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Full Protection of Labor




The principle that the CBA is the law between the contracting parties stands strong and true. 17 However, the
present controversy involves not merely an interpretation of CBA provisions. More importantly, it requires a
determination of the effect of an executive order on the terms and the conditions of the CBA. This is, and
should be, the focus of the instant case.

It is unnecessary to delve too much on the intention of the parties as to what they allegedly meant by the term
"basic wage" at the time the CBA and MOA were executed because there is no question that as of 1 May 1987,
as mandated by E.O. No. 178, the basic wage of workers, or the statutory minimum wage, was increased with
the integration of the COLA. As of said date, then, the term "basic wage" includes the COLA. This is what the
law ordains and to which the collective bargaining agreement of the parties must conform.

Petitioner’s arguments eventually lose steam in the light of the fact that compliance with the law is mandatory
and beyond contractual stipulation by and between the parties; consequently, whether or not petitioner
intended the basic wage to include the COLA becomes immaterial. There is evidently nothing to construe and
interpret because the law is clear and unambiguous. Unfortunately for petitioner, said law, by some uncanny
coincidence, retroactively took-effect on the same date the CBA increase became effective. Therefore, there
cannot be any doubt that the computation of the CBA increase on the basis of the "integrated" wage does not
constitute a violation of the CBA.

Petitioner’s contention that under the Rules Implementing E.O. No. 178, the definition of the term "basic
wage" has remained unchanged is off the mark since said definition expressly allows integration of monetary
benefits into the regular pay of employees

Integration of monetary benefits into the basic pay of workers is not a new method of increasing the minimum
wage. 18 But even so, we are still guided by our ruling in Davao Integrated Port Stevedoring Services v.
Abarquez, 19 which we herein reiterate

While the terms and conditions of the CBA constitute the law between the parties, it is not, however, an
ordinary contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor
contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the
relations between labor and capital, is not merely contractual in nature but impressed with public interest,
thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon it, giving due consideration
to the context in which it is negotiated and purpose which it is intended to serve.

Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that "when the
pendulum of judgment swings to and for and the forces are equal on both sides, the same must be stilled in
favor of labor." While petitioner acknowledges that all doubts in the interpretation of the Labor Code shall be
resolved in favor of labor, 20 it insists that what is involved-here is the amended CBA which is essentially a
contract between private persons. What petitioner has lost sight of is the avowed policy of the State,
enshrined in our Constitution, to accord utmost protection and justice to labor, a policy, we are, likewise,
sworn to uphold.

 When conflicting interests of labor and capital are to be weighed on the scales of social justice, the
heavier influence of the latter should be counter-balanced by sympathy and compassion the law must
accord the underprivileged worker.

 Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social justice
policy. The purpose of E.O. No. 178 is to improve the lot of the workers covered by the said statute. We
are bound to ensure its fruition.

Doubt is resolved in favor of labor


The Court grants the Petition.

In labor cases, issues of fact are for the labor tribunals to resolve, as this Court is not a trier of facts.
However, in exceptional cases, this Court may be urged to resolve factual issues: "[1] where there is
insufficient or insubstantial evidence to support the findings of the tribunal or the court below; or[2] when too
much is concluded, inferred or deduced from the bare or incomplete facts submitted by the parties[;] or, [3]
where the [Labor Arbiter] and the NLRC came up with conflicting positions.42 "When there is a divergence
between the findings of facts of the labor tribunals and the CA, there is a need to refer to the record."43

The instant Petition presents not only a situation where the Labor Arbiter, the NLRC and the CA differ in their
assessment of petitioner’s case, but also one where the evidence miserably fails to support a finding that
petitioner committed theft. The Labor Arbiter and the CA – and the NLRC as well – ignored one material piece
of evidence which should have exonerated petitioner from the theft charge.

Respondent claims that what petitioner returned to its warehouse on July 11, 2004 was the Fabrication
Unit’s aluminum level. This is based on the identical claim of Fabrication Unit workers – Mangahas, Tercero,
and Nagales – that they discovered their lost aluminum level upon which was engraved the word "Fabrication"
and had the familiar dent which, based on warehouse records, turned out to be that which was returned by


The Labor Arbiter (LA) ruled in favor of petitioners but granted respondent’s claim for 13th month pay. The
National Labor Relations Commission (NLRC) affirmed in toto the LA decisions.

The Court of Appeals (CA) set aside the decision and resolution of the NLRC. It ruled that the joint testimony
of Mercy Bura-ay and Mea Torno in favor of respondent is tainted with bias and cannot credibly and
substantially prove the fact of respondent’s alleged dismissal. However, neither should the testimony of Eva
Gorospe, Ferraris’s lone witness, deserve much probative weight in proving that respondent abandoned her
job. Doubt should be resolved in favor of the worker, respondent in this case.

Did the CA commit a reversible error?

Ruling: Yes.

The Court of Appeals was correct in its observation that the Labor Arbiter’s quote on the shifting of the
burden of proof in dismissal cases, supposedly from De Paul, could not actually be found in said case. Yet, it
does not necessarily mean that the Labor Arbiter’s ruling on the matter was fallacious or entirely baseless.

It bears to point out that in the case at bar, the Labor Arbiter, the NLRC, and even the Court of Appeals, all
consistently found that respondent was not able to present substantial evidence of her dismissal. They all
rejected the joint affidavit of Mercy and Mea, submitted by respondent, for being partial and biased. It appears
that Mercy and Mea executed said affidavits to return a favor as respondent testified for them in their own
cases against petitioners. The Court of Appeals only deviated from the findings of the Labor Arbiter and the
NLRC by also disregarding Eva’s affidavit, submitted by petitioners to corroborate their allegations, for being
insufficient to prove abandonment. The appellate court then applied the equipoise doctrine: with all things
considered equal, all doubts must be resolved in favor of labor, that is, respondent.

The application by the Court of Appeals of the equipoise doctrine and the rule that all doubts should be
resolved in favor of labor was misplaced. Without the joint affidavit of Mercy and Mea, there only remained the
bare allegation of respondent that she was dismissed by petitioners on Feb. 5, 2005, which hardly constitute
substantial evidence of her dismissal. As both the Labor Arbiter and the NLRC held, since respondent was
unable to establish with substantial evidence her dismissal from employment, the burden of proof did not
shift to petitioners to prove that her dismissal was for just or authorized cause.

As pointed out by petitioners, they never raised abandonment as a defense as there was no dismissal in the
first place. Petitioners did not argue that respondent abandoned her work which justified her dismissal from
employment. Petitioners merely alleged the fact that respondent, after being scolded on Feb. 4, 2005, no
longer returned to work beginning February 5, 2005, which was corroborated by one of petitioners’
employees, Eva, in her affidavit.

Prospective effect of Labor

When Labor is retroactive – Oro Enterprise Inc vs NLRC and L.L. Cecilio


Whether or not R.A. 7641 can favorably apply to private respondent’s case.


RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a
curative statute that — absent a retirement plan devised by, an agreement with, or a voluntary grant from, an
employer — can respond, in part at least, to the financial well-being of workers during their twilight years
soon following their life of labor. There should be little doubt about the fact that the law can apply to labor
contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only
from the date of the law’s enactment but retroactively to the time said employment contracts have started.
Petitioner’s insists the assumption that it should not be given a retroactive effect. That would be to ignore the
well-settled principle that police power legislation intended to promote public welfare applies to existing
contracts. The contracts of employment were entered into at a time when there was no law granting the
workers said right. Such being the case, it was then contended that the application as to them of the
subsequent enactment would amount to an impairment of contractual obligations. In refuting such a view, it
was made clear in the opinion that “constitutional guaranty of non-impairment . . . is limited by the exercise
of the police power of the State, in the interest of public health, safety, morals and general welfare.”