Syllabus Labor Law Rev Plus Cases

I.
EMPLOYER-EMPLOYEE RELATIONSHIP AS THE MATRIX OR BASIS FOR

THE LABOR COURT’S JURISDICTION TO HEAR AND DECIDE LABOR
DISPUTES:
FOUR-FOLD TEST:
A. EN BANC
[G.R. No. L-8967. May 31, 1956.]
ANASTACIO VIAÑA, Petitioner, vs. ALEJO AL-LAGADAN and FILOMENA
PIGA, Respondents.
DECISION
CONCEPCION, J.:
Petitioner Anastacio Viaña owned the fishing sailboat “Magkapatid”, which, in the night of September 3,
1948, sunk in the waters between the province of Bataan and the island of Corregidor, as a consequence
of a collision with the USS “TINGLES”, a vessel of the U.S. Navy. Inasmuch as Alejandro Al-Lagadan, a
member of the crew of the “Magkapatid”, disappeared with the craft, his parents, Respondent Alejo Al-
Lagadan and Filomena Piga, filed the corresponding claim for compensation under Act No. 3428. After
appropriate proceedings, a Referee of the Workmen’s Compensation Commission rendered a decision,
dated February 23, 1953: chanroble svirtuallawlibrary
“1. Ordering Mr. Anastacio Viaña to pay the above-named claimants through the Workmen’s
Compensation Commission, Manila, the sum of P1,560 in lump sum with interest at 6 per cent from
September 3, 1948 until fully paid; and. chan roblesvirtualawlibrary
“To pay the sum of P16 to the Workmen’s Compensation Commission as costs.”
Said decision was, on petition for review filed by Viaña, affirmed by the Workmen’s Compensation
Commissioner, on or about October 22, 1954, “with additional fee of P5.00”. Said Commissioner, having
subsequently denied a reconsideration of this action, Viaña has brought the matter to us, for review by
certiorari, upon the ground that this case does not fall within the purview of Act No. 3428, because the
gross income of his business for the year 1947 was allegedly less than P10,000, and because Alejandro Al-
Lagadan was, at the time of his death, his (Petitioner’s) industrial partner, not his employee.
The first ground is untenable, Petitioner not having invoked it before the rendition of the Referee’s
decision on February 23, 1953. The objection to the application of Act No. 3428, upon said ground, was
made for the first time when Petitioner sought a review of said decision by the Workmen’s Compensation
Commissioner. The non- applicability of said Act to employers whose gross income does not reach P20,000
is, however, a matter of defense, which cannot be availed of unless pleaded in the employer’s answer to
the claim for compensation filed by the employee or his heirs. Petitioner herein having failed to do so,
said defense may not now be entertained (Rolan vs. Perez, 63 Phil., 80, 85-86).
As regards the second ground, Petitioner maintains, contrary to the finding of the Referee and said
Commissioner, that the deceased was his industrial partner, not employee. In this connection, it is alleged
in paragraph (6) of the petition: chanroblesvirtuallawlibrary
“That the practice observed then and now in engaging the services of crewmen of sailboats plying
between Mindoro and Manila is on a partnership basis, to wit: that the owner of the vessel, on one chanroblesvirtuallawlibrary
hand receives one-half of the earnings of the sailboat after deducting the expenses for the maintenance
of the crew, the other half is divided pro rata among the members of the crew, the ‘patron’ or captain
receiving four parts, the ‘piloto’ or next in command three parts, the wheelsman or ‘timonel’ 1 1/2 parts
and the rest of the members of the crew one part each, as per Annex ‘B’ hereof.”
It appears that, before rendering his aforementioned decision, the Referee requested Mr. Manuel O.
Morente, an attorney of the Workmen’s Compensation Commission, “to look into and inquire and
determine the method of and the basis of engaging the services of crewmen for sailboats (batel) of twenty
(20) tons or more plying between Manila and Mariveles and moored along Manila North Harbor”, and
that, thereafter, said Atty. Morente reported: chanroblesvirtuallawlibrary
“The basis of engaging the services of crewmen of a batel is determined in accordance with the contract
executed between the owner and the patron. The contract commonly followed is on a share basis after
deducting all the expenses incurred on the voyage. One half goes to the owner of the batel and the other
half goes to the patron and the members of the crew and divided among themselves on a share basis also
in accordance with their agreement with the patron getting the lion’s share. The hiring of the crew is done
by the patron himself. Usually, when a patron enters into a contract with the owner of the batel, he has a
crew ready with him.” (Italics supplied.)
In sustaining the Referee’s finding to the effect that the deceased was an employee of Viaña, the
Workmen’s Compensation Commissioner said: chanroblesvirtuallawlibrary
“The trial referee found that there was an employer-employee relation between the Respondentand the
deceased, Alejandro Al-Lagadan, and the share which the deceased received at the end of each trip was
in the nature of ‘wages’ which is defined under section 39 of the Compensation Act. This is so because
such share could be reckoned in terms of money. In other words, there existed the relation of employer
and employee between the Respondent and Alejandro Al-Lagadan at the time of the latter’s death.
“We believe that the trial referee did not err in finding the deceased an employee of the Respondent. We
cite the following cases which illustrate the point at issue: chanroble svirtuallawlibrary
‘The officers and crews of whaling and other fishing vessels who are to receive certain proportions of
produce of the voyage in lieu of wages; (Rice vs. Austin, 17 Mass. 206; 2Y & C. 61); Captains of chan roblesvirtualawlibrary chan roblesvirtualawlibrary chan roblesvirtualawlibrary
merchant ships who, instead of wages, receive shares in the profits of the adventure; (4 Maule & C. chan roblesvirtualawlibrary
240); or who take vessels under an agreement to pay certain charges and receive a share of the
chan roble svirtualawlibrary
earnings; (Tagard vs. Loring, 16 Mass. 336, 8 Am. Dec. 140; Winsor vs. Cutts, 7 Greenl. Me. 261) have
chan roblesvirtualawlibrary chan roblesvirtualawlibrary
generally been held not to be partners with the Respondent, and the like. Running a steamboat on shares
does not make the owners partners in respect to the vessel (The Daniel Koine, 35 Fed. 785); so of an chan roblesvirtualawlibrary
agreement between two parties to farm on shares; (Hooloway vs. Brinkley, 42 Ga. 226); A seaman chan roblesvirtualaw library chan roble svirtualawlibrary
who is to receive pay in proportion to the amount of fish caught is not a partner; (Holdren vs. French, chan roble svirtualawlibrary
68 Me. 241); sharing profits in lieu of wages is not a partnership. There is no true contribution; chan roble svirtualawlibrary chan
(Crawford vs. Austin, 34 Md. 49; Whitehill vs. Shickle, 43 Mo. 538; Sankey vs. Iron Works, 44 Ga.
roblesvirtualawlibrary chan roblesvirtualawlibrary chan roblesvirtualawlibrary
228.)’“ (Italics supplied.)

In other words, in the opinion of the Referee, as well as of said Commissioner, the mere fact that
Alejandro’s share in the understanding “could be reckoned in terms of money”, sufficed to characterize
him as an employee of Viaña. We do not share this view. Neither can we accept, however, Petitioner’s
theory to the effect that the deceased was his partner, not an employee, simply because he (the deceased)
shared in the profits, not in the losses. In determining the existence of employer-employee relationship,
the following elements are generally considered, namely: (1) the selection and engagement of the chanroblesvirtuallawlibrary
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
chan roble svirtualawlibrary chan roblesvirtualawlibrary chan roblesvirtualawlibrary
employees’ conduct — although the latter is the most important element (35 Am. Jur. 445). Assuming
that the share received by the deceased could partake of the nature of wages — on which we need not,
and do not, express our view — and that the second element, therefore, exists in the case at bar, the
record does not contain any specific data regarding the third and fourth elements.
With respect to the first element, the facts before us are insufficient to warrant a reasonable conclusion,
one way or the other. On the one hand, Atty. Morente said, in his aforementioned report, that “the
contract commonly followed is on a share basis The hiring of a crew is done by the patron himself. Usually, cralaw
when a patron enters into a contract with the owner of the batel, he has a crew ready with him”. This
statement suggests that the members of the crew are chosen by the patron, seemingly, upon his sole
responsibility and authority. It is noteworthy, however, that said report referred to a practice commonly
and “usually” observed in a given place. The record is silent on whether such practice had been followed
in the case under consideration. More important still, the language used in said report may be construed
as intimating, not only that the “patron” selects and engages the crew, but, also, that the members
thereof are subject to his control and may be dismissed by him. To put it differently, the literal import of
said report is open to the conclusion that the crew has a contractual relation, not with the owner of the
vessel, but with the patron, and that the latter, not the former, is either their employer or their partner.
Upon the other hand, the very allegations of the petition show otherwise, for Petitioner explicitly averred
therein that the deceased Alejandro Al-Lagadan was his “industrial partner”. This implies that a contract
of partnership existed between them and that, accordingly, if the crew was selected and engaged by the
“patron”, the latter did so merely as agent or representative of Petitionerherein. Again, if Petitioner were
a partner of the crew members, then neither the former nor the patron could control or dismiss the latter.
In the interest of justice and equity, and considering that a decision on the merits of the issue before us
may establish an important precedent, it would be better to remand the case to the Workmen’s
Compensation Commission for further evidence and findings on the following questions: (1) who chanroblesvirtuallawlibrary
selected the crew of the “Magkapatid” and engaged their services; (2) if selected and engaged by the chan roblesvirtualawlibrary
“patron”, did the latter act in his own name and for his own account, or on behalf and for the account of
Viaña; (3) could Viaña have refused to accept any of the crew members chosen and engaged by the
chan roblesvirtualawlibrary
“patron”; (4) did Petitioner have authority to determine the time when, the place where and/or the
manner or conditions in or under which the crew would work; and (5) who could dismiss its members.
Wherefore, let the case be remanded to the Workmen’s Compensation Commission, for further
proceedings in conformity with this decision, without special pronouncement as to costs. SO ORDERED.
B. G.R. No. L-9110 April 30, 1957

JOSEFA VDA. DE CRUZ, ET AL., plaintiffs-appellants,
vs.
THE MANILA HOTEL COMPANY, defendant-appellee.
Javier and Javier for appellants.

Government Corporate Counsel Ambrosio Padilla and Panfilo B. Morales for appellee.
BENGZON, J.:
On May 22, 1954 and for several years before, Tirso Cruz with his orchestra furnished music to the
Manila Hotel under the arrangement hereafter to be set forth. On that date the corporation owning
the Hotel gave written notice to its employees that beginning July 1, 1954 the Hotel would be leased
to the Bay View Hotel, and that those employees to be laid off would be granted a separation
gratuity computed according to specified terms and conditions.
Cruz and his musicians claimed the gratuity; but the Manila Hotel management denied their claim
saying they were not its employees. Wherefore they instituted this action in the Manila court of first
instance in December 1954.
On motion by defendant and after hearing the parties, the Hon. Francisco E. Jose, Judge, issued an
order dismissing the complaint on the ground that plaintiffs had no cause of action against defendant
since they were not its employees. Hence this appeal directly to this Court, involving only questions
of law. In the meantime Tirso Cruz the band leader died; he is now substituted by his legal heirs.
However for convenience we shall refer to him as if he were still a party to the proceedings.
The complaint alleged that plaintiffs "were members of the orchestra which had been employed by
the defendant to furnish music in the Manila Hotel"; that they were employees of the Hotel, and that
contrary to the announcement (Annex A) promising gratuities to its "employees" the Hotel
Management had refused to pay plaintiffs. The complaint attached a Copy of the announcement
which partly reads as follows:
. . . . It is for this reason that the necessary authority has already been secured for the
payment of separation gratuity to the employees to be laid off as a result of the lease and
who are not yet entitled to either the optional or compulsory retirement insurance provided
under Republic Act No. 660, as amended, . . . .
The defendant filed a motion to dismiss alleging that plaintiffs were not its employees, under the
terms of the contract whereby they had rendered services to the hotel, copy of which was attached
as Exhibit 1. It also alleged plaintiffs did not fall within the terms of Annex A because they were not,
and never had been members of the Government Service Insurance System. Plaintiffs replied to the
motion, did not deny the terms of Exhibit 1, nor the allegations of non-membership in the
Government Service Insurance System; but insisted they were employees of the Hotel.
The controversy could therefore be decided and it was decide in the light of the terms of Exhibit 1
and Annex A, plus the factual allegations expressly or impliedly admitted by the contending parties.
At the outset the following consideration presents itself: plaintiffs' right is not predicated on some
statutory provision, but upon the offer or promise contained in Annex A. Such offer or promise
having been written by the defendant, it is logical to regard said defendant to in the best position to
state who were the employees contemplated in the aforesaid Annex A. The defendant asserts these
musicians were not included; therefore such assertion should be persuasive, if not conclusive. Let it
be emphasized that Annex A is not a contract, but a mere offer of gratuity, the beneficiaries of which
normally depended upon the free selection of the offeror.
Independently however of the Hotel's interpretation of its own announcement, and analyzing the
terms of Annex A, we notice that it extends to those employees of the Hotel who were "not
yet entitled to either the optional or compulsory retirement insurance provided under Republic Act
No. 660". And then we read that retirement insurance under Republic Act No. 660 is given only to
those insured with the Government Service Insurance System or the G.S.I.S.; and that the herein
plaintiffs were never members of (insured with) such Insurance System. Wherefore the inevitable
conclusion flows that even if these plaintiffs were "employees" of the Hotel in general, they cannot
claim to be beneficiaries under Annex A, because they could not qualify as employees "who were
not yet entitled to retirement insurance under the G.S.I.S." The quoted portion of the announcement
implied reference to employees insured by the Government Insurance System.
Still going further, are these plaintiffs "employees" of the Hotel? None of them except Tirzo Cruz and
Ric Cruz, is mentioned in the contract Exhibit 1. None has submitted any contract or appointment
except said Exhibit 1. Obviously their connection with the Hotel was only thru Tirso Cruz who was
the leader of the orchestra; and they couldn't be in a better class than Tirso Cruz who dealt with the
Hotel. Was Tirso Cruz an employee? Or was he an independent contractor, as held by the trial
court?
It will be observed that by Annex 1 the Manila Hotel contracted or engaged the "services of your
orchestra" (of Tirso Cruz) composed of fifteen musicians including yourself plus Ric Cruz as vocalist"
at P250 per day, said orchestra to "play from 7:30 p.m. to closing time daily". What pieces the
orchestra shall play, and how the music shall be arranged or directed, the intervals and other details
— such are left to the leader's discretion. The music instruments, the music papers and other
paraphernalia are not furnished by the Hotel, they belong to the orchestra, which in turn belongs to
Tirso Cruz — not to the Hotel. The individual musicians, and the instruments they have not been
selected by the Hotel. It reserved no power to discharge any musician. How much salary is given to
the individual members is left entirely to "the orchestra" or the leader. Payment of such salary is not
made by the Hotel to the individual musicians, but only a lump-sum compensation is given weekly to
Tirso Cruz.
Considering the above features of the relationship, in connection with the tests indicated by
numerous authorities, it is our opinion that Tirso Cruz was not an employee of the Manila Hotel, but
one engaged to furnish music to said hotel for the price of P250.00 daily, in other words, an
independent contractor1 within the meaning of the law of master and servant.
An independent contractor is one who in rendering services, exercises an independent

employment or occupation and represents the will of his employer only as to the results of
his work and not as to the means whereby it is accomplished; one who exercising an
independent employment, contracts to do a piece of work according to his own methods,
without being subject to the control of his employer except as to the result of his work; and
who engages to perform a certain service for another, according to his own manner and
methods, without being subject to the control of his employer except as to the result of his
work; and who engages to perform a certain service for another, according to his own
manner and method, free from the control and direction of his employer in all matters
connected with the performance of the service, except as to the result of the work. (56 C. J.
S. pp. 41-43.)
Among the factors to be considered are whether the contractor is carrying on an independent
business; whether the work is part of the employer's general business; the nature and extent
of the work; the skill required; the term and duration of the relationship; the right to assign the
performance of the work to another; the power to terminate the relationship; the existence of
a contract for the performance of a specified piece of work; the control and supervision of the
work; the employer's powers and duties with respect to the hiring, firing, and payment of the
contractor's servants; the control of the premises; the duty to supply the premises, tools,
appliances, material and labor; and the mode, manner, and terms of payment. (56 C. J. S. p.
46.) (Emphasis ours.)
Not being employees of the Manila Hotel, the plaintiff's have no cause of action against the latter
under Annex A. The order of dismissal is therefore affirmed, with costs against them. So ordered.
Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Endencia and Felix, JJ., concur.
C. G.R. No. L-12582 January 28, 1961
LVN PICTURES, INC., petitioner-appellant,

vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL
RELATIONS, respondents-appellees.
x---------------------------------------------------------x
G.R. No. L-12598 January 28, 1961
SAMPAGUITA PICTURES, INC., petitioner-appellant,

vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL
RELATIONS, respondents-appellees.
Nicanor S. Sison for petitioner-appellant.

Jaime E. Ilagan for respondent-appellee Court of Agrarian Relations.
Gerardo P. Cabo Chan for respondent-appellee Philippine Musicians Guild.
CONCEPCION, J.:
Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures, Inc. seek a review by certiorari of an
order of the Court of Industrial Relations in Case No. 306-MC thereof, certifying the Philippine
Musicians Guild (FFW), petitioner therein and respondent herein, as the sole and exclusive
bargaining agency of all musicians working with said companies, as well as with the Premiere
Productions, Inc., which has not appealed. The appeal of LVN Pictures, Inc., has been docketed as
G.R. No. L-12582, whereas G.R. No. L-12598 is the appeal of Sampaguita Pictures, Inc. Involving
as they do the same order, the two cases have been jointly heard in this Court, and will similarly be
disposed of.
In its petition in the lower court, the Philippine Musicians Guild (FFW), hereafter referred to as the
Guild, averred that it is a duly registered legitimate labor organization; that LVN Pictures, Inc.,
Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized under
the Philippine laws, engaged in the making of motion pictures and in the processing and distribution
thereof; that said companies employ musicians for the purpose of making music recordings for title
music, background music, musical numbers, finale music and other incidental music, without which a
motion picture is incomplete; that ninety-five (95%) percent of all the musicians playing for the
musical recordings of said companies are members of the Guild; and that the same has no
knowledge of the existence of any other legitimate labor organization representing musicians in said
companies. Premised upon these allegations, the Guild prayed that it be certified as the sole and
exclusive bargaining agency for all musicians working in the aforementioned companies. In their
respective answers, the latter denied that they have any musicians as employees, and alleged that
the musical numbers in the filing of the companies are furnished by independent contractors. The
lower court, however, rejected this pretense and sustained the theory of the Guild, with the result
already adverted to. A reconsideration of the order complained of having been denied by the
Court en banc, LVN Pictures, inc., and Sampaguita Pictures, Inc., filed these petitions for review
for certiorari.
Apart from impugning the conclusion of the lower court on the status of the Guild members as
alleged employees of the film companies, the LVN Pictures, Inc., maintains that a petition for
certification cannot be entertained when the existence of employer-employee relationship between
the parties is contested. However, this claim is neither borne out by any legal provision nor
supported by any authority. So long as, after due hearing, the parties are found to bear said
relationship, as in the case at bar, it is proper to pass upon the merits of the petition for certification.
It is next urged that a certification is improper in the present case, because, "(a) the petition does not
allege and no evidence was presented that the alleged musicians-employees of the respondents
constitute a proper bargaining unit, and (b) said alleged musicians-employees represent a majority
of the other numerous employees of the film companies constituting a proper bargaining unit under
section 12 (a) of Republic Act No. 875."
The absence of an express allegation that the members of the Guild constitute a proper bargaining
unit is fatal proceeding, for the same is not a "litigation" in the sense in which this term is commonly
understood, but a mere investigation of a non-adversary, fact finding character, in which the
investigating agency plays the part of a disinterested investigator seeking merely to ascertain the
desires of employees as to the matter of their representation. In connection therewith, the court
enjoys a wide discretion in determining the procedure necessary to insure the fair and free choice of
bargaining representatives by employees.1 Moreover, it is alleged in the petition that the Guild it a
duly registered legitimate labor organization and that ninety-five (95%) percent of the musicians
playing for all the musical recordings of the film companies involved in these cases are members of
the Guild. Although, in its answer, the LVN Pictures, Inc. denied both allegations, it appears that, at
the hearing in the lower court it was merely the status of the musicians as its employees that the film
companies really contested. Besides, the substantial difference between the work performed by said
musicians and that of other persons who participate in the production of a film, and the peculiar
circumstances under which the services of that former are engaged and rendered, suffice to show
that they constitute a proper bargaining unit. At this juncture, it should be noted that the action of the
lower court in deciding upon an appropriate unit for collective bargaining purposes is discretionary
(N.L.R.B. v. May Dept. Store Co., 66 Sup. Ct. 468. 90 L. ed. 145) and that its judgment in this
respect is entitled to almost complete finality, unless its action is arbitrary or capricious (Marshall
Field & Co. v. N.L.R.B. [C.C.A. 19431, 135 F. 2d. 891), which is far from being so in the cases at
bar.
Again, the Guild seeks to be, and was, certified as the sole and exclusive bargaining agency for the
musicians working in the aforesaid film companies. It does not intend to represent the other
employees therein. Hence, it was not necessary for the Guild to allege that its members constitute a
majority of all the employees of said film companies, including those who are not musicians. The real
issue in these cases, is whether or not the musicians in question are employees of the film
companies. In this connection the lower court had the following to say:
As a normal and usual course of procedure employed by the companies when a picture is to
be made, the producer invariably chooses, from the musical directors, one who will furnish
the musical background for a film. A price is agreed upon verbally between the producer and
musical director for the cost of furnishing such musical background. Thus, the musical
director may compose his own music specially written for or adapted to the picture. He
engages his own men and pays the corresponding compensation of the musicians under
him.
When the music is ready for recording, the musicians are summoned through 'call slips' in
the name of the film company (Exh 'D'), which show the name of the musician, his musical
instrument, and the date, time and place where he will be picked up by the truck of the film
company. The film company provides the studio for the use of the musicians for that
particular recording. The musicians are also provided transportation to and from the studio
by the company. Similarly, the company furnishes them meals at dinner time.
During the recording sessions, the motion picture director, who is an employee of the
company, supervises the recording of the musicians and tells what to do in every detail. He
solely directs the performance of the musicians before the camera as director, he supervises
the performance of all the action, including the musicians who appear in the scenes so that
in the actual performance to be shown on the screen, the musical director's intervention has
stopped.
And even in the recording sessions and during the actual shooting of a scene, the
technicians, soundmen and other employees of the company assist in the operation. Hence,
the work of the musicians is an integral part of the entire motion picture since they not only
furnish the music but are also called upon to appear in the finished picture.
The question to be determined next is what legal relationship exits between the musicians
and the company in the light of the foregoing facts.
We are thus called upon to apply R.A. Act 875. which is substantially the same as and
patterned after the Wagner Act substantially the same as a Act and the Taft-Hartley Law of
the United States. Hence, reference to decisions of American Courts on these laws on the
point-at-issue is called for.
Statutes are to be construed in the light of purposes achieved and the evils sought to be
remedied. (U.S. vs. American Tracking Association, 310 U.S. 534, 84 L. ed. 1345.) .
In the case of National Labor Relations Board vs. Hearts Publication, 322 U.S. 111, the
United States Supreme Court said the Wagner Act was designed to avert the 'substantial
obstruction to the free flow of commerce which results from strikes and other forms of
industrial unrest by eliminating the causes of the unrest. Strikes and industrial unrest result
from the refusal of employers' to bargain collectively and the inability of workers to bargain
successfully for improvement in their working conditions. Hence, the purposes of the Act are
to encourage collective bargaining and to remedy the workers' inability to bargaining power,
by protecting the exercise of full freedom of association and designation of representatives of
their own choosing, for the purpose of negotiating the terms and conditions of their
employment.'
The mischief at which the Act is aimed and the remedies it offers are not confined exclusively
to 'employees' within the traditional legal distinctions, separating them from 'independent
contractor'. Myriad forms of service relationship, with infinite and subtle variations in the term
of employment, blanket the nation's economy. Some are within this Act, others beyond its
coverage. Large numbers will fall clearly on one side or on the other, by whatever test may
be applied. Inequality of bargaining power in controversies of their wages, hours and working
conditions may characterize the status of one group as of the other. The former, when acting
alone may be as helpless in dealing with the employer as dependent on his daily wage and
as unable to resist arbitrary and unfair treatment as the latter.'
To eliminate the causes of labor dispute and industrial strike, Congress thought it necessary
to create a balance of forces in certain types of economic relationship. Congress recognized
those economic relationships cannot be fitted neatly into the containers designated as
'employee' and 'employer'. Employers and employees not in proximate relationship may be
drawn into common controversies by economic forces and that the very dispute sought to be
avoided might involve 'employees' who are at times brought into an economic relationship
with 'employers', who are not their 'employers'. In this light, the language of the Act's
definition of 'employee' or 'employer' should be determined broadly in doubtful situations, by
underlying economic facts rather than technically and exclusively established legal
classifications. (NLRB vs. Blount, 131 F [2d] 585.)
In other words, the scope of the term 'employee' must be understood with reference to the
purposes of the Act and the facts involved in the economic relationship. Where all the
conditions of relation require protection, protection ought to be given .
By declaring a worker an employee of the person for whom he works and by recognizing and
protecting his rights as such, we eliminate the cause of industrial unrest and consequently
we promote industrial peace, because we enable him to negotiate an agreement which will
settle disputes regarding conditions of employment, through the process of collective
bargaining.
The statutory definition of the word 'employee' is of wide scope. As used in the Act, the term
embraces 'any employee' that is all employees in the conventional as well in the legal sense
expect those excluded by express provision. (Connor Lumber Co., 11 NLRB 776.).
It is the purpose of the policy of Republic Act 875; (a) To eliminate the causes of industrial
unrest by protecting the exercise of their right to self-organization for the purpose of
collective bargaining. (b) To promote sound stable industrial peace and the advancement of
the general welfare, and the best interests of employers and employees by the settlement of
issues respecting terms and conditions of employment through the process of collective
bargaining between employers and representatives of their employees.
The primary consideration is whether the declared policy and purpose of the Act can be
effectuated by securing for the individual worker the rights and protection guaranteed by the
Act. The matter is not conclusively determined by a contract which purports to establish the
status of the worker, not as an employee.
The work of the musical director and musicians is a functional and integral part of the
enterprise performed at the same studio substantially under the direction and control of the
company.
In other words, to determine whether a person who performs work for another is the latter's
employee or an independent contractor, the National Labor Relations relies on 'the right to
control' test. Under this test an employer-employee relationship exist where the person for
whom the services are performed reserves the right to control not only the end to be
achieved, but also the manner and means to be used in reaching the end. (United Insurance
Company, 108, NLRB No. 115.).
Thus, in said similar case of Connor Lumber Company, the Supreme Court said:.
'We find that the independent contractors and persons working under them are
employees' within the meaning of Section 2 (3) of its Act. However, we are of the
opinion that the independent contractors have sufficient authority over the persons
working under their immediate supervision to warrant their exclusion from the
unit. We shall include in the unit the employees working under the supervision of the
independent contractors, but exclude the contractors.'
'Notwithstanding that the employees are called independent contractors', the Board will hold
them to be employees under the Act where the extent of the employer's control over them
indicates that the relationship is in reality one of employment. (John Hancock Insurance Co.,
2375-D, 1940, Teller, Labor Dispute Collective Bargaining, Vol.).
The right of control of the film company over the musicians is shown (1) by calling the
musicians through 'call slips' in 'the name of the company; (2) by arranging schedules in its
studio for recording sessions; (3) by furnishing transportation and meals to musicians; and
(4) by supervising and directing in detail, through the motion picture director, the
performance of the musicians before the camera, in order to suit the music they are playing
to the picture which is being flashed on the screen.
Thus, in the application of Philippine statutes and pertinent decisions of the United States
Courts on the matter to the facts established in this case, we cannot but conclude that to
effectuate the policies of the Act and by virtue of the 'right of control' test, the members of the
Philippine Musicians Guild are employees of the three film companies and, therefore, entitled
to right of collective bargaining under Republic Act No. 875.
In view of the fact that the three (3) film companies did not question the union's majority, the
Philippine Musicians Guild is hereby declared as the sole collective bargaining
representative for all the musicians employed by the film companies."
We are fully in agreement with the foregoing conclusion and the reasons given in support thereof.
Both are substantially in line with the spirit of our decision in Maligaya Ship Watchmen Agency vs.
Associated Watchmen and Security Union, L-12214-17 (May 28, 1958). In fact, the contention of the
employers in the Maligaya cases, to the effect that they had dealt with independent contractors, was
stronger than that of the film companies in these cases. The third parties with whom the
management and the workers contracted in the Maligaya cases were agencies registered with the
Bureau of Commerce and duly licensed by the City of Manila to engage in the business of supplying
watchmen to steamship companies, with permits to engage in said business issued by the City
Mayor and the Collector of Customs. In the cases at bar, the musical directors with whom the film
companies claim to have dealt with had nothing comparable to the business standing of said
watchmen agencies. In this respect, the status of said musical directors is analogous to that of the
alleged independent contractor in Caro vs. Rilloraza, L-9569 (September 30, 1957), with the
particularity that the Caro case involved the enforcement of the liability of an employer under the
Workmen's Compensation Act, whereas the cases before us are merely concerned with the right of
the Guild to represent the musicians as a collective bargaining unit. Hence, there is less reason to
be legalistic and technical in these cases, than in the Caro case.
Herein, petitioners-appellants cite, in support of their appeal, the cases of Sunripe Coconut Product
Co., Inc vs. CIR(46 Off. Gaz., 5506, 5509), Philippine Manufacturing Co. vs. Santos Vda. de
Geronimo, L-6968 (November 29, 1954), Viana vs. Al-Lagadan, L-8967 (May 31, 1956), and Josefa
Vda. de Cruz vs. The Manila Hotel Co. (53 Off. Gaz., 8540). Instead of favoring the theory of said
petitioners-appellants, the case of the Sunripe Coconut Product Co., Inc. is authority for herein
respondents-appellees. It was held that, although engaged as piece-workers, under the "pakiao"
system, the "parers" and "shellers" in the case were, not independent contractor, but employees of
said company, because "the requirement imposed on the 'parers' to the effect that 'the nuts are
pared whole or that there is not much meat wasted,' in effect limits or controls the means or details
by which said workers are to accomplish their services" — as in the cases before us.
The nature of the relation between the parties was not settled in the Viana case, the same having
been remanded to the Workmen's Compensation Commission for further evidence.
The case of the Philippine Manufacturing Co. involved a contract between said company and Eliano
Garcia, who undertook to paint a tank of the former. Garcia, in turn engaged the services of Arcadio
Geronimo, a laborer, who fell while painting the tank and died in consequence of the injuries thus
sustained by him. Inasmuch as the company was engaged in the manufacture of soap, vegetable
lard, cooking oil and margarine, it was held that the connection between its business and the
painting aforementioned was purely casual; that Eliano Garcia was an independent contractor; that
Geronimo was not an employee of the company; and that the latter was not bound, therefore, to pay
the compensation provided in the Workmen's Compensation Act. Unlike the Philippine
Manufacturing case, the relation between the business of herein petitioners-appellants and the work
of the musicians is not casual. As held in the order appealed from which, in this respect, is not
contested by herein petitioners-appellants — "the work of the musicians is an integral part of the
entire motion picture." Indeed, one can hardly find modern films without music therein. Hence, in
the Caro case (supra), the owner and operator of buildings for rent was held bound to pay the
indemnity prescribed in the Workmen's Compensation Act for the injury suffered by a carpenter while
working as such in one of said buildings even though his services had been allegedly engaged by a
third party who had directly contracted with said owner. In other words, the repair work had not
merely a casual connection with the business of said owner. It was a necessary incident thereof, just
as music is in the production of motion pictures.
The case of Josefa Vda. de Cruz vs. The Manila Hotel Co., L-9110 (April 30, 1957) differs materially
from the present cases. It involved the interpretation of Republic Act No. 660, which amends the law
creating and establishing the Government Service Insurance System. No labor law was sought to be
construed in that case. In act, the same was originally heard in the Court of First Instance of Manila,
the decision of which was, on appeal, affirmed by the Supreme Court. The meaning or scope if the
term "employee," as used in the Industrial Peace Act (Republic Act No. 875), was not touched
therein. Moreover, the subject matter of said case was a contract between the management of the
Manila Hotel, on the one hand, and Tirso Cruz, on the other, whereby the latter greed to furnish the
former the services of his orchestra, consisting of 15 musicians, including Tirso Cruz, "from 7:30
p.m. to closing time daily." In the language of this court in that case, "what pieces the orchestra shall
play, and how the music shall be arranged or directed, the intervals and other details — such are left
to the leader's discretion."
This is not situation obtaining in the case at bar. The musical directors above referred to
have no such control over the musicians involved in the present case. Said musical directors control
neither the music to be played, nor the musicians playing it. The film companies summon the
musicians to work, through the musical directors. The film companies, through the musical directors,
fix the date, the time and the place of work. The film companies, not the musical directors, provide
the transportation to and from the studio. The film companies furnish meal at dinner time.
What is more — in the language of the order appealed from — "during the recording sessions, the
motion picture director who is an employee of the company" — not the musical director —
"supervises the recording of the musicians and tells them what to do in every detail". The motion
picture director — not the musical director — "solely directs and performance of the musicians
before the camera". The motion picture director "supervises the performance of all the
actors, including the musicians who appear in the scenes, so that in the actual performance to be
shown in the screen, the musical director's intervention has stopped." Or, as testified to in the lower
court, "the movie director tells the musical director what to do; tells the music to be cut or tells
additional music in this part or he eliminates the entire music he does not (want) or he may want
more drums or move violin or piano, as the case may be". The movie director "directly controls the
activities of the musicians." He "says he wants more drums and the drummer plays more" or "if he
wants more violin or he does not like that.".
It is well settled that "an employer-employee relationship exists . . .where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the
means to be used in reaching such end . . . ." (Alabama Highway Express Co., Express Co., v. Local
612, 108S. 2d. 350.) The decisive nature of said control over the "means to be used", is illustrated in
the case of Gilchrist Timber Co., et al., Local No. 2530 (73 NLRB No. 210, pp. 1197, 1199-1201), in
which, by reason of said control, the employer-employee relationship was held to exist between the
management and the workers, notwithstanding the intervention of an alleged independent
contractor, who had, and exercise, the power to hire and fire said workers. The aforementioned
control over the means to be used" in reading the desired end is possessed and exercised by the
film companies over the musicians in the cases before us.
WHEREFORE, the order appealed from is hereby affirmed, with costs against petitioners herein. It is
so ordered.
Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes and
Dizon, JJ., concur.
Gutierrez David, J., took no part.
D. G.R. No. 77205 May 27, 1991
VALENTINO TORILLO, petitioner,

vs.
VICENTE LEOGARDO, JR., in his official capacity as Deputy Minister of Labor;
the HONORABLE MINISTER OF LABOR AND EMPLOYMENT; and ABERDEEN
COURT, INC., respondents.
F.P. Pobre & Associates for petitioner.

Delos Reyes, Bonifacio, Delos Reyes for Aberdeen Court, Inc.
FERNAN, C.J.:
The main issue in this case is whether or not the award of backwages in addition to an award of
separation pay to an illegally dismissed employee whose reinstatement is no longer feasible is
proper.
Petitioner Valentino Torillo, alias "Lady Valerie," was employed as an organist by private respondent
Aberdeen Court, Inc. in October 1977 with a daily compensation of P115.00 for five hour work a day.
On July 2, 1978, he invited his co-employees for a night out in his hometown in Rosario, Cavite in
celebration of his birthday. Private respondent objected to such activity, requesting its employees, if
possible, to refrain from attending the affair because the following day was a working day. Despite
private respondent's objections, petitioner pushed through with his birthday party.
Petitioner reported for work the next day, July 3. On July 4, 1978, private respondent, through its
Floor Manager, informed petitioner that he was being dismissed from his employment effective that
same day for having defied private respondent's order.
Consequently, on October 8, 1978 petitioner filed with the Ministry of Labor & Employment, Region
IV, a complaint against private respondent for illegal dismissal with prayer for reinstatement with
backwages, including payment of his unpaid wages from July 1 to July 3, 1978, holiday pay and
premium pay from February to July 1, 1978. Private respondent tried to justify petitioner's dismissal
by claiming that the latter abandoned his work in failing to report for duty after his birthday
celebration.
On November 23, 1978, the Ministry of Labor, thru Director Francisco L. Estrella, ruled that private
respondent's theory of abandonment of work was without factual and legal basis as petitioner
reported for work on July 3, 1978 immediately following his birthday celebration; and that his
dismissal was without the required prior clearance. Finding petitioner's dismissal as illegal, Director
Estrella ordered private respondent Aberdeen Court, Inc. to reinstate petitioner to his former position
without loss of seniority rights and privileges with full backwages from date of dismissal on July 4,
1978 until date of actual reinstatement and to pay petitioner his holiday pay for seven (7) days plus
his unpaid wages from July 1 to 3, 1978, However, petitioner's claim for premium pay was dismissed
for lack of merit.1
On December 14, 1978, private respondent Aberdeen Court, Inc. appealed to the Ministry of Labor
(Rollo, pp. 20-23) alleging that there was no factual or legal basis to support the subject order and
that said Director abused his discretion. Petitioner filed on January 3, 1979 his opposition alleging
that the appeal was frivolous and dilatory.
On February 13, 1986, or after seven (7) years, the Ministry of Labor and Employment, thru Deputy
Minister Vicente Leogardo, Jr., issued an order affirming that of Director Estrella with the
modification that in lieu of reinstatement, petitioner should be paid separation pay equivalent to
petitioner's wages for two (2) months.2 A motion for reconsideration dated March 21, 1986 was filed
by private respondent but this was denied in an order dated April 21, 1986.3 Undaunted, private
respondent filed a motion for leave to file second motion for reconsideration attaching thereto the
said second motion.4
Meanwhile, petitioner filed an urgent motion for execution and appointment of special sheriff dated
April 7, 19865which was opposed by private respondent.6 Thereafter, the Ministry of Labor, National
Capital Region, thru its Officer-in-Charge, Romeo A. Young, issued a writ of execution on May 13,
1986 directing the sheriff to execute the order of Deputy Minister Leogardo, Jr.7 requiring private
respondent to pay petitioner the total amount of P280,715.00 representing his backwages from July
4, 1978 to February 13, 1986, legal holiday pay for seven days, separation pay of two (2) months
and unpaid wages for three (3) days.
By virtue of said writ, personal properties of private respondent were levied upon. These personal
properties were to have been sold in a public auction scheduled on May 30, 19868 were it not for the
motion to quash the writ of execution filed by private respondent on the grounds that: first, its second
motion for reconsideration has not yet been acted upon, second, backwages should not be awarded
to petitioner since the order of Deputy Minister Leogardo, Jr. on February 13, 1986 stated that in lieu
of reinstatement, petitioner should only be paid separation pay equivalent to his wages for two (2)
months, third, assuming that petitioner is entitled to backwages, the law allows the employer to
deduct from his backwages his income earned elsewhere during the time he was out of work;
andfourth, private respondent should be present during the computation of the monetary award.9
Petitioner filed an opposition to this motion as well as a supplemental motion for

execution citing Section 2, Rule XV of the Implementing Rules & Regulations of the New Labor
Code, which states that the decision of the Secretary of Labor shall be immediately executory,
pending appeal, unless stayed by the order of the President of the Philippines.10
On May 30, 1986, Officer-in-charge Romeo A. Young of the Ministry of Labor, National Capital
Region, issued a restraining order enjoining the assigned sheriff from proceeding with the auction
sale of the levied properties of private respondent until further orders.11 However, on July 23, 1986,
he recalled the restraining order issued and directed the sheriff to proceed with the execution.12
Thereafter, private respondent appealed to the Office of the Minister of Labor praying that the July
23, 1986 Order be set aside and should private respondent be liable to pay backwages to
complainant, the same be computed following the guidelines set forth by this Court.13
On September 8, 1986, Deputy Minister Vicente Leogardo, Jr. issued an order setting aside the
order dated July 23, 1986, stating therein that the February 13, 1986 Order stands with the
clarification that the affirmative relief granted to complainant does not include the payment of
backwages. In addition, the writ of execution dated May 13, 1986 to enforce payment of backwages
in the amount of P280,715.00 was quashed.14
On September 11, 1986, petitioner filed a motion for reconsideration of said order but the same was
denied on November 12, 1986 by Minister of Labor Augusta Sanchez.15
Hence, this recourse by petitioner.
Preliminarily, it must be stressed that the illegality of petitioner's dismissal is a matter long settled in
the Order dated November 23, 1978 issued by Director Estrella, which on appeal, was affirmed by
then Deputy Minister Vicente Leogardo, Jr. on February 13, 1986. The finding of illegality of
dismissal having thus attained finality, petitioner now questions the scope and extent of the reliefs
granted to him by public respondent.
The dispute in the instant case arose when Deputy Minister Leogardo, Jr. issued an Order on
September 8, 198616clarifying his previous Order of February 13, 198617 by declaring in the
clarificatory order that the dispositive portion of the Order of February 13, 1986 should not be
accorded the interpretation that backwages are likewise included as due the complainant (petitioner)
for the affirmative relief of backwages is available only where reinstatement is ordered.
We find the clarificatory order erroneous in so far as it declared that the affirmative relief of
backwages is available only where reinstatement is ordered.18
A number of cases have already been decided by this Court whereby an illegally dismissed
employee is awarded both backwages and separation pay.
Article 280 (now Article 279) of the Labor Code provides that "an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages . . . ." Backwages in general are granted on grounds of equity for
earnings which a worker or employee has lost due to his illegal dismissal.19 Reinstatement, on the
other hand, means restoration to a state of condition from which one had been removed or
separated.20
Backwages and reinstatement are two reliefs given to an illegally dismissed employee. They are
separate and distinct from each other. However, in the event that reinstatement is no longer
1awp++i1
possible, separation pay is awarded to the employee. Thus, the award of separation pay is in lieu of
reinstatement and not of backwages. In other words, an illegally dismissed employee is entitled to
(1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable and (2)
backwages.
The distinction between separation pay and backwages has been exhaustively discussed by this
Court in Santos vs. NLRC, et. al,21 wherein we held:
The normal consequences of a finding that an employee has been illegally dismissed are,
firstly, that the employee becomes entitled to reinstatement to his former position without
loss of seniority rights and, secondly, the payment of backwages corresponding to the period
from his illegal dismissal up to actual reinstatement. The statutory intent on this matter is
clearly discernible. Reinstatement restores the employee who was unjustly dismissed to the
position from which he was removed, that is, to his status quo antedismissal, while the grant
of backwages allows the same employee to recover from the employer that which he had
lost by way of wages as a result of his dismissal. These twin remedies-reinstatement and
payment of backwages — make the dismissed employee whole who can then look forward
to continued employment. Thus do these two remedies give meaning and substance to the
constitutional right of labor to security of tenure. The two forms of relief are distinct and
separate, one from the other. Though the grant of reinstatement commonly carries with it an
award of backwages, the inappropriateness or non-availability of one does not carry with it
the inappropriateness or non-availability of the other. Separation pay was awarded in favor of
petitioner Lydia Santos because the NLRC found that her reinstatement was no longer
feasible or appropriate. As the term suggest, separation pay is the amount that an employee
receives at the time of his severance from the service and, as correctly noted by the Solicitor
General in Comment, is designed to provide the employee with "the wherewithal during the
period that he is looking for another employment." In the instant case, the grant of separate
on pay was a substitute for immediate and continued re-employment with the private
respondent Bank. The grant of separation pay did not redress the injury that is intended to be
relieved by the second remedy of backwages, that is, the loss of earnings that would have
accrued to the dismissed employee during the period between dismissal and reinstatement.
Put a little differently, payment of backwages is a form of relief that restores the income that
was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented towards the
immediate future, the transitional period the dismissed employee must undergo before
locating a replacement job.
In Hernandez vs. NLRC,22 involving an illegally dismissed employee, this Court held that "petitioner
should be paid backwages not exceeding three years without deduction and separation pay in the
amount of one month for every year of service." In another case, this Court stated "the public
respondent's order for the private respondents' reinstatement to their former position is no longer
possible under the circumstances. An award equivalent to three years backwages plus separation
pay to compensate for their illegal separation is thus proper.23 Also in Asphalt & Cement Pavers, Inc.
vs. Vicente Leogardo, Jr.,24 we held that "an illegally dismissed employee is entitled to reinstatement
to his previous position without loss of seniority rights with backwages for a period of three (3) years
without qualification or deduction. If reinstatement is no longer feasible, the employer may be
ordered to pay, in addition to backwages, separation pay as provided by law."
In the light of the above rulings of this Court, petitioner, by reason of his illegal dismissal is entitled to
both separation pay and backwages. However, the amount of backwages shall be based on
the Mercury Drug Rulewhich limits backwages of illegally dismissed employees to an amount
equivalent to their wages for three (3) years, without qualification and deduction. The Court has
adopted the practice of fixing the amount of backwages at a reasonable level without qualification
and deduction so as to relieve the employees from proving their earnings during their layoffs and the
employer from submitting counter proofs and thus obviate the twin evils of idleness on the part of the
employees and attrition and undue delay in satisfying the award on the part of the employer. This
practice has been hailed as a realistic, reasonable and mutually beneficial solution. An award of
backwages equivalent to three years (where the case is not terminated sooner) serves as the base
figure for such award without deduction.25
Again, as we stated in Lepanto Consolidated Mining Company vs. Olegario,26: "The Court serves
notice on the National Labor Relations Commission (NLRC), labor arbiters and other responsible
officials of the Department of Labor and Employment to take their bearings from this rule that illegally
dismissed employees or laborers shall be entitled to reinstatement without loss of seniority (rights)
and payment of backwages of not more than three (3) years without any qualification or deduction.
Although this policy had been consistently adhered to by the Court even after the passage of the
present Labor Code, there are still many instances, as in this case and other cases decided by the
Court, where the labor arbiters and/or the NLRC still awarded backwages beyond the 3-year limit set
by the Court. The governing principle, which has given consistency and stability to the law, is stare
decisis et no movere (follow past precedent and do not disturb what has been settled).27
With regards to petitioner's separation pay which was awarded to him in lieu of reinstatement, he
shall receive the amount equivalent to one month wage/salary for every year of service, including the
three-year period in which backwages are awarded. This finds support in the case of Grolier
International, Inc. vs. Amansec,28 wherein we held:
Thus, when the Court stated that private respondent was entitled to "separation pay based
on the applicable law or company practice, whichever is higher, effective as of the end of the
above three (3) year period," it meant only that in the computation of separation pay, the
three (3) year period in respect of which backwages are awarded, must be included
(although private respondent had not actually served during the last three (3) years). . .29
Furthermore, his actual service with private respondent for approximately nine (9) months, counted
from October 1977 to July 1978 shall be considered as one (1) year, in accordance with Article 283
of the Labor Code, which provides that a fraction of at least six (6) months is considered one (1)
whole year.
Petitioner Valentino Torillo was illegally dismissed in 1978. This case has been pending for almost
thirteen (13) years. In the interest of justice and equity as well as to avoid any further ambiguities,
this Court shall fix the exact amount due petitioner. Thus, based on the records of the case,30 we hold
that the total amount due to petitioner is P146,255.37, computed as follows:
1âw phi1
A. Backwages
P330,050.00*
x 365 days x 3 years — P130,048.48
2,779 days
B. Holiday Pay — 1,610.00
C. Separation Pay
P330,050.00
x 30 days x 4 years — 14,251.89
2,779
D. Unpaid Wages from July 1 to 3, 1978 — 345.00
TOTAL P146,55.37
WHEREFORE, the petition is granted. The decision in Labor Case No. R-4-STF-7-4525-78 is hereby
modified. Private respondent Aberdeen Court, Inc. is hereby ordered to pay petitioner Valentino
Torillo, the amount of P146,255.37 representing his backwages, separation pay, holiday pay and
unpaid wages by reason of his illegal dismissal. This decision is immediately executory. Costs
against private respondent.
SO ORDERED.
E. [G.R. NO. 153511 - July 18, 2012]
LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON NAPUD, in his capacity
as the President of Petitioner Corporation, Petitioner, v. HERNANI S. REALUYO, also known as JOEY
ROA, Respondent.
DECISION
BERSAMIN, J.:
This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. On
August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor
practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays,
separation pay, service incentive leave pay, and 13111 month pay. He prayed for attorney's fees, moral
damages off P100,000.00 and exemplary damages for P100,000.00.1 Ï‚rÎ½ll
Respondent averred that he had worked as a pianist at the Legend Hotel s Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night that was given to him after each night s performance;
that his rate had increased to P750.00/night; and that during his employment, he could not choose the time
of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that
the Legend Hotel s restaurant manager had required him to conform with the venue s motif; that he had
been subjected to the rules on employees representation checks and chits, a privilege granted to other
employees; that on July 9, 1999, the management had notified him that as a cost-cutting measure his
services as a pianist would no longer be required effective July 30, 1999; that he disputed the excuse,
insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that the loss
of his employment made him bring his complaint.2 Ï‚ rÎ½ll
In its defense, petitioner denied the existence of an employer-employee relationship with respondent,
insisting that he had been only a talent engaged to provide live music at Legend Hotel s Madison Coffee
Shop for three hours/day on two days each week; and stated that the economic crisis that had hit the
country constrained management to dispense with his services.
On December 29, 1999, the Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding that
the parties had no employer-employee relationship.3 The LA explained thusly: Ï‚rÎ± lÎ±Ï‰
xxx
On the pivotal issue of whether or not there existed an employer-employee relationship between the parties,
our finding is in the negative. The finding finds support in the service contract dated September 1, 1992
xxx. crvll
xxx
Even if we grant the initial non-existence of the service contract, as complainant suggests in his reply (third
paragraph, page 4), the picture would not change because of the admission by complainant in his letter
dated October 8, 1996 (Annex "C") that what he was receiving was talent fee and not salary.
This is reinforced by the undisputed fact that complainant received his talent fee nightly, unlike the regular
employees of the hotel who are paid by monthly xxx. crvll
xxx
And thus, absent the power to control with respect to the means and methods by which his work was to be
accomplished, there is no employer-employee relationship between the parties xxx.
xxx
WHEREFORE, this case must be, as it is hereby, DISMISSED for lack of merit.
SO ORDERED.4 Ï‚rÎ½l l
Respondent appealed, but the National Labor Relations Commission (NLRC) affirmed the LA on May 31,
2001.5Ï‚rÎ½l l
Respondent assailed the decision of the NLRC in the Court of Appeals (CA) on certiorari .
On February 11, 2002, the CA set aside the decision of the NLRC,6 holding:
xxx
Applying the above-enumerated elements of the employee-employer relationship in this case, the question
to be asked is, are those elements present in this case? chanroble svirt ualawli bra ry
The answer to this question is in the affirmative.
xxx
Well settled is the rule that of the four (4) elements of employer-employee relationship, it is the power of
control that is more decisive.
In this regard, public respondent failed to take into consideration that in petitioner s line of work, he was
supervised and controlled by respondent s restaurant manager who at certain times would require him to
perform only tagalog songs or music, or wear barong tagalog to conform with Filipiniana motif of the place
and the time of his performance is fixed by the respondents from 7:00 pm to 10:00 pm, three to six times a
week. Petitioner could not choose the time of his performance. xxx. crvll
As to the status of petitioner, he is considered a regular employee of private respondents since the job of
the petitioner was in furtherance of the restaurant business of respondent hotel. Granting that petitioner
was initially a contractual employee, by the sheer length of service he had rendered for private respondents,
he had been converted into a regular employee xxx. crvll
xxx
xxx In other words, the dismissal was due to retrenchment in order to avoid or minimize business losses,
which is recognized by law under Article 283 of the Labor Code, xxx. crvll
xxx
WHEREFORE, foregoing premises considered, this petition is GRANTED. xxx.7 Ï‚rÎ½l l
Issues
In this appeal, petitioner contends that the CA erred:Ï‚ Î·Î± Ã±rÎ¿blÎµÅ¡ Î½ Î¹râ€ Ï…Î±l l Î±Ï‰ lÎ¹b rÎ± rÃ¿
I. XXX WHEN IT RULED THAT THERE IS THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN
THE PETITIONER HOTEL AND RESPONDENT ROA.
II. XXX IN FINDING THAT ROA IS A REGULAR EMPLOYEE AND THAT THE TERMINATION OF HIS SERVICES
WAS ILLEGAL. THE CA LIKEWISE ERRED WHEN IT DECLARED THE REINSTATEMENT OF ROA TO HIS
FORMER POSITION OR BE GIVEN A SEPARATION PAY EQUIVALENT TO ONE MONTH FOR EVERY YEAR OF
SERVICE FROM SEPTEMBER 1999 UNTIL JULY 30, 1999 CONSIDERING THE ABSENCE OF AN EMPLOYMENT
RELATIONSHIP BETWEEN THE PARTIES.
III. XXX WHEN IT DECLARED THAT ROA IS ENTITLED TO BACKWAGES, SERVICE INCENTIVE LEAVE AND
OTHER BENEFITS CONSIDERING THAT THERE IS NO EMPLOYER EMPLOYEE RELATIONSHIP BETWEEN THE
PARTIES.
IV. XXX WHEN IT NULLIFIED THE DECISION DATED MAY 31, 2001 IN NLRC NCR CA NO. 023404-2000 OF
THE NLRC AS WELL AS ITS RESOLUTION DATED JUNE 29, 2001 IN FAVOR OF HEREIN PETITIONER HOTEL
WHEN HEREIN RESPONDENT ROA FAILED TO SHOW PROOF THAT THE NLRC AND THE LABOR ARBITER
HAVE COMMITTED GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION IN THEIR RESPECTIVE
DECISIONS.
V. XXX WHEN IT OVERLOOKED THE FACT THAT THE PETITION WHICH ROA FILED IS IMPROPER SINCE IT
RAISED QUESTIONS OF FACT.
VI. XXX WHEN IT GAVE DUE COURSE TO THE PETITION FILED BY ROA WHEN IT IS CLEARLY IMPROPER AND
SHOULD HAVE BEEN DISMISSED OUTRIGHT CONSIDERING THAT A PETITION FOR CERTIORARI UNDER
RULE 65 IS LIMITED ONLY TO QUESTIONS OR ISSUES OF GRAVE ABUSE OF DISCRETION OR LACK OF
JURISDICTION COMMITTED BY THE NLRC OR THE LABOR ARBITER, WHICH ISSUES ARE NOT PRESENT IN
THE CASE AT BAR.
chanrobles vi rt ual law li bra ry
The assigned errors are divided into the procedural issue of whether or not the petition for certiorari filed in
the CA was the proper recourse; and into two substantive issues, namely: (a) whether or not respondent
was an employee of petitioner; and (b) if respondent was petitioner s employee, whether he was validly
terminated.
Ruling
The appeal fails.
Procedural Issue:
Certiorari was a proper recourse
Petitioner contends that respondent s petition for certiorari was improper as a remedy against the NLRC due
to its raising mainly questions of fact and because it did not demonstrate that the NLRC was guilty of grave
abuse of discretion.
The contention is unwarranted. There is no longer any doubt that a petition for certiorari brought to assail
the decision of the NLRC may raise factual issues, and the CA may then review the decision of the NLRC and
pass upon such factual issues in the process.8 The power of the CA to review factual issues in the exercise of
its original jurisdiction to issue writs of certiorari is based on Section 9 of Batas Pambansa Blg. 129, which
pertinently provides that the CA "shall have the power to try cases and conduct hearings, receive evidence
and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and
appellate jurisdiction, including the power to grant and conduct new trials or further proceedings."
Substantive Issue No. 1:
Employer-employee relationship existed between the parties
We next ascertain if the CA correctly found that an employer-employee relationship existed between the
parties.
The issue of whether or not an employer-employee relationship existed between petitioner and respondent
is essentially a question of fact.9 The factors that determine the issue include who has the power to select
the employee, who pays the employee s wages, who has the power to dismiss the employee, and who
exercises control of the methods and results by which the work of the employee is accomplished.10 Although
no particular form of evidence is required to prove the existence of the relationship, and any competent and
relevant evidence to prove the relationship may be admitted,11 a finding that the relationship exists must
nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind
might accept as adequate to justify a conclusion.12 Ï‚rÎ½ll
Generally, the Court does not review factual questions, primarily because the Court is not a trier of facts.
However, where, like here, there is a conflict between the factual findings of the Labor Arbiter and the NLRC,
on the one hand, and those of the CA, on the other hand, it becomes proper for the Court, in the exercise of
its equity jurisdiction, to review and re-evaluate the factual issues and to look into the records of the case
and re-examine the questioned findings.13 Ï‚ rÎ½ll
A review of the circumstances reveals that respondent was, indeed, petitioner s employee. He was
undeniably employed as a pianist in petitioner s Madison Coffee Shop/Tanglaw Restaurant from September
1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered into the service contract
dated September 1, 1992 with respondent. This is true, notwithstanding petitioner s insistence that
respondent had only offered his services to provide live music at petitioner s Tanglaw Restaurant, and
despite petitioner s position that what had really transpired was a negotiation of his rate and time of
availability. The power of selection was firmly evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine Velazco, petitioner s restaurant manager, for the
increase of his remuneration.14 Ï‚rÎ½l l
Petitioner could not seek refuge behind the service contract entered into with respondent. It is the law that
defines and governs an employment relationship, whose terms are not restricted to those fixed in the
written contract, for other factors, like the nature of the work the employee has been called upon to
perform, are also considered. The law affords protection to an employee, and does not countenance any
attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when the employer utilizes
the stipulation to deprive the employee of his security of tenure. The inequality that characterizes employer-
employee relations generally tips the scales in favor of the employer, such that the employee is often
scarcely provided real and better options.15 Ï‚ rÎ½ll
Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent fees
that were not included in the definition of wage under the Labor Code; and that such talent fees were but
the consideration for the service contract entered into between them.
The argument is baseless.
Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six
nights a week. Such rate of remuneration was later increased to P750.00 upon restaurant manager Velazco
s recommendation. There is no denying that the remuneration denominated as talent fees was fixed on the
basis of his talent and skill and the quality of the music he played during the hours of performance each
night, taking into account the prevailing rate for similar talents in the entertainment industry.16 Ï‚rÎ½l l
Respondent s remuneration, albeit denominated as talent fees, was still considered as included in the term
wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate the
remuneration. Anent this, Article 97(f) of the Labor Code clearly states: Ï‚rÎ±lÎ± Ï‰
xxx wage paid to any employee shall mean the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee.
Clearly, respondent received compensation for the services he rendered as a pianist in petitioner s hotel.
Petitioner cannot use the service contract to rid itself of the consequences of its employment of respondent.
There is no denying that whatever amounts he received for his performance, howsoever designated by
petitioner, were his wages.
It is notable that under the Rules Implementing the Labor Code and as held in Tan v. Lagrama,17 every
employer is required to pay his employees by means of a payroll, which should show in each case, among
others, the employee s rate of pay, deductions made from such pay, and the amounts actually paid to the
employee. Yet, petitioner did not present the payroll of its employees to bolster its insistence of respondent
not being its employee.
That respondent worked for less than eight hours/day was of no consequence and did not detract from the
CA s finding on the existence of the employer-employee relationship. In providing that the " normal hours of
work of any employee shall not exceed eight (8) hours a day," Article 83 of the Labor Code only set a
maximum of number of hours as "normal hours of work" but did not prohibit work of less than eight hours.
Thirdly, the power of the employer to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship.18 This is the so-called control test, and
is premised on whether the person for whom the services are performed reserves the right to control both
the end achieved and the manner and means used to achieve that end.19 Ï‚rÎ½l l
Petitioner submits that it did not exercise the power of control over respondent and cites the following to
buttress its submission, namely: (a) respondent could beg off from his nightly performances in the
restaurant for other engagements; (b) he had the sole prerogative to play and perform any musical
arrangements that he wished; (c) although petitioner, through its manager, required him to play at certain
times a particular music or song, the music, songs, or arrangements, including the beat or tempo, were
under his discretion, control and direction; (d) the requirement for him to wear barong Tagalog to conform
with the Filipiniana motif of the venue whenever he performed was by no means evidence of control; (e)
petitioner could not require him to do any other work in the restaurant or to play the piano in any other
places, areas, or establishments, whether or not owned or operated by petitioner, during the three hour
period from 7:00 pm to 10:00 pm, three to six times a week; and (f) respondent could not be required to
sing, dance or play another musical instrument.
A review of the records shows, however, that respondent performed his work as a pianist under petitioner s
supervision and control. Specifically, petitioner s control of both the end achieved and the manner and
means used to achieve that end was demonstrated by the following, to wit: Ï‚Î·Î± Ã±rÎ¿bl Îµ Å¡ Î½Î¹râ€ Ï… Î±l lÎ± Ï‰ lÎ¹brÎ±rÃ¿
A. He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm,
three to six times a week;
b. He could not choose the place of his performance;
c. The restaurant s manager required him at certain times to perform only Tagalog songs or music, or to
wear barong Tagalog to conform to the Filipiniana motif; and cralawlib rary
d. He was subjected to the rules on employees representation check and chits, a privilege granted to other
employees.
Relevantly, it is worth remembering that the employer need not actually supervise the performance of duties
by the employee, for it sufficed that the employer has the right to wield that power.
Lastly, petitioner claims that it had no power to dismiss respondent due to his not being even subject to its
Code of Discipline, and that the power to terminate the working relationship was mutually vested in the
parties, in that either party might terminate at will, with or without cause.
The claim is contrary to the records. Indeed, the memorandum informing respondent of the discontinuance
of his service because of the present business or financial condition of petitioner20showed that the latter had
the power to dismiss him from employment.21 Ï‚ rÎ½ ll
Substantive Issue No. 2:
Validity of the Termination
Having established that respondent was an employee whom petitioner terminated to prevent losses, the
conclusion that his termination was by reason of retrenchment due to an authorized cause under the Labor
Code is inevitable.
Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor Code.
It is a management prerogative resorted to by employers to avoid or to minimize business losses. On this
matter, Article 283 of the Labor Code states: Ï‚rÎ±l Î±Ï‰
Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. xxx. In
case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year.
The Court has laid down the following standards that an employer should meet to justify retrenchment and
to foil abuse, namely: Ï‚Î· Î±Ã±rÎ¿bl Îµ Å¡ Î½Î¹râ€ Ï…Î±l l Î±Ï‰ l Î¹b rÎ± rÃ¿
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses;
and cralawlib rary
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must
be proved by sufficient and convincing evidence.22 Ï‚rÎ½l l
Anent the last standard of sufficient and convincing evidence, it ought to be pointed out that a less exacting
standard of proof would render too easy the abuse of retrenchment as a ground for termination of services
of employees.23 Ï‚ rÎ½ll
Was the retrenchment of respondent valid? chanro blesvi rt ualawlib ra ry
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon
the employer. Here, petitioner did not submit evidence of the losses to its business operations and the
economic havoc it would thereby imminently sustain. It only claimed that respondent s termination was due
to its "present business/financial condition." This bare statement fell short of the norm to show a valid
retrenchment. Hence, we hold that there was no valid cause for the retrenchment of respondent.
Indeed, not every loss incurred or expected to be incurred by an employer can justify retrenchment. The
employer must prove, among others, that the losses are substantial and that the retrenchment is reasonably
necessary to avert such losses. Thus, by its failure to present sufficient and convincing evidence to prove
that retrenchment was necessary, respondent s termination due to retrenchment is not allowed.
The Court realizes that the lapse of time since the retrenchment might have rendered respondent's
reinstatement to his former job no longer feasible. If that should be true, then petitioner should instead pay
to him separation pay at the rate of one. month pay for every year of service computed from September
1992 (when he commenced to work for the petitioners) until the finality of this decision, and full backwages
from the time his compensation was withheld until the finality of this decision.
WHEREFORE, we DENY the Petition for Review on Certiorari, and AFFIRM the decision of the Court of
Appeals promulgated on February 11, 2002, subject to the modification that should reinstatement be no
longer feasible, petitioner shall pay to respondent separation pay of one month for every year of service
computed from September 1992 until the finality of this decision, and full backwages from the time his
compensation was withheld until the finality of this decision.
Costs of suit to be paid by the petitioners.
SO ORDERED.
F. G.R. No. 198782, October 19, 2016

ALLAN BAZAR, Petitioner, v. CARLOS A. RUIZOL, Respondent.
DECISION
PEREZ, J.:
This is a petition for review of the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. SP No.
00937-MIN dated 11 November 2010 and 8 September 2011, respectively.
The antecedent facts follow.
Respondent Carlos A. Ruizol (also identified as Carlos Ruisol in the Complaint, Labor Arbiter's Decision and in
other pleadings) was a mechanic at Norkis Distributors and assigned at the Surigao City branch. He was
terminated effective 27 March 2002. At the time of his termination, respondent was receiving a monthly
salary of P2,050.00 and was working from 8:00 a.m. to 5:00 p.m. with a one-hour meal break for six (6)
days in a week. Respondent claimed that petitioner Allan Bazar came from Tandag branch before he was
assigned as a new manager in the Surigao City branch. Respondent added that he was dismissed by
petitioner because the latter wanted to appoint his protege as a mechanic. Because of his predicament,
respondent filed a complaint before Regional Arbitration Branch No. XIII of the National Labor Relations
Commission (NLRC) in Butuan City for illegal dismissal and other monetary claims. An Amended Complaint
was filed on 12 August 2002 changing the name of the petitioner therein from Norkis Display Center to
Norkis Distributors, Inc. (NDI).
Petitioner, on the other hand, alleged that NDI is a corporation engaged in the sale, wholesale and retail of
Yamaha motorcycle units. Petitioner countered that respondent is not an employee but a franchised
mechanic of NDI pursuant to a retainership agreement. Petitioner averred that respondent, being the owner
of a motor repair shop, performed repair warranty service, back repair of Yamaha units, and ordinary repair
at his own shop. Petitioner maintained that NDI terminated the retainership contract with respondent
because they were no longer satisfied with the latter's services.
On 8 October 2003,3 Executive Labor Arbiter Noel Augusto S. Magbanua ruled in favor of respondent
declaring him a regular employee of NDI and that he was illegally dismissed, to wit:
chanRoble svirtual Lawlib ra ry
WHEREFORE, judgment is hereby rendered:
1. Declaring [respondent] a regular employee of [NDI and petitioner];

2. Declaring [respondent's] dismissal illegal;
3. Ordering [NDI] to pay [respondent] Carlos A. Ruisol the total amount of TWO HUNDRED
THREE THOUSAND FIVE HUNDRED FIFTY ONE PESOS & 33/100 (P203,551.33) representing
his monetary award computed above.
4. Other claims of [respondent] are dismissed for lack of merit.4
The Labor Arbiter stressed that an employer-employee relationship existed in this case. He did not give any
weight to the unsworn contract of retainership based on the reason that it is a clear circumvention of
respondent's security of tenure.
On appeal, petitioner reiterated that there is no employer-employee relationship between NDI and
respondent because the latter is only a retainer mechanic of NDI. Finding merit in the appeal, the NLRC
reversed the ruling of the Labor Arbiter and dismissed the case for lack of cause of action. The NLRC held
that respondent failed to refute petitioner's allegation that he personally owns a motor shop offering repair
and check-up services to other customers and that he worked on the units referred by NDI either at his own
motor shop or at NDI's service shop. The NLRC also ruled that NDI had no power of control and supervision
over the means and method by which respondent performed job as mechanic. The NLRC concluded that
respondent is bound to adhere to and respect the retainership contract wherein he declared and
acknowledged that he is not an employee of NDI.
Respondent filed a petition for certiorari before the Court of Appeals, submitting that the Labor Arbiter's
ruling had become final with respect to NDI because the latter failed to appeal the same. · Respondent
asserted that the NLRC erred in ruling that there is no employer-employee relationship between the parties.
Respondent also prayed for re'i?statement.
On 11 November 2010, the Court of Appeals:granted the petition. The Court of Appeals ruled that petitioner
had no legal personality to make the appeal for NDI. The Court of Appeals held that te labor arbiter's
decision with respect to NDI is final. The Court of Appeals found that there was employer-employee
relationship between respondent and NDI and that respondent was unlawfully dismissed. Finally, the Court
of Appeals awarded respondent separation pay in lieu of reinstatement.
Petitioner sought reconsideration of the decision but its motion for reconsideration was denied. Hence, this
petition.
Before this Court, petitioner assigns the following alleged errors committed by the Court of Appeals:
1. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN GRANTING THE PETITION FOR
CERTIORARI, AND REVERSING THE "DECISION" AND "RESOLUTION" (ANNEXES "A" AND
"B") OF THE NATIONAL LABOR RELATIONS COMMISSION - FIFTH DIVISION, CAGAYAN DE
ORO CITY, AS THE SAME ARE NOT IN ACCORDANCE WITH EXISTING LAWS ANDIOR
DECISIONS [PROMULGATED] BY THE HONORABLE SUPREME COURT.
a. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPLY THE.

DECISION OF THE HONORABLE SUPREME COURT THAT "JURISDICTION CANNOT
BE ACQUIRED OVER THE DEFENDANT WITHOUT SERVICE OF SUMMONS, EVEN IF
HE KNOWS OF THE CASE AGAINST HIM, UNLESS HE VOLUNTARILY SUBMITS TO
THE JURISDICTION OF THE COURT BY APPEARING THEREIN AS THROUGH HIS
COUNSEL FILING THE CORRESPONDING PLEADING IN THE CASE", PURSUANT TO
THE RULING OF THIS HONORABLE SUPREME COURT IN THE CASE OF "HABANA VS.
VAMENTA, ET AL., L-27091, JUNE 30, 1970."
b. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPLY THE

LEGAL PRINCIPLE THAT "IT IS BASIC THAT A CORPORATION IS INVESTED BY LAW
WITH A [PERSONALITY] SEPARATE AND DISTINCT FROM THOSE OF THE PERSONS
COMPOSING IT AS WELL AS FROM THAT OF ANY OTHER LEGAL ENTITY TO WHICH
IT MAY BE RELATED.", PURSUANT TO THE RULING OF THE HONORABLE SUPREME
COURT IN THE CASE OF "ELCEE FARMS, INC. VS. NATIONAL LABOR RELATIONS
COMMISSION, 512 SCRA 602."
c. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPLY THE

RULE REGARDING "DECLARATION AGAINST INTEREST", PURSUANT TO SECTION
38, RULE 130 ON THE REVISED RULES ON EVIDENCE.
d. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPLY THE

DECISION OF THE HONORABLE SUPREME COURT THAT "LD. CARDS WHERE THE
WORDS "EMPLOYEE'S NAME" APPEAR PRINTED THEREIN DO NOT PROVE
EMPLOYER EMPLOYEE RELATIONSHIP WHERE SAID I.D. CARDS ARE ISSUED FOR
THE PURPOSE OF ENABLING CERTAIN "CONTRACTORS" SUCH AS SINGERS AND
BAND PERFORMERS, TO ENTER THE PREMISES OF AN ESTABLISHMENT",
PURSUANT TO THE RULING OF THIS HONORABLE SUPREME COURT IN THE CASE
OF "TSPIC CORPORATION VS. TSPIC EMPLOYEES UNION (FFE), 545 SCRA 215."
2. THE HONORABLE COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT AND

UNDISPUTED FACTS THAT, IF PROPERLY CONSIDERED, WOULD JUSTIFY A DIFFERENT
CONCLUSION.
a. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO DECLARE

THAT "NORKIS DISTRIBUTORS, INC. IS NOT A PARTY IN THE INSTANT CASE."
b. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO DECLARE

THAT "THE DECISION OF THE LABOR ARBITER IS NOT BINDING UPON NORKIS
DISTRIBUTORS, INC."
c. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT,

"WITH RESPECT TO NORKIS DISTRIBUTORS, INC., THE DECISION OF THE LABOR
ARBITER HAD ALREADY BECOME FINAL", FOR THE REASON THAT NO
JURISDICTION HAD BEEN ACQUIRED OVER NORKIS DISTRIBUTORS, INC. SINCE
THERE WAS NO PROPER SERVICE OF SUMMONS UPON THE CORPORATION.
d. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN SETTING ASIDE THE

"DECISION" OF THE NATIONAL LABOR RELATIONS COMMISSION FIFTH DIVISION,
CAGAYAN DE ORO CITY, AND REINSTATING THE "DECISION" OF THE LABOR
ARBITER, AS RESPONDENT IS NOT AN EMPLOYEE OF NORKIS DISTRIBUTORS,
INC., BUT ONLY A "RETAINER MECHANIC", JUST LIKE A RETAINER LAWYER WHO
IS NOT AN EMPLOYEE OF THE LAWYER'S CLIENT.
e. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THE :
EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP, SINCE THERE IS AN
ABSENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN NORKIS
DISTRIBUTORS, INC. AND RESPONDENT RUIZOL.
f. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISREGARDING THE

"MASTERLIST OF ALL EMPLOYEES" OF NORKIS DISTRIBUTORS, INC. AS PROOF
THAT RESPONDENT RUIZOL IS NOT ITS EMPLOYEE.
g. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE

"DECISION" OF THE LABOR ARBITER REGARDING THE AWARD OF 10%
ATTORNEY'S FEES, FOR THE REASON THAT RESPONDENT WAS, AT THAT TIME,
REPRESENTED BY A PUBLIC LAWYER FROM THE PUBLIC ATTORNEY'S OFFICE OF
BUTUAN CITY.
h. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REINSTATING THE

"DECISION" OF THE LABOR ARBITER, WHICH AWARDS BACKWAGES, SALARY
DIFFERENTIAL, 13TH MONTH PAY, SEPARATION PAY, SERVICE INCENTIVE LEAVE
AND ATTORNEY'S FEES, AS THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP
BETWEEN NDI AND RESPONDENT RUIZOL.5
Petitioner first raises a question of procedure. Petitioner asserts that no summons was served on NDI. Thus,
NDI had no reason to appeal the adverse decision of the Labor Arbiter because jurisdiction over its person
was not acquired by the labor tribunal. Considering the foregoing, petitioner maintains that he cannot be
made personally liable for the monetary awards because he has a personality separate and distinct from
NDI.
We partly grant the petition.
The NLRC, despite ruling against an employer-employee relationship had nevertheless upheld the
jurisdiction of the Labor Arbiter over NDI. The NLRC ruled and we agree, thus:
Indeed, NDI was impleaded as respondent in this case as clearly indicated in the amended complaint filed by
[respondent] on August 12, 2002, contrary to the belief of [NDI and petitioner]. And considering that the
summons and other legal processes issued by the Regional Arbitration Branch a quo were duly served to
[petitioner] in his capacity as branch manager of NDI, the Labor Arbiter had validly acquired jurisdiction
over the juridical person of NDI.6
The Court of Appeals correctly added that the Labor Arbiter's ruling with respect to NDI has become final
and executory for the latter's failure to appeal within the reglementary period; and that petitioner had no
legal personality to appeal for and/or behalf of the corporation.
Interestingly, despite vehemently arguing that NDI was not bound by the ruling because it was not
impleaded as respondent to the complaint, petitioner in the same breath admits even if impliedly NDI is
covered by the ruling, arguing that there cannot be any illegal dismissal because there is no employer-
employee relationship between NDI and respondent. We are not convinced.
We emphasize at the outset that the existence of an employer employee relationship is ultimately a question
of fact. Only errors of law are generally reviewed by this Court. Factual findings of administrative and quasi-
judicial agencies specializing in their respective fields, especially when affirmed by the Court of Appeals,
must be accorded high respect, if not finality.7 We here see an exception to the rule on the binding effect on
us of the factual conclusiveness of the quasi-judicial agency. The findings of the Labor Arbiter are in conflict
with that of the NLRC and Court of Appeals. We can thus look into the factual issues involved in this case.
The four-fold test used in determining the, existence of employer employee relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer's power to control the employee with respect to the means and. method by which the work is
to be accomplished.8 chan roble slaw
In finding that respondent was an employee of NDI, the Court of Appeals applied the four-fold test in this
wise:
x x x First, the services of [respondent] was indisputably engaged by the [NDI] without the aid of a third
party. Secondly, the fact that the [respondent] was paid a retainer fee and on a per diem basis does not
altogether negate the existence of an [employer]-employee relationship. The retainer agreement only
provided the breakdown, of the [respondent's] monthly income. On a more important note, the [NDI] did
not present its payroll, which it could conveniently do, to disprove the [respondent's] claim that he was their
employee. x x x
Third, the [NDI's] power of dismissal can be [gleaned] from the termination of the [respondent] although
couched under the guise of the non-renewal of his contract with the company. Also, the contract alone
showed that the [respondent] provided service to Yamaha motorbikes brought to the NDI service shop in
accordance with the manual of the unit and subject to the minimum standards set by the company. Also,
tool kits were furnished to the mechanics which they use in repairs and checking of the units conducted
inside or in front of the Norkis Display Center.9
Petitioner argues that respondent was not engaged as an employee but the parties voluntarily executed a
retainership contract where respondent became NDI's retainer mechanic; that respondent was paid a
retainer's fee similar to that of the services of lawyers; that the termination of the retainership contract does
not constitute illegal dismissal of the retained mechanic; and that NDI is only interested in the outcome of
respondent's work. Petitioner further explained that respondent is free to use his own means and methods
by which his work is to be accomplished and the manual of the Yamaha motorbike unit is necessary in order
to guide respondent in the repairs of the motorbikes.
At the outset, respondent denied the existence of a retainership contract. Indeed, the contract presented by
NDI was executed by the latter and a certain Eusequio Adorable. The name "Carlos Ruizol" was merely
added as a retainer/franchised mechanic and the same was unsigned. Assuming, however, that such a
contract did exist, its provisions should not bind respondent. We agree with the Labor Arbiter on the
following points:
Paragraph 5 and 6 of the unsworned contract of Retainership between [respondent] and [NDI and
petitioner] dated March 1, 1989 states as follows: ChanRoblesVi rt ualawlib ra ry
"5. That the franchised mechanic, though not an employee of the NDI agrees to observe and abide by the
rules and regulations by the NDI aims to maintain a good quality and efficient service to customer.
6.) Franchised mechanic hereby acknowledge that he is not an employee of NDI, hence, not entitled to
Labor Standard benefits.
It bears stressing that the contents of the unsworn Contract of Retainership is a clear circumvention of the
security of tenure pursuant to Articles 279 and 280 of the Labor Code. The agreement embodied in the said
contract is contrary to law. thus [respondent] is not bound to comply with the same.10 chan roble svirtuallaw lib rary
NDI admitted to have engaged the services of respondent, although under the guise of a retainership
agreement. The fact of engagement does not exclude the power ofNDI to hire respondent as its employee.
Assuming that respondent signed the retainership agreement, it is not indicative of his employment status.
It is the law that defines and governs an employment relationship, whose terms are not restricted by those
fixed in the written contract, for other factors, like the nature of the work the employee has been called
upon to perform, are also considered. The law affords protection to an employee, and does not countenance
any attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when the employer
utilizes the stipulation to deprive the employee of his security of tenure. The inequality that characterizes
employer-employee relations generally tips the scales in favor of the employer, such that the employee is
often scarcely provided real and better options.11chan robles law
Petitioner claims that respondent was receiving 1!2,050.00 as his monthly retainer's fee as of his
termination in March 2002. This fee is covered by the term "wages" and defined as remuneration or
earnings, however designated, capable of being expressed in terms of money, whether· fixed or ascertained
on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract 'of employment for work done or to be done,
or for service rendered or to be rendered.12 For services rendered to NDI, respondent received
compensation. NDI could have easily disproved that respondent was its employee by presenting the manner
by which such compensation was paid to respondent. NDI did not do so.
That NDI had the power to dismiss respondent was clearly evidenced by the fact that respondent's services
were terminated.
The control test is the most crucial and determinative indicator of the presence or absence of an employer-
employee relationship. Under the control test, an employer-employee relationship exists where the person
for whom the services are performed reserves the right to control not only the end achieved, but also the
manner and means to be used in reaching that end.13 chanrob leslaw
Petitioner asserts that NDI did not exercise the power of control over respondent because he is free to use
his own means and methods by which his work is to be accomplished. The records show the contrary. It was
shown that respondent had to abide by the standards sets by NDI in conducting repair work on Yamaha
motorbikes done in NDI's service shop. As a matter of fact, on allegations that respondent failed to live up
to the demands of the work, he was sent several memoranda14 by NDI. We agree with the Labor Arbiter that
the presence of control is evident thus:
This Branch agree with the complainants' contention that there is no contract and that he is a regular
employee as shown in Annexes "2" & "3" respectively of the respondents position paper, as follows: ChanRobles Vi rt ualawlib ra ry
"Furthermore, you are directed and advice to religiously follow orders from your immediate superior x x x
Failure on your part to submit a written explanation will be construed as a waiver of your right and your
case will be decided based on available information"
The above memo is so worded in a way that it unmistakably show that it is addressed to the [respondent]
who is an employee of [NDI]. It shows clearly the presence of the element of "control" by [NDI and
petitioner] over [respondent's] manner of work.15 chanroble svirtual lawlib rary
Petitioner points out that respondent actually owns a motor repair shop where he performs repair warranty
service and back job repairs of Yamaha motorcycles for NDI and other clients. This allegation was
unsubstantiated. We cannot give credit to such claim.
Petitioner argues that the appellate court erred in holding that respondent is an employee of NDI based on
the identification card issued to him. While it is true that identification cards do not prove employer
employee relationship, the application of the four-fold test in this case proves that an employer-employee
relationship did exist between respondent and NDI.
Since it was sufficiently established that petitioner is an employee of NDI, he is entitled to security of
tenure. He can only be dismissed for a just or authorized cause. Petitioner was dismissed through a letter
informing him of termination of contract of retainership which we construe as a termination notice. For lack
of a just or authorized cause coupled with failure to observe the twin-notice rule in termination cases,
respondent's dismissal is clearly illegal.
An illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs
provided are separate and distinct. In instances where reinstatement is no longer feasible because of
strained relations between the employee and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and backwages.16 chanro bles law
Based on the foregoing, we affirm that NDI is not only liable for respondent's illegal dismissal, but that the
Labor Arbiter's decision against it had already become final and executory.
We now go to the liability of petitioner for payment of the monetary award. There is solidary liability when
the obligation expressly so states, when the law so provides, or when the nature of the obligation so
requires.17 Settled is the rule that a director or officer shall only be personally liable for the obligations of
the corporation, if the following conditions concur: (1) the complainant alleged in the complaint that the
director or officer assented to patently unlawful acts of the corporation, or that the officer was guilty of
gross negligence or bad faith; and (2) the complainant clearly and convincingly proved such unlawful acts,
negligence or bad faith.18cha nrob leslaw
In the instant case, there is an allegation that petitioner dismissed respondent because he wanted to hire his
own mechanic. However, this remained to be an allegation absent sufficient proof of motive behind
respondent's termination. Petitioner may have directly issued the order to dismiss respondent but
respondent must prove with certainty bad faith on the part of petitioner. No bad faith can be presumed from
the lone fact that immediately after respondent's termination, a new mechanic was hired. That the new
mechanic was actually petitioner's protege is a mere allegation with no proof. Therefore, petitioner, as
branch manager, cannot be held solidarily liable with NDI.
WHEREFORE, the instant Petition is PARTLY GRANTED. The Decision dated 11 November 2010 and
Resolution dated 8 September 2011 of the Court of Appeals in CA-G.R. SP No. 00937-MIN reinstating the
Decision of the Labor Arbiter declaring respondent Carlos Ruizol's dismissal as illegal are AFFIRMED.
Petitioner Allan Bazar is however ABSOLVED from the liability adjudged against Norkis Distributors, Inc.
SO ORDERED.
G. G.R. No. 197899
JOAQUIN LU, Petitioner

vs
TIRSO ENOPIA, ROBERTO ABANES, ALEJANDRE BAGAS, SALVADOR BERNAL,
SAMUEL CAHAYAG, ALEJANDRO CAMPUGAN, RUPERTO CERNA, JR., REYNALDO
CERNA, PETER CERVANTES, LEONARDO CO ND ES TABLE, ROLANDO ESLOPOR,
ROLLY FERNANDEZ, EDDIE FLORES, ROLANDO FLORES, JUDITO FUDOLIN, LEO
GRAPANI, FELIX HUBAHIB, JERRY JUAGPAO, MARCIANO LANUTAN, JOVENTINO
MATOBATO, ALFREDO MONIVA, VICTORIANO ORTIZ, JR., RENALDO PIALAN,
ALFREDO PRUCIA, PONCIANO REANDO, HERMENIO REMEGIO, DEMETRIO RUAYA,
EDGARDO RUSIANA, NESTOR SALILI, VICENTE SASTRELLAS, ROMEO SUMAYANG,
and DESIDERIO TABAY, Respondents
DECISION
PERALTA, J.:
Before us is a petition for review on certiorari filed by Joaquin Lu which seeks to reverse and set
aside the Decision1dated October 22, 2010 and the Resolution2 dated May 12, 2011, respectively, of
the Court of Appeals issued in CA-G.R. SP No. 55486-MIN.
The facts of the case, as stated by the Court of Appeals, are as follows:
Petitioners (now herein respondents) were hired from January 20, 1994 to March 20, 1996 as crew
members of the fishing mother boat F/B MG-28 owned by respondent Joaquin "Jake" Lu (herein
petitioner Lu) who is the sole proprietor of Mommy Gina Tuna Resources [MGTR] based in General
Santos City. Petitioners and Lu had an income-sharing arrangement wherein 55% goes to Lu, 45%
to the crew members, with an additional 4% as "backing incentive." They also equally share the
expenses for the maintenance and repair of the mother boat, and for the purchase of nets, ropes
and payaos.
Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing Agreement between
them, but petitioners refused to sign the same as they opposed the one-year term provided in the
agreement. According to petitioners, during their dialogue on August 18, 1997, Lu terminated their
services right there and then because of their refusal to sign the agreement. On the other hand, Lu
alleged that the master fisherman (piado) Ruben Salili informed him that petitioners still refused to
sign the agreement and have decided to return the vessel F/B MG-28.
On August 25, 1997, petitioners filed their complaint for illegal dismissal, monetary claims and
damages. Despite serious efforts made by Labor Arbiter (LA) Arturo P. Aponesto, the case was not
amicably settled, except for the following matters: (1) Balansi 8 and 9; (2) 10% piado share; (3) sud-
anon refund; and (4) refund of payment of motorcycle in the amount of ₱15,000.00. LA Aponesto
further inhibited himself from the case out of "delicadeza," and the case was raffled to LA Amado M.
Solamo.
In their Position Paper, petitioners alleged that their refusal to sign the Joint Venture Fishing
Agreement is not a just cause for their termination. Petitioners also asked for a refund of the amount
of ₱8,700,407.70 that was taken out of their 50% income share for the repair and maintenance of
boat as well as the purchase of fishing materials, as Lu should not benefit from such deduction.
On the other hand, Lu denied having dismissed petitioners, claiming that their relationship was one
of joint venture where he provided the vessel and other fishing paraphernalia, while petitioners, as
industrial partners, provided labor by fishing in the high seas. Lu alleged that there was no employer-
employee relationship as its elements were not present, viz.: it was the piado who hired petitioners;
they were not paid wages but shares in the catch, which they themselves determine; they were not
subject to his discipline; and respondent had no control over the day-to-day fishing operations,
although they stayed in contact through respondent's radio operator or checker. Lu also claimed that
petitioners should not be reimbursed for their share in the expenses since it was their joint venture
that shouldered these expenses.3
On June 30, 1998, the LA rendered a Decision4 dismissing the case for lack of merit finding that
there was no employer-employee relationship existing between petitioner and the respondents but a
joint venture.
In so ruling, the LA found that: (1) respondents were not hired by petitioner as the hiring was done
by the piado or master fisherman; (2) the earnings of the fishermen from the labor were in the form
of wages they earned based on their respective shares; (3) they were never disciplined nor
sanctioned by the petitioner; and, (4) the income-sharing and expense-splitting was no doubt a
working set up in the nature of an industrial partnership. While petitioner issued memos, orders and
directions, however, those who were related more on the aspect of management and supervision of
activities after the actual work was already done for purposes of order in hauling and sorting of
fishes, and thus, not in the nature of control as to the means and method by which the actual fishing
operations were conducted as the same was left to the hands of the master fisherman.
The LA also ruled that the checker and the use of radio were for the purpose of monitoring and
supplying the logistics requirements of the fishermen while in the sea; and that the checkers were
also tasked to monitor the recording of catches and ensure that the proper sharing system was
implemented; thus, all these did not mean supervision on how, when and where to fish.
Respondents appealed to the National Labor Relations Commission (NLRC), which affirmed the LA
Decision in its Resolution5 dated March 12, 1999. Respondents' motion for reconsideration was
denied in a Resolution6 dated July 9, 1999.
Respondents filed a petition for certiorari with the CA which dismissed7 the same for having been
filed beyond the 60-day reglementary period as provided under Rule 65 of the Rules of Court, and
that the sworn certification of non-forum shopping was signed only by two (2) of the respondents
who had not shown any authority to sign in behalf of the other respondents. As their motion for
reconsideration was denied, they went to Us via a petition for certiorari assailing the dismissal which
We granted in a Resolution8 dated July 31, 2006 and remanded the case to the CA for further
proceedings.
Petitioner filed its Comment to the petition. The parties submitted their respective memoranda as
required by the CA.
On October 22, 2010, the CA rendered its assailed Decision reversing the NLRC, the decretal
portion of which reads as follows:
WHEREFORE, premises considered, the assailed March 12, 1999 Resolution of public respondent
National Labor Relations Commission (NLRC), Fifth Division, Cagayan de Oro City, is hereby
REVERSED and SET ASIDE, and a new one is entered.
Thus, private respondent Mommy Gina Tuna Resources (MGTR) thru its sole proprietor/general
manager, Joaquin T. Lu (Lu), is hereby ORDERED to pay each of the petitioners, namely, TIRSO
ENOPIA, ROBERTO ABANES, ALEJANDRE BAGAS, SALVADOR BERNAL,
SAMUEL CAHAYAG, ALEJANDRO CAMPUNGAN, RUPERTO CERNA, JR., REYNALDO CERNA,

PETER CERVANTES, LEONARDO CONDESTABLE, ROLANDO ESLOPOR, ROLLY
FERNANDEZ, EDDIE FLORES, ROLANDO FLORES, JUDITO FUDOLIN, LEO GRAPANI, FELIX
HUBAHIB, JERRY JUAGPAO, MARCIANO LANUTAN, JOVENTINO MATOBATO, ALFREDO
MONIVA, VICTORIANO ORTIZ, JR., RENALDO PIALAN, SEVERO PIALAN, ALFREDO PRUCIA,
POCIANO REANDO, HERMENIO REMEGIO, DEMETRIO RUAYA, EDGARDO RUSIANA,
NESTOR SALILI, RICHARD SALILI, SAMUEL SALILI, VICENTE SASTRELLAS, ROMEO
SUMAYANG and DESIDERIO TABAY the following:
(1) SEPARATION PAY (in lieu of the supposed reinstatement) equivalent to one (1) month pay for
every year of service reckoned from the very moment each petitioner was hired as fishermen-crew
member of FIB MG-28 by MGTR until the finality of this judgment. A fraction of at least six (6)
months shall be considered one (l) whole year. Any fraction below six months shall be paid pro rata;
(2) FULL BACKWAGES (inclusive of all allowances and other benefits required by law or their
monetary equivalent) computed from the time they were dismissed from employment on August 18,
1997 until finality of this Judgment;
(3) EXEMPLARY DAMAGES in the sum of Fifty Thousand Pesos (₱50,000.00);
(4) ATTORNEY'S FEES equivalent to 10% of the total monetary award.
Considering that a person's income or earning is his "lifeblood," so to speak, i.e., equivalent to life
itself, this Decision is deemed immediately executory pending appeal should MGTR decide to
elevate this case to the Supreme Court.
Let this case be referred back to the Office of the Labor Arbiter for proper computation of the
awards.9
The CA found that petitioner exercised control over respondents based on the following: (1)
respondents were the fishermen crew members of petitioner's fishing vessel, thus, their services to
the latter were so indispensable and necessary that without them, petitioner's deep-sea fishing
industry would not have come to existence much less fruition; (2) he had control over the entire
fishing operations undertaken by the respondents through the master fisherman (piado) and the
assistant master fisherman (assistant piado) employed by him; (3) respondents were paid based on
a percentage share of the fish catch did not in any way affect their regular employment status; and
(4) petitioner had already invested millions of pesos in its deep-sea fishing industry, hence, it is
highly improbable that he had no control over respondents' fishing operations.
Petitioner's motion for reconsideration was denied by the CA in its Resolution dated May 12, 2011.
Aggrieved, petitioner filed the instant petition for review on certiorari citing the following as reasons
for granting the same, to wit:
I
THE HONORABLE COURT OF APPEALS RENDERED THE ASSAILED DECISION CONTRARY

TO LAW AND LOGIC BY CITING THE ABSENCE OF PROOF OF REQUISITES OF A VALID
DISMISSAL AS BASIS FOR CONCLUDING THAT THE NLRC GRAVELY ABUSED ITS
DISCRETION.
II
THE HONORABLE COURT OF APPEALS EXCEEDED ITS JURISDICTION BY TREATING

RESPONDENTS' PETITION FOR CERTIORARI UNDER RULE 65 AS AN ORDINARY APPEAL,
AND BY INSISTING ON ITS OWN EVALUATION OF THE EVIDENCE.
III
THE HONORABLE COURT OF APPEALS RENDERED THE DECISION DATED 22 OCTOBER

2010 CONTRARY TO LAW AND THE EVIDENCE ON RECORD.
IV
THE HONORABLE COURT OF APPEALS HAS DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS BY MAKING ITS ASSAILED DECISION IMMEDIATELY
EXECUTORY PENDING APPEAL IN SPITE OF THE FACT THAT RESPONDENTS DID NOT ASK
FOR IMMEDIATE PAYMENT OF SEPARATION PAY AND OTHER CLAIMS, AND DESPITE THE
CLAIM OF RESPONDENTS THAT MOST OF THEM ARE CURRENTLY EMPLOYED IN OTHER
DEEP-SEA FISHING COMPANIES.10
Petitioner contends that no grave abuse of discretion can be attributed to the NLRC's finding
affirming that of the LA that the arrangement between petitioner and respondents was a joint venture
partnership; and that the CA, in assuming the role of an appellate body, had re-examined the facts
and re-evaluated the evidence thereby treating the case as an appeal instead of an original action
for certiorari under Rule 65.
We are not persuaded.
In Prince Transport, Inc. v. Garcia,11 We held:
The power of the CA to review NLRC decisions via a petition for certiorari under Rule 65 of the
Rules of Court has been settled as early as this Court's decision in St. Martin Funeral Homes v.
NLRC. In said case, the Court held that the proper vehicle for such review is a special civil action
for certiorari under Rule 65 of the said Rules, and that the case should be filed with the CA in strict
observance of the doctrine of hierarchy of courts. Moreover, it is already settled that under Section 9
of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902, the CA, pursuant to the
exercise of its original jurisdiction over petitions for certiorari, is specifically given the power to pass
upon the evidence, if and when necessary, to resolve factual issues. Section 9 clearly states:
xxxx
The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual issues raised in cases falling within its original
and appellate jurisdiction, including the power to grant and conduct new trials or further
proceedings.x x x.
However, equally settled is the rule that factual findings of labor officials, who are deemed to have
acquired expertise in matters within their jurisdiction, are generally accorded not only respect but
even finality by the courts when supported by substantial evidence, i.e., the amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion. But these
findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard
of the evidence on record, they may be examined by the courts. The CA can grant the petition
for certiorari if it finds that the NLRC, in its assailed decision or resolution, made a factual finding not
supported by substantial evidence. It is within the jurisdiction of the CA, whose jurisdiction over labor
cases has been expanded to review the findings of the NLRC.12
Here, the LA's factual findings was affirmed by the NLRC, however, the CA found that the latter's
resolution did not critically examine the facts and rationally assess the evidence on hand, and thus
found that the NLRC gravely abused its discretion when it sustained the LA's decision dismissing
respondents' complaint for illegal dismissal on the ground of lack of merit.
The judicial function of the CA in the exercise of its certiorari jurisdiction over the NLRC extends to
the careful review of the NLRC's evaluation of the evidence because the factual findings of the
NLRC are accorded great respect and finality only when they rest on substantial
evidence.13 Accordingly, the CA is not to be restrained from revising or correcting such factual
findings whenever warranted by the circumstances simply because the NLRC is not infallible.
Indeed, to deny to the CA this power is to diminish its corrective jurisdiction through the writ
of certiorari.14
The main issue for resolution is whether or not an employer-employee relationship existed between
petitioner and respondents.
At the outset, We reiterate the doctrine that the existence of an employer-employee relationship is
ultimately a question of fact. Generally, We do not review errors that raise factual questions.
However, when there is a conflict among the factual findings of the antecedent deciding bodies like
the LA, the NLRC and the CA, it is proper, in the exercise of Our equity jurisdiction, to review and re-
evaluate the factual issues and to look into the records of the case and re-examine the questioned
findings. In dealing with factual issues in labor cases, substantial evidence or that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion is sufficient.15
In determining the existence of an employer-employee relationship, the following elements are

considered: (1) the selection and engagement of the workers; (2) the power to control the worker's
conduct; (3) the payment of wages by whatever means; and (4) the power of dismissal.16 We find all
these elements present in this case.
It is settled that no particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be
admitted.17
In this case, petitioner contends that it was the piado who hired respondents, however, it was shown
by the latter's evidence that the employer stated in their Social Security System (SSS) online inquiry
system printouts was MGTR, which is owned by petitioner. We have gone over these printouts and
found that the date of the SSS remitted contributions coincided with the date of respondents'
employment with petitioner. Petitioner failed to rebut such evidence. Thus, the fact that petitioner
had registered the respondents with SSS is proof that they were indeed his employees. The
coverage of the Social Security Law is predicated on the existence of an employer-employee
relationship.18
Moreover, the records show that the 4% backing incentive fee which was divided among the
fishermen engaged in the fishing operations approved by petitioner was paid to respondents after
deducting the latter's respective vale or cash advance.19 Notably, even the piado's name was written
in the backing incentive fee sheet with the corresponding vale which was deducted from his
incentive fee. If indeed a joint venture was agreed upon between petitioner and respondents, why
would these fishermen obtain vale or cash advance from petitioner and not from the piado who
allegedly hired and had control over them.
It was established that petitioner exercised control over respondents. It should be remembered that
the control test merely calls for the existence of the right to control, and not necessarily the exercise
thereof. It is not essential that the employer actually supervises the performance of duties by the
employee. It is enough that the former has a right to wield the power.20
Petitioner admitted in his pleadings that he had contact with respondents at sea via the former's
radio operator and their checker. He claimed that the use of the radio was only for the purpose of
receiving requisitions for the needs of the fishermen in the high seas and to receive reports of fish
catch so that they can then send service boats to haul the same. However, such communication
would establish that he was constantly monitoring or checking the progress of respondents' fishing
operations throughout the duration thereof, which showed their control and supervision over
respondents' activities. Consequently, We give more credence to respondents' allegations in their
petition filed with the CA on how such control was exercised, to wit:
The private respondent (petitioner) controls the entire fishing operations. For each mother fishing
boat, private respondent assigned a master fisherman (pi ado) and assistant master fisherman
(assistant pi ado), who every now and then supervise the fishing operations. Private respondent also
assigned a checker and assistant checker based on the office to monitor and contact every now and
then the crew at sea through radio. The checker and assistant checker advised then the private
respondent of the condition. Based on the report of the checker, the private respondent, through
radio, will then instruct the "piado" how to conduct the fishing operations.21
Such allegations are more in consonance with the fact that, as the CA found, MGTR had already
invested millions of pesos in its deep-sea fishing industry.
The payment of respondents' wages based on the percentage share of the fish catch would not be
sufficient to negate the employer-employee relationship existing between them. As held in Ruga v.
NLRC:22
x x x [I]t must be noted that petitioners received compensation on a percentage commission based
on the gross sale of the fish-catch, i.e., 13% of the proceeds of the sale if the total proceeds
exceeded the cost of the crude oil consumed during the fishing trip, otherwise, only 10% of the
proceeds of the sale. Such compensation falls within the scope and meaning of the term "wage" as
defined under Article 97(f) of the Labor Code, thus:
(f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and included the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to
the employee. x x x23
Petitioner wielded the power of dismissal over respondents when he dismissed them after they
refused to sign the joint fishing venture agreement.
The primary standard for determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the
employer.24 Respondents' jobs as fishermen-crew members of FIB MG 28 were directly related and
necessary to petitioner's deep-sea fishing business and they had been performing their job for more
than one year. We quote with approval what the CA said, to wit:
Indeed, it is not difficult to see the direct linkage or causal connection between the nature of
petitioners' (now respondents) work visa- vis MGTR's line of business. In fact, MGTR's line of
business could not possibly exist, let alone flourish without people like the fishermen crew members
of its fishing vessels who actually undertook the fishing activities in the high seas. Petitioners'
1âw phi 1
services to MGTR are so indispensable and necessary that without them MGTR's deep-sea fishing
industry would not have come to existence, much less fruition. Thus, We do not see any reason why
the ruling of the Supreme Court in Ruga v. National Labor Relations Commission should not apply
squarely to the instant case, viz.:
x x x The hiring of petitioners to perform work which is necessary or desirable in the usual business
or trade of private respondent x x x [qualifies] them as regular employees within the meaning of
Article 28025 of the Labor Code as they were indeed engaged to perform activities usually necessary
or desirable in the usual fishing business or occupation of private respondent.26
As respondents were petitioner's regular employees, they are entitled to security of tenure under
Section 3,27 Article XIII of the 1987 Constitution. It is also provided under Article 279 of the Labor
Code, that the right to security of tenure guarantees the right of employees to continue in their
employment absent a just or authorized cause for termination. Considering that respondents were
petitioner's regular employees, the latter's act of asking them to sign the joint fishing venture
agreement which provides that the venture shall be for a period of one year from the date of the
agreement, subject to renewal upon mutual agreement of the parties, and may be pre-terminated by
any of the parties before the expiration of the one-year period, is violative of the former's security of
tenure. And respondents' termination based on their refusal to sign the same, not being shown to be
one of those just causes for termination under Article 282,28 is, therefore, illegal.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.29
Respondents who were unjustly dismissed from work are entitled to reinstatement and backwages,
among others. However, We agree with the CA that since most (if not all) of the respondents are
already employed in different deep-sea fishing companies, and considering the strained relations
between MGTR and the respondents, reinstatement is no longer viable. Thus, the CA correctly
ordered the payment to each respondent his separation pay equivalent to one month for every year
of service reckoned from the time he was hired as fishermen-crew member of FIB MG-28 by MGTR
until the finality of this judgment.
The CA correctly found that respondents are entitled to the payment of backwages from the time
they were dismissed until the finality of this decision.
The CA's award of exemplary damages to each respondent is likewise affirmed. Exemplary
damages are granted by way of example or correction for the public good if the employer acted in a
wanton, fraudulent, reckless, oppressive or malevolent manners.30
We also agree with the CA that respondents are entitled to attorney's fees in the amount of 10% of
the total monetary award. It is settled that where an employee was forced to litigate and, thus, incur
1âwphi1
expenses to protect his rights and interest, the award of attorney's fees is legally and morally
justifiable.31
The legal interest shall be imposed on the monetary awards herein granted at the rate of six percent
(6%) per annum from the finality of this judgment until fully paid.32
Petitioner's contention that there is no justification to incorporate in the CA decision the immediate
execution pending appeal of its decision is not persuasive. The petition for certiorari filed with the CA
contained a general prayer for such other relief and remedies just and equitable under the premises.
And this general prayer is broad enough to justify extension of a remedy different from or together
with the specific remedy sought.33 Indeed, a court may grant relief to a party, even if the party
awarded did not pray for it in his pleadings.34
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated October 22, 2010
and the Resolution dated May 12, 2011 of the Court of Appeals in CA-G.R. SP No. 55486-MIN are
hereby AFFIRMED. The monetary awards which are herein granted shall earn legal interest at the
rate of six percent (6%) per annum from the date of the finality of this Decision until fully paid.
SO ORDERED.
II. GENERAL LABOR POLICY
A. CONSTITUTION
a. Art. II, Sections 2, 9, 10, 11, 13, 14, 18, 20

b. Art III, Sections 1, 4, 8, 10
c. Art XII, Sec. 1
d. Art XIII, Sections 1, 2, 3, 16
e. Art. XIV, Sections 1, 2
B. LABOR CODE
a. Art. 3, 4, 166, 211, 221, 255, 263(a), 275(a)
C. CIVIL CODE
a. Art. 1700, 1701
III. LABOR STANDARDS
A. ART. 82-90 LABOR CODE

B. HOUSEHELPERS
a. G.R. No. 94951 April 22, 1991

APEX MINING COMPANY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA
CANDIDO, respondents.
Bernabe B. Alabastro for petitioner.
Angel Fernandez for private respondent.
GANCAYCO, J.:
Is the househelper in the staff houses of an industrial company a domestic helper or a regular
employee of the said firm? This is the novel issue raised in this petition.
Private respondent Sinclita Candida was employed by petitioner Apex Mining Company, Inc. on May
18, 1973 to perform laundry services at its staff house located at Masara, Maco, Davao del Norte. In
the beginning, she was paid on a piece rate basis. However, on January 17, 1982, she was paid on
a monthly basis at P250.00 a month which was ultimately increased to P575.00 a month.
On December 18, 1987, while she was attending to her assigned task and she was hanging her
laundry, she accidentally slipped and hit her back on a stone. She reported the accident to her
immediate supervisor Mila de la Rosa and to the personnel officer, Florendo D. Asirit. As a result of
the accident she was not able to continue with her work. She was permitted to go on leave for
medication. De la Rosa offered her the amount of P 2,000.00 which was eventually increased to
P5,000.00 to persuade her to quit her job, but she refused the offer and preferred to return to work.
Petitioner did not allow her to return to work and dismissed her on February 4, 1988.
On March 11, 1988, private respondent filed a request for assistance with the Department of Labor
and Employment. After the parties submitted their position papers as required by the labor arbiter
assigned to the case on August 24, 1988 the latter rendered a decision, the dispositive part of which
reads as follows:
WHEREFORE, Conformably With The Foregoing, judgment is hereby rendered ordering the
respondent, Apex Mining Company, Inc., Masara, Davao del Norte, to pay the complainant,
to wit:
1 Salary
Differential –– P16,289.20
2. Emergency Living
Allowance –– 12,430.00
3. 13th Month Pay
Differential –– 1,322.32
4. Separation Pay
(One-month for
every year of
service [1973-19881) –– 25,119.30
or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND 42/100
(P55,161.42).
SO ORDERED.1
Not satisfied therewith, petitioner appealed to the public respondent National Labor Relations
Commission (NLRC), wherein in due course a decision was rendered by the Fifth Division thereof on
July 20, 1989 dismissing the appeal for lack of merit and affirming the appealed decision. A motion
for reconsideration thereof was denied in a resolution of the NLRC dated June 29, 1990.
Hence, the herein petition for review by certiorari, which appopriately should be a special civil action
for certiorari, and which in the interest of justice, is hereby treated as such.2 The main thrust of the
petition is that private respondent should be treated as a mere househelper or domestic servant and
not as a regular employee of petitioner.
The petition is devoid of merit.
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms "househelper" or
"domestic servant" are defined as follows:
The term "househelper" as used herein is synonymous to the term "domestic servant" and
shall refer to any person, whether male or female, who renders services in and about the
employer's home and which services are usually necessary or desirable for the maintenance
and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of
the employer's family.3
The foregoing definition clearly contemplates such househelper or domestic servant who is
employed in the employer's home to minister exclusively to the personal comfort and enjoyment of
the employer's family. Such definition covers family drivers, domestic servants, laundry women,
yayas, gardeners, houseboys and other similar househelps.
The definition cannot be interpreted to include househelp or laundrywomen working in staffhouses of

a company, like petitioner who attends to the needs of the company's guest and other persons
availing of said facilities. By the same token, it cannot be considered to extend to then driver,
houseboy, or gardener exclusively working in the company, the staffhouses and its premises. They
may not be considered as within the meaning of a "househelper" or "domestic servant" as above-
defined by law.
The criteria is the personal comfort and enjoyment of the family of the employer in the home of said
employer. While it may be true that the nature of the work of a househelper, domestic servant or
laundrywoman in a home or in a company staffhouse may be similar in nature, the difference in their
circumstances is that in the former instance they are actually serving the family while in the latter
case, whether it is a corporation or a single proprietorship engaged in business or industry or any
other agricultural or similar pursuit, service is being rendered in the staffhouses or within the
premises of the business of the employer. In such instance, they are employees of the company or
employer in the business concerned entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant is assigned to certain
aspects of the business of the employer that such househelper or domestic servant may be
considered as such as employee. The Court finds no merit in making any such distinction. The mere
fact that the househelper or domestic servant is working within the premises of the business of the
employer and in relation to or in connection with its business, as in its staffhouses for its guest or
even for its officers and employees, warrants the conclusion that such househelper or domestic
servant is and should be considered as a regular employee of the employer and not as a mere
family househelper or domestic servant as contemplated in Rule XIII, Section l(b), Book 3 of the
Labor Code, as amended.
Petitioner denies having illegally dismissed private respondent and maintains that respondent
abandoned her work. This argument notwithstanding, there is enough evidence to show that
1âwphi1
because of an accident which took place while private respondent was performing her laundry
services, she was not able to work and was ultimately separated from the service. She is, therefore,
entitled to appropriate relief as a regular employee of petitioner. Inasmuch as private respondent
appears not to be interested in returning to her work for valid reasons, the payment of separation
pay to her is in order.
WHEREFORE, the petition is DISMISSED and the appealed decision and resolution of public
respondent NLRC are hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
b. G.R. Nos. 169295-96 November 20, 2006

REMINGTON INDUSTRIAL SALES CORPORATION, Petitioner,
vs.
ERLINDA CASTANEDA, Respondent.
DECISION
PUNO, J.:
Before this Court is the Petition for Review on Certiorari1 filed by Remington Industrial Sales
Corporation to reverse and set aside the Decision2 of the Fourth Division of the Court of Appeals in
CA-G.R. SP Nos. 64577 and 68477, dated January 31, 2005, which dismissed petitioner’s
consolidated petitions for certiorari, and its subsequent Resolution,3 dated August 11, 2005, which
denied petitioner’s motion for reconsideration.
The antecedent facts of the case, as narrated by the Court of Appeals, are as follows:
The present controversy began when private respondent, Erlinda Castaneda ("Erlinda") instituted on
March 2, 1998 a complaint for illegal dismissal, underpayment of wages, non-payment of overtime
services, non-payment of service incentive leave pay and non-payment of 13th month pay against
Remington before the NLRC, National Capital Region, Quezon City. The complaint impleaded Mr.
Antonio Tan in his capacity as the Managing Director of Remington.
Erlinda alleged that she started working in August 1983 as company cook with a salary of Php
4,000.00 for Remington, a corporation engaged in the trading business; that she worked for six (6)
days a week, starting as early as 6:00 a.m. because she had to do the marketing and would end at
around 5:30 p.m., or even later, after most of the employees, if not all, had left the company
premises; that she continuously worked with Remington until she was unceremoniously prevented
from reporting for work when Remington transferred to a new site in Edsa, Caloocan City. She
averred that she reported for work at the new site in Caloocan City on January 15, 1998, only to be
informed that Remington no longer needed her services. Erlinda believed that her dismissal was
illegal because she was not given the notices required by law; hence, she filed her complaint for
reinstatement without loss of seniority rights, salary differentials, service incentive leave pay, 13th
month pay and 10% attorney’s fees.
Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic helper,
not a regular employee; Erlinda worked as a cook and this job had nothing to do with Remington’s
business of trading in construction or hardware materials, steel plates and wire rope products. It also
contended that contrary to Erlinda’s allegations that the (sic) she worked for eight (8) hours a day,
Erlinda’s duty was merely to cook lunch and "merienda", after which her time was hers to spend as
she pleased. Remington also maintained that it did not exercise any degree of control and/or
supervision over Erlinda’s work as her only concern was to ensure that the employees’ lunch and
"merienda" were available and served at the designated time. Remington likewise belied Erlinda’s
assertion that her work extended beyond 5:00 p.m. as she could only leave after all the employees
had gone. The truth, according to Remington, is that Erlinda did not have to punch any time card in
the way that other employees of Remington did; she was free to roam around the company
premises, read magazines, and to even nap when not doing her assigned chores. Remington
averred that the illegal dismissal complaint lacked factual and legal bases. Allegedly, it was Erlinda
who refused to report for work when Remington moved to a new location in Caloocan City.
In a Decision4 dated January 19, 1999, the labor arbiter dismissed the complaint and ruled that the
respondent was a domestic helper under the personal service of Antonio Tan, finding that her work
as a cook was not usually necessary and desirable in the ordinary course of trade and business of
the petitioner corporation, which operated as a trading company, and that the latter did not exercise
control over her functions. On the issue of illegal dismissal, the labor arbiter found that it was the
respondent who refused to go with the family of Antonio Tan when the corporation transferred office
and that, therefore, respondent could not have been illegally dismissed.
Upon appeal, the National Labor Relations Commission (NLRC) rendered a Decision,5 dated
November 23, 2000, reversing the labor arbiter, ruling, viz:
We are not inclined to uphold the declaration below that complainant is a domestic helper of the
family of Antonio Tan. There was no allegation by respondent that complainant had ever worked in
the residence of Mr. Tan. What is clear from the facts narrated by the parties is that complainant
continuously did her job as a cook in the office of respondent serving the needed food for lunch and
merienda of the employees. Thus, her work as cook inured not for the benefit of the family members
of Mr. Tan but solely for the individual employees of respondent.
Complainant as an employee of respondent company is even bolstered by no less than the

certification dated May 23, 1997 issued by the corporate secretary of the company certifying that
complainant is their bonafide employee. This is a solid evidence which the Labor Arbiter simply
brushed aside. But, such error would not be committed here as it would be at the height of injustice if
we are to declare that complainant is a domestic helper.
Complainant’s work schedule and being paid a monthly salary of ₱4,000.00 are clear indication that
she is a company employee who had been employed to cater to the food needed by the employees
which were being provided by respondent to form part of the benefit granted them.
With regard to the issue of illegal dismissal, we believe that there is more reason to believe that
complainant was not dismissed because allegedly she was the one who refused to work in the new
office of respondent. However, complainant’s refusal to join the workforce due to poor eyesight could
not be considered abandonment of work or voluntary resignation from employment.
Under the Labor Code as amended, an employee who reaches the age of sixty years old (60 years)
has the option to retire or to separate from the service with payment of separation pay/retirement
benefit.
In this case, we notice that complainant was already 60 years old at the time she filed the complaint
praying for separation pay or retirement benefit and some money claims.
Based on Article 287 of the Labor Code as amended, complainant is entitled to be paid her
separation pay/retirement benefit equivalent to one-half (1/2) month for every year of service. The
amount of separation pay would be based on the prescribed minimum wage at the time of dismissal
since she was then underpaid. In as much as complainant is underpaid of her wages, it behooves
that she should be paid her salary differential for the last three years prior to separation/retirement.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is hereby, SET ASIDE, and a new one is
hereby entered ordering respondents to pay complainant the following:
1. Salary differential - ₱12,021.12 2. Service Incentive Leave Pay - 2,650.00 3. 13th Month Pay
differential - 1,001.76 4. Separation Pay/retirement benefit - 36,075.00
Total - ₱51,747.88
SO ORDERED.
Petitioner moved to reconsider this decision but the NLRC denied the motion. This denial of its
motion prompted petitioner to file a Petition for Certiorari6 with the Court of Appeals, docketed as CA-
G.R. SP No. 64577, on May 4, 2001, imputing grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of the NLRC in (1) reversing in toto the decision of the labor arbiter, and (2)
awarding in favor of respondent salary differential, service incentive leave pay, 13th month pay
differential and separation benefits in the total sum of ₱51,747.88.
While the petition was pending with the Court of Appeals, the NLRC rendered another Decision7 in
the same case on August 29, 2001. How and why another decision was rendered is explained in that
decision as follows:
On May 17, 2001, complainant filed a Manifestation praying for a resolution of her Motion for
Reconsideration and, in support thereof, alleges that, sometime December 18, 2000, she mailed her
Manifestation and Motion for Reconsideration registered as Registered Certificate No. 188844; and
that the said mail was received by the NLRC, through a certain Roland Hernandez, on December
26, 2000. Certifications to this effect was issued by the Postmaster of the Sta. Mesa Post Office
bearing the date May 11, 2001 (Annexes A and B, Complainant’s Manifestation).
Evidence in support of complainant’s having actually filed a Motion for Reconsideration within the
reglementary period having been sufficiently established, a determination of its merits is thus, in
order.
On the merits, the NLRC found respondent’s motion for reconsideration meritorious leading to the
issuance of its second decision with the following dispositive portion:
WHEREFORE, premises considered, the decision dated November 23, 2000, is MODIFIED by
increasing the award of retirement pay due the complainant in the total amount of SIXTY TWO
THOUSAND FOUR HUNDRED THIRTY-SEVEN and 50/100 (₱62,437.50). All other monetary relief
so adjudged therein are maintained and likewise made payable to the complainant.
SO ORDERED.
Petitioner challenged the second decision of the NLRC, including the resolution denying its motion
for reconsideration, through a second Petition for Certiorari8 filed with the Court of Appeals, docketed
as CA-G.R. SP No. 68477 and dated January 8, 2002, this time imputing grave abuse of discretion
amounting to lack of or excess of jurisdiction on the part of the NLRC in (1) issuing the second
decision despite losing its jurisdiction due to the pendency of the first petition for certiorari with the
Court of Appeals, and (2) assuming it still had jurisdiction to issue the second decision
notwithstanding the pendency of the first petition for certiorari with the Court of Appeals, that its
second decision has no basis in law since respondent’s motion for reconsideration, which was made
the basis of the second decision, was not filed under oath in violation of Section 14, Rule VII9 of the
New Rules of Procedure of the NLRC and that it contained no certification as to why respondent’s
motion for reconsideration was not decided on time as also required by Section 10, Rule VI10 and
Section 15, Rule VII11 of the aforementioned rules.
Upon petitioner’s motion, the Court of Appeals ordered the consolidation of the two (2) petitions, on
January 24, 2002, pursuant to Section 7, par. b(3), Rule 3 of the Revised Rules of the Court of
Appeals. It summarized the principal issues raised in the consolidated petitions as follows:
1. Whether respondent is petitioner’s regular employee or a domestic helper;
2. Whether respondent was illegally dismissed; and
3. Whether the second NLRC decision promulgated during the pendency of the first petition
for certiorari has basis in law.
On January 31, 2005, the Court of Appeals dismissed the consolidated petitions for lack of merit,
finding no grave abuse of discretion on the part of the NLRC in issuing the assailed decisions.
On the first issue, it upheld the ruling of the NLRC that respondent was a regular employee of the
petitioner since the former worked at the company premises and catered not only to the personal
comfort and enjoyment of Mr. Tan and his family, but also to that of the employees of the latter. It
agreed that petitioner enjoys the prerogative to control respondent’s conduct in undertaking her
assigned work, particularly the nature and situs of her work in relation to the petitioner’s workforce,
thereby establishing the existence of an employer-employee relationship between them.
On the issue of illegal dismissal, it ruled that respondent has attained the status of a regular
employee in her service with the company. It noted that the NLRC found that no less than the
company’s corporate secretary certified that respondent is a bonafide company employee and that
she had a fixed schedule and routine of work and was paid a monthly salary of ₱4,000.00; that she
served with petitioner for 15 years starting in 1983, buying and cooking food served to company
employees at lunch and merienda; and that this work was usually necessary and desirable in the
regular business of the petitioner. It held that as a regular employee, she enjoys the constitutionally
guaranteed right to security of tenure and that petitioner failed to discharge the burden of proving
that her dismissal on January 15, 1998 was for a just or authorized cause and that the manner of
dismissal complied with the requirements under the law.
Finally, on petitioner’s other arguments relating to the alleged irregularity of the second NLRC
decision, i.e., the fact that respondent’s motion for reconsideration was not under oath and had no
certification explaining why it was not resolved within the prescribed period, it held that such
violations relate to procedural and non-jurisdictional matters that cannot assume primacy over the
substantive merits of the case and that they do not constitute grave abuse of discretion amounting to
lack or excess of jurisdiction that would nullify the second NLRC decision.
The Court of Appeals denied petitioner’s contention that the NLRC lost its jurisdiction to issue the
second decision when it received the order indicating the Court of Appeals’ initial action on the first
petition for certiorari that it filed. It ruled that the NLRC’s action of issuing a decision in installments
was not prohibited by its own rules and that the need for a second decision was justified by the fact
that respondent’s own motion for reconsideration remained unresolved in the first decision.
Furthermore, it held that under Section 7, Rule 65 of the Revised Rules of Court,12the filing of a
petition for certiorari does not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued against the public respondent
from further proceeding with the case.
From this decision, petitioner filed a motion for reconsideration on February 22, 2005, which the
Court of Appeals denied through a resolution dated August 11, 2005.
Hence, the present petition for review.
The petitioner raises the following errors of law: (1) the Court of Appeals erred in affirming the
NLRC’s ruling that the respondent was petitioner’s regular employee and not a domestic helper; (2)
the Court of Appeals erred in holding that petitioner was guilty of illegal dismissal; and (3) the Court
of Appeals erred when it held that the issuance of the second NLRC decision is proper.
The petition must fail. We affirm that respondent was a regular employee of the petitioner and that
the latter was guilty of illegal dismissal.
Before going into the substantive merits of the present controversy, we shall first resolve the
propriety of the issuance of the second NLRC decision.
The petitioner contends that the respondent’s motion for reconsideration, upon which the second
NLRC decision was based, was not under oath and did not contain a certification as to why it was
not decided on time as required under the New Rules of Procedure of the NLRC.13 Furthermore, the
former also raises for the first time the contention that respondent’s motion was filed beyond the ten
(10)-calendar day period required under the same Rules,14 since the latter received a copy of the first
NLRC decision on December 6, 2000, and respondent filed her motion only on December 18, 2000.
Thus, according to petitioner, the respondent’s motion for reconsideration was a mere scrap of paper
and the second NLRC decision has no basis in law.
We do not agree.
It is well-settled that the application of technical rules of procedure may be relaxed to serve the
demands of substantial justice, particularly in labor cases.15 Labor cases must be decided according
to justice and equity and the substantial merits of the controversy.16 Rules of procedure are but mere
tools designed to facilitate the attainment of justice.17 Their strict and rigid application, which would
result in technicalities that tend to frustrate rather than promote substantial justice, must always be
avoided.18
This Court has consistently held that the requirement of verification is formal, and not jurisdictional.
Such requirement is merely a condition affecting the form of the pleading, non-compliance with
which does not necessarily render it fatally defective. Verification is simply intended to secure an
assurance that the allegations in the pleading are true and correct and not the product of the
imagination or a matter of speculation, and that the pleading is filed in good faith.19 The court may
order the correction of the pleading if verification is lacking or act on the pleading although it is not
verified, if the attending circumstances are such that strict compliance with the rules may be
dispensed with in order that the ends of justice may thereby be served.20
Anent the argument that respondent’s motion for reconsideration, on which the NLRC’s second
decision was based, was filed out of time, such issue was only brought up for the first time in the
instant petition where no new issues may be raised by a party in his pleadings without offending the
right to due process of the opposing party.
Nonetheless, the petitioner asserts that the respondent received a copy of the NLRC’s first decision
on December 6, 2000, and the motion for reconsideration was filed only on December 18, 2000, or
two (2) days beyond the ten (10)-calendar day period requirement under the New Rules of
Procedure of the NLRC and should not be allowed.21
This contention must fail.
Under Article 22322 of the Labor Code, the decision of the NLRC shall be final and executory after
ten (10) calendar days from the receipt thereof by the parties.
While it is an established rule that the perfection of an appeal in the manner and within the period
prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal has the
effect of rendering the judgment final and executory, it is equally settled that the NLRC may
disregard the procedural lapse where there is an acceptable reason to excuse tardiness in the taking
of the appeal.23 Among the acceptable reasons recognized by this Court are (a) counsel's reliance
on the footnote of the notice of the decision of the Labor Arbiter that "the aggrieved party may
appeal. . . within ten (10) working days";24 (b) fundamental consideration of substantial justice;25 (c)
prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal is from a
decision granting separation pay which was already granted in an earlier final decision;26 and (d)
special circumstances of the case combined with its legal merits27 or the amount and the issue
involved.28
We hold that the particular circumstances in the case at bar, in accordance with substantial justice,
call for a liberalization of the application of this rule. Notably, respondent’s last day for filing her
motion for reconsideration fell on December 16, 2000, which was a Saturday. In a number of
cases,29 we have ruled that if the tenth day for perfecting an appeal fell on a Saturday, the appeal
shall be made on the next working day. The reason for this ruling is that on Saturdays, the office of
the NLRC and certain post offices are closed. With all the more reason should this doctrine apply to
respondent’s filing of the motion for reconsideration of her cause, which the NLRC itself found to be
impressed with merit. Indeed, technicality should not be permitted to stand in the way of equitably
and completely resolving the rights and obligations of the parties for the ends of justice are reached
not only through the speedy disposal of cases but, more importantly, through a meticulous and
comprehensive evaluation of the merits of a case.
Finally, as to petitioner’s argument that the NLRC had already lost its jurisdiction to decide the case
when it filed its petition for certiorari with the Court of Appeals upon the denial of its motion for
reconsideration, suffice it to state that under Section 7 of Rule 6530 of the Revised Rules of Court,
the petition shall not interrupt the course of the principal case unless a temporary restraining order or
a writ of preliminary injunction has been issued against the public respondent from further
proceeding with the case. Thus, the mere pendency of a special civil action for certiorari, in
connection with a pending case in a lower court, does not interrupt the course of the latter if there is
no writ of injunction.31 Clearly, there was no grave abuse of discretion on the part of the NLRC in
issuing its second decision which modified the first, especially since it failed to consider the
respondent’s motion for reconsideration when it issued its first decision.
Having resolved the procedural matters, we shall now delve into the merits of the petition to
determine whether respondent is a domestic helper or a regular employee of the petitioner, and
whether the latter is guilty of illegal dismissal.
Petitioner relies heavily on the affidavit of a certain Mr. Antonio Tan and contends that respondent is
the latter’s domestic helper and not a regular employee of the company since Mr. Tan has a
separate and distinct personality from the petitioner. It maintains that it did not exercise control and
supervision over her functions; and that it operates as a trading company and does not engage in
the restaurant business, and therefore respondent’s work as a cook, which was not usually
necessary or desirable to its usual line of business or trade, could not make her its regular
employee.
This contention fails to impress.
In Apex Mining Company, Inc. v. NLRC,32 this Court held that a househelper in the staff houses of an
industrial company was a regular employee of the said firm. We ratiocinated that:
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper" or
"domestic servant" are defined as follows:
"The term ‘househelper’ as used herein is synonymous to the term ‘domestic servant’ and shall refer
to any person, whether male or female, who renders services in and about the employer’s home and
which services are usually necessary or desirable for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and enjoyment of the employer’s family."
The foregoing definition clearly contemplates such househelper or domestic servant who is
employed in the employer’s home to minister exclusively to the personal comfort and enjoyment of
the employer’s family. Such definition covers family drivers, domestic servants, laundry women,
yayas, gardeners, houseboys and similar househelps.
xxx xxx xxx
The criteria is the personal comfort and enjoyment of the family of the employer in the home of said
employer. While it may be true that the nature of the work of a househelper, domestic servant or
laundrywoman in a home or in a company staffhouse may be similar in nature, the difference in their
circumstances is that in the former instance they are actually serving the family while in the latter
case, whether it is a corporation or a single proprietorship engaged in business or industry or any
other agricultural or similar pursuit, service is being rendered in the staffhouses or within the
premises of the business of the employer. In such instance, they are employees of the company or
employer in the business concerned entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant is assigned to certain
aspects of the business of the employer that such househelper or domestic servant may be
considered as such an employee. The Court finds no merit in making any such distinction. The mere
fact that the househelper or domestic servant is working within the premises of the business of the
employer and in relation to or in connection with its business, as in its staffhouses for its guest or
even for its officers and employees, warrants the conclusion that such househelper or domestic
servant is and should be considered as a regular employee of the employer and not as a mere
family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of the
Labor Code, as amended.
In the case at bar, the petitioner itself admits in its position paper33 that respondent worked at the
company premises and her duty was to cook and prepare its employees’ lunch and merienda.
Clearly, the situs, as well as the nature of respondent’s work as a cook, who caters not only to the
needs of Mr. Tan and his family but also to that of the petitioner’s employees, makes her fall
squarely within the definition of a regular employee under the doctrine enunciated in the Apex Mining
case. That she works within company premises, and that she does not cater exclusively to the
personal comfort of Mr. Tan and his family, is reflective of the existence of the petitioner’s right of
control over her functions, which is the primary indicator of the existence of an employer-employee
relationship.
Moreover, it is wrong to say that if the work is not directly related to the employer's business, then
the person performing such work could not be considered an employee of the latter. The
determination of the existence of an employer-employee relationship is defined by law according to
the facts of each case, regardless of the nature of the activities involved.34 Indeed, it would be the
height of injustice if we were to hold that despite the fact that respondent was made to cook lunch
and merienda for the petitioner’s employees, which work ultimately redounded to the benefit of the
petitioner corporation, she was merely a domestic worker of the family of Mr. Tan.
We note the findings of the NLRC, affirmed by the Court of Appeals, that no less than the company’s
corporate secretary has certified that respondent is a bonafide company employee;35 she had a fixed
schedule and routine of work and was paid a monthly salary of ₱4,000.00;36 she served with the
company for 15 years starting in 1983, buying and cooking food served to company employees at
lunch and merienda, and that this service was a regular feature of employment with the company.37
Indubitably, the Court of Appeals, as well as the NLRC, correctly held that based on the given
circumstances, the respondent is a regular employee of the petitioner. 1âwphi 1
Having determined that the respondent is petitioner’s regular employee, we now proceed to
ascertain the legality of her dismissal from employment.
Petitioner contends that there was abandonment on respondent’s part when she refused to report for
work when the corporation transferred to a new location in Caloocan City, claiming that her poor
eyesight would make long distance travel a problem. Thus, it cannot be held guilty of illegal
dismissal.
On the other hand, the respondent claims that when the petitioner relocated, she was no longer
called for duty and that when she tried to report for work, she was told that her services were no
longer needed. She contends that the petitioner dismissed her without a just or authorized cause
and that she was not given prior notice, hence rendering the dismissal illegal.
We rule for the respondent.
As a regular employee, respondent enjoys the right to security of tenure under Article 27938 of the
Labor Code and may only be dismissed for a just39 or authorized40 cause, otherwise the dismissal
becomes illegal and the employee becomes entitled to reinstatement and full backwages computed
from the time compensation was withheld up to the time of actual reinstatement.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.41 It
is a form of neglect of duty; hence, a just cause for termination of employment by the employer
under Article 282 of the Labor Code, which enumerates the just causes for termination by the
employer.42 For a valid finding of abandonment, these two factors should be present: (1) the failure
to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever
employer-employee relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the employee has no more intention to
work.43The intent to discontinue the employment must be shown by clear proof that it was deliberate
and unjustified.44This, the petitioner failed to do in the case at bar.
Alongside the petitioner’s contention that it was the respondent who quit her employment and
refused to return to work, greater stock may be taken of the respondent’s immediate filing of her
complaint with the NLRC. Indeed, an employee who loses no time in protesting her layoff cannot by
any reasoning be said to have abandoned her work, for it is well-settled that the filing of an
employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of her
desire to return to work, thus, negating the employer’s charge of abandonment.45
In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a
just and valid cause; failure to do so would necessarily mean that the dismissal was illegal.46 The
employer’s case succeeds or fails on the strength of its evidence and not on the weakness of the
employee’s defense.47 If doubt exists between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter.48
IN VIEW WHEREOF, the petition is DENIED for lack of merit. The assailed Decision dated January
31, 2005, and the Resolution dated August 11, 2005, of the Court of Appeals in CA-G.R. SP Nos.
64577 and 68477 are AFFIRMED. Costs against petitioner.
SO ORDERED.
C. MANAGEMENT PREROGATIVES
a. G.R. No. L-53515 February 8, 1989

SAN MIGUEL BREWERY SALES FORCE UNION
(PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL
CORPORATION, respondents.
Lorenzo F. Miravite for petitioner.
Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GRIÑO-AQUINO, J.:
This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor
Case No. AJML-069-79, approving the private respondent's marketing scheme, known as the
"Complementary Distribution System" (CDS) and dismissing the petitioner labor union's complaint
for unfair labor practice.
On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31,
1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the
private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled
to a basic monthly compensation plus commission based on their respective sales.
(p. 6, Annex A; p. 113, Rollo.)
In September 1979, the company introduced a marketing scheme known as the "Complementary
Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers
through San Miguel's sales offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor,
with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme
whereby the Route Salesmen were assigned specific territories within which to sell their stocks of
beer, and wholesalers had to buy beer products from them, not from the company. It was alleged
that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement
because the introduction of the CDS would reduce the take-home pay of the salesmen and their
truck helpers for the company would be unfairly competing with them.
The complaint filed by the petitioner against the respondent company raised two issues: (1) whether
the CDS violates the collective bargaining agreement, and (2) whether it is an indirect way of busting
the union.
In its order of February 28, 1980, the Minister of Labor found:
... We see nothing in the record as to suggest that the unilateral action of the
employer in inaugurating the new sales scheme was designed to discourage union
organization or diminish its influence, but rather it is undisputable that the
establishment of such scheme was part of its overall plan to improve efficiency and
economy and at the same time gain profit to the highest. While it may be admitted
that the introduction of new sales plan somewhat disturbed the present set-up, the
change however was too insignificant as to convince this Office to interpret that the
innovation interferred with the worker's right to self-organization.
Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is
already a prejudgment of the plan's viability and effectiveness. It is like saying that
the plan will not work out to the workers' [benefit] and therefore management must
adopt a new system of marketing. But what the petitioner failed to consider is the fact
that corollary to the adoption of the assailed marketing technique is the effort of the
company to compensate whatever loss the workers may suffer because of the new
plan over and above than what has been provided in the collective bargaining
agreement. To us, this is one indication that the action of the management is devoid
of any anti-union hues. (pp. 24-25, Rollo.)
The dispositive part of the Minister's Order reads:
WHEREFORE, premises considered, the notice of strike filed by the petitioner, San
Miguel Brewery Sales Force Union-PTGWO is hereby dismissed. Management
however is hereby ordered to pay an additional three (3) months back adjustment
commissions over and above the adjusted commission under the complementary
distribution system. (p. 26, Rollo.)
The petition has no merit.
Public respondent was correct in holding that the CDS is a valid exercise of management
prerogatives:
Except as limited by special laws, an employer is free to regulate, according to his
own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations, transfer
of employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of work. ... (NLU vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings
Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations Law,
1985 Ed., p. 44.) (Emphasis ours.)
Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise
means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:
... Even as the law is solicitous of the welfare of the employees, it must also protect
the right of an employer to exercise what are clearly management prerogatives. The
free will of management to conduct its own business affairs to achieve its purpose
cannot be denied.
So long as a company's management prerogatives are exercised in good faith for the advancement
of the employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold them (LVN Pictures
Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer
to compensate the members of its sales force who will be adversely affected by the implementation
of the CDS by paying them a so-called "back adjustment commission" to make up for the
commissions they might lose as a result of the CDS proves the company's good faith and lack of
intention to bust their union.
WHEREFORE, the petition for certiorari is dismissed for lack of merit.
SO ORDERED.
b. Sime Darby Pilipinas, Inc. vs. NLRC 2nd Division and Sime Darby
Salaried Employees Association (ALU-TUCP) G.R. No. 119205.
April 15, 1998
FACTS: All company factory workers of Sime Darby Pilipinas, Inc., manufacturer of automotive tires,
tubes and other rubber products, in Marikina including members of private respondent union, Sime
Darby Salaried Employees Association (ALU-TUCP), worked from 7:45 a.m. to 3:45 p.m. with a 30-
minute paid on-call lunch break. On August 14, 1992, the petitioner issued a memorandum to all
factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant a
change in work schedule. The new schedule extends to 9 hours with two 10-minute paid coffee
break and 1-hour unpaid and undisturbed lunch break. The Warehouse and Quality Assurance
Department working on shifts, are excluded from this change in work schedule.
Private respondent, which is an association of monthly salaried employees of petitioner at its

Marikina factory, filed on behalf of its members a complaint with the Labor Arbiter for unfair labor
practice, discrimination and evasion of liability.
The Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and
the elimination of the 30-minute paid lunch break of the factory workers constituted a valid exercise
of management prerogative and that the new work schedule, break time and one-hour lunch break
did not have the effect of diminishing the benefits granted to factory workers as the working time did
not exceed eight (8) hours.
NLRC sustained the decision of Labor Arbiter but upon motion for reconsideration by private
respondent, the NLRC, having two new commissioners, reversed its earlier decision.
ISSUE: Whether or not the act of management in revising the work schedule of its employees and
eliminating their paid lunch break constitutes unfair labor practice?
RULING: The Court held that the employer has the right to exercise its management prerogatives.
Management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of work,
processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of workers. Management retains
the prerogative, whenever exigencies of the service so require, to change the working hours of its
employees. So long as such prerogative is exercised in good faith for the advancement of the
employers interest and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements.
In this case, the new work schedule set by the employer fully complies with the daily work period of
eight (8) hours without violating the Labor Code. Although the old work schedule included a 30-
minute paid lunch break, the employees were on call and could be called upon to do jobs during
lunch break. With the new schedule, they can take one-hour lunch break without any interruption
from their employer.
Moreover, this act was not discriminatory as the new schedule applies to all employees in the factory
similarly situated whether they are union members or not.
c. G.R. No. 142824 December 19, 2001

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO
GONZALES and MA. THERESA MONTEJO,petitioners,
vs.
INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO
A. QUISUMBING, SECRETARY OF LABOR AND
EMPLOYMENT, respondents.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999,
and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-
and-file employees of Interphil Laboratories, Inc., a company engaged in the business of
manufacturing and packaging pharmaceutical products. They had a Collective Bargaining
Agreement (CBA) effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,1 Vice-
President-Human Resources Department of respondent company, was approached by Nestor
Ocampo, the union president, and Hernando Clemente, a union director. The two union officers
inquired about the stand of the company regarding the duration of the CBA which was set to expire
in a few months. Salazar told the union officers that the matter could be best discussed during the
formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about
the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a
meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held
on 15 April 1993 where the union officers asked whether Salazar would be amenable to make the
new CBA effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it
would still be premature to discuss the matter and that the company could not make a decision at
the moment. The very next day, or on 16 April 1993, all the rank-and-file employees of the company
refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00
p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left
their workplace without sealing the containers and securing the raw materials they were working on.
When Salazar inquired about the reason for their refusal to follow their normal work schedule, the
employees told him to "ask the union officers." To minimize the damage the overtime boycott was
causing the company, Salazar immediately asked for a meeting with the union officers. In the
meeting, Enrico Gonzales, a union director, told Salazar that the employees would only return to
their normal work schedule if the company would agree to their demands as to the effectivity and
duration of the new CBA. Salazar again told the union officers that the matter could be better
discussed during the formal renegotiations of the CBA. Since the union was apparently unsatisfied
with the answer of the company, the overtime boycott continued. In addition, the employees started
to engage in a work slowdown campaign during the time they were working, thus substantially
delaying the production of the company.2
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the
latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations Commission
(NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work slowdown" which,
according to respondent company, amounted to illegal strike. The case, docketed NLRC-NCR Case
No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board
(NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA
negotiations.3 The parties, however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with the Office of the Secretary of Labor and Employment a petition for
assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor
practice allegedly committed by respondent company. On 12 February 1994, the union staged a
strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order4 over the
labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent
company to "immediately accept all striking workers, including the fifty-three (53) terminated union
officers, shop stewards and union members back to work under the same terms and conditions
prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its employees in
1993."5 On the other hand, petitioner union was directed to "strictly and immediately comply with the
return-to-work orders issued by (the) Office x x x6 The same order pronounced that "(a)ll pending
cases which are direct offshoots of the instant labor dispute are hereby subsumed herewith."7
In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union filed an
"Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings"
seeking the consolidation of the case with the labor dispute pending before the Secretary of Labor.
Despite objection by respondent company, Labor Arbiter Caday held in abeyance the proceedings
before him. However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that
the issues raised would require a formal hearing and the presentation of evidentiary matters,
directed Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the cases
before them and to thereafter submit their report and recommendation to his office.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of
Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in
his Order, dated 13 August 1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by
substantial evidence, this Office hereby RESOLVES to APPROVE and ADOPT the same as
the decision in this case, and judgment is hereby rendered:
(1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo President

Carmelo Santos Vice-President
Marites Montejo Treasurer/Board Member
Rico Gonzales Auditor
Rod Abuan Director
Segundino Flores Director
Hernando Director
Clemente
who spearheaded and led the overtime boycott and work slowdown, to have lost their
employment status; and
(3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA
which prohibits the union or any employee during the existence of the CBA from staging a
strike or engaging in slowdown or interruption of work and ordering them to cease and desist
from further committing the aforesaid illegal acts.
Petitioner union moved for the reconsideration of the order but its motion was denied. The union
went to the Court of Appeals via a petition for certiorari. In the now questioned decision promulgated
on 29 December 1999, the appellate court dismissed the petition. The union's motion for
reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE

HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT COMPLETELY DISREGARDED "PAROL EVIDENCE RULE" IN
THE EVALUATION AND APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION,
WHEN IT DID NOT DECLARE PRIVATE RESPONDENT'S ACT OF EXTENDING
SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL INVOLVED OFFICERS OF
PETITIONER UNION, DURING THE PENDENCY OF THE CASE, AS TANTAMOUNT TO
CONDONATION, IF INDEED, THERE WAS ANY MISDEED COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION
WHEN IT HELD THAT THE SECRETARY OF LABOR AND EMPLOYMENT HAS
JURISDICTION OVER A CASE (A PETITION TO DECLARE STRIKE ILLEGAL) WHICH
HAD LONG BEEN FILED AND PENDING BEFORE THE LABOR ARBITER. 9
We sustain the questioned decision.
On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule on
the illegal strike committed by petitioner union, it is undisputed that the petition to declare the strike
illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and Employment
issued the assumption order on 14 February 1994. However, it cannot be denied that the issues of
"overtime boycott" and "work slowdown" amounting to illegal strike before Labor Arbiter Caday are
intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner
union even asked Labor Arbiter Caday to suspend the proceedings before him and consolidate the
same with the case before the Secretary of Labor. When Acting Labor Secretary Brillantes ordered
Labor Arbiter Caday to continue with the hearing of the illegal strike case, the parties acceded and
participated in the proceedings, knowing fully well that there was also a directive for Labor Arbiter
Caday to thereafter submit his report and recommendation to the Secretary. As the appellate court
pointed out, the subsequent participation of petitioner union in the continuation of the hearing was in
effect an affirmation of the jurisdiction of the Secretary of Labor.
The appellate court also correctly held that the question of the Secretary of Labor and Employment's
jurisdiction over labor and labor-related disputes was already settled in International Pharmaceutical,
Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU)10 where the Court declared:
In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor Code
the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, and decide the same
accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute
must include and extend to all questions and controversies arising therefrom, including cases
over which the labor arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto.
This is evident from the opening proviso therein reading '(e)xcept as otherwise provided
under this Code . . .' Plainly, Article 263(g) of the Labor Code was meant to make both the
Secretary (or the various regional directors) and the labor arbiters share jurisdiction, subject
to certain conditions. Otherwise, the Secretary would not be able to effectively and efficiently
dispose of the primary dispute. To hold the contrary may even lead to the absurd and
undesirable result wherein the Secretary and the labor arbiter concerned may have
diametrically opposed rulings. As we have said, '(i)t is fundamental that a statute is to be
read in a manner that would breathe life into it, rather than defeat it.
In fine, the issuance of the assailed orders is within the province of the Secretary as
authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same Code,
taken conjointly and rationally construed to subserve the objective of the jurisdiction vested
in the Secretary.11
Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that the
factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record, must be
accorded due respect by the Supreme Court.12 Here, the report and recommendation of Labor
Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but was likewise
affirmed by the Court of Appeals. We see no reason to depart from their findings.
Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the "parol
evidence rule"13when they upheld the allegation of respondent company that the work schedule of its
employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 am. According to petitioner
union, the provisions of their CBA on working hours clearly stated that the normal working hours
were "from 7:30 a.m. to 4:30 p.m."14 Petitioner union underscored that the regular work hours for the
company was only eight (8) hours. It further contended that the Labor Arbiter as well as the Court of
Appeals should not have admitted any other evidence contrary to what was stated in the CBA.
The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission
or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not
controlling.15 Rules of procedure and evidence are not applied in a very rigid and technical sense in
labor cases.16 Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence
other than, and even contrary to, what is stated in the CBA.
In any event, the parties stipulated:
Section 1. Regular Working Hours — A normal workday shall consist of not more than eight
(8) hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M.
The schedule of shift work shall be maintained; however the company may change the
prevailing work time at its discretion, should such change be necessary in the operations of
the Company. All employees shall observe such rules as have been laid down by the
company for the purpose of effecting control over working hours.17
It is evident from the foregoing provision that the working hours may be changed, at the discretion of
the company, should such change be necessary for its operations, and that the employees shall
observe such rules as have been laid down by the company. In the case before us, Labor Arbiter
Caday found that respondent company had to adopt a continuous 24-hour work daily schedule by
reason of the nature of its business and the demands of its clients. It was established that the
employees adhered to the said work schedule since 1988. The employees are deemed to have
waived the eight-hour schedule since they followed, without any question or complaint, the two-shift
schedule while their CBA was still in force and even prior thereto. The two-shift schedule effectively
changed the working hours stipulated in the CBA. As the employees assented by practice to this
arrangement, they cannot now be heard to claim that the overtime boycott is justified because they
were not obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:
Respondents' attempt to deny the existence of such regular overtime schedule is belied by
their own awareness of the existence of the regular overtime schedule of 6:00 A.M. to 6:00
P.M. and 6:00 P.M. to 6:00 A.M. of the following day that has been going on since 1988.
Proof of this is the case undisputedly filed by the union for and in behalf of its members,
wherein it is claimed that the company has not been computing correctly the night premium
and overtime pay for work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to
6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro G. Salazar during hearing on August
9, 1994). In fact, the union Vice-President Carmelo C. Santos, demanded that the company
make a recomputation of the overtime records of the employees from 1987 (Exh. "P"). Even
their own witness, union Director Enrico C. Gonzales, testified that when in 1992 he was still
a Quality Control Inspector at the Sucat Plant of the company, his schedule was sometime at
6:00 A.M. to 6:00 P.M., sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and
sometime at 6:00 P.M. to 6:00 A.M., and when on the 6 to 6 shifts, he received the
commensurate pay (t.s.n. pp. 7-9, hearing of January 10, 1994). Likewise, while in the
overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which were passed around daily for the
employees to sign, his name appeared but without his signatures, he however had rendered
overtime during those dates and was paid because unlike in other departments, it has
become a habit to them to sign the overtime schedule weekly (t.s.n. pp. 26-31, hearing of
January 10, 1994). The awareness of the respondent union, its officers and members about
the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to
6:00 A.M. of the following day will be further shown in the discussion of the second issue.18
As to the second issue of whether or not the respondents have engaged in "overtime
boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both amounting to
illegal strike, the evidence presented is equally crystal clear that the "overtime boycott" and
"work slowdown" committed by the respondents amounted to illegal strike.
As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-President-

Human Resources Department, sometime in February, 1993, he was approached by the
union President Nestor Ocampo and Union Director Hernando Clemente who asked him as
to what was the stand of the company regarding the duration of the CBA between the
company and which was set to expire on July 31, 1993. He answered that the matter could
be best discussed during the formal renegotiations which anyway was to start soon. This
query was followed up sometime in March, 1993, and his answer was the same. In early
April, 1993, the union president requested for a meeting to discuss the duration and
effectivity of the CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein
the union officers asked him if he would agree to make the new CBA effective on August 1,
1993 and the term thereof to be valid for only two (2) years. When he answered that it was
still premature to discuss the matter, the very next day, April 16, 1993, all the rank and file
employees of the company refused to follow their regular two-shift work schedule of 6:00
A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-hours work, they abruptly
stopped working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place of work without
sealing the containers and securing the raw materials they were working on. When he saw
the workers leaving before the end of their shift, he asked them why and their reply was
"asked (sic) the union officers." Alarmed by the overtime boycott and the damage it was
causing the company, he requested for a meeting with the union officers. In the meeting, he
asked them why the regular work schedule was not being followed by the employees, and
union Director Enrico Gonzales, with the support of the other union officers, told him that if
management would agree to a two-year duration for the new CBA and an effectivity date of
August 1, 1993, all employees will return to the normal work schedule of two 12-hour shifts.
When answered that the management could not decide on the matter at the moment and to
have it discussed and agreed upon during the formal renegotiations, the overtime boycott
continued and the employees at the same time employed a work slowdown campaign during
working hours, causing considerable delay in the production and complaints from the
clients/customers (Exh. "O", Affidavit of Alessandro G. Salazar which formed part of his
direct testimony). This testimonial narrations of Salazar was, as earlier said, undisputed
because the respondents' counsel waived his cross examination (t.s.n. p. 15, hearing on
August 9, 1994).
Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other
Department Managers pointing to the union officers as the instigators of the overtime boycott
and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a union member at the
time the concerted activities of the respondents took place, is quoted hereunder:
"2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo

ang lahat ng taga-maintenance ng bawat departamento upang dumalo sa isang
miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na
mayroon ilalabas na memo ang Unyon na nag-uutos sa mga empleyado ng
Kompanya na mag-imbento ng sari-saring dahilan para lang hindi sila
makapagtrabaho ng "overtime". Sinabihan rin ako ni Tessie Montejo na siya namang
Treasurer ng Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes para hindi
ka masabihan ng magtrabaho ng Sabado at Linggo' na siya namang araw ng
"overtime" ko x x x
"3. Nakalipas ang dalawang buwan at noong unang bahagi ng Abril 1993, miniting
kami ng Shop Stewards namin na sina Ariel Abenoja, Dany Tansiongco at Vicky
Baron. Sinabihan kami na huwag ng mag-overtime pag nagbigay ng senyas ang
Unyon ng "showtime."
"4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng

"showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay silang
umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18, 1993 na Sabado
at Linggo.
"5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa
opisina ng Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng Unyon na sina:
Nestor Ocampo Presidente

Carmelo Santos Bise-Presidente
Nanding Clemente Director
TessMontejo Chief Steward
Segundo Flores Director
Enrico Gonzales Auditor
Boy Alcantara Shop Steward
Rod Abuan Director
at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga
opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-overtime"
gayong "Binigyan ka na namin ng instruction na huwag pumasok, pinilit mo pa ring
pumasok." "Management ka ba o Unyonista." Sinagot ko na ako ay Unyonista.
Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala akong maibigay na
dahilan para lang hindi pumasok at "mag-overtime." Pagkatapos nito, ako ay
pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang umalis.
xxx xxx xxx
Likewise, the respondents' denial of having a hand in the work slowdown since there was no
change in the performance and work efficiency for the year 1993 as compared to the
previous year was even rebuffed by their witness Ma. Theresa Montejo, a Quality Control
Analyst. For on cross-examination, she (Montejo) admitted that she could not answer how
she was able to prepare the productivity reports from May 1993 to February 1994 because
from April 1993 up to April 1994, she was on union leave. As such, the productivity reports
she had earlier shown was not prepared by her since she had no personal knowledge of the
reports (t.s.n. pp. 32-35, hearing of February 27, 1995). Aside from this admission, the
comparison made by the respondents was of no moment, because the higher production for
the years previous to 1993 was reached when the employees regularly rendered overtime
work. But undeniably, overtime boycott and work slowdown from April 16, 1993 up to March
7, 1994 had resulted not only in financial losses to the company but also damaged its
business reputation.
Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the 24-hour
work schedule thru their concerted activities of "overtime boycott" and "work slowdown" from
April 16, 1993 up to March 7, 1994, to force the petitioner company to accede to their
unreasonable demands, can be classified as a strike on an installment basis, as correctly
called by petitioner company x x x19
It is thus undisputed that members of the union by their own volition decided not to render overtime
services in April 1993.20 Petitioner union even admitted this in its Memorandum, dated 12 April 1999,
filed with the Court of Appeals, as well as in the petition before this Court, which both stated that
"(s)ometime in April 1993, members of herein petitioner, on their own volition and in keeping with the
regular working hours in the Company x x x decided not to render overtime".21 Such admission
confirmed the allegation of respondent company that petitioner engaged in "overtime boycott" and
"work slowdown" which, to use the words of Labor Arbiter Caday, was taken as a means to coerce
respondent company to yield to its unreasonable demands.
More importantly, the "overtime boycott" or "work slowdown" by the employees constituted a
violation of their CBA, which prohibits the union or employee, during the existence of the CBA, to
stage a strike or engage in slowdown or interruption of work.22 In Ilaw at Buklod ng Manggagawa vs.
NLRC ,23 this Court ruled:
x x x (T)he concerted activity in question would still be illicit because contrary to the workers'
explicit contractual commitment "that there shall be no strikes, walkouts, stoppage or
slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise,
picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other
interference with any of the operations of the COMPANY during the term of x x x (their
collective bargaining) agreement."
What has just been said makes unnecessary resolution of SMC's argument that the workers'
concerted refusal to adhere to the work schedule in force for the last several years, is a
slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike
clause in a collective bargaining contract, or statute or rule. The Court is in substantial
agreement with the petitioner's concept of a slowdown as a "strike on the installment plan;"
as a willful reduction in the rate of work by concerted action of workers for the purpose of
restricting the output of the employer, in relation to a labor dispute; as an activity by which
workers, without a complete stoppage of work, retard production or their performance of
duties and functions to compel management to grant their demands. The Court also agrees
that such a slowdown is generally condemned as inherently illicit and unjustifiable, because
while the employees "continue to work and remain at their positions and accept the wages
paid to them," they at the same time "select what part of their allotted tasks they care to
perform of their own volition or refuse openly or secretly, to the employer's damage, to do
other work;" in other words, they "work on their own terms." x x x24
Finally, the Court cannot agree with the proposition that respondent company, in extending
substantial separation package to some officers of petitioner union during the pendency of this case,
in effect, condoned the illegal acts they committed.
Respondent company correctly postured that at the time these union officers obtained their
separation benefits, they were still considered employees of the company. Hence, the company was
merely complying with its legal obligations.25 Respondent company could have withheld these
benefits pending the final resolution of this case. Yet, considering perhaps the financial hardships
experienced by its employees and the economic situation prevailing, respondent company chose to
let its employees avail of their separation benefits. The Court views the gesture of respondent
company as an act of generosity for which it should not be punished.
WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of the
Court of Appeals is AFFIRMED.
SO ORDERED.
D. COMPRESS WORK WEEK
a. DOLE Department Order No. 4 Series of 2004

b. DOLE Department Advisory no 2, Series of 2009 (Jan. 29, 2009)
E. NO WORK, NO PAY
a. Waiting Time
G.R. No. 78210 February 28, 1989
TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL

TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO
RICHA, RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN
DAAROL, JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and
561 OTHERS, HEREIN REPRESENTED BY KORONADO B. APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON,
HONORABLE CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and
STANDARD (PHILIPPINES) FRUIT CORPORATION, respondents.
Koronado B. Apuzen and Jose C. Espinas for petitioners.
The Solicitor General for public respondent.
Dominguez & Paderna Law Offices Co. for private respondent.
PARAS, J.:
This is a petition for review on certiorari of the decision of the National Labor Relations Commission
dated December 12, 1986 in NLRC Case No. 2327 MC-XI-84 entitled Teofilo Arica et al. vs.
Standard (Phil.) Fruits Corporation (STANFILCO) which affirmed the decision of Labor Arbiter Pedro
C. Ramos, NLRC, Special Task Force, Regional Arbitration Branch No. XI, Davao City dismissing
the claim of petitioners.
This case stemmed from a complaint filed on April 9, 1984 against private respondent Stanfilco for
assembly time, moral damages and attorney's fees, with the aforementioned Regional Arbitration
Branch No. XI, Davao City.
After the submission by the parties of their respective position papers (Annex "C", pp. 30-40; Annex
"D", Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a decision dated October 9, 1985
(Annex 'E', Rollo, pp. 51-58) in favor of private respondent STANFILCO, holding that:
Given these facts and circumstances, we cannot but agree with respondent that the
pronouncement in that earlier case, i.e. the thirty-minute assembly time long
practiced cannot be considered waiting time or work time and, therefore, not
compensable, has become the law of the case which can no longer be disturbed
without doing violence to the time- honored principle of res-judicata.
WHEREFORE, in view of the foregoing considerations, the instant complaint should

therefore be, as it is hereby, DISMISSED.
SO ORDERED. (Rollo, p. 58)
On December 12, 1986, after considering the appeal memorandum of complainant and the
opposition of respondents, the First Division of public respondent NLRC composed of Acting
Presiding Commissioner Franklin Drilon, Commissioner Conrado Maglaya, Commissioner Rosario
D. Encarnacion as Members, promulgated its Resolution, upholding the Labor Arbiters' decision. The
Resolution's dispositive portion reads:
'Surely, the customary functions referred to in the above- quoted provision of the
agreement includes the long-standing practice and institutionalized non-
compensable assembly time. This, in effect, estopped complainants from pursuing
this case.
The Commission cannot ignore these hard facts, and we are constrained to uphold
the dismissal and closure of the case.
WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.
SO ORDERED. (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion for Reconsideration which was opposed by private
respondent (Annex "I", Rollo, pp. 90-91; Annex J Rollo, pp. 92-96).
Public respondent NLRC, on January 30, 1987, issued a resolution denying for lack of merit
petitioners' motion for reconsideration (Annex "K", Rollo, p. 97).
Hence this petition for review on certiorari filed on May 7, 1987.
The Court in the resolution of May 4, 1988 gave due course to this petition.
Petitioners assign the following issues:

1) Whether or not the 30-minute activity of the petitioners before the scheduled
working time is compensable under the Labor Code.
2) Whether or not res judicata applies when the facts obtaining in the prior case and
in the case at bar are significantly different from each other in that there is merit in
the case at bar.
3) Whether or not there is finality in the decision of Secretary Ople in view of the
compromise agreement novating it and the withdrawal of the appeal.
4) Whether or not estoppel and laches lie in decisions for the enforcement of labor
standards (Rollo, p. 10).
Petitioners contend that the preliminary activities as workers of respondents STANFILCO in the
assembly area is compensable as working time (from 5:30 to 6:00 o'clock in the morning) since
these preliminary activities are necessarily and primarily for private respondent's benefit.
These preliminary activities of the workers are as follows:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter, they are individually required to accomplish the Laborer's Daily
Accomplishment Report during which they are often made to explain about their
reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools, equipment and
materials.
All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11).
Contrary to this contention, respondent avers that the instant complaint is not new, the very same
claim having been brought against herein respondent by the same group of rank and file employees
in the case of Associated Labor Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76
which was filed way back April 27, 1976 when ALU was the bargaining agent of respondent's rank
and file workers. The said case involved a claim for "waiting time", as the complainants purportedly
were required to assemble at a designated area at least 30 minutes prior to the start of their
scheduled working hours "to ascertain the work force available for the day by means of a roll call, for
the purpose of assignment or reassignment of employees to such areas in the plantation where they
are most needed." (Rollo, pp. 64- 65)
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case
(Associated Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76 where
significant findings of facts and conclusions had already been made on the matter.
The Minister of Labor held:
The thirty (30)-minute assembly time long practiced and institutionalized by mutual
consent of the parties under Article IV, Section 3, of the Collective Bargaining
Agreement cannot be considered as waiting time within the purview of Section 5,
Rule I, Book III of the Rules and Regulations Implementing the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of

the employees, and the proceedings attendant thereto are not infected with
complexities as to deprive the workers the time to attend to other personal pursuits.
They are not new employees as to require the company to deliver long briefings
regarding their respective work assignments. Their houses are situated right on the
area where the farm are located, such that after the roll call, which does not
necessarily require the personal presence, they can go back to their houses to attend
to some chores. In short, they are not subject to the absolute control of the company
during this period, otherwise, their failure to report in the assembly time would justify
the company to impose disciplinary measures. The CBA does not contain any
provision to this effect; the record is also bare of any proof on this point. This,
therefore, demonstrates the indubitable fact that the thirty (30)-minute assembly time
was not primarily intended for the interests of the employer, but ultimately for the
employees to indicate their availability or non-availability for work during every
working day. (Annex "E", Rollo, p. 57).
Accordingly, the issues are reduced to the sole question as to whether public respondent National
Labor Relations Commission committed a grave abuse of discretion in its resolution of December
17, 1986.
The facts on which this decision was predicated continue to be the facts of the case in this
questioned resolution of the National Labor Relations Commission.
It is clear that herein petitioners are merely reiterating the very same claim which they filed through
the ALU and which records show had already long been considered terminated and closed by this
Court in G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling that petitioners' claim is
already barred by res-judicata.
Be that as it may, petitioners' claim that there was a change in the factual scenario which are
"substantial changes in the facts" makes respondent firm now liable for the same claim they earlier
filed against respondent which was dismissed. It is thus axiomatic that the non-compensability of the
claim having been earlier established, constitute the controlling legal rule or decision between the
parties and remains to be the law of the case making this petition without merit.
As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar
principle of res judicata.There will be no end to this controversy if the light of the Minister of Labor's
decision dated May 12, 1979 that had long acquired the character of finality and which already
resolved that petitioners' thirty (30)-minute assembly time is not compensable, the same issue can
be re-litigated again." (Rollo, p. 183)
This Court has held:
In this connection account should be taken of the cognate principle that res
judicata operates to bar not only the relitigation in a subsequent action of the issues
squarely raised, passed upon and adjudicated in the first suit, but also the ventilation
in said subsequent suit of any other issue which could have been raised in the first
but was not. The law provides that 'the judgment or order is, with respect to the
matter directly adjudged or as to any other matter that could have been raised in
relation thereto, conclusive between the parties and their successors in interest by
title subsequent to the commencement of the action .. litigating for the same thing
and in the same capacity.' So, even if new causes of action are asserted in the
second action (e.g. fraud, deceit, undue machinations in connection with their
execution of the convenio de transaccion), this would not preclude the operation of
the doctrine of res judicata. Those issues are also barred, even if not passed upon in
the first. They could have been, but were not, there raised. (Vda. de Buncio v. Estate
of the late Anita de Leon, 156 SCRA 352 [1987]).
Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired expertise
because their jurisdiction is confined to specific matters are accorded not only respect but at times
even finality if such findings are supported by substantial evidence (Special Events & Central
Shipping Office Workers Union v. San Miguel Corporation, 122 SCRA 557 [1983]; Dangan v. NLRC,
127 SCRA 706 [1984]; Phil. Labor Alliance Council v. Bureau of Labor Relations, 75 SCRA 162
[1977]; Mamerto v. Inciong, 118 SCRA 265 (1982]; National Federation of Labor Union (NAFLU) v.
Ople, 143 SCRA 124 [1986]; Edi-Staff Builders International, Inc. v. Leogardo, Jr., 152 SCRA 453
[1987]; Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]).
The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex "E", Petition)
pointed out in detail the basis of his findings and conclusions, and no cogent reason can be found to
disturb these findings nor of those of the National Labor Relations Commission which affirmed the
same.
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the decision of the
National Labor Relations Commission is AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla and Regalado, JJ., concur.
Separate Opinions
SARMIENTO, J., Dissenting:
It is my opinion that res judicata is not a bar.
The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI-
76) relied upon by the respondents as basis for claims of res judicata, is not, to my mind, a
controlling precedent. In that case, it was held that the thirty-minute "waiting time" complained of was
a mere "assembly time" and not a waiting time as the term is known in law, and hence, a
compensable hour of work. Thus:
Agreement cannot be considered as 'waiting time' within the purview of Section 5,
Rule 1, Book III of the Rules and Regulations Implementing the Labor Code. ...

area where the farms are located, such that after the roll call, which does not
to some chores.
In short, they are not subject to the absolute control of the company during this
period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The CBA does not contain any provision
to this effect; the record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute assembly time was not
primarily intended for the interests of the employer, but ultimately for the employees
to indicate their availability or non-availability for work during every working day.
(Decision, 6.)
Precisely, it is the petitioners' contention that the assembly time in question had since undergone
dramatic changes, thus:
(b) Thereafter,they are individually required to accomplish the Laborer's Daily

materials. (Supra, 4-5.)
The petitioners have vehemently maintained that in view thereof, the instant case should be
distinguished from the first case. And I do not believe that the respondents have successfully
rebutted these allegations. The Solicitor General relies solely on the decision of then Minister Ople,
the decision the petitioners precisely reject in view of the changes in the conditions of the parties.
The private respondent on the other hand insists that these practices were the same practices taken
into account in ALU v. STANFILCO. If this were so, the Ople decision was silent thereon.
It is evident that the Ople decision was predicated on the absence of any insinuation of
obligatoriness in the course or after the assembly activities on the part of the employees.(" . . [T]hey
are not subject to the absolute control of the company during this period, otherwise, their failure to
report in the assembly time would justify the company to impose disciplinary measures;" supra, 6.)
As indicated, however, by the petitioners, things had since changed, and remarkably so, and the
latter had since been placed under a number of restrictions. My considered opinion is that the thirty-
minute assembly time had become, in truth and fact, a "waiting time" as contemplated by the Labor
Code.
I vote, then, to grant the petition.
Separate Opinions
SARMIENTO, J., Dissenting:
It is my opinion that res judicata is not a bar.
The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI-
76) relied upon by the respondents as basis for claims of res judicata, is not, to my mind, a
controlling precedent. In that case, it was held that the thirty-minute "waiting time" complained of was
a mere "assembly time" and not a waiting time as the term is known in law, and hence, a
compensable hour of work. Thus:
Agreement cannot be considered as 'waiting time' within the purview of Section 5,
Rule 1, Book III of the Rules and Regulations Implementing the Labor Code. ...

area where the farms are located, such that after the roll call, which does not
to some chores.
In short, they are not subject to the absolute control of the company during this
period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The CBA does not contain any provision
to this effect; the record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute assembly time was not
primarily intended for the interests of the employer, but ultimately for the employees
to indicate their availability or non-availability for work during every working day.
(Decision, 6.)
Precisely, it is the petitioners' contention that the assembly time in question had since undergone
dramatic changes, thus:
(b) Thereafter,they are individually required to accomplish the Laborer's Daily

materials. (Supra, 4-5.)
The petitioners have vehemently maintained that in view thereof, the instant case should be
distinguished from the first case. And I do not believe that the respondents have successfully
rebutted these allegations. The Solicitor General relies solely on the decision of then Minister Ople,
the decision the petitioners precisely reject in view of the changes in the conditions of the parties.
The private respondent on the other hand insists that these practices were the same practices taken
into account in ALU v. STANFILCO. If this were so, the Ople decision was silent thereon.
It is evident that the Ople decision was predicated on the absence of any insinuation of
obligatoriness in the course or after the assembly activities on the part of the employees.(" . . [T]hey
are not subject to the absolute control of the company during this period, otherwise, their failure to
report in the assembly time would justify the company to impose disciplinary measures;" supra, 6.)
As indicated, however, by the petitioners, things had since changed, and remarkably so, and the
latter had since been placed under a number of restrictions. My considered opinion is that the thirty-
minute assembly time had become, in truth and fact, a "waiting time" as contemplated by the Labor
Code.
I vote, then, to grant the petition.
b. Travel Time
G.R. No. 96078

Rada v. NLRC
REGALADO, J.:
In this special civil action for certiorari, petitioner Rada seeks to annul the decision of respondent National
Labor Relations Commission (NLRC), dated November 19, 1990, reversing the decision of the labor
arbiter which ordered the reinstatement of petitioner with backwages and awarded him overtime pay.[1]
The facts, as stated in the Comment of private respondent Philnor Consultants and Planners, Inc.
(Philnor), are as follows:
"Petitioner's initial employment with this Respondent was under a 'Contract of Employment for a Definite
Period' dated July 7, 1977, copy of which is hereto attached and made an integral part hereof as Annex A
whereby Petitioner was hired as 'Driver' for the construction supervision phase of the Manila North
Expressway Extension, Second Stage (hereinafter referred to as MNEE Stage 2) for a term of 'about 24
months effective July 1, 1977'.
xxx
"Highlighting the nature of Petitioner's employment, Annex A specifically provides as follows:
'It is hereby understood that the Employer does not have a continuing need for the services of the
Employee beyond the termination date of this contract and that Employee's services shall automatically,
and without notice, terminate upon the completion of the above specified phase of the project; and that it
is further understood that the engagement of his/her services is co-terminus with the same and not with
the whole project or other phases thereof wherein other employees of similar position as he/she have
been hired.' (Par. 7, underscoring supplied)
"Petitioner's first contract of employment expired on June 30, 1979. Meanwhile, the main project, MNEE
Stage 2, was not finished on account of various constraints, not the least of which was inadequate
funding, and the same was extended and remained in progress beyond the original period of 23 years.
Fortunately for the Petitioner, at the time the first contract of employment expired, Respondent was in
need of Driver for the extended project. Since Petitioner had the necessary experience and his
performance under the first contract of employment was found satisfactory, the position of Driver was
offered to Petitioner, which he accepted. Hence a second Contract of Employment for a Definite Period of
10 months, that is, from July 1, 1979 to April 30, 1980 was executed between Petitioner and Respondent
on July 7, 1979. x x x
"In March 1980 some of the areas or phases of the project were completed, but the bulk of the project
was yet to be finished. By that time some of those project employees whose contracts of employment
expired or were about to expire because of the completion of portions of the project were offered another
employment in the remaining portion of the project. Petitioner was among those whose contract was
about to expire, and since his service performance was satisfactory, respondent renewed his contract of
employment in April 1980, after Petitioner agreed to the offer. Accordingly, a third contract of employment
for a definite period was executed by and between the Petitioner and the Respondent whereby the
Petitioner was again employed as Driver for 19 months, from May 1, 1980 to November 30, 1981, x x x.
"This third contract of employment was subsequently extended for a number of times, the last extension
being for a period of 3 months, that is, from October 1, 1985 to December 31, 1985, x x x.
"The last extension, from October 1, 1985 to December 31, 1985 (Annex E) covered by an 'Amendment
to the Contract of Employment with a Definite Period', was not extended any further because Petitioner
had no more work to do in the project. This last extension was confirmed by a notice on November 28,
1985 duly acknowledged by the Petitioner the very next day, x x x.
"Sometime in the 2nd week of December 1985, Petitioner applied for 'Personnel Clearance' with
Respondent dated December 9, 1985 and acknowledged having received the amount of P3,796,20
representing conversion to cash of unused leave credits and financial assistance. Petitioner also released
Respondent from all obligations and/or claims, etc. in a 'Release, Waiver and Quitclaim' x x x."[2]
Culled from the records, it appears that on May 20, 1987, petitioner filed before the NLRC, National
Capital Region, Department of Labor and Employment, a Complaint for non-payment of separation pay
and overtime pay. On June 3, 1987, Philnor filed its Position Paper alleging, inter alia, that petitioner was
not illegally terminated since the project for which he was hired was completed; that he was hired under
three distinct contracts of employment, each of which was for a definite period, all within the estimated
period of MNEE Stage 2 Project, covering different phases or areas of the said project; that his work was
strictly confined to the MNEE Stage 2 Project and that he was never assigned to any other project of
Philnor; that he did not render overtime services and that there was no demand or claim for him for such
overtime pay; that he signed a "Release, Waiver and Quitclaim" releasing Philnor from all obligations and
claims; and that Philnor's business is to provide engineering consultancy services, including supervision
of construction services, such that it hires employees according to the requirements of the project
manning schedule of a particular contract.[3]
On July 2, 1987, petitioner filed an Amended Complaint alleging that he was illegally dismissed and that
he was not paid overtime pay although he was made to render three hours overtime work from Monday to
Saturday for a period of three years.
On July 7, 1987, petitioner filed his Position Paper claiming that he was illegally dismissed since he was a
regular employee entitled to security of tenure; that he was not a project employee since Philnor is not
engaged in the construction business as to be covered by Policy Instructions No. 20; that the contract of
employment for a definite period executed between him and Philnor is against public policy and a clear
circumvention of the law designed merely to evade any benefits or liabilities under the statute; that his
position as driver was essential, necessary and desirable to the conduct of the business of Philnor; that
he rendered overtime work until 6:00 P.M. daily except Sundays and holidays and, therefore, he was
entitled to overtime pay.[4]
In his Reply to Respondent's Position Paper, petitioner claimed that he was a regular employee pursuant
to Article 278(c) of the Labor Code and, thus, he cannot be terminated except for a just cause under
Article 280 of the Code; and that the public respondent's ruling in Quiwa vs. Philnor Consultants and
Planners, Inc.[5] is not applicable to his case since he was an administrative employee working as a
company driver, which position still exists and is essential to the conduct of the business of Philnor even
after the completion of his contract of employment.[6] Petitioner likewise avers that the contract of
employment for a definite period entered into between him and Philnor was a ploy to defeat the intent of
Article 280 of the Labor Code.
On July 28, 1987, Philnor filed its Respondent's Supplemental Position Paper, alleging therein that
petitioner was not a company driver since his job was to drive the employees hired to work at the MNEE
Stage 2 Project to and from the field office at Sto. Domingo Interchange, Pampanga; that the office hours
observed in the project were from 7:00 A.M. to 4:00 P.M., Mondays through Saturdays; that Philnor
adopted the policy of allowing certain employees, not necessarily the project driver, to bring home project
vehicles to afford fast and free transportation to and from the project field office considering the distance
between the project site and the employees' residences, to avoid project delays and inefficiency due to
employee tardiness caused by transportation problems; that petitioner was allowed to use a project
vehicle which he used to pick up and drop off some ten employees along Epifanio de los Santos Avenue
(EDSA), on his way home to Marikina, Metro Manila; that when he was absent or on leave, another
employee living in Metro Manila used the same vehicle in transporting the same employees; that the time
used by petitioner to and from his residence to the project site from 5:30 A.M. to 7:00 A.M. and from 4:00
P.M. to 6:00 P.M., or about three hours daily, was not overtime work as he was merely enjoying the
benefit and convenience of free transportation provided by Philnor, otherwise without such vehicle he
would have used at least four hours by using public transportation and spent P12.00 daily as fare; that in
the case of Quiwa vs. Philnor Consultants and Planners Inc., supra, the NLRC upheld Philnor's position
that Quiwa was a project employee and he was not entitled to termination pay under Policy Instructions
No. 20 since his employment was coterminous with the completion of the project.
On August 25, 1987, Philnor filed its Respondent's Reply/Comments to Complainant's Rejoinder and
Reply, submitting therewith two letters dated January 5, 1985 and February 6, 1985, signed by MNEE
Stage 2 Project employees, including herein petitioner, where they asked what termination benefits could
be given to them as the MNEE Stage 2 Project was nearing completion, and Philnor's letter-reply dated
February 22, 1985 informing them that they are not entitled to termination benefits as they are
contractual/project employees.
On August 31, 1989, Labor Arbiter Dominador M. Cruz rendered a decision,[7] with the following
dispositive portion:
"WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered:
(1) Ordering the respondent company to re-instate the complainant to his former position without loss of
seniority right and other privileges with full backwages from the time of his dismissal to his actual
reinstatement;
(2) Directing the respondent company to pay the complainant overtime pay for the three excess hours of
work performed during working days from January 1983 to December 1985; and
(3) Dismissing all other claims for lack of merit
SO ORDERED."
Acting on Philnor's appeal, the NLRC rendered its assailed decision dated November 19, 1990, setting
aside the labor arbiter's aforequoted decision and dismissing petitioner's complaint.
Hence this petition wherein petitioner charges respondent NLRC with grave abuse of discretion
amounting to lack of jurisdiction for the following reasons:
1. The decision of the labor arbiter, dated August 31, 1989, has already become final and executory;
2. The case of Quiwa vs. Philnor Consultants and Planners, Inc. is not binding nor is it applicable to
this case;
3. The petitioner is a regular employee with eight years and five months of continuous services for
his employer, private respondent Philnor;
4. The claims for overtime services, reinstatement and full backwages are valid and meritorious and
should have been sustained; and
5. The decision of the labor arbiter should be reinstated as it is more in accord with the facts, the law
and evidence.
The petition is devoid of merit.
1. Petitioner questions the jurisdiction of respondent NLRC in taking cognizance of the appeal filed
by Philnor in spite of the latter's failure to file a supersedeas bond within ten days from receipt of
the labor arbiter's decision, by reason of which the appeal should be deemed to have been filed
out of time. It will be noted, however, that Philnor was able to file a bond although it was made
beyond the 10-day reglementary period.
While it is true that the payment of the supersedeas bond is an essential requirement in the
perfection of an appeal, however, where the fee had been paid although payment was delayed,
the broader interests of justice and the desired objective of resolving controversies on the merits
demands that the appeal be given due course. Besides, it was within the inherent power of the
NLRC to have allowed late payment of the bond, considering that the aforesaid decision of the
labor arbiter was received by private respondent on October 3, 1989 and its appeal was duly filed
on October 13, 1989. However, said decision did not state the amount awarded as backwages
and overtime pay, hence the amount of the supersedeas bond could not be determined. It was
only in the order of the NLRC of February 16, 1990 that the amount of the supersedeas bond was
specified and which bond, after an extension granted by the NLRC, was timely filed by private
respondent.
Moreover, as provided by Article 221 of the Labor Code, "in any proceeding before the
Commission or any of the Labor Arbiters, the rules of evidence prevailing in Courts of law or
equity shall not be controlling and it is the spirit and intention of this Code that the Commission
and its members and the Labor Arbiters shall use every and all reasonable means to ascertain
the facts in each case speedily and objectively without regard to technicalities of law or
procedure, all in the interest of due process.[8] Finally, the issue of timeliness of the appeal being
an entirely new and unpleaded matter in the proceedings below it may not now be raised for the
first time before this Court.[9]
2. Petitioner postulates that as a regular employee, he is entitled to security of tenure, hence he

cannot be terminated without cause. Private respondent Philnor believes otherwise and asserts
that petitioner is merely a project employee who was terminated upon the completion of the
project for which he was employed.
In holding that petitioner is a regular employee, the labor arbiter found that:
"x x x There is no question that the complainant was employed as driver in the respondent
company continuously from July 1, 1977 to December 31, 1985 under various contracts of
employment. Similarly, there is no dispute that respondent Philnor Consultants & Planners, Inc.,
as its business name connotes, has been engaged in providing to its client (e) le engineering
consultancy services. The record shows that while the different labor contracts executed by the
parties stipulated definite periods of engaging the services of the complainant, yet the latter was
suffered to continue performing his job upon the expiration of one contract and the renewal of
another. Under these circumstances, the complainant has obtained the status of regular
employee, it appearing that he has worked without fail for almost eight years, a fraction of six
months considered as one whole year, and that his assigned task as driver was necessary and
desirable in the usual trade/business of the respondent employer. Assuming to be true, as spelled
out in the employment contract, that the Employer has no 'continuing need for the services of the
Employe(e) beyond the termination date of this contract and that the Employee's services shall
automatically, and without notice, terminate upon completion of the above specified phase of the
project', still we cannot see our way clear why the complainant was hired and his services
engaged contract after contract straight from 1977 to 1985 which, to our considered view, lends
credence to the contention that he worked as regular driver ferrying early in the morning office
personnel to the company main office in Pampanga and bringing them back late in the afternoon
to Manila, and driving company executives for inspection of construction projects, as well as
engineers and workers to the jobsites. All told, we believe that the complainant, under the
environmental facts obtaining in the case at bar, is a regular employee, the provision of written
agreement to the contrary notwithstanding and regardless of the oral understanding of the
parties. x x x"[10]
On the other hand, respondent NLRC declared that, as between the uncorroborated and
unsupported assertions of petitioner and those of private respondent which are supported by
documents, greater credence should be given the latter. It further held that:
"Complainant was hired in a specific project or undertaking as driver. While such project was still
on-going he was hired several times with his employment period fixed every time his contract was
renewed. At the completion of the specific project or undertaking his employment contract was
not renewed.
"We reiterate our ruling in the case of (Quiwa) vs. Philnor Consultants and Planners, Inc., NLRC
RAB III 5-1738-84, it being applicable in this case, viz:
"x x x While it is true that the activities performed by him were necessary or desirable in the usual
business or trade of the respondent as consultants, planners, contractor and while it is also true
that the duration of his employment was for a period of about seven years, these circumstances
did not make him a regular employee in contemplation of Article 281 of (the) Labor Code. x x x" [11]
Our ruling in Sandoval Shipyards, Inc. vs. National Labor Relations Commission, et al. [12] is
applicable to the case at bar. Thus:
"We hold that private respondents were project employees whose work was coterminous with the
project for which they were hired. Project employees, as distinguished from regular or non-project
employees, are mentioned in section 281 of the Labor Code as those 'where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee.'
"Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize
employer?employee relations in the construction industry, provides:
'Project employees are those employed in connection with a particular construction project. Non-
project (regular) employees are those employed by a construction company without reference to
any particular project.
'Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the
number of projects in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain clearance from the Secretary of Labor in
connection with such termination.'
"The petitioner cited three of its own cases wherein the National Labor Relations Commission,
Deputy Minister of Labor and Employment Inciong and the Director of the National Capital Region
held that the layoff of its project employees was lawful. Deputy Minister Inciong in TFU Case No.
1530, In Re Sandoval Shipyards, Inc. Application for Clearance to Terminate Employees,
rendered the following ruling on February 26, 1979:
'We feel that there is merit in the contention of the applicant corporation. To our mind, the
employment of the employees concerned were fixed for a specific project or undertaking. For the
nature of the business the corporation is engaged into is one which will not allow it to employ
workers for an indefinite period.
'It is significant to note that the corporation does not construct vessels for sale or otherwise which
will demand continuous productions of ships and will need permanent or regular workers. It
merely accepts contracts for shipbuilding or for repair of vessels from, third parties and, only, on
occasion when it has work contract of this nature that it hires workers to do the job which,
needless to say, lasts only for less than a year or longer.
'The completion of their work or project automatically terminates their employment, in which case,
the employer is, under the law, only obliged to render a report on the termination of the
employment. (139-140, Rollo of G. R. No. 65689)'" (Underscoring supplied.)
In Cartagenas, et al. vs. Romago Electric Company, Inc., et al.,[13] we likewise held that:
"As an electrical contractor, the private respondent depends for its business on the contracts it is
able to obtain from real estate developers and builders of buildings. Since its work depends on
the availability of such contracts or 'projects,' necessarily the duration of the employments of its
work force is not permanent but co-terminus with the projects to which they are assigned and
from whose payrolls they are paid. It would be extremely burdensome for their employer who, like
them, depends on the availability of projects, if it would have to carry them as permanent
employees and pay them wages even if there are no projects for them to work on" (Emphasis
supplied.)
It must be stressed herein that although petitioner worked with Philnor as a driver for eight years,
the fact that his services were rendered only for a particular project which took that same period
of time to complete categorizes him as a project employee. Petitioner was employed for one
specific project.
A non-project employee is different in that the employee is hired for more than one project. A non-
project employee, vis-a-vis a project employee, is best exemplified in the case of Fegurin, et al.
vs. National Labor Relations Commission, et al.[14] wherein four of the petitioners had been
working with the company for nine years, one for eight years, another for six years, the shortest
term being three years. In holding that petitioners are regular employees, this Court therein
explained:
"Considering the nature of the work of petitioners, that of carpenter, laborer or mason, their
respective jobs would actually be continuous and on-going. When a project to which they are
individually assigned is completed, they would be assigned to the next project or a phase thereof.
In other words, they belonged to a 'work pool' from which the company would draw workers for
assignment to other projects at its discretion. They are, therefore, actually 'non-project
employees'."
From the foregoing, it is clear that petitioner is a project employee considering that he does not
belong to a "work pool" from which the company would draw workers for assignment to other
projects at its discretion. It is likewise apparent from the facts obtaining herein that petitioner was
utilized only for one particular project, the MNEE Stage 2 Project of respondent company. Hence,
the termination of herein petitioner is valid by reason of the completion of the project and the
expiration of his employment contract.
3. Anent the claim for overtime compensation, we hold that petitioner is entitled to the same. The
fact that he picks up employees of Philnor at certain specified points along EDSA in going to the
project site and drops them off at the same points on his way back from the field office going
home to Marikina, Metro Manila is not merely incidental to petitioner's job as a driver. On the
contrary, said transportation arrangement had been adopted, not so much for the convenience of
the employees, but primarily for the benefit of the employer, herein private respondent. This fact
is inevitably deducible from the Memorandum of respondent company:
"The herein Respondent resorted to the above transport arrangement because from its previous project
construction supervision experiences. Respondent found out that project delays and inefficiencies
resulted from employees' tardiness; and that the problem of tardiness, in turn, was aggravated by
transportation problems, which varied in degrees in proportion to the distance between the project site
and the employees' residence. In view of this lesson from experience, and as a practical, if expensive,
solution to employees' tardiness and its concomitant problems. Respondent adopted the policy of
allowing certain employees not necessarily project drivers to bring home project vehicles, so that
employees could be afforded fast, convenient and free transportation to and from the project field office. x
x x."[15]
Private respondent does not hesitate to admit that it is usually the project driver who is tasked with picking
up or dropping off his fellow employees. Proof thereof is the undisputed fact that when petitioner is
absent, another driver is supposed to replace him and drive the vehicle and likewise pick up and/or drop
off the other employees at the designated points on EDSA. If driving these employees to and from the
project site is not really part of petitioner's job, then there would have been no need to find a replacement
driver to fetch these employees. But since the assigned task of fetching and delivering employees is
indispensable and consequently mandatory, then the time required of and used by petitioner in going
from his residence to the field office and back, that is, from 5:30 A.M. to 7:00 A.M. and from 4:00 P.M. to
around 6:00 P.M., which the labor arbiter rounded off as averaging three hours each working day, should
be paid as overtime work. Quintessentially, petitioner should be given overtime pay for the three excess
hours of work performed during working days from January, 1983 to December, 1985.
WHEREFORE, subject to the modification regarding the award of overtime pay to herein petitioner, the
decision appealed from is AFFIRMED in all other respects.
SO ORDERED.
c. Weekly Rest Period
i. Articles 91-93
G.R. Nos. L-56176-77 February 28, 1985

REMERCO GARMENTS MANUFACTURING, petitioner,
vs.
HON. MINISTER OF LABOR AND EMPLOYMENT and ZENAIDA BUSTAMANTE, LUZ
RAYMUNDO and RUTH CORPUZ, respondents.
Luna, Sison & Manas Law Office for petitioner.
Manuel M. Iway for respondents.
CUEVAS, J.:
Petitioner Remerco Garments Manufacturing seeks the nullification of the decision 1 of the Minister of
Labor and Employment dated January 21, 1981, declaring the dismissal of Zenaida Bustamante,
Luz Raymundo and Ruth Corpuz, (its employees) illegal, and ordering their reinstatement to their
former positions without loss of seniority rights and privileges and with full backwages. The said
decision set aside, on appeal, the order 2 of Acting Director, National Capital Region, MOLE, dated
March 6, 1978, granting petitioner's clearance application to terminate the employment of its three
(3) employees.
Private respondents Zenaida Bustamante, Luz Raymundo and Ruth Corpuz were the employees of
Remerco Garments Manufacturing, a domestic corporation engaged in the business of
manufacturing and exporting of men's, ladies' and children's dresses.
This case arose from three (3) applications for clearance to terminate employment filed by the
petitioner on three (3) separate dates. The first, against Ruth Corpuz filed on October 5, 1978 for
allegedly defacing company's property by placing a check mark on a jacket with a chalk; the second,
filed on October 16, 1978 against Luz Raymundo for insubordination for refusal to work on her rest
day; and the third, against Zenaida Bustamante on November 10, 1980, for abandonment for failing
to report for work after the expiration of her suspension on October 23, 1978. The said employees
sought to be dismissed opposed the clearance application by filing separate complaints for illegal
dismissal docketed as Case Nos. R4-STF-106695-78 and R4-STF-10-6670-78.
The antecedent facts appearing on record are as follows:
During the period of their employment with petitioner, Luz Raymundo and Zenaida Bustamante were
given three consecutive warnings. The first, on June 24; then on July 24; and the third one, on
October 15, 1978 for alleged refusal to render overtime work. Finally, they were penalized with one
week's suspension effective October 16, 1978.
It appears that Luz Raymundo was required to work on October 15, 1978, a Sunday, despite her
request for exemption to work on that Sunday, her rest day. Her request was disapproved. For
failure to report for work despite denial of her request, she was notified of her dismissal effective
upon expiration of her suspension. Thereafter or more specifically on October 16, 1978, petitioner
filed a clearance application to dismiss her on grounds of insubordination. Raymundo opposed said
application by filing a complaint for illegal dismissal and for money claims.
With respect to Zenaida Bustamante, she failed to report for work despite the expiration of her
suspension on October 23, 1978. Petitioner contends that said failure constitutes abandonment
which it later invoke as ground for clearance application to dismiss her from employment filed on
November 10, 1978. Like Raymundo, Zenaida Bustamante opposed the clearance application by
filing a complaint for illegal dismissal claiming that her alleged failure to report for work was due to
illness, as in fact, she was treated by one Dr. Lorenzo Yuson for fever and severe stomach ache on
October 15, 1978.
Ruth Corpuz, like the two aforenamed co-respondents of hers, was also given a warning for refusal
to render overtime work on another date, August 30, 1978. She was subsequently dismissed on
October 4, 1978 for having written a chalk mark on a nylon jacket for export allegedly a violation of
Rule 26 of petitioner's rules and regulations, which provides: "Employees are strictly prohibited from
defacing or writing on walls of the factory, toilets or any other company property." The clearance
application for her dismissal was filed only on October 5, 1978 which she also opposed by filing a
complaint for illegal dismissal.
The case was submitted for conciliation proceedings, but no settlement was arrived at, whereupon,
the Acting Director of National Capital Region, MOLE, required the parties to submit their respective
position papers, after which, the case was deemed submitted for resolution.
On March 6, 1979, the Acting Director of National Capital Region, MOLE, issued an order granting
petitioner's application for clearance to terminate the employment of private respondents and
dismissing their complaints for lack of merit.
Private respondents appealed the order to the National Labor Relations Commission on March 22,
1979. Meanwhile, the Acting Director of the National Capital Region, MOLE, elevated the records of
the case to the Labor Appeals and Review Staff, Office of the Minister of Labor on April 17, 1979. 3
On January 20, 1981, the Minister of Labor rendered a decision reversing the appealed order and
directed petitioner to reinstate private respondents Luz Raymundo, Zenaida Bustamante and Ruth
Corpuz to their former positions without loss of seniority rights and privileges and with full
backwages.
Petitioner's motion for reconsideration was denied by the Minister of Labor in an order 4 dated
February 9, 1981.
Hence, this petition for certiorari.
After the Solicitor General and private respondents filed their respective COMMENTS on the petition
in compliance with the resolution of this Court of March 16, 1981, petitioner filed on June 25, 1981 a
motion 5 which reads:
PETITIONER respectfully states that one of the private respondents, Ruth Corpuz de
Leon, has executed a sworn statement manifesting her desire to withdraw the
complaint against petitioner in Case No. R4-STF-10-6695-78, Region 4, Ministry of
Labor, absolving petitioner from any and all of the charges contained in the
complaint, and stating that she did not execute and sign the appeal to the respondent
National Labor Relations Commission and had no intention of doing so and it was
private respondent Luz Raymundo who signed her name on the appeal. A copy of
the affidavit is hereto attached and made integral part hereof.
WHEREFORE, it is respectfully prayed that an order issue vacating the decision of

the respondent Minister of Labor and Employment, subject matter of the petition,
insofar as it orders reinstateinent of Ruth Corpuz de Leon without loss of seniority
right and privilege and with full backwages, absolving petitioner from her complaint in
Case No. R4-STF-10-6695-78, Region 4. Ministry of Labor and striking out the
comment of private respondents in this case as to her.
In a Resolution 6 dated November 4, 1981, this Court, acting on the aforequoted motion, the
Comment 7 of private respondents Luz Raymundo and Zenaida Bustamante thereon, and the
Reply 8 of petitioner thereto, as well as the motion to dismiss 9 personally filed by Ruth Corpuz de
Leon assisted by her husband Jesus de Leon and her complaint/claim which was confirmed by
petitioner in its Comment 10 on said motion to dismiss, GRANTED the dismissal of the
complaint/claim of respondent Ruth Corpuz de Leon against petitioner.
Meanwhile, the petition was given due course.

Petitioner would want Us to annul the decision of the Minister of Labor assailed to have been
rendered without and/or lack of jurisdiction, and in lieu thereof, sustain the order of the Acting
Director of the National Capital Region, MOLE, granting the clearance application to dismiss Luz
Raymundo, Zenaida Bustamante and Ruth Corpuz. As herein earlier stated, Ruth Corpuz had
withdrawn her complaint/claim against petitioner, hence, the resolution of the instant appeal applies
only to Luz Raymundo and Zenaida Bustamante, the two (2) remaining employees.
In support of the jurisdictional issue raised, petitioner contends that private respondents' appeal from
the order dated March 6, 1979 of the Acting Director of the National Capital Region granting the
application for clearance to dismiss them was not perfected on time for failure to furnish petitioner a
copy of the appeal pursuant to Article 223 of the New Labor Code and-Section 9, Rule XIII of its
Implementing Rules and Regulations, thus making the order appealed from, final and executory.
Further, it is the contention of petitioner that it was denied due process of law because it was not
given the opportunity to present evidence to rebut private respondents' documentary evidence
allegedly submitted only on appeal.
Stripped of procedural technicalities, the decisive issue before Us-is whether or not sufficient legal
grounds exist under the relevant facts and applicable law to justify the dismissal of private
respondents Luz Raymundo and Zenaida Bustamante.
Our answer is in the negative.
While it is true that it is the sole prerogative of the management to dismiss or lay-off an employee,
the exercise of such a prerogative, however, must be made without abuse of discretion, for what is
at stake is not only private respondents' positions but also their means of livelihood. Basically, the
right of an employer to dismiss an employee differs from and should not be confused with the
manner in which such right is exercised. It must not be oppressive and abusive since it affects one's
person and property. 11
In the case of Luz Raymundo, she was charged of insubordination for allegedly refusing to work on a
Sunday, October 15, 1978, which was her rest day. The records show that the day before, she
requested exemption from work on that Sunday. In fact, she was granted a clearance slip (Exhibit
"B") allowing her to be absent on that Sunday by her immediate supervisor (Department Head). She
had a valid ground, therefore, not to work on that Sunday, and her failure to report that day can not
be considered as gross insubordination. The disapproval of her request by top management
reasonably creates the impression of a hostile attitude characterizing the efforts of petitioner
(Management) of easing out with undue haste the services of private respondents. Besides,
petitioner has not shown that Luz Raymundo's failure to report for work on that Sunday, October 15,
1978, constitutes one of the just causes for termination under Article 283 of the New Labor Code.
On the other hand, in the case of Zenaida Bustamante, she allegedly abandoned her employment by
failing to report for work after the expiration of her suspension on October 23, 1978. Like Luz
Raymundo, her one week suspension arose from her failure to report for work on a Sunday, October
15, 1978 which as explained in her opposition to the clearance application, was not without reason
because on that day, she was ill and in fact treated by Dr. Lorenzo Yuson for fever and severe
stomach ache as shown by the medical certificate (Exhibit "C"). On the consequent charge of
abandonment, it must be noted that Zenaida Bustamante flied a complaint for illegal dismissal on
November 15, 1978 to oppose the clearance application to dismiss her. Of course, it is a recognized
principle that abandonment of work by an employee is inconsistent with the immediate filing of a
complaint for illegal dismissal.12It would be illogical for Zenaida Bustamante to abandon her job and
then immediately file an action seeking her reinstatement. At that time, no employee would
recklessly abandon her job knowing fully well the acute unemployment problem then existing and the
difficulty of looking for a means of livelihood.
The illegality of the dismissal of the herein private respondents, under the facts and circumstances
disclosed, becomes even more apparent in the light of the express provision of the Constitution,
requiring the State to assure the workers "security of tenure" and "just and humane conditions of
work." 13 The constitutional mandate of security of tenure and just and humane conditions of work,
both as aspects of the protection accorded to labor, militates against the severity of the sanction
imposed on private respondents. The penalty of dismissal from the service, even assuming
petitioner's charges to be true, is too severe a penalty. It is a penalty out of proportion to the offense
committed-failure to report for work on a Sunday (October 15, 1978) — when after all, suspension
would suffice. The dismissal came as an afterthought because private respondents were already
suspended for one week. The lack of sympathetic understanding of the underlying reasons for their
absence aggravated by the indecent haste attendant to the efforts of petitioner to terminate the
services of private respondents portray a total disregard of the constitutional mandate of "security of
tenure" and "just and humane conditions of work" which the State is mandated to protect. The New
Labor Code is clear on this point. It is the duty of every employer, whether operating for profit or not,
to provide each of his employees a rest period of not less than twenty four (24) hours after every six
(6) consecutive normal work days. 14 Even if there really existed an urgency to require work on a rest
day, (which is not in the instant case) outright dismissal from employment is so severe a
consequence, more so when justifiable grounds exist for failure to report for work.
From the other standpoint, We find the objections raised grounded on procedural technicalities
devoid of merit. The mere failure to furnish copy of the appeal memorandum to adverse party is not
a fatal defect. We have consistently adhered to the principle clearly held in Alonso vs. Villamor15 that
"technicality when it deserts its proper office as an aid to justice and becomes its great hindrance
and chief enemy, deserves scant consideration from court." In a more forceful language, Mr. Chief
Justice Enrique M. Fernando, speaking for the Court, in Meracap vs. International Ceramics
Manufacturing Co., Inc.16 stated "for the strictly juridical standpoint, it cannot be too strongly stressed,
to follow Davis in his masterly work, Discretionary Justice, that where a decision may be made to
rest on informed judgment rather than rigid rules, all the equities of the case must be accorded their
due weight. Finally, labor law determinations, to quote from Bultmann, should be not only secundum
retionem but also secundum caritatem. " More recently, we held that in appeals in labor cases, non-
service of the copy of the appeal or appeal memorandum to the adverse party is not a jurisdictional
defect, and does not justify dimissal of the appeal. 17 Likewise, it was held that dismissal of an
employee's appeal on a purely technical ground is inconsistent with the constitutional mandate on
protection to labor. 18
Petitioner's belated claim of lack of jurisdiction on the ground that it was the Minister of Labor, and
not the National Labor Relations Commission, which acted on the appeal pursuant to Article 217 of
the New Labor, lacks merit. The records of the case were forwarded by the Acting Director of the
National Capital Region to the Labor Appeals and Review Staff, Office of the Minister of Labor in an
order dated April 17, 1979 with the knowledge of petitioner. Having failed to manifest its objection,
but chose instead to await the decision of the Minister of Labor, petitioner is now estopped from
questioning the exercise of jurisdiction by the Minister of Labor after an adverse decision have been
rendered against it. We cannot countenance petitioner's stance of speculating on the possibility of a
favorable decision from the Minister of Labor and later on question the latter's jurisdiction after an
adverse decision.
As regards the due process argument, petitioner contend that it was denied the opportunity to cross-
examine private respondents and rebut their documentary evidence allegedly submitted only on
appeal. At the inception of the case however, both parties, after failing to arrive at an amicable
settlement, agreed to submit their case for resolution on the basis of their respective position papers.
While private respondents insisted on its claim that they have submitted their documentary evidence
together with their position papers, petitioner, on the other hand, claim otherwise. Surprisingly
though, it is only after the rendition of an adverse decision that petitioner now raised this matter of
non-submission of documentary evidence. And petitioner did not insist on this alleged
nonsubmission of evidence apparently because the Acting Director of the National Capital Region
decided the case in its favor.
Even on the assumption that no documentary evidence was ever submitted by private respondents,
still, on appeal, the entire record of the case was reviewed by the respondent Minister of Labor and
in fact, decided the case on the merits. Besides, a motion for reconsideration filed by petitioner
invoking due process cured the defect based on the alleged lack of procedural due process. 19 On its
argument that it was denied the opportunity to rebut private respondents' documentary evidence
allegedly submitted only on appeal, it is interesting to note that in the application for clearance to
dismiss employees, the employer is required to present evidence before the former can present any
contrary evidence. Petitioner's technical objections pointedly create an impression of the weakness
of its stand on the merits of the case.
Notwithstanding the foregoing, We are convinced, after a closer examination of the records, that
indeed there is no reasonable ground for the outright dismissal of Luz Raymundo and Zenaida
Bustamante.
Petitioner therefore is under obligation to REINSTATE Luz Raymundo and Zenaida Bustamante to
their former or substantially equivalent positions without loss of seniority rights and privileges with
three-year (3) backwages 20 to be computed from October 23, 1978, the date of expiration of their
suspension.
WHEREFORE, finding the instant petition to be without merit, the same is hereby DISMISSED. The
appealed decision of the Minister of Labor and Employment dated January 21, 1981 is hereby
AFFIRMED.
Petitioner Remerco Garments Manufacturing is hereby ordered to reinstate Luz Raymundo and
Zenaida Bustamante to their former or substantially equivalent position without loss of seniority
rights and privileges with three-year (3) backwages computed from October 23, 1978.
No costs.
SO ORDERED.
d. Holidays and Service Incentive Leaves
G.R. No. 146775 January 30, 2002
SAN MIGUEL CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS-FORMER THIRTEENTH DIVISION, HON.
UNDERSECRETARY JOSE M. ESPAÑOL, JR., Hon. CRESENCIANO B. TRAJANO, and
HON. REGIONAL DIRECTOR ALLAN M. MACARAYA, respondents.
DECISION
KAPUNAN, J.:
Assailed in the petition before us are the decision, promulgated on 08 May 2000, and the resolution,
promulgated on 18 October 2000, of the Court of Appeals in CA G.R. SP-53269.
The facts of the case are as follows:
On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District Office,
conducted a routine inspection in the premises of San Miguel Corporation (SMC) in Sta. Filomena,
Iligan City. In the course of the inspection, it was discovered that there was underpayment by SMC
of regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection result to SMC
and it was received by and explained to its personnel officer Elena dela Puerta.1 SMC contested the
findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993 and 4 and 5
October 1993. Still, SMC failed to submit proof that it was paying regular Muslim holiday pay to its
employees. Hence, Alan M. Macaraya, Director IV of DOLE Iligan District Office issued a compliance
order, dated 17 December 1993, directing SMC to consider Muslim holidays as regular holidays and
to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days from the receipt
of the order.
SMC appealed to the DOLE main office in Manila but its appeal was dismissed for having been filed
late. The dismissal of the appeal for late filing was later on reconsidered in the order of 17 July 1998
after it was found that the appeal was filed within the reglementary period. However, the appeal was
still dismissed for lack of merit and the order of Director Macaraya was affirmed.
SMC went to this Court for relief via a petition for certiorari, which this Court referred to the Court of
Appeals pursuant to St. Martin Funeral Homes vs. NLRC.2
The appellate court, in the now questioned decision, promulgated on 08 May 2000, ruled, as follows:
WHEREFORE, the Order dated December 17, 1993 of Director Macaraya and Order dated July 17,
1998 of Undersecretary Español, Jr. is hereby MODIFIED with regards the payment of Muslim
holiday pay from 200% to 150% of the employee's basic salary. Let this case be remanded to the
Regional Director for the proper computation of the said holiday pay.
SO ORDERED.3
Its motion for reconsideration having been denied for lack of merit, SMC filed a petition
for certiorari before this Court, alleging that:
PUBLIC RESPONDENTS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF

DISCRETION WHEN THEY GRANTED MUSLIM HOLIDAY PAY TO NON-MUSLIM EMPLOYEES
OF SMC-ILICOCO AND ORDERING SMC TO PAY THE SAME RETROACTIVE FOR ONE (1)
YEAR FROM THE DATE OF THE PROMULGATION OF THE COMPLIANCE ORDER ISSUED ON
DECEMBER 17, 1993, IT BEING CONTRARY TO THE PROVISIONS, INTENT AND PURPOSE OF
P.D. 1083 AND PREVAILING JURISPRUDENCE.
THE ISSUANCE OF THE COMPLIANCE ORDER WAS TAINTED WITH GRAVE ABUSE OF
DISCRETION IN THAT SAN MIGUEL CORPORATION WAS NOT ACCORDED DUE PROCESS
OF LAW; HENCE, THE ASSAILED COMPLIANCE ORDER AND ALL SUBSEQUENT ORDERS,
DECISION AND RESOLUTION OF PUBLIC RESPONDENTS WERE ALL ISSUED WITH GRAVE
ABUSE OF DISCRETION AND ARE VOID AB INITIO.
THE HON. COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT

DECLARED THAT REGIONAL DIRECTOR MACARAYA, UNDERSECRETARY TRAJANO AND
UNDERSECRETARY ESPAÑOL, JR., WHO ALL LIKEWISE ACTED WITH GRAVE ABUSE OF
DISCRETION AND WITHOUT OR IN EXCESS OF THEIR JURISDICTION, HAVE JURISDICTION
IN ISSUING THE ASSAILED COMPLIANCE ORDER AND SUBSEQUENT ORDERS, WHEN IN
FACT THEY HAVE NO JURISDICTION OR HAS LOST JURISDICTION OVER THE HEREIN
LABOR STANDARD CASE.4
At the outset, petitioner came to this Court via a petition for certiorari under Rule 65 instead of an
appeal under Rule 45 of the 1997 Rules of Civil Procedure. In National Irrigation Administration vs.
Court of Appeals,5 the Court declared:
x x x (S)ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors
committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable by
timely appeal and not by a special civil action of certiorari. If the aggrieved party fails to do so within
the reglementary period, and the decision accordingly becomes final and executory, he cannot avail
himself of the writ of certiorari, his predicament being the effect of his deliberate inaction.
The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 and
not a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65, respectively,
of the 1997 Rules of Civil Procedure. Rule 45 is clear that decisions, final orders or resolutions of the
Court of Appeals in any case, i.e.,regardless of the nature of the action or proceeding involved, may
be appealed to this Court by filing a petition for review, which would be but a continuation of the
appellate process over the original case. Under Rule 45 the reglementary period to appeal is fifteen
(15) days from notice of judgment or denial of motion for reconsideration.
xxx
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must show that he
has no plain, speedy and adequate remedy in the ordinary course of law against its perceived
grievance. A remedy is considered "plain, speedy and adequate" if it will promptly relieve the
petitioner from the injurious effects of the judgment and the acts of the lower court or agency. In this
case, appeal was not only available but also a speedy and adequate remedy.6
Well-settled is the rule that certiorari cannot be availed of as a substitute for a lost appeal.7 For failure
of petitioner to file a timely appeal, the questioned decision of the Court of Appeals had already
become final and executory.
In any event, the Court finds no reason to reverse the decision of the Court of Appeals.
Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No.
1083,8otherwise known as the Code of Muslim Personal Laws, which states:
Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays:
(a) ‘Amun Jadīd (New Year), which falls on the first day of the first lunar month of Muharram;
(b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar
month of Rabi-ul-Awwal;
(c) Lailatul Isrā Wal Mi’rāj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on
the twenty-seventh day of the seventh lunar month of Rajab;
(d) ‘Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and
(e) ‘Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhū’l-Hijja.
Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially
observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North
Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities
as may hereafter be created;
(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially
observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which
provides:
Art. 94. Right to holiday pay. -
(a) Every worker shall be paid his regular daily wage during regular holidays, except in retail
and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall
be paid a compensation equivalent to twice his regular rate; x x x.
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "(t)he provisions of
this Code shall be applicable only to Muslims x x x." However, there should be no distinction
between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. The Court
of Appeals did not err in sustaining Undersecretary Español who stated:
Assuming arguendo that the respondent’s position is correct, then by the same token, Muslims
throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by law
as regular holidays. We must remind the respondent-appellant that wages and other emoluments
granted by law to the working man are determined on the basis of the criteria laid down by laws and
certainly not on the basis of the worker’s faith or religion.
At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that "x x x nothing herein shall
be construed to operate to the prejudice of a non-Muslim."
In addition, the 1999 Handbook on Workers’ Statutory Benefits, approved by then DOLE Secretary
Bienvenido E. Laguesma on 14 December 1999 categorically stated:
Considering that all private corporations, offices, agencies, and entities or establishments operating
within the designated Muslim provinces and cities are required to observe Muslim holidays, both
Muslim and Christians working within the Muslim areas may not report for work on the days
designated by law as Muslim holidays.9
On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya, Article 128,
Section B of the Labor Code, as amended by Republic Act No. 7730, provides:
"Article 128. Visitorial and enforcement power. -
xxx
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment or
his duly authorized representatives shall have the power to issue compliance orders to give effect to
the labor standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of the
inspection. The Secretary or his duly authorized representative shall issue writs of execution to the
appropriate authority for the enforcement of their orders, except in cases where the employer
contests the findings of the labor employment and enforcement officer and raises issues supported
by documentary proofs which were not considered in the course of inspection.
xxx
In the case before us, Regional Director Macaraya acted as the duly authorized representative of the
Secretary of Labor and Employment and it was within his power to issue the compliance order to
SMC. In addition, the Court agrees with the Solicitor General that the petitioner did not deny that it
was not paying Muslim holiday pay to its non-Muslim employees. Indeed, petitioner merely contends
that its non-Muslim employees are not entitled to Muslim holiday pay. Hence, the issue could be
resolved even without documentary proofs. In any case, there was no indication that Regional
Director Macaraya failed to consider any documentary proof presented by SMC in the course of the
inspection.
Anent the allegation that petitioner was not accorded due process, we sustain the Court of Appeals
in finding that SMC was furnished a copy of the inspection order and it was received by and
explained to its Personnel Officer. Further, a series of summary hearings were conducted by DOLE
on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Thus, SMC could not claim that it
was not given an opportunity to defend itself.
Finally, as regards the allegation that the issue on Muslim holiday pay was already resolved in NLRC
CA No. M-000915-92 (Napoleon E. Fernan vs. San Miguel Corporation Beer Division and Leopoldo
Zaldarriaga),10 the Court notes that the case was primarily for illegal dismissal and the claim for
benefits was only incidental to the main case. In that case, the NLRC Cagayan de Oro City declared,
in passing:
We also deny the claims for Muslim holiday pay for lack of factual and legal basis. Muslim holidays 1âwphi1
are legally observed within the area of jurisdiction of the present Autonomous Region for Muslim
Mindanao (ARMM), particularly in the provinces of Maguindanao, Lanao del Sur, Sulu and Tawi-
Tawi. It is only upon Presidential Proclamation that Muslim holidays may be officially observed
1âwphi1
outside the Autonomous Region and generally extends to Muslims to enable them the observe said
holidays.11
The decision has no consequence to issues before us, and as aptly declared by Undersecretary
Español, it "can never be a benchmark nor a guideline to the present case x x x."12
WHEREFORE, in view of the foregoing, the petition is DISMISSED.
SO ORDERED.
G.R. No. L-65482 December 1, 1987
JOSE RIZAL COLLEGE, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.
PARAS, J.:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary injunction, seeking
the annulment of the decision of the National Labor Relations Commission * in NLRC Case No. RB-IV 23037-
78 (Case No. R4-1-1081-71) entitled "National Alliance of Teachers and Office Workers and Juan E. Estacio, Jaime Medina, et al. vs. Jose
Rizal College" modifying the decision of the Labor Arbiter as follows:
WHEREFORE, in view of the foregoing considerations, the decision appealed from is
MODIFIED, in the sense that teaching personnel paid by the hour are hereby
declared to be entitled to holiday pay.
SO ORDERED.
The factual background of this case which is undisputed is as follows:
Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws
of the Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly
basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual
number of working days in a month without deduction for holidays; (b) personnel on daily basis who
are paid on actual days worked and they receive unworked holiday pay and (c) collegiate faculty
who are paid on the basis of student contract hour. Before the start of the semester they sign
contracts with the college undertaking to meet their classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private
respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty and
personnel of Jose Rizal College filed with the Ministry of Labor a complaint against the college for
said alleged non-payment of holiday pay, docketed as Case No. R04-10-81-72. Due to the failure of
the parties to settle their differences on conciliation, the case was certified for compulsory arbitration
where it was docketed as RB-IV-23037-78 (Rollo, pp. 155-156).
After the parties had submitted their respective position papers, the Labor Arbiter ** rendered a decision on
February 5, 1979, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. The faculty and personnel of the respondent Jose Rizal College who are paid their
salary by the month uniformly in a school year, irrespective of the number of working
days in a month, without deduction for holidays, are presumed to be already paid the
10 paid legal holidays and are no longer entitled to separate payment for the said
regular holidays;
2. The personnel of the respondent Jose Rizal College who are paid their wages
daily are entitled to be paid the 10 unworked regular holidays according to the
pertinent provisions of the Rules and Regulations Implementing the Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid
compensation per student contract hour are not entitled to unworked regular holiday
pay considering that these regular holidays have been excluded in the programming
of the student contact hours. (Rollo. pp. 26-27)
On appeal, respondent National Labor Relations Commission in a decision promulgated on June 2,

1982, modified the decision appealed from, in the sense that teaching personnel paid by the hour
are declared to be entitled to holiday pay (Rollo. p. 33).
Hence, this petition.
The sole issue in this case is whether or not the school faculty who according to their contracts are
paid per lecture hour are entitled to unworked holiday pay.
Labor Arbiter Julio Andres, Jr. found that faculty and personnel employed by petitioner who are paid
their salaries monthly, are uniformly paid throughout the school year regardless of working days,
hence their holiday pay are included therein while the daily paid employees are renumerated for
work performed during holidays per affidavit of petitioner's treasurer (Rollo, pp. 72-73).
There appears to be no problem therefore as to the first two classes or categories of petitioner's
workers.
The problem, however, lies with its faculty members, who are paid on an hourly basis, for while the
Labor Arbiter sustains the view that said instructors and professors are not entitled to holiday pay,
his decision was modified by the National Labor Relations Commission holding the contrary.
Otherwise stated, on appeal the NLRC ruled that teaching personnel paid by the hour are declared
to be entitled to holiday pay.
Petitioner maintains the position among others, that it is not covered by Book V of the Labor Code
on Labor Relations considering that it is a non- profit institution and that its hourly paid faculty
members are paid on a "contract" basis because they are required to hold classes for a particular
number of hours. In the programming of these student contract hours, legal holidays are excluded
and labelled in the schedule as "no class day. " On the other hand, if a regular week day is declared
a holiday, the school calendar is extended to compensate for that day. Thus petitioner argues that
the advent of any of the legal holidays within the semester will not affect the faculty's salary because
this day is not included in their schedule while the calendar is extended to compensate for special
holidays. Thus the programmed number of lecture hours is not diminished (Rollo, pp. 157- 158).
The Solicitor General on the other hand, argues that under Article 94 of the Labor Code (P.D. No.
442 as amended), holiday pay applies to all employees except those in retail and service
establishments. To deprive therefore employees paid at an hourly rate of unworked holiday pay is
contrary to the policy considerations underlying such presidential enactment, and its precursor, the
Blue Sunday Law (Republic Act No. 946) apart from the constitutional mandate to grant greater
rights to labor (Constitution, Article II, Section 9). (Reno, pp. 76-77).
In addition, respondent National Labor Relations Commission in its decision promulgated on June 2,
1982, ruled that the purpose of a holiday pay is obvious; that is to prevent diminution of the monthly
income of the workers on account of work interruptions. In other words, although the worker is forced
to take a rest, he earns what he should earn. That is his holiday pay. It is no excuse therefore that
the school calendar is extended whenever holidays occur, because such happens only in cases of
special holidays (Rollo, p. 32).
Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442, as amended),
which reads:
Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate; ... "
and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
SEC. 8. Holiday pay of certain employees. — (a) Private school teachers, including
faculty members of colleges and universities, may not be paid for the regular
holidays during semestral vacations. They shall, however, be paid for the regular
holidays during Christmas vacations. ...
Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is under
obligation to give pay even on unworked regular holidays to hourly paid faculty members subject to
the terms and conditions provided for therein.
We believe that the aforementioned implementing rule is not justified by the provisions of the law
which after all is silent with respect to faculty members paid by the hour who because of their
teaching contracts are obliged to work and consent to be paid only for work actually done (except
when an emergency or a fortuitous event or a national need calls for the declaration of special
holidays). Regular holidays specified as such by law are known to both school and faculty members
as no class days;" certainly the latter do not expect payment for said unworked days, and this was
clearly in their minds when they entered into the teaching contracts.
On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to
payment on Special Public Holidays.
It is readily apparent that the declared purpose of the holiday pay which is the prevention of
diminution of the monthly income of the employees on account of work interruptions is defeated
when a regular class day is cancelled on account of a special public holiday and class hours are
held on another working day to make up for time lost in the school calendar. Otherwise stated, the
faculty member, although forced to take a rest, does not earn what he should earn on that day. Be it
noted that when a special public holiday is declared, the faculty member paid by the hour is deprived
of expected income, and it does not matter that the school calendar is extended in view of the days
or hours lost, for their income that could be earned from other sources is lost during the extended
days. Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and
the like, these faculty members must likewise be paid, whether or not extensions are ordered.
Petitioner alleges that it was deprived of due process as it was not notified of the appeal made to the
NLRC against the decision of the labor arbiter.
The Court has already set forth what is now known as the "cardinal primary" requirements of due
process in administrative proceedings, to wit: "(1) the right to a hearing which includes the right to
present one's case and submit evidence in support thereof; (2) the tribunal must consider the
evidence presented; (3) the decision must have something to support itself; (4) the evidence must be
substantial, and substantial evidence means such evidence as a reasonable mind might accept as
adequate to support a conclusion; (5) the decision must be based on the evidence presented at the
hearing, or at least contained in the record and disclosed to the parties affected; (6) the tribunal or
body of any of its judges must act on its or his own independent consideration of the law and facts of
the controversy, and not simply accept the views of a subordinate; (7) the board or body should in all
controversial questions, render its decisions in such manner that the parties to the proceeding can
know the various issues involved, and the reason for the decision rendered. " (Doruelo vs.
Commission on Elections, 133 SCRA 382 [1984]).
The records show petitioner JRC was amply heard and represented in the instant proceedings. It
submitted its position paper before the Labor Arbiter and the NLRC and even filed a motion for
reconsideration of the decision of the latter, as well as an "Urgent Motion for Hearing En Banc"
(Rollo, p. 175). Thus, petitioner's claim of lack of due process is unfounded.
PREMISES CONSIDERED, the decision of respondent National Labor Relations Commission is

hereby set aside, and a new one is hereby RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays,
whether the same be during the regular semesters of the school year or during semestral,
Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as
special holidays or for some reason classes are called off or shortened for the hours they are
supposed to have taught, whether extensions of class days be ordered or not; in case of extensions
said faculty members shall likewise be paid their hourly rates should they teach during said
extensions.
SO ORDERED.
G.R. No. 79255 January 20, 1992

UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTLÉ
PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GUTIERREZ, JR., J.:
This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the
change of the divisor in the computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National
Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and
obligations respecting claims of its monthly paid employees for holiday pay in the light of the Court's
decision in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the Code,
subject only to the exclusions and limitations specified in Article 82 and such other
legal restrictions as are provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and
(3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation
and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity of the
Labor Code, that their sales personnel are not field personnel and are therefore entitled to holiday
pay, and that the use of 251 as divisor is an established employee benefit which cannot be
diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the
holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He
adjudged, however, that the company's sales personnel are field personnel and, as such, are not
entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor
should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime,
night differential, vacation and sick leave pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator
treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution
dated May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no
jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor
Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the
rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the
case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned
from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from
251 to 261 days and whether or not the previous use of 251 as divisor resulted in overpayment for
overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of
the Labor Code. The respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel
as "non-agritultural employees who regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the field
cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to
the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales
personnel's working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be reasonably
ascertained. The company has no way of determining whether or not these sales personnel, even if
they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend
the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to report
for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the
realm of work in the field as defined in the Code but an exercise of purely
management prerogative of providing administrative control over such personnel.
This does not in any manner provide a reasonable level of determination on the
actual field work of the employees which can be reasonably ascertained. The
theoretical analysis that salesmen and other similarly-situated workers regularly
report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m.,
creating the assumption that their field work is supervised, is surface projection.
Actual field work begins after 8:00 a.m., when the sales personnel follow their field
itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to
their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their
hours of work in the field, the extent or scope and result of which are subject to their
individual capacity and industry and which "cannot be determined with reasonable
certainty." This is the reason why effective supervision over field work of salesmen
and medical representatives, truck drivers and merchandisers is practically a
physical impossibility. Consequently, they are excluded from the ten holidays with
pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be determined with
reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules
which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage — This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied)
While contending that such rule added another element not found in the law (Rollo, p. 13), the
petitioner nevertheless attempted to show that its affected members are not covered by the
abovementioned rule. The petitioner asserts that the company's sales personnel are strictly
supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated
March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add
another element to the Labor Code definition of field personnel. The clause "whose time and
performance is unsupervised by the employer" did not amplify but merely interpreted and expounded
the clause "whose actual hours of work in the field cannot be determined with reasonable certainty."
The former clause is still within the scope and purview of Article 82 which defines field personnel.
Hence, in deciding whether or not an employee's actual working hours in the field can be determined
with reasonable certainty, query must be made as to whether or not such employee's time and
performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales
personnel's time and performance are supervised. The purpose of this schedule is merely to ensure
that the sales personnel are out of the office not later than 8:00 a.m. and are back in the office not
earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual hours spent in
field work by an employee through the imposition of sanctions on absenteeism contained in the
company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter
based on their performance is proof that their actual hours of work in the field can be determined
with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales
target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good
merchandising work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely
because of the difficulty in measuring their actual hours of field work. These employees are
evaluated by the result of their work and not by the actual hours of field work which are hardly
susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had
occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea
Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent. Such a
salesman, to a greater extent, works individually. There are no restrictions respecting
the time he shall work and he can earn as much or as little, within the range of his
ability, as his ambition dictates. In lieu of overtime he ordinarily receives
commissions as extra compensation. He works away from his employer's place of
business, is not subject to the personal supervision of his employer, and his
employer has no way of knowing the number of hours he works per day.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the same
rationale for their exclusion as field personnel from holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award
of holiday pay, the divisor should be changed from 251 to 261 days to include the additional 10
holidays and the employees should reimburse the amounts overpaid by Filipro due to the use of 251
days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of ten holidays
certainly adds to or accelerates the basis of conversion and computation by ten days.
With the inclusion of ten holidays as paid days, the divisor is no longer 251 but 261
or 262 if election day is counted. This is indeed an extremely difficult legal question
of interpretation which accounts for what is claimed as falling within the concept of
"solutio indebti."
When the claim of the Union for payment of ten holidays was granted, there was a
consequent need to abandon that 251 divisor. To maintain it would create an
impossible situation where the employees would benefit with additional ten days with
pay but would simultaneously enjoy higher benefits by discarding the same ten days
for purposes of computing overtime and night time services and considering sick and
vacation leave credits. Therefore, reimbursement of such overpayment with the use
of 251 as divisor arises concomitant with the award of ten holidays with pay. (Rollo,
p. 34)
The divisor assumes an important role in determining whether or not holiday pay is already included
in the monthly paid employee's salary and in the computation of his daily rate. This is the thrust of
our pronouncement in Chartered Bank Employees Association v. Ople (supra). In that case, We
held:
It is argued that even without the presumption found in the rules and in the policy
instruction, the company practice indicates that the monthly salaries of the
employees are so computed as to include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered
Bank, in computing overtime compensation for its employees, employs a "divisor" of
251 days. The 251 working days divisor is the result of subtracting all Saturdays,
Sundays and the ten (10) legal holidays from the total number of calendar days in a
year. If the employees are already paid for all non-working days, the divisor should
be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:
monthly rate x 12 months
———————————
251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by
respondent Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise
the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary increases, is a
constant figure for the purpose of computing overtime and night differential pay and commutation of
sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for
computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower
daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the
Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend,
which represents the employee's annual salary, should correspondingly be increased to incorporate
the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is
P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10
days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 +
1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in respondent
Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave
benefits, the computation of which are all based on the daily rate, since the daily rate is still the same
before and after the grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days
as divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be resolved in
favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day
working schedule, the divisor used by the company was 303, indicating that the 10 holidays were
likewise not paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the
chance to rectify its error, if ever there was one but did not do so. It is now too late to allege payment
by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from
November 1, 1974. This ruling was not questioned by the petitioner union as obviously said decision
was favorable to it. Technically, therefore, respondent Nestle should have filed a separate petition
raising the issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is
not an appellant may assign errors in his brief where his purpose is to maintain the judgment on
other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief
unless he has also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing
La Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394
[1986]). Nevertheless, in order to fully settle the issues so that the execution of the Court's decision
in this case may not be needlessly delayed by another petition, the Court resolved to take up the
matter of effectivity of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when
the Chartered Bank decision, promulgated on August 28, 1985, became final and executory, and not
from the date of effectivity of the Labor Code. Although the Court does not entirely agree with Nestle,
we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984],
hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February
16, 1976 and April 23, 1976, respectively, and which excluded monthly paid employees from holiday
pay benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor
Code's provisions on holiday pay, the aforementioned implementing rule and policy instruction
amended them by enlarging the scope of their exclusion. The Chartered Bank case reiterated the
above ruling and added the "divisor" test.
However, prior to their being declared null and void, the implementing rule and policy instruction
enjoyed the presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the
promulgation of the IBAA case on October 23, 1984 was in compliance with these presumably valid
rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed
the effect to be given to a legislative or executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity such challenged
legislative or executive act must have been in force and had to be complied with.
This is so as until after the judiciary, in an appropriate case, declares its invalidity, it
is entitled to obedience and respect. Parties may have acted under it and may have
changed their positions. What could be more fitting than that in a subsequent
litigation regard be had to what has been done while such legislative or executive act
was in operation and presumed to be valid in all respects. It is now accepted as a
doctrine that prior to its being nullified, its existence as a fact must be reckoned with.
This is merely to reflect awareness that precisely because the judiciary is the
government organ which has the final say on whether or not a legislative or executive
measure is valid, a period of time may have elapsed before it can exercise the power
of judicial review that may lead to a declaration of nullity. It would be to deprive the
law of its quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a

statute, prior to such a determination of [unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, — with respect to particular
relations, individual and corporate, and particular conduct, private and official."
(Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This
language has been quoted with approval in a resolution in Araneta v. Hill (93 Phil.
1002 [1952]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738
[1956]). An even more recent instance is the opinion of Justice Zaldivar speaking for
the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness
and resulting unfairness must be avoided. It is now almost the end of 1991. To require various
companies to reach back to 1975 now and nullify acts done in good faith is unduly harsh. 1984 is a
fairer reckoning period under the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on
the implicit validity of the implementing rule and policy instruction before this Court nullified them,
and thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may
have been moved to grant other concessions to its employees, especially in the collective bargaining
agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among
the highest paid in the industry. With this consideration, it would be unfair to impose additional
burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not in any way
attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but from
October 23, 1984, the date of promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in
computing holiday pay shall be 251 days. The holiday pay as above directed shall be computed from
October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED.
SO ORDERED.
[G.R. No. 114734. March 31, 2000.]
VIVIAN Y. IMBUIDO, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, INTERNATIONAL

INFORMATION SERVICES, INC. and GABRIEL LIBRANDO, Respondents.
DECISION
BUENA, J.:
This special civil action for certiorari seeks to set aside the Decision 1 of the National Labor Relations
Commission (NLRC) promulgated on September 27, 1993 and its Order dated January 11, 1994, which
denied petitioner’s motion for reconsideration.
Petitioner was employed as a data encoder by private respondent International Information Services, Inc., a
domestic corporation engaged in the business of data encoding and keypunching, from August 26, 1988
until October 18, 1991 when her services were terminated. From August 26, 1988 until October 18, 1991,
petitioner entered into thirteen (13) separate employment contracts with private respondent, each contract
lasting only for a period of three (3) months. Aside from the basic hourly rate, specific job contract number
and period of employment, each contract contains the following terms and conditions: chanro bles vi rtua llawli bra ry:red
"a. This Contract is for a specific project/job contract only and shall be effective for the period covered as
above-mentioned unless sooner terminated when the job contract is completed earlier or withdrawn by
client, or when employee is dismissed for just and lawful causes provided by law The happening of any of
these events will automatically terminate this contract of employment. chan robles. com.ph : red
"b. Subject shall abide with the Company’s rules and regulations for its employees attached herein to form
an integral part hereof.
"c. The nature of your job may require you to render overtime work with pay so as not to disrupt the
Company’s commitment of scheduled delivery dates made on said job contract." 2
In September 1991, petitioner and twelve (12) other employees of private respondent allegedly agreed to
the filing of a petition for certification election involving the rank-and-file employees of private Respondent.
3 Thus, on October 8, 1991, Lakas Manggagawa sa Pilipinas (LAKAS) filed a petition for certification election
with the Bureau of Labor Relations (BLR), docketed as NCR-OD-M-9110-128 . 4
Subsequently, on October 18, 1991, petitioner received a termination letter from Edna Kasilag,
Administrative Officer of private respondent, allegedly "due to low volume of work." 5
Thus, on May 25, 1992, petitioner filed a complaint for illegal dismissal with prayer for service incentive
leave pay and 13th month differential pay, with the National Labor Relations Commission, National Capital
Region, Arbitration Branch, docketed as NLRC-NCR Case No. 05--02912-92. 6
In her position paper dated August 3, 1992 and filed before labor arbiter Raul T. Aquino, petitioner alleged
that her employment was terminated not due to the alleged low volume of work but because she "signed a
petition for certification election among the rank and file employees of respondents," thus charging private
respondent with committing unfair labor practices. Petitioner further complained of non-payment of service
incentive leave benefits and underpayment of 13th month pay. 7
On the other hand, private respondent, in its position paper filed on July 16, 1992, maintained that it had
valid reasons to terminate petitioners employment and disclaimed any knowledge of the existence or
formation of a union among its rank-and-file employees at the time petitioner’s services were terminated. 8
Private respondent stressed that its business." . . relies heavily on companies availing of its services. Its
retention by client companies with particular emphasis on data encoding is on a project to project basis," 9
usually lasting for a period of "two (2) to five (5) months." Private respondent further argued that
petitioner’s employment was for a "specific project with a specified period of engagement." According to
private respondent,." . . the certainty of the expiration of complainant’s engagement has been determined
at the time of their (sic) engagement (until 27 November 1991) or when the project is earlier completed or
when the client withdraws," as provided in the contract. 10 "The happening of the second event [completion
of the project] has materialized, thus, her contract of employment is deemed terminated per the Brent
School ruling." 11 Finally, private respondent averred that petitioner’s "claims for non-payment of overtime
time (sic) and service incentive leave [pay] are without factual and legal basis." 12 chanroble s virtual l awlibra ry
In a decision dated August 25, 1992, labor arbiter Raul T. Aquino, ruled in favor of petitioner and
accordingly ordered her reinstatement without loss of seniority rights and privileges, and the payment of
backwages and service incentive leave pay. The dispositive part of the said decision reads: jgc:chan roble s.com.p h
"WHEREFORE, responsive to the foregoing, judgment is hereby rendered ordering respondents to
immediately reinstate complainant [petitioner herein] as a regular employee to her former position without
loss of seniority rights and privileges and to pay backwages from the time of dismissal up to the date of this
decision, the same to continue until complainant [’s] [petitioner herein] actual reinstatement from (sic) the
service. Respondents are likewise ordered to pay complainant [petitioner herein] service incentive leave pay
computed as follows: chan robles. com : law lib rary
Backwages: chanro b1es vi rtua l 1aw lib ra ry
10/18/91 - 8/25/92 = 10.23 mos.
P118.00 x 26 x 10.23 mos. = P31, 385.64
Service Incentive Leave Pay
1989=P89.00 x 5 days=P445.00
1990 =106 x 5 days = P530.00
1991 =118 x 5 days = P590 00
————
P1,565.00
Total P32,950.64
=========
SO ORDERED." 13
In his decision, the labor arbiter found petitioner to be a regular employee, ruling that [e]ven if herein
complainant [petitioner herein] had been obstensively (sic) hired for a fixed period or for a specific
undertaking, she should be considered as [a] regular] employee of the respondents in conformity with the
provisions (sic) laid down under Article 280 of the Labor Code," 14 after finding that." . . [i]t is crystal clear
that herein complainant [petitioner herein] performed a job which are (sic) usually necessary or desirable in
the usual business of respondent [s]." 15 The labor arbiter further denounced" ...the purpose behind the
series of contracts which respondents required complainant to execute as a condition of employment was to
evade the true intent and spirit of the labor laws for the working men . . ." 16 Furthermore, the labor arbiter
concluded that petitioner was illegally dismissed because the alleged reason for her termination, that is, low
volume of work, is "not among the just causes for termination recognized by law," 17 hence, he ordered her
immediate reinstatement without loss of seniority rights and with full backwages. With regard to the service
incentive leave pay, the labor arbiter decided . . . to grant the same for failure of the respondents to fully
controvert said claims." 18 Lastly, the labor arbiter rejected petitioner’s claim for 13th month pay" ...since
complainant [petitioner herein] failed to fully substantiate and argued (sic) the same." 19 chanroble s.com : vi rtual lawlib rary
On appeal, the NLRC reversed the decision of the labor arbiter in a decision 20 promulgated on September
27, 1993, the dispositive part of which reads: jgc:chan robles. com.ph
"WHEREFORE, the appealed decision is hereby set aside. The complaint for illegal dismissal is hereby
dismissed for being without merit. Complainant’s [petitioner herein] claim for service incentive leave pay is
hereby remanded for further arbitration.
SO ORDERED." 21
The NLRC ruled that" [t]here is no question that the complainant [petitioner herein], viewed in relation to
said Article 280 of the [Labor] Code, is a regular employee judging from the function and/or work for which
she was hired. . . . But this does not necessarily mean that the complainant [petitioner herein] has to be
guaranteed a tenurial security beyond the period for which she was hired." 22 The NLRC held that ‘. . . the
complainant [petitioner herein], while hired as a regular worker, is statutorily guaranteed, in her tenurial
security, only up to the time the specific project for which she was hired is completed." 23 Hence, the NLRC
concluded that" [w]ith the specific project "at RCBC 014" admittedly completed, the complainant [petitioner
herein] has therefore no valid basis in charging illegal dismissal for her concomitant (sic) dislocation." 24 chan roble s virtua| |aw |ibrary
In an Order dated January 11, 1994, the NLRC denied petitioner’s motion for reconsideration.25 cra law:red
In this petition for certiorari, Petitioner, for and in her behalf, argues that (1) the public respondent
"committed grave abuse of discretion when it ignored the findings of Labor Arbiter Raul Aquino based on the
evidence presented directly before him, and when it made findings of fact that are contrary to or not
supported by evidence," 26 (2)" [p]etitioner was a "regular employee," NOT a "project employee" as found
by public respondent NLRC," 27 (3)" [t]he termination of petition (sic) was tainted with unfair labor
practice," 28 and (4) the public respondent "committed grave abuse of discretion in remanding the awarded
service incentive leave pay for further arbitration." 29
The petition is impressed with merit.

We agree with the findings of the NLRC that petitioner is a project employee. The principal test for
determining whether an employee is a project employee or a regular employee is whether the project
employee was assigned to carry out a specific project or undertaking, the duration and scope of which were
specified at the time the employee was engaged for that project. 30 A project employee is one whose
employment has been fixed for a specific project or undertaking, the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season. 31 In the instant
case, petitioner was engaged to perform activities which were usually necessary or desirable in the usual
business or trade of the employer, as admittedly, petitioner worked as a data encoder for private respondent
a corporation engaged in the business of data encoding and keypunching, and her employment was fixed for
a specific project or undertaking the completion or termination of which had been determined at the time of
her engagement, as may be observed from the series of employment contracts 32 between petitioner and
private respondent, all of which contained a designation of the specific job contract and a specific period of
employment.
However, even as we concur with the NLRC’s findings that petitioner is a project employee, we have reached
a different conclusion. In the recent case of Maraguinot, Jr. v. NLRC, 33 we held that" [a] project employee
or a member of a work pool may acquire the status of a regular employee when the following concur: c hanro bles vi rtua| |aw |ib rary
1) There is a continuous rehiring of project employees even after [the] cessation of a project; 34 and
2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the
usual business or trade of the employer. 35"
The evidence on record reveals that petitioner was employed by private respondent as a data encoder,
performing activities which are usually necessary or desirable in the usual business or trade of her employer,
continuously for a period of more than three (3) years, from August 26, 1988 to October 18, 1991 36 and
contracted for a total of thirteen (13) successive projects. We have previously ruled that" [h]owever, the
length of time during which the employee was continuously re-hired is not controlling, but merely serves as
a badge of regular employment." 37 Based on the foregoing, we conclude that petitioner has attained the
status of a regular employee of private Respondent. chan roble svirtual|awli bra ry
At this point, we reiterate with emphasis that: jgc:chanrobles. com.ph
"x x x
"At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty
to re-hire a project employee even after completion of the project for which he was hired. The import of this
decision is not to impose a positive and sweeping obligation upon the employer to re-hire project
employees. What this decision merely accomplishes is a judicial recognition of the employment status of a
project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the
employer of project or work pool employees who perform tasks necessary or desirable to the employers
usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao 38 has ruled, project
or work pool employees who have gained the status of regular employees are subject to the "no work-no
pay" principle, to repeat: cha nrob les.com : vi rtua llawli b rary
"A work pool may exist although the workers in the pool do not receive salaries and are free to seek other
employment during temporary breaks in the business, provided that the worker shall be available when
called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can
likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This
is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the
expense of capital" and at the same time enables the workers to attain the status of regular employees.
"The Court’s ruling here is meant precisely to give life to the constitutional policy of strengthening the labor
sector, but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not
mean that simply because an employee is a project or work pool employee even outside the construction
industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work
pool employee has been: 1) continuously, as opposed to intermittently, re-hired by the same employer for
the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a regular employee, pursuant to
Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow circumvention of labor laws
in industries not falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence
allowing the prevention of acquisition of tenurial security by project or work pool employees who have
already gained the status of regular employees by the employer’s conduct." 39 (Emphasis supplied). cha nro bles vi rtua llawli bra ry
Being a regular employee, petitioner is entitled to security of tenure and could only be dismissed for a just
or authorized cause, as provided in Article 279 of the Labor Code, as amended: jgc:chanroble s.com.p h
"ARTICLE 279. Security of Tenure. — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement." cralaw virt ua1aw lib ra ry
The alleged causes of petitioner’s dismissal (low volume of work: and belatedly, completion of project) are
not valid causes for dismissal under Articles 282 and 283 of the Labor Code. Thus, petitioner is entitled to
reinstatement without loss of seniority rights and other privileges, and to her full backwages, inclusive of
allowances, and to her other benefits or their monetary equivalent computed from the time her
compensation was withheld from her up to the time of her actual reinstatement. However, complying with
the principles of "suspension of work’’ and "no work, no pay" between the end of one project and the start of
a new one, in computing petitioner’s backwages, the amounts corresponding to what could have been
earned during the periods from the date petitioner was dismissed until her reinstatement when private
respondent was not undertaking any project, should be deducted chan roble s virtual lawlib rary
With regard to petitioner’s claim for service incentive leave pay, we agree with the labor arbiter that
petitioner is entitled to service incentive leave pay, as provided in Article 95 of the Labor Code, which
reads: jgc:chan roble s.com.p h
"ARTICLE 95. Right to service incentive leave. —
(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
x x x"
Having already worked for more than three (3) years at the time of her unwarranted dismissal, petitioner is
undoubtedly entitled to service incentive leave benefits, computed from 1989 until the date of her actual
reinstatement. As we ruled in the recent case of Fernandez v. NLRC, 40" [s]ince a service incentive leave is
clearly demandable after one year of service — whether continuous or broken — or its equivalent period,
and it is one of the "benefits" which would have accrued if an employee was not otherwise illegally
dismissed, it is fair and legal that its; computation should be up to the date of reinstatement as provided
under Section [Article] 279 of the Labor Code, as amended, which reads: chan roble s.com : virtual law lib rary
"ARTICLE 279. Security of Tenure. — An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation
is withheld from him up to the time of his actual reinstatement." (Emphasis supplied).
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations
Commission in NLRC NCR CA No. 003845-92 dated September 27, 1993, as well as its Order dated January
11, 1994, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of discretion
and the decision of the Labor Arbiter in NLRC NCR Case No. 05-02912-92 is REINSTATED) with
MODIFICATION as above-stated, with regard to the computation of back wages and service incentive leave
pay.chanroble s.com : vi rtual law lib rary
SO ORDERED.
G.R. No. 105892 January 28, 1998
LEIDEN FERNANDEZ, BRENDA GADIANO, GLORIA ADRIANO, EMELIA NEGAPATAN, JESUS

TOMONGHA, ELEONOR QUIÑANOLA, ASTERIA CAMPO, FLORIDA VILLACERAN, FLORIDA
TALLEDO, MARILYN LIM and JOSEPH CANONIGO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FOURTH DIVISION;
MARGUERITE1 LHUILLIER AND/OR AGENCIA CEBUANA-H. LHUILLIER, respondents.
PANGANIBAN, J.:
Is failure to attend hearings before the labor arbiter a waiver of the right to present evidence?
Are moral damages included in the computation of "monetary award" for purposes of
determining the amount of the appeal bond? Is there a limit to the amount of service
incentive leave pay and backwages that may be awarded to an illegally dismissed
employee?
The Case
These are the main questions raised in this petition for certiorari under Rule 65 of the Rules
of Court assailing the March 11, 1992 Decision2 of Respondent National Labor Relations
Commission (NLRC),3 the dispositive portion of which reads:4
WHEREFORE, premises considered, the appealed decision is hereby declared

VACATED and the entire records of these cases are hereby ordered remanded to
the Regional Arbitration Branch VII for further proceedings.
This petition also challenges the NLRC's May 29, 1992 Resolution denying the motion for
reconsideration.
The decision5 vacated by the NLRC and penned by Labor Arbiter Gabino A. Velasquez, Jr.
disposed as follows:6
WHEREFORE, judgment is hereby rendered in favor of the complainants and

against the respondent. The respondent is hereby ordered:
1. To reinstate the complainants to their respective position [sic] at the Agencia

Cebuana with full backwages without qualification; if reinstatement is not feasible, for
one reason or another, to pay to the complainants their respective separation pay,
service incentive leave pay with full backwages without qualification computed
hereunder as follows:
1. LEIDEN FERNANDEZ:
a) Separation Pay for 6 years P

8,640.00
b) Service Incentive Leave (6 yrs.) 3,322.50
c) Backwages for one year only 34,560.00
TOTAL P
46,522.50
2. GLORIA ADRIANO:

28,560.00
TOTAL P
79,866.25
3. EMELIA NEGAPATAN:

35,760.00
TOTAL P
85,272.00
4. JESUS P. TOMONGHA:

50,655.00
b) Service Incentive Leave 19,478.25
TOTAL P
106,973.25
5. ELEONOR QUIÑANOLA:
20,860.00
b) Service Incentive Leave 8,022.00
TOTAL P
64,642.00
6. ASTERIA CAMPO:

19,240.00
TOTAL P
62,160.25
7. FLORIDA VILLACERAN:

25,160.00
TOTAL P
70,357.25
8. FLORIDA TALLEDO:

27,450.00
TOTAL P
74,607.00
9. BRENDA GADIANO:

19,597.50
TOTAL P
63,313.25
10. MARILYN LIM:

12,950.00

TOTAL P
62,330.00
11. JOSEPH CANONIGO:

2,700.00
TOTAL P
36,138.50
2) To pay to all complainants the amount of P100,000.00 for moral damages and the
amount of another P100,000.00 for exemplary damages, plus the amount of
P98,018.25 as attorney's fees representing 10% of the total award and the amount of
P30,000.00 for litigation expenses.
The totality of the award amounting to P1,078,200.55 must be deposited with this
Office ten (10) days from receipt of this decision for further disposition. However, the
payment of backwages will be computed as of the actual date of payment provided it
will not exceed a period of three years.
The Facts
The factual milieu of this case is recited by the solicitor general in his Comment dated
December 21, 1992 as follows:7
1. The instant case stemmed from a consolidated complaint against private

respondents Agencia Cebuana-H. Lhuillier and/or Margueritte Lhuillier (Lhuillier) for
illegal dismissal (Rec., pp. 56-58). The Agencia Cebuana is a sole proprietorship
operated by Margueritte Lhuillier.
2. Two (2) Position Papers were filed by petitioners, one by Leiden E. Fernandez,
Gloria B. Adriano, Emilia A. Negapatan, Jesus P. Tomongha, Eleonor A. Quiñanola,
Asteria C. Ocampo [sic], Florida Villaceran, Florida B. Tallado [sic] and Brenda A.
Gadiano (Rec., pp. 79-88) and the other by Marilyn E. Lim and Joseph Canonigo
(Exhibit "C-4").
3. In their Position Papers, petitioners alleged that they were employed by Lhuillier,
as follows:
Name Position Date of Latest Date of

Employment Salary/Month Dismissal
1. Leiden E. Cashier Dec. 3, 1984 P2,880.00 July 19, 1990

Fernandez
2. Gloria B. Appraiser July 10, 1973 3,360.00 July 19, 1990

Adriano
3. Emilia A. Sales Girl March 9, 1966 2,980.00 July 19, 1990

Negapatan
4. Jesus P. Office Clerk July 1957 3,070.00 July 19, 1990

Tomongha
5. Eleonor A. Office Clerk Dec. 8, 1976 2,980.00 July 21, 1990

Quiñanola
6. Asteria C. Clerk May 27, 1977 2,960.00 July 19, 1990

Campo
7. Florida Sales Clerk March 8, 1973 2,960.00 July 19, 1990
Villaceran
8. Florida B. Pawnshop June 19, 1972 3,050.00 July 19, 1990

Talledo Writer
9. Brenda A. Pawnshop March 7, 1977 3,015.00 July 19, 1990

Gadiano Teller
10. Marilyn E. Branch June 1984 3,700.00 Feb. 16, 1990

Lim Manager
11. Joseph M. Record Keeper June 1988 2,700.00 July 14, 1990
Canonigo
Petitioners Fernandez, Adriano, Negapatan, Tomongha, Quiñanola, Campo,

Villaceran, Talledo, and Gadiano further alleged that prior to and during early July
1990, they "demanded" from Margueritte Lhuillier an increase in their salaries since
her business was making good and that she was evading payment of taxes by
making false entries in her records of account; that Lhuillier became angry and
threatened them that something would happen to their employment if they would
report her to the BIR; that shortly thereafter, Lhuillier suspected them of stealing
jewelry from the pawnshop; that on July 19, 1990, Lhuillier verbally informed them
not to report for work as their employment had been terminated; that from July 20,
1990 they did not report for work; and on July 23, 1990, they filed the instant
complaint (Rec., pp. 79-88).
On their part, petitioners Lim and Canonigo alleged that in early January 1990 and in
June 1990, respectively, they demanded increases in their salaries since they noted
that Lhuillier had a very lucrative business besides evading tax payments by making
false entries in her records of account; that they also informed her that they intended
to join the Associated Labor Union (ALU), which made Lhuillier angry, causing her to
threaten them that should they report her to the BIR and join the ALU something
would happen to their employment; that Lhuillier advised them to tender their
resignations as they were reportedly responsible for some anomalies at the Agencia
Cebuana-H Lhuillier; that Lhuillier assured them that they will be given separation
pay; that they asked Lhuillier that they be allowed to confront the persons who
reported to her about their supposed involvement in the alleged anomalies but she
ignored it and told them to tender their respective resignations effective February 16,
1990 (for Lim) and July 14, 1990 (for Canonigo); and that they were not given
separation pay (Decision, pp. 6-8; Rec., pp. 256-258).
5. In her Position Paper, Lhuillier, represented initially by Atty. Malcolm V. Seno,

alleged that:
a) In the case of Marilyn Lim, on January 13, 1990, she was informed
that an investigation will be conducted by Lhuillier because of the
report received by Flora Go, also an employee of Lhuillier, that Lim
sold to a company consumer her own jewelry, in violation of the
company house rules; on January 22, 1990, a Notice of Intended
Termination was served upon her requiring her to submit a written
explanation within 48 hours from receipt; Lim did not submit a written
explanation but actively participated in the investigation where she
admitted having committed the violation complained of; in view of her
admission of guilt, the company lawyer recommended to the
management her demotion and transfer without reduction of salary;
after Lim's receipt of a copy of the investigation report, she sent
through her lawyer a letter signifying her intention to resign and her
willingness to execute a promissory note for her indebtedness; the
company gave Lim a draft of the promissory note which was never
returned by her; on February 24, 1990 she tendered an irrevocable
letter of resignation, hence, she was not terminated; and because of
the malicious and false complaint filed by Lim, the company was
compelled to file a counter-complaint for Perjury against her before
the Office of the City Prosecutor of Cebu City (Rec., pp. 92-93; 97).
b) In the case of Jesus Tomongha, he was found to have stolen

"rematado" jewelries worth P70,670.00 sometime in March 1990;
instead of attending the investigation scheduled for this offense, he
abandoned his job although his application for leave of absence was
not approved; Lhuillier asked the company lawyer to talk with
Tomongha for him to return to work so that he could pay his
pecuniary liability out of his salary; Lhuillier made it a pre-condition for
his return to work that he executes a promissory note for his
indebtedness; on April 10, 1990, he executed a promissory note and
was allowed to return to work; on July 20, 1990, he and the other
petitioners, abandoned their employment; he was not dismissed but
he was allowed to return to work and was only made to execute a
promissory note when the company found out sometime in March
1990 that he had stolen "rematado" jewelries worth P70,670.00
(Rec., pp. 97-101).
c) In the case of the other petitioners, on July 19, 1990, Gloria

Adriano was found by Flora Go to have over-declared the weights
and values of certain items of jewelry pawned to the company, as a
result of which, upon investigation, the pawnshop was found to have
lost the amount of P174,850.00; a letter dated July 19, 1990 was
served upon Adriano to explain within 72 hours why she should not
be terminated; on July 20, 1990, Gloria Adriano, Florida Villaceran,
Emilia Negapatan, Brenda Gadiano, Leiden Fernandez, Jesus
Tomongha, Asteria Campo and Florida Talledo did not report for work
although no requests for leave of absence were filed by them, which
absence violated company rules; on July 21, 1990, the said
employees did not report for work; another employee, Eleonor
Quiñanola, also did not report for work although she did not file a
request for leave of absence; on July 23, 1990 the said nine (9)
employees did not report for work; because of this unusual incident,
the management decided to make an inventory of the transactions in
Agencia Cebuana and the "rematado" diamond-studded jewelry; the
inventory showed that the pawnshop incurred a considerable loss as
a result of the anomalous overpricing of pawned items and the
employees immediately responsible were Gloria Adriano, Florida
Talledo and Leiden Fernandez, being the appraiser, writer and
prayer, respectively; the inventory also showed that of the "rematado"
diamond-studded jewelries, items worth P1,592,200.00 were lost for
which Florida Villaceran and Emilia Negapatan were directly
responsible, being the employees entrusted with their safekeeping; a
case of Estafa was filed on July 24, 1990 before the Office of the City
Prosecutor of Cebu City against Gloria Adriano, Florida Talledo,
Leiden Fernandez, Asteria Campo, Brenda Gadiano, Florida
Villaceran, Emilia Negapatan, and Jesus Tomongha and three (3)
other unknown persons; a case of Theft was filed on August 16, 1990
with the Office of the City Prosecutor of Cebu City against Florida
Villaceran and Emilia Negapatan; when Lhuillier left for Hongkong on
July 19, 1990; she did not terminate the employment of Gloria
Adriano nor was she advised not to report for work, although a letter
was served upon her requiring her to explain within 72 hours why she
should not be terminated from her employment; when Lhuillier arrived
from Hongkong, she caused to be served upon the eight (8)
petitioners who joined Adriano, letter dated July 25, 1990 requiring
them to explain the sudden abandonment of their posts; petitioners,
except Lim, instead of giving an explanation, claimed that their
employment[s] were terminated on July 19, 1990; Lhuillier was
prevented from pursuing any action in respect of the illegal
abandonment of their work by the nine (9) petitioners because she
was served with summons in the instant case; petitioners did not
report for work and voluntarily abandoned their work on July 19, 1990
in order to dramatize their sympathy for Gloria Adriano, and they
were not dismissed from their employment; their demand for an
award of damages and attorney's fees was unwarranted; petitioners
had no cause of action against Lhuillier because they were not
terminated from employment; and Quiñanola could not have been
terminated from employment on July 21, 1990 because Lhuillier was
in Hongkong at that time (Rec., pp. 96-108).
6. Trial on the merits ensued and hearings were scheduled on July 5, 8, and 12,
1991.
7. The hearing scheduled on July 5, 1991 was, however, postponed by agreement of

the parties as shown in the minutes of the proceedings on July 8, 1991:
xxx xxx xxx
REMARKS
This case was scheduled for the cross-examination of the last

witnesses (sic), Marilyn Lim, who is one of the complainants of this
(sic) consolidated cases.
The scheduled dates was (sic) July 5, 8, and 12, 1991 which dates
were for the crossexamination (sic) of Marilyn Lim and for the
respondents to present their evidence.
The July 5, 1991 (sic) was postponed upon agreement [sic] of the
parties and counsels and that it was aggreed (sic) the repondents
(sic) counsel will cross examine Marilyn Lim on July 8, 1991 and for
the respondents to present their evidence on July 12, 1991. In as
much (sic) as the respondents and their counsel failed to appear
today to cross-examine Marilyn Lim, we moved that the respondent
be declared having waived their rights (sic) to cross-examine Marilyn
Lim. (Rec., p. 176).
8. On July 8, 1991, counsel for petitioners filed Complainants' Formal Offer of

Evidence (Rec., pp. 182-187).
9. At the hearing scheduled on July 12, 1991, Atty. Seno and Lhuillier failed to
appear. Thus, counsel for petitioners submitted the instant case for resolution (Rec.,
p.181).
10. On July 18, 1991, a "Ruling" was issued by Labor Arbiter Velasquez, admitting
complainants' exhibits (Rec., pp. 189-190).
11. On July 30, 1991, counsel for petitioners filed an Urgent Motion For Early
Decision (Rec., pp. 191-193).
12. On August 6, 1991, Atty. Seno filed a Comment to the Offer of Exhibits With
Counter-Manifestation stating that:
[T]he failure of undersigned to appear on the date of hearing was for

the reason that his car bogged down, as in fact he called up the
Office of the Hearing Officer. While his absence may be considered a
waiver to cross-examine the witness, it cannot be taken to mean
forfeiture of the right to present admissible evidence against the
complainant witness. (Rec., pp. 195-197)
13. On August 9, 1991, Atty. Seno filed his Comment on Complainants' Urgent
Motion For Early Decision praying that Lhuillier be given a period of ten (10) days
from August 9, 1991 within which to submit additional affidavits and thereafter to
consider the cases submitted for resolution (Rec., pp. 199-200).
14. On August 15, 1991, petitioners filed a "Counter-Comment On Respondent's
Comment of [sic] Motion For Early Decision' alleging that under Rule VII, Section 10
(c) of the Revised Rules of Court of the NLRC which reads:
xxx xxx xxx
c) In case of unjustified non-appearance by the respondent during

her/his turn to present evidence, despite due notice, the case shall be
considered submitted for decision on the basis of the evidence so far
presented.
the non-appearance of Lhuillier or its counsel on the scheduled dates of hearing on

July 8 and 12, 1991, was clearly unjustified (Rec., pp. 202-205).
15. On October 14, 1991, Atty. Seno filed a Motion Reiterating The Request For
Submission Of Additional Affidavits therein alleging that Lhuillier's previous motion to
present additional affidavits had not been acted upon; and that he had not received
an order considering the instant case submitted for resolution. With the motion,
Lhuillier submitted the affidavits of additional witnesses, praying that said
supplemental affidavits be admitted and presentation of additional evidence be
allowed (Rec., pp. 207-209).
16. On October 16, 1991, petitioners filed an Opposition On [sic] Respondents'

Request For Submission Of Additional Affidavits And Urgent Motion To Release
Decision, alleging that counsel for Lhuillier was given ample opportunity to present
his evidence; that by his failure to appear at the scheduled hearings without any
reason or prior motion for postponement, he was deemed to have waived his right to
present evidence; and that about the later part of August 1991, upon learning that
Labor Arbiter Velasquez would be transferred to NLRC, Tacloban, they (petitioners)
inquired about the status of the instant case and they were informed by Labor Arbiter
Velasquez that a Decision was already rendered (Rec., pp. 203-205).
On August 30, 1991, the labor arbiter rendered a decision in favor of petitioners. On appeal,
Respondent NLRC vacated the labor arbiter's order and remanded the case for further
proceedings. It subsequently denied the motion for reconsideration.
Respondent NLRC's Ruling
Ruled the NLRC:8
In resolving this issue [of due process], it is necessary to go over the pertinent
provisions of the 1990 NLRC Rules of Procedure, more particularly Sec. 11, Rule V.
Rule V — Proceedings Before the Labor Arbiters:
Sec. 11. Non-appearance of Parties at Conference/Hearings. — (a)

Two (2) successive absences at a conference/hearing by the
complainant or petitioner, who was duly notified thereof may be
sufficient cause to dismiss the case without prejudice. Where proper
justification, however, is shown by proper motion to warrant the re-
opening of the case, the Labor Arbiter shall call a second hearing and
continue the proceedings until the case is finally decided. Dismissal
of the case for the second time due to the unjustified non-appearance
of the complainant or petitioner who was duly notified thereof shall be
with prejudice.
b) In case of two (2) successive non-appearances by the respondent,

despite due notice, during the complainant's presentation of
evidence, the complainant shall be allowed to present evidence ex-
parte, subject to cross-examination by the respondent, where proper,
at the next hearing. Upon completion of such presentation of
evidence for the complainant, another notice of hearing for the
reception of the respondent's evidence shall be issued, with a
warning that failure of the respondent to appear shall be construed as
submission by him of the case for resolution without presenting his
evidence.
c) In case of two (2) successive unjustified non-appearances by the

respondent during his turn to present evidence, despite due notice,
the case shall be considered submitted for decision on the basis of
the evidence so far presented.
The established fact is that July 8 and 12, 1991 were the scheduled dates for the
cross-examination of Marilyn Lim, last witness for the complainants and the start of
respondents' presentation of evidence. It is also not disputed that respondent and
counsel failed to appear at the July 8 hearing. A scrutiny of the minutes of the July 8,
1991 hearing would however reveal that date was alloted [sic] purposely for the
cross-examination of Marilyn Lim and that respondents' presentation of evidence
would start on July 12, 1991. (page 176, records) Technically, the Labor Arbiter was
correct in ruling that respondent had waived her right to cross-examine complainant
Marilyn Lim when she failed to appear on July 8, 1991. But definitely, it was error for
him to consider the case submitted for decision when respondent failed to appear on
July 12, 1991. The above-cited rules are clear and explicit. It takes two successive
and unjustified non-appearance on the part of respondent before he or she can be
considered to have waived his/her right to present evidence and thereafter to
consider the case submitted for decision on the basis of the evidence thus far
presented. Respondent's absence on July 12, 1991 was but her first since, as
pointed out, it was on that day that she was supposed to start presenting her
evidence. What the Labor Arbiter should have done was to set another date for the
reception of respondent's evidence. If she still failed to appear, his reliance on Sec.
11 (c), Rule V of the New Rules of Procedure of the NLRC would have been justified
and this Commission would not hesitate to uphold him on that respect. As it is, the
questioned ruling was, indeed, premature to say the least. While concern for the less
privileged workers and speediin [sic] the disposition of labor cases are highly
commendable, those considerations should not run roughshod over well-established
principles of due process.
It may be argued that the evidence sought to be introduced by respondent are

contained in the additional affidavits which now form part of the records, hence this
Commission can now decide this appeal on the merits. It is with more reason that
this case should be remanded not only to allow respondent to formally present her
evidence, but also to allow complainants to cross-examine and confront their
accusers. (Emphasis supplied.)
Not satisfied, petitioners filed the present petition before us under Rule 65 of the Rules of
Court.9
The Issues
Petitioners submit to this Court the following issues:10
The Honorable Commission has committed serious reversible error amounting to a

grave abuse of discretion and in excess of jurisdiction in finding that the private
respondent was not afforded due process by the hearing labor arbiter, particularly the
reception of private respondent's evidence.

grave abuse of discretion and in excess of jurisdiction in finding that the declaration
by the hearing labor arbiter submitting these cases for decision on July 12, 1991 was
not in accordance with Rule V Section II of the 1990 New Rules of Procedure of the
NLRC (attached hereto as annex "C").
C

grave abuse of discretion and in excess of jurisdiction in giving importance to private
respondent's additional alleged affidavits which were filed only on October 14, 1991
(attached hereto as annex "G-1"), by way of attaching the same in private
respondent's motion reiterating request for submission of additional affidavits
(attached hereto as annex "G"), long after the hearing labor arbiter rendered a
decision on August 30, 1992 (attached hereto as annex "E"), contrary to the private
respondent's prayer and commitment (attached hereto as annex "F-1").

grave abuse of discretion, in substance and in law, in not modifying the appealed
decision of the hearing labor arbiter (attached hereto as annex "E") with respect to
the accuracy of the monetary awards pursuant to the pertinent provisions of the
Labor Code, its implementing rules and regulations and pursuant particularly to the
celebrated case of Roche (Philippines), et als. [sic] vs. NLRC, et als., [sic] G.R. No.
83335, October 12, 1989.
The Honorable Commission has no jurisdiction to entertain private respondent's two

appeals.
Put differently but more plainly, the issues in this case are as follows:
1. Did the NLRC acquire jurisdiction over the appeal notwithstanding the alleged insufficiency
of the appeal bond?
2. Were private respondents deprived of due process of law by the labor arbiter?
3. Were petitioners illegally dismissed?
4. Assuming petitioners were illegally dismissed, was the computation of the backwages,
service incentive leave pay and damages valid and correct?
The Court's Ruling
The petition is meritorious. We hold that the private respondents were not denied due
process of law by the labor arbiter; and that nine of the petitioners were illegally dismissed,
but that Petitioners Lim and Canonigo were not.
First Issue: Insufficiency of Appeal Bond
Petitioners contend that Respondent NLRC did not acquire jurisdiction over the appeal of
private respondents because the appeal bond was insufficient. Although the total monetary
award in their favor was P1,078,200.55, private respondents posted a cash bond in the
amount of P752,183.00 only. In computing the monetary award for the purpose of posting an
appeal bond, private respondents relied on Rule VI, Section 6 of the 1990 New Rules of
Procedure of the NLRC and excluded the award for damages, litigation expenses and
attorney's fees. Petitioners argue however that the said rule cannot prevail over Article 223
of the Labor Code, which does not provide for such exclusion.
We agree with private respondents. Article 223 of the Labor Code provides:
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by the employer may

be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement provided therein
. . . (Emphasis supplied.)
On the other hand, Rule VI, Section 6 of the 1990 NLRC New Rules of Procedure,11 invoked
by private respondent, provides:
Sec. 6. Bond. In case of the decision of a Labor Arbiter involves a monetary award,
an appeal by the employer shall be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the
Commission or the Supreme Court in an amount equivalent to the monetary award.
The Commission may, in meritorious cases and upon Motion of the Appellant, reduce
the amount of the bond. However, an appeal is deemed perfected upon the posting
of the bond equivalent to the monetary award exclusive of moral and exemplary
damages as well as attorney's fees.
Nothing herein however, shall be construed as extending the period of appeal.

(Emphasis supplied.)
There is no conflict between the two provisions. Article 223 lays down the requirement that
an appeal bond should be filed. The implementing rule, on the other hand, explains how the
appeal bond shall be computed. The rule explicitly excludes moral and exemplary damages
and attorney's fees from the computation of the appeal bond. This exclusion has been
recognized by the Court in a number of cases. Hence, in Erectors vs. NLRC,12 the Court
nullified an NLRC order requiring the posting of an appeal bond which, among others, "even
included in the computation the award of P400,000.00 for moral and exemplary damages."
Indeed, the said implementing rule is a contemporaneous construction of Article 223 by the
NLRC pursuant to the mandate of the Labor Code; hence, it is accorded great respect by this
Court.13
In line with the desired objective of our labor laws to resolve controversies on their merits,
the Court has held that the filing of a bond in appeals involving monetary awards should be
given liberal construction.14 The rule requiring the employer to post a cash or surety bond to
perfect his appeal assures the workers that they will receive the money judgment awarded to
them upon the dismissal of the employer's appeal. It also discourages employers from using
an appeal to delay or even evade their obligation to satisfy the just and lawful claims of their
employees.15
Hence, deducting from the total monetary award of P1,078,200.55 the amount of
P200,000.00 for moral and exemplary damages, P98,018.25 for attorney's fees and
P30,000.00 for litigation expenses, the amount of the bond should be P750,182.55. Thus,
the appeal bond actually posted in the amount of P752,183 is even more than the amount of
appeal bond that may be required from private respondents under Respondent NLRC's
rules.
Second Issue: No Denial of Due Process
The NLRC ruled that private respondents were denied due process because the labor arbiter
deemed the case submitted for resolution when they failed to attend the hearings on July 8
and 12, 1991. Under the NLRC Rules of Procedure, a case may be deemed submitted for
decision on the basis of the evidence thus far adduced in the event respondent incurs two
successive absences "during his turn to present evidence." While the hearing on July 12,
1991 was for the presentation of herein private respondents' evidence, the NLRC found that
the hearing on July 8, 1991 was scheduled for the cross-examination of petitioners' witness.
Since the absences were not made during respondents' "turn to present evidence," public
respondent remanded the case to the labor arbiter for "further proceedings."
Petitioners dispute the NLRC ruling, contending that the parties in this case were able to
submit their respective position papers together with supporting affidavits and other
documents. They stress that private respondents' failure to attend the hearings on July 8 and
12, 1991, without any justification or motion for postponement, warranted the submission of
the case for decision pursuant to Section 11, Rule V of the 1990 New Rules of Procedure of
the NLRC. They insist that the hearing on July 8, 1991 was scheduled to afford private
respondents not only an opportunity "to cross-examine petitioner's last witness, Marilyn Lim,
[but also] to start the presentation of [their] evidence . . ."16
On the other hand, private respondents argue that the labor arbiter erred in considering the
absence of their counsel during the hearings scheduled on July 8 and July 12, 1991 as
waiver not only of the right to cross-examine but of the right to present evidence. They
further contend that the labor arbiter released his decision notwithstanding the pendency of
three unresolved motions.17 These circumstances clearly show that they were not afforded
due process of law.18
To make a clear ruling, we again cite Rule V, Section 11 of the 1990 Rules of Procedure of
Respondent NLRC, which provides:
Sec. 11. Non-appearance of Parties at Conference/Hearings. — (a) Two (2)

successive absences at a conference/hearing by the complainant or petitioner, who
was duly notified thereof, may be sufficient cause to dismiss the case without
prejudice. Where proper justification, however, is shown by proper motion to warrant
the re-opening of the case, the Labor Arbiter shall call a second hearing and continue
the proceedings until the case is finally decided. Dismissal of the case of the second
time due to the unjustified non-appearance of the complainant or petitioner who was
duly notified thereof shall be with prejudice.
(b) In case of two (2) successive non-appearances by the respondent, despite due
notice, during the complainant's presentation of evidence, the complainant shall be
allowed to present evidence ex parte, subject to cross-examination by the
respondent, where proper, at the next hearing. Upon completion of such presentation
of evidence for the complainant, another notice of hearing for the reception of the
respondent's evidence shall be issued, with a warning that failure of the respondent
to appear shall be construed as submission by him of the case for resolution without
presenting his evidence.
(c) In case of two (2) successive unjustified non-appearances by the respondent

during his turn to present evidence, despite due notice, the case shall be considered
submitted for decision on the basis of the evidence so far presented. (Emphasis
supplied).
It is undisputed that private respondents' counsel failed to attend the hearings on the two
aforementioned dates. Moreover, the labor arbiter19 and the NLRC held that the hearing on
July 8, 1991 was only for the cross-examination of herein petitioners' witness, while that on
July 12, 1991 was for the reception of private respondents' evidence. This notwithstanding,
we hold that the NLRC committed grave abuse of discretion in remanding the case to the
labor arbiter.
Private respondents were able to file their respective position papers and the documents in
support thereof, and all these were duly considered by the labor arbiter.20 Indeed, the
requirements of due process are satisfied where the parties are given the opportunity to
submit position papers.21 In any event, Respondent NLRC and the labor arbiter are
authorized under the Labor Code to decide a case on the basis of the position papers and
documents submitted.22 The holding of an adversarial trial depends on the discretion of the
labor arbiter, and the parties cannot demand it as a matter of right. In other words, the filing
of position papers and supporting documents fulfilled the requirements of due
process.23 Therefore, there was no denial of this right because private respondents were
given the opportunity to present their side.24
Moreover, it should be noted that private respondents did not dispute the order of the labor
arbiter submitting the case for decision immediately after its issuance. Likewise, they failed to
present additional evidence on the date they themselves specified. It was only on August 6,
1991 that private respondents' counsel, in his Comments to the Offer of Exhibits25 with
counter-manifestation, explained his failure to appear at the hearing on July 8, 1991. His
explanation, quoted below, is not compelling.26
The failure of the undersigned to appear on the date of hearing was for the reason
that his car bogged down, as in fact he called up the Office of the Hearing Officer.
While his absence may be considered a waiver to cross-examine the witness, it
cannot be taken to mean forfeiture of the right to present admissible evidence
against the complainant-witness.
Three days later on August 9, 1991, private respondents moved that they be given a "period
of ten days from August 9, 1991" — or until August 19, 1991— within which to submit
additional affidavits, "after which, the cases will be deemed submitted for resolution on the
basis of complainants' evidence and respondents' position paper and the additional
affidavits."27 Counsel, however, failed to submit the supposed evidence on said date. On
October 14, 1991, private respondents filed a Motion Reiterating the Request for Submission
of Additional Affidavits.28 Again, private respondents did not submit the said documents.
As earlier noted, the essence of due process is simply an opportunity to be heard, to explain
one's side, or to seek a reconsideration of the action or ruling complained of. In the case at
bar, private respondents were given ample opportunity to do just that but they failed, for
unknown reasons, to avail themselves of such opportunity. They themselves moved that they
be allowed to present additional affidavits on August 19, 1991, but they never did; no valid
reason was given for their failure to do so. Their contention that the labor arbiter failed to rule
on their motion deserves scant consideration. It is axiomatic — in fact, it is plainly
commonsensical — that when a counsel asks for an extension of time within which to file a
pleading, he must be ready with that pleading on the date specified in his motion, even
absent a resolution or order disposing of his motion.
We cannot remand the instant case to the labor arbiter for further proceedings. Respondent
NLRC, on the basis of the evidence on record, could have resolved the dispute. To remand it
to the labor arbiter is to delay needlessly the disposition of this case, which has been
pending since July 23, 1990. It becomes our duty under the circumstances to determine the
validity of the allegations of the parties. Remanding the case to the labor arbiter will just
frustrate speedy justice and, in any event, would be a futile exercise, as in all probability the
case would end up with this Court. We shall thus rule on the substantial claims of the parties.
Third Issue: Petitioners Were Illegally Dismissed
Private respondents controvert the claim of illegal dismissal by maintaining that petitioners
abandoned their employment. They aver that on July 19, 1990, Petitioner Gloria Adriano,
pawnshop appraiser, over-declared the weights and values of pawned pieces of jewelry,
which allegedly caused a loss of at least P174,850. In a letter dated July 19, 1990, they
required Petitioner Adriano to explain within 72 hours why her employment should not be
terminated. On July 20, 1990, however, Petitioner Adriano together with Petitioners Asteria
Campo, Leiden Fernandez, Brenda Gadiano, Emilia Negapatan, Eleonor Quiñanola, Jesus
Tomongha, Florida Talledo and Florida Villaceran allegedly did not report for work without
any excuse. Thus, private respondents concluded that petitioners abandoned their
employment. They also state that they intended to pursue legal action against the said
petitioners for "illegal abandonment." But before they could do so, they received summons
requiring them to respond to the complaints of illegal dismissal filed by the said nine
petitioners.29
On the other hand, petitioners maintain that on July 19, 1990, Private Respondent
Marguerite Lhuillier, the pawnshop owner, told them not to report for work because their
employment had been terminated. Thus, they did not report for work the following day, July
20, 1990. On July 23, 1990, they filed their respective complaints before the Regional
Arbitration Board of Respondent NLRC.
In view of the conflicting claims of the parties, we examined the records of this case and
found that private respondents did not abandon their employment; rather, they were illegally
dismissed.
To succeed in pleading abandonment as a valid ground for dismissal, the employer must
prove (1) the intention of an employee to abandon his or her employment and (2) an overt
act from which such intention may be inferred; i.e., the employee showed no desire to
resume his work.30 Mere absence is not sufficient. The employer must prove a deliberate and
unjustified refusal of the employee to resume his employment without any intention of
returning.31 Private respondents failed to discharge this burden. The claim of abandonment
was inconsistent with the immediate filing of petitioners' complaint for illegal dismissal and
prayer for reinstatement. For how can an inference be made that an employee had no
intention of returning to work, when he filed a complaint for illegal dismissal praying for
reinstatement three days after the alleged abandonment?32 Moreover, considering that
petitioner had been with Pawnshop Lhuillier for several years — ranging from six (6) years to
thirty three (33) years — it is unlikely that they would simply leave their employment. Clearly,
there is no cogent basis for private respondents' theory that said petitioners abandoned their
work. In this light, we sustain the finding of the labor arbiter that said petitioners were illegally
dismissed, with neither just cause nor due process.
Petitioners Lim and Canonigo Resigned
The foregoing holding cannot apply to Petitioners Marilyn Lim and Joseph Canonigo,
however.
Lim claims that Private Respondent Lhuillier forced her to resign, but at the same time
assured her of separation pay.33 On February 5, 1990, prior to Lim's letter of resignation
dated February 24, 1990,34her lawyer proposed the following to Private Respondent
Lhuillier:35
1. That our client Ms. Marilyn Lim be given immediately a clearance upon resignation
from your good company and payment of separation pay at the rate of one month per
year of service; and
2. That our client is willing to execute a promissory note on her indebtedness, and
will pay upon the same terms prevailing before her resignation. Our client's ability to
settle her indebtedness should be given kind consideration by your company
considering that her eventual resignation will render her jobless for a while. Besides,
per Investigation Report No. 2, Series of 1990, conducted by your Resident Counsel,
Atty. Malcolm V. Seno, our client has impressed your Resident Counsel as a person
of much valor and great determination when she immediately admitted her guilt.
3. That the various checks she endorsed to your company be returned to our client,
so that she could file a case against the issuers or drawers of the same, be it criminal
or civil in nature. (Emphasis supplied).
Petitioner Lim's testimony36 that she has never been informed of any wrongdoing until her
termination is belied by her assertions in the aforequoted letter. Her admission of the offense
charged shows that she was not coerced to resign. Besides, the fact that her complaint for
illegal dismissal was filed long after her resignation on February 24, 1990 suggests that it
was a mere afterthought.
On the other hand, Petitioner Canonigo contends that he was forced to sign his letter of
resignation dated July 14, 1990, because Private Respondent Lhuillier received reports from
other employees that he was responsible for some anomalies in the pawnshop. He also
stated that he resigned because he was assured of separation pay.37 Like Petitioner Lim, he
did not immediately file a complaint for illegal dismissal, doing so only on July 23, 1990.
From the foregoing facts, we see no cogent basis for holding that he was forced to resign.
On the contrary, we find that he voluntarily tendered his resignation on the assurance of
separation pay. Clearly, Petitioner Canonigo, like Lim, was not dismissed; rather, he
resigned voluntarily.
Fourth Issue: Service Incentive Leave Pay and Damages
In his decision, the labor arbiter granted varying amounts of service incentive leave pay to
the petitioners based on the length of their tenure; i.e., the shortest was six years and the
longest was thirty-three years. While recommending that the labor arbiter's decision be
reinstated substantially, the solicitor general recommended that the award of service
incentive leave be limited to three years. This is based on Article 291 of the Labor Code
which provides:
Art. 291. Money Claims. — All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued; otherwise they shall be forever
barred.
xxx xxx xxx
Petitioners counter that Article 291 "speaks clearly on the prescription of filing [an] action
upon monetary claims within three (3) years from the time the cause of action accrued, but it
is not a prescription of a period of time for the computation of monetary claims."38
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing
Rules and Regulations39 provides that "[e]very employee who has rendered at least one year
of service shall be entitled to a yearly service incentive leave of five days with pay." Service
incentive leave is a right which accrues to every employee who has served "within 12
months, whether continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless the working days in
the establishment as a matter of practice or policy, or that provided in the employment
contracts, is less than 12 months, in which case said period shall be considered as one
year."40 It is also "commutable to its money equivalent if not used or exhausted at the end of
the year."41 In other words, an employee who has served for one year is entitled to it. He may
use it as leave days or he may collect its monetary value. To limit the award to three years,
as the solicitor general recommends, is to unduly restrict such right. The law indeed does not
prohibit its commutation. Moreover, the solicitor general's recommendation is contrary to the
ruling of the Court in Bustamante et al. vs. NLRC et al.,42 lifting the three-year restriction on
the amount of backwages and other allowances that may be awarded an illegally dismissed
employee, thus:
Therefore, in accordance with R.A. No. 6715, petitioners are entitled to their full
backwages, inclusive of allowances and other benefits or their monetary equivalent,
from the time their actual compensation was withheld from them up to the time of
their actual reinstatement. (Emphasis supplied.).
Since a service incentive leave is clearly demandable after one year of service — whether
continuous or broken — or its equivalent period, and it is one of the "benefits" which would
have accrued if an employee was not otherwise illegally dismissed, it is fair and legal that its
computation should be up to the date of reinstatement as provided under Section 279 of the
Labor Code, as amended, which reads:
Art. 279. Security of Tenure. — An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalentcomputed from the time his compensation is withheld from him
up to the time of his actual reinstatement. (emphasis supplied).
However, the Implementing Rules clearly state that entitlement to "benefit provided under
this Rule shall start December 16, 1975, the date the amendatory provision of the [Labor]
Code took effect."43Hence, petitioners, except Lim and Canonigo, should be entitled to
service incentive leave pay from December 16, 1975 up to their actual reinstatement.
Petitioners, citing Roche Philippines et al. vs. NLRC et al.,44 further contend that the award of
damages in the case at bar should be increased, for "there are eleven (11)
complainants/petitioners whose long years of employment was illegally, oppressively and
wantonly terminated by the private
respondent."45
We disagree. Determination of the amount of moral damages and attorney's fees is best left
to the discretion of the labor arbiter.46 Moral damages are recoverable where the dismissal of
the employee was attended by bad faith or fraud, or it constituted an act oppressive to labor,
or it was done in a manner contrary to morals, good customs or public policy.47 In the case
before us, records show that petitioners' dismissals were done oppressively and in bad faith,
for they were just summarily dismissed without even the benefit of notice and hearing. The
well-settled rule is that the employer shall be sanctioned for noncompliance with the
requirements of, or for failure to observe, due process in dismissing its
employees.48 Petitioners were likewise subjected to unnecessary embarrassment or
humiliation because of the filing of the criminal charge of qualified theft, which was later
dismissed49 by the investigating prosecutor.50 It follows then that the award of attorney's fees
is likewise proper, for the "defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest."51
Full Backwages for Dismissals

Effected After March 21, 1989
Having determined that petitioners, except Lim and Canonigo, were illegally dismissed, we
next resolve the question of whether Respondent NLRC gravely abused its discretion in
ordering the reinstatement of dismissed employees and the payment to them of full
backwages; or, if reinstatement was no longer feasible, whether the grant to them of
separation pay plus backwages was correct. In several cases,52 this Court has held that
illegally dismissed employees are entitled to reinstatement and full backwages. If
reinstatement is not possible, the employees are entitled to separation pay and full
backwages. Accordingly, the award to petitioners of backwages for three years should be
modified in accordance with Article 27953 Of the Labor Code, as amended by R.A. 6715, by
giving them full backwages without conditions and limitations, the dismissals having occurred
after the effectivity of the amendatory law on March 21, 1989.54 Thus, the Court held
in Bustamante.55
The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more
benefits to workers than was previously given them under the Mercury Drug rule or
the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the
legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning
exactly that, i.e., without deducting from backwages the earnings derived elsewhere
by the concerned employee during the period of his illegal dismissal.
WHEREFORE, the petition is hereby GRANTED and the assailed Decision and Resolution
are REVERSED and SET ASIDE. The labor arbiter's decision is REINSTATED with
MODIFICATIONS, such that the award of separation pay is deleted and the service incentive
leave pay is computed from December 16, 1975 up to petitioners' actual reinstatement. Full
backwages, including the accrued thirteenth month pay, are also awarded to the nine
petitioners — Leiden Fernandez, Brenda Gadiano, Gloria Adriano, Emelia Negapatan, Jesus
Tomongha, Eleonor Quiñanola, Asteria Campo, Florida Villaceran and Florida Talledo —
from the date of their illegal dismissal to the time of their actual reinstatement. Petitioners
Lim and Canonigo, whom we find to have voluntarily resigned, are not entitled to any benefit.
SO ORDERED.
[G.R. NO. 151966 July 8, 2005]
JPL MARKETING PROMOTIONS, Petitioner, v. COURT OF APPEALS, NATIONAL LABOR

RELATIONS COMMISSION, NOEL GONZALES, RAMON ABESA III and FAUSTINO
ANINIPOT, Respondents.
DECISION
TINGA, J.:
This is a Petition for Review of the Decision1 of the Court of Appeals in CA-G.R. SP No. 62631 dated
03 October 2001 and its Resolution2 dated 25 January 2002 denying petitioner's Motion for
Reconsideration, affirming the Resolution of the National Labor Relations Commission (NLRC),
Second Division, dated 27 July 2000, awarding separation pay, service incentive leave pay, and
13th month pay to private respondents.
JPL Marketing and Promotions (hereinafter referred to as "JPL") is a domestic corporation engaged
in the business of recruitment and placement of workers. On the other hand, private respondents
Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers on
separate dates and assigned at different establishments in Naga City and Daet, Camarines Norte as
attendants to the display of California Marketing Corporation (CMC), one of petitioner's clients.
On 13 August 1996, JPL notified private respondents that CMC would stop its direct merchandising
activity in the Bicol Region, Isabela, and Cagayan Valley effective 15 August 1996.3 They were
advised to wait for further notice as they would be transferred to other clients. However, on 17
October 1996,4 private respondents Abesa and Gonzales filed before the National Labor Relations
Commission Regional Arbitration Branch (NLRC) Sub V complaints for illegal dismissal, praying for
separation pay, 13th month pay, service incentive leave pay and payment for moral
damages.5Aninipot filed a similar case thereafter.
After the submission of pertinent pleadings by all of the parties and after some clarificatory hearings,
the complaints were consolidated and submitted for resolution. Executive Labor Arbiter Gelacio L.
Rivera, Jr. dismissed the complaints for lack of merit.6 The Labor Arbiter found that Gonzales and
Abesa applied with and were employed by the store where they were originally assigned by JPL
even before the lapse of the six (6)-month period given by law to JPL to provide private respondents
a new assignment. Thus, they may be considered to have unilaterally severed their relation with
JPL, and cannot charge JPL with illegal dismissal.7 The Labor Arbiter held that it was incumbent
upon private respondents to wait until they were reassigned by JPL, and if after six months they
were not reassigned, they can file an action for separation pay but not for illegal dismissal.8 The
claims for 13th month pay and service incentive leave pay was also denied since private
respondents were paid way above the applicable minimum wage during their employment.9
Private respondents appealed to the NLRC. In its Resolution,10 the Second Division of the NLRC
agreed with the Labor Arbiter's finding that when private respondents filed their complaints, the six-
month period had not yet expired, and that CMC's decision to stop its operations in the areas was
beyond the control of JPL, thus, they were not illegally dismissed. However, it found that despite
JPL's effort to look for clients to which private respondents may be reassigned it was unable to do
so, and hence they are entitled to separation pay.11 Setting aside the Labor Arbiter's decision, the
NLRC ordered the payment of:
1. Separation pay, based on their last salary rate and counted from the first day of their employment
with the respondent JPL up to the finality of this judgment;
2. Service Incentive Leave pay, and 13th month pay, computed as in No.1 hereof.12
Aggrieved, JPL filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals, imputing grave abuse of discretion on the part of the NLRC. It claimed that private
respondents are not by law entitled to separation pay, service incentive leave pay and 13th month
pay.
The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While
conceding that there was no illegal dismissal, it justified the award of separation pay on the grounds
of equity and social justice.13The Court of Appeals rejected JPL's argument that the difference in the
amounts of private respondents' salaries and the minimum wage in the region should be considered
as payment for their service incentive leave and 13th month pay.14 Notwithstanding the absence of a
contractual agreement on the grant of 13th month pay, compliance with the same is mandatory
under the law. Moreover, JPL failed to show that it was exempt from paying service incentive leave
pay. JPL filed a motion for reconsideration of the said resolution, but the same was denied on 25
January 2002.15
In the instant Petition for Review , JPL claims that the Court of Appeals committed reversible error in
rendering the assailed Decision and Resolution.16 The instant case does not fall under any of the
instances where separation pay is due, to wit: installation of labor-saving devices, redundancy,
retrenchment or closing or cessation of business operation,17or disease of an employee whose
continued employment is prejudicial to him or co-employees,18 or illegal dismissal of an employee
but reinstatement is no longer feasible.19 Meanwhile, an employee who voluntarily resigns is not
entitled to separation unless stipulated in the employment contract, or the collective bargaining
agreement, or is sanctioned by established practice or policy of the employer.20 It argues that private
respondents' good record and length of service, as well as the social justice precept, are not enough
to warrant the award of separation pay. Gonzales and Aninipot were employed by JPL for more than
four (4) years, while Abesa rendered his services for more than two (2) years, hence, JPL claims
that such short period could not have shown their worth to JPL so as to reward them with payment of
separation pay.21
In addition, even assuming arguendo that private respondents are entitled to the benefits awarded,
the computation thereof should only be from their first day of employment with JPL up to 15 August
1996, the date of termination of CMC's contract, and not up to the finality of the 27 July 2000
resolution of the NLRC.22 To compute separation pay, 13th month pay, and service incentive leave
pay up to 27 July 2000 would negate the findings of both the Court of Appeals and the NLRC that
private respondents were not unlawfully terminated.23 Additionally, it would be erroneous to compute
service incentive leave pay from the first day of their employment up to the finality of the NLRC
resolution since an employee has to render at least one (1) year of service before he is entitled to
the same. Thus, service incentive leave pay should be counted from the second year of service.24
On the other hand, private respondents maintain that they are entitled to the benefits being claimed
as per the ruling of this Court in Serrano v. NLRC, et al.25 They claim that their dismissal, while not
illegal, was tainted with bad faith.26 They allege that they were deprived of due process because the
notice of termination was sent to them only two (2) days before the actual termination.27 Likewise,
the most that JPL offered to them by way of settlement was the payment of separation pay of seven
(7) days for every year of service.28
Replying to private respondents' allegations, JPL disagrees that the notice it sent to them was a
notice of actual termination. The said memo merely notified them of the end of merchandising for
CMC, and that they will be transferred to other clients.29 Moreover, JPL is not bound to observe the
thirty (30)-day notice rule as there was no dismissal to speak of. JPL counters that it was private
respondents who acted in bad faith when they sought employment with another establishment,
without even the courtesy of informing JPL that they were leaving for good, much less tender their
resignation.30 In addition, the offer of seven (7) days per year of service as separation pay was
merely an act of magnanimity on its part, even if private respondents are not entitled to a single
centavo of separation pay.31
The case thus presents two major issues, to wit: whether or not private respondents are entitled to
separation pay, 13th month pay and service incentive leave pay, and granting that they are so
entitled, what should be the reckoning point for computing said awards.
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals
due to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c)
retrenchment; (d) cessation of the employer's business; and (e) when the employee is suffering from
a disease and his continued employment is prohibited by law or is prejudicial to his health and to the
health of his co-employees. However, separation pay shall be allowed as a measure of social justice
in those cases where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character, but only when he was illegally dismissed.32 In addition, Sec.
4(b), Rule I, Book VI of the Implementing Rules to Implement the Labor Code provides for the
payment of separation pay to an employee entitled to reinstatement but the establishment where he
is to be reinstated has closed or has ceased operations or his present position no longer exists at
the time of reinstatement for reasons not attributable to the employer.
The common denominator of the instances where payment of separation pay is warranted is that the
employee was dismissed by the employer.33In the instant case, there was no dismissal to speak of.
Private respondents were simply not dismissed at all, whether legally or illegally. What they received
from JPL was not a notice of termination of employment, but a memo informing them of the
termination of CMC's contract with JPL. More importantly, they were advised that they were to be
reassigned. At that time, there was no severance of employment to speak of.
Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months, wherein an employee/employees
are placed on the so-called "floating status." When that "floating status" of an employee lasts for
more than six months, he may be considered to have been illegally dismissed from the service.
Thus, he is entitled to the corresponding benefits for his separation, and this would apply to
suspension either of the entire business or of a specific component thereof.34
As clearly borne out by the records of this case, private respondents sought employment from other
establishments even before the expiration of the six (6)-month period provided by law. As they
admitted in their comment, all three of them applied for and were employed by another
establishment after they received the notice from JPL.35 JPL did not terminate their employment;
they themselves severed their relations with JPL. Thus, they are not entitled to separation pay.
The Court is not inclined in this case to award separation pay even on the ground of compassionate
justice. The Court of Appeals relied on the cases36 wherein the Court awarded separation pay to
legally dismissed employees on the grounds of equity and social consideration. Said cases involved
employees who were actually dismissed by their employers, whether for cause or not. Clearly, the
principle applies only when the employee is dismissed by the employer, which is not the case in this
instance. In seeking and obtaining employment elsewhere, private respondents effectively
terminated their employment with JPL.
In addition, the doctrine enunciated in the case of Serrano37 cited by private respondents has
already been abandoned by our ruling in Agabon v. National Labor Relations Commission.38 There
we ruled that an employer is liable to pay indemnity in the form of nominal damages to a dismissed
employee if, in effecting such dismissal, the employer failed to comply with the requirements of due
process. However, private respondents are not entitled to the payment of damages considering that
there was no violation of due process in this case. JPL's memo dated 13 August 1996 to private
respondents is not a notice of termination, but a mere note informing private respondents of the
termination of CMC's contract and their re-assignment to other clients. The thirty (30)-day notice rule
does not apply.
Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to
private respondents. Said benefits are mandated by law and should be given to employees as a
matter of right.
Presidential Decree No. 851, as amended, requires an employer to pay its rank and file employees a
13th month pay not later than 24 December of every year. However, employers not paying their
employees a 13th month pay or its equivalent are not covered by said law.39 The term "its
equivalent" was defined by the law's implementing guidelines as including Christmas bonus, mid-
year bonus, cash bonuses and other payment amounting to not less than 1/12 of the basic salary but
shall not include cash and stock dividends, cost-of-living-allowances and all other allowances
regularly enjoyed by the employee, as well as non-monetary benefits.40
On the other hand, service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly
leave benefit of five (5) days with pay, enjoyed by an employee who has rendered at least one year
of service. Unless specifically excepted, all establishments are required to grant service incentive
leave to their employees. The term "at least one year of service" shall mean service within twelve
(12) months, whether continuous or broken reckoned from the date the employee started
working.41 The Court has held in several instances that "service incentive leave is clearly
demandable after one year of service."42
Admittedly, private respondents were not given their 13th month pay and service incentive leave pay
while they were under the employ of JPL. Instead, JPL provided salaries which were over and above
the minimum wage. The Court rules that the difference between the minimum wage and the actual
salary received by private respondents cannot be deemed as their 13th month pay and service
incentive leave pay as such difference is not equivalent to or of the same import as the said benefits
contemplated by law. Thus, as properly held by the Court of Appeals and by the NLRC, private
respondents are entitled to the 13th month pay and service incentive leave pay.
However, the Court disagrees with the Court of Appeals' ruling that the 13th month pay and service
incentive leave pay should be computed from the start of employment up to the finality of the NLRC
resolution. While computation for the 13th month pay should properly begin from the first day of
employment, the service incentive leave pay should start a year after commencement of service, for
it is only then that the employee is entitled to said benefit. On the other hand, the computation for
both benefits should only be up to 15 August 1996, or the last day that private respondents worked
for JPL. To extend the period to the date of finality of the NLRC resolution would negate the absence
of illegal dismissal, or to be more precise, the want of dismissal in this case. Besides, it would be
unfair to require JPL to pay private respondents the said benefits beyond 15 August 1996 when they
did not render any service to JPL beyond that date. These benefits are given by law on the basis of
the service actually rendered by the employee, and in the particular case of the service incentive
leave, is granted as a motivation for the employee to stay longer with the employer. There is no
cause for granting said incentive to one who has already terminated his relationship with the
employer.
The law in protecting the rights of the employees authorizes neither oppression nor self-destruction
of the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it
is but recognition of the inherent economic inequality between labor and management. The intent is
to balance the scale of justice; to put the two parties on relatively equal positions. There may be
cases where the circumstances warrant favoring labor over the interests of management but never
should the scale be so tilted if the result is an injustice to the employer. Justitia nemini neganda
est (Justice is to be denied to none).43
WHEREFORE, the petition is GRANTED IN PART. The Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 62631 are hereby MODIFIED. The award of separation pay is deleted.
Petitioner is ordered to pay private respondents their 13th month pay commencing from the date of
employment up to 15 August 1996, as well as service incentive leave pay from the second year of
employment up to 15 August 1996. No pronouncement as to costs.
SO ORDERED.
G.R. No. 164804 January 30, 2009

VIRGINIA A. SUGUE and THE HEIRS OF RENATO S. VALDERRAMA, Petitioners,
vs.
TRIUMPH INTERNATIONAL (PHILS.), INC., Respondent.
x---------------x
G.R. No. 164784 January 30, 2009
TRIUMPH INTERNATIONAL (PHILS.), INC., Petitioner,
vs.
VIRGINIA A. SUGUE and THE HEIRS OF RENATO S. VALDERRAMA, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before us are consolidated petitions for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure filed by both contending parties assailing the Decision1 dated April 23, 2004 and the
Resolution2 dated July 21, 2004 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 68591.
In G.R. No. 164804, petitioners Virginia Sugue (Sugue) and the Heirs of Renato Valderrama
(Valderrama) question the CA decision which partly granted their appeal but deleted the attorney’s
fees and reduced the moral and exemplary damages awarded to them.
On the other hand, in G.R. No. 164784, petitioner Triumph International (Phils.), Inc. (Triumph
hereafter) assails the CA decision for setting aside an earlier decision3 of the National Labor
Relations Commission (NLRC) dated June 13, 2001 which ruled in its favor.
The antecedents of the case show that Triumph hired Sugue in May 1990 as its Assistant Manager
for Marketing and was subsequently promoted to Marketing Services Manager with a monthly salary
of ₱82,500.00. On the other hand, Valderrama was hired in April 1993 as Direct Sales Manager with
a monthly salary of ₱121,000.00. Their main function/responsibility was to ensure that the
company’s sales targets and objectives were met.
Beginning sometime in October 1999, Triumph’s top management began to notice a sharp decline in
the sales of the company. Moreover, in the following months, the actual sales figures continued to be
significantly below the sales targets set by Valderrama himself. This persistent below target sales
performance was the subject of correspondence between Valderrama and his superiors from
November 1999 to July 2000.4
On June 1, 2000, Sugue and Valderrama filed a complaint with the NLRC against Triumph for
payment of money claims arising from allegedly unpaid vacation and sick leave credits, birthday
leave and 14th month pay for the period 1999-2000. Said complaint was docketed as NLRC-NCR-
Case No. 00-06-03008-2000.5
On June 19, 2000, Sugue and Valderrama personally attended the preliminary conference of the
said case. The following day, a memorandum was issued by Triumph’s Managing Director/General
Manager, Alfredo Escueta, reminding all department heads of existing company policy that requires
department heads to notify him (Escueta) before leaving the office during work hours.6 That same
day, Triumph’s Personnel Manager, Ralph Funtila, issued separate memoranda to Sugue and
Valderrama requiring them to inform the office of the General Manager of their whereabouts on June
19, 2000 from 9:06 a.m. to 11:15 a.m. They replied that they attended the aforementioned
preliminary conference.7
On June 23, 2000, Valderrama and Sugue were directed to submit a written explanation as to why
they used company time and the company vehicle and driver in attending the preliminary conference
at the NLRC and why they left the office without advising the Managing Director. They explained that
they believed they may use company time and the company vehicle since the hearing they attended
was pursuant to a complaint that they filed as employees of the company.
On June 28, 2000, Triumph charged the one-half day utilized by Sugue and Valderrama in attending
the NLRC hearing on June 19, 2000 to their vacation leave credits.
In the pleadings, Valderrama likewise complained that his request for an executive check-up on
June 19, 2000 was disapproved by Triumph. Thereafter, Valderrama did not report for work on July
3 to 5, 2000 due allegedly to persistent cough and vertigo, but his request for sick leave on those
dates was disapproved by Triumph because he failed to submit a medical certificate as required by
the company’s rules and policies.
Subsequently, on July 10, 2000, Triumph issued a show cause memo to Valderrama requiring him to
explain, among others, his department’s dismal performance since October 1999, within 48 hours
from receipt.8 On July 11, 2000, Valderrama replied to the show cause memo.9
On July 17, 2000, Valderrama wrote the company a letter stating that he considered himself
constructively dismissed due to the unreasonable pressures and harassments he suffered the past
months which prevented him from effectively exercising his tasks as Direct Sales Manager.10
Subsequently, on July 28, 2000, Triumph issued a memorandum requiring Valderrama to explain,
under pain of dismissal, his continued absences without official leave. Valderrama failed to respond,
thus, on August 11, 2000, Triumph decided to terminate Valderrama’s employment for abandonment
of work.11
Meanwhile, on July 25, 2000, Sugue also wrote the company stating that she considers herself
constructively dismissed.12 From the pleadings, Sugue’s charge of constructive dismissal was based
on the fact that her request for vacation leave from July 14 to 15, 2000 was subject to the condition
that she first submit a report on the company’s 2001 Marketing Plan. Also, the approval of her
request for executive check-up was deferred. Then, on July 18, 2000, she received a memorandum
instructing her to report to Mr. Efren Temblique, who was appointed OIC for Marketing as a result of
a reorganization prompted by Valderrama’s continued absences. Sugue claimed that such act by
Triumph was an outright demotion considering that Mr. Temblique was her former assistant.
On August 11, 2000, Triumph required Sugue to explain why she should not be terminated for
continued absences without official leave.13 Sugue failed to comply, thus, on September 1, 2000, her
employment was terminated for abandonment of work.14
Prior to the actual termination of their employment by Triumph, Sugue and Valderrama filed on July
31, 2000 a complaint for constructive dismissal against Triumph, docketed as NLRC NCR Case No.
00-07-03965-2000.15
The following day, on August 1, 2000, Valderrama commenced his employment as Sales Director of
Fila Phils., Inc., a competitior of Triumph.
On March 15, 2001, Labor Arbiter Salimathar Nambi rendered a decision, declaring that Sugue and
Valderrama were constructively dismissed. The dispositive portion of the Labor Arbiter’s decision
follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Triumph

International (Phils.), Inc. to:
1) Pay, since reinstatement is not feasible, complainants Virginia A. Sugue and Renato
Valderrama their separation pay computed at one month salary for every year of service
from their initial engagement on May 1990 and April 1993, respectively.
2) Pay both complainants full backwages from the time that they were constructively
dismissed, i.e. from 17 July 2000 in the case of Valderrama and from 25 July 2000 in the
case of Sugue until finality of judgment.
3) Pay P2,000,000.00 as moral damages to each of the complainants
4) Pay P1,000,000.00 as exemplary damages to each of the complainants.
5) Reimburse the complainants the 20% of the amounts claimed as attorney’s fees.
SO ORDERED.16
Aggrieved, Triumph filed an appeal with the NLRC,17 and in a decision dated June 13, 2001, the First
Division of the NLRC granted the appeal and reversed the ruling of Labor Arbiter Nambi.
Not satisfied with the NLRC decision, Sugue and Valderrama elevated the matter to the CA by way
of a petition for certiorari. While the matter was pending with the CA, Valderrama passed away (on
July 3, 2003) and notice of his death was filed by his counsel.18
On April 23, 2004, the CA rendered its assailed decision, the dispositive portion of which reads:
WHEREFORE, the petition is partly granted. The Decision dated June 13, 2001 of public respondent
NLRC is hereby set aside, and the Decision dated March 15, 2001 of the labor arbiter is reinstated,
subject to the deletion of the award of attorney’s fees and the reduction of the award of moral
damages to P500,000.00 and exemplary damages to 250,000.00, for each of the petitioners.
SO ORDERED.19
Triumph’s subsequent motion for reconsideration as well as the motion for partial reconsideration
filed by Sugue and the heirs of Valderrama were both denied by the appellate court in its resolution
dated July 21, 2004.
Hence, the parties filed the present petitions which were consolidated by this Court in a Resolution
dated September 27, 2004.20
In G.R. No. 164804, petitioners therein Sugue and the heirs of Valderrama allege that the Court of
Appeals gravely erred in deleting the labor arbiter’s award of attorney’s fees.21
In G.R. No. 164784, petitioner therein Triumph cites the following reasons why the Court should rule
in its favor:
The Court of Appeals gravely erred and contravened prevailing jurisprudence in abandoning the
NLRC’s findings of fact and making its own findings. The rule is basic that the factual findings of the
NLRC are accorded respect, if not finality, considering that the same were based on evidence on
record. Reassessment of evidence is beyond the province of a writ of certiorari.
II
The Court of Appeals gravely erred and contravened the law and jurisprudence in ruling that
Valderama and Sugue were constructively dismissed, and are entitled to separation pay, backwages
and damages. The facts of the case, as correctly found by the NLRC based on evidence on record,
clearly belie their contention that they were constructively dismissed.22
From the allegations of the respective parties in their pleadings, it is clear that the controversies
involved in the two consolidated cases center on the question of whether Valderrama and Sugue
were constructively dismissed by Triumph.
At the outset, it should be stated that the main issue in this case involves a question of fact. It is an
established rule that the jurisdiction of the Supreme Court in cases brought before it from the CA via
Rule 45 of the 1997 Rules of Civil Procedure is generally limited to reviewing errors of law.23 This
Court is not a trier of facts. In the exercise of its power of review, the findings of fact of the CA are
conclusive and binding and consequently, it is not our function to analyze or weigh evidence all over
again.24
The above rule, however, is not without exceptions. In Sta. Maria v. Court of Appeals,25 we
enumerated the instances when the factual findings of the CA are not deemed conclusive, to wit: (1)
when the conclusion is a finding grounded entirely on speculations, surmises or conjecture; (2) when
the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of
facts are conflicting; (6) when the CA, in making its findings, went beyond the issues of the case and
the same are contrary to the admission of both the appellant and the appellee; (7) when the findings
are contrary to those of the trial court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the petition as well as in
the petitioner’s main and reply briefs are not disputed by the respondent; and (10) when the findings
of fact are premised on the supposed evidence and contradicted by the evidence on record.
In the instant case, it appears that there is a divergence between the findings of facts of the NLRC
and that of the CA. Hence, we are constrained to review the factual findings made by the NLRC and
the appellate court.
After a thorough review of the evidence on record, we find sufficient reasons to uphold Triumph’s
position.
Constructive dismissal is defined as an involuntary resignation resorted to when continued

employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.26
On a preliminary point, we note that Sugue and Valderrama discuss extensively in their pleadings
alleged denial of leave applications and unpaid cash conversion of unused leaves and other
monetary benefits which moved them to file a complaint for monetary claims on June 1, 2000.27 We
find no need to pass upon these matters here precisely because they are the subject matters of a
separate case and properly threshed out therein. In any event, it is Sugue and Valderrama’s theory
that Triumph’s acts of harassment, upon which they base their charge of constructive dismissal,
were in retaliation for their filing of the aforementioned complaint for unpaid benefits.28 The acts
which purportedly show discrimination and bad faith on the part of Triumph are summarized below:
In the case of Valderrama:
1. The half-day he spent in attending the NLRC hearing on June 19, 2000 was charged to his
vacation leave credit;
2. His application for sick leave for July 3 to 5, 2000 was disapproved; and
3. His request for executive check-up was denied.
In the case of Sugue:
1. The half-day she spent in attending the NLRC hearing on June 19, 2000 was charged to
her vacation leave credit;
2. The approval of her application for leave of absence for July 14 and 15, 2000 was made
subject to the condition that she should first submit a report on the 2001 Marketing Plan;
3. The approval of her request for executive check-up was deferred until after the visit of the
company’s regional marketing manager; and
4. A memorandum was issued instructing her to report to her former assistant, Mr.
Temblique, which was allegedly tantamount to a demotion.
According to Sugue and Valderrama, this series of discriminatory acts committed by Triumph
created an adverse working environment rendering it impossible for them to continue working for
Triumph. Hence, their severance from the company was not of their own making and therefore
amounted to constructive dismissal which is tantamount to an illegal termination of employment.
With respect to the first alleged discriminatory act, we can conceive of no reason to ascribe bad faith
or malice to Triumph for charging to the leave credits of Sugue and Valderrama the half-day that
they spent in attending the preliminary conference of the case they instituted against Triumph. It is
fair and reasonable for Triumph to do so considering that Sugue and Valderrama did not perform
work for one-half day on June 19, 2000.
Indeed, we find it surprising that Sugue and Valderrama would even have the temerity to contend
that the hours they spent in attending the hearing were compensable time. As the NLRC correctly
pointed out, as early as the case of J.B. Heilbronn Co. v. National Labor Union,29 this Court held that:
When the case of strikes, and according to the CIR even if the strike is legal, strikers may not collect
their wages during the days they did not go to work, for the same reasons if not more, laborers who
voluntarily absent themselves from work to attend the hearing of a case in which they seek to prove
and establish their demands against the company, the legality and propriety of which demands is not
yet known, should lose their pay during the period of such absence from work. The age-old rule
governing the relation between labor and capital or management and employee is that a "fair day's
wage for a fair day's labor." If there is no work performed by the employee there can be no wage or
pay, unless of course, the laborer was able, willing and ready to work but was illegally locked out,
dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or litigate against
his employer on the employer's time.
In a case where a laborer absents himself from work because of a strike or to attend a conference or
hearing in a case or incident between him and his employer, he might seek reimbursement of his
wages from his union which had declared the strike or filed the case in the industrial court. Or, in the
present case, he might have his absence from his work charged against his vacation leave. xxx
(Emphasis ours)
This doctrine in Heilbronn was reiterated in Manila Trading & Supply Co. v. Manila Trading Labor
Association30 and quoted favorably in later cases.31 Triumph is, thus, justified in charging Sugue and
Valderrama’s half-day absence to their vacation leave credits.
Corollarily, we cannot uphold the CA’s approval of the Labor Arbiter’s finding that the memoranda
issued by Triumph in connection with the June 19, 2000 hearing constitute undue harassment.
To begin with, the complained of Memorandum dated June 20, 2000 issued by Mr. Escueta,
regarding the company policy that required department heads to give prior notice to the General
Manager if they will be away from the office during office hours, did not single out Sugue and
Valderrama but was addressed to all department heads. Contrary to Sugue and Valderrama’s
assertion that said policy was being retroactively applied to them, it is plain on the face of the same
memorandum (a copy of which was even attached to their Position Paper filed with the Labor
Arbiter)32that the policy of requiring department heads to give notice to the Office of the Managing
Director/General Manager should they leave the office during regular work hours had been in force
since 1997. The memoranda of Mr. Funtila, requiring Sugue and Valderrama to inform the office of
the General Manager of their whereabouts on the morning of June 19, 2000, could not be deemed a
form of harassment but rather it was in keeping with due process. Notwithstanding the fact that the
company had received summons for the same hearing, the company could not simply assume that
the hearing was the reason for Valderrama and Sugue’s absence. When an employer believes that
there has been a possible violation of company rules or policies, the law, in fact, requires the
employer to give the employee ample opportunity to explain. Finally, the memoranda informing
Valderrama and Sugue that they cannot use company time and the company vehicle when attending
hearings for the case they filed against the company and that their absence would be charged
against their vacation leaves were, as discussed above, in accordance with existing jurisprudence
and principles of fair play. Verily, this is not a case of ordinary workers with limited resources who
were being unlawfully pressured or prevented by their employer from pursuing their claims. Sugue
and Valderrama are highly educated managers who were ably represented by counsel and were
then being paid handsome compensation packages by Triumph. Even assuming that Sugue and
Valderrama in good faith believed that they are merely exercising their legal right to prosecute their
monetary claims when they chose to absent themselves from work to attend the June 19, 2000, it
would have imposed little burden on them to have the courtesy to inform their employer beforehand
of their intention to personally attend the hearing and the decency to do so on their own time and at
their own expense.
Anent Sugue and Valderrama’s claim that they were unjustly denied availment of their leaves as part
of a scheme on the part of Triumph to harass them, we find the same patently without merit.
In the case of Valderrama, he applied for sick leave for the period July 3 to 5, 2000 allegedly
because of persistent cough and vertigo, but this was disapproved by Triumph. The record,
however, reveals that he failed to comply with the company’s requirement that an application for sick
leave for two or more days must be supported by a medical certificate which must be verified by the
company physician. He was even given twenty-four (24) hours to submit the same but he totally
ignored it. That his sick leave application was denied was mainly due to his own fault and must not
be unduly blamed on his employer.
For her part, Sugue condemns Triumph for putting a condition on the approval of her two days
vacation leave for July 14 and 15, 2000, when she was required to first submit a report on the 2001
Marketing Plan. To be very accurate, Mr. Escueta’s memorandum dated July 13, 2000 advised
Sugue that her application for leave will be approved if she will commit to submit her reports in
connection with the 2001 Marketing Plan by July 17, 2000, which was two days after her leave.
Again, we find nothing discriminatory in such a condition considering that she was unable to show
that she was the only employee whose leave application has been subjected to a condition.
Discrimination is the failure to treat all persons equally when no reasonable distinction can be found
between those favored and those not favored.33 Sugue obviously failed to substantiate her claim of
discrimination. To be sure, he who asserts must prove.34 On the contrary, the record shows that as
early as October 12, 1999, a memorandum was issued by Triumph addressed to all department
heads that leave applications may be approved, disapproved or postponed depending on the (1)
business status due to CBA; (2) company’s urgent need for their presence; and (3) CBA negotiations
status.35 Evidently, this directive applies not just to Sugue but to all department heads. Although this
memorandum was supposedly in force only until December 1999, it establishes a precedent for the
company imposing conditions on the approval of leave applications of department heads.
As for the nature of the condition itself, we do not see how it can be deemed unreasonable or in bad
faith for the employer to require its employee to complete her assignments on time or before taking a
vacation leave. Being the Marketing Services Manager, Sugue’s reports were indispensable in the
preparation of the 2001 Marketing Plan plus the fact that the company had been experiencing a
significant decline in sales at that time which all the more emphasizes the need for her to submit an
updated report relative to the 2001 Initial Marketing Plan. For sure, she failed to show that the
company prevented her from availing of her vacation leave afterwards or at some other time. Clearly
then, there was no discrimination nor harassment to speak of.
Third, both Sugue and Valderrama question the denial by Triumph of their request for executive
check-up. It should be noted that Triumph did not completely turn down their request. Based on
Sugue and Valderrama’s own evidence, their request was merely deferred because the 2001 Initial
Marketing Plan was due on June 26, 2000 and Triumph’s regional product manager was scheduled
to visit the country on June 26 to 29, 2000.36 As Valderrama was the Direct Sales Manager and
Sugue was the Marketing Services Manager, their presence on those dates was undoubtedly
needed. Thus, their contention that the approval of their request was indefinitely withheld is
apocryphal. In fact, there is nothing that prevented them from scheduling their executive check-up
after the visit of the regional marketing manager.
It is worth stressing that in the grant of vacation and sick leave privileges to an employee, the
employer is given leeway to impose conditions on the entitlement to the same as the grant of
vacation and sick leave is not a standard of law, but a prerogative of management. It is a mere
concession or act of grace of the employer and not a matter of right on the part of the
employee.37 Thus, it is well within the power and authority of an employer to deny an employee’s
application for leave and the same cannot be perceived as discriminatory or harassment.
Sugue next asserts that she was demoted when she was directed to report to Mr. Efren Temblique
who was her subordinate and when she was stripped of her usual functions. We are far from
convinced. Demotion involves a situation where an employee is relegated to a subordinate or less
important position constituting a reduction to a lower grade or rank, with a corresponding decrease in
salaries, benefits and privileges.38
The evidence on hand belies Sugue’s assertion, the truth being that prior to the reorganization, Mr.
Temblique occupied the position of Assistant Manager for Direct Sales,39 and as such was
Valderrama’s subordinate and not of Sugue. Sugue likewise failed to adequately prove her assertion
that she reported directly to the General Manager, Mr. Escueta, when she was Marketing Services
Manager or that she was not subordinate to Valderrama. To show that she was reporting directly to
Mr. Escueta, Sugue adverts to Annexes U and V of her Position Paper. However, Annexes U and V
were merely memoranda addressed to Mr. Escueta involving Sugue’s application for leave and did
not relate to the discharge of her functions.40 On the other hand, there is on record memoranda
issued by Sugue concerning work matters which were addressed to Valderrama, not Mr. Escueta.41
The evidence on record suggests that the Marketing Services Department was part of the Direct
Sales Department. As Direct Sales Manager, Valderrama’s responsibilities not only included sales
but also marketing for which he was tasked to closely coordinate with the regional sales/marketing
head office in Hongkong.42 The record would also show that Sugue considered herself as belonging
to the Direct Sales Department.43 It is unsurprising then that when the Direct Sales Department was
reorganized due to Valderrama’s unexpected departure on July 17, 2000, Sugue’s Marketing
Services Department was included in the reorganization. It would appear from Mr. Escueta’s
Memorandum dated July 18, 2000 (Re: Direct Sales Reorganization) the sales and marketing
responsibilities of Mr. Valderrama were taken over by Mr. Edilberto S. Rivera and Temblique, as OIC
for Direct Sales and Marketing, respectively.
In view of Valderrama’s sudden severance of his employment coupled with the substantially low
sales Triumph had been experiencing for the past nine months, the company saw an imperative
need to effect a reorganization in its sales department, and this included the temporary designation
of Temblique as OIC for Marketing concurrently with his position as Assistant Manager for Direct
Sales-SMSD.44 When Sugue was directed to report to Temblique, she was not being made to report
to Temblique as Assistant Manager for Direct Sales-SMSD but as the newly designated OIC for
Marketing, i.e., the officer chiefly responsible for all marketing matters. Furthermore, we find no merit
in Sugue’s contention that she was in any way stripped of her usual functions. A careful perusal of
Annexes EE and FF of her Position Position shows that she continued to be the head of Marketing
Services, under the supervision of Temblique as OIC for Marketing.
As we see it, Triumph’s directive for Sugue to report to Temblique was not unreasonable,
inconvenient or prejudicial to her considering that it did not entail a demotion in rank or diminution of
salaries, benefits and other privileges. Even assuming there was a change in the personalities to
whom Sugue is required to report, she continued to assume her position as Marketing Services
Manager and to exercise the same functions. Neither did she assert, much less prove, that there
was any diminution in her salary or other benefits. We ruled in Philippine Wireless, Inc. v.
NLRC45 that there is no demotion where there is no reduction in position, rank or salary.
In fine, we find that Triumph’s reorganization was intended to improve management operations
especially in the light of the poor sales performance of the company during that period. The act of
management in reorganizing the sales department in order to achieve its objectives is a legitimate
exercise of its management prerogatives, barring any showing of bad faith which is absent in the
instant case. Indeed, labor laws discourage interference in employers’ judgments concerning the
conduct of their business. The law must protect not only the welfare of employees, but also the right
of employers.46
All told, Triumph did not act with discrimination, insensibility or disdain towards Sugue and
Valderrama, which foreclosed any choice on their part except to forego their continued employment.
Purely conjectural are their assertions that the disapproval of their leave applications, the denial of
their request for executive check-up and the alleged demotion, were carried out by Triumph in
retaliation to their filing of a complaint for unpaid money claims against the company. Sugue and
Valderrama offered insufficient proof to substantiate their allegations. For this reason, their bare and
self-serving charges of constructive dismissal, when unsupported by the evidence on record, cannot
be given credence.
Worth noting at this point is that as early as June 21, 2000, Valderrama had accepted employment
with Fila Philippines, Inc. as its Sales Director. Although his appointment was to take effect only on
August 1, 2000, it cannot be denied that he had finalized or was finalizing his employment deal with
Fila while he was still employed with Triumph as shown by Fila’s inter-office memo dated June 21,
2000 announcing to its employees Valderrama’s appointment effective August 1, 2000.47 Unlike the
Labor Arbiter and the CA, we do not view this circumstance as insignificant. It is evident that
Valderrama already had a firm understanding with Fila as of June 21, 2000 so much so that his
arrival was highly anticipated and even formally announced by his new employer on said date. This
undeniably demonstrated that Valderrama intended to leave his employment with Triumph even
before the company issued a show cause memo (on July 10, 2000) for him to explain, among
others, his below target sales performance and before he informed the company that he considered
himself constructively dismissed on July 17, 2001. It may be inferred therefrom that he filed the
constructive dismissal case merely as a subterfuge to evade liability for breach of his employment
contract with Triumph which requires 60-day notice prior to resignation. The circumstance that he did
not pray for reinstatement in his complaint bolsters the theory that the constructive dismissal case
was a tool designed to conceal his impending transfer to Fila.
Having failed to substantiate their claim of constructive dismissal, Sugue and Valderrama should be
deemed to have abandoned their work, thus, their dismissal is warranted. Abandonment is the
deliberate and unjustified refusal of an employee to resume his employment, without any intention of
returning. It is a form of neglect of duty, hence, a just cause for termination of employment by the
employer. For abandonment to be a valid ground for dismissal, two elements must then be satisfied:
(1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear
intention to sever the employer-employee relationship. The second element is the more
determinative factor and must be evinced by overt acts.48
The abovementioned elements are present in the instant case. First, Sugue and Valderrama’s failure
to report for work was without justifiable reason. As earlier discussed, their allegation of
discrimination and harassment lacks factual basis, thus, under the circumstances, we find their
absences to be unjustified and without any valid reason. Second, their overt act of writing letters
informing Triumph that they considered themselves constructively dismissed was a clear
manifestation of their intention to desist from their employment. Too, their defiance and disregard of
the memorandum sent by Triumph requiring them to explain their unauthorized absences
demonstrated a clear intention on their part to sever their employer-employee relationship. This is
particularly true with Valderrama who, even before unilaterally terminating his employment with
Triumph, had already sought regular employment elsewhere and in fact was set to join a competitor,
Fila Phils., Inc.
Further, they filed a complaint for constructive dismissal without praying for reinstatement. By
analogy, we point to the doctrine that abandonment of work is inconsistent with the filing of a
complaint for illegal dismissal is not applicable where the complainant does not pray for
reinstatement and just asks for separation pay instead.49 In this case, Sugue and Valderrama opted
not to ask for reinstatement and even for separation pay, which clearly contradicts their stance that
they did not abandon their work, for it appears they have no intention of ever returning to their
positions in Triumph. In addition, we cannot subscribe to the CA’s view that Triumph’s issuance of
show cause memos and notices of termination for abandonment were mere afterthought since they
were preceded by Sugue’s and Valderrama’s letters informing the company that they considered
themselves constructively dismissed. Logically, Triumph could not have issued show cause memos
or termination notices for abandonment before Sugue and Valderrama unilaterally declared
themselves constructively dismissed and stopped reporting for work without justifiable reason.
Indeed, the law imposes many obligations on the employer such as providing just compensation to
workers, and observance of the procedural requirements of notice and hearing in the termination of
employment. On the other hand, the law also recognizes the right of the employer to expect from its
workers not only good performance, adequate work and diligence, but also good conduct and
loyalty. The employer may not be compelled to continue to employ such persons whose continuance
in the service will patently be inimical to his interests.50 Triumph has adequately shown the existence
of a just and valid cause in terminating the employment of Sugue and Valderrama, and has faithfully
complied with the procedural requirements of due process for valid termination of employment.
Anent Sugue and the heirs of Valderrama’s petition regarding the CA’s deletion of the award of
attorney’s fees, a discussion on the propriety of the award of damages and attorney’s fees is
rendered unnecessary in view of their failure to prove constructive dismissal.lawphil.net
WHEREFORE, the petition for review filed by Virginia Sugue and the Heirs of Renato Valderrama in
G.R. No. 164804 is DENIED while the petition for review filed by Triumph International (Phils.), Inc.
in G.R. No. 164784 is GRANTED. Accordingly, the assailed decision and resolution of the Court of
Appeals are hereby REVERSED and SET ASIDE. The National Labor Relations Commission’s
Decision dated June 13, 2001 is REINSTATED.
SO ORDERED.
[G.R. No. 171231 : February 17, 2010]
PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANIZATION

(PSTMSDWO), REPRESENTED BY ITS PRESIDENT, RENE SORIANO, PETITIONER, VS. PNCC
SKYWAY CORPORATION, RESPONDENT.
DECISION
PERALTA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set
aside the Decision[1] and the Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP. No. 87069, which
annulled and set aside the Decision and Order of the Voluntary Arbitrator dated July 12, 2004 and August
11, 2004, respectively.
The factual antecedents are as follows:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization
(PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE).
Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by virtue of
the laws of the Philippines.
On November 15, 2002, petitioner and respondent entered into a Collective Bargaining Agreement (CBA)
incorporating the terms and conditions of their agreement which included vacation leave and expenses for
security license provisions.
The pertinent provisions of the CBA relative to vacation leave and sick leave are as follows:
ARTICLE VIII
VACATION LEAVE AND SICK LEAVE
Section 1. Vacation Leave.
[a] Regular Employees covered by the bargaining unit who have completed at least one [1]year of continuous
service shall be entitled to vacation leave with pay depending on the length of service as follows:
1-9 years of service- 15 working days

26 and above years of service - 19 working days.
[b] The company shall schedule the vacation leave of employees during the year taking into
consideration the request of preference of theemployees.(emphasis supplied)
[c] Any unused vacation leave shall be converted to cash and shall be paidto the employees on the first
week of December each year."
ARTICLE XXI
Section 6. Security License - All covered employees must possess a valid License [Security Guard License]
issued by the Chief, Philippine National Police or his duly authorized representative, to perform his duties as
security guard. All expenses of security guard in securing/renewing their licenses shall be for their personal
account. Guards, securing/renewing their license must apply for a leave of absence and/or a change of
schedule. Any guard who fails to renew his security guard license should be placed on forced leave until such
time that he can present a renewed security license.
In a Memorandum dated December 29, 2003,[3] respondent's Head of the Traffic Management and Security
Department (TMSD) published the scheduled vacation leave of its TMSD personnel for the year 2004.
Thereafter, the Head of the TMSD issued a Memorandum[4] dated January 9, 2004 to all TMSD personnel. In
the said memorandum, it was provided that:
SCHEDULED VACATION LEAVE WITH PAY.
The 17 days (15 days SVL plus 2-day-off) scheduled vacation leave (SVL) with pay for the year 2004 had
been published for everyone to take a vacation with pay which will be our opportunity to enjoy quality time
with our families and perform our other activities requiring our personal attention and supervision. Swapping
of SVL schedule is allowed on a one-on-one basis by submitting a written request at least 30 days before the
actual schedule of SVL duly signed by the concerned parties. However, the undersigned may consider the
re-scheduling of the SVL upon the written request of concerned TMSD personnel at least 30 days before the
scheduled SVL. Re-scheduling will be evaluated taking into consideration the TMSDs operational
requirement.
Petitioner objected to the implementation of the said memorandum. It insisted that the individual members
of the union have the right to schedule their vacation leave. It opined that the unilateral scheduling of the
employees' vacation leave was done to avoid the monetization of their vacation leave in December 2004.
This was allegedly apparent in the memorandum issued by the Head HRD,[5] addressed to all department
heads, which provides:
FOR : All Dept. Heads

FROM: Head, HRD
SUBJECT : Leave Balances as of January 01, 2004
DATE: January 9, 2004
We are furnishing all the departments the leave balances of their respective staff as of January 01, 2004, so
as to have them monitor and program the schedule of such leave.
Please consider the leave credit they earned each month [1-2-0], one day and two hours in anticipation of
the later schedule. As we are targeting the zero conversion comes December 2004, it is suggested that the
leave balances as of to date be given preferential scheduling.
x x x.
Petitioner also demanded that the expenses for the required in-service training of its member security
guards, as a requirement for the renewal of their license, be shouldered by the respondent. However, the
respondent did not accede to petitioner's demands and stood firm on its decision to schedule all the vacation
leave of petitioner's members.
Due to the disagreement between the parties, petitioner elevated the matter to the DOLE-NCMB for
preventive mediation. For failure to settle the issue amicably, the parties agreed to submit the issue before
the voluntary arbitrator.
The voluntary arbitrator issued a Decision dated July 12, 2004, the dispositive portion of which reads:
WHEREFORE, premises all considered, declaring that:
a) The scheduling of all vacation leaves under Article VIII, Section 6, thereof, shall be under the discretion of
the union members entitled thereto, and the management to convert them into cash all the leaves which the
management compelled them to use.
b) To pay the expenses for the in-service-training of the company security guards, as a requirement for
renewal of licenses, shall not be their personal account but that of the company.
All other claims are dismissed for lack of merit.
SO ORDERED.[6]
Respondent filed a motion for reconsideration, which the voluntary arbitrator denied in the Order[7] dated
August 11, 2004.
Aggrieved, on October 22, 2004, respondent filed a Petition for Certiorari with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction with the CA, and the CA rendered a Decision dated
October 4, 2005,[8] annulling and setting aside the decision and order of the voluntary arbitrator. The CA
ruled that since the provisions of the CBA were clear, the voluntary arbitrator has no authority to interpret
the same beyond what was expressly written.
Petitioner filed a motion for reconsideration, which the CA denied through a Resolution dated January 23,
2006.[9] Hence, the instant petition assigning the following errors:
WITH ALL DUE RESPECT, THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS [THIRTEENTH
DIVISION] ERRED IN HOLDING THAT:
A) THE MANAGEMENT HAS THE SOLE DISCRETION TO SCHEDULE THE VACATION LEAVE OF HEREIN
PETITIONER.
B) THE MANAGEMENT IS NOT LIABLE FOR THE IN-SERVICE-TRAINING OF THE SECURITY GUARDS.
II
THE HONORABLE PUBLIC RESPONDENT ERRED IN OVERSEEING THE CONVERSION ASPECT OF THE UNUSED
LEAVE.
Before considering the merits of the petition, We shall first address the objection based on technicality
raised by respondent.
Respondent alleged that the petition was fatally defective due to the lack of authority of its union president,
Rene Soriano, to sign the certification and verification against forum shopping on petitioner's behalf. It
alleged that the authority of Rene Soriano to represent the union was only conferred on June 30, 2006 by
virtue of a board resolution,[10] while the Petition for Review had long been filed on February 27, 2006. Thus,
Rene Soriano did not possess the required authority at the time the petition was filed on February 27, 2006.
The petitioner countered that the Board Resolution[11] dated June 30, 2006 merely reiterated the authority
given to the union president to represent the union, which was conferred as early as October 2005. The
resolution provides in part that:
WHEREAS, in a meeting duly called for October 2005, the Union decided to file a Motion for Reconsideration
and if the said motion be denied, to file a petition before the Supreme Court. (Emphasis supplied)
Thus, the union president, representing the union, was clothed with authority to file the petition on February
27, 2006.
The purpose of requiring verification is to secure an assurance that the allegations in the petition have been
made in good faith; or are true and correct, not merely speculative. This requirement is simply a condition
affecting the form of pleadings, and non-compliance therewith does not necessarily render it fatally
defective. Truly, verification is only a formal, not a jurisdictional, requirement.
With respect to the certification of non-forum shopping, it has been held that the certification requirement is
rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in
different fora, as this practice is detrimental to an orderly judicial procedure. However, this Court has
relaxed, under justifiable circumstances, the rule requiring the submission of such certification considering
that, although it is obligatory, it is not jurisdictional. Not being jurisdictional, it can be relaxed under the rule
of substantial compliance.[12]
In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue,[13] We said that:
In a slew of cases, however, we have recognized the authority of some corporate officers to sign the
verification and certification against forum shopping. In Mactan-Cebu International Airport Authority v. CA,
we recognized the authority of a general manager or acting general manager to sign the verification and
certificate against forum shopping; in Pfizer v. Galan, we upheld the validity of a verification signed by an
"employment specialist" who had not even presented any proof of her authority to represent the company;
in Novelty Philippines, Inc., v. CA, we ruled that a personnel officer who signed the petition but did not
attach the authority from the company is authorized to sign the verification and non-forum shopping
certificate; and in Lepanto Consolidated Mining Company v. WMC Resources International Pty.
Ltd. (Lepanto), we ruled that the Chairperson of the Board and President of the Company can sign the
verification and certificate against non-forum shopping even without the submission of the board's
authorization.
In sum, we have held that the following officials or employees of the company can sign the verification and
certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the
President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and
(5) an Employment Specialist in a labor case.
While the above cases do not provide a complete listing of authorized signatories to the verification and
certification required by the rules, the determination of the sufficiency of the authority was done on a case
to case basis. The rationale applied in the foregoing cases is to justify the authority of corporate officers or
representatives of the corporation to sign the verification or certificate against forum shopping, being "in a
position to verify the truthfulness and correctness of the allegations in the petition."
In the case at bar, We rule that Rene Soriano has sufficient authority to sign the verification and certification
against forum shopping for the following reasons: First, the resolution dated June 30, 2006 was merely a
reiteration of the authority given to the Union President to file a case before this Court assailing the CBA
violations committed by the management, which was previously conferred during a meeting held on October
5, 2005. Thus, it can be inferred that even prior to the filing of the petition before Us on February 27, 2006,
the president of the union was duly authorized to represent the union and to file a case on its
behalf. Second, being the president of the union, Rene Soriano is in a position to verify the truthfulness and
correctness of the allegations in the petition. Third, assuming that Mr. Soriano has no authority to file the
petition on February 27, 2006, the passing on June 30, 2006 of a Board Resolution authorizing him to
represent the union is deemed a ratification of his prior execution, on February 27, 2006, of the verification
and certificate of non-forum shopping, thus curing any defects thereof. Ratification in agency is the adoption
or confirmation by one person of an act performed on his behalf by another without authority.[14]
We now go to the merits of the case.
Petitioner insisted that their union members have the preference in scheduling their vacation leave. On the
other hand, respondent argued that Article VIII, Section 1 (b) gives the management the final say regarding
the vacation leave schedule of its employees. Respondent may take into consideration the employees'
preferred schedule, but the same is not controlling.
Petitioner also requested the respondent to provide and/or shoulder the expenses for the in-service training
of their members as a requirement for the renewal of the security guards' license. Respondent did not
accede to the union's request invoking the CBA provision which states that all expenses of security guards in
securing /renewing their license shall be for their personal account. The petitioner further argued that any
doubts or ambiguity in the interpretation of the CBA should be resolved in favor of the laborer.
As to the issue on vacation leaves, the same has no merit.
The rule is that where the language of a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids. The intention of the parties must be gathered from
that language, and from that language alone. Stated differently, where the language of a written contract is
clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean,
unless some good reason can be assigned to show that the words used should be understood in a different
sense.[15]
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of
the CBA categorically provides that the scheduling of vacation leave shall be under the option of the
employer. The preference requested by the employees is not controlling because respondent retains its
power and prerogative to consider or to ignore said request.
Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail.[16] In fine, the CBA must be strictly adhered to and respected if
its ends have to be achieved, being the law between the parties. In Faculty Association of Mapua Institute of
Technology (FAMIT) v. Court of Appeals,[17] this Court held that 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. The parties cannot be allowed to change the terms they agreed upon on the ground
that the same are not favorable to them.
As correctly found by the CA:
The words of the CBA were unequivocal when it provided that "The company shall schedule the vacation
leave of employees during the year taking into consideration the request of preference of the employees."
The word shall in this instance connotes an imperative command, there being nothing to show a different
intention. The only concession given under the subject clause was that the company should take into
consideration the preferences of the employees in scheduling the vacations; but certainly, the concession
never diminished the positive right of management to schedule the vacation leaves in accordance with what
had been agreed and stipulated upon in the CBA.
There is, thus, no basis for the Voluntary Arbitrator to interpret the subject provision relating to the schedule
of vacation leaves as being subject to the discretion of the union members. There is simply nothing in the
CBA which grants the union members this right.
It must be noted the grant to management of the right to schedule vacation leaves is not without good
reason. Indeed, if union members were given the unilateral discretion to schedule their vacation leaves, the
same may result in significantly crippling the number of key employees of the petitioner manning the toll
ways on holidays and other peak seasons, where union members may wittingly or unwittingly choose to
have a vacation. Put another way, the grant to management of the right to schedule vacation leaves ensures
that there would always be enough people manning and servicing the toll ways, which in turn assures the
public plying the same orderly and efficient toll way service.
Indeed, the multitude or scarcity of personnel manning the tollways should not rest upon the option of the
employees, as the public using the skyway system should be assured of its safety, security and convenience.
Although the preferred vacation leave schedule of petitioner's members should be given priority, they cannot
demand, as a matter of right, that their request be automatically granted by the respondent. If the
petitioners were given the exclusive right to schedule their vacation leave then said right should have been
incorporated in the CBA. In the absence of such right and in view of the mandatory provision in the CBA
giving respondent the right to schedule the vacation leave of its employees, compliance therewith is
mandated by law.
In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose
conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a
standard of law, but a prerogative of management.[18] It is a mere concession or act of grace of the
employer and not a matter of right on the part of the employee.[19] Thus, it is well within the power and
authority of an employer to impose certain conditions, as it deems fit, on the grant of vacation leaves, such
as having the option to schedule the same.
Along that line, since the grant of vacation leave is a prerogative of the employer, the latter can compel its
employees to exhaust all their vacation leave credits. Of course, any vacation leave credits left unscheduled
by the employer, or any scheduled vacation leave that was not enjoyed by the employee upon the
employer's directive, due to exigencies of the service, must be converted to cash, as provided in the CBA.
However, it is incorrect to award payment of the cash equivalent of vacation leaves that were already used
and enjoyed by the employees. By directing the conversion to cash of all utilized and paid vacation leaves,
the voluntary arbitrator has licensed unjust enrichment in favor of the petitioner and caused undue financial
burden on the respondent. Evidently, the Court cannot tolerate this.
It would seem that petitioner's goal in relentlessly arguing that its members preferred vacation leave
schedule should be given preference is not allowed to them to avail themselves of their respective vacation
leave credits at all but, instead, to convert these into cash.
In Cuajo v. Chua Lo Tan,[20] We said that the purpose of a vacation leave is to afford a laborer a chance to
get a much-needed rest to replenish his worn-out energy and acquire a new vitality to enable him to
efficiently perform his duties, and not merely to give him additional salary and bounty.
This purpose is manifest in the Memorandum dated January 9, 2004[21] addressed to all TMSD Personnel
which provides that:
SCHEDULED VACATION LEAVE WITH PAY
The 17 days (15 days SVL plus 2-Day-Off) scheduled vacation leave (SVL) with pay for the year 2004 had
been published for everyone to take a vacation with pay which will be our opportunity to enjoy quality
time with our families and perform our other activities requiring our personal attention and
supervision.(Emphasis ours.)
Accordingly, the vacation leave privilege was not intended to serve as additional salary, but as a non-
monetary benefit. To give the employees the option not to consume it with the aim of converting it to cash
at the end of the year would defeat the very purpose of vacation leave.
Petitioner's contention that labor contracts should be construed in favor of the laborer is without basis and,
therefore, inapplicable to the present case. This rule of construction does not benefit petitioners because, as
stated, there is here no room for interpretation. Since the CBA is clear and unambiguous, its terms should
be implemented as they are written.
This brings Us to the issue of who is accountable for the in-service training of the security guards. On this
point, We find the petition meritorious.
Although it is a rule that a contract freely entered into between the parties should be respected, since a
contract is the law between the parties, there are, however, certain exceptions to the rule, specifically
Article 1306 of the Civil Code, which provides:
The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
Moreover, the relations between capital and labor are not merely contractual. "They are so impressed with
public interest that labor contracts must yield to the common good x x x."[22] The supremacy of the law over
contracts is explained by the fact that labor contracts are not ordinary contracts; they are imbued with
public interest and therefore are subject to the police power of the state.[23] However, it should not be taken
to mean that provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and
nullification. If the provisions in the CBA run contrary to law, public morals, or public policy, such provisions
may very well be voided.
In the present case, Article XXI, Section 6 of the CBA provides that "All expenses of security guards in
securing /renewing their licenses shall be for their personal account." A reading of the provision would reveal
that it encompasses all possible expenses a security guard would pay or incur in order to secure or renew
his license. In-service training is a requirement for the renewal of a security guard's license.[24]Hence,
following the aforementioned CBA provision, the expenses for the same must be on the personal account of
the employee. However, the 1994 Revised Rules and Regulations Implementing Republic Act No. 5487
provides the following:
Section 17. Responsibility for Training and Progressive Development. It is the primary responsibility of all
operators private security agency and company security forces to maintain and upgrade the standards of
efficiency, discipline, performance and competence of their personnel. To attain this end, each duly licensed
private security agency and company security force shall establish a staff position for training and appoint a
training officer whose primary functions are to determine the training needs of the agency/guards in relation
to the needs of the client/ market/ industry, and to supervise and conduct appropriate training
requirements. All private security personnel shall be re-trained at least once very two years.
Section 12. In service training. - a. To maintain and/or upgrade the standard of efficiency, discipline and
competence of security guards and detectives, company security force and private security agencies upon
prior authority shall conduct-in-service training at least two (2) weeks duration for their organic members by
increments of at least two percent (2%) of their total strength. Where the quality of training is better
served by centralization, the CSFD Directors may activate a training staff from local talents to
assist. The cost of training shall be pro-rated among the participating agencies/private
companies. All security officer must undergo in-service training at least once every two (2) years
preferably two months before his or her birth month.
Since it is the primary responsibility of operators of company security forces to maintain and upgrade the
standards of efficiency, discipline, performance and competence of their personnel, it follows that the
expenses to be incurred therein shall be for the personal account of the company. Further, the intent of the
law to impose upon the employer the obligation to pay for the cost of its employees' training is manifested
in the aforementioned law's provision that Where the quality of training is better served by centralization,
the CFSD Directors may activate a training staff from local talents to assist. The cost of training shall be pro-
rated among the participating agencies/private companies. It can be gleaned from the said provision that
cost of training shall be pro-rated among participating agencies and companies if the training is best served
by centralization. The law mandates pro-rating of expenses because it would be impracticable and unfair to
impose the burden of expenses suffered by all participants on only one participating agency or company.
Thus, it follows that if there is no centralization, there can be no pro-rating, and the company that has its
own security forces shall shoulder the entire cost for such training. If the intent of the law were to impose
upon individual employees the cost of training, the provision on the pro-rating of expenses would not have
found print in the law.
Further, petitioner alleged that prior to the inking of the CBA, it was the respondent company providing for
the in-service training of the guards.[25] Respondent never controverted the said allegation and is thus
deemed to have admitted the same.[26] Implicit from respondent's actuations was its acknowledgment of its
legally mandated responsibility to shoulder the expenses for in-service training.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision and Resolution of the Court of Appeals,
dated October 4, 2005 and January 23, 2006, respectively, in CA-G.R. SP. No. 87069 is MODIFIED. The
cost of in-service training of the respondent company's security guards shall be at the expense of the
respondent company. This case is remanded to the voluntary arbitrator for the computation of the expenses
incurred by the security guards for their in-service training, and respondent company is directed to
reimburse its security guards for the expenses incurred.
SO ORDERED.
e. Other Leaves
 Maternity Leave, Art 133
 Paternity Leave, RA 8187
 Parental Leave, RA 8972 (Solo Parents’ Welfare Act of
2000)
f. Service Charge
G.R. No. 157634 May 16, 2005
MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO LAM, petitioners,

vs.
ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO ALAMARES, AMADO
ALAMARES, EDGARDO TORREFRANCA, LOURDES CAMIGLA, TEODORO LAURENARIA,
WENEFREDO LOVERES, LUIS GUADES, AMADO MACANDOG, PATERNO LLARENA,
GREGORIO NICERIO, JOSE ATRACTIVO, MIGUEL TORREFRANCA, and SANTOS
BROÑOLA, respondents.
DECISION
PUNO, J.:
This is a petition for certiorari to reverse and set aside the Decision issued by the Court of Appeals
(CA)1 in CA-G.R. SP No. 68642, entitled "Rolando Adana, Wenefredo Loveres, et. al. vs. National
Labor Relations Commission (NLRC), Mayon Hotel & Restaurant/Pacita O. Po, et al.," and the
Resolution2 denying petitioners' motion for reconsideration. The assailed CA decision reversed the
NLRC Decision which had dismissed all of respondents' complaints,3 and reinstated the Joint
Decision of the Labor Arbiter4 which ruled that respondents were illegally dismissed and entitled to
their money claims.
The facts, culled from the records, are as follows:5
Petitioner Mayon Hotel & Restaurant is a single proprietor business registered in the name of
petitioner Pacita O. Po,6 whose mother, petitioner Josefa Po Lam, manages the establishment.7 The
hotel and restaurant employed about sixteen (16) employees.
Records show that on various dates starting in 1981, petitioner hotel and restaurant hired the
following people, all respondents in this case, with the following jobs:8
1. Wenefredo Loveres Accountant and Officer-in-charge

2. Paterno Llarena Front Desk Clerk
3. Gregorio Nicerio Supervisory Waiter
4. Amado Macandog Roomboy
5. Luis Guades Utility/Maintenance Worker
6. Santos Broñola Roomboy
7. Teodoro Laurenaria Waiter
8. Eduardo Alamares Roomboy/Waiter
9. Lourdes Camigla Cashier
10. Chona Bumalay Cashier
11. Jose Atractivo Technician
12. Amado Alamares Dishwasher and Kitchen Helper
13. Roger Burce Cook
14. Rolando Adana Waiter
15. Miguel Torrefranca Cook
16. Edgardo Torrefranca Cook
Due to the expiration and non-renewal of the lease contract for the rented space occupied by the
said hotel and restaurant at Rizal Street, the hotel operations of the business were suspended on
March 31, 1997.9 The operation of the restaurant was continued in its new location at Elizondo
Street, Legazpi City, while waiting for the construction of a new Mayon Hotel & Restaurant at
Peñaranda Street, Legazpi City.10 Only nine (9) of the sixteen (16) employees continued working in
the Mayon Restaurant at its new site.11
On various dates of April and May 1997, the 16 employees filed complaints for underpayment of
wages and other money claims against petitioners, as follows:12
Wenefredo Loveres, Luis Guades, Amado Macandog and Jose Atractivo for illegal dismissal,
underpayment of wages, nonpayment of holiday and rest day pay; service incentive leave
pay (SILP) and claims for separation pay plus damages;
Paterno Llarena and Gregorio Nicerio for illegal dismissal with claims for underpayment of
wages; nonpayment of cost of living allowance (COLA) and overtime pay; premium pay for
holiday and rest day; SILP; nightshift differential pay and separation pay plus damages;
Miguel Torrefranca, Chona Bumalay and Lourdes Camigla for underpayment of wages;
nonpayment of holiday and rest day pay and SILP;
Rolando Adana, Roger Burce and Amado Alamares for underpayment of wages;
nonpayment of COLA, overtime, holiday, rest day, SILP and nightshift differential pay;
Eduardo Alamares for underpayment of wages, nonpayment of holiday, rest day and SILP
and night shift differential pay;
Santos Broñola for illegal dismissal, underpayment of wages, overtime pay, rest day pay,
holiday pay, SILP, and damages;13 and
Teodoro Laurenaria for underpayment of wages; nonpayment of COLA and overtime pay;
premium pay for holiday and rest day, and SILP.
On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr. rendered a Joint Decision in favor of
the employees. The Labor Arbiter awarded substantially all of respondents' money claims, and held
that respondents Loveres, Macandog and Llarena were entitled to separation pay, while
respondents Guades, Nicerio and Alamares were entitled to their retirement pay. The Labor Arbiter
also held that based on the evidence presented, Josefa Po Lam is the owner/proprietor of Mayon
Hotel & Restaurant and the proper respondent in these cases.
On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and all the complaints were
dismissed.
Respondents filed a motion for reconsideration with the NLRC and when this was denied, they filed
a petition for certiorari with the CA which rendered the now assailed decision.
After their motion for reconsideration was denied, petitioners now come to this Court, seeking the
reversal of the CA decision on the following grounds:
I. The Honorable Court of Appeals erred in reversing the decision of the National Labor
Relations Commission (Second Division) by holding that the findings of fact of the NLRC
were not supported by substantial evidence despite ample and sufficient evidence showing
that the NLRC decision is indeed supported by substantial evidence;
II. The Honorable Court of Appeals erred in upholding the joint decision of the labor arbiter
which ruled that private respondents were illegally dismissed from their employment, despite
the fact that the reason why private respondents were out of work was not due to the fault of
petitioners but to causes beyond the control of petitioners.
III. The Honorable Court of Appeals erred in upholding the award of monetary benefits by the
labor arbiter in his joint decision in favor of the private respondentS, including the award of
damages to six (6) of the private respondents, despite the fact that the private respondents
have not proven by substantial evidence their entitlement thereto and especially the fact that
they were not illegally dismissed by the petitioners.
IV. The Honorable Court of Appeals erred in holding that Pacita Ong Po is the owner of the
business establishment, petitioner Mayon Hotel and Restaurant, thus disregarding the
certificate of registration of the business establishment ISSUED by the local government,
which is a public document, and the unqualified admissions of complainants-private
respondents.14
In essence, the petition calls for a review of the following issues:
1. Was it correct for petitioner Josefa Po Lam to be held liable as the owner of petitioner
Mayon Hotel & Restaurant, and the proper respondent in this case?
2. Were respondents Loveres, Guades, Macandog, Atractivo, Llarena and Nicerio illegally
dismissed?
3. Are respondents entitled to their money claims due to underpayment of wages, and
nonpayment of holiday pay, rest day premium, SILP, COLA, overtime pay, and night shift
differential pay?
It is petitioners' contention that the above issues have already been threshed out sufficiently and
definitively by the NLRC. They therefore assail the CA's reversal of the NLRC decision, claiming that
based on the ruling in Castillo v. NLRC,15 it is non sequitur that the CA should re-examine the
factual findings of both the NLRC and the Labor Arbiter, especially as in this case the NLRC's
findings are allegedly supported by substantial evidence.
We do not agree.
There is no denying that it is within the NLRC's competence, as an appellate agency reviewing
decisions of Labor Arbiters, to disagree with and set aside the latter's findings.16 But it stands to
reason that the NLRC should state an acceptable cause therefore, otherwise it would be a
whimsical, capricious, oppressive, illogical, unreasonable exercise of quasi-judicial prerogative,
subject to invalidation by the extraordinary writ of certiorari.17 And when the factual findings of the
Labor Arbiter and the NLRC are diametrically opposed and this disparity of findings is called into
question, there is, necessarily, a re-examination of the factual findings to ascertain which opinion
should be sustained.18 As ruled in Asuncion v. NLRC,19
Although, it is a legal tenet that factual findings of administrative bodies are entitled to great
weight and respect, we are constrained to take a second look at the facts before us because
of the diversity in the opinions of the Labor Arbiter and the NLRC. A disharmony between the
factual findings of the Labor Arbiter and those of the NLRC opens the door to a review
thereof by this Court.20
The CA, therefore, did not err in reviewing the records to determine which opinion was supported by
substantial evidence.
Moreover, it is explicit in Castillo v. NLRC21 that factual findings of administrative bodies like the
NLRC are affirmed only if they are supported by substantial evidence that is manifest in the
decision and on the records. As stated in Castillo:
[A]buse of discretion does not necessarily follow from a reversal by the NLRC of a decision
of a Labor Arbiter. Mere variance in evidentiary assessment between the NLRC and the
Labor Arbiter does not automatically call for a full review of the facts by this Court. The
NLRC's decision, so long as it is not bereft of substantial support from the records, deserves
respect from this Court. As a rule, the original and exclusive jurisdiction to review a decision
or resolution of respondent NLRC in a petition for certiorari under Rule 65 of the Rules of
Court does not include a correction of its evaluation of the evidence but is confined to issues
of jurisdiction or grave abuse of discretion. Thus, the NLRC's factual findings, if supported by
substantial evidence, are entitled to great respect and even finality, unless petitioner is able
to show that it simply and arbitrarily disregarded the evidence before it or had
misappreciated the evidence to such an extent as to compel a contrary conclusion if such
evidence had been properly appreciated. (citations omitted)22
After careful review, we find that the reversal of the NLRC's decision was in order precisely because
it was not supported by substantial evidence.
1. Ownership by Josefa Po Lam
The Labor Arbiter ruled that as regards the claims of the employees, petitioner Josefa Po Lam is, in
fact, the owner of Mayon Hotel & Restaurant. Although the NLRC reversed this decision, the CA, on
review, agreed with the Labor Arbiter that notwithstanding the certificate of registration in the name
of Pacita Po, it is Josefa Po Lam who is the owner/proprietor of Mayon Hotel & Restaurant, and the
proper respondent in the complaints filed by the employees. The CA decision states in part:
[Despite] the existence of the Certificate of Registration in the name of Pacita Po, we cannot
fault the labor arbiter in ruling that Josefa Po Lam is the owner of the subject hotel and
restaurant. There were conflicting documents submitted by Josefa herself. She was ordered
to submit additional documents to clearly establish ownership of the hotel and restaurant,
considering the testimonies given by the [respondents] and the non-appearance and failure
to submit her own position paper by Pacita Po. But Josefa did not comply with the directive
of the Labor Arbiter. The ruling of the Supreme Court in Metropolitan Bank and Trust
Company v. Court of Appeals applies to Josefa Po Lam which is stated in this wise:
When the evidence tends to prove a material fact which imposes a liability on a party,
and he has it in his power to produce evidence which from its very nature must
overthrow the case made against him if it is not founded on fact, and he refuses to
produce such evidence, the presumption arises that the evidence[,] if produced,
would operate to his prejudice, and support the case of his adversary.
Furthermore, in ruling that Josefa Po Lam is the real owner of the hotel and restaurant, the
labor arbiter relied also on the testimonies of the witnesses, during the hearing of the instant
case. When the conclusions of the labor arbiter are sufficiently corroborated by evidence on
record, the same should be respected by appellate tribunals, since he is in a better position
to assess and evaluate the credibility of the contending parties.23(citations omitted)
Petitioners insist that it was error for the Labor Arbiter and the CA to have ruled that petitioner Josefa
Po Lam is the owner of Mayon Hotel & Restaurant. They allege that the documents they submitted
to the Labor Arbiter sufficiently and clearly establish the fact of ownership by petitioner Pacita Po,
and not her mother, petitioner Josefa Po Lam. They contend that petitioner Josefa Po Lam's
participation was limited to merely (a) being the overseer; (b) receiving the month-to-month and/or
year-to-year financial reports prepared and submitted by respondent Loveres; and (c) visitation of
the premises.24 They also put emphasis on the admission of the respondents in their position paper
submitted to the Labor Arbiter, identifying petitioner Josefa Po Lam as the manager, and Pacita Po
as the owner.25 This, they claim, is a judicial admission and is binding on respondents. They protest
the reliance the Labor Arbiter and the CA placed on their failure to submit additional documents to
clearly establish ownership of the hotel and restaurant, claiming that there was no need for petitioner
Josefa Po Lam to submit additional documents considering that the Certificate of Registration is the
best and primary evidence of ownership.
We disagree with petitioners. We have scrutinized the records and find the claim that petitioner
Josefa Po Lam is merely the overseer is not borne out by the evidence.
First. It is significant that only Josefa Po Lam appeared in the proceedings with the Labor Arbiter.
Despite receipt of the Labor Arbiter's notice and summons, other notices and Orders, petitioner
Pacita Po failed to appear in any of the proceedings with the Labor Arbiter in these cases, nor file
her position paper.26 It was only on appeal with the NLRC that Pacita Po signed the pleadings.27 The
apathy shown by petitioner Pacita Po is contrary to human experience as one would think that the
owner of an establishment would naturally be concerned when all her employees file complaints
against her.
Second. The records of the case belie petitioner Josefa Po Lam's claim that she is merely an
overseer. The findings of the Labor Arbiter on this question were based on credible, competent and
substantial evidence. We again quote the Joint Decision on this matter:
Mayon Hotel and Restaurant is a [business name] of an enterprise. While [petitioner] Josefa
Po Lam claims that it is her daughter, Pacita Po, who owns the hotel and restaurant when
the latter purchased the same from one Palanos in 1981, Josefa failed to submit the
document of sale from said Palanos to Pacita as allegedly the sale was only verbal although
the license to operate said hotel and restaurant is in the name of Pacita which, despite our
Order to Josefa to present the same, she failed to comply (p. 38, tsn. August 13, 1998).
While several documentary evidences were submitted by Josefa wherein Pacita was named
therein as owner of the hotel and restaurant (pp. 64, 65, 67 to 69; vol. I, rollo)[,] there were
documentary evidences also that were submitted by Josefa showing her ownership of said
enterprise (pp. 468 to 469; vol. II, rollo). While Josefa explained her participation and interest
in the business as merely to help and assist her daughter as the hotel and restaurant was
near the former's store, the testimonies of [respondents] and Josefa as well as her demeanor
during the trial in these cases proves (sic) that Josefa Po Lam owns Mayon Hotel and
Restaurant. [Respondents] testified that it was Josefa who exercises all the acts and
manifestation of ownership of the hotel and restaurant like transferring employees from the
Greatwall Palace Restaurant which she and her husband Roy Po Lam previously owned; it is
Josefa to whom the employees submits (sic) reports, draws money for payment of payables
and for marketing, attending (sic) to Labor Inspectors during ocular inspections. Except for
documents whereby Pacita Po appears as the owner of Mayon Hotel and Restaurant,
nothing in the record shows any circumstance or manifestation that Pacita Po is the owner of
Mayon Hotel and Restaurant. The least that can be said is that it is absurd for a person to
purchase a hotel and restaurant in the very heart of the City of Legazpi verbally. Assuming
this to be true, when [petitioners], particularly Josefa, was directed to submit evidence as to
the ownership of Pacita of the hotel and restaurant, considering the testimonies of
[respondents], the former should [have] submitted the lease contract between the owner of
the building where Mayon Hotel and Restaurant was located at Rizal St., Legazpi City and
Pacita Po to clearly establish ownership by the latter of said enterprise. Josefa failed. We are
not surprised why some employers employ schemes to mislead Us in order to evade
liabilities. We therefore consider and hold Josefa Po Lam as the owner/proprietor of Mayon
Hotel and Restaurant and the proper respondent in these cases.28
Petitioners' reliance on the rules of evidence, i.e., the certificate of registration being the best proof of
ownership, is misplaced. Notwithstanding the certificate of registration, doubts were cast as to the
true nature of petitioner Josefa Po Lam's involvement in the enterprise, and the Labor Arbiter had
the authority to resolve this issue. It was therefore within his jurisdiction to require the additional
documents to ascertain who was the real owner of petitioner Mayon Hotel & Restaurant.
Article 221 of the Labor Code is clear: technical rules are not binding, and the application of
technical rules of procedure may be relaxed in labor cases to serve the demand of substantial
justice.29 The rule of evidence prevailing in court of law or equity shall not be controlling in labor
cases and it is the spirit and intention of the Labor Code that the Labor Arbiter shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process.30 Labor laws mandate the
speedy administration of justice, with least attention to technicalities but without sacrificing the
fundamental requisites of due process.31
Similarly, the fact that the respondents' complaints contained no allegation that petitioner Josefa Po
Lam is the owner is of no moment. To apply the concept of judicial admissions to respondents —
who are but lowly employees - would be to exact compliance with technicalities of law that is
contrary to the demands of substantial justice. Moreover, the issue of ownership was an issue that
arose only during the course of the proceedings with the Labor Arbiter, as an incident of determining
respondents' claims, and was well within his jurisdiction.32
Petitioners were also not denied due process, as they were given sufficient opportunity to be heard
on the issue of ownership.33 The essence of due process in administrative proceedings is simply an
opportunity to explain one's side or an opportunity to seek reconsideration of the action or ruling
complained of.34 And there is nothing in the records which would suggest that petitioners had
absolute lack of opportunity to be heard.35 Obviously, the choice not to present evidence was made
by petitioners themselves.36
But more significantly, we sustain the Labor Arbiter and the CA because even when the case was on
appeal with the NLRC, nothing was submitted to negate the Labor Arbiter's finding that Pacita Po is
not the real owner of the subject hotel and restaurant. Indeed, no such evidence was submitted in
the proceedings with the CA nor with this Court. Considering that petitioners vehemently deny
ownership by petitioner Josefa Po Lam, it is most telling that they continue to withhold evidence
which would shed more light on this issue. We therefore agree with the CA that the failure to submit
could only mean that if produced, it would have been adverse to petitioners' case.37
Thus, we find that there is substantial evidence to rule that petitioner Josefa Po Lam is the owner of
petitioner Mayon Hotel & Restaurant.
2. Illegal Dismissal: claim for separation pay
Of the sixteen employees, only the following filed a case for illegal dismissal: respondents Loveres,
Llarena, Nicerio, Macandog, Guades, Atractivo and Broñola.38
The Labor Arbiter found that there was illegal dismissal, and granted separation pay to respondents
Loveres, Macandog and Llarena. As respondents Guades, Nicerio and Alamares were already 79,
66 and 65 years old respectively at the time of the dismissal, the Labor Arbiter granted retirement
benefits pursuant to Article 287 of the Labor Code as amended.39 The Labor Arbiter ruled that
respondent Atractivo was not entitled to separation pay because he had been transferred to work in
the restaurant operations in Elizondo Street, but awarded him damages. Respondents Loveres,
Llarena, Nicerio, Macandog and Guades were also awarded damages.40
The NLRC reversed the Labor Arbiter, finding that "no clear act of termination is attendant in the
case at bar" and that respondents "did not submit any evidence to that effect, but the finding and
conclusion of the Labor Arbiter [are] merely based on his own surmises and conjectures."41 In turn,
the NLRC was reversed by the CA.
It is petitioners contention that the CA should have sustained the NLRC finding that none of the
above-named respondents were illegally dismissed, or entitled to separation or retirement pay.
According to petitioners, even the Labor Arbiter and the CA admit that when the illegal dismissal
case was filed by respondents on April 1997, they had as yet no cause of action. Petitioners
therefore conclude that the filing by respondents of the illegal dismissal case was premature and
should have been dismissed outright by the Labor Arbiter.42 Petitioners also claim that since the
validity of respondents' dismissal is a factual question, it is not for the reviewing court to weigh the
conflicting evidence.43
We do not agree. Whether respondents are still working for petitioners is a factual question. And
the records are unequivocal that since April 1997, when petitioner Mayon Hotel & Restaurant
suspended its hotel operations and transferred its restaurant operations in Elizondo Street,
respondents Loveres, Macandog, Llarena, Guades and Nicerio have not been permitted to work for
petitioners. Respondent Alamares, on the other hand, was also laid-off when the Elizondo Street
operations closed, as were all the other respondents. Since then, respondents have not been
permitted to work nor recalled, even after the construction of the new premises at Peñaranda Street
and the reopening of the hotel operations with the restaurant in this new site. As stated by the Joint
Decision of the Labor Arbiter on July 2000, or more than three (3) years after the complaint was
filed:44
[F]rom the records, more than six months had lapsed without [petitioner] having resumed
operation of the hotel. After more than one year from the temporary closure of Mayon Hotel
and the temporary transfer to another site of Mayon Restaurant, the building which
[petitioner] Josefa allege[d] w[h]ere the hotel and restaurant will be transferred has been
finally constructed and the same is operated as a hotel with bar and restaurant nevertheless,
none of [respondents] herein who were employed at Mayon Hotel and Restaurant which was
also closed on April 30, 1998 was/were recalled by [petitioner] to continue their services...
Parenthetically, the Labor Arbiter did not grant separation pay to the other respondents as they had
not filed an amended complaint to question the cessation of their employment after the closure of
Mayon Hotel & Restaurant on March 31, 1997.45
The above factual finding of the Labor Arbiter was never refuted by petitioners in their appeal with
the NLRC. It confounds us, therefore, how the NLRC could have so cavalierly treated this
uncontroverted factual finding by ruling that respondents have not introduced any evidence to show
that they were illegally dismissed, and that the Labor Arbiter's finding was based on conjecture.46 It
was a serious error that the NLRC did not inquire as to the legality of the cessation of employment.
Article 286 of the Labor Code is clear — there is termination of employment when an otherwise bona
fide suspension of work exceeds six (6) months.47 The cessation of employment for more than six
months was patent and the employer has the burden of proving that the termination was for a just or
authorized cause.48
Moreover, we are not impressed by any of petitioners' attempts to exculpate themselves from the
charges. First, in the proceedings with the Labor Arbiter, they claimed that it could not be illegal
dismissal because the lay-off was merely temporary (and due to the expiration of the lease contract
over the old premises of the hotel). They specifically invoked Article 286 of the Labor Code to argue
that the claim for separation pay was premature and without legal and factual basis.49 Then, because
the Labor Arbiter had ruled that there was already illegal dismissal when the lay-off had exceeded
the six-month period provided for in Article 286, petitioners raise this novel argument, to wit:
It is the firm but respectful submission of petitioners that reliance on Article 286 of the Labor
Code is misplaced, considering that the reason why private respondents were out of work
was not due to the fault of petitioners. The failure of petitioners to reinstate the private
respondents to their former positions should not likewise be attributable to said petitioners as
the private respondents did not submit any evidence to prove their alleged illegal dismissal.
The petitioners cannot discern why they should be made liable to the private respondents for
their failure to be reinstated considering that the fact that they were out of work was not due
to the fault of petitioners but due to circumstances beyond the control of petitioners, which
are the termination and non-renewal of the lease contract over the subject premises. Private
respondents, however, argue in their Comment that petitioners themselves sought the
application of Article 286 of the Labor Code in their case in their Position Paper filed before
the Labor Arbiter. In refutation, petitioners humbly submit that even if they invoke Article 286
of the Labor Code, still the fact remains, and this bears stress and emphasis, that the
temporary suspension of the operations of the establishment arising from the non-renewal of
the lease contract did not result in the termination of employment of private respondents and,
therefore, the petitioners cannot be faulted if said private respondents were out of work, and
consequently, they are not entitled to their money claims against the petitioners.50
It is confounding how petitioners have fashioned their arguments. After having admitted, in effect,
that respondents have been laid-off since April 1997, they would have this Court excuse their refusal
to reinstate respondents or grant them separation pay because these same respondents purportedly
have not proven the illegality of their dismissal.
Petitioners' arguments reflect their lack of candor and the blatant attempt to use technicalities to
muddle the issues and defeat the lawful claims of their employees. First, petitioners admit that since
April 1997, when hotel operations were suspended due to the termination of the lease of the old
premises, respondents Loveres, Macandog, Llarena, Nicerio and Guades have not been permitted
to work. Second, even after six months of what should have been just a temporary lay-off, the
same respondents were still not recalled to work. As a matter of fact, the Labor Arbiter even found
that as of the time when he rendered his Joint Decision on July 2000 — or more than three (3) years
after the supposed "temporary lay-off," the employment of all of the respondents with petitioners
had ceased, notwithstanding that the new premises had been completed and the same operated as
a hotel with bar and restaurant. This is clearly dismissal — or the permanent severance or complete
separation of the worker from the service on the initiative of the employer regardless of the reasons
therefor.51
On this point, we note that the Labor Arbiter and the CA are in accord that at the time of the filing of
the complaint, respondents had no cause of action to file the case for illegal dismissal. According to
the CA and the Labor Arbiter, the lay-off of the respondents was merely temporary, pending
construction of the new building at Peñaranda Street.52
While the closure of the hotel operations in April of 1997 may have been temporary, we hold that
the evidence on record belie any claim of petitioners that the lay-off of respondents on that same
date was merely temporary. On the contrary, we find substantial evidence that petitioners intended
the termination to be permanent. First, respondents Loveres, Macandog, Llarena, Guades, Nicerio
and Alamares filed the complaint for illegal dismissal immediately after the closure of the hotel
operations in Rizal Street, notwithstanding the alleged temporary nature of the closure of the hotel
operations, and petitioners' allegations that the employees assigned to the hotel operations knew
about this beforehand. Second, in their position paper submitted to the Labor Arbiter, petitioners
invoked Article 286 of the Labor Code to assert that the employer-employee relationship was merely
suspended, and therefore the claim for separation pay was premature and without legal or factual
basis.53 But they made no mention of any intent to recall these respondents to work upon
completion of the new premises. Third, the various pleadings on record show that petitioners held
respondents, particularly Loveres, as responsible for mismanagement of the establishment and for
abuse of trust and confidence. Petitioner Josefa Po Lam's affidavit on July 21, 1998, for example,
squarely blamed respondents, specifically Loveres, Bumalay and Camigla, for abusing her leniency
and causing petitioner Mayon Hotel & Restaurant to sustain "continuous losses until it is closed."
She then asserts that respondents "are not entitled to separation pay for they were not terminated
and if ever the business ceased to operate it was because of losses."54 Again, petitioners make the
same allegation in their memorandum on appeal with the NLRC, where they alleged that three (3)
years prior to the expiration of the lease in 1997, the operation of the Hotel had been sustaining
consistent losses, and these were solely attributed to respondents, but most especially due to
Loveres's mismanagement and abuse of petitioners' trust and confidence.55 Even the petition filed in
this court made reference to the separation of the respondents due to "severe financial losses and
reverses," again imputing it to respondents' mismanagement.56 The vehemence of petitioners'
accusation of mismanagement against respondents, especially against Loveres, is inconsistent with
the desire to recall them to work. Fourth, petitioners' memorandum on appeal also averred that the
case was filed "not because of the business being operated by them or that they were supposedly
not receiving benefits from the Labor Code which is true, but because of the fact that the source of
their livelihood, whether legal or immoral, was stopped on March 31, 1997, when the owner of
the building terminated the Lease Contract."57 Fifth, petitioners had inconsistencies in their pleadings
(with the NLRC, CA and with this Court) in referring to the closure,58 i.e., in the petition filed with this
court, they assert that there is no illegal dismissal because there was "only a temporary cessation or
suspension of operations of the hotel and restaurant due to circumstances beyond the control of
petitioners, and that is, the non-renewal of the lease contract..."59 And yet, in the same petition, they
also assert that: (a) the separation of respondents was due to severe financial losses and reverses
leading to the closure of the business; and (b) petitioner Pacita Po had to close shop and was
bankrupt and has no liquidity to put up her own building to house Mayon Hotel & Restaurant.60 Sixth,
and finally, the uncontroverted finding of the Labor Arbiter that petitioners terminated all the other
respondents, by not employing them when the Hotel and Restaurant transferred to its new site on
Peñaranda Street.61 Indeed, in this same memorandum, petitioners referred to all respondents as
"former employees of Mayon Hotel & Restaurant."62
These factors may be inconclusive individually, but when taken together, they lead us to conclude
that petitioners really intended to dismiss all respondents and merely used the termination of the
lease (on Rizal Street premises) as a means by which they could terminate their employees.
Moreover, even assuming arguendo that the cessation of employment on April 1997 was merely
temporary, it became dismissal by operation of law when petitioners failed to reinstate respondents
after the lapse of six (6) months, pursuant to Article 286 of the Labor Code.
We are not impressed by petitioners' claim that severe business losses justified their failure to
reinstate respondents. The evidence to prove this fact is inconclusive. But more important, serious
business losses do not excuse the employer from complying with the clearance or report required
under Article 283 of the Labor Code and its implementing rules before terminating the employment
of its workers.63 In the absence of justifying circumstances, the failure of petitioners to observe the
procedural requirements set out under Article 284, taints their actuations with bad faith, especially
since they claimed that they have been experiencing losses in the three years before 1997. To say
the least, if it were true that the lay-off was temporary but then serious business losses prevented
the reinstatement of respondents, then petitioners should have complied with the requirements of
written notice. The requirement of law mandating the giving of notices was intended not only to
enable the employees to look for another employment and therefore ease the impact of the loss of
their jobs and the corresponding income, but more importantly, to give the Department of Labor and
Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of
termination.64
And even assuming that the closure was due to a reason beyond the control of the employer, it still
has to accord its employees some relief in the form of severance pay.65
While we recognize the right of the employer to terminate the services of an employee for a just or
authorized cause, the dismissal of employees must be made within the parameters of law and
pursuant to the tenets of fair play.66 And in termination disputes, the burden of proof is always on the
employer to prove that the dismissal was for a just or authorized cause.67 Where there is no showing
of a clear, valid and legal cause for termination of employment, the law considers the case a matter
of illegal dismissal.68
Under these circumstances, the award of damages was proper. As a rule, moral damages are
recoverable where the dismissal of the employee was attended by bad faith or fraud or constituted
an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy.69 We believe that the dismissal of the respondents was attended with bad faith and meant to
evade the lawful obligations imposed upon an employer.
To rule otherwise would lead to the anomaly of respondents being terminated from employment in
1997 as a matter of fact, but without legal redress. This runs counter to notions of fair play,
substantial justice and the constitutional mandate that labor rights should be respected. If doubts
exist between the evidence presented by the employer and the employee, the scales of justice must
be tilted in favor of the latter — the employer must affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause.70 It is a time-honored rule that in controversies between
a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of
agreements and writing should be resolved in the former's favor.71 The policy is to extend the
doctrine to a greater number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and protection of labor.72
We therefore reinstate the Labor Arbiter's decision with the following modifications:
(a) Separation pay for the illegal dismissal of respondents Loveres, Macandog and Llarena;
(Santos Broñola cannot be granted separation pay as he made no such claim);
(b) Retirement pay for respondents Guades, Nicerio, and Alamares, who at the time of
dismissal were entitled to their retirement benefits pursuant to Article 287 of the Labor Code
as amended;73 and
(c) Damages for respondents Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and
Broñola.
3. Money claims
The CA held that contrary to the NLRC's ruling, petitioners had not discharged the burden of proving
that the monetary claims of the respondents have been paid.74 The CA thus reinstated the Labor
Arbiter's grant of respondents' monetary claims, including damages.
Petitioners assail this ruling by repeating their long and convoluted argument that as there was no
illegal dismissal, then respondents are not entitled to their monetary claims or separation pay and
damages. Petitioners' arguments are not only tiring, repetitive and unconvincing, but confusing and
confused — entitlement to labor standard benefits is a separate and distinct concept from payment
of separation pay arising from illegal dismissal, and are governed by different provisions of the Labor
Code.
We agree with the CA and the Labor Arbiter. Respondents have set out with particularity in their
complaint, position paper, affidavits and other documents the labor standard benefits they are
entitled to, and which they alleged that petitioners have failed to pay them. It was therefore
petitioners' burden to prove that they have paid these money claims. One who pleads payment has
the burden of proving it, and even where the employees must allege nonpayment, the general rule is
that the burden rests on the defendant to prove nonpayment, rather than on the plaintiff to prove non
payment.75 This petitioners failed to do.
We also agree with the Labor Arbiter and the CA that the documents petitioners submitted, i.e.,
affidavits executed by some of respondents during an ocular inspection conducted by an inspector of
the DOLE; notices of inspection result and Facility Evaluation Orders issued by DOLE, are not
sufficient to prove payment.76 Despite repeated orders from the Labor Arbiter,77 petitioners failed to
submit the pertinent employee files, payrolls, records, remittances and other similar documents
which would show that respondents rendered work entitling them to payment for overtime work,
night shift differential, premium pay for work on holidays and rest day, and payment of these as well
as the COLA and the SILP – documents which are not in respondents' possession but in the custody
and absolute control of petitioners.78 By choosing not to fully and completely disclose information and
present the necessary documents to prove payment of labor standard benefits due to respondents,
petitioners failed to discharge the burden of proof.79 Indeed, petitioners' failure to submit the
necessary documents which as employers are in their possession, inspite of orders to do so, gives
rise to the presumption that their presentation is prejudicial to its cause.80 As aptly quoted by the CA:
[W]hen the evidence tends to prove a material fact which imposes a liability on a party, and
he has it in his power to produce evidence which from its very nature must overthrow the
case made against him if it is not founded on fact, and he refuses to produce such evidence,
the presumption arises that the evidence, if produced, would operate to his prejudice, and
support the case of his adversary.81
Petitioners next claim that the cost of the food and snacks provided to respondents as facilities
should have been included in reckoning the payment of respondents' wages. They state that
although on the surface respondents appeared to receive minimal wages, petitioners had granted
respondents other benefits which are considered part and parcel of their wages and are allowed
under existing laws.82 They claim that these benefits make up for whatever inadequacies there may
be in compensation.83 Specifically, they invoked Sections 5 and 6, Rule VII-A, which allow the
deduction of facilities provided by the employer through an appropriate Facility Evaluation Order
issued by the Regional Director of the DOLE.84 Petitioners also aver that they give five (5) percent of
the gross income each month as incentives. As proof of compliance of payment of minimum wages,
petitioners submitted the Notice of Inspection Results issued in 1995 and 1997 by the DOLE
Regional Office.85
The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of
respondents' minimum wage. As stated in the Labor Arbiter's decision:86
While [petitioners] submitted Facility Evaluation Orders (pp. 468, 469; vol. II, rollo) issued by
the DOLE Regional Office whereby the cost of meals given by [petitioners] to [respondents]
were specified for purposes of considering the same as part of their wages, We cannot
consider the cost of meals in the Orders as applicable to [respondents]. [Respondents] were
not interviewed by the DOLE as to the quality and quantity of food appearing in the
applications of [petitioners] for facility evaluation prior to its approval to determine whether or
not [respondents] were indeed given such kind and quantity of food. Also, there was no
evidence that the quality and quantity of food in the Orders were voluntarily accepted by
[respondents]. On the contrary; while some [of the respondents] admitted that they were
given meals and merienda, the quality of food serve[d] to them were not what were provided
for in the Orders and that it was only when they filed these cases that they came to know
about said Facility Evaluation Orders (pp. 100; 379[,] vol. II, rollo; p. 40, tsn[,] June 19, 1998).
[Petitioner] Josefa herself, who applied for evaluation of the facility (food) given to
[respondents], testified that she did not inform [respondents] concerning said Facility
Evaluation Orders (p. 34, tsn[,] August 13, 1998).
Even granting that meals and snacks were provided and indeed constituted facilities, such facilities
could not be deducted without compliance with certain legal requirements. As stated in Mabeza v.
NLRC,87 the employer simply cannot deduct the value from the employee's wages without satisfying
the following: (a) proof that such facilities are customarily furnished by the trade; (b) the provision of
deductible facilities is voluntarily accepted in writing by the employee; and (c) the facilities are
charged at fair and reasonable value. The records are clear that petitioners failed to comply with
these requirements. There was no proof of respondents' written authorization. Indeed, the Labor
Arbiter found that while the respondents admitted that they were given meals and merienda, the
quality of food served to them was not what was provided for in the Facility Evaluation Orders and it
was only when they filed the cases that they came to know of this supposed Facility Evaluation
Orders.88 Petitioner Josefa Po Lam herself admitted that she did not inform the respondents of the
facilities she had applied for.89
Considering the failure to comply with the above-mentioned legal requirements, the Labor Arbiter
therefore erred when he ruled that the cost of the meals actually provided to respondents should be
deducted as part of their salaries, on the ground that respondents have availed themselves of the
food given by petitioners.90 The law is clear that mere availment is not sufficient to allow deductions
from employees' wages.
More important, we note the uncontroverted testimony of respondents on record that they were
required to eat in the hotel and restaurant so that they will not go home and there is no interruption in
the services of Mayon Hotel & Restaurant. As ruled in Mabeza, food or snacks or other convenience
provided by the employers are deemed as supplements if they are granted for the convenience of
the employer. The criterion in making a distinction between a supplement and a facility does not so
much lie in the kind (food, lodging) but the purpose.91 Considering, therefore, that hotel workers are
required to work different shifts and are expected to be available at various odd hours, their ready
availability is a necessary matter in the operations of a small hotel, such as petitioners'
business.92 The deduction of the cost of meals from respondents' wages, therefore, should be
removed.
We also do not agree with petitioners that the five (5) percent of the gross income of the
establishment can be considered as part of the respondents' wages. We quote with approval the
Labor Arbiter on this matter, to wit:
While complainants, who were employed in the hotel, receive[d] various amounts as profit
share, the same cannot be considered as part of their wages in determining their claims for
violation of labor standard benefits. Although called profit share[,] such is in the nature of
share from service charges charged by the hotel. This is more explained by [respondents]
when they testified that what they received are not fixed amounts and the same are paid not
on a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also, [petitioners] failed to submit
evidence that the amounts received by [respondents] as profit share are to be considered
part of their wages and had been agreed by them prior to their employment. Further, how
can the amounts receive[d] by [respondents] be considered as profit share when the same
[are] based on the gross receipt of the hotel[?] No profit can as yet be determined out of the
gross receipt of an enterprise. Profits are realized after expenses are deducted from the
gross income.
On the issue of the proper minimum wage applicable to respondents, we sustain the Labor Arbiter.
We note that petitioners themselves have admitted that the establishment employs "more or less
sixteen (16) employees,"93therefore they are estopped from claiming that the applicable minimum
wage should be for service establishments employing 15 employees or less.
As for petitioners repeated invocation of serious business losses, suffice to say that this is not a
defense to payment of labor standard benefits. The employer cannot exempt himself from liability to
pay minimum wages because of poor financial condition of the company. The payment of minimum
wages is not dependent on the employer's ability to pay.94
Thus, we reinstate the award of monetary claims granted by the Labor Arbiter.
4. Conclusion
There is no denying that the actuations of petitioners in this case have been reprehensible. They
have terminated the respondents' employment in an underhanded manner, and have used and
abused the quasi-judicial and judicial processes to resist payment of their employees' rightful claims,
thereby protracting this case and causing the unnecessary clogging of dockets of the Court. They
have also forced respondents to unnecessary hardship and financial expense. Indeed, the
circumstances of this case would have called for exemplary damages, as the dismissal was effected
in a wanton, oppressive or malevolent manner,95 and public policy requires that these acts must be
suppressed and discouraged.96
Nevertheless, we cannot agree with the Labor Arbiter in granting exemplary damages of P10,000.00
each to all respondents. While it is true that other forms of damages under the Civil Code may be
awarded to illegally dismissed employees,97 any award of moral damages by the Labor Arbiter
cannot be based on the Labor Code but should be grounded on the Civil Code.98 And the law is clear
that exemplary damages can only be awarded if plaintiff shows proof that he is entitled to moral,
temperate or compensatory damages.99
As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo and Broñola
specifically claimed damages from petitioners, then only they are entitled to exemplary damages.sjgs1
Finally, we rule that attorney's fees in the amount to P10,000.00 should be granted to each
respondent. It is settled that in actions for recovery of wages or where an employee was forced to
litigate and incur expenses to protect his rights and interest, he is entitled to an award of attorney's
fees.100 This case undoubtedly falls within this rule.
IN VIEW WHEREOF, the petition is hereby DENIED. The Decision of January 17, 2003 of the Court
of Appeals in CA-G.R. SP No. 68642 upholding the Joint Decision of July 14, 2000 of the Labor
Arbiter in RAB V Case Nos. 04-00079-97 and 04-00080-97 is AFFIRMED, with the following
MODIFICATIONS:
(1) Granting separation pay of one-half (1/2) month for every year of service to respondents
Loveres, Macandog and Llarena;
(2) Granting retirement pay for respondents Guades, Nicerio, and Alamares;
(3) Removing the deductions for food facility from the amounts due to all respondents;
(4) Awarding moral damages of P20,000.00 each for respondents Loveres, Macandog,
Llarena, Guades, Nicerio, Atractivo, and Broñola;
(5) Deleting the award of exemplary damages of P10,000.00 from all respondents except
Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñola; and
(6) Granting attorney's fees of P10,000.00 each to all respondents.
The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the total monetary
benefits awarded and due to the employees concerned in accordance with the decision. The Labor
Arbiter is ORDERED to submit his compliance thereon within thirty (30) days from notice of this
decision, with copies furnished to the parties.
SO ORDERED.
F. WAGES, ART. 97-105, LABOR CODE
G.R. No. L-44169 December 3, 1985

ROSARIO A. GAA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, and
CESAR R. ROXAS, Deputy Sheriff of Manila, respondents.
Federico C. Alikpala and Federico Y. Alikpala, Jr. for petitioner.
Borbe and Palma for private respondent.
PATAJO, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals promulgated on
March 30, 1976, affirming the decision of the Court of First Instance of Manila.
It appears that respondent Europhil Industries Corporation was formerly one of the tenants in
Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the
building administrator. On December 12, 1973, Europhil Industries commenced an action (Civil
Case No. 92744) in the Court of First Instance of Manila for damages against petitioner "for
having perpetrated certain acts that Europhil Industries considered a trespass upon its rights,
namely, cutting of its electricity, and removing its name from the building directory and gate
passes of its officials and employees" (p. 87 Rollo). On June 28, 1974, said court rendered
judgment in favor of respondent Europhil Industries, ordering petitioner to pay the former the
sum of P10,000.00 as actual damages, P5,000.00 as moral damages, P5,000.00 as exemplary
damages and to pay the costs.
The said decision having become final and executory, a writ of garnishment was issued pursuant
to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon
El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or
remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said
garnishment on the ground that her "salaries, commission and, or remuneration are exempted
from execution under Article 1708 of the New Civil Code. Said motion was denied by the lower
Court in an order dated November 7, 1975. A motion for reconsideration of said order was
likewise denied, and on January 26, 1976 petitioner filed with the Court of Appeals a petition for
certiorari against filed with the Court of Appeals a petition for certiorari against said order of
November 7, 1975.
On March 30, 1976, the Court of Appeals dismissed the petition for certiorari. In dismissing the
petition, the Court of Appeals held that petitioner is not a mere laborer as contemplated under
Article 1708 as the term laborer does not apply to one who holds a managerial or supervisory
position like that of petitioner, but only to those "laborers occupying the lower strata." It also held
that the term "wages" means the pay given" as hire or reward to artisans, mechanics, domestics
or menial servants, and laborers employed in manufactories, agriculture, mines, and other
manual occupation and usually employed to distinguish the sums paid to persons hired to
perform manual labor, skilled or unskilled, paid at stated times, and measured by the day, week,
month, or season," citing 67 C.J. 285, which is the ordinary acceptation of the said term, and that
"wages" in Spanish is "jornal" and one who receives a wage is a "jornalero."
In the present petition for review on certiorari of the aforesaid decision of the Court of Appeals,
petitioner questions the correctness of the interpretation of the then Court of Appeals of Article
1708 of the New Civil Code which reads as follows:
ART. 1708. The laborer's wage shall not be subject to execution or attachment, except for debts
incurred for food, shelter, clothing and medical attendance.
It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a responsibly
place employee," of El Grande Hotel, "responsible for planning, directing, controlling, and
coordinating the activities of all housekeeping personnel" (p. 95, Rollo) so as to ensure the
cleanliness, maintenance and orderliness of all guest rooms, function rooms, public areas, and
the surroundings of the hotel. Considering the importance of petitioner's function in El Grande
Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a managerial or
supervisory position.
In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or
physical labor, but as commonly and customarily used and understood, it only applies to one
engaged in some form of manual or physical labor. That is the sense in which the courts
generally apply the term as applied in exemption acts, since persons of that class usually look to
the reward of a day's labor for immediate or present support and so are more in need of the
exemption than are other. (22 Am. Jur. 22 citing Briscoe vs. Montgomery, 93 Ga 602, 20 SE
40; Miller vs. Dugas, 77 Ga 4 Am St Rep 192; State ex rel I.X.L. Grocery vs. Land, 108 La 512,
32 So 433; Wildner vs. Ferguson, 42 Minn 112, 43 NW 793; 6 LRA 338; Anno 102 Am St Rep.
84.
In Oliver vs. Macon Hardware Co., 98 Ga 249 SE 403, it was held that in determining whether a
particular laborer or employee is really a "laborer," the character of the word he does must be
taken into consideration. He must be classified not according to the arbitrary designation given to
his calling, but with reference to the character of the service required of him by his employer.
In Wildner vs. Ferguson, 42 Minn 112, 43 NW 793, the Court also held that all men who earn
compensation by labor or work of any kind, whether of the head or hands, including judges,
laywers, bankers, merchants, officers of corporations, and the like, are in some sense "laboring
men." But they are not "laboring men" in the popular sense of the term, when used to refer to a
must presume, the legislature used the term. The Court further held in said case:
There are many cases holding that contractors, consulting or assistant engineers, agents,
superintendents, secretaries of corporations and livery stable keepers, do not come within the
meaning of the term. (Powell v. Eldred, 39 Mich, 554, Atkin v. Wasson, 25 N.Y. 482; Short v.
Medberry, 29 Hun. 39; Dean v. De Wolf, 16 Hun. 186; Krausen v. Buckel, 17 Hun. 463; Ericson
v. Brown, 39 Barb. 390; Coffin v. Reynolds, 37 N.Y. 640; Brusie v. Griffith, 34 Cal. 306; Dave v.
Nunan, 62 Cal. 400).
Thus, in Jones vs. Avery, 50 Mich, 326, 15 N.W. Rep. 494, it was held that a traveling salesman,
selling by sample, did not come within the meaning of a constitutional provision making
stockholders of a corporation liable for "labor debts" of the corporation.
In Kline vs. Russell 113 Ga. 1085, 39 SE 477, citing Oliver vs. Macon Hardware Co., supra, it
was held that a laborer, within the statute exempting from garnishment the wages of a "laborer,"
is one whose work depends on mere physical power to perform ordinary manual labor, and not
one engaged in services consisting mainly of work requiring mental skill or business capacity,
and involving the exercise of intellectual faculties.
So, also in Wakefield vs. Fargo, 90 N.Y. 213, the Court, in construing an act making
stockholders in a corporation liable for debts due "laborers, servants and apprentices" for
services performed for the corporation, held that a "laborer" is one who performs menial or
manual services and usually looks to the reward of a day's labor or services for immediate or
present support. And in Weymouth vs. Sanborn, 43 N.H. 173, 80 Am. Dec. 144, it was held that
"laborer" is a term ordinarily employed to denote one who subsists by physical toil in
contradistinction to those who subsists by professional skill. And in Consolidated Tank Line Co.
vs. Hunt, 83 Iowa, 6, 32 Am. St. Rep. 285, 43 N.W. 1057, 12 L.R.A. 476, it was stated that
"laborers" are those persons who earn a livelihood by their own manual labor.
Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what
are to be exempted from attachment and execution. The term "wages" as distinguished from
"salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season, while "salary" denotes a higher degree of
employment, or a superior grade of services, and implies a position of office: by contrast, the
term wages " indicates considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important service (35 Am. Jur.
496).
The distinction between wages and salary was adverted to in Bell vs. Indian Livestock Co. (Tex.
Sup.), 11 S.W. 344, wherein it was said: "'Wages' are the compensation given to a hired person
for service, and the same is true of 'salary'. The words seem to be synonymous, convertible
terms, though we believe that use and general acceptation have given to the word 'salary' a
significance somewhat different from the word 'wages' in this: that the former is understood to
relate to position of office, to be the compensation given for official or other service, as
distinguished from 'wages', the compensation for labor." Annotation 102 Am. St. Rep. 81, 95.
We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code
to operate in favor of any but those who are laboring men or women in the sense that their work
is manual. Persons belonging to this class usually look to the reward of a day's labor for
immediate or present support, and such persons are more in need of the exemption than any
others. Petitioner Rosario A. Gaa is definitely not within that class.
We find, therefore, and so hold that the Trial Court did not err in denying in its order of November
7, 1975 the motion of petitioner to lift the notice of garnishment against her salaries, commission
and other remuneration from El Grande Hotel since said salaries, Commission and other
remuneration due her from the El Grande Hotel do not constitute wages due a laborer which,
under Article 1708 of the Civil Code, are not subject to execution or attachment.
IN VIEW OF THE FOREGOING, We find the present petition to be without merit and hereby
AFFIRM the decision of the Court of Appeals, with costs against petitioner.
SO ORDERED.
[G.R. NO. 149758 : August 25, 2005]
PHILEX GOLD PHILIPPINES, INC., GERARDO H. BRIMO, LEONARD P. JOSEF, and

JOSE B. ANIEVAS, Petitioners, v. PHILEX BULAWAN SUPERVISORS UNION,
represented by its President, JOSE D. PAMPLIEGA, Respondent.
DECISION
AZCUNA, J.:
This is a Petition for Review on Certiorari, with prayer for the issuance of a temporary
restraining and/or status quo order, assailing the Decision of the Court of Appeals in
CA-G.R. SP No. 57701 promulgated on April 23, 2001 and its Resolution, promulgated
on August 29, 2001, denying petitioner's Motion for Reconsideration. The said Decision
of the Court of Appeals reversed and set aside the Resolution dated February 29, 2000
of the Voluntary Arbitrator and reinstated the Voluntary Arbitrator's Resolution dated
January 14, 2000 with modification.
The antecedents1 of the case are as follows:
Respondent Philex Bulawan Supervisors Union ("Philex Supervisors Union") is the sole
and exclusive bargaining representative of all supervisors of petitioner Philex Gold
Philippines, Incorporated ("Philex Gold"), a gold mining company with mine site at Vista
Alegre, Nabulao, Sipalay, Negros Occidental. On July 2, 1997, respondent union
entered into a Collective Bargaining Agreement (CBA) with petitioner company effective
August 1, 1996 up to July 31, 2001.
It appears, however, that after the signing of the CBA, Philex Gold made the employees
of Philex Mining Corporation from Padcal, Tuba, Benguet, its regular supervisory
employees effective July 1, 1997. Some of the so-called "ex-Padcal" supervisors began
to work in the Bulawan mines of Philex Mining Corporation in 1992 as ordinary rank-
and-file workers. When Philex Gold was incorporated in 1996 to exclusively handle gold
mining, it took over the operations of the Bulawan mines and absorbed some of the ex-
Padcal employees.
Philex Gold conveyed to Philex Supervisors Union the status of the ex-Padcal
supervisors in November 1997 upon the insistence of the union to be informed of their
standing.
It turned out that the ex-Padcal supervisors were maintained under a confidential
payroll, receiving a different set of benefits and higher salaries compared to the locally
hired supervisors of similar rank and classification doing parallel duties and functions.
Philex Supervisors Union filed a Complaint2 against Philex Gold with the National
Conciliation and Mediation Board (NCMB), Bacolod City, for the payment of wage
differential and damages and the rectification of the discriminatory salary structure and
benefits between the ex-Padcal supervisors and the local-hires.
After the submission of the parties' respective position papers and

rejoinders/supplemental position papers, the Voluntary Arbitrator rendered a decision
on January 14, 2000 in favor of respondent Union.
As regards the supervisors' wage rates3 which was submitted by Philex Gold, the
Voluntary Arbitrator held:
...
The Wage rates of the employers as classified and classed by them are not also
reasonable and undiscriminatory.
This is shown by the fact that the maximum rate for S-4 at P18,065 per month is
higher than the minimum rate for S-5, the highest category at P13,295 a month only.
The rate difference between the maximum rate of S-4 and the minimum rate for S-5
is P4,770, the maximum rate of S-4 being higher than the minimum rate of S-5.
Simply stated, an S-4 employee getting the maximum salary of P18,065 a month will
merely get a reduced or diminished salary of P13,295 upon his promotion to S-5, the
highest class or category of supervisors upon his promotion. This condition is not an
ideal labor relation but a situation which will surely ignite labor conflicts and disputes in
the work place.
In whatever shade or color that we shall look upon the issue of whether or not the
herein employer can be held liable to pay the wage differential pay to the LOCALLY
HIRED SUPERVISORS due to its obvious discriminatory wage policy, one thing stands
out'supervisors of the same ranks are not paid the same rates of pay.
This inequitable rates of pay being implemented by respondents result naturally into
the herein employers' discriminatory wage policy which Article 248 (e) of the LABOR
CODE prohibits and defines as UNFAIR LABOR PRACTICE OF EMPLOYERS.4
The dispositive portion of the Decision reads:
WHEREFORE, in view of all the FOREGOING, judgment is hereby decreed ORDERING

the respondent PHILEX GOLD PHILIPPINES, INC./GERARD H. BRIMO/LEONARD P.
JOSEF/JOSE B. ANIEVAS, JOINTLY and SEVERALLY to:
1. Readjust the MONTHLY RATES OF PAY of locally hired SUPERVISORS in the

categories of S-1 to S-5 RANKS in the same level/or amount with that of PADCAL
SUPERVISORS of the same RANKS namely:
S-1 - - - - - - - - - - - - - - - - - P13,081.60
S-2 - - - - - - - - - - - - - - - - - P13,893.60
S-3 - - - - - - - - - - - - - - - - - P15,209.60
S-4 - - - - - - - - - - - - - - - - - P17,472.00
S-5 - - - - - - - - - - - - - - - - - P20,300.00
effective November 1, 1998 and to pay Wage differential pay from November 1, 1998
up to the date of the Decision to all affected locally hired supervisors.
2. To revise or modify its existing wage rates per supervisory ranking, making the
maximum rate of a lower category lower than the minimum rate of the next higher
category; and,
3. Pay to the UNION ATTORNEY'S FEES at 5% of the total sum of the Wage differential
pay awarded within ten (10) days from receipt of this Decision.
The respondent is further ordered to deposit with the cashier of the NCMB the sum
which is equivalent to the wage differential pay computed at a differential of P5,501.24
per person/supervisor per month from November 1, 1998 up to the date of this
decision, for S-1; P5,663.24 per month per supervisor, for S-2; P5,979.24 per
supervisor per month, for S-3; P7,065.75 per supervisor per month for S-4
and P8,428.46 per supervisor per month for S-5, and the ATTORNEY'S FEE which is 5%
of the total wage differential pay also within ten (10) days from receipt of this decision.
SO ORDERED.5
Philex Supervisors Union filed a Motion for Partial Reconsideration dated January 20,
2000, seeking, among others, the modification of the effectivity of the readjustment of
the monthly rates of pay of the locally hired supervisors and of the computation of their
wage differential from November 1, 1998 to August 1, 1997 although the discrimination
in wages started upon the regularization of the ex-Padcal supervisors on July 1, 1997.
On January 25, 2000, Philex Gold also filed a motion for reconsideration, which was
allegedly filed a day late, contending that it was denied due process as the Voluntary
Arbitrator decided the
case without its supplemental position paper, that the decision undermined the
collective bargaining process between the parties relative to wage differentials, and that
there was neither unlawful discrimination nor wage distortion between the ex-Padcal
supervisors and the locally hired supervisors.
On February 29, 2000, the Voluntary Arbitrator issued the assailed Resolution
modifying his earlier Decision dated January 14, 2000, this time finding that there was
no discrimination in the determination of the rates of pay of the supervisors. The
Voluntary Arbitrator, however, readjusted the amount of wages of local supervisors by
adding or increasing their wages in the uniform sum of P800.00 a month effective
October 1, 1999 "to erase the shadows of inequities among the various grades of
supervisors." The dispositive portion of the Decision reads:
WHEREFORE, IN VIEW of the foregoing, the Decision dated January 14, 2000 is hereby
modified in the following manner, to wit:
1. The respondent employer is hereby ordered to re-adjust the wage rates of S-1 to S-5
supervisors by adding or increasing their wages in the uniform sum of P800.00 a month
each effective October 1, 1999; and to compute and pay their differential pay from
October 1, 1999 up to the time it is paid and implemented;
2. The respondent is further ordered to pay Attorney's Fee to the Union's lawyer at 5%
of the total amount of WAGE DIFFERENTIAL PAY;
3. Finally, the respondent employer is ordered to deposit to the cashier of the NCMB the
WAGE DIFFERENTIAL PAY and the Attorney's Fee adjudged within 10 days from receipt
of this Resolution.
SO ORDERED.6
On March 13, 2000, respondent Union filed a Petition for Review before the Court of
Appeals raising the following issues: (1) whether or not the Voluntary Arbitrator erred
in admitting petitioner's motion for reconsideration which was filed beyond the
reglementary period; (2) whether or not the Voluntary Arbitrator erred in modifying his
decision by finding petitioner to be liable to its locally hired members in the sum
of P800 per month as wage adjustment effective October 1999; and (3) whether or not
the Voluntary Arbitrator erred in failing to grant 10 percent attorney's fees on the total
awards.
On March 2, 2000, petitioners filed a Manifestation of Compliance with the Voluntary

Arbitrator alleging that on account of its payment to respondent union members of
monetary benefits (in the amount of P1,000) provided by the Amendments and
Supplement to the CBA, it has complied with the Resolution dated February 29, 2000.
In a Resolution dated April 4, 2000, the Voluntary Arbitrator denied7 said Manifestation
of Compliance for lack of merit.
While CA-G.R. SP No. 57701 was pending, respondent Union filed on April 8, 2000 a
Motion for Issuance of Writ of Execution of the Resolution dated February 29, 2000.
In an Order dated June 27, 2000, the Voluntary Arbitrator issued a Writ of Execution
enforcing the Resolution dated February 29, 2000.
On June 29, 2000, Philex Gold filed a Motion to Lift Writ of Execution, which was not
acted upon by the Voluntary Arbitrator.
On July 10, 2000, Philex Gold filed a Petition for Review before the Court of Appeals,
docketed as CA-G.R. SP No. 60065, questioning the propriety and validity of the
Voluntary Arbitrator's Order granting execution pending appeal. Said petition was
denied for lack of merit.
On April 23, 2001, the Court of Appeals rendered the assailed Decision, in CA-G.R. SP
No. 57701, finding that petitioners failed to prove that they did not discriminate against
the locally hired supervisors in paying them lower salaries than the ex-Padcal
supervisors. It held, thus:
Philex Gold's attempt to explain the disparity in the salary rates between "ex-Padcal"
supervisors and the local-hires failed to convince Us. It presented a salary structure for
supervisors classified into five categories, namely: "S-1, S-2, S-3, S-4, and S-5" with
different rates of pay. Each classification is further divided in terms of wage rates into
minimum, medium, and maximum. While the "ex-Padcal" supervisors received the
maximum for each category, presumably because of seniority in employment, longer
work experience in gold mining, specialized skills, and the "dislocation factor", the local-
hires received the minimum.
This explanation is fraught with inconsistencies. First, the CBA between the parties did
not disclose this multi-tiered classification of supervisors (Rollo, pp. 36-37, 46-74).
Second, as found by the voluntary arbitrator in his original decision, the local-hires
actually received salaries less than those they were supposed to be entitled (Rollo, p.
41). Third, the minimum wage rate for a higher category happened to be lesser than
the maximum rate of a lower category such that a supervisor with a rank of "S-1"
maximum would get less upon his promotion to "S-2" minimum (Rollo, pp. 38-39, 90).
And finally, this pay structure was kept from the knowledge of the union and was only
revealed in the course of the proceedings before the voluntary arbitrator. These factors
only accentuate the fact which Philex Gold tried to hide, that is, it unduly favored the
"ex-Padcal" supervisors over the local-hires through a system of confidential salary
structure.
The long honored legal truism of "equal pay for equal work," meaning, "persons who
work with substantially equal qualification, skill, effort and responsibility, under similar
conditions, should be paid similar salaries," has been institutionalized in our jurisdiction.
Such that "if an employer accords employees the same position and rank, the
presumption is that these employees perform equal work" as "borne by logic and
human experience." The ramification is that "(i)f the employer pays one employee less
than the rest, it is not for that employee to explain why he receives less or why the
others receive more. That would be adding insult to injury. The employer has
discriminated against that employee; it is for the employer to explain why the employee
is treated unfairly." (International School Alliance of Educators v. Quisumbing, et al.,
G.R. No. 128845, June 1, 2000).
Philex Gold having failed to discharge this burden, We opt therefore to reinstate, albeit
with modification, the original decision dated 14 January 2000 of the voluntary
arbitrator as the same is duly supported by the pleadings filed before Us.8
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the assailed resolution of 29 February 2000

is REVERSED and SET ASIDE and a new one entered REINSTATING the 14 January
2000 decision subject to the MODIFICATION that the readjustment of the monthly
rates of pay of locally hired supervisors as well as their wage differential pay be made
effective 1 August 1997 up to the finality of this decision. This case is REMANDED to
the voluntary arbitrator for the proper computation of wage differential and attorney's
fees. No costs.
SO ORDERED.9
Petitioners' motion for reconsideration was denied by the appellate court in its
Resolution dated August 29, 2001.
Petitioners thus filed this petition with a prayer for the issuance of a temporary
restraining order. The Court issued a temporary restraining order enjoining the
execution of the Decision of the Court of Appeals dated April 23, 2001 and its
Resolution dated August 29, 2001 after petitioners posted a cash bond.
Petitioners raise the following issues:
1. Section 4, Rule 43 and Luzon Development Bank [v. Association of Luzon

Development Bank Employees, 249 SCRA 162 (1995)] provide that the decision of a
voluntary arbitrator becomes final after 15 days from notice of the award. Assuming the
validity of service on Philex Gold's liaison office, instead of its counsel's address on
record, did the Court of Appeals commit an error in law by stating that the Decision
dated 14 January 2000 of VA Sitjar became "final and executory" after eleven days
from notice?chanroblesvirtualawlibrary
2. Granting arguendo that Philex Gold had only a period of 10 days within which to seek
reconsideration of the Sitjar Decision, did the period begin to run upon service of said
Decision at an address which is not the address on record or upon the actual receipt
thereof by Philex Gold's counsel?chanroblesvirtualawlibrary
3. VA Sitjar found petitioners Brimo, Josef and Jose B. Anievas, in their capacity as
corporate officers, jointly and severally liable for the alleged obligation of Philex Gold to
pay wage differentials to PBSU. Did the Court of Appeals commit an error in law in
affirming VA Sitjar when the latter disposed of an issue not submitted to him for
arbitration and in directing solidary liability between Philex Gold and its top officers
despite the absence of any finding of malice, bad faith, or gross
negligence?chanroblesvirtualawlibrary
4. In leveling the wages of the Padcal Supervisors and the Locally-Hired Supervisors,
the Court of Appeals applied the egalitarian doctrine of "equal pay for equal work"
in International School Alliance of Educators v. Quisumbing. Does "equal pay for equal
work" unqualifiedly remove management prerogative to institute qualitative difference
in pay and benefits on the basis of seniority, skill, experience and other valid factors in
the same class of workers doing the same kind of work?10
The relevant issues in this case are as follows:
(1) Whether the notice sent through petitioner company's Liaison Office can be
considered as notice to counsel;
(2) Whether the petitioners-corporate officers are solidarily liable with Philex Gold in
any liability to respondent Union;
(3) Whether the doctrine of "equal pay for equal work" should not remove management
prerogative to institute difference in salary on the basis of seniority, skill, experience
and the dislocation factor in the same class of supervisory workers doing the same kind
of work.
First Issue : Whether the notice sent through petitioner company's Liaison
Office can be considered as notice to counsel
Petitioners contend that the Court of Appeals erred in holding that their motion for
reconsideration of the Decision of the Voluntary Arbitrator dated January 14, 2000 was
filed out of time.
Indeed, the Court of Appeals found that "[b]ased on the certification issued by the
voluntary arbitrator himself, the decision was received by the respondents (petitioners
herein) on 14 January 2000 (Rollo, p. 123), and they filed their motion for
reconsideration on 25 January 2000, or on the eleventh day from receipt of the
decision." The appellate court ruled that the late filing rendered the decision final and
executory as regards the petitioners, and that the Voluntary Arbitrator erred in
admitting petitioners' motion for reconsideration.
Petitioners argue that the service of the Voluntary Arbitrator's Decision on Philex Gold's
Liaison Office at Libertad St., Bacolod City on January 14, 2000 was improper since
their counsel's address of record was at Vista Alegre, Nabulao, Sipalay, Negros
Occidental 6113. Petitioners state that Philex Gold's Liaison Office forwarded said
Decision to their counsel only the next day or on January 15, 2000, which should be the
date of notice to counsel and the basis for computation of the period to file a motion for
reconsideration of said Decision.
The contention is meritorious.
Section 4, Rule III of the NCMB Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings states:
Section 4. Service of Pleadings, Notices and Awards. - Copies of pleadings, notices or

copies of [an] award may be served through personal service or by registered mails on
the parties to the dispute: Provided, that where a party is represented by counsel
or authorized representative, service shall be made on the latter. Service by
registered mail is complete upon receipt by the addressee or his agents.11
In this case, petitioners were represented before the Voluntary Arbitrator by Attys.
Deogracias G. Contreras Jr. and Weldy U. Manlong. Hence, under the NCMB Guidelines,
service of pleadings, notices and awards should be made on petitioners' counsel.
The Court noted that in petitioners' Position Paper and Supplemental Position Paper
filed with the Voluntary Arbitrator, the address of petitioners' counsel was indicated as
Vista Alegre, Nabulao, Sipalay, Negros Occidental, 6113. However, the Decision of the
Voluntary Arbitrator dated January 14, 2000 was sent through the Liaison Office of
Philex Gold, thus:
ATTY. WENDY U. MANLONG
Counsel for the Respondents
PHILEX GOLD PHILIPPINES, INC.
GERARDO BRIMO, LEONARD P. JOSEF,
JOSE B. ANIEVAS
C/O Liaison Office, Libertad St.
Bacolod City
Even the Court of Appeals stated that "based on the certification issued by the
voluntary arbitrator himself, the decision was received by the Respondents on 14
January 2000. . . ." Said service on Philex Gold's Liaison Office or on the petitioners
themselves cannot be considered as notice in law to petitioners' counsel.
Under the circumstances, reliance may be placed on the assertion of petitioners that a
copy of the Decision of the Voluntary Arbitrator dated January 14, 2000 was delivered
to their counsel the next day or on January 15, 2000, which must be deemed as the
date of notice to counsel of said Decision.12
Hence, when petitioners' motion for reconsideration was filed on January 25, 2000, it
was filed within the 10-day reglementary period under Article 262-A of the Labor Code.
The Court of Appeals,
therefore, erred in holding that said motion for reconsideration was filed out of time.
Second Issue : Whether the petitioners-corporate officers are solidarily liable

with Philex Gold in any liability to respondent Union
Petitioners officers contend that they should not be adjudged solidarily liable with Philex
Gold.
The contention is meritorious.
A corporation is a juridical entity with legal personality separate and distinct from those
acting for and in its behalf and, in general, from the people comprising it.13 The rule is
that obligations incurred by the corporation, acting through its directors, officers and
employees, are its sole liabilities.14 However, it is possible for a corporate director,
trustee or officer to be held solidarily liable with the corporation in the following
instances:
1. When directors and trustees or, in appropriate cases, the officers of a corporation - -
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders
or members, and other persons.
2. When a director or officer has consented to the issuance of watered stocks or who,
having knowledge thereof, did not forthwith file with the corporate secretary his written
objection thereto.
3. When a director, trustee or officer has contractually agreed or stipulated to hold

himself personally and solidarily liable with the Corporation.
4. When a director, trustee or officer is made, by specific provision of law, personally

liable for his corporate action.15
The corporate officers in this case have not been proven to fall under any of the
aforecited instances; hence, they cannot be held solidarily liable with the company in
the payment of any liability.
Third Issue : Whether the doctrine of "equal pay for equal work" should not
remove management prerogative to institute difference in salary within the
same supervisory level
Petitioners submit that the "equal pay for equal work" doctrine in International
School Alliance of Educators v. Quisumbing,16 which the Court of Appeals cited to
support its Decision should be narrowly construed to apply to a situation where
invidious discrimination exists by reason of race or ethnicity, but not where valid factors
exist to justify distinctive treatment of employees even if they do the same work.
Petitioners explained that the ex-Padcal supervisors were paid higher because of their
longer years of service, experience, their training and skill in the underground mining
method wanting in the local supervisors, and their relocation to Bulawan, Negros
Occidental. They assert that the differential treatment of the ex-Padcal supervisors is
not arbitrary, malicious or discriminatory but justified by the circumstances of their
relocation and integration in the new mining operation in Bulawan.
The Court is not persuaded by petitioners' contention.
Petitioners admit that the "same class of workers [are] doing the same kind of work."
This means that an ex-Padcal supervisor and a locally hired supervisor of equal rank do
the same kind of work. If an employer accords employees the same position and rank,
the presumption is that these employees perform equal work.17 Hence, the doctrine of
"equal pay for equal work" in International School Alliance of Educators was correctly
applied by the Court of Appeals.
Petitioners now contend that the doctrine of "equal pay for equal work" should not
remove management prerogative to institute difference in salary on the basis of
seniority, skill, experience and the dislocation factor in the same class of supervisory
workers doing the same kind of work.18
In this case, the Court cannot agree because petitioners failed to adduce evidence to
show that an ex-Padcal supervisor and a locally hired supervisor of the same rank are
initially paid the same basic salary for doing the same kind of work. They failed to
differentiate this basic salary from any kind of salary increase or additional benefit
which may have been given to the ex-Padcal supervisors due to their seniority,
experience and other factors.
The records only show that an ex-Padcal supervisor is paid a higher salary than a
locally hired supervisor of the same rank. Therefore, petitioner failed to prove with
satisfactory evidence that it has not discriminated against the locally hired supervisor in
view of the unequal salary.
To reiterate the ruling of Philippine-Singapore Transport Services, Inc. v. NLRC,19 which

was cited by the Court of Appeals in its Decision:
...
It is noteworthy to state that an employer is free to manage and regulate, according to

his own discretion and judgment, all phases of employment, which includes hiring, work
assignments, working methods, time, place and manner of work, supervision of
workers, working regulations, transfer of employees, lay-off of workers, and the
discipline, dismissal and recall of work. While the law recognizes and safeguards this
right of an employer to exercise what are clearly management prerogatives, such right
should not be abused and used as a tool of oppression against labor. The company's
prerogative must be exercised in good faith and with due regard to the rights of
labor. A priori, they are not absolute prerogatives but are subject to legal limits,
collective bargaining agreements and the general principles of fair play and
justice.20 (Emphasis supplied.)
WHEREFORE, the petition is hereby DENIED. No reversible error was committed by

the Court of Appeals in its Decision in CA-G.R. SP No. 57701 and in its Resolution
promulgated on August 29, 2001. The Temporary Restraining Order issued by the Court
is LIFTED.
No costs.
SO ORDERED.
[G.R. NO. 152456 : April 28, 2004]
SEVILLA TRADING COMPANY, Petitioner, v. A. V. A. TOMAS E. SEMANA, SEVILLA TRADING

WORKERS UNIONSUPER, Respondents.
DECISION
PUNO, J.:
On appeal is the Decision1 of the Court of Appeals in CA-G. R. SP No. 63086 dated 27
November 2001 sustaining the Decision2 of Accredited Voluntary Arbitrator Tomas E.
Semana dated 13 November 2000, as well as its subsequent Resolution3 dated 06
March 2002 denying petitioners Motion for Reconsideration.
The facts of the case are as follows:chanroblesvirtua1awlibrary

For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla
Trading, for short), a domestic corporation engaged in trading business, organized and
existing under Philippine laws, added to the base figure, in its computation of the 13th-
month pay of its employees, the amount of other benefits received by the employees
which are beyond the basic pay. These benefits included:chanroblesvirtua1awlibrary
(a) Overtime premium for regular overtime, legal and special

holidays;chanroblesvirtuallawlibrary
(b) Legal holiday pay, premium pay for special holidays;chanroblesvirtuallawlibrary
(c) Night premium;chanroblesvirtuallawlibrary
(d) Bereavement leave pay;chanroblesvirtuallawlibrary
(e) Union leave pay;chanroblesvirtuallawlibrary
(f) Maternity leave pay;chanroblesvirtuallawlibrary
(g) Paternity leave pay;chanroblesvirtuallawlibrary
(h) Company vacation and sick leave pay; andcralawlibrary
(i) Cash conversion of unused company vacation and sick leave.
Petitioner claimed that it entrusted the preparation of the payroll to its office staff,
including the computation and payment of the 13th-month pay and other benefits.
When it changed its person in charge of the payroll in the process of computerizing its
payroll, and after audit was conducted, it allegedly discovered the error of including
non-basic pay or other benefits in the base figure used in the computation of the 13th-
month pay of its employees. It cited the Rules and Regulations Implementing P. D. No.
851 (13th-Month Pay Law), effective December 22, 1975, Sec. 2(b) which stated
that:chanroblesvirtua1awlibrary
Basic salary shall include all remunerations or earnings paid by an employer to an

employee for services rendered but may not include cost-of-living allowances granted
pursuant to P. D. No. 525 or Letter of Instruction No. 174, profit-sharing payments, and
all allowances and monetary benefits which are not considered or integrated as part of
the regular or basic salary of the employee at the time of the promulgation of the
Decree on December 16, 1975.
Petitioner then effected a change in the computation of the thirteenth month pay, as
follows:chanroblesvirtua1awlibrary
13th-month pay = net basic pay
12 months
where:chanroblesvirtua1awlibrary
net basic pay = gross pay (non-basic pay or other benefits)
Now excluded from the base figure used in the computation of the thirteenth month pay
are the following:chanroblesvirtua1awlibrary
a) Overtime premium for regular overtime, legal and special

holidays;chanroblesvirtuallawlibrary
b) Legal holiday pay, premium pay for special holidays;chanroblesvirtuallawlibrary

c) Night premium;chanroblesvirtuallawlibrary
d) Bereavement leave pay;chanroblesvirtuallawlibrary
e) Union leave pay;chanroblesvirtuallawlibrary
f) Maternity leave pay;chanroblesvirtuallawlibrary
g) Paternity leave pay;chanroblesvirtuallawlibrary
h) Company vacation and sick leave pay; andcralawlibrary
i) Cash conversion of unused vacation/sick leave.
Hence, the new computation reduced the employees thirteenth month pay. The daily
piece-rate workers represented by private respondent Sevilla Trading Workers Union
SUPER (Union, for short), a duly organized and registered union, through the Grievance
Machinery in their Collective Bargaining Agreement, contested the new computation
and reduction of their thirteenth month pay. The parties failed to resolve the issue.
On March 24, 2000, the parties submitted the issue of whether or not the exclusion of
leaves and other related benefits in the computation of 13th-month pay is valid to
respondent Accredited Voluntary Arbitrator Tomas E. Semana (A. V. A. Semana, for
short) of the National Conciliation and Mediation Board, for consideration and
resolution.
The Union alleged that petitioner violated the rule prohibiting the elimination or
diminution of employees benefits as provided for in Art. 100 of the Labor Code, as
amended. They claimed that paid leaves, like sick leave, vacation leave, paternity
leave, union leave, bereavement leave, holiday pay and other leaves with pay in the
CBA should be included in the base figure in the computation of their 13th-month pay.
On the other hand, petitioner insisted that the computation of the 13th-month pay is
based on basic salary, excluding benefits such as leaves with pay, as per P. D. No. 851,
as amended. It maintained that, in adjusting its computation of the 13th-month pay, it
merely rectified the mistake its personnel committed in the previous years.
A. V. A. Semana decided in favor of the Union. The dispositive portion of his Decision
reads as follows:chanroblesvirtua1awlibrary
WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared

that:chanroblesvirtua1awlibrary
1. The company is hereby ordered to include sick leave and vacation leave, paternity
leave, union leave, bereavement leave and other leave with pay in the CBA, premium
for work done on rest days and special holidays, and pay for regular holidays in the
computation of the 13th-month pay to all covered and entitled
employees;chanroblesvirtuallawlibrary
2. The company is hereby ordered to pay corresponding backwages to all covered and
entitled employees arising from the exclusion of said benefits in the computation of
13th-month pay for the year 1999.
Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It
filed before the Court of Appeals, a Manifestation and Motion for Time to File Petition
for Certiorari on January 19, 2001. A month later, on February 19, 2001, it filed its
Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure for the
nullification of the Decision of the Arbitrator. In addition to its earlier allegations,
petitioner claimed that assuming the old computation will be upheld, the reversal to the
old computation can only be made to the extent of including non-basic benefits actually
included by petitioner in the base figure in the computation of their 13 th-month pay in
the prior years. It must exclude those non-basic benefits which, in the first place, were
not included in the original computation. The appellate court denied due course to, and
dismissed the petition.
Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as
follows:chanroblesvirtua1awlibrary
1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD

COMPUTATION OF THE 13TH-MONTH PAY ON THE BASIS THAT THE OLD COMPUTATION
HAD RIPENED INTO PRACTICE IS WITHOUT LEGAL BASIS.
2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN

COMPUTATION WHICH WILL CAUSE GRAVE AND IRREPARABLE DAMAGE TO
EMPLOYERS.4 cralawred
First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse
decision of the arbitrator is a Petition for Review under Rule 43 of the 1997 Rules of
Civil Procedure, not a Petition for Certiorari under Rule 65. Section 1 of Rule 43
states:chanroblesvirtua1awlibrary
RULE 43
Appeals from the Court of Tax Appeals and
Quasi-Judicial Agencies to the Court of Appeals
SECTION 1. Scope. This Rule shall apply to appeals from judgments or final orders of
the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.
Among these agencies are the Civil Service Commission, Central Board of Assessment
Appeals, Securities and Exchange Commission, Office of the President, Land
Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National Electrification Administration,
Energy Regulatory Board, National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural Inventions Board, Insurance
Commission, Philippine Atomic Energy Commission, Board of Investments, Construction
Industry Arbitration Commission, and voluntary arbitrators authorized by law.
[Emphasis supplied.]
It is elementary that the special civil action of certiorari under Rule 65 is not, and
cannot be a substitute for an appeal, where the latter remedy is available, as it was in
this case. Petitioner Sevilla Trading failed to file an appeal within the fifteen-day
reglementary period from its notice of the adverse decision of A. V. A. Semana. It
received a copy of the decision of A. V. A. Semana on December 20, 2000, and should
have filed its appeal under Rule 43 of the 1997 Rules of Civil Procedure on or before
January 4, 2001. Instead, petitioner filed on January 19, 2001 a Manifestation and
Motion for Time to File Petition for Certiorari, and on February 19, 2001, it filed a
Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure. Clearly,
petitioner Sevilla Trading had a remedy of appeal but failed to use it.
A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to
timely file a Petition for Review on Certiorari under Rule 45 (Rule 43, in the case at bar)
of the Rules of Court. Rule 65 is an independent action that cannot be availed of as a
substitute for the lost remedy of an ordinary appeal, including that under Rule 45 (Rule
43, in the case at bar), especially if such loss or lapse was occasioned by ones own
neglect or error in the choice of remedies.5 cralawred
Thus, the decision of A. V. A. Semana had become final and executory when petitioner
Sevilla Trading filed its Petition for Certiorari on February 19, 2001. More particularly,
the decision of A. V. A. Semana became final and executory upon the lapse of the
fifteen-day reglementary period to appeal, or on January 5, 2001. Hence, the Court of
Appeals is correct in holding that it no longer had appellate jurisdiction to alter, or much
less, nullify the decision of A. V. A. Semana.
Even assuming that the present Petition for Certiorari under Rule 65 of the 1997 Rules
of Civil Procedure is a proper action, we still find no grave abuse of discretion
amounting to lack or excess of jurisdiction committed by A. V. A. Semana. Grave abuse
of discretion has been interpreted to mean such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, or, in other words where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility,
and it must be so patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined or to act at all in contemplation of law.6 We
find nothing of that sort in the case at bar.
On the contrary, we find the decision of A. V. A. Semana to be sound, valid, and in

accord with law and jurisprudence. A. V. A. Semana is correct in holding that petitioners
stance of mistake or error in the computation of the thirteenth month pay is
unmeritorious. Petitioners submission of financial statements every year requires the
services of a certified public accountant to audit its finances. It is quite impossible to
suggest that they have discovered the alleged error in the payroll only in 1999. This
implies that in previous years it does not know its cost of labor and operations. This is
merely basic cost accounting. Also, petitioner failed to adduce any other relevant
evidence to support its contention. Aside from its bare claim of mistake or error in the
computation of the thirteenth month pay, petitioner merely appended to its petition a
copy of the 1997-2002 Collective Bargaining Agreement and an alleged corrected
computation of the thirteenth month pay. There was no explanation whatsoever why its
inclusion of non-basic benefits in the base figure in the computation of their 13th-month
pay in the prior years was made by mistake, despite the clarity of statute and
jurisprudence at that time.
The instant case needs to be distinguished from Globe Mackay Cable and Radio
Corp. v. NLRC,7which petitioner Sevilla Trading invokes. In that case, this Court
decided on the proper computation of the cost-of-living allowance (COLA) for monthly-
paid employees. Petitioner Corporation, pursuant to Wage Order No. 6 (effective 30
October 1984), increased the COLA of its monthly-paid employees by multiplying
the P3. 00 daily COLA by 22 days, which is the number of working days in the
company. The Union disagreed with the computation, claiming that the daily COLA rate
of P3. 00 should be multiplied by 30 days, which has been the practice of the company
for several years. We upheld the contention of the petitioner corporation. To answer the
Unions contention of company practice, we ruled that:chanroblesvirtua1awlibrary
Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in
1982 and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984),
should not be construed as constitutive of voluntary employer practice, which cannot
now be unilaterally withdrawn by petitioner. To be considered as such, it should have
been practiced over a long period of time, and must be shown to have been consistent
and deliberate. .. The test of long practice has been enunciated
thus:chanroblesvirtua1awlibrary
.. . Respondent Company agreed to continue giving holiday pay knowing fully well that
said employees are not covered by the law requiring payment of holiday pay. (Oceanic
Pharmacal Employees Union [FFW] v. Inciong, 94 SCRA 270 [1979])
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the
implementation of the Wage Orders. It was only when the Rules Implementing Wage
Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily
allowance to its monthly equivalent was laid down.
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for
erroneous application of the law. ..
In the above quoted case, the grant by the employer of benefits through an erroneous
application of the law due to absence of clear administrative guidelines is not
considered a voluntary act which cannot be unilaterally discontinued. Such is not the
case now. In the case at bar, the Court of Appeals is correct when it pointed out that as
early as 1981, this Court has held in San Miguel Corporation v.
Inciong8that:chanroblesvirtua1awlibrary
Under Presidential Decree 851 and its implementing rules, the basic salary of an
employee is used as the basis in the determination of his 13th-month pay. Any
compensations or remunerations which are deemed not part of the basic pay is
excluded as basis in the computation of the mandatory bonus.
Under the Rules and Regulations Implementing Presidential Decree 851, the following
compensations are deemed not part of the basic salary:chanroblesvirtua1awlibrary
a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of

Instruction No. 174;chanroblesvirtuallawlibrary
b) Profit sharing payments;chanroblesvirtuallawlibrary
c) All allowances and monetary benefits which are not considered or integrated as part
of the regular basic salary of the employee at the time of the promulgation of the
Decree on December 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing Presidential

Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and
other remunerations are excluded as part of the basic salary and in the computation of
the 13th-month pay.
The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of
Instruction No. 174 and profit sharing payments indicate the intention to strip basic
salary of other payments which are properly considered as fringe benefits. Likewise, the
catch-all exclusionary phrase all allowances and monetary benefits which are not
considered or integrated as part of the basic salary shows also the intention to strip
basic salary of any and all additions which may be in the form of allowances or fringe
benefits.
Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree

851 is even more empathic in declaring that earnings and other remunerations which
are not part of the basic salary shall not be included in the computation of the 13th-
month pay.
While doubt may have been created by the prior Rules and Regulations Implementing
Presidential Decree 851 which defines basic salary to include all remunerations or
earnings paid by an employer to an employee, this cloud is dissipated in the later and
more controlling Supplementary Rules and Regulations which categorically, exclude
from the definition of basic salary earnings and other remunerations paid by employer
to an employee. A cursory perusal of the two sets of Rules indicates that what has
hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the seeming tendency of the former rules to
include all remunerations and earnings within the definition of basic salary.
The all-embracing phrase earnings and other remunerations which are deemed not part
of the basic salary includes within its meaning payments for sick, vacation, or maternity
leaves, premium for works performed on rest days and special holidays, pay for regular
holidays and night differentials. As such they are deemed not part of the basic salary
and shall not be considered in the computation of the 13th-month pay. If they were not
so excluded, it is hard to find any earnings and other remunerations expressly excluded
in the computation of the 13th-month pay. Then the exclusionary provision would prove
to be idle and with no purpose.
In the light of the clear ruling of this Court, there is, thus no reason for any mistake in
the construction or application of the law. When petitioner Sevilla Trading still included
over the years non-basic benefits of its employees, such as maternity leave pay, cash
equivalent of unused vacation and sick leave, among others in the computation of the
13th-month pay, this may only be construed as a voluntary act on its part. Putting the
blame on the petitioners payroll personnel is inexcusable.
In Davao Fruits Corporation v. Associated Labor Unions, we likewise held

that:9 cralawred
The Supplementary Rules and Regulations Implementing P. D. No. 851 which put to
rest all doubts in the computation of the thirteenth month pay, was issued by the
Secretary of Labor as early as January 16, 1976, barely one month after the effectivity
of P. D. No. 851 and its Implementing Rules. And yet, petitioner computed and paid the
thirteenth month pay, without excluding the subject items therein until 1981. Petitioner
continued its practice in December 1981, after promulgation of the aforequoted San
Miguel decision on February 24, 1981, when petitioner purportedly discovered its
mistake.
From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the
computation of its employees thirteenth month pay, without the payments for sick,
vacation and maternity leave, premium for work done on rest days and special
holidays, and pay for regular holidays. The considerable length of time the questioned
items had been included by petitioner indicates a unilateral and voluntary act on its
part, sufficient in itself to negate any claim of mistake.
A company practice favorable to the employees had indeed been established and the
payments made pursuant thereto, ripened into benefits enjoyed by them. And any
benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer, by virtue of Sec. 10 of the
Rules and Regulations Implementing P. D. No. 851, and Art. 100 of the Labor Code of
the Philippines which prohibit the diminution or elimination by the employer of the
employees existing benefits. [Tiangco v. Leogardo, Jr., 122 SCRA 267 (1983)]
With regard to the length of time the company practice should have been exercised to
constitute voluntary employer practice which cannot be unilaterally withdrawn by the
employer, we hold that jurisprudence has not laid down any rule requiring a specific
minimum number of years. In the above quoted case of Davao Fruits Corporation v.
Associated Labor Unions,10 the company practice lasted for six (6) years. In another
case, Davao Integrated Port Stevedoring Services v. Abarquez,11 the employer,
for three (3) years and nine (9) months, approved the commutation to cash of the
unenjoyed portion of the sick leave with pay benefits of its intermittent workers. While
in Tiangco v. Leogardo, Jr. ,12 the employer carried on the practice of giving a fixed
monthly emergency allowance from November 1976 to February 1980, or three (3)
years and four (4) months. In all these cases, this Court held that the grant of these
benefits has ripened into company practice or policy which cannot be peremptorily
withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of including
non-basic benefits such as paid leaves for unused sick leave and vacation leave in the
computation of their 13th-month pay for at least two (2) years. This, we rule likewise
constitutes voluntary employer practice which cannot be unilaterally withdrawn by the
employer without violating Art. 100 of the Labor Code:chanroblesvirtua1awlibrary
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book
shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
IN VIEW WHEREOF, the petition is DENIED. The Decision of the Court of Appeals in
CA-G. R. SP No. 63086 dated 27 November 2001 and its Resolution dated 06 March
2002 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 155059. April 29, 2005

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION, Petitioner,
vs.
AMERICAN WIRE AND CABLE CO., INC. and THE COURT OF APPEALS, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a special civil action for certiorari, assailing the Decision1 of the Special Eighth Division
of the Court of Appeals dated 06 March 2002. Said Decision upheld the Decision2 and Order3 of
Voluntary Arbitrator Angel A. Ancheta of the National Conciliation and Mediation Board (NCMB)
dated 25 September 2001 and 05 November 2001, respectively, which declared the private
respondent herein not guilty of violating Article 100 of the Labor Code, as amended. Assailed
likewise, is the Resolution4 of the Court of Appeals dated 12 July 2002, which denied the motion for
reconsideration of the petitioner, for lack of merit.
THE FACTS
The facts of this case are quite simple and not in dispute.
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and
cables. There are two unions in this company, the American Wire and Cable Monthly-Rated
Employees Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees
Union (Daily-Rated Union).
On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and
Employment (DOLE) by the two unions for voluntary arbitration. They alleged that the private
respondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefits and
entitlements which they have long enjoyed. These are the following:
a. Service Award;
b. 35% premium pay of an employee’s basic pay for the work rendered during Holy Monday, Holy
Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29;
c. Christmas Party; and
d. Promotional Increase.
A promotional increase was asked by the petitioner for fifteen (15) of its members who were given or
assigned new job classifications. According to petitioner, the new job classifications were in the
nature of a promotion, necessitating the grant of an increase in the salaries of the said 15 members.
On 21 June 2001, a Submission Agreement was filed by the parties before the Office for Voluntary
Arbitration. Assigned as Voluntary Arbitrator was Angel A. Ancheta.
On 04 July 2001, the parties simultaneously filed their respective position papers with the Office of
the Voluntary Arbitrator, NCMB, and DOLE.
On 25 September 2001, a Decision5 was rendered by Voluntary Arbitrator Angel A. Ancheta in favor
of the private respondent. The dispositive portion of the said Decision is quoted hereunder:
WHEREFORE, with all the foregoing considerations, it is hereby declared that the Company is not
guilty of violating Article 100 of the Labor Code, as amended, or specifically for withdrawing the
service award, Christmas party and 35% premium for work rendered during Holy Week and
Christmas season and for not granting any promotional increase to the alleged fifteen (15) Daily-
Rated Union Members in the absence of a promotion. The Company however, is directed to grant
the service award to deserving employees in amounts and extent at its discretion, in consultation
with the Unions on grounds of equity and fairness.6
A motion for reconsideration was filed by both unions7 where they alleged that the Voluntary
Arbitrator manifestly erred in finding that the company did not violate Article 100 of the Labor Code,
as amended, when it unilaterally withdrew the subject benefits, and when no promotional increase
was granted to the affected employees.
On 05 November 2001, an Order8 was issued by Voluntary Arbitrator Angel A. Ancheta. Part of the
Order is quoted hereunder:
Considering that the issues raised in the instant case were meticulously evaluated and length[i]ly
discussed and explained based on the pleadings and documentary evidenc[e] adduced by the
contending parties, we find no cogent reason to change, modify, or disturb said decision.
WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as they are hereby,
denied for lack of merit. Our decision dated 25 September 2001 is affirmed "en toto."9
An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated Union
before the Court of Appeals10 and docketed as CA-G.R. SP No. 68182. The petitioner averred that
Voluntary Arbitrator Angel A. Ancheta erred in finding that the company did not violate Article 100 of
the Labor Code, as amended, when the subject benefits were unilaterally withdrawn. Further, they
assert, the Voluntary Arbitrator erred in adopting the company’s unaudited Revenues and
Profitability Analysis for the years 1996-2000 in justifying the latter’s withdrawal of the questioned
benefits.11
On 06 March 2002, a Decision in favor of herein respondent company was promulgated by the
Special Eighth Division of the Court of Appeals in CA-G.R. SP No. 68182. The decretal portion of the
decision reads:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit. The Decision of Voluntary Arbitrator Angel A. Ancheta
dated September 25, 2001 and his Order dated November 5, 2001 in VA Case No. AAA-10-6-4-
2001 are hereby AFFIRMED and UPHELD.12
A motion for reconsideration13 was filed by the petitioner, contending that the Court of Appeals
misappreciated the facts of the case, and that it committed serious error when it ruled that the
unaudited financial statement bears no importance in the instant case.
The Court of Appeals denied the motion in its Resolution dated 12 July 200214 because it did not
present any new matter which had not been considered in arriving at the decision. The dispositive
portion of the Resolution states:
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.15
Dissatisfied with the court a quo’s ruling, petitioner instituted the instant special civil action
for certiorari,16 citing grave abuse of discretion amounting to lack of jurisdiction.
ASSIGNMENT OF ERRORS
The petitioner assigns as errors the following:
THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT VIOLATE
ARTICLE 100 OF THE LABOR CODE, AS AMENDED, WHEN IT UNILATERALLY WITHDREW
THE BENEFITS OF THE MEMBERS OF PETITIONER UNION, TO WIT: 1) 35% PREMIUM PAY; 2)
CHRISTMAS PARTY AND ITS INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH IN
TRUTH AND IN FACT SAID BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME
IMMEMORIAL, AS A MATTER OF LONG ESTABLISHED COMPANY PRACTICE, WITH THE
FURTHER FACT THAT THE SAME NOT BEING DEPENDENT ON PROFITS.
II
THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK, LINE AND SINKER, THE
RESPONDENT COMPANY’S SELF SERVING AND UNAUDITED REVENUES AND
PROFITABILITY ANALYSIS FOR THE YEARS 1996-2000 WHICH THEY SUBMITTED TO
FALSELY JUSTIFY THEIR UNLAWFUL ACT OF UNILATERALLY AND SUDDENLY
WITHDRAWING OR DENYING FROM THE PETITIONER THE SUBJECT
BENEFITS/ENTITLEMENTS.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE AWARD IS
NOT DEPENDENT ON PROFIT BUT ON SERVICE AND THUS, CANNOT BE UNILATERALLY
WITHDRAWN BY RESPONDENT COMPANY.
ISSUE
Synthesized, the solitary issue that must be addressed by this Court is whether or not private
respondent is guilty of violating Article 100 of the Labor Code, as amended, when the
benefits/entitlements given to the members of petitioner union were withdrawn.
THE COURT’S RULING
Before we address the sole issue presented in the instant case, it is best to first discuss a matter
which was raised by the private respondent in its Comment. The private respondent contends that
this case should have been dismissed outright because of petitioner’s error in the mode of appeal.
According to it, the petitioner should have elevated the instant case to this Court through a petition
for review on certiorari under Rule 45, and not through a special civil action for certiorari under Rule
65, of the 1997 Rules on Civil Procedure.17
Assuming arguendo that the mode of appeal taken by the petitioner is improper, there is no question
that the Supreme Court has the discretion to dismiss it if it is defective. However, sound policy
dictates that it is far better to dispose the case on the merits, rather than on technicality.18
The Supreme Court may brush aside the procedural barrier and take cognizance of the petition as it
raises an issue of paramount importance. The Court shall resolve the solitary issue on the merits for
future guidance of the bench and bar.19
With that out of the way, we shall now resolve whether or not the respondent company is guilty of
violating Article 100 of the Labor Code, as amended.
Article 100 of the Labor Code provides:
ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. – Nothing in

this Book shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
The petitioner submits that the withdrawal of the private respondent of the 35% premium pay for
selected days during the Holy Week and Christmas season, the holding of the Christmas Party and
its incidental benefits, and the giving of service awards violated Article 100 of the Labor Code. The
grant of these benefits was a customary practice that can no longer be unilaterally withdrawn by
private respondent without the tacit consent of the petitioner. The benefits in question were given by
the respondent to the petitioner consistently, deliberately, and unconditionally since time
immemorial. The benefits/entitlements were not given to petitioner due to an error in interpretation,
or a construction of a difficult question of law, but simply, the grant has been a practice over a long
period of time. As such, it cannot be withdrawn from the petitioner at respondent’s whim and caprice,
and without the consent of the former. The benefits given by the respondent cannot be considered
as a "bonus" as they are not founded on profit. Even assuming that it can be treated as a "bonus,"
the grant of the same, by reason of its long and regular concession, may be regarded as part of
regular compensation.20
With respect to the fifteen (15) employees who are members of petitioner union that were given new
job classifications, it asserts that a promotional increase in their salaries was in order. Salary
adjustment is a must due to their promotion.21
On respondent company’s Revenues and Profitability Analysis for the years 1996-2000, the
petitioner insists that since the former was unaudited, it should not have justified the company’s
sudden withdrawal of the benefits/entitlements. The normal and/or legal method for establishing
profit and loss of a company is through a financial statement audited by an independent auditor.22
The petitioner cites our ruling in the case of Saballa v. NLRC,23 where we held that financial
statements audited by independent auditors constitute the normal method of proof of the profit and
loss performance of the company. Our ruling in the case of Bogo-Medellin Sugarcane Planters
Association, Inc., et al. v. NLRC, et al.24 was likewise invoked. In this case, we held:
… The Court has previously ruled that financial statements audited by independent external auditors
constitute the normal method of proof of the profit and loss performance of a company.
On the matter of the withdrawal of the service award, the petitioner argues that it is the employee’s
length of service which is taken as a factor in the grant of this benefit, and not whether the company
acquired profit or not.25
In answer to all these, the respondent corporation avers that the grant of all subject benefits has not
ripened into practice that the employees concerned can claim a demandable right over them. The
grant of these benefits was conditional based upon the financial performance of the company and
that conditions/circumstances that existed before have indeed substantially changed thereby
justifying the discontinuance of said grants. The company’s financial performance was affected by
the recent political turmoil and instability that led the entire nation to a bleeding economy. Hence, it
only necessarily follows that the company’s financial situation at present is already very much
different from where it was three or four years ago.26
On the subject of the unaudited financial statement presented by the private respondent, the latter
contends that the cases cited by the petitioner indeed uniformly ruled that financial statements
audited by independent external auditors constitute the normal method of proof of the profit and loss
performance of a company. However, these cases do not require that the only legal method to
ascertain profit and loss is through an audited financial statement. The cases only provide that an
audited financial statement is the normal method.27
The respondent company likewise asseverates that the 15 members of petitioner union were not
actually promoted. There was only a realignment of positions.28
From the foregoing contentions, it appears that for the Court to resolve the issue presented, it is
critical that a determination must be first made on whether the benefits/entitlements are in the nature
of a bonus or not, and assuming they are so, whether they are demandable and enforceable
obligations.
In the case of Producers Bank of the Philippines v. NLRC29 we have characterized what a bonus
is, viz:
A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed
to the success of the employer’s business and made possible the realization of profits. It is an act of
generosity granted by an enlightened employer to spur the employee to greater efforts for the
success of the business and realization of bigger profits. The granting of a bonus is a management
prerogative, something given in addition to what is ordinarily received by or strictly due the recipient.
Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the
wage, salary or compensation of the employee.
Based on the foregoing pronouncement, it is obvious that the benefits/entitlements subjects of the
instant case are all bonuses which were given by the private respondent out of its generosity and
munificence. The additional 35% premium pay for work done during selected days of the Holy Week
and Christmas season, the holding of Christmas parties with raffle, and the cash incentives given
together with the service awards are all in excess of what the law requires each employer to give its
employees. Since they are above what is strictly due to the members of petitioner-union, the
granting of the same was a management prerogative, which, whenever management sees
necessary, may be withdrawn, unless they have been made a part of the wage or salary or
compensation of the employees.
The consequential question therefore that needs to be settled is if the subject benefits/entitlements,
which are bonuses, are demandable or not. Stated another way, can these bonuses be considered
part of the wage or salary or compensation making them enforceable obligations?
The Court does not believe so.
For a bonus to be enforceable, it must have been promised by the employer and expressly agreed
upon by the parties,30 or it must have had a fixed amount31 and had been a long and regular practice
on the part of the employer.32
The benefits/entitlements in question were never subjects of any express agreement between the
parties. They were never incorporated in the Collective Bargaining Agreement (CBA). As observed
by the Voluntary Arbitrator, the records reveal that these benefits/entitlements have not been
subjects of any express agreement between the union and the company, and have not yet been
incorporated in the CBA. In fact, the petitioner has not denied having made proposals with the
private respondent for the service award and the additional 35% premium pay to be made part of the
CBA.33
The Christmas parties and its incidental benefits, and the giving of cash incentive together with the
service award cannot be said to have fixed amounts. What is clear from the records is that over the
years, there had been a downtrend in the amount given as service award.34 There was also a
downtrend with respect to the holding of the Christmas parties in the sense that its location changed
from paid venues to one which was free of charge,35evidently to cut costs. Also, the grant of these
two aforementioned bonuses cannot be considered to have been the private respondent’s long and
regular practice. To be considered a "regular practice," the giving of the bonus should have been
done over a long period of time, and must be shown to have been consistent and deliberate.36 The
downtrend in the grant of these two bonuses over the years demonstrates that there is nothing
consistent about it. Further, as held by the Court of Appeals:
Anent the Christmas party and raffle of prizes, We agree with the Voluntary Arbitrator that the same
was merely sponsored by the respondent corporation out of generosity and that the same is
dependent on the financial performance of the company for a particular year…37
The additional 35% premium pay for work rendered during selected days of the Holy Week and
Christmas season cannot be held to have ripened into a company practice that the petitioner herein
have a right to demand. Aside from the general averment of the petitioner that this benefit had been
granted by the private respondent since time immemorial, there had been no evidence adduced that
it had been a regular practice. As propitiously observed by the Court of Appeals:
. . . [N]otwithstanding that the subject 35% premium pay was deliberately given and the same was in
excess of that provided by the law, the same however did not ripen into a company practice on
account of the fact that it was only granted for two (2) years and with the express reservation from
respondent corporation’s owner that it cannot continue to rant the same in view of the company’s
current financial situation.38
To hold that an employer should be forced to distribute bonuses which it granted out of kindness is
to penalize him for his past generosity.39
Having thus ruled that the additional 35% premium pay for work rendered during selected days of
the Holy Week and Christmas season, the holding of Christmas parties with its incidental benefits,
and the grant of cash incentive together with the service award are all bonuses which are neither
demandable nor enforceable obligations of the private respondent, it is not necessary anymore to
delve into the Revenues and Profitability Analysis for the years 1996-2000 submitted by the private
respondent.
On the alleged promotion of 15 members of the petitioner union that should warrant an increase in
their salaries, the factual finding of the Voluntary Arbitrator is revealing, viz:
… Considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with
respect to the 15 employees, the Daily Rated Union’s claim for promotional increase likewise fall[s]
there being no promotion established under the records at hand.40
WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the Court of
Appeals dated 06 March 2002 and 12 July 2002, respectively, which affirmed and upheld the
decision of the Voluntary Arbitrator, are hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
[G.R. No. L-54424. August 31, 1989.]
NASIPIT LUMBER COMPANY, INC., Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION,

EXECUTIVE LABOR ARBITER ILDEFONSO G. AGBUYA and JUANITO COLLADO, Respondents.
SYLLABUS
1. LABOR LAW; PRINCIPLE OF RES JUDICATA; NOT APPLICABLE TO LABOR RELATIONS

PROCEEDINGS. — The Court stated in Razon v. Inciong that the principle of res judicata
may not be invoked in labor relations proceedings considering that Section 5, Rule XIII,
Book V of the Rules and Regulations Implementing the Labor Code provides that such
proceedings are "non-litigious and summary in nature without regard to legal
technicalities obtaining in courts of law." Said pronouncement is in consonance with the
jurisprudential dictum that the doctrine of res judicata applies only to judicial or quasi-
judicial proceedings and not to the exercise of administrative powers.
2. ID.; EMPLOYEE-EMPLOYER RELATIONSHIP; APPLICATION FOR CLEARANCE TO

TERMINATE EMPLOYMENT; A SHIELD AGAINST ARBITRARY DISMISSALS. — The
requirement of a clearance to terminate employment was a creation of the Department
of Labor to carry out the Labor Code provisions on security of tenure and termination of
employment. The proceeding subsequent to the filing of an application for clearance to
terminate employment was outlined in Book V, Rule XIV of the Rules and Regulations
Implementing the Labor Code. The fact that said rule allowed a procedure for the
approval of the clearance with or without the opposition of the employee concerned
(Secs. 7 & 8), demonstrates the non-litigious and summary nature of the proceeding.
The clearance requirement was therefore necessary only as an expeditious shield
against arbitrary dismissals without the knowledge and supervision of the Department
of Labor. Hence, a duly approved clearance implied that the dismissal was legal or for
cause (Sec. 2).
3. ID.; ID.; ID.; WRITTEN CLEARANCE FROM THE DEPT. OF LABOR ABOLISHED AT THE
ENACTMENT OF BATAS PAMBANSA BLG. 130. — The requirement of a written clearance
from the Department prior to termination was abolished by the enactment of Batas
Pambansa Blg. 130 in 1981. Dismissal proceedings are now confined within the
establishments. The NLRC or the labor arbiter steps in only if the said decision is
contested by the employee.
4. ID.; ID.; LOSS OF CONFIDENCE AS GROUND FOR DISMISSAL; PROOF BEYOND

REASONABLE DOUBT NOT REQUIRED. — Proof beyond reasonable doubt of an
employee’s misconduct is not required when loss of confidence is the ground for
dismissal. It is sufficient if the employer has "some basis" to lose confidence or that the
employer has reasonable ground to believe or to entertain the moral conviction that the
employee concerned is responsible for the misconduct and that the nature of his
participation therein rendered him absolutely unworthy of the trust and confidence
demanded by his position.
5. ID.; ID.; ID.; SEPARATION PAY DISALLOWED. — We are aware of Collado’s almost
six years of service to the petitioner as well as the hardships resulting from the loss of
his job. Compassion dictates us to grant him separation pay as financial assistance but
we are bound by the ruling of the Court en banc in Philippine Long Distance Telephone
Company v. NLRC that henceforth separation pay shall be allowed as a measure of
social justice only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character.
DECISION
FERNAN, C.J.:
Petitioner Nasipit Lumber Company, Inc. (NALCO for brevity) is a domestic corporation
organized and existing under the laws of the Philippines. It is engaged in the business
of logging, lumber manufacturing and wood processing with field offices at Nasipit,
Agusan del Norte.
Private respondent Juanito Collado was employed by petitioner as a security guard on

September 9, 1970. He was assigned as 1st Sergeant of the NALCO Security Force at
Nasipit. In the course of Collado’s employment or on August 20, 1976, four (4) crates
of lawanit boards containing 1,000 panels were stolen from petitioner’s premises,
particularly the crating section of the Philippine Wallboard Corporation, a NALCO
affiliate.
Collado was implicated in the theft and was thereafter placed under preventive
suspension. On September 8, 1976, NALCO filed a petition (application) for clearance to
dismiss Collado with the Regional Office No. X of the Department of Labor in Cagayan
de Oro City. 1 On September 15, 1976, Collado filed an opposition to said application
for clearance to dismiss. The case was set for hearing the following day, September 16,
but Collado, despite notice, failed to appear. Hence, NALCO was allowed to present
evidence ex-parte.
On October 12, 1976, the application for clearance to dismiss was approved in an order
issued by Regional Office No. X Officer-in-Charge Roy V. Seneres. 2 The order was
based on the investigation report of the head of the Agusan Provincial Labor Office.
Collado filed a motion for the reconsideration of said order on the ground that he was
not given an opportunity to rebut the false findings or adduce evidence in his favor. He
further denied participation in the theft. 3
On December 7, 1976, the said Officer-in-Charge, through a subordinate, certified the

case to the Executive Labor Arbiter for compulsory arbitration. 4 Notice and summons
were issued. NALCO and Collado were then required to submit their respective position
papers under pain of a default judgment. 5 After a perusal of the records, Executive
Labor Arbiter Ildefonso G. Agbuya returned the case to the Regional Director of
Regional Office No. X in Cagayan de Oro City for whatever appropriate action he may
deem fit. A portion of the order dated February 25, 1977 of said Executive Labor Arbiter
reads:jgc:chanrobles.com.ph
"From all indications, we find that the Motion for Reconsideration should be treated as
an appeal to (sic) the Order of Roy V. Seneres, dated 12 October 1976, and as such it
should be elevated to the Secretary of Labor. Besides, we also fear that if we take
cognizance of this case, perhaps, we might reverse the order of the Regional Director
which, to our thinking, would only create a disturbance to the harmonious relation
existing between our two offices. . . ." 6
Consequently, the case was elevated to the Secretary of Labor. On June 7, 1978, Acting
Secretary of Labor Amado G. Inciong issued an order affirming the order of Officer-in-
Charge Roy V. Seneres thereby granting petitioner’s application for clearance to dismiss
Collado. 7
Instead of resorting to this Court on a petition for certiorari, 8 on October 9, 1978,

Collado filed a complaint before the Butuan District Labor Office, Butuan City, for unjust
dismissal and reinstatement with backwages and benefits. 9 Without going to specifics,
Collado averred therein that his termination from employment "was unfounded, unjust
and illegal, based as it was on uncorroborated and malicious suspicion, insinuation and
hearsay, and characterized by harassment."cralaw virtua1aw library
NALCO filed a motion to dismiss the complaint. It alleged that in view of Acting
Secretary Inciong’s aforesaid order, Collado did not have any sufficient cause of action
and therefore his complaint was a nuisance. 10 In its position paper, NALCO added that
because Acting Secretary Inciong’s order had become final and executory, the issue of
illegal dismissal had also become res judicata. 11
The case having been certified for compulsory arbitration, on January 29, 1979,
Executive Labor Arbiter Ildefonso G. Agbuya rendered a decision ordering NALCO to
reinstate Collado to his former position without backwages and without loss of seniority
rights "provided he has the necessary papers required of the service as security guard.
12
In his decision, the said labor arbiter stated that while NALCO complied with the
requirements of law when it obtained a clearance to terminate, he could not discount
the possibility that NALCO "knew or at least suspected that there was something wrong
with the manner in which the investigation was conducted" by the head of the Butuan
District Labor Office whose report was the basis of the approval of the clearance
application. 13 He conceded that NALCO acted in good faith in terminating Collado’s
employment and that it was NALCO’s prerogative to terminate such employment to
protect its business interests. However, he was constrained to arrive at said conclusion
ordering the reinstatement of Collado because of the order of the Nasipit municipal
judge in Criminal Case No. 2236 finding that there was nothing in the testimony of the
prosecution witness to establish the probable guilt of Collado who should therefore be
dropped from the complaint for qualified theft. He also took into consideration the
certification of the Agusan del Norte provincial fiscal showing that Collado had also been
dropped from the complaint in Criminal Case No. 1127.
Both parties appealed to the National Labor Relations Commission (NLRC). NALCO
asked for the reversal and revocation of the decision of the Executive Labor Arbiter
while Collado prayed for a modification of the appealed decision to include backwages
and benefits in addition to reinstatement.chanrobles.com.ph : virtual law library
On May 30, 1980, the NLRC First Division 14 rendered a decision modifying the
Executive Labor Arbiter’s decision by ordering Collado’s reinstatement to his former
position with two (2) years backwages without qualification and loss of seniority rights.
15 It agreed with the findings and conclusions of the Executive Labor Arbiter with
respect to the dropping of Collado from the criminal cases but it ruled that the rights of
Collado to backwages were not precluded by the findings that his termination was
effected in good faith. On the issue of res judicata, the NLRC
said:jgc:chanrobles.com.ph
"We cannot subscribe to the arguments of the respondent-appellant that the order of
the OIC of Region X which was subsequently approved by then Acting Secretary Amado
G. Inciong has become the law of the case. Res judicata cannot be validly invoked in
this case because the granting of the application for clearance which although
admittedly was secured with all the formalities required by law, did not resolve the case
on its merits. Records show that on September 16, 1976 the application to terminate
was scheduled for investigation before the Provincial Labor Office. Petitioner Collado
who was then the respondent in this case failed to appear although he was properly
notified of the scheduled investigation. On September 22, 1976, the Head of the
Agusan Provincial Office submitted its investigation report recommending the approval
of the application to terminate Juanito Collado without affording him another chance to
be heard and defend his side. It is very clear that the investigation conducted by the
Provincial Labor Office was hastily done and vitiated with infirmities. What it should
have done is to give the respondent (Collado) another chance to defend his case
considering the gravity of the offense imputed against him which if proved would cause
him his only means of livelihood." 16
NALCO filed the instant petition for certiorari and prohibition with prayer for the
issuance of a writ of preliminary injunction and/or a restraining order, seeking to annul
the NLRC decision and to prohibit its execution. It imputed to the NLRC lack or excess
of jurisdiction and grave and patent abuse of discretion amounting to lack of jurisdiction
in overturning the final decision of the Acting Secretary of Labor thereby denigrating
the time-honored doctrine of bar by former judgment or res judicata. It assailed
Collado’s reinstatement as improper inasmuch as the employer-employee relations of
the parties had been legally severed by the approval of the clearance to dismiss.
This Court dismissed the petition for lack of merit. 17 Upon receipt of the dismissal
resolution, NALCO filed an urgent motion for reconsideration based on the following
grounds: (a) it has a valid and meritorious cause of action due to the NLRC’s violation
of the principle of res judicata; (b) the occurrence of a supervening event consisting of
the remand of the records of the approved clearance to dismiss for execution and/or
appropriate action, 49 days after the promulgation of the herein questioned NLRC
decision; (c) the NLRC not only disregarded the final and executory decision of the
Acting Secretary of Labor but also the pronouncements of this Court on the curative
effects of appeals in labor cases wherein the issue of denial of procedural due process
had been raised; and (d) should the NLRC decision become final, a confusing situation
of two diametrically opposed decisions on the same issue of dismissal, would arise.
Understandably, Collado opposed the motion for reconsideration. On the other hand,
the Solicitor General, appearing for public respondents, filed a manifestation and
motion recommending that the urgent motion for reconsideration be granted. He stated
therein that the NLRC gravely abused its discretion because: (a) all the elements of res
judicata are present in this case: (b) the merits of Collado’s dismissal had been litigated
in the first case and Collado was therefore estopped from attacking the final decision of
the Acting Secretary of Labor either in the original action or in a new and subsequent
action; (c) not only the "formal aspect" in the application for clearance to terminate was
involved in the first case as the merits thereof were fully taken into consideration; and
(d) to allow a distinction between the two cases would result in splitting a cause of
action which would ultimately breed multiplicity of suits.chanrobles.com.ph : virtual law
library
On the strength of the Solicitor General’s manifestation and motion, the Court
reconsidered the dismissal resolution and gave due course to the instant petition
for certiorari and prohibition. 18
The two principal issues presented to this Court for adjudication are the applicability of
the principle of res judicata and the legality of Collado’s reinstatement with backwages
and without loss of seniority rights.
On the first issue, we hold that this is one of the cases wherein the pronouncement of
this Court thru Justice Vicente Abad Santos in Razon v. Inciong 19 applies. The Court
stated therein that the principle of res judicata may not be invoked in labor relations
proceedings considering that Section 5, Rule XIII, Book V of the Rules and Regulations
Implementing the Labor Code provides that such proceedings are "non-litigious and
summary in nature without regard to legal technicalities obtaining in courts of law."
Said pronouncement is in consonance with the jurisprudential dictum that the doctrine
of res judicata applies only to judicial or quasi-judicial proceedings and not to the
exercise of administrative powers. 20
The requirement of a clearance to terminate employment was a creation of the

Department of Labor to carry out the Labor Code provisions on security of tenure and
termination of employment. The proceeding subsequent to the filing of an application
for clearance to terminate employment was outlined in Book V, Rule XIV of the Rules
and Regulations Implementing the Labor Code. The fact that said rule allowed a
procedure for the approval of the clearance with or without the opposition of the
employee concerned (Secs. 7 & 8), demonstrates the non-litigious and summary nature
of the proceeding. The clearance requirement was therefore necessary only as an
expeditious shield against arbitrary dismissals without the knowledge and supervision of
the Department of Labor. Hence, a duly approved clearance implied that the dismissal
was legal or for cause (Sec. 2).
But even while said clearance was a requirement, employees who faced dismissal still
contested said applications not only through oppositions thereto but by filing separate
complaints for illegal dismissal. Usually, the investigation on the application and the
hearing on the complaint for illegal dismissal were conducted simultaneously. What
makes the present case unusual is that the employee filed the complaint for illegal
dismissal only after the Acting Secretary of Labor had affirmed the approval of the
application to terminate his employment. Nonetheless, we are unprepared to rule that
such action of the Acting Secretary of Labor barred Collado from filing the complaint for
illegal dismissal. If ever, the most that can be attributed against Collado is laches for
his failure to question seasonably the Acting Secretary of Labor’s affirmance of the
approval of the clearance to terminate. However, to count such laches against Collado
would be prejudicial to his rights as a laborer.chanroblesvirtualawlibrary
Be that as it may, the possibility that there would be two conflicting decisions on the
issue of Collado’s dismissal may now be considered academic. The requirement of a
written clearance from the Department prior to termination was abolished by the
enactment of Batas Pambansa Blg. 130 in 1981. Dismissal proceedings are now
confined within the establishments. The NLRC or the labor arbiter steps in only if the
said decision is contested by the employee. 21
On the legality of Collado’s dismissal, we hold that the NLRC abused its discretion in
directing his reinstatement with two (2) years backwages. The relation between
petitioner and Collado is now strained by the latter’s violation of the trust and
confidence reposed on him as a member of the security force, a position impressed with
a high degree of trust. 22 Proof beyond reasonable doubt of an employee’s misconduct
is not required when loss of confidence is the ground for dismissal. It is sufficient if the
employer has "some basis" to lose confidence or that the employer has reasonable
ground to believe or to entertain the moral conviction that the employee concerned is
responsible for the misconduct and that the nature of his participation therein rendered
him absolutely unworthy of the trust and confidence demanded by his position. 23
In this case, petitioner supported its application for clearance to terminate Collado’s
employment with sworn statements implicating him in the theft. 24 Such sworn
statements are sufficient to warrant the dismissal. On the other hand, the dropping of
the qualified theft charges against Collado is not binding upon a labor tribunal. 25 The
sensitivity of Collado’s job as a security guard vis-a-vis the cause of his dismissal cost
him his right to be rehired to the same position. Reinstatement is not proper where
termination of employment was due to breach of trust and confidence. 26
We are aware of Collado’s almost six years of service to the petitioner as well as the
hardships resulting from the loss of his job. Compassion dictates us to grant him
separation pay as financial assistance but we are bound by the ruling of the Court en
banc in Philippine Long Distance Telephone Company v. NLRC 27 that henceforth
separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character.
WHEREFORE, the decision of the NLRC is hereby reversed and set aside. Juanito
Collado’s dismissal from employment is hereby declared valid. No costs.
SO ORDERED.
G.R. No. 121439. January 25, 2000
AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO), Petitioner,

vs. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), RODOLFO
M. RETISO and 165 OTHERS,1Respondents.
DECISION
GONZAGA-REYES, J.:
In his petition for certiorari and prohibition with prayer for writ of preliminary injunction
and/or temporary restraining order, petitioner assails (a) the decision dated April 20,
1995, of public respondent National Labor Relations Commission (NLRC), Fourth (4th)
Division, Cebu City, in NLRC Case No. V-0143-94 reversing the February 25, 1994
decision of Labor Arbiter Dennis D. Juanon and ordering petitioner to pay wages in the
aggregate amount of P6,485,767.90 to private respondents, and (b) the resolution
dated July 28, 1995 denying petitioners motion for reconsideration, for having been
issued with grave abuse of discretion.
A temporary restraining order was issued by this Court on October 9, 1995 enjoining
public respondent from executing the questioned decision upon a surety bond posted by
petitioner in the amount of P6,400,000.00.2cräläwvirtualibräry
The facts as found by the Labor Arbiter are as follows:3cräläwvirtualibräry
"These are consolidated cases/claims for non-payment of salaries and wages, 13th
month pay, ECOLA and other fringe benefits as rice, medical and clothing allowances,
submitted by complainant Rodolfo M. Retiso and 163 others, Lyn E. Banilla and Wilson
B. Sallador against respondents Aklan Electric Cooperative, Inc. (AKELCO), Atty.
Leovigildo Mationg in his capacity as General Manager; Manuel Calizo, in his capacity as
Acting Board President, Board of Directors, AKELCO.
Complainants alleged that prior to the temporary transfer of the office of AKELCO from
Lezo Aklan to Amon Theater, Kalibo, Aklan, complainants were continuously performing
their task and were duly paid of their salaries at their main office located at Lezo,
Aklan.
That on January 22, 1992, by way of resolution of the Board of Directors of AKELCO
allowed the temporary transfer holding of office at Amon Theater, Kalibo, Aklan per
information by their Project Supervisor, Atty. Leovigildo Mationg, that their head office
is closed and that it is dangerous to hold office thereat;
Nevertheless, majority of the employees including herein complainants continued to

report for work at Lezo Aklan and were paid of their salaries.
That on February 6, 1992, the administrator of NEA, Rodrigo Cabrera, wrote a letter
addressed to the Board of AKELCO, that he is not interposing any objections to the
action taken by respondent Mationg
That on February 11, 1992, unnumbered resolution was passed by the Board of
AKELCO withdrawing the temporary designation of office at Kalibo, Aklan, and that the
daily operations must be held again at the main office of Lezo,
Aklan;4cräläwvirtualibräry
That complainants who were then reporting at the Lezo office from January 1992 up to
May 1992 were duly paid of their salaries, while in the meantime some of the
employees through the instigation of respondent Mationg continued to remain and work
at Kalibo, Aklan;
That from June 1992 up to March 18, 1993, complainants who continuously reported for
work at Lezo, Aklan in compliance with the aforementioned resolution were not paid
their salaries;
That on March 19, 1993 up to the present, complainants were again allowed to draw
their salaries; with the exception of a few complainants who were not paid their salaries
for the months of April and May 1993;
Per allegations of the respondents, the following are the facts:

1. That these complainants voluntarily abandoned their respective work/job
assignments, without any justifiable reason and without notifying the management of
the Aklan Electric Cooperative, Inc. (AKELCO), hence the cooperative suffered damages
and systems loss;
2. That the complainants herein defied the lawful orders and other issuances by the
General Manager and the Board of Directors of the AKELCO. These complainants were
requested to report to work at the Kalibo office x x x but despite these lawful orders of
the General Manager, the complainants did not follow and wilfully and maliciously
defied said orders and issuance of the General Manager; that the Board of Directors
passed a Resolution resisting and denying the claims of these complainants, x x x under
the principle of "no work no pay" which is legally justified; That these complainants
have "mass leave" from their customary work on June 1992 up to March 18, 1993 and
had a "sit-down" stance for these periods of time in their alleged protest of the
appointment of respondent Atty. Leovigildo Mationg as the new General Manager of the
Aklan Electric Cooperative, Inc. (AKELCO) by the Board of Directors and confirmed by
the Administrator of the National Electrification Administration (NEA), Quezon City; That
they engaged in " . . . slowdown mass leaves, sit downs, attempts to damage, destroy
or sabotage plant equipment and facilities of the Aklan Electric Cooperative, Inc.
(AKELCO)."
On February 25, 1994, a decision was rendered by Labor Arbiter Dennis D. Juanon
dismissing the complaints.5cräläwvirtualibräry
Dissatisfied with the decision, private respondents appealed to the respondent

Commission.
On appeal, the NLRCs Fourth Division, Cebu City,6 reversed and set aside the Labor
Arbiters decision and held that private respondents are entitled to unpaid wages from
June 16, 1992 to March 18, 1993, thus:7cräläwvirtualibräry
"The evidence on records, more specifically the evidence submitted by the

complainants, which are: the letter dated April 7, 1993 of Pedrito L. Leyson, Office
Manager of AKELCO (Annex "C"; complainants position paper; Rollo, p.102) addressed
to respondent Atty. Leovigildo T. Mationg; respondent AKELCO General Manager; the
memorandum of said Atty. Mationg dated 14 April 1993, in answer to the letter of
Pedrito Leyson (Annex "D" complainants position paper); as well as the computation of
the unpaid wages due to complainants (Annexes "E" to "E-3"; complainants position
paper, Rollo, pages 1024 to 1027) clearly show that complainants had rendered
services during the period - June 16, 1992 to March 18, 1993. The record is bereft of
any showing that the respondents had submitted any evidence, documentary or
otherwise, to controvert this asseveration of the complainants that services were
rendered during this period. Subjecting these evidences submitted by the complainants
to the crucible of scrutiny, We find that respondent Atty. Mationg responded to the
request of the Office Manager, Mr. Leyson, which We quote, to wit:
"Rest assured that We shall recommend your aforesaid request to our Board of
Directors for their consideration and appropriate action. This payment, however, shall
be subject, among others, to the availability of funds."
This assurance is an admission that complainants are entitled to payment for services
rendered from June 16, 1992 to March 18, 1993, specially so that the recommendation
and request comes from the office manager himself who has direct knowledge
regarding the services and performance of employees under him. For how could one
office manager recommend payment of wages, if no services were rendered by
employees under him. An office manager is the most qualified person to know the
performance of personnel under him. And therefore, any request coming from him for
payment of wages addressed to his superior as in the instant case shall be given
weight.
Furthermore, the record is clear that complainants were paid of their wages and other
fringe benefits from January, 1992 to May, 1992 and from March 19, 1993 up to the
time complainants filed the instant cases. In the interegnum, from June 16, 1992 to
March 18, 1993, complainants were not paid of their salaries, hence these claims. We
could see no rhyme nor reason in respondents refusal to pay complainants salaries
during this period when complainants had worked and actually rendered service to
AKELCO.
While the respondents maintain that complainants were not paid during this interim
period under the principle of "no work, no pay", however, no proof was submitted by
the respondents to substantiate this allegation. The labor arbiter, therefore, erred in
dismissing the claims of the complainants, when he adopted the "no work, no pay"
principle advanced by the respondents.
WHEREFORE, in view of the foregoing, the appealed decision dated February 25, 1994
is hereby Reversed and Set Aside and a new one entered ordering respondent AKELCO
to pay complainants their claims amounting to P6,485,767.90 as shown in the
computation (Annexes "E" to "E-3")."
A motion for reconsideration was filed by petitioner but the same was denied by public
respondent in a resolution dated July 28, 1995.8cräläwvirtualibräry
Petitioner brought the case to this Court alleging that respondent NLRC committed
grave abuse of discretion citing the following grounds:9cräläwvirtualibräry
1. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING

THE FACTUAL FINDINGS AND CONCLUSIONS OF THE LABOR ARBITER, AND
DISREGARDING THE EXPRESS ADMISSION OF PRIVATE RESPONDENTS THAT THEY
DEFIED PETITIONERS ORDER TRANSFERRING THE PETITIONERS OFFICIAL BUSINESS
OFFICE FROM LEZO TO KALIBO AND FOR THEM TO REPORT THEREAT.
2. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN CONCLUDING

THAT PRIVATE RESPONDENTS WERE REALLY WORKING OR RENDERING SERVICE ON
THE BASIS OF THE COMPUTATION OF WAGES AND THE BIASED RECOMMENDATION
SUBMITTED BY LEYSON WHO IS ONE OF THE PRIVATE RESPONDENTS WHO DEFIED
THE LAWFUL ORDERS OF PETITIONER.
3. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN CONSIDERING

THE ASSURANCE BY PETITIONERS GENERAL MANAGER MATIONG TO RECOMMEND THE
PAYMENT OF THE CLAIMS OF PRIVATE RESPONDENTS AS AN ADMISSION OF LIABILITY
OR A RECOGNITION THAT COMPENSABLE SERVICES WERE ACTUALLY RENDERED.
4. GRANTING THAT PRIVATE RESPONDENTS CONTINUED TO REPORT AT THE LEZO

OFFICE, IT IS STILL GRAVE ABUSE OF DISCRETION FOR PUBLIC RESPONDENT TO
CONSIDER THAT PETITIONER IS LEGALLY OBLIGATED TO RECOGNIZE SAID
CIRCUMSTANCE AS COMPENSABLE SERVICE AND PAY WAGES TO PRIVATE
RESPONDENTS FOR DEFYING THE ORDER FOR THEM TO REPORT FOR WORK AT THE
KALIBO OFFICE WHERE THE OFFICIAL BUSINESS AND OPERATIONS WERE
CONDUCTED.
5. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AND SERIOUS,

PATENT AND PALPABLE ERROR IN RULING THAT THE "NO WORK, NO PAY" PRINCIPLE
DOES NOT APPLY FOR LACK OF EVIDENTIARY SUPPORT WHEN PRIVATE REPONDENTS
ALREADY ADMITTED THAT THEY DID NOT REPORT FOR WORK AT THE KALIBO OFFICE.
6. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN ACCORDING

WEIGHT AND CREDIBILITY TO THE SELF-SERVING AND BIASED ALLEGATIONS OF
PRIVATE RESPONDENTS, AND ACCEPTING THEM AS PROOF, DESPITE THE
ESTABLISHED FACT AND ADMISSION THAT PRIVATE RESPONDENTS DID NOT REPORT
FOR WORK AT THE KALIBO OFFICE, OR THAT THEY WERE NEVER PAID FOR ANY
WAGES FROM THE TIME THEY DEFIED PETITIONERS ORDERS.
Petitioner contends that public respondent committed grave abuse of discretion in
finding that private respondents are entitled to their wages from June 16, 1992 to
March 18, 1993, thus disregarding the principle of "no work, no pay". It alleges that
private respondents stated in their pleadings that they not only objected to the transfer
of petitioners business office to Kalibo but they also defied the directive to report
thereat because they considered the transfer illegal. It further claims that private
respondents refused to recognize the authority of petitioners lawful officers and agents
resulting in the disruption of petitioners business operations in its official business office
in Lezo, AKlan, forcing petitioner to transfer its office from Lezo to Kalibo transferring
all its equipments, records and facilities; that private respondents cannot choose where
to work, thus, when they defied the lawful orders of petitioner to report at Kalibo,
private respondents were considered dismissed as far as petitioner was concerned.
Petitioner also disputes private respondents allegation that they were paid their salaries
from January to May 1992 and again from March 19, 1993 up to the present but not for
the period from June 1992 to March 18, 1993 saying that private respondents illegally
collected fees and charges due petitioner and appropriated the collections among
themselves for which reason they are claiming salaries only for the period from June
1992 to March 1993 and that private respondents were paid their salaries starting only
in April 1993 when petitioners Board agreed to accept private respondents back to work
at Kalibo office out of compassion and not for the reason that they rendered service at
the Lezo office. Petitioner also adds that compensable service is best shown by
timecards, payslips and other similar documents and it was an error for public
respondent to consider the computation of the claims for wages and benefits submitted
merely by private respondents as substantial evidence.
The Solicitor General filed its Manifestation in lieu of Comment praying that the decision
of respondent NLRC be set aside and payment of wages claimed by private respondents
be denied for lack of merit alleging that private respondents could not have worked for
petitioner's office in Lezo during the stated period since petitioner transferred its
business operation in Kalibo where all its records and equipments were brought; that
computations of the claims for wages and benefits submitted by private respondents to
petitioner is not proof of rendition of work. Filing its own Comment, public respondent
NLRC claims that the original and exclusive jurisdiction of this Court to review decisions
or resolutions of respondent NLRC does not include a correction of its evaluation of
evidence as factual issues are not fit subject for certiorari.
Private respondents, in their Comment, allege that review of a decision of NLRC in a

petition for certiorari under Rule 65 does not include the correctness of its evaluation of
the evidence but is confined to issues of jurisdiction or grave abuse of discretion and
that factual findings of administrative bodies are entitled to great weight, and accorded
not only respect but even finality when supported by substantial evidence. They claim
that petitioner's Board of Directors passed an unnumbered resolution on February 11,
1992 returning back the office to Lezo from Kalibo Aklan with a directive for all
employees to immediately report at Lezo; that the letter-reply of Atty. Mationg to the
letter of office manager Leyson that he will recommend the payment of the private
respondents' salary from June 16, 1992 to March 18, 1993 to the Board of Directors
was an admission that private respondents are entitled to such payment for services
rendered. Private respondents state that in appreciating the evidence in their favor,
public respondent NLRC at most may be liable for errors of judgment which, as
differentiated from errors of jurisdiction, are not within the province of the special civil
action of certiorari.
Petitioner filed its Reply alleging that review of the decision of public respondent is
proper if there is a conflict in the factual findings of the labor arbiter and the NLRC and
when the evidence is insufficient and insubstantial to support NLRCs factual findings;
that public respondents findings that private respondents rendered compensable
services were merely based on private respondents computation of claims which is self-
serving; that the alleged unnumbered board resolution dated February 11, 1992,
directing all employees to report to Lezo Office was never implemented because it was
not a valid action of AKELCOs legitimate board.
The sole issue for determination is whether or not public respondent NLRC committed
grave abuse of discretion amounting to excess or want of jurisdiction when it reversed
the findings of the Labor Arbiter that private respondents refused to work under the
lawful orders of the petitioner AKELCO management; hence they are covered by the "no
work, no pay" principle and are thus not entitled to the claim for unpaid wages from
June 16, 1992 to March 18, 1993.
We find merit in the petition.
At the outset, we reiterate the rule that in certiorari proceedings under Rule 65, this
Court does not assess and weigh the sufficiency of evidence upon which the labor
arbiter and public respondent NLRC based their resolutions. Our query is limited to the
determination of whether or not public respondent NLRC acted without or in excess of
its jurisdiction or with grave abuse of discretion in rendering the assailed
resolutions.10While administrative findings of fact are accorded great respect, and even
finality when supported by substantial evidence, nevertheless, when it can be shown
that administrative bodies grossly misappreciated evidence of such nature as to compel
a contrary conclusion, this court had not hesitated to reverse their factual
findings.11 Factual findings of administrative agencies are not infallible and will be set
aside when they fail the test of arbitrariness.12 Moreover, where the findings of NLRC
contradict those of the labor arbiter, this Court, in the exercise of its equity jurisdiction,
may look into the records of the case and reexamine the questioned
findings.13cräläwvirtualibräry
We find cogent reason, as shown by the petitioner and the Solicitor General, not to
affirm the factual findings of public respondent NLRC.
We do not agree with the finding that private respondents had rendered services from
June 16, 1992 to March 18, 1993 so as to entitle them to payment of wages. Public
respondent based its conclusion on the following: (a) the letter dated April 7, 1993 of
Pedrito L. Leyson, Office Manager of AKELCO addressed to AKELCOs General Manager,
Atty. Leovigildo T. Mationg, requesting for the payment of private respondents unpaid
wages from June 16, 1992 to March 18, 1993; (b) the memorandum of said Atty.
Mationg dated 14 April 1993, in answer to the letter request of Pedrito Leyson where
Atty. Mationg made an assurance that he will recommend such request; (c) the private
respondents own computation of their unpaid wages. We find that the foregoing does
not constitute substantial evidence to support the conclusion that private respondents
are entitled to the payment of wages from June 16, 1992 to March 18, 1993.
Substantial evidence is that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.14 These evidences relied upon by
public respondent did not establish the fact that private respondents actually rendered
services in the Kalibo office during the stated period.
The letter of Pedrito Leyson to Atty. Mationg was considered by public respondent as
evidence that services were rendered by private respondents during the stated period,
as the recommendation and request came from the office manager who has direct
knowledge regarding the services and performance of employees under him. We are
not convinced. Pedrito Leyson is one of the herein private respondents who are claiming
for unpaid wages and we find his actuation of requesting in behalf of the other private
respondents for the payment of their backwages to be biased and self-serving, thus not
credible.
On the other hand, petitioner was able to show that private respondents did not render
services during the stated period. Petitioners evidences show that on January 22, 1992,
petitioners Board of Directors passed a resolution temporarily transferring the Office
from Lezo, Aklan to Amon Theater, Kalibo, Aklan upon the recommendation of Atty.
Leovigildo Mationg, then project supervisor, on the ground that the office at Lezo was
dangerous and unsafe. Such transfer was approved by then NEA Administrator, Rodrigo
E. Cabrera, in a letter dated February 6, 1992 addressed to petitioners Board of
Directors.15 Thus, the NEA Administrator, in the exercise of supervision and control over
all electric cooperatives, including petitioner, wrote a letter dated February 6, 1992
addressed to the Provincial Director PC/INP Kalibo Aklan requesting for military
assistance for the petitioners team in retrieving the electric cooperatives equipments
and other removable facilities and/or fixtures consequential to the transfer of its
principal business address from Lezo to Kalibo and in maintaining peace and order in
the cooperatives coverage area.16 The foregoing establishes the fact that the
continuous operation of the petitioners business office in Lezo Aklan would pose a
serious and imminent threat to petitioners officials and other employees, hence the
necessity of temporarily transferring the operation of its business office from Lezo to
Kalibo. Such transfer was done in the exercise of a management prerogative and in the
absence of contrary evidence is not unjustified. With the transfer of petitioners business
office from its former office, Lezo, to Kalibo, Aklan, its equipments, records and
facilities were also removed from Lezo and brought to the Kalibo office where
petitioners official business was being conducted; thus private respondents allegations
that they continued to report for work at Lezo to support their claim for wages has no
basis.
Moreover, private respondents in their position paper admitted that they did not report
at the Kalibo office, as Lezo remained to be their office where they continuously
reported, to wit:17cräläwvirtualibräry
"On January 22, 1991 by way of a resolution of the Board of Directors of AKELCO it
allowed the temporary holding of office at Amon Theater, Kalibo, Aklan, per information
by their project supervisor, Atty. Leovigildo Mationg that their head office is closed and
that it is dangerous to hold office thereat.
Nevertheless, majority of the employees including the herein complainants, continued

to report for work at Lezo, Aklan and were paid of their salaries.
xxx
The transfer of office from Lezo, Aklan to Kalibo, Aklan being illegal for failure to comply
with the legal requirements under P.D. 269, the complainants remained and continued
to work at the Lezo Office until they were illegally locked out therefrom by the
respondents. Despite the illegal lock out however, complainants continued to report
daily to the location of the Lezo Office, prepared to continue in the performance of their
regular duties.
Complainants thus could not be considered to have abandoned their work as Lezo
remained to be their office and not Kalibo despite the temporary transfer thereto.
Further the fact that they were allowed to draw their salaries up to May, 1992 is an
acknowledgment by the management that they are working during the period.
xxx
It must be pointed out that complainants worked and continuously reported at Lezo
office despite the management holding office at Kalibo. In fact, they were paid their
wages before it was withheld and then were allowed to draw their salaries again on
March 1993 while reporting at Lezo up to the present.
Respondents acts and payment of complainants salaries and again from March 1993 is
an unequivoecognition on the part of respondents that the work of complainants is
continuing and uninterrupted and they are therefore entitled to their unpaid wages for
the period from June 1992 to March 1993."
The admission is detrimental to private respondents cause. Their excuse is that the
transfer to Kalibo was illegal but we agree with the Labor Arbiter that it was not for
private respondents to declare the managements act of temporarily transferring the
AKELCO office to Kalibo as an illegal act. There is no allegation nor proof that the
transfer was made in bad faith or with malice. The Labor Arbiter correctly rationalized in
its decision as follows:18cräläwvirtualibräry
"We do not subscribe to complainants theory and assertions. They, by their own
allegations, have unilaterally committed acts in violation of managements/respondents
directives purely classified as management prerogative. They have taken amongst
themselves declaring managements acts of temporarily transferring the holding of the
AKELCO office from Lezo to Kalibo, Aklan as illegal. It is never incumbent upon
themselves to declare the same as such. It is lodged in another forum or body legally
mantled to do the same. What they should have done was first to follow managements
orders temporarily transferring office for it has the first presumption of legality. Further,
the transfer was only temporary. For:
"The employer as owner of the business, also has inherent rights, among which are the
right to select the persons to be hired and discharge them for just and valid cause; to
promulgate and enforce reasonable employment rules and regulations and to modify,
amend or revoke the same; to designate the work as well as the employee or
employees to perform it; to transfer or promote employees; to schedule, direct, curtail
or control company operations; to introduce or install new or improved labor or money
savings methods, facilities or devices; to create, merge, divide, reclassify and abolish
departments or positions in the company and to sell or close the business.
xxx
Even as the law is solicitous of the welfare of the employees it must also protect the
right of an employer to exercise what are clearly management prerogatives. The free
will of management to conduct its own business affairs to achieve its purpose can not
be denied. The transfer of assignment of a mediepresentative from Manila to the
province has therefore been held lawful where this was demanded by the requirements
of the drug companys marketing operations and the former had at the time of his
employment undertaken to accept assignment anywhere in the Philippines. (Abbot
Laboratories (Phils.), Inc., et al. vs. NLRC, et al., G.R. No. L-76959, Oct. 12, 1987).
It is the employers prerogative to abolish a position which it deems no longer

necessary, and the courts, absent any findings of malice on the part of the
management, cannot erase that initiative simply to protect the person holding office
(Great Pacific Life Assurance Corporation vs. NLRC, et al., G.R. No. 88011, July 30,
1990)."
Private respondents claim that petitioners Board of Directors passed an unnumbered

resolution dated February 11, 1992 returning back the office from its temporary office
in Kalibo to Lezo. Thus, they did not defy any lawful order of petitioner and were
justified in continuing to remain at Lezo office. This allegation was controverted by
petitioner in its Reply saying that such unnumbered resolution was never implemented
as it was not a valid act of petitioners Board. We are convinced by petitioners argument
that such unnumbered resolution was not a valid act of petitioners legitimate Board
considering the subsequent actions taken by the petitioners Board of Directors decrying
private respondents inimical act and defiance, to wit (1) Resolution No. 411, s. of 1992
on September 9, 1992, dismissing all AKELCO employees who were on illegal strike and
who refused to return to work effective January 31, 1992 despite the directive of the
NEA project supervisor and petitioners acting general manager;19 (2) Resolution No.
477, s. of 1993 dated March 10, 1993 accepting back private respondents who staged
illegal strike, defied legal orders and issuances, out of compassion, reconciliation,
Christian values and humanitarian reason subject to the condition of "no work, no
pay"20(3) Resolution No. 496, s. of 1993 dated June 4, 1993, rejecting the demands of
private respondents for backwages from June 16, 1992 to March 1993 adopting the
policy of "no work, no pay" as such demand has no basis, and directing the COOP Legal
Counsel to file criminal cases against employees who misappropriated collections and
officers who authorized disbursements of funds without legal authority from the NEA
and the AKELCO Board.21 If indeed there was a valid board resolution transferring back
petitioners office to Lezo from its temporary office in Kalibo, there was no need for the
Board to pass the above-cited resolutions.
We are also unable to agree with public respondent NLRC when it held that the
assurance made by Atty. Mationg to the letter-request of office manager Leyson for the
payment of private respondents wages from June 1992 to March 1993 was an
admission on the part of general manager Mationg that private respondents are indeed
entitled to the same. The letter reply of Atty. Mationg to Leyson merely stated that he
will recommend the request for payment of backwages to the Board of Directors for
their consideration and appropriate action and nothing else, thus, the ultimate approval
will come from the Board of Directors. We find well-taken the argument advanced by
the Solicitor General as follows:22cräläwvirtualibräry
The allegation of private respondents that petitioner had already approved payment of
their wages is without basis. Mationgs offer to recommend the payment of private
respondents' wages is hardly approval of their claim for wages. It is just an undertaking
to recommend payment. Moreover, the offer is conditional. It is subject to the condition
that petitioners Board of Directors will give its approval and that funds were available.
Mationgs reply to Leysons letter for payment of wages did not constitute approval or
assurance of payment. The fact is that, the Board of Directors of petitioner rejected
private respondents demand for payment (Board Resolution No. 496, s. 1993).
We are accordingly constrained to overturn public respondents findings that petitioner

is not justified in its refusal to pay private respondents wages and other fringe benefits
from June 16, 1992 to March 18, 1993; public respondents stated that private
respondents were paid their salaries from January to May 1992 and again from March
19, 1993 up to the present. As cited earlier, petitioners Board in a Resolution No. 411
dated September 9, 1992 dismissed private respondents who were on illegal strike and
who refused to report for work at Kalibo office effective January 31, 1992; since no
services were rendered by private respondents they were not paid their salaries. Private
respondents never questioned nor controverted the Resolution dismissing them and
nowhere in their Comment is it stated that they questioned such dismissal. Private
respondents also have not rebutted petitioners claim that private respondents illegally
collected fees and charges due petitioner and appropriated the collections among
themselves to satisfy their salaries from January to May 1992, for which reason, private
respondents are merely claiming salaries only for the period from June 16, 1992 to
March 1993.
Private respondents were dismissed by petitioner effective January 31, 1992 and were
accepted back by petitioner, as an act of compassion, subject to the condition of "no
work, no pay" effective March 1993 which explains why private respondents were
allowed to draw their salaries again. Notably, the letter-request of Mr. Leyson for the
payment of backwages and other fringe benefits in behalf of private respondents was
made only in April 1993, after a Board Resolution accepting them back to work out of
compassion and humanitarian reason. It took private respondents about ten months
before they requested for the payment of their backwages, and the long inaction of
private respondents to file their claim for unpaid wages cast doubts as to the veracity of
their claim.
The age-old rule governing the relation between labor and capital, or management and
employee of a "fair days wage for a fair days labor" remains as the basic factor in
determining employees wages. If there is no work performed by the employee there
can be no wage or pay unless, of course, the laborer was able, willing and ready to
work but was illegally locked out, suspended or dismissed,23 or otherwise illegally
prevented from working,24 a situation which we find is not present in the instant case.
It would neither be fair nor just to allow private respondents to recover something they
have not earned and could not have earned because they did not render services at the
Kalibo office during the stated period.
Finally, we hold that public respondent erred in merely relying on the computations of
compensable services submitted by private respondents. There must be competent
proof such as time cards or office records to show that they actually rendered
compensable service during the stated period to entitle them to wages. It has been
established that the petitioners business office was transferred to Kalibo and all its
equipments, records and facilities were transferred thereat and that it conducted its
official business in Kalibo during the period in question. It was incumbent upon private
respondents to prove that they indeed rendered services for petitioner, which they
failed to do. It is a basic rule in evidence that each party must prove his affirmative
allegation. Since the burden of evidence lies with the party who asserts the affirmative
allegation, the plaintiff or complainant has to prove his affirmative allegations in the
complaint and the defendant or the respondent has to prove the affirmative allegation
in his affirmative defenses and counterclaim.25cräläwvirtualibräry
WHEREFORE, in view of the foregoing, the petition for CERTIORARI is GRANTED.

Consequently the decision of public respondent NLRC dated April 20, 1995 and the
Resolution dated July 28, 1995 in NLRC Case No. V-0143-94 are hereby REVERSED and
SET ASIDE for having been rendered with grave abuse of discretion amounting to lack
or excess of jurisdiction. Private respondents complaint for payment of unpaid wages
before the Labor Arbiter is DISMISSED.
SO ORDERED.
G.R. No. 111474

FIVE J TAXI v. NLRC
REGALADO, J.:
Petitioners Five J Taxi and/or Juan S. Armamento filed this special civil action for certiorari to
annul the decision[1] of respondent National Labor Relations Commission (NLRC) ordering
petitioners to pay private respondents Domingo Maldigan and Gilberto Sabsalon their accumulated
deposits and car wash payments, plus interest thereon at the legal rate from the date of promulgation
of judgment to the date of actual payment, and 10% of the total amount as and for attorney's fees.
We have given due course to this petition for, while to the cynical the de minimis amounts involved
should not impose upon the valuable time of this Court, we find therein a need to clarify some issues
the resolution of which are important to small wage earners such as taxicab drivers. As we have
heretofore repeatedly demonstrated, this Court does not exist only for the rich or the powerful, with
their reputed monumental cases of national impact. It is also the Court of the poor or the
underprivileged, with the actual quotidian problems that beset their individual lives.
Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi
drivers[2] and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from the
daily "boundary" of P700.00 for air-conditioned taxi or P450.00 for non-airconditioned taxi, they
were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer for
any deficiency in their "boundary," for every actual working day.
In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already failed
to report for work for unknown reasons. Later, petitioners learned that he was working for "Mine of
Gold" Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on September
6, 1983, he was held up by his armed passenger who took all his money and thereafter stabbed him.
He was hospitalized and after his discharge, he went to his home province to recuperate.
In January 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms and
conditions as when he was first employed, but his working schedule was made on an "alternative
basis," that is, he drove only every other day. However, on several occasions, he failed to report for
work during his schedule.
On September 22, 1991, Sabsalon failed to remit his "boundary" of P700.00 for the previous day.
Also, he abandoned his taxicab in Makati without fuel refill worth P300.00. Despite repeated
requests of petitioners for him to report for work, he adamantly refused. Afterwards it was revealed
that he was driving a taxi for "Bulaklak Company."
Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash deposits
for 2 years, but herein petitioners told him that not a single centavo was left of his deposits as these
were not even enough to cover the amount spent for the repairs of the taxi he was driving. This was
allegedly the practice adopted by petitioners to recoup the expenses incurred in the repair of their
taxicab units. When Maldigan insisted on the refund of his deposit, petitioners terminated his
services. Sabsalon, on his part, claimed that his termination from employment was effected when he
refused to pay for the washing of his taxi seat covers.
On November 27, 1991, private respondents filed a complaint with the Manila Arbitration Office of
the National Labor Relations Commission charging petitioners with illegal dismissal and illegal
deductions. That complaint was dismissed, the labor arbiter holding that it took private respondents
two years to file the same and such unreasonable delay was not consistent with the natural reaction
of a person who claimed to be unjustly treated, hence the filing of the case could be interpreted as a
mere afterthought.
Respondent NLRC concurred in said findings, with the observation that private respondents failed to
controvert the evidence showing that Maldigan was employed by "Mine of Gold" Taxi Company from
February 10, 1987 to December 10, 1990; that Sabsalon abandoned his taxicab on September 1, 1990;
and that they voluntarily left their jobs for similar employment with other taxi operators. It,
accordingly, affirmed the ruling of the labor arbiter that private respondents' services were not
illegally terminated. It, however, modified the decision of the labor arbiter by ordering petitioners to
pay private respondents the awards stated at the beginning of this resolution.
Petitioners' motion for reconsideration having been denied by the NLRC, this petition is now before
us imputing grave abuse of discretion on the part of said public respondent.
This Court has repeatedly declared that the factual findings of quasi-judicial agencies like the NLRC,
which have acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only respect but, at times, finality if such findings are supported by substantial
evidence.[3] Where, however, such conclusions are not supported by the evidence, they must be
struck down for being whimsical and capricious and, therefore, arrived at with grave abuse of
discretion.[4]
Respondent NLRC held that the P15.00 daily deposits made by respondents to defray any shortage in
their "boundary" is covered by the general prohibition in Article 114 of the Labor Code against
requiring employees to make deposits, and that there is no showing that the Secretary of Labor has
recognized the same as a "practice" in the taxi industry. Consequently, the deposits made were illegal
and the respondents must be refunded therefor.
Article 114 of the Labor Code provides as follows:
"Article 114. Deposits for loss or damage. - No employer shall require his worker to make deposits
from which deductions shall be made for the reimbursement of loss of or damage to tools, materials;
or equipment supplied by the employer, except when the employer is engaged in such trades,
occupations or business where the practice of making deposits is a recognized one, or is necessary or
desirable as determined by the Secretary of Labor in appropriate rules and regulations."
It can be deduced therefrom that the said article provides the rule on deposits for loss or damage to
tools, materials or equipments supplied by the employer. Clearly, the same does not apply to or
permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his
"boundary." Also, when private respondents stopped working for petitioners, the alleged purpose for
which petitioners required such unauthorized deposits no longer existed. In other case, any balance
due to private respondents after proper accounting must be returned to them with legal interest.
However, the unrebutted evidence with regard to the claim of Sabsalon is as follows:
DEPOSITS SHORTAGES
II. YEAR A. VALES
1987 P1,403.00 P 567.00 P1,000.00
1988 720.00 760.00 200.00
1989 686.00 130.00 1,500.00
1990 605.00 570.00 --
1991 165.00 2,300.00 --
P3,579.00 P4,327.00 P2,700.00
The foregoing accounting shows that from 1987-1991, Sabsalon was able to withdraw his deposits
through vales or he incurred shortages, such that he is even indebted to petitioners in the amount of
P3,448.00. With respect to Maldigan's deposits, nothing was mentioned questioning the same even
in the present petition. We accordingly agree with the recommendation of the Solicitor General that
since the evidence shows that he had not withdrawn the same, he should be reimbursed the amount
of his accumulated cash deposits.[5]
On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent the
issue of illegal deductions, there is no dispute that as a matter of practice in the taxi industry, after a
tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean
condition when he took it out, and as claimed by the respondents (petitioners in the present case),
complainant(s) (private respondents herein) were made to shoulder the expenses for washing, the
amount doled out was paid directly to the person who washed the unit, thus we find nothing illegal in
this practice, much more (sic) to consider the amount paid by the driver asillegal deduction in the
context of the law."[6] (Words in parentheses added.)
Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments
they made. It will be noted that there was nothing to prevent private respondents from cleaning the
taxi units themselves, if they wanted to save their P20.00. Also, as the Solicitor General correctly
noted, car washing after a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair
play.
On the last issue of attorney's fees or service fees for private respondents' authorized representative,
Article 222 of the Labor Code, as amended by Section 3 of Presidential Decree No. 1691, states that
non-lawyers may appear before the NLRC or any labor arbiter only (1) if they represent themselves,
or (2) if they represent their organization or the members thereof. While it may be true that
Guillermo H. Pulia was the authorized representative of private respondents, he was a non-lawyer
who did not fall in either of the foregoing categories. Hence, by clear mandate of the law, he is not
entitled to attorney's fees.
Furthermore, the statutory rule that an attorney shall be entitled to have and recover from his client
a reasonable compensation for his services[7] necessarily imports the existence of an attorney-client
relationship as a condition for the recovery of attorney's fees, and such relationship cannot exist
unless the client's representative is a lawyer.[8]
WHEREFORE, the questioned judgment of respondent National Labor Relations Commission is
hereby MODIFIED by deleting the awards for reimbursement of car wash expenses and attorney's
fees and directing said public respondent to order and effect the computation and payment by
petitioners of the refund for private respondent Domingo Maldigan's deposits, plus legal interest
thereon from the date of finality of this resolution up to the date of actual payment thereof.
SO ORDERED.
[G.R. No. 80039. April 18, 1989.]
ERNESTO M. APODACA, Petitioner, v. NATIONAL LABOR RELATIONS

COMMISSION, JOSE M. MIRASOL, AND INTRANS PHILS., INC., Respondents.
Diego O. Untalan for Petitioner.
The Solicitor General for public Respondent.
Barcelona, Perlas, Joven & Academia Law Offices for Private Respondents.
SYLLABUS
1. LABOR LAW; NATIONAL LABOR RELATIONS COMMISSION; HAS NO JURISDICTION OVER INTRA-
CORPORATE DISPUTE BETWEEN STOCKHOLDER AND THE CORPORATION. — The NLRC has no jurisdiction to
determine such intra-corporate dispute between the stockholder and the corporation as in the matter of
unpaid subscriptions. This controversy is within the exclusive jurisdiction of the Securities and Exchange
Commission.
2. COMMERCIAL LAW; CORPORATION; UNPAID SUBSCRIPTION; NOT DUE AND DEMANDABLE UNTIL A CALL
FOR PAYMENT IS MADE BY THE CORPORATION. — The unpaid subscriptions are not due and payable until a
call is made by the corporation for payment. Private respondents have not presented a resolution of the
board of directors of respondent corporation calling for the payment of the unpaid subscriptions. It does not
even appear that a notice of such call has been sent to petitioner by the respondent corporation.
3. LABOR LAW; WAGE DEDUCTION; INSTANCES WHEN ALLOWED. — The NLRC cannot validly set it off
against the wages and other benefits due petitioner. Article 113 of the Labor Code allows such a deduction
from the wages of the employees by the employer, only in three instances, to wit: "ART. 113. Wage
Deduction. — No employer, in his own behalf or in behalf of any person, shall make any deduction from the
wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by him as premium on the insurance.
(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by
the employer or authorized in writing by the individual worker concerned; and (c) In cases where the
employer is authorized by law or regulations issued by the Secretary of Labor."
DECISION
GANCAYCO, J.:
Does the National Labor Relations Commission (NLRC) have jurisdiction to resolve a claim for non-payment
of stock subscriptions to a corporation? Assuming that it has, can an obligation arising therefrom be offset
against a money claim of an employee against the employer? These are the issues brought to this court
through this petition for review of a decision of the NLRC dated September 18, 1987.
The only remedy provided for by law from such a decision is a special civil action for certiorari under Rule 65
of the Rules of Court based on jurisdictional grounds or on alleged grave abuse of discretion amounting to
lack or excess of jurisdiction, not by way of an appeal by certiorari. Nevertheless, in the interest of justice,
this petition is treated as a special civil action for certiorari.
Petitioner was employed in respondent corporation. On August 28, 1985, respondent Jose M. Mirasol
persuaded petitioner to subscribe to P1,500 shares of respondent corporation it P100.00 per share or a total
of P150,000.00. He made an initial payment of P37,500.00. On September 1, 1975, petitioner was
appointed President and General Manager of the respondent corporation. However, on January 2, 1986, he
resigned.
On December 19, 1986, petitioner instituted with the NLRC a complaint against private respondents for the
payment of his unpaid wages, his cost of living allowance, the balance of his gasoline and representation
expenses and his bonus compensation for 1986. Petitioner and private respondents submitted their position
papers to the labor arbiter. Private respondents admitted that there is due to petitioner the amount of
P17,060.07 but this was applied to the unpaid balance of his subscript in the amount of P95,439.93.
Petitioner questioned the set-off alleging that there was no call or notice for the payment of unpaid
subscription and that, accordingly, the alleged obligation is not enforceable.
In a decision dated April 28, 1987, the labor arbiter sustained the claim of petitioner for P17,060.07 on the
ground that the employer has no right to withhold payment of wages already earned under Article 103 of
the Labor Code. Upon the appeal of the private respondents to public respondent NLRC, the decision of the
labor arbiter was reversed in a decision dated September 18, 1987. The NLRC held that a stockholder who
fails to pay his unpaid subscription on call becomes a debtor of the corporation and that the set off of said
obligation against the wages and others due to petitioner is not contrary to law, morals and public policy.
chanrobles. com:cha nrob les.com. ph
chan rob les vi rtualaw lib rary
Hence, the instant petition.
The petition is impressed with merit.
Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder and
the corporation as in the matter of unpaid subscriptions. This controversy is within the exclusive jurisdiction
of the Securities and Exchange Commission. 1
Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the said subject matter under
the circumstances of this case, the unpaid subscriptions are not due and payable until a call is made by the
corporation for payment. 2 Private respondents have not presented a resolution of the board of directors of
respondent corporation calling for the payment of the unpaid subscriptions. It does not even appear that a
notice of such call has been sent to petitioner by the respondent corporation.
What the records show is that the respondent corporation deducted the amount due to petitioner from the
amount receivable from him for the unpaid subscriptions. 3 No doubt such set-off was without lawful basis,
if not premature. As there was no notice or call for the payment of unpaid subscriptions, the same is not yet
due and payable.
Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC cannot
validly set it off against the wages and other benefits due petitioner. Article 113 of the Labor Code allows
such a deduction from the wages of the employees by the employer, only in three instances, to wit: jgc:chanroble s.com.p h
"ART. 113. Wage Deduction. — No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except: c hanrob1es vi rt ual 1aw li bra ry
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by
the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor." 4
WHEREFORE, the petition is GRANTED and the questioned decision of the NLRC dated September 18, 1987
is hereby set aside and another judgment is hereby rendered ordering private respondents to pay petitioner
the amount P17,060.07 plus legal interest computed from the time of the filing of the complaint on
December 19, 1986, with costs against private respondents.
SO ORDERED.
G. WOMEN EMPLOYEES
[G.R. NO. 166379 October 20, 2005]
LAKPUE DRUG, INC., LA CROESUS PHARMA, INC., TROPICAL BIOLOGICAL

PHILS., INC. (all known as LAKPUE GROUP OF COMPANIES) and/or ENRIQUE
CASTILLO, JR., Petitioners, v. MA. LOURDES BELGA, Respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us is a Petition for Review of the July 28, 2004 Decision1 of the Court of Appeals
in CA-G.R. SP No. 80616 which reversed and set aside the April 14, 2003 Decision2 of
the National Labor Relations Commission (NLRC) in NLRC NCR 00-09-04981-01; and its
December 17, 2004 Resolution3 denying the motion for reconsideration.
Petitioner Tropical Biological Phils., Inc. (Tropical), a subsidiary of Lakpue Group of

Companies, hired on March 1, 1995 respondent Ma. Lourdes Belga (Belga) as
bookkeeper and subsequently promoted as assistant cashier. On March 19, 2001, Belga
brought her daughter to the Philippine General Hospital (PGH) for treatment of
broncho-pneumonia. On her way to the hospital, Belga dropped by the house of
Marylinda O. Vegafria, Technical Manager of Tropical, to hand over the documents she
worked on over the weekend and to give notice of her emergency leave.
While at the PGH, Belga who was pregnant experienced labor pains and gave birth on
the same day. On March 22, 2001, or two days after giving birth, Tropical summoned
Belga to report for work but the latter replied that she could not comply because of her
situation. On March 30, 2001, Tropical sent Belga another memorandum ordering her to
report for work and also informing her of the clarificatory conference scheduled on April
2, 2001. Belga requested that the conference be moved to April 4, 2001 as her
newborn was scheduled for check-up on April 2, 2001. When Belga attended the
clarificatory conference on April 4, 2001, she was informed of her dismissal effective
that day.
Belga thus filed a complaint with the Public Assistance and Complaint Unit (PACU) of
the Department of Labor and Employment (DOLE). Attempts to settle the case failed,
hence the parties brought the case before the NLRC-NCR.
Tropical, for its part, averred that it hired Belga on March 1, 1995 as a bookkeeper and
later promoted to various positions the last of which was as "Treasury Assistant".
Tropical claimed that this position was not merely clerical because it included duties
such as assisting the cashier in preparing deposit slips, bills purchased, withdrawal
slips, provisional receipts, incoming and outgoing bank transactions, postdated checks,
supplier's checklist and issuance of checks, authorities to debit and doing liaison work
with banks.
Tropical also alleged that Belga concealed her pregnancy from the company. She did
not apply for leave and her absence disrupted Tropical's financial transactions. On
March 21, 2001, it required Belga to explain her unauthorized absence and on March
30, 2001, it informed her of a conference scheduled on April 2, 2001. Tropical claimed
that Belga refused to receive the second memorandum and did not attend the
conference. She reported for work only on April 4, 2001 where she was given a chance
to explain.
On April 17, 2001, Tropical terminated Belga on the following grounds: (1) Absence
without official leave for 16 days; (2) Dishonesty, for deliberately concealing her
pregnancy; (3) Insubordination, for her deliberate refusal to heed and comply with the
memoranda sent by the Personnel Department on March 21 and 30, 2001 respectively.4
The Labor Arbiter ruled in favor of Belga and found that she was illegally dismissed,
thus:
WHEREFORE, the termination of complainant is hereby declared illegal. ACCORDINGLY,

she should be reinstated with full backwages, which as of May 31, 2002, now amounts
to P122, 248.71.
Ten (10%) percent of the total monetary award as attorney's fees is likewise ordered.
SO ORDERED.5
Tropical appealed to the NLRC, which reversed the findings of the labor arbiter in its
Decision dated April 14, 2003, thus:
WHEREFORE, in the light of the foregoing, the assailed Decision is REVERSED and SET
ASIDE. We thereby render judgment:
(1) declaring complainant-appellee's dismissal valid; andcralawlibrary
(2) nullifying complainant-appellee's monetary claims.
SO ORDERED.6
Upon denial of the motion for reconsideration on September 24, 2003,7Belga filed a
petition for certiorari with the Court of Appeals which found in favor of Belga, thus:
WHEREFORE, premises considered, the Decision promulgated on April 14, 2003 and the
Resolution promulgated on September 24, 2003 of the public respondent National Labor
Relations Commission are hereby REVERSED and SET ASIDE. The decision of the Labor
Arbiter dated June 15, 2002 is hereby REINSTATED.
SO ORDERED.8
Hence, Tropical filed the instant petition claiming that:
I.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN HOLDING THAT

RESPONDENT WAS ILLEGALLY DISMISSED.
II.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN DISREGARDING

THE FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION.9
The petition lacks merit.
Tropical's ground for terminating Belga is her alleged concealment of pregnancy. It

argues that such non-disclosure is tantamount to dishonesty and impresses upon this
Court the importance of Belga's position and the gravity of the disruption her
unexpected absence brought to the company. Tropical also charges Belga with
insubordination for refusing to comply with its directives to report for work and to
explain her absence.
Tropical cites the following paragraphs of Article 282 of the Labor Code as legal basis
for terminating Belga:
Article 282. Termination by employer. - An employer may terminate an employment for

any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
....
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative; ....
We have defined misconduct as a transgression of some established and definite rule of

action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment. The misconduct to be serious must be of such
grave and aggravated character and not merely trivial and unimportant. Such
misconduct, however serious, must, nevertheless, be in connection with the employee's
work to constitute just cause for his separation.10
In the instant case, the alleged misconduct of Belga barely falls within the situation
contemplated by the law. Her absence for 16 days was justified considering that she
had just delivered a child, which can hardly be considered a forbidden act, a dereliction
of duty; much less does it imply wrongful intent on the part of Belga. Tropical harps on
the alleged concealment by Belga of her pregnancy. This argument, however, begs the
question as to how one can conceal a full-term pregnancy. We agree with respondent's
position that it can hardly escape notice how she grows bigger each day. While there
may be instances where the pregnancy may be inconspicuous, it has not been
sufficiently proven by Tropical that Belga's case is such.
Belga's failure to formally inform Tropical of her pregnancy can not be considered as
grave misconduct directly connected to her work as to constitute just cause for her
separation.
The charge of disobedience for Belga's failure to comply with the memoranda must
likewise fail. Disobedience, as a just cause for termination, must be willful or
intentional. Willfulness is characterized by a wrongful and perverse mental attitude
rendering the employee's act inconsistent with proper subordination.11 In the instant
case, the memoranda were given to Belga two days after she had given birth. It was
thus physically impossible for Belga to report for work and explain her absence, as
ordered.
Tropical avers that Belga's job as Treasury Assistant is a position of responsibility since
she handles vital transactions for the company. It adds that the nature of Belga's work
and the character of her duties involved utmost trust and confidence.
Time and again, we have recognized the right of employers to dismiss employees by
reason of loss of trust and confidence. However, we emphasize that such ground is
premised on the fact that the employee concerned holds a position of responsibility or
trust and confidence.12 In order to constitute a just cause for dismissal, the act
complained of must be "work-related" such as would show the employee concerned to
be unfit to continue working for the employer.13 More importantly, the loss of trust and
confidence must be based on the willful breach of the trust reposed in the employee by
his employer. A breach of trust is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently.14
Belga was an assistant cashier whose primary function was to assist the cashier in such
duties as preparation of deposit slips, provisional receipts, post-dated checks, etc. As
correctly observed by the Court of Appeals, these functions are essentially clerical. For
while ostensibly, the documents that Belga prepares as Assistant Cashier pertain to her
employer's property, her work does not call for independent judgment or discretion.
Belga simply prepares the documents as instructed by her superiors subject to the
latter's verification or approval. Hence, her position cannot be considered as one of
responsibility or imbued with trust and confidence.
Furthermore, Tropical has not satisfactorily shown how and to what extent it had
suffered damages because of Belga's absences. For while it may be true that the
company was caught unprepared and unable to hire a temporary replacement, we are
not convinced that Belga's absence for 16 days has wreaked havoc on Tropical's
business as to justify her termination from the company. On the other hand, it is
undisputed that Belga has worked for Tropical for 7 years without any blemish on her
service record. In fact, the company admitted in its petition that she "has rendered
seven (7) years of service in compliance with [the company's] rules".15 And her fidelity
to her work is evident because even in the midst of an emergency, she managed to
transmit to the company the documents she worked on over the weekend so that it
would not cause any problem for the company.
All told, we find that the penalty of dismissal was too harsh in light of the circumstances
obtaining in this case. While it may be true that Belga ought to have formally informed
the company of her impending maternity leave so as to give the latter sufficient time to
find a temporary replacement, her termination from employment is not commensurate
to her lapse in judgment.
Even assuming that there was just cause for terminating Belga, her dismissal is
nonetheless invalid for failure of Tropical to observe the twin-notice requirement. The
March 21, 2001 memorandum merely informed her to report for work and explain her
absences. The March 30, 2001 memorandum demanded that she report for work and
attend a clarificatory conference. Belga received the first memorandum but allegedly
refused to receive the second.
In Electro System Industries Corporation v. National Labor Relations Commission,16 we

held that, in dismissing an employee, the employer has the burden of proving that the
worker has been served two notices: (1) one to apprise him of the particular acts or
omissions for which his dismissal is sought, and (2) the other to inform him of his
employer's decision to dismiss him. The first notice must state that the dismissal is
sought for the act or omission charged against the employee, otherwise the notice
cannot be considered sufficient compliance with the rules. It must also inform outright
that an investigation will be conducted on the charges particularized therein which, if
proven, will result to his dismissal. Further, we held that a notation in the notice that
the employee refused to sign is not sufficient proof that the employer attempted to
serve the notice to the employee.
An employee who was illegally dismissed from work is entitled to reinstatement without
loss of seniority rights, and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual
reinstatement.17 Thus, Belga is entitled to be reinstated to her former or equivalent
position and to the payment of full backwages from the time she was illegally dismissed
until her actual reinstatement.
WHEREFORE, the instant petition is DENIED. The July 28, 2004 Decision of the Court
of Appeals in CA-G.R. SP No. 80616 and its December 17, 2004 Resolution
are AFFIRMED in toto.
SO ORDERED.
[G.R. No. 118978. May 23, 1997]
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY,* Petitioner, v.NATIONAL

LABOR RELATIONS COMMISSION and GRACE DE GUZMAN, Respondents.
DECISION
REGALADO, J.:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine
Telegraph and Telephone Company (hereafter, PT&T) invokes the alleged concealment
of civil status and defalcation of company funds as grounds to terminate the services of
an employee. That employee, herein private respondent Grace de Guzman, contrarily
argues that what really motivated PT&T to terminate her services was her having
contracted marriage during her employment, which is prohibited by petitioner in its
company policies. She thus claims that she was discriminated against in gross violation
of law, such a proscription by an employer being outlawed by Article 136 of the Labor
Code.
Grace de Guzman was initially hired by petitioner as a reliever, specifically as a

Supernumerary Project Worker, for a fixed period from November 21, 1990 until April
20, 1991 vice one C.F. Tenorio who went on maternity leave.1 Under the Reliever
Agreement which she signed with petitioner company, her employment was to be
immediately terminated upon expiration of the agreed period. Thereafter, from June 10,
1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondents
services as reliever were again engaged by petitioner, this time in replacement of one
Erlinda F. Dizon who went on leave during both periods.2 After August 8, 1991, and
pursuant to their Reliever Agreement, her services were terminated.
On September 2, 1991, private respondent was once more asked to join petitioner
company as a probationary employee, the probationary period to cover 150 days. In
the job application form that was furnished her to be filled up for the purpose, she
indicated in the portion for civil status therein that she was single although she had
contracted marriage a few months earlier, that is, on May 26,
1991.3chanroblesvirtuallawlibrary
It now appears that private respondent had made the same representation in the two
successive reliever agreements which she signed on June 10, 1991 and July 8, 1991.
When petitioner supposedly learned about the same later, its branch supervisor in
Baguio City, Delia M. Oficial, sent to private respondent a memorandum dated January
15, 1992 requiring her to explain the discrepancy. In that memorandum, she was
reminded about the companys policy of not accepting married women for
employment.4chanroblesvirtuallawlibrary
In her reply letter dated January 17, 1992, private respondent stated that she was not
aware of PT&Ts policy regarding married women at the time, and that all along she had
not deliberately hidden her true civil status.5Petitioner nonetheless remained
unconvinced by her explanations. Private respondent was dismissed from the company
effective January 29, 1992,6which she readily contested by initiating a complaint for
illegal dismissal, coupled with a claim for non-payment of cost of living allowances
(COLA), before the Regional Arbitration Branch of the National Labor Relations
Commission in Baguio City.
At the preliminary conference conducted in connection therewith, private respondent

volunteered the information, and this was incorporated in the stipulation of facts
between the parties, that she had failed to remit the amount of P2,380.75 of her
collections. She then executed a promissory note for that amount in favor of
petitioner.7 All of these took place in a formal proceeding and with the agreement of the
parties and/or their counsel.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision
declaring that private respondent, who had already gained the status of a regular
employee, was illegally dismissed by petitioner. Her reinstatement, plus payment of the
corresponding back wages and COLA, was correspondingly ordered, the labor arbiter
being of the firmly expressed view that the ground relied upon by petitioner in
dismissing private respondent was clearly insufficient, and that it was apparent that she
had been discriminated against on account of her having contracted marriage in
violation of company rules.
On appeal to the National Labor Relations Commission (NLRC), said public respondent
upheld the labor arbiter and, in its decision dated April 29, 1994, it ruled that private
respondent had indeed been the subject of an unjust and unlawful discrimination by her
employer, PT&T. However, the decision of the labor arbiter was modified with the
qualification that Grace de Guzman deserved to be suspended for three months in view
of the dishonest nature of her acts which should not be condoned. In all other respects,
the NLRC affirmed the decision of the labor arbiter, including the order for the
reinstatement of private respondent in her employment with PT&T.
The subsequent motion for reconsideration filed by petitioner was rebuffed by

respondent NLRC in its resolution of November 9, 1994, hence this special civil action
assailing the aforestated decisions of the labor arbiter and respondent NLRC, as well as
the denial resolution of the latter.
1. Decreed in the Bible itself is the universal norm that women should be regarded with
love and respect but, through the ages, men have responded to that injunction with
indifference, on the hubristic conceit that women constitute the inferior sex. Nowhere
has that prejudice against womankind been so pervasive as in the field of labor,
especially on the matter of equal employment opportunities and standards. In the
Philippine setting, women have traditionally been considered as falling within the
vulnerable groups or types of workers who must be safeguarded with preventive and
remedial social legislation against discriminatory and exploitative practices in hiring,
training, benefits, promotion and retention.
The Constitution, cognizant of the disparity in rights between men and women in almost
all phases of social and political life, provides a gamut of protective provisions. To cite a
few of the primordial ones, Section 14, Article II8 on the Declaration of Principles and
State Policies, expressly recognizes the role of women in nation-building and commands
the State to ensure, at all times, the fundamental equality before the law of women and
men. Corollary thereto, Section 3 of Article XIII9 (the progenitor whereof dates back to
both the 1935 and 1973 Constitution) pointedly requires the State to afford full
protection to labor and to promote full employment and equality of employment
opportunities for all, including an assurance of entitlement to tenurial security of all
workers. Similarly, Section 14 of Article XIII10 mandates that the State shall protect
working women through provisions for opportunities that would enable them to reach
their full potential.
2. Corrective labor and social laws on gender inequality have emerged with more
frequency in the years since the Labor Code was enacted on May 1, 1974 as
Presidential Decree No. 442, largely due to our countrys commitment as a signatory to
the United Nations Convention on the Elimination of All Forms of Discrimination Against
Women (CEDAW).11chanroblesvirtuallawlibrary
Principal among these laws are Republic Act No. 672712 which explicitly prohibits
discrimination against women with respect to terms and conditions of employment,
promotion, and training opportunities; Republic Act No. 695513 which bans the mail-
order-bride practice for a fee and the export of female labor to countries that cannot
guarantee protection to the rights of women workers; Republic Act No. 7192,14 also
known as the Women in Development and Nation Building Act, which affords women
equal opportunities with men to act and to enter into contracts, and for appointment,
admission, training, graduation, and commissioning in all military or similar schools of
the Armed Forces of the Philippines and the Philippine National Police; Republic Act No.
732215increasing the maternity benefits granted to women in the private sector;
Republic Act No. 787716 which outlaws and punishes sexual harassment in the
workplace and in the education and training environment; and Republic Act No.
8042,17 or the Migrant Workers and Overseas Filipinos Act of 1995, which prescribes as
a matter of policy, inter alia, the deployment of migrant workers, with emphasis on
women, only in countries where their rights are secure. Likewise, it would not be amiss
to point out that in the Family Code,18 womens rights in the field of civil law have been
greatly enhanced and expanded.
In the Labor Code, provisions governing the rights of women workers are found in
Articles 130 to 138 thereof. Article 130 involves the right against particular kinds of
night work while Article 132 ensures the right of women to be provided with facilities
and standards which the Secretary of Labor may establish to ensure their health and
safety. For purposes of labor and social legislation, a woman working in a nightclub,
cocktail lounge, massage clinic, bar or other similar establishments shall be considered
as an employee under Article 138. Article 135, on the other hand, recognizes a womans
right against discrimination with respect to terms and conditions of employment on
account simply of sex. Finally, and this brings us to the issue at hand, Article 136
explicitly prohibits discrimination merely by reason of the marriage of a female
employee.
3. Acknowledged as paramount in the due process scheme is the constitutional

guarantee of protection to labor and security of tenure. Thus, an employer is required,
as a condition sine qua non prior to severance of the employment ties of an individual
under his employ, to convincingly establish, through substantial evidence, the existence
of a valid and just cause in dispensing with the services of such employee, ones labor
being regarded as constitutionally protected property.
On the other hand, it is recognized that regulation of manpower by the company falls
within the so-called management prerogatives, which prescriptions encompass the
matter of hiring, supervision of workers, work assignments, working methods and
assignments, as well as regulations on the transfer of employees, lay-off of workers,
and the discipline, dismissal, and recall of employees.19 As put in a case, an employer is
free to regulate, according to his discretion and best business judgment, all aspects of
employment, from hiring to firing, except in cases of unlawful discrimination or those
which may be provided by law.20chanroblesvirtuallawlibrary
In the case at bar, petitioners policy of not accepting or considering as disqualified from
work any woman worker who contracts marriage runs afoul of the test of, and the right
against, discrimination, afforded all women workers by our labor laws and by no less
than the Constitution. Contrary to petitioners assertion that it dismissed private
respondent from employment on account of her dishonesty, the record discloses clearly
that her ties with the company were dissolved principally because of the companys
policy that married women are not qualified for employment in PT&T, and not merely
because of her supposed acts of dishonesty.
That it was so can easily be seen from the memorandum sent to private respondent by
Delia M. Oficial, the branch supervisor of the company, with the reminder, in the words
of the latter, that youre fully aware that the company is not accepting married women
employee (sic), as it was verbally instructed to you.21 Again, in the termination notice
sent to her by the same branch supervisor, private respondent was made to understand
that her severance from the service was not only by reason of her concealment of her
married status but, over and on top of that, was her violation of the companys policy
against marriage (and even told you that married women employees are not applicable
[sic] or accepted in our company.)22 Parenthetically, this seems to be the curious
reason why it was made to appear in the initiatory pleadings that petitioner was
represented in this case only by its said supervisor and not by its highest ranking
officers who would otherwise be solidarily liable with the
corporation.23chanroblesvirtuallawlibrary
Verily, private respondents act of concealing the true nature of her status from PT&T
could not be properly characterized as willful or in bad faith as she was moved to act
the way she did mainly because she wanted to retain a permanent job in a stable
company. In other words, she was practically forced by that very same illegal company
policy into misrepresenting her civil status for fear of being disqualified from work.
While loss of confidence is a just cause for termination of employment, it should not be
simulated.24 It must rest on an actual breach of duty committed by the employee and
not on the employers caprices.25Furthermore, it should never be used as a subterfuge
for causes which are improper, illegal, or unjustified.26chanroblesvirtuallawlibrary
In the present controversy, petitioners expostulations that it dismissed private
respondent, not because the latter got married but because she concealed that fact,
does have a hollow ring. Her concealment, so it is claimed, bespeaks dishonesty hence
the consequent loss of confidence in her which justified her dismissal. Petitioner would
asseverate, therefore, that while it has nothing against marriage, it nonetheless takes
umbrage over the concealment of that fact. This improbable reasoning, with interstitial
distinctions, perturbs the Court since private respondent may well be minded to claim
that the imputation of dishonesty should be the other way around.
Petitioner would have the Court believe that although private respondent defied its
policy against its female employees contracting marriage, what could be an act of
insubordination was inconsequential. What it submits as unforgivable is her
concealment of that marriage yet, at the same time, declaring that marriage as a trivial
matter to which it supposedly has no objection. In other words, PT&T says it gives its
blessings to its female employees contracting marriage, despite the maternity leaves
and other benefits it would consequently respond for and which obviously it would have
wanted to avoid. If that employee confesses such fact of marriage, there will be no
sanction; but if such employee conceals the same instead of proceeding to the
confessional, she will be dismissed. This line of reasoning does not impress us as
reflecting its true management policy or that we are being regaled with responsible
advocacy.
This Court should be spared the ennui of strained reasoning and the tedium of
propositions which confuse through less than candid arguments. Indeed, petitioner
glosses over the fact that it was its unlawful policy against married women, both on the
aspects of qualification and retention, which compelled private respondent to conceal
her supervenient marriage. It was, however, that very policy alone which was the cause
of private respondents secretive conduct now complained of. It is then apropos to recall
the familiar saying that he who is the cause of the cause is the cause of the evil caused.
Finally, petitioners collateral insistence on the admission of private respondent that she
supposedly misappropriated company funds, as an additional ground to dismiss her
from employment, is somewhat insincere and self-serving. Concededly, private
respondent admitted in the course of the proceedings that she failed to remit some of
her collections, but that is an altogether different story. The fact is that she was
dismissed solely because of her concealment of her marital status, and not on the basis
of that supposed defalcation of company funds. That the labor arbiter would thus
consider petitioners submissions on this supposed dishonesty as a mere afterthought,
just to bolster its case for dismissal, is a perceptive conclusion born of experience in
labor cases. For, there was no showing that private respondent deliberately
misappropriated the amount or whether her failure to remit the same was through
negligence and, if so, whether the negligence was in nature simple or grave. In fact, it
was merely agreed that private respondent execute a promissory note to refund the
same, which she did, and the matter was deemed settled as a peripheral issue in the
labor case.
Private respondent, it must be observed, had gained regular status at the time of her
dismissal. When she was served her walking papers on January 29, 1992, she was
about to complete the probationary period of 150 days as she was contracted as a
probationary employee on September 2, 1991. That her dismissal would be effected
just when her probationary period was winding down clearly raises the plausible
conclusion that it was done in order to prevent her from earning security of
tenure.27 On the other hand, her earlier stints with the company as reliever were
undoubtedly those of a regular employee, even if the same were for fixed periods, as
she performed activities which were essential or necessary in the usual trade and
business of PT&T.28 The primary standard of determining regular employment is the
reasonable connection between the activity performed by the employee in relation to
the business or trade of the employer.29chanroblesvirtuallawlibrary
As an employee who had therefore gained regular status, and as she had been
dismissed without just cause, she is entitled to reinstatement without loss of seniority
rights and other privileges and to full back wages, inclusive of allowances and other
benefits or their monetary equivalent.30 However, as she had undeniably committed an
act of dishonesty in concealing her status, albeit under the compulsion of an unlawful
imposition of petitioner, the three-month suspension imposed by respondent NLRC
must be upheld to obviate the impression or inference that such act should be
condoned. It would be unfair to the employer if she were to return to its fold without
any sanction whatsoever for her act which was not totally justified. Thus, her
entitlement to back wages, which shall be computed from the time her compensation
was withheld up to the time of her actual reinstatement, shall be reduced by deducting
therefrom the amount corresponding to her three months suspension.
4. The government, to repeat, abhors any stipulation or policy in the nature of that
adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:
ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require
as a condition of employment or continuation of employment that a woman shall not
get married, or to stipulate expressly or tacitly that upon getting married, a woman
employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of marriage.
This provision had a studied history for its origin can be traced to Section 8 of
Presidential Decree No. 148,31 better known as the Women and Child Labor Law, which
amended paragraph (c), Section 12 of Republic Act No. 679,32 entitled An Act to
Regulate the Employment of Women and Children, to Provide Penalties for Violations
Thereof, and for Other Purposes. The forerunner to Republic Act No. 679, on the other
hand, was Act No. 3071 which became law on March 16, 1923 and which regulated the
employment of women and children in shops, factories, industrial, agricultural, and
mercantile establishments and other places of labor in the then Philippine Islands.
It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et
al. vs. Philippine Air Lines,33 a decision that emanated from the Office of the President.
There, a policy of Philippine Air Lines requiring that prospective flight attendants must
be single and that they will be automatically separated from the service once they
marry was declared void, it being violative of the clear mandate in Article 136 of the
Labor Code with regard to discrimination against married women. Thus:
Of first impression is the incompatibility of the respondents policy or regulation with the
codal provision of law. Respondent is resolute in its contention that Article 136 of the
Labor Code applies only to women employed in ordinary occupations and that the
prohibition against marriage of women engaged in extraordinary occupations, like flight
attendants, is fair and reasonable, considering the pecularities of their chosen
profession.
We cannot subscribe to the line of reasoning pursued by respondent. All along, it knew
that the controverted policy has already met its doom as early as March 13, 1973 when
Presidential Decree No. 148, otherwise known as the Women and Child Labor Law, was
promulgated. But for the timidity of those affected or their labor unions in challenging
the validity of the policy, the same was able to obtain a momentary reprieve. A close
look at Section 8 of said decree, which amended paragraph (c) of Section 12 of
Republic Act No. 679, reveals that it is exactly the same provision
reproduced verbatim in Article 136 of the Labor Code, which was promulgated on May
1, 1974 to take effect six (6) months later, or on November 1, 1974.
It cannot be gainsaid that, with the reiteration of the same provision in the new Labor
Code, all policies and acts against it are deemed illegal and therefore abrogated. True,
Article 132 enjoins the Secretary of Labor to establish standards that will ensure the
safety and health of women employees and in appropriate cases shall by regulation
require employers to determine appropriate minimum standards for termination in
special occupations, such as those of flight attendants, but that is precisely the factor
that militates against the policy of respondent. The standards have not yet been
established as set forth in the first paragraph, nor has the Secretary of Labor issued
any regulation affecting flight attendants.
It is logical to presume that, in the absence of said standards or regulations which are
as yet to be established, the policy of respondent against marriage is patently illegal.
This finds support in Section 9 of the New Constitution, which provides:
Sec. 9. The State shall afford protection to labor, promote full employment and equality
in employment, ensure equal work opportunities regardless of sex, race, or creed, and
regulate the relations between workers and employees. The State shall assure the
rights of workers to self-organization, collective bargaining, security of tenure, and just
and humane conditions of work x x x.
Moreover, we cannot agree to the respondents proposition that termination from

employment of flight attendants on account of marriage is a fair and reasonable
standard designed for their own health, safety, protection and welfare, as no basis has
been laid therefor. Actually, respondent claims that its concern is not so much against
the continued employment of the flight attendant merely by reason of marriage as
observed by the Secretary of Labor, but rather on the consequence of marriage-
pregnancy. Respondent discussed at length in the instant appeal the supposed ill effects
of pregnancy on flight attendants in the course of their employment. We feel that this
needs no further discussion as it had been adequately explained by the Secretary of
Labor in his decision of May 2, 1976.
In a vain attempt to give meaning to its position, respondent went as far as invoking
the provisions of Articles 52 and 216 of the New Civil Code on the preservation of
marriage as an inviolable social institution and the family as a basic social institution,
respectively, as bases for its policy of non-marriage. In both instances, respondent
predicates absence of a flight attendant from her home for long periods of time as
contributory to an unhappy married life. This is pure conjecture not based on actual
conditions, considering that, in this modern world, sophisticated technology has
narrowed the distance from one place to another. Moreover, respondent overlooked the
fact that married flight attendants can program their lives to adapt to prevailing
circumstances and events.
Article 136 is not intended to apply only to women employed in ordinary occupations, or
it should have categorically expressed so. The sweeping intendment of the law, be it on
special or ordinary occupations, is reflected in the whole text and supported by Article
135 that speaks of non-discrimination on the employment of women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining &
Industrial Corporation34 considered as void a policy of the same nature. In said case,
respondent, in dismissing from the service the complainant, invoked a policy of the firm
to consider female employees in the project it was undertaking as separated the
moment they get married due to lack of facilities for married women. Respondent
further claimed that complainant was employed in the project with an oral
understanding that her services would be terminated when she gets married. Branding
the policy of the employer as an example of discriminatory chauvinism tantamount to
denying equal employment opportunities to women simply on account of their sex, the
appellate court struck down said employer policy as unlawful in view of its repugnance
to the Civil Code, Presidential Decree No. 148 and the Constitution.
Under American jurisprudence, job requirements which establish employer preference

or conditions relating to the marital status of an employee are categorized as a sex-plus
discrimination where it is imposed on one sex and not on the other. Further, the same
should be evenly applied and must not inflict adverse effects on a racial or sexual group
which is protected by federal job discrimination laws. Employment rules that forbid or
restrict the employment of married women, but do not apply to married men, have
been held to violate Title VII of the United States Civil Rights Act of 1964, the main
federal statute prohibiting job discrimination against employees and applicants on the
basis of, among other things, sex.35chanroblesvirtuallawlibrary
Further, it is not relevant that the rule is not directed against all women but just against
married women. And, where the employer discriminates against married women, but
not against married men, the variable is sex and the discrimination is unlawful.36 Upon
the other hand, a requirement that a woman employee must remain unmarried could
be justified as a bona fide occupational qualification, or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a general
principle, such as the desirability of spreading work in the workplace. A requirement of
that nature would be valid provided it reflects an inherent quality reasonably necessary
for satisfactory job performance. Thus, in one case, a no-marriage rule applicable to
both male and female flight attendants, was regarded as unlawful since the restriction
was not related to the job performance of the flight
attendants.37chanroblesvirtuallawlibrary
5. Petitioners policy is not only in derogation of the provisions of Article 136 of the
Labor Code on the right of a woman to be free from any kind of stipulation against
marriage in connection with her employment, but it likewise assaults good morals and
public policy, tending as it does to deprive a woman of the freedom to choose her
status, a privilege that by all accounts inheres in the individual as an intangible and
inalienable right.38 Hence, while it is true that the parties to a contract may establish
any agreements, terms, and conditions that they may deem convenient, the same
should not be contrary to law, morals, good customs, public order, or public
policy.39 Carried to its logical consequences, it may even be said that petitioners policy
against legitimate marital bonds would encourage illicit or common-law relations and
subvert the sacrament of marriage.
Parenthetically, the Civil Code provisions on the contract of labor state that the
relations between the parties, that is, of capital and labor, are not merely contractual,
impressed as they are with so much public interest that the same should yield to the
common good.40 It goes on to intone that neither capital nor labor should visit acts of
oppression against the other, nor impair the interest or convenience of the public. 41 In
the final reckoning, the danger of just such a policy against marriage followed by
petitioner PT&T is that it strikes at the very essence, ideals and purpose of marriage as
an inviolable social institution and, ultimately, of the family as the foundation of the
nation.42 That it must be effectively interdicted here in all its indirect, disguised or
dissembled forms as discriminatory conduct derogatory of the laws of the land is not
only in order but imperatively required.
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone

Company is hereby DISMISSED for lack of merit, with double costs against petitioner.
SO ORDERED.
G.R. No. 187226 January 28, 2015
CHERYLL SANTOS LEUS, Petitioner,

vs.
ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or SR. EDNA QUIAMBAO,
OSB, Respondents.
DECISION
REYES, J.:
Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove (SSCW), a
Catholic educational institution, as a non-teaching personnel, engaged in pre-marital sexual
relations, got pregnant out of wedlock, married the father of her child, and was dismissed by SSCW,
in that order. The question that has to be resolved is whether the petitioner's conduct constitutes a
ground for her dismissal.
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 dated September 24, 2008 and Resolution2 dated March 2, 2009
issued by the Court of Appeals (CA) in CA-G.R. SP No. 100188, which affirmed the Resolutions
dated February 28, 20073 and May 21, 20074 of the National Labor Relations Commission (NLRC)in
NLRC CA No. 049222-06.
The Facts
SSCW is a catholic and sectarian educational institution in Silang, Cavite. In May 2001, SSCW hired
the petitioner as an Assistant to SSCW’s Director of the Lay Apostolate and Community Outreach
Directorate.
Sometime in 2003, the petitioner and her boyfriend conceived a child out of wedlock. When SSCW
learned of the petitioner’s pregnancy, Sr. Edna Quiambao (Sr. Quiambao), SSCW’s Directress,
advised her to file a resignation letter effective June 1, 2003. In response, the petitioner informed Sr.
Quiambao that she would not resign from her employment just because she got pregnant without the
benefit of marriage.5
On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain in writing why she should
not be dismissed for engaging in pre-marital sexual relations and getting pregnant as a result
thereof, which amounts to serious misconduct and conduct unbecoming of an employee of a
Catholic school.6
In a letter7 dated May 31, 2003, the petitioner explained that her pregnancy out of wedlock does not
amount to serious misconduct or conduct unbecoming of an employee. She averred that she is
unaware of any school policy stating that being pregnant out of wedlock is considered as a serious
misconduct and, thus, a ground for dismissal. Further, the petitioner requested a copy of SSCW’s
policy and guidelines so that she may better respond to the charge against her. On June 2, 2003, Sr.
Quiambao informed the petitioner that, pending the promulgation of a "Support Staff Handbook,"
SSCW follows the 1992 Manual of Regulations for Private Schools (1992 MRPS) on the causes for
termination of employments; that Section 94(e) of the 1992 MRPS cites "disgraceful or immoral
conduct" as a ground for dismissal in addition to the just causes for termination of employment
provided under Article 282 of the Labor Code.8
On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a letter,9 which, in part, reads:
To us, pre-marital sex between two consenting adults without legal impediment to marry each other
who later on married each other does not fall within the contemplation of "disgraceful or immoral
conduct" and "serious misconduct" of the Manual of Regulations for Private Schools and the Labor
Code of the Philippines.
Your argument that what happened to our client would set a bad example to the students and other
employees of your school is speculative and is more imaginary than real. To dismiss her on that sole
ground constitutes grave abuse of management prerogatives.
Considering her untarnished service for two years, dismissing her with her present condition would
also mean depriving her to be more secure in terms of financial capacity to sustain maternal needs.10
In a letter11 dated June 6, 2003, SSCW, through counsel, maintained that pre-marital sexual
relations, evenif between two consenting adults without legal impediment to marry, is considered a
disgraceful and immoral conduct or a serious misconduct, which are grounds for the termination of
employment under the 1992 MRPS and the Labor Code. That SSCW, as a Catholic institution of
learning, has the right to uphold the teaching of the Catholic Church and expect its employees to
abide by the same. They further asserted that the petitioner’s indiscretion is further aggravated by
the fact that she is the Assistant to the Director of the Lay Apostolate and Community Outreach
Directorate, a position of responsibility that the students look up to as rolemodel. The petitioner was
again directed to submit a written explanation on why she should not be dismissed.
On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts her counsel’s letter dated
June 4, 2003 as her written explanation.12
Consequently, in her letter13 dated June 11, 2003, Sr. Quiambao informed the petitioner that her
employment with SSCW is terminated on the ground of serious misconduct. She stressed that pre-
marital sexual relations between two consenting adults with no impediment to marry, even if they
subsequently married, amounts to immoral conduct. She further pointed out that SSCW finds
unacceptable the scandal brought about by the petitioner’s pregnancy out of wedlock as it ran
counter to the moral principles that SSCW stands for and teaches its students.
Thereupon, the petitioner filed a complaint for illegal dismissal with the Regional Arbitration Branch
of the NLRC in Quezon City against SSCW and Sr. Quiambao (respondents). In her position
paper,14 the petitioner claimed that SSCW gravely abused its management prerogative as there was
no just cause for her dismissal. She maintained that her pregnancy out of wedlock cannot be
considered as serious misconduct since the same is a purely private affair and not connected in any
way with her duties as an employee of SSCW. Further, the petitioner averred that she and her
boyfriend eventually got married even prior to her dismissal.
For their part, SSCW claimed that there was just cause to terminate the petitioner’s employment with
SSCW and that the same is a valid exercise of SSCW’s management prerogative. They maintained
that engaging in pre-marital sex, and getting pregnant as a result thereof, amounts to a disgraceful
or immoral conduct, which is a ground for the dismissal of an employee under the 1992 MRPS.
They pointed out that SSCW is a Catholic educational institution, which caters exclusively to young
girls; that SSCW would lose its credibility if it would maintain employees who do not live up to the
values and teachings it inculcates to its students. SSCW further asserted that the petitioner, being
an employee of a Catholic educational institution, should have strived to maintain the honor, dignity
and reputation of SSCW as a Catholic school.15
The Ruling of the Labor Arbiter
On February 28, 2006, the Labor Arbiter (LA) rendered a Decision,16 in NLRC Case No. 6-17657-03-
C which dismissed the complaint filed by the petitioner. The LA found that there was a valid ground
for the petitioner’s dismissal; that her pregnancy out of wedlock is considered as a "disgraceful and
immoral conduct." The LA pointed out that, as an employee of a Catholic educational institution, the
petitioner is expected to live up to the Catholic values taught by SSCW to its students. Likewise, the
LA opined that:
Further, a deep analysis of the facts would lead us to disagree with the complainant that she was
dismissed simply because she violate[d] a Catholic [teaching]. It should not be taken in isolation but
rather it should be analyzed in the lightof the surrounding circumstances as a whole. We must also
take into [consideration] the nature of her work and the nature of her employer-school. For us, it is
not just an ordinary violation. It was committed by the complainant in an environment where her strict
adherence to the same is called for and where the reputation of the school is at stake. x x x.17
The LA further held that teachers and school employees, both in their official and personal conduct,
must display exemplary behavior and act in a manner that is beyond reproach.
The petitioner appealed to the NLRC, insisting that there was no valid ground for the termination of
her employment. She maintained that her pregnancy out of wedlock cannot be considered as
"serious misconduct" under Article 282 of the Labor Code since the same was not of such a grave
and aggravated character. She asserted that SSCW did not present any evidence to establish that
her pregnancy out of wedlock indeed eroded the moral principles that it teaches its students.18
The Ruling of the NLRC
On February 28, 2007, the NLRC issued a Resolution,19 which affirmed the LA Decision dated
February 28, 2006. The NLRC pointed out that the termination of the employment of the personnel
of private schools is governed by the 1992 MRPS; that Section 94(e) thereof cites "disgraceful or
immoral conduct" as a just cause for dismissal, in addition to the grounds for termination of
employment provided for under Article 282 of the Labor Code. The NLRC held that the petitioner’s
pregnancy out of wedlock is a "disgraceful or immoral conduct" within the contemplation of Section
94(e) of the 1992 MRPS and, thus, SSCW had a valid reason to terminate her employment.
The petitioner sought reconsideration20 of the Resolution dated February 28, 2007 but it was denied
by the NLRC in its Resolution21 dated May 21, 2007.
Unperturbed, the petitioner filed a petition22 for certiorari with the CA, alleging that the NLRC gravely
abused its discretion in ruling that there was a valid ground for her dismissal. She maintained that
pregnancy out of wedlock cannot be considered as a disgraceful or immoral conduct; that SSCW
failed to prove that its students were indeed gravely scandalized by her pregnancy out of wedlock.
She likewise asserted that the NLRC erred in applying Section 94(e) of the 1992 MRPS.
The Ruling of the CA
On September 24, 2008, the CA rendered the herein assailed Decision,23 which denied the petition
for certiorari filed by the petitioner. The CA held that it is the provisions of the 1992 MRPS and not
the Labor Code which governs the termination of employment of teaching and non-teaching
personnel of private schools, explaining that:
It is a principle of statutory construction that where there are two statutes that apply to a particular
case, that which was specially intended for the said case must prevail. Petitioner was employed by
respondent private Catholic institution which undeniably follows the precepts or norms of conduct set
forth by the Catholic Church. Accordingly, the Manual of Regulations for Private Schools followed by
it must prevail over the Labor Code, a general statute. The Manual constitutes the private schools’
Implementing Rules and Regulations of Batas Pambansa Blg. 232 or the Education Act of 1982. x x
x.24
The CA further held that the petitioner’s dismissal was a valid exercise of SSCW’s management
prerogative to discipline and impose penalties on erring employees pursuant toits policies, rules and
regulations. The CA upheld the NLRC’s conclusion that the petitioner’s pregnancy out of wedlock is
considered as a "disgraceful and immoral conduct" and, thus, a ground for dismissal under Section
94(e) of the 1992 MRPS. The CA likewise opined that the petitioner’s pregnancy out of wedlock is
scandalous per segiven the work environment and social milieu that she was in, viz:
Under Section 94 (e) of the [MRPS], and even under Article 282 (serious misconduct) of the Labor
Code, "disgraceful and immoral conduct" is a basis for termination of employment.
xxxx
Petitioner contends that her pre-marital sexual relations with her boyfriend and her pregnancy prior
to marriage was not disgraceful or immoral conduct sufficient for her dismissal because she was not
a member of the school’s faculty and there is no evidence that her pregnancy scandalized the school
community.
We are not persuaded. Petitioner’s pregnancy prior to marriage is scandalous in itself given the work
environment and social milieu she was in. Respondent school for young ladies precisely seeks to
prevent its students from situations like this, inculcating in them strict moral values and standards.
Being part of the institution, petitioner’sprivate and public life could not be separated. Her admitted
pre-marital sexual relations was a violation of private respondent’s prescribed standards of conduct
that views pre-marital sex as immoral because sex between a man and a woman must only take
place within the bounds of marriage.
Finally, petitioner’s dismissal is a valid exercise of the employer-school’s management prerogative to

discipline and impose penalties on erring employees pursuant to its policies, rules and regulations. x
x x.25 (Citations omitted)
The petitioner moved for reconsideration26 but it was denied by the CA in its Resolution27 dated March
2, 2009.
Hence, the instant petition.
Issues
Essentially, the issues set forth by the petitioner for this Court’s decision are the following: first,
whether the CA committed reversible error in ruling that it is the 1992 MRPS and not the Labor Code
that governs the termination of employment of teaching and non-teaching personnel of private
schools; and second, whether the petitioner’spregnancy out of wedlock constitutes a valid ground to
terminate her employment.
The Ruling of the Court
The Court grants the petition.

First Issue: Applicability of the 1992 MRPS
The petitioner contends that the CA, in ruling that there was a valid ground to dismiss her, erred in
applying Section 94 of the 1992 MRPS. Essentially, she claims that the 1992 MRPS was issued by
the Secretary of Education as the revised implementing rules and regulations of Batas Pambansa
Bilang 232 (BP 232) or the "Education Act of 1982." That there is no provision in BP 232, which
provides for the grounds for the termination of employment of teaching and non-teaching personnel
of private schools. Thus, Section 94 of the 1992 MRPS, which provides for the causes of terminating
an employment, isinvalid as it "widened the scope and coverage" of BP 232.
The Court does not agree.
The Court notes that the argument against the validity of the 1992 MRPS, specifically Section 94
thereof, is raised by the petitioner for the first time in the instant petition for review. Nowhere in the
proceedings before the LA, the NLRC or the CA did the petitioner assail the validity of the provisions
of the 1992 MRPS.
"It is well established that issues raised for the first time on appeal and not raised in the proceedings
in the lower court are barred by estoppel. Points of law, theories, issues, and arguments not brought
to the attention of the trial court ought not to be considered by a reviewing court, as these cannot be
raised for the first time on appeal. To consider the alleged facts and arguments belatedly raised
would amount to trampling on the basic principles of fair play, justice, and due process."28
In any case, even if the Court were to disregard the petitioner’s belated claim of the invalidity of the
1992 MRPS, the Court still finds the same untenable.
The 1992 MRPS, the regulation in force at the time of the instant controversy, was issued by the
Secretary of Education pursuant to BP 232. Section 7029 of BP 232 vests the Secretary of Education
with the authority to issue rules and regulations to implement the provisions of BP 232.
Concomitantly, Section 5730 specifically empowers the Department of Education to promulgate rules
and regulations necessary for the administration, supervision and regulation of the educational
system in accordance with the declared policy of BP 232.
The qualifications of teaching and non-teaching personnel of private schools, as well as the causes
for the termination of their employment, are an integral aspect of the educational system of private
schools. Indubitably, ensuring that the teaching and non-teaching personnel of private schools are
not only qualified, but competent and efficient as well goes hand in hand with the declared objective
of BP 232 – establishing and maintaining relevant quality education.31 It is thus within the authority of
the Secretary of Education to issue a rule, which provides for the dismissal of teaching and non-
teaching personnel of private schools based on their incompetence, inefficiency, or some other
disqualification.
Moreover, Section 69 of BP 232 specifically authorizes the Secretary of Education to "prescribe and
impose such administrative sanction as he may deem reasonable and appropriate in the
implementing rules and regulations" for the "[g]ross inefficiency of the teaching or non-teaching
personnel" of private schools.32 Accordingly, contrary to the petitioner’s claim, the Court sees no
reason to invalidate the provisions of the 1992 MRPS, specifically Section 94 thereof. Second Issue:
Validity of the Petitioner’s Dismissal
The validity of the petitioner’s dismissal hinges on the determination of whether pregnancy out of
wedlock by an employee of a catholic educational institution is a cause for the termination of her
employment.
In resolving the foregoing question,the Court will assess the matter from a strictly neutral and secular
point of view – the relationship between SSCW as employer and the petitioner as an employee, the
causes provided for by law in the termination of suchrelationship, and the evidence on record. The
ground cited for the petitioner’s dismissal, i.e., pre-marital sexual relations and, consequently,
pregnancy outof wedlock, will be assessed as to whether the same constitutes a valid ground for
dismissal pursuant to Section 94(e) of the 1992 MRPS.
The standard of review in a Rule 45

petition from the CA decision in
labor cases.
In a petition for review under Rule 45 of the Rules of Court, such as the instant petition, where the
CA’s disposition in a labor case is sought to be calibrated, the Court’s review isquite limited. In ruling
for legal correctness, the Court has to view the CA decision in the same context that the petition for
certiorari it ruled upon was presented to it; the Court has to examine the CA decision from the prism
of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC decision on the merits of the case was
correct.33
The phrase "grave abuse of discretion" is well-defined in the Court’s jurisprudence. It exists where
an act of a court or tribunal is performed with a capricious or whimsical exercise ofjudgment
equivalent to lack of jurisdiction.34 The determination of the presence or absence of grave abuse of
discretion does not include an inquiry into the correctness of the evaluation of evidence, which was
the basis of the labor agency in reaching its conclusion.35
Nevertheless, while a certiorari proceeding does not strictly include an inquiry as to the correctness
of the evaluation of evidence (that was the basis of the labor tribunals in determining their
conclusion), the incorrectness of its evidentiary evaluation should not result in negating the
requirement of substantial evidence. Indeed, when there is a showing that the findings or
conclusions, drawn from the same pieces of evidence, were arrived at arbitrarily or in disregard of
the evidence on record, they may be reviewed by the courts. In particular, the CA can grant the
petition for certiorariif it finds that the NLRC, in its assailed decision or resolution, made a factual
finding not supported by substantial evidence. A decision that is not supported by substantial
evidence is definitely a decision tainted with grave abuse of discretion.36
The labor tribunals’ respective

conclusions that the petitioner’s
pregnancy is a "disgraceful or
immoral conduct" were arrived at
arbitrarily.
The CA and the labor tribunals affirmed the validity of the petitioner’s dismissal pursuant to Section
94(e) of the 1992 MRPS, which provides that:
Sec. 94. Causes of Terminating Employment – In addition to the just causes enumerated in the
Labor Code, the employment of school personnel, including faculty, may be terminated for any of the
following causes:
xxxx
e. Disgraceful or immoral conduct;
xxxx
The labor tribunals concluded that the petitioner’s pregnancy out of wedlock, per se, is "disgraceful
and immoral"considering that she is employed in a Catholic educational institution. In arriving at such
conclusion, the labor tribunals merely assessed the fact of the petitioner’s pregnancy vis-à-visthe
totality of the circumstances surrounding the same.
However, the Court finds no substantial evidence to support the aforementioned conclusion arrived
at by the labor tribunals. The fact of the petitioner’s pregnancy out of wedlock, without more, is not
enough to characterize the petitioner’s conduct as disgraceful or immoral. There must be substantial
evidence to establish that pre-marital sexual relations and, consequently, pregnancy outof wedlock,
are indeed considered disgraceful or immoral.
The totality of the circumstances

surrounding the conduct alleged to
be disgraceful or immoral must be
assessed against the prevailing
norms of conduct.
In Chua-Qua v. Clave,37 the Court stressed that to constitute immorality, the circumstances of each
particular case must be holistically considered and evaluated in light of the prevailing norms of
conductand applicable laws.38Otherwise stated, it is not the totality of the circumstances surrounding
the conduct per se that determines whether the same is disgraceful or immoral, but the conduct that
is generally accepted by society as respectable or moral. If the conduct does not conform to what
society generally views as respectable or moral, then the conduct is considered as disgraceful or
immoral. Tersely put, substantial evidence must be presented, which would establish that a
particular conduct, viewed in light of the prevailing norms of conduct, is considered disgraceful or
immoral.
Thus, the determination of whether a conduct is disgraceful or immoral involves a two-step process:
first, a consideration of the totality of the circumstances surrounding the conduct; and second, an
assessment of the said circumstances vis-à-visthe prevailing norms of conduct, i.e., what the society
generally considers moral and respectable.
That the petitioner was employed by a Catholic educational institution per se does not absolutely
determine whether her pregnancy out of wedlock is disgraceful or immoral. There is still a necessity
to determine whether the petitioner’s pregnancy out of wedlock is considered disgraceful or immoral
in accordance with the prevailing norms of conduct.
Public and secular morality should

determine the prevailing norms of
conduct, not religious morality.
However, determining what the prevailing norms of conduct are considered disgraceful or immoral is
not an easy task. An individual’s perception of what is moral or respectable is a confluence of a
myriad of influences, such as religion, family, social status, and a cacophony of others. In this
regard, the Court’s ratiocination in Estrada v. Escritor39 is instructive.
In Estrada, an administrative case against a court interpreter charged with disgraceful and immoral
conduct, the Court stressed that in determining whether a particular conduct can be considered as
disgraceful and immoral, the distinction between public and secular morality on the one hand, and
religious morality, on the other, should be kept in mind.40 That the distinction between public and
secular morality and religious morality is important because the jurisdiction of the Court extends only
to public and secular morality.41 The Court further explained that:
The morality referred to in the law is public and necessarily secular, not religiousx x x. "Religious
teachings as expressed in public debate may influence the civil public order but public moral
disputes may be resolved only on grounds articulable in secular terms." Otherwise, if government
relies upon religious beliefs in formulating public policies and morals, the resulting policies and
morals would require conformity to what some might regard as religious programs or agenda.The
non-believers would therefore be compelled to conform to a standard of conduct buttressed by a
religious belief, i.e., to a "compelled religion," anathema to religious freedom. Likewise, if
government based its actions upon religious beliefs, it would tacitly approve or endorse that belief
and thereby also tacitly disapprove contrary religious or non-religious views that would not support
the policy. As a result, government will not provide full religious freedom for all its citizens, or even
make it appear that those whose beliefs are disapproved are second-class citizens. Expansive
religious freedom therefore requires that government be neutral in matters of religion; governmental
reliance upon religious justification is inconsistent with this policy of neutrality.
In other words, government action, including its proscription of immorality as expressed in criminal
law like concubinage, must have a secular purpose. That is, the government proscribes this conduct
because it is "detrimental (or dangerous) to those conditions upon which depend the existence and
progress of human society" and not because the conduct is proscribed by the beliefs of one religion
or the other. Although admittedly, moral judgments based on religion might have a compelling
influence on those engaged in public deliberations over what actions would be considered a moral
disapprobation punishable by law. After all, they might also be adherents of a religion and thus have
religious opinions and moral codes with a compelling influence on them; the human mind endeavors
to regulate the temporal and spiritual institutions of society in a uniform manner, harmonizing earth
with heaven. Succinctly put, a law could be religious or Kantian or Aquinian or utilitarian in its
deepest roots, but it must have an articulable and discernible secular purpose and justification to
pass scrutiny of the religion clauses.x x x.42(Citations omitted and emphases ours)
Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it pertains to
public and secular morality; it refers to those conducts which are proscribed because they are
detrimental to conditions upon which depend the existence and progress of human society. Thus, in
Anonymous v. Radam,43 an administrative case involving a court utility worker likewise charged with
disgraceful and immoral conduct, applying the doctrines laid down in Estrada, the Court held that:
For a particular conduct to constitute "disgraceful and immoral" behavior under civil service laws, it
must be regulated on account of the concerns of public and secular morality. It cannot be judged
based on personal bias, specifically those colored by particular mores. Nor should it be grounded on
"cultural" values not convincingly demonstrated to have been recognized in the realm of public policy
expressed in the Constitution and the laws. At the same time, the constitutionally guaranteed rights
(such as the right to privacy) should be observed to the extent that they protect behavior that may be
frowned upon by the majority.
Under these tests, two things may be concluded from the fact that an unmarried woman gives birth
out of wedlock:
(1) if the father of the child is himself unmarried, the woman is not ordinarily administratively
liable for disgraceful and immoral conduct.It may be a not-so-ideal situation and may cause
complications for both mother and child but it does not give cause for administrative
sanction. There is no law which penalizes an unmarried mother under those circumstances
by reason of her sexual conduct or proscribes the consensual sexual activity between two
unmarried persons. Neither does the situation contravene any fundamental state policy as
expressed in the Constitution, a document that accommodates various belief systems
irrespective of dogmatic origins.
(2) if the father of the child born out of wedlock is himself married to a woman other thanthe
mother, then there is a cause for administrative sanction against either the father or the
mother. In sucha case, the "disgraceful and immoral conduct" consists of having extramarital
relations with a married person. The sanctity of marriage is constitutionally recognized and
likewise affirmed by our statutes as a special contract of permanent union. Accordingly,
judicial employees have been sanctioned for their dalliances with married persons or for their
own betrayals of the marital vow of fidelity.
In this case, it was not disputed that, like respondent, the father of her child was unmarried.
Therefore, respondent cannot be held liable for disgraceful and immoral conduct simply because she
gave birth to the child Christian Jeon out of wedlock.44 (Citations omitted and emphases ours)
Both Estrada and Radamare administrative cases against employees in the civil service. The Court,
however, sees no reason not to apply the doctrines enunciated in Estrada and Radamin the instant
case. Estrada and Radamalso required the Court to delineate what conducts are considered
disgraceful and/or immoral as would constitute a ground for dismissal. More importantly, as in the
said administrative cases, the instant case involves an employee’s security of tenure; this case
likewise concerns employment, which is not merely a specie of property right, but also the means by
which the employee and those who depend on him live.45
It bears stressing that the right of an employee to security of tenure is protected by the Constitution.
Perfunctorily, a regular employee may not be dismissed unless for cause provided under the Labor
Code and other relevant laws, in this case, the 1992 MRPS. As stated above, when the law refers to
morality, it necessarily pertains to public and secular morality and not religious morality. Thus, the
proscription against "disgraceful or immoral conduct" under Section 94(e) of the 1992 MRPS, which
is made as a cause for dismissal, must necessarily refer to public and secular morality. Accordingly,
in order for a conduct tobe considered as disgraceful or immoral, it must be "‘detrimental (or
dangerous) to those conditions upon which depend the existence and progress of human society’
and not because the conduct is proscribed by the beliefs of one religion or the other."
Thus, in Santos v. NLRC,46 the Court upheld the dismissal of a teacher who had an extra-marital
affair with his co-teacher, who is likewise married, on the ground of disgraceful and immoral conduct
under Section 94(e) of the 1992 MRPS. The Court pointed out that extra-marital affair is considered
as a disgraceful and immoral conduct is an afront to the sanctity of marriage, which is a basic
institution of society, viz:
We cannot overemphasize that having an extra-marital affair is an afront to the sanctity of marriage,
which is a basic institution of society. Even our Family Code provides that husband and wife must
live together, observe mutual love, respect and fidelity. This is rooted in the fact that both our
Constitution and our laws cherish the validity of marriage and unity of the family. Our laws, in
implementing this constitutional edict on marriage and the family underscore their permanence,
inviolability and solidarity.47
The petitioner’s pregnancy out of

wedlock is not a disgraceful or
immoral conduct since she and the
father of her child have no
impediment to marry each other.
In stark contrast to Santos, the Court does not find any circumstance in this case which would lead
the Court to conclude that the petitioner committed a disgraceful or immoral conduct. It bears
stressing that the petitioner and her boyfriend, at the time they conceived a child, had no legal
impediment to marry. Indeed, even prior to her dismissal, the petitioner married her boyfriend, the
father of her child. As the Court held in Radam, there is no law which penalizes an unmarried mother
by reason of her sexual conduct or proscribes the consensual sexual activity between two unmarried
persons; that neither does such situation contravene any fundamental state policy enshrined in the
Constitution.
Admittedly, the petitioner is employed in an educational institution where the teachings and doctrines
of the Catholic Church, including that on pre-marital sexual relations, is strictly upheld and taught to
the students. That her indiscretion, which resulted in her pregnancy out of wedlock, is anathema to
the doctrines of the Catholic Church. However, viewed against the prevailing norms of conduct, the
petitioner’s conduct cannot be considered as disgraceful or immoral; such conduct is not denounced
by public and secular morality. It may be an unusual arrangement, but it certainly is not disgraceful
or immoral within the contemplation of the law.
To stress, pre-marital sexual relations between two consenting adults who have no impediment to
marry each other, and, consequently, conceiving a child out of wedlock, gauged from a purely public
and secular view of morality, does not amount to a disgraceful or immoral conduct under Section
94(e) of the 1992 MRPS.
Accordingly, the labor tribunals erred in upholding the validity of the petitioner’s dismissal. The labor
tribunals arbitrarily relied solely on the circumstances surrounding the petitioner’s pregnancy and its
supposed effect on SSCW and its students without evaluating whether the petitioner’s conduct is
indeed considered disgraceful or immoral in view of the prevailing norms of conduct. In this regard,
the labor tribunals’ respective haphazard evaluation of the evidence amounts to grave abuse of
discretion, which the Court will rectify.
The labor tribunals’ finding that the petitioner’s pregnancy out of wedlock despite the absence of
substantial evidence is not only arbitrary, but a grave abuse of discretion, which should have been
set right by the CA.
There is no substantial evidence to

prove that the petitioner’s pregnancy
out of wedlock caused grave scandal
to SSCW and its students.
SSCW claimed that the petitioner was primarily dismissed because her pregnancy out of wedlock
caused grave scandal to SSCW and its students. That the scandal brought about by the petitioner’s
indiscretion prompted them to dismiss her. The LA upheld the respondents’ claim, stating that:
In this particular case, an "objective" and "rational evaluation" of the facts and circumstances
obtaining in this case would lead us to focus our attention x x x on the impact of the act committed
by the complainant. The act of the complainant x x x eroded the moral principles being taught and
project[ed] by the respondent [C]atholic school to their young lady students.48 (Emphasis in the
original)
On the other hand, the NLRC opined that:
In the instant case, when the complainant-appellant was already conceiving a child even before she
got married, such is considered a shameful and scandalous behavior, inimical to public welfare and
policy. It eroded the moral doctrines which the respondent Catholic school, an exclusive school for
girls, is teaching the young girls. Thus, when the respondent-appellee school terminated
complainant-appellant’s services, it was a valid exercise of its management prerogative. Whether or
not she was a teacher is of no moment. There is no separate set of rules for non-teaching personnel.
Respondents-appellees uphold the teachings of the Catholic Church on pre-marital sex and that the
complainant-appellant as an employee of the school was expected to abide by this basic principle
and to live up with the standards of their purely Catholic values. Her subsequent marriage did not
take away the fact that she had engaged in pre-marital sex which the respondent-appellee school
denounces as the same is opposed to the teachings and doctrines it espouses.49 (Emphasis ours)
Contrary to the labor tribunals’ declarations, the Court finds that SSCW failed to adduce substantial
evidence to prove that the petitioner’s indiscretion indeed caused grave scandal to SSCW and its
students. Other than the SSCW’s bare allegation, the records are bereft of any evidence that would
convincingly prove that the petitioner’s conduct indeed adversely affected SSCW’s integrity in
teaching the moral doctrines, which it stands for. The petitioner is only a non-teaching personnel; her
interaction with SSCW’s students is very limited. Itis thus quite impossible that her pregnancy out of
wedlock caused such a grave scandal, as claimed by SSCW, as to warranther dismissal.
Settled is the rule that in termination cases, the burden of proving that the dismissal of the
employees was for a valid and authorized cause rests on the employer. It is incumbent upon the
employer to show by substantial evidence that the termination of the employment of the employees
was validly made and failure to discharge that duty would mean that the dismissal is not justified and
therefore illegal.50 "Substantial evidence is more than a mere scintilla of evidence. It means such
relevant evidence as a reasonable mind might accept as adequateto support a conclusion, even if
other minds equally reasonable mightconceivably opine otherwise."51
Indubitably, bare allegations do not amount to substantial evidence. Considering that the
respondents failed to adduce substantial evidence to prove their asserted cause for the petitioner’s
dismissal, the labor tribunals should not have upheld their allegations hook, line and sinker. The
labor tribunals’ respective findings, which were arrived at sans any substantial evidence, amounts to
a grave abuse of discretion, which the CA should have rectified. "Security of tenure is a right which
may not be denied on mere speculation of any unclearand nebulous basis."52
The petitioner’s dismissal is not a

valid exercise of SSCW’s
management prerogative.
The CA be labored the management prerogative of SSCW to discipline its employees. The CA
opined that the petitioner’s dismissal is a valid exercise of management prerogative to impose
penalties on erring employees pursuant to its policies, rules and regulations.
The Court does not agree.
The Court has held that "management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods, time,
place and manner of work, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of
workers. The exercise of management prerogative, however, is not absolute as it must beexercised
in good faith and with due regard to the rights of labor." Management cannot exercise its prerogative
in a cruel, repressive, or despotic manner.53
SSCW, as employer, undeniably has the right to discipline its employees and, if need be, dismiss
themif there is a valid cause to do so. However, as already explained, there is no cause to dismiss
the petitioner. Her conduct is not considered by law as disgraceful or immoral. Further, the
respondents themselves have admitted that SSCW, at the time of the controversy, does not have
any policy or rule against an employee who engages in pre-marital sexual relations and conceives a
child as a result thereof. There being no valid basis in law or even in SSCW’s policy and rules,
SSCW’s dismissal of the petitioner is despotic and arbitrary and, thus, not a valid exercise of
management prerogative.
In sum, the Court finds that the petitioner was illegally dismissed as there was no just cause for the
termination of her employment. SSCW failed to adduce substantial evidence to establish that the
petitioner’s conduct, i.e., engaging in pre-marital sexual relations and conceiving a child out of
wedlock, assessed in light of the prevailing norms of conduct, is considered disgraceful or immoral.
The labor tribunals gravely abused their discretion in upholding the validity of the petitioner’s
dismissal as the charge against the petitioner lay not on substantial evidence, but on the bare
allegations of SSCW. In turn, the CA committed reversible error in upholding the validity of the
petitioner’s dismissal, failing torecognize that the labor tribunals gravely abused their discretion in
ruling for the respondents.
The petitioner is entitled to

separation pay, in lieu of actual
reinstatement, full backwages and
attorney’s fees, but not to moral and
exemplary damages.
Having established that the petitioner was illegally dismissed, the Court now determines the reliefs
thatshe is entitled to and their extent. Under the law and prevailing jurisprudence, "an illegally
dismissed employee is entitled to reinstatement as a matter of right."54 Aside from the instances
provided under Articles 28355 and 28456 of the Labor Code, separation pay is, however, granted when
reinstatement is no longer feasible because of strained relations between the employer and the
employee. In cases of illegal dismissal, the accepted doctrine is that separation pay is available in
lieu of reinstatement when the latter recourse is no longer practical or in the best interest of the
parties.57
In Divine Word High School v. NLRC,58 the Court ordered the employer Catholic school to pay the
illegally dismissed high school teacher separation pay in lieu of actual reinstatement since her
continued presence as a teacher in the school "may well bemet with antipathy and antagonism by
some sectors in the school community."59
In view of the particular circumstances of this case, it would be more prudent to direct SSCW to pay
the petitioner separation pay inlieu of actual reinstatement. The continued employment of the
petitioner with SSCW would only serve to intensify the atmosphere of antipathy and antagonism
between the parties. Consequently, the Court awards separation pay to the petitioner equivalent to
one (1) month pay for every year of service, with a fraction of at least six (6) months considered as
one (1) whole year, from the time of her illegal dismissal up to the finality of this judgment, as an
alternative to reinstatement.
Also, "employees who are illegally dismissed are entitled to full backwages, inclusive of allowances
and other benefits or their monetary equivalent, computed from the time their actual compensation
was withheld from them up to the time of their actual reinstatement but if reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal termination up to the finality
of the decision."60 Accordingly, the petitioner is entitled to an award of full backwages from the time
she was illegally dismissed up to the finality of this decision.
Nevertheless, the petitioner is not entitled to moral and exemplary damages. "A dismissed employee
isentitled to moral damages when the dismissal is attended by bad faith or fraud or constitutes an act
oppressive to labor, or is done in a manner contrary to good morals, good customs or public policy.
Exemplary damages may be awarded if the dismissal is effected in a wanton, oppressive or
malevolent manner."61
"Bad faith, under the law, does not simply connote bad judgment or negligence. It imports a
1âw phi1
dishonest purpose or some moral obliquity and conscious doing of a wrong, or a breach of a known
duty through some motive or interest or ill will that partakes of the nature of fraud."62
"It must be noted that the burden of proving bad faith rests on the one alleging it"63 since basic is the
principle that good faith is presumed and he who alleges bad faith has the duty to prove the
same.64 "Allegations of bad faith and fraud must be proved by clear and convincing evidence."65
The records of this case are bereft of any clear and convincing evidence showing that the
respondents acted in bad faith or in a wanton or fraudulent manner in dismissing the petitioner. That
the petitioner was illegally dismissed is insufficient to prove bad faith. A dismissal may be contrary to
law but by itself alone, it does not establish bad faith to entitle the dismissed employee to moral
damages. The award of moral and exemplary damages cannot be justified solely upon the premise
that the employer dismissed his employee without cause.66
However, the petitioner is entitled to attorney’s fees in the amount of 10% of the total monetary
award pursuant to Article 11167 of the Labor Code. "It is settled that where an employee was forced
to litigate and, thus, incur expenses to protect his rights and interest, the award of attorney’s fees is
legally and morally justifiable."68
Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of six
percent (6%) per annumfrom the finality of this judgment until fully paid.69
WHEREFORE, in consideration of the foregoing disquisitions, the petition is GRANTED. The

Decision dated September 24, 2008 and Resolution dated March 2, 2009 of the Court of Appeals in
CA-G.R. SP No. 100188 are hereby REVERSED and SET ASIDE.
The respondent, St. Scholastica’s College Westgrove, is hereby declared guilty of illegal dismissal
and is hereby ORDERED to pay the petitioner, Cheryll Santos Leus, the following: (a) separation
pay in lieu of actual reinstatement equivalent to one (1) month pay for every year of service, with a
fraction of at least six (6) months considered as one (1) whole year from the time of her dismissal up
to the finality of this Decision; (b) full backwages from the time of her illegal dismissal up to the
finality of this Decision; and (c) attorney’s fees equivalent to ten percent (10%) of the total monetary
award. The monetary awards herein granted shall earn legal interest at the rate of six percent (6%)
per annumfrom the date of the finality of this Decision untilfully paid. The case is REMANDED to the
Labor Arbiter for the computation of petitioner’s monetary awards.
SO ORDERED.
G.R. No. 198587, January 14, 2015
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA, Petitioners, v. MA. JOPETTE M.
REBESENCIO, MONTASSAH B. SACAR-ADIONG, ROUEN RUTH A. CRISTOBAL AND LORAINE S.
SCHNEIDER-CRUZ, Respondents.
DECISION
LEONEN, J.:
All Filipinos are entitled to the protection of the rights guaranteed in the Constitution.
This is a Petition for Review on Certiorari with application for the issuance of a temporary restraining order
and/or writ of preliminary injunction under Rule 45 of the 1997 Rules of Civil Procedure praying that
judgment be rendered reversing and setting aside the June 16, 2011 Decision1 and September 13, 2011
Resolution2 of the Court of Appeals in CA-G.R. SP. No. 113006.
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and existing under the laws of
Jeddah, Kingdom of Saudi Arabia. It has a Philippine office located at 4/F, Metro House Building, Sen. Gil J.
Puyat Avenue, Makati City.3 In its Petition filed with this court, Saudia identified itself as follows:
chanro blesvi rt uallawl ibra ry
1. Petitioner SAUDIA is a foreign corporation established and existing under the Royal Decree No. M/24 of
18.07.1385H (10.02.1962G) in Jeddah, Kingdom of Saudi Arabia ("KSA"). Its Philippine Office is located at
4/F Metro House Building, Sen, Gil J. Puyat Avenue, Makati City (Philippine Office). It may be served with
orders of this Honorable Court through undersigned counsel at 4th and 6th Floors, Citibank Center Bldg.,
8741 Paseo de Roxas, Makati City.4 (Emphasis supplied)
Respondents (complainants before the Labor Arbiter) were recruited and hired by Saudia as Temporary
Flight Attendants with the accreditation and approval of the Philippine Overseas Employment
Administration.5 After undergoing seminars required by the Philippine Overseas Employment Administration
for deployment overseas, as well as training modules offered by Saudia (e.g., initial flight attendant/training
course and transition training), and after working as Temporary Flight Attendants, respondents became
Permanent Flight Attendants. They then entered into Cabin Attendant contracts with Saudia: Ma. Jopette M.
Rebesencio (Ma. Jopette) on May 16, 1990;6 Montassah B. Sacar-Adiong (Montassah) and Rouen Ruth A.
Cristobal (Rouen Ruth) on May 22, 1993;7 and Loraine Schneider-Cruz (Loraine) on August 27, 1995.8
Respondents continued their employment with Saudia until they were separated from service on various
dates in 2006.9
Respondents contended that the termination of their employment was illegal. They alleged that the
termination was made solely because they were pregnant.10
As respondents alleged, they had informed Saudia of their respective pregnancies and had gone through the
necessary procedures to process their maternity leaves. Initially, Saudia had given its approval but later on
informed respondents that its management in Jeddah, Saudi Arabia had disapproved their maternity leaves.
In addition, it required respondents to file their resignation letters.11
Respondents were told that if they did not resign, Saudia would terminate them all the same. The threat of
termination entailed the loss of benefits, such as separation pay and ticket discount entitlements.12
Specifically, Ma. Jopette received a call on October 16, 2006 from Saudia's Base Manager, Abdulmalik
Saddik (Abdulmalik).13 Montassah was informed personally by Abdulmalik and a certain Faisal Hussein on
October 20, 2006 after being required to report to the office one (1) month into her maternity leave.14Rouen
Ruth was also personally informed by Abdulmalik on October 17, 2006 after being required to report to the
office by her Group Supervisor.15 Loraine received a call on October 12, 2006 from her Group Supervisor,
Dakila Salvador.16
Saudia anchored its disapproval of respondents' maternity leaves and demand for their resignation on its
"Unified Employment Contract for Female Cabin Attendants" (Unified Contract).17 Under the Unified
Contract, the employment of a Flight Attendant who becomes pregnant is rendered void. It provides: chanro blesvi rt uallawl ibra ry
(H) Due to the essential nature of the Air Hostess functions to be physically fit on board to provide various
services required in normal or emergency cases on both domestic/international flights beside her role in
maintaining continuous safety and security of passengers, and since she will not be able to maintain the
required medical fitness while at work in case of pregnancy, accordingly, if the Air Hostess becomes
pregnant at any time during the term of this contract, this shall render her employment contract
as void and she will be terminated due to lack of medical fitness.18 (Emphasis supplied)
In their Comment on the present Petition,19 respondents emphasized that the Unified Contract took effect on
September 23, 2006 (the first day of Ramadan),20 well after they had filed and had their maternity leaves
approved. Ma. Jopette filed her maternity leave application on September 5, 2006.21 Montassah filed her
maternity leave application on August 29, 2006, and its approval was already indicated in Saudia's computer
system by August 30, 2006.22 Rouen Ruth filed her maternity leave application on September 13,
2006,23 and Loraine filed her maternity leave application on August 22, 2006.24
Rather than comply and tender resignation letters, respondents filed separate appeal letters that were all
rejected.25
Despite these initial rejections, respondents each received calls on the morning of November 6, 2006 from
Saudia's office secretary informing them that their maternity leaves had been approved. Saudia, however,
was quick to renege on its approval. On the evening of November 6, 2006, respondents again received calls
informing them that it had received notification from Jeddah, Saudi Arabia that their maternity leaves had
been disapproved.26
Faced with the dilemma of resigning or totally losing their benefits, respondents executed handwritten
resignation letters. In Montassah's and Rouen Ruth's cases, their resignations were executed on Saudia's
blank letterheads that Saudia had provided. These letterheads already had the word "RESIGNATION" typed
on the subject portions of their headings when these were handed to respondents.27
On November 8, 2007, respondents filed a Complaint against Saudia and its officers for illegal dismissal and
for underpayment of salary, overtime pay, premium pay for holiday, rest day, premium, service incentive
leave pay, 13th month pay, separation pay, night shift differentials, medical expense reimbursements,
retirement benefits, illegal deduction, lay-over expense and allowances, moral and exemplary damages, and
attorney's fees.28 The case was initially assigned to Labor Arbiter Hermino V. Suelo and docketed as NLRC
NCR Case No. 00-11-12342-07.
Saudia assailed the jurisdiction of the Labor Arbiter.29 It claimed that all the determining points of contact
referred to foreign law and insisted that the Complaint ought to be dismissed on the ground of forum non
conveniens.30 It added that respondents had no cause of action as they resigned voluntarily.31
On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the Decision32dismissing
respondents' Complaint. The dispositive portion of this Decision reads: cha nro blesvi rtua llawli bra ry
WHEREFORE, premises' considered, judgment is hereby rendered DISMISSING the instant complaint for
lack of jurisdiction/merit.33 c ralawlawl ibra ry
On respondents' appeal, the National Labor Relations Commission's Sixth Division reversed the ruling of
Executive Labor Arbiter Jambaro-Franco. It explained that "[considering that complainants-appellants are
OFWs, the Labor Arbiters and the NLRC has [sic] jurisdiction to hear and decide their complaint for illegal
termination."34 On the matter of forum non conveniens, it noted that there were no special circumstances
that warranted its abstention from exercising jurisdiction.35 On the issue of whether respondents were
validly dismissed, it held that there was nothing on record to support Saudia's claim that respondents
resigned voluntarily.
The dispositive portion of the November 19, 2009 National Labor Relations Commission Decision36reads: cha nro blesvi rtua llawli bra ry
WHEREFORE, premises considered, judgment is hereby rendered finding the appeal impressed with merit.
The respondents-appellees are hereby directed to pay complainants-appellants the aggregate amount of
SR614,001.24 corresponding to their backwages and separation pay plus ten (10%) percent thereof as
attorney's fees. The decision of the Labor Arbiter dated December 12, 2008 is hereby VACATED and SET
ASIDE. Attached is the computation prepared by this Commission and made an integral part of this
Decision.37cra lawlawlib rary
In the Resolution dated February 11, 2010,38 the National Labor Relations Commission denied petitioners'
Motion for Reconsideration.
In the June 16, 2011 Decision,39 the Court of Appeals denied petitioners' Rule 65 Petition and modified the
Decision of the National Labor Relations Commission with respect to the award of separation pay and
backwages.
The dispositive portion of the Court of Appeals Decision reads: chan roblesv irtuallaw lib rary
WHEREFORE, the instant petition is hereby DENIED. The Decision dated November 19, 2009 issued by
public respondent, Sixth Division of the National Labor Relations Commission - National Capital Region
is MODIFIED only insofar as the computation of the award of separation pay and backwages. For greater
clarity, petitioners are ordered to pay private respondents separation pay which shall be computed from
private respondents' first day of employment up to the finality of this decision, at the rate of one month per
year of service and backwages which shall be computed from the date the private respondents were illegally
terminated until finality of this decision. Consequently, the ten percent (10%) attorney's fees shall be based
on the total amount of the award. The assailed Decision is affirmed in all other respects.
The labor arbiter is hereby DIRECTED to make a recomputation based on the foregoing.40 cra lawlawlib ra ry
In the Resolution dated September 13, 2011, 41

the Court of Appeals denied petitioners' Motion for
Reconsideration.
Hence, this Appeal was filed.
The issues for resolution are the following:
First, whether the Labor Arbiter and the National Labor Relations Commission may exercise jurisdiction over
Saudi Arabian Airlines and apply Philippine law in adjudicating the present dispute;
Second, whether respondents' voluntarily resigned or were illegally terminated; and
Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian Airlines. chanRoblesv irtual Lawlib rary
Summons were validly served on Saudia and jurisdiction over it validly acquired.
There is no doubt that the pleadings and summons were served on Saudia through its counsel.42 Saudia,
however, claims that the Labor Arbiter and the National Labor Relations Commission had no jurisdiction over
it because summons were never served on it but on "Saudia Manila."43 Referring to itself as "Saudia
Jeddah," it claims that "Saudia Jeddah" and not "Saudia Manila" was the employer of respondents because:
First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into by respondents;
Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries and benefits; and
Lastly, it was with "Saudia Jeddah" that respondents filed their resignations.44
Saudia posits that respondents' Complaint was brought against the wrong party because "Saudia Manila,"
upon which summons was served, was never the employer of respondents.45
Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare allegation, there is
no basis for concluding that "Saudia Jeddah" is distinct from "Saudia Manila."
What is clear is Saudia's statement in its own Petition that what it has is a "Philippine Office . . . located at
4/F Metro House Building, Sen. Gil J. Puyat Avenue, Makati City."46 Even in the position paper that Saudia
submitted to the Labor Arbiter,47 what Saudia now refers to as "Saudia Jeddah" was then only referred to as
"Saudia Head Office at Jeddah, KSA,"48 while what Saudia now refers to as "Saudia Manila" was then only
referred to as "Saudia's office in Manila."49
By its own admission, Saudia, while a foreign corporation, has a Philippine office.
Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act of 1991, provides
the following: chan roblesv irtuallawl ib rary
The phrase "doing business" shall include . . . opening offices, whether called "liaison" offices or
branches; . . . and any other act or acts that imply a continuity of commercial dealings or arrangements
and contemplate to that extent the performance of acts or works, or the exercise of some of the functions
normally incident to, and in progressive prosecution of commercial gain or of the purpose and object of the
business organization. (Emphasis supplied)
A plain application of Section 3(d) of the Foreign Investments Act leads to no other conclusion than that
Saudia is a foreign corporation doing business in the Philippines. As such, Saudia may be sued in the
Philippines and is subject to the jurisdiction of Philippine tribunals.
Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia Manila" — the latter being
nothing more than Saudia's local office — service of summons to Saudia's office in Manila sufficed to vest
jurisdiction over Saudia's person in Philippine tribunals. chanRo blesv irtua lLawl ibra ry
II
Saudia asserts that Philippine courts and/or tribunals are not in a position to make an intelligent decision as
to the law and the facts. This is because respondents' Cabin Attendant contracts require the application of
the laws of Saudi Arabia, rather than those of the Philippines.50 It claims that the difficulty of ascertaining
foreign law calls into operation the principle of forum non conveniens, thereby rendering improper the
exercise of jurisdiction by Philippine tribunals.51
A choice of law governing the validity of contracts or the interpretation of its provisions dees not necessarily
imply forum non conveniens. Choice of law and forum non conveniens are entirely different matters.
Choice of law provisions are an offshoot of the fundamental principle of autonomy of contracts. Article 1306
of the Civil Code firmly ensconces this: chanroblesv irt uallawl ibra ry
Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public
policy.
In contrast, forum non conveniens is a device akin to the rule against forum shopping. It is designed to
frustrate illicit means for securing advantages and vexing litigants that would otherwise be possible if the
venue of litigation (or dispute resolution) were left entirely to the whim of either party.
Contractual choice of law provisions factor into transnational litigation and dispute resolution in one of or in
a combination of four ways: (1) procedures for settling disputes, e.g., arbitration; (2) forum, i.e., venue; (3)
governing law; and (4) basis for interpretation. Forum non conveniens relates to, but is not subsumed by,
the second of these.
Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on the laws of a given
jurisdiction as the governing law of a contract does not preclude the exercise of jurisdiction by tribunals
elsewhere. The reverse is equally true: The assumption of jurisdiction by tribunals does not ipso factomean
that it cannot apply and rule on the basis of the parties' stipulation. In Hasegawa v. Kitamura:52 ChanRobles Vi rtualawl ib rary
Analytically, jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether it is fair
to cause a defendant to travel to this state; choice of law asks the further question whether the application
of a substantive law V'hich will determine the merits of the case is fair to both parties. The power to exercise
jurisdiction does not automatically give a state constitutional authority to apply forum law. While jurisdiction
and the choice of the lex fori will often, coincide, the "minimum contacts" for one do not always provide the
necessary "significant contacts" for the other. The question of whether the law of a state can be applied to a
transaction is different from the question of whether the courts of that state have jurisdiction to enter a
judgment.53 cra lawlawlib rary
As various dealings, commercial or otherwise, are facilitated by the progressive ease of communication and
travel, persons from various jurisdictions find themselves transacting with each other. Contracts involving
foreign elements are, however, nothing new. Conflict of laws situations precipitated by disputes and
litigation anchored on these contracts are not totally novel.
Transnational transactions entail differing laws on the requirements Q for the validity of the formalities and
substantive provisions of contracts and their interpretation. These transactions inevitably lend themselves to
the possibility of various fora for litigation and dispute resolution. As observed by an eminent expert on
transnational law: chanroblesvi rt uallawl ibra ry
The more jurisdictions having an interest in, or merely even a point of contact with, a transaction or
relationship, the greater the number of potential fora for the resolution of disputes arising out of or related
to that transaction or relationship. In a world of increased mobility, where business and personal
transactions transcend national boundaries, the jurisdiction of a number of different fora may easily be
invoked in a single or a set of related disputes.54 c ralawlawl ibra ry
Philippine law is definite as to what governs the formal or extrinsic validity of contracts. The first paragraph
of Article 17 of the Civil Code provides that "[t]he forms and solemnities of contracts . . . shall be governed
by the laws of the country in which they are executed"55 (i.e., lex loci celebrationis).
In contrast, there is no statutorily established mode of settling conflict of laws situations on matters
pertaining to substantive content of contracts. It has been noted that three (3) modes have emerged:
(1) lex loci contractus or the law of the place of the making; (2) lex loci solutionis or the law of the place of
performance; and (3) lex loci intentionis or the law intended by the parties.56
Given Saudia's assertions, of particular relevance to resolving the present dispute is lex loci intentionis.
An author observed that Spanish jurists and commentators "favor lex loci intentionis."57 These jurists and
commentators proceed from the Civil Code of Spain, which, like our Civil Code, is silent on what governs the
intrinsic validity of contracts, and the same civil law traditions from which we draw ours.
In this jurisdiction, this court, in Philippine Export and Foreign Loan Guarantee v. V.P. Eusebio Construction,
Inc.,58 manifested preference for allowing the parties to select the law applicable to their contract": chanrob lesvi rtual lawlib rary
No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule followed by
most legal systems, however, is that the intrinsic validity of a contract must be governed by the lex
contractus or "proper law of the contract." This is the law voluntarily agreed upon by the parties (the lex loci
voluntatis) or the law intended by them either expressly or implicitly (the lex loci intentionis). The law
selected may be implied from such factors as substantial connection with the transaction, or the nationality
or domicile of the parties. Philippine courts would do well to adopt the first and most basic rule in most legal
systems, namely, to allow the parties to select the law applicable to their contract, subject to the limitation
that it is not against the law, morals, or public policy of the forum and that the chosen law must bear a
substantive relationship to the transaction.59 (Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant contracts require the application of the laws of
Saudi Arabia. It insists that the need to comply with these stipulations calls into operation the doctrine
of forum non conveniens and, in turn, makes it necessary for Philippine tribunals to refrain from exercising
jurisdiction.
As mentioned, contractual choice of laws factors into transnational litigation in any or a combination of four
(4) ways. Moreover, forum non conveniens relates to one of these: choosing between multiple possible fora.
Nevertheless, the possibility of parallel litigation in multiple fora — along with the host of difficulties it poses
— is not unique to transnational litigation. It is a difficulty that similarly arises in disputes well within the
bounds of a singe jurisdiction.
When parallel litigation arises strictly within the context of a single jurisdiction, such rules as those on forum
shopping, litis pendentia, and res judicata come into operation. Thus, in the Philippines, the 1997 Rules on
Civil Procedure provide for willful and deliberate forum shopping as a ground not only for summary dismissal
with prejudice but also for citing parties and counsels in direct contempt, as well as for the imposition of
administrative sanctions.60 Likewise, the same rules expressly provide that a party may seek the dismissal
of a Complaint or another pleading asserting a claim on the ground "[t]hat there is another action pending
between the same parties for the same cause," i.e., litis pendentia, or "[t]hat the cause of action is barred
by a prior judgment,"61 i.e., res judicata.
Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata, is a means of
addressing the problem of parallel litigation. While the rules of forum shopping, litis pendentia, and res
judicata are designed to address the problem of parallel litigation within a single jurisdiction, forum non
conveniens is a means devised to address parallel litigation arising in multiple jurisdictions.
Forum non conveniens literally translates to "the forum is inconvenient."62 It is a concept in private
international law and was devised to combat the "less than honorable" reasons and excuses that litigants
use to secure procedural advantages, annoy and harass defendants, avoid overcrowded dockets, and select
a "friendlier" venue.63 Thus, the doctrine of forum non conveniens addresses the same rationale that the
rule against forum shopping does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata,64 is a concept originating in common law.65 However, unlike the
rule on res judicata, as well as those on litis pendentia and forum shopping, forum non conveniens finds no
textual anchor, whether in statute or in procedural rules, in our civil law system. Nevertheless, jurisprudence
has applied forum non conveniens as basis for a court to decline its exercise of jurisdiction.66
Forum non conveniens is soundly applied not only to address parallel litigation and undermine a litigant's
capacity to vex and secure undue advantages by engaging in forum shopping on an international scale. It is
also grounded on principles of comity and judicial efficiency.
Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction on account of forum
non conveniens is a deferential gesture to the tribunals of another sovereign. It is a measure that prevents
the former's having to interfere in affairs which are better and more competently addressed by the latter.
Further, forum non conveniens entails a recognition not only that tribunals elsewhere are better suited to
rule on and resolve a controversy, but also, that these tribunals are better positioned to enforce
judgments and, ultimately, to dispense justice. Forum non conveniens prevents the embarrassment of an
awkward situation where a tribunal is rendered incompetent in the face of the greater capability — both
analytical and practical — of a tribunal in another jurisdiction.
The wisdom of avoiding conflicting and unenforceable judgments is as much a matter of efficiency and
economy as it is a matter of international courtesy. A court would effectively be neutering itself if it insists
on adjudicating a controversy when it knows full well that it is in no position to enforce its judgment. Doing
so is not only an exercise in futility; it is an act of frivolity. It clogs the dockets of a.tribunal and leaves it to
waste its efforts on affairs, which, given transnational exigencies, will be reduced to mere academic, if not
trivial, exercises.
Accordingly, under the doctrine of forum non conveniens, "a court, in conflicts of law cases, may refuse
impositions on its jurisdiction where it is not the most 'convenient' or available forum and the parties are not
precluded from seeking remedies elsewhere."67 In Puyat v. Zabarte,68 this court recognized the following
situations as among those that may warrant a court's desistance from exercising jurisdiction: chan roble svirtual lawlib rary
1) The belief that the matter can be better tried and decided elsewhere,
either because the main aspects of the case transpired in a foreign
jurisdiction or the material witnesses have their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice
known as forum shopping[,] merely to secure procedural advantages or
to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non residents or

aliens when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right
sought to be maintained; and
5) The difficulty of ascertaining foreign law.69

In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,70 this court
underscored that a Philippine court may properly assume jurisdiction over a case if it chooses to do so to the
extent: "(1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the
Philippine Court is in a position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have power to enforce its decision."71
The use of the word "may" (i.e., "may refuse impositions on its jurisdiction"72) in the decisions shows that
the matter of jurisdiction rests on the sound discretion of a court. Neither the mere invocation of forum non
conveniens nor the averment of foreign elements operates to automatically divest a court of jurisdiction.
Rather, a court should renounce jurisdiction only "after 'vital facts are established, to determine whether
special circumstances' require the court's desistance."73 As the propriety of applying forum non
conveniens is contingent on a factual determination, it is, therefore, a matter of defense.74
The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil Procedure is exclusive in its recital of the
grounds for dismissal that are exempt from the omnibus motion rule: (1) lack of jurisdiction over the subject
matter; (2) litis pendentia; (3) res judicata; and (4) prescription. Moreover, dismissal on account offorum
non conveniens is a fundamentally discretionary matter. It is, therefore, not a matter for a defendant to foist
upon the court at his or her own convenience; rather, it must be pleaded at the earliest possible
opportunity.
On the matter of pleading forum non conveniens, we state the rule, thus: Forum non conveniens must not
only be clearly pleaded as a ground for dismissal; it must be pleaded as such at the earliest possible
opportunity. Otherwise, it shall be deemed waived.
This court notes that in Hasegawa,76 this court stated that forum non conveniens is not a ground for a
motion to dismiss. The factual ambience of this case however does not squarely raise the viability of this
doctrine. Until the opportunity comes to review the use of motions to dismiss for parallel
litigation, Hasegawa remains existing doctrine.
Consistent with forum non conveniens as fundamentally a factual matter, it is imperative that it proceed
from & factually established basis. It would be improper to dismiss an action pursuant to forum non
conveniens based merely on a perceived, likely, or hypothetical multiplicity of fora. Thus, a defendant must
also plead and show that a prior suit has, in fact, been brought in another jurisdiction.
The existence of a prior suit makes real the vexation engendered by duplicitous litigation, the
embarrassment of intruding into the affairs of another sovereign, and the squandering of judicial efforts in
resolving a dispute already lodged and better resolved elsewhere. As has been noted: chan roble svirtual lawlib rary
A case will not be stayed o dismissed on [forum] non conveniens grounds unless the plaintiff is shown to
have an available alternative forum elsewhere. On this, the moving party bears the burden of proof.
A number of factors affect the assessment of an alternative forum's adequacy. The statute of limitations
abroad may have run, of the foreign court may lack either subject matter or personal jurisdiction over the
defendant. . . . Occasionally, doubts will be raised as to the integrity or impartiality of the foreign court
(based, for example, on suspicions of corruption or bias in favor of local nationals), as to the fairness of its
judicial procedures, or as to is operational efficiency (due, for example, to lack of resources, congestion and
delay, or interfering circumstances such as a civil unrest). In one noted case, [it was found] that delays of
'up to a quarter of a century' rendered the foreign forum... inadequate for these purposes.77 cralawl awlib rary
We deem it more appropriate and in the greater interest of prudence that a defendant not only allege
supposed dangerous tendencies in litigating in this jurisdiction; the defendant must also show that such
danger is real and present in that litigation or dispute resolution has commenced in another
jurisdiction and that a foreign tribunal has chosen to exercise jurisdiction.
III
Forum non conveniens finds no application and does not operate to divest Philippine tribunals of jurisdiction
and to require the application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the stipulations of the Cabin Attendant
contracts that require the application of the laws of Saudi Arabia.
Forum non conveniens relates to forum, not to the choice of governing law. Thai forum non conveniensmay
ultimately result in the application of foreign law is merely an incident of its application. In this strict
sense, forum non conveniens is not applicable. It is not the primarily pivotal consideration in this case.
In any case, even a further consideration of the applicability of forum non conveniens on the incidental
matter of the law governing respondents' relation with Saudia leads to the conclusion that it is improper for
Philippine tribunals to divest themselves of jurisdiction.
Any evaluation of the propriety of contracting parties' choice of a forum and'its incidents must grapple with
two (2) considerations: first, the availability and adequacy of recourse to a foreign tribunal; and second, the
question of where, as between the forum court and a foreign court, the balance of interests inhering in a
dispute weighs more heavily.
The first is a pragmatic matter. It relates to the viability of ceding jurisdiction to a foreign tribunal and can
be resolved by juxtaposing the competencies and practical circumstances of the tribunals in alternative fora.
Exigencies, like the statute of limitations, capacity to enforce orders and judgments, access to records,
requirements for the acquisition of jurisdiction, and even questions relating to the integrity of foreign courts,
may render undesirable or even totally unfeasible recourse to a foreign court. As mentioned, we consider it
in the greater interest of prudence that a defendant show, in pleading forum non conveniens, that litigation
has commenced in another jurisdiction and that a foieign tribunal has, in fact, chosen to exercise
jurisdiction.
Two (2) factors weigh into a court's appraisal of the balance of interests inhering in a dispute: first, the
vinculum which the parties and their relation have to a given jurisdiction; and second, the public interest
that must animate a tribunal, in its capacity as an agent of the sovereign, in choosing to assume or decline
jurisdiction. The first is more concerned with the parties, their personal circumstances, and private interests;
the second concerns itself with the state and the greater social order.
In considering the vinculum, a court must look into the preponderance of linkages which the parties and
their transaction may have to either jurisdiction. In this respect, factors, such as the parties' respective
nationalities and places of negotiation, execution, performance, engagement or deployment, come into play.
In considering public interest, a court proceeds with a consciousness that it is an organ of the state. It must,
thus, determine if the interests of the sovereign (which acts through it) are outweighed by those of the
alternative jurisdiction. In this respect, the court delves into a consideration of public policy. Should it find
that public interest weighs more heavily in favor of its assumption of jurisdiction, it should proceed in
adjudicating the dispute, any doubt or .contrary view arising from the preponderance of linkages
notwithstanding.
Our law on contracts recognizes the validity of contractual choice of law provisions. Where such provisions
exist, Philippine tribunals, acting as the forum court, generally defer to the parties' articulated choice.
This is consistent with the fundamental principle of autonomy of contracts. Article 1306 of the Civ:l Code
expressly provides that "[t]he contracting parties may establish 'such stipulations, clauses, terms and
conditions as they may deem convenient."78 Nevertheless, while a Philippine tribunal (acting as the forum
court) is called upon to respect the parties' choice of governing law, such respect must not be so permissive
as to lose sight of considerations of law, morals, good customs, public order, or public policy that underlie
the contract central to the controversy.
Specifically with respect to public policy, in Pakistan International Airlines Corporation v. Ople,79 this court
explained that:chan roblesv irt uallawl ibra ry
counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions
of applicable law, especially provisions relating to matters affected with public policy, are deemed written
inta the contract. Put a little differently, the governing principle is that parties may not contract away
applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with
public interest.80(Emphasis supplied)
Article II, Section 14 of the 1987 Constitution provides that "[t]he State ... shall ensure the fundamental
equality before the law of women and men." Contrasted with Article II, Section 1 of the 1987 Constitution's
statement that "[n]o person shall ... be denied the equal protection of the laws," Article II, Section 14
exhorts the State to "ensure." This does not only mean that the Philippines shall not countenance nor lend
legal recognition and approbation to measures that discriminate on the basis of one's being male or female.
It imposes an obligation to actively engage in securing the fundamental equality of men and women.
The Convention on the Elimination of all Forms of Discrimination against Women (CEDAW), signed and
ratified by the Philippines on July 15, 1980, and on August 5, 1981, respectively,81 is part of the law of the
land. In view of the widespread signing and ratification of, as well as adherence (in practice) to it by states,
it may even be said that many provisions of the CEDAW may have become customary international law. The
CEDAW gives effect to the Constitution's policy statement in Article II, Section 14. Article I of the CEDAW
defines "discrimination against women" as: chanroble svi rtual lawlib rary
any distinction, exclusion or restriction made on the basis of sex which has the effect or purpose of
impairing or nullifying the recognition, enjoyment or exercise by women, irrespective of their marital status,
on a basis of equality of men and women, of human rights and fundamental freedoms in the political,
economic, social, cultural, civil or any other field.82 cralaw lawlib rary
The constitutional exhortation to ensure fundamental equality, as illumined by its enabling law, the CEDAW,
must inform and animate all the actions of all personalities acting on behalf of the State. It is, therefore, the
bounden duty of this court, in rendering judgment on the disputes brought before it, to ensure that no
discrimination is heaped upon women on the mere basis of their being women. This is a point so basic and
central that all our discussions and pronouncements — regardless of whatever averments there may be of
foreign law — must proceed from this premise.
So informed and animated, we emphasize the glaringly discriminatory nature of Saudia's policy. As argued
by respondents, Saudia's policy entails the termination of employment of flight attendants who become
pregnant. At the risk of stating the obvious, pregnancy is an occurrence that pertains specifically to women.
Saudia's policy excludes from and restricts employment on the basis of no other consideration but sex.
We do not lose sight of the reality that pregnancy does present physical limitations that may render difficult
the performance of functions associated with being a flight attendant. Nevertheless, it would be the height
of iniquity to view pregnancy as a disability so permanent and immutable that, it must entail the termination
of one's employment. It is clear to us that any individual, regardless of gender, may be subject to exigencies
that limit the performance of functions. However, we fail to appreciate how pregnancy could be such an
impairing occurrence that it leaves no other recourse but the complete termination of the means through
which a woman earns a living.
Apart from the constitutional policy on the fundamental equality before the law of men and women, it is
settled that contracts relating to labor and employment are impressed with public interest. Article 1700 of
the Civil Code provides that "[t]he relation between capital and labor are not merely contractual. They are
so impressed with public interest that labor contracts must yield to the common good."
Consistent with this, this court's pronouncements in Pakistan International Airlines Corporation83 are clear
and unmistakable: chan roblesv irtuallaw lib rary
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly, the
law of Pakistan as the applicable law of the agreement, and, secondly, lays the venue for settlement of any
dispute arising out of or in connection with the agreement "only [in] courts of Karachi, Pakistan". The first
clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and'regulations
to the subject matter of this case, i.e., the employer-employee relationship between petitioner PIA and
private respondents. We have already pointed out that the relationship is much affected with public interest
and that the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties
agreeing upon some other law to govern their relationship. . . . Under these circumstances, paragraph 10 of
the employment agreement cannot be given effect so as to oust Philippine agencies and courts of the
jurisdiction vested upon them by Philippine law.84 (Emphasis supplied)
As the present dispute relates to (what the respondents allege to be) the illegal termination of respondents'
employment, this case is immutably a matter of public interest and public policy. Consistent with clear
pronouncements in law and jurisprudence, Philippine laws properly find application in and govern this case.
'Moreover, as this premise for Saudia's insistence on the application forum non conveniens has been
shattered, it follows that Philippine tribunals may properly assume jurisdiction over the present controversy.
Philippine jurisprudence provides ample illustrations of when a court's renunciation of jurisdiction on account
of forum non conveniens is proper or improper.'
In Philsec Investment Corporation v. Court of Appeals,85 this court noted that the trial court failed to
consider that one of the plaintiffs was a domestic corporation, that one of the defendants was a Filipino, and
that it was the extinguishment of the latter's debt that was the object of the transaction subject of the
litigation. Thus, this court held, among others, that the trial court's refusal to assume jurisdiction was not
justified by forum non conveniens and remanded the case to the trial court.
In Raytheon International, Inc. v. Rouzie, Jr.,86 this court sustained the trial court's assumption of
jurisdiction considering that the trial court could properly enforce judgment on the petitioner which was a
foreign corporation licensed to do business in the Philippines.
In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court found no reason to disturb the trial court's
assumption of jurisdiction over a case in which, as noted by the trial court, "it is more convenient to hear
and decide the case in the Philippines because Todaro [the plaintiff] resides in the Philippines and the
contract allegedly breached involve[d] employment in the Philippines."88
In Pacific Consultants International Asia, Inc. v. Schonfeld,89 this court held that the fact that the
complainant in an illegal dismissal case was a Canadian citizen and a repatriate did not warrant the
application of forum non conveniens considering that: (1) the Labor Code does not include forum non
conveniens as a ground for the dismissal of a complaint for illegal dismissal; (2) the propriety of dismissing
a case based on forum non conveniens requires a factual determination; and (3) the requisites for
assumption of jurisdiction as laid out in Bank of America, NT&SA90 were all satisfied.
In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations Commission91 that the
National Labor Relations Q Commission was a seriously inconvenient forum. In that case, private respondent
Marcelo G. Santos was working in the Sultanate of Oman when he received a letter from Palace Hotel
recruiting him for employment in Beijing, China. Santos accepted the offer. Subsequently, however, he was
released from employment supposedly due to business reverses arising from political upheavals in China
(i.e., the Tiananmen Square incidents of 1989). Santos later filed a Complaint for illegal dismissal
impleading Palace Hotel's General Manager, Mr. Gerhard Schmidt, the Manila Hotel International Company
Ltd. (which was, responsible for training Palace Hotel's personnel and staff), and the Manila Hotel
Corporation (which owned 50% of Manila Hotel International Company Ltd.'s capital stock).
In ruling against the National Labor Relations Commission's exercise of jurisdiction, this court noted that the
main aspects of the case transpired in two (2) foreign jurisdictions, Oman and China, and that the case
involved purely foreign elements. Specifically, Santos was directly hired by a foreign employer through
correspondence sent to Oman. Also, the proper defendants were neither Philippine nationals nor engaged in
business in the Philippines, while the main witnesses were not residents of the Philippines. Likewise, this
court noted that the National Labor Relations Commission was in no position to conduct the following: first,
determine the law governing the employment contract, as it was entered into in foreign soil; second,
determine the facts, as Santos' employment was terminated in Beijing; and third, enforce its judgment,
since Santos' employer, Palace Hotel, was incorporated under the laws of China and was not even served
with summons.
Contrary to Manila Hotel, the case now before us does not entail a preponderance of linkages that favor a
foreign jurisdiction.
Here, the circumstances of the parties and their relation do not approximate the circumstances enumerated
in Puyat,92 which this court recognized as possibly justifying the desistance of Philippine tribunals from
exercising jurisdiction.
First, there is no basis for concluding that the case can be more conveniently tried elsewhere. As established
earlier, Saudia is doing business in the Philippines. For their part, all four (4) respondents are Filipino
citizens maintaining residence in the Philippines and, apart from their previous employment with Saudia,
have no other connection to the Kingdom of Saudi Arabia. It would even be to respondents' inconvenience if
this case were to be tried elsewhere.
Second, the records are bereft of any indication that respondents filed their Complaint in an effort to engage
in forum shopping or to vex and inconvenience Saudia.
Third, there is no indication of "unwillingness to extend local judicial facilities to non-residents or

aliens."93That Saudia has managed to bring the present controversy all the way to this court proves this.
Fourth, it cannot be said that the local judicial machinery is inadequate for effectuating the right sought to
be maintained. Summons was properly served on Saudia and jurisdiction over its person was validly
acquired.
Lastly, there is not even room for considering foreign law. Philippine law properly governs the present
dispute.
As the question of applicable law has been settled, the supposed difficulty of ascertaining foreign law (which
requires the application of forum non conveniens) provides no insurmountable inconvenience or special
circumstance that will justify depriving Philippine tribunals of jurisdiction.
Even if we were to assume, for the sake of discussion, that it is the laws of Saudi Arabia which should apply,
it does not follow that Philippine tribunals should refrain from exercising jurisdiction. To. recall our
pronouncements in Puyat,94 as well as in Bank of America, NT&SA,95 it is not so much the mere
applicability of foreign law which calls into operation forum non conveniens. Rather, what justifies a court's
desistance from exercising jurisdiction is "[t]he difficulty of ascertaining foreign law"96 or the inability of a
"Philippine Court to make an intelligent decision as to the law[.]"97
Consistent with lex loci intentionis, to the extent that it is proper and practicable (i.e., "to make an
intelligent decision"98), Philippine tribunals may apply the foreign law selected by the parties. In fact, (albeit
without meaning to make a pronouncement on the accuracy and reliability of respondents' citation) in this
case, respondents themselves have made averments as to the laws of Saudi Arabia. In their Comment,
respondents write: c han roblesv irt uallawl ibra ry
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is illegal and unlawful to terminate the
employment of any woman by virtue of pregnancy. The law in Saudi Arabia is even more harsh and strict
[sic] in that no employer can terminate the employment of a female worker or give her a warning of the
same while on Maternity Leave, the specific provision of Saudi Labor Laws on the matter is hereto quoted as
follows:cha nro blesvi rtua llawli bra ry
"An employer may not terminate the employment of a female worker or give her a warning of the same
while on maternity leave." (Article 155, Labor Law of the Kingdom of Saudi Arabia, Royal Decree No.
M/51.)99 cralawlaw lib rary
All told, the considerations for assumption of jurisdiction by Philippine tribunals as outlined in Bank of
America, NT&SA100 have been satisfied. First, all the parties are based in the Philippines and all the material
incidents transpired in this jurisdiction. Thus, the parties may conveniently seek relief from Philippine
tribunals. Second, Philippine tribunals are in a position to make an intelligent decision as to the law and the
facts. Third, Philippine tribunals are in a position to enforce their decisions. There is no compelling basis for
ceding jurisdiction to a foreign tribunal. Quite the contrary, the immense public policy considerations
attendant to this case behoove Philippine tribunals to not shy away from their duty to rule on the case. chanRoblesvi rtua lLawl ibra ry
IV
Respondents were illegally terminated.
In Bilbao v. Saudi Arabian Airlines,101 this court defined voluntary resignation as "the voluntary act of an
employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the
exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a
formal pronouncement or relinquishment of an office, with the intention of relinquishing the office
accompanied by the act of relinquishment."102 Thus, essential to the act of resignation is voluntariness. It
must be the result of an employee's exercise of his or her own will.
In the same case of Bilbao, this court advanced a means for determining whether an employee resigned
voluntarily: cha nrob lesvi rtua llawlib ra ry
As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before
and after the alleged resignation must be considered in determining whether he or she, in fact, intended, to
sever his or her employment.103 (Emphasis supplied)
On the other hand, constructive dismissal has been defined as "cessation of work because 'continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a
diminution in pay' and other benefits."104
In Penaflor v. Outdoor Clothing Manufacturing Corporation,105 constructive dismissal has been described as
tantamount to "involuntarily [sic] resignation due to the harsh, hostile, and unfavorable conditions set by
the employer."106 In the same case, it was noted that "[t]he gauge for constructive dismissal is whether a
reasonable person in the employee's position would feel compelled to give up his employment under the
prevailing circumstances."107
Applying the cited standards on resignation and constructive dismissal, it is clear that respondents were
constructively dismissed. Hence, their termination was illegal.
The termination of respondents' employment happened when they were pregnant and expecting to incur
costs on account of child delivery and infant rearing. As noted by the Court of Appeals, pregnancy is a time
when they need employment to sustain their families.108 Indeed, it goes against normal and reasonable
human behavior to abandon one's livelihood in a time of great financial need.
It is clear that respondents intended to remain employed with Saudia. All they did was avail of their
maternity leaves. Evidently, the very nature of a maternity leave means that a pregnant employee will not
report for work only temporarily and that she will resume the performance of her duties as soon as the leave
allowance expires.
It is also clear that respondents exerted all efforts to' remain employed with Saudia. Each of them
repeatedly filed appeal letters (as much as five [5] letters in the case of Rebesencio109) asking Saudia to
reconsider the ultimatum that they resign or be terminated along with the forfeiture of their benefits. Some
of them even went to Saudia's office to personally seek reconsideration.110
Respondents also adduced a copy of the "Unified Employment Contract for Female Cabin Attendants."111This
contract deemed void the employment of a flight attendant who becomes pregnant and threatened
termination due to lack of medical fitness.112 The threat of termination (and the forfeiture of benefits that it
entailed) is enough to compel a reasonable person in respondents' position to give up his or her
employment.
Saudia draws attention to how respondents' resignation letters were supposedly made in their own
handwriting. This minutia fails to surmount all the other indications negating any voluntariness on
respondents' part. If at all, these same resignation letters are proof of how any supposed resignation did not
arise from respondents' own initiative. As earlier pointed out, respondents' resignations were executed on
Saudia's blank letterheads that Saudia had provided. These letterheads already had the word
"RESIGNATION" typed on the subject portion of their respective headings when these were handed to
respondents.113 ChanRobles Vi rt ualawlib ra ry
"In termination cases, the burden of proving just or valid cause for dismissing an employee rests on the
employer."114 In this case, Saudia makes much of how respondents supposedly completed their exit
interviews, executed quitclaims, received their separation pay, and took more than a year to file their
Complaint.115 If at all, however, these circumstances prove only the fact of their occurrence, nothing more.
The voluntariness of respondents' departure from Saudia is non sequitur.
Mere compliance with standard procedures or processes, such as the completion of their exit interviews,
neither negates compulsion nor indicates voluntariness.
As with respondent's resignation letters, their exit interview forms even support their claim of illegal
dismissal and militates against Saudia's arguments. These exit interview forms, as reproduced by Saudia in
its own Petition, confirms the unfavorable conditions as regards respondents' maternity leaves. Ma. Jopette's
and Loraine's exit interview forms are particularly telling:chan roblesv irtuallawl ib rary
a. From Ma. Jopette's exit interview form:
3. In what respects has the job met or failed to meet your expectations?
THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY LEAVE.116
b. From Loraine's exit interview form:
1. What are your main reasons for leaving Saudia? What company are you joining?
xxx xxx xxx
Others
CHANGING POLICIES REGARDING MATERNITY LEAVE (PREGNANCY)117

