Labor Standards Notes and Cases 1st
batch
Social justice is the view that everyone deserves equal
economic, political and social rights and opportunities. Social
workers aim to open the doors of access and opportunity for
everyone, particularly those in greatest need.
1987 Constitution
Article 2 State Policies
Section 5. The maintenance of peace and order, the
protection of life, liberty, and property, and promotion of the
general welfare are essential for the enjoyment by all the
people of the blessings of democracy.
Section 9. The State shall promote a just and dynamic social
order that will ensure the prosperity and independence of the
nation and free the people from poverty through policies that
provide adequate social services, promote full employment, a
rising standard of living, and an improved quality of life for all.
Section 10. The State shall promote social justice in all phases
of national development.
Section 11. The State values the dignity of every human
person and guarantees full respect for human rights.
Section 13. The State recognizes the vital role of the youth in
nation-building and shall promote and protect their physical,
moral, spiritual, intellectual, and social well-being. It shall
inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs.
Section 14. The State recognizes the role of women in nation-
building, and shall ensure the fundamental equality before
the law of women and men.
Section 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and
promote their welfare.
Article XIII
SOCIAL JUSTICE AND HUMAN RIGHTS
Section 1. The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of
all the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the
common good.
1
To this end, the State shall regulate the acquisition,
ownership, use, and disposition of property and its
increments.
Section 2. The promotion of social justice shall include the
commitment to create economic opportunities based on
freedom of initiative and self-reliance.
LABOR
Section 3. The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for
all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance
with law. They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting
their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation,
and shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in
the fruits of production and the right of enterprises to
reasonable returns to investments, and to expansion and
growth.
WOMEN
Section 14. The State shall protect working women by
providing safe and healthful working conditions, taking into
account their maternal functions, and such facilities and
opportunities that will enhance their welfare and enable
them to realize their full potential in the service of the nation.
[G.R. No. 47800. December 2, 1940.]
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL.,
Respondents.
Maximo Calalang, in his capacity as a private citizen and as a
taxpayer of Manila, brought before this court this petition for
a writ of prohibition against the respondents, A. D. Williams,
as Chairman of the National Traffic Commission; Vicente
Labor Standards Notes and Cases 1st
batch
Fragante, as Director of Public Works; Sergio Bayan, as Acting
Secretary of Public Works and Communications; Eulogio
Rodriguez, as Mayor of the City of Manila; and Juan
Dominguez, as Acting Chief of Police of Manila.
It is alleged in the petition that the National Traffic
Commission, in its resolution of July 17, 1940, resolved to
recommend to the Director of Public Works and to the
Secretary of Public Works and Communications that animal-
drawn vehicles be prohibited from passing along Rosario
Street extending from Plaza Calderon de la Barca to
Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from
1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending
from the railroad crossing at Antipolo Street to Echague
Street, from 7 a.m. to 11 p.m., from a period of one year from
the date of the opening of the Colgante Bridge to traffic; that
the Chairman of the National Traffic Commission, on July 18,
1940 recommended to the Director of Public Works the
adoption of the measure proposed in the resolution
aforementioned, in pursuance of the provisions of
Commonwealth Act No. 548 which authorizes said Director of
Public Works, with the approval of the Secretary of Public
Works and Communications, to promulgate rules and
regulations to regulate and control the use of and traffic on
national roads; that on August 2, 1940, the Director of Public
Works, in his first indorsement to the Secretary of Public
Works and Communications, recommended to the latter the
approval of the recommendation made by the Chairman of
the National Traffic Commission as aforesaid, with the
modification that the closing of Rizal Avenue to traffic to
animal-drawn vehicles be limited to the portion thereof
extending from the railroad crossing at Antipolo Street to
Azcarraga Street; that on August 10, 1940, the Secretary of
Public Works and Communications, in his second indorsement
addressed to the Director of Public Works, approved the
recommendation of the latter that Rosario Street and Rizal
Avenue be closed to traffic of animal-drawn vehicles, between
the points and during the hours as above indicated, for a
period of one year from the date of the opening of the
Colgante Bridge to traffic; that the Mayor of Manila and the
Acting Chief of Police of Manila have enforced and caused to
be enforced the rules and regulations thus adopted; that as a
consequence of such enforcement, all animal-drawn vehicles
are not allowed to pass and pick up passengers in the places
above-mentioned to the detriment not only of their owners
but of the riding public as well.
It is contended by the petitioner that Commonwealth Act No.
548 by which the Director of Public Works, with the approval
2
of the Secretary of Public Works and Communications, is
authorized to promulgate rules and regulations for the
regulation and control of the use of and traffic on national
roads and streets is unconstitutional because it constitutes an
undue delegation of legislative power. This contention is
untenable. As was observed by this court in Rubi v. Provincial
Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere
been better stated than in the early Ohio case decided by
Judge Ranney, and since followed in a multitude of cases,
namely: The true distinction therefore is between the
delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring an
authority or discretion as to its execution, to be exercised
under and in pursuance of the law. The first cannot be done;
to the latter no valid objection can be made. (Cincinnati, W. &
Z. R. Co. v. Commrs. Clinton County, 1 Ohio St., 88.)
Discretion, as held by Chief Justice Marshall in Wayman v.
Southard (10 Wheat., 1) may be committed by the Legislature
to an executive department or official. The Legislature may
make decisions of executive departments or subordinate
officials thereof, to whom it has committed the execution of
certain acts, final on questions of fact. (U.S. v. Kinkead, 248
Fed., 141.) The growing tendency in the decisions is to give
prominence to the necessity of the case."cralaw virtua1aw
library
Section 1 of Commonwealth Act No. 548 reads as
follows:jgc:chanrobles.com.ph
"SECTION 1. To promote safe transit upon, and avoid
obstructions on, roads and streets designated as national
roads by acts of the National Assembly or by executive orders
of the President of the Philippines, the Director of Public
Works, with the approval of the Secretary of Public Works and
Communications, shall promulgate the necessary rules and
regulations to regulate and control the use of and traffic on
such roads and streets. Such rules and regulations, with the
approval of the President, may contain provisions controlling
or regulating the construction of buildings or other structures
within a reasonable distance from along the national roads.
Such roads may be temporarily closed to any or all classes of
traffic by the Director of Public Works and his duly authorized
representatives whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in
the public convenience and interest, or for a specified period,
with the approval of the Secretary of Public Works and
Communications."cralaw virtua1aw library
Labor Standards Notes and Cases 1st
batch
The above provisions of law do not confer legislative power
upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred
upon them and under which they promulgated the rules and
regulations now complained of is not to determine what
public policy demands but merely to carry out the legislative
policy laid down by the National Assembly in said Act, to wit,
"to promote safe transit upon and avoid obstructions on,
roads and streets designated as national roads by acts of the
National Assembly or by executive orders of the President of
the Philippines" and to close them temporarily to any or all
classes of traffic "whenever the condition of the road or the
traffic makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all,
therefore, is not the determination of what the law shall be,
but merely the ascertainment of the facts and circumstances
upon which the application of said law is to be predicated. To
promulgate rules and regulations on the use of national roads
and to determine when and how long a national road should
be closed to traffic, in view of the condition of the road or the
traffic thereon and the requirements of public convenience
and interest, is an administrative function which cannot be
directly discharged by the National Assembly. It must depend
on the discretion of some other government official to whom
is confided the duty of determining whether the proper
occasion exists for executing the law. But it cannot be said
that the exercise of such discretion is the making of the law.
As was said in Lockes Appeal (72 Pa. 491): "To assert that a
law is less than a law, because it is made to depend on a
future event or act, is to rob the Legislature of the power to
act wisely for the public welfare whenever a law is passed
relating to a state of affairs not yet developed, or to things
future and impossible to fully know." The proper distinction
the court said was this: "The Legislature cannot delegate its
power to make the law; but it can make a law to delegate a
power to determine some fact or state of things upon which
the law makes, or intends to make, its own action depend. To
deny this would be to stop the wheels of government. There
are many things upon which wise and useful legislation must
depend which cannot be known to the law-making power,
and, must, therefore, be a subject of inquiry and
determination outside of the halls of legislation." (Field v.
Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)
In the case of People v. Rosenthal and Osmea, G.R. Nos.
46076 and 46077, promulgated June 12, 1939, and in
Pangasinan Transportation v. The Public Service Commission,
G.R. No. 47065, promulgated June 26, 1940, this Court had
occasion to observe that the principle of separation of powers
3
has been made to adapt itself to the complexities of modern
governments, giving rise to the adoption, within certain limits,
of the principle of "subordinate legislation," not only in the
United States and England but in practically all modern
governments. Accordingly, with the growing complexity of
modern life, the multiplication of the subjects of
governmental regulations, and the increased difficulty of
administering the laws, the rigidity of the theory of separation
of governmental powers has, to a large extent, been relaxed
by permitting the delegation of greater powers by the
legislative and vesting a larger amount of discretion in
administrative and executive officials, not only in the
execution of the laws, but also in the promulgation of certain
rules and regulations calculated to promote public interest.
The petitioner further contends that the rules and regulations
promulgated by the respondents pursuant to the provisions of
Commonwealth Act No. 548 constitute an unlawful
interference with legitimate business or trade and abridge the
right to personal liberty and freedom of locomotion.
Commonwealth Act No. 548 was passed by the National
Assembly in the exercise of the paramount police power of
the state.
Said Act, by virtue of which the rules and regulations
complained of were promulgated, aims to promote safe
transit upon and avoid obstructions on national roads, in the
interest and convenience of the public. In enacting said law,
therefore, the National Assembly was prompted by
considerations of public convenience and welfare. It was
inspired by a desire to relieve congestion of traffic. which is,
to say the least, a menace to public safety. Public welfare,
then, lies at the bottom of the enactment of said law, and the
state in order to promote the general welfare may interfere
with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all
kinds of restraints and burdens, in order to secure the general
comfort, health, and prosperity of the state (U.S. v. Gomez
Jesus, 31 Phil., 218). To this fundamental aim of our
Government the rights of the individual are subordinated.
Liberty is a blessing without which life is a misery, but liberty
should not be made to prevail over authority because then
society will fall into anarchy. Neither should authority be
made to prevail over liberty because then the individual will
fall into slavery. The citizen should achieve the required
balance of liberty and authority in his mind through education
and personal discipline, so that there may be established the
resultant equilibrium, which means peace and order and
happiness for all. The moment greater authority is conferred
Labor Standards Notes and Cases 1st
batch
upon the government, logically so much is withdrawn from
the residuum of liberty which resides in the people. The
paradox lies in the fact that the apparent curtailment of
liberty is precisely the very means of insuring its preservation.
The scope of police power keeps expanding as civilization
advances. As was said in the case of Dobbins v. Los Angeles
(195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the
police power is a continuing one, and a business lawful today
may in the future, because of the changed situation, the
growth of population or other causes, become a menace to
the public health and welfare, and be required to yield to the
public good." And in People v. Pomar (46 Phil., 440), it was
observed that "advancing civilization is bringing within the
police power of the state today things which were not
thought of as being within such power yesterday. The
development of civilization, the rapidly increasing population,
the growth of public opinion, with an increasing desire on the
part of the masses and of the government to look after and
care for the interests of the individuals of the state, have
brought within the police power many questions for
regulation which formerly were not so considered."cralaw
virtua1aw library
The petitioner finally avers that the rules and regulations
complained of infringe upon the constitutional precept
regarding the promotion of social justice to insure the well-
being and economic security of all the people. The promotion
of social justice, however, is to be achieved not through a
mistaken sympathy towards any given group. Social justice is
"neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization
of social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the
competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations
of the members of the community, constitutionally, through
the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying
the existence of all governments on the time-honored
principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition
of the necessity of interdependence among divers and diverse
units of a society and of the protection that should be equally
and evenly extended to all groups as a combined force in our
4
social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."cralaw virtua1aw
library
In view of the foregoing, the writ of prohibition prayed for is
hereby denied, with costs against the petitioner. So ordered.
Avancea, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.
[G.R. No. 127598. February 22, 2000]
MANILA ELECTRIC COMPANY, petitioner, vs. Hon. Secretary
of Labor Leonardo Quisumbing and Meralco Employees and
Workers Association (MEWA), respondents.
RESOLUTION
YNARES_SANTIAGO, J.:
In the Decision promulgated on January 27, 1999, the Court
disposed of the case as follows:
"WHEREFORE, the petition is granted and the orders of public
respondent Secretary of Labor dated August 19, 1996 and
December 28, 1996 are set aside to the extent set forth
above. The parties are directed to execute a Collective
Bargaining Agreement incorporating the terms and conditions
contained in the unaffected portions of the Secretary of
Labors orders of August 19, 1996 and December 28, 1996,
and the modifications set forth above. The retirement fund
issue is remanded to the Secretary of Labor for reception of
evidence and determination of the legal personality of the
Meralco retirement fund."[1]
The modifications of the public respondents resolutions
include the following:
January 27, 1999 decision Secretarys resolution
Wages -P1,900.00 for 1995-96 P2,200.00
Xmas bonus -modified to one month 2 months
Retirees -remanded to the Secretary granted
Loan to coops -denied granted
Labor Standards Notes and Cases 1st
batch
GHSIP, HMP and Housing loans -granted up to P60,000.00
granted
Signing bonus -denied granted
Union leave -40 days (typo error) 30 days
High voltage/pole -not apply to those who are members of a
team not exposed to the risk
Collectors -no need for cash bond, no need to reduce quota
and MAPL
CBU -exclude confidential employees include
Union security -maintenance of membership closed shop
Contracting out -no need to consult union consult first
All benefits -existing terms and conditions all terms
Retroactivity -Dec 28, 1996-Dec 27, 199(9) from Dec 1, 1995
Dissatisfied with the Decision, some alleged members of
private respondent union (Union for brevity) filed a motion
for intervention and a motion for reconsideration of the said
Decision. A separate intervention was likewise made by the
supervisors union (FLAMES[2]) of petitioner corporation
alleging that it has bona fide legal interest in the outcome of
the case.[3] The Court required the "proper parties" to file a
comment to the three motions for reconsideration but the
Solicitor-General asked that he be excused from filing the
comment because the "petition filed in the instant case was
granted" by the Court.[4] Consequently, petitioner filed its
own consolidated comment. An "Appeal Seeking Immediate
Reconsideration" was also filed by the alleged newly elected
president of the Union.[5] Other subsequent pleadings were
filed by the parties and intervenors.
The issues raised in the motions for reconsideration had
already been passed upon by the Court in the January 27,
1999 decision. No new arguments were presented for
consideration of the Court. Nonetheless, certain matters will
be considered herein, particularly those involving the amount
of wages and the retroactivity of the Collective Bargaining
Agreement (CBA) arbitral awards.
Petitioner warns that if the wage increase of P2,200.00 per
month as ordered by the Secretary is allowed, it would simply
5
pass the cost covering such increase to the consumers
through an increase in the rate of electricity. This is a non
sequitur. The Court cannot be threatened with such a
misleading argument. An increase in the prices of electric
current needs the approval of the appropriate regulatory
government agency and does not automatically result from a
mere increase in the wages of petitioners employees. Besides,
this argument presupposes that petitioner is capable of
meeting a wage increase. The All Asia Capital report upon
which the Union relies to support its position regarding the
wage issue can not be an accurate basis and conclusive
determinant of the rate of wage increase. Section 45 of Rule
130 Rules of Evidence provides:
"Commercial lists and the like. - Evidence of statements of
matters of interest to persons engaged in an occupation
contained in a list, register, periodical, or other published
compilation is admissible as tending to prove the truth of any
relevant matter so stated if that compilation is published for
use by persons engaged in that occupation and is generally
used and relied upon by them therein."
Under the afore-quoted rule, statement of matters contained
in a periodical may be admitted only "if that compilation is
published for use by persons engaged in that occupation and
is generally used and relied upon by them therein." As
correctly held in our Decision dated January 27, 1999, the
cited report is a mere newspaper account and not even a
commercial list. At most, it is but an analysis or opinion which
carries no persuasive weight for purposes of this case as no
sufficient figures to support it were presented. Neither did
anybody testify to its accuracy. It cannot be said that
businessmen generally rely on news items such as this in their
occupation. Besides, no evidence was presented that the
publication was regularly prepared by a person in touch with
the market and that it is generally regarded as trustworthy
and reliable. Absent extrinsic proof of their accuracy, these
reports are not admissible.[6] In the same manner,
newspapers containing stock quotations are not admissible in
evidence when the source of the reports is available.[7] With
more reason, mere analyses or projections of such reports
cannot be admitted. In particular, the source of the report in
this case can be easily made available considering that the
same is necessary for compliance with certain governmental
requirements.
Nonetheless, by petitioners own allegations, its actual total
net income for 1996 was P5.1 billion.[8] An estimate by the
All Asia financial analyst stated that petitioners net operating
Labor Standards Notes and Cases 1st
batch
income for the same year was about P5.7 billion, a figure
which the Union relies on to support its claim. Assuming
without admitting the truth thereof, the figure is higher than
the P4.171 billion allegedly suggested by petitioner as its
projected net operating income. The P5.7 billion which was
the Secretarys basis for granting the P2,200.00 is higher than
the actual net income of P5.1 billion admitted by petitioner. It
would be proper then to increase this Courts award of
P1,900.00 to P2,000.00 for the two years of the CBA award.
For 1992, the agreed CBA wage increase for rank-and-file was
P1,400.00 and was reduced to P1,350.00, for 1993; further
reduced to P1,150.00 for 1994. For supervisory employees,
the agreed wage increase for the years 1992-1994 are
P1,742.50, P1,682.50 and P1,442.50, respectively. Based on
the foregoing figures, the P2,000.00 increase for the two-year
period awarded to the rank-and-file is much higher than the
highest increase granted to supervisory employees.[9] As
mentioned in the January 27, 1999 Decision, the Court does
"not seek to enumerate in this decision the factors that
should affect wage determination" because collective
bargaining disputes particularly those affecting the national
interest and public service "requires due consideration and
proper balancing of the interests of the parties to the dispute
and of those who might be affected by the dispute."[10] The
Court takes judicial notice that the new amounts granted
herein are significantly higher than the weighted average
salary currently enjoyed by other rank-and-file employees
within the community. It should be noted that the relations
between labor and capital is impressed with public interest
which must yield to the common good.[11] Neither party
should act oppressively against the other or impair the
interest or convenience of the public.[12] Besides, matters of
salary increases are part of management prerogative.[13]
On the retroactivity of the CBA arbitral award, it is well to
recall that this petition had its origin in the renegotiation of
the parties 1992-1997 CBA insofar as the last two-year period
thereof is concerned. When the Secretary of Labor assumed
jurisdiction and granted the arbitral awards, there was no
question that these arbitral awards were to be given
retroactive effect. However, the parties dispute the reckoning
period when retroaction shall commence. Petitioner claims
that the award should retroact only from such time that the
Secretary of Labor rendered the award, invoking the 1995
decision in Pier 8 case[14] where the Court, citing Union of
Filipino Employees v. NLRC,[15] said:
"The assailed resolution which incorporated the CBA to be
signed by the parties was promulgated on June 5, 1989, the
6
expiry date of the past CBA. Based on the provision of Section
253-A, its retroactivity should be agreed upon by the parties.
But since no agreement to that effect was made, public
respondent did not abuse its discretion in giving the said CBA
a prospective effect. The action of the public respondent is
within the ambit of its authority vested by existing law."
On the other hand, the Union argues that the award should
retroact to such time granted by the Secretary, citing the 1993
decision of St Lukes.[16]
"Finally, the effectivity of the Order of January 28, 1991, must
retroact to the date of the expiration of the previous CBA,
contrary to the position of petitioner. Under the
circumstances of the case, Article 253-A cannot be properly
applied to herein case. As correctly stated by public
respondent in his assailed Order of April 12, 1991 dismissing
petitioners Motion for Reconsideration---
Anent the alleged lack of basis for the retroactivity provisions
awarded, we would stress that the provision of law invoked
by the Hospital, Article 253-A of the Labor Code, speaks of
agreements by and between the parties, and not arbitral
awards . . .
"Therefore, in the absence of a specific provision of law
prohibiting retroactivity of the effectivity of arbitral awards
issued by the Secretary of Labor pursuant to Article 263(g) of
the Labor Code, such as herein involved, public respondent is
deemed vested with plenary and discretionary powers to
determine the effectivity thereof."
In the 1997 case of Mindanao Terminal,[17] the Court applied
the St. Lukes doctrine and ruled that:
"In St. Lukes Medical Center v. Torres, a deadlock also
developed during the CBA negotiations between
management and the union. The Secretary of Labor assumed
jurisdiction and ordered the retroaction of the CBA to the
date of expiration of the previous CBA. As in this case, it was
alleged that the Secretary of Labor gravely abused its
discretion in making his award retroactive. In dismissing this
contention this Court held:
"Therefore, in the absence of a specific provision of law
prohibiting retroactive of the effectivity of arbitral awards
issued by the Secretary of Labor pursuant to Article 263(g) of
the Labor Code, such as herein involved, public respondent is
Labor Standards Notes and Cases 1st
batch
deemed vested with plenary and discretionary powers to
determine the effectivity thereof."
The Court in the January 27, 1999 Decision, stated that the
CBA shall be "effective for a period of 2 years counted from
December 28, 1996 up to December 27, 1999."
Parenthetically, this actually covers a three-year period. Labor
laws are silent as to when an arbitral award in a labor dispute
where the Secretary had assumed jurisdiction by virtue of
Article 263 (g) of the Labor Code shall retroact. In general, a
CBA negotiated within six months after the expiration of the
existing CBA retroacts to the day immediately following such
date and if agreed thereafter, the effectivity depends on the
agreement of the parties.[18] On the other hand, the law is
silent as to the retroactivity of a CBA arbitral award or that
granted not by virtue of the mutual agreement of the parties
but by intervention of the government. Despite the silence of
the law, the Court rules herein that CBA arbitral awards
granted after six months from the expiration of the last CBA
shall retroact to such time agreed upon by both employer and
the employees or their union. Absent such an agreement as
to retroactivity, the award shall retroact to the first day after
the six-month period following the expiration of the last day
of the CBA should there be one. In the absence of a CBA, the
Secretarys determination of the date of retroactivity as part
of his discretionary powers over arbitral awards shall control.
It is true that an arbitral award cannot per se be categorized
as an agreement voluntarily entered into by the parties
because it requires the interference and imposing power of
the State thru the Secretary of Labor when he assumes
jurisdiction. However, the arbitral award can be considered as
an approximation of a collective bargaining agreement which
would otherwise have been entered into by the parties.[19]
The terms or periods set forth in Article 253-A pertains
explicitly to a CBA. But there is nothing that would prevent its
application by analogy to an arbitral award by the Secretary
considering the absence of an applicable law. Under Article
253-A: "(I)f any such agreement is entered into beyond six
months, the parties shal! agree on the duration of
retroactivity thereof." In other words, the law contemplates
retroactivity whether the agreement be entered into before
or after the said six-month period. The agreement of the
parties need not be categorically stated for their acts may be
considered in determining the duration of retroactivity. In this
connection, the Court considers the letter of petitioners
Chairman of the Board and its President addressed to their
stockholders, which states that the CBA "for the rank-and-file
employees covering the period December 1, 1995 to
7
November 30, 1997 is still with the Supreme Court,"[20] as
indicative of petitioners recognition that the CBA award
covers the said period. Earlier, petitioners negotiating panel
transmitted to the Union a copy of its proposed CBA covering
the same period inclusive.[21] In addition, petitioner does not
dispute the allegation that in the past CBA arbitral awards,
the Secretary granted retroactivity commencing from the
period immediately following the last day of the expired CBA.
Thus, by petitioners own actions, the Court sees no reason to
retroact the subject CBA awards to a different date. The
period is herein set at two (2) years from December 1, 1995
to November 30, 1997.
On the allegation concerning the grant of loan to a
cooperative, there is no merit in the unions claim that it is no
different from housing loans granted by the employer. The
award of loans for housing is justified because it pertains to a
basic necessity of life. It is part of a privilege recognized by
the employer and allowed by law. In contrast, providing seed
money for the establishment of the employees cooperative is
a matter in which the employer has no business interest or
legal obligation. Courts should not be utilized as a tool to
compel any person to grant loans to another nor to force
parties to undertake an obligation without justification. On
the contrary, it is the government that has the obligation to
render financial assistance to cooperatives and the
Cooperative Code does not make it an obligation of the
employer or any private individual.[22]
Anent the 40-day union leave, the Court finds that the same is
a typographical error. In order to avoid any confusion, it is
herein declared that the union leave is only thirty (30) days as
granted by the Secretary of Labor and affirmed in the
Decision of this Court.
The added requirement of consultation imposed by the
Secretary in cases of contracting out for six (6) months or
more has been rejected by the Court. Suffice it to say that the
employer is allowed to contract out services for six months or
more. However, a line must be drawn between management
prerogatives regarding business operations per se and those
which affect the rights of employees, and in treating the
latter, the employer should see to it that its employees are at
least properly informed of its decision or modes of action in
order to attain a harmonious labor-management relationship
and enlighten the workers concerning their rights.[23] Hiring
of workers is within the employers inherent freedom to
regulate and is a valid exercise of its management prerogative
subject only to special laws and agreements on the matter
Labor Standards Notes and Cases 1st
batch
and the fair standards of justice.[24] The management cannot
be denied the faculty of promoting efficiency and attaining
economy by a study of what units are essential for its
operation. It has the ultimate determination of whether
services should be performed by its personnel or contracted
to outside agencies. While there should be mutual
consultation, eventually deference is to be paid to what
management decides.[25] Contracting out of services is an
exercise of business judgment or management prerogative.
[26] Absent proof that management acted in a malicious or
arbitrary manner, the Court will not interfere with the
exercise of judgment by an employer.[27] As mentioned in the
January 27, 1999 Decision, the law already sufficiently
regulates this matter.[28] Jurisprudence also provides
adequate limitations, such that the employer must be
motivated by good faith and the contracting out should not
be resorted to circumvent the law or must not have been the
result of malicious or arbitrary actions.[29] These are matters
that may be categorically determined only when an actual
suit on the matter arises.
WHEREFORE, the motion for reconsideration is partially
granted and the assailed Decision is modified as follows: (1)
the arbitral award shall retroact from December 1, 1995 to
November 30, 1997; and (2) the award of wage is increased
from the original amount of One Thousand Nine Hundred
Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the
years 1995 and 1996. This Resolution is subject to the
monetary advances granted by petitioner to its rank-and-file
employees during the pendency of this case assuming such
advances had actually been distributed to them. The assailed
Decision is AFFIRMED in all other respects.
SO ORDERED.
b. foundation: police power and state protection
[ GR No. L-26298, Sep 28, 1984 ]
CMS ESTATE v. SOCIAL SECURITY SYSTEM +
This appeal by the CMS Estate, Inc. from the decision
rendered by the Social Security Commission in its Case No. 12,
entitled "CMS Estate, Inc. vs Social Security System", declaring
CMS subject to compulsory coverage as of September 1, 1957
and "directing the Social Security System to effect such
coverage of the petitioner's employees in its logging and real
estate business conformably to the provision of Republic Act
No. 1161, as amended", was certified to Us by the defunct
8
Court of Appeals[1] for further disposition considering that
purely questions of law are involved.
Petitioner is a domestic corporation organized primarily for
the purpose of engaging in the real estate business. On
December 1, 1952, it started doing business with only six (6)
employees. It's Articles of Incorporation was amended on
June 4, 1956 in order to engage in the logging business. The
Securities and Exchange Commission issued the certificate of
filing of said amended articles on June 18, 1956. Petitioner
likewise obtained an ordinary license from the Bureau of
Forestry to operate a forest concession of 13,000 hectares
situated in the municipality of Baganga, Province of Davao.
On January 28, 1957, petitioner entered into a contract of
management with one Eufracio D. Rojas for the operation and
exploitation of the forest concession. The logging operation
actually started on April 1, 1957 with four monthly salaried
employees. As of September 1, 1957, petitioner had 89
employees and laborers in the logging operation. On
December 26, 1957, petitioner revoked its contract of
management with Mr. Rojas.
On August 1, 1958, petitioner became a member of the Social
Security System with respect to its real estate business. On
September 6, 1958, petitioner remitted to the System the
sum of P203.13 representing the initial premium on the
monthly salaries of the employees in its logging business.
However, on October 9, 1958, petitioner demanded the
refund of the said amount, claiming that it is not yet subject
to compulsory coverage with respect to its logging business.
The request was denied by respondent System on the ground
that the logging business was a mere expansion of peti-
tioner's activities and for purposes of the Social Security Act,
petitioner should be considered a member of the System
since December 1, 1952 when it commenced its real estate
business.
On November 10, 1958, petitioner filed a petition with the
Social Security Commission praying for the determination of
the effectivity date of the compulsory coverage of petitioner's
logging business.
After both parties have submitted their respective
memoranda, the Commission issued on January 14, 1960,
Resolution No. 91[2] , the dispositive portion of which reads
as follows:
"Premises considered, the instant petition is hereby denied
and petitioner is hereby adjudged to be subject to
Labor Standards Notes and Cases 1st
batch
compulsory coverage as of Sept. 1, 1957 and the Social
Security System is hereby directed to effect such coverage of
petitioner's employees in its logging and real estate business
conformably to the provisions of Rep. Act No. 1161, as
amended.
"SO ORDERED."
Petitioner's motion for reconsideration was denied in
Resolution No. 609 of the commission.
These two (2) resolutions are now the subject of petitioner's
appeal. Petitioner submits that respondent Commission erred
in holding -
(1) that the contributions required of employers and
employees under our Social Security Act of 1954 are not in
the nature of excise taxes because the said Act was allegedly
enacted by congress in the exercise of the police power of the
State, not of its taxing power;
(2) that no contractee -independent contractor relationship
existed between petitioner and Eufracio D. Rojas during the
time that he was operating its forest concession at Baganga,
Davao;
(3) that a corporation which has been in operation for more
than two years in one business is immediately covered with
respect to any new and independent business it may
subsequently engage in;
(4) that a corporation should be treated as a single employing
unit for purposes of coverage under the Social Security Act,
irrespective of its separate, unrelated and independent busi-
nesses established and operated at different places and on
different dates; and
(5) that Section 9 of the Social Security Act on the question of
compulsory membership of employers should be given a
liberal interpretation.
Respondent, on the other hand, advances the following
propositions, inter alia:
(1) that the Social Security Act speaks of compulsory coverage
of employers and not of businesses;
(2) that once an employer is initially covered under the Social
Security Act, any other business undertaken or established by
the same employer is likewise subject in spite of the fact that
the latter has not been in operation for at least two years;
9
(3) that petitioner's logging business while actually of a
different, distinct, separate and independent nature from its
real estate business should be considered as an operation
under the same management;
(4) that the amendment of petitioner's articles of
incorporation, so as to enable it to engage in the logging
business did not alter the juridical personality of petitioner;
and
(5) that petitioner's logging operation is a mere expansion of
its business activities.
The Social Security Law was enacted pursuant to the policy of
the government "to develop, establish gradually and perfect a
social security system which shall be suitable to the needs of
the people throughout the Philippines, and shall provide
protection against the hazards of disability, sickness, old age
and death". (Sec. 2, RA 1161, as amended) It is thus clear that
said enactment implements the general welfare mandate of
the Constitution and constitutes a legitimate exercise of the
police power of the State. As held in the case of Philippine
Blooming Mills Co., Inc., et al vs S S S[3] -
"Membership in the S S S is not a result of bilateral,
consensual agreement where the rights and obligations of the
parties are defined by and subject to their will. RA 1161
requires compulsory coverage of employees and employers
under the System. It is actually a legal imposition on said
employers and employees, designed to provide social security
to the workingmen. Membership in the S S S is therefore, in
compliance with the lawful exercise of the police power of
the State, to which the principle of non-impairment of the
obligation of contract is not a proper defense."
"x x x x"
The taxing power of the State is exercised for the purpose of
raising revenues. However, under our Social Security Law, the
emphasis is more on the promotion of the general welfare.
The Act is not part of our Internal Revenue Code nor are the
contributions and premiums therein dealt with and provided
for, collectible by the Bureau of Internal Revenue. The funds
contributed to the System belong to the members who will
receive benefits, as a matter of right, whenever the hazards
provided by the law occur.
"All that is required of appellant is to make monthly con-
tributions to the System for covered employees in its employ.
These contributions, contrary to appellant's contention, are
Labor Standards Notes and Cases 1st
batch
not 'in the nature of taxes on employment.' Together with the
contributions imposed upon employees and the Government,
they are intended for the protection of said employees
against the hazards of disability, sickness, old age and death in
line with the constitutional mandate to promote social justice
to insure the well-being and economic security of all the
people."[4]
Because of the broad social purpose of the Social Security Act,
all doubts in construing the Act should favor coverage rather
than exemption.
Prior to its amendment, Sec. 9 of the Act provides that before
an employer could be compelled to become a member of the
System, he must have been in operation for at least two years
and has at the time of admission at least six employees. It
should be pointed out that it is the employer, either natural or
juridical person, who is subject to compulsory coverage and
not the business. If the intention of the legislature was to
consider every venture of the employer as the basis of a
separate coverage, an express provision to that effect could
have been made. Unfortunately, however, none of that sort
appeared provided for in the said law.
Should each business venture of the employer be considered
as the basis of the coverage, an employer with more than one
line of business but with less than six employees in each,
would never be covered although he has in his employ a total
of more than six employees which is sufficient to bring him
within the ambit of compulsory coverage. This would
frustrate rather than foster the policy of the Act. The
legislative intent must be respected. In the absence of an
express provision for a separate coverage for each kind of
business, the reasonable interpretation is that once an
employer is covered in a particular kind of business, he should
be automatically covered with respect to any new line of
business he may subsequently undertake even under a new
name. Any interpretation which would defeat rather than
promote the ends for which the Social Security Act was
enacted should be eschewed.[5]
Petitioner contends that the Commission cannot
indiscriminately combine for purposes of coverage two
distinct and separate businesses when one has not yet been
in operation for more than two years thus rendering nugatory
the period of stabilization fixed by the Act. This contention
lacks merit since the amendatory law, RA 2658, which was
approved on June 18, 1960, eliminated the two-year
stabilization period as employers now become automatically
covered immediately upon the start of the business.
10
Sec. 10 (formerly Sec. 9) of RA 1161, as amended by RA 2658
now provides:
"Sec. 10. Effective date of coverage. - Compulsory coverage of
the employer shall take effect on the first day of his operation,
and that of the employee on the date of his employment."
(Italics supplied)
As We have previously mentioned, it is the intention of the
law to cover as many persons as possible so as to promote
the constitutional objective of social justice. It is axiomatic
that a later law prevails over a prior statute and moreover the
legislative intent must be given effect.[6]
Petitioner further submits that Eufracio Rojas is an
independent contractor who engages in an independent
business of his own consisting of the operation of the timber
concession of the former. Rojas was appointed as operations
manager of the logging concession;[7] he has no power to
appoint or hire employees; as the term implies, he only
manages the employees and it is petitioner who furnishes
him the necessary equipment for use in the logging business;
and he is not free from the control and direction of his
employer in matters connected with the performance of his
work. These factors clearly indicate that Rojas is not an
independent contractor but merely an employee of
petitioner; and should be entitled to the compulsory coverage
of the Act.
The records indubitably show that petitioner started its real
estate business on December 1, 1952 while its logging
operation was actually commenced on April 1, 1957. Applying
the provision of Sec. 10 of the Act, petitioner is subject to
compulsory coverage as of December 1, 1952 with respect to
the real estate business and as of April 1, 1957 with respect to
its logging operation.
WHEREFORE, premises considered, the appeal is hereby
DISMISSED. With costs against petitioner.
SO ORDERED.
c. limits of use
[G.R. No. L-53552. October 18, 1988.]
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,
Petitioner, v. THE NATIONAL LABOR RELATIONS
COMMISSION and EDUARDO PANGAN, Respondents.
Labor Standards Notes and Cases 1st
batch
Petitioner assails the decision of the National Labor Relations
Commission (NLRC) ordering the reinstatement of private
respondent notwithstanding his having committed theft and
misappropriation of company properties.chanrobles law
library
Private respondent Eduardo Pangan was employed by the
Philippine Long Distance Telephone Company (hereinafter
referred to as PLDT) as lineman-helper with rank of Grade I in
1970.
