the
parties.[21] Given that the bonus in this case is integrated in the
CBA, the same partakes the nature of a demandable obligation.
Verily, by virtue of its incorporation in the CBA, the Christmas
bonus due to respondent Association has become more than just
an act of generosity on the part of the petitioner but a contractual
obligation it has undertaken.[22]
A CBA refers to a negotiated contract between a legitimate
labor organization and the employer, concerning wages, hours
of work and all other terms and conditions of employment in a
bargaining unit. As in all other contracts, the parties to a CBA
may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided these are not contrary
to law, morals, good customs, public order or public policy.[23]
It is a familiar and fundamental doctrine in labor law that the
CBA is the law between the parties and they are obliged to
comply with its provisions.[24] This principle stands strong and
true in the case at bar.
A reading of the provision of the CBA reveals that the same
provides for the giving of a Christmas gift package/bonus
without qualification. Terse and clear, the said provision did not
state that the Christmas package shall be made to depend on the
petitioners financial standing. The records are also bereft of any
showing that the petitioner made it clear during CBA
negotiations that the bonus was dependent on any condition.
Indeed, if the petitioner and respondent Association intended
that the P3,000.00 bonus would be dependent on the company
earnings, such intention should have been expressed in the
CBA.
It is noteworthy that in petitioners 1998 and 1999 Financial
Statements, it took note that the 1997 financial crisis in the
Asian region adversely affected the Philippine economy.[
25]
From the foregoing, petitioner cannot insist on business losses
as a basis for disregarding its undertaking. It is manifestly clear
that petitioner was very much aware of the imminence and
possibility of business losses owing to the 1997 financial crisis.
In 1998, petitioner suffered a net loss of P14,347,548.00.[26]
Yet it gave a P3,000.00 bonus to the members of the respondent
Association. In 1999, when petitioners very own financial
statement reflected that the positive developments in the
economy have yet to favorably affect the operations of the
company,[27] and reported a loss of P346,025,733.00,[28] it
entered into the CBA with the respondent Association whereby
it contracted to grant a Christmas gift package/bonus to the
latter. Petitioner supposedly continued to incur losses in the
years 2000[29] and 2001. Still and all, this did not deter it from
honoring the CBA provision on Christmas bonus as it continued
to give P3,000.00 each to the members of the respondent
Association in the years 1999, 2000 and 2001.
All given, business losses are a feeble ground for petitioner to
repudiate its obligation under the CBA. The rule is settled that
any benefit and supplement being enjoyed by the employees
cannot be reduced, diminished, discontinued or eliminated by
the employer. The principle of non-diminution of benefits is
founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full
protection.[30]
Hence, absent any proof that petitioners consent was vitiated by
fraud, mistake or duress, it is presumed that it entered into the
CBA voluntarily and had full knowledge of the contents thereof
and was aware of its commitments under the contract.
The Court is fully aware that implementation to the letter of the
subject CBA provision may further deplete petitioners
resources. Petitioners remedy though lies not in the Courts
invalidation of the provision but in the parties clarification of
the same in subsequent CBA negotiations. Article 253 of the
Labor Code is relevant:
Art. 253. Duty to bargain collectively when there exists a
collective bargaining agreement. - When there is a collective
bargaining agreement, the duty to bargain collectively shall also
mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve
a written notice to terminate or modify the agreement at least
sixty (60) days prior to its expiration date. It shall be the duty
of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing
agreement during the sixty (60)-day period and/or until a new
agreement is reached by the parties.
WHEREFORE, Premises considered, the petition is DENIED
for lack of merit. The Decision of the Court of Appeals dated 5
April 2006 and the Resolution of the same court dated 13
December 2007 in CA-G.R. SP No. 78334 are AFFIRMED.
ZUELLIG PHARMA CORPORATION, Petitioner, vs.
ALICE M. SIBAL,
This Petition for Review on Certiorari1 assails the December
4, 2003 Decision2 of the Court of Appeals (CA) in CA-G.R. SP
No. 50448 which nullified the January 21, 1998 Decision3 of
the National Labor Relations Commission (NLRC) in NLRC NCR
CA NO. 011914-96. The NLRC affirmed the August 6, 1996
Decision4 of the Labor Arbiter which, in turn, denied
respondents' claim for retirement gratuity and monetary
equivalent of their unused sick leave on top of the
redundancy pay they already received.
Also assailed in this Petition is the CA's July 13,2006
Resolution5 denying petitioner's motion to reconsider
aforesaid CA Decision.
Factual Antecedents
Petitioner Zuellig Pharma Corporation (Zuellig) is a domestic
corporation engaged in the manufacture and distribution of
pharmaceutical products. It also distributes pharmaceutical
products manufactured by other companies like Syntex
Pharmaceuticals (Syntex). Respondents (36 in all), on the
other hand, were the employees of Zuellig at its Syntex
Division.
In 1995, Roche Philippines, Inc. (Roche) purchased Syntex and
took over from Zuellig the distribution of Syntex products.
Consequently, Zuellig closed its Syntex Division and
terminated the services of respondents due to redundancy.
They were properly notified of their termination6 and were
paid their respective separation pay in accordance with
Section 3(b), Article XIV of the March 21, 1995 Collective
Bargaining Agreement (CBA)7 for which, respondents
individually signed Release and Quitclaim8 in full settlement
of all claims arising from their employment with Zuellig.
Proceedings before the Labor Arbiter and the NLRC
Controversy arose when respondents filed before the
Arbitration Branch of the NLRC separate Complaints9 (which
were later consolidated) for payment of retirement gratuity
and monetary equivalent of their unused sick leave on top of
the separation pay already given them. Respondents claimed
that they are still entitled to retirement benefits and that
their receipt of separation pay and execution of Release and
Quitclaim do not preclude pursuing such claim.
On August 6, 1996, Labor Arbiter Eduardo J. Carpio (Labor
Arbiter Carpio) rendered a Decision denying respondents’
claims. He opined that only employees whose separation
from employment was brought about by sickness, death,
compulsory or optional retirement, or resignation are entitled
to gratuity pay. However, employees whose separation from
employment was by reason of redundancy are not entitled to
the monetary equivalent of their unused sick leave if
cessation from employment was caused by redundancy.
Upon respondents’ appeal, the NLRC rendered a Decision
dated January 21, 1998 affirming the Decision of the Labor
Arbiter.
Proceedings before the Court of Appeals
Twice rebuffed but still undeterred, the respondents filed a
Petition for Certiorari10 with the CA.
In a Decision dated December 4, 2003, the CA granted
respondents’ Petition and nullified the Decisions of both the
Labor Arbiter and the NLRC. Relying on the case of Aquino v.
National Labor Relations Commission,11 the CA ruled that
since there is nothing in the CBA which expressly prohibits
the grant of both benefits, those who received separation pay
are, therefore, still entitled to retirement gratuity. The CA
also took note of Section 5, Article V of Zuellig’s January 1,
1968 Retirement Gratuity Plan,12 which provides that an
employee who may be separated from the service for any
cause not attributable to his or her own fault or misconduct
shall be entitled to full retirement benefits. Since the cause of
respondents’ separation from work was redundancy, the CA
ordered Zuellig to pay respondents retirement gratuity and
the monetary equivalent of their unused sick leave on top of
the redundancy pay previously granted to them. The
dispositive portion of the CA Decision reads:
WHEREFORE, the petition is GIVEN DUE COURSE and
GRANTED, and the assailed Decision of the Labor Arbiter
dated August 6, 1996 and the affirming Decision of the NLRC
dated January 21, 1998 are SET ASIDE and VACATED. In its
stead, judgment is rendered ORDERING respondent Zuellig
Pharma Corporation to pay the retirement gratuity and
unused sick leave pay prayed for, and to this end the
respondent NLRC is directed to compute and specify the
respective amounts due them.
SO ORDERED.13
Grounds
Zuellig moved for a reconsideration,14 but to no avail.15
Hence, this Petition anchored on the following grounds:
I
THE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT
HELD THAT UNDER THE TERMS AND CONDITIONS OF THE CBA
AND THE RETIREMENT AND GRATUITY PLAN X X X
RESPONDENTS COULD AVAIL OF BOTH REDUNDANCY PAY
AND RETIRMENT BENEFITS.
II
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN
FINDING THAT RESPONDENTS ARE ENTITLED TO THE
MONETARY EQUIVALENT OF UNUSED SICK LEAVE.
III
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN
FAILING TO HOLD THAT QUITCLAIMS BAR RESPONDENTS
FROM CLAIMING FROM PETITIONER ANY MORE THAN THEY
HAVE LAWFULLY RECEIVED.16
The Parties’ Arguments
Zuellig concedes that, in the absence of contractual
prohibition, payment of both separation pay and retirement
pay may be allowed as ruled by this Court in Aquino.
Nonetheless, it asserts that Aquino is not applicable in this
case. It explains that in Aquino, the parties’ CBA incorporates
by reference a retirement plan agreed upon by the parties
prior to the execution of the CBA. On the other hand, Zuellig
insists that in this case, Section 2, Article XIV of the parties’
CBA prohibits the recovery of both retirement gratuity and
severance pay. In addition, Section 2, Article VII of the
Retirement and Gratuity Plan likewise expressly limits the
benefits the employees may receive to their choice between
(i) the benefits enumerated therein and (ii) separation pay or
other benefits that Zuellig may be required by law or
competent authority to pay them. In any event, Zuellig
further argues that respondents are not qualified to receive
early retirement benefits as none of them resigned from the
service, have reached the retirement age of 60 or have been
in the employ of Zuellig for at least 25 years as required by
Section 1(b), Article XIV of the CBA.
Zuellig furthermore contends that the CA’s award of
monetary equivalent of respondents’ unused sick leave lacks
basis. It asserts that under Section 2(c) and (d), Article VIII of
the CBA, only employees who are due for compulsory
retirement and those availing of early retirement are entitled
to the cash equivalent of their unused sick leave. Those
separated from employment by reason of redundancy like
the respondents are not.
Finally, Zuellig insists that the CA committed grave error in
invalidating the Release and Quitclaim voluntarily executed
by the respondents. Said quitclaims represent a fair
reasonable settlement of all the claims respondents had
against Zuellig. In fact, the amount of redundancy pay given
to respondents is substantially higher than the retirement
package received by those who resigned.
Respondents counter that there is nothing in the CBA which
categorically prohibits the recovery of retirement benefits in
addition to separation pay. They assert that Section 2, Article
XIV of the CBA alluded to by Zuellig does not constitute as an
express prohibition that would foreclose recovery of
retirement gratuity after the employees had received
redundancy pay. Hence, following the ruling of this Court in
Aquino, they are entitled to said retirement gratuity.
With regard to Zuellig’s contention that retirement benefits
can be extended only to those who resigned, respondents
echo the observation of the CA that since their separation
from employment was due to a cause beyond their control,
they cannot be considered to have exclusively chosen
separation pay and abandoned their right to retirement
gratuity. To bolster their point, respondents cite Section 5,
Article V of the Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel, who may
be separated from the service of the Company for any cause
not attributable to his own fault or misconduct shall be
entitled to full benefits as provided for under Article V,
Sections 1 and 2 above, provided, however, that any
employee, executive or supervisory personnel separated for
cause shall not be entitled to any benefit as provided for
under said Article V, Sections 1, 2 and 3.17
Respondents likewise insist that since there is no specific
provision in the CBA prohibiting them from claiming the
monetary value of their unused sick leave, the same should
be given to them.
Zuellig ripostes that nothing prevented respondents from
resigning to make them eligible to receive retirement
gratuity. They had ample time to decide whether to resign or
to accept redundancy pay. But they chose redundancy pay
over early retirement benefits because they knew they would
be getting more. As to respondents’ reliance on Section 5,
Article V, in relation to Sections 1 and 2, of the Retirement
Gratuity Plan, Zuellig posits that the same cannot prevail over
Section 2, Article XIV of the CBA.
On August 23, 2006, this Court issued a Temporary
Restraining Order enjoining the CA from implementing its
now assailed Decision until further orders from this Court.18
Our Ruling
The Petition is impressed with merit.
The CBA does not allow recovery of both separation pay and
retirement gratuity.
In Aquino,19 the petitioner employees were retrenched after
their employer Otis Elevator Company (Otis) adopted cost-
cutting measures and streamlined its operations. They were
thus given separation pay double the amount required by the
Labor Code. Subsequently, however, the employees filed a
claim for retirement benefits, alleging entitlement thereto by
virtue of the Retirement Plan. Otis denied the claim by
asserting that separation pay and retirement benefits are
mutually exclusive of each other; hence, acceptance of one
bars recovery of the other. When the case reached its final
review, this Court held that in the absence of specific
prohibition in the retirement plan or the CBA, retirement
benefits and separation pay are not mutually exclusive of
each other and the employees whose services were
terminated without cause are entitled to both separation pay
and retirement gratuity.
In the present case, the CBA contains specific provisions
which effectively bar the availment of retirement benefits
once the employees have chosen separation pay or vice
versa. The provisions of the CBA on Retirement Gratuity read:
ARTICLE XIV
RETIREMENT GRATUITY
Section 1[a] – Any employee who is separated from
employment due to sickness or death shall receive from the
COMPANY a retirement gratuity in an amount equivalent to
one [1] month’s basic salary per year of service. For the
purpose of this agreement, years of service shall be deemed
equivalent to the total service credits in the COMPANY; a
fraction of at least six [6] months shall be considered as one
[1] year, including probationary employment; basic salary is
understood to mean the monthly compensation being
received by the employee under the payroll for services
rendered during the normal regular working hours of the
company, excluding but not limited to any other emoluments
for extra work, premiums, incentives, benefits and
allowances of whatever kind and nature.
[b] No person may retire under this paragraph for old age
before reaching the age of sixty [60] years provided that the
COMPANY may compel the retirement of an employee who
reaches or is past 60 years of age. An employee who resigns
prior to attaining such retirement age shall be entitled to any
of the following percentage of the gratuity provided above:
Early Retirement or Separation
a] 5 to 7 years of service 60%
b] 8 to 10 years of service 70%
c] 11 to 15 years of service 90%
d] 16 years of service and above 100%
An employee who opts to retire before reaching the age of 60
is entitled to one (1) month’s basic pay per year of service or
Four Hundred Thirty Thousand Pesos (₱430,000.00),
whichever is higher, provided however that his service record
in the COMPANY is not less than twenty-nine (29) years.
Those whose service record is from twenty-five (25) to
twenty-eight (28) years will be paid an amount equivalent to
one (1) month’s basic pay per year of service or Three
Hundred Sixty Thousand Pesos (₱360,000.00), whichever is
higher.
An employee may be entitled to retirement gratuity on
account of illness under this article only upon a certification
by the COMPANY’s physician, that the illness of the retiring
individual will disable said individual from employment for a
protracted length of time.
A transfer of an employee from the employment of the
COMPANY to that of any other sister company shall be
deemed a retirement for the purpose of this section.
In case an employee retires at the age of 60, he shall receive
a retirement pay equivalent to his last monthly basic pay
multiplied by his total service credits or Two Hundred Ten
Thousand Pesos (₱210,000.00) whichever is higher, provided
however, that his service record in the COMPANY is from
sixteen (16) to nineteen (19) years. Those whose service
record is less than sixteen (16) years will be paid an amount
equivalent to one (1) month’s basic pay per year of service.
An employee who retires at the age of 60 or who is separated
from employment on account of illness or death will be
entitled to one (1) month’s basic pay per year of service or
Two Hundred Fifty Thousand Pesos (₱250,000.00) whichever
is higher, provided however, that his service record in the
COMPANY is not less than 20 years.
Section 2 – Any payment under this provision shall be
chargeable against separation pay (other than the Social
Security System benefits) which may be demandable under
an applicable law.
Section 3[a] – The COMPANY shall grant to all employees
whose employment is terminated due to retrenchment or
closure of business a termination pay in accordance with the
following schedule:
1. For employees who have rendered one [1] year to five [5]
years of continuous and satisfactory service – 100% of
monthly basic pay for every year of service;
2. For employees who have rendered six [6] years to nine [9]
years of continuous and satisfactory service – 130% of
monthly basic pay for every year of service;
3. For employees who have rendered ten [10] [years] to
fifteen [15] years of continuous and satisfactory service –
155% of monthly basic pay for every year of service;
4. For employees who have rendered [at least] sixteen [16]
years x x x of continuous and satisfactory service – 160% of
monthly basic pay for every year of service.
[b] The COMPANY shall grant to all employees whose
employment is terminated due to merger, redundancy or
installation of labor-saving device a termination pay in
accordance with the following schedule:
1. For employees who have rendered one [1] year to five [5]
years of continuous and satisfactory service – 120% of
monthly basic pay for every year of service;
2. For employees who have rendered six [6] years to nine [9]
years of continuous and satisfactory service – 150% of
monthly basic pay for every year of service;
3. For employees who have rendered ten [10] [years] to
fifteen [15] years of continuous and satisfactory service –
175% of monthly basic pay for every year of service;
4. For employees who have rendered [at least] sixteen [16]
[years] x x x of continuous and satisfactory service – 185% of
monthly basic pay for every year of service.20 (Emphasis and
Italics supplied)
Section 2 of Article XIV explicitly states that any payment of
retirement gratuity shall be chargeable against separation
pay. Clearly, respondents cannot have both retirement
gratuity and separation pay, as selecting one will preclude
recovery of the other. To illustrate the mechanics of how
Section 2 of Article XIV bars double recovery, if the
employees choose to retire, whatever amount they will
receive as retirement gratuity will be charged against the
separation pay they would have received had their separation
from employment been for a cause which would entitle them
to severance pay. These causes are enumerated in Section 3,
Article XIV of the CBA (i.e., retrenchment, closure of business,
merger, redundancy, or installation of labor-saving device).
However, if the cause of the termination of their employment
was any of the causes enumerated in said Section 3, they
could no longer claim retirement gratuity as the fund from
which the same would be taken had already been used in
paying their separation pay. Put differently, employees who
were separated from the company cannot have both
retirement gratuity and separation pay as there is only one
fund from which said benefits would be taken. Inarguably,
Section 2 of Article XIV effectively disallows recovery of both
separation pay and retirement gratuity. Consequently,
respondents are entitled only to one. Since they have already
chosen and accepted redundancy pay and have executed the
corresponding Release and Quitclaim, they are now barred
from claiming retirement gratuity.
In Suarez, Jr. v. National Steel Corporation,21 the same issue
cropped up – whether the retrenched employees are entitled
to retirement gratuity even after they have received their
separation pay in accordance with the retrenchment program
of the company. In ruling in the negative, this Court observed
that Sections 1 and 3 of Article XIV on Retirement Benefits of
the CBA separately provide for retirement benefits and
severance pay for retrenched employees.
Section 1 thereof states, among others, that those retiring
with at least 10 years of service credits are entitled to a
retirement pay equivalent to one and one-half months of
basic pay for every year of service, while Section 3 extends
two months base pay for every year of service for laid-off
employees pursuant to retrenchment program. This Court
elaborated thus:
A perusal of Article XIV of the parties’ 1994-1996 CBA readily
shows that retirement benefits shall be granted only to those
employees who, after rendering at least ten (10) years of
continuous services, would retire upon reaching the
mandatory retirement age, or would avail of optional
voluntary retirement. Nowhere can it be deduced from the
CBA that those employees whose employment was
terminated through one of the authorized causes are entitled
to retirement benefits. In fact, Section 3 of the afore-quoted
Article XIV specifically provides that retrenched employees
shall be given two (2) months pay for every year of service.
Section 3 shows the intention of the parties to exclude
retrenched employees, like herein petitioners, from receiving
retirement benefits under the existing retirement plan as set
forth in Section 1.22 (Italics supplied)
Similarly, in this case, there is also nothing in the CBA which
would indicate that those employees whose services were
terminated by reason of redundancy are entitled to
retirement gratuity. As in Suarez, Sections 1 and 3 of Article
XIV of the CBA of the parties herein separately provide for the
amount of benefits to be received by retired employees on
the one hand and those who were terminated due to
retrenchment, closure of business, merger, redundancy, or
installation of labor-saving device on the other. In short,
