G.R. No.

87653 February 11, 1992

CONRADO M. AQUINO, NAPO!ON ". AROMIN, RO"!R#O A. GA$PAN a%& NICARDO P.
"ANQUI$CO,petitioners,
vs.
NA#IONA A"OR R!A#ION$ COMMI$$ION AND O#I$ !!'A#OR COMPAN(, respondents.
Alejandro P. Ruiz, Jr. for petitioners.
Abad, Leano & Associates for private respondent.

CRU), J.:
The petitioners' services were terminated on the ground of retrenchment, and they received separation pay
double that required by the Labor Code. Thereafter, they demanded retirement benefits, invoking the Retirement
lan of the respondent company which they said was contractual rather than statutory. The question eventually
submitted to the labor authorities was, having received the separation pay, were the petitioners still entitled to the
retirement benefits! The Labor "rbiter said they were, but the #LRC reversed him. The issue is now before us
for final resolution.
The petitioners were employees of private respondent $tis %levator Company when they were informed of the
termination of their employment in line with the need of the company &to streamline its operations, consolidate
certain functions, reduce its manpower and cut non'essential spending.& The separate letters addressed to the
petitioners advised them that (
)n lieu of notice, you shall be paid one month's equivalent salary, plus your regular
allowances, counted from such date, and you shall be covered with the normal benefits for
that period. *ou shall also be paid your earned and+or unused sick leave and vacation
leave, including your pro'rata ,-th month pay. "nd for every year of service with the
Company, you shall be paid one month's basic salary or your retirement benefits, if
applicable to you, whichever is higher. 1
"ccordingly, petitioners were paid their separation pay, computed as follows.
Basic monthly ears in !eparation
salary service Pay
Conrado /. "quino 0,-11 22 30,411
#apoleon 5. "romin ,1,-61 22 227,711
Roberto ". 8aspan -,911 ,3 72,211
#icardo . 5lanquisco 9,911 ,- ,,1,611
The separation pay was based on :ection 0, "rticle ;)) of the Collective 5argaining "greement between the
company and its employees providing thus.
"ll employees in the bargaining unit separated without cause shall be granted separation
pay of not less than one <,= month's latest basic rate for every year of service sub>ect to the
e?isting provisions of the Retirement lan.
)n >ustifying their subsequent demand for retirement benefits before the Labor "rbiter, the petitioners invoked
:ection ,, "rticle @);, of the C5" in relation to :ection 6.2, "rticle ;, of the company's Retirement lan, which
provides.
The C$/"#* shall maintain the present group retirement plan which is attached hereto
as "nne? &"& and made an integral part of this contract. <:ec. ,, "rt. @);=.
??? ??? ???
6.2. " articipant who is terminated from employment and who has rendered at least ten
<,1= years of service shall be entitled to receive in lump sum all or a portion of his accrued
benefit credits as of his date of termination, in accordance with the following schedule.
ears of !ervice "ested Percenta#e
$pon %ermination of Benefit &redits
Less than ,1 years #)L
,1 to less than ,6 61A
,6 to less than 21 76A
21 years and over ,11A
They also cited the case of their co'employees Cleodeveo :oriano, Br. and atriciano Cesta>o, Br., whose services
were terminated on the ground of redundancy in ,39- and ,392, respectively, and were both given separation
pay and retirement benefits.
Dor its part, the respondent company argued that separation pay and retirement benefits were mutually e?clusiveE
hence, the petitioners could no longer claim the latter after having received the former.
The Labor "rbiter ruled in favor of the petitioners mainly on the ground that the company was estopped from
withholding retirement benefits from them after having granted similar benefits to the employees earlier
mentioned. Fe held that a different treatment of the petitioners would constitute discrimination because &benefits
accorded to other employees must likewise be e?tended to the rest who are similarly situated.& 2
)n reversing the appealed decision, the #LRC declared that the case cited by the petitioners was e?ceptional and
could not be considered a precedent. /oreover (
The C5" provision is very clear that while the employees separated without cause are
entitled to a separation pay of not less than one <,= month's latest basic rate for every
year of service, this is made merely subject to and not in addition to the e?isting
provisions of :ection 6.2 of the "rticle ; of the Retirement lan. )n other words, no
logical inference can be made that the benefits under :ection 6.2 of "rticle ; of the
Retirement in addition to the one <,= month's latest basic rate for every year of service.
<sic= Therefore, the offer of appellant perfectly fits well within the contemplation of the
parties as envisaged in the aforementioned provisions of the C5" and the Retirement
lan. 3
)t is important at the outset to note the distinction between separation pay and retirement benefits.
:eparation pay is required in the cases enumerated in "rticles 29- and 290 of the Labor Code, which include
retrenchment, and is computed at at least one month salary or at the rate of one'half month salary for every year
of service, whichever is higher. Ge have held that it is a statutory right designed to provide the employee with
the wherewithal during the period that he is looking for another employment. *
Retirement benefits, where not mandated by law, may be granted by agreement of the employees and their
employer or as a voluntary act on the part of the employer. Retirement benefits are intended to help the
employee en>oy the remaining years of his life, lessening the burden of worrying for his financial support, and
are a form of reward for his loyalty and service to the employer. 5
)t is on the basis of these distinctions that the petitioners claim to be entitled not only to the separation pay they
have already received but also to the retirement benefits provided for in the Retirement lan of the respondent
company.
)n re>ecting this contention, the private respondent insists that the retirement benefits are sub>ect to the
provisions of the Retirement lan under :ection 0 of the C5". /oreover, under the $mnibus )mplementing
Rules of the Labor Code, retired employees whose services are terminated shall receive the corresponding
retirement benefits or separation pay, whichever is higher. 6 This clearly indicates that one benefit should
e?clude the other.
The petitioners are covered by the Retirement lan because they have contributed to the retirement fund, have
been separated by reason of the retrenchment, and have served the company for more than the prescribed
minimum period of ten years.
)n Batan#as La#una %ayabas Bus &o. v. &ourt of Appeals, 7 Bustice /artin started his ponencia thus. &The issue
in this petition is whether an employee who has already received his separation pay can still recover retirement
benefits from his employer.& Resolving the question affirmatively, the Court declared in part.
5ut petitioner contends that private respondent can only avail himself of either separation
pay or retirement benefits but not both, citin# in support thereof, the ruling of this Court in
the case of&ipriano vs. !an 'i#uel &orporation, 20 :CR" 71-. The foregoing ruling
cannot be made to apply to the present suit because in said case it is so e?pressly provided
in the Labor "greement that.
Regular employees who are separated from the service of the
company for any reason other than misconduct or voluntary
resignation shall be entitled to either ,11A of the benefits provided
in :ection 2, "rticle ;))) hereof regardless of their length of service
in the company or to the severance pay provided by law, whichever
is the greater amount.
Thus, in said case the employee was entitled to either the amount prescribed in the plan or
the severance pay provided by law whichever is the greater amount. )n the present
case, there is nothin# in the labor a#reement entered into by the petitioner with 5atangas
Transportation %mployees "ssociation of which private respondent is a member barrin#
the latter from recoverin# (hatever benefits he is entitled to under the la( in addition to
the #ratuity benefits under the labor a#reementbetween him and his employer. )either is
there any provision in the %ermination Pay La( *Republic Act )o. +,-., as amended by
Republic Act )o. +/0/1 that an employee (ho receives bi# termination pay upon
separation from the service (ithout cause is precluded from recoverin# any other benefits
a#reed upon by him and his employer. )n the absence of any such prohibition, both in the
aforesaid Labor "greement and the Termination ay Law the private respondent has the
ri#ht to recover from the petitioner (hatever benefits he is entitled to under the
%ermination Pay La( in addition to the other benefits conferred upon him by the aforesaid
labor a#reement. +
The same issue was squarely raised in $niversity of the 2ast v. 'inister of Labor, 8 where the award of both
separation pay and retirement benefits to the employees was assailed by the employer on the ground that &there
could only be one mode of termination of employment with respect to one and the same employee.& Through
Bustice 8utierreH, the Court reaffirmed the above'quoted ruling in the BL%B case and held as follows.
Therefore, if there is no provision contained in the collective bargaining agreement to the
effect that benefits received under the Termination ay Law shall preclude the employee
from receiving other benefits from the agreement, then said employee is entitled to the
benefits embodied in the agreement in addition to whatever benefits are mandated by
statute. )n the case at bar, there is no such provision. Ge cannot presume that it forms an
implicit part of either the C5" or the law.!eparation pay arisin# from a forced
termination of employment and benefits #iven as a contractual ri#ht due to many years of
faithful service are not necessarily anta#onistic to each other, especially where there are
strong equitable considerations as in this case. ++
Ge have carefully e?amined the record, and particularly the Collective 5argaining "greement and the
Retirement lan, and have found no specific prohibition against the payment of both benefits to the employee.
/aintaining that the above cases have no application to the case at bar, the company calls attention to 5ook ;),
:ection ,0, Rule ,, of the $mnibus Rules )mplementing the Labor Code, which provides as follows.
<a= "n employee who is retired pursuant to a bonafide retirement plan or in accordance
with the applicable individual or collective agreement or established employer policy shall
be entitled to all the retirement benefits provided therein or to termination pay equivalent
to at least one'half month salary for every year of service, whichever is higher, a fraction
of at least si? <4= months being considered as one whole year.
Fowever, it overlooks sub'section <c= of the same :ection ,0, which clearly provides that.
<c= This :ection shall apply where the employee retires at the age of si?ty <41= years or
more.
The private respondent has not shown that the petitioners were si?ty years or older at the time of their separation
and therefore covered by the said section. Faving itself invoked that provision, the company had the obligation
to prove that the petitioners came under its terms.
The private respondent's argument that the petitioners did not retire but were terminated in employment is, in our
view, plain nitpicking. )t cannot be seriously contended that if an employee dies before he can retire <at a time
when he is already eligible for retirement=, his beneficiaries are entitled to the retirement pay he would have
himself earned. The effective cause of separation is death, for which his heirs are entitled to death benefits, but
they are also paid retirement benefits as a consequence of such death.
This is not to say that one whose services are terminated not only because he has retired but for another cause
resulting in retirement is always entitled to both separation pay and retirement benefits. )t should be obvious that
if, say, an employee is dismissed for dishonesty, he is not entitled to separation pay or, for that matter, even
retirement benefits. 5ut in the case before us, the petitioners have not been separated for cause, in the sense that
they have committed an offense warranting their removal. They were separated for reasons not imputable to
them, as the letter above quoted categorically declared.
Dinally, we want to assure you that your retrenchment is through no fault of your own but
mainly due to prevention of further losses. )n behalf of the Company, we e?press our
sincere appreciation for your services and loyalty and wish you every success in your
future undertakings. 9
)n arriving at our conclusion, we are guided by the principle that any doubt concerning the rights of labor should
be resolved in its favor, pursuant to the social >ustice policy. The Court feels that if the private respondent really
intended to make the separation pay and the retirement benefits mutually e?clusive, it should have sought
inclusion of the corresponding provision in the Retirement lan and the Collective 5argaining "greement so as
to remove all possible ambiguity regarding this matter.
Ge may presume that the counsel of the respondent company was aware of the prevailing doctrine embodied in
the cases earlier cited. Inowing this, he should have made it a point to categorically provide in the Retirement
lan and the C5" that an employee who had received separation pay would no longer be entitled to retirement
benefits. $r to put it more plainly, collection of retirement benefits was prohibited if the employee had already
received separation pay.
The private respondent argues that it had paid the petitioners more than what the law requires by giving them
separation pay at the rate of one month instead of one'half month for every year of service. The suggestion is
that the company had been more than liberal and that to require it to pay the retirement benefits as well would be
a strain on its benevolence.
The petitioners are not pleadin# for generosity but demandin# their rights. These rights are embodied in the
Collective 5argaining "greement, which was the result of negotiations between the company and the employees.
5argaining is a process where the parties discuss their demands and counter'demands and, after haggling, agree
on what is essentially a compromise reflecting the concessions mutually given by the parties to arrive at a
common understanding. The resultant contract provides for demandable rights, not withdrawable doles. Ghen
the employer signs a collective bargaining agreement, it reco#nizes the rights of the workers and does not
merely concedecertain privileges to them out of the goodness of its heart.
The private respondent asserts in its statement of facts that it gave the petitioners a choice between accepting the
separation pay and the retirement benefits and they opted for the former. This is not borne by the record. )n its
letter advising the petitioners of the termination of their services, the company merely informed them that they
would be given separation pay or retirement benefits, whichever was higher. The petitioners received the
separation pay because they felt they were entitled thereto but they did not thereby waive their rights to the
retirement benefits.
Ge realiHe that the retirement benefits of the petitioners come up to a substantial figure, considering their
respective lengths of service with the company. These benefits, added to the separation pay they have already
received, make up a tidy sum indeed. The point, however, is that the petitioners are entitled to this amount under
the provisions of the C5" and the Retirement lan freely entered into by the parties. These instruments are
binding agreements, not being contrary to law, morals, good customs, public order or public policy, and must
therefore be upheld.
GF%R%D$R%, the petition is 8R"#T%C. The decision of the respondent #ational Labor Relations 5oard is
R%;%R:%C and a new >udgment is hereby rendered directing the payment of retirement benefits to the
petitioners in accordance with the Retirement lan of the respondent company and its Collective 5argaining
"greement with its employees.
:$ $RC%R%C.
G.R. No. 1,2157 -u.y 23, 1993
G'M $!CURI#( AND PRO#!C#I'! AG!NC( AND P/IIPPIN! $COU# '!#!RAN$ $!CURI#(
0 IN'!$#IGA#ION AG!NC(, petitioners,
vs.
NA#IONA A"OR R!A#ION$ COMMI$$ION a%& AN#ONIO DUC!, respondents.
3.P. 'ercado & Associates for petitioners.
&iriaco !. &ruz & Associates for private respondent.

QUIA$ON, J.:
The issue in this petition for certiorari is whether a 40'year old employee, who voluntarily resigned, is entitled
retirement benefits under the Labor Code, in the absence of the company retirement plan or collective bargaining
agreement or an established company policy on such benefits.
rivate respondent was employed as a security guard by petitioners in Buly ,369. $n Debruary 4, ,397, after 29
years in the service of petitioners, he tendered his resignation, stating therein that &he is going back to the
province to put up a little business and to get his cash deposit& <Rollo, p. 62=. Fe was then 40 years old, and
earning a monthly salary of 2,-61.11. "fter petitioners paid him the amount of 4,461.11 as his &cash deposit,&
he e?ecuted a quitclaim in their favor.
$n /ay 6, ,399, private respondent filed a complaint against petitioners for monetary claim, including
retirement pay. etitioners denied any liability for the claims, taking the position that they did not have a
company policy or collective bargaining agreement on employees' retirement benefits.
The Labor "rbiter dismissed private respondent's complaint on &lack of sufficient supporting evidence to
establish JhisK claims.& Fe, however, stated that &considering private respondent's twenty'eight years service . . .
he may be granted any e45#ratia benefits, or any benefits pursuant to the company policy& <Rollo, p. 02=.
$n appeal, the #LRC, in its Resolution dated Cecember 29, ,331, held petitioners liable for the amount of
-,3,6.11 as differential to private respondent's separation pay and -3,.61 as attorneys fees. The #LRC
arrived at the amount by applying the formula found in paragraph <a=, :ection ,0, Rule ), 5ook ;) of the
$mnibus Rules, specifically the provision granting a separation pay equivalent to one'half month salary for
every year of service and considering a fraction of at least si? months as one whole year.
5oth parties moved for reconsideration of the resolution. rivate respondent questioned the mathematical
computation of the differential, claiming that he was entitled to 27,-26.11 as differential and 2,7-2.11 as
attorney's fees. etitioners assailed the legal basis for the grant of retirement pay.
"cting on the motions for reconsideration, the #LRC, in its Resolution dated "ugust 2-, ,33,, ordered
petitioners to pay private respondent the amount of 27,-26.11 as &differential of his retirement benefits and
2,702.61 as attorney's fees& <Rollo, p. 22=.
Fence, the instant petition for certiorari.
$n #ovember 0, ,33,, this Court issued a temporary restraining order en>oining, the #LRC from implementing
the assailed resolutions.
The issue involved in the instant case was settled in Llora 'otor, 6nc. v. 3rilon, ,73 :CR" ,76, J,393K wherein
we held that under "rticle 297 of the Labor Code, entitlement of employees to retirement benefits must be
specifically granted under e?isting laws, a collective bargaining agreement or employment contract or an
established employer policy. Llora 'otor, 6nc. was reiterated in Aba7uin !ecurity and 3etective A#ency, 6nc. v.
Atienza, ,31 :CR" 041 J,331K.
"rticle 297 of the Labor Code reads as follows.
"rt. 297. Retirement. ( "ny employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment
contract.
)n case of retirement, the employee shall be entitled to receive such retirement benefits as
he may have earned under e?isting laws and any collective bargaining agreement and
other agreements.
The first paragraph of "rticle 297 deals with the retirement age of an employee, which is the age established in
<a= a collective bargaining agreement or <b= other applicable retirement contract.
The second paragraph of said "rticle deals with the retirement benefits to be received by a retiring employee and
which are the retirement benefits as the employee may have earned under <a= an e?isting law, <b= a collective
bargaining or <c= other agreements.
"s stressed in Llora 'otors, 6nc., "rticle 297 does not in itself purport to impose any obligation upon employers
to set up a retirement scheme for their employees over and above that already established under e?isting laws,
like the :ocial :ecurity "ct.
There are three kinds of retirement schemes. The first type is compulsory and contributory in character. The
second type is one set up by agreement between the employer and the employees in collective bargaining
agreements or other agreements between them <Llora /otors, )nc. v. Crilon, supra=. The third type is one that is
voluntarily given by the employer, e?pressly as in an announced company policy or impliedly as in a failure to
contest the employee's claim for retirement benefits <"llied )nvestigation 5ureau, )nc. v. $ple, 3, :CR" 246
J,373K=.
Respondent is not asking for retirement benefits due him under the :ocial :ecurity Law. Fe does not claim that
there is a collective bargaining agreement or other applicable contract or an established company policy,
granting him retirement benefits.
The asymmetry in the law in granting separation pay to employees who have served the company for at least one
year but denying retirement benefits to those who have reached retirement age in the absence of agreements
granting the same, is for the legislature to remedy.
GF%R%D$R%, the instant petition is 8R"#T%C. The assailed Resolutions of the #LRC dated "ugust 2-, ,33,
and Cecember 29, ,331 are :%T ":)C%, and the Temporary Restraining $rder issued by the Court on
#ovember 0, ,33, is made %R/"#%#T.
G.R. No.173587 -u.y 15, 2,13
)U!IG P/ARMA CORPORA#ION, etitioner,
vs.
AIC! M. $I"A, MA. #!R!$A -. "ARI$O, PR!$CIANO . GON)A!$, AURA ".
"!RNARDO, MAM!R#A R. )I#A, -O$!P/IN! -UD( C. GARCIA, MA. A$UNCION ". /!RC!,
!DI#/A D. CARPI#ANO$, MA. U) ". "U!NO, DAN#! C. '!RA$#IGU!,++ AGN!$ R. ACO"!R,
AR1IN (. CRU), ADONI$ F. OCAMPO, $OP/IA P. ANG!!$, -O! ". "U$# AMAN#!, !DI#/A
". CO!, UDI'INA C. PACIA, RO$!! M. DI)ON, RODOFO A. A"C!D!, 1IFR!DO
RICAFR!N#!, RODOFO R. RO"!R#O, RO$AI! R. UNAR, "!N-AMINR. CAA(CA(,
GUI!RO (AP CADORNA, #/RO' ADOR! #O"O$O, CAROINA$. U(, MARIA OR!##O M.
R!GI$, AMAR C. CAUAG,++ 'IMA R. $API1O$O ANA#AIA . CAPI#O, F!IP! $.
CAINA1AN, 'I'I!I)A D!MAR MANUA#, MA. I)A . RAFINAN,++ AMMI! '. GA#IAO,
A!2 ". $ADA(A a%& R!GINO !DDI! PANGA,Respondents.
C % C ) : ) $ #
D! CA$#IO, J.:
This etition for Review on Certiorari1 assails the Cecember 0, 211- Cecision2 of the Court of "ppeals <C"= in
C"'8.R. : #o. 61009 which nullified the Banuary 2,, ,339 Cecision3 of the #ational Labor Relations
Commission <#LRC= in #LRC #CR C" #$. 1,,3,0'34. The #LRC affirmed the "ugust 4, ,334 Cecision4 of
the Labor "rbiter which, in turn, denied respondents' claim for retirement gratuity and monetary equivalent of
their unused sick leave on top of the redundancy pay they already received.
"lso assailed in this etition is the C"'s Buly ,-,2114 Resolution5 denying petitioner's motion to reconsider
aforesaid C" Cecision.
Dactual "ntecedents
etitioner Luellig harma Corporation <Luellig= is a domestic corporation engaged in the manufacture and
distribution of pharmaceutical products. )t also distributes pharmaceutical products manufactured by other
companies like :ynte? harmaceuticals <:ynte?=. Respondents <-4 in all=, on the other hand, were the employees
of Luellig at its :ynte? Civision.
)n ,336, Roche hilippines, )nc. <Roche= purchased :ynte? and took over from Luellig the distribution of :ynte?
products. Consequently, Luellig closed its :ynte? Civision and terminated the services of respondents due to
redundancy. They were properly notified of their termination6 and were paid their respective separation pay in
accordance with :ection -<b=, "rticle @); of the /arch 2,, ,336 Collective 5argaining "greement <C5"= 7 for
which, respondents individually signed Release and Muitclaim8 in full settlement of all claims arising from their
employment with Luellig.
roceedings before the Labor "rbiter and the #LRC
Controversy arose when respondents filed before the "rbitration 5ranch of the #LRC separate
Complaints9 <which were later consolidated= for payment of retirement gratuity and monetary equivalent of their
unused sick leave on top of the separation pay already given them. Respondents claimed that they are still
entitled to retirement benefits and that their receipt of separation pay and e?ecution of Release and Muitclaim do
not preclude pursuing such claim.
$n "ugust 4, ,334, Labor "rbiter %duardo B. Carpio <Labor "rbiter Carpio= rendered a Cecision denying
respondentsN claims. Fe opined that only employees whose separation from employment was brought about by
sickness, death, compulsory or optional retirement, or resignation are entitled to gratuity pay. Fowever,
employees whose separation from employment was by reason of redundancy are not entitled to the monetary
equivalent of their unused sick leave if cessation from employment was caused by redundancy.
Opon respondentsN appeal, the #LRC rendered a Cecision dated Banuary 2,, ,339 affirming the Cecision of the
Labor "rbiter.
roceedings before the Court of "ppeals
Twice rebuffed but still undeterred, the respondents filed a etition for Certiorari10 with the C".
)n a Cecision dated Cecember 0, 211-, the C" granted respondentsN etition and nullified the Cecisions of both
the Labor "rbiter and the #LRC. Relying on the case of "quino v. #ational Labor Relations Commission, 11 the
C" ruled that since there is nothing in the C5" which e?pressly prohibits the grant of both benefits, those who
received separation pay are, therefore, still entitled to retirement gratuity. The C" also took note of :ection 6,
"rticle ; of LuelligNs Banuary ,, ,349 Retirement 8ratuity lan,12 which provides that an employee who may
be separated from the service for any cause not attributable to his or her own fault or misconduct shall be entitled
to full retirement benefits. :ince the cause of respondentsN separation from work was redundancy, the C"
ordered Luellig to pay respondents retirement gratuity and the monetary equivalent of their unused sick leave on
top of the redundancy pay previously granted to them. The dispositive portion of the C" Cecision reads.
GF%R%D$R%, the petition is 8);%# CO% C$OR:% and 8R"#T%C, and the assailed Cecision of the Labor
"rbiter dated "ugust 4, ,334 and the affirming Cecision of the #LRC dated Banuary 2,, ,339 are :%T ":)C%
and ;"C"T%C. )n its stead, >udgment is rendered $RC%R)#8 respondent Luellig harma Corporation to pay
the retirement gratuity and unused sick leave pay prayed for, and to this end the respondent #LRC is directed to
compute and specify the respective amounts due them.
:$ $RC%R%C.13
8rounds
Luellig moved for a reconsideration,14 but to no avail.15 Fence, this etition anchored on the following
grounds.
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The artiesN "rguments
Luellig concedes that, in the absence of contractual prohibition, payment of both separation pay and retirement
pay may be allowed as ruled by this Court in "quino. #onetheless, it asserts that "quino is not applicable in this
case. )t e?plains that in "quino, the partiesN C5" incorporates by reference a retirement plan agreed upon by the
parties prior to the e?ecution of the C5". $n the other hand, Luellig insists that in this case, :ection 2, "rticle
@); of the partiesN C5" prohibits the recovery of both retirement gratuity and severance pay. )n addition,
:ection 2, "rticle ;)) of the Retirement and 8ratuity lan likewise e?pressly limits the benefits the employees
may receive to their choice between <i= the benefits enumerated therein and <ii= separation pay or other benefits
that Luellig may be required by law or competent authority to pay them. )n any event, Luellig further argues that
respondents are not qualified to receive early retirement benefits as none of them resigned from the service, have
reached the retirement age of 41 or have been in the employ of Luellig for at least 26 years as required by
:ection ,<b=, "rticle @); of the C5".
Luellig furthermore contends that the C"Ns award of monetary equivalent of respondentsN unused sick leave
lacks basis. )t asserts that under :ection 2<c= and <d=, "rticle ;))) of the C5", only employees who are due for
compulsory retirement and those availing of early retirement are entitled to the cash equivalent of their unused
sick leave. Those separated from employment by reason of redundancy like the respondents are not.
Dinally, Luellig insists that the C" committed grave error in invalidating the Release and Muitclaim voluntarily
e?ecuted by the respondents. :aid quitclaims represent a fair reasonable settlement of all the claims respondents
had against Luellig. )n fact, the amount of redundancy pay given to respondents is substantially higher than the
retirement package received by those who resigned.
Respondents counter that there is nothing in the C5" which categorically prohibits the recovery of retirement
benefits in addition to separation pay. They assert that :ection 2, "rticle @); of the C5" alluded to by Luellig
does not constitute as an e?press prohibition that would foreclose recovery of retirement gratuity after the
employees had received redundancy pay. Fence, following the ruling of this Court in "quino, they are entitled to
said retirement gratuity.
Gith regard to LuelligNs contention that retirement benefits can be e?tended only to those who resigned,
respondents echo the observation of the C" that since their separation from employment was due to a cause
beyond their control, they cannot be considered to have e?clusively chosen separation pay and abandoned their
right to retirement gratuity. To bolster their point, respondents cite :ection 6, "rticle ; of the Retirement
8ratuity lan, which reads.
"n employee, e?ecutive or supervisory personnel, who may be separated from the service of the Company for
any cause not attributable to his own fault or misconduct shall be entitled to full benefits as provided for under
"rticle ;, :ections , and 2 above, provided, however, that any employee, e?ecutive or supervisory personnel
separated for cause shall not be entitled to any benefit as provided for under said "rticle ;, :ections ,, 2 and
-.17
Respondents likewise insist that since there is no specific provision in the C5" prohibiting them from claiming
the monetary value of their unused sick leave, the same should be given to them.
Luellig ripostes that nothing prevented respondents from resigning to make them eligible to receive retirement
gratuity. They had ample time to decide whether to resign or to accept redundancy pay. 5ut they chose
redundancy pay over early retirement benefits because they knew they would be getting more. "s to
respondentsN reliance on :ection 6, "rticle ;, in relation to :ections , and 2, of the Retirement 8ratuity lan,
Luellig posits that the same cannot prevail over :ection 2, "rticle @); of the C5".
$n "ugust 2-, 2114, this Court issued a Temporary Restraining $rder en>oining the C" from implementing its
now assailed Cecision until further orders from this Court.18
$ur Ruling
The etition is impressed with merit.
The C5" does not allow recovery of both separation pay and retirement gratuity.
)n "quino,19 the petitioner employees were retrenched after their employer $tis %levator Company <$tis=
adopted cost'cutting measures and streamlined its operations. They were thus given separation pay double the
amount required by the Labor Code. :ubsequently, however, the employees filed a claim for retirement benefits,
alleging entitlement thereto by virtue of the Retirement lan. $tis denied the claim by asserting that separation
pay and retirement benefits are mutually e?clusive of each otherE hence, acceptance of one bars recovery of the
other. Ghen the case reached its final review, this Court held that in the absence of specific prohibition in the
retirement plan or the C5", retirement benefits and separation pay are not mutually e?clusive of each other and
the employees whose services were terminated without cause are entitled to both separation pay and retirement
gratuity.
)n the present case, the C5" contains specific provisions which effectively bar the availment of retirement
benefits once the employees have chosen separation pay or vice versa. The provisions of the C5" on Retirement
8ratuity read.
"RT)CL% @);
R%T)R%/%#T 8R"TO)T*
:ection ,JaK P "ny employee who is separated from employment due to sickness or death shall
receive from the C$/"#* a retirement gratuity in an amount equivalent to one J,K monthNs
basic salary per year of service. Dor the purpose of this agreement, years of service shall be
deemed equivalent to the total service credits in the C$/"#*E a fraction of at least si? J4K
months shall be considered as one J,K year, including probationary employmentE basic salary is
understood to mean the monthly compensation being received by the employee under the
payroll for services rendered during the normal regular working hours of the company,
e?cluding but not limited to any other emoluments for e?tra work, premiums, incentives,
benefits and allowances of whatever kind and nature.
JbK #o person may retire under this paragraph for old age before reaching the age of si?ty J41K
years provided that the C$/"#* may compel the retirement of an employee who reaches or
is past 41 years of age. "n employee who resigns prior to attaining such retirement age shall be
entitled to any of the following percentage of the gratuity provided above.
%arly Retirement or :eparation
aK 6 to 7 years of service 41A
bK 9 to ,1 years of service 71A
cK ,, to ,6 years of service 31A
dK ,4 years of service and above ,11A
"n employee who opts to retire before reaching the age of 41 is entitled to one <,= monthNs
basic pay per year of service or Dour Fundred Thirty Thousand esos <0-1,111.11=,
whichever is higher, provided however that his service record in the C$/"#* is not less
than twenty'nine <23= years. Those whose service record is from twenty'five <26= to twenty'
eight <29= years will be paid an amount equivalent to one <,= monthNs basic pay per year of
service or Three Fundred :i?ty Thousand esos <-41,111.11=, whichever is higher.
"n employee may be entitled to retirement gratuity on account of illness under this article only
upon a certification by the C$/"#*Ns physician, that the illness of the retiring individual
will disable said individual from employment for a protracted length of time.
" transfer of an employee from the employment of the C$/"#* to that of any other sister
company shall be deemed a retirement for the purpose of this section.
)n case an employee retires at the age of 41, he shall receive a retirement pay equivalent to his
last monthly basic pay multiplied by his total service credits or Two Fundred Ten Thousand
esos <2,1,111.11= whichever is higher, provided however, that his service record in the
C$/"#* is from si?teen <,4= to nineteen <,3= years. Those whose service record is less than
si?teen <,4= years will be paid an amount equivalent to one <,= monthNs basic pay per year of
service.
"n employee who retires at the age of 41 or who is separated from employment on account of
illness or death will be entitled to one <,= monthNs basic pay per year of service or Two
Fundred Difty Thousand esos <261,111.11= whichever is higher, provided however, that his
service record in the C$/"#* is not less than 21 years.
:ection 2 P "ny payment under this provision shall be chargeable against separation pay <other
than the :ocial :ecurity :ystem benefits= which may be demandable under an applicable law.
:ection -JaK P The C$/"#* shall grant to all employees whose employment is terminated
due to retrenchment or closure of business a termination pay in accordance with the following
schedule.
,. Dor employees who have rendered one J,K year to five J6K years of continuous
and satisfactory service P ,11A of monthly basic pay for every year of serviceE
2. Dor employees who have rendered si? J4K years to nine J3K years of continuous
and satisfactory service P ,-1A of monthly basic pay for every year of serviceE
-. Dor employees who have rendered ten J,1K JyearsK to fifteen J,6K years of
continuous and satisfactory service P ,66A of monthly basic pay for every year of
serviceE
0. Dor employees who have rendered Jat leastK si?teen J,4K years ? ? ? of
continuous and satisfactory service P ,41A of monthly basic pay for every year of
service.
JbK The C$/"#* shall grant to all employees whose employment is terminated due to
merger, redundancy or installation of labor'saving device a termination pay in accordance with
the following schedule.
,. Dor employees who have rendered one J,K year to five J6K years of continuous
and satisfactory service P ,21A of monthly basic pay for every year of serviceE
2. Dor employees who have rendered si? J4K years to nine J3K years of continuous
and satisfactory service P ,61A of monthly basic pay for every year of serviceE
-. Dor employees who have rendered ten J,1K JyearsK to fifteen J,6K years of
continuous and satisfactory service P ,76A of monthly basic pay for every year of
serviceE
0. Dor employees who have rendered Jat leastK si?teen J,4K JyearsK ? ? ? of
continuous and satisfactory service P ,96A of monthly basic pay for every year of
service.20 <%mphasis and )talics supplied=
:ection 2 of "rticle @); e?plicitly states that any payment of retirement gratuity shall be
chargeable against separation pay. Clearly, respondents cannot have both retirement gratuity
and separation pay, as selecting one will preclude recovery of the other. To illustrate the
mechanics of how :ection 2 of "rticle @); bars double recovery, if the employees choose to
retire, whatever amount they will receive as retirement gratuity will be charged against the
separation pay they would have received had their separation from employment been for a
cause which would entitle them to severance pay. These causes are enumerated in :ection -,
"rticle @); of the C5" <i.e., retrenchment, closure of business, merger, redundancy, or
installation of labor'saving device=. Fowever, if the cause of the termination of their
employment was any of the causes enumerated in said :ection -, they could no longer claim
retirement gratuity as the fund from which the same would be taken had already been used in
paying their separation pay. ut differently, employees who were separated from the company
cannot have both retirement gratuity and separation pay as there is only one fund from which
said benefits would be taken. )narguably, :ection 2 of "rticle @); effectively disallows
recovery of both separation pay and retirement gratuity. Consequently, respondents are entitled
only to one. :ince they have already chosen and accepted redundancy pay and have e?ecuted
the corresponding Release and Muitclaim, they are now barred from claiming retirement
gratuity.
)n :uareH, Br. v. #ational :teel Corporation,21 the same issue cropped up P whether the retrenched employees
are entitled to retirement gratuity even after they have received their separation pay in accordance with the
retrenchment program of the company. )n ruling in the negative, this Court observed that :ections , and - of
"rticle @); on Retirement 5enefits of the C5" separately provide for retirement benefits and severance pay for
retrenched employees.
:ection , thereof states, among others, that those retiring with at least ,1 years of service credits are entitled to a
retirement pay equivalent to one and one'half months of basic pay for every year of service, while :ection -
e?tends two months base pay for every year of service for laid'off employees pursuant to retrenchment program.
This Court elaborated thus.
" perusal of "rticle @); of the partiesN ,330',334 C5" readily shows that retirement benefits shall be granted
only to those employees who, after rendering at least ten <,1= years of continuous services, would retire upon
reaching the mandatory retirement age, or would avail of optional voluntary retirement. #owhere can it be
deduced from the C5" that those employees whose employment was terminated through one of the authoriHed
causes are entitled to retirement benefits. )n fact, :ection - of the afore'quoted "rticle @); specifically provides
that retrenched employees shall be given two <2= months pay for every year of service. :ection - shows the
intention of the parties to e?clude retrenched employees, like herein petitioners, from receiving retirement
benefits under the e?isting retirement plan as set forth in :ection ,.22 <)talics supplied=
:imilarly, in this case, there is also nothing in the C5" which would indicate that those employees whose
services were terminated by reason of redundancy are entitled to retirement gratuity. "s in :uareH, :ections ,
and - of "rticle @); of the C5" of the parties herein separately provide for the amount of benefits to be
received by retired employees on the one hand and those who were terminated due to retrenchment, closure of
business, merger, redundancy, or installation of labor'saving device on the other. )n short, :ections , and -
clearly spell out the difference in the treatment of employees who retired as provided in :ection , and those who
were constrained to leave the company due to any of the causes enumerated in :ection -. :uch difference in the
treatment, as well as in the corresponding pay or gratuity, indicates the partiesN intention to e?clude retired
employees from receiving separation pay and vice versa. " contrary construction would distort the clear intent of
the parties and render useless the classification specifically spelled out in the C5".
The same ruling was arrived at in :alomon v. "ssociate of )nternational :hipping Lines, )ncorporated. 23 :ection
, of the partiesN C5" in that case provides for separation pay in case an employee is separated from the service
for cause, i.e., redundancy. :ection -, on the other hand, prescribes the amount of retirement benefits for
employees who have rendered at least ,6 years of continuous service in the association. This Court held that, as
prescribed by the C5", the employees are entitled only to either separation pay, if they are terminated for cause,
or optional retirement benefits, if they rendered at least ,6 years of continuous service. :ince they were
separated from the service for cause, the employees are entitled to separation pay only.
The C" opined that since respondents were not at fault and had nothing to do with their separation from the
company by reason of redundancy, they are therefore entitled to full retirement benefits. )t anchored its
conclusion on :ection 6 of "rticle ; of the Retirement 8ratuity lan, which reads.
"n employee, e?ecutive or supervisory personnel, who may be separated from the service of the Company for
any cause not attributable to his own fault or misconduct shall be entitled to full benefits as provided for under
"rticle ;, :ections , and 2 above, provided, however, that any employee, e?ecutive or supervisory personnel
separated for cause shall not be entitled to any benefit as provided for under said "rticle ;, :ections ,, 2 and
-.24
Fowever, the same Retirement 8ratuity lan provides that in case Luellig is required by law or by lawful order
to pay separation pay, its employees shall not be entitled to both separation pay and the benefits provided
therein. The employees are entitled only either to separation pay or retirement gratuity, depending on their own
choice. 5ut they cannot have both. :ection 2, "rticle ;)) of the Retirement 8ratuity lan on %ffect of :ocial
Legislation is clear on the matter. Thus.
:ection 2 P $ther Laws and+or 8overnment "wards, Rules and Regulations
%?cept only as provided in the ne?t preceding :ection hereof, in the event that the Company is required under
the laws or by lawful order of competent authority to give to its employees any separation pay, or other benefits
or emoluments similar or analogous to those herein already provided, the employees concerned shall not be
entitled to both what the law or the lawful order of competent authority requires the company to give and the
benefits herein provided, but shall be entitled only to the benefit of his choice.25 <)talics supplied=
Faving chosen and accepted redundancy pay, respondents are thus precluded from seeking payment of
retirement pay. /oreover, as correctly pointed out by Luellig, :ection 6, "rticle ; of the ,349 Retirement
8ratuity lan was already superseded by :ection 2, "rticle @); of the ,336 C5", a much later contract which
reiterates the e?press prohibition against &double recovery.& )n addition, unlike in "quino where the employees
have served the company for at least ten years making them eligible for retirement, 26 none of the respondents
herein appear to be qualified for optional retirement. Onder :ection ,JaK and JbK, "rticle @); of the C5" earlier
quoted, to be entitled to retirement gratuity, the employee must have reached 41 years of age, resigned, suffered
illness, or opted to retire even before reaching the age of 41 but has been in the employ of Luellig for at least 26
years. #one of the respondents who initiated the complaints appear to have met the above requirements. They
never even bothered to controvert LuelligNs contention that they are not qualified for retirement.
Respondents are not entitled to the monetary equivalent of their unused sick leave credits.
The pertinent provisions of "rticle ;))) of the C5" on unused sick leave provide.
:ection 2JaK P :ick leave P %very regular employee who has rendered.
,. $ne J,K year to fifteen J,6K years of continuous and satisfactory service shall be entitled
to fifteen J,6K working days sick leave with pay for every yearE
2. :i?teen J,4K years and above of continuous and satisfactory service shall be entitled to
twenty J21K working days sick leave with pay for every yearE provided that the illness is
certified by the C$/"#* physician or in e?ceptional cases, by any other duly licensed
physician.
JbK Onspent sick leave shall accrue to a period not e?ceeding one hundred twenty J,21K working days.
JcK "n employee who is si?ty J41K years old and due for compulsory retirement shall be entitled to
encashment of unused sick leave based on his+her service record in the company in accordance with
the following schedule.
,. ,4 years and above of continuous service P ,11A encashment up to a ma?imum of four
J0K months basic salary
2. ,, years to ,6 years of continuous service P 61A encashment up to a ma?imum of two
J2K months basic salary
-. ,1 years and below of continuous service P 61 A encashment up to a ma?imum of one
J,K month basic salary
JdK "n employee who retires before reaching the age of si?ty J41K shall be entitled to encashment of
unused sick leave based on his+her service record in the C$/"#* in accordance with the following
schedule.
,. 26 years and above of continuous service P ,11A encashment up to a ma?imum of one
and one'half J,QK months basic salary
2. ,, years to 20 years of continuous service P 61A encashment up to a ma?imum of one
J,K month basic salary provided the retirement is due to illness or disability as certified by
the company physician.27
"ccording to the C", since &the above enumerations fall short of providing in the instances of the other causes
of separation from service such as redundancy as in the case of the petitioners, death, merger, installation of
labor cost'saving device, retrenchment or closure of business, all of which are causes not attributable and beyond
the control of the employees,&28 the respondents should be given the monetary equivalent of their unused sick
leave.
This Court cannot agree.
The C"Ns ruling in effect put something into the C5" that is not written in it, contrary to the old and familiar
Latin ma?im of e?pressio unius est e?clusio alterius. The e?press mention of one person, thing, act, or
consequence e?cludes all others. ut differently, where the terms are e?pressly limited to certain matters, it may
not, by interpretation or construction, be e?tended to other matters. )n this case, "rticle ;))) of the C5" covers
only <,= an employee who is 41 years old and due for compulsory retirementE <2= an employee who retires prior
to attaining the compulsory retirement age but has served at least 26 yearsE and, <-= an employee who retires
before attaining compulsory retirement age due to illness or disability. #ecessarily, the enumeration cannot be
e?tended to include those who will be leaving the company due to redundancy, death, merger, installation of
labor cost'saving device, retrenchment, or closure of business as mistakenly ruled by the C".
"s the law between the parties, the C5" must be strictly complied with.
)t is a familiar and fundamental doctrine in labor law that the C5" is the law between the parties and they are
obliged to comply with its provisions. )n Fonda hils., )nc. v. :amahan ng /alayang /anggagawa sa
Fonda29 this Court elucidated as follows.
" collective bargaining agreement Jor C5"K refers to the negotiated contract between a legitimate labor
organiHation and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. "s in all contracts, the parties in a C5" may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good
customs, public order or public policy. Thus, where the C5" is clear and unambiguous, it becomes the law
between the parties and compliance therewith is mandated by the e?press policy of the law.30
Fere, and as discussed above, the partiesN C5" provides in no uncertain terms that whatever amount of money
the employees will receive as retirement gratuity shall be chargeable against separation pay. )t is the unequivocal
manifestation of their agreement that acceptance of retirement gratuity forecloses receipt of separation pay and
vice versa. The C5" likewise e?clusively enumerates departing employees who are entitled to the monetary
equivalent of their unused sick leave. These agreements must prevail and be given full effect.
The Release and Muitclaim e?ecuted by each of the respondents remains valid.
)t is true that quitclaims e?ecuted by employees are often frowned upon as contrary to public policy. 5ut that is
not to say that all waivers and quitclaims are invalid as against public policy. 31 Muitclaims will be upheld as
valid if the following requisites are present. &<,= the employee e?ecutes a deed of quitclaim voluntarilyE <2= there
is no fraud or deceit on the part of any of the partiesE <-= the consideration of the quitclaim is credible and
reasonableE and, <0= the contract is not contrary to law, public order, public policy, morals or good customs or
pre>udicial to a third person with a right recogniHed by law.&32
)n this case, there is no showing that Luellig coerced or forced respondents to sign the Release and Muitclaim. )n
fact, there is no allegation that Luellig employed fraud or deceit in making respondents sign the Release and
Muitclaim. $n the other hand, respondents declared that they had received the separation pay in full settlement
of all claims arising from their employment with Luellig. Dor which reason, they have remised, released and
discharged Luellig.
#otably, the Release and Muitclaim represents a reasonable and fair settlement of respondentsN claims. Onder
"rticle 29- of the Labor Code, the employers are required to pay employees separated from employment by
reason of redundancy at least one <,= month pay or at least one <,= month pay for every year of service,
whichever is higher.33 Fere, respondents received ,11A of their one <,= month basic pay for every year of
service, plus a premium ranging from 21A to 96A of such basic pay for every year of service <depending on the
number of years in service=, as separation pay. )n 8oodrich /anufacturing Corporation, v. "tivo,34 this Court
declared that P
)t is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the
terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction.
5ut where it is shown that the person making the waiver did so voluntarily, with full understanding of what he
was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recogniHed
as a valid and binding undertaking.
GF%R%D$R%, the instant etition is hereby 8R"#T%C. The Cecember 0, 211- Cecision and the Buly ,-,
2114 Resolution of the Court of "ppeals in C"'8.R. : #o. 61009 are "##OLL%C and :%T ":)C% and the
Banuary 2,, ,339 Cecision of the #ational Labor Relations Commission in #LRC #CR C" #$. 1,,3,0'34 is
R%)#:T"T%C and "DD)R/%C.
The Temporary Restraining $rder issued by this Court on "ugust 2-,2114 is made %R/"#%#T.
:$ $RC%R%C.
G.R. No. 1995*7 $e34e5ber 2*, 2,12
#/! N!1 P/IIPPIN! $6(AND!R$, INC. a%&7or -!NNIF!R M. !NANO8"O#!, etitioners,
vs.
FRANCI$CO N. DA6IA, Respondent.
R % : $ L O T ) $ #
P!RA$8"!RNA"!, J.:
The etition for Review on Certiorari1 assails the "ugust -,, 21,,2 and #ovember 2-, 21,,3 Resolutions of the
Court of "ppeals <C"= in C"'8.R. : #o. ,,-1,6 which affirmed the :eptember ,1, 2113 Cecision4 and
Cecember ,6, 2113 Resolution5 of the #ational Labor Relations Commission <#LRC= finding respondent
Drancisco #.Cakila <respondent Cakila= to have been illegally dismissed.
The Dactual "ntecedents
Respondent Cakila was employed by petitionercorporation as early as ,397 and terminated for cause in "pril
,337 when the corporation was sold. )n /ay ,337, he was rehired as consultant by the petitioners under a
Contract for Consultancy :ervices6 dated "pril -1, ,337.
Thereafter, in a letter7 dated "pril ,3, 2117, respondent Cakila informed petitioners of his compulsory
retirement effective /ay 2, 2117 and sought for the payment of his retirement benefits pursuant to the Collective
5argaining "greement. Fis request, however, was not acted upon. )nstead, he was terminated from service
effective /ay ,, 2117.
Consequently, respondent Cakila filed a complaint for constructive illegal dismissal, non'payment of retirement
benefits, under+non'payment of wages and other benefits of a regular employee, and damages against petitioners,
The #ew hilippine :kylanders, )nc. and its resident and 8eneral /anager, Bennifer /. %Rano'5ote, before the
#LRC. Fe averred, among others, that the consultancy contract was a scheme to deprive him of the benefits of
regulariHation, claiming to have assumed tasks necessary and desirable in the trade or business of petitioners and
under their direct control and supervision. )n support of his claim, he submitted, among others, copies of his time
cards, $fficial 5usiness )tinerary :lips, Caily "ttendance :heets and other documents prescribing the manner in
which his tasks were to be accomplished under the control of the petitioners and acknowledging his status as a
regular employee of the corporation.
$n the other hand, petitioners, in their position paper,8 asserted that respondent Cakilawas a consultant and not
their regular employee. The latter was not included in petitioners' payroll and paid a fi?ed amount under the
consultancy contract. Fe was not required to observe regular working hours and was free to adopt means and
methods to accomplish his task e?cept as to the results of the work required of him. Fence, no employer'
employee relationship e?isted between them. /oreover, respondentCakila terminated his contract in a letter
dated "pril ,3, 2117, thus, negating his dismissal.
Ruling of the Labor "rbiter
$n /ay 29, 2119, Labor "rbiter Thomas T. Mue, Br. rendered a Cecision9 finding respondent Cakila to have
been illegally dismissed and ordered his reinstatement with full backwages computed from the time of his
dismissal on /ay ,, 2117 until his actual reinstatement as well as the payment of his unpaid benefits under the
Collective 5argaining "greement <C5"=. Fe declared respondent Cakila to be a regular employee on the basis
of the unrebutted documentary evidence showing that he was under the petitioners' direct control and
supervision and performed tasks that were either incidental or usually desirable and necessary in the trade or
business of petitioner corporation for a period of ten years. Faving been dismissed without cause and notice,
respondent Cakila was awarded moral and e?emplary damages in the amount of 61,111.11 each. Fe is also
entitled to avail of thecorporation's retirement benefits upon his reinstatement.
Ruling of the #LRC
$n appeal, the #LRC sustained the Labor "rbiter's <L"= finding that respondent Cakila was a regular employee
and that his dismissal was illegal. Fowever, it noted that since he was already beyond the retirement age, his
reinstatement was no longer feasible. "s such, it ordered the payment of his retirement pay to be computed from
,337 until the date of the decision. /oreover, it found respondent Cakila entitled to reinstatement wages from
the time petitioners received a copy of the L"Ns Cecision on Buly 7, 2119 up to the date of the #LRC's decision.
Thus, it ordered the petitioners to pay respondent Cakila the additional amount of 279,619.--representing
reinstatement wages and retirement pay.10
The petitioners' motion for reconsideration having been denied in the Resolution11 dated Cecember ,6, 2113,
they filed a petition for certiorari12 before the C" raising the following errors.
<,= the complaint should have been dismissed against petitioner Bennifer /. %Rano'5ote absent any
showing of bad faithE
<2= respondent Cakila is not a regular employeeE
<-= respondent was not illegally dismissed as it was the respondent who resignedE and
<0= theL"Ns monetary award has no basis.
Ruling of the C"
)n the Resolution13 dated "ugust -,, 21,,, the C" dismissed the petition for failure to show that the #LRC
committed grave abuse of discretion in affirming the L"'s Cecision. )t found the factual findings of the L" and
the #LRC to be supported by substantial evidence and thus, should be accorded respect and finality. etitioners'
motion for reconsideration therefrom was likewise denied in the Resolution14 dated #ovember 2-, 21,,.
Fence, the instant petition reiterating the arguments raised before the C".
Ruling of the Court
The issue of illegal dismissal is premised on the e?istence of an employer'employee relationship between the
parties herein. )t is essentially a question of fact, beyond the ambit of a petition for review on certiorari under
Rule 06 of the Rules of Court unless there is a clear showing of palpable error or arbitrary disregard of evidence
which does not obtain in this case. Records reveal that both the L" and the #LRC, as affirmed by the C", have
found substantial evidence to show that respondent Cakila was a regular employee who was dismissed without
cause.
Dollowing "rticle 273 of the Labor Code, an employee who is un>ustly dismissed from work is entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages computed from the
time he was illegally dismissed. Fowever, considering that respondent Cakila was terminated on /ay ,, 2117,
or one <,= day prior to his compulsory retirement on /ay 2, 2117, his reinstatement is no longer feasible.
"ccordingly, the #LRC correctly held him entitled to the payment of his retirement benefits pursuant to the
C5". $n the other hand, his backwages should be computed only for days prior to his compulsory retirement
which in this case is only a day. Consequently, the award of reinstatement wages pending appeal must be deleted
for lack of basis.
:imilarly, the Court finds no basis to hold petitioner Bennifer /. %Rano'5ote, resident and 8eneral /anager of
The #ew hilippine :kylanders, )nc., >ointly and severally liable with the corporation for the payment of the
monetary awards. The mere lack of authoriHed or >ust cause to terminate one's employment and the failure to
observe due process do not ipso facto mean that the corporate officer acted with malice or bad faith. 15 There
must be independent proof of malice or bad faith which was not established in this case. erforce, petitioner
Bennifer /. %Rano'5ote cannot be made personally liable for the liabilities of the corporation which, by legal
fiction, has a personality separate and distinct from its officers, stockholders and members. /oreover, for lack of
factual and legal bases, the awards of moral and e?emplary damages cannot also be sustained.16,Swphi,
GF%R%D$R%, premises considered, the petition is "RTL* 8R"#T%C. The assailed "ugust -,, 21,, and
#ovember 2-, 21,, Resolutions of the Court of "ppeals in C"'8.R. : #o. ,,-1,6 are /$C)D)%C as follows.
<,= petitioner Bennifer /. %Rano'5ote is "5:$L;%C from liability for payment of respondent
Drancisco #. Cakila's monetary awardsE
<2= the awards of reinstatement wages pending appeal as well as the moral and e?emplary damages
are ordered C%L%T%CE and
<-= the computation of backwages should be limited only for a day prior to his compulsory
retirement.
The rest of the decision stands.
:$ $RC%R%C.
G.R. No. 179293 Au9u:4 1*, 2,,9
!D!N AMA$, etitioner,
vs.
OC!AN GA#!1A( MARI#IM! AND MANAG!M!N#, INC. Respondent.
C % C ) : ) $ #
CARPIO MORA!$, J.:
$cean 8ateway /aritime and /anagement, )nc. <respondent or the company= hired %den Llamas <petitioner= on
"ugust ,, 211, as an accounting manager.
$n Debruary 3, 2112, /ary "nne T. /acaraig </ary "nne=, respondentNs Chief %?ecutive $fficer, called
petitionerNs attention to her failure, despite repeated demands, to accomplish the long overdue monthly and
annual company financial reports and to remit the companyNs contributions to the :ocial :ecurity :ystem <:::=
and hilFealth for #ovember and Cecember 211,.
:ubsequently or on Debruary 21, 2112, /ary "nne again instructed petitioner to remit on that day or until the
following day the companyNs contributions to the ::: and hilFealth for Banuary 2112. 5y petitionerNs claim,
she failed to comply with the instruction as money for the purpose was not, as of Debruary 21, 2112, credited to
the companyNs account at the bank. The following day, Debruary 2,, 2112, petitioner did not report for work as
she was allegedly suffering from hypertension, hence, she was again unable to remit the contributions.
$n Debruary 24, 2112 /ary "nne sent a memorandum to petitioner charging her with gross and habitual neglect
of duty and+or misconduct or willful disobedience and insubordination, detailing therein the bases of the charges,
and requiring her to submit a written e?planation why she should not be penaliHed or dismissed from
employment.
Complying with the show cause order, petitioner claimed that the delay was due to the fact that she was
overloaded with work and undermanned. Fer e?planation reads.
) was able to submit :::+hilFealth reports and payment from Buly to $ctober, 211, because ) was assisted by
an on'the'>ob trainee who stayed only up to #ovember.
)n spite of my repeated request to give me some help because of my heavy load nothing has been provided. )
have to stay working for ,1 to ,2 hours a day and sometimes for more than ,2 hours without overtime pay >ust
to lessen my load and meet the deadlines.
)n our Debruary 3th meeting, /s. "bigail CarranHa was instructed to help me in order to finish the needed report
for :::+hilhealth for #ovember up to Banuary and she was able to finish on Debruary ,0th after she unloaded
herself of her regular duties and concentrated on the :::+hilhealth reports. Fer regular work was divided
between /s. :onia 8onHales T /r. %fren Robles.
$n Debruary 21th at about ,2.,1 ./. /s. /acaraig gave me, in the presence of Capt. icardal, the finished
work of /s. CarranHa and instructed me to pay the ::: on that day or the ne?t day. ) called up 5) to check if
the remittance from /// has already been credited to our bank account but ) was informed by 5) Dore? Cept.
that the money is not yet credited. The payment was made the following day by /s. /acaraig and /s. CarranHa
since ) was not able to report because ) got sick.
Gith the above e?planation, the penalties imposed therefore, on non'remittance of the contribution to ::: and
hilFealth on time should not be blamed on me.
? ? ? ?
) believe ) did something good for the office when our declaration of gross income submitted to City Fall for the
renewal of our municipal license was lower than our actual gross income for which the office paid a lower
amount. City Fall is only after the gross income which amount ) got from our "gency Dee received during the
year.
)f only ) will be provided with some assistance that ) always request, who will do some of my additional tasks
especially the vouchers T check preparation, reports for :::+hilhealth, $%" T 5)R, and filing, ) could
perform all the tasks given to me by the /anagement and submit all the reports on timeE
? ? ? ?1 <Onderscoring supplied=
$n account of the delay in the remittance of those contributions, respondent was penaliHed in the amount
of,9,691.0, which it charged to petitioner via salary deductions.
:ometime in Buly 2112, /ary "nne instructed petitioner to encash a check and remit the proceeds thereof to the
architect who renovated respondentNs new office in /akati. etitioner instead suggested that she would ask one
of the cadets to encash the check because she was scheduled to go to the 5ureau of )nternal Revenue, and
reminded /ary "nne that it was very risky to pay in cash. )nsisting that she was the boss, /ary "nne told
petitioner to follow her orders. etitioner complied. 8etting wind of the incident, respondentNs president asked
her to give a statement of facts thereof which she did.
"s respondent found petitionerNs e?planation unsatisfactory, it sent her a notice of termination from employment
on Buly -,, 2112,2 anchored on gross and habitual neglect of duty and+or serious misconduct or willful
disobedience+insubordination, drawing, petitioner to file on "ugust 6, 2112 before the #ational Labor Relations
Commission <#LRC= a Complaint3 against respondent and /ary "nne for illegal dismissal, damages and
attorneyNs fees.
:he later amended her complaint to include as cause of action non'payment of overtime pay. 4 :till, in her
osition aper,5 she included illegal deductions as additional cause of action.
etitioner, claiming that she was fired because of the heated discussion between her and /ary "nne, maintained
that her delay in the remittance of the companyNs :::+hilFealth contributions was occasioned by the
circumstances she had spelled out.
Opon the other hand, respondent maintained its >ustification of petitionerNs dismissal, highlighting her failure to
accomplish the companyNs monthly and annual financial reports for 211, reflecting its gross income which is
determinative of the amount to be paid to secure government licenses and permits.
Respecting petitionerNs claim for overtime pay, respondent contended that she, being a managerial employee
and+or a member of the managerial staff, is not entitled thereto.,avvphi,
5y Cecision6 of "pril ,6, 211-, the Labor "rbiter found petitionerNs dismissal to have been for a >ust cause and
with due process. Fowever, he ordered respondent to pay petitionerNs &proportionate ,-th month pay for the year
2111 JsicK and final assistance& in the amount of Thirty Three Thousand Two Fundred Difty esos <--,261=.
$n appeal, the #LRC, finding petitioner to have been illegally dismissed, set aside the Labor "rbiterNs decision
and awarded backwages, separation pay, and ,-th month pay. )t held that petitionerNs dismissal was due to the
heated argument between her and /ary "nne and that she was already penaliHed when she was required to pay
via salary deduction the above'stated fine meted the company.
$n petition for certiorari, the Court of "ppeals nullified the #LRC decision and reinstated the Labor "rbiterNs
decision.7 The appellate court ruled that petitioner neglected her duties not >ust once, but four times.
Durthermore, it held that, following "madeo Dishing Corporation v. #ierra,8 as petitioner occupied a position of
trust and confidence, the company could not be compelled to continuously engage her services which is
detrimental to its interests. etitionerNs motion for reconsideration having been denied by Resolution9 dated
"ugust ,7, 2117, she filed the present petition.10
The petition fails.
Onder "rticle 292 <b= of the Labor Code, negligence must be both gross and habitual to >ustify the dismissal of
an employee. 8ross negligence is characteriHed by want of even slight care, acting or omitting to act in a
situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious
indifference to consequences insofar as other persons may be affected.11
)n the present case, petitioner, as respondentNs "ccounting /anager, failed to discharge her important duty of
remitting :::+hilFealth contributions not once but quadruple times, resulting in respondentNs incurring of
penalties totaling ,9,691.0,, not to mention the employees+membersN contributions being unupdated.
Fer claim of being overworked and undermanned does not persuade. "s noted by respondent, the company had
been in operation for less than three <-= months at the time the negligence and delays were committed, with only
a few transactions and only with one principal, /alaysian /erchant /arine 5hd., hence, its financial and
accounting books should not have been difficult to prepare. /oreover, as claimed by respondent which was not
refuted by petitioner, she failed to remit the contributions as early as #ovember 211, during which time,
however, on'the'>ob trainees were still with the company, hence, her claim of being undermanned behind such
failure does not lie.
"s to the delay in the remittance of :::+hilFealth contributions for Banuary 2112, which petitioner claims to be
due to the fact that the money intended for payment was not yet credited as of Debruary 21, 2112 to respondentNs
bank account, as well as to her absence the following day or on Debruary 2,, 2112 due to hypertension, the
Court is not persuaded, given that at that time, she had already been in delay in the performance of her duties.
$n petitionerNs declaration that &) believe that ) did something good for our office when our declaration of gross
income submitted to City Fall for the renewal of our municipal license was lower than our actual gross income
for which the office had paid a lower amount,& the Court finds the same as betraying a streak of dishonesty in
her. )t partakes of serious misconduct.
? ? ? /isconduct has been defined as improper or wrong conduct. )t is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and
not mere error of >udgment. The misconduct to be serious must be of such grave and aggravated character and
not merely trivial and unimportant. :uch misconduct, however serious, must nevertheless be in connection (ith
the employee8s (or9 to constitute just cause for his separation. Thus, for misconduct or improper behavior to be
a >ust cause for dismissal, <a= it must be seriousE <b= must relate to the performance of the employeeNs dutiesE and
<c= must show that the employee has become unfit to continue working for the employer. )ndeed, an employer
may not be compelled to continue to employ such person whose continuance in the service would be patently
inimical to his employerNs interest.12 <%mphasis supplied=
Dor her act of understating the companyNs profits or financial position was willful and not a mere error of
>udgment, committed as it was in order to &save& costs, which to her warped mind, was supposed to benefit
respondent. )t was not merely a violation of company policy, but of the law itself, and put respondent at risk of
being made legally liable. ;erily, it warrants her dismissal from employment as respondentNs "ccounting
/anager, for as correctly ruled by the appellate court, an employer cannot be compelled to retain in its employ
someone whose services is inimical to its interests.
"s to whether due process was accorded petitioner, the Court rules in the affirmative. Dar from being arbitrary,
the termination of her services was effected after she was afforded the opportunity to, as she did, submit her
e?planation on why she should not be disciplined or dismissed, which e?planation, it bears reiteration, was,
however, found unsatisfactory.
GF%R%D$R%, the /ay 26, 2117 Cecision of the Court of "ppeals reinstating the "pril ,6, 211- decision of the
Labor "rbiter is "DD)R/%C.
:$ $RC%R%C.
G.R. No. 163123. A3r;. 15, 2,,5
P/IIPPIN! /!A#/ IN$URANC! CORPORA#ION, etitioners,
vs.
C/IN!$! G!N!RA /O$PI#A AND M!DICA C!N#!R, Respondents.
C % C ) : ) $ #
CORONA, J.<
5efore us is a petition for review on certiorari under Rule 06 of the Rules of Court assailing the /arch 23, 2110
decision1 of the Court of "ppeals, the dispositive portion of which read.
FOR #/! FOR!GOING DI$QUI$I#ION$, the petition is GRAN#!D, the hilippine Fealth )nsurance
Corporation2is hereby ordered to give due course to petitionerNs, Chinese 8eneral Fospital and /edical Center,
claims for the period from ,393 to ,332, amounting to D$ORT%%# /)LL)$# TG$ FO#CR%C #)#%T*
$#% TF$O:"#C D);% FO#CR%C :)@T* %)8FT %:$: and 7,+,11 %:$: <,0,23,,649.7,=.3
The facts, as culled by the Court of "ppeals, follow.
$n Debruary ,0, ,336, Republic "ct #o. 7976, otherwise known as &"n "ct )nstituting a #ational Fealth
)nsurance rogram for all Dilipinos and %stablishing the hilippine Fealth )nsurance Corporation Dor the
urpose,& was approved and signed into law. "s its guiding principle, it is provided in :ection 2 thereof, thus.
&:ection 2. Ceclaration of rinciples and olicies. P :ection ,,, "rticle @))) of the Constitution of the Republic
of the hilippines declares that the state shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social services available to all the
people at affordable cost. riority for the needs of the underprivileged, sick, elderly, disabled, women, and
children should be recogniHed. Likewise, it shall be the policy of the :tate to provide free medical care to
paupers.
rior to the enactment of R.". 7976. C8F4 had been an accredited health care provider under the hilippine
/edical Care Commission </CC=, more popularly known as /edicare. "s defined by R.". 7976, a health care
provider refers to a health care institution, which is duly licensed and accredited devoted primarily to the
maintenance and operation of facilities for health promotion, prevention, diagnosis, treatment and care of
individuals suffering from illness, disease, in>ury, disability or deformity, or in need of obstetrical or other
medical and nursing care.5
"s such, petitioner6 filed its /edicare claims with the :ocial :ecurity :ystem <:::=, which, together with the
8overnment :ervice )nsurance :ystem <8:):=, administered the Fealth )nsurance Dund of the //C. Thus,
petitioner filed its claim from ,393 to ,332 with the :::, amounting to %)8FT /)LL)$# $#% FO#CR%C
TG$ TF$O:"#C :%;%# FO#CR%C %)8FT*'TG$ and ,1+,11 <9,,12,792.,1=. )ts application for the
payment of its claim with the ::: was overtaken by the passage of R.". 7976, which in :ection 6, and 62,
provides.
:%CT)$# 6,. /erger. P Githin si?ty <41= days from the promulgation of the implementing rules and
regulations, all functions and assets of the hilippine /edical Care Commission shall be merged with those of
the Corporation <F)LF%"LTF= without need of conveyance, transfer or assignment. The /CC shall
thereafter cease to e?ist.
The liabilities of the /CC shall be treated in accordance with e?isting laws and pertinent rules and regulations.
???
:%CT)$# 62. Transfer of Fealth )nsurance Dunds of the ::: and 8:):. P The Fealth )nsurance Dunds being
administered by the ::: and 8:): shall be transferred to the Corporation within si?ty <41= days from the
promulgation of the implementing rules and regulations. The ::: and 8:): shall, however, continue to perform
/edicare functions under contract with the Corporation until such time that such functions are assumed by the
Corporation ???.
5eing the successor of the /CC, F)LF%"LTF, in compliance with the mandate of R.". 7976,7 promulgated
the rules and regulations implementing said act, :ection 62 of which provides.
:%CT)$# 62. Dee for :ervice 8uidelines on Claims ayment. P ??? b. "ll claims for payment of services
rendered shall be filed within si?ty <41= calendar days from the date of discharge of the patient. $therwise, the
claim shall be barred from payment e?cept if the delay in the filing of thee claim is due to natural calamities and
other fortuitous events. )f the claim is sent through mail, the date of the mailing as stamped by the post office of
origin shall be considered as the date of the filing.
)f the delay in the filing is due to natural calamities or other fortuitous events, the health care provider shall be
accorded an e?tension period of si?ty <41= calendar days.
)f the delay in the filing of the claim is caused by the health care provider, and the /edicare benefits had already
been deducted, the claim will not be paid. )f the claim is not yet deducted, it will be paid to the member
chargeable to the future claims of the health care provider.
)nstead of giving due course to petitionerNs claims totaling to %)8FT /)LL)$# $#% FO#CR%C TG$
TF$O:"#C :%;%# FO#CR%C %)8FT*'TG$ and ,1+,11 <9,,12,792.,1=, only $#% /)LL)$# TFR%%
FO#CR%C :)@T*'D);% TF$O:"#C D);% FO#CR%C D)DT*':)@ and -2+,11 esos <,,-46,664.-2= was
paid to petitioner, representing its claims from ,393 to ,332 <sic=.
etitioner again filed its claims representing services rendered to its patients from ,339 to ,333, amounting to
:%;%# /)LL)$# D);% FO#CR%C D)DT* D$OR TF$O:"#C TFR%% FO#CR%C D$RT* TG$ and
3-+,11 esos <7,660,-02.3-=. Dor being allegedly filed beyond the si?ty <41= day period allowed by the
implementing rules and regulations, :ection 62 thereof, petitionerNs claims were denied by the Claims Review
Onit of hilhealth in its letter dated Banuary ,0, 211, thus.
&???
This pertains to your three hundred seventy three hilhealth medicare claims <-7-= which were primarily denied
by Claims rocessing Cepartment for late filing and for which you made an appeal to this office. Ge regret to
inform you that after thorough evaluation of your claims, JyourK -4, medicare claims were 32)623, due to the
fact that the claims (ere filed - to +: ; months after dischar#e. Fowever, the remaining medicare claims have
been forwarded to Claims rocessing Cepartment <CC= for payment.
:%CT)$# 62 <5= Rule 62 <5= Rule ;))) of the )mplementing Rules and Regulations of 7976 provides that all
claims for payment of services rendered shall be filed (ithin si4ty *:,1 days from the day of dischar#e of the
patient. Fowever, hilhealth Circular #o, -,'", series of ,339, state that all claims pendin# (ith Philhealth as
of !eptember +-, +<<0 and claims (ith dischar#e dates from !eptember to 3ecember =+, +<<0 are #iven one
hundred t(enty *+.,1 days from the date of dischar#e to file their claim. )n as much as we would like to grant
your request for reconsideration, the Corporation could no longer e?tend the period of filing ???.
etitionerNs claim was denied with finality by F)LF%"LTF in its assailed decision dated Bune 4, 2111.
)n a petition for review under Rule 0- of the Rules of Court, the Court of "ppeals ordered herein petitioner
hilippine Fealth )nsurance Corporation <hilhealth= to pay the claims in the amount of Dourteen /illion Two
Fundred #inety'one Thousand Dive Fundred :i?ty'eight esos and 7,+,11 <,0,23,,649.7,=, principally on the
ground of liberal application of the 41'day rule under :ection 62 of R" 7976Ns )mplementing Rules and
Regulations. "ccording to the Court of "ppeals.
The avowed policy in the creation of a national health program is, as provided in :ection ,,, "rticle @))) of the
,397 Constitution, to adopt an integrated and comprehensive approach to health development which shall
endeavor to make essential goods, health and other social services a=a;.ab.e 4o a.. 3eo3.e a4 a>>or&ab.e ?o:4. To
assist the state in pursuing this policy, hospitals and medical institutions such as herein petitioner are accredited
to provide health care. )t is true, as aptly stated by the $8CC, that petitioner was not required by the government
to take part in its program, it did so voluntarily. 5ut the fact that the government did not &twist& petitionerNs arm,
so to speak, to participate does not make petitionerNs participation in the program less commendable, considering
that at rate F)LF%"LTF is denying claims of health care givers, it is more risky rather than providential for
health care givers to take part in the governmentNs health program.
)t is $ur firmly held view that the policy of the state in creating a national health insurance program would be
better served by granting the instant petition. Thus, it is noteworthy to mention that health care givers are
threatening to &boycott& F)LF%"LTF, reasoning that the claims approved by F)LF%"LTF are not
commensurate to the services rendered by them to its members. Thus, how can these accredited health care
givers be encouraged to serve an increasing number of members when they end up on the losing end of this
venture. Ge must admit that the costs of operating these medical institutions cannot be taken lightly. They must
also earn a modicum amount of profit in order to operate properly.
"gain, it is trite to emphasiHe that essentially, the purpose of the national health insurance program is to provide
members immediate medical care with the least amount of cash e?pended. Thus, with F)LF%"LTF,
members+patients need only to present their card to prove their membership and the accredited health care giver
is mandated by law to provide the necessary medical assistance, said health care giver shouldering the
F)LF%"LTF part of the bill. Fowever, it is the members+patients who bear the brunt. Thus, they are made to
shoulder the F)LF%"LTF part of the bill, and the refund thereof is sub>ect to whether or not the claims of the
health care providers are approved by F)LF%"LTF. This is blatantly contrary to the very purpose for which
the #ational Fealth )nsurance rogram was created.8
? ? ? ? ? ? ? ? ?
Ge agree.
The state policy in creating a national health insurance program is to grant discounted medical coverage to all
citiHens, with priority to the needs of the underprivileged, sick, elderly, disabled, women and children, and free
medical care to paupers9.
The very same policy was adopted in R" 797610 which sought to.
a= provide all citiHens of the hilippines with the mechanism to gain financial access to health servicesE
b= create the #ational Fealth )nsurance rogram to serve as the means to help the people pay for the health
servicesE
c= prioritiHe and accelerate the provision of health services to all Dilipinos, especially that segment of the
population who cannot afford such servicesE and
d= establish the hilippine Fealth )nsurance Corporation that will administer the program at central and local
levels.11
To assist the state in pursuing the aforementioned policy, health institutions were granted the privilege of
applying for accreditation as health care providers.12 Respondent Chinese 8eneral Fospital and /edical Center
<C8F= was one of those which received such accreditation.
Onder the rules promulgated by the hilhealth 5oard pursuant to R" 7976, any claim for payment of services
rendered <to a patient= shall be filed within si?ty <41= calendar days from the date of discharge of the patient.
$therwise, the claim is barred.13
5ut before a claim is filed with petitioner hilhealth for services already rendered, an accredited health care
provider like respondent C8F is required to.
a. accomplish a hilhealth claim formE
b. accomplish an itemiHed list of the medicines administered to and medical supplies used by the patient
concerned, indicating therein the quality, unit, price and total price corresponding theretoE
c. require the patient concerned and his+her employer to accomplish and submit a hilhealth member+employer
certificationE
d. in case the patient gave birth, require her to submit a certified true copy of the childNs birth certificateE
e. in case the patient died, require the immediate relatives to submit a certified true copy of the deceasedNs death
certificateE and
f. in case a memberNs dependent is hospitaliHed for which the member seeks coverage, require the member to
submit proof of relationship to the patient and to e?ecute an affidavit of support.14
"part from the foregoing requirements which often necessitate securing documents from other government
offices, and the fact that most patients are unable to immediately accomplish and submit the required documents,
an accredited health care provider like C8F has to contend with an average of about a thousand members and+or
dependents seeking medical treatment for various illnesses per month.
Onder these circumstances, it is unreasonable to e?pect respondent C8F to comply ,11A of the time with the
prescribed 41'day rule of hilhealth. Cespite the prescribed standard procedures, respondent has no assurance of
the membersN prompt submission of the required documents. This factor is completely beyond its control. There
will always be delay not attributable to respondent.
The unreasonably strict implementation of the 41'day rule, without regard to the causes of delay beyond
respondentNs control, will be counter'productive to the long'term effectiveness of the #F). )nstead of placing a
premium on participation in the rogram, hilhealth punishes an accredited health provider like C8F by
refusing to pay its claims for services already rendered. Onder these circumstances, no accredited provider will
gamble on honoring claims with delayed supporting papers U no matter how meritorious U knowing that
reimbursement from hilhealth will not be forthcoming.
This Court will not hesitate, whenever necessary, to allow a liberal implementation of the rules and regulations
of an administrative agency in cases where their un>ustifiably rigid enforcement will result in a deprivation of
legal rights. )n this case, respondent had already rendered the services for which it was filing its claims.
Technicalities should not be allowed to defeat respondentNs right to be reimbursed, specially since petitionerNs
charter itself guarantees such reimbursement.
" careful reading of R" 7976 shows that the la( itself does not provide for any specific period (ithin (hich to
file claims. Ge can safely presume therefore that the period for filing was not per se the principal concern of the
legislature. /ore important than mere technicalities is the realiHation of the state policy to provide hilhealth
members with the requisite medical care at the least possible cost. Truly, nothing can be more disheartening than
to see the "ctNs noble ob>ective frustrated by the overly stringent application of technical rules.
%he fact is that it (as not RA /0/- itself but !ection -. of its 6mplementin# Rules and Re#ulations (hich
established the :,5day cut5off for the filin# of claims.
Ghile it is doctrinal in administrative law that the rules and regulations of administrative bodies interpreting the
law they are entrusted to enforce have the force of law15, these issuances are by no means iron'clad norms.
"dministrative bodies themselves can and have in fact &bent the rules& for reasons of public interest. $n
:eptember ,6, ,339, for instance, petitioner issued hilhealth Circular #o. -,'".16
)# $RC%R to allow members of the #ational Fealth )nsurance rogram <#F)= sufficient time to complete all
documents to support their medical care claims, hilhealth is temporarily suspending the si?ty <41='day
reglementary period for filing claims.
1@;.e $e?4;o% 52 AbB, Ru.e 'III o> 4@e I53.e5e%4;%9 Ru.e: a%& Re9u.a4;o%: o> R.A. 7875 3ro=;&e: 4@a4 a..
?.a;5: >or 3ay5e%4 o> :er=;?e: :@a.. be >;.e& C;4@;% 6, ?a.e%&ar &ay: >ro5 4@e &ay o> &;:?@ar9e o> a
3a4;e%4, 4@ere ;: a %ee& 4o eD4e%& 4@;: 3er;o& 4o 5;%;5;Ee 4@e ;%?;&e%?e o> .a4e >;.;%9 &ue 4o 5e5ber:F
3er:o%a. &;>>;?u.4;e: a%& ?;r?u5:4a%?e: beyo%& 4@e;r ?o%4ro.. <emphasis ours=
"nd then again, on "pril 21, ,333, hilhealth Circular #o. 61 was issued.
#O MINIMI)! 4@e ;%?;&e%?e o> .a4e >;.;%9 o> ?.a;5: &ue 4o 5e5ber:F 3er:o%a. &;>>;?u.4;e: ;% 3re3ar;%9 4@e
%ee&e& &o?u5e%4:, P@;.@ea.4@ ;: eD4e%&;%9 4@e 3er;o& >or >;.;%9 o> ?.a;5: ??? <emphasis ours=
The above circulars indubitably recogniHed the necessity of e?tending the 41'day period because of the
difficulties encountered by members in completing the required documents, often due to circumstances beyond
their control. etitioner appeared to be well aware of the problems encountered by its members in complying
with the 41'day rule. Durthermore, implicit in the wording of the circulars was the cognition of the fact that the
fault was not always attributable to the health care providers like C8F but to the members themselves.
Celay on the part of members is an ordinary occurrence. There is no need to make a mountain out of a molehill
as far as this particular point is concerned. To this day, members continue to encounter delay in submitting their
documents. There was therefore no compelling reason for the e?acting and meticulous enforcement of the rule
when, in at least two instances, petitioner itself implemented it liberally and on the same ground that it was using
against respondent.
etitioner likewise contends that respondent failed to e?haust administrative remedies before resorting to >udicial
intervention. Ge disagree.
Onder the doctrine of e?haustion of administrative remedies, an administrative decision must first be appealed to
the administrative superiors at the highest level before it may be elevated to a court of >ustice for review.
This doctrine, however, is a relative one and its fle?ibility is conditioned on the peculiar circumstances of a
case.17There are a number of instances when the doctrine has been held to be inapplicable. "mong the
established e?ceptions are.
,= when the question raised is purely legalE
2= when the administrative body is in estoppelE
-= when the act complained of is patently illegalE
0= when there is urgent need for >udicial interventionE
6= when the claim involved is smallE
4= when irreparable damage will be sufferedE
7= when there is no other plain, speedy and adequate remedyE
9= C@e% :4ro%9 3ub.;? ;%4ere:4 ;: ;%=o.=e&G
3= when the sub>ect of the controversy is private landE
,1= in 7uo (arranto proceedings.18
"s e?plained by the appellate court.
)t is $ur view that the instant case falls as one of the e?ceptions, concerning as it does public interest. "s
mentioned earlier, although they were not made parties to the instant case, the rights of millions of Dilipinos who
are members of F)LF%"LTF and who obviously rely on it for their health care, are considered, nonetheless,
parties to the present case. This Court is mandated herein to take conscious and detailed consideration of the
interplay of the interests of the state, the health care giver and the members. Gith these in mind, Ge hold that the
greater interest of the greater number of people, mostly members of F)LF%"LTF, is paramount.
Durthermore, when the representatives of herein petitioner met with Cr. %nrique Lalamea, F)LF%"LTFNs
resident and Chief %?ecutive $fficer, he informed them that, in lieu of protest to be filed directly with him, the
representatives could make representations with the $ffice of the resident, which petitioner did to no avail,
considering that the formal protest filed was referred back by the $ffice of the resident to Cr. Lalamea. 5eing
then the head of F)LF%"LTF, and e?pected to have an intimate knowledge of the law and the rules creating
the #ational Fealth )nsurance rogram, under which F)LF%"LTF was created, he instructed herein petitioner
to pursue a remedy not sanctioned by the rules and not in accord with the rule of e?haustion of administrative
remedies. )n so doing, F)LF%"LTF is deemed estopped from assailing the instant petition for failure to
e?haust administrative remedies when F)LF%"LTF itself, through its president, does not subscribe to it.19
There is no need to belabor the fact that the baseless denial of respondentNs claims will be gravely disturbing to
the health care industry, specially the providers whose claims will be unpaid. The unfortunate reality is that there
are today some health care providers who admit numbers for treatment and+or confinement yet require them to
pay the portion which ought to be shouldered by hilhealth. " refund is made only if their claim is first paid, due
to the apprehension of not being reimbursed. :imply stated, a member cannot avail of his benefits under the
#F) at the time he needs it most.
Ge cannot turn a deaf ear to respondentNs plea for fairness which essentially demands that its claims for services
already rendered be honored as the #ational Fealth )nsurance rogram law intended.
1/!R!FOR!, the assailed decision of the Court of "ppeals is hereby "DD)R/%C. etitioner is hereby
ordered to pay respondentNs claims representing services rendered to its members from ,393 to ,332.
#o costs.
:$ $RC%R%C.
G.R. No. 1926,1 -u%e 3, 2,13
P/IIPPIN! -OURNAI$#$, INC., etitioner,
vs.
-OURNA !MPO(!!$ UNION A-!UB, FOR I#$ UNION M!M"!R, MIC/A!
AFAN#!, Respondents.
C % C ) : ) $ #
"!R$AMIN, J.:
The coverage of the term legal dependent as used in a stipulation in a collective bargaining agreement <C5"=
granting funeral or bereavement benefit to a regular employee for the death of a legal dependent, if the C5" is
silent about it, is to be construed as similar to the meaning that contemporaneous social legislations have set.
This is because the terms of such social legislations are deemed incorporated in or adopted by the C5".
The decision of the Court of "ppeals <C"= under review summariHes the factual and procedural antecedents, as
follows.
Complainant Budith ulido alleged that she was hired by respondent as proofreader on ,1 Banuary ,33,E that she
was receiving a monthly basic salary of ',6,03-.44 plus ',66.11 longevity pay plus other benefits provided by
law and their Collective 5argaining "greementE that on 2, Debruary 211-, as union president, she sent two
letters to resident 8loria "rroyo, regarding their complaint of mismanagement being committed by )B
e?ecutiveE that sometime in /ay 211-, the union was furnished with a letter by :ecretary :ilvestre "fable, Br.
head of residential /anagement :taff </:=, endorsing their letter'complaint to $mbudsman :imeon ;.
/arceloE that respondents took offense and started harassments to complainant union presidentE that on -1 /ay
211-, complainant received a letter from respondent Dundador :oriano, )nternational %dition managing editor,
regarding complainantNs attendance recordE that complainant submitted her reply to said memo on 12 Bune 211-E
that on 14 Bune 211-, complainant received a memorandum of reprimandE that on 10 Buly 211-, complainant
received another memo from /r. :oriano, for not wearing her company )C, which she replied the ne?t day 16
Buly 211-E that on 10 "ugust 211-, complainant again received a memo regarding complainantNs tardinessE that
on 16 "ugust 211-, complainant received another memorandum asking her to e?plain why she should not be
accused of fraud, which she replied to on 17 "ugust 211-E and that on the same day between -.11 to 0.11 ./.,
/r. %rnesto &%stong& :an "gustin, a staff of FRC handed her termination paper.
Complainant added that in her thirteen <,-= years with the company and after so many changes in its
management and e?ecutives, she had never done anything that will cause them to issue a memorandum against
her or her work attitude, more so, reasons to terminate her servicesE that she got dismissed because she was the
Onion resident who was very active in defending and pursuing the rights of her union members, and in fighting
against the abuses of respondent Corporate $fficersE and that she got the ire of respondents when the employees
filed a complaint against the Corporate $fficers before /alacaRang and which was later indorsed to the $ffice
of the $mbudsman.
The second complainant /ichael L. "lfante alleged that he started to work with respondents as computer
technician at /anagement )nformation :ystem under manager #eri Torrecampo on ,4 /ay 2111E that on ,6
Buly 211,, he was regulariHed receiving a monthly salary of 3,171.11 plus other monetary benefitsE that
sometime in 211,, Rico agkalinawan replaced Torrecampo, which was opposed by complainant and three other
co'employeesE that agkalinawan took offense of their ob>ectionE that on 22 $ctober 2112, complainant "lfante
received a memorandum from agkalinawan regarding his e?cessive tardinessE that on ,1 Bune 211-,
complainant "lfante received a memorandum from %?ecutive ;ice'resident "rnold 5anares, requiring him to
e?plain his side on the evaluation of his performance submitted by manager agkalinawanE that one week after
complainant submitted his e?planation, he was handed his notice of dismissal on the ground of &poor
performance&E and that complainant was dismissed effective 29 Buly 211-.
Complainant "lfante submitted that he was dismissed without >ust cause.
Respondents, in their position paper, averred that complainants ulido and "lfante were dismissed for cause and
with due process.
Gith regard to complainant ulido, respondents averred that in a memorandum dated -1 /ay 211-, directed
complainant to e?plain her habitual tardiness, at least 76 times from Banuary to /ay of 211-. )n a memorandum,
dated 14 Bune 211-, directed complainant to observe the - p.m. rule to avoid grammatical lapses, use of stale
stories >ust to beat the ,1.11 p.m. deadline. )n the same memorandum complainant was given the warning that
any repeated violation of the rules shall be dealt with more severely. $nce again, in a memorandum, dated 10
"ugust 211-, complainant ulido was required to e?plain why no disciplinary action should be taken against her
for habitual tardiness P ,9 times out of the 2- reporting days during the period from 27 Bune P 27 Buly 211- and
on 16 "ugust 211-, complainant was directed to e?plain in writing why complainant should not be
administratively sanctioned for committing fraud or attempting to commit fraud against respondents.
Respondents found complainantNs e?planations unsatisfactory. $n 17 "ugust 211-, respondents dismissed
complainant ulido for habitual tardiness, gross insubordination, utter disrespect for superiors, and committing
fraud or attempting to commit fraud which led to the respondentsN loss of confidence upon complainant ulido.
)n case of complainant "lfante, respondents averred in defense that complainant was dismissed for &poor
performance& after an evaluation by his superior, and after being forewarned that complainant may be removed
if there was no showing of improvement in his skills and knowledge on current technology.
)n both instances, respondents maintained that they did not commit any act of unfair labor practicesE that they
did not commit acts tantamount to interfering, restraining, or coercing employees in the e?ercise of their right to
self'organiHation.
Respondents deny liabilities as far as complainantsN monetary claims are concerned. Concerning violations of the
provision on wage distortion under Gage $rder #o. 3, respondents stressed that complainants were not affected
since their salary is way over the minimum wage.
Gith respect to the alleged non'ad>ustment of longevity pay and burial aid, respondent B) pointed out that it
complies with the provisions of the C5" and that both complainants have not claimed for the burial aid.
Respondents put forward the information that the alleged nonpayment of rest days P every /onday for the past
three <-= years is a matter that is still at issue in #LRC Case #o. 12'101237-'3-, which case is still pending
before this Commission.
Respondents asserted that the respondents "rturo Cela CruH, 5obby Capco, "rnold 5anares, Ruby RuiH'5runo
and Dundador :oriano should not be held liable on account of complainantsN dismissal as they merely acted as
agents of respondent B).1
Opon the foregoing backdrop, Labor "rbiter CoraHon C. 5orbolla rendered her decision on /arch 23, 2114,
disposing thusly.
GF%R%D$R%, foregoing premises considered, >udgment is hereby rendered, finding complainant Budith ulido
to have been illegally dismissed. "s such, she is entitled to reinstatement and backwages from 17 "ugust 211-
up to her actual or payroll reinstatement. To date, complainantNs backwages is 230,-73.60.
Respondent hilippine Bournalist, )nc. is hereby ordered to pay complainant Budith ulido her backwages from
17 "ugust 211- up to her actual or payroll reinstatement and to reinstate her to her former position without loss
of seniority right.
Respondent is further ordered to submit a report to this $ffice on complainantNs reinstatement ten <,1= days from
receipt of this decision.
The charge of illegal dismissal by /ichael "lfante is hereby dismissed for lack of merit.
The charge of unfair labor practice is dismissed for lack of basis.
:$ $RC%R%C.2
Complainant /ichael "lfante <"lfante=, >oined by his labor organiHation, Bournal %mployees Onion <B%O=, filed
a partial appeal in the #ational Labor Relations Commission <#LRC=.3
)n the meantime, on /ay ,1, 2114, petitioner and Budith ulido <ulido=, the other complainant, >ointly
manifested to the #LRC that the decision of /arch 23, 2114 had been fully satisfied as to ulido under the
following terms, namely. <a= she would be reinstated to her former position as editorial staffmember, or an
equivalent position, without loss of seniority rights, effective /ay ,6, 2114E <b= she would go on maternity
leave, and report to work after giving birthE <c= she would be entitled to backwages of ,-1,111.11E and <d= she
would e?ecute the quitclaim and release on /ay ,,, 2114 in favor of petitioner.4 This left "lfante as the
remaining complainant.
$n Banuary -,, 2117, the #LRC rendered its decision dismissing the partial appeal for lack of merit.
B%O and "lfante moved for the reconsideration of the decision, but the #LRC denied their motion on "pril 20,
2117.
Thereafter, B%O and "lfante assailed the decision of the #LRC before the C" on certiorari <C.".'8.R. : #o.
33017=.
$n Debruary 6, 21,1, the C" promulgated its decision in C.".'8.R. : #o. 33017,7 decreeing.
GF%R%D$R%, premises considered, the instant petition is "RTL* 8R"#T%C.
The twin Resolutions dated Banuary -,, 2117 and "pril 20, 2117, respectively, of the Third Civision of the
#ational Labor Relations Commission <#LRC=, in #LRC #CR C" #o. 109796'14 <#LRC #CR Case #o. 11'
,1',,0,-'10=, are /$C)D)%C insofar as the funeral or bereavement aid is concerned, which is hereby
8R"#T%C, but only after submission of conclusive proofs that the deceased is a parent, either father or mother,
of the employees concerned, as well as the death certificate to establish the fact of death of the deceased legal
dependent.
The rest of the findings of fact and law in the assailed Resolutions are hereby "DD)R/%C.
:$ $RC%R%C.
5oth parties moved for reconsideration, but the C" denied their respective motions for reconsideration on Bune
2, 21,1.8
B%O and "lfante appealed to the Court <8.R. #o. ,32079= to challenge the C"Ns dispositions regarding the
legality of. <a= "lfanteNs dismissalE <b= the non'compliance with /inimum Gage $rder #o. 3E and <c= the non'
payment of the rest day.9
$n "ugust ,9, 21,1, the Court denied due course to the petition in 8.R. #o. ,32079 for failure of petitioners to
sufficiently show that the C" had committed any reversible error to warrant the CourtNs e?ercise of its
discretionary appellate >urisdiction.10
The Court denied with finality B%O and "lfanteNs ensuing motion for reconsideration through the resolution of
Cecember 9, 21,1.11 The entry of >udgment in 8.R. #o. ,32079 issued in due course on Debruary ,, 21,,.12
$n its part, petitioner likewise appealed <8.R. #o. ,3241,=, seeking the review of the C"Ns disposition in the
decision of Debruary 6, 21,1 on the granting of the funeral and bereavement aid stipulated in the C5".
)n its petition for review, petitioner maintained that under :ection 0, "rticle @))) of the C5", funeral and
bereavement aid should be granted upon the death of a legal dependent of a regular employeeE that consistent
with the definition provided by the :ocial :ecurity :ystem <:::=, the term legal dependent referred to the spouse
and children of a married regular employee, and to the parents and siblings, ,9 years old and below, of a single
regular employeeE13 that the C5" considered the term dependents to have the same meaning as beneficiaries, as
provided in :ection 6, "rticle @))) of the C5" on the payment of death benefitsE 14 that its earlier granting of
claims for funeral and bereavement aid without regard to the foregoing definition of the legal dependents of
married or single regular employees did not ripen into a company policy whose unilateral withdrawal would
constitute a violation of "rticle ,11 of the Labor Code, 15 the law disallowing the non'diminution of
benefitsE16 that it had approved only four claims from ,333 to 211- based on its mistaken interpretation of the
term legal dependents, but later corrected the same in 2111E17 that the grant of funeral and bereavement aid for
the death of an employeeNs legal dependent, regardless of the employeeNs civil status, did not occur over a long
period of time, was not consistent and deliberate, and was partly due to its mistake in appreciating a doubtful
question of lawE and that its denial of subsequent claims did not amount to a violation of the law against the non'
diminution of benefits.18
)n their comment,19 B%O and "lfante countered that the C5" was a bilateral contractual agreement that could
not be unilaterally changed by any party during its lifetimeE and that the grant of burial benefits had already
become a company practice favorable to the employees, and could not anymore be reduced, diminished,
discontinued or eliminated by petitioner.
)ssue
)n view of the entry of >udgment issued in 8.R. #o. ,32079, B%O and "lfanteNs submissions on the illegality of
his dismissal, the non'payment of his rest days, and the violation of /inimum Gage $rder #o. 3 shall no longer
be considered and passed upon.
The sole remaining issue is whether or not petitionerNs denial of respondentsN claims for funeral and bereavement
aid granted under :ection 0, "rticle @))) of their C5" constituted a diminution of benefits in violation of "rticle
,11 of the Labor Code.
Ruling
The petition for review lacks merit.
The nature and force of a C5" are delineated in Fonda hils., )nc. v. :amahan ng /alayang /anggagawa sa
Fonda,20 thuswise.
" collective bargaining agreement <or C5"= refers to the negotiated contract between a legitimate labor
organiHation and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. "s in all contracts, the parties in a C5" may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good
customs, public order or public policy. Thus, where the C5" is clear and unambiguous, it becomes the law
between the parties and compliance therewith is mandated by the e?press policy of the law.
"ccordingly, the stipulations, clauses, terms and conditions of the C5", being the law between the parties, must
be complied with by them. The literal meaning of the stipulations of the C5", as with every other contract,
control if they are clear and leave no doubt upon the intention of the contracting parties.22
Fere, a conflict has arisen regarding the interpretation of the term legal dependent in connection with the grant
of funeral and bereavement aid to a regular employee under :ection 0, "rticle @))) of the C5", 23 which
stipulates as follows.
:%CT)$# 0. Duneral+5ereavement "id. The C$/"#* agrees to grant a funeral+bereavement aid in the
following instances.
a. Ceath of a regular employee in line of duty P 61,111
b. Ceath of a regular employee not in line of duty P 01,111
c. Ceath of legal dependent of a regular employee P ,6,111. <%mphasis supplied=
etitioner insists that notwithstanding the silence of the C5", the term legal dependent should follow the
definition of it under Republic "ct <R.".= #o. 9292 <:ocial :ecurity Law=,24 so that in the case of a married
regular employee, his or her legal dependents include only his or her spouse and children, and in the case of a
single regular employee, his or her legal dependents include only his or her parents and siblings, ,9 years old
and belowE and that the term dependents has the same meaning as beneficiaries as used in :ection 6, "rticle @)))
of the C5".
Ge cannot agree with petitionerNs insistence.
:ocial legislations contemporaneous with the e?ecution of the C5" have given a meaning to the term legal
dependent. Dirst of all, :ection 9<e= of the :ocial :ecurity Law provides that a dependent shall be the following,
namely. <a= the legal spouse entitled by law to receive support from the memberE <b= the legitimate, legitimated,
or legally adopted, and illegitimate child who is unmarried, not gainfully employed and has not reached 2, of
age, or, if over 2, years of age, is congenitally or while still a minor has been permanently incapacitated and
incapable of self'support, physically or mentallyE and <c= the parent who is receiving regular support from the
member. :econdly, :ection 0<f= of R.". #o. 7976, as amended by R.". #o. 320,,25 enumerates who are the
legal dependents, to wit. <a= the legitimate spouse who is not a memberE <b= the unmarried and unemployed
legitimate, legitimated, illegitimate, acknowledged children as appearing in the birth certificateE legally adopted
or step'children below 2, years of ageE <c= children who are 2, years old and order but suffering from congenital
disability, either physical or mental, or any disability acquired that renders them totally dependent on the
member of our supportE and <d= the parents who are 41 years old or older whose monthly income is below an
amount to be determined by the hilippine Fealth )nsurance Corporation in accordance with the guiding
principles set forth in "rticle ) of R.". #o. 7976. "nd, thirdly, :ection 2<f= of residential Cecree #o. ,,04, as
amended by R.". #o. 923,,dependent for support upon the member or pensionerE <b= the legitimate, legitimated,
legally adopted child, including the illegitimate child, who is unmarried, not gainfully employed, not over the
age of ma>ority, or is over the age of ma>ority but incapacitated and incapable of self'support due to a mental or
physical defect acquired prior to age of ma>orityE and <c= the parents dependent upon the member for
support.,Swphi,
)t is clear from these statutory definitions of dependent that the civil status of the employee as either married or
single is not the controlling consideration in order that a person may qualify as the employeeNs legal dependent.
Ghat is rather decidedly controlling is the fact that the spouse, child, or parent is actually dependent for support
upon the employee. )ndeed, the Court has adopted this understanding of the term dependent in :ocial :ecurity
:ystem v. Ce Los :antos,27 viH.
:ocial :ecurity :ystem v. "guas is instructive in determining the e?tent of the required &dependency& under the
:: Law. )n "guas, the Court ruled that although a husband and wife are obliged to support each other, whether
one is actually dependent for support upon the other cannot be presumed from the fact of marriage alone.
Durther, "guas pointed out that a wife who left her family until her husband died and lived with other men, was
not dependent upon her husband for support, financial or otherwise, during the entire period.
:aid the Court.
)n a parallel case involving a claim for benefits under the 8:): law, the Court defined a dependent as &one who
derives his or her main support from another. /eaning, relying on, or sub>ect to, someone else for supportE not
able to e?ist or sustain oneself, or to perform anything without the will, power, or aid of someone else.& )t should
be noted that the 8:): law likewise defines a dependent spouse as &the legitimate spouse dependent for support
upon the member or pensioner.& )n that case, the Court found it obvious that a wife who abandoned the family
for more than ,7 years until her husband died, and lived with other men, was not dependent on her husband for
support, financial or otherwise, during that entire period. Fence, the Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already separated de facto from her husband cannot be said to
be &dependent for support& upon the husband, absent any showing to the contrary. Conversely, if it is proved that
the husband and wife were still living together at the time of his death, it would be safe to presume that she was
dependent on the husband for support, unless it is shown that she is capable of providing for herself.
Considering that e?isting laws always form part of any contract, and are deemed incorporated in each and every
contract,28 the definition of legal dependents under the aforecited social legislations applies herein in the
absence of a contrary or different definition mutually intended and adopted by the parties in the C5".
"ccordingly, the concurrence of a legitimate spouse does not disqualify a child or a parent of the employee from
being a legal dependent provided substantial evidence is adduced to prove the actual dependency of the child or
parent on the support of the employee.
)n this regard, the differentiation among the legal dependents is significant only in the event the C5" has
prescribed a hierarchy among them for the granting of a benefitE hence, the use of the terms primary
beneficiaries and secondary beneficiaries for that purpose. 5ut considering that :ection 0, "rticle @))) of the
C5" has not included that differentiation, petitioner had no basis to deny the claim for funeral and bereavement
aid of "lfante for the death of his parent whose death and fact of legal dependency on him could be substantially
proved.
ursuant to "rticle ,11 of the Labor Code, petitioner as the employer could not reduce, diminish, discontinue or
eliminate any benefit and supplement being en>oyed by or granted to its employees. This prohibition against the
diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote
their welfare and to afford labor full protection.29 The application of the prohibition against the diminution of
benefits presupposes that a company practice, policy or tradition favorable to the employees has been clearly
establishedE and that the payments made by the employer pursuant to the practice, policy, or tradition have
ripened into benefits en>oyed by them.30 To be considered as a practice, policy or tradition, however, the giving
of the benefits should have been done over a long period of time, and must be shown to have been consistent and
deliberate.31 )t is relevant to mention that we have not yet settled on the specific minimum number of years as
the length of time sufficient to ripen the practice, policy or tradition into a benefit that the employer cannot
unilaterally withdraw.32
The argument of petitioner that the grant of the funeral and bereavement benefit was not voluntary but resulted
from its mistaken interpretation as to who was considered a legal dependent of a regular employee deserves
scant consideration. To be sure, no doubtful or difficult question of law was involved inasmuch as the several
cogent statutes e?isting at the time the C5" was entered into already defined who were qualified as the legal
dependents of another. /oreover, the voluntariness of the grant of the benefit became even manifest from
petitionerNs admission that, despite the memorandum it issued in 211133 in order to &correct& the interpretation
of the term legal dependent, it still approved in 211- the claims for funeral and bereavement aid of two
employees, namely. <a= Cecille 5ulacan, for the death of her fatherE and <b= Charito Cartel, for the death of her
mother, based on its supposedly mistaken interpretation.34
)t is further worthy to note that petitioner granted claims for funeral and bereavement aid as early as ,333, then
issued a memorandum in 2111 to correct its erroneous interpretation of legal dependent under :ection 0, "rticle
@))) of the C5". This notwithstanding, the 211,'2110 C5"35 still contained the same provision granting
funeral or bereavement aid in case of the death of a legal dependent of a regular employee without
differentiating the legal dependents according to the employee's civil status as married or single. The continuity
in the grant of the funeral and bereavement aid to regular employees for the death of their legal dependents has
undoubtedly ripened into a company policy. Gith that, the denial of "lfante's qualified claim for such benefit
pursuant to :ection 0, "rticle @))) of the C5" violated the law prohibiting the diminution of benefits.
GF%R%D$R%, the Court "DD)R/: the decision promulgated on Debruary 6, 21, 1E and $RC%R: petitioner to
pay the costs of suit.
:$ $RC%R%C.
G.R. No. 1*62,2 -u.y 1*, 2,,*
RUFINA PA#I$ FAC#OR(, a%& -!$U$ UCA$, $R. petitioners,
vs.
-UAN AU$I#AIN, respondent.
C % C ) : ) $ #
CARPIO MORA!$, J.<
Drom the Bune 2-, 2111 Cecision1 of the Court of "ppeals in C"'8.R. : #o. 60722 affirming that of the
#ational Labor Relations Commission <#LRC= awarding retirement benefits in the amount of 99,636.11 to
respondent Buan "lusitain <"lusitain=, petitioners Rufina atis Dactory and Besus Lucas, :r. <Lucas= come to this
Court on a petition for review on certiorari.
The antecedent facts are as follows.
)n /arch ,309, "lusitain was hired as a laborer at the Rufina atis Dactory owned and operated by
petitioner Lucas. "fter close to forty three years or on Debruary ,3, ,33,, "lusitain admittedly
tendered his letter of resignation which is quoted verbatim.
Debruary ,3, ,33,
T$. /R. B%:O: LOC":, BR.
"::):T"#T /"#"8%R
ROD)#" "T): D"CT$R*
8entlemen.
) would like to tender my separation letter as a laborer, from your good company effective this 21th of
Debruary ,33,. /ay ) take this opportunity to e?tent my heartfelt thanks to you for having given me
the chance to commit myself to work in your factory from which ) owe varied e?periences that has
made a part of me and be what ) am today. "nticipating your outmost consideration on this matter. )
remain.
;%R* TROL* *$OR:,
<:igned=
BO"# ". "LO:)T")#
R%C%);%C TF% "5$;% :%"R"T)$# L%TT%R $# TF): C"*, D%5RO"R* 21, ,33,.
<:igned=
5*. B%:O: R. LOC":, BR.
"ssistant /anager2
$n /ay 22, ,33,, "lusitain e?ecuted a duly notariHed affidavit of separation from employment and submitted
the same on even date to the ensions Cepartment of the :ocial :ecurity :ystem <:::=. The affidavit reads.
Republic of the hilippines =:::
MueHon City =
"DD)C";)T $D :%"R"T)$# DR$/ %/L$*/%#T
), BO"# ":%R": "LO:)T")# of legal age, 4-, Dilipino and residing at )nt. ,9 Dlores :t., /al. /la,
after having JbeenK sworn to in accordance with law hereby depose and stateE
,. That ) am JaK bonafide member of the :ocial :ecurity :ystem with ::: #umber 1-'
1,17262'1
2. That ) was separated from my last employer ROD)#" "T): D"CT$R* with address at
231 C. "rellano :t., /alabon, /etro /anila on 2'21'3, and thereafter, ) was never again
re'employed.
-. That ) cannot secure a certification of separation from my last employer because ) have
not reached the company applicable age of retirement.
0. That ) am e?ecuting this affidavit to attest to the truth of the foregoing facts and to
support my retirement paper.
DORTF%R "DD)"#T :"*%TF #"O8FT.
<:igned=
"ffiant3
$n Banuary 7, ,33-, Republic "ct #o. 740, <R.". 740,=,4 &"# "CT "/%#C)#8 "RT)CL% 297 $D
R%:)C%#T)"L C%CR%% #$. 002, ": "/%#C%C $TF%RG):% I#$G# ": TF% L"5$R C$C% $D
TF% F)L))#%:, 5* R$;)C)#8 D$R R%T)R%/%#T "* T$ MO"L)D)%C R);"T% :%CT$R
%/L$*%%: )# TF% "5:%#C% $D "#* R%T)R/%#T L"# )# TF% %:T"5L):F/%#T,& took
effect5 providing, among other things, thusly.
"rt. 297. Retirement. ( "ny employee may be retired upon reaching the retirement age established
in the collective bargaining agreement or other applicable employment contract.
? ? ?
)n the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of si?ty <41= years or more, but not beyond si?ty
five <46= years which is hereby declared the compulsory retirement age, who has served at least five
<6= years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at
least one half <,+
2
= month salary for every year of service, a fraction of at least si? <4= months being
considered as one whole year.
Onless the parties provide for broader inclusions, the term one half <,+
2
= month salary shall mean
fifteen <,6= days plus one twelfth <,+
,2
= of the ,-th month pay and the cash equivalent of not more
than five <6= days of service incentive leaves.
? ? ?
;iolation of this provision is hereby declared unlawful and sub>ect to the penal provisions under
"rticle 299 of this Code.6
:ometime in ,336, "lusitain, claiming that he retired from the company on Banuary -,, ,336, having reached the
age of 467 and due to poor health, verbally demanded from petitioner Lucas for the payment of his retirement
benefits. 5y his computation, he claimed that he was entitled to 94,7,1.118 broken down as follows.
Retirement 5enefits V Q month salary for every year of service
$ne'half month salary V ,,996.11
*ears of :ervice V 07 years
Retirement 5enefits V 94,7,1.119
etitioner Lucas, however, refused to pay the retirement benefits of "lusitain, prompting the latter to make a
written demand on :eptember 21, ,336. Lucas, however, remained adamant in his refusal to give in to
"lusitain's demands.
Faving failed to arrive at an amicable settlement, "lusitain filed on #ovember ,7, ,336 a complaint before the
#LRC against petitioners Rufina atis Dactory and Lucas for non'payment of retirement benefits. The complaint
was docketed as #LRC Case #o. 11',,'17070'36.
etitioners maintained that "lusitain had resigned from the company on Debruary ,3, ,33, per his letter of
resignation and the "ffidavit of :eparation dated /ay 22, ,33,.10
$n the other hand, while respondent admitted having tendered his letter of resignation on Debruary ,3, ,33, and
e?ecuted the "ffidavit of :eparation on /ay 22, ,33,,11 he nevertheless maintained that he continued working
for petitioners until Banuary ,336, the date of actual retirement, due to illness and old age, and that he merely
accomplished the foregoing documents in compliance with the requirements of the ::: in order to avail of his
retirement benefits.12
5y Cecision13 of Debruary 4, ,337, %?ecutive Labor "rbiter ;alentin C. 8uanio upheld "lusitain's position in
this wise.
"fter carefully considering the respective submissions of the parties and the evidence they adduced in
support of their opposing claims, this $ffice rules in favor of the complainant.
To substantiate his allegation that he had continued working for the respondents even after his
supposed resignation on Debruary ,3, ,33,, the complainant submitted in evidence his sworn
statement and that of his eldest daughter, 8loria "lusitain. )n his affidavit, the complainant swore
that. &5agamat ako ay pensionado ng :::, ako ay patuloy na naglilingkod+nagtratrabaho sa
kompanya ng Rufina atis Dactory hanggang noong buwan ng %nero ,336.& 5y way of corroboration,
his daughter on the other hand, stated under oath that since elementary school <sic=, she was the one
who brought food to her father at work in the Rufina atis DactoryE and that the last time she brought
him food at the said factory was in the month of Banuary ,336.
Ghile the foregoing statements may appear to be self'serving, still they have the ring of truth. Drom
e?perience, it is quite common that the eldest daughter would be tasked with the duty of taking lunch
to her father at work. 5esides, the respondents failed to controvert these sworn declarations by
submitting their counter'affidavits. )f it is true that the complainant had in fact stopped working on
Debruary ,33,, the respondents could have produced a number of witnesses who could have attested
to this. Fence, their failure to submit even a single affidavit does not speak well of their credibility in
this regard.
Thus, this $ffice finds that the complainant had e?ecuted the letter of resignation and affidavit of
separation from employment in ,33, only for the purpose of securing a pension from the :::, but
that despite this he remained in the employ of the respondents until his actual retirement on Banuary
-,, ,336, two years after the effectivity of Republic "ct 740, on Banuary 7, ,33-. "t the time of his
retirement, the complainant was already si?ty'five <46= years of age and had served the respondent
company for forty'seven <07= years and therefore, he is legally entitled to the retirement benefits
granted by R.". 740, which is one'half <,+2= month salary for every year of service which as
computed will amount to a total of 99,636.11 <,,996.11 ? 07 years=.
GF%R%D$R%, in view of the foregoing, >udgment is hereby rendered ordering the respondents
&Rufina atis Dactory& and Besus Lucas, :r., >ointly and severally to pay complainant Buan "lusitain
his retirement benefits in the amount of 99,636.11.
:$ $RC%R%C.14
$n appeal, the #LRC, by Resolution15 of /ay ,7, ,333, affirmed the Labor "rbiter's decision.
"ggrieved by the #LRC resolution, petitioners brought the case on certiorari16 to the Court of "ppeals which,
by the assailed decision, dismissed it, holding that the #LRC committed no error much less any grave abuse of
discretion17 as "lusitain was able to sufficiently establish that his letter of resignation and "ffidavit of
:eparation were e?ecuted only for the purpose of securing a pension from the ::: and that he remained in the
employ of petitioners.18
Their motion for reconsideration having been denied by the Court of "ppeals by Resolution19 of Cecember 4,
2111, petitioners lodged the present petition.20
etitioners argue that the appellate court erred when it did not give weight and probative value to "lusitain's
letter of resignation and "ffidavit of :eparation, choosing instead to give credence to his self'serving sworn
statement and that of his daughter that he remained in the employ of petitioners until Banuary -,, ,336.
etitioners assert that the "ffidavit of :eparation, being a public document, is entitled to full faith and credit
upon its face, and proof is required to assail and controvert the same, citing Cacho v. Court of
Appeals21 and Arrieta v. Llosa.22
etitioners further assert that the appellate court erred in applying retroactively R.". 740, as said law does not
e?pressly provide for such retroactive application and to do so would defeat the clear intent of Congress.
Durthermore, petitioners insist that the case of >ro 2nterprises, 6nc. v. )LR&23 is inapplicable and submit that
what is controlling is the case of J.V. Angeles Construction Corp. v. NLRC24 where this Court held that
before R.". 740, could be given retroactive effect, the claimant should still be an employee of the employer at
the time the said law took effect,.
The petition is impressed with merit.
This Court held in >ro25 that R.". 740, should be given retroactive effect, viz.
R.". 740, is undoubtedly a social legislation. The law has been enacted as a labor protection measure
and as a curative statute that P absent a retirement plan devised by, an agreement with, or a voluntary
grant from, an employer P can respond, in part at least, to the financial well'being of workers during
their twilight years soon following their life of labor. There should be little doubt about the fact
that the law can apply to labor contracts still e4istin# at the time the statute has taken effect , and that
its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time
said employment contracts have started. . .26 <Onderscoring supplied=
The doctrine enunciated in >ro has been clarified in several cases. )n &J& %radin#, 6nc. v. )LR&,27 this Court,
speaking through Bustice Dlorentino Deliciano, held that R.". 740, may be given retroactive effect where <,= the
claimant for retirement benefits was still the employee of the employer at the time the statute took effectE and <2=
the claimant had complied with the requirements for eligibility under the statute for such retirement
benefits.28These twin requirements for the retroactive application of R.". 740, have been reiterated
in Philippine Scout Veterans Security and Investigation Agency v. NLRC,29 Cabcaban v. NLRC,30 J.V.
Angeles Construction Corporation v. NLRC31 and !anuel L. "ue#on $niversity v. NLRC.32
)t is thus clear that in order for respondent to claim retirement benefits from petitioner Rufina atis Dactory, he
has to prove that he was its employee at the time R.". 740, took effect.
"s a general rule, the factual findings and conclusions of quasi'>udicial agencies such as the #LRC are, on
appeal, accorded great weight and even finality, unless petitioners are able to show that the #LRC arbitrarily
disregarded the evidence before it or misapprehended evidence of such nature as to compel a contrary
conclusion if properly appreciated.33
)n affirming the decision of the #LRC and the Labor "rbiter, the Court of "ppeals disregarded "lusitain's letter
of resignation and "ffidavit of :eparation and gave weight to his and his daughter's sworn statements that he
remained in the employ of petitioners until Banuary -,, ,336.
)t is a basic rule in evidence, however, that the burden of proof is on the part of the party who makes the
allegations34 P ei incumbit probatio, 7ui dicit, non 7ui ne#at.35 )f he claims a right granted by law, he must
prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness
of that of his opponent.
)n the case at bar, it was incumbent on "lusitain to prove that he retired on Banuary -,, ,336 and not on Debruary
21, ,33, as indicated on his letter of resignation. "s the following discussion will show, he utterly failed to
discharge the onus.
Respondent's letter of resignation and /ay 22, ,33, "ffidavit of :eparation which he admittedly voluntarily
e?ecuted constitute admissions against his own interest.36 The said documents belie his claim that he retired on
Banuary -,, ,336. 5eing an admission against interest, the documents are the best evidence which affords the
greatest certainty of the facts in dispute.37 The rationale for the rule is based on the presumption that no man
would declare anything against himself unless such declaration was true.38 Thus, it is fair to presume that the
declaration corresponds with the truth, and it is his fault if it does not.39
Ghile these two documents may have facilitated the release of "lusitain's retirement benefits from the :::,
hence, beneficial to him at that time, they may still be considered admissions against interest since the disserving
quality of the admission is >udged as of the time it is used or offered in evidence and not when such admission is
made.40Thus, it matters not that the admission is self'serving when it was made, so long as it is against
respondent's present claim.41
#o doubt, admissions against interest may be refuted by the declarant.42 )t bears stressing, however, that
"lusitain's "ffidavit of :eparation filed with the ::: is a notarial document,43 hence, prima
facie evidence44 of the facts e?pressed therein.45
:ince notarial documents have in their favor the presumption of regularity, to contradict the facts stated therein,
there must be evidence that is ?.ear, ?o%=;%?;%9 a%& 5ore 4@a% 5ere.y 3re3o%&era%4.46
"lusitain e?plains through his subsequent sworn statement that he only e?ecuted these two documents in order
to obtain his retirement benefits from the :::. Fis daughter, also by sworn statement, corroborates his
e?planation. Fis position does not persuade.
)n order for a declarant to impugn a notarial document which he himself e?ecuted, it is not enough for him to
merely e?ecute a subsequent notarial document. Ghat the law requires in order to contradict the facts stated in a
notarial document is clear and convincing evidence. The subsequent notarial documents e?ecuted by respondent
and his daughter fall short of this standard.
The case of Reyes v. ?aballero47 is instructive. )n said case, the creditor e?ecuted on Cecember ,, ,300 a
notarial document stating that he was releasing a real estate mortgage as the debtor had already paid his debt. $n
even date, the creditor subsequently e?ecuted an affidavit without the debtor's knowledge stating that he had
accepted the payment under protest and &obli#ado por las circunstancias actuales.& This Court held that the
creditor's statement in his affidavit that he received the money &obli#ado por las circunstancias actuales& is self'
serving evidence.48
" contrary rule would undermine the confidence of the public in the integrity of notarial documents. )n 3e7uito
v. Llamas,49 this Court held.
"fter e?ecuting the affidavit voluntarily wherein he made admissions and declarations against his
own interest under the solemnity of an oath, he cannot be allowed to spurn them and undo what he
has done. Fe cannot, even &with great repentance, retrieve the body he forsook and now wishes to
live.&50
#either is the sworn statement of "lusitain's daughter sufficient to prove that he indeed retired on Banuary -,,
,336. The Debruary 4, ,337 Cecision of Labor "rbiter 8uanio relates the material portion of the sworn statement
of "lusitain's daughter as follows.
. . . 5y way of corroboration, his daughter on the other hand, stated under oath that since elementary
school <sic=, she was the one who brought food to her father at work in the Rufina atis DactoryE and
that the last time she brought him food at the said factory was in the month of Banuary
,336.51 <%mphasis and underscoring supplied=
"lusitain's daughter did not state, however, that her father worked for petitioner Rufina atis Dactory until his
alleged retirement on Banuary -,, ,336. "ll she said was that the last time she brought him food at the factory
was in Banuary ,336. To conclude that "lusitain was still employed on Banuary ,336 from the mere fact that his
daughter brought him food at the Rufina atis Dactory is non se7uitur.
Lastly, while it is evident that "lusitain's subsequent sworn statement is in the nature of a retraction of his /ay
22, ,33, "ffidavit of :eparation, such retraction does not necessarily negate the affidavit. Dor retractions are
generally unreliable and looked upon with considerable disfavor by the courts as they can easily be fabricated.
Thus, before accepting a retraction, it is necessary to e?amine the circumstances surrounding it and possible
motives for reversing the previous declaration, as these motives may not necessarily be in consonance with the
truth. To automatically adopt them hook, line and sinker would allow unscrupulous individuals to throw wide
open the doors to fraud.
)n the case at bar, "lusitain's retraction is highly suspect. $ther than his bare and self'serving allegations and the
sworn statement of his daughter which, as reflected above, cannot be relied upon, he has not shown any scintilla
of evidence that he was employed with petitioner Rufina atis Dactory at the time R.". 740, took effect. Fe did
not produce any documentary evidence such as pay slips, income ta? return, his identification card, or any other
independent evidence to substantiate his claim.
Ghile the #LRC and its Labor "rbiters are not bound by technical rules of procedure and evidence in the
ad>udication of cases,52 this should not be construed as a license to disregard fundamental rules on evidence in
proving one's allegations.53
)n fine, "lusitain having failed to prove that he was an employee of petitioner at the time R.". 740, took effect,
his claim for retirement benefits thereunder must be disallowed.
1/!R!FOR!, the petition is 8R"#T%C. The Court of "ppeals Bune 2-, 2111 Cecision and Cecember 4,
2111 Resolution in C"'8.R. : #o. 60722 are R%;%R:%C and :%T ":)C%.
$O ORD!R!D.
G.R. No. 15693* Mar?@ 16, 2,,7
AP/A C. -ACU"!, etitioner,
vs.
$IIMAN UNI'!R$I#(,Respondent.
C % C ) : ) $ #
CORONA, J.:
etitioner comes to us via this petition for review on certiorari1 to challenge a decision2 of the Court of "ppeals
<C"= and the resolution3 affirming it.
:ometime in ,369, petitioner began working for respondentNs university medical center as a nurse.4
)n a letter dated Cecember -, ,332,5 respondent, through its Fuman Resources Cevelopment $ffice, informed
petitioner that she was approaching her -6th year of service with the university and was due for automatic
retirement on #ovember ,9, ,33-, at which time she would be 67 years old. This was pursuant to respondentNs
retirement plan for its employees which provided that its members could be automatically retired &upon reaching
the age of 46 or after -6 years of uninterrupted service to the university.&6 Respondent required certain
documents in connection with petitionerNs impending retirement.
" brief e?change of letters7 between petitioner and respondent followed. etitioner emphatically insisted that
the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be
allowed to work until the age of 41 because this was the minimum age at which she could qualify for
:::8 pension. 5ut respondent stood pat on its decision to retire her, citing &company policy.&
$n #ovember ,6, ,33-, petitioner filed a complaint in the #ational Labor Relations Commission <#LRC= for
&termination of service with preliminary in>unction and+or restraining order.&9 $n #ovember ,9, ,33-,
respondent compulsorily retired petitioner.
"fter the parties submitted their position papers, the labor arbiter rendered a decision finding respondent guilty
of illegal dismissal and ordered that petitioner be reinstated and paid full backwages.10 $n appeal, however, the
#LRC reversed the labor arbiterNs decision and dismissed the complaint for lack of merit.11 The #LRC
likewise denied petitionerNs motion for reconsideration.12 )n the assailed decision and resolution, the C"
affirmed the #LRC.
Fence, this petition.
The issues for our consideration are.
,= did respondentNs retirement plan imposing automatic retirement after -6 years of service
contravene the security of tenure clause in the ,397 Constitution and the Labor Code!
2= did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in
its retirement plan!
Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 46
are not per se repugnant to the constitutional guaranty of security of tenure. "rticle 297 of the Labor Code
provides.
"RT. 297. Retirement ' "ny employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract. ???
5y its e?press language, the Labor Code permits employers and employees to fi? the applicable retirement age at
below 41 years.13
Fowever, after reviewing the assailed decision together with the rules and regulations of respondentNs retirement
plan, we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in "rticle
@))), also known as the provision on :ocial Bustice and Fuman Rights.
The C", in ruling against petitioner, premised its decision to uphold the retirement plan on her voluntary
participation therein.
The petitioner in this case may, however, argue that the antranco case is not applicable in the case at bar as the
controversy in the said case involves a compulsory retirement on the basis of the length of service rendered by
the employee as agreed in an e?isting C5", whereas in the present case, the private respondent compulsorily
retired the petitioner not based on a C5" but on the retirement scheme provided for in the private respondentNs
retirement plan. #onetheless, this argument must fail. The contract fi?ing for retirement age as allowed under
"rticle 297 of the Labor Code does not e?clusively refer to C5" which provides for an agreed retirement age.
The said provision e?plicitly allows, as well, other applicable employment contract to fi? retirement age.
The records disclose that the private respondentNs Retirement lan has been in effect for more than -1 years. The
said plan is deemed integrated into the employment contract between private respondent and its employees a:
e=;&e%?e& by 4@e .a44erF: =o.u%4ary ?o%4r;bu4;o% 4@rou9@ 5o%4@.y :a.ary &e&u?4;o%:. revious retirees have
already en>oyed the benefits of the retirement plan, and ever since the said plan was effected, no questions or
disagreement have been raised, until the same was made to apply to the petitioner. ???14 <emphasis ours=
The problem with this line of reasoning is that a perusal of the rules and regulations of the plan shows that
participation therein was not voluntary at all.
Rule ))) of the plan, on membership, stated.
:%CT)$# , P /%/5%R:F)
"ll full'time Dilipino employees of the Oniversity will au4o5a4;?a..y be?o5e 5e5ber: o> 4@e P.a%, provided,
however, that those who have retired from the Oniversity, even if rehired, are no longer eligible for membership
in the lan. A 5e5ber C@o ?o%4;%ue: 4o :er=e 4@e U%;=er:;4y ?a%%o4 C;4@&raC >ro5 4@e P.a%.
??? ??? ???
:%CT)$# 2 P %DD%CT);)T* $D /%/5%R:F)
/embership in the lan starts on the day a person is hired on a full'time basis by the Oniversity.
:%CT)$# - P T%R/)#"T)$# $D /%/5%R:F)
#er5;%a4;o% o> 5e5ber:@;3 in the lan shall be upon the &ea4@ o> 4@e 5e5ber, re:;9%a4;o% or 4er5;%a4;o%
o> e53.oyeeF: ?o%4ra?4 by 4@e U%;=er:;4y, or re4;re5e%4 from the Oniversity.15 <emphasis ours=.
Rule );, on contributions, stated.
The lan is contributory. The Oniversity shall set aside an amount equivalent to -QA of the basic salaries of the
faculty and staff. To this shall be added a 6A deduction from the basic salaries of the faculty and staff.
" member on leave with the Oniversity approval shall continue paying, based on his pay while on leave, his
leave without pay should pay his contributions to the lan. Fowever, a member, who has been on leave without
pay should pay his contributions based on his salary plus the OniversityNs contributions while on leave or the full
amount within one month immediately after the date of his reinstatement. rovidedJ,K further that if a member
has no sufficient source of income while on leave may pay within si? months after his reinstatement.16
Drom the language of the foregoing retirement plan rules, the compulsory nature of both membership in and
contribution to the plan debunked the C"Ns theory that petitionerNs &voluntary contributions& were evidence of
her willing participation therein. )t was through no voluntary act of her own that petitioner became a member of
the plan. )n fact, the only way she could have ceased to be a member thereof was if she stopped working for
respondent altogether. Durthermore, in the rule on contributions, the repeated use of the word &shall& ineluctably
pointed to the conclusion that employees had no choice but to contribute to the plan <even when they were on
leave=.
"ccording to the assailed decision, respondentNs retirement plan &ha<d= been in effect for more than -1
years.&17Ghat was not pointed out, however, was that the retirement plan came into being in ,37118 or ,2
years after petitioner started working for respondent. )n short, it was not part of the terms of employment to
which petitioner agreed when she started working for respondent. #either did it become part of those terms
shortly thereafter, as the C" would have us believe.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the
former.19 )n Pantranco )orth 24press, 6nc. v. )LR&,20 to which both the C" and respondent refer, the
imposition of a retirement age below the compulsory age of 46 was deemed acceptable because this was part of
the C5" between the employer and the employees. The consent of the employees, as represented by their
bargaining unit, to be retired even before the statutory retirement age of 46 was laid out clearly in black and
white and was therefore in accord with "rticle 297.
)n this case, neither the C" nor the respondent cited any agreement, collective or otherwise, to >ustify the latterNs
imposition of the early retirement age in its retirement plan, opting instead to harp on petitionerNs alleged
&voluntary& contributions to the plan, which was simply untrue. The truth was that petitioner had no choice but
to participate in the plan, given that the only way she could refrain from doing so was to resign or lose her >ob. )t
is a?iomatic that employer and employee do not stand on equal footing,21 a situation which often causes an
employee to act out of need instead of any genuine acquiescence to the employer. This was clearly >ust such an
instance.
#ot only was petitioner still a good eight years away from the compulsory retirement age but she was also still
fully capable of discharging her duties as shown by the fact that respondentNs board of trustees seriously
considered rehiring her after the effectivity of her &compulsory retirement.&22
"s already stated, an employer is free to impose a retirement age less than 46 for as long as it has the employeesN
consent. :tated conversely, employees are free to accept the employerNs offer to lower the retirement age if they
feel they can get a better deal with the retirement plan presented by the employer. Thus, having terminated
petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her,
respondent was guilty of illegal dismissal.
"t this point, reinstatement is out of the question.,awphi,.nWt etitioner is now 7, years old and therefore well
over the statutory compulsory retirement age. Dor this reason, we grant her separation pay in lieu of
reinstatement. )t is also for this reason that we modify the award of backwages in her favor, to be computed from
the time of her illegal dismissal on #ovember ,9, ,33- up to her compulsory retirement age.
1/!R!FOR!, the petition is hereby GRAN#!D. The decision of the Court of "ppeals in C"'8.R. : #o.
61006 isR!'!R$!D and $!# A$ID!. The $ctober 26, ,330 decision of the labor arbiter finding respondent
guilty of illegal dismissal is R!IN$#A#!D, with the MODIFICA#ION that, in lieu of reinstatement, petitioner
is awarded separation pay, the award of backwages to be computed from the time of her illegal dismissal up to
her compulsory retirement age.
$O ORD!R!D.
G.R. No. 8216*2 -u.y 3,, 1966
$OCIA $!CURI#( $($#!M, petitioner'appellee,
vs.
CAND!ARIA D. DA'AC, !# A., respondentsE
OURD!$ #u3.a%o, respondent'appellant.
J. 'a. @rancisco and ). A. Bravo for respondent5appellant.
>ffice of the !olicitor Aeneral Arturo A. Alafriz, !olicitor &amilo 3. Buiason and 2. %. 3uran for petitioner5
appellee.
"ARR!RA, J.:
This is an appeal from the resolution of the :ocial :ecurity Commission declaring respondent Candelaria Cavac
as the person entitled to receive the death benefits payable for the death of etronilo Cavac.
The facts of the case as found by the :ocial :ecurity Commission, briefly are. The late etronilo Cavac, a former
employee of Lianga 5ay Logging Co., )nc. became a member of the :ocial :ecurity :ystem <::: for short= on
:eptember ,, ,367. "s such member, he was assigned :: ).C. #o. 19'117,-7. )n ::: form %', </ember's
Record= which he accomplished and filed with the ::: on #ovember 2,, ,367, he designated respondent
Candelaria Cavac as his beneficiary and indicated his relationship to her as that of &wife&. Fe died on "pril 6,
,363 and, thereupon, each of the respondents <Candelaria Cavac and Lourdes Tuplano= filed their claims for
death benefit with the :::. )t appears from their respective claims and the documents submitted in support
thereof, that the deceased contracted two marriages, the first, with claimant Lourdes Tuplano on "ugust 23,
,304, who bore him a child, Romeo Cavac, and the second, with Candelaria Cavac on Banuary ,9, ,303, with
whom he had a minor daughter %liHabeth Cavac. Cue to their conflicting claims, the processing thereof was held
in abeyance, whereupon the ::: filed this petition praying that respondents be required to interpose and litigate
between themselves their conflicting claims over the death benefits in question.,XwphY,.RZt
$n Debruary 26, ,34-, the :ocial :ecurity Commission issued the resolution referred to above, #ot satisfied
with the said resolution, respondent Lourdes Tuplano brought to us the present appeal.
The only question to be determined herein is whether or not the :ocial :ecurity Commission acted correctly in
declaring respondent Candelaria Cavac as the person entitled to receive the death benefits in question.
:ection ,-, Republic "ct #o. ,,4,, as amended by Republic "ct #o. ,732, in force at the time etronilo Cavac's
death on "pril 6, ,363, provides.
,. :%C. ,-. Opon the covered employee's death or total and permanent disability under such
conditions as the Commission may define, before becoming eligible for retirement and if either such
death or disability is not compensable under the Gorkmen's Compensation "ct, he or, in case of his
death, his beneficiaries, as recorded by his employer shall be entitled to the following benefit. ... .
<emphasis supplied.=
Onder this provision, the beneficiary &as recorded& by the employee's employer is the one entitled to the death
benefits. )n the case of %ecson vs. !ocial !ecurity !ystem, <L',6739, Cecember 29, ,34,=, this Court, construing
said :ection ,-, said.
)t may be true that the purpose of the coverage under the :ocial :ecurity :ystem is protection of the
employee as well as of his family, but this purpose or intention of the law cannot be enforced to the
e?tent of contradicting the very provisions of said law as contained in :ection ,-, thereof, ... . Ghen
the provision of a law are clear and e?plicit, the courts can do nothing but apply its clear and e?plicit
provisions <;elasco vs. LopeH, , hil, 271E Caminetti vs. O.:., 202 O.:. 071, 4, L. ed. 002=.
5ut appellant contends that the designation herein made in the person of the second and, therefore, bigamous
wife is null and void, because <,= it contravenes the provisions of the Civil Code, and <2= it deprives the lawful
wife of her share in the con>ugal property as well as of her own and her child's legitime in the inheritance.
"s to the first point, appellant argues that a beneficiary under the :ocial :ecurity :ystem partakes of the nature
of a beneficiary in life insurance policy and, therefore, the same qualifications and disqualifications should be
applied.
"rticle 21,2 of the #ew Civil Code provides.
"RT. 21,2. "ny person who is forbidden from receiving any donation under "rticle 7-3 cannot be
named beneficiary of a life insurance policy by the person who cannot make any donation to him
according to said article.
"nd "rticle 7-3 of the same Code prescribes.
"RT. 7-3. The following donations shall be void.
<,= Those made between persons who were guilty of adultery or concubinage at the time of the
donationE
? ? ? ? ? ? ? ? ?
Githout deciding whether the naming of a beneficiary of the benefits accruing from membership in the :ocial
:ecurity :ystem is a donation, or that it creates a situation analogous to the relation of an insured and the
beneficiary under a life insurance policy, it is enough, for the purpose of the instant case, to state that the
disqualification mentioned in "rticle 7-3 is not applicable to herein appellee Candelaria Cavac because she was
not guilty of concubinage, there being no proof that she had knowledge of the previous marriage of her husband
etronilo.,
Regarding the second point raised by appellant, the benefits accruing from membership in the :ocial :ecurity
:ystem do not form part of the properties of the con>ugal partnership of the covered member. They are disbursed
from a public special fund created by Congress in pursuance to the declared policy of the Republic &to develop,
establish gradually and perfect a social security system which ... shall provide protection against the haHards of
disability, sickness, old age and death.&2
The sources of this special fund are the covered employee's contribution <equal to 2'Q per cent of the employee's
monthly compensation=E- the employer's contribution <equivalent to -'Q per cent of the monthly compensation
of the covered employee=E0 and the 8overnment contribution which consists in yearly appropriation of public
funds to assure the maintenance of an adequate working balance of the funds of the :ystem.6 "dditionally,
:ection 2, of the :ocial :ecurity "ct, as amended by Republic "ct ,732, provides.
:%C. 2,. Aovernment Auarantee. ( The benefits prescribed in this "ct shall not be diminished and
to guarantee said benefits the 8overnment of the Republic of the hilippines accepts general
responsibility for the solvency of the :ystem.
Drom the foregoing provisions, it appears that the benefit receivable under the "ct is in the nature of a special
privilege or an arrangement secured by the law, pursuant to the policy of the :tate to provide social security to
the workingmen. The amounts that may thus be received cannot be considered as property earned by the member
during his lifetime. Fis contribution to the fund, it may be noted, constitutes only an insignificant portion
thereof. Then, the benefits are specifically declared not transferable,4 and e?empted from ta? legal processes,
and lien.7Durthermore, in the settlement of claims thereunder the procedure to be observed is governed not by
the general provisions of law, but by rules and regulations promulgated by the Commission. Thus, if the money
is payable to the estate of a deceased member, it is the Commission, not the probate or regular court that
determines the person or persons to whom it is payable.9 that the benefits under the :ocial :ecurity "ct are not
intended by the lawmaking body to form part of the estate of the covered members may be gathered from the
subsequent amendment made to :ection ,6 thereof, as follows.
:%C. ,6. )on5transferability of benefit. C The system shall pay the benefits provided for in this "ct
to such persons as may be entitled thereto in accordance with the provisions of this "ct. :uch benefits
are not transferable, and no power of attorney or other document e?ecuted by those entitled thereto in
favor of any agent, attorney, or any other individual for the collection thereof in their behalf shall be
recogniHed e?cept when they are physically and legally unable to collect personally such
benefits. Provided, ho(ever, That in the case of death benefits, if no beneficiary has been designated
or the designation there of is void, said benefits shall be paid to the legal heirs in accordance with the
laws of succession. <Rep. "ct 2469, amending Rep. "ct ,,4,.=
)n short, if there is a named beneficiary and the designation is not invalid <as it is not so in this case=, it is not the
heirs of the employee who are entitled to receive the benefits <unless they are the designated beneficiaries
themselves=. )t is only when there is no designated beneficiaries or when the designation is void, that the laws of
succession are applicable. "nd we have already held that the :ocial :ecurity "ct is not a law of succession.3
Gherefore, in view of the foregoing considerations, the resolution of the :ocial :ecurity Commission appealed
from is hereby affirmed, with costs against the appellant.
:o ordered.
G.R. No. 17,195 Mar?@ 28, 2,11
$OCIA $!CURI#( COMMI$$ION a%& $OCIA $!CURI#( $($#!M, etitioner,
vs.
#!R!$A G. FA'IA, Respondent.
C % C ) : ) $ #
D! CA$#IO, J.:
" spouse who claims entitlement to death benefits as a primary beneficiary under the :ocial :ecurity Law must
establish two qualifying factors, to wit. <,= that he+she is the legitimate spouseE and <2= that he+she is dependent
upon the member for support.1
This etition for Review on &ertiorari assails the Cecision2 dated /ay 20, 2116 of the Court of "ppeals <C"=
in C"'8.R. : #o. 9274- which reversed and set aside the Resolution3 dated Bune 0, 211- and $rder4 dated
Banuary 2,, 2110 of the :ocial :ecurity Commission <::C= in ::C Case #o. 9',6-09'12. Likewise assailed is
the C" Resolution5 dated $ctober ,7, 2116 denying the /otion for Reconsideration thereto.
Factual Antecedents
$n "ugust 6, 2112, respondent Teresa 8. Davila <Teresa= filed a etition6 before petitioner ::C docketed as
::C Case #o. 9',6-09'12. :he averred therein that after she was married to Dlorante Davila <Dlorante= on
Banuary ,7, ,371, the latter designated her as the sole beneficiary in the %', Dorm he submitted before petitioner
:ocial :ecurity :ystem <:::=, MueHon City 5ranch on Bune -1, ,371. Ghen they begot their children Bofel,
Dloresa and Dlorante )), her husband likewise designated each one of them as beneficiaries. Teresa further
averred that when Dlorante died on Debruary ,, ,337, his pension benefits under the ::: were given to their only
minor child at that time, Dlorante )), but only until his emancipation at age 2,. 5elieving that as the surviving
legal wife she is likewise entitled to receive DloranteNs pension benefits, Teresa subsequently filed her claim for
said benefits before the :::. The :::, however, denied the claim in a letter dated Banuary -,, 2112, hence, the
petition.
)n its "nswer,7 ::: averred that on /ay 4, ,333, the claim for DloranteNs pension benefits was initially settled
in favor of Teresa as guardian of the minor Dlorante )). er its records, Teresa was paid the monthly pension for a
total period of 67 months or from Debruary ,337 to $ctober 211, when Dlorante )) reached the age of 2,. The
claim was, however, re'ad>udicated on Buly ,,, 2112 and the balance of the five'year guaranteed pension was
again settled in favor of Dlorante )).8 ::: also alleged that %stelita Ramos, sister of Dlorante, wrote a
letter9stating that her brother had long been separated from Teresa. :he alleged therein that the couple lived
together for only ten years and then decided to go their separate ways because Teresa had an affair with a
married man with whom, as Teresa herself allegedly admitted, she slept with four times a week. ::: also
averred that an interview conducted in TeresaNs neighborhood in Tondo, /anila on :eptember ,9, ,339 revealed
that although she did not cohabit with another man after her separation with Dlorante, there were rumors that she
had an affair with a police officer. To support TeresaNs non'entitlement to the benefits claimed, ::: cited the
provisions of :ections 9<k= and ,- of Republic "ct <R"= #o. ,,4,, as amended otherwise known as :ocial
:ecurity <::= Law.10
Ruling of the Social Security Commission
)n a Resolution11 dated Bune 0, 211-, ::C held that the surviving spouseNs entitlement to an ::: memberNs
death benefits is dependent on two factors which must concur at the time of the latterNs death, to wit. <,= legality
of the marital relationshipE and <2= dependency for support. "s to dependency for support, the ::C opined that
same is affected by factors such as separation de facto of the spouses, marital infidelity and such other grounds
sufficient to disinherit a spouse under the law. Thus, although Teresa is the legal spouse and one of DloranteNs
designated beneficiaries, the ::C ruled that she is disqualified from claiming the death benefits because she was
deemed not dependent for support from Dlorante due to marital infidelity. Onder :ection 9<k= of the :: Law, the
dependent spouse until she remarries is entitled to death benefits as a primary beneficiary, together with the
deceased memberNs legitimate minor children. "ccording to ::C, the word &remarry& under said provision has
been interpreted as to include a spouse who cohabits with a person other than his+her deceased spouse or is in an
illicit relationship. This is for the reason that no support is due to such a spouse and to allow him+her to en>oy the
memberNs death benefits would be tantamount to circumvention of the law. %ven if a spouse did not cohabit with
another, ::C went on to state that for purposes of the :: Law, it is sufficient that the separation in'fact of the
spouses was precipitated by an adulterous act since the actual absence of support from the member is evident
from such separation. #otable in this case is that while Teresa denied having remarried or cohabited with another
man, she did not, however, deny her having an adulterous relationship. ::C therefore concluded that Teresa was
not dependent upon Dlorante for support and consequently disqualified her from en>oying her husbandNs death
benefits.
::C further held that Teresa did not timely contest her non'entitlement to the award of benefits. )t was only
when Dlorante ))Ns pension was stopped that she deemed it wise to file her claim. Dor ::C, TeresaNs long silence
led ::: to believe that she really suffered from a disqualification as a beneficiary, otherwise she would have
immediately protested her non'entitlement. )t thus opined that Teresa is now estopped from claiming the
benefits. Fence, ::C dismissed the petition for lack of merit.
"s TeresaNs /otion for Reconsideration12 of said Resolution was also denied by ::C in an $rder13 dated
Banuary 2,, 2110, she sought recourse before the C" through a etition for Review14 under Rule 0-.
Ruling of the Court of Appeals
5efore the C", Teresa insisted that ::: should have granted her claim for death benefits because she is
undisputedly the legal surviving spouse of Dlorante and is therefore entitled to such benefits as primary
beneficiary. :he claimed that the ::CNs finding that she was not dependent upon Dlorante for support is unfair
because the fact still remains that she was legally married to Dlorante and that her alleged illicit affair with
another man was never sufficiently established. )n fact, ::: admitted that there was no concrete evidence or
proof of her amorous relationship with another man. /oreover, Teresa found :::Ns strict interpretation of the ::
Law as not only anti'labor but also anti'family. )t is anti'labor in the sense that it does not work to the benefit of
a deceased employeeNs primary beneficiaries and anti'family because in denying benefits to surviving spouses, it
destroys family solidarity. )n sum, Teresa prayed for the reversal and setting aside of the assailed Resolution and
$rder of the ::C.
The ::C and the ::: through the $ffice of the :olicitor 8eneral <$:8= filed their respective Comments15 to
the petition.
::C contended that the word &spouse& under :ection 9<k= of the :: Law is qualified by the word &dependent&.
Thus, to be entitled to death benefits under said law, a surviving spouse must have been dependent upon the
member spouse for support during the latterNs lifetime including the very moment of contingency. "ccording to
it, the fact of dependency is a mandatory requirement of law. )f it is otherwise, the law would have simply used
the word &spouse& without the descriptive word &dependent&. )n this case, ::C emphasiHed that Teresa never
denied the fact that she and Dlorante were already separated and living in different houses when the contingency
happened. 8iven this fact and since the conduct of investigation is standard operating procedure for :::, it
being under legal obligation to determine prior to the award of death benefit whether the supposed beneficiary is
actually receiving support from the member or if such support was rightfully withdrawn prior to the contingency,
::: conducted an investigation with respect to the coupleNs separation. "nd as said investigation revealed tales
of TeresaNs adulterous relationship with another man, ::: therefore correctly ad>udicated the entire death
benefits in favor of Dlorante )).
To negate TeresaNs claim that ::: failed to establish her marital infidelity, ::C enumerated the following
evidence. <,= the letter16 of DloranteNs sister, %stelita Ramos, stating that the main reasons why Teresa and
Dlorante separated after only ,1 years of marriage were TeresaNs adulterous relationship with another man and
her propensity for gamblingE <2= the /emorandum17 dated "ugust -1, 2112 of ::: :enior "nalysts LiHa
"gilles and Bana :impas which ran through the facts in connection with the claim for death benefits accruing
from DloranteNs death. )t indicates therein, among others, that based on interviews conducted in TeresaNs
neighborhood, she did not cohabit with another man after her separation from her husband although there were
rumors that she and a certain police officer had an affair. Fowever, there is not enough proof to establish their
relationship as Teresa and her paramour did not live together as husband and wifeE and <-= the field investigation
report18 of ::: :enior "nalyst Dernando D. #icolas which yielded the same findings. The ::C deemed the
foregoing evidence as substantial to support the conclusion that Teresa indeed had an illicit relationship with
another man.
::C also defended :::Ns interpretation of the :: law and argued that it is neither anti'labor nor anti'family. )t is
not anti'labor because the sub>ect matter of the case is covered by the :: Law and hence, Labor Law has no
application. )t is likewise not anti'family because ::: has nothing to do with TeresaNs separation from her
husband which resulted to the latterNs withdrawal of support for her. "t any rate, ::C advanced that even if
Teresa is entitled to the benefits claimed, same have already been received in its entirety by Dlorante )) so that no
more benefits are due to DloranteNs other beneficiaries. Fence, ::C prayed for the dismissal of the petition.
Dor its part, the $:8 likewise believed that Teresa is not entitled to the benefits claimed as she lacks the
requirement that the wife must be dependent upon the member for support. This is in view of the rule that
beneficiaries under the :: Law need not be the legal heirs but those who are dependent upon him for support.
/oreover, it noted that Teresa did not file a protest before the ::: to contest the award of the five'year
guaranteed pension to their son Dlorante )). )t posited that because of this, Teresa cannot raise the matter for the
first time before the courts. The $:8 also believed that no further benefits are due to DloranteNs other
beneficiaries considering that the balance of the five'year guaranteed pension has already been settled.
)n a Cecision19 dated /ay 20, 2116, the C" found TeresaNs petition impressed with merit. )t gave weight to the
fact that she is a primary beneficiary because she is the lawful surviving spouse of Dlorante and in addition, she
was designated by Dlorante as such beneficiary. There was no legal separation or annulment of marriage that
could have disqualified her from claiming the death benefits and that her designation as beneficiary had not been
invalidated by any court of law. The C" cited :ocial :ecurity :ystem v. Cavac20 where it was held that it is
only when there is no designation of beneficiary or when the designation is void that the ::: would have to
decide who is entitled to claim the benefits. )t opined that once a spouse is designated by an ::: member as
his+her beneficiary, same forecloses any inquiry as to whether the spouse is indeed a dependent deriving support
from the member. Thus, when ::: conducted an investigation to determine whether Teresa is indeed dependent
upon Dlorante, ::: was unilaterally adding a requirement not imposed by law which makes it very difficult for
designated primary beneficiaries to claim for benefits. To make things worse, the result of said investigation
which became the basis of TeresaNs non'entitlement to the benefits claimed was culled from unfounded rumors.
/oreover, the C" saw :::Ns conduct of investigations to be violative of the constitutional right to privacy. )t
lamented that ::: has no power to investigate and pry into the memberNs and his+her familyNs personal lives and
should cease and desist from conducting such investigations. Oltimately, the C" reversed and set aside the
assailed Resolution and $rder of the ::C and directed ::: to pay TeresaNs monetary claims which included the
monthly pension due her as the surviving spouse and the lump sum benefit equivalent to thirty'si? times the
monthly pension.
::C filed its /otion for Reconsideration21 of said Cecision but same was denied in a Resolution22 dated
$ctober ,7, 2116. )mpleading ::: as co'petitioner, ::C thus filed this petition for review on certiorari.
I::ue
)s Teresa a primary beneficiary in contemplation of the :ocial :ecurity Law as to be entitled to death benefits
accruing from the death of Dlorante!
Petitioners Arguments
::C reiterates the argument that to be entitled to death benefits, a surviving spouse must have been actually
dependent for support upon the member spouse during the latterNs lifetime including the very moment of
contingency. To it, this is clearly the intention of the legislatureE otherwise, :ection 9<k= of the :: law would
have simply stated &spouse& without the descriptive word &dependent&. Fere, although Teresa is without question
DloranteNs legal spouse, she is not the &dependent spouse& referred to in the said provision of the law. 8iven the
reason for the coupleNs separation for about ,7 years prior to DloranteNs death and in the absence of proof that
during said period Teresa relied upon Dlorante for support, there is therefore no reason to infer that Teresa is a
dependent spouse entitled to her husbandNs death benefits.
::C adds that in the process of determining non'dependency status of a spouse, conviction of a crime involving
marital infidelity is not an absolute necessity. )t is sufficient for purposes of the award of death benefits that a
thorough investigation was conducted by ::: through interviews of impartial witnesses and that same showed
that the spouse'beneficiary committed an act of marital infidelity which caused the member to withdraw support
from his spouse. )n this case, no less than DloranteNs sister, who does not stand to benefit from the present
controversy, revealed that Teresa frequented a casino and was disloyal to her husband so that they separated after
only ,1 years of marriage. This was affirmed through the interview conducted in TeresaNs neighborhood. Fence,
it is not true that TeresaNs marital infidelity was not sufficiently proven.
Likewise, ::C contends that contrary to the C"Ns posture, a memberNs designation of a primary beneficiary does
not guarantee the latterNs entitlement to death benefits because such entitlement is determined only at the time of
happening of the contingency. This is because there may have been events which supervened subsequent to the
designation which would otherwise disqualify the person designated as beneficiary such as emancipation of a
memberNs child or separation from his+her spouse. This is actually the same reason why ::: must conduct an
investigation of all claims for benefits.
/oreover, ::C >ustifies :::Ns conduct of investigation and argues that said office did not intrude into DloranteNs
and his familyNs personal lives as the investigation did not aggravate the situation insofar as TeresaNs relationship
with her deceased husband was concerned. )t merely led to the discovery of the true state of affairs between
them so that based on it, the death benefits were awarded to the rightful primary beneficiary, Dlorante )). Clearly,
such an investigation is an essential part of ad>udication process, not only in this case but also in all claims for
benefits filed before :::. Thus, ::C prays for the setting aside of the assailed C" Cecision and Resolution.
Respondents Arguments
To support her entitlement to the death benefits claimed, Teresa cited &eneta v. !ocial !ecurity !ystem,23 a case
decided by the C" which declared, vizD
Clearly then, the term dependent spouse, who must not re'marry in order to be entitled to the ::: death benefits
accruing from the death of his+her spouse, refers to the legal spouse who, under the law, is entitled to receive
support from the other spouse.
)ndubitably, petitioner, having been legally married to the deceased ::: member until the latterNs death and
despite his subsequent marriage to respondent Carolina, is deemed dependent for support under "rticle 49 of the
Damily Code. :aid provision reads.
[The husband and wife are obliged to live together, observe mutual love, respect and fidelity, and render mutual
help and supportN
5ased on said law, petitioner is, therefore, entitled to the claimed death benefits. Fer marriage to the deceased
not having been lawfully severed, the law disputably presumes her to be continually dependent for support.
#o evidence or even a mere inference can be adduced to prove that petitioner ceased to derive all her needs
indispensable for her sustenance, and thus, she remains a legal dependent. " dependent spouse is primary
beneficiary entitled to the death benefits of a deceased ::: member spouse unless he or she remarries. " mere
allegation of adultery not substantially proven can not validly deprive petitioner of the support referred to under
the law, and consequently, of her claim under the ::: Law.
Thus, being the legal wife, Teresa asserts that she is presumed to be dependent upon Dlorante for support. The
bare allegation of %stelita that she had an affair with another man is insufficient to deprive her of support from
her husband under the law and, conversely, of the death benefits from :::. /oreover, Teresa points out that
despite their separation and the rumors regarding her infidelity, Dlorante did not withdraw her designation as
primary beneficiary. Onder this circumstance, Teresa believes that Dlorante really intended for her to receive the
benefits from :::.
Teresa also agrees with the C"Ns finding that ::: unilaterally added to the
requirements of the law the condition that a surviving spouse must be actually dependent for support upon the
member spouse during the latterNs lifetime. :he avers that this could not have been the lawmakersN intention as it
would make it difficult or even impossible for beneficiaries to claim for benefits under the :: Law. :he stresses
that courts <or quasi'>udicial agencies for that matter=, may not, in the guise of interpretation, enlarge the scope
of a statute and include therein situations not provided nor intended by lawmakers. Courts are not authoriHed to
insert into the law what they think should be in it or to supply what they think the legislature would have
supplied if its attention had been called to the omission. Fence, Teresa prays that the assailed C" Cecision and
Resolution be affirmed in toto.
Our Ru.;%9
Ge find merit in the petition.
The law in force at the time of DloranteNs death was R" ,,4,. :ection 9 <e= and <k= of said law provides.
:ection 9. %erms 3efined. Dor the purposes of this "ct, the following terms shall, unless the conte?t indicates
otherwise, have the following meanings.
? ? ? ?
<e= 3ependent P The legitimate, legitimated or legally adopted child who is unmarried, not gainfully employed
and not over twenty'one years of age, or over twenty'one years of age, provided that he is congenitally
incapacitated and incapable of self'support, physically or mentallyE 4@e .e9;4;5a4e :3ou:e &e3e%&e%4 >or
:u33or4 u3o% 4@e e53.oyeeE and the legitimate parents wholly dependent upon the covered employee for
regular support.
? ? ? ?
<k= Beneficiaries P The &e3e%&e%4 :3ou:e until he remarries and dependent children, who shall be the primary
beneficiaries. )n their absence, the dependent parents and, sub>ect to the restrictions imposed on dependent
children, the legitimate descendants and illegitimate children who shall be the secondary beneficiaries. )n the
absence of any of the foregoing, any other person designated by the covered employee as secondary beneficiary.
<%mphasis ours.=
Drom the above'quoted provisions, it is plain that for a spouse to qualify as a primary beneficiary under
paragraph <k= thereof, he+she must not only be a legitimate spouse but also a dependent as defined under
paragraph <e=, that is, one who is dependent upon the member for support. aragraphs <e= and <k= of :ection 9 of
R" ,,4, are very clear. &Fence, we need only apply the law. Onder the principles of statutory construction, if a
statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted
interpretation. This plain meaning rule or verba le#is, derived from the ma?im inde4 animo sermo est <speech is
the inde? of intention=, rests on the valid presumption that the words employed by the legislature in a statute
correctly e?press its intent by the use of such words as are found in the statute. "erba le#is non est recedendum,
or, from the words of a statute there should be no departure.&24
Thus, in !ocial !ecurity !ystem v. A#uas25 we held that.
J)Kt bears stressing that for her <the claimant= to qualify as a primary beneficiary, she must prove that she was
[the legitimate spouse dependent for support from the employee.N The claimant'spouse must therefore establish
two qualifying factors. <,= that she is the legitimate spouse, and <2= that she is dependent upon the member for
support. ? ? ?
Fere, there is no question that Teresa was DloranteNs legal wife. Ghat is at point, however, is whether Teresa is
dependent upon Dlorante for support in order for her to fall under the term &dependent spouse& under :ection
9<k= of R" ,,4,.
Ghat the ::C relies on in concluding that Teresa was not dependent upon Dlorante for support during their
separation for ,7 years was its findings that Teresa maintained an illicit relationship with another man. Teresa
however counters that such illicit relationship has not been sufficiently established and, hence, as the legal wife,
she is presumed to be continually dependent upon
Dlorante for support.
Ge agree with Teresa that her alleged affair with another man was not sufficiently established. The
/emorandum of ::: :enior "nalysts LiHa "gilles and Bana :impas reveals that it was Dlorante who was in fact
living with a common law wife, :usan Davila <:usan= and their three minor children at the time of his death.
:usan even filed her own claim for death benefits with the ::: but same was, however, denied. Gith respect to
Teresa, we quote the pertinent portions of said /emorandum, viz.
:O:"# :O5/)TT%C " L%TT%R :)8#%C 5* %:T%L)T" R"/$:, %LC%R :):T%R $D TF% C%C%":%C
:T"T)#8 TF"T /%/5%R G": :%"R"T%C DR$/ T%R%:" "DT%R ,1 *%"R: $D L);)#8 )# D$R
TF% R%":$#: TF"T F): G)D% F"C C$F"5)T%C G)TF " /"RR)%C /"#. "L:$, %R %:T%L)T",
TF% G)D% F%R:%LD "C/)TT%C TF"T TF% /"# :L%T G)TF F%R 0 T)/%: " G%%I.
T%R%:" :O5/)TT%C "# "DD)C";)T %@%COT%C 5* #"$L%$# "#C B$:%D)#",
5R$TF%R "#C :):T%R <)#= L"G, R%:%CT);%L*, $D TF% C%C%":%C TF"T
T%R%:" F": #%;%R R%'/"RR)%C #$R C$F"5)T%C G)TF "#$TF%R /"#.
5":%C $# TF% )#T%R;)%G <C"T%C 3+,9+39= C$#COCT%C DR$/ TF%
#%)8F5$RF$$C $D T%R%:" "#C 58*. I"8"G"C )# T$#C$, /"#)L", I# 1A$
!$#A"I$/!D #/A# #!R!$A DID NO# CO/A"I# 1I#/ ANO#/!R MAN AF#!R
#/! $!PARA#ION A#/OUG/ #/!R! AR! RUMOR$ #/A# $/! AND A
C!R#AIN POIC! OFFIC!R /AD AN AFFAIR. "U# HNO#I !NOUG/ PROOF #O
!$#A"I$/ #/!IR R!A#ION$/IP $INC! #/!( DID NO# I'!8IN A$
/U$"AND AND 1IF!.
5":%C $# TF% )#T%R;)%G G)TF B$:%D)#" D";)L", /%/5%R "#C T%R%:"
G%R% :%"R"T%C D$R " #O/5%R $D *%"R: "#C TF"T $/! /AD NO
6NO1!DG! IF #!R!$A CO/A"I#!D 1I#/ ANO#/!R MAN A#/OUG/ $/!
/!ARD OF #/! RUMOR$ #/A# $AID 1IF! /AD AN AFFAIR 1I#/ ANO#/!R
MAN. #"$L%$# G": #$T )#T%R;)%G%C. <%mphasis ours=
Ghile ::C believes that the foregoing constitutes substantial evidence of TeresaNs amorous relationship, we,
however, find otherwise. )t is not hard to see that %stelitaNs claim of TeresaNs cohabitation with a married man is
a mere allegation without proof. Likewise, the interviews conducted by ::: revealed rumors only that Teresa
had an affair with a certain police officer. #otably, not one from those interviewed confirmed that such an affair
indeed e?isted. &The basic rule is that mere allegation is not evidence and is not equivalent to proof. Charges
based on mere suspicion and speculation likewise cannot be given credence.&26 &/ere uncorroborated hearsay
or rumor does not constitute substantial evidence.&27 Remarkably, the /emorandum itself stated that there is
not enough proof to establish TeresaNs alleged relationship with another man since they did not live as husband
and wife.
This notwithstanding, we still find untenable TeresaNs assertion that being the legal wife, she is presumed
dependent upon Dlorante for support. )n ReD Application for !urvivor8s Benefits of 'anlavi,28 this Court defined
&dependent& as &one who derives his or her main support from another JorK relying on, or sub>ect to, someone
else for supportE not able to e?ist or sustain oneself, or to perform anything without the will, power or aid of
someone else.& "lthough therein, the wifeNs marriage to the deceased husband was not dissolved prior to the
latterNs death, the Court denied the wifeNs claim for survivorship benefits from the 8overnment :ervice
)nsurance :ystem <8:):= because the wife abandoned her family to live with other men for more than ,7 years
until her husband died. Fer whereabouts was unknown to her family and she never attempted to communicate
with them or even check up on the well'being of her daughter with the deceased. Drom these, the Court
concluded that the wife during said period was not dependent on her husband for any support, financial or
otherwise, hence, she is not a dependent within the contemplation of R" 923,29 as to be entitled to survivorship
benefits. )t is worthy to note that under :ection 2<f= R" 923,, a legitimate spouse dependent for support is
likewise included in the enumeration of dependents and under :ection 2<g=, the legal dependent spouse in the
enumeration of primary beneficiaries.
Onder this premise, we declared in A#uas that &the obvious conclusion is that a wife who is already separated de
facto from her husband cannot be said to be [dependent for supportN upon the husband, absent any showing to
the contrary. Conversely, if it is proved that the husband and wife were still living together at the time of his
death, it would be safe to presume that she was dependent on the husband for support, unless it is shown that she
is capable of providing for herself.&30 Fence, we held therein that the wife'claimant had the burden to prove
that all the statutory requirements have been complied with, particularly her dependency on her husband at the
time of his death. "nd, while said wife'claimant was the legitimate wife of the deceased, we ruled that she is not
qualified as a primary beneficiary since she failed to present any proof to show that at the time of her husbandNs
death, she was still dependent on him for support even if they were already living separately.
)n this case, aside from TeresaNs bare allegation that she was dependent upon her husband for support and her
misplaced reliance on the presumption of dependency by reason of her valid and then subsisting marriage with
Dlorante, Teresa has not presented sufficient evidence to discharge her burden of proving that she was dependent
upon her husband for support at the time of his death. :he could have done this by submitting affidavits of
reputable and disinterested persons who have knowledge that during her separation with Dlorante, she does not
have a known trade, business, profession or lawful occupation from which she derives income sufficient for her
support and such other evidence tending to prove her claim of dependency. Ghile we note from the
abovementioned ::: /emorandum that Teresa submitted affidavits e?ecuted by #apoleon Davila and Bosefina
Davila, same only pertained to the fact that she never remarried nor cohabited with another man. $n the contrary,
what is clear is that she and Dlorante had already been separated for about ,7 years prior to the latterNs death as
Dlorante was in fact, living with his common law wife when he died. :uffice it to say that &JwKhoever claims
entitlement to the benefits provided by law should establish his or her right thereto by substantial
evidence.&31Fence, for TeresaNs failure to show that despite their separation she was dependent upon Dlorante
for support at the time of his death, Teresa cannot qualify as a primary beneficiary. ,Swphi, Fence, she is not
entitled to the death benefits accruing on account of DloranteNs death.
"s a final note, we do not agree with the C"Ns pronouncement that the investigations conducted by ::: violate a
personNs right to privacy. :::, as the primary institution in charge of e?tending social security protection to
workers and their beneficiaries is mandated by :ection 0<b=<7= of R" 929232 to require reports, compilations
and analyses of statistical and economic data and to make an investigation as may be needed for its proper
administration and development. recisely, the investigations conducted by ::: are appropriate in order to
ensure that the benefits provided under the :: Law are received by the rightful beneficiaries. )t is not hard to see
that such measure is necessary for the systemNs proper administration, otherwise, it will be swamped with bogus
claims that will pointlessly deplete its funds. :uch scenario will certainly frustrate the purpose of the law which
is to provide covered employees and their families protection against the haHards of disability, sickness, old age
and death, with a view to promoting their well'being in the spirit of social >ustice. /oreover and as correctly
pointed out by ::C, such investigations are likewise necessary to carry out the mandate of :ection ,6 of the ::
Law which provides in part, vizD
:ec. ,6. )on5transferability of Benefits. P The ::: shall pay the benefits provided for in this "ct to such [x x x
persons as may !e entitled thereto in accordance "ith the pro#isions of this Act ? ? ?. <%mphasis ours.=
GF%R%D$R%, the etition for Review on Certiorari is 8R"#T%C. The assailed Cecision and Resolution of
the Court of "ppeals dated /ay 20, 2116 and $ctober ,7, 2116 in C"'8.R. : #o. 9274- are hereby
R%;%R:%C and :%T ":)C%. Respondent Teresa 8. Davila is declared to be not a dependent spouse within the
contemplation of Republic "ct #o. ,,4, and is therefore not entitled to death benefits accruing from the death of
Dlorante Davila.
:$ $RC%R%C.
G.R. No. 132529. February 2, 2,,1
$U$AN NICDAO CARIJO, petitioner,
vs.
$U$AN (!! CARIJO, respondent.
C % C ) : ) $ #
(NAR!$8$AN#IAGO, J.:
The issue for resolution in the case at bar hinges on the validity of the two marriages contracted by the deceased
:$0 :antiago :. CariRo, whose \death benefits] is now the sub>ect of the controversy between the two :usans
whom he married. ,Swphi,.n^t
5efore this Court is a petition for review on certiorari seeking to set aside the decision , of the Court of "ppeals
in C"'8.R. C; #o. 6,24-, which affirmed in toto the decision 2 of the Regional Trial Court of MueHon City,
5ranch 97, in Civil Case #o. M'3-',94-2.
Curing the lifetime of the late :$0 :antiago :. CariRo, he contracted two marriages, the first was on Bune 21,
,343, with petitioner :usan #icdao CariRo <hereafter referred to as :usan #icdao=, with whom he had two
offsprings, namely, :ahlee and :andee CariRoE and the second was on #ovember ,1, ,332, with respondent
:usan *ee CariRo <hereafter referred to as :usan *ee=, with whom he had no children in their almost ten year
cohabitation starting way back in ,392.
)n ,399, :$0 :antiago :. CariRo became ill and bedridden due to diabetes complicated by pulmonary
tuberculosis. Fe passed away on #ovember 2-, ,332, under the care of :usan *ee, who spent for his medical
and burial e?penses. 5oth petitioner and respondent filed claims for monetary benefits and financial assistance
pertaining to the deceased from various government agencies. etitioner :usan #icdao was able to collect a total
of ,04,111.11 from \/5"), CCO), Commutation, #"$LC$/, JandK ag'ibig,] - while respondent :usan
*ee received a total of 2,,111.11 from \8:): Life, 5urial <8:):= and burial <:::=.] 0
$n Cecember ,0, ,33-, respondent :usan *ee filed the instant case for collection of sum of money against
petitioner :usan #icdao praying, inter alia, that petitioner be ordered to return to her at least one'half of the one
hundred forty'si? thousand pesos <,04,111.11= collectively denominated as \death benefits] which she
<petitioner= received from \/5"), CCO), Commutation, #"$LC$/, JandK ag'ibig.] Cespite service of
summons, petitioner failed to file her answer, prompting the trial court to declare her in default.
Respondent :usan *ee admitted that her marriage to the deceased took place during the subsistence of, and
without first obtaining a >udicial declaration of nullity of, the marriage between petitioner and the deceased. :he,
however, claimed that she had no knowledge of the previous marriage and that she became aware of it only at
the funeral of the deceased, where she met petitioner who introduced herself as the wife of the deceased. To
bolster her action for collection of sum of money, respondent contended that the marriage of petitioner and the
deceased is void ab initio because the same was solemniHed without the required marriage license. )n support
thereof, respondent presented. ,= the marriage certificate of the deceased and the petitioner which bears no
marriage license numberE 6 and 2= a certification dated /arch 3, ,330, from the Local Civil Registrar of :an
Buan, /etro /anila, which reads P
%his is to certify that this >ffice has no record of marria#e license of the spouses !A)%6AA> &AR6)> *sic1 and
!$!A) )6&3A>, (ho are married in this municipality on June .,, +<:<. Eence, (e cannot issue as re7uested a
true copy or transcription of 'arria#e License number from the records of this archives.
%his certification is issued upon the re7uest of 'rs. !usan ee &ariFo for (hatever le#al purpose it may serve. :
$n "ugust 29, ,336, the trial court ruled in favor of respondent, :usan *ee, holding as follows.
GE2R2@>R2, the defendant is hereby ordered to pay the plaintiff the sum of P/=,,,,.,,, half of the amount
(hich (as paid to her in the form of death benefits arisin# from the death of !P>H !antia#o !. &ariFo, plus
attorney8s fees in the amount of P-,,,,.,,, and costs of suit.
6% 6! !> >R32R23. /
$n appeal by petitioner to the Court of "ppeals, the latter affirmed in toto the decision of the trial court. Fence,
the instant petition, contending that.
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Onder "rticle 01 of the Damily Code, the absolute nullity of a previous marriage may be invoked for purposes of
remarriage on the basis solely of a final >udgment declaring such previous marriage void. /eaning, where the
absolute nullity of a previous marriage is sought to be invoked for purposes of contracting a second marriage,
the sole basis acceptable in law, for said pro>ected marriage to be free from legal infirmity, is a final >udgment
declaring the previous marriage void. 3 Fowever, for purposes other than remarriage, no >udicial action is
necessary to declare a marriage an absolute nullity. Dor other purposes, such as but not limited to the
determination of heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of property
regime, or a criminal case for that matter, the court may pass upon the validity of marriage even after the death
of the parties thereto, and even in a suit not directly instituted to question the validity of said marriage, so long as
it is essential to the determination of the case. ,1 )n such instances, evidence must be adduced, testimonial or
documentary, to prove the e?istence of grounds rendering such a previous marriage an absolute nullity. These
need not be limited solely to an earlier final >udgment of a court declaring such previous marriage void. ,,
)t is clear therefore that the Court is clothed with sufficient authority to pass upon the validity of the two
marriages in this case, as the same is essential to the determination of who is rightfully entitled to the sub>ect
\death benefits] of the deceased.
Onder the Civil Code, which was the law in force when the marriage of petitioner :usan #icdao and the
deceased was solemniHed in ,343, a valid marriage license is a requisite of marriage, ,2 and the absence thereof,
sub>ect to certain e?ceptions, ,- renders the marriage void ab initio. ,0
)n the case at bar, there is no question that the marriage of petitioner and the deceased does not fall within the
marriages e?empt from the license requirement. " marriage license, therefore, was indispensable to the validity
of their marriage. This notwithstanding, the records reveal that the marriage contract of petitioner and the
deceased bears no marriage license number and, as certified by the Local Civil Registrar of :an Buan, /etro
/anila, their office has no record of such marriage license. )n Republic v. &ourt of Appeals, ,6 the Court held
that such a certification is adequate to prove the non'issuance of a marriage license. "bsent any circumstance of
suspicion, as in the present case, the certification issued by the local civil registrar en>oys probative value, he
being the officer charged under the law to keep a record of all data relative to the issuance of a marriage license.
:uch being the case, the presumed validity of the marriage of petitioner and the deceased has been sufficiently
overcome. )t then became the burden of petitioner to prove that their marriage is valid and that they secured the
required marriage license. "lthough she was declared in default before the trial court, petitioner could have
squarely met the issue and e?plained the absence of a marriage license in her pleadings before the Court of
"ppeals and this Court. 5ut petitioner conveniently avoided the issue and chose to refrain from pursuing an
argument that will put her case in >eopardy. Fence, the presumed validity of their marriage cannot stand.
)t is beyond cavil, therefore, that the marriage between petitioner :usan #icdao and the deceased, having been
solemniHed without the necessary marriage license, and not being one of the marriages e?empt from the
marriage license requirement, is undoubtedly void ab initio.
)t does not follow from the foregoing disquisition, however, that since the marriage of petitioner and the
deceased is declared void ab initio, the \death benefits] under scrutiny would now be awarded to respondent
:usan *ee. To reiterate, under "rticle 01 of the Damily Code, for purposes of remarriage, there must first be a
prior >udicial declaration of the nullity of a previous marriage, though void, before a party can enter into a
second marriage, otherwise, the second marriage would also be void.
"ccordingly, the declaration in the instant case of nullity of the previous marriage of the deceased and petitioner
:usan #icdao does not validate the second marriage of the deceased with respondent :usan *ee. The fact
remains that their marriage was solemniHed without first obtaining a >udicial decree declaring the marriage of
petitioner :usan #icdao and the deceased void. Fence, the marriage of respondent :usan *ee and the deceased
is, likewise, void ab initio.
$ne of the effects of the declaration of nullity of marriage is the separation of the property of the spouses
according to the applicable property regime. ,4 Considering that the two marriages are void ab initio, the
applicable property regime would not be absolute community or con>ugal partnership of property, but rather, be
governed by the provisions of "rticles ,07 and ,09 of the Damily Code on \roperty Regime of Onions Githout
/arriage.]
Onder "rticle ,09 of the Damily Code, which refers to the property regime of bigamous marriages, adulterous
relationships, relationships in a state of concubine, relationships where both man and woman are married to
other persons, multiple alliances of the same married man, ,7 '
\... I>Jnly the properties ac7uired by both of the parties throu#h their actual joint contribution of money,
property, or industry shall be o(ned by them in common in proportion to their respective contributions ...K
)n this property regime, the properties acquired by the parties through their a?4ua. Ko;%4 ?o%4r;bu4;o% shall
belong to the co'ownership. Gages and salaries earned by each party belong to him or her e?clusively. Then too,
contributions in the form of care of the home, children and household, or spiritual or moral inspiration, are
e?cluded in this regime. ,9
Considering that the marriage of respondent :usan *ee and the deceased is a bigamous marriage, having been
solemniHed during the subsistence of a previous marriage then presumed to be valid <between petitioner and the
deceased=, the application of "rticle ,09 is therefore in order.
The disputed ,04,111.11 from /5") J"D /utual 5enefit "ssociation, )nc.K, #"$LC$/, Commutation,
ag'ibig, and CCO), are clearly renumerations, incentives and benefits from governmental agencies earned by
the deceased as a police officer. Onless respondent :usan *ee presents proof to the contrary, it could not be said
that she contributed money, property or industry in the acquisition of these monetary benefits. Fence, they are
not owned in common by respondent and the deceased, but belong to the deceased alone and respondent has no
right whatsoever to claim the same. 5y intestate succession, the said \death benefits] of the deceased shall pass
to his legal heirs. "nd, respondent, not being the legal wife of the deceased is not one of them.
"s to the property regime of petitioner :usan #icdao and the deceased, "rticle ,07 of the Damily Code governs.
This article applies to unions of parties who are legally capacitated and not barred by any impediment to contract
marriage, but whose marriage is nonetheless void for other reasons, like the absence of a marriage license.
"rticle ,07 of the Damily Code reads '
Art. +H/. Ghen a man and a (oman (ho are capacitated to marry each other, live e4clusively (ith each other as
husband and (ife (ithout the benefit of marria#e or under a void marria#e, their (a#es and salaries shall be
o(ned by them in e7ual shares and the property ac7uired by both of them throu#h their (or9 or industry shall
be #overned by the rules on co5o(nership.
6n the absence of proof to the contrary, properties ac7uired (hile they lived to#ether shall be presumed to have
been obtained by their joint efforts, (or9 or industry, and shall be o(ned by them in e7ual shares. @or purposes
of this Article, a party (ho did not participate in the ac7uisition by the other party of any property shall be
deemed to have contributed jointly in the ac7uisition thereof if the former8s efforts consisted in the care and
maintenance of the family and of the household.
4 4 4
Ghen only one of the parties to a void marria#e is in #ood faith, the share of the party in bad faith in the co5
o(nership shall be forfeited in favor of their common children. 6n case of default of or (aiver by any or all of
the common children or their descendants, each vacant share shall belon# to the respective survivin#
descendants. 6n the absence of descendants, such share shall belon# to the innocent party. 6n all cases, the
forfeiture shall ta9e place upon termination of the cohabitation.
)n contrast to "rticle ,09, under the foregoing article, wages and salaries earned by either party during the
cohabitation shall be owned by the parties in equal shares and will be divided equally between them, even if only
one party earned the wages and the other did not contribute thereto. ,3 Conformably, even if the disputed \death
benefits] were earned by the deceased alone as a government employee, "rticle ,07 creates a co'ownership in
respect thereto, entitling the petitioner to share one'half thereof. "s there is no allegation of bad faith in the
present case, both parties of the first marriage are presumed to be in good faith. Thus, one'half of the sub>ect
\death benefits] under scrutiny shall go to the petitioner as her share in the property regime, and the other half
pertaining to the deceased shall pass by, intestate succession, to his legal heirs, namely, his children with :usan
#icdao.
)n affirming the decision of the trial court, the Court of "ppeals relied on the case of "da. de &onsue#ra v.
Aovernment !ervice 6nsurance !ystem, 21 where the Court awarded one'half of the retirement benefits of the
deceased to the first wife and the other half, to the second wife, holding that.
\... I!Jince the defendant8s first marria#e has not been dissolved or declared void the conju#al partnership
established by that marria#e has not ceased. )or has the first (ife lost or relin7uished her status as putative
heir of her husband under the ne( &ivil &ode, entitled to share in his estate upon his death should she survive
him. &onse7uently, (hether as conju#al partner in a still subsistin# marria#e or as such putative heir she has an
interest in the husband8s share in the property here in dispute....K And (ith respect to the ri#ht of the second
(ife, this &ourt observed that althou#h the second marria#e can be presumed to be void ab initio as it (as
celebrated (hile the first marria#e (as still subsistin#, still there is need for judicial declaration of such nullity.
And inasmuch as the conju#al partnership formed by the second marria#e (as dissolved before judicial
declaration of its nullity, LItJhe only just and e7uitable solution in this case (ould be to reco#nize the ri#ht of
the second (ife to her share of one5half in the property ac7uired by her and her husband, and consider the other
half as pertainin# to the conju#al partnership of the first marria#e.K .+
)t should be stressed, however, that the aforecited decision is premised on the rule which requires a prior and
separate >udicial declaration of nullity of marriage. This is the reason why in the said case, the Court determined
the rights of the parties in accordance with their e?isting property regime.
)n 3omin#o v. &ourt of Appeals, 22 however, the Court, construing "rticle 01 of the Damily Code, clarified that
a prior and separate declaration of nullity of a marriage is an all important condition precedent only for purposes
of remarriage. That is, if a party who is previously married wishes to contract a second marriage, he or she has to
obtain first a >udicial decree declaring the first marriage void, before he or she could contract said second
marriage, otherwise the second marriage would be void. The same rule applies even if the first marriage is
patently void because the parties are not free to determine for themselves the validity or invalidity or their
marriage. Fowever, for purposes other than to remarry, like for filing a case for collection of sum of money
anchored on a marriage claimed to be valid, no prior and separate >udicial declaration of nullity is necessary. "ll
that a party has to do is to present evidence, testimonial or documentary, that would prove that the marriage from
which his or her rights flow is in fact valid. Thereupon, the court, if material to the determination of the issues
before it, will rule on the status of the marriage involved and proceed to determine the rights of the parties in
accordance with the applicable laws and >urisprudence. Thus, in )iFal v. Bayado#, 2- the Court e?plained.
I%Jhe court may pass upon the validity of marria#e even in a suit not directly instituted to 7uestion the same so
lon# as it is essential to the determination of the case. %his is (ithout prejudice to any issue that may arise in the
case. Ghen such need arises, a final jud#ment of declaration of nullity is necessary even if the purpose is other
than to remarry. %he clause Lon the basis of a final jud#ment declarin# such previous marria#e voidK in Article
H, of the @amily &ode connoted that such final jud#ment need not be obtained only for purpose of remarria#e.
GF%R%D$R%, the petition is 8R"#T%C, and the decision of the Court of "ppeals in C"'8.R. C; #o. 6,24-
which affirmed the decision of the Regional Trial Court of MueHon City ordering petitioner to pay respondent the
sum of 7-,111.11 plus attorneyNs fees in the amount of 6,111.11, is R%;%R:%C and :%T ":)C%. The
complaint in Civil Case #o. M'3-',94-2, is hereby C):/)::%C. #o pronouncement as to costs.
G.R. No. 171298 A3r;. 15, 2,13
$POU$!$ O$CAR a%& #/!MA CACA(ORIN, etitioners,
vs.
ARM!D FORC!$ AND POIC! MU#UA "!N!FI# A$$OCIA#ION, INC., Respondent.
C % C ) : ) $ #
D! CA$#IO, J.:
Consignation is necessarily >udicial. "rticle ,269 of the Civil Code specifically provides that consignation shall
be made by depositing the thing or things due at the disposal of >udicial authority. The said provision clearly
precludes consignation in venues other than the courts.
"ssailed in this etition for Review on Certiorari1 are the :eptember 23, 2116 Cecision2 of the Court of
"ppeals <C"= which granted the etition for Certiorari in C"'8.R. : #o. 90004 and its Banuary ,2, 2114
Resolution3denying petitioners' /otion for Reconsideration.4
Fa?4ua. A%4e?e&e%4:
etitioner $scar Cacayorin <$scar= is a member of respondent "rmed Dorces and olice /utual 5enefit
"ssociation, )nc. <"D/5")=, a mutual benefit association duly organiHed and e?isting under hilippine laws
and engaged in the business of developing low'cost housing pro>ects for personnel of the "rmed Dorces of the
hilippines, hilippine #ational olice, 5ureau of Dire rotection, 5ureau of Bail /anagement and enology,
and hilippine Coast 8uard. Fe filed an application with "D/5") to purchase a piece of property which the
latter owned, specifically Lot 6, 5lock 9, hase ), Ialikasan /utual Fomes, :an edro, uerto rincesa City
<the property=, through a loan facility.
$n Buly 0, ,330, $scar and his wife and co'petitioner herein, Thelma, on one hand, and the Rural 5ank of :an
Teodoro <the Rural 5ank= on the other, e?ecuted a Loan and /ortgage "greement 5 with the former as borrowers
and the Rural 5ank as lender, under the auspices of ag')5)8 or Fome Cevelopment /utual DundNs Fome
Dinancing rogram.
The Rural 5ank issued an "ugust 22, ,330 letter of guaranty6 informing "D/5") that the proceeds of
petitionersN approved loan in the amount of 77,0,9.11 shall be released to "D/5") after title to the property
is transferred in petitionersN name and after the registration and annotation of the partiesN mortgage agreement.
$n the basis of the Rural 5ankNs letter of guaranty, "D/5") e?ecuted in petitionersN favor a Ceed of "bsolute
:ale,7 and a new title P Transfer Certificate of Title #o. -71,78 <TCT #o. -71,7= P was issued in their name,
with the corresponding annotation of their mortgage agreement with the Rural 5ank, under %ntry #o. --40.9
Onfortunately, the ag')5)8 loan facility did not push through and the Rural 5ank closed and was placed under
receivership by the hilippine Ceposit )nsurance Corporation <C)C=. /eanwhile, "D/5") somehow was
able to take possession of petitionersN loan documents and TCT #o. -71,7, while petitioners were unable to pay
the loan+consideration for the property.
"D/5") made oral and written demands for petitioners to pay the loan+ consideration for the property.10
)n Buly 211-, petitioners filed a Complaint11 for consignation of loan payment, recovery of title and cancellation
of mortgage annotation against "D/5"), C)C and the Register of Ceeds of uerto rincesa City. The case
was docketed as Civil Case #o. -9,2 and raffled to 5ranch 07 of the Regional Trial Court <RTC= of uerto
rincesa City <uerto rincesa RTC=. etitioners alleged in their Complaint that as a result of the Rural 5ankNs
closure and C)CNs claim that their loan papers could not be located, they were left in a quandary as to where
they should tender full payment of the loan and how to secure cancellation of the mortgage annotation on TCT
#o. -71,7. etitioners prayed, thus.
a. That after the filing of this complaint an order be made allowing the consignation ? ? ? of
hp77,0,9.11.
b. Dor the court to compute and declare the amount of interest to be paid by the plaintiffs and
thereafter to allow the consignation of the interest payments in order to give way for the full
discharge of the loan.
c. To order the "D/5") to turn over to the custody of the court the loan records and title <T.C.T.
#o. -71,7= of the plaintiffs if the same are in their possession.
d. To declare the full payment of the principal loan and interest and ordering the full discharge from
mortgage of the property covered by T.C.T. #o. -71,7.
e. To order the Register of Ceeds of uerto rincesa City to cancel the annotation of real estate
mortgage under %ntry #o. --40 at the back of T.C.T. #o. -71,7.
f. Thereafter, to turn over to the plaintiffs their title free from the aforesaid mortgage loan.12
"D/5") filed a /otion to Cismiss13 claiming that petitionersN Complaint falls within the >urisdiction of the
Fousing and Land Ose Regulatory 5oard <FLOR5= and not the uerto rincesa RTC, as it was filed by
petitioners in their capacity as buyers of a subdivision lot and it prays for specific performance of contractual
and legal obligations decreed under residential Cecree #o. 36714 <C 367=. )t added that since no prior valid
tender of payment was made by petitioners, the consignation case was fatally defective and susceptible to
dismissal.
Ru.;%9 o> 4@e Re9;o%a. #r;a. Cour4
)n an $ctober ,4, 211- $rder,15 the trial court denied "D/5")Ns /otion to Cismiss, declaring that since title
has been transferred in the name of petitioners and the action involves consignation of loan payments, it
possessed >urisdiction to continue with the case. )t further held that the only remaining unsettled transaction is
between petitioners and C)C as the appointed receiver of the Rural 5ank.
"D/5") filed a /otion for Reconsideration,16 which the trial court denied in its /arch ,3, 2110 $rder.17
Ru.;%9 o> 4@e Cour4 o> A33ea.:
"D/5") thus instituted C"'8.R. : #o. 90004, which is a etition for Certiorari18 raising the issue of
>urisdiction. $n :eptember 23, 2116, the C" rendered the assailed Cecision decreeing as follows.
GF%R%D$R%, premises considered, this etition is 8R"#T%C. The "ssailed ,4 $ctober 211- and ,3 /arch
2110 $rders of the public respondent >udge are hereby ordered ;"C"T%C and :%T ":)C%.
:$ $RC%R%C.19
The C" held that Civil Case #o. -9,2 is a case for specific performance of "D/5")Ns contractual and
statutory obligations as owner+developer of Ialikasan /utual Fomes, which makes C 367 applicable and thus
places the case within the >urisdiction of the FLOR5. )t said that since one of the remedies prayed for is the
delivery to petitioners of TCT #o. -71,7, the case is cogniHable e?clusively by the FLOR5.
etitioners moved for reconsideration which was denied by the C" in its Banuary ,2, 2114 Resolution.
Fence, the instant etition.
I::ue
The sole issue that must be resolved in this etition is. Coes the Complaint in Civil Case #o. -9,2 fall within
the e?clusive >urisdiction of the FLOR5!
etitionersN "rguments
etitioners assert that the elements which make up a valid case for consignation are present in their Complaint.
They add that since a deed of absolute sale has been issued in their favor, and possession of the property has
been surrendered to them, not to mention that title has been placed in their name, the FLOR5 lost >urisdiction
over their case. "nd for this same reason, petitioners argue that their case may not be said to be one for specific
performance of contractual and legal obligations under C 367 as nothing more was left to be done in order to
perfect or consolidate their title.
etitioners thus pray that the herein assailed Cecision and Resolution of the C" be set aside, and that the trial
court be ordered to continue with the proceedings in Civil Case #o. -9,2.
Respondent's "rguments
Respondent, on the other hand, insists in its Comment20 that >urisdiction over petitionersN case lies with the
FLOR5, as it springs from their contractual relation as seller and buyer, respectively, of a subdivision lot. The
prayer in petitionersN Complaint involves the surrender or delivery of the title after full payment of the purchase
price, which respondent claims are reciprocal obligations in a sale transaction covered by C 367. Respondent
adds that in effect, petitioners are e?acting specific performance from it, which places their case within the
>urisdiction of the FLOR5.
Our Ru.;%9
The Court grants the etition.
The Complaint makes out a case for consignation.
The settled principle is that &the allegations of the Complaint determine the nature of the action and
consequently the >urisdiction of the courts. This rule applies whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein as this is a matter that can be resolved only after and as a result of
the trial.&21
Coes the Complaint in Civil Case #o. -9,2 make out a case for consignation! )t alleges that.
4.1 P #ot long after however, R5:T22 closed shop and defendant hilippine Ceposit )nsurance
Corporation <C)C= was appointed as its receiver. The plaintiffs, through a representative, made a
verbal inquiry to the C)C regarding the payment of their loan but were told that it has no
information or record of the said loan. This made JsicK the plaintiffs in quandary as to where or whom
they will pay their loan, which they intend to pay in full, so as to cancel the annotation of mortgage in
their title.
7.1 P )t was discovered that the loan papers of the plaintiffs, including the duplicate original of their
title, were in the possession of defendant "D/5"). )t was unclear though why the said documents
including the title were in the possession of "D/5"). These papers should have been in R5:TNs
possession and given to C)C after its closure in the latterNs capacity as receiver.
9.1 P laintiffs are now intending to pay in full their real estate loan but could not decide where to
pay the same because of R5:T JsicK closure and C)CNs failure to locate the loan records and title.
This courtNs intervention is now needed in order to determine to JsicK where or whom the loan should
be paid.
3.1 P laintiffs hereby respectfully prays JsicK for this court to allow the deposit of the amount of
hp77,0,9.11 as full payment of their principal loan, e?cluding interest, pursuant to the Loan and
/ortgage "greement on 0 Buly ,330.23
Drom the above allegations, it appears that the petitionersN debt is outstandingE that the Rural 5ankNs receiver,
C)C, informed petitioners that it has no record of their loan even as it took over the affairs of the Rural 5ank,
which on record is the petitionersN creditor as per the Buly 0, ,330 Loan and /ortgage "greementE that one way
or another, "D/5") came into possession of the loan documents as well as TCT #o. -71,7E that petitioners
are ready to pay the loan in fullE however, under the circumstances, they do not know which of the two P the
Rural 5ank or "D/5") P should receive full payment of the purchase price, or to whom tender of payment
must validly be made.
Onder "rticle ,264 of the Civil Code,24 the debtor shall be released from responsibility by the consignation of
the thing or sum due, without need of prior tender of payment, when the creditor is absent or unknown, or when
he is incapacitated to receive the payment at the time it is due, or when two or more persons claim the same right
to collect, or when the title to the obligation has been lost. "pplying "rticle ,264 to the petitionersN case as
shaped by the allegations in their Complaint, the Court finds that a case for consignation has been made out, as it
now appears that there are two entities which petitioners must deal with in order to fully secure their title to the
property. ,= the Rural 5ank <through C)C=, which is the apparent creditor under the Buly 0, ,330 Loan and
/ortgage "greementE and 2= "D/5"), which is currently in possession of the loan documents and the
certificate of title, and the one making demands upon petitioners to pay. Clearly, the allegations in the Complaint
present a situation where the creditor is unknown, or that two or more entities appear to possess the same right to
collect from petitioners. Ghatever transpired between the Rural 5ank or C)C and "D/5") in respect of
petitionersN loan account, if any, such that "D/5") came into possession of the loan documents and TCT #o.
-71,7, it appears that petitioners were not informed thereof, nor made privy thereto.
)ndeed, the instant case presents a unique situation where the buyer, through no fault of his own, was able to
obtain title to real property in his name even before he could pay the purchase price in full. There appears to be
no vitiated consent, nor is there any other impediment to the consummation of their agreement, >ust as it appears
that it would be to the best interests of all parties to the sale that it be once and for all completed and terminated.
Dor this reason, Civil Case #o. -9,2 should at this >uncture be allowed to proceed.
/oreover, petitionersN position is buttressed by "D/5")Ns own admission in its Comment25 that it made oral
and written demands upon the former, which naturally aggravated their confusion as to who was their rightful
creditor to whom payment should be made P the Rural 5ank or "D/5"). )ts subsequent filing of the /otion to
Cismiss runs counter to its demands to pay. )f it wanted to be paid with alacrity, then it should not have moved to
dismiss Civil Case #o. -9,2, which was brought precisely by the petitioners in order to be able to finally settle
their obligation in full.
Dinally, the lack of prior tender of payment by the petitioners is not fatal to their consignation case. They filed
the case for the e?act reason that they were at a loss as to which between the two P the Rural 5ank or "D/5")
P was entitled to such a tender of payment. 5esides, as earlier stated, "rticle ,264 authoriHes consignation alone,
without need of prior tender of payment, where the ground for consignation is that the creditor is unknown, or
does not appear at the place of paymentE or is incapacitated to receive the payment at the time it is dueE or when,
without >ust cause, he refuses to give a receiptE or when two or more persons claim the same right to collectE or
when the title of the obligation has been lost.
Consignation is necessarily >udicialE hence, >urisdiction lies with the RTC, not with the FLOR5.
$n the question of >urisdiction, petitionersN case should be tried in the uerto rincesa RTC, and not the
FLOR5. Consignation is necessarily >udicial,26 as the Civil Code itself provides that consignation shall be
made by depositing the thing or things due at the disposal of >udicial authority, thus.
"rt. ,269. Consignation shall be made by depositing the things due at the disposal of >udicial authority, before
whom the tender of payment shall be proved, in a proper case, and the announcement of the consignation in
other cases.
The consignation having been made, the interested parties shall also be notified thereof. <%mphasis and
underscoring supplied=
The above provision clearly precludes consignation in venues other than the courts. ,Swphi, %lsewhere, what
may be made is a valid tender of payment, but not consignation. The two, however, are to be distinguished.
Tender of payment must be distinguished from consignation. Tender is the antecedent of consignation, that is, an
act preparatory to the consignation, which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain. Tender of payment may be e?tra>udicial, while
consignation is necessarily >udicial, and the priority of the first is the attempt to make a private settlement before
proceeding to the solemnities of consignation. <9 /anresa -26=.27
Ghile it may be true that petitionersN claim relates to the terms and conditions of the sale of "D/5")Ns
subdivision lot, this is overshadowed by the fact that since the Complaint in Civil Case #o. -9,2 pleads a case
for consignation, the FLOR5 is without >urisdiction to try it, as such case may only be tried by the regular
courts.
GF%R%D$R%, premises considered, the etition is 8R"#T%C. The :eptember 23, 2116 Cecision and Banuary
,2, 2114 Resolution of the Court of "ppeals in C"'8.R. : #o. 90004 are "##OLL%C and :%T ":)C%. The
$ctober ,4, 211- and /arch ,3, 2110 $rders of the Regional Trial Court of uerto rincesa City, 5ranch 07, are
R%)#:T"T%C, and the case is R%/"#C%C to the said court for continuation of the proceedings.
:$ $RC%R%C.
G.R. No. 17,292 -u%e 22, 2,11
/OM! D!'!OPM!N# MU#UA FUND A/DMFB, etitioner,
vs.
$3ou:e: FID! a%& FORINDA R. $!! a%& $@er;>> MANU! . ARIMADO, Respondents.
C % C ) : ) $ #
D! CA$#IO, J.:
" party that loses its right to appeal by its own negligence cannot seek refuge in the remedy of a writ of
certiorari.
This is a etition for Review on Certiorari1 under Rule 06 of the Rules of Court assailing the "ugust -,, 2116
Cecision,2 as well as the $ctober 24, 2116 Resolution,3 of the Court of "ppeals <C"= in C"'8.R. : #o.
71929. The dispositive portion of the assailed C" Cecision reads thus.
GF%R%D$R%, premises considered, the instant petition is C%#)%C CO% C$OR:% and is accordingly
C):/)::%C. The assailed Cecision of the Regional Trial Court, 5ranch 4, LegaHpi City dated Debruary 2,,
2112 and its $rder dated /arch ,6, 2112 are "DD)R/%C.
:$ $RC%R%C.4
Dactual "ntecedents
Respondent'spouses Didel and Dlorinda :ee <respondent'spouses= were the highest bidders in the e?tra>udicial
foreclosure sale of a property5 that was mortgaged to petitioner Fome Cevelopment /utual Dund or ag'ibig
Dund <ag'ibig=. They paid the bid price of 272,111.11 in cash to respondent :heriff /anuel L. "rimado
<:heriff "rimado=. )n turn, respondent'spouses received a Certificate of :ale wherein :heriff "rimado
acknowledged receipt of the purchase price, and an $fficial Receipt #o. ,,0341-9 dated Banuary 29, 2111 from
"tty. Baime :. #arvaeH, the clerk of court with whom :heriff "rimado deposited the respondent'spousesN
payment.6
Cespite the e?piration of the redemption period, ag'ibig refused to surrender its certificate of title to the
respondent'spouses because it had yet to receive the respondent'spousesN payment from :heriff "rimado7 who
failed to remit the same despite repeated demands.8 )t turned out that :heriff "rimado withdrew from the clerk
of court the 272,111.11 paid by respondent'spouses, on the pretense that he was going to deliver the same to
ag'ibig. The money never reached ag'ibig and was spent by :heriff "rimado for his personal use.9
Considering ag'ibigNs refusal to recogniHe their payment, respondent'spouses filed a complaint for specific
performance with damages against ag'ibig and :heriff "rimado before 5ranch - of the Regional Trial Court
<RTC= of LegaHpi City. The complaint alleged that the law on foreclosure authoriHed :heriff "rimado to receive,
on behalf of ag'ibig, the respondent'spousesN payment. "ccordingly, the payment made by respondent'spouses
to ag'ibigNs authoriHed agent should be deemed as payment to ag'ibig.10 )t was prayed that :heriff "rimado
be ordered to remit the amount of 272,111.11 to ag'ibig and that the latter be ordered to release the title to the
auctioned property to respondent'spouses.11
ag'ibig admitted the factual allegations of the complaint <i.e., the bid of respondent'spouses,12 their full
payment in cash to :heriff "rimado,13 and the fact that :heriff "rimado misappropriated the money14= but
maintained that respondent'spouses had no cause of action against it. ag'ibig insisted that it has no duty to
deliver the certificate of title to respondent'spouses unless ag'ibig actually receives the bid price. ag'ibig
denied that the absconding sheriff was its agent for purposes of the foreclosure proceedings.15
Ghen the case was called for pre'trial conference, the parties submitted their Compromise "greement for the
courtNs approval. The Compromise "greement reads.
Ondersigned parties, through their respective counselsJ,K to this Fonorable Court respectfully submit this
Compromise "greement for their mutual interest and benefit that this case be amicably settled, the terms and
conditions of which are as follows.
,. JRespondentK /anuel L. "rimado, :heriff ); RTC, LegaHpi acknowledges his obligation to the
Fome Cevelopment /utual Dund <"8')5)8=, Regional $ffice ;, LegaHpi City and+or to
Jrespondent'spousesK the amount of -11,111.11, representing payment for the bid price and other
necessary e?penses incurred by the Jrespondent'spousesK, the latter being the sole bidder of the
property sub>ect matter of the %?tra>udicial Doreclosure :ale conducted by :heriff "rimado on
Banuary ,0, 2111, at the $ffice of the Clerk of Court, RTC, LegaHpiE
? ? ? ?
-. Respondent /anuel L. "rimado due to urgent financial need acknowledgeJsK that he personally
used the money paid to him by Jrespondent'spousesK which represents the bid price of the
aboveJ'Kmentioned property sub>ect of the foreclosure sale. The JmoneyK should have been
delivered+paid by Respondent "rimado to Fome Cevelopment /utual Dund <"8')5)8= as payment
and in satisfaction of its mortgage claim.
0. Respondent /anuel L. "rimado obligates himself to pay in cash to JpetitionerK Fome
Cevelopment /utual Dund <"8')5)8= the amount of 272,111.11 representing full payment of its
claim on or before $ctober -,, 211, JsoK that the title to the property JcouldK be released by "8'
)5)8 to Jrespondent'spousesK. "n additional amount of 29,111.11 shall likewise be paid by
JrespondentK "rimado to the Jrespondent'spousesK as reimbursement for litigation e?pensesE
6. JetitionerK Fome Cevelopment /utual Dund <"8')5)8= shall upon receipt of the 272,111.11
from JrespondentK /anuel L. "rimado release immediately within a period of three <-= days the
certificate of title of the property above'mentioned to Jrespondent'spousesK being the rightful buyer or
owner of the propertyE
4. )n the event JrespondentK /anuel L. "rimado fails to pay JpetitionerK Fome Cevelopment /utual
Dund <"8')5)8=, or, Jrespondent'spousesK the amount of 272,111.11 on or before $ctober -,,
211,, the Jrespondent'spousesK shall be entitled to an immediate writ of e?ecution without further
notice to respondent /anuel L. "rimado and the issue as to whether JpetitionerK Fome Cevelopment
/utual Dund <"8')5)8= shall be liable for the release of the title to Jrespondent spousesK under the
circumstances or allegations narrated in the complaint shall continue to be litigated upon in order that
the Fonorable Court may resolve the legality of said issueE
7. )n the event JrespondentK /anuel L. "rimado complies with the payment as above'stated, the
parties mutually agree to withdraw all claims and counterclaimJsK they may have against each other
arising out of the above'entitled case.16
The trial court approved the compromise agreement and incorporated it in its Cecision dated $ctober -,, 211,.
The trial court stressed the implication of paragraph 4 of the approved compromise agreement.
"ccordingly, the parties are en>oined to comply strictly with the terms and conditions of their Compromise
"greement.
)n the event that JrespondentK /anuel L. "rimado fails to pay JpetitionerK FC/D <ag'ibig=, or Jrespondent'
spousesK the amount of 272,111.11 on $ctober -,, 211,, the Court, upon motion of Jrespondent'spousesK, may
issue the necessary writ of e?ecution.
)n this connection, with respect to the issue as to whether or not JpetitionerK FC/D <ag'ibig= shall be liable for
the release of the title of the Jrespondent'spousesK under the circumstances narrated in the Complaint which
necessitates further litigation in court, let the hearing of the same be set on Cecember ,0, 211, at 3.11 oNclock in
the morning.
:$ $RC%R%C.17
#one of the parties sought a reconsideration of the aforequoted Cecision.
Ghen :heriff "rimado failed to meet his undertaking to pay on or before $ctober -,, 211,, the trial court
proceeded to rule on the issue of whether ag'ibig is liable to release the title to respondent'spouses despite non'
receipt of their payment.18
Ruling of the Regional Trial Court19
The trial court rendered its Cecision dated Debruary 2,, 2112 in favor of respondent'spouses, reasoning as
follows. Onder "rticle ,201 of the Civil Code, payment is valid when it is made to a person authoriHed by law to
receive the same. )n foreclosure proceedings, the sheriff is authoriHed by "ct #o. -,-6 and the Rules of Court to
receive payment of the bid price from the winning bidder. Ghen ag'ibig invoked the provisions of these laws
by applying for e?tra>udicial foreclosure, it likewise constituted the sheriff as its agent in conducting the
foreclosure and receiving the proceeds of the auction. Thus, when the respondent'spouses paid the purchase
price to :heriff "rimado, a legally authoriHed representative of ag'ibig, this payment effected a discharge of
their obligation to ag'ibig.
The trial court thus ordered ag'ibig to deliver the documents of ownership to the respondent'spouses. The
dispositive portion reads thus.
GF%R%D$R%, premises considered, decision is hereby rendered in favor of the Jrespondent'spousesK and
against the JpetitionerK FC/D, ordering said JpetitionerK to e?ecute a Release and+or Cischarge of /ortgage, and
to deliver the same to the Jrespondent'spousesK together with the documents of ownership and the ownerNs copy
of Certificate of Title #o. T'79171 covering the property sold Jto respondent'spousesK in the auction sale within
ten <,1= days from the finality of this decision.
:hould JpetitionerK FC/D fail to e?ecute the Release and+or Cischarge of /ortgage and to deliver the same
together with the documents of ownership and TCT #o. T'79171 within ten <,1= days from the finality of this
decision, the court shall order the Clerk of Court to e?ecute the said Release and+or Cischarge of /ortgage and
shall order the cancellation of TCT #o. T'79171 and the issuance of a second ownerNs copy thereof.
:$ $RC%R%C.20
ag'ibig filed a motion for reconsideration on the sole ground that &Jag'ibigK should not be compelled to
release the title to ? ? ? Jrespondent'spousesK :ee because /anuel "rimado JhasK yet to deliver to Jag'ibigK the
sum of272,111.11.&21
The trial court denied the motion on /arch ,6, 2112. )t e?plained that the partiesN compromise agreement duly
authoriHed the court to rule on ag'ibigNs liability to respondent'spouses despite :heriff "rimadoNs non'
remittance of the proceeds of the auction.22
ag'ibig received the denial of its motion for reconsideration on /arch 22, 211223 but took no further action.
Fence, on "pril 2-, 2112, the trial court issued a writ of e?ecution of its Debruary 2,, 2112 Cecision.24
$n /ay 20, 2112,25 ag'ibig filed before the C" a etition for Certiorari under Rule 46 in order to annul and
set aside the Debruary 2,, 2112 Cecision of the trial court. ag'ibig argued that the Debruary 2,, 2112 Cecision,
which ordered ag'ibig to deliver the title to respondent'spouses despite its non'receipt of the proceeds of the
auction, is void because it modified the final and e?ecutory Cecision dated $ctober -,, 211,. 26 )t maintained
that the $ctober -,, 211, Cecision already held that ag'ibig will deliver its title to respondent'spouses only
upon receipt of the proceeds of the auction from :heriff "rimado. :ince :heriff "rimado did not remit the said
amount to ag'ibig, the latter has no obligation to deliver the title to the auctioned property to respondent'
spouses.27
Durther, ag'ibig contended that the Debruary 2,, 2112 Cecision was null and void because it was issued without
affording petitioner the right to trial.28
Ruling of the Court of "ppeals29
The C" denied the petition due course. The C" noted that petitionerNs remedy was to appeal the Debruary 2,,
2112 Cecision of the trial court and not a petition for certiorari under Rule 46. "t the time the petition was filed,
the Cecision of the trial court had already attained finality. The C" then held that the remedy of certiorari was
not a substitute for a lost appeal.30
The C" also ruled that petitionerNs case fails even on the merits. )t held that the Debruary 2,, 2112 Cecision did
not modify the $ctober -,, 211, Cecision of the trial court. The latter Cecision of the trial court e?pressly
declared that in case :heriff "rimado fails to pay the 272,111.11 to ag'ibig, the court will resolve the
remaining issue regarding ag'ibigNs obligation to deliver the title to the respondent'spouses.31
"s to the contention that petitioner was denied due process when no trial
was conducted for the reception of evidence, the C" held that there was no need for the trial court to conduct a
full'blown trial given that the facts of the case were already admitted by ag'ibig and what was decided in the
Debruary 2,, 2112 Cecision was only a legal issue.32
etitioner filed a motion for reconsideration33 which was denied for lack of merit in the Resolution dated
$ctober 24, 2116.34
)ssues
etitioner then raises the following issues for the CourtNs consideration.
,. Ghether certiorari was the proper remedyE
2. Ghether the Debruary 2,, 2112 Cecision of the trial court modified its $ctober -,, 211, Cecision
based on the compromise agreementE
-. Ghether petitioner was entitled to a trial prior to the rendition of the Debruary 2,, 2112 Cecision.
$ur Ruling
etitioner argues that the C" erred in denying due course to its petition for certiorari and maintains that the
remedy of certiorari is proper for two reasons. first, the trial court rendered its Debruary 2,, 2112 Cecision
without the benefit of a trialE and second, the Debruary 2,, 2112 Cecision modified the $ctober -,, 211,
Cecision, which has already attained finality. These are allegedly two recogniHed instances where certiorari lies
to annul the trial courtNs Cecision because of grave abuse of discretion amounting to lack of >urisdiction.35
The argument does not impress.
&JCKertiorari is a limited form of review and is a remedy of last recourse.&36 )t is proper only when appeal is not
available to the aggrieved party.37 )n the case at bar, the Debruary 2,, 2112 Cecision of the trial court was
appealable under Rule 0, of the Rules of Court because it completely disposed of respondent'spousesN case
against ag'ibig. ag'ibig does not e?plain why it did not resort to an appeal and allowed the trial courtNs
decision to attain finality. )n fact, the Debruary 2,, 2112 Cecision was already at the stage of e?ecution when
ag'ibig belatedly resorted to a Rule 46 etition for Certiorari. Clearly, ag'ibig lost its right to appeal and tried
to remedy the situation by resorting to certiorari. )t is settled, however, that certiorari is not a substitute for a lost
appeal, &especially if the JpartyNsK own negligence or error in JtheK choice of remedy occasioned such loss or
lapse.&38
/oreover, even assuming arguendo that a Rule 46 certiorari could still be resorted to, ag'ibigNs petition would
still have to be dismissed for having been filed beyond the reglementary period of 41 days from notice of the
denial of the motion for reconsideration.39 ag'ibig admitted receiving the trial courtNs $rder denying its
/otion for Reconsideration on /arch 22, 2112E40 it thus had until /ay 2,, 2112 to file its petition for
certiorari. Fowever, ag'ibig filed its petition only on /ay 20, 2112,41 which was the 4-rd day from its receipt
of the trial courtNs order and obviously beyond the reglementary 41'day period.
ag'ibig stated that its petition for certiorari was filed &within si?ty <41= days from receipt of the copy of the writ
of e?ecution by petitioner Jag'ibigK on 17 /ay 2112,& which writ sought to enforce the Cecision assailed in the
petition.42 This submission is beside the point. Rule 46, :ection 0 is very clear that the reglementary 41'day
period is counted &from notice of the >udgment, order or resolution& being assailed, or &from notice of the denial
of the motion Jfor reconsiderationK,& and not from receipt of the writ of e?ecution which seeks to enforce the
assailed >udgment, order or resolution. The date of ag'ibigNs receipt of the copy of the writ of e?ecution is
therefore immaterial for purposes of computing the timeliness of the filing of the petition for certiorari.,avvphi,
:ince ag'ibigNs petition for certiorari before the C" was an improper remedy and was filed late, it is not even
necessary to look into the other issues raised by ag'ibig in assailing the Debruary 2,, 2112 Cecision of the trial
court and the C"Ns rulings sustaining the same. "t any rate, ag'ibigNs arguments on these other issues are
devoid of merit.
"s to ag'ibigNs argument that the Debruary 2,, 2112 Cecision of the RTC is null and void for having been
issued without a trial, it is a mere afterthought which deserves scant consideration. The Court notes that ag'ibig
did not ob>ect to the absence of a trial when it sought a reconsideration of the Debruary 2,, 2112 Cecision.
)nstead, ag'ibig raised the following lone argument in their motion.
-. Consequently, Jag'ibigK should not be compelled to release the title to other Jrespondent'spousesK :ee
because /anuel "rimado JhasK yet to deliver to Jag'ibigK the sum of 272,111.11.43
Onder the $mnibus /otion Rule embodied in :ection 9 of Rule ,6 of the Rules of Court, all available
ob>ections that are not included in a partyNs motion shall be deemed waived.
ag'ibig ne?t argues that the Debruary 2,, 2112 Cecision of the trial court, in ordering ag'ibig to release the
title despite :heriff "rimadoNs failure to remit the 272,111.11 to ag'ibig, &modified& the $ctober -,, 211,
Cecision. "ccording to ag'ibig, the $ctober -,, 211, Cecision allegedly decreed that ag'ibig would deliver
the title to respondent'spouses only after :heriff "rimado has paid the 272,111.11.44 )n other words, under its
theory, ag'ibig cannot be ordered to release the title if :heriff "rimado fails to pay the said amount.
The Court finds no merit in this argument. The $ctober -,, 211, Cecision <as well as the Compromise
"greement on which it is based= does not provide that ag'ibig cannot be ordered to release the title if :heriff
"rimado fails to pay. $n the contrary, what the $rder provides is that if :heriff "rimado fails to pay, the trial
court shall litigate <and, necessarily, resolve= the issue of whether ag'ibig is obliged to release the title. This is
based on paragraph 4 of the Compromise "greement which states that in the event :heriff "rimado fails to pay,
&the Jrespondent'spousesK shall be entitled to an immediate writ of e?ecution without further notice to J:heriffK
"rimado and the issue as to whether Jag'ibigK shall be liable for the release of the title to Jrespondent spousesK
under the circumstances or allegations narrated in the complaint shall continue to be litigated upon in order that
the Fonorable Court may resolve the legality of said issue.& )n fact, the trial court, in its $ctober -,, 211,
Cecision, already set the hearing of the same &on Cecember ,0, 211, at 3.11 oNclock in the morning.&45
)t is thus clear from both the $ctober -,, 211, Cecision and the Compromise "greement that the trial court was
authoriHed to litigate and resolve the issue of whether ag'ibig should release the title upon :heriff "rimadoNs
failure to pay the 272,111.11. "s it turned out, the trial court eventually resolved the issue against ag'ibig, i.e.,
it ruled that ag'ibig is obliged to release the title. )n so doing, the trial court simply e?ercised the authority
provided in the $ctober -,, 211, Cecision <and stipulated in the Compromise "greement=. The trial court did
not thereby &modify& the $ctober -,, 211, Cecision.
GF%R%D$R%, premises considered, the petition is C%#)%C. The assailed "ugust -,, 2116 Cecision, as well as
the $ctober 24, 2116 Resolution, of the Court of "ppeals in C"'8.R. : #o. 71929 are "DD)R/%C.
$O ORD!R!D.