At the time of his dismissal from service he was occupying the
position of lineman II. The nature of his job entails the
following duties and responsibilities: repairing of telephone
lines, canvassing telephone numbers affected by Estimates,
Job Orders and Routine Orders, and handling cable facilities
for various cable troubles.
Sometime in early 1977, it was discovered that Pangan with
three (3) other PLDT employees committed pilferages of
company properties. According to the Audit Report
conducted by a PLDT auditor on Small Tool Accountabilities of
Installer-Repairmen Personnel, Pangans audit tool
accountability record disclosed that he returned to stock and
credited at cost to his account worthless materials and items
valued at P2,402.00 to offset previous requisitions charged to
him.
When asked to explain why he returned unserviceable
materials, Pangan admitted having sold two (2) new leather
belts and one (1) handset all costing P1,609.00. He pleaded as
an excuse his dire need for money to help defray his expenses
incurred in his goiter operation plus the cost of medicines he
had to purchase. Thus in the confrontation conducted by the
company Audit Supervisor, Pangan explained:chanrob1es
virtual 1aw library
Q In these requisitions, there are five (5) belt tool
leather. Did you recover all these?
A Im now using one. I sold 2 units and recovered the
rest.
Q How come then that you recovered defective units
everytime you requested when you supposedly sold 2 units?]
A We buy defective similar units which I recovered to
the Bodega.
11
Q How much did you sell each unit?
A P120.00 per unit.
Q How much did you buy defective items for
recoveries?
A P20.00 per unit.
Q There are 2 hand sets under your accountability. Did
you also sell one?
A Yes, for P100.00.
Q How did you recover this?
A Again, I buy defective similar item at a nominal cost
lower than my selling price.
Q Do you have something more to say?
A Last November 1976, I was operated with goiter. My
hospital bills were so big in amount and added to this I was in
dire need of money for my medicines. I was forced to sell
some of my accountabilities because of these needs. I have
no intention previously to do this irregularity had it not been
for my operation. [Labor Arbiters decision, p. 3, Rollo, p. 20.]
When informed of his eventual dismissal Pangan interposed
no opposition. Consequently, on May 31, 1977 PLDT filed an
application for clearance to terminate his services with
preventive suspension, on the ground of theft and
misappropriation of company properties. On September 27,
1977 the Department of Labor granted the same.
Thereafter, Pangan filed a letter-complaint with the
Department of Labor in opposition to the companys
application for clearance to terminate his services. The
complaint was certified for compulsory arbitration. On
December 14, 1978 the Labor Arbiter dismissed private
respondents complaint for lack of merit.
On appeal the NLRC reversed, with one commissioner voting
for the affirmance of the Labor Arbiters decision, and
ordered Pangans reinstatement without backwages,
explaining in its decision dated March 12, 1980,
that:chanrob1es virtual 1aw library
x x x
Labor Standards Notes and Cases 1st
batch
Concluding this Decision, We reiterate Our well considered
view that the Labor Arbiter gravely abused his discretion in
imposing the supreme industrial penalty of dismissal to the
act committed by herein complainant-appellant in the light of
the attendant circumstances of the instant case. In arriving at
this conclusion, however, it is believed and We hold that
complainant-appellant should be reinstated to his former
position as Lineman but without the usual backwages
attendant to it. To do so would in effect, be giving premium to
an act which is a legitimate ground for disciplinary action
were it not for the peculiar circumstances which to Our mind
mitigates the imposition of the supreme industrial penalty of
separation from the service. More so, as in the instant case
where the company acted in good faith in preventively
suspending an employee and followed it with an application
for clearance to terminate employment. [NLRC Decision, pp.
8-9, Rollo, pp. 31-32.] (Emphasis supplied.)
x x x specific provision of the Labor Code.
As found by the NLRC the peculiar circumstances that
mitigate the imposition of the supreme industrial penalty of
separation from service are as follows:chanrob1es virtual 1aw
library
a. On one occasion, Pangan had risked his life during an
emergency when the Pasay Central Office of PLDT caught fire
when he tried to protect company properties from being
totally destroyed that no less than the PLDT President and
Vice-President commended him for his exceptional courage
[NLRC Decision, p. 3, Rollo, p. 26.];
b. That Pangan sold the item valued at P1,600 for only
P100. This could only mean that he was in dire need of money
as in fact he needed it for an operation of his goiter [NLRC
Decision, p. 4, Rollo, p. 27.]; and,
c. Since the time Pangan had been placed under
preventive suspension and up to the writing of the NLRC
decision, considerable time had already elapsed as to
constitute his punishment [NLRC Decision, pp. 4-5, Rollo, p.
28.]
PLDT now files this special civil action of certiorari and
prohibition with preliminary injunction assigning the following
error:chanrob1es virtual 1aw library
12
RESPONDENT NATIONAL LABOR RELATIONS COMMISSION
COMMITTED A GRAVE ABUSE OF DISCRETION WHEN IT
ORDERED THE REINSTATEMENT OF RESPONDENT EDUARDO
PANGAN TO HIS FORMER POSITION NOTWITHSTANDING THE
FACT THAT HE COMMITTED A SERIOUS ACT OF MISCONDUCT
WHICH CONSTITUTES A JUST AND VALID CAUSE FOR HIS
DISMISSAL. [Rollo, p. 4]
On April 14, 1980 the Supreme Court issued a temporary
restraining order as prayed for by PLDT restraining the NLRC
from enforcing its decision.
The aforestated mitigating circumstances notwithstanding
this Court finds that petitioner had valid ground to terminate
private respondent and NLRC acted with grave abuse of
discretion in ordering his reinstatement.
Theft of company property is a recognized just and valid cause
for dismissing an employee as falling under the following
Art. 282.Termination by employer. An employer may
terminate an employment for any of the following just
causes:chanrob1es virtual 1aw library
(a) Serious misconduct . . .;
x x x
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
x x x
(e) Other causes analogous to the foregoing.
In the case of Firestone Tire and Rubber Co. of the Phils. v.
Lariosa [G.R. No. 70479, February 27, 1987, 148 SCRA 187]
involving a factory worker who was apprehended at the gate
during a routine check by the company security guards with
possession of company properties, namely, sixteen (16) wool
flannel swabs, the Supreme Court set aside the NLRC decision
ordering the workers reinstatement without backwages,
stating that:chanrob1es virtual 1aw library
Labor Standards Notes and Cases 1st
batch
x x x
There is no gainsaying that theft committed by an employee
constitutes a valid reason for his dismissal by the employer.
Although as a rule this Court leans over backwards to help
workers and employees continue with their employment or to
mitigate the penalties imposed on them, acts of dishonesty in
the handling of company property are a different matter. [at
p. 192.] (Emphasis supplied.)
x x x
The reason for this rule is to protect both labor and
management. Labor, because:chanrob1es virtual 1aw library
x x x employee.
The dismissal of a dishonest employee is as much in the
interests of labor as it is of management. The labor force in
any company is protected and the workers security of tenure
strengthened when pilferage of equipment, goods, and
products which endangers the viability of an employer and,
therefore, the workers continued employment is minimized
or eliminated and consequently labor-management relations
based on mutual trust and confidence are promoted.
(International Hardwood and Veneer Co. of the Phils v.
Leogardo, G.R. No. 57429, October 28, 1982, 117 SCRA 967,
973-974.]
x x x Secretary of Labor and Employment; DR. BRIAN MACCAULEY
And management, because as this Court had consistently
held:chanrob1es virtual 1aw library
x x x Receiving salaries less than their counterparts hired abroad,
. . . an employer cannot legally be compelled to continue with
the employment of a person who admittedly was guilty of
misfeasance or malfeasance towards his employer, and whose
continuance in the service of the latter is patently inimical to
his interests. The law, in protecting the rights of the laborer,
authorizes neither oppression nor self-destruction of the
employer . . . [Manila Trading and Supply Co. v. Zulueta, 69
Phil. 485, 486-487 (1940).]
13
x x x
In the case at bar private respondent is admittedly guilty not
only of violating the law but also the company rules and
regulations as well imposing the penalty of dismissal on first
offense of an employee found guilty of selling or disposing of
company property without proper authority [Code of Conduct
of PLDT Employees, Labor Arbiter s decision, p. 5, Rollo, p.
22.]cralawnad
This Court is not unmindful of the plight of the workers
throughout the country nor of the Constitutional provisions,
laws and statutes protecting them. However, the Court must
likewise balance these with the rights given to management
particularly when there is just cause for dismissing an erring
WHEREFORE, the petition is GRANTED. The NLRC decision is
SET ASIDE and the temporary restraining order issued by this
Court on April 14, 1980 is hereby made PERMANENT.
SO ORDERED.
Legal Bases
a. International Labor Organization (ILO) Conventions
[G.R. No. 128845. June 1, 2000]
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE),
petitioner, vs. HON. LEONARDO A. QUISUMBING in his
capacity as the Secretary of Labor and Employment; HON.
CRESENCIANO B. TRAJANO in his capacity as the Acting
in his capacity as the Superintendent of International
School-Manila; and INTERNATIONAL SCHOOL, INC.,
respondents.
the local-hires of private respondent School, mostly Filipinos,
cry discrimination. We agree. That the local-hires are paid
more than their colleagues in other schools is, of course,
beside the point. The point is that employees should be given
equal pay for work of equal value. That is a principle long
honored in this jurisdiction. That is a principle that rests on
fundamental notions of justice. That is the principle we
uphold today.
Labor Standards Notes and Cases 1st
batch
Private respondent International School, Inc. (the School, for
short), pursuant to Presidential Decree 732, is a domestic
educational institution established primarily for dependents
of foreign diplomatic personnel and other temporary
residents.[1] To enable the School to continue carrying out its
educational program and improve its standard of instruction,
Section 2(c) of the same decree authorizes the School to
employ its own teaching and management personnel selected
by it either locally or abroad, from Philippine or other
nationalities, such personnel being exempt from otherwise
applicable laws and regulations attending their employment,
except laws that have been or will be enacted for the
protection of employees.
Accordingly, the School hires both foreign and local teachers
as members of its faculty, classifying the same into two: (1)
foreign-hires and (2) local-hires. The School employs four
tests to determine whether a faculty member should be
classified as a foreign-hire or a local hire:
a.....What is one's domicile?
b.....Where is one's home economy?
c.....To which country does one owe economic allegiance?
d.....Was the individual hired abroad specifically to work in the
School and was the School responsible for bringing that
individual to the Philippines?[2]
Should the answer to any of these queries point to the
Philippines, the faculty member is classified as a local hire;
otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded
local-hires. These include housing, transportation, shipping
costs, taxes, and home leave travel allowance. Foreign-hires
are also paid a salary rate twenty-five percent (25%) more
than local-hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have to
endure, namely: (a) the "dislocation factor" and (b) limited
tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from
his home country, leave his family and friends, and take the
risk of deviating from a promising career path-all for the
purpose of pursuing his profession as an educator, but this
time in a foreign land. The new foreign hire is faced with
14
economic realities: decent abode for oneself and/or for one's
family, effective means of transportation, allowance for the
education of one's children, adequate insurance against
illness and death, and of course the primary benefit of a basic
salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted
again with the same economic reality after his term: that he
will eventually and inevitably return to his home country
where he will have to confront the uncertainty of obtaining
suitable employment after a long period in a foreign land.
The compensation scheme is simply the School's adaptive
measure to remain competitive on an international level in
terms of attracting competent professionals in the field of
international education.[3]
When negotiations for a new collective bargaining agreement
were held on June 1995, petitioner International School
Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members"[4]
of the School, contested the difference in salary rates
between foreign and local-hires. This issue, as well as the
question of whether foreign-hires should be included in the
appropriate bargaining unit, eventually caused a deadlock
between the parties.
On September 7, 1995, petitioner filed a notice of strike. The
failure of the National Conciliation and Mediation Board to
bring the parties to a compromise prompted the Department
of Labor and Employment (DOLE) to assume jurisdiction over
the dispute. On June 10, 1996, the DOLE Acting Secretary,
Crescenciano B. Trajano, issued an Order resolving the parity
and representation issues in favor of the School. Then DOLE
Secretary Leonardo A. Quisumbing subsequently denied
petitioner's motion for reconsideration in an Order dated
March 19, 1997. Petitioner now seeks relief in this Court.
Petitioner claims that the point-of-hire classification
employed by the School is discriminatory to Filipinos and that
the grant of higher salaries to foreign-hires constitutes racial
discrimination.
The School disputes these claims and gives a breakdown of its
faculty members, numbering 38 in all, with nationalities other
than Filipino, who have been hired locally and classified as
local hires.[5]The Acting Secretary of Labor found that these
non-Filipino local-hires received the same benefits as the
Filipino local-hires:
Labor Standards Notes and Cases 1st
batch
The compensation package given to local-hires has been
shown to apply to all, regardless of race. Truth to tell, there
are foreigners who have been hired locally and who are paid
equally as Filipino local hires.[6]
The Acting Secretary upheld the point-of-hire classification for
the distinction in salary rates:
The principle "equal pay for equal work" does not find
application in the present case. The international character of
the School requires the hiring of foreign personnel to deal
with different nationalities and different cultures, among the
student population.
We also take cognizance of the existence of a system of
salaries and benefits accorded to foreign hired personnel
which system is universally recognized. We agree that certain
amenities have to be provided to these people in order to
entice them to render their services in the Philippines and in
the process remain competitive in the international market.
Furthermore, we took note of the fact that foreign hires have
limited contract of employment unlike the local hires who
enjoy security of tenure. To apply parity therefore, in wages
and other benefits would also require parity in other terms
and conditions of employment which include the
employment contract.
A perusal of the parties' 1992-1995 CBA points us to the
conditions and provisions for salary and professional
compensation wherein the parties agree as follows:
All members of the bargaining unit shall be compensated only
in accordance with Appendix C hereof provided that the
Superintendent of the School has the discretion to recruit and
hire expatriate teachers from abroad, under terms and
conditions that are consistent with accepted international
practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the
Overseas Recruited Staff (OSRS) salary schedule. The 25%
differential is reflective of the agreed value of system
displacement and contracted status of the OSRS as
differentiated from the tenured status of Locally Recruited
Staff (LRS).
15
To our mind, these provisions demonstrate the parties'
recognition of the difference in the status of two types of
employees, hence, the difference in their salaries.
The Union cannot also invoke the equal protection clause to
justify its claim of parity. It is an established principle of
constitutional law that the guarantee of equal protection of
the laws is not violated by legislation or private covenants
based on reasonable classification. A classification is
reasonable if it is based on substantial distinctions and apply
to all members of the same class. Verily, there is a substantial
distinction between foreign hires and local hires, the former
enjoying only a limited tenure, having no amenities of their
own in the Philippines and have to be given a good
compensation package in order to attract them to join the
teaching faculty of the School.[7]
We cannot agree.
That public policy abhors inequality and discrimination is
beyond contention. Our Constitution and laws reflect the
policy against these evils. The Constitution[8] in the Article on
Social Justice and Human Rights exhorts Congress to "give
highest priority to the enactment of measures that protect
and enhance the right of all people to human dignity, reduce
social, economic, and political inequalities." The very broad
Article 19 of the Civil Code requires every person, "in the
exercise of his rights and in the performance of his duties, [to]
act with justice, give everyone his due, and observe honesty
and good faith."
International law, which springs from general principles of
law,[9] likewise proscribes discrimination. General principles
of law include principles of equity,[10] i.e., the general
principles of fairness and justice, based on the test of what is
reasonable.[11] The Universal Declaration of Human Rights,
[12] the International Covenant on Economic, Social, and
Cultural Rights,[13] the International Convention on the
Elimination of All Forms of Racial Discrimination,[14] the
Convention against Discrimination in Education,[15] the
Convention (No. 111) Concerning Discrimination in Respect of
Employment and Occupation[16] - all embody the general
principle against discrimination, the very antithesis of fairness
and justice. The Philippines, through its Constitution, has
incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and
labor are often skewed in favor of capital, inequality and
Labor Standards Notes and Cases 1st
batch
discrimination by the employer are all the more
reprehensible.
The Constitution[17] specifically provides that labor is entitled
to "humane conditions of work." These conditions are not
restricted to the physical workplace - the factory, the office or
the field - but include as well the manner by which employers
treat their employees.
The Constitution[18] also directs the State to promote
"equality of employment opportunities for all." Similarly, the
Labor Code[19] provides that the State shall "ensure equal
work opportunities regardless of sex, race or creed." It would
be an affront to both the spirit and letter of these provisions if
the State, in spite of its primordial obligation to promote and
ensure equal employment opportunities, closes its eyes to
unequal and discriminatory terms and conditions of
employment.[20]
Discrimination, particularly in terms of wages, is frowned
upon by the Labor Code. Article 135, for example, prohibits
and penalizes[21] the payment of lesser compensation to a
female employee as against a male employee for work of
equal value. Article 248 declares it an unfair labor practice for
an employer to discriminate in regard to wages in order to
encourage or discourage membership in any labor
organization.
Notably, the International Covenant on Economic, Social, and
Cultural Rights, supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right
of everyone to the enjoyment of just and favourable
conditions of work, which ensure, in particular:
a.....Remuneration which provides all workers, as a minimum,
with:
i.....Fair wages and equal remuneration for work of equal
value without distinction of any kind, in particular women
being guaranteed conditions of work not inferior to those
enjoyed by men, with equal pay for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this
jurisdiction the long honored legal truism of "equal pay for
equal work." Persons who work with substantially equal
qualifications, skill, effort and responsibility, under similar
16
conditions, should be paid similar salaries.[22] This rule
applies to the School, its "international character"
notwithstanding.
The School contends that petitioner has not adduced
evidence that local-hires perform work equal to that of
foreign-hires.[23] The Court finds this argument a little
cavalier. If an employer accords employees the same position
and rank, the presumption is that these employees perform
equal work. This presumption is borne by logic and human
experience. If the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less
or why the others receive more. That would be adding insult
to injury. The employer has discriminated against that
employee; it is for the employer to explain why the employee
is treated unfairly.
The employer in this case has failed to discharge this burden.
There is no evidence here that foreign-hires perform 25%
more efficiently or effectively than the local-hires. Both
groups have similar functions and responsibilities, which they
perform under similar working conditions.
The School cannot invoke the need to entice foreign-hires to
leave their domicile to rationalize the distinction in salary
rates without violating the principle of equal work for equal
pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a
reward or recompense for services performed." Similarly, the
Philippine Legal Encyclopedia states that "salary" is the
"[c]onsideration paid at regular intervals for the rendering of
services." In Songco v. National Labor Relations Commission,
[24] we said that:
"salary" means a recompense or consideration made to a
person for his pains or industry in another man's business.
Whether it be derived from "salarium," or more fancifully
from "sal," the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered.
(Emphasis supplied.)
While we recognize the need of the School to attract foreign-
hires, salaries should not be used as an enticement to the
prejudice of local-hires. The local-hires perform the same
services as foreign-hires and they ought to be paid the same
salaries as the latter. For the same reason, the "dislocation
factor" and the foreign-hires' limited tenure also cannot serve
as valid bases for the distinction in salary rates. The
Labor Standards Notes and Cases 1st
batch
dislocation factor and limited tenure affecting foreign-hires
are adequately compensated by certain benefits accorded
them which are not enjoyed by local-hires, such as housing,
transportation, shipping costs, taxes and home leave travel
allowances.
The Constitution enjoins the State to "protect the rights of
workers and promote their welfare,"[25] "to afford labor full
protection."[26] The State, therefore, has the right and duty
to regulate the relations between labor and capital.[27] These
relations are not merely contractual but are so impressed
with public interest that labor contracts, collective bargaining
agreements included, must yield to the common good.[28]
Should such contracts contain stipulations that are contrary to
public policy, courts will not hesitate to strike down these
stipulations.
In this case, we find the point-of-hire classification employed
by respondent School to justify the distinction in the salary
rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the
services rendered by foreign-hires and local-hires. The
practice of the School of according higher salaries to foreign-
hires contravenes public policy and, certainly, does not
deserve the sympathy of this Court.
We agree, however, that foreign-hires do not belong to the
same bargaining unit as the local-hires.
A bargaining unit is "a group of employees of a given
employer, comprised of all or less than all of the entire body
of employees, consistent with equity to the employer indicate
to be the best suited to serve the reciprocal rights and duties
of the parties under the collective bargaining provisions of the
law."[29] The factors in determining the appropriate collective
bargaining unit are (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest,
such as substantial similarity of work and duties, or similarity
of compensation and working conditions (Substantial Mutual
Interests Rule); (3) prior collective bargaining history; and (4)
similarity of employment status.[30] The basic test of an
asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all
employees the exercise of their collective bargaining rights.
[31]
It does not appear that foreign-hires have indicated their
intention to be grouped together with local-hires for purposes
of collective bargaining. The collective bargaining history in
17
the School also shows that these groups were always treated
separately. Foreign-hires have limited tenure; local-hires enjoy
security of tenure. Although foreign-hires perform similar
functions under the same working conditions as the local-
hires, foreign-hires are accorded certain benefits not granted
to local-hires. These benefits, such as housing, transportation,
shipping costs, taxes, and home leave travel allowance, are
reasonably related to their status as foreign-hires, and justify
the exclusion of the former from the latter. To include foreign-
hires in a bargaining unit with local-hires would not assure
either group the exercise of their respective collective
bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition
is hereby GRANTED IN PART. The Orders of the Secretary of
Labor and Employment dated June 10, 1996 and March 19,
1997, are hereby REVERSED and SET ASIDE insofar as they
uphold the practice of respondent School of according
foreign-hires higher salaries than local-hires.
SO ORDERED.
[G.R. No. 146650. January 13, 2003]
DOLE PHILIPPINES, INC., petitioner, vs. PAWIS NG
MAKABAYANG OBRERO (PAMAO-NFL), respondent.
Before us is a petition for review filed under Rule 45 of the
1997 Rules of Civil Procedure, assailing the January 9, 2001
resolution of the Court of Appeals which denied petitioners
motion for reconsideration of its September 22, 2000
decision[1] which in turn upheld the Order issued by the
voluntary arbitrator[2] dated 12 October 1998, the dispositive
portion of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the complainant. Respondent is hereby
directed to extend the free meal benefit as provided for in
Article XVIII, Section 3 of the collective bargaining agreement
to those employees who have actually performed overtime
works even for exactly three (3) hours only.
SO ORDERED. [3]
The core of the present controversy is the interpretation of
the provision for free meals under Section 3 of Article XVIII of
the 1996-2001 Collective Bargaining Agreement (CBA)
between petitioner Dole Philippines, Inc. and private
respondent labor union PAMAO-NFL. Simply put, how many
Labor Standards Notes and Cases 1st
batch
hours of overtime work must a Dole employee render to be
entitled to the free meal under Section 3 of Article XVIII of the
1996-2001 CBA? Is it when he has rendered (a) exactly, or no
less than, three hours of actual overtime work or (b) more
than three hours of actual overtime work?
The antecedents are as follows:
On February 22, 1996, a new five-year Collective Bargaining
Agreement for the period starting February 1996 up to
February 2001, was executed by petitioner Dole Philippines,
Inc., and private respondent Pawis Ng Makabayang Obrero-
NFL (PAMAO-NFL). Among the provisions of the new CBA is
the disputed section on meal allowance under Section 3 of
Article XVIII on Bonuses and Allowances, which reads:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant
a MEAL ALLOWANCE of TEN PESOS (P10.00) to all employees
who render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced,
not exceeding TWENTY FIVE PESOS (P25.00) after THREE (3)
hours of actual overtime work.[4]
Pursuant to the above provision of the CBA, some
departments of Dole reverted to the previous practice of
granting free meals after exactly three hours of actual
overtime work. However, other departments continued the
practice of granting free meals only after more than three
hours of overtime work. Thus, private respondent filed a
complaint before the National Conciliation and Mediation
Board alleging that petitioner Dole refused to comply with the
provisions of the 1996-2001 CBA because it granted free
meals only to those who rendered overtime work for more
than three hours and not to those who rendered exactly three
hours overtime work.
The parties agreed to submit the dispute to voluntary
arbitration. Thereafter, the voluntary arbitrator, deciding in
favor of the respondent, issued an order directing petitioner
Dole to extend the free meal benefit to those employees who
actually did overtime work even for exactly three hours only.
Petitioner sought a reconsideration of the above order but
the same was denied. Hence, petitioner elevated the matter
to the Court of Appeals by way of a petition for review on
certiorari.
On September 22, 2000, the Court of Appeals rendered its
decision upholding the assailed order.
18
Thus, the instant petition.
Petitioner Dole asserts that the phrase after three hours of
actual overtime work should be interpreted to mean after
more than three hours of actual overtime work.
On the other hand, private respondent union and the
voluntary arbitrator see it as meaning after exactly three
hours of actual overtime work.
The meal allowance provision in the 1996-2001 CBA is not
new. It was also in the 1985-1988 CBA and the 1990-1995
CBA. The 1990-1995 CBA provision on meal allowance was
amended by the parties in the 1993-1995 CBA Supplement.
The clear changes in each CBA provision on meal allowance
were in the amount of the meal allowance and free meals,
and the use of the words after and after more than to qualify
the amount of overtime work to be performed by an
employee to entitle him to the free meal.
To arrive at a correct interpretation of the disputed provision
of the CBA, a review of the pertinent section of past CBAs is in
order.
The CBA covering the period 21 September 1985 to 20
September 1988 provided:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant
a MEAL ALLOWANCE of FOUR (P4.00) PESOS to all employees
who render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced,
after THREE (3) hours of actual overtime work.[5]
The CBA for 14 January 1990 to 13 January 1995 likewise
provided:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant
a MEAL ALLOWANCE of EIGHT PESOS (P8.00) to all employees
who render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced,
not exceeding SIXTEEN PESOS (P16.00) after THREE (3) hours
of actual overtime work.[6]
The provision above was later amended when the parties
renegotiated the economic provisions of the CBA pursuant to
Article 253-A of the Labor Code. Section 3 of Article XVIII of
the 14 January 1993 to 13 January 1995 Supplement to the
1990-1995 CBA reads:
Labor Standards Notes and Cases 1st
batch
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant
a MEAL SUBSIDY of NINE PESOS (P9.00) to all employees who
render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced,
not exceeding TWENTY ONE PESOS (P21.00) after more than
THREE (3) hours of actual overtime work (Section 3, as
amended).[7]
We note that the phrase more than was neither in the 1985-
1988 CBA nor in the original 1990-1995 CBA. It was inserted
only in the 1993-1995 CBA Supplement. But said phrase is
again absent in Section 3 of Article XVIII of the 1996-2001
CBA, which reverted to the phrase after three (3) hours.
Petitioner asserts that the phrase after three (3) hours of
actual overtime work does not mean after exactly three hours
of actual overtime work; it means after more than three
hours of actual overtime work. Petitioner insists that this has
been the interpretation and practice of Dole for the past
thirteen years.
Respondent, on the other hand, maintains that after three (3)
hours of actual overtime work simply means after rendering
exactly, or no less than, three hours of actual overtime work.
The Court finds logic in private respondents interpretation.
The omission of the phrase more than between after and
three hours in the present CBA spells a big difference.
No amount of legal semantics can convince the Court that
after more than means the same as after.
Petitioner asserts that the more than in the 1993-1995 CBA
Supplement was mere surplusage because, regardless of the
absence of said phrase in all the past CBAs, it had always been
the policy of petitioner corporation to give the meal
allowance only after more than 3 hours of overtime work.
However, if this were true, why was it included only in the
1993-1995 CBA Supplement and the parties had to negotiate
its deletion in the 1996-2001 CBA?
Clearly then, the reversion to the wording of previous CBAs
can only mean that the parties intended that free meals be
given to employees after exactly, or no less than, three hours
of actual overtime work.
19
The disputed provision of the CBA is clear and unambiguous.
The terms are explicit and the language of the CBA is not
susceptible to any other interpretation. Hence, the literal
meaning of free meals after three (3) hours of overtime work
shall prevail, which is simply that an employee shall be
entitled to a free meal if he has rendered exactly, or no less
than, three hours of overtime work, not after more than or in
excess of three hours overtime work.
Petitioner also invokes the well-entrenched principle of
management prerogative that the power to grant benefits
over and beyond the minimum standards of law, or the Labor
Code for that matter, belongs to the employer x x x. According
to this principle, even if the law is solicitous of the welfare of
the employees, it must also protect the right of the employer
to exercise what clearly are management prerogatives.[8]
Petitioner claims that, being the employer, it has the right to
determine whether it will grant a free meal benefit to its
employees and, if so, under what conditions. To see it
otherwise would amount to an impairment of its rights as an
employer.
We do not think so.
The exercise of management prerogative is not unlimited. It is
subject to the limitations found in law, a collective bargaining
agreement or the general principles of fair play and justice.[9]
This situation constitutes one of the limitations. The CBA is
the norm of conduct between petitioner and private
respondent and compliance therewith is mandated by the
express policy of the law.[10]
Petitioner Dole cannot assail the voluntary arbitrators
interpretation of the CBA for the supposed impairment of its
management prerogatives just because the same
interpretation is contrary to its own.
WHEREFORE, petition is hereby denied.
SO ORDERED.
b. Past practices
[G.R. No. 85073. August 24, 1993.]
DAVAO FRUITS CORPORATION, Petitioner, v. ASSOCIATED
LABOR UNIONS (ALU) for and in behalf of all the rank-and-file
workers/employees of DAVAO FRUITS CORPORATION and
NATIONAL LABOR RELATIONS COMMISSION, Respondent.
Labor Standards Notes and Cases 1st
batch
PHILIPPINE SUPREME COURT DECISIONS
FIRST DIVISION
[G.R. No. 85073. August 24, 1993.]
DAVAO FRUITS CORPORATION, Petitioner, v. ASSOCIATED
LABOR UNIONS (ALU) for and in behalf of all the rank-and-
file workers/employees of DAVAO FRUITS CORPORATION
and NATIONAL LABOR RELATIONS COMMISSION,
Respondent.
This is a petition for certiorari to set aside the resolution of
the National Labor Relations Commission (NLRC), dismissing
for lack of merit petitioners appeal from the decision of the
Labor Arbiter in NLRC Case No. 1791-MC-X1-82.
On December 28, 1982, respondent Associated Labor Unions
(ALU), for and in behalf of all the rank-and-file workers and
employees of petitioner, filed a complaint (NLRC Case No.
1791-MC-XI-82) before the Ministry of Labor and
Employment, Regional Arbitration Branch XI, Davao City,
against petitioner, for "Payment of the Thirteenth-Month Pay
Differentials." Respondent ALU sought to recover from
petitioner the thirteenth month pay differential for 1982 of its
rank-and-file employees, equivalent to their sick, vacation and
maternity leaves, premium for work done on rest days and
special holidays, and pay for regular holidays which petitioner,
allegedly in disregard of company practice since 1975,
excluded from the computation of the thirteenth month pay
for 1982.
In its answer, petitioner claimed that it erroneously included
items subject of the complaint in the computation of the
thirteenth month pay for the years prior to 1982, upon a
doubtful and difficult question of law. According to petitioner,
this mistake was discovered only in 1981 after the
promulgation of the Supreme Court decision in the case of
San Miguel Corporation v. Inciong (103 SCRA 139).
A decision was rendered on March 7, 1984 by Labor Arbiter
Pedro C. Ramos, in favor of respondent ALU. The dispositive
portion of the decision reads as
follows:jgc:chanrobles.com.ph
"WHEREFORE, in view of all the foregoing considerations,
judgment is hereby rendered ordering respondent to pay the
20
1982 13th month pay differential to all its rank-and-file
workers/employees herein represented by complainant
Union" (Rollo, p. 32).chanrobles virtual lawlibrary
Petitioner appealed the decision of the Labor Arbiter to the
NLRC, which affirmed the said decision and accordingly
dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition for
review under Rule 45 of the Revised Rules of Court. This error
notwithstanding and in the interest of justice, this Court
resolved to treat the instant petition as a special civil action
for certiorari under Rule 65 of the Revised Rules of Court (P.D.
No. 1391, Sec. 5; Rules Implementing P.D. No. 1391, Rule II,
Sec. 7; Cando v. National Labor Relations Commission, 189
SCRA 666 [1990]; Pearl S. Buck Foundation, Inc. v. National
Labor Relations Commission, 182 SCRA 446 [1990]).
The crux of the present controversy is whether in the
computation of the thirteenth month pay given by employers
to their employees under P.D. No. 851, payments for sick,
vacation and maternity leaves, premiums for work done on
rest days and special holidays, and pay for regular holidays
may be excluded in the computation and payment thereof,
regardless of long-standing company practice.
Presidential Decree No. 851, promulgated on December 16,
1975, mandates all employers to pay their employees a
thirteenth month pay. How this pay shall be computed is set
forth in Section 2 of the "Rules and Regulations Implementing
Presidential Decree No. 851," thus:jgc:chanrobles.com.ph
"SECTION 2. ...
(a) Thirteenth-month pay shall mean one twelfth (1/12) of
the basic salary of an employee within a calendar year.
(b) Basic Salary shall include all remunerations or earnings
paid by an employer to an employee for services rendered
but may not include cost-of-living allowances granted
pursuant to Presidential Decree No. 525 or Letter of
Instructions No. 174, profit-sharing payments, and all
allowances and monetary benefits which are not considered
or integrated as part of the regular or basic salary of the
employee at the time of the promulgation of the Decree on
December 16, 1975."cralaw virtua1aw library
The Department of Labor and Employment issued on January
16, 1976 the "Supplementary Rules and Regulations
Labor Standards Notes and Cases 1st
batch
Implementing P.D. No. 851" which in paragraph 4 thereof
further defines the term "basic salary,"
thus:jgc:chanrobles.com.ph
"4. Overtime pay, earnings and other remunerations
which are not part of the basic salary shall not be included in
the computation of the 13-month pay."cralaw virtua1aw
library
Clearly, the term "basic salary" includes all remunerations or
earnings paid by the employer to the employee, but excludes
cost-of-living allowances, profit-sharing payments, and all
allowances and monetary benefits which have not been
considered as part of the basic salary of the employee as of
December 16, 1975. The exclusion of cost-of-living allowances
and profit sharing payments shows the intention to strip
"basic salary" of payments which are otherwise considered as
"fringe" benefits. This intention is emphasized in the catch-all
phrase "all allowances and monetary benefits which are not
considered or integrated as part of the basic salary." Basic
salary, therefore does not merely exclude the benefits
expressly mentioned but all payments which may be in the
form of "fringe" benefits or allowances (San Miguel
Corporation v. Inciong, supra, at 143-144). In fact, the
Supplementary Rules and Regulations Implementing P.D. No.
851 are very emphatic in declaring that overtime pay,
earnings and other remunerations shall be excluded in
computing the thirteenth month pay.chanrobles virtual
lawlibrary
In other words, whatever compensation an employee
receives for an eight-hour work daily or the daily wage rate is
the basic salary. Any compensation or remuneration other
than the daily wage rate is excluded. It follows therefore, that
payments for sick, vacation and maternity leaves, premium
for work done on rest days and special holidays, as well as pay
for regular holidays, are likewise excluded in computing the
basic salary for the purpose of determining the thirteenth
month pay.
Petitioner claims that the mistake in the interpretation of
"basic salary" was caused by the opinions, orders and rulings
rendered by then Acting Labor Secretary Amado G. Inciong,
expressly including the subject items in computing the
thirteenth month pay. The inclusion of these items is clearly
not sanctioned under P.D. No. 851, the governing law and its
implementing rules, which speak only of "basic salary" as the
basis for determining the thirteenth month pay.
21
Moreover, whatever doubt arose in the interpretation of P.D.
No. 851 was erased by the Supplementary Rules and
Regulations which clarified the definition of "basic
salary."cralaw virtua1aw library
As pointed out in San Miguel Corporation v. Inciong,
(supra):jgc:chanrobles.com.ph
"While doubt may have been created by the prior Rules and
Regulations Implementing Presidential Decree 851 which
defines basic salary to include all remunerations or earnings
paid by an employer to an employee, this cloud is dissipated
in the later and more controlling Supplementary Rules and
Regulations which categorically, exclude from the definition of
basic salary earnings and other remunerations paid by
employer to an employee. A cursory perusal of the two sets
of Rules indicates that what has hitherto been the subject of a
broad inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the seeming
tendency of the former rules to include all remunerations and
earnings within the definition of basic salary.
The all-embracing phrase earnings and other remunerations
which are deemed not part of the basic salary includes within
its meaning payments for sick, vacation, or maternity leaves,
premium for work performed on rest days and special
holidays, pay for regular holidays and night differentials. As
such they are deemed not part of the basic salary and shall
not be considered in the computation of the 13th-month pay.
If they were not so excluded, it is hard to find any earnings
and other remunerations expressly excluded in the
computation of the 13th-month pay. Then the exclusionary
provision would prove to be idle and with no purpose."cralaw
virtua1aw library
The "Supplementary Rules and Regulations Implementing P.D.
No. 851," which put to rest all doubts in the computation of
the thirteenth month pay, was issued by the Secretary of
Labor as early as January 16, 1976, barely one month after
the effectivity of P.D. No. 851 and its Implementing Rules. And
yet, petitioner computed and paid the thirteenth month pay,
without excluding the subject item therein until 1981.
Petitioner continued its practice in December 1981, after
promulgation of the afore-quoted San Miguel decision on
February 24, 1981, when petitioner purportedly "discovered"
its mistake.chanrobles lawlibrary : rednad
From 1975 to 1981, petitioner had freely, voluntarily and
continuously included in the computation of its employees
Labor Standards Notes and Cases 1st
batch
thirteenth month pay, the payments for sick, vacation and
maternity leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays. The
considerable length of time the questioned items had been
included by petitioner indicates a unilateral and voluntary act
on its part, sufficient in itself to negate any claim of mistake.
A company practice favorable to the employees had indeed
been established and the payments made pursuant thereto,
ripened into benefits enjoyed by them. And any benefit and
supplement being enjoyed by the employees cannot be
reduced, diminished, discontinued or eliminated by the
employer, by virtue of Section 10 of the Rules and Regulations
Implementing P.D. No. 851, and Article 100 of the Labor Code
of the Philippines, which prohibit the diminution or
elimination by the employer of the employees existing
benefits (Tiangco v. Leogardo, Jr., 122 SCRA 267, [1983]).
Petitioner cannot invoke the principle of solutio indebiti
which is a civil law concept that is not applicable in Labor Law.
Besides, in solutio indebiti, the obligee is required to return to
the obligor whatever he received from the latter (Civil Code of
the Philippines, Arts. 2154 and 2155). Petitioner in the instant
case, does not demand the return of what it paid respondent
ALU from 1975 until 1981; it merely wants to "rectify" the
error it made over these years by excluding unilaterally from
the thirteenth month pay in 1982 the items subject of
litigation. Solutio indebiti, therefore, is not applicable to the
instant case.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
WHEREFORE, finding no grave abuse of discretion on the part
of the NLRC, the petition is hereby DISMISSED, and the
questioned decision of respondent NLRC is AFFIRMED
accordingly.
[G.R. No. 155059. April 29, 2005]
AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES
UNION, petitioner, vs. AMERICAN WIRE AND CABLE CO., INC.
and THE COURT OF APPEALS, respondents.
Before Us is a special civil action for certiorari, assailing the
Decision[1] of the Special Eighth Division of the Court of
Appeals dated 06 March 2002. Said Decision upheld the
Decision[2] and Order[3] of Voluntary Arbitrator Angel A.
Ancheta of the National Conciliation and Mediation Board
(NCMB) dated 25 September 2001 and 05 November 2001,
respectively, which declared the private respondent herein
22
not guilty of violating Article 100 of the Labor Code, as
amended. Assailed likewise, is the Resolution[4] of the Court
of Appeals dated 12 July 2002, which denied the motion for
reconsideration of the petitioner, for lack of merit.
THE FACTS
The facts of this case are quite simple and not in dispute.
American Wire and Cable Co., Inc., is a corporation engaged in
the manufacture of wires and cables. There are two unions in
this company, the American Wire and Cable Monthly-Rated
Employees Union (Monthly-Rated Union) and the American
Wire and Cable Daily-Rated Employees Union (Daily-Rated
Union).
On 16 February 2001, an original action was filed before the
NCMB of the Department of Labor and Employment (DOLE)
by the two unions for voluntary arbitration. They alleged that
the private respondent, without valid cause, suddenly and
unilaterally withdrew and denied certain benefits and
entitlements which they have long enjoyed. These are the
following:
a. Service Award;
b. 35% premium pay of an employees basic pay for the work
rendered during Holy Monday, Holy Tuesday, Holy
Wednesday, December 23, 26, 27, 28 and 29;
c. Christmas Party; and
d. Promotional Increase.
A promotional increase was asked by the petitioner for fifteen
(15) of its members who were given or assigned new job
classifications. According to petitioner, the new job
classifications were in the nature of a promotion,
necessitating the grant of an increase in the salaries of the
said 15 members.
On 21 June 2001, a Submission Agreement was filed by the
parties before the Office for Voluntary Arbitration. Assigned
as Voluntary Arbitrator was Angel A. Ancheta.
On 04 July 2001, the parties simultaneously filed their
respective position papers with the Office of the Voluntary
Arbitrator, NCMB, and DOLE.
Labor Standards Notes and Cases 1st
batch
On 25 September 2001, a Decision[5] was rendered by
Voluntary Arbitrator Angel A. Ancheta in favor of the private
respondent. The dispositive portion of the said Decision is
quoted hereunder:
WHEREFORE, with all the foregoing considerations, it is
hereby declared that the Company is not guilty of violating
Article 100 of the Labor Code, as amended, or specifically for
withdrawing the service award, Christmas party and 35%
premium for work rendered during Holy Week and Christmas
season and for not granting any promotional increase to the
alleged fifteen (15) Daily-Rated Union Members in the
absence of a promotion. The Company however, is directed to
grant the service award to deserving employees in amounts
and extent at its discretion, in consultation with the Unions
on grounds of equity and fairness.[6]
A motion for reconsideration was filed by both unions[7]
where they alleged that the Voluntary Arbitrator manifestly
erred in finding that the company did not violate Article 100
of the Labor Code, as amended, when it unilaterally withdrew
the subject benefits, and when no promotional increase was
granted to the affected employees.
On 05 November 2001, an Order[8] was issued by Voluntary
Arbitrator Angel A. Ancheta. Part of the Order is quoted
hereunder:
Considering that the issues raised in the instant case were
meticulously evaluated and length[i]ly discussed and
explained based on the pleadings and documentary
evidenc[e] adduced by the contending parties, we find no
cogent reason to change, modify, or disturb said decision.
WHEREFORE, let the instant MOTION[S] FOR
RECONSIDERATION be, as they are hereby, denied for lack of
merit. Our decision dated 25 September 2001 is affirmed en
toto.[9]
An appeal under Rule 43 of the 1997 Rules on Civil Procedure
was made by the Daily-Rated Union before the Court of
Appeals[10] and docketed as CA-G.R. SP No. 68182. The
petitioner averred that Voluntary Arbitrator Angel A. Ancheta
erred in finding that the company did not violate Article 100
of the Labor Code, as amended, when the subject benefits
were unilaterally withdrawn. Further, they assert, the
Voluntary Arbitrator erred in adopting the companys
unaudited Revenues and Profitability Analysis for the years
23
1996-2000 in justifying the latters withdrawal of the
questioned benefits.[11]
On 06 March 2002, a Decision in favor of herein respondent
company was promulgated by the Special Eighth Division of
the Court of Appeals in CA-G.R. SP No. 68182. The decretal
portion of the decision reads:
WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED, for
lack of merit. The Decision of Voluntary Arbitrator Angel A.
Ancheta dated September 25, 2001 and his Order dated
November 5, 2001 in VA Case No. AAA-10-6-4-2001 are
hereby AFFIRMED and UPHELD.[12]
A motion for reconsideration[13] was filed by the petitioner,
contending that the Court of Appeals misappreciated the
facts of the case, and that it committed serious error when it
ruled that the unaudited financial statement bears no
importance in the instant case.
The Court of Appeals denied the motion in its Resolution
dated 12 July 2002[14] because it did not present any new
matter which had not been considered in arriving at the
decision. The dispositive portion of the Resolution states:
WHEREFORE, the motion for reconsideration is hereby
DENIED for lack of merit.[15]
Dissatisfied with the court a quos ruling, petitioner instituted
the instant special civil action for certiorari,[16] citing grave
abuse of discretion amounting to lack of jurisdiction.
ASSIGNMENT OF ERRORS
The petitioner assigns as errors the following:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
COMPANY DID NOT VIOLATE ARTICLE 100 OF THE LABOR
CODE, AS AMENDED, WHEN IT UNILATERALLY WITHDREW
THE BENEFITS OF THE MEMBERS OF PETITIONER UNION, TO
WIT: 1) 35% PREMIUM PAY; 2) CHRISTMAS PARTY AND ITS
INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH IN
TRUTH AND IN FACT SAID BENEFITS/ENTITLEMENTS HAVE
BEEN GIVEN THEM SINCE TIME IMMEMORIAL, AS A MATTER
OF LONG ESTABLISHED COMPANY PRACTICE, WITH THE
Labor Standards Notes and Cases 1st
batch
FURTHER FACT THAT THE SAME NOT BEING DEPENDENT ON
PROFITS.
II
THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED
HOOK, LINE AND SINKER, THE RESPONDENT COMPANYS SELF
SERVING AND UNAUDITED REVENUES AND PROFITABILITY
ANALYSIS FOR THE YEARS 1996-2000 WHICH THEY
SUBMITTED TO FALSELY JUSTIFY THEIR UNLAWFUL ACT OF
UNILATERALLY AND SUDDENLY WITHDRAWING OR DENYING
FROM THE PETITIONER THE SUBJECT
BENEFITS/ENTITLEMENTS.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
YEARLY SERVICE AWARD IS NOT DEPENDENT ON PROFIT BUT
ON SERVICE AND THUS, CANNOT BE UNILATERALLY
WITHDRAWN BY RESPONDENT COMPANY.
ISSUE
Synthesized, the solitary issue that must be addressed by this
Court is whether or not private respondent is guilty of
violating Article 100 of the Labor Code, as amended, when
the benefits/entitlements given to the members of petitioner
union were withdrawn.
THE COURTS RULING
Before we address the sole issue presented in the instant
case, it is best to first discuss a matter which was raised by the
private respondent in its Comment. The private respondent
contends that this case should have been dismissed outright
because of petitioners error in the mode of appeal. According
to it, the petitioner should have elevated the instant case to
this Court through a petition for review on certiorari under
Rule 45, and not through a special civil action for certiorari
under Rule 65, of the 1997 Rules on Civil Procedure.[17]
Assuming arguendo that the mode of appeal taken by the
petitioner is improper, there is no question that the Supreme
Court has the discretion to dismiss it if it is defective.
However, sound policy dictates that it is far better to dispose
the case on the merits, rather than on technicality.[18]
The Supreme Court may brush aside the procedural barrier
and take cognizance of the petition as it raises an issue of
24
paramount importance. The Court shall resolve the solitary
issue on the merits for future guidance of the bench and bar.
[19]
With that out of the way, we shall now resolve whether or not
the respondent company is guilty of violating Article 100 of
the Labor Code, as amended.
Article 100 of the Labor Code provides:
ART. 100. PROHIBITION AGAINST ELIMINATION OR
DIMINUTION OF BENEFITS. Nothing in this Book shall be
construed to eliminate or in any way diminish supplements,
or other employee benefits being enjoyed at the time of
promulgation of this Code.
The petitioner submits that the withdrawal of the private
respondent of the 35% premium pay for selected days during
the Holy Week and Christmas season, the holding of the
Christmas Party and its incidental benefits, and the giving of
service awards violated Article 100 of the Labor Code. The
grant of these benefits was a customary practice that can no
longer be unilaterally withdrawn by private respondent
without the tacit consent of the petitioner. The benefits in
question were given by the respondent to the petitioner
consistently, deliberately, and unconditionally since time
immemorial. The benefits/entitlements were not given to
petitioner due to an error in interpretation, or a construction
of a difficult question of law, but simply, the grant has been a
practice over a long period of time. As such, it cannot be
withdrawn from the petitioner at respondents whim and
caprice, and without the consent of the former. The benefits
given by the respondent cannot be considered as a bonus as
they are not founded on profit. Even assuming that it can be
treated as a bonus, the grant of the same, by reason of its
long and regular concession, may be regarded as part of
regular compensation.[20]
With respect to the fifteen (15) employees who are members
of petitioner union that were given new job classifications, it
asserts that a promotional increase in their salaries was in
order. Salary adjustment is a must due to their promotion.[21]
On respondent companys Revenues and Profitability Analysis
for the years 1996-2000, the petitioner insists that since the
former was unaudited, it should not have justified the
companys sudden withdrawal of the benefits/entitlements.
The normal and/or legal method for establishing profit and
Labor Standards Notes and Cases 1st
batch
loss of a company is through a financial statement audited by
an independent auditor.[22]
The petitioner cites our ruling in the case of Saballa v. NLRC,
[23] where we held that financial statements audited by
independent auditors constitute the normal method of proof
of the profit and loss performance of the company. Our ruling
in the case of Bogo-Medellin Sugarcane Planters Association,
Inc., et al. v. NLRC, et al.[24] was likewise invoked. In this case,
we held:
The Court has previously ruled that financial statements
audited by independent external auditors constitute the
normal method of proof of the profit and loss performance of
a company.
On the matter of the withdrawal of the service award, the
petitioner argues that it is the employees length of service
which is taken as a factor in the grant of this benefit, and not
whether the company acquired profit or not.[25]
In answer to all these, the respondent corporation avers that
the grant of all subject benefits has not ripened into practice
that the employees concerned can claim a demandable right
over them. The grant of these benefits was conditional based
upon the financial performance of the company and that
conditions/circumstances that existed before have indeed
substantially changed thereby justifying the discontinuance of
said grants. The companys financial performance was affected
by the recent political turmoil and instability that led the
entire nation to a bleeding economy. Hence, it only
necessarily follows that the companys financial situation at
present is already very much different from where it was
three or four years ago.[26]
On the subject of the unaudited financial statement
presented by the private respondent, the latter contends that
the cases cited by the petitioner indeed uniformly ruled that
financial statements audited by independent external
auditors constitute the normal method of proof of the profit
and loss performance of a company. However, these cases do
not require that the only legal method to ascertain profit and
loss is through an audited financial statement. The cases only
provide that an audited financial statement is the normal
method.[27]
The respondent company likewise asseverates that the 15
members of petitioner union were not actually promoted.
There was only a realignment of positions.[28]
25
From the foregoing contentions, it appears that for the Court
to resolve the issue presented, it is critical that a
determination must be first made on whether the
benefits/entitlements are in the nature of a bonus or not, and
assuming they are so, whether they are demandable and
enforceable obligations.
In the case of Producers Bank of the Philippines v. NLRC[29]
we have characterized what a bonus is, viz:
A bonus is an amount 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. It is an act of generosity granted by an enlightened
employer to spur the employee to greater efforts for the
success of the business and realization of bigger profits. The
granting of a bonus is a management prerogative, something
given in addition to what is ordinarily received by or strictly
due the recipient. Thus, a bonus is not a demandable and
enforceable obligation, except when it is made part of the
wage, salary or compensation of the employee.
Based on the foregoing pronouncement, it is obvious that the
benefits/entitlements subjects of the instant case are all
bonuses which were given by the private respondent out of
its generosity and munificence. The additional 35% premium
pay for work done during selected days of the Holy Week and
Christmas season, the holding of Christmas parties with raffle,
and the cash incentives given together with the service
awards are all in excess of what the law requires each
employer to give its employees. Since they are above what is
strictly due to the members of petitioner-union, the granting
of the same was a management prerogative, which, whenever
management sees necessary, may be withdrawn, unless they
have been made a part of the wage or salary or compensation
of the employees.
The consequential question therefore that needs to be settled
is if the subject benefits/entitlements, which are bonuses, are
demandable or not. Stated another way, can these bonuses
be considered part of the wage or salary or compensation
making them enforceable obligations?
The Court does not believe so.
For a bonus to be enforceable, it must have been promised by
the employer and expressly agreed upon by the parties,[30]
Labor Standards Notes and Cases 1st
batch
or it must have had a fixed amount[31] and had been a long
and regular practice on the part of the employer.[32]
The benefits/entitlements in question were never subjects of
any express agreement between the parties. They were never
incorporated in the Collective Bargaining Agreement (CBA). As
observed by the Voluntary Arbitrator, the records reveal that
these benefits/entitlements have not been subjects of any
express agreement between the union and the company, and
have not yet been incorporated in the CBA. In fact, the
petitioner has not denied having made proposals with the
private respondent for the service award and the additional
35% premium pay to be made part of the CBA.[33]
The Christmas parties and its incidental benefits, and the
giving of cash incentive together with the service award
cannot be said to have fixed amounts. What is clear from the
records is that over the years, there had been a downtrend in
the amount given as service award.[34] There was also a
downtrend with respect to the holding of the Christmas
parties in the sense that its location changed from paid
venues to one which was free of charge,[35] evidently to cut
costs. Also, the grant of these two aforementioned bonuses
cannot be considered to have been the private respondents
long and regular practice. To be considered a regular practice,
the giving of the bonus should have been done over a long
period of time, and must be shown to have been consistent
and deliberate.[36] The downtrend in the grant of these two
bonuses over the years demonstrates that there is nothing
consistent about it. Further, as held by the Court of Appeals:
Anent the Christmas party and raffle of prizes, We agree with
the Voluntary Arbitrator that the same was merely sponsored
by the respondent corporation out of generosity and that the
same is dependent on the financial performance of the
company for a particular year[37]
The additional 35% premium pay for work rendered during
selected days of the Holy Week and Christmas season cannot
be held to have ripened into a company practice that the
petitioner herein have a right to demand. Aside from the
general averment of the petitioner that this benefit had been
granted by the private respondent since time immemorial,
there had been no evidence adduced that it had been a
regular practice. As propitiously observed by the Court of
Appeals:
. . . [N]otwithstanding that the subject 35% premium pay was
deliberately given and the same was in excess of that
26
provided by the law, the same however did not ripen into a
company practice on account of the fact that it was only
granted for two (2) years and with the express reservation
from respondent corporations owner that it cannot continue
to rant the same in view of the companys current financial
situation.[38]
To hold that an employer should be forced to distribute
bonuses which it granted out of kindness is to penalize him
for his past generosity.[39]
Having thus ruled that the additional 35% premium pay for
work rendered during selected days of the Holy Week and
Christmas season, the holding of Christmas parties with its
incidental benefits, and the grant of cash incentive together
with the service award are all bonuses which are neither
demandable nor enforceable obligations of the private
respondent, it is not necessary anymore to delve into the
Revenues and Profitability Analysis for the years 1996-2000
submitted by the private respondent.