Sections 1 and 3 clearly spell out the difference in the
treatment of employees who retired as provided in Section 1
and those who were constrained to leave the company due
to any of the causes enumerated in Section 3. Such difference
in the treatment, as well as in the corresponding pay or
gratuity, indicates the parties’ intention to exclude retired
employees from receiving separation pay and vice versa. A
contrary construction would distort the clear intent of the
parties and render useless the classification specifically
spelled out in the CBA.
The same ruling was arrived at in Salomon v. Associate of
International Shipping Lines, Incorporated.23 Section 1 of the
parties’ CBA in that case provides for separation pay in case
an employee is separated from the service for cause, i.e.,
redundancy. Section 3, on the other hand, prescribes the
amount of retirement benefits for employees who have
rendered at least 15 years of continuous service in the
association. This Court held that, as prescribed by the CBA,
the employees are entitled only to either separation pay, if
they are terminated for cause, or optional retirement
benefits, if they rendered at least 15 years of continuous
service. Since they were separated from the service for cause,
the employees are entitled to separation pay only.
The CA opined that since respondents were not at fault and
had nothing to do with their separation from the company by
reason of redundancy, they are therefore entitled to full
retirement benefits. It anchored its conclusion on Section 5 of
Article V of the Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel, who may
be separated from the service of the Company for any cause
not attributable to his own fault or misconduct shall be
entitled to full benefits as provided for under Article V,
Sections 1 and 2 above, provided, however, that any
employee, executive or supervisory personnel separated for
cause shall not be entitled to any benefit as provided for
under said Article V, Sections 1, 2 and 3.24
However, the same Retirement Gratuity Plan provides that in
case Zuellig is required by law or by lawful order to pay
separation pay, its employees shall not be entitled to both
separation pay and the benefits provided therein. The
employees are entitled only either to separation pay or
retirement gratuity, depending on their own choice. But they
cannot have both. Section 2, Article VII of the Retirement
Gratuity Plan on Effect of Social Legislation is clear on the
matter. Thus:
Section 2 – Other Laws and/or Government Awards, Rules
and Regulations
Except only as provided in the next preceding Section hereof,
in the event that the Company is required under the laws or
by lawful order of competent authority to give to its
employees any separation pay, or other benefits or
emoluments similar or analogous to those herein already
provided, the employees concerned shall not be entitled to
both what the law or the lawful order of competent authority
requires the company to give and the benefits herein
provided, but shall be entitled only to the benefit of his
choice.25 (Italics supplied)
Having chosen and accepted redundancy pay, respondents
are thus precluded from seeking payment of retirement pay.
Moreover, as correctly pointed out by Zuellig, Section 5,
Article V of the 1968 Retirement Gratuity Plan was already
superseded by Section 2, Article XIV of the 1995 CBA, a much
later contract which reiterates the express prohibition against
"double recovery." In addition, unlike in Aquino where the
employees have served the company for at least ten years
making them eligible for retirement,26 none of the
respondents herein appear to be qualified for optional
retirement. Under Section 1[a] and [b], Article XIV of the CBA
earlier quoted, to be entitled to retirement gratuity, the
employee must have reached 60 years of age, resigned,
suffered illness, or opted to retire even before reaching the
age of 60 but has been in the employ of Zuellig for at least 25
years. None of the respondents who initiated the complaints
appear to have met the above requirements. They never
even bothered to controvert Zuellig’s contention that they
are not qualified for retirement.
Respondents are not entitled to the monetary equivalent of
their unused sick leave credits.
The pertinent provisions of Article VIII of the CBA on unused
sick leave provide:
Section 2[a] – Sick leave – Every regular employee who has
rendered:
1. One [1] year to fifteen [15] years of continuous and
satisfactory service shall be entitled to fifteen [15] working
days sick leave with pay for every year;
2. Sixteen [16] years and above of continuous and satisfactory
service shall be entitled to twenty [20] working days sick
leave with pay for every year; provided that the illness is
certified by the COMPANY physician or in exceptional cases,
by any other duly licensed physician.
[b] Unspent sick leave shall accrue to a period not exceeding
one hundred twenty [120] working days.
[c] An employee who is sixty [60] years old and due for
compulsory retirement shall be entitled to encashment of
unused sick leave based on his/her service record in the
company in accordance with the following schedule:
1. 16 years and above of continuous service – 100%
encashment up to a maximum of four [4] months basic salary
2. 11 years to 15 years of continuous service – 50%
encashment up to a maximum of two [2] months basic salary
3. 10 years and below of continuous service – 50 %
encashment up to a maximum of one [1] month basic salary
[d] An employee who retires before reaching the age of sixty
[60] shall be entitled to encashment of unused sick leave
based on his/her service record in the COMPANY in
accordance with the following schedule:
1. 25 years and above of continuous service – 100%
encashment up to a maximum of one and one-half [1½]
months basic salary
2. 11 years to 24 years of continuous service – 50%
encashment up to a maximum of one [1] month basic salary
provided the retirement is due to illness or disability as
certified by the company physician.27
According to the CA, since "the above enumerations fall short
of providing in the instances of the other causes of separation
from service such as redundancy as in the case of the
petitioners, death, merger, installation of labor cost-saving
device, retrenchment or closure of business, all of which are
causes not attributable and beyond the control of the
employees,"28 the respondents should be given the
monetary equivalent of their unused sick leave.
This Court cannot agree.
The CA’s ruling in effect put something into the CBA that is
not written in it, contrary to the old and familiar Latin maxim
of expressio unius est exclusio alterius. The express mention
of one person, thing, act, or consequence excludes all others.
Put differently, where the terms are expressly limited to
certain matters, it may not, by interpretation or construction,
be extended to other matters. In this case, Article VIII of the
CBA covers only (1) an employee who is 60 years old and due
for compulsory retirement; (2) an employee who retires prior
to attaining the compulsory retirement age but has served at
least 25 years; and, (3) an employee who retires before
attaining compulsory retirement age due to illness or
disability. Necessarily, the enumeration cannot be extended
to include those who will be leaving the company due to
redundancy, death, merger, installation of labor cost-saving
device, retrenchment, or closure of business as mistakenly
ruled by the CA.
As the law between the parties, the CBA must be strictly
complied with.
It is a familiar and fundamental doctrine in labor law that the
CBA is the law between the parties and they are obliged to
comply with its provisions. In Honda Phils., Inc. v. Samahan ng
Malayang Manggagawa sa Honda29 this Court elucidated as
follows:
A collective bargaining agreement [or CBA] refers to the
negotiated contract between a legitimate labor organization
and the employer concerning wages, hours of work and all
other terms and conditions of employment in a bargaining
unit. As in all contracts, the parties in a CBA may establish
such stipulations, clauses, terms and conditions as they may
deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus,
where the CBA is clear and unambiguous, it becomes the law
between the parties and compliance therewith is mandated
by the express policy of the law.30
Here, and as discussed above, the parties’ CBA provides in no
uncertain terms that whatever amount of money the
employees will receive as retirement gratuity shall be
chargeable against separation pay. It is the unequivocal
manifestation of their agreement that acceptance of
retirement gratuity forecloses receipt of separation pay and
vice versa. The CBA likewise exclusively enumerates
departing employees who are entitled to the monetary
equivalent of their unused sick leave. These agreements must
prevail and be given full effect.
The Release and Quitclaim executed by each of the
respondents remains valid.
It is true that quitclaims executed by employees are often
frowned upon as contrary to public policy. But that is not to
say that all waivers and quitclaims are invalid as against
public policy.31 Quitclaims will be upheld as valid if the
following requisites are present: "(1) the employee executes
a deed of quitclaim voluntarily; (2) there is no fraud or deceit
on the part of any of the parties; (3) the consideration of the
quitclaim is credible and reasonable; and, (4) the contract is
not contrary to law, public order, public policy, morals or
good customs or prejudicial to a third person with a right
recognized by law."32
In this case, there is no showing that Zuellig coerced or forced
respondents to sign the Release and Quitclaim. In fact, there
is no allegation that Zuellig employed fraud or deceit in
making respondents sign the Release and Quitclaim. On the
other hand, respondents declared that they had received the
separation pay in full settlement of all claims arising from
their employment with Zuellig. For which reason, they have
remised, released and discharged Zuellig.
Notably, the Release and Quitclaim represents a reasonable
and fair settlement of respondents’ claims. Under Article 283
of the Labor Code, the employers are required to pay
employees separated from employment by reason of
redundancy at least one (1) month pay or at least one (1)
month pay for every year of service, whichever is higher.33
Here, respondents received 100% of their one (1) month
basic pay for every year of service, plus a premium ranging
from 20% to 85% of such basic pay for every year of service
(depending on the number of years in service), as separation
pay. In Goodrich Manufacturing Corporation, v. Ativo,34 this
Court declared that –
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.
WHEREFORE, the instant Petition is hereby GRANTED. The
December 4, 2003 Decision and the July 13, 2006 Resolution
of the Court of Appeals in CA-G.R. SP No. 50448 are
ANNULLED and SET ASIDE and the January 21, 1998 Decision
of the National Labor Relations Commission in NLRC NCR CA
NO. 011914-96 is REINSTATED and AFFIRMED.
The Temporary Restraining Order issued by this Court on
August 23,2006 is made PERMANENT.
SO ORDERED.
HOLY CROSS OF DAVAO COLLEGE, INC., petitioner, vs. HOLY
CROSS OF DAVAO FACULTY UNION - KAMAPI, respondent.
At bar is a petition for review on certiorari under Rule 45 of
the 1997 Rules of Civil Procedure, as amended, assailing the
Decision[1] dated June 5, 2002 and Resolution[2] dated
October 18, 2002 rendered by the Court of Appeals in CA-G.R.
SP No. 65507, entitled Holy Cross of Davao College, Inc. vs.
Holy Cross of Davao Faculty Union - KAMAPI.
The facts as borne by the records are:
Holy Cross of Davao College, Inc., petitioner, is a tertiary level
educational institution at Sta. Ana Avenue, Davao City.
Sometime in June 1997, petitioner and Holy Cross of Davao
College Faculty Union KAMAPI,[3] respondent, executed a
collective bargaining agreement (CBA) providing for a faculty
development scholarship for academic teaching personnel.
On January 16, 1998, petitioner received a letter of invitation
for the 1999 Monbusho scholarship grant (In-Service Training
for Teachers)[4] offered and sponsored by the Japanese
Government, through the Japan Information and Cultural
Center (JICC).
This prompted Jean Legaspi, a permanent English teacher in
petitioners high school department, to submit her
application.
Meantime, on March 31, 1999, petitioner issued policy
statement and guidelines on educational trips abroad for the
school year 1998 to 1999.
In a letter dated August 25, 1999, JICC informed Jean Legaspi
that she was selected as a recipient of the scholarship.
Consequently, she requested petitioner to allow her to be on
study leave with grant-in aid equivalent to her 18 months
salary and allowance, pursuant to Section 1, Article XIII of the
CBA. However, petitioner denied her request, claiming that
she is not entitled to grant-in aid under its Policy Statement
and Guidelines for Trips Abroad for Professional Growth.
Nevertheless, petitioner granted her 12 months study leave
without pay from October 1999 to September 2000.
Before she left for Japan, she asked respondent union KAMPI
to submit to the Grievance Committee petitioners refusal to
grant her claim for grant-in aid, but the same was not settled.
Thus, respondent filed with the National Conciliation and
Mediation Board (NCMB), Regional Office No. XI, Davao City,
a complaint for payment of grant-in aid against petitioner. In
a Submission Agreement dated June 23, 2000, the parties
stipulated to submit the case for voluntary arbitration.
On March 26, 2001, after the parties submitted their
pleadings and position papers, the Voluntary Arbitrator
rendered a Decision ordering petitioner to pay respondents
member, Jean A. Legaspi, her grant-in aid benefits, the
dispositive portion of which reads:
WHEREFORE, premises considered, decision is hereby
rendered:
1. Declaring that there is non-implementation of Article XIII,
Section 1 of the existing collective bargaining agreement
(CBA) in the case of Miss Jean A. Legaspi, a bonafide member
of the complainant faculty union;
2. Ordering respondent Holy Cross of Davao College to pay
Miss Jean A. Legaspi her grant-in aid benefit equivalent to her
salary, COLA and other benefits under the law and collective
bargaining agreement during the period of her scholarship
grant; and
3. Directing respondent to cease and desist from committing
a similar offense to prevent another dispute in the future,
thus, ensure industrial peace.
SO ORDERED.
Petitioner then filed a motion for reconsideration but the
same was denied in a Resolution dated June 20, 2001.
Thereafter, petitioner filed with the Court of Appeals a
petition for review under Rule 43 of the 1997 Rules of Civil
Procedure, as amended.
On June 5, 2002, the Appellate Court promulgated its
Decision affirming the Voluntary Arbitrators assailed Decision.
The Court of Appeals held:
The terms of the CBA are clear and leave little room for
further interpretation. In this case, the provision on faculty
development operated both to grant and limit the rights of
the parties. As such, while the provision obliges petitioner to
provide grant-in aid programs to its faculty, it also requires
such faculty to be bound in employment to petitioner for a
certain period of time, all in the recognized need to increase
the competence of the schools faculty. Legaspi satisfied all
the requirements under the CBA. She agreed to keep her part
of the bargain under the terms of the CBA. Despite her
increased professional competence after undergoing foreign
training, she bound herself to continue working for petitioner
for at least two years for every year of scholarship study.
Since the collective bargaining agreement is considered the
law between the parties, containing as it does the agreed
terms of employment of the employee with his employer,
unilaterally imposed orders or rules qualifying the terms
contained in the agreement are subordinate to the CBA. At
most, such rules, such as the rules on trips abroad formulated
by petitioner a few months before Legaspis application, are
merely suppletory and can neither contradict nor undermine
the terms found in the CBA.
xxxxxx
Of course, petitioner asseverates that far from deviating from
the terms of the CBA, petitioner in fact merely enforces its
terms, in that Section 1 of Article XIII specifies what petitioner
calls the substantive conditions for availment of the benefit,
to wit: that the course must be related to her functions with
petitioner and that it must be in the pursuit of a higher
degree. None of these conditions, according to petitioner,
was satisfied by the Monbusho scholarship because the
training will be conducted in a foreign language and will only
lead to the grant of a certificate of completion and not a
masters or higher degree.
Even on these ratiocinations, however, petitioner still fails to
persuade this court. Contrary to petitioners insistence,
Legaspis foreign training is clearly related to her work with
petitioner and will lead to an advancement in her
qualifications for her job.
First of all, we stress that it is petitioners president herself
who, presumably after determining the worth of allowing its
faculty to undergo an in-service training in a premier foreign
institution, immediately advertised the availability of the
scholarship. That petitioner itself encouraged its faculty to
apply for the scholarship effectively demonstrates that
petitioner believed that availment of the training will
contribute not only to the professional advancement of its
faculty but also to the development of the quality of
education in the school.
Second, and more importantly, a cursory examination of the
contents of the course manifests its relevance to Legaspis
work with petitioner. The training program which focuses on
areas such as (a) Educational Management (e.g. Educational
Administration and Finance, School Management), (b)
Methods of Education (e.g. Teaching-Learning Process
System, Curriculum Development, Educational Evaluation), (c)
Study of Special Subjects (e.g. Mathematics, Physics,
Chemistry, Physical Education), and (d) Observation Study
(e.g. Inspection of a Class Participation in Special Extra-
curricular Practice, Inspection of Various Educational
Research Services) obviously relates to enhancing Legaspis
effectiveness as a teacher. The fact that the medium of
instruction is Japanese does not negate the programs
relevance to Legaspis work as an English teacher because the
course contents were designed to hone her skills in
effectively teaching her students.
Further, while no degree but only a certificate will be
conferred on Legaspi, she should not be barred from availing
of the benefits under the CBA. Indeed, the CBA merely states
higher studies and did not specify to which trainings the
benefit will apply. If the CBA intended that such trainings be
confined to those which will formally grant degrees as
petitioner contends, the agreement should have so stated.
Contrary thereto, however, the CBA provides the award of
grant-in aid benefits to faculty members who will pursue
higher studies. The term is so broad as to include programs
that would grant certificates and not degrees. In any case, the
unassailable truth is that the certificate which is granted by a
premier foreign institute, is an added higher qualification in
favor of Legaspi in recognition of her increased competence
in handling her classes under petitioners auspices.
In any event, the construction of any ambiguity in the CBA,
such as which course would be relevant to Legaspis job, and
whether such course comprises higher studies should be
made in favor of the employee, Legaspi, in consonance with
the rule that labor laws and agreements should be construed
in favor of the working man.
WHEREFORE, the assailed decision is hereby AFFIRMED. Costs
against petitioner.
SO ORDERED.
On October 18, 2002, the Court of Appeals issued a
Resolution denying petitioners motion for reconsideration.
Hence, this petition for review on certiorari.
Petitioner contends that the Appellate Court erred in
interpreting the parties CBA, thereby, restricting its exercise
of academic freedom; that it is not obliged to grant Jean
Legaspi a grant-in aid considering that she failed to comply
with the substantive requirements set forth in their CBA, such
as (1) that the course is within her area of competence; and
(2) that she will acquire higher academic degree; and that the
Monbusho scholarship is a non-degree program outside her
area of competence (English).
Petitioners contentions lack merit.
The basic issue for our resolution is whether Jean Legaspi is
entitled to grant-in aid benefits in light of the CBA between
the parties.
To begin with, any doubt or ambiguity in the contract (CBA)
between management and the union members should be
resolved in favor of the latter. This is pursuant to Article 1702
of the Civil Code which provides: (I)n case of doubt, all labor
legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.[5]
Section 1, Article XIII of the CBA provides:
Section 1. FACULTY DEVELOPMENT. It has always been the
policy of the Holy Cross of Davao College that academic
teaching personnel must develop within their areas of
competence and in so doing have exercised its prerogative to
demand that academic teaching personnel take the necessary
measure to effect their upgrading in acquiring higher
academic degree. In view thereof, the Management shall
grant to all academic personnel a grant-in-aid program,
where the academic teaching personnel, whenever
scholarship opportunities should arise, be afforded a leave of
absence to further their studies in Institutions of Higher
Learning with a grant-in-aid equivalent to their salary and
allowance (when there is a mandated wage order) that the
concerned academic teaching personnel is receiving at the
time of the scholarship grant, under the following conditions:
That whenever the school wishes to grant faculty
development scholarships, notice to the entire faculty of the
department concerned shall be made through a public
announcement in the bulletin board. In cases where there are
two (2) or more applicants, the Department Head shall set a
committee chosen from among the regular and permanent
faculty of the department composed of at least three (3) but
not more than five (5) members.
That the academic teaching personnel grantee shall finish
his/her scholarship grant within time frame of the scholarship
grant unless prevented by some causes over, above and
beyond his/her control.
That the academic teaching personnel grantee shall sign a
contract with the Holy Cross of Davao College to serve
therein for at least two (2) years for every year of scholarship
study.
That should he/she fail to comply with the conditions of the
scholarship grant, she/she shall reimburse the Holy Cross of
Davao College with all the amount he/she has received during
the pendency of the grant together with all interest thereon
allowed by law. No clearance shall be given until full
reimbursement plus interest would have been made.
Along the same line, paragraph 2 of petitioners Policy
Statement and Guidelines for Trips Abroad for Professional
Growth (SY 1998-1999) reads:
The school recognizes that educational trips abroad promote
both personal and professional growth. Hence, employees
may travel abroad for study tours and to attend seminars,
conferences, and other related academic pursuits. The school
may provide financial assistance subject to the following
guidelines:
xxxxxx
2. That the employee is the official representative of the
school upon recommendation of the office head. As such,
he/she receives regular salary.

x x x x x x.

The above provisions state that academic teaching personnel,

like Jean Legaspi, as recipient of a scholarship grant are
entitled to a leave of absence with a grant-in-aid equivalent
to their monthly salary and allowance, provided such grant is
to promote their professional growth or to enhance their
studies in institutions of higher learning. Such provisions need
no interpretation for they are clear. Contracts which are not
ambiguous are to be interpreted according to their literal
meaning and not beyond their obvious intendment. [6]

In Mactan Workers Union vs. Aboitiz,[7] we held that the

terms and conditions of a collective bargaining contract
constitute the law between the parties. Those who are
entitled to its benefits can invoke its provisions. In the event
that an obligation therein imposed is not fulfilled, the
aggrieved party has the right to go to court for redress.

Thus, the Court of Appeals did not err in its assailed Decision
and Resolution.

WHEREFORE, the petition is DENIED. The assailed Decision

dated June 5, 2002 and Resolution dated October 18, 2002 of
the Court of Appeals in CA-G.R. SP No. 65507 are AFFIRMED.
Costs against petitioner.
SECOND DIVISION
JUAN DELA RAMA and G.R. No. 142309
EUGENIA DELA RAMA,
Petitioners, Present:
QUISUMBING, J.,
Chairperson,
CORONA,*
- versus - CARPIO MORALES,
TINGA, and
BRION, JJ.
OSCAR PAPA and AMEUERFINA Promulgated:
PAPA,
Respondents. January 30, 2009
x----------------------------------------------------------------------------x
DECISION
TINGA, J.:
This petition allows us to reiterate some of the basic rules
concerning the notarization of deeds of conveyance involving
real property. Such rules are important because an
improperly notarized document cannot be considered a
public document and will not enjoy the presumption of its
due execution and authenticity.
I.
Petitioner spouses Juan and Eugenia dela Rama were the
registered owners of a parcel of land situated in Calamba,
Laguna, covered by Transfer Certificate of Title (TCT) No.
91166 issued by the Registry of Deeds of Laguna. The
property was acquired for P96,000.00 by way of sale from
Canlubang Sugar Estate (CSE), as evidenced by a notarized
Absolute Deed of Sale dated 10 July 1980 executed by Juan
dela Rama and CSE, as represented by Jesus de Veyra.
Eugenia dela Rama also affixed her signature as proof of her
marital consent.[1]
According to Juan dela Rama, he became a resident of the
United States by 1984 and would acquire American
citizenship by 1989.[2] In 1992, petitioners through their
representative, were reminded to pay the realty tax on the
property, only to be informed by the assessors office that
their title to the property had in fact been cancelled, and a
new title, TCT No. 102128, issued in favor of respondents
Oscar and Ameorfina Papa.[3]
Until 31 July 1985, Oscar Papa had been the Assistant Vice-
President and Head of Marketing of the Laguna Estate
Development Corporation (LEDC), a marketing arm of CSE
and the entity through which the property had earlier been
marketed and sold to petitioners. The property was
transferred to and retitled in the name of the spouses Papa
pursuant to a notarized Deed of Absolute Sale dated 29
March 1985, covering the subject property, and identifying
petitioners as the vendors and respondents as the vendees.
The 1985 deed of sale bears the signatures of petitioners and
respondents, at least two witnesses (whose identities are not
spelled out or otherwise ascertainable on the face of the
document), and the notarial signature and seal of Atty.
William Gumtang. The new title in the name of respondents
was issued on 21 June 1985.
Articulating the primary claim that their signatures on the
1985 deed of sale were forged, petitioners filed a complaint
with the Regional Trial Court of Calamba, Branch 92, for
Cancellation of Title Obtained Under Forged Deed of Sale.[4]
They prayed for the declaration of nullity of the 1985 deed of
sale, the corresponding cancellation of TCT No. 102128 in the
name of respondents and the issuance of a new one in their
names. Respondents counterposed in their Answer with
Compulsory Counterclaim:[5] (1) that the 1985 deed of sale
had been duly executed; (2) that laches had barred the
complaint since they had obtained title and physical
possession as far back as 1985; (3) that they had every reason
to believe that the person from whom they purchased the
property was duly authorized to sell the same given that such
person was in possession of the owners duplicate TCT; and (4)
that their purchase of the property was in good faith and for
value, thus even assuming that the forgery occurred, the
action should be directed against those who perpetrated the
fraud.
During pre-trial, the following factual matters were stipulated
upon: (1) that Juan dela Rama was the registered owner of
the property covered by TCT No. T-91166, which was
subsequently cancelled; (2) that TCT No. 102128 was issued
in the name of respondents after they acquired the same for
P96,000.00; (3) that from 1974 to 1985 or thereabouts Oscar
Papa was employed or connected with LEDC, holding the
position of Head of Marketing; (4) that LEDC was a developer
and marketing arm of CSE; and (5) that LEDC had developed
the residential subdivision where the subject property is
located.
Petitioner Juan dela Rama and respondent Oscar Papa both
testified in court. Dela Rama claimed having religiously paid
the property taxes since 1980. He denied that he or his wife
executed the 1985 deed of sale or any other document that
conveyed their interests or rights over the property. He even
denied having met Papa before he testified in court in 1995.
Dela Rama also explained that he had purchased the property
in 1980 while a student at New York University, and that he
had been a permanent resident of California since 1984, and
a United States citizen since 1989.
Oscar Papa testified that he was connected with LEDC from
1974 to 1985, where he marketed residential, industrial and
agricultural lots which belonged to the Canlubang Sugar
Estates. He claimed not to recall who had offered to him to
buy the subject property, and that he had never met Juan
Dela Rama. He also admitted signing the deed of sale, such
document being witnessed by two staff members of LEDC,
but he did not see dela Rama sign the same document.
Neither could he remember signing the deed of sale in front
of the notary public who notarized the document.
Papa claimed that in real estate transactions, it was standard
practice that the buyer first sign the document before the
seller did so. He also claimed that it was likewise standard
practice in the real estate industry that the buyer and seller
did not necessarily have to meet face to face. Respondent
further alleged that at the time of the transaction, sales of
real property was (sic) very bad with several owners trying to
sell back their property even at a price less than the purchase
price, as this came shortly after the assassination of Senator
Benigno Aquino, Jr.
On 26 June 1986, the RTC promulgated a Decision[6]
annulling the deed of sale, cancelling respondents title and
reinstating petitioners title to the subject property. The RTC
said that the facts and evidence presented indicated
preponderating evidence that the plaintiffs signatures in the
deed of sale x x x are not their signatures,[7] such conclusion
being corroborated by the admission of Papa that he did not
see petitioners sign the deed of sale. The RTC also disbelieved
respondents contention that it was standard practice in real
estate transactions for the buyer to first affix his signature
before the seller; noting that [i]t must be that before a buyer
would part with his money, he will first see to it that the
sellers [sic] signatures were already affixed and if possible,
affixed in his presence.[8]
The RTC did not consider respondents as buyers in good faith,
given their dubious assertion that it was typical that the
buyer signs the deed of sale before the seller, as well as such
circumstances like the failure of respondents to ever pay real
estate taxes on the property and to assert possession or
occupancy over the property. Accordingly, it held that the
cancellation of respondents title was proper. In addition, the
RTC discounted the claim of defendants that laches and
estoppel had set in to bar the action, pointing out that under
Section 47 of Pres. Decree No. 1529, no title to registered
land in derogation of the title of the registered owner shall be
acquired by prescription or adverse possession, and that
under Article 1410 of the Civil Code, [t]he action of defense
for the declaration of the inexistence of a contract does not
prescribe.[9]
Respondents appealed to the Court of Appeals. On 7
September 1999, the appellate court rendered a Decision
reversing the RTC and upholding the validity of the deed of
sale.[10]
The Court of Appeals considered the pivotal issue as whether
the signatures of the petitioners on the deed of sale were
indeed forged, and ultimately concluded that there was no
such evidence to support the finding of forgery. It was
observed that the burden of proving the forgery fell upon the
petitioners, yet they failed to present convincing evidence to
establish the forgery. The only evidence presented to
establish the forgery was the oral testimony of Juan dela
Rama himself, which according to the Court of Appeals, was
self-serving. The RTC was chided for not applying Section 22
of Rule 132 of the Rules of Evidence, which provided in clear
terms how handwriting must be proved. It was pointed out
that the Rule required that the handwriting of a person be
proved by any witness who believes it to be the handwriting
of such person because he has seen the person write, or has
seen writing purporting to be his upon which the witness has
acted or been charged, and has thus acquired knowledge of
the handwriting of such person.[11]
Moreover, the Court of Appeals cited that neither one of the
dela Ramas was confronted with their signatures in the
challenged deed of sale. Nor did they positively and
unequivocally declare that the signatures were not theirs or
that these were forged.
II.
Hence, this petition for review. Petitioners devote
considerable effort in highlighting facts and admissions
elicited from Oscar Papa himself to cast doubt on the validity
of the deed of sale. Yet it would be impertinent on our part to
immediately dwell on such evidentiary matters without first
contending with the legal arguments cited by the Court of
Appeals in dismissing the complaint. While this Court is
generally not a trier of fact, there are recognized exceptions
to that rule, such as when the findings of fact are conflicting,
or when the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties and which, if
properly considered, would justify a different conclusion.[12]
The petition hinges on a factual questionwhether the
signatures of the petitioners as appearing on the deed of sale
were forged. The Court of Appeals correctly observed that
petitioners had the onus probandi to establish such forgery.
In concluding that petitioners failed to discharge such burden,
the appellate court cited the rule upholding the presumption
of regularity of a notarized document. Applying that rule, it is
necessary that the forgery must be established not merely by
preponderance of evidence, but by clear, positive and
convincing evidence, and the Court of Appeals appears to
have applied that more exacting standard.
However, petitioners point out that respondent Papa had
admitted before the Court that he did not sign the deed of
sale in front of the Notary Public. Based on the transcript of
Papas testimony before the RTC,[13] it is clear at least that
the witness could not attest to the fact that he had signed the
document in front of the Notary Public.
Atty. Lizares:
Do you recall Mr. Witness if you sign[ed] this document in
front of a Notary Public?
[Papa]:
No[,] sir.
Atty. Lizares:
Do you know this Mr. William Gumtang?
Witness:
Yes
Atty. Lizares:
How do you know him Mr. Witness?
Witness:
Atty. Gumtang is one of the Notary Public of CSE.
Atty. Lizares:
He is one of the Notary Public of CSE?
Witness:
Yes[,] sir.
Atty. Lizares:
So you do not recall if you signed this in front of Atty.
Gumt[a]ng?
Witness:
I do not recall
The deed was purportedly notarized by Atty. William
Gumtang, who was personally known to Papa as he was one
of the notaries public of CSE.[14] Had Atty. Gumtang testified
that Papa had signed the deed of sale in his presence, Papas
memory lapse would have had less relevance. Yet Atty.
Gumtang was never called on as a witness for the defense,
nor was any other step taken by the respondents to
otherwise establish that Papa had signed the deed of sale in
front of the notary public.
A.
Papas admissions, refreshing in their self-incriminatory
candor, bear legal significance. With respect to deeds of sale
or conveyance, what spells the difference between a public
document and a private document is the acknowledgment in
the former that the parties acknowledging the document
appear before the notary public and specifically manifest
under oath that they are the persons who executed it, and
acknowledge that the same are their free act and deed. The
Court, through Chief Justice Davide, had previously explained:
A jurat which is normally in this form:
Subscribed and sworn to before me in ____________, this
____ day of __________, affiant having exhibited to me his
Community (before, Residence) Tax Certificate No.
__________ issued at __________ on ___________.
"is that part of an affidavit in which the officer certifies that
the instrument was sworn to before him. It is not a part of a
pleading but merely evidences the fact that the affidavit was
properly made (Young vs. Wooden, 265 SW 24, 204 Ky. 694)."
The jurat in the petition in the case also begins with the
words "subscribed and sworn to me."
To subscribe literally means to write underneath, as one's
name; to sign at the end of a document. To swear means to
put on oath; to declare on oath the truth of a pleading, etc.
Accordingly, in a jurat, the affiant must sign the document in
the presence of and take his oath before a notary public or
any other person authorized to administer oaths.
As to acknowledgment, Section 1 of Public Act No. 2103
provides:
(a) The acknowledgment shall be made before a notary public
or an officer duly authorized by law of the country to take
acknowledgments of instruments or documents in the place
where the act is done. The notary public or the officer taking
the acknowledgment shall certify that the person
acknowledging the instrument or document is known to him
and that he is the same person who executed it, and
acknowledged that the same is his free act and deed. The
certificate shall be made under his official seal, if he is by law
required to keep a seal, and if not, his certificate shall so
state.
It is obvious that the party acknowledging must likewise
appear before the notary public or any other person
authorized to take acknowledgments of instruments or
documents.(Emphasis supplied)[15]
The presumptions that attach to notarized documents can be
affirmed only so long as it is beyond dispute that the
notarization was regular. We cannot ascribe that conclusion
at bar to the deed of sale. Respondent failed to confirm
before the RTC that he had actually appeared before the
notary public, a bare minimum requirement under Public Act
No. 2103. Such defect will not ipso facto void the deed of
sale. However, it eliminates the presumptions that are carried
by notarized public documents and subject the deed of sale
to a different level of scrutiny than that relied on by the Court
of Appeals. This consequence is with precedent. In Tigno v.
Sps. Aquino,[16] where the public document in question had
been notarized by a judge who had no authority to do so, the
Court dispensed with the clear and convincing evidentiary
standard normally attached to duly notarized documents, and
instead applied preponderance of evidence as the measure to
test the validity of that document.
It appears that respondents had previously laid stress on the
claim that it is a common practice in real estate transactions
that deeds of conveyance are signed on separate occasions
by the vendor and the vendee, and not necessarily in the
presence of the notary public who notarizes the document
but they adduced nothing to support their claim but their
mere say-so. Assuming arguendo that is indeed the common
practice in the business, we quite frankly do not care. The
clear requirements of law for a proper acknowledgment may
not be dispensed with simply because generations of
transactions have blithely ignored such requirements. If it is
physically impossible for the vendor and the vendee to meet
and sign the deed in the presence of one notary public, there
is no impediment to having two or more different notaries
ratifying the document for each party that respectively
appears before them. This is the prudent practice adopted by
professional law enterprises, and it is a correct measure in
consonance with the law.
B.
There is another implication under our rules of evidence.
Under Section 19, Rule 132 of the Rules of Court, documents
acknowledged before a notary public except for last wills and
testaments are deemed as public documents, and as such,
under Section 23 of the same Rule, they are evidence of the
fact which gave rise to its execution and as to its date.[17]
Excepting the other public documents enumerated in Section
19, all other writings are private, and before such private
document is offered as authentic, its due execution and
authenticity must be proved either: (a) by anyone who saw
the document executed or written; or (b) by evidence of the
genuineness of the signature or handwriting of the
maker.[18] Accordingly, in order that the challenged deed of
sale may be accepted by the Court as genuine, we must be
satisfied by the evidence on record establishing that its
genuineness was proved by anyone who saw the document
executed or written, or by evidence of the genuineness or
handwriting of the maker.
This shift in perspectives relieves petitioners of an
extraordinary burden to prove with clear and convincing
evidence that the deed of sale was forged, as well as any
presumption that the said document is genuine as to its due
execution. The question now is thus whether they were able
to establish the fact of forgery through a preponderance of
evidence.
III.
It is now upon this Court to ascertain whether the
genuineness and due execution of the deed of sale have been
duly proven, there being no presumption that it was. In doing
so, we continue to recognize that it remains incumbent on
the petitioners to prove their allegation that the deed of sale
was forged even though that document no longer enjoys any
significantly weighted presumption as to its validity since it
cannot be considered as a public document. The properly
applicable standard of preponderance of evidence
necessitates that the court counterweigh the respective
evidence submitted by the litigants to test whether the
plaintiffs claims are actionable. Accordingly, in this case if the
evidence presented by the petitioners that the deed of sale is
a forgery is greater or more convincing than that presented
by the respondents, then favorable relief may be granted to
petitioners.
The evidence-in-chief presented by petitioners to prove that
the deed of sale was fraudulent consists of the testimony of
two witnesses for the plaintiff petitioner Juan dela Rama, and
respondent Oscar Papa, who called as a hostile witness for
the plaintiff.
A.
We begin with Juan dela Ramas testimony. Petitioners assert
that Juan dela Rama expressly denied in open court his
signature on the deed of sale, and such denial is made plain in
the transcript of his testimony of 25 July 1995.
Atty. Lizares:
Mr. Witness I am showing to you the document mark[ed] as
plaintiff[s] exhibit which is the Deed of [A]bsolute Sale
which is also the Annex C of complaint purportedly executed
on March 29, 1985 by Juan Eugenio dela Rama and Eugenia
dela Rama in favor of Mr. Oscar Papa, did you
execut[e] the document?
[dela Rama]:
I did not.
Court:
What exhibit is that.
Atty. Lizares:
Exhibit 1 your Honor is defendant marking the same
document that is mark as exhibit M and M-1 for the plaintiff
this a common exhibit. This is a 2 pag[e] document. Did you
execute the document?
Witness:
No [I] did not.
Atty. Fortun:
May I know the date?
Atty. Lizares:
March 29, 1985. Did you execute any document whatsoever
M[r]. Witness disposing or transferring any interest or right
over the property which was earlier evidence[d] by your TCT
No. T-91166?
Witness:
No such document was ever executed by me or my wife.
xxx
[On cross examination]
Atty. Fortun:
You declare that when you [were] shown that contract, it
Appears that between you and Mr. Papa you stated that was
not your signature?
Witness:
Yes Maam.[19]
[On redirect]
Atty. Lizares: So you never executed any Deed of Absolute
Sale on any document transferring your right or interest of
the property covered by TCT No. T-91166.
Witness:
No sir.[20]
The Court of Appeals noted that his testimony was not
corroborated, thus, self-serving, and further castigated the
trial court for failing to apply Section 22 of Rule 132, which
establishes how the genuineness of handwriting must be
proved. The provision reads:
SEC. 22. How genuineness of handwriting proved.The
handwriting of a person may be proved by any witness who
believes it to be the handwriting of such person because he
has seen the person write, or has seen writing purporting to
be his upon which the witness has acted or been charged,
and has thus acquired knowledge of the handwriting of such
person. Evidence respecting the handwriting may also be
given by a comparison, made by the witness or the court,
with writings admitted or treated as genuine by the party
against whom the evidence is offered, or proved to be
genuine to the satisfaction of the judge.
Petitioners argue that our ruling in Emas v. De Zuzuarregui
and Aguilar[21] is in point. Emas involved a plaintiff who
sought annulment of title on the ground that his signature on
the contract of mortgage on which the conveyance of the
property was based had been forged. In explaining that the
plaintiffs testimony on the forgery of his signature sufficed to
debunk the genuineness of the contract, we held:
The proof adduced before the trial court shows, we think,
beyond any doubt, that the deed, original of Exhibit A, which
purports to show a conveyance of the property in which
purports to show a conveyance of the property in question
from the plaintiff, Lucio Emas, to the defendant De
Zuzuarregui, is a forgery, and that the fraud was
consummated substantially in the manner above described.
The plaintiff in this action (the real Lucio Emas) testified
unequivocally that he had never taken any part in the
creation of the deed in question, and his testimony, in our
opinion, leaves no room to doubt that he was speaking the
truth. As evidence of the crime of forgery, the plaintiff's
attorney submitted in the trial court certified copies of the
judgments entered in the Court of First Instance of Manila
and afterwards in the Supreme Court in the criminal case
convicting Ortega of the crime of estafa by falsification of a
public document. These certified copies were admitted by the
trial court as competent proof and the attorney for the
defendants objected on the ground that said judgments are
inadmissible in this civil action, being res inter alios acta. As
an abstract point of law the assignment of error based on this
exception is perhaps well taken; but we are of the opinion
that, apart from said certified judgments, the record contains
ample evidence to support the finding of the trial court that
the original of the Exhibit A is a forged document, and that
the present plaintiff, Lucio Emas, was not a party thereto.[22]
Does Section 22 of Rule 132 accommodate the testimony of
the very person whose signature is disputed as a means to
establish the genuineness of handwriting? We believe that it
does, and Emas remains a good law notwithstanding the
subsequent enactment of the Rules of Court. After all, the
owner of such disputed signature may fall within the category
of any witness who believes it to be the handwriting of such
person because he has seen the person write and has thus
acquired knowledge of the handwriting of such person. In Alo
v. Rocamora,[23] plaintiff Alo presented in evidence a deed of
sale establishing that he, and not the defendant, was the
prior purchaser of the land in question. Alo himself testified
as to the authenticity of the deed of sale. In discussing
whether the genuineness of such document was proved, we
cited the then Section 324 of the Code of Civil Procedure,
which provides any writing may be proved, either by anyone
who saw the writing executed; or by evidence of the
genuineness of the handwriting of the maker; or by a in so far as it affects the weight. Thus evidence of handwriting
subscribing witness. The Court then pronounced: may be admissible even though the person whose writing it is
claimed to be in available as a witness.
As to the authenticity of Exhibit A, introduced by the plaintiff,
it may be said that it was fully established by the testimony of xxx
the plaintiff himself and by that of the witness, Vicente
When the testimony of the writer is not available it may be
Alquizola, who signed the same together with the
said that the next best evidence in quality would be in the
gobernadorcillo and who testified under oath that he was
testimony of a witness who had seen the writer sign his name
present when the document was executed and signed by
or actually make the writing x x x (Citations omitted)[26]
those whose names are subscribed thereto. x x x
We acknowledge the general premise that the testimony of
Telesforo Alo and Vicente Alquizola witnessed the execution
the very person whose signature is put in question has
of the said instrument, the latter having been one of the
probative value, whether such testimony is offered to affirm
accompanying witnesses of the local authority before whom
or dispute the genuineness of his signature. That testimony
it was executed. Consequently there is no doubt as to the
satisfies the requirements under Section 22 of Rule 132 on
authenticity of the said document, nor as to the truth of the
how handwriting must be proved. At the same time, the
contents thereof, nor is there anything in the record, or any
evidentiary weight of such testimony wholly depends on the
legal reason, that would justify this court in holding that the
strength of the particular witnesss testimony viewed in
said document was false.[24]
conjunction with the totality of the evidence at hand.
Section 324 of the Code of Civil Procedure is substantially
It may be possible, as the Court of Appeals did in this case, to
similar to Section 22 of Rule 132, so our application of the
discount the testimony of a plaintiff disavowing the
former rule in Alo remains appropriate today. At the very
authenticity of his purported signature as self-serving, but
least, Section 22 of Rule 132 does not exclude such testimony
such posture can only be warranted if the self-serving
from consideration. It is in fact well-established in the law of
assertion is negated by other evidence or legal presumptions.
evidence that the testimony of the very person whose
If the challenged deed of sale were considered by us as a
signature is disputed is more than competent proof on the
public document, then dela Ramas mere testimonial
genuineness of such signature. According to Wigmore on
disavowal of his signature would be insufficient to rebut the
Evidence, there even was once thought that for proving the
presumptive due execution of that writing. However, since
genuineness of a document the alleged writer was a
we cannot consider the deed of sale as a public document
preferred witness, though it is now believed that no such rule
owing to its improper acknowledgment, Dela Ramas denial
of preference exists.[25] At the same time, there really is no
that the signature was his gains greater weight for evidentiary
rule that automatically discounts the testimony of the alleged
purposes.
writer as to the genuineness or spuriousness of his own
signature. In enumerating the methods of authentication of a B.
handwriting, Professor Herrera actually designates as the first
method, the testimony of the purported writer: Counter-intuitively perhaps, the petitioners as plaintiffs called
on Oscar Papa to testify in their behalf as a hostile witness.
I. Proof of the Genuineness of a handwriting This he did on 25 July 1995. It was an impressive gambit on
the part of counsel for the petitioners that produced
A. Methods of Authentication
spectacular results.
1. The Testimony of the purported writer
Papa testified for the petitioners that he did not sign the
Except to the extent that certain formalities of proof are document in the presence of the dela Ramas.
required by the rules relating to attesting witnesses or rules
Atty. Lizares:
requiring formal certification, and the like, various means are
available for proving the authenticity of a document as a But you do not (sic) meet the person. Who signed as Juan
prerequisite to its admission in evidence. Under ordinary
circumstances, it would seem that the testimony of the Eugenio dela Rama?
purported writer would be the most satisfactory
[Papa]:
authentication, where it is available.
No I did not see him sign.
While this is generally true, it is not necessarily so in all cases.
There is no preferential rule requiring the testimony of the Atty. Lizares:
writer on the ground that it is the best evidence; the fact that
the best available evidence is not used being significant only So you did not see him signing?
Witness: Atty. Fortun:

Yes. Misleading your Honor.

Atty. Lizares: Court:

But you said you sign[ed] this document? Sustain[ed]

Witness: Atty. Lizares:

Yes. So you mean you never met the person who execute[d] this
document?
Atty. Lizares:
Witness:
When you sign[ed] this document did Mr. dela Rama were
[sic] the person who purportedly signed in his behalf? Yes sir.[28]

Atty. Fortun: As a witness for the petitioners, Papa could not recall who
exactly had offered the subject property to him.
Your Honor he had repeatedly answered that he signed it
without seeing him.[27] Atty. Lizares:

A contrary admission on Oscar Papas part would have Who offer[ed] you this property which is the subject matter
allowed the Court cause to believe that the petitioners had of this case?
consented to the sale.
[Papa]:
As a witness for the petitioners, Oscar Papa admitted that he
I could not specifically recall who in particular offer[ed] the
had not never met Juan dela Rama before and during the
property, it could have been one of my staff, or brokers at the
sale, and until 1995 or ten years after the sale.
time because aside from my job I am handling several
Atty. Lizares: construction not only this subdivision, not only Ceres I, there
is Ceres II and Ceres III and all the industrial lots.[29]
Have you ever met Juan Eugenio dela Rama?
xxx
[Papa]:
Atty. Lizares:
No sir.
You dont recall who offer[ed] this property?
Atty. Lizares:
Witness:
He is not the one Juan Eugenio dela Rama who testified a
while ago? At this moment specifically I cannot recall.[30]

Atty. Fortun: As a witness for the petitioners, Papa admitted he could not
recall whether or not any of the dela Ramas had already
Already answered your Honor witness cannot recall.
signed the deed of sale when he signed the same:
Court:
Atty. Lizares:
Sustain[ed].
When you signed the document was it already signed by the
Atty. Lizares: suppose[d] vendor?

At the time you acquire[d] the property supposedly from Mr. [Papa]:
dela Rama you were the Head [of the] Marketing
I could not really recall right now but the fact is at the time
Department?
for the buyer to sign it first and then give it [to] the seller
Witness:
seller and then the seller signed it afterwards.[31]
Yes sir.
xxx
Atty. Lizares:
Atty. Lizares:
Who introduce[d] you to Mr. Juan Eugenio dela Rama?
And you also dont recall whether the signature Juan Eugenio
dela Rama was already in this document when you
sign this document?
Witness:
I do not specifically recall now as I have said earlier the
practice was for the buyer to sign first and then the seller
signed afterwards.[32]
As a witness for the petitioners, Papa admitted he could not
remember where and how he signed the deed of sale.
Atty. Lizares:
Now so who presented this document to you for your
signature?
[Papa]:
My either (sic) my staff or agent who told me that such
property is for sale.
Atty. Lizares:
When the staff or agent told you that the property is for sale
what document did you ask from agent or staff?
Witness:
Deed of Absolute sale and I presume at the time whoever
was selling it inform me that the title is available.
Atty. Lizares:
Now when you sign[ed] this document where did you [sign]
it?
Already answered your Honor he does not know.[33]
Had counsel for petitioners been content with relying singly
on dela Ramas testimony, there would have been a good
chance that the complaint would not have survived. His move
to call in Papa as a hostile witness allowed the above-cited
testimony to form part of the evidence for the plaintiffs. The
trial court correctly appreciated Papas testimony on 25 July
1995 (as distinguished from his subsequent testimony as a
witness for the defense) as part of the evidence for the
petitioners.[34]
In addition, another corroborative piece of evidence of the
petitioners, as found by the trial court, lay in the fact that the
dela Ramas had paid real estate taxes on the property until
about 1993,[35] or eight (8) years after the purported sale.
Any reasonable person who had sold his property would not
undertake the unnecessary burden of continuing to pay real
property taxes on the same.
That piece in evidence should be taken into account together
with petitioners presentation of Papas clear-cut and
unrebutted testimony of as well as the evasive and
ambivalent testimony of Papa. The totality of the evidence
for the petitioners established a prima facie case that the
deed of sale was not genuine. Even as the burden of proof
may have initially lain with petitioners in establishing the
forgery of what is a private document, their evidence was
sufficient to shift the burden of evidence to respondents to
establish the authenticity and due execution of said private
document, especially as it is they who rely on the same in
their defense.
III.

Witness: There are a myriad of ways respondents could have swayed

the case then in their behalf after the burden of evidence had
I could have signed it in the office or in our house. shifted to them. Most pertinently, they could have presented
Atty. Lizares: the two persons whom Oscar Papa had identified as
witnesses to the deed of sale, Mrs. Galeos and Mrs. Reyes, as
You dont recall where? well as Atty. Gumtang, to whom the deed was referred to for
notarization. All three persons were personally known to
Witness:
Papa. Galeos and Reyes were, according to Papa, staff of
Yes I cannot recall. LEDCwho finalize[d] the document,[36] while Atty. Gumtang
was one of the notaries public of CSE.[37] Yet none of them
Atty. Lizares: testified in respondents behalf.
When you signed it were you alone? Respondents had initially manifested to the trial court that
Witness: they were to present Gales and Reyes as witnesses in their
behalf,[38] yet only Papa ultimately testified for the defense.
I could not even recall where I signed it. Assuming that the deed of sale was prepared, signed and
notarized according to Papas version of events, any of these
Atty. Lizares:
three witnesses could have easily bolstered the evidence in
Or perhaps with your wife? favor of the genuineness of the deed since Papa himself
attested to their personal knowledge of these events. That
Atty. Fortun: they were not presented by Papa in his behalf speaks poorly
of the veracity of his tale.
When Papa did testify in behalf of the defense on 26 March
1996, his counsel adopted in full his earlier 25 July 1995
testimony as a hostile witness.[39] That earlier testimony
unfortunately was quite incriminatory. To make matters
worse, his own testimony in his defense poked even more
holes to his version of events. On cross-examination, he made
it clear that he had no particular interest in meeting the
petitioners for the purposes of negotiating or consummating
the sale.
Atty. Lizares:
In your previous testimony Mr. Witness you testified that you
never met Mr. Dela Rama do you confirm that?
[Papa]:
Yes sir.
Atty. Lizares:
And you never had a chance to speak with him?
Witness:
Yes sir.
Atty. Lizares:
And neither his wife?
Witness:
Yes sir.
Atty. Lizares:
Did you ever ha[ve] a chance to ask the broker or the person
facilitating this whoever he was that you want to meet Mr.
dela Rama?
Atty. Fortun:
Objection your Honor. Misleading.
Atty. Lizares:
No Im just asking whether he had a chance to ask.
Court:
Reform your question.
Atty. Lizares:
Did you ever make a request in connection with this
Transaction to meet with Mr. dela Rama?
Witness:
I cannot answer because I cannot recall.[40]
Most incredibly, Papa revealed he could not even remember
to whom he tendered the purchase price of P96,000.00.
Atty. Lizares:
Mr. Witness, you or do you recall to whom did you made paid
(sic) of the P96,000.00 that you said you paid to whoever who
effected or facilitate[d] the sale?
[Papa]:
Unfortunately I cannot recall at this time because it was on
1985 and this is not the only transaction I am handling at that
time being in sales I am also handling the same of companys
commercial lots, also handling the industrial lots the golf
shares, Ive been meeting a lot of people, I could not really
recall how this particular transaction happen.
Atty. Lizares:
So you do not remember to whom you pay the money?
Witness:
Yes sir.
Atty. Lizares:
Do you remember if there is only one or two or three
person[s] who arrange[d] with you for the sale of the
property?
Witness:
I cannot recall but as I am trying to recall the numerous
transaction handled at that time, normally with this kind of
transaction it will involv[e] some person, or some broker or
even some agent.
Atty. Lizares:
But for this particular transaction you can tell exactly how
many?
Witness:
No sir.[41]
In the context of trying to establish the authenticity and due
execution of the deed of sale, Papas testimony proves
woefully insufficient. It must be remembered that the
transaction was personal to Papa, and he was not conducting
in behalf of his employers. It was his own money, and not the
companys, that he was tendering. Thus, it is highly
incredulous that Papa could not recall even the most basic
details over his own personal transaction, in fact the only one
he had during his stint at the LEDC, that involved a then
princely sum of P96,000.00 of his own money.
Papa did testify in court that he had signed the deed of
sale,[42] and that assertion by itself has about as much
weight as dela Ramas claim that he did not. At the same time,
that statement even if true does not conclusively prove the
validity of the sale as it does not establish mutual consent as
to the putative vendors and vendees to the sale. That point is
especially salient since Papa admitted that he did not sign the
document in the presence of the petitioners.
IV.
apparently unknown to him were indeed duly authorized by
the petitioners to sell the property.
The following observation of the trial court is also pertinent in
this regard:

We are cognizant that the Court of Appeals approached its
analysis of the case from a wholly different, and ultimately
erroneous perspective. We are unable to utilize its
appreciation of the facts. The Court of Appeals was unable to
advert to anything on record as to how the deed of sale was
substantiated during trial by Papa. Respondents, before this
Court, are likewise unable to offer any convincing argument
tending to verify the deed of sale that is independent of the
now-debunked legal presumption that the document was
duly executed.
The reversal of the Court of Appeals decision is clearly
warranted. We do not discount the fact that the petitioners
could have further bolstered their case either by presenting a
handwriting expert, or Amuerfina dela Rama as a witness.
Still, their failure to do so is not fatal as the document in
question is a private document, one which carries no
presumption as to its authenticity and due execution. All told,
the findings and conclusions of the trial court are correct and
credible, compared to those of the Court of Appeals hence,
reinstatement of the lower courts decision is in order.
At the same time, we wish to impart a few more
observations.
Given that the deed of sale has been proven as false, is there
still any basis for which the respondents can retain title to
their property? We observe that at the respective levels of
the trial court and the Court of Appeals, respondents had
argued that they should be considered as purchasers in good
faith, especially since the complaint had adverted to certain
unscrupulous persons illegally representing themselves to be
the plaintiffs and illicitly forging plaintiffs signatures sold to
herein defendants.[43] We are unable to agree. By the very
version of facts submitted by the respondents, there are
enough circumstances to discount good faith on their part.
Papa never bothered to communicate directly with the
petitioners to ascertain whether the persons claiming to be
their representatives persons Papa could not even identify
were indeed authorized by the petitioners. Papas inability to
remember to whom he tendered payment for the property
likewise reveals utter apathy on his part as to the
circumstances of the sale.
The defendants said that it is the practice in real estate
transaction for the buyer to first affixed his signature and
then the seller. This asseverations cannot be accepted as
ordinary. It must be that before a buyer would part with his
money, he will first see to it that the sellers signatures were
already affixed and if possible, affixed in his presence.
Intriguing also is the failure of the defendants to assert their
right of ownership over the land by actually entering and
occupying the premises and their failure at any moment the
real estate taxes since 1985 when they allegedly purchased
the property. xxx[45]
Finally, the Court of Appeals had observed that upon close
comparison of the signatures on the questioned deed of sale
and that earlier executed between the petitioners and CSE
and in petitioners passport, the challenged signatures
appeared very similar with each other. We have examined
the signatures in the two deeds of sale, and in fact noticed
distinct differences, and varying writing styles. The signatures
of the petitioners on the 1980 deed of sale are smooth and
smaller than their purported signatures on the 1985 deed of
sale. Moreover, the signature of Juan dela Rama in the deed
of sale appears hesitant and non-fluid. The signature Eugenia
dela Rama on the two deeds betray their very distinctive
angles or slants.
WHEREFORE, the petition is GRANTED. The assailed Decision
of the Court of Appeals dated 7 September 1999 and the
Resolution dated 1 March 2000 in CA G.R. CV No. 53914 are
REVERSED and SET ASIDE. The Decision of the Regional Trial
Court of Calamba, Branch 92 dated 26 June 1996 is
REINSTATED. Costs against private respondents.

In Abad v. Guimba,[44] we ruled that a party was not an

innocent mortgagee in good faith because he neglected to
check if the person he was dealing with had any authority to
mortgage the property. The rules on ascertaining mortgagee
in good faith are the same as those for purchasers in good
faith. Without directly communicating with the petitioners,
how could have Papa been certain that the persons