As to respondents' quitclaims, in Phil. Employ Services and Resources, Inc. v. Paramio,118 this court noted
that "[i]f (a) there is clear proof that the waiver was wangled from an unsuspecting or gullible person; or (b)
the terms of the settlement are unconscionable, and on their face invalid, such quitclaims must be struck
down as invalid or illegal."119 Respondents executed their quitclaims after having been unfairly given an
ultimatum to resign or be terminated (and forfeit their benefits). chanRob lesvi rtual Lawl ibra ry
Having been illegally and unjustly dismissed, respondents are entitled to full backwages and benefits from
the time of their termination until the finality of this Decision. They are likewise entitled to separation pay in
the amount of one (1) month's salary for every year of service until the fmality of this Decision, with a
fraction of a year of at least six (6) months being counted as one (1) whole year.
Moreover, "[m]oral damages are awarded in termination cases where the employee's dismissal was
attended by bad faith, malice or fraud, or where it constitutes an act oppressive to labor, or where it was
done in a manner contrary to morals, good customs or public policy."120 In this case, Saudia terminated
respondents' employment in a manner that is patently discriminatory and running afoul of the public interest
that underlies employer-employee relationships. As such, respondents are entitled to moral damages.
To provide an "example or correction for the public good"121 as against such discriminatory and callous
schemes, respondents are likewise entitled to exemplary damages.
In a long line of cases, this court awarded exemplary damages to illegally dismissed employees whose
"dismissal[s were] effected in a wanton, oppressive or malevolent manner."122 This court has awarded
exemplary damages to employees who were terminated on such frivolous, arbitrary, and unjust grounds as
membership in or involvement with labor unions,123 injuries sustained in the course of
employment,124development of a medical condition due to the employer's own violation of the employment
contract,125and lodging of a Complaint against the employer.126 Exemplary damages were also awarded to
employees who were deemed illegally dismissed by an employer in an attempt to evade compliance with
statutorily established employee benefits.127 Likewise, employees dismissed for supposedly just causes, but
in violation of due process requirements, were awarded exemplary damages.128
These examples pale in comparison to the present controversy. Stripped of all unnecessary complexities,
respondents were dismissed for no other reason than simply that they were pregnant. This is as wanton,
oppressive, and tainted with bad faith as any reason for termination of employment can be. This is no
ordinary case of illegal dismissal. This is a case of manifest gender discrimination. It is an affront not only to
our statutes and policies on employees' security of tenure, but more so, to the Constitution's dictum of
fundamental equality between men and women.129
The award of exemplary damages is, therefore, warranted, not only to remind employers of the need to
adhere to the requirements of procedural and substantive due process in termination of employment, but
more importantly, to demonstrate that gender discrimination should in no case be countenanced.
Having been compelled to litigate to seek reliefs for their illegal and unjust dismissal, respondents are
likewise entitled to attorney's fees in the amount of 10% of the total monetary award.130
VI
Petitioner Brenda J. Betia may not be held liable.
A corporation has a personality separate and distinct from those of the persons composing it. Thus, as a
rule, corporate directors and officers are not liable for the illegal termination of a corporation's employees. It
is only when they acted in bad faith or with malice that they become solidarity liable with the corporation.131
In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever Electrical,132 this court
clarified that "[b]ad faith does not connote bad judgment or negligence; it imports a dishonest purpose or
some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive
or interest or ill will; it partakes of the nature of fraud."133
Respondents have not produced proof to show that Brenda J. Betia acted in bad faith or with malice as
regards their termination. Thus, she may not be held solidarity liable with Saudia. cralawre d
WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J. Betia is not solidarity liable with
petitioner Saudi Arabian Airlines, and second, that petitioner Saudi Arabian Airlines is liable for moral and
exemplary damages. The June 16, 2011 Decision and the September 13, 2011 Resolution of the Court of
Appeals in CA-G.R. SP. No. 113006 are hereby AFFIRMED in all other respects. Accordingly, petitioner
Saudi Arabian Airlines is ordered to pay respondents:
(1) Full backwages and all other benefits computed from the respective dates in which each of
the respondents were illegally terminated until the finality of this Decision;
(2) Separation pay computed from the respective dates in which each of the respondents
commenced employment until the finality of this Decision at the rate of one (1) month's
salary for every year of service, with a fraction of a year of at least six (6) months being
counted as one (1) whole year;
(3) Moral damages in the amount of P100,000.00 per respondent;
(4) Exemplary damages in the amount of P200,000.00 per respondent; and
(5) Attorney's fees equivalent to 10% of the total award.
Interest of 6% per annum shall likewise be imposed on the total judgment award from the finality of this
Decision until full satisfaction thereof.
This case is REMANDED to the Labor Arbiter to make a detailed computation of the amounts due to
respondents which petitioner Saudi Arabian Airlines should pay without delay.
SO ORDERED. chanroblesvi rtua llawli bra ry
G.R. No. 187417
CHRISTINE JOY CAPIN-CADIZ, Petitioner,

vs.
BRENT HOSPITAL AND COLLEGES, INC., Respondent.
DECISION
REYES, J.:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the
Resolutions dated July 22, 20082 and February 24, 20093 of the Court of Appeals (CA) in CA-GR. SP
No. 02373-MIN, which dismissed the petition filed by petitioner Christine Joy Capin-Cadiz (Cadiz) on
the following grounds: (1) incomplete statement of material dates; (2) failure to attach registry
receipts; and (3) failure to indicate the place of issue of counsel's Professional Tax Receipt (PTR)
and Integrated Bar of the Philippines (IBP) official receipts.
Antecedent Facts
Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent) at
the time of her indefinite suspension from employment in 2006. The cause of suspension was
Cadiz's Unprofessionalism and Unethical Behavior Resulting to Unwed Pregnancy. It appears that
Cadiz became pregnant out of wedlock, and Brent imposed the suspension until such time that she
marries her boyfriend in accordance with law.
Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, Constructive
Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement.4
Ruling of the Labor Tribunals
In its Decision5 dated April 12, 2007, the LA found that Cadiz's indefinite suspension amounted to a
constructive dismissal; nevertheless, the LA ruled that Cadiz was not illegally dismissed as there
was just cause for her dismissal, that is, she engaged in premarital sexual relations with her
boyfriend resulting in a pregnancy out of wedlock. 6 The LA further stated that her "immoral conduct x
x x [was] magnified as serious misconduct not only by her getting pregnant as a result thereof before
and without marriage, but more than that, also by the fact that Brent is an institution of the Episcopal
Church in the Philippines operating both a hospital and college where [Cadiz] was employed."7 The
LA also ruled that she was not entitled to reinstatement "at least until she marries her boyfriend," to
backwages and vacation/sick leave pay. Brent, however, manifested that it was willing to pay her
13th month pay. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered, ordering [Brent] to pay [Cadiz] 13th month pay in the
sum of Seven Thousand Nine Hundred Seventy & 11/100 Pesos (P7,970.11).
All other charges and claims are hereby dismissed for lack of merit.
SO ORDERED.8
Cadiz appealed to the National Labor Relations Commission (NLRC), which affirmed the LA decision
in its Resolution9 dated December 10, 2007. Her motion for reconsideration having been denied by
the NLRC in its Resolution10 dated February 29, 2008, Cadiz elevated her case to the CA on petition
for certiorari under Rule 65.
Ruling of the CA
The CA, however, dismissed her petition outright due to technical defects in the petition: (1)
incomplete statement of material dates; (2) failure to attach registry receipts; and (3) failure to
indicate the place of issue of counsel's PTR and IBP official receipts. 11 Cadiz sought reconsideration
of the assailed CA Resolution dated July 22, 2008 but it was denied in the assailed Resolution dated
February 24, 2009. 12 The CA further ruled that "a perusal of the petition will reveal that public
respondent NLRC committed no grave abuse of discretion amounting to lack or excess of jurisdiction
x x x holding [Cadiz's] dismissal from employment valid." 13
Hence, the present petition.
Cadiz argues that -
THE HONORABLE [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT HELD THAT
[CADIZ'S] IMPREGNATION OUTSIDE OF WEDLOCK IS A GROUND FOR THE TERMINATION OF
[CADIZ'S] EMPLOYMENT14
II
THE [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT UPHELD THE DISMISSAL
OF [CADIZ] ON THE GROUND THAT THE INDEFINITE SUSPENSION WAS VALID AND
REQUIRED [CADIZ] TO FIRST ENTER INTO MARRIAGE BEFORE SHE CAN BE ADMITTED
BACK TO HER EMPLOYMENT15
III
RESPONDENT [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED [CADIZ'S]

CLAIM FOR BACKWAGES, ALLOWANCES, SICK LEAVE PAY, MATERNITY PAY AND MORAL
AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES 16
IV
THE [CA] MISPLACED APPLICATION OF THE MATERIAL DATA RULE RESULTING TO GRAVE
ABUSE OF DISCRETION WHEN IT DISMISSED THE APPEAL17
Cadiz contends, among others, that getting pregnant outside of wedlock is not grossly immoral,
especially when both partners do not have any legal impediment to marry. Cadiz surmises that the
reason for her suspension was not because of her relationship with her then boyfriend but because
of the resulting pregnancy. Cadiz also lambasts Brent's condition for her reinstatement - that she
gets married to her boyfriend - saying that this violates the stipulation against marriage under Article
136 of the Labor Code. Finally, Cadiz contends that there was substantial compliance with the rules
of procedure, and the CA should not have dismissed the petition. 18
Brent, meanwhile, adopts and reiterates its position before the LA and the NLRC that Cadiz's
arguments are irrational and out of context. Brent argues, among others, that for Cadiz to limit acts
of immorality only to extra-marital affairs is to "change the norms, beliefs, teachings and practices of
BRENT as a Church institution of the x x x Episcopal Church in the Philippines." 19
Ruling of the Court
Ordinarily, the Court will simply gloss over the arguments raised by Cadiz, given that the main matter
dealt with by the CA were the infirmities found in the petition and which caused the dismissal of her
case before it. In view, however, of the significance of the issues involved in Cadiz's dismissal from
employment, the Court will resolve the petition including the substantial grounds raised herein.
The issue to be resolved is whether the CA committed a reversible error in ruling that: (1) Cadiz's
petition is dismissible on ground of technical deficiencies; and (2) the NLRC did not commit grave
abuse of discretion in upholding her dismissal from employment.
Rules of procedure are mere tools

designed to facilitate the attainment
of justice
In dismissing outright Cadiz's petition, the CA found the following defects: (1) incomplete statement
of material dates; (2) failure to attach registry receipts; and (3) failure to indicate the place of issue of
counsel's PTR and IBP official receipts.
Rule 46, Section 3 of the Rules of Court states the contents of a petition filed with the CA under Rule
65, viz, "the petition shall x x x indicate the material dates showing when notice of the judgment or
final order or resolution subject thereof was received, when a motion for new trial or reconsideration,
if any, was filed and when notice of the denial thereof was received." The rationale for this is to
enable the CA to determine whether the petition was filed within the period fixed in the
rules. 20 Cadiz's failure to state the date of receipt of the copy of the NLRC decision, however, is not
fatal to her case since the more important material date which must be duly alleged in a petition is
the date of receipt of the resolution of denial of the motion for reconsideration,21 which she has duly
complied with. 22
The CA also dismissed the petition for failure to attach the registry receipt in the affidavit of
service.23 Cadiz points out, on the other hand, that the registry receipt number was indicated in the
petition and this constitutes substantial compliance with the requirement. What the rule requires,
however, is that the registry receipt must be appended to the paper being served.24 Clearly, mere
indication of the registry receipt numbers will not suffice. In fact, the absence of the registry receipts
amounts to lack of proof of service.25 Nevertheless, despite this defect, the Court finds that the ends
of substantial justice would be better served by relaxing the application of technical rules of
procedure. 26With regard to counsel's failure to indicate the place where the IBP and PTR receipts
were issued, there was substantial compliance with the requirement since it was indicated in the
verification and certification of non-forum shopping, as correctly argued by Cadiz's lawyer. 27
Time and again, the Court has emphasized that rules of procedure are designed to secure
substantial justice. These are mere tools to expedite the decision or resolution of cases and if their
strict and rigid application would frustrate rather than promote substantial justice, then it must be
avoided.28
Immorality as a just cause for

termination of employment
Both the LA and the NLRC upheld Cadiz's dismissal as one attended with just cause. The LA, while
ruling that Cadiz's indefinite suspension was tantamount to a constructive dismissal, nevertheless
found that there was just cause for her dismissal. According to the LA, "there was just cause
therefor, consisting in her engaging in premarital sexual relations with Carl Cadiz, allegedly her
boyfriend, resulting in her becoming pregnant out of wedlock."29 The LA deemed said act to be
immoral, which was punishable by dismissal under Brent's rules and which likewise constituted
serious misconduct under Article 282(a) of the Labor Code. The LA also opined that since Cadiz was
Brent's Human Resource Officer in charge of implementing its rules against immoral conduct, she
should have been the "epitome of proper conduct."30 The LA ruled:
[Cadiz's] immoral conduct by having premarital sexual relations with her alleged boy friend, a former
Brent worker and her co-employee, is magnified as serious misconduct not only by her getting
pregnant as a result thereof before and without marriage, but more than that, also by the fact that
Brent is an institution of the Episcopal Church in the Philippines x x x committed to "developing
competent and dedicated professionals x x x and in providing excellent medical and other health
services to the community for the Glory of God and Service to Humanity." x x x As if these were not
enough, [Cadiz] was Brent's Human Resource Officer charged with, among others, implementing the
rules of Brent against immoral conduct, including premarital sexual relations, or fornication x x x. She
should have been the epitome of proper conduct, but miserably failed. She herself engaged in
premarital sexual relations, which surely scandalized the Brent community.xx x.31
The NLRC, for its part, sustained the LA's conclusion.
The Court, however, cannot subscribe to the labor tribunals' conclusions.
Admittedly, one of the grounds for disciplinary action under Brent's policies is immorality, which is
punishable by dismissal at first offense.32 Brent's Policy Manual provides:
CATEGORY IV
In accordance with Republic Act No. 1052,33 the following are just cause for terminating an
employment of an employee without a definite period:
xxxx
2. Serious misconduct or willful disobedience by the employee of the orders of his employer or
representative in connection with his work, such as, but not limited to the following:
xxxx
b. Commission of immoral conduct or indecency within the company premises, such as an act of
lasciviousness or any act which is sinful and vulgar in nature.
c. Immora1ity, concubinage, bigamy. 34
Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such as scandalous
behaviour, acts of lasciviousness against any person (patient, visitors, co-workers) within hospital
premises"35 as a ground for discipline and discharge. Brent also relied on Section 94 of the Manual of
Regulations for Private Schools (MRPS), which lists "disgraceful or immoral conduct" as a cause for
terminating employment. 36
Thus, the question that must be resolved is whether Cadiz's premarital relations with her boyfriend
and the resulting pregnancy out of wedlock constitute immorality. To resolve this, the Court makes
reference to the recently promulgated case of Cheryll Santos Leus v. St. Scholastica’s College
Westgrove and/or Sr. Edna Quiambao, OSB.37
Leus involved the same personal circumstances as the case at bench, albeit the employer was a
Catholic and sectarian educational institution and the petitioner, Cheryll Santos Leus (Leus ), worked
as an assistant to the school's Director of the Lay Apostolate and Community Outreach Directorate.
Leus was dismissed from employment by the school for having borne a child out of wedlock. The
Court ruled in Leus that the determination of whether a conduct is disgraceful or immoral involves a
two-step process: first, a consideration of the totality of the circumstances surrounding the conduct;
and second, an assessment of the said circumstances vis-a-vis the prevailing norms of
conduct, i.e., what the society generally considers moral and respectable.
In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she was
employed as a human resources officer in an educational and medical institution of the Episcopal
Church of the Philippines; she and her boyfriend at that time were both single; they engaged in
premarital sexual relations, which resulted into pregnancy. The labor tribunals characterized these
as constituting disgraceful or immoral conduct. They also sweepingly concluded that as Human
Resource Officer, Cadiz should have been the epitome of proper conduct and her indiscretion
"surely scandalized the Brent community."38
The foregoing circumstances, however, do not readily equate to disgraceful and immoral conduct.
Brent's Policy Manual and Employee's Manual of Policies do not define what constitutes immorality;
it simply stated immorality as a ground for disciplinary action. Instead, Brent erroneously relied on
the standard dictionary definition of fornication as a form of illicit relation and proceeded to conclude
that Cadiz's acts fell under such classification, thus constituting immorality. 39
Jurisprudence has already set the standard of morality with which an act should be gauged - it is
public and secular, not religious. 40 Whether a conduct is considered disgraceful or immoral should
be made in accordance with the prevailing norms of conduct, which, as stated in Leus, refer to those
conducts which are proscribed because they are detrimental to conditions upon which depend
the existence and progress of human society. The fact that a particular act does not conform to
the traditional moral views of a certain sectarian institution is not sufficient reason to qualify such act
as immoral unless it, likewise, does not conform to public and secular standards. More importantly,
there must be substantial evidence to establish that premarital sexual relations and pregnancy out
of wedlock is considered disgraceful or immoral.41
The totality of the circumstances of this case does not justify the conclusion that Cadiz committed
acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single and had no legal
impediment to marry at the time she committed the alleged immoral conduct. In fact, they eventually
married on April 15, 2008.42 Aside from these, the labor tribunals' respective conclusion that Cadiz's
"indiscretion" "scandalized the Brent community" is speculative, at most, and there is no proof
adduced by Brent to support such sweeping conclusion. Even Brent admitted that it came to know of
Cadiz's "situation" only when her pregnancy became manifest.43 Brent also conceded that "[a]t the
time [Cadiz] and Carl R. Cadiz were just carrying on their boyfriend-girlfriend relationship, there was
no knowledge or evidence by [Brent] that they were engaged also in premarital sex."44 This only goes
to show that Cadiz did not flaunt her premarital relations with her boyfriend and it was not carried on
under scandalous or disgraceful circumstances. As declared in Leus, "there is no law which
penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual sexual
activity between two unmarried persons; that neither does such situation contravene[s] any
fundamental state policy enshrined in the Constitution. "45 The fact that Brent is a sectarian institution
does not automatically subject Cadiz to its religious standard of morality absent an express
statement in its manual of personnel policy and regulations, prescribing such religious standard as
gauge as these regulations create the obligation on both the employee and the employer to abide by
the same. 46
Brent, likewise, cannot resort to the MRPS because the Court already stressed in Leus that
"premarital sexual relations between two consenting adults who have no impediment to marry each
other, and, consequently, conceiving a child out of wedlock, gauged from a purely public and secular
view of morality, does not amount to a disgraceful or immoral conduct under Section 94(e) of the
1992 MRPS."47
Marriage as a condition for

reinstatement
The doctrine of management prerogative gives an employer the right to "regulate, according to his
own discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, the time, place and manner of work, work supervision, transfer of employees, lay-
off of workers, and discipline, dismissal, and recall of employees."48 In this case, Brent imposed on
Cadiz the condition that she subsequently contract marriage with her then boyfriend for her to be
reinstated. According to Brent, this is "in consonance with the policy against encouraging illicit or
common-law relations that would subvert the sacrament of marriage."49
Statutory law is replete with legislation protecting labor and promoting equal opportunity in
employment. No less than the 1987 Constitution mandates that the "State shall afford full protection
to labor, local and overseas, organized and unorganized, and promote full employment and equality
of employment opportunities for all."50 The Labor Code of the Philippines, meanwhile, provides:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.
With particular regard to women, Republic Act No. 9710 or the Magna Carta of Women51 protects
women against discrimination in all matters relating to marriage and family relations, including
the right to choose freely a spouse and to enter into marriage only with their free and full
consent.52
Weighed against these safeguards, it becomes apparent that Brent's condition is coercive,
oppressive and discriminatory. There is no rhyme or reason for it. It forces Cadiz to marry for
1âw phi 1
economic reasons and deprives her of the freedom to choose her status, which is a privilege that
inheres in her as an intangible and inalienable right. 53While a marriage or no-marriage qualification
may be justified as a "bona fide occupational qualification," Brent must prove two factors
necessitating its imposition, viz: (1) that the employment qualification is reasonably related to the
essential operation of the job involved; and (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be unable to properly perform the duties of
the job.54 Brent has not shown the presence of neither of these factors. Perforce, the Court cannot
uphold the validity of said condition.
Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option, separation pay should be
awarded as an alternative and as a form of financial assistance. 55 In the computation of separation
pay, the Court stresses that it should not go beyond the date an employee was deemed to
have been actually separated from employment, or beyond the date when reinstatement was
rendered impossible.56 In this case, the records do not show whether Cadiz already severed her
employment with Brent or whether she is gainfully employed elsewhere; thus, the computation of
separation pay shall be pegged based on the findings that she was employed on August 16, 2002,
on her own admission in her complaint that she was dismissed on November 17, 2006, and that she
was earning a salary of P9,108.70 per month,57 which shall then be computed at a rate of one (1)
month salary for every year of service,58 as follows:
Monthly salary P9,108.70
multiplied by number of years x
in service (Aug 02 to Nov 06) 4
P36,434.80
The Court also finds that Cadiz is only entitled to limited backwages. Generally, the computation of
backwages is reckoned from the date of illegal dismissal until actual reinstatement. 59 In case
separation pay is ordered in lieu of reinstatement or reinstatement is waived by the employee,
backwages is computed from the time of dismissal until the finality of the decision ordering
separation pay. 60 Jurisprudence further clarified that the period for computing the backwages during
the period of appeal should end on the date that a higher court reversed the labor arbitration ruling of
illegal dismissal. 61 If applied in Cadiz's case, then the computation of backwages should be from
November 17, 2006, which was the time of her illegal dismissal, until the date of promulgation of this
decision. Nevertheless, the Court has also recognized that the constitutional policy of providing full
protection to labor is not intended to oppress or destroy management. 62 The Court notes that at the
time of Cadiz's indefinite suspension from employment, Leus was yet to be decided by the Court.
Moreover, Brent was acting in good faith and on its honest belief that Cadiz's pregnancy out of
wedlock constituted immorality. Thus, fairness and equity dictate that the award of backwages shall
only be equivalent to one (1) year or P109,304.40, computed as follows:
Monthly salary P9,108.70
multiplied by one year x
or 12 months 12
P109,304.40
Finally, with regard to Cadiz's prayer for moral and exemplary damages, the Court finds the same
without merit. A finding of illegal dismissal, by itself, does not establish bad faith to entitle an
employee to moral damages. 63 Absent clear and convincing evidence showing that Cadiz's dismissal
from Brent's employ had been carried out in an arbitrary, capricious and malicious manner, moral
and exemplary damages cannot be awarded. The Court nevertheless grants the award of attorney's
fees in the amount of ten percent (10%) of the total monetary award, Cadiz having been forced to
litigate in order to seek redress of her grievances.64
WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and February 24,
2009 of the Court of Appeals in CA-G.R. SP No. 02373-MIN are REVERSED and SET ASIDE, and
a NEW ONE ENTERED finding petitioner Christine Joy Capin-Cadiz to have been dismissed without
just cause.
Respondent Brent Hospital and Colleges, Inc. is hereby ORDERED TO PAY petitioner Christine Joy
Capin-Cadiz:
(1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100 (Pl 09,304.40) as
backwages;
(2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100 (P36,434.80) as
separation pay; and
(3) Attorney's fees equivalent to ten percent (10%) of the total award.
The monetary awards granted shall earn legal interest at the rate of six percent (6%) per
annum from the date of the finality of this Decision until fully paid.
SO ORDERED.
H. HANDICAPPED EMPLOYEES
G.R. No. 122917 July 12, 1999
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL,

RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON
GEORGE P. LIGUTAN JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN,
ROWENA M. TABAQUERO, CORAZON C. DELOS REYES, ROBERT G. NOORA, MILAGROS O.
LEQUIGAN, ADRIANA F. TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO, DORENDA
CANTIMBUHAN, ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL
MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY V. GRUELA, BERNADETH D.
AGERO, CYNTHIA DE VERA, LANI R. CORTEZ, MA. ISABEL B. CONCEPCION, DINDO
VALERIO, ZENAIDA MATA, ARIEL DEL PILAR, MARGARET CECILIA CANOZA, THELMA
SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY
BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO and TIMOSA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK AND TRUST
COMPANY, respondents.
PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the
same terms and conditions of employment as qualified able-bodied employees. Once they have
attained the status of regular workers, they should be accorded all the benefits granted by law,
notwithstanding written or verbal contracts to the contrary. This treatments is rooted not merely on
charity or accomodation, but on justice for all.
The Case
Challenged in the Petition for Certiorari 1 before us is the June 20, 1995 Decision2 of the National
Labor Relations Commission (NLRC), 3 which affirmed the August, 22 1994 ruling of Labor Arbiter
Cornelio L. Linsangan. The labor arbiter's Decision disposed as follows: 4
WHEREFORE, judgment is hereby rendered dismissing the above-mentioned

complaint for lack of merit.
Also assailed is the August 4, 1995 Resolution 5 of the NLRC, which denied the Motion for
Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise: 6
Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on
various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as
Money Sorters and Counters through a uniformly worded agreement called
"Employment Contract for Handicapped Workers". (pp. 68 & 69, Records) The full
text of said agreement is quoted below:
EMPLOYMENT CONTRACT FOR
HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking

corporation duly organized and existing under and by virtue of the
laws of the Philippines, with business address at FEBTC Building,
Muralla, Intramuros, Manila, represented herein by its Assistant Vice
President, MR. FLORENDO G. MARANAN, (hereinafter referred to
as the "BANK");
-and-
—————, ————— years old, of legal age, ————, and

residing at (hereinafter referred to as the ("EMPLOYEE").
WITNESSETH : That
WHEREAS, the BANK, cognizant of its social responsibility, realizes

that there is a need to provide disabled and handicapped persons
gainful employment and opportunities to realize their potentials, uplift
their socio-economic well being and welfare and make them
productive, self-reliant and useful citizens to enable them to fully
integrate in the mainstream of society;
WHEREAS, there are certain positions in the BANK which may be

filled-up by disabled and handicapped persons, particularly deaf-
mutes, and the BANK ha[s] been approached by some civic-minded
citizens and authorized government agencies [regarding] the
possibility of hiring handicapped workers for these positions;
WHEREAS, the EMPLOYEE is one of those handicapped workers

who [were] recommended for possible employment with the BANK;
NOW, THEREFORE, for and in consideration of the foregoing

premises and in compliance with Article 80 of the Labor Code of the
Philippines as amended, the BANK and the EMPLOYEE have
entered into this Employment Contract as follows:
1. The BANK agrees to employ and train the EMPLOYEE, and the
EMPLOYEE agrees to diligently and faithfully work with the BANK,
as Money Sorter and Counter.
2. The EMPLOYEE shall perform among others, the following duties

and responsibilities:
i. Sort out bills according to color;
ii. Count each denomination per

hundred, either manually or with the
aid of a counting machine;
iii. Wrap and label bills per hundred;
iv. Put the wrapped bills into bundles;

and
v. Submit bundled bills to the bank

teller for verification.
3. The EMPLOYEE shall undergo a training period of one (1) month,
after which the BANK shall determine whether or not he/she should
be allowed to finish the remaining term of this Contract.
4. The EMPLOYEE shall be entitled to an initial compensation of

P118.00 per day, subject to adjustment in the sole judgment of the
BANK, payable every 15th and end of the month. 1âwphi1.nêt
5. The regular work schedule of the EMPLOYEE shall be five (5)

days per week, from Mondays thru Fridays, at eight (8) hours a day.
The EMPLOYEE may be required to perform overtime work as
circumstance may warrant, for which overtime work he/she [shall] be
paid an additional compensation of 125% of his daily rate if
performed during ordinary days and 130% if performed during
Saturday or [a] rest day.
6. The EMPLOYEE shall likewise be entitled to the following benefits:
i. Proportionate 13th month pay based

on his basic daily wage.
ii. Five (5) days incentive leave.
iii. SSS premium payment.
7. The EMPLOYEE binds himself/herself to abide [by] and comply

with all the BANK Rules and Regulations and Policies, and to conduct
himself/herself in a manner expected of all employees of the BANK.
8. The EMPLOYEE acknowledges the fact that he/she had been

employed under a special employment program of the BANK, for
which reason the standard hiring requirements of the BANK were not
applied in his/her case. Consequently, the EMPLOYEE
acknowledges and accepts the fact that the terms and conditions of
the employment generally observed by the BANK with respect to the
BANK's regular employee are not applicable to the EMPLOYEE, and
that therefore, the terms and conditions of the EMPLOYEE's
employment with the BANK shall be governed solely and exclusively
by this Contract and by the applicable rules and regulations that the
Department of Labor and Employment may issue in connection with
the employment of disabled and handicapped workers. More
specifically, the EMPLOYEE hereby acknowledges that the
provisions of Book Six of the Labor Code of the Philippines as
amended, particularly on regulation of employment and separation
pay are not applicable to him/her.
9. The Employment Contract shall be for a period of six (6) months or

from —— to —— unless earlier terminated by the BANK for any just
or reasonable cause. Any continuation or extension of this Contract
shall be in writing and therefore this Contract will automatically expire
at the end of its terms unless renewed in writing by the BANK.
IN WITNESS WHEREOF, the parties, have hereunto affixed their

signature[s] this —— day of ———, ——— at Intramuros, Manila,
Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two
(2); in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one
(21). Their employment[s] were renewed every six months such that by the time this
case arose, there were fifty-six (56) deaf-mutes who were employed by respondent
under the said employment agreement. The last one was Thelma Malindoy who was
employed in 1992 and whose contract expired on July 1993.
xxx xxx xxx
Disclaiming that complainants were regular employees, respondent Far East Bank
and Trust Company maintained that complainants who are a special class of workers
— the hearing impaired employees were hired temporarily under [a] special
employment arrangement which was a result of overtures made by some civic and
political personalities to the respondent Bank; that complainant[s] were hired due to
"pakiusap" which must be considered in the light of the context career and working
environment which is to maintain and strengthen a corps of professionals trained and
qualified officers and regular employees who are baccalaureate degree holders from
excellent schools which is an unbending policy in the hiring of regular employees;
that in addition to this, training continues so that the regular employee grows in the
corporate ladder; that the idea of hiring handicapped workers was acceptable to
them only on a special arrangement basis; that it was adopted the special program to
help tide over a group of workers such as deaf-mutes like the complainants who
could do manual work for the respondent Bank; that the task of counting and sorting
of bills which was being performed by tellers could be assigned to deaf-mutes that
the counting and sorting of money are tellering works which were always logically
and naturally part and parcel of the tellers' normal functions; that from the beginning
there have been no separate items in the respondent Bank plantilla for sortes or
counters; that the tellers themselves already did the sorting and counting chore as a
regular feature and integral part of their duties (p. 97, Records); that through the
"pakiusap" of Arturo Borjal, the tellers were relieved of this task of counting and
sorting bills in favor of deaf-mutes without creating new positions as there is no
position either in the respondent or in any other bank in the Philippines which deals
with purely counting and sorting of bills in banking operations.
Petitioners specified when each of them was hired and dimissed, viz: 7
NAME OF PETITIONER WORKPLACE Date Hired Date Dismissed

1. MARITES BERNARDO Intramuros 12-Nov-90 17-Nov-93
2. ELVIRA GO DIAMANTE Intramuros 24-Jan-90 11-Jan-94
3. REBECCA E. DAVID Intramuros 16-Apr-90 23-Oct-93
4. DAVID P. PASCUAL Bel-Air 15-Oct-88 21-Nov-94
5. RAQUEL ESTILLER Intramuros 2-Jul-92 4-Jan-94
6. ALBERT HALLARE West 4-Jan-91 9-Jan-94
7. EDMUND M. CORTEZ Bel-Air 15-Jan-91 3-Dec-93
8. JOSELITO O. AGDON Intramuros 5-Nov-90 17-Nov-93
9. GEORGE P. LIGUTAN JR. Intramuros 6-Sep-89 19-Jan-94
10. CELSO M. YAZAR Intramuros 8-Feb-93 8-Aug-93
11. ALEX G. CORPUZ Intramuros 15-Feb-93 15-Aug-93
12. RONALD M. DELFIN Intramuros 22-Feb-93 22-Aug-93
13. ROWENA M. TABAQUERO Intramuros 22-Feb-93 22-Aug-93
14. CORAZON C. DELOS REYES Intramuros 8-Feb-93 8-Aug-93
15. ROBERT G. NOORA Intramuros 15-Feb-93 15-Aug-93
16. MILAGROS O. LEQUIGAN Intramuros 1-Feb-93 1-Aug-93
17. ADRIANA F. TATLONGHARI Intramuros 22-Jan-93 22-Jul-93
18. IKE CABUNDUCOS Intramuros 24-Feb-93 24-Aug-93
19. COCOY NOBELLO Intramuros 22-Feb-93 22-Aug-93
20. DORENDA CATIMBUHAN Intramuros 15-Feb-93 15-Aug-93
21. ROBERT MARCELO West 31 JUL 93 8 1-Aug-93
22. LILIBETH Q. MARMOLEJO West 15-Jun-90 21-Nov-93
23. JOSE E. SALES West 6-Aug-92 12-Oct-93
24. ISABEL MAMAUAG West 8-May-92 10-Nov-93
25. VIOLETA G. MONTES Intramuros 2-Feb-90 15-Jan-94
26. ALBINO TECSON Intramuros 7-Nov-91 10-Nov-93
27. MELODY B. GRUELA West 28-Oct-91 3-Nov-93
28. BERNADETH D. AGERO West 19-Dec-90 27-Dec-93
29. CYNTHIA DE VERA Bel-Air 26-Jun-90 3-Dec-93
30. LANI R. CORTEZ Bel-Air 15-Oct-88 10-Dec-93
31. MARIA ISABEL B.CONCEPCION West 6-Sep-90 6-Feb-94
32. DINDO VALERIO Intramuros 30-May-93 30-Nov-93
33. ZENAIDA MATA Intramuros 10-Feb-93 10-Aug-93
34. ARIEL DEL PILAR Intramuros 24-Feb-93 24-Aug-93
35. MARGARET CECILIA CANOZA Intramuros 27-Jul-90 4-Feb-94
36. THELMA SEBASTIAN Intramuros 12-Nov-90 17-Nov-93
37. MA. JEANETTE CERVANTES West 6-Jun-92 7-Dec-93
38. JEANNIE RAMIL Intramuros 23-Apr-90 12-Oct-93
39. ROZAIDA PASCUAL Bel-Air 20-Apr-89 29-Oct-93
40. PINKY BALOLOA West 3-Jun-91 2-Dec-93
41. ELIZABETH VENTURA West 12-Mar-90 FEB 94 [sic]
42. GRACE S. PARDO West 4-Apr-90 13-Mar-94
43. RICO TIMOSA Intramuros 28-Apr-93 28-Oct-93
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners. Hence,
this recourse to this Court. 9
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular
employees under Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated
as follows:
We agree that Art. 280 is not controlling herein. We give due credence to the
conclusion that complainants were hired as an accommodation to [the]
recommendation of civic oriented personalities whose employment[s] were covered
by . . . Employment Contract[s] with special provisions on duration of contract as
specified under Art. 80. Hence, as correctly held by the Labor Arbiter a quo, the
terms of the contract shall be the law between the parties. 10
The NLRC also declared that the Magna Carta for Disabled Persons was not applicable,
"considering the prevailing circumstances/milieu of the case."
Issues
In their Memorandum, petitioners cite the following grounds in support of their cause:
I. The Honorable Commission committed grave abuse of discretion in holding that

the petitioners — money sorters and counters working in a bank — were not regular
employees.
II. The Honorable Commission committed grave abuse of discretion in holding that
the employment contracts signed and renewed by the petitioners — which provide
for a period of six (6) months — were valid.
III. The Honorable Commission committed grave abuse of discretion in not applying
the provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on
proscription against discrimination against disabled persons. 11
In the main, the Court will resolve whether petitioners have become regular employees.
This Court's Ruling
The petition is meritorious. However, only the employees, who worked for more than six months and
whose contracts were renewed are deemed regular. Hence, their dismissal from employement was
illegal.
Preliminary Matter:
Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the findings of facts of the
NLRC is not allowed in a petition for certiorari. Specifically, it maintains that the Court cannot pass
upon the findings of public respondent that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in
a certiorari proceeding. In resolving whether the petitioners have become regular employees, we
shall not change the facts found by the public respondent. Our task is merely to determine whether
the NLRC committed grave abuse of discretion in applying the law to the established facts, as
above-quoted from the assailed Decision.
Main Issue
Are Petitioners Regular Employee?
Petitioners maintain that they should be considered regular employees, because their task as money
sorters and counters was necessary and desirable to the business of respondent bank. They further
allege that their contracts served merely to preclude the application of Article 280 and to bar them
from becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as "special workers
and should not in any way be considered as part of the regular complement of the Bank." 12 Rather,
they were "special" workers under Article 80 of the Labor Code. Private respondent contends that it
never solicited the services of petitioners, whose employment was merely an "accommodation" in
response to the requests of government officials and civic-minded citizens. They were told from the
start, "with the assistance of government representatives," that they could not become regular
employees because there were no plantilla positions for "money sorters," whose task used to be
performed by tellers. Their contracts were renewed several times, not because of need "but merely
for humanitarian reasons." Respondent submits that "as of the present, the "special position" that
was created for the petitioners no longer exist[s] in private respondent [bank], after the latter had
decided not to renew anymore their special employment contracts."
At the outset, let it be known that this Court appreciates the nobility of private respondent's effort to
provide employment to physically impaired individuals and to make them more productive members
of society. However, we cannot allow it to elude the legal consequences of that effort, simply
because it now deems their employment irrelevant. The facts, viewed in light of the Labor Code and
the Magna Carta for Disabled Persons, indubitably show that the petitioners, except sixteen of them,
should be deemed regular employees. As such, they have acquired legal rights that this Court is
duty-bound to protect and uphold, not as a matter of compassion but as a consequence of law and
justice.
The uniform employment contracts of the petitioners stipulated that they shall be trained for a period
of one month, after which the employer shall determine whether or not they should be allowed to
finish the 6-month term of the contract. Furthermore, the employer may terminate the contract at any
time for a just and reasonable cause. Unless renewed in writing by the employer, the contract shall
automatically expire at the end of the term. 1âwphi1.nêt
According to private respondent, the employment contracts were prepared in accordance with Article
80 of the Labor code, which provides;
Art. 80. Employment agreement. — Any employer who employs handicapped

workers shall enter into an employment agreement with them, which agreement shall
include:
(a) The names and addresses of the handicapped workers to be

employed;
(b) The rate to be paid the handicapped workers which shall be not
less than seventy five (75%) per cent of the applicable legal minimum
wage;
(c) The duration of employment period; and
(d) The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection by the Secretary of Labor

or his duly authorized representatives.
The stipulations in the employment contracts indubitably conform with the aforecited provision.
Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled
Persons), 13 however, justify the application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and
renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the
renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion
that their tasks were beneficial and necessary to the bank. More important, these facts show that
they were qualified to perform the responsibilities of their positions. In other words, their disability did
not render them unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee
should be given the same terms and conditions of employment as a qualified able-bodied person.
Section 5 of the Magna Carta provides:
Sec. 5. Equal Opportunity for Employment. — No disabled person shall be denied

access to opportunities for suitable employment. A qualified disabled employee shall
be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person.
The fact that the employees were qualified disabled persons necessarily removes the employment
contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified
able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides:
Art. 280. Regular and Casual Employment. — The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business
or trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered as regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.
The test of whether an employee is regular was laid down in De Leon v. NLRC, 14 in which this Court
held:
The primary standard, therefore, of determining regular employment is the

reasonable connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and
its relation to the scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least one year, even if the performance
is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensibility
of that activity to the business. Hence, the employment is considered regular, but
only with respect to such activity, and while such activity exist.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of
respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more
than six months. Thus, the following twenty-seven petitioners should be deemed regular employees:
Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert
Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E.
Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero,
Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma
Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth
Ventura and Grace S. Pardo.
As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice
of making permanent casuals of our lowly employees by the simple expedient of extending to them
probationary appointments, ad infinitum."15 The contract signed by petitioners is akin to a
probationary employment, during which the bank determined the employees' fitness for the job.
When the bank renewed the contract after the lapse of the six-month probationary period, the
employees thereby became regular employees. 16 No employer is allowed to determine indefinitely
the fitness of its employees.
As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their
services may be terminated only for a just or authorized cause. Because respondent failed to show
such cause, 17 these twenty-seven petitioners are deemed illegally dismissed and therefore entitled
to back wages and reinstatement without loss of seniority rights and other privileges. 18 Considering
the allegation of respondent that the job of money sorting is no longer available because it has been
assigned back to the tellers to whom it originally belonged, 18 petitioners are hereby awarded
separation pay in lieu of reinstatement. 20
Because the other sixteen worked only for six months, they are not deemed regular employees and
hence not entitled to the same benefits.
Applicability of the
Brent Ruling
Respondent bank, citing Brent School v. Zamora 21 in which the Court upheld the validity of an
employment contract with a fixed term, argues that the parties entered into the contract on equal
footing. It adds that the petitioners had in fact an advantage, because they were backed by then
DSWD Secretary Mita Pardo de Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the petitioners
were disabled, and that the bank had to determine their fitness for the position. Indeed, its validity is
based on Article 80 of the Labor Code. But as noted earlier, petitioners proved themselves to
be qualified disabled persons who, under the Magna Carta for Disabled Persons, are entitled to
terms and conditions of employment enjoyed by qualified able-bodied individuals; hence, Article 80
does not apply because petitioners are qualified for their positions. The validation of the limit
imposed on their contracts, imposed by reason of their disability, was a glaring instance of the very
mischief sought to be addressed by the new law.
Moreover, it must be emphasized that a contract of employment is impressed with public

interest. 22 Provisions of applicable statutes are deemed written into the contract, and the "parties are
not at liberty to insulate themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other." 23Clearly, the agreement of the parties regarding
the period of employment cannot prevail over the provisions of the Magna Carta for Disabled
Persons, which mandate that petitioners must be treated as qualified able-bodied employees.
Respondent's reason for terminating the employment of petitioners is instructive. Because the
Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP during
business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of
money. Thus, it reasons that this task "could not be done by deaf mutes because of their physical
limitations as it is very risky for them to travel at night." 24 We find no basis for this argument.
Travelling at night involves risks to handicapped and able-bodied persons alike. This excuse cannot
justify the termination of their employment.
Other Grounds Cited by Respondent

Respondent argues that petitioners were merely "accommodated" employees. This fact does not
change the nature of their employment. As earlier noted, an employee is regular because of the
nature of work and the length of service, not because of the mode or even the reason for hiring
them.
Equally unavailing are private respondent's arguments that it did not go out of its way to recruit
petitioners, and that its plantilla did not contain their positions. In L. T. Datu v. NLRC, 25 the Court
held that "the determination of whether employment is casual or regular does not depend on the will
or word of the employer, and the procedure of hiring . . . but on the nature of the activities performed
by the employee, and to some extent, the length of performance and its continued existence."
Private respondent argues that the petitioners were informed from the start that they could not
become regular employees. In fact, the bank adds, they agreed with the stipulation in the contract
regarding this point. Still, we are not persuaded. The well-settled rule is that the character of
employment is determined not by stipulations in the contract, but by the nature of the work
performed. 26 Otherwise, no employee can become regular by the simple expedient of incorporating
this condition in the contract of employment.
In this light, we iterate our ruling in Romares v. NLRC: 27
Art. 280 was emplaced in our statute books to prevent the circumvention of the
employee's right to be secure in his tenure by indiscriminately and completely ruling
out all written and oral agreements inconsistent with the concept of regular
employment defined therein. Where an employee has been engaged to perform
activities which are usually necessary or desirable in the usual business of the
employer, such employee is deemed a regular employee and is entitled to security of
tenure notwithstanding the contrary provisions of his contract of employment.
xxx xxx xxx
At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive.
As reaffirmed in subsequent cases, this Court has upheld the legality of fixed-term
employment. It ruled that the decisive determinant in "term employment" should not
be the activities that the employee is called upon to perform but the day certain
agreed upon the parties for the commencement and termination of their employment
relationship. But this Court went on to say that where from the circumstances it is
apparent that the periods have been imposed to preclude acquisition of tenurial
security by the employee, they should be struck down or disregarded as contrary to
public policy and morals.
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the
working class, but also the concern of the State for the plight of the disabled. The noble objectives of
Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on
justice and the equal treatment of qualified persons, disabled or not. In the present case, the
handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this
statement is the repeated renewal of their employment contracts. Why then should they be
dismissed, simply because they are physically impaired? The Court believes, that, after showing
their fitness for the work assigned to them, they should be treated and granted the same rights like
any other regular employees.
In this light, we note the Office of the Solicitor General's prayer joining the petitioners' cause. 28
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995 Decision
and the August 4, 1995 Resolution of the NLRC are REVERSED and SET ASIDE. Respondent Far
East Bank and Trust Company is hereby ORDERED to pay back wages and separation pay to each
of the following twenty-seven (27) petitioners, namely, Marites Bernardo, Elvira Go Diamante,
Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O.
Agdon, George P. Ligutan Jr., Liliberh Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G.
Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez,
Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes,
Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC
is hereby directed to compute the exact amount due each of said employees, pursuant to existing
laws and regulations, within fifteen days from the finality of this Decision. No costs. 1âw phi 1.nêt
SO ORDERED.
I. APPRENTICES
[G.R. NO. 152894 : August 17, 2007]
CENTURY CANNING CORPORATION, Petitioner, v. COURT OF APPEALS and GLORIA C.

PALAD,Respondents.
DECISION
CARPIO, J.:
The Case
This is a Petition for Review 1 of the Decision2 dated 12 November 2001 and the Resolution dated 5 April
2002 of the Court of Appeals in CA-G.R. SP No. 60379.
The Facts
On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad) as "fish cleaner" at
petitioner's tuna and sardines factory. Palad signed on 17 July 1997 an apprenticeship agreement3with
petitioner. Palad received an apprentice allowance of P138.75 daily. On 25 July 1997, petitioner submitted
its apprenticeship program for approval to the Technical Education and Skills Development Authority
(TESDA) of the Department of Labor and Employment (DOLE). On 26 September 1997, the TESDA approved
petitioner's apprenticeship program.4
According to petitioner, a performance evaluation was conducted on 15 November 1997, where petitioner
gave Palad a rating of N.I. or "needs improvement" since she scored only 27.75% based on a 100%
performance indicator. Furthermore, according to the performance evaluation, Palad incurred numerous
tardiness and absences. As a consequence, petitioner issued a termination notice5 dated 22 November 1997
to Palad, informing her of her termination effective at the close of business hours of 28 November 1997.
Palad then filed a complaint for illegal dismissal, underpayment of wages, and non-payment of pro-rated
13th month pay for the year 1997.
On 25 February 1999, the Labor Arbiter dismissed the complaint for lack of merit but ordered petitioner to
pay Palad her last salary and her pro-rated 13th month pay. The dispositive portion of the Labor Arbiter's
decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the complaint for illegal
dismissal filed by the complainant against the respondents in the above-entitled case should be, as it is
hereby DISMISSED for lack of merit. However, the respondents are hereby ordered to pay the complainant
the amount of ONE THOUSAND SIX HUNDRED THIRTY-TWO PESOS (P1,632.00), representing her last salary
and the amount of SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT (P7,228.00) PESOS representing her
prorated 13th month pay.
All other issues are likewise dismissed.
SO ORDERED.6
On appeal, the National Labor Relations Commission (NLRC) affirmed with modification the Labor Arbiter's
decision, thus:
WHEREFORE, premises considered, the decision of the Arbiter dated 25 February 1999 is hereby MODIFIED
in that, in addition, respondents are ordered to pay complainant's backwages for two (2) months in the
amount of P7,176.00 (P138.75 x 26 x 2 mos.). All other dispositions of the Arbiter as appearing in the
dispositive portion of his decision are AFFIRMED.
SO ORDERED.7
Upon denial of Palad's motion for reconsideration, Palad filed a special civil action for certiorari with the
Court of Appeals. On 12 November 2001, the Court of Appeals rendered a decision, the dispositive portion of
which reads:
WHEREFORE, in view of the foregoing, the questioned decision of the NLRC is hereby SET ASIDE and a new
one entered, to wit:
(a) finding the dismissal of petitioner to be illegal;
(b) ordering private respondent to pay petitioner her underpayment in wages;
(c) ordering private respondent to reinstate petitioner to her former position without loss of seniority rights
and to pay her full backwages computed from the time compensation was withheld from her up to the time
of her reinstatement;
(d) ordering private respondent to pay petitioner attorney's fees equivalent to ten (10%) per cent of the
monetary award herein; and cralawl ibra ry
(e) ordering private respondent to pay the costs of the suit.
SO ORDERED.8
The Ruling of the Court of Appeals
The Court of Appeals held that the apprenticeship agreement which Palad signed was not valid and binding
because it was executed more than two months before the TESDA approved petitioner's apprenticeship
program. The Court of Appeals cited Nitto Enterprises v. National Labor Relations Commission,9 where it was
held that prior approval by the DOLE of the proposed apprenticeship program is a condition sine qua
non before an apprenticeship agreement can be validly entered into.
The Court of Appeals also held that petitioner illegally dismissed Palad. The Court of Appeals ruled that
petitioner failed to show that Palad was properly apprised of the required standard of performance. The
Court of Appeals likewise held that Palad was not afforded due process because petitioner did not comply
with the twin requirements of notice and hearing.
The Issues
Petitioner raises the following issues:
1. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PRIVATE
RESPONDENT WAS NOT AN APPRENTICE; and cralawlib rary
2. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PETITIONER HAD
NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE
RESPONDENT.10
The Ruling of the Court
The petition is without merit.
Registration and Approval by the TESDA of Apprenticeship Program Required Before Hiring of
Apprentices
The Labor Code defines an apprentice as a worker who is covered by a written apprenticeship agreement
with an employer.11 One of the objectives of Title II (Training and Employment of Special Workers) of the
Labor Code is to establish apprenticeship standards for the protection of apprentices.12 In line with this
objective, Articles 60 and 61 of the Labor Code provide:
ART. 60. Employment of apprentices. - Only employers in the highly technical industries may employ
apprentices and only in apprenticeable occupations approved by the Minister of Labor and
Employment. (Emphasis supplied) cra lawlib rary
ART. 61. Contents of apprenticeship agreements. - Apprenticeship agreements, including the wage rates of
apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The period of
apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates
below the legal minimum wage, which in no case shall start below 75 percent of the applicable
minimum wage, may be entered into only in accordance with apprenticeship programs duly
approved by the Minister of Labor and Employment. The Ministry shall develop standard model
programs of apprenticeship. (Emphasis supplied) c ralawli bra ry
In Nitto Enterprises v. National Labor Relations Commission,13 the Court cited Article 61 of the Labor Code
and held that an apprenticeship program should first be approved by the DOLE before an apprentice may be
hired, otherwise the person hired will be considered a regular employee. The Court held:
In the case at bench, the apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care
maker/molder." On the same date, an apprenticeship program was prepared by petitioner and submitted to
the Department of Labor and Employment. However, the apprenticeship agreement was filed only on June
7, 1990. Notwithstanding the absence of approval by the Department of Labor and Employment, the
apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law. It is
mandated that apprenticeship agreements entered into by the employer and apprentice shall be
entered only in accordance with the apprenticeship program duly approved by the Minister of
Labor and Employment.
Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is,
therefore, a condition sine qua non before an apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a
preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice
relationship.
Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship program
through the participation of employers, workers and government and non-government agencies" and "to
establish apprenticeship standards for the protection of apprentices." To translate such objectives into
existence, prior approval of the DOLE to any apprenticeship program has to be secured as a condition sine
qua non before any such apprenticeship agreement can be fully enforced. The role of the DOLE in
apprenticeship programs and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private respondent has no force and
effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's
assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves
credence. He should rightly be considered as a regular employee of petitioner as defined by Article 280 of
the Labor Code x x x. (Emphasis supplied)14
Republic Act No. 779615 (RA 7796), which created the TESDA, has transferred the authority over
apprenticeship programs from the Bureau of Local Employment of the DOLE to the TESDA.16 RA 7796
emphasizes TESDA's approval of the apprenticeship program as a pre-requisite for the hiring of apprentices.
Such intent is clear under Section 4 of RA 7796:
SEC. 4. Definition of Terms. - As used in this Act:
xxx
j) "Apprenticeship" training within employment with compulsory related theoretical instructions involving
a contract between an apprentice and an employer on an approved apprenticeable occupation;
k) "Apprentice" is a person undergoing training for an approved apprenticeable occupation during an

established period assured by an apprenticeship agreement;
l) "Apprentice Agreement" is a contract wherein a prospective employer binds himself to train the
apprentice who in turn accepts the terms of training for a recognized apprenticeable occupation
emphasizing the rights, duties and responsibilities of each party;
m) "Apprenticeable Occupation" is an occupation officially endorsed by a tripartite body and approved

for apprenticeship by the Authority [TESDA]; (Emphasis supplied) c ralawl ibra ry
In this case, the apprenticeship agreement was entered into between the parties before petitioner filed its
apprenticeship program with the TESDA for approval. Petitioner and Palad executed the apprenticeship
agreement on 17 July 1997 wherein it was stated that the training would start on 17 July 1997 and would
end approximately in December 1997.17 On 25 July 1997, petitioner submitted for approval its
apprenticeship program, which the TESDA subsequently approved on 26 September 1997.18 Clearly, the
apprenticeship agreement was enforced even before the TESDA approved petitioner's apprenticeship
program. Thus, the apprenticeship agreement is void because it lacked prior approval from the TESDA.
The TESDA's approval of the employer's apprenticeship program is required before the employer is allowed
to hire apprentices. Prior approval from the TESDA is necessary to ensure that only employers in the highly
technical industries may employ apprentices and only in apprenticeable occupations.19 Thus, under RA 7796,
employers can only hire apprentices for apprenticeable occupations which must be officially endorsed by a
tripartite body and approved for apprenticeship by the TESDA. Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½ Î¹râ€ Ï…Î±l l Î±Ï‰ lÎ¹b rÎ± rÃ¿
This is to ensure the protection of apprentices and to obviate possible abuses by prospective employers who
may want to take advantage of the lower wage rates for apprentices and circumvent the right of the
employees to be secure in their employment.
The requisite TESDA approval of the apprenticeship program prior to the hiring of apprentices was further
emphasized by the DOLE with the issuance of Department Order No. 68-04 on 18 August 2004. Department
Order No. 68-04, which provides the guidelines in the implementation of the Apprenticeship and
Employment Program of the government, specifically states that no enterprise shall be allowed to hire
apprentices unless its apprenticeship program is registered and approved by TESDA.20
Since Palad is not considered an apprentice because the apprenticeship agreement was enforced before the
TESDA's approval of petitioner's apprenticeship program, Palad is deemed a regular employee performing
the job of a "fish cleaner." Clearly, the job of a "fish cleaner" is necessary in petitioner's business as a tuna
and sardines factory. Under Article 28021 of the Labor Code, an employment is deemed regular where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer.
Illegal Termination of Palad
We shall now resolve whether petitioner illegally dismissed Palad.
Under Article 27922 of the Labor Code, an employer may terminate the services of an employee for just
causes23 or for authorized causes.24 Furthermore, under Article 277(b)25 of the Labor Code, the employer
must send the employee who is about to be terminated, a written notice stating the causes for termination
and must give the employee the opportunity to be heard and to defend himself. Thus, to constitute valid
dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or authorized
cause; and (2) the employee must be afforded an opportunity to be heard and to defend himself.26
In this case, the Labor Arbiter held that petitioner terminated Palad for habitual absenteeism and poor
efficiency of performance. Under Section 25, Rule VI, Book II of the Implementing Rules of the Labor Code,
habitual absenteeism and poor efficiency of performance are among the valid causes for which the employer
may terminate the apprenticeship agreement after the probationary period.
However, the NLRC reversed the finding of the Labor Arbiter on the issue of the legality of Palad's
termination:
As to the validity of complainant's dismissal in her status as an apprentice, suffice to state that the findings
of the Arbiter that complainant was dismissed due to failure to meet the standards is nebulous. What clearly
appears is that complainant already passed the probationary status of the apprenticeship agreement of 200
hours at the time she was terminated on 28 November 1997 which was already the fourth month of the
apprenticeship period of 1000 hours. As such, under the Code, she can only be dismissed for cause, in this
case, for poor efficiency of performance on the job or in the classroom for a prolonged period despite
warnings duly given to the apprentice.
We noted that no clear and sufficient evidence exist to warrant her dismissal as an apprentice
during the agreed period. Besides the absence of any written warnings given to complainant
reminding her of "poor performance," respondents' evidence in this respect consisted of an
indecipherable or unauthenticated xerox of the performance evaluation allegedly conducted on
complainant. This is of doubtful authenticity and/or credibility, being not only incomplete in the
sense that appearing thereon is a signature (not that of complainant) side by side with a date
indicated as "1/16/98". From the looks of it, this signature is close to and appertains to the
typewritten position of "Division/Department Head", which is below the signature of
complainant's immediate superior who made the evaluation indicated as "11-15-97."
The only conclusion We can infer is that this evaluation was made belatedly, specifically, after
the filing of the case and during the progress thereof in the Arbitral level, as shown that nothing
thereon indicate that complainant was notified of the results. Its authenticity therefor, is a big
question mark, and hence lacks any credibility. Evidence, to be admissible in administrative
proceedings, must at least have a modicum of authenticity. This, respondents failed to comply with.
As such, complainant is entitled to the payment of her wages for the remaining two (2) months of her
apprenticeship agreement.27 (Emphasis supplied) c ralawli bra ry
Indeed, it appears that the Labor Arbiter's conclusion that petitioner validly terminated Palad was based
mainly on the performance evaluation allegedly conducted by petitioner. However, Palad alleges that she
had no knowledge of the performance evaluation conducted and that she was not even informed of the
result of the alleged performance evaluation. Palad also claims she did not receive a notice of dismissal, nor
was she given the chance to explain. According to petitioner, Palad did not receive the termination notice
because Palad allegedly stopped reporting for work after being informed of the result of the evaluation.
Under Article 227 of the Labor Code, the employer has the burden of proving that the termination was for a
valid or authorized cause.28 Petitioner failed to substantiate its claim that Palad was terminated for valid
reasons. In fact, the NLRC found that petitioner failed to prove the authenticity of the performance
evaluation which petitioner claims to have conducted on Palad, where Palad received a performance rating
of only 27.75%. Petitioner merely relies on the performance evaluation to prove Palad's inefficiency. It was
likewise not shown that petitioner ever apprised Palad of the performance standards set by the company.
When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the
law considers the matter a case of illegal dismissal.29
Furthermore, Palad was not accorded due process. Even if petitioner did conduct a performance evaluation
on Palad, petitioner failed to warn Palad of her alleged poor performance. In fact, Palad denies any
knowledge of the performance evaluation conducted and of the result thereof. Petitioner likewise admits that
Palad did not receive the notice of termination30 because Palad allegedly stopped reporting for work. The
records are bereft of evidence to show that petitioner ever gave Palad the opportunity to explain and defend
herself. Clearly, the two requisites for a valid dismissal are lacking in this case.
WHEREFORE, we AFFIRM the Decision dated 12 November 2001 and the Resolution dated 5 April 2002 of
the Court of Appeals in CA-G.R. SP No. 60379.
SO ORDERED.
G.R. No. 114337 September 29, 1995
NITTO ENTERPRISES, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI, respondents.
KAPUNAN, J.:
This petition for certiorari under Rule 65 of the Rules of Court seeking to annul the
decision1 rendered by public respondent National Labor Relations Commission, which reversed the
decision of the Labor Arbiter.
Briefly, the facts of the case are as follows:
Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired
Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker as
evidenced by an apprenticeship agreement2 for a period of six (6) months from May 28, 1990 to
November 28, 1990 with a daily wage rate of P66.75 which was 75% of the applicable minimum
wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he
was working on, accidentally hit and injured the leg of an office secretary who was treated at a
nearby hospital.
Later that same day, after office hours, private respondent entered a workshop within the office
premises which was not his work station. There, he operated one of the power press machines
without authority and in the process injured his left thumb. Petitioner spent the amount of P1,023.04
to cover the medication of private respondent.
The following day, Roberto Capili was asked to resign in a letter3 which reads:
August
2, 1990
Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung
papaano gamitin and "TOOL" sa pagbuhat ng salamin, sarili niyang desisyon ang
paggamit ng tool at may disgrasya at nadamay pa ang isang sekretarya ng
kompanya.
Sa araw ding ito limang (5) minute ang nakakalipas mula alas-singko ng hapon siya
ay pumasok sa shop na hindi naman sakop ng kanyang trabaho. Pinakialaman at
kinalikot ang makina at nadisgrasya niya ang kanyang sariling kamay.
Nakagastos ang kompanya ng mga sumusunod:
Emergency and doctor fee P715.00

Medecines (sic) and others 317.04
Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang
matanggal ang tahi ng kanyang kamay.
Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng
Agosto, 1990.
Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang

kamay, pagkatapos ng siyam na araw mula ika-2 ng Agosto.
Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon,

kasama ng kanyang comfirmasyon at pag-ayon na ang lahat sa itaas ay totoo.
Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking

pagkakasala sa hindi pagsunod sa alintuntunin ng kompanya.
(Sgd.) Roberto
Capili
Roberto Capili
On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for
and in consideration of the sum of P1,912.79.4
Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration
Branch, National Capital Region a complaint for illegal dismissal and payment of other monetary
benefits.
On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit. The dispositive portion of the
ruling reads:
WHEREFORE, premises considered, the termination is valid and for cause, and the
money claims dismissed for lack of merit.
The respondent however is ordered to pay the complainant the amount of P500.00
as financial assistance.
SO ORDERED.5
Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto Capilian
was valid. First, private respondent who was hired as an apprentice violated the terms of their
agreement when he acted with gross negligence resulting in the injury not only to himself but also to
his fellow worker. Second, private respondent had shown that "he does not have the proper attitude
in employment particularly the handling of machines without authority and proper training.6
On July 26, 1993, the National Labor Relations Commission issued an order reversing the decision
of the Labor Arbiter, the dispositive portion of which reads:
WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby
directed to reinstate complainant to his work last performed with backwages
computed from the time his wages were withheld up to the time he is actually
reinstated. The Arbiter of origin is hereby directed to further hear complainant's
money claims and to dispose them on the basis of law and evidence obtaining.
SO ORDERED.7
The NLRC declared that private respondent was a regular employee of petitioner by
ruling thus:
As correctly pointed out by the complainant, we cannot understand how an

apprenticeship agreement filed with the Department of Labor only on June 7, 1990
could be validly used by the Labor Arbiter as basis to conclude that the complainant
was hired by respondent as a plain "apprentice" on May 28, 1990. Clearly, therefore,
the complainant was respondent's regular employee under Article 280 of the Labor
Code, as early as May 28,1990, who thus enjoyed the security of tenure guaranteed
in Section 3, Article XIII of our 1987 Constitution.
The complainant being for illegal dismissal (among others) it then behooves upon
respondent, pursuant to Art. 227(b) and as ruled in Edwin Gesulgon vs. NLRC, et al.
(G.R. No. 90349, March 5, 1993, 3rd Div., Feliciano, J.) to prove that the dismissal of
complainant was for a valid cause. Absent such proof, we cannot but rule that the
complainant was illegally dismissed.8
On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private
respondent's representative was present.
On April 22, 1994, a Writ of Execution was issued, which reads:
NOW, THEREFORE, finding merit in [private respondent's] Motion for Issuance of

the Writ, you are hereby commanded to proceed to the premises of [petitioner] Nitto
Enterprises and Jovy Foster located at No. l 74 Araneta Avenue, Portero, Malabon,
Metro Manila or at any other places where their properties are located and effect the
reinstatement of herein [private respondent] to his work last performed or at the
option of the respondent by payroll reinstatement.
You are also to collect the amount of P122,690.85 representing his backwages as
called for in the dispositive portion, and turn over such amount to this Office for
proper disposition.
Petitioner filed a motion for reconsideration but the same was denied.
Hence, the instant petition — for certiorari.
The issues raised before us are the following:
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE

OF DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN
APPRENTICE.
II
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE

OF DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY
PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE
OF PRIVATE RESPONDENT.
We find no merit in the petition.
Petitioner assails the NLRC's finding that private respondent Roberto Capili cannot plainly be
considered an apprentice since no apprenticeship program had yet been filed and approved at the
time the agreement was executed.
Petitioner further insists that the mere signing of the apprenticeship agreement already established
an employer-apprentice relationship.
Petitioner's argument is erroneous.
The law is clear on this matter. Article 61 of the Labor Code provides:
Contents of apprenticeship agreement. — Apprenticeship agreements, including the

main rates of apprentices, shall conform to the rules issued by the Minister of Labor
and Employment. The period of apprenticeship shall not exceed six months.
Apprenticeship agreements providing for wage rates below the legal minimum wage,
which in no case shall start below 75% per cent of the applicable minimum wage,
may be entered into only in accordance with apprenticeship program duly approved
by the Minister of Labor and Employment. The Ministry shall develop standard model
programs of apprenticeship. (emphasis supplied)
In the case at bench, the apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care
maker/molder." On the same date, an apprenticeship program was prepared by petitioner and
submitted to the Department of Labor and Employment. However, the apprenticeship Agreement
was filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of Labor
and Employment, the apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law. It is
mandated that apprenticeship agreements entered into by the employer and apprentice shall be
entered only in accordance with the apprenticeship program duly approved by the Minister of Labor
and Employment.
Prior approval by the Department of Labor and Employment of the proposed apprenticeship program
is, therefore, a condition sine quo non before an apprenticeship agreement can be validly entered
into.
The act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not instantaneously give rise to
an employer-apprentice relationship.
Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship
program through the participation of employers, workers and government and non-government
agencies" and "to establish apprenticeship standards for the protection of apprentices." To translate
such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be
secured as a condition sine qua non before any such apprenticeship agreement can be fully
enforced. The role of the DOLE in apprenticeship programs and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private respondent has no force
and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private
respondent's assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or
"pahinante") deserves credence. He should rightly be considered as a regular employee of petitioner
as defined by Article 280 of the Labor Code:
Art. 280. Regular and Casual Employment. — The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business
or trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists. (Emphasis supplied)
and pursuant to the constitutional mandate to "protect the rights of workers and promote their
welfare."9
Petitioner further argues that, there is a valid cause for the dismissal of private respondent.
There is an abundance of cases wherein the Court ruled that the twin requirements of due process,
substantive and procedural, must be complied with, before valid dismissal exists. 10 Without which,
the dismissal becomes void.
The twin requirements of notice and hearing constitute the essential elements of due process. This
simply means that the employer shall afford the worker ample opportunity to be heard and to defend
himself with the assistance of his representative, if he so desires.
Ample opportunity connotes every kind of assistance that management must accord the employee to
enable him to prepare adequately for his defense including legal representation. 11
As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC: 12
The law requires that the employer must furnish the worker sought to be dismissed
with two (2) written notices before termination of employee can be legally effected:
(1) notice which apprises the employee of the particular acts or omissions for which
his dismissal is sought; and (2) the subsequent notice which informs the employee of
the employer's decision to dismiss him (Sec. 13, BP 130; Sec. 2-6 Rule XIV, Book V,
Rules and Regulations Implementing the Labor Code as amended). Failure to
comply with the requirements taints the dismissal with illegality. This procedure is
mandatory, in the absence of which, any judgment reached by management is void
and in existent (Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp.
vs. NLRC, 168 SCRA 122; Ruffy vs. NLRC. 182 SCRA 365 [1990]).
The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three days
after he was made to sign a Quitclaim, a clear indication that such resignation was not voluntary and
deliberate.
Private respondent averred that he was actually employed by petitioner as a delivery boy ("kargador"
or "pahinante").
He further asserted that petitioner "strong-armed" him into signing the aforementioned resignation
letter and quitclaim without explaining to him the contents thereof. Petitioner made it clear to him that
anyway, he did not have a choice. 13
Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the latter's
alleged resignation and subsequent execution of a Quitclaim and Release. A judicious examination
of both events belies any spontaneity on private respondent's part.
WHEREFORE, finding no abuse of discretion committed by public respondent National Labor

Relations Commission, the appealed decision is hereby AFFIRMED.
SO ORDERED.
[G.R. No. 187320 : January 26, 2011]
ATLANTA INDUSTRIES, INC. AND/OR ROBERT CHAN, PETITIONERS, VS. APRILITO R. SEBOLINO,
KHIM V. COSTALES, ALVIN V. ALMOITE, AND JOSEPH S. SAGUN, RESPONDENTS.
DECISION
BRION, J.:
For resolution is the petition for review on certiorari[1] assailing the decision[2] and the resolution[3] of the
Court of Appeals (CA) rendered on November 4, 2008 and March 25, 2009, respectively, in CA-G.R. SP. No.
99340.[4]cralaw
The Antecedents
The facts are summarized below.
In the months of February and March 2005, complainants Aprilito R. Sebolino, Khim V. Costales, Alvin V.
Almoite, Joseph S. Sagun, Agosto D. ZaÃ±o, Domingo S. Alegria, Jr., Ronie Ramos, Edgar Villagomez,
Melvin Pedregoza, Teofanes B. Chiong, Jr., Leonardo L. dela Cruz, Arnold A. Magalang, and Saturnino M.
Mabanag filed several complaints for illegal dismissal, regularization, underpayment, nonpayment of wages
and other money claims, as well as claims for moral and exemplary damages and attorney's fees against the
petitioners Atlanta Industries, Inc. (Atlanta) and its President and Chief Operating Officer Robert Chan.
Atlanta is a domestic corporation engaged in the manufacture of steel pipes.
The complaints were consolidated and were raffled to Labor Arbiter Daniel Cajilig, but were later transferred
to Labor Arbiter Dominador B. Medroso, Jr.
The complainants alleged that they had attained regular status as they were allowed to work with Atlanta for
more than six (6) months from the start of a purported apprenticeship agreement between them and the
company. They claimed that they were illegally dismissed when the apprenticeship agreement expired.
In defense, Atlanta and Chan argued that the workers were not entitled to regularization and to their money
claims because they were engaged as apprentices under a government-approved apprenticeship program.
The company offered to hire them as regular employees in the event vacancies for regular positions occur in
the section of the plant where they had trained. They also claimed that their names did not appear in the list
of employees (Master List)[5] prior to their engagement as apprentices.
On May 24, 2005, dela Cruz, Magalang, ZaÃ±o and Chiong executed a Pagtalikod at Pagwawalang
Saysaybefore Labor Arbiter Cajilig.
The Compulsory Arbitration Rulings
On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect to dela Cruz, Magalang,
ZaÃ±o and Chiong, but found the termination of service of the remaining nine to be illegal.[6]Consequently,
the arbiter awarded the dismissed workers backwages, wage differentials, holiday pay and service incentive
leave pay amounting to P1,389,044.57 in the aggregate.
Atlanta appealed to the National Labor Relations Commission (NLRC). In the meantime, or on October 10,
2006, Ramos, Alegria, Villagomez, Costales and Almoite allegedly entered into a compromise agreement
with Atlanta.[7] The agreement provided that except for Ramos, Atlanta agreed to pay the workers a
specified amount as settlement, and to acknowledge them at the same time as regular employees.
On December 29, 2006,[8] the NLRC rendered a decision, on appeal, modifying the ruling of the labor
arbiter, as follows: (1) withdrawing the illegal dismissal finding with respect to Sagun, Mabanag, Sebolino
and Pedregoza; (2) affirming the dismissal of the complaints of dela Cruz, ZaÃ±o, Magalang and Chiong; (3)
approving the compromise agreement entered into by Costales, Ramos, Villagomez, Almoite and Alegria,
and (4) denying all other claims.
Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the decision, but the NLRC denied
the motion in its March 30, 2007[9] resolution. The four then sought relief from the CA through a petition
for certiorari under Rule 65 of the Rules of Court. They charged that the NLRC committed grave abuse of
discretion in: (1) failing to recognize their prior employment with Atlanta; (2) declaring the second
apprenticeship agreement valid; (3) holding that the dismissal of Sagun, Mabanag, Sebolino and Melvin
Pedregoza is legal; and (4) upholding the compromise agreement involving Costales, Ramos, Villagomez,
Almoite and Alegria.
The CA Decision
The CA granted the petition based on the following findings:[10]
1. The respondents were already employees of the company before they entered into the first and second
apprenticeship agreements - Almoite and Costales were employed as early as December 2003 and,
subsequently, entered into a first apprenticeship agreement from May 13, 2004 to October 12, 2004; before
this first agreement expired, a second apprenticeship agreement, from October 9, 2004 to March 8, 2005
was executed. The same is true with Sebolino and Sagun, who were employed by Atlanta as early as March
3, 2004. Sebolino entered into his first apprenticeship agreement with the company from March 20, 2004 to
August 19, 2004, and his second apprenticeship agreement from August 20, 2004 to January 19, 2005.
Sagun, on the other hand, entered into his first agreement from May 28, 2004 to October 8, 2004, and the
second agreement from October 9, 2004 to March 8, 2005.
2. The first and second apprenticeship agreements were defective as they were executed in violation of the
law and the rules.[11] The agreements did not indicate the trade or occupation in which the apprentice would
be trained; neither was the apprenticeship program approved by the Technical Education and Skills
Development Authority (TESDA).
3. The positions occupied by the respondents - machine operator, extruder operator and scaleman - are
usually necessary and desirable in the manufacture of plastic building materials, the company's main
business. Costales, Almoite, Sebolino and Sagun were, therefore, regular employees whose dismissals were
illegal for lack of a just or authorized cause and notice.
4. The compromise agreement entered into by Costales and Almoite, together with Ramos, Villagomez and
Alegria, was not binding on Costales and Almoite because they did not sign the agreement.
The petitioners themselves admitted that Costales and Almoite were initially planned to be a part of the
compromise agreement, but their employment has been regularized as early as January 11, 2006; hence,
the company did not pursue their inclusion in the compromise agreement.[12]
The CA faulted the NLRC for failing to appreciate the evidence regarding the respondents' prior employment
with Atlanta. The NLRC recognized the prior employment of Costales and Almoite on Atlanta's monthly
report for December 2003 for the CPS Department/Section dated January 6, 2004.[13] This record shows that
Costales and Almoite were assigned to the company's first shift from 7:00 a.m. to 3:00 p.m. The NLRC
ignored Sebolino and Sagun's prior employment under the company's Production and Work Schedule for
March 7 to 12, 2005 dated March 3, 2004,[14] as they had been Atlanta's employees as early as March 3,
2004, with Sebolino scheduled to work on March 7-12, 2005 at 7:00 a.m. to 7:00 p.m., while Sagun was
scheduled to work for the same period but from 7:00 p.m. to 7:00 a.m. The CA noted that Atlanta failed to
challenge the authenticity of the two documents before it and the labor authorities.
Atlanta and Chan moved for reconsideration, but the CA denied the motion in a resolution rendered on
March 25, 2009.[15] Hence, the present petition.
The Petition
Atlanta seeks a reversal of the CA decision, contending that the appellate court erred in (1) concluding that
Costales, Almoite, Sebolino and Sagun were employed by Atlanta before they were engaged as apprentices;
(2) ruling that a second apprenticeship agreement is invalid; (3) declaring that the respondents were
illegally dismissed; and (4) disregarding the compromise agreement executed by Costales and Almoite. It
submits the following arguments:
First. The CA's conclusion that the respondent workers were company employees before they were engaged
as apprentices was primarily based on the Monthly Report[16] and the Production and Work Schedule for
March 7-12, 2005,[17] in total disregard of the Master List[18] prepared by the company accountant, Emelita
M. Bernardo. The names of Costales, Almoite, Sebolino and Sagun do not appear as employees in the
Master List which "contained the names of all the persons who were employed by and at petitioner."[19]
Atlanta faults the CA for relying on the Production and Work Schedule and the Monthly Report which were
not sworn to, and in disregarding the Master List whose veracity was sworn to by Bernardo and by Alex Go
who headed the company's accounting division. It maintains that the CA should have given more credence
to the Master List.
Second. In declaring invalid the apprenticeship agreements it entered into with the respondent workers, the
CA failed to recognize the rationale behind the law on apprenticeship. It submits that under the
law,[20] apprenticeship agreements are valid, provided they do not exceed six (6) months and the
apprentices are paid the appropriate wages of at least 75% of the applicable minimum wage.
The respondents initially executed a five-month apprenticeship program with Atlanta, at the end of which,
they "voluntarily and willingly entered into another apprenticeship agreement with the petitioner for the
training of a second skill"[21] for five months; thus, the petitioners committed no violation of the
apprenticeship period laid down by the law.
Further, the apprenticeship agreements, entered into by the parties, complied with the requisites under
Article 62 of the Labor Code; the company's authorized representative and the respondents signed the
agreements and these were ratified by the company's apprenticeship committee. The apprenticeship
program itself was approved and certified by the TESDA.[22] The CA, thus, erred in overturning the NLRC's
finding that the apprenticeship agreements were valid.
Third. There was no illegal dismissal as the respondent workers' tenure ended with the expiration of the
apprenticeship agreement they entered into. There was, therefore, no regular employer-employee
relationship between Atlanta and the respondent workers.
The Case for Costales, Almoite, Sebolino and Sagun
In a Comment filed on August 6, 2009,[23] Costales, Almoite, Sebolino and Sagun pray for a denial of the
petition for being procedurally defective and for lack of merit.
The respondent workers contend that the petition failed to comply with Section 4, Rule 45 of the Rules of
Court which requires that the petition be accompanied by supporting material portions of the records. The
petitioners failed to attach to the petition a copy of the Production and Work Schedule despite their
submission that the CA relied heavily on the document in finding the respondent workers' prior employment
with Atlanta. They also did not attach a copy of the compromise agreement purportedly executed by
Costales and Almoite. For this reason, the respondent workers submit that the petition should be dismissed.
The respondents posit that the CA committed no error in holding that they were already Atlanta's employees
before they were engaged as apprentices, as confirmed by the company's Production and Work
Schedule.[24] They maintain that the Production and Work Schedule meets the requirement of substantial
evidence as the petitioners failed to question its authenticity. They point out that the schedule was
prepared by Rose A. Quirit and approved by Adolfo R. Lope, head of the company's PE/Spiral Section. They
argue that it was highly unlikely that the head of a production section of the company would prepare and
assign work to the complainants if the latter had not been company employees.
The respondent workers reiterate their mistrust of the Master List[25] as evidence that they were not
employees of the company at the time they became apprentices. They label the Master List as "self-serving,
dubious and even if considered as authentic, its content contradicts a lot of petitioner's claim and
allegations,"[26] thus -
1. Aside from the fact that the Master List is not legible, it contains only the names of inactive employees.
Even those found by the NLRC to have been employed in the company (such as Almoite, Costales and
Sagun) do not appear in the list. If Costales and Almoite had been employed with Atlanta since January 11,
2006, as the company claimed,[27] their names would have been in the list, considering that the Master List
accounts for all employees "as of May 2006" - the notation carried on top of each page of the document.
2. There were no entries of employees hired or resigned in the years 2005 and 2006 despite the "as of May
2006" notation; several pages making up the Master List contain names of employees for the years 1999 -
2004.
3. The fact that Atlanta presented the purported Master List instead of the payroll raised serious doubts on
the authenticity of the list.
In sum, the respondent workers posit that the presentation of the Master List revealed the "intention of the
herein petitioner[s] to perpetually hide the fact of [their] prior employment."[28]
On the supposed apprenticeship agreements they entered into, Costales, Almoite, Sebolino and Sagun
refuse to accept the agreements' validity, contending that the company's apprenticeship program is merely
a ploy "to continually deprive [them] of their rightful wages and benefits which are due them as regular
employees."[29] They submit the following "indubitable facts and ratiocinations:"[30]
1. The apprenticeship agreements were submitted to TESDA only in 2005 (with dates of receipt on "1/4/05"
& "2/22/05"[31]), when the agreements were supposed to have been executed in April or May 2004. Thus,
the submission was made long after the starting date of the workers' apprenticeship or even beyond the
agreement's completion/termination date, in violation of Section 23, Rule VI, Book II of the Labor Code.
2. The respondent workers were made to undergo apprenticeship for occupations different from those
allegedly approved by TESDA. TESDA approved Atlanta's apprenticeship program on "Plastic Molder"[32]and
not for extrusion molding process, engineering, pelletizing process and mixing process.
3. The respondents were already skilled workers prior to the apprenticeship program as they had been
employed and made to work in the different job positions where they had undergone training. Sagun and
Sebolino, together with Mabanag, Pedregoza, dela Cruz, Chiong, Magalang and Alegria were even given
production assignments and work schedule at the PE/Spiral Section from May 11, 2004 to March 23, 2005,
and some of them were even assigned to the 3:00 p.m. - 11:00 p.m. and graveyard shifts (11:00 p.m. -
7:00 a.m.) during the period.[33]
4. The respondent workers were required to continue as apprentices beyond six months. The TESDA
certificate of completion indicates that the workers' apprenticeship had been completed after six months.
Yet, they were suffered to work as apprentices beyond that period.
Costales, Almoite, Sebolino and Sagun resolutely maintain that they were illegally dismissed, as the reason
for the termination of their employment - notice of the completion of the second apprenticeship agreement -
did not constitute either a just or authorized cause under Articles 282 and 283 of the Labor Code.
Finally, Costales and Almoite refuse to be bound by the compromise agreement[34] that Atlanta presented to
defeat the two workers' cause of action. They claim that the supposed agreement is invalid as against them,
principally because they did not sign it.
The Court's Ruling
The procedural issue
The respondent workers ask that the petition be dismissed outright for the petitioners' failure to attach to
the petition a copy of the Production and Work Schedule and a copy of the compromise agreement Costales
and Almoite allegedly entered into -- material portions of the record that should accompany and support the
petition, pursuant to Section 4, Rule 45 of the Rules of Court.
In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J. Garchitorena[35] where the Court addressed
essentially the same issue arising from Section 2(d), Rule 42 of the Rules of Court,[36] we held that the
phrase "of the pleadings and other material portions of the record xxx as would support the allegation of the
petition clearly contemplates the exercise of discretion on the part of the petitioner in the selection of
documents that are deemed to be relevant to the petition. The crucial issue to consider then is whether or
not the documents accompanying the petition sufficiently supported the allegations therein."[37]
As in Mariners, we find that the documents attached to the petition sufficiently support the petitioners'
allegations. The accompanying CA decision[38] and resolution,[39] as well as those of the labor arbiter[40]and
the NLRC,[41] referred to the parties' position papers and even to their replies and rejoinders. Significantly,
the CA decision narrates the factual antecedents, defines the complainants' cause of action, and cites the
arguments, including the evidence the parties adduced. If any, the defect in the petition lies in the
petitioners' failure to provide legible copies of some of the material documents mentioned, especially several
pages in the decisions of the labor arbiter and of the NLRC. This defect, however, is not fatal as the
challenged CA decision clearly summarized the labor tribunal's rulings. We, thus, find no procedural
obstacle in resolving the petition on the merits.
The merits of the case
We find no merit in the petition. The CA committed no reversible error in nullifying the NLRC
decision[42] and in affirming the labor arbiter's ruling,[43] as it applies to Costales, Almoite, Sebolino and
Sagun. Specifically, the CA correctly ruled that the four were illegally dismissed because (1) they were
already employees when they were required to undergo apprenticeship and (2) apprenticeship agreements
were invalid.
The following considerations support the CA ruling.
First. Based on company operations at the time material to the case, Costales, Almoite, Sebolino and Sagun
were already rendering service to the company as employees before they were made to undergo
apprenticeship. The company itself recognized the respondents' status through relevant operational records
- in the case of Costales and Almoite, the CPS monthly report for December 2003[44] which the NLRC relied
upon and, for Sebolino and Sagun, the production and work schedule for March 7 to 12, 2005[45] cited by the
CA.
Under the CPS monthly report, Atlanta assigned Costales and Almoite to the first shift (7:00 a.m. to 3:00
p.m.) of the Section's work. The Production and Work Schedules, in addition to the one noted by the CA,
showed that Sebolino and Sagun were scheduled on different shifts vis-Ã -vis the production and work of the
company's PE/Spiral Section for the periods July 5-10, 2004;[46] October 25-31, 2004;[47] November 8-14,
2004;[48] November 16-22, 2004;[49] January 3-9, 2005;[50] January 10-15, 2005;[51] March 7-12,
2005[52] and March 17-23, 2005.[53]
We stress that the CA correctly recognized the authenticity of the operational documents, for the
failure of Atlanta to raise a challenge against these documents before the labor arbiter, the NLRC and the
CA itself. The appellate court, thus, found the said documents sufficient to establish the employment of
the respondents before their engagement as apprentices.
Second. The Master List[54] (of employees) that the petitioners heavily rely upon as proof of their position
that the respondents were not Atlanta's employees, at the time they were engaged as apprentices, is
unreliable and does not inspire belief.
The list, consisting of several pages, is hardly legible. It requires extreme effort to sort out the names of the
employees listed, as well as the other data contained in the list. For this reason alone, the list deserves little
or no consideration. As the respondents also pointed out, the list itself contradicts a lot of Atlanta's claims
and allegations, thus: it lists only the names of inactive employees; even the names of those the NLRC
found to have been employed by Atlanta, like Costales and Almoite, and those who even Atlanta claims
attained regular status on January 11, 2006,[55] do not appear in the list when it was supposed to account
for all employees "as of May 6, 2006." Despite the "May 6, 2006" cut off date, the list contains no entries
of employees who were hired or who resigned in 2005 and 2006. We note that the list contains the names of
employees from 1999 to 2004.
We cannot fault the CA for ignoring the Master List even if Bernardo, its head office accountant, swore to its
correctness and authenticity.[56] Its substantive unreliability gives it very minimal probative value. Atlanta
would have been better served, in terms of reliable evidence, if true copies of the payroll (on which the list
was based, among others, as Bernardo claimed in her affidavit) were presented instead.
Third. The fact that Costales, Almoite, Sebolino and Sagun were already rendering service to the company
when they were made to undergo apprenticeship (as established by the evidence) renders the
apprenticeship agreements irrelevant as far as the four are concerned. This reality is highlighted by the CA
finding that the respondents occupied positions such as machine operator, scaleman and extruder operator -
tasks that are usually necessary and desirable in Atlanta's usual business or trade as manufacturer of plastic
building materials.[57] These tasks and their nature characterized the four as regular employees under Article
280 of the Labor Code. Thus, when they were dismissed without just or authorized cause, without notice,
and without the opportunity to be heard, their dismissal was illegal under the law.[58]
Even if we recognize the company's need to train its employees through apprenticeship, we can only
consider the first apprenticeship agreement for the purpose. With the expiration of the first agreement and
the retention of the employees, Atlanta had, to all intents and purposes, recognized the completion of their
training and their acquisition of a regular employee status. To foist upon them the second apprenticeship
agreement for a second skill which was not even mentioned in the agreement itself,[59] is a violation of the
Labor Code's implementing rules[60] and is an act manifestly unfair to the employees, to say the least. This
we cannot allow.
Fourth. The compromise agreement[61] allegedly entered into by Costales and Almoite, together with
Ramos, Villagomez and Alegria, purportedly in settlement of the case before the NLRC, is not binding on
Costales and Almoite because they did not sign it. The company itself admitted[62] that while Costales and
Almoite were initially intended to be a part of the agreement, it did not pursue their inclusion "due to their
regularization as early as January 11, 2006."[63]cralaw
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The assailed decision
and resolution of the Court of Appeals are AFFIRMED. Costs against the petitioner Atlanta Industries, Inc.
SO ORDERED.
J. JOBSTART PHILIPPINES ACT, R.A. 10869 AND IRR’S
K. ANTI-AGE DISCRIMINATION IN EMPLOYMENT ACT, R.A. 10911 AND IRR’S
L. OVERSEES FILIPINO WORKERS
IV. JOB CONTRACTING AND LABOR ONLY CONTRACTING, ART. 106-109 OF LABOR
CODE, DOLE DEPARTMENT ORDER NO. 18-A (NOV. 14, 2011)

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I.

EMPLOYER-EMPLOYEE RELATIONSHIP AS THE MATRIX OR BASIS FOR

228.)’“ (Italics supplied.)

B. G.R. No. L-9110 April 30, 1957

Javier and Javier for appellants.

An independent contractor is one who in rendering services, exercises an independent

C. G.R. No. L-12582 January 28, 1961

LVN PICTURES, INC., petitioner-appellant,

G.R. No. L-12598 January 28, 1961

SAMPAGUITA PICTURES, INC., petitioner-appellant,

Nicanor S. Sison for petitioner-appellant.

D. G.R. No. 77205 May 27, 1991

VALENTINO TORILLO, petitioner,

F.P. Pobre & Associates for petitioner.

Petitioner filed an opposition to this motion as well as a supplemental motion for

Hence, this recourse by petitioner.

E. [G.R. NO. 153511 - July 18, 2012]

The answer to this question is in the affirmative.

WHEREFORE, foregoing premises considered, this petition is GRANTED. xxx.7 Ï‚rÎ½l l

The appeal fails.

Certiorari was a proper recourse

Substantive Issue No. 1:

Employer-employee relationship existed between the parties

b. He could not choose the place of his performance;

Substantive Issue No. 2:

Validity of the Termination

(b) The substantial losses apprehended must be reasonably imminent;

chanrobles vi rt ual law li bra ry

Was the retrenchment of respondent valid? chanro blesvi rt ualawlib ra ry

Costs of suit to be paid by the petitioners.

F. G.R. No. 198782, October 19, 2016

The antecedent facts follow.

WHEREFORE, judgment is hereby rendered:

1. Declaring [respondent] a regular employee of [NDI and petitioner];

a. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPLY THE.

b. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPLY THE

c. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPLY THE

d. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO APPLY THE

2. THE HONORABLE COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT AND

a. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO DECLARE

b. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO DECLARE

c. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT,

d. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN SETTING ASIDE THE

f. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISREGARDING THE

g. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE

h. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REINSTATING THE

We partly grant the petition.

G. G.R. No. 197899

JOAQUIN LU, Petitioner

SAMUEL CAHAYAG, ALEJANDRO CAMPUNGAN, RUPERTO CERNA, JR., REYNALDO CERNA,

(3) EXEMPLARY DAMAGES in the sum of Fifty Thousand Pesos (₱50,000.00);

(4) ATTORNEY'S FEES equivalent to 10% of the total monetary award.

THE HONORABLE COURT OF APPEALS RENDERED THE ASSAILED DECISION CONTRARY

THE HONORABLE COURT OF APPEALS EXCEEDED ITS JURISDICTION BY TREATING

THE HONORABLE COURT OF APPEALS RENDERED THE DECISION DATED 22 OCTOBER

We are not persuaded.

In Prince Transport, Inc. v. Garcia,11 We held:

In determining the existence of an employer-employee relationship, the following elements are

II. GENERAL LABOR POLICY

a. Art. II, Sections 2, 9, 10, 11, 13, 14, 18, 20

a. Art. 3, 4, 166, 211, 221, 255, 263(a), 275(a)

a. Art. 1700, 1701

III. LABOR STANDARDS