On the alleged promotion of 15 members of the petitioner
union that should warrant an increase in their salaries, the
factual finding of the Voluntary Arbitrator is revealing, viz:
Considering that the Union was unable to adduce proof that a
promotion indeed occur[ed] with respect to the 15
employees, the Daily Rated Unions claim for promotional
increase likewise fall[s] there being no promotion established
under the records at hand.[40]
WHEREFORE, in view of all the foregoing, the assailed
Decision and Resolution of the Court of Appeals dated 06
March 2002 and 12 July 2002, respectively, which affirmed
and upheld the decision of the Voluntary Arbitrator, are
hereby AFFIRMED. No pronouncement as to costs.
Company policies
CHINA BANKING CORPORATION, G.R. No. 156515
Petitioner, - versus - CALLEJO, SR.,
Respondent. October 19, 2004
Before the Court is the petition for review on certiorari filed
by China Banking Corporation seeking the reversal of the
Decision[1] dated July 19, 2002 of the Court of Appeals in CA-
G.R. SP No. 57365, remanding to the Labor Arbiter for further
hearings the complaint for payment of separation pay, mid-
year bonus, profit share and damages filed by respondent
Mariano M. Borromeo against the petitioner Bank. Likewise,
Labor Standards Notes and Cases 1st
batch
sought to be reversed is the appellate courts Resolution dated
January 6, 2003, denying the petitioner Banks motion for
reconsideration.
The factual antecedents of the case are as follows:
Respondent Mariano M. Borromeo joined the petitioner Bank
on June 1, 1989 as Manager assigned at the latters Regional
Office in Cebu City. He then had the rank of Manager Level I.
Subsequently, the respondent was laterally transferred to
Cagayan de Oro City as Branch Manager of the petitioner
Banks branch thereat.
For the years 1989 and 1990, the respondent received a
highly satisfactory performance rating and was given the
corresponding profit sharing/performance bonus. From 1991
up to 1995, he consistently received a very good performance
rating for each of the said years and again received the
corresponding profit sharing/performance bonus. Moreover,
in 1992, he was promoted from Manager Level I to Manager
Level II. In 1994, he was promoted to Senior Manager Level I.
Then again, in 1995, he was promoted to Senior Manager
Level II. Finally, in 1996, with a highly satisfactory
performance rating, the respondent was promoted to the
position of Assistant Vice-President, Branch Banking Group for
the Mindanao area effective October 16, 1996. Each
promotion had the corresponding increase in the respondents
salary as well as in the benefits he received from the
petitioner Bank.
However, prior to his last promotion and then unknown to the
petitioner Bank, the respondent, without authority from the
Executive Committee or Board of Directors, approved several
DAUD/BP accommodations amounting to P2,441,375 in favor
of Joel Maniwan, with Edmundo Ramos as surety. DAUD/BP is
the acronym for checks Drawn Against Uncollected
Deposits/Bills Purchased. Such checks, which are not
sufficiently funded by cash, are generally not honored by
banks. Further, a DAUD/BP accommodation is a credit
accommodation granted to a few and select bank clients
through the withdrawal of uncollected or uncleared check
deposits from their current account. Under the petitioner
Banks standard operating procedures, DAUD/BP
accommodations may be granted only by a bank officer upon
express authority from its Executive Committee or Board of
Directors.
As a result of the DAUD/BP accommodations in favor of
Maniwan, a total of ten out-of-town checks (7 PCIB checks
27
and 3 UCPB checks) of various dates amounting to P2,441,375
were returned unpaid from September 20, 1996 to October
17, 1996. Each of the returned checks was stamped with the
notation Payment Stopped/Account Closed.
On October 8, 1996, the respondent wrote a Memorandum to
the petitioner Banks senior management requesting for the
grant of a P2.4 million loan to Maniwan. The memorandum
stated that the loan was to regularize/liquidate subjects
(referring to Maniwan) DAUD availments. It was only then
that the petitioner Bank came to know of the DAUD/BP
accommodations in favor of Maniwan. The petitioner Bank
further learned that these DAUD/BP accommodations
exceeded the limit granted to clients, were granted without
proper prior approval and already past due. Acting on this
information, Samuel L. Chiong, the petitioner Banks First Vice-
President and Head-Visayas Mindanao Division, in his
Memorandum dated November 19, 1996 for the respondent,
sought clarification from the latter on the following matters:
1) When DAUD/BP accommodations were allowed,
what efforts, if any, were made to establish the identity
and/or legitimacy of the alleged broker or drawers of the
checks accommodated?
2) Did the branch follow and comply with operating
procedure which require that all checks accommodated for
DAUD/BP should be previously verified with the drawee bank
and history if not outright balances determined if enough to
cover the checks?
3) How did the accommodations reach
P2,441,375.00 when our records indicate that the borrowers
B/P-DAUD line is only for P500,000.00? When did the
accommodations start exceeding the limit of P500,000.00 and
under whose authority?
4) When did the accommodated checks start
bouncing?
5) What is the status of these checks now and what
has the branch done so far to protect/ensure collectibility of
the returned checks?
6) What about client Joel Maniwan and surety
Edmund Ramos, what steps have they done to pay the checks
returned?[2]
Labor Standards Notes and Cases 1st
batch
In reply thereto, the respondent, in his Letter dated
December 5, 1996, answered the foregoing queries in
seriatim and explained, thus:
1. None
2. No
3. The accommodations reach P2.4 million upon the
request of Mr. Edmund Ramos, surety, and this request was
subsequently approved by undersigned. The excess
accommodations started in July 96 without higher
management approval.
4. Checks started bouncing on September 20, 1996.
5. Checks have remained unpaid. The branch sent
demand letters to Messrs. Maniwan and Ramos and referred
the matter to our Legal Dept. for filing of appropriate legal
action.
6. Mr. Maniwan, thru his lawyer, Atty. Oscar Musni
has signified their intention to settle by Feb. 1997.
Justification for lapses committed (Item nos. 1 to 3).
The account was personally endorsed and referred to us by
Mr. Edmund Ramos, Branch Manager of Metrobank, Divisoria
Br., Cagayan de Oro City. In fact, the CASA account was
opened jointly as &/or (Maniwan &/or Ramos). Mr. Ramos
gave us his full assurance that the checks that we intend to
purchase are the same drawee that Metrobank has been
purchasing for the past one (1) year already. He even
disclosed that these checks were verified by his own branch
accountant and that Mr. Maniwans loan account was being
co-maked by Mr. Elbert Tan Yao Tin, son of Jose Tan Yao Tin of
CIFC. To show his sincerity, Mr. Ramos signed as surety for Mr.
Maniwan for P2.5MM. Corollary to this, Mr. Ramos applied
for a loan with us mortgaging his house, lot and duplex with
an estimated market value of P4.508MM. The branch,
therefore, is not totally negligent as officer to officer bank
checking was done. In fact, it is also for the very same reason
that other banks granted DAUD to subject account and,
likewise, the checks returned unpaid, namely:
Solidbank P1.8 Million
Allied Bank .8
Far East Bank 2.0
28
MBTC 5.0
The attached letter of Mr. Ramos dated 19 Nov. 1996 will
speak for itself. Further to this, undersigned conferred with
the acting BOH VSYap if these checks are legitimate 3rd party
checks.
On the other hand, Atty. Musni continues to insist that Mr.
Maniwan was gypped by a broker in the total amount of
P10.00 Million.
Undersigned accepts full responsibility for committing an
error in judgment, lapses in control and abuse of discretion by
relying solely on the word, assurance, surety and REM of Mr.
Edmund Ramos, a friend and a co-bank officer. I am now
ready to face the consequence of my action.[3]
In another Letter dated April 8, 1997, the respondent notified
Chiong of his intention to resign from the petitioner Bank and
apologized for all the trouble I have caused because of the
Maniwan case.[4] The respondent, however, vehemently
denied benefiting therefrom. In his Letter dated April 30,
1997, the respondent formally tendered his irrevocable
resignation effective May 31, 1997.[5]
In the Memorandum dated May 23, 1997 addressed to the
respondent, Nancy D. Yang, the petitioner Banks Senior Vice-
President and Head-Branch Banking Group, informed the
former that his approval of the DAUD/BP accommodations in
favor of Maniwan without authority and/or approval of higher
management violated the petitioner Banks Code of Ethics. As
such, he was directed to restitute the amount of
P1,507,736.79 representing 90% of the total loss of
P1,675,263.10 incurred by the petitioner Bank. However, in
view of his resignation and considering the years of service in
the petitioner Bank, the management earmarked only
P836,637.08 from the respondents total separation benefits
or pay. The memorandum addressed to the respondent
stated:
After a careful review and evaluation of the facts surrounding
the above case, the following have been conclusively
established:
1. The branch granted various BP/DAUD
accommodations to clients Joel Maniwan/Edmundo Ramos in
excess of approved lines through the following out-of-town
Labor Standards Notes and Cases 1st
batch
checks which were returned for the reason Payment
Stopped/Account Closed:
1. PCIB Cebu Check No. 86256 P251,816.00
2. PCIB Cebu Check No. 86261 235,880.00
3. PCIB Cebu Check No. 8215 241,443.00
4. UCPB Tagbilaran Check No. 277,630.00
5. PCIB Bogo, Cebu Check No. 6117 267,418.00
6. UCPB Tagbilaran Check No. 216070 197,467.00
7. UCPB Tagbilaran Check No. 216073 263,920.00
8. PCIB Bogo, Cebu Check No. 6129 253,528.00
9. PCIB Bogo, Cebu Check No. 6122 198,615.00
10. PCIB Bogo, Cebu Check No. 6134 253,658.00
2. The foregoing checks were accommodated
through your approval which was in excess of your authority.
3. The branch failed to follow the fundamental and
basic procedures in handling BP/DAUD accommodations
which made the accommodations basically flawed.
4. The accommodations were attended by lapses in
control consisting of failure to report the exception and failure
to cover the account of Joel Maniwan with the required Credit
Line Agreement.
Since the foregoing were established by your own admissions
in your letter explanation dated 5 December 1996, and the
Audit Report and findings of the Region Head, Management
finds your actions in violation of the Banks Code of Ethics:
Table 6.2., no. 1: Compliance with Standard Operating
Procedures
- Infraction of Bank procedures in handling any bank
transactions or work assignment which results in a loss or
probable loss.
Table 6.3., no. 6: Proper Conduct and Behavior -
Willful misconduct in the performance of duty whether or not
the bank suffers a loss, and/or
Table 6.5., no. 1: Work Responsibilities -
Dereliction of duty whether or not the Bank suffers a loss,
and/or
Table 6.6., no. 2: Authority and Subordination -
Failure to carry out lawful orders or instructions of superiors.
Your approval of the accommodations in excess of your
authority without prior authority and/or approval from higher
management is a violation of the above cited Rules.
29
In view of these, you are directed to restitute the amount of
P1,507,736.79 representing 90% of the total loss of
P1,675,263.10 incurred by the Bank as your proportionate
share. However, in light of your voluntary separation from the
Bank effective May 31, 1997, in view of the years of service
you have given to the Bank, management shall earmark and
segregate only the amount of P836,637.08 from your total
separation benefits/pay. The Bank further directs you to fully
assist in the effort to collect from Joel Maniwan and Edmundo
Ramos the sums due to the Bank.[6]
In the Letter dated May 26, 1997 addressed to the
respondent, Remedios Cruz, petitioner Banks Vice-President
of the Human Resources Division, again informed him that the
management would withhold the sum of P836,637.08 from
his separation pay, mid-year bonus and profit sharing. The
amount withheld represented his proportionate share in the
accountability vis--vis the DAUD/BP accommodations in favor
of Maniwan. The said amount would be released upon
recovery of the sums demanded from Maniwan in Civil Case
No. 97174 filed against him by the petitioner Bank with the
Regional Trial Court in Cagayan de Oro City.
Consequently, the respondent, through counsel, made a
demand on the petitioner Bank for the payment of his
separation pay and other benefits. The petitioner Bank
maintained its position to withhold the sum of P836,637.08.
Thus, the respondent filed with the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. 10, in
Cagayan de Oro City, the complaint for payment of separation
pay, mid-year bonus, profit share and damages against the
petitioner Bank.
The parties submitted their respective position papers to the
Labor Arbiter. Thereafter, the respondent filed a motion to set
case for trial or hearing. Acting thereon, the Labor Arbiter, in
the Order dated January 29, 1999, denied the same stating
that:
... This Branch views that if complainant finds the necessity to
controvert the allegations in the respondents pleadings, then
he may file a supplemental position paper and adduce
thereto evidence and additional supporting documents, the
soonest possible time. All the evidence will be evaluated by
the Branch to determine whether or not a clarificatory
hearing shall be conducted.[7]
Labor Standards Notes and Cases 1st
batch
On February 26, 1999, the Labor Arbiter issued another Order
submitting the case for resolution upon finding that he could
judiciously pass on the merits without the necessity of further
hearing.
On even date, the Labor Arbiter promulgated the Decision[8]
dismissing the respondents complaint. According to the Labor
Arbiter, the respondent, an officer of the petitioner Bank, had
committed a serious infraction when, in blatant violation of
the banks standard operating procedures and policies, he
approved the DAUD/BP accommodations in favor of Maniwan
without authorization by senior management. Even the
respondent himself had admitted this breach in the letters
that he wrote to the senior officers of the petitioner Bank.
The Labor Arbiter, likewise, made the finding that the
respondent offered to assign or convey a property that he
owned to the petitioner Bank as well as proposed the
withholding of the benefits due him to answer for the losses
that the petitioner Bank incurred on account of unauthorized
DAUD/BP accommodations. But even if the respondent had
not given his consent, the Labor Arbiter held that the
petitioner Banks act of withholding the benefits due the
respondent was justified under its Code of Ethics. The
respondent, as an officer of the petitioner Bank, was bound
by the provisions of the said Code.
Aggrieved, the respondent appealed to the National Labor
Relations Commission. After the parties had filed their
respective memoranda, the NLRC, in the Decision dated
October 20, 1999, dismissed the appeal as it affirmed in toto
the findings and conclusions of the Labor Arbiter. The NLRC
preliminarily ruled that the Labor Arbiter committed no grave
abuse of discretion when he decided the case on the basis of
the position papers submitted by the parties. On the merits,
the NLRC, like the Labor Arbiter, gave credence to the
petitioner Banks allegation that the respondent offered to
pledge his property to the bank and proposed the
withholding of his benefits in acknowledgment of the serious
infraction he committed against the bank. Further, the NLRC
concurred with the Labor Arbiter that the petitioner Bank was
justified in withholding the benefits due the respondent.
Being a responsible bank officer, the respondent ought to
know that, based on the petitioner Banks Code of Ethics,
restitution may be imposed on erring employees apart from
any other penalty for acts resulting in loss or damage to the
bank. The decretal portion of the NLRC decision reads:
30
WHEREFORE, the decision of the Labor Arbiter is Affirmed.
The appeal is Dismissed for lack of merit.
SO ORDERED.[9]
The respondent moved for a reconsideration of the said
decision but the NLRC, in the Resolution of December 20,
1999, denied his motion.
The respondent then filed a petition for certiorari with the
Court of Appeals alleging that the NLRC committed grave
abuse of discretion when it affirmed the findings and
conclusions of the Labor Arbiter. He vehemently denied
having offered to pledge his property to the bank or proposed
the withholding of his separation pay and other benefits.
Further, he argued that the petitioner Bank deprived him of
his right to due process because it unilaterally imposed the
penalty of restitution on him. The DAUD/BP accommodations
in favor of Maniwan allegedly could not be considered as a
loss to the bank as the amounts may still be recovered. The
respondent, likewise, maintained that the Labor Arbiter
should not have decided the case on the basis of the parties
position papers but should have conducted a full-blown
hearing thereon.
On July 19, 2002, the CA rendered the Decision[10] now being
assailed by the petitioner Bank. The CA found merit in the
respondents contention that he was deprived of his right to
due process by the petitioner Bank as no administrative
investigation was conducted by it prior to its act of
withholding the respondents separation pay and other
benefits. The respondent was not informed of any charge
against him in connection with the Maniwan DAUD/BP
accommodations nor afforded the right to a hearing or to
defend himself before the penalty of restitution was imposed
on him. This, according to the appellate court, was contrary
not only to the fundamental principle of due process but to
the petitioner Banks Code of Ethics as well.
The CA further held that the Labor Arbiter, likewise, failed to
afford the respondent due process when it denied his motion
to set case for trial or hearing. While the authority of the
Labor Arbiter to decide a case based on the parties position
papers and documents is indubitable, the CA opined that
factual issues attendant to the case, including whether or not
the respondent proposed the withholding of his benefits or
pledged the same to the petitioner Bank, necessitated the
Labor Standards Notes and Cases 1st
batch
conduct of a full-blown trial. The appellate court explained
that:
Procedural due process, as must be remembered, has two
main concerns, the prevention of unjustified or mistaken
deprivation and the promotion of participation and dialogue
by affected individuals in the decision-making process. Truly,
the magnitude of the case and the withholding of Borromeos
property as well as the willingness of the parties to conciliate,
make a hearing imperative. As manifested by the bank, it did
not contest Borromeos motion for hearing or trial inasmuch
as the bank itself wanted to fully ventilate its side.[11]
Accordingly, the CA set aside the decision of the NLRC and
ordered that the records of the case be remanded to the
Labor Arbiter for further hearings on the factual issues
involved.
The petitioner Bank filed a motion for reconsideration of the
said decision but the CA, in the assailed Resolution of January
6, 2003, denied the same as it found no compelling ground to
warrant reconsideration.[12] Hence, its recourse to this Court
alleging that the assailed CA decision is contrary to law and
jurisprudence in that:
I.
THE FACTUAL FINDINGS OF THE LABOR ARBITER AS AFFIRMED
BY THE NATIONAL LABOR RELATIONS COMMISSION ARE
SUPPORTED BY SUBSTANTIAL EVIDENCE AND SHOULD HAVE
BEEN ACCORDED RESPECT AND FINALITY BY THE COURT OF
APPEALS IN ACCORDANCE WITH GOVERNING
JURISPRUDENCE.
II.
AT ALL TIMES, THE LABOR ARBITER ACTED IN ACCORDANCE
WITH THE REQUIREMENTS OF DUE PROCESS IN THE
PROCEEDINGS A QUO.
III.
THERE WAS NO VIOLATION BY PETITIONER BANK OF
RESPONDENTS RIGHT TO DUE PROCESS AS NO
ADMINISTRATIVE INVESTIGATION WAS NEEDED TO BE
CONDUCTED ON HIS ADMITTED MISCONDUCT.[13]
The petitioner Bank posits that the sole factual issue that
remained in dispute was whether the respondent pledged his
benefits as guarantee for the losses the bank incurred
resulting from the unauthorized DAUD/BP accommodations
in favor of Maniwan. On this issue, both the Labor Arbiter and
31
the NLRC found that the respondent had indeed pledged his
benefits to
the bank. According to the petitioner Bank, this factual finding
should have been accorded respect by the CA as the same is
supported by the evidence on record. By ordering the remand
of the case to the Labor Arbiter, the CA allegedly unjustifiably
analyzed and weighed all over again the evidence presented.
The petitioner Bank insists that the Labor Arbiter acted within
his authority when he denied the respondents motion to set
case for hearing or trial and instead decided the case on the
basis of the position papers and evidence submitted by the
parties. Due process simply demands an opportunity to be
heard and the respondent was not denied of this as he was
even given the opportunity to file a supplemental position
paper and other supporting documents, but he did not do so.
The petitioner Bank takes exception to the findings of the
appellate court that the respondent was not afforded the
right to a hearing or to defend himself by the petitioner Bank
as it did not conduct an administrative investigation. The
petitioner Bank points out that it was poised to conduct one
but was preempted by the respondents resignation. In any
case, respondent himself in his Letter dated December 5,
1996, in reply to the clarificatory queries of Chiong, admitted
that the DAUD/BP accommodations were granted without
higher management approval and that he (the respondent)
accepts full responsibility for committing an error of
judgment, lapses in control and abuse of discretion ... Given
the respondents admission, the holding of a formal
investigation was no longer necessary.
For his part, the respondent, in his Comment, maintains that
the DAUD/BP accommodations in favor of Maniwan were
approved, albeit not expressly, by the senior management of
the petitioner Bank. He cites the regular reports he made to
Chiong, his superior, regarding the DAUD/BP transactions
made by the branch, including that of Maniwan, and Chiong
never called his attention thereto nor stopped or
reprimanded him therefor. These reports further showed that
he did not conceal these transactions to the management.
The respondent vehemently denies having offered the
withholding of his benefits or pledged the same to the
petitioner Bank. The findings of the Labor Arbiter and the
NLRC that what he did are allegedly not supported by the
evidence on record.
Labor Standards Notes and Cases 1st
batch
The respondent is of the view that restitution is not proper
because the petitioner Bank has not, as yet, incurred any
actual loss as the amount owed by Maniwan may still be
recovered from him. In fact, the petitioner Bank had already
instituted a civil case against Maniwan for the recovery of the
sum and the RTC rendered judgment in the petitioner Banks
favor. The case is still pending appeal. In any case, the
respondent argues that the petitioner Bank could not
properly impose the accessory penalty of restitution on him
without imposing the principal penalty of Written
Reprimand/Suspension as provided under its Code of Ethics.
He, likewise, vigorously avers that, in contravention of its own
Code of Ethics, he was denied due process by the petitioner
Bank as it did not conduct any administrative investigation
relative to the unauthorized DAUD/BP accommodations. He
was not informed in writing of any charge against him nor was
he given the opportunity to defend himself.
The petition is meritorious.
The Court shall first resolve the procedural issue raised in the
petition, i.e., whether the CA erred in remanding the case to
the Labor Arbiter. The Court rules in the affirmative. It is
settled that administrative bodies like the NLRC, including the
Labor Arbiter, are not bound by the technical niceties of the
law and procedure and the rules obtaining in courts of law.
[14] Rules of evidence are not strictly observed in
proceedings before administrative bodies like the NLRC,
where decisions may be reached on the basis of position
papers.[15] The holding of a formal hearing or trial is
discretionary with the Labor Arbiter and is something that the
parties cannot demand as a matter of right.[16] As a corollary,
trial-type hearings are not even required as the cases may be
decided based on verified position papers, with supporting
documents and their affidavits.[17]
Hence, the Labor Arbiter acted well within his authority when
he issued the Order dated February 26, 1999 submitting the
case for resolution upon finding that he could judiciously pass
on the merits without the necessity of further hearing. On the
other hand, the assailed CA decisions directive requiring him
to conduct further hearings constitutes undue interference
with the Labor Arbiters discretion. Moreover, to require the
conduct of hearings would be to negate the rationale and
purpose of the summary nature of the proceedings mandated
by the Rules and to make mandatory the application of the
technical rules of evidence.[18] The appellate court,
32
therefore, committed reversible error in ordering the remand
of the case to the Labor Arbiter for further hearings.
Before delving on the merits of the case, it is well to
remember that factual findings of the NLRC affirming those of
the Labor Arbiter, both bodies being deemed to have
acquired expertise in matters within their jurisdiction, when
sufficiently supported by evidence on record, are accorded
respect, if not finality, and are considered binding on this
Court.[19] As long as their decisions are devoid of any
arbitrariness in the process of their deduction from the
evidence proffered by the parties, all that is left is for the
Court to stamp its affirmation.[20]
In this case, the factual findings of the Labor Arbiter and
those of the NLRC concur on the following material points:
the respondent was a responsible officer of the petitioner
Bank; by his own admission, he granted DAUD/BP
accommodations in excess of the authority given to him and
in violation of the banks standard operating procedures; the
petitioner Banks Code of Ethics provides that
restitution/forfeiture of benefits may be imposed on the
employees for, inter alia, infraction of the banks standard
operating procedures; and, the respondent resigned from the
petitioner Bank on May 31, 1998. These factual findings are
amply supported by the evidence on record.
Indeed, it had been indubitably shown that the respondent
admitted that he violated the petitioner Banks standard
operating procedures in granting the DAUD/BP
accommodations in favor of Maniwan without higher
management approval. The respondents replies to the
clarificatory questions propounded to him by way of the
Memorandum dated November 19, 1996 were particularly
significant. When the respondent was asked whether efforts
were made to establish the identity and/or legitimacy of the
drawers of the checks before the DAUD/BP accommodations
were allowed,[21] he replied in the negative.[22] To the query
did the branch follow and comply with operating procedure
which require that all checks accommodated for DAUD/BP
should be previously verified with the drawee bank and
history, if not outright balances, determined if enough to
cover the checks?[23] again, the respondent answered no.
[24] When asked under whose authority the excess DAUD/BP
accommodations were granted,[25] the respondent expressly
stated that they were approved by undersigned (referring to
himself) and that the excess accommodation was granted
without higher management approval.[26] More telling,
however, is the respondents statement that he accepts full
Labor Standards Notes and Cases 1st
batch
responsibility for committing an error in judgment, lapses in
control and abuse of discretion by relying solely on the word,
assurance, surety and REM of Mr. Edmundo Ramos.[27] The
respondent added that he was ready to face the consequence
of [his] action.[28]
The foregoing sufficiently establish that the respondent, by
his own admissions, had violated the petitioner Banks
standard operating procedures. Among others, the petitioner
Banks Code of Ethics provides:
Table 6.2 COMPLIANCE WITH STANDARD OPERATING
PROCEDURES
VIOLATIONS
PENALTIES
1ST
2ND
3RD
4TH
1. Infraction of Bank procedures in handling any Bank
transaction or work assignment which results in a loss or
probable loss
Written Reprimand/ Suspension*
Suspension/ Dismissal*
Dismissal*
* With restitution, if warranted.
Further, the said Code states that:
7.2.5. Restitution/Forfeiture of Benefits
Restitution may be imposed independently or together with
any other penalty in case of loss or damage to the property of
the Bank, its employees, clients or other parties doing
business with the Bank. The Bank may recover the amount
involved by means of salary deduction or whatever legal
means that will prompt offenders to pay the amount involved.
But restitution shall in no way mitigate the penalties attached
to the violation or infraction.
Forfeiture of benefits/privileges may also be effected in cases
where infractions or violations were incurred in connection
with or arising from the application/availment thereof.
33
It is well recognized that company policies and regulations
are, unless shown to be grossly oppressive or contrary to law,
generally binding and
valid on the parties and must be complied with until finally
revised or amended unilaterally or preferably through
negotiation or by competent authority.[29] Moreover,
management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers
pursuant to company rules and regulations.[30] With more
reason should these truisms apply to the respondent, who, by
reason of his position, was required to act judiciously and to
exercise his authority in harmony with company policies.[31]
Contrary to the respondents contention that the petitioner
Bank could not properly impose the accessory penalty of
restitution on him without imposing the principal penalty of
Written Reprimand/Suspension, the latters Code of Ethics
expressly sanctions the imposition of restitution/forfeiture of
benefits apart from or independent of the other penalties.
Obviously, in view of his voluntary separation from the
petitioner Bank, the imposition of the penalty of reprimand or
suspension would be futile. The petitioner Bank was left with
no other recourse but to impose the ancillary penalty of
restitution. It was certainly within the petitioner Banks
prerogative to impose on the respondent what it considered
the appropriate penalty under the circumstances pursuant to
its company rules and regulations.
Anent the issue that the respondents right to due process was
violated by the petitioner Bank since no administrative
investigation was conducted prior to the withholding of his
separation benefits, the Court rules that, under the
circumstances obtaining in this case, no formal administrative
investigation was necessary. Due process simply demands an
opportunity to be heard and this opportunity was not denied
the respondent.[32]
Prior to the respondents resignation, he was furnished with
the Memorandum[33] dated November 19, 1996 in which
several clarificatory questions were propounded to him
regarding the DAUD/BP accommodations in favor of
Maniwan. Among others, the respondent was asked whether
the banks standard operating procedures were complied with
and under whose authority the accommodations were
granted. From the tenor thereof, it could be reasonably
gleaned that the said memorandum constituted notice of the
charge against the respondent.
Labor Standards Notes and Cases 1st
batch
Replying to the queries, the respondent, in his Letter[34]
dated December 5, 1996, admitted, inter alia, that he
approved the DAUD/BP accommodations in favor of Maniwan
and the amount in excess of the credit limit of P500,000 was
approved by him without higher management approval. The
respondent, likewise, admitted non-compliance with the
banks standard operating procedures, specifically, that which
required that all checks accommodated for DAUD/BP be
previously verified with the drawee bank and history, if not
outright balances determined if enough to cover the checks.
In the same letter, the respondent expressed that he
accepts full responsibility for committing an error in
judgment, lapses in control and abuse of discretion and that
he is ready to face the consequence of his action.
Contrary to his protestations, the respondent was given the
opportunity to be heard and considering his admissions, it
became unnecessary to hold any formal investigation.[35]
More particularly, it became unnecessary for the petitioner
Bank to conduct an investigation on whether the respondent
had committed an [I]nfraction of Bank procedures in handling
any Bank transaction or work assignment which results in a
loss or probable loss because the respondent already
admitted the same. All that was needed was to inform him of
the findings of the management[36] and this was done by
way of the Memorandum[37] dated May 23, 1997 addressed
to the respondent. His claim of denial of due process must
perforce fail.
Significantly, the respondent is not wholly deprived of his
separation benefits. As the Labor Arbiter stressed in his
decision, the separation benefits due the complainant (the
respondent herein) were merely withheld.[38] The NLRC
made the same conclusion and was even more explicit as it
opined that the respondent is entitled to the benefits he
claimed in pursuance to the Collective Bargaining Agreement
but, in the meantime, such benefits shall be deposited with
the bank by way of pledge.[39] Even
the petitioner Bank itself gives the assurance that as soon as
the Bank has satisfied a judgment in Civil Case No. 97174, the
earmarked portion of his benefits will be released without
delay.[40]
It bears stressing that the respondent was not just a rank and
file employee. At the time of his resignation, he was the
Assistant Vice- President, Branch Banking Group for the
Mindanao area of the petitioner Bank. His position carried
34
authority for the exercise of independent judgment and
discretion, characteristic of sensitive posts in corporate
hierarchy.[41] As such, he was, as earlier intimated, required
to act judiciously and to exercise his authority in harmony
with company policies.[42]
On the other hand, the petitioner Banks business is
essentially imbued with public interest and owes great fidelity
to the public it deals with.[43] It is expected to exercise the
highest degree of diligence in the selection and supervision of
their employees.[44] As a corollary, and like all other business
enterprises, its prerogative to discipline its employees and to
impose appropriate penalties on erring workers pursuant to
company rules and regulations must be respected.[45] The
law, in protecting the rights of labor, authorized neither
oppression nor self-destruction of an employer company
which itself is possessed of rights that must be entitled to
recognition and respect.[46]
WHEREFORE, the petition is GRANTED. The Decision dated
July 19, 2002 of the Court of Appeals and its Resolution dated
January 6, 2003 in CA-G.R. SP No. 57365 are REVERSED AND
SET ASIDE. The Resolution dated October 20, 1999 of the
NLRC, affirming the Decision dated February 26, 1999 of the
Labor Arbiter, is REINSTATED.
SO ORDERED.
[G.R. No. 114671. November 24, 1999]
AURELIO SALINAS, JR., ARMANDO SAMULDE, ALEJANDRO
ALONZO and AVELINO CORTEZ, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and ATLANTIC GULF AND
PACIFIC CO. of MANILA, INC., respondents.
This petition for review should have been properly initiated
and is therefore treated as a special civil action for certiorari
under Rule 65. The herein petitioners, Aurelio Salinas, Jr.,
Armando Samulde, Alejandro Alonzo and Avelino Cortez,
assail the Resolution[1] dated January 31, 1994 of the
National Labor Relations Commission (NLRC, for brevity)
which dismissed their complaint, and affirming, in effect, the
Decision[2] of the Labor Arbiter declaring them project
employees and not regular employees of respondent Atlantic
Labor Standards Notes and Cases 1st
batch
Gulf and Pacific Company of Manila, Inc. (hereinafter referred
to as AG & P).
Petitioner Alejandro Alonzo had been employed with AG & P
in the several construction projects of the latter from 1982 to
1989, in the course of which he essentially performed the
same job, initially as a laborer, and later as bulk cement
operator, bulk cement plant/carrier operator, and crane
driver. Under similar circumstances, petitioner Avelino Cortez
had been employed with AG & P from 1979 to 1988 as
carpenter/forklift operator; petitioner Armando Samulde
served as lubeman/stationary operator from 1982 to 1989;
while petitioner Aurelio Salinas, Jr., used to work as
carpenter/finishing carpenter from 1983 to 1988.
On May 29, June 6, July 4 and July 5 of 1989, respectively,
petitioners Salinas, Samulde, Alonzo and Cortez filed against
the respondent corporation separate complaints for illegal
dismissal, which cases were consolidated and jointly heard by
Labor Arbiter Manuel P. Asuncion.
In his Order of dismissal, Labor Arbiter Asuncion found that
petitioners are project employees whose work contracts with
AG & P indicate that they were employed in such category;
that they have been assigned to different work projects, not
just to one and that their work relation with AG & P, relative
to termination, is governed by Policy Instruction No. 20.
On appeal, NLRC affirmed the said findings of the Labor
Arbiter and dismissed the complaint for want of merit,
ratiocinating thus:
In the first place, examining the contract of employment of
complainants herein presented as evidence by respondent,
we found that a) they were employed for a specific project
and for a specific period; b) that they were assigned to
different projects and not just one as earlier claimed by them.
In short, from the evidence adduced by respondent which
complainants miserably failed to rebut with their one page
position paper containing sweeping statements, there
appears to be no doubt that they are project employees hired
for a specific project. Their subsequent separation from
service, therefore, as a result of the completion of the project
or its phase did not result in illegal dismissal.[3]
Dissatisfied with the aforesaid disposition below, petitioners
found their way to this Court via the present petition posing
as the sole issue whether they are regular or project
employee.
35
Petitioners principally argue that following the ruling in the
Caramol case,[4] NLRC gravely erred in dismissing their
complaint and declaring them project employees. According
to them, they had been covered by a number of contracts
renewed continuously, with periods ranging from five (5) to
nine (9) years, and they performed the same kind of work
through out their employment, and such was usually
necessary and desirable in the trade or business of the
respondent corporation; and their work did not end on a
project-to-project basis, although the contrary was made to
appear by the employer through the signing of separate
employment contracts.
Petitioners emphatically stressed that no report even a single
one, was ever submitted by the respondent corporation to
the nearest public employment office every time petitioners
employment was terminated pursuant to Policy Instruction
No. 20. There being no report, NLRCs insistence that they
(petitioners) were respondents corporations project
employees is without any legal basis; petitioners maintain.
In its Manifestation and Motion in Lieu of Comment,[5] the
Office of the Solicitor General agrees with the contention of
petitioners, to wit:
5. Thus, since petitioners had continuously performed the
same kind of work during the whole course of their
employment x x x their jobs were indeed necessary and
desirable to the private respondents main line of business.
And this should be the main consideration in classifying the
nature of employment afforded the herein workers.
6. Furthermore, if private respondent really employed the
herein petitioners on a project-to-project basis, it should have
submitted a series of reports to the nearest public
employment office every time the employment of the
workers were terminated, in line with Policy Instruction No.
20 of the Department of Labor. (citation omitted) Private
respondent miserably failed to do its obligation under the set-
up. This failure effectively belies its assertion that herein
petitioners are project employees.[6]
Respondent corporation preliminary contends that the
present petition for review should have been brought under
Rule 65, Rule 45 not being the proper remedy. Assuming
arguendo that the petition should be treated under Rule 65,
the petition would still fail for failure of the petitioners to
present a motion for reconsideration. It maintains that the
Labor Standards Notes and Cases 1st
batch
instant petition should not be given due course due to non-
exhaustion of administrative remedies as required by Section
14, Rule VII (sic). It theorizes further that the questioned
Resolution had already become final and executory on March
20, 1994, ten days after receipt thereof by petitioners on
March 9, 1994. Respondent corporation also claims that the
present petition is insufficient in form, for failure to attach
thereto a duplicate original or certified true copies of the
complainants-petitioners position paper, respondent
corporations position paper, and the questioned resolution of
the public respondent.
AG & P staunchly claims that the petitioners are mere project
employees; that the questioned resolution of public
respondent is supported by substantial evidence and
therefore, conclusive and binding. According to respondent
corporation, factual findings of the NLRC are generally
accorded not only respect but, at times, finality as long as
such findings are based on substantial evidence; that the
doctrinal cases cited by petitioners have no applicability in the
case under scrutiny and that the Magante case[7] does not
apply because it was therein established that Magante was
never deployed from project to project but had been regularly
assigned to perform carpentry work; and on the other hand,
the Baguio Country Club case[8] pertains to entertainment-
service.
Meanwhile the De Leon case,[9] claims the respondent
corporation, bolsters instead, its position since it recognizes
the legality of project employment, which is not deemed
regular but a separate and distinct category, particularly in the
construction business. It also attempts to create a chasm
between the doctrinal case of Caramol and the present case,
allegedly due to different circumstances involved, and citing
the implementation of Department Order No. 19, amending
Policy Instruction No. 20, which allows the rehiring of project
workers on a project-to-project basis (Section 2.3.b), and
which considers the report of termination of employment a
mere indicator of project employment. (Section 2.2)
The petition is impressed with merit.
The present case is on all fours with the cases of Caramol vs.
NLRC (penned by Justice Bellosillo) and Samson vs. NLRC[10]
(with Justice Regalado as ponente), both of which involved
the same private respondent.
In the case of Caramol, petitioner Rogelio Caramol was hired
as a rigger by AG & P on a project-to-project basis but whose
36
employment was renewed forty-four (44) times by the latter.
In holding that Caramol was a regular worker, the Court
declared that the successive employment contracts where he
was made to perform the same kind of work as a rigger,
would clearly manifest that Caramols tasks were usually
necessary or desirable in the usual trade or business of AG &
P.[11]
The Court likewise upheld the validity of a project-to-project
basis contract of employment, provided that the period was
agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure brought to
bear upon the employee and absent any other circumstances
vitiating his consent, or where it satisfactorily appears that
the employer and employee dealt with each other on more or
less equal terms with no moral dominance whatever being
exercised by the former xxx.[12] However, this Court warned,
where from the circumstances it is apparent that periods have
been imposed to preclude the acquisition of tenurial security
by the employee, they should be struck down as contrary to
public policy, morals, good custom or public order.[13]
The case of Samson on the other hand, concerned Ismail
Samson who served initially as a rigger, as a laborer and
finally as a rigger foreman for AG & P, for approximately 28
years. He was also covered by successive employment
contracts with gaps of from one (1) day up to one (1) week.
Noting the successive contracts of employment, the repeated
re-hiring, and petitioners performance of essentially the same
tasks, this Court held that Samson was a regular employee,
because these were sufficient evidence that he was
performing tasks usually necessary and desirable in the
ordinary course of business of AG & P.[14] Thus the Court
pronounced:
The mandate in Article 281 of the Labor Code, which
pertinently prescribes that the provisions of written
agreement to the contrary notwithstanding and regardless of
the oral agreements of the parties, an employment shall be
deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable
in the usual business or trade of the employer and that any
employee who has rendered at least one year of service,
whether such service is continuous or broken shall be
considered a regular employee with respect to the activity in
which he is employed and his employment shall continue
while such actually exists, should apply in the case of
petitioner (Samson).[15]
Labor Standards Notes and Cases 1st
batch
In the case under consideration, the Court likewise rules that
failure to report the termination to Public Employment Office
is a clear indication that petitioners were not and are not
project employees.
When these consolidated complaints were filed in 1989, and
while petitioners were serving the respondent corporation,
the rule in force then was Policy Instruction (P.I.) No. 20,
which required the employer company to report to the
nearest Public Employment Office the fact of termination of
project employee as a result of the completion of the project
or any phase thereof, in which he is employed. Further,
Department Order (D.O.) No. 19, which was issued on April 1,
1993, did not totally dispense with the notice requirement
but, instead, made provisions therefor, and considered it as
one of the indicators that a worker is a project employee.[16]
It is significant to note that the notice of termination
requirement has been retained under Section 6.1 of D.O. No.
19, viz:[17]
6.1. Requirements of labor and social legislations.--(a) The
construction company and the general contractor and/or
subcontractor referred to in Sec. 2.5 shall be responsible for
the workers in its employ on matters of compliance with the
requirements of existing laws and regulations on hours of
work, wages, wage-related benefits, health, safety and social
welfare benefits, including submission to the DOLE-Regional
Office of Work Accident/Illness Report, Monthly Report on
Employees Terminations/Dismissals/Suspensions and other
reports. x x x (Italics supplied)
In light of the cases of Caramol and Samson and the
application of P.I. No. 20 as amended by D.O. No. 19, the
retroactive or prospective effect of D.O. No. 19 is of no
moment. Nevertheless, it was held in Samson vs. NLRC that it
is prospective in effect. Otherwise, it would be prejudicial to
the employees and would run counter to the constitutional
mandate on social justice and protection to labor and
furthermore, such view is more in accord with the avowed
purpose of said Department Order.[18]
It is basic and irrefragable rule that in carrying out and
interpreting the provisions of the Labor Code and its
implementing regulations, the workingmans welfare should
be the primordial and paramount consideration. The
interpretation herein made gives meaning and substance to
the liberal and compassionate spirit of the law enunciated in
Article 4 of Labor Code that all doubts in the implementation
37
and interpretation of the provisions of the Labor Code
including its implementing rules and regulations shall be
resolved in favor of labor.[19]
It is beyond cavil that petitioners had been providing the
respondent corporation with continuous and uninterrupted
services, except for a day or so gap in their successive
employment contracts. Their contracts had been renewed
several times, with the total length of their services ranging
from five (5) to nine (9) years. Throughout the duration of
their contracts, they had been performing the same kinds of
work (e.g., as lubeman, bulk cement operator and carpenter),
which were usually necessary and desirable in the
construction business of AG & P, its usual trade or business.
Undoubtedly, periods in the present case have been imposed
to preclude the acquisition of tenurial security by petitioners,
and must be struck down for being contrary to public policy,
morals, good customs or public order.
Anent the issue that the petition should have been brought
under Rule 65 and not under Rule 45 of the Revised Rules of
Court, this rule is not inflexible.[20] In the interest of justice,
often the Court has judiciously treated as special civil actions
for certiorari petitions erroneously captioned as petitions for
review on certiorari.[21]
With regard to the issue on non-exhaustion of administrative
remedies, the Court hold that the failure of petitioners to
interpose a motion for reconsideration of the NLRC decision
before coming to this Court was not a fatal omission. The
exhaustion of administrative remedies doctrine is not a hard
and fast rule and does not apply where the issue is purely a
legal one.[22] A motion for reconsideration as a prerequisite
for the bringing of an action under Rule 65 may be dispensed
with where the issue is purely of law, as in this case.[23] At all
events and in the interest of substantial justice, especially in
cases involving the rights of workers, procedural lapses, if any,
may be disregarded to enable the Court to examine and
resolve the conflicting rights and responsibilities of the
parties. This liberality is warranted in the case at bar,
especially since it has been shown that the intervention of the
Court is necessary for the protection of the herein
petitioner(s).[24]
WHEREFORE, the questioned Resolution of the NLRC in NLRC
NCR Case No. 00-05-02489-89; NLRC NCR Case No. 00-06-
02621-89; NLRC NCR Case No. 00-06-02815-89; NLRC NCR
Case No. 00-07-03095-89; and NLRC NCR Case No. 00-07-
Labor Standards Notes and Cases 1st
batch
03129-89, is SET ASIDE and another one is hereby ENTERED
ordering the respondent corporation to reinstate petitioners
without loss of seniority and with full backwages. Costs
against the respondent corporation.
SO ORDERED.
[G.R. No. 154448. August 15, 2003]
DR. PEDRITO F. REYES, petitioner, vs. COURT OF APPEALS,
PHIL. MALAY POULTRY BREEDERS, INC. and LEONG HUP
POULTRY FARM SDN, BHD., Mr. Francis T.N. Lau, President
and Chairman of the Board and Mr. Chor Tee Lim, Director,
respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review under Rule 45 of the
Revised Rules of Court are the January 28, 2002[1] and July
22, 2002[2] Resolutions[3] of the Court of Appeals in CA-G.R.
SP No. 67431, which dismissed the petition for certiorari filed
by petitioner for failure to attach to the petition the duplicate
original or certified true copy of the Labor Arbiters decision as
well as the relevant pleadings.
The facts show that on August 24, 1989, respondent Leong
Hup Poultry Farms SDN. BHD (Leung Hup) of Malaysia, thru its
Managing Director Francis T. Lau, appointed petitioner Pedrito
F. Reyes as Technical/Sales Manager with a net salary of
US$4,500.00 a month. His duties consisted of selling parent
stock day-old chicks and providing technical assistance to
clients of the company in Malaysia and other Asian countries.
[4] Sometime in 1992, the company formed Philippine Malay
Poultry Breeders, Inc., (Philmalay) in the Philippines.
Petitioner was appointed General Manager thereof with a
monthly salary of US$5,500.00.
In 1996-1997, respondents suffered losses which caused them
to reduce production and retrench employees in Philmalay.
On June 30, 1997, petitioner gave verbal notice to respondent
Francis T. Lau that he will serve as General Manager of
Philmalay until December 31, 1997 only.[5] In a letter dated
January 12, 1998, petitioner confirmed his verbal notice of
resignation and requested that he be given the same benefits
granted to retrenched and resigned employees of the
company, consisting of separation pay equivalent to 1 month
salary for every year of service and the monetary equivalent
of his sick leave and vacation leave. He likewise requested for
the following:
38
1. payment of underpaid salary for the period December 1989
December 31, 1997 together with the additional one month
salary payable in December of every year which was paid at
the rate of P26.00 instead of the floating rate;
2. brand new car (Galant Super Saloon) or its equivalent;
3. life insurance policy in the amount of US$100,000.00 from
December 1, 1989 to December 31, 1997, or the premiums
due thereon;
4. office rentals at the rate of US$300.00 or its peso
equivalent for the use of his residence as office of Philmalay
for the period December 1, 1989 to July 1996; and
5. retention of the services of the law firm Quasha Ancheta
Pena and Nolasco Law Firm, which was hired by respondents
to defend him in the illegal recruitment case filed against him
in connection with his employment with respondents.[6]
In a letter dated January 19, 1998, respondent Philmalay
retrenched petitioner effective January 20, 1998 and
promised to pay him separation benefits pursuant to the
provisions of the Labor Code.[7] He was, however, offered a
separation pay equivalent to four months only, or the total
amount of P578,600.00 (P144,650 x 4). The offer was not
accepted by petitioner and efforts to settle the impasse
proved futile.
Petitioner filed with the Arbitration Branch of the National
Labor Relations Commission a complaint[8] for underpayment
of wages and non-payment of separation pay, sick leave,
vacation leave and other benefits against respondents.
On December 22, 1999, the Labor Arbiter rendered a
decision[9] in favor of petitioner, the dispositive portion of
which reads:
PREMISES CONSIDERED, judgment is hereby rendered in favor
of the complainant and against the respondents, as follows:
1. To order respondents to pay jointly and severally the
complainant, the following:
(a) Unpaid salary from January 1, 1998 to January 19, 1998,
the same to be computed in the following manner:
19 = days % 31 days of January 98
Labor Standards Notes and Cases 1st
batch
= 0.613 month x US$5,500.00
= US$3,370.00
(b) Underpayment of salary, the same to be computed at net
US$5,500.00 or its peso-equivalent from July 1, 1997 to
December 31, 1997, together with the additional one (1)
salary payable every year, the same to be paid at the rate of
P26.30 instead of the following rate computed as follows:
July 1997 - P27.66 P1.36 - P7, 480.00
August 1997 - 29.33 3.02 - 16, 665.00
September - 32.39 - 6.09 - 33, 495.00
October 1997 - 34.46 - 8.16 - 44, 880.00
November 1997 - 34.51 - 8.21 - 45, 155.00
December 1997 - 37.17 - 10.57- 59, 785.00
P207,460.00
(c) 13th month pay for December 1997 computed as follows:
December 1997 P37.17 P10.57 P59,785.00.
2. To order respondents to pay jointly and severally the
complainant the following:
(a) Unused vacation and sick leaves from December 01, 1989
to December 31, 1997 based on the same salary, to be
computed as follows:
i) Vacation Leave Fifteen (15) days for every year of services x
9 years = 135 days
135 days % 26 working days a month
= 5.2 months
= US$28,600.00
ii) Sick Leave Fifteen (15) Days for every [year] of service x 9
years = 135 days
135 days % 26 working days a month
= 5.2 months x US$5,500.00 / month
39
= US$28,600.00
3) To order respondents to pay jointly and severally the
complainant his separation pay equivalent to one (1) month
pay for very year of service at the rate of US $5,500.00 or its
peso equivalent from December 1, 1989 to January 19, 1998,
computed as follows:
9 years x US$5,500.00 = US$49,500.00
4) To order respondents to pay jointly and severally the
complainants other claims and benefits:
a) A brand new car (Galant super saloon) or its equivalent in
the sum of P945,100.00;
b) Office rentals for the use of his residence situated at No. 38
Don Wilfredo St., Don Enrique Heights Diliman, Quezon City,
[from] 01 December 1989 to July 1996 at the rate of
US$300.00 or its peso equivalent to US$23,700.00;
c) Life insurance policy for US$100,000.00 from December 1,
1989 to December 31, 1997, or if the same was not secured
the premiums due thereon for the above period, the same to
be computed as follows:
US$2,736.50 x 9 years = US$24,628.50
d) The services of the Law firm of Quasha Ancheta Pea and
Nolasco be continued to be retained by the two (2)
companies to represent complainant in the illegal recruitment
case before the Regional Trial Court of Quezon City, Branch
96, docketed as Crim. Case No. Q-93-46421, entitled People
of the Philippines vs. Dr. Antonio B. Mangahas, et al., filed
against him in connection with his employment by Leong Hup,
or in default thereof to pay the attorneys fees of the new
counsel, that may be hired by the complainant to defend him
in the said case estimated in the sum of P200,000.00, more or
less;
5) To order the respondents to pay jointly and severally the
complainant moral damages in the sum of P2.5 million and
exemplary damages of P2.5 million;
6) To order the respondents to pay jointly and severally the
complainant in the sum equivalent to ten percent (10%) of
the total claim as and for attorneys fees.
Labor Standards Notes and Cases 1st
batch
7) Respondents counterclaims are hereby dismissed for lack
of merit.
SO ORDERED.[10]
On appeal by respondents to the National Labor Relations
Commission (NLRC), the Decision of the Labor Arbiter was
modified by deleting the awards of (1) US$3,370.00
representing unpaid salary for the period January 1, 1998 to
January 19, 1998; (2) US$28,600.00 as vacation leave; (3)
brand new car or its equivalent in the sum of P945,100.00; (4)
US$23,700.00 as office rentals for the period of December 1,
1989 to July 1996; (5) US$100,000.00 life insurance policy or
the equivalent premium in the amount of US$24,628.50; (6)
P2.5 million as moral damages; and (7) P2.5 million as
exemplary damages. The NLRC likewise reduced the amount
of petitioners separation pay to US$44,400.00 after adjusting
its computation based on the length of service of petitioner
which it lowered from 9 years to 8 years; and by limiting the
basis of the 10% attorneys fees to the total of the awards of
underpayment of salary (P207,460.00), 13th month pay
differential (P59,785.00) and cash equivalent of sick leave
(US$28,600.00) only, and excluding therefrom the award of
separation pay in the amount of US$44,400.00. The decretal
portion of the said decision[11] states:
WHEREORE, premises considered, the Decision dated
December 22, 1999 is hereby MODIFIED as follows:
Respondents are hereby ordered to pay jointly and severally
the complainant, the following:
(a) underpayment of salary as computed in the appealed
Decision in the amount of P207, 460.00;
(b) 13th month pay differential as computed in the appealed
Decision in the amount of P59,785.00;
(c) monetary equivalent of complainants sick leave as
computed in the appealed Decision in the amount of
US$28,600.00;
(d) separation pay in the amount of US$44,000.00 as earlier
computed in this Decision;
(e) attorneys fees equivalent to ten (10%) percent of the total
award based on the awards representing underpayment of
salary, 13th month pay, [and] cash equivalent of sick leave.
40
Respondents are likewise directed to provide legal counsel to
complainant as defendant in Criminal Case No. Q-93-46421.
The awards of unpaid wages from June 1-19, 1998, vacation
leave in the amount of US$28,600, P945,000 for car,
US23,700.00, for office rentals, life insurance policy in the
amount of US$100,000.00 and moral and exemplary damages
in the amount of 2.5 million pesos are hereby DELETED on
grounds above-discussed.
SO ORDERED.[12]
Petitioner filed a motion for reconsideration, however, the
same was denied.[13] Undaunted, petitioner filed a petition
for certiorari with the Court of Appeals, which was dismissed
on January 28, 2002 for failure to attach to the petition the
following: (1) complainants (petitioner) Position Paper filed
before the Labor Arbiter; (2) Decision dated 22 December
1992 penned by Labor Arbiter Ariel Cadiente Santos; and (3)
Memorandum of Appeal filed by the petitioner.[14]
On February 21, 2002, petitioner filed a motion for
reconsideration, attaching thereto a copy of the Labor
Arbiters decision and the pleadings he failed to attach to the
petition. The Court of Appeals, however, denied petitioners
motion for reconsideration. Hence, the instant petition based
on the following grounds:
1. COURT OF APPEALS COMMITTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF
JURISDICTION, IN ISSUING THE QUESTIONED RESOLUTION
DISMISSING THE PETITION FOR CERTIORARI BASED ON
TECHNICALITIES, THAT PETITIONER FAILED TO COMPLY WITH
SEC. 1, RULE 65, RULES OF CIVIL PROCEDURE FOR FAILURE TO
ATTACH THREE (3) DOCUMENTS CONSISTING OF:
Complainants (petitioner) Position Paper filed before the
labor arbiter;
Decision dated 22 December 1999 penned by Labor Arbiter
Ariel Cadiente Santos; and
Memorandum of Appeal filed by the petitