Mine Labor

G.R. No.
183952
September 9, 2013
CZARINA T. MALVAR, Petitioner,

vs.
KRAFT FOOD PHILS., INC. and/or BIENVENIDO BAUTISTA, KRAFT FOODS
INTERNATIONAL, Respondents.
DECISION
BERSAMIN, J.:
Although the practice of law is not a business, an attorney is entitled to be
properly compensated for the professional services rendered for the client, who
is bound by her express agreement to duly compensate the attorney. The client
may not deny her attorney such just compensation.
The Case
The case initially concerned the execution of a final decision of the Court of
Appeals (CA) in a labor litigation, but has mutated into a dispute over attorney's
fees between the winning employee and her attorney after she entered into a
compromise agreement with her employer under circumstances that the attorney
has bewailed as designed to prevent the recovery of just professional fees.
Antecedents
On August 1, 1988, Kraft Foods (Phils.), Inc. (KFPI) hired Czarina Malvar
(Malvar) as its Corporate Planning Manager. From then on, she gradually rose
from the ranks, becoming in 1996 the Vice President for Finance in the
Southeast Asia Region of Kraft Foods International (KFI),KFPIs mother
company. On November 29, 1999, respondent Bienvenido S. Bautista, as
Chairman of the Board of KFPI and concurrently the Vice President and Area
Director for Southeast Asia of KFI, sent Malvar a memo directing her to explain
why no administrative sanctions should be imposed on her for possible breach of
trust and confidence and for willful violation of company rules and regulations.
Following the submission of her written explanation, an investigating body was
formed. In due time, she was placed under preventive suspension with pay.
Ultimately, on March 16, 2000, she was served a notice of termination.
Obviously aggrieved, Malvar filed a complaint for illegal suspension and illegal
dismissal against KFPI and Bautista in the National Labor Relations Commission
(NLRC). In a decision dated April 30, 2001,1 the Labor Arbiter found and declared
her suspension and dismissal illegal, and ordered her reinstatement, and the
payment of her full backwages, inclusive of allowances and other benefits, plus
attorneys fees.
On October 22, 2001, the NLRC affirmed the decision of the Labor Arbiter but
additionally ruled that Malvar was entitled to "any and all stock options and
bonuses she was entitled to or would have been entitled to had she not been
illegally dismissed from her employment," as well as to moral and exemplary
damages.2
KFPI and Bautista sought the reconsideration of the NLRCs decision, but the
NLRC denied their motion to that effect.3
Undaunted, KFPI and Bautista assailed the adverse outcome before the CA on
certiorari (CA-G.R. SP No. 69660), contending that the NLRC thereby committed
grave abuse of discretion. However, the petition for certiorari was dismissed by
the CA on December 22, 2004, but with the CA reversing the order of
reinstatement and instead directing the payment of separation pay to Malvar, and
also reducing the amounts awarded as moral and exemplary damages.4
After the judgment in her favor became final and executory on March14, 2006,
Malvar moved for the issuance of a writ of execution.5 The Executive Labor
Arbiter then referred the case to the Research and Computation Unit (RCU) of
the NLRC for the computation of the monetary awards under the judgment. The
RCUs computation ultimately arrived at the total sum of P41,627,593.75.6
On November 9, 2006, however, Labor Arbiter Jaime M. Reyno issued an
order,7 finding that the RCUs computation lacked legal basis for including the
salary increases that the decision promulgated in CA-G.R. SP No. 69660 did not
include. Hence, Labor Arbiter Reyno reduced Malvars total monetary award
to P27,786,378.11, viz:
WHEREFORE, premises considered, in so far as the computation of
complainants other benefits and allowances are concerned, the same are in
order. However, insofar as the computation of her backwages and other
monetary benefits (separation pay, unpaid salary for January 1 to 26,
2005,holiday pay, sick leave pay, vacation leave pay, 13th month pay), the same
are hereby recomputed as follows:
1.
Separation Pay
8/1/88-1/26/05 = 16 yrs
P344,575.83 x 16 =
5,513,213.28
2.
Unpaid Salary
1/1-26/05 = 87 mos.
P344,575.83 x 87 =
3.
299,780.97
Holiday Pay
4/1/00-1/26/05 = 55 holidays
P4,134,910/12 mos/20.83 days x 55 days
909,825.77
4.
Unpaid 13th month pay for Dec 2000
344,575.83
5.
Sick Leave Pay

Year 1999 to 2004 = 6 yrs
P344,575.88/20.83 x 15 days x 6 = 1,488,805.79
Year 2005
P344,575.83/20.83 x 15/12 x 1 20,677.86
6.
1,509,483.65
Vacation Leave Pay

Year 1999 to 2004 = 6 years
P344,575.88/20.83 x 22 days x 6 = 2,183,581.83
Year 2005
P344,575.83/20.83 x 22/12 x 1 30,327.55
2,213,909.36
10,790,788.86
Backwages (from 3/7/00-4/30/01, award in LA Sytians

Decision
4,651,773.75
Allowances & Other Benefits:

Management Incentive Plan
7,355,166.58
Cash Dividend on Philip Morris Shares
2,711,646.00
Car Maintenance
381,702.92
Gas Allowance
198,000.00
Entitlement to a Company Driver
438,650.00
Rice Subsidy
Moral Damages
58,650.00
500,000.00
Exemplary Damages
200,000.00
Attorneys Fees
500,000.00
Entitlement to Philip Sch G

"Share Option Grant"
Subject to
Market Price
27,786,378.11
SO ORDERED.
Both parties appealed the computation to the NLRC, which, on April19, 2007,
rendered its decision setting aside Labor Arbiter Reynos November 9, 2006
order, and adopting the computation by the RCU.8
In its resolution dated May 31, 2007,9 the NLRC denied the respondents motion
for reconsideration.
Malvar filed a second motion for the issuance of a writ of execution to enforce the
decision of the NLRC rendered on April 19, 2007. After the writ of execution was
issued, a partial enforcement as effected by garnishing the respondents funds
deposited with Citibank worth 37,391,696.06.10
On July 27, 2007, the respondents went to the CA on certiorari (with prayer for
the issuance of a temporary restraining order (TRO) or writ of preliminary
injunction), assailing the NLRCs setting aside of the computation by Labor
Arbiter Reyno (CA-G.R. SP No. 99865). The petition mainly argued that the
NLRC had gravely abused its discretion in ruling that: (a) the inclusion of the
salary increases and other monetary benefits in the award to Malvar was final
and executory; and (b) the finality of the ruling in CA-G.R. SP No. 69660
precluded the respondents from challenging the inclusion of the salary increases
and other monetary benefits. The CA issued a TRO, enjoining the NLRC and
Malvar from implementing the NLRCs decision.11
On April 17, 2008, the CA rendered its decision in CA-G.R. SP No.
99865,12 disposing thusly:
WHEREFORE, premises considered, the herein Petition is GRANTED and the
19 April 2007 Decision of the NLRC and the 31May 2007 Resolution in NLRC
NCR 30-07-02316-00 are hereby REVERSED and SET ASIDE.
The matter of computation of monetary awards for private respondent is hereby
REMANDED to the Labor Arbiter and he is DIRECTED to recompute the
monetary award due to private respondent based on her salary at the time of her
termination, without including projected salary increases. In computing the said
benefits, the Labor Arbiter is further directed to DISREGARD monetary awards
arising from: (a) the management incentive plan and (b) the share option grant,
including cash dividends arising therefrom without prejudice to the filing of the
appropriate remedy by the private respondent in the proper forum. Private
respondents allowances for car maintenance and gasoline are likewise
DELETED unless private respondent proves, by appropriate receipts, her
entitlement thereto.
With respect to the Motion to Exclude the Undisputed Amount of P14,252,192.12
from the coverage of the Writ of Preliminary Injunction and to order its immediate
release, the same is hereby GRANTED for reasons stated therefor, which
amount shall be deducted from the amount to be given to private respondent
after proper computation.
As regards the Motions for Reconsideration of the Resolution denying the Motion
for Voluntary Inhibition and the Omnibus Motion dated 30 October 2007, both
motions are hereby DENIED for lack of merit.
SO ORDERED.13
Malvar sought reconsideration, but the CA denied her motion on July30, 2008.14
Aggrieved, Malvar appealed to the Court, assailing the CAs decision.
On December 9, 2010, while her appeal was pending in this Court, Malvar and
the respondents entered into a compromise agreement, the pertinent dispositive
portion of which is quoted as follows:
NOW, THEREFORE, for and in consideration of the covenants and
understanding between the parties herein, the parties hereto have entered into
this Agreement on the following terms and conditions:
1. Simultaneously upon execution of this Agreement in the presence of Ms.
Malvars attorney, KFPI shall pay Ms. Malvar the amount of Philippine Pesos
Forty Million (Php 40,000,000.00), which is in addition to the Philippine Pesos
Fourteen Million Two Hundred Fifty-Two Thousand One Hundred Ninety-Two and
Twelve Centavos (Php14,252,192.12) already paid to and received by Ms.
Malvar from KFPI in August2008 (both amounts constituting the "Compromise
Payment").
The Compromise Payment includes full and complete payment and settlement of
Ms. Malvars salaries and wages up to the last day of her employment,
allowances, 13th and 14th month pay, cash conversion of her accrued vacation,
sick and emergency leaves, separation pay, retirement pay and such other
benefits, entitlements, claims for stock, stock options or other forms of equity
compensation whether vested or otherwise and claims of any and all kinds
against KFPI and KFI and Altria Group, Inc., their predecessors-in-interest, their
stockholders, officers, directors, agents or successors-in-interest, affiliates and
subsidiaries, up to the last day of the aforesaid cessation of her employment.
2. In consideration of the Compromise Payment, Ms. Malvar hereby freely and
voluntarily releases and forever discharges KFPI and KFI and Altria Group, Inc.,
their predecessors or successors-in-interest, stockholders, officers, including Mr.
Bautista who was impleaded in the Labor Case as a party respondent, directors,
agents or successors-in-interest, affiliates and subsidiaries from any and all
manner of action, cause of action, sum of money, damages, claims and demands
whatsoever in law or in equity which Ms. Malvar or her heirs, successors and
assigns had, or now have against KFPI and/or KFI and/or Altria Group, Inc.,
including but not limited to, unpaid wages, salaries, separation pay, retirement
pay, holiday pay, allowances, 13th and 14th month pay, claims for stock, stock
options or other forms of equity compensation whether vested or otherwise
whether arising from her employment contract, company grant, present and
future contractual commitments, company policies or practices, or otherwise, in
connection with Ms. Malvars employment with KFPI.15
xxxx
Thereafter, Malvar filed an undated Motion to Dismiss/Withdraw Case,16 praying
that the appeal be immediately dismissed/withdrawn in view of the compromise
agreement, and that the case be considered closed and terminated.
Intervention
Before the Court could act on Malvars Motion to Dismiss/Withdraw Case, the
Court received on February 15, 2011 a so-called Motion for Intervention to
Protect Attorneys Rights17 from The Law Firm of Dasal, Llasos and Associates,
through its Of Counsel Retired Supreme Court Associate Justice Josue N.
Bellosillo18 (Intervenor), whereby the Intervenor sought, among others, that both
Malvar and KFPI be held and ordered to pay jointly and severally the Intervenors
contingent fees.
The Motion for Intervention relevantly averred:
xxxx
Lawyers, oftentimes, are caricatured as alligators or some other specie of
voracious carnivore; perceived also as leeches sucking dry the blood of their
adversaries, and even their own clients they are sworn to serve and protect! As
we lay down the facts in this case, this popular, rather unpopular, perception will
be shown wrong. This case is a reversal of this perception.
xxxx
Here, it is the lawyer who is eaten up alive by the warring but conspiring litigants
who finally settled their differences without the knowledge, much less,
participation, of Petitioners counsel that labored hard and did everything to
champion her cause.
xxxx
This Motion for Intervention will illustrate an aberration from the norm where the
lawyer ends up seeking protection from his clients and Respondents indecent
and cunning maneuverings. x x x.
xxxx
On 18 March 2008 Petitioner engaged the professional services of Intervenor x x
x on a contingency basis whereby the former agreed in writing to pay the latter
contingency fees amounting to almostP19,600,000.00 (10% of her total claim of
almost P196,000,000.00 in connection with her labor case against Respondents.
x x x.
xxxx
According to their agreement (Annex "A"), Petitioner bound herself to pay
Intervenor contingency fees as follows (a) 10% of P14,252, 192.12 upon its
collection; (b) 10% of the remaining balance ofP41,627,593.75; and (c)10% of
the value of the stock options Petitioner claims to be entitled to, or
roughly P154,000,000.00 as of April 2008.
xxxx
Intervenors efforts resulted in the award and partial release of Petitioners claim
amounting toP14,252,192.12 out of which Petitioner paid Intervenor 10%
or P1,425,219.21 as contingency fees pursuant to their engagement agreement
(Annex "A"). Copy of the check payment of Petitioner payable to Intervenors Of
Counsel is attached as Annex "C".
xxxx
On 12 September 2008 Intervenor filed an exhaustive Petition for Review with
the Supreme Court containing 70 pages, including its Annexes "A" to "R", or a
total of 419 pages against Respondents to collect on the balance of Petitioners
claims amounting to at least P27,000,000.00 andP154,000,000.00 the latter
representing the estimated value of Petitioners stock options as of April 2008.
xxxx
On 15 January 2009 Respondents filed their Comment to the Petition for Review.
xxxx
On 13 April 2009 Intervenor, in behalf of Petitioner, filed its Reply to the
Comment.
xxxx
All the pleadings in this Petition have already been submitted on time with
nothing more to be done except to await the Resolution of this Honorable Court
which, should the petition be decided in her favor, Petitioner would stand to
gain P182,000,000.00, more or less, which victory would be largely through the
efforts of Intervenor.19 (Bold emphasis supplied).
xxxx
It appears that in July 2009, to the Intervenors surprise, Malvar unceremoniously
and without any justifiable reason terminated its legal service and required it to
withdraw from the case.20 Hence, on October 5,2009, the Intervenor reluctantly
filed a Manifestation (With Motion to Withdraw as Counsel for Petitioner),21 in
which it spelled out: (a) the terms of and conditions of the Intervenors
engagement as counsel; (b) the type of legal services already rendered by the
Intervenor for Malvar; (c) the absence of any legitimate reason for the termination
of their attorney-client relationship; (d) the reluctance of the Intervenor to
withdraw as Malvars counsel; and (e) the desire of the Intervenor to assert and
claim its contingent fee notwithstanding its withdrawal as counsel. The Intervenor
prayed that the Court furnish it with copies of resolutions, decisions and other
legal papers issued or to be issued after its withdrawal as counsel of Malvar in
the interest of protecting its interest as her attorney.
The Intervenor indicated that Malvars precipitate action had baffled, shocked
and even embarrassed the Intervenor, because it had done everything legally
possible to serve and protect her interest. It added that it could not recall any
instance of conflict or misunderstanding with her, for, on the contrary, she had
even commended it for its dedication and devotion to her case through her
following letter to Justice Bellosillo, to wit:
July 16, 2008
Justice Josue Belocillo (sic)
Dear Justice,
It is almost morning of July 17 as I write this letter to you. Let me first thank you
for your continued and unrelenting lead, help and support in the case. You have
been our "rock" as far as this case is concerned. Jun and I are forever grateful to
you for all your help. I just thought Id express to you what is in the innermost of
my heart as we proceed in the case. It has been around four months now since
we met mid-March early this year.
The most important and immediate aspect of the case at this time for me is the
collection of the undisputed amount of Pesos 14million which the Court has
clearly directed and ordered the NLRC to execute. The only impending constraint
for NLRC to execute and collect this amount from the already garnished amount
of Pesos 41 million at Citibank is the MR of Kraft on the Order of the Court (CA)
to execute collection. We need to get a denial of this motion for NLRC to execute
immediately. We already obtained commitment from NLRC that all it needed to
execute collection is the denial of the MR. Jun and I applaud your initiative and
efforts to mediate with Romulo on potential settlement. However, as I expressed
to you in several instances, I have serious reservations on the willingness of
Romulo to settle within reasonable amounts specifically as it relates to the stock
options. Let us continue to pursue this route vigorously while not setting aside
our efforts to influence the CA to DENY their Motion on the Undisputed amount of
Pesos 14million.
At this point, I cannot overemphasize to you our need for funds. We have made
financial commitments that require us to raise some amount. But we can barely
meet our day to day business and personal requirements given our current
situation right now.
Thank you po for your understanding and support.22
According to the Intervenor, it was certain that the compromise agreement was
authored by the respondents to evade a possible loss of P182,000,000.00 or
more as a result of the labor litigation, but considering the Intervenors interest in
the case as well as its resolve in pursuing Malvars interest, they saw the
Intervenor as a major stumbling block to the compromise agreement that it was
then brewing with her. Obviously, the only way to remove the Intervenor was to
have her terminate its services as her legal counsel. This prompted the
Intervenor to bring the matter to the attention of the Court to enable it to recover
in full its compensation based on its written agreement with her, averring thus:
xxxx
28. Upon execution of the Compromise Agreement and pursuant thereto,
Petitioner immediately received (supposedly) from RespondentsP40,000,000.00.
But despite the settlement between the parties, Petitioner did not pay Intervenor
its just compensation as set forth in their engagement agreement; instead, she
immediately moved to Dismiss/Withdraw the Present Petition.
29. To parties minds, with the dismissal by Petitioner of Intervenor as her
counsel, both Petitioner and Respondents probably thought they would be able
to settle the case without any cost to them, with Petitioner saving on Intervenors
contingent fees while Respondents able to take advantage of the absence of
Intervenor in determining the settlement price.
30. The parties cannot be any more mistaken. Pursuant to the Second
Paragraph of Section 26, Rule 138, of the Revised Rules of Court quoted in
paragraph 3 hereof, Intervenor is still entitled to recover from Petitioner the full
compensation it deserves as stipulated in its contract.
31. All the elements for the full recovery of Intervenors compensation are
present. First, the contract between the Intervenor and Petitioner is reduced into
writing. Second, Intervenor is dismissed without justifiable cause and at the stage
of proceedings where there is nothing more to be done but to await the Decision
or Resolution of the Present Petition.23
xxxx
In support of the Motion for Intervention, the Intervenor cites the rulings in Aro v.
Naawa24 and Law Firm of Raymundo A. Armovit v. Court of
Appeals,25 particularly the following passage:
x x x. While We here reaffirm the rule that "the client has an undoubted right to
compromise a suit without the intervention of his lawyer," We hold that when
such compromise is entered into in fraud of the lawyer, with intent to deprive him
of the fees justly due him, the compromise must be subject to the said fees and
that when it is evident that the said fraud is committed in confabulation with the
adverse party who had knowledge of the lawyers contingent interest or such
interest appears of record and who would benefit under such compromise, the
better practice is to settle the matter of the attorneys fees in the same
proceeding, after hearing all the affected parties and without prejudice to the
finality of the compromise agreement in so far as it does not adversely affect the
right of the lawyer.26 x x x.
The Intervenor prays for the following reliefs:
a) Granting the Motion for Intervention to Protect Attorneys Rights in favor
of the Intervenor;
b) Directing both Petitioner and Respondents jointly and severally to pay
Intervenor its contingent fees;
c) Granting a lien upon all judgments for the payment of money and
executions issued in pursuance of such judgments; and
d) Holding in Abeyance in the meantime the Resolution of the Motion to
Dismiss/Withdraw Case filed by Petitioner and granting the Motion only
after Intervenor has been fully paid its just compensation; and
e) Other reliefs just and equitable.27
Opposing the Motion for Intervention,28 Malvar stresses that there was no truth to
the Intervenors claim to defraud it of its professional fees; that the Intervenor
lacked the legal capacity to intervene because it had ceased to exist after Atty.
Marwil N. Llasos resigned from the Intervenor and Atty. Richard B. Dasal became
barred from private practice upon his appointment as head of the Legal
Department of the Small Business Guarantee and Finance Corporation, a
government subsidiary; and that Atty. Llasos and Atty. Dasal had personally
handled her case.
Malvar adds that even assuming, arguendo, that the Intervenor still existed as a
law firm, it was still not entitled to intervene for the following reasons, namely:
firstly, it failed to attend to her multiple pleas and inquiries regarding the case, as
when communications to the Intervenor through text messages were left
unanswered; secondly, maintaining that this was a justifiable cause to dismiss its
services, the Intervenor only heeded her repeated demands to withdraw from the
case when Atty. Dasal was confronted about his appointment to the government
subsidiary; thirdly, it was misleading and grossly erroneous for the Intervenor to
claim that it had rendered to her full and satisfactory services when the truth was
that its participation was strictly limited to the preparation, finalization and
submission of the petition for review with the Supreme Court; and finally, while
the Intervenor withdrew its services on October 5, 2009, the compromise
agreement was executed with the respondents on December 9,2010 and
notarized on December 14, 2010, after more than a year and two months,
dispelling any badge of bad faith on their end.
On June 21, 2011, the respondents filed their comment to the Intervenors Motion
for Intervention.
On November 18, 2011, the Intervenor submitted its position on the respondents
comment dated June 21, 2011,29 and thereafter the respondents sent in their
reply.30
Issues
The issues for our consideration and determination are two fold, namely: (a)
whether or not Malvars motion to dismiss the petition on the ground of the
execution of the compromise agreement was proper; and (b) whether or not the
Motion for Intervention to protect attorneys rights can prosper, and, if so, how
much could it recover as attorneys fees.
Ruling of the Court
We shall decide the issues accordingly.
1.
Clients right to settle litigation
by compromise agreement, and
to terminate counsel; limitations
A compromise agreement is a contract, whereby the parties undertake reciprocal
obligations to avoid litigation, or put an end to one already commenced.31 The
client may enter into a compromise agreement with the adverse party to
terminate the litigation before a judgment is rendered therein.32 If the compromise
agreement is found to be in order and not contrary to law, morals, good customs
and public policy, its judicial approval is in order.33 A compromise agreement,
once approved by final order of the court, has the force of res judicata between
the parties and will not be disturbed except for vices of consent or forgery.34
A client has an undoubted right to settle her litigation without the intervention of
the attorney, for the former is generally conceded to have exclusive control over
the subject matter of the litigation and may at anytime, if acting in good faith,
settle and adjust the cause of action out of court before judgment, even without
the attorneys intervention.35 It is important for the client to show, however, that
the compromise agreement does not adversely affect third persons who are not
parties to the agreement.36
By the same token, a client has the absolute right to terminate the attorney-client
relationship at any time with or without cause.37 But this right of the client is not
unlimited because good faith is required in terminating the relationship. The
limitation is based on Article 19 of the Civil Code, which mandates that "every
person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith." The
right is also subject to the right of the attorney to be compensated. This is clear
from Section 26, Rule 138 of the Rules of Court, which provides:
Section 26. Change of attorneys. - An attorney may retire at anytime from any
action or special proceeding, by the written consent of his client filed in court. He
may also retire at any time from an action or special proceeding, without the
consent of his client, should the court, on notice to the client and attorney, and on
hearing, determine that he ought to be allowed to retire. In case of substitution,
the name of the attorney newly employed shall be entered on the docket of the
court in place of the former one, and written notice of the change shall be given
to the adverse party.
A client may at any time dismiss his attorney or substitute another in his place,
but if the contract between client and attorney has been reduced to writing and
the dismissal of the attorney was without justifiable cause, he shall be entitled to
recover from the client the full compensation stipulated in the contract. However,
the attorney may, in the discretion of the court, intervene in the case to protect
his rights. For the payment of his compensation the attorney shall have a lien
upon all judgments for the payment of money, and executions issued in
pursuance of such judgment, rendered in the case wherein his services had been
retained by the client. (Bold emphasis supplied)
In fine, it is basic that an attorney is entitled to have and to receive a just and
reasonable compensation for services performed at the special instance and
request of his client. The attorney who has acted in good faith and honesty in
representing and serving the interests of the client should be reasonably
compensated for his service.38
2.
Compromise agreement is to be approved

despite favorable action on the
Intervenors Motion for Intervention
On considerations of equity and fairness, the Court disapproves of the
tendencies of clients compromising their cases behind the backs of their
attorneys for the purpose of unreasonably reducing or completely setting to
naught the stipulated contingent fees.39 Thus, the Court grants the Intervenors
Motion for Intervention to Protect Attorneys Rights as a measure of protecting
the Intervenors right to its stipulated professional fees that would be denied
under the compromise agreement. The Court does so in the interest of protecting
the rights of the practicing Bar rendering professional services on contingent fee
basis.
Nonetheless, the claim for attorneys fees does not void or nullify the compromise
agreement between Malvar and the respondents. There being no obstacles to its
approval, the Court approves the compromise agreement. The Court adds,
however, that the Intervenor is not left without a remedy, for the payment of its
adequate and reasonable compensation could not be annulled by the settlement
of the litigation without its participation and conformity. It remains entitled to the
compensation, and its right is safeguarded by the Court because its members
are officers of the Court who are as entitled to judicial protection against injustice
or imposition of fraud committed by the client as much as the client is against
their abuses as her counsel. In other words, the duty of the Court is not only to
ensure that the attorney acts in a proper and lawful manner, but also to see to it
that the attorney is paid his just fees. Even if the compensation of the attorney is
dependent only on winning the litigation, the subsequent withdrawal of the case
upon the clients initiative would not deprive the attorney of the legitimate
compensation for professional services rendered.40
The basis of the intervention is the written agreement on contingent fees
contained in the engagement executed on March 19, 2008 between Malvar and
the Intervenor,41 the pertinent portion of which stipulated that the Intervenor would
"collect ten percent (10%) of the amount of PhP14,252,192.12 upon its collection
and another ten percent (10%) of the remaining balance of PhP41,627,593.75
upon collection thereof, and also ten percent (10%) of whatever is the value of
the stock option you are entitled to under the Decision." There is no question that
such arrangement was a contingent fee agreement that was valid in this
jurisdiction, provided the fees therein fixed were reasonable.42
We hold that the contingent fee of 10% of P41,627,593.75 and 10% of the value
of the stock option was reasonable. The P41,627,593.75 was already awarded to
Malvar by the NLRC but the award became the subject of the appeal in this Court
because the CA reversed the NLRC. Be that as it may, her subsequent change of
mind on the amount sought from the respondents as reflected in the compromise
agreement should not negate or bar the Intervenors recovery of the agreed
attorneys fees.
Considering that in the event of a dispute between the attorney and the client as
to the amount of fees, and the intervention of the courts is sought, the
determination requires that there be evidence to prove the amount of fees and
the extent and value of the services rendered, taking into account the facts
determinative thereof,43 the history of the Intervenors legal representation of
Malvar can provide a helpful predicate for resolving the dispute between her and
the Intervenor.
The records reveal that on March 18, 2008, Malvar engaged the professional
services of the Intervenor to represent her in the case of illegal dismissal. At that
time, the case was pending in the CA at the respondents instance after the
NLRC had set aside the RCUs computation of Malvars backwages and
monetary benefits, and had upheld the computation arrived at by the NLRC
Computation Unit. On April 17, 2008, the CA set aside the assailed resolution of
the NLRC, and remanded the case to the Labor Arbiter for the computation of her
monetary awards. It was at this juncture that the Intervenor commenced its legal
service, which included the following incidents, namely:
a) Upon the assumption of its professional duties as Malvars counsel, a
Motion for Reconsideration of the Decision of the Court of Appeals dated
April 17, 2008 consisting of thirty-eight pages was filed before the Court of
Appeals on May 6, 2008.
b) On June 2, 2009, Intervenors filed a Comment to Respondents Motion
for Partial Reconsideration, said Comment consisted 8 pages.
c) In the execution proceedings before Labor Arbiter Jaime Reyno,
Intervenor prepared and filed on Malvars behalf an "Ex-Parte Motion to
Release to Complainant the Undisputed amount of P14,252,192.12" in
NLRC NCR Case No. 30-07-02716-00.
d) On July 29, 2000, Intervenor prepared and filed before theLabor Arbiter
a Comment to Respondents Opposition to the "Ex-Parte Motion to
Release" and a "Motion Reiterating Immediate Implementation of the Writ
of Execution"
e) On August 6, 2008, Intervenor prepared and filed before the Labor

Arbiter Malvars Motion Reiterating Motion to Release the Amount
of P14,252,192.12.44
The decision promulgated on April 17, 200845 and the resolution promulgated on
July 30, 200846 by the CA prompted Malvar to appeal on August 15, 2008 to this
Court with the assistance of the Intervenor. All the subsequent pleadings,
including the reply of April 13, 2009,47 were prepared and filed in Malvars behalf
by the Intervenor.
Malvar should accept that the practice of law was not limited to the conduct of
cases or litigations in court but embraced also the preparation of pleadings and
other papers incidental to the cases or litigations as well as the management of
such actions and proceedings on behalf of the clients.48 Consequently, fairness
and justice demand that the Intervenor be accorded full recognition as her
counsel who discharged its responsibility for Malvars cause to its successful
end.
But, as earlier pointed out, although a client may dismiss her lawyer at any time,
the dismissal must be for a justifiable cause if a written contract between the
lawyer and the client exists.49
Considering the undisputed existence of the written agreement on contingent
fees, the question begging to be answered is: Was the Intervenor dismissed for a
justifiable cause?
We do not think so.
In the absence of the lawyers fault, consent or waiver, a client cannot deprive the
lawyer of his just fees already earned in the guise of a justifiable reason. Here,
Malvar not only downplayed the worth of the Intervenors legal service to her but
also attempted to camouflage her intent to defraud her lawyer by offering
excuses that were not only inconsistent with her actions but, most importantly, fell
short of being justifiable.
The letter Malvar addressed to Retired Justice Bellosillo, who represented the
Intervenor, debunked her allegations of unsatisfactory legal service because she
thereby lavishly lauded the Intervenor for its dedication and devotion to the
prosecution of her case and to the protection of her interests. Also significant was
that the attorney-client relationship between her and the Intervenor was not
severed upon Atty. Dasals appointment to public office and Atty. Llasos
resignation from the law firm. In other words, the Intervenor remained as her
counsel of record, for, as we held in Rilloraza, Africa, De Ocampo and Africa v.
Eastern Telecommunication Philippines, Inc.,50 a client who employs a law firm

engages the entire law firm; hence, the resignation, retirement or separation from
the law firm of the handling lawyer does not terminate the relationship, because
the law firm is bound to provide a replacement.
The stipulations of the written agreement between Malvar and the Intervenors,
not being contrary to law, morals, public policy, public order or good customs,
were valid and binding on her. They expressly gave rise to the right of the
Intervenor to demand compensation. In a word, she could not simply walk away
from her contractual obligations towards the Intervenor, for Article 1159 of the
Civil Code provides that obligations arising from contracts have the force of law
between the parties and should be complied with in good faith.
To be sure, the Intervenors withdrawal from the case neither cancelled nor
terminated the written agreement on the contingent attorneys fees. Nor did the
withdrawal constitute a waiver of the agreement. On the contrary, the agreement
continued between them because the Intervenors Manifestation (with Motion to
Withdraw as Counsel for Petitioner)explicitly called upon the Court to safeguard
its rights under the written agreement, to wit:
WHEREFORE, premises considered, undersigned counsel respectfully pray that
instant Motion to Withdraw as Counsel for Petitioner be granted and their
attorneys lien pursuant to the written agreement be reflected in the judgment or
decision that may be rendered hereafter conformably with par. 2, Sec. 26, Rule
138 of the Rules of Court.
Undersigned counsel further requests that they be furnished copy of the decision,
resolutions and other legal processes of this Honorable Court to enable them to
protect their interests.51
Were the respondents also liable?
The respondents would be liable if they were shown to have connived with
Malvar in the execution of the compromise agreement, with the intention of
depriving the Intervenor of its attorneys fees. Thereby, they would be solidarily
liable with her for the attorneys fees as stipulated in the written agreement under
the theory that they unfairly and unjustly interfered with the Intervenors
professional relationship with Malvar.
The respondents insist that they were not bound by the written agreement, and
should not be held liable under it.
1wphi1
We disagree with the respondents insistence. The respondents were complicit in

Malvars move to deprive the Intervenor of its duly earned contingent fees.
First of all, the unusual timing of Malvars letter terminating the Intervenors legal
representation of her, of her Motion to Dismiss/Withdraw Case, and of the
execution of compromise agreement manifested her desire to evade her legal
obligation to pay to the Intervenor its attorneys fees for the legal services
rendered. The objective of her withdrawal of the case was to release the
respondents from all her claims and causes of action in consideration of the
settlement in the stated amount of P40,000.000.00, a sum that was measly
compared to what she was legally entitled to, which, to begin with, already
included the P41,627,593.75 and the value of the stock option already awarded
to her. In other words, she thereby waived more than what she was lawfully
expected to receive from the respondents.
Secondly, the respondents suddenly turned around from their strong stance of
berating her demand as offensive to all precepts of justice and fair play and as a
form of unjust enrichment for her to a surprisingly generous surrender to her
demand, allowing to her through their compromise agreement the additional
amount ofP40,000,000.00 on top of theP14,252,192.12 already received by her
in August 2008. The softening unavoidably gives the impression that they were
now categorically conceding that Malvar deserved much more. Under those
circumstances, it is plausible to conclude that her termination of the Intervenors
services was instigated by their prodding in order to remove the Intervenor from
the picture for being a solid obstruction to the settlement for a much lower
liability, and thereby save for themselves and for her some more amount.
Thirdly, the compromise agreement was silent on the Intervenors contingent fee,
indicating that the objective of the compromise agreement was to secure a huge
discount from its liability towards Malvar.
Finally, contrary to the stipulation in the compromise agreement, only Malvar,
minus the respondents, filed the Motion to Dismiss/Withdraw Case.
At this juncture, the Court notes that the compromise agreement would have
Malvar waive even the substantial stock options already awarded by the NLRCs
decision,52 which ordered the respondents to pay to her, among others, the value
of the stock options and all other bonuses she was entitled to or would have
been entitled to had she not been illegally dismissed from her employment. This
ruling was affirmed by the CA.53 But the waiver could not negate the Intervenors
right to 10% of the value of the stock options she was legally entitled to under the
decisions of the NLRC and the CA, for that right was expressly stated in the
written agreement between her and the Intervenor. Thus, the Intervenor should
be declared entitled to recover full compensation in accordance with the written

agreement because it did not assent to the waiver of the stock options, and did
not waive its right to that part of its compensation.
These circumstances show that Malvar and the respondents needed an escape
from greater liability towards the Intervenor, and from the possible obstacle to
their plan to settle to pay. It cannot be simply assumed that only Malvar would be
liable towards the Intervenor at that point, considering that the Intervenor, had it
joined the negotiations as her lawyer, would have tenaciously fought all the way
for her to receive literally everything that she was entitled to, especially the
benefits from the stock option. Her rush to settle because of her financial
concerns could have led her to accept the respondents offer, which offer could
be further reduced by the Intervenors expected demand for compensation.
Thereby, she and the respondents became joint tort-feasors who acted adversely
against the interests of the Intervenor. Joint tort-feasors are those who command,
instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the
commission of a tort, or who approve of it after it is done, if done for their
benefit.54
They are also referred to as those who act together in committing wrong or
whose acts, if independent of each other, unite in causing a single injury.55 Under
Article 2194 of the Civil Code, joint tort-feasors are solidarily liable for the
resulting damage. As regards the extent of their respective liabilities, the Court
said in Far Eastern Shipping Company v. Court of Appeals:56
x x x. Where several causes producing an injury are concurrent and each is an
efficient cause without which the injury would not have happened, the injury may
be attributed to all or any of the causes and recovery may be had against any or
all of the responsible persons although under the circumstances of the case, it
may appear that one of them was more culpable, and that the duty owed by them
to the injured person was not same. No actors negligence ceases to be a
proximate cause merely because it does not exceed the negligence of other acts.
Each wrongdoer is responsible for the entire result and is liable as though his
acts were the sole cause of the injury.
There is no contribution between joint tort-feasors whose liability is solidary since
both of them are liable for the total damage. Where the concurrent or successive
negligent acts or omissions of two or more persons, although acting
independently, are in combination the direct and proximate cause of a single
injury to a third person, it is impossible to determine in what proportion each
contributed to the injury and either of them is responsible for the whole injury. x x
x
Joint tort-feasors are each liable as principals, to the same extent and in the
same manner as if they had performed the wrongful act themselves. It is likewise
not an excuse for any of the joint tort-feasors that individual participation in the
tort was insignificant as compared to that of the other.57 To stress, joint tortfeasors are not liable pro rata. The damages cannot be apportioned among
them, except by themselves. They cannot insist upon an apportionment, for the
purpose of each paying an aliquot part. They are jointly and severally liable for
the whole amount.58 Thus, as joint tort-feasors, Malvar and the respondents
should be held solidarily liable to the Intervenor. There is no way of appreciating
these circumstances except in this light.
That the value of the stock options that Malvar waived under the compromise
agreement has not been fixed as yet is no hindrance to the implementation of
this decision in favor of the Intervenor. The valuation could be reliably made at a
subsequent time from the finality of this adjudication. It is enough for the Court to
hold the respondents and Malvar solidarily liable for the 10% of that value of the
stock options.
As a final word, it is necessary to state that no court can shirk from enforcing the
contractual stipulations in the manner they have agreed upon and written. As a
rule, the courts, whether trial or appellate, have no power to make or modify
contracts between the parties. Nor can the courts save the parties from
disadvantageous provisions.59 The same precepts hold sway when it comes to
enforcing fee arrangements entered into in writing between clients and attorneys.
In the exercise of their supervisory authority over attorneys as officers of the
Court, the courts are bound to respect and protect the attorneys lien as a
necessary means to preserve the decorum and respectability of the Law
Profession.60 Hence, the Court must thwart any and every effort of clients already
served by their attorneys worthy services to deprive them of their hard-earned
compensation. Truly, the duty of the courts is not only to see to it that attorneys
act in a proper and lawful manner, but also to see to it that attorneys are paid
their just and lawful fees.61
WHEREFORE, the Court APPROVES the compromise agreement; GRANTS the
Motion for Intervention to Protect Attorney's Rights; and ORDERS Czarina T.
Malvar and respondents Kraft Food Philippines Inc. and Kraft Foods International
to jointly and severally pay to Intervenor Law Firm, represented by Retired
Associate Justice Josue N. Bellosillo, its stipulated contingent fees of 10%
of P41,627,593.75, and the further sum equivalent to 10% of the value of the
stock option. No pronouncement on costs of suit.
G.R. No. 169940
September 14, 2009
UNIVERSITY OF SANTO TOMAS, Petitioner,

vs.
SAMAHANG MANGGAGAWA NG UST (SM-UST), Respondent.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review on certiorari is the January 31, 2005
Decision1 of the Court of Appeals in CA-G.R. SP No. 72965, which affirmed the
May 31, 2002 Order of the Secretary of the Department of Labor and
Employment (DOLE) directing the parties to execute a Collective Bargaining
Agreement incorporating the terms in said Order with modification that the
signing bonus is increased to P18,000.00. Also assailed is the September 23,
2005 Resolution2 denying the motion for reconsideration.
Respondent Samahang Manggagawa ng U.S.T. (SM-UST) was the authorized
bargaining agent of the non-academic/non-teaching rank-and-file daily- and
monthly-paid employees (numbering about 619) of petitioner, the Pontifical and
Royal University of Santo Tomas, The Catholic University of the Philippines (or
UST), a private university in the City of Manila run by the Order of Preachers. In
October 2001, during formal negotiations for a new collective bargaining
agreement (CBA) for the academic year 2001 through 2006, petitioner submitted
its "2001-2006 CBA Proposals" which, among others, contained the following
economic provisions:
A. ACADEMIC YEAR 2001-2002
1. Salary increase of P800.00 per month
2. Signing bonus of P10,000.00
3. Additional Christmas bonus of P2,000.00
B. ACADEMIC YEAR 2002-2003
1. Salary increase of P1,500.00 per month
3. P6,000,000.00 for salary restructuring
C. ACADEMIC YEAR 2003-2004

In November 2001, the parties agreed in principle on all non-economic provisions
of the proposed CBA, except those pertaining to Agency Contract or
contractualization (Art. III, Sec. 3 of the proposed CBA), Union Leave of the SMUST President (No. 4 of the Addendum to the proposed CBA), and hiring
preference.
In December 2001, petitioner submitted its final offer on the economic provisions,
thus:
A. ACADEMIC YEAR 2001-2002
2. Signing bonus of P10,000.00
B. ACADEMIC YEAR 2002-2003
3. P6,190,000.00 to be distributed in the form of salary restructuring
C. ACADEMIC YEAR 2003-2004
On the other hand, respondent reduced its demands for the first year from
P8,000.00 monthly salary increase per employee to P7,000.00, and from
P75,000.00 signing bonus to P60,000.00 for each employee, but petitioner
insisted on its final offer. As a result, respondent declared a deadlock and filed a
notice of strike with the National Conciliation and Mediation Board -National
Capital Region (NCMB-NCR).
Conciliation and mediation proved to be futile, such that in January 2002,
majority of respondents members voted to stage a strike. However, the DOLE
Secretary timely assumed jurisdiction over the dispute, and the parties were
summoned and heard on their respective claims, and were required to submit
their respective position papers.
On May 31, 2002, the DOLE Secretary issued an Order,3 the pertinent portions of
which read, as follows:
x x x In arguing on the reasonableness of its demands, it cites the income of the
school from tuition fee increases and the allocation of this amount to the faculty
and non-teaching employees of the School x x x. According to the Union, the
Schools estimate of the tuition fee increase for the school year 2003-2004 at
P76,410,000.00 is erroneous. The Union argues that the total income of the
School from tuition fee increases for school year 2003-2004 is P101,000,000.00
more or less, or a net of P98,252,187.36, after deducting adjustments for
additional charges, allowances and discounts. This is based on the computation
of the Schools Assistant Chief Accountant x x x.
xxxx
The Union feels that the members of the bargaining unit are the least favored. On
the wage increases alone, the Union points out that a comparison of the average
monthly salary of the non-academic personnel from school year 1995-1996 up to
school year 1999-2000 shows a declining relative percentage. For this period,
the bargaining unit enjoyed an average monthly salary increase of 14.234%, the
lowest being 8.9% in school year 1998-1999 and the highest being 15.38% in
school year 1995-1996. The Schools offer for this CBA cycle translates to an
increase of only 8.23%, specified as follows: (1) 5.69% increase in school year
2000-2001 (P1,000.00); (2) 9.15% increase in school year 2001-2002
(P1,700.00); and (3) 9.86% increase in 2002-2003 (P2,000.00).
The Union also submits a comparative chart of the allocation to non-academic
personnel of the 70% increase in tuition fees from school year 1996-1997 to
1999-2000 x x x. The average percentage allocation to non-academic personnel
during this period is 32.8% of the total 70% of total tuition fee increases, the
lowest being 20.83% for the school year 1999-2000 and the highest being
43.11% of the total allocation in 1997-1998. Using P101,036,330.37 as the
estimated increase in tuition fee, 70% of this amount, net of adjustment, is
P68,775,831.15 x x x. The Union argues that it is entitled to at least the average
percentage of allocation to it for the past four (4) school years which is at
32.85%, or P22,592,860.53 of the total allocation of P68,775,831.15.
It maintains, however, that it is entitled to more than the average percentage of
its allocation of the total 70% because it is School practice to allocate more than
70% of the total tuition fee increases for the salaries and benefits of School
employees. Comparing the employees share in the tuition fee increases from
school year 1996-1997 to 1999-2000, the School allocated an average
percentage of 76.75% for the benefits and salaries of its personnel, or from a low
of 72% in 1998-1999 to a high of 84.4% in 1996-1997 x x x. If the average is
applied this year, the Union argues that the available amount is P75,407,786.29.
Because of this practice, the Union maintains that the School is already estopped
from arguing that the allocation for employee wages and benefits should not
exceed 70% of tuition fee increases.
Aside from this amount, the Union maintains that it is entitled to an additional
P15,475,000.00, sourced from other income, for the signing bonus or one-time
grant of P25,000.00 per member x x x. The Union alleges that it is school
practice to appropriate other funds for the wages and benefits of its employees.
For the school year 1996-1997, the School used funds from other sources to
fund the P2,000,000.00 hospitalization fund and 50% of the signing bonus for the
academic personnel; in 1997-1998 and 1998-1999, it used additional funds for
the P1,000,000.00 hospitalization fund of the academic personnel; and in 19992000, it used other funds to finance the one-time grant of P10,000.00 each to the
non-academic personnel and additional P4,000,000.00 for the hospitalization
fund of the academic employees or a total of P17,592,500.00 for the past four (4)
academic years x x x.
The School cannot claim that the funds are insufficient to cover the expenses for
the CBA because for the fiscal year 2000-2001 alone, the accumulated excess of
revenues over expenses at the end of the year totaled P148,881,678.00 x x x.
The Statement of Revenues and Expenses from School Operations collated from
the audited Financial Statements of the School for the school years 1996-1997
up to 2000-2001 shows that except for school years 1996-1997 and 2000-2001,
the School posted a net income from school operations. Its average annual net
income from school operations alone is P7,956,187.00 and the net loss in 20002001 was a result of the revaluation of the Main Building as part of the assets
from its fully depreciated value so that a new depreciation cost was reported and
charged to general expenses.
From the foregoing arguments, the Union demands that an amount should be
allocated to it annually to finance its demands as follows:
1st Year P38,067,860.00 distributed as follows: P22,592,860.53 (share
from tuition fee increases) for the economic benefits with sliding effect on
the succeeding years; plus P15,475,000.00 for the one-time signing bonus
of P25,000.00 for each employee sourced from other funds.
2nd Year P33,568,970.00 to apply to its demand for salary increase,

Christmas bonus, rice subsidy and clothing/uniform allowance.
3rd Year P46,653,295.37 to apply to its demand for salary increase,
Christmas bonus, medicine allowance, mid-year bonus allowance and
meal allowance.
Based on the Unions computation, its demands will cost the School a total of
P133,765,125.37 for the entire three (3) year period.
xxxx
Given all the foregoing, we cannot follow the Unions formula and in effect
disregard the Schools two other bargaining units; to do so is a distortion of
economic reality that will not bring about long term industrial peace. We cannot
simply adopt the Schools proposal in light of the parties bargaining history,
particularly the pattern of increases in the last cycle. Considering all these, we
believe the following to be a fair and reasonable resolution of the wage issue.
1st Year P1,000.00/month
2nd Year P2,000.00/month
3rd Year P2,200.00/month
These increases, at a three-year total of P68,337,600, are less than the three (3)year increases in the last CBA cycle to accommodate the Schools proven lack of
capacity to afford a higher increase, but are still substantial enough to
accommodate the workers needs while taking into account the symmetry that
must be maintained with the wages of the other bargaining units. On a straight
line aggregate of P5,200.00, the non-academic personnel will receive P498.48
less than an Instructor I (member of the faculty union) who received an
aggregate of P5,698.48, thus maintaining the gap between the teaching and nonteaching personnel. The salary difference will as well be maintained over the
three (3)-year period of the CBA. An RFI employee (member of the unions
bargaining unit) will receive a monthly salary of P21,695.95 while an Instructor I
(faculty union member) will have a salary of P22,948.00; while an RF5-5/A
(member of the unions bargaining unit) will receive a salary of P23,462.97
compared to an Asst. Prof. 1 (faculty) who will receive P29,250.96. From a total
cost of salary increases for the first year at P7,428,000, these costs will escalate
to P22,284,000 in the second year, and to P38,625,000 at the third year. Given
these figures, the amounts available for distribution and the member of groups
sharing these amounts, these increases are by no means minimal.
Signing Bonus
A review of the past bargaining history of the parties shows that the School as a
matter of course grants a signing bonus. This ranged from P8,000.00 during the
first three (3) years of the last CBA to P10,000.00 during the remaining two (2)
years of the re-negotiated term. In this instance, the Schools offer of P10,000.00
signing bonus is already reasonable considering that the School could have
taken the position that no signing bonus is due on compulsory arbitration in line
with the ruling in Meralco v. Quisumbing et al., G.R. No. 127598, 27 January
1999.
Christmas Bonus
We note that the members of the bargaining unit receive a P6,500.00 Christmas
bonus. Considering this current level, we believe that the Schools offer of
P2,000.00 for each of the next three (3) years of the CBA is already reasonable.
Under this grant, the workers Christmas bonus will stand at a total of P12,500 at
the end of the third year.
Hospitalization Benefit
We believe that the current practice is already reasonable and should be
maintained.
Meal Allowance
The Union failed to show any justification for its demand on this item, hence its
demand on the increase of meal allowance is denied.
Rice Allowance
We believe an additional 2 sacks of rice on top of the existing 6 sacks of rice is
reasonable and is hereby granted, effective on the second year.
Medical Allowance
In the absence of any clear justification for an improvement of this benefit, we
find the existing practice to be already reasonable and should be maintained.
Uniform/Clothing
The Union has not established why the School should grant the benefit; hence
this demand is denied.
Mid-year Bonus
The P3,000.00 bonus is already fair and should be maintained.
Hazard Pay
There is no basis to increase this benefit, the current level being fair and
reasonable.
Educational Benefit
The existing provision is already generous and should be maintained.
Retirement Plan
We are convinced that the 100% of basic salary per year of service is already
reasonable and should be maintained.
Hiring Preference
Based on the Minutes of Meeting on 18 October 2001 and 8 November 2001, the
parties agreed to retain the existing provision; hence, our ruling on this matter is
no longer called for.
Contractualization
The Unions proposed amendments are legal prohibitions which need not be
incorporated in the CBA. The Union has alternative remedies if it desires to assail
the Schools contracts with agencies.
Full-time Union Leave of Union President
The Union failed to provide convincing reasons why this demand should be
favorably granted; hence, the same is denied.
Other Demands
All other demands not included in the defined deadlock issues are deemed
abandoned, except for existing benefits which the School shall continue to grant
at their current levels consistent with the principle of non-diminution of benefits.
WHEREFORE, premises considered, the parties are hereby directed to execute
within ten (10) days from receipt of this Order a Collective Bargaining Agreement
incorporating the terms and conditions of this Order as well as other agreements
made in the course of negotiations and on conciliation.4
Respondent filed a motion for reconsideration but it was denied by the Secretary
of Labor. Thus, respondent filed an original petition for certiorari with the Court of
Appeals, claiming that the awards made by the DOLE Secretary are not
supported by the evidence on record and are contrary to law and jurisprudence.
On January 31, 2005, the appellate court rendered the assailed Decision, the
dispositive portion of which reads, as follows:
WHEREFORE, premises considered, the petition is partially GRANTED. The
assailed Order of May 31, 2002 of Secretary Patricia Sto. Tomas is hereby
AFFIRMED with the modification that the P10,000.00 signing bonus awarded is
increased to P18,000.00.
SO ORDERED.5
In arriving at the foregoing disposition, the appellate court noted that:
Based on UST Chief Accountant Antonio J. Dayags Certification, the tuition fee
increment for the SY 2001-2002 amounted to P101,036,330.37. From this
amount, the tuition fee adjustment amounting to P2,785,143.00 was deducted
leaving a net tuition fee increment of P98,251,189.36.
Pursuant to Section 5 (2) RA 6728, seventy percent (70%) of P98,251,187.36 or
P68,775,831.15 is the amount UST has to allocate for salaries, wages,
allowances and other benefits of its 2,290 employees, categorized as follows:
619 non-teaching personnel represented by herein petitioner SM-UST; 1,452
faculty members represented by UST-Faculty Union (UST-FU) and 219
academic/administrative officials. The last group of employees is excluded from
the coverage of the two bargaining units.
Public respondent, taking into consideration the bargaining history of the parties,
the needs of the members of Union in relation to the capability of its employer,
UST, to grant its demands, the impact of the award on the UST-Faculty Union
members (UST-FU), and how the present salary and benefits of the nonacademic personnel compare with the compensation of the employees of other
learning institutions, arrived at the following "fair and reasonable" resolution to
the wage issue:
1st year P1,000.00/month
2nd year P2,000.00/month

3rd year P2,000.00/month
Based on public respondents arbitral award for the first year (AY 2001-2002), We
determine the allocation that SM-UST would get from the 70% of the tuition fee
increment for AY 2001-2002 by approximating USTs expense on the increment
of salaries/wages, allowances and benefits of the non-teaching personnel:
1.
Increment on Salaries/Wages
+ 13th month pay
(P1,000 x 13 months x 619 employees)
2.
Signing Bonus
(P10,000/employee)
6,190,000.00
3.
P2,000 Christmas Bonus
1,238,000.00
Total
P 8,047,000.00
P15,475,000.00
=============
The amount of P15,475,000.00 represents 22.50% of the allocated

P68,775,831.00 (70% of the tuition fee increment for AY 2001-2002). UST has
allocated P45 million or 65.43% of the P68,775,831 to UST-Faculty Union.
Is the distribution equitable? If the share from the allocated P68,775,831.00 for
each bargaining unit would be based on the unions membership, then the
distribution appears fair and reasonable:
xxxx
Academic
1,452 employees
awarded P45 million
Non-academic
619 employees
awarded P15.475 million
Academic &
Administrative
219 employees
awarded P8 million
Total awarded
P68,475,000.00
The difference between P68,775,831 (70% of incremental tuition fee proceeds)

and P68,475,000 (total actual allocation or award to the two bargaining units and
the school officials) is P300,831.00, which is only .437% of the 70% mandatory
allocation (P68,775,831.00).
The Supreme Court in the case of Cebu Institute of Medicine v. Cebu Institute of
Medicine Employees Union National Federation of Labor held that SSS,
Medicare and Pag-Ibig employers share may be charged against the "seventy
percent (70%) incremental tuition fee increase (sic)" as they are, after all, for the
benefit of the Universitys teaching and non-teaching personnel. The High Court
further ruled that "the private educational institution concerned has the discretion
on the disposition of the seventy percent (70%) incremental tuition fee increase
(sic). It enjoys the privilege of determining how much increase in salaries to grant
and the kind and amount of allowances and other benefits to give. The only
precondition is that seventy percent (70%) of the incremental tuition fee increase
(sic) goes to the payment of salaries, wages, allowances and other benefits of
teaching and non-teaching personnel."
a1f
In the (sic) light of the foregoing jurisprudence, the University, in order to comply
with R.A. 6728, must fully allocate the 70% of the tuition fee increases to
salaries, wages, allowances and other benefits of the teaching and non-teaching
personnel. The amount of P300,831.00 must therefore be allocated either as
salary increment or fringe benefits of the non-teaching personnel.
We noted that USTs non-teaching employees enjoy several fringe benefits.
We listed them down and estimated their costs for AY 2001-2002:
1. P3,000.00 mid-year bonus
P1,857,000.00
2. 6 sacks of rice/employee
@ P1,000.00/sack
3,714,000.00
3. Hospitalization benefit
2,476,000.00
4. Meal allowance
(P600/month/employee)
4,456,800.00
5. Hazard pay (P200/month for

198 entitled employees)
8,430,780.00
6. Medicine Allowance
(P1,000/month/employee)
7,428,000.00
7. SSS (P910.00 employers

share per employee)
6,759,480.00
8. Pag-Ibig (2% of the basic pay)
742,800.00
20,407,000.00
9. Phil Health (P125.00/employee)
928,500.00
P28,837,780.00
=============
Total
The allocation for salary increases, 13th month pay, signing bonus and
Christmas bonus for USTs teaching and non-teaching employees, as well as the
school officials, amount to P68.475 million. This represents almost 70% of the
UST incremental tuition fee proceeds for AY 2001-2002. Considering the fringe
benefits being extended to UST employees, it is safe to assume that the funds
for such benefits need to be sourced from the Universitys other revenues. We
looked into USTs financial statements to determine its financial standing. The
financial statements duly audited by independent and credible external auditors
constitute the normal method of proof of profit and loss performance of a
company. We examined UST audited financial statements from 1997 to 2001 and
found that the Universitys "other incomes" come from parking fees, rent income
and interest income. It, likewise, derives income from school operations:
1999
Income from
Operations
2000
2001
P19,874,937.00
(24,222,602)
(40,905,598)
Other Income
85,995,039.00
77,335,032.00
78,358,303
Excess of Revenues
Over
Expenses Before
Income Tax
96,869,976.00
53,112,480.00
(29,726,651)
2,122,518.00
2,602,305.00
94,747,458.00
50,510,175.00
(32,115,272)
P180,996,950.00
P130,486,775.00
P148,881,678
Provision for
Income Tax
Excess of Revenues
Over Expenses
ACCUMULATED
EXCESS OF
REVENUES OVER
EXPENSES AT
END OF YEAR
Thus, if We charge the employees other benefits from the

accumulated excess of revenues, We will come up with the
following:
Accumulated Excess of Revenues

Over Expenses (2001)
P148,881,678.00
Less:
Other Benefits of Non-Teaching Personnel
Balance
28,837,780.00
P120,043,898.00
Even if the other benefits of the faculty members were to be charged from the
remaining balance of the Accumulated Excess of Revenues Over Expenses,
there would still be sufficient amount to fund the other benefits of the nonteaching personnel.
xxxx
However, while We subscribe to USTs position on "salary distortion", Our earlier
findings support the petitioners contention that the UST has substantial
accumulated income and thus, We deem it proper to award an increase, not in
salary, to prevent any salary distortion, but in signing bonus. The arbitral award of
P10,000 signing bonus per employee awarded by public respondent is hereby
increased to P18,000.00.
We are well aware of the need for the University to maintain a sound and viable
financial condition in the light of the decreasing number of its enrollees and the
increasing costs of construction of buildings and modernization of equipment,
libraries, laboratories and other similar facilities. To balance this concern of the
University with the need of its non-academic employees, the additional award,
which We deem reasonable, and to be funded from the Universitys accumulated
income, is thus limited to the increase in signing bonus.6
Petitioner filed a motion for reconsideration, which the appellate court denied in
its September 23, 2005 Resolution. Hence, the instant petition which raises the
following issues:
I.
THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF
SUBSTANCE WHEN IT RULED THAT THE MEMBERS OF PRIVATE
RESPONDENT DID NOT VOLUNTARILY AND KNOWINGLY ACCEPT THE
ARBITRAL AWARD OF THE SECRETARY OF DOLE.
II.

SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT
INCREASED THE SIGNING BONUS AWARDED BY THE SECRETARY OF
DOLE TO EACH OF THE MEMBERS OF PRIVATE RESPONDENT FROM
P10,000.00 TO P18,000.00.
III.
THE HONORABLE COURT OF APPEALS HAS COMPLETELY IGNORED THE
CLEAR MANDATE AND INTENTION OF R.A. 6728 OTHERWISE KNOWN AS
THE GOVERNMENT ASSISTANCE TO STUDENTS AND TEACHERS IN
PRIVATE EDUCATION ACT.
IV.
RULED THAT THE FRINGE BENEFITS BEING ENJOYED BY THE ACADEMIC
AND NON-ACADEMIC EMPLOYEES OF PETITIONER WERE SOURCED OUT
FROM ITS OTHER INCOME.
V.
IGNORED THE TIME HONORED PRINCIPLES GOVERNING PETITION FOR
CERTIORARI INVOLVING LABOR CASES.7
Petitioner alleges that, as of December 11, 2002, 526 regular non-academic
employees out of a total of 619 respondents members have decided to
unconditionally abide by the May 31, 2002 Order of the DOLE Secretary.8 A letter
signed by the 526 non-academic employees allegedly reads:
December 3, 2002
TO: REV. FR. TAMERLANE R. LANA, O.P.
Rector
REV. FR. JUAN V. PONCE, O.P.
Vice-Rector
KAMI NA NAKALAGDA SA IBABA AY NAGPAPAABOT NG AMING TAHASANG
PAGTANGGAP SA AWARD NG SECRETARY OF LABOR SA AMING (CBA)
DEADLOCK CASE.
SANA PO AY MA-RELEASE ANG AMING MGA WAGE ADJUSTMENTS AT IBA

PANG BENEPISYO BAGO MAG DECEMBER 15, 2002.
x x x x9
Petitioner claims that it began paying the wage adjustment and other benefits
pursuant to the May 31, 2002 Order of the DOLE Secretary; and that to date, 572
out of the 619 members of respondent have been paid. It now argues that by
their acceptance of the award and the resulting payments made to them, the said
union members have ratified its offer and thus rendered moot the case before the
Court of Appeals (CA-G.R. SP No. 72965).
Petitioner also argues that the Court of Appeals erred in ordering it to source part
of its judgment award from the schools other income, claiming that Republic Act
672810 does not compel or require schools to allocate more than 70% of the
incremental tuition fee increase for the salaries and benefits of its employees.
Citing an authority in education law, it stresses that
Clearly, only 70% may be used for the "payment of salaries, wages, allowances
and other benefits of teaching and non-teaching personnel," since 20% "shall go
to the improvement or modernization of buildings, equipment, libraries,
laboratories, gymnasia and similar facilities and the payment of other costs of
operation."
A school does not exist solely for the benefit of its teachers and non-teaching
personnel. A school is principally established to deliver quality education at all
levels, as the Constitution requires. Therefore, any tuition fee increase authorized
by either the DepEd Secretary, the CHED or the Director General of the TESDA
for private schools should not solely benefit the teaching and non-teaching
personnel but should rather be used for the welfare of the entire school
community, particularly the students. The students are entitled as a matter of
right to the improvement and modernization of the school "buildings, equipment,"
as this is fundamental to the maintenance or improvement of the quality of
education they receive.
Thus, if schools use any part of the 20% reserved for the upgrading of school
facilities to supplement the salaries of their academic and non-academic
personnel, they would not only be violating the students constitutional right to
quality education through "improvement and modernization" but also committing
a serious infraction of the mandatory provisions of RA 6728.
The law is silent, however, on the remaining ten percent of the tuition fee
increase. The DepEd has referred to it as the "return of investment" for
proprietary schools and the "free portion" for non-stock, non-profit educational
institutions. This ten percent (10%) is the only portion of the tuition fee increase
which schools may use as they wish.11
Petitioner thus concedes liability only up to P300,831.00, which is the remaining
balance of the undistributed amount of P68,775,831.00, which represents 70% of
the incremental tuition fee proceeds for the period in question.
Petitioner contends further that the appellate courts award of additional signing
bonus (from P10,000.00 to P18,000.00) is contrary to the nature and principle
behind the grant of such benefit, which is one given as a matter of discretion and
cannot be demanded by right,12 a consideration paid for the goodwill that existed
in the negotiations, which culminate in the signing of a CBA.13 Petitioner claims
that since this condition is absent in the parties case, it was erroneous to have
rewarded respondent with an increased signing bonus.
Finally, petitioner endorses the original award of the DOLE Secretary, calling her
disposition of the case "fair and equitable"14 and deserving of our attention, in
light of the principle that
The conclusions reached by public respondent (Secretary of Labor) in the
discharge of her statutory duty as compulsory arbitrator, demand the high respect
of this Court. The study and settlement of these disputes fall within public
respondent's distinct administrative expertise. She is especially trained for this
delicate task, and she has within her cognizance such data and information as
will assist her in striking the equitable balance between the needs of
management, labor, and the public. Unless there is clear showing of grave abuse
of discretion, this Court cannot and will not interfere with the labor expertise of
public respondent x x x.15
On the other hand, respondent seeks to sustain the appellate courts disposition,
echoing its ruling that even though majority of the non-teaching employees
agreed to petitioners offer and accepted payment thereupon, they are not
precluded from receiving additional benefits that the courts may award later on,
bearing in mind that
the employer and the employee do not stand on the same footing. Considering
the countrys prevailing economic conditions, the employee oftentimes finds
himself in no position to resist money proffered, thus, his case becomes one of
adherence and not of choice. This being the case, they are deemed not to have
waived any of their rights.16
As regards petitioners assertion that the funds to cover for the cost of the other
benefits awarded by the DOLE Secretary may not be sourced from its other
income pursuant to R.A. 6728 as these benefits should only be paid out from the
70% tuition fee increment, respondent argues that R.A. 6728
does not provide that the increase or improvement of the salaries and fringe
benefits of the employees should be exclusively funded from the income of the
University which is derived from the increase in tuition fees. In fact, the statute
has no application with respect to the manner of disposition of the other incomes
(as distinguished from income derived from tuition fee increases) of the
University, nor does it preclude or exempt the latter from using its other income
or part thereof to fund the cost of increases or improvements in the salaries and
benefits of its employees. x x x
15. Contrary to the assertion of Petitioner, it is very clear that the funds used by
the University to cover the cost of other fringe benefits (under the existing CBA)
granted to the non-academic employees for AY 2001-2002 in the amount of
P28,837,780.00 as observed by the Court of Appeals, came from the other
income of the University and not from the share of the said employees in the
income derived from the tuition fee increases during the same period. Logically,
the grant of the said fringe benefits could not have come from the amount of
P15,475,000.00 which was already allocated by the University to cover the total
cost of the increases in the salaries, grant of signing bonus, and increase in the
Christmas bonus to the non-academic employees for AY 2001-2002.17
On the appellate courts award of additional signing bonus, respondent argues
that since no strike or any untoward incident occurred, goodwill between the
parties remained, which entitles respondents members to receive their signing
bonus. Besides, respondent asserts that since petitioner did not appeal the
DOLE Secretarys award, it may not now argue against its grant, the issue
remaining being the propriety of the awarded amount; that is, whether or not it
was proper for the appellate court to have raised it from P10,000.00 to
P18,000.00.
We resolve to PARTIALLY GRANT the petition.
To put matters in their proper context, we must first simplify the facts.
Although the parties were negotiating on the CBA for academic years 2001
through 2006 (2001-2006 CBA Proposals), we are here concerned only with the
economic provisions for the academic year (AY) 2001-2002, specifically the
appellate courts increased award of signing bonus, from P10,000.00 as originally
granted by the DOLE Secretary, to P18,000.00; the parties do not appear to

question any other disposition made by the DOLE Secretary.
Thus, it has been determined that from the tuition fees for the academic year in
question, petitioner earned an increment of P101,036,330.37. Under R.A. 6728,
70% of that amount or the net18 amount of P68,775,831.15 should be allotted
for payment of salaries, wages, allowances and other benefits of teaching and
non-teaching personnel except administrators who are principal stockholders of
the school.
Of this amount (P68,775,831.15), an aggregate of P15,475,000.00 (or 22.5 %)
was allocated to the universitys non-teaching or non-academic personnel, by
way of the following:
Increment on Salaries/Wages
plus 13th month pay
(P1,000 x 13 months x 619
non-academic personnel)
P 8,047,000.00
Signing Bonus
(P10,000 per employee)
6,190,000.00
P2,000 Christmas Bonus
1,238,000.00
TOTAL
15,475,000.00
On the other hand, the amount of P45 million (or 65.43% of P68,775,831.15) was
allocated to the teaching personnel.
After distribution of the respective shares of the teaching and non-teaching
personnel, there remained a balance of P300,831.00 from the P68,775,831.15.
In addition to the salary increase, signing and Christmas bonuses, the Court of
Appeals extended to respondents members the following fringe benefits for AY
2001-2002, which benefits petitioner has been giving its non-teaching employees
in the past, and which are included in the DOLE Secretarys award an award
which petitioner prays for this Court to affirm in toto:
1.
P3,000.00 mid-year bonus
2.
6 sacks of rice/employee
@ P1,000/sack
P1,857,000.00
3,714,000.00
3.
Hospitalization benefit
2,476,000.00
4.
Meal allowance
(P600/month/employee)
4,456,800.00
5.
Hazard pay (P200/month for

198 entitled employees)
8,430,780.00
6.
Medicine Allowance
(P1,000/month/employee)
7,428,000.00
7.
SSS (P910.00 employers

share per employee)
8.
Pag-Ibig (2% of the basic pay)
742,800.00
9.
Philhealth (P125.00/employee)
928,500.00
20,407,000.00
6,759,480.00
Total
P28,837,780.00
Clearly, these fringe benefits would have to be obtained from sources other than
the incremental tuition fee proceeds (P68,775,831.15), since only
P15,475,000.00 thereof was set aside for the non-teaching personnel; the rest
was allocated to the teaching personnel.
The appellate court, moreover, granted an increase in the signing bonus, that is,
from the DOLE Secretarys award of P10,000.00, to P18,000.00. This, exactly, is
the parties point of contention.
Going now to the question of whether respondents members individual
acceptance of the award and the resulting payments made by petitioner operate
as a ratification of the DOLE Secretarys award which renders CA-G.R. SP No.
72965 moot, we find that such do not operate as a ratification of the DOLE
Secretarys award; nor a waiver of their right to receive further benefits, or what
they may be entitled to under the law. The appellate court correctly ruled that the
respondents members were merely constrained to accept payment at the time.
Christmas was then just around the corner, and the union members were in no
position to resist the temptation to accept much-needed cash for use during the
most auspicious occasion of the year. Time and again, we have held that
necessitous men are not, truly speaking, free men; but to answer a present
emergency, will submit to any terms that the crafty may impose upon them.19
Besides, as individual components of a union possessed of a distinct and
separate corporate personality, respondents members should realize that in
joining the organization, they have surrendered a portion of their individual

freedom for the benefit of all the other members; they submit to the will of the
majority of the members in order that they may derive the advantages to be
gained from the concerted action of all.20 Since the will of the members is
personified by its board of directors or trustees, the decisions it makes should
accordingly bind them. Precisely, a labor union exists in whole or in part for the
purpose of collective bargaining or of dealing with employers concerning terms
and conditions of employment.21 What the individual employee may not do alone,
as for example obtain more favorable terms and conditions of work, the labor
organization, through persuasive and coercive power gained as a group, can
accomplish better.
1avvphi1
Regarding petitioners assertion that it was unlawful for the Court of Appeals to
have required it to source the award of fringe benefits (in the amount of
P28,837,780.00) from the schools other income, since R.A. 6728 does not
compel or require schools to allocate more than 70% of the incremental tuition
fee increase for the salaries and benefits of its employees, we find it unnecessary
to rule on this matter. These fringe benefits are included in the DOLE Secretarys
award an award which petitioner seeks to affirm in toto; this being so, it cannot
now argue otherwise. Since it abides by the DOLE Secretarys award, which it
finds "fair and equitable," it must raise the said amount through sources other
than incremental tuition fee proceeds.
Finally, we come to the appellate courts award of additional signing bonus, which
we find to be unwarranted under the circumstances. A signing bonus is a grant
motivated by the goodwill generated when a CBA is successfully negotiated and
signed between the employer and the union.22 In the instant case, no CBA was
successfully negotiated by the parties. It is only because petitioner prays for this
Court to affirm in toto the DOLE Secretarys May 31, 2002 Order that we shall
allow an award of signing bonus. There would have been no other basis to grant
it if petitioner had not so prayed. We shall take it as a manifestation of petitioners
liberality, which we cannot now allow it to withdraw. A bonus is a gratuity or act of
liberality of the giver;23 when petitioner filed the instant petition seeking the
affirmance of the DOLE Secretarys Order in its entirety, assailing only the
increased amount of the signing bonus awarded, it is considered to have
unqualifiedly agreed to grant the original award to the respondent unions
members.
WHEREFORE, the petition is PARTIALLY GRANTED. The signing bonus of
EIGHTEEN THOUSAND PESOS (P18,000.00) per member of respondent
Samahang Manggagawa ng U.S.T. as awarded by the Court of Appeals is
REDUCED to TEN THOUSAND PESOS (P10,000.00). All other findings and
dispositions made by the Court of Appeals in its January 31, 2005 Decision and
September 23, 2005 Resolution in CA-G.R. SP No. 72965 are AFFIRMED.
SO ORDERED.
A.M. No. MTJ-06-1630
March 31, 2006
[Formerly OCA I.P.I. No. 04-1590-MTJ]
ESTRELLA A. BARBA, Complainant,
vs.
JUDGE ROSITA B. SALAZAR, and CLERK OF COURT II JOSEPH L.
BRILLANTES, both of the MCTC, LICUAN-BAAY, ABRA, Respondents.
RESOLUTION
TINGA, J.:
On 23 June 2004, the Office of the Court Administrator (OCA) received an
undated Letter-Complaint 1 from Estrella A. Barba (complainant) against Judge
Rosita B. Salazar (respondent judge), Presiding Judge, Metropolitan Circuit Trial
Court (MCTC), Baay-Licuan, Abra for Conduct Unbecoming and/or Abuse of
Discretion and Gross Dishonesty.
Complainant alleged that she is the mother of Rosette Rosario B. Pineda
(Pineda), Clerk II of the MCTC, Baay-Licuan, Abra who resigned from her post
effective 1 March 2004 to work abroad. Even after her resignation, Pinedas
name remained in the payroll and several checks 2 were still issued in her favor.
Complainant claimed that her daughter did not receive any of the checks. Yet
three (3) of the checks were allegedly encashed by respondent judge.
Complainant related that the checks issued for Pineda were in the following
amounts: midyear bonus for the year 2004 in the amount of P5,925.50; clothing
allowance in the amount of P4,000.00; Judiciary Development Fund allowance
for the month of April in the amount of P3,000.00; fiscal autonomy allowance for
the year 2004 in the amount of P4,000.00; monthly salary for the months of
March and April 2004; and Judiciary Development Fund allowance for March
2004.
It was later determined that the monthly salary checks for the months of March
and April 2004 and the Judiciary Development Fund allowance for March 2004
were promptly returned to the Court. However, the four remaining checks
representing the midyear bonus, clothing allowance, fiscal autonomy allowance,
and the Judiciary Development Fund allowance for April 2004 remained
unremitted.
After further inquiry, complainant learned that three (3) of the checks 3 were in the
possession of respondent judge. To support her claim, complainant submitted
photocopies of the payroll registry of two (2) of the three (3) checks where the
signature of respondent judge may be seen opposite the name of Pineda, thus
signifying that the checks were indeed received by respondent judge. The check
for the Judiciary Development Fund allowance was eventually returned to the
Court after some time.
A Supplemental Complaint 4 was filed by herein respondent implicating Joseph
Brillantes (respondent clerk of court), Clerk of Court of the same MCTC, in the
instant administrative case for non-feasance in view of his failure to perform his
duty to return the checks of Pineda to the Court, thereby allowing respondent
judge to take the checks.
On 23 September 2004, respondent clerk of court filed his Comment 5 averring
that while it is true that he was the addressee for all the checks for the court
employees, the last checks he received under the name of Pineda were for her
salary for the months of March and April 2004, and the Judiciary Development
Fund allowance for March 2004. The others were obtained from the Philippine
Postal Corporation on different dates by respondent judge herself.
Respondent clerk of court upon receipt of the checks for Pineda immediately
returned the same to the Checks Disbursement Division of this Court. However,
the checks taken by respondent judge were not returned as she herself
volunteered to return them personally since she was supposedly going to the
Supreme Court at that time.
Respondent judge in her Comment 6 admits taking the checks of Pineda
representing the latters midyear bonus, clothing allowance, and fiscal autonomy
allowance from the post office. She states that she did so not for any immoral
motive or sinister interest but for the sole and honest purpose of returning them
herself to the Court. However, she discovered that the checks were missing from
the book were she inserted them and her earnest efforts to locate them, to the
point of castigating the members of her household, proved futile. Upon
discovering the loss, respondent judge immediately informed the Court of such
loss and requested the stoppage of payment of the checks through the Checks
Disbursement Division. 7 Finally, respondent judge reiterates that the loss was
completely beyond her perception.
On 7 December 2004, the OCA recommended that the instant administrative
complaint be referred to the executive judge of the Regional Trial Court (RTC),
Bangued, Abra for investigation, report and recommendation. In addition, the
OCA, upon verification with the Land Bank of the Philippines, reported that two
(2) of the three (3) missing checks 8 were already encashed/negotiated.
In a Resolution 9 dated 31 January 2005, the Court resolved to refer the case to
the executive judge of RTC, Bangued, Abra.
After hearing and submission of the parties respective pleadings, Executive
Judge Charito B. Gonzales (investigating judge) found that the midyear bonus
and clothing allowance checks were encashed at Lands Merchandising Store by
respondent judges son, James Salazar (Salazar). On the other hand, the fiscal
autonomy allowance check was encashed at Co Chiok Department Store. The
signature of respondent judge appeared on the dorsal portion of the said check.
During the investigation of the case, complainant, in her Memorandum presented
a Certification 10 by Christine Co (Co), owner/manager of Co Chiok Department
Store, which imputes that the check for Pineda was encashed by respondent
judge. This was disputed by respondent judge who in turn presented Cos sworn
statement saying that though the signature of respondent judge appeared at the
back of the check, Co did not see respondent judge personally encashing the
check and that it was encashed because she honored the name of respondent
judge which appeared at the back of the check. 11
The investigating judge filed her Report and Recommendation 12 recommending
that the administrative complaint against respondent clerk of court be dismissed
for lack of substantial evidence. The investigating judge reasoned that:
With respect to the charge against respondent Clerk of Court Joseph Brillantes
the undersigned believes that there is no substantial proof to establish that he
had any complicity in the loss and subsequent negotiation and encashment of
the subject missing checks. In her memorandum[,] the complainant herself
pinned all liabilities on the respondent Judge not even mentioning a bit of any
administrative infraction on the part of respondent clerk of court. Respondent
Clerk of Court was earlier included in the administrative complaint having allowed
respondent Judge to take custody of the missing checks. The undersigned
however believes that the mere passive act of the respondent clerk of court in
allowing respondent Judge to take custody of the missing checks, with the
assurance that she would return them herself to the Supreme Court, does not
amount to any administrative liability. Respondent Judge exercises administrative
supervision over respondent clerk of court hence the latter cannot be faulted for
trusting his superior. At this point, the undersigned concludes that respondent
clerk of court should be absolved from any administrative charge pertaining to
the missing checks. 13
As to respondent judge, the investigating judge recommended that she be
exonerated of the charges of gross dishonesty, conduct unbecoming of a judge,
and abuse of discretion. The investigating judge concluded that, after taking
pains in comparing respondent judges signature in the records of the case and
her purported signature on the check, she failed to arrive at any conclusion as to
the purported signatures genuineness. However, it was recommended that
respondent judge be held liable for simple neglect of duty for the loss of the
checks, and that she be fined P10,000.00 and ordered restitution of the amount
of the three (3) checks.
We agree in part with the recommendation of the investigating judge.
Respondent clerk of court should be reminded that he works not for respondent
judge but for the Judiciary and as such, his responsibilities which this Court has
prescribed should be fulfilled with keenness. The Court recognizes the fact that
judges have the control and supervision of their court employees. However, with
the irregularity respondent clerk of court saw in the acts of respondent judge, he
should have been more circumspect in upholding his task in safeguarding the
checks which, in the first place, should have been in his custody.
This notwithstanding, the Court absolves him of any liability in the loss and
eventual encashment of the checks as respondent judge has already admitted
that she kept the check before its alleged loss. Furthermore, it was respondent
judges assurance that she will personally return the checks that made
respondent clerk of court cease reminding her of the need for the remittance of
the check to the Checks Disbursement Division. Hence, respondent clerk of court
acted within the bounds of his duties.
We cannot say the same for respondent judge. Her act of taking the three (3)
checks, even if with honorable intentions, does not excuse her from the eventual
consequences prejudicing Pineda and more importantly, the Judiciary.
Respondent judge clearly overstepped her responsibilities when she went the
extra mile to go to the post office on three separate occasions to claim Pinedas
checks. That circumstance alone is already a cause for suspicion. In so doing,
respondent judge violated Canon 2 of the Code of Judicial Conduct, which states
that "[a] judge should avoid impropriety and the appearance of impropriety in all
activities."
It should be noted that respondent clerk of court returned Pinedas checks on 26
April 2004. 14 Respondent judge, on the other hand, received Pinedas midyear
bonus and clothing allowance checks on 12 May 2004 and 29 April 2004,
respectively. 15 There is no record however of the date of receipt of the check for
fiscal autonomy allowance. This would mean that the checks which respondent
clerk of court received and returned were those issued by the Court prior to the
issuance of the subject checks. Respondent judge executed an Affidavit of Loss
and the request for stoppage of payment on 10 June 2004, or roughly a month
after she took the checks of Pineda. She had sufficient time to return the checks.
Her procrastination in the remitting the checks to the Court was the direct cause
of the loss. Hence, there is negligence on the part of respondent judge in
performing her duty to return the subject checks.
The Court has said time and time again that the conduct and behavior of
everyone charged with the administration and disposition of justicefrom the
presiding judge to the lowliest clerkshould be circumscribed with the heavy
burden of responsibility and free from any suspicion that may taint the wellguarded image of the judiciary. The conduct of judges and court personnel must
not only be characterized by propriety and decorum at all times, but must also be
above suspicion. Verily, the image of a court of justice is necessarily mirrored in
the conduct, official and otherwise, of the men and women, from the judge to the
lowest employee, hence, it becomes the imperative sacred duty of each and
everyone in the court to maintain its good name and standing as a true temple of
justice. Thus, every employee of the court should be an exemplar of integrity,

uprightness, and honesty.16
A magistrate of the law must comport himself at all times in such manner that his
conduct, official or otherwise, can bear the most searching scrutiny of the public
that looks up to him as the epitome of integrity and justice. 17
In SPO4 Manaois v. Judge Leomo, 18 we ruled:
Canon 2 mandates that a judge should avoid impropriety, or even an appearance
of impropriety in all his conduct as a magistrate.
It bears reiterating the dictum that, like Caesars wife, a judge must not only be
pure, but must also be above suspicion. He must conduct himself in a manner
that gives no ground for reproach. This exacting standard of decorum is
demanded from judges to promote public confidence in the integrity and
impartiality of the judiciary. 19
Respondent judges irregular obtention of the three (3) checks, and their
subsequent loss in her custody, stand as the proximate cause of the illegal
encashment of these checks to the financial damage of the Supreme Court. Even
if there is no substantial evidence establishing respondents participation or
acquiescence to the encashment of the checks, her negligence is sufficiently
proved, and administrative sanction warranted.
Respondent judge, in her Memorandum, questioned the motives of complainant
in instituting the instant case, as according to her, complainant or Pineda had no
more right to the checks and thus, respondent judge had the authority to take
custody of the checks. Furthermore, respondent judge admitted that her son
Salazar, was hooked on illegal drugs and things of value in their house went
missing and she never mentioned her son previously because it is "the tendency
of every mother to protect her beloved child." 20
Respondent judge has a misplaced appraisal of the situation. The ultimate victim
in this case is neither complainant nor her daughter Pineda. The money was
illegally extracted from the funds of the Court. Evidently, it is the Court which is
prejudiced by the negligence of respondent judge since the money was given to
someone who did not render service to the Court.
Had she prudently turned over the checks and not kept it in a book, she would
not be administratively charged in the present case. She did not even have to
sign the payroll registry and personally receive the checks of Pineda as she
could have just simply returned them to the Checks Disbursement Division as
soon as she found out that these were checks issued for a resigned employee. In
the first place, it was not her responsibility to get the bulk of the checks from the
Philippine Postal Corporation. The 2002 Revised Manual for Clerks of
Court 21 states that it is the function of the Office of the Clerk of Court to distribute
salary checks and other benefits, and not the judges. For the act of keeping the
checks alone, respondent judge may already be liable for administrative
sanctions.
Thus, when the checks allegedly lost were encashed not by the person to whom
it was issued, respondent judges liability is compounded. Not only is she
responsible for keeping the checks to which she is not entitled but she is also
directly accountable for the loss and the encashment of these checks by no other
than her son and another person whose signature appears to be hers.
Furthermore, having admitted that she had a problem with her son and that
valuable belongings in her house had disappeared, she should have been put on
guard and particularly careful with the checks, if truly respondent judge was
committed to delivering the checks personally to this Court.
Complainant cannot be faulted in instituting this administrative complaint
because her daughter was also prejudiced by the culpable acts of respondent
judge. As stated in her Reply to the Memorandum of Respondent
Judge, 22 because the checks were not returned to the Court, Pineda could not
get a clearance and thus cannot claim her terminal leave, GSIS, and other
benefits due her, which she would have used to pay for the loans she obtained
from the Supreme Court Savings and Loans Association.
WHEREFORE, premises considered, the case against respondent Clerk of Court
Joseph L. Brillantes is DISMISSED for lack of merit. Respondent Judge Rosita B.
Salazar is hereby FINED Twenty Thousand Pesos (P20,000.00) and ORDERED
to restitute the amount of Thirteen Thousand Nine Hundred Twenty Five and
Thirty Centavos (P13, 925.30) taken from the Court.
The Office of the Court Administrator (OCA) is DIRECTED to institute appropriate

criminal charges against James Salazar and all other persons responsible for the
encashment of the three (3) checks.
SO ORDERED.
G.R. No. 175803
December 4, 2009
GOVERNOR ORLANDO A. FUA, JR.,* IN REPRESENTATION OF THE

PROVINCIAL GOVERNMENT OF SIQUIJOR and ALL ITS OFFICIALS AND
EMPLOYEES, Petitioners,
vs.
THE COMMISSION ON AUDIT and ELIZABETH S. ZOSA, DIRECTOR IV,
LEGAL AND ADJUDICATION OFFICE-LOCAL COMMISSION OF AUDIT,
QUEZON CTY, PHILIPPINES, Respondents.
DECISION
PERALTA, J.:
This resolves the Petition for Certiorari, under Rule 64 in relation to Rule 65 of
the Rules of Court, praying that the Decision1 of the Commission on Audit (COA)
dated October 19, 2006, denying petitioner's appeal, be declared null and void.
The undisputed facts, as gathered from the records, are as follows.
On November 14, 2003, the Sangguniang Panlalawigan of the Province of
Siquijor adopted Resolution No. 2003-247 segregating the sum of P8,600,000.00
as payment for the grant of extra Christmas bonus at P20,000.00 each to all its
officials and employees. On the same date, corresponding Appropriation
Ordinance No. 029 was passed.
Thereafter, Resolution No. 2003-239 was adopted requesting President Gloria
Macapagal Arroyo for an authority to the Provincial Government of Siquijor to
grant such bonus. On even date, petitioner wrote a letter to the President
reiterating said request. On said letter, the President then wrote a marginal note
reading, NO OBJECTION.
The provincial government, relying on the aforementioned resolutions and the

Presidents marginal note, then proceeded to release the extra Christmas bonus
to its officials and employees. However, a post-audit was conducted by Ms.
Eufemia C. Jaugan, Audit Team Leader (ATL), Province of Siquijor, and
thereafter, she issued Audit Observation Memorandum (AOM) Nos. 2004-011
and 2004-022, dated June 28, 2004 and October 27, 2004, respectively. In AOM
Nos. 2004-011 and 2004-022, Ms. Jaugan questioned the legality of the payment
of said bonuses, citing Section 4.1 of Budget Circular No. 2003-7 dated
December 5, 2003, limiting the grant of Extra Christmas Bonus to P5,000.00, and
Section 325 (a) of the Local Government Code imposing a 55% limitation on
Personal Services expenditures.
AOM Nos. 2004-011 and 2004-022 were then reviewed by Atty. Roy L. Ursal,
Regional Cluster Director, Legal and Adjudication Sector, Commission on Audit
Region VII. Atty. Ursal disallowed the payments and issued Notices of
Disallowance Nos. 2004-001-100 (2003) L3-05-164-00-018-A and 2004-002-100
(2003) L3-05-164-00-019-A, both dated October 28, 2005 in the total amount
of P6,345,000.00 on the following grounds:
1. Violation of item 8.0 of Budget Circular No. 2002-A dated November 28,
2002 on the prohibition of any increase in compensation not in accordance
with the Salary Standardization Law (SSL) and the grant of other additional
incentives, bonuses, cash gifts and similar benefits outside of those
authorized in said Circular and Republic Act (R.A.) No. 6686, without the
prior approval of the President. The Presidents marginal note of "No
Objection" cannot be considered an approval.
2. Based on the computation submitted by the Provincial Budget Officer for
the Province of Siquijor, Personal Services of the local government unit
has exceeded the limitation for Budget Year 2003.
Petitioner filed a motion for reconsideration dated October 28, 2005, but in the
1st Indorsement dated February 1, 2006, the same was denied by the Regional
Cluster Director.
From said denial, petitioner appealed to the Commission on Audit-Legal and
Adjudication Office (COA-LAO-Local), headed by respondent Director IV,
Elizabeth S. Zosa. Petitioner raised the issues of (1) whether the Presidents
marginal note of No Objection on the letter-request of Gov. Orlando B. Fua to

grant extra Christmas bonus to the provincial governments employees should be
a ground to lift the disallowance, and (2) whether the Province, in granting the
extra Christmas bonus, has complied with the 55% Personal Service limitation
under Section 325 of the Local Government Code.
On October 19, 2006, the COA-LAO-Local issued a Decision affirming the
Regional Cluster Directors Notice of Disallowance, the dispositive portion of
which reads thus:
WHEREFORE, premises considered, the herein appeal is hereby denied for lack
of merit and the disallowance is affirmed in the total amount of P6,345,000.00.2
Aggrieved by the foregoing Decision of the COA-LAO-Local, petitioner filed the
present petition alleging that:
THE COMMISSION ON AUDIT COMMITTED GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING FOR
THE DISALLOWANCE OF P6,345,000.00 PURSUANT TO ADMINISTRATIVE
ORDER NO. 88 AND DISREGARDING THE CONSENT OF THE PRESIDENT
OF THE REPUBLIC OF THE PHILIPPINES TO THE GIVING OF EXTRA
BONUS.3
Respondents, on the other hand, argued that the petition should not be given due
course because of petitioners failure to observe the doctrine of exhaustion of
administrative remedies.4 Moreover, respondents emphasized that the marginal
note allegedly written by the President stating No Objection had never been
authenticated and was effectively revoked by Budget Circular No. 2003-7 and
Administrative Circular No. 88, limiting extra cash-gift to all government and local
government personnel to P5,000.00 only.5
Petitioner counters that the present case should be deemed an exception to the
above-mentioned general rule, because the issue raised here is a purely legal
one.6
The petition is doomed to fail.
The 1997 Revised Rules of Procedure of the COA states, thus:
RULE VI
APPEAL FROM DIRECTOR TO COMMISSION PROPER
Section 1. Who May Appeal and Where to Appeal. The party aggrieved by a
final order or decision of the Director may appeal to the Commission Proper.
RULE XI
JUDICIAL REVIEW
Section 1. Petition for Certiorari. Any decision, order or resolution of the
Commission may be brought to the Supreme Court on certiorari by the aggrieved
party within thirty (30) days from receipt of a copy thereof in the manner provided
by law, the Rules of Court and these Rules.
Clearly, by immediately filing the present petition for certiorari, petitioner failed to
exhaust the administrative remedies available to him. The hornbook doctrine,
reiterated in Joseph Peter Sison, et al. v. Rogelio Tablang, etc.,7 is as follows:
The general rule is that before a party may seek the intervention of the court, he
should first avail himself of all the means afforded him by administrative
processes. The issues which administrative agencies are authorized to decide
should not be summarily taken from them and submitted to the court without first
giving such administrative agency the opportunity to dispose of the same after
due deliberation.
xxxx
x x x The non-observance of the doctrine results in the petition having no cause
of action, thus, justifying its dismissal. In this case, the necessary
consequence of the failure to exhaust administrative remedies is obvious:
the disallowance as ruled by the LAO-C has now become final and
executory.8
There is nothing in this case to convince us that it should be considered as an
exception to the aforementioned general rule. The issue presented is not a purely
legal one. The Commission Proper, which is the tribunal possessing special
knowledge, experience and tools to determine technical and intricate matters of
fact involved in the conduct of the audit, would still be the best body to determine
whether the marginal note of No Objection on petitioners letter-request to the

President is indeed authentic and tantamount to the required approval.
In addition, Section 1, Rule 65 of the Rules of Court, provides that the remedy of
certiorari may only be availed of if "there is no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law." In Badillo v. Court of Appeals,9 it
was held that:
x x x "the special civil action for certiorari is a limited form of review and is a
remedy of last recourse." It lies only where there is no appeal or plain, speedy,
and adequate remedy in the ordinary course of law.10
It was absolutely necessary for petitioner to allege in the petition, and adduce
evidence to prove, that any other existing remedy is not speedy or
adequate.11 Thus, since petitioner could have appealed the Decision of the
Director to the Commission Proper under the 1997 Revised Rules of Procedure
of the COA, he is definitely not entitled to a writ of certiorari, because there was
some other speedy and adequate remedy available to him.
1avvphi1
Petitioner having failed to pursue an appeal with the Commission Proper, the
Decision issued by the COA-LAO-Local has become final and executory. In Pea
v. Government Service Insurance System,[12] the Court held that:
x x x it is axiomatic that final and executory judgments can no longer be attacked
by any of the parties or be modified, directly or indirectly, even by the highest
court of the land. Just as the losing party has the right to file an appeal within the
prescribed period, so also the winning party has the correlative right to enjoy the
finality of the resolution of the case.13
xxxx
The rule on finality of decisions, orders or resolutions of a judicial, quasijudicial or administrative body is "not a question of technicality but of
substance and merit," the underlying consideration therefore, being the
protection of the substantive rights of the winning party. Nothing is more settled
in law than that a decision that has acquired finality becomes immutable
and unalterable and may no longer be modified in any respect even if the
modification is meant to correct erroneous conclusions of fact or law and
whether it will be made by the court that rendered it or by the highest court
of the land.14
Consequently, the Decision of the COA-LAO-Local can no longer be altered or
modified.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
G.R. No. 177705
September 18, 2009
KIMBERLY-CLARK PHILIPPINES, INC. Petitioner,

vs.
NORA DIMAYUGA, ROSEMARIE C. GLORIA, and MARICAR C. DE
GUIA, Respondents.
DECISION
CARPIO MORALES, J.:
Respondents were employees of Kimberly-Clark Philippines, Inc. (petitioner).
Nora Dimayuga (Nora) was Cost Accounting Supervisor, Rosemarie Gloria
(Rosemarie) was Business Analyst, and Maricar de Guia (Maricar) was General
Accounting Manager.
On September 19, 2002, Nora tendered her resignation effective October 21,
2002.1
On October 7, 2002, Rosemarie tendered her resignation, also effective October
21, 2002.2
As petitioner had been experiencing a downward trend in its sales, it created a
tax-free early retirement package for its employees as a cost-cutting and
streamlining measure. Twenty-four of its employees availed of the offer that was
made available from November 10-30, 2002.3
Despite their resignation before the early retirement package was offered, Nora
and Rosemarie pleaded with petitioner that they be retroactively extended the
benefits thereunder, to which petitioner acceded.4 Hence, Nora received a total
of P1,025,113.73 while Rosemarie received a total of P1,006,493.94, in

consideration of which they executed release and quitclaim deeds dated January
17, 20035 and January 16, 2003,6 respectively.
On November 4, 2002, Maricar tendered her resignation effective December 1,
2002,7 citing career advancement as the reason therefor. As at the time of her
resignation the early retirement package was still effective, she received a total
of P523,540.13 for which she signed a release and quitclaim.8
On November 28, 2002, petitioner announced that in lieu of the merit increase
which it did not give that year, it would provide economic assistance, to be
released the following day, to all monthly-paid employees on regular status as of
November 16, 2002.
Still later or on January 16, 2003, petitioner announced that it would the grant a
lump sum retirement pay in the amount of P200,000, in addition to the early
retirement package benefit, to those who signed up for early retirement and who
would sign up until January 22, 2003.9
On May 23, 2003, respondents filed a Complaint,10 docketed as NLRC Case No.
RAB-IV 5-17522-03-L, before the National Labor Relations Commission (NLRC)
Regional Arbitration Branch No. IV against petitioner and its Finance Manager
Fernando B. Gomez (Gomez) whom respondents alleged to be "responsible for
the withholding of [their] additional retirement benefits,"11 claiming entitlement to
the P200,000 lump sum retirement pay. Respondents Nora and Rosemarie
additionally claimed entitlement to the economic assistance.
By Decision of August 31, 2004, Labor Arbiter Generoso V. Santos dismissed the
claims of Nora and Rosemarie, holding that they were not entitled to
the P200,000 lump sum retirement pay, they having ceased to be employees of
petitioner at the time it was offered or made effective on January 16, 2003. He,
however, granted Maricars claim for the same pay, holding that she was entitled
to it because at the time she resigned from the company effective December 1,
2002, such pay was already offered. Besides, the Labor Arbiter ruled, Maricar
had a vested right to it as she was given a formal notice of her entitlement to it by
petitioner, through its Human Resources Director.
On appeal by both parties,12 the NLRC, by Decision13 of November 22, 2005,
modified the Labor Arbiters Decision by ordering petitioner to pay Nora P200,000
additional bonus and P2,880 economic assistance, and to pay

Rosemarie P200,000 additional bonus and P2,656 economic assistance. It
affirmed Maricars entitlement to the lump sum retirement pay.
Applying the ruling in Businessday Information Systems and Services, Inc. v.
NLRC (Businessday),14 the NLRC ratiocinated that petitioners refusal to give
Nora and Rosemarie the lump sum retirement pay was an act of discrimination,
more so because a certain Oscar Diokno, another employee who presumably
resigned also prior to January 16, 2003, was given said benefit.
As to the award of economic assistance, the NLRC held that Nora and
Rosemarie were also entitled to it as the same was given in lieu of the annual
performance-based salary increase that was not given in 2002 and, therefore,
already earned by them when they resigned. Petitioners Motion for
Reconsideration15 having been denied,16 it filed a Petition for Certiorari17 before
the Court of Appeals.
By Decision18 of January 19, 2007, the appellate court affirmed the NLRC
Decision. It held that, contrary to petitioners assertion that the early retirement
package was extended to respondents out of generosity, the offer/grant thereof,
as well as their inclusion in the termination report submitted to the Department of
Labor and Employment, made them "full retirees," hence, they must be given the
other benefits extended to petitioners other employees, following the ruling in
Businessday.
The appellate court added that since respondents resigned from their respective
positions barely a month before the effectivity of the early retirement package,
the general principles of fair play and justice dictate that petitioner extend to them
the same benefits in consideration of their long years of service.
The appellant court, noting that Nora and Rosemarie received commendable
ratings, upheld their entitlement to the economic assistance as their resignation
before the grant of such benefit took effect did not detract from the fact that it was
in substitution of the traditional merit increase extended by petitioner to its
employees with commendable or outstanding ratings which it failed to give in
2002.
Petitioners Motion for Reconsideration19 having been denied,20 it filed the present
petition, insisting that Nora and Rosemarie are no longer entitled to the economic
assistance and lump sum pay considering that they were already retired and
have in fact executed quitclaims and waivers.
And petitioner questions the application to the present case by the appellate
court of the doctrine laid down in Businessday.
The petition is impressed with merit.
It is settled that entitlement of employees to retirement benefits must specifically
be granted under existing laws, a collective bargaining agreement or employment
contract, or an established employer policy.21 No law or collective bargaining
agreement or other applicable contract, or an established company policy
was existing during respondents employment entitling them to the P200,000
lump-sum retirement pay. Petitioner was not thus obliged to grant them such pay.
Respondents nevertheless argue that since other employees who resigned
before the announcement of the grant of the lump sum retirement pay received
the same, they (respondents) should also receive it,22 citing the pronouncement
in Businessday that:
x x x The law requires an employer to extend equal treatment to its employees. It
may not, in the guise of exercising management prerogatives, grant greater
benefits to some and less to others. Management prerogatives are not absolute
prerogatives but are subject to legal limits, collective bargaining agreements, or
general principles of fair play and justice.23 (Underscoring supplied)
Respondents reliance on Businessday is misplaced. The factual milieu in
Businessday is markedly different from that of the present case. That case
involved the retrenched employees separation pay to which they are entitled
under Article 283 of the Labor Code. In the present case, Nora and Rosemarie
resigned prior to petitioners offer of the lump sum retirement pay as an incentive
to those employees who would voluntarily avail of its early retirement scheme as
a cost-cutting and streamlining measure. That respondents resigned, and not
retrenched, is clear from their respective letters to petitioner. And nowhere in the
letters is there any allegation that they resigned in view of the companys
downward trend in sales which necessitated downsizing or streamlining.
The appellate courts finding that petitioners inclusion of Nora and Rosemarie in
the termination report submitted to the DOLE and its grant to them of the early
retirement benefits made them "full retirees" to thus entitle them to the same
benefits offered to those who would voluntarily resign after November 16, 2003
does not lie.
Petitioners claim that it allowed Nora and Rosemarie to avail of the early
retirement package despite their previous separation from the company out of
pure generosity is well-taken in light of Noras letter of September 15, 2002
asking if she could avail of the early retirement package as "it would certainly be
of great assistance to us financially." It is thus absurd to fault petitioner for
acceding to such a request out of compassion by directing it to pay additional
benefits to resigned employees who are not entitled thereto.
1avvphi1
Petitioners decision to extend the benefit to some former employees who had
already resigned before the offer of the lump sum pay incentive was thus an act
of generosity which it is not obliged to extend to respondents. Apropos is this
Courts ruling in Businessday:
With regard to the private respondents claim for the mid-year bonus, it is settled
doctrine that the grant of a bonus is a prerogative, not an obligation, of the
employer. The matter of giving a bonus over and above the workers lawful
salaries and allowances is entirely dependent on the financial capability of the
employer to give it. The fact that the companys business was no longer
profitable (it was in fact moribund) plus the fact that the private respondents did
not work up to the middle of the year (they were discharged in May 1998) were
valid reasons for not granting them a mid-year bonus. Requiring the company to
pay a mid-year bonus to them also would in effect penalize the company for its
generosity to those workers who remained with the company "till the end" of its
days.24 (Citations omitted) (Emphasis and underscoring supplied)
Neither are Nora and Rosemarie entitled to the economic assistance which
petitioner awarded to "all monthly employees who are under regular status as of
November 16, 2002," they having resigned earlier or on October 21, 2002.
Again, contrary to the appellate courts ruling that Nora and Rosemarie already
earned the economic assistance, the same having been given in lieu of the
performance-based annual salary increase, the Court finds that the economic
assistance was a bonus over and above the employees salaries and allowances.
A perusal of the memorandum regarding the grant of economic assistance shows
that it was granted in lieu of salary increase (the grant of which depends on
petitioners financial capability) and that it was not intended to be a counterpart of
the Collective Bargaining Agreement grant to members of the K-CPI union. The
grant of economic assistance to all monthly employees under regular status as of
November 16, 2002 was thus well within petitioners prerogatives.
1avvphi1
Moreover, petitioners decision to give economic assistance was arrived at more

than a month after respondents resignation and, therefore, it was a benefit not
yet existing at the time of their separation.
In any event, assuming that Nora and Rosemarie are entitled to the economic
assistance, they had signed release and quitclaim deeds upon their
resignation25 in which they waived x x x any or manner of action or actions,
course or courses of action, suits, debts, dues, sums of money, accounts,
reckonings, promises, damages (whether actual, moral, nominal, temperate,
liquidated or exemplary), claims and liabilities whatsoever, in law or equity,
arising out or and in connection with, but not limited to claims for salary,
termination pay, vacation leave, overtime, night work, compensation for injuries
or illness directly caused by my employment or either aggravated by or the
results of the nature of my employment and claims for which I may or shall make,
or may have for or by any reason of any matter, cause or thing whatsoever,
including but not limited to my employment and to matters arising from my
employment by KIMBERLY-CLARK PHILIPPINES, INC. over any period or
periods in the past.26
While quitclaims executed by employees are commonly frowned upon as being
contrary to public policy and are ineffective to bar claims for the full measure of
their legal rights, where the person making the waiver has done so voluntarily,
with a full understanding thereof, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as being a valid and
binding undertaking.27 In the case at bar, Nora and Rosemarie are Accounting
graduates. They have not alleged having been compelled to sign the quitclaims,
nor that the considerations thereof (P1,024,113.73 for Nora and P682,721.24 for
Rosemarie) are unconscionable.
As for Maricars claim to the lump sum retirement pay, the Court finds that, like
Nora and Rosemarie, she is not entitled to it. Although the incentive was offered
when she was still connected with petitioner, she resigned from employment,
citing career advancement as the reason therefor. Indubitably, the incentive was
addressed to those employees who, without prior plans of resigning, opted to
terminate their employment in light of the downsizing being undertaken by
petitioner. In other words, Maricar resigned from petitioner in order to find gainful
employment elsewhere a reason which has no bearing on the financial viability
of petitioner.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the
Court of Appeals dated January 19, 2007 and April 30, 2007, respectively, are
REVERSED and SET ASIDE. NLRC Case No. RAB-IV-17522-03-L is
DISMISSED.
SO ORDERED.
G.R. No. 191661
August 13, 2013
CITY GOVERNMENT OF MAKATI, AS REPRESENTED BY HON. MAYOR

JEJOMAR C. BINAY, PETITIONER,
vs.
EMERITA B. ODEA, RESPONDENT.
DECISION
SERENO, CJ.:
This is a Rule 45 Petition for Review on Certiorari assailing the Resolution dated
17 March 2010 of the Court Appeals (CA) docketed as CA-G.R. SP No.
108983.1 The assailed Resolution denied the Motion for Reconsideration filed by
petitioner City of Makati (petitioner) of the CAs earlier Resolution dated 23
October 20092 that in turn dismissed petitioners Rule 43 Petition for Review.3
This case involves respondent Emerita B. Odea (respondent) who was a
teacher previously employed by petitioner. She was illegally dismissed and is
now seeking full payment of her backwages and other benefits as she interprets
them to be.
Facts of the Case
Some of the incidents of this case have been previously resolved by this Court in
Elenita S. Binay, in her capacity as Mayor of the City of Makati, Mario Rodriguez
and Priscilla Ferrolino v. Emerita Odea, docketed as G.R. No. 163683, in a
Decision dated 08 June 2007 (hereinafter, the 2007 Decision).4 This Court ruled
therein that respondent had been illegally dismissed and was thus ordered to be
reinstated and paid her backwages, computed from date of dismissal up to date
of reinstatement, but in no case to exceed five (5) years.5
2007 Decision
The factual findings in the 2007 Decision of this Court are summarized as
follows:
Respondent had been employed by petitioner as a teacher since 1980. She was
a contractual employee up to 30 July 1992 and a casual employee from July
1992 until November 1996. Sometime in 1996, she held the position of Clerk I
and was detailed at the Library Department of the Makati High School.
It was the practice of respondent to sign an Attendance Sheet bearing her name
and signature to signify attendance, instead of using a Daily Time Record.
In 2000, she was asked to explain why she supposedly failed to report for work
starting in November 1999. She explained that she did not incur those alleged
absences and presented the employees log book as proof of her attendance.
Her explanation was disregarded by then education consultant Priscilla Ferrolino.
Thereafter, on 8 June 2000, Mayor Elenita S. Binay issued a Memorandum
dropping respondent from the roll of employees, effective at the close of office
hours of 15 May 2000, in view of the latters absences without official leave
(AWOL) starting on 10 November 1999. Respondent moved for reconsideration,
but her motion was denied. Aggrieved, she appealed to the Civil Service
Commission (CSC).
The CSC ruled that the dropping of respondent from the roll of employees was
not supported by evidence.6 It found that she had actually reported for work from
November 1999 to May 2000; and that, while she had incurred absences during
that period, those were not equivalent to a continuous absence of at least thirty
(30) working days.7 The Attendance Sheet duly complied with regulations,8 as it
indicated her name and signature, as well as times of arrival and departure, and
was verified by her immediate supervisor.9 Furthermore, she could not have
received her corresponding salary for the said period if she were indeed absent.
The CSC, by virtue of respondents illegal dismissal, directed petitioner to: (1)
reinstate her; and (2) to pay her back salaries from the time of her separation up
to her actual reinstatement.10
Consequently, petitioner moved for reconsideration, but the motion was
denied.11 Aggrieved, it filed a Rule 43 Petition appealing the findings of the CSC
to the CA.12
The CA denied the Petition and affirmed that respondent was illegally
dismissed.13 The CA affirmed the CSC Resolutions which ordered the
reinstatement of respondent and payment of back salaries, but subject to the
modification that an illegally terminated civil service employee, like respondent, is
entitled to back salaries limited to a maximum period of five (5) years, and not to
full salaries from her illegal dismissal up to her reinstatement.14
The dispositive portion of the CA Decision provides as follows:
WHEREFORE, the petition is DISMISSED for lack of merit. CSC Resolution No.
010962 dated May 29, 2001 and CSC Resolution No. 021491 dated November
18, 2002 are affirmed, without prejudice to the filing of whatever appropriate
disciplinary case against Emerita Odea, and subject to the modification that
payment of her back salaries shall be computed from date of dismissal up to date
of reinstatement, but in no case to exceed five (5) years.
SO ORDERED. (Emphasis supplied)15
Thereafter, petitioner filed a Petition with this Court16 arguing that the CA
committed serious error in ruling that the respondent had been illegally
dismissed.
In its 2007 Decision, this Court dismissed the Petition and affirmed the ruling of
the CA in its entirety; more specifically, that respondent had indeed been illegally
dismissed and was thus entitled to payment of backwages to be computed from
the date of dismissal up to the date of reinstatement, but not exceeding five (5)
years.17
The dispositive portion of the 2007 Decision in no uncertain terms affirmed the
CA Decision without any modification as follows:
WHEREFORE, the instant petition is DISMISSED for lack of merit. The assailed
CA Decision dated May 14, 2004 is hereby AFFIRMED. Costs against
petitioners.
SO ORDERED.18 (Emphasis supplied)
The Present Case
The 2007 Decision became final. The following events significant to the present
Petition occurred after the promulgation of this Courts 2007 Decision:19
The CSC, upon motion of respondent,20 directed the incumbent Mayor of Makati
to immediately reinstate respondent to her former position and cause the
payment of all her salaries and other benefits from the date of her removal from
service up to her reinstatement.21
The directive, however, was not complied with,22 which then compelled the CSC
to subsequently reiterate its previous order to immediately reinstate respondent.23
The directive to reinstate respondent was never complied with. Respondent
instead opted to avail herself of early retirement effective 13 February 2008.
Petitioner thereafter paid her the amount of P558,944.19, representing her
supposed back salaries and other benefits.24
In acknowledging receipt of this amount, she signed in favor of petitioner a
"Release, Quitclaim, and Waiver" dated 05 May 2008 (Quitclaim).25
The Letter-Complaint
Respondent alleges that after realizing that she had been shortchanged by
petitioner, she complained to the CSC, asserting that the amount paid her did not
correspond to the entire amount she was legally entitled to.26She claimed in her
Letter-Complaint that the payment made to her, the amount of which
corresponded to five years of service, was insufficient to cover her almost eight
years of suffering, viz.:
Ipinaglaban ko itong karapatang ito at ito ay aking nakamtan sa papel nga

lamang dahil hindi ito lubos na kapanalunan. Limang taong kabayaran katumbas
ng halos walong (8) taong pagdurusa ko at ng aking pamilya, ito ba ang tamang
katarungan na iginawad sa akin ng City Government of Makati? Proseso po ba
ng inyong pamahalaan ang pagpapapirma ng pilit ng Release quit claim at
waiver (See attached A&B) na pag hindi ka pumirma hindi mo makukuha ang
iyong kabayaran. Kinontra ko iyon sa pagdagdag ng gusto ko (See attached
C&C-1) ngunit walang nangyari. Nagalit sila, matigas daw ang ulo ko di ko raw
makukuha ang nais ko pag di ako sumunod. Pananakot para pumirma lang ako
sa waiver (see attached D &D-1) kasama ba iyon sa Decision ng Korte
Suprema? Batas ba iyon ng Civil Service Commission?
Takot na mamatay sa gutom ang pamilya ko kaya naghihimagsik man ang aking
kalooban sa matinding pagtutol ay napilitan akong pirmahan iyon-kapalit ng
tsekeng nagkakahalaga ng limang daan at limamput libong piso (P550,000.00)
lamang para sa limang (5) taong kabayaran. (See attached "E") Ito ang nangyari
noong Mayo 5, 2008 sa opisina ng legal ng City Hall ng Makati. Ito po ba ay
angkop na HATOL na inilapat sa akin ng City Government ng Makati? Alam ko
hindi ulit makatarungan ang ginawa nilang ito. Hindi makatarungang pagtanggal
sa trabaho ang ginawa nila sa akin noon naipanalo ko nga ang aking karapatan
ngunit ngayon hindi pa rin makatarungan ang kanilang kabayaran. Hindi sapat
ang limang taong (5) kabayaran sa halos magwawalong (8) taong walang
hanapbuhay, dapat po bang ako ang umatang ng kakulangan? Nasaan po ba
ang tunay na batas?
xxxx
Dahil hindi na ako nagreinstate nagfile ako ng retirement letter effective noong
February 13, 2008, petsa nang matanggap ko ang CSC, Resolution No. 08-0132.
Di po ba isa sa mga benepisyo ko na dapat matanggap ay ang GSIS, PAG-IBIG
at yung mga leave credits ko? May karapatan po ba ako na makuha ko ang
kumpletong leave credits ko simula nang maglingkod ako sa City Government of
Makati, hanggang sa petsa ng reinstatement ko, kahit ako ay nagfile na ng early
retirement? Ayon sa legal ng City Government ng Makati, wala daw po akong
karapatan sa benepisyong iyon, lalo na yong pitong taon (7) at labing isang (11)
buwan na di ko pagpasok simula nang tinanggal nila ako sa trabaho, kasi
accumulation daw po iyon, di ko naman pinasukan kaya di ako dapat bayaran,
proseso din daw po iyon ng gobyerno, gaano po katotoo iyon? Naaangkop po ba
iyon sa aking katayuan, sila naman po ang dahilan kung bakit di ako nagtrabaho,
bakit ako ang magdudusa, ayon po ba iyon sa desisyon ng korte? Bakit inilagay
nila yun sa Release quit claim at waiver na pinapirmahan nila sa akin bilang
pagsang-ayon kung iyon ay proseso? Meron bang dapat pangilagan ang City
Government ng Makati kaya nila ako pinapirma ng Release quit claim at waiver
nang sapilitan?
xxxx
Kaya muli po akong maninikluhod upang humingi ng tamang hustisya at
mabigyang linaw ang lahat ng katanungan ko sa kung ano ang tunay na batas ng
Civil Service Commission. Sana po ay mabigyan ng makatarungang paglapat ng
hustisya ang hamak na kawani na katulad ko nang sa ganon ay hindi na maulit
muli, at sana ay mabigyan ng karampatang lunas ang hinaing kong ito at
maimplemento nang tama ang CSC Resolution 08-132 sa lalong madaling
panahon.27 (Emphasis supplied.)
The CSC took cognizance of respondents Letter-Complaint and directed
petitioner to file her comment.28
In her Comment,29 petitioner denied the allegations of respondent for being false
and baseless. She argued that the 2007 Decision of this Court has become final
and executor, and that, under the same, payment of respondents back salaries
shall be limited to five years only. Moreover, respondent had not been forced to
sign a Release, Quitclaim and Waiver, as she executed the same voluntarily.
While respondent claimed that the amount of P550,000 representing five (5)-year
back salaries is insufficient, respondent has not submitted the supposed correct
amount that she should receive. Furthermore, as to her leave credits, respondent
had failed to submit the necessary documents so the city government could start
processing the release. Finally, as regards the GSIS and PAG-IBIG benefits,
petitioner contended that respondent has to personally apply for their release
from the said government agencies.
The Ruling of the CSC
The CSC ruled in favor of respondent, and directed petitioner to pay her
backwages and other benefits from the period of her illegal dismissal until her
early retirement, or for a period of seven (7) years, eight (8) months and twentyeight (28) days.30
The CSC, in its Resolution No. 082264,31 stated that the 5-year limit was
inequitable, to wit:
Although it would appear that the Supreme Court in the aforementioned case
affirmed the ruling of the Court of Appeals, it is worth noting, however, that there
is nothing in the High Courts decision, either in the body or the dispositive
portion, that categorically states that Odena is entitled to back salaries and other
benefits only for a period not exceeding five (5) years. As such, it is apposite to
conclude that Odena is entitled to the payment of her entire back salaries and
other benefits from the date of her illegal dismissal up to the date of her
retirement, as will be explained later. This is precisely why the Commission, in all
its Resolutions promulgated in relation with this case, was consistent in holding
that Odena must be paid her back salaries and other benefits from the days of
her illegal dismissal up to her reinstatement.
xxxx
Admittedly, there are rulings of the Supreme Court where the claims of an
illegally dismissed employee were limited only to five (5) years without conditions
and qualifications. Such rulings, however, were expressly and explicitly
abandoned in subsequent decisions of the High Court.
xxxx
But even if the Supreme Court had implicitly intended, in the case of Binay vs.
Odena, 524 SCRA 248 (2007), that Odena is entitled only to five (5) years of
back salaries and other benefits, such will not bar her from claiming payment of
the same in full for the entire period she was out from the service as a result of
her illegal dismissal. To limit the entitlement of Odena to only five (5) years of
back salaries and other benefits will indubitably cause serious injustice to her
inasmuch as the prevailing jurisprudence at the time of promulgation of the Binay
case, supra, is that an illegally dismissed employee who is ordered reinstated by
competent authority is entitled to the payment of his/her illegal dismissal up to
his/her reinstatement. Thus, even if the Supreme Court indeed intended to limit
to only five (5) years the back salaries and other benefits of Odea, and that said
decision had already become final and executory, the same had to yield to the
higher interest of justice. x x x.32 (Emphases supplied)
The dispositive portion of CSC Resolution No. 08226433 provides as follows:
WHEREFORE, the incumbent City Mayor of Makati is hereby directed to

recompute the full back salaries and other benefits of Emerita B. Odena which
she is entitled for seven (7) years, eight (8) months, and twenty-eight (28) days,
the entire period she was out of the service as a result of her illegal dismissal.
Said benefits shall include the allowances, 13th month pay, bonuses, cash gifts,
all other monetary benefits which other employees of the City Government of
Makati received within the same period, yearly fifteen (15) days sick and fifteen
(15) days vacation leave benefits for the same period including commutation of
her entire accrued leave credits that she earned prior to her illegal dismissal.
Should there appear, upon re-computation of Odeas back salaries and other
benefit, an excess of the amount of P558,944.19 which she already received,
said excess must be immediately paid her.
The City Mayor of Makati is directed to report to the Commission the action he
will take to implement the Resolution, within 15 days from receipt hereof. He is
likewise reminded that his failure to implement the decision of the Commission
shall be reason enough to cite him in indirect contempt of the Commission and
shall be the basis for the filing of administrative and criminal charges against him
before the proper forum.34 (Emphases supplied)
It is clear from the foregoing that the CSC ignored the 5-year limit imposed on
backwages and instead awarded respondent backwages and other benefits
equivalent to a period of more than 7 years, pegged from her illegal dismissal in
2000 until her early retirement in 2008.
Petitioner moved for reconsideration,35 but the CSC denied the motion and
affirmed CSC Resolution No. 082264.36 In Resolution No. 090622,37 CSC stated
that res judicata invoked by petitioner must give way to the higher interest of
justice, to wit:
Notably, the issue on the computation of the back salaries and other benefits to
which Emerita B. Odea is entitled to raised by the City Government of Makati in
its motion for reconsideration were already discussed and passed upon
extensively in the Resolution now being sought to be reconsidered. By sheer
necessity, however, be it reiterated and emphasized that the apparent affirmation
by the Supreme Court of the Decision dated May 14, 2004 of the Court of
Appeals must not be employed as an instrument to thwart and ultimately defeat
the lawful claim of Odea for the payment in full of her back salaries and other
benefits after her illegal dismissal from the service.
Thus, the doctrine of res judicata being invoked by the City Government of
Makati must give way to the higher interest of justice. x x x (Emphasis supplied)38
The dispositive portion of CSC Resolution No. 090622,39 which dismissed
petitioners Motion for Reconsideration, states as follows:
WHEREFORE, the motion for reconsideration of the City Government of Makati
is hereby DENIED for lack of merit. Accordingly, the directive of the Commission
stated in CSC Resolution No. 08-2264 dated December 8, 2008 is REITERATED
whether the incumbent City Mayor of Makati is directed to re-compute the full
back salaries and other benefits which Emerita B. Odea is entitled to for a
period of seven (7) years, eight (8) months and twenty-eight (28) days. x x x.
(Emphasis supplied)
Thereafter, petitioner filed a Rule 43 Petition with the CA40 and argued that: (1)
the CSC Resolutions were violative of the doctrine of res judicata;41 and (2) the
CSC erred in including respondents retirement as a ground for her entitlement to
full back salaries and other benefits, more than what was granted by this Court in
its 2007 Decision.42 Petitioner contended that the cause of action of the case is
the entitlement of respondent to back salaries, and therefore, the issues of her
retirement and entitlement to other benefits cannot be assailed.43
The Ruling of the CA
The CA dismissed the Rule 43 Petition. The CA regarded the CSC Resolutions,
issued in relation to respondents Letter-Complaint, as orders of execution of the
final and executory 2007 Decision of this Court.44 Thus, petitioners recourse to a
Rule 43 Petition was unavailing, because orders of execution cannot be the
subject of appeal, the proper remedy being a Rule 65 petition.45 The CA ruled
that:
This notwithstanding, even if such procedural infirmity is to be disregarded, the
instant Petition for Review must still be dismissed for being a wrong mode of
remedy.
Section 1(f), Rule 41 of the Revised Rules of Civil Procedure provides that:
Section 1. Subject of appeal. An appeal may be taken from a judgment or final

order that completely disposes of the case, or of a particular matter therein when
declared by these Rules to be appealable.
No appeal may be taken from:
xxx
(f) an order of execution;
xxx
In all the above instances where the judgment or final order is not appealable,
the aggrieved party may file an appropriate special civil action under Rule 65.
(Emphasis supplied)
It is thus explicit from the above provision that no appeal may be taken from an
order of execution. Instead, such order may be challenged by the aggrieved party
by way of a special civil action for certiorari under Rule 65 of the Rules of Court.
Here, the instant Petition for review assails the CSCs Resolution No. 082264
dated December 8, 2008 and Resolution No. 090622 dated April 28, 2009
ordering herein petitioner City of Government Makati to re-compute the full back
salaries and benefits of private respondent from the time of her illegal dismissal
up to her retirement. A cursory reading of the petition, however, reveals that the
merits of the illegal dismissal case has already been adjudged with finality by the
Supreme Court in a Decision dated June 8, 2007. The assailed Resolutions of
the CSC arose merely as an incident of the execution when the CSC modified
the judgment award on account of private respondents complaint wherein she
sought to be paid more than what has been awarded to her by the Supreme
Court.
Such being the case, petitioners recourse to a Petition for Review is unavailing.
The filing of a special civil action for certiorari under Rule 65 of the Rules of Court
was the proper remedy questioning an order of execution on the ground of grave
abuse of discretion amounting to lack or excess of jurisdiction. x x x.46 (Emphasis
supplied)
Petitioner moved for reconsideration, but the CA denied the motion and affirmed
its previous ruling.47
The Present Petition
On 8 April 2010, petitioner filed before this Court a Motion for Extension of Time
to File Petition for Review on Certiorari (Motion for Extension), praying for an
additional period of thirty (30) days or until 9 May 2010 within which to file a
petition for review on certiorari.48 On 27 April 2010, We denied the Motion for
Extension for failing to state material dates.49 Petitioner received notice of the
denial only on 9 June 2010, or one and a half months after its promulgation.50
In the meantime, on 7 May 2010, petitioner filed the instant Petition.51 Thereafter,
this Court required respondent to file a comment,52 notwithstanding the previous
denial of petitioners Motion for Extension.
In her Comment,53 respondent argued: (1) the CA did not err in considering the
CSC Resolutions as execution orders; (2) petitioner failed to properly serve its
pleadings upon respondent; (3) respondent is entitled to the moneys awarded
her by the CSC; and (4) the Petition was filed out of time, since petitioners
Motion for Extension had been denied by this Court.
In response, petitioner countered as follows:54 (1) no motion for execution was
ever filed before the CSC, since petitioner had already complied with this Courts
2007 Decision by paying respondent; (2) petitioner had been serving its
pleadings at respondents last address on record; (3) the issue of respondents
benefits had already been settled with finality; and (4) petitioner was notified of
this Courts denial of its Motion for Extension only on 9 June 2010, many days
after the present Petition had been filed and after this Court had constructively
admitted the present Petition by requiring respondent to file her Comment.
Issues
Based on the submissions of both parties, the following main issues are
presented for resolution by this Court:
1. Whether petitioner undertook an improper remedy when it filed a Rule
43 Petition with the CA to question the Resolutions issued by the CSC; and
2. Whether respondent, after receiving payment from petitioner, is still

entitled to the additional amount awarded by the CSC.
Respondent raises the following preliminary procedural matters:
First, she argues that the present Petition was filed out of time, since petitioners
Motion for Extension had been denied, thereby causing the lapse of the original
period for filing the Petition.
We dispose of this argument forthwith. While it is true that the Petition was
belatedly filed, it may still be admitted and allowed by this Court in the exercise of
its discretion,55 as in fact it effectively did when it required respondent to file her
Comment.
Second, respondent argued that petitioner improperly sent its Petition to the
wrong address. On the other hand, the latter insisted that it served its Petition at
her last address on record. We note that respondent was able to secure a copy
of the Petition and intelligently respond thereto. Thus, we adopt the principle that
rules of procedure are employed only to help secure and not override substantial
justice.56 If a stringent application of the rules would hinder rather than serve the
demands of substantial justice, the former must yield to the latter.57
The Courts Ruling
We find the instant Petition impressed with merit.
I. Petitioner undertook the correct remedy in assailing the CSC Resolutions by
filing a Rule 43 Petition with the Court of Appeals.
Petitioner insists that its filing of a Rule 43 Petition to assail the CSC Resolutions
was proper, as these supposedly involved a new subject matter and were thus
issued pursuant to CSCs exercise of its quasi-judicial function. They were not
merely incidental to the execution of this Courts 2007 Decision.
We rule that filing a Rule 43 Petition with the CA is the proper remedy to assail
the CSC Resolutions, but not for the reasons advanced by petitioner.
First, the jurisdiction of the CA over petitions for review under Rule 43 is not
limited to judgments and final orders of the CSC, but can extend to appeals from
awards, judgments, final orders or resolutions issued by the latter.58Section 1,

Rule 43 of the Rules, provides in part:
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
x x x. (Emphasis supplied.)
In PAGCOR v. Aumentado, Jr.,59 this Court ruled that it is clear from the abovequoted provision that the CAs jurisdiction covers not merely final judgments and
final orders of the CSC, but also awards, judgments, final orders or resolutions of
the CSC.60
Second, although the general rule is that an order of execution is not appealable,
the CA failed to consider that there are exceptions to this rule, as illustrated in
this case.
A writ of execution is a direct command of the court to the sheriff to carry out the
mandate of the writ, which is normally the enforcement of a judgment.61 By
analogy, the CSC Resolutions were orders of execution and were issued in
connection with the implementation of this Courts 2007 Decision.
It is obvious from both the body and the dispositive portions of the CSC
Resolutions that they carried instructions to enforce this Courts 2007 Decision,
albeit erroneously made.
The dispositive portion of CSC Resolution No. 082264,62 directed petitioner to
pay respondents backwages:
WHEREFORE, the incumbent City Mayor of Makati is hereby directed to
recompute the full back salaries and other benefits of Emerita B. Odea which
she is entitled for seven (7) years, eight (8) months, and twenty-eight (28) days,
the entire period she was out of the service as a result of her illegal dismissal.
Said benefits shall include the allowances, 13th month pay, bonuses, cash gifts,
all other monetary benefits which other employees of the City Government of
Makati received within the same period, yearly fifteen (15) days sick and fifteen
(15) days vacation leave benefits for the same period including commutation of
her entire accrued leave credits that she earned prior to her illegal dismissal.
Should there appear, upon re-computation of Odeas back salaries and other
benefit, an excess of the amount of P558,944.19 which she already received,
said excess must be immediately paid her.
The City Mayor of Makati is directed to report to the Commission the action he
will take to implement the Resolution, within 15 days from receipt hereof. He is
likewise reminded that his failure to implement the decision of the Commission
shall be reason enough to cite him in indirect contempt of the Commission and
shall be the basis for the filing of administrative and criminal charges against him
before the proper forum.63 (Emphasis supplied)
The directive addressed to petitioner to recompute the amount of full back
salaries and other benefits is derived from the enforcement of this Courts 2007
Decision.
In a similar vein, the dispositive portion of CSC Resolution No. 090622,64 which
dismissed petitioners Motion for Reconsideration of the above Resolution, states
as follows:
WHEREFORE, the motion for reconsideration of the City Government of Makati
is hereby DENIED for lack of merit. Accordingly, the directive of the Commission
stated in CSC Resolution No. 08-2264 dated December 8, 2008 is REITERATED
where the incumbent City Mayor of Makati is directed to re-compute the full back
salaries and other benefits of which Emerita B. Odena is entitled to for a period of
seven (7) years, eight (8) months, and twenty-eight (28) days. x x x.
Based on the foregoing, the CA was correct in treating the CSC Resolutions as
orders of execution that were issued in connection with the implementation of this
Courts 2007 Decision. The CA, however erred in dismissing petitioners Rule 43
Petition for being improper.
To recall, the CA ruled that an order of execution is not appealable under Section
1(f), Rule 41of the Rules of Court.65 It reasoned that the correct remedy should
have been a special civil action for certiorari under Rule 65.66
Section 1(f), Rule 41provides, in pertinent part:
SECTION 1. Subject of Appeal. An appeal may be taken from a judgment or

final order that completely disposes of the case, or of a particular matter therein
when declared by these Rules to be appealable.
No appeal may be taken from:
xxxx
f) An order of execution;
xxxx
In all the above instances where the judgment or final order is not appealable,
the aggrieved party may file an appropriate special civil action under Rule 65.
(Emphasis supplied)
Indeed, the general rule is that an order of execution is not appealable;
otherwise, a case would never end.67 The CA, however, failed to consider that
there are exceptions to this rule. This Court in Banaga v. Majaducon68enumerated
the exceptions as follows:
Even prior to the promulgation of the 1997 Rules of Civil Procedure, the rule that
no appeal lies from an order or writ directing the execution of a final judgment, for
otherwise a case will not attain finality, is not absolute since a party aggrieved by
an improper or irregular execution of a judgment is not without a remedy. Thus, in
Limpin v. Intermediate Appellate Court, the Court enumerated the exceptional
circumstances where a party may elevate the matter of an improper execution for
appeal, to wit:
There may, to be sure, be instances when an error may be committed in the
course of execution proceedings prejudicial to the rights of a party. These
instances, rare though they may be, do call for correction by a superior court, as
where
1) the writ of execution varies the judgment;
2) there has been a change in the situation of the parties making execution
inequitable or unjust;
xxxx
6) it appears that the writ of execution has been improvidently issued, or
that it is defective in substance, or is issued against the wrong party, or that
the judgment debt has been paid or otherwise satisfied, or the writ was
issued without authority;
In these exceptional circumstances, considerations of justice and equity dictate
that there be some mode available to the party aggrieved of elevating the
question to a higher court. That mode of elevation may be either by appeal (writ
of error or certiorari), or by a special civil action of certiorari, prohibition, or
mandamus.
The aforementioned pronouncement has been reiterated in cases subsequent to
t he adoption of the 1997 Rules of Civil Procedure. The Court finds no sound
justification to abandon the aforequoted pronouncement insofar as it recognizes
the filing of an ordinary appeal as a proper remedy to assail a writ or order issued
in connection with the execution of a final judgment, where a factual review in the
manner of execution is called for to determine whether the challenged writ or
order has indeed varied the tenor of the final judgment.69 (Emphases supplied)
To rule that a special civil action for certiorari constitutes the sole and exclusive
remedy to assail a writ or order of execution would unduly restrict the remedy
available to a party prejudiced by an improper or illegal execution.70 It must be
borne in mind that the issue in a special civil action for certiorari is whether the
lower court acted without or in excess of jurisdiction or with grave abuse of
discretion.71
In the instant case, the appeal of the CSC Resolutions under Rule 43 is proper
on two (2) points: (1) they varied the 2007 Decision and (2) the judgment debt
has been paid or otherwise satisfied.
First, the CSC Resolutions have varied the 2007 Decision, considering that
instead of directing the payment of backwages for a period not exceeding five (5)
years, the CSC ordered petitioner to pay an amount equivalent to almost eight
(8) years.
Second, the judgment debt arising from the 2007 Decision has been satisfied as
respondent has already received payment from petitioner the amount
of P558,944.19, representing her back salaries not exceeding five (5) years, as
computed by petitioner.
All these circumstances require a factual review of the manner of the execution
of the 2007 Decision, which should have prompted the CA to take cognizance of
the appeal. Clearly, these circumstances fall under the above-quoted
enumeration of the exceptions to the general rule that an order of execution is
not subject to appeal. Thus, the CA committed grave error when it denied
petitioners appeal for being the wrong remedy.
At this juncture, however, a remand of the case to the CA would serve no useful
purpose, since the core issue hereinmore specifically, whether respondent is
entitled to the money awarded to her by the CSCmay already be resolved
using the records of the proceedings. A remand would unnecessarily burden the
parties with the concomitant difficulties and expenses of another proceeding, in
which they would have to present similar arguments and pieces of evidence.
Thus, we deem it proper to resolve the issue of whether respondent is entitled to
the amount awarded to her by the CSC. We rule in the negative.
II. Respondent is not entitled to the amount awarded to her by the CSC.
We reverse the ruling of the CSC granting respondent additional amounts
pertaining to her back wages equivalent to seven (7) years, eight (8) months and
twenty-eight (28) days, or for the entire period that she was not reinstated; more
specifically, from the time of her illegal dismissal on 15 May 2000 until her early
retirement on 13 February 2008, contrary to our 2007 Decision, which limited the
said award only to five (5) years. We reverse based on the following reasons:
1. The Letter-Complaint is a belated attempt to seek the reversal of the
2007 Decision, which should not have been considered by the CSC in the
first place. Thus, the CSC Resolutions awarding additional amounts arising
therefrom are void and ineffectual.
2. The CSC Resolutions are void and ineffectual for varying the tenor of
our 2007 Decision.
3. Petitioner had already complied with this Courts 2007 Decision, and its
obligation under the 2007 Decision was extinguished, when it paid
respondent the amount of P558,944.19 representing her backwages, from

the time of illegal dismissal up to reinstatement (in this case, early
retirement) for a period not exceeding five (5) years. The amounts awarded
by the CSC exceeding this payment is not justified under this Courts 2007
Decision.
To recall, the 2007 Decision, in relation to the CA Decision dated 14 May 2004,
directed petitioner to do two things: (1) to reinstate respondent to her former
position;72 and (2) to pay her back wages to be computed from the time of her
illegal dismissal until her reinstatement to her former position, but not to exceed
five (5) years.
The reinstatement portion was rendered moot by respondents early retirement
effective on 13 February 2008.
To comply with the second directive, the amount of P558,944.19 representing the
amount of back wages for a period not exceeding five (5) years, as computed by
petitioner, was paid to respondent.
We rule, however, that the Quitclaim executed by respondent is void and of no
effect and cannot validly foreclose her right to receive amounts pertaining to her
early retirement.
A. The Letter-Complaint is a belated attempt to seek the reversal of this Courts
2007 Decision, which should not have been considered by the CSC.
The CSC grievously erred in taking cognizance of respondents Letter-Complaint
which was actually a prohibited appeal of the 2007 Decision that by then had
long become final and executory.
It is axiomatic that final and executory judgments can no longer be attacked by
any of the parties or be modified, directly or indirectly, even by the highest court
of the land.73
In the instant case, respondents Letter-Complaint, which is clearly geared
towards the reversal of this Courts 2007 Decision, states as follows:
Ipinaglaban ko itong karapatang ito at ito ay aking nakamtan sa papel nga
lamang dahil hindi ito lubos na kapanalunan. Limang taong kabayaran katumbas
ng halos walong (8) taong pagdurusa ko at ng aking pamilya, ito ba ang tamang
katarungan na iginawad sa akin ng City Government of Makati? Proseso po ba
ng inyong pamahalaan ang pagpapapirma ng pilit ng Release quit claim at
waiver (See attached A&B) na pag hindi ka pumirma hindi mo makukuha ang
iyong kabayaran. Kinontra ko iyon sa pagdagdag ng gusto ko (See attached
C&C-1) ngunit walang nangyari. Nagalit sila, matigas daw ang ulo ko di ko raw
makukuha ang nais ko pag di ako sumunod. Pananakot para pumirma lang ako
sa waiver (see attached D &D-1) kasama ba iyon sa Decision ng Korte
Suprema? Batas ba iyon ng Civil Service Commission?
Takot na mamatay sa gutom ang pamilya ko kaya naghihimagsik man ang aking
kalooban sa matinding pagtutol ay napilitan akong pirmahan iyon- kapalit ng
tsekeng nagkakahalaga ng limang daan at limamput libong piso (P550,000.00)
lamang para sa limang (5) taong kabayaran. (See attached "E") Ito ang nangyari
noong Mayo 5, 2008 sa opisina ng legal ng City Hall ng Makati. Ito po ba ay
angkop na HATOL na inilapat sa akin ng City Government ng Makati? Alam ko
hindi ulit makatarungan ang ginawa nilang ito. Hindi makatarungang pagtanggal
sa trabaho ang ginawa nila sa akin noon naipanalo ko nga ang aking karapatan
ngunit ngayon hindi pa rin makatarungan ang kanilang kabayaran. Hindi sapat
ang limang taong (5) kabayaran sa halos magwawalong (8) taong walang
hanapbuhay, dapat po bang ako ang umatang ng kakulangan? Nasaan po ba
ang tunay na batas?
xxxx
Kaya muli po akong maninikluhod upang humingi ng tamang hustisya at
mabigyang linaw ang lahat ng katanungan ko sa kung ano ang tunay na batas ng
Civil Service Commission. Sana po ay mabigyan ng makatarungang paglapat ng
hustisya ang hamak na kawani na katulad ko nang sa ganon ay hindi na maulit
muli, at sana ay mabigyan ng karampatang lunas ang hinaing kong ito at
maimplemento nang tama ang CSC Resolution 08-132 sa lalong madaling
panahon.74 (Emphasis supplied.)
It can be gleaned from the above-quoted portion of the Letter-Complaint that
respondent was assailing the award of back wages for a period not exceeding
five (5) years as decreed by this Court in the 2007 Decision. In the said LetterComplaint, respondent expresses her dismay at the seemingly insufficient award
of back wages, which were limited to five (5) years vis--vis the period of almost
eight (8) years that she was out of work. The CSC should have realized that it did
not have any authority to entertain any attempt to seek the reversal of the 2007
Decision.
Indeed, while being well-aware that the 2007 Decision had long become final and
executory, and that any such appeal by respondent would be futile and useless, it
still erringly took cognizance of the appeal and worse, modified the 2007
Decision, instead of dismissing the Letter-Complaint outright.
As the final arbiter of all legal questions properly brought before it, our decision in
any given case constitutes the law of that particular case, from which there is no
appeal.75 The 2007 Decision bars a further repeated consideration of the very
same issues that have already been settled with finality; more particularly, the
illegal dismissal of respondent, as well as the amount of back wages that she
was entitled to receive by reason thereof.
To once again reopen that issue through a different avenue would defeat the
existence of our courts as final arbiters of legal controversies. Having attained
finality, the decision is beyond review or modification even by this Court.76 Every
litigation must come to an end once a judgment becomes final, executory and
unappealable.77Just as a losing party has the right to file an appeal within the
prescribed period, the winning party also has the correlative right to enjoy the
finality of the resolution of the latters case by the execution and satisfaction of
the judgment, which is the "life of the law."78
Thus, the CSC gravely erred in taking cognizance of respondents appeal of this
Courts 2007 Decision in the guise of a Letter-Complaint. Any proceedings and
resolutions arising therefrom should be rendered nugatory.
B. The CSC Resolutions are void and ineffectual for varying the tenor of the 2007
Decision.
We likewise rule that the CSC Resolutions are void and ineffectual for varying the
tenor of our 2007 Decision. These Resolutions directed petitioner to pay
respondents back salaries for the entire period of seven (7) years, eight (8)
months and twenty-eight (28) days or for the entire period that she had not been
reinstated; more specifically, from the time of her illegal dismissal on 15 May
2000 until her early retirement on 13 February 2008, contrary to our 2007
Decision limiting the said award only to five (5) years.
It is a fundamental rule that when a final judgment becomes executory, it thereby

becomes immutable and unalterable.79 It 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 this Court.80 The only
recognized exception is the correction of clerical errors; or the making of socalled nunc pro tunc entries which cause no prejudice to any party or when the
judgment is void.81 Any amendment or alteration that substantially affects a final
and executory judgment is null and void for lack of jurisdiction, including the
entire proceedings held for that purpose.82
In the instant case, when the CSC directed petitioner to pay respondent an
amount pertaining to her backwages for a period of almost eight (8) years, it
erroneously modified the 2007 Decision of this Court. The CSCs directive cannot
be considered as mere correction of a clerical error either, since it substantially
altered the amount of benefits respondent was entitled to as decreed by this
Court.
To recall, an examination of the CA Decision dated 14 May 200483 would reveal
that it clearly imposed a five-year limit on the amount of back wages that
respondent is entitled to receive upon her illegal dismissal. The appellate court
ruled in this wise:
However, as regards the CSCs order to pay Emerita Odeas "salaries from the
time of her separation up to her actual reinstatement," the Court deems it
appropriate to modify the same. It is settled that an illegally terminated civil
service employee is entitled to back salaries limited only to a maximum period of
five years, not full back salaries from her illegal dismissal up to her reinstatement
(Marohombsar vs. Court of Appeals, 326 SCRA 62 [2000]). Hence, considering
that Emerita Odea was dropped from the rolls effective at the close of office
hours of May 15, 2000, her back salaries shall be computed from May 16, 2000
up to date of reinstatement, but not to exceed five (5) years.84 (Emphases
supplied)
The five-year limit was also reflected in the dispositive portion of the CA Decision
as follows:
WHEREFORE, the petition is DISMISSED for lack of merit. CSC Resolution No.
010962 dated May 29, 200185and CSC Resolution No. 021491 dated November
18, 200286 are affirmed, without prejudice to the filing of whatever appropriate
disciplinary case against Emerita Odea, and subject to the modification that
payment of her back salaries shall be computed from date of dismissal up to date
of reinstatement, but in no case to exceed five (5) years.
SO ORDERED. (Emphasis supplied)87
The discussion in the 2007 Decision did not mention any qualification pertaining
to the five-year limit set by the CA on the amount of back wages to be received
by respondent. Likewise, the dispositive portion of the 2007 Decision simply
provides as follows:
WHEREFORE, the instant petition is DISMISSED for lack of merit. The assailed
CA Decision dated May 14, 2004 is hereby AFFIRMED. Costs against
petitioners.
SO ORDERED. (Emphasis supplied)
Thus, our 2007 Decision unequivocally affirmed the CA Decision dated 14 May
200488 without modification. Since there is no qualification stated in either the
body or the dispositive portion, the ordinary and literal meaning of the word
"affirm" should prevail, that is, that the CA Decision had been affirmed in its
entirety; including the five-year limit imposed by the appellate court.89 This Court
in Jose Clavano, Inc. v. HLURB90 reiterated previous rulings wherein We nullified
orders that veered away from the dispositive portion of final judgments:
Clearly, there is nothing in the body much less in the dispositive portion of the
HLURB Decision nor in the pleadings of the parties from where we may deduce
that petitioner must pay for the amounts spent in transferring title to private
respondents. It is well-settled that under these circumstances no process may be
issued to enforce the asserted legal obligation. In De la Cruz Vda. de Nabong v.
Sadang we nullified an order requiring an indemnity bond since the requirement
was not contained in the dispositive part of the final judgment. Similarly in
Supercars, Inc. v. Minister of Labor we set aside the award of backwages for the
period that the writ of execution was unserved since the final and executory
decision of the Minister of Labor merely directed the reinstatement of the laborers
to their former positions. Finally, David v. Court of Appeals affirmed the ruling of
the Court of Appeals mandating the payment of simple legal interest only with
nothing said about compounded interest since the judgment sought to be
executed therein ordered the payment of simple legal interest only and held
nothing about payment of compounded interest. This Court can do no less than
follow these precedents in the instant petition.
xxxx
Verily, since the Orders in question are a wide departure from and a material
amplification of the final and at least executory HLURB Decision, they are pro
tanto void and absolutely unenforceable for any purpose. It is well settled that
after the decision has become final and executory, it can no longer be amended
or corrected by the court except for clerical errors or mistakes. In Robles v.
Timario we nullified and set aside the imposition of interest in a subsequent order
of the lower court on the ground that the dispositive part of the judgment
"absolutely made no mention of any interest on the amount of the judgment,
hence there is no ambiguity to be clarified from the statements made in the body
of the decision x x x" We shall do the same in the instant case. (Emphasis
supplied)
We have often ruled that when the dispositive portion of a judgment is clear and
unequivocal, it must be executed strictly according to its tenor.91 A definitive
judgment is no longer subject to change, revision, amendment or reversal. Upon
finality of the judgment, the Court loses its jurisdiction to amend, modify or alter
it.92 The 2007 Decision had been clear and unambiguous to both parties;
otherwise, the parties would have filed a motion for its clarification, but neither
party did in this case. Thus, the CSCs act of increasing the amount of benefits
awarded to respondent was improper. It did not have any authority to modify, let
alone increase the said award which has already been adjudged with finality.
The CSC has no authority to vary or modify such final and executory judgment. It
is merely obliged with becoming modesty to enforce that judgment and has no
jurisdiction either to modify in any way or to reverse the same.93
C. Petitioner already complied with this Courts 2007 Decision, and its obligation
was extinguished, when it paid respondent the amount of P558,944.19
representing her backwages for a period not exceeding five (5) years, as
computed by petitioner.
Petitioner insists that it has complied with this Courts 2007 Decision upon its
payment of the amount ofP558,944.19 to respondent. We agree.
The rule is fundamental, that after a judgment has been fully satisfied, the case is
deemed terminated once and for all. It cannot be modified or altered.94 The CSC
gravely erred in modifying a judgment which had in fact already been satisfied
even before respondent filed her Letter-Complaint.
As previously stated, the 2007 Decision, in relation to the CA Decision dated 14
May 2004, directed petitioner to do two things: (1) to reinstate respondent to her
former position;95 and (2) to pay her back wages to be computed from the time of
her illegal dismissal until her reinstatement to her former position, but not to
exceed five (5) years. We rule that these directives have already been complied
with prior to the filing of the Letter-Complaint.
Moreover, respondents reinstatement was rendered moot by the fact of her early
retirement. Thus, petitioner could no longer carry out the same.
As earlier discussed, it is undisputed that the respondent received from the
petitioner the amount of P558,944.19 as backwages. Thus, upon satisfaction of
the judgment, any subsequent modification thereof ordered by the CSC was
rendered useless and futile.
D. The quitclaim executed by respondent is void and of no effect in terms of
foreclosing her rights to receive additional amounts pertaining to her retirement
benefits.
We are aware that respondent has already retired. We emphasize that this
Decision, as well as our 2007 Decision, pertain mainly to her entitlement to back
wages due to her illegal dismissal. We were made aware, however, of a quitclaim
that she executed in favor of petitioner, signed after receiving payment of her
back wages, and which seemingly included a waiver of her rights to her
retirement benefits. We deem it necessary, therefore, to discuss the implications
of that quitclaim, with regard not only to the payment of back wages, but also as
to her retirement benefits.
Petitioner argues that the waiver executed by respondent forecloses any right to
receive additional amounts pertaining to her benefits.
We cannot sustain petitioners argument. The waiver made by respondent cannot

repudiate her entitlement to her retirement benefits after having served petitioner
for almost twenty-eight years (28) or beginning 1980.
In our jurisprudence, quitclaims, waivers or releases are looked upon with
disfavor.96 In Interorient Maritime Enterprises, Inc. v. Remo,97 this Court elucidated
on the following requirements for a waiver of rights to be valid:
To be valid, a Deed of Release, Waiver and/or Quitclaim must meet the following
requirements: (1) that there was no fraud or deceit on the part of any of the
parties; (2) that the consideration for the quitclaim is credible and reasonable;
and (3) that the contract is not contrary to law, public order, public policy, morals
or good customs, or prejudicial to a third person with a right recognized by law.
Courts have stepped in to invalidate questionable transactions, especially where
there is clear proof that a waiver, for instance, was obtained from an
unsuspecting or a gullible person, or where the agreement or settlement was
unconscionable on its face. A quitclaim is ineffective in barring recovery of the full
measure of a worker's rights, and the acceptance of benefits therefrom does not
amount to estoppel. Moreover, a quitclaim in which the consideration is
scandalously low and inequitable cannot be an obstacle to the pursuit of a
worker's legitimate claim.
A reading of the wording of the Release, Waiver and Quitclaim98 executed by
respondent reveals that the waiver also included her retirement benefits as
follows:
1. In accordance with the Decision of the Supreme Court dated June 08,
2007 in SC G.R. 163683, I hereby agree to accept payment in the amount
of FIVE HUNDRED FIFTY EIGHT THOUSAND NINE HUNDRED FORTY
FOUR AND 19/100 (Php 558,944.19) which is full and total payment
pursuant to the said Decision;
2. It is understood and agreed that with the payment to me of the specified
amount, receipt of which is hereby acknowledged, I hereby release and
forever discharge the City Government of Makati of all its obligations and
liabilities pursuant to the said Decision and in relation to my previous
employment to the City Government of Makati;
3. It is also understood and agreed that the amount paid to me is in full

settlement of my benefits, except for the terminal leave earned during the
period that I rendered actual service to the City Government of Makati as
maybe allowed under the law, and I hereby waive any further action,
causes of actions, demands, damages, or any claim whatsoever against
the City Government of Makati and its officials;
4. Further, I hereby state that I have carefully read and understood the
foregoing release, waiver and quitclaim and have signed the same freely
and voluntarily. (Emphases supplied)
We find that respondents waiver is void and contrary to public policy, insofar as it
included therein her entitlement to retirement benefits.
The waiver states that petitioner was being discharged from its obligations
pertaining not only to the 2007 Decision, but also from those obligations in
relation to respondents previous employment with petitioner. Those obligations in
relation to her previous employment erroneously include within its scope her
retirement benefits. This waiver, therefore, cannot be countenanced, insofar as it
included her retirement benefits.
1wphi1
We rule that the said waiver is void in two respects, more particularly the
following: (1) there was fraud or deceit on the part of petitioner; and (2) the
consideration for the quitclaim was unreasonable.
Obviously, the waiver was merely inveigled from respondent, who had been
anxiously waiting to receive payment of her back wages as decreed by this
Court. Petitioner basically cornered respondent into signing the same by making
its execution a pre-condition before she could receive her back wages.
Similarly, the consideration for the quitclaim is unreasonably low, if we consider
that she was supposed to receive her retirement benefits as well, computed from
the time she started serving petitioner since way back in 1980. The quitclaim
basically meant that the P558,944.19 she received from petitioner as payment of
back wages was likewise in fulfillment of her retirement benefits as well.
Needless to state, the quitclaim, in effect, unduly limited the amount of retirement
pay that she was supposed to receive from petitioner. The waiver is, therefore,
without effect insofar as it foreclosed her entitlement to her retirement benefits. It
should not prevent her from receiving her retirement benefits for her employment.
WHEREFORE, the instant Petition for Review filed by City of Makati is hereby
GRANTED. The Resolutions dated 23 October 2009 and 17 March 2010 of the
Court of Appeals in CA-G.R. SP No. 108983 are REVERSED. The Release,
Waiver and Quitclaim signed by respondent, however, is without force and effect,
and should not foreclose her entitlement to retirement benefits. The City of
Makati is hereby likewise directed to immediately pay the same.
SO ORDERED.
G.R. No. 168654
March 25, 2009
ZAYBER JOHN B. PROTACIO, Petitioner,

vs.
LAYA MANANGHAYA & CO. and/or MARIO T. MANANGHAYA, Respondents.
DECISION
TINGA, J.:
Before the Court is a petition for review on certiorari1 under Rule 45 of the 1997
Rules of Civil Procedure, assailing the decision2 and resolution3 of the Court of
Appeals in CA-G.R. SP No. 85038. The Court of Appeals decision reduced the
monetary award granted to petitioner by the National Labor Relations
Commission (NLRC) while the resolution denied petitioners motion for
reconsideration for lack of merit.
The following factual antecedents are matters of record.
Respondent KPMG Laya Mananghaya & Co. (respondent firm) is a general
professional partnership duly organized under the laws of the Philippines.
Respondent firm hired petitioner Zayber John B. Protacio as Tax Manager on 01
April 1996. He was subsequently promoted to the position of Senior Tax
Manager. On 01 October 1997, petitioner was again promoted to the position of
Tax Principal.4
However, on 30 August 1999, petitioner tendered his resignation effective 30
September 1999. Then, on 01 December 1999, petitioner sent a letter to
respondent firm demanding the immediate payment of his 13th month pay, the
cash commutation of his leave credits and the issuance of his 1999 Certificate of
Income Tax Withheld on Compensation. Petitioner sent to respondent firm two

more demand letters for the payment of his reimbursement claims under pain of
the legal action.5
Respondent firm failed to act upon the demand letters. Thus, on 15 December
1999, petitioner filed before the NLRC a complaint for the non-issuance of
petitioners W-2 tax form for 1999 and the non-payment of the following benefits:
(1) cash equivalent of petitioners leave credits in the amount of P55,467.60; (2)
proportionate 13th month pay for the year 1999; (3) reimbursement claims in the
amount of P19,012.00; and (4) lump sum pay for the fiscal year 1999 in the
amount of P674,756.70. Petitioner also sought moral and exemplary damages
and attorneys fees. Respondent Mario T. Managhaya was also impleaded in his
official capacity as respondent firms managing partner.6
In his complaint,7 petitioner averred, inter alia, that when he was promoted to the
position of Tax Principal in October 1997, his compensation package had
consisted of a monthly gross compensation of P60,000.00, a 13th month pay and
a lump sum payment for the year 1997 in the amount of P240,000.00 that was
paid to him on 08 February 1998.
According to petitioner, beginning 01 October 1998, his compensation package
was revised as follows: (a) monthly gross compensation of P95,000.00, inclusive
of nontaxable allowance; (b) 13th month pay; and (c) a lump sum amount in
addition to the aggregate monthly gross compensation. On 12 April 1999,
petitioner received the lump sum amount of P573,000.00 for the fiscal year
ending 1998.8
Respondent firm denied it had intentionally delayed the processing of petitioners
claims but alleged that the abrupt departure of petitioner and three other
members of the firms Tax Division had created problems in the determination of
petitioners various accountabilities, which could be finished only by going over
voluminous documents. Respondents further averred that they had been taken
aback upon learning about the labor case filed by petitioner when all along they
had done their best to facilitate the processing of his claims.9
During the pendency of the case before the Labor Arbiter, respondent firm on
three occasions sent check payments to petitioner in the following amounts:
(1) P71,250.00, representing petitioners 13th month pay; (2)P54,824.18, as
payments for the cash equivalent of petitioners leave credits and reimbursement
claims; and (3)P10,762.57, for the refund of petitioners taxes withheld on his
vacation leave credits. Petitioners copies of his withholding tax certificates were
sent to him along with the check payments.10 Petitioner acknowledged the receipt
of the 13th month pay but disputed the computation of the cash value of his
vacation leave credits and reimbursement claims.11
On 07 June 2002, Labor Arbiter Eduardo J. Carpio rendered a decision,12 the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering respondents to jointly and
solidarily pay complainant the following:
P12,681.00 - representing the reimbursement claims of complainant;
P28,407.08 - representing the underpayment of the cash equivalent of the
unused leave credits of complainant;
P573,000.00 - representing complainants 1999 year-end lump sum
payment; and
10% of the total judgment awards way of attorneys fees.
SO ORDERED.13
The Labor Arbiter awarded petitioners reimbursement claims on the ground that
respondent firms refusal to grant the same was not so much because the claim
was baseless but because petitioner had failed to file the requisite
reimbursement forms. He held that the formal defect was cured when petitioner
filed several demand letters as well as the case before him.14
The Labor Arbiter held that petitioner was not fully paid of the cash equivalent of
the leave credits due him because respondent firm had erroneously based the
computation on a basic pay of P61,000.00. He held that the evidence showed
that petitioners monthly basic salary was P95,000.00 inclusive of the other
benefits that were deemed included and integrated in the basic salary and that
respondent firm had computed petitioners 13th month pay based on a monthly
basic pay of P95,000.00; thus, the cash commutation of the leave credits should
also be based on this figure.15
The Labor Arbiter also ruled that petitioner was entitled to a year-end payment
of P573,000.00 on the basis of the company policy of granting yearly lump sum
payments to petitioner during all the years of service and that respondent firm
had failed to give petitioner the same benefit for the year 1999 without any
explanation.16
Aggrieved, respondent firm appealed to the NLRC. On 21 August 2003, the
NLRC rendered a modified judgment,17 the dispositive portion of which states:
WHEREFORE, the Decision dated June 7, 2002 is hereby Affirmed with the
modification that the complainant is only entitled to receive P2,301.00 as
reimbursement claims. The award of P12,681.00 representing the
reimbursement claims of complainant is set aside for lack of basis.
SO ORDERED.18
From the amount of P12,681.00 awarded by the Labor Arbiter as payment for the
reimbursement claims, the NLRC lowered the same to P2,301.00 representing
the amount which remained unpaid.19 As regards the issues on the lump sum
payments and cash equivalent of the leave credits, the NLRC affirmed the
findings of the Labor Arbiter.
Respondents filed a motion for reconsideration20 but the NLRC denied the motion
for lack of merit.21 Hence, respondents elevated the matter to the Court of
Appeals via a petition for certiorari.22
In the assailed Decision dated 19 April 2005, the Court of Appeals further
reduced the total money award to petitioner, to wit:
WHEREFORE, in the light of the foregoing, the assailed resolution of public
respondent NLRC dated August 21, 2003 in NLRC NCR Case No. 30-12-0092799 (CA No. 032304-02) is hereby MODIFIED, ordering petitioner firm to pay
private respondent the following:
(1) P2,301.00 representing private respondents reimbursement claims;
(2) P9,802.83 representing the underpayment of the cash equivalent of
private respondents unused leave credits;
(3) P10,000.00 attorneys fees.

SO ORDERED.23
Petitioner sought reconsideration. In the assailed Resolution dated 27 June
2005, the Court of Appeals denied petitioners motion for reconsideration for lack
of merit.
Hence, the instant petition, raising the following issues:
I.
WHETHER PUBLIC RESPONDENT COURT OF APPEALS SUMMARY DENIAL
OF PETITIONERS MOTION FOR RECONSIDERATION VIOLATES THE
CONSTITUTIONAL REQUIREMENT THAT COURT DECISIONS MUST STATE
THE LEGAL AND FACTUAL BASIS [THEREOF].
II
WHETHER PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AND ACTED IN WANTON EXCESS OF
JURISDICTION IN TAKING COGNIZANCE OF [RESPONDENTS] PETITION
FOR CERTIORARI WHEN THE RESOLUTION THEREOF HINGES ON MERE
EVALUATION OF EVIDENCE.
III.
WHETHER PUBLIC RESPONDENT COURT OF APPEALS WANTONLY
ABUSED ITS DISCRETION IN EMPLOYING A LARGER DIVISOR TO
COMPUTE PETITIONERS DAILY SALARY RATE THEREBY DIMINISHING HIS
BENEFITS, IN [VIOLATION] OF THE LABOR CODE.
IV.
WHETHER PUBLIC RESPONDENT COURT OF APPEALS CAPRICIOUSLY
ABUSED ITS DISCRETION IN REVERSING THE [CONCURRING] FINDINGS
OF BOTH LABOR ARBITER AND NLRC ON THE COMPENSABLE NATURE OF
PETITIONERS YEAR END [LUMP] SUM PLAY [sic] CLAIM.24
Before delving into the merits of the petition, the issues raised by petitioner
adverting to the Constitution must be addressed. Petitioner contends that the
Court of Appeals resolution which denied his motion for reconsideration violated
Article VIII, Section 14 of the Constitution, which states:
Section 14. No decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall
be refused due course or denied without stating the legal basis therefor.
Obviously, the assailed resolution is not a "decision" within the meaning of the
Constitutional requirement. This mandate is applicable only in cases "submitted
for decision," i.e., given due course and after filing of briefs or memoranda and/or
other pleadings, as the case may be.25 The requirement is not applicable to a
resolution denying a motion for reconsideration of the decision. What is
applicable is the second paragraph of the above-quoted Constitutional provision
referring to "motion for reconsideration of a decision of the court." The assailed
resolution complied with the requirement therein that a resolution denying a
motion for reconsideration should state the legal basis of the denial. It sufficiently
explained that after reading the pleadings filed by the parties, the appellate court
did not find any cogent reason to reverse itself.
Next, petitioner argues that the Court of Appeals erred in giving due course to the
petition for certiorari when the resolution thereof hinged on mere evaluation of
evidence. Petitioner opines that respondents failed to make its case in showing
that the Labor Arbiter and the NLRC had exercised their discretion in an arbitrary
and despotic manner.
As a general rule, in certiorari proceedings under Rule 65 of the Rules of Court,
the appellate court does not assess and weigh the sufficiency of evidence upon
which the Labor Arbiter and the NLRC based their conclusion. The query in this
proceeding is limited to the determination of whether or not the NLRC acted
without or in excess of its jurisdiction or with grave abuse of discretion in
rendering its decision. However, as an exception, the appellate court may
examine and measure the factual findings of the NLRC if the same are not
supported by substantial evidence.26 The Court has not hesitated to affirm the
appellate courts reversals of the decisions of labor tribunals if they are not
supported by substantial evidence.27
The Court is not unaware that the appellate court had reexamined and weighed
the evidence on record in modifying the monetary award of the NLRC. The Court
of Appeals held that the amount of the year-end lump sum compensation was not
fully justified and supported by the evidence on record. The Court fully agrees
that the lump sum award of P573,000.00 to petitioner seemed to have been
plucked out of thin air. Noteworthy is the fact that in his position paper, petitioner
claimed that he was entitled to the amount of P674,756.70.28 The variance
between the claim and the amount awarded, with the record bereft of any proof
to support either amount only shows that the appellate court was correct in
holding that the award was a mere speculation devoid of any factual basis. In the
exceptional circumstance as in the instant case, the Court finds no error in the
appellate courts review of the evidence on record.
After an assessment of the evidence on record, the Court of Appeals reversed
the findings of the NLRC and the Labor Arbiter with respect to the award of the
year-end lump sum pay and the cash value of petitioners leave credits. The
appellate court held that while the lump sum payment was in the nature of a
proportionate share in the firms annual income to which petitioner was entitled,
the payment thereof was contingent upon the financial position of the firm.
According to the Court of Appeals, since no evidence was adduced showing the
net income of the firm for fiscal year ending 1999 as well as petitioners
corresponding share therein, the amount awarded by the labor tribunals was a
baseless speculation and as such must be deleted.29
On the other hand, the NLRC affirmed the Labor Arbiters award of the lump sum
payment in the amount ofP573,000.00 on the basis that the payment thereof had
become a company policy which could not be withdrawn arbitrarily. Furthermore,
the NLRC held that respondent firm had failed to controvert petitioners claim that
he was responsible for generating some P7,365,044.47 in cash revenue during
the fiscal year ending 1999.
The evidence on record establishes that aside from the basic monthly
compensation,30 petitioner received a yearly lump sum amount during the first two
years31 of his employment, with the payments made to him after the annual net
incomes of the firm had been determined. Thus, the amounts thereof varied and
were dependent on the firms cash position and financial performance.32 In one of
the letters of respondent Mananghaya to petitioner, the amount was referred to
as petitioners "share in the incentive compensation program."33
While the amount was drawn from the annual net income of the firm, the
distribution thereof to non-partners or employees of the firm was not, strictly
speaking, a profit-sharing arrangement between petitioner and respondent firm
contrary to the Court of Appeals finding. The payment thereof to non-partners of
the firm like herein petitioner was discretionary on the part of the chairman and
managing partner coming from their authority to fix the compensation of any
employee based on a share in the partnerships net income.34 The distribution
being merely discretionary, the year-end lump sum payment may properly be
considered as a year-end bonus or incentive. Contrary to petitioners claim, the
granting of the year-end lump sum amount was precisely dependent on the firms
net income; hence, the same was payable only after the firms annual net income
and cash position were determined.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something
given in addition to what is ordinarily received by or strictly due the recipient.35 A
bonus is granted and paid to an employee for his industry and loyalty which
contributed to the success of the employers business and made possible the
realization of profits.36 Generally, a bonus is not a demandable and enforceable
obligation. It is so only when it is made part of the wage or salary or
compensation. When considered as part of the compensation and therefore
demandable and enforceable, the amount is usually fixed. If the amount would be
a contingent one dependent upon the realization of the profits, the bonus is also
not demandable and enforceable.37
In the instant case, petitioners claim that the year-end lump sum represented the
balance of his total compensation package is incorrect. The fact remains that the
amounts paid to petitioner on the two occasions varied and were always
dependent upon the firms financial position.
Moreover, in Philippine Duplicators, Inc. v. NLRC,38 the Court held that if the
bonus is paid only if profits are realized or a certain amount of productivity
achieved, it cannot be considered part of wages. If the desired goal of production
is not obtained, of the amount of actual work accomplished, the bonus does not
accrue.39 Only when the employer promises and agrees to give without any
conditions imposed for its payment, such as success of business or greater

production or output, does the bonus become part of the wage.40
Petitioners assertion that he was responsible for generating revenues amounting
to more than P7 million remains a mere allegation in his pleadings. The records
are absolutely bereft of any supporting evidence to substantiate the allegation.
The granting of a bonus is basically a management prerogative which cannot be
forced upon the employer who may not be obliged to assume the onerous
burden of granting bonuses or other benefits aside from the employees basic
salaries or wages.41 Respondents had consistently maintained from the start that
petitioner was not entitled to the bonus as a matter of right. The payment of the
year-end lump sum bonus based upon the firms productivity or the individual
performance of its employees was well within respondent firms prerogative.
Thus, respondent firm was also justified in declining to give the bonus to
petitioner on account of the latters unsatisfactory performance.
Petitioner failed to present evidence refuting respondents allegation and proof
that they received a number of complaints from clients about petitioners "poor
services." For purposes of determining whether or not petitioner was entitled to
the year-end lump sum bonus, respondents were not legally obliged to raise the
issue of substandard performance with petitioner, unlike what the Labor Arbiter
had suggested. Of course, if what was in question was petitioners continued
employment vis--vis the allegations of unsatisfactory performance, then
respondent firm was required under the law to give petitioner due process to
explain his side before instituting any disciplinary measure. However, in the
instant case, the granting of the year-end lump sum bonus was discretionary and
conditional, thus, petitioner may not question the basis for the granting of a mere
privilege.
1avvph!1
With regard to the computation of the cash equivalent of petitioners leave

credits, the Court of Appeals used a base figure of P71,250.00 representing
petitioners monthly salary as opposed to P95,000.00 used by the Labor Arbiter
and NLRC. Meanwhile, respondents insist on a base figure of only P61,000.00,
which excludes the advance incentive pay of P15,000.00, transportation
allowance of P15,000.00 and representation allowance ofP4,000.00, which
petitioner regularly received every month. Because of a lower base figure
(representing the monthly salary) used by the appellate court, the cash
equivalent of petitioners leave credits was lowered fromP28,407.08

to P9,802.83.
lawphil.net
The monthly compensation of P71,250.00 used as base figure by the Court of

Appeals is totally without basis. As correctly held by the Labor Arbiter and the
NLRC, the evidence on record reveals that petitioner was receiving a monthly
compensation of P95,000.00 consisting of a basic salary of P61,000.00, advance
incentive pay ofP15,000.00, transportation allowance of P15,000.00 and
representation allowance of P4,000.00. These amounts totaling P95,000.00 are
all deemed part of petitioners monthly compensation package and, therefore,
should be the basis in the cash commutation of the petitioners leave credits.
These allowances were customarily furnished by respondent firm and regularly
received by petitioner on top of the basic monthly pay of P61,000.00. Moreover,
the Labor Arbiter noted that respondent firms act of paying petitioner a 13th
month-pay at the rate of P95,000.00 was an admission on its part that petitioners
basic monthly salary was P95,000.00
The Court of Appeals, Labor Arbiter and NLRC used a 30-working day divisor
instead of 26 days which petitioner insists. The Court of Appeals relied on
Section 2, Rule IV, Book III42 of the implementing rules of the Labor Code in using
the 30-working day divisor. The provision essentially states that monthly-paid
employees are presumed to be paid for all days in the month whether worked or
not.
The provision has long been nullified in Insular Bank of Asia and American
Employees Union (IBAAEU) v. Hon. Inciong, etc., et al.,43 where the Court ruled
that the provision amended the Labor Codes provisions on holiday pay by
enlarging the scope of their exclusion.44 In any case, the provision is inapplicable
to the instant case because it referred to the computation of holiday pay for
monthly-paid employees.
Petitioners claim that respondent firm used a 26-working day divisor is supported
by the evidence on record. In a letter addressed to
petitioner,45 respondents counsel expressly admitted that respondent used a 26working day divisor. The Court is perplexed why the tribunals below used a 30day divisor when there was an express admission on respondents part that they
used a 26-day divisor in the cash commutation of leave credits. Thus, with a
monthly compensation of P95,000.00 and using a 26-working day divisor,

petitioners daily rate is P3,653.85.46 Based on this rate, petitioners cash
equivalent of his leave credits of 23.5 is P85,865.48.47 Since petitioner has
already received the amount P46,009.67, a balance of P39,855.80 remains
payable to petitioner.
WHEREFORE, the instant petition for review on certiorari is PARTLY GRANTED.
The Decision of the Court of Appeals in CA-G.R. SP No. 85038
is AFFIRMED with the MODIFICATION that respondents are liable for the
underpayment of the cash equivalent of petitioners leave credits in the amount
of P39,855.80.
SO ORDERED.
G.R. No. 187232
April 17, 2013
ZENAIDA D. MENDOZA, Petitioner,

vs.
HMS CREDIT CORPORATION and/or FELIPE R. DIEGO, MA. LUISA B.
DIEGO, HONDA MOTOR SPORTS CORPORATION and/or FELIPE R. DIEGO,
MA. LUISA B. DIEGO, BETA MOTOR TRADING INCORPORATED and/or
FELIPE DIEGO, MA. LUISA B. DIEGO, JIANSHE CYCLE WORLD IN
CORPORATED and/or JOSE B. DIEGO, Respondents.
DECISION
SERENO, CJ.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court, assailing the Decision dated 14 November 20081 issued by the Court of
Appeals (CA) in CA G.R. SP No. 82653.
Petitioner Zenaida D. Mendoza (Mendoza) was the Chief Accountant of
respondent HMS Credit Corporation (HMS Credit) beginning 1 August
1999.2 During her employment, she simultaneously serviced three other
respondent companies, all part of the Honda Motor Sports Group (HMS
Group),3 namely, Honda Motor Sports Corporation (Honda Motors), Beta Motor
Trading Incorporated (Beta Motor) and Jianshe Cycle World
(Jianshe).4Respondent Luisa B. Diego (Luisa) was the Managing Director of HMS
Credit, while respondent Felipe R. Diego (Felipe) was the company officer to
whom Mendoza directly reported.5
Mendoza avers that on 11 April 2002, after she submitted to Luisa the audited
financial statements of Honda Motors, Beta Motor, and Jianshe, Felipe
summoned Mendoza to advise her of her termination from service.6
She claims that she was even told to leave the premises without being given the
opportunity to collect her personal belongings.7
Mendoza also contends that when she went back to the office building on 13
April 2012, the stationed security guard stopped her and notified her of the
instruction of Felipe and Luisa to prohibit her from entering the premises.8 Later
that month, she returned to the office to pick up her personal mail and to settle
her food bills at the canteen, but the guard on duty told her that respondents had
issued a memorandum barring her from entering the building.9
On the other hand, respondents maintain that Mendoza was hired on the basis of
her qualification as a Certified Public Accountant (CPA),10 which turned out to be
a misrepresentation.11 They likewise contend that not only did she fail to disclose
knowledge of the resignations of two HMS Group officers, Art Labasan (Labasan)
and Jojit de la Cruz (de la Cruz), and their subsequent transfer to a competitor
company, but she also had a hand in pirating them. Thus, on 12 April 2002, they
supposedly confronted her about these matters. In turn, she allegedly told them
that if they had lost their trust in her, it would be best for them to part
ways.12 Accordingly, they purportedly asked her to propose an amount
representing her entitlement to separation benefits. Before she left that night,
they allegedly handed her P30,000 as payment for the external auditor she had
contracted to examine the books of the HMS Group.13
On 30 April 2002, Mendoza filed with the National Labor Relations Commission
(NLRC) a Complaint for Illegal Dismissal and Non-payment of Salaries/Wages,
13th Month Pay and Mid-Year Bonus.14 The case was docketed as NLRC-NCR
North Sector Case No. 00-04-02576-2002.15
On 28 January 2003, the Labor Arbiter rendered a Decision ruling that Mendoza
had been illegally dismissed, and that the dismissal had been effected in violation
of due process requirements.16 Thus, the Labor Arbiter held respondents jointly
and severally liable for the payment of separation pay, backwages, moral and
exemplary damages, and attorneys fees in the total amount of P1,025,081.82.17
Respondents filed an Appeal dated 14 March 200318 and a Motion to Reduce
Appeal Bond dated 21 March 2003 with the National Labor Relations
Commission (NLRC), tendering the amount of only P650,000 on the ground of
purported business losses.19 In its Order dated 30 May 2003, the NLRC denied
the request for the reduction of the appeal bond, and directed respondents to put
up the additional amount of P122,801.66 representing the differential between
the judgment award not including the moral and exemplary damages and
attorneys fees and the sum previously tendered by them.20 Respondents
complied with the Order.21
On 30 September 2008, the NLRC rendered a Decision reversing the ruling of
the Labor Arbiter.22 In declaring that Mendoza had not been summarily dismissed,
the NLRC held as follows: (a) her claim that she was terminated was
incompatible with respondents act of entrusting the amount of P30,000 to her as
payment for the external auditor; (b) the same act demonstrated that the parties
parted amicably, and that she had the intention to resign; and (c) her admission
that respondents allowed her to take a leave of absence subsequent to their
confrontation also belied her claim that she was dismissed.23 Further, it also ruled
that her misrepresentation as to her qualifications, her concealment of her
meeting with a rival motorcycle dealership, and her non-disclosure of her meeting
with the officers and mechanics of HMS Group amounted to a breach of trust,
which constituted a just cause for termination, especially of managerial
employees like her.24 Nevertheless, it ordered respondents to pay her separation
pay equivalent to one month for every year of service.25
The NLRC denied the Motion for Reconsideration filed by Mendoza,26 prompting
her to file a Petition for Certiorari with the CA, which rendered a Decision
affirming that of the lower tribunal.27 The CA ruled that that there was no
dismissal, as the parties had entered into a compromise agreement whereby
respondents offered to pay Mendoza separation benefits in exchange for her
voluntary resignation.28 It further explained:
On the merits, this case involves neither dismissal on the part of the employer
nor abandonment on the part of the employee. On the evening of April 11, 2002,
respondents and petitioner had already agreed on an amicable settlement with
petitioner voluntarily resigning her employment and respondents paying her

separation benefits. This is evident from the amiable manner with which the
parties ended their meeting, with respondents entrusting to petitioner
the P30,000.00 payment for the external auditor and the petitioner considering
her absence the following day as a previously approved leave from work. It
appears, however, that respondents had a sudden change of heart while
petitioner was away on leave on April 12, 2002 because when the latter returned
on April 13, 2002 she was already prevented from entering the office premises
per strict instructions from respondents. Clearly, this was an attempt on the part
of respondents to effectively renege on its commitment to pay separation benefits
to petitioner.
While, generally, an employee who voluntarily resigns from employment is not
entitled to separation pay, an arrangement whereby the employee would receive
separation pay despite having resigned voluntarily constitutes a contract which is
freely entered into and which must be performed in good faith. Thus, the NLRC
correctly sustained the prior commitment of respondents to pay separation
benefits to petitioner. For although loss of trust and confidence could have been
a valid ground available to respondents, they did not institute the appropriate
dismissal procedures against petitioner. Instead, they opted to enter into a
compromise agreement with an offer to pay separation benefits in exchange for
the latters voluntary resignation. It is an accepted practice for parties to adjust
their difficulties by mutual consent and, through the execution of a compromise
agreement, prevent or to put an end to a lawsuit. And, since there was no
dismissal, valid or otherwise, involved in this case, the non-observance of the
notice requirements is of no relevance.29
Mendoza consequently filed the present Petition for Review, raising the following
grounds:
a. The CA erred in concluding that respondents had timely filed their
appeal with the NLRC.
b. The CA erred in ruling that there was no illegal dismissal.30
Thus, in disposing of the instant case, the following issues must be discussed:
(a) whether the appeal of respondents to the NLRC was timely filed, and (b)
whether Mendoza was illegally dismissed.
First issue: Timely filing of the

appeal before the NLRC
The relevant portion of Article 223 of the Labor Code on appeals of decisions,
awards or orders of the Labor Arbiter as follows:
Art. 223. x x x In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission in
the amount equivalent to the monetary award in the judgment appealed from.
In Pasig Cylinder v. Rollo,31 this Court explained that the required posting of a
bond equivalent to the monetary award in the appealed judgment may be
liberally interpreted as follows:
x x x. True, Article 223 of the Labor Code requires the filing of appeal bond "in the
amount equivalent to the monetary award in the judgment appealed from."
However, both the Labor Code and this Courts jurisprudence abhor rigid
application of procedural rules at the expense of delivering just settlement of
labor cases. Petitioners reasons for their filing of the reduced appeal bond the
downscaling of their operations coupled with the amount of the monetary award
appealed are not unreasonable. Thus, the recourse petitioners adopted
constitutes substantial compliance with Article 223 consistent with our ruling in
Rosewood Processing, Inc. v. NLRC, where we allowed the appellant to file a
reduced bond of P50,000 (accompanied by the corresponding motion) in its
appeal of an arbiters ruling in an illegal termination case awarding P789,154.39
to the private respondents.32
In the case at bar, respondents filed a Motion to Reduce Appeal Bond, tendering
the sum of P650,000 instead of the P1,025,081.82 award stated in the Decision
of the Labor Arbiter because it was allegedly what respondents could afford,
given the business losses they had suffered at that time.33 Upon the denial by the
NLRC of this Motion, respondents promptly complied with its directive to post the
differential in the amount ofP122,801.66, which had been computed without
including the award of moral and exemplary damages and attorneys
fees.34 Following the pronouncement in Pasig Cylinder, the CA was correct in
holding that the appeal was timely filed on account of respondents substantial
compliance with the requirement under Article 223.
Second issue: Illegal dismissal of

Mendoza
The Labor Code provides for instances when employment may be legally
terminated by either the employer or the employee, to wit:
Art. 282. Termination by employer. An employer may terminate an employment
for any of the following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
d. Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representatives; and
e. Other causes analogous to the foregoing.
xxx
xxx
xxx
Art. 285. Termination by employee.

a. An employee may terminate without just cause the employee-employer
relationship by serving a written notice on the employer at least one (1)
month in advance. The employer upon whom no such notice was served
may hold the employee liable for damages.
b. An employee may put an end to the relationship without serving any
notice on the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the honor
and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the

employer or his representative;
3. Commission of a crime or offense by the employer or his
representative against the person of the employee or any of the
immediate members of his family; and
4. Other causes analogous to any of the foregoing.
In instances in which the termination of employment by the employer is based on
breach of trust, a distinction must be made between rank-and-file employees and
managerial employees, thus:
The degree of proof required in labor cases is not as stringent as in other types
of cases. It must be noted, however, that recent decisions of this Court have
distinguished the treatment of managerial employees from that of rank-and-file
personnel, insofar as the application of the doctrine of loss of trust and
confidence is concerned. Thus, with respect to rank-and-file personnel, loss of
trust and confidence as ground for valid dismissal requires proof of involvement
in the alleged events in question, and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But as regards a managerial
employee, the mere existence of a basis for believing that such employee has
breached the trust of his employer would suffice for his dismissal. Hence, in the
case of managerial employees, proof beyond reasonable doubt is not required, it
being sufficient that there is some basis for such loss of confidence, such as
when the employer has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence demanded
by his position.35 (Emphasis supplied)
Further, in the case of termination by the employer, it is not enough that there
exists a just cause therefor, as procedural due process dictates compliance with
the two-notice rule in effecting a dismissal: (a) the employer must inform the
employee of the specific acts or omissions for which the dismissal is sought, and
(b) the employer must inform the employee of the decision to terminate
employment after affording the latter the opportunity to be heard.36
On the other hand, if the termination of employment is by the employee, the

resignation must show the concurrence of the intent to relinquish and the overt
act of relinquishment, as held in San Miguel Properties v. Gucaban:37
Resignation the formal pronouncement or relinquishment of a position or office
is the voluntary act of an employee who is in a situation where he believes
that personal reasons cannot be sacrificed in favor of the exigency of the service,
and he has then no other choice but to disassociate himself from employment.
The intent to relinquish must concur with the overt act of relinquishment; hence,
the acts of the employee before and after the alleged resignation must be
considered in determining whether he in fact intended to terminate his
employment. In illegal dismissal cases, fundamental is the rule that when an
employer interposes the defense of resignation, on him necessarily rests the
burden to prove that the employee indeed voluntarily resigned.38(Emphases
supplied)
In this case, the NLRC and the CA were in agreement that although Mendoza
committed acts that amounted to breach of trust, the termination of her
employment was not on that basis.39 Instead, both tribunals held that the parties
parted amicably, with Mendoza evincing her voluntary intention to resign and
respondents proposed settlement to pay her separation benefits.40 This Court
does not agree with these findings in their entirety.
Whether Mendoza was a Chief Accountant of HMS Credit, as stated in her
appointment letter,41 or a Finance Officer of all the corporations under the HMS
Group, as claimed by respondents,42 what is certain is that she was a managerial
employee. In securing this position, she fraudulently misrepresented her
professional qualifications by stating in her Personal Information Sheet that she
was a CPA. Based on the records, she never controverted this imputation of
dishonesty or, at the very least, provided any explanation therefor. Thus, this
deceitful action alone was sufficient basis for respondents loss of confidence in
her as a managerial employee.
In addition, this Court finds no reason to deviate from the factual findings of the
NLRC and the CA as regards the existence of other circumstances that
demonstrated Mendozas breach of trust. The NLRC held in this wise:
In sum, the commission finds that Mendoza was not illegally

dismissed. Respondents could have validly dismissed her for just cause
because she had forfeited her employment by having incurred breach of trust
that they had reposed in her. She had concealed from them the fact that she was
going to visit a rival motorcycle dealership in Tarlac, called Honda Mar, on the
afternoon of April 5, 2002, in the company of its owner; the notice she had given
was that, on the morning of that date, she would get her childs report card from
her school. She also failed to disclose to them the fact that she saw in that store
Labasan and De la Cruz, and respondents mechanics, Gatus and Mejis, who
cleaned and painted the same. And she gave the appearance of giving aid and
support to respondents competitor, to the prejudice of their business standing
and goodwill. These were acts of disloyalty for which [they] would have been
justified in terminating her service on the ground of loss of confidence.43
1wphi1
However, despite the existence of a just cause for termination, Mendoza was
nevertheless dismissed from service in violation of procedural due process, as
respondents failed to observe the two-notice requirement. Instead, respondents
insisted that she voluntarily resigned, which argument the NLRC and the CA
sustained. This Court is not persuaded.
Respondents were unable to discharge their burden to prove the
contemporaneous existence of an intention on the part of Mendoza to resign and
an overt act of resignation. Aside from their self-serving allegation that she had
offered to resign after they had expressed their loss of trust in her, there is
nothing in the records to show that she voluntarily resigned from her position in
their company. In this regard, it is worthy to underscore the established rule that
the filing of a complaint for illegal dismissal is inconsistent with resignation or
abandonment.44
Moreover, the conclusion of the NLRC and the CA that Mendoza voluntarily
resigned in consideration of respondents supposed payment of a settlement is
bereft of any basis. The lower tribunals merely surmised that the parties forged a
compromise agreement despite respondents own admission that they never
decided thereon.45 In fact, the records are clear that none of the parties claimed
the existence of any settlement in exchange for her resignation.
From the foregoing discussion, it is evident that although there was a just cause
for terminating the services of Mendoza, respondents were amiss in complying
with the two-notice requirement. Following the prevailing jurisprudence on the

matter, if the dismissal is based on a just cause, then the non-compliance with
procedural due process should not render the termination from employment
illegal or ineffectual.46 Instead, the employer must indemnify the employee in the
form of nominal damages.47 Therefore, the dismissal of Mendoza should be
upheld, and respondents cannot be held liable for the payment of either
backwages or separation pay. Considering all the circumstances surrounding this
case, this Courts finds the award of nominal damages in the amount
of P30,00048 to be in order.
WHEREFORE, the Petition for Review is DENIED. The Decision dated 14
November 2008 of the CA in CA G.R. SP No. 82653 is AFFIRMED WITH
MODIFICATION: the award of separation pay is deleted and in lieu thereof,
nominal damages in the amount of P30,000 is awarded in favor of petitioner.
SO ORDERED.
G.R. No. 185001
September 25, 2009
RONNIE H. LUMAYNA, ROMEO O. CHULANA, HELEN A. BONHAON, PETER

G. LAHINA, JR., JUANITO O. LICHNACHAN, JR., SAMMY C. CHANG-AGAN,
BONIFACIO L. BAICHON, REYNALDO B. UCHAYAN, JOHN L. MARTIN,
AUGUSTA C. PANITO, ROSENDO P. BONGYO, JR., KLARISA MAE C.
CHAWANA, Petitioners,
vs.
COMMISSION ON AUDIT, Respondent.
DECISION
DEL CASTILLO, J.:
Assailed in this Petition for Certiorari under Rule 64 in relation to Rule 65 of the
Rules of Court is the Decision No. 2005-0711 dated 29 December 2005 of the
Commission on Audit (COA) affirming the Notice of Disallowance2 of the 5%
salary increase of the municipal personnel of the Municipality of Mayoyao, Ifugao
covering the period 15 February to 30 September 2002, in the amount
of P895,891.50, and requiring petitioners to refund the same. Also assailed is the
COA Decision No. 2007-0403 dated 25 October 2007 denying the Motion for
Reconsideration.
On 15 June 2001, the Department of Budget and Management (DBM) issued

Local Budget Circular No. 744 (LBC No. 74), authorizing the grant of a maximum
of 5% salary adjustment to personnel in the Local Government Units (LGUs)
effective 1 July 2001, pursuant to Republic Act No. 91375 dated 8 June 2001.
On 13 May 2002, the Sangguniang Bayan of Mayoyao, Ifugao, (Sangguniang
Bayan) enacted Resolution No. 41, s. 2002,6 approving the 2002 Annual
Municipal Budget, and appropriating the amount of P1,590,376.00 thereof for the
salaries and benefits of 17 newly created positions in the municipality.7 Upon
review by the SangguniangPanlalawigan of the Province of Ifugao
(Sangguniang Panlalawigan), the 2002 Annual Municipal Budget of Mayoyao,
Ifugao was declared operative subject to the conditions that the creation of 17
new positions shall in no case be made retroactive and that the filling up of such
positions be made strictly in accordance with the Civil Service rules and
regulations.8
On 8 July 2002, the Sangguniang Bayan approved Resolution No. 66, s. 2002,
adopting a first class salary scheme for the municipality and implementing a 5%
salary increase for its personnel in accordance with LBC No. 74.9 For this
purpose, it enacted Resolution No. 94, s. 2002, re-aligning the amount
of P1,936,524.9610 from the 2002 municipal budget originally appropriated for the
salaries and benefits of the 17 new positions.11
On 12 July 2002, DBM issued Local Budget Circular No. 7512 (LBC No. 75)
providing guidelines on personal services limitation, pursuant to Section 325(a) of
the Local Government Code of 1991 (LGC).
On 16 December 2002, the Sangguniang Bayan through Resolution No. 144, s.
2002, approved the 2003 Annual Municipal Budget stated in Appropriation
Ordinance No. 03.13 This was reviewed by the SangguniangPanlalawigan and
approved on 10 February 2003 via Resolution No. 2003808.14 The SangguniangPanlalawigan, however, disallowed the 5% salary
increase and the re-alignment of funds pursuant to Resolution No. 94, s. 2002, of
the Sangguniang Bayan on the ground that the re-alignment is not sufficient in
form to implement a salary increase.
On 9 June 2003, the Sangguniang Bayan enacted Resolution No. 73, s.
2003,15 earnestly requesting theSangguniang Panlalawigan to reconsider its
Resolution.16 Finding good faith on the part of the officials of the municipality,
the Sangguniang Panlalawigan in its Resolution No. 2004-1185 reconsidered its
earlier position. Thus, the Sangguniang Panlalawigan allowed the adoption of a
first class salary schedule and the 5% salary increase of the Municipality of
Mayoyao, Ifugao.
Meanwhile, the Regional Legal and Adjudication Office (RLAO) of the COACordillera Administrative Region (COA-CAR) issued a Notice of Disallowance
dated 16 May 2003 of the amount of P895,891.50, representing payments for
salary increases of municipal personnel, for the period 15 February - 30
September 2002. According to COA-CAR, the grant of the increase was not in
accordance with Sections 325 and 326 of the LGC; that the limitation on personal
services had been exceeded; and that the Sangguniang Bayan resolution was
not the appropriate manner of granting the increase. Pursuant thereto, the
following persons, petitioners herein, were ordered to refund the said amount:
Helen A. Bonhain
Peter G. Lahina, Jr.
Ronnie H. Lumayna
Budget Officer
Municipal Accountant
Municipal Mayor
Romeo O. Chulana
Juanito O. Lichnachan, Jr.
Sammy C. Chang-agan
Bonifacio L. Baichon
Reynaldo B. Uchayan
John L. Martin
Augusta C. Panitio
Rosendo P. Bongyo, Jr.
Klarisa Mae C. Chawana
\
|
|
|
SB Members who approved Resolution No. 94, s.
>
2002
|
|
|
/
Petitioners requested a reconsideration, which was denied on 5 August 2003 by

the RLAO-COA-CAR.17 Thus, petitioners filed a Notice of Appeal before the
Director, LAO-Local of COA but it was denied on 10 November 2003 in Decision
No. 2003-104.
Hence, petitioners filed a Petition for Review before respondent COA assailing
LAO-Local Decision No. 2003-104.
On 29 December 2005, the COA rendered the herein assailed Decision No.
2005-07118 denying the petition for lack of merit, and affirming the disallowance in
the amount of P895,891.50. The COA held thus:
After a careful evaluation, this Commission answers in the negative subject to the
extended discussions hereunder.
Anent the first assignment of error, the same has been judiciously passed upon
in LAO-Local Decision No. 2003-104. While the Municipality of Mayoyao may
grant salary increases pursuant to LBC No. 74, such grant should comply with
the limitations provided by law, specifically Section 325 (a) of R.A. No. 7160.
There is no doubt that in the grant of the 5% salary increase to the officials and
employees of the Municipality of Mayoyao, the limitation for PS in the annual
budget of said Municipality had been exceeded. In fact, in a recomputation made
Ms. Virginia B. Farro, Provincial Budget Officer of Ifugao, as embodied in her
letter dated July 04, 2003, it was revealed that the Annual Budget of the
Municipality exceeded the PS limit by P3,944,568.05. Furthermore, Mr. Julian L.
Pacificador, Jr., Regional Director, DBM-CAR, in his letter dated December 3,
3003 asserted that the grant of the increase through the adoption of higher salary
class schedule is not included in the list of items and activities whereby PS
limitation may be waived under LBC No. 75. It must also be noted that the
Municipalitys budget adopted the salary rates under LBC No. 69 and not the
salary rates under LBC No. 74.
Anent the second assignment of error, the same will not suffice to over-turn the
other grounds for the audit disallowance. The fact remains that the grant of the
5% salary increase contravened the limitation of the law as explicitly provided
under item (a) of section 325 of R.A. No. 7160.
Anent the third assignment of error, while the Sanggguniang Panlalawigan of
Ifugao, in its resolution No. 2002-556, has declared operative the 2002 Annual
Budget of Mayoyao, the review of said Sanggunian was only limited to the
provisions stated in the said budget which contained, among others, provisions
for the funding of the 17 newly created positions and not the salary increases.
Thus, the declaration of the Sangguniang Panlalawigan of Ifugao that the 2002
annual budget was operative did not include the grant of the 5% salary increase
because the same was not actually contained in the said budget but in SB
Resolution No. 66, series of 2002.
Anent the 4th assignment of error, the disallowance is not based solely on the
results of the favorable review of the Sangguniang Panlalawigan of Ifugao since
there are other grounds which would justify and uphold the disallowance. 19
Petitioners filed a Motion for Reconsideration but it was denied by respondent
COA on 25 October 2007 in its Decision No. 2007-040.20
Hence, this petition21 under Rule 64 of the Rules of Court raising the following
issues:
1. RESOLUTION NO. 66, S. 2002 ADOPTING A 5% INCREASE IN THE
SALARY OF THE PERSONNEL OF LGU MAYOYAO PURSUANT TO DBM LBC
74, AND RESOLUTION NO. 94, S. 2002 PROVIDING THE FUND TO
IMPLEMENT THE FORMER ARE VALID EXERCISES OF LOCAL LEGISLATIVE
PREROGATIVE BY THE SANGGUNIANG BAYAN OF MAYOYAO, IFUGAO.

THERE IS SUFFICIENT PROOF THAT THE BUDGET OF THE MUNICIPALITY
OF MAYOYAO FOR 2002 DID NOT EXCEED THE PS LIMITATIONS FOR THAT
PARTICULAR YEAR. IN THE SAME MANNER, THE REALIGNMENT OF
FUNDS PURSUANT TO RESOLUTION NO. 94, S. 2002 DID NOT CREATE ANY
INCREASE IN THE PERSONAL SERVICES ALLOCATION OF THE
AFORESAID MUNICIPALITY FOR THAT PARTICULAR YEAR BECAUSE THE
REALIGNMENT PERTAINS TO A REALIGNMENT OF AN EXISTING
PERSONAL SERVICES FUND PARTICULARLY THE AMOUNT ORIGINALLY
INTENDED FOR THE SEVENTEEN POSITIONS WHICH WERE VACATED
AND/OR ABOLISHED, TO FUND THE SALARY INCREASE WHICH IN ITSELF
IS A PERSONAL SERVICE EXPENDITURE. THE HONORABLE COMMISSION
ON AUDIT, THEREFORE, GRAVELY ABUSED ITS DISCRETION WHEN IT
HELD THAT THE REALIGNMENT PURSUANT TO RESOLUTION NO. 94, S.
2002 CAUSED THE LGU OF MAYOYAO TO EXCEED THE PS LIMITATIONS
FOR 2002 AS PRESCRIBED BY LAW AND CONSEQUENTLY DECLARING AS
INVALID RESOLUTION NO. 66 S. 2002 OF THE SANGGUNIANG BAYAN OF
MAYOYAO, IFUGAO.
2. THE PERSONAL SERVICES ALLOCATION FOR THE MUNICIPALITY OF
MAYOYAO, IFUGAO FOR FY 2002 WAS COMPUTED IN ACCORDANCE WITH
DBM LBC 74 IN RELATION TO DBM LBC 69 WHICH WERE THE CIRCULARS
IN EFFECT AT THE TIME THE BUDGET OF THE LGU FOR FY 2002 WAS
REVIEWED, APPROVED AND DECLARED OPERATIVE BY THE
SANGGUNIANG PANLALAWIGAN OF THE PROVINCE OF IFUGAO
THROUGH RESOLUTION NO. 2002-556. SOON THEREAFTER DBM LBC 75
WAS ISSUED WITH A CLEAR EFFECTIVITY CLAUSE EXEMPTING FROM ITS
OPERATION BUDGETS WHICH HAVE ALREADY BEEN REVIEWED PRIOR
TO ITS ISSUANCE. NOTICE OF DISALLOWANCE (ND) NO. 03-006 DATED
MAY 16, 2003 IS PREMISED ON A RECOMPUTATION OF THE ALLOWABLE
PS LIMITATION OF THE LGU BASED ON RATES STATED IN DBM LBC 75
CONTRARY TO THE CLEAR LANGUAGE OF ITS EFFECTIVITY CLAUSE. THE
HONORABLE COMMISSION, THEREFORE, GRAVELY ABUSED ITS
DISCRETION WHEN IT UPHELD THE NOTICE OF DISALLOWANCE (ND) NO.
03-007 WHICH DIRECTED THE HEREIN PETITIONERS TO REFUND THE
AMOUNT DISALLOWED THEREIN.
3. PUBLIC OFFICERS ENJOY THE PRESUMPTION OF REGULARITY OF
PERFORMANCE OF OFFICIAL FUNCTIONS AND DUTIES. FOR THIS
REASON AND MORE, THE HONORABLE SUPREME COURT UPHELD
CERTAIN NOTICES OF DISALLOWANCE ISSUED BY THE HONORABLE
COMMISSION TO CERTAIN GOVERNMENT AGENCIES BUT DECLINED TO
LET THE PERSONS LIABLE THEREFORE TO REFUND THE AMOUNT
DISALLOWED ON THE GROUND OF GOOD FAITH. IN RESOLUTION NO.

2004-1185 OF THE SANGGUNIANG PANLALAWIGAN OF IFUGAO
RECOGNIZED THE GOOD FAITH OF LGU MAYOYAO AND THE NOBLE
INTENTIONS OF THE OFFICERS THEREOF TO GIVE THE EMPLOYEES A
DECENT PAY. THE HONORABLE COMMISSION ON AUDIT, THEREFORE
GRAVELY ABUSED ITS DISCRETION, WHEN IT FAILED TO CONSIDER THE
GOOD FAITH OF THE OFFICERS WHO APPROVED THE QUESTIONED
RESOLUTIONS AND DEMANDED THE REFUND BY HEREIN PETITIONERS
OF THE WHOLE AMOUNT DISALLOWED THEREIN EVEN IF THE SAID
AMOUNTS WERE ALREADY RECEIVED BY THE EMPLOYEES. 22
The foregoing boils down to the core issue of whether the COA committed grave
abuse of discretion in affirming the disallowance of the amount of P895,891.50,
representing the 5% salary increase of the personnel of the municipality of
Mayoyao for the period 15 February to 30 September 2002, and in ordering
petitioners to refund the same.
We first dispense with the procedural issue of whether the petition was timely
filed.
Respondent, through the Office of the Solicitor General, argues that the petition
should be dismissed outright for being filed beyond the reglementary period to
appeal.23 Respondent maintains that since petitioners received a copy of
Decision No. 2005-071 on 29 August 2006, they only had 30 days or until 28
September 2006 within which to file a Motion for Reconsideration or a Petition for
Review on Certiorari with the Supreme Court. As the Motion for Reconsideration
was filed only on 2 October 2006, the COA Decision No. 2005-71 already
attained finality.24
On the other hand, petitioners allege that this argument on belated filing is
misplaced considering that respondent COA already gave due course to their
Motion for Reconsideration, the resolution of which was embodied in its Decision
No. 2007-040. At any rate, petitioners argue that their failure to file the Motion for
Reconsideration with respondent COA on 28 September 2006 was justified
because the government offices in Metro Manila were closed due to typhoon
"Feria."25
a1f
Petitioners contention has merit. Records show that COA gave due course to the
Motion for Reconsideration without stating in its Decision No. 2007-04026 that it
was filed out of time. For this reason, we find that the issue of whether the
petitioners timely filed the Motion for Reconsideration has become moot.
Going now to the merits of the case, petitioners contend that Resolution Nos. 66
and 94, s. 2002, are valid exercise of legislative prerogative in accordance with
DBM LBC No. 74, which gave them the authority to grant a maximum of 5%
salary adjustment to personnel in the LGU effective 1 July 2001. Petitioners cite
as basis Resolution No. 2002-556 of the Sangguniang Panlalawigan which
declared as operative the 2002 Annual Budget of the Municipality of Mayoyao,
Ifugao on 10 June 2002.
Petitioners also claim that the amount allocated in the 2002 municipal budget for
personal services is within the allowable limits prescribed by law. In declaring that
the municipality exceeded the personal services limitation set by law, respondent
COA based its finding on a computation using the rates prescribed in LBC No.
75, and not LBC No. 74, in relation to LBC No. 69, on which the municipality
based its computation. Petitioners further explain that when the municipality
enacted Resolution No. 94, s. 2002, re-aligning the amount appropriated for the
17 newly created positions to the 5% salary increase of the municipal personnel,
it did so with the understanding that the 17 newly created positions were vacated
and/or abolished. Thus, the re-alignment of the aforesaid amount was done
without decreasing the whole amount originally earmarked for personal services.
Claiming good faith, petitioners insist that Resolution No. 66, s. 2002 was
enacted on 2 July 2002, while LBC No. 75 was issued by DBM on 12 July 2002
and was received by them at a much later date; that Notice of Disallowance No.
03-006 was issued only on 16 May 2003, after the municipality had already
implemented the 5% salary increase pursuant to Resolution Nos. 66 and 94, s.
2002; and that the Sangguniang Panlalawiganrecognized the good faith of the
municipality when it enacted Resolution No. 2004-1185 where it reconsidered its
earlier Resolution No. 2003-808.
We PARTIALLY GRANT the petition.
The COA disallowed the amount of P895,891.50 on the ground that the 5%
salary increase exceeded the total allowable appropriations of the municipality for
personal services provided by law, specifically Section 325(a)27 of the LGC. It
based its finding on the recomputation made by Ms. Virginia B. Farro, Provincial
Budget Officer of Ifugao, which showed that the Annual Budget of the
municipality exceeded the personal services limit byP3,944,568.05.28 According
to the COA, the municipalitys budget adopted the salary rates under LBC No. 69
instead of the salary rates prescribed under LBC No. 74 which is the applicable
circular in this case.29
As regards petitioners reliance on Resolution No. 2002-556 of
the Sangguniang Panlalawigan, the COA in its Decision No. 2005-071 made it
clear that the review of the 2002 municipal budget by

the SangguniangPanlalawigan was only limited to the provisions stated in the
said budget which contained, among others, provisions for the funding of the 17
newly created positions, and not its re-alignment to the 5% salary increase.
Consequently, the declaration by the Sangguniang Panlalawigan in the said
Resolution that the 2002 municipal budget was operative did not include the
grant of the 5% salary increase, as the same was not contained in the said
budget but in Resolution No. 66, s. 2002.30
We find that the COA correctly affirmed the disallowance of the amount
of P895,891.50.
At the outset, it must be stressed that factual findings of administrative bodies
charged with their specific field of expertise, are afforded great weight by the
courts, and in the absence of substantial showing that such findings were made
from an erroneous estimation of the evidence presented, they are conclusive,
and in the interest of stability of the governmental structure, should not be
disturbed.31
In this case, the assailed Decisions of the COA clearly presented the factual
findings and adequately explained the legal basis for disallowing the said
amount. Indeed, as computed by Ms. Virginia Farro, the Provincial Budget Officer
of Ifugao, the annual budget of Mayoyao for 2002 exceeded the limit for personal
services as prescribed in Section 325(a) of the LGC by P3,944,568.05. Further, it
was established that the grant of the increase through the adoption of higher
salary class schedule is not among the list of items and activities whereby the
limitation for personal services may be waived pursuant to LBC No. 75. Finally,
the municipality adopted the salary rates under LBC No. 69 and not the salary
rates under LBC No. 74. No grave abuse of discretion amounting to lack or
excess of jurisdiction can thus be attributed to respondent COA. Grave abuse of
discretion exists where an act of a court or tribunal is performed with a capricious
or whimsical exercise of judgment equivalent to lack of jurisdiction, or where the
power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility which must be so patent and gross as to amount to an invasion
of positive duty or to a virtual refusal to perform the duty enjoined or to act at all
in contemplation of law mere abuse of discretion is not enough.32
However, we find that petitioners should not be ordered to refund the disallowed
amount because they acted in good faith.
In Abanilla v. Commission on Audit,33 the Board of Directors of the Metropolitan
Cebu Water District (MCWD) issued several resolutions giving benefits and
privileges to its personnel which included hospitalization privileges, monetization
of leave credits, Christmas bonus, and longevity allowance. MCWD likewise

entered into a collective bargaining agreement (CBA) with the employees union
providing for benefits, such as cash advances, 13th month pay, mid-year bonus,
Christmas bonus, vacation and leave credits, hospitalization, medicare, uniform
privileges and water allowance.
However, the COA disallowed the amount of P12,221,120.86 representing
hospitalization benefits, mid-year bonus, 13th month pay, Christmas bonus and
longevity pay on the ground that the compensation package of MCWD personnel
may no longer be subject of a CBA, as its officers and employees were covered
by the Civil Service laws, and not by the Labor Code.
On petition for certiorari before this Court, the disallowance by COA was
sustained; however, the MCWD personnel who received those benefits were no
longer required to refund the same. The Court held, thus:
While we sustain the disallowance of the above benefits by respondent COA,
however, we find that the MCWDaffected personnel who received the above
mentioned benefits and privileges acted in good faith under the honest belief that
the CBA authorized such payment. Consequently, they need not refund them.
In Querubin vs. Regional Cluster Director, Legal and Adjudication Office, COA
Regional Office VI, Pavia, Iloilo City, citing, De Jesus vs. Commission on
Audit, this Court held.:
"Considering, however, that all the parties here acted in good faith, we cannot
countenance the refund of subject incentive benefits for the year 1992, which
amounts the petitioners have already received. Indeed, no indicia of bad faith can
be detected under the attendant facts and circumstances. The officials and chiefs
of offices concerned disbursed such incentive benefits in the honest belief that
the amounts given were due to the recipients and the latter accept the same with
gratitude, confident that they richly deserve such benefits.
x x x. Petitioners here received the additional allowances and bonuses in good
faith under the honest belief that the LWUA Board Resolution No. 313 authorized
such payment. At the time petitioners received the additional allowances and
bonuses, the Court had not yet decided Baybay Water District. Petitioners had no
knowledge that such payment was without legal basis. Thus, being in good
faith, petitioners need not refund the allowances and bonuses they
received but disallowed by the COA."34
In Blaquera v. Alcala,35 petitioners who were officials and employees of several
government agencies were paid productivity incentive benefits for the year 1992
pursuant to Executive Order No. 292, otherwise known as the Administrative

Code of 1987. On 19 January 1993, then President Fidel V. Ramos issued
Administrative Order No. 29 limiting the grant of productivity incentive benefits for
the year 1992 in the maximum amount of P1,000.00 and enjoining the grant of
said benefit without prior approval of the President.
1avvph!1
Consequently, all agencies that authorized the payment of productivity incentive

benefits for the year 1992 in excess of P1,000.00 were directed to immediately
cause the return/refund of the excess amount. Thus, respondents therein caused
the deduction, from petitioners salaries or allowances, of the amounts needed to
cover the alleged overpayments.
On petition before the Court, it was held that Administrative Order No. 29 limiting
the amount of incentive benefits and enjoining heads of government agencies
from granting incentive benefits without prior approval of the President, was a
valid exercise of the Presidents power of control and authority over executive
departments. As regards petitioners contention that respondents should be held
personally liable for the refund in question, the Court held, thus:
Untenable is petitioners contention that the herein respondents be held
personally responsible for the refund in question. Absent a showing of bad faith
or malice, public officers are not personally liable for damages resulting from the
performance of official duties.
Every public official is entitled to the presumption of good faith in the discharge of
official duties. Absent any showing of bad faith and malice, there is likewise a
presumption of regularity in the performance of official duties.
In upholding the constitutionality of AO 268 and AO 29, the Court reiterates the
well-entrenched doctrine that "in interpreting statutes, that which will avoid a
finding of unconstitutionality is to be preferred."
Considering, however, that all the parties here acted in good faith, we cannot
countenance the refund of subject incentive benefits for the year 1992, which
amounts the petitioners have already received. Indeed, no indicia of bad faith can
be detected under the attendant facts and circumstances. The officials and chiefs
of offices concerned disbursed such incentive benefits in the honest belief that
the amounts given were due to the recipients and the latter accepted the same
with gratitude, confident that they richly deserve such benefits.36
This ruling has been consistently applied in several cases.37
In the instant case, although the 5% salary increase exceeded the limitation for
appropriations for personal services in the Municipality of Mayoyao, this alone is
insufficient to overthrow the presumption of good faith in favor of petitioners as
municipal officials. It must be mentioned that the disbursement of the 5% salary
increase of municipal personnel was done under the color and by virtue of
resolutions enacted pursuant to LBC No. 74, and was made only after
the Sangguniang Panlalawigan declared operative the 2002 municipal budget. In
fact, the Notice of Disallowance was issued only on 16 May 2003, after the
municipality had already implemented the salary increase. Moreover, in its
Resolution No. 2004-1185,38 the Sangguniang Panlalawigan reconsidered its
prior disallowance of the adoption of a first class salary schedule and 5% salary
increase of the Municipality of Mayoyao based on its finding that the municipal
officials concerned acted in good faith, thus:
WHEREAS, the Sangguniang Bayan of Mayoyao however justified that their
realignment of the amount of Php 1,936,524.96 and the adoption of a first class
salary was done in good faith and with the purpose of giving decent pay to
officials and employees of the said Municipality considering the high cost of
living;
WHEREAS, this Body finding merit on the justification of the said Municipality
hereby reconsiders its earlier stand on the disallowed adoption of a first class
salary schedule and the 5% salary increase of the Municipality of Mayoyao,
Ifugao;
x x x x.39
Furthermore, granting arguendo that the municipalitys budget adopted the
incorrect salary rates, this error or mistake was not in any way indicative of bad
faith. Under prevailing jurisprudence, mistakes committed by a public officer are
not actionable, absent a clear showing that he was motivated by malice or gross
negligence amounting to bad faith. It does not simply connote bad moral
judgment or negligence. Rather, there must be some dishonest purpose or some
moral obliquity and conscious doing of a wrong, a breach of a sworn duty through
some motive or intent, or ill will. It partakes of the nature of fraud and
contemplates a state of mind affirmatively operating with furtive design or some
motive of self-interest or ill will for ulterior purposes.40 As we see it, the
disbursement of the 5% salary increase was done in good faith. Accordingly,
petitioners need not refund the disallowed disbursement in the amount
of P895,891.50.
WHEREFORE, the instant Petition is PARTIALLY GRANTED. The Decision of
the Commission on Audit No. 2005-071 dated 29 December 2005 and its
Decision No. 2007-040 dated 25 October 2007 affirming the disallowance of the
5% salary increase of the municipal personnel of Mayoyao, Ifugao, covering the
period 15 February to 30 September 2002 in the amount of P895,891.50, are
AFFIRMED with MODIFICATION that petitioners need not refund the said
disallowed amount of P895,891.50.
SO ORDERED.
THIRD DIVISION
G.R. No. 161694
June 26, 2006
PEPITO VELASCO, Petitioner,

vs.
NATIONAL LABOR RELATIONS, and COMMISSION, ANTONIO TAYAG,
ERNESTO TAYAG and RODOLFO TAYAG, Respondents.
DECISION
TINGA, J.:
There is little difficulty on the part of the Court in upholding the rulings challenged
in this Petition for Review and confirming the finding that private respondents in
this case were illegally dismissed. Further, it is clear that private respondents
should be awarded full backwages, an entitlement denied them even as they
were granted separation pay in lieu of reinstatement. We affirm, subject to
modification on the matter of backwages.
Petitioner Pepito Velasco (Velasco) is the owner-manager of Modern Furniture
Manufacturing (Modern Furniture).1 Private respondent Ernesto Tayag was hired
as a carpenter by Velasco and Modern Furniture in 1968, while his relatives, coprivate respondents Antonio Tayag and Rodolfo Tayag, were hired in the same
capacity in 1970. All three were paid on a piece-rate basis.2
According to the Tayags, in 1998, Velasco and Modern Furniture started laying
off workers due to business losses, albeit with the promise to the dismissed
workers that they would be rehired should the business again prosper.
Purportedly, Antonio and Ernesto Tayag were laid off in December of 1999, while
Rodolfo Tayag was dismissed in May of 2000.3 All three filed complaints for illegal
dismissal against Modern Furniture and Velasco with the National Labor
Relations Commission, Regional Arbitration Branch No. III, based in San

Fernando, Pampanga.4 The Tayags sought separation pay in lieu of
reinstatement, as well as 13th month pay, holiday pay, overtime pay, and
exemplary damages.5
Velasco and Modern Furniture have a different version. They claimed that while
they had indeed suffered business losses in 1998, causing them to lay off some
workers, they subsequently agreed with their employees, including the Tayags, to
pay wages on a piece-rate basis. In the first part of the year 2000, Ernesto Tayag
inexplicably stopped reporting to work. In June of that year, Antonio and Rodolfo
Tayag also stopped reporting for work.6 Velasco claimed that he next heard from
the three when he was served summons in the instant case.7 It was thus argued
that the Tayags were not actually terminated, but instead had abandoned their
work.
After the complaints of the Tayags were consolidated, Labor Arbiter Eduardo J.
Carpio rendered a Decision dated 15 September 2000 dismissing the complaints
for illegal dismissal. The Labor Arbiter reasoned that since Velasco and Modern
Furniture had denied terminating the employees in the first place, the burden fell
upon the Tayags to prove by substantial evidence that they were actually
terminated.8 The Labor Arbiter concluded that the contentions of the Tayags of
dismissal were unsubstantiated, and thus he dismissed the complaints.
On appeal, the NLRC set aside the Decision of the Labor Arbiter in its Resolution
dated 26 March 2002.9 The NLRC held that the Labor Arbiter had misappreciated
the facts of the case. It was noted that Velasco and Modern Furniture had
admitted that since the Tayags were paid on a per piece basis, they were not
required to go to the work place. In fact, the Tayags were only required to report
for work when new job orders came in and they were called upon by Velasco and
Modern Furniture. The NLRC found that there was no instance from the evidence
adduced wherein Velasco or Modern Furniture called upon the Tayags to report
for work.10 From these facts, the NLRC concluded that the Tayags had not
reported to the premises of Modern Furniture simply because they were not
given any work, as in fact they had actually been dismissed. Thus, the NLRC did
not agree with the contention that the Tayags had abandoned work, and
concluded instead that they were entitled to separation pay in lieu of
reinstatement. Nonetheless, the other monetary claims of the Tayags were
dismissed for lack of merit.11
Velasco filed a Petition for Certiorari and Prohibition with the Court of Appeals,
assailing the Resolution of the NLRC. In a Decision12 dated 30 September 2003,
the Court of Appeals sustained the NLRC and dismissed the petition. The
appellate court agreed that it was Velasco, as employer, who had the burden to
prove that the termination was for just or authorized causes, and that Velasco
had failed to overcome such burden.13 The Court of Appeals also deemed the
award of separation pay as proper, with the finding of illegal dismissal and
separation pay being a proper alternative remedy should reinstatement be no
longer possible.14
Hence this petition, brought forth after the Court of Appeals had denied Velascos
Motion for Reconsideration.15The crux of Velascos arguments before this Court
rests on one sentence in the Resolution of the NLRC, which states:
Viewed in this light, the relief available to complainants-appellants is
reinstatement without backwages there being no showing also that there was
illegal dismissal.16
Velasco argues that since the NLRC had concluded that there was no illegal
dismissal, the Court of Appeals erred in concluding instead that the Tayags were
illegally dismissed.17 From the same premise, Velasco also claims that the Court
of Appeals also erred in granting separation pay, considering the alleged finding
of the NLRC that there was no illegal dismissal.18
The proper perspective should be asserted. This being an appeal by certiorari
under Rule 45 from a decision of the Court of Appeals, the petitioner must be
able to establish an error of law imputable to the Court of Appeals, since it is the
decision of that court that is primarily reviewed by this Court. In short, the
petitioner must stake the petition on the position that in error was the Court of
Appeals itself, rather than the agencies below.
In the case at bar, Velasco claims that the Court of Appeals erred in ruling that
the Tayags were illegally dismissed because the NLRC had purportedly
concluded otherwise. We are not persuaded.
We have examined the entirety of the Resolution of the NLRC, as well as the
controversial sentence. The phrase "there being no showing also that there was
illegal dismissal" is clearly off-tangent with the rest of the Resolution, as well as
the dispositive portion thereof.
The Resolution of the NLRC is eight (8) pages long. It devoted the first four (4)
pages to the factual narrative and a summary of the ruling of the Labor Arbiter.
The Resolution then proceeded to discuss the position of the Labor Arbiter that
with Velascos counter-allegation of abandonment the burden of proof shifted to
the Tayags to establish by substantial evidence that they were terminated by
Velasco. On this point, the NLRC concluded that "[the Tayags opposing]
contention has merit."19 The NLRC then proceeded to cite the legal doctrines on
abandonment, including a statement that the burden of proof was on the
employer to show an unequivocal intent on the part of the employee to
discontinue employment.20
We now quote the next three pages of the Resolution, culminating in the
paragraph containing the controverted passage:
In this case, complainants-appellants Antonio and Ernesto Tayag contend that
they were laid off in December 1999, while complainant-appellant Rodolfo Tayag
was laid-off in May, 2000 and that respondents-appellees promised to recall them
as soon as business gets better. On the other hand, respondents-appellants
contend that complainant-appellant Ernesto Tayag voluntarily did not come to the
work premises for about six (6) months or since February, 2000; that in June,
2000, complainants-appellants Antonio and Rodolfo Tayag likewise for no
apparent reason failed to report at respondents-appellees premises. Moreover,
respondents-appellees repeatedly assert that:
"Apparently, complainants-appellants are being paid on a per piece basis and not
required to go to the work place, they have the liberty to go or not to go to the
work place and therefore, they cannot claim to have been illegally dismissed if
respondent-appellee does not notify or call them for work. It should also be noted
that the complainants-appellants work is based on orders received by the
respondent-appellee, thus, if there are no work orders, they have no work.
Furthermore, herein complainants-appellants are not the only workers engaged
by herein respondent-appellee, thus work orders are usually divided among them
and if there are only few orders, other workers would have no work." (p. 55,
Records)
From the foregoing, it is clear that complainants-appellants only go to work
when there are orders that need to be done and when they are called upon
by respondents-appellees. The choice to call complainants-appellants rests
on respondents-appellees, so the latter has no basis to complain that

complainants-appellants failed to appear at the work premises. From the
evidence adduced, there was no instance where respondents-appellees
called upon complainants-appellants to report for work because there are
orders to be done and the latter refused. What respondents-appellees are
merely saying is that complainants-appellants had voluntarily failed to go
to the premises. Clearly, the reason why complainants-appellants do not
appear at the work premises is the fact that they are not called upon to do
work pursuant to their alleged agreement of paying by payment rate basis.
It is undisputed that since early 2000, complainant-appellant Ernesto Tayag
was not given work while complainants-appellants Antonio and Rodolfo
Tayag were not also given work since May, 2000. Hence, complainantsappellants believed and concluded that they were laid off. Having worked for
more than thirty (30) years with respondents-appellees, Antonio Tayag and
Ernesto Tayag are both fifty-five (55) years of age while Rodolfo Tayag is forty-six
(46) years old. We can thus safely conclude that another reason why
respondents-appellants do not call upon them to work is because of their having
become old. Verily, respondents-appellees assertion that complainantsappellants abandoned their work have no factual basis. We note that even
during the hearing of this case until the Decision was issued, there has
been no offer of work made by respondents-appellees to complainantsappellants.
Viewed in this light, the relief available to complainants-appellants is
reinstatement without backwages there being no showing also that there
was illegal dismissal. However, it is clear that respondents-appellees are no
longer interested in calling complainants-appellants back to work because of the
financial difficulty of the business and that complainants-appellants on the other
hand, are asking for separation pay. Such being the case, separation pay in lieu
of reinstatement without backwages is the proper relief in the instant case.21
Reading the entire Resolution, it is beyond doubt that the NLRC concluded that
Velasco had failed to establish that the Tayags had abandoned their employment.
Such conclusion is crucial, Velascos defense against the charge of illegal
dismissal being that the Tayags had actually abandoned their employment, which
is recognized in jurisprudence as a form of neglect of duty one of the just causes
for dismissal under Article 282 of the Labor Code.22 The disquisition is also
relevant, as it debunks the Labor Arbiters contention that it fell upon the Tayags
to establish that they had been illegally dismissed. Instead, the NLRC correctly
held that the burden was upon Velasco to substantiate his claim that the Tayags
had abandoned their employment.
Further, the NLRC concluded that the Tayags had stopped reporting to the
premises of Modern Furniture because Velasco and Modern Furniture had
stopped assigning them work. Considering that the Tayags were paid on a perpiece basis, it necessarily followed that they stopped receiving income as well.
The NLRC even hazarded a theory that Velasco had stopped giving the Tayags
work because of their age. Thus, the NLRC stated: "Verily, respondentsappellees assertion that complainants-appellants abandoned their work have no
factual basis."23
Given the context of the preceding discussion, which illustrated that the Tayags
were not guilty of abandonment, there is no legal basis whatsoever for the
conclusion that "there was no showing x x x that there was illegal dismissal." It is
not clear why the NLRC stated that there was "no showing also that there was
illegal dismissal" when its preceding discussion so obviously pointed to the
contrary. Yet when it is clear that the cited passage cannot stand with the rest of
the decision, including the dispositive portion, the Court cannot obviously confer
binding effect on the conclusion that there was no illegal dismissal, as it runs
contrary against the grain of the rest of the Resolution.
Indeed, the dispositive portion of the Resolution clearly supports the premise that
the Tayags were illegally dismissed, there being an award of separation pay in
lieu of reinstatement.
WHEREFORE, premises considered, the appeal is partly GRANTED and the
Decision dated 15 September 2000 finding that complainants-appellants simply
did not report for work or were the ones who abandoned their work is hereby
ordered SET ASIDE. A new Decision is hereby issued ordering respondentsappellees to award complainants-appellants separation pay in lieu of
reinstatement computed at one-half (1/2) month pay for every year of service
computed as follows:
1) Antonio Tayag
Separation Pay:
From 1970 to May 2000 = 30 yrs.

P1,200.00 x 4 wks x 30 yrs. x mo. P72,000.00
2) Ernesto Tayag
Separation Pay:
From 1968 to Dec. 1999 31 yrs.
P1,500.00 x 4 wks. X 31 yrs. x mo. P93,000.00
3) Rodolfo Tayag
Separation Pay:
From 1970 to May 2000 = 30 yrs.
P1,500.00 x 4 wks. x 30 yrs. x mo. P90,000.00
GRAND TOTAL P255,000.00
SO ORDERED.24
Under Article 279 of the Labor Code, an employee unjustly dismissed from work
is entitled to reinstatement and backwages, among others. However, it has long
been recognized that if reinstatement is no longer possible or practicable, the
employer may be made instead to pay separation pay to the employee in lieu of
reinstatement.25The dispositive portion of the Resolution is consistent with the
premise that the Tayags were entitled to reinstatement by reason of their illegal
dismissal, but they could receive instead separation pay in lieu of reinstatement if
reinstatement is no longer practicable. The dispositive portion does not hew to a
mindset that the Tayags were not illegally dismissed, the thinking which Velasco
wishes to ascribe on the NLRC. It is derived instead from the conclusion that the
Tayags were illegally dismissed, a conclusion that may contradict the cited
passage of the NLRC Resolution, but not the tenor and findings of the Resolution
in its entirety.
Other than the erroneous contention that the NLRC had concluded that there
was no illegal dismissal, Velascos only remaining argument is that the payment
of separation pay was "misplaced, since no evidence as to the necessity thereof

was presented." Velasco cites the Courts comment in Quijano v. Mercury Drug
Corp.26 that "the doctrine of strained relations should be strictly construed x x x
Every labor dispute almost always results in strained relations, and the phrase
cannot be given an over-arching interpretation x x x x27
In Quijano, it was the employer who was seeking that the employee be granted
separation pay instead of reinstatement, while in this case Velasco consistently
argued against the award of separation pay. Of course, following Velascos logic,
the Tayags should instead be reinstated. Nonetheless, the Court finds no reason
to disturb the ruling that the Tayags should be awarded separation pay in lieu of
reinstatement. The cited remarks of the Court in Quijano were made in the
context of pointing out that "[s]ome unscrupulous employers x x x have taken
advantage of the overgrowth of this doctrine of strained relations by using it as a
cover to get rid of its employees and thus defeat their right to job security."28
The accepted doctrine is that separation pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best interest of the
parties.29 Separation pay in lieu of reinstatement may likewise be awarded if the
employee decides not to be reinstated.30 It is not controverted that Modern
Furniture has undergone financial hardship, and that the Tayags had opted to
seek separation pay in lieu of reinstatement. We defer to the findings of the
NLRC, as affirmed by the Court of Appeals and authorized under jurisprudence,
that separation pay in lieu of reinstatement is warranted in this case.
Finally, the Tayags argue in their Memorandum before this Court that the NLRC
and Court of Appeals had erred in not awarding them full backwages.31 The
NLRC, while awarding separation pay to the Tayags, held that they had failed to
establish sufficient factual basis for their other monetary claims.32 The Court of
Appeals remained silent on that aspect.
The Tayags are correct in pointing out that they are entitled to full backwages by
reason of their illegal dismissal, notwithstanding the award of separation pay. The
Court made this point clear in Santos v. NLRC.33
The normal consequences of a finding that an employee has been illegally
dismissed are, firstly, that the employee becomes entitled to reinstatement to his
former position without loss of seniority rights and, secondly, the payment of
backwages corresponding to the period from his illegal dismissal up to actual

reinstatement. The statutory intent on this matter is clearly discernible.
Reinstatement restores the employee who was unjustly dismissed to the position
from which he was removed, that is, to his status quo ante dismissal, while the
grant of backwages allows the same employee to recover from the employer that
which he had lost by way of wages as a result of his dismissal. These twin
remediesreinstatement and payment of backwagesmake the dismissed
employee whole who can then look forward to continued employment. Thus do
these two remedies give meaning and substance to the constitutional right of
labor to security of tenure. The two forms of relief are distinct and separate,
one from the other. Though the grant of reinstatement commonly carries
with it an award of backwages, the inappropriateness or non-availability of
one does not carry with it the inappropriateness or non-availability of the
other. Separation pay was awarded in favor of petitioner Lydia Santos because
the NLRC found that her reinstatement was no longer feasible or appropriate. As
the term suggests, separation pay is the amount that an employee receives at
the time of his severance from the service and, as correctly noted by the Solicitor
General in his Comment, is designed to provide the employee with "the
wherewithal during the period that he is looking for another employment." In the
instant case, the grant of separation pay was a substitute for immediate
and continued re-employment with the private
respondent Bank. The grant of separation pay did not redress the injury
that is intended to be relieved by the second remedy of backwages, that is,
the loss of earnings that would have accrued to the dismissed employee
during the period between dismissal and reinstatement. Put a little
differently, payment of backwages is a form of relief that restores the
income that was lost by reason of unlawful dismissal; separation pay, in
contrast, is oriented towards the immediate future, the transitional period
the dismissed employee must undergo before locating a replacement job. It
was grievous error amounting to grave abuse of discretion on the part of the
NLRC to have considered an award of separation pay as equivalent to the
aggregate relief constituted by reinstatement plus payment of backwages under
Article 280 of the Labor Code. The grant of separation pay was a proper
substitute only for reinstatement; it could not be an adequate substitute
both for reinstatement and for backwages. In effect, the NLRC in its assailed
decision failed to give to petitioner the full relief to which she was entitled under
the statute.34 (Emphasis supplied)
The Santos rule has been repeatedly affirmed by this Court, and must be applied
to this case.35 Even assuming that the Tayags had not adduced any evidence to
establish the amount of backwages to be paid, it cannot be denied that under the
law, particularly Article 279 of the Labor Code, they are entitled to backwages as
a matter of right, owing to their illegal dismissal. Hence, the NLRC and the Court
of Appeals erred in not awarding backwages as well.
However, the Court recognizes that there may be some difficulty in ascertaining
the proper amount of backwages, considering that the Tayags were apparently
paid on a piece-rate basis. In Labor Congress of the Philippines v. NLRC,36 the
Court was confronted with a situation
wherein several workers paid on a piece-rate basis were entitled to back wages
by reason of illegal dismissal. However, the Court noted that as the piece-rate
workers had been paid by the piece, "there [was] a need to determine the varying
degrees of production and days worked by each worker," and that "this issue is
best left to the [NLRC]."37 We believe the same result should obtain in this case,
and the NLRC be tasked to conduct the proper determination of the appropriate
amount of backwages due to each of the Tayags.38
Nonetheless, even as the case should be remanded to the NLRC for the proper
determination of backwages, nothing in this decision should be construed in a
manner that would impede the award of separation pay to the Tayags as
previously rendered by the NLRC, and affirmed by the Court of Appeals.
WHEREFORE, the Petition is DENIED. The Resolution of the National Labor
Relations Commission dated 26 March 2002 and the Decision of the Court of
Appeals dated 30 September 2003 are AFFIRMED, with the MODIFICATION that
backwages shall be awarded to respondents in such amounts as shall be
determined by the National Labor Relations Commission. In this regard, the case
is hereby REMANDED to the National Labor Relations Commission for the
determination of the back wages due respondents, conformably with this
Decision. Said Commission is further DIRECTED TO RESOLVE the issue of
backwages within sixty (60) days from its receipt of a copy of this Decision and of
the records of the case and to submit to this Court a report of its compliance
herewith within ten (10) days from the rendition of its resolution. Costs against
petitioner.
SO ORDERED.
G.R. No. 191281
December 5, 2012
BEST WEAR GARMENTS and/or WARREN PARDILLA, Petitioners,

vs.
ADELAIDA B. DE LEMOS and CECILE M. OCUBILLO, Respondents.
DECISION
VILLARAMA, J.:
This is a petition for review on certiorari under Rule 45 assailing the
Decision1 dated February 24, 2009 and Resolution2 dated February 10, 2010 of
the Court of Appeals (CA) in CA-G.R. SP No. 102002. TheCA reversed the
Decision3 dated August 28, 2007 of the National Labor Relations Commission
(NLRC) and reinstated the September 5, 2005 Decision 4 of the Labor Arbiter.
Petitioner Best Wear Garments is a sole proprietorship represented by its
General Manager Alex Sitosta. Respondents Cecile M. Ocubillo and Adelaida B.
De Lemos were hired as sewers on piece-rate basis by petitioners on October
27, 1993 andJuly 12, 1994, respectively.
On May 20, 2004, De Lemos filed a complaint5 for illegal dismissal with prayer for
backwages and other accrued benefits, separation pay, service incentive leave
pay and attorneys fees. A similar complaint6 was filed by Ocubillo on June 10,
2004. Both alleged in their position paper that in August 2003, Sitosta arbitrarily
transferred them to other areas of operation of petitioners garments company,
which they said amounted to constructive dismissal as it resulted in less earnings
for them.
De Lemos claimed that after two months in her new assignment, she was able to
adjust but Sitosta again transferred her to a "different operation where she could
not earn [as] much as before because by-products require long period of time to
finish." She averred that the reason for her transfer was her refusal "to render
[overtime work] up to 7:00 p.m." Her request to be returned to her previous
assignment was rejected and she was "constrained not to report for work as
Sitosta had become indifferent to her since said transfer of operation." She
further alleged that her last salary was withheld by petitioner company.7
On her part, Ocubillo alleged that her transfer was precipitated by her having
"incurred excessive absences since 2001." Her absences were due to the fact
that her father became very sick since 2001 until his untimely demise on
November 9, 2003; aside from this, she herself became very sickly. She claimed
that from September to October 2003, Sitosta assigned her to different machines
"whichever is available" and that "there were times, she could not earn for a day
because there was no available machine to work for [sic]." Sitosta also allegedly
required her to render overtime work up to 7:00 p.m. which she refused "because
she was only paid up to 6:25 p.m."8
Petitioners denied having terminated the employment of respondents who
supposedly committed numerous absences without leave (AWOL). They claimed
that sometime in February 2004, De Lemos informed Sitosta that due to personal
problem, she intends to resign from the company. She then demanded the
payment of separation pay. In March 2004, Ocubillo likewise intimated her
intention to resign and demanded separation pay. Sitosta explained to both De
Lemos and Ocubillo that the company had no existing policy on granting
separation pay, and hence he could not act on their request. De Lemos never
reported back to work since March 2004, while Ocubillo failed to report for work
from October 2004 to the present.
As to the allegation of respondents that the reason for their transfer was their
refusal to render overtime work until 7:00 p.m., petitioners asserted that
respondents are piece-rate workers and hence they are not paid according to the
number of hours worked.
On September 5, 2005, Labor Arbiter Arden S. Anni rendered a Decision granting
respondents claims, as follows:
WHEREFORE, ALL THE FOREGOING CONSIDERED, judgment is rendered, as
follows:
1. Declaring that complainants were constructively, nay, illegally dismissed
from employment;
2. Ordering respondents to pay each of the complainants SEPARATION
PAY equivalent to one-month salary for every year of service, a fraction of
at least six (6) months being considered as one (1) whole year;
3. Ordering respondents to pay each of the complainants BACKWAGES

computed from the time of their dismissal up to the finality of this decision.
For this purpose, both parties are directed to submit their respective
computations of the total amount awarded for approval by this office.
All other claims are dismissed for lack of merit.
SO ORDERED.9
Labor Arbiter Anni ruled that since respondents neither resigned nor abandoned
their jobs, the ambiguities in the circumstances surrounding their dismissal are
resolved in favor of the workers. It was emphasized that respondents could no
longer be deemed terminated for reason of AWOL because this prerogative
should have been exercised before the dismissals have been effected. Moreover,
it would have been illogical for respondents to resign and then file a complaint for
illegal dismissal.
Petitioners appealed to the NLRC which reversed the Labor Arbiters decision
and dismissed respondents complaints. The NLRC found no basis for the charge
of constructive dismissal, thus:
Complainants alleged demotion is vague. They simply allege that by reason of
their transfer in August 2003, they did not earn as much as they earned in their
previous assignments. They failed to state how much they earned before and
after their transfer, if only to determine whether or not there was indeed a
diminution in their earnings. Further, it is to be stressed that complainants were
paid on a piece rate basis, which simply means that the more output, they
produced the more earnings they will have. In other words, the earning is
dependent upon complainants.
We find more credible respondents assertion that complainants transfer was a
valid exercise of management prerogative. Respondent company points out
that it is engaged in the business of garments manufacturing as a sub-contractor.
That, the kind of work it performs is dependent into with its client which
specifies the work it has to perform. And, that corollary thereto, the work to
be performed by its employees will depend on the work specifications in
the contract. Thus, if complainants have been assigned to different
operations, it was pursuant to the requirements of its contracts. x x x.
In furtherance of their defense that complainants were not dismissed, either

actual or constructive in August 2003, respondents allege that complainants
continued to report for work until February 2004 for complainant De Lemos and
August 2004 for complainant Ocubillo. We lend credence to this allegation of
respondents because it remains unrebutted by complainants.
It is to be noted that it was only [on] May 20, 2004 and June 10, 2004 that the
instant consolidated cases were filed by complainant De Lemos and Ocubillo,
respectively. It may not be amiss to state that the date of filing jibe with
respondents allegation that sometime in February and March 2004,
complainants intimated their intention to resign and demanded for payment of
separation pay but was not favorably acted upon by management.
Be that as it may, considering that complainants were not dismissed by
respondents, they should be ordered to report back to work without backwages
and for the respondents to accept them.
WHEREFORE, premises considered, the Decision dated September 5, 2005 is
hereby SET ASIDE and a new one entered dismissing complainants charge of
illegal dismissal for lack of merit. However, there being no dismissal,
complainants Adelaida B. De Lemos and Cecile M. Ocubillo are hereby directed
to report back to work without backwages within ten (10) days from receipt of this
Resolution and for the respondent Company to accept them under the same
terms and conditions at the time of their employment.
SO ORDERED.10 (Italics in the original; emphasis supplied)
Respondents filed a motion for reconsideration which the NLRC denied. Thus,
they elevated the case to the CA alleging grave abuse of discretion on the part of
the NLRC.
By Decision dated February 24, 2009, the CA granted the petition for certiorari,
reversed the ruling of the NLRC and reinstated the Labor Arbiters decision with
modification that the service incentive leave pay shall be excluded in the
computation of the monetary award. The CA found no valid and legitimate
business reason for the transfer order which entailed the reduction of
respondents earnings. Because respondents plea to be returned to their former
posts was not heeded by petitioners, no other conclusion "is discernible from the
attendant circumstances except the fact that [respondents] transfer was
unreasonable, inconvenient and prejudicial to them which [is] tantamount to a

constructive dismissal."11 Moreover, the unauthorized absences of respondents
did not warrant a finding of abandonment in view of the length of their service
with petitioner company and the difficulty in finding similar employment. The CA
further invoked the rule that an employee who forthwith takes steps to protest his
layoff cannot by any logic be said to have abandoned his work.
Petitioners filed a motion for partial reconsideration which was denied by the CA.
Hence, this petition alleging that the CA has glaringly overlooked and clearly
erred in its findings of fact and in applying the law on constructive dismissal.
At the outset, it must bestated that the main issue in this case involves a question
of fact. It is an established rule that the jurisdiction of the Supreme Court in cases
brought before it from the CA via Rule 45 of the 1997 Rules of Civil Procedure is
generally limited to reviewing errors of law. This Court is not a trier of facts. In the
exercise of its power of review, the findings of fact of the CA are conclusive and
binding and consequently, it is not our function to analyze or weigh evidence all
over again.12
There are, however, recognized exceptions13 to this rule such as when there is a
divergence between the findings of facts of the NLRC and that of the CA.14 In this
case, the CAs findings are contrary to those of the NLRC. There is, therefore, a
need to review the records to determine which of them should be preferred as
more conformable to evidentiary facts.15
The right of employees to security of tenure does not give them vested rights to
their positions to the extent of depriving management of its prerogative to change
their assignments or to transfer them. Thus, an employer may transfer or assign
employees from one office or area of operation to another, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges, and the
action is not motivated by discrimination, made in bad faith, or effected as a form
of punishment or demotion without sufficient cause.16
In Blue Dairy Corporation v. NLRC,17 we held that:
x x x. The managerial prerogative to transfer personnel must be exercised
without grave abuse of discretion, bearing in mind the basic elements of justice
and fair play. Having the right should not be confused with the manner in which
that right is exercised. Thus, it cannot be used as a subterfuge by the employer

to rid himself of an undesirable worker. In particular, the employer must be able
to show that the transfer is not unreasonable, inconvenient or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits. Should the employer fail to overcome this burden of
proof, the employees transfer shall be tantamount to constructive dismissal,
which has been defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely; as an offer involving a demotion in rank
and diminution in pay. Likewise, constructive dismissal exists when an act of
clear discrimination, insensibility or disdain by an employer has become so
unbearable to the employee leaving him with no option but to forego with his
continued employment.18
With the foregoing as guidepost, we hold that the CA erred in reversing the
NLRCs ruling that respondents were not constructively dismissed.
Being piece-rate workers assigned to individual sewing machines, respondents
earnings depended on the quality and quantity of finished products. That their
work output might have been affected by the change in their specific work
assignments does not necessarily implythat any resultingreduction in payis
tantamount to constructive dismissal. Workers under piece-rate employment
have no fixed salaries and their compensation is computed on the basis of
accomplished tasks. As admitted by respondent De Lemos, some garments or
by-products took a longer time to finish so they could not earn as much as
before. Also,the type of sewing jobs available would depend on the specifications
made by the clients of petitioner company. Under these circumstances, it cannot
be said that the transfer was unreasonable, inconvenient or prejudicial to the
respondents. Such deployment of sewers to work on different types of garments
as dictated by present business necessity is within the ambit of management
prerogative which, in the absence of bad faith, ill motive or discrimination, should
not be interfered with by the courts.
The records are bereft of any showing of clear discrimination, insensibility or
disdain on the part of petitioners in transferring respondents to perform a different
type of sewing job.It is unfair to charge petitioners with constructive dismissal
simply because the respondents insist that their transfer to a new work
assignment was against their will. We have long stated that "the objection to the
transfer being grounded on solely upon the personal inconvenience or hardship
that will be caused to the employee by reason of the transfer is not a valid reason
to disobey an order of transfer."19 That respondents eventually discontinued
reporting for work after their plea to be returned to their former work assignment
was their personal decision, for which the petitioners should not be held liable
particularly as the latter did not, in fact, dismiss them.
Indeed, there was no evidence that respondents were dismissed from
employment. In fact, petitioners expressed willingness to accept them back to
work. There being no termination of employment by the employer, the award of
backwages cannot be sustained. It is well settled that backwages may be
granted only when there is a finding of illegal dismissal.20 In cases where there is
no evidence of dismissal, the remedy is reinstatement but without backwages.21
1wphi1
The constitutional policy of providing full protection to labor is not intended to

oppress or destroy management.22While the Constitution is committed to the
policy of social justice and the protection of the working class, it should not be
supposed that every labor dispute will be automatically decided in favor of labor.
Management also has its rights which are entitled to respect and enforcement in
the interest of simple fair play.23 Thus, where management prerogative to transfer
employees is validly exercised, as in this case, courts will decline to interfere.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision
dated February 24, 2009 and Resolution dated February 10, 2010 of the Court of
Appeals in CA-G.R. SP No. 102002 are SET ASIDE. The Decision dated August
28, 2007 of the National Labor Relations Commission is hereby REINSTATED
and UPHELD.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 192558
February 15, 2012
BITOY JAVIER (DANILO P. JAVIER), Petitioner,

vs.
FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents.
DECISION
MENDOZA, J.:
This is a petition under Rule 45 of the Rules of Civil Procedure assailing the
March 18, 2010 Decision1 of the Court of Appeals (CA) and its June 7, 2010
Resolution,2 in CA-G.R. SP No. 109975, which reversed the May 28, 2009
Decision3 of the National Labor Relations Commission (NLRC) in the case
entitled Bitoy Javier v. Fly Ace/Flordelyn Castillo,4 holding that petitioner Bitoy
Javier (Javier) was illegally dismissed from employment and ordering Fly Ace
Corporation (Fly Ace) to pay backwages and separation pay in lieu of
reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of
salaries and other labor standard benefits. He alleged that he was an employee
of Fly Ace since September 2007, performing various tasks at the respondents
warehouse such as cleaning and arranging the canned items before their
delivery to certain locations, except in instances when he would be ordered to
accompany the companys delivery vehicles, as pahinante; that he reported for
work from Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in
the afternoon; that during his employment, he was not issued an identification
card and payslips by the company; that on May 6, 2008, he reported for work but
he was no longer allowed to enter the company premises by the security guard
upon the instruction of Ruben Ong (Mr. Ong), his superior;5 that after several
minutes of begging to the guard to allow him to enter, he saw Ong whom he
approached and asked why he was being barred from entering the premises; that
Ong replied by saying, "Tanungin mo anak mo;" 6 that he then went home and
discussed the matter with his family; that he discovered that Ong had been
courting his daughter Annalyn after the two met at a fiesta celebration in Malabon
City; that Annalyn tried to talk to Ong and convince him to spare her father from
trouble but he refused to accede; that thereafter, Javier was terminated from his
employment without notice; and that he was neither given the opportunity to
refute the cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela
who alleged that Javier was a stevedore or pahinante of Fly Ace from September
2007 to January 2008. The said affidavit was subscribed before the Labor
Arbiter (LA).7
For its part, Fly Ace averred that it was engaged in the business of importation
and sales of groceries. Sometime in December 2007, Javier was contracted by
its employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed rate
of P 300.00 per trip, which was later increased to P 325.00 in January 2008. Mr.
Ong contracted Javier roughly 5 to 6 times only in a month whenever the vehicle
of its contracted hauler, Milmar Hauling Services, was not available. On April 30,
2008, Fly Ace no longer needed the services of Javier. Denying that he was their
employee, Fly Ace insisted that there was no illegal dismissal.8 Fly Ace submitted
a copy of its agreement with Milmar Hauling Services and copies of
acknowledgment receipts evidencing payment to Javier for his contracted
services bearing the words, "daily manpower (pakyaw/piece rate pay)" and the
latters signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on the
ground that Javier failed to present proof that he was a regular employee of Fly
Ace. He wrote:
Complainant has no employee ID showing his employment with the Respondent
nor any document showing that he received the benefits accorded to regular
employees of the Respondents. His contention that Respondent failed to give
him said ID and payslips implies that indeed he was not a regular employee of
Fly Ace considering that complainant was a helper and that Respondent
company has contracted a regular trucking for the delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in the importation
and sales of groceries. Since there is a regular hauler to deliver its products, we
give credence to Respondents claim that complainant was contracted on
"pakiao" basis.
As to the claim for underpayment of salaries, the payroll presented by the
Respondents showing salaries of workers on "pakiao" basis has evidentiary
weight because although the signature of the complainant appearing thereon are
not uniform, they appeared to be his true signature.
xxxx
Hence, as complainant received the rightful salary as shown by the above

described payrolls, Respondents are not liable for salary differentials. 9
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the
argument of Javier and immediately concluded that he was not a regular
employee simply because he failed to present proof. It was of the view that
apakyaw-basis arrangement did not preclude the existence of employeremployee relationship. "Payment by result x x x is a method of compensation and
does not define the essence of the relation. It is a mere method of computing
compensation, not a basis for determining the existence or absence of an
employer-employee relationship.10" The NLRC further averred that it did not
follow that a worker was a job contractor and not an employee, just because the
work he was doing was not directly related to the employers trade or business or
the work may be considered as "extra" helper as in this case; and that the
relationship of an employer and an employee was determined by law and the
same would prevail whatever the parties may call it. In this case, the NLRC held
that substantial evidence was sufficient basis for judgment on the existence of
the employer-employee relationship. Javier was a regular employee of Fly Ace
because there was reasonable connection between the particular activity
performed by the employee (as a "pahinante") in relation to the usual business or
trade of the employer (importation, sales and delivery of groceries). He may not
be considered as an independent contractor because he could not exercise any
judgment in the delivery of company products. He was only engaged as a
"helper."
Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a
security of tenure. For failing to present proof of a valid cause for his termination,
Fly Ace was found to be liable for illegal dismissal of Javier who was likewise
entitled to backwages and separation pay in lieu of reinstatement. The NLRC
thus ordered:
WHEREFORE, premises considered, complainants appeal is partially
GRANTED. The assailed Decision of the labor arbiter is VACATED and a new
one is hereby entered holding respondent FLY ACE CORPORATION guilty of
illegal dismissal and non-payment of 13th month pay. Consequently, it is hereby
ordered to pay complainant DANILO "Bitoy" JAVIER the following:
1. Backwages -P 45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -P 59,854.16
All other claims are dismissed for lack of merit.
SO ORDERED.11
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a
former employee of Fly Ace and reinstated the dismissal of Javiers complaint as
ordered by the LA. The CA exercised its authority to make its own factual
determination anent the issue of the existence of an employer-employee
relationship between the parties. According to the CA:
xxx
In an illegal dismissal case the onus probandi rests on the employer to prove that
its dismissal was for a valid cause. However, before a case for illegal dismissal
can prosper, an employer-employee relationship must first be established. x x x it
is incumbent upon private respondent to prove the employee-employer
relationship by substantial evidence.
xxx
It is incumbent upon private respondent to prove, by substantial evidence, that he
is an employee of petitioners, but he failed to discharge his burden. The nonissuance of a company-issued identification card to private respondent supports
petitioners contention that private respondent was not its employee.12
The CA likewise added that Javiers failure to present salary vouchers, payslips,
or other pieces of evidence to bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly Ace. Further, it found that Javiers
work was not necessary and desirable to the business or trade of the company,
as it was only when there were scheduled deliveries, which a regular hauling
service could not deliver, that Fly Ace would contract the services of Javier as an
extra helper. Lastly, the CA declared that the facts alleged by Javier did not pass
the "control test."
He contracted work outside the company premises; he was not required to
observe definite hours of work; he was not required to report daily; and he was
free to accept other work elsewhere as there was no exclusivity of his contracted
service to the company, the same being co-terminous with the trip only.13 Since
no substantial evidence was presented to establish an employer-employee
relationship, the case for illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER WAS NOT A REGULAR EMPLOYEE
OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER IS NOT ENTITLED TO HIS
MONETARY CLAIMS.14
The petitioner contends that other than its bare allegations and self-serving
affidavits of the other employees, Fly Ace has nothing to substantiate its claim
that Javier was engaged on a pakyaw basis. Assuming that Javier was indeed
hired on a pakyaw basis, it does not preclude his regular employment with the
company. Even the acknowledgment receipts bearing his signature and the
confirming receipt of his salaries will not show the true nature of his employment
as they do not reflect the necessary details of the commissioned task. Besides,
Javiers tasks as pahinante are related, necessary and desirable to the line of
business by Fly Ace which is engaged in the importation and sale of grocery
items. "On days when there were no scheduled deliveries, he worked in
petitioners warehouse, arranging and cleaning the stored cans for delivery to
clients."15 More importantly, Javier was subject to the control and supervision of
the company, as he was made to report to the office from Monday to Saturday,
from 7:00 oclock in the morning until 5:00 oclock in the afternoon. The list of
deliverable goods, together with the corresponding clients and their respective
purchases and addresses, would necessarily have been prepared by Fly Ace.
Clearly, he was subjected to compliance with company rules and regulations as
regards working hours, delivery schedule and output, and his other duties in the
warehouse.16
The petitioner chiefly relied on Chavez v. NLRC,17 where the Court ruled that
payment to a worker on a per trip basis is not significant because "this is merely
a method of computing compensation and not a basis for determining the
existence of employer-employee relationship." Javier likewise invokes the rule
that, "in controversies between a laborer and his master, x x x doubts reasonably
arising from the evidence should be resolved in the formers favour. The policy is
reflected is no less than the Constitution, Labor Code and Civil Code."18
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally
dismissed by the latters failure to observe substantive and procedural due
process. Since his dismissal was not based on any of the causes recognized by
law, and was implemented without notice, Javier is entitled to separation pay and
backwages.
In its Comment,19 Fly Ace insists that there was no substantial evidence to prove
employer-employee relationship. Having a service contract with Milmar Hauling
Services for the purpose of transporting and delivering company products to
customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere
"per trip basis." Javier, who was actually a loiterer in the area, only accompanied
and assisted the company driver when Milmar could not deliver or when the
exigency of extra deliveries arises for roughly five to six times a month. Before
making a delivery, Fly Ace would turn over to the driver and Javier the delivery
vehicle with its loaded company products. With the vehicle and products in their
custody, the driver and Javier "would leave the company premises using their
own means, method, best judgment and discretion on how to deliver, time to
deliver, where and [when] to start, and manner of delivering the products."20
Fly Ace dismisses Javiers claims of employment as baseless assertions. Aside
from his bare allegations, he presented nothing to substantiate his status as an
employee. "It is a basic rule of evidence that each party must prove his
affirmative allegation. If he claims a right granted by law, he must prove his claim
by competent evidence, relying on the strength of his own evidence and not upon
the weakness of his opponent."21 Invoking the case of Lopez v. Bodega City,22 Fly
Ace insists that in an illegal dismissal case, the burden of proof is upon the
complainant who claims to be an employee. It is essential that an employeremployee relationship be proved by substantial evidence. Thus, it cites:
In an illegal dismissal case, the onus probandi rests on the employer to prove
that its dismissal of an employee was for a valid cause. However, before a case
for illegal dismissal can prosper, an employer-employee relationship must first be
established.
Fly Ace points out that Javier merely offers factual assertions that he was an
employee of Fly Ace, "which are unfortunately not supported by proof,
documentary or otherwise."23 Javier simply assumed that he was an employee of
Fly Ace, absent any competent or relevant evidence to support it. "He performed
his contracted work outside the premises of the respondent; he was not even
required to report to work at regular hours; he was not made to register his time
in and time out every time he was contracted to work; he was not subjected to
any disciplinary sanction imposed to other employees for company violations; he
was not issued a company I.D.; he was not accorded the same benefits given to
other employees; he was not registered with the Social Security
System (SSS) as petitioners employee; and, he was free to leave, accept and
engage in other means of livelihood as there is no exclusivity of his contracted
services with the petitioner, his services being co-terminus with the trip only. All
these lead to the conclusion that petitioner is not an employee of the
respondents."24
Moreover, Fly Ace claims that it had "no right to control the result, means,
manner and methods by which Javier would perform his work or by which the
same is to be accomplished."25 In other words, Javier and the company driver
were given a free hand as to how they would perform their contracted services
and neither were they subjected to definite hours or condition of work.
Fly Ace likewise claims that Javiers function as a pahinante was not directly
related or necessary to its principal business of importation and sales of
groceries. Even without Javier, the business could operate its usual course as it
did not involve the business of inland transportation. Lastly, the acknowledgment
receipts bearing Javiers signature and words "pakiao rate," referring to his
earned salaries on a per trip basis, have evidentiary weight that the LA correctly
considered in arriving at the conclusion that Javier was not an employee of the
company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged illegal dismissal is anchored on
the existence of an employer-employee relationship between him and Fly Ace.
This is essentially a question of fact. Generally, the Court does not review errors
that raise factual questions. However, when there is conflict among the factual
findings of the antecedent deciding bodies like the LA, the NLRC and the CA, "it
is proper, in the exercise of Our equity jurisdiction, to review and re-evaluate the
factual issues and to look into the records of the case and re-examine the
questioned findings."26 In dealing with factual issues in labor cases, "substantial
evidence that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion is sufficient."27
As the records bear out, the LA and the CA found Javiers claim of employment
with Fly Ace as wanting and deficient. The Court is constrained to agree.
Although Section 10, Rule VII of the New Rules of Procedure of the
NLRC28 allows a relaxation of the rules of procedure and evidence in labor cases,
this rule of liberality does not mean a complete dispensation of proof. Labor
officials are enjoined to use reasonable means to ascertain the facts speedily
and objectively with little regard to technicalities or formalities but nowhere in the
rules are they provided a license to completely discount evidence, or the lack of
it. The quantum of proof required, however, must still be satisfied. Hence, "when
confronted with conflicting versions on factual matters, it is for them in the
exercise of discretion to determine which party deserves credence on the basis
of evidence received, subject only to the requirement that their decision must be
supported by substantial evidence."29 Accordingly, the petitioner needs to show
by substantial evidence that he was indeed an employee of the company against
which he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as
different as chalk and cheese. It is, therefore, incumbent upon the Court to
determine whether the party on whom the burden to prove lies was able to hurdle
the same. "No particular form of evidence is required to prove the existence of
such employer-employee relationship. Any competent and relevant evidence to

prove the relationship may be
admitted.http://www.lawphil.net/judjuris/juri2009/may2009/gr_179652_2009.html
- fnt31 Hence, while no particular form of evidence is required, a finding that such
relationship exists must still rest on some substantial evidence. Moreover, the
substantiality of the evidence depends on its quantitative as well as
its qualitative aspects."30Although substantial evidence is not a function of
quantity but rather of quality, the x x x circumstances of the instant case demand
that something more should have been proffered. Had there been other proofs of
employment, such as x x x inclusion in petitioners payroll, or a clear exercise of
control, the Court would have affirmed the finding of employer-employee
relationship."31
In sum, the rule of thumb remains: the onus probandi falls on petitioner to
establish or substantiate such claim by the requisite quantum of
evidence.32 "Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto x x x."33 Sadly, Javier failed to adduce substantial
evidence as basis for the grant of relief.
In this case, the LA and the CA both concluded that Javier failed to establish his
employment with Fly Ace. By way of evidence on this point, all that Javier
presented were his self-serving statements purportedly showing his activities as
an employee of Fly Ace. Clearly, Javier failed to pass the substantiality
requirement to support his claim. Hence, the Court sees no reason to depart from
the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly
Ace, he was made to work in the company premises during weekdays arranging
and cleaning grocery items for delivery to clients, no other proof was submitted to
fortify his claim. The lone affidavit executed by one Bengie Valenzuela was
unsuccessful in strengthening Javiers cause. In said document, all Valenzuela
attested to was that he would frequently see Javier at the workplace where the
latter was also hired as stevedore.34 Certainly, in gauging the evidence presented
by Javier, the Court cannot ignore the inescapable conclusion that his mere
presence at the workplace falls short in proving employment therein. The
supporting affidavit could have, to an extent, bolstered Javiers claim of being
tasked to clean grocery items when there were no scheduled delivery trips, but
no information was offered in this subject simply because the witness had no
personal knowledge of Javiers employment status in the company. Verily, the

Court cannot accept Javiers statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies the burden to pass the
well-settled tests to determine the existence of an employer-employee
relationship, viz: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the
employees conduct. Of these elements, the most important criterion is whether
the employer controls or has reserved the right to control the employee not only
as to the result of the work but also as to the means and methods by which the
result is to be accomplished.35
In this case, Javier was not able to persuade the Court that the above elements
exist in his case. He could not submit competent proof that Fly Ace engaged his
services as a regular employee; that Fly Ace paid his wages as an employee, or
that Fly Ace could dictate what his conduct should be while at work. In other
words, Javiers allegations did not establish that his relationship with Fly Ace had
the attributes of an employer-employee relationship on the basis of the abovementioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion
that it had an agreement with a hauling company to undertake the delivery of its
goods. It was also baffling to realize that Javier did not dispute Fly Aces denial of
his services exclusivity to the company. In short, all that Javier laid down were
bare allegations without corroborative proof.
1avvphi1
Fly Ace does not dispute having contracted Javier and paid him on a "per trip"
rate as a stevedore, albeit on apakyaw basis. The Court cannot fail to note that
Fly Ace presented documentary proof that Javier was indeed paid on
a pakyaw basis per the acknowledgment receipts admitted as competent
evidence by the LA. Unfortunately for Javier, his mere denial of the signatures
affixed therein cannot automatically sway us to ignore the documents because
"forgery cannot be presumed and must be proved by clear, positive and
convincing evidence and the burden of proof lies on the party alleging forgery."36
Considering the above findings, the Court does not see the necessity to resolve
the second issue presented.
One final note. The Courts decision does not contradict the settled rule that
"payment by the piece is just a method of compensation and does not define the
essence of the relation."37 Payment on a piece-rate basis does not negate regular
employment. "The term wage is broadly defined in Article 97 of the Labor Code
as remuneration or earnings, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece or commission basis.
Payment by the piece is just a method of compensation and does not define the
essence of the relations. Nor does the fact that the petitioner is not covered by
the SSS affect the employer-employee relationship. However, in determining
whether the relationship is that of employer and employee or one of an
independent contractor, each case must be determined on its own facts and all
the features of the relationship are to be considered."38 Unfortunately for Javier,
the attendant facts and circumstances of the instant case do not provide the
Court with sufficient reason to uphold his claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor
dispute will be automatically decided in favor of labor. Management also has its
rights which are entitled to respect and enforcement in the interest of simple fair
play. Out of its concern for the less privileged in life, the 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 the Court 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.39
WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the
Court of Appeals and its June 7, 2010 Resolution, in CA-G.R. SP No. 109975,
are hereby AFFIRMED.
SO ORDERED.

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G.R. No.

CZARINA T. MALVAR, Petitioner,

Unpaid 13th month pay for Dec 2000

Sick Leave Pay

Vacation Leave Pay

Backwages (from 3/7/00-4/30/01, award in LA Sytians

Allowances & Other Benefits:

Cash Dividend on Philip Morris Shares

Entitlement to a Company Driver

Entitlement to Philip Sch G

Compromise agreement is to be approved

e) On August 6, 2008, Intervenor prepared and filed before the Labor

Eastern Telecommunication Philippines, Inc.,50 a client who employs a law firm

We disagree with the respondents insistence. The respondents were complicit in

be declared entitled to recover full compensation in accordance with the written

September 14, 2009

UNIVERSITY OF SANTO TOMAS, Petitioner,

1. Salary increase of P1,700.00 per month

2nd Year P33,568,970.00 to apply to its demand for salary increase,

2nd year P2,000.00/month

P2,000 Christmas Bonus

The amount of P15,475,000.00 represents 22.50% of the allocated

awarded P45 million

awarded P15.475 million

The difference between P68,775,831 (70% of incremental tuition fee proceeds)

5. Hazard pay (P200/month for

7. SSS (P910.00 employers

8. Pag-Ibig (2% of the basic pay)

9. Phil Health (P125.00/employee)

Thus, if We charge the employees other benefits from the

Accumulated Excess of Revenues

THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF

SANA PO AY MA-RELEASE ANG AMING MGA WAGE ADJUSTMENTS AT IBA

granted by the DOLE Secretary, to P18,000.00; the parties do not appear to

P2,000 Christmas Bonus

P3,000.00 mid-year bonus

Hazard pay (P200/month for

SSS (P910.00 employers

Pag-Ibig (2% of the basic pay)

joining the organization, they have surrendered a portion of their individual

justice. Thus, every employee of the court should be an exemplar of integrity,

The Office of the Court Administrator (OCA) is DIRECTED to institute appropriate

GOVERNOR ORLANDO A. FUA, JR.,* IN REPRESENTATION OF THE

The provincial government, relying on the aforementioned resolutions and the

marginal note of No Objection on the letter-request of Gov. Orlando B. Fua to

whether the marginal note of No Objection on petitioners letter-request to the

September 18, 2009

KIMBERLY-CLARK PHILIPPINES, INC. Petitioner,

of P1,025,113.73 while Rosemarie received a total of P1,006,493.94, in

additional bonus and P2,880 economic assistance, and to pay

Moreover, petitioners decision to give economic assistance was arrived at more

August 13, 2013

CITY GOVERNMENT OF MAKATI, AS REPRESENTED BY HON. MAYOR

Ipinaglaban ko itong karapatang ito at ito ay aking nakamtan sa papel nga

WHEREFORE, the incumbent City Mayor of Makati is hereby directed to

Section 1. Subject of appeal. An appeal may be taken from a judgment or final

2. Whether respondent, after receiving payment from petitioner, is still

awards, judgments, final orders or resolutions issued by the latter.58Section 1,

SECTION 1. Subject of Appeal. An appeal may be taken from a judgment or

respondent the amount of P558,944.19 representing her backwages, from

It is a fundamental rule that when a final judgment becomes executory, it thereby

We cannot sustain petitioners argument. The waiver made by respondent cannot

3. It is also understood and agreed that the amount paid to me is in full

March 25, 2009