Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-50999 March 23, 1990
JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,
vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and
F.E. ZUELLIG (M), INC., respondents.
RaulE.Espinosaforpetitioners.
LucasEmmanuelB.CanilaoforpetitionerA.Manuel.
Atienza,Tabora,DelRosario&Castilloforprivaterespondent.

MEDIALDEA, J.:
This is a petition for certiorari seeking to modify the decision of the National Labor Relations
Commission in NLRC Case No. RB-IV-20840-78-T entitled, "JoseSongcoandRomeoCipres,
Complainants-Appellants,v.F.E.Zuellig(M),Inc.,Respondent-Appellee" and NLRC Case No. RN-
IV-20855-78-T entitled, "AmancioManuel,Complainant-Appellant,v.F.E.Zuellig(M),Inc.,
Respondent-Appellee," which dismissed the appeal of petitioners herein and in effect affirmed
the decision of the Labor Arbiter ordering private respondent to pay petitioners separation pay
equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year
of service.
The antecedent facts are as follows:
Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the
Department of Labor (Regional Office No. 4) an application seeking clearance to terminate the
services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to
as petitioners) allegedly on the ground of retrenchment due to financial losses. This application
was seasonably opposed by petitioners alleging that the company is not suffering from any
losses. They alleged further that they are being dismissed because of their membership in the
union. At the last hearing of the case, however, petitioners manifested that they are no longer
contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis
of the separation pay due to petitioners. Petitioners, who were in the sales force of Zuellig
received monthly salaries of at least P40,000. In addition, they received commissions for every
sale they made.
The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees
Association, of which petitioners are members, contains the following provision (p. 71, Rollo):
ARTICLE XIV Retirement Gratuity
Section l(a)-Any employee, who is separated from employment due to old age,
sickness, death or permanent lay-off not due to the fault of said employee shall
receive from the company a retirement gratuity in an amount equivalent to one
(1) month's salary per year of service. One month of salaryas used in this
paragraph shall be deemed equivalent to the salary at date of retirement; years
of service shall be deemed equivalent to total service credits, a fraction of at least
six months being considered one year, including probationary employment.
(Emphasis supplied)
On the other hand, Article 284 of the Labor Code then prevailing provides:
Art. 284. Reductionofpersonnel. The termination of employment of any
employee due to the installation of labor saving-devices, redundancy,
retrenchment to prevent losses, and other similar causes, shall entitle the
employee affected thereby to separation pay. In case of termination due to the
installation of labor-saving devices or redundancy, the separation pay shall be
equivalent to one (1) month pay or to at least one (1) month payfor every year of
service, whichever is higher. In case of retrenchment to prevent losses and other
similar causes, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
(Emphasis supplied)
In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code
provide:
x x x
Sec. 9(b). Where the termination of employment is due to retrechment initiated
by the employer to prevent losses or other similar causes, or where the employee
suffers from a disease and his continued employment is prohibited by law or is
prejudicial to his health or to the health of his co-employees, the employee shall
be entitled to termination pay equivalent at least to his one month salary, or to
one-half month pay for every year of service, whichever is higher, a fraction of at
least six (6) months being considered as one whole year.
x x x
Sec. 10. Basisofterminationpay. The computation of the termination pay of
an employee as provided herein shall be based on his latest salary rate, unless the
same was reduced by the employer to defeat the intention of the Code, in which
case the basis of computation shall be the rate before its deduction. (Emphasis
supplied)
On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads
(p. 78, Rollo):
RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered
to pay the complainants separation pay equivalent to their one month salary
(exclusive of commissions, allowances, etc.) for every year of service that they
have worked with the company.
SO ORDERED.
The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of
merit.
Hence, the present petition.
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and
Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground
that he wants "to abide by the decision appealed from" since he had "received, to his full and
complete satisfaction, his separation pay," resolved to dismiss the petition as to him.
The issue is whether or not earned sales commissions and allowances should be included in the
monthly salary of petitioners for the purpose of computation of their separation pay.
The petition is impressed with merit.
Petitioners' position was that in arriving at the correct and legal amount of separation pay due
them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions
and allowances should be added together. They cited Article 97(f) of the Labor Code which
includes commission as part on one's salary, to wit;
(f) 'Wage' paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other method
of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee. 'Fair reasonable value'
shall not include any profit to the employer or to any person affiliated with the
employer.
Zuellig argues that if it were really the intention of the Labor Code as well as its implementing
rules to include commission in the computation of separation pay, it could have explicitly said so
in clear and unequivocal terms. Furthermore, in the definition of the term "wage", "commission"
is used only as one of the features or designations attached to the word remuneration or
earnings.
Insofar as the issue of whether or not allowances should be included in the monthly salary of
petitioners for the purpose of computation of their separation pay is concerned, this has been
settled in the case of Santosv.NLRC,etal., G.R. No. 76721, September 21, 1987, 154 SCRA 166,
where We ruled that "in the computation of backwages and separation pay, account must be
taken not only of the basic salary of petitioner but also of her transportation and emergency
living allowances." This ruling was reiterated in Sorianov.NLRC,etal., G.R. No. 75510, October
27, 1987, 155 SCRA 124 and recently, in PlantersProducts,Inc.v.NLRC,etal.,G.R. No. 78524,
January 20, 1989.
We shall concern ourselves now with the issue of whether or not earned sales commission
should be included in the monthly salary of petitioner for the purpose of computation of their
separation pay.
Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It
has been repeatedly declared by the courts that where the law speaks in clear and categorical
language, there is no room for interpretation or construction; there is only room for application
(Cebu Portland Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24
SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain
and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor and
tends only to obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article
XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and
10 of the Implementing Rules, there appears to be an ambiguity. In this regard, the Labor Arbiter
rationalized his decision in this manner (pp. 74-76, Rollo):
The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be
(sic) stated as a general definition. It is 'wage ' in its generic sense. A careful
perusal of the same does not show any indication that commission is part of
salary. We can say that commission by itself may be considered a wage. This is not
something novel for it cannot be gainsaid that certain types of employees like
agents, field personnel and salesmen do not earn any regular daily, weekly or
monthly salaries, but rely mainly on commission earned.
Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the
implementing rules in conjunction with Articles 273 and 274 (sic) of the Code
specifically states that the basis of the termination pay due to one who is sought
to be legally separated from the service is 'his latest salary rates.
x x x.
Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'.
The above terms found in those Articles and the particular Rules were
intentionally used to express the intent of the framers of the law that for
purposes of separation pay they mean to be specifically referring to salary only.
.... Each particular benefit provided in the Code and other Decrees on Labor has
its own pecularities and nuances and should be interpreted in that light. Thus, for
a specific provision, a specific meaning is attached to simplify matters that may
arise there from. The general guidelines in (sic) the formation of specific rules for
particular purpose. Thus, that what should be controlling in matters concerning
termination pay should be the specific provisions of both Book VI of the Code and
the Rules. At any rate, settled is the rule that in matters of conflict between the
general provision of law and that of a particular- or specific provision, the latter
should prevail.
On its part, the NLRC ruled (p. 110, Rollo):
From the aforequoted provisions of the law and the implementing rules, it could
be deduced that wage is used in its generic sense and obviously refers to the
basic wage rate to be ascertained on a time, task, piece or commission basis or
other method of calculating the same. It does not, however, mean that
commission, allowances or analogous income necessarily forms part of the
employee's salary because to do so would lead to anomalies (sic), if not absurd,
construction of the word "salary." For what will prevent the employee from
insisting that emergency living allowance, 13th month pay, overtime, and
premium pay, and other fringe benefits should be added to the computation of
their separation pay. This situation, to our mind, is not the real intent of the Code
and its rules.
We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and
Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections
9(b) and 10 of the Implementing Rules, which mention the terms "pay" and "salary", is more
apparent than real. Broadly, the word "salary" means a recompense or consideration made to a
person for his pains or industry in another man's business. Whether it be derived from
"salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered. Indeed, there is eminent authority for
holding that the words "wages" and "salary" are in essence synonymous (Words and Phrases,
Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481;
38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used
interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both
words generally refer to one and the same meaning, that is, a reward or recompense for services
performed. Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th
Ed.). Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and
commission is included in the definition of "wage", the logical conclusion, therefore, is, in the
computation of the separation pay of petitioners, their salary base should include also their
earned sales commissions.
The aforequoted provisions are not the only consideration for deciding the petition in favor of
the petitioners.
We agree with the Solicitor General that granting, ingratiaargumenti, that the commissions
were in the form of incentives or encouragement, so that the petitioners would be inspired to
put a little more industry on the jobs particularly assigned to them, still these commissions are
direct remuneration services rendered which contributed to the increase of income of Zuellig .
Commission is the recompense, compensation or reward of an agent, salesman, executor,
trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing
Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and
the reason for such type of remuneration for services rendered demonstrate clearly that
commission are part of petitioners' wage or salary. We take judicial notice of the fact that some
salesmen do not receive any basic salary but depend on commissions and allowances or
commissions alone, are part of petitioners' wage or salary. We take judicial notice of the fact
that some salesman do not received any basic salary but depend on commissions and allowances
or commissions alone, although an employer-employee relationship exists. Bearing in mind the
preceeding dicussions, if we adopt the opposite view that commissions, do not form part of
wage or salary, then, in effect, We will be saying that this kind of salesmen do not receive any
salary and therefore, not entitled to separation pay in the event of discharge from employment.
Will this not be absurd? This narrow interpretation is not in accord with the liberal spirit of our
labor laws and considering the purpose of separation pay which is, to alleviate the difficulties
which confront a dismissed employee thrown the the streets to face the harsh necessities of life.
Additionally, in Sorianov.NLRC,etal.,supra, in resolving the issue of the salary base that should
be used in computing the separation pay, We held that:
The commissions also claimed by petitioner ('override commission' plus 'net
deposit incentive') are not properly includible in such base figure since such
commissions must be earned by actual market transactions attributable to
petitioner.
Applying this by analogy, since the commissions in the present case were earned by actual
market transactions attributable to petitioners, these should be included in their separation pay.
In the computation thereof, what should be taken into account is the average commissions
earned during their last year of employment.
The final consideration is, in carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that
"all doubts in the implementation and interpretation of the provisions of the Labor Code
including its implementing rules and regulations shall be resolved in favor of labor" (Abella v.
NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R.
No. 78763, July 12,1989), and Article 1702 of the Civil Code which provides that "in case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer.
ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor
Relations Commission is MODIFIED by including allowances and commissions in the separation
pay of petitioners Jose Songco and Amancio Manuel. The case is remanded to the Labor Arbiter
for the proper computation of said separation pay.
SO ORDERED.
Narvasa(Chairman),Cruz,GancaycoandGrio-Aquino,JJ.,concur.













Republic of the Philippines
SUPREME COURT

THIRD DIVISION

G.R. No. 121927 April 22, 1998
ANTONIO W. IRAN (doing business under the name and style of Tones Iran
Enterprises), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), GODOFREDO O. PETRALBA,
MORENO CADALSO, PEPITO TECSON, APOLINARIO GOTHONG GEMINA, JESUS BANDILAO, EDWIN
MARTIN, CELSO LABIAGA, DIOSDADO GONZALGO, FERNANDO M. COLINA, respondents.

ROMERO, J.:
Whether or not commissions are included in determining compliance with the minimum wage
requirement is the principal issue presented in this petition.
Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue City,
Cebu, employing truck drivers who double as salesmen, truck helpers, and non-field personnel in
pursuit thereof. Petitioner hired private respondents Godofredo Petralba, Moreno Cadalso,
Celso Labiaga and Fernando Colina as drivers/salesmen while private respondents Pepito Tecson,
Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado Gonzalgo were hired as truck
helpers. Drivers/salesmen drove petitioner's delivery trucks and promoted, sold and delivered
softdrinks to various outlets in Mandaue City. The truck helpers assisted in the delivery of
softdrinks to the different outlets covered by the driver/salesmen.
As part of their compensation, the driver/salesmen and truck helpers of petitioner received
commissions per case of softdrinks sold at the following rates:
SALESMEN:
Ten Centavos (P0.10) per case of Regular softdrinks.
Twelve Centavos (P0.12) per case of Family Size softdrinks.
TRUCK HELPERS:
Eight Centavos (P0.08) per case of Regular softdrinks.
Ten Centavos (P0.10) per case of Family Size softdrinks.
Sometime in June 1991, petitioner, while conducting an audit of his operations, discovered cash
shortages and irregularities allegedly committed by private respondents. Pending the
investigation of irregularities and settlement of the cash shortages, petitioner required private
respondents to report for work everyday. They were not allowed, however, to go on their
respective routes. A few days thereafter, despite aforesaid order, private respondents stopped
reporting for work, prompting petitioner to conclude that the former had abandoned their
employment. Consequently, petitioner terminated their services. He also filed on November 7,
1991, a complaint for estafa against private respondents.
On the other hand, private respondents, on December 5, 1991, filed complaints against
petitioner for illegal dismissal, illegal deduction, underpayment of wages, premium pay for
holiday and rest day, holiday pay, service incentive leave pay, 13th month pay, allowances,
separation pay, recovery of cash bond, damages and attorney's fees. Said complaints were
consolidated and docketed as Rab VII-12-1791-91, RAB VII-12-1825-91 and RAB VII-12-1826-91,
and assigned to Labor Arbiter Ernesto F. Carreon.
The labor arbiter found that petitioner had validly terminated private respondents, there being
just cause for the latter's dismissal. Nevertheless, he also ruled that petitioner had not complied
with minimum wage requirements in compensating private respondents, and had failed to pay
private respondents their 13th month pay. The labor arbiter, thus, rendered a decision on
February 18, 1993, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the
respondent Antonio W. Iran to pay the complainants the following:
1. Celso Labiaga P10,033.10
2. Godofredo Petralba 1,250.00
3. Fernando Colina 11,753.10
4. Moreno Cadalso 11,753.10
5. Diosdado Gonzalgo 7,159.04
6. Apolinario Gimena 8,312.24
7. Jesus Bandilao 14,729.50
8. Pepito Tecson. 9,126.55

Attorney's Fees (10%) 74,116.63
of the gross award 7,411.66

GRAND TOTAL AWARD P81,528.29
========
The other claims are dismissed for lack of merit.
SO ORDERED.
1

Both parties seasonably appealed to the NLRC, with petitioner contesting the labor arbiter's
refusal to include the commissions he paid to private respondents in determining compliance
with the minimum wage requirement. He also presented, for the first time on appeal, vouchers
denominated as 13th month pay signed by private respondents, as proof that petitioner had
already paid the latter their 13th month pay. Private respondents, on the other hand, contested
the findings of the labor arbiter holding that they had not been illegally dismissed, as well as
mathematical errors in computing Jesus Bandilao's wage differentials. The NLRC, in its decision
of December 21, 1994, affirmed the validity of private respondent's dismissal, but found that
said dismissal did not comply with the procedural requirements for dismissing employees.
Furthermore, it corrected the labor arbiter's award of wage differentials to Jesus Bandilao. The
dispositive portion of said decision reads:
WHEREFORE, premises considered, the decision is hereby MODIFIED in that
complainant Jesus Bandilao's computation for wage differential is corrected from
P154.00 to P4,550.00. In addition to all the monetary claim (sic) originally
awarded by the Labor Arbiter aquo, P1,000.00 is hereby granted to each
complainants (sic) as indemnity fee for failure of respondents to observe
procedural due process.
SO ORDERED.
2

Petitioner's motion for reconsideration of said decision was denied on July 31, 1995, prompting
him to elevate this case to this Court, raising the following issues:
1. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION
AND CONTRARY TO LAW AND JURISPRUDENCE IN AFFIRMING THE DECISION OF
THE LABOR ARBITER AQUOEXCLUDING THE COMMISSIONS RECEIVED BY THE
PRIVATE RESPONDENTS IN COMPUTING THEIR WAGES;
2. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION IN
FINDING PETITIONER GUILTY OF PROCEDURAL LAPSES IN TERMINATING PRIVATE
RESPONDENTS AND IN AWARDING EACH OF THE LATTER P1,000.00 AS
INDEMNITY FEE;
3. THE HONORABLE COMMISSION GRAVELY ERRED IN NOT CREDITING THE
ADVANCE AMOUNT RECEIVED BY THE PRIVATE RESPONDENTS AS PART OF THEIR
13TH MONTH PAY.
The petition is impressed with merit.
The NLRC, in denying petitioner's claim that commissions be included in determining compliance
with the minimum wage ratiocinated thus:
Respondent (petitioner herein) insist assiduously that the commission should be
included in the computation of actual wages per agreement. We will not fall prey
to this fallacious argument. An employee should receive the minimum wage as
mandated by law and that the attainment of the minimum wage should not be
dependent on the commission earned by an employee. A commission is an
incentive for an employee to work harder for a better production that will benefit
both the employer and the employee. To include the commission in the
computation of wage in order to comply with labor standard laws is to negate the
practice that a commission is granted after an employee has already earned the
minimum wage or even beyond it.
3

This holding is unsupported by law and jurisprudence. Article 97(f) of the Labor Code defines
wage as follows:
Art. 97(f) "Wage" paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or commissionbasis, or other
method of calculating the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for work done or to be
done, or for services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, of board, lodging, or
other facilities customarily furnished by the employer to the employee.
xxx xxx xxx (Emphasis supplied)
This definition explicitly includes commissions as part of wages. While commissions are, indeed,
incentives or forms of encouragement to inspire employees to put a little more industry on the
jobs particularly assigned to them, still these commissions are direct remunerations for services
rendered. In fact, commissions have been defined as the recompense, compensation or reward
of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his transactions or on the profit to the principal.
The nature of the work of a salesman and the reason for such type of remuneration for services
rendered demonstrate clearly that commissions are part of a salesman's wage or salary.
4

Thus, the commissions earned by private respondents in selling softdrinks constitute part of the
compensation or remuneration paid to drivers/salesmen and truck helpers for serving as such,
and hence, must be considered part of the wages paid them.
The NLRC asserts that the inclusion of commissions in the computation of wages would negate
the practice of granting commissions only after an employee has earned the minimum wage or
over. While such a practice does exist, the universality and prevalence of such a practice is
questionable at best. In truth, this Court has taken judicial notice of the fact that some salesmen
do not receive any basic salary but depend entirely on commissions and allowances or
commissions alone, although an employer-employee relationship exists.
5
Undoubtedly, this
salary structure is intended for the benefit of the corporation establishing such, on the apparent
assumption that thereby its salesmen would be moved to greater enterprise and diligence and
close more sales in the expectation of increasing their sales commissions. This, however, does
not detract from the character of such commissions as part of the salary or wage paid to each of
its salesmen for rendering services to the corporation.
6

Likewise, there is no law mandating that commissions be paid only after the minimum wage has
been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below
which an employee's remuneration cannot fall, not that commissions are excluded from wages
in determining compliance with the minimum wage law. This conclusion is bolstered
by PhilippineAgriculturalCommercialandIndustrialWorkersUnionvs. NLRC,
7
where this Court
acknowledged that drivers and conductors who are compensated purely on a commission basis
are automatically entitled to the basic minimum pay mandated by law should said commissions
be less than their basic minimum for eight hours work. It can, thus, be inferred that were said
commissions equal to or even exceed the minimum wage, the employer need not pay, in
addition, the basic minimum pay prescribed by law. It follows then that commissions are
included in determining compliance with minimum wage requirements.
With regard to the second issue, it is settled that in terminating employees, the employer must
furnish the worker with two written notices before the latter can be legally terminated: (a) a
notice which apprises the employee of the particular acts or omissionsforwhichhisdismissalis
sought, and (b) the subsequent notice which informs the employee of the employer's decision to
dismiss him.
8
(Emphasis ours) Petitioner asseverates that no procedural lapses were committed
by him in terminating private respondents. In his own words:
. . . when irregularities were discovered, that is, when the misappropriation of
several thousands of pesos was found out, the petitioner instructed private
respondents to report back for work and settle their accountabilities but the
latter never reported for work. This instruction by the petitioner to report back
for work and settle their accountabilities served as notices to private respondents
for the latter to explain or account for the missing funds held in trust by them
before they disappeared.
9

Petitioner considers this return-to-work order as equivalent to the first notice apprising the
employee of the particular acts or omissions for which his dismissal is sought. But by petitioner's
own admission, private respondents were never told in said notice that their dismissal was being
sought, only that they should settle their accountabilities. In petitioner's incriminating words:
It should be emphasized here that at the time the misappropriation was
discovered and subsequently thereafter, the petitioner's first concern was not
effecting the dismissal of private respondents but the recovery of the
misappropriated funds thus the latter were advised to report back to work.
10

As above-stated, the first notice should inform the employee that his dismissal is being sought.
Its absence in the present case makes the termination of private respondents defective, for
which petitioner must be sanctioned for his non-compliance with the requirements of or for
failure to observe due process.
11
The twin requirements of notice and hearing constitute the
essential elements of due process, and neither of these elements can be disregarded without
running afoul of the constitutional guarantee. Not being mere technicalities but the very essence
of due process, to which every employee is entitled so as to ensure that the employer's
prerogative to dismiss is not exercised arbitrarily,
12
these requisites must be complied with
strictly.
Petitioner makes much capital of private respondents' failure to report to work, construing the
same as abandonment which thus authorized the latter's dismissal. As correctly pointed out by
the NLRC, to which the Solicitor General agreed, Section 2 of Book V, Rule XIV of the Omnibus
Rules Implementing the Labor Code requires that in cases of abandonment of work, notice
should be sent to the worker's last known address. If indeed private respondents had abandoned
their jobs, it was incumbent upon petitioner to comply with this requirement. This, petitioner
failed to do, entitling respondents to nominal damages in the amount of P5,000.00 each, in
accordance with recent jurisprudence,
13
to vindicate or recognize their right to procedural due
process which was violated by petitioner.
Lastly, petitioner argues that the NLRC gravely erred when it disregarded the vouchers presented
by the former as proof of his payment of 13th month pay to private respondents. While
admitting that said vouchers covered only a ten-day period, petitioner argues that the same
should be credited as amounts received by private respondents as part of their 13th month pay,
Section 3(e) of the Rules and Regulations Implementing P.D. No. 851 providing that the employer
shall pay the difference when he pays less than 1/12th of the employee's basic salary.
14

While it is true that the vouchers evidencing payments of 13th month pay were submitted only
on appeal, it would have been more in keeping with the directive of Article 221
15
of the Labor
Code for the NLRC to have taken the same into account.
16
Time and again, we have allowed
evidence to be submitted on appeal, emphasizing that, in labor cases, technical rules of evidence
are not binding.
17
Labor officials should use every and all reasonable means to ascertain the
facts in each case speedily and objectively, without regard to technicalities of law or
procedure.
18

It must also be borne in mind that the intent of P.D. No. 851 is the granting of additional income
in the form of 13th month pay to employees not as yet receiving the same and not that a double
burden should be imposed on the employer who is already paying his employees a 13th month
pay or its equivalent.
19
An employer who pays less than 1/12th of the employees basic salary as
their 13th month pay is only required to pay the difference.
20

The foregoing notwithstanding, the vouchers presented by petitioner covers only a particular
year. It does not cover amounts for other years claimed by private respondents. It cannot be
presumed that the same amounts were given on said years. Hence, petitioner is entitled to
credit only the amounts paid for the particular year covered by said vouchers.
WHEREFORE, in view of the foregoing, the decision of the NLRC dated July 31, 1995, insofar as it
excludes the commissions received by private respondents in the determination of petitioner's
compliance with the minimum wage law, as well as its exclusion of the particular amounts
received by private respondents as part of their 13th month pay is REVERSED and SET ASIDE. This
case is REMANDED to the Labor Arbiter for a recomputation of the alleged deficiencies. For non-
observance of procedural due process in effecting the dismissal of private respondents, said
decision is MODIFIED by increasing the award of nominal damages to private respondents from
P1,000.00 to P5,000.00 each. No costs.
SO ORDERED.
Narvasa,C.J.,KapunanandPurisima,JJ.,concur.


















Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-44169 December 3, 1985
ROSARIO A. GAA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, and CESAR R.
ROXAS, Deputy Sheriff of Manila, respondents.
FedericoC.AlikpalaandFedericoY.Alikpala,Jr.forpetitioner.
BorbeandPalmaforprivaterespondent.

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












Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 164772 June 8, 2006
EQUITABLE BANKING CORPORATION (now known as EQUITABLE-PCI BANK), petitioner,
vs.
RICARDO SADAC, Respondent.
D E C I S I O N
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari with Motion to Refer the Petition to the Court En
Banc filed by Equitable Banking Corporation (now known as Equitable-PCI Bank), seeking to
reverse the Decision
1
and Resolution
2
of the Court of Appeals, dated 6 April 2004 and 28 July
2004, respectively, as amended by the Supplemental Decision
3
dated 26 October 2004 in CA-G.R.
SP No. 75013, which reversed and set aside the Resolutions of the National Labor Relations
Commission (NLRC), dated 28 March 2001 and 24 September 2002 in NLRC-NCR Case No. 00-11-
05252-89.
The Antecedents
As culled from the records, respondent Sadac was appointed Vice President of the Legal
Department of petitioner Bank effective 1 August 1981, and subsequently General Counsel
thereof on 8 December 1981. On 26 June 1989, nine lawyers of petitioner Banks Legal
Department, in a letter-petition to the Chairman of the Board of Directors, accused respondent
Sadac of abusive conduct, inter alia, and ultimately, petitioned for a change in leadership of the
department. On the ground of lack of confidence in respondent Sadac, under the rules of client
and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in
his custody in all cases in which the latter was appearing as its counsel of record. In reaction
thereto, respondent Sadac requested for a full hearing and formal investigation but the same
remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal
dismissal with damages against petitioner Bank and individual members of the Board of Directors
thereof. After learning of the filing of the complaint, petitioner Bank terminated the services of
respondent Sadac. Finally, on 10 August 1989, respondent Sadac was removed from his office
and ordered disentitled to any compensation and other benefits.
4

In a Decision
5
dated 2 October 1990, Labor Arbiter Jovencio Ll. Mayor, Jr., dismissed the
complaint for lack of merit. On appeal, the NLRC in its Resolution
6
of 24 September 1991
reversed the Labor Arbiter and declared respondent Sadacs dismissal as illegal. The decretal
portion thereof reads, thus:
WHEREFORE, in view of all the foregoing considerations, let the Decision of October 2, 1990 be,
as it is hereby, SET ASIDE, and a new one ENTERED declaring the dismissal of the complainant as
illegal, and consequently ordering the respondents jointly and severally to reinstate him to his
former position as bank Vice-President and General Counsel without loss of seniority rights and
other privileges, and to pay him full backwages and other benefits from the time his
compensation was withheld to his actual reinstatement, as well as moral damages of
P100,000.00, exemplary damages of P50,000.00, and attorneys fees equivalent to Ten Percent
(10%) of the monetary award. Should reinstatement be no longer possible due to strained
relations, the respondents are ordered likewise jointly and severally to grant separation pay at
one (1) month per year of service in the total sum of P293,650.00 with backwages and other
benefits from November 16, 1989 to September 15, 1991 (cut off date, subject to adjustment)
computed at P1,055,740.48, plus damages of P100,000.00 (moral damages), P50,000.00
(exemplary damages) and attorneys fees equal to Ten Percent (10%) of all the monetary award,
or a grand total of P1,649,329.53.
7

Petitioner Bank came to us for the first time via a Special Civil Action for Certiorari assailing the
NLRC Resolution of 24 September 1991 in Equitable Banking Corporation v. National Labor
Relations Commission, docketed as G.R. No. 102467.
8

In our Decision
9
of 13 June 1997, we held respondent Sadacs dismissal illegal. We said that the
existence of the employer-employee relationship between petitioner Bank and respondent
Sadac had been duly established bringing the case within the coverage of the Labor Code, hence,
we did not permit petitioner Bank to rely on Sec. 26, Rule 138
10
of the Rules of Court, claiming
that the association between the parties was one of a client-lawyer relationship, and, thus, it
could terminate at any time the services of respondent Sadac. Moreover, we did not find that
respondent Sadacs dismissal was grounded on any of the causes stated in Article 282 of the
Labor Code. We similarly found that petitioner Bank disregarded the procedural requirements in
terminating respondent Sadacs employment as so required by Section 2 and Section 5, Rule XIV,
Book V of the Implementing Rules of the Labor Code. We decreed:
WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the following
MODIFICATIONS: That private respondent shall be entitled to backwages from termination of
employment until turning sixty (60) years of age (in 1995) and, thereupon, to retirement benefits
in accordance with law; that private respondent shall be paid an additional amount of P5,000.00;
that the award of moral and exemplary damages are deleted; and that the liability herein
pronounced shall be due from petitioner bank alone, the other petitioners being absolved from
solidary liability. No costs.
11

On 28 July 1997, our Decision in G.R. No. 102467 dated 13 June 1997 became final and
executory.
12

Pursuant thereto, respondent Sadac filed with the Labor Arbiter a Motion for
Execution
13
thereof. Likewise, petitioner Bank filed a Manifestation and Motion
14
praying that
the award in favor of respondent Sadac be computed and that after payment is made, petitioner
Bank be ordered forever released from liability under said judgment.
Per respondent Sadacs computation, the total amount of the monetary award is P6,030,456.59,
representing his backwages and other benefits, including the general increases which he should
have earned during the period of his illegal termination. Respondent Sadac theorized that he
started with a monthly compensation of P12,500.00 in August 1981, when he was appointed as
Vice President of petitioner Banks Legal Department and later as its General Counsel in
December 1981. As of November 1989, when he was dismissed illegally, his monthly
compensation amounted to P29,365.00 or more than twice his original compensation. The
difference, he posited, can be attributed to the annual salary increases which he received
equivalent to 15 percent (15%) of his monthly salary.
Respondent Sadac anchored his claim on Article 279 of the Labor Code of the Philippines, and
cited as authority the cases of East Asiatic Company, Ltd. v. Court of Industrial Relations,
15
St.
Louis College of Tuguegarao v. National Labor Relations Commission,
16
and Sigma Personnel
Services v. National Labor Relations Commission.
17
According to respondent Sadac, the catena of
cases uniformly holds that it is the obligation of the employer to pay an illegally dismissed
employee the whole amount of the salaries or wages, plus all other benefits and bonuses and
general increases to which he would have been normally entitled had he not been dismissed;
and therefore, salary increases should be deemed a component in the computation of
backwages. Moreover, respondent Sadac contended that his check-up benefit, clothing
allowance, and cash conversion of vacation leaves must be included in the computation of his
backwages.
Petitioner Bank disputed respondent Sadacs computation. Per its computation, the amount of
monetary award due respondent Sadac is P2,981,442.98 only, to the exclusion of the latters
general salary increases and other claimed benefits which, it maintained, were unsubstantiated.
The jurisprudential precedent relied upon by petitioner Bank in assailing respondent Sadacs
computation is Evangelista v. National Labor Relations Commission,
18
citing Paramount Vinyl
Products Corp. v. National Labor Relations Commission,
19
holding that an unqualified award of
backwages means that the employee is paid at the wage rate at the time of his dismissal.
Furthermore, petitioner Bank argued before the Labor Arbiter that the award of salary
differentials is not allowed, the established rule being that upon reinstatement, illegally
dismissed employees are to be paid their backwages without deduction and qualification as to
any wage increases or other benefits that may have been received by their co-workers who were
not dismissed or did not go on strike.
On 2 August 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. rendered an Order
20
adopting
respondent Sadacs computation. In the main, the Labor Arbiter relying on Millares v. National
Labor Relations Commission
21
concluded that respondent Sadac is entitled to the general
increases as a component in the computation of his backwages. Accordingly, he awarded
respondent Sadac the amount of P6,030,456.59 representing his backwages inclusive of
allowances and other claimed benefits, namely check-up benefit, clothing allowance, and cash
conversion of vacation leave plus 12 percent (12%) interest per annum equivalent to
P1,367,590.89 as of 30 June 1999, or a total of P7,398,047.48. However, considering that
respondent Sadac had already received the amount of P1,055,740.48 by virtue of a Writ of
Execution
22
earlier issued on 18 January 1999, the Labor Arbiter directed petitioner Bank to pay
respondent Sadac the amount of P6,342,307.00. The Labor Arbiter also granted an award of
attorneys fees equivalent to ten percent (10%) of all monetary awards, and imposed a 12
percent (12%) interest per annum reckoned from the finality of the judgment until the
satisfaction thereof.
The Labor Arbiter decreed, thus:
WHEREFORE, in view of al (sic) the foregoing, let an "ALIAS" Writ of Execution be issued
commanding the Sheriff, this Branch, to collect from respondent Bank the amount of
Ph6,342,307.00 representing the backwages with 12% interest per annum due complainant.
23

Petitioner Bank interposed an appeal with the NLRC, which reversed the Labor Arbiter in a
Resolution,
24
promulgated on 28 March 2001. It ratiocinated that the doctrine on general
increases as component in computing backwages in Sigma Personnel Services and St. Louis was
merely obiter dictum. The NLRC found East Asiatic Co., Ltd. inapplicable on the ground that the
original circumstances therein are not only peculiar to the said case but also completely strange
to the case of respondent Sadac. Further, the NLRC disallowed respondent Sadacs claim to
check-up benefit ratiocinating that there was no clear and substantial proof that the same was
being granted and enjoyed by other employees of petitioner Bank. The award of attorneys fees
was similarly deleted.
The dispositive portion of the Resolution states:
WHEREFORE, the instant appeal is considered meritorious and accordingly, the computation
prepared by respondent Equitable Banking Corporation on the award of backwages in favor of
complainant Ricardo Sadac under the decision promulgated by the Supreme Court on June 13,
1997 in G.R. No. 102476 in the aggregate amount of P2,981,442.98 is hereby ordered.
25

Respondent Sadacs Motion for Reconsideration thereon was denied by the NLRC in its
Resolution,
26
promulgated on 24 September 2002.
Aggrieved, respondent Sadac filed before the Court of Appeals a Petition for Certiorari seeking
nullification of the twin resolutions of the NLRC, dated 28 March 2001 and 24 September 2002,
as well as praying for the reinstatement of the 2 August 1999 Order of the Labor Arbiter.
For the resolution of the Court of Appeals were the following issues, viz.:
(1) Whether periodic general increases in basic salary, check-up benefit, clothing
allowance, and cash conversion of vacation leave are included in the computation of full
backwages for illegally dismissed employees;
(2) Whether respondent is entitled to attorneys fees; and
(3) Whether respondent is entitled to twelve percent (12%) per annum as interest on all
accounts outstanding until full payment thereof.
Finding for respondent Sadac (therein petitioner), the Court of Appeals rendered a Decision on 6
April 2004, the dispositive portion of which is quoted hereunder:
WHEREFORE, premises considered, the March 28, 2001 and the September 24, 2002 Resolutions
of the National Labor Relations Commissions (sic) are REVERSED and SET ASIDE and the August 2,
1999 Order of the Labor Arbiter is REVIVED to the effect that private respondent is DIRECTED TO
PAY petitioner the sum of PhP6,342,307.00, representing full back wages (sic) which sum
includes annual general increases in basic salary, check-up benefit, clothing allowance, cash
conversion of vacation leave and other sundry benefits plus 12% per annum interest on
outstanding balance from July 28, 1997 until full payment.
Costs against private respondent.
27

The Court of Appeals, citing East Asiatic held that respondent Sadacs general increases should
be added as part of his backwages. According to the appellate court, respondent Sadacs
entitlement to the annual general increases has been duly proven by substantial evidence that
the latter, in fact, enjoyed an annual increase of more or less 15 percent (15%). Respondent
Sadacs check-up benefit, clothing allowance, and cash conversion of vacation leave were
similarly ordered added in the computation of respondent Sadacs basic wage.
Anent the matter of attorneys fees, the Court of Appeals sustained the NLRC. It ruled that our
Decision
28
of 13 June 1997 did not award attorneys fees in respondent Sadacs favor as there
was nothing in the aforesaid Decision, either in the dispositive portion or the body thereof that
supported the grant of attorneys fees. Resolving the final issue, the Court of Appeals imposed a
12 percent (12%) interest per annum on the total monetary award to be computed from 28 July
1997 or the date our judgment in G.R. No. 102467 became final and executory until fully paid at
which time the quantification of the amount may be deemed to have been reasonably
ascertained.
On 7 May 2004, respondent Sadac filed a Partial Motion for Reconsideration
29
of the 6 April 2004
Court of Appeals Decision insofar as the appellate court did not award him attorneys fees.
Similarly, petitioner Bank filed a Motion for Partial Reconsideration thereon. Following an
exchange of pleadings between the parties, the Court of Appeals rendered a Resolution,
30
dated
28 July 2004, denying petitioner Banks Motion for Partial Reconsideration for lack of merit.
Assignment of Errors
Hence, the instant Petition for Review by petitioner Bank on the following assignment of errors,
to wit:
(a) The Hon. Court of Appeals erred in ruling that general salary increases should be
included in the computation of full backwages.
(b) The Hon. Court of Appeals erred in ruling that the applicable authorities in this case
are: (i) East Asiatic, Ltd. v. CIR, 40 SCRA 521 (1971); (ii) St. Louis College of Tuguegarao v.
NLRC, 177 SCRA 151 (1989); (iii) Sigma Personnel Services v. NLRC, 224 SCRA 181 (1993);
and (iv) Millares v. NLRC, 305 SCRA 500 (1999) and not (i) Art. 279 of the Labor Code; (ii)
Paramount Vinyl Corp. v. NLRC, 190 SCRA 525 (1990); (iii) Evangelista v. NLRC, 249 SCRA
194 (1995); and (iv) Espejo v. NLRC, 255 SCRA 430 (1996).
(c) The Hon. Court of Appeals erred in ruling that respondent is entitled to check-up
benefit, clothing allowance and cash conversion of vacation leaves notwithstanding that
respondent did not present any evidence to prove entitlement to these claims.
(d) The Hon. Court of Appeals erred in ruling that respondent is entitled to be paid legal
interest even if the principal amount due him has not yet been correctly and finally
determined.
31

Meanwhile, on 26 October 2004, the Court of Appeals rendered a Supplemental Decision
granting respondent Sadacs Partial Motion for Reconsideration and amending the dispositive
portion of the 6 April 2004 Decision in this wise, viz.:
WHEREFORE, premises considered, the March 24 (sic), 2001 and the September 24, 2002
Resolutions of the National Labor Relations Commission are hereby REVERSED and SET ASIDE
and the August 2, 1999 Order of the Labor Arbiter is hereby REVIVED to the effect that private
respondent is hereby DIRECTED TO PAY petitioner the sum of P6,342,307.00, representing full
backwages which sum includes annual general increases in basic salary, check-up benefit,
clothing allowance, cash conversion of vacation leave and other sundry benefits "and attorneys
fees equal to TEN PERCENT (10%) of all the monetary award" plus 12% per annum interest on all
outstanding balance from July 28, 1997 until full payment.
Costs against private respondent.
32

On 22 November 2004, petitioner Bank filed a Supplement to Petition for Review
33
contending in
the main that the Court of Appeals erred in issuing the Supplemental Decision by directing
petitioner Bank to pay an additional amount to respondent Sadac representing attorneys fees
equal to ten percent (10%) of all the monetary award.
The Courts Ruling
I.
We are called to write finis to a controversy that comes to us for the second time. At the core of
the instant case are the divergent contentions of the parties on the manner of computation of
backwages.
Petitioner Bank asseverates that Article 279 of the Labor Code of the Philippines does not
contemplate the inclusion of salary increases in the definition of "full backwages." It controverts
the reliance by the appellate court on the cases of (i) East Asiatic; (ii) St. Louis; (iii) Sigma
Personnel; and (iv) Millares. While it is in accord with the pronouncement of the Court of
Appeals that Republic Act No. 6715, in amending Article 279, intends to give more benefits to
workers, petitioner Bank submits that the Court of Appeals was in error in relying on East Asiatic
to support its finding that salary increases should be included in the computation of backwages
as nowhere in Article 279, as amended, are salary increases spoken of. The prevailing rule in the
milieu of the East Asiatic doctrine was to deduct earnings earned elsewhere from the amount of
backwages payable to an illegally dismissed employee.
Petitioner Bank posits that even granting that East Asiatic allowed general salary increases in the
computation of backwages, it was because the inclusion was purposely to cushion the blow of
the deduction of earnings derived elsewhere; with the amendment of Article 279 and the
consequent elimination of the rule on the deduction of earnings derived elsewhere, the rationale
for including salary increases in the computation of backwages no longer exists. On the
references of salary increases in the aforementioned cases of (i) St. Louis; (ii) Sigma Personnel;
and (iii) Millares, petitioner Bank contends that the same were merely obiter dicta. In fine,
petitioner Bank anchors its claim on the cases of (i) Paramount Vinyl Products Corp. v. National
Labor Relations Commission;
34
(ii) Evangelista v. National Labor Relations Commission;
35
and (iii)
Espejo v. National Labor Relations Commission,
36
which ruled that an unqualified award of
backwages is exclusive of general salary increases and the employee is paid at the wage rate at
the time of the dismissal.
For his part, respondent Sadac submits that the Court of Appeals was correct when it ruled that
his backwages should include the general increases on the basis of the following cases, to wit: (i)
East Asiatic; (ii) St. Louis; (iii) Sigma Personnel; and (iv) Millares.
Resolving the protracted litigation between the parties necessitates us to revisit our
pronouncements on the interpretation of the term backwages. We said that backwages in
general are granted on grounds of equity for earnings which a worker or employee has lost due
to his illegal dismissal.
37
It is not private compensation or damages but is awarded in furtherance
and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right
but rather in the nature of a command to the employer to make public reparation for dismissing
an employee either due to the formers unlawful act or bad faith.
38
The Court, in the landmark
case of Bustamante v. National Labor Relations Commission,
39
had the occasion to explicate on
the meaning of full backwages as contemplated by Article 279
40
of the Labor Code of the
Philippines, as amended by Section 34 of Rep. Act No. 6715. The Court in Bustamante said, thus:
The Court deems it appropriate, however, to reconsider such earlier ruling on the computation
of backwages as enunciated in said Pines City Educational Center case, by now holding that
conformably with the evident legislative intent as expressed in Rep. Act No. 6715, above-quoted,
backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be
diminished or reduced by the earnings derived by him elsewhere during the period of his illegal
dismissal. The underlying reason for this ruling is that the employee, while litigating the legality
(illegality) of his dismissal, must still earn a living to support himself and family, while full
backwages have to be paid by the employer as part of the price or penalty he has to pay for
illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No.
6715 is to give more benefits to workers than was previously given them under the Mercury
Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the
legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that,
i.e., without deducting from backwages the earnings derived elsewhere by the concerned
employee during the period of his illegal dismissal. In other words, the provision calling for "full
backwages" to illegally dismissed employees is clear, plain and free from ambiguity and,
therefore, must be applied without attempted or strained interpretation. Index animi sermo
est.
41

Verily, jurisprudence has shown that the definition of full backwages has forcefully evolved. In
Mercury Drug Co., Inc. v. Court of Industrial Relations,
42
the rule was that backwages were
granted for a period of three years without qualification and without deduction, meaning, the
award of backwages was not reduced by earnings actually earned by the dismissed employee
during the interim period of the separation. This came to be known as the Mercury Drug
rule.
43
Prior to the Mercury Drug ruling in 1974, the total amount of backwages was reduced by
earnings obtained by the employee elsewhere from the time of the dismissal to his
reinstatement. The Mercury Drug rule was subsequently modified in Ferrer v. National Labor
Relations Commission
44
and Pines City Educational Center v. National Labor Relations
Commission,
45
where we allowed the recovery of backwages for the duration of the illegal
dismissal minus the total amount of earnings which the employee derived elsewhere from the
date of dismissal up to the date of reinstatement, if any. In Ferrer and in Pines, the three-year
period was deleted, and instead, the dismissed employee was paid backwages for the entire
period that he was without work subject to the deductions, as mentioned. Finally came our
ruling in Bustamante which superseded Pines City Educational Center and allowed full recovery
of backwages without deduction and without qualification pursuant to the express provisions of
Article 279 of the Labor Code, as amended by Rep. Act No. 6715, i.e., without any deduction of
income the employee may have derived from employment elsewhere from the date of his
dismissal up to his reinstatement, that is, covering the entirety of the period of the dismissal.
The first issue for our resolution involves another aspect in the computation of full backwages,
mainly, the basis of the computation thereof. Otherwise stated, whether general salary increases
should be included in the base figure to be used in the computation of backwages.
In so concluding that general salary increases should be made a component in the computation
of backwages, the Court of Appeals ratiocinated, thus:
The Supreme Court held in East Asiatic, Ltd. v. Court of Industrial Relations, 40 SCRA 521 (1971)
that "general increases" should be added as a part of full backwages, to wit:
In other words, the just and equitable rule regarding the point under discussion is this: It is the
obligation of the employer to pay an illegally dismissed employee or worker the whole amount
of the salaries or wages, plus all other benefits and bonuses and general increases, to which he
would have been normally entitled had he not been dismissed and had not stopped working, but
it is the right, on the other hand of the employer to deduct from the total of these, the amount
equivalent to the salaries or wages the employee or worker would have earned in his old
employment on the corresponding days he was actually gainfully employed elsewhere with an
equal or higher salary or wage, such that if his salary or wage in his other employment was less,
the employer may deduct only what has been actually earned.
The doctrine in East Asiatic was subsequently reiterated, in the cases of St. Louis College of
Tugueg[a]rao v. NLRC, 177 SCRA 151 (1989); Sigma Personnel Services v. NLRC, 224 SCRA 181
(1993) and Millares v. National Labor Relations Commission, 305 SCRA 500 (1999).
Private respondent, in opposing the petitioners contention, alleged in his Memorandum that
only the wage rate at the time of the employees illegal dismissal should be considered private
respondent citing the following decisions of the Supreme Court: Paramount Vinyl Corp. v. NLRC
190 SCRA 525 (1990); Evangelista v. NLRC, 249 SCRA 194 (1995); Espejo v. NLRC, 255 SCRA 430
(1996) which rendered obsolete the ruling in East Asiatic, Ltd. v. Court of Industrial Relations, 40
SCRA 521 (1971).
We are not convinced.
The Supreme Court had consistently held that payment of full backwages is the price or penalty
that the employer must pay for having illegally dismissed an employee.
In Ala Mode Garments, Inc. v. NLRC 268 SCRA 497 (1997) and Bustamante v. NLRC and Evergreen
Farms, Inc. 265 SCRA 61 (1996) the Supreme Court held that the clear legislative intent in the
amendment in Republic Act 6715 was to give more benefits to workers than was previously
given them under the Mercury Drug rule or the "deductions of earnings elsewhere" rule.
The Paramount Vinyl, Evangelista, and Espejo cases cited by private respondent are inapplicable
to the case at bar. The doctrines therein came about as a result of the old Mercury Drug rule,
which was repealed with the passage of Republic Act 6715 into law. It was in Alex Ferrer v. NLRC
255 SCRA 430 (1993) when the Supreme Court returned to the doctrine in East Asiatic, which
was soon supplanted by the case of Bustamante v. NLRC and Evergreen Farms, Inc., which held
that the backwages to be awarded to an illegally dismissed employee, should not, as a general
rule, be diminished or reduced by the earnings derived from him during the period of his illegal
dismissal. Furthermore, the Mercury Drug rule was never meant to prejudice the workers, but
merely to speed the recovery of their backwages.
Ever since Mercury Drug Co. Inc. v. CIR 56 SCRA 694 (1974), it had been the intent of the
Supreme Court to increase the backwages due an illegally dismissed employee. In the Mercury
Drug case, full backwages was to be recovered even though a three-year limitation on recovery
of full backwages was imposed in the name of equity. Then in Bustamante, full backwages was
interpreted to mean absolutely no deductions regardless of the duration of the illegal dismissal.
In Bustamante, the Supreme Court no longer regarded equity as a basis when dealing with illegal
dismissal cases because it is not equity at play in illegal dismissals but rather, it is employers
obligation to pay full back wages (sic). It is an obligation of the employer because it is "the price
or penalty the employer has to pay for illegally dismissing his employee."
The applicable modern definition of full backwages is now found in Millares v. National Labor
Relations Commission 305 SCRA 500 (1999), where although the issue in Millares concerned
separation pay separation pay and backwages both have employees wage rate at their
foundation.
x x x The rationale is not difficult to discern. It is the obligation of the employer to pay an illegally
dismissed employee the whole amount of his salaries plus all other benefits, bonuses and
general increases to which he would have been normally entitled had he not been dismissed and
had not stopped working. The same holds true in case of retrenched employees. x x x
x x x x
x x x Annual general increases are akin to "allowances" or "other benefits."
46
(Italics ours.)
We do not agree.
Attention must be called to Article 279 of the Labor Code of the Philippines, as amended by
Section 34 of Rep. Act No. 6715. The law provides as follows:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. (Emphasis supplied.)
Article 279 mandates that an employees full backwages shall be inclusive of allowances and
other benefits or their monetary equivalent. Contrary to the ruling of the Court of Appeals, we
do not see that a salary increase can be interpreted as either an allowance or a benefit. Salary
increases are not akin to allowances or benefits, and cannot be confused with either. The term
"allowances" is sometimes used synonymously with "emoluments," as indirect or contingent
remuneration, which may or may not be earned, but which is sometimes in the nature of
compensation, and sometimes in the nature of reimbursement.
47
Allowances and benefits are
granted to the employee apart or separate from, and in addition to the wage or salary. In
contrast, salary increases are amounts which are added to the employees salary as an increment
thereto for varied reasons deemed appropriate by the employer. Salary increases are not
separate grants by themselves but once granted, they are deemed part of the employees salary.
To extend the coverage of an allowance or a benefit to include salary increases would be to
strain both the imagination of the Court and the language of law. As aptly observed by the NLRC,
"to otherwise give the meaning other than what the law speaks for by itself, will open the
floodgates to various interpretations."
48
Indeed, if the intent were to include salary increases as
basis in the computation of backwages, the same should have been explicitly stated in the same
manner that the law used clear and unambiguous terms in expressly providing for the inclusion
of allowances and other benefits.
Moreover, we find East Asiatic inapplicable to the case at bar. In East Asiatic, therein petitioner
East Asiatic Company, Ltd. was found guilty of unfair labor practices against therein respondent,
Soledad A. Dizon, and the Court ordered her reinstatement with back pay. On the question of
the amount of backwages, the Court granted the dismissed employee the whole amount of the
salaries plus all general increases and bonuses she would have received during the period of her
lay-off with the corresponding right of the employer to deduct from the total amounts, all the
earnings earned by the employee during her lay-off. The emphasis in East Asiatic is the duty of
both the employer and the employee to disclose the material facts and competent evidence
within their peculiar knowledge relative to the proper determination of backwages, especially as
the earnings derived by the employee elsewhere are deductions to which the employer are
entitled. However, East Asiatic does not find relevance in the resolution of the issue before us.
First, the material date to consider is 21 March 1989, when the law amending Article 279 of the
Labor Code, Rep. Act No. 6715, otherwise known as the Herrera-Veloso Law, took effect. It is
obvious that the backdrop of East Asiatic, decided by this Court on 31 August 1971 was prior to
the current state of the law on the definition of full backwages. Second, it bears stressing that
East Asiatic was decided at a time when even as an illegally dismissed employee is entitled to the
whole amount of the salaries or wages, it was the recognized right of the employer to deduct
from the total of these, the amount equivalent to the salaries or wages the employee or worker
would have earned in his old employment on the corresponding days that he was actually
gainfully employed elsewhere with an equal or higher salary or wage, such that if his salary or
wage in his other employment was less, the employer may deduct only what has been actually
earned.
49
It is for this reason the Court centered its discussion on the duty of both parties to be
candid and open about facts within their knowledge to establish the amount of the deductions,
and not leave the burden on the employee alone to establish his claim, as well as on the duty of
the court to compel the parties to cooperate in disclosing such material facts. The inapplicability
of East Asiatic to respondent Sadac was sufficiently elucidated upon by the NLRC, viz.:
A full discernment of the pertinent portion of the judgment sought to be executed in East Asiatic
Co., Ltd. would reveal as follows:
"x x x to reinstate Soledad A. Dizon immediately to her former position with backwages from
September 1, 1958 until actually reinstated with all the rights and privileges acquired and due
her, including seniority and such other terms and conditions of employment AT THE TIME OF
HER LAY-OFF"
The basis on which this doctrine was laid out was summed up by the Supreme Court which
ratiocinated in this light. To quote:
"x x x on the other hand, of the employer to deduct from the total of these, the amount
equivalent to these salaries or wages the employee or worker would have earned in his old
employment on the corresponding days that he was actually gainfully employed elsewhere with
an equal or higher salary or wage, such that if his salary or wage in his other employment was
less, the employer may deduct only what has been actually earned x x x" (Ibid, pp. 547-548).
But the Supreme Court, in the instant case, pronounced a clear but different judgment from that
of East Asiatic Co. decretal portion, in this wise:
"WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the following
MODIFICATIONS: that private respondent shall be entitled to backwages from termination of
employment until turning sixty (60) years of age (in 1995) and, thereupon, to retirement benefits
in accordance with law; xxx"
Undisputably (sic), it was decreed in plain and unambiguous language that complainant Sadac
"shall be entitled to backwages." No more, no less.
Thus, this decree for Sadac cannot be considered in any way, substantially in essence, with the
award of backwages as pronounced for Ms. Dizon in the case of East Asiatic Co. Ltd.
50

In the same vein, we cannot accept the Court of Appeals reliance on the doctrine as espoused in
Millares. It is evident that Millares concerns itself with the computation of the salary base used
in computing the separation pay of petitioners therein. The distinction between backwages and
separation pay is elementary. Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the employee and the employer. Backwages
represent compensation that should have been earned but were not collected because of the
unjust dismissal. The bases for computing the two are different, the first being usually the length
of the employees service and the second the actual period when he was unlawfully prevented
from working.
51

The issue that confronted the Court in Millares was whether petitioners housing and
transportation allowances therein which they allegedly received on a monthly basis during their
employment should have been included in the computation of their separation pay. It is plain to
see that the reference to general increases in Millares citing East Asiatic was a mere obiter. The
crux in Millares was our pronouncement that the receipt of an allowance on a monthly basis
does not ipso facto characterize it as regular and forming part of salary because the nature of
the grant is a factor worth considering. Whether salary increases are deemed part of the salary
base in the computation of backwages was not the issue in Millares.
Neither can we look at St. Louis of Tuguegarao to resolve the instant controversy. What was
mainly contentious therein was the inclusion of fringe benefits in the computation of the award
of backwages, in particular additional vacation and sick leaves granted to therein concerned
employees, it evidently appearing that the reference to East Asiatic in a footnote was a mere
obiter dictum. Salary increases are not akin to fringe benefits
52
and neither is it logical to
conceive of both as belonging to the same taxonomy.
We must also resolve against the applicability of Sigma Personnel Services to the case at bar. The
basic issue before the Court therein was whether the employee, Susan Sumatre, a domestic
helper in Abu Dhabi, United Arab Emirates, had been illegally dismissed, in light of the
contention of Sigma Personnel Services, a duly licensed recruitment agency, that the former was
a mere probationary employee who was, on top of this status, mentally unsound.
53
Even a
cursory reading of Sigma Personnel Services citing St. Louis College of Tuguegarao would readily
show that inclusion of salary increases in the computation of backwages was not at issue. The
same was not on all fours with the instant petition.
What, then, is the basis of computation of backwages? Are annual general increases in basic
salary deemed component in the computation of full backwages? The weight of authority leans
in petitioner Banks favor and against respondent Sadacs claim for the inclusion of general
increases in the computation of his backwages.
We stressed in Paramount that an unqualified award of backwages means that the employee is
paid at the wage rate at the time of his dismissal, thus:
The determination of the salary base for the computation of backwages requires simply an
application of judicial precedents defining the term "backwages". Unfortunately, the Labor
Arbiter erred in this regard. An unqualified award of backwages means that the employee is paid
at the wage rate at the time of his dismissal [Davao Free Worker Front v. Court of Industrial
Relations, G.R. No. L-29356, October 27, 1975, 67 SCRA 418; Capital Garments Corporation v.
Ople, G.R. No. 53627, September 30, 1982, 117 SCRA 473; Durabilt Recapping Plant & Company
v. NLRC, G.R. No. 76746, July 27, 1987, 152 SCRA 328]. And the Court has declared that the base
figure to be used in the computation of backwages due to the employee should include not just
the basic salary, but also the regular allowances that he had been receiving, such as the
emergency living allowances and the 13th month pay mandated under the law [See Pan-
Philippine Life Insurance Corporation v. NLRC, G.R. No. 53721, June 29, 1982, 144 SCRA 866;
Santos v. NLRC, G.R. No. 76721, September 21, 1987, 154 SCRA 166; Soriano v. NLRC, G.R. No.
75510, October 27, 1987, 155 SCRA 124; Insular Life Assurance Co., Ltd. v. NLRC,
supra.]
54
(Emphasis supplied.)
There is no ambivalence in Paramount, that the base figure to be used in the computation of
backwages is pegged at the wage rate at the time of the employees dismissal, inclusive of
regular allowances that the employee had been receiving such as the emergency living
allowances and the 13th month pay mandated under the law.
In Evangelista v. National Labor Relations Commission,
55
we addressed the sole issue of whether
the computation of the award of backwages should be based on current wage level or the wage
levels at the time of the dismissal. We resolved that an unqualified award of backwages means
that the employee is paid at the wage rate at the time of his dismissal, thus:
As explicitly declared in Paramount Vinyl Products Corp. vs. NLRC, the determination of the
salary base for the computation of backwages requires simply an application of judicial
precedents defining the term "backwages." An unqualified award of backwages means that the
employee is paid at the wage rate at the time of his dismissal. Furthermore, the award of salary
differentials is not allowed, the established rule being that upon reinstatement, illegally
dismissed employees are to be paid their backwages without deduction and qualification as to
any wage increases or other benefits that may have been received by their co-workers who were
not dismissed or did not go on strike.
56

The case of Paramount was relied upon by the Court in the latter case of Espejo v. National Labor
Relations Commission,
57
where we reiterated that the computation of backwages should be
based on the basic salary at the time of the employees dismissal plus the regular allowances
that he had been receiving. Further, the clarification made by the Court in General Baptist Bible
College v. National Labor Relations Commission,
58
settles the issue, thus:
We also want to clarify that when there is an award of backwages this actually refers to
backwages without qualifications and deductions. Thus, We held that:
"The term backwages without qualification and deduction means that the workers are to be
paid their backwages fixed as of the time of the dismissal or strike without deduction for their
earnings elsewhere during their layoff and without qualification of their wages as thus fixed; i.e.,
unqualified by any wage increases or other benefits that may have been received by their co-
workers who are not dismissed or did not go on strike. Awards including salary differentials are
not allowed. The salary base properly used should, however, include not only the basic salary but
also the emergency cost of living allowances and also transportation allowances if the workers
are entitled thereto."
59
(Italics supplied.)
Indeed, even a cursory reading of the dispositive portion of the Courts Decision of 13 June 1997
in G.R. No. 102467, awarding backwages to respondent Sadac, readily shows that the award of
backwages therein is unqualified, ergo, without qualification of the wage as thus fixed at the
time of the dismissal and without deduction.
A demarcation line between salary increases and backwages was drawn by the Court in Paguio v.
Philippine Long Distance Telephone Co., Inc.,
60
where therein petitioner Paguio, on account of
his illegal transfer sought backwages, including an amount equal to 16 percent (16%) of his
monthly salary representing his salary increases during the period of his demotion, contending
that he had been consistently granted salary increases because of his above average or
outstanding performance. We said:
In several cases, the Court had the opportunity to elucidate on the reason for the grant of
backwages. Backwages are granted on grounds of equity to workers for earnings lost due to their
illegal dismissal from work. They are a reparation for the illegal dismissal of an employee based
on earnings which the employee would have obtained, either by virtue of a lawful decree or
order, as in the case of a wage increase under a wage order, or by rightful expectation, as in the
case of ones salary or wage. The outstanding feature of backwages is thus the degree of
assuredness to an employee that he would have had them as earnings had he not been illegally
terminated from his employment.
Petitioners claim, however, is based simply on expectancy or his assumption that, because in
the past he had been consistently rated for his outstanding performance and his salary
correspondingly increased, it is probable that he would similarly have been given high ratings
and salary increases but for his transfer to another position in the company.
In contrast to a grant of backwages or an award of lucrum cessans in the civil law, this contention
is based merely on speculation. Furthermore, it assumes that in the other position to which he
had been transferred petitioner had not been given any performance evaluation. As held by the
Court of Appeals, however, the mere fact that petitioner had been previously granted salary
increases by reason of his excellent performance does not necessarily guarantee that he would
have performed in the same manner and, therefore, qualify for the said increase later. What is
more, his claim is tantamount to saying that he had a vested right to remain as Head of the
Garnet Exchange and given salary increases simply because he had performed well in such
position, and thus he should not be moved to any other position where management would
require his services.
61

Applying Paguio to the case at bar, we are not prepared to accept that this degree of
assuredness applies to respondent Sadacs salary increases. There was no lawful decree or order
supporting his claim, such that his salary increases can be made a component in the
computation of backwages. What is evident is that salary increases are a mere expectancy. They
are, by its nature volatile and are dependent on numerous variables, including the companys
fiscal situation and even the employees future performance on the job, or the employees
continued stay in a position subject to management prerogative to transfer him to another
position where his services are needed. In short, there is no vested right to salary increases. That
respondent Sadac may have received salary increases in the past only proves fact of receipt but
does not establish a degree of assuredness that is inherent in backwages. From the foregoing,
the plain conclusion is that respondent Sadacs computation of his full backwages which includes
his prospective salary increases cannot be permitted.
Respondent Sadac cannot take exception by arguing that jurisprudence speaks only of wage and
not salary, and therefore, the rule is inapplicable to him. It is respondent Sadacs stance that he
was not paid at the wage rate nor was he engaged in some form of manual or physical labor as
he was hired as Vice President of petitioner Bank. He cites Gaa v. Court of Appeals
62
where the
Court distinguished between wage and salary.
The reliance is misplaced. The distinction between salary and wage in Gaa was for the purpose of
Article 1708 of the Civil Code which mandates that, "[t]he laborers wage shall not be subject to
execution or attachment, except for debts incurred for food, shelter, clothing and medical
attendance." In labor law, however, the distinction appears to be merely semantics. Paramount
and Evangelista may have involved wage earners, but the petitioner in Espejo was a General
Manager with a monthly salary of P9,000.00 plus privileges. That wage and salary are
synonymous has been settled in Songco v. National Labor Relations Commission.
63
We said:
Broadly, the word "salary" means a recompense or consideration made to a person for his pains
or industry in another mans business. Whether it be derived from "salarium," or more fancifully
from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation
for services rendered. Indeed, there is eminent authority for holding that the words "wages" and
"salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing
Hopkins vs. Cromwell, 85 N.Y.S.839, 841, 89 App. Div. 481; 38 Am. Jur. 496). "Salary," the
etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the
etymology of which is the Middle English word "wagen". Both words generally refer to one and
the same meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the
synonym of "wages" and "salary" (Blacks Law Dictionary, 5th Ed). x x x
64
(Italics supplied.)
II.
Petitioner Bank ascribes as its second assignment of error the Court of Appeals ruling that
respondent Sadac is entitled to check-up benefit, clothing allowance and cash conversion of
vacation leaves notwithstanding that respondent Sadac did not present any evidence to prove
entitlement to these claims.
65

The determination of respondent Sadacs entitlement to check-up benefit, clothing allowance,
and cash conversion of vacation leaves involves a question of fact. The well-entrenched rule is
that only errors of law not of facts are reviewable by this Court in a petition for review.
66
The
jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, is limited to reviewing only errors of law, not of fact, unless the
factual findings being assailed are not supported by evidence on record or the impugned
judgment is based on a misapprehension of facts.
67
This Court is also not precluded from delving
into and resolving issues of facts, particularly if the findings of the Labor Arbiter are inconsistent
with those of the NLRC and the Court of Appeals.
68
Such is the case in the instant petition. The
Labor Arbiter and the Court of Appeals are in agreement anent the entitlement of respondent
Sadac to check-up benefit, clothing allowance, and cash conversion of vacation leaves, but the
findings of the NLRC were to the contrary. The Labor Arbiter sustained respondent Sadacs
entitlement to check-up benefit, clothing allowance and cash conversion of vacation leaves. He
gave weight to petitioner Banks acknowledgment in its computation that respondent Sadac is
entitled to certain benefits, namely, rice subsidy, tuition fee allowance, and medicine allowance,
thus, there exists no reason to deprive respondent Sadac of his other benefits. The Labor Arbiter
also reasoned that the petitioner Bank did not adduce evidence to support its claim that the
benefits sought by respondent Sadac are not granted to its employees and officers. Similarly, the
Court of Appeals ratiocinated that if ordinary employees are entitled to receive these benefits,
so it is with more reason for a Vice President, like herein respondent Sadac to receive the same.
We find in the records that, per petitioner Banks computation, the benefits to be received by
respondent are monthly rice subsidy, tuition fee allowance per year, and medicine allowance per
year.
69
Contained nowhere is an acknowledgment of herein claimed benefits, namely, check-up
benefit, clothing allowance, and cash conversion of vacation leaves. We cannot sustain the
rationalization that the acknowledgment by petitioner Bank in its computation of certain
benefits granted to respondent Sadac means that the latter is also entitled to the other benefits
as claimed by him but not acknowledged by petitioner Bank. The rule is, he who alleges, not he
who denies, must prove. Mere allegations by respondent Sadac does not suffice in the absence
of proof supporting the same.
III.
We come to the third assignment of error raised by petitioner Bank in its Supplement to Petition
for Review, assailing the 26 October 2004 Supplemental Decision of the Court of Appeals which
amended the fallo of its 6 April 2004 Decision to include "attorneys fees equal to TEN PERCENT
(10%) of all the monetary award" granted to respondent Sadac. Petitioner Bank posits that
neither the dispositive portion of our 13 June 1997 Decision in G.R. No. 102467 nor the body
thereof awards attorneys fees to respondent Sadac. It is postulated that the body of the 13 June
1997 Decision does not contain any findings of facts or conclusions of law relating to attorneys
fees, thus, this Court did not intend to grant to respondent Sadac the same, especially in the light
of its finding that the petitioner Bank was not motivated by malice or bad faith and that it did not
act in a wanton, oppressive, or malevolent manner in terminating the services of respondent
Sadac.
70

We do not agree.
At the outset it must be emphasized that when a final judgment becomes executory, it thereby
becomes immutable and unalterable. The judgment may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be an erroneous conclusion of
fact or law, and regardless of whether the modification is attempted to be made by the Court
rendering it or by the highest Court of the land. The only recognized exceptions are the
correction of clerical errors or the making of so-called nunc pro tunc entries which cause no
prejudice to any party, and, of course, where the judgment is void.
71
The Courts 13 June 1997
Decision in G.R. No. 102467 became final and executory on 28 July 1997. This renders moot
whatever argument petitioner Bank raised against the grant of attorneys fees to respondent
Sadac. Of even greater import is the settled rule that it is the dispositive part of the judgment
that actually settles and declares the rights and obligations of the parties, finally, definitively, and
authoritatively, notwithstanding the existence of inconsistent statements in the body that may
tend to confuse.
72

Proceeding therefrom, we make a determination of whether the Court in Equitable Banking
Corporation v. National Labor Relations Commission,
73
G.R. No. 102467, dated 13 June 1997,
awarded attorneys fees to respondent Sadac. In recapitulation, the dispositive portion of the
aforesaid Decision is hereunder quoted:
WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the following
MODIFICATIONS: That private respondent shall be entitled to backwages from termination of
employment until turning sixty (60) years of age (in 1995) and, thereupon, to retirement benefits
in accordance with law; that private respondent shall be paid an additional amount of P5,000.00;
that the award of moral and exemplary damages are deleted; and that the liability herein
pronounced shall be due from petitioner bank alone, the other petitioners being absolved from
solidary liability. No costs.
74

The dispositive portion of the 24 September 1991 Decision of the NLRC awards respondent
Sadac attorneys fees equivalent to ten percent (10%) of the monetary award, viz:
WHEREFORE, in view of all the foregoing considerations, let the Decision of October 2, 1990 be,
as it is hereby, SET ASIDE and a new one ENTERED declaring the dismissal of the complainant as
illegal, and consequently ordering the respondents jointly and severally to reinstate him to his
former position as bank Vice-President and General Counsel without loss of seniority rights and
other privileges, and to pay him full backwages and other benefits from the time his
compensation was withheld to his actual reinstatement, as well as moral damages of
P100,000.00, exemplary damages of P50,000.00, and attorneys fees equivalent to Ten Percent
(10%) of the monetary award. Should reinstatement be no longer possible due to strained
relations, the respondents are ordered likewise jointly and severally to grant separation pay at
one (1) month per year of service in the total sum of P293,650.00 with backwages and other
benefits from November 16, 1989 to September 15, 1991 (cut off date, subject to adjustment)
computed at P1,055,740.48, plus damages of P100,000.00 (moral damages), P50,000.00
(exemplary damages) and attorneys fees equal to Ten Percent (10%) of all the monetary award,
or a grand total of P1,649,329.53.
75
(Italics Ours.)
As can be gleaned from the foregoing, the Courts Decision of 13 June 1997 AFFIRMED with
MODIFICATION the NLRC Decision of 24 September 1991, which modification did not touch upon
the award of attorneys fees as granted, hence, the award stands. Juxtaposing the decretal
portions of the NLRC Decision of 24 September 1991 with that of the Courts Decision of 13 June
1997, we find that what was deleted by the Court was "the award of moral and exemplary
damages," but not the award of "attorneys fees equivalent to Ten Percent (10%) of the
monetary award." The issue on the grant of attorneys fees to respondent Sadac has been
adequately and definitively threshed out and settled with finality when petitioner Bank came to
us for the first time on a Petition for Certiorari in Equitable Banking Corporation v. National Labor
Relations Commission, docketed as G.R. No. 102467. The Court had spoken in its Decision of 13
June 1997 in the said case which attained finality on 28 July 1997. It is now immutable.
IV.
We proceed with the penultimate issue on the entitlement of respondent Sadac to twelve
percent (12%) interest per annum on the outstanding balance as of 28 July 1997, the date when
our Decision in G.R. No. 102467 became final and executory.
In Eastern Shipping Lines, Inc. v. Court of Appeals,
76
the Court, speaking through the Honorable
Justice Jose C. Vitug, laid down the following rules of thumb:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts
or quasi-delicts is breached, the contravenor can be held liable for damages. The
provisions under Title XVIII on "Damages" of the Civil Code govern in determining the
measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual or
compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as
follows:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due shall
itself earn legal interest from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum. No interest, however, shall
be adjudged on unliquidated claims or damages except when or until the demand
can be established with reasonable certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (Article 1169, Civil Code) but
when such certainty cannot be so reasonably established at the time the demand
is made, the interest shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages may be deemed to
have been reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2 above, shall be 12% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.
77

It is obvious that the legal interest of twelve percent (12%) per annum shall be imposed from the
time judgment becomes final and executory, until full satisfaction thereof. Therefore, petitioner
Bank is liable to pay interest from 28 July 1997, the finality of our Decision in G.R. No.
102467.
78
The Court of Appeals was not in error in imposing the same notwithstanding that the
parties were at variance in the computation of respondent Sadacs backwages. What is
significant is that the Decision of 13 June 1997 which awarded backwages to respondent Sadac
became final and executory on 28 July 1997.
V.
Finally, petitioner Banks Motion to Refer the Petition En Banc must necessarily be denied as
established in our foregoing discussion. We are not herein modifying or reversing a doctrine or
principle laid down by the Court en banc or in a division. The instant case is not one that should
be heard by the Court en banc.
79
1avvphil.net
Fallo
WHEREFORE, the petition is PARTIALLY GRANTED in the sense that in the computation of the
backwages, respondent Sadacs claimed prospective salary increases, check-up benefit, clothing
allowance, and cash conversion of vacation leaves are excluded. The petition is PARTIALLY
DENIED insofar as we AFFIRMED the grant of attorneys fees equal to ten percent (10%) of all the
monetary award and the imposition of twelve percent (12%) interest per annum on the
outstanding balance as of 28 July 1997. Hence, the Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 75013, dated 6 April 2004 and 28 July 2004, respectively, and the
Supplemental Decision dated 26 October 2004 are MODIFIED in the following manner, to wit:
Petitioner Bank is DIRECTED TO PAY respondent Sadac the following:
(1) BACKWAGES in accordance with Our Decision dated 13 June 1997 in G.R. No. 102467
with a clarification that the award of backwages EXCLUDES respondent Sadacs claimed
prospective salary increases, check-up benefit, clothing allowance, and cash conversion
of vacation leaves;
(2) ATTORNEYS FEES equal to TEN PERCENT (10%) of the total sum of all monetary
award; and
(3) INTEREST of TWELVE PERCENT (12%) per annum is hereby imposed on the total sum
of all monetary award from 28 July 1997, the date of finality of Our Decision in G.R. No.
102467 until full payment of the said monetary award.
The Motion to Refer the Petition to the Court En Banc is DENIED.
No costs.
Republic of the Philippines
SUPREME COURT
Baguio City
FIRST DIVISION

G.R. No. 118506 April 18, 1997
NORMA MABEZA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL SUPREME, respondents.

KAPUNAN, J.:
This petition seeking the nullification of a resolution of public respondent National Labor
Relations Commission dated April 28, 1994 vividly illustrates why courts should be ever vigilant in
the preservation of the constitutionally enshrined rights of the working class. Without the
protection accorded by our laws and the tempering of courts, the natural and historical
inclination of capital to ride roughshod over the rights of labor would run unabated.
The facts of the case at bar, culled from the conflicting versions of petitioner and private
respondent, are illustrative.
Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-
employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign
an instrument attesting to the latter's compliance with minimum wage and other labor standard
provisions of law.
1
The instrument provides:
2

JOINTAFFIDAVIT
We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA,
ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of
legal ages (sic), Filipinos and residents of Baguio City, under oath, depose and say:
1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No.
416 Magsaysay Ave., Baguio City.
2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;
3. That we are all (8) employees in the hotel and assigned in each respective
shifts;
4. ThatwehavenocomplaintsagainstthemanagementoftheHotelSupremeas
wearepaidaccordinglyandthatwearetreatedwell.
5. That we are executing this affidavit voluntarily without any force or
intimidation and for the purpose of informing the authorities concerned and to
dispute the alleged report of the Labor Inspector of the Department of Labor and
Employment conducted on the said establishment on February 2, 1991.
IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May,
1991 at Baguio City, Philippines.
(Sgd.) (Sgd.) (Sgd.)
SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY
(Sgd.) (Sgd.) (Sgd.)
MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA.
(Sgd.) (Sgd.)
JONATHAN PICART JOSE DIZON
SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines.
Asst. City Prosecutor
Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the
veracity and contents of the affidavit as instructed by management. The affidavit was
nevertheless submitted on the same day to the Regional Office of the Department of Labor and
Employment in Baguio City.
As gleaned from the affidavit, the same was drawn by management for the sole purpose of
refuting findings of the Labor Inspector of DOLE (in an inspection of respondent's establishment
on February 2, 1991) apparently adverse to the private respondent.
3

After she refused to proceed to the City Prosecutor's Office on the same day the affidavit was
submitted to the Cordillera Regional Office of DOLE petitioner avers that she was ordered by
the hotel management to turn over the keys to her living quarters and to remove her belongings
from the hotel
premises.
4
According to her, respondent strongly chided her for refusing to proceed to the City
Prosecutor's Office to attest to the affidavit.
5
She thereafter reluctantly filed a leave of absence
from her job which was denied by management. When she attempted to return to work on May
10, 1991, the hotel's cashier, Margarita Choy, informed her that she should not report to work
and, instead, continue with her unofficial leave of absence. Consequently, on May 13, 1991,
three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal
before the Arbitration Branch of the National Labor Relations Commission CAR Baguio City. In
addition to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment
of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits.
The complaint was docketed as NLRC Case No. RAB-CAR-05-0198-91 and assigned to Labor
Arbiter Felipe P. Pati.
Responding to the allegations made in support of petitioner's complaint for illegal dismissal,
private respondent Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left
(her job) without notice to the management"
6
and that she actually abandoned her work. He
maintained that there was no basis for the money claims for underpayment and other benefits
as these were paid in the form of facilities to petitioner and the hotel's other
employee.
7
Pointing to the Affidavit of May 7, 1991, the private respondent asserted that his
employees actually have no problems with management. In a supplemental answer submitted
eleven (11) months after the original complaint for illegal dismissal was filed, private respondent
raised a new ground, loss of confidence, which was supported by a criminal complaint for
Qualified Theft he filed before the prosecutor's office of the City of Baguio against petitioner on
July 4, 1991.
8

On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the
ground of loss of confidence. His disquisitions in support of his conclusion read as follows:
It appears from the evidence of respondent that complainant carted away or
stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel (Exhibits
"9", "9-A," "9-B," "9-C" and "10" pages 12-14 TSN, December 1, 1992).
In fact, this was the reason why respondent Peter Ng lodged a criminal complaint
against complainant for qualified theft and perjury. The fiscal's office finding
aprimafacie evidence that complainant committed the crime of qualified theft
issued a resolution for its filing in court but dismissing the charge of perjury
(Exhibit "4" for respondent and Exhibit "B-7" for complainant). As a consequence,
complainant was charged in court for the said crime (Exhibit "5" for respondent
and Exhibit "B-6" for the complainant).
With these pieces of evidence, complainant committed serious misconduct
against her employer which is one of the just and valid grounds for an employer
to terminate an employee (Article 282 of the Labor Code as amended).
9

On April 28, 1994, respondent NLRC promulgated its assailed
Resolution
10
affirming the Labor Arbiter's decision. The resolution substantially incorporated
the findings of the Labor Arbiter.
11
Unsatisfied, petitioner instituted the instant special civil
action for certiorari under Rule 65 of the Rules of Court on the following grounds:
12

1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE ALLEGED
LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE PART
OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL
OF THE COMPLAINANT FROM HER EMPLOYMENT;
2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR ARBITER
THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS ON THE BASIS
OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION PREPARED BY
ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS TOTALLY
INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF WAGES AND BENEFITS;
3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE ADDUCED
BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR PRACTICE
COMMITTED BY THE RESPONDENT.
The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private
respondent's principal claims and defenses and urges this Court to set aside the public
respondent's assailed resolution.
13

We agree.
It is settled that in termination cases the employer bears the burden of proof to show that the
dismissal is for just cause, the failure of which would mean that the dismissal is not justified and
the employee is entitled to reinstatement.
14

In the case at bar, the private respondent initially claimed that petitioner abandoned her job
when she failed to return to work on May 8, 1991. Additionally, in order to strengthen his
contention that there existed sufficient cause for the termination of petitioner, he belatedly
included a complaint for loss of confidence, supporting this with charges that petitioner had
stolen a blanket, a bedsheet and two towels from the hotel.
15
Appended to his last complaint
was a suit for qualified theft filed with the Baguio City prosecutor's office.
From the evidence on record, it is crystal clear that the circumstances upon which private
respondent anchored his claim that petitioner "abandoned" her job were not enough to
constitute just cause to sanction the termination of her services under Article 283 of the Labor
Code. For abandonment to arise, there must be concurrence of two things: 1) lack of intention to
work;
16
and 2) the presence of overt acts signifying the employee's intention not to work.
17

In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of
absence when she learned that the hotel management was displeased with her refusal to attest
to the affidavit. The fact that she made this attempt clearly indicates not an intention to
abandon but an intention to return to work after the period of her leave of absence, had it been
granted, shall have expired.
Furthermore, while absence from work for a prolonged period may suggest abandonment in
certain instances, mere absence of one or two days would not be enough to sustain such a claim.
The overt act (absence) ought
to unerringly point to the fact that the employee has no intention to return to work,
18
which is
patently not the case here. In fact, several days after she had been advised to take an informal
leave, petitioner tried to resume working with the hotel, to no avail. It was only after she had
been repeatedly rebuffed that she filed a case for illegal dismissal. These acts militate against the
private respondent's claim that petitioner abandoned her job. As the Solicitor General in his
manifestation observed:
Petitioner's absence on that day should not be construed as abandonment of her
job. She did not report because the cashier told her not to report anymore, and
that private respondent Ng did not want to see her in the hotel premises. But two
days later or on the 10th of May, after realizing that she had to clarify her
employment status, she again reported for work. However, she was prevented
from working by private respondents.
19

We now come to the second cause raised by private respondent to support his contention that
petitioner was validly dismissed from her job.
Loss of confidence as a just cause for dismissal was never intended to provide employers with a
blank check for terminating their employees. Such a vague, all-encompassing pretext as loss of
confidence, if unqualifiedly given the seal of approval by this Court, could readily reduce to
barren form the words of the constitutional guarantee of security of tenure. Having this in mind,
loss of confidence should ideally apply only to cases involving employees occupying positions of
trust and confidence or to those situations where the employee is routinely charged with the
care and custody of the employer's money or property. To the first class belong managerial
employees, i.e., those vested with the powers or prerogatives to lay down management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or
effectively recommend such managerial actions; and to the second class belong cashiers,
auditors, property custodians, etc., or those who, in the normal and routine exercise of their
functions, regularly handle significant amounts of money or property. Evidently, an ordinary
chambermaid who has to sign out for linen and other hotel property from the property
custodian each day and who has to account for each and every towel or bedsheet utilized by the
hotel's guests at the end of her shift would not fall under any of these two classes of employees
for which loss of confidence, if ably supported by evidence, would normally apply. Illustrating
this distinction, this Court in MarinaPortServices,Inc.vs.NLRC,
20
has stated that:
To be sure, every employee must enjoy some degree of trust and confidence
from the employer as that is one reason why he was employed in the first place.
One certainly does not employ a person he distrusts. Indeed, even the lowly
janitor must enjoy that trust and confidence in some measure if only because he
is the one who opens the office in the morning and closes it at night and in this
sense is entrusted with the care or protection of the employer's property. The
keys he holds are the symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the
trust and confidence of his employer, whose property he is safeguarding. Like the
janitor, he has access to this property. He too, is charged with its care and
protection.
Notably, however, and like the janitor again, he is entrusted only with
thephysicaltask of protecting that property. The employer's trust and confidence
in him is limited to that ministerial function. He is not entrusted, in the Labor
Arbiter's words, with the duties of safekeeping and safeguarding company
policies, management instructions, and company secrets such as operation
devices. He is not privy to these confidential matters, which are shared only in the
higher echelons of management. It is the persons on such levels who, because
they discharge these sensitive duties, may be considered holding positions of
trust and confidence. The security guard does not belong in such category.
21

More importantly, we have repeatedly held that loss of confidence should not be simulated in
order to justify what would otherwise be, under the provisions of law, an illegal dismissal. "It
should not be used as a subterfuge for causes which are illegal, improper and unjustified. It must
be genuine, not a mere afterthought to justify an earlier action taken in bad faith."
22

In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges
against petitioner long after the latter exposed the hotel's scheme (to avoid its obligations as
employer under the Labor Code) by her act of filing illegal dismissal charges against the private
respondent would hardly warrant serious consideration of loss of confidence as a valid ground
for dismissal. Notably, the Solicitor General has himself taken a position opposite the public
respondent and has observed that:
If petitioner had really committed the acts charged against her by private
respondents (stealing supplies of respondent hotel), private respondents should
have confronted her before dismissing her on that ground. Private respondents
did not do so. In fact, private respondent Ng did not raise the matter when
petitioner went to see him on May 9, 1991, and handed him her application for
leave. It took private respondents 52 days or up to July 4, 1991 before finally
deciding to file a criminal complaint against petitioner, in an obvious attempt to
build a case against her.
The manipulations of private respondents should not be countenanced.
23

Clearly, the efforts to justify petitioner's dismissal on top of the private respondent's scheme
of inducing his employees to sign an affidavit absolving him from possible violations of the Labor
Code taints with evident bad faith and deliberate malice petitioner's summary termination
from employment.
Having said this, we turn to the important question of whether or not the dismissal by the
private respondent of petitioner constitutes an unfair labor practice.
The answer in this case must inevitably be in the affirmative.
The pivotal question in any case where unfair labor practice on the part of the employer is
alleged is whether or not the employer has exerted pressure, in the form of restraint,
interference or coercion, against his employee's right to institute concerted action for better
terms and conditions of employment. Without doubt, the act of compelling employees to sign an
instrument indicating that the employer observed labor standards provisions of law when he
might have not, together with the act of terminating or coercing those who refuse to cooperate
with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the
right of the hotel's workers to seek better terms and conditions of employment through
concerted action.
We agree with the Solicitor General's observation in his manifestation that "[t]his actuation . . . is
analogous to the situation envisaged in paragraph (f) of Article 248 of the Labor Code"
24
which
distinctly makes it an unfair labor practice "to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or being about to give testimony"
25
under the
Labor Code. For in not giving positive testimony in favor of her employer, petitioner had
reserved not only her right to dispute the claim and proffer evidence in support thereof but also
to work for better terms and conditions of employment.
For refusing to cooperate with the private respondent's scheme, petitioner was obviously held
up as an example to all of the hotel's employees, that they could only cause trouble to
management at great personal inconvenience. Implicit in the act of petitioner's termination and
the subsequent filing of charges against her was the warning that they would not only be
deprived of their means of livelihood, but also possibly, their personal liberty.
This Court does not normally overturn findings and conclusions of quasi-judicial agencies when
the same are ably supported by the evidence on record. However, where such conclusions are
based on a misperception of facts or where they patently fly in the face of reason and logic, we
will not hesitate to set aside those conclusions. Going into the issue of petitioner's money claims,
we find one more salient reason in this case to set things right: the labor arbiter's evaluation of
the money claims in this case incredibly ignores existing law and jurisprudence on the matter. Its
blatant one-sidedness simply raises the suspicion that something more than the facts, the law
and jurisprudence may have influenced the decision at the level of the Arbiter.
Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the
reason the monetary benefits received by petitioner between 1981 to 1987 were less than
minimum wage was because petitioner did not factor in the meals, lodging, electric consumption
and water she received during the period in her computations.
26
Granting that meals and
lodging were provided and indeed constituted facilities, such facilities could not be deducted
without the employer complying first with certain legal requirements. Without satisfying these
requirements, the employer simply cannot deduct the value from the employee's ages. First,
proof must be shown that such facilities are customarily furnished by the trade. Second, the
provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally,
facilities must be charged at fair and reasonable value.
27

These requirements were not met in the instant case. Private respondent "failed to present any
company policy or guideline to show that the meal and lodging . . . (are) part of the salary;"
28
he
failed to provide proof of the employee's written authorization; and, he failed to show how he
arrived at the valuations.
29

Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision
were figures furnished by the private respondent's own accountant, without corroborative
evidence. On the pretext that records prior to the July 16, 1990 earthquake were lost or
destroyed, respondent failed to produce payroll records, receipts and other relevant documents,
where he could have, as has been pointed out in the Solicitor General's manifestation, "secured
certified copies thereof from the nearest regional office of the Department of Labor, the SSS or
the BIR."
30

More significantly, the food and lodging, or the electricity and water consumed by the petitioner
were not facilities but supplements. A benefit or privilege granted to an employee for the
convenience of the employer is not a facility. The criterion in making a distinction between the
two not so much lies in the kind (food, lodging) but the purpose.
31
Considering, therefore, that
hotel workers are required to work different shifts and are expected to be available at various
odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as
the private respondent's hotel.
It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages
equivalent to thefullwage applicable from May 13, 1988 up to the date of her illegal dismissal.
Additionally, petitioner is entitled to payment of service incentive leave pay, emergency cost of
living allowance, night differential pay, and 13th month pay for the periods alleged by the
petitioner as the private respondent has never been able to adduce proof that petitioner was
paid the aforestated benefits.
However, the claims covering the period of October 1987 up to the time of filing the case on
May 13, 1988 are barred by prescription as P.D. 442 (as amended) and its implementing rules
limit all money claims arising out of employer-employee relationship to three (3) years from the
time the cause of action accrues.
32

We depart from the settled rule that an employee who is unjustly dismissed from work normally
should be reinstated without loss of seniority rights and other privileges. Owing to the strained
relations between petitioner and private respondent, allowing the former to return to her job
would only subject her to possible harassment and future embarrassment. In the instant case,
separation pay equivalent to one month's salary for every year of continuous service with the
private respondent would be proper, starting with her job at the Belfront Hotel.
In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our decision
in OsmalikBustamante,etal.vs.NationalLaborRelationsCommission,
33
petitioner is entitled to
full backwages from the time of her illegal dismissal up to the date of promulgation of this
decision without qualification or deduction.
Finally, in dismissal cases, the law requires that the employer must furnish the employee sought
to be terminated from employment with two written notices before the same may be legally
effected. The first is a written notice containing a statement of the cause(s) for dismissal; the
second is a notice informing the employee of the employer's decision to terminate him stating
the basis of the dismissal. During the process leading to the second notice, the employer must
give the employee ample opportunity to be heard and defend himself, with the assistance of
counsel if he so desires.
Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal, it is
noteworthy that the private respondent never even bothered to inform petitioner of the charges
against her. Neither was petitioner given the opportunity to explain the loss of the articles. It was
only almost two months after petitioner had filed a complaint for illegal dismissal, as an
afterthought, that the loss was reported to the police and added as a supplemental answer to
petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of notice and
hearing prior to her termination violated her constitutional right to due process. Under the
circumstance an award of One Thousand Pesos (P1,000.00) on top of payment of the deficiency
in wages and benefits for the period aforestated would be proper.
WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations Commission
dated April 24, 1994 is REVERSED and SET ASIDE, with costs. For clarity, the economic benefits
due the petitioner are hereby summarized as follows:
1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of petitioner's
illegal dismissal;
2) Service incentive leave pay; night differential pay and 13th month pay for the same period;
3) Separation pay equal to one month's salary for every year of petitioner's continuous service
with the private respondent starting with her job at the Belfront Hotel;
4) Full backwages, withoutqualificationordeduction, from the date of petitioner's illegal
dismissal up to the date of promulgation of this decision pursuant to our ruling in Bustamante
vs.NLRC.
34

5) P1,000.00.
ORDERED.





















Republic of the Philippines
SUPREME COURT
Manila
SPECIAL FIRST DIVISION
G.R. No. 110524 July 29, 2002
DOUGLAS MILLARES and ROGELIO LAGDA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME AGENCY, INC. and ESSO
INTERNATIONAL SHIPPING CO., LTD. respondents.
R E S O L U T I O N
KAPUNAN, J.:
On March 14, 2000, the Court promulgated its decision in the above-entitled case, ruling in favor
of the petitioners. The dispositive portion reads, as follows:
WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993, of the
National Labor Relations Commission is hereby REVERSED and SET ASIDE and a new
judgment is hereby rendered ordering the private respondents to:
(1) Reinstate petitioners Millares and Lagda to their former positions without loss of
seniority rights, and to pay full backwages computed from the time of illegal dismissal to
the time of actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners Millares and Lagda
separation pay equivalent to one month's salary for every year of service; and,
(3) Jointly and severally pay petitioners One Hundred Percent (100%) of their total
credited contributions as provided under the Consecutive Enlistment Incentive Plan.
SO ORDERED.
1

A motion for reconsideration was consequently filed
2
by the private respondents to which
petitioners filed an Opposition thereto.
3

In a Minute Resolution dated June 28, 2000, the Court resolved to deny the motion for
reconsideration with finality.
4

Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME) filed a Motion for
Leave to Intervene and to Admit a Motion for Reconsideration in Intervention.
Private respondents, meanwhile, also filed a Motion for Leave to File a Second Motion for
Reconsideration of our decision.
In both motions, the private respondents and FAME respectively pray in the main that the Court
reconsider its ruling that "Filipino seafarers are considered regular employees within the context
of Article 280 of the Labor Code." They claim that the decision may establish a precedent that
will adversely affect the maritime industry.
The Court resolved to set the case for oral arguments to enable the parties to present their
sides.
To recall, the facts of the case are, as follows:
Petitioner Douglas Millares was employed by private respondent ESSO International
Shipping Company LTD. (Esso International, for brevity) through its local manning agency,
private respondent Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on
November 16, 1968 as a machinist. In 1975, he was promoted as Chief Engineer which
position he occupied until he opted to retire in 1989. He was then receiving a monthly
salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9
to August 7, 1989. In a letter dated June 14, 1989, Michael J. Estaniel, President of
private respondent Trans-Global, approved the request for leave of absence. On June 21,
1989, petitioner Millares wrote G.S. Hanly, Operations Manager of Exxon International
Co., (now Esso International) through Michael J. Estaniel, informing him of his intention
to avail of the optional retirement plan under the Consecutive Enlistment Incentive Plan
(CEIP) considering that he had already rendered more than twenty (20) years of
continuous service. On July 13, 1989 respondent Esso International, through W.J. Vrints,
Employee Relations Manager, denied petitioner Millares' request for optional retirement
on the following grounds, to wit: (1) he was employed on a contractual basis; (2) his
contract of enlistment (COE) did not provide for retirement before the age of sixty (60)
years; and (3) he did not comply with the requirement for claiming benefits under the
CEIP, i.e., to submit a written advice to the company of his intention to terminate his
employment within thirty (30) days from his last disembarkation date.
On August 9, 1989, petitioner Millares requested for an extension of his leave of absence
from August 9 to 24, 1989. On August 19, 1989, Roy C. Palomar, Crewing Manager, Ship
Group A, Trans-global, wrote petitioner Millares advising him that respondent Esso
International "has corrected the deficiency in its manpower requirement specifically in
the Chief Engineer rank by promoting a First Assistant Engineer to this position as a result
of (his) previous leave of absence which expired last August 8, 1989. The adjustment in
said rank was required in order to meet manpower schedules as a result of (his) inability."
On September 26, 1989, respondent Esso International, through H. Regenboog,
Personnel Administrator, advised petitioner Millares that in view of his absence without
leave, which is equivalent to abandonment of his position, he had been dropped from the
roster of crew members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by private respondent Esso
International as wiper/oiler in June 1969. He was promoted as Chief Engineer in 1980, a
position he continued to occupy until his last COE expired on April 10, 1989. He was then
receiving a monthly salary of US$1,939.00.
On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989 up
to the whole month of August 1989. On June 14, 1989, respondent Trans-Global's
President, Michael J. Estaniel, approved petitioner Lagda's leave of absence from June 22,
1989 to July 20, 1989 and advised him to report for re-assignment on July 21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager of
respondent Esso International, through respondent Trans-Global's President Michael J.
Estaniel, informing him of his intention to avail of the optional early retirement plan in
view of his twenty (20) years continuous service in the complaint.
On July 13, 1989, respondent Trans-global denied petitioner Lagda's request for
availment of the optional early retirement scheme on the same grounds upon which
petitioner Millares request was denied.
On August 3, 1989, he requested for an extension of his leave of absence up to August
26, 1989 and the same was approved. However, on September 27, 1989, respondent
Esso International, through H. Regenboog, Personnel Administrator, advised petitioner
Lagda that in view of his "unavailability for contractual sea service," he had been dropped
from the roster of crew members effective September 1, 1989.
On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed
as POEA (M) 89-10-9671, for illegal dismissal and non-payment of employee benefits
against private respondents Esso International and Trans-Global, before the POEA.
5

On July 17, 1991, the POEA rendered a decision dismissing the complaint for lack of merit.
On appeal to the NLRC, the decision of the POEA was affirmed on June 1, 1993 with the following
disquisition:
The first issue must be decided in the negative. Complainants-appellants, as seamen and
overseas contract workers are not covered by the term "regular employment" as defined
under Article 280 of the Labor Code. The POEA, which is tasked with protecting the rights
of the Filipino workers for overseas employment to fair and equitable recruitment and
employment practices and to ensure their welfare, prescribes a standard employment
contract for seamen on board ocean-going vessels for a fixed period but in no case to
exceed twelve (12) months (Part 1, Sec. C). This POEA policy appears to be in consonance
with the international maritime practice. Moreover, the Supreme Court in Brent School,
Inc. vs. Zamora, 181 SCRA 702, had held that a fixed term is essential and natural
appurtenance of overseas employment contracts to which the concept of regular
employment with all that it implies is not applicable, Article 280 of the Labor Code
notwithstanding. There is, therefore, no reason to disturb the POEA Administrator's
finding that complainants-appellants were hired on a contractual basis and for a definite
period. Their employment is thus governed by the contracts they sign each time they are
re-hired and is terminated at the expiration of the contract period.
6

Undaunted, the petitioners elevated their case to this Court
7
and successfully obtained the
favorable action, which is now vehemently being assailed.
At the hearing on November 15, 2000, the Court defined the issues for resolution in this case,
namely:
I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE EMPLOYMENTS
ARE TERMINATED EVERYTIME THEIR CONTRACTS OF EMPLOYMENT EXPIRE?
II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES, WERE THEY DISMISSED
WITHOUT JUST CAUSE SO AS TO BE ENTITLED TO REINSTATEMENT AND BACKWAGES,
INCLUDING PAYMENT OF 100% OF THEIR TOTAL CREDITED CONTRIBUTIONS TO THE
CONSECUTIVE ENLISTMENT INCENTIVE PLAN (CEIP)?
III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT FOR SEAFARERS ON
BOARD FOREIGN VESSELS (SEC. C., DURATION OF CONTRACT) PRECLUDE THE
ATTAINMENT BY SEAMEN OF THE STATUS OF REGULAR EMPLOYEES?
IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524 CONTRAVENE
INTERNATIONAL MARITIME LAW, ALLEGEDLY PART OF THE LAW OF THE LAND UNDER
SECTION 2, ARTICLE II OF THE CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A DEPARTURE FROM ITS
RULING INCOYOCAVS.NLRC(G.R. NO. 113658, March 31, 1995)?
8

In answer to the private respondents' Second Motion for Reconsideration and to FAME's Motion
for Reconsideration in Intervention, petitioners maintain that they are regular employees as
found by the Court in the March 14, 2000 Decision. Considering that petitioners performed
activities which are usually necessary or desirable in the usual business or trade of private
respondents, they should be considered as regular employees pursuant to Article 280, Par. 1 of
the Labor Code.
9
Other justifications for this ruling include the fact that petitioners have
rendered over twenty (20) years of service, as admitted by the private respondents;
10
that they
were recipients of Merit Pay which is an express acknowledgment by the private respondents
that petitioners are regular and not just contractual employees;
11
that petitioners were
registered under the Social Security System (SSS).
The petitioners further state that the case of Coyocav.NLRC
12
which the private respondents
invoke is not applicable to the case at bar as the factual milieu in that case is not the same.
Furthermore, private respondents' fear that our judicial pronouncement will spell the death of
the manning industry is far from real. Instead, with the valuable contribution of the manning
industry to our economy, these seafarers are supposed to be considered as "Heroes of the
Republic" whose rights must be protected.
13
Finally, the first motion for reconsideration has
already been denied with finality by this Court and it is about time that the Court should
write finis to this case.
The private respondents, on the other hand, contend that: (a) the ruling holding petitioners as
regular employees was not in accord with the decision in Coyocav.NLRC, 243 SCRA 190; (b) Art.
280 is not applicable as what applies is the POEA Rules and Regulations Governing Overseas
Employment; (c) seafarers are not regular employees based on international maritime practice;
(d) grave consequences would result on the future of seafarers and manning agencies if the
ruling is not reconsidered; (e) there was no dismissal committed; (f) a dismissed seafarer is not
entitled to back wages and reinstatement, that being not allowed under the POEA rules and the
Migrant Workers Act; and, (g) petitioners are not entitled to claim the total amount credited to
their account under the CEIP.
14

Meanwhile, Intervenor Filipino Association of Mariners Employment (FAME) avers that our
decision, if not reconsidered, will have negative consequences in the employment of Filipino
Seafarers overseas which, in turn, might lead to the demise of the manning industry in the
Philippines. As intervenor FAME puts it:
xxx
7.1 Foreign principals will start looking for alternative sources for seafarers to man their
ships. AS reported by the BIMCO/ISF study, "there is an expectancy that there will be an
increasing demand for (and supply of) Chinese seafarers, with some commentators
suggesting that this may be a long-term alternative to the Philippines." Moreover, "the
political changes within the former Eastern Bloc have made new sources of supply
available to the international market." Intervenor's recent survey among its members
shows that 50 Philippine manning companies had already lost some 6,300 slots to other
Asian, East Europe and Chinese competition for the last two years;
7.2 The Philippine stands to lose an annual foreign income estimated at U.S. DOLLARS
TWO HUNDRED SEVENTY FOUR MILLION FIVE HUNDRED FORTY NINE THOUSAND (US$
274,549,000.00) from the manning industry and another US DOLLARS FOUR BILLION SIX
HUNDRED FIFTY MILLION SEVEN HUNDRED SIX THOUSAND (US$ 4,650,760,000.00) from
the land-based sector if seafarers and equally situated land-based contract workers will
be declared regular employees;
7.3 Some 195,917 (as of 1998) deployed overseas Filipino seafarers will be rendered
jobless should we lose the market;
7.4 Some 360 manning agencies (as of 30 June 2000) whose principals may no longer be
doing business with them will close their shops;
7.5 The contribution to the Overseas Worker's Welfare Administration by the sector,
which is USD 25.00 per contract and translates to US DOLLARS FOUR MILLION (US$
4,000,000.00)annually, will be drastically reduced. This is not to mention the processing
fees paid to POEA, Philippine Regulatory Commission (PRC), Department of Foreign
Affairs (DFA) and Maritime Industry Authority (MARINA) for the documentation of these
seafarers;
7.6 Worst, some 195,917 (as of 1998) families will suffer socially and economically, as
their breadwinners will be rendered jobless; and
7.7 It will considerably slow down the government's program of employment generation,
considering that, as expected foreign employers will now avoid hiring Filipino overseas
contract workers as they will become regular employees with all its concomitant
effects.
15

Significantly, the Office of the Solicitor General, in a departure from its original position in this
case, has now taken the opposite view. It has expressed its apprehension in sustaining our
decision and has called for a re-examination of our ruling.
16

Considering all the arguments presented by the private respondents, the Intervenor FAME and
the OSG, we agree that there is a need to reconsider our position with respect to the status of
seafarers which we considered as regular employees under Article 280 of the Labor Code. We,
therefore, partially grant the second motion for reconsideration.
In BrentSchoolInc.v.Zamora,
17
the Supreme Court stated that Article 280 of the Labor Code
does not apply to overseas employment.
In the light of the foregoing description of the development of the provisions of the Labor
Code bearing on term or fixed-period employment that the question posed in the
opening paragraph of this opinion should now be addressed. Is it then the legislative
intention to outlaw stipulations in employment contracts laying down a definite period
therefor? Are such stipulations in essence contrary to public policy and should not on this
account be accorded legitimacy?
On the other hand, there is the gradual and progressive elimination of references to term
or fixed-period employment in the Labor Code, and the specific statement of the rule
that:
Regular and Casual Employment The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer except where the employment has been
fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or where
the work or service to be employee is seasonal in nature and the employment is
for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; provided that, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues
to recognize, the validity and propriety of contracts and obligations with a fixed or
definite period, and imposes no restraints on the freedom of the parties to fix the
duration of a contract, whatever its object, be it specific, goods or services, except the
general admonition against stipulations contrary to law, morals, good customs, public
order or public policy. Under the Civil code, therefore, and as a general proposition,
fixed-term employment contracts are not limited, as they are under the present Labor
Code, to those by natural seasonal or for specific projects with predetermined dates of
completion; they also include those to which the parties by free choice have assigned a
specific date of termination.
Some familiar examples may be cited of employment contract which may be neither for
seasonal work nor for specific projects, but to which a fixed term is an essential and natural
appurtenance: overseas employment contracts, for one, to which, whatever the nature of
the engagement, the concept of regular employment with all that it implies does not
appear ever to have been applied. Article 280 of the Labor Code notwithstanding also
appointments to the positions of dean, assistant dean, college secretary, principal, and
other administrative offices in educational institutions, which are by practice or tradition
rotated among the faculty members, and where fixed terms are a necessity without
which no reasonable rotation would be possible. Similarly, despite the provisions of
Article 280, Policy Instructions. No. 8 of the Minister of Labor implicitly recognize that
certain company officials may be elected for what would amount to fix periods, at the
expiration of which they would have to stand down, in providing that these officials, xxx
may lose their jobs as president, executive vice-president or vice-president, etc. because
the stockholders or the board of directors for one reason or another did not reelect
them.
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down or disregard as contrary to
public policy, morals, etc. But where no such intent to circumvent the law is shown, or
stated otherwise, where the reason for the law does not exists, e.g., where it is indeed
the employee himself who insists upon a period or where the nature of the engagement
is such that, without being seasonal or for a specific project, a definite date of
termination is a sine qua non, would an agreement fixing a period be essentially evil or
illicit, therefore anathema? Would such an agreement come within the scope of Article
280 which admittedly was enacted "to prevent the circumvention of the right of the
employee to be secured in xxx his employment
As it is evident from even only the three examples already given that Article 280 of the
Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut
of employment contracts to which the lack of a fixed period would be an anomaly, but
would also appear to restrict, without reasonable distinctions, the right of an employee
to freely stipulate within his employer the duration of his engagement, it logically follows
that such a literal interpretation should be eschewed or avoided. The law must be given a
reasonable interpretation, to preclude absurdity in its application. Outlawing the whole
concept of term employment and subverting to boot the principle of freedom of contract
to remedy the evil of employer's using it as a means to prevent their employees from
obtaining security of tenure is like cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping of the head.
It is a salutary principle in statutory construction that there exists a valid
presumption that undesirable consequences were never intended by a legislative
measure, and that a construction of which the statute is fairly susceptible is
favored, which will avoid all objectionable, mischievous, indefensible, wrongful,
evil, and injurious consequences."
Nothing is better settled than that courts are not to give words a meaning which
would lead to absurd or unreasonable consequences. That is a principle that goes
back to In re Allen decided on October 27, 1902, where it was held that a literal
interpretation is to be rejected if it would be unjust or lead to absurd results. That
is a strong argument against its adoption. The words of Justice Laurel are
particularly apt. Thus: "the appellants would lead to an absurdity is another
argument for rejecting it."
xxx We have, here, then a case where the true intent of the law is clear that calls
for the application of the cardinal rule of statutory construction that such intent
of spirit must prevail over the letter thereof, for whatever is within the spirit of a
statute is within the statute, since adherence to the letter would result in
absurdity, injustice and contradictions and would defeat the plain and vital
purpose of the statute.
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor code clearly appears to have been, as
already observed, to prevent circumvention of the employee's right to be secure in his
tenure, the clause in said article indiscriminately and completely ruling out all written or
oral agreements conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has singled out;
agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where a fixed period of employment was agreed upon knowingly
and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by
the former over the latter. Unless thus limited in its purview, the law would be made to
apply to purposes other than those explicitly stated by its framers; it thus becomes
pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended
consequences.
Again, in Pablo Coyocav.NLRC,
18
the Court also held that a seafarer is not a regular employee
and is not entitled to separation pay. His employment is governed by the POEA Standard
Employment Contract for Filipino Seamen.
x x x. In this connection, it is important to note that neither does the POEA standard
employment contract for Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing
Overseas Employment and the said Rules do not provide for separation or termination
pay. What is embodied in petitioner's contract is the payment of compensation arising
from permanent partial disability during the period of employment. We find that private
respondent complied with the terms of contract when it paid petitioner P42,315.00
which, in our opinion, is a reasonable amount, as compensation for his illness.
Lastly, petitioner claims that he eventually became a regular employee of private
respondent and thus falls within the purview of Articles 284 and 95 of the Labor Code. In
support of this contention, petitioner cites the case of WorthShippingService,Inc.,et
al. v.NLRC,etal.,wherein we held that the crew members of the shipping company had
attained regular status and thus, were entitled to separation pay. However, the facts of
said case differ from the present. In Worth, we held that the principal and agent had
"operational control and management" over the MV Orient Carrier and thus, were the
actual employers of their crew members.
From the foregoing cases, it is clear that seafarers are considered contractual employees. They
can not be considered as regular employees under Article 280 of the Labor Code. Their
employment is governed by the contracts they sign everytime they are rehired and their
employment is terminated when the contract expires. Their employment is contractually fixed
for a certain period of time. They fall under the exception of Article 280 whose employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
19
We
need not depart from the rulings of the Court in the two aforementioned cases which indeed
constitute staredecisis with respect to the employment status of seafarers.
Petitioners insist that they should be considered regular employees, since they have rendered
services which are usually necessary and desirable to the business of their employer, and that
they have rendered more than twenty(20) years of service. While this may be true,
the Brent case has, however, held that there are certain forms of employment which also require
the performance of usual and desirable functions and which exceed one year but do not
necessarily attain regular employment status under Article 280.
20
Overseas workers including
seafarers fall under this type of employment which are governed by the mutual agreements of
the parties.
In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are governed by the
Rules and Regulations of the POEA. The Standard Employment Contract governing the
employment of All Filipino seamen on Board Ocean-Going Vessels of the POEA, particularly in
Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed period. And in
no case should the contract of seamen be longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to exceed 12
months and shall be stated in the Crew Contract. Any extension of the Contract period
shall be subject to the mutual consent of the parties.
Moreover, it is an accepted maritime industry practice that employment of seafarers are for a
fixed period only. Constrained by the nature of their employment which is quite peculiar and
unique in itself, it is for the mutual interest of both the seafarer and the employer why the
employment status must be contractual only or for a certain period of time. Seafarers spend
most of their time at sea and understandably, they can not stay for a long and an indefinite
period of time at sea.
21
Limited access to shore society during the employment will have an
adverse impact on the seafarer. The national, cultural and lingual diversity among the crew
during the COE is a reality that necessitates the limitation of its period.
22

Petitioners make much of the fact that they have been continually re-hired or their contracts
renewed before the contracts expired (which has admittedly been going on for twenty (20)
years). By such circumstance they claim to have acquired regular status with all the rights and
benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was dictated
by practical considerations that experienced crew members are more preferred. Petitioners
were only given priority or preference because of their experience and qualifications but this
does not detract the fact that herein petitioners are contractual employees. They can not be
considered regular employees. We quote with favor the explanation of the NLRC in this wise:
xxx The reference to "permanent" and "probationary" masters and employees in these
papers is a misnomer and does not alter the fact that the contracts for enlistment
between complainants-appellants and respondent-appellee Esso International were for a
definite periods of time, ranging from 8 to 12 months. Although the use of the terms
"permanent" and "probationary" is unfortunate, what is really meant is "eligible for-re-
hire". This is the only logical conclusion possible because the parties cannot and should
not violate POEA's requirement that a contract of enlistment shall be for a limited period
only; not exceeding twelve (12)months.
23

From all the foregoing, we hereby state that petitioners are not considered regular or
permanent employees under Article 280 of the Labor Code. Petitioners' employment have
automatically ceased upon the expiration of their contracts of enlistment (COE). Since there was
no dismissal to speak of, it follows that petitioners are not entitled to reinstatement or payment
of separation pay or backwages, as provided by law.
With respect to the benefits under the Consecutive Enlistment Incentive Plan (CEIP), we hold
that the petitioners are still entitled to receive 100% of the total amount credited to him under
the CEIP. Considering that we have declared that petitioners are contractual employees, their
compensation and benefits are covered by the contracts they signed and the CEIP is part and
parcel of the contract.
The CEIP was formulated to entice seamen to stay long in the company. As the name implies, the
program serves as an incentive for the employees to renew their contracts with the same
company for as long as their services were needed. For those who remained loyal to them, they
were duly rewarded with this additional remuneration under the CEIP, if eligible. While this is an
act of benevolence on the part of the employer, it can not, however, be denied that this is part
of the benefits accorded to the employees for services rendered. Such right to the benefits is
vested upon them upon their eligibility to the program.
The CEIP provides that an employee becomes covered under the Plan when he completes thirty-
six (36) months or an equivalent of three (3) years of credited service with respect to
employment after June 30, 1973.
24
Upon eligibility, an amount shall be credited to his account as
it provides, among others:
III. Distribution of Benefits
A. Retirement, Death and Disability
When the employment of an employee terminates because of his retirement, death or
permanent and total disability, a percentage of the total amount credited to his account
will be distributed to him (or his eligible survivor(s) in accordance with the following:
Reason for Termination Percentage
a) Attainment of mandatory retirement age of
60.
100%
b) Permanent and total disability, while under
contract, that is not due to accident or
misconduct.
100%
c) Permanent and total disability, while under
contract, that is due to accident, and not due to
misconduct.
100%
xxx
B. Voluntary Termination
When an employee voluntary terminates his employment with at least 36 months of
credited service without any misconduct on his part, 18 percent of the total amount
credited to his account, plus an additional of one percent for each month (up to a
maximum of 164 months of credited service in excess of 36, will be distributed to him
provided (1) the employee has completed his last Contract of Enlistment and (2)
employee advises the company in writing, within 30 days, from his last disembarkation
date, of his intention to terminate his employment. (To advise the Company in writing
means that the original letter must be sent to the Company's agent in the Philippines, a
copy sent to the Company in New York).
xxx
C. Other Terminations
When the employment of an employee is terminated by the Company for a reason other
than one in A and B above, without any misconduct on his part, a percentage of the total
amount credited to his account will be distributed to him in accordance with the
following.
Credited Service Percentage
36 months 50%
48 " 75%
60 " 100%
When the employment of an employee is terminated due to his poor-performance,
misconduct, unavailability, etc., or if employee is not offered re-engagement for similar
reasons, no distribution of any portion of employee's account will ever be made to him
(or his eligible survivor[s]).
It must be recalled that on June 21, 1989, Millares wrote a letter to his employer informing his
intention to avail of the optional retirement plan under the CEIP considering that he has
rendered more than twenty (20) years of continuous service. Lagda, likewise, manifested the
same intention in a letter dated June 26, 1989. Private respondent, however, denied their
requests for benefits under the CEIP since: (1) the contract of enlistment (COE) did not provide
for retirement before 60 years of age; and that (2) petitioners failed to submit a written notice of
their intention to terminate their employment within thirty (30) days from the last
disembarkation date pursuant to the provision on Voluntary Termination of the CEIP. Petitioners
were eventually dropped from the roster of crew members and on grounds of "abandonment"
and "unavailability for contractual sea service", respectively, they were disqualified from
receiving any benefits under the CEIP.
25

In our March 14, 2000 Decision, we, however, found that petitioners Millares and Lagda were
not guilty of "abandonment" or "unavailability for contractual sea service," as we have stated:
The absence of petitioners was justified by the fact that they secured the approval of
private respondents to take a leave of absence after the termination of their last
contracts of enlistment. Subsequently, petitioners sought for extensions of their
respective leaves of absence. Granting arguendo that their subsequent requests for
extensions were not approved, it cannot be said that petitioners were unavailable or had
abandoned their work when they failed to report back for assignment as they were still
questioning the denial of private respondents of their desire to avail of the optional early
retirement policy, which they believed in good faith to exist.
26

Neither can we consider petitioners guilty of poor performance or misconduct since they were
recipients of Merit Pay Awards for their exemplary performances in the company.
Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989 (for Lagda) which private
respondent considered as belated written notices of termination, we find such assertion
specious. Notwithstanding, we could conveniently consider the petitioners eligible under Section
III-B of the CEIP (Voluntary Termination), but this would, however, award them only a measly
amount of benefits which to our mind, the petitioners do not rightfully deserve under the facts
and circumstances of the case. As the CEIP provides:
III. Distribution of Benefits
xxx
E. Distribution of Accounts
When an employee terminates under conditions that would qualify for a distribution of
more than one specified in A, B or C above, the largest single amount, only, will be
distributed.
Since petitioners' termination of employment under the CEIP do not fall under Section III-A
(Retirement, Death and Disability) or Section III-B (Voluntary Termination), nor could they be
they be considered under the second paragraph of Section III-C, as earlier discussed; it follows
that their termination falls under the first paragraph of Section III-C for which they are entitled to
100% of the total amount credited to their accounts. The private respondents can not now
renege on their commitment under the CEIP to reward deserving and loyal employees as the
petitioners in this case.
In taking cognizance of private respondent's Second Motion for Reconsideration, the Court
hereby suspends the rules to make them comformable to law and justice and to subserve an
overriding public interest.
IN VIEW OF THE FOREGOING, the Court Resolved to Partially GRANT Private Respondent's Second
Motion for Reconsideration and Intervenor FAMES' Motion for Reconsideration in Intervention.
The Decision of the National Labor Relations Commission dated June 1, 1993 is
hereby REINSTATED with MODIFICATION. The Private Respondents, Trans-Global Maritime
Agency, Inc. and Esso International Shipping Co., Ltd. are hereby jointly and
severally ORDERED to pay petitioners One Hundred Percent (100%) of their total credited
contributions as provided under the Consecutive Enlistment Incentive Plan(CEIP).
SO ORDERED.











Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 192473 October 11, 2010
S.I.P. FOOD HOUSE and MR. and MRS. ALEJANDRO PABLO, Petitioners,
vs.
RESTITUTO BATOLINA, ALMER CALUMPISAN, ARIES MALGAPO, ARMANDO MALGAPO, FLORDELIZA
MATIAS, PERCIVAL MATIAS, ARWIN MIRANDA, LOPE MATIAS, RAMIL MATIAS, ALLAN STA.
INES,Respondents.
D E C I S I O N
BRION, J.:
We resolve the present petition for review on certiorari
1
which seeks to nullify the decision
2
and
resolution
3
of the Court of Appeals (CA), promulgated on November 27, 2009 and May 31, 2010,
respectively, in CA-G.R. SP No. 101651.
4

The Antecedents
The facts are laid out in the assailed CA Decision and are summarized below.
The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the
Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate
a canteen in the new GSIS Building, but had no capability and expertise in this area. Thus, it
engaged the services of the petitioner S.I.P. Food House (SIP), owned by the spouses Alejandro
and Esther Pablo, as concessionaire. The respondents Restituto Batolina and nine (9) others (the
respondents) worked as waiters and waitresses in the canteen.
In February 2004, GMPC terminated SIPs "contract as GMPC concessionaire," because of
GMPCs decision "to take direct investment in and management of the GMPC canteen;" SIPs
continued refusal to heed GMPCs directives for service improvement; and the alleged
interference of the Pablos two sons with the operation of the canteen.
5
The termination of the
concession contract caused the termination of the respondents employment, prompting them
to file a complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo.
The Compulsory Arbitration Proceedings
ThePartiesPositions
The respondents alleged before the labor arbiter that they were SIP employees, who were
illegally dismissed sometime in February and March 2004. SIP did not implement Wage Order
Nos. 5 to 11 for the years 1997 to 2004. They did not receive overtime pay although they worked
from 6:30 in the morning until 5:30 in the afternoon, or other employee benefits such as service
incentive leave, and maternity benefit (for their co-employee Flordeliza Matias). Their employee
contributions were also not remitted to the Social Security System.
To avoid liability, SIP argued that it operated the canteen in behalf of GMPC since it had no
authority by itself to do so. The respondents were not its employees, but GMPCs, as shown by
their identification cards. It claimed that GMPC terminated its concession and prevented it from
having access to the canteen premises as GSIS personnel locked the place; GMPC then operated
the canteen on its own, absorbing the respondents for the purpose and assigning them to the
same positions they held with SIP. It maintained that the respondents were not dismissed, but
were merely prevented by GMPC from performing their functions. For this reason, SIP posited
that the legal obligations that would arise under the circumstances have to be shouldered by
GMPC.
TheLaborArbitersDecision
Labor Arbiter Francisco A. Robles rendered a Decision on June 30, 2005 dismissing the complaint
for lack of merit.
6
He found that the respondents were GMPCs employees, and not SIPs, as
there existed a labor-only contracting relationship between the two entities. The labor arbiter,
however, opined that even if respondents were considered as SIPs employees, their dismissal
would still not be illegal because the termination of its contract to operate the canteen came as
a surprise and was against its will, rendering the canteens closure involuntary.
Arbiter Robles likewise denied the employees money claims. He ruled that SIP is not liable for
unpaid salaries because it had complied with the minimum statutory requirement and had
extended better benefits than GMPC; although they were paid only P160.00 to PP220.00 daily,
the employees were provided with free board and lodging seven (7) days a week. Neither were
the respondents entitled to overtime pay as it was highly improbable that they regularly worked
beyond eight (8) hours every day for a canteen that closes after 5:30 p.m.
The respondents brought their case, on appeal, to the National Labor Relations Commission
(NLRC).
TheNLRCRuling
In its Decision of August 30, 2007,
7
the NLRC found that SIP was the respondents employer, but
it sustained the labor arbiters ruling that the employees were not illegally dismissed as the
termination of SIPs concession to operate the canteen constituted an authorized cause for the
severance of employer-employee relations. Furthermore, the respondents admission that they
applied with GMPC when it terminated SIPs concession is an indication that they were
employees of SIP and that they were terminating their employment relationship with it. As the
labor arbiter did, the NLRC regarded the closure of SIPs canteen operations involuntary, thus,
negating the employees entitlement to separation pay.
8

For failure of SIP to present proof of compliance with the law on the minimum wage, 13th month
pay, and service incentive leave, the NLRC awarded the respondents a total of P952,865.53 in
salary and 13th month pay differentials and service incentive leave pay.
9
The NLRC, however,
denied the employees claim for overtime pay, holding that the respondents failed to present
evidence that they rendered two hours overtime work every day of their employment with SIP.
SIP moved for, but failed to secure, a reconsideration of the NLRC decision. It then elevated the
case to the CA through a petition for certiorari charging the NLRC with grave abuse of discretion
in rendering the assailed decision. Essentially, SIP argued that the NLRC erred in declaring that it
was the respondents employer who is liable for their money claims despite its being a labor-only
contractor of GMPC.
The CA Decision
In its Decision promulgated on November 27, 2009,
10
the CA granted the petition in part. While
it affirmed the award, it found merit in SIPs objection to the NLRC computation and assumption
that a month had twenty-six (26) working days, instead of twenty (20) working days. The CA
recognized that in a government agency such as the GSIS, there are only 20 official business days
in a month. It noted that the respondents presented no evidence that the employees worked
even outside official business days and hours. It accordingly remanded the case for a
recomputation of the award.
Finding substantial evidence in the records supporting the NLRC conclusions, the CA brushed
aside SIPs argument that it could not have been the employer of the respondents because it was
a mere labor-only contractor of GMPC. It sustained the NLRCs findings that SIP was the
respondents employer.
SIP moved for reconsideration, but the CA denied the motion on May 31, 2010.
11
Hence, the
present petition.
The Petition
SIP seeks a reversal of the appellate courts ruling that it was the employer of the respondents,
claiming that it was merely a labor-only contractor of GMPC.
It insists that it could not be the respondents employer as it was not allowed to operate a
canteen in the GSIS building. It was the GMPC who had the authority to undertake the operation.
GMPC only engaged SIPs services because GMPC had no capability or competence in the area.
SIP points out that GMPC assumed responsibility for its acts in operating the canteen; all
businesses it transacted were under GMPCs name, as well as the business registration and other
permits of the canteen, sales receipts and vouchers for food purchased from the canteen; the
employees were issued individual ID cards by GMPC. In sum, SIP contends that its arrangement
with GMPC was one of contractor/subcontractor governed by Article 106 of the Labor Code.
Lastly, it submits that it was not registered with the Department of Labor and Employment as an
independent contractor and, therefore, it is presumed to be a labor-only contractor.
The Respondents Comment
Without being required by the Court, the respondents filed their comment to SIPs petition on
August 3, 2010.
12
They question the propriety of the petition for review on certiorari raising only
questions of fact and not of law as required by Rule 45 of the Rules of Court. This
notwithstanding, they submit that the CA committed no error in upholding the NLRCs findings of
facts which established that SIP was the real employer of Batolina and the other complainants.
Thus, SIP was liable to them for their statutory benefits, although it was not made to answer for
their lost employment due to the involuntary nature of the canteens closure.
The respondents pray that the petition be dismissed for lack of merit.
The Courts Ruling
We first resolve the alleged impropriety of the petition.
13
While it is the general rule that the
Court may not review factual findings of the CA, we deem it proper to depart from the rule and
examine the facts of the case in view of the conflicting factual findings of the labor arbiter, on
one hand, and the NLRC and the CA, on the other.
14
We, therefore, hold the respondents
position on this point unmeritorious.
We now consider the merits of the case.
Theemployer-employeerelationshipissue
We affirm the CA ruling that SIP was the respondents employer. The NLRC decision, which the
CA affirmed, states:
Respondents have been the concessionaire of GMPC canteen for nine (9) years (Annex "A" of
Complainants Sur-Rejoinder., Records, 302). During this period, complainants were employed
at the said canteen (Sinumpaang Salaysay of complainants, Records, p. 156). On February 29,
2004, respondents concession with GMPC was terminated (Annex "C" of Respondents Answer
and Position Paper, Records, p. 77). When respondents were prevented from entering the
premises as a result of the termination of their concession, they sent a protest letter dated April
14, 2004 to GMPC thru their counsel. Pertinent portion of the letter:
We write this letter in behalf of our client Mr. & Mrs. Alejandro C. Pablo, the concessionaires
who used to occupy and/or rent the area for a cafeteria/canteen at the 2nd Floor of the GSIS
Building for the past several years.
Last March 12, 2004, without any court writ or order, and with the aid of your armed agents, you
physically barredour clients & their employees/helpers from entering the said premises and from
performing their usual duties of serving the food requirements of GSIS personnel and others.
Clearly, no less than respondents, thru their counsel, admitted that complainants herein were
their employees.
That complainants were employees of respondents is further bolstered by the fact that
respondents do not deny that they were the ones who paid complainants salary. When
complainants charged them of underpayment, respondents even interposed the defense of file
(sic) board and lodging given to complainants.
Furthermore, these IDs issued to complainants bear the signature of respondent Alejandro C.
Pablo (Annexes "J", "K", "M" to "M-2" of complainants Reply. . ., Records, pp. 285 to 290).
Likewise, the memoranda issued to complainants regarding their absences without leave were
signed by respondent Alejandro C. Pablo (Annexes A, C, E, & G, Ibid., Records, pp. 274, 276, 279,
282). All these pieces of evidence clearly show that respondents are the employer of
complainants. (Rollo, pp. 87-88.)
x x x x
The CA ruled out SIPs claim that it was a labor-only contractor or a mere agent of GMPC. We
agree with the CA; SIP and its proprietors could not be considered as mere agents of GMPC
because they exercised the essential elements of an employment relationship with the
respondents such as hiring, payment of wages and the power of control, not to mention that SIP
operated the canteen on its own account as it paid a fee for the use of the building and for the
privilege of running the canteen. The fact that the respondents applied with GMPC in February
2004 when it terminated its contract with SIP, is another clear indication that the two entities
were separate and distinct from each other. We thus see no reason to disturb the CAs findings.
Therespondentssmoneyclaims
We likewise affirm the CA ruling on the monetary award to Batolina and the other
complainants.1avvp++i1 The free board and lodging SIP furnished the employees cannot operate
as a set-off for the underpayment of their wages. We held in Mabezav.NationalLaborRelations
Commission
15
that the employer cannot simply deduct from the employees wages the value of
the board and lodging without satisfying the following requirements: (1) proof that such facilities
are customarily furnished by the trade; (2) voluntary acceptance in writing by the employees of
the deductible facilities; and (3) proof of the fair and reasonable value of the facilities charged.
As the CA aptly noted, it is clear from the records that SIP failed to comply with these
requirements.
On the collateral issue of the proper computation of the monetary award, we also find the CA
ruling to be in order. Indeed, in the absence of evidence that the employees worked for 26 days
a month, no need exists to recompute the award for the respondents who were "explicitly
claiming for their salaries and benefits for the services rendered from Monday to Friday or 5 days
a week or a total of 20 days a month."
16

In light of the foregoing, we find no merit in the petition.
WHEREFORE, premises considered, we hereby DISMISS the petition for lack of merit. The assailed
decision and resolution of the Court of Appeals in CA-G.R. SP No. 101651, are AFFIRMED.
SO ORDERED.


















Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 172161 March 2, 2011
SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO ZUIGA and
DANILO CAETE, Respondents.
D E C I S I O N
MENDOZA, J.:
Assailed in this petition for review on certiorari are the January 11, 2006 Decision
1
and the
March 31, 2006 Resolution
2
of the Court of Appeals (CA),in CA-G.R. SP No. 00598 which affirmed
with modification the March 31, 2004 Decision
3
and December 15, 2004 Resolution
4
of the
National Labor Relations Commission (NLRC). The NLRC Decision found the petitioners, SLL
International Cables Specialist (SLL) and its manager, Sonny L. Lagon(petitioners),not liable for
the illegal dismissal of Roldan Lopez, Danilo Caete and Edgardo Zuiga (privaterespondents) but
held them jointly and severallyliable for payment of certain monetary claims to said
respondents.
A chronicle of the factual antecedents has been succinctly summarized by the CA as follows:
Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for brevity) and
Danilo Caete (Caete for brevity), and Edgardo Zuiga (Zuiga for brevity) respectively, were
hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full
minimum wage and other benefits but since they were only trainees, they did not report for
work regularly but came in as substitutes to the regular workers or in undertakings that needed
extra workers to expedite completion of work. After their training, Zuiga, Caete and Lopez
were engaged as project employees by the petitioners in their Islacom project in Bohol. Private
respondents started on March 15, 1997 until December 1997. Upon the completion of their
project, their employment was also terminated. Private respondents received the amount
of P145.00, the minimum prescribed daily wage for Region VII. In July 1997, the amount of P145
was increased to P150.00 by the Regional Wage Board (RWB) and in October of the same year,
the latter was increased to P155.00. Sometime in March 1998, Zuiga and Caete were engaged
again by Lagon as project employees for its PLDT Antipolo, Rizal project, which ended sometime
in (sic) the late September 1998. As a consequence, Zuiga and Caetes employment was
terminated. For this project, Zuiga and Caete received only the wage of P145.00 daily. The
minimum prescribed wage for Rizal at that time was P160.00.
Sometime in late November 1998, private respondents re-applied in the Racitelcom project of
Lagon in Bulacan. Zuiga and Caete were re-employed. Lopez was also hired for the said
specific project. For this, private respondents received the wage of P145.00. Again, after the
completion of their project in March 1999, private respondents went home to Cebu City.
On May 21, 1999, private respondents for the 4th time worked with Lagons project in Camarin,
Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire
on February 28, 2000, the period of completion of the project. From May 21, 1997-December
1999, private respondents received the wage ofP145.00. At this time, the minimum prescribed
rate for Manila was P198.00. In January to February 28, the three received the wage of P165.00.
The existing rate at that time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation, the
Camarin project was not completed on the scheduled date of completion. Face[d] with economic
problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,] including
private respondents. Thus, when requested by private respondents on February 28, 2000 to
work overtime, Lagon refused and told private respondents that if they insist, they would have to
go home at their own expense and that they would not be given anymore time nor allowed to
stay in the quarters. This prompted private respondents to leave their work and went home to
Cebu. On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment
of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well
as damages and attorneys fees.
In their answers, petitioners admit employment of private respondents but claimed that the
latter were only project employees[,] for their services were merely engaged for a specific
project or undertaking and the same were covered by contracts duly signed by private
respondents. Petitioners further alleged that the food allowance ofP63.00 per day as well as
private respondents allowance for lodging house, transportation, electricity, water and snacks
allowance should be added to their basic pay. With these, petitioners claimed that private
respondents received higher wage rate than that prescribed in Rizal and Manila.
Lastly, petitioners alleged that since the workplaces of private respondents were all in Manila,
the complaint should be filed there. Thus, petitioners prayed for the dismissal of the complaint
for lack of jurisdiction and utter lack of merit. (Citations omitted.)
On January 18, 2001, Labor Arbiter Reynoso Belarmino (LA) rendered his decision
5
declaring that
his office had jurisdiction to hear and decide the complaint filed by private respondents.
Referring to Rule IV, Sec. 1 (a) of the NLRC Rules of Procedure prevailing at that time,
6
the LA
ruled that it had jurisdiction because the "workplace," as defined in the said rule, included the
place where the employee was supposed to report back after a temporary detail, assignment or
travel, which in this case was Cebu.
As to the status of their employment, the LA opined that private respondents were regular
employees because they were repeatedly hired by petitioners and they performed activities
which were usual, necessary and desirable in the business or trade of the employer.
With regard to the underpayment of wages, the LA found that private respondents were
underpaid. It ruled that the free board and lodging, electricity, water, and food enjoyed by them
could not be included in the computation of their wages because these were given without their
written consent.
The LA, however, found that petitioners were not liable for illegal dismissal. The LA viewed
private respondents act of going home as an act of indifference when petitioners decided to
prohibit overtime work.
7

In its March 31, 2004 Decision, the NLRC affirmed the findings of the LA. In addition, the NLRC
noted that not a single report of project completion was filed with the nearest Public
Employment Office as required
by the Department of Labor and Employment (DOLE) Department Order No. 19, Series of
1993.
8
The NLRC later denied
9
the motion for reconsideration
10
subsequently filed by
petitioners.
When the matter was elevated to the CA on a petition for certiorari, it affirmed the findings that
the private respondents were regular employees. It considered the fact that they performed
functions which were the regular and usual business of petitioners. According to the CA, they
were clearly members of a work pool from which petitioners drew their project employees.
The CA also stated that the failure of petitioners to comply with the simple but compulsory
requirement to submit a report of termination to the nearest Public Employment Office every
time private respondents employment was terminated was proof that the latter were not
project employees but regular employees.
The CA likewise found that the private respondents were underpaid. It ruled that the board and
lodging, electricity, water, and food enjoyed by the private respondents could not be included in
the computation of their wages because these were given without their written consent. The CA
added that the private respondents were entitled to 13th month pay.
The CA also agreed with the NLRC that there was no illegal dismissal. The CA opined that it was
the petitioners prerogative to grant or deny any request for overtime work and that the private
respondents act of leaving the workplace after their request was denied was an act of
abandonment.
In modifying the decision of the labor tribunal, however, the CA noted that respondent Roldan
Lopez did not work in the Antipolo project and, thus, was not entitled to wage differentials. Also,
in computing the differentials for the period January and February 2000, the CA disagreed in the
award of differentials based on the minimum daily wage of P223.00, as the prevailing minimum
daily wage then was only P213.00. Petitioners sought reconsideration but the CA denied it in its
March 31, 2006 Resolution.
11

In this petition for review on certiorari,
12
petitioners seek the reversal and setting aside of the CA
decision anchored on this lone:
GROUND/ASSIGNMENT OF ERROR
THE PUBLIC RESPONDENT NLRC COMMITTED A SERIOUS ERROR IN LAW IN AWARDING WAGE
DIFFERENTIALS TO THE PRIVATE COMPLAINANTS ON THE BASES OF MERE TECHNICALITIES, THAT
IS, FOR LACK OF WRITTEN CONFORMITY x x x AND LACK OF NOTICE TO THE DEPARTMENT OF
LABOR AND EMPLOYMENT (DOLE)[,] AND THUS, THE COURT OF APPEALS GRAVELY ERRED IN
AFFIRMING WITH MODIFICATION THE NLRC DECISION IN THE LIGHT OF THE RULING IN THE CASE
OF JENNY M. AGABON and VIRGILIO AGABON vs, NLRC, ET AL., GR NO. 158963, NOVEMBER 17,
2004, 442 SCRA 573, [AND SUBSEQUENTLY IN THE CASE OF GLAXO WELLCOME PHILIPPINES, INC.
VS. NAGAKAKAISANG EMPLEYADO NG WELLCOME-DFA (NEW DFA), ET AL., GR NO. 149349, 11
MARCH 2005], WHICH FINDS APPLICATION IN THE INSTANT CASE BY ANALOGY.
13

Petitioners reiterated their position that the value of the facilities that the private respondents
enjoyed should be included in the computation of the "wages" received by them. They argued
that the rulings in Agabon v. NLRC
14
and Glaxo Wellcome Philippines, Inc. v. Nagkakaisang
Empleyado Ng Wellcome-DFA
15
should be applied by analogy, in the sense that the lack of
written acceptance of the employees of the facilities enjoyed by them should not mean that the
value of the facilities could not be included in the computation of the private respondents
"wages."
On November 29, 2006, the Court resolved to issue a Temporary Restraining
Order (TRO) enjoining the public respondent from enforcing the NLRC and CA decisions until
further orders from the Court.
After a thorough review of the records, however, the Court finds no merit in the petition.
This petition generally involves factual issues, such as, whether or not there is evidence on
record to support the findings of the LA, the NLRC and the CA that private respondents were
project or regular employees and that their salary differentials had been paid. This calls for a re-
examination of the evidence, which the Court cannot entertain. Settled is the rule that factual
findings of labor officials, who are deemed to have acquired expertise in matters within their
respective jurisdiction, are generally accorded not only respect but even finality, and bind the
Court when supported by substantial evidence. It is not the Courts function to assess and
evaluate the evidence
all over again, particularly where the findings of both the Labor tribunals and the CA concur.
16

As a general rule, on payment of wages, a party who alleges payment as a defense has the
burden of proving it.
17
Specifically with respect to labor cases, the burden of proving payment of
monetary claims rests on the employer, the rationale being that the pertinent personnel files,
payrolls, records, remittances and other similar documents which will show that overtime,
differentials, service incentive leave and other claims of workers have been paid are not in the
possession of the worker but in the custody and absolute control of the employer.
18

In this case, petitioners, aside from bare allegations that private respondents received wages
higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips,
to support their defense of payment. Thus, petitioners utterly failed to discharge the onus
probandi.
Private respondents, on the other hand, are entitled to be paid the minimum wage, whether
they are regular or non-regular employees.
Section 3, Rule VII of the Rules to Implement the Labor Code
19
specifically enumerates those
who are not covered by the payment of minimum wage. Project employees are not among
them.
On whether the value of the facilities should be included in the computation of the "wages"
received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that
an employer may provide subsidized meals and snacks to his employees provided that the
subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such cases,
the employer may deduct from the wages of the employees not more than 70% of the value of
the meals and snacks enjoyed by the latter, provided that such deduction is with the written
authorization of the employees concerned.
Moreover, before the value of facilities can be deducted from the employees wages, the
following requisites must all be attendant: first,proof must be shown that such facilities are
customarily furnished by the trade; second, the provision of deductible facilities must be
voluntarily accepted in writing by the employee; and finally, facilities must be charged at
reasonable value.
20
Mere availment is not sufficient to allow deductions from employees
wages.
21

These requirements, however, have not been met in this case. SLL failed to present any company
policy or guideline showing that provisions for meals and lodging were part of the employees
salaries. It also failed to provide proof of the employees written authorization, much less show
how they arrived at their valuations. At any rate, it is not even clear whether private respondents
actually enjoyed said facilities.
The Court, at this point, makes a distinction between "facilities" and "supplements." It is of the
view that the food and lodging, or the electricity and water allegedly consumed by private
respondents in this case were not facilities but supplements. In the case of Atok-BigWedgeAssn.
v.Atok-BigWedgeCo.,
22
the two terms were distinguished from one another in this wise:
"Supplements," therefore, constitute extra remuneration or special privileges or benefits given
to or received by the laborers over and abovetheirordinaryearningsorwages. "Facilities," on
the other hand, are items of expense necessary for the laborer's and his family's existence and
subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when
furnished by the employer are deductible therefrom, since if they are not so furnished, the
laborer would spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage is supplement; and when said benefit or
privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the
kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it
is given.
23
In the case at bench, the items provided were given freely by SLL for the purpose of
maintaining the efficiency and health of its workers while they were working at their respective
projects.1avvphi1
For said reason, the cases of Agabonand Glaxo are inapplicable in this case. At any rate, these
were cases of dismissal with just and authorized causes. The present case involves the matter of
the failure of the petitioners to comply with the payment of the prescribed minimum wage.
The Court sustains the deletion of the award of differentials with respect to respondent Roldan
Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.
WHEREFORE, the petition is DENIED. The temporary restraining order issued by the Court on
November 29, 2006 is deemed, as it is hereby ordered, DISSOLVED.
SO ORDERED.











Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 157775 October 19, 2007
LEYTE IV ELECTRIC COOPERATIVE, INC., Petitioner,
vs.
LEYECO IV Employees Union-ALU, Respondent.
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the Resolution
1
dated September 4, 2002 of the Court of Appeals (CA) in CA-G.R. SP No.
72336 which dismissed outright petitioner's Petition for Certiorari for adopting a wrong mode of
appeal and the CA Resolution
2
dated February 28, 2003 which denied petitioner's Motion for
Reconsideration.
The facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-
ALU (respondent) entered into a Collective Bargaining Agreement (CBA)
3
covering petitioner
rank-and-file employees, for a period of five (5) years effective January 1, 1998.
On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a
letter to petitioner demanding holiday pay for all employees, as provided for in the CBA.
4

On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to Casilan, explaining
that after perusing all available pay slips, it found that it had paid all employees all the holiday
pays enumerated in the CBA.
5

After exhausting the procedures of the grievance machinery, the parties agreed to submit the
issues of the interpretation and implementation of Section 2, Article VIII of the CBA on the
payment of holiday pay, for arbitration of the National Conciliation and Mediation Board
(NCMB), Regional Office No. VIII in Tacloban City.
6
The parties were required to submit their
respective position papers, after which the dispute was submitted for decision.
While admitting in its Position Paper
7
that the employees were paid all of the days of the month
even if there was no work, respondent alleged that it is not prevented from making separate
demands for the payment of regular holidays concomitant with the provisions of the CBA, with
its supporting documents consisting of a letter demanding payment of holiday pay, petitioner's
reply thereto and respondent's rejoinder, a computation in the amount of P1,054,393.07 for the
unpaid legal holidays, and several pay slips.
Petitioner, on the other hand, in its Position Paper,
8
insisted payment of the holiday pay in
compliance with the CBA provisions, stating that payment was presumed since the formula used
in determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by
30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the
employees are already paid their regular and special days, the days when no work is done, the 51
un-worked Sundays and the 51 un-worked Saturdays.
On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision
9
in favor of
respondent, holding petitioner liable for payment of unpaid holidays from 1998 to 2000 in the
sum of P1,054,393.07. He reasoned that petitioner miserably failed to show that it complied
with the CBA mandate that holiday pay be "reflected during any payroll period of occurrence"
since the payroll slips did not reflect any payment of the paid holidays. He found unacceptable
not only petitioner's presumption of payment of holiday pay based on a formula used in
determining and computing the daily rate of each covered employee, but also petitioner's
further submission that the rate of its employees is not less than the statutory minimum wage
multiplied by 365 days and divided by twelve.
On April 11, 2001, petitioner filed a Motion for Reconsideration
10
but it was denied by the
Voluntary Arbitrator in a Resolution
11
dated June 17, 2002. Petitioner received said Resolution
on June 27, 2002.
12

Thirty days later, or on July 27, 2002,
13
petitioner filed a Petition for Certiorari
14
in the CA,
ascribing grave abuse of discretion amounting to lack of jurisdiction to the Voluntary Arbitrator:
(a) for ignoring that in said company the divisor for computing the applicable daily rate of rank-
and-file employees is 360 days which already includes payment of 13 un-worked regular holidays
under Section 2, Article VIII of the CBA;
15
and (b) for holding the petitioner liable for the unpaid
holidays just because the payroll slips submitted as evidence did not show any payment for the
regular holidays.
16

In a Resolution
17
dated September 4, 2002, the CA dismissed outright petitioner's Petition
for Certiorari for adopting a wrong mode of appeal. It reasoned:
Considering that what is assailed in the present recourse is a Decision of a Voluntary Arbitrator,
the proper remedy is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure;
hence, the present petition for certiorari under Rule 65 filed on August 15, 2002, should be
rejected, as such a petition cannot be a substitute for a lost appeal. And in this case, the period
for appeal via a petition for review has already lapsed since the petitioner received a copy of the
Resolution denying its motion for reconsideration on June 27, 2002, so that its last day to appeal
lapsed on July 12, 2002.
x x x x
18

Petitioner filed a Motion for Reconsideration
19
but it was denied by the CA in a
Resolution
20
dated February 28, 2003.
Hence, the present petition anchored on the following grounds:
(1) The Honorable Court of Appeals erred in rejecting the petition for certiorari under
Rule 65 of the Rules of Court filed by herein petitioner to assail the Decision of the
Voluntary Arbitrator.
21

(2) Even if decisions of voluntary arbitrator or panel of voluntary arbitrators are
appealable to the Honorable Court of Appeals under Rule 43, a petition for certiorari
under Rule 65 is still available if it is grounded on grave abuse of discretion. Hence, the
Honorable Court of Appeals erred in rejecting the petition for certiorari under Rule 65 of
the Rules of Court filed by herein petitioner.
22

(3) The Honorable Court of Appeals erred in refusing to rule on the legal issue presented
by herein petitioner in the petition for certiorari that it had filed and in putting emphasis
instead on a technicality of procedure. The legal issues needs a clear-cut ruling by this
Honorable Court for the guidance of herein petitioner and private respondent.
23

Petitioner contends that Rule 65 of the Rules of Court is the applicable mode of appeal to the CA
from judgments issued by a voluntary arbitrator since Rule 43 only allows appeal from judgments
of particular quasi-judicial agencies and voluntary arbitrators authorized by law and not those
judgments and orders issued under the Labor Code; that the petition before the CA did not raise
issues of fact but was founded on jurisdictional issues and, therefore, reviewable through a
special civil action for certiorari under Rule 65; that technicalities of law and procedure should
not be utilized to subvert the ends of substantial justice.
In its Comment,
24
respondent avers that LuzonDevelopmentBankv.AssociationofLuzon
DevelopmentBankEmployees
25
laid down the prevailing rule that judgments of the Voluntary
Arbitrator are appealable to the CA under Section 1, Rule 43 of the Rules of Court; that having
failed to file the appropriate remedy due to the lapse of the appeal period, petitioner cannot
simply invoke Rule 65 for its own convenience, as an alternative remedy.
In its Reply,
26
petitioner submits that the ruling in LuzonDevelopmentBankdoes not expressly
exclude the filing of a petition for certiorari under Rule 65 of the Rules of Court to assail a
decision of a voluntary arbitrator. It reiterates that technicalities of law and procedure should
not be utilized to subvert the ends of substantial justice.
It has long been settled in the landmark case LuzonDevelopmentBank that a voluntary
arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency;
hence, his decisions and awards are appealable to the CA. This is so because the awards of
voluntary arbitrators become final and executory upon the lapse of the period to appeal;
27
and
since their awards determine the rights of parties, their decisions have the same effect as
judgments of a court. Therefore, the proper remedy from an award of a voluntary arbitrator is a
petition for review to the CA, following Revised Administrative Circular No. 1-95, which provided
for a uniform procedure for appellate review of all adjudications of quasi-judicial entities, which
is now embodied in Section 1, Rule 43 of the 1997 Rules of Civil Procedure, which reads:
SECTION 1. Scope. This Rule shall apply to appeals from judgments or final orders of the Court
of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any
quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the
Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange
Commission, Office of the President, Land Registration Authority, Social Security Commission,
Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National
Electrification Administration, Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service
Insurance System, Employees Compensation Commission, Agricultural Inventions Board,
Insurance Commission, Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary arbitratorsauthorized by
law.
28
(Emphasis supplied)
Section 2, Rule 43 of the 1997 Rules of Civil Procedure which provides that:
SEC. 2. Casesnotcovered. - This Rule shall not apply to judgments or final orders issued under
the Labor Code of the Philippines.
did not alter the Court's ruling in LuzonDevelopmentBank. Section 2, Rule 42 of the 1997 Rules
of Civil Procedure, is nothing more than a reiteration of the exception to the exclusive appellate
jurisdiction of the CA,
29
as provided for in Section 9, BatasPambansaBlg. 129,
30
as amended by
Republic Act No. 7902:
31

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the
Philippines under Presidential Decree No. 442, as amended, the provisions of this Act and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section
17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank but, nevertheless, held
that the decisions of voluntary arbitrators issued pursuant to the Labor Code do not come within
its ambit, thus:
x x x. The fact that [the voluntary arbitrators] functions and powers are provided for in the Labor
Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein. It will be noted that, although the Employees
Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is the
forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for
the appealability of its decisions to the Court of Appeals under the foregoing rationalization, and
this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise
be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities
not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or
another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC
be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative
competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the
labor arbiter.
32

This ruling has been repeatedly reiterated in subsequent cases
33
and continues to be the
controlling doctrine. Thus, the general rule is that the proper remedy from decisions of voluntary
arbitrators is a petition for review under Rule 43 of the Rules of Court.
Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the proper
remedy for one who complains that the tribunal, board or officer exercising judicial or quasi-
judicial functions acted in total disregard of evidence material to or decisive of the
controversy.
34
As this Court elucidated in Garcia v. National Labor Relations Commission
35
-
[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings
complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals,
we emphasized thus:
[I]t has been said that a wide breadth of discretion is granted a court of justice
in certiorari proceedings. The cases in which certiorari will issue cannot be defined, because to
do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the
court that authority is not wanting to show that certiorari is more discretionary than either
prohibition or mandamus. In the exercise of our superintending control over inferior courts, we
are to be guided by all the circumstances of each particular case "as the ends of justice may
require." So it is that the writ will be granted where necessary to prevent a substantial wrong or
to do substantial justice.
36

In addition, while the settled rule is that an independent action for certiorari may be availed of
only when there is no appeal or any plain, speedy and adequate remedy in the ordinary course
of law
37
and certiorari is not a substitute for the lapsed remedy of appeal,
38
there are a few
significant exceptions when the extraordinary remedy of certiorari may be resorted to despite
the availability of an appeal, namely: (a) when public welfare and the advancement of public
policy dictate; (b) when the broader interests of justice so require; (c) when the writs issued are
null; and (d) when the questioned order amounts to an oppressive exercise of judicial
authority.
39

In this case, while the petition was filed on July 27, 2002,
40
15 days after July 12, 2002, the
expiration of the 15-day reglementary period for filing an appeal under Rule 43, the broader
interests of justice warrant relaxation of the rules on procedure. Besides, petitioner alleges that
the Voluntary Arbitrators conclusions have no basis in fact and in law; hence, the petition should
not be dismissed on procedural grounds.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of
the CBA provisions that the holiday pay be reflected in the payroll slips. Such literal
interpretation ignores the admission of respondent in its Position Paper
41
that the employees
were paid all the days of the month even if not worked. In light of such admission, petitioner's
submission of its 360 divisor in the computation of employees salaries gains significance.
In Union of Filipro Employees v. Vivar, Jr.
42
the Court held that "[t]he divisor assumes an
important role in determining whether or not holiday pay is already included in the monthly paid
employees salary and in the computation of his daily rate". This ruling was applied in Wellington
InvestmentandManufacturingCorporationv.Trajano,
43
ProducersBankofthePhilippinesv.
NationalLaborRelationsCommission
44
and Odangov.NationalLaborRelations
Commission,
45
among others.
46

In Wellington,
47
the monthly salary was fixed by Wellington to provide for compensation for
every working day of the year including the holidays specified by law and excluding only
Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it simply
deducted 51 Sundays from the 365 days normally comprising a year and used the difference,
314, as basis for determining the monthly salary. The monthly salary thus fixed actually covered
payment for 314 days of the year, including regular and special holidays, as well as days when no
work was done by reason of fortuitous cause, such as transportation strike, riot, or typhoon or
other natural calamity, or cause not attributable to the employees.
In ProducersBank,
48
the employer used the divisor 314 in arriving at the daily wage rate of
monthly salaried employees. The divisor 314 was arrived at by subtracting all Sundays from the
total number of calendar days in a year, since Saturdays are considered paid rest days. The Court
held that the use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays
are already included therein.
In Odangov.NationalLaborRelationsCommission,
49
the Court ruled that the use of a divisor
that was less than 365 days cannot make the employer automatically liable for underpayment of
holiday pay. In said case, the employees were required to work only from Monday to Friday and
half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days, less
52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that
the employees were deprived of their holiday pay for some or all of the ten legal holidays. The
304-day divisor used by the employer was clearly above the minimum of 287 days.
In this case, the employees are required to work only from Monday to Friday.1wphi1 Thus, the
minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51
un-worked Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which
is clearly above the minimum, indubitably, petitioner's employees are being given their holiday
pay.
Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula.
In granting respondent's claim of non-payment of holiday pay, a "double burden" was imposed
upon petitioner because it was being made to pay twice for its employees' holiday pay when
payment thereof had already been included in the computation of their monthly salaries.
Moreover, it is absurd to grant respondent's claim of non-payment when they in fact admitted
that they were being paid all of the days of the month even if not worked. By granting
respondent's claim, the Voluntary Arbitrator sanctioned unjust enrichment in favor of the
respondent and caused unjust financial burden to the petitioner. Obviously, the Court cannot
allow this.
While the Constitution is committed to the policy of social justice
50
and the protection of the
working class,
51
it should not be supposed that every labor dispute would automatically be
decided in favor of labor. Management also has it own rights which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Out of concern for those with less
privileges in life, this Court has inclined more often than not toward the worker and upheld his
cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule
that justice is in every case for the deserving, to be dispensed in the light of the established facts
and the applicable law and doctrine.
52

WHEREFORE, the petition for review is GRANTED. The Resolutions dated September 4, 2002 and
February 28, 2003 of the Court of Appeals in CA-G.R. SP No. 72336 are REVERSED and SET
ASIDE. The Decision dated March 1, 2001 and Resolution dated June 17, 2002 of the Voluntary
Arbitrator are declared NULL and VOID.
SO ORDERED.




Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 139940 September 19, 2006
ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, CARLOS C. A. RIVAS, JR., SIMEON B.
INOCENCIO, ROMULO D. JACOB, NYMIA M. PINEDA, BENEDICTO I. NIETO, JR., LUIS JACINTO,
MILBERT MORA, MONICO CALMA, CONSTANCIO BAYHONAN, BERNARDO SABLE, NESTOR
BRINOSA, NANJI MACARAMPAT, EDUARDO FLORAGUE and DIONY S. LUMANTA, petitioners,
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, and ARELLANO UNIVERSITY,
INC.,respondents.
D E C I S I O N
CARPIO MORALES, J.:
Subject of the present petition for certiorari are the Court of Appeals Resolution of April 13,
1999
1
and Resolution of September 3, 1999
2
which dismissed petitioners petition for certiorari
for having been filed six days beyond the reglementary period under Section 4, Rule 65 of the
1997 Rules of Civil Procedure, as amended by Supreme Court EnBanc Resolution dated July 21,
1998 reading:
If the petitioner had filed a motion for new trial or reconsideration in due time after
notice of said judgment, order or resolution, the period herein fixed shall be interrupted.
If the motion is denied, the aggrieved party may file the petition within the remaining
period, but which shall not be less than five (5) days in any event,reckoned from notice of
such denial. No extension of time to file the petition shall be granted except for the most
compelling reason and in no case to exceed fifteen (15) days. (Emphasis and
underscoring supplied)
Petitioners, in the main, plead for the application of substantial justice over procedural lapses,
conformably to this Courts pronouncements in several cases, and a liberal construction of the
Rules in order to promote its objective of securing a just disposition of every action or
proceeding.
3

The record shows that the September 3, 1999 Resolution of the Court of Appeals denying
petitioners motion for reconsideration was received by them on September 13, 1999. On
September 27, 1999, petitioners filed a motion for 30-day extension of time to file petition which
this Court granted.
4
On October 28, 1999, petitioners filed the present petition for
certiorari.
5
Doubtless, petitioners could not have availed of such petition as a mere substitute for
lost appeal,
6
hence, this Court treats it as one for review under Rule 45.
Indeed, Section 4 of Rule 65 of the 1997 Rules of Civil Procedure was amended by the July 21,
1998 Resolution of this Court EnBanc by adding to it as second paragraph the above-quoted
amendment.
The same Section was, however, subsequently amended by this Courts En Banc Resolution in
A.M. No. 00-2-03-SC which took effect on September 1, 2000 providing for a 60-day period to
file petition under Rule 65 from denial of a motion for reconsideration or new trial. As thus
further amended, Section 4 of Rule 65 now reads:
SEC. 4. Whenandwherepetitionfiled. The petition shall be filed not later than sixty (60)
days from notice of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not,
the sixty (60) day period shall be counted from notice of the denial of said motion.
(Emphasis and underscoring supplied)
The rule is settled that remedial statutes or modes of procedure, which do not create new rights
or take away vested rights but only operate in furtherance of the remedy or confirmation of
rights already existing, do not come within the purview of the general rule against the
retroactive operation of statutes. They are construed to be applicable to actions pending and
undetermined at the time of their passage, and are deemed retroactive in that sense and to that
extent. Hence, in a long line of cases,
7
the new period under Section 4 of Rule 65 was given
retroactive application. Of course at the time the assailed Resolutions of the appellate court
were issued in 1999, Section 4 of Rule 65 had not yet been amended by this Courts Resolution in
A.M. No. 00-2-03-SC.
There being no reason why Section 4 of Rule 65, as amended in 2000 by this Court, may not be
given retroactive application to petitioners petition, it now gives said application. While,
normally, a remand of the case to the appellate court for further proceedings is done,
8
this Court
now opts to decide the petition on the merits to forestall further delay in its disposition.
On December 12, 1997, the Arellano University Employees and Workers Union (the Union), the
exclusive bargaining representative of about 380 rank-and-file employees of Arellano University,
Inc. (the University), filed with the National Conciliation and Mediation Board (NCMB) a Notice of
Strike charging the University with Unfair Labor Practice (ULP) as follows:
1. Interfering in union activities;
2. Union Busting violation of CBAs Article IV, Section 2;
9

3. Union Busting disregarding the unions request to deduct penalties from its members
who were absent and without justifiable reasons during union meetings; and
4. Contracting Workout the management is contracting out services and functions
being performed by Union members.
10

The Notice of Strike was docketed as NCMB-NCR-NS-12-520-97.
Subsequently or on December 17, 1997, a majority of the members of the Union filed a
December 15, 1997 petition for audit
11
of union funds before the Office of the National Capital
Region Director of the Department of Labor and Employment (DOLE) against the officers of the
Union.
On March 11, 1998, the Regional Director of DOLE-NCR directed the Union officers to call a
general membership meeting to, among other things, render an accounting of union funds
amounting to P481,117.28 which were remitted per the check-off statement.
12

Also on March 11, 1998, then DOLE Secretary Cresenciano B. Trajano certified the Notice of
Strike for compulsory arbitration to the National Labor Relations Commission (NLRC) which the
latter assigned to Labor Arbiter Cristeta D. Tamayo. The Labor Arbiter set the dispute for
hearing/conference on July 3, 1998, July 17, 1998, and August 11, 1998. No settlement was
reached by the parties, however.
13

On July 28, 1998, the University moved for the consolidation with the ULP charge (NCMB-NCR-
NS-12-520-97) the Interpleader
14
it filed against the Union and some of its members, docketed
as NLRC NCR Case No. 00-02-02036-98 and pending before Labor Arbiter Felipe T. Garduque II,
and the Complaint the Union filed for underpayment of wages arising from the change in the
manner of computation of salary of employees and non-payment of Sunday pay, docketed
as NLRC NCR Case No. 00-02-01422-98 and pending before Labor Arbiter Ramon Valentin T.
Reyes, both of which involve the same parties.
15

Before the NLRC could act on the Universitys motion for consolidation, DOLE Secretary
Bienvenido E. Laguesma, by Order
16
of August 5, 1998, certified for compulsory arbitration to the
NLRC a second Notice of Strike filed by the Union on July 16, 1998, docketed as NCMB-NCR-NS-
07-277-98, charging the University with the following:
a. Violation of Collective Bargaining Agreement (CBA), Art. V withholding of union and
death benefits;
b. Violation of CBA, Art. VI non-granting of ten (10%) percent salary increase to some
union members;
c. Illegal/unauthorized deductions in the payroll;
d. Union interference circulating letters against the union; and
e. Non-implementation of the retirement plan as approved by the BIR.
17

A strike was in fact staged on August 5, 1998.
By the same Order of August 5, 1998, the DOLE Secretary directed the strikers to return to work
within twenty-four (24) hours. The order was served upon the Union on August 6, 1998, and the
following day, August 7, 1998, at about 3:00 p.m., the Union lifted its strike.
18

The strike staged by the Union on August 5-7, 1998 prompted the University to file on August 24,
1998 a petition to declare the same illegal, docketed as NLRC-NCR Case No. 00-08-06897-98,
which was also consolidated with the other cases.
Resolving the consolidated cases, the NLRC, by Decision
19
of October 12, 1998, disposed as
follows:
WHEREFORE, judgment is hereby rendered declaring:
1. That the Unions two notices of strike docketed as NCMB-NCR-NS-12-520-97
and NCMB-NCR-NS-07-277-98 were, to the extent as they concern the issues
herein resolved, without merit;
2. That as a consequence, the University is absolved from the charges of Unfair
Labor Practicecontained in said notices of strike;
3. The loss of employment status of all the individual respondents in NLRC-NCR-
Case No. 00-08-06897-98; and
4. That there is no diminution of workers benefits in NLRC-NCR Case No. 00-02-
01422-98, because apart from the Unions failure to prove it, the University,
based on existing laws, is correct in using 314 days as divisor in computing the
daily wage of its daily paid employees.
SO ORDERED.
20
(Emphasis and underscoring supplied)
The NLRC found that what triggered the strike was the Unions suspicion that the petition for
audit of union funds was initiated by the University. The NLRC, citing an Order of March 11, 1998
issued by the DOLE Regional Director, found the therein petitioners to have initiated, out of their
own volition, the filing of the petition. It thus concluded that there was no factual basis to hold
the University guilty of interference in union activities.
21

On the allegation of union busting, the NLRC ruled that the refusal of the University to deduct
penalties from the salaries of members of the Union who failed to attend meetings was based on
Article IV, Section 2
22
of the CBAvis--vis Section 1
23
of the same Article which requires as
condition for a valid checkoff prior submission to the management of individual checkoff
authorizations, a requirement which was not met by the Union.
24
Besides, the NLRC held, the law
mandates that the Union should not be "arbitrary, excessive or oppressive" in imposing a fine.
25

On the claim that the University had been contracting out work, the NLRC held that the same
was never raised during the conciliation meetings at the NCMB level.
26

Respecting the second Notice of Strike, the NLRC found that only the charges of violation of the
CBA for withholding union dues and death benefits, and the non-implementation of the
retirement plan, as approved by the BIR, were left for resolution as the Union dropped the other
issues raised therein after the NCMB hearings on July 21, 1998 and July 28, 1998.
27

Crediting the explanation of the University that its withholding of union dues and death aid
benefits was upon the written request of several union members themselves, the NLRC held that
no ULP was committed.
On the charge of non-implementation of the retirement plan by the University, the NLRC found
that the same was baseless and it was in fact not ventilated before the NCMB.
28

In NLRC NCR Case No. 00-02-02036-98, the NLRC ruled that the University may not be held guilty
of ULP for refusal to heed the demand of the Union that salaries of its members be deducted for
their failure to attend union meetings: firstly, because the Union itself failed to meet the
requirements provided for in Sections 1 and 2, Article IV of the CBA; and secondly, an
interpleader had been filed by the University for the parties to litigate their claims before the
NLRC.
29
The NLRC also ruled that the resolution calling for such deduction was not valid as it was
not even signed by the majority of Union officers and circulated to the members.
30

In NLRC NCR Case No. 00-08-06897-98 (the Universitys petition to declare the strike staged by
the Union on August 5-7, 1998 illegal), the NLRC granted the petition and declared the loss of
employment status of all thestrikers for knowingly defying the Return-to-Work Order of the
DOLE Secretary dated August 5, 1998, said Order having been served upon the union on August
6, 1998 but it was only on August 7, 1998, at about 3:00 p.m., that the strike was lifted.
31

In NLRC NCR Case No. 00-02-01422-98, the NLRC ruled that the University was correct in using
314 days as divisor, instead of 365 days, in computing the "equivalent daily rate"
32
of pay of a
worker.
The Union et al. (hereafter petitioners) filed a motion for reconsideration of the NLRC decision
which was denied by Resolution
33
of January 20, 1999. Hence, they elevated the decision to the
Court of Appeals via petition for certiorari which was, as stated early on, dismissed.
In the present petition, petitioners insist that the University violated the CBA by withholding
union dues and death benefits. The University counters that on the request of Union members in
light of their gripes against the Union and its officers, it did withhold said dues and benefits
which they deposited with the DOLE where the parties could settle the issues among
themselves.
The then prevailing Rules Implementing the Labor Code, Book V
34
, Rule XVIII provided that
Section 1. Rightofuniontocollectdues. The right of the incumbent bargaining
representative to check off and to collect dues resulting therefrom shall not be affected
by the pendency of a representation case or an intra-union dispute.
35
(Emphasis
supplied)
To constitute ULP, however, violations of the CBA must be gross. Gross violation of the CBA,
under Article 261 of the Labor Code, means flagrant and/or malicious refusal to comply with the
economic provisions thereof. Evidently, the University can not be faulted for ULP as it in good
faith merely heeded the above-said request of Union members.
On the NLRCs declaration of loss of employment status of the strikers, the pertinent provision of
Article 264 of the Labor Code provides:
Article 264.
x x x x
Any union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a strike
may be declared to have lost his employment status (Emphasis and underscoring
supplied)
Under the immediately quoted provision, an ordinary striking worker may not be declared to
have lost his employment status by mere participation in an illegal strike. There must be proof
that he knowingly participated in the commission of illegal acts during the strike. While the
University adduced photographs
36
showing strikers picketing outside the university premises, it
failed to identify who they were. It thus failed to meet the "substantiality of evidence
test"
37
applicable in dismissal cases.
Petitioner-union members must thus be reinstated to their former position, without backwages.
If reinstatement is no longer possible, they should receive separation pay of One (1) Month for
every year of service in accordance with existing jurisprudence.
38

With respect to the union officers, as already discussed, their mere participation in the illegal
strike warrants their dismissal.
As for petitioners claim of substantial diminution of their salary on account of the divisor used
by the University in its computation 314 days, instead of 365 days, this Court finds nothing
wrong therewith. Sundays being un-worked and considered unpaid rest days, while regular
holidays as well as special holidays considered as paid days,
39
the factor used by the University
merely complies with the basic rule in this jurisdiction of "no work, no pay." The right to be paid
for un-worked days is generally limited to the ten legal holidays in a year.
40

WHEREFORE, the Court of Appeals Resolution of April 13, 1999 and Resolution of September 3,
1999 are SET ASIDE.
The NLRC Decision of October 12, 1998 and Resolution of January 20, 1999 are AFFIRMED, with
the MODIFICATION that the dismissal of petitioner-union members MONICO CALMA,
CONSTANCIO BAYHONAN, BERNARDO SABLE, NESTOR BRINOSA, NANJI MACARAMPAT,
EDUARDO FLORAGUE and DIONY S. LUMANTA is SET ASIDE, and they are thus ordered
REINSTATED WITHOUT BACKWAGES. If their reinstatement is no longer possible, however, they
should be given SEPARATION PAY at the rate of One (1) Month pay for every year of service.
SO ORDERED.


















Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 130439 October 26, 1999
PHILIPPINE VETERANS BANK, petitioner,
vs.
HONORABLE NATIONAL LABOR RELATIONS COMMISSION, HON. POTENCIANO CAIZARES, JR., and
DR. TEODORICO V. MOLINA, respondents.
DAVIDE, JR., C.J.:
InthispetitionforcertiorariunderRule65oftheRulesofCourt,petitionerseekstosetasidethe
resolution
1
oftheNationalLaborRelationsCommission(NLRC)inNLRCCaseNo.05-02940-91
anditsorder
2
denyingthemotionforreconsiderationthereof.
In1983,petitionerPhilippineVeteransBankwasplacedunderreceivershipbytheCentralBank
(nowBangkoSentral)
3
byvirtueofResolutionNo.334issuedbytheMonetaryBoard.Petitioner
wassubsequentlyplacedunderliquidationon15June1985.Consequently,itsemployees,
includingprivaterespondentDr.JoseTeodoricoV.Molina(MOLINA),wereterminatedfromwork
andgiventheirrespectiveseparationpayandotherbenefits.Toassistintheliquidation,someof
petitioner'sformeremployeeswererehired,amongthemMOLINA,whosere-employment
commencedon15June1985.
On11May1991,MOLINAfiledacomplaint
4
againstRenanV.
Santos,
5
PacificoU.CervantesandAlfredoL.Dizon,membersoftheliquidationteam.
6
Docketed
asNLRC-NCRCaseNo.05-02940-91,thecomplaintdemandedtheimplementationofWage
OrdersNos.NCR-01andNCR-02(hereafterW.O.1andW.O.2)aswellasmoraldamagesand
attorney'sfeesintheamountofP300,000.1wphi1.nt
Inhispositionpaper,MOLINAallegedthathestartedworkingforpetitionerasalegalassistant
on17March1974.Whenpetitionerwasplacedunderliquidationin1985,hewasretainedas
ManagerIIintheLegalDepartment,wherehecontinuedtoreceiveamonthlysalaryof
P3,754,60.
Meanwhile,W.O.1tookeffecton10November1990,prescribingaP17-increaseinthedaily
wageofemployeeswhosemonthlysalarydidnotexceedP3,802.08.Ontheotherhand,W.O.2,
whichbecameeffectiveon8January1991,mandatedaP12-increaseinthedailywageof
employeeswhosemonthlysalarydidnotexceedP4,319.16.MOLINAclaimedthathissalary
shouldhavebeenadjustedincompliancewithsaidwageorders.
Intheirpositionpaper,theliquidationteamcounteredthatMOLINAwasnotentitledtoany
salaryincreasebecausehewasalreadyreceivingamonthlysalaryofP6,654.60brokendownas
follows:P3,754.60asbasiccompensation,P2,000asrepresentationandtransportation
allowance(RATA),andaspecialallowanceofP900.
Inhisdecision,
7
LaborArbiterPotencianoS.Caizares,Jr.rejectedthe26.16factorusedbythe
liquidatorsincomputingthedailywageofMOLINA,adoptinginsteadthefactorof"365days."
Consequently,theywereorderedtopayMOLINAP4,136.64andP2,190representingthewage
differentialsduehimunderW.O.1andW.O.2.TheywerealsorequiredtopayhimP100,000in
moraldamagesandattorney'sfees.
Onappeal,theNLRCsustainedthelaborarbiter'srulingafterconcludingthatMOLINAwasa
regularemployeeofpetitionerwithabasicmonthlysalaryofP3,754.60atthetimeofhis
dismissalon31January1992.Hewas,therefore,entitledtothewageincreasesmandatedbythe
aforesaidwageorders.
Initsassailedresolutionof7April1997,theNLRCdecreedthus:
WHEREFORE,therespondents[membersofhereinpetitioner'sliquidationteam]
areherebydirectedtopaythecomplainant[MOLINA]thetotalsum[sic]of
P112,501.20brokendownasfollows:
WO#NCR-01&01-AP17.00/dayNov.1990-Jan.7,1991
WO#NCR-02&02-AP12.00/dayJan.8,1991-Jan.31,1992
(Dateoftermination)
WageDifferential:
WO#NCR-01(Nov.1990Jan.31,1992-15mos.)
P17.00x36512=P517.08x15mos.-P7,756.20
WO#NCR-02(Jan.8,1991Jan.31,1992-13mos.)
P12.00x36512=P365.00x13mos.-P4,745.00
TotalWageDifferentialP12,501.20
MoralDamages&Attorney'sFeesP100,000.00
TOTALAWARDP112,501.20
SOORDERED.
8

AsMOLINAmovedfortheexecutionoftheNLRCresolution,petitioner,inturn,movedforits
reconsideration.Initsorderof27June1997,theNLRCdeniedpetitioner'smotion,promptingthe
lattertofiletheinstantpetitionwithaprayerfortheissuanceofatemporaryrestrainingorder
andwritofpreliminaryinjunction.
Inthisaction,petitionerquestionstheproprietyofitssubstitutionasaparty-respondentbelowon
thepretextthatitwastherebydeprivedofitsrighttodueprocess.Second,MOLINAwasalluding
toactscommittedbytherepresentativesofthethenCentralBank.Petitioneremphasizesthathe
wasrehiredonlytoassistintheliquidationprocess.
9
Infact,allitsemployeesweredismissedand
giventheircorrespondingseparationpayandbenefits.Atthatmoment,theemployer-employee
relationshipbetweenpetitionerandMOLINAceasedtoexist.Third,petitionermaintainsthat
MOLINAisestoppedfromclaimingthatitcontinuedtobehisemployerduringtherehabilitation
periodsincetheadmissionsinhispleadings,oneofwhichisthattheliquidatorswerehis
employers,arebindingandconclusive.
Nonetheless,petitionerreiteratestheargumentsraisedbytheoriginalrespondents,particularly
thatthefactorof26.16shouldhavebeenappliedindeterminingMOLINA'sdailywage.Doingso
wouldshowthatMOLINA'sdailypayexceededtheminimumwageand,therefore,wasbeyond
thescopeofthewageorders.
PetitioneralsoaversthattheawardofP100,000inmoraldamagesandattorney'sfeeswas
inappropriatesincethecomplaintdidnotspecifythesame,anditwasclearlyexcessive,
consideringthatthecasewasdecidedbasedonthepleadingsandwithoutthebenefitoftrial.In
fact,MOLINAfailedtoprovehisclaimforbothmoraldamagesandattorney'sfees.Evenifdue,
theamountfarsurpassedanyactualdamagethatMOLINAmayhavesuffered.Inanyevent,
moraldamagesmayonlyberecoveredinlaborcaseswhenthedismissalisattendedbybadfaith
orfraud,orwhenitconstitutesanactoppressivetolabororcommittedinamannercontraryto
goodmorals,goodcustomsorpublicpolicy.MOLINA'sdismissalwasmadeintheordinarycourse
ofbusiness.
Ontheotherhand,MOLINAprimarilyassertsthatuponpetitioner'srehabilitationitassumedall
therightsandobligationsoftheliquidator,includingtheNLRC'smonetaryawardarisingfromthe
laborcomplainthefiledagainsttheliquidationteam.
TheOfficeoftheSolicitorGeneralsupportstheNLRC'sfindingthatMOLINAwasentitledtothe
wageincreasesbecauseitwasneverdisputedthathissalaryofP3,754.60wasclearlycoveredby
thewageorders.Theliquidators,however,usedthe26.16insteadofthe365factorincomputing
hisdailywage.TheOSGcitestherulingoftheNationalWagesCouncilinits
letter
10
tothePhilippineVeteransBankRetainedEmployees,wheretheCouncilopinedthatthe
retainedemployeeswereentitledtothewageincreasecomputedonthebasisof365days.Italso
agreeswiththeNLRC'sconclusionthatMOLINAisentitledtomoraldamagesandattorney'sfees,
althoughtheymustbeseparatelyspecified.Finally,theOSGopinesthatupontherehabilitation
ofpetitioner,itassumedalltheassets,liabilities,rightsandobligationsoftheliquidationteam.
Thiswouldincludethesalariesoftheemployeeshiredforliquidationpurposes,suchasMOLINA.
Initsreply,petitionerinsiststhatwhenitwasplacedunderliquidation,itlostitsjuridical
personality,suchthatitcouldnolongerenterintocontractsortransactbusiness.Allitsassets
andliabilitieswereturnedovertotheCentralBank.MOLINA'scomplaintpertainedtoacts
committedduringliquidationandsowascorrectlyfiledagainsttheliquidationteam.Its
substitutionasparty-respondentwasclearlyerroneous.
Hence,theissuestoberesolvedare:(1)AreW.O.1andW.O.2applicabletoMOLINA?(2)Is
MOLINAentitledtomoraldamagesandattorney'sfees?(3)Ifso,whoisliabletopayMOLINA's
claims?
Weseenoreasontodisturbthefactualfindingofthelaborarbiter,andaffirmedbytheNLRC,
thatMOLINA'ssalarywaswithinthecoverageofthecitedwageorders.Well-settledistherule
thatthefindingsoffactofquasi-judicialbodiesaregenerallyaccordedrespectandfinalitywhere
theyaresupportedbysubstantialevidence.
11
Indeed,MOLINA'smonthlysalaryofP3,754.60was
neveratissue.Whatwasindisputewasthecomputationofhisdailywage.
W.O.1expresslystatesthatemployeeshavingamonthlysalaryofnotmorethanP3,802.08are
entitledtoreceivethemandatedwageincrease.Undeniably,MOLINAwasreceivingamonthly
salaryofP3,754.60.Thisfactaloneleavesnodoubtthatheshouldbenefitfromsaidwageorder.
Ontheotherhand,W.O.2raisedtheceilingforentitlementtothewageincrease.IfMOLINAwas
coveredbytheearlierwageorder,withmorereasonshouldthelaterwageorderapplytohim.
Worthmentioningistheopinion
12
renderedbytheNationalWagesCouncilonthequeryofthe
PhilippinesVeteransBankRetainedEmployees,onwhethertheywereentitledtoawageincrease
underRepublicActNo.6640,
13
viz.:
ThedocumentsattachedtoyourqueryshowthattheBankhasbeenconsistently
usingthefactorof365daysincomputingyourequivalentmonthlysalarypriorto
itsbeingplacedunderreceivershipbytheCentralBank.Thisisevidentinthewage
andallowanceincreasesgrantedunderpreviousPresidentialDecreesandWage
Orders,whichweregivenbytheBankonmonthlybasis,i.e.,wheretherestdays
areunworked[sic]butpaid.Thisisalsoindicatedintheappointmentandservice
recordsofbankpersonnelwhostartedoutasdailypaidemployeesandwere
eventuallypromotedaspermanentemployeeswithfixedmonthlysalaries.
However,whenR.A.6640wentintoforce,theBankunilaterallyreducedthefactor
to262insteadofmaintainingfactor365aswasthepractice/policylongbefore
theeffectivityoftheAct.AndwhenR.A.6727tookeffect,theBankrevertedtothe
oldpractice/policyofusingfactor365daysincomputingyourequivalentmonthly
ratesalary....
Mayweaddthattheoldpracticeofthebankinusingfactor365daysinayearin
determiningyourequivalentmonthlysalarycannotunilaterallybechangedby
youremployerwithouttheconsentoftheemployees,suchpracticebeingnowa
partofthetermsandconditionsofyouremployment.Anemploymentagreement,
whetherwrittenorunwritten,isabilateralcontractand,assuchotherparty
theretocannotchangeoramendthetermsthereofwithouttheconsentofthe
otherpartythereto.
Fromtheforegoing,itisclearthatyouareentitledtothewageincreaseunder
R.A.6440computedonthebasisof365paiddaysandtothecorrespondingsalary
differentialsasaresultoftheapplicationofthisfactor.[Emphasissupplied]
Evidently,theuseofthe365factorisbindingandconclusive,formingasitdidpartofthe
employmentcontract.Petitionercannolongerinvokethe26.16factorafteritvoluntarily
adoptedthe365factorasapolicyevenpriortoitsreceivership.Toabandonsuchpolicyand
reverttoitsoldpracticeofusingthe26.16factorwouldbeadiminutionofalaborbenefit,which
isprohibitedbytheLaborCode.
14
Itcannotbedoubtedthatthe365factorfavorspetitioner's
employees,includingMOLINA,becauseitresultsinahigherdeterminationoftheirmonthly
salary.
Astothesecondissue,weagreewiththeNLRCthatMOLINAisentitledtomoraldamagesand
attorney'sfees.Hemayhaveomittedsuchclaimsinhiscomplaint,buthecertainlyincludedthem
inhispositionpaper.Weholdthatsuchallegationissufficienttoenablethecomplainanttoseek
anawardthereof.Thecomplaintbeingproforma,MOLINA'somissiontospecifyaclaimfor
damagesdoesnotbarrecoverythereofespeciallywhen,asinthiscase,suchaclaimwasprayed
forinhispositionpaper.
15

TheNLRC,however,didnotdistinguishbetweenattorney'sfeesandmoraldamagesinaffirming
theawardofP100,000toMOLINA.Weholdthatawardsformoraldamagesandattorney'sfees
cannotbeconsolidatedfortheyaredifferentinnatureandeachmustbeseparately
determined.
16
SincetheLaborCodelimitsattorney'sfeestotenpercentofthewages
awarded,
17
andthetotalwagedifferentialdueMOLINAwascomputedatP12,501.20,only
P1,250.12shouldhavebeenawardedasattorney'sfees.
Movingontotheissueofmoraldamages,therecordsshowthatMOLINAbasedhisclaimonthe
allegedfailureoftheliquidationteamtoimplementthebenefitsofthewageorders,without
submittinganyproofinsupportthereof.Itisbasic,however,thatformoraldamagestobe
awarded,theclaimantmustsatisfactorilyproveitsfactualbasisandcausalconnectionwiththe
respondent'sacts.
18
Inthis,MOLINAfailed,forwhichreasontheawardofmoraldamagesmust
bedeleted.
Finally,werulethatthepaymentofMOLINA'sclaimsdevolvesuponpetitioner,nottheliquidation
team.Whenabankisdeclaredinsolventandplacedunderreceivership,theMonetaryBoardof
theCentralBankdetermineswhethertoproceedwiththeliquidationorreorganizationofthe
financiallydistressedbank.
19
Areceivertakescontrolandpossessionoftheassetsofthebankfor
thebenefitofitscreditors
20
andconcurrentlyrepresentsthebank.
21
Ontheotherhand,a
liquidatorassumestheroleofthereceiveruponthedeterminationbytheMonetaryBoardthat
thebankcannolongerresumebusiness.Histaskistodisposeofalltheassetsofthebankand
effectpartialpaymentsofitsobligationsinaccordancewiththeirlegalpriority.
22
Inboth
receivershipandliquidationproceedings,thebankretainsitsjuridicalpersonality
notwithstandingtheclosureofitsbusiness;infact,thebankmayevenbesued.
23
Itscorporate
existenceisassumedbythereceiverorliquidator.Thelatter,however,actsnotonlyforthe
benefitofthebank,butforthebank'screditorsaswell.
24

Intheinstantcase,petitionerwasinitiallyclosedandputunderreceivershipandliquidation.
Subsequently,itsrehabilitationwaseffectedbyvirtueofRepublicActNo.7169
25
andMonetary
BoardResolutionNo.348dated10April1992.Rehabilitationcontemplatesacontinuanceof
corporatelifeandactivitiesinanefforttorestoreandreinstatethecorporationtoitsformer
positionofsuccessfuloperationandsolvency.
26
Uponitsrehabilitation,petitionerassumedthe
rightsandobligationsofthereceiverandliquidator.ThisincludesMOLINA'sclaimforunpaid
wages.Itmustbeborneinmindthatalltheactsofthereceiverandliquidatorpertainto
petitioner,bothhavingassumedpetitioner'scorporateexistence.Petitionercannotdisclaim
liabilitybyarguingthatthenon-paymentofMOLINA'sjustwageswascommittedbythe
liquidatorsduringtheliquidationperiod.
WHEREFORE,thiscaseisDISMISSED.TheassailedResolutionof7April1997andOrderof27June
1997oftheNationalLaborRelationsinNLRCCaseNo.05-02940-91areAFFIRMEDwiththe
MODIFICATIONthattheawardofmoraldamagesisdeletedandtheawardofattorney'sfeesis
reducedtoONETHOUSANDTWOHUNDREDFIFTY&12/100PESOS(P1,250.12).1wphi1.nt
Nopronouncementastocosts.
SOORDERED.







Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 147420 June 10, 2004
CEZAR ODANGO in his behalf and in behalf of 32 complainants, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTIQUE ELECTRIC COOPERATIVE,
INC., respondents.
D E C I S I O N
CARPIO, J.:
The Case
Before the Court is a petition for review
1
assailing the Court of Appeals Resolutions of 27
September 2000
2
and 7 February 2001 in CA-G.R. SP No. 51519. The Court of Appeals upheld the
Decision
3
dated 27 November 1997 and the Resolution dated 30 April 1998 of the National Labor
Relations Commission ("NLRC") in NLRC Case No. V-0048-97. The NLRC reversed the Labor
Arbiters Decision of 29 November 1996, which found respondent Antique Electric Cooperative
("ANTECO") liable for petitioners wage differentials amounting to P1,017,507.73 plus attorneys
fees of 10%.
Antecedent Facts
Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday
and half of Saturday. After a routine inspection, the Regional Branch of the Department of Labor
and Employment ("DOLE") found ANTECO liable for underpayment of the monthly salaries of its
employees. On 10 September 1989, the DOLE directed ANTECO to pay its employees wage
differentials amounting to P1,427,412.75. ANTECO failed to pay.
Thus, on various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with
the NLRC Sub-Regional Branch VI, Iloilo City, praying for payment of wage differentials, damages
and attorneys fees. Labor Arbiter Rodolfo G. Lagoc ("Labor Arbiter") heard the consolidated
complaints.
On 29 November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting
them wage differentials amounting to P1,017,507.73 and attorneys fees of 10%. Florentino
Tongson, whose case the Labor Arbiter dismissed, was the sole exception.
ANTECO appealed the Decision to the NLRC on 24 December 1996. On 27 November 1997, the
NLRC reversed the Labor Arbiters Decision. The NLRC denied petitioners motion for
reconsideration in its Resolution dated 30 April 1998. Petitioners then elevated the case to this
Court through a petition for certiorari, which the Court dismissed for petitioners failure to
comply with Section 11, Rule 13 of the Rules of Court. On petitioners motion for
reconsideration, the Court on 13 January 1999 set aside the dismissal. Following the doctrine
in St.MartinFuneralHomev.NLRC,
4
the Court referred the case to the Court of Appeals.
On 27 September 2000, the Court of Appeals issued a Resolution dismissing the petition for
failure to comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained
that petitioners failed to allege the specific instances where the NLRC abused its discretion. The
appellate court denied petitioners motion for reconsideration on 7 February 2001.
Hence, this petition.
The Labor Arbiters Ruling
The Labor Arbiter reasoned that ANTECO failed to refute petitioners argument that monthly-
paid employees are considered paid for all the days in a month under Section 2, Rule IV of Book
3 of the Implementing Rules of the Labor Code ("Section 2").
5
Petitioners claim that this includes
not only the 10 legal holidays, but also their un-worked half of Saturdays and all of Sundays.
The Labor Arbiter gave credence to petitioners arguments on the computation of their wages
based on the 304 divisor used by ANTECO in converting the leave credits of its employees. The
Labor Arbiter agreed with petitioners that ANTECOs use of 304 as divisor is an admission that it
is paying its employees for only 304 days a year instead of the 365 days as specified in Section 2.
The Labor Arbiter concluded that ANTECO owed its employees the wages for 61 days, the
difference between 365 and 304, for every year.
The NLRCs Ruling
On appeal, the NLRC reversed the Labor Arbiters ruling that ANTECO underpaid its employees.
The NLRC pointed out that the Labor Arbiters own computation showed that the daily wage
rates of ANTECOs employees were above the minimum daily wage of P124. The lowest paid
employee of ANTECO was then receiving a monthly wage of P3,788. The NLRC applied the
formula in Section 2 [(Daily Wage Rate = (Wage x 12)/365)] to the monthly wage of P3,788 to
arrive at a daily wage rate of P124.54, an amount clearly above the minimum wage.
The NLRC noted that while the reasoning in the body of the Labor Arbiters decision supported
the view that ANTECO did not underpay, the conclusion arrived at was the opposite. Finally, the
NLRC ruled that the use of 304 as a divisor in converting leave credits is more favorable to the
employees since a lower divisor yields a higher rate of pay.
The Ruling of the Court of Appeals
The Court of Appeals held that the petition was insufficient in form and substance since it "does
not allege the essential requirements of the extra-ordinary special action of certiorari." The
Court of Appeals faulted petitioners for failing to recite "where and in what specific instance
public respondent abused its discretion." The appellate court characterized the allegations in the
petition as "sweeping" and clearly falling short of the requirement of Section 3, Rule 46 of the
Rules of Court.
The Issues
Petitioners raise the following issues:
I
WHETHER THE COURT OF APPEALS IS CORRECT IN DISMISSING THE CASE.
II WHETHER PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIM.
6

The Ruling of the Court
The petition has no merit.
On the sufficiency of the petition
Petitioners argue that the Court of Appeals erred in dismissing their petition because this Court
had already ruled that their petition is sufficient in form and substance. They argue that this
precludes any judgment to the contrary by the Court of Appeals. Petitioners cite this Courts
Resolution dated 13 January 1999 as their basis. This Resolution granted petitioners motion for
reconsideration and set aside the dismissal of their petition for review.
Petitioners reliance on our 16 September 1998 Resolution is misplaced. In our Resolution, we
dismissed petitioners case for failure to comply with Section 11, Rule 13 of the Rules of
Court.
7
The petition lacked a written explanation on why service was made through registered
mail and not personally.
The error petitioners committed before the Court of Appeals is different. The appellate court
dismissed their petition for failure to comply with the first paragraph of Section 3 of Rule 46
8
in
relation to Rule 65 of the Rules of Court, outlining the necessary contents of a petition for
certiorari. This is an entirely different ground. The previous dismissal was due to petitioners
failure to explain why they resorted to service by registered mail. This time the content of the
petition itself is deficient. Petitioners failed to allege in their petition the specific instances where
the actions of the NLRC amounted to grave abuse of discretion.
There is nothing in this Courts Resolution dated 13 January 1999 that remotely supports
petitioners argument. What we resolved then was to reconsider the dismissal of the petition
due to a procedural defect and to refer the case to the Court of Appeals for its proper
disposition. We did not in any way rule that the petition is sufficient in form and substance.
Petitioners also argue that their petition is clear and specific in its allegation of grave abuse of
discretion. They maintain that they have sufficiently complied with the requirement in Section 3,
Rule 46 of the Rules of Court.
Again, petitioners are mistaken.
We quote the relevant part of their petition:
REASONS RELIED UPON FOR ALLOWANCE OF PETITION
12. This Honorable court can readily see from the facts and circumstances of this case,
the petitioners were denied of their rights to be paid of 4 hours of each Saturday, 51 rest
days and 10 legal holidays of every year since they started working with respondent
ANTECO.
13. The respondent NLRC while with open eyes knew that the petitioners are entitled to
salary differentials consisting of 4 hours pay on Saturdays, 51 rest days and 10 legal
holidays plus 10% attorneys fees as awarded by the Labor Arbiter in the above-
mentioned decision, still contrary to law, contrary to existing jurisprudence issued
arbitrary, without jurisdiction and in excess of jurisdiction the decision vacating and
setting aside the said decision of the Labor Arbiter, to the irreparable damage and
prejudice of the petitioners.
14. That the respondent NLRC in grave abuse of discretion in the exercise of its function,
by way of evasion of positive duty in accordance with existing labor laws, illegally refused
to reconsider its decision dismissing the petitioners complaints.
15. That there is no appeal, nor plain, speedy and adequate remedy in law from the
above-mentioned decision and resolution of respondent NLRC except this petition for
certiorari.
9

These four paragraphs comprise the petitioners entire argument. In these four paragraphs
petitioners ask that a writ of certiorari be issued in their favor. We find that the Court of Appeals
did not err in dismissing the petition outright. Section 3, Rule 46 of the Rules of Court requires
that a petition for certiorari must state the grounds relied on for the relief sought. A simple
perusal of the petition readily shows that petitioners failed to meet this requirement.
The appellate courts jurisdiction to review a decision of the NLRC in a petition for certiorari is
confined to issues of jurisdiction or grave abuse of discretion.
10
An extraordinary remedy, a
petition for certiorari is available only and restrictively in truly exceptional cases. The sole office
of the writ of certiorari is the correction of errors of jurisdiction including the commission of
grave abuse of discretion amounting to lack or excess of jurisdiction.
11
It does not include
correction of the NLRCs evaluation of the evidence or of its factual findings. Such findings are
generally accorded not only respect but also finality.
12
A party assailing such findings bears the
burden of showing that the tribunal acted capriciously and whimsically or in total disregard of
evidence material to the controversy, in order that the extraordinary writ of certiorari will lie.
13

We agree with the Court of Appeals that nowhere in the petition is there any acceptable
demonstration that the NLRC acted either with grave abuse of discretion or without or in excess
of its jurisdiction. Petitioners merely stated generalizations and conclusions of law. Rather than
discussing how the NLRC acted capriciously, petitioners resorted to a litany of generalizations.
Petitions that fail to comply with procedural requisites, or are unintelligible or clearly without
legal basis, deserve scant consideration. Section 6, Rule 65 of the Rules of Court requires that
every petition be sufficient in form and substance before a court may take further action.
Lacking such sufficiency, the court may dismiss the petition outright.
The insufficiency in substance of this petition provides enough reason to end our discussion
here. However, we shall discuss the issues raised not so much to address the merit of the
petition, for there is none, but to illustrate the extent by which petitioners have haphazardly
pursued their claim.
On the right of the petitioners to wage differentials
Petitioners claim that the Court of Appeals gravely erred in denying their claim for wage
differentials. Petitioners base their claim on Section 2, Rule IV of Book III of the Omnibus Rules
Implementing the Labor Code. Petitioners argue that under this provision monthly-paid
employees are considered paid for all days of the month including un-worked days. Petitioners
assert that they should be paid for all the 365 days in a year. They argue that since in the
computation of leave credits, ANTECO uses a divisor of 304, ANTECO is not paying them 61 days
every year.
Petitioners claim is without basis
We have long ago declared void Section 2, Rule IV of Book III of the Omnibus Rules Implementing
the Labor Code. In InsularBankofAsiav.Inciong,
14
we ruled as follows:
Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued
by the Secretary (then Minister) of Labor are null and void since in the guise of clarifying
the Labor Codes provisions on holiday pay, they in effect amended them by enlarging
the scope of their exclusion.
The Labor Code is clear that monthly-paid employees are not excluded from the benefits
of holiday pay. However, the implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly-paid employees from the said benefits by inserting,
under Rule IV, Book III of the implementing rules, Section 2 which provides that monthly-
paid employees are presumed to be paid for all days in the month whether worked or
not.
Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis,
petitioners claim for wage differentials must fail.
Even assuming that Section 2, Rule IV of Book III is valid, petitioners claim will still fail. The basic
rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally
limited to the ten legal holidays in a year.
15
Petitioners claim is based on a mistaken notion that
Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten
legal holidays. In effect, petitioners demand that ANTECO should pay them on Sundays, the un-
worked half of Saturdays and other days that they do not work at all. Petitioners line of
reasoning is not only a violation of the "no work, no pay" principle, it also gives rise to an
invidious classification, a violation of the equal protection clause. Sustaining petitioners
argument will make monthly-paid employees a privileged class who are paid even if they do not
work.
The use of a divisor less than 365 days cannot make ANTECO automatically liable for
underpayment. The facts show that petitioners are required to work only from Monday to Friday
and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days,
less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days means
that ANTECOs workers are deprived of their holiday pay for some or all of the ten legal holidays.
The 304 days divisor used by ANTECO is clearly above the minimum of 287 days.
Finally, petitioners cite CharteredBankEmployeesAssociationv.Ople
16
as an analogous situation.
Petitioners have misread this case.
In CharteredBank, the workers sought payment for un-worked legal holidays as a right
guaranteed by a valid law. In this case, petitioners seek payment of wages for un-worked non-
legal holidays citing as basis a void implementing rule. The circumstances are also markedly
different. In CharteredBank,there was a collective bargaining agreement that prescribed the
divisor. No CBA exists in this case. In CharteredBank, the employer was liable for underpayment
because the divisor it used was 251 days, a figure that clearly fails to account for the ten legal
holidays the law requires to be paid. Here, the divisor ANTECO uses is 304 days. This figure does
not deprive petitioners of their right to be paid on legal holidays.
A final note. ANTECOs defense is likewise based on Section 2, Rule IV of Book III of the Omnibus
Rules Implementing the Labor Code although ANTECOs interpretation of this provision is
opposite that of petitioners. It is deplorable that both parties premised their arguments on an
implementing rule that the Court had declared void twenty years ago in Insular Bank. This case is
cited prominently in basic commentaries.
17
And yet, counsel for both parties failed to consider
this. This does not speak well of the quality of representation they rendered to their clients. This
controversy should have ended long ago had either counsel first checked the validity of the
implementing rule on which they based their contentions.
WHEREFORE, the petition is DENIED. The Resoution of the Court of Appeals DISMISSING CA-G.R.
SP No. 51519 is AFFIRMED.
SO ORDERED.