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ASOCIACION DE AGRICULTORES DE TALISAY-SILAY, INC.

, TRINO MONTINOLA, FERNANDO CUENCA, EDUARDO LEDESMA, EMILIO JISON, NILO LIZARES, NICOLAS JALANDONI and SECRETARY OF LABOR, plaintiffs-appellees, vs. TALISAY-SILAY MILLING CO., INC., and LUZON SURETY CO., INC. 1979 Feb 19 En Banc G.R. No. L-19937 DECISION BARREDO, J: APPEAL, in G.R. No. L-19937, by the defendants Talisay-Silay Milling Co., Inc. and Luzon Surety Company, from the decision rendered by the Court of First Instance of Manila in Civil Case No. 24128, entitled Asociacion de Agricultores de Talisay-Silay, Inc. et al. vs. Talisay-Silay Milling Co., Inc. et al., on January 26, 1962 as well as from its order dated April 28, 1962 amending the same, which together granted the main reliefs prayed for in the complaint, based on Republic Act 809, and dismissed all of the counterclaims of the defendants; and PETITION, in G.R. No. L-21304, filed by the Solicitor General in behalf of the Republic of the Philippines for certiorari and/or mandamus to compel respondent judge of the Court of First Instance of Negros Occidental to appoint, in Civil Case No. 6980 of said court, entitled Republic of the Philippines vs. Talisay-Silay Milling Co., Inc., an administrator of respondent Central, which the Government had taken over, pursuant to the provisions of the same Republic Act 809 aforementioned, respondent judge having refused to do so, holding that the take-over of the Central by the Government is unconstitutional. The two cases, although proceeding from different courts and requiring distinct remedies, have been consolidated because they involve closely related or partially identical issues between practically the same parties. Re: G.R. No. L-19937 THE PROCEEDINGS BELOW 1. The pleadings and stipulations of fact The original basic complaint in this case filed as a class suit on September 23, 1954 named as plaintiffs the Asociacion de Agricultores de Talisay-Silay, Inc. and six sugarcane planters, namely, Trino Montinola, Fernando Cuenca, Eduardo Ledesma, Emilio Jison, Nilo Lizares and Nicolas Jalandoni, hereinafter to be referred to, jointly with the Asociacion, as PLANTERS, and as defendant the Talisay-Silay Milling Co., Inc., hereinafter to be referred to as CONTROL. Later on, on December 20, 1956, an amended complaint was filed to supersede the original one. In the amended complaint, the Secretary of Labor was joined as plaintiff, to represent the laborers favored by the law in dispute, whereas, the Luzon Surety Company and Philippine National Bank were impleaded as defendants. The amended complaint alleged three main causes of action (the second, an alternative one), namely: Under the first cause of action, the claim of the plaintiffs is that inasmuch as under Republic Act 809, approved on June 22, 1952, it is provided that: "Section 1. In the absence of written milling agreements between the majority of planters and the millers of sugarcane in any milling district in the Philippines, the unrefined sugar produced in that district from the milling by any sugar central of the sugar-cane of any sugar-cane planter or plantation owner, as well as all by-products and derivatives thereof, shall be divided between them as follows: "Sixty per centum for the planter, and forty per centum for the central in any milling district the maximum actual production of which is not more than four hundred thousand piculs: Provided, That the provisions of this section shall not apply to sugar centrals with an actual production of less than one hundred fifty thousand piculs. "Sixty-two and one-half per centum for the planter, and thirty-seven and one half per centum for the central in any milling district the maximum actual production of which exceeds four hundred thousand piculs but does not exceed six hundred thousand piculs; "Sixty-five per centum for the planter, and thirty-five per centum for the central in any milling district the maximum actual production of which exceeds six hundred thousand piculs but does not exceed nine hundred thousand piculs; "Sixty-seven and one-half per centum for the planter, and thirty-two and one-half per centum for the central in any milling district the maximum actual production of which exceeds nine hundred thousand piculs but does not exceed one million two hundred thousand piculs; "Seventy per centum for the planter, and thirty per centum for the central in any milling district the maximum actual production of which exceeds one million two hundred thousand piculs. "By actual production is meant the total production of the mill for the crop year immediately preceding."and considering that, according to them, in the Talisay-Silaymilling district to which they belong, a majority of the planters had no milling contracts, the court should: "1. Declare the applicability to the Talisay-Silay Mill District of the sharing participation prescribed by Republic Act No. 809 for every crop year starting from the crop year 1952-53: "2. Adjudicate in favor of plaintiffs PLANTERS and their laborers who are herein represented by plaintiff Secretary of Labor the amounts deposited with the defendant Philippine National Bank , in the account entitled 'In Trust for Talisay-Silay Milling Co., Inc., Asociacion de Agricultores de Talisay-Silay, Inc., and Department of Labor;' 1 "3. Order the defendant CENTRAL to account for any unsold escrow quedans or the proceeds thereof which have not been deposited with the Philippine National Bank in the above mentioned trust account; "4. Order defendant CENTRAL and the defendant Luzon Surety Co., Inc. to account for and pay jointly and severally to plaintiffs PLANTERS and their laborers represented by the plaintiff Secretary of Labor the proceeds of the sugar representing the increased participation (7-1/2%) for the 1954-65 crop year plus legal interest in favor of the plaintiffs PLANTERS, computed on the basis of the average market price during the month within which the sugar was sold; "5. Order defendant CENTRAL to account for and pay to plaintiffs PLANTERS and their laborers the increased participation in the byproducts and derivatives, namely: molasses, bagasse, and filter cake;" (pp. 14-15, Record on Appeal of Central.). As second and alternative cause of action, the PLANTERS averred that on or before October 24, 1954, the CENTRAL executed contracts with eight planters in which a higher percentage of partition in the sugar and by-products and derivatives produced by the CENTRAL was given to said eight planters than those given to the rest of the planters in the district, that is, 63% to 64%, the latter, whenever the production of the CENTRAL should be 1,200,000 piculs or over, whereas all the others were given only 60%, and inasmuch as under the provisions of the milling contracts between the PLANTERS and the CENTRAL since the crop year 1920-1921, the CENTRAL bound itself to give all planters having contracts with it, the highest rate of participation it would ever give to any planter, (a sort of most-favored-planter clause), the court should: "1. Declare, in the event that this Honorable Court should rule that the sharing proportion prescribed by Republic Act No. 809 is not applicable to the Talisay-Silay Mill District, that the sharing participation of 63%, or 64% in case the total production of defendant CENTRAL is 1,200,000 piculs or over, in favor of plaintiffs PLANTERS shall be applicable to the Talisay-Silay Mill District starting from the crop year 1954-55 and for every crop year thereafter;

"2. Order the defendant CENTRAL to account for and pay to plaintiffs PLANTERS the proceeds of the sugar and molasses representing the increased participation in favor of said plaintiffs PLANTERS during the past crop years starting from 1954-55 crop year;" (pp. 1516, Id.). As third cause of action, the PLANTERS alleged that notwithstanding that the applicability of Republic Act 809 to the Talisay-Silay milling district had already been ruled upon by the Sugar Quota Administrator, the Central still refused to abide by said ruling and to cause the release to the plaintiffs of the corresponding amounts to which they are entitled, hence they were constrained to engage the services of legal counsel, for which reason they prayed that the court: "1. Order the defendant CENTRAL to pay the amount of P50,000.00 as attorney's fees and litigation expenses incurred by plaintiff ASOCIACION and plaintiffs PLANTERS; "2. Order the defendant CENTRAL to pay plaintiff ASOCIACION and plaintiffs PLANTERS by way of moral and exemplary damages, such amount as this Honorable Court may deem sufficient to set an example for public good as provided for in Articles 2217 and 2219 of the New Civil Code; " (p. 16, Id.). In the course of the proceedings below which terminated only in 1962, five (5) supplements to the amended complaint were successively filed, year after year, to cover the claims of the PLANTERS and the Secretary of Labor for additional participation corresponding to the crop years, 1957-1958, 1958-1959, 1959-1960, 1960-1961 and 1961-1962. In the meantime and within the periods fixed in the Rules, the defendant CENTRAL filed its respective answers to the amended complaint and the supplements thereto. In said answers to the CENTRAL alleged in substance the following defenses: (1) that Republic Act 809 is invalid and unconstitutional; (2) that even if said Act were valid, it is not applicable to the Talisay-Silay milling district because the majority of the planters had written milling contracts with the CENTRAL at the time said Act went into effect, and that this situation continued during the crop years 1951-52, 1952-53, 1953-54, and all the subsequent crop years in' dispute; (3) that the planters who entered into said milling contracts did so voluntarily and those voluntary contracts may not be altered or modified without infringing the constitutional guarantee on freedom of contracts and the non-impairment clause of the Constitution; and as to those planters who entered into contracts after the effective date of the law, they should be deemed as having voluntarily waived all the rights and benefits that might accrue to them under it; (4) that the Act does not contain any expressed or implied provision invalidating the written milling contracts entered into between the CENTRAL and the owners of adherent plantations before its effective date; (5) that the Act sanctions and allows the entering into milling contracts after its effective date, and as a matter of fact a large number of the PLANTERS are also planters in the Hawaiian-Philippine milling district, adjoining the Talisay-Silay milling district, and they had entered into milling contracts with the Hawaiian-Philippine Co. one year and four months after the effectivity of the Act and in their milling contracts they had stipulations regarding sharing participation without regard to the ratios fixed in the Act, and they have abided by those milling contracts and (6) that the arrangement, regarding the issuance of escrow quedans and the deposit of the proceeds of the sale of the disputed increased participation of the planters was agreed to and accepted by the CENTRAL from the Sugar Quota Administrator under duress, because said Administrator would not allow the issuance of any warehouse receipt on the share of the mill unless the CENTRAL agreed to the escrow quedans arrangement; (7) that neither are the PLANTERS entitled to increased participation as claimed by them in their second and alternative cause of action because they do not qualify as the PLANTERS contemplated in their invoked twenty second (Vigesimo Segundo) paragraph of the original milling contract, since what are referred to in that paragraph are only the PLANTERS "que se obliguen a moler caadulce en la fabrica para la cosecha 1920-21"; (8) that the provisions of Republic Act 809 relating to the increased sharing participation of the planters would affect and alter the allocation of exportable sugar to the United States (export A sugar) among Philippine mills and plantation owners, in violation of the Trade Relations Agreement between the Philippines and the United States, and this is precisely what is expected from the application of the law as provided in the second paragraph of Section 8 of the very same Republic Act 809; and (9) that the instant case is not a proper one for a class suit. The CENTRAL also alleged various counterclaims, briefly stated as follows: As first counterclaim, it is averred that an examination of the records of defendant CENTRAL's mill site office revealed that during the 1951-52 crop year there was a total of 182 planters adhered to the CENTRAL, and 105 of those planters had milling contracts while 77 did not have; that in said crop year, the CENTRAL started milling on October 18, 1951 and stopped on March 24, 1952, hence even before the effective date of Republic Act 809 the CENTRAL had written milling agreements with a majority of the planters; that during the 1952-53 year the CENTRAL had milling contracts with 118 of the 205 planters; and in 1953-54 crop year it had milling contracts with 132 out of 21 planters, and the said majority of planters who had milling contracts with the CENTRAL had thereafter been maintained, if not actually increased. As second counterclaim, the CENTRAL claims that the most frequent basic plantation milling share in the written contracts is 60% for the planters and 40% for the central in all classes of sugar, and this sharing was applied to the non-contract planters pursuant to Section 5 of Executive Order No. 900 and Section 11 of Executive Order No. 901; that the correct sharing proportion between the CENTRAL and all the planters in the 1951-52, 1952-53, 1953-54, 1954-55, 1955-56, 1956-57 and all succeeding crop years, unless and until voluntarily changed by the parties, should have been and should be 60% for the planters and 40% for the CENTRAL, excepting only few planters with whom the CENTRAL had executed written milling contracts establishing different sharing proportions; and the CENTRAL had the right to demand specific performance by all the contract planters of their respective written milling contracts. As third counterclaim, it is alleged that the CENTRAL, before the recount of those planters having milling contracts, had shared, as a temporary measure, with the planters on the general basis of 55% for the planters and 45% for the miller in export sugar, and 65% for the planters and 35% for the miller in domestic sugar, and a readjustment in the sharing had to be made after the recount, so that the parties had to make mutual restitution for the crop year 1953-54. As fourth counterclaim, it is insisted that Republic Act 809 is unconstitutional and invalid on the following grounds: "(a) Contrary to the provisions of Art. VI, Sec. 21(1) of the 1935 Constitution, the Act embraces more than one subject. "In addition to providing, among other things, for the division of the sugar manufactured at sugar mills, 'as well as all by-products and derivatives thereof', the act amends the minimum wage law by providing that 60% of the proceeds of the increased participation in the sugar and all by-products and derivatives thereof, of the plantation owner or sugar cane planter, shall be paid to his laborers. "(b) The title of the act reads as follows: 'An Act to regulate the relations among persons engaged in the sugar industry', and the subject-matter of Sec. 4 of the act, which, among other things, authorizes the Government of the Philippines to take a sugar mill, and operate it through an administrator; of Sec. 6, which, among other things, authorizes the Government to take over and administer a sugar plantation; of Sec. 6, which, among other things, fixes the period of duration of the operation of a sugar mill by the administrator; of Sec. 7 which, among other thing, establishes the procedure for the appointment of the administrator, and for ascertaining the compensation to be paid for the operation of the sugar mill; of Sec. 8, which, among other things, determines where the compensation to be paid to the sugar mill or plantation owner, or sugar cane planter shall be taken from; and of Sec. 9, which provides that 60% of the proceeds of the increased participation in the sugar crop and all by-products and derivatives thereof of the plantation owner or sugar cane planter shall be paid to his laborers, are not expressed in the title of the act, as is required by Sec. 21(1) of Art. VI of the 1935 Constitution which renders the act, or, at least, said Section 3, 4, 5, 6, 7, 8 and 9 invalid.

" The act deprives sugar mills, among them, defendant herein, or authorizes the deprivation of said sugar mills of their property (factories), without due process of law, and without just compensation. "The act authorizes the seizure by the Government of the Philippines of sugar mills upon a mere proclamation issued by the President of the Philippines, and the act does not provide for just compensation therefor to the owners of the sugar mills, or for losses due to mismanagement by the administrator, or other causes not attributable to the owners of the sugar mills. "Section 8 of the act provides for compensation to the owners of sugar mills but the same should be paid 'out of the proceeds of the operation which would have corresponded to said central', or, in other words, the compensation to be paid to the owners of sugar mills will be taken from the property of the sugar mills themselves." (pp. 69 to 71, Record on Appeal of Central.). As fifth counterclaim, is alleged that the plaintiffs' action is clearly unfounded and the CENTRAL was compelled to incur expenses, to protect its rights and interests through the employment of attorneys to represent it in this case, in the total amount of P100,000.00. Defendant CENTRAL prayed for the dismissal of the amended complaint, and, particularly, for a declaration that as to sugar for export to the United States, Republic Act 809, even if it is declared constitutional and valid, became inoperative as of January 1, 1956, the effective date of the Revised Trade Agreement between the Philippines and the United States. It further prayed, under the first counterclaim, to order the Philippine National Bank to turn over to the CENTRAL all the deposits of the proceeds of the sales of the sugar covered by escrow quedans; under the second counterclaim, to order the specific performance by the contract PLANTERS of their respective written milling contracts with the CENTRAL and to adjudge that the sharing proportions between the CENTRAL and its planters, both contract and non-contract, in the sugar and by-products produced, shall be 60% for the PLANTERS and 40% for the CENTRAL in all the crop years referred to in the counterclaim, unless and until voluntarily changed by the parties; to order the Sugar Quota Administrator to adjust the issuance of quedans to the PLANTERS and to the CENTRAL in accordance with the aforesaid sharing proportion, and to instruct his permit agent detailed with the CENTRAL to sign such quedans; under the third counterclaim, to order the PLANTERS concerned and the CENTRAL to make the reciprocal restitutions and readjustments as mentioned in the counterclaim; under the fourth counterclaim, to declare Republic Act 809 unconstitutional and invalid; under the fifth counterclaim, to order the plaintiffs, jointly and severally to indemnify the CENTRAL in the sum of P100,000.00 for attorney's fees and expenses of litigation. The plaintiffs filed their answer to the counterclaims of the CENTRAL, denying the material allegations therein, and reiterating that when Republic Act 809 took effect on June 22, 1952 a majority of the planters adhered to the CENTRAL had no written milling contract with it and even after the effectivity of said Act still the majority of the planters did not have milling contracts, and if there were some planters who executed milling contracts after the effectivity of the Act, said additional contracts cannot be counted for the purpose of determining whether or not Republic Act 809 is applicable to the district; denying at the same time that Republic Act 809 is unconstitutional, and praying that defendant's counterclaims be dismissed. The defendant Sugar Quota Administrator also filed his answer to the CENTRAL's counterclaims, alleging defenses more or less similar to those of the plaintiffs ASOCIACION and PLANTERS. The Secretary of Labor likewise filed his answer to the counterclaims of the CENTRAL, alleging practically the same defenses as those of the PLANTERS. The defendant Luzon Surety Co., after its motion to dismiss the complaint was denied by the court, filed an answer and put up as special defenses: that the complaint fails to state a cause of action against it; that there is no privity between it and some of the plaintiffs; that the condition precedent, "in the event that the courts should finally adjudge that said Republic Act 809 is applicable to 1954-55 crop of the Talisay-Silay Mill District and that the planters are entitled to an additional participation . . . the central will pay to each and every planter concerned . . ." had not yet been fulfilled, hence the action of the plaintiffs against it was prematurely brought; that the terms and conditions of the Surety Bond had been materially altered and/or novated without its written conformity, thereby releasing it from liability if there is any. The Luzon Surety Co. also demanded, by way of counterclaim, the payment to it by the plaintiffs of the sum of P20,000.00 as attorney's fees. 2 The plaintiffs filed their answer to the counterclaim of the Luzon surely Co., Inc. denying all the allegations in said pleading. From time to time between July 30, 1957 and December 5, 1960, the parties filed ten partial stipulations of facts with supporting exhibits, on the basis of which they submitted the case for decision without any presentation of any independent exclusive evidence of any of them. Meanwhile, on August 31, 1960, plaintiffs filed a Manifestation asking the court to notify the Office of the Solicitor General that the question of constitutionality of Republic Act 809 was raised. In answer thereto, the Solicitor General filed on October 14, 1960, the following Manifestation: "COMES NOW the undersigned counsel and in compliance with the Order dated September 7, 1960 requiring the undersigned to express their view on the constitutionality of Republic Act No. 809 pursuant to the provisions of Section 23 of Rule 3, of the Rules of Court, to this Honorable Court respectfully allege: "1. That on April 3, 1957, the undersigned counsel filed in behalf of the Sugar Quota Administrator the pleading entitled, 'Amended Answer of the Sugar Quota Administrator to the Counterclaims of the Defendant Talisay-Silay Milling Co., Inc.' dated April 2, 1957; "2. That in their answer to the fourth counterclaim, the undersigned counsel have expressed their view on the constitutionality of Republic Act No. 809, and for the purpose of this manifestation is reproduced hereunder: 'TO THE FOURTH COUNTERCLAIM 1. That he reproduces by reference his answer to the allegations reproduced by reference in paragraph 1; 2. That he denies the allegation in paragraph 2 that Republic Act No. 809 violates the constitutional prohibition that 'No bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title of the bill' (Art. VI, sec. 21 (1), 1935 Constitution), and states in connection therewith that the various sections cited by defendant are germane to the title and general object of the law (Gov't, v. Hongkong & Shanghai Bank, 66 Phil. 483); 3. That he denies the allegation in paragraph 2(c) that the Act deprives defendant Mill of its property (factories) or authorizes such deprivation without due process of law and without just compensation, and states as reasons for such denial as follows: (a) Republic Act No. 809, entitled 'An Act to Regulate the Relations Among Persons Engaged in the Sugar Industry' was to cope with 'The necessity for increasing the share of the planters and laborers in the income derived from the sugar industry . . .' (Explanatory Note to H.B. 1517) and an implementation of the constitutional mandate that 'The Senate shall afford protection to labor . . . and shall regulate the relations between . . . labor and capital in industry and agriculture' (Art. XIV, Sec. 6, 1935 Constitution ) and is a proper and valid exercise of police power; (b) The Act does not provide for nor authorize the seizure of any central but only the transfer or temporary assumption by the government of the administration thereof, (1) 'In the event that any central shall be unable to arrive at a milling agreement with a majority of the planters affiliated with it, and shall refuse to mill the sugarcane of such planters in the absence of such an agreement' (Section 4) and (2) such 'prevention, interruption, or cessation of the milling of sugar by the central concerned . . . shall, in the

judgment of the President, lead to a defficiency or delinquency in the filing of the entire national quota for any particular year' (Sec. 6, par. 1); That contrary to defendant's claim, the Act provides for the payment of 'just compensation to be paid for the temporary operation or administration of the same (Central)' (Sec. 7) "with due regard for the costs of operation or administration and such other charges and deductions as the court may deem just and proper' (Sec. 8), although, strictly speaking, in the application of certain laws and regulations enacted pursuant to police power, annoyance and financial loss are not compensable (Malcolm, Philippine Constitutional Law). Provided the means adopted are reasonably necessary for the accomplishment of the end in view, not unduly oppressive upon individuals, and in the interest of the public generally rather than of a particular class, the legislature may adopt such regulations as it deems proper restricting, limiting, and regulating the use of private property in the exercise of its police power (U.S. v. Toribio, 15 Phil. 85 cited in U.S. v. Villareal, 28 Phil. 390). Persons and property may be subjected to all kinds of restraint and burdens, in order to secure the general comfort, health, and prosperity of the State (U.S. v. Gomez Jesus, 31 Phil. 218, cited in Calalang v. A.D. Williams, et al., 40 O.G. 7th Supp. 239)." (pp. 319-323, Rec. on Appeal of CENTRAL.). 2. The incident of the alleged disqualification of the judge. Before deciding the case, on October 12, 1961, the trial judge brought to the attention of the parties that he had engaged, on January 25, 1960, the services of Attorney Jose L. Africa, of the law firm of counsel for plaintiffs, to represent him in Civil Case No. 42036, also of the Court of First Instance of Manila, entitled Felipe Cuaderno Sr. vs. Carmelino G. Alvendia, et al., in which he was a party defendant, and that he wanted to hear from the parties whether they had any objection to his deciding this case. The defendant CENTRAL prayed, on October 23, 1961, that the presiding judge inhibit himself. On the other hand, the Sugar Quota Administrator, the Philippine National Bank, the Secretary of Labor and the PLANTERS manifested that they had no objection to the presiding judge rendering the decision. Upon the ground that the majority of the lawyers expressed no objection to his deciding the case, on November 21, 1961, the presiding judge issued an order stating that he considered himself duty-bound to proceed taking cognizance of the case and that unless restrained by an order of a Superior Court within 20 days, he would proceed to render a decision on the merits. The motion for the reconsideration of said order was denied. 3. The original decision of the trial court. On January 20, 1962, the trial court rendered a decision upholding the constitutionality of Republic Act 809, upon the ground that its enactment is a legitimate exercise of the police power of the State, and declaring that said law is applicable to the Talisay-Silay milling district, because from the record it appears that the majority of the planters in the district did not have milling contracts with the CENTRAL. Accordingly, plaintiffs-appellees were adjudged to be entitled to the disputed portions of all the sugar milled at the CENTRAL and all the corresponding by-products and derivatives, starting from the crop year 1952-1953 up to crop year 1960-61. No pronouncement was made as regards the PLANTERS' alternative cause of action. With particular reference to the sugar produced in the crop year 1954-1955, the lower court ordered the CENTRAL and the Luzon Surety Company, Inc., jointly and severally, to pay the plaintiffs-appellees the sum of P949,856.53 with interest thereon at the rate of 3% per annum from the time said amount was delivered to the Central in the year 1955 until the same is fully paid. It further ordered the Philippine National Bank to deliver to the plaintiffs-appellees all the amounts deposited with the said Bank as proceeds of the sugar in dispute corresponding to the crop years 1952-1953 up to 1960-1961, as well as the proceeds of the sale of the by-products and derivatives corresponding to the same crop years. Correspondingly, the Sugar Quota Administrator was ordered to be guided by the court's decision in the distribution of the sugar and by-products and derivatives produced in the Talisay-Silay mill district beginning with the agricultural year 1961-1962. The CENTRAL was further sentenced to pay the plaintiffs-appellees the sum of fifty thousand pesos (P50,000.00) as attorney's fees, plus costs. 4. The amended decision. On May 4, 1962, upon two motions for reconsideration of practically the same tenor, one filed by the PLANTERS and the other by the Secretary of Labor, the lower court amended its decision ". . . in the case that the increase in the planters' share of the sugar and the by-products of sugarcane produced during the agricultural year 1959-1960 should be 10%, thereby entitling the plaintiffs to 70% of the sugar production and by-products for that year and the defendant Sugar Central to 30% of said sugar production." The decision was also amended so that a portion of the decision would read: "The Court further orders the Philippine National Bank to deliver to the plaintiffs all the amounts with said bank as proceeds of the sugar in dispute corresponding to the following years: 1952-1953, 1953-1954, 1955-1956 up to 1960-1961. The defendant Talisay-Silay Milling Company, Inc. is hereby ordered to deliver to the plaintiffs their share in accordance with the proportion indicated in this decision, taking into account the increased proportion of the planters' share corresponding to the agricultural years 1952-1953 up to 1960-1961." The decision was further corrected, changing the name "Agustin P. Locson" appearing in the decision to "Agustin T. Locsin". Hence, this appeal. 5. The other incidents in the course of this appellate proceeding. (a) On September 12, 1962, plaintiffs-appellees filed a motion praying that the CENTRAL be directed to issue quedans covering the 1962-63 sugar production in the proportion of 60% for the PLANTERS, 32-1/2% for the CENTRAL, and 7-1/2% in "escrow quedans" in the joint name of the ASOCIACION, the CENTRAL and the Secretary of Labor, to be disposed of only by unanimous action of the three parties and the proceeds of the sale of said "escrow quedans" to be deposited with the Philippine National Bank under Savings Account No. 151250 in trust for said entities as in the previous crop years, or, in the alternative, that the movants be allowed to take the disputed 7-1/2% upon filing of a bond to be fixed by the Court. This motion was reiterated on April 27, 1963, May 25, 1963 and August 10, 1963. Later, on September 7, 1963, a supplemental motion was filed in order to include a similar prayer regarding the 1963-64 production. On September 26, 1963, the Court issued the following resolution: "In G.R. No. L-19937, Associacion de Agricultores, etc. vs. Talisay-Silay Milling, etc., acting on appellees supplemental petition dated September 7, 1963, the Court directed the appellant Central to issue escrow quedans covering the 7-1/2% of the sugar production for 1962-963 (presently stored in its warehouse, 89,000 piculs of sugar) in the joint name of the Associacion de Agricultores de TalisaySilay, Inc., the Talisay-Silay Milling Co. and the Secretary of Labor, said escrow quedan to be disposed only by unanimous action of said three parties, and the proceeds of the sale, if any, to be deposited with the Philippine National Bank under Savings Account No. 151250 in trust for said entities, as in the previous crop years. "With the understanding that this order having been issued only for the preservation and/or timely marketing of the said sugar crop, does not decide the question whether it could or should be included in this appealed litigation or should be disposed of in the Civil Case No. 7104 of the Negros Occidental Court entitled 'Talisay-Silay Industrial, etc. vs. Talisay-Silay Milling Co., etc.' which defendantappellant mentioned in its latest 'Manifestation.'" (b) On October 31, 1963, plaintiffs-appellees filed a supplement to the aforementioned petition dated September 2, 1963 asking the Court to resolve the matter referring to the 1963-64 production, which had been left out, claiming at the same time that the disputed portion should be 10%. The CENTRAL filed its opposition on the ground that it was no longer the operator of the mill, the same having been leased for three crop years the Talisay-Silay Industrial Cooperative Associacion (hereinafter referred to as TASICA), beginning with the crop year 1963-1964. As a matter of fact, the disputed portions of the crop years 1962-63 and 1963-64 were already the subject of litigation in Civil Case No. 7104 of the Court of First Instance of Negros Occidental, entitled "Talisay-Silay Cooperative Associacion vs. Talisay-Silay Milling Co., Inc.," an action of interpleader filed by TASICA asking that the CENTRAL and the PLANTERS be made to litigate between themselves in regard to the disputed portion of those crop years' productions. The Secretary of Labor filed a motion on November 5, 1963 supporting the motion of plaintiffs-appellees. On November 7, 1963, the Court resolved that "the Court's resolution of September 26, 1963 in connection with the 7-1/2 percent of the sugar production for 1962-1963 shall be applicable and extended to the same portion of the sugar crop year 1963-64 under the same terms and conditions." It will be noted

that the PLANTERS referred to the disputed portion as amounting to 10%, whereas Our resolution mentioned only 7-1/2%. According to the PLANTERS, although the total production in the Talisay-Silay mill that year was less than 1,200,000 piculs, there should be added to it what were milled by some of the planters in the Bacolod-Murcia and Ma-ao sugar centrals and with said addition, the total would exceed 1.2M piculs. We reserved the resolution of that issue until the decision of the case. On December 16, 1963, the TASICA filed a special appearance questioning Our jurisdiction over the incident, contending that it was the lessee of the central of appellant milling company and miller beginning with the crop year 1963-1964, and inasmuch as the pleadings in the trial court covered only up to crop year 1961-62, the subsequent crop years should be the subject of another case, and, further, that since it is not a party herein, it could not be legally subjected to any resolution issued by the Court in this case. An opposition and counterpetition was filed by the PLANTERS and the Secretary of Labor on December 21, 1963. The Court resolved, on December 23, 1963, to defer action on that matter of jurisdiction until the case is considered on the merits. (d) On March 20, 1964, the manager of TASICA invalidated the escrow quedans covering the disputed 7-1/2 percent of the crop year 1963-64, for which reason the PLANTERS filed a petition on March 25, 1964 to hold TASICA in contempt of court and to declare without force and effect the invalidation made by it of the escrow quedans. On May 18, 1964, the Court likewise resolved to defer action thereon until this case is decided on the merits. (e) On April 6, 1964, the Secretary of Labor filed an urgent motion asking the Court to declare illegal and violative of Our Resolution of November 7, 1963 the act of TASICA of allowing the diversion of Talisay-Silay canes to the Bacolod-Murcia Milling Co., Inc. and to issue a restraining order or writ of preliminary injunction prohibiting said diversion. The PLANTERS joined said petition on April 15, 1964. After hearing the parties on May 27, 1964, on the same date, the Court resolved to deny the prayer for preliminary injunction, since, anyway petitioners may just the same protect their interests by producing or compelling the production of the milling record of any sugar that might be so diverted. (f) Since the resolution of November 7, 1963 remained unimplemented, on August 21, 1964, the PLANTERS filed a petition praying for an order directing TASICA and/or the Sugar Quota Administrator to issue quedans covering the disputed portion of the production for the crop year 1963-1964. On September 28, 1964 We ordered the issuance of escrow quedans in the joint names of the ASOCIACION, the Secretary of Labor, and TASICA, and the sugar covered by the quedans to be sold upon the unanimous consent of the three parties and the proceeds to be deposited with a new bank in trust for all said parties, without prejudice to resolving later the questions of jurisdiction and of the sharing-participation for the crop year 1963-64. 2 (g) Upon petition of the PLANTERS, on June 2, 1965, the Court likewise directed the issuance of escrow quedans covering the disputed portion of the production for the crop year 1964-65 in the joint names of the ASOCIACION, TASICA, and the Secretary of Labor, to be disposed of under the same conditions as the disputed portion of the preceding crop year. (h) Similarly, upon petition also of the PLANTERS, on May 25, 1966, We ordered the issuance of escrow quedans covering the disputed portion of the sugar production for the crop year 1965-1966 under the same conditions as the disputed portion of the preceding year. (i) In a resolution of February 8, 1967, the Court resolved merely to note the contents of the manifestation of the PLANTERS praying for the disposal of the disputed portion of the production for the crop year 1966-1967 and to consider the controversy relative thereto when the case is decided on the merits. (j) There are other motions and manifestations and oppositions and counter-motions filed by the parties, but they all deal basically with the issues of (1) whether or not this Court has jurisdiction to resolve matters related to the crop years subsequent to that of 1960-1961 covered by the decision of the trial court and the supplemental pleadings submitted before said decision and (2) whether or not this Court has acquired jurisdiction over TASICA for the purposes of this case. Upon motions filed by each of them, Attys. Roman Ozaeta (now deceased), Jose E. Romero (also already deceased), and Enrique Belo, and the law firm of Taada, Teehankee and Carreon, were allowed to appear as amici curiae in this case. The Court has duly considered the points they have discussed and the arguments they have advanced and is appreciative of their valuable assistance. Long after these cases had been submitted for resolution and when We were already finalizing Our decision, all of a sudden, on June 30, 1978, the appellees' counsel filed a motion praying for another oral argument, which was subsequently joined by private counsel appearing for the laborers. Over the opposition of appellant CENTRAL, the Court granted said motion and set the hearing on September 6, 1978 but this was first postponed to October 10, 1978 and later reset on November 17, 1978, after which, the PLANTERS filed in addition to their Memorandum in Amplification of Oral Argument dated November 17, 1978, a motion and manifestation dated December 1, 1978, while on the other hand, the CENTRAL filed a supplemental memorandum dated December 2, 1978. At the hearing, the new counsel for the CENTRAL, Assemblyman Emmanuel Pelaez, formally withdrew the CENTRAL's first and second assignments of error in its brief relative respectively to the alleged disqualification of the trial judge and to the challenge against the constitutionality of Republic Act 809. This withdrawal was reiterated in the CENTRAL's supplemental memorandum dated December 2, 1978 which added its sixth assignment of error among those it is withdrawing. Considering, however, that actually, such withdrawal of the first and second assignments of error was made after the case had long been submitted for decision, and anyway the two issues concerned have already been sufficiently discussed by the previous counsels of the parties, as well as by the amici curiae, both orally and in writing, the Court has opted to nevertheless pass on the assignments of error referred to, in view of the transcedental importance of said issues, particularly those vis-a-vis the constitutional provisions on social justice and freedom of contract and the police power of the state to regulate the relations among the three main elements of the sugar industry in the Philippines, the planters, the millers and the laborers. As will be explained later, We are also disregarding the withdrawal of the sixth assignment of error. The case was deemed resubmitted for decision as of December 2, 1978. OPINION The CENTRAL has assigned seven errors allegedly committed by the trial court. The Luzon Surety Company has assigned two. On the other hand, the plaintiffs-appellees, aside from refuting the assignments made by the appellants, have made a counter-assignment of three alleged errors. To simplify and abbreviate discussion, and considering that the supposed errors of the trial court counterassigned by appellees are inseparably related to some of the errors alleged by appellant Central, We shall resolve appellees' counterassigned errors together with the errors assigned by the Central to which they respectively correspond. The CENTRAL's first assigned error is as follows: I

"THE JUDGE A QUO WHO, NOTWITHSTANDING THE PENDENCY OF THIS CASE BEFORE HIM, ENGAGED ATTY. JOSE AFRICA OF THE PLANTERS AS HIS OWN LAWYER, GRAVELY VIOLATED THE CANONS OF JUDICIAL ETHICS AND SERIOUSLY ERRED IN AFTERWARDS INSISTING THAT IT STILL WAS HIS BOUNDEN AND UNAVOIDABLE DUTY TO CONTINUE TO PRESIDE IN AND DECIDE THIS CASE; (1) Because, in soliciting, contracting, and/or accepting the services of Atty. Jose Africa of the planters as his own lawyer, the Judge a quo had most improperly placed himself under obligation to said counsel for the planters, who, in the ordinary course of nature and the ordinary habits of life, would presumably not accept and, much less, demand payment for his services rendered to the Judge;

(2) Because, in accordance with the spirit and intent of our law, as interpreted by this Honorable Court in the case of Gutierrez vs. Santos (G.R. No. L-15824), the judge a quo and client of Atty. Jose Africa of the planters had thereby disqualified himself to further preside and render judgment in this case; (3) Because, in accordance with recognized jurisprudence, also cited and relied upon by this Honorable Court in the same case, 'due process of law required a hearing before an impartial and disinterested tribunal;' that 'second only to the duty of rendering a just decision is the duty of doing it in a manner that will not arouse any suspicion as to its fairness and the integrity of the Judge;' and 'that no Judge shall preside in a case in which he is not wholly free, disinterested, impartial and independent. And in relation to this alleged error, the CENTRAL prays: "That Judge Carmelino Alvendia be declared legally disqualified, within the intention and meaning of Section 1, Rule 126 of the Rules of Court (Rule 137 of the Revised Rules of 1974) and that therefore his decision and all proceedings in this case be declared null and void." The issue thus posed is doubtless interesting and important. But in the peculiar premises of the instant case, We do not deem it necessary to run once more thru the whole gamut of jurisprudence here and elsewhere elucidating on the high ethical principles that should guide a judge in every case where, because of known relation he has with any of the parties or counsel before him, which although not included expressly in any law or rule among the disqualifications for him to take cognizance thereof, may yet leave room for doubt as to his absolute impartiality. Suffice it to say that if for one reason or another not amounting to evident bad faith and deliberate malintention, a judge in such a situation continues to act for undeniably, there are men endowed with impregnable integrity who can unquestionably rise above the feared compulsions of otherwise suspicious circumstances the remedy does not lie in the outright invalidation and setting aside of his actuations. The ultimate test this Court has established in such a mileu is for the appellate tribunal to determine from the record whether or not actually the party complaining has been deprived of a fair and impartial trial, and in the affirmative, to correspondingly grant a new trial. (Dais vs. Torres, 57 Phil. 897.) Indeed, in the case at hand, it is not imperative to rule on any possible bias on the part of the trial judge. As We have indicated earlier, this case was submitted for decision of the trial court on the basis exclusively of various agreed stipulations of facts of the parties, accompanied by corresponding undisputed documents. No oral evidence was presented by any of them. There was, therefore, no possibility that the trial judge had either admitted or rejected any piece of evidence improperly or in violation of any rule over the objection of anyone of them. Neither do We have to accord the usual deference given by appellate courts to any of his findings of fact on account of his having been better situated to appreciate the credibility of any witness. The complete record of the agreed stipulations of the parties and the pertinent accompanying documents are before Us for our own first hand examination, consideration and appreciation. We are entirely free to draw our own conclusions from them without any regard to what appear in the appealed decision. Needless to say, the rulings on questions of law therein are completely open to our review. In the last analysis, therefore, no substantial prejudice to the right of the parties to a just, fair and legal determination of the issues herein can be caused by rejecting appellant Central's prayer for annulment of the decision under review. On the contrary, with the time that has passed since this appeal came to this Court and in view of the unusually long list of exhibits attached to the stipulations (from Exhibit A to Exhibit RRRRRR, with subsidiary numbers) it would be most impractical and unfair to all concerned for Us to send this controversy back to the trial court, just so all of these stipulations and exhibits may be the subject of another decision by a different judge, who will have to study them all over again before he renders his decision, which inevitably will have to be appealed to Us, and no one knows how many years again such repetitive procedure will take. Accordingly, the CENTRAL's prayer for annulment must be, as it is hereby, overruled. II Secondly, the Central, thru counsel, Atty. Vicente Hilado, assails the trial court's negative resolution of the constitutional issues raised by it. According to the Central: "THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF THE PLANTERS ERRED IN NOT DECLARING REPUBLIC ACT 809 UNCONSTITUTIONAL AND NULL AND VOID; "(1) Because Police Power is a law of necessity' which can be exercised by the State only when necessary to protect the interest of the people in general; but not just to favor, and increase the profits of a particular group or groups of sugarcane planters and their own laborers, at the expense of the sugar centrals; in clear violation of the constitutional prohibition against class legislation and denial of the equal protection of the laws; "(2) Because it seems to us most illogical and unreasonable to assume that the sugar industry in any milling district could not be saved, unless the planters therein are given special protection and treatment, so as to increase their profits; while the same industry in other milling districts could very well be saved without giving the planters therein equal protection and treatment to increase their own profits; "(3) Because it seems to us equally illogical and unreasonable to assume that the sugar industry in any milling district could very well be saved without giving the planters therein such special protection and treatment to increase their profits, when Fifty-one (51) out of every One hundred (100) of them have written milling contracts with the miller in their district, "(4) Because, it seems to use likewise illogical and unreasonable to assume that the interest of the people in general requires that only the laborers of the planters in the milling districts where the majority of their employers have no written milling contracts with the miller in their district should, at the expense of the Central, be so favored and so discriminatory given higher and additional compensations over and above the minimum wage fixed by law for all other laborers in the country; but not those in districts where the majority of their employers have such milling contracts with the miller in their district; "(5) Because it seems to us also illogical and unreasonable to assume that the interest of the people in general requires that the planters (big or small) in the bigger milling districts be given higher participations or shares in the sugar produced from their sugarcane than the planters (big or small) in the smaller milling districts." (Pp. c-d, Central's Brief.). Joining the Central in this posture are the amici curiae, the late Justice Roman Ozaeta and Ambassador Jose E. Romero and Atty. Enrique M. Belo. On the other hand, aside from Justice Marceliano Montemayor and the law office of San Juan, Africa and Benedicto, counsel for the plaintiff-appellee association and the sugar planters, Attys. Paciano Villavieja and Porfirio Villanueva of the Department of Labor and the other amici curiae, the law office of Taada, Teehankee and Carreon, have presented to the court the opposite view. We have carefully considered the pros and cons forcefully and brilliantly discussed by this array of learned legal luminaries, and it must be stated that their respective scholarly and illuminating dissertations on the various constitutional questions herein raised have considerably made the work of the Court much easier. A REPUBLIC ACT 809 IS A SOCIAL JUSTICE AND POLICE POWER MEASURE FOR THE PROMOTION OF LABOR CONDITIONS IN SUGAR PLANTATIONS, HENCE WHATEVER RATIONAL DEGREE OF CONSTRAINT IT EXERTS ON FREEDOM OF CONTRACT AND EXISTING CONTRACTUAL OBLIGATIONS IS CONSTITUTIONALLY PERMISSIBLE. Despite very strongly persuasive arguments to the contrary of the distinguished lawyers supporting the position of the centrals, the Court has arrived at the conclusion that Republic Act 809 was conceived and enacted as a social legislation designed primarily to ameliorate the condition of the laborers in the sugar plantations, and the fact that at the same time the planters would also be

benefited by it does not detract from if it does not add to such basic purpose of the Act. We do not deem it necessary to make here an extended historical account of how the statute came into being. The following observations of the trial court which, as the record reveals, are more or less basically accurate should suffice, to Our mind, to project the social spirit that animated the legislature: "Moreover, Republic Act No. 809 seeks to reduce the inequality in the benefits being received by the Central and the laborers, It should be noted that under Section 9 of the law, 60% of the increased participation shall be given to the laborers and 40% for the planters. The application of the Act would go a long way towards promoting better relations between the laborers on one side and the planters and the Central on the other side. "The almost yearly recurrence of strikes in the farms by the laborers has for its root cause discontent generated by the inadequate earnings of the laborers. Theirs is a miserable lot for they do not earn enough to give their families the minimum needed to maintain a decent living in a civilized society, not to mention the expenses necessary for the education of their children. "On the other hand, the planters are not without their problems. They have to bear the expenses of cultivation of the land which includes the cost of the seeds and fertilizer. They have to pay their taxes. They have to assume the unforeseen risks incident to raising and producing the sugar cane like drought, locusts and the like. And when the sugar cane is about ready for milling, there is the added danger of fires which not infrequently reduce the harvest to an amount which is not enough to cover the expenses in producing the cane. "Considering that the share of the Central is entirely its own, and that the share of the planters includes that of the laborers and, therefore, has to be divided between them, a small increase in the percentage of distribution of the yearly crop depending upon an increased production is, in the opinion of the Court, just and equitable. "Years ago, when the sugar industry was just being developed and modernized, with the introduction in the Philippines of machinery to replace the crude and antiquated means of extracting sugar from the cane, it was necessary to induce capitalists to invest big sums in building sugar centrals. Their capital has already been recuperated plus allowance for reasonable earnings yearly. At present, the only expenses of the Central consists of the maintenance of its equipment, the replacement of worn out parts, the fuel consumed during the milling season and the salaries of personnel. Certainly, the Centrals are now in a position to contribute to the burden of producing the cane and to solve the perennial labor problems caused by the discontent of laborers arising from their meager income. This problem is a constant threat to the very existence of the sugar industry. "Realizing this danger to the biggest industry of the country, the late President Quezon caused a survey of the causes of the discontent of the laborers and the recurrent trouble in the sugar regions. The report submitted by the late Mr. Justice Moran after he investigated the books of the Centrals and those of the planters, advocated very strongly the necessity of a new and better sharing plan for the sugar planters. "A bill similar to House Bill No. 1517 which finally became Republic Act No. 809 was passed by Congress in 1951, but the same was vetoed by the President. Members of both houses of the Legislative approved Republic Act No. 809 because they found it necessary to save the country's biggest industry. When the welfare of the public is at stake, the state may, in the exercise of its police power, enact legislation which may cause harm or injury to a certain class of the inhabitants as long as it benefits the greater majority. The welfare of the people is the supreme law." (Decision of Lower Court, pp. 409-412 of the Central's Record on Appeal.) The primary purpose of the law to insure that the sugar plantation workers are paid just wages is, indeed, stated by the authors themselves of the law in the explanatory note of their bill, H. No. 1517 thus: "The necessity for increasing the share of the planters and the laborers in the income derived from the sugar industry for its stabilization is not a new question but an admitted fact even before the outbreak of World War II. "On February 23, 1938, President Quezon appointed Justice Manuel V. Moran to make a study of the 'distribution of sugar resulting from the milling of sugar-cane between the centrals and the planters with a view to ameliorating the condition of the planters' laborers', and after an exhaustive investigation covering several months, Justice Moran filed his report on April 30, 1939, recommending an increase in the participation of sugar planters, even in violation of existing milling contracts, contending that such a law is constitutional as a valid exercise of the police power of the state. The National Sugar Board created by Executive Orders Nos. 157 and 168, which made another investigation of the sugar industry, in its report to the President of the Philippines on August 2, 1939, confirmed practically the findings of Justice Moran." (Appellees' Brief, pp. 73-74.). One particular legislative incident should dispel all doubts about the overriding intent of Congress in approving the Act, which, although by its title, appears to be only to regulate the relations among the persons engaged in the sugar industry, is in fact to improve the living conditions of the laborers in the farms. Section 10 of the original bill, H. No. 1517, reads this wise: "SEC. 10. Effective upon the approval of this Act, the daily wage of sugar farm workers shall be in accordance with the following scale: "(a) In milling districts where the participation between planters and central is 60% for the planters and 40% for the central, the sugar farm laborers shall receive a minimum daily wage equivalent to 10% of the average market price of export sugar per picul of the preceding year, as declared by the Bureau of Commerce, including free lodging; but in no case shall sugar farm laborers be paid a daily wage of less than P1.20 and free lodging. "(b) In milling districts where, under the provisions of section one hereof, the participation of the planters is over 60%, the sugar farm laborers shall receive in addition to the minimum daily wage provided for in paragraph (a) of this section, an additional rate of P0.10 per every 1% increase in participation beyond 60%." Evidently, this provision was inserted in the bill to give it the social ingredient without which President Quirino felt any regulation fixing the sharing proportion between only the millers and the planters would be unconstitutional, not only for impairing contractual obligations but for in effect denying altogether to said parties the freedom to contract, hence his veto of the original bill. Even then, when the bill reached the Senate, the consensus among the senators was that it was imperative that the laborers be given a proportionally bigger benefit than what the planters were to get from the latter's increased share proposed in the House Bill. The records of the Senate deliberations on this point showing how Section 9 as it now appears was molded unmistakably support Our conclusion, On p. 549 et seq. of the Congressional Record, Second Congress of the Republic of the Philippines, Third Regular Session, Vol. III, Nos. 36-37, March 17 & 18, 1952, it is recorded thus: "Senator MONTANO. Mr. President, I have another amendment to offer, but before I do so I wish to make a statement. "This is a joint amendment of Senators Puyat, Delgado and myself, but before offering it, I wish to state that it was my intention to file an amendment that reads as follows: 'The proceeds of any increase in the participation granted the planters under this Act over and above their present share shall accrue to the exclusive benefit of the laborers of the said planters in terms not only of wages but also of living conditions, and said proceeds shall be placed under the control and administration of the Department of Labor.' "However, since legislation not only is the ultimate result of logical presentation and argument but also of compromise, the gentleman from Bulacan, Senator Delgado, and the gentleman from Pampanga, Senator Puyat, have expressed their desires to support an amendment similar in nature only of lesser impact to the planters. So, therefore. I am offering this joint amendment of Senators Puyat, Delgado and myself:

"On page 7, strike out the whole of Section 10 from line 4 to line 18 and in lieu thereof, insert the following: 'THE PROCEEDS OF ANY INCREASE IN THE PARTICIPATION GRANTED THE PLANTERS UNDER THIS ACT OVER AND ABOVE: THEIR PRESENT SHARE SHALL BE DIVIDED BETWEEN THE PLANTER AND HIS LABORERS IN THE PLANTATION IN THE FOLLOWING PROPORTION: SIXTY PER CENTUM OF THE INCREASED PARTICIPATION FOR THE LABORERS AND 40 PER CENTUM FOR THE PLANTERS, THE DISTRIBUTION OF THE SHARE CORRESPONDING TO THE LABORERS SHALL BE MADE UNDER THE SUPERVISION OF THE DEPARTMENT OF LABOR'. xxx xxx xxx

"Senator MONTANO. Mr. President, I shall proceed now to make a statement on the amendment presented by Senators Puyat, Delgado and myself, Mr. President, if there was any reason adduced in support of the measure under consideration fixing the new arrangements in the division of the produce in the sugar plantation and centrals, there was no argument more potent, more convincing than the supposed benefit that labor would ultimately reap from these new arrangements. Even the explanatory note to the bill under consideration lays proper stress on this phase of the issue before the Congress today, that is, that the proponents of the present amendment desire to improve the lot of the planters by an increased share in the crop so that they will then be in a position to pay more to their laborers in the farm. "In consonance with this belief, we the proponents of this amendment have seen fit to present a modification to the bill in the sense that any and all increases that will accrue to the planters by virtue of the bill, shall be divided in such proportion as to give 60 percent to the laborers and 40 per cent to the planters. Before presenting this amendment, I made a preliminary statement to the effect that it was my intention to present an amendment which would give to labor in the plantations all the benefits that would accrue to planters by virtue of the passage and approval of this bill. That was my intention, gentlemen, because it is a known fact, it is a common belief in this country, that of all agricultural planters, the sugar planters are the most benefited no only by the legislations already passed by Congress but by the progress of the sugar industry. "(En este momento el Presidente Protempore ocupa la presidencia, por designacion de la Mesa). "PREGUNTAS DEL SEN. OSIAS. "Senator OSIAS, Mr. President, may the gentleman be interrupted at this point for a question? Will the gentleman kindly yield? "The PRESIDENT PRO TEMPORE. The gentleman may yield, if he so desires. "Senator OSIAS. I just want to follow the trend of thought of the gentleman, which I think is in the right direction. But may I know from him the share that is alloted by this amendment to the planters and the laborers? "Senator MONTANO. Sixty per cent of any increase is alloted to the laborers and forty per cent to the planters. "Senator OSIAS. May I announce that in due time I shall submit an amendment to the amendment to make it 50-50. That is just an announcement, and I thank the gentleman for having permitted me to interpellate him. "Senator MONTANO. (Continuing) Mr. President, of all the people in this country who live by cultivating the soil, the sugar planters, especially those in the province of Negros, are known to be the most prosperous. There are even claims among those who oppose the bill, that there is no necessity for the present plant to increase the participation of the planters. There as a time when the whole country witnesses sugar planters and sugar barons from Negros who lived luxuriously, and remembering this, many of our countrymen believe that their present claim that they cannot even pay their laborers decently has no basis in fact. The original bill Mr. President and gentleman, despite the claim that it will benefit labor, does not in fact do that, because the said bill provides that in those plantations where the increased share of the planters does not exceed 65 per cent, labor shall not receive any benefit from the increased participation of the planters because, in those plantations the minimum wage law which already benefits labor shall govern. The original text of the bill is no other than that the laborers shall participate only in the increase where the participation given to the planters is over and above 65 per cent. "Gentlemen, there is a potent group which comes to Congress and pleads for an increase in the planters' participation in the sugar crop, under the pretext of giving more participation to labor, but with this bill, gentlemen of the Senate, the Congress is miserably misled because if these planters do not receive more than 5 per cent above the basic 60 per cent, the laborers will not receive any benefit from that increased participation of the planters. "Mr. President, I am glad that the gentleman from La Union, who announced his intention to file an amendment to my amendment by reducing the share of labor from 60 per cent to 50 per cent, will give his kind support to an amendment that will truly benefit labor and the sugar planters. I am glad, but at the same time, I regret that such a distinguished gentleman, and future presidential candidate, shall double the reasonable 10 per cent reduction in the 60-40 sharing 60 for labor and 40 for capital and make it 50 for labor and 50 for planters. I respect the opinion of the gentleman from La Union, and I am certain that has a reason for announcing that he would present an amendment making 50-50 the proportion which is proposed at 60-40 in this amendment. "Mr. President and gentlemen I am now especially addressing myself to the gentleman who announced that he would file such an amendment, because this 10 per cent might represent the difference between a reasonable standard of living or misery for the laborers, but the 10 per cent deducted from the share of the planters, especially when the planters come from Negros, will not diminish their luxurious standard of living. So, I plead now, Mr. President and gentlemen, that if the gentleman from La Union really wishes to support the noble purpose behind our amendment, he should do it without reducing the minimum 60 per cent proposed to be given to labor to 50 per cent, because as I said, that 10 per cent might represent the difference between misery or an ameliorated lot for the farm laborers. "Mr. President, I thank you. "MANIFESTACIONES DEL SEN. OSIAS. "Senator OSIAS. Mr. President. "The PRESIDENT PRO TEMPORE. Gentleman from La Union. "Senator OSIAS. When I rose to object an inquiry to the gentleman from Cavite, who is sponsoring this amendment, I did so because I wanted to be enlightened on the reasons that motivated the presentation of this amendment. At the time, I recalled that when this bill under consideration was first presented, there was no minimum wage law. During the period that had elapsed from the presentation of this amendment. At the time, I recalled that when this bill under consideration was first presented, there was no minimum wage law. During the period that had elapsed from the presentation of the original bill to the present through the various tortous processes that it had to undergo and finally its veto by the Chief Executive a minimum wage law which is very advantageous to labor and wage earners had been taken into consideration. "Mr. President, the fundamental consideration that prompted me to give my vote and support to this measure affecting the sugar industry was that, while admitting that there should be no conflict between central owners on the one hand and planters from the other, in the event that there is an unavoidable conflict between these two, my heart instinctively and by conviction goes out to the

support of the planters because, they are the owners of the land, and I consider the ownership of land in our country as one of the last bulwarks, if not the last, of democracy in the Philippines. "In the course of my brief sponsorship during this session, Mr. President, I stated that I would give my vote and support to this bill, because my thoughts and actuations in this august body in matters of this nature have always been to consider always human rights above property rights. "This amendment seeks, as it does, to benefit not only the planters but also the laborers. I want to announce that I desist from my original intention to present an amendment to the amendment, and that I shall vote for this amendment offered by the gentlemen from Cavite, Pampanga and Bulacan. "MANIFESTACIONES DEL. SEN. PUYAT. "Senator PUYAT. Mr. President. "The PRESIDENT PRO TEMPORE. (Gentleman from Pampanga and Manila. "Senator PUYAT. Mr. President and gentlemen of the Senate: As a co-author of this amendment, I plead earnestly for its approval, if for no other reason than that the approval Or this amendment will be a belated act of justice in favor of the laborers working in an industry which has made thousands of people millionaires, and which industry at the same time, allows its laborers to subsist on wages of 30 to 40 centavos a day. It is a sad commentary on any economic system where the upper class becomes richer and yet the foundation of the industry labor remains in that miserable economic state in which it started. And if we will carry out the spirit of this bill, Mr. President, if we have to be consistent, may I comment that while we are trying to improve the position of the planter, the other factor in production, the laborer, is overlooked. So I say, if we wish to be consistent, we have to take care of that bigger section of the economic field which precisely is the basis of the industry. "Mr. President, I am a planter, but at the same time it is known that I am the son of a man who started in life as a laborer. Thus, I understand the position of both the planter and the laborer. And I say that, to a planter one or two thousand pesos more will not make much difference. Yet to an ordinary laborer, an increase of twenty or thirty centavos in his daily wages will mean a bigger meal, a better homes, better opportunities for education and an improvement in health for his children. On the basis of this human consideration, Mr. President, I plead that these countless anonymous laborers who have made the sugar industry what it is today, be given this slight increase in their participation. "I thank you, Mr. President. "PREGUNTAS DEL SEN. PRIMICIAS. "Senator PRIMICIAS. Mr. President will the gentleman may yield? "THE PRESIDENT PRO TEMPORE. The gentleman may yield, if he so desires. "Senator PUYAT. I can never refuse the gentleman from Pangasinan, Mr. President. "Senator PRIMICIAS. I wish to state at the outset that I am in favor of this amendment, but one thing strikes me. The amendment, now being sponsored by Your Honor and Senators Montano and Delgado proposes to strike out the whole section 10 of the original bill which speaks of the Minimum Wage Law. Would Your Honor guarantee that under the provision now proposed in substitution of said section 10, which gives 60 per cent of any increase in participation to the laborers, these laborers will receive at least the minimum compensation provided for in the Minimum Wage Law? "Senator PUYAT. The minimum wage provided therein is compulsory, Mr. President. Whether section 10 is included or not, the provisions of the Minimum Wage Law will have to be applied. "Senator PRIMICIAS. There might be a controversy later on because, under section 10 of the original bill, the provisions of the Minimum Wage Law are to be observed. With this amendment, as such provision are deleted, which might give rise to the argument later on that it was the intention of the Congress to make ineffective, in this particular case, the Minimum Wage Law. "Senator PUYAT. Your Honor, although I feel that it will be a superfluity or a redundancy, to retain that portion of the bill which has reference to the application of the Minimum Wage Law, the sponsors will offer no objection. "Senator PRIMICIAS. For example, before the beginning of the proposed amendment in capital letters, I would like to insert the following: 'WITHOUT PREJUDICE TO ANY MINIMUM WAGE'. "MANIFESTACIONES DEL SEN. DELGADO "Senator DELGADO. Mr. President, may I just be permitted to give briefly the reasons why I joined the sponsorship of this amendment? "The PRESIDENT PRO TEMPORE. The gentleman from Bulacan has the floor. "Senator DELGADO Mr. President, while I was the Philippines' Resident Commissioner in the United States, I had occasion to investigate the living condition of the Filipino laborers in the United States. In my travels through Hawaii, Guam and other places, I had also occasion to receive most complementary reports regarding Filipino laborers. It is indeed strange that there should be many people who believe that the Filipino as a laborer in his own country susceptible to criticism. I attribute this to the manner they are treated and the wages they earn in their own country. "I am therefore co-sponsoring this amendment, because I firmly believe that it will be an incentive for the Filipinos as laborers in their own country to attain the same height of success and industry as the Filipinos in America, Hawaii, Guam and elsewhere have achieved, "I thank you, Mr. President. "ENMIENDAS PRIMICIAS A LAS ENMIENDAS MONTANO PUYAT Y DELGADO "The PRESIDENT PRO TEMPORE. The gentleman from Pangasinan may state now his amendment. "Senator PRIMICIAS. The amendment to the amendment that I propose is as follows: Insert before the text of the amendment in capital letters the words 'WITHOUT PREJUDICE TO ANY MINIMUM WAGE LAW'.

"Senator MONTANO. Mr. President, may I suggest to the gentleman from Pangasinan the change of the phraseology to the following: THE PROVISIONS OF THE MINIMUM WAGE LAW NOTWITHSTANDING. "Senator PRIMICIAS. No, that would carry the reverse meaning. That would be just the opposite of what I intended. "The PRESIDENT PRO TEMPORE. Do the authors of the original amendment accept the amendment? "Senator MONTANO. Mr. President, as announced before, we have no objection to any amendment that would clarify the amendment we presented, although it is a belief that any amendment tending to clarify it is a superfluity since the Minimum Wage Law is already a law. However, we cannot offer any objection to anything that will improve the amendment. So, we accept the amendment of the gentleman from Pangasinan. "The PRESIDENT PRO TEMPORE. Are there any remarks on the amendment to the amendment? "EL SEN. PRIMICIAS RAZONA SU ENMIENDA "Senator PRIMICIAS. Mr. President, I cannot exactly agree to the claim that the amendment to the amendment is a superfluity. Should the matter come before the courts", lawyers will be looking for loopholes in the law. It is better to be on the safe side. I therefore submit the amendment to the amendment. "The PRESIDENT PRO TEMPORE. Is the Senate ready to vote on the amendment of the gentleman from Pangasinan to the amendment submitted by Senators Montano, Puyat and Delgado? "EL SEN. LAUREL FIDE UNA ACLARACION "Senator LAUREL. Mr. President, just for a clarification. "The PRESIDENT PRO TEMPORE. The gentleman from Batangas. "Senator LAUREL. I understand that the amendment as amended will read as follows: 'Without prejudice to any minimum wage law the proceeds of any increase in the participation granted the planters . . .' etc. Does it mean that a laborer, who is receiving the minimum wage, will get more, or may be get less when we say without prejudice to any minimum wage law?' This amendment seems to imply that if the laborer is getting the minimum wage and his share proposed in the bill does not reach the minimum wage, the laborer will get the minimum wage and no more, even if he may get more on the basis of the proportion outlined in the amendment. I wish to be clarified with regard to the meaning of the amendment as proposed to be amended. "The PRESIDENT PRO TEMPORE. Will the author of the amendment to the amendment please clarify? "Senator PRIMICIAS. I think, Mr. President, we can clarify that by changing the phraseology in this wise: 'IN ADDITION TO THE BENEFITS GRANTED BY THE MINIMUM WAGE LAW . . .' etc. "Senator LAUREL, Can't we say, for instance: 'IN ADDITION TO THE MINIMUM WAGE TO WHICH A LABORER IS ENTITLED . . .' etc? In other words, the laborer will get the minimum wage in all cases, in addition to what he is entitled to under the proposed amendment. If that is the meaning then I suppose it should be worded that way 'IN ADDITION TO THE MINIMUM WAGE TO WHICH THE LABORER IS ENTITLED , then follow the rest. "Senator PRIMICIAS. Then, Mr. President, may I ask that my amendment be reworded this way: 'IN ADDITION TO THE BENEFITS GRANTED BY THE MINIMUM WAGE LAW'. "The PRESIDENT PRO TEMPORE. Do the authors of the amendment accept the amendment to the amendment now reworded? "Senator MONTANO. We accept the amendment. "The PRESIDENT PRO TEMPORE. Are there any further remarks to the amendment to the amendment? (Silence) The Secretary will please read the amendment to the amendment before we vote. "The SECRETARY. "The text in capital letters shall be preceded by the following words: 'IN ADDITION TO THE BENEFITS GRANTED BY THE MINIMUM WAGE LAW'. "APROBACION DE LA ENMIENDA PRIMICIAS A LA ENMIENDA MONTANO, PUYAT Y DELGADO "The PRESIDENT PRO TEMPORE. Those who are in favor of the amendment to the amendment just read, will please say AYE. (Several Senatos. Aye) Those who are opposed will please say NAY. (Silence) The amendment to the amendment is approved." (Congressional Record, Senate. Third Regular Session. Second Congress of the Republic, Vol. III, Nos. 36 & 37, March 17 & 18, 1952, pp. 549, 552556. Bold letters supplied)". Police Power It is therefore beyond cavil that dealing as it did with the unfortunate plight of the farm laborers crying for just and urgent amelioration and confronted with the usual constitutional objections whenever contractual relations are sought to be regulated, Congress ultimately availed of the state's police power, in the face of which all arguments about freedom of contract and impairment of contractual obligations have generally been held not to prevail. In Lutz vs. Araneta (G.R. No. L-2859, Dec. 22, 1959), this Court recognized the propriety of exercising police power when it is needed to do so in order that our sugar industry may be stabilized, and to that end, it was held that the legislature could provide that the distribution of benefits from the proceeded of sugar be readjusted among the components of the industry to enable it to resist the added strain of the increase in taxes that it had to sustain then. With at least equal persuasiveness must such reasoning obtain when the readjustment of the distribution of proceeds is impelled by the need to render social justice among all the participants in the industry, specially the laborers. True it is that, as counsel for the centrals contend, police power cannot be resorted to just any time the legislature wishes, but it is not correct to say that it is indispensable that exceptional circumstances must exist before police power can be exercised. As very aptly pointed out by the able amicus curiae, Attys. Taada, Teehankee and Carreon, gone are the days when courts could "be found adhering to the doctrine that interference with contracts can only be justified by exceptional circumstances", for the "test of validity today under the due process clause, even in the case of legislation interfering with existing contracts, is reasonableness, as held by this Honorable Supreme Court in the case of People vs. Zeta. 3 In other words, freedom from arbitrariness, capriciousness and whimsicality is the test of constitutionality." (p. 17, Brief of Amicus Curiae in Behalf of Silay-Saravia Planters' Association, Attys. Taada, Teehankee and Carreon.) And there is not enough showing here of unreasonableness in the legislation in question. Quite to the contrary, as will b e discussed anon, We find all the provisions of the impugned act to germane to the end being pursued. Social Justice

But it is not police power alone that sustains the validity of the statutory provision in dispute. Having in view its primary objective to promote the interests of labor, it can never be possible that the State would be bereft of constitutional authority to enact legislations of its kind. Here, in the Philippines, whenever any government measure designed for the advancement of the working class is impugned on constitutional grounds and shadows of doubt are cast over the scope of the State's prerogative in respect thereto, the imperious mandate of the social justice ideal consecrated in our fundamental laws, both the old and the new, 4 asserts its majesty, calling upon the courts to accord utmost consideration to the spirit animating the act assailed, not just for the sake of enforcing the explicit social justice provisions of the article on "Declaration of Principles and State Policies", but more fundamentally. to serve the sacred cause of human dignity, which is actually what lies at the core of those constitutional precepts as it is also the decisive element always in the determination of any controversy between capital 21nd labor. Thus, Section 5 of Article II of the Constitution of 1935, under the aegis of which the law in question was enacted, made it one of the declared principles to which the people committed themselves that "the promotion of social justice to insure the well being and economic security of all the people should be the concern of the State." More specifically in regard to labor, there was also Section 6 of Article XIX, to the effect that "the State shall afford protection to labor . . . and shall regulate the relation between . . . labor and capital in industry and in agriculture." 5 It is difficult to conceive of any legislation more aptly rooted in the declared principle and the plain injunction of the old Constitution just quoted than the Act under discussion which is a law to regulate the relations between the centrals and the planters with the primordial objective of protecting and promoting the interests of labor. In regard then to the arguments of the centrals relative to due process and the sanctity of contractual obligations as well as the freedom of contract, We hold that more cogently than in regard to the exertion of police power as discussed above, the criterion for determining whether or not social justice has been overextended in any given case is nothing more than the economic viability or feasibility of the proposed law in favor of labor, and certainly not the existence of exceptional circumstances. In other words, as long as capital in industry or agriculture will not be fatally prejudiced to the extent of incurring losses as a result of its enforcement, any legislation to improve labor conditions would be valid, provided the assailed legislation is more or less demanded as a measure to improve the situation in which the workers and laborers are actually found. And in the case at bar, there is not even a pretension that the finances of the centrals would be anywhere in the red as a result of the enforcement of Republic Act 809. In the light of the foregoing considerations, We do not find the position of the Central that Section 1 of Republic Act 809 interferes unconstitutionally with existing contracts and the freedom of all the parties concerned in entering into new ones to be sufficiently persuasive. THE ACT DOES NOT VIOLATE THE EQUAL PROTECTION CLAUSE. No unequal protection of the laws It is next argued that the challenged Act denies equal protection of the laws in several ways to the different groups of laborers in the sugar industry. For instance, it is pointed out that whereas it alleviates the condition of the workers in some sugar plantations, it does not provide for similar treatment to the laborers in the centrals. In fact, it is stressed, even among those working in the sugar farms, there is unequal treatment, not only because Section 1 of the law expressly excludes from its application milling districts with centrals having an actual production of less than one hundred fifty thousand piculs of refined sugar, but also according to the schedule prescribed in the same section, the share of the planters together with the resultant share of the laborers is made proportional to the amount of production of the corresponding mills instead of being uniform. So also it is decried that even as among milling districts producing not less than 150,000 piculs, only the laborers working in the plantations within the districts where the majority of the planters do not have written milling contracts with the respective centrals are entitled to the benefits ordained by the law and not all the laborers in all plantations where the planters have been given increase in their shares, regardless of the existence of such majority. 1 Considering the purpose of the law, the bigger share given to planters in districts with bigger centrals is rational. Anent the indictment that the law discriminates between the planters in the big milling districts, on the one hand, and those in small milling districts, on the other, by providing for bigger shares to the planters in the former and smaller shares to those in the latter, it appears to Us to be obvious that as the standard used by the legislature is the amount of production in each district, naturally, the planters adhered to the bigger centrals should be given bigger shares, considering that the more a central produces, the bigger could be its margin of profit which can be correspondingly cut for the purpose of enlarging the share of the planters. Understandably, the smaller centrals may not be able to afford to have their shares reduced substantially, which is evidently the reason why the law has not been made applicable to centrals having a production of less than 150,000 piculs a year. In any event, the point raised relates to the wisdom of the standard fixed by the legislature, which the courts are bound to uphold, absent any indication, as in this case, of arbitrariness or capriciousness in it. As appellees put it, "the law is applicable to all mill districts whose productions fall within the standards set forth therein; the graduated scale of production is the goal the law seeks to attain: an increased production." (p. 36, Appellees' Brief.). 2 Laborers in the centrals are differently situated and are already protected by other laws. Much lees is there substantial basis for the claim that it is within the constitutional proscription under discussion for the Act to discriminate against the workers in the centrals by not including them among the components of labor in the apportionment of the fruits of their joint efforts with the planters, We have looked into the corresponding factual premises of this contention of the Central relative to the equal protection clause with the care they deserve, and We are of the considered opinion that the criterion on which the provisions in issue is predicated precludes the conclusion of capricious and arbitrary discrimination which the Charter abhors. The laborers in the centrals perform work the nature of which is entirely different from that of those working in the farms, thereby requiring the application to them of other laws advantageous to labor, which upon the other hand, do not correspondingly favor plantation or purely agricultural manpower. Besides, there is no denying the fact that as industrial or semi-industrial workers, the laborers in the centrals, even the farmlands, therein, are being more or less sufficiently taken care of under other existing laws and the prevailing terms and conditions of their employment, for which reason there is no known nor demonstrated demand, much less perceptible urgent need, to bring them under the coverage of the instant legislative bounty. Nonetheless, for the better protection of the laborers in the centrals against any attempt of their employers to prejudice them in retaliation for the reduction of the income that the operation of the law might cause the centrals concerned, Section 3 of the Act ordains thus: "Sec. 3. Neither the enforcement of this Act nor anything contained herein shall be deemed sufficient and just cause for the reduction of the wages of workers employed by sugar centrals, for the withdrawal or cancellation of any benefits, facilities, privileges, or other concessions heretofore granted to them, or for the temporary lay-off or permanent dismissal of any of the said workers." xxx xxx xxx B

It is implicit in this provision that precisely because the legislature could not extend any increase to the laborers of the centrals at the same time that the millers' share in the production is being reduced, it however showed its concern for the laborers by enjoining the centrals from adopting any measure that would in any manner place the former in a worse position than where they were before the effectivity of the Act.

In this connection, We note that the following apt observations in the brief of Attys. Taada, Teehankee and Carreon stand unrefuted by any of the opposing counsels: "Alleged discrimination against laborers of sugar centrals. Section 9 of Republic Act 809 requires that 60% of the increased rate of participation be paid to the plantation laborers, while no additional benefit is provided in the law for central laborers. On this ground, it is contended that Republic Act 809 discriminates against laborers of sugar centrals. Considered by itself the law appears to be lacking in abstract symmetry, but when the actual facts regarding employment conditions of plantations laborers, on one hand, and central laborers on the other, are taken into account, the seeming inequality will disappears. There are many points of material differences between the two categories of laborers. Most important is the fact that because centrals, since their establishment in the 20s, had been receiving an undue proportion of the sugar processed from the planters' sugarcane, they have always been financially able to give their laborers better wages and better employment conditions than planters could give to their laborers. Another important difference that may be noted is the fact that the laborers of planters, with their families, are more numerous than the central laborers with their families. Even existing legislation, apart from Republic Act 809, has provided or made available more benefits to central laborers. Today, as at the time of passage of the Sugar Act, farm laborers are expressly excluded from the benefits to central laborers. Today, as at the time of passage of the Sugar Act, farm laborers are expressly excluded from the benefits of co. Act 444, otherwise knows as the Eight-Hour Labor Law (Section 2); of Act 1847, otherwise known as The Employers' Liability Act (Section 9); of the Minimum Wage Law (Rep. ct 602), unless they are employed in a farm over 12 hectares in size (Section 3, par. [b].), and even then, the Minimum Wage Law provides for a much lower wage level for farm laborers than that provided for industrial laborers, the daily minimum wage for farm laborers being originally P1.75 a day to become P2.00 a day one year after the effective date of the Minimum Wage Law and P2.50 a day one year still later, and for industrial laborers the minimum wage being P4.00 a day in Manila and P3.00 outside of Manila, but to be increased to P4.00 one year after the effective date of the law (Pars. [a] and [b], Sec. 3); of Act 3961, as amended by Com. Act 324 and Rep. Act 46, providing for emergency medical treatment to be furnished by their employers, unless the number of farm laborers of any given employer is 30 pr more (Section 1); of Rep. 239, providing for emergency dental treatment, unless their number is 50 or more (Section 1); and of Com. Act 103 in regard to submitting disputes to the Court of Industrial Relations unless their number exceeds 30 (Section 3); while laborers in sugar centrals enjoy the benefits conferred by all the laws mentioned either because they come squarely within their provisions or because, where the laws fix the minimum number required in order to avail of their benefits, the number of laborers in any given central always and inevitably exceeds the minimum number respectively fixed in the various laws mentioned; and few, if any, farm laborers can take advantage of the collective bargaining rights provided in Com. Act 213 and the Industrial Peace Act, and at any rate, farm laborers are, relatively, in weaker bargaining positions in negotiating with their respective individual employers than laborers in sugar centrals. RA 809 is therefore but a belated attempt to compensate plantation laborers in some form for what existing legislation denies to them but grants to laborers of centrals. Though the Sugar Act provides no new benefits for laborers of centrals. Though the Sugar Act provides no new benefits for laborers in centrals, it ensures that its enforcement and operation shall not be occasion for the reduction or withdrawal of benefits at present enjoyed by them (Section 3)." (Amicus curiae's Brief, pp. 46-49.) 3 How Sections 1 and 9 should be construed in order not to defeat the basic objective of the Act and to avoid unconstitutionality thereof. The claim of inequality in the benefits to labor resulting from the criterion of existence of non-existence in the different milling districts of a majority of planters with written contracts in the determination of the applicability of the Act requires more extended disquisition. Indeed, it is in connection with this point that We perceive a feature of the Act which unless viewed in proper light would render the same constitutionality objectionable. Considering that because under the terms of Section 1 of the Act the ratios of sharing therein specified are to be observed only those milling districts where the majority of the planters have no written contracts with the centrals, it is pointed out that it, therefore, makes the benefits intended by it for the laborers dependent on the subjective contingency of the millers and the planters signing or not written agreements, instead of automatically by direct legislative fiat regardless of the will of either the millers or the planters or both. Worse, it is contended, in consequence of such condition in the law, it contains within its own provisions the very means by which the planters can be benefited exclusively by an increase in their share, without any obligation on their part to share such benefit with their laborers, despite the fact that such laborers' share, as We have pointed out above, is precisely the very element purposely and deliberately incorporated in the law to make it the social legislation that it is, exempted from the constitutional injunctions and constraints relative in contractual obligations and the freedom of contract. To put it otherwise, it is argued that it is actually possible within the letter of this statute for the planters to secure exclusively for themselves any increase they want, and even more than that specified for them in Section 1 thereof, without being necessarily bound to share the same with their laborers, by the simple expedient of the majority of them signing contracts with the centrals providing for such increase, thus thwarting the very avowed primary purpose of the legislature in approving the same. In brief, the terms of the statute can easily be taken advantage of by the planters and the centrals in complete disregard of the interests of labor for whom it was specifically designed. Viewed in this manner, the Act would appear to be self-defeating in so far as the laborers are concerned, but efficacious in providing what the PLANTERS desire for themselves, contrary to its true objective of increasing the share of the planters only as a means of ameliorating the situation of the laborers. Parenthetically, the Central insists that this was actually the real scheme of the particular legislators who framed the law to compel the centrals to augment the share of the planters, and not really to improve the lot of the laborers. Indeed, if such is the inevitable result of applying the provisions in question, there is ample ground for considering them as violative of the Constitution. For instance, applying the bare letter of the Act, if the central and the majority of the planters in any district having a production of more than one million two hundred thousand piculs should agree by contract to reduce the share of the central from 40% to 34% and to increase that of the planters from 60% to 66%, not only would the planters be greatly benefited by the increase in their shares, but the centrals would also save 4% which otherwise it would have to give to the planters if it were not to sign contracts with the majority, and yet the laborers of the planters would get no part of the increase their planters-employers would be entitled to, since it would be argued that the clause in Section 1 making the "absence of written milling agreements between the majority of planters and the millers in any milling district" is the condition sine qua non of the enforceability of the whole Act, including Section 9, which is the one that provides for the increase of the share of the laborers. This literal reading of the Act manifestly inconsistent with its basic intent, does render the Act unconstitutional, since any legislative enactment that is deceptive by ostensibly being a social legislation to ameliorate the condition of labor so that it may hurdle constitutional obstacles as a police power or social justice measure, when in truth it is only intended to operate in favor of the employer or of capital, must be stricken down as a despicable fraud which no constitution in the world can ever be conceived as allowing the legislature under it to perpetrate upon the people. Instead of promoting social justice, the Act would clearly be a double instrument of injustice and oppression to labor, for aside from perpetuating their wretched condition, they would be the victims of a legislative deception. Accordingly, We feel it is the proper evaluation of the considerations just discussed that is most decisive in the ultimate resolution of the controversy before Us. Incidentally, We note that none of the learned counsels has discoursed on them from what We deem to be the correct perspective, namely, that, as has been pointed out above, the primary reason for being of Republic Act 809 is the improvement of the condition of the plantation laborers. It is quite regrettable that counsel of the Secretary of Labor took no pains to adopt an independent position from the lawyers of the planters and merely co-signed a joint brief with them for the plaintiffsappellees, hence their inability to draw attention to the inevitable inconsistency and conflict of interest between the planters and the laborers resulting from the literal application of the law as above pointed out. They have overlooked the incontrovertible proposition that unless the laudable intention of the law to protect the laborers is carried out in the construction and application of Sections 1 and 9 vis-a-vis each other, any other way of implementing the same would render it unconstitutional.

We reiterate that as can be seen in the portion of the trial court's decision We have quoted earlier, the declared foundation of the Act was the so-called Moran Report, copy of the full text of which is attached to the printed memorandum of counsels for the planters. The thrust of said report is that the sugar industry, a very vital element of the national economy, would collapse if no means could be devised to compel the centrals to increase the share of the planters in their milled sugarcane production, for without such increase, the planters would not be able to contain the surging unrest and imminent refusal of their laborers to work unless their demand for higher wages, which they badly needed, were granted. The report proposed remedial measures to cope with the situation, and the Act is the legislative effort in that direction. To quote again from the decision of the learned trial judge: "Moreover, Republic Act No. 809 seeks to reduce the inequality in the benefits being received by the Central and the laborers. It should be noted that under Section 9 of the law, 60% of the increased participation shall be given to the laborers and 40% for the planters. The application of the Act would go a long way towards promoting better relations between the laborers on one side and the planters and the Central on the other side. "The almost yearly recurrence of strikes in the farms by the laborers has for its root cause discontent generated by the inadequate earnings of the laborers. Theirs is a miserable lot for they do not earn enough to give their families the minimum needed to maintain a decent living in a civilized society, not to mention the expenses necessary for the education of their children: xxx xxx xxx

"Realizing this danger to the biggest industry of the country, the late President Quezon caused a survey of the causes of the discontent of the laborers and the recurrent trouble in the sugar regions. The report submitted by the late Mr. Justice Moran after he investigated the books of the Centrals and those of the planters, advocated very strongly the necessity of a new and better sharing plan for the sugar planters." (Brief of Appellees, pp. 29-30; p. 31.). The Moran Report itself contains the following pertinent observations: "Considering the laborers to have been most adversely affected by the limitation, the planters had come out openly for an increase in the wages of their plantation laborers provided their share in the milling contract be also increased. The following gives us a fair view of their stand. 'At the beginning of this brief we have expressed our indorsement, in principle, of the proposition to fix minimum wage for the laborers in the sugar plantations. This is because we are with the laborers in their needs and in the improvement of their lot. But under the conditions in which the finances of the mass of the planters are found, nothing more can be done unless the state of such finances is also ameliorated. The proposed fixing of minimum wages is intended to be a measure of social justice to the laboring class but to render justice to a class at the expense of another class that also needs the New Deal will be most unjust. We have an abiding faith in the wisdom of our government and of those who control it, and that when it renders justice it does it not only to one class but to all classes needing it. Finally, we trust that when the government takes the steps towards adjusting the wages of the laborers at the expense of planters it will, at the same time adopt measure that will insure the planters of the increase of the benefits they derived from the industry. Any measure that the government may adopt toward raising the standard of wages for farm labor should be accompanied by a readjustment of the milling contract increasing the planter's share of the sugar, otherwise such a measure will be unfair and unjust to the planter.' (See pp. 34-35 of Preliminary Report dated Sept. 18, 1937, of Judge Francisco Zulueta, Court of Industrial Relations, to His Excellency, the President.)" xxx xxx xxx

"From what has been thus far discussed, two cardinal facts are clear: (1) that in general the profits of the centrals greatly out proportion those of the planters and (2) that the latter can not be made to ameliorate the condition of their laborers unless their milling shares be increased. It is thus obvious that the problem of improving the lot of the laborers in the sugar industry depends upon and is inseparably bound with another problem arising from the contractual relation between planters and centrals. There can be no question, however, that if the centrals refuse to adjust their milling contracts, to give room for increased participation in favor of the planters and thus obstruct the government's legitimate policy of improving the condition of the planters' laborers, its rightful authority may be exercised either in the form of taxation or police power. It may impose a tax on central's receipts . . ." (Memorandum of Justice Montemayor, pp. LXI to LXII; LXV to LXVI; See also Exhibit O.). Any increase in participation given to planters in contracts executed after the approval of Republic Act 809 must be shared with laborers of the planters in the manner provided in Section 9, even if by the reason of the number of such contracts, Section 1 would not apply. In other words, it is conceivable for Republic Act 809 to survive the constitutional attack mounted by the counsels for the CENTRAL, if in any instance its provisions can be availed of to get some advantage for the planters without their laborers being correspondingly benefited. A greater and more intolerable social injustice would result in such an event. In a sense, a dilemma has emerged. If We declare the Act unconstitutional upon the ground that it is unwarranted invasion of the freedom of contract as between the millers and the planters, the deplorable condition of the laborers in the sugar farms would remain as it was before its enactment. On the other hand, if We sustain its validity but at the same time apply it literally and sanction a construction thereof that would enable the centrals and their planters to enter into agreements, under which the latter would have to be given increased participation without any obligation to share the same with their laborers, the Court would be a party to a conspiracy to virtually defraud labor of the benefits, the grant of which is precisely its sole redeeming feature to save it from unconstitutionality. For it is clear for anyone to see that without the Act, under the conditions prevailing in the industry, the planters would have no means of persuading, much less compelling, the centrals or millers to give them any increase in their respective shares, whereas, with this law, faced with the prospect of being forced to grant the planters their proportion of sharing prescribed by it, if no written contracts were to be signed by them with the majority of the planters, naturally, the centrals would readily agree to give the planters the increase they want, which could be less than that stipulated in the Act and yet be exactly what the planters would get under it if the majority of them were not to have written contracts with the central. In which eventuality, and should we uphold the proposed strictly literal construction of the Act, the laborers would be left holding the proverbial empty bag. In that way, the interests of the capitalist components of the industry, the millers and planters, would be served by the compulsive effect of the law but labor would not be assured of receiving even the crumbs, when the truth is that the legislation would have no reason for being as a constitutional and enforceable statute if it did not include mandatory provisions designed to lift them from misery. The Court emphatically refuses to have anything to do with such an unconscionable posture vis-a-vis the fate of labor, which pose, after all, We must assume could not have been in the contemplation of the legislature that precisely inserted into it its pro-labor element in order to bring it within the ambit of the social justice and police power protection of the fundamental law. We condemn such a view as definitely anti-social and as a gross injustice to labor, which no respectable legislature composed of duly elected representatives of the people may ever be deemed as capable of dirtying the sacred statute books with. Conscious of the highmindedness of the Congress and aware that deception, particularly if it would victimize labor, could never have been within their contemplation, We are thoroughly convinced that the Act should never be construed in the manner suggested. The benefit to labor contemplated in Section 9 is ineludible eve if Section 1 should be inapplicable. The way then to remove from Republic Act 809 any taint of any furtive character is to construe it in the only manner its social justice purpose can be attained. Never should its provisions be deemed as permitting the planters to benefit from the operation thereof without their being compelled to give their laborers that without which the Act would not have been approved by Congress nor allowed by President Quirino to lapse into a law and for which alone it can avoid being struck down as unconstitutional. It is a familiar rule in constitutional law that when a statute is rationally capable of different constructions, that which will render it unconstitutional

should be disregarded. Under the same principle, the constitutionality of a statute should not be prejudiced by applying the same in a manner that would render it unconstitutional. As has already been demonstrated, Republic Act 809 owes its constitutionality exclusively to its labor content, hence to allow it to be applied in a way that would strip it of that particular element would be fatal to its constitutional life. In this connection, it is vigorously insisted that the terms of Section 1 are plain and explicit to the effect that the Act may be applied only in the milling districts where the majority of the planters do not have written milling contracts with the centrals. Likewise, it is as vehemently contended that Section 9 compels the planters to share with their laborers whatever increase the centrals would give them only and only if such increase is given to them "under the Act" more specifically, its Section 1, and, therefore, whatever increase should be given to the planters by written contract rather than by the inexistence of a majority of such written contracts would not be within the coveraged the Act. Viewing these arguments in the light of the social justice imperatives that inform the Act, as discussed above, the Court cannot agree. There is latent ambiguity in the Act, hence the justification and the need for Judicial construction. Granting arguendo that the words of the provisions referred to do not suffer from patent ambiguity, We nevertheless discern latent ambiguity in them latent in the sense that while the mandate to always protect labor whichever way said provisions might be construed does not seem apparent in the language employed, such compulsion propelled by the indubitable spirit and objective of the Act is readily perceptible in the obvious coercive pressure that Section 1 exerts upon the centrals for them to yield to the demand of the planters for written contracts with increased shares for the latter, as other wise, that is, if the majority of the planters should not have written contracts, that is, if the majority of the planters should not have written contracts, the full force of said provision would fall on them (the centrals) and they would have no alter native than to give their planters the higher ratio of shares prescribed therein. In view of such latent ambiguity, judicial construction is imperative. Thus, reading the provisions in question from the ineludible perspective of its pro-labor intendment, We are not convinced that the existence of the majority of contractual planters mentioned in Section 1, attained after the effectivity of the Act, would inexorably result in the inapplicability of Section 9, such that by such majority of written contracts, the planters would be able to get by contract the increase intended for them by Section 1 without being mandatorily bound to give their laborers any portion thereof. We believe that to read Sections 1 and 9 in such manner would be contrary to the very purpose for which the Act was conceived and approved. It is clear to Us that all that Section 1 implies is that the proportions of sharing therein specified would no longer hold in the event a majority of the planters in the district should have written milling contracts with the centrals. In that sense, it cannot be aid that the Act impairs the freedom of contract to which the CENTRAL and the planters are entitled. The language of said section does not however appear to Us to necessarily envisage inseparability of its applicability from the enforceability of the rest of the Act. On the contrary, it is implicit in the separability clause contained in Section 10 of the Act itself that to avoid that the unconstitutionality of any provision of the Act which may result from its application in relation to another provision thereof, such provisions should he accordingly applied independently of each other, specially if by so doing, as in this instance, the objective of the statute can be best achieved. More specifically with reference to the contention that Section 9 pegs or predicates the right of labor to partake in the increase of the shares of the planters to the increase resulting from the absence of a majority of contract planters provided for in Section 1, We hold that it is entirely within the purview of the legislative pro-labor-and-social-justice intent of the Act that any increase the central should concede to the planters by contract executed after the passage thereof is an increase "under the Act", thereby resulting in the application of its Section 9, for there can be no doubt that the centrals would only grant such increase for the ultimate purpose of avoiding the application of Section 1, which is to say that the centrals' act of entering into written contracts would plainly be nothing less than an ineludible consequence of the compulsive effect of the Act intended by the legislature. That this construction may not give the laborers exactly what the Act contemplates, since the contracts to be entered into might actually provide for proportions less favorable to the planters than that stipulated in Section 1 is no argument to render it untenable. What would happen in such a case is only a lesser evil that the totally anti-social disaster of labor getting absolutely nothing while the planters would be getting an increase which could be as much as that provided for them (planters) in said section. To reiterate, the percentage for labor specified in Section 9 may be safely construed to be demandable whatever be the percentage of increase for the planters that their contracts with their centrals might provide. And inasmuch as this constitutional approach just indicated is the only one consistent with the manifest objective of the Act, We are duty bound to adopt the same in the case at bar. The spirit rather than the latently ambigous letter of the Act must be enforced. Why new contracts executed to secure majority were not illegal nor in bad faith. At this point, it may be asked, since the new contracts just referred to were entered into purposely to avoid the application of Section 1 of the Act, should it not follow that they should be declared non-existent in the determination of whether or not there was absence of a majority of planters without written milling agreements with the CENTRAL? At first blush, it would seem reasonable to so hold. On deeper reflection and deliberation, however, it will be realized that it is not the purpose of the Act to prevent the execution of new contracts, even if this would create a majority of contract planters in any district. There is an abundant proof in the record that the interference with contractual freedom intended by the Act was precisely in the sense that the millers be placed in such a position that, for fear of being obliged to follow the ratio of sharing prescribed in its Section 1, they would have to sign new contracts agreeing to increase the share of the planters, leaving it to the planters to secure in the process of bargaining the percentage they consider adequate for them under the circumstances. In other words, the new contracts here in question cannot be deemed as entered into in bad faith or for an illegal purpose, since the expected effect of the Act is that there would he more contracts executed. Indeed, it was in the execution of those agreements that the objective of the law may be said to have been ideally achieved. At the same time that freedom of contract was observed, the desired increase of the share of the planters was also assured. It is as if the Act merely gave the planters a bargaining force with which to induce the millers to increase the share to be given to them (planters), albeit on the condition that from any such increase, the plantation laborers would in turn be given the benefit stipulated for them in Section 9. As We see it, the schedule of sharing as fixed in Section 1 was not designed to be the standard to be observed when the parties are willing to negotiate by themselves. Said schedule has to be followed only when either the majority of the planters in the district or the miller refuses to sign any agreement. In conclusion, We hold that Republic Act 809 is a legitimate police power measure and at the same time a proper and valid implementation of the social justice provisions of the Constitution, and We have no alternative but to construe its provisions in the manner most conducive to that end. This is the basic criterion We will adopt in disposing of the other issues in this case, as will be seen anon. OTHER CONSTITUTIONAL OBJECTIONS LESS TENABLE. C

The rest of the constitutional issues raised by the CENTRAL are even less impressive. Indeed, that the Act does not embrace more than one subject, that all the matters dealt with by its provisions are sufficiently covered by its title and are germane and that it does not deprive the CENTRAL of any property without due process of law is clearly elucidated in the manifestation of the Solicitor General dated October 14, 1960 quoted earlier in this decision. We find the position taken herein by the Solicitor General to be well taken. We are thus fully satisfied that the whole Republic Act 809, properly applied as indicated in this decision, was well within the power of the legislature to enact and that it does not violate any provision of the Constitution. Thirdly, the CENTRAL maintains that: III

"THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF THE PLANTERS ERRED IN HOLDING THAT THERE WAS AN ABSENCE OF WRITTEN MILLING CONTRACTS BETWEEN THE DEFENDANT CENTRAL AND THE MAJORITY OF THE PLANTERS IN THE TALISAY-SILAY MILLING DISTRICT SINCE THE CROP YEAR 1952-53; "(1) Because His Honor has disregarded even the official figures of the Sugar Quota Administrator, who after investigating the planters' complaint, found that in the crop year 1952-59 there were only One Hundred Fifty-Two (52) planters in the Talisay-Silay milling district: and instead His Honor has inflated said number to One Hundred Seventy (170), or by Eighteen (18 more planters; by the simple expedient of (1), listing two planters twice; (2) including in his list as planters in the district, Eight (8) persons who were not registered planters, and were cultivating only 'emergency plantations', not included in the Sugar Audit, as defined in Act 4166 (Sugar Limitation Law); and (3) counting Eight (8) other planters in his list two times (See Annex 'C' of plaintiffs' amended complaint)." (2) Because even the planters themselves, in their said complaint filed with the Sugar Quota Administrator, claimed that there were only 'One Hundred Fifty-Four (154) planters adhered to the Talisay-Silay Milling District', and that 'Eighty-One (81) planters have written milling contracts, Sixty-Two (62) of which were executed on or before the effectivity of Republic Act No. 809, and Nineteen (19), after the effectivity of the above law' (See Appendix '12' of Central's answer). (3) Because the Judge a quo has clearly confused the number of milling contracts with the number of planters who cultivated and produced sugarcane on the plantations covered by said milling contracts." (CENTRAL's Brief, pp. 76-78.). As can be seen, the issue raised in this assignment of error is mainly factual. However, there are certain situations involved in the resolution of said factual issue that call for the application of legal concepts which the trial court appears not to have correctly considered. The criterion established by Section 1 should be observed not only once but year by year. Thus, the first point that has to be determined is whether the presence of the majority of contract planters contemplated in the law has reference only to the contracts existing during the first crop year after the passage of the act or to that of each year, starting from said first crop year. In other words, should the existence of such majority be determined only once, that is, when the Act took effect or year by year? The PLANTERS claim it should be only once while the CENTRAL contends it should be every crop year. In fact, in this connection, in their brief, the PLANTERS have counter assigned as alleged error of the trial court that: "(2) THE LOWER COURT ERRED IN HOLDING THAT THE DETERMINATION OF MAJORITY SHOULD BE MADE FROM YEAR TO YEAR." (Page a, Brief of PLANTERS.) The ruling of the trial court on this point is as follows: "The Court holds that the sharing of the sugarcane produced during one agricultural year between the planters and the Central shall depend upon the existence or non-existence of the majority of planters during that year as provided by Section 1 of Republic Act No. 809. In other words, it is possible that during one agricultural year the majority of the planters may not have written milling agreements with the Central and, therefore, the sharing proportions provided for in Section 1 of the Republic Act No. 809 shall apply; while the following year the majority of said planters may have written milling agreements with the Central, in which case the terms of the contracts of the planters, both oral and written, shall govern. It is, therefore, necessary that the determination of the existence or non-existence of said majority be made each year. "In arriving at the above conclusion, the Court has taken into consideration the text of the law as a whole and the purpose or objective of the legislature in enacting the same. That the Central is not deprived by Republic Act No. 809 of its right to induce the planters to enter into written milling contracts with it subsequent to the effectivity of said act for the purpose of avoiding the application of the sharing proportions provided for in Section 1 of said Act is evident from the text of Section 4 of the same Act which reads as follows: 'SEC. 4. In the event that any central shall be unable to arrive at a milling agreement with a majority of the planters affiliated with it, and shall refuse to mill the sugarcane of such planters in the absence of such an agreement, the President of the Philippines shall issue a proclamation declaring that, in the interest of the national welfare, the Government of the Philippines has taken over the central concerned, and thereupon the central shall be operated in the name and under the authority of the Government by an administrator to be appointed in the court proceeding provided for in section seven of this Act.' "This section clearly allows the Central to attempt to arrive at a written milling agreement with a majority of the planters affiliated with it. Said attempt may he exercised at any time after the passage of the Act and as often as the Central wishes to make the attempt. The result of said attempt or attempts shall be considered yearly in determining whether or not the majority of the planters have written milling contracts with the Central for the purpose of determining whether or not Republic Act No. 809 is applicable that year. "This interpretation is in accordance with the ruling of this Court above to the effect that lessees are included within the meaning of the term 'planter. The lease may be for two or three years or more. The lessee may enter into a written milling contract with the Central for the duration of the lease. If he shall be considered as one planter with a written milling agreement for the purpose of applying Section 1 of Republic Act No. 809. Upon the expiration of the lease, the right to enter or not to enter into a written milling agreement with the Central reverts to the owner or passes to a new lessee or to both owner and new lessee. For this reason, Congress worded Republic Act No. 809 in such a way that the applicability of said Act should be determined every year." We agree with the reasoning and conclusion of the trial court. Indeed, there are other strong reasons in support of such holding. As We see it, the obvious objective of the Act is more to induce the centrals to enter into written agreements with the planters in their respective districts providing for better sharing ratios than the old 60-40 scheme, rather than to directly fix for them such ratio in the manner prescribed in Section 1. Were it the intent of the Act to definitely fix said sharing ratios, without regard to the contractual agreements between the parties, it would have been worded accordingly in the clearest terms, considering that such fixing would amount to a curtailment of the freedom of contract and may, therefore, be upheld only when the legislative intent is manifest and the exertion of police power in the premises is reasonably justified. It would have been the easiest thing for Congress to have provided clearly that thenceforth the sharing ratios should be as indicated in the Act instead of making its own applicability and enforcement dependent on factors obviously subjective to the parties concerned. The question may be asked, why did the law lay down as the criterion for its applicability or enforcement such a subjective condition as the absence of a majority of planters with written milling contracts? A cursory reading of the pertinent provisions of the Act would readily reveal that Congress was aware that the best way to deal with the problems of the sugar industry it had in mind was to base their solution on the situation of the relationship between the planters and the millers in each milling district instead of in all of them as a whole. It is a matter of judicial notice that such situation in each district varied. A uniform formula of solution must have appeared to the legislature as impractical and unjustified to the members who were conversant regarding the problems of the industry. Thus, the lawmakers knew that the existence of a majority with written contracts in a district would naturally indicate that the planters were satisfied with the terms being given to them by the miller, hence the impropriety in such a district of any state interference by legislative fiat based on police power. In the language of the PLANTERS' brief, "if such condition was imposed by Congress, it would only mean that Congress was willing to let well enough alone in a milling district wherein the majority of the planters appeared to be satisfied." (pp. 77-78.) On the other hand, the absence of such a majority would signify the contrary; and

usually, this sad state of affairs was due to the fact that the planters were practically at the mercy of the miller who could refuse to mill their sugarcane except under its terms. It is this virtual stranglehold by the miller that the law must have intended to remedy. And so, by providing that unless it entered into written contracts with the majority of the planters affiliated to it, the miller would have to follow the higher sharing ratio prescribed in the law, and it was assumed that the miller would rather yield to the planters by agreeing by written contract to a better sharing ratio if it was to save itself from having to suffer a bigger cut in its share of the proceeds. But why would the planters prefer to sign written contracts with a sharing ratio for them different from or less than that prescribed by the law which would apply if the majority of them were to refrain from entering into written contracts? The reason may be found in the fact that there are other advantages in having such contracts, aside from the sharing ratio, which could probably offset the resulting loss in the percentage of sharing. Moreover, for the good of the industry and better relations between the planters and the miller it is always better to have written contracts to govern their relationship. Nothing can best promote the interests of the industry as a whole than mutual formal accord between the planters and the millers. (See pp. 22-23, Printed Memorandum on behalf of PLANTERS and LABORERS in amplification of oral argument dated August 29, 1963.). The foregoing considerations make it quite evident that the Congress could not have contemplated making the situation obtaining on the date of its effectivity as a law the sole and exclusive criterion for determining its applicability in the respective milling districts of the Philippines. Our considered opinion is that the lawmakers were aware of how the situation used to vary from crop year to crop year in each district, so they must have deemed it best to make the applicability of the Act go along the way such variations would demand. We are certain the legislature could not have intended that the benefits for labor envisaged in the law should be allowed to be completely negated nor rendered ineffective for all the crop years to follow just because there was a majority of planters with contracts in crop year 1952-53, a possibility which it could not have ignored. The planters and laborers contend that the Congress must have had in contemplation the fact that most if not all the contracts of 1920-21 had expired in 1950 and that it was more likely that there would be only a minority of the planters with contracts by the time the Act would be in force, hence the criterion under discussion. In any event, they insist that the Congress must have contemplated that the contracts signed after the approval of the Act should not be considered. We do not see the relevant circumstances that way. The truth revealed in the records is that many of the old contracts had already been extended way back in 1948. Withal, We cannot read in the provisions of the Act any indication to curtail the freedom of the parties to enter into contracts after the passage of the Act. Again, if the Congress really intended to either suppress that freedom or make the terms of future contracts subject to the sharing ratios prescribed in Section 1, We cannot conceive of any ponderous consideration why words to that effect were not used. If Congress had in mind that the old contracts had already expired and it was its intention to disregard the new contracts to be signed after its passage, it would have, with more reason, directly provided for the definite and unconditional enforcement of Section 1 instead of imposing the condition about the absence of a majority of contract planters. Withal, weighty reasons of constitutional policy prevent Us from adopting a construction that would make the Act violative of the freedom of contract. As a matter of fact, the PLANTERS and LABORERS themselves practically concede the legal possibility of new contracts providing for a ratio different from that in Section 1. (See p. 21, Printed Memo, supra.). But the PLANTERS insist that the above construction would mischievously leave it entirely in the hands of some planters, who would augment the number of contract planters by belatedly executing contracts with the CENTRAL, the fate of the other planters and the laborers, who otherwise should be benefited by the Act. We are not unaware of such possibility. However, We have to consider that, as already stated, it is quite evident from the records of the deliberations in Congress that there was no intent to entirely do away with the right of the parties to enter into written contracts. It must have been assumed that faced with the inevitability of having to follow the sharing ratio prescribed in Section 1, the millers would be more than willing to enter into contracts providing for a ratio less prejudicial to them than that fixed in Section 1 but more beneficial to the planters than the old 60-40 ratio. In other words, increasing the share of the planters would still have been inevitable. Thus, the planters would not really stand to lose very much, what with the other benefits that go with a written contract. And as far as the laborers are concerned, as We shall show later, any increase the planters would be able to get would naturally entitle the laborers to the corresponding share provided for in Section 9 of the Act. For all these reasons, We find no alternative than to overrule the PLANTERS' second counter-assignment of error. A THE NUMBER OF PLANTERS IN THE TALISAY-SILAY DISTRICT IN 1962-53 CROP YEAR. How many planters were there in the sugar district in question during the crop year 1962-53? It is but logical that in the solution of the problem on hand the first thing We have to determine is the correct number of planters who were affiliated to the Talisay-Silay sugar district during the first crop year (1952-53) of the effectivity of Republic Act 809. In this connection, the trial court found that there were one-hundred and seventy (170) of them. But appellant CENTRAL maintains that in arriving at such conclusion, His Honor adopted a concept of the term "planter" which is in some respects or as applied to some of the actual situations herein involved is not legally correct, much less realistic. A review of the record shows that the CENTRAL's observation is well taken. Thus, the trial court found:. "For the sake of clarity, according to Exh. H-1, the planters affiliated to the Talisay-Silay Milling District as at June 22, 1952 are the following: 1. Alano, Amado Dr. 2. Alvarez, Rosendo 3.Kilayko, Francisco Dr. 4. Beson, Jose 5. Claparols, C.L. Vda. de 6. Estrella, Deogracias 7. Cordova, Candido 8. Esteban, Gloria A. de 9. Misa, Maria L. de 10. Labayen, Julio D. 11. Olimpo, Felicidad

12. Gaston, Benjamin 13. Perovano, Estefania R. Vda. de 14. Osmea, Lourdes R. de 15. Lopez, Lolita R. de 16. Sian, Aniceta Rama de 17. Gamboa, Aguinaldo S. 18. Gamboa, Generoso, Jr. 19. Gamboa, Romeo B. 20. Santibaez, Efraim 21. Gaston, Amparo Vda. de 22. Henares, Fidel M. 23. Jareo, Catalino 24. Heirs of Hernaez, Amalia 25. Hernaez, Dominador 26. Hernaez, Pedro C. 27. Infante, Purita H. de 28. Lopez, Apeles, Concepcion 29. Hilado, Tacela Vda. de 30. Ledesma, Anita L. de 31. Locsin, Agusto M. 32. Montinola, Trino Dr. 33. Hilado, Alfonso 34. Escay, Jose G. 35. Javellana, Manuel A. 36. Oca, Gil de 37. Jison, Dominador 38. Jison, Emiliano 39. Jizares, Felix A. 40. Lacson, Caridad 41. Lacson, Ignacio et al. 42. Lacson, Domingo M. 43. Lacson, Salvador 44. Cuaycong, Jose G. 45. Tampingco, Gloria L. de 46. Yusay, Enrique Dr. 47. Lacson, Ernesto 48. Ledesma, Eduardo 49. Lacson, Pedro 50. Lacson, Damaso 51. Ayalde, Ceferino T. Dr. 52. Ledesma, Nicolas & L. M. 53. Ledesma, Eduardo & M. L. 54. Lizares, Emiliano 55. Oca, Luz de 56. Lizares, Antonio Dr. 57. Lizares, Demetria Vda. de

58.Lizares, Co., Inc. 59. Ybiernas, Vicente 60. Panlilio, Encarnacion L. Vda. de 61. Lizares, Maria A. 62. Camon, Emilio 63. Oca, Felisa de 64. Oca, Librada de 65. Lizares, Nilo 66. Lizares, Simplicio 67. Oca, Pedro de 68. Pison, Espedito 69. Coscolluela, Agustin 70. Jalandoni, Nicolas 71. Lacson, Eduardo 72. Gamboa, Serafin 73. Kilayko, Ramiro 74. Lacson, Rafael 75. Trecho, Miguela 76. Trecho, Felimon 77. Villarde, Pelagio 78. Trecho, Benjamin 79. Treyes, Emilia 80. Granada, Roberto 81. Granada, Walterio 82. Coscolluela, Gloria de 83. Jocson, Flory G. de 84. Granada, Caridad 85. Granada, Alfredo 86. Kilayko, Celsa L. Vda. de 87.Gaston, Gerardo 88. Jalandoni, Daniel H. 89. Jofilea, Manuel S. 90. Jalandoni, Carolina 91. Lopez, Julieta H. de 92. Holifea, Fe S. 93. Labayen, Emma H. de 94. Lomotan, Violeta H. de 95. Holifea, Luis Ramos 96. Holifea, Hector L. 97. Lizares, Generosa Vda. de 98. Lizares, Purita 99. Lizares, Carmen H. Vda. de 100. Holifea, Roque 101. Granada, Pura G. de 102. Jison, Emilio L. 103. Lacson, Consolacion

104. Lacson, Felipe B. 105. Cuaycong, Natividad 106. Alvarez, Ramon 107. Treyes, Florentino 108. Cordova. Consoling 109. Cordova, Balconeri 110. Oca, Aniceto de 111. Oca, Francisco de 112. Jimenez, Conrado L. 113. Lacson, Purita 114. Lacson, Josefina 115. Espuelas, Victoria 116. Jalandoni, Felisa Vda. de 117. Lizares, Jesus 118. Lizares, Heirs of Enrique 119. Lizares, Rodolfo 120. Pascual, Jose 121. Sausi, Atanacio 122. Gamboa, Angel S. 123. Velez, Sergio 124. Agravante, Dominador 125. Jonota, Julian 126. Jundos, Enrique 127. Medel, Magdalena 128. Robello, Armando 129. Villasor, Milagros 130. Ereeta, Fernando H. 131. Gonzaga, Adoracion 132. Gamboa, Jose B. 133. Lacson, Daniel 134. Villanueva, Manuel M. 135. Treyes, Gorgonio 136. Gonzaga, Julian Dr. 137. Herrera, Patricio 138. Lizares, Antonio M. 139. Mascuana, Angel 140. Holifea, Vicente 141. Ortiz, Rosario G. de 142. Lacson, Angelina B. 143. Treyes, Gorgonio 144. Vasquez, Ramon 145. Bustamante, Arturo 146. Villanueva, Alfredo 147. Lacson, Victoria 148. Gonzaga, Luis L. 149. Locsin, Agustin

150. Torres, Jose & R. de Leon 151. Blanca, Lucilo 152. Magallanes, Jesus A. 153. Nepomuceno, Miguel de 154. Torres, Jose Jr. 155. Nessia, Elegio 156. Arnaldo, Ricardo 157. Malejan, Renato 158. Rentoy, Federico 159. Castor, Juanito 160. Advincule, Rufino 161. Layson, Vicente 162. Puentebella, Romulo "As listed above, such planter was counted as one although he may be planting two or more plantations. To the above 162 planters should be added 8 other planters thereby making a total of 170 planters in the Talisay-Silay Milling District as at June 22, 1962. These 8 planters are already included among the 162 listed in Exh H-1 out they have to be listed twice because each of them operates at least one plantation under a written milling contract and one other plantation without written milling contract. These planters are: No. in the list per Exh. H-1 1. Lacon, Rafael 73 2. Lacson, Salvador 43 3. Lacson, Ernesto 47 4. Lacson, Eduardo 71 5. Lacson, Daniel 133 6. Lacson, Victoria 147 7. Jalandoni, Daniel 88 8. Oca, Gil de 36" (Pp. 421-428, Record on Appeal of CENTRAL.) Analysis of the trial court's findings. A careful analysis of the above-quoted portion of the appealed decisions reveals certain misconceptions in the mind of His Honor. 1. The trial court erred in including Emiliano Jison. In regard to the number 162 used as main figure by His Honor, admittedly, the basis thereof is Exhibit H-1, the Associated Planters' Final Report for the crop year 1952-1953, prepared by the CENTRAL. It is conceded by the appellees, however, that, on that basis or from the point of view of who are listed in Exhibit H-1, the correct number is really one hundred and sixty-one (161) only. There is agreement between the parties that the name of Emiliano Jison (No. 38) in the trial court's list) should be excluded, since there is no planter with that name in the district. There is an Emilio Jison, who is No. 102 in the list above. The name Emiliano Jison on page 1 of Exhibit H-1 opposite Plantation Audit No. 58-d is admitted by the PLANTERS to actually refer to Emilio Jison, even as the latter is also listed on page 3 of the same exhibit, which is nothing strange because of the different plantation audit numbers to which each of said entries correspond, considering that Emilio Jison was working in two separate registered plantations. On the other hand, the other contention of the CENTRAL that the name of Gorgonio Treyes had also been listed twice by the trial court, while apparently correct, is sufficiently explained by the fact that the second listing of Treyes' name as No. 143 by His Honor should really correspond to and should be substituted with the name of Josefina Vda. de Lacson who, together with Treyes, is covered by Plantation Audit No. 126-e, as may be seen on page 4 of Exhibit H-1, thus entitling her to be included in the list of planters affiliated to the CENTRAL in addition to those listed in the decision under review. Who is considered planter within the contemplation of R.A. 809? At this juncture, it becomes imperative to define the term "planter" as that word is used in Republic Act 809. In this regard, since the Act itself does not contain any definition, the trial court adopted the opinion of the Secretary of Justice (Opinion No. 85, Series of 1954) and held that a planter is "one who is entitled to produce sugar on a plantation and to deliver his produce to a sugar mill for milling," and that "the 'planter' referred to in Republic Act 809 may be either the owner of the plantation who produces or is entitled to produce sugarcane on his plantation or any lessee, usufractuary or person (other than the owner) who has a right to cultivate and to produce sugar thereon, provided that in either case, the planter has the right to deliver the sugar to the Central for milling". (Pp. 413-414, Record on Appeal of the CENTRAL.) Basically, both the CENTRAL and the PLANTERS adhere to this definition but do not see eye to eye on how to apply the same. 2. May "emergency" planters be counted as planters for the purposes of this case? We believe not, but this point is hardly of any consequence. The inclusion in the list of the trial court of the following eight persons, namely: 1. Dominador Agravante 2. Julian Jonota

3. Enrique Jundos 4. Vicente Layson 5. Magdalena Medel 6. Romulo Puentebella 7. Armando Robello and 8. Milagros Villasor is assailed by the CENTRAL on the ground that as can be seen in Exhibit H-1, they are merely "emergency" planters, so called because they have no corresponding plantation audit number. It is insisted that inasmuch as under Section 7 of Executive Order No. 873 and Section 12 of Executive Order No. 885, Series of 1935, supplementing the provisions of Act 4166, the Sugar Limitation Law, a planter is "any person, firm or corporation, or combination thereof, entitled by virtue of ownership, or by virtue of written or oral contract with the owner of the plantation, to produce sugarcane on the plantation and to deliver the same to the mill to fill the whole or a part of the plantation-owner's allotment", and, since the lands cultivated by the above-named eight persons had no allotment of centrifugal sugar or were not included in the audit of sugar mills and sugar plantations provided for in Executive Order of Governor General No. 459, they could not be deemed "planters in the district" within the contemplation of the sugar limitation laws. On the other hand, the PLANTERS contend that considering that sugarcane cultivated by them was undisputably delivered to the CENTRAL from their plantations, those plantations should be considered part of the mill district. it being provided in Section 1 (e) of Act 4166, as amended, that "a plantation is adherent by virtue of sugarcane being delivered therefrom to a mill regardless of contract relations between the mill company and the plantation owner and/or any other person cultivating sugarcane on the plantation. Anent such conflicting views, it is, of course, beyond question that an said eight persons did produce sugarcane from the plantations they cultivated and did deliver their produce to the CENTRAL and the latter did mill their sugarcane during the crop year 1952-53, albeit, contrary to the contention of the PLANTERS on page 49 of their brief, none of them had any production coefficients and allotments. We have carefully examined Exhibit A-1, the lit of coefficients and production allotments for 1952-53 crop year and We have not found any of their names among those listed therein. In fact, We have examined the lists for the other years, Exhibits A, A-2, A-3, A-4, etc. Their names are not in any of them. Since they had no production allotments, it stands to reason that they were not producing to fill any quota allotments. But even if We should hold that these eight emergency planters should be excluded from the 161 We have found above, the final outcome of the main issue under discussion would not be altered, considering Our other finding, as will be stated later, regarding the number of contract planters adherent to the CENTRAL during the crop year 1952-53. 3. The trial court erroneously counted eight other planters twice. According to the trial court, as appears in the above quoted portion of its decision, eight planters, namely, Rafael Lacson, Salvador Lacson, Ernesto Lacson, Eduardo Lacson, Daniel Lacson, Victoriano Lacson, Daniel Jalandoni and Gil de Oca, although they are already included among the 161 listed by it "have to be listed twice because each of them operates at least one plantation under a written milling contract and one other plantation without written milling contract." (Pp. 427-428, Record on Appeal of CENTRAL.) We cannot agree. As We read Section 1 of Republic Act 809, "the absence of written milling agreements between the majority of the planters and the millers of sugarcane in any milling district in the Philippines" plainly contemplates only the total number of actual planters milling in a given central such that if the majority of that number have written milling contracts, the provision would no longer apply, regardless of the number of plantations any of such planters have cultivated and whether or not all of such plantations are covered by contracts. In other words, it is absence of written contracts with the majority of the planters that is the criterion. If a planter has a contract with the Central covering one plantation he works on, there can be no absence of contract with him, even if he cultivates other plantations not covered by any contract. Indeed, it is absurd to think that a planter is a contract planter and a non contract planter at the same time, where the law, as in this case, does not refer to plantations covered or not covered by contracts, but only to planters who have or do not have contracts with the central Thus, it is evident that the trial court erred in counting those eight planters twice, once as contract planters and separately again as non contract planters, in computing the total number of planters in the district. Neither the number of plantations worked by a planter nor the number of quotas he has is relevant. Anyway, as long as a planter has a contract covering one plantation, the likelihood, insofar as the ratio of sharing is concerned. is that he would get the same ratio for the plantations not covered by the contract, since under Executive Orders Nos. 900 and 901, Series of 1936, the plantation milling share for the plantations not covered by any contract with the miller "shall be the most frequent basic plantation milling share stipulated in valid written contracts." In connection with the above figures, it is interesting to point out that in the official communication of the Sugar Administrator, Annex C of the complaint in this case, it is stated that according to the records of his office there were 152 planters adherent to Talisay-Silay Milling Company during the crop year 1952-53. While neither party admits the correctness of such figure, it may be noted that the CENTRAL's contention in regard to the point at issue seems nearer to the finding of the Sugar Administrator, whereas the conclusion of the trial judge, sustained by the PLANTERS, appears to be quite farfetched. 6 There were 161 planters in 1952-53. In the light of the foregoing disquisition, and adopting a liberal view as to the emergency planters. Our conclusion is that for the purposes of the application of Section 1 of Republic Act 809 to the Talisay-Silay sugar district during the crop year 1952-1953, there were one hundred sixty-one (161) planters adherent to the CENTRAL. B THE NUMBER OF CONTRACT AND NON-CONTRACT PLANTERS IN THE TALISAY-SILAY DISTRICT IN 1952-53 CROP YEAR. Having arrived at the conclusion that there were 161 planters in the district in question in crop year 1952-53, the next issue for Our resolution is, how many of those planters had contracts with the CENTRAL during that period. Otherwise stated, was there absence of contract with a majority of them during that crop year? In arriving at its conclusion as to the number of contract planters, the trial court merely counted the contracts but omitted to consider how many planters are bound thereby and, incidentally, who they are. Ruling on this issue, after finding albeit erroneously that there were 170 planters in the district, when there were actually only 161, including already the 8 emergency ones, His Honor held: "Of the above planters, the following have written milling contracts with the Central on June 22, 1952 as shown by their contracts Exhs. C, C-1 to C-62: Exhibit C Rosendo Alvarez C-1 A. Be Chingsuy C-2 Hormesinda Diaz C-3 Fernando Ereeta

C-4 Fundador Espuelas C-5 Simon Espuelas C-6 Victoria Espuelas C-7 Blandina Gamboa C-8 Jose B. Gamboa C-9 Julian F. Gonzaga C-10 Serafin R. Gamboa C-11 Soledad Gamboa Vda. de Velez C-12 Carlota Gonzaga C-13 Maria H. Maramba in her capacity as Jud. Admtx. of Estate of Esteban Henares C-14 Patricio Herrera C-15 Daniel H. Jalandoni C-16 Celsa L. Vda. de Kilayko C-17 Rufina C. Vda. de Kilayko C-18 Carolina Lacson Gigante C-19 Rodrigo Lacson & Damaso Lacson C-20 Daniel Lacson for himself and in place and stead of Josefa Lacson, Irene Lacson, Salvacion Lacson and Teresa Lacson de Presbitero C-21 Eduardo B. Lacson C-22 Ernesto J. Lacson C-23 Gloria Lacson Tampinco C-24 Mercedes Lacson C-25 Felipe Lacson C-26 Rafael Lacson C-27 Rosario Avancea Vda. de Lacson C-28 Rosario Avancea Vda. de Lacson C-29 Salvador Lacson C-30 Sofia Lacson de Gonzaga C-31 Victoria Lacson C-32 Dr. Antonio A. Lizares C-33 Antonio M. A. Lizares C-34 Carmen H. Vda. de Lizares C-35 Demetria Vda. de Lizares C-36 Emiliano Lizares C-37 Estate of the deceased Enrica Alunan Vda. de Lizares represented by Dr. Antonio Lizares C-38 Felix A. Lizares C-39 Generosa B. Vda. de Lizares C-40 Maria A. Lizares, Felisa L. de Jalandoni & Dr. Antonio A. Lizares C-41 Purita Lizares Tiongson C-42 Simplicio Lizares por los heredores de la difunta Agueda Lizares C-43 Simplicio Lizares C-44 Adela L. Vda. de Mapa C-45 Angel Mascuana C-46 Maria Lizares de Misa C-47 Maria Lizares de Misa for herself and by general power of attorney for the place and stead of Nicolas I. Misa C-48 Maria L. de Misa, German Lacson, Ernesto Lacson & Cecilia L. de Misa

C-49 Patricia Vda. de Oca C-50 Encarnacion L. Vda. de Panlilio, Efigenia L. Vda. de Paredes, Remedios L. de Guinto y Leon Guinto C-51 Testate Estate of Don Esteban de la Rama C-52 Estate of Domingo Rodriguez represented by Dr. Antonio A. Lizares C-53 Leontina N. de Sian C-54 Leontina Novella de Sian for herself and in her capacity as Attorney-in-fact for the co-owners of Hda. Cafe consisting of Lots Nos. 480 and 481 C-55 Ciriaco Trecho C-56 Felimon Trecho C-57 Miguela Trecho C-58 Petra Trecho C-59 Magdalena L. de Treyes, for herself and by power of Attorney for the places and stead of all the other heirs C-60 Gorgonio Treyes C-61 Anita de Leon de Villanueva C-62 Pelagio Villarde. "Among the planters in Exh. H-1, eleven (11) who did not have the milling contracts when Republic Act No. 809 was enacted, entered into milling contract on February 17, 1953 (Exhs. D, D-1, D-2, D-4, D-15, D-16, D-17, D-18, D-22, D-24 and D-25). They should be added to the 63 with milling contracts during the agricultural year 1952-1953, thereby making a total of 74. Since the majority of 170 is 86, the Court holds that a majority of the planters in the Talisay-Silay Milling District did not have a written milling contract during the agricultural year 1952-1953. Republic Act No. 809 is, therefore, applicable that year." (Pp. 428-432, Record on Appeal of CENTRAL.). It is to be noted that in arriving at the foregoing conclusion, the trial judge did not more than count the number of contracts presented in evidence, Exhibits C, C-1 to C-62, D, D-1, D-2, D-4, D-16, D-16, D-17, D-18, D-22, D-24 and D-25. No effort was made to examine the details of said contracts in order to find out who and how many, in fact, are the planters bound by each of them. Actually, these details are of decisive importance, for the basis adopted by the trial court ignores the realities of the true situation as well as the legal import of said contracts vis-a-vis the main issue presented for its determination. On pages 90-92 of its brief, the CENTRAL makes the pertinent observations that: ". . . Thus, an examination of the milling contracts, in question, will show that some of the planters listed by the Judge, as for example, Maria L. de Misa (No. 9), actually had executed and signed at least three milling contracts mentioned by the Judge, namely: Exhibits 'C-46', 'C-47' and 'C-48'). On the other hand, some milling contracts, as, for example, Exhibit 'C-37', executed on May 13, 1948, by the Judicial Administrator of the owner, Estate of Enrica A. Vda. de Lizares, actually covers two plantations or haciendas named 'Minuluan' and 'Efigenia'. But after the project of partition of said Estate of Enrica Alunan Vda. de Lizares was later approved, as shown by Exhibit 'V', the hacienda 'Minuluan' alone was actually subdivided among sixteen heirs, and each subdivision was given a separate plantation audit number in the name of the corresponding heir, from Plantation No. 213 to Plantation No. 229-a; in such a way that in the list of plantation owners, and their corresponding Production Coefficients and Allotments, contained in Exhibit 'A-1' (par. 1, First Stipulation, pp. 198-199, Central's Record on Appeal) for the crop year 1952-1953, each of the newly numbered subdivision plantations was already registered in the name of the respective heirs, as follows: Plantation No. Plantation Owners 213 Lizares, Maria A. 214a Ybiernas, Estrella M. de and Mapa, Placido L. 215 Lizares, Simplicio 216a Lizares, Heirs of Nicolas 217 Lizares, Emiliano 218 Kilayko, Celsa L. Vda. de 219a Panlilio, Encarnacion L. Vda. de 220 Jalandoni, Felisa L. Vda. de 221a Lizares, Dr. Antonio A. 222 Lizares, Heirs of Enrique 223a Paredes, Efigenia L. Vda. de 224a Guinto, Remedios L. de 225 Jalandoni, Felisa L. Vda. de 227 Lizares, Rodolfo 228a Lizares, Asuncion Lopez Vda. de 229a Moreno, Jimmy Nolan" Analyzing the 63 contracts, Exhibits C, C-1 to C-62, plus the eleven new ones taken into consideration by the trial court, the obvious inevitable result is that there were 86 contract planters.

There is ample support in the record for the points thus raised by the CENTRAL. Indeed, a close scrutiny of the evidence shows quite plainly that there are contracts listed in the lower court's decision (Exhs. C-C-1 to C-62) that bound not the persons who appear to have executed the contracts with the CENTRAL but their successors in interest or their lessees. An example of this is the case of Exh. C-1 in the name of A. Be Chingsuy. This A. Be Chingsuy is not listed in Exhibit H-1 as one of the planters affiliated with the CENTRAL during the crop year 1952-53. The evidence shows that Jose Beson is a transferee by absolute sale of Hda. Tabayag, P/A 8, from A. Be Chungsuy (Exh. HH) and a lessee of Hda. Cataywa, P/A 6a, and Hda. Luciana P/A 7a (Exh. A-1 p. 2). It is also shown that Francisco Kilayko is lessee of Hda. Bantod, P/A 4c (Exh. A-1 p. 2). All these haciendas mentioned are covered by contract Exhibit C-1 entered into by A. Be Chingsuy with the CENTRAL. Both Jose Beson and Francisco Kilayko are listed in Exhibit H-1 as planters affiliated with the CENTRAL in the crop year 1952-53 and the PLANTERS expressedly admit in their brief that Jose Beson and Francisco Kilayko were contract planters for the crop year 1952-53. (p. V, Annex A) The milling contract bound Jose Beson and Francisco Kilayko because of the provision of paragraph 17, which is found in all milling contracts, as follows: 17. Que este contrato, y todos sus terminos obligaciones y condiciones se entenderan contraidos tambien por las tierras y plantaciones mencionadas, y seran obligaterias para los Plantadores testamentarios, albaceas, cesionarios y representantes de los Plantadores y para las plantaciones y las tierras". There are many other persons appearing as the ones who executed the milling contracts, but were not planters affiliated to the CENTRAL during the crop year 1952-53. This is where the lower court committed error. It simply assumed that the 63 contracts (Exhs. C, C-1 to C-62) as represent also 63 planters with milling contracts, without taking into consideration that there were many of those contracts that bound not the persons who executed them but the person or persons who are the successors in interest of those who did so. What the lower court did was simply to count the contracts as they are 63 in all without even considering that there are cases of two or three contracts appearing in the name of one person. Such, for instance, is the case of Maria L. de Misa, as pointed out by counsel for the CENTRAL, who appears to have executed three contracts (Exhs. C 46, C-47 and C-48). Then there is the case of Rosario Avancea Vda. de Lacson who appears to have executed two contracts (Exhs. C-27 and C-28). As can be seen, Rosario Avancea Vda. de Lacson is not even listed in Exh. H-1 as a planter affiliated to the CENTRAL during the crop year 1952-53. There is also the case of Simplicio Lizares who appears to have executed two contracts one for himself (Exh. C-43) and another for the heirs of the late Agueda Lizares (Exh. 42). In other words, the finding of the trial court that there were 63 contract planters has no other basis than that there were numerically 63 contracts extent in the record. No thought at all was given to the fact just pointed out that in a number of said contracts the PLANTERS involved are the same. Neither did His Honor consider, that, on the other band, there are contracts that bound more than one PLANTER, such as the contracts executed by Daniel Lacson, for himself and for four others (Exh. C-20); the contract executed by the executor of the estate of Enrica Alunan Vda. de Lizares (Exh. C-37); the contract executed by the executor of the estate of Esteban de la Rama (Exh. C-51); the contract executed by the administrator of the estate of Domingo Rodriguez (Exh. C-52); the contract executed by Magdalena L. de Treyes, for herself and as attorney-in-fact of the other heirs, who were individually planters in their own rights, etc. These cases certainly make manifest the error committed by the lower court in simply counting the 63 contracts as representing 63 contract planters affiliated with the CENTRAL during the crop year 1952-53. Contrary to the finding of the trial court there were 86 contract planters. It is Our considered opinion, and so We hold, that the trial court's finding that there were only seventy-four (74) contract planters in the Talisay-Silay district in crop year 1952-53, (the 63 that the court based on Exhibits C, C-1 to C-62 plus the eleven borne by Exhibits D, D-1, D-2, D-4, D-15, D-16, D-17, D-18, D-22, D-24 and D-25, the contracts executed on February 17, 1953, that is, after the Act took effect on June 22, 1952 but within the crop year 1952-53) is inaccurate and does not reflect the true import of the undisputed documents in the record submitted by the parties along with their stipulations of fact. We have scrutinized each of the contracts referred to by His Honor and checked and rechecked their pertinent provisions regarding the status of the contracting parties therein. We are fully convinced that, on the basis thereof, it is beyond question that there were no less than eighty-six (86) contract planters in the district in question during the material period here in dispute. To begin with, there are forty-four (44) planters as to whim the CENTRAL and the PLANTERS appear to be agreed they are contract planters, namely: 1. Alvarez, Ramon 2. Alvarez, Rosendo 3. Beson, Jose L. 4. Bustamante, Arturo 5. Camon, Emilio 6. Coscolluela, Agustin 7. Ereeta, Fernando H. 8. Espuelas, Victoria 9. Gamboa, Jose B. 10. Gamboa, Serafin 11. Gonzaga, Julian 12. Gonzaga, Luis L. 13. Henares, Fidel M. 14. Herrera, Patricio 15. Hofilea, Vicente 16. Jalandoni, Felisa Vda. de 17. Jalandoni, Nicolas 18. Kilayko, Celsa L. Vda. de 19. Kilayko, Francisco Dr. 20. Kilayko, Ramiro C.

21. Labayen, Julio D. 22. Lacson, Felipe 23. Lacson, Pedro 24. Lizares, Antonio Dr. 25. Lizares, Antonio Ma. 26. Lizares, Carmen H. Vda de 27. Lizares, Demetria Vda. de 28. Lizares, Emiliano 29. Lizares, Felix A. 30. Lizares, Generosa, Vda. de 31. Lizares, Maria A. 32. Lizares, Purita 33. Lizares, Simplicio 34. Mascuana, Angel 35. Misa, Maria L. de 36. Olimpo, Felicidad 37. Panlilio, Encarnacion L. Vda. de 38. Santibaez, Efraim 39. Tanpingco, Gloria L. de 40. Torres, Jose and R. de Leon 41. Trecho, Miguela 42. Treyes, Gorgonio 43. Villanueva, Alfredo 44. Villarde, Pelagio (CENTRAL's Brief, pp. 93-117; PLANTERS' Brief, Appendix A, Pp. IV to LIX.). However, in the Guidelines and Tabulations submitted to the Court by counsel for the PLANTERS, Atty. Miguel V. Gonzalez, to which is annexed as Exh. A-1 a list of the planters indicating who in the view of said PLANTERS had written contracts with the CENTRAL during crop year 1952-53, the name of Efraim Santibaez, No. 38 above, does not appear as a contract planter, whereas Sergio Velez and Manuel Villanueva, who are not listed above are included as contract planters. Since it is rather too late in the day now for the PLANTERS to alter the classification, already given by them in their brief, in a manner that would favor them, while any admission made by them at this stage adverse to their interest should bind them, it results that We should consider the status of 46 planters to be contract planters during crop year 1952-53 as no longer controversial. So, also are the parties in virtual agreement that the following seventy-five (75) planters are non-contract ones: 7 1. Agravante, Dominador 2. Alano, Amado Dr. 3. Ayalde, Ceferino T. Dr. 4. Claparols, C.P. Vda. de 5. Cordova, Balconeri 6. Cordova, Candido 7. Cordova, Consoling 8. Consolluela, Gloria D. 9. Cuaycong, Jose J. 10. Cuaycong, Natividad L. de 11. Esteban, Gloria de 12. Estrella, Deogracias 13. Gamboa, Aguinaldo 14. Gamboa, Angel 15. Gamboa, Generoso 16. Gamboa, Romeo S. 17. Gaston, Amparo C. Vda. de 18. Gaston, Benjamin 19. Gaston, Gerardo 20. Granada, Alfredo 21. Granada, Caridad 22. Granada, Pura J. de 23. Granada, Roberto 24. Granada, Walterio 25. Hernaez, Heirs of Amalia 26. Hernaez, Pedro C. 27. Henares, Dominador 28. Hilado, Alfonso 29. Hilado, Tarcela Vda. de 30. Hofilea, Fe S. 31. Hofilea, Hector L. 32. Hofilea, Luis Ramiro

33. Hofilea, Manuel S. 34. Hofilea, Roque 35. Infante, Purita H. de 36. Jalandoni, Carolina 37. Javellana, Manuel A. 38. Jimenez, Conrado L. 39. Jison, Dominador L. 40. Jison, Emilio L. 41. Jocson, Flory J. de 42. Jonota, Julian 43. Jondos, Enrique 44. Labayen, Emma H. de 46. Lacson, Angelina de 46. Lacson, Consolacion 47. Lacson, Domingo W. and Enriqueta 48. Lacson, Ignacio, et al. 49. Lacson, Josefita Vda. de 50. Lacson, Purita 51. Layson, Vicente 52. Ledesma, Anita L. de 53. Ledesma, Eduardo and M.L. 54. Ledesma, Nicolas and L.M. 55. Lizares, Nilo 56. Locsin, Augusto M. 57. Lomotan, Violeta H. de 58. Lopez, Apeles Concepcion and Pompeyo 59. Lopez, Julieta H. de 60.Medel, Magdalena 61. Montinola, Trino Dr. 62. Oca, Aniceta de 63. Oca, Felisa de 64. Oca, Francisco de 65. Oca, Librada de 66. Oca, Pedro de 67. Ortiz, Rosario J. de 68. Pascual, Jose 69. Pison, Expedito 70. Puentebella, Romulo 71. Robello, Armando 72. Sausi, Atanacio 73. Treyes, Emilia 74. Vasquez, Ramon 75. Villasor, Milagros (Included already among these 76 are the 8 emergency planters previously referred to as being controversial.) Thus, it would appear that it is with respect only to the following forty (40) planters listed in the trial court's decision that there is controversy in this case as to whether they are contract planters or not: 1. Advincula, Rufino 2. Arnaldo, Ricardo 3. Blanca, Lucilo 4. Castor, Juanito 5. Escay, Jose G. 6. Gonzaga, Adoracion 7. Jalandoni, Daniel 8.Jareo, Catalino 9. Lacson, Caridad 10. Lacson, Damaso 11. Lacson, Daniel 12. Lacson, Eduardo 13. Lacson, Ernesto 14. Lacson, Josefina 15. Lacson, Rafael 16. Lacson, Salvador 17. Lacson, Victoria 18. Ledesma, Eduardo Lacson 19. Lizares Co., Inc. 20. Lizares, Heirs of Enrique 21. Lizares, Jesus 22. Lizares, Rodolfo 23. Locsin, Agustin T. 24. Lopez, Lolita (Dolores R. de) 25. Magallanes, Jesus 26. Malajan, Renato 27. Nepomuceno, Miguel de 28. Nessia, Eligio 29. Oca, Gil de 30. Oca, Luz de 31. Osmea, Lourdes R. de 32. Pirovano, Estefania Vda. de 33. Rentoy, Federico de 34. Sian, Aniceta Rama de 35. Torres, Jose 36. Trecho, Benjamin 37. Trecho, Felimon 38. Treyes, Florentino 39. Ybiernas, Vicente 40. Yusay, Enrique Dr.

Now, of this 40, ten (10), namely, (1) Rufino Advincula, (2) Ricardo Arnaldo, (3) Lucilo Blanca, (4) Juanito Castor, (25) Jesus de Magallanes, (26) Renato Malejan, (27) Miguel de Nepomuceno, (28) Eligio Nessia, (33) Federico de Rentoy and (35) Jose Torres, who is different from Jose R. Torres Jr., were held by the trial court to have been contract planters in 1952-53, as already stated earlier, in view of Exhibits D, D-1, D-2, D-4, D-15, D-16, D-17, D-18, D-22 and D-24, 8 the ten (10) contracts executed by them on February 17, 1953. In this regard, contrary to the contention of the PLANTERS in their first counter-assignment of error in their brief to the effect that: "(1) THE LOWER COURT ERRED IN HOLDING THAT MILLING CONTRACTS EXECUTED AFTER JUNE 22, 1952 SHOULD BE CONSIDERED IN THE COUNTING OF CONTRACT PLANTERS." (Page a, Brief of Appellees.). there can be no possible doubt as to the propriety of these planters being considered as contract planters for the period in question. The evidence shows that the sugarcane crop year in the Talisay-Silay Milling district begins on September of each year and technically ends in August of the following year. It is thus obvious that the crop year 1962-1953 began in September of 1952. And since the ten (10) contracts referred to were executed in February 1953, it follows that they correspond to the 1952-1953 crop year here in dispute, hence, said counter assignment of error should be as it is hereby overruled. Therefore, Our remaining task is limited to the determination of the status of only the remaining thirty (30) planters in the above list. On this score, the evidence clearly establishes the status of those 30 planters to be as follows: GONZAGA, ADORACION (No. 6) She is the absolute owner of a definite portion of Hda. Bubog, with P/A 20b covered by contract Exh. C-3 signed by Fernando H. Ereeta covering the said entire Hda. Bubog. Upon acquiring that definite portion of Hda. Bubog and also her own P/A, Adoracion Gonzaga milled her sugarcane with the CENTRAL under the terms of the contract Exh. C-3 (Exhs. H-1, p. 4; A1, p. 2; and Y). JALANDONI, DANIEL (No. 7) In the very list of contracts in the decision of the lower court, it appears that contract Exh. C-15 is in the name of Daniel H. Jalandoni as the owner of P/A 152a and P/A 153a (Exh. H-1, p. 3). This planter had milling contract as heir and owner of the Hda. Cabug, P/A No. 152a and No. 153a, formerly belonging to his aunt Rosario Hofilea and his mother Carmen Hofilea. He signed the milling contract Exh. C-15 as owner. It does not appear that Rosario Hofilea or Carmen Hofilea ever executed a milling contract. However, P/A 152a and P/A 153a cover among other lands Lot No. 542, and contract Exh. C-15 executed on July 20, 1948 by Daniel Jalandoni covered precisely Lot No. 542 of Hda. Cabug. There is identity of the lot covered by contract Exh. C-15, and P/A Nos. 152a and 153a. (Exhs. A-1, and V-11). LACSON, CARIDAD (No. 9) It appears that contract Exh. C-20 signed by Daniel Lacson covers Hda. Binoga, Lot 482. It is shown in Exh. Y that Lot 482 is covered by P/A Nos. 61a, 61c, and 61d. P/A 61a is planted by Daniel Lacson while P/A 61c is planted and owned by Caridad Lacson (Exh. A-1 p. 3) as successor in interested the former owners. LACSON, DAMASO (No. 10) He is the planter with P/A NO. 7-a, Hda. Puyas (Exh. H 1, p. 2). In the very list of contracts in the decision of the lower court it appears that contract Exh. C-19 was executed by Rodrigo Lacson and Damaso Lacson. There is no question, therefore, that Damaso Lacson is a contract planter. LACSON, DANIEL (No. 11) It appears that Daniel Lacson has P/A No. 61a. In the very list of contracts in the lower court's decision, it appears that contract Exh. C-20 was executed by Daniel Lacson for himself and in the place and stead of Josefa Lacson, Irene Lacson, Salvacion Lacson and Teresa Lacson de Presbitero. Exh. Y, p. 2 shows that P/A Nos. 61a, 61c, 61d (Hda. Binoga-Othella) pertain to Lot No. 482. Contract Exhibit G-20 executed by Daniel Lacson for himself and his co-heirs covers precisely Lot No. 482. LACSON, EDUARDO (No. 12) He is the owner of P/A No. 190, Hda. Sta. Maria (Exhs. H-1 p. 3; A-1 p. 4). In the very list of contracts appearing in the decision of the lower court, it appears that Eduardo E. Lacson executed contract Exh. C-21. He executed Exh. C-21 on June 16, 1948, covering Hda. Sta. Maria. LACSON, ERNESTO (No. 13) In the very list of contracts in the decision of the lower court, it appears that Ernesto Lacson executed contract Exh. C-22. He is the owner of P/A No. 68e and lessee of P/A 68g owned by Mercedes, Fernando, Carolina and Estrella Lacson (Exhs. A-1, p. 3). He executed the contract Exh. C-22 on July 1, 1948, covering the portion corresponding to him of Lots Nos. 501 and 510 of the cadastral survey of Talisay (Exh. Y p. 2). LACSON, JOSEFINA (No. 14) She owned and planted Hda. San Antonio, P/A 207 (Exh. H-1 p. 3 and Exh. A-1 p. 5). She is successor in interest of Rosario Avancea Vda. de Lacson who executed contract Exh. C-28. LACSON, RAFAEL (No. 15) In the very list of contracts in the decision of the lower court, it appears that Rafael Lacson executed contract Exh. C-26. He owns Hda. Vista 1 and 2 (Exh. H-1 p. 2) P/A No. 126a, and Hda. Sta. Maria (Exh. H-1 p. 3) with P/A No. 184. It appears that he executed contract Exh. C-26 on August 14, 1948 covering these two haciendas. LACSON, SALVADOR (No. 16) In the very list of contracts in the decision of the lower court, it appears that Salvador Lacson executed contract Exhibit C-29. He has a contract (Exh. C-29) for P/A 206, Hda. San Rafael (Exh. H-1, p. 3). LACSON, VICTORIA (No. 17) In the very list of contracts, in the decision of the lower court, it appears that Victoria Lacson executed contract Exhibit C-31. Her contract covered P/A 186, Lot 7 comprised in Hda. Sta. Maria. LEDESMA, EDUARDO LACSON (No. 18) The evidence shows that Eduardo Lacson Ledesma is lessee of a portion of Hda. San Juan, P/A 684 owned by Aurora and Elisa Lacson, successors in interest to P/A 68h, covered by contract, Exh. C-22, executed by Ernesto J. Lacson. LIZARES Co., Inc. (No. 19) It is the owner of Hda. Cabiayan with P/A 86 (Exh. H-1, p. 2; and Exh A-1, p. 3) covered by contract Exh. C36 executed by Emiliano Lizares, former owner. LIZARES, HEIRS OF ENRIQUE (No. 20) LIZARES, JESUS (No. 21) LIZARES, RODOLFO (No. 22) The evidence shows that these three planters were affiliated to the CENTRAL during the crop year 1952-53. The Heirs of Enrique Lizares owned part of Hda. Minuluan with P/A 222 (Exh. H-1, p. 4, and Exh. A-1 p. 5). The date of entry in the District Transfer Registry shows that as of August 8, 1961 the Heirs of Enrique Lizares already possessed a P/A number (Exhs. TTT and BB). Jesus Lizares was lessee of P/A 216a, Hda. Minuluan, owned by the Heirs of Nicolas Lizares who were the heirs of Enrica Alunan Vda. de Lizares. He is also the lessee of P/A Hda. Minuluan, owned by Asuncion Vda. de Lizares, an heir of Enrica Vda. de Lizares. The evidence shows that as of October 21, 1961, the date of entry of the lease between Jesus Lizares and the Heirs of Nicolas Lizares in the District Planters Registry, the heirs of Nicolas Lizares already possessed a P/A number (Exh. NNNN, Exh. BB and Exh. A-1). The evidence also shows that as of October 12, 1961, the date of entry of the lease between Jesus Lizares and Asuncion Vda. de Lizares in the District Planters Registry, Asuncion L. Vda. de Lizares already possessed a P/A number (Exh CCCCC; Exh. BB and Exh. A-1).

Rodolfo Lizares is the successor in interest of Nolan Jesus, Ramon and Mary, all surnamed Lizares, who owned P/A 227, Hda. Minuluan, in common as heirs of Enrica Vda. de Lizares. P/A 227 was transferred to Rodolfo Lizares on August 8, 1961 and entered in the District Transfer Registry on same date (Exh AAAAA; Exh. BB; and Exh. A-1). The Hda. Minuluan formed part of the estate of Enrica Vda. de Lizares which was covered by milling contract Exh. G-37 executed by the Administrator of the estate. There was a project of partition and adjudication, of the estate of Enrica Vda. de Lizares, approved by the court (Exh. V), and all the portions adjudicated to the heirs were bound by the milling contract Exh. 37. ESCAY, JOSE G. (No. 5) LOPEZ, LOLITA (DOLORES, R. DE) (No. 24) OSMEA, LOUDES R. (No. 31) PIROVANO, ESTEFANIA VDA. DE (No. 32) SIAN, ANICETA RAMA DE (No. 34) The foregoing persons are listed as planters affiliated to the CENTRAL during the crop year 1952-53. Jose Escay was lessee of Hda. Esmeralda, P/A 114b (Exh. H-1, p. 1; Exh. A-1, p. 3), which plantation was part of the estate of Esteban de la Rama representing Hijos de I. de la Rama. The District Planters Registry shows that as of July 30, 1937 E. de la Rama, representing Hijos de I. de la Rama had P/A number. (Exh. PPPPPP). Jose Escay was bound by contract, Exh. C-51 executed by the administrator of the estate of Esteban de la Rama. Lolita (Dolores) de Lopez was the owner of P/A 23-23, 25-50 and 40-24 (Exh. H-1, p. 1), Hda. Cabanbanan, as heir and successor in interest of Esteban de la Rama. (Exh. A-2, p. 11). The District Transfer Registry shows that on July 11, 1962, she already had a P/A number (Exh. AAAAAA, and Exh. BB). She milled her sugarcane with the CENTRAL under contract Exh. C-51 executed by the administrator of the estate of Esteban de la Rama. Lourdes R. Osmea was the owner of P/A 23-22, 26-49 and 40-23 (Exh. H-1, p. 1), Hda. Cabanbanan (Exh. A-2, p. 11). As of July 11, 1952 the District Transfer Registry shows she had already a P/A number (Exh. YYYYY and Exh. BB). She was bound by contract, Exh. C-51 executed by the administrator of the estate of Esteban de la Rama. Estefania Vda. de Pirovano was the owner of P/A 23-21 and 40-22 (Exh. H-1, p. 1), Hda. Cabanbanan (Exh. A-2, pp. 10-11). As of July 11, 1952 the District Transfer Registry shows she had her P/A number (Exh. WWWWW and Exh. BB). She was also bound by contract Exh. C-51, executed by the administrator of the estate of Esteban de la Rama. Aniceta Rama de Sian was the owner of P/A 22-24 and 40-25. Hda. Cabanbanan (Exh. H-1, p. 1), also part of the estate of Esteban de la Rama. She was bound by contract Exh. C-51 executed by the administrator of the estate of Esteban de la Rama. Moreover, according to Exhibit D-23, this planter executed a written agreement with the CENTRAL on June 23, 1953. Regarding the estate of Esteban de la Rama, the distribution of the estate is shown in the project of partition Exh. V-4, and the identification of the lots inherited by the heirs is shown in Exh. Y. The PLANTERS contend that the planters who are heirs or lessees of plantations that belonged to the estate of Enrica Alunan Vda. de Lizares and to the estate of Esteban de la Rama can not be counted as contract planters because they did not execute milling contracts with the CENTRAL themselves, but were simply covered by the contracts executed by the judicial administrators of those estates (Exhs. C-37 and C-51). The PLANTERS assert that the judicial administrators were not authorized by the court to enter into the milling contracts, and so the milling contracts were null and void, specially because the milling contracts contained provisions which would convey to the CENTRAL certain real rights over the plantations covered by the contracts, such as easements, etc. For the purposes of this case, the contention of the PLANTERS can not be sustained. The validity or nullity of the milling contracts entered into by the administrators of the estates of Enrica Alunan Vda. de Lizares and of Esteban de la Rama is not in issue in the present case. What is simply sought to be determined in this case is whether or not on June 22, 1962 when R.A. 809 went into effect the planters who produced sugarcane in the plantations formerly belonging to the estates of Enrica A. Vda de Lizares and Esteban de la Rama were milling their sugarcane with the CENTRAL under contracts that were then accepted by the planters as binding on them and the CENTRAL. Until those contracts are declared invalid by the court in proper proceedings, those contracts should be considered valid and binding between the parties thereto and their successors in interest, us the said parties did in fact consider them to be so. It cannot be gainsaid that those contracts were entered into by the executor or administrator as a proper act of administration, and the heirs and successors in interest of the properties belonging to the estate accepted, and benefited from, that act of the administrator. We have found that the administrators of the estates of Enrica A. Vda. de Lizares and Esteban de la Rama did not, in fact, enter into new contracts. They simply signed extension contracts, or contracts that extended the very contracts signed by the decedents themselves during their lifetime, because those administrators considered it necessary for the proper administration of the sugar plantations that framed part of the estates under their administration. The administrator of the estate of a deceased person may exercise all acts of administration without special authority from the court. 9 The fact that even after the judicial administration of the estates the heirs or successors in interest continued to abide by the milling contracts executed by the administrators, and accepted the benefits arising from the contracts, showed that those heirs and successors in interest ratified the acts of the administrators and submitted themselves to the terms and conditions of the milling contracts. We hold, therefore, that for the purposes of the application of R.A. 809 to the Talisay-Silay Milling District for the crop year 1952-53, the milling contracts, Exh. C-37, executed by the administrator of the estate of Enrica A. Vda. de Lizares, and Exh. C-51, executed by the administrator of the estate of Esteban de la Rama, should be considered not as merely the contracts of two planters but as the separate contracts of the individual successors in interests of said estate who had already received their respective shares in the respective inheritances and who were actually holding separate and distinct Plantation Audit Numbers respectively and who were actually dealing with the Central independently of each other, as they were deemed by the Central to be such. LOCSIN, AGUSTIN T. (No. 23) The evidence shows that Agustin T. Locsin, was the owner of P-/A 236, Hda. Matabang, (Exhs. H-1, p. 6; and A-2 p. 10). This planter executed milling contract Exh. D-14 on April 14, 1953. Considering that crop year 1952-53 commenced on September 1, 1952 to August 31, 1953, he is thereby a contract planter for said crop year. OCA, GIL DE (No. 29) He was the lessee of Hda. Librada, P/A 90e (Exh. H-1, p. 1) owned by Patricia de Oca who executed contract, Exhibit C-49). OCA, LUZ DE (No. 30) She was the owner and planter of Hda. Matabang, P/A 79 (Exh. H-1, p. 2) and which was covered by contract, Exh C-42, executed by Simplicio Lizares for the heirs of Agueda Lizares. TRECHO, FILEMON (No. 37) In the very list of contracts in the lower court's decision, it appears that Filemon Trecho executed milling contract, Exh. C-56. He owned P/A 126 and is part owner of Hda. Pantayanan (Exh H-1, p. 2.) In fact, Exhibit C-56 clearly states that he signed the same as owner of Lots Nos. 760-A, 767, 966 and 1303 all of the cadastral survey of Talisay, Negros Occidental, hence, the observation of the PLANTERS about his being a lessee without any right to enter into a contract is not borne by the record. TREYES, FLORENTINO (No. 38) He was owner of P/A 194, Hda. Baga-as (Exh. H-1, p, 3). Hda. Baga-as, with P/A 193 and 194 (See Exh. Y) was covered by contract Exh. C-59 executed by Magdalena Treyes, and as power of attorney of all other heirs. Florentino Treyes is successor in interest to P/A 194 (Exh. H-1, p. 3 and Exh. A-1, p. 4). YBIERNAS, VICENTE (No. 39) He was the lessee of Hda. Cabiayan, P/A 87b (Exh. H-1, p. 2) owned by Placido Mapa and Estrella Mapa de Ybiernas (Exh. A-1, p. 3) who were the successors in interest of the former owner, Adela L. Vda. de Mapa who executed contract. Exh. C-44.

YUSAY, ENRIQUE (No. 40) He was owner of Hda. San Juan, P/A 68b (Exhs. A-1, p. 3 and Exh. H-1, p. 2). He was the successor in interest of Carolina Lacson Gigante, former owner of part of Hda. San Juan that was acquired by Enrique Yusay, who executed contract, Exh. C-18. JAREO, CATALINO (No. 8) Catalino Jareo was owner of P/A 38a, Hda. Trinidad, (Exh. H-1, p. 1 and Exh. A-1, p. 2). Maria H. Maramba as judicial administratrix of the Estate of Esteban Henares signed contract, Exh. C-13, covering Hda. Encarnacion with P/A 37b and Hda. Trinidad with P/A 38a. Hda. Trinidad was sold to Aniceta Jareo Perdigueros (Exh. HH) and Catalino Jareo was successor in interest of Aniceta Jareo Perdigueros. TRECHO, BENJAMIN (No. 36) He was owner of P/A 130b, Hda. Pantayanan (Exh. H-1, p. 2; and Exh. A-2, p. 4). He was successor in interest of Pelagio Villarde who executed contract Exh. C-62 which covered Hda. Pantayanan. As intimated earlier, these 30 planters We have found to have been established by undisputable evidence to be contract planters, as just explained, added to the 46 planters mutually admitted by the parties to be also contract planters, plus the 10 whom the trial court correctly included because they unquestionably signed contracts on February 17, 1953, make eighty-six (86) contract planters. It is inconceivable how any lesser number can be said to be borne by the evidence on the record, hence, this figure is well nigh incontestable. To summarize then the situation obtaining in the Talisay-Silay sugar district during the crop year 1952-53, We can see that out of the one-hundred sixty-one (161) planters We found there were in the district during that period, eighty-six (86) had contracts binding unto themselves. Clearly, therefore, since the majority of 161 is 81, there was a majority of planters with written contracts during said crop year, hence Section 1 of Republic Act 809 could not be applied in said district as far as that crop year is concerned. THE SITUATION IN CROP YEAR 1953-1954 C

Contrary to the finding of the trial court, the majority of the contract planters in 1953-54 was bigger and more indubitable. It is to be regretted that the trial court made a very scanty discourse of the situation that obtained during the 1953-54 crop year. This is how briefly it viewed the matter: "For the year 1953-54, Alfredo A. Bustamante, a new planter entered into a written milling contract but without duration or expiry date (Exh. D-3). It shall be considered a written milling contract for 1953-1954 only and the number of planters shall be deemed increased to 171. "Agustin T. Lacson also entered into a written milling contract (Exh. D-14) effective from 1953-1954 to June 1, 1965. He was a planter in 1952-1953 without a written milling contract and, therefore, the total number of planters for that crop year will not be affected. "Aniceta R. de Sian milled her 1952-1953 crop under written milling contract Exh. G-51 executed by the administrator of the estate of Esteban de la Rama. Her contract Exh. D-23 dated June 23, 1953 has no date of effectivity. It should be considered for the 1953-54 crop only and will increase the number of planters with written milling contracts for that year by one because her share of the properties covered by the written contract executed by the administratrix (Exh. C-51) is segregated and is now covered by Exh. D-23, a separate contract. Therefore, the planters for 1953-1954 are 173 and the majority is 87. "Adding the three written contracts Exhs. D-3, D-14 and D-23 to the 74 written milling contracts for the 1952-1953 agricultural year will give 77, which is still short by 10 to obtain a majority for that year. Hence, for the year 1953-1954, Republic Act No. 809 also applies." (Pp. 432-433, Record on Appeal.). The evidence, however, reveals much more than what the trial judge cared to discuss. For instance, of the 161 planters in 1952-53 We found above, as listed in Exhibit H-1, the following twelve (12) planters listed together with their respective status already determined earlier) no longer appear in Exhibit H-2, the list of planters in crop year 1953-54: 1. Cordova, Candido (non-contract) 2. Gamboa, Angel S. (non-contract) 3. Granada, Pura G. de (non-contract) 4. Hilado, Alfonso (non-contract) 5. Lizares, Demetria Vda. de (contract) 6. Lizares, Heirs of Enrique (contract) 7. Lizares, Purita (contract) 8. Locsin, Augusto M. (non-contract) 9. Medel, Magdalena (non contract) 10. Oca, Aniceta de (non-contract) 11. Oca, Francisco de (non-contract) 12. Villanueva, Manuel H. (contract). This absence simply means that they did not cultivate any plantation during that period, thereby leaving only 149 of the initial 161 to be considered as having continued to be planters in the 1953-54 period. As can be seen, only four (4) of them were contract planters; the rest or eight (8) were non-contract ones. On the other hand, Exhibit H-2 contains the names of fourteen (14) planters not listed in Exhibit H-1, thereby indicating that these 14 must have been new planters who came in only in the 1953-54 crop year. Adding these 14 to the 149 left of 1952-53 list, the total of planters in 1953-54 crop year was 163. The names of these 14 new planters as well as their respective contract status, as shown by the documentary evidence correspondingly annotated after their respective names follow: 1. Bustamante, Alfredo (Exh. H-2, p. 5) (contract) Executed on Feb. 17, 1963 Exh. D-3. 2. Cuenca, Fernando (Exh. H-2, p. 1) (non-contract) 3. Gamboa, Arturo (Exh. H-2, p, 4) (non contract) 4. Gonzaga, Ricardo (Exh. H-2, p. 2) (non-contract) 5. Granada, Edgardo (Exh. H-2, p. 4) (contract) He executed milling contract, Exh. D-7 on February 16, 1964.E-Alibaso (without quota) (Exh. H-2, p. 4) 6. Jocson, Narciso (Exh. H-2, p. 4) (non-contract) 7. Kilayko, Agustin (Exh. H-2, p. 3) (contract) P/A No. 147a Hda. Matab-ang (Exh. H-a, p. 3) The owner is Celsa L. Vda. de Kilayko (Exh. A-2, p. 9). According to Exh. Y, p. 3, P/A 147a, together with P/A 89a, is comprised, among others, in lots Nos. 440-A. Lot 440-A is covered by Exh. C-16, executed by the owner Celsa L. Vda. de Kilayko on April 30, 1948. Planter-lessee must, therefore, be considered as also under contract.

8. Kilayko, Jesus L. (Exh. H-2, p. 1) (contract) P/A No. 4d Hda. Bantud (Exh. H-a, p. 1) Owner is Alejandro Be Chingsuy (Exh. A-2, p. 7). Plantation No. 4d, Hda. Bantud, is covered by contract Exh. C-1, executed by the owner on August 12, 1948, covering lot No. 770, which precisely comprised P/A 4d (Exh. Y, p. 1). Planter, must, therefore, be considered as a lessee under contract. 9. Lizares, Cecilia de Lacson (Exh. H-2, p. 4) (contract) P/A No. 213 Hda. Cabiayan (Exh. H-2, p. 4) Owner (Exh. A-2, p. 10). Hacienda Cabiayan (P/A Nos. 87b, 165, and 243) is comprised in lots Nos. 711, 713 C (Exh. Y, p. 3). Lot 713 C is under contract, Exh. C-44, executed by Adela L. Vda. de Mapa on April 30, 1948. Planter must therefore be considered as a successor in interest to a plantation under contract, and must be considered as under contract also. 10. Lizares, Lourdes (Exh. H-2, p. 4) (contract) P/A No. 223b Hda. Minuluan (Exh. H-2, p. 4), 242 Hda. Baga-as (Exh. H-2, p. 4), 266 Hda. Minuluan (Exh. H-2, p. 4), 267 Hda. Concepcion (Exh. H-2, p. 4). "Planter is owner of P/A 242 (Exh. A-2, p. 10); and lessee of P/A 223b owned by Efigenia L. Vda. de Lizares (Exh. A-2, p. 10). The owners of P/A Nos. 266 and 267 do not appear in Exh. A-2. Exh. Y, p. 3, shows that P/A 242 comprises lots Nos. 476, 473, 461-B, 477, 471, and 469. These lots are covered by Exh. C-36, executed by Demetria Vda. de Lizares. Planter must be considered the latter's successor in interest to said lot, and must be considered as under contract. 11. Lizares, Maria D. (Exh. H-2, p. 2) (contract) P/A No. 140-Hda. San Fernando (Exh. H-2, p. 2). Owner (Exh. A-2, p. 9). Exh. Y, p. 2, shows that P/A 140 (together with 139b) comprises lots Nos. 727 and 1168. Exh. C-46, executed by Maria Lizares de Misa covered lot No. 727. Hence P/A 140 must be considered under contract, and planter must be considered also under contract. 12. Oca, Severino de (Exh. H-2, p. 4) (contract) E-Hda. Concepcion (without quota) (Exh. H-2, p. 4). Executed contract D-19 on February 16, 1964. 13. Torre, Pablo Dr. (Exh. H-2, p. 1) (non-contract) 14. Yusay, Julieta (Exh. H-2, p. 2) (non-contract). In other words, eight (8) of the fourteen (14) new planters in 1953-54 had contracts while six (6) had none. As to the 149 planters who continued in 1953-54, hereunder is the list of their names together with the indications of their respective contract status during that period, emphasis being given to those who had no contracts in 1952-53 but who subsequently executed written agreements the following year: 1. Advincula, Rufino (contract) 2. Agravante, Dominador (now-contract planter). This planter, non-contract in the crop year 1952-1953 executed Exh. D-6 on March 23, 1954. He must therefore be considered under contract in crop year 1953-1954. 3. Alano, Amado Dr. (contract) 4. Alvarez, Ramon T. (contract) 5. Alvarez, Rosendo (contract) 6. Arnaldo, Ricardo Jr. (contract) 7. Ayalde, Ceferino T. Dr. (non-contract) 8. Beson, Jose L. (contract). In 1953-1954, Jose L. Beson cultivated also P/A No. 5a Hda. Catabla (Exh. H-2, p. 1). This cannot change his status as contract planter for he continued cultivating P/A Nos. 6a and 7a which were under contract. 9. Blanca, Lucilo (contract) 10. Bustamante, Arturo (contract) 11. Camon, Emilio (contract) 12. Castor, Juanito (contract) 13. Claparola, C. L. Vda. de (non-contract) 14. Cordova, Balconeri (non-contract) 15. Cordova, Consoling(non-contract) 16. Coscolluela, Agustin (contract) 17. Coscolluela, Gloria de (non-contract) (now is owner of 146c & 174 (A-a, p. 9) 18. Cuaycong, Jose G. (now-contract) 19. Cuaycong, Natividad L. de (now contract) Natividad L. de Cuaycong, a non-contract planter in 1952-1953, executed with her spouse Jose Cuaycong, Exh. D-5 on August 18, 1964, which date is within the crop year 1953-1954. Both Jose and Natividad should, therefore, be considered contract planters from that year. 20. Ereeta, Fernando H. (contract) 21. Escay, Jose G. (contract) 22. Espuelas, Victoria (contract)

23. Esteban, Gloria A. de (non-contract) 24. Estrella, Deogracias (non-contract) 25. Gamboa, Aguinaldo S. (non-contract) 26. Gamboa, Generoso Jr. (non-contract) 27. Gamboa, Jose B. (contract) 28. Gamboa, Romeo S. (non-contract) 29. Gamboa, Serafin R. (contract) 30. Gaston, Amparo C. Vda. de (non-contract) 31. Gaston, Benjamin (non-contract) 32. Gaston, Gerardo (non-contract) 33. Gonzaga, Adoracion (contract) 34. Gonzaga, Julian Dr. (contract) 35. Gonzaga, Luis L. (contract) 36. Granada, Alfredo (non-contract) 37. Granada, Caridad (non-contract) 38. Granada, Roberto (non-contract) 39. Granada, Walterio (non-contract) 40. Heirs of Hernaez, Amalia (non-contract) 41. Henares, Fidel M. (contract) 42. Hernaez, Dominador C. (non-contract) 43. Hernaez, Pedro C. (non-contract) 44. Herrera, Patricio (contract) 45. Hilado, Tarcela Vda. de (non-contract) 46. Hofilea, Fe S. (non-contract) 47. Hofilea, Hector L. (non-contract) 48. Hofilea, Luis Ramiro (non-contract) 49. Hofilea, Manuel S. (non-contract) 50. Hofilea, Roque (non-contract) 51. Hofilea, Vicente (contract) 52. Infante, Purita H. de (non-contract) 53. Jalandoni, Carolina (non-contract) 54. Jalandoni, Daniel (contract) 55. Jalandoni, Felisa Vda. de (contract) 56. Jalandoni, Nicolas (contract) 57. Jareo, Catalino (contract) 58. Javellana, Manuel A. (non-contract) 59. Jimenez, Conrado L. (non-contract) 60. Jison, Dominador L. (non-contract) 61. Jison, Emilio L. (non-contract) 62. Jocson, Flory G. de (non-contract) Mrs. Flory G. de Jocson, who was a non-contract planter in 1952-53, executed Exh. D-9 on June 25, 1954, which is within the crop year 1953-1954. She must be considered therefore a contract planter in this crop year. 63. Jonota, Julian (non-contract) 64. Jundos, Enrique (now-contract). Enrique Jundos executed Exhibit D-10 on July 29, 1954; so he should be counted as contract planter in this crop year. 65. Kilayko, Celsa L. Vda. de (contract) 66. Kilayko, Francisco Dr. (contract)

Dr. Francisco Kilayko ceased to plant P/A 4-c in 1953-1954, but continued to be planter lessee of P/A 139b, which is also under contract, Exh. C-16, executed by the owner. He continued, therefore, as contract planter. 67. Kilayko, Ramiro C. (contract) 68. Labayen, Emma H. de (non-contract) 69. Labayen, Julio D. (contract) 70. Lacson, Angelina B. (non-contract) 71. Lacson, Caridad (contract) 72. Lacson, Consolacion (non-contract) 73. Lacson, Damaso (contract) 74. Lacson, Daniel (contract) 75. Lacson, Domingo W. & Enriqueta (non-contract) 76. Lacson, Eduardo B. (contract) 77. Lacson, Ernesto J. (contract) 78. Lacson, Felipe B. (contract) 79. Lacson, Ignacio, et al. (non-contract) 80. Lacson, Josefina (contract) 81. Lacson, Josefita Vda. de (non-contract) 82. Lacson, Pedro (contract) 83. Lacson, Purita de Mora (non-contract) 84. Lacson, Rafael (contract) 85. Lacson, Salvador (contract) 86. Lacson, Victoria (contract) 87. Layson, Vicente (non-contract) Vicente Layson, formerly a non-contract planter, executed Exh. D-12 or Feb. 9, 1954 and D-13 on Feb. 16, 1954 as sublessee. 88. Ledesma, Anita L. de (non-contract) 89. Ledesma, Eduardo & M. L. (non-contract) 90. Ledesma, Eduardo Lacson (contract) 91. Ledesma, Nicolas and L. M. (non-contract) 92. Lizares, Antonio, Dr. A. (contract) 93. Lizares, Antonio M.A. (contract) 94. Lizares, Carmen H. Vda. de (contract) 95. Lizares, Co., Inc. (contract) 96. Lizares, Emiliano (contract) 97. Lizares, Felix A. (contract) 98. Lizares, Generosa Vda. de (contract) 99. Lizares, Jesus L. (contract) 100. Lizares, Maria A. (contract) 101. Lizares, Nilo (non-contract) 102. Lizares, Rodolfo (contract) 103. Lizares, Simplicio (contract) 104. Locsin, Agustin T. (contract) 105. Lomotan, Violeta H. de (non-contract) 106. Lopez, Apeles, Concepcion & Pomp. (non-contract) 107. Lopez, Julieta H. de (non-contract) 108. Lopez, Lolita (Dolores) R. de (contract) 109. Magallanes, Jesus (contract)

110. Malejan, Renato (contract) 111. Mascuana, Angel (contract) 112. Misa, Maria L. de (contract) 113. Montinola, Trino Dr. (non-contract) 114. Nepomuceno, Miguel de (contract) 115. Nessia, Eligio (contract) 116. Oca, Felisa de (non-contract) 117. Oca, Gil de (contract) 118. Oca, Librada de (non-contract) 119. Oca, Luz de (contract) 120. Oca, Pedro de (non-contract) 121. Olimpo, Felicidad (contract) 122. Ortiz, Rosario G. de (non-contract) 123. Osmea, Lourdes R. de (contract) 124. Panlilio, Encarnacion L. Vda. de (contract) This planter did not cultivate P/A No. 88d in 1953-54. This will not change her status for she still cultivated P/A 88b which was under contract. 125. Pascual, Jose N. (non-contract) 126. Perovano, Estefania R. Vda. de (contract) 127. Pison, Espedito (non-contract) 128. Puentebella, Romulo (non-contract) 129. Rentoy, Federico D. (contract) 130. Robello, Armando (non-contract) 131. Santibaez, Efraim (contract) 132. Sausi, Atanacio (non-contract) 133. Sian, Aniceta Rama de (contract). This planter, under contract Exh. D-23, in 1952-53, cultivated a new plantation P/A 265 (23-7 ex 25-51) - Hda. Cabanbanan (Exh. H-2, p. 4) in 1953-54. 134. Tanpinco, Gloria L. de (contract) 135. Torres, Jose R. (contract) 136. Torres, Jose R. Jr. (contract) 137. Trecho, Benjamin (contract) 138. Trecho, Felimon Z. (contract) 139. Trecho, Miguela, (contract) 140. Treyes, Emilia (non-contract) 141. Treyes, Florentino (contract) 142. Treyes, Gorgonio (contract) 143. Vasquez, Ramon (non-contract) 144. Velez, Sergio (contract) 145. Villanueva, Alfredo Dr. (contract) 146. Villarde, Pelagio (contract) 147. Villasor, Milagros (non-contract) 148. Ybiernas, Vicente R. (contract) 149. Yusay, Enrique Dr. (contract) Thus, it appears that out of the 149 planters referred to, eighty two (82) continued having contracts, while six (6) who had none became contract planters, 10 hence, there were eighty-eight (88) contract planters and sixty one (61) non-contract ones among them. There was a majority of contract planters in 1953-54 crop year.

In brief, as already shown, there were 163 planters adhered to the CENTRAL during the crop year 1953-54. We have found that there were 161 such planters in 1952-53. To reiterate, twelve (12) of them ceased cultivating in the following year. Now, four (4) of these were contract planters and eight (8) were non-contract ones, hence, of the 86 We found to be contract planters in 1952-53, only eighty-two (82) remained. But of the fourteen (14) new planters that cultivated in 1953-54, eight (8) had contracts and six (6) did not have. Adding the 8 new contract planters to the 82 left of the 1952-53, it results that there were ninety (90) contract planters. To this so we have to add also the six (6) non-contract planters of 1952-53 who, as shown in the above list of 149, entered into written contracts with the CENTRAL in 1953-54. Consequently, We can see that there was a total of ninety-six (96) contract planters during that period. As to the non-contract planters, of the 76 We found in 1952-53, eight (8) ceased to cultivate, thus leaving only 67 of them. But with the coming in of six (6) new ones in 1953-54, the number would have risen again to 73, were it not for the fact that, as already shown, six (6) of the non-contract planters of 1952-53, entered into contracts, as just stated, in 1953-54, thus depleting the number of non-contract planters back to 67. Our conclusion, therefore, is that of the one hundred sixty-three (163) planters adhered to the CENTRAL in 1953-54, ninety-six (96) were contract planters and only sixty-seven (67) were non-contract planters. And so, there was also a clear majority of contract planters in the Talisay-Silay district in the 1953-1954 crop year and Section 1 of Republic Act 809 cannot be applied to said district during that crop year. THE SITUATIONS DURING EACH OF THE SUBSEQUENT CROP YEARS FROM 1954-55 TO 1959-60 There was no material change in the situation of the parties after 1953-54 up to 1959-60. Our conclusions just set forth apply as well to the situations obtaining in the subsequent crop years from 1954-55 to 1959-60. In all of said crop years, there was a majority of PLANTERS in the Talisay-Silay district with written agreements with the CENTRAL. Brief statement of the situation during each of the crop years mentioned, beginning with 1954-55. 1 We have found that in crop year 1953-54, there were 163 planters, 96 of whom had contracts and 67 without. In 1954-55, seven (7) of them did not plant, three (3) of whom, namely, Arturo Bustamante, Josefina Lacson and Emiliano Lizares, were contract planters while the other four (4), namely, Fe S. Hofilea, Hector L. Hofilea, Luis Ramiro Hofilea and Conrado L. Jimenez were not. However, twelve (12) new planters went in that year. These 12, together with their pertinent circumstances were: 1. Consing, A. C.M. (Exh. H-3, p. 6) (non-contract). No contract appears to have been entered into. 2. Gamboa, Ernesto (Exh. H-3, p. 4) (non-contract) 3. Gonzales, Fausto (Exh. H-3, p. 2) (contract) P/A 83 - Hda. Esmeralda (Exh. H-3, p. 2) Owner is Hijos de Inocentes de la Rama (Exh. A-4, p. 2). According to Exh. Y, p. 3, Hda. Esmeralda, comprising P/A Nos. 114-b, 114-c, and 83, is covered by Lot No. 720. This lot is covered by Exh. C-51, executed on March 12, 1961 by the Administrator of the Testate Estate of Esteban de la Rama. 4. Lacson, Adela V. de (Exh. H-3, p. 3) (contract) P/A No. 207 Hda. San Antonio (Exh. H-3, p. 3) 5. Leduna, Inocenta (Exh. H-3, p. 3) (contract) 6. Lizares, Purita (contract). This planter did not plant in 1953-54, but planted again in 1954-55 the same Hda. P/A 168, San Antonio Exh. H-3, p. 3. For having executed Exh. C-41 on June 16, 1948, she must be deemed to continue to be under contract. 7. Malan, Severino (Exh. H-3, p. 4) (non-contract) 8. Oca, Aniceto de (Exh. H-3, p. 3) (non-contract) 9. Pimentel, Isabelo (Exh. H-3, p. 6) (contract) 10. Treyes, Victor (Exh. H-3, p. 4) (non-contract) 11. Velez, Enriquez (Exh. H-3, p. 6) (contract) 12. Villanueva, Manuel H. (Exh. H-3, p. 6) (contract). As will be noted, of the 12, there were seven (7) contract planters and five (6) non contract planters. Accordingly, as there were 163 planters in 1953-54 and seven ceased cultivating in 1954-55 but twelve new ones came in, there were one hundred sixty-eight (168) 163 7 = 156 + 12 = 168 - planters in the subsequent year. Now, of the 96 contract planters in the former year, 3 stopped, but of the 12 who newly cultivated in 1954-55, 7 had contracts and only 5 had none, and so, taking into account also the change of status of Lizares & Co. Inc., from non-contract to contract planter, the number of contract planters in 1954-55 rose to 100 (96 3 = 93 + 7 = 100) while the non-contract planters increased only by one for a total of 68. Clearly then, there was no absence of written milling agreements between majority of planters and ten millers in the Talisay-Silay district in crop year 1954-55. In crop year 1955-56 2 D

Practically the same story may be repeated as to crop year 1955-56. Of the 168 planters of the preceding year, twenty-two (22) did not cultivate in 1955-56, but fourteen (14) new ones came in, thus, there were 160 (168 22 = 146 + 14 = 160) planters that year. Of the 22, fifteen (15) were contract planters, namely, Rufino Advincula, Lucito Blanca, Alfredo Bustamante, Juanito Castor, Edgardo Granada, Fidel M. Henares, Vicente Hofilea, Agustin T. Locsin, Jesus Magallanes, Renato Malejan, Miguel de Nepomuceno, Eligio Messia, Lourdes R. de Osmea, Isabelo Pimentel and Federico D. Rentoy, whereas seven (7) were not, namely, Dr. Amado Alano, A.G.M. Consing, Heirs of Amalia Hernaez, Narciso Jocson, Anita L. de Ledesma, Julieta H. de Lopez and Severino Malan. On the other hand, hereunder is what the evidence shows as to who the new planters were and what was the respective status of each of them: 1. Akol, Claudio Jr. (Exh. H-4, p. 1) (non-contract) P/A No. 2b Hda. Constancia Exh. H-4, p. 1) 149b Hda. Normandia (Exh. H-4, p. 3). These plantations were formerly cultivated by Dr. Amado Alano (Exh. A-4, p. 1), and, as previously stated, were not under contract (see p. 42 crop year 1952-53).

2. Akol, Claudio, Sr. (Exh. H-4, p. 4) (non-contract) 3. Consing, Josefina M. Vda. de (Exh. H-4, p. 5) (contract) P/A No. 235 Hda. Magdalena (Exh. H-4, p. 5). This plantation was formerly cultivated by Agustin T. Locsin (Exh. A-4, p. 1). The parties had stipulated, as stated above (see p. 63, crop year 1952-53), that P/A 236 is under contract (Exh. HH). Planter must, therefore, be considered under contract. 4. Garcia, Alfonso (Exh. H-4, p. 61 (contract) P/A 248 Hda. Camantiro (Exh. H-4, p. 5). This plantation was formerly cultivated by Eligio Nessia (Exh. A-4, p. 1). This plantation is covered by Exh. D-18 (see No. 124, crop year 1952-53). Planter must be considered a contract planter. 5. Garcia, Vicente (Exh. H-4, p. 5) (contract) P/A No. 244 Hda. Camantiro (Exh. H-4, p. 65. This plantation was formerly cultivated by Lucilo Blanca (Exh. A-4, p. 1). This plantation was under contract Exh. d-2, and should be considered, contract planter. 6. Hofilea, Fe S. (Exh. H-1, p. 3) (non-contract) P/A No. 167 Hda. Cabug (Exh. H-4, p. 3). 7. Hofilea, Hector L. (Exh. H-4, p. 3) (non-contract) P/A No. 161 - Hda. Cabug (Exh. H-4, p. 3) 8. Kilayko, Jose Maria (H-4, p. 3) (non-contract) 9. Ledesma, Luis L. (Exh. H-4, p. 4) (non-contract) 10. Rivilla, Carlos (Exh. H-4, p. 4) (non-contract) 11. Sian, Antonio N. (Exh. H-4, p. 4) (contract) P/A No. 100b Hda. Binaliwan (Exh. H-4, p. 4122b Hda. Cafe (Exh. H-4, p. 4). These plantations were formerly cultivated by Vicente Hofilea (Exh. A-4, p. 1). It was cultivated by Vicente Hofilea (Exh. A-4, p. 1). It was stated in crop year 1952-53 that the plantations were covered by written contract. Hence planter must also be considered under contract. 12. Torres, Henrietta (Exh. H-4, p. 5) (contract) P/A 269 Hda. Camantiro (Exh. H-4, p. 5). This plantation was previously cultivated by Rufino Advincula (Exh. A-4, p. 1) who executed Exh. D. She is a contract planter. 13. Torres, Manuel (Exh. H-4, p. 5) (contract) P/A No. 246 Hda. Camantiro (Exh. H-4, p. 5), 246 Hda. Camantiro (Exh. H-4, p. 5). Previous to the present crop year, P/A 246 was cultivated by Jesus Magallanes, and covered by D-16, and P/A 246 by Miguel Nepomuceno, and covered by Exh. D-17. (See p. 46, crop year 1952-1953.) 14. Torres, Raquel (Exh. H-4, p. 5) (contract) P/A No. 262 Hda. Camantiro (Exh. H-4, p. 5). This plantation was formerly cultivated by Juanito Castor (Exh. A-4 p. 1), who, as already stated (crop year 1952-53), executed Exh. D-4. As can be seen, seven (7) of them had contracts and seven (7) also had none. It results, therefore, that of the 100 contract planters in 1954-55, only 85 were left, but one of them, Enrique Velez became a noncontract planter because, while he had 8 contract the year before for P/A 86a, Hda. Cabiayan, he ceased to plant therein the following year and continued only with the other plantation not covered by contract. So, there were in the ultimate only 84 left, to whom must be added the 7 new ones named above, thus making a total of 91 contract planters. On the other hand, from the 68 non-contract planters of 1954-55, must be deducted seven who did not cultivate the following year, but We have to add again the new 7 who came in. Thus, the non-contract planters would have remained at 68 were it not for Velez having become a non-contract planter, thereby increasing their number of 69. Compared to the 91 contract planters, 69 is certainly a minority. Again, the same formula applied to the 1954-55 crop year is applicable to 1955-56, for the reasons already discussed above. In crop year 1956-57. 3

The evidence on record relative to the situation that obtained during crop year 1956-57 shows quite plainly that Our conclusion as to the ratio of sharing among the parties for that year cannot be different from that of the previous years already considered. Specifically, seven (7) out of the 160 planters in 1955-56 did not plant in 1956-57, while eighteen (18) new planters registered during said period, thereby resulting in their being one hundred seventy one (17) planters to be considered for the latter crop year. Three (3) planters, namely, Amparo G. Vda. de Gaston, Ignacio Lacson et al., and Victor Treyes, of those who ceased in 1956-57, had no contract, whereas four (4), namely, Ramiro C. Kilayko, Inocenta Leduna, Felicidad Olimpo and Sergio Velez had. Therefore, there were only 87 contract planters left, but as may be noted hereunder, ten (10) of the new planters had contracts and only eight (8) had none. Here is what the evidence shows as to the 18 new planters: 1. Arzadon, Tarcila Vda. de (Exh. H-5, p. 1) (non-contract). The owner is Tarcila Vda. de Hilado (Exh. A-5, p. 1). 2. Bustamante, Alfredo (Exh. H-5, p. 5) (contract) E-29 Dos Hermanos with quota (Exh. H-5, p. 5) Owner (Exh. A-5, p. 5). As said in crop year 1954-55, owner executed contract Exh. D-3 on February 17, 1963. Planter is therefore with contract. 3. Capay, Maximo (Exh. H-5, p. 1) (contract) P/A No. 37 Hda. Encarnacion (Exh. H-5, p. 1) Owner (Exh. A-5, p. 1). As per Exh. HH, the parties have stipulated that P/A 37b (which appears to be the same as P/A No. 37) Hda. Encarnacion, sold to Maximo Capay on Oct. 23, 1964, is under contract. Hence, planter must be so considered. 4. Ereeta, Josefina, et al., (Exh. H-5, p. 2) (contract) E-4 Hda. Bayusan with quota (Exh. H-4, p. 2), E - Hda. Bagaas with quota (Exh. H-5, p. 2). The last mentioned plantation was planted by Ereeta, Justa and Josefina. This appears to be the same as Ereeta, Josefina et al., hence the two plantations are placed under the same planter. E-Bagaas as well as E-4 Bayusan are owned by Ereeta, Justa and Josefina, et al. (Exh. A-5, p. 4). It does not appear that owners have entered into any written milling contract. But we find that Hda. Baga-as of which Hda. E, together with P/A 193 and 194 are covered by Exh. C-59. Hence, planter is to be considered as with contract. 5. Gaston, Antonio & Mar. D. de Locsin (Exh. H-5, p. 1) (non-contract)6. Gaston, Virgilio (Adm.) Exh. H-5, p. 1 (contract) P/A No. 33f Hda. Puyas # 1 (Exh. H-5, p. 1).

The owner of Hda. Puyas # 1, according to Exh. A-5, p. 2, was Rufina C. de Paula. This hacienda was cultivated by David Lacson, who, as said in crop year 1952-53, was under contract. Hence, planter must be considered to be under contract. 7. Guinto, Remedios L. de (Exh. H-5, p. 4) (contract) P/A No. 284a - Hda. Minuluan (Exh. H-5, p. 4) Owner (Exh. A-5, p. 4). The evidence shows that owner was one of those who executed Exh. C-50 on May 4, 1948. She is, therefore, a planter with contract. 8. Jalandoni, Manuel A. (Exh. H-5, p. 1) (non-contract) 9. Jimenez, Conrado L. (Exh. H-5, p. 3) (non-contract) 10. Jocson, Narciso (Exh. H-5, p. 2) (contract) E-7 - Hda. Caridad with quota (Exh. H-5, p. 2) Owner is Jocson, Flory G. de (Exh. A-5, p. 4). The evidence shows that Narciso Jocson, as attorney-in-fact of his wife, Flory G. de Jocson, executed Exh. D-9 on Feb. 9, 1954 covering lot, among others, No. 1316-B of the Cadastral Survey of Talisay, which lot according to Exh. Y, p. 1, comprises Hda. Caridad of which E-7 forms part. The plantation is, therefore, under contract and planter should be considered a planter with contract. 11. Kilayko, Romeo C. (Exh. H-5, p. 3) (contract) P/A No. 123 C-Hda. Cafe (Exh. H-5, p. 3). This plantation was planted by Ramiro C. Kilayko in the previous years, and that the plantations was covered by contract Exh. C-17, executed by the owner Rufina C. Vda. de Kilayko on July 20, 1948. 12. Lizares, Emiliano (Exh. H-5, p. 4) (contract) 13. Lizares, Felisa (Exh. H-5, p. 2) (non-contract) 14. Malan, Severino (Exh. H-5, p. 2) (non-contract) 15. Medel, Magdalena (Exh. H-5, p. 3) (non-contract) 16. Misa, Nicolas, and Maria L. de (Exh. H-5, p. 1) (contract) P/A No. 18 Hda. Imbang # 2 (Exh. H-5, p. 1), 19 Hda. Imbang # 3 (Exh. H-5, p. 1) Owner (Exh. A-5, p. 3). 17. Rama, Esteban de la (Exh. H-5, p. 3) (non-contract) P/A No. 113, Hda. Cabanbanan (Exh. H-5, p. 3) Owner (Exh. A-5, p. 4). It does not appear that planter owner ever entered into any written milling contract. Hence, he is without contract. 18. Velez, Soledad G. de (Exh. H-5, p. 4) (contract) P/A No. 239 - Hda. Camantiro (Exh. H-5, p. 4) Owner (Exh. A-5, p. 4).Planter owner executed Exh. C-11 on August 10, 1948. She is, therefore, with contract. Summarizing the foregoing data, We have 171 planters, 98 of them with contracts (101 4 = 97 + 1 conversion from non-contract to contract) and 73 (69 3 = 66 + 8 = 74 - 1, the conversion just mentioned) without. No doubt, the application of the same formula as in previous years is proper regarding the sharing of that year 9 production among the parties. In crop year 1957-58 4

Neither can We escape from the same conclusion as above when We come to crop year 1957-58. The evidence is clear that there were one hundred sixty-nine (169) planters then, ninety-seven with contracts, seventy-two (72) without. Thirteen (13) of the 171 in 1956-57 failed to cultivate, but eleven (11) new ones did. (171 13 = 168 + 11 = 169.) Of said 13, six (6), namely, Romeo C. Kilayko, Julio D. Labayen, Pedro Lacson, Luz de Oca, Efrain Santibaez and Filemon Z. Trecho had written agreements, while seven (7), namely, Walterio Granada, Roque Hofilea, Tarcela Vda. de Hilado, Manuel A. Jalandoni, Eduardo & M. L. Ledesma, Felisa Lizares and Severino Malan had none. The following list shows that of the eleven (11) new planters, six (6) were contract planters and five (5) were not: 1. Camon, Melchor (Exh. K, p. 1) (non-contract) 2. Ereeta, Justa A. (Exh. K, p. 4) (contract) P/A E-Baga-as owned by planter (Exh. K, p. 4). It appears that Hda. Baga-as P/A Nos. 193, 194 and E cover lots Nos. 1278 E, 451 A, 451, and 452, which lots are covered by Exh. C59. 3. Gamboa, Oscar (Exh. K, p. 1) (contract) P/A No. 69c Hda. Camantiro (Exh. K. p. 1) Owner is Domingo & Rodrigo Lacson (Exh. K, p. 1). It appears that owner Rodrigo Lacson executed Exh. C-19 on Aug. 10, 1948 covering lots Nos. 761 and 763, which lots, among others, are covered by P/A 69 (P/A 69c and 204). 4. Javellana, Mercedes L. (Exh. K, p. 2 (non-contract) 5. Kilayko, Dr. Jose C. (Exh. K, p. 2) (contract) P/A 123e Hda. Matab-ang (Exh. K, p. 2) Owner (Exh. K, p. 2). Owner entered into contract Exh. C-17 covering Hda. Cafe. 6. Labayen, Amando (Exh. K, p. 2) (contract) P/A No. 17e Hda. Matab-ang (Exh. K, p. 2) Owner (Exh. K, p. 2). By stipulation of the parties as set forth in Exh. HH, this plantations is to be considered under contract. 7. Labayen, Heirs of Vicente (Exh. K, p. 2) (contract) P/A No. 17e Hda. Matab-ang (Exh. K, p. 2) Owner (Exh. K, p. 2). This plantation is comprised in lot 1285 A which is covered by Exh. C-2, executed by Hormecinda Diaz on April 30, 1948. 8. Malan, Silvino (Exh. K, p. 4) (non-contract) 9. Mascuana, Emilio (Exh. K, p. 5) (non-contract) 10. Siason, R. & Yusay, S. (Exh. K, p. 2) (non-contract) 11. Treyes, Victor, et al. (Exh. K, p. 4) (contract) P/A 128d - Hda. Pantayanan, owned by Felimon Trecho (Exh. K, p. 4); E-20 - Hda. Mansueto, owned by planter (Exh. K, p. 4) These plantations were planted in the previous year by Felimon Trecho, and Felimon Trecho was a contract planter. (See crop year 1952-53.)

In crop year 1958-69

It is almost a monotone to say that as to crop year 1958-59, We have not seen any evidence that could materially bring about a conclusion different from those We arrived at relative to previous years. Thus, to the one hundred sixty-nine (169) planters in 195758, must be added eleven (11) new ones as follows: 1. Bonin, Juan Z. (Exh. QQQQQQ-2, p. 1) (contract) P/A 28a Hda. Germinal, owned by Jose B. Gamboa (Exh. QQQQQQ-2, p. 1). Owner executed Exh. C-8 on July 23, 1948 covering Hda. Germinal. (See crop year 1952-1953). Planter lessee must, therefore, be considered under contract. 2. Cordova, Romulo (Exh. QQQQQQ-2, p. 1) (non-contract) 3. Florentino, Pedro (Exh. QQQQQQ-2, p. 1) (contract) P/A 5a Hda. Catabla, 6a Hda. Cataywa, 7a Hda. Luciana. All the plantations are owned by Alejandra Ching Suy. These plantations were in the previous years planted by Jose L. Beson (crop year 1952-1953), and as said before, they were covered by Exh. C-1 executed by the owner. 4. Lacson, Remedios L. (Exh. QQQQQQ-2, p. 3) (contract) P/A No. 67 Hda. Bagacay owned by Felix Lacson. Hda. Bagacay was formerly planted by Gloria Tampinco who executed Exh. C-23 over it. Hence, planter must also be considered under contract. 5. Lizares, Domingo (Exh. QQQQQQ-2, p. 3) (contract) P/A No. 67 Hda. San Jacinto, owned by Purita Lizares). Owner executed Exh. C-41 over the Hacienda. (See crop year 1952-1953.). 6. Velez, Enrique & J. Jalandoni (Exh. QQQQQ-2, p. 4) (contract) P/A No. 87a Hda. Virgen del Pilar owned by Lizares & Co. This plantation was formerly planted by Emiliano Lizares (see crop year 1952-1953), who executed Exh. C-36 covering Hda. del Pilar. 7. Villarde, Fausta P. (Exh. QQQQQQ-2, p. 4) (contract) P/A No. 129Hda. Pantayanan owned by planter. This plantation was formerly planted by Pelagio Villarde (crop year 1952-1953). The plantation is covered by Exh. C-55, executed by Felicidad Olimpo Vda. de Trecho. 8. Villarde, Mauricia (Exh. QQQQQQ-2, p. 4) (contract) P/A 130 Hda. Pantayanan owned by planter. This plantation is covered by Exh. C-62 executed by Pelagio Villarde. (See crop year 1952-53.) 9. Treyes, Dominga (Exh. QQQQQQ-2, p. 4) (contract) P/A No. E-33-a Hda. Baga-as, owned by Justa A. Ereeta. Hda. E-Baga-as was covered by Exh. C-59. (See crop year 1956-1957, New Planters.) Planters should be considered under contract. 10. Gonzaga, Anunciacion (Exh. QQQQQQ-2, p. 4) (non-contract) 11. Villanueva, Samuel (Exh. QQQQQQ-2, p. 5) (non-contract). In other words, eight (8) new contract planters and three (3) non-contract ones came in. On the other hand, sixteen (16) of the 169 did not plant thirteen (13) of them contract planters, namely, Josefa Consing, Justa a. Ereeta, Adoracion Gonzaga, Luis L. Gonzaga, Dr. Francisco Kilayko, heirs of Vicente Labayen, Lizares & Co. Inc., Emiliano Lizares, Purita Lizares, Nicolas and Maria L. de Lizares, Severino D. Oca, Gloria L. de Tampinco and pelagio Villarde, and three (3) of them non-contract ones, namely, Ernesto Gamboa, Benjamin C. Gaston and Caridad Granada. On the basis of these data, We should add that 11 new planters to the 169 and then subtract the 16 who did no plant, which results in there having been 164 (169 + 11 = 18 - 16 = 164) planters that year. Then, to the 97 contract planters in 1957-58, We should add the 8 new ones named above and afterwards subtract the 13 who did not cultivate that year, thereby getting 92 (97 + 8 = 105 13 = 92) as to the number of contract planters for the period. We have to add one (1) more to these, making the total 93, because Jose N. Pascual who was in the list of non-contract planters in 195758, planted in 1958-59 P/A 139b owned by Celsa L. Vda. de Kilayko, (Exhibit QQQQQQ-2, p. 4) which is covered by contract, Exhibit C16, for which reason, he became a contract planter. On the other hand, the non-contract planters would be 71 because 3, already listed above, stopped, and also 3, above-named, came in, but there was 1 conversion from non-contract to contract. Again, therefore, there was a majority of contract planters in the district during crop year 1958-59. In crop year 1959-60 6

Crop year 1959-60, the last We will consider, was not also essentially different from the previous years. There were fourteen (14) new planters in that crop year, but eight (8) of the 164 in the previous year stopped, hence there were 170 (164 + 14 = 178 8 = 170) planters then. Four (4) of the 14 new ones had contracts and ten (10) had none, thus: 1.Bautista, Benjamin (Exh. QQQQQ-3, p. 1) (non-contract) 2.Braganza, Angela (Exh. QQQQQQ-3, p. 1) (contract). This plantation was covered by Exh. C-59. (See crop year 1952-53.). 3. Gamboa, Emilieta (Exh. QQQQQQ-3, p. 1) (non-contract) 4. Jalandoni, Cesar Jr. (Exh. QQQQQQ-3, p. 2) (non-contract) 5. Jalbuena, Augusto (Exh. QQQQQQ-3, p. 2) (contract) P/A No. 165b Hda. Cabiayan, 86b Hda. Cabiayan. Both plantations were owned by Lizares & Co. P/A 86 was covered by contract (Exh. HH). Planter-lessee was, therefore, a contract planter. 6. Javellana, Jose No. (Exh. QQQQQQ-3, p. 2) (non-contract) 7. Jison, Josefina L. de (Exh. QQQQQQ-3, p. 2) (non contract) 8. Lacson, Ernesto D. (Exh. QQQQQQ-3, p. 3) (contract) P/A 19a Hda. Imbang # 3, owned by Misa, Maria L. de, and Nicolas. This plantation was covered by Exh. C-47 (see crop year 1952-1953).

9. Lacson, German (Exh. QQQQQQ-3, p. 3) (contract) P/A No. 16b Hda. Imbang # 1 owned by Misa, Maria L. de, 18b Hda. Imbang No. 2 owned by Misa, Maria L. de & Nicolas, 140a Hda. San Fernando, owned by Misa, Maria D. P/A Nos. 16 and 18 were covered by Exh. C-48 and Exh. C-47 (see crop year 1952-53). P/A 140a is covered by Exh. C-46 (see No. 11, new Planters, crop year 1953-1954). Planter-lessee must, therefore, be considered as contract planter. 10. Lacson, Ignacio, et al. (Exh. QQQQQQ-3, p. 3) (non-contract) 11. Lacson, Luis L. (Exh. QQQQQQ-3, p. 4) (non-contract) 12. Oca, Hernando, de (Exh. QQQQQQ-3, p. 4) (non-contract) 13. Ortiz, Victor (Exh. QQQQQQ-3 p.4) non-contract) 14. Vasquez, Jose L. (Exh. QQQQQQ-3, p. 5) (non-contract) The 4 contract planters who ceased that year were Adela Vda. de Lacson, Maria D. Lizares, Jose Torres Jr. and Enrique Velez and the 4 non-contract one were Fernando Cuenca, Mercedes L. Javellana, Magdalena Medel and Dr. Pablo Torre. The result is that of the 170 planters, there were 93 (93 + 4 = 97 4 = 93) contract planters and 77 (71 + 10 = 81 4 = 77) non-contract ones then. Definitely, there was a majority of contract planters during crop year 1959-60. THE SIX CONTRACTS EXCLUDED BY THE TRIAL COURT CANNOT AFFECT THE RESULT WE HAVE ARRIVED AT. In its decision, the lower court singled out six contracts that it considered as effective only for the crop year 1954-1955. According to the lower court the contracts did not provide for a specific period of duration, and so that should not be counted in determining who were contract planters during the crop years subsequent to the crop year 1954-1955. These contracts are: Exhibit D-5, executed by the spouses Jose Cuaycong and Natividad Lacson de Cuaycong; Exhibit D-7, executed by Edgardo Granada; Exhibit D-19, executed by Vicente Layson; Exhibit D-19, executed by Severino de Oca; Exhibit D-21, executed by Isabelo Pimentel; and Exhibit D-23, executed by Aniceta R. de Sian. The truth of the matter, however, is that whether the six planters concerned are considered to be contract planters or not, the result of this case, as maybe deduced from the above discussion and explanation of the relevant details, cannot be altered. The fact that there was always a majority of contract planters during the years referred to will persist. 11 Nevertheless, just to dispose of all the points on which the trial court predicated its decision, We shall set forth Our views relative to the particular ruling We are referring to. We have examined these contracts one by one. We find that in Exhibit D-6, executed by Jose Cuaycong and his wife, it is clearly stated therein that the contract is to be effective up to June 1, 1964. We also find that Exhibits D-7, D-13, D-19 and D-21, respectively executed by Edgardo Granada, Vicente Layson, Severino de Oca, and Isabelo Pimentel, were milling contract that were executed by lessees of plantations adherent to the CENTRAL. It is provided in all these four milling contracts that the effectivity of the contracts was for the entire duration of the lease. We do not find in the records of this case those contracts of lease, but it is presumed, unless the contrary is shown, that the leases would last for several years after their execution in 1954. Necessarily, the milling contracts would also last for several years. There is absolutely no evidence in the record that the milling contracts, Exhibits D-7, D-13, D-19 and D-21 were intended to be good for only one year. On the contrary, there is reason to believe that those milling contracts, like the other contracts existing between the CENTRAL and the other planters, would last until the crop year 1959-60. As regards Exhibit D-23, executed by Aniceta R. de Sian, it had really no date of effectivity of the milling contract, but We do not agree with the view of the lower court that the contract was good for only one crop year. This contract, Exhibit D-23, was an extension of a previous milling contract, and it is similar to the other contracts of extension, signed by the other planters, which would expire during the crop year 1959-1960. The lower court was not called upon to determine the period of the duration of the six contracts in question. What was to be determined only as whether or not during a particular crop year a planter was milling his sugarcane with the CENTRAL under a milling contract, which was then mutually observed by the parties thereto. The power of the court to fix the duration of an obligation may be exercised only when either of the contracting parties should so request, or should seek to terminate the obligation, but the court cannot motu proprio retroactively and arbitrarily declare a contract to be terminated several years back when the said judicial declaration is not sought by any of the contracting parties. Our finding is that the persons who executed the six contracts in question had been milling their sugarcane with the CENTRAL under the terms and conditions of those contracts. In consequence, We hold that the lower court erred when it considered the six contracts, Exhibits D-5, D-7, D-13, D-19, D-21 and D23, as effective only for the crop year 1954-55. F THE COURT SUSTAINS THE THIRD COUNTER-ASSIGNMENT OF ERROR IN PLAINTIFFS-APPELLEES' BRIEF RE THE MOST-FAVORED PLANTER CLAUSE WHICH BECAME EFFECTIVE DURING THE 1954-55 CROP YEAR. At this juncture, We have arrived at the most important legal aspect of this case. In a sense, where We are is actually the turning point of the instant litigation. Here is where the Court will have to enforce the evident and indubitable spirit of Republic Act 809 rather than what We have seen earlier in this decision to be the rather latently ambiguous tenor of its provisions. Our fundamental perspective cannot be more compelling, which is to protect and preserve by all possible means within logic and law whatever benefit can be derived by the sugar plantation laborers from the implementation of the statute. Indeed, We would be miserably failing the primary objective of the Act, were We to permit the capitalist sectors of the sugar industry the millers and the planters to take advantage of the passage of the law thru some kind of device, seemingly permitted by its language but which could exclude the less fortunate third sector the plantation laborers from deriving any benefit from the enforcement of the Act which We have found earlier in this decision to have been approved precisely to ameliorate their financial and social condition. Importantly, We reiterate emphatically the proposition We have rather lengthily discussed earlier herein that any construction of the statute under scrutiny that would allow the millers and planters to enter into contracts that can have the effect of depriving the plantation laborers of any share in the produce of the sugar district to which their planter-employers belong must have to be ruled out, if We are to remain faithful to its basic character as a police power and social justice measure. The Central increased by contract the shares of some planters in 1954-55. Such increase is of transcendental significance. As We have stated earlier, in the amended complaint, plaintiffs-appellees, it is alleged as a second and alternative cause of action that: E

"2. That defendant CENTRAL has refused and continues to refuse to give all the plaintiffs PLANTERS a sharing participation in excess of 60%; "3. That on October 26, 1954, the defendant CENTRAL through its General Manager., M.N. Castaeda, sent the plaintiff ASOCIACION a letter, copy of which is hereto attached as Annex 'B' and made an integral part of this Amended Complaint, informing the latter that certain planters have been given a share in the sugar production as high as 63% to 64% (64% if the production of the defendant CENTRAL is 1,200,000 piculs or over); "4. That although the old written milling contracts in the Talisay-Silay Mill District only stipulate a sharing participation of 60% for the planter, the higher sharing participation provided for in the new milling contracts is deemed incorporated in the old written milling contracts because of the following provision of the old written milling contracts: 'VIGESIMO SEGUNDO: 'La Central' conviene en que no firmara in aceptara, mas adelante, contratos con ningun Plantador, que reunan mejores condiciones que las concedidas a los que se obliguen a moler su caa dulce en la fabrica para la cosecha de '920-21; quedando obligada, is contraviniese esta clausula, a conceder a dichos Plantadores los privilegios favorables que concediere a los nuevos.'. "5. that both Sections 5 (b) and 11 (b) of the Executive Orders Nos. 900 and 901, Series of 1935, provide as follows:. 'Plantation milling share. The percentage of the sugar manufactured by the mill from sugarcane grown on a plantation which the mill company returns to, or credits to the account of, the owner and/or planters of the plantation shall be known as the 'basic plantation milling share' and shall be determined as follows: xxx xxx xxx

(b) For plantations or parts thereof not covered by valid written milling contract between the mill company and the owners and/or planters of such plantations, the basic plantation share shall be the most frequent basic plantation milling share stipulated in valid written milling contracts between the mill company and the owners and/or planters of other plantations adherent to the mill.' "6. That construing together the above quoted provisions of the law and the contract, the plaintiffs PLANTERS, both with ant without written milling contracts, are therefore entitled starting from the crop year 1954-55 to a sharing participation of 63% of the production, or 64% in case the sugar production of the defendant CENTRAL is 1,200,000 piculs or over, inasmuch as said higher participation should be considered as the most frequent basic plantation milling share for the Talisay-Silay Mill District;" (Pp. 10-13, Central's Rec. on Appeal.). The prayer corresponding to the foregoing cause of action is as follows: "ON THE SECOND AND ALTERNATIVE CAUSE OF ACTION 1. Declare, in that event that this Honorable Court should rule that the sharing proportion prescribed by Republic Act No. 809 is not applicable to the Talisay-Silay Mill District, that the sharing participation of 63%, or 64% in case the total production of defendant CENTRAL is 1,200,000 piculs or over, in favor of plaintiffs PLANTERS shall be applicable to the Talisay-Silay Mill District starting from the crop year 1954-55 and for every crop year thereafter; 2. Order the defendant CENTRAL to account for and pay to plaintiffs PLANTERS the proceeds of the sugar and molasses representing the increased participation in favor of said plaintiffs PLANTERS during the past crop years starting from 1954-55 crop year;" (Pp. 1516, Id.). The third counter-assignment of error of the plaintiffs-appellees in their brief deals with the failure of the trial court to make a finding on their above alternative cause of action. Among other things, in said brief they argue: "It is clear, therefore, that if Republic Act No. 809 is not applicable to the Talisay-Silay Mill District, then the 'most favored planter clause' can be invoked by all contract planters of the Talisay-Silay Mill District. Consequently, the higher sharing participation given by the defendant Central to the planters mentioned in Exh. 'U' became the most frequent basic plantation milling share of the said district starting from the crop year 1954-55 as contemplated in Executive Orders Nos. 900 and 901 series of 1935." (Page 19, Appellees Brief.) The prayer in said brief in respect to that counter-assignment of error is: "(2) In the alternative, declaring that the planters of the Talisay-Silay-Mill District are entitled to a higher sharing participation of 63%, or 64% if the production of the Central exceeds P1,200,000 piculs, starting from the 1954-55 crop year;" (page 111, Appellees Brief.) In connection with such posture of the PLANTERS, admitted it is that on October 26, 1954, General Manager M. N. Castaeda of the CENTRAL addressed the following letter to the ASOCIACION: "THE TALISAY-SILAY MILLING CO., INC. TALISAY, NEGROS OCCIDENTAL PHILIPPINES. October 26, 1954 Asociacion de Agricultores de Talisay-Silay Talisay, Negros Occidental Sirs: Please be advised that in accordance with the milling contracts executed by this Central and the planters indicated below, the sugar distributions corresponding to the signatories thereof are as follows: Name Hacienda Central Planter Share Share Jocson, Flory C. de Gloria 38% 62% Layson, Vicente M. Bayusan 38% 62% Magbuyo 38% 62% Tambara 38% 62% Granada, Edgardo Gloria 38% 62% Oca, Severino de Caridad 38% 62% Dalimos-os, Bonifacia A. 38% 62% Jundos, EnriqueConcepcion 37%-36% 63%- 64% Lacson, Natividad Sta. Maria 37%-36% 63%-64% Lacson, Angelina Sta. Maria 37%-36% 63%-64%

(Ramon Lacson) Note: 36%-64% for central's and planter's participation, respectively, in force if production exceeds or reaches 1,200,000 piculs. Yours truly, s/M.N. Castaeda t/M.N. Castaeda General Manager" (Pp. 393-394, Record on Appeal.) The letter does not say so, but the evidence is uncontradicted that all the contracts referred to were executed between February and September, 1954, hence they correspond to the 1953-54 crop year. 12 However, in its supplemental memorandum of December 2, 1978, the CENTRAL maintains that although there were really increases given to some planters in their new contracts, as thus alleged by the PLANTERS, the provisions granting said increases were never fully implemented and, in fact, it war solely during crop year 1954-55 that it was partially implemented, as shown, according to it, in Annex A of said supplemental memorandum; which is the record of actual percentage shares given to the so-called favored planters from crop year 1953-54 to crop year 1959-60. In other words, whereas, on the one hand, the PLANTERS contend that the mostfavored-planter clause should be held by Us to have been in force from crop year 1954-55 and all subsequent crop years, on the other hand, the CENTRAL maintains that at most it should apply only to crop year 1954-55. In regard to this controverted point, it is Our considered opinion and so We hold that both parties should be bound by their respective pleadings in the trial court and to the positions taken by them in their respective briefs. Notwithstanding that We note that the contracts containing the most-favored planter clause became effective during the 1953-54 crop year, the PLANTERS have specifically asked in their pleadings that the same applied from crop year 1954-55 and the subsequent ones, which must be due to the fact that as the CENTRAL contends, according to the records, it was only in that year that it was implemented. But We cannot, on the other hand, sustain the pose of the CENTRAL that said enforcement of the clause in controversy be limited to the 1954-55 crop year exclusively, because We find this contention to be rather late, since in the CENTRAL's answer to the amended complaint of the PLANTERS filed on December 22, 1956 already, which answer is dated February 28, 1957, on which date the actual facts must have been by then within the knowledge of the CENTRAL, it was completely silent in respect to this particular point, even as it denied the correctness of the PLANTERS' construction of the most-favored-planter clause. More, the PLANTERS reiterated their position in their brief as appellees, by way of a third counter assignment of error, and no reply brief appears to have been filed by the CENTRAL. Indeed, We cannot consider as admissible evidence at this appeal stage, the aforementioned Annex A of the CENTRAL's supplemental memorandum of December 2, 1978. The best We can do under the circumstances is to bind the PLANTERS to their repeated posture of asking that the said clause in question be considered in relation to crop year 1954-55 onward. The effect of such most-favored-planter clause Thus, it is such increase in the shares of some planters given by the CENTRAL by virtue of the contracts referred to that entails the legal consequences We are about to consider. The PLANTERS maintain that:. "We respectfully submit that the Lower Court should have made a specific finding on the alternative cause of action, notwithstanding its finding on the first cause of action. "This alternative cause of action is predicated on Executive Order No. 900 series of 1935 section 5 (b) and Executive Order No. 901 series of 1935 section 11 (b) which both provide as follows:. 'Plantation milling shares. The percentage of the sugar manufactured by the mill from sugarcane grown on a plantation which the mill company returns to, or credits to the account of the owner and/or planters of the plantation milling share' and shall be determined as follows: xxx xxx xxx

'(b) For plantations or parts thereof not covered by valid written milling contract between the mill company and the owners and/or planters of such plantation, the basic plantation share shall be the most frequent basic plantation milling share stipulated in valid written milling contracts between the mill company and the owners and/or planters of other plantations adherent to the mill.' "Before 1954, the maximum share given by the defendant CENTRAL to any planter of the Talisay-Silay Mill District was 60%. However, the written milling contracts contained this stipulation: 'VIGESIMO SEGUNDO; 'La Central' conviene en que no firmara in aceptra, mas adelante, contratos con ningun Plantador, que reunan mejores condiciones que las concedidas a los que se obliguen a moler su caa dulce en la fabrica para la cosecha de 1920-21; quedando obligada, si contraviniese esta clausula a conceder a dichos Plantadores los privilegios favorables que concediere a los nuevos.' (See the aforementioned paragraph of the Milling Contracts attached to Exh. C, C-1 to C-62.) "On October 26, 1954, the defendant CENTRAL sent a letter to the plaintiff ASOCIACION (Exh. 'U') informing the latter that certain planters had been given a share in the sugar production as high as 63% to 64% (64% if the production of the defendant CENTRAL is 1,200,000 piculs or over). This higher sharing participation can also be seen in the Milling Contracts marked as Exhs. D-5 and D-10. "Considering, therefore, the effects of the 'most favored planter clause' in the old milling contracts, it follows that the higher sharing participation of 63-64% in favor of the planters is deemed incorporated into the new contracts, becoming thereby the most frequent basic plantation milling share in the Talisay-Silay Mill District starting from the 1954-55 crop year. "It should be pointed out that the phrase 'que reunan mejores condiciones que las concedidas a los que se obliguen a moler su caa dulce en la fabrica para la cosecha de 1920-21' does not mean that only planters who agreed to start milling their canes from the 1920-21 crop are entitled to the 'most-favored planter clause'. The correct interpretation is that the said clause shall be applicable to all planters whose contracts contained the same terms and conditions as those in the 1920-21 contracts. An examination of the milling contracts (Exh 'C', 'C-1' to 'C-62') would show that practically all of them are extensions of the old 1920-21 contract. This 1920-21 contract is the pre-war standard milling contract of the Talisay-Silay Mill District. As a matter of fact, all pre-war contracts, regardless of date of execution, were deemed to have commenced from 1920-21 and to terminate 30 years thereafter or 1949-50. Thus, the old standard milling contract provided: OBLIGACIONES DEL PLANTADOR 'Primera: Que durante period o de treinta (30) aos, a contar desde el momento en que La Central le notifique que se halla a recibirla, entregara a la mencionada 'La Central', debidamente despuntada y limpia de punta y hoja, toda la caa que se siembre, cultive y produzca en sus dichas tierras y haciendas.' xxx xxx xxx

OBLIGACIONES MUTUALES

'12. Este contrato estara en vigor hasta el dia primero de Junio de 1950. La primera cosecha del Plantador que se sujetara a los terminos del presente contrato, sera la cosecha de 1920-21, y la ultima, la de 1949-1950.' (Appendix '14' of the Answer found on pp. 150 and 153 of the Central's Record on Appeal.) "It is clear, therefore, that if Republic Act No. 809 is not applicable to the Talisay-Silay Mill District, then the 'most favored planter clause' can be invoked by all contract planters of the Talisay-Silay Mill District. Consequently, the higher sharing participation given by the defendant Central to the planters mentioned in Exh 'U' became the most frequent basic plantation milling share of the said district starting from the crop year 1954-55 as contemplated in Executive Orders Nos. 900 and 901 series of 1935." (Pp. 15-19, PLANTERS' Brief.) On the other hand, the position of the CENTRAL in respect to the issue thus raised by the PLANTERS is stated in its answer to the amended complaint thus: "4. In answer to paragraph 4 of said Second and Alternative Cause of Action, it avers that in the old written milling contracts in the Talisay-Silay mill district the stipulated planter's participation is 55%, and that is, as appears from the copy of clause "VEGISIMO SEGUNDO" thereof inserted in paragraph 4 of the Second and Alternative Cause of Action, the stipulations of said clause are confined to planters 'que se obliguen a moler caa dulce en la fabrics para la cosecha 1920-21', and none of the instant plaintiffs qualifies under that description." (Page 40, Record on Appeal.) As We read it, the contractual stipulation around which the instant controversy between the appellant and the appellees revolves does not really present much difficulty as to what it must have been contemplated by the parties to signify. It is a provision found in all contracts between the Central and the Planters. It reads: "VIGESIMO SEGUNDO: 'La Central' conviene en que no firmara in aceptara, mas adelante, contratos con ningun Plantador, que reunan mejores condiciones que las concedidas a los que se obliguen a moler su caa dulce en la fabrica para ;a cosecha de 192021; quedando obligada, si contraviniese esta clausula, a conceder a dichos Plantadores los privilegios favorables que concediere a los nuevos." It is Our considered opinion that the following free literal translation of such Spanish-worded provision fairly conveys what the parties to the contracts in dispute had in mind: "TWENTY SECOND:" 'The Central' agrees that it win neither sign nor accept, henceforth, contracts with any Planter, which will provide conditions better than those conceded to those (Planters) who had obligated themselves to mill their sugarcane in the factory during the 1920-21 harvest; thereby being bound, should it contravene this clause to concede to those Planters the same favorable conditions which it shall have conceded to the new ones." The obvious thrust of this provision is to see to it that the planters who had bound themselves by their contracts with the CENTRAL in 1920 to the ratio of sharing therein stipulated are not tied down to said rates should the CENTRAL grant higher percentage of sharing to any planter subsequently executing contracts with it. Under this stipulation, should such eventuality materialize during the life of the earlier contracts, all the planters concerned would automatically be entitled henceforth to the higher ratio stipulated in the new contracts, as if the former contracts were correspondingly amended for the purpose. In effect, this twenty second clause of the 192021 contracts partake of the nature of a most-favored-planter clause, to the end that no planter in the district can be granted a higher percentage of sharing than any other, thereby to maintain uniformity in the relations of the CENTRAL with all the affiliated planters and thereby correspondingly avoid discrimination among them which could be prejudicial to the interests of the industry. We cannot accept the CENTRAL's pose that the PLANTERS of 1953-54 do not qualify under the description of planters "que se obliquen a moler caa dulce en la fabrica para la cosecha 1920-21" (in English - who had obligated themselves to mill their sugarcane in the factory during the 1020-21 harvest). According to the CENTRAL, this clause refers exclusively to the very planters who signed the original contracts for the 1920-21 crop year, thereby excluding entirely from the enjoyment of the benefits thereof even the successors-in-interest of said planters. In effect, the theory of the CENTRAL is that the right created thereby and its corresponding obligation related thereto is purely personal to the planters of 192021. The Court cannot agree. A studious examination of all the contracts in the record would give anyone the unmistakable impression that the contractual relationship between the millers and the planters in all the sugar districts of the Philippines is characterized by uniformity and equal treatment among all the planters. 13 There are no instances where any planter or group of planters of a given district is extended any favorable term or terms not similarly given to all the other affiliated planters of that district. Indeed, We are impressed that it is essential for the good of the sugar industry itself that the millers do not discriminate among their planters. So much so that to maintain such even treatment, specially as to the ratio of sharing in the proceeds of production, Section 5 (b) of Executive Order No. 900, series of 1935 and Section 11 (b) of Executive Order No. 901, of the same series, both provide as follows: "Plantation milling shares. The percentage of the sugar manufactured by the mill from sugarcane grown on a plantation which the mill company returns to, or credits to the account of the owner and/or planters of the plantation milling share and shall be determined as follows: xxx xxx xxx

"(b) For plantations or parts thereof not covered by valid written milling contract between the mill company and the owners and/or planters of such plantation, the basic plantation share shall be the most frequent basic plantation milling share stipulated in valid written contracts between the mill company and the owners and/or planters of other plantations adherent to the mill." thereby extending even to the non contract planters the required equality and uniformity among the contract planters. In fact, the periods of the contracts are practically co-terminus with each other, except perhaps in the instances where the planters who dealt directly with the CENTRAL happened to be mere lessees for limited periods. (Exhibits D-7, D-13, D-19 and D-21.) Such being the case, We are more inclined to view the right involved in the clause in question as not personal to the original planters of 1920-21, contrary to the claim of the CENTRAL. We read stipulation as not depriving the original parties thereto of the prerogative to transfer and transmit their rights and obligations to others during the duration of their contracts. The guarantee of equal treatment implicit in the provision is in line with the characteristic uniformity that pervades among all the contracts among the component elements of the industry. We see no reason why the assignees and transferees of the original parties should be discriminated against. To be sure, this is the logical and legal consequence of stipulation No. 17 of the 1920-21 contracts which reads as follows: "17. Que este contrato, y todos sus terminos obligaciones y condiciones se entenderan contraidos tambien por las tierras y plantaciones mencionadas, y sera, obligatorios para los Plantadores testamentarios, albaceas, cesionarios y representantes de los Plantadores y para las plantaciones y las tierras." (See Annex A of Exhibit C.). This is in consonance with Article 1311 of the Civil Code which provides that "contracts take effect only between parties, their assigns and heirs, except in cases where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by law." (Cristobal v. Gomez, 50 Phil. 810; Eleizegue vs. Lawn Tennis Club, 2 Phil. 309.) Not only that. All but eleven of the contracts here in dispute are mere extensions of the original contracts of 1920-21, For example, Exhibit C, the contract between the CENTRAL and PLANTER Rosendo Alvarez, which is mutatis mutandis identical with all the others, contains the following provisions:

"WHEREAS, the PLANTER represents and warrants that he is the present true and lawful owner, in fee simple, of the following described land (hereinafter referred to as the PLANTATION): (description) "WHEREAS, the said PLANTATION is subject to a milling contract heretofore executed by and between the parties (or their predecessors in interest) 'duly registered and annotated on the Title of the said property' under the terms and conditions set forth in the printed form of the said milling contract, copy of which is hereto attached and made an integral part thereof, marked as Annex A; "WHEREAS, the said milling contract is due to expire on June 1, 1950, and the parties hereto have agreed to extend the same for the period herein fixed, under the same terms and conditions, except as herein otherwise provided, changed or modified." The ready and necessary implication of these whereases is that the PLANTERS who are parties in the instant case are either the same planters of 1920-21 or their successors. And since it is stipulated that they are "subject to the same terms and conditions contained in the printed form Annex A," regardless of whether they are the same parties or successors, the ineludible inference is that all the rights and obligations of the original PLANTER bound by said contract were transmitted to said successors, without any qualification, much less any diminution. Again, from the second whereas above quoted it can be clearly gathered that the extension agreed upon was made subject to the same terms and conditions of the original contracts, "except as herein otherwise provided, changed or modified," And scrutinizing the terms of said contracts, it is obvious that there is no contrary provision, change or modification stipulated therein in regard to the clause under consideration. In this connection, it may also be explained that in the new contracts, Exhibits D-6 to D-13, inclusive, and D-19, D-21 and NNNNNN the only modifications contained therein which differentiate them from the old ones consist in the reference to the PLANTERS concerned as not being either the same planters of 1920-21 or their successors but new ones, and, of course, the additional corresponding stipulations arising from that fact. What is importantly relevant is that it is expressly stipulated in these new contracts that the parties have agreed to make the same subject to the identical terms and conditions as those in the 1920-21 contracts, which necessarily means that all the rights granted to the 1920-21 planters were also being extended to the new planters. In other words, as to these new planters, the so-called most-favored-planters clause became obligatory upon the CENTRAL not by transmission from a predecessor-in-interest but by consequent concession on the part of the CENTRAL in the new contracts, when it agreed that they would be subject to the terms and conditions of the 1920-21 contracts. For better appreciation, We quote the pertinent provision thus: "WHEREAS, the PLANTER represents and warrants that is the present true and lawful owner, in fee simple, of the following described land (hereinafter referred to as the PLANTATION): (description) "WHEREAS, the parties herein have agreed and stipulated to subject the said plantation to the applicable terms, conditions and stipulations of a milling contract heretofore executed by and between the CENTRAL and other adherent planters, as set forth in the printed form of the said milling contract, copy of which is hereto attached and made an integral part hereof, marked as Annex A, except as such applicable terms and conditions of Annex A are herein otherwise provided, changed or modified; "NOW, THEREFORE, for and in consideration of the premises and of the mutual covenants and undertakings herein and in said Annex A provided, the parties have agreed and stipulated, and by these presents do hereby agree and stipulate, as follows: "1. PERIOD OF MILLING CONTRACT. "This agreement, as well as the aforesaid applicable terms, conditions and stipulations of Annex A shall be effective immediately and shall extend until the first day of June, 1964 and the last crop of the PLANTER to be subject thereto, as hereby amended, shall be the sugar crop of 1963-64. "2. RAILROAD. "The CENTRAL will maintain and operate its existing lines of steam or motor railway, or both, with all existing sidings, for the transportation of sugarcane, sugar, fertilizer, materials and supplies over rights-of-way now used by it, during the whole period of this contract. "The CENTRAL, if it should find it necessary, will also construct such branch lines of railway, either permanent or temporary, at such points or places as may in its judgment from time to time deem necessary, to receive and transport sugarcane from the PLANTER's lands to the mill, either independently or in connection with the aforesaid existing railroad systems as the CENTRAL may consider most convenient for the general operation of its factory. "3. PARTICIPATION IN THE SUGAR AND BY-PRODUCTS. "Paragraph 'VIGESIMOPRIMERO' of the 'PACTOS A QUE SE OBLIGA LA CENTRAL' of the aforesaid Annex A is hereby amended by reducing the share of the CENTRAL in the sugar and the molasses produced, from Forty-five percent (45%) to thirty-eight percent (38%)" (Exhibit D-6.) From the very nature of the clause in dispute, We are convinced that it is obviously among the terms and conditions referred to in this provision as "applicable". Briefly stated, the very circumstances indicated in the contracts in dispute compel the natural and inescapable conclusion that the plaintiffs-PLANTERS in the instant case are entitled to the benefits of the most-favored-planter clause just discussed. Upon these premises, We find no alternative than to sustain the PLANTERS' third counter-assignment of error. We hold that under the abovequoted twenty-second clause of the contracts We have discussed, the appellant CENTRAL must extend to all the Planters having contracts with it during the 1953-54 crop year the highest rate of sharing stipulated in the contracts it had newly entered into with some planters in 1954 as specified in the foregoing discussion. And pursuant to Executive Orders Nos. 900 and 901 just cited, the same ratio should govern insofar as the non-contract planters are concerned. May Section 9 of Republic Act 809 be applied to such ensuing situation, such that the plantation laborers should be held entitled to a portion of the increase thus given to the planters? We believe so. In consequence of the foregoing conclusion We have arrived at, the next issue for Our resolution is whether or not the increase in the share We have thus recognized the PLANTERS to be entitled to correspondingly carries with it the application of Section 9 of Republic Act 809 which prescribes a share for the laborers to be taken from any increase that the PLANTERS would get "under the Act." This is what that Section 9 provides: "Sec. 9. In addition to the benefits granted by the Minimum Wage Law, the proceeds of any increase in the participation granted the planters under this Act and above their present share shall be divided between the planter and his laborer in the plantation in the following proportion:

"Sixty per centum of the increased participation for the laborers and forty per centum for the planters. The distribution of the share corresponding to the laborers shall be made under the supervision of the Department of Labor. "The benefits granted to laborers in sugar plantations under this Act and in the Minimum Wage Law shall not in any way be diminished by such labor contracts known as 'by the piece,' 'by the volume,' 'by the area,' or by any other system of 'pakyaw,' the Secretary of Labor being hereby authorized to issue the necessary orders for the enforcement of this provision." But before We address Ourselves to that all-important legal issue, We should perhaps find out first what is the exact factual milieu that will serve as definite basis for Our action. According to the trial court, and here does not seem to be any dispute about it, the official records show that the respective annual sugar productions in the CENTRAL during the periods material to this case are: Piculs

Crop Year 1952-1953 1953-1954 1954-1955 1955-1956 1956-1957 1957-1958 1958-1959 1958-1960 (Page 436, Record on Appeal.)

Produced 864,493 1,059,037 1,071,346.98 822,130.97 809,115.79 985,582.58 1,250,008.70 1,189,837.37

Exhibit G G G G G AA-2 QQQQQ-1 RRRRR-1

and that the by-products produced during the same periods are as follows:

Exhibit G G G G G AA-2 QQQQQ-1 RRRRR-1 (Pp. 436-437, Record on Appeal.)

Year 1952-1953 1953-1954 1954-1955 1955-1956 1956-1957 1957-1958 1958-1959 1958-1960

Molasses (gallons)

Pressed Cake (tons)

Bagasse (tons) 117,296. 851 136,746. 355 141,967. 437 108,821.2 3 103,148. 408 123,517. 935 172,496. 806 165,345. 739

2,172,932 9,185.850 2,159,979 2,490,748 1,659,447 11,920.0 54 11,619 8,594.2

1,283,373 7,912.075 1,736,202 2,970,158 2,679,646 8,411.85 13,765.5 89 13,723.2 00

On the basis of the foregoing figures, excluding, of course, crops years 1952-63 and 1953-54 before the most-favored planter clause went into effect, and if Section 1 of Republic Act 809 were to be applied, the sharing ratio between the mill and the planters in the Talisay-Silay district would have been 65% for the planters and 35% for the mill in the crop years 1956-57 and 1957-58; and 67-1/2% for the planters and 32-1/2 for the mill in crop years 1954-55, 1957-58, and 1958-59; and 70% for the planters and 30% for the mill in crop year 1959-60. Now, the respective ratios stipulated in the contracts concerned are these: Exhibit D-5, contract of Jose Cuaycong 37% for the Central and 63% for the planter Exhibit D-6 of Dominador Agravante and/or his wife Bonifacia A. Dalimo-os 38% for the Central and 62% for the planter Exhibit D-7 of Edgardo Granada 38% for the Central and 62% for the planter Exhibit D-9 of Flory de Jocson

38% for the Central and 62% for the planter. Exhibit D-10 of Enrique Jundos 37% for the Central and 63% for the planter Exhibit D-12 of Vicente Layson 38% for the Central and 62% for the planter Exhibit D-13 also of Vicente Layson 38% for the Central and 62% for the planter Exhibit D-19 of Severino de Oca 38% for the Central and 62% for the planter, with the proviso that in any crop year wherein the production exceeds 1,200,000 piculs, the proportion would be 64%-36%. Thus, there were at least two planters given 63%. Under the most-favored-planter clause, and because there was always a majority of contract planters, the PLANTERS became entitled, instead of that provided by the law, to a sharing of on 63 - 37 during the whole period referred to, except for crop year 1959-60, when it was 64-36. Accordingly, We hereby declare and hold that out of the 3% and 4% increase We have thus found the PLANTERS are entitled to, their respective laborers are in turn entitled to 6%. Therefore, the portions in dispute and held in escrow, namely, 5% for 1956-57 and 1957-58; 7-1/2% for 1954-55, 1955-66 and 1958-59; and 10% for 1969-60, should be shared as follows: Mill Planters Laborers (a) For crop years 1954-55 to 1957-58 and 1959-60 4-1/2% 1.2% 1.8% (b) For crop year 1958 69 3-1/2% 1.6% 2.4% 14 The legal reasons and the logic and equity behind this ruling. As earlier intimated, the legal basis of the foregoing ruling may not be readily discernible. One may not perceive it from the language of the statute read in isolation from the inescapable objective of the enactment and the compelling reasons that brought about its passage. As far as the PLANTERS are concerned, they would view the legal consequence of the most-favored-planter clause in their contracts with the CENTRAL as being outside the purview of Republic Act 809. And from the point of view of the CENTRAL, they would naturally rather be adjudged liable to give the stipulated increase by virtue of said clause than be compelled to comply with the ratios provided for in Section 1 thereof. Thus, if We did nothing more than enforce the twenty-second contractual clause in question, it is to be expected that all the PLANTERS, herein plaintiffs, would be more than contended to receive the increase of 3% or 4% in their share of the production in 1954-55, and the subsequent years provided they would not have any obligation to give any part thereof to their laborers. We are fully convinced. however, that the Court is called upon to go further and inquire as to the applicability of Section 9 of the Act in the premises. It is to Us utterly inconceivable that the legislature ever contemplated that as a consequence of the direct or indirect enforcement of the Act, the PLANTERS would by contract be getting an increase of their participation in the sugar production of their district for themselves alone, with their laborers not getting any portion thereof. And, as We view it, the pivotal consideration in that respect is whether or not the execution of the new contracts in 1953-54, particularly those that provided for increased shares for the planters, and the consequent enforcement of the most-favored-planter clause may be deemed as resulting in an increase of the share of the PLANTERS "under the Act" as that phrase is used in Section 9 thereof, as effectively as if there had been an "absence (during said crop year) of written milling agreements between the majority of planters and the millers of sugarcane" in the TalisaySilay district referred to in its Section 1. In this connection, it may be recalled that in the crop year 1952-53, the first year of enforceability of Republic Act 809, there were initially only 76 planters with contracts with the CENTRAL. It was the execution of 10 contracts on February 17, 1953 that increased their number to 86. Had those 10 planters opted not to sign any contract, there would have been a majority of non contract planters during that year, for out of the 161 planters, there would have been only 76 with contracts and 85 without. With those figures and the rates of increase provided for in Section 1 of the Act in mind, it is not difficult to surmise and deem as a certainty that the parties concerned must have exerted all efforts to bring about new contracts, and the bargaining and concessions involved in the process may well be left for the imagination. One has to be very naive to believe that those 10 contracts which overturned the situation for the benefit of the CENTRAL were offered to the CENTRAL by the planters concerned on a silver platter. This is not to ascribe bad faith per se to any of the parties involved; it is only a recognition of how hard economic factors can force those adversely affected thereby to seek alternatives and devices, not anyway proscribed by the letter of the law, by which the expected harm can at least be mitigated, if not evaded. What happened in the crop years after 1952-53 must have been the same story told all over. The majority of contract planters had to maintained. Thus, as We have already explained with specific reference to the pertinent detailed facts, the majority of 11 in 1952-53 became 29 in 1953-54 and 32 in 1954-56. After the most favored planter clause went into effect, the situation for the PLANTERS became less critical, and so, the majorities in 1955-56 and 1958-59 were only 22, in 1956-57 and 1957-58 were 25 and in 1959-60, 26. Besides, many of the contracts were expiring by end of the 1950's. We take judicial notice of the fact that as things stood in the sugar industry at the time of the passage of Republic Act 809, the millers occupied such a position of dominance over the planters that enabled the former to dictate unquestioningly under what terms the sugarcane of the latter would be milled, it is easily understandable that nothing short of governmental compulsion in the form of authoritative mandatory regulations or legislations could have made the CENTRAL yield to any diminution of its participation in the sugar production of its district of that prevailing at the time. An effective legislative threat spelling economic disadvantage to it was imperative. The Moran report above referred to attests to that. Indeed, it may be mentioned here that the Court knows that in other sugar districts judicial controversies exist involving claims that, with the cooperation of the planters concerned, contracts have been executed in frantic attempts to minimize as much as possible the effects of the law insofar as the millers were concerned, to the

prejudice of the plantation laborers who were made to conform, if they did, to minor improvements of their condition which were much less than what would otherwise have been given to them under it. The conclusion is thus inescapable that what brought about the increased participation for the planters concerned in the contracts here in dispute cannot be anything else than the feared consequence of the application of Section 1 of the law under discussion. In other words, those increases were given purposely to avoid the effects of said provision. Thus, there can be no doubt that at least in logic and equity, if not in strict law, the said increases come under the provision of Section 9 which refers to "any increase in the participation granted the planters under this Act." We can assume that the legislature is not as naive as to make the primordial purpose of its enactment to provide relief to the plantation laborers dependent exclusively on the absence of a majority of planters having written agreements with the millers, when it was aware or ought to have been aware that it was the easiest thing for the millers to concede to the planters by contract increases much less than those prescribed by the statute and thereby preclude the application of Section 1. The Court is thoroughly convinced that the increase contemplated in Section 9 as the criterion for the direct participation of labor in the production of the district could not be only that prescribed in Section 1, which is based on absence of contracts with the majority of the planters in the district. After mature deliberation on all relevant circumstances and considerations, We have arrived at the conclusion that even when there is a majority of contract planters in the district, Section 9 would still apply as long as the contracts providing for increase in the participation of the planters have been executed purportedly to attain the majority required by Section 1, and thereby to prevent the application of the higher rates of increase prescribed by the provisions thereof. It is only by this construction that the full intent of the law under consideration can be realized. We are not unmindful of the vehement suggestion of counsel for the laborers that the more reasonable construction of the Act is that all contracts entered into to avoid the application of its Section 1 should be deemed illegal and void as having been executed in contravention or avoidance of public policy. We have in fact given considerable weight to it. We could not, however, ignore the more ponderous consideration that the law was not intended to do away entirely with the freedom of contract, guaranteed by the Constitution. There are to be sure the forces of police power and the social justice provisions of the Constitution that, as We have explained earlier, can be availed of, but We are persuaded on the basis of the circumstances record in this case as well as those within judicial notice that the Congress had no intent to improve the condition of the planters and their laborers in a manner that would curtail the normal exercise by the planters and the mill owners of their liberty to contract. It is precisely in the compulsion that Section 9 carries to make the planters share, by giving 60% of whatever increase the latter would obtain from the miller, the police power and the social justice provisions operated. Withal, it cannot be said with exact certainty that the contracts in question were entered into in bad faith. The stronger probability is that all the parties concerned might have understood the Act as merely a means by which to compel the millers to relax their adamance to revise the contracts that were about to expire. If nothing were done to provide the planters with something to effectively induce the millers to improve the former's situation, both the planters and their laborers would have remained chained to their wretched condition, particularly the laborers. With the Act, however, the millers were deprived of their superior position from which they could dictate their terms, for the simple reason that if they refused to enter into contracts the ratio provided in Section 1 would hurt them to its full extent. Thus, the planters were enabled to bargain with the miller for better terms without having to lose the advantages that go with having a contract, as against having none. And in Our view, it is also in relation to any improved share that the planters may gain by contract that the Act conceived the corresponding increase for the plantation laborers stipulated in Section 9. The proceeds from milled sugarcane during crop year 1954-55 were retained by the CENTRAL hence there should be a separate computation in relation thereto. As has been indicated in the earlier portions of this opinion, by agreement of the parties and on the security of a bond given by the defendant appellant Luzon Surety Company, all the proceeds of the sugarcane milled during the 1954-55 crop year in the amount of P949,856.53 were retained by the CENTRAL. The trial court sentenced the CENTRAL to pay the ASOCIACION the said amount plus interest of 3% per annum from October 1, 1966 to the date of payment. In this appeal, the CENTRAL denied liability therefor upon the sole ground that there was a majority of planters with contracts during said crop year. It did not raise any issue as to the amount. On the other hand, the PLANTERS did not appeal from nor did they even counter-assign as error the rate of interest fixed by the trial court. Accordingly, We are without authority to change the rate of interest thus fixed by His Honor. Therefore, as of November 30, 1978, the amount in issue should have been P1,610,006.94, including already the interest earned. This amount corresponds to the 7-1/2% that should have been held in escrow of the total production for that crop year. Now, since We hold that the correct ratio for that crop year should be 37% for the CENTRAL and 63% for the PLANTERS, instead of 40-60, the result is, as already indicated earlier, that of the said 7-1/2% which should have been held in escrow, 4-1/2% should pertain to the CENTRAL and 3% to the PLANTERS, and inasmuch as to make the computation simpler, 4-1/2% of 7-1/2% is 60% and 4% of 7-1/2% is 40%, it follows that the CENTRAL is obligated to the ASOCIACION for only P644,002.76 and the PLANTERS shall pay their respective laborers a total of P386,401.66 out of the said amount. PUBLIC INTEREST COMPELS THE COURT TO EXTEND THIS DECISION TO ALL SUBSEQUENT CROP YEARS UP to 1966-67 The evidence regarding crop year 1960-61 is inconclusive. The decision under review covers even crop year 1960-61. The pertinent portion thereof runs that: "After the year 1955-1956, up to the present there has not been any appreciable change in the number of planters with written milling contracts with the Central. This is particularly true after the crop year 1959-1960 because that was the last year of effectivity of the contracts Exh. C, C-1 to C-2. Therefore, Republic Act No. 809 is applicable to all subsequent agricultural years up to 19601961." (Page 435, Record on Appeal of CENTRAL.) In truth, however, the conclusion of His Honor regarding crop year 1960-61 is not based on solid evidence. Thus, with respect to all the previous years, the parties submitted stipulations of facts, accompanied by documents which provided sufficient basis for the needed findings of fact regarding the number of planters that cultivated during each of those crop years and who among them were the contract and non-contract ones. But the last of those stipulations was that of December 5, 1960 covering the 1959-60 crop year. There was no similar stipulation touching on crop year 1960-61. On the contrary, after the trial court had, by its order of December 1, 1959 declared the case submitted for separate judgment, pursuant to the joint motion of the parties of November 13, 1959, as regards crop years 1952-53 to 1958-59, albeit no such separate judgment was ever rendered, and after it had later on again declared the whole case submitted for decision in its order of March 25, 1961, as pointed out in PLANTERS' motion in the court below of September 26, 1961, in that very motion, PLANTERS asked to be allowed to resort to a Request for Admission precisely for the reason that "the parties have not been able to agree on the stipulation of facts" because of "unavoidable circumstances occasioned by the checking of the records and their transmission from Negros to Manila." The record does not even show how this motion was disposed of. Neither does it appear that the request for admission just mentioned, if it went thru its course, brought forth any results. True it is that Exhibit SSSSSS attached to the said request for admission could be a genuine record of the CENTRAL as to how many planters there were in 1960-61, but We cannot find in the record any reliable concrete evidence as to how many of them had written milling agreements with the CENTRAL. In a word, the evidence on the disputed matters in this case which were presented by the parties in the lower court is complete only up to what refers to crop years 1959-60. There is partial evidence showing the number of planters in crop year 1960-61 but not G

enough about the number of contract planters. But the proceeds of each year's production continued to be held in escrow, as indicated in this decision up to crop year 1966-67, even after the entry of TASICA hereinto, hence, from time to time, as already stated at the outset, corresponding motions were filed for the proper disposition of said proceeds, including those corresponding to the crop years subsequent to 1959-60 up to 1966-67. The problem which confronts Us at this point is whether or not this case should be remanded to the trial court for appropriate disposition of the matters relative to the crop years from 1960-61 to 1966-67. The foregoing consideration notwithstanding, We hold that there is no need for such remand. Cases involving labor deserve expeditious and simplified handling not only by the courts but more appropriately by the employers whose attitude should be openness and goodwill rather than reluctance and antagonism. In this connection, the Court cannot but articulate the observation that, even as the submission by the parties of stipulations of facts as to material matters relative to crop years 1952-53 to 1959-60 is creditably in the right direction, much more could have been accomplished to facilitate the expeditious termination of this very important litigation and thus bring into reality the amelioration of the laborers in the sugar industry designed by Republic Act 809, had the CENTRAL and the PLANTERS been more candid to each other regarding such a simple matter of how many contract and non-contract planters there were in the district. It cannot be overemphasized that labor has a big stake here. Republic Act 809 accorded the plantation laborers the all-important opportunity to secure what they should have had long before, namely, a direct share in the production of the sugar industry in which they constitute an indispensable element. Certainly, it is to be regretted that it has taken all those long years before those laborers could be finally told they can get at that only a fraction of the measure of amelioration they had expected. That is not to say that the Court is not entirely blameless for its own part in such delay, added to the six or seven years that the proceedings in the court below lasted, even if Our failure to act earlier can be explained. These cases were submitted for decision by the Court as early as August 12, 1963. In the usual course of the Court's functioning, the records passed from one Justice to another. In the process, some of them reached their compulsory age of retirement. It took sometime before they were succeeded by new ones who had to go over the said records all over again. One can have an idea of the time those Justices and the writer of this opinion had to take in going over and studying the same, if it is considered that there are no less than five volumes of pleadings, almost two feet thick and as many bundles of exhibits numbering over a thousand marked as Exhibits A, A-1 et seq. up to RRRRRR-,1 consisting of documents, tabulations, reports and rather voluminous manuscripts of various kinds, some of them mere copies which can be read only with difficult and the use of magnifying glasses. This mountain of papers, data and literature would have been entirely unnecessary had there been honest and sincere effort on the part of both parties to make the Act effective, if only for the sake of giving labor promptly what was due it. All technicalities should have been set aside. Surely, the question of how many planters there were in the district each year could not have been disputable, being so concrete and readily demonstrable. And the question of how many of said planters had written agreements with the CENTRAL was no more complicated. It is incomprehensible why so much evidence had to be produced to complicate the determination of these practically obvious facts. True it is that certain situations involving some planters or some contracts required the settlement of differences of views as to their legal status, but the determination to those issues, as We have seen them, did not require the mass of evidence We have been made to examine and evaluate. This should not have been the case. Although the rulings this Court has made on the point under discussion in earlier cases referred only to expediting of execution of judgments, already final, awarding monetary claims of laborers, We hold that the principles underlying the same can apply correspondingly with as much reason and force to the circumstances, of the instant litigation. Paraphrasing what We said in Danao Development Corporation vs. National Labor Relations Commission et al., G. R. Nos. L-40706-07, promulgated on February 16, 1978, which was a reiteration of Our admonition in the earlier case of East Asiatic Company Ltd. et al. vs. The Court of Industrial Relations, 40 SCRA 521, claims of laborers must be attended to with complete openness and in the best of faith, to the end that there may be the most expeditious determination thereof soonest by mutual admissions between the parties relative to matters that should ordinarily be beyond dispute. In such instances, it is the inescapable duty of management or of the capitalist sector to lay its books open for appropriate inspection and examination of the duly authorized representatives of the laborers and to otherwise furnish them with correct and accurate information needed by them, considering the nature of the controversy. Equally it is the obligation of labor and other parties concerned to reveal without loss of time and in all good faith facts of their own peculiar knowledge which are relevant and material to the investigation. 1. The matters related to the crop years after 1959-60 should therefore be settled here, if legally possible. 2. All the proceeds from 1960-61 to 1966-67 belong to the PLANTERS and their laborers in the proportion of 40-60 per Section 9. With these considerations in mind and yielding to the prayer of the PLANTERS, the Court has opted to dispense with further proceedings in the trial court for the purpose of disposing of the issues involved in the crop years after 1959-60 up to 1966-67. In doing this, We are not overlooking that the CENTRAL as later on TASICA have always insisted that the pleadings including the supplemental ones, filed with the lower court and in which the parties joined issued for resolution of His Honor refer to events that took place only up to 1959-60 or at the latest 1960-61 and, therefore, in this appeal, this Court has no jurisdiction to pass on matters affecting crop years 1960-61 to 1966-67, much less those subsequent thereto. Strictly speaking from the technical point of view, the CENTRAL and TASICA could have merit. But under the circumstances now obtaining and with the changed attitude of the parties manifested at the hearing of October 10, 1978 and their latest written representations prior and subsequent thereto, it would appear that for Us to limit this decision to the crop years up to 1959-60 and leave the matters related to subsequent crop years for further proceedings in the trial court by requiring the filing of new pleadings and corresponding presentation of evidence would be to waste time, effort and money to all concerned. As We see it, what could be factual issues that the trial court would be called upon to resolve are no longer controverted by the parties, namely, (1) whether or not there was a majority of planters with written milling contracts during those crop years in question and (2) the production figures corresponding thereto. As to such first issue, the pleadings and manifestations of the parties relative to the latest relevant developments in the controversy among them as well as in the sugar industry, particularly in the Talisay-Silay milling district do not indicate any possibility that the majority of the planters therein had renewed or extended their contracts with the CENTRAL or that a sufficient number of new ones had entered into written contracts such as to maintain the majority of contract planters beyond crop year 1959-60. Nowhere in its latest representations does the CENTRAL make any claim that such majority has continued after the 1959-60 contracts expired. In fact, neither the CENTRAL nor TASICA has specifically and effectively denied the allegation in paragraph 5 (a) of the Counter-Petition of the PLANTERS dated December 21, 1963 and paragraph 2 (b) (1) of the Manifestation and Motion of January 10, 1967 of the PLANTERS that as found by the trial court, "crop year 1959-60 . . . was the last year of effectivity of the contracts Exhs. C, C-1 to C62" and, therefore, the majority of planters in the Talisay-Silay milling district did not have written milling agreements since then. And as far as the production figures for the crop years 1960-61 to 1966-67 supplied by the parties and extant in the record, We do not perceive any dispute as to their accuracy, except as to crop year 1963-64 where according to the figures of the CENTRAL the total production was only 1,155.064.09 piculs whereas the PLANTERS claim it was 1,186,679.37 piculs plus 16,340.36 piculs milled thru accommodation in Ma-ao Sugar Central and 202.77 piculs milled in Bacolod-Murcia Milling Co. to make a total of 1,203,222.48 piculs. Actually, the PLANTERS have been asking for a reconsideration of Our resolution of November 7, 1963 which fixed the percentage of disputed sharing at 62-1/2 and 37-1/2, contending that it should have been 70-30 because allegedly the production was over 1,200,000 piculs. Accordingly, leaving for further disposition the 2-1/2% in controversy for crop year 1963-64, it is quite obvious that what would be done by the trial court to dispose of the controversy regarding crop years 1960-61 to 1966-67 may be as well done here and now, thereby cutting short this litigation. Upon the foregoing premises and in the exercise of Our plenary adjudicatory powers, thereby to avoid delaying further the complete termination of this quarter-of-a-century-old case, We laid and hold that in contrast to crop years 1952-53 to 1959-60, Republic Act

809, particularly Sections 1 and 9 thereof, was applicable to and in force and effect in the Talisay-Silay milling district from crop year 1960-61 to crop year 1966-67 and that all the disputed proceeds of production during the whole of said period deposited in the various banks hereinafter to be specified pertain exclusively to the PLANTERS and their respective plantation laborers in the proportion of 40% thereof for the PLANTERS and 60% for the LABORERS. The CENTRAL's fourth assignment of error is to the effect that: IV

"THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF THE PLANTERS ERRED IN APPARENTLY OVERLOOKING THAT THE CONGRESS OF THE PHILIPPINES DID NOT INTEND AND DID NOT MEAN TO APPLY REPUBLIC ACT 809 IN A MANNER THAT WOULD NULLIFY EXISTING CONTRACTUAL RIGHTS AND IMPAIR THE OBLIGATION OF EXISTING CONTRACTS; (1) Because, the Congress of the Philippines in the Explanatory Note to the Bill (H. No. 1517) which became Rep. Act No. 809 has in effect clearly acknowledged its constitutional duty and intention to respect and uphold the obligation of existing contracts, by frankly stating that 'this bill does not violate existing milling agreements between planters and millers of sugarcane as its provisions are only applicable in the absence of such milling contracts', in fact, Section 10 of said Act clearly anticipates that the application of its provisions to planters under contract would be invalid; (2) Because it seems to us clearly illogical and unreasonable to hold that said Act would violate or impair the obligation of existing contracts only when the planters under contract happen to be in the majority, but not when the planters under contract happen to be in the minority in their district; (3) Because, Republic Act 809 cannot in good conscience be interpreted in a manner that will so unjustly allow or permit any planter under contract to repudiate his contractual obligations to the Central, but at the same time to retain and enjoy all the rights and benefits accruing to him under the same contract, regardless of whether he happens to be in the majority or in the minority of the planters in his district; (4) Because, contractual rights are also property rights, and the State cannot, by simple legislative fiat, deprive the millers of their contractual and property rights, just to give them to, and increase the profits of, the planters; and also to make the millers pay additional compensation to the planters' own laborers, over the minimum wage fixed by law for all other laborers in the country, regardless of whether the planters under contract happen to be in the majority or in the minority in their milling district." (Pp. 124126, Brief of CENTRAL.) A THIS FOURTH ASSIGNMENT OF ERROR OF THE CENTRAL HAS BECOME ACADEMIC. Stated differently, the position of the CENTRAL is that even on the assumption that there was absence of a majority of planters in the district with written milling agreements with it during the periods in question and hence, Section 1 of Republic Act 809 would be applicable during said periods, the ratios of sharing therein prescribed may not be applied to those of the minority who had written contracts providing for lesser percentage of shares for the respective planters concerned. Considering, however, that in disposing of the CENTRAL's third assignment of error, We have reversed the lower court's finding on which the instant assignment of error is premised, the issue thus raised by the CENTRAL has lost relevance. And more so because We have sustained the PLANTERS' third counter-assignment of error. As may be recalled, it is Our ruling above that the reference point in determining the ratio of sharing among the CENTRAL, the PLANTERS and the latter's laborers need not be the absence alone of a majority of planters with written milling agreements with the CENTRAL referred to in Section 1 of the Act but the provisions of its Section 9 construed in conjunction with the effect of the most-favored-planter clause in the prevailing milling contracts, even if the planters having such contracts were in the majority, with the result that the percentage of the share of all the planters with contracts should be 63% for the years from 1952-53 to 1959-60, except for 1958-59 when it should be 64%. And such being the case, said 63% and 64%, as the case may be, constituted "the most frequent basic plantation milling share stipulated in valid written milling contracts between the mill company and the owners and/or planters of other plantations adherent to the mill" referred to in Executive Orders Nos. 900 and 901, Series of 1935. It follows from this that the said 63% and 64% became the percentage to which planters without written contracts with the CENTRAL became entitled. With the foregoing view We have taken of the basic points related to the CENTRAL's fourth assignment of error, and since, in the light of such view, the predicate of the instant assignment can not exist, further discussion thereof is now purely academic and of no practical bearing on the final result of this case. In brief, no distinction need be drawn between contract planters and non-contract planters for the purpose of determining the share to which the planters in the district should be entitled. The CENTRAL submits as its fifth assignment of error that: V

"THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF THE PLANTERS ALSO ERRED IN APPARENTLY OVERLOOKING THAT REPUBLIC ACT 809, BY EXPRESS PROVISION OF SECTION 8 THEREOF, WAS NOT INTENDED AND CANNOT BE PERMITTED TO AFFECT THE ALLOCATION OF THE PRODUCTION AND/OR MARKETING ALLOTMENTS OR ALLOWANCES OF THE EXPORT, OR "A" SUGAR (EXPORTABLE TO THE UNITED STATES OF AMERICA), THE ALLOCATION OF WHICH AMONG ALL THE MILLING DISTRICTS IN THE PHILIPPINES, AND IN TURN BETWEEN THE MILLERS AND THE PLANTERS IN THEIR RESPECTIVE MILLING DISTRICTS, HAS BEEN FIXED IN ACCORDANCE WITH THE TRADE RELATIONS AGREEMENT BETWEEN THE PHILIPPINES AND THE UNITED STATES OF AMERICA." (Page 135, CENTRAL's Brief.) A THIS ALTERNATIVE PROPOSITION OF THE CENTRAL NEED NOT BE CONSIDERED BECAUSE HOLD THAT SECTION 1 OF REPUBLIC ACT 809 DID NOT APPLY TO THE TALISAY-SILAY DISTRICT DURING THE MATERIAL YEARS IN DISPUTE. The sole point raised by the CENTRAL under the last aforequoted assignment of error is that it is not within the power of the Philippine Legislature to alter or modify, as it does in Section 1 of Republic Act 809, the allocation of export or "A" sugar in view of the provisions of its Section 8 which reads pertinently as follows: "SEC. 8. The compensation to the central or planter or plantation owner shall be paid out of the proceeds of the operation which would have corresponded to the said central or planter or plantation owner, with due regard for the costs of operation or administration and such other charges and deductions as the court may deem just and proper. "Nothing in this Act shall he deemed to affect the agreement between the Republic of the Philippines and the United States of America concerning trade and related matters during a transitional period following the institution of Philippine Independence, and the protocol and annexes thereof, as proclaimed on the first day of January, nineteen hundred and forty-seven." It is argued that under Public Law 371 of the Congress of the United States, approved on April 30, 1946 and otherwise known as the Philippine Trade Act of 1946, as well as Commonwealth Act 733 approved on July 3, 1946, which authorized the acceptance of the trade agreement "to be entered into between the President of the Philippines and the President of the United States pursuant to Public Law 371", the allocation of sugar exportable from the Philippines to the United States was expressly limited ". . . to the sugar producing mills and plantation owners in the Philippines in the calendar year 1940, whose sugars were exported to the United States during such calendar year, or their successor-in-interest, proportionately on the basis of their average annual production (or in the case of such a successor-in-interest, the average annual production of his predecessor-in-interest) for the calendar years 1931-1932 and 1933, and the amount of sugar which may be so exported shall be allocated each year between each mill and the plantation owners on the basis of the proportion of sugars to which each mill and the plantation owners are respectively entitled, in accordance with any milling agreements between them or any extension, modification, or renewal thereof." Hence, it would be violative of the

laws mentioned for the Congress of the Philippines to alter the apportionment of ratio of sharing between the CENTRAL and the PLANTERS in the instances where there are no contracts. Whatever merit there may be in such pose, We consider it quite pointless for Us to rule on it, since, as We have held above, the distribution of the proceeds of sugar production from each crop year from 1952-53 to crop year 1959-60 should be on the basis of the existing contracts between the CENTRAL and the PLANTERS, including particularly the most favored-planter clause, which became operative directly on the PLANTERS, majority of whom had written milling agreements with the CENTRAL during said periods, together with the provisions of Executive Orders Nos. 900 and 901, Series of 1935, on the non-contract planters and, therefore, such allocation is plainly "in accordance with any milling agreement between them (the millers and planters) or any extension, modification or renewal thereof," as required by the statutes invoked. In any event, We wish to make it clear that We agree with the following ratiocination of distinguished counsel for the PLANTERS: "1. Congress of the Philippines has the power to legislate on the allocation of our quota to the U.S. market. "The argument of Appellant Central on this point smacks of a colonial mentality. The Philippine American agreements on the subject of sugar never contemplated the abdication of our sovereign rights on the matter. Section 211 of the Philippine Trade Act of 1946 provides: '(d) Allocation of quotas for Unrefined Sugars. The quota for unrefined sugars, including that required to manufacture the refined sugars, established by this section shall be allocated annually to the sugar producing mills and plantation owners in the Philippines in the calendar year 1940 whose sugars were exported to the United States during such calendar year, or their successors in interest, proportionately on the basis of their average annual production (or in the case of such a successor in interest, the average annual production of his predecessor in interest) for the calendar years 1931, 1932 and 1933, and the amount of sugars which may be so exported shall be allocated in each year between each mill and the plantation owners on the basis of the proportion of sugars to which each mill and the plantation owners are respectively entitled, in accordance with any milling agreements between them, or any extension, modification, or renewal thereof.' "The extension, modification or renewal" of milling agreements mentioned in the foregoing legal provision is not necessarily limited to an extension, modification or renewal arising from contracts. The same may arise from law as a result of the exercise of police power. ' Not only are existing laws read into contracts in order to fix obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order.' (Home Bldg. Loan Assn. v. Blaisdell, 290 U.S. 398). "The absence of intention on the part of the United States to encroach on the exercise of our sovereign functions nor on the part of the Philippines to abdicate its sovereign rights is clear from the wording of Section 215 of the said Philippine Trade Act of 1946 which states: 'Sec. 215. Laws putting into effect allocations of Quotas. The necessary laws and regulations for putting into effect the allocation of quotas on the basis provided for in sections 211, 212, and 214, respectively, shall not be enacted by the United States, it being the purpose of this title that such laws and regulations shall be enacted by the Philippines.' "There is, therefore, no justification in construing the Trade Agreement as a restriction on the power of Congress to legislate on the sharing participation between millers and planters. The United States had no reason to require the Philippines to relinquish its police power to regulate the relations between millers and planters, particularly to fix their sharing participation in the sugar production. In other words, the United States had no preoccupation as to how the export quota would be distributed among the millers and planters, its only concern being that said quota should not be exceeded. "As this Honorable Court has pointed out: 'It is to be observed that both Acts (Bell and Tydings-McDuffie) provide for allocation of the sugar quota in each year between the mills and the planters, thereby implying that the allocation could vary from year to year.' (Suarez v. Mt. Arayat GR L-6435, Decision prom. March 31, 1955). "In the absence of clear and express treaty limitation, it should never be assumed that the Philippines abdicated its sovereign power on a matter essential to our economy. 'Status in derogation of sovereignty should be strictly construed in favor of the state, so that its sovereignty may be upheld and not narrowed or destroyed, and should not be permitted to divest the state or its government of any of its prerogatives, rights, or remedies, unless the intention of the legislature to effect this object is clearly expressed. (People v. Center-O Mart, 214 P. 2d 378; Valley County v. Thomas, 97 P. 2d 345; 109 Mont. 345; Appeal of Reading Co., 22 A. 2d 906, 343 Pa. 320; 59 C.J. p. 1121 note 68; 82 C.J.S. p. 936). "It should also be remembered that the allocation of the sugar quota is not in the nature of a reward or bounty. As this Honorable Court in the Suarez case observed: 'Such contention unwarrantedly assumes that the allocation provided in Section 211 of the 1946 Philippine Trade Act (Bell Act) is in the nature of a bounty or reward for past services in producing and exporting sugar to the United States on or before 1940. We see no reason for such construction. The reference to 1940 export in Section 211 (d) in our opinion merely purports to restrict future sugar exports to the Philippine sugar producers entitled to quotas in 1940, and to exclude those who entered the sugar production field at a later date. The plain terms of the section indicate that it was designed to merely continue the original system of allocation between planters and sugar producing mills initiated in 1934 by the Tydings McDuffie Act, in recognition of the complementary roles and respective contributions of planters and processors to the production and manufacture of the sugar. It is to be observed that both Acts (Bell and Tydings McDuffie) provide for allocation of the sugar quota in each year between the mills and the planters, thereby implying that the allocation could vary from year to year.' (Suarez vs. Mount Arayat, Decision, supra). "Executive Order No. 900, it is true, established a formula for the determination of the respective marketing coefficients of the plantation-owners and millers, but it does not follow that the basis of the quota-sharing is fixed and absolute as to preclude change. "Section 5 of Executive Order No. 900 provides '5. Plantation milling share. The percentage of the sugar manufactured by the mill from sugarcane grown on a plantation which the mill company returns to, or credits to the account of, the owner and/or planters of the plantation shall be known as the "basic plantation milling share' and shall be determined as follows: (a) For any plantation or a part thereof covered by a valid written milling contract between the mill company and the owner and/or planters of that plantation, the basic plantation share shall be as stipulated in the contract. "(b) For plantations or parts thereof not covered by a valid written milling contract between the mill company and the owner and/or planters of such plantations, the basic plantation share shall be the most frequent basic plantation milling share stipulated in valid

written milling contracts between the mill company and the owners and/or planters of other plantations adherent to the mill. In determining the most frequent basic plantation milling share, plantations owned by or operated for the account of the mill company shall not be considered. The qualification (basic) as used in this sections shall be taken to include any general increase in plantation milling shares effected by action of the management, directors, trustees, shareholders or owners of the mill so long as such action shall be valid or subsisting. Variations in plantation milling shares due to bonuses, penalties, or methods of cane delivery, provided for in valid written milling contracts shall not be considered as "basic' in determining plantation milling shares, but may be adjusted between the mill company and the owners and/or planters concerned by cash payments, or in sugar by endorsement of warehouse receipts from one party to other . . .' "By no stretch of the imagination can this provision be considered as an obstacle to the exercise of legislative authority, particularly one based on police power, which may alter the basis or formula contained in Executive Order No. 900. Needless to state, irrepealable laws are not countenanced in this jurisdiction. 'There can be no vested right to the continued existence of a statute which precludes its change or appeal.' (Traux v. Corrigan, 257 U.S. 312, 66 L. Ed. 254). "In other words, the original quota allocation by the State having been predicated on the exercise of police power, there is no reason why the same police power cannot now be exercised to promote the public welfare. "Like Executive Order No. 900 which established a formula for the determination of marketing coefficients for A sugar (U.S. Export), Executive Order No. 901 established a formula for the determination of the marketing coefficients for B and C sugar (Domestic and Reserve Sugar). Said Executive Order No. 901 provides: '11. Plantation milling share. The percentage of the sugar manufactured by the mill from sugarcane grown on a plantation which the mill company returns to, or credits to the account of, the owner and/or planters of the plantation shall be known as the 'basic plantation milling share' and shall be determined as follows: (a) For any plantation or a part thereof covered by a valid written milling contract between the mill company and the owner and/or planters of that plantation, the basic plantation share shall be as stipulated in the contract. (b) For plantation or parts thereof not covered by a valid written milling contract between the mill company and the owner and/or planters of such plantations, the basic plantation share shall be the most frequent basic plantation milling contracts between the mill company and the owners and/or planters of other plantations adhered to the mill. In determining the most frequent basic plantation milling share, plantations owned by or operated for the account of the milling company shall not be considered. The qualification 'basic' as used in this section shall be taken to include any general increase in plantation milling shares effected by action of the management, directors, trustees, shareholders, or owners of the mill so long as such action shall be valid or subsisting . . .' "Since this involves practically the same argument in the case Executive Order No. 900, was respectfully reiterate our refutation thereof particularly that there can be no vested right in the formula established in the Executive Order because the same is susceptible to change by the exercise of the very same police power to which it owes its existence." (Pp. 82-91, Brief of Appellees.) as well as the arguments along the same vein by Amicus Curiae, Attys. Taada, Teehankee and Carreon on pages 2 to 40 of their brief, which for the sake of brevity, We just incorporate hereto by reference. The sixth assignment of error of the CENTRAL is as follows: VI

"THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF THE PLANTERS HAD NO JURISDICTION AND ERRED IN ADJUDICATING AND ORDERING THE DELIVERY TO THE PLAINTIFFS IN THIS CASE, THE TOTAL AMOUNT DEPOSITED WITH THE PHILIPPINE NATIONAL BANK, WHICH, EVEN IF THE CONTROVERTED LAW IS FINALLY HELD VALID AND APPLICABLE, WOULD BELONG, NOT TO THE FEW PLANTERS WHO ARE PLAINTIFFS IN THIS CASE, BUT TO THE NUMEROUS OTHER PLANTERS IN THE DISTRICT WHO HAVE NOT JOINED AND ARE NOT PARTIES IN THIS CASE, EXCEPT FOR THE RELATIVELY SMALL PORTION WHICH WOULD CORRESPOND TO SAID FEW PLANTERS WHO ARE PLAINTIFFS IN THIS CASE;" A THE THRUST OF THIS ALLEGED ERROR OF THE TRIAL COURT IS THE ERRONEOUS THEORY OF THE CENTRAL THAT THE INSTANT ACTION IS NOT A CLASS SUIT, WHICH WE HOLD IT IS, HENCE THE MONEY IN ESCROW IN THE BANKS MAY BE DISPOSED OF IN THIS CASE NOT ONLY AMONG ALL THE NAMED PARTIES HEREIN BUT AMONG ALL THE PLANTERS IN THE DISTRICT, THEIR RESPECTIVE LABORERS AND THE CENTRAL." The evident premise of the CENTRAL's sixth assignment of error aforequoted is that the present action may not be deemed as a class suit, hence, the trial court had no authority to adjudicate the money held in escrow by the banks in favor the PLANTERS who are not actually named as parties herein. On thus score, the CENTRAL seeks umbrage under the ruling in Berses vs. Villanueva, 25 Phil. 473, wherein We held that where numerous defendants or individuals are occupying different portions of a big parcel of land, a class suit would not he because "each of the defendants had an interest only in the particular portion of the land he was occupying." We are of the considered view that apart from the correctness of the procedural theory advanced by the PLANTERS as regards the particular issue under discussion, practical considerations conducive to the earliest determination of inevitable subsequent controversies between the unnamed planters, on the one hand, and the CENTRAL, on the other, which would necessarily hinge on the main prop of this decision, make it desirable and proper that any such further litigation, which cannot have any different result, be now foreclosed. But very little elucidation is needed to demonstrate the palpable community of interest of all the planters in the district in the settlement of the two vital issues of fact and the various issues of law submitted for Our determination in this case, the resolution of which has no bearing on and cannot in any event affect either the respective allocations or quota of each individual planter in the district or their rights of ownership or possession over the respective plantations they worked on during the material periods herein involved. We believe the CENTRAL cannot be unaware of these considerations, and We welcome its formal withdrawal of the above assignment of error. (CENTRAL's Supplemental Memorandum of December 2, 1978, p. 1) But, just the same, We feel that for the benefit of all concerned, it is best to explain why its position cannot be sustained. Thus, by settling the controversy as to whether or not Section 1 of Republic Act 809 applies to the Talisay-Silay district, the factual issues to be determined have to do only with the number of planters there were in the district during the periods in dispute and how many of them had written milling agreements with the CENTRAL. Of course, it was of particular interest respectively to each of those who worked on the plantations within the district as to who of them should be deemed as planters or not, and being planters who among them were contract and non contract planters within the contemplation of Section 7 of Republic Act 809. But at the same time, it cannot be denied that the same issues were of common interest to all the PLANTERS and, in fact, to their respective laborers, since it is on the correct resolution thereof that the expected improvement or augmentation of their share in the production of the CENTRAL would depend. In other words, all the PLANTERS in the district as well as their respective laborers were similarly situated, whether they were named parties or not. More than that, the resolution of said issues could not in any event be different as to any of them, which is virtually saying that the subject matter of the controversy cannot be but of common and general interest to all of them. On the other band, the number of planters involved, not to mention the number of laborers to be affected, is so numerous as to make it impracticable to bring them all to court. Under these circumstances, the propriety of considering the present litigation as a

class suit cannot be open to question. As a matter of fact, in another case practically on all fours with the instant one, We already ruled against the pretention of the CENTRAL here, We refer to the case of Felipe Acar et al. vs. Hon. Inocencio Rosal etc. et al., 19 SCRA 625, wherein it was held that the suit filed by ten (10) laborers to recover "their alleged participation or shares amounting to the aggregate sum of P14,030,836.74, in the sugar, molasses, bagasse and other derivatives, based on the provisions of Republic Act 809 (The Sugar Act of 1952)", the very law here in issue, was a proper class suit. Moreover, according to Chief Justice Moran, 15 the theory in the United States that a class suit is permissible whenever there is community of interest in the question involved and in the relief sought, even in the absence of community of interest in the subject matter of the litigation, "may be adopted in the Philippines under the present rules which authorize joinder of parties who have common interest in the same question of fact or law where the relief sought arises out of the same transaction or series of transactions." This view strengthens the position of appellees in this case. VII The seventh assignment of error of the CENTRAL alleging that: "THE JUDGE A QUO AND CLIENT OF ATTY. JOSE AFRICA OF THE PLANTERS FINALLY ERRED IN RENDERING BOTH THE ORIGINAL JUDGMENT AND THE SUBSEQUENT AMENDATORY ORDER HEREIN APPEALED FROM." is a mere corollary of its preceding assignments which We have overruled and does not, therefore, need further discussion. Like the previous ones, the same must perforce be similarly overruled. VIII

RE: THE APPEAL OF LUZON SURETY CO., INC.

A THE APPEAL OF LUZON SURETY CO., INC. IS PRACTICALLY ACADEMIC Defendant-appellant Luzon Surety Co., Inc. submits the following assignments of error: "I THE LOWER COURT ERRED IN NOT DISMISSING THE COMPLAINT AGAINST THE DEFENDANT LUZON SURETY CO., INC., ON THE GROUND THAT THE ACTION AGAINST IT WAS PREMATURELY PRESENTED. "II THE LOWER COURT ERRED IN ORDERING DEFENDANT LUZON SURETY CO., INC., TO PAY PLAINTIFFS THE VALUE OF ITS BOND." The factual background of Luzon's appeal is simple. It is more or less accurately narrated in said appellant's brief thus: "STATEMENT OF THE FACTS AND OF THE CASE. "On September 23, 1954, plaintiffs filed the original complaint against defendant Talisay-Silay Milling Co., Inc. (R.A p. 1). "On November 20, 1954, the defendant Luzon Surety Co., Inc. and the defendant Talisay-Silay Milling Co., Inc. issued a bond binding themselves to pay jointly and severally the Sugar Quota Administrator ant the Asociacion de Agricultores de Talisay-Silay, Inc. in the sum of P1,000,000.00 under the condition that: in the event that the courts should finally adjudge that said Republic Act No. 809 is applicable to the 1954-55 crop of Talisay-Silay Mill District, and that the planters are entitled to an additional participation of SEVEN AND A HALF (7-1/2%) PERCENT, or less, over and above SIXTY (60%) PERCENT, of their respective production in that year, the CENTRAL will pay to each and every planter concerned, through the Sugar Quota Administration and the Asociacion de Agricultores de Talisay-Silay, Inc., the value of such additional participation of SEVEN AND A HALF (7-1/2%) PERCENT, or less, as may be determined by the courts in accordance with the average market price during the month within which the sugar is sold. (Annex 'A', R.A. pp. 18-24)." In the light of the foregoing stipulation and upon finding and holding that Republic Act 809 applied to the Talisay-Silay district during crop year 1954-55, the trial court rendered its appealed judgment, the pertinent portion of which reads thus: "With respect to the disputed portion of the sugar produced in 1954-1955, inasmuch as the same has been sold and the amount realized and turned over to the defendant Central under the surety bond filed by the Luzon Surety & Company, Inc. has been determined to be valued in the amount of P949,856.53, the Court renders judgment against the defendant Central, Talisay-Silay Milling Company, Inc. and the Luzon Surety Company, Inc., jointly and severally, to pay the plaintiffs the sum of P949,856.53, with interest thereon at the rate of 3% per annum from the time the said amount was delivered to the Central in the year 1955 until the same is fully paid . . ." (Pp. 439-440, Record on Appeal.). Upon these premises, We do not believe Luzon's appeal requires extended discussion. In fact, it appears to Us to be virtually academic, and We are thus relieved of having to pass on any of the legal arguments advanced by counsel in their brief. In this decision, We hold, as already explained above, that during the crop year 1954-55, there was a majority of planters in the Talisay-Silay district with written milling agreements with the CENTRAL, hence Section 1 of Republic Act 809 did not apply then. We are further holding, however, that by virtue of the most favored planter clause, the PLANTERS are entitled to a 3% increase in their share of the production of the CENTRAL in that year, 60% of which should in turn be paid to the respective plantation laborers of the PLANTERS pursuant to Section 9 of the Act. Hence, it is clear that the basic contingency that is the condition of Luzon's bond in question has fundamentally materialized, except that it would not be enforceable, strictly speaking from the point of view of the matter most favorable to Luzon, until after this decision has become final and the CENTRAL does not pay. Now, under the terms of this decision, the CENTRAL is entitled to receive a total amount much more than what is involved in the Luzon bond because of our holding above that from crop year 1952-53 to crop year 1959-60, Republic Act 809 was not applicable to the Talisay-Silay milling district and, therefore, a large portion of the money held in escrow by the Philippine National Bank for the purposes of this case will go to the CENTRAL. And so, brushing aside technicalities otherwise applicable, this controversy involving Luzon may more expeditiously be disposed of by holding that whatever amount corresponds to the PLANTERS and their laborers of the money that the CENTRAL got under the Luzon bond corresponding to the 1954-55 crop year should be deducted from the total sum that the CENTRAL is entitled to under this decision. Anyway, the CENTRAL is the principal under the bond, and since it has the necessary amount with which to comply with the terms thereof, it is unnecessary to render any judgment which can be executed against Luzon. Accordingly, the requirements of justice can be fully satisfied by a modification of the judgment of the trial court sentencing the CENTRAL to pay the PLANTERS and their laborers P949,856.53 plus interest at 3% per annum in the sense that the judgment should be that of the total amount that is due the CENTRAL under this decision of the proceeds deposited in escrow for the crop years 1952-53, 1953-54 and 1955-56 to 1959-60, there should be deducted the equivalent of 60% of said P949,856.53 plus 3% per annum which shall be paid instead to the PLANTERS and their respective laborers at the ratio of 40% thereof for the former and 60% for their laborers or the Secretary of Labor. INCIDENTS DURING THE APPEAL Issues raised by the TASICA. IX

As stated in the prefatory portion of this decision, during the pendency of this appeal, the CENTRAL leased for a period of three years, beginning September 1, 1963, its mill to the TASICA, which thereby acquired the mill rights and became the miller in the Talisay-Silay milling district starting from the crop year 1963-1964. In the resolution dated November 8, 1963, the Court ordered that the resolution of September 26, 1963, in connection with the disposition of the controverted 7-1/2 percent of the sugar production for the crop year 1962-63 be made applicable to the controverted portion of the sugar production during the crop year 1963-1964, under the same terms and conditions. On December 16, 1963, TASICA filed a special appearance questioning the jurisdiction of this Court over its person, on the ground that it was not a party to this case, and therefore, could not be legally bound by any of its resolution with respect to the sugar production for the crop year 1963-1964. We deferred action on the question of jurisdiction until the case would be considered on the merits. Likewise, We deferred action on the contempt charge against the TASICA arising from the invalidation by its Manager of the escrow quedans covering the controverted 7-1/2 percent of the production for the crop year 1963-1964. The appellees and the amici curiae maintain that TASICA is subject to the jurisdiction of this Court and is liable for contempt of this Court because (1) TASICA, being a lessee of the mill and the milling rights of the CENTRAL, was a transferee pendente lite, and, by the provision of Section 20, Rule 3, of the Rules of Court, it was bound by any judgment or order which might be rendered against the original party and transferor; and (2) TASICA had actual notice of the resolution of this Court of November 7, 1963 which it violated when it invalidated the escrow quedans issued pursuant to said resolution. As We have indicated earlier, We feel it is in the best interest of justice that the whole controversy regarding the application of Republic Act 809 to the Talisay-Silay milling district should be completely determined, is legally and equitably possible, in this proceeding. Indeed. as We see it, nothing substantial would be gained by any of the parties if we reserved for the trial court the remaining issues just mentioned affecting TASICA. After all, the lease contract between the CENTRAL expired in crop year 1966-67 and no new material circumstances have been shown to have taken place during the period of said lease that could in any way alter the points in dispute which arose relative to crop year 1963-64. Withal, Our impression is that the TASICA arrangement might have beer intended to prolong the controversy, but in truth it is quite obvious that the base of the CENTRAL did not and could not have had the effect of substantially changing the basic issue herein. On the issue of jurisdiction. The contention of the TASICA that this Court has no jurisdiction to consider and decide questions related to the crop years regarding which the parties did not present evidence or any stipulations of fact in the court below loses sight of the fact that in a general sense the pleadings filed by the parties in the trial court refer not only to the crop year 1952-53 but to all subsequent crop years. Thus, at least in the prayer of the amended complaint referring to the second alternative cause of action, the plaintiffs-appellees ask for judgment covering "crop year 1954-55 and every crop year thereafter". Accordingly, it cannot be said that the crop years 1960-61 to 1966-67 are not covered by the pleadings. Of course inasmuch as the trial was terminated in 1961, strictly speaking, it would be more appropriate to require supplemental pleadings and corresponding hearings by the trial court, if indeed there were any factual issues on which the parties are in disagreement and the new legal issues are being raised. But, despite the contention of the CENTRAL and TASICA in its earlier pleadings in this Court that they would be denied due process if they were not given an opportunity to be heard on facts and issues related to the later crop years, a comprehensive view of the case convinces Us that there are no such possible new issues. The main factual question of number of contract planters, as already observed earlier in this opinion, became a dead issue after the expiration of most of contracts at the end of crop year 1959-60. And the figures regarding the production during the later crop years cannot be controversial, except as to the 1963-64 crop year, which We are resolving elsewhere in this decision. More importantly, the PLANTERS and the laborers have been constantly asking that the judgment herein should include these later crop years, and although the CENTRAL has as late as in its supplemental memorandum of December 2, 1978 insisted formally on a remand of this case to the trial court for the purposes under discussion, Our plain understanding from counsel for the Central, when they submitted the detailed figures relative to the money in dispute here deposited in escrow in different banks is that the CENTRAL has no serious objection to the prayer of the PLANTERS and laborers. On the joinder of TASICA. Similarly, TASICA's contention that it is not a transferee pendente lite of the CENTRAL from the point of view of Section 20 of Rule 3 is without merit. The predicate of its argument is that the crop years 1960-61 are not covered by the pleadings in the lower court, which We have just shown is not accurate. Under the cited rule, a transferee pendente lite does not have to be included or impleaded by name in order to be bound by the judgment because the action or suit may be continued for or against the original party or the transferor and still be binding on the transferee. On the alleged contempt committed by TASICA. The motion for contempt against TASICA is based on the "invalidation" by its manager of the quedans in escrow for crop year 196364, which were issued to TASICA instead of the CENTRAL as required by Our resolution of November 7, 1963. The CENTRAL and TASICA have explained that the supposed invalidation was an unintentional mistake. Besides, Our subsequent resolution of September 28, 1964 has been duly complied with and with such compliance, no substantial injury can be said to have been suffered by the PLANTERS. We find the explanation of TASICA satisfactory, hence the motion to declare it in contempt is hereby denied. IN RE THE QUESTION OF WHO IS THE COUNSEL FOR THE PLANTATION LABORERS Incidentally, and on the basis of the compliance filed by the Secretary of Labor dated August 23, 1977 and by Attys. Montemayor and Dimaano and Camilo L. Sabio dated August 15, 1977, the Court makes it clear that the principal counsel of record of the plaintiffs plantation laborers in this case are the official lawyers of the Secretary of Labor, who under Republic Act 809, is their sole legal representative, namely Attorneys Ernesto H. Cruz and Emilia E. Andres of the Legal Division of the Department of Labor, with whom collaborating counsels Attys. Montemayor, Dimaano and Sabio, are expected to coordinate for common representation on behalf of said laborers. THE MATTER OF BAGASSE, MOLASSES, PRESS CAKES AND OTHER DERIVATIVES AND BY-PRODUCTS OF MILLED SUGARCANE The decision of the trial court under review adjudged the ASOCIACION to be entitled to increased shares not only of the proceeds of milled sugar but also that of the corresponding derivatives and by-products of the milled sugarcane. His Honor is correct, for under Section 1 of Republic Act 809, it is clear that the ratio of sharing therein fixed refers not only to the unrefined sugar produced by the miller of the sugarcane of the planters but of all the by-products and derivatives therefore, by which is meant the bagasse, press cakes and molasses. In other words, the law requires that these derivatives and by-products should be divided between the CENTRAL and the ASOCIACION in the same proportion as the money that has been deposited in escrow which corresponds only to the proceeds of unrefined sugar. As may be noted, however, the record reveals nothing as to the amount and value of said by-products and derivatives produced during the whole period here in dispute from crop years 1952-53 to 1966-67, and it is to be presumed that no corresponding deposits in escrow had been made therefor. Accordingly, it is imperative that such accounting be made by the CENTRAL. On the basis of the result of such accounting, the CENTRAL should pay the respective amounts due the ASOCIACION, and, of course, the respective PLANTERS should in turn pay the 60% share due their laborers, pursuant to Section 9 of the Act, as We have construed the same above. Specifically, since, as discussed earlier, Section 1 did not apply to the Talisay-Silay milling district during crop years 1952-53 to 195960 because there was always a majority then of planters with written milling contracts with the miller, the ASOCIACION would not have been entitled to any increased share in the produce during those crop years were it not for Our holding herein that by virtue of

the most favored-planter clause, the ASOCIACION is entitled to the 3% and 4% increases in the share of the planters, as already shown earlier. It follows then that the ASOCIACION, and correspondingly the laborers, should also share in the proceeds of the byproducts and derivatives during the whole period that the most favored planter clause was operative, namely, from crop year 195455 to crop year 1959-60, in the same proportion as the increase in the proceeds of unrefined sugar. The same is true as regards crop years 1960-61 to 1966-67 where the whole disputed portions should go to the ASOCIACION and the laborers. RE: G.R. NO. L-21304 As stated earlier, the petition in this case was filed on May 16, 1963 for the purpose of securing an order of this Court compelling the respondent judge to appoint in Civil Case No. 6980 of the Court of First Instance of Negros Occidental, a temporary administrator to operate the respondent sugar central until the end of the milling period 1962-1963, pursuant to Sections 4 and 7 of Republic Act 809, petitioner claiming that notwithstanding that respondent CENTRAL was refusing to mill the sugarcane of the planters in the district, respondent judge declined to appoint such administrator, holding that the takeover of a central provided for in the law is unconstitutional. On May 22, 1963, the Court heard the oral argument of the parties. On May 31, 1963, the Court, "reserving its opinion on the merits of the case and the validity of the law" directed respondent judge to forthwith appoint a qualified administrator "of the sugar central of the Respondent Central for the exclusive purpose of milling the remaining 1962-1968 sugarcane crop of Talisay-Silay Mill District". Under date of June 4, 1963, respondents CENTRAL and ASSOCIACION filed an "Ex-parte Petition for Immediate Redress of Unwitting Injustice" claiming: "7. That respondents therefore sincerely believe and most respectfully submit that the highest interests of justice require that the so called preliminary mandatory injunction, which for an practical intents and purposes, was under the circumstances virtually a definite writ of mandamus issued by this Honorable Court in Baguio on May 31, 1963, without knowing about the settlement of the alleged subsequent controversy regarding the cutting of said young canes, should be promptly set aside, with or without a decision on the merits, in order to thereby redress, even partially, the undeniable moral damage and injury, mental anguish serious anxiety, besmirched reputation, moral shock and social humiliation caused by the same to the respondents in this case (Article 2217, Civil Code). However, upon being required to answer by the Court, the Solicitor General filed an opposition to this petition stating that: "Respondents' motion dated June 4, 1963 seeks in effect a reconsideration of the resolution of this Honorable Court dated May 31, 1963 granting the appointment of an administrator. "The resolution however directed that the administrator should act only for the 'exclusive purpose of milling the remaining 1962- 63 sugarcane crop of the TalisaySilay Mill District.' The milling of the said sugarcane crop was officially terminated on June 5, 1963 at 11:05 P.M. (Copy of Special Administrative Order No. 5) is attached hereto as Annex '1') and both petitioner and respondents filed separate motions before the Court of First Instance of Negros Occidental to declare the administration terminated. "On June 15, 1963, the Court of First Instance of Negros Occidental granted both motions and declared the appointment of the administrator terminated (A copy of the Order is attached hereto as Annex '2'). "The said motion of June 4, 1963 therefore is now moot and academic." (Pp. 163-164, Record.). And so, on July 1, 1963, the Court required the Solicitor General "to show cause why this case should not be dismissed." In compliance therewith, the Solicitor General made the following representation: "1. That the issue before this Honorable Court has not been rendered moot and academic by the termination of the administration of the sugar central of the respondent Talisay-Silay Milling Co., Inc. because: a) The questioned Order of the Respondent Judge contains a declaration of the unconstitutionality of Section 7 of Republic Act No. 809, thereby necessitating a review by this Honorable Court; b) The petition seeks to obtain an interpretation of Section 7 of Republic Act No. 809, particularly as to whether or not under said Section, it is the duty of the Court of First Instance to appoint an administrator before conducting a hearing on the legality or propriety of Executive Proclamation for the administration of a sugar central. "2. That the resolution of the legal questions are of vital and transcendental importance to the public at large and to the sugar industry in particular, inasmuch as the legal provision under consideration is the only feasible and effective remedy in preventing paralization of the milling operations in a Mill District, which in turn will lead to a deficiency or delinquency in the filling of the entire national quota. "Moreover, there is the practical consideration that the need for governmental administration of a sugar central under Rep. Act No. 809 would probably arise only towards the end of the milling season when the production is about to exceed 1,200,000 piculs and the central owner stubbornly refuses to produce further, because to exceed 1,200,000 piculs would mean an increase in the participation of the planters and their laborers in the next crop year in accordance with Sec. 1 of Rep. Act No. 809. Since the time required to mill the remaining canes would usually be very short, as in the case at bar, any governmental administration granted by this Honorable Court as an ancillary remedy will naturally be terminated before this Honorable Court can have an opportunity to act on the main case. "3. That this Honorable Court in cases wherein public interest is involved has proceeded to act on the case even if the matter may be moot and academic, as in the case of Krivenko vs. Register of Deeds (44 O.G. 471). "WHEREFORE, it is respectfully prayed that this Honorable Court consider for resolution the issues raised in the petition for certiorari and or mandamus, particularly the question as to whether or not Section 7 of Republic Act No. 809 is unconstitutional insofar as it requires the appointment of an administrator prior to the hearing on the legality or propriety of the Executive Proclamation." (Pp. 192-194, Id.). and the respondents represented by Atty. Vicente Hilado countered in a motion filed on October 10, 1963 thus: "Now come the respondents, by their undersigned attorney, and respectfully represent: "1. That in the Manifestation, dated July 16, 1963, filed by the Solicitor General for the petitioner in this case, the petitioner has invoked the 'vital and transcendental importance to the public at large and to the sugar industry in particular' of the legal questions involved in this case to justify its prayer that this Honorable Court consider for resolution the issues raised in the petition for certiorari and/or mandamus, particularly the question as to whether or not Section 7 of Republic Act 809 is unconstitutional insofar as it require the appointment of an administrator prior to the hearing on the legality or propriety of the executive proclamation.' "2. That pursuant to said prayer of the petitioner, the Honorable Court on August 12, 1963, approved the following resolution:

'Considering petitioner's comment for the dismissal in L-21304 (Republic of the Philippines vs. Hon. Jose Fernandez, Talisay-Silay Milling Co., Inc. and Talisay-Silay Industrial Cooperation Association), and the Solicitor General's motion that this Court consider for resolution the issue raised in the question as to whether or not Section 7 of Republic Act 809 is unconstitutional insofar as it is required the appointment in administrator prior to the hearing on the legality or propriety of the Executive Proclamation. THE COURT RESOLVE to consolidate this case with L-19937.' "3. That, in view of the fact that Section 7 of Republic Act 809 does not contain any express provision which makes it a mandatory duty specifically enjoined by law (as contemplated in Section 3 of Rule 67 of the Rules of Court) for the Court to appoint an administrator upon the filing of the petition mentioned in said Section 7 of Republic Act 809, the respondents in this case interpret said resolution of this Honorable Court to mean only that this Honorable Court is willing to resolve the question of whether said Section 7 would not be unconstitutional, as a violation of the constitutional right to due process, if interpreted in the sense that it makes it the specific legal duty of the Court to appoint said administrator immediately upon the filing of the required petition, and prior to the hearing on the legality or propriety of the executive proclamation involved, which the respondent central is expressly given by said Sec. 7 the right to raise, as a preferential question, after due notice, undoubtedly with the intention and purpose precisely to preserve and protect said constitutional right of the central to due process of law before it may be deprived of the right to the possession and administration of its property, which is of course a necessary attribute and integral part of the right of ownership; "4. That of equal importance as the legal question of the constitutionality of said Section 7 of Republic Act 809, if so interpreted as to deprive the respondent central of its constitutional right to due process, is, in our humble opinion, the legal question of validity and propriety arising from the fact that the Presidential Proclamation and consequent petition for appointment of administrator which gave rise to the present case were respectively issued and filed, notwithstanding that the respondent central had already produced the total amount of sugar that it has been allocated and licensed to produce during the crop year 1962-63, in accordance with Sections 4, 5 and 15, of the Sugar Limitation Law (Act 4166, as amended), which, in effect, prohibit and penalize the milling and/or manufacture by a sugar central of a bigger amount of sugar than it has been so allocated and licensed to produce during each crop year, as follows: 'SEC. 4. After this Act takes effect, it shall be unlawful to manufacture centrifugal or "AA" refined sugar without first obtaining a license therefor in accordance with the provisions this Act.' 'SEC. 5. The total amount of centrifugal and "AA" refined sugar for the manufacture of which licenses may be issued for any crop or calendar year under the terms of this Act, shall be the sum total of the following: (a) The quantity in short tons of "A" and "AA" sugar which shall be identical with the amount of such sugar, which, under Act of Congress, may be shipped to Continental United States during the calendar year; plus (b) Such a quantity in short tons of "B" sugar as the Governor-General may from time to time find to be required for consumption within the Philippine Islands, either in its original form or as refined sugar; plus A quantity in short tons of "C" sugar equivalent to ten per centum of the total of (a) and (b) or 100,000 short tons, whichever is greater, provided that in, determining said amount the Governor-General may, in his discretion, deduct therefrom the whole or any part of the amount of "C" sugar in stock at time of determination." 'SEC. 15. Any mill company or refining plant manufacturing centrifugal or "AA" refined sugar, respectively, in a quantity greater than the quantity prescribed in its license or any person manufacturing centrifugal or "AA" refined sugar without a license shall be punished by a fine of fifty pesos for each short ton or fraction of more than one-half a short ton so manufactured and such sugar shall be seized and disposed of as the President of the Philippines shall direct in such manner as will not be inconsistent with the purpose of this Act.' "5. That said fact is alleged in the 'Opposition to Appointment of Administrator' filed by respondents in the court below, which is attached as Annex '3' of the petition in this case, and is also reproduced and incorporated by reference as part of respondents' answer to the petition in this case (See par. 1 of respondents' answer in this case); "6. That, in view of said provisions of Sections 4, 5 and 15 of the Sugar Limitation Law, the very important legal question arises whether or not Section 4 of the same Republic Act 809 which allows the Government to take over and have an administrator appointed for a sugar central which 'shall refuse to mill the sugarcane of such planters in the absence of such an agreement,' could or should be interpreted to include the case of a sugar central which stop or discontinues further milling and manufacture of sugar after it has manufactured the total amount of sugar which it has been allocated and licensed to produce during any crop year, and thereby avoid possible prosecution and punishment for violation of said restrictive provisions of the Sugar Limitation Law; in such a way that it would be liable to such prosecution and punishment, if it continues to mill and manufacture more than said total production quota which it has been allocated and licensed to produce during that crop year; and, on the other hand, would be liable to seizure, if it ceases to mill the excessive sugarcanes produced by the planters, as the Government has tried to do in this case; "7. That, as a matter of fact, for the incoming crop year 1963-64, the Sugar Quota Administration has allocated to and licensed the herein respondent Central to mill and produce the total amount of 1,147,253.38 picul; but the big sugarcane crop planted by the planters for this crop year is again expected to produce considerably much more than said amount of 1,147,253.38 piculs; and it is very probable that efforts will again be exerted to threaten and compel the herein respondent central and its present lessee (also respondent herein) to exceed its said total allocated production quota, in violation of said Sections 4, 5 and 15 of the Sugar Limitation Law, under pain of being again subjected to seizure and placed under administration by the Government. Copy of the production quotas allocated to each and every milling district in the Philippines for the crop year 1963-64 and of the circular letter of transmittal of the Sugar Quota Administration, dated August 27, 1963, are attached to and made a part of this motion, marked as Annexes '1' and '1-A'. "8. That, in justice and fairness to the herein respondents therefore, and in order to prevent a multiplicity of suits and repetition of the unpleasant and untenable situation created by the Presidential Proclamation and consequent petition for appointment of administrator which gave rise to the present case, it would, in our humble opinion, be only proper and fitting for this Honorable Court to consider and resolve in this case also the very important question of the real import, scope and extent of said Section 4 of Republic Act 809, particularly the legality and/or propriety of the executive proclamation and petition for appointment of an administrator for the respondent Central, notwithstanding the fact that it had in fact already produced more than the total amount of sugar which it has been allocated and licensed to produce during, the crop year 1962-63, in accordance with said Sections 4, 5 and 15 of the Sugar Limitation Law. "WHEREFORE, respondents respectfully pray that, in the interest of a speedy administration of justice, and thereby avoid continued or renewed and further protracted litigation, this Honorable Court see fit to resolve in this case, once and for all, the very important legal questions hereinabove mentioned, particularly the legal question of the proper and correct interpretation, scope and extent of said Section 4 of Republic Act 809, in the light of the provisions of said Sections 4, 5 and 15 of the Sugar Limitation Law." (pp. 196201, Id.). We must resist the temptation to acquiesce to the insistent prayer of the parties that the constitutional issue passed upon by respondent judge be settled, if only because none of the parties ever raised that issue below, and the considerations now being submitted by the Solicitor General of supposed urgency of resolving said constitutional question do not, in Our Opinion, justify departure from the general rule the Court has always adhered to, as stated in Santiago vs. Far Eastern Broadcasting, 73 Phil. 408, to

the effect that "the constitutionality of a law will not be considered unless the point is specially pleaded, insisted upon and adequately argued. " (at p, 412) Anyway, the appointment of an administrator pursuant to Sections 4 and 7 of Republic Act 809 ordered by this Court on May 31, 1963 hardly became of material importance because the administration was, by agreement of the parties terminated as of June 5, 1963. We are not impressed that the allegations regarding moral damage and injury, etc. in respondents' ex-parte petition of June 4, 1963 can have substantial basis or will even he insisted upon anymore. In other words, no active and positive substantial relief will be due any of the parties even if We should decide here the constitutional matter referred to one way or the other. And as regards the plea of respondents relative to the construction of Section 4 of Republic Act 809 in relation to Sections 4, 5 and 15 of Act 4166, the Sugar Limitation Law, it is to be noted that in his "Manifestation" dated October 29, 1963, the Solicitor General defined the position of the Government to be as follows: "3. That in connection with the statement of respondent Sugar Central in its motion dated October 10, 1983 that if it is compelled to mill more sugar than the quota allotted to him, he will criminally liable under the penal provisions of the Sugar Limitations Law (Secs. 4, 5, and 6), suffice it to state that a sugar central is subject to seizure under Rep. Act 809 only when its refusal to mill will cause a deficiency in the national quota; the fact implicit therein being that when the mill stops operating there is sugar yet to be milled and the quota allotted to it (both the basic and the additional) has not yet been filled." (Pp. 207-208, Id.) which is substantially in accord with the contention of said respondents. JUDGMENT Predicated on all the foregoing considerations, it is the judgment of the Court in G. R. No. L-19937 that the decision of the trial court be, as it is hereby, modified in the following manner, to wit: (a) Republic Act 809, otherwise known as the Sugar Act of 1952, is hereby declared not to be unconstitutional and is, therefore, enforceable in all sugar milling districts wherein the relevant facts come within the conditions prescribed therein. (b) Thus, inasmuch as relative to crop years 1952-53 to 1959-60 in the sugar milling district of appellant TALISAY-SILAY MILLING CO., INC., it has been proven that there were written milling agreements between the majority of the planters and the miller in said district, the provisions of Section 1 of said Act providing for the manner in which the unrefined sugar produced in the district from the milling by said CENTRAL of the sugarcane of the planters or plantation owners, as well as the by-products and derivatives thereof, should be apportioned among them did not apply to said district, hence, the ratio of sharing of the proceeds of the production during those crop years must be that fixed in the respective contracts of the CENTRAL and the PLANTERS, as construed in this decision: Accordingly, as regards crop years 1952-53 and 1953-54, the amended complaint of the PLANTERS and the SECRETARY OF LABOR is dismissed and the defendant PHILIPPINE NATIONAL BANK is hereby sentenced to pay to the appellant CENTRAL, out of the money deposited with it in escrow for the purpose of this case, the amounts hereinunder specified as corresponding to said crop years, plus the interest up to the time full payment is made; (d) In relation to crop year, 1954-55 in which all the proceeds of the sugarcane milled by the ASOCIACION amounting to P949,856.53 were retained by the CENTRAL, the judgment of the trial court sentencing the CENTRAL to pay the whole said amount to the ASOCIACION with interest at 3% per annum is modified only in the sense that only P644,002.76 shall be paid by the CENTRAL and that out of this latter sum, 60% thereof, or P326,401.66 shall be paid by the PLANTERS to their respective laborers, per Section 9 of Republic Act 809. (As explained earlier, the P949,856.53 represented 7-1/2% of the total proceeds for crop year 1954-55 which should have been deposited in escrow but which, by agreement of the parties was retained for itself by the CENTRAL under the security of a bond given by the appellant Luzon Surety Company conditioned on the payment to the ASOCIACION, upon the termination of this case, of whatever amount may be found due thereto, and which amount the lower court fixed as above stated. No appeal was taken by the ASOCIACION from said judgment, hence the modification should only be as to the proportion or ratio of sharing. Under the foregoing opinion, of the 7-1/2% in controversy, only 3% should go to the ASOCIACION to complete the 63% the PLANTERS are entitled to under the most-favored-planter clause. Now, 3% represents 2/5 or 40% of the 7-1/2% in question, hence of the P949,856.53, plus 3% interest per annum which totalled to P1,610,006.94 as of November 30, 1978, 60% or P966,004.14 should be the share of the CENTRAL, which should be considered as already fully paid, and the remaining 40% or P644,002.26 should be paid by the CENTRAL to the ASOCIACION.) (1) However, to simplify matters, the said amount of P644,002.26 should merely be deducted from whatever total amount the CENTRAL is entitled to under this decision, the suns to be added correspondingly to the respective shares of the PLANTERS and their laborers in the amounts just indicated, for which reason no judgment need be rendered against the defendant Luzon Surety Company and it is hereby relieved of any execution under its bond, Exhibit P, and the said bond is hereby ordered cancelled. (e) As regards crop years 1955-56 to 1959-60, the defendant Philippine National Bank is hereby sentenced to pay out of the money deposited with it for purposes of this case follows: (1) To the plaintiff-appellee ASOCIACION for the benefit of PLANTERS, 40% of the amounts retained or deposited corresponding to each of said crop years, except crop year 1958-59, in respect to which the amount should be 53.33%, including in both instances all the interests actually earned up to the time of full payment. (The portions retained for crop years 1955-56 and 1958-59 were 7-1/2% of the total proceeds each of said crop year; for crop years 1956-57 and 1957-58, 5%; and for crop year 1959-60, 10%; and inasmuch as the sharing for 1955-56, 1957-58, 1958-59 and 1959-60, per the most favored-planter clause, was 63-37 and in 1958-59 it was 6436, of the 7-1/2 for 1955-56 and of the 5% for 1956-67 and 1957-58, the planters should get 3%; of the 7-1/2 for 1958-59, 4%; and of the 10% for 1959-60 also 3%, the total production having exceeded 1,200,000 piculs only in 1958-59; however, what was retained for crop year 1958-59 was 7-1/2 and in 1959-60 it was 10%.). (f) As regards crop year 1960-61 and all the subsequent crop years up to 1956-57 16 the Philippine National Bank, the Philippine Commercial and Industrial Bank and the Pacific Banking Corporation are hereby ordered to pay the plaintiff ASOCIACION, for the benefit of all the PLANTERS in this class suit, all the amounts respectively deposited with said banks for the purposes of this case in the joint names of the ASOCIACION, the CENTRAL/TASICA and the Secretary of Labor during said crop years, together with all the interests earned up to the date of full payment, and all the PLANTERS in turn are hereby sentenced to forthwith pay and distribute, under the supervision of the Secretary of Labor, to their respective laborers during said crop years, 60% of the amount to be so paid to each of them by the banks. (g) According to the compliance made by counsel for the CENTRAL dated December 21, 1978, the detailed data regarding the production in piculs and the exact amounts deposited in escrow in the three different banks aforementioned during crop years material to this case, computed together with all the corresponding interest earned up to November 30, 1978 and the total thereof, duly confirmed by the respective banks, are as follows:

TOTAL PRODUCTION CROP YEAR 1952-53 1953-54 1955-56 IN PICULS 864,493 1,057,980.19 820,704.29 PROCEEDS (in pesos) 1,859,113.69 1,945,845.42 2,105,604.57

1956-57 1957-58 1958-59 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67

806,864.36 984,848.53 1,250,008.70 1,189,837.37 1,137,910.36 1,140,794.01 1,186,679.35 1,155,064.09 862,855.01 663,958.14 567,556 TOTAL

1,601,318.34 2,023,172.45 3,743,362.87 5,646,614.51 4,381,170.39 4,980,051.78 8,281,658.34 4,593,192.06 4,148,896.59 2,404,659.67 2,019,947.00 P49,734,607. 68

Thus, on the basis of these figures, the respective amounts for (b), (e) (1) and (f) above should be as follows: Amounts to be paid to: CROP YEAR 1952-53 1953-54 1955-56 1956-57 1957-58 1958-59 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 CENTRAL PLANTERS LABORERS

1,859,113.6 PP 9 1,945,845 .42 1,263,362.7 336,896.73 4 640.527.3 384,316.40 3 809,268.9 485,561.38 8 1,747,027 798,534.16 .45 3,952,630 677,593.74 .15 1,752,468.1 5 1,992,020.7 1 3,312,663.3 3 1,838,476.8 2 1,659,558.6 3

505,345.10 576,474.61 728,342.09 1,197,801.26 1,016,390.62 2,628,702.24 2,988,031.07 4,968,995.01 2,754,715.24 2,489,337.96

P12,217,775.76 P15,007,932.71 P22.508.899.21 Pursuant to paragraph (d) (1) above, the amount of P644,002.76 should be deducted from the P12,217.775.76 due the CENTRAL, thereby reducing the total amount to be paid to it to P11,573,773.00 and increasing the amounts due the PLANTERS and their laborers to P15,265,533.81 and P22,895,300.87, respectively, 60%, of the P644,002.76 being added to the share of the laborers and 40% thereof or P257,601.10 being added to that of the PLANTERS. As indicated, an the above figures or amounts are as of November 30, 1978, hence, for purposes of implementation or execution, corresponding additional amounts should be added to cover the respective interests from December 1, 1978 to the date of payment. (h) Finally, relative to the amount and value of the by-products and derivatives of the milled sugarcane, the CENTRAL is hereby ordered to make an accounting thereof corresponding to crop year 1954-55 to crop year 1966-67, and to pay to the ASOCIACION for the benefit of the PLANTERS, at the same ratio fixed above for the proceeds of unrefined sugar, the corresponding value thereof, and the PLANTERS are in turn sentenced to pay their respective laborers, under the supervision of the Secretary of Labor, 17 60% of the amount to be paid to them by the CENTRAL thru the ASOCIACION. as in the case of the proceeds of unrefined sugar. Resolution of the TASICA incidents. 1. Re: The issues of jurisdiction and of joinder of TASICA. Considering that, as already explained earlier, although TASICA was not a party in the proceedings in the court below, the basic issues between the original parties raised in their pleadings contemplate also the crop years subsequent to 1959-60 and inasmuch as the production figures during those crop years which are already before Us as part of the record of this case are not disputed, thus obviating also the necessity of supplemental pleadings as well as the presentation of evidence thereon, for the same would be a mere formality, the Court holds that under these peculiar circumstances, it has jurisdiction to include as it has included above in this adjudication the matters involving said crop years. In this connection, it is to be noted that, according to the record, notice of the rehearing of this cage was sent by registered mail to counsel of record of TASICA, and nothing further has been heard from said counsel on this point at issue, which to Our mind indicates that TASICA has already lost interest in it. Based on the foregoing consideration that the incidents involving TASICA in this appeal stage of this case are but incidental to the continuation of the issues duly raised in the court a quo, the Court holds that TASICA is a mere transferee pendente lite of the interests of the CENTRAL in this case within the contemplation of Section 20 of Rule 3 and that, therefore, this judgment binds TASICA without the need of its being formally impleaded as a party hereto. For the reasons already stated earlier which the Court considers satisfactory, the motion for contempt filed by the plaintiffs-appellees against TASICA is denied. 2. Percentage of disputed portions in 1963-64 crop year's production. Anent the issue of whether the disputed portion for crop year 1963-64 should be 10% instead of 7-1/2%, the Court, as maybe observed has computed the same on the basis of 7-1/2%. At the moment, We are of the view that, unless clear evidence is presented to show that there were planters of the Talisay-Silay milling district who milled in the Ma-ao Sugar Central and the Bacolod-Murcia Milling Co. for the specific purpose of evading the provisions of Section 1 of Republic Act 809, something which is seemingly against the interest of the said farmers themselves, the position of the CENTRAL that the said milling in those other centrals was done in the ordinary course and with the authority of the Sugar Administrator, is well taken. If the plaintiffs-appellees have the necessary evidence and they feel they can pursue the matter further, the right to do so is hereby reserved for them. All of the CENTRAL's counterclaims are hereby accordingly overruled.

In G.R. No. L-21304, the petition is hereby dismissed the issues raised therein, as We have demonstrated a few pages back having already become moot and academic. No attorney's fees, bad faith on the part of the CENTRAL in the premises not having been sufficiently shown. No costs in both cases. Castro, C.J., Antonio, Concepcion Jr., Santos, Fernandez and Guerrero, JJ., concur. Fernando, J., joins in the opinion and reserves the right to file a brief concurrence on the constitutional issues involved. Makasiar, J., concur in the result. Teehankee, Aquino, Abad Santos, De Castro and Melencio-Herrera, JJ., took no part. Footnotes 1. The parties entered into an agreement whereby the escrow quedans were to be issued corresponding to the increase in participation claimed by plaintiffs, the same to be sold only with the consent of the Asociacion or PLANTERS, the Secretary of Labor and the CENTRAL, every year while the case is pending, the proceeds to be deposited in a bank in trust for the Secretary of Labor, the Asociacion or Planters and the Central to be disposed of in the manner the court may eventually decide. The agreement as implemented eventually covered the proceeds of crop years 1952-53, 1953-54 and 1955-56 to 1961-62. 2. The reasons for the inclusion of the Luzon Surety Company and the Philippine National Bank as defendants are seated in Paragraph 8 of the amended complaint thus: "8. That defendant CENTRAL refused and continues to refuse to follow the sharing participation prescribed by Republic Act No. 809. For the crop years 1952-53, 1953-54, 1954-55, 1955-56 and 1956-57, plaintiffs PLANTERS were only given a share of 60% of the production instead of their legal share of 65% for 1952-53, 65% for 1953-54, 67-1/2% for 1955-56, and 65% for 1956-57. The disputed portions of the sugar production for the crop years 1952-53, 1953-54, 1955-56, and 1956-57 were covered by escrow quedans issued in the names of plaintiff ASOCIACION, plaintiff Secretary of Labor and defendant CENTRAL with the understanding that said escrow quedans were to be sold from time to time with the conformity of the three parties mentioned and the proceeds thereof deposited with the Philippine National Bank in an account entitled 'In Trust for Talisay-Silay Milling Co., Inc., Asociacion de Agricultores de Talisay-Silay and Department of Labor'. The disputed portion for the crop year 1954-55 was, upon agreement of the parties, delivered to defendant CENTRAL subject to the conditions stated in the Luzon Surety Co. Inc. Bond No. 5835, copy of which is hereto attached as Annex 'A' and made an integral part of this Amended Complaint, executed in favor of the plaintiff ASOCIACION and the Sugar Quota Administrator." (Pp. 8-9, Record on Appeal of CENTRAL.). 2a. Accordingly, the proceeds were deposited half and half with the Philippine Commercial and Industrial Bank and the Pacific Banking Corporation respectively, and subsequently, those of crop years referred to in the following paragraphs (g) to (i) were likewise deposited in said banks. 4. "SEC. 6. The State shall promote social justice to ensure the dignity, welfare, and security of all the people. Towards this end, the State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitable diffuse property ownership and profits. (Article II 1973 Constitution). "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 employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. The State may provide for compulsory arbitration." (Id.). 5. These provisions of the 1935 Constitution have been reenacted in Sections 6 and 9 of Article II on Declaration of Principles and State Policies of the 1973 Constitution. 6. On the other hand, the figures given by the Sugar Administrator regarding the number of contract planters to which the PLANTERS would give importance can hardly be reliable, considering that the primary and best evidence of the existence of the contracts are found in the records of the Central and, of course, of the respective planters concerned. In fact, in their brief, the PLANTERS maintain that notwithstanding the announced result of the administrative investigation conducted by the Sugar Administrator respecting the matters here in dispute, "the Lower Court (and on appeal, the appellate court) had (would have) the power to make its own findings of fact on the basis of the evidence presented." (pp. 37-38.) 7. PLANTERS' brief, Appendix A. The CENTRAL did not include those names in its list of contract planters, so it is deemed the CENTRAL considers them as non-contract planters, pp. 93-117 of CENTRAL's brief. 8. Exhibit D-25 is not included here. It is the contract of Jose R. Torres Jr. who is already included as No. 40 in the list of the uncontroverted contract planters. 9. See Moran, "Comments on the Rules of Court", Vol. III, p. 452, and cases cited therein, in connection with comments on Rule 84 of the Rules of Court. 10. These are: (No. 2) Dominador Agravante; (No. 18) Jose Cuaycong; (No. 19) Natividad Cuaycong; (No. 62) Flory G. de Jocson; (No. 64) Enrique Jundos and (No. 87) Vicente Layson. 11. Subtracting 6 from the number of contract planters in each of the succeeding years, 1955-56 to 1959-60, and adding the same number to that of non-contract ones will still result in the contract planters being in the majority during that whole period. 12. Exhibit D-5, the contract of Natividad Lacson and her husband Jose Cuaycong was executed on August 14, 1954; Exhibit D-6, that of Bonifacia A. Dalimo-os, wife of Dominador Agravante April 5, 1954; Exhibit D-7 of Edgardo Granada, on February 16, 1954; Exhibit D-9 of Flory C. de Jocson, on February 9, 1954; Exhibit D-10 of Enrique Jundos on July 24, 1954; Exhibit D-12 of Vicente Layson, on February 9, 1954 and Exhibit D-13 of the same planter, on February 16, 1954, Exhibit D-19 of Severino de Oca, on February 3, 1954 and Exhibit NNNNNN of Ramon B. Lacson on August 9, 1954. 13. The record of this case includes not only the contracts in issue here but samples of printed contracts of other sugar centrals with their respective planters. (See Exhibits M to M-9.). 14. For simpler computation, 4-1/2% of the 7-1/2% in escrow is equivalent to 60% of the amount in dispute for the corresponding crop year, whereas, 3-1/2% is 53.33% of said amount. 15. Moran, Rules of Court, Vol. II, p. 203, 1970 ed. 16. After crop year 1966-67, no more retentions or deposits in escrow were made because the mount of production no longer exceeded 600,000 piculs and there is no indication at all that the sharing adopted by the CENTRAL was not in accordance with Section 1 of Republic Act 809.

BATONG BUHAY GOLD MINES, INC., petitioner, vs. HONORABLE DIONISIO DELA SERNA IN HIS CAPACITY AS THE UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, ELSIE ROSALINDA TY, ANTONIO MENDELEBAR, MA. CONCEPCION Q. REYES, AND THE OTHER COMPLAINANTS* IN CASE NO. NCRLSED-CI-2047-87; MFT CORPORATION AND SALTER HOLDINGS PTY. LTD., respondents. 1999 Aug 6 3rd Division G.R. No. 86963 RESOLUTION PURISIMA, J.: At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court with a Prayer for Preliminary Injunction and or Restraining Order brought by Batong Buhay Gold Mines, Inc. (BBGMI for brevity) to annul three orders issued by respondent Undersecretary Dionisio dela Serna of the Department of Labor and Employment, dated September 16, 1988, December 14, 1988 and February 13, 1989, respectively. The Order of September 16, 1988 stated the facts as follows: "xxx on 5 February 1987, Elsie Rosalinda B. Ty, Antonia L. Mendelebar, Ma. Concepcion O. Reyes and 1,247 others filed a complaint against Batong Buhay Gold Mines, Inc. for: (1) Non-payment of their basic pay and allowances for the period of 6 July 1983 to 5 July 1984, inclusive, under Wage Order No. 2; (2) Non-payment of their basic pay and allowances for the period 16 June 1984 to 5 October 1986, inclusive under Wage Order No. 5; (3) Non-payment of their salaries for the period 16 March 1986 to the present; (4) Nonpayment of their 13th month pay for 1985, 1986 and 1987; (5) Non-payment of their vacation and sick leave, and the compensatory leaves of mine site employees; and (6) Non-payment of the salaries of employees who were placed on forced leaves since November, 1985 to the present, if this is not feasible, the affected employees be awarded corresponding separation pay. On 9 February 1987, the Regional Director set the case for hearing on 17 February 1987. On 17 February 1987, the respondent moved for the resetting of the case to 2 March 1987. On 27 February 1987, the complainants filed a Motion for the issuance of an inspection authority. xxx On 13 July 1987, the Labor Standards and Welfare Officers submitted their report with the following recommendations: WHEREFORE, premises considered, this case is hereby submitted with the recommendation that an Order of Compliance be issued directing respondent Batong Buhay Gold Mines Inc. to pay complainants Elsie Rosalina Ty, et al. FOUR MILLION EIGHT HUNDRED EIGHTEEN THOUSAND SEVEN HUNDRED FORTY-SIX PESOS AND FORTY CENTAVOS (P4,818,746.40) by way of unpaid salaries of workers from March 16, 1987 to present, unpaid and ECOLA differentials under Wage Order Nos. 2 and 5 unpaid 13th months pay for 1985 and 1986, and upaid (sic) vacation/sick/compensatory leave benefits. On 31 July 1987, the Regional Director[1] adopted the recommendation of the LSWOs and issued an order directing the respondent to pay the complainants the sum of P4,818,746.40 representing their unpaid 13th month pay for 1985 and 1986, wage and ECOLA differentials under wage order Nos. 2 and 5, unpaid salaries from 16 March 1986 to present and vacation/sick leave benefits for 1984, 1985 and 1986. On 19 August 1987, the complainants filed an ex-parte motion for the issuance of a writ of execution and appointment of special sheriff. xxx On 21 August 1987, the Regional Director issued an Order directing the respondent to put up a cash or surety bond otherwise a writ of execution will be issued. xxx When the respondent failed to post a cash/surety bond, and upon motion for the issuance of a writ of execution by the complainants, the Regional Director, on 14 September 1987 issued a writ of execution appointing Mr. John Espiridion C. Ramos as Special Sheriff and directing him to do the following: You are to collect the above-stated amount from the respondent and deposit the same with Cashier of this Office for appropriate disposition to herein complainants under the supervision of the office of the Director. Otherwise, you are to execute this writ by attaching the goods and chattels of the respondent not exempt from execution or in case of insufficiency thereof against the real or immovable property of the respondent. The Special Sheriff proceeded to execute the appealed Order on 17 September 1987 and seized three (3) units of Peterbuilt trucks and then sold the same by public auction. Various materials and motor vehicles were also seized on different dates and sold at public auction by said sheriff. xxx xxx xxx

On 11 December 1987, the respondent finally posted a supersedeas bond which prompted this Office to issue an Order dated 26 January 1988, restraining the complainants and sheriff Ramos from enforcing the writ of execution. xxx[2] BBGMI appealed the Order dated July 31, 1987 of Regional Director Luna C. Piezas to respondent Undersecretary Dionisio de la Serna, contending that the Regional Director had no jurisdiction over the case. On September 16, 1988, the public respondent issued the first challenged Order upholding the jurisdiction of the Regional Director and annulling all the auction sales conducted by Special Sheriff John Ramos. The decretal portion of the said Order ruled: WHEREFORE, the Order dated 31 July 1987 of the Regional Director, National Capital Region, is hereby AFFIRMED. Accordingly, the writ of execution dated 14 September 1987 issued in connection thereto is hereby declared VALID. However, the public auction sales conducted by special sheriff John Ramos pursuant to the writ of execution dated 14 September 1987 on 24 September 2, 20, 23, and 29 October 1987 are all hereby declared NULL AND VOID. Furthermore, the personal properties sold and the proceeds thereof which have been turned over to the complainants thru their legal counsel are hereby ordered returned to the custody of the respondent and the buyers respectively. SO ORDERED.[3] On October 13, 1988, a Motion for Reconsideration of the aforesaid order was presented by the complainants in Case No. NCR-LSEDCI-2047-87 but the same was denied.

On November 7, 1988, a Motion for Intervention was filed by MFT Corporation, inviting attention to a Deed of Sale executed in its favor by Fidel Bermudez, the highest bidder in the auction sale conducted on October 29, 1987. On December 2, 1988, another Motion for Intervention was filed, this time by Salter Holdings Pty., Ltd., claiming that MFT Corporation assigned its rights over the subject properties in favor of movant as evidenced by a Sales Agreement between MFT Corp. and Salter Holdings Pty., Ltd. The two Motions for Intervention were granted in the second questioned order dated December 14, 1988, directing the exclusion from annulment of the properties sold at the October 29, 1987 auction sale and claimed by the intervenors, including one cluster of junk mining machineries, equipment and supplies, and disposing thus: WHEREFORE, in view of the foregoing, the motions for reconsideration filed by intervenors MFT and Salter are hereby granted. Correspondingly, this Offices Order dated 16 September 1988 is hereby modified to exclude from annulment the one lot of junk mining machineries, equipment and supplies as-is-where-is sold by Sheriff John C. Ramos in the auction sale of 29 October 1987. xxx xxx xxx

Motions for Reconsideration were interposed by Batong Buhay Gold Mining, Inc. and the respondent employees but to no avail. The same were likewise denied in the third assailed Order dated February 13, 1989. Hence, the petition under scrutiny, ascribing grave abuse of discretion amounting to lack or excess of jurisdiction to the public respondent in issuing the three Orders under attack. The questioned Orders aforementioned have given rise to the issues: (1) whether the Regional Director has jurisdiction over the complaint filed by the employees of BBGMI; and (2) whether or not the auction sales conducted by the said Special Sheriff are valid. Anent the first issue, an affirmative ruling is indicated. The Regional Director has jurisdiction over the BBGMI employees who are the complainants in Case Number NCR-LSED-CI-2047-87. The subject labor standards case of the petition arose from the visitorial and enforcement powers by the Regional Director of Department of Labor and Employment (DOLE). Labor standards refers to the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety and health standards.[4] Labor standards cases are governed by Article 128(b) of the Labor Code. The pivot of inquiry here is whether the Regional Director has jurisdiction over subject labor standards case. As can be gleaned from the records on hand, subject labor standards case was filed on February 5, 1987 at which time Article 128 (b) read as follows[5]: Art. 128 ( b) Visitorial and enforcement powers (b) The Minister of Labor or his duly authorized representative shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulations officers and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the ordinary course of inspection. Petitioner theorizes that the Regional Director is without jurisdiction over subject case, placing reliance on the ruling in Zambales Base Inc. vs. Minister of Labor[6]and Oreshoot Mining Company vs. Arellano.[7] Respondent Undersecretary Dionision C. Dela Serna, on the other hand, upheld the jurisdiction of Regional Director Luna C. Piezas by relying on E.O. 111, to quote: Considering therefore that there still exists an employer-employee relationship between the parties; that the case involves violations of the labor standard provisions of the labor code; that the issues therein could be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection; and, if only to give meaning and not render nugatory and meaningless the visitorial and enforcement powers of the Secretary of Labor and Employment as provided by Article 128(b) of the Labor Code, as amended by Section 2 of Executive Order No. 111 which states: The provisions of article 217 of this code to the contrary notwithstanding and in cases where the relationship of employer-employee still exists, the Minister of Labor and Employment or his duly authorized representative shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provision of this Code based on the findings of the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulations officers and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the ordinary course of inspection. We agree with the complainants that the regional office a quo has jurisdiction to hear and decide the instant labor standard case. xxx xxx xxx[8]

The Court agrees with the public respondent. In the case of Maternity Childrens Hospital vs Secretary of Labor (174 SCRA 632), the Court in upholding the jurisdiction of the Regional Director over the complaint on underpayment of wages and ECOLAs filed on May 23, 1986, by the employees of Maternity Childrens Hospital, held: This is a labor standards case and is governed by Art. 128(b) of the Labor Code, as amended by E.O. 111. xxx xxx xxx

Prior to the promulgation of E.O. 111 on December 24, 1986, the Regional Directors authority over money claims was unclear. The complaint in the present case was filed on May 23, 1986 when E.O. 111 was not yet in effect. xxx xxx We believe, however , that even in the absence of E.O. 111 , Regional Directors already had enforcement powers over money claims, effective under P.D. 850, issued on December 16, 1975, which transferred labor standards cases from the arbitration system to the enforcement system. In the aforecited case, the Court in reinforcing its conclusion that Regional Director has jurisdiction over labor standards cases, treated E.O. 111 as a curative statute, ruling as follows: E.O. No. 111 was issued on December 24, 1986 or three(3) months after the promulgation of the Secretary of Labors decision upholding private respondents salary differentials and ECOLAs on September 24, 1986. The amendment of the visitorial and enforcement powers of the Regional Director (Article 128(b)) by said E.O. 111 reflects the intention enunciated in Policy Instructions

Nos. 6 and 37 to empower the Regional Directors to resolve uncontested money claims in cases where an employer-employee relationship still exists. This intention must be given weight and entitled to great respect. As held in Progressive Workers Union, et al. vs. F.P. Aguas, et al. G.R. No. 59711-12, May 29, 1985, 150 SCRA 429: .xx The interpretation by officers of laws which are entrusted to their administration is entitled to great respect. We see no reason to detract from this rudimentary rule in administrative law, particularly when later events have proved said interpretation to be in accord with the legislative intent. xx The proceedings before the Regional Director must, perforce be upheld on the basis of Article 128(b) as amended by E.O. No. 111, dated December 24, 1986, this executive order to be considered in the nature of a curative statute with retrospective application. (Progressive Workers Union, et al. vs. Hon. Aguas, et al. (Supra); M. Garcia vs. Judge A. Martinez, et al. G.R.No. l-47629, may 28,1979, 90 SCRA 331). With regard to the petitioners reliance on the cases of Zambales Base, Inc. vs. Minister of Labor (supra) and Oreshoot Mining Company vs. Arellano, (supra), this is misplaced. In the case of Zambales Base, Inc., the court has already ruled that: xxx, in view of the promulgation of Executive Order No. 111, Zambales Base Metals vs. Minister of Labor is no longer good law. mphasis supplied) Executive Order No. 111 is in the character of a curative law, that is to say, it was intended to remedy a defect that, in the opinion of the Legislature (the incumbent Chief Executive in this case, in the exercise of her lawmaking powers under the Freedom Constitution) had attached to the provision under the amendment. xxx xxx xxx[9]

The case of Oreshoot Mining Corporation, on the other hand, involved money claims of illegally dismissed employees. As the employer-employee relationship has already ceased and reinstatement is sought, jurisdiction necessarily falls under the Labor Arbiter. Petitioner should not have used this to support its theory as this petition involves labor standards cases and not monetary claims of illegally dismissed employees. The Court would have ruled differently had the petitioner shown that subject labor standards case is within the purview of the exception clause in Article 128 (b) of the Labor Code. Said provision requires the concurrence of the following elements in order to divest the Regional Director or his representatives of jurisdiction, to wit: (a) that the petitioner (employer) contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection.[10] Nowhere in the records does it appear that the petitioner alleged any of the aforestated grounds. In fact, in its Motion for Reconsideration of the Order of the Regional Director dated August 20, 1987, the grounds which petitioner raised were the following: 1. This Honorable Office has no jurisdiction to hear this case and its Order of 31 October 1987 is therefore null and void; 2. Batong Buhay Gold Mines, Inc. is erroneously impleaded as the sole party respondent, the complaint should have been directed also against the Asset Privatization Trust. In the other pleadings filed by petitioner in NCR-LSED-C1-2047-87, such as the Urgent Omnibus Motion to declare void the Writ of Execution for lack of jurisdiction and the Oppositions it filed on the Motions for Intervention questioning the legal personality of the intervenors, questions as to the amounts complained of by the employees or absence of violation of labor standards laws were never raised. Raising lack of jurisdiction in a Motion to Dismiss is not the contest contemplated by the exception clause under Article 128(b) of the Labor Code which would take the case out of the jurisdiction of the Regional Director and bring it before the Labor Arbiter. The only instance when there was a semblance of raising the aforestated grounds, was when they filed an Appeal Memorandum dated January 14, 1988, before the respondent undersecretary. In the said Appeal Memorandum, petitioner comes up with the defense that the Regional Director was without jurisdiction, as employer-employee relationship was absent, since petitioner had ceased doing business since 1985. Records indicate that the Labor Standards and Welfare Officers, pursuant to Complaint Inspection Authority No. CI-2-047-87, were not allowed to look into records, vouchers and other related documents. The officers of the petitioner alleged that the company is presently under receivership of the Development Bank of the Philippines.[11] In lieu of this, the Regional Director had ordered that a summary investigation be conducted.[12] Despite proper notices, the petitioner refused to appear before the Regional Director. To give it another chance, an order to file its position paper was issued to substantiate its defenses. Notwithstanding all these opportunities to be heard, petitioner chose not to avail of such. As held in the case of M. Ramirez Industries vs. Sec. of Labor and Employment, (266 SCRA 111): xxx Under Art. 128(a) of the Labor Code, the Secretary of Labor or his duly authorized representatives, such as the Regional Directors, has visitorial powers which authorize him to inspect the records nd premises of an employer at any time of the day or night whenever work is being undertaken therein, to question any employee and investigate any fact, condition or matter, and to determine violations of labor laws, wage orders or rules and regulations. If the employer refuses to attend the inspection or conference or to submit any record, such as payrolls and daily time records, he will be deemed to have waived his right to present evidence. mphasis supplied) Petitioners refusal to allow the Labor Standards and Welfare Officers to conduct inspection in the premises of their head office in Makati and the failure to file their position paper is equivalent to a waiver of its right to contest the claims of the employees. This Court had occasion to hold there is no violation of due process where the Regional Director merely required the submission of position papers and resolved the case summarily thereafter.[13] Furthermore, the issuance of the compliance order was well within the jurisdiction of the Regional Director, as Section 14 of the Rules on the Disposition of Labor Standards Cases provides: Section 14. Failure to Appear - Where the employer or the complainant fails or refuses to appear during the investigation, despite proper notice, for two (2) consecutive hearings without justifiable reasons, the hearing officer may recommend to the Regional Director the issuance of a compliance order based on the evidence at hand or an order of dismissal of the complaint as the case may be. mphasis supplied) It bears stressing that this petition involves a labor standards case and it is in keeping with the law that the worker need not litigate to get what legally belongs to him, for the whole enforcement machinery of the Department of Labor exists to insure its expeditious delivery to him free of charge.[14] Thus, their claim of closure for business, among other things, are factual issues which cannot be brought here for the first time. As petitioner refused to participate in the proceedings below where it could have ventilated the appropriate defenses, to do so in this petition is unavailing. The reason for this is that factual issues are not proper subjects of a special civil action for certiorari to the Supreme Court.[15] It is therefore abundantly clear that at the time of the filing of the claims of petitioners employees, the Regional Director was already exercising visitorial and enforcement powers.

Regional Directors visitorial and enforcement powers under Art. 128 (b) has undergone series of amendments which the Court feels to be worth mentioning. Confusion was engendered by the promulgation of the decision in the case of Servandos Inc. vs. Secretary of Labor and Employment and the Regional Director, Region VI, Department of Labor and Employment.[16] In the said case, the Regional Director took cognizance of the labor standards cases of the employees of Servandos Inc., but this Court held that: In the case of Briad Agro Development Corporation vs. Dela Cerna and Camus Engineering Corp. vs. Sec. Of labor applying E.O. 111 the Court recognized the concurrent jurisdiction of the Secretary of labor (or Regional Directors) and the labor Arbiters to pass on employees money claims, including those cases which the labor Arbiters had previously exercised jurisdiction. However, in a subsequent modificatory resolution in the Briad Agro Case, dated 9 November 1989, the Court modified its original decision in view of the enactment of RA 6715, and upheld the power of the Regional Directors to adjudicate money claims subject to the conditions set forth in Section 2 of said law (RA 6715). The power then of the Regional Director (under the present state of law) to adjudicate employees money claims is subject to the concurrence of all the requisites provided under Sec. 2 of RA 6715, to wit: (a) the claim is represented by an employer or person employed in domestic or household service, or househelper; (b) the claim arises from employer-employee relationship; (c) the claimant does not seek reinstatement; and (d) the aggregate money claim of each employee or househelper does not exceed P5,000. xxx xxx xxx[17]

The Servando ruling, in effect, expanded the jurisdictional limitation provided for by RA 6715 as to include labor standards cases under Article 128 (b) and no longer limited to ordinary monetary claims under Article 129. In fact, in the Motion for Reconsideration[18] presented by the private respondents in the Servando case, the court applied more squarely the P5,000 limit to the visitorial and enforcement power of the Regional Director, to wit: To construe the visitorial power of the Secretary of Labor to order and enforce compliance with labor laws as including the power to hear and decide cases involving employees claims for wages, arising from employer-employee relations, even if the amount of said claims exceed P5,000 for each employee, would, in our considered opinion, emasculate and render meaningless, if not useless, the provisions of Art. 217 (a) and (6) and Article 129 of the Labor Code which, as above-pointed out, confer exclusive jurisdiction on the Labor Arbiter to hear and decide such employees claims, regardless of amount, can be heard and determined by the Secretary of Labor under his visitorial power. This does not, however, appear to be the legislative intent. But prevailing law and jurisprudence rendered the Servando ruling inapplicable. In the recent case of Francisco Guico, Jr. versus The Honorable Secretary of Labor & Employment Leonardo A. Quisumbing, GR # 131750, promulgated on November 16, 1998, this Court upheld the jurisdiction of the Regional Director notwithstanding the fact that the amounts awarded exceeded P5,000. Republic Act 7730, the law governing the visitorial and enforcement powers of the Labor Secretary and his representatives reads: Article 128 (b) Notwithstanding the provisions of Articles 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 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 xxx xxx mphasis supplied)

The present law, RA 7730, can be considered a curative statute to reinforce the conclusion that the Regional Director has jurisdiction over the present labor standards case. Well-settled is the rule that jurisdiction over the subject matter is determined by the law in force when the action was commenced, unless a subsequent statute provides for its retroactive application, as when it is a curative legislation.[19] Curative statutes are intended to supply defects, abridge superfluities in existing laws and curb certain evils. They are intended to enable persons to carry into effect that which they have designed and intended, but has failed of expected legal consequence by reason of some statutory disability or irregularity in their own action. They make valid that which, before the enactment of the statute, was invalid.[20] In arriving at this conclusion, the case of Briad Agro Development vs. De la Cerna[21] comes to the fore. In the said case, RA 6715 was held to be a curative statute. There, the Court ruled that RA 6715 is deemed a curative statute and should be applied to pending cases. The rationale of the ruling of the Court was that prior to RA 6715, Article 217 as amended by E.O. 111, created a scenario where the Labor Arbiter and the Regional Director of DOLE had overlapping jurisdiction over money claims. Such a situation was viewed as a defect in the law so that when RA 6715 was passed, it was treated or interpreted by the Court as a rectification of the infirmity of the law, and therefore curative in nature, with retroactive application. Parenthetically, the same rationale applies in treating RA 7730 as a curative statute. Explicit in its title[22] is the legislative intent to rectify the error brought about by this Courts ruling that RA 6715 covers even labor standards cases where the amounts to be awarded by the Regional Director exceed P5,000 as provided for under RA 6715. Congressional records relative to Republic Act 7730 reveal that, this bill seeks to do away with the jurisdictional limitations imposed thru said ruling (referring to Servando) and to finally settle any lingering doubts on the visitorial and enforcement powers of the Secretary of Labor and Employment.[23] All the foregoing studiedly considered, the ineluctable conclusion is that the application of RA 7730 to the case under consideration is proper. Thus, it is decisively clear that the public respondent did not act with grave abuse of discretion in issuing the Order dated September 16, 1988. The second issue for resolution is the validity of the auction sales conducted by Special Sheriff Ramos. It bears stressing that the writ of execution issued by the Regional Director led to the several auction sales conducted on September 24, 1987, October 2, 1987, October 23, 1987, October 29, 1987 and October 30, 1987.

In the first Order of public respondent, the five (5) auction sales were declared null and void. As the public respondent put it, the scandalously low price for which the personal properties of the respondent were sold leads us to no other recourse but to invalidate the auction sales conducted by the special sheriff.[24] In the September 16, 1988 Order[25] of public respondent, the personal properties and corresponding prices for which they were sold were as follows: Personal properties sold on September 24, 1987: 1. One (1) unit peterbuilt truck Model 1978 with Engine No. 6A4102-65, Chassis No. 139155-P not running condition. 2. One (1) unit 1978 Model peterbuilt truck with Engine No. 6467-8040, Chassis No. 6A410235, truck with Engine No. (Truck 4) not running condition. 3. One (1) unit 1978 Model peterbuilt truck with Engine No. 6A410319, Chassis No. 139163-P Truck No. 4 not running condition. Proceeds of Sale ............P178,000.00 Personal Properties Sold on October 2, 1987: 1. One (1) unit peterbuilt truck model 1978, with Engine No. 6A410347, Chassis No. 1391539-P. 2. One (1) unit peterbuilt truck Model 1978 with Engine No. 6A410325, Chassis No. 139149. 3. One (1) unit payloader (caterpillar with Engine No. (not visible) 966. 4. One (1) unit Forklift; one (1) unit crowler crane, Engine No. (not visible); and one (1) Lot of scrap irons impounded inside the Batong Buhay Compound, Calanan, Kalinga Apayao. 5. One (1) unit panel Isuzu with Engine No. 821 POF200207, Plate No. PBV 386. Proceeds of Sale....P228,750.00 Personal Properties Sold on October 23, 1987: 1. One (1) Unit Toyota Land Cruiser, with Engine No. BO4466340, Chassis No. 81400500227, Plate No. BAT 353, burned, damage not running condition, type of body jeep motor not visible. 2. Two (2) units peterbuilts, damaged, burned motor Nos. (not visible) and Chassis Nos. not visible. 3. One (1) Unit Layland, burned, damaged and Motor No. not visible. 4. Two (units) air compressor, burned, damaged and one (1) generator. 5. One (1) Unit Loader Michigan 50, damaged and burned, and 6. One (1) rock crasher, damaged, burned, scrap iron junk. Proceeds of Sale...........P98,000.00 Properties sold on October 29, 1987: 1. One (1) lot of scrap construction materials 2. One (1) lot of scrap mining machineries equipments and supplies. 3. One (1) lot of junk machineries, equipments and supplies. Proceeds of Sale............P1,699,999.99 Personal Properties Sold on October 20, 1987* 1. One (1) lot of scrap construction materials 2. One (1) lot of scrap mining machineries, equipments and supplies Proceeds of Sale...........P2,185,000.00 Total Proceeds Sale.... P4,389,749.99 to satisfy the judgment award in the amount of P4,818,746.00. As a general rule, findings of fact and conclusion of law arrived at by quasi-judicial agencies are not to be disturbed absent any showing of grave abuse of discretion tainting the same. But in the case under scrutiny, there was grave abuse of discretion when the public respondent, without any evidentiary support, adjudged such prices as scandalously low. He merely relied on the self-serving assertion by the petitioner that the value of the auctioned properties was more than the price bid. Obviously, this ratiocination did not suffice to set aside the auction sales. The presumption of regularity in the performance of official function is applicable here. Conformably, any party alleging irregularity vitiating auction sales must come forward with clear and convincing proof. Furthermore, it is a well-settled principle that: Mere inadequacy of price is not, of itself sufficient ground to set aside an execution sale where the sale is regular, proper and legal in other respects, the parties stand on an equal footing, there are no confidential relation between them, there is no element of fraud, unfairness, or oppression, and there is no misconduct, accident, mistake or surprise connected with, and tending to cause, the inadequacy.[26] Consequently, in declaring the nullity of the subject auction sales on the ground of inadequacy of price, the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

But, this is not to declare the questioned auction sales as valid. The same are null and void since on the properties of petitioner involved was constituted a mortgage between petitioner and the Development Bank of the Philippines, as shown by the: (a) Deed of Mortgage dated December 28,1973; (b) Joint Mortgage (Amending Deed of Mortgage) dated August 25, 1975; (c) Amendment to Joint Mortgage dated October 18, 1976. (d) Confirmation of Mortgage dated March 27,1979; and (e) Additional Joint First Mortgage dated March 31, 1981.[27] The aforementioned documents were executed between the petitioner and Development Bank of the Philippines (DBP) even prior to the filing of the complaint of petitioners employees. The properties having been mortgaged to DBP, the applicable law is Section 14 of Executive Order No. 81, dated 3 December 1986, otherwise known as the The 1986 Revised Charter of the Development Bank of the Philippines, which exempts the properties of petitioner mortgaged to DBP from attachment or execution sales. Section 14 of E.O. 81, reads: Sec. 14. Exemption from Attachment. The provisions of any law to the contrary notwithstanding, securities on loans and/or other accommodations granted by the Bank or its predecessor-in-interest shall not be subject to attachment, execution or any other court process, nor shall they be included in the property of insolvent persons or institutions, unless all debts and obligations of the Bank or its predecessor-in-interest, penalties, collection of expenses, and other charges, subject to the provisions of paragraph (e) of Sec. 9 of this Charter. In fact, a letter dated January 31, 1990 of Jose C. Sison, Associate Executive Trustee of the Asset Privatization Trust, to the Office of the Clerk of Court of the Supreme Court, certified that the petitioner is covered by Proclamation No. 50 issued on December 8, 1986 by President Corazon C. Aquino. Quoted hereunder are the pertinent portions of the said letter:[28] RE: BBGMI vs. Hon. dela Serna, GR No. 86963 Supreme Court Certiorari SIR: xxx xxx xxx

xxx all the assets (real and personal/chattel) of Batong Buhay Gold Mines, Inc. (BBGMI) have been transferred and entrusted to the Asset Privatization Trust (APT) by virtue of Proclamation No. 50 dated December 8, 1986 of her Excellency, President Corazon C. Aquino. All the said assets of BBGMI are covered by real and chattel mortgages executed in favor of the Philippine National Bank (PNB), the Development Bank of the Philippines (DBP) and the National Investment and Development Corporation (NIDC). xxx xxx xxx

Section 14, Executive Order No. 81: xxx xxx xxx

Pursuant to the above-quoted provision of law, you are hereby warned that all the assets (real and personal /chattel) of BBGMI are exempted from writs of execution, attachment, or any other lien or court processes. The Government, through APT, shall initiate any administrative measures and remedies against you for any violation of the vested rights of PNB, DBP and APT. xxx xxx (sgd) JOSE C. SISON The exemption referred to in the aforecited letter is one of the circumstances contemplated by Rule 39 of the Revised Rules of Court, to wit: Sec. 13. Property exempt from execution. - Except as otherwise expressly provided by law, the following properties, and no other, shall be exempt from execution: xxx xxx xxx xxx

(m) Properties specially exempted by law. xxx xxx xxx

Private respondents contend that even if subject properties were mortgaged to DBP (now under Asset Privatization Trust), Article 110[29] of the Labor Code, as amended by RA 6715, applies just the same. According to them, the said provision of law grants preference to money claims of workers over and above all credits of the petitioner. This contention is untenable. In the case of DBP vs. NLRC,[30] the Supreme Court held that the workers preference regarding wages and other monetary claims under Article 110 of the Labor Code, as amended, contemplates bankruptcy or liquidation proceedings of the employers business. What is more, it does not disregard the preferential lien of mortgagees considered as preferred credits under the provisions of the New Civil Code on the classification, concurrence and preference of credits. We now come to the issue with respect to the second Order, dated December 14, 1988, which declared as valid the auction sale conducted on October 29, 1987 by Special Sheriff John Ramos. Public respondent had no authority to validate the said auction sale on the ground that the intervenors, MFT Corporation and Salter Holdings Pty., Ltd., as purchasers for value, acquired legal title over subject properties. It is well to remember that the said properties were transferred to the intervenors, when Fidel Bermudez, the highest bidder at the auction sale, sold the properties to MFT Corporation which, in turn, sold the same properties to Salter Holdings Pty., Ltd. Public respondent opined that the contract of sale between the intervenors and the highest bidder should be respected as these sales took place during the interregnum after the auction sale was conducted on October 29, 1987 and before the issuance of the first disputed Order declaring all the auction sales null and void. On this issue, the Court rules otherwise.

As regards personal properties, the general rule is that title, like a stream, cannot rise higher than its source.[31] Consequently, a seller without title cannot transfer a title better than what he holds. MFT Corporation and Salter Holdings Pty., Ltd. trace their title from Fidel Bermudez, who was the highest bidder of a void auction sale over properties exempt from execution. Such being the case, the subsequent sale made by him (Fidel Bermudez) is incapable of vesting title or ownership in the vendee. The Order dated December 14, 1988, declaring the October 29, 1987 auction sale as valid, was issued with grave abuse of discretion amounting to lack or excess of jurisdiction. WHEREFORE, the petition is hereby GRANTED, insofar as the Order dated December 14, 1988 of Undersecretary Dionisio dela Serna is concerned, which Order is SET ASIDE. The Order of September 16, 1988, upholding the jurisdiction of the Regional Director, is AFFIRMED. No pronouncement as to costs. SO ORDERED. Melo, (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

-------------------------------------------------------------------------------* Attachment "Q", Rollo, pp. 175-191. * This was typographical error as admitted by the public respondent and should have read Oct. 30, 1987. As can be seen from the records, there was no auction sale conducted by the Special Sheriff dated Oct. 20, 1987.

-------------------------------------------------------------------------------[1] Rollo, p. 67, penned by Regional Director Luna C. Piezas.

[2] Rollo, pp. 192-198. Attachment R. Order of Usec Dionisio dela Serna dated September 16, 1988. [3] [4] [5] [6] [7] [8] [9] Rollo, p. 203. Section 7, Rule 1, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September 16, 1987. PD 850 as amended by PD 1691, latter became effective May 1, 1980. 146 SCRA 51. 156 SCRA 498. Rollo, pp. 199-200. Briad Agro Development Corporation vs. Dionisio dela Serna, 174 SCRA 524.

[10] SSK Parts Corporation vs. Camas, 181 SCRA 675. [11] Rollo, page 65. [12] Section 11. Hearing. Where no proof of compliance is submitted by the employer after seven (7) calendar days from receipt of the inspection results, the Regional Director shall summon the employer and the complainants to a summary investigation. In regular routine inspection cases however, such investigation shall be conducted where no complete field investigation can be made for reasons attributable to the fault of the employer or his representatives, such as those but not limited to instances when the field inspectors are denied access to the premises, employment records, or workers of the employer. (Rules on the Disposition of Labor Standards Cases) [13] [14] [15] [16] [17] [18] [19] Villadolid vs. Inciong, 121 SCRA 205. MOLE Policy Instructions No. 7. Philippine Long Distance Company vs. NLRC, 190 SCRA 717. 184 SCRA 664 184 SCRA 664; 198 SCRA 156. 198 SCRA 156. Atlas Fertilizer Corporation vs. Navarro, April 30, 1987.

[20] Agpalo, Ruben. Statutory Construction. Citing the cases of Del Castillo vs. SEC, 96 Phil 119; Santos vs. Duata, 14 SCRA 1041; DBP vs. CA, 96 SCRA 342. [21] 179 SCRA 270.

[22] Entitled AN ACT FURTHER STRENGTHENING THE VISITORIAL AND ENFORCEMENT POWERS OF THE SECRETARY OF LABOR AND EMPLOYMENT, AMENDING FOR THE PURPOSE ARTICLE 128OF PD 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, approved by the President on June 2, 1994. [23] The records of the House of Representatives showed that Congressman Alberto S. Veloso and Eriberto V. Loreto sponsored RA 7730. [24] [25] [26] Rollo, p. 203. Rollo, pp. 200-202. Francisco, The Revised Rules of Court in the Philippines, supra, page 755.

[27] [28]

Rollo, pp. 478-508. Rollo, pp. 451-452.

[29] Art. 110. Worker preference in case of bankruptcy. - In the event of bankruptcy or liquidation of an employers business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of government and other creditors may be paid. [30] 183 SCRA 328. [31] Tolentino, Arturo M. CIVIL CODE OF THE PHILIPPINES, Vol. V, page 65, citing National Bank vs. Wisconsin, C.R. Co., 44 Minn, 224, 46 N.W. 342, 9 L. R. A., 20 Am. St. Rep 566.

JMM PROMOTION AND MANAGEMENT, INC., and KARY INTERNATIONAL, INC., petitioner, vs. HON. COURT OF APPEALS, HON. MA. NIEVES CONFESSOR, then Secretary of the Department of Labor and Employment, HON. JOSE BRILLANTES, in his capacity as acting Secretary of the Department of Labor and Employment and HON. FELICISIMO JOSON, in his capacity as Administrator of the Philippine Overseas Employment Administration, respondents. 1996 Aug 5 1st Division G.R. No. 120095 KAPUNAN, J.: The limits of government regulation under the State's police power are once again at the vortex of the instant controversy. Assailed is the government's power to control deployment of female entertainers to Japan by requiring an Artist Record Book (ARB) as a precondition to the processing by the POEA of any contract for overseas employment. By contending that the right to overseas employment is a property right within the meaning of the Constitution, petitioners vigorously aver that deprivation thereof allegedly through the onerous requirement of an ARB violates the due process clause and constitutes an invalid exercise of the police power. The factual antecedents are undisputed. Following the much-publicized death of Maricris Sioson in 1991, former President Corazon C. Aquino ordered a total ban against the deployment of performing artists to Japan and other foreign destinations. The ban was, however, rescinded after leaders of the overseas employment industry promised to extend full support for a program aimed at removing kinks in the system of deployment. In its place, the government, through the Secretary of Labor and Employment, subsequently issued Department Order No. 28, creating the Entertainment Industry Advisory Council (EIAC), which was tasked with issuing guidelines on the training, testing certification and deployment of performing artists abroad. Pursuant to the EIAC's recommendations, 1 the Secretary of Labor, on January 6, 1994, issued Department Order No. 3 establishing various procedures and requirements for screening performing artists under a new system of training, testing, certification and deployment of the former. Performing artists successfully hurdling the test, training and certification requirement were to be issued an Artist's Record Book (ARB), a necessary prerequisite to processing of any contract of employment by the POEA. Upon request of the industry, implementation of the process, originally scheduled for April 1, 1994, was moved to October 1, 1994. Thereafter, the Department of Labor, following the EIAC's recommendation, issued a series of orders fine-tuning and implementing the new system. Prominent among these orders were the following issuances: 1. Department Order No. 3-A, providing for additional guidelines on the training, testing, certification and deployment of performing artists. 2. Department Order No. 3-B, pertaining to the Artist Record Book (ARB) requirement, which could be processed only after the artist could show proof of academic and skills training and has passed the required tests. 3. Department Order No. 3-E, providing the minimum salary a performing artist ought to received (not less than US$600.00 for those bound for Japan) and the authorized deductions therefrom. 4. Department Order No. 3-F, providing for the guidelines on the issuance and use of the ARB by returning performing artists who, unlike new artists, shall only undergo a Special Orientation Program (shorter than the basic program) although they must pass the academic test. In Civil Case No. 95-72750, the Federation of Entertainment Talent Managers of the Philippines (FETMOP), on January 27, 1995 filed a class suit assailing these department orders, principally contending that said orders 1) violated the constitutional right to travel; 2) abridged existing contracts for employment; and 3) deprived individual artists of their licenses without due process of law. FETMOP, likewise, averred that the issuance of the Artist Record Book (ARB) was discriminatory and illegal and "in gross violation of the constitutional right... to life liberty and property." Said Federation consequently prayed for the issuance of a writ of preliminary injunction against the aforestated orders. On February 2, 1992, JMM Promotion and Management, Inc. Kary International, Inc., herein petitioners, filed a Motion for Intervention in said civil case, which was granted by the trial court in an Order dated 15 February, 1995. However, on February 21, 1995, the trial court issued an Order denying petitioners' prayed for a writ of preliminary injunction and dismissed the complaint. On appeal from the trial court's Order, respondent court, in CA G.R. SP No. 36713 dismissed the same. Tracing the circumstances which led to the issuance of the ARB requirement and the assailed Department Order, respondent court concluded that the issuance constituted a valid exercise by the state of the police power. We agree. The latin maxim salus populi est surprema lex embodies the character of the entire spectrum of public laws aimed at promoting the general welfare of the people under the State's police power. As an inherent attribute of sovereignty which virtually "extends to all public needs," 2 this "least limitable" 3 of governmental powers grants a wide panoply of instruments through which the state, as parens patriae gives effect to a host of its regulatory powers. Describing the nature and scope of the police power, Justice Malcolm, in the early case of Rubi v. Provincial Board of Mindoro 4 wrote: "The police power of the State," one court has said... is a power coextensive with self-protection, and is not inaptly termed "the law of overruling necessity." It may be said to be that inherent and plenary power in the state which enables it to prohibit all things hurtful to the comfort, safety and welfare of society." Carried onward by the current of legislature, the judiciary rarely attempts to dam the onrushing power of legislative discretion, provided the purposes of the law do not go beyond the great principles that mean security for the public welfare or do not arbitrarily interfere with the right of the individual. 5 Thus, police power concerns government enactments which precisely interfere with personal liberty or property in order to promote the general welfare or the common good. As the assailed Department Order enjoys a presumed validity, it follows that the burden rests upon petitioners to demonstrate that the said order, particularly, its ARB requirement, does not enhance the public welfare or was exercised arbitrarily or unreasonably. A thorough review of the facts and circumstances leading to the issuance of the assailed orders compels us to rule that the Artist Record Book requirement and the questioned Department Order related to its issuance were issued by the Secretary of Labor pursuant to a valid exercise of the police power. In 1984, the Philippines emerged as the largest labor sending country in Asia dwarfing the labor export of countries with mammoth populations such as India and China. According to the National Statistics Office, this diaspora was augmented annually by over 450,000 documented and clandestine or illegal (undocumented) workers who left the country for various destinations abroad, lured by higher salaries, better work opportunities and sometimes better living conditions.

Of the hundreds of thousands of workers who left the country for greener pastures in the last few years, women composed slightly close to half of those deployed, constituting 47% between 1987-1991, exceeding this proportion (58%) by the end of 1991, 6 the year former President Aquino instituted the ban on deployment of performing artists to Japan and other countries as a result of the gruesome death of Filipino entertainer Maricris Sioson. It was during the same period that this Court took judicial notice not only of the trend, but also of the fact that most of our women, a large number employed as domestic helpers and entertainers, worked under exploitative conditions "marked by physical and personal abuse." 7 Even then, we noted that "[t]he sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by testimonies of returning workers" compelled "urgent government action." 8 Pursuant to the alarming number of reports that a significant number of Filipina performing artists ended up as prostitutes abroad (many of whom were beaten, drugged and forced into prostitution), and following the deaths of number of these women, the government began instituting measures aimed at deploying only those individuals who met set standards which would qualify them as legitimate performing artists. In spite of these measures, however, a number of our countrymen have nonetheless fallen victim to unscrupulous recruiters, ending up as virtual slaves controlled by foreign crime syndicates and forced into jobs other than those indicated in their employment contracts. Worse, some of our women have been forced into prostitution. Thus, after a number of inadequate and failed accreditation schemes, the Secretary of Labor issued on August 16, 1993, D.O. No. 28, establishing the Entertainment Industry Advisory Council (EIAC), the policy advisory body of DOLE on entertainment industry matters. 9 Acting on the recommendations of the said body, the Secretary of Labor, on January 6, 1994, issued the assailed orders. These orders embodied EIAC's Resolution No. 1, which called for guidelines on screening, testing and accrediting performing overseas Filipino artists. Significantly, as the respondent court noted, petitioners were duly represented in the EIAC, 10 which gave the recommendations on which the ARB and other requirements were based. Clearly, the welfare of Filipino performing artists, particularly the women was paramount in the issuance of Department Order No. 3. Short of a total and absolute ban against the deployment of performing artists to "high risk" destinations, a measure which would only drive recruitment further underground, the new scheme at the very least rationalizes the method of screening performing artists by requiring reasonable educational and artistic skills from them and limits deployment to only those individuals adequately prepared for the unpredictable demands of employment as artists abroad. It cannot be gainsaid that this scheme at least lessens the room for exploitation by unscrupulous individuals and agencies. Moreover, here or abroad, selection of performing artists is usually accomplished by auditions, where those deemed unfit are usually weeded out through a process which is inherently subjective and vulnerable to bias and differences in taste. The ARB requirement goes one step further, however, attempting to minimize the subjectivity of the process by defining the minimum skills required from entertainers and performing artists. As the Solicitor General observed, this should be easily met by experienced artists possessing merely basic skills. The test are aimed at segregating real artists or performers from those passing themselves off as such, eager to accept any available job and therefore exposing themselves to possible exploitation. As to the other provisions of Department Order No. 3 questioned by petitioners, we see nothing wrong with the requirements for document and booking confirmation (D.O. 3-C), a minimum salary scale (D.O. 3-E), or the requirement for registration of returning performers. The requirement for a venue certificate or other documents evidencing the place and nature or work allows the government closer monitoring of foreign employers and helps keep our entertainers away from prostitution fronts and other worksites associated with unsavory, immoral, illegal or exploitative practices. Parenthetically, none of these issuances appear to us, by any stretch of the imagination, even remotely unreasonable or arbitrary. They address a felt need of according greater protection for an oft-exploited segment of our OCW's. They respond to the industry's demand for clearer and more practicable rules and guidelines. Many of these provisions were fleshed out following recommendations by, and after consultations with, the affected sectors and non-government organizations. On the whole, they are aimed at enhancing the safety and security of entertainers and artists bound for Japan and other destinations, without stifling the industry's concerns for expansion and growth. In any event, apart from the State's police power, the Constitution itself mandates government to extend the fullest protection to our overseas workers. The basic constitutional statement on labor, embodied in Section 18 of Article II of the Constitution provides: Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. More emphatically, the social justice provisions on labor of the 1987 Constitution in its first paragraph states: 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. Obviously, protection to labor does not indicate promotion of employment alone. Under the welfare and social justice provisions of the Constitution, the promotion of full employment, while desirable, cannot take a backseat to the government's constitutional duty to provide mechanisms for the protection of our workforce, local or overseas. As this Court explained in Philippine Association of Service Exporters (PASEI) v. Drilon, 11 in reference to the recurring problems faced by our overseas workers: What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the Government is duty-adequate protection, personally and economically, while away from home. We now go to petitioners' assertion that the police power cannot, nevertheless, abridge the right of our performing workers to return to work abroad after having earlier qualified under the old process, because, having previously been accredited, their accreditation became a "property right," protected by the due process clause. We find this contention untenable. A profession, trade of calling is a property right within the meaning of our constitutional guarantees. One cannot be deprived of the right to work and right to make a living because these rights are property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable wrong. 12 Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade has always been upheld as a legitimate subject of a valid exercise of the police power by the state particularly when their conduct affects either the execution of legitimate governmental functions, the preservation of the State, the public health and welfare and public morals. According to the maxim, sic utere tuo ut alienum non laedas, it must of course be within the legitimate range of legislative action to define the mode and manner in which every one may so use of his own property so as not to pose injury to himself or others. 13 In any case, where the liberty curtailed affects at most the rights of property, the permissible scope of regulatory measures is certainly muchwider. 14 To pretend that licensing or accreditation requirements violates the due process clause is to ignore the settled practice, under the mantle of the police power, of regulating entry to the practice of various trades or professions. Professionals leaving for abroad are required to pass rigid written and practical exams before they are deemed fit to practice their trade. Seamen are required to take tests determining their seamanship. Locally, the Professional Regulation Commission has began to require previously licensed doctors and other professionals to furnish documentary proof that they has either re-trained or had undertaken continuing education courses as a requirement for renewal of their licenses. It is not claimed that these requirements

pose an unwarranted deprivation of a property right under the due process clause. So long as professionals and other workers meet reasonable regulatory standards no such deprivation exists. Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause of the Constitution to support their argument that the government cannot enact the assailed regulatory measures because they abridge the freedom to contract. In Philippine Association of Service Exporters, Inc. vs. Drilon, we held that "[t]he non-impairment clause of the Constitution... must yield to the loftier purposes targeted by the government." 15 Equally important, into every contract is read provisions of existing law, and always, a reservation of the police power for so long as the agreement deals with a subject impressed with the public welfare. A last point. Petitioners suggest that the singling out of entertainers and performing artists under the assailed department orders constitutes class legislation which violates the equal protection clause of the Constitution. We do not agree. The equal protection clause is directed principally against undue favor and individual or class privilege. It is not intended to prohibit legislation which is limited to the object to which it is directed or by the territory in which it is to operate. It does not require absolute equality, but merely that all persons be treated alike under like conditions both as to privileges conferred and liabilities imposed. 16 We have held, time and again, that the equal protection clause of the Constitution does not forbid classification for so long as such classification is based on real and substantial differences having a reasonable relation to the subject of the particular legislation. 17 If classification is germane to the purpose of the law, concerns all members of the class, and applies equally to present and future conditions, the classification does not violate the equal protection guarantee. In the case at bar, the challenged Department Order clearly applies to all performing artists and entertainers destined for jobs abroad. These orders, we stressed hereinfore, further the Constitutional mandate requiring government to protect our workforce, particularly those who may be prone to abuse and exploitation as they are beyond the physical reach of government regulatory agencies. The tragic incidents must somehow stop, but short of absolutely curtailing the right of these performers and entertainers to work abroad, the assailed measures enable our government to assume a measure of control. WHEREFORE, finding no reversible error in the decision sought to be reviewed, petition is hereby DENIED. SO ORDERED. Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.

MAXIMO CALALANG, petitioner, vs. A. D. WILLIAMS, ET AL., respondents. 1940 Dec 2 1st Division G.R. No. 47800 DECISION LAUREL, J: Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court this petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila. It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to the Director of Public Works and to the Secretary of Public Works and Communications that animal-drawn vehicles be prohibited from passing along Rosario Street extending from Plaza Calderon de la Barca to Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic Commission, on July 18, 1940 recommended to the Director of Public Works the adoption of the measure proposed in the resolution aforementioned, in pursuance of the provisions of Commonwealth Act No. 548 which authorizes said Director of Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate rules and regulations to regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director of Public Works, in his first indorsement to the Secretary of Public Works and Communications, recommended to the latter the approval of the recommendation made by the Chairman of the National Traffic Commission as aforesaid, with the modification that the closing of Rizal Avenue to traffic to animaldrawn vehicles be limited to the portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public Works and Communications, in his second indorsement addressed to the Director of Public Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and during the hours as above indicated, for a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulations thus adopted; that as a consequence of such enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places above-mentioned to the detriment not only of their owners but of the riding public as well. It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works, with the approval of the Secretary of Public Works and Communications, is authorized to promulgate rules and regulations for the regulation and control of the use of and traffic on national roads and streets is unconstitutional because it constitutes an undue delegation of legislative power. This contention is untenable. As was observed by this court in Rubi vs. Provincial Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been better stated than in the early Ohio case decided by Judge Ranney, and since followed in a multitude of cases, namely: 'The true distinction therefore is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made.' (Cincinnati, W. & Z. R. Co. vs. Comm'rs. Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman vs. Southard (10 Wheat., 1) may be committed by the Legislature to an executive department or official. The Legislature may make decisions of executive departments or subordinate officials thereof, to whom it has committed the execution of certain acts, final on questions of fact. (U.S. vs. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give prominence to the 'necessity' of the case." Section 1 of Commonwealth Act No. 548 reads as follows: "SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines, the Director of Public Works, with the approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules and regulations to regulate and control the use of and traffic on such roads and streets. Such rules and regulations, with the approval of the President, may contain provisions controlling or regulating the construction of buildings or other structures within a reasonable distance from along the national roads. Such roads may be temporarily closed to any or all classes of traffic by the Director of Public Works and his duly authorized representatives whenever the condition of the road or the traffic thereon makes such action necessary or advisable in the public convenience and interest, or for a specified period, with the approval of the Secretary of Public Works and Communications." The above provisions of law do not confer legislative power upon the Director of Public Works and the Secretary of Public Works and Communications. The authority therein conferred upon them and under which they promulgated the rules and regulations now complained of is not to determine what public policy demands but merely to carry out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines" and to close them temporarily to any or all classes of traffic "whenever the condition of the road or the traffic makes such action necessary or advisable in the public convenience and interest." The delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the application of said law is to be predicated. To promulgate rules and regulations on the use of national roads and to determine when and how long a national road should be closed to traffic, in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative function which cannot be directly discharged by the National Assembly. It must depend on the discretion of some other government official to whom is confided the duty of determining whether the proper occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the making of the law. As was said in Locke's Appeal (72 Pa. 491): "To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know." The proper distinction the court said was this: "The Legislature cannot delegate its power to make the law; but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation must depend which cannot be known to the law-making power, and, must, therefore, be a subject of inquiry and determination outside of the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.) In the case of People vs. Rosenthal and Osmea, G.R. Nos. 46076 and 46077, promulgated June 12, 1939, and in Pangasinan Transportation vs. The Public Service Commission, G.R. No. 47065, promulgated June 26, 1940, this Court had occasion to observe that the principle of separation of powers has been made to adapt itself to the complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of "subordinate legislation," not only in the United States and England but in practically all modern governments. Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental regulations, and the increased difficulty of administering the laws, the rigidity of the theory of separation of governmental powers has, to a large extent, been relaxed by permitting the delegation of greater powers by the legislative and vesting a larger amount of discretion in administrative and executive officials, not only in the execution of the laws, but also in the promulgation of certain rules and regulations calculated to promote public interest. The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an unlawful interference with legitimate business or trade and abridge the right to personal liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the interest and convenience of the public. In enacting said law, therefore, the National Assembly was prompted by considerations of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic. which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty, with property, and with business and occupations. Persons and property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state (U.S. vs. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen should achieve the required balance of liberty and authority in his mind through education and personal discipline, so that there may be established the resultant equilibrium, which means peace and order and happiness for all. The moment greater authority is conferred upon the government, logically so much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of insuring its preservation. The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins vs. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a continuing one, and a business lawful today may in the future, because of the changed situation, the growth of population or other causes, become a menace to the public health and welfare, and be required to yield to the public good." And in People vs. Pomar (46 Phil., 440), it was observed that "advancing civilization is bringing within the police power of the state today things which were not thought of as being within such power yesterday. The development of civilization, the rapidly increasing population, the growth of public opinion, with an increasing desire on the part of the masses and of the government to look after and care for the interests of the individuals of the state, have brought within the police power many questions for regulation which formerly were not so considered." The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional precept regarding the promotion of social justice to insure the well-being and economic security of all the people. The promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given group. Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex. Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number." In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the petitioner. So ordered. Avancea, C.J., Imperial, Diaz. and Horrilleno. JJ.. concur.

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents. 1988 Aug 23 En Banc G.R. No. L-80609 DECISION CRUZ, J.: The only issue presented in the case at bar is the legality of the award of financial assistance to an employee who had been dismissed for cause as found by the public respondent. Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone installation. 1 Investigated and heard, she was found guilty as charged and accordingly separated from the service. 2 She went to the Ministry of Labor and Employment claiming she had been illegally removed. After consideration of the evidence and arguments of the parties, the company was sustained and the complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter's decision declared: "WHEREFORE, the instant complaint is dismissed for lack of merit. "Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally blameless in the light of the fact that the deal happened outside the premises of respondent company and that their act of giving P3,800.00 without any receipt is tantamount to corruption of public officers, complainant must be given one month pay for every year of service as financial assistance." 3 Both the petitioner and the private respondent appealed to the National Labor Relations Board, which upheld the said decision in toto and dismissed the appeals. 4 The private respondent took no further action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the above-quoted award as having been made with grave abuse of discretion. In its challenged resolution of September 22, 1987, the NLRC said: ". . . Anent the award of separation pay as financial assistance in complainant's favor, We find the same to be equitable, taking into consideration her long years of service to the company whereby she had undoubtedly contributed to the success of respondent. While we do not in any way approve of complainants (private respondent) malfeasance, for which she is to suffer the penalty of dismissal, it is for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her favor." 5 The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled to reinstatement and backwages as required by the labor laws. However, an employee dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at all because his dismissal is in accordance with law. In the case of the private respondent, she has been awarded financial assistance equivalent to ten months pay corresponding to her 10-year service in the company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for her dishonesty, and without any legal authorization or justification. The award is made on the ground of equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and encourages instead of deterring corruption. For its part, the public respondent claims that the employee is sufficiently punished with her dismissal. The grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after working faithfully with the company for ten years. In support of this position, the Solicitor General cites the cases of Firestone Tire and Rubber Company of the Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were dismissed for cause but were nevertheless allowed separation pay on grounds of social and compassionate justice. As the Court put it in the Firestone case: "In view of the foregoing, We rule that Firestone had valid grounds to dispense with the services of Lariosa and that the NLRC acted with grave abuse of discretion in ordering his reinstatement. However, considering that Lariosa had worked with the company for eleven years with no known previous bad record, the ends of social and compassionate justice would be served if he is paid full separation pay but not reinstatement without backwages by the NLRC." In the said case, the employee was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay for his 11 years of service with the company. In Soco, the employee was also legally separated for unauthorized use of a company vehicle and refusal to attend the grievance proceedings but he was just the same granted one-half month separation pay for every year of his 18year service. Similar action was taken in Filipino, Inc. v. NLRC, 8 where the employee was validly dismissed for preferring certain dealers in violation of company policy but was allowed separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the employee was validly removed for loss of confidence because of her failure to account for certain funds but she was awarded separation pay equivalent to one-half month's salary for every year of her service of 15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he had instigated labor unrest among the workers and had serious differences with them, among other grounds, but he was still granted three months separation pay corresponding to his 3-year service. In New Frontier Mines Inc. v. NLRC, 11 the employee's 3-year service was held validly terminated for lack of confidence and abandonment of work but he was nonetheless granted three months separation pay. And in San Miguel Corporation v. Deputy Minister of Labor and Employment, et al., 12 full separation pay for 6, 10, and 16 years service, respectively, was also allowed three employees who had been dismissed after they were found guilty of misappropriating company funds. The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. 13 The cases above cited constitute the exception, based upon considerations of equity. Equity has been defined as justice outside law, 14 being ethical rather than jural and belonging to the sphere of morals than of law. 15 It is grounded on the precepts of conscience and not on any sanction of positive law. 16 Hence, it cannot prevail against the expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause. The Court notes, however, that where the exception has been applied, the decisions have not been consistent as to the justification for the grant of separation pay and the amount or rate of such award. Thus, the employees dismissed for theft in the Firestone case and for animosities with fellow workers in the Engineering Equipment case were both awarded separation pay notwithstanding that

the first cause was certainly more serious than the second. No less curiously, the employee in the Soco case was allowed only onehalf month pay for every year of his 18 years of service, but in Filipino the award was two months separation pay for 2 years service. In Firestone, the employee was allowed full separation pay corresponding to his 11 years of service, but in Metro, the employee was granted only one-half month separation pay for every year of her 15-year service. It would seem then that length of service is not necessarily a criterion for the grant of separation pay and neither apparently is the reason for the dismissal. The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was considered warranted, was required regardless of the nature or degree of the ground proved, be it mere inefficiency or something graver like immorality or dishonesty. The benediction of compassion was made to cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. This policy should be re-examined. It is time we rationalized the exception, to make it fair to both labor and management, especially to labor. There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance, this being another authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause. But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified. We hold 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. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it-is called, on the ground of social justice. A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. The Court also rules that the separation pay, if found due under the circumstances of each case, should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material. This is without prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of computation and providing for more benefits to the discharged employee. 17 WHEREFORE, the petition is GRANTED. The challenged resolution of September 22, 1987, is AFFIRMED in toto except for the grant of separation pay in the form of financial assistance, which is hereby DISALLOWED. The temporary restraining order dated March 23, 1988, is LIFTED. It is so ordered. Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Medialdea, JJ., concur. Separate Opinions PADILLA, J., concurring: I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay, as financial assistance, to the private respondent, since the ground for termination of employment is dishonesty in the performance of her duties. I do not, however, subscribe to the view that "the separation pay, if found due under the circumstances of each case, should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material." (p. 11, Decision). It is my considered view that, except for terminations based on dishonesty and serious misconduct involving moral turpitude ---- where no separation pay should be allowed ---- in other cases, the grant of separation pay, i.e. the amount thereof, as financial assistance to the terminated employee, should be left to the judgment of the administrative agency concerned which is the NLRC. It is in such cases ---- where the termination of employment is for a valid cause without, however, involving dishonesty or serious misconduct involving moral turpitude ---- that the Constitutional policy of affording protection to labor should be allowed full play; and this is achieved by leaving to the NLRC the primary jurisdiction and judgment to determine the amount of separation pay that should be awarded to the terminated employee in accordance with the "environmental facts" of each case. It is further my view that the Court should not, as a rule, disturb or alter the amount of separation pay awarded by the NLRC in such cases of valid termination of employment but with the financial assistance, in the absence of a demonstrated grave abuse of discretion on the part of the NLRC. FERNAN, C.J., dissenting:

The majority opinion itself declares that the reason for granting separation pay to lawfully dismissed employees is that "our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers." 1 It is my firm belief that providing a rigid mathematical formula for determining the amounts of such separation pay will not be in keeping with these constitutional directives. By computing the allowable financial assistance on the formula suggested, we shall be closing our eyes to the spirit underlying these constitutional mandates that "those who have less in life should have more in law." It cannot be denied that a low-salaried employee who is separated from work would suffer more hardship than a well-compensated one. Yet, if we follow the formula suggested, we would in effect be favoring the latter instead of the former, as it would be the low-salaried employee who would encounter difficulty finding another job. I am in accord with the opinion of Justice Sarmiento that we should not rationalize compassion and that of Justice Padilla that the awards of financial assistance should be left to the discretion of the National Labor Relations Commission as may be warranted by the "environmental facts" of the case. GRIO-AQUINO, J., dissenting: I dissent. We should not rationalize compassion. I vote to affirm the grant of financial assistance.

ASUNCION BROS. & CO., INC., and JOSE ASUNCION, petitioners, vs. COURT OF INDUSTRIAL RELATIONS, JUAN B. CEPE, et al., respondents. 1988 Jul 27 1st Division G.R. No. L-39514 DECISION NARVASA, J.: In the case at bar, the defunct Court of Industrial Relations is shown to have sanctioned the disregard of the grievance procedure set forth in a collective bargaining agreement, and to have failed to take account of material evidence. It thereby incurred in serious error, impelling reversal of its decision. The petitioners, Asuncion Bros. & Co., Inc. and Jose Asuncion were charged with unfair labor practice in the C.I.R. by the Court Prosecutor, on complaint of certain of their employees and the latter's labor organization, the Asuncion Bros. Woodcraft Employees and Laborers Union. The complaint substantially alleged that because the individual complainants had organized a labor organization which later affiliated itself with the Philippine Transport and General Workers Organization (PTGWO), the company, thru its general manager, Jose Asuncion, had made the members work on rotation basis and eventually dismissed them on various dates. In their answer, the petitioners denied the accusation; they claimed that the rotation of workers was resorted to on account of circumstances beyond their control, not the least of which was the "systematic" acts of the complainants' absenting themselves at will, reporting late, and "moonlighting" with other firms; and they set up certain affirmative defenses including the failure of the complaint to state a cause of action and the Court's lack of jurisdiction. 1 Evidence was thereafter presented by the parties before a Hearing Examiner in accordance with the procedure obtaining in the CIR. 2 The Hearing Examiner found petitioners guilty as charged and recommended that 3 ". . . since respondent business firm . . . is only a small and growing business entity which may not be in a position to immediately implement a return to work order of complainants, we respectfully recommend that reinstatement be gradual to minimize the idea of economic dislocation by integrating a labor force that it cannot possibly absorb. This may be arranged by, say, two (2) complainants every month, depending on the need and exigency of the business. And considering further the precarious situation that may ensue because of anticipated award of huge amount of damages, which will eat up the assets of the respondents business and since some of the complainants have found casual or temporary employment elsewhere, the amount of back-wages be limited to a period of six (6) months computed at the rate of the employees were enjoying at the time of their dismissal . . . " This recommendation, and the factual and legal conclusions of the Hearing Examiner on which it was founded, were adopted by the C.I.R. in its decision dated June 27, 1974. The C.I.R. thereafter also denied the petitioners' motion for reconsideration. 4 The case is now before this Court on an appeal by certiorari seasonably taken by the petitioners. They seek to make two basic points: (1) the C.I.R. lost jurisdiction of the case on promulgation of the Labor Code (PD 442) on May 1, 1974, and (2) the judgment is not reasonably supported by the evidence. The first point is grounded on Article 338 of the Code providing that "All cases pending before the Court of Industrial Relations and the National Labor Relations Commission established under Presidential Decree No. 21 at the time of the passage of this Code should be transferred to and processed by the National Labor Relations Commission created under this Code in accordance with the procedure laid down herein." The petitioners set the passage of the Code at May 1, 1974 and argue that the C.I.R. had already lost jurisdiction by the time it rendered judgment on June 27, 1974. The point is not well taken. While it is true that the Labor Code was promulgated on May 1, 1974, it expressly provided 5 that its effectivity would commence six months thereafter, or on November 1, 1974. Moreover, Article 338 relied upon by the petitioners was amended by PD 570-A by inter alia changing the work " passage" to "effectivity." The amendment made the provision read as follows: ". . . All cases pending before the Court of Industrial Relations and the National Labor Relations Commission established under Presidential Decree No. 71 on the date of effectivity of this Code shall be transferred to and processed by the corresponding labor relations division of the regional labor office, the Bureau of Labor Relations or the National Labor Relations Commission created under this Code having cognizance of the same in accordance with the procedure laid down herein, and its implementing rules and regulations . . ." And the date of effectivity of the Code, fixed at November 1, 1974, as above stated, was reaffirmed by PD 570-A. 6 There can thus be no doubt that the Labor Court still had jurisdiction of the case at the time it rendered its judgment on June 27, 1974. As the Court sees it, the error of the Labor Court lies in its omission to take account of relevant evidence on record and the quite material fact that the employees and their union had completely disregard the grievance procedure set forth in their collective bargaining agreement with the petitioner company. The Court a quo ignored the evidence given by two impartial witnesses: Gilbert Tumlos, personnel manager of Permaline, and Eustaquio Kerr, manager of Kawayan Woodcraft, who both testified to the employment of a majority of the complainants in their respective firms. 7 Their sworn declarations are fully corroborative and confirmatory of the testimony of the petitioners' witnesses, 8 as well as the documents listing the names of those workers whose employment had been terminated, the specific infractions of company rules constituting the respective causes therefor, and the dates of the commission of said infractions. 9 No reason is given by the Court for refusing to take account of such material proofs, and none in truth appears on record to justify it. The evidence satisfactorily establishes the petitioners' claim that their woodcraft plant "operates under an integrated assembly line system ([where] assignments [are integrated: e.g.] pattern, cutting, carving, lathe machine, disc sanding, spindle sanding, drum sanding, varnishing and finishing, packing). Failure of one unit or set of workers to perform in time its assigned functions hampers the whole operation and will cause stoppage of work, to the damage and prejudice of the enterprise, a small and budding one at that." 10 The record thus contains adequate evidentiary foundation for the dismissal of the complainants from employment, a circumstance that at the time constitutes persuasive refutation of the theory that said complainants were fired simply because of their union activities. Further disclosed by the record is the disregard by the complainant employees and their union of the grievance procedure prescribed in their collective bargaining agreement with the employer, dated February 19, 1969. 11 Article XIII of that agreement states that "In the event that grievances or differences arise between the Union and the Company or between a worker or group of workers on the one hand and the Company on the other, as regards the application, implementation of this agreement, or other differences which any of the parties desire to resolve, the Company and the Union shall take immediate steps to settle the differences shall be created, two (2) of which shall come from the Company and the other in the following manner: 1. A grievance committee composed of four (4) member two (2) . . . from the Union. Any grievance shall be resolved by the said committee within two (2) days after the grievance is submitted to them. 2. In case of disagreement, parties agree to submit the differences to the Bureau of Labor Relations, Department of Labor, for resolution.

3. If it cannot be resolved by the Bureau of Labor Relations, then the case may be submitted to an arbitrator agreed upon by both the Company and the Union whose decision shall be final and unappealable. 4. If however the parties cannot agree to arbitration, then the same shall be considered as a labor dispute." No reason whatever is given by the Union and the other complainants for ignoring this procedure for the settlement of their grievance relating to their work rotation which, as petitioners have pointed out, could have been "easily threshed out in the Grievance Committee," 12 or their subsequent dismissal from their employment. The collective bargaining agreement was, of course, the law between the parties, 13 and the refusal to comply therewith is a violation of the duty to bargain collectively, constituting unfair labor practice on the part of a union. 14 It thus seems that it was not the petitioners, but the employees and their union, against whom the charge of unfair labor practice might properly have been laid in this case. In any event, there is nothing in the record warranting condemnation of the petitioners for unfair labor practice in having terminated the employment of the complainants, such termination of work being, on the contrary, justified by the material circumstances. WHEREFORE, the judgment of the Court a quo is REVERSED AND SET ASIDE and another entered, absolving the petitioners from any unfair labor practice or any liability to the private respondents. No costs. Cruz, Gancayco, Aquino and Medialdea, JJ., concur.

PHILIPPINE NATIONAL BANK, Petitioner, versus FLORENCE O. CABANSAG, Respondent. 2005 Jun 21 3rd Division G.R. No. 157010 DECISION PANGANIBAN, J.: The Court reiterates the basic policy that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations. Our labor statutes may not be rendered ineffective by laws or judgments promulgated, or stipulations agreed upon, in a foreign country. The Case Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, seeking to reverse and set aside the July 16, 2002 Decision[2] and the January 29, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 68403. The assailed Decision dismissed the CA Petition (filed by herein petitioner), which had sought to reverse the National Labor Relations Commission (NLRC)s June 29, 2001 Resolution,[4] affirming Labor Arbiter Joel S. Lustrias January 18, 2000 Decision.[5] The assailed CA Resolution denied herein petitioners Motion for Reconsideration. The Facts The facts are narrated by the Court of Appeals as follows: In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She applied for employment, with the Singapore Branch of the Philippine National Bank, a private banking corporation organized and existing under the laws of the Philippines, with principal offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank of Vice-President of the Bank. At the time, too, the Branch Office had two (2) types of employees: (a) expatriates or the regular employees, hired in Manila and assigned abroad including Singapore, and (b) locally (direct) hired. She applied for employment as Branch Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of duties after approval. Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998, a letter to the President of the Bank in Manila, recommending the appointment of Florence O. Cabansag, for the position. xxx xxx xxx

The President of the Bank was impressed with the credentials of Florence O. Cabansag that he approved the recommendation of Ruben C. Tobias. She then filed an Application, with the Ministry of Manpower of the Government of Singapore, for the issuance of an Employment Pass as an employee of the Singapore PNB Branch. Her application was approved for a period of two (2) years. On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a month and, upon her successful completion of her probation to be determined solely, by the Bank, she may be extended at the discretion of the Bank, a permanent appointment and that her temporary appointment was subject to the following terms and conditions: 1. You will be on probation for a period of three (3) consecutive months from the date of your assumption of duty. 2. You will observe the Banks rules and regulations and those that may be adopted from time to time. 3. You will keep in strictest confidence all matters related to transactions between the Bank and its clients. 4. You will devote your full time during business hours in promoting the business and interest of the Bank. 5. You will not, without prior written consent of the Bank, be employed in anyway for any purpose whatsoever outside business hours by any person, firm or company. 6. Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation, one month notice upon confirmation or the equivalent of one (1) days or months salary in lieu of notice. Florence O. Cabansag accepted the position and assumed office. In the meantime, the Philippine Embassy in Singapore processed the employment contract of Florence O. Cabansag and, on March 8, 1999, she was issued by the Philippine Overseas Employment Administration, an Overseas Employment Certificate, certifying that she was a bona fide contract worker for Singapore. xxx xxx xxx

Barely three (3) months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on March 9, 1999, her initial Performance Report. Ruben C. Tobias was so impressed with the Report that he made a notation and, on said Report: GOOD WORK. However, in the evening of April 14, 1999, while Florence O. Cabansag was in the flat, which she and Cecilia Aquino, the Assistant Vice-President and Deputy General Manager of the Branch and Rosanna Sarmiento, the Chief Dealer of the said Branch, rented, she was told by the two (2) that Ruben C. Tobias has asked them to tell Florence O. Cabansag to resign from her job. Florence O. Cabansag was perplexed at the sudden turn of events and the runabout way Ruben C. Tobias procured her resignation from the Bank. The next day, Florence O. Cabansag talked to Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento had told her was true. Ruben C. Tobias confirmed the veracity of the information, with the explanation that her resignation was imperative as a cost-cutting measure of the Bank. Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB Singapore Branch will be sold or transformed into a remittance office and that, in either way, Florence O. Cabansag had to resign from her employment. The more Florence O. Cabansag was perplexed. She then asked Ruben C. Tobias that she be furnished with a Formal Advice from the PNB Head Office in Manila. However, Ruben C. Tobias flatly refused. Florence O. Cabansag did not submit any letter of resignation. On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and demanded that she submit her letter of resignation, with the pretext that he needed a Chinese-speaking Credit Officer to penetrate the local market, with the information that a Chinese-speaking Credit Officer had already been hired and will be reporting for work soon. She was warned that, unless she submitted her letter of resignation, her employment record will be blemished with the notation DISMISSED spread thereon. Without giving any definitive answer, Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look for another job. Ruben C. Tobias told her that she should be out of her employment by May 15, 1999. However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999, she received a letter from Ruben C. Tobias terminating her employment with the Bank.

xxx

xxx

xxx

On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and against the Respondents, the decretal portion of which reads as follows: WHEREFORE, considering the foregoing premises, judgment is hereby rendered finding respondents guilty of Illegal dismissal and devoid of due process, and are hereby ordered: 1. To reinstate complainant to her former or substantially equivalent position without loss of seniority rights, benefits and privileges; 2. Solidarily liable to pay complainant as follows: a) To pay complainant her backwages from 16 April 1999 up to her actual reinstatement. Her backwages as of the date of the promulgation of this decision amounted to SGD 40,500.00 or its equivalent in Philippine Currency at the time of payment; b) Mid-year bonus in the amount of SGD 2,250.00 or its equivalent in Philippine Currency at the time of payment; c) Allowance for Sunday banking in the amount of SGD 120.00 or its equivalent in Philippine Currency at the time of payment; d) Monetary equivalent of leave credits earned on Sunday banking in the amount of SGD 1,557.67 or its equivalent in Philippine Currency at the time of payment; e.) Monetary equivalent of unused sick leave benefits in the amount of SGD 1,150.60 or its equivalent in Philippine Currency at the time of payment. f.) Monetary equivalent of unused vacation leave benefits in the amount of SGD 319.85 or its equivalent in Philippine Currency at the time of payment. g.) 13th month pay in the amount of SGD 4,500.00 or its equivalent in Philippine Currency at the time of payment; 3. Solidarily to pay complainant actual damages in the amount of SGD 1,978.00 or its equivalent in Philippine Currency at the time of payment, and moral damages in the amount of PhP 200,000.00, exemplary damages in the amount of PhP 100,000.00; 4. To pay complainant the amount of SGD 5,039.81 or its equivalent in Philippine Currency at the time of payment, representing attorneys fees. SO ORDERED. [6] [Emphasis in the original.] PNB appealed the labor arbiters Decision to the NLRC. In a Resolution dated June 29, 2001, the Commission affirmed that Decision, but reduced the moral damages to P100,000 and the exemplary damages to P50,000. In a subsequent Resolution, the NLRC denied PNBs Motion for Reconsideration. Ruling of the Court of Appeals In disposing of the Petition for Certiorari, the CA noted that petitioner bank had failed to adduce in evidence the Singaporean law supposedly governing the latters employment Contract with respondent. The appellate court found that the Contract had actually been processed by the Philippine Embassy in Singapore and approved by the Philippine Overseas Employment Administration (POEA), which then used that Contract as a basis for issuing an Overseas Employment Certificate in favor of respondent. According to the CA, even though respondent secured an employment pass from the Singapore Ministry of Employment, she did not thereby waive Philippine labor laws, or the jurisdiction of the labor arbiter or the NLRC over her Complaint for illegal dismissal. In so doing, neither did she submit herself solely to the Ministry of Manpower of Singapores jurisdiction over disputes arising from her employment. The appellate court further noted that a cursory reading of the Ministrys letter will readily show that no such waiver or submission is stated or implied. Finally, the CA held that petitioner had failed to establish a just cause for the dismissal of respondent. The bank had also failed to give her sufficient notice and an opportunity to be heard and to defend herself. The CA ruled that she was consequently entitled to reinstatement and back wages, computed from the time of her dismissal up to the time of her reinstatement. Hence, this Petition.[7] Issues Petitioner submits the following issues for our consideration: 1. Whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy; 2. Whether or not the arbitration of the NLRC in the National Capital Region is the most convenient venue or forum to hear and decide the instant controversy; and 3. Whether or not the respondent was illegally dismissed, and therefore, entitled to recover moral and exemplary damages and attorneys fees.[8] In addition, respondent assails, in her Comment,[9] the propriety of Rule 45 as the procedural mode for seeking a review of the CA Decision affirming the NLRC Resolution. Such issue deserves scant consideration. Respondent miscomprehends the Courts discourse in St. Martin Funeral Home v. NLRC,[10] which has indeed affirmed that the proper mode of review of NLRC decisions, resolutions or orders is by a special civil action for certiorari under Rule 65 of the Rules of Court. The Supreme Court and the Court of Appeals have concurrent original jurisdiction over such petitions for certiorari. Thus, in observance of the doctrine on the hierarchy of courts, these petitions should be initially filed with the CA.[11] Rightly, the bank elevated the NLRC Resolution to the CA by way of a Petition for Certiorari. In seeking a review by this Court of the CA Decision -- on questions of jurisdiction, venue and validity of employment termination -- petitioner is likewise correct in invoking Rule 45.[12] It is true, however, that in a petition for review on certiorari, the scope of the Supreme Courts judicial review of decisions of the Court of Appeals is generally confined only to errors of law. It does not extend to questions of fact. This doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve. [13] In the present case, the labor arbiter and the NLRC have already determined the factual issues. Their findings, which are supported by substantial evidence, were affirmed by the CA. Thus,

they are entitled to great respect and are rendered conclusive upon this Court, absent a clear showing of palpable error or arbitrary disregard of evidence.[14] The Courts Ruling The Petition has no merit. First Issue: Jurisdiction The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as follows: ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work and other terms and conditions of employment 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. xxx xxx x x x.

More specifically, Section 10 of RA 8042 reads in part: SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. xxx xxx x x x

Based on the foregoing provisions, labor arbiters clearly have original and exclusive jurisdiction over claims arising from employeremployee relations, including termination disputes involving all workers, among whom are overseas Filipino workers (OFW).[15] We are not unmindful of the fact that respondent was directly hired, while on a tourist status in Singapore, by the PNB branch in that city state. Prior to employing respondent, petitioner had to obtain an employment pass for her from the Singapore Ministry of Manpower. Securing the pass was a regulatory requirement pursuant to the immigration regulations of that country.[16] Similarly, the Philippine government requires non-Filipinos working in the country to first obtain a local work permit in order to be legally employed here. That permit, however, does not automatically mean that the non-citizen is thereby bound by local laws only, as averred by petitioner. It does not at all imply a waiver of ones national laws on labor. Absent any clear and convincing evidence to the contrary, such permit simply means that its holder has a legal status as a worker in the issuing country. Noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in Singapore. The Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore. Under Philippine law, this document authorized her working status in a foreign country and entitled her to all benefits and processes under our statutes. Thus, even assuming arguendo that she was considered at the start of her employment as a direct hire governed by and subject to the laws, common practices and customs prevailing in Singapore[17] she subsequently became a contract worker or an OFW who was covered by Philippine labor laws and policies upon certification by the POEA. At the time her employment was illegally terminated, she already possessed the POEA employment Certificate. Moreover, petitioner admits that it is a Philippine corporation doing business through a branch office in Singapore.[18] Significantly, respondents employment by the Singapore branch office had to be approved by Benjamin P. Palma Gil,[19] the president of the bank whose principal offices were in Manila. This circumstance militates against petitioners contention that respondent was locally hired; and totally governed by and subject to the laws, common practices and customs of Singapore, not of the Philippines. Instead, with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker, in this case one deployed in Singapore. Hence, petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the labor arbiter. In any event, we recall the following policy pronouncement of the Court in Royal Crown Internationale v. NLRC:[20] x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon in a foreign country.

Second Issue: Proper Venue Section 1(a) of Rule IV of the NLRC Rules of Procedure reads: Section 1. Venue (a) All cases which Labor Arbiters have authority to hear and decide may be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW) shall be filed before the Regional Arbitration Branch where the complainant resides or where the principal office of the respondent/employer is situated, at the option of the complainant. For purposes of venue, workplace shall be understood as the place or locality where the employee is regularly assigned when the cause of action arose. It shall include the place where the employee is supposed to report back after a temporary detail, assignment or travel. In the case of field employees, as well as ambulant or itinerant workers, their workplace is where they are regularly assigned, or where they are supposed to regularly receive their salaries/wages or work instructions from, and report the results of their assignment to their employers. Under the Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042), a migrant worker refers to a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state of which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker.[21] Undeniably, respondent was employed by petitioner in its branch office in Singapore. Admittedly, she is a Filipino and not a legal resident of that state. She thus falls within the category of migrant worker or overseas Filipino worker. As such, it is her option to choose the venue of her Complaint against petitioner for illegal dismissal. The law gives her two choices: (1) at the Regional Arbitration Branch (RAB) where she resides or (2) at the RAB where the principal office of her employer is situated. Since her dismissal by petitioner, respondent has returned to the Philippines -- specifically to her residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in Quezon City, she has made a valid choice of proper venue. Third Issue: Illegal Dismissal The appellate court was correct in holding that respondent was already a regular employee at the time of her dismissal, because her three-month probationary period of employment had already ended. This ruling is in accordance with Article 281 of the Labor Code: An employee who is allowed to work after a probationary period shall be considered a regular employee. Indeed, petitioner recognized respondent as such at the time it dismissed her, by giving her one months salary in lieu of a one-month notice, consistent with provision No. 6 of her employment Contract. Notice and Hearing Not Complied With As a regular employee, respondent was entitled to all rights, benefits and privileges provided under our labor laws. One of her fundamental rights is that she may not be dismissed without due process of law. The twin requirements of notice and hearing constitute the essential elements of procedural due process, and neither of these elements can be eliminated without running afoul of the constitutional guarantee.[22] In dismissing employees, the employer must furnish them two written notices: 1) one to apprise them of the particular acts or omissions for which their dismissal is sought; and 2) the other to inform them of the decision to dismiss them. As to the requirement of a hearing, its essence lies simply in the opportunity to be heard.[23] The evidence in this case is crystal-clear. Respondent was not notified of the specific act or omission for which her dismissal was being sought. Neither was she given any chance to be heard, as required by law. At any rate, even if she were given the opportunity to be heard, she could not have defended herself effectively, for she knew no cause to answer to. All that petitioner tendered to respondent was a notice of her employment termination effective the very same day, together with the equivalent of a one-month pay. This Court has already held that nothing in the law gives an employer the option to substitute the required prior notice and opportunity to be heard with the mere payment of 30 days salary.[24] Well-settled is the rule that the employer shall be sanctioned for noncompliance with the requirements of, or for failure to observe, due process that must be observed in dismissing an employee.[25] No Valid Cause for Dismissal Moreover, Articles 282,[26] 283[27] and 284[28] of the Labor Code provide the valid grounds or causes for an employees dismissal. The employer has the burden of proving that it was done for any of those just or authorized causes. The failure to discharge this burden means that the dismissal was not justified, and that the employee is entitled to reinstatement and back wages.[29] Notably, petitioner has not asserted any of the grounds provided by law as a valid reason for terminating the employment of respondent. It merely insists that her dismissal was validly effected pursuant to the provisions of her employment Contract, which she had voluntarily agreed to be bound to. Truly, the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between them. However, petitioner overlooks the qualification that those terms and conditions agreed upon must not be contrary to law, morals, customs, public policy or public order.[30] As explained earlier, the employment Contract between petitioner and respondent is governed by Philippine labor laws. Hence, the stipulations, clauses, and terms and conditions of the Contract must not contravene our labor law provisions. Moreover, a contract of employment is imbued with public interest. The Court has time and time again reminded parties that they are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.[31] Also, while a contract is the law between the parties, the provisions of positive law that regulate such contracts are deemed included and shall limit and govern the relations between the parties.[32] Basic in our jurisprudence is the principle that when there is no showing of any clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal.[33] Awards for Damages Justified

Finally, moral damages are recoverable when the dismissal of an employee is attended by bad faith or constitutes an act oppressive to labor or is done in a manner contrary to morals, good customs or public policy.[34] Awards for moral and exemplary damages would be proper if the employee was harassed and arbitrarily dismissed by the employer.[35] In affirming the awards of moral and exemplary damages, we quote with approval the following ratiocination of the labor arbiter: The records also show that [respondents] dismissal was effected by [petitioners] capricious and high-handed manner, anti-social and oppressive, fraudulent and in bad faith, and contrary to morals, good customs and public policy. Bad faith and fraud are shown in the acts committed by [petitioners] before, during and after [respondents] dismissal in addition to the manner by which she was dismissed. First, [respondent] was pressured to resign for two different and contradictory reasons, namely, cost-cutting and the need for a Chinese[-]speaking credit officer, for which no written advice was given despite complainants request. Such wavering stance or vacillating position indicates bad faith and a dishonest purpose. Second, she was employed on account of her qualifications, experience and readiness for the position of credit officer and pressured to resign a month after she was commended for her good work. Third, the demand for [respondents] instant resignation on 19 April 1999 to give way to her replacement who was allegedly reporting soonest, is whimsical, fraudulent and in bad faith, because on 16 April 1999 she was given a period of [sic] until 15 May 1999 within which to leave. Fourth, the pressures made on her to resign were highly oppressive, anti-social and caused her absolute torture, as [petitioners] disregarded her situation as an overseas worker away from home and family, with no prospect for another job. She was not even provided with a return trip fare. Fifth, the notice of termination is an utter manifestation of bad faith and whim as it totally disregards [respondents] right to security of tenure and due process. Such notice together with the demands for [respondents] resignation contravenes the fundamental guarantee and public policy of the Philippine government on security of tenure. [Respondent] likewise established that as a proximate result of her dismissal and prior demands for resignation, she suffered and continues to suffer mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation. Her standing in the social and business community as well as prospects for employment with other entities have been adversely affected by her dismissal. [Petitioners] are thus liable for moral damages under Article 2217 of the Civil Code. xxx xxx xxx

[Petitioners] likewise acted in a wanton, oppressive or malevolent manner in terminating [respondents] employment and are therefore liable for exemplary damages. This should served [sic] as protection to other employees of [petitioner] company, and by way of example or correction for the public good so that persons similarly minded as [petitioners] would be deterred from committing the same acts.[36] The Court also affirms the award of attorneys fees. It is settled that when an action is instituted for the recovery of wages, or when employees are forced to litigate and consequently incur expenses to protect their rights and interests, the grant of attorneys fees is legally justifiable.[37] WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. SO ORDERED. ARTEMIO V. PANGANIBAN Associate Justice Chairman, Third Division [1] Rollo, pp. 9-31.

[2] Id., pp. 33-56. Tenth Division. Penned by Justice Romeo J. Callejo Sr. (chairman and now a member of this Court), with the concurrence of Justices Remedios Salazar-Fernando and Danilo B. Pine (members). [3] [4] [5] [6] Id., pp. 59-60. Id., pp. 75-91. Id., pp. 62-74. Assailed Decision, pp. 2-7; rollo, pp. 34-39.

[7] This case was deemed submitted for decision on December 5, 2003, upon this Courts receipt of respondents Memorandum -signed by Atty. Elvira de Vera Bitonio. Petitioners Memorandum, signed by Attys. Benilda V. Abrasia-Tejada, Irahlyn P. SacupayoLariba and Marino M. Buban Jr. -- was received by this Court on November 7, 2003. [8] [9] Petition, p. 8; rollo, p. 16. Rollo, pp. 100-110.

[10] 356 Phil. 811, September 16, 1998. [11] Id., p. 824.

[12] See Retuya v. Dumarpa, 408 SCRA 315, August 5, 2003. [13] Alfaro v. CA, 416 Phil. 310, August 28, 2001. [14] Ibid. See also PNOC Dockyard & Engineering Corp. v. NLRC, 353 Phil. 431, June 26, 1998; KAMADA v. Ferrer-Calleja, 344 Phil. 67, September 5, 1997; Caurdanetaan Piece Workers Union v. Laguesma, 350 Phil. 35, February 24, 1998; Tan v. NLRC, 359 Phil. 499, November 24, 1998. [15] 3(a) of RA 8042 defines migrant worker as a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state in which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker. (Emphasis ours.) [16] Paragraph 8 of the employment pass states:

If there is a change in the Designation or Duties as declared in the application form for an Employment Pass, a fresh application is required. It is an offence under the Immigration Regulations for failing to do so. (Annex 5-a to Comment; rollo, p. 120.) [17] Petition, p. 3; rollo, p. 11. [18] Petitioners Memorandum, p. 22; rollo, p. 178. [19] [20] Annex 2 to Comment; rollo, pp. 113-114. 178 SCRA 569, 580-581, October 16, 1989, per Cortes, J.

[21] 3(a), RA 8042; also 2(a) and (e), Rule II of the Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act. [22] Vinta Maritime Co., Inc. v. NLRC, 348 Phil. 714, January 23, 1998.

[23] Paguio Transport Corp. v. NLRC, 356 Phil. 158, August 28, 1998; Tan v. NLRC, supra; Pascua v. NLRC, 351 Phil. 48, March 13, 1998; Vinta Maritime Co., Inc. v. NLRC, supra. [24] [25] Serrano v. NLRC, 387 Phil. 345, May 4, 2000. Fernandez, v. NLRC, 349 Phil. 65, January 28, 1998.

[26] Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing. [27] Art. 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 [Department] of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. 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 to 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. [28] Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, that he is paid separation pay equivalent to at least one (1) month salary or to one-half month salary for every year or service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year. [29] Paguio Transport Corp. v. NLRC, supra; Caurdanetaan Piece Workers Union v. Laguesma, supra; Vinta Maritime Co., Inc. v. NLRC, supra; Anino v. NLRC, 352 Phil. 1098, May 21, 1998. [30] Solid Homes, Inc. v. CA, 341 Phil. 261, 280, July 8, 1997. [31] Pakistan International Airlines Corp. v. Ople, 190 SCRA 90, 99, September 28, 1990, per Feliciano, J. (cited in Bernardo v. NLRC, 369 Phil. 443, July 12, 1999; Magsalin v. National Organization of Working Men, 403 SCRA 199, May 9, 2003). [32] Asia World Recruitment, Inc. v. NLRC, 371 Phil. 745, August 24, 1999. [33] Vinta Maritime Co., Inc. v. NLRC, supra. [34] Pascua v. NLRC, supra; Nueva Ecija I Electric Cooperative, Inc. v. NLRC, 380 Phil. 44, January 24, 2000. [35] Cruz v. NLRC, 381 Phil. 775, February 7, 2000 (cited in Asia Pacific Chartering (Phils.), Inc. v. Farolan, 441 Phil. 776, December 4, 2002). [36] Labor Arbiter Joel S. Lustrias Decision, pp. 9-12; rollo, pp. 70-73. (Citations omitted) [37] PNCC v. NLRC, 342 Phil. 769, August 11, 1997.

PHILIPPINE NATIONAL BANK, Petitioner, versus FLORENCE O. CABANSAG, Respondent. 2005 Jun 21 3rd Division G.R. No. 157010 DECISION PANGANIBAN, J.: The Court reiterates the basic policy that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations. Our labor statutes may not be rendered ineffective by laws or judgments promulgated, or stipulations agreed upon, in a foreign country. The Case Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, seeking to reverse and set aside the July 16, 2002 Decision[2] and the January 29, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 68403. The assailed Decision dismissed the CA Petition (filed by herein petitioner), which had sought to reverse the National Labor Relations Commission (NLRC)s June 29, 2001 Resolution,[4] affirming Labor Arbiter Joel S. Lustrias January 18, 2000 Decision.[5] The assailed CA Resolution denied herein petitioners Motion for Reconsideration. The Facts The facts are narrated by the Court of Appeals as follows: In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She applied for employment, with the Singapore Branch of the Philippine National Bank, a private banking corporation organized and existing under the laws of the Philippines, with principal offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank of Vice-President of the Bank. At the time, too, the Branch Office had two (2) types of employees: (a) expatriates or the regular employees, hired in Manila and assigned abroad including Singapore, and (b) locally (direct) hired. She applied for employment as Branch Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of duties after approval. Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998, a letter to the President of the Bank in Manila, recommending the appointment of Florence O. Cabansag, for the position. xxx xxx xxx

The President of the Bank was impressed with the credentials of Florence O. Cabansag that he approved the recommendation of Ruben C. Tobias. She then filed an Application, with the Ministry of Manpower of the Government of Singapore, for the issuance of an Employment Pass as an employee of the Singapore PNB Branch. Her application was approved for a period of two (2) years. On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a month and, upon her successful completion of her probation to be determined solely, by the Bank, she may be extended at the discretion of the Bank, a permanent appointment and that her temporary appointment was subject to the following terms and conditions: 1. You will be on probation for a period of three (3) consecutive months from the date of your assumption of duty. 2. You will observe the Banks rules and regulations and those that may be adopted from time to time. 3. You will keep in strictest confidence all matters related to transactions between the Bank and its clients. 4. You will devote your full time during business hours in promoting the business and interest of the Bank. 5. You will not, without prior written consent of the Bank, be employed in anyway for any purpose whatsoever outside business hours by any person, firm or company. 6. Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation, one month notice upon confirmation or the equivalent of one (1) days or months salary in lieu of notice. Florence O. Cabansag accepted the position and assumed office. In the meantime, the Philippine Embassy in Singapore processed the employment contract of Florence O. Cabansag and, on March 8, 1999, she was issued by the Philippine Overseas Employment Administration, an Overseas Employment Certificate, certifying that she was a bona fide contract worker for Singapore. xxx xxx xxx

Barely three (3) months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on March 9, 1999, her initial Performance Report. Ruben C. Tobias was so impressed with the Report that he made a notation and, on said Report: GOOD WORK. However, in the evening of April 14, 1999, while Florence O. Cabansag was in the flat, which she and Cecilia Aquino, the Assistant Vice-President and Deputy General Manager of the Branch and Rosanna Sarmiento, the Chief Dealer of the said Branch, rented, she was told by the two (2) that Ruben C. Tobias has asked them to tell Florence O. Cabansag to resign from her job. Florence O. Cabansag was perplexed at the sudden turn of events and the runabout way Ruben C. Tobias procured her resignation from the Bank. The next day, Florence O. Cabansag talked to Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento had told her was true. Ruben C. Tobias confirmed the veracity of the information, with the explanation that her resignation was imperative as a cost-cutting measure of the Bank. Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB Singapore Branch will be sold or transformed into a remittance office and that, in either way, Florence O. Cabansag had to resign from her employment. The more Florence O. Cabansag was perplexed. She then asked Ruben C. Tobias that she be furnished with a Formal Advice from the PNB Head Office in Manila. However, Ruben C. Tobias flatly refused. Florence O. Cabansag did not submit any letter of resignation. On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and demanded that she submit her letter of resignation, with the pretext that he needed a Chinese-speaking Credit Officer to penetrate the local market, with the information that a Chinese-speaking Credit Officer had already been hired and will be reporting for work soon. She was warned that, unless she submitted her letter of resignation, her employment record will be blemished with the notation DISMISSED spread thereon. Without giving any definitive answer, Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look for another job. Ruben C. Tobias told her that she should be out of her employment by May 15, 1999.

However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999, she received a letter from Ruben C. Tobias terminating her employment with the Bank. xxx xxx xxx

On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and against the Respondents, the decretal portion of which reads as follows: WHEREFORE, considering the foregoing premises, judgment is hereby rendered finding respondents guilty of Illegal dismissal and devoid of due process, and are hereby ordered: 1. To reinstate complainant to her former or substantially equivalent position without loss of seniority rights, benefits and privileges;

2. Solidarily liable to pay complainant as follows:

a) To pay complainant her backwages from 16 April 1999 up to her actual reinstatement. Her backwages as of the date of the promulgation of this decision amounted to SGD 40,500.00 or its equivalent in Philippine Currency at the time of payment;

b) Mid-year bonus in the amount of SGD 2,250.00 or its equivalent in Philippine Currency at the time of payment;

c) Allowance for Sunday banking in the amount of SGD 120.00 or its equivalent in Philippine Currency at the time of payment;

d) Monetary equivalent of leave credits earned on Sunday banking in the amount of SGD 1,557.67 or its equivalent in Philippine Currency at the time of payment;

e.) Monetary equivalent of unused sick leave benefits in the amount of SGD 1,150.60 or its equivalent in Philippine Currency at the time of payment.

f.) Monetary equivalent of unused vacation leave benefits in the amount of SGD 319.85 or its equivalent in Philippine Currency at the time of payment.

g.) 13th month pay in the amount of SGD 4,500.00 or its equivalent in Philippine Currency at the time of payment;

3. Solidarily to pay complainant actual damages in the amount of SGD 1,978.00 or its equivalent in Philippine Currency at the time of payment, and moral damages in the amount of PhP 200,000.00, exemplary damages in the amount of PhP 100,000.00;

4. To pay complainant the amount of SGD 5,039.81 or its equivalent in Philippine Currency at the time of payment, representing attorneys fees.

SO ORDERED. [6] [Emphasis in the original.] PNB appealed the labor arbiters Decision to the NLRC. In a Resolution dated June 29, 2001, the Commission affirmed that Decision, but reduced the moral damages to P100,000 and the exemplary damages to P50,000. In a subsequent Resolution, the NLRC denied PNBs Motion for Reconsideration. Ruling of the Court of Appeals In disposing of the Petition for Certiorari, the CA noted that petitioner bank had failed to adduce in evidence the Singaporean law supposedly governing the latters employment Contract with respondent. The appellate court found that the Contract had actually been processed by the Philippine Embassy in Singapore and approved by the Philippine Overseas Employment Administration (POEA), which then used that Contract as a basis for issuing an Overseas Employment Certificate in favor of respondent. According to the CA, even though respondent secured an employment pass from the Singapore Ministry of Employment, she did not thereby waive Philippine labor laws, or the jurisdiction of the labor arbiter or the NLRC over her Complaint for illegal dismissal. In so doing, neither did she submit herself solely to the Ministry of Manpower of Singapores jurisdiction over disputes arising from her employment. The appellate court further noted that a cursory reading of the Ministrys letter will readily show that no such waiver or submission is stated or implied. Finally, the CA held that petitioner had failed to establish a just cause for the dismissal of respondent. The bank had also failed to give her sufficient notice and an opportunity to be heard and to defend herself. The CA ruled that she was consequently entitled to reinstatement and back wages, computed from the time of her dismissal up to the time of her reinstatement. Hence, this Petition.[7]

Issues Petitioner submits the following issues for our consideration:

1. Whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy; 2. Whether or not the arbitration of the NLRC in the National Capital Region is the most convenient venue or forum to hear and decide the instant controversy; and 3. Whether or not the respondent was illegally dismissed, and therefore, entitled to recover moral and exemplary damages and attorneys fees.[8] In addition, respondent assails, in her Comment,[9] the propriety of Rule 45 as the procedural mode for seeking a review of the CA Decision affirming the NLRC Resolution. Such issue deserves scant consideration. Respondent miscomprehends the Courts discourse in St. Martin Funeral Home v. NLRC,[10] which has indeed affirmed that the proper mode of review of NLRC decisions, resolutions or orders is by a special civil action for certiorari under Rule 65 of the Rules of Court. The Supreme Court and the Court of Appeals have concurrent original jurisdiction over such petitions for certiorari. Thus, in observance of the doctrine on the hierarchy of courts, these petitions should be initially filed with the CA.[11] Rightly, the bank elevated the NLRC Resolution to the CA by way of a Petition for Certiorari. In seeking a review by this Court of the CA Decision -- on questions of jurisdiction, venue and validity of employment termination -- petitioner is likewise correct in invoking Rule 45.[12] It is true, however, that in a petition for review on certiorari, the scope of the Supreme Courts judicial review of decisions of the Court of Appeals is generally confined only to errors of law. It does not extend to questions of fact. This doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve. [13] In the present case, the labor arbiter and the NLRC have already determined the factual issues. Their findings, which are supported by substantial evidence, were affirmed by the CA. Thus, they are entitled to great respect and are rendered conclusive upon this Court, absent a clear showing of palpable error or arbitrary disregard of evidence.[14] The Courts Ruling The Petition has no merit. First Issue: Jurisdiction The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as follows: ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work and other terms and conditions of employment 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. xxx xxx x x x.

More specifically, Section 10 of RA 8042 reads in part: SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. xxx xxx x x x

Based on the foregoing provisions, labor arbiters clearly have original and exclusive jurisdiction over claims arising from employeremployee relations, including termination disputes involving all workers, among whom are overseas Filipino workers (OFW).[15] We are not unmindful of the fact that respondent was directly hired, while on a tourist status in Singapore, by the PNB branch in that city state. Prior to employing respondent, petitioner had to obtain an employment pass for her from the Singapore Ministry of Manpower. Securing the pass was a regulatory requirement pursuant to the immigration regulations of that country.[16]

Similarly, the Philippine government requires non-Filipinos working in the country to first obtain a local work permit in order to be legally employed here. That permit, however, does not automatically mean that the non-citizen is thereby bound by local laws only, as averred by petitioner. It does not at all imply a waiver of ones national laws on labor. Absent any clear and convincing evidence to the contrary, such permit simply means that its holder has a legal status as a worker in the issuing country. Noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in Singapore. The Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore. Under Philippine law, this document authorized her working status in a foreign country and entitled her to all benefits and processes under our statutes. Thus, even assuming arguendo that she was considered at the start of her employment as a direct hire governed by and subject to the laws, common practices and customs prevailing in Singapore[17] she subsequently became a contract worker or an OFW who was covered by Philippine labor laws and policies upon certification by the POEA. At the time her employment was illegally terminated, she already possessed the POEA employment Certificate. Moreover, petitioner admits that it is a Philippine corporation doing business through a branch office in Singapore.[18] Significantly, respondents employment by the Singapore branch office had to be approved by Benjamin P. Palma Gil,[19] the president of the bank whose principal offices were in Manila. This circumstance militates against petitioners contention that respondent was locally hired; and totally governed by and subject to the laws, common practices and customs of Singapore, not of the Philippines. Instead, with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker, in this case one deployed in Singapore. Hence, petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the labor arbiter. In any event, we recall the following policy pronouncement of the Court in Royal Crown Internationale v. NLRC:[20] x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon in a foreign country. Second Issue: Proper Venue Section 1(a) of Rule IV of the NLRC Rules of Procedure reads: Section 1. Venue (a) All cases which Labor Arbiters have authority to hear and decide may be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW) shall be filed before the Regional Arbitration Branch where the complainant resides or where the principal office of the respondent/employer is situated, at the option of the complainant. For purposes of venue, workplace shall be understood as the place or locality where the employee is regularly assigned when the cause of action arose. It shall include the place where the employee is supposed to report back after a temporary detail, assignment or travel. In the case of field employees, as well as ambulant or itinerant workers, their workplace is where they are regularly assigned, or where they are supposed to regularly receive their salaries/wages or work instructions from, and report the results of their assignment to their employers. Under the Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042), a migrant worker refers to a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state of which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker.[21] Undeniably, respondent was employed by petitioner in its branch office in Singapore. Admittedly, she is a Filipino and not a legal resident of that state. She thus falls within the category of migrant worker or overseas Filipino worker. As such, it is her option to choose the venue of her Complaint against petitioner for illegal dismissal. The law gives her two choices: (1) at the Regional Arbitration Branch (RAB) where she resides or (2) at the RAB where the principal office of her employer is situated. Since her dismissal by petitioner, respondent has returned to the Philippines -- specifically to her residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in Quezon City, she has made a valid choice of proper venue. Third Issue: Illegal Dismissal The appellate court was correct in holding that respondent was already a regular employee at the time of her dismissal, because her three-month probationary period of employment had already ended. This ruling is in accordance with Article 281 of the Labor Code: An employee who is allowed to work after a probationary period shall be considered a regular employee. Indeed, petitioner recognized respondent as such at the time it dismissed her, by giving her one months salary in lieu of a one-month notice, consistent with provision No. 6 of her employment Contract. Notice and Hearing Not Complied With As a regular employee, respondent was entitled to all rights, benefits and privileges provided under our labor laws. One of her fundamental rights is that she may not be dismissed without due process of law. The twin requirements of notice and hearing constitute the essential elements of procedural due process, and neither of these elements can be eliminated without running afoul of the constitutional guarantee.[22] In dismissing employees, the employer must furnish them two written notices: 1) one to apprise them of the particular acts or omissions for which their dismissal is sought; and 2) the other to inform them of the decision to dismiss them. As to the requirement of a hearing, its essence lies simply in the opportunity to be heard.[23] The evidence in this case is crystal-clear. Respondent was not notified of the specific act or omission for which her dismissal was being sought. Neither was she given any chance to be heard, as required by law. At any rate, even if she were given the opportunity to be heard, she could not have defended herself effectively, for she knew no cause to answer to. All that petitioner tendered to respondent was a notice of her employment termination effective the very same day, together with the equivalent of a one-month pay. This Court has already held that nothing in the law gives an employer the option to substitute the required prior notice and opportunity to be heard with the mere payment of 30 days salary.[24] Well-settled is the rule that the employer shall be sanctioned for noncompliance with the requirements of, or for failure to observe, due process that must be observed in dismissing an employee.[25]

No Valid Cause for Dismissal

Moreover, Articles 282,[26] 283[27] and 284[28] of the Labor Code provide the valid grounds or causes for an employees dismissal. The employer has the burden of proving that it was done for any of those just or authorized causes. The failure to discharge this burden means that the dismissal was not justified, and that the employee is entitled to reinstatement and back wages.[29] Notably, petitioner has not asserted any of the grounds provided by law as a valid reason for terminating the employment of respondent. It merely insists that her dismissal was validly effected pursuant to the provisions of her employment Contract, which she had voluntarily agreed to be bound to. Truly, the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between them. However, petitioner overlooks the qualification that those terms and conditions agreed upon must not be contrary to law, morals, customs, public policy or public order.[30] As explained earlier, the employment Contract between petitioner and respondent is governed by Philippine labor laws. Hence, the stipulations, clauses, and terms and conditions of the Contract must not contravene our labor law provisions. Moreover, a contract of employment is imbued with public interest. The Court has time and time again reminded parties that they are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.[31] Also, while a contract is the law between the parties, the provisions of positive law that regulate such contracts are deemed included and shall limit and govern the relations between the parties.[32] Basic in our jurisprudence is the principle that when there is no showing of any clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal.[33] Awards for Damages Justified Finally, moral damages are recoverable when the dismissal of an employee is attended by bad faith or constitutes an act oppressive to labor or is done in a manner contrary to morals, good customs or public policy.[34] Awards for moral and exemplary damages would be proper if the employee was harassed and arbitrarily dismissed by the employer.[35] In affirming the awards of moral and exemplary damages, we quote with approval the following ratiocination of the labor arbiter: The records also show that [respondents] dismissal was effected by [petitioners] capricious and high-handed manner, anti-social and oppressive, fraudulent and in bad faith, and contrary to morals, good customs and public policy. Bad faith and fraud are shown in the acts committed by [petitioners] before, during and after [respondents] dismissal in addition to the manner by which she was dismissed. First, [respondent] was pressured to resign for two different and contradictory reasons, namely, cost-cutting and the need for a Chinese[-]speaking credit officer, for which no written advice was given despite complainants request. Such wavering stance or vacillating position indicates bad faith and a dishonest purpose. Second, she was employed on account of her qualifications, experience and readiness for the position of credit officer and pressured to resign a month after she was commended for her good work. Third, the demand for [respondents] instant resignation on 19 April 1999 to give way to her replacement who was allegedly reporting soonest, is whimsical, fraudulent and in bad faith, because on 16 April 1999 she was given a period of [sic] until 15 May 1999 within which to leave. Fourth, the pressures made on her to resign were highly oppressive, anti-social and caused her absolute torture, as [petitioners] disregarded her situation as an overseas worker away from home and family, with no prospect for another job. She was not even provided with a return trip fare. Fifth, the notice of termination is an utter manifestation of bad faith and whim as it totally disregards [respondents] right to security of tenure and due process. Such notice together with the demands for [respondents] resignation contravenes the fundamental guarantee and public policy of the Philippine government on security of tenure. [Respondent] likewise established that as a proximate result of her dismissal and prior demands for resignation, she suffered and continues to suffer mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation. Her standing in the social and business community as well as prospects for employment with other entities have been adversely affected by her dismissal. [Petitioners] are thus liable for moral damages under Article 2217 of the Civil Code. xxx xxx xxx

[Petitioners] likewise acted in a wanton, oppressive or malevolent manner in terminating [respondents] employment and are therefore liable for exemplary damages. This should served [sic] as protection to other employees of [petitioner] company, and by way of example or correction for the public good so that persons similarly minded as [petitioners] would be deterred from committing the same acts.[36] The Court also affirms the award of attorneys fees. It is settled that when an action is instituted for the recovery of wages, or when employees are forced to litigate and consequently incur expenses to protect their rights and interests, the grant of attorneys fees is legally justifiable.[37] WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. SO ORDERED.

ARTEMIO V. PANGANIBAN Associate Justice Chairman, Third Division

[1]

Rollo, pp. 9-31.

[2] Id., pp. 33-56. Tenth Division. Penned by Justice Romeo J. Callejo Sr. (chairman and now a member of this Court), with the concurrence of Justices Remedios Salazar-Fernando and Danilo B. Pine (members). [3] Id., pp. 59-60.

[4] [5] [6]

Id., pp. 75-91. Id., pp. 62-74. Assailed Decision, pp. 2-7; rollo, pp. 34-39.

[7] This case was deemed submitted for decision on December 5, 2003, upon this Courts receipt of respondents Memorandum -signed by Atty. Elvira de Vera Bitonio. Petitioners Memorandum, signed by Attys. Benilda V. Abrasia-Tejada, Irahlyn P. SacupayoLariba and Marino M. Buban Jr. -- was received by this Court on November 7, 2003. [8] Petition, p. 8; rollo, p. 16. [9] Rollo, pp. 100-110. [10] 356 Phil. 811, September 16, 1998. [11] Id., p. 824. [12] See Retuya v. Dumarpa, 408 SCRA 315, August 5, 2003. [13] Alfaro v. CA, 416 Phil. 310, August 28, 2001. [14] Ibid. See also PNOC Dockyard & Engineering Corp. v. NLRC, 353 Phil. 431, June 26, 1998; KAMADA v. Ferrer-Calleja, 344 Phil. 67, September 5, 1997; Caurdanetaan Piece Workers Union v. Laguesma, 350 Phil. 35, February 24, 1998; Tan v. NLRC, 359 Phil. 499, November 24, 1998. [15] 3(a) of RA 8042 defines migrant worker as a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state in which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker. (Emphasis ours.) [16] Paragraph 8 of the employment pass states: If there is a change in the Designation or Duties as declared in the application form for an Employment Pass, a fresh application is required. It is an offence under the Immigration Regulations for failing to do so. (Annex 5-a to Comment; rollo, p. 120.) [17] Petition, p. 3; rollo, p. 11. [18] Petitioners Memorandum, p. 22; rollo, p. 178. [19] Annex 2 to Comment; rollo, pp. 113-114. [20] 178 SCRA 569, 580-581, October 16, 1989, per Cortes, J. [21] 3(a), RA 8042; also 2(a) and (e), Rule II of the Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act. [22] Vinta Maritime Co., Inc. v. NLRC, 348 Phil. 714, January 23, 1998. [23] Paguio Transport Corp. v. NLRC, 356 Phil. 158, August 28, 1998; Tan v. NLRC, supra; Pascua v. NLRC, 351 Phil. 48, March 13, 1998; Vinta Maritime Co., Inc. v. NLRC, supra. [24] Serrano v. NLRC, 387 Phil. 345, May 4, 2000. [25] Fernandez, v. NLRC, 349 Phil. 65, January 28, 1998. [26] Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing. [27] Art. 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 [Department] of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. 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 to 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. [28] Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, that he is paid separation pay equivalent to at least one (1) month salary or to one-half month salary for every year or service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year. [29] Paguio Transport Corp. v. NLRC, supra; Caurdanetaan Piece Workers Union v. Laguesma, supra; Vinta Maritime Co., Inc. v. NLRC, supra; Anino v. NLRC, 352 Phil. 1098, May 21, 1998. [30] Solid Homes, Inc. v. CA, 341 Phil. 261, 280, July 8, 1997.

[31] Pakistan International Airlines Corp. v. Ople, 190 SCRA 90, 99, September 28, 1990, per Feliciano, J. (cited in Bernardo v. NLRC, 369 Phil. 443, July 12, 1999; Magsalin v. National Organization of Working Men, 403 SCRA 199, May 9, 2003). [32] Asia World Recruitment, Inc. v. NLRC, 371 Phil. 745, August 24, 1999. [33] Vinta Maritime Co., Inc. v. NLRC, supra. [34] Pascua v. NLRC, supra; Nueva Ecija I Electric Cooperative, Inc. v. NLRC, 380 Phil. 44, January 24, 2000.

[35] Cruz v. NLRC, 381 Phil. 775, February 7, 2000 (cited in Asia Pacific Chartering (Phils.), Inc. v. Farolan, 441 Phil. 776, December 4, 2002). [36] Labor Arbiter Joel S. Lustrias Decision, pp. 9-12; rollo, pp. 70-73. (Citations omitted) [37] PNCC v. NLRC, 342 Phil. 769, August 11, 1997.

CARMEN SANTOS, petitioner, vs. EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE INSURANCE SYSTEM (Philippine Navy), respondents. 1993 Apr 7 2nd Division G.R. No. 89222 DECISION NOCON, J.: Is liver cirrhosis an illness which is compensable? This is the question put forth by petitioner, Carmen Santos, whose husband died of liver cirrhosis while still a civilian employee of the Philippine Navy. Francisco Santos was employed as welder at the Philippine Navy and its Naval Shipyard as early as March 22, 1955. He spent the last 32 years of his life in the government service, the first year as a welder helper and the last two years as shipyard assistant. On December 29, 1986, Francisco was admitted at the Naval Station Hospital in Cavite City, on complaint that he was having epigastric pain and been vomiting blood 2 days prior to his hospitalization. His case was diagnosed as bleeding Peptic Ulcer disease (PUD), cholelithiasis and diabetes mellitus. On January 11, 1987, he died, the cause of which as indicated in the Death Certificate was liver cirrhosis. Mrs. Carmen A. Santos filed a claim for the death benefit of her husband, Francisco, on January 28, 1987, pursuant to Presidential Decree No. 626, as amended. However, on a letter dated April 30, 1987, the Government Service Insurance System (GSIS), denied the claim on the ground that upon proofs and evidence submitted, Francisco's ailment cannot be considered an occupational disease as contemplated under P.D. 626, as amended. Mrs. Santos then sought the assistance of the Commander of NASCOM, PN, who in turn wrote the GSIS requesting for a favorable action on her claim. Said letter also substantiated petitioner's claim that her husband's duties as Senior Welder, assigned at the Structural Branch of the Naval Shipbuilding Facility, required him to perform delicate welding jobs inside compartments of naval vessels, like compartmentation bulk heads; CIC rooms; officers and PO's quarters; fuel, lube oil and fresh water tanks, where he was exposed to heat and inhalation of burning chemical substances and gas fumes coming from burning welding electrodes. Despite such endorsement, petitioner's motion for reconsideration was likewise denied, upon claim of the GSIS that Francisco's job as a welder would instead cause lung disease rather than liver cirrhosis. On appeal to the Employees' Compensation Commission (ECC), the Commission affirmed the denial of the GSIS on petitioner's claim relying on the fact that the diagnosis on Francisco's illness did not specify the type of cirrhosis which caused his death. Nevertheless, the Commission took cognizant of the fact that the deceased employee did not have a previous history of alcoholism, hepatitis or a previous history of biliary condition which could give a clue to the nature of cirrhosis he had. We find merit in this petition. The law defines compensable sickness as any illness definitely accepted as occupational disease listed by the Commission, or any illness caused by employment subject to proof that the risk of contracting the same is increased by the working conditions. For sickness and the resulting death of an employee to be compensable, the claimant must show either: (1) that it is a result of an occupational disease listed under Annex A of the Amended Rules on Employees' Compensation with the conditions set therein satisfied; or (2) if not so listed, that the risk of contracting the disease is increased by the working conditions. 1 Where the claimant's illness is not listed in the Table of Occupational Diseases embodied in Annex A of the Rules of Employees' Compensation, said claimant must positively prove that the risk of contracting the disease is increased by the working conditions. 2 Cirrhosis of the liver is not listed as an occupational disease. Nevertheless, in the very recent case of Librea v. Employees' Compensation Commission 3 We took a liberal stand and based on the evidence presented, pronounced the said sickness compensable. In the cited case, a Division Physical Education Supervisor, who likewise spent the last 32 years of his life in public service was adjudged entitled to the benefits of the ECC, upon his death due to liver cirrhosis. In the said case, the ECC denied the claim of the heirs on the ground that the abundant stress and strain experienced by the deceased employee were too farfetched to cause the development of liver cirrhosis. According to the medical research made by the Commission in the case, portal cirrhosis or cirrhosis of the liver occurs chiefly in males in their late middle life. Malnutrition is believed to be a predisposing factor if not the primary etiologic factor, and may account for its prevalence among alcoholics. This chronic disease characterized by increased connective tissue that spreads from the portal spaces, distorts the liver architecture thereby impairing liver functions. 4 In granting the petition, the Court correlated the fact that the deceased experienced untold sufferings in the course of his inspection of barrio schools and that he became malnourished because of the scarcity of food in the places he travelled to. All these factors were found to have contributed to the weakening of his health rendering him susceptible to malnutrition and eventually to contracting liver cirrhosis. In the case at bar, the Commission said that liver cirrhosis may be classified by a mixture of etiologically and morphologically defined entities as follows: 1) Alcoholic cirrhosis, chronic alcoholism is a major cause of alcohol cirrhosis. The amount and duration of ethanol ingestion rather than the type of alcoholic beverage of the pattern of ingestion, appear to be an important determinant of liver injury. Nutritional factors may augment the detrimental effects of chronic alcohol ingestion on the liver. 2) Post necrotic cirrhosis is the final pathway of many types of advanced liver injury of both specific and unknown causes. Viral hepatitis, (hepatitis B, Non A, Non B) may be an antecedent. Other causes are drugs, toxins and alcoholic liver disease and primary biliary cirrhosis. 3) Biliary cirrhosis results from injury to or prolonged obstruction of either the intrahepatic or extrahepatic biliary system. 4) Cardiac cirrhosis ---- prolonged severe right-sided congestive heart failure may lead to chronic liver injury and cardiac cirrhosis. 5) Metabolic, hereditary, drug-related and other types. We do not pretend to be an expert in the realm of medical discipline. However, We cannot discount the fact that the cause of death of petitioner's husband could very well be related to his previous working conditions. Even the Commission volunteered the theory that post necrotic cirrhosis show that of the many types of advanced liver injury, one cause may be due to toxins. As a welder, Francisco was exposed to heat, gas fumes and chemical substances coming from the burning electrodes caused by welding. Generally, the metal burned is iron. In the course thereof, other compounds and oxides, such as carbon monoxide, carbon dioxide, sulfur and phosphorus, may be emitted in the process of welding, depending on the kind of material used and extent of

corrosion of the metal worked on. These vaporized metals are inhaled by the welder in the process and significantly in this case, Francisco had to do welding jobs within enclosed compartments. Research shows that ingestion or inhalation of small amounts of iron over a number of years may lead to siderosis. Acute poisoning brings about circulatory collapse which may occur rapidly or be delayed to 48 hours with liver failure. 5 These are industrial hazards to which Francisco was exposed. And in the long course of time, 32 years at that, his continuous exposure to burned electrodes and chemicals emitted therefrom would likely cause poisoning and malfunction of the liver. The leading doctrine on compensability is that laid down in the case of Raro v. Employees' Compensation Commission, 6 where this Court said: "There is a widespread misconception that the poor employee is still arrayed against the might and power of his rich corporate employer. Hence, he must be given all kinds of favorable presumptions. This is fallacious. It is now the trust fund and not the employer which suffers if benefits are paid to claimants who are not entitled under the law. The employer joins the employee in trying to have their claims approved. The employer is spared the problem of proving a negative proposition that the disease was not caused by employment." The decision of this Court in Raro in effect supersedes the cases with conclusions different from that stated therein, such as Nemaria v. ECC, 155 SCRA 166 (1987); Ovenson v. ECC, 156 SCRA 21 (1987); Mercado v. ECC, 127 SCRA 664 (1984). The reason behind the present doctrine is that the New Labor Code has abolished the presumption of compensability for illness contracted by a worker during employment. To be entitled to disability benefits, the claimant has to present evidence to prove that his ailment was the result of, or the risk of contracting the same were aggravated by working conditions or the nature of his work. 7 However, while the presumption of compensability and theory of aggravation under the Workmen's Compensation Act may have been abandoned under the new Labor Code, the liberality of the law in general in favor of the working man still prevails. 8 The Employees' Compensation Act is basically a social legislation designed to afford relief to the working man and woman in our society. The Employees' Compensation Commission, as the agency tasked with implementing the social justice mandate guaranteed by the Constitution, should be more liberal in resolving compensation claims of employees especially where there is some basis in the facts for inferring a work connection to the cause of death. 9 This interpretation gives meaning and substance to the liberal and compassionate spirit of the law as embodied in Article 4 of the New Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor." 10 The policy is to extend the applicability of PD 626 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 to labor. 11 Premises considered, We find the petition meritorious. Liver cirrhosis, although not one among those listed as compensable ailment, as considered in the case at bar as covered under the Act, on the ground that the nature of the work of petitioner's husband, exposed him to the risk of contracting the same. WHEREFORE, petition is hereby GRANTED and the decision of the Employees' Compensation Commission is REVERSED. SO ORDERED. Narvasa (C.J., Chairman), Padilla, Regalado and Campos, Jr., JJ., concur. --------------Footnotes 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Quizon v. Employees Compensation Commission, G.R. No. 87590, 204 SCRA 426 (1991). De Guia v. Employees Compensation Commission, G.R. No. 95595, 198 SCRA 834 (1991). G.R. No. 58879, 203 SCRA 545 (1991). Id. at p. 548. Gradwohl's Legal Medicine, 2nd Edition, Bristol: John Wright & Sons Ltd. (1968). G.R. No. 58445, 172 SCRA 845 (1989). Naval v. Employees' Compensation Commission, G.R. No. 83568, 199 SCRA 388 (1991). Nitura v. Employees Compensation Commission, G.R. No. 89217, 201 SCRA 278 (1991). Lazo v. Employees' Compensation Commission, G.R. No. 78617, 186 SCRA 569 (1990). Nitura, supra. Carbajal v. Government Service Insurance System, G.R. No. 46654, 164 SCRA 204 (1988).

GLOBE-MACKAY CABLE AND RADIO CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMISSION and IMELDA SALAZAR, respondents. 1992 Mar 3 En Banc G.R. No. 82511 DECISION ROMERO, J.: For private respondent Imelda L. Salazar, it would seem that her close association with Delfin Saldivar would mean the loss of her job. In May 1982, private respondent was employed by Globe-Mackay Cable and Radio Corporation (GMCR) as general systems analyst. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. Sometime in 1984, petitioner GMCR, prompted by reports that company equipment and spare parts worth thousands of dollars under the custody of Saldivar were missing, caused the investigation of the latter's activities. The report dated September 25, 1984 prepared by the company's internal auditor, Mr. Agustin Maramara, indicated that Saldivar had entered into a partnership styled Concave Commercial and Industrial Company with Richard A. Yambao, owner and manager of Elecon Engineering Services (Elecon), a supplier of petitioner often recommended by Saldivar. The report also disclosed that Saldivar had taken petitioner's missing Fedders airconditioning unit for his own personal use without authorization and also connived with Yambao to defraud petitioner of its property. The airconditioner was recovered only after petitioner GMCR filed an action for replevin against Saldivar. 1 It likewise appeared in the course of Maramara's investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed to inform her employer. Consequently, in a letter dated October 8, 1984, petitioner company placed private respondent Salazar under preventive suspension for one (1) month, effective October 9, 1984, thus giving her thirty (30) days within which to explain her side. But instead of submitting an explanation, three (3) days later or on October 12, 1984, private respondent filed a complaint against petitioner for illegal suspension, which she subsequently amended to include illegal dismissal, vacation and sick leave benefits, 13th month pay and damages, after petitioner notified her in writing that effective November 8,1984, she was considered dismissed "in view of (her) inability to refute and disprove these findings." 2 After due hearing, the Labor Arbiter in a decision dated July 16, 1985, ordered petitioner company to reinstate private respondent to her former or equivalent position and to pay her full backwages and other benefits she would have received were it not for the illegal dismissal. Petitioner was also ordered to pay private respondent moral damages of P50,000.00. 3 On appeal, public respondent National Labor Relations Commission in the questioned resolution dated December 29, 1987 affirmed the aforesaid decision with respect to the reinstatement of private respondent but limited the backwages to a period of two (2) years and deleted the award for moral damages. 4 Hence, this petition assailing the Labor Tribunal for having committed grave abuse of discretion in holding that the suspension and subsequent dismissal of private respondent were illegal and in ordering her reinstatement with two (2) years' backwages. On the matter of preventive suspension, we find for petitioner GMCR. The investigative findings of Mr. Maramara, which pointed to Delfin Saldivar's acts in conflict with his position as technical operations manager, necessitated immediate and decisive action on any employee closely associated with Saldivar. The suspension of Salazar was further impelled by the discovery of the missing Fedders airconditioning unit inside the apartment private respondent shared with Saldivar. Under such circumstances, preventive suspension was the proper remedial recourse available to the company pending Salazar's investigation. By itself, preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the company's property pending investigation of any alleged malfeasance or misfeasance committed by the employee. 5 Thus, it is not correct to conclude that petitioner GMCR had violated Salazar's right to due process when she was promptly suspended. If at all, the fault lay with private respondent when she ignored petitioner's memorandum of October 8, 1984 "giving her ample opportunity to present (her) side to the Management." Instead, she went directly to the Labor Department and filed her complaint for illegal suspension without giving her employer a chance to evaluate her side of the controversy. But while we agree with the propriety of Salazar's preventive suspension, we hold that her eventual separation from employment was not for cause. What is the remedy in law to rectify an unlawful dismissal so as to "make whole" the victim who has not merely lost her job which, under settled jurisprudence, is a property right of which a person is not to be deprived without due process, but also the compensation that should have accrued to her during the period when she was unemployed ? Art. 279 of the Labor Code, as amended, provides: "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" 6 mphasis supplied). Corollary thereto are the following provisions of the Implementing Rules and Regulations of the Labor Code: "Sec. 2. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause as provided in the Labor Code or when authorized by existing laws. Sec. 3. Reinstatement. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to backwages."' 7 mphasis supplied) Before proceeding any further, it must be recalled that the present Constitution has gone further than the 1973 Charter in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Given the pro-poor orientation of several articulate Commissioners of the Constitutional Commission of 1986, it was not surprising that a whole new Article emerged on Social Justice and Human Rights designed, among other things, to "protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good." 8

Proof of the priority accorded to labor is that it leads the other areas of concern in the Article on Social Justice, viz., Labor ranks ahead of such topics as Agrarian and Natural Resources Reform, Urban Land Reform and Housing, Health, Women, Role and Rights of People's Organizations and Human Rights. 9 The opening paragraphs on Labor state: "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. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law." 10 (Emphasis mine) Compare this with the sole provision on Labor in the 1973 Constitution under the Article on Declaration of principles and State Policies that 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 employers. The State shall ensure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. The State may provide for compulsory arbitration." 11 To be sure, both Charters recognize "security of tenure" as one of the rights of labor which the State is mandated to protect. But there is no gainsaying the fact that the intent of the framers of the present Constitution was to give primacy to the rights of labor and afford the sector "full protection," at least greater protection than heretofore accorded them, regardless of the geographical location of the workers and whether they are organized or not. It was then CONCOM Commissioner, now Justice Hilario G. Davide, Jr., who substantially contributed to the present formulation of the protection to labor provision and proposed that the same be incorporated in the Article on Social Justice and not just in the Article on Declaration of Principles and State Policies "in the light of the special importance that we are giving now to social justice and the necessity of emphasizing the scope and role of social justice in national development." 12 If we have taken pains to delve into the background of the labor provisions in our Constitution and the Labor Code, it is but to stress that the right of an employee not to be dismissed from his job except for a just or authorized cause provided by law has assumed greater importance under the 1987 Constitution with the singular prominence labor enjoys under the article on Social Justice. And this transcendent policy has been translated into law in the Labor Code. Under its terms, where a case of unlawful or unauthorized dismissal has been proved by the aggrieved employee, or on the other hand, the employer whose duty it is to prove the lawfulness or justness of his act of dismissal has failed to do so, then the remedies provided in Article 279 should find application. Consonant with this liberalized stance vis-a-vis labor, the legislature even went further by enacting Republic Act No. 6715 which took effect on March 2, 1989 that amended said Article to remove any possible ambiguity that jurisprudence may have generated which watered down the constitutional intent to grant to labor "full protection." 13 To go back to the instant case, there being no evidence to show an authorized, much less a legal, cause for the dismissal of private respondent, she had every right, not only to be entitled to reinstatement, but as well, to full backwages. 14 The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is, in the former, to restore the dismissed employee to her status before she lost her job, for the dictionary meaning of the word "reinstate" is "to restore to a state, condition, position, etc. from which one had been removed" 15 and in the latter, to give her back the income lost during the period of unemployment. Both remedies, looking to the past, would perforce make her "whole." Sadly, the avowed intent of the law has at times been thwarted when reinstatement has not been forthcoming and the hapless dismissed employee finds himself on the outside looking in. Over time, the following reasons have been advanced by the Court for denying reinstatement under the facts of the case and the law applicable thereto; that reinstatement can no longer be effected in view of the long passage of time (22 years of litigation) or because of the realities of the situation; 16 or that it would be "inimical to the employer's interest;" 17 or that reinstatement may no longer be feasible; 18 or, that it will not serve the best interests of the parties involved; 19 or that the company would be prejudiced by the workers' continued employment; 20 or that it will not serve any prudent purpose as when supervening facts have transpired which make execution on that score unjust or inequitable 21 or, to an increasing extent, due to the resultant atmosphere of "antipathy and antagonism" or "strained relations" or "irretrievable estrangement" between the employer and the employee. 22 In lieu of reinstatement, the Court has variously ordered the payment of backwages and separation pay 23 or solely separation pay. 24 In the case at bar, the law is on the side of private respondent. In the first place, the wording of the Labor Code is clear and unambiguous: "An employee who is 'unjustly dismissed from work shall be entitled to reinstatement . . . and to his full backwages . . . " 25 Under the principles of statutory construction, if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This plain-meaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent or will and preclude the court from construing it differently. 26 The legislature is presumed to know the meaning of the words, to have used words advisedly, and to have expressed its intent by the use of such words as are found in the statute. 27 Verba legis non est recedendum, or from the words of a statute there should be no departure. Neither does the provision admit of any qualification. If in the wisdom of the Court, there may be a ground or grounds for non- application of the above-cited provision, this should be by way of exception, such as when the reinstatement may be inadmissible due to ensuing strained relations between the employer and the employee. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. A few examples will suffice to illustrate the Court's application of the above principle: where the employee is a Vice-President for Marketing and as such, enjoys the full trust and confidence of top management; 28 or is the Officer-In-Charge of the extension office of the bank where he works; 29 or is an organizer of a union who was in a position to sabotage the union's efforts to organize the workers in commercial and industrial establishments; 30 or is a warehouseman of a non-profit organization whose primary purpose is to facilitate and maximize voluntary gifts by foreign individuals and organizations to the Philippines; 31 or is a manager of its Energy Equipment Sales. 32 Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwise, reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature. 33 Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. 34

Here, it has not been proved that the position of private respondent as systems analyst is one that may be characterized as a position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee. Hence, this does not constitute an exception to the general rule mandating reinstatement for an employee who has been unlawfully dismissed. On the other hand, has she betrayed any confidence reposed in her by engaging in transactions that may have created conflict of interest situations ? Petitioner GMCR points out that as a matter of company policy, it prohibits its employees from involving themselves with any company that has business dealings with GMCR. Consequently, when private respondent Salazar signed as a witness to the partnership papers of Concave (a supplier of Ultra which in turn is also a supplier of GMCR), she was deemed to have placed herself in an untenable position as far as petitioner was concerned. However, on close scrutiny, we agree with public respondent that such a circumstance did not create a conflict of interests situation. As a system analyst, Salazar was very far removed from operations involving the procurement of supplies. Salazar's duties revolved around the development of systems and analysis of designs on a continuing basis. In other words, Salazar did not occupy a position of trust relative to the approval and purchase of supplies and company assets. In the instant case, petitioner has predicated its dismissal of Salazar on loss of confidence. As we have held countless times, while loss of confidence or breach of trust is a valid ground for termination, it must rest on some basis which must be convincingly established. 35 An employee may not be dismissed on mere presumptions and suppositions. Petitioner's allegation that since Salazar and Saldivar lived together in the same apartment, it "presumed reasonably that complainant's sympathy would be with Saldivar" and its averment that Saldivar's investigation although unverified, was probably true, do not pass this Court's test. 36 While we should not condone the acts of disloyalty of an employee, neither should we dismiss him on the basis of suspicion derived from speculative inferences. To rely on the Maramara report as a basis for Salazar's dismissal would be most iniquitous because the bulk of the findings centered principally on her friend's alleged thievery and anomalous transactions as technical operations' support manager. Said report merely insinuated that in view of Salazar's special relationship with Saldivar, Salazar might have had direct knowledge of Saldivar's questionable activities. Direct evidence implicating private respondent is wanting from the records. It is also worth emphasizing that the Maramara report came out after Saldivar had already resigned from GMCR on May 31, 1984. Since Saldivar did not have the opportunity to refute management's findings, the report remained obviously one-sided. Since the main evidence obtained by petitioner dealt principally on the alleged culpability of Saldivar, without his having bad a chance to voice his side in view of his prior resignation, stringent examination should have been carried out to ascertain whether or not there existed independent legal grounds to hold Salazar answerable as well and, thereby, justify her dismissal. Finding none, from the records, we find her to have been unlawfully dismissed. WHEREFORE, the assailed resolution of public respondent National Labor Relations Commission dated December 29, 1987 is hereby AFFIRMED. Petitioner GMCR is ordered to REINSTATE private respondent Imelda Salazar and to pay her backwages equivalent to her salary for a period of two (2) years only.This decision is immediately executory. SO ORDERED. Paras, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr. and Nocon, JJ., concur. Gutierrez, Jr., Feliciano and Padilla, JJ., took no part. Cruz, J., concur in the result. Narvasa (C.J.), I agree with Justice Herrera that there is just cause for dismissal. Herrera, J., I believe there is just cause for dismissal per investigative findings (See Dec., p. 2). Footnotes 1. Records, pp. 34-43. 2. Records, p. 22. 3. Ibid, p. 121. 4. Rollo, p. 149. 5. Soriano v. NLRC, G.R. No. 75510, October 27, 1987, 155 SCRA124. 6. Pres. Decree No. 442, as amended by Rep. Act No. 6715. 7. LABOR CODE (1991), Book VI, Rule 1, Secs. 2 and 3. 8. CONST., Art. XIII, Sec. 1, par. (1). 9. CONST., Art. XIII. 10. CONST., Art. XIII, Sec. 3, pars. (1) and (2). 11. CONST. (1973), Art. II, Sec. 9. 12. CONCOM Record, Vol. 2, p. 681. 13. The following provision on security of tenure is embodied in Article 279, Labor Code, reproduced herein but with the amendments inserted by Republic Act No. 6715 approved on March 2, 1989 in bold type: "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 em.ployee 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." 14. The application of Article 279 is illustrated in the following cases: Santos Salao v. NLRC, G.R. No. 90786, September 21, 1991; Morales v. NLRC, G.R. 91501, August 2, 1990, 188 SCRA 295; Carandang v. Dulay, G.R. 90492, July 30, 1990, 188 SCRA 792; and Santos v. NLRC, No. 76.721, September 21,1987,154 SCRA 166. 15. Webster's New Twentieth Century Dictionary. 16. Balaquezon EWTU v. Zamora, Nos. L-46766-7, April 1, 1980, 97 SCRA 5. 17. San Miguel Corporation v. Deputy Minister of Labor and Employment, No. 58927, October 27, 1986, 145 SCRA 204. 18. Hydro Resources Contractors Corporation v. Pagalibuan, G.R. 62909, April 18, 1989, 172 SCRA 404. 19. Century Textile Mills, Inc. v. NLRC, No. 77859, May 25, 1988, 161 SCRA 528. 20. Gubac v. NLRC, G.R. No. 81946, July 13, 1990, 187 SCRA 412. 21. Sealand Service, Inc. v. NLRC, G.R. No. 90500, October 5, 1990, 190 SCRA 347. 22. Commercial Motors Corporation v. Commissioners, G.R. No. 74762, December 10, 1990, 192 SCRA 191; De Vera v. NLRC, G.R. No. 93212, November 22, 1990,191 SCRA 632; Orcino v. Civil Service Commission, G.R. No. 92869, October 18, 1990, 190 SCRA 815; Maglutac v. NLRC/Conmart v. NLRC, G.R. No. 78637, September 21, 1990, 189 SCRA 767; Carandang v. Dulay, G.R. No. 90942, August 20, 1990, 188 SCRA 792; Esmalin v. NLRC, G.R. No. 67880, September 15, 1989, 177 SCRA 537; Fernandez v. NLRC, G.R No. 84302, August 10, 1989, 176 SCRA 269; Quezon Electric Cooperative v. NLRC, G.R. Nos. 79718-22, April 12, 1989, 172 SCRA 88; Bautista v. Inciong, No. 52824, March 16, 1988, 158 SCRA 665; Citytrust Finance Corp. v. NLRC, No. 75740, January 15, 1988, 157 SCRA 87; Asiaworld Publishing House, Inc. v. Ople, No. 56398, July 23, 1987, 152 SCRA 219; and Divine Word High School v. NLRC, No. 72207, August 6, 1986, 143 SCRA 346. 23. Chua Qua v. Clave, G.R. No. 49549, August 30, 1990, 189 SCRA 117; Gold City Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, September 21, 1990, 189 SCRA 811; ALU v. NLRC, G.R. Nos. 83886-87, September 20, 1990, 189 SCRA 743; and Pizza Inn v. NLRC, No. 74531, June 28,1988,162 SCRA 773.

24. Maglutac v. NLRC, G.R. No. 78345, September 21, 1990, 189 SCRA 767; Conmart v. NLRC, G.R. No. 78637, 189 SCRA 767; De Vera v. NLRC, G.R. No. 93212, November 22, 1990, 191 SCRA 632; Commercial Motors Corp. v. Commissioners, G.R. No. 74762, December 10, 1990, 192 SCRA 191; Sealand Service, Inc. v. NLRC, G.R. No. 90500, October 5, 1990, 190 SCRA 347. 25. LABOR CODE, Art. 279. 26. R. AGPALO, STATUTORY CONSTRUCTION, p.94 (1990). 27. Aparri v. Court of Appeals, G.R. No. 30057, January 31, 1984, 231 SCRA 241. 28. Asiaworld Publishing House, Inc. v. Ople, No. 56393, July 23, 1987, 152 SCRA 219. 29. Citytrust Finance Corp. v. NLRC, No. 75740, January 15, 1988, 157 SCRA 87. 30. Bautista v. Inciong, No. 52824, March 16, 1988, 158 SCRA 665. 31. Esmalin v. NLRC, G.R. No. 67880, September 15, 1989, 177 SCRA 537 32. Maglutac v. NLRC, G.R. No.78345, September 21, 1990, 189 SCRA 767. 33. Anscor Transport and Terminals v. NLRC, G.R No. 85894, September 28, 1990, 190 SCRA 147. 34. Sibal v. Notre Dame of Greater Manila, G.R. No. 75093, February 23, 1990, 182 SCRA 538. 35. Reyes v. Zamora, No. L-46732, May 5, 1979, 90 SCRA 92; De Vera v. NLRC and BPI, G.R No. 93070, August 9, 1991. 36. Rollo, pp. 29 and 35.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents. 1993 Mar 24 2nd Division G.R. No. 101761 DECISION REGALADO, J.: The main issue presented for resolution in this original petition for certiorari is whether supervisory employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers or members of the managerial staff under Article 82, Book III of the same Code, and hence are not entitled to overtime rest day and holiday pay. Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool Supervisor. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. The JE Program was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery. Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows: "WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directed to ---1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay enjoyed by them instead of the P100.00 special allowance which was implemented on June 11, 1988; and 2. pay the individual members of complainant union the difference in money value between the P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought to have received from June 1, 1988. All other claims are hereby dismissed for lack of merit. SO ORDERED." In finding for the members therein respondent union, the labor ruled that the along span of time during which the benefits were being paid to the supervisors has accused the payment thereof to ripen into contractual obligation; at the complainants cannot be estopped from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits therefrom, considering that respondent union was formed only a year after the implementation of the Job Evaluation Program, hence there was no way for the individual supervisors to express their collective response thereto prior to the formation of the union; and the comparative computations presented by the private respondent union showed that the P100.00 special allowance given NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been discontinued, which arrangement, therefore, amounted to a diminution of benefits. On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they do not participate in the formulation of management policies nor in the hiring or firing of employees; and their main function is to carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was denied in a resolution of public respondent dated August 30, 1991. 4 Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent commission committed a grave abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff who are not entitled to overtime, rest day and holiday pay; and in making petitioner assume the "double burden" of giving the benefits due to rank-and-file employees together with those due to supervisors under the JE Program. We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue. The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime, rest day and holiday pay. Before this can be resolved, however it must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code. It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads:

"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book." Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, and in ruling that the latter are not managerial employees, adopted the definition stated in the aforequoted statutory provision. Petitioner, however, avers that for purposes of determining whether or not the members of respondent union are entitled to overtime, rest day and holiday pay, said employees should be considered as "officers or members of the managerial staff" as defined under Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code, to wit: "Art. 82 Coverage. ---- The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations. "As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff." ( mphasis supplied.) xxx xxx xxx

'Sec. 2. Exemption. ---- The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: xxx xxx xxx

(b) Managerial employees, if they meet all of the following conditions, namely: (1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof: (2) They customarily and regularly direct the work of two or more employees therein: (3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. (c) Officers or members of a managerial staff if they perform the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of their employer; (2) Customarily and regularly exercise discretion and independent judgment; (3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and (4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and above." It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 5 This is one such case where we are inclined to tip the scales of justice in favor of the employer. The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work performed, rather than the title of the employee's position. 6 Consequently, while generally this Court is not supposed to review the factual findings of respondent commission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation from the rule. A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective departments. More specifically, their duties and functions include, among others, the following operations whereby the employee: 1) assists the department superintendent in the following: a) planning of systems and procedures relative to department activities; b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning complement;

c) decision making by providing relevant information data and other inputs; d) attaining the company's set goals and objectives by giving his full support; e) selecting the appropriate man to handle the job in the department; and f) preparing annual departmental budget; 2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates; 3) trains and guides subordinates on how to assume responsibilities and become more productive; 4) conducts semi-annual development/advancement; performance evaluation of his subordinates and recommends necessary action for their

5) represents the superintendent or the department when appointed and authorized by the former; 6) coordinates and communicates with other inter and intra department supervisors when necessary; 7) recommends disciplinary actions/promotions; 8) recommends measures to improve work methods, equipment performance, quality of service and working conditions; 9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed abnormality within the refinery; 10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented; and 11) performs other related tasks as may be assigned by his immediate superior. From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consist of the management of a department of the establishment in which they are employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work hereinbefore described. Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday. The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union members are supervisory employees and this is one instance where the nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious. The controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been made along that line and its corresponding conceptual criteria. II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefits to the union members has ripened into a contractual obligation. A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to the rank-and-file employees such as overtime, rest day and holiday pay, simply because they were treated in the same manner as rank-and-file employees, and their basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact is apparent from the clarification made by petitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it lucidly explained: "But, complainants no longer occupy the same positions they held before the JE Program. Those positions formerly classified as 'supervisory' and found after the JE Program to be rank-and-file were classified correctly and continue to receive overtime, holiday and restday pay. As to them, the practice subsists. "However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-defined and in most cases their organizational positions re-designated to confirm their superior rank and duties. Thus, after the JE program, complainants cannot be said to occupy the same positions." 9 It bears mention that this positional submission was never refuted nor controverted by respondent union in any of its pleadings filed before herein public respondent or with this Court. Hence, it can be safely concluded therefrom that the members of respondent union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as members or officers of the managerial staff considering that they were then treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary employer practice, which cannot be 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. 10 The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowingly fully well that said employees are not covered by the law requiring payment thereof. 11 In the case at bar, respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure generosity. B. It remains undisputed that the implementation of the JE Program, the members of private respondent union were re-classified under levels S-5 S-8 which were considered under the program as managerial staff purposes of compensation and benefits, that they occupied re-evaluated positions, and that their basic pay was increased by an average of 50% of their basic salary prior to the JE Program. In other words, after the JE Program there was an ascent in position, rank and salary. This in essence is a promotion which is defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. 12

Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom. As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As the sating goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO. Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive. Not so long ago, on this particular score, we had the occasion to hold that: ". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspects of employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating on circumventing the rights of employees under special laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite." 13 WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion, and the basic complaint of private respondent union is DISMISSED. Narvasa, (C.J., Chairman), Padilla, Nocon and Campos, Jr., JJ., concur. --------------Footnotes 1. Rollo, 209. 2. Annex E, Petition; Rollo, 51, 56-57. 3. Annex A, id.; ibid., 20-27; NLRC Case CA No. L-000058; penned by Pres. Comm. Lourdes C. Javier, with the concurrence of Comm. Ireneo B. Bernardo and Regalio I. Rayala. 4. Rollo, 28-29. 5. Sosito vs. Aguinaldo Development Corporation, 156 SCRA 392 (1987). 6. 56 C.J.S., Master and Servant, Sec. 151 (11). 7. Annexes I to I-23, Petition; Rollo, 84-149. 8. Annex G, Petition; Rollo, 72. 9. Rollo, 79 10. Globe Mackay Cable and Radio Corporation, et al. vs. NLRC et al., 163 SCRA 71 (1988). 11. Oceanic Pharmacal Employees Union (FFW) vs. Inciong, et al., 94 SCRA 270 (1979). 12. Millares vs. Subido, et al., 20 SCRA 954 (1967); Dosch, vs. NLRC, et al., 123 SCRA 296 (1983). 13. Wise and Co., Inc. vs. Wise and Co., Inc. Employees Union-Natu, et al., SCRA 536 (1989).

JUAN BONIFACIO, petitioner-appellant, vs. GOVERNMENT SERVICE INSURANCE SYSTEM [Ministry of Education & Culture] and EMPLOYEES' COMPENSATION COMMISSION, respondent-appellees. 1986 Dec 15 2nd Division G.R. No. L-62207 DECISION FERNAN, J: Petition for review on certiorari of the decision of the Employees Compensation Commission dated August 19, 1982, affirming the denial by the Government Service Insurance System of petitioner's claim for benefits under PD No. 626, as amended, for the death of his spouse, Lourdes Bonifacio. The facts are undisputed. The late Lourdes Bonifacio was a classroom teacher assigned to the district of Bagamanoc, Division of Catanduanes, Ministry of Education and Culture from August, 1965 until she contracted carcinoma of the breast with metastases to the gastro-intestinal tract and lungs which caused her death on October 5, 1978. Dra. Corazon Yabes-Almirante of the Ospital ng Bagong Lipunan certified that the late Lourdes Bonifacio underwent radical mastectomy for cancer of the breast in 1973. In 1976, when her ailment was noted to have metastasized to her abdomen, she submitted herself to an operation known as "exploratory laparotomy" in March of the same year. On September 1, 1978, she complained of "abdominal pain, abdominal enlargement, vomiting, and failure to pass stools inspite of laxatives." Upon operation, it was found that her entire gastro-intestinal tract was enveloped by carcinoma. Despite chemotherapy, she died on October 5, 1978 from carcinoma of the breast metastatic to gastro-intestinal tract and lungs. Thereafter a claim for death benefits under P.D. No. 626, as amended, was filed by petitioner with the GSIS. The same was however denied on the ground that the decedent's principal ailment, carcinoma of the breast with metastases to gastro-intestinal tract and lungs, is not an occupational disease for her particular work as a teacher, nor is the risk of contracting said disease increased by her working conditions. The Employees Compensation Commission, on appeal, affirmed the decision of the respondent System. Petitioner now assails the decision of the respondent Commission on the following grounds: a] The respondent Commission's affirmance of the denial by respondent System totally ignored the Supreme Court's pronouncements on compensation cases; and b] Under the law, in case of doubt in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, the same shall be resolved in favor of the laborer. We hold that the GSIS and the Employees Compensation Commission did not err in denying petitioner's claim. A compensable sickness means "any illness definitely accepted as an occupational disease listed by the Employees Compensation Commission, or any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions. For this purpose, the Commission is empowered to determine and approve occupational diseases and workrelated illnesses that may be considered compensable based on peculiar hazards of employment." [Art. 167(1) Labor Code as amended by P.D. No. 1368, effective May 1, 1978]. Thus, for the sickness or the resulting disability or death to be compensable, the sickness must be the result of an accepted occupational disease listed by the Employees Compensation Commission [Annex "A" of the Amended Rules on Employees Compensation], or any other sickness caused by employment subject to proof by claimant that the risk of contracting the same is increased by working conditions. [Sec. 1, Rule II, Amended Rules on Employees Compensation]. Carcinoma of the breast with metastases to the gastro-intestinal tract and lungs is not listed by the Commission as an occupational disease. As to the "metastases to the gastro-intestinal tract and lungs" the Commission lists such disease as occupational only in the following employment: "Occupational Diseases"----Nature of Employment 16. Cancer of stomach and other---lymphatic and blood form---ing vessels; nasal cavity and---sinuses---17. Cancer of the lungs, liver ---and brain.---Woodworkers, wood products industry carpenters, loggers and employees in pulp and paper mills and ply wood mills. Vinyl chloride workers, plastic workers.

[Annex A, Amended Rules on Employees Compensation, see p. 38, Rollo.] The cancer which affected the deceased not being occupational in her particular employment, it became incumbent upon petitioner to prove that the decedent's working conditions increased the risk of her contracting the fatal illness. This onus, petitioner failed to satisfactorily discharge. We note the following medical report on breast cancer which the Employees Compensation Commission cited in its decision and which the petitioner failed to controvert: ". . . Recent observations on the epidemeology of breast cancer suggest that it is intimately linked to 'estrogenic hormones' [W.A.P. Anderson, Mosby, Pathology 5th edition, pp. 1217-1218]. Mammary carcinoma is likely to metastasize relatively early to the regional lymph nodes-axillary and supra clavicular, if the primary site is in the outer half of the breast. From thence it spreads primarily to the bones, lungs, skin and subcutaneous tissues generally; less frequently to the brain. [Wintrobe, et. al., Harrison's Principles of Internal Medicine, 7th edition, pp. 584-585]." (pp. 3-4, ECC decision dated August 19, 1982). Petitioner's contention that the decision of the Employees Compensation Commission totally ignored the Supreme Court's pronouncements on compensation cases is unmeritorious. The petitioner evidently overlooked that his claim is now within the ambit of the Labor Code and the rulings under the old law, Act No. 3428, as amended, no longer control. The old law as embodied particularly in Section 43 of RA No. 772 amending Act No. 3812, provided for "the presumption of compensability and the rule on aggravation of illness, which favor the employee," and "paved the way for the latitudinarian or expansive application of the Workmen's Compensation Law in favor of the employee or worker." [Sulit v. ECC, 98 SCRA 483, 489] The presumption in essence states that in any proceeding for the enforcement of the claim for compensation under the Workmen's Compensation Act "it shall be presumed in the absence of substantial evidence to the contrary that the claim comes within the

provisions of the said Act, that sufficient notice thereof was given, that the injury was not occasioned by the willful intention of the injured employee to bring about the injury or death of himself or of another, that the injury did not result solely from the intoxication of the injured employee while on duty, and that the contents of verified medical and surgical reports introduced in evidence by claimants for compensation are correct." Thus, under the Workmen's Compensation Law, it is not necessary for the claimant to carry the burden of proof to establish his case to the point of demonstration [Abana vs. Quisumbing, 22 SCRA 1278]. It is "not necessary to prove that employment was the sole cause of the death or injury suffered by the employee. It is sufficient to show that the employment had contributed to the aggravation or acceleration of such death or ailment." [Fontesa vs. ECC, 22 SCRA 282] "Once the disease had been shown to have arisen in the course of employment, it is presumed by law, in the absence of substantial evidence to the contrary, that it arose out of it." [Hernandez vs. ECC, et. al. L-20202, May 31, 1965]. With this legal presumption in the old law, the burden of proof shifts to the employer and the employee no longer suffers the burden of showing causation. Under the present Labor Code, the "latitudinarian or expansive application of the Workmen's Compensation Law in favor of the employee or worker" no longer prevails as the burden of showing proof of causation has shifted back to the employee particularly in cases of sickness or injuries which are not accepted or listed as occupational by the Employees Compensation Commission. As stated in Sulit vs. Employees Compensation Commission, [supra] "the Labor Code abolished the presumption of compensability and the rule on aggravation of illness caused by the nature of the employment." While we do not dispute petitioner's contention that under the law, in case of doubt in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, the doubt shall be resolved in favor of the laborer, we find that the same has no application in this case since the pertinent provisions of the Labor Code leave no room for doubt either in their interpretation or application. WHEREFORE, the petition is dismissed and the decisions of the GSIS and the Employees Compensation Commission denying the claim, are affirmed. No costs. SO ORDERED. Feria (Chairman), Alampay, Gutierrez, Jr., and Paras, JJ., concur.

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. petitioner, vs. HON. RUBEN D. TORRES, as Secretary of the Department of Labor & Employment, and JOSE N. SARMIENTO, as Administrator of the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, respondents. 1992 Aug 6 En Banc G.R. No. 101279 DECISION GRIO-AQUINO, J.: This petition for prohibition with temporary restraining order was filed by the Philippine Association of Service Exporters (PASEI, for short), to prohibit and enjoin the Secretary of the Department of Labor and Employment (DOLE) and the Administrator of the Philippine Overseas Employment Administration (or POEA) from enforcing and implementing DOLE Department Order No. 16, Series of 1991 and POEA Memorandum Circular Nos. 30 and 37, Series of 1991, temporarily suspending the recruitment by private employment agencies of Filipino domestic helpers for Hong Kong and vesting in the DOLE, through the facilities of the POEA, the task of processing and deploying such workers. PASEI is the largest national organization of private employment and recruitment agencies duly licensed and authorized by the POEA, to engage in the business of obtaining overseas employment for Filipino landbased workers, including domestic helpers. On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids employed in Hong Kong, DOLE Secretary Ruben D. Torres issued Department Order No. 16, Series of 1991, temporarily suspending the recruitment by private employment agencies of "Filipino domestic helpers going to Hong Kong" (p. 30, Rollo). The DOLE itself, through the POEA took over the business of deploying such Hong Kong-bound workers. "In view of the need to establish mechanisms that will enhance the protection for Filipino domestic helpers going to Hong Kong, the recruitment of the same by private employment agencies is hereby temporarily suspended effective 1 July 1991. As such, the DOLE through the facilities of the Philippine Overseas Employment Administration shall take over the processing and deployment of household workers bound for Hong Kong, subject to guidelines to be issued for said purpose. "In support of this policy, all DOLE Regional Directors and the Bureau of Local Employment's regional offices are likewise directed to coordinate with the POEA in maintaining a manpower pool of prospective domestic helpers to Hong Kong on a regional basis. "For compliance." (Underscoring ours; p. 30, Rollo.) Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991, dated July 10, 1991, providing GUIDELINES on the Government processing and deployment of Filipino domestic helpers to Hong Kong and the accreditation of Hong Kong recruitment agencies intending to hire Filipino domestic helpers. "Subject: Guidelines on the Temporary Government Processing and Deployment of Domestic Helpers to Hong Kong.

"Pursuant to Department Order No. 16, series of 1991 and in order to operationalize the temporary government processing and deployment of domestic helpers (DHs) to Hong Kong resulting from the temporary suspension of recruitment by private employment agencies for said skill and host market, the following guidelines and mechanisms shall govern the implementation of said policy: "I. Creation of a Joint POEA-OWWA Household Workers Placement Unit (HWPU). "An ad hoc, one stop Household Workers Placement Unit [or HWPU] under the supervision of the POEA shall take charge of the various operations involved in the Hong Kong-DH industry segment: "The HWPU shall have the following functions in coordination with appropriate units and other entities concerned: "1. "2. "3. "4. "5. Negotiations with and Accreditation of Hong Kong Recruitment Agencies Manpower Pooling Worker Training and Briefing Processing and Deployment Welfare Programs.

"II. Documentary Requirements and Other Conditions for Accreditation of Hong Kong Recruitment Agencies or Principals. "Recruitment agencies in Hong Kong intending to hire Filipino DHs for their employers may negotiate with the HWPU in Manila directly or through the Philippine Labor Attache's Office in Hong Kong. "xxx xxx xxx

"X. Interim Arrangement "All contracts stamped in Hong Kong as of June 30 shall continue to be processed by POEA until 31 July 1991 under the name of the Philippine agencies concerned. Thereafter, all contracts shall be processed with the HWPU. "Recruitment agencies in Hong Kong shall submit to the Philippine Consulate General in Hong Kong a list of their accepted applicants in their pool within the last week of July. The last day of acceptance shall be July 31 which shall then be the basis of HWPU in accepting contracts for processing. After the exhaustion of their respective pools the only source of applicants will be the POEA manpower pool. "For strict compliance of all concerned." (pp. 31-35, Rollo.) On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of 1991, on the processing of employment contracts of domestic workers for Hong Kong. "TO: All Philippine and Hong Kong Agencies engaged in the recruitment of Domestic helpers for Hong Kong.

"Further to Memorandum Circular No. 30, series of 1991 pertaining to the government processing and deployment of domestic helpers (DHs) to Hong Kong, processing of employment contracts which have been attested by the Hong Kong Commissioner of Labor up to 30 June 1991 shall be processed by the POEA Employment Contracts Processing Branch up to 15 August 1991 only. "Effective 16 August 1991, all Hong Kong recruitment agent/s hiring DHs from the Philippines shall recruit under the new scheme which requires prior accreditation with the POEA. "Recruitment agencies in Hong Kong may apply for accreditation at the Office of the Labor Attache, Philippine Consulate General where a POEA team is posted until 31 August 1991. Thereafter, those who failed to have themselves accredited in Hong Kong may

proceed to the POEA-OWWA Household Workers Placement Unit in Manila for accreditation before their recruitment and processing of DHs shall be allowed. "Recruitment agencies in Hong Kong who have some accepted applicants in their pool after the cut-off period shall submit this list of workers upon accreditation. Only those DHs in said list will be allowed processing outside of the HWPU manpower pool. "For strict compliance of all concerned." ( mphasis supplied, p. 36, Rollo.) On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the aforementioned DOLE and POEA circulars and to prohibit their implementation for the following reasons: 1. that the respondents acted with grave abuse of discretion and/or in excess of their rule-making authority in issuing said circulars; 2. that the assailed DOLE and POEA circulars are contrary to the Constitution, are unreasonable, unfair and oppressive; and 3. that the requirements of publication and filing with the Office of the National Administrative Register were not complied with. There is no merit in the first and second grounds of the petition. Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate recruitment and placement activities. "Art. 36. Regulatory Power. The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this title [Regulation of Recruitment and Placement Activities] and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this title." (Italics ours.) On the other hand, the scope of the regulatory authority of the POEA, which was created by Executive Order No. 797 on May 1, 1982 to take over the functions of the Overseas Employment Development Board, the National Seamen Board, and the overseas employment functions of the Bureau of Employment Services, is broad and far-ranging for: 1. Among the functions inherited by the POEA from the defunct Bureau of Employment Services was the power and duty: ""2. To establish and maintain a registration and/or licensing system to private sector participation in the recruitment and placement of workers, locally and overseas, . . . .' (Art. 15, Labor Code, talics supplied)." (p. 13, Rollo.) 2. It assumed from the defunct Overseas Employment Development Board the power and duty: "'3. To recruit and place workers for overseas employment of Filipino contract workers, on a government to government arrangement and in such other sectors as policy may dictate . . . .' (Art. 17, Labor Code.)" (p. 13, Rollo.) 3. From the National Seamen Board, the POEA took over: "2. To regulate and supervise the activities of agents or representatives of shipping companies in the hiring of seamen for overseas employment; and secure the best possible terms of employment for contract seamen workers and secure compliance therewith." (Art. 20, Labor Code.) The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing complexity of the modern society" (Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79). More and more administrative bodies are necessary to help in the regulation of society's ramified activities. "Specialized in the particular field assigned to them, they can deal with the problems thereof with more expertise and dispatch than can be expected from the legislature or the courts of justice" (Ibid.). It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the recruitment and deployment of Filipino landbased workers for overseas employment. A careful reading of the challenged administrative issuances discloses that the same fall within the "administrative and policing powers expressly or by necessary implication conferred" upon the respondents (People vs. Maceren, 79 SCRA 450). The power to "restrict and regulate conferred by Article 36 of the Labor Code involves a grant of police power (City of Naga vs. Court of Appeals, 24 SCRA 898). To "restrict" means "to confine, limit or stop" (p. 62, Rollo) and whereas the power to "regulate" means "the power to protect, foster, promote, preserve, and control with due regard for the interests, first and foremost, of the public, then of the utility and of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA 218). The Solicitor General, in his Comment, aptly observed: " . . . Said Administrative Order [i.e., DOLE Administrative Order No. 16] merely restricted the scope or area of petitioner's business operations by excluding therefrom recruitment and deployment of domestic helpers for Hong Kong till after the establishment of the `mechanisms' that will enhance the protection of Filipino domestic helpers going to Hong Kong. In fine, other than the recruitment and deployment of Filipino domestic helpers for Hongkong, petitioner may still deploy other class of Filipino workers either for Hongkong and other countries and all other classes of Filipino workers for other countries. "Said administrative issuances, intended to curtail, if not to end, rampant violations of the rule against excessive collections of placement and documentation fees, travel fees and other charges committed by private employment agencies recruiting and deploying domestic helpers to Hongkong. [They are] reasonable, valid and justified under the general welfare clause of the Constitution, since the recruitment and deployment business, as it is conducted today, is affected with public interest. "xxx xxx xxx

"The alleged takeover [of the business of recruiting and placing Filipino domestic helpers in Hongkong] is merely a remedial measure, and expires after its purpose shall have been attained. This is evident from the tenor of Administrative Order No. 16 that recruitment of Filipino domestic helpers going to Hongkong by private employment agencies are hereby 'temporarily suspended effective July 1. 1991.' "The alleged takeover is limited in scope, being confined to recruitment of domestic helpers going to Hongkong only. "xxx xxx xxx

" . . . the justification for the takeover of the processing and deploying of domestic helpers for Hongkong resulting from the restriction of the scope of petitioner's business is confined solely to the unscrupulous practice of private employment agencies victimizing applicants for employment as domestic helpers for Hongkong and not the whole recruitment business in the Philippines." (pp. 62-65. Rollo.) The questioned circulars are therefore a valid exercise of the police power as delegated to the executive branch of Government.

Nevertheless, they are legally invalid, defective and unenforceable for lack of proper publication and filing in the Office of the National Administrative Register as required in Article 2 of the Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 which provide: "Art. 2. Laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazette, unless it is otherwise provided. . . . ." (Civil Code.) "Art. 5. Rules and Regulations. The Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation." ( mphasis supplied, Labor Code, as amended.) Section 3. Filing. (1) Every agency shall file with the University of the Philippines Law Center, three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months shall not thereafter be the basis of any sanction against any party or persons." ( nderscoring supplied, Chapter 2, Book VII of the Administrative Code of 1987.) "Section 4. Effectivity. In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them." ( mphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987.) Once more, we advert to our ruling in Taada vs. Tuvera, 146 SCRA 446 that: " . . . Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation," (p. 447.). "Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties." (p. 448.) "We agree that publication must be in full or it is no publication at all since its purpose is to inform the public of the content of the laws." (p. 448.) For lack of proper publication, the administrative circulars in question may not be enforced and implemented. WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE Department Order No. 16, Series of 1991, and POEA Memorandum Circular Nos. 30 and 37, Series of 1991, by the public respondents is hereby SUSPENDED pending compliance with the statutory requirements of publication and filing under the aforementioned laws of the land. SO ORDERED. Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Medialdea, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.

AMELIA J. DELOS SANTOS, Petitioner, versus J EBSEN MARITIME, INC., Respondent. 2005 Nov 22 3rd Division G.R. No. 154185 DECISION GARCIA, J.: Petitioner Amelia J. Delos Santos seeks in this petition for review on certiorari under Rule 45 of the Rules of Court to nullify and set aside the decision and resolution dated 21 March 2002[1] and 03 July 2002[2], respectively, of the Court of Appeals in CA-G.R. SP No. 62229. From the petition and its annexes, the respondents comment thereto, and the parties respective memoranda, the Court gathers the following factual antecedents: On 10 August 1995, or thereabout, herein respondent Jebsen Maritime, Inc., for and in behalf of Aboitiz Shipping Co. (Aboitiz Shipping, for short), hired petitioners husband, Gil R. Delos Santos (hereinafter, Delos Santos) as third engineer of MV Wild Iris. The corresponding contract of employment, as approved by the Philippine Overseas Employment Administration (POEA), was for a fixed period of one (1) month and for a specific undertaking of conducting said vessel to and from Japan. It quoted Delos Santos basic monthly salary and other monetary benefits in US currency. Under POEA rules, all employers and principals are required to adopt the POEA - standard employment contract (POEA-SEC) without prejudice to their adoption of terms and conditions over and above the minimum prescribed by that agency.[3] On the vessels return to the Philippines a month after, Delos Santos remained on board, respondent having opted to retain his services while the vessel underwent repairs in Cebu. After its repair, MV Wild Iris, this time renamed/registered as MV Super RoRo 100, sailed within domestic waters, having been meanwhile issued by the Maritime Industry Authority a Certificate of Vessel Registry and a permit to engage in coastwise trade on the Manila-Cebu-Manila-Zamboanga-General Santos-Manila route.[4] During this period of employment, Delos Santos was paid by and received from respondent his salary in Philippine peso thru a payroll-deposit arrangement with the Philippine Commercial & Industrial Bank.[5] Some five months into the vessels inter-island voyages, Delos Santos experienced episodes of chest pain, numbness and body weakness which eventually left him temporarily paralyzed. On 17 February 1996, he was brought to the Manila Doctors Hospital a duly accredited hospital of respondent - where he underwent a spinal column operation. Respondent shouldered all operation-related expenses, inclusive of his post operation confinement. As narrated in the assailed decision of the Court of Appeals, the following events next transpired: 1. After his discharge from the Manila Doctors, Delos Santos was made to undergo physical therapy sessions at the same hospital, which compelled the Batangas-based Delos Santoses to rent a room near the hospital at P3,000.00 a month; 2. Delos Santos underwent a second spinal operation at the non-accredited Lourdes Hospital at the cost of P119, 536.00; and

3. After Lourdes, Delos Santos was confined in a clinic in San Juan, Batangas where P20,000.00 in hospitalization expenses was incurred. It would appear that the spouses Delos Santos paid all the expenses attendant the second spinal operation as well as for the subsequent medical treatment. Petitioners demand for reimbursement of these expenses was rejected by respondent for the reason that all the sickness benefits of Delos Santos under the Social Security System (SSS) Law had already been paid. Thus, on 25 January 1997, petitioner filed a complaint[6] with the Arbitration Branch of the National Labor Relations Commission (NLRC) against respondent and Aboitiz Shipping for recovery of disability benefits, and sick wage allowance and reimbursement of hospital and medical expenses. She also sought payment of moral damages and attorneys fees. After due proceedings, the labor arbiter rendered, on 08 January 1999,[7] judgment finding for petitioner and ordering respondent and Aboitiz Shipping to jointly and severally pay the former the following: (1) P119,536.01, representing reimbursement of medical, surgical and hospital expenses; (2) P9,000, representing reasonable cost of board and lodging; (3) P500,000, representing moral damages; (4) US$60,000, representing disability benefits corresponding to Total Permanent Disability; (5) US$2,452, representing Sick Wage allowance; (6) P62,853.60, representing attorneys fees; and, (7) US$6,245.20, also representing attorneys fees. On appeal, the NLRC, in a decision[8] dated 29 August 2000, modified that of the labor arbiter, as follows: WHEREFORE, the decision appealed from is MODIFIED to the extent that respondents Jebsen Maritime, Inc., and Aboitiz Shipping Company are hereby ordered jointly and severally liable to pay Gil delos Santos through Amelia delos Santos the Philippine peso equivalent at the time of actual payment of US DOLLARS SIXTY THOUSAND (US$60,000.00) and US DOLLARS TWO THOUSAND FOUR HUNDRD (sic) FIFTY TWO (US$2,452.00) representing total disability compensation benefits and sickness wages, and the amount of ONE HUNDRED THREE THOUSAND EGHT (sic) HUNDRED FOUR AND 87/100 PHILIPPINE PESOS (P103,804.87) representing reimbursement of surgical, medical and hospital expenses, plus the equivalent of five percent (5%) of the aggregate award as and for attorneys fees. All other dispositions are SET ASIDE. SO ORDERED. Like the labor arbiter, the NLRC predicated its ruling mainly on the theory that the POEA-approved contract of employment continued to govern Delos Santos employment when he contracted his illness. In specific terms, the NLRC states that the same contract was still effective when Delos Santos fell ill, thus entitling him to the payment of disability and like benefits provided in and required under the POEA-SEC.

Following the denial of its motion for reconsideration per NLRC Resolution[9] of 31 October 2000, respondent went to the Court of Appeals on a petition for certiorari, thereat docketed as CA-G.R. No. 62229, imputing on the NLRC grave abuse of discretion. In its petition, respondent scored the NLRC for, among other things, extending the application of the expired POEA-approved employment contract beyond the one-month limit stipulated therein. On 21 March 2002, the Court of Appeals rendered judgment[10], modifying the NLRCs decision by deleting altogether the award of disability compensation benefits, sickness wages and attorneys fees, thus: WHEREFORE, premises considered, the instant petition for certiorari is hereby DENIED, finding no grave abuse of discretion on the part of the NLRC. The Decision of the National Labor Relations Commission (NLRC) dated August 29, 2000 and the Resolution of October 31, 2000 denying petitioners Motion for Reconsideration are hereby AFFIRMED with MODIFICATION, that the disability compensation benefits of US$60,000.00 and the sickness wages of US$2,452.00 are hereby deleted, without prejudice to claiming the same from the proper government agency. The award of attorneys fees is likewise deleted. In time, petitioner moved for reconsideration, but the appellate court denied the motion per its resolution of 03 July 2002.[11] Hence, petitioners present recourse on the grounds that the Court of Appeals seriously erred:[12] I IN DELETING THE AWARD OF US$60,000.00 REPRESENTING THE MAXIMUM DISABILITY BENEFITS APPLYING THE PROVISIONS OF THE POEA STANDARD EMPLOYMENT CONTRACT. (A) PRIOR TO HIS ACCIDENT, THE EMPLOYMENT CONTRACT OF SEAFARER DELOS SANTOS HAS NOT YET BEEN TERMINATED, IN RELATION TO SECTION 2, PARAGRAPHS (A) AND (B) AND SECTION 18 (A), POEA STANDARD EMPLOYMENT CONTRACT. (B) THE CONTRACT OF EMPLOYMENT AT THE TIME OF SEAFARER DELOS SANTOS ACCIDENT HAS NOT YET EXPIRED BECAUSE IT WAS MUTUALLY EXTENDED BY THE PARTIES WHEN DELOS SANTOS WAS NOT SIGNED OFF AND REPATRIATED PRIOR TO SAID ACCIDENT. II IN CONCLUDING THAT NOTWITHSTANDING THE CONTINUATION OF DELOS SANTOS EMPLOYMENT ON BOARD THE SAME VESSEL AND UNDER THE SAME CONTRACT, IT IS THE PROVISIONS OF THE LABOR CODE, AS AMENDED, THAT SHALL GOVERN HIS EMPLOYMENT RELATIONS. III IN DELETING THE AWARD OF SICKNESS ALLOWANCE IN THE AMOUNT OF US$2,452.00. (A) THERE IS NO BASIS IN THE DELETION OF THE AWARD OF SICKNESS ALOWANCE (sic) SINCE PAYMENT OF SOCIAL SECURITY SYSTEM SICK LEAVE BENEFIT IS INDEPENDENT, SEPARATE AND DISTINCT FROM THE SICKNESS ALLOWANCE PROVIDED FOR UNDER THE POEA STANDARD EMPLOYMENT CONTRACT. The petition is devoid of merit. As a rule, stipulations in an employment contract not contrary to statutes, public policy, public order or morals have the force of law between the contracting parties.[13] An employment with a period is generally valid, unless the term was purposely intended to circumvent the employees right to his security of tenure.[14] Absent a covering specific agreement and unless otherwise provided by law, the terms and conditions of employment of all employees in the private sector shall be governed by the Labor Code[15] and such rules and regulations as may be issued by the Department of Labor and Employment and such agencies charged with the administration and enforcement of the Code. The differing conclusions arrived at by the NLRC, finding for the herein petitioner, and the Court of Appeals, siding in part with the herein respondent, on Delos Santos entitlement to disability benefits and sickness allowance are veritably attributable to the question of applicability, under the premises, of the POEA-SEC. The principal issue to be resolved here, therefore, boils down to: which, between the POEA-SEC and the Labor Code, governs the employer-employee relationship between Delos Santos and respondent after MV Wild Iris, as later renamed Super RoRo 100, returned to the country from its one-month conduction voyage to and from Japan. The Court of Appeals ruled against the governing applicability of the POEA-SEC and, on that basis, deleted the NLRCs award of US$60,000.00 and US$2,452.00 by way of disability benefits and sickness allowance, respectively. An excerpt of the appellate courts explanation: xxx Both parties do not dispute the existence of the POEA approved contract signed by the parties. The said contract is the law between the contracting parties and absent any showing that its provisions are wholly or in part contrary to law, morals, good policy, it shall be enforced to the letter by the contracting parties (Metropolitan Bank and Trust Co. vs. Wong, G.R. No. 120859, June 26, 2001). The contract in question is for a duration of one (1) month. Being a valid contract between Delos Santos and the [respondent], the provisions thereof, specifically with respect to the one (1) month period of employment has the force of law between them (D.M. Consunji vs. NLRC, G.R. No. 116572, December 18, 2000). Perforce, the said contract has already expired and is no longer in effect. The fact that Delos Santos continued to work in the same vessel which sailed within Philippine waters does not mean that the POEA standard employment contract continues to be enforced between the parties. The employment of Delos Santos is within the Philippines, and not on a foreign shore. As correctly pointed out by [respondent], the provisions of the Labor Code shall govern their employer-employee relationship. xxx. (Words in bracket added.) The Court agrees with the conclusion of the Court of Appeals for two (2) main reasons. First, we the start with something elementary, i.e., POEA was created primarily to undertake a systematic program for overseas employment of Filipino workers and to protect their rights to fair and equitable employment practices.[16] And to ensure that overseas workers, including seafarers on board oceangoing vessels, are amply protected, the POEA is authorized to formulate employment standards in accordance with welfare objectives of the overseas employment program.[17] Given this consideration, the Court is at a loss to understand why the POEA-SEC should be made to continue to apply to domestic employment, as here, involving a Filipino seaman on board an inter-island vessel.

Just as basic as the first reason is the fact that Delos Santos POEA-approved employment contract was for a definite term of one (1) month only, doubtless fixed to coincide with the pre-determined one-month long Philippines-Japan-Philippines conduction-voyage run. After the lapse of the said period, his employment under the POEA-approved contract may be deemed as functus oficio and Delos Santos employment pursuant thereto considered automatically terminated, there being no mutually-agreed renewal or

extension of the expired contract.[18] This is as it should be. For, as we have held in the landmark case of Millares v. National Labor Relations Commission:[19] From the foregoing cases, it is clear that seafarers are considered contractual employees. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 [of the Labor Code] whose employment has been fixed for a specific project or undertaking . . . We need not depart from the rulings of the Court in the two aforementioned cases which indeed constitute stare decisis with respect to the employment status of seafarers. (Underscoring and words in bracket added) Petitioners posture, citing Section 2 (A)[20] in relation to Section 18[21] of the POEA-SEC about the POEA approved contract still subsisting since Delos Santos was never signed off from the vessel and repatriated to Manila, the point of hire, is untenable. With the view we have of things, Delos Santos is deemed to have been signed off when he acceded to a new employment arrangement offered by the respondent. A seaman need not physically disembarked from a vessel at the expiration of his employment contract to have such contract considered terminated. And the repatriation aspect of the contract assumes significance only where the vessel remains in a foreign port. For, repatriation presupposes a return to ones country of origin or citizenship.[22] In the case at bar, however, there can be quibbling that MV Wild Iris returned to the port of Cebu with Delos Santos on board. Parenthetically, while the parties are agreed that their underlying contract was executed in the country, the records do not indicate what city or province of the Philippines is the specific point of hire. While petitioner says it is Manila, she did not bother to attach to her petition a copy of the contract of employment in question. Petitioner next submits, echoing the NLRCs holding, that the POEA-approved contract remained in full force and effect even after the expiry thereof owing to the interplay of the following circumstances: 1) Delos Santos, after such contract expiration, did not conclude another contract of employment with respondent, but was asked to remain and work on board the same vessel just the same; and 2) If the parties intended their employer-employee relationship to be under the aegis of a new contract, such intention should have been embodied in a new agreement. Contract extension or continuation by mutual consent appears to be petitioners thesis. We are not persuaded. The fact that respondent retained Delos Santos and allowed him to remain on board the vessel cannot plausibly be interpreted, in context, as evidencing an intention on its part to continue with the POEA-SEC. In the practical viewpoint, there could have been no sense in consenting to renewal since the rationale for the execution of the POEA-approved contract had already been served and achieved. At any rate, factors obtain arguing against the notion that respondent consented to contract extension under the same terms and conditions prevailing when the original contract expired. Stated a bit differently, there are compelling reasons to believe that respondent retained the services of the acceding Delos Santos, as the Court of Appeals aptly observed, but under domestic terms and conditions. We refer first to the reduced salary of Delos Santos payable in Philippine peso[23] which, significantly enough, he received without so much of a protest. As respondent stated in its Comment, without any controverting response from petitioner, Delos Santos, for the period ending October 31, 1995, was drawing a salary at the rate of P8,475.00 a month, whereas the compensation package stipulated under the POEA-approved contract provided for a US$613 basic monthly salary and a US$184 fixed monthly overtime pay. And secondly, MV Super RoRo 100 was no longer engaged in foreign trading as it was no longer intended as an ocean-going ship. Accordingly, it does not make sense why a seafarer of goodwill or a manning agency of the same disposition would insist on being regulated by an overseas employment agency under its standard employment contract, which governs employment of Filipino seamen on board ocean-going vessels.[24] Petitioners submission about the parties not having entered into another employment contract after the expiration of the POEAapproved employment contract, ergo, the extension of the expired agreement, is flawed by the logic holding it together. For, it presupposes that an agreement to do or to give does not bind, unless it is embodied in a written instrument. It is elementary, however, that, save in very rare instances where certain formal requisites go into its validity, a contract, to be valid and binding between the parties, need not be in writing. A contract is perfected when the contracting minds agree on the object and cause thereof.[25] And, as earlier discussed, several circumstantial indicia tended to prove that a new arrangement under domestic terms was agreed upon by the principal players to govern the employment of Delos Santos after the return of MV Wild Iris to the country to engage in coastwise trading. Given the foregoing perspective, the disallowance under the decision subject of review of the petitioners claim for maximum disability benefits and sickness allowance is legally correct. As it were, Delos Santos right to such benefits is predicated on the continued enforceability of POEA-SEC when he contracted his illness, which, needless to stress, was not the case. Likewise legally correct is the deletion of the award of attorneys fees, the NLRC having failed to explain petitioners entitlement thereto. As a matter of sound policy, an award of attorneys fee remains the exception rather than the rule. It must be stressed, as aptly observed by the appellate court, that it is necessary for the trial court, the NLRC in this case, to make express findings of facts and law that would bring the case within the exception. In fine, the factual, legal or equitable justification for the award must be set forth in the text of the decision.[26] The matter of attorneys fees cannot be touched once and only in the fallo of the decision, else, the award should be thrown out for being speculative and conjectural.[27] In the absence of a stipulation, attorneys fees are ordinarily not recoverable; otherwise a premium shall be placed on the right to litigate.[28] They are not awarded every time a party wins a suit. WHEREFORE, the petition is DENIED and the assailed Decision and Resolution of the Court of Appeals AFFIRMED. No pronouncement as to costs. SO ORDERED. CANCIO C. GARCIA Associate Justice

[1] Penned by Associate Justice Juan Q. Enriquez, Jr., with Associate Justices Delilah Vidallon Magtolis and Candido V. Rivera, concurring; Rollo, pp. 32-39. [2] Rollo, p. 28.

[3] Poquiz, LABOR Employment. [4] [5] [6] [7] [8] [9]

STANDARDS LAW, 2005 ed., p. 73, citing Rule II, Book V, Rules and Regulations Governing Overseas

Respondents memorandum, pp. 18-19, Rollo, pp. 129-130. CA decision, Rollo, p. 33. CA Decision, p. 3, Rollo, p. 34. CA Decision, p. 4, Rollo, p. 35. CA Decision, pp. 1-2, Rollo, pp. 32-33. CA Rollo, pp. 56-57.

[10] See Note #1, supra. [11] See Note #2, supra. [12] Rollo, pp. 10-11. [13] Art. 1306 of the Civil Code; Lagunsad vs. Soto, 92 SCRA 476 and other cases. [14] Brent School vs. Zamora, 181 SCRA 702 [1990]. [15] PD No. 442, as amended. [16] Art. 17, Labor Code of the Phil. [17] Poquiz, LABOR STANDARDS LAW, 2005 ed., p. 73. [18] (Sec. 2(B) of the POEA Standard Employment Contract provides that [A]ny extension of the contract of employment [between the employer and the seafarer] shall be subject to the mutual consent of both parties. [19] 385 SCRA 306 [2002]. [20] Sec. 2 (A) The employment contract between the employer and the seafarer .shall be effective until the seafarers date of arrival at the point of hire upon the termination of his employment pursuant to Section of the Contract. . [21] Sec. 18. The employment of the seafarer shall cease when the seafarer completes his period of contractual service . . . signs off from the vessel and arrives at the point of hire. [22] Blacks Law Dictionary, 6th ed., p. 1299. [23] CA decision, p. 2, Rollo, p. 33. [24] Millares vs. NLRC, supra. [25] Metropolitan Development Authority v. JANCOM Environmental Corporation, 375 SCRA 320 [2002]; citing Bugatti v. Court of Appeals, 343 SCRA 335 [2000]; Romago Electric Co., Inc., v. Court of Appeals, 333 SCRA 291 [2000]; and Royal Lines, Inc. v. Court of Appeals, 143 SCRA 608 [1986]. [26] PAL vs. Miano, 242 SCRA 235 [1995]; Scott Consultants & Resource Development Corp. vs. CA 242 SCRA 393 [1995]. [27] DBP vs.CA, 262 SCRA 245 [1996], citing Mirasol vs. De la Cruz, 84 SCRA 337 and other cases. [28] Firestone Tire & Rubber Co. vs. Ines Chaves, 18 SCRA 356 [1966] and other cases.

DUTY FREE PHILIPPINES, Petitioner, versus ROSSANO J. MOJICA, Respondent. 2005 Sep 30 1st Division G.R. No. 166365 DECISION YNARES-SANTIAGO, J.: This petition for review on certiorari[1] under Rule 45 of the Rules of Court seeks to annul and set aside the August 31, 2004 Decision[2] of the Court of Appeals in CA-G.R. SP No. 76995, and its December 13, 2004 Resolution[3] denying the motion for reconsideration. The antecedent facts show that on November 28, 1997, the Discipline Committee of Duty Free Philippines (DFP) rendered a decision[4] in DISCOM Case No. 97-027 finding Stock Clerk Rossano A. Mojica guilty of Neglect of Duty by causing considerable damage to or loss of materials, assets and property of DFP. Thus, Mojica was considered forcibly resigned from the service with forfeiture of all benefits except his salary and the monetary value of the accrued leave credits.[5] Mojica was formally informed of his forced resignation on January 14, 1998. Thereupon, he filed a complaint for illegal dismissal with prayer for reinstatement, payment of full back wages, damages, and attorneys fees, against DFP before the National Labor Relations Commission (NLRC). On February 2, 2000, Labor Arbiter Facundo L. Leda rendered a Decision finding that Mojica was illegally dismissed. The dispositive portion of the Decision reads: WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Rossano J. Mojica to be illegal such that respondent Duty Free Philippines is directed to reinstate him to his former or substantially equivalent position without loss of seniority rights and other privileges and to pay him the amount of TWO HUNDRED FIFTY NINE THOUSAND SEVENTEEN PESOS & 08/100 (P259,017.08) representing his backwages and attorneys fees, both awards being subject to further computation until actual reinstatement. SO ORDERED.[6] The NLRC reversed the ruling of the arbiter. It found that the dismissal was valid and with just cause. Mojicas motion for reconsideration was denied,[7] hence he filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals, docketed as CA-G.R. SP No. 76995. The appellate court agreed with the arbiter that Mojica was not guilty of gross or habitual negligence that would warrant his dismissal. It found that there was no convincing evidence to prove that Mojica connived with other personnel in pilfering the stocks of DFP. Hence, this petition. Respondent Mojica is a civil service employee; therefore, jurisdiction is lodged not with the NLRC, but with the Civil Service Commission.

DFP was created under Executive Order (EO) No. 46[8] on September 4, 1986 primarily to augment the service facilities for tourists and to generate foreign exchange and revenue for the government. In order for the government to exercise direct and effective control and regulation over the tax and duty free shops, their establishment and operation was vested in the Ministry, now Department of Tourism (DOT), through its implementing arm, the Philippine Tourism Authority (PTA).[9] All the net profits from the merchandising operations of the shops accrued to the DOT. As provided under Presidential Decree (PD) No. 564,[10] PTA is a corporate body attached to the DOT. As an attached agency, the recruitment, transfer, promotion and dismissal of all its personnel was governed by a merit system established in accordance with the civil service rules.[11] In fact, all PTA officials and employees are subject to the Civil Service rules and regulations.[12] Accordingly, since DFP is under the exclusive authority of the PTA, it follows that its officials and employees are likewise subject to the Civil Service rules and regulations. Clearly then, Mojicas recourse to the Labor Arbiter was not proper. He should have followed the procedure laid down in DFPs merit system and the Civil Service rules and regulations. PD No. 807 or The Civil Service Decree of the Philippines[13] declared that the Civil Service Commission shall be the central personnel agency to set standards and to enforce the laws governing the discipline of civil servants.[14] It categorically described the scope of Civil Service as embracing every branch, agency, subdivision, and instrumentality of the government, including every government-owned or controlled corporation whether performing governmental or proprietary function.[15] It construed an agency to mean any bureau, office, commission, administration, board, committee, institute, corporation, whether performing governmental or proprietary function, or any other unit of the National Government, as well as provincial, city or municipal government, except as otherwise provided.[16] Subsequently, EO No. 180[17] defined government employees as all employees of all branches, subdivisions, instrumentalities, and agencies, of the Government, including government-owned or controlled corporations with original charters.[18] It provided that the Civil Service and labor laws shall be followed in the resolution of complaints, grievances and cases involving government employees. [19] EO No. 292 or The Administrative Code of 1987 empowered the Civil Service Commission to hear and decide administrative cases instituted by or brought before it directly or on appeal, including contested appointments, and review decisions and actions of its offices and of the agencies attached to it.[20] Thus, we held in Zamboanga City Water District v. Buat[21] that: There is no dispute that petitioner, a water district with an original charter, is a government-owned and controlled corporation. The established rule is that the hiring and firing of employees of government-owned and controlled corporations are governed by provisions of the Civil Service Law and Civil Service Rules and Regulations. Jurisdiction over the strike and the dismissal of private respondents is therefore lodged not with the NLRC but with the Civil Service Commission. (Citations omitted) In Philippine Amusement and Gaming Corp. v. Court of Appeals[22] we also held that:

It is now settled that, conformably to Article IX-B, Section 2(1), [of the 1987 Constitution] government-owned or controlled corporations shall be considered part of the Civil Service only if they have original charters, as distinguished from those created under general law.

PAGCOR belongs to the Civil Service because it was created directly by PD 1869 on July 11, 1983. Consequently, controversies concerning the relations of the employee with the management of PAGCOR should come under the jurisdiction of the Merit System Protection Board and the Civil Service Commission, conformably to the Administrative Code of 1987. Section 16(2) of the said Code vest in the Merit System Protection Board the power inter alia to: a) Hear and decide on appeal administrative cases involving officials and employees of the Civil Service. Its decision shall be final except those involving dismissal or separation from the service which may be appealed to the Commission. Applying this rule, we have upheld the jurisdiction of Civil Service Authorities, as against that of the labor authorities, in controversies involving the terms of employment, and other related issues, of the Civil Service official and employees... EO No. 292 provided that civil service employees have the right to present their complaints or grievances to management and have them adjudicated as expeditiously as possible in the best interest of the agency, the government as a whole, and the employee concerned. Such complaint or grievances shall be resolved at the lowest possible level in the department or agency, as the case may be, and the employee shall have the right to appeal such decision to higher authorities. In case any dispute remains unresolved after exhausting all the available remedies under existing laws and procedure, the parties may jointly refer the dispute in the Public Sector Labor Management Council for appropriate action.[23] In sum, the labor arbiter and the NLRC erred in taking cognizance of the complaint as jurisdiction over the complaint for illegal dismissal is lodged with the Civil Service Commission. The Court of Appeals likewise erred in sustaining the labor arbiter. WHEREFORE, the August 31, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 76995; and its December 13, 2004 Resolution, are ANNULLED and SET ASIDE. The complaint for illegal dismissal with prayer for reinstatement, payment of backwages and attorneys fees, is DISMISSED. SO ORDERED. CONSUELO YNARES-SANTIAGO Associate Justice Chief Justice

[1] Rollo, pp. 12-45. [2] Id. at 50-61. Penned by Associate Justice Delilah Vidallon-Magtolis and concurred in by Associate Justices Eliezer R. De Los Santos and Arturo D. Brion. [3] Id. at 63. [4] Id. at 117-128. [5] CA Rollo, p. 87. [6] Rollo, pp. 76-77. [7] Id. at 92. [8] GRANTING THE MINISTRY OF TOURISM, THROUGH THE PHILIPPINE TOURISM AUTHORITY (PTA), AUTHORITY TO ESTABLISH AND OPERATE A DUTY AND TAX FREE MERCHANDISING SYSTEM IN THE PHILIPPINES. [9] Section 1, EO No. 46. [10] REVISING THE CHARTER OF THE PHILIPPINE TOURISM AUTHORITY CREATED UNDER PRESIDENTIAL DECREE NO. 189, DATED MAY 11, 1973. [11] Section 28, PD No. 564. [12] Section 29, id. [13] Took effect on October 6, 1975. Superseded Republic Act No. 2260 or The Civil Service Act of 1959. [14] Section 2, Art. II, PD No. 807. [15] Section 4, Art. IV, id. [16] Section 3, Art. III, id. [17] PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO ORGANIZE OF GOVERNMENT EMPLOYEES, CREATING A PUBLIC SECTION LABOR-MANAGEMENT COUNCIL, AND FOR OTHER PURPOSES. Took effect June 1, 1987. [18] Section 1, EO No. 180. [19] Section 16, id. [20] Section 12(11), Chapter 3, Book V, EO No. 292. [21] G.R. No. 104389, May 27, 1994, 232 SCRA 587, 591. [22] G.R. No. 93396, September 30, 1991, 202 SCRA 191, 194. [23] Section 27, Chapter 5, Book V, EO No. 292.

SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), DIONISIO T. BAYLON, RAMON MODESTO, JUANITO MADURA, REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO ARANETA, PLACIDO AGUSTIN, VIRGILIO MAGPAYO, petitioners, vs. THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C. PERALEJO RTC, BRANCH 98, QUEZON CITY, respondents. 1989 Jul 28 3rd Division G.R. No. 85279 DECISION CORTES, J.: Primarily, the issue raised in this petition is whether or not the Regional Trial Court can enjoin the Social Security System Employees Association (SSSEA) from striking and order the striking employees to return to work. Collaterally, it is whether or not employees of the Social Security System (SSS) have the right to strike. The antecedents are as follows: On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a complaint for damages with a prayer for a writ of preliminary injunction against petitioners, alleging that on June 9, 1987, the officers and members of SSSEA staged an illegal strike and barricaded the entrances to the SSS Building, preventing non-striking employees from reporting for work and SSS members from transacting business with the SSS; that the strike was reported to the Public Sector Labor-Management Council, which ordered the strikers to return to work; that the strikers refused to return to work; and that the SSS suffered damages as a result of the strike. The complaint prayed that a writ of preliminary injunction be issued to enjoin the strike and that the strikers be ordered to return to work; that the defendants (petitioners herein) be ordered to pay damages; and that the strike be declared illegal. It appears that the SSSEA went on strike after the SSS failed to act on the union's demands, which included: implementation of the provisions of the old SSS-SSSEA collective bargaining agreement (CBA) on check-off of union dues; payment of accrued overtime pay, night differential pay and holiday pay; conversion of temporary or contractual employees with six (6) months or more of service into regular and permanent employees and their entitlement to the same salaries, allowances and benefits given to other regular employees of the SSS; and payment of the children's allowance of P30.00, and after the SSS deducted certain amounts from the salaries of the employees and allegedly committed acts of discrimination and unfair labor practices [Rollo, pp. 21-24]. The court a quo, on June 11, 1987, issued a temporary restraining order pending resolution of the application for a writ of preliminary injunction [Rollo, p. 71.] In the meantime, petitioners filed a motion to dismiss alleging the trial court's lack of jurisdiction over the subject matter [Rollo, pp. 72-82.] To this motion, the SSS filed an opposition, reiterating its prayer for the issuance of a writ of injunction [Rollo, pp. 209-222]. On July 22, 1987, in a four-page order, the court a quo denied the motion to dismiss and converted the restraining order into an injunction upon posting of a bond, after finding that the strike was illegal [Rollo, pp. 83-86]. As petitioners' motion for the reconsideration of the aforesaid order was also denied on August 14, 1988 [Rollo, p. 94], petitioners filed a petition for certiorari and prohibition with preliminary injunction before this Court. Their petition was docketed as G.R. No. 79577. In a resolution dated October 21, 1987, the Court, through the Third Division, resolved to refer the case to the Court of Appeals. Petitioners filed a motion for reconsideration thereof, but during its pendency the Court of Appeals on March 9, 1988 promulgated its decision on the referred case [Rollo, pp. 130-137]. Petitioners moved to recall the Court of Appeals' decision. In the meantime, the Court on June 29, 1988 denied the motion for reconsideration in G.R. No. 97577 for being moot and academic. Petitioners' motion to recall the decision of the Court of Appeals was also denied in view of this Court's denial of the motion for reconsideration [Rollo, pp. 141-143]. Hence, the instant petition to review the decision of the Court of Appeals [Rollo, pp. 12-37]. Upon motion of the SSS on February 6, 1989, the Court issued a temporary restraining order enjoining the petitioners from staging another strike or from pursuing the notice of strike they filed with the Department of Labor and Employment on January 25, 1989 and to maintain the status quo [Rollo, pp. 151-152]. The Court, taking the comment as answer, and noting the reply and supplemental reply filed by petitioners, considered the issues joined and the case submitted for decision. The position of the petitioners is that the Regional Trial Court had no jurisdiction to hear the case initiated by the SSS and to issue the restraining order and the writ of preliminary injunction, as jurisdiction lay with the Department of Labor and Employment or the National Labor Relations Commission, since the case involves a labor dispute. On the other hand, the SSS advances the contrary view, on the ground that the employees of the SSS are covered by civil service laws and rules and regulations, not the Labor Code, therefore they do not have the right to strike. Since neither the DOLE nor the NLRC has jurisdiction over the dispute, the Regional Trial Court may enjoin the employees from striking. In dismissing the petition for certiorari and prohibition with preliminary injunction filed by petitioners, the Court of Appeals held that since the employees of the SSS, are government employees, they are not allowed to strike, and may be enjoined by the Regional Trial Court, which had jurisdiction over the SSS' complaint for damages, from continuing with their strike. Thus, the sequential questions to be resolved by the Court in deciding whether or not the Court of Appeals erred is finding that the Regional Trial Court did not act without or in excess of jurisdiction when it took cognizance of the case and enjoined the strike are as follows: 1. Do the employees of the SSS have the right to strike? 2. Does the Regional Trial Court have jurisdiction to hear the case initiated by the SSS and to enjoin the strikers from continuing with the strike and to order them to return to work? These shall be discussed and resolved seriatim. I The 1987 Constitution, in the Article on Social Justice and Human Rights, provides that the State "shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law" [Art. XIII, Sec. 3]. By itself, this provision would seem to recognize the right of all workers and employees, including those in the public sector, to strike. But the Constitution itself fails to expressly confirm this impression, for in the Sub-Article on the Civil Service Commission, it provides, after defining the scope of the civil service as "all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters," that "[t]he right to self-organization shall not be denied to government employees" [Art. IX(B), Sec. 2(1) and (50)]. Parenthetically, the Bill of Rights also provides that "[t]he right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not abridged" [Art. III, Sec. 8]. Thus, while there is no question that the Constitution recognizes the right of government employees to organize, it is silent as to whether such recognition also includes the right to strike. Resort to the intent of the framers of the organic law becomes helpful in understanding the meaning of these provisions. A reading of the proceedings of the Constitutional Commission that drafted the 1987 Constitution would show that in recognizing the right of

government employees to organize, the commissioners intended to limit the right to the formation of unions or associations only, without including the right to strike. Thus, Commissioner Eulogio R. Lerum, one of the sponsors of the provision that "[t]he right to self-organization shall not be denied to government employees" [Art. IX(B), Sec. 2(5)], in answer to the apprehensions expressed by Commissioner Ambrosio B. Padilla, VicePresident of the Commission, explained: MR. LERUM. I think what I will try to say will not take that long. When we proposed this amendment providing for self-organization of government employees, it does not mean that because they have the right to organize, they also have the right to strike. That is a different matter. We are only talking about organizing, uniting as a union. With regard to the right to strike, everyone will remember that in the Bill of Rights, there is a provision that the right to form associations or societies whose purpose is not contrary to law shall not be abridged. Now then, if the purpose of the state is to prohibit the strikes coming from employees exercising government functions, that could be done because the moment that is prohibited, then the union which will go on strike will be an illegal union. And that provision is carried in Republic Act 875. In Republic Act 875, workers, including those from the government-owned and controlled, are allowed to organize but they are prohibited from striking. So, the fear of our honorable Vice-President is unfounded. It does not mean that because we approve this resolution, it carries with it the right to strike. That is a different matter. As a matter of fact, that subject is now being discussed in the Committee on Social Justice because we are trying to find a solution to this problem. We know that this problem exists; that the moment we allow anybody in the government to strike, then what will happen if the members of the Armed Forces will go on strike? What will happen to those people trying to protect us? So that is a matter of discussion in the Committee on Social Justice. But, I repeat, the right to form an organization does not carry with it the right to strike. [Record of the Constitutional Commission, vol. I, p. 569]. It will be recalled that the Industrial Peace Act (C.A. No. 875), which was repealed by the Labor Code (PAD. 442) in 1974, expressly banned strikes by employees in the Government, including instrumentalities exercising governmental functions, but excluding entities entrusted with proprietary functions: Sec. 11. Prohibition Against Strikes in the Government. The terms and conditions of employment in the Government, including any political subdivision or instrumentality thereof, are governed by law and it is declared to be the policy of this Act that employees therein shall not strike for the purpose of securing changes or modification in their terms and conditions of employment. Such employees may belong to any labor organization which does not impose the obligation to strike or to join in strike: Provided, however, That this section shall apply only to employees employed in governmental functions and not those employed in proprietary functions of the Government including but not limited to governmental corporations. No similar provision is found in the Labor Code, although at one time it recognized the right of employees of government corporations established under the Corporation Code to organize and bargain collectively and those in the civil service to "form organizations for purposes not contrary to law" [Art. 244, before its amendment by B.P. Blg. 70 in 1980], in the same breath it provided that "[t]he terms and conditions of employment of all government employees, including employees of government owned and controlled corporations, shall be governed by the Civil Service Law, rules and regulations" [now Art. 276]. Understandably, the Labor Code is silent as to whether or not government employees may strike, for such are excluded from its coverage [Ibid]. But then the Civil Service Decree [P.D. No. 807], is equally silent on the matter. On June 1, 1987, to implement the constitutional guarantee of the right of government employees to organize, the President issued E.O. No. 180 which provides guidelines for the exercise of the right to organize of government employees. In Section 14 thereof, it is provided that "[t]he Civil Service law and rules governing concerted activities and strikes in the government service shall be observed, subject to any legislation that may be enacted by Congress." The President was apparently referring to Memorandum Circular No. 6, s. 1987 of the Civil Service Commission under date April 21, 1987 which, "prior to the enactment by Congress of applicable laws concerning strike by government employees . . . enjoins under pain of administrative sanctions, all government officers and employees from staging strikes, demonstrations, mass leaves, walk-outs and other forms of mass action which will result in temporary stoppage or disruption of public service." The air was thus cleared of the confusion. At present, in the absence of any legislation allowing government employees to strike, recognizing their right to do so, or regulating the exercise of the right, they are prohibited from striking, by express provision of Memorandum Circular No. 6 and as implied in E.O. No. 180. [At this juncture, it must be stated that the validity of Memorandum Circular No. 6 is not at issue]. But are employees of the SSS covered by the prohibition against strikes? The Court is of the considered view that they are. Considering that under the 1987 Constitution "[t]he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters" [Art. IX(B), Sec. 2(1); see also Sec. 1 of E.O. No. 180 where the employees in the civil service are denominated as "government employees"] and that the SSS is one such government-controlled corporation with an original charter, having been created under R.A. No. 1161, its employees are part of the civil service [NASECO v. NLRC, G.R. Nos. 69870 & 70295, November 24, 1988] and are covered by the Civil Service Commission's memorandum prohibiting strikes. This being the case, the strike staged by the employees of the SSS was illegal. The statement of the Court in Alliance of Government Workers v. Minister of Labor and Employment [G.R. No. 60403, August 3, 1983, 124 SCRA 1] is relevant as it furnishes the rationale for distinguishing between workers in the private sector and government employees with regard to the right to strike: The general rule in the past and up to the present is that "the terms and conditions of employment in the Government, including any political subdivision or instrumentality thereof are governed by law" (Section 11, the Industrial Peace Act, R.A. No. 875, as amended and Article 277, the Labor Code, P.D. No. 442, as amended). Since the terms and conditions of government employment are fixed by law, government workers cannot use the same weapons employed by workers in the private sector to secure concessions from their employers. The principle behind labor unionism in private industry is that industrial peace cannot be secured through compulsion by law. Relations between private employers and their employees rest on an essentially voluntary basis. Subject to the minimum requirements of wage laws and other labor and welfare legislation, the terms and conditions of employment in the unionized private sector are settled through the process of collective bargaining. In government employment, however, it is the legislature and, where properly given delegated power, the administrative heads of government which fix the terms and conditions of employment. And this is effected through statutes or administrative circulars, rules, and regulations, not through collective bargaining agreements. [At p. 13]. Apropos is the observation of the Acting Commissioner of Civil Service, in his position paper submitted to the 1971 Constitutional Convention, and quoted with approval by the Court in Alliance, to wit: It is the stand, therefore, of this Commission that by reason of the nature of the public employer and the peculiar character of the public service, it must necessarily regard the right to strike given to unions in private industry as not applying to public employees and civil service employees. It has been stated that the Government, in contrast to the private employer, protects the interest of all people in the public service, and that accordingly, such conflicting interests as are present in private labor relations could not exist in the relations between government and those whom they employ. [At pp. 16-17; also quoted in National Housing Corporation v. Juco, G.R. No. 64313 January 17, 1985, 134 SCRA 172, 178-179]. E.O. No. 180, which provides guidelines for the exercise of the right to organize of government employees, while clinging to the same philosophy, has, however, relaxed the rule to allow negotiation where the terms and conditions of employment involved are not among those fixed by law. Thus:

SECTION 13. Terms and conditions of employment or improvements thereof, except those that are fixed by law, may be the subject of negotiations between duly recognized employees' organizations and appropriate government authorities. The same executive order has also provided for the general mechanism for the settlement of labor disputes in the public sector, to wit: SECTION 16. The Civil Service and labor laws and procedures, whenever applicable, shall be followed in the resolution of complaints, grievances and cases involving government employees. In case any dispute remains unresolved after exhausting all the available remedies under existing laws and procedures, the parties may jointly refer the dispute to the [Public Sector Labor-Management] Council for appropriate action. Government employees may, therefore, through their unions or associations, either petition the Congress for the betterment of the terms and conditions of employment which are within the ambit of legislation or negotiate with the appropriate government agencies for the improvement of those which are not fixed by law. If there be any unresolved grievances, the dispute may be referred to the Public Sector Labor-Management Council for appropriate action. But employees in the civil service may not resort to strikes, walkouts and other temporary work stoppages, like workers in the private sector, to pressure the Government to accede to their demands. As now provided under Sec. 4, Rule III of the Rules and Regulations to Govern the Exercise of the Right of Government Employees to Self-Organization, which took effect after the instant dispute arose, "[t]he terms and conditions of employment in the government, including any political subdivision or instrumentality thereof and government-owned and controlled corporations with original charters are governed by law and employees therein shall not strike for the purpose of securing changes thereof." II The strike staged by the employees of the SSS belonging to petitioner union being prohibited by law, an injunction may be issued to restrain it. It is futile for the petitioners to assert that the subject labor dispute falls within the exclusive jurisdiction of the NLRC and, hence, the Regional Trial Court had no jurisdiction to issue a writ of injunction enjoining the continuance of the strike. The Labor Code itself provides that terms and conditions of employment of government employees shall be governed by the Civil Service Law, rules and regulations [Art. 276]. More importantly, E.O. No. 180 vests the Public Sector Labor-Management Council with jurisdiction over unresolved labor disputes involving government employees [Sec. 16]. Clearly, the NLRC has no jurisdiction over the dispute. This being the case, the Regional Trial Court was not precluded, in the exercise of its general jurisdiction under B.P. Blg. 129, as amended, from assuming jurisdiction over the SSS's complaint for damages and issuing the injunctive writ prayed for therein. Unlike the NLRC, the Public Sector Labor-Management Council has not been granted by law authority to issue writs of injunction in labor disputes within its jurisdiction. Thus, since it is the Council, and not the NLRC, that has jurisdiction over the instant labor dispute, resort to the general courts of law for the issuance of a writ of injunction to enjoin the strike is appropriate. Neither could the court a quo be accused of imprudence or overzealousness, for in fact it had proceeded with caution. Thus, after issuing a writ of injunction enjoining the continuance of the strike to prevent any further disruption of public service, the respondent judge, in the same order, admonished the parties to refer the unresolved controversies emanating from their employer-employee relationship to the Public Sector Labor-Management Council for appropriate action [Rollo, p. 86]. III In their "Petition/Application for Preliminary and Mandatory Injunction," and reiterated in their reply and supplemental reply, petitioners allege that the SSS unlawfully withheld bonuses and benefits due the individual petitioners and they pray that the Court issue a writ of preliminary prohibitive and mandatory injunction to restrain the SSS and its agents from withholding payment thereof and to compel the SSS to pay them. In their supplemental reply, petitioners annexed an order of the Civil Service Commission, dated May 5, 1989, which ruled that the officers of the SSSEA who are not preventively suspended and who are reporting for work pending the resolution of the administrative cases against them are entitled to their salaries, year-end bonuses and other fringe benefits and affirmed the previous order of the Merit Systems Promotion Board. The matter being extraneous to the issues elevated to this Court, it is Our view that petitioners' remedy is not to petition this Court to issue an injunction, but to cause the execution of the aforesaid order, if it has already become final. WHEREFORE, no reversible error having been committed by the Court of Appeals, the instant petition for review is hereby DENIED and the decision of the appellate court dated March 9, 1988 in CA-G.R. SP No. 13192 is AFFIRMED. Petitioners' "Petition/Application for Preliminary and Mandatory Injunction" dated December 13, 1988 is DENIED. SO ORDERED. Fernan, (C.J.), Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

LUZ LUMANTA, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and FOOD TERMINAL, INC., respondents. 1989 Feb 8 3rd Division G.R. No. 82819 RESOLUTION FELICIANO, J.: The present Petition for Certiorari seeks to annul and set aside the Decision of the National Labor Relations Commission rendered on 18 March 1988 in NLRC-NCR Case No. 00-03-01035-87, entitled "Luz Lumanta, et al., versus Food Terminal Incorporated." The Decision affirmed an order of the Labor Arbiter dated 31 August 1987 dismissing petitioners' complaint for lack of jurisdiction. On 20 March 1987, petitioner Luz Lumanta, joined by fifty-four (54) other retrenched employees, filed a complaint for unpaid retrenchment or separation pay against private respondent Food Terminal, Inc. ("FTI") with the Department of Labor and Employment. The complaint was later amended to include charges of underpayment of wages and non-payment of emergency cost of living allowances (ECOLA). Private respondent FTI moved to dismiss the complaint on the ground of lack of jurisdiction. It argued that being a governmentowned and controlled corporation, its employees are governed by the Civil Service Law not by the Labor Code, and that claims arising from employment fall within the jurisdiction of the Civil Service Commission and not the Department of Labor and Employment. The petitioners opposed the Motion to Dismiss contending although FTI is a corporation owned and controlled by the government, it has still the marks of a private corporation: it directly hires its employees without seeking approval from the Civil Service Commission and its personnel are covered by the Social Security System and not the Government Service Insurance System. Petitioners also argued that being a government-owned and controlled corporation without original charter, private respondent FTI clearly falls outside the scope of the civil service as marked out in Section 2 (1), Article IX of the 7 Constitution. On 31 August 1987, Labor Arbiter Isabel P. Oritiguerra issued an Order, 1 the dispositive part of which read: "On account of the above findings the instant case is governed by Civil Service Law. The case at bar lies outside the jurisdictional competence of this Office. WHEREFORE, premises considered this case is hereby directed to be DISMISSED for lack of jurisdiction of this Office to hear and decide the case. SO ORDERED." On 18 March 1988, the public respondent National Labor Relations Commission affirmed on appeal the order of the or Arbiter and dismissed the petitioners' appeal for lack of merit. Hence this Petition for Certiorari. The only question raised in the present Petition is whether lot a labor law claim against a government-owned and controlled corporation, such as private respondent FTI, falls within jurisdiction of the Department of Labor and Employment. In refusing to take cognizance of petitioners' complaint against late respondent, the Labor Arbiter and the National Labor Relations Commission relied chiefly on this Court's ruling in National Housing Authority v. Juco, 2 which held that "there should no longer be any question at this time that employees of government-owned or controlled corporations are governed by civil service law and civil service rules and regulations." Juco was decided under the 1973 Constitution, Article II-B, Section 1 (1) of which provided: "The civil service embraces every branch, agency, subdivision, and instrumentality of the Government, including every governmentowned or controlled corporation." The 1987 Constitution which took effect on 2 February 1987, has on this point a notably different provision which reads: "The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including governmentowned or controlled corporations with original charter." (Article IX-B, Section 2 [1]). The Court, in National Service Corporation (NASECO) v. National Labor Relations Commission, G.R. No. 69870, promulgated on 29 November 1988, 3 quoting extensively from the deliberations 4 of the 1986 Constitutional Commission in respect of the intent and meaning of the new phrase "with original charter," in effect held that government owned and controlled corporations with original charter refer to corporations chartered by special law as distinguished from corporations organized under our general incorporation statute-the Corporation Code. In NASECO, the company involved had been organized under the general incorporation statute and was a subsidiary of the National Investment Development Corporation (NIDC) which in turn was a subsidiary of the Philippine National Bank, a bank chartered by a special statute. Thus, government-owned or controlled corporations like NASECO are effectively excluded from the scope of the Civil Service. It is the 1987 Constitution, and not the case law embodied in Juco, 5 which applies in the case at bar, under the principle that jurisdiction is determined as of the time of the filing of the complaint. 6 At the time the complaint against private respondent FTI was filed (i.e., 20 March 1987), and at the time the decisions of the respondent Labor Arbiter and National Labor Relations Commission were rendered (i.e., 31 August 1987 and 18 March 1988, respectively), the 1987 Constitution had already come into effect. Letter of Instruction No. 1013, dated 19 April 1980, included Food Terminal, Inc. in the category of "government-owned or controlled corporations." 7 Since then, FTI served as the marketing arm of the National Grains Authority (now known as the National Food Authority). The pleadings show that FTI was previously a privately owned enterprise, created and organized under the general incorporation law, with the corporate name "Greater Manila Food Terminal Market, Inc." 8 The record does not indicate the precise amount of the capital stock of FTI that is owned by the government; the petitioners' claim, and this has not been disputed, that FTI is not hundred percent (100%) government-owned and that it has some private shareholders. We conclude that because respondent FTI is government-owned and controlled corporation without original charter, it is the Department of Labor and Employment, and not the Civil Service Commission, which has jurisdiction over the dispute arising from employment of the petitioners with private respondent FTI, and that consequently, the terms and conditions of such employment are governed by the Labor Code and not by the Civil Service Rules and Regulations. Public respondent National Labor Relations Commission acted without or in excess of its jurisdiction in dismissing petitioners' complaint. ACCORDINGLY, the Petition for Certiorari is hereby GRANTED and the Decision of public respondent Labor Arbiter dated 31 August 1987 and the Decision of public respondent Commission dated 18 March 1988, both in NLRC-NCR Case No. 00-03-01035-87 are hereby SET ASIDE. The case is hereby REMANDED to the Labor Arbiter for further appropriate proceedings.

Fernan (C.J.), Gutierrez, Jr., Bidin, and Cortes, JJ., concur. --------------Footnotes 1. Rollo, p. 18. 2. 134 SCRA 172 (1985). 3. Consolidated with Engenia C. Credo v. National Labor Relations Commission, G.R. No. 70295. 4. Record of the Constitutional Commission, Volume I, pp. 583-585; Deliberations were held on 15 July 1986. 5. The public respondents overlooked the fact that even in this case which they had chiefly relied upon in throwing out petitioners' complaint, the Court made it clear that its decision "refers [only] to corporations claimed as government owned or controlled entity. It does not cover cases involving private firms taken over by the government in foreclosure or similar proceedings." (134 SCRA at 172 [1985]). 6. Lee v. Municipal Trial Court of Legaspi City, Branch I, 145 SCRA 408 (1986); People v. Mariano, 71 SCRA 600 (1976); Laperal v. Cruz, 63 SCRA 329 (1975); People v. Fontanilla, 23 SCRA 1227 (1968); and Rilloraza v. Arciaga, 21 SCRA 717 (1967). 7. Rollo, p. 18. 8. Rollo, p. 69.

SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT (SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL CUEVAS (HEAD, ADMINISTRATIVE DIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND JUVENAL LAZAGA, respondents. 1992 Feb 14 2nd Division G.R. No. 86773 DECISION NOCON, J.: This is a petition for certiorari to annul and set aside the July 26, 1988 decision of the National Labor Relations Commission sustaining the labor arbiter, in holding herein petitioners Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDECAQD), Dr. Flor Lacanilao, Rufil Cuevas and Ben de los Reyes liable to pay private respondent Juvenal Lazaga the amount of P126,458.89 plus interest thereon computed from May 16, 1986 until full payment thereof is made, as separation pay and other postemployment benefits, and the resolution denying the petitioners' motion for reconsideration of said decision dated January 9, 1989. The antecedent facts of the case are as follows: SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development Center, organized through an agreement entered into in Bangkok, Thailand on December 28, 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country (Article 1, Agreement Establishing the SEAFDEC). On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate on a probationary basis by the SEAFDEC-AQD and was appointed Senior External Affairs Officer on January 5, 1983 with a monthly basic salary of P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed to the position of Professional III and designated as Head of External Affairs Office with the same pay and benefits. On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to private respondent informing him that due to the financial constraints being experienced by the department, his services shall be terminated at the close of office hours on May 15, 1986 and that he is entitled to separation benefits equivalent to one (1) month of his basic salary for every year of service plus other benefits (Rollo, p. 153). Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the latter filed on March 18, 1987 a complaint against petitioners for non-payment of separation benefits plus moral damages and attorney's fees with the Arbitration Branch of the NLRC (Annex "C" of Petition for Certiorari). Petitioners in their Answer with counterclaim alleged that the NLRC has no jurisdiction over the case inasmuch as the SEAFDEC-AQD is an international organization and that private respondent must first secure clearances from the proper departments for property or money accountability before any claim for separation pay will be paid, and which clearances had not yet been obtained by the private respondent. A formal hearing was conducted whereby private respondent alleged that the non-issuance of the clearances by the petitioners was politically motivated and in bad faith. On the other hand, petitioners alleged that private respondent has property accountability and an outstanding obligation to SEAFDEC-AQD in the amount of P27,532.11. Furthermore, private respondent is not entitled to accrued sick leave benefits amounting to P44,000.00 due to his failure to avail of the same during his employment with the SEAFDEC-AQD (Annex "D", Id.). On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of which reads: "WHEREFORE, premises considered, judgment is hereby rendered ordering respondents: 1. To pay complainant P126,458.89, plus legal interest thereon computed from May 16, 1986 until full payment thereof is made, as separation pay and other post-employment benefits; 2. To pay complainant actual damages in the amount of P50,000, plus 10% attorney's fees. All other claims are hereby dismissed. SO ORDERED." (Rollo, p. 51. Annex "E"). On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except as to the award of P50,000.00 as actual damages and attorney's fees for being baseless. (Annex "A", p. 28, id.). On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G". id.) which was denied on January 9, 1989. Thereafter, petitioners instituted this petition for certiorari alleging that the NLRC has no jurisdiction to hear and decide respondent Lazaga's complaint since SEAFDEC-AQD is immune fro suit owing to its international character and the complaint is in effect a suit against the State which cannot be maintained without its consent. The petition is impressed with merit. Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent NLRC. It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia, Japan, Kingdom of Laos, Malaysia, Republic of the Philippines, Republic of Singapore, Kingdom of Thailand and Republic of Vietnam (Annex "H", Petition). The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on January 16, 1968. Its purpose is as follows: "The purpose of the Center is to contribute to the promotion of the fisheries development in Southeast Asia by mutual cooperation among the member governments of the Center, hereinafter called the 'Members', and through collaboration with international organizations and governments external to the Center. (Agreement Establishing the SEAFDEC, Art. 1; Annex "H", Petition)" (p. 310, Rollo). SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in Kuala Lumpur, Malaysia as one of the principal departments of SEAFDEC (Annex "I", id.) to be established in Iloilo for the promotion of research in aquaculture. Paragraph 1, Article 6 of the Agreement establishing SEAFDEC mandates: "1. The Council shall be the supreme organ of the Center and all powers of the Center shall be vested in the Council." Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located.

As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public International Law (p, 83. 1956 ed.): "Permanent international commissions and administrative bodies have been created by the agreement of a considerable number of States for a variety of international purposes, economic or social and mainly non-political. Among the notable instances are the International Labor Organization, the International Institute of Agriculture, the International Danube Commission. In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical personality independent of the municipal law of the State where they are situated. As such, according to one leading authority they must be deemed to possess a species of international personality of their own.' (Salonga and Yap, Public International Law, 83 [1956 ed.])". Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by one Director in the governing SEAFDEC Council (Agreement Establishing SEAFDEC, Art. 5, Par. 1, Annex "H", ibid) and that its national laws and regulations shall apply only insofar as its contribution to SEAFDEC of "an agreed amount of money, movable and immovable property and services necessary for the establishment and operation of the Center" are concerned (Art. 11, ibid). It expressly waived the application of the Philippine laws on the disbursement of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292). The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over SEAFDEC-AQD in Opinion No. 139, Series of 1984 "4. One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-44) The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization: besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states. In the case at bar, for instance, the entertainment by the National Labor Relations Commission of Mr. Madamba's reinstatement cases would amount to interference by the Philippine Government in the management decisions of the SEARCA governing board; even worse, it could compromise the desired impartiality of the organization since it will have to suit its actuations to the requirements of Philippine law, which may not necessarily coincide with the interests of the other member-states. It is precisely to forestall these possibilities that in cases where the extent of the immunity is specified in the enabling instruments of international organizations, jurisdictional immunity is specified in the enabling instruments of international organizations, jurisdictional immunity from the host country is invariably among the first accorded. (See Jenks, Id.; See also Bowett, The Law of International Institutions, pp. 284-1285)." Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs. Ramirez, this Court held: "A rule, that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstances involved in Sibonghanoy which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel." (Calimlim vs. Ramirez, G.R. No. L-34362, 118 SCRA 399 [1982]). Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147 SCRA 286 [1987]) to justify its assumption of jurisdiction over SEAFDEC is misplaced. On the contrary, the court in said case explained why it took cognizance of the case. Said the Court: "We would note, finally, that the present petition relates to a controversy between two claimants to the same position: this is not a controversy between the SEAFDEC on the one hand, and an officer or employee, or a person claiming to be an officer or employee, of the SEAFDEC, on the other hand. There is before us no question involving immunity from the jurisdiction of the Court, there being no plea for such immunity whether by or on behalf of SEAFDEC, or by an official of SEAFDEC with the consent of SEAFDEC (Id., at 300; mphasis supplied)." WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the courts or local agency of the Philippine government, the questioned decision and resolution of the NLRC dated July 26, 1988 and January 9, 1989, respectively, are hereby REVERSED and SET ASIDE for having been rendered without jurisdiction. No costs. SO ORDERED. Melencio-Herrera (Chairman), Paras, Padilla and Regalado, JJ., concur.

INTERNATIONAL CATHOLIC MIGRATION COMMISSION, petitioner, vs. HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU, respondents. 1990 Sep 28 2nd Division G.R. Nos. 85750 DECISION MELENCIO-HERRERA, J.: Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by the International Catholic Migration Commission (ICMC) and the International Rice Research Institute, Inc. (IRRI) from the application of Philippine labor laws. Facts and Issues A. G.R. No. 85750 I the International Catholic Migration Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's communist rule confronted the international community. In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine Government and the United Nations High Commissioner for Refugees whereby an operating center for processing Indo-Chinese refugees for eventual resettlement to other countries was to be established in Bataan (Annex "A," Rollo, pp. 22-32). ICMC was one of those accredited by the Philippine Government to operate the refugee processing center in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a non-profit agency involved in international humanitarian and voluntary work. It is duly registered with the United Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. As an international organization rendering voluntary and humanitarian services in the Philippines, its activities are parallel to those of the International Committee for Migration (ICM) and the International Committee of the Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. I]. On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministry of Labor and Employment a Petition for Certification Election among the rank and file members employed by ICMC. The latter opposed the petition on the ground that it is an international organization registered with the United Nations and, hence, enjoys diplomatic immunity. On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for lack of jurisdiction. On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-Arbiter's Decision and ordered the immediate conduct of a certification election. At that time, ICMC's request for recognition as a specialized agency was still pending with the Department of Foreign Affairs (DEFORAF). Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted ICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, as evidenced by a Memorandum of Agreement between the Government and ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra. ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking the immunity expressly granted but the same was denied by respondent BLR Director who, again, ordered the immediate conduct of a pre-election conference. ICMC's two Motions for Reconsideration were denied despite an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violated ICMC's diplomatic immunity. Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction assailing the BLR Order. On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the certification election. On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of the Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive department with the competence and authority to act on matters involving diplomatic immunity and privileges, and tasked with the conduct of Philippine diplomatic and consular relations with foreign governments and UN organizations, it has a legal interest in the outcome of this case. Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention. On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal of memoranda by the parties, which has been complied with. As initially stated, the issue is whether or not the grant of diplomatic privileges and immunities to ICMC extends to immunity from the application of Philippine labor laws. ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the Philippine Government giving it the status of a specialized agency, (infra); (2) the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949 (the Philippine Instrument of Ratification was signed by the President on 30 August 1949 and deposited with the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the generally accepted principles of international law as part of the law of the land. Intervenor DEFORAF upholds ICMC's claim of diplomatic immunity and seeks an affirmance of the DEFORAF determination that the BLR Order for a certification election among the ICMC employees is violative of the diplomatic immunity of said organization. Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policy and Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and Article III, Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid. In addition, she contends that a certification election is not a litigation but a mere investigation of a non-adversary, fact-finding character. It is not a suit against ICMC, its property, funds or assets, but is the sole concern of the workers themselves. B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989, resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered case pending with the Second Division, upon manifestation by the Solicitor General that both cases involve similar issues. The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller Foundations signed a Memorandum of Understanding establishing the International Rice Research Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free non-profit, non-stock organization designed to carry out the principal objective of conducting "basic research on the rice plant, on all phases of rice production, management, distribution and utilization with a view to

attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing areas through improvement in quality and quantity of rice." Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an international organization. The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI. On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office of the Department of Labor and Employment (DOLE). IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international organization and granting it immunity from all civil, criminal and administrative proceedings under Philippine laws. On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No. 1620 and dismissed the Petition for Direct Certification. On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's Order and authorized the calling of a certification election among the rank-and-file employees of IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra, and Article XIII, Section 3 of the 1987 Constitution, 1 and held that "the immunities and privileges granted to IRRI do not include exemption from coverage of our Labor Laws." Reconsideration sought by IRRI was denied. On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order, dismissed the Petition for Certification Election, and held that the grant of specialized agency status by the Philippine Government to the IRRI bars DOLE from assuming and exercising jurisdiction over IRRI. Said Resolution reads in part as follows: "Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges and immunities of an international organization is clear and explicit. It provides in categorical terms that: "Art. 3 The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as immunity has been expressly waived by the Director-General of the Institution or his authorized representative. "Verily, unless and until the Institute expressly waives its immunity, no summons, subpoena, orders, decisions or proceedings ordered by any court or administrative or quasi-judicial agency are enforceable as against the Institute. In the case at bar there was no such waiver made by the Director-General of the Institute. Indeed, the Institute, at the very first opportunity already vehemently questioned the jurisdiction of this Department by filing an ex-parte motion to dismiss the case." Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by respondent Secretary of Labor in upholding IRRI's diplomatic immunity. The Third Division, to which the case was originally assigned required the respondents to comment on the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it was "not adopting as his own" the decision of the BLR Director in the ICMC Case as well as the Comment of the Solicitor General sustaining said Director. The last pleading was filed by IRRI on 14 August 1990. Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be excused from filing a comment "it appearing that in the earlier case of International Catholic Migration Commission v. Hon. Pura Calleja, G.R. No. 85750, the Office of the Solicitor General had sustained the stand of Director Calleja on the very same issue now before it, which position has been superseded by respondent Secretary of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor General's prayer. The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse of discretion in dismissing the Petition for Certification Election filed by Kapisanan. Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges, prerogatives and immunities of an international organization, invoked by the Secretary of Labor, is unconstitutional in so far as it deprives the Filipino workers of their fundamental and constitutional right to form trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution. A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI's appeal from the Order of the Director of the Bureau of Labor Relations directing the holding of a certification election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of the Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final and unappealable and that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal. On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act. No. 6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the Med-Arbiter to the Office of the Secretary of Labor and Employment instead of to the Director of the Bureau of Labor Relations in cases involving certification election orders. Findings in Both Cases. III

There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI. Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides that ICMC shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19 on 17 May 1949, explicitly provides: "Article III, Section 4. The specialized agencies, their property and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case they have expressly waived their immunity. It is however, understood that no waiver of immunity shall extend to any measure of execution." Sec. 5. The premises of the specialized agencies shall be inviolable. The property and assets of the specialized agencies, wherever located and by whomsoever held shall be immune from search, requisition, confiscation, expropriation and any other form of interference, whether by executive, administrative, judicial or legislative action." IRRI is similarly situated. Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus: "Article 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as that immunity has been expressly waived by the Director-General of the Institute or his authorized representatives."

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC's invocation of immunity when in a Memorandum, dated 17 October 1988, it expressed the view that "the Order of the Director of the Bureau of Labor Relations dated 21 September 1988 for the conduct of Certification Election within ICMC violates the diplomatic immunity of the organization." Similarly, in respect of IRRI, the DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this particular instance." The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government that ICMC and IRRI enjoy immunities accorded to international organizations, which determination has been held to be a political question conclusive upon the Courts in order not to embarrass a political department of Government. "It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government as in the case at bar, it is then the duty of courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government . . . or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the executive arm of the government in conducting foreign relations, it is accepted doctrine that in such cases the judicial department of (this) government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction." 3 A brief look into the nature of international organizations and specialized agencies is in order. The term "international organization" is generally used to describe an organization set up by agreement between two or more states. 4 Under contemporary international law, such organizations are endowed with some degree of international legal personality 5 such that they are capable of exercising specific rights, duties and powers. 6 They are organized mainly as a means for conducting general international business in which the member states have an interest. 7 The United Nations, for instance, is an international organization dedicated to the propagation of world peace. "Specialized agencies" are international organizations having functions in particular fields. The term appears in Articles 57 8 and 63 9 of the Charter of the United Nations: "The Charter, while it invests the United Nations with the general task of promoting progress and international cooperation in economic, social, health, cultural, educational and related matters, contemplates that these tasks will be mainly fulfilled not by organs of the United Nations itself but by autonomous international organizations established by inter-governmental agreements outside the United Nations. There are now many such international agencies having functions in many different fields, e.g. in posts, telecommunications, railways, canals, rivers, sea transport, civil aviation, meteorology, atomic energy, finance, trade, education and culture, health and refugees. Some are virtually world-wide in their membership, some are regional or otherwise limited in their membership. The Charter provides that those agencies which have 'wide international responsibilities' are to be brought into relationship with the United Nations by agreements entered into between them and the Economic and Social Council, are then to be known as 'specialized agencies.'" 10 The rapid growth of international organizations under contemporary international law has paved the way for the development of the concept of international immunities. "It is now usual for the constitutions of international organizations to contain provisions conferring certain immunities on the organizations themselves, representatives of their member states and persons acting on behalf of the organizations. A series of conventions, agreements and protocols defining the immunities of various international organizations in relation to their members generally are now widely in force; . . ." 11 There are basically three propositions underlying the grant of international immunities to international organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international institutions should have a status which protects them against control or interference by any one government in the performance of functions for the effective discharge of which they are responsible to democratically constituted international bodies in which all the nations concerned are represented; 2) no country should derive any national financial advantage by levying fiscal charges on common international funds; and 3) the international organization should, as a collectivity of States members, be accorded the facilities for the conduct of its official business customarily extended to each other by its individual member States. 12 The theory behind all three propositions is said to be essentially institutional in character. "It is not concerned with the status, dignity or privileges of individuals, but with the elements of functional independence necessary to free international institutions from national control and to enable them to discharge their responsibilities impartially on behalf of all their members." 13 The raison d'etre for these immunities is the assurance of unimpeded performance of their functions by the agencies concerned. The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice a member States of the organization, and to ensure the unhampered performance of their functions. ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which are guarantee by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of the 1987 Constitution; and implemented by Articles 243 and 246 of the Labor Code, 16 relied on by the BLR Director and by Kapisanan. For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations 17 provides that "each specialized agency shall make provision for appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes of private character to which the specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement between ICMC and the Philippine Government, whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges and immunities accorded. Thus: "Article IV. Cooperation with Government Authorities. 1. The Commission shall cooperate at all times with the appropriate authorities of the Government to ensure the observance of Philippine laws, rules and regulations, facilitate the proper administration of justice and prevent the occurrences of any abuse of the privileges and immunities granted its officials and alien employees in Article III of this Agreement to the Commission. "2. In the event that the Government determines that there has been an abuse of the privileges and immunities granted under this Agreement, consultations shall be held between the Government and the Commission to determine whether any such abuse has occurred and, if so, the Government shall withdraw the privileges and immunities granted the Commission and its officials." Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there had been organized a forum for better management-employee relationship as evidenced by the formation of the Council of IRRI Employees and Management (CIEM) wherein "both management and employees were and still are represented for purposes of maintaining mutual and beneficial cooperation between IRRI and its employees." The existence of this Union factually and tellingly belies the argument that Pres. Decree No. 1620, which grants to IRRI the status, privileges and Immunities of an international organization, deprives its employees of the right to self-organization.

The immunity granted being "from every form of legal process except in so far as in any particular case they have expressly waived their immunity," it is inaccurate to state that a certification election is beyond the scope of that immunity for the reason that it is not a suit against ICMC. A certification election cannot be viewed as an independent or isolated process. It could trigger off a series of events in the collective bargaining process together with related incidents and/or concerted activities, which could inevitably involve ICMC in the "legal process," which includes "any penal, civil and administrative proceedings." The eventuality of Court litigation is neither remote and from which international organizations are precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional immunity are said to be standard provisions in the constitutions of international organizations. "The immunity covers the organization concerned, its property and its assets. It is equally applicable to proceedings in personam and proceedings in rem." 18 We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the case entitled "International Catholic Migration Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having taken cognizance of that dispute (on the issue of payment of salary for the unexpired portion of a six-month probationary employment), the Court is now estopped from passing upon the question of DOLE jurisdiction over ICMC. We find no merit to said submission. Not only did the facts of said controversy occur between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency with corresponding immunities, but also because ICMC in that case did not invoke its immunity and, therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly recognized as enjoying such immunity. Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR Director, dated 15 February 1989, had not become final because of a Motion for Reconsideration filed by IRRI. Said Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which provides for direct appeals from the Orders of the Med-Arbiter to the Secretary of Labor in certification election cases either from the order or the results of the election itself, was already in effect, specifically since 21 March 1989. Hence, no grave abuse of discretion may be imputed to respondent Secretary of Labor in his assumption of appellate jurisdiction, contrary to Kapisanan's allegations. The pertinent portion of that law provides: "Article 259. Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground that the rules and regulations or parts thereof established by the Secretary of Labor and Employment for the conduct of the election have been violated. Such appeal shall be decided within 15 calendar days". En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by two departments of the executive branch of government have been rectified and the resultant embarrassment to the Philippine Government in the eyes of the international community now, hopefully, effaced. WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the Bureau of Labor Relations for certification election is SET ASIDE, and the Temporary Restraining Order earlier issued is made PERMANENT. In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion having been committed by the Secretary of Labor and Employment in dismissing the Petition for Certification Election. No pronouncement as to costs. SO ORDERED. Padilla, Sarmiento and Regalado, JJ., concur. Paras, J., On leave. Footnotes 1. Article XIII, Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations and peaceful concerted activities including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. 2. RULE V. Section 7. Appeal : Any aggrieved party may appeal the order of the Med-Arbiter to the Bureau only on the following grounds: a) grave abuse of discretion and b) gross incompetence. The appeal shall specifically state the grounds relied upon by the appellant with supporting memorandum. Section 8. Where to file appeal : The appellant shall file his appeal which shall be under oath, in the Regional Office where the case originated, copy furnished the appellee. Section 9. Period to Appeal. : The appeal shall be filed within ten (10) working days from receipt of the Order by the appellant. Likewise, the appellee shall file his answer thereto within ten (10) working days from receipt of the appeal. The Regional Director shall immediately forward the entire records of the case to the Bureau. Section 10. Decision of the Bureau is final and unappealable. : The Bureau shall have twenty (20) working days within which to decide the appeal from receipt of the records of the case. The decision of the Bureau in all cases shall be final and unappealable. 3. World Health Organization and Dr. Leonce Verstuyft v. Hon. Benjamin Aquino, et al., L-35131, 29 November 1972, 48 SCRA 242.

4. MICHAEL AKEHURST, A MODERN INTRODUCTION TO INTERNATIONAL LAW (1984) at 69. 5. The leading judicial authority on the personality of international organizations is the advisory opinion given by the ICJ in the Reparation for Injuries Suffered in the Service of the United Nations Case ([1949] I.C.J. Rep 174) where the Court recognized the UN's international personality. 6. M. AKEHURST, supra, at 70. 7. J.L. BRIERLY, THE LAW OF NATIONS (1963) at 95. 8. Article 57. : 1. The various specialized agencies, established by intergovernmental agreement and having wide international responsibilities, as defined in their basic instruments, in economic, social cultural, educational, health, and related fields, shall be brought into relationship with the United Nations in accordance with the provisions of Article 63. agencies. 2. Such agencies thus brought into relationship with the United Nations are hereinafter referred to as specialized

9. Article 63. : 1. The Economic and Social Council may enter into agreements with any of the agencies referred to in Article 57 defining the terms on which the agency concerned shall be brought into relationship with the United Nations. Such agreements shall be subject to approval by the General Assembly. 2. It may co-ordinate the activities of the specialized agencies through consultation with and recommendations to such agencies and through recommendations to the General Assembly and to the Members of the United Nations. 10. BRIERLY, supra, at 121-122. 11. C. WILFRED JENKS, INTERNATIONAL IMMUNITIES (1961) at 2-3. 12. Ibid., at 17. 13. Ibid. 14. Article II, Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. 15. Article III, Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. 16. Article 243. Coverage and Employees' Right to Self-Organization. : All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite employees may form labor organizations for their mutual aid and protection. Article 246. Non-abridgement of Right to Self-organization. : It shall be unlawful for any person to restrain, coerce, discriminate against or unduly interfere with employees and workers in the exercise of the right to self-organization. Such right shall include the right to form, join, or assist labor organizations for the purpose of collective bargaining through representatives of their own choosing and to engage in lawful concerted activities for the same purpose or for their mutual aid and protection, subject to the provisions of Article 264 of this Code. 17. This Convention, adopted by the U.N. General Assembly on November 21, 1947, was concurred in by the Philippine Senate under Senate Resolution No. 21, dated 17 May 1949. The Philippine Instrument of Ratification was signed by the Philippine President on 21 February 1959. (Vol. 1, Phil. Treaty Series, p. 621). 18. JENKS, supra at 38.

BAGUIO WATER DISTRICT, petitioner, vs. HON. CRESENCIANO B. TRAJANO in his official capacity as the Director of the Bureau of Labor Relations of the Ministry of Labor and Employment, and BAGUIO WATER DISTRICT EMPLOYEES LABOR UNION, respondents. 1984 Feb 20 2nd Division G.R. No. L-65428 DECISION ABAD SANTOS, J.: This is a petition to review the decision of the public respondent which affirmed that of a Med-Arbiter calling for a certification election among the regular rank and file employees of the Baguio Water District (BWD). The Baguio Water District was formed pursuant to Title II Local Water District Law of P.D. No. 198, as amended. The BWD is by Sec. 6 of that decree "a quasi-public corporation performing public service and supplying public wants." A part of the public respondent's decision rendered in September, 1983, reads in part. "We find the appeal [of the BWD] to be devoid of merit. The records show that the operation and administration of BWD is governed and regulated by special laws, that is, Presidential Decrees Nos. 198 and 1497 which created local water districts throughout the country. Section 25 of Presidential Decree (PD) 198 clearly provides that the district and its employees shall be exempt from the provisions of the Civil Service Law and that its personnel below supervisory level shall have the right to collectively bargain. Contrary to appellant's claim, said provision has not been amended much more abrogated expressly or impliedly by PD 1497 which does not make mention of any matter on Civil Service Law or collective bargaining." (Rollo, p. 59.) We grant the petition for the following reasons: 1. Section 25 of P.D. No. 198 was repealed by Sec. 3 of P.D. No. 1479; Sec. 26 of P.D. NO. 198 was amended to read as Sec. 25 by Sec. 4 of P.D. No. 1479. The amendatory decree took effect on June 11, 1978. Sec. 25 of P.D. NO 198 was originally written as follows: "Sec. 25. Exemption from Civil Service. The district and its employees, being engaged in a proprietary function, are hereby exempt from the provisions of the Civil Service Law. Collective bargaining shall be available only to personnel below supervisory levels: Provided, however, That the total of all salaries, wages, emoluments, benefits or other compensation paid to all employees in any month shall not exceed fifty percent (50%) of average net monthly revenue, said net revenue representing income from water sales and sewerage service charges, less pro-rata share of debt service and expenses for fuel or energy for pumping during the preceding fiscal year." After P.D. No. 198 was amended by P.D. No. 1479, Sec. 25 now reads: "Sec. 25. Authorization. The district may exercise all the powers which are expressly granted by this Title or which are necessarily implied from or incidental to the powers and purposes herein stated. For the purpose of carrying out the objectives of this Act, a district is hereby granted the power of eminent domain, the exercise thereof shall, however, be subject to review by the Administration." It is obvious that the public respondent erred when he said: "Contrary to appellant's claim, said provision has not been amended much more abrogated expressly or impliedly by PD 1497 which does not make mention of any matter on Civil Service Law or collective bargaining." 2. The agencies of the Ministry of Labor and Employment do not compare notes. In NLRC Case No. RAB-I-0053-82, Beneco Employees Labor Union, et al. vs. Baguio Water District, the Second Division of the NLRC held: "Upon absorption of herein complainant by BWD by virtue of the terms of the aforementioned agreement, he automatically became a government employee. As such, his terms and conditions of employment are governed by the Civil Service law, rules and regulations and therefore any dispute or controversy arising from such employment status is removed from the jurisdiction of the Labor Arbiter and this Commission pursuant to Article 277 of the Labor Code, as amended, which We hereby reproduce below: 'ART. 277. Government employees. The terms and conditions of employment of all government employees, including employees of government-owned and controlled corporations, shall be governed by the Civil Service Law, rules and regulations. Their salaries shall be standardized by the National Assembly as provided for in the New Constitution. However, there shall be no reduction of existing wages, benefits and other terms and conditions of employment being enjoyed by them at the time of the adoption of the Code.' "As one of the issues raised before Us in this appeal is one of jurisdiction, We rule to dismiss the above entitled case based on the ground of lack of jurisdiction. "WHEREFORE, the appealed Decision is hereby Reversed. Case dismissed for lack of jurisdiction." (Rollo, p. 64.) The Union appealed to this Court but in G.R No. 63184 a resolution dated April 24, 1983, dismissed its appeal for lack of merit. 3. The BWD is a corporation created pursuant to a special law P.D. No. 198, as amended. As such its officers and employees are part of the Civil Service. (Sec. 1, Art. XII-B, Constitution; P.D. No. 868.). WHEREFORE, the petition is granted and the questioned decision of the public respondent is hereby set aside. No costs. SO ORDERED. Aquino, Concepcion, Jr., Guerrero, De Castro and Escolin, JJ., concur. Makasiar (Chairman), J., I reserve my vote.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LOMA GOCE y OLALIA, DAN GOCE and NELLY D. AGUSTIN, accused. 1995 Aug 29 2nd Division G.R. No. 113161 DECISION REGALADO, J.: On January 12, 1988, an information for illegal recruitment committed by a syndicate and in a large scale, punishable under Articles 38 and 39 of the Labor Code (Presidential Decree No. 442) as amended by Section 1(b) of Presidential Decree No. 2018, was filed against spouses Dan and Loma Goce and herein accused-appellant Nelly Agustin in the Regional Trial Court Manila, Branch 5, alleging "That in or about and during the period comprised between May 1986 and June 25, 1987, both dates inclusive, in the City of Manila, Philippines, the said accused, conspiring and confederating together and helping one another, representing themselves to have the capacity to contract, enlist and transport Filipino workers - for employment abroad, did then and there willfully and unlawfully, for a fee, recruit and promise employment/job placement abroad, to (1) Rolando Dalida y Piernas, (2) Ernesto Alvarez y Lubangco, (3) Rogelio Salado y Savillo, (4) Ramona Salado y Alvarez, (5) Dionisio Masaya y de Guzman, (6) Dave Rivera y de Leon, (7) Lorenzo Alvarez y Velayo, and (8) Nelson Trinidad y Santos, without first having secured the required license or authority from the Department of Labor." 1 On January 21, 1987, a warrant of arrest was issued against the three accused but not one of them was arrested. 2 Hence, on February 2, 1989, the trial court ordered the case archived but it issued a standing warrant of arrest against the accused 3 Thereafter, on learning of the whereabouts of the accused, one of the offended parties, Rogelio Salado, requested on March 17, 1989 for a copy of the warrant of arrest 4 Eventually, at around midday of February 26, 1993, Nelly Agustin was apprehended by the Paraaque police 5 On March 8, 1993, her counsel filed a motion to revive the case and requested that it be set for hearing "for purposes of due process and for the accused to immediately have her day in court. 6 Thus, on April 15, 1993, the trial court reinstated the case and set the arraignment for May 3, 1993, 7 on which date Agustin pleaded not guilty 8 and the case subsequently went to trial. Four of the complainants testified for the prosecution. Rogelio Salado was the first to take the witness stand and he declared that sometime in March or April, 1987 he was introduced by Lorenzo Alvarez, his brother-in-law and a co-applicant, to Nelly Agustin in the latter's residence at Factor, Dongalo, Paraaque, Metro Manila. Representing herself as the manager of the Clover Placement Agency, Agustin showed him a job order as proof that he could readily be deployed for overseas employment. Salado learned that he had to pay P5,000.00 as processing fee, which amount he gave sometime in April or May of the same year. He was issued the corresponding receipt 9 Also in April or May, 1987, Salado, accompanied by five other applicants who were his relatives, went to the office of the placement agency at Nakpil Street, Ermita, Manila where he saw Agustin and met the spouses Dan and Loma Goce, owners of the agency. He submitted his bio-data and learned from Loma Goce that he had to give P12,000.00, instead of the original amount of P5,000.00 for the placement fee. Although surprised at the new and higher sum, they subsequently agreed as long as there was an assurance that they could leave for abroad. 10 Thereafter, a receipt was issued in the name of the Clover Placement Agency showing that Salado and his aforesaid co-applicants each paid P2,000.00, instead of the P5,000.00 which each of them actually paid. Several months passed but Salado failed to leave for the promised overseas employment. Hence, in October, 1987, along with the other recruits, he decided to go to the Philippine Overseas Employment Administration (POEA) to verify the real status of Clover Placement Agency. They discovered that said agency was not duly licensed to recruit job applicants. Later, upon learning that Agustin had been arrested, Salado decided to see her and to demand the return of the money he had paid, but Agustin could only give him P500.00. 11 Ramona Salado, the wife of Rogelio Salado, came to know through her brother, Lorenzo Alvarez, about Nelly Agustin. Accompanied by her husband, Rogelio, Ramona went to see Agustin at the latter's residence. Agustin persuaded her to apply as a cutter/sewer in Oman so that she could join her husband. Encouraged by Agustin's promise that she and her husband could live together while working in Oman, she instructed her husband to give Agustin P2,000.00 for each of them as placement fee, or the total sum of P4,000.00. 12 Much later, the Salado couple received a telegram from the placement agency requiring them to report to its office because the "NOC" (visa) had allegedly arrived. Again, around February, or March, 1987, Rogelio gave P2,000.00 as payment for his and his wife's passports. Despite follow-up of their papers twice a week from February to June, 1987, he and his wife failed to leave for abroad. 13 Complainant Dionisio Masaya, accompanied by his brother-in-law, Aquiles Ortega, applied for a job in Oman with the Clover Placement Agency at Paraaque, the agency's former office address. There, Masaya met Nelly Agustin, who introduced herself as the manager of the agency, and the Goce spouses, Dan and Loma, as well as the latter's daughter. He submitted several pertinent documents, such as his bio-data and school credentials. 14 In May, 1986, Masaya gave Dan Goce P1,900.00 as an initial down payment for the placement fee, and in September of that same year, he gave an additional P10,000.00. He was issued receipts for said amounts and was advised to go to the placement office once in a while to follow up his application, which he faithfully did. Much to his dismay and chagrin, he failed to leave for abroad as promised. Accordingly, he was forced to demand that his money be refunded but Loma Goce could give him back only P4,000.00 in installments. 15 As the prosecution's fourth and last witness, Ernesto Alvarez took the witness stand on June 7, 1993. He testified that in February, 1987, he met appellant Agustin through his cousin, Larry Alvarez, at her residence in Paraaque. She informed him that "madalas siyang nagpapalakad sa Oman" and offered him a job as an ambulance driver at the Royal Hospital in Oman with a monthly salary of about $600.00 to $700.00. 16 On March 10, 1987, Alvarez gave an initial amount of P3,000.00 as processing fee to Agustin at the latter's residence. In, the same month, he gave another P3,000.00, this time in the office- of the placement agency. Agustin assured him that he could leave for abroad before the end of 1987. He returned several - times to the placement agency's office to follow up his application but to no avail. Frustrated, he demanded the return of the money he had paid, but Agustin could only give back P500.00. Thereafter, he looked for Agustin about eight times, but he could no longer find her. 17 Only herein appellant Agustin testified for the defense. She asserted that Dan and Loma Goce were her neighbors at Tambo, Paraaque and that they were licensed recruiters and owners of the Clover Placement Agency. Previously, the Goce couple was able to send her son, Reynaldo Agustin, to Saudi Arabia. Agustin met the aforementioned complainants through Lorenzo Alvarez who requested her to introduce them to the Goce couple, to which request she acceded. 18 Denying any participation in, the illegal recruitment and maintaining that the recruitment was perpetrated only by the Goce couple, Agustin denied any knowledge of the receipts presented by the prosecution. She insisted that the complainants included her in the

complaint thinking that this would compel her to reveal the whereabouts of the Goce spouses. She failed to do so because in truth, so she claims, she does not know the present address of the couple. All she knew was that they had left their residence in l987. 19 Although she admitted having given P500.00 each to Rogelio Salado and Alvarez, she explained that it was entirely for different reasons. Salado had supposedly asked for a loan, while Alvarez needed money because he was sick at that time. 20 On November 19, 1993, the trial court rendered judgment finding herein appellant guilty as a principal in the crime of illegal recruitment in large scale, and- sentencing her to serve the penalty of life imprisonment, as well as to pay a fine of P100,000.00. 21 In her present appeal, appellant Agustin raises the following arguments: (1) her act of introducing complainants to the Goce couple does not fall within the meaning of illegal recruitment and placement under Article 13(b) in relation to Article 34 of the Labor Code; (2) there is no proof of conspiracy to commit illegal recruitment among appellant and the Goce spouses; and (3) there is no proof that appellant offered or promised overseas employment to the complainants. 22 These three arguments being interrelated, they will be discussed together. Herein appellant is accused of violating Articles 38 and 39 of the Labor Code. Article 38 of the Labor Code, as amended by Presidential Decree No. 2018, provides that any recruitment activity, including the prohibited practices enumerated in Article 34 of said Code, undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 thereof. The same article further provides that illegal recruitment shall be considered an offense involving economic sabotage if any of these qualifying circumstances exist, namely, (a) when illegal recruitment is committed by a syndicate, i,e., if it is carried out by a group of three or more persons conspiring and/or confederating with one another; or (b) when illegal recruitment is committed in large scale, i.e., if it is committed against three or more persons individually or as a group. At the outset, it should be made clear that all the accused in this case were not authorized to engage in any recruitment activity, as evidenced by a certification issued by Cecilia E. Curso, Chief of the Licensing and Regulation Office of the Philippine Overseas Employment Administration, on November 10, 1987. Said certification states that Dan and Loma Goce and Nelly Agustin are neither licensed nor authorized to recruit workers for overseas employment. 23 Appellant does not dispute this. As a matter of fact her counsel agreed to stipulate that she was neither licensed nor authorized to recruit applicants for overseas employment. Appellant, however, denies that she was in any way guilty of illegal recruitment. 24 It is appellant's defensive theory that all she did was to introduce complainants to the Goce spouses. Being a neighbor of said couple, and owing to the fact that her son's overseas job application was processed and facilitated by them, the complainants asked her to introduce them to said spouses. Allegedly out of the goodness of her heart, she complied with their request. Such an act, appellant argues, does not fall within the meaning of "referral" under the Labor Code to make her liable for illegal recruitment. Under said Code, recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not; provided, that any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. 25 On the other hand, referral is the act of passing along or forwarding of an applicant for employment after an initial interview of a selected applicant for employment to a selected employer, placement officer or bureau. 26 Hence, the inevitable query is whether or not appellant Agustin merely introduced complainants to the Goce couple or her actions went beyond that. The testimonial evidence hereon show that she indeed further committed acts constitutive of illegal recruitment. All four prosecution witnesses testified that it was Agustin whom they initially approached regarding their plans of working overseas. It was from her that they learned about the fees they had to pay, as well as the papers that they had to submit. It was after they had talked to her that they met the accused spouses who owned the placement agency. As correctly held by the trial court, being an employee of the Goces, it was therefore logical for appellant to introduce the applicants to said spouses, they being the owners of the agency. As such, appellant was actually making referrals to the agency of which she was a part. She was therefore engaging in recruitment activity. 27 Despite Agustin's pretensions that she was but a neighbor of the Goce couple, the testimonies of the prosecution witnesses paint a different picture. Rogelio Salado and Dionisio Masaya testified that appellant represented herself as the manager of the Clover Placement Agency. Ramona Salado was offered a job as a cutter/sewer by Agustin the first time they met, while Ernesto Alvarez remembered that when he first met Agustin, the latter represented herself as "nagpapaalis papunta sa Oman." 28 Indeed, Agustin played a pivotal role in the operations of the recruitment agency, working together with the Goce couple. There is illegal recruitment when one gives the impression of having the ability to send a worker abroad. 29 It is undisputed that appellant gave complainants the distinct impression that she had the power or ability to send people abroad for work such that the latter were convinced to give her the money she demanded in order to be so employed. 30 It cannot be denied that Agustin received from complainants various sums for purpose of their applications. Her act of collecting from each of the complainants payment for their respective passports, training fees, placement fees, medical tests and other sundry expenses unquestionably constitutes an act of recruitment within the meaning of the law. In fact, appellant demanded and received from complainants amounts beyond the allowable limit of P5,000.00 under government regulations. It is true that the mere act of a cashier in receiving money far exceeding the amount allowed by law was not considered per se as "recruitment and placement" in contemplation of law, but that was because the recipient had no other participation in the transactions and did not conspire with her co-accused in defrauding the victims. 31 That is not the case here. Appellant further argues that "there is no evidence of receipts of collections/payments from complainants to appellant." On the contrary xerox copies of said receipts/vouchers were presented by the prosecution. For instance, a cash voucher marked as Exhibit D, 32 showing the receipt of P10,000.00 for placement fee and duly signed by appellant, was presented by the prosecution. Another receipt, identified as Exhibit E, 33 was issued and signed by appellant on February 5, 1987 to acknowledge receipt of P4,000.00 from Rogelio and Ramona Salado for "processing of documents for Oman." Still another receipt dated March 10, 1987 and presented in evidence as Exhibit F, shows that appellant received from Ernesto Alvarez P2,000.00 for "processing of documents for Oman." 34 Apparently, the original copies of said receipts/vouchers were lost, hence only xerox copies thereof were presented and which, under the circumstances, were admissible in evidence. When the original writing has been lost or destroyed or cannot be produced in court, upon proof of its execution and loss or destruction, or unavailability, its contents may be proved by a copy or a recital of its contents in some authentic document, or by the recollection of witnesses. 35 Even assuming arguendo that the xerox copies presented by the prosecution as secondary evidence are not allowable in court, still the absence thereof does not warrant the acquittal of appellant. In People vs. Comia, 36 where this particular issue was involved, the Court held that the complainants' failure to ask for receipts for the fees they paid to the accused therein, as well as their consequent failure to present receipts before the trial court as proof of the said payments, is not fatal to their case. The complainants duly proved by their respective testimonies that said accused was involved in the entire recruitment process. Their testimonies in this regard, being clear and positive, were declared sufficient to establish that factum probandum. Indeed, the trial court was justified and correct in accepting the version of the prosecution witnesses, their statements being positive and affirmative in nature. This is more worthy of credit than the mere uncorroborated and self-serving denials of appellant. The lame defense consisting of such bare denials by appellant cannot overcome the evidence presented by the prosecution proving her guilt beyond reasonable doubt. 37

The presence of documentary evidence notwithstanding, this case essentially involves the credibility of witnesses which is best left to the judgment of the trial court, in the absence of abuse of discretion therein. The findings of fact of a trial court, arrived at only after a hearing and evaluation of what can usually be expected to be conflicting testimonies of witnesses, certainly `deserve respect by an appellate court. 38 Generally, the findings of fact of the trial court on the matter of credibility of witnesses will not be disturbed on appeal. 39 In a last-ditch effort to exculpate herself from conviction, appellant argues that there is no proof of conspiracy between her and the Goce couple as to make her liable for illegal recruitment. We do not agree. The evidence presented by the prosecution clearly establish that appellant confabulated with the Goces in their plan to deceive the complainants. Although said accused couple have not been tried and convicted, nonetheless they is sufficient basis for appellant's conviction as discussed above. In People vs. Sendon, 40 we held that the non-prosecution of another suspect therein provided no ground for the appellant concerned to fault the decision of the trial court convicting her. The prosecution of other persons, equally or more culpable than herein appellant, may come later after their true identities and addresses shall have been ascertained and said malefactors duly taken into custody. We see no reason why the same doctrinal rule and course of procedure should not apply in this case. WHEREFORE, the appealed judgment of the court a quo is hereby AFFIRMED in toto, with costs against accused-appellant Nelly D. Agustin. SO ORDERED. Narvasa, C.J., Puno, Mendoza and Francisco, JJ., concur. --------------Footnotes 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. Original Record, 1. Ibid., 8-9. Ibid., 17. Ibid., 24. Ibid., 27. Ibid., 30. Ibid., 33. Ibid., 44. TSN, May 12, 1993, 2-3, 8, 12. Ibid., id., 3-5, 10, 13. Ibid., id., 7-8, 12-16. Ibid., May 25,1993, 15-17. Ibid., id., 18-20. Ibid., id., 3-5, 11-12. Ibid., id., 5-9. Ibid., June 7, 1993, 2-5. Ibid., id., 4-10. Ibid., June 30, 2-3. Ibid., id., 5. Ibid., id., 6-7. Penned by presiding Judge Cesar J. Mindaro. Appellant 's Brief, 10; Rollo, 194. Original Record, 153. TSN, June 11, 1993, 8. Article 13(b), Labor Code. Webster's Third New International Dictionary, 1986 Ed., 1908. Decision, 7; Original Record, 172. TSN., June 7, 1993, 3. People vs Manungas, Jr., G.R. Nos. 91552-55, March 10, 1994, 231 SCRA 1. People vs Villafuerte, G.R. Nos. 93723-27, May 6,1994, 232 SCRA 225. People vs Gaoat, G.R. No. 97028, May 21 1993, 222 SCRA 385. Original Record, 155. Ibid., 156. Ibid., 157. Section 4, Rule 130, Rules of Court. G.R. No. 109761. September 1, 1994, 236 SCRA 185. People vs Resuma, G.R. Nos. 106640-42, June 15,1994. People vs Jumao-as, G.R. No. 101334, February 14, 1994, SCRA 70. People vs Yap, G.R. No. 103517, February 9, 1994, 229 SCRA 787. G.R. Nos. 101579-89, December 15, 1993, 228 SCRA 489.

GENERAL MILLING CORPORATION and EARL TIMOTHY CONE, petitioners, vs. HON. RUBEN D. TORRES, in his capacity as Secretary of Labor and Employment, HON. BIENVENIDO E. LAGUESMA, in his capacity as Acting Secretary of Labor and Employment, and BASKETBALL COACHES ASSOCIATION OF THE PHILIPPINES, respondents. Sobrevinas, Diaz, Hayudini & Bodegon Law Office for petitioners. Rodrigo, Cuevas & De Borja for respondent BCAP. 1991 Apr 22 3rdDivision G.R. No. 93666 RESOLUTION FELICIANO, J.: On 1 May 1989, the National Capital Region of the Department of Labor and Employment issued Alien Employment Permit No. M0689-3-535 in favor of petitioner Earl Timothy Cone, a United States citizen, as sports consultant and assistant coach for petitioner General Milling Corporation ("GMC"). On 27 December 1989, petitioners GMC and Cone entered into a contract of employment whereby the latter undertook to coach GMC's basketball team. On 15 January 1990, the Board of Special Inquiry of the Commission on Immigration and Deportation approved petitioner Cone's application for a change of admission status from temporary visitor to prearranged employee. On 9 February 1990, petitioner GMC requested renewal of petitioner Cone's alien employment permit. GMC also requested that it be allowed to employ Cone as full-fledged coach. The DOLE Regional Director, Luna Piezas, granted the request on 15 February 1990. On 18 February 1990, Alien Employment Permit No. M-02903-881, valid until 25 December 1990, was issued. Private respondent Basketball Coaches Association of the Philippines ("BCAP") appealed the issuance of said alien employment permit to the respondent Secretary of Labor who, on 23 April 1990, issued a decision ordering cancellation of petitioner Cone's employment permit on the ground that there was no showing that there is no person in the Philippines who is competent, able and willing to perform the services required nor that the hiring of petitioner Cone would redound to the national interest. Petitioner GMC filed a Motion for Reconsideration and two (2) Supplemental Motions for Reconsideration but said Motions were denied by Acting Secretary of Labor Bienvenido E. Laguesma in an Order dated 8 June 1990. Petitioners are now before the Court on a Petition for Certiorari, dated 14 June 1990, alleging that: 1. respondent Secretary of Labor gravely abused his discretion when he revoked petitioner Cone's alien employment permit; and 2. Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is null and void as it is in violation of the enabling law as the Labor Code does not empower respondent Secretary to determine if the employment of an alien would redound to national interest. Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of respondent Secretary of Labor in rendering his decision, dated 23 April 1990, revoking petitioner Cone's Alien Employment Permit. The alleged failure to notify petitioners of the appeal filed by private respondent BCAP was cured when petitioners were allowed to file their Motion for Reconsideration before respondent Secretary of Labor. 1 Petitioner GMC's claim that hiring of a foreign coach is an employer's prerogative has no legal basis at all. Under Article 40 of the Labor Code, an employer seeking employment of an alien must first obtain an employment permit from the Department of Labor. Petitioner GMC's right to choose whom to employ is, of course, limited by the statutory requirement of an alien employment permit. Petitioners will not find solace in the equal protection clause of the Constitution. As pointed out by the Solicitor-General, no comparison can be made between petitioner Cone and Mr. Norman Black as the latter is "a long time resident of the country," and thus, not subject to the provisions of Article 40 of the Labor Code which apply only to "non-resident aliens." In any case, the term "non-resident alien" and its obverse "resident alien," here must be given their technical connotation under our law on immigration. Neither can petitioners validly claim that implementation of respondent Secretary's decision would amount to an impairment of the obligations of contracts. The provisions of the Labor Code and its Implementing Rules and Regulations requiring alien employment permits were in existence long before petitioners entered into their contract of employment. It is firmly settled that provisions of applicable laws, especially provisions relating to matters affected with public policy, are deemed written into contracts. 2 Private parties cannot constitutionally contract away the otherwise applicable provisions of law. Petitioners' contention that respondent Secretary of Labor should have deferred to the findings of Commission on Immigration and Deportation as to the necessity of employing petitioner Cone, is, again, bereft of legal basis. The Labor Code itself specifically empowers respondent Secretary to make a determination as to the availability of the services of a "person in the Philippines who is competent, able and willing at the time of application to perform the services for which an alien is desired." 3 In short, the Department of Labor is the agency vested with jurisdiction to determine the question of availability of local workers. The constitutional validity of legal provisions granting such jurisdiction and authority and requiring proof of non-availability of local nationals able to carry out the duties of the position involved, cannot be seriously questioned. Petitioners apparently also question the validity of the Implementing Rules and Regulations, specifically Section 6 (c), Rule XIV, Book I of the Implementing Rules, as imposing a condition not found in the Labor Code itself Section 6 (c), Rule XIV, Book I of the Implementing Rules, provides as follows: "Section 6. Issuance of Employment Permit The Secretary of Labor may issue an employment permit to the applicant based on:

(a) Compliance by the applicant and his employer with the requirements of Section 2 hereof; (b) Report of the Bureau Director as to the availability or non-availability of any person in the Philippines who is competent and willing to do the job for which the services of the applicant are desired. (c) His assessment as to whether or not the employment of the applicant will redound to the national interest; (d) Admissibility of the alien as certified by the Commission on Immigration and Deportation; (e) The recommendation of the Board of Investments or other appropriate government agencies if the applicant will be employed in preferred areas of investments or in accordance with the imperative of economic development;

xxx

xxx

xxx"

Article 40 of the Labor Code reads as follows: "ART. 40. Employment permit of non-resident aliens. Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor. The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the nonavailability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise." Petitioners apparently suggest that the Secretary of Labor is not authorized to take into account the question of whether or not employment of an alien applicant would "redound to the national interest" because Article 40 does not explicitly refer to such assessment. This argument (which seems impliedly to concede that the relationship of basketball coaching and the national interest is tenuous and unreal) is not persuasive. In the first place, the second paragraph of Article 40 says: "[t]he employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired." The permissive language employed in the Labor Code indicates that the authority granted involves the exercise of discretion on the part of the issuing authority. In the second place, Article 12 of the Labor Code sets forth a statement of objectives that the Secretary of Labor should, and indeed must, take into account in exercising his authority and jurisdiction granted by the Labor Code. "ART. 12. Statement of Objectives. It is the policy of the State:

a) To promote and maintain a state of full employment through improved manpower training, allocation and utilization; xxx xxx xxx

c) To facilitate a free choice of available employment by persons seeking work in conformity with the national interest; d) To facilitate and regulate the movement of workers in conformity with the national interest; e) To regulate the employment of aliens, including the establishment of a registration and or work permit system; xxx xxx xxx"

Thus, we find petitioners' arguments on the above points of constitutional law too insubstantial to require further consideration. Petitioners have very recently manifested to this Court that public respondent Secretary of Labor has reversed his earlier decision and has issued an Employment Permit to petitioner Cone. Petitioners seek to withdraw their Petition for Certiorari on the ground that it has become moot and academic. While ordinarily this Court would dismiss a petition that clearly appears to have become moot and academic, the circumstances of this case and the nature of the questions raised by petitioners are such that we do not feel justified in leaving those questions unanswered 4 Moreover, assuming that an alien employment permit has in fact been issued to petitioner Cone, the basis of the reversal by the Secretary of Labor of his earlier decision does not appear on the record. If such reversal is based on some view of constitutional law or labor law different from those here set out, then such employment permit, if one has been issued, would appear open to serious legal objections. ACCORDINGLY, the Court Resolved to DISMISS the Petition for Certiorari for lack of merit. Costs against petitioners. Fernan (C.J., Chairman), Bidin and Davide, Jr., JJ., concur. Footnotes 1. De Leon v. Commission on Elections, 129 SCRA 117 (1984). 2. E.g., Pakistan International Airways Corporation v. Hon. Blas F. Ople, et al., G.R. No. 61594, 28 September 1990; Commissioner of Internal Revenue v. United States Lines Co., 5 SCRA 175 (1962). 3. Article 40 of the Labor Code. 4. Cf. Javier v. Commission on Elections, 144 SCRA 194 (1986).

TRANS ACTION OVERSEAS CORPORATION, petitioner vs. THE HONORABLE SECRETARY OF LABOR, ROSELLE CASTIGADOR, JOSEFINA MAMON, JENELYN CASA, PEACHY LANIOG, VERDELINA BELGIRA, ELMA FLORES, RAMONA LITURCO, GRACE SABANDO, GLORIA PALMA, AVELYN ALVAREZ, CANDELARIA NONO, NITA BUSTAMANTE, CYNTHIA ARANDILLO, SANDIE AGUILAR, DIGNA PANAGUITON, VERONICA BAYOGOS, JULIANITA ARANADOR, LEONORA CABALLERO, NANCY BOLIVAR, NIMFA BUCOL, ZITA GALINDO, ESTELITA BIOCOS, MARJORIE MACATE, RUBY SEPULVIDA, ROSALIE SONDIA, NORA MAQUILING, PAULINA CORDERO, LENIROSE ABANGAN, SELFA PALMA, ANTONIA NAVARRO, ELSIE PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT, CLETA MAYO, respondents. 1997 Sep 5 2nd Division G.R. No. 109583 DECISION ROMERO, J.: The issue presented in the case at bar is whether or not the Secretary of Labor and Employment has jurisdiction to cancel or revoke the license of a private fee-charging employment agency. From July 24 to September 9, 1987, petitioner Trans Action Overseas Corporation, a private fee-charging employment agency, scoured Iloilo City for possible recruits for alleged job vacancies in Hongkong. Private respondents sought employment as domestic helpers through petitioner's employees, Luzviminda Aragon, Ben Hur Domincil and his wife Cecille. The applicants paid placement fees ranging from P1,000.00 to P14,000.00, but petitioner failed to deploy them. Their demands for refund proved unavailing; thus, they were constrained to institute complaints against petitioner for violation of Articles 32 and 34(a) 1 of the Labor Code, as amended. Petitioner denied having received the amounts allegedly collected from respondents, and averred that Aragon, whose only duty was to pre-screen and interview applicants, and the spouses Domincil were not authorized to collect fees from the applicants. Accordingly, it cannot be held liable for the money claimed by respondents. Petitioner maintains that it even warned respondents not to give any money to unauthorized individuals. POEA Regional Extension Unit Coordinator Edgar Somes testified that although he was aware that petitioner collected fees from respondents, the latter insisted that they be allowed to make the payments on the assumption that it could hasten their deployment abroad. He added that Mrs. Honorata Manliclic, a representative of petitioner tasked to oversee the conduct of the interviews, told him that she was leaving behind presigned receipts to Aragon as she cannot stay in Iloilo City for the screening of the applicants. Manliclic, however, denied this version and argued that it was Somes who instructed her to leave the receipts behind as it was perfectly alright to collect fees. On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered the assailed order, the dispositive portion of which reads: WHEREFORE, respondents are hereby ordered to pay, jointly and severally, the following claims: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. Rosele Castigador Josefina Mamon Jenelyn Casa Peachy Laniog Verdelina Belgira Elma Flores Ramona Liturco Grace Sabando Gloria Palma Avelyn Alvarez Candelaria Nono Nita Bustamante Cynthia Arandillo Sandie Aguilar Digna Panaguiton Veronica Bayogos Sony Jamuat Irma Sobrequil Elsie Penarubia Antonia Navarro Selfa Palma Lenirose Abangan Paulina Cordero Nora Maquiling Rosalie Sondia Ruby Sepulvida Marjorie Macate Estelita Biocos Zita Galindo Nimfa Bucol Nancy Bolivar Leonora Caballero Julianita Aranador P14,000.00 3,000.00 3,000.00 13,500.00 2,000.00 2,500.00 2,500.00 3,500.00 1,500.00 1,500.00 1,000.00 5,000.00 1,000.00 3,000.00 2,500.00 2,000.00 4,500.00 2,000.00 2,000.00 2,000.00 3,000.00 13,300.00 1,400.00 2,000.00 2,000.00 3,500.00 1,500.00 3,000.00 3,500.00 1,000.00 2,000.00 13,900.00 14,000.00

The complaints of Ma. Luz Alingasa, Nimfa Perez, and Cleta Mayo are hereby dismissed in view of their desistance. The following complaints are hereby dismissed for failure to appear/prosecute: 1. 2. 3. 4. 5. Jiyasmin Bantillo Rosa de Luna Senail Elnor Bandojo Teresa Caldeo Virginia Castroverde 6. Edna Salvante 7. Thelma Beltiar 8. Cynthia Cepe 9. Rosie Pavillon

The complaints filed by the following are hereby dismissed for lack of evidence: 1. 2. 3. 4. Aleth Palomaria Emely Padrones Marybeth Aparri Lenia Biona 5. Mary Ann Beboso 6. Josefina Tejero 7. Bernadita Aprong 8. Joji Lull

Respondent agency is liable for twenty eight (28) counts of violation of Article 32 and five (5) counts of Article 34 (a) with a corresponding suspension in the aggregate period of sixty six (66) months. Considering however, that under the schedule of

penalties, any suspension amounting to a period of 12 months merits the imposition of the penalty of cancellation, the license of respondent TRANS ACTION OVERSEAS CORPORATION to participate in the overseas placement and recruitment of workers is hereby ordered CANCELLED, effective immediately. SO ORDERED. 2 On April 29, 1991, petitioner filed its Motion for Temporary Lifting of Order of Cancellation alleging, among other things, that to deny it the authority to engage in placement and recruitment activities would jeopardize not only its contractual relations with its foreign principals, but also the welfare, interests, and livelihood of recruited workers scheduled to leave for their respective assignments. Finally, it manifested its willingness to post a bond to insure payment of the claims to be awarded, should its appeal or motion be denied. Finding the motion to be well taken, Undersecretary Confesor provisionally lifted the cancellation of petitioner's license pending resolution of its Motion for Reconsideration filed on May 6, 1991. On January 30, 1992, however, petitioner's motion for reconsideration was eventually denied for lack of merit, and the April 5, 1991, order revoking its license was reinstated. Petitioner contends that Secretary; Confesor acted with grave abuse of discretion in rendering the assailed orders on alternative grounds, viz.: (1) it is the Philippine Overseas Employment Administration (POEA) which has the exclusive and original jurisdiction to hear and decide illegal recruitment cases, including the authority to cancel recruitment licenses, or (2) the cancellation order based on the 1987 POEA Schedule of Penalties is not valid for non-compliance with the Revised Administrative Code of 1987 regarding its registration with the U.P. Law Center. Under Executive Order No. 797 3 (E.O. No. 797) and Executive Order No. 247 (E.O. No. 247), 4 the POEA was established and mandated to assume the functions of the Overseas Employment Development Board (OEDB), the National Seamen Board (NSB), and the overseas employment function of the Bureau of Employment Services (BES). Petitioner theorizes that when POEA absorbed the powers of these agencies, Article 35 of the Labor Code, as amended, was rendered ineffective. The power to suspend or cancel any license or authority to recruit employees for overseas employment is vested upon the Secretary of Labor and Employment. Article 35 of the Labor Code, as amended, which provides: Art. 5. Suspension and/or Cancellation of License or Authority The Minister of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment Development Board, and the National Seamen Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions. In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, 5 we held that: The penalties of suspension and cancellation of license or authority are prescribed for violations of the above quoted provisions, among others. And the Secretary of Labor has the power under Section 35 of the law to apply these sanctions, as well as the authority, conferred by Section 36, not only to "restrict and regulate the recruitment and placement activities of all agencies," but also to "promulgate rules and regulations to carry out the objectives and implement the provisions" governing said activities. Pursuant to this rule-making power thus granted, the Secretary of Labor gave the POEA, 6 "on its own initiative or upon filing of a complaint or report or upon request for investigation by any aggrieved person, . . (authority to) conduct the necessary proceedings for the suspension or cancellation of the license or authority of any agency or entity" for certain enumerated offenses including 1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or services, or any fee or bond in excess of what is prescribed by the Administration, and 2) any other violation of pertinent provisions of the Labor Code and other relevant laws, rules and regulations. 7 The Administrator was also given the power to "order the dismissal of the case of the suspension of the license or authority of the respondent agency or contractor or recommend to the Minister the cancellation thereof." 8 This power conferred upon the Secretary of Labor and Employment was echoed in People v. Diaz, 9 viz.: A non-licensee or non-holder of authority means any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor, or whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary. In view of the Court's disposition on the matter, we rule that the power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested with the POEA and the Secretary of Labor. As regards petitioner's alternative argument that the non-filing of the 1987 POEA Schedule of Penalties with the UP Law Center rendered it ineffective and, hence, cannot be utilized as basis for penalizing them, we agree with Secretary Confesor's explanation, to wit: On the other hand, the POEA Revised Rules on the Schedule of Penalties was issued pursuant to Article 34 of the Labor Code, as amended. The same merely amplified and particularized the various violations of the rules and regulations of the POEA and clarified and specified the penalties therefore (sic). Indeed, the questioned schedule of penalties contains only a listing of offenses. It does not prescribe additional rules and regulations governing overseas employment but only detailed the administrative sanctions imposable by this Office for some enumerated prohibited acts. Under the circumstances, the license of the respondent agency was cancelled on the authority of Article 35 of the Labor Code, as amended, and not pursuant to the 1987 POEA Revised Rules on Schedule of Penalties. 10 WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED. Accordingly, the decision of the Secretary of Labor dated April 5, 1991, is AFFIRMED. No costs. SO ORDERED. Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.

PHILIPPINE-SINGAPORE PORTS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER DANIEL M. LUCAS, JR., and PERFECTO JARDIN, respondents. 1993 Jan 29 3rd Division G.R. No. 67035 DECISION BIDIN, J p: This petition for certiorari with preliminary injunction and/or restraining order seeks to reverse and set aside: (a) the May 29, 1981 Resolution of the National Labor Relations Commission (NLRC) dismissing the appeal of the Philippine-Singapore Ports Corporation (PSPC) to pay Perfecto Jardin the sum of $3,800.00 or its peso equivalent at the current rate of exchange representing the latter's wages for the unexpired portion of his employment contract, and (b) the February 9, 1984 Resolution of the NLRC en banc denying PSPC's motion for the reconsideration of its earlier Resolution. The facts of the case are as follows: PSPC is a corporation organized and existing under Philippine laws. On September 5, 1977, PSPC and Jardin entered into a contract of employment wherein the latter was employed by the former as a winchman/signalman at the Commercial Islamic Port of Jeddah in Saudi Arabia for a two-year period commencing in January, 1978. On or about October 18, 1978, the PSPC Medical Director recommended that Jardin be given priority in the schedule for rest and recreation (R and R) leave as he was diagnosed to be in need of a fistulectomy due to "fistula in anu." Jardin was sent back to the Philippines at PSPC's expense for medical treatment. At the GSIS Hospital, Quezon City where he was treated and confined, his ailment was diagnosed as "pruritis ani due to ancylostomiasis." On November 4, 1978, Jardin was certified as fit to work by his attending physician at the said hospital. When he reported to the PSPC on the same day, however, he was advised to file his resignation papers. Thus, on January 31, 1979, Jardin filed with the then Ministry of Labor, Region IV, Manila, a complaint for illegal dismissal and recovery of backwages (R4-STF-1-787-79). In its position paper, the PSPC prayed for the dismissal of the complaint principally on the ground that under Art. 15 of the Labor Code (P.D. No. 442), the Bureau of Employment Services and not the Labor Arbiter had jurisdiction over the case because it involved the overseas employment of a Filipino worker. In his decision of January 3, 1980, Labor Arbiter Daniel M. Lucas, Jr. did not pass upon the issue of jurisdiction. He resolved the case on its merits and disposed of it as follows: "WHEREFORE, respondent corporation is hereby ordered to pay complainant the sum of P3,800.00 or, its equivalent in Peso, Philippine Currency, at the current rate of exchange, representing the latter's wages for the unexpired portion of his employment contract. "SO ORDERED." (Rollo, p. 29). In its appeal filed with the NLRC on February 19, 1980, PSPC reiterated its contention that it is the Bureau of Employment Services that has jurisdiction over the case and that, assuming that the Labor Arbiter had such jurisdiction, he gravely abused his discretion in finding that Jardin had been illegally dismissed even in the absence of evidentiary support thereon. In the Resolution of May 29, 1981, the NLRC 1 dismissed the appeal on the sole ground that since Jardin had not been furnished with a copy of the appeal within the reglementary period of ten days, no appeal had been duly perfected by the PSPC. PSPC filed a motion for reconsideration of said Resolution alleging that it had furnished Jardin with a copy of its memorandum of appeal which was attached to its opposition to Jardin's motion for issuance of a writ of execution. The PSPC also stressed that the Bureau of Employment Services and not the arbitration section of the Ministry of Labor, had jurisdiction over the case. In the Resolution of February 9, 1984, the NLRC en banc 2 denied the motion for reconsideration and lifted the injunction it had issued in the case. Mentioning the fact that PSPC had repeatedly raised the issue of jurisdiction in all its previous cases without success, the NLRC held that the case fell "within the ambit of compulsory arbitration." The NLRC also ruled that PSPC's "belated service" of the appeal memorandum "did not cure the infirmity of the appeal" and therefore the PSPC failed to comply within the reglementary period with the mandatory requirements of an appeal (Rollo, pp. 59-60). Hence, the instant petition for certiorari filed by PSPC asserting that the Labor Arbiter had no jurisdiction over the case and therefore the decision he had rendered is null and void, that the NLRC abused its discretion in dismissing the appeal on the technical ground of failure to furnish the adverse party with a copy of the appeal memorandum, and that, granting that the Labor Arbiter had jurisdiction over the case, he erred in finding that Jardin had been illegally dismissed. The petition is impressed with merit. When Jardin filed the complaint for illegal dismissal on January 31, 1979, Art. 217 (5) of the Labor Code provided that Labor Arbiters and the NLRC shall have "exclusive jurisdiction to hear and decide" all cases arising from employer-employee relations "unless expressly excluded by this Code." At that time, Art. 15 of the same Code had been amended by P.D. No. 1412 which took effect on June 9, 1978. The pertinent provision of the said presidential decree states: "Article 15. Bureau of Employment Services. (a) . . . (b) The Bureau shall have the original and exclusive jurisdiction over all matters or cases involving employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment, except seamen. The decisions of the Bureau shall be final and executory subject to appeal to the Secretary of Labor whose decisions shall be final and inappealable." Considering that private respondent Jardin's claims undeniably arose out of an employer-employee relationship with petitioner PSPC and that private respondent worked overseas or in Saudi Arabia, the Bureau of Employment Services and not the Labor Arbiter had jurisdiction over the case. "Overseas employment" is defined by Art. 13(h) of the Labor Code as "employment of a worker outside the Philippines." Since the definition does not make a distinction regarding the nationality of the employer, Filipino employers who deploy their employees abroad should be deemed covered by the definition (See: Philippine National Construction Corporation v. NLRC, 193 SCRA 401 [1991]). Art. 15 was further amended by P.D. No. 1691 which took effect on May 1, 1980. Such amendment qualified the jurisdiction of the Bureau of Employment Services as follows: "(b) The regional offices of the Ministry of Labor shall have the original and exclusive jurisdiction over all matter or cases involving employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment except seamen: Provided, That the Bureau of Employment Services may, in the case of the National Capital Region, exercise such power, whenever the Minister of Labor deems it appropriate. The decisions of the regional offices or the Bureau

of Employment Services if so authorized by the Minister of Labor as provided in this Article, shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the National Labor Relations Commission shall be final and inappealable." Hence, as further amended, Art. 15 provided for concurrent jurisdiction between the regional offices of the then Ministry of Labor and the Bureau of Employment Services" in the case of the National Capital Region." It is noteworthy that P.D. No. 1691, while likewise amending Art. 217 of the Labor Code, did not alter the provision that Labor Arbiters shall have jurisdiction over all claims arising from employer-employee relations "unless expressly excluded by this Code." The functions of the Bureau of Employment Services were subsequently assumed by the Philippine Overseas Employment Administration (POEA) on May 1, 1982 by virtue of Executive Order No. 797 by granting the POEA "original and exclusive jurisdiction over all cases, including money claims, involving employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas employment, including seamen" (Sec. 4(a); Eastern Shipping Lines v. Philippine Overseas Employment Administration [POEA], 200 SCRA 663 [1991]). This development showed the legislative authority's continuing intent to exclude from the Labor Arbiter's jurisdiction claims arising from overseas employment. These amendments notwithstanding, when the complaint for illegal dismissal was filed on January 31, 1979, under Art. 15, as amended by P.D. No. 1412, it was the Bureau of Employment Services which had jurisdiction over the case and not the Labor Arbiters. It is a settled ruled that jurisdiction is determined by the statute in force at the time of the commencement of the action (Municipality of Sogod v. Rosal, 201 SCRA 632, 637 [1991]). P.D. No. 1691 which gave the regional offices of the Ministry of Labor concurrent jurisdiction with the Bureau of the Ministry of Labor concurrent jurisdiction with the Bureau of Employment Services, was promulgated more than a year after the complaint was filed. It is indubitable that at the time the Labor Arbiter took cognizance of the complaint of illegal dismissal, he was devoid of jurisdiction. Consequently, the decision promulgated by him is null and void having been rendered without jurisdiction and may be struck down any time - even on appeal to the Supreme Court (Suarez v. Court of Appeals, 186 SCRA 339 [1990]). On the issue of whether or not the NLRC abused its discretion in dismissing the appeal on the technical ground of failure to furnish the adverse party with a copy of the appeal memorandum, the ruling of the Court in Remerco Garments Manufacturing v. Minister of Labor and Employment 135 SCRA 167, 178 [1985] 178) is squarely in point. The Court said therein: ". . . 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. Villamor that `technicality when it deserts its proper office as an aid to justice and become its great hindrance and chief enemy, deserves scant consideration from court.' In a more forceful language, Jr. Chief Justice Enrique M. Fernando, speaking for the Court, in Meracap vs. International Ceramics Manufacturing Co., Inc. stated that `from 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 their due weight. Finally, labor law determinations, to quote from Bultmann, should not be not only secundum retionem but also secundum caritatem'. More recently, we held that in appeal or appeal memorandum to the adverse party is not a jurisdictional defect, and does not justify dismissal of the appeal. 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." The NLRC therefore arbitrarily and despotically exercised its power by evading its positive duty to entertain the appeal on a purely technical ground. As the Court said in Rapid Manpower Consultants, Inc. v. NLRC 190 SCRA 747, 752 [1990]). "(t)echnicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties." In view of the clear lack of jurisdiction on the part of the Labor Arbiter over the complaint for illegal dismissal filed by private respondent, and the apparent abuse of discretion on the part of the NLRC in refusing to resolve petitioner's appeal, there is no reason to discuss the merits of the case. WHEREFORE, the instant petition for certiorari is GRANTED and the proceedings below NULLIFIED but without prejudice to the right of private respondent Perfecto Jardin to refile with the Philippine Overseas Employment Administration his claim against the petitioner Philippine-Singapore Ports Authority. SO ORDERED. Gutierrez, Jr. (Chairman), Davide, Jr., Romero, and Melo, JJ., concur.

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. petitioner, vs. HON. RUBEN D. TORRES, as Secretary of the Department of Labor & Employment, and JOSE N. SARMIENTO, as Administrator of the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, respondents. 1992 Aug 6 En Banc G.R. No. 101279 DECISION GRIO-AQUINO, J.: This petition for prohibition with temporary restraining order was filed by the Philippine Association of Service Exporters (PASEI, for short), to prohibit and enjoin the Secretary of the Department of Labor and Employment (DOLE) and the Administrator of the Philippine Overseas Employment Administration (or POEA) from enforcing and implementing DOLE Department Order No. 16, Series of 1991 and POEA Memorandum Circular Nos. 30 and 37, Series of 1991, temporarily suspending the recruitment by private employment agencies of Filipino domestic helpers for Hong Kong and vesting in the DOLE, through the facilities of the POEA, the task of processing and deploying such workers. PASEI is the largest national organization of private employment and recruitment agencies duly licensed and authorized by the POEA, to engage in the business of obtaining overseas employment for Filipino landbased workers, including domestic helpers. On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids employed in Hong Kong, DOLE Secretary Ruben D. Torres issued Department Order No. 16, Series of 1991, temporarily suspending the recruitment by private employment agencies of "Filipino domestic helpers going to Hong Kong" (p. 30, Rollo). The DOLE itself, through the POEA took over the business of deploying such Hong Kong-bound workers. "In view of the need to establish mechanisms that will enhance the protection for Filipino domestic helpers going to Hong Kong, the recruitment of the same by private employment agencies is hereby temporarily suspended effective 1 July 1991. As such, the DOLE through the facilities of the Philippine Overseas Employment Administration shall take over the processing and deployment of household workers bound for Hong Kong, subject to guidelines to be issued for said purpose. "In support of this policy, all DOLE Regional Directors and the Bureau of Local Employment's regional offices are likewise directed to coordinate with the POEA in maintaining a manpower pool of prospective domestic helpers to Hong Kong on a regional basis. "For compliance." (Underscoring ours; p. 30, Rollo.) Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991, dated July 10, 1991, providing GUIDELINES on the Government processing and deployment of Filipino domestic helpers to Hong Kong and the accreditation of Hong Kong recruitment agencies intending to hire Filipino domestic helpers. "Subject: Guidelines on the Temporary Government Processing and Deployment of Domestic Helpers to Hong Kong.

"Pursuant to Department Order No. 16, series of 1991 and in order to operationalize the temporary government processing and deployment of domestic helpers (DHs) to Hong Kong resulting from the temporary suspension of recruitment by private employment agencies for said skill and host market, the following guidelines and mechanisms shall govern the implementation of said policy: "I. Creation of a Joint POEA-OWWA Household Workers Placement Unit (HWPU). "An ad hoc, one stop Household Workers Placement Unit [or HWPU] under the supervision of the POEA shall take charge of the various operations involved in the Hong Kong-DH industry segment: "The HWPU shall have the following functions in coordination with appropriate units and other entities concerned: "1. "2. "3. "4. "5. Negotiations with and Accreditation of Hong Kong Recruitment Agencies Manpower Pooling Worker Training and Briefing Processing and Deployment Welfare Programs.

"II. Documentary Requirements and Other Conditions for Accreditation of Hong Kong Recruitment Agencies or Principals. "Recruitment agencies in Hong Kong intending to hire Filipino DHs for their employers may negotiate with the HWPU in Manila directly or through the Philippine Labor Attache's Office in Hong Kong. "xxx xxx xxx

"X. Interim Arrangement "All contracts stamped in Hong Kong as of June 30 shall continue to be processed by POEA until 31 July 1991 under the name of the Philippine agencies concerned. Thereafter, all contracts shall be processed with the HWPU. "Recruitment agencies in Hong Kong shall submit to the Philippine Consulate General in Hong Kong a list of their accepted applicants in their pool within the last week of July. The last day of acceptance shall be July 31 which shall then be the basis of HWPU in accepting contracts for processing. After the exhaustion of their respective pools the only source of applicants will be the POEA manpower pool. "For strict compliance of all concerned." (pp. 31-35, Rollo.) On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of 1991, on the processing of employment contracts of domestic workers for Hong Kong. "TO: All Philippine and Hong Kong Agencies engaged in the recruitment of Domestic helpers for Hong Kong.

"Further to Memorandum Circular No. 30, series of 1991 pertaining to the government processing and deployment of domestic helpers (DHs) to Hong Kong, processing of employment contracts which have been attested by the Hong Kong Commissioner of Labor up to 30 June 1991 shall be processed by the POEA Employment Contracts Processing Branch up to 15 August 1991 only. "Effective 16 August 1991, all Hong Kong recruitment agent/s hiring DHs from the Philippines shall recruit under the new scheme which requires prior accreditation with the POEA. "Recruitment agencies in Hong Kong may apply for accreditation at the Office of the Labor Attache, Philippine Consulate General where a POEA team is posted until 31 August 1991. Thereafter, those who failed to have themselves accredited in Hong Kong may

proceed to the POEA-OWWA Household Workers Placement Unit in Manila for accreditation before their recruitment and processing of DHs shall be allowed. "Recruitment agencies in Hong Kong who have some accepted applicants in their pool after the cut-off period shall submit this list of workers upon accreditation. Only those DHs in said list will be allowed processing outside of the HWPU manpower pool. "For strict compliance of all concerned." ( mphasis supplied, p. 36, Rollo.) On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the aforementioned DOLE and POEA circulars and to prohibit their implementation for the following reasons: 1. that the respondents acted with grave abuse of discretion and/or in excess of their rule-making authority in issuing said circulars; 2. that the assailed DOLE and POEA circulars are contrary to the Constitution, are unreasonable, unfair and oppressive; and 3. that the requirements of publication and filing with the Office of the National Administrative Register were not complied with. There is no merit in the first and second grounds of the petition. Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate recruitment and placement activities. "Art. 36. Regulatory Power. The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this title [Regulation of Recruitment and Placement Activities] and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this title." (Italics ours.) On the other hand, the scope of the regulatory authority of the POEA, which was created by Executive Order No. 797 on May 1, 1982 to take over the functions of the Overseas Employment Development Board, the National Seamen Board, and the overseas employment functions of the Bureau of Employment Services, is broad and far-ranging for: 1. Among the functions inherited by the POEA from the defunct Bureau of Employment Services was the power and duty: ""2. To establish and maintain a registration and/or licensing system to private sector participation in the recruitment and placement of workers, locally and overseas, . . . .' (Art. 15, Labor Code, talics supplied)." (p. 13, Rollo.) 2. It assumed from the defunct Overseas Employment Development Board the power and duty: "'3. To recruit and place workers for overseas employment of Filipino contract workers, on a government to government arrangement and in such other sectors as policy may dictate . . . .' (Art. 17, Labor Code.)" (p. 13, Rollo.) 3. From the National Seamen Board, the POEA took over: "2. To regulate and supervise the activities of agents or representatives of shipping companies in the hiring of seamen for overseas employment; and secure the best possible terms of employment for contract seamen workers and secure compliance therewith." (Art. 20, Labor Code.) The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing complexity of the modern society" (Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79). More and more administrative bodies are necessary to help in the regulation of society's ramified activities. "Specialized in the particular field assigned to them, they can deal with the problems thereof with more expertise and dispatch than can be expected from the legislature or the courts of justice" (Ibid.). It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the recruitment and deployment of Filipino landbased workers for overseas employment. A careful reading of the challenged administrative issuances discloses that the same fall within the "administrative and policing powers expressly or by necessary implication conferred" upon the respondents (People vs. Maceren, 79 SCRA 450). The power to "restrict and regulate conferred by Article 36 of the Labor Code involves a grant of police power (City of Naga vs. Court of Appeals, 24 SCRA 898). To "restrict" means "to confine, limit or stop" (p. 62, Rollo) and whereas the power to "regulate" means "the power to protect, foster, promote, preserve, and control with due regard for the interests, first and foremost, of the public, then of the utility and of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA 218). The Solicitor General, in his Comment, aptly observed: " . . . Said Administrative Order [i.e., DOLE Administrative Order No. 16] merely restricted the scope or area of petitioner's business operations by excluding therefrom recruitment and deployment of domestic helpers for Hong Kong till after the establishment of the `mechanisms' that will enhance the protection of Filipino domestic helpers going to Hong Kong. In fine, other than the recruitment and deployment of Filipino domestic helpers for Hongkong, petitioner may still deploy other class of Filipino workers either for Hongkong and other countries and all other classes of Filipino workers for other countries. "Said administrative issuances, intended to curtail, if not to end, rampant violations of the rule against excessive collections of placement and documentation fees, travel fees and other charges committed by private employment agencies recruiting and deploying domestic helpers to Hongkong. [They are] reasonable, valid and justified under the general welfare clause of the Constitution, since the recruitment and deployment business, as it is conducted today, is affected with public interest. "xxx xxx xxx

"The alleged takeover [of the business of recruiting and placing Filipino domestic helpers in Hongkong] is merely a remedial measure, and expires after its purpose shall have been attained. This is evident from the tenor of Administrative Order No. 16 that recruitment of Filipino domestic helpers going to Hongkong by private employment agencies are hereby 'temporarily suspended effective July 1. 1991.' "The alleged takeover is limited in scope, being confined to recruitment of domestic helpers going to Hongkong only. "xxx xxx xxx

" . . . the justification for the takeover of the processing and deploying of domestic helpers for Hongkong resulting from the restriction of the scope of petitioner's business is confined solely to the unscrupulous practice of private employment agencies victimizing applicants for employment as domestic helpers for Hongkong and not the whole recruitment business in the Philippines." (pp. 62-65. Rollo.) The questioned circulars are therefore a valid exercise of the police power as delegated to the executive branch of Government.

Nevertheless, they are legally invalid, defective and unenforceable for lack of proper publication and filing in the Office of the National Administrative Register as required in Article 2 of the Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 which provide: "Art. 2. Laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazette, unless it is otherwise provided. . . . ." (Civil Code.) "Art. 5. Rules and Regulations. The Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation." ( mphasis supplied, Labor Code, as amended.) Section 3. Filing. (1) Every agency shall file with the University of the Philippines Law Center, three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months shall not thereafter be the basis of any sanction against any party or persons." ( nderscoring supplied, Chapter 2, Book VII of the Administrative Code of 1987.) "Section 4. Effectivity. In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them." ( mphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987.) Once more, we advert to our ruling in Taada vs. Tuvera, 146 SCRA 446 that: " . . . Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation," (p. 447.). "Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties." (p. 448.) "We agree that publication must be in full or it is no publication at all since its purpose is to inform the public of the content of the laws." (p. 448.) For lack of proper publication, the administrative circulars in question may not be enforced and implemented. WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE Department Order No. 16, Series of 1991, and POEA Memorandum Circular Nos. 30 and 37, Series of 1991, by the public respondents is hereby SUSPENDED pending compliance with the statutory requirements of publication and filing under the aforementioned laws of the land. SO ORDERED. Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Medialdea, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.

ESALYN CHAVEZ, petitioner, vs. HON. EDNA BONTO-PEREZ, HON. ROGELIO T. RAYALA, HON. DOMINGO H. ZAPANTA, HON. JOSE N. SARMIENTO, CENTRUM PROMOTIONS & PLACEMENT CORPORATION, JOSE A. AZUCENA, JR., and TIMES SURETY & INSURANCE COMPANY, INC., respondents. 1995 Mar 1 2nd Division G.R. No. 109808 DECISION PUNO, J.: One of the anguished cries in our society today is that while our laws appear to protect the poor, their interpretation is sometimes anti-poor, uncounselled entertainment dancer signed a contract with her Japanese employer calling for a monthly salary of One Thousand Five Hundred U.S. Dollars (US$1,500) but later had to sign an immoral side agreement reducing her salary below the minimum standard set by the POEA. Petitioner invoked the law to collect her salary differentials, but incredibly found public respondents straining the seams of our law to disfavor her. There is no greater disappointment to the poor like petitioner than to discover the ugly reality behind the beautiful rhetoric of laws. We will not allow this traversty. This is a petition for certiorari to review the Decision of the National Labor Relations Commission (NLRC), 1 dated December 29, 1992, which affirmed the Decision of public respondent Philippine Employment Agency (POEA) Administrator Jose N. Sarmiento, dated February 17, 1992, dismissing petitioner's complaint for unpaid salaries amounting to six Thousand U.S. Dollars (US$6,000.00). The facts are undisputed. On December 1, 1988, petitioner, an entertainment dancer, entered into a standard employment contract for overseas Filipino artists and entertainers with Planning Japan Co., LTD., 2 through its Philippine representative, private respondent Centrum Placement & Promotions Corporation. The contract had a duration of two (2) to six (6) months, and petitioner was to be paid a monthly compensation of One Thousand Five Hundred U.S. Dollars (US$1,500.00). On December 5, 1988, the POEA approved the contract. Subsequently, petitioner executed the following side agreement with her Japanese employer through her local manager, Jaz Talents Promotion: "Date: Dec. 10, 1988 "SUBJECT: Salary Deduction -----MANAGERIAL COMMISSION -------------

"DATE OF DEPARTURE: _____________ "ATTENTION: MR. IWATA I, ESALYN CHAVEZ, DANCER, do hereby with my own free will and voluntarily have the honor to authorize your good office to please deduct the amount of TWO HUNDRED FIFTY DOLLARS ($250) from my contracted monthly salary of SEVEN HUNDRED FIFTY DOLLARS ($750) as monthly commission for my Manager, Mr. Jose A. Azucena, Jr. "That my monthly salary (net) is FIVE HUNDRED DOLLARS ($500). (sgd. by petitioner)" 3 On December 16, 1988, petitioner left for Osaka, Japan, where she worked for six (6) months, until June 10, 1989. She came back to the Philippines on June 14, 1989. Petitioner instituted the case at bench for underpayment of wages with the POEA on February 21, 1991. She prayed for the payment of Six Thousand U.S. Dollars (US$6,000.00), representing the unpaid portion of her basic salary for six months. Charged in the case were private respondent Centrum Promotions and Placement Corporation, the Philippine representative of Planning Japan, Co., its insurer, Times Surety and Insurance Co., Inc., and Jaz Talents Promotion. The complaint was dismissed by public respondent POEA Administrator on February 17, 1992. He ratiocinated, inter alia: ". . . Apparently and form all indications, complainant (referring to petitioner herein) was satisfied and did not have any complaint (about) anything regarding her employment in Japan until after almost two (2) years (when) she filed the instant complaint on February 21, 1991. The records show that after signing the Standard Employment Contract on December 1, 1988, she entered into a side agreement with the Japanese employer into a side agreement with the Japanese employer thru her local manager, Jaz Talents Promotion consenting to a monthly salary of US$750.00 which she affirmed during the conference of May 21, 1991. Respondent agency had no knowledge nor participation in the said agreement such that it could not be faulted for violation of the Standard Employment Contract regarding the stipulated salary. We cannot take cognizance of such violation when one of the principal party (sic) thereto opted to receive a salary different from what has been stipulated in their contract, especially so if the other contracting party did not consent/participate in such arrangement. Complainant (petitioner) cannot now demand from respondent agency to pay her the salary based (on) the processed Employment contract for she is now considered in bad faith and hence, estopped from claiming thereto thru her own act of consenting and agreeing to receive a salary not in accordance with her contract of employment. Moreover, her self-imposed silence for a long period of time worked to her own disadvantage as she allowed laches to prevail which barred respondent from doing something at the outset. Normally, if a person's right (is) violated, she/he would immediately react to protect her/his rights which is not true in the case at bar. "The term laches has been defined as one's negligence or failure to assert his right in due time or within reasonable time from the accrual of his cause of action, thus, leading another party to believe that there is nothing wrong with his own claim. This resulted in placing the negligent party in estoppel to assert or enforce his right. . . . Likewise, the Supreme Court in one case held that only is inaction within reasonable time to enforce a right the basic premise that underlies a valid defense of laches but such inaction evinces implied consent or acquiescene to the violation of the right. . . . "Under the prevailing circumstances of this case, it is outside the regulatory powers of the Administration to rule on the liability of respondent Jaz Talents Promotions, if any, (it) not being a licensed private agency but a promotion which trains entertainers for abroad. "xxx xxx xxx

On appeal, the NLRC upheld the Decision, thus: "We will to see any conspiracy that the complainant (petitioner herein) imputes to the respondents. She has, to put it bluntly, not established and/or laid the basis for US to arrive at a conclusion that the respondents have been and should be held liable for her claims.

"The way We see it, the records do not at all indicate any connection between respondents Centrum Promotion & Placement Corporation and Jaz Talents Promotion. "There is, therefore, no merit in the appeal. Hence, We affirmed. 4 Dissatisfied with the NLRC's Decision, petitioner instituted the present petition, alleging that public respondents committed grave abuse of discretion in finding: that she is guilty of laches; that she entered into a side contract on December 10, 1988 for the reduction of her basic salary to Seven Hundred Fifty U.S. Dollars (US$750.00) which superseded, nullified and invalidated the standard employment contract she entered into on December 1, 1988; and that Planning Japan Co., Ltd. and private respondents are not solidarily liable to her for Six Thousand US Dollars (US$6,000.00) in unpaid wages. 5 The petition is meritorious. Firstly, we hold that the managerial commission agreement executed by petitioner to authorize her Japanese employer to deduct Two Hundred Fifty U.S. Dollars (US$250.00) from her monthly basic salary is void because it is against our existing laws, morals and public policy. It cannot supersede the standard employment contract of December 1, 1988 approved by the POEA with the following stipulation appended thereto: "It is understood that the terms and conditions stated in this Employment Contract are in conformance with the Standard Employment contract for Entertainers prescribed by the POEA under Memorandum Circular No. 2, Series of 1986. Any alterations or changes made in any part of this contract without prior approval by the POEA shall be null and void;" 6 The stipulation is in line with the provisions of Rule II, Book V and Section 2(f), Rule I, Book VI of the 1991 Rules and Regulations Governing Overseas Employment, thus: "Book V, Rule II "Section 1. Employment Standards. The Administration shall determine, formulate and review employment standards in accordance with the market development and welfare objectives of the overseas employment program and the prevailing market conditions. "Section 2. employment: "xxx Minimum Provisions for Contract. The following shall be considered the minimum requirements for contracts of xxx xxx

"Section 3. Standard Employment Contract. The Administration shall undertake development and/or periodic review of region, country and skills specific employment contracts for landbased workers and conduct regular review of standard employment contracts (SEC) for seafarers. These contracts shall provide for minimum employment standards herein enumerated under Section 2, of this Rule and shall recognize the prevailing labor and social legislations at the site of employment and international conventions. The SEC shall set the minimum terms and conditions of employment. All employers and principals shall adopt the SEC in connection with their adoption of other terms and conditions of employment over and above the minimum standards of the Administration." and "BOOK VI, RULE I "Section 2. "xxx Grounds for suspension/cancellation of license. xxx xxx

"f. Substituting or altering employment contracts and other documents approved and verified by the Administration from the time of actual signing thereof by the parties up to and including the period of expiration of the same without the Administration's approval. "xxx xxx xxx"

Clearly, the basic salary of One Thousand five Hundred U.S. Dollars (US$1,500.00) guaranteed to petitioner under the parties standard employment contract is in accordance with the minimum employment standards with respect to wages set by the POEA. Thus, the side agreement which reduced petitioner's basic wage to Seven Hundred Fifty U.S. Dollars (US$750.00) is null and void for violating the POEA's minimum employment standards, and for not having been approved by the POEA. Indeed, this side agreement is a scheme all too frequently resorted to by unscrupulous employers against our helpless oversees workers who are compelled to agree to satisfy their basic economic needs. Secondly. The doctrine of laches or "stale demands" cannot be applied to petitioner. Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, 7 thus giving rise to a presumption that the party entitled to assert it either has abandoned or declined to assert it. 8 It is not concerned with mere lapse of time; the fact of delay, standing alone, is insufficient to constitute laches. 9 The doctrine of laches is based upon grounds of public policy which requires, for the peace of society, the discouragement of stale claims, and is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted. 10 There is no absolute rule as to what constitutes laches; each case is to be determined according to its particular circumstances. The question of laches is addressed to the sound discretion of the court, and since it is an equitable doctrine, its application is controlled by equitable considerations. It cannot be worked to defeat justice or to perpetrate fraud and injustice. 11 In the case at bench, petitioner filed her claim well within the three-year prescriptive period for the filling of money claims set forth in Article 291 of the Labor Code. 12 For this reason, we hold the doctrine of laches inapplicable to petitioner. As we ruled in Imperial Victory Shipping Agency v. NLRC, 200 SCRA 178 (1991): ". . . Laches is a doctrine in equity while prescription is based on law. Our courts are basically courts of law not courts of equity. Thus laches cannot be invoked to resist the enforcement of an existing legal right. We have ruled in Arsenal v. Intermediate Appellate Court . . . that it is a long standing principle that equity follows the law. Courts exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them. In Zabat, Jr. v. Court of Appeals . . ., this Court was more emphatic in upholding the rules of procedure. We said therein: "As for equity, which has been aptly described as a 'justice outside legality,' this is applied only in the absence of, and never against, statutory law or, as in this case, judicial rules of procedure. Aequetas nunguam contravenit legis. The pertinent positive rules being present here, they should pre-empt and prevail over all abstract arguments based only on equity." "Thus, where the claim was filed within the three-year statutory period, recovery therefore cannot be barred by laches. courts should never apply the doctrine of laches earlier than the expiration of time limited for the commencement of actions at law.

"xxx

xxx

xxx"

Thirdly, private respondents Centrum and Times as well as Planning Japan Co., Ltd. - the agency's foreign principal - are solidarily liable to petitioner for her unpaid wages. This is in accordance with stipulation 13.7 of the parties' standard employment contract which provides: "13.7. The employer (in this case, Planning Japan Co., Ltd.) and its locally (sic) agent/promoter/representative (private respondent Centrum Promotions & Placement Corporation) shall be jointly and severally responsible for the proper implementation of the terms and conditions in this Contract." 13 This solidary liability also arises from the provisions of Section 10(a)(2), rule V, Book I of the Omnibus Rules Implementing the Labor Code, as amended, thus: "Section 10. Requirement before recruitment. - Before recruiting any worker, the private employment agency shall submit to the Bureau the following documents: a) A formal appointment or agency contract executed by a foreign-based employer in favor of the license holder to recruit and hire personnel for the former . . . Such formal appointment or recruitment agreement shall contain the following provisions, among other: xxx xxx xxx

"2. Power of the agency to sue and be sued jointly and solidarily with the principal or foreign based employer for any of the violations of the recruitment agreement and the contracts of employment." "xxx xxx xxx"

Our overseas workers constitute an exploited class. Most of them come from the poorest sector of our society. They are thoroughly disadvantaged. Their profile shows they live in suffocating slums, trapped in an environment of crime. hardly literate and in ill health, their only hope lies in jobs they can hardly find in our country. Their unfortunate circumstance makes them easy prey to avaricious employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just to survive. Out of despondence, they will work under sub-human conditions and accept salaries below the minimum. The least we can do is to protect them with our laws in our land. Regretfully, respondent public officials who should symphatize with the working class appear to have a different orientation. IN VIEW WHEREOF, the petition is GRANTED. The Decisions of respondent POEA Administrator and NLRC commissioners in POEA Case No. Adj. 91-02-199 (ER), respectively dated February 17 and December 29, 1992, and the Resolution of the NLRC, dated March 23, 1993, are REVERSED and SET ASIDE. private respondents are held jointly and severally liable to petitioner for the payment for the payment of SIX THOUSAND US DOLLARS (US$6,000.00) in unpaid wages. Costs against private respondents. SO ORDERED. Narvasa, C.J., Bidin, Regalado, Puno and Mendoza, JJ., concur. --------------Footnotes 1. Through its Second Division, composed of public respondents presiding Commissioner Edna Bonto-Perez, Commissioner Rogelio I. Rayala (ponente), and Commissioner Domingo H. Zapanta. 2. Owned and operated by Iwata International Management Co., Ltd. 3. Exh. "C" of Petition; Rollo, p. 17. 4. The Second division also denied petitioner's Motion for Reconsideration in a minute resolution, dated March 23, 1993. 5. See Petition, pp. 5-6; Rollo, pp. 6-7. 6. Exh. "a" of Petition, p. 1; Rollo, p. 10. 7. La Campana Food Products, Inc. v. Court of Appeals, 223 SCRA 151 (1993); Radio Communications of the Philippines, Inc. v. National Labor Relations Commission, 223 SCRA 656 (1993); Marcelino v. Court of Appeals, 210 SCRA 444 (1992). 8. Bergado v. Court of Appeals, 173 SCRA 497 (1989). 9. See Donato v. Court of Appeals, 217 SCRA 196 (1993). 10. Bergado v. Court of Appeals, op. cit. 11. Jimenez v. Fernandez, 184 SCRA 190 (1990). 12. "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. . . . 13. Exh. "A" of Petition, p. 4; Rollo, p. 13.

MARSAMAN MANNING AGENCY, INC. and DIAMANTIDES MARITIME, INC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and WILFREDO T. CAJERAS, respondents. 1999 Aug 25 2nd Division G.R. No. 127195 DECISION BELLOSILLO, J.: MARSAMAN MANNING AGENCY, INC. (MARSAMAN) and its foreign principal DIAMANTIDES MARITIME, INC. (DIAMANTIDES) assail the Decision of public respondent National Labor Relations Commission dated 16 September 1996 as well as its Resolution dated 12 November 1996 affirming the Labor Arbiter's decision finding them guilty of illegal dismissal and ordering them to pay respondent Wilfredo T. Cajeras salaries corresponding to the unexpired portion of his employment contract, plus attorney's fees. Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local manning agent of petitioner DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned and operated by DIAMANTIDES, for a contract period of ten (10) months with a monthly salary of US$600.00, evidenced by a contract between the parties dated 15 June 1995. Cajeras started work on 8 August 1995 but less than two (2) months later, or on 28 September 1995, he was repatriated to the Philippines allegedly by mutual consent. On 17 November 1995 private respondent Cajeras filed a complaint for illegal dismissal against petitioners with the NLRC National Capital Region Arbitration Branch alleging that he was dismissed illegally, denying that his repatriation was by mutual consent, and asking for his unpaid wages, overtime pay, damages, and attorneys fees.[1] Cajeras alleged that he was assigned not only as Chief Cook Steward but also as assistant cook and messman in addition to performing various inventory and requisition jobs. Because of his additional assignments he began to feel sick just a little over a month on the job constraining him to request for medical attention. He was refused at first by Capt. Kouvakas Alekos, master of the MV Prigipos, who just ordered him to continue working. However a day after the ships arrival at the port of Rotterdam, Holland, on 26 September 1995 Capt. Alekos relented and had him examined at the Medical Center for Seamen. However, the examining physician, Dr. Wden Hoed, neither apprised private respondent about the diagnosis nor issued the requested medical certificate allegedly because he himself would forward the results to private respondents superiors. Upon returning to the vessel, private respondent was unceremoniously ordered to prepare for immediate repatriation the following day as he was said to be suffering from a disease of unknown origin. On 28 September 1995 he was handed his Seaman's Service Record Book with the following entry: "Cause of discharge - Mutual Consent."[2] Private respondent promptly objected to the entry but was not able to do anything more as he was immediately ushered to a waiting taxi which transported him to the Amsterdam Airport for the return flight to Manila. After his arrival in Manila on 29 September 1995 Cajeras complained to MARSAMAN but to no avail.[3] MARSAMAN and DIAMANTIDES, on the other hand, denied the imputation of illegal dismissal. They alleged that Cajeras approached Capt. Alekos on 26 September 1995 and informed the latter that he could not sleep at night because he felt something crawling over his body. Furthermore, Cajeras reportedly declared that he could no longer perform his duties and requested for repatriation. The following paragraph in the vessel's Deck Log was allegedly entered by Capt. Alekos, to wit: Cajeras approached me and he told me that he cannot sleep at night and that he feels something crawling on his body and he declared that he can no longer perform his duties and he must be repatriated.[4] Private respondent was then sent to the Medical Center for Seamen at Rotterdam where he was examined by Dr. Wden Hoed whose diagnosis appeared in a Medical Report as paranoia and other mental problems.[5] Consequently, upon Dr. Hoeds recommendation, Cajeras was repatriated to the Philippines on 28 September 1995. On 29 January 1996 Labor Arbiter Ernesto S. Dinopol resolved the dispute in favor of private respondent Cajeras ruling that the latter's discharge from the MV Prigipos allegedly by mutual consent was not proved by convincing evidence. The entry made by Capt. Alekos in the Deck Log was dismissed as of little probative value because it was a mere unilateral act unsupported by any document showing mutual consent of Capt. Alekos, as master of the MV Prigipos, and Cajeras to the premature termination of the overseas employment contract as required by Sec. H of the Standard Employment Contract Governing the Employment of all Filipino Seamen on Board Ocean-Going Vessels. Dr. Hoeds diagnosis that private respondent was suffering from paranoia and other mental problems was likewise dismissed as being of little evidentiary value because it was not supported by evidence on how the paranoia was contracted, in what stage it was, and how it affected respondent's functions as Chief Cook Steward which, on the contrary, was even rated Very Good in respondent's Service Record Book. Thus, the Labor Arbiter disposed of the case as follows: WHEREFORE, judgment is hereby rendered declaring the repatriation and dismissal of complaint Wilfredo T. Cajeras as illegal and ordering respondents Marsaman Manning Agency, Inc. and Diamantides Maritime, Inc. to jointly and severally pay complainant the sum of USD 5,100.00 or its peso equivalent at the time of payment plus USD 510.00 as 10% attorneys fees it appearing that complainant had to engage the service of counsel to protect his interest in the prosecution of this case. The claims for nonpayment of wages and overtime pay are dismissed for having been withdrawn (Minutes, December 18, 1995). The claims for damages are likewise dismissed for lack of merit, since no evidence was presented to show that bad faith characterized the dismissal.[6] Petitioners appealed to the NLRC.[7] On 16 September 1996 the NLRC affirmed the appealed findings and conclusions of the Labor Arbiter.[8] The NLRC subscribed to the view that Cajeras repatriation by alleged mutual consent was not proved by petitioners, especially after noting that private respondent did not actually sign his Seamans Service Record Book to signify his assent to the repatriation as alleged by petitioners. The entry made by Capt. Alekos in the Deck Log was not considered reliable proof that private respondent agreed to his repatriation because no opportunity was given the latter to contest the entry which was against his interest. Similarly, the Medical Report issued by Dr. Hoed of Holland was dismissed as being of dubious value since it contained only a sweeping statement of the supposed ailment of Cajeras without any elaboration on the factual basis thereof. Petitioners' motion for reconsideration was denied by the NLRC in its Resolution dated 12 November 1996.[9] Hence, this petition contending that the NLRC committed grave abuse of discretion: (a) in not according full faith and credit to the official entry by Capt. Alekos in the vessels Deck Log conformably with the rulings in Haverton Shipping Ltd. v. NLRC[10] and Wallem Maritime Services, Inc. v. NLRC;[11] (b) in not appreciating the Medical Report issued by Dr. Wden Hoed as conclusive evidence that respondent Cajeras was suffering from paranoia and other mental problems; (c) in affirming the award of attorneys fees despite the fact that Cajeras' claim for exemplary damages was denied for lack of merit; and, (d) in ordering a monetary award beyond the maximum of three (3) months salary for every year of service set by RA 8042. We deny the petition. In the Contract of Employment[12] entered into with private respondent, petitioners convenanted strict and faithful compliance with the terms and conditions of the Standard Employment Contract approved by the POEA/DOLE[13] which provides: 1. The employment of the seaman shall cease upon expiration of the contract period indicated in the Crew Contract unless the Master and the Seaman, by mutual consent, in writing, agree to an early termination x x x x (underscoring ours). Clearly, under the foregoing, the employment of a Filipino seaman may be terminated prior to the expiration of the stipulated period provided that the master and the seaman (a) mutually consent thereto and (b) reduce their consent in writing.

In the instant case, petitioners do not deny the fact that they have fallen short of the requirement. No document exists whereby Capt. Alekos and private respondent reduced to writing their alleged mutual consent to the termination of their employment contract. Instead, petitioners presented the vessel's Deck Log wherein an entry unilaterally made by Capt. Alekos purported to show that private respondent himself asked for his repatriation. However, the NLRC correctly dismissed its evidentiary value. For one thing, it is a unilateral act which is vehemently denied by private respondent. Secondly, the entry in no way satisfies the requirement of a bilateral documentation to prove early termination of an overseas employment contract by mutual consent required by the Standard Employment Contract. Hence, since the latter sets the minimum terms and conditions of employment for the protection of Filipino seamen subject only to the adoption of better terms and conditions over and above the minimum standards,[14] the NLRC could not be accused of grave abuse of discretion in not accepting anything less. However petitioners contend that the entry should be considered prima facie evidence that respondent himself requested his repatriation conformably with the rulings in Haverton Shipping Ltd. v. NLRC[15] and Abacast Shipping and Management Agency, Inc. v. NLRC.[16] Indeed, Haverton says that a vessels log book is prima facie evidence of the facts stated therein as they are official entries made by a person in the performance of a duty required by law. However, this jurisprudential principle does not apply to win the case for petitioners. In Wallem Maritime Services, Inc. v. NLRC[17] the Haverton ruling was not given unqualified application because the log book presented therein was a mere typewritten collation of excerpts from what could be the log book.[18] The Court reasoned that since the log book was the only piece of evidence presented to prove just cause for the termination of respondent therein, the log book had to be duly identified and authenticated lest an injustice would result from a blind adoption of its contents which were but prima facie evidence of the incidents stated therein. In the instant case, the disputed entry in the Deck Log was neither authenticated nor supported by credible evidence. Although petitioners claim that Cajeras signed his Seamans Service Record Book to signify his conformity to the repatriation, the NLRC found the allegation to be actually untrue since no signature of private respondent appeared in the Record Book. Neither could the Medical Report prepared by Dr. Hoed be considered corroborative and conclusive evidence that private respondent was suffering from paranoia and other mental problems, supposedly just causes for his repatriation. Firstly, absolutely no evidence, not even an allegation, was offered to enlighten the NLRC or this Court as to Dr. Hoed's qualifications to diagnose mental illnesses. It is a matter of judicial notice that there are various specializations in medical science and that a general practitioner is not competent to diagnose any and all kinds of illnesses and diseases. Hence, the findings of doctors who are not proven experts are not binding on this Court.[19] Secondly, the Medical Report prepared by Dr. Hoed contained only a general statement that private respondent was suffering from paranoia and other mental problems without providing the details on how the diagnosis was arrived at or in what stage the illness was. If Dr. Hoed indeed competently examined private respondent then he would have been able to discuss at length the circumstances and precedents of his diagnosis. Petitioners cannot rely on the presumption of regularity in the performance of official duties to make the Medical Report acceptable because the presumption applies only to public officers from the highest to the lowest in the service of the Government, departments, bureaus, offices, and/or its political subdivisions,[20] which Dr. Wden Hoed was not shown to be. Furthermore, neither did petitioners prove that private respondent was incompetent or continuously incapacitated for the duties for which he was employed by reason of his alleged mental state. On the contrary his ability as Chief Cook Steward, up to the very moment of his repatriation, was rated Very Good in his Seamans Service Record Book as correctly observed by public respondent. Considering all the foregoing we cannot ascribe grave abuse of discretion on the part of the NLRC in ruling that petitioners failed to prove just cause for the termination of private respondent's overseas employment. Grave abuse of discretion is committed only when the judgment is rendered in a capricious, whimsical, arbitrary or despotic manner, which is not true in the present case.[21] With respect to attorneys fees, suffice it to say that in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum award of ten percent (10%) of the monetary award by way of attorneys fees is legally and morally justifiable under Art. 111 of the Labor Code,[22] Sec. 8, Rule VIII, Book III of its Implementing Rules,[23] and par. 7, Art. 2208[24] of the Civil Code.[25] The case of Albenson Enterprises Corporation