Page |1

LABOR STANDARD
SECOND DIVISION G.R. No. 185556 March 28, 2011 SUPREME STEEL CORPORATION, Petitioner, vs. NAGKAKAISANG MANGGAGAWA NG SUPREME INDEPENDENT UNION (NMSIND-APL), Respondent. D E C I S I O N NACHURA, J.: This petition for review on certiorari assails the Court of Appeals (CA) Decision1 dated September 30, 2008, and Resolution dated December 4, 2008, which affirmed the finding of the National Labor Relations Commission (NLRC) that petitioner violated certain provisions of the Collective Bargaining Agreement (CBA). Petitioner Supreme Steel Pipe Corporation is a domestic corporation engaged in the business of manufacturing steel pipes for domestic and foreign markets. Respondent Nagkakaisang Manggagawa ng Supreme Independent Union is the certified bargaining agent of petitioners rank-and-file 2 employees. The CBA in question was executed by the parties to cover the period from June 1, 2003 to May 31, 2008. The Case On July 27, 2005, respondent filed a notice of strike with the National Conciliation and Mediation Board (NCMB) on the ground that petitioner violated certain provisions of the CBA. The parties failed to settle

their dispute. Consequently, the Secretary of Labor certified the case to the NLRC for compulsory arbitration pursuant to Article 263(g) of the Labor Code. Respondent alleged eleven violations, delineated follows: CBA as

A. Denial to four employees of the CBA- provided wage increase Article XII, Section CBA provides: 1 of the

Section 1. The COMPANY shall grant a general wage increase, over and above to all employees, according to the following schedule: A. Effective June 1, 2003 P14.00 per working day; B. Effective June 1, 2004 P12.00 per working day; and C. Effective June 1, 2005 P12.00 per working day.3 Respondent alleged that petitioner has repeatedly denied the annual CBA increases to at least four individuals: Juan Nio, Reynaldo Acosta, Rommel Talavera, and Eddie Dalagon. According to respondent, petitioner gives an anniversary increase to its employees upon reaching their first year of employment. The four employees received their respective anniversary increases and petitioner used such anniversary increase to justify the denial of their CBA increase for the year.4 Petitioner explained that it has been the companys long standing practice that upon reaching one year of service, a wage adjustment is granted, and, once wages are adjusted, the increase provided for in the CBA for that year is no longer implemented.

Page |2

Petitioner claimed that this practice was not objected to by respondent as evidenced by the employees pay slips.5 Respondent countered that petitioner failed to prove that, as a matter of company practice, the anniversary increase took the place of the CBA increase. It contended that all employees should receive the CBA stipulated increase for the 6 years 2003 to 2005. B. Contracting-out labor Article II, Section 6 of the CBA provides: Section 6. Prohibition of Contracting Out of Work of Members of Bargaining Unit. Thirty (30) days from the signing of this CBA, contractual employees in all departments, except Warehouse and Packing Section, shall be phased out. Those contractual employees who are presently in the workforce of the COMPANY shall no longer be allowed to work after the expiration of their contracts without prejudice to being hired as probationary employees of the COMPANY.7 Respondent claimed that, contrary to this provision, petitioner hired temporary workers for five months based on uniformly worded employment contracts, renewable for five months, and assigned them to almost all of the departments in the company. It pointed out that, under the CBA, temporary workers are allowed only in the Warehouse and Packing Section; consequently, employment of contractual employees outside this section, whether direct or agency-hired, was absolutely prohibited. Worse, petitioner never regularized them even if the

position they occupied and the services they performed were necessary and desirable to its business. Upon the expiration of their contracts, these workers would be replaced with other workers with the same employment status. This scheme is a clear circumvention of the laws on regular employment. 8 Respondent argued that the right to self-organization goes beyond the maintenance of union membership. It emphasized that the CBA maintains a union shop clause which gives the regular employees 30 days within which to join respondent as a condition for their continued employment. Respondent maintained that petitioners persistent refusal to grant regular status to its employees, such as Dindo Buella, who is assigned in the Galvanizing Department, violates the employees right to selforganization in two ways: (1) they are deprived of a representative for collective bargaining purposes; and (2) respondent is deprived the right to expand its membership. Respondent contended that a unions strength lies in its number, which becomes crucial especially during negotiations; after all, an employer will not bargain seriously with a union whose membership constitutes a minority of the total workforce of the company. According to respondent, out of the 500 employees of the company, only 147 are union members, and at least 60 employees would have been eligible for union membership had they been recognized as regular employees.9 For its part, petitioner admitted that it hired temporary workers. It purportedly did so to cope with the seasonal

Page |3

increase of the job orders from abroad. In order to comply with the job orders, petitioner hired the temporary workers to help the regular workers in the production of steel pipes. Petitioner maintained that these workers do not affect respondents membership. Petitioner claimed that it agreed to terminate these temporary employees on the condition that the regular employees would have to perform the work that these employees were performing, but respondent refused. Respondents refusal allegedly proved that petitioner was not contracting out the services being performed by union members. Finally, petitioner insisted that the hiring of temporary workers is a management prerogative.10 C. Failure service to provide shuttle

Respondent asserted that petitioner is liable for the expenses incurred by three employees who were injured while in the company premises. This liability allegedly stems from Article VIII, Section 4 of the CBA which provides: Section 4. The COMPANY agrees to provide first aid medicine and first aid service and consultation free of charge to all its employees.14 According to respondent, petitioners definition of what constitutes first aid service is limited to the bare minimum of treating injured employees while still within the company premises and referring the injured employee to the Chinese General Hospital for treatment, but the travel expense in going to the hospital is charged to the employee. Thus, when Alberto Guevarra and Job Canizares, union members, were injured, they had to pay P90.00 each for transportation expenses in going to the hospital for treatment and going back to the company thereafter. In the case of Rodrigo Solitario, petitioner did not even shoulder the cost of the first aid medicine, amounting to P2,113.00, even if he was injured during the company sportsfest, but the amount was deducted, instead, from his salary. Respondent insisted that this violates the above cited provision of the CBA.15 Petitioner insisted that it provided medicine and first aid assistance to Rodrigo Solitario.1avvphi1 It alleged that the latter cannot claim hospitalization benefits under Article VIII, Section 116 of the CBA because he was not confined in a hospital.17

Petitioner has allegedly reneged on its obligation to provide shuttle service for its employees pursuant to Article XIV, Section 7 of the CBA, which provides: Section 7. Shuttle Service. As per company practice, once the company vehicle used for the purpose has been reconditioned.11 Respondent claimed that the company vehicle which would be used as shuttle service for its employees has not been reconditioned by petitioner since the signing of the CBA on February 26, 2004.12 Petitioner explained that it is difficult to implement this provision and simply denied that it has reneged on its obligation.13 D. Refusal to answer for the medical expenses incurred by three employees

Page |4

E. Failure to comply with time-off with pay provision

the

Article II, Section 8 of the CBA provides: Section 8. Time-Off with Pay. The COMPANY shall grant to the UNIONs duly authorized representative/s or to any employee who are on duty, if summoned by the UNION to testify, if his/her presence is necessary, a paid time-off for the handling of grievances, cases, investigations, labormanagement conferences provided that if the venue of the case is outside Company premises involving [the] implementation and interpretation of the CBA, two (2) representatives of the UNION who will attend the said hearing shall be considered time-off with pay. If an employee on a night shift attends grievance on laborrelated cases and could not report for work due to physical condition, he may avail of union leave without need of the two (2) days prior notice.18 Respondent contended that under the said provision, petitioner was obliged to grant a paid time-off to respondents duly authorized representative or to any employee who was on duty, when summoned by respondent to testify or when the employees presence was necessary in the grievance hearings, meetings, or investigations.19 Petitioner admitted that it did not honor the claim for wages of the union officers who attended the grievance meetings because these meetings were initiated by respondent itself. It argued that since the union officers were performing their functions as such, and not as employees of the company, the latter should

not be liable. Petitioner further asserted that it is not liable to pay the wages of the union officers when the meetings are held beyond company time (3:00 p.m.). It claimed that time-off with pay is allowed only if the venue of the meeting is outside company premises and the meeting involves the implementation and 20 interpretation of the CBA. In reply, respondent averred that the above quoted provision does not make a qualification that the meetings should be held during office hours (7:00 a.m. to 3:00 p.m.); hence, for as long as the presence of the employee is needed, time spent during the grievance meeting should be paid.21 F. Visitors free access to company premises Respondent charged petitioner with violation of Article II, Section 7 of the CBA which provides: Section 7. Free Access to Company Premises. Local Union and Federation officers (subject to companys security measure) shall be allowed during working hours to enter the COMPANY premises for the following reasons: a. To grievances arisen; investigate that have

b. To interview Union Officers, Stewards and members during reasonable hours; and c. To attend to any meeting called by the Management or the UNION.22 G. Failure to comply with reporting time-off provision Respondent maintained that a brownout is covered by Article

Page |5

XII, Section 3 of the CBA which states: Section 3. Reporting Time-Off. The employees who have reported for work but are unable to continue working because of emergencies such as typhoons, flood, earthquake, transportation strike, where the COMPANY is affected and in case of fire which occurs in the block where the home of the employee is situated and not just across the street and serious illness of an immediate member of the family of the employee living with him/her and no one in the house can bring the sick family member to the hospital, shall be paid as follows: a. At least half day if the work stoppage occurs within the first four (4) hours of work; and b. A whole day if the work stoppage occurs after four (4) hours of work.23 Respondent averred that petitioner paid the employees salaries for one hour only of the four-hour brownout that occurred on July 25, 2005 and refused to pay for the remaining three hours. In defense, petitioner simply insisted that brownouts are not included in the above list of emergencies.24 Respondent rejoined that, under the principle of ejusdem generis, brownouts or power outages come within the "emergencies" contemplated by the CBA provision. Although brownouts were not specifically identified as one of the emergencies listed in the said CBA provision, it cannot be denied that brownouts fall within the same kind or class of the enumerated emergencies.

Respondent maintained that the intention of the provision was to compensate the employees for occurrences which are beyond their control, and power outage is one of such occurrences. It insisted that the list of emergencies is not an exhaustive list but merely gives an idea as to what constitutes an actual emergency that is beyond the control of the employee.25 H. Dismissal of Diosdado Madayag Diosdado Madayag was employed as welder by petitioner. He was served a Notice of Termination dated March 14, 2005 which read: Please consider this as a Notice of Termination of employment effective March 14, 2005 under Art. 284 of the Labor Code and its Implementing Rules. This is based on the medical certificate submitted by your attending physician, Lucy Anne E. Mamba, M.D., Jose R. Reyes Memorial Medical Center dated March 7, 2005 with the following diagnosis: Diabetes Mellitus Type 2 Please be guided accordingly.26 Respondent contended that Madayags dismissal from employment is illegal because petitioner failed to obtain a certification from a competent public authority that his disease is of such nature or at such stage that it cannot be cured within six months even after proper medical treatment. Petitioner also failed to prove that Madayags continued employment was prejudicial to his health or that of his colleagues.27 Petitioner, on the other hand, alleged that Madayag was validly terminated under Art. 28428 of

Page |6

the Labor Code and that his leg was amputated by reason of diabetes, which disease is not work-related. Petitioner claimed that it was willing to pay Madayag 13 days for every year of service but respondent was asking for additional 29 benefits. I. Denial of paternity benefit to two employees leave

Article XV, Section 2 of the CBA provides: Section 2. Paternity Leave. As per law[,] [t]he Company shall, as much as possible, pay paternity leave within 2 weeks from submission of documents.30 Petitioner admitted that it denied this benefit to the claimants for failure to observe the requirement provided in the Implementing Rules and Regulations of Republic Act No. 8187 (Paternity Leave Act of 1995), that is, to notify the employer of the pregnancy of their wives and the expected date of delivery.31 Respondent argued that petitioner is relying on technicalities by insisting that the denial was due to the two employees failure to notify it of the pregnancy of their respective spouses. It maintained that the notification requirement runs counter to the spirit of the law. Respondent averred that, on grounds of social justice, the oversight to notify petitioner should not be dealt with severely by denying the two claimants this 32 benefit. J. Discrimination and harassment According to respondent, petitioner was contemptuous over union officers for protecting the rights of union members. In

an affidavit executed by Chito Guadaa, union secretary, he narrated that Alfred Navarro, Officer-in-Charge of the Packing Department, had been harsh in dealing with his fellow employees and would even challenge some workers to a fight. He averred that Navarro had an overbearing attitude during work and grievance meetings. In November 2004, Navarro removed Guadaa, a foreman, from his position and installed another foreman from another section. The action was allegedly brought about by earlier grievances against Navarros abuse. Petitioner confirmed his transfer to another section in violation of Article VI, Section 6 of the CBA,33 which states in part: Section 6. Transfer of Employment. No permanent positional transfer outside can be effected by the COMPANY without discussing the grounds before the Grievance Committee. All transfer shall be with advance notice of two (2) weeks. No transfer shall interfere with the employees exercise of the right to self-organization.34 Respondent also alleged that Ariel Marigondon, union president, was also penalized for working for his fellow employees. One time, Marigondon inquired from management about matters concerning tax discrepancies because it appeared that non-taxable items were included as part of taxable income. Thereafter, Marigondon was transferred from one area of operation to another until he was allegedly forced to accept menial jobs of putting control tags on steel pipes, a kind of job which did not require his 16 years of expertise in examining steel pipes.35

Page |7

Edgardo Masangcay, respondents Second Vice President, executed an affidavit wherein he cited three instances when his salary was withheld by petitioner. The first incident happened on May 28, 2005 when petitioner refused to give his salary to his wife despite presentation of a proof of identification (ID) and letter of authorization. On June 18, 2005, petitioner also refused to release his salary to Pascual Lazaro despite submission of a letter of authority and his ID and, as a result, he was unable to buy medicine for his child who was suffering from asthma attack. The third instance happened on June 25, 2005 when his salary was short of P450.00; this amount was however released the following week.36 Petitioner explained that the transfer of the employee from one department to another was the result of downsizing the Warehouse Department, which is a valid exercise of management prerogative. In Guadaas case, Navarro denied that he was being harsh but claimed that he merely wanted to stress some points. Petitioner explained that Guadaa was transferred when the section where he was assigned was phased out due to the installation of new machines. Petitioner pointed out that the other workers assigned in said section were also transferred.37 For the petitioner, Emmanuel Mendiola, Production Superintendent, also executed an affidavit attesting that the allegation of Ariel Marigondon, that he was harassed and was a victim of discrimination for being respondents President, had no basis. Marigondon pointed out that after the job order was completed, he was reassigned to his original shift and group.38

Petitioner also submitted the affidavits of Elizabeth Llaneta Aguilar, disbursement clerk and hiring staff, and Romeo T. Sy, Assistant Personnel Manager. Aguilar explained that she did not mean to harass Masangcay, but she merely wanted to make sure that he would receive his salary. Affiant Sy admitted that he refused to release Masangcays salary to a woman who presented herself as his (Masangcays) wife since nobody could attest to it. He claimed that such is not an act of harassment but a precautionary measure to protect Masangcays interest.39 K. Non-implementation of COLA in Wage Order Nos. RBIII-10 and 11 Respondent posited that any form of wage increase granted through the CBA should not be treated as compliance with the wage increase given through the wage boards. Respondent claimed that, for a number of years, petitioner has complied with Article XII, Section 2 of the CBA which provides: Section 2. All salary increase granted by the COMPANY shall not be credited to any future contractual or legislated wage increases. Both increases shall be implemented separate and distinct from the increases stated in this Agreement. It should be understood by both parties that contractual salary increase are separate and distinct from legislated wage increases, thus the increase brought by the latter shall be enjoyed also by all covered employees.40 Respondent maintained that for every wage order that was issued in Region 3, petitioner never hesitated to comply and grant a similar increase. Specifically,

Page |8

respondent cited petitioners compliance with Wage Order No. RBIII-10 and grant of the mandated P15.00 cost of living allowance (COLA) to all its employees. Petitioner, however, stopped implementing it to nonminimum wage earners on July 24, 2005. It contended that this violates Article 100 of the Labor Code which prohibits the diminution of benefits already enjoyed by the workers and that such grant of benefits had already ripened into a company practice.41 Petitioner explained that the COLA provided under Wage Order No. RBIII-10 applies to minimum wage earners only and that, by mistake, it implemented the same across the board or to all its employees. After realizing its mistake, it stopped integrating the COLA to the basic pay of the workers who were earning above the minimum wage.42 The NLRCs Ruling Out of the eleven issues raised by respondent, eight were decided in its favor; two (denial of paternity leave benefit and discrimination of union members) were decided in favor of petitioner; while the issue on visitors free access to company premises was deemed settled during the mandatory conference. The dispositive portion of the NLRC Decision dated March 30, 2007 reads: WHEREFORE, Supreme Steel Pipe Corporation (the Company) is hereby ordered to: 1) implement general wage increase to Juan Nio, Eddie Dalagon and Rommel Talavera pursuant to the CBA in June 2003, 2004 and 2005;

2) regularize workers Dindo Buella and 60 other workers and to respect CBA provision on contractingout labor; 3) recondition the company vehicle pursuant to the CBA; 4) answer for expenses involved in providing first aid services including transportation expenses for this purpose, as well as to reimburse Rodrigo Solitario the sum of P2,113.00; 5) pay wages of union members/officers who attended grievance meetings as follows: 6) pay workers their salary for the 3 hours of the 4 hour brownout as follows: 7) reinstate Diosdado Madayag to his former position without loss of seniority rights and to pay full backwages and other benefits from 14 March 2005, date of dismissal, until the date of this Decision; if reinstatement is impossible[,] to pay separation pay of one month pay for every year of service in addition to backwages; 8) dismiss the claim for paternity leave for failure of claimants to observe the requirements; 9) dismiss the charge of harassment and discrimination for lack of merit; and to 10) continue to implement COLA under Wage Order Nos. [RBIII]-10 & 11 across the board.

Page |9

The issue on Visitors Free Access to Company Premises is dismissed for being moot and academic after it was settled during the scheduled conferences. SO ORDERED.43 Forthwith, petitioner elevated the case to the CA, reiterating its arguments on the eight issues resolved by the NLRC in respondents favor. The CAs Ruling On September 30, 2008, the CA rendered a decision dismissing the petition, thus: WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED, for lack of merit. The assailed Decision dated March 30, 2007 and Resolution dated April 28, 2008 of the National Labor Relations Commission in NLRC NCR CC No. 000305-05 are hereby AFFIRMED. With costs petitioner. SO ORDERED.44 According to the CA, petitioner failed to show that the NLRC committed grave abuse of discretion in finding that it violated certain provisions of the CBA. The NLRC correctly held that every employee is entitled to the wage increase under the CBA despite receipt of an anniversary increase. The CA concluded that, based on the wording of the CBA, which uses the words "general increase" and "over and above," it cannot be said that the parties have intended the anniversary increase to be given in lieu of the CBA wage increase.45 against the

The CA declared that the withdrawal of the COLA under Wage Order No. RBIII-10 from the employees who were not minimum wage earners amounted to a diminution of benefits because such grant has already ripened into a company practice. It pointed out that there was no ambiguity or doubt as to who were covered by the wage order. Petitioner, therefore, may not invoke error or mistake in extending the COLA to all employees and such act can only be construed as "as a voluntary act on the part of the 46 employer." The CA opined that, considering the foregoing, the ruling in Globe Mackay Cable and Radio Corp. v. NLRC47 clearly did not apply as there was no doubtful or difficult question involved in the present case.48 The CA sustained the NLRCs interpretation of Art. VIII, Section 4 of the CBA as including the expenses for first aid medicine and transportation cost in going to the hospital. The CA stressed that the CBA should be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it was negotiated and the purpose which it intended to serve.49 Based on the principle of liberal construction of the CBA, the CA likewise sustained the NLRCs rulings on the issues pertaining to the shuttle service, time-off for attendance in grievance meetings/hearings, and time-off due to brownouts.50 The CA further held that management prerogative is not unlimited: it is subject to limitations found in law, a CBA, or the general principles of

P a g e | 10

fair play and justice. It stressed that the CBA provided such limitation on management prerogative to contract-out labor, and compliance with the CBA is mandated by the express policy of the law.51 Finally, the CA affirmed the NLRCs finding that Madayags dismissal was illegal. It emphasized that the burden to prove that the employees disease is of such nature or at such stage that it cannot be cured within a period of six months rests on the employer. Petitioner failed to submit a certification from a competent public authority attesting to such fact; hence, Madayags dismissal is illegal.52 Petitioner moved for a reconsideration of the CAs decision. On December 4, 2008, the CA denied the motion for lack of merit.53 Dissatisfied, petitioner filed this petition for review on certiorari, contending that the CA erred in finding that it violated certain provisions of the CBA. The Courts Ruling The petition meritorious. is partly

it.55 Any doubt in the interpretation of any law or provision affecting labor should be resolved in favor of labor.56 Upon these well-established precepts, we sustain the CAs findings and conclusions on all the issues, except the issue pertaining to the denial of the COLA under Wage Order No. RBIII10 and 11 to the employees who are not minimum wage earners. The wording of the CBA on general wage increase cannot be interpreted any other way: The CBA increase should be given to all employees "over and above" the amount they are receiving, even if that amount already includes an anniversary increase. Stipulations in a contract must be read together, not in isolation from one 57 another. Consideration of Article XIII, Section 2 (noncrediting provision), bolsters such interpretation. Section 2 states that "[a]ll salary increase granted by the company shall not be credited to any future contractual or legislated wage increases." Clearly then, even if petitioner had already awarded an anniversary increase to its employees, such increase cannot be credited to the "contractual" increase as provided in the CBA, which is considered "separate and distinct." Petitioner claims that it has been the company practice to offset the anniversary increase with the CBA increase. It however failed to prove such material fact. Company practice, just like any other fact, habits, customs, usage or patterns of conduct must be proven. The offering party must allege and prove specific, repetitive conduct that might constitute evidence of habit,58

It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and compliance therewith is mandated by the express policy of the law. If the terms of a CBA are clear and there is no doubt as to the intention of the contracting parties, the literal meaning of its stipulation shall prevail.54 Moreover, the CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and realistic construction upon

P a g e | 11

or company practice. Evidently, the pay slips of the four employees do not serve as sufficient proof. Petitioners excuse in not providing a shuttle service to its employees is unacceptable. In fact, it can hardly be considered as an excuse. Petitioner simply says that it is difficult to implement the provision. It relies on the fact that "no time element [is] explicitly stated [in the CBA] within which to fulfill the undertaking." We cannot allow petitioner to dillydally in complying with its obligation and take undue advantage of the fact that no period is provided in the CBA. Petitioner should recondition the company vehicle at once, lest it be charged with and found guilty of unfair labor practice. Petitioner gave a narrow construction to the wording of the CBA when it denied (a) reimbursement for the first-aid medicines taken by Rodrigo Solitario when he was injured during the company sportsfest and the transportation cost incurred by Alberto Guevara and Job Canizares in going to the hospital, (b) payment of the wages of certain employees during the time they spent at the grievance meetings, and (c) payment of the employees wages during the brownout that occurred on July 25, 2002. As previously stated, the CBA must be construed liberally rather than narrowly and technically. It is the duty of the courts to place a practical and realistic construction upon the CBA, giving due consideration to the context in which it is negotiated and the purpose which it is intended to serve. Absurd and illogical interpretations should be avoided.59 A CBA, like

any other contract, must be interpreted according to the intention of the parties.60 The CA was correct in pointing out that the concerned employees were not seeking hospitalization benefits under Article VIII, Section 1 of the CBA, but under Section 4 thereof; hence, confinement in a hospital is not a prerequisite for the claim. Petitioner should reimburse Solitario for the first aid medicines; after all, it is the duty of the employer to maintain first- aid medicines in its premises.61 Similarly, Guevara and Canizares should also be reimbursed for the transportation cost incurred in going to the hospital. The Omnibus Rules Implementing the Labor Code provides that, where the employer does not have an emergency hospital in its premises, the employer is obliged to transport an employee to the nearest hospital or 62 clinic in case of emergency. We likewise agree with the CA on the issue of nonpayment of the time-off for attending grievance meetings. The intention of the parties is obviously to compensate the employees for the time that they spend in a grievance meeting as the CBA provision categorically states that the company will pay the employee "a paid time-off for handling of grievances, investigations, labor-management conferences." It does not make a qualification that such meeting should be held during office hours or within the company premises. The employees should also be compensated for the time they were prevented from working due to the brownout. The CBA enumerates some of the instances considered as "emergencies" and

P a g e | 12

these are "typhoons, flood earthquake, transportation strike." As correctly argued by respondent, the CBA does not exclusively enumerate the situations which are considered "emergencies." Obviously, the key element of the provision is that employees "who have reported for work are unable to continue working" because of the incident. It is therefore reasonable to conclude that brownout or power outage is considered an "emergency" situation. Again, on the issue of contracting-out labor, we sustain the CA. Petitioner, in effect, admits having hired "temporary" employees, but it maintains that it was an exercise of management prerogative, necessitated by the increase in demand for its product. Indeed, jurisprudence recognizes the right to exercise management prerogative. Labor laws also discourage interference with an employer's judgment in the conduct of its business. For this reason, the Court often declines to interfere in legitimate business decisions of employers. The law must protect not only the welfare of employees, but also the right of employers.63 However, the exercise of management prerogative is not unlimited. Managerial prerogatives are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice.64 The CBA is the norm of conduct between the parties and, as previously stated, compliance therewith is mandated by the express policy of the law.65

The CBA is clear in providing that temporary employees will no longer be allowed in the company except in the Warehouse and Packing Section. Petitioner is bound by this provision. It cannot exempt itself from compliance by invoking management prerogative. Management prerogative must take a backseat when faced with a CBA provision. If petitioner needed additional personnel to meet the increase in demand, it could have taken measures without violating the CBA. Respondent claims that the temporary employees were hired on five-month contracts, renewable for another five months. After the expiration of the contracts, petitioner would hire other persons for the same work, with the same employment status. Plainly, petitioners scheme seeks to prevent employees from acquiring the status of regular employees. But the Court has already held that, where from the circumstances it is apparent that the periods of employment have been imposed to preclude acquisition of security of tenure by the employee, they should be struck down or disregarded as contrary to 66 public policy and morals. The primary standard to determine a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and

P a g e | 13

continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business of the employer. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.67 We also uphold the CAs finding that Madayags dismissal was illegal. It is already settled that the burden to prove the validity of the dismissal rests upon the employer. Dismissal based on Article 284 of the Labor Code is no different, thus: The law is unequivocal: the employer, before it can legally dismiss its employee on the ground of disease, must adduce a certification from a competent public authority that the disease of which its employee is suffering is of such nature or at such a stage that it cannot be cured within a period of six months even with proper treatment. x x x x In Triple Eight Integrated Services, Inc. v. NLRC, the Court explains why the submission of the requisite medical certificate is for the employers compliance, thus: The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy on the protection of labor. x x x x68

However, with respect to the issue of whether the COLA under Wage Order Nos. RBIII-10 and 11 should be implemented across the board, we hold a different view from that of the CA. No diminution of benefits would result if the wage orders are not implemented across the board, as no such company practice has been established. Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees. There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.69 To recall, the CA arrived at its ruling by relying on the fact that there was no ambiguity in the wording of the wage order as to the employees covered by it. From this, the CA concluded that petitioner actually made no error or mistake, but acted voluntarily, in granting the COLA to all its employees. It therefore took exception to the Globe Mackay case which, according to it, applies only when there is a doubtful or difficult question involved. The CA failed to note that Globe Mackay primarily emphasized that, for the grant of the benefit to be considered voluntary, "it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate."70 The fact that the

P a g e | 14

practice must not have been due to error in the construction or application of a doubtful or difficult question of law is a distinct requirement. The implementation of the COLA under Wage Order No. RBIII-10 across the board, which only lasted for less than a year, cannot be considered as having been practiced "over a long period of time." While it is true that jurisprudence has not laid down any rule requiring a specific minimum number of years in order for a practice to be considered as a voluntary act of the employer, under existing jurisprudence on this matter, an act carried out within less than a year would certainly not qualify as such. Hence, the withdrawal of the COLA Wage Order No. RBIII-10 from the salaries of non-minimum wage earners did not amount to a "diminution of benefits" under the law. There is also no basis in enjoining petitioner to implement Wage Order No. RBIII11 across the board. Similarly, no proof was presented showing that the implementation of wage orders across the board has ripened into a company practice. In the same way that we required petitioner to prove the existence of a company practice when it alleged the same as defense, at this instance, we also require respondent to show proof of the company practice as it is now the party claiming its existence. Absent any proof of specific, repetitive conduct that might constitute evidence of the practice, we cannot give credence to respondents claim. The isolated act of implementing a wage order across the board can hardly be considered a 71 company practice, more so when

such implementation erroneously made.

was

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The CA Decision September 30, 2008 and Resolution dated December 4, 2008 are AFFIRMED with MODIFICATION that the order for petitioner to continue implementing Wage Order No. RBIII-10 and 11 across the board is SET ASIDE. Accordingly, item 10 of the NLRC Decision dated March 30, 2007 is modified to read "dismiss the claim for implementation of Wage Order Nos. RBIII-10 and 11 to the employees who are not minimum wage earners." SO ORDERED. ANTONIO EDUARDO Associate Justice HIRD DIVISION G.R. No. 172029 August 6, 2008 ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., in its own behalf and in representation of its members: AMERICAN TRANSPORT LINES, INC., AUSTRALIAN NATIONAL LINE, FLEET TRANS INTERNATIONAL AND UNITED ARAB SHIPPING CO., DONGNAMA SHIPPING CO., HANJIN SHIPPING COMPANY, LTD., HAPAGLLOYD A/G, KNUTSEN LINE, KYOWA LINE, NEPTUNE ORIENT LINE, ORIENT OVERSEAS CONTAINER LINE, P & O CONTAINERS, LTD., P & O SWIRE CONTAINERS AND WILH WILHELMSEN LINE A/S, REGIONAL CONTAINERS LINES (PTE), LTD., SENATOR LINE BREMEN GERMANY, TOKYO SENPAKU KAISHA, LTD., UNIGLORY LINE, WAN HAI LINES, LTD., WESTWIND LINE, ZIM ISRAEL NAVIGATION CO., LTD., COMPANIA SUD AMERICANA DE VAPORES S.A., DEUTSCHE SEEREEDEREI ROSTOCK (DSR) GERMANY AND ARIMURA SANGYO COMPANY, LTD., PACIFIC B. NACHURA

P a g e | 15

INTERNATIONAL LINES (PTE), LTD., COMPAGNIE MARITIME D' AFFRETEMENT (CMA), YANGMING MARINE TRANSPORT CORP., NIPON YUSEN KAISHA, HYUNDAI MERCHANT MARINE CO., LTD., MALAYSIAN INTERNATIONAL SHIPPING CORPORATION BERHAD, BOLT ORIENT LINE, MITSUI O.S.K. LINES, LTD., PHILS. MICRONESIA & ORIENT NAVIGATION CO. (PMSO LINE), LLOYD TRIESTINO DI NAVIGAZIONE S.P.A.N., HEUNG-A SHIPPING COMPANY, KAWASAKI KISEN KAISHAARIMURA SANGYO COMPANY, LTD., AMERICAN PRESIDENT LINES, LTD., MAERSK FILIPINAS, INC., EASTERN SHIPPING LINES, INC., NEDLLOYD LINES, INC., PHILIPPINE PRESIDENT LINES, LTD., SEA-LAND SERVICE, INC., MADRIGAL-WAN HAI LINES, petitioners, vs. UNITED HARBOR PILOTS' ASSOCIATION OF THE PHILIPPINES, INC., respondent. D E C I S I O N REYES, R.T., J.: PAYMENT of nighttime and overtime differential of harbor pilots is the object of this petition for review on 1 2 certiorari of the Decision of the Court of Appeals (CA) partly setting aside the Order3 of the Regional Trial Court (RTC), Branch 36, Manila pertaining to a motion for execution. The Facts On March 1, 1985, the Philippine Ports Authority (PPA) issued PPA Administrative Order (AO) No. 03-85 substantially adopting the provisions of Customs Administrative Order (CAO) No. 15-654 on the payment of additional charges for pilotage service5 rendered "between 1800H to 1600H," or on "Sundays or Holidays," practically referring

to "nighttime and overtime pay." Section 16 of the AO reads: Section 16. Payment of Pilotage Service Fees. Any vessel which employs a Harbor Pilot shall pay the pilotage fees prescribed in this Order and shall comply with the following conditions: x x x x c) When pilotage service is rendered at any port between 1800H to 1600H, Sundays or Holidays, an additional charge of one hundred (100%) percentum over the regular pilotage fees shall be paid by vessels engaged in foreign trade, and fifty (50%) percentum by coastwise vessels. This additional charge or premium fee for nighttime pilotage service shall likewise be paid when the pilotage service is commenced before and terminated after sunrise. Provided, however, that no premium fee shall be considered for service rendered after 1800H if it shall be proven that the service can be undertaken before such hours after the one (1) hour grace period, as provided in paragraph (d) of this section, has expired. (Emphasis supplied) On February 3, 1986, responding to the clamor of harbor pilots for the increase and rationalization of pilotage service charges, then President Ferdinand E. Marcos issued Executive Order (EO) No. 1088 providing for uniform and

P a g e | 16

modified rates for pilotage services rendered in all Philippine ports. It fixed the rate of pilotage fees on the basis of the "vessel's tonnage" and provided that the "rate for docking and undocking anchorage, conduction and shifting and other related special services is equal to 100%." EO No. 1088 also contained a repealing clause stating that all orders, letters of instruction, rules, regulations, and issuances inconsistent with it are repealed or amended accordingly.6 Subsequently, pursuant to EO No. 1088, the PPA issued several resolutions disallowing overtime premium or charge and recalling its recommendation for a reasonable night premium pay or night differential pay, viz.: RESOLUTION NO. 14867 RESOLVED, That on motion duly seconded, and in consideration of the proper court order(s) mandating PPA to implement the pilotage rates under Executive Order No. 1088, the overtime premium or charge collected by Harbor Pilots is hereby disallowed and Section 16(c) of Article III of PPA Administrative Order No. 03-85, prescribing general guidelines on pilotage services, be, as it is hereby repealed and modified accordingly; RESOLVED FURTHER, That the General Manager, be, as he is hereby authorized, to issue the corresponding amendatory guidelines.

RESOLUTION NO. 15418 RESOLVED, That on motion duly seconded, and after taking into consideration the respective positions of the various Harbor Pilot associations and shipping groups, Board Resolution No. 1486, be, as it is hereby reiterated and affirmed, and Management, be, as it is hereby directed to adopt a policy of no overtime pay for pilotage services; RESOLVED FURTHER, That in lieu of the "no overtime pay policy," Management be, as it is hereby directed, to recommend a reasonable night premium pay or night differential pay for the conduct of the basic pilotage services." RESOLUTION NO. 15549 RESOLVED, That on motion duly seconded, and taking into consideration the arguments raised by the Association of International Shipping Lines, Inc., raising certain legal issues on the adoption of Resolution No. 1541, as adopted on November 13, 1995, the proposed PPA Administrative Order No. 19-95, hereto attached and incorporated by reference, recommending amendments to Section 16(c) of PPA Administrative Order No. 03-85, disallowing overtime pay and authorizing instead the collection of nighttime premium pay for pilotage services rendered during nighttime (1800H to 0600H), be, as it is hereby deferred, for further legal review;

P a g e | 17

RESOLVED FURTHER, That pending review and clarification by the Office of the Government Corporate Counsel of the legal issues on overtime pay/nighttime premium pay, Resolution No. 1541, be, as it is hereby recalled and Resolution No. 1486, as adopted on May 19, 1995, be, as it is hereby reaffirmed. On the strength of PPA Resolution No. 1486, petitioners Association of International Shipping Lines (AISL) and its members refused to pay respondent United Harbor Pilots' Association of the Philippines, Inc. (UHPAP)'s claims for nighttime and overtime pay.10 In response, UHPAP threatened to discontinue pilotage services should their claims be continually ignored.11 Petitioners then filed a petition for declaratory relief with the RTC, Branch 36, Manila, docketed as Civil Case No. 9678400. The issues raised there were: (1) whether EO No. 1088 authorized the payment of nighttime and overtime pay; and (2) whether the rate of pilotage fees enumerated in EO No. 1088 were for "every pilotage maneuver" or for the "entire package of pilotage services." On January 26, 1998, the RTC granted the petition and declared that respondent UHPAP is not authorized to collect any overtime or night shift differential for pilotage services rendered. The RTC disposed as follows: WHEREFORE, judgment is hereby rendered granting the petition herein and it is hereby declared that (1) respondent PPA is bereft of authority to impose and

respondent UHPAP is not authorized to collect any overtime or night shift differential for pilotage services rendered; and (2) the rates of fees for pilotage services rendered refer to the totality of pilotage services rendered and respondent UHPAP cannot legally charge separate fees for each pilotage service rendered. All billings inconsistent with this decision are declared null and void and petitioners are not liable therefor. SO ORDERED.12 supplied) (Emphasis

The trial court said that in view of the repealing clause in EO No. 1088, it was axiomatic that all prior issuances inconsistent with it were deemed repealed. Thus, the provisions of Section 16 of PPA AO No. 0385 on nighttime and overtime pay were "effectively stricken-off the books." It further held that since the rate of pilotage fees enumerated in EO No. 1088 was based on the "vessel's tonnage," it meant that such rate referred to the "entire package of pilotage services." According to the trial court, to rule otherwise is to frustrate the uniformity envisioned by the rationalization scheme. Respondent UHPAP moved for reconsideration but the motion was denied. Desiring to secure for its members the payment of nighttime and overtime pay, respondent UHPAP filed directly before this Court a petition for review on certiorari, docketed as G.R. No. 133763, raising the following legal issues for determination: (1) whether EO No. 1088 repealed

P a g e | 18

the provisions of CAO No. 15-65 and PPA AO No. 03-85, as amended, on payment of additional pay for holidays work and premium pay for nighttime service; (2) whether the rates, as fixed in the schedule of fees based on tonnage in EO No. 1088, are to be imposed on every pilotage movement; and (3) whether EO No. 1088 deprived the PPA of its right, duty and obligation to promulgate new rules and rates for payment of fees, including additional pay for holidays and premium pay for nighttime services. On November 13, 2002, this Court granted the petition and reversed the RTC. This Court held then: Section 3 of E.O. No. 1088 is a general repealing clause, the effect of which falls under the category of an implied repeal as it does not identify the orders, rules or regulations it intends to abrogate. A repeal by implication is frowned upon in this jurisdiction. It is not favored, unless it is manifest that the legislative authority so intended or unless it is convincingly and unambiguously demonstrated that the subject laws or orders are clearly repugnant and patently inconsistent that they cannot co-exist. This is because the legislative authority is presumed to know the existing law so that if repeal is intended, the proper step is to express it. There is nothing in E.O. No. 1088 that reveals any intention on the part of Former President Marcos to

amend or supersede the provisions of PPA AO No. 03-85 on nighttime and overtime pay. While it provides a general repealing clause, the same is made dependent upon its actual inconsistency with other previous orders, rules, regulations or other issuance. Unfortunately for AISL, we find no inconsistency between E.O. No. 1088 and the provisions of PPA AO No. 03-85. At this juncture, it bears pointing out that these two orders dwell on entirely different subject matters. E.O. No. 1088 provides for uniform and modified rates for pilotage services rendered to foreign and coastwise vessels in all Philippine ports, public or private. The purpose is to rationalize and standardize the pilotage service charges nationwide. Upon the other hand, the subject matter of the controverted provisions of PPA AO No. 03-85 is the payment of the additional charges of nighttime and overtime pay. Plainly, E.O. No. 1088 involves the basic compensation for pilotage service while PPA AO No. 03-85 provides for the additional charges where pilotage service is rendered under certain circumstances. Just as the various wage orders do not repeal the provisions of the Labor Code on nighttime and overtime pay, the same principle holds true with respect to E.O. No. 1088 and PPA AO 03-85. Moreover, this Court adheres to the rule that every statute must be so construed and harmonized with other statutes as to form a

P a g e | 19

uniform system of jurisprudence. E.O. No. 1088 and PPA AO No. 03-85 should thus be read together and harmonized to give effect to both. x x x x While E.O. No. 1088 prescribes the rates of pilotage fees on the basis of the "vessel's tonnage," however, this does not necessarily mean that the said rate shall apply to the totality of pilotage services. If it were so, the benefit intended by E.O. No. 1088 to harbor pilots would be rendered useless and ineffectual. It would create an unjust if not an absurd situation of reducing take home pay of the harbor pilots to a single fee, regardless of the number of services they rendered from the time a vessel arrives up to its departure. It must be remembered that pilotage services cover a variety of maneuvers such as "docking," "undocking anchorage," "conduction," "shifting" and other "related special services." To say that the rate prescribed by E.O. No. 1088 refers to the totality of all these maneuvers is to defeat the benefit intended by the law for harbor pilots. It should be stressed that E.O. No. 1088 was enacted in response to the clamor of harbor pilots for the increase and rationalization of pilotage service charges through the imposition of uniform and adjusted rates. Hence, in keeping with the benefit intended by E.O. No. 1088, the schedule of fees fixed

therein based on tonnage should be interpreted as applicable to "each pilotage maneuver" and not to the "totality of the pilotage services." The use of the word "and" between the words "docking" and "undocking" in paragraph 2 of Section 1 of E.O. No. 1088 should not override the abovementioned purpose of said law. It is a basic precept of statutory construction that statutes should be construed not so much according to the letter that killeth but in line with the purpose for which they have been enacted. Statutes are to be given such construction as will advance the object, suppress the mischief, and secure the benefits intended. Furthermore, as can be gleaned from the drafts submitted by the PPA on the guidelines pertaining to the uniform pilotage services to be rendered in all pilotage districts, the PPA is of the interpretation that the rate of pilotage fees fixed by E.O. No. 1088 is to be separately imposed on every pilotage maneuver done by the harbor pilots. This interpretation is likewise made clear in PPA Memorandum Circular No. 4298, dated October 8, 1998, which clarifies pilotage charges for docking and undocking, as follows "To prevent disruption in pilotage service and considering the pendency of the final and executory decision of the Supreme

P a g e | 20

Court on the pilotage rates issue, it is hereby clarified that pilotage fees for docking and undocking of vessels shall be paid as two (2) separate services x x x." The PPA is the proper government agency tasked with the duty of implementing E.O. No. 1088. As such, its interpretation of said law carries great weight and consideration. In a catena of cases, we ruled that the construction given to a statute by an administrative agency charged with the interpretation and application of a statute is entitled to great respect and should be accorded great weight by the courts. The exception, which does not obtain in the present case, is when such construction is clearly shown to be in sharp conflict with the governing statute or the Constitution and other laws. The rationale for this rule relates not only to the emergence of the multifarious needs of a modern or modernizing society and the establishment of diverse administrative agencies for addressing and satisfying those needs, it also relates to accumulation of experience and growth of specialized capabilities by the administrative agency charged with implementing a particular statute. The charges and fees provided for in E.O. No. 1088 are therefore to be imposed for every pilotage maneuver performed by the harbor pilots, as properly

interpreted by the PPA, the agency charged with its implementation. x x x x Finally, on the third issue, we rule that E.O. No. 1088 does not deprive the PPA of its power and authority to promulgate new rules and rates for payment of fees, including additional charges. As we held in Philippine Interisland Shipping Association of the Philippines v. Court of Appeals: "The power of the PPA to fix pilotage rates and its authority to regulate pilotage still remain notwithstanding the fact that a schedule for pilotage fees has already been prescribed by the questioned executive order (referring to E.O. No. 1088). PPA is at liberty to fix new rates of pilotage subject only to the limitation that such new rates should not go below the rates fixed under E.O. No. 1088. x x x." Our pronouncement is clearly in consonance with the provisions of Presidential Decree 857 which vests upon the PPA the power and authority (1) "to supervise, control, regulate x x x such services as are necessary in the ports vested in, or belonging to the Authority"; (2) "to control, regulate and supervise pilotage and the conduct of pilots in any

P a g e | 21

Port District"; and (3) "to impose, fix, prescribe, increase or decrease such rates, charges or fees x x x for the services rendered by it or by any private organization within a Port District."13 (Emphasis supplied) The decision became final and executory on February 14, 2003. On April 8, 2003, respondent UHPAP filed a motion for the issuance of a writ of execution with the RTC.14 Petitioners 15 opposed the motion. On September 25, 2003, the RTC issued an Order16 denying respondent UHPAP's motion and declaring that "pursuant to the decision of the Supreme Court in G.R. No. 133763, PPA Resolution Nos. 1486, 1541, and 1554 are valid and effective thereby disallowing the collection of overtime pay."17 The RTC explained: x x x [W]hen the Supreme Court ruled and declared that Executive Order 1088 does not deprive the PPA of its power and authority to promulgate rules and rates for payment of fees including additional charges, it had effectively ruled on the validity of PPA resolutions 1486, 1541, and 1554. Said resolutions did not violate any provision of Executive Order 1088 and did not constitute any diminution of the rates provided by said Executive Order. They merely repealed the collection of overtime premiums or charges which is provided not by Executive Order 1088 but by another PPA Administrative Order 03-85. This is not

inconsistent with the ruling of the Supreme Court that Executive Order 1088 did not repeal the additional pay for holiday work and premium pay for nighttime service, collectively referred to as overtime pay provided in Customs Administrative Order No. 15-65 and PPA Administrative Order 03-85. The Supreme Court did not consider subsequent PPA resolutions or administrative orders affecting overtime pay because this was not brought out as an issue. Resolutions 1486, 1541, and 1554 have no effect on Executive Order 1088 18 whatsoever. (Emphasis supplied) Respondent UHPAP then filed a petition for certiorari19 under Rule 65 with the CA, docketed as CA-G.R. SP No. 87892. It contended that the RTC committed grave abuse of discretion amounting to lack of jurisdiction when it practically overturned the final and executory decision of this Court in G.R. No. 133763 by declaring in its September 25, 2003 Order that PPA Resolution Nos. 1486, 1541, and 1554 were valid and effective.20 CA Disposition In a Decision dated October 19, 2005, the CA partly granted respondent's petition in that it affirmed the denial of the motion for the issuance of a writ of execution while, at the same time, deleting portions of the challenged Order. The decretal portion of the CA Decision states:

P a g e | 22

IN VIEW OF ALL THE FOREGOING, the herein petition is hereby PARTLY GRANTED, in such a way that the denial of UHPAP's motion for the issuance of a writ of execution is AFFIRMED, while the declaration in the assailed Order of September 25, 2003 stating that "pursuant to the decision of the Supreme Court in G.R. No. 133763, PPA resolutions 1486, 1541, and 1554 are valid and effective thereby disallowing the collection of overtime pay," is RECALLED and SET ASIDE and ordered DELETED from the said Order. No pronouncement as to cost. SO ORDERED.21 supplied) (Emphasis

On November 10, 2005, petitioners filed a motion for partial reconsideration.25 It contended that in resolving the issue of whether EO No. 1088 repealed the provisions of CAO No. 15-65 and PPA AO No. 03-85 on nighttime and overtime pay, this Court, in G.R. No. 133763, did not discuss the logical consequence of the resolution of the issue on PPA Resolution Nos. 1486, 1541, and 1554.26 It further asserted that PPA Resolution Nos. 1486, 1541, and 1554 remain valid as they were issued pursuant to PPA's authority to regulate pilotage services.27 In a Resolution dated March 23, 2006, the CA denied petitioners' motion for partial reconsideration. Hence, the present recourse. Issue Petitioners, via Rule 45, submit the lone assignment that THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN INTERPRETING AND CONCLUDING THAT THE RULING OF THE SUPREME COURT IN THE CASE OF "THE UNITED HARBOR PILOTS' ASSOCIATION OF THE PHILIPPINES, INC. V. ASSOCIATION OF THE INTERNATIONAL SHIPPING LINES, INC., ET AL., G.R. 133763," RENDERED "WITHOUT LEGAL EFFECT" THE PPA RESOLUTION NOS. 1486, 1541, AND 1554 WHICH REPEALED OVERTIME AND NIGHTTIME PAY.28 Our Ruling The petition lacks merit. This Court's ruling in G.R. No. 133763 that "EO No. 1088 did not repeal the provisions of PPA AO No. 03-85 on nighttime and

The CA set aside the declaration in the RTC Order dated September 25, 2003 that "pursuant to the decision of the Supreme Court in G.R. No. 133763, PPA Resolution Nos. 1486, 1541, and 1554 are valid and effective thereby disallowing the collection of overtime pay." According to the CA, the RTC committed grave abuse of discretion as "it really not only modified but reversed a final and executory decision of the highest court of the land."22 The appellate court ruled that when this Court, in G.R. No. 133763, declared ineffective the "pretended" repealing effect of EO No. 1088 on PPA AO No. 03-85, the subject PPA Resolutions implementing Section 3 of EO No. 1088 were automatically rendered without any legal effect as well.23 It also ruled that since there was no inconsistency between EO No. 1088 and the provisions of PPA AO No. 03-85, the latter was rendered in full legal force and effect.24

P a g e | 23

overtime pay," necessarily rendered PPA Resolution Nos. 1486, 1541 and 1554 without any legal effect. Petitioners posit that notwithstanding the declaration by this Court in G.R. No. 133763 that EO No. 1088 did not repeal the overtime and nighttime pay provided under PPA AO 03-85, PPA Resolution Nos. 1486, 1541, and 1554 were not rendered "without legal effect." They insist that in resolving in G.R. No. 133763 the issue of whether EO No. 1088 repealed the provisions of PPA AO No. 03-85 on nighttime and overtime pay, this Court did not discuss the logical consequence of the resolution of the issue on the subject PPA Resolutions.29 We are not persuaded. At the outset, it should be stressed that the PPA issued the subject resolutions which disallowed overtime pay and recalled PPA's recommendation for nighttime pay to harbor pilots - pursuant to Section 3 of EO No. 1088 stating that "all orders, letters of instruction, rules, regulations and issuances inconsistent with it are repealed or amended accordingly." The PPA, just like petitioners,30 was of the belief that there was an actual inconsistency or an irreconcilable conflict between EO No. 1088 and the provisions of PPA AO No. 03-85 on nighttime and overtime pay, resulting in the implied repeal of the 31 latter. But, as this Court pronounced in G.R. No. 133763, there is nothing in EO No. 1088 that reveals any intention on the part of Former President Marcos to amend or supersede the provisions of PPA AO No. 03-85 on nighttime and overtime pay. While Section 3 of EO No. 1088

provides a general repealing clause, the same is made dependent upon its actual inconsistency with other previous orders, rules, regulations or other issuance. There is no inconsistency between EO No. 1088 and the provisions of PPA AO No. 03-85. These two orders dwell on entirely different subject matters. EO No. 1088 provides for uniform and modified rates for pilotage services rendered to foreign and coastwise vessels in all Philippine ports, public or private. On the other hand, the subject matter of the provisions of PPA AO No. 03-85 is the payment of the additional charges of nighttime and overtime pay. Plainly, EO No. 1088 involves the basic compensation for pilotage service while PPA AO No. 03-85 provides for the additional charges where pilotage service is rendered under certain circumstances. Obviously, this Court's ruling in G.R. No. 133763 was that EO No. 1088 did not repeal the provisions of PPA AO No. 03-85 on nighttime and overtime pay as there was no inconsistency between the two orders. The ruling rendered "without legal effect" PPA Resolution Nos. 1486, 1541, and 1554, which were all issued by PPA pursuant to Section 3 of EO No. 1088. Upon the other hand, the validity of the earlier PPA AO No. 03-85, which allowed nighttime and overtime pay to harbor pilots, was affirmed. It is noteworthy that when this Court, in G.R. No. 133763, reversed the RTC Decision dated January 26, 1998 (which declared, among others, that in view of the repealing clause in EO No. 1088 respondent UHPAP is

P a g e | 24

not authorized to collect any overtime or night shift differential for pilotage services rendered), the Court likewise recognized the right of the members of respondent UHPAP to overtime and nighttime pay under PPA AO No. 03-85. Indeed, a harbor pilot who has rendered nighttime and overtime work must be paid nighttime and overtime pay. Members of respondent UHPAP are entitled to nighttime and overtime pay. Undoubtedly, pursuant to PPA AO No. 03-85, members of respondent UHPAP are legally entitled to nighttime and overtime pay. It bears pointing out that additional compensation for nighttime work is founded on public policy.32 Working at night is violative of the law of nature for it is the period for rest and sleep. An employee who works at night has less stamina and vigor. Thus, he can easily contract disease. The lack of sunlight tends to produce anemia and tuberculosis and predispose him to other ills. Night work brings increased liability to eyestrain and accident. Serious moral dangers also are likely to result from the necessity of traveling the street alone at night, and from the interference with normal home life.33 Hygienic, medical, moral, cultural and socio-biological reasons are in accord that night work has many inconveniences and when there is no alternative but to perform it, it is but just that the laborer should earn greater salary than ordinary work so as to compensate the laborer to some extent for the said inconveniences.34 Anent the payment of overtime pay, the Court explained its rationale in Philippine National

Bank v. Philippine National Bank Employees Association (PEMA):35 x x x Why is a laborer or employee who works beyond the regular hours of work entitled to extra compensation called in this enlightened time, overtime pay? Verily, there can be no other reason than that he is made to work longer than what is commensurate with his agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to do. When he thus spends additional time to his work, the effect upon him is multi-faceted: he puts in more effort, physical and/or mental; he is delayed in going home to his family to enjoy the comforts thereof; he might have no time for relaxation, amusement or sports; he might miss important pre-arranged engagements; etc., etc. It is thus the additional work, labor or service employed and the adverse effects just mentioned of his longer stay in his place of work that justify and is the real reason for the extra compensation that he called overtime pay. Overtime work is actually the lengthening of hours developed to the interests of the employer and the requirements of his enterprise. It follows that the wage or salary to be received must likewise be increased, and more than that, a special additional amount must be added to serve either as encouragement or inducement or to make up for the

P a g e | 25

things he loses which we have already referred to. And on this score, it must always be borne in mind that wage is indisputably intended as payment for work done or services rendered.36 Moreover, We agree with the CA that the RTC correctly denied respondent's motion for execution. It will be recalled that the original action before the RTC was one for declaratory relief filed by petitioners praying for: (1) a construction of Executive Order No. 1088 declaring that AISLI is not liable to pay overtime and night shift differential to respondent UHPAP; and (2) a construction of Executive Order No. 1088 declaring that the schedule of rates provided therein applies to the entire package of pilotage services under the compulsory pilotage scheme and that UHPAP cannot separately charge AISLI for each pilotage service rendered.37 The disposition of the RTC in favor of petitioners in the declaratory relief petition was the decision elevated by the UHPAP to this Court.38 Upon the reversal of the RTC decision by this Court, UHPAP went back to the RTC on a motion for execution. Verily, that course of action on the part of UHPAP was procedurally infirm. In such civil actions for declaratory relief under Rule 63 of the Rules of Court, the judgment does not entail an executory process, as the primary objective of petitioner

is to determine any question of construction or validity and for a declaration of concomitant rights and duties.39 The proper remedy would have been for members of respondent UHPAP to claim for overnight and nighttime pay before petitioners AISLI and its members. WHEREFORE, the petition is DENIED and the appealed Decision AFFIRMED. Costs against petitioners. SO ORDERED.

SECOND DIVISION G.R. No. 196539 October 10, 2012 MARIETTA N. PORTILLO, Petitioner, vs. RUDOLF LIETZ, INC., RUDOLF LIETZ and COURT OF APPEALS Respondents. D E C I S I O N PEREZ, J.: Before us is a petition for certiorari assailing the 1 Resolution dated 14 October 2010 of the Court of Appeals in CA-G.R. SP No. I 065g I which modified its Decision2 dated 31 March 2009, thus allowing the legal compensation or petitioner Marietta N. Portillo's (Portillo) monetary claims against respondent corporation Rudolf Lietz, Inc.'s (Lietz 3 Inc.) claim for liquidated damages arising from Portillos alleged violation of the "Goodwill Clause" in the employment contract executed by the parties. The facts are not in dispute.

P a g e | 26

In a letter agreement dated 3 May 1991, signed by individual respondent Rudolf Lietz (Rudolf) and conformed to by Portillo, the latter was hired by the former under the following terms and conditions: A copy of [Lietz Inc.s] work rules and policies on personnel is enclosed and an inherent part of the terms and conditions of employment. We acknowledge your proposal in your application specifically to the effect that you will not engage in any other gainful employment by yourself or with any other company either directly or indirectly without written consent of [Lietz Inc.], and we hereby accept and henceforth consider your proposal an undertaking on your part, a breach of which will render you liable to [Lietz Inc.] for liquidated damages. If you are in agreement with these terms and conditions of employment, please signify your conformity below.4 On her tenth (10th) year with Lietz Inc., specifically on 1 February 2002, Portillo was promoted to Sales Representative and received a corresponding increase in basic monthly salary and sales quota. In this regard, Portillo signed another letter agreement containing a "Goodwill Clause:" It remains understood and you agreed that, on the termination of your employment by act of either you or [Lietz Inc.], and for a period of three (3) years thereafter, you shall not engage directly or indirectly as employee, manager, proprietor, or solicitor for yourself or others in a similar or competitive business or the same

character of work which you were employed by [Lietz Inc.] to do and perform. Should you breach this good will clause of this Contract, you shall pay [Lietz Inc.] as liquidated damages the amount of 100% of your gross compensation over the last 12 months, it being agreed that this sum is reasonable and 5 just. Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit interview, Portillo declared that she intended to engage in businessa rice dealership, selling rice in wholesale. On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill Clause" in the last letter agreement she had signed. Upon receipt thereof, Portillo jotted a note thereon that the latest contract she had signed in February 2004 did not contain any "Goodwill Clause" referred to by Lietz Inc. In response thereto, Lietz Inc. categorically wrote: Please be informed that the standard prescription of prohibiting employees from engaging in business or seeking employment with organizations that directly or indirectly compete against [Lietz Inc.] for three (3) years after resignation remains in effect. The documentation you pertain to is an internal memorandum of your salary increase, not an employment contract. The absence of the three-year prohibition clause in this document (or any document for that matter) does not cancel the prohibition itself. We did not, have not, and will not issue any cancellation of such in the foreseeable future[.] [T]hus[,]

P a g e | 27

regretfully, it is erroneous of you to believe otherwise.6 In a subsequent letter dated 21 June 2005, Lietz Inc. wrote Portillo and supposed that the exchange of correspondence between them regarding the "Goodwill Clause" in the employment contract was a moot exercise since Portillos articulated intention to go into business, selling rice, will not compete with Lietz Inc.s products. Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to head its Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz Inc. Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and commissions went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her salaries and commissions were still being computed. On 14 September 2005, Portillo filed a complaint with the National Labor Relations Commission (NLRC) for nonpayment of 1 months salary, two (2) months commission, 13th month pay, plus moral, exemplary and actual damages and attorneys fees. In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount of P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillos money claims should be offset against her liability to Lietz Inc. for liquidated damages in the amount of 7 869,633.09 for Portillos alleged breach of the "Goodwill Clause" in the employment

contract when she employed with Ed Philippines, Limited. On 25 May 2007, Labor Daniel J. Cajilig Portillos complaint:

became Keller Arbiter granted

WHEREFORE, judgment is hereby rendered ordering respondents Rudolf Lietz, Inc. to pay complainant Marietta N. Portillo the amount of Php110,662.16, representing her salary and commissions, including 13th month pay.8 On appeal by respondents, the NLRC, through its Second Division, affirmed the ruling of Labor Arbiter Daniel J. Cajilig. On motion for reconsideration, the NLRC stood pat on its ruling. Expectedly, respondents filed a petition for certiorari before the Court of Appeals, alleging grave abuse of discretion in the labor tribunals rulings. As earlier adverted to, the appellate court initially affirmed the labor tribunals: WHEREFORE, considering the foregoing premises, judgment is hereby rendered by us DENYING the petition filed in this case. The Resolution of the National Labor Relations Commission (NLRC), Second Division, in the labor case docketed as NLRC NCR Case No. 00-09- 08113-2005 [NLRC LAC No. 07-001965-07(5)] is 9 hereby AFFIRMED. The disposition was disturbed. The Court of Appeals, on motion for reconsideration, modified its previous decision, thus: WHEREFORE, in view of the foregoing premises, we hereby MODIFY the decision promulgated on March 31, 2009 in that, while we uphold the monetary award in

P a g e | 28

favor of the [petitioner] in the aggregate sum of 110,662.16 representing the unpaid salary, commission and 13th month pay due to her, we hereby allow legal compensation or set-off of such award of monetary claims by her liability to [respondents] for liquidated damages arising from her violation of the "Goodwill Clause" in her employment contract with them.10 Portillos motion reconsideration was denied. for

petition for certiorari, a special civil action under Rule 65 of the Rules of Court, instead of a petition for review on certiorari, a mode of appeal, under Rule 45 thereof. On this score alone, the petition should have been dismissed outright. Section 1, Rule 45 of the Rules of Court expressly provides that a party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals may file a verified petition for review on certiorari. Considering that, in this case, appeal by certiorari was available to Portillo, that available recourse foreclosed her right to resort to a special civil action for certiorari, a limited form of review and a remedy of last recourse, which lies only where there is no appeal or plain, speedy and adequate remedy in the ordinary course of law.12 A petition for review on certiorari under Rule 45 and a petition for certiorari under Rule 65 are mutually exclusive remedies. Certiorari cannot coexist with an appeal or any other adequate remedy.13 If a petition for review is available, even prescribed, the nature of the questions of law intended to be raised on appeal is of no consequence. It may well be that those questions of law will treat exclusively of whether or not the judgment or final order was rendered without or in excess of jurisdiction, or with grave abuse of discretion. This is immaterial. The remedy is appeal, not certiorari as a special civil action.14 Be that as it may, on more than one occasion, to serve the ultimate purpose of all rules of proceduresattaining substantial justice as expeditiously as

Hence, this petition for certiorari listing the following acts as grave abuse of discretion of the Court of Appeals: THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY EVADING TO RECOGNIZE (sic) THAT THE RESPONDENTS EARLIER PETITION IS FATALLY DEFECTIVE; THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY OVERSTEPPING THE BOUNDS OF APPELLATE JURISDICTION[;] THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY MODIFYING ITS PREVIOUS DECISION BASED ON AN ISSUE THAT WAS RAISED ONLY ON THE FIRST INSTANCE AS AN APPEAL BUT WAS NEVER AT THE TRIAL COURT AMOUNTING TO DENIAL OF DUE PROCESS[;] THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY EVADING THE POSITIVE DUTY TO UPHOLD THE RELEVANT LAWS[.]11 Simply, the issue is whether Portillos money claims for unpaid salaries may be offset against respondents claim for liquidated damages. Before anything else, we address the procedural error committed by Portillo, i.e., filing a

P a g e | 29

possible15we have accepted procedurally incorrect petitions and decided them on the merits. We do the same here. The Court of Appeals anchors its modified ruling on the ostensible causal connection between Portillos money claims and Lietz Inc.s claim for liquidated damages, both claims apparently arising from the same employment relations. Thus, did it say: x x x This Court will have to take cognizance of and consider the "Goodwill Clause" contained [in] the employment contract signed by and between [respondents and Portillo]. There is no gainsaying the fact that such "Goodwill Clause" is part and parcel of the employment contract extended to [Portillo], and such clause is not contrary to law, morals and public policy. There is thus a causal connection between [Portillos] monetary claims against [respondents] and the latters claim for liquidated damages against the former. Consequently, we should allow legal compensation or set-off to take place. [Respondents and Portillo] are both bound principally and, at the same time, are creditors of each other. [Portillo] is a creditor of [respondents] in the sum of 110,662.16 in connection with her monetary claims against the latter. At the same time, [respondents] are creditors of [Portillo] insofar as their claims for liquidated damages in the sum of 980,295.2516 against the latter is concerned.17 We are not convinced. Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by the Court of Appeals on the "causal

connection between [Portillos] monetary claims against [respondents] and the latters claim from liquidated damages against the former." Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this code, the 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 case involving all workers, whether agricultural or nonagricultural: x x x x 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; (Underscoring supplied) Evidently, the Court of Appeals is convinced that the claim for liquidated damages emanates from the "Goodwill Clause of the employment contract and, therefore, is a claim for damages arising from the employeremployee relations." As early as Singapore Airlines Limited v. Pao,18 we established that not all disputes between an employer and his employee(s) fall within the jurisdiction of the labor tribunals. We differentiated between abandonment per se and the manner and consequent effects of such abandonment and ruled that the first, is a labor case, while the second, is a civil law case. Upon the facts and issues involved, jurisdiction over the present controversy must be held to belong to the civil Courts.

P a g e | 30

While seemingly petitioner's claim for damages arises from employer-employee relations, and the latest amendment to Article 217 of the Labor Code under PD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-employee relationship are cognizable by Labor Arbiters [citation omitted], in essence, petitioner's claim for damages is grounded on the "wanton failure and refusal" without just cause of private respondent Cruz to report for duty despite repeated notices served upon him of the disapproval of his application for leave of absence without pay. This, coupled with the further averment that Cruz "maliciously and with bad faith" violated the terms and conditions of the conversion training course agreement to the damage of petitioner removes the present controversy from the coverage of the Labor Code and brings it within the purview of Civil Law. Clearly, the complaint was anchored not on the abandonment per se by private respondent Cruz of his jobas the latter was not required in the Complaint to report back to workbut on the manner and consequent effects of such abandonment of work translated in terms of the damages which petitioner had to suffer. Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer & Plywood, Inc. [citation omitted], the pertinent portion of which reads: "Although the acts complained of seemingly appear to constitute 'matter involving employeeemployer' relations as Quisaba's dismissal was the severance of a pre-existing employee-employer

relations, his complaint is grounded not on his dismissal per se, as in fact he does not ask for reinstatement or backwages, but on the manner of his dismissal and the consequent effects of such dismissal. "Civil law consists of that 'mass of precepts that determine or regulate the relations . . . that exist between members of a society for the protection of private interest (1 Sanchez Roman 3). "The 'right' of the respondents to dismiss Quisaba should not be confused with the manner in which the right was exercised and the effects flowing therefrom. If the dismissal was done anti-socially or oppressively as the complaint alleges, then the respondents violated Article 1701 of the Civil Code which prohibits acts of oppression by either capital or labor against the other, and Article 21, which makes a person liable for damages if he wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy, the sanction for which, by way of moral damages, is provided in article 2219, No. 10. [citation omitted]" Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach

P a g e | 31

of an obligation, intrinsically a civil dispute.19 (Emphasis supplied) Subsequent rulings amplified the teaching in Singapore Airlines. The reasonable causal connection rule was discussed. Thus, in San Miguel Corporation v. National Labor Relations Commission,20 we held: While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money claims that might be asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating to claims concerning terms and conditions of employment), paragraph 4 (claims relating to household services, a particular species of employer-employee relations), and paragraph 5 (relating to certain activities prohibited to employees or to employers). It is evident that there is a unifying element which runs through paragraph 1 to 5 and that is, that they all refer to cases or disputes arising out of or in connection with an employer-employee relationship. This is, in other words, a situation where the rule of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the terms themselves of Article 217, as last amended by B.P. Blg. 227, and even though earlier versions of Article 217

of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer-employee relations, [citation omitted]" which clause was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-employee relationship, and which would therefore fall within the general jurisdiction of regular courts of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the "money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employer-employee relationship.21 (Emphasis supplied) We thereafter ruled that the "reasonable causal connection with the employer-employee relationship" is a requirement not only in employees money claims against the employer but is, likewise, a condition when the claimant is the employer. In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr.,22 which reiterated the San Miguel ruling and allied jurisprudence, we

P a g e | 32

pronounced that a non-compete clause, as in the "Goodwill Clause" referred to in the present case, with a stipulation that a violation thereof makes the employee liable to his former employer for liquidated damages, refers to postemployment relations of the parties. In Dai-Chi, the trial court dismissed the civil complaint filed by the employer to recover damages from its employee for the latters breach of his contractual obligation. We reversed the ruling of the trial court as we found that the employer did not ask for any relief under the Labor Code but sought to recover damages agreed upon in the contract as redress for its employees breach of contractual obligation to its "damage and prejudice." We iterated that Article 217, paragraph 4 does not automatically cover all disputes between an employer and its employee(s). We noted that the cause of action was within the realm of Civil Law, thus, jurisdiction over the controversy belongs to the regular courts. At bottom, we considered that the stipulation referred to post-employment relations of the parties. That the "Goodwill Clause" in this case is likewise a postemployment issue should brook no argument. There is no dispute as to the cessation of Portillos employment with Lietz Inc.23 She simply claims her unpaid salaries and commissions, which Lietz Inc. does not contest. At that juncture, Portillo was no longer an 24 employee of Lietz Inc. The "Goodwill Clause" or the "NonCompete Clause" is a contractual undertaking effective after the cessation of the employment

relationship between the parties. In accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law case. It is clear, therefore, that while Portillos claim for unpaid salaries is a money claim that arises out of or in connection with an employeremployee relationship, Lietz Inc.s claim against Portillo for violation of the goodwill clause is a money claim based on an act done after the cessation of the employment relationship. And, while the jurisdiction over Portillos claim is vested in the labor arbiter, the jurisdiction over Lietz Inc.s claim rests on the regular courts. Thus: As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages based on the parties' contract of employment as redress for respondent's breach thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so must this be in the present case, what with the reality that the stipulation refers to the postemployment relations of the parties. For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter is one of claim for damages arising from a breach of contract, which is within the ambit of the regular court's jurisdiction. [citation omitted] It is basic that jurisdiction over the subject matter is determined upon the allegations made in the complaint, irrespective of whether or not the plaintiff is entitled to

P a g e | 33

recover upon the claim asserted therein, which is a matter resolved only after and as a result of a trial. Neither can jurisdiction of a court be made to depend upon the defenses made by a defendant in his answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely upon the defendant.25 [citation omitted] x x x x Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees [citation omitted], we hold that by the designating clause "arising from the employeremployee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal dismissal case.26 x x x x This is, of course, to distinguish from cases of actions for damages where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation. Thus, the jurisdiction of regular courts was upheld where the damages, claimed for were based on tort [citation omitted], malicious prosecution [citation omitted], or breach of contract, as when the claimant seeks to recover a debt from a former employee [citation omitted] or seeks liquidated damages in enforcement of a

prior employment [citation omitted]

contract.

Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the complaint does not entail application of the Labor Code or other labor laws, the dispute is intrinsically civil. Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-employee relationsin other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code.27 (Emphasis supplied) In the case at bar, the difference in the nature of the credits that one has against the other, conversely, the nature of the debt one owes another, which difference in turn results in the difference of the forum where the different credits can be enforced, prevents the application of compensation. Simply, the labor tribunal in an employees claim for unpaid wages is without authority to allow the compensation of such claims against the post employment claim of the former employer for breach of a post employment condition. The labor tribunal does not have jurisdiction over the civil case of breach of contract. We are aware that in Baez v. Hon. Valdevilla, we mentioned that: Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees [citation omitted], we hold that

P a g e | 34

by the designating clause "arising from the employeremployee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal 28 dismissal case. While on the surface, Baez supports the decision of the Court of Appeals, the facts beneath premise an opposite conclusion. There, the salesmanemployee obtained from the NLRC a final favorable judgment of illegal dismissal. Afterwards, the employer filed with the trial court a complaint for damages for alleged nefarious activities causing damage to the employer. Explaining further why the claims for damages should be entered as a counterclaim in the illegal dismissal case, we said: Even under Republic Act No. 875 (the Industrial Peace Act, now completely superseded by the Labor Code), jurisprudence was settled that where the plaintiffs cause of action for damages arose out of, or was necessarily intertwined with, an alleged unfair labor practice committed by the union, the jurisdiction is exclusively with the (now defunct) Court of Industrial Relations, and the assumption of jurisdiction of regular courts over the same is a nullity. To allow otherwise would be "to sanction split jurisdiction, which is prejudicial to the orderly administration of justice." Thus, even after the enactment of the Labor Code, where the damages separately claimed by the employer were allegedly incurred as a consequence of

strike or picketing of the union, such complaint for damages is deeply rooted from the labor dispute between the parties, and should be dismissed by ordinary courts for lack of jurisdiction. As held by this Court in National Federation of Labor vs. Eisma, 127 SCRA 419: Certainly, the present Labor Code is even more committed to the view that on policy grounds, and equally so in the interest of greater promptness in the disposition of labor matters, a court is spared the often onerous task of determining what essentially is a factual matter, namely, the damages that may be incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations.29 Evidently, the ruling of the appellate court is modeled after the basis used in Baez which is the "intertwined" facts of the claims of the employer and the employee or that the "complaint for damages is deeply rooted from the labor dispute between the parties." Thus, did the appellate court say that: There is no gainsaying the fact that such "Goodwill Clause" is part and parcel of the employment contract extended to [Portillo], and such clause is not contrary to law, morals and public policy. There is thus a causal connection between [Portillos] monetary claims against [respondents] and the latters claim for liquidated damages against the former. Consequently, we should allow legal compensation or set-off to take place.30 The Court of Appeals misguided. Its conclusion incorrect. was was

P a g e | 35

There is no causal connection between the petitioner employees claim for unpaid wages and the respondent employers claim for damages for the alleged "Goodwill Clause" violation. Portillos claim for unpaid salaries did not have anything to do with her alleged violation of the employment contract as, in fact, her separation from employment is not "rooted" in the alleged contractual violation. She resigned from her employment. She was not dismissed. Portillos entitlement to the unpaid salaries is not even contested. Indeed, Lietz Inc.s argument about legal compensation necessarily admits that it owes the money claimed by Portillo. The alleged contractual violation did not arise during the existence of the employeremployee relationship. It was a post-employment matter, a postemployment violation. Reminders are apt. That is provided by the fairly recent case of Yusen Air and Sea Services Phils., Inc. v. Villamor,31 which harked back to the previous rulings on the necessity of "reasonable causal connection" between the tortious damage and the damage arising from the employer-employee relationship. Yusen proceeded to pronounce that the absence of the connection results in the absence of jurisdiction of the labor arbiter. Importantly, such absence of jurisdiction cannot be remedied by raising before the labor tribunal the tortious damage as a defense. Thus: When, as here, the cause of action is based on a quasidelict or tort, which has no reasonable causal connection with any of the claims provided for in Article 217, jurisdiction over the action is with the

regular omitted]

courts.

[citation

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages based on the parties contract of employment as redress for respondents breach thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so must this be in the present case, what with the reality that the stipulation refers to the postemployment relations of the parties. For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter is one of claim for damages arising from a breach of contract, which is within the ambit of the regular courts jurisdiction. [citation omitted] It is basic that jurisdiction over the subject matter is determined upon the allegations made in the complaint, irrespective of whether or not the plaintiff is entitled to recover upon the claim asserted therein, which is a matter resolved only after and as a result of a trial. Neither can jurisdiction of a court be made to depend upon the defenses made by a defendant in his answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely upon the defendant.32 (Underscoring supplied). The error of the appellate court in its Resolution of 14 October 2010 is basic. The original decision, the right ruling, should not have been reconsidered.1wphi1

P a g e | 36

Indeed, the application of compensation in this case is effectively barred by Article 113 of the Labor Code which prohibits wage deductions except in three circumstances: ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor. WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals in CA-G.R. SP No. I 06581 dated 14 October 20 I 0 is SET ASIDE. The Decision of the Court of Appeals in CAG.R. SP No. I 06581 dated 3 I March :2009 is REINSTATED. No costs. SO ORDERED. JOSE PORTUGAL PEREZ Associate Justice

TARA TRADING SHIPMANAGEMENT INC. AND SHINLINE SDN BHD, Respondents. D E C I S I O N MENDOZA, J.: While it is true that labor contracts are impressed with public interest and the provisions of the POEA Standard Employment Contract must be construed logically and liberally in favor of Filipino seamen in the pursuit of their employment on board ocean-going vessels, absent substantial evidence from which reasonable basis for the grant of benefits prayed for can be drawn, We are left with no choice but to deny the claims of the employee, lest We cause injustice to the employer. We must always remember that justice is in every case for the deserving, to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence.1 This is a petition for review under Rule 45 of the Rules of Court challenging the October 29, 2008 Decision2 of the Court of Appeals (CA), and its March 4, 2009 Resolution,3 in CA-G.R. SP No. 104343, reversing the March 25, 2008 Decision4 and April 30, 2008 Resolution5 of the National Labor Relations Commission (NLRC) which affirmed the decision of the Labor Arbiter (LA) favoring the petitioner. THE FACTS:

SECOND DIVISION G.R. No. 187032 October 18, 2010 EDGARDO Petitioner, vs. M. PANGANIBAN,

In November 2005, petitioner was hired by respondent Tara Trading Shipmanagement, Inc. (Tara), in behalf of its foreign principal, respondent Shinline SDN BHD (Shinline) to work as an Oiler on board MV "Thailine 5"6 with a monthly salary of US$409.00.

P a g e | 37

Sometime in April 2006, petitioner began exhibiting signs of mental instability. He was repatriated on May 24, 2006 for further medical evaluation and management.7 Petitioner was referred by respondents to the Metropolitan Medical Center where he was diagnosed to be suffering from "brief psychotic disorder."8 Despite his supposed total and permanent disability and despite repeated demands for payment of disability compensation, respondents allegedly failed and refused to comply with their contractual obligations.9 Hence, petitioner filed a Complaint against respondents praying for the payment of US$60,000.00 as total and permanent disability benefits, reimbursement of medical and hospital expenses, moral and exemplary damages, and attorneys fees equivalent to 10% of total claims.10 Respondents, on the other hand, maintained that petitioner requested for an early repatriation and arrived at the point of hire on May 24, 2006; that while on board the vessel, he confided to a co-worker, Henry Santos, that his eating and sleeping disorders were due to some family problems; that Capt. Zhao, the master of the vessel, even asked him if he wanted to see a doctor; that he initially declined; that on May 22, 2006, petitioner approached Capt. Zhao and requested for a vacation and early repatriation; that the said request was granted; that upon arrival, petitioner was subjected to a thorough psychiatric evaluation; and that after a series of check-ups, it was concluded that his illness did not appear to be

work-related. Respondents argued that petitioner was not entitled to full and permanent disability benefits under the Philippine Overseas Employment Administration Standard Employment Contract (POEA SEC) because there was no declaration from the company-designated physician that he was permanently and totally disabled and that the claim for damages was without basis as no bad faith can be attributed to 11 them. On September 17, 2007, the LA ruled in favor of the petitioner.12 Specifically, the LA held that: The claim for total and permanent disability benefits is resolved in favor of complainant. Respondents have stated that the cause of complainants illness, brief psychotic disorder, is largely unknown. This being the case, it is not therefore right to bluntly claim that the same is not work-related because it is also possible that the illness may be caused by or aggravated by his employment. As alleged by respondents, there are certain factors which may bring about brief psychotic disorder such as "biological or psychological vulnerability toward the development of psychotic symptoms." Complainant, and all seamen for that matter, are subjected to stress because of the rigorous and strenuous demands of being at sea for prolonged periods of time, causing sensory deprivation and continuous isolation, to borrow the words of complainants attending psychiatrist. As correctly argued by complainant, while all seamen may be subjected to the same or greater degree of stress, their respective abilities to cope

P a g e | 38

with these factors are different. There is therefore the risk that seamen, not only complainant, are prone to contract brief psychotic disorder since they are most of the time at sea and away from their loved ones. As early as 27 June 2006, respondents designated physicians have declared that complainants condition does not appear to be work-related. With this declaration, respondents are bound to deny complainants claim for disability benefits. He cannot therefore be faulted for filing the instant case in October 2006 without waiting for the evaluation of his disability impediment by the company designated doctors. Moreover, the 120 days period lapsed without the latter having declared the degree of complainants disability, if any. Complainant is thus considered to be totally and permanently disabled as he is no longer capable of earning wages in the same kind of work, or work of similar nature that he was trained for or accustomed to perform. He is now incapacitated to work, hence, his earning capacity is impaired. Jurisprudence has declared that disability should not be understood more on its medical significance but on loss of earning capacity. With the foregoing, complainant is awarded total and permanent disability benefits in the amount of US$ 60,000.00 or its equivalent in Philippine Currency at the time of payment. Complainant cannot however be awarded his claim for medical and hospitalization expenses. He did not anymore pursue this

charge in his pleadings, hence, the same remained unsubstantiated. The same holds true with his claim for moral and exemplary damages. Complainant failed to prove bad faith or malice on respondents part in denying his claims. Complainant is entitled to attorneys fees as he sought the assistance of his counsel in pursuing his claims against respondents for his total and permanent disability benefits. He is thus awarded an equivalent of ten percent (10%) of his total claims as and by way of attorneys fees. WHEREFORE, in view of the foregoing, respondents Tara Trading Shipmanagement, Inc. and/or Shinline SDN. BHD, are hereby ordered to pay complainant Edgardo M. Panganiban his total and permanent disability benefit in the amount of US$60,000.00 plus US$6,000.00 attorneys fees, in Philippine Currency, at the prevailing rate of exchange at the time of payment. All other claims are denied. SO ORDERED.13 Respondents appealed to the NLRC. On March 25, 2008, the NLRC affirmed the decision of the LA.14 The appeal of respondents was dismissed for lack of merit.15 The NLRC reasoned out that "All material averments on appeal are mere rehash or amplification of the substantive allegations propounded in the proceedings below which were already discerned and judiciously passed upon by the Labor Arbiter." 16 Respondents filed a motion for reconsideration but it was denied in a resolution dated April 30, 2008.

P a g e | 39

Aggrieved, respondents filed a Petition for Certiorari with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining 17 order with the CA. In their petition, respondents presented the following grounds: A. Public respondent gravely abused its discretion and committed serious error in ruling that the petitioners are liable to private respondent for the payment of disability compensation in the amount of US$ 60,000.00 considering the facts as borne out by the evidence on record and the applicable laws. 1. Public respondent committed grave abuse of discretion in arriving at the findings of fact which are not substantiated by the evidence on record. 2. Public respondent committed grave abuse of discretion when it failed to consider the evidence which proves the illness is not work related, thereby violating petitioners right to procedural due process. 3. Public respondent erred in not finding in favor of the expert opinion of the companydesignated doctor on the nature of the illness as against that of complainants doctor in utter disregard of rules on evidence. Without concrete proof that his assessment is

biased and selfserving, the medical opinion of the companydesignate physician should be accorded probative value and not discarded merely on the basis of unfounded allegation. 4. Public respondent committed grave abuse of discretion when it affirmed the award of attorneys fees. B. Public respondent committed grave abuse of discretion when it affirmed the award of attorneys 18 fees. On October 29, 2008, the CA reversed the decision of the NLRC.19 Pertinently, the CA held that: We find that the NLRC (Sixth Division) committed grave abuse of discretion in affirming the Decision of Labor Arbiter Cellan which awarded US$60,000.00 total and permanent disability benefits and US$6,000.00 attorneys fees in favor of private respondent, as the findings of both the Labor Arbiter and the NLRC (Sixth Division) are not anchored on substantial evidence. It is basic that a contract is the law between the parties. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Unless the stipulations in a contract are contrary to law, morals, good customs, public order or public policy, the same are binding as between the parties. A seafarer is a contractual, not a regular employee, and his employment is contractually

P a g e | 40

fixed for a certain period of time. His employment, including claims for death or illness compensations, is governed by the contract he signs every time he is hired, and is not rooted from the provisions of the Labor Code. The Contract of Employment entered into by petitioners and private respondent, and approved by the POEA on 25 October 2005, provides: "The herein terms and conditions in accordance with Department Order No. 4 and Memorandum Circular No. 09, both Series of 2000, shall be strictly and faithfully observed. x x x Upon approval, the same shall be deemed an integral part of the: Standard Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels." Section 20-B of the POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels ("POEA-SEC" for brevity) provides that "COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS. The liabilities of the employer when the seafarer suffers workrelated injury or illness during the term of his contract: x x x" Under the Definition of Terms found in the Standard Contract, a work related illness is defined as "any sickness resulting to disability or death as a result of an occupational disease listed under Section 32A of this contract with the conditions set therein satisfied." In the instant case, the illness "brief psychotic disorder" is not listed as an occupational disease.

In the instant case, it is an undisputed fact that private respondents illness occurred during the term of his contract. The remaining issue to be determined is whether or not private respondents illness of "brief psychotic disorder" is work-related. We find that private respondents brief psychotic disorder was not contracted as a result of or caused by the seafarers work as an Oiler on board the vessel M.V. Thailine 5. A review of the evidence shows that the company-designated physician Dr. Mylene Cruz-Balbon ("Dr. Balbon," for brevity) issued a certification dated 26 June 2006 certifying that private respondent has undergone medical evaluation treatment at Robert D. Lim, M.D. Marine Medical Services, Metropolitan Medical Center from 26 May 2006 up to the date of the certification, due to "Brief Psychotic Disorder." x x x. x x x x x x x x x

On the psychological test done on 30 May 2006 on private respondent, Dr. Raymond L. Rosales ("Dr. Rosales," for brevity) Diplomate in Neurology and Psychiatry and Associate Professor of the University of Santo Tomas Hospital, who is the specialist to whom private respondent was referred by the company-designated physician, commented that private respondent suffered from hallucinations, persecutory delusions and paranoia; at present, he does not exhibit these symptoms; no definite mood disturbance; no suicidal intent; fair judgment and insight; the working diagnosis is brief

P a g e | 41

psychotic disorder; at this point, his condition does not appear to be work-related since he claims to have no significant stressor at work and his symptoms were most likely triggered by personal family problems; and he needs to be followed up for atleast 3 months with regular intake of medications. As to the question of which findings should prevail, that of the company-designated physician or the private respondents personal physician, Section 20-B of the POEA-SEC provides: 2. x x x x x x

mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctors decision shall be final and binding on both parties. (Emphasis supplied) In order to claim disability benefits under the Standard Employment Contract, it is the "company-designated" physician who must proclaim that the seaman suffered a permanent disability, whether total or partial, due to either injury or illness, during the term of the latters employment. It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. There is no ambiguity in the wording of the Standard Employment Contract the only qualification prescribed for the physician entrusted with the task of assessing the seamans disability is that he be "company-designated." x x x x x x x x x

However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at cost to the employer until such time he is declared fit or the degree of his disability has been established by the companydesignated physician. 3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the companydesignated physician but in no case shall this period exceed one hundred twenty (120) days. For this purpose, the seafarer shall submit himself to a postemployment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the

[E]ven private respondents coemployee Oiler Henry Santos stated in his letter to the Master of the vessel that private respondent could not eat and sleep because of a family problem. X x x. x x x x x x x x x

From the foregoing disquisitions, private respondent is neither entitled

P a g e | 42

to a total and permanent disability of US$60,000.00 nor to attorneys fees of US$6,000.00. Petitioners did not act with gross or evident bad faith in denying the claim of private respondent. Thus, We find that the NLRC (Sixth Division) acted with grave abuse of discretion in dismissing petitioners appeal, affirming the Decision of Labor Arbiter Cellan, and denying petitioners Motion for Reconsideration. While it is true that labor contracts are impressed with public interest and the provisions of the POEA Standard Employment Contract must be construed fairly, reasonably and liberally in favor of Filipino seamen in the pursuit of their employment on board ocean-going vessels, we should always be mindful that justice is in every case for the deserving, to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence. x x x. x x x x x x x x x

assessment could be made, with regard to private respondents medical condition. SO ORDERED.20 Petitioners Motion for Reconsideration was denied by the CA in its Resolution dated March 4, 2009.21 Hence, this Petition anchored on the following grounds--I THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN IGNORING THE OVERWHELMING EVIDENCE THAT SUPPORTS PETITIONERS ENTITLEMENT TO MAXIMUM DISABILITY BENEFITS IN THE AMOUNT OF USD60,000.00 II THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN DENYING THE COMPLAINANTS DISABILITY BENEFITS SOLELY BECAUSE THE COMPANY-DESIGNATED PHYSICIAN HAS DECLARED PETITIONERS ILLNESS AS NOT WORK-RELATED III THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN NOT CONSIDERING THAT COMPLAINANT COULD NO LONGER RETURN TO ACTIVE SEA DUTIES, A JOB HE WAS TRAINED AND ACCUSTOMED TO PERFORM WITHOUT ENDANGERING HIS HEALTH AND LIFE IV THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISMISSING PETITONERS SEPARATE CLAIMS FOR DAMAGES AND 22 ATTORNEYS FEES. The Court denies the petition.

WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated 25 March 2008 and Resolution dated 30 April 2008 of the National Labor Relations Commission (Sixth Division) in NLRC LAC NO. 11-000311-07; NLRC NCR OFW (M) CASE NO. 06-1003278-00 are REVERSED and SET ASIDE and private respondents complaint is hereby DISMISSED. However, solely for humanitarian considerations, petitioners are hereby ORDERED to grant private respondent the amount of Php50,000.00 by way of financial assistance, and to continue, at their expense, the medical treatment of private respondent until the final evaluation or

P a g e | 43

Preliminarily, considering the grounds raised by petitioner, it appears that he denominated this petition as one under Rule 45, but he filed it as both a petition for review under Rule 45 and a petition for certiorari under Rule 65 of the Rules of Court. The applicable rule is Rule 45, which clearly provides that decisions, final orders or resolutions of the CA in any case, regardless of the nature of the action or proceeding involved, may be appealed to this Court through a petition for review. This remedy is a continuation of the appellate process over the original case. Recourse under Rule 65 cannot be allowed either as an add-on or as a substitute for appeal.23 The procedural infirmity notwithstanding, the Court shall treat this petition as one filed under Rule 45 only and shall consider the alleged grave abuse of discretion on the part of the CA as an allegation of reversible error. The pivotal issue to be resolved is whether or not the CA is correct in denying petitioners entitlement to full and total disability benefits amounting to US$60,000.00 and attorneys fees in the amount of US$6,000.00. The Court resolves the issue in the affirmative. It need not be overemphasized that in the absence of substantial evidence, working conditions cannot be accepted to have caused or at least increased the risk of contracting the disease, in this case, brief psychotic disorder. Substantial evidence is more than a mere scintilla.http://sc.judiciary.go v.ph/jurisprudence/2006/jan2006/ G.R. No. 155359.htm - _ftn41 The

evidence must be real and substantial, and not merely apparent; for the duty to prove work-causation or workaggravation imposed by law is real and not merely apparent.24 Even in case of death of a seafarer, the grant of benefits in favor of the heirs of the deceased is not automatic. As in the case of Rivera v. Wallem Maritime Services, Inc.,25 without a post-medical examination or its equivalent to show that the disease for which the seaman died was contracted during his employment or that his working conditions increased the risk of contracting the ailment, the employer/s cannot be made liable for death compensation. In fact, in Mabuhay Shipping Services, Inc. v. NLRC,26 the Court held that the death of a seaman even during the term of employment does not automatically give rise to compensation. Several factors must be taken into account such as the circumstances which led to the death, the provisions of the contract, and the right and obligation of the employer and the seaman with due regard to the provisions of the Constitution on the due process and equal protection clauses. Petitioner points out that his illness is work-related simply because had it been a land-based employment, petitioner would have easily gone home and attended to the needs of his family.27 The Court cannot submit to this argument. This is not the "workrelated" instance contemplated by the provisions of the employment contract in order to be entitled to the benefits. Otherwise, every seaman would

P a g e | 44

automatically be entitled to compensation because the nature of his work is not land-based and the submission of the seaman to the company-designated physician as to the nature of the illness suffered by him would just be an exercise of futility. The fact is that the petitioner failed to establish, by substantial evidence, that his brief psychotic disorder was caused by the nature of his work as oiler of the company-owned vessel. In fact, he failed to elaborate on the nature of his job or to specify his functions as oiler of respondent company. The Court, therefore, has difficulty in finding any link between his position as oiler and his illness. The Court cannot give less importance either to the fact that petitioner was a seaman for 10 years serving 10 to 18-month contracts and never did he have any problems with his earlier contracts.28 The Court can only surmise that the brief psychotic disorder suffered by him was brought about by a family problem. His daughter was sick and, as a seafarer, he could not just decide to go home and be with his family.29 Even the 30 psychiatric report prepared by the evaluating private psychiatrist of petitioner shows that the hospitalization of petitioners youngest daughter caused him poor sleep and appetite. Later, he started hearing voices and developed fearfulness. Although strict rules of evidence are not applicable in claims for compensation and disability benefits, the Court cannot just disregard the provisions of the POEA SEC. Significantly, a seaman is a

contractual and not a regular employee. His employment is contractually fixed for a certain period of time. Petitioner and respondents entered into a contract of employment. It was approved by the POEA on October 25, 2005 and, thus, served as the law between the parties. Undisputedly, Section 20-B of the POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA-SEC) provides for compensation and benefits for injury or illness suffered by a seafarer. It says that, in order to claim disability benefits under the Standard Employment Contract, it is the companydesignated physician who must proclaim that the seaman suffered a permanent disability, whether total or partial, due to either injury or illness, during the term of the latters employment. In German Marine Agencies, Inc. v. NLRC,31 the Courts discussion on the seafarers claim for disability benefits is enlightening. Thus: [In] order to claim disability benefits under the Standard Employment Contract, it is the "company-designated" physician who must proclaim that the seaman suffered a permanent disability, whether total or partial, due to either injury or illness, during the term of the latters employment. There is no provision requiring accreditation by the POEA of such physician. In fact, aside from their own gratuitous allegations, petitioners are unable to cite a single provision in the said contract in support of their assertions or to offer any credible evidence to substantiate their claim. If accreditation of the company-designated physician was

P a g e | 45

contemplated by the POEA, it would have expressly provided for such a qualification, by specifically using the term "accreditation" in the Standard Employment Contract, to denote its intention. For instance, under the Labor Code, it is expressly provided that physicians and hospitals providing medical care to an injured or sick employee covered by the Social Security System or the Government Service Insurance System must be accredited by the Employees Compensation Commission. It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. There is no ambiguity in the wording of the Standard Employment Contract the only qualification prescribed for the physician entrusted with the task of assessing the seamans disability is that he be company-designated. When the language of the contract is explicit, as in the case at bar, leaving no doubt as to the intention of the drafters thereof, the courts may not read into it any other intention that would contradict its plain import. [Emphasis supplied] In this case, the findings of respondents designated physician that petitioner has been suffering from brief psychotic disorder and that it is not work-related must be respected. The Court commiserates with the petitioner, but absent substantial evidence from which reasonable basis for the grant of benefits prayed for can be drawn, the Court is left with no choice but to deny his petition, lest an injustice be caused to

the employer. Otherwise stated, while it is true that labor contracts are impressed with public interest and the provisions of the POEA SEC must be construed logically and liberally in favor of Filipino seamen in the pursuit of their employment on board ocean-going vessels, still the rule is that justice is in every case for the deserving, to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence.32 Lastly, it appears premature at this time to consider petitioners disability as permanent and total because the severity of his ailment has not been established with finality to render him already incapable of performing the work of a seafarer. In fact, the medical expert termed his condition as brief psychotic disorder. The Court also takes note, as the CA correctly did, that petitioner did not finish his treatment with the company-designated physician, hence, there is no final evaluation yet on petitioner. All told, no reversible error was committed by the CA in rendering the assailed Decision and issuing the questioned Resolution. WHEREFORE, the October 29, 2008 Decision of the Court of Appeals and its March 4, 2009 Resolution in CA-G.R. SP No. 104343, are AFFIRMED./p> SO ORDERED. JOSE CATRAL MENDOZA Associate Justice

P a g e | 46

THIRD DIVISION G.R. No. 142399 March 12, 2008 PHILIPPINE AIRLINES, INCORPORATED, Petitioner, vs. PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), Respondent. D E C I S I O N CHICO-NAZARIO, J.: This Petition for Review on Certiorari under Rule 45 of the Rules of Court, as amended, seeks to set aside the 30 April 1999 Decision1 and 10 March 2000 Resolution2 of the Court of Appeals in CA-G.R. SP No. 50161 entitled, "Philippine Airlines, Inc. v. National Labor Relations Commission and Philippine Airlines Employees Association (PALEA)." In the assailed decision, the appellate court dismissed the petition filed by petitioner Philippine Airlines, Inc. (PAL) and affirmed the 28 January 1998 Decision3 and 23 June 1998 Resolution,4 both of the First Division of the National Labor Relations Commission (NLRC) wherein the said Commission reversed and set aside the 12 March 1990 Decision5 of the Labor Arbiter in NLRC NCR No. 00-03-01134-89 dismissing the labor complaint filed by Philippine Airlines Employees Association (PALEA), the collective bargaining agent of the rank and file employees of petitioner PAL. The present petition arose from a labor complaint,6 filed by respondent PALEA against petitioners PAL and one Mary Anne del Rosario, Director of Personnel of petitioner PAL, on 1 March 1989. The labor complaint charged both petitioners with unfair labor practice for the alleged non-

payment of the 13th month pay of petitioner PALs employees who had not been regularized as of the 30 of April 1988, allegedly in contravention of the Collective Bargaining Agreement (CBA) entered into by petitioner PAL and respondent PALEA. The facts are undisputed. On 6 February 1987, petitioner PAL and respondent PALEA entered into a CBA7 covering the period of 1986-1989, to be applied, thus: Section 3 Application All the terms and conditions of employment of employees within the bargaining unit are embodied in this Agreement, and the same shall govern the relationship between the Company and such employees. On the other hand, all such benefits and/or privileges as are not expressly provided for in this Agreement but which are now being accorded in accordance with the PAL Personnel Policies and Procedures Manual, shall be deemed also part and parcel of the terms and conditions of employment, or of this 8 Agreement. Part of said agreement required petitioner PAL to pay its rank and file employees the following bonuses: Section 4 13th Month Pay (Midyear Bonus) A 13th month pay, equivalent to one months current basic pay, consistent with the existing practice shall be paid in advance in May. Section 5 Christmas Bonus The equivalent of one months current basic pay as of November 30, shall be paid in December as

P a g e | 47

a Christmas bonus. Payment may be staggered in two (2) stages. It is distinctly understood that nothing herein contained shall be construed to mean that the Company may not at its sole discretion give an additional amount or increase the Christmas bonus.9 On 22 April 1988, prior to the payment of the 13th month pay (mid-year bonus), petitioner PAL released a guideline10 implementing the aforequoted provision, to wit: 1) Eligibility a) Ground employees in the general payroll who are regular as of April 30, 1988; b) Other ground employees in the general payroll, not falling within category a) above shall receive their 13th Month Pay on or before December 24, 1988; 2) Amount a) For category a) above, one month basic salary as of April 30, 1988; b) Employees covered under 1 b) above shall be paid not less than 1/12 of their basic salary for every month of service within the calendar year. 3) Payment Date: May 1988 for category 1 above.11 9, a)

13th month pay. In fact, in a letter dated 16 December 1988, respondent PALEA, through Herbert C. Baldovino,12 informed petitioner PAL that the following regular employees failed to receive their 13th Month Pay as of the date of the correspondence. Said letter reads in part: 16 December 1988 To : Ms. Marie Anne E. Rosario Director-Personnel Services From : PALEA Engineering Board Del

Member-

Subject : 13th Month Pay Please be informed that the following regular employees have not received their 13th month pay as of today. NAME Date Regularized Employed Date

1. Renato C. Buenaventura Nov. 17, 1987 May 17, 1988 2. Rene Zaragoza 1987 June 1, 1988 -Dec. 1,

3. Ronald Lumibao -Dec. 1, 1987 June 1, 1988 4. Ruel Villa-real -Dec. 1, 1987 June 1, 1988 5. Rene Philip Banzon -Dec. 1, 1987 June 1, 1988 We feel that these employees are entitled to the 13th month pay in accordance with the guidelines issued by your office last 22 April 1988. (Copy attached.) May we request your good office to do the necessary to effect payment of the 13th month pay to the above listed regular

Respondent PALEA assailed the implementation of the foregoing guideline on the ground that all employees of PAL, regular or non-regular, must be paid their

P a g e | 48

employees payroll.

in

the

next

regular prompt

pay on or 24, 1988.

before

December

Praying for attention.

usual

(Sgd.) HERBERT C. BALDOVINO13 In response thereto, petitioner PAL informed respondent PALEA that rank and file employees who were regularized after 30 April 1988 were not entitled to the 13th month pay as they were already given their Christmas bonuses on 9 December 1988 per the Implementing Rules of Presidential Decree No. 851.14 Petitioner PALs response is hereunder quoted in full January 2, 1989 Mr. Herbert C. Baldovino PALEA Board Member and Mr. George M. Pulido PALEA President 2nd Floor, Philbanking Bldg. Baclaran, Paraaque, M.M. Dear Messrs. Pulido: Baldovino and

2. The guideline providing for the payment of the 13th month pay on or before December 24, 1988 for those who were not entitled to receive such in May is anchored on the Companys compliance with the Rules and Regulations Implementing PD 851 (pp. 236-237, Labor Code of the Philippines 1988 Edition), to wit: "Sec. 3. Employees covered the Decree shall apply to all employees except to: x x x c) Employers already paying their employees 13-month pay or more in a calendar year or its equivalent at the time of this issuance; x x x the term "its equivalent" as used in paragraph (c) hereof shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits." 3. In accordance with 1 and 2, the above-mentioned employees were paid the equivalent of their 13th month pay in the form of the Christmas bonus granted by the Company on December 9, 1988. The same was

This pertains to your letter which we received on December 19, 1988 requesting for payment of 13th month pay to employees: Renato Buenaventura, Rene Zaragoza, Ronald Lumibao, Ruel Villareal and Rene Philip Banzon. We would like following: to clarify the

1. The above-mentioned employees and other similarly situated employees were not paid the 13th month pay on May 9, 1988 because they were not qualified regular employees as of April 30, 1988. However, the guidelines provide that they should be granted their 13th month

P a g e | 49

applied to similarly situated employees in compliance with pertinent provisions of the 1986-1989 PAL-PALEA CBA and the Labor Code of the Philippines. (SGD.) MARIE 15 ROSARIO ANNE E. DEL

additional practice made in the past, "such being the case, it violated no agreement or existing practice or committed unfair labor practice, as 17 charged." The decretal part of said ruling reads: WHEREFORE, decision is hereby issued ordering the dismissal of the complaint.18 Respondent PALEA appealed to the NLRC. In a Decision dated 28 January 1998, the Commission reversed the Decision of the Arbiter. The fallo of said decision is quoted hereunder: WHEREFORE, finding the appeal well-impressed with merit, the decision appealed from is REVERSED and SET ASIDE and a new one ENTERED ordering [herein petitioner] PAL to pay the 13th month pay or mid-year bonus of the members as discussed above.19 The NLRC held that after going through the documents submitted by respondent PALEA in support of its contention, the Commission is convinced that the 13th month pay or mid-year bonus is distinct from the Christmas Bonus, and although petitioner PAL already paid its employees the latter, it must likewise pay them the former. Petitioner PAL moved for reconsideration of the NLRC Decision but this was denied in a Resolution dated 23 June 1998. Undaunted, petitioner PAL went directly to this Court via a Petition for Review on Certiorari. In view of this Courts decision in St. Martin Funeral Homes v. National Labor Relations Commission,20 however, the Petition was referred to the Court of Appeals for proper disposition. The case was

Disagreeing with petitioner PAL, respondent PALEA filed a labor complaint16 for unfair labor practice against petitioner PAL before the NLRC on 1 March 1989. The complaint interposed that "the cut-off period for regularization should not be used as the parameter for granting [the] 13th month pay considering that the law does not distinguish the status of employment but (sic) the law covers all employees." In its Position Paper submitted before the Labor Arbiter, petitioner PAL countered that those rank and file employees who were not regularized by 30 April of a particular year are, in principle, not denied their 13th month pay considering they receive said mandatory bonus in the form of the Christmas Bonus; that the Christmas Bonus given to all its employees is deemed a compliance with Presidential Decree No. 851 and the latters implementing rules; and that the foregoing has been the practice formally adopted in previous CBAs as early as 1970. On 12 March 1990, the Labor Arbiter rendered a Decision dismissing the respondent PALEAs complaint for lack of merit. The Labor Arbiter ruled that petitioner PAL was not guilty of unfair labor practice in withholding the grant of the 13th Month Pay or Mid Year Bonus to the concerned employees. The giving of the particular bonus was said to be merely an

P a g e | 50

docketed therein as CA-G.R. SP No. 50161. On 30 April 1999, the Court of Appeals promulgated its Decision dismissing the Petition filed by petitioner PAL, hence, affirming the 28 January 1998 Decision of the NLRC. The dismissal reads WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit.21 The Court of Appeals held that "from the x x x provision of the said inter-office memo, employees who are regular as of 30 April 1988 and those regularized thereafter, are entitled for (sic) the payment of the non-regular employees as provided for under letter (c) of the Guidelines issued."22 It reasoned that "if the intention is not to include employees regularized beyond 30 April 1988, they would not have placed letter (c)."23 The Court of Appeals further rationalized that "well-settled is the rule that all doubts should be resolved in favor of labor. To rule otherwise is a betrayal of our zealous commitment to uphold the constitutional provision affording protection to 24 labor." Petitioner PAL seasonably moved for the reconsideration of the aforequoted Court of Appeals Decision, but was also denied in a Resolution dated 10 March 2000.1avvphi1 Hence, the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court, as amended. In a Resolution25 dated 19 June 2007, We resolved to suspend the proceedings of the case at bar in view of the on-going rehabilitation of petitioner PAL as mandated by the Securities

and Exchange Commission. On 28 September 2007, however, the SEC issued an Order26 granting petitioner PALs request to exit from rehabilitation after successfully stabilizing its financial operations. Hence, the suspension earlier issued by this Court is hereby lifted, making the present Petition ripe for resolution. In refusing payment of the midyear bonus, petitioner PAL argues that 1) the CBA does not apply to non-regular employees such that any benefits arising from said agreement cannot be made to apply to them, including the mid-year bonus; and 2) it has always been the company practice not to extend the midyear bonus to those employees who have not attained regular status prior to the month of May, when payment of the particular bonus accrues. Respondent PALEA, however, disputes petitioner PALs allegations and maintains that "the benefits to all employees in the collective bargaining unit, including those who do not belong to the chosen bargaining labor organization, applies."27 Put in another way, "[a]ll employees in PAL are entitled to the same benefit as they are within the same collective bargaining unit and the entitlement to such benefit spills over to even non-union members."28 Anent the supposed company practice of petitioner PAL not to extend the payment of the 13th month pay or mid-year bonus to non-regular employees, respondent PALEA contends that non-payment of said benefit is considered a diminution of privileges or benefits proscribed by Presidential Decree No. 851; that petitioner PAL misrepresented that the 13th month pay or mid-year bonus is

P a g e | 51

the same as the Christmas bonus when, in actuality, the latter is entirely different as it is a benefit paid under the provisions of the CBA, while the former is one mandated by law, Presidential Decree No. 851, in particular. The sole issue for resolution of this Court is whether or not the Court of Appeals committed reversible error in affirming the order of the NLRC for the payment of the 13th month pay or mid-year bonus to its employees regularized after 30 April 1988. We rule in the negative. Petitioner PAL maintains that in extending the grant of the 13th month pay or mid-year bonus to employees who are not covered by the CBA, the Court of Appeals, in effect, "modified or altered the terms of said agreement and expanded its coverage to nonregular employees who are not covered by the bargaining 29 unit." The issue on modification or alteration of the CBA, however, was raised by petitioner PAL rather belatedly and invoked for the first time on appeal. This being the case, We are barred from taking cognizance of and resolving the issue for it would be violative of the proscription against the presentation of new issues on appeal. To do otherwise would be offensive to the basic rules of fair play, justice and due process.30 Be that as it may, a cursory reading of the 1986-1989 CBA of the parties herein will instantly reveal that Art. I, Sec. 3 of said agreement made its provision applicable to all employees in the bargaining unit. The particular section specifically defined the scope of application of the CBA, thus:

Section 3 Application. All the terms and conditions of employment of employees within the bargaining unit are embodied in this Agreement, and the same shall govern the relationship between the Company and such employees. On the other hand, all such benefits and/or privileges as are not expressly provided for in this Agreement but which are now being accorded in accordance with the PAL Personnel Policies and Procedures Manual, shall be deemed also part and parcel of the terms and conditions of employment, or of this Agreement. without distinguishing between regular and non-regular employees. As succinctly put by respondent PALEA in its Memorandum: All employees in (sic) PAL are entitled to the same benefit as they are within the same collective bargaining unit and the entitlement to such benefit spills over to even non-union members.31 It is a well-settled doctrine that the benefits of a CBA extend to the laborers and employees in the collective bargaining unit, including those who do not belong to the chosen bargaining labor organization.32 Otherwise, it would be a clear case of discrimination. Hence, to be entitled to the benefits under the CBA, the employees must be members of the bargaining unit, but not necessarily of the labor organization designated as the bargaining agent. A "bargaining unit" has been defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the

P a g e | 52

collective interest of all the employees, consistent with equity to the employer, indicates to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.33 At this point, the allegation of petitioner PAL that the nonregular employees do not belong to the collective bargaining unit and are thus not covered by the CBA is unjustified and unsubstantiated. It is apparent to us that petitioner PAL excludes certain employees from the benefits of the CBA only because they have not yet achieved regular status by the cut-off date, 30 April 1988. There is no showing that the non-regular status of the concerned employees by said cutoff date sufficiently distinguishes their interests from those of the regular employees so as to exclude them from the collective bargaining unit and the benefits of the CBA. Having ruled that the benefits provided by the subject CBA are applicable even to non-regular employees who belong to the bargaining unit concerned, the next and crucial query to be addressed is whether the 13th month pay or mid-year bonus can be equated to the Christmas bonus. Petitioner PAL equates the 13th month pay, also referred to as the mid-year bonus in the CBA, to the Christmas bonus. It insists that "[u]nder the 13th Month Pay Law (P.D. 851, as amended), the 13th Month Pay is due on or before December 24th of the year. Therefore, nonregular employees are entitled to their 13th Month Pay, not in the month of May, but in the month of December when the

Christmas Bonus becomes due. The Christmas bonus becomes their 13th Month Pay, by express provision of Section 2, Presidential Decree 851."34 Simply put, as far as nonregular employees are concerned, petitioner PAL alleges that their 13th month pay shall be the same as their Christmas bonus and will be paid according to the terms governing the latter. We do not agree. From the facts of the present Petition, it is crystal clear that petitioner PAL is claiming an exemption from payment of the 13th month pay or mid-year bonus provided in the CBA under the guise of paying the Christmas bonus which it claims to be the equivalent of the 13th month pay under Presidential Decree No. 851. Presidential Decree No. 851 mandates that all employers must pay all their employees receiving a basic salary of not more than P1,000.00 a month, regardless of the nature of the employment, a 13th month pay not later than 24 December of every year. Memorandum Order No. 28,35 dated 13 August 1986, removed the salary ceiling, generally making all employees entitled to the 13th month pay regardless of the amount of their basic salary, designation or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one (1) month during a calendar year.36 Presidential Decree No. 851, as amended, does admit of certain exceptions or exclusions from its coverage, among which is: Sec. 3(c). Employers already paying their employees 13-month pay or more in a calendar year

P a g e | 53

or its equivalent at the time of this issuance. While employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of the issuance of Presidential Decree No. 851 are already exempted from the mandatory coverage of said law, petitioner PAL cannot escape liability in this case by virtue thereof. It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed to pay its employees 1) the 13th month pay or the midyear bonus, and 2) the Christmas bonus. The 13th month pay, guaranteed by Presidential Decree No. 851, is explicitly covered or provided for as the mid-year bonus in the CBA, while the Christmas bonus is evidently and distinctly a separate benefit. Petitioner PAL may not be allowed to brush off said distinction, and unilaterally and arbitrarily declare that for non-regular employees, their Christmas bonus is the same as or equivalent to the 13th month pay. Presidential Decree No. 851 mandates the payment of the 13th month pay to uniformly provide the low-paid employees with additional income. It but sets a minimum requirement that employers must comply with. It does not intend, however, to preclude the employers from voluntarily granting additional bonuses that will benefit their employees. A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's business and made possible the realization of profits. It is an act of generosity of the employer for which the employee ought to be thankful and grateful. It is

also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.37 We deem that the Christmas bonus in this case is of this nature, although, by virtue of its incorporation into the CBA, it has become more than just an act of generosity on the part of petitioner PAL, but a contractual obligation it has undertaken. The inclusion of a provision for the continued payment of the Christmas bonus in the 1986-1989 CBA between respondent PALEA and petitioner PAL contradicts the companys claim that the grant of such benefit was intended to be credited as compliance with the statutory mandate to give the 13th month pay. Memorandum Order No. 28, extending Presidential Decree No. 851 to all employees regardless of the amount of their monthly salaries, was issued on 13 August 1986. As early as said date, therefore, petitioner PAL was already fully aware that it was lawfully compelled to accord all its employees a 13th month pay. Accordingly, if petitioner PAL truly intended that the Christmas bonus be treated as the "equivalent" of the 13th month pay required by law, then said intention should have been expressly declared in their 1986-1989 CBA, or the separate provision therein on the Christmas bonus should have been removed because it would only be superfluous.381avvphil.zw+ In United CMC Textile Workers Union v. The Labor Arbiter,39 one of the issues passed upon by the Court was whether or not an employer who was already paying Christmas bonus pursuant to a CBA, was still bound to pay the 13th month pay pursuant to

P a g e | 54

Presidential Decree No. 851. Finding that the intention of the parties to the CBA was that the Christmas bonus was meant to be on top of the 13th month pay, the Court ordered the employer to pay the employees both. The Court ratiocinated: If the Christmas bonus was included in the 13th month pay, then there would be no need for having a specific provision on Christmas bonus in the CBA. But is did provide for a bonus in graduated amounts depending on the length of service of the employee. The intention is clear therefore that the bonus provided in the CBA was meant to be in addition to the legal requirement. x x x A bonus under the CBA is an obligation created by the contract between the management and workers while the 13th month pay is mandated by the law (P.D. 851). In the case under consideration, the provision for the payment of the Christmas bonus, apart from the 13th month pay, was incorporated into the 1986-1989 CBA between respondent PALEA and petitioner PAL without any condition. The Christmas bonus, payable in December of every year, is distinguished from the 13th month pay, due yearly in May, for which reason it was denominated as the mid-year bonus. Such being the case, the only logical inference that could be derived therefrom is that petitioner PAL intended to give the members of the bargaining unit, represented by respondent PALEA, a Christmas bonus over and above its legally mandated obligation to grant the 13th month pay. The non-regular rank and file employees of petitioner PAL as of 30 April 1988, are not actually seeking more benefits

than what the other memberemployees of the same bargaining unit are already enjoying. They are only requesting that all members of the bargaining unit be treated equally and afforded the same privileges and benefits as agreed upon between respondent PALEA and petitioner PAL in the CBA. Petitioner PAL is committing a patent act of inequity that is grossly prejudicial to the non-regular rank and file employees there being no rational basis for withholding from the latter the benefit of a Christmas bonus besides the 13th month pay or mid-year bonus, while the same is being granted to the other rank and file employees of petitioner PAL who have been regularized as of 30 April 1988, although both types of employees are members of the same bargaining unit. As it had willfully and intentionally agreed to under the terms of the CBA, petitioner PAL must pay its regular and non-regular employees who are members of the bargaining unit represented by respondent PALEA their 13th month pay or mid-year bonus separately from and in addition to their Christmas bonus. A collective bargaining agreement refers to a negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit.40 As in all other contracts, the parties to a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided these are not contrary to law, morals, good customs, public order or public policy.41 Thus, where the CBA is clear and unambiguous, it becomes the law between the parties, and compliance

P a g e | 55

therewith is mandated by express policy of the law.42

the

WHEREFORE, premises considered, the petition is hereby DENIED. The Decision of the Court of Appeals promulgated on 30 April 1999, and its Resolution dated 10 March 2000, are hereby AFFIRMED. Costs against petitioner Philippine Airlines, Inc. SO ORDERED. MINITA V. Associate Justice FIRST DIVISION G.R. No. 177578 January 25, 2012 MAGSAYSAY MARITIME CORPORATION and/or WASTFEL-LARSEN MANAGEMENT A/S+ Petitioners, vs. OBERTO S. LOBUSTA, Respondent. D E C I S I O N VILLARAMA, JR., J.: Petitioners appeal the Decision1 dated August 18, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 74035 and its Resolution2 dated April 19, 2007, denying the motion for reconsideration thereof. The CA declared that respondent is suffering from permanent total disability and ordered petitioners to pay him US$2,060 as medical allowance, US$60,000 as disability benefits and 5% of the total monetary award as attorneys fees. The facts follow: Petitioner Magsaysay Maritime Corporation is a domestic corporation and the local manning agent of the vessel MV "Fossanger" and of petitioner Wastfel-Larsen Management A/S.3 CHICO-NAZARIO

Respondent Oberto S. Lobusta is a seaman who has worked for Magsaysay Maritime Corporation since 1994.4 In March 1998, he was hired again as Able Seaman by Magsaysay Maritime Corporation in behalf of its principal Wastfel-Larsen Management A/S. The employment contract5 provides for Lobusta's basic salary of US$515 and overtime pay of US$206 per month. It also provides that the standard terms and conditions governing the employment of Filipino seafarers on board ocean-going vessels, approved per Department Order No. 33 of the Department of Labor and Employment and Memorandum Circular No. 55 of the Philippine Overseas Employment Administration (POEA Standard Employment Contract), both series of 1996, shall be strictly and faithfully observed. Lobusta boarded MV "Fossanger" on March 16, 1998.6 After two months, he complained of breathing difficulty and back pain. On May 12, 1998, while the vessel was in Singapore, Lobusta was admitted at Gleneagles Maritime Medical Center and was diagnosed to be suffering from severe acute bronchial asthma with secondary infection and lumbosacral muscle strain. Dr. C K Lee certified that Lobusta was fit for discharge on May 21, 1998, for repatriation for further treatment.7 Upon repatriation, Lobusta was referred to Metropolitan Hospital. The medical coordinator, Dr. Robert Lim, issued numerous medical reports regarding Lobustas condition. Lobusta was first seen by a Pulmonologist and an Orthopedic Surgeon on May 22, 1998.8 Upon reexamination by the Orthopedic Surgeon on August 11, 1998, he

P a g e | 56

opined that Lobusta needs surgery, called decompression 9 laminectomy, which was done on August 30, 1998.10 On October 12, 1998, Dr. Lim issued another medical report stating the opinion of the Orthopedic Surgeon that the prognosis for Lobustas recovery after the spine surgery is good. However, the Pulmonologist opined that Lobustas obstructive airway disease needs to be monitored regularly and that Lobusta needs to be on bronchodilator indefinitely. Hence, Lobusta should be declared disabled with a suggested disability grading of 10-20%.11 The suggestion was not heeded and Lobusta's treatment continued. On February 16, 1999, Lobusta was reexamined. Dr. Lim reported that Lobusta still complains of pain at the lumbosacral area although the EMG/NCV12 test revealed normal findings. Lobusta was prescribed medications and was advised to return on March 16, 1999 for reevaluation.13 On February 19, 1999, Dr. Lim reported that Lobusta has been diagnosed to have a moderate obstructive pulmonary disease which tends to be a chronic problem, such that Lobusta needs to be on medications indefinitely. Dr. Lim also stated that Lobusta has probably reached his maximum medical care.14 Petitioners "then faced the need for confirmation and grading by a second opinion" and "it took the parties time to agree on a common doctor, until they agreed on Dr. Camilo Roa."15 Dr. Roas clinical summary states that Lobusta's latest follow-up check-up was on December 16, 1999; that Lobusta is not physically fit to resume his

normal work as a seaman due to the persistence of his symptoms; that his asthma will remain chronically active and will be marked by intermittent exacerbations; and that he needs multiple controller medications for his asthma.16 As the parties failed to reach a settlement as to the amount to which Lobusta is entitled, Lobusta filed on October 2, 2000, a complaint17 for disability/medical benefits against petitioners before the National Labor Relations Commission (NLRC). Sometime in October 2000, Magsaysay Maritime Corporation suggested that Lobusta be examined by another companydesignated doctor for an independent medical examination. The parties agreed on an independent medical examination by Dr. Annette M. David, whose findings it was agreed upon, would be considered final. On November 17, 2000, Dr. David interviewed and examined Lobusta.18 Pertinent portions of Dr. Davids report read: xxx Based on the Classes of Respiratory Impairment as described in the American Medical Association's Guidelines for the Evaluation of Permanent Impairment, this is equivalent to Class 2 or Mild Impairment of the Whole Person (level of impairment: 10-25% of the whole person). Given the persistence of the symptoms despite an adequate medical regimen, the impairment may be considered permanent. The determination of disability and fitness for duty/return-towork is more complex. During asymptomatic periods, Mr. Lobusta could conceivably be

P a g e | 57

capable of performing the duties and responsibilities of an Able Seaman as listed in the memos provided by Pandiman (Duties of an Able Seaman on board an average vessel, January 26, 2000; and Deck Crew general Responsibilities, 95.11.01). However, consideration needs to be given to the following:

substances (e.g. grease, solvents, cleaning agents, de-greasers, paint, etc.), many of which are known or suspected asthma triggers in sensitized individuals. The potential for an Able Seaman's exposure to these asthma triggers is considerable. Taken altogether, it is my opinion that Mr. Lobusta ought not to be considered fit to return to work as an Able Seaman. While the degree of impairment is mild, for the reasons stated above, it would be in the interest of all parties involved if he were to no longer be considered as capable of gainful employment as a seafarer. It is possible that he may perform adequately in another capacity, given a landbased assignment.19 (Stress in the original by Dr. David.) As no settlement was reached despite the above findings, the Labor Arbiter ordered the parties to file their respective position papers. On April 20, 2001, the Labor Arbiter rendered a decision20 ordering petitioners to pay Lobusta (a) US$2,060 as medical allowance, (b) US$20,154 as disability benefits, and (c) 5% of the awards as attorneys fees. The Labor Arbiter ruled that Lobusta suffered illness during the term of his contract. Hence, petitioners are liable to pay Lobusta his medical allowance for 120 days or a total of US$2,060. The Labor Arbiter held that provisions of the Labor Code, as amended, on permanent total disability do not apply to overseas seafarers. Hence, he awarded Lobusta US$20,154 instead of US$60,000, the

During the personal interview, Mr. Lobusta reported the need to use a self-contained breathing apparatus (SCBA) for "double bottom" work. While the use of these devices may not appreciably increase the work of breathing, an individual who develops an acute asthmatic attack under conditions requiring the use of an SCBA (oxygen-poor atmospheres) may be at increased risk for a poor outcome. When out at sea, the medical facilities on board an average vessel may not be adequate to provide appropriate care for an acute asthmatic exacerbation. Severe asthmatic attacks require life-sustaining procedures such as endotracheal intubation and on occasion, mechanical ventilation. Asthma can be fatal if not treated immediately. The distance from and the time required to transport an individual having an acute asthmatic attack on a vessel at sea to the appropriate medical facilities on land are important factors in the decision regarding fitness for duty. Several of the duties listed for an Able Seaman require the use of a variety of chemical

P a g e | 58

maximum rate for permanent and total disability under Section 30 and 30-A of the 1996 POEA Standard Employment Contract. The Labor Arbiter also awarded attorneys fees equivalent to 5% of the total award since Lobusta was assisted by 21 counsel. 1avvphi1 Lobusta appealed. The NLRC dismissed his appeal and affirmed the Labor Arbiters decision. The NLRC ruled that Lobustas condition may only be considered permanent partial disability. While Dr. David suggested that Lobustas prospects as seafarer may have been restricted by his bronchial asthma, Dr. David also stated that the degree of impairment is mild. Said qualification puts Lobusta's medical condition outside the definition of total permanent disability, said the NLRC.22 Later, the NLRC also denied Lobustas motion for reconsideration. Unsatisfied, Lobusta brought the case to the CA under Rule 65 of the 1997 Rules of Civil Procedure, as amended. As aforesaid, the CA declared that Lobusta is suffering from permanent total disability and increased the award of disability benefits in his favor to US$60,000, to wit: WHEREFORE, the petition for certiorari is hereby GRANTED. The challenged resolution of the NLRC dated 20 June 2002 is MODIFIED, declaring [Lobusta] to be suffering from permanent total disability. [Petitioners] are ORDERED to pay [Lobusta] the following: a) US$2,060.00 allowance, as medical as

c) 5% of the total monetary award as attorneys fees x x x x23 The CA faulted the NLRC for "plucking only particular phrases" from Dr. Davids report and said that the NLRC cannot wantonly disregard the full import of said report. The CA ruled that Lobusta's disability brought about by his bronchial asthma is permanent and total as he had been unable to work since May 14, 1998 up to the present or for more than 120 days, and because Dr. David found him not fit to return to work as an able seaman. Hence, this petition raises two legal issues: which

WHETHER OR NOT THE POEA CONTRACT CONSIDERS THE MERE LAPSE OF MORE THAN ONE HUNDRED TWENTY (120) DAYS AS TOTAL AND PERMANENT DISABILITY. WHETHER OR NOT THERE IS LEGAL BASIS TO AWARD RESPONDENT LOBUSTA 24 ATTORNEYS FEES. Petitioners argue that the CA erred in applying the provisions of the Labor Code instead of the provisions of the POEA contract in determining Lobustas disability, and in ruling that the mere lapse of 120 days entitles Lobusta to total and permanent disability benefits. The CA allegedly erred also in holding them liable for attorneys fees, despite the absence of legal and factual bases. The petition lacks merit. Petitioners are mistaken that it is only the POEA Standard Employment Contract that must be considered in determining

b) US$60,000.00 disability benefits, and

P a g e | 59

Lobusta's disability. In Palisoc v. Easways Marine, Inc.,25 we said that whether the Labor Codes provision on permanent total disability applies to seafarers is already a settled matter. In Palisoc, we cited the earlier case of Remigio v. National Labor Relations Commission26 where we said (1) that the standard employment contract for seafarers was formulated by the POEA pursuant to its mandate under Executive Order No. 24727 "to secure the best terms and conditions of employment of Filipino contract workers and ensure compliance therewith," and "to promote and protect the well-being of Filipino workers overseas"; (2) that Section 29 of the 1996 POEA Standard Employment Contract itself provides that all rights and obligations of the parties to the contract, including the annexes thereof, shall be governed by the laws of the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is a signatory; and (3) that even without this provision, a contract of labor is so impressed with public interest that the Civil Code expressly subjects it to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.28 In affirming the Labor Code concept of permanent total disability, Remigio further stated: Thus, the Court has applied the Labor Code concept of permanent total disability to the case of seafarers. In Philippine Transmarine Carriers v. NLRC, seaman Carlos Nietes was found to be suffering from congestive heart failure and cardiomyopathy

and was declared as unfit to work by the company-accredited physician. The Court affirmed the award of disability benefits to the seaman, citing ECC v. Sanico, GSIS v. CA, and Bejerano v. ECC that "disability should not be understood more on its medical significance but on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature that [he] was trained for or accustomed to perform, or any kind of work which a person of [his] mentality and attainment could do. It does not mean absolute helplessness." It likewise cited Bejerano v. ECC, that in a disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of ones earning capacity. The same principles were cited in the more recent case of Crystal Shipping, Inc. v. Natividad. In addition, the Court cited GSIS v. Cadiz and Ijares v. CA that "permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body." x x x x These facts clearly prove that petitioner was unfit to work as drummer for at least 11-13 months from the onset of his ailment on March 16, 1998 to 810 months after June 25, 1998. This, by itself, already constitutes permanent total 29 disability. x x x In Vergara v. Hammonia Maritime Services, Inc.,30 we also said that the standard terms of the POEA Standard Employment

P a g e | 60

Contract agreed upon are intended to be read and understood in accordance with Philippine laws, particularly, Articles 191 to 193 of the Labor Code, as amended, and the applicable implementing rules and regulations in case of any dispute, claim or grievance. Thus, the CA was correct in applying the Labor Code provisions in Lobustas claim for disability benefits. The Labor Arbiter erred in failing to apply them. Article 192(c)(1) under Title II, Book IV of the Labor Code, as amended, reads: ART. 192. Permanent disability. x x x x x x x (c) The following disabilities shall be deemed total and permanent: (1) Temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided in the Rules; x x x x Section 2(b), Rule VII of the Implementing Rules of Title II, Book IV of the Labor Code, as amended, or the Amended Rules on Employees Compensation Commission (ECC Rules), reads: Sec. 2. Disability. x x x (b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days, except as otherwise provided for in Rule X of these Rules. x x x x total

Section 2, Rule Rules reads:

of

the

ECC

SEC. 2. Period of entitlement. (a) The income benefit shall be paid beginning on the first day of such disability. If caused by an injury or sickness it shall not be paid longer than 120 consecutive days except where such injury or sickness still requires medical attendance beyond 120 days but not to exceed 240 days from onset of disability in which case benefit for temporary total disability shall be paid. However, the System may declare the total and permanent status at any time after 120 days of continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical or mental functions as determined by the System. x x x x According to Vergara,31 these provisions of the Labor Code, as amended, and implementing rules are to be read hand in hand with the first paragraph of Section 20(B)(3) of the 2000 POEA Standard Employment Contract which reads: Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the companydesignated physician[,] but in no case shall this period exceed one hundred twenty (120) days. Vergara continues: As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the company-designated physician within three (3) days from arrival for diagnosis and

P a g e | 61

treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical condition. x x x x As we outlined above, a temporary total disability only becomes permanent when so declared by the company physician within the periods he is allowed to do so, or upon the expiration of the maximum 240day medical treatment period without a declaration of either fitness to work or the existence of a permanent disability.32 To be sure, there is one Labor Code concept of permanent total disability, as stated in Article 192(c)(1) of the Labor Code, as amended, and the ECC Rules. We also note that the first paragraph of Section 20(B)(3) of the 2000 POEA Standard Employment Contract was lifted verbatim from the first paragraph of Section 20(B)(3) of

the 1996 POEA Standard Employment Contract, to wit: Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the companydesignated physician, but in no case shall this period exceed one hundred twenty (120) days. Applying the foregoing considerations, we agree with the CA that Lobusta suffered permanent total disability. On this point, the NLRC ruling was not in accord with law and jurisprudence. Upon repatriation, Lobusta was first examined by the Pulmonologist and Orthopedic Surgeon on May 22, 1998. The maximum 240-day (8-month) medical-treatment period expired, but no declaration was made that Lobusta is fit to work. Nor was there a declaration of the existence of Lobustas permanent disability. On February 16, 1999, Lobusta was still prescribed medications for his lumbosacral pain and was advised to return for reevaluation. May 22, 1998 to February 16, 1999 is 264 days or 6 days short of 9 months. On Lobustas other ailment, Dr. Roas clinical summary also shows that as of December 16, 1999, Lobusta was still unfit to resume his normal work as a seaman due to the persistence of his symptoms. But neither did Dr. Roa declare the existence of Lobustas permanent disability. Again, the maximum 240-day medical treatment period had already expired. May 22, 1998 to December 16, 1999 is 19 months or 570 days. In Remigio,

P a g e | 62

unfitness to work for 11-13 months was considered permanent total disability. So it must be in this case. And Dr. Davids much later report that Lobusta "ought not to be considered fit to return to work as an Able Seaman" validates that his disability is permanent and total as provided under the POEA Standard Employment Contract and the Labor Code, as amended. In fact, the CA has found that Lobusta was not able to work again as a seaman and that his disability is permanent "as he has been unable to work since 14 May 1998 to the present or for more than 120 days." This period is more than eight years, counted until the CA decided the case in August 2006. On the CA ruling that Lobustas disability is permanent since he was unable to work "for more than 120 days," we have clarified in Vergara that this "temporary total disability period may be extended up to a maximum of 240 days." Thus, we affirm the award to Lobusta of US$60,000 as permanent total disability benefits, the maximum award under Section 30 and 30-A of the 1996 POEA Standard Employment Contract. We also affirm the award of US$2,060 as sickness allowance which is not contested and appears to have been accepted by the parties. On the matter of attorneys fees, under Article 220833 of the Civil Code, attorneys fees can be recovered in actions for recovery of wages of laborers and actions for indemnity under employers liability laws. Attorneys fees are also recoverable when the defendants act or omission has compelled the plaintiff to incur expenses to protect his interest.34 Such

conditions being present here, we affirm the award of attorneys fees, which we compute as US$3,103 or 5% of US$62,060. Before we end, we note petitioners repeated failure to comply with our resolutions, as well as the orders issued by the tribunals below. We remind petitioners and their counsels that our resolutions requiring them to file pleadings are not to be construed as mere requests, nor should they be complied with partially, inadequately or selectively. Counsels are also reminded that lawyers are called upon to obey court orders and willful disregard thereof will subject the lawyer not only for contempt but to disciplinary sanctions as well.35 We may also dismiss petitioners appeal for their failure to comply with any circular, directive or order of the Supreme Court without 36 justifiable cause. In fact, we actually denied the instant petition on July 9, 2008 since petitioners failed to file the required reply to the comment filed by Lobusta.37 On reconsideration, however, we 38 reinstated the petition. But when we required the parties to submit memoranda, petitioners again did not comply.39 As regards the proceedings below, they did not file their position paper on time, despite the extensions granted by the Labor Arbiter.40 Nor did they file the comment and memorandum required by the CA.41 Finally, we note that the Labor Arbiter improperly included Miguel Magsaysay as respondent in his decision.42 It should be noted that Lobusta sued Magsaysay Maritime Corporation and/or Wastfel-Larsen Management A/S in his complaint.43 He also

P a g e | 63

named them as the respondents in his position paper.44 Petitioners are the proper parties. WHEREFORE, we DENY the present petition for review on certiorari and AFFIRM the Decision dated August 18, 2006 of the Court of Appeals and its Resolution dated April 19, 2007 in CA-G.R. SP No. 74035. We ORDER petitioners Magsaysay Maritime Corporation and/or Wastfel-Larsen Management A/S to pay respondent Oberto S. Lobusta US$65,163 as total award, to be paid in Philippine pesos at the exchange rate prevailing during the time of payment. With costs against the petitioners. SO ORDERED. MARTIN S. VILLARAMA, JR. Associate JusticeHIRD DIVISION

Decision3 1999.

dated

October

14,

The facts are: Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer, shandy, bottled water and glass products. ABI entered into a Collective Bargaining Agreement (CBA),4 effective for five (5) years from August 1, 1997 to July 31, 2002, with Bisig at Lakas ng mga Manggagawa sa AsiaIndependent (BLMA-INDEPENDENT), the exclusive bargaining representative of ABIs rankand-file employees. On October 3, 2000, ABI and BLMAINDEPENDENT signed a renegotiated CBA effective from August 1, 2000 to 31 July 2003.5 Article I of the CBA defined the scope of the bargaining unit, as follows: Section 1. Recognition. The COMPANY recognizes the UNION as the sole and exclusive bargaining representative of all the regular rank-and-file daily paid employees within the scope of the appropriate bargaining unit with respect to rates of pay, hours of work and other terms and conditions of employment. The UNION shall not represent or accept for membership employees outside the scope of the bargaining unit herein defined. Section 2. Bargaining Unit. The bargaining unit shall be comprised of all regular rankand-file daily-paid employees of the COMPANY. However, the following jobs/positions as herein defined shall be excluded from the bargaining unit, to wit: 1. Managers

G.R. No. 162025 August 3, 2010 TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA BREWERY, Petitioner, vs. ASIA BREWERY, INC., Respondent. D E C I S I O N VILLARAMA, JR., J.: For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1 dated November 22, 2002 and 2 Resolution dated January 28, 2004 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 55578, granting the petition of respondent company and reversing the Voluntary Arbitrators

P a g e | 64

2. Assistant Managers 3. Section Heads 4. Supervisors 5. Superintendents 6. Confidential Executive Secretaries and

lodged a complaint before the National Conciliation and Mediation Board (NCMB). The parties eventually agreed to submit the case for arbitration to resolve the issue of "[w]hether or not there is restraint to employees in the exercise of their right to selforganization."8 In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-INDEPENDENT after finding that the records submitted by ABI showed that the positions of the subject employees qualify under the rank-and-file category because their functions are merely routinary and clerical. He noted that the positions occupied by the checkers and secretaries/clerks in the different divisions are not managerial or supervisory, as evident from the duties and responsibilities assigned to them. With respect to QA Sampling Inspectors/Inspectresses and Machine Gauge Technician, he ruled that ABI failed to establish with sufficient clarity their basic functions as to consider them Quality Control Staff who were excluded from the coverage of the CBA. Accordingly, the subject employees were declared eligible for inclusion within the bargaining unit represented by BLMA-INDEPENDENT.9 On appeal, the CA reversed the Voluntary Arbitrator, ruling that: WHEREFORE, foregoing premises considered, the questioned decision of the Honorable Voluntary Arbitrator Bienvenido De Vera is hereby REVERSED and SET ASIDE, and A NEW ONE ENTERED DECLARING THAT:

7. Personnel, Accounting and Marketing Staff 8. Communications Personnel 9. Probationary Employees 10. Security and Brigade Personnel 11. Monthly Employees 12. Purchasing and Quality Control Staff6 [emphasis supplied.] Subsequently, a dispute arose when ABIs management stopped deducting union dues from eighty-one (81) employees, believing that their membership in BLMA-INDEPENDENT violated the CBA. Eighteen (18) of these affected employees are QA Sampling Inspectors/Inspectresses and Machine Gauge Technician who formed part of the Quality Control Staff. Twenty (20) checkers are assigned at the Materials Department of the Administration Division, Full Goods Department of the Brewery Division and Packaging Division. The rest are secretaries/clerks directly under their respective division managers.7 BLMA-INDEPENDENT claimed that ABIs actions restrained the employees right to selforganization and brought the matter to the grievance machinery. As the parties failed to amicably settle the controversy, BLMA-INDEPENDENT Fire

P a g e | 65

a) the 81 employees are excluded from and are not eligible for inclusion in the bargaining unit as defined in Section 2, Article I of the CBA; b) the 81 employees cannot validly become members of respondent and/or if already members, that their membership is violative of the CBA and that they should disaffiliate from respondent; and c) petitioner has not committed any act that restrained or tended to restrain its employees in the exercise of their right to self-organization. NO COSTS. SO ORDERED.10 BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a certification election was held on August 10, 2002 wherein petitioner Tunay na Pagkakaisa ng Manggagawa sa Asia (TPMA) won. As the incumbent bargaining representative of ABIs rank-and-file employees claiming interest in the outcome of the case, petitioner filed with the CA an omnibus motion for reconsideration of the decision and intervention, with attached petition signed by the union officers.11 Both motions were denied by the CA.12 The petition is anchored on the following grounds: (1) THE COURT OF APPEALS ERRED RULING THAT THE 81 EMPLOYEES EXCLUDED FROM AND ARE ELIGIBLE FOR INCLUSION IN BARGAINING UNIT AS DEFINED SECTION 2, ARTICLE 1 OF CBA[;] IN ARE NOT THE IN THE

(2) THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81 EMPLOYEES CANNOT VALIDLY BECOME UNION MEMBERS, THAT THEIR MEMBERSHIP IS VIOLATIVE OF THE CBA AND THAT THEY SHOULD DISAFFILIATE FROM RESPONDENT; (3) THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER (NOW PRIVATE RESPONDENT) HAS NOT COMMITTED ANY ACT THAT RESTRAINED OR TENDED TO RESTRAIN ITS EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF13 ORGANIZATION. Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records.14 Confidential employees are thus excluded from the rank-and-file bargaining unit. The rationale for their separate category and disqualification to join any labor organization is similar to the inhibition for managerial employees because if allowed to be affiliated with a Union, the latter might not be assured of their loyalty in view of evident conflict of interests and the Union can also become companydenominated with the presence of managerial employees in the Union membership.15 Having access to confidential information, confidential employees may also become the source of undue advantage. Said

P a g e | 66

employees may act as a spy or spies of either party to a collective bargaining agreement.16 In Philips Industrial Development, Inc. v. NLRC,17 this Court held that petitioners "division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems" are confidential employees not included within the rank-and-file bargaining 18 unit. Earlier, in Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-Confesor,19 we declared that legal secretaries who are tasked with, among others, the typing of legal documents, memoranda and correspondence, the keeping of records and files, the giving of and receiving notices, and such other duties as required by the legal personnel of the corporation, fall under the category of confidential employees and hence excluded from the bargaining unit composed of rank-and-file employees.20 Also considered having access to "vital labor information" are the executive secretaries of the General Manager and the executive secretaries of the Quality Assurance Manager, Product Development Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production 21 Manager. In the present case, the CBA expressly excluded "Confidential and Executive Secretaries" from the rank-and-file bargaining unit, for which reason ABI seeks their disaffiliation from

petitioner. Petitioner, however, maintains that except for Daisy Laloon, Evelyn Mabilangan and Lennie Saguan who had been promoted to monthly paid positions, the following secretaries/clerks are deemed included among the rank-and-file employees of ABI:22 As can be gleaned from the above listing, it is rather curious that there would be several secretaries/clerks for just one (1) department/division performing tasks which are mostly routine and clerical. Respondent insisted they fall under the "Confidential and Executive Secretaries" expressly excluded by the CBA from the rank-and-file bargaining unit. However, perusal of the job descriptions of these secretaries/clerks reveals that their assigned duties and responsibilities involve routine activities of recording and monitoring, and other paper works for their respective departments while secretarial tasks such as receiving telephone calls and filing of office correspondence appear to have been commonly imposed as additional duties.23 Respondent failed to indicate who among these numerous secretaries/clerks have access to confidential data relating to management policies that could give rise to potential conflict of interest with their Union membership. Clearly, the rationale under our previous rulings for the exclusion of executive secretaries or division secretaries would have little or no significance considering the lack of or very limited access to confidential information of these secretaries/clerks. It is not even farfetched that the job category may exist only on paper since they are all daily-paid

P a g e | 67

workers. Quite understandably, petitioner had earlier expressed the view that the positions were just being "reclassified" as these employees actually discharged routine functions. We thus hold that the secretaries/clerks, numbering about forty (40), are rank-andfile employees and not confidential employees. With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine Technician, there seems no dispute that they form part of the Quality Control Staff who, under the express terms of the CBA, fall under a distinct category. But we disagree with respondents contention that the twenty (20) checkers are similarly confidential employees being "quality control staff" entrusted with the handling and custody of company properties and sensitive information. Again, the job descriptions of these checkers assigned in the storeroom section of the Materials Department, finishing section of the Packaging Department, and the decorating and glass sections of the Production Department plainly showed that they perform routine and mechanical tasks preparatory to the delivery of the finished products.24 While it may be argued that quality control extends to post-production phase -proper packaging of the finished products -- no evidence was presented by the respondent to prove that these daily-paid checkers actually form part of the companys Quality Control Staff who as such "were exposed to sensitive, vital and confidential information about [companys] products" or "have knowledge of mixtures of the products, their defects, and

even their formulas" which are considered trade secrets. Such allegations of respondent must be supported by evidence.25 Consequently, we hold that the twenty (20) checkers may not be considered confidential employees under the category of Quality Control Staff who were expressly excluded from the CBA of the rank-and-file bargaining unit. Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two (2) criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the "confidential employee rule."26 There is no showing in this case that the secretaries/clerks and checkers assisted or acted in a confidential capacity to managerial employees and obtained confidential information relating to labor relations policies. And even assuming that they had exposure to internal business operations of the company, respondent claimed, this is not per se ground for their exclusion in the bargaining unit of the daily-paid rank-and-file 27 employees.

P a g e | 68

Not being confidential employees, the secretaries/clerks and checkers are not disqualified from membership in the Union of respondents rank-and-file employees. Petitioner argues that respondents act of unilaterally stopping the deduction of union dues from these employees constitutes unfair labor practice as it "restrained" the workers exercise of their right to selforganization, as provided in Article 248 (a) of the Labor Code. Unfair labor practice refers to "acts that violate the workers right to organize." The prohibited acts are related to the workers right to self organization and to the observance of a CBA. For a charge of unfair labor practice to prosper, it must be shown that ABI was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x x"28 from ABIs act in discontinuing the union dues deduction from those employees it believed were excluded by the CBA. Considering that the herein dispute arose from a simple disagreement in the interpretation of the CBA provision on excluded employees from the bargaining unit, respondent cannot be said to have committed unfair labor practice that restrained its employees in the exercise of their right to selforganization, nor have thereby demonstrated an anti-union stance. WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2002 and Resolution

dated January 28, 2004 of the Court of Appeals in CA-G.R. SP No. 55578 are hereby REVERSED and SET ASIDE. The checkers and secretaries/clerks of respondent company are hereby declared rank-and-file employees who are eligible to join the Union of the rank-and-file employees. No costs. SO ORDERED. MARTIN S. VILLARAMA, JR. Associate JusticeTHIRD DIVISION

G.R. No. 166920 February 19, 2007 PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER HENRICHSEN, Petitioners, vs. KLAUS K. SCHONFELD, Respondent. D E C I S I O N CALLEJO, SR., J.: Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 76563. The CA decision reversed the Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, affirmed the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00 dismissing the complaint of respondent Klaus K. Schonfeld. The antecedent follows: facts are as

Respondent is a Canadian citizen and was a resident of New Westminster, British Columbia, Canada. He had been a consultant in the field of environmental

P a g e | 69

engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established and incorporated in accordance with the laws of the Philippines. The primary purpose of PPI was to engage in the business of providing specialty and technical services both in and out of the Philippines.2 It is a subsidiary of Pacific Consultants International of Japan (PCIJ). The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan. Henrichsen commuted from Japan to Manila and vice versa, as well as in other countries where PCIJ had business. In 1997, PCIJ decided to engage in consultancy services for water and sanitation in the Philippines. In October 1997, respondent was employed by PCIJ, through Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department. However, PCIJ assigned him as PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ. On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in Canada, requesting him to accept the same and affix his conformity thereto. Respondent made some revisions in the letter of employment and signed the contract.3 He then sent a copy to Henrichsen. The letter of employment reads: Mr. Klaus K. Schonfeld II-365 Ginger Drive New Westminster, B.C. Canada V3L 5L5 Tokyo 7 January 1998 Dear Mr. Schonfeld, Letter of Employment

This Letter of Employment with the attached General Conditions of Employment constitutes the agreement under which you will be engaged by our Company on the terms and conditions defined hereunder. In case of any discrepancies or contradictions between this Letter of Employment and the General Conditions of Employment, this Letter of Employment will prevail. You will, from the date of commencement, be ["seconded"] to our subsidiary Pacicon Philippines, Inc. in Manila, hereinafter referred as Pacicon. Pacicon will provide you with a separate contract, which will define that part of the present terms and conditions for which Pacicon is responsible. In case of any discrepancies or contradictions between the present Letter of Employment and the contract with Pacicon Philippines, Inc. or in the case that Pacicon should not live up to its obligations, this Letter of Employment will prevail. 1. Project Country: The Philippines with possible short-term assignments in other countries. 2. Duty Station: the Philippines. Manila,

3. Family Status: Married. 4. Position: Manager, Water Sanitation. 5. Commencement: October 1997. Sector and 1st

6. Remuneration: US$7,000.00 per month. The amount will be paid partly as a local salary (US$2,100.00 per month) by Pacicon and partly as an offshore salary

P a g e | 70

(US$4,900.00) by bank accounts nominated by you.

PCI to

to be

as annotated and initialed4 Section 21 of the General Conditions of Employment appended to the letter of employment reads: 21 Arbitration Any question of interpretation, understanding or fulfillment of the conditions of employment, as well as any question arising between the Employee and the Company which is in consequence of or connected with his employment with the Company and which can not be settled amicably, is to be finally settled, binding to both parties through written submissions, by the Court of Arbitration in London.5 Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was accorded the status of a resident alien. As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the Department of Labor and Employment (DOLE). It appended respondents contract of employment to the application.1awphi1.net On February 26, 1999, the DOLE granted the application and issued the Permit to respondent. It reads: Republic of the Philippines Department of Labor & Employment National Capital Region ALIEN EMPLOYMENT PERMIT ISSUED TO: SCHONFELD, KLAUS KURT DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian

A performance related component corresponding to 17.6% of the total annual remuneration, subject to satisfactory performance against agreed tasks and targets, paid offshore. 7. Accommodation: The company will provide partly furnished accommodation to a rent including association fees, taxes and VAT not exceeding the Pesos equivalent of US$2,900.00 per month. 8. Transportation: Included for in the remuneration. 9. Leave Travels: You are entitled to two leave travels per year. 10. Shipment of Personal Effects: The maximum allowance is US$4,000.00. 11. Mobilization Travel: Mobilization travel will be from New Westminster, B.C., Canada. This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us. Yours sincerely, Pacific Consultants International Jens Peter Henrichsen Above terms accepted and conditions

Date: 2 March 1998 (Sgd.) Klaus Schonfeld

P a g e | 71

POSITION: SANITATION EMPLOYER: INC.

VP PACICON

WATER

&

continued his work with PPI until the end of business hours on October 1, 1999. Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest. On December 5, 2000, respondent filed a Complaint11 for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as NLRC-NCR Case No. 30-1204787-00. In his Complaint, respondent alleged that he was illegally dismissed; PPI had not notified the DOLE of its decision to close one of its departments, which resulted in his dismissal; and they failed to notify him that his employment was terminated after August 4, 1999. Respondent also claimed for separation pay and other unpaid benefits. He alleged that the company acted in bad faith and disregarded his rights. He prayed for the following reliefs: 1. Judgment be rendered in his favor ordering the respondents to reinstate complainant to his former position without loss of seniority and other privileges and benefits, and to pay his full backwages from the time compensation was with held (sic) from him up to the time of his actual reinstatement. In the alternative, if reinstatement is no longer feasible, respondents must pay the complainant full

PHILIPPINES,

ADDRESS: 27/F Rufino Pacific Towers Bldg., Ayala Ave., Makati City P E R M I T ISSUED ON: February SIGNATURE OF BEARER: VALID UNTIL: (Sgd.) January 26, 7, 1999 2000

APPROVED: BIENVENIDO S. LAGUESMA By: MAXIMO REGIONAL DIRECTOR (Emphasis supplied)6 Respondent received his compensation from PPI for the following periods: February to June 1998, November to December 1998, and January to August 1999. He was also reimbursed by PPI for the expenses he incurred in connection with his work as sector manager. He reported for work in Manila except for occasional assignments abroad, and received instructions from Henrichsen.7 On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI had not been successful in the water and sanitation sector in the Philippines.8 However, on July 24, 1999, Henrichsen, by electronic mail,9 requested respondent to stay put in his job after August 5, 1999, until such time that he would be able to report on certain projects and discuss all the opportunities he had 10 developed. Respondent B. ANITO

P a g e | 72

backwages, and separation pay equivalent to one month pay for every year of service, or in the amount of US$16,400.00 as separation pay; 2. Judgment be rendered ordering the respondents to pay the outstanding monetary obligation to complainant in the amount of US$10,131.76 representing the balance of unpaid salaries, leave pay, cost of his air travel and shipment of goods from Manila to Canada; and 3. Judgment be rendered ordering the respondent company to pay the complainant damages in the amount of no less than US $10,000.00 and to pay 10% of the total monetary award as attorneys fees, and costs. Other reliefs just and equitable under the premises are, likewise, prayed for.12 1awphi1.net Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly laid. It averred that respondent was a Canadian citizen, a transient expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a foreign corporation with principal office in Tokyo, Japan. Since respondents cause of action was based on his letter of employment executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci contractus, the complaint should have been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer any

justification for filing his complaint against PPI before the NLRC in the Philippines. Moreover, under Section 12 of the General Conditions of Employment appended to the letter of employment dated January 7, 1998, complainant and PCIJ had agreed that any employment-related dispute should be brought before the London Court of Arbitration. Since even the Supreme Court had already ruled that such an agreement on venue is valid, Philippine courts have no jurisdiction.13 Respondent opposed the Motion, contending that he was employed by PPI to work in the Philippines under contract separate from his January 7, 1998 contract of employment with PCIJ. He insisted that his employer was PPI, a Philippineregistered corporation; it is inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two corporations have separate and distinct personalities; and he received orders and instructions from Henrichsen who was the president of PPI. He further insisted that the principles of forum non conveniens and lex loci contractus do not apply, and that although he is a Canadian citizen, Philippine Labor Laws apply in this case. Respondent adduced in evidence the following contract of employment dated January 9, 1998 which he had entered into with Henrichsen: Mr. Klaus K. Schonfeld II-365 Ginger New Westminster, Canada V3L 5L5 Manila 9 January, 1998 Dear Mr. Schonfeld, Drive B.C.

P a g e | 73

Letter of Employment This Letter of Employment with the attached General Conditions of Employment constitutes the agreement, under which you will be engaged by Pacicon Philippines, Inc. on the terms and conditions defined hereunder. 1. Project Philippines assignments countries. Country: The with possible in other Manila,

This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us. Yours sincerely, Pacicon Philippines, Inc. Jens Peter Henrichsen President14 According to respondent, the material allegations of the complaint, not petitioners defenses, determine which quasijudicial body has jurisdiction. Section 21 of the Arbitration Clause in the General Conditions of Employment does not provide for an exclusive venue where the complaint against PPI for violation of the Philippine Labor Laws may be filed. Respondent pointed out that PPI had adopted two inconsistent positions: it was first alleged that he should have filed his complaint in Tokyo, Japan; and it later insisted that the complaint should have been filed in the London Court of 15 Arbitration. In their reply, petitioners claimed that respondents employer was PCIJ, which had exercised supervision and control over him, and not PPI. Respondent was dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in 16 Japan. The letter of employment dated January 9, 1998 which respondent relies upon did not bear his (respondents) signature nor that of Henrichsen. On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners Motion to Dismiss. The dispositive portion reads: WHEREFORE, finding merit in respondents Motion to Dismiss, the same is hereby granted. The

2. Duty Station: the Philippines.

3. Family Status: Married. 4. Position: Sector Manager Water and Sanitation Sector. 5. Commencement: 1 January, 1998. 6. Remuneration: US$3,100.00 per month payable to a bank account to be nominated by you. 7. Accommodation: The company will provide partly furnished accommodation to a rent including association fees, taxes and VAT not exceeding the Pesos equivalent of US$2300.00 per month. 8. Transportation: Included for in the remuneration. 9. Shipment of Personal The maximum allowance is US$2500.00 in Effects: connection with initial shipment of personal effects from Canada. 10. Mobilization Travel: Mobilization travel will be from New Westminster, B.C., Canada.

P a g e | 74

instant complaint filed by the complainant is dismissed for lack of merit. SO ORDERED.
17

AND NOT THE COURT OF ARBITRATION IN LONDON. II WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISMISSAL OF THE COMPLAINT CONSIDERING THAT PETITIONERS TERMINATION FROM EMPLOYMENT IS ILLEGAL: A. THE CLOSURE OF RESPONDENT COMPANYS WATER AND SANITATION SECTOR WAS NOT BONA FIDE. B. ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT COMPANYS WATER AND SANITATION SECTOR WAS JUSTIFIABLE, PETITIONERS DISMISSAL WAS INEFFECTUAL AS THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) AND PETITIONER WAS NOT NOTIFIED THIRTY (30) DAYS BEFORE THE ALLEGED CLOSURE.19 Respondent averred that the absence or existence of a written contract of employment is not decisive of whether he is an employee of PPI. He maintained that PPI, through its president Henrichsen, directed his work/duties as Sector Manager of PPI; proof of this was his letter-proposal to the Development Bank of the Philippines for PPI to provide consultancy services for the Construction Supervision of the Water Supply and Sanitation component of the World BankAssisted LGU Urban Water and Sanitation Project.20 He emphasized that as gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him by DOLE on February 26, 1999, he is an employee of PPI. It was

The Labor Arbiter found, among others, that the January 7, 1998 contract of employment between respondent and PCIJ was controlling; the Philippines was only the "duty station" where Schonfeld was required to work under the General Conditions of Employment. PCIJ remained respondents employer despite his having been sent to the Philippines. Since the parties had agreed that any differences regarding employer-employee relationship should be submitted to the jurisdiction of the court of arbitration in London, this agreement is controlling. On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed the 18 latters decision in toto. Respondent then filed a petition for certiorari under Rule 65 with the CA where he raised the following arguments: I WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE LABOR ARBITERS DECISION CONSIDERING THAT: A. PETITIONERS TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE INSTANT CASE; AND B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE ARBITRATION BRANCH OF THE NLRC

P a g e | 75

PPI president Henrichsen who terminated his employment; PPI also paid his salary and reimbursed his expenses related to transactions abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no moment because the two corporations have separate and distinct personalities. The CA found the petition meritorious. Applying the fourfold test21 of determining an employer-employee relationship, the CA declared that respondent was an employee of PPI. On the issue of venue, the appellate court declared that, even under the January 7, 1998 contract of employment, the parties were not precluded from bringing a case related thereto in other venues. While there was, indeed, an agreement that issues between the parties were to be resolved in the London Court of Arbitration, the venue is not exclusive, since there is no stipulation that the complaint cannot be filed in any other forum other than in the Philippines. On November 25, 2004, the CA rendered its decision granting the petition, the decretal portion of which reads: WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to the Labor Arbiter a quo for disposition of the case on the merits. SO ORDERED.22 A motion for the reconsideration of the above decision was filed by PPI and Henrichsen, which the appellate court denied for lack of merit.23

In the present recourse, PPI and Henrichsen, as petitioners, raise the following issues: I THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS AND RESPONDENT DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND WAS MERELY "SECONDED" TO PETITIONERS SINCE HIS WORK ASSIGNMENT WAS IN MANILA. II THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR ARBITER A QUO HAS JURISDICTION OVER RESPONDENTS CLAIM DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM "SHALL BE FINALLY SETTLED BY THE COURT OF 24 ARBITRATION IN LONDON." Petitioners fault the CA for reversing the findings of the Labor Arbiter and the NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the NLRC, are conclusive on the CA. They maintain that it is not within the province of the appellate court in a petition for certiorari to review the facts and evidence on record since there was no conflict in the factual findings and conclusions of the lower tribunals. Petitioners assert that such findings and conclusions, having been made by agencies with expertise on the subject matter, should be deemed binding and

P a g e | 76

conclusive. They contend that it was the PCIJ which employed respondent as an employee; it merely seconded him to petitioner PPI in the Philippines, and assigned him to work in Manila as Sector Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was never the employer of respondent. Petitioners assert that the January 9, 1998 letter of employment which respondent presented to prove his employment with petitioner PPI is of doubtful authenticity since it was unsigned by the purported parties. They insist that PCIJ paid respondents salaries and only coursed the same through petitioner PPI. PPI, being its subsidiary, had supervision and control over respondents work, and had the responsibilities of monitoring the "daily administration" of respondent. Respondent cannot rely on the pay slips, expenses claim forms, and reimbursement memoranda to prove that he was an employee of petitioner PPI because these documents are of doubtful authenticity. Petitioners further contend that, although Henrichsen was both a director of PCIJ and president of PPI, it was he who signed the termination letter of respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJs letterhead was used to inform him that his employment was terminated. Petitioners further assert that all work instructions came from PCIJ and that petitioner PPI only served as a "conduit." Respondents Alien Employment Permit stating that petitioner PPI was his employer is but a necessary consequence of his being "seconded" thereto. It is not sufficient proof that

petitioner PPI is respondents employer. The entry was only made to comply with the DOLE requirements. There being no evidence that petitioner PPI is the employer of respondent, the Labor Arbiter has no jurisdiction over respondents complaint. Petitioners aver that since respondent is a Canadian citizen, the CA erred in ignoring their claim that the principlesof forum non conveniens and lex loci contractus are applicable. They also point out that the principal office, officers and staff of PCIJ are stationed in Tokyo, Japan; and the contract of employment of respondent was executed in Tokyo, Japan. Moreover, under Section 21 of the General Conditions for Employment incorporated in respondents January 7, 1998 letter of employment, the dispute between respondent and PCIJ should be settled by the court of arbitration of London. Petitioners claim that the words used therein are sufficient to show the exclusive and restrictive nature of the stipulation on venue. Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers and employers, while the Labor Code of the Philippines applies only to Filipino employers and Philippine-based employers and their employees, not to PCIJ. In fine, the jurisdictions of the NLRC and Labor Arbiter do not extend to foreign workers who executed employment agreements with foreign employers abroad, although "seconded" to the 25 Philippines.

P a g e | 77

In his Comment,26 respondent maintains that petitioners raised factual issues in their petition which are proscribed under Section 1, Rule 45 of the Rules of Court. The finding of the CA that he had been an employee of petitioner PPI and not of PCIJ is buttressed by his documentary evidence which both the Labor Arbiter and the NLRC ignored; they erroneously opted to dismiss his complaint on the basis of the letter of employment and Section 21 of the General Conditions of Employment. In contrast, the CA took into account the evidence on record and applied case law correctly. The petition is denied for lack of merit. It must be stressed that in resolving a petition for certiorari, the CA is not proscribed from reviewing the evidence on record. Under Section 9 of Batas Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to pass upon the evidence, if and when necessary, to resolve 27 factual issues. If it appears that the Labor Arbiter and the NLRC misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had been properly appreciated, the factual findings of such tribunals cannot be given great respect and finality.28 Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence which respondent appended to his pleadings showing that he was an employee of petitioner PPI; they merely focused on the January 7, 1998 letter of employment and Section 21 of the General Conditions of Employment.

Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE. In said application, PPI averred that respondent is its employee. To show that this was the case, PPI appended a copy of respondents employment contract. The DOLE then granted the application of PPI and issued the permit. It bears stressing that under the Omnibus Rules Implementing the Labor Code, one of the requirements for the issuance of an employment permit is the employment contract. Section 5, Rule XIV (Employment of Aliens) of the Omnibus Rules provides: SECTION 1. Coverage. This rule shall apply to all aliens employed or seeking employment in the Philippines and the present or prospective employers. SECTION 2. Submission of list. All employers employing foreign nationals, whether resident or non-resident, shall submit a list of nationals to the Bureau indicating their names, citizenship, foreign and local address, nature of employment and status of stay in the Philippines. SECTION 3. Registration of resident aliens. All employed resident aliens shall register with the Bureau under such guidelines as may be issued by it. SECTION 4. Employment permit required for entry. No alien seeking employment, whether as a resident or non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-working visa and wishes to be employed thereafter, he may only be allowed to be employed

P a g e | 78

upon presentation of a duly approved employment permit. SECTION 5. Requirements for employment permit applicants. The application for an employment permit shall be accompanied by the following: (a) Curriculum vitae duly signed by the applicant indicating his educational background, his work experience and other data showing that he possesses technical skills in his trade or profession. (b) Contract of employment between the employer and the principal which shall embody the following, among others: 1. That the nonresident alien worker shall comply with all applicable laws and rules and regulations of the Philippines; 2. That the nonresident alien worker and the employer shall bind themselves to train at least two (2) Filipino understudies for a period to be determined by the Minister; and 3. That he shall not engage in any gainful employment other than that for which he was issued a permit. (c) A designation by the employer of at least two (2) understudies for every alien worker. Such understudies must be the most ranking regular employees in the section or department for which the expatriates are being hired

to insure the actual transfer of technology. Under Section 6 of the Rule, the DOLE may issue an alien employment permit based only on the following: (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 nonavailability 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. Thus, as claimed by respondent, he had an employment contract with petitioner PPI; otherwise, petitioner PPI would not have filed an application for a Permit with the DOLE. Petitioners are thus estopped from alleging that the PCIJ, not petitioner PPI, had been the employer of respondent all along.

P a g e | 79

We agree with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent using the four-fold test. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationship that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Stated otherwise, an employeremployee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end.29 We quote with approval the following ruling of the CA: [T]here is, indeed, substantial evidence on record which would erase any doubt that the respondent company is the true employer of petitioner. In the case at bar, the power to control and supervise petitioners work performance devolved upon the respondent company. Likewise, the power to terminate the employment relationship was exercised by the President of the respondent company. It is not the letterhead used by the company in the termination letter which controls, but the person who exercised the power to terminate

the employee. It is also inconsequential if the second letter of employment executed in the Philippines was not signed by the petitioner. An employeremployee relationship may indeed exist even in the absence of a written contract, so long as the four elements mentioned in the Mafinco case are all present.30 The settled rule on stipulations regarding venue, as held by this Court in the vintage case of Philippine Banking Corporation v. Tensuan,31 is that while they are considered valid and enforceable, venue stipulations in a contract do not, as a rule, supersede the general rule set forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words. They should be considered merely as an agreement or additional forum, not as limiting venue to the specified place. They are not exclusive but, rather permissive. If the intention of the parties were to restrict venue, there must be accompanying language clearly and categorically expressing their purpose and design that actions between them be litigated only at the place named by them.32 In the instant case, no restrictive words like "only," "solely," "exclusively in this court," "in no other court save ," "particularly," "nowhere else but/except ," or words of equal import were stated in the contract.33 It cannot be said that the court of arbitration in London is an exclusive venue to bring forth any complaint arising out of the employment contract. Petitioners contend that respondent should have filed his Complaint in his place of permanent residence, or where

P a g e | 80

the PCIJ holds its principal office, at the place where the contract of employment was signed, in London as stated in their contract. By enumerating possible venues where respondent could have filed his complaint, however, petitioners themselves admitted that the provision on venue in the employment contract is indeed merely permissive. Petitioners insistence on the application of the principle of forum non conveniens must be rejected. The bare fact that respondent is a Canadian citizen and was a repatriate does not warrant the application of the principle for the following reasons: First. The Labor Code the Philippines does include forum conveniens as a ground the dismissal of complaint.34 of not non for the

likely to have power to enforce its decision. x x x Admittedly, all the foregoing requisites are present in this case. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor Arbiter for disposition of the case on the merits. Cost against petitioners. SO ORDERED. ROMEO J. CALLEJO, SR. Associate Justice

THIRD DIVISION G.R. No. 144315 July 17, 2006 PHILCOM EMPLOYEES UNION, petitioner, vs. PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM CORPORATION, respondents. D E C I S I O N CARPIO, J.: The Case This is a petition for review1 to annul the Decision2 dated 31 July 2000 of the Court of Appeals in CA-G.R. SP No. 53989. The Court of Appeals affirmed the assailed portions of the 2 October 1998 and 27 November 1998 Orders of the Secretary of Labor and Employment in OS-AJ0022-97. The Facts The facts, as summarized by the Court of Appeals, are as follows:

Second. The propriety of dismissing a case based on this principle requires a factual determination; hence, it is properly considered as defense.35 Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,36 this Court held that: x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is

P a g e | 81

Upon the expiration of the Collective Bargaining Agreement (CBA) between petitioner Philcom Employees Union (PEU or union, for brevity) and private respondent Philippine Global Communications, Inc. (Philcom, Inc.) on June 30, 1997, the parties started negotiations for the renewal of their CBA in July 1997. While negotiations were ongoing, PEU filed on October 21, 1997 with the National Conciliation and Mediation Board (NCMB) National Capital Region, a Notice of Strike, docketed as NCMBNCR-NS No. 10-435-97, due to perceived unfair labor practice committed by the company (Annex "1", Comment, p. 565, ibid.). In view of the filing of the Notice of Strike, the company suspended negotiations on the CBA which moved the union to file on November 4, 1997 another Notice of Strike, docketed as NCMB-NCR-NS No. 11-465-97, on the ground of bargaining deadlock (Annex "2", Comment, p. 566, ibid.) On November 11, 1997, at a conciliation conference held at the NCMB-NCR office, the parties agreed to consolidate the two (2) Notices of Strike filed by the union and to maintain the status quo during the pendency of the proceedings (Annex "3", Comment, p. 567, ibid.). On November 17, 1997, however, while the union and the company officers and representatives were meeting, the remaining

union officers and members staged a strike at the company premises, barricading the entrances and egresses thereof and setting up a stationary picket at the main entrance of the building. The following day, the company immediately filed a petition for the Secretary of Labor and Employment to assume jurisdiction over the labor dispute in accordance with Article 263(g) of the Labor Code. On November 19, 1997, then Acting Labor Secretary Cresenciano B. Trajano issued an Order assuming jurisdiction over the dispute, enjoining any strike or lockout, whether threatened or actual, directing the parties to cease and desist from committing any act that may exacerbate the situation, directing the striking workers to return to work within twenty-four (24) hours from receipt of the Secretary's Order and for management to resume normal operations, as well as accept the workers back under the same terms and conditions prior to the strike. The parties were likewise required to submit their respective position papers and evidence within ten (10) days from receipt of said order (Annex "4", Comment, pp. 610-611, ibid.). On November 28, 1997, a second order was issued reiterating the previous directive to all striking employees to return to work immediately. On November 27, 1997, the union filed a Motion for Reconsideration assailing,

P a g e | 82

among others, the authority of then Acting Secretary Trajano to assume jurisdiction over the labor dispute. Said motion was denied in an Order dated January 7, 1998. As directed, the parties submitted their respective position papers. In its position paper, the union raised the issue of the alleged unfair labor practice of the company hereunder enumerated as follows: "(a) PABX transfer and contractualization of PABX service and position; "(b) Massive contractualization; "(c) Flexible labor and additional work/function; "(d) Disallowance of union leave intended for union seminar; "(e) Misimplementation and/or nonimplementation of employees' benefits like shoe allowance, rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance, motorcycle award and full-time physician; "(f) Non-payment, discrimination and/or deprivation of overtime, restday work, waiting/stand by time and staff meetings; "(g) Economic inducement by promotion during CBA negotiation;

"(h) Disinformation scheme, surveillance and interference with union affairs; "(i) Issuance of memorandum/notice to employees without giving copy to union, change in work schedule at Traffic Records Section and ITTO policies; and "(j) Inadequate transportation allowance, water and facilities." (Annex A, Petition; pp. 110-182, ibid.) The company, on the other hand, raised in its position paper the sole issue of the illegality of the strike staged by the union (Annex B, Petition; pp. 302-320, ibid.). On the premise that public respondent Labor Secretary cannot rule on the issue of the strike since there was no petition to declare the same illegal, petitioner union filed on March 4, 1998 a Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position Paper for being irrelevant, immaterial and impertinent to the issues assumed for resolution (Annex C, Petition; pp. 330-333, ibid.). In opposition to PEU's Manifestation/Motion, the company argued that it was precisely due to the strike suddenly staged by the union on November 17, 1997 that the dispute was assumed by the Labor Secretary. Hence, the case would necessarily include

P a g e | 83

the issue of the legality of the strike (Opposition to PEU'S Motion to Strike Out; Annex F, Petition; pp. 389-393, ibid.).3 On 2 October 1998, the Secretary of Labor and Employment ("Secretary") issued the first assailed order. The pertinent parts of the Order read: Going now to the first issue at hand, a reading of the complaints charged by the Union as unfair labor practices would reveal that these are not so within the legal connotation of Article 248 of the Labor Code. On the contrary, these complaints are actually mere grievances which should have been processed through the grievance machinery or voluntary arbitration outlined under the CBA. The issues of flexible labor and additional functions, misimplementation or nonimplementation of employee benefits, non-payment of overtime and other monetary claims and inadequate transportation allowance, are all a matter of implementation or interpretation of the economic provisions of the CBA subject to the grievance procedure. Neither do these complaints amount to gross violations which, thus, may be treated as unfair labor practices outside of the coverage of Article 261. The Union failed to convincingly show that there is flagrant and/or malicious refusal by the Company to comply with the economic provisions stipulated in the CBA.

With respect to the charges of contractualization and economic inducement, this Office is convinced that the acts of said company qualify as a valid exercise of management prerogative. The act of the Company in contracting out work or certain services being performed by Union members should not be seen as an unfair labor practice act per se. First, the charge of massive contractualization has not been substantiated while the contractualization of the position of PABX operator is an isolated instance. Secondly, in the latter case, there was no proof that such contracting out interfered with, restrained or coerced the employees in the exercise of their right to selforganization. Thus, it is not unfair labor practice to contract out work for reason of reduction of labor cost through the acquisition of automatic machines. Likewise, the promotion of certain employees, who are incidentally members of the Union, to managerial positions is a prerogative of management. A promotion which is manifestly beneficial to an employee should not give rise to a gratuitous speculation that such a promotion was made simply to deprive the union of the membership of the promoted employee (Bulletin Publishing Co. v. Sanchez, et. al., G.R. No. 74425, October 7, 1986). There remains the issue on bargaining deadlock. The Company has denied the

P a g e | 84

existence of any impasse in its CBA negotiations with the Union and instead maintains that it has been negotiating with the latter in good faith until the strike was initiated. The Union, on the other hand, contends otherwise and further prays that the remaining CBA proposals of the Union be declared reasonable and equitable and thus be ordered incorporated in the new CBA to be executed. As pointed out by the Union, there are already thirty-seven (37) items agreed upon by the parties during the CBA negotiations even before these were suspended. Prior to this Office's assumption over the case, the Company furnished the Union its improved CBA counterproposal on the matter of promotional and wage increases which however was rejected by the Union as divisive. Even as the Union has submitted its remaining CBA proposals for resolution, the Company remains silent on the matter. In the absence of any basis, other than the Union's position paper, on which this Office may make its determination of the reasonableness and equitableness of these remaining CBA proposals, this Office finds it proper to defer deciding on the matter and first allow the Company to submit its position thereon. We now come to the question of whether or not the strike staged by the Union on November 17, 1997 is illegal. The Company claims

it is, having been held on grounds which are nonstrikeable, during the pendency of preventive mediation proceedings in the NCMB, after this Office has assumed jurisdiction over the dispute, and with the strikers committing prohibited and illegal acts. The Company further prays for the termination of some 20 Union officers who were positively identified to have initiated the alleged illegal strike. The Union, on the other hand, refuses to submit this issue for resolution. Considering the precipitous nature of the sanctions sought by the Company, i.e., declaration of illegality of the strike and the corresponding termination of the errant Union officers, this Office deems it wise to defer the summary resolution of the same until both parties have been afforded due process. The non-compliance of the strikers with the return-to-work orders, while it may warrant dismissal, is not by itself conclusive to hold the strikers liable. Moreover, the Union's position on the alleged commission of illegal acts by the strikers during the strike is still to be heard. Only after a full-blown hearing may the respective liabilities of Union officers and members be determined. The case of Telefunken Semiconductors Employees Union-FFW v. Secretary of Labor and Employment and Temic Telefunken MicroElectronics (Phils.), Inc.

P a g e | 85

(G.R. No. 122743 and 127215, December 12, 1997) is instructive on this point: It may be true that the workers struck after the Secretary of Labor and Employment had assumed jurisdiction over the case and that they may have failed to immediately return to work even after the issuance of a returnto-work order, making their continued strike illegal. For, a returnto-work order is immediately effective and executory notwithstanding the filing of a motion for reconsideration. But, the liability of each of the union officers and the workers, if any, has yet to be determined. xxx xxx 4 xxx. The dispositive portion of the Order reads: WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows: The Union's Manifestation/Motion to Implead Philcom Corporation is hereby granted. Let summons be issued to respondent Philcom Corporation to appear before any hearing that may hereafter be scheduled and to submit its position paper as may be required. The Union's Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's Position Paper is hereby denied for lack of merit.

The Union's charges of unfair labor practice against the Company are hereby dismissed. Pending resolution of the issues of illegal strike and bargaining deadlock which are yet to be heard, all the striking workers are directed to return to work within twenty-four (24) hours from receipt of this Order and Philcom and/or Philcom Corporation are hereby directed to unconditionally accept back to work all striking Union officers and members under the same terms and conditions prior to the strike. The parties are directed to cease and desist from committing any acts that may aggravate the situation. Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this Department is hereby designated as the Hearing Officer to hear and receive evidence on all matters and issues arising from the present labor dispute and, thereafter, to submit a report/recommendation within twenty (20) days from the termination of the proceedings. The parties are further directed to file their respective position papers with Atty. Lita V. Aglibut within ten (10) days from receipt of this Order. SO ORDERED.5 Philcom Corporation ("Philcom") filed a motion for reconsideration. Philcom prayed for reconsideration of the Order impleading it as party-litigant

P a g e | 86

in the present case and directing it to accept back to work unconditionally all the officers and members of the union who participated in the strike.6 Philcom also filed a Motion to Certify Labor Dispute to the National Labor Relations Commission for Compulsory Arbitration.7 For its part, Philcom Employees Union (PEU) filed a Motion for Partial Reconsideration. PEU asked the Secretary to "partially reconsider" the 2 October 1998 Order insofar as it dismissed the unfair labor practices charges against Philcom and included the illegal strike issue in the labor dispute.8 The Secretary denied both motions for reconsideration of Philcom and PEU in its assailed Order of 27 November 1998. The pertinent parts of the Order read: The question of whether or not Philcom Corporation should be impleaded has been properly disposed of in the assailed Order. We reiterate that neither the Company herein nor its predecessor was able to convincingly establish that each is a separate entity in the absence of any proof that there was indeed an actual closure and cessation of the operations of the predecessor-company. We would have accommodated the Company for a hearing on the matter had it been willing and prepared to submit evidence to controvert the finding that there was a mere merger. As it now stands, nothing on record would prove that the two (2) companies are

separate and distinct from each other. Having established that what took place was a mere merger, we correspondingly conclude that the employeremployee relations between the Company and the Union officers and members was never severed. And in merger, the employees of the merged companies or entities are deemed absorbed by the new company (Filipinas Port Services, Inc. v. NLRC, et. al., G.R. No. 97237, August 16, 1991). Considering that the Company failed miserably to adduce any evidence to provide a basis for a contrary ruling, allegations to the effect that employer-employee relations and positions previously occupied by the workers no longer exist remain just that mere allegations. Consequently, the Company cannot now exempt itself from compliance with the Order. Neither can it successfully argue that the employees were validly dismissed. As held in Telefunken Semiconductor Employees Union-FFW v. Secretary of Labor and Employment (G.R. Nos. 122743 and 122715, December 12, 1997), to exclude the workers without first ascertaining the extent of their individual participation in the strike or non-compliance with the return-to-work orders will be tantamount to dismissal without due process of law. With respect to the unfair labor practice charges against the Company, we have carefully reviewed the records and found no reason

P a g e | 87

to depart from the findings previously rendered. The issues now being raised by the Union are the same issues discussed and passed upon in our earlier Order. Finally, it is our determination that the issue of the legality of the strike is well within the jurisdiction of this Office. The same has been properly submitted and assumed jurisdiction by the Office for resolution.9 The dispositive portion of the Order reads: WHEREFORE, there being no merit in the remaining Motions for Reconsideration filed by both parties, the same are hereby DENIED. Our 2 October 1998 Order STANDS. To expedite the resolution of the Motion to Certify Labor Dispute to the NLRC for Compulsory Arbitration, Philcom Employees Union is hereby directed to submit its Opposition thereto within ten (10) days from receipt of the copy of this Order. SO ORDERED.10 PEU filed with this Court a petition for certiorari and prohibition under Rule 65 of the Rules of Court assailing the Secretary's Orders of 2 October 1998 and 27 November 1998. This Court, in accordance with its Decision of 10 March 1999 in G.R. No. 123426 entitled National Federation of Labor (NFL) vs. Hon. Bienvenido E. Laguesma, Undersecretary of the Department of Labor and Employment, and Alliance of Nationalist Genuine Labor Organization, Kilusang Mayo Uno

(ANGLO-KMU),11 referred the case to the Court of Appeals.12 The Ruling Appeals of the Court of

On 31 July 2000, the Court of Appeals rendered judgment as follows: WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED. The assailed portions of the Orders of the Secretary of Labor and Employment dated October 2, 1998 and November 27, 1998 are AFFIRMED. SO ORDERED.13 The Court of Appeals ruled that, contrary to PEU's view, the Secretary could take cognizance of an issue, even only incidental to the labor dispute, provided the issue must be involved in the labor dispute itself or otherwise submitted to him for resolution. The Court of Appeals pointed out that the Secretary assumed jurisdiction over the labor dispute upon Philcom's petition as a consequence of the strike that PEU had declared and not because of the notices of strike that PEU filed with the National Conciliation and Mediation Board (NCMB). The Court of Appeals stated that the reason of the Secretary's assumption of jurisdiction over the labor dispute was the staging of the strike. Consequently, any issue regarding the strike is not merely incidental to the labor dispute between PEU and Philcom, but also part of the labor dispute itself. Thus, the Court of Appeals held that it was proper for the Secretary to take

P a g e | 88

cognizance of the issue on the legality of the strike. The Court of Appeals also ruled that for an employee to claim an unfair labor practice by the employer, the employee must show that the act charged as unfair labor practice falls under Article 248 of the Labor Code. The Court of Appeals held that the acts enumerated in Article 248 relate to the workers' right to self-organization. The Court of Appeals stated that if the act complained of has nothing to do with the acts enumerated in Article 248, there is no unfair labor practice. The Court of Appeals held that Philcom's acts, which PEU complained of as unfair labor practices, were not in any way related to the workers' right to self-organization under Article 248 of the Labor Code. The Court of Appeals held that PEU's complaint constitutes an enumeration of mere grievances which should have been threshed out through the grievance machinery or voluntary arbitration outlined in the Collective Bargaining Agreement (CBA). The Court of Appeals also held that even if by Philcom's acts, Philcom had violated the provisions of the CBA, still those acts do not constitute unfair labor practices under Article 248 of the Labor Code. The Court of Appeals held that PEU failed to show that those violations were gross or that there was flagrant or malicious refusal on the part of Philcom to comply with the economic provisions of the CBA. The Court of Appeals stated that as of 21 March 1989, as held in PAL vs. NLRC,14 violations of CBAs will no longer be deemed

unfair labor practices, except those gross in character. Violations of CBAs, except those gross in character, are mere grievances resolvable through the appropriate grievance machinery or voluntary arbitration as provided in the CBAs. Hence, this petition. The Issues In assailing the Decision of the Court of Appeals, petitioner contends that: 1. The Honorable Court of Appeals has failed to faithfully adhere with the decisions of the Supreme Court when it affirmed the order/resolution of the Secretary of Labor denying the Union's Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position Paper and including the issue of illegal strike notwithstanding the absence of any petition to declare the strike illegal. 2. The Honorable Court of Appeals has decided a question of substance in a way not in accord with law and jurisprudence when it affirmed the order/resolution of the Secretary of Labor dismissing the Union's charges of unfair labor practices. 3. The Honorable Court of Appeals has departed from the edict of applicable law and jurisprudence when it failed to issue such order mandating/directing the issuance of a writ of execution directing the Company to unconditionally

P a g e | 89

accept back to work the Union officers and members under the same terms and conditions prior to the strike and as well as to pay their salaries/backwages and the monetary equivalent of their other benefits from October 6, 1998 to date.15 The Ruling of the Court The petition must fail. PEU contends that the Secretary should not have taken cognizance of the issue on the alleged illegal strike because it was not properly submitted to the Secretary for resolution. PEU asserts that after Philcom submitted its position paper where it raised the issue of the legality of the strike, PEU immediately opposed the same by filing its Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's Position Paper. PEU asserts that it stated in its Manifestation/Motion that certain portions of Philcom's position paper and some of its attachments were "irrelevant, immaterial and impertinent to the issues assumed for resolution." Thus, PEU asserts that the Court of Appeals should not have affirmed the Secretary's order denying PEU's Manifestation/Motion. PEU also contends that, contrary to the findings of the Court of Appeals, the Secretary's assumption of jurisdiction over the labor dispute was based on the two notices of strike that PEU filed with the NCMB. PEU asserts that only the issues on unfair labor practice and bargaining deadlock should be resolved in the present case.

PEU insists that to include the issue on the legality of the strike despite its opposition would convert the case into a petition to declare the strike illegal. PEU's contentions are untenable. The Secretary properly took cognizance of the issue on the legality of the strike. As the Court of Appeals correctly pointed out, since the very reason of the Secretary's assumption of jurisdiction was PEU's declaration of the strike, any issue regarding the strike is not merely incidental to, but is essentially involved in, the labor dispute itself. Article 263(g) of the Labor Code provides: When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing

P a g e | 90

before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure the compliance with this provision as well as with such orders as he may issue to enforce the same. x x x x. The powers granted to the Secretary under Article 263(g) of the Labor Code have been characterized as an exercise of the police power of the State, with the aim of promoting public good.16 When the Secretary exercises these powers, he is granted "great breadth of discretion" in order to find a solution to a labor dispute. The most obvious of these powers is the automatic enjoining of an impending strike or lockout or its lifting if one has already taken place.17 In this case, the Secretary assumed jurisdiction over the dispute because it falls in an industry indispensable to the national interest. As noted by the Secretary. [T]he Company has been a vital part of the telecommunications industry for 73 years. It is particularly noted for its expertise and dominance in the area of international telecommunications. Thus, it performs a vital role in providing critical services indispensable to the national interest. It is for this very reason that this Office strongly opines that any concerted action, particularly a prolonged work stoppage is fraught with dire consequences. Surely, the on-going strike

will adversely affect not only the livelihood of workers and their dependents, but also the company's suppliers and dealers, both in the public and private sectors who depend on the company's facilities in the day-today operations of their businesses and commercial transactions. The operational viability of the company is likewise adversely affected, especially its expansion program for which it has incurred debts in the approximate amount of P2 Billion. Any prolonged work stoppage will also bring about substantial losses in terms of lost tax revenue for the government and would surely pose a serious set back in the company's modernization program. At this critical time when government is working to sustain the economic gains already achieved, it is the paramount concern of this Office to avert any unnecessary work stoppage and, if one has already occurred, to minimize its deleterious effect on the workers, the company, the industry and national economy as a whole.18 It is of no moment that PEU never acquiesced to the submission for resolution of the issue on the legality of the strike. PEU cannot prevent resolution of the legality of the strike by merely refusing to submit the issue for resolution. It is also immaterial that this issue, as PEU asserts, was not properly submitted for resolution of the Secretary.

P a g e | 91

The authority of the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to national interest includes and extends to all questions and controversies arising from such labor dispute. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose of the dispute.19 Besides, it was upon Philcom's petition that the Secretary immediately assumed jurisdiction over the labor dispute on 19 November 1997.20 If petitioner's notices of strike filed on 21 October and 4 November 1997 were what prompted the assumption of jurisdiction, the Secretary would have issued the assumption order as early as those dates. Moreover, after an examination of the position paper21 Philcom submitted to the Secretary, we see no reason to strike out those portions which PEU seek to expunge from the records. A careful study of all the facts alleged, issues raised, and arguments presented in the position paper leads us to hold that the portions PEU seek to expunge are necessary in the resolution of the present case. On the documents attached to Philcom's position paper, except for Annexes MM-2 to MM-22 22 inclusive which deal with the supposed consolidation of Philippine Global Communications, Inc. and Philcom Corporation, we find the other annexes relevant and material in the resolution of the issues that have emerged in this case. PEU also claims that Philcom has committed several unfair labor practices. PEU asserts that there are "factual and

evidentiary bases" for the charge of unfair labor practices against Philcom. On unfair labor practices of employers, Article 248 of the Labor Code provides: Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair labor practice: (a) To interfere with, restrain or coerce employees in the exercise of their right to selforganization; (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to selforganization; (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters; (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. x x x

P a g e | 92

(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; (g) To violate the duty to bargain collectively as prescribed by this Code; (h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or (i) To violate a collective bargaining agreement. Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are related to the workers' right to selforganization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not 23 unfair labor practices. The only exception is Article 248(f), which in any case is not one of the acts specified in PEU's charge of unfair labor practice. A review of the acts complained of as unfair labor practices of Philcom convinces us that they do not fall under any of the prohibited acts defined and enumerated in Article 248 of the Labor Code. The issues of misimplementation or nonimplementation of employee benefits, non-payment of overtime and other monetary claims, inadequate transportation allowance, water, and other facilities, are all a matter of implementation or interpretation of the economic provisions of the CBA between

Philcom and PEU subject to the grievance procedure. We find it pertinent to quote certain portions of the assailed Decision, thus A reading of private respondent's justification for the acts complained of would reveal that they were actually legitimate reasons and not in anyway related to union busting. Hence, as to compelling employees to render flexible labor and additional work without additional compensation, it is the company's explanation that the employees themselves voluntarily took on work pertaining to other assignments but closely related to their job description when there was slack in the business which caused them to be idle. This was the case of the International Telephone Operators who tried telemarketing when they found themselves with so much free time due to the slowdown in the demand for international line services. With respect to the Senior Combination Technician at the Cebu branch who was allegedly made to do all around work, the same happened only once when the lineman was absent and the lineman's duty was his ultimate concern. Moreover, the new assignment of the technicians at CTSS who were promoted to QCE were based on the job description of QCE, while those of the other technicians were merely temporary due to the promotion of several technicians to QCE (pars.

P a g e | 93

9-12, Philcom's Reply to PEU's Position Paper; Annex "E", Petition; pp. 350-351, ibid.). On the alleged misimplementation and/or non-implementation of employees' benefits, such as shoe allowance, rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance, motorcycle award and full-time physician, the company gave the following explanation which this Court finds plausible, to wit: 16. The employees at CTSS were given One Thousand Pesos (P1,000.00) cash or its equivalent in purchase orders because it was their own demand that they be given the option to buy the pair of leather boots they want. For the Cebu branch, the employees themselves failed to include these benefits in the list of their demands during the preparation of the budget for the year 1997 despite the instruction given to them by the branch manager. According to the employees, they were not aware that they were entitled to these benefits. They thought that because they have been provided with two vans to get to their respective assignments, these benefits are available only to collectors, messengers and technicians in motorcycles.

17. The P450.00 monthly allowance was provided by the CBA to be given to counter clerks. However, the position of counter clerks had been abolished in accordance with the reorganization plan undertaken by the company in April 1995, with the full knowledge of the Union membership. As a result of the abolition of the position of counter clerks, there was no more reason for granting the subject allowance. 18. The company more than satisfied the provision in the CBA to engage the services of a physician and provided adequate medical services. Aside from a part time physician who reports for duty everyday, the company has secured the services of Prolab Diagnostics, which has complete medical facilities and personnel, to serve the medical needs of the employees. x x x 19. The Union demands that a full-time physician to be assigned at the Head Office. This practice, is not provided in the CBA and, moreover is too costly to maintain. The medical services offered by Prolab [D]iagnostics are even better and more comprehensive than any full time physician can give. It places at the employees' disposal

P a g e | 94

numerous specialists in various fields of medicine. It is beyond understanding why the Union would insist on having a full-time physician when they could avail of better services from Prolab Diagnostics. (Philcom's Reply to PEU's Position Paper, pp.352, 354, ibid.) On the issue of nonpayment, discrimination and/or deprivation of overtime, restday work, waiting/stand by time and staff meeting allowance, suffice it to state that there is nothing on record to prove the same. Petitioner did not present evidence substantial enough to support its claim. As to the alleged inadequate transportation allowance and facilities, the company posits that: 30. The transportation allowances given to the Dasmarinas and Pinugay employees are more than adequate to defray their daily transportation cost. Hence, there is absolutely no justification for an increase in the said allowance. In fact, said employees at Dasmarinas and Pinugay, who are only residing in areas near their place of work, are more privileged as they receive transportation expenses while the rest of the company workers do not.

31. As to the demand for clean drinking water, the company has installed sufficient and potable water inside the Head Office even before the strike was staged by the Union. Any person who visits the Makati Head Office can attest to this fact. (Philcom's Reply to PEU's Position Paper, p. 357, ibid.) Anent the allegation of PABX transfer and contractualization of PABX service and position, these were done in anticipation of the company to switch to an automatic PABX machine which requires no operator. This cannot be treated as ULP since management is at liberty, absent any malice on its part, to abolish positions which it deems no longer necessary (Arrieta vs. National Labor Relations Commission, 279 SCRA 326, 332). Besides, at the time the company hired a temporary employee to man the machine during daytime, the subject position was vacant while the assumption of the function by the company guard during nighttime was only for a brief period. With respect to the perceived massive contractualization of the company, said charge cannot be considered as ULP since the hiring of contractual workers did not threaten the security of tenure of regular employees or union members. That only 160 employees out of 400 employees in the company's

P a g e | 95

payroll were considered rank and file does not of itself indicate unfair labor practice since this is but a company prerogative in connection with its business concerns. Likewise, the offer or promotions to a few union members is neither unlawful nor an economic inducement. These offers were made in accordance with the legitimate need of the company for the services of these employees to fill positions left vacant by either retirement or resignation of other employees. Besides, a promotion is part of the career growth of employees found competent in their work. Thus, in Bulletin Publishing Corporation vs. Sanchez (144 SCRA 628, 641), the Supreme Court held that "(T)he promotion of employees to managerial or executive positions rests upon the discretion of management. Managerial positions are offices which can only be held by persons who have the trust of the corporation and its officers. It is the prerogative of management to promote any individual working within the company to a higher position. It should not be inhibited or prevented from doing so. A promotion which is manifestly beneficial to an employee should not give rise to a gratuitous speculation that such a promotion was made simply to deprive the union of the membership of the promoted employee, who after all appears to have accepted his promotion."

That the promotions were made near or around the time when CBA negotiations were about to be held does not make the company's action an unfair labor practice. As explained by the company, these promotions were based on the availability of the position and the qualification of the employees promoted (p. 6, Annex "4", Philcom's Reply to PEU's Position Paper; p. 380, ibid.) On the union's charge that management disallowed leave of union officers and members to attend union seminar, this is belied by the evidence submitted by the union itself. In a letter to PEU's President, the company granted the leave of several union officers and members to attend a seminar notwithstanding that its request to be given more details about the affair was left unheeded by the union (Annex "Y", PEU's Position Paper; p. 222, ibid.). Those who were denied leave were urgently needed for the operation of the company. On the ULP issue of disinformation scheme, surveillance and interference with union affairs, these are mere allegations unsupported by facts. The charge of "black propaganda" allegedly committed by the company when it supposedly posted two (2) letters addressed to the Union President is totally baseless. Petitioner presents no proof that it was the company which was behind

P a g e | 96

the incident. On the purported disallowance of union members to observe the July 27, 1997 CBA meeting, the company explained that it only allowed one (1) employee from ITTO, instead of two (2), as it would adversely affect the operation of the group. It also took into consideration the fact that ITTO members represent only 20% of the union. Other union members from other departments of the company should have equal representation (Annex "L", Position Paper for the Union; pp. 205-206, ibid.). As to the alleged surveillance of the company guards during a union seminar, We find the idea of sending guards to spy on a mere union seminar quite preposterous. It is thus not likely for the company which can gain nothing from it to waste its resources in such a scheme. On the issuance of memorandum/notice to employees without giving copy to union, change in work schedule at Traffic Records Section and ITTO policies, the company has sufficiently rebutted the same, thus: 27. The Union also whines about the failure of the company to furnish copies of memoranda or notices sent to employees and change of work schedules at the Traffic Records Section and ITTO policies. The CBA, however, does not obligate the Company to give the Union a copy of each and every

memorandum or notice sent to employees. This would be unreasonable and impractical. Neither did the Union demand that they be furnished copies of the same. This is clearly a non-issue as copies of all memoranda or notices issued by management are readily available upon request by any employee or the Union. 28. Contrary to the allegations of the Union, the rationale and mechanics for the abolishment of the midnight schedule at the Traffic Record Services had been thoroughly and adequately discussed with the Union's President, Robert Benosa, and the staff of Traffic Record Services in the meeting held on May 9, 1997. The midnight services were abolished for purely economic reasons. The company realized that the midnight work can be handled in the morning without hampering normal operations. At the same time, the company will be able to save on cost. For this objective, the employees concerned agreed to create a manning and shifting schedule starting at 6:00 a.m. up to 10:00 p.m., with each employee rendering only eight hours of work every day without violating any provision

P a g e | 97

of the labor the CBA.24

laws

or

The Court has always respected a company's exercise of its prerogative to devise means to improve its operations. Thus, we have held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, supervision and transfer of employees, working methods, time, place and manner of work.25 This is so because the law on unfair labor practices is not intended to deprive employers of their fundamental right to prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and profitable operation of their business.26 Even assuming arguendo that Philcom had violated some provisions in the CBA, there was no showing that the same was a flagrant or malicious refusal to comply with its economic provisions. The law mandates that such violations should not be treated as unfair labor practices.27 PEU also asserts that the Court of Appeals should have issued an order directing the issuance of a writ of execution ordering Philcom to accept back to work unconditionally the striking union officers and members under the same terms and conditions prevailing before the strike. PEU asserts that the union officers and members should be paid their salaries or backwages and monetary equivalent of other benefits beginning 6 October 1998 when PEU received a copy of the Secretary's 2 October 1998 return-to-work order.

PEU claims that even if the "issue of illegal strike can be included in the assailed orders and that the union officers and members have been terminated as a result of the alleged illegal strike, still, the Secretary has to rule on the illegality of the strike and the liability of each striker." PEU asserts that the union officers and members should first be accepted back to work because a return-to-work order is immediately 28 executory. We rule on the legality of the strike if only to put an end to this protracted labor dispute. The facts necessary to resolve the legality of the strike are not in dispute. The strike and the strike activities that PEU had undertaken were patently illegal for the following reasons: 1. Philcom is engaged in a vital industry protected by Presidential Decree No. 823 (PD 823), as amended by Presidential Decree No. 849, from strikes and lockouts. PD 823, as amended, provides: Sec. 1. It is the policy of the State to encourage free trade unionism and free collective bargaining within the framework of compulsory and voluntary arbitration. Therefore, all forms of strikes, picketings and lockouts are hereby strictly prohibited in vital industries, such as in public utilities, including transportation and communications, x x x. (Emphasis supplied) Enumerating the industries considered as vital, Letter of Instruction No. 368 provides:

P a g e | 98

For the guidance of workers and employers, some of whom have been led into filing notices of strikes and lockouts even in vital industries, you are hereby instructed to consider the following as vital industries and companies or firms under PD 823 as amended: 1. Public Utilities: x x x x B. Communications: 1) Wire or wireless telecommunica tions such as telephone, telegraph, telex, and cable companies or firms; (Emphasis supplied) x x x x It is therefore clear that the striking employees violated the no-strike policy of the State in regard to vital industries. 2. The Secretary had already assumed jurisdiction over the dispute. Despite the issuance of the return-to-work orders dated 19 November and 28 November 1997, the striking employees failed to return to work and continued with their strike. Regardless of their motives, or the validity of their claims, the striking employees should have ceased or desisted from all acts that would undermine the authority given the Secretary under Article 263(g) of the Labor Code. They could not defy the return-to-work orders by citing Philcom's alleged unfair

labor practices to justify such defiance.29 PEU could not have validly anchored its defiance to the return-to-work orders on the motion for reconsideration that it had filed on the assumption of jurisdiction order. A returnto-work order is immediately effective and executory despite the filing of a motion for reconsideration. It must be strictly complied with even during the pendency of any petition questioning its 30 validity. The records show that on 22 November 1997, Philcom published in the Philippine Daily Inquirer a notice to striking employees to return to work.31 These employees did not report back to work but continued their mass action. In fact, they lifted their picket lines only on 22 December 1997.32 Philcom formally notified twice these employees to explain in writing why they should not be dismissed for defying the return-to-work order.33 Philcom held administrative hearings on these disciplinary cases.34 Thereafter, Philcom dismissed these employees for abandonment of work in defiance of the return-to-work order.35 A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived. While the workers may choose not to obey, they do so at the risk of severing their relationship with their employer.36 The following provision of the Labor Code governs the effects of defying a return-to-work order: ART. 264. Prohibited activities. (a) x x x x

P a g e | 99

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout x x x x Any union officer who knowingly participates in illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike, shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. (Emphasis supplied) A strike undertaken despite the Secretary's issuance of an assumption or certification order becomes a prohibited activity, and thus, illegal, under Article 264(a) of the Labor Code. The union officers who knowingly participate in the illegal strike are deemed to have lost their employment status. The union members, including union officers, who commit specific illegal acts or who knowingly defy a return-towork order are also deemed to have lost their employment status.37 Otherwise, the workers will simply refuse to return to their work and cause a standstill in the company operations while retaining the positions they refuse to discharge and preventing

management to positions.38

fill

up

their

Hence, the failure of PEU's officers and members to comply immediately with the return-towork orders dated 19 November and 28 November 1997 cannot be condoned. Defiance of the return-to-work orders of the Secretary constitutes a valid ground for dismissal.39 3. PEU staged the strike using unlawful means and methods. Even if the strike in the present case was not illegal per se, the strike activities that PEU had undertaken, especially the establishment of human barricades at all entrances to and egresses from the company premises and the use of coercive methods to prevent company officials and other personnel from leaving the company premises, were definitely illegal.40 PEU is deemed to have admitted that its officers and members had committed these illegal acts, as it never disputed Philcom's assertions of PEU's unlawful strike activities in all the pleadings that PEU submitted to the Secretary and to this Court. PEU's picketing officers and members prohibited other tenants at the Philcom building from entering and leaving the premises. Leonida S. Rabe, Country Manager of Societe Internationale De Telecommunications Aeronautiques (SITA), a tenant at the Philcom building, wrote two letters addressed to PEU President Roberto B. Benosa. She told Benosa that PEU's act of obstructing the free ingress to and egress from the company premises "has badly disrupted normal operations of their 41 organization."

P a g e | 100

The right to strike, while constitutionally recognized, is not without legal constrictions. Article 264(e) of the Labor Code, on prohibited activities, provides: No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares. The Labor Code is emphatic against the use of violence, coercion, and intimidation during a strike and to this end prohibits the obstruction of free passage to and from the employer's premises for lawful purposes. A picketing labor union has no right to prevent employees of another company from getting in and out of its rented premises, otherwise, it will be held liable for damages for its acts against an innocent by-stander.42 The sanction provided in Article 264(a) is so severe that any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status.43 By insisting on staging the prohibited strike and defiantly picketing Philcom's premises to prevent the resumption of company operations, the striking employees have forfeited their right to be readmitted.44 4. PEU declared the strike during the pendency of preventive mediation proceedings at the NCMB. On 17 November 1997, while a conciliation meeting was being

held at the NCMB in NCMB-NCR-NS 10-435-97, PEU went on strike. It should be noted that in their meeting on 11 November 1997, both Philcom and PEU were even "advised to maintain the status quo."45 Such disregard of the mediation proceedings was a blatant violation of Section 6, Book V, Rule XXII of the Omnibus Rules Implementing the Labor Code, which explicitly obliges the parties to bargain collectively in good faith and prohibits them from impeding or disrupting the proceedings.46 The relevant provision of the Implementing Rules provides: Section 6. Conciliation. x x x x During the proceedings, the parties shall not do any act which may disrupt or impede the early settlement of dispute. They are obliged, as part of their duty, to bargain collectively in good faith, to participate fully and promptly in the conciliation meetings called by the regional branch of the Board. x x x x Article 264(a) of the Labor Code also considers it a prohibited activity to declare a strike "during the pendency of cases involving the same grounds for the same strike." Lamentably, PEU defiantly proceeded with their strike during the pendency of the conciliation proceedings. 5. PEU staged the strike in utter disregard of the grievance procedure established in the CBA. By PEU's own admission, Union's complaints to management began in June "the the 1997

P a g e | 101

even before the start of the 1997 CBA renegotiations."47 Their CBA expired on 30 June 1997.48 PEU could have just taken up their grievances in their negotiations for the new CBA. This is what a Philcom officer had suggested to the Dasmarias staff when the latter requested on 16 June 1997 for an increase in transportation 49 allowance. In fact, when PEU declared the strike, Philcom and PEU had already agreed on 37 items in their negotiations for the new CBA.50 The bottom line is that PEU should have immediately resorted to the grievance machinery provided for in the CBA.51 In disregarding this procedure, the union leaders who knowingly participated in the strike have acted unreasonably. The law cannot interpose its hand to protect them from the consequences of their illegal acts.52 A strike declared on the basis of grievances which have not been submitted to the grievance committee as stipulated in the CBA of the parties is premature and illegal.53 Having held the strike illegal and having found that PEU's officers and members have committed illegal acts during the strike, we hold that no writ of execution should issue for the return to work of PEU officers who participated in the illegal strike, and PEU members who committed illegal acts or who defied the return-to-work orders that the Secretary issued on 19 November 1997 and 28 November 1997. The issue of who participated in the illegal strike, committed illegal acts, or defied the return-to-work orders is a question of fact that must be resolved in the

appropriate proceedings the Secretary of Labor.

before

WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of Appeals in CAG.R. SP No. 53989, with the MODIFICATION that the Secretary of Labor is directed to determine who among the Philcom Employees Union officers participated in the illegal strike, and who among the union members committed illegal acts or defied the return-to-work orders of 19 November 1997 and 28 November 1997. No pronouncement as to costs. SO ORDERED. Quisumbing, Chairman, CarpioMorales, Tinga, Velasco, Jr., J.J., concur.

FIRST DIVISION G.R. No. 161713 August 20, 2008 LEPANTO CONSOLIDATED MINING COMPANY, petitioner, vs. LEPANTO LOCAL STAFF UNION, respondent. R E S O L U T I O N CARPIO, J.: The Case Before the Court is a petition for review1 assailing the 22 July 2003 Decision2 and 20 January 2004 Resolution3 of the Court of Appeals in CA-G.R. SP No. 60644. The Antecedent Facts Lepanto Company4 domestic Lepanto Consolidated Mining (petitioner) is a mining corporation. Local Staff Union

P a g e | 102

(respondent) is the duly certified bargaining agent of petitioner's employees occupying staff positions. On 28 November 1998, petitioner and respondent entered into their fourth Collective Bargaining Agreement (4th CBA) for the period from 1 July 1998 to 30 June 2000. The 4th CBA provides: ARTICLE VIII - NIGHT SHIFT DIFFERENTIAL Section 3. Night Differential pay. The Company shall continue to pay nightshift differential for work during the first and third shifts to all covered employees within the bargaining unit as follows: For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic rate. For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the basic rate. However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00 p.m.), there [will] be no night differential pay added before the overtime pay is calculated. ARTICLE XII PRIVILEGES AND BENEFITS RIGHTS, OTHER

National Conciliation and Mediation Board, Cordillera Administrative Region (NCMB-CAR) alleging that petitioner failed to pay the night shift differential and longevity pay of respondent's members as th provided in the 4 CBA. Petitioner and respondent failed to amicably settle the dispute. They agreed to submit the issues to Voluntary Arbitrator Norma B. Advincula (Voluntary Arbitrator) for resolution. The Ruling Arbitrator of the Voluntary

In a Decision dated 26 May 2000,6 the Voluntary Arbitrator ruled in favor of respondent as follows: WHEREFORE, foregoing considered, this Office holds and so orders respondent Lepanto Consolidated Mining Corporation (LCMC) to grant complainant Lepanto Local Staff Union (LLSU) the following benefits: Longevity pay of P30.00 per month which shall be reckoned form July 1, 1998 and every year thereafter in consonance with their contract; and Night shift differential pay of 15% of the basic rate for hours of work rendered beyond 3:00 p.m. for the following shifts: 7:00 A.M. to 4:00 P.M., 7:30 A.M. to 4:30 P.M. and 8:00 A.M. to 5:00 P.M. to be reckoned from the date of the effectivity of the 4th CBA which was on July 1, 1998. SO ORDERED.7 The Voluntary Arbitrator that petitioner had the ruled legal

Section 9. Longevity pay The company shall grant longevity pay of P30.00 per month effective July 1, 1998 and every year thereafter.5 On 23 April 2000, filed a complaint respondent with the

P a g e | 103

obligation to pay longevity pay of P30 per month effective 1 July 1998. The Voluntary Arbitrator rejected petitioner's contention that "effective" should be understood as the reckoning period from which the employees start earning their right to longevity pay, and that the longevity pay should be paid only on 1 July 1999. The Voluntary Arbitrator ruled that 1 July 1998 was the reckoning date that indicated when the amounts due were to be given. The Voluntary Arbitrator agreed with respondent that surface workers on the second shift who performed work after 3:00 p.m. should be given an additional night shift differential pay equivalent to 15% of their basic rate. Interpreting paragraph 3, Section 3, Article VIII of the 4th CBA, the Voluntary Arbitrator ruled that it only meant that an employee who extends work beyond the second shift shall receive overtime pay which shall be computed before the night shift differential pay. In other words, it excludes the night shift differential in the computation of overtime pay. The Voluntary Arbitrator ruled that the inclusion of paragraph 3, Section 3, Article VIII of the 4th CBA disclosed the intent of the parties to grant night shift differential benefits to employees who rendered work beyond the regular day shift. The Voluntary Arbitrator ruled that if the intention were otherwise, paragraph 3 would have been deleted. Finally, the Voluntary Arbitrator ruled that the respondent's claim for night shift differential arising from the 1st, 2nd, and 3rd CBAs had already prescribed.

Petitioner filed a motion for reconsideration. In her Resolution dated 5 August 2000,8 the Voluntary Arbitrator denied the motion for reconsideration for lack of merit. Petitioner filed a petition for review before the Court of Appeals. The Ruling Appeals of the Court of

In its 22 July 2003 Decision, the Court of Appeals affirmed the Voluntary Arbitrator's Decision. The Court of Appeals ruled that paragraph 3, Section 3, Article VIII was clear and unequivocal. It grants night shift differential pay to employees of the second shift for work rendered beyond their regular day shift. However, the night shift differential was excluded in the computation of the overtime pay. The Court of Appeals further ruled that the records of the case revealed that during the effectivity of the 4th CBA, petitioner voluntarily complied with paragraph 3, Section 3, Article VIII by paying night shift differential to employees for hours worked beyond 3:00 p.m. Petitioner's act disclosed the parties' intent to include employees in the second shift in the payment of night shift differential. The Court of Appeals rejected petitioner's claim that the payment was due to error and mere inadvertence on the part of petitioner's accounting employees. The Court of Appeals noted that the records revealed that petitioner still continued to pay night shift differential for hours worked beyond 3:00 p.m. after the Voluntary Arbitrator

P a g e | 104

rendered the 26 May 2000 Decision. Thus, petitioner is estopped from claiming erroneous payment. Petitioner filed a motion reconsideration. In its January 2004 Resolution, Court of Appeals denied motion for lack of merit. for 20 the the

20% of the basic rate. For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the basic rate. However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00 p.m.), there [will] be no night differential pay added before the overtime pay is calculated. There is no question that workers are entitled to night shift differential of 20% of the basic rate for work performed during the first shift from 11:00 p.m. to 7:00 a.m. Workers are also entitled to night shift differential of 15% of the basic rate for work performed during the third shift from 3:00 p.m. to 11:00 p.m. The issue is whether workers are entitled to night shift differential for work performed beyond the regular day shift, from 7:00 a.m. to 3:00 p.m. We sustain the interpretation of both the Voluntary Arbitrator and the Court of Appeals. The first paragraph of Section 3 provides that petitioner shall continue to pay night shift differential to workers of the first and third shifts. It does not provide that workers who performed work beyond the second shift shall not be entitled to night shift differential. The inclusion of the third paragraph is not intended to exclude the regular day shift workers from receiving night shift differential for work performed beyond 3:00 p.m. It only provides that the night shift differential pay shall be excluded in the computation of the overtime pay. It is settled that in order to ascertain the intention of the contracting parties, the

Hence, the petition before this Court. The Issue The sole issue in this case is whether the Court of Appeals erred in affirming the Voluntary Arbitrator's interpretation of the 4th CBA that the employees in the second shift are entitled to night shift differential. The Ruling of this Court The petition has no merit. The terms and conditions of a collective bargaining contract constitute the law between the parties.9 If the terms of the CBA are clear and have no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail.10 The disputed provision 4th CBA provides: of the

ARTICLE VIII - NIGHT SHIFT DIFFERENTIAL Section 3. Night Differential pay. The Company shall continue to pay nightshift differential for work during the first and third shifts to all covered employees within the bargaining unit as follows: For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be

P a g e | 105

Voluntary Arbitrator shall principally consider their contemporaneous and subsequent acts as well as their negotiating and contractual history and evidence of past practices.11 In this case, the Voluntary Arbitrator and the Court of Appeals both found that the provision in question was contained in the 1st, 2nd, and 3rd CBAs between petitioner and respondent. During the effectivity of the first three CBAs, petitioner paid night shift differentials to other workers who were members of respondent for work performed beyond 3:00 p.m. Petitioner also paid night shift differential for work beyond 3:00 p.m. during the effectivity of the 4th CBA. Petitioner alleges that the payment of night shift differential for work performed beyond 3:00 p.m. during the 4th CBA was a mistake on the part of its accounting department. However, the Court of Appeals correctly ruled that petitioner failed to present any convincing evidence to prove that the payment was erroneous. In fact, the Court of Appeals found that even after the promulgation of the Voluntary Arbitrator's decision and while the case was pending appeal, petitioner still paid night shift differential for work performed beyond 3:00 p.m. It affirms the intention of the parties to the CBA to grant night shift differential for work performed beyond 3:00 p.m. WHEREFORE, we DENY the petition. We AFFIRM the 22 July 2003 Decision and 20 January 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 60644. Costs against petitioner. SO ORDERED. ANTONIO T. CARPIO

SECOND DIVISION G.R. No. 148470. April 29, 2005 LOPEZ DELA ROSA DEVELOPMENT CORPORATION and GLORIA DELA ROSA LOPEZ, Petitioners, vs. HON. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER VICENTE LAYAWEN and ARIEL CHAVEZ, Respondents. D E C I S I O N CHICO-NAZARIO, J.: Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking the reversal of the Decision1 of the Court of Appeals dated 12 February 2001 and its Resolution2 dated 31 May 2001 denying petitioners motion for reconsideration. A complaint3 for illegal dismissal, wage differential, nonpayment of legal holiday pay, nonpayment of premiums for rest day pay, nonpayment of 13th month pay, nonpayment of 5-day service incentive leave pay, nonpayment of overtime pay, nonpayment of night-shift differential pay and nonpayment of salary from December 1-8, 1994 was filed by respondent Ariel Chavez against petitioners Lopez Dela Rosa Development Corporation and Gloria Dela Rosa Lopez before the Department of Labor and Employment, National Capital Region, on 09 December 1994. The case was docketed as NLRC-NCR-CASE NO. 00-12-0896194. The facts that gave rise to the aforesaid complaint are stated in the Decision of the Court of Appeals quoting the decision of respondent Labor Arbiter Vicente Layawen, to wit:

P a g e | 106

The factual antecedents, as found by Labor Arbiter Layawen in his decision of June 7, 1999, are as follows: As culled from the position paper, testimonial evidence of the witnesses of both parties as well as from their other pleadings, the material antecedent facts are as follows: Complainant alleges that: (1) On June 1, 1993, complainant was employed by respondent Ms. Gloria Lopez of Lopez de la Rosa Development Corporation as employee in charge of building maintenance. Respondent Gloria Lopez is engaged in the business of renting apartment units. (2) The parties verbally agreed on the terms of employment. During the period of his employment, complainant reported to work everyday and was paid a salary of PHP120.00 per day. From the period of June 1, 1993 to December 31, 1993, complainant worked from 7:00 AM to 10:00 PM everyday (Mondays to Sundays) but was not paid overtime pay. From the period of January 1, 1994, complainant worked from 7:00 AM to 7:00 PM everyday, also without overtime pay. (3) Likewise, complainant was not given his 13th month pay, sick leave, holiday pay, night shift differentials, days-off for 1993 and 1994. His salary remained at PHP 120.00 per day despite repeated assurances from Gloria Lopez that she should be increasing such to conform to the minimum wage. (4) On December 6, 1994, complainant sent a request for a cash advance, through Ms. Lopezs secretary. As there was no response yet, complainant called the respondent on

December 8, 1994, at around 8:00 PM. Ms. Lopez did not agree to the request for a cash advance, complainant then reminded Ms. Lopez about the adjustment in his salary so as to reach the minimum wage as required by law. Ms. Lopez simply remained silent. At around 10:00 PM Ms. Lopez called the complainant and informed him that he was fired. Without the benefit of due notice and hearing, complainant was illegally terminated on December 8, 1994 for allegedly stealing two (2) refrigerators. (5) On December 9, 1994, Chavez lodged a complaint with the NLRC. On December 12, 1994, complainant was requested by respondent to drop the charges on the assurance that she would give in to all his demands as stated in the complaint. On December 14, 1994, respondent only offered to give complainant PHP460.00 only. In their answer, respondents denied the charge of complainant for illegal dismissal, underpayment of wages, nonpayment of eight (8) days salaries, overtime pay, premium pay for holiday, rest day, night shift differential pay, holiday, service incentive leave pay and 13th month pay. In addition, they adopted the affidavits of Gloria de la Rosa Lopez, Mario Peralta de la Cruz and Nenita Apilado Nunez wherein they averred as follows: (1) Gloria that: de la Rosa alleges

That I am the President of Lopez de la Rosa Development Corporation (Corporation) whose principal place of business is located at 1114 J. Barlin Street, Sampaloc, Manila, Metro Manila, Philippines. That as

P a g e | 107

President of Corporation, I have the power to direct the daily management of the business and operations of the Corporation. That as pursuant to this power, I hired Ariel Chavez, complainant, on behalf of corporation. Respondent, under a Labor Agreement dated December 1, 1993 on a day, no work, no pay basis. That on January 3, 1994, an Employment Contract was executed between Complainant and Respondent hiring Complainant as an all-around Building Maintenance for the period of January 2, 1994 to December 31, 1994. That based on this Employment Contract, respondent has the option to terminate the Employment Contract in the event that Complainant shall have been continuously unable to or unwillingly or have failed to perform his duties for three (3) consecutive days. That Complainant was legally terminated/discharged on December 14, 1994 due to his willful and intentional failure to report for work from December 8, 1994 to December 14, 1994. That based on this Employment Contract, Complainant is subject to the rules and regulations of the Corporation established for the conduct of its business and may be discharged for failure to perform his duty or obligations directed by the corporation. That prior to complainants discharge, Complainant was given a warning by Respondent for his failure to abide to (sic) the rules and regulations of corporation and for his incompetence in his work performance to which a written

promise to abide was given complainant to Respondent.

by

That based on this Employment Contract, complainant is entitled to free housing with light, water, cooking gas and a daily one kilo rice ration valued at market price for a total monthly benefit of Five Thousand Six Hundred Eighty Pesos (PHP5,680.00). That based on this Employment Contract which covers a no work, no pay contract, Complainant is not entitled to Premium pay for Holiday, Rest Day and Night Shift; and 5-day Service Incentive leave pay unless complainant actually worked on the aforesaid days as his salary is calculated daily on a non work, no pay basis as provided for by the Employment Contract. That Complainant is not entitled to overtime pay and a night shift pay since: "A. Respondent has no information and no knowledge that Complainant has ever worked overtime and or at night; and "B. Complainant has not at anytime prior to the filing of this Complaint ever (1) requested for overtime or night shift work; (2) filed a verbal and or written report for overtime work or night shift work performed; (3) filed a verbal and or written request for payment for any overtime or night time work performed. The complainant is not entitled to his 8 day salary from December 1, 1994 to December 8, 1994 and to his thirteenth (13th) month salary for the year 1994 unless and until Respondent is given an accounting and credit for the following:

P a g e | 108

(1) Cash advances and other benefits advanced to Complainant by Respondent; (2) Return and or payment by Complainant of a five (5) cubic feet white refrigerator valued at Two Thousand Five Hundred Pesos (PHP2,500.00) taken by Complainant and his wife, Dolor Chavez, from Respondents office without the consent and knowledge of Respondent. That complainant had in the past taken and sold properties of Respondent without Respondents consent and or knowledge for which respondent had to buy back from Mr. Allan Constantino. That Complainant has no basis under the January 3, 1994 Employment Contract to seek entitlement to a Separation Pay benefit as no contract for same exist between complainant and respondent and that no written modification of the aforesaid contract has been executed to give complainant a Separation Pay benefit. That complainant has no legal basis to claim that he has paid for the five (5) cubic feet white refrigerator in the amount of One Thousand Five Hundred Pesos (PHP1,500.00) since the payment he made was for a fourteen (14) cubic feet and said payment was made on behalf of his brother-in-law, Arnold Montanez, to which he owed money in the amount of One Thousand Five Hundred Pesos (PHP1,500.00). That based on the foregoing Respondent legally terminated complainant and is entitled to an accounting/credit from complainant. The affidavits of the other witnesses merely corroborated the Affidavit of Gloria de la

Rosa Lopez except on some minor matters.4 In his decision dated 07 June 1999, respondent Labor Arbiter Layawen disposed of the case as follows: WHEREFORE, in view of all the foregoing, we find sufficient evidence to establish that complainant was illegally dismissed. Consequently, respondents are hereby directed to reinstate complainant to his former position without loss of seniority rights and benefits and to pay him his backwages from December 8, 1994 until his actual reinstatement which backwages up to the rendition of this decision, have amounted to: (PLEASE SEE COMPUTATION)5 ATTACHED

Likewise, respondents are ordered to pay complainant his salary from December 1 to 8, 1994 and his 13th month pay for that year plus attorneys fees equivalent to 10% of the total monetary awards. All other claims are dismissed for lack of merit.6 Petitioners appealed the decision of respondent Labor Arbiter to respondent National Labor Relations Commission (NLRC) filing an Appeal with Memorandum of Appeal with Prayer to Reduce Bond on 12 July 1999. Petitioners posted a surety bond in the amount of P100,000.00 on 16 August 1999. On 29 November 1999, respondent NLRC issued a resolution7 dismissing the appeal for failure to perfect the appeal within the statutory period, the dispositive portion of which reads:

P a g e | 109

WHEREFORE, premises considered, respondents appeal is hereby DISMISSED for failure to perfect appeal within the statutory period. The Motion to Reduce Bond is likewise DISMISSED for lack of merit. On 25 January 2000, the Deputy Executive Clerk of the Third Division of the NLRC issued an entry of judgment and forwarded the records of the case to the arbitration branch of origin for the execution of judgment.8 At the execution conference at the arbitration branch, petitioners filed a Manifestation and Motion asking that the execution conference be held in abeyance in view of the pending Motion for Reconsideration which has not been acted upon by the NLRC. Thus, the Labor Arbiter issued an order elevating the records to the NLRC for appropriate action. Respondent NLRC, in its resolution dated June 30, 2000, explained: Before the Commission now is respondents (sic) Opposition and Manifestation to Resolve their Motion for Reconsideration. A scrutiny of the records indicate (sic) that respondents received a copy of our Resolution on December 20, 1999. (Rollo, p. 452). Respondents alleges (sic) that it (sic) had filed a Motion for Reconsideration on January 3, 2000. However, records indicate otherwise. A check with the records show (sic) that no motion for reconsideration has been filed with the Docket and Records Section of the Commission. Furthermore, in the motion for reconsideration allegedly filed with this office and submitted by respondents as Annex "A", the official stamp of

the Docket section of the Commission is absent. Hence, we cannot give due course to the Motion for Reconsideration.9 Thus, it disposed of the case as follows: WHEREFORE PREMISES CONSIDERED, the Motion for Reconsideration cannot be given due course. Let the records herein be REMANDED to Arbitration Branch of origin for appropriate proceedings.10 Petitioners appealed to the Court of Appeals via petition for certiorari under Rule 65 of the Rules of Court.11 On 25 August 2000, the Court of Appeals dismissed the petition for failure of petitioners to state the date when they filed the motion for reconsideration of the NLRC resolution dated 29 November 1999.12 On 13 September 2000, petitioners moved for the reconsideration of the dismissal.13 On 16 November 2000, the Court of Appeals 14 reinstated the petition. In his comment dated 01 December 2000,15 private complainant stated, among other things, that the petition should not be given due course because the decision of Labor Arbiter Vicente R. Layawen had already become final and executory on 13 January 2000 when they did not file a motion for reconsideration of the resolution of the NLRC dated 29 November 1999 that dismissed their appeal. Private complainant likewise informed the Court of Appeals that petitioners did not include in their petition that an entry of judgment had already been issued on 25 January 2000 by Atty. Catalino R. Laderas, Deputy Executive Clerk, Third Division, NLRC.16 Petitioners did not file a Reply.17

P a g e | 110

On 12 February 2001, the Court of Appeals rendered its 18 decision dismissing the petition. The decision reads in part: We shall first address the consequence/s of petitioners inaction after their receipt on December 20, 1999 of the resolution dated November 29, 1999. As found by the NLRC, and as indeed reflected in the records, no motion for reconsideration of the aforesaid resolution had been filed by the petitioners with the said public respondent. It should be stressed here that the implementing rules of respondent NLRC are unequivocal in requiring that a motion for reconsideration of the order, resolution or decision of respondent Commission should be seasonably filed as a precondition for pursuing any further or subsequent recourse, otherwise, the order, resolution or decision would become final and executory after ten (10) calendar days from receipt thereof. Obviously, the rationale therefore is that the law intends to afford the NLRC an opportunity to rectify such errors or mistakes it may have committed before resort to courts of justice can be had. This merely adopts the rule that the function of a motion for reconsideration is to point out to the court the error it may have committed and to give it a chance to correct itself. As no motion for reconsideration had been seasonably filed by the petitioners herein, the resolution handed down by the NLRC on November 29, 1999 had undoubtedly become final and executory. On 31 May 2001, it denied the motion for reconsideration filed by petitioners.19

On 29 June 2001, petitioners filed the instant Petition for Review on Certiorari20 with the following assignment of errors: THE HONORABLE COURT OF APPEALS, IN AFFIRMING THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION (NLRC), FAILED TO UPHOLD THE RULINGS OF THE HONORABLE SUPREME COURT IN STAR ANGEL HANDICRAFT VS. NLRC [G.R. No. 108914], GLOBE GENERAL SERVICES & SECURITY AGENCY VS. NLRC [G.R. No. 106477], AND CORAL POINT DEVELOPMENT CORPORATION VS. NLRC [G.R. No. 129761], WHERE THE HONORABLE SUPREME COURT HAD EMPHASIZED THAT: FIRST: BEING A QUASI-JUDICIAL AGENCY NOT BOUND BY THE STRICT TECHNICALITIES OF LAW AND PROCEDURE, THE HONORABLE PUBLIC RESPONDENT SHOULD HAVE RELAXED THE RULE ON ACTUAL POSTING OF BOND ESPECIALLY IN THE INSTANT CASE WHERE PETITIONERS FILED A "MOTION TO REDUCE BOND" WITHIN THE REGLEMENTARY PERIOD, WHICH PUBLIC RESPONDENT NLRC SHOULD HAVE FIRST RESOLVED BEFORE IT DISMISSED THE APPEAL. SECOND: TECHNICALITY SHOULD NOT BE ALLOWED TO HINDER THE ADMINISTRATION OF JUSTICE WHEN THE HONORABLE PUBLIC RESPONDENTS HAD COMMITTED SERIOUS ERRORS AND PALPABLE GRAVE ABUSE OF DISCRETION IN RENDERING THE ASSAILED DECISION, AND AWARDED SEVERAL MONEY CLAIMS IN FAVOR OF THE PRIVATE RESPONDENT DESPITE THE CLEAR CONTRARY PROVISIONS OF LAW. On 10 August 2001, private complainant Ariel Chavez opposed petitioners appeal by certiorari.21 He filed his comment on the petition on 24 October 2001.22 He argued that contrary to the allegations of petitioners, the Court of

P a g e | 111

Appeals correctly held that the NLRC found that no motion for reconsideration was filed by petitioners on 03 January 2000 as borne by the records. He explained that the Motion for Reconsideration23 allegedly filed by petitioners with the NLRC lacked the official stamp of the Docket Section of the Commission. In the instant petition, he disclosed that petitioners did not state when they allegedly filed the Motion for Reconsideration. He added that petitioners tried to trick the NLRC into resolving the issues raised in the nonexistent Motion for Reconsideration, and the Court of Appeals by raising the very same arguments in their petition for certiorari. In their Reply24 dated 16 January 2002, petitioners attached a photocopy of said motion for reconsideration bearing the corresponding registry receipt which was earlier submitted to the Court of Appeals. They argued that the lack of the official stamp of the Docket Section of the NLRC was not their fault because same was duly received initially by the Second Division by reason of the erroneous indication of the Division Number, and which was later forwarded to the Third Division. They maintain that technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. On 10 July 2002, the Court resolved to give due course to the petition and required the parties to submit their respective memoranda within thirty (30) days from receipt of notice.25 The petition is DENIED.

After reviewing the evidence on hand, we find that the resolution of respondent NLRC dated 29 November 1999 dismissing the appeal of petitioners became final and executory on 13 January 2000 as evidenced by an Entry of Judgment issued by Atty. Catalino R. Laderas, Deputy Executive Clerk, Third Division, NLRC..26 This fact has not been rebutted. Apparently, petitioners deliberately omitted this information in their petitions before the Court of Appeals and before this Court. Respondent NLRCs resolution dated 29 November 1999 became final and executory because no motion for reconsideration was filed. Respondent NLRC explained in its resolution dated 30 June 2000 that no motion for reconsideration has been filed with its Docket and Record Section as shown by the records. It said that the motion for reconsideration allegedly filed and submitted as Annex "A" did not contain the official stamp of the Docket Section. Thus, the same cannot be given due course. Said finding was affirmed by respondent Court of Appeals in its decision dated 12 February 2001. Time and again, this Court has been emphatic in ruling that the seasonable filing of a motion for reconsideration within the 10-day reglementary period following the receipt by a party of any order, resolution or decision of the NLRC, is a mandatory requirement to forestall the finality of such order, resolution or decision. The statutory bases for this are found in Article 22327 of the Labor Code and Section 14,28 Rule VII of the New Rules of Procedure of the NLRC.29 The implementing rules of respondent

P a g e | 112

NLRC are unequivocal in requiring that a motion for reconsideration of the order, resolution, or decision of respondent Commission should be seasonably filed as a precondition for pursuing any further or subsequent remedy; otherwise, the said order, resolution, or decision, shall become final and executory after ten (10) calendar days from receipt thereof. Obviously, the rationale therefor is that the law intends to afford the NLRC an opportunity to rectify such errors or mistakes it may have lapsed into before resort to the courts of justice can be had. This merely adopts the rule that the function of a motion for reconsideration is to point out to the court the error that it may have committed and to give it a chance to correct itself.30 It is settled doctrine that the NLRC, as an administrative and quasi-judicial body, is not bound by the rigid application of technical rules of procedure in the conduct of its proceedings. However, the filing of a motion for reconsideration and filing it on time are not mere technicalities of procedure. These are jurisdictional and mandatory requirements which must be strictly complied with.31 Although there are exceptions32 to said rule, the case before us presents no valid reason to deviate from the rule. Petitioners would like to make the NLRC, the Court of Appeals and this Court believe they filed a Motion for Reconsideration from the resolution of the NLRC dismissing their appeal. They claimed they filed the motion for reconsideration on 03 January 2000 and explained that the absence of the official

stamp of the Docket and Record Section of the NLRC thereon was not their fault because said motion was received initially by the Second Division by reason of the erroneous indication of the Division Number, and which was subsequently forwarded to the Third Division. We do not subscribe to their lame excuses. The fact that the alleged motion for reconsideration did not contain the official stamp of the Docket and Record Section of the NLRC is sufficient indication that same was never filed. Even assuming arguendo that the motion was wrongly addressed to the Second Division of the NLRC, the Docket and Record Section will still put a stamp as to when it received the same. It is simply incredible, assuming that a motion has indeed been filed, that no one will acknowledge receipt thereof by putting a stamp thereon. Moreover, if a motion for reconsideration was truly filed by petitioners, why did private complainant never receive a copy of the same? Failure to furnish the adverse party a copy of the motion for reconsideration is tantamount to non-filing, because furnishing the adverse party is a requirement before the motion can be entertained under the New Rules of Procedure of the 33 NLRC. Service of a copy of the motion on the opposing lawyers and an indication of the time and place of hearing are 34 mandatory requirements. Proof of service is mandatory. Without such proof of service to the adverse party, a motion is nothing but an empty formality deserving no judicial 35 cognizance. Petitioners clearly failed to file the required motion for reconsideration. Their undoing

P a g e | 113

made the NLRC resolution become final and executory even before they filed their petition for certiorari with respondent Court of Appeals. On this ground alone, the instant petition must perforce be dismissed. Finally, petitioners utter failure to bring up the matter concerning the motion for reconsideration in the instant petition only shows that they are evading the issue. In light of the foregoing, we find no need to discuss the errors allegedly committed by respondent Court of Appeals. WHEREFORE, premises considered, the petition for review is hereby DENIED. SO ORDERED. Puno, (Chairman), AustriaMartinez, and Tinga, JJ., concur. Callejo, Sr., J., no part.

petitioners motion reconsideration.

for

Romeo D. Flores and Lope A. Rallama were employed as security officers of Forever Security and General Services (Forever Security) in 1990 and 1988, respectively. As security officers, they worked for twelve (12) hours everyday including Sundays and holidays. On February 15, 1993, Forever Security dismissed Flores and Rallama on the ground that they abandoned their posts, duties and responsibilities as security guards.3 Hence, they filed Complaints4 for Illegal Dismissal with the National Labor Relations Commission (NLRC), against Forever Security and/or its Executive Vice President Antonio Garin. The case was docketed as NLRC NCR Case No. 00-04-2813-93. In his complaint, Flores alleged that he did not receive his salary from January 18, 1993 to February 15, 1993. The reason given was that he was allegedly absent without official leave (AWOL) since December 26, 1992. He vehemently denied this and averred that his absence from such date until January 15, 1993 was with the companys consent and that he resumed work since then until he was terminated from service.5 Rallama, on the other hand, averred that he failed to go to work on January 3 to 31, 1993 because he was hospitalized. When he returned for work, he was told that he was considered AWOL.6 Flores and Rallama further claimed that during their employment with Forever Security, they were not paid the proper overtime pay, premium pay, rest day and holiday pay, and night shift differential, service incentive leave pay and 13th month pay. They prayed for reinstatement

FIRST DIVISION G.R. No. 147961 September 7, 2007 FOREVER SECURITY & GENERAL SERVICES, petitioner, vs. ROMEO FLORES and LOPE RALLAMA, respondents. D E C I S I O N AZCUNA, J.: Before the Court is a petition for review on certiorari assailing the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 58253 dated December 11, 2000 and the Resolution2 dated April 24, 2001 denying

P a g e | 114

with payment of other monetary attorneys fees.7

backwages and claims plus

sums, as computed by the Research and Information Unit of this Commission: SO ORDERED.10 On April 27, 1995, Forever Security and Garin appealed the Labor Arbiters decision to the NLRC.11 The case was docketed as NLRC NCR CA No. 00-9021-95 and was raffled to the Second Division. Instead of posting a cash or surety bond, Forever Security and Garin filed a Motion for Extension of Time to File/Submit Appeal/Surety 12 Bond, alleging among others, that appellants are finalizing appropriate arrangements with an insurance bonding company; that due to lack of material time, they are not able to file surety/appeal bond. They further prayed that they be given a thirty (30)-day extension from April 27, 1995 or until May 27, 1995, within which to file a surety/appeal bond.13 On July 31, 1995, the Second Division issued a Resolution14 dismissing the appeal for appellants failure to perfect the same in accordance with the requirements of the Labor Code, specifically by posting the required cash or surety bond.15 Appellants filed a Motion for Reconsideration16 but it was denied in a Resolution dated October 24, 1995.17 An official certification was later issued by the Philippine Postal Corporation, signed by Makati Central Acting Postmaster Danilo A. Velasco, stating that a copy of said resolution was delivered and received by the parties.18 The decision thus became final and executory and an Entry of Judgment was issued on August 2, 1996.19 Flores and Rallama moved for the issuance of a Writ of

For its part, Forever Security, thru its Vice President Garin, averred that Flores and Rallama went on vacation and sick leave, respectively, but failed to report for work thereafter, thus, they were considered to have abandoned their posts, duties and responsibilities which is a ground for their dismissal from service. It likewise asserted that it had fully paid the complainants salaries and wages, overtime pay, premium pay for holiday and rest day, night shift differential, service incentive leave pay and 13th month pay. It prayed that the case be 8 dismissed for lack of merit. The case was calendared for hearings on May 3 and 10, June 10 and 20, and July 15 and 29, 1993, but Forever Security and Vice President Garin failed to appear. On September 16, 1994, Labor Arbiter Ernesto S. Dinopol rendered a decision9 in favor of complainants-employees, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered declaring that the dismissal of complainants ROMEO D. FLORES and LOPE A. RALLAMA was illegal and unjustified and ordering respondents FOREVER SECURITY AND GEN. SERVICES, INC. and ANTONIO GARIN to reinstate them to their former positions without loss of seniority rights and other privileges. Above-named respondents are further ordered to pay jointly and severally complainants, the following

P a g e | 115

Execution20 which was favorably acted upon by the Labor Arbiter on August 28, 1997.21 The writ, however, was returned unserved, thus, an Alias Writ of Execution and a Second Alias Writ of Execution were subsequently 22 issued. Pursuant to the Writ of Execution and Alias Writs of Execution, a Notice of Garnishment was issued.23 Thereafter, Forever Security and Garin filed an urgent ex-parte motion to quash the writ of execution and alias writs of execution.24 They insisted that the Resolution of the Second Division denying their motion for reconsideration was not yet final and executory considering that respondents counsel failed to receive a copy of the same. As such, the Entry of Judgment is null and void and consequently, the Writ of Execution, Alias Writs of Execution and Notice of Garnishment were all irregularly issued and have no legal force and effect.25 On March 15, 1999, pursuant to the Notice of Garnishment, an Order26 of garnishment was issued directing Mr. Taja Guinomia and Mrs. Cynthia Tayam of the Department of Foreign Affairs, Office of Fiscal Management, to release a check drawn in favor of the NLRC Cashier amounting to P430,758.64. Forever Security and Garin then filed an Urgent Ex-parte Motion for Reconsideration and Opposition to Release27 which was, however, denied in an Order28 dated May 12, 1999. Said order became the subject of another appeal which the NLRC denied in a Resolution29 dated February 9, 2000, ratiocinating that the same was dilatory in nature and indicative of bad faith. Their Motion for Reconsideration was likewise denied for lack of

merit in a Resolution March 7, 2000.30

dated

Forever Security, represented by Garin, as petitioner, elevated the matter before the CA in a special civil action for certiorari, prohibition and 31 mandamus. In a Decision dated December 11, 2000, the CA dismissed the petition, the decretal portion of which reads: WHEREFORE, premises considered, the petition for certiorari, prohibition and mandamus is DENIED for lack of merit. SO ORDERED.32 The court found that petitioner failed to substantiate its claim that respondents were guilty of abandonment, which would have justified their dismissal from service. The court further held that petitioner failed to observe the procedural rules provided for by the Labor Code. As to the allegation that petitioners counsel did not receive a copy of the NLRC resolution denying its motion for reconsideration, the court applied the rule on presumption of receipt in the ordinary course of mail. The CA opined that the certification issued by the acting postmaster of the Makati Central Post Office negates petitioners claim that their former counsel, Atty. Cleofe L. Jaime, failed to receive a copy of the NLRC resolution. Consequently, there is nothing left to be done except to implement the orders of execution and garnishment.33 Forthwith, petitioner filed a Motion for Reconsideration34 which was denied in a 35 Resolution dated April 24, 2001. Hence, this petition.

P a g e | 116

The issues, as raised by petitioner, are as follows:

the

Court finds no persuasion in 36 case.

application or the present

WHETHER OR NOT THE COURT OF APPEALS HAS ERRED IN LAW: A. FOR NOT HOLDING VALID AND LEGAL THE DISMISSAL OF RESPONDENTS FLORES AND RALLAMA ON THE GROUND OF ABANDONMENT. B. FOR HOLDING THAT THE ORDER DATED OCTOBER 24, 1995 WAS DULY RECEIVED BY PETITIONERS COUNSEL, ATTY. MA. CLEOFE JAIME IN THE ORDINARY COURSE OF THE MAIL APPLYING THE PRESUMPTION UNDER RULE 131, SECTION 5 (v), AND FOR HOLDING THE PETITIONER TO HAVE FAILED TO OVERCOME SUCH PRESUMPTION BY SATISFACTORY PROOF. C. FOR HOLDING FINAL AND EXECUTORY THE DECISION DATED SEPTEMBER 16, 1994 OF LABOR ARBITER ERNESTO DINOPOL. Petitioner maintains that the CA decision runs counter to the Rules of Procedure of the NLRC, particularly Rule III, Sections 6 and 7. To buttress its claim, petitioner insists that there is nothing in said rule that would suggest that the completeness of service of the order, coursed through mail, shall be determined by applying the rules of presumption under the Revised Rules of Court. Petitioner contends that the NLRC Rules, to be considered complete service, service of summons, notices, orders, decisions or final awards sent through registered mail must be received by the addressee or his/her agent. In the present case, such was not complied with. Thus, the presumption under Section 5(v), Rule 131 of the Revised Rules of

Petitioner added that there was no proof on who actually received the copy of the resolution or whether such person was authorized to receive it in behalf of Atty. Jaime. Consequently, the entry of judgment, writ of execution and alias writs of execution, notice of garnishment, and order of garnishment are all null and void ab initio.37 Moreover, petitioner claims that the issue of abandonment and reinstatement has become moot and academic since it had already ceased operation and closed its business as a security agency since December 31, 1993.38 The petition is without merit on both the procedural and substantive issues. At the outset, this Court would like to point out that the present case at bench had long become final and executory for failure of petitioner to comply with procedural rules on perfection of appeals to the NLRC. Article 223 of the Labor Code sets forth the rules on appeal from the Labor Arbiters monetary award, thus: Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x. x x x In case of a judgment involving a monetary award,

P a g e | 117

an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis ours) Moreover, Sections 1 and 6, Rule VI of the New Rules of Procedure of the NLRC39 provide: SEC 1. Periods of Appeal. Decisions, awards or orders of the Labor Arbiter and the POEA Administrator shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter x x x. x x x SEC. 6. Bond. In case the decision of a Labor Arbiter, POEA Administrator and Regional Director or his duly authorized hearing officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award. The requirement of a cash or surety bond for the perfection of an appeal from the Labor Arbiters monetary award is not only mandatory but jurisdictional as well, and noncompliance therewith is fatal and has the effect of rendering

the award final and executory.40 The logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence that would defeat or diminish recovery under the judgment if subsequently affirmed; it also validates and justifies, at least prima facie, an interpretation that would limit the amount of the bond to the aggregate of the sums awarded other than in the concept of moral and exemplary damages.41 This is consistent with the States constitutional mandate to afford full protection to labor in order to forcefully and meaningfully underscore labor as a primary social and economic force.42 As clearly explained by the NLRC, petitioner filed its appeal and paid the appeal fee on April 27, 1995. Instead of posting a cash or surety bond, it filed a motion for extension of time to file appeal or surety bond. Petitioner asked that it be given until May 27, 1995 within which to post the bond. Apparently, petitioner did not make good its promise on the specified date. At the time of the issuance of the NLRC Resolution dated July 31, 1995 dismissing the appeal, no bond was posted. Records reveal that it was only in 1999 when the petitioner posted the bond, long after the finality of the Labor Arbiters decision. Indeed, the Court, in a number of cases, has applied substantial compliance of the rules and allowed the appeal to proceed despite the failure of the petitioner company to post the full amount of the bond. In Rosewood Processing, Inc. v. NLRC,43 the Court considered petitioners motion to reduce bond as substantial compliance

P a g e | 118

to the procedural requirement of posting of bond. In that case, petitioner filed, together with its memorandum on appeal and notice of appeal, a motion to reduce the appeal bond accompanied by a surety bond for fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc. The rule on substantial compliance was applied because of the willingness to post the bond as well as the clear merits which appeared in the appeal from the labor arbiters Decision. In Your Bus Lines v. NLRC,44 this Court excused the appellant for its failure to post the bond because it relied on the notice of the decision which, while stating the requirements for perfecting an appeal, did not mention that a bond must be filed. Also, in Blancaflor v. NLRC,45 it was noted that the failure of the appellant to post a bond was in part due to the failure of the Labor Arbiter to state the exact amount of back wages and separation pay due; thus, no basis existed for the computation of the amount of the bond to be filed. Further, in UERM-Memorial Medical Center v. NLRC,46 the appellant-employer was allowed to post a property bond in lieu of a cash or surety bond. In that case, the judgment involved more than P17M and its precipitate execution could adversely affect the existence of the employer medical center. It also appeared that the real property bond was worth more than P102M, hence, the posting of a real property bond was sufficient compliance with the requirements of Art. 223.

There is no dispute regarding the instances where a more compassionate interpretation of the rules may be allowed. These instances, however, call for the existence of meritorious grounds and substantial compliance or at the very least, a willingness to pay by posting a partial bond.47 In the instant case, petitioner has not by any overt act shown substantial compliance or exhibited intent to comply therewith in view of its absolute failure to post a bond during the pendency of the appeal. There is likewise no satisfactory showing of the existence of meritorious grounds, allowed by law and jurisprudence to justify a departure from the effect of non-compliance. Therefore, guided by the above doctrines, the Court is left with no alternative but to state that the failure of petitioner to post the requisite appeal bond resulted in the non-perfection of its appeal, and consequently, the finality of the Labor Arbiters decision. Considering the foregoing, the issues raised by petitioner deserve scant consideration. However, if only to satisfy petitioner and erase doubts on the validity of the Labor Arbiters decision, the Court will deal with the issues raised herein. On whether or not the service of the NLRC Order to the counsel of petitioner is valid, the answer is in the affirmative. Sections 4 and 5, Rule III of the Rules of Procedure state: Section 4. Service of notices and resolutions.-a) Notices or summons and copies of orders, resolutions or decisions

P a g e | 119

shall be served on the parties to the case by the bailiff or duly authorized public officer within three (3) days from receipt thereof or by registered mail; x x x Provided further, That in cases of decision and final awards, copies thereof shall be served on both the parties and their counsel: x x x x x x." Section 5. Proof and completeness of service.-The return is prima facie proof of the facts indicated therein. Service by registered mail is complete upon receipt by the addressee or his agent. x x x The acting postmaster of the Makati Post Office certified that the registered mail was sent to the address of petitioners counsel and was accordingly received in said office. Said certification was based on the registry receipt and the record of the post office duly accomplished in the ordinary course of business. The postmaster certified not only as to the sending of the registered mail but also as to the name of the carrier of the mail; the receipt thereof by the recipient at the correct address; and the name of the person who received it.48 Notwithstanding the certification, petitioner merely offered an allegation of nonreceipt. It is a legal presumption, based on wisdom and experience, that official duty has been regularly performed; that the proceedings of a judicial (and quasi-judicial) tribunal are regular and valid, and that judicial (quasijudicial) acts and duties have been and will be duly and

properly performed.49 The burden of proving the irregularity in official conduct, if any, is on the part of petitioner who in this case clearly failed to discharge the same. Considering the sufficiency of the postmasters certification, the CA did not err in applying the presumption of receipt in the ordinary course of mail. Now, on the validity respondents dismissal on ground of abandonment. of the

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty; hence, a just cause for termination of employment by the employer under Article 282 of the Labor Code, which enumerates the just causes for termination by the 50 employer. Two factors must be present in order to constitute an abandonment: (a) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employeremployee relationship. The second is the more determinative factor and is manifested by overt acts from which it may be deduced that the employee has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. Mere absence from work does not imply abandonment.51 It is apparent from the records that respondents did not abandon their work. After their absence both Flores and Rallama reported back for work, thus negating any intent on their part to sever their employer-employee relationship with petitioner. As aptly held by the CA:

P a g e | 120

It should be noted that respondent Flores worked for almost one month after the expiration of his leave while respondent Rallama reported back for work after being hospitalized but was simply told that he was on AWOL and was no longer allowed to work. Abandonment is further belied by the filing of this complaint x x x.52 WHEREFORE, premises considered, the petition is hereby DENIED. The Decision of the Court of Appeals dated December 11, 2000 and its Resolution dated April 24, 2001 are AFFIRMED. No costs. SO ORDERED. Puno, C.J., Chairperson, Sandoval-Gutierrez, Corona, Garcia, JJ., concur.

The facts follow. Petitioners filed a case against respondent JB Line Bicol Express, Inc. (JB Line) in the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in Legazpi City, Albay for illegal dismissal, underpayment of salaries/wages, overtime pay, premium pay for the holiday and rest day, night shift differential, 13th month pay, separation pay and damages. In their complaint, they claimed that: The respondent [JB Line] is a bus company operator plying the Bicol-Manila route. The [petitioners] are all employees of respondent [JB Line]. Most of [them] are drivers, conductors and mechanics while the rest are regular employees who assist in the conduct of the business of transportation of [respondent JB Line]. All the drivers and conductors who ply the BicolManila route would render their services at night until morning when they reach the place of destination. Most of the [petitioners] have been with the company for at least ten years. In fact[,] some of them have been with the company for more than twenty years. Most of them are members of the ABC [l]abor [u]nion and there is an existing [c]ollective [b]argaining [a]greement between the company and the said labor union. All of them were underpaid and most of them, particularly those who travel the Bicol-Manila-Bicol route were not given overtime and night differential pay. Sometime beginning the year 2000, the company started constructively dismissing [petitioners]. This was done by

FIRST DIVISION G.R. No. 163775 October 19, 2007 OSCAR G. SAPITAN; ANDRES M. LADISLA; NICANIO E. PURA; Petitioners, vs. JB LINE BICOL EXPRESS, INC./ LAO HUAN LING/JOSE BARITUA,** Respondents. D E C I S I O N CORONA, J.: This is a petition for review under Rule 45 of the Rules of Court assailing the decision1 of the Court of Appeals (CA) dated August 14, 2003 in CA-G.R. SP No. 75535 entitled JB Line Bicol Express, Inc., Jose Baritua/Lao Huan Ling v. National Labor Relations Commission, et al.

P a g e | 121

not allowing [them] to perform their duties and function or simply by not admitting them to their work by stating that they should just return some other time. What the company would do is to inform the concerned employees that they should not [report to work] on that date and to return to another date as the bus they were supposed to drive is [not] serviceable. [Petitioners] would just be informed to return to a latter date but when they returned, another excuse will greet them for them not to perform their regular function. These same acts of the respondent [JB Line] hold true to all [petitioners]. Tired of being treated in the same manner and for failure on the part of [JB Line] to give them their work despite no cessation of operations and for non-payment of their salaries, wage adjustments and other benefits, [petitioners were] left with no recourse except to file the instant case to force respondent [JB Line] to reinstate them in their jobs and [pay] their benefits.2 Respondent JB Line, represented by its owners, Lao Huan Ling and Jose Baritua, repudiated the allegations claiming that petitioners were not dismissed constructively from their jobs. Respondent JB Line claimed: [Petitioners] are still regular employees of respondent [JB Line]. No record will show that letter of suspension were sent to them. Their claim for alleged... constructive dismissal is baseless considering the absence of any documentary evidence relative thereto and their failure to present testimonial evidence to prove that respondent [JB Line]

violated the essential elements for constructive dismissal. Their failure to work regularly was due to economic crises that necessitated the reduction of trips for drivers and conductors and shortened workdays for office personnel and maintenance crew. The measures taken by respondent [JB Line] to prevent losses and possible closure of the business [were] management prerogative and were not resorted to as a ploy to constructively dismissed [petitioners]. On the contrary, [petitioners] can resume duties anytime depending on the availability of buses and passengers... As to [petitioners] Joue Balderama, Jesus Velarde, Edison Belen, Wilfredo Loscano, 3 Marcelino Hamto, Romeo Ermino, Eduardo Escurel, Benjamin Pura, Noel Hapin4 and Albert Binaday5 , respondent [JB Line] asserts that these [petitioners] were separated and dismissed for just and valid causes...[A]s to [petitioner] Salvador Genetia, respondent [JB Line] contends that he suffered a stroke five (5) years ago and has already availed of his disability benefits...while [petitioner] Emilio Escandor has been legally terminated for cause.6 Although the labor arbiter (LA)7 found that some of JB Line's employees were validly dismissed from their jobs, he nonetheless ruled that JB Line was liable for constructive dismissal. In a decision dated August 24, 2001, he ruled: ...[I]t can be deduced that because of the reduced number of trips and shortened workdays, [petitioners] would naturally suffer diminution in pay. One

P a g e | 122

does not need to stretch his imagination to arrive at a conclusion that because at present, only two (2) buses are dispatched daily, almost all of the [petitioners] lost their jobs. With only two (2) buses presently dispatched, continuation of [petitioners'] employment with respondent [JB Line] is rendered impossible. There is constructive dismissal when [petitioners suffer] diminution in pay and/or continued employment is rendered impossible.8 x x x x x x x x x

went AWOL and subsequently abandoned their jobs... ...[T]he complaint and claim of [petitioner] Larry Escarilla10 should also be denied because of prescription...[H]e filed his complaint after the lapse of more than five (5) years from the date of his dismissal. Under the [Labor Code]..."all money claims arising from the employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time that the cause of action accrued, otherwise they shall be forever barred."11 x x x x x x x x x

The normal consequences of constructive dismissal are reinstatement and payment of backwages. However, in this case ... the 1999 Collective Bargaining Agreement, signed by both parties, provide only for payment of separation pay to every employee whose service is terminated due to reduction in work force because of lack of work or financial difficulty, in an amount equivalent to twenty four (24) days for every year of service, computed based [on petitioners'] latest daily 9 wage... x x x x x x x x x

As to [petitioners] Salvador Genetia and Emilio Escandor, this Branch finds for [them]. Again, respondent [JB Line] miserably failed to substantiate its allegations that Salvador Genetia suffered stroke five (5) years ago, while [petitioner] Emilio Escandor had been terminated for cause... Anent [petitioners'] claim for underpayment of wages, nonpayment of 13th month pay and of night shift differential pay, this Arbitration Branch finds for [petitioners], there being no contrary evidence presented to controvert said claims...12 x x x x x x x x x

...As to [petitioners] Joue Balderama, Jesus Velarde, Edison Belen, Wilfredo Lascano, Marcelino Hamto, Romeo Ermino, Eduardo Escurel, Benjamin Pura, Noel Hapin...this Arbitration Branch believes and so holds that they were validly dismissed. Respondent [JB Line] presented substantial evidence which clearly support its contention that these [petitioners] either committed dishonesty, grave misconduct or

[Petitioners]...Oscar O, Domalaon, Abelardo D. Mangampo, Armando Lladones, Alfredo Bonagua, Sosante Pantua,13 Eligio Nicol, Edgar L. Bitancur, Emilio S. Escandor, Salvacion M. Hasta, Romeo O. Domalaon, Rustico Lagonoy, Serafin Dongaol, Rolando Gribialde,14 Eddie Ginete, Salvador R. Genetia [and] Manuel Frejas

P a g e | 123

should[,] however, be excluded in the award of night shift differential pay...15 x x x x x x x x x

WHEREFORE, premises considered, judgment is hereby rendered 16 declaring [petitioners ] to have been constructively dismissed by respondent [JB Line] and consequently, ordering the latter to pay complainants the total amount of NINE MILLION NINETY SEVEN THOUSAND SIX HUNDRED TWENTY FOUR PESOS (P9,097,624.00) representing [petitioners'] separation pay, wage differential, 13th month and night shift differential... All other claims and charge[s] are DISMISSED finding no factual and legal basis therefor. SO ORDERED.17 Respondent JB Line appealed the arbiters decision (accompanied by a P200,000 supersedeas bond) to the NLRC. Finding that the bond posted was not equivalent to the monetary judgment, the NLRC ordered respondent JB Line to post an additional bond, otherwise, its appeal would be dismissed for non-perfection.18 The latter failed, hence, the NLRC denied its appeal, saying: To date...respondent [JB Line] failed to post an additional bond in the amount of P8,897,624.00 in blatant disregard of our Order. x x x x x x x x x

Respondent JB Line elevated the case to the CA via Rule 65 of the Rules of Court. In a resolution,20 however, the CA dismissed the petition for failure to attach a secretary's certificate or board resolution authorizing Lao Huan Ling to sign the verification and certification of non-forum shopping for and on behalf of respondent JB Line. The coowner, Jose Baritua, also did not execute a special power of attorney authorizing him (Lao Huan Ling) to sign the verification and certification. On MR, however, the CA reinstated respondent JB Lines petition.21 Subsequently, in its assailed decision of August 14, 2003, the CA set aside the LA and NLRC's decision and exonerated respondent JB Line from any liability. It held: ..[I]t is clear that the law does not award separation pay to employees when the closure is due to serious business losses. [Respondent JB Line] [has] the burden to prove that such losses actually exist. In the case at bar, [respondent JB Line] convincingly discharged such burden. From the evidence presented by [it] consisting of financial statements audited by an independent auditor, it has been satisfactorily established that [respondent JB Line] indeed suffered serious business losses for the three preceding years to its closure. Hence, it is not legally obligated to grant separation pay to [petitioners]. x x x x x x x x x

..[I]ndeed, for respondent [JB Line's] failure to comply with the mandatory requirements of a valid appeal, the decision of the Labor Arbiter dated August 24, 2001 has already attained finality.19

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The assailed [o]rders issued by the NLRC as well as

P a g e | 124

the decision of the Arbiter...are SET ASIDE. SO ORDERED.22

Labor

Petitioners moved for the reconsideration of the decision but it was denied. Thus, this appeal. In their bid to reverse the CA decision, petitioners argue that the CA erred in (1) giving due course to respondent JB Line's petition despite the absence of a secretary's certificate or board resolution or special power of attorney authorizing Lao Huan Ling to sign the verification and the certification of non-forum shopping; (2) allowing the petition despite the fact that the LAs decision had already become final after respondent JB Line failed to post the required bond and (3) holding that they were not entitled to separation pay since respondent JB Line had ceased operations due to serious financial losses. We find meritorious. the petition

caprice. For what is at stake is the matter of verity attested by the sanctity of an oath to secure an assurance that the allegations in the pleading have been made in good faith, or are true and correct and not merely speculative. This Court has strictly been enforcing the requirement of verification and certification and enunciating that the obedience to the requirements of procedural rules is needed if fair results are to be expected therefrom. Utter disregard of the rules cannot just be rationalized by harking on the policy of liberal construction. While the requirement is not jurisdictional in nature, it does not make it less a rule... In Fuentebella and Rolling Hills Memorial Park, Inc. v. Castro,24 we likewise declared that a certification without the proper authorization is defective and constitutes a valid cause for dismissal of the petition. We explained: The reason for this is that the principal party has actual knowledge whether a petition has previously been filed involving the same case or substantially the same issues. If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly authorized. This requirement is intended to apply to both natural and juridical persons as Supreme Court Circular No. 28-9125 and Section 5, Rule 7 of the Rules of Court do not make a distinction between natural and juridical persons. Where the petitioner is a corporation, the certification against forum shopping should be signed by its duly authorized director or

Lack of Proof of Authority To Sign the Verification and Certification of Non-Forum Shopping On the first issue, the appellate court should not have given due course to respondent JB Line's petition due to the improper verification and certification. Over time, we have emphasized the importance of complying with the procedural requirements of the Rules of Court. In Hyung Hyung Park v. Eng Won Choi,23 we said: Verification is not an empty ritual or a meaningless formality. Its import must never be sacrificed in the name of mere expedience or sheer

P a g e | 125

representative...[I]f the real party-in-interest is a corporate body, an officer of the corporation can sign the certification against forum shopping as long as he is authorized by a resolution of its board of directors. x x x x x x x x x

Effect of Failure to Post Bond Where the Judgment Involves Monetary Award On the second assigned error, the records show that respondent JB Line clearly failed to post the bond required by the NLRC. Article 223 of the Labor Code provides: ARTICLE 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders... x x x x x x x x x

A certification without the proper authorization is defective and constitutes a valid cause for the dismissal of the petition. This holds true in the present case...the Administrative Manager of petitioner corporation, who signed the verification and certificate of non-forum shopping, initially failed to submit a secretary's certificate or a board resolution confirming her authority to sign on behalf of co-petitioner... Although respondent JB Line claims that it substantially complied with the requirement, albeit belatedly (when it submitted a secretary's certificate to the CA), said certificate, however, was neither dated nor its signatory Lao Huan Ling authorized to sign the verification and the certification of non-forum shopping to be filed in the CA. The records disclose that Lao Huan Lings authority was to represent respondent JB Line only before the LA and in the NLRC. While, as a rule, factual (and evidentiary) issues are beyond the province of our judicial review under Rule 45,26 a discrepancy between the findings of the CA and those of the LA and NLRC (as in this case) excludes it from the purview of said rule.27

In case of judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. x x x x x x x x x

The perfection of an appeal in a manner and within the period prescribed by law is not only mandatory but also 28 jurisdictional. For respondent JB Line's failure to comply with the rules on appeal, the LA's decision became final and executory. Nothing more can therefore be done to change the decision. Respondent JB Line had lost the privilege of seeking relief from the appellate court. In one case,29 we held: The intention to make indispensable perfection of employer, is of the lawmakers the bond an requisite for the an appeal by the clearly limned in

P a g e | 126

the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer may be the exclusive means by which an employer's appeal maybe perfected. In some cases,30 the requirement to post a supersedeas bond for the perfection of an appeal was relaxed but this was justified by substantial compliance. In this case, however, no similar reason existed to excuse respondent JB Line from complying with the requirement. The bond posted by respondent JB Line was not even close to half of the amount required by the NLRC.31 Closure of Business Due Serious Financial Losses To

Assuming such closure indeed took place, respondent JB Line was still not off the hook. Under the law, in case of closure of business due to serious financial losses, it is imperative for the employer to send a notice of closure to the employees and to the Department of Labor and Employment 35 (DOLE). Article 283 of the Labor Code, as amended, provides: ARTICLE 283: Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to 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 notice on the workers and the Ministry of Labor and Employment36 at least one (1) month before the intended date thereof. xxx The records are devoid of proof that respondent JB Line ever furnished the DOLE or petitioners with such notice.1wphi1 Moreover, even if we were to grant that respondent JB Line was on the brink of closing down at that time, the reduction of petitioners' workload and/or the "floating" of their employment was still not warranted. Petitioners' plight had persisted for months which only meant that they were already constructively dismissed. In International Hardware, Inc. v. NLRC,37 we declared that an employee is constructively dismissed when his working days are substantially cut for more

We likewise hold that the CA erred in ruling that 32 petitioners were no longer entitled to separation pay on the ground alone that respondent JB Line had ceased to operate due to serious losses. The crucial point to consider is when petitioners' employment was put on hold until the filing of the case with the LA. At that time, respondent JB Line admitted that it was financially distressed but it never claimed it was closing down. In fact, in the proceedings before the LA and in the NLRC, it argued that it could not be liable for constructive dismissal since "petitioners (were) still (its) regular employees"33 and could resume performing their duties depending on the availability of buses and passengers.34

P a g e | 127

than six months due to the employer's financial losses. Lastly, the LA found that "because of the reduced number of trips and shortened workdays, petitioners naturally suffer(ed) diminution in pay." We agree with him that "there (was) constructive dismissal (because of the) diminution in pay and/or (the) continued employment (was) rendered impossible..."38 WHEREFORE, the assailed decision of the Court of Appeals in CAG.R. SP No. 75535 dated August 14, 2003 is hereby SET ASIDE. Accordingly, the decision of the labor arbiter dated August 24, 2001 is REINSTATED. SO ORDERED. RENATO C. CORONA Associate Justice

Labor and Employment (DOLE) Acting Secretary Manuel G. Imson (acting Secretary Imson) dated June 4, 2003 and the Order4 of respondent DOLE Secretary Patricia A. Sto. Tomas (DOLE Secretary) dated September 18, 2003. Petitioner Iloilo La Filipina Uygongco Corporation (petitioner) is a domestic corporation engaged in trading and trucking businesses. Petitioner is the employer of the private respondents La Filipina Uygongco Corporation Workers (respondents). Petitioner claims that respondents are "pakyaw" workers, hence, not entitled to the full enjoyment of the benefits provided in the labor standards under the Labor Code. Sometime in October 1997, the drivers and motor pool personnel of petitioner formed the Iloilo La Filipina Uygongco Corporation Labor Union (ILFUCLU) and said union was registered with the DOLE on November 14, 1997.5 ILFUCLU President and herein respondent, Ronaldo Payda, verbally requested the DOLE 6 Region VI Office to conduct a routine labor inspection as the ILFUCLU believed that they were receiving wages below the minimum mandated by law, among others. Sometime in December 1997, respondents, who are officers and members of ILFUCLU, filed a Complaint for Underpayment of Wages, Nonpayment of Holiday Pay, Overtime Pay, Rest day Pay, Nightshift Differential and Service Incentive Leave Pay before the DOLE Region VI Office. On March 26, 1998 a labor routine inspection was conducted. On October 6, 1998, the Labor Inspector held that petitioner did not violate any provision on labor standards which the DOLE

THIRD DIVISION G.R. No. 170244 November 28, 2007 ILOILO LA FILIPINA UYGONGCO CORPORATION, Petitioner, vs. HON. COURT OF APPEALS; CEBU CITY, HON. PATRICIA A. STO. TOMAS, in her capacity as Secretary, Department of Labor and Employment; and LA FILIPINA UYGONGCO CORPORATION WORKERS, Respondents. R E S O L U T I O N NACHURA, J.: Before this Court is a Petition1 for Certiorari under Rule 65 of the Rules of Civil Procedure, seeking to nullify the respondent Court of Appeals (CA) Decision2 dated December 2, 2004 which affirmed in toto the 3 Order of the Department of

P a g e | 128

Regional Director in his Order7 dated December 1, 1998 affirmed on the following grounds, to wit: 1. The truck drivers concerned are nonagricultural field personnel and they are paid by results. Hence, they are not covered by hours of work under paragraph (e) and (f), Rule I, Rule II, Rule IV, & Rule V of Book III of the Labor Code; 2. The basis of their salary is "per trip" at a minimum of P50.00 per trip and on the average they made at 4 to 5 trips per day they earned from P200.00 to P250.00 per day which is over the minimum wage; and 3. They are given P70.00 food allowance if they report for work which is not required by law. On appeal, acting Secretary Imson in his Order dated June 4, 2003, reversed and set aside these findings, holding that respondents are regular employees of the petitioner based on the parameters set by law in the determination of employer-employee relationship and are, therefore, entitled to said monetary benefits. He further held that petitioner is engaged in the trucking business; hence, respondents as truck drivers perform activities which are usually necessary and desirable to the said business. Lastly, the DOLE Region VI Office should not have merely relied on the pro-forma affidavits of the respondents and based the inspection results on company records. The dispositive portion of the Order reads:

WHEREFORE, the Order dated December 01, 1998 is hereby SET ASIDE and VACATED and a new one is entered finding the appellee, Iloilo La Filipina Uycongco (sic) Corporation liable for underpayment of wages, nonpayment of holiday pay, rest day pay and overtime pay. Let the case be REMANDED to the DOLE-Regional Office VI for the appropriate computation of the workers' individual entitlements as above-stated. All other claims of appellants are DISMISSED for lack of merit. SO ORDERED.8 Petitioner filed a Motion for Reconsideration. On September 18, 2003, the DOLE Secretary denied petitioner's Motion for Reconsideration for its failure to establish and substantiate its allegation of paying the minimum wage to respondents and for lack of merit.9 Aggrieved, petitioner filed a petition10 for certiorari before the CA which eventually affirmed the DOLE Secretary's ruling. The CA held that respondents' employment status cannot be based solely on their pro-forma affidavits manifesting that they are "pakyaw" employees considering that they abandoned the same in a subsequent Joint Affidavit. Moreover, the CA held that respondents worked under the petitioner's control and supervision. Assuming respondents are piece-rate employees, such will not exculpate the petitioner from complying with labor standards based on the Rules Implementing the Labor Code and existing jurisprudence. Petitioner filed its Motion for Reconsideration11 which was, however, denied in a

P a g e | 129

Resolution12 dated September 26, 2005. Petitioner received the copy of the said Resolution on October 4, 2005. Initially, petitioner filed a Motion13 for Extension of Time to File a Petition for Review on Certiorari under Rule 45 on October 18, 2005. However, on November 17, 2005, petitioner filed a Manifestation and 14 Motion, stating that "in the course of the preparation of the petition, petitioner through counsel has realized that the proper action to be filed is a PETITION FOR CERTIORARI under Rule 65 of the Rules of Court and not (a) PETITION FOR REVIEW ON CERTIORARI under Rule 45 of the Rules of Court" and that it will be filing a Petition for Certiorari under Rule 65 instead. Hence, this Petition for Certiorari under Rule 65, ascribing grave abuse of discretion on the CA in affirming the DOLE Secretary's ruling on the following grounds: I. THAT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND HAS COMMITTED GRAVE ABUSE OF DISCRETION IN FINDING THAT THE WORKERS ARE REGULAR EMPLOYEES OF ILOILO LA FILIPINA UYGONGCO CORPORATION DESPITE THEIR EXECUTION OF AN AFFIDAVIT ADMITTING THE FACT THAT THEY ARE "PAKYAW" WORKERS AND, THEREFORE, NOT ENTITLED TO THE LABOR STANDARDS PROVIDED (SIC) UNDER THE LABOR CODE; II. THAT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND HAS COMMITTED GRAVE ABUSE OF DISCRETION IN FINDING THAT THE WORKERS ARE REGULAR EMPLOYEES AND, THEREFORE, ENTITLED TO THEIR INDIVIDUAL ENTITLEMENT NOTWITHSTANDING THE DECISION OF THE HONORABLE 18TH DIVISION, COURT OF APPEALS, CEBU CITY, DISMISSING THE WORKERS' COMPLAINT FOR ILLEGAL DISMISSAL

AND IN EFFECT, AFFIRMING THE DECISION OF THE 4TH [DIVISION] NATIONAL LABOR RELATIONS COMMISSION, CEBU CITY, THEREBY DECLARING THEM AS "PAKYAW" WORKERS AND, THEREFORE, NOT ENTITLED TO THEIR MONETARY CLAIMS; III. THAT THE HONORABLE COURT OF APPEALS HAS SERIOUSLY ERRED AND HAS COMMITTED GRAVE ABUSE OF DISCRETION IN NOT FINDING THAT THE LA FILIPINA UYGONGCO WORKERS HAVE VIOLATED THE RULE AGAINST FORUM SHOPPING. Petitioner posits (1) that the affidavits executed by the respondents are not pro-forma and the same particularly stated that the respondents are "pakyaw" employees; (2) that they executed the same freely and voluntarily before the DOLE Region VI Office; (3) that the DOLE Secretary's and the CA's respective acts of disregarding the first set of affidavits and giving credence to the subsequent Joint Affidavit of the respondents stating that they are regular employees would sanction the perjurious acts of the workers and are tantamount to grave abuse of discretion; and (4) that the respondents are guilty of forum shopping because six of its officers/members (complainants) filed a case15 for Union Busting, Underpayment of Wages, Non-payment of Holiday Pay, Service Incentive Leave Pay, 13th Month Pay, Night Shift Differentials, Allowances and Attorney's Fees (Union Busting case) against herein petitioner and as such, there is identity of parties and causes of action.16 Moreover, in this Union Busting case both the Labor Arbiter17 and the National Labor Relations Commission 18 (NLRC) uniformly held that said complainants were not illegally dismissed. Both also

P a g e | 130

held that the complainants were "pakyaw employees" and, as such, they are not entitled to their respective monetary claims.19 On certiorari, the CA dismissed the complainants' petition based on procedural infirmities. The said Union Busting case is still pending before the CA on Motion for Reconsideration.20 On the other hand, respondents submit that the lone issue in this case is whether or not the CA committed grave abuse of discretion in upholding the DOLE Secretary's Orders which the petitioner failed to show; that the instant Petition is anchored on questions of fact; that petitioner did not attach all the relevant and pertinent pleadings and documents in violation of Rule 65; that the first set of affidavits executed by respondents were merely proforma, un-sworn affidavits; that petitioner did not dispute the contention that they are engaged in the trucking and trading businesses and that respondents are its drivers and members of its motor pool personnel, hence, respondents are regular employees since their work is directly and necessarily connected with petitioner's business; that petitioner wielded control and supervision over the respondents as a result its officers/members were illegally dismissed, giving rise to the Union Busting case; that petitioner never advanced any argument refuting respondents' assertion that the latter received wages below the minimum; that petitioner as respondents' employer failed to overcome the burden of proving that it complied with the minimum wage law and the labor standards law; that petitioner's act of citing the rulings of the Labor Arbiter and the NLRC on the Union Busting case violates

the rule on sub judice; that on the premise that said decisions on the Union Busting case relied on the findings of the DOLE Regional Director and such findings were duly overturned by the DOLE Secretary, said decisions have no more leg to stand on; and, that there is no forum shopping in this case as the Union Busting case is based on Illegal Dismissal while the instant case emanated from the routine labor inspection of DOLE Region VI Office.21 We deny the instant Petition. The Petition is evidently used as a substitute for the lost remedy of appeal. Mark that what is being assailed in this recourse is the CA Decision dated December 2, 2004. Rule 45 of the Rules of Civil Procedure specifically provides that an appeal by certiorari from the judgments or final orders or resolutions of the Court of Appeals is by verified petition for review on certiorari. Thus: SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. SECTION 2. Time for filing; extension The petition shall be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of the petitioner's motion for

P a g e | 131

new trial or reconsideration filed in due time after notice of the judgment. On motion duly filed and served, with full payment of the docket and other lawful fees and the deposit for costs before the expiration of the reglementary period, the Supreme Court may for justifiable reasons grant an extension of thirty (30) days only within which to file the petition. The aggrieved party is proscribed from assailing a decision or final order of the CA via Rule 65 because such recourse is proper only if the party has no plain, speedy and adequate remedy in the course of law. In this case, petitioner had an adequate remedy, namely, a petition for review on certiorari under Rule 45 of the Rules of Court.22 A petition for review on certiorari, not a special civil action for certiorari was, therefore, the correct remedy. Records show that petitioner received the copy of the CA Resolution denying his Motion for Reconsideration on October 4, 2005. At the outset, petitioner filed a Motion for Extension of Time to File a Petition for Review on Certiorari under Rule 45 on October 18, 2005. Petitioner prayed that it be given a period of thirty (30) days counted from October 19, 2005. Subsequently, on November 17, 2005, the day the thirty (30)-day extended period was about to expire, petitioner filed a Manifestation and Motion manifesting that it will be filing a Petition for Certiorari under Rule 65 instead. In this Court's Resolution dated December 5, 2005, we granted the Motion for Extension of Time of thirty (30) days within which to file a

Petition for Review under Rule 45, and simply took note of the petitioner's Manifestation and Motion. Petitioner filed the instant Petition on December 2, 2005. Petitioner averred that computed from October 4, 2005, the last day for the filing of a Petition for Certiorari under Rule 65 of the Rules of Court is December 4, 2005, hence, the timeliness of its petition. Respondents filed their Comment and petitioner filed its Reply respectively. It is obvious from petitioner's own Manifestation and Motion that the decision to file the instant Petition under Rule 65 was made of while the remedy of appeal under Rule 45 still existed. It is also evident that petitioner tried to tinker with this Court's rules by the simple expedient of filing a Manifestation and Motion informing this Court, at the time the extended period to file an appeal was about to expire, that it is availing of a petition for Certiorari rather than a petition for review on Certiorari under Rule 45, the period of filing of which petitioner sought to extend. This Court is convinced that petitioner knew that it had the existing remedy of appeal as borne out by the fact that petitioner prayed for the extension of the period in the filing thereof, which the Court actually granted in this case. However, when petitioner filed the instant petition, it even had the temerity to allege that "there is no appeal (sic) or plain, speedy or adequate remedy in the ordinary course of law than the filing of this petition." Clearly then, the petitioner interposed the present special civil action for certiorari under Rule 65 as an alternative to a petition for

P a g e | 132

review under Rule 45, not because the former is the speedy and adequate remedy but in order to make up for the loss of its remedy of an ordinary appeal. Settled is the rule that where appeal is available to the aggrieved party, the special civil action for certiorari will not be entertained remedies of appeal and certiorari are mutually exclusive, not alternative or successive. Hence, certiorari is not and cannot be a substitute for a lost appeal, especially if one's own negligence or error in one's choice of remedy occasioned such loss or lapse. One of the requisites of certiorari is that there be no available appeal or any plain, speedy and adequate remedy. Where an appeal was available, as in this case, certiorari will not prosper, even if the ground therefor is grave abuse of discretion.23 Petitioner's resort to this Court by Petition for Certiorari was a fatal procedural error, and the instant petition must, therefore, fail. Indeed there are instances when certiorari was granted despite the availability of appeal such as: (a) when public welfare and the advancement of public policy dictates; (b) when the broader interest of justice so requires; (c) when the writs issued are null and void; or (d) when the questioned order amounts to an oppressive exercise of judicial authority. None of these recognized exceptions, however, is present in the case at bar. Petitioner failed to show circumstances that would justify a deviation from the general rule, and make available a petition for certiorari in lieu of taking an appeal.24

Moreover, while it is true that this Court, in accordance with the liberal spirit which pervades the Rules of Court and in the interest of justice, may treat a Petition for Certiorari as having been filed under Rule 45, the instant Petition cannot be treated as such, primarily because it was filed way beyond the 15-day reglementary period within which to file the 25 Petition for Review and even beyond the extended period of thirty (30) days granted to petitioner by this Court, without the attending instances aforementioned. Based on the foregoing disquisitions, the assailed decision of the CA had already become final and executory and beyond the purview of this Court to act upon.26 On petitioner's claim that respondents are guilty of forum shopping because after the filing of this case for labor inspection, six of its officers/members subsequently filed the Union Busting case against the same petitioner in view of their dismissal from work based on Dishonesty and Perjury on October 1, 1998, we hold that there is no forum shopping in this case. Pertinent is our ruling in Consolidated Broadcasting System, Inc. v. Oberio,27 where we held, to wit: Under Article 217 of the Labor Code, termination cases fall under the jurisdiction of Labor Arbiters.1wphi1 Whereas, Article 128 of the same Code vests the Secretary of Labor or his duly authorized representatives with the power to inspect the employer's records to determine and compel compliance with labor standard laws. The exercise of the said power by the Secretary or his

P a g e | 133

duly authorized representatives is exclusive to cases where employer-employee relationship still exists. Thus, in cases where the complaint for violation of labor standard laws preceded the termination of the employee and the filing of the illegal dismissal case, it would not be in consonance with justice to charge the complainants with engaging in forum shopping when the remedy available to them at the time their causes of action arose was to file separate cases before different fora. In this case, said officers/members of the respondents merely pursued the subsequent case of Union Busting, among others, in view of their dismissal from work. Said cause of action is independent from the labor inspection case which respondents filed with the DOLE way ahead of the Union Busting case. No less than the law provides for these respective remedies. Finally, if the consequences for pursuing the wrong remedial tack in this case seem harsh, it should be remembered that there is no innate right to appeal. Appeal is a statutory right which may be exercised within the prescribed limits. The 1997 Rules of Civil Procedure provides for a rational and orderly method by which appeal can be pursued, and even contingency remedial measures if appeal could no longer be timely pursued.28 Petitioner must bear the consequence for its failure to undertake a timely appeal when such remedy existed. Once again, we stress that the rules of procedure were promulgated for a noble purpose, and to disregard such rules in the guise of liberal construction

would be to defeat such purpose. Procedural rules are not to be disdained as mere technicalities. They may not be ignored to suit the convenience of a party. Adjective law ensures the effective enforcement of substantive rights through the orderly and speedy administration of justice. Rules are not intended to hamper litigants or complicate litigation. But they help provide for a vital system of justice where suitors may be heard following judicial procedure and in the correct forum. Public order and our system of justice are well served by a conscientious observance by the parties of the procedural rules.29 WHEREFORE, the instant Petition is DISMISSED and the Court of Appeals Decision dated December 2, 2004 is AFFIRMED. Costs against the petitioner. SO ORDERED. ANTONIO EDUARDO Associate Justice B. NACHURA

THIRD DIVISION G.R. No. 174209 August 25, 2009 PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Petitioner, vs. RIZALINA RAUT, LEILA EMNACE and GINA CAPISTRANO, Respondents. D E C I S I O N NACHURA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of Appeals (CA) Decision1 in CA-GR SP. No. 85829 which affirmed the National Labor

P a g e | 134

Relations Commissions (NLRCs) dismissal2 of petitioner Philippine Long Distance Telephone Companys Memorandum of Appeal for failure to attach thereto the requisite Certificate of Non-Forum Shopping. The facts, as summarized by the CA, are as follows: This case was originally filed on December 17, 1996 by Rizalina Raut and [Leila] Emnace against Philippine Long Distance Telephone Company (PLDT for brevity) for illegal dismissal and non-payment of salaries, overtime pay, night shift differential, 13th month pay, service incentive leave, backwages with moral damages and attorneys fees. Gina Capistrano followed suit by filing a similar case on January 18, 1997. These cases were consolidated by the Labor Arbiter on February 25, 1997 due to similarity of facts and issues involved. In the complaint, signed and verified by the respondents, they alleged that they were illegally dismissed on November 30, 1996 and December 16, 1996 respectively. In the decision of the Labor Arbiter promulgated on July 30, 1997, it reinstated the respondents x x x to their former position as telephone operators or if not feasible anymore to another equal position without loss of seniority rights and benefits and to pay the following backwages which are subject to recomputation up to the date of the finality of the decision as follows: Soon after, the respondents were reinstated on December 16, 1998,

but allegedly continued to be treated as temporary employees of the petitioner. Petitioner appealed the decision, alleging grave abuse of discretion on the part of the Honorable Labor Arbiter, insisting that the respondents were never employees of the petitioner but that of independent contractor, Peerless Integrated Services, Inc. In respondents Answer to the Appeal, respondents argued that their functions were no different from those performed by the regular employees. They aver that they were trained by petitioner to become Traffic Operator, a position that is categorized as technical. Now, if they were trained to be skilled workers, how come they were extended only contractual employment of ten (10) months? Aside from that, respondents maintained that the claim of the petitioner that their arrangement with Peerless to supply it with various types of workers "in order to augment its present workforce" is but a scheme to subvert their tenurial security. According to respondents, petitioner expressly admits that Peerless provides only the workers. Thus, its contract with the former is one of "labor only" contracting, which is specifically prohibited under Sec. 9 (b) Rule VIII of the Omnibus Rules in relation to Article 106 of the Labor Code of the Philippines. Subsequently, on April 30, 1998, the NLRC rendered a Decision affirming with modification the Decision of the Honorable Labor Arbiter. In addition to those already granted, petitioner x x x is further ordered to pay respondents their overtime pay, nightshift differential pay,

P a g e | 135

service incentive leave pay and 13th month pay.1avvphi1 Petitioner filed a motion for reconsideration but the same was denied in a Resolution promulgated by the NLRC dated September 25, 1998. Consequently, petitioner filed a petition for certiorari before the Court of Appeals. However, the court rendered a Decision dated September 24, 1999, the dispositive portion of which reads as follows: "Wherefore, with the modification that the 13th month pay for respondents Raut and Emnace for the period August 16, 1995 to June 15, 1996 and for respondent Capistrano for the period of August 1, 1995 to May 31, 1996 should be deducted from the computation of the awards to private respondents, the assailed Decision of the National Labor Relations Commission is AFFIRMED." Petitioner filed a Motion for Reconsideration, which was denied by the court. In effect, its aforesaid Decision became final and executory on March 26, 2000 per Entry of Judgment. On April 24, 2002, respondents filed a Motion for Issuance of Writ of Execution which was granted by the Labor Arbiter in an Order dated June 21, 2002, the dispositive portion of which viz.: "Wherefore, let a writ of execution be issued for the enforcement of the following awards: Aggrieved, petitioner appealed the order to the NLRC which, as previously adverted to, dismissed petitioners Memorandum of Appeal for failure

to attach a Certificate of NonForum Shopping. Undaunted, petitioner filed a petition for certiorari before the CA alleging grave abuse of discretion in the NLRCs dismissal of its appeal. Once again, petitioner fared no better in the CA; its petition for certiorari was denied due course. Indefatigably, petitioner comes before us on appeal by certiorari raising the following issues for our resolution: 1. WHETHER x x x THE DECISION DATED APRIL 18, 2006 OF THE COURT OF APPEALS, WHICH AFFIRMED RESOLUTION DATED JANUARY 15, 2004 AND RESOLUTION DATED JULY 26, 2004, BOTH ISSUED BY THE NLRC, IS IN ACCORDANCE WITH LAW AND APPLICABLE DECISIONS OF THE SUPREME COURT. 2. WHETHER x x x THE OMISSION OF THE CERTIFICATION OF NON-FORUM SHOPPING IN THE APPEAL MEMORANDUM WARRANTS THE DISMISSAL OF THE PETITIONERS APPEAL FROM THE ORDER DATED JUNE 21, 2002 OF THE LABOR ARBITER TO THE NLRC. 3. WHETHER x x x THE ORDER DATED JUNE 21, 2002 OF LABOR ARBITER ERNESTO F. CARREON DIRECTING THE ISSUANCE OF A WRIT OF EXECUTION FOR THE ENFORCEMENT OF THE AWARD OF [P]354,535.36 TO EACH OF THE RESPONDENTS, WHICH WAS AFFIRMED IN TOTO BY THE NLRCS DECISION DATED JANUARY 15, 2004[,] AND WHICH[,] IN TURN[,] WAS AFFIRMED BY THE COURT OF APPEALS DECISION DATED

P a g e | 136

APRIL 18, 2006, IS NULL AND VOID.4 The definitive issue boils down to whether the CA erred in affirming the NLRCs dismissal of petitioners appeal for failing to attach a Certificate of Non-Forum Shopping. We find the petition bereft of merit. We note that petitioner deftly brought to the fore the validity of the Labor Arbiters order of execution. However, even on this issue, the appeal lacks merit.1avvphi1 The decision of the CA is consistent with both law and jurisprudence. Petitioners contention that the only jurisdictional requirements of appeal are: (1) the perfection of the appeal within the reglementary period of ten (10) days from receipt of the decision, award, or order; and (2) the posting of a cash or surety bond in appeals involving monetary awards, as specified under Article 223 of the Labor Code is wrong. Petitioner is mistaken in confining the perfection of an appeal to compliance with just those requisites. The perfection of an appeal necessarily includes the filing of a complete (not a defective) memorandum of appeal within the ten (10) day reglementary period. Petitioner conveniently disregards that the NLRC Rules of Procedure requires the appeal to be accompanied by a Certificate of Non-Forum Shopping.5 Thus, petitioners filing of a memorandum of appeal without the requisite certificate did not stop the running of the period to perfect an appeal. In short, the Order of Execution of the Labor

Arbiter became executory.

final

and

Our ruling in Accessories Specialist, Inc. v. Alabanza6 emphasizes the nature of an appeal: Furthermore, we would like to reiterate that appeal is not a constitutional right, but a mere statutory privilege. Thus, parties who seek to avail themselves of it must comply with the statutes or rules allowing it. Perfection of an appeal in the manner and within the period permitted by law is mandatory and jurisdictional. The requirements for perfecting an appeal must, as a rule, be strictly followed. Such requirements are considered indispensable interdictions against needless delays and are necessary for the orderly discharge of the judicial business. Failure to perfect the appeal renders the judgment of the court final and executory. Just as a losing party has the privilege to file an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision. In the case at bar, the judgment against petitioner became final and executory on March 26, 2000. However, to this day, respondents are prevented from enjoying fruits of the final judgment in their favor because of petitioners frivolous appeal against an order of execution. To lend some semblance of merit to its appeal and to further delay the execution of judgment against it, petitioner insists that the Labor Arbiters order of execution is null and void for increasing the judgment award in the original decision. Petitioner likewise avers that

P a g e | 137

nothing appears in the dispositive portion of the Labor Arbiters decision that respondents ought to be reinstated as regular employees. Petitioners contention splits hairs. Indeed, an order of execution must conform to the decision sought to be enforced.7 The Labor Arbiters order of execution does ostensibly appear to increase the original judgment award if, as what petitioner has done, only the dispositive portions of the lower tribunals decisions are laid out. However, we point out that the Labor Arbiters decision specifically declared "that the [respondents] were never the employees of Peerless Integrated Services, Inc., as they were all the time employees of [petitioner]." We need not belabor the point. It is quite apparent from the respective decisions of the Labor Arbiter, the NLRC, and the CA that respondents were found to be regular employees of petitioner. Article 279, in relation to Article 280 of the Labor Code, confirms the nature of employment of respondents regardless of petitioners unschooled opinion. The articles read: ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was

withheld from him up to the time of his actual reinstatement. ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. Thus, the lower tribunals all affirmed the order of reinstatement of respondents and their corresponding entitlement to the payment of salaries and other benefits received by petitioners regular employees. Finally, on the increase in the computation of the monetary award to respondents, the decision of the Labor Arbiter specified that for purposes of putting up a bond should petitioner appeal, the backwages were computed only for a certain period. Otherwise, the actual backwages to be paid to respondents are computed from the date of dismissal until the finality of the decision. In addition, because petitioner continues to refuse and accord regular status to respondents and to pay them their corresponding wages even after the lapse of two (2) years from the finality of the Labor Arbiters decision, the Labor Arbiter correctly included that

P a g e | 138

in its order of execution. Thus, the Labor Arbiters order of execution simply covered the correct computation of wages and other payments enjoyed by petitioners regular employees. WHEREFORE, premises considered, the petition is hereby DENIED. The decision of the Court of Appeals in CA-G.R. SP. No. 85829 is AFFIRMED. Costs against petitioner. SO ORDERED. ANTONIO EDUARDO Associate Justice SECOND DIVISION G.R. No. 172537 August 14, 2009 JETHRO INTELLIGENCE & SECURITY CORPORATION and YAKULT PHILS., INC. Petitioners, vs. THE HON. SECRETARY OF LABOR AND EMPLOYMENT, FREDERICK GARCIA, GIL CORDERO, LEONIELYN UDALBE, MICHAEL BENOZA, EDWIN ABLITER, CELEDONIO SUBERE and MA. CORAZON LANUZA, Respondents. D E C I S I O N CARPIO MORALES, J.: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor with a security service contract agreement with co-petitioner Yakult Phils., Inc. (Yakult). On the basis of a complaint1 filed by respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13th month pay, and night shift differential, the Department of Labor and Employment (DOLE)Regional Office No. IV conducted an inspection at Yakults B. NACHURA

premises in Calamba, Laguna in the course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as required under Department Order No. 18-022. Hearings on Garcias complaint and on the subsequent complaints of his co-respondents Gil Cordero et al. were conducted during which Jethro submitted copies of payrolls covering June 16 to 30, 2003, February to May 16-31, 2004, June 16-30, 2003, and February 1-15, 2004. Jethro failed to submit daily time records of the claimants from 2002 to June 2004, however, despite the order for it to do so. By Order3 of September 9, 2004, the DOLE Regional Director, noting petitioners failure to rectify the violations noted during the above-stated inspection within the period given for the purpose, found them jointly and severally liable to herein respondents for the aggregate amount of EIGHT HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials, regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift differential premium and rest day premium. Petitioners were also ordered to submit proof of payment to the claimants within ten calendar days, failing which the entire award would be doubled, pursuant to Republic Act No. 8188, and the corresponding writs of execution and garnishment would be issued.

P a g e | 139

Jethro appealed4 to the Secretary of Labor and Employment (SOLE), faulting the Regional Director for, among other things, basing the computation of the judgment award on Garcias affidavit instead of on the data reflected in the payrolls for 2001 to 2004.5 By Decision6 dated May 27, 2005, then SOLE Patricia A. Sto. Tomas partially granted petitioner Jethros appeal by affirming with modification the Regional Directors Order dated September 9, 2004 by deleting the penalty of double indemnity and setting aside the writs of execution and garnishment, without prejudice to the subsequent issuance by the Regional Director of the writs necessary to implement the said Decision. Petitioners Motion for Reconsideration7 of the SOLE Decision having been denied,8 they filed a petition for certiorari before the Court of Appeals, insisting that the affidavit of Garcia should not have been given evidentiary weight in computing the judgment award. By Decision9 of January 24, 2006, the appellate court denied the petition, it holding that contrary to petitioners contention, Garcias affidavit has probative weight for under Art. 221 of the Labor Code, the rules of evidence are not controlling, and pursuant to Rule V of the National Labor Relations Commission (NLRC) Rules of Procedure, labor tribunals may accept affidavits in lieu of direct testimony. Petitioners motion for reconsideration having been denied by Resolution10 dated April 28, 2006, they filed the

present petition for review on certiorari. Petitioners attribute grave abuse of discretion on the part of the DOLE Regional Director and the SOLE in this wise: (1) the SOLE has no jurisdiction over the case because, following Article 129 of the Labor Code, the aggregate money claim of each employee exceeded P5,000.00; (2) petitioner Jethro, as the admitted employer of respondents, could not be expected to keep payrolls and daily time records in Yakults premises as its office is in Quezon City, hence, the inspection conducted in Yakults plant had no basis; and (3) having filed the required bond equivalent to the judgment award, and as the Regional Directors Order of September 9, 2004 was not served on their counsel of record, the writs of execution and garnishment subsequently issued were not in order. And petitioners maintain that Garcias affidavit should not have been given weight, they not having been afforded the opportunity to cross-examine him. The petition is bereft of merit. The sole office of a writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack of jurisdiction. It does not include the correction of a tribunals evaluation of the evidence and factual findings thereon, especially since factual findings of administrative agencies are generally held to be binding and final so long as they are supported by substantial

P a g e | 140

evidence case.11

in

the

record

of

the

In dismissing petitioners petition for certiorari and thus affirming the SOLE Decision, the appellate court did not err. The scope of the visitorial powers of the SOLE and his/her duly authorized representatives was clarified in Allied Investigation Bureau, Inc. v. Secretary of Labor and 12 Employment, viz: While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730) thus: Art. 128. Visitorial enforcement power. x x x x (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employeremployee 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 representatives shall issue and

writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the finding of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. [Emphasis, underscoring and italics supplied] x x x x The aforequoted [Art. 128] explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase "(N)otwithstanding the provisions of Articles 129 and 217 of this Code to the contrary xxx" thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representative to issue compliance orders to give effect to the labor standards provisions of said 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.13 (Emphasis and underscoring supplied.) In Ex-Bataan Veterans Security Agency, Inc. v. Laguesma case, the Court went on to hold that x x x if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues therein; (b) that in

P a g e | 141

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. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results.14 In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakults premises in Calamba, as Jethros offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit competent proof that it was giving its security guards the wages and benefits mandated by law. Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor standard violation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law.

Respecting petitioners objection to the weight given to Garcias affidavit, it bears noting that said affidavit was not the only basis in arriving at the judgment award. The payrolls for June 16-30, 2003 and February 1-15, 2004 reveal that the overtime rates were below the required rate.15 That Garcia was not cross-examined on his affidavit is of no moment. For, as Mayon Hotel and Restaurant vs. Adana16 instructs: Article 221 of the Labor Code is clear: technical rules are not binding, and the application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice. The rule of evidence prevailing in court of law or equity shall not be controlling in labor cases and it is the spirit and intention of the Labor Code that the Labor Arbiter shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. Labor laws mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process.17 (Emphasis and underscoring supplied) It bears noting that while Jethro claims that it did not cross-examine Garcia, the minutes of the July 5, 2004 hearing at which Jethros counsel was present indicate that Garcias affidavit was 18 presented. Jethro had thus the opportunity to controvert the contents of the affidavit, but it failed.

P a g e | 142

Respecting the fact that Jethros first counsel of record, Atty. Benjamin Rabuco III, was not furnished a copy of the September 9, 2004 Order of the Director, the SOLE noted in her assailed Decision that since Atty. Thaddeus Venturanza formally entered his appearance as Jethros new counsel on appeal and an appeal was indeed filed and duly verified by Jethros owner/manager, for all practical purposes, the failure to furnish Atty. Rabuco a copy of the said Order had been rendered moot. For, on account of such lapse, the SOLE deleted the double indemnity award and held that the writs issued in implementation of the September 9, 2004 Order were null and void, "without prejudice to the subsequent issuance by the Regional Director of the writs necessary to implement" the SOLE Decision.1avvphi1 Thus, the DOLE-Regional Office subsequently issued the following Orders: Order19 of July 31, 2006 holding in abeyance the release of the amount equivalent to the judgment award out of Yakult accounts pending the receipt of the supersedeas bond; and 20 Order of February 27, 2007 ordering the immediate release of the garnished amount. It bears emphasis that the SOLE, under Article 106 of the Labor Code, as amended, exercises quasi-judicial power, at least to the extent necessary to determine violations of labor standards provisions of the Code and other labor legislation. He/she or the Regional Directors can issue compliance orders and writs of execution for the enforcement thereof. The significance of and binding effect of the compliance orders

of the DOLE Secretary is enunciated in Article 128 of the Labor Code, as amended, viz: ART. 128. Visitorial enforcement power. x x x x (d) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor or his duly authorized representatives issued pursuant to the authority granted under this article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this article. And Sec. 5, Rule V (Execution) of the Rules on Disposition of Labor Standards Cases in Regional Offices provides that the filing of a petition for certiorari shall not stay the execution of the appealed order or decision, unless the aggrieved party secures a temporary restraining order (TRO) from the Court. In the case at bar, no TRO or injunction was issued, hence, the issuance of the questioned writs of execution and garnishment by the DOLE-Regional Director was in order. WHEREFORE, the petition is DENIED and the Court of Appeals Decision dated January 24, 2006 and Resolution dated April 28, 2006 are AFFIRMED. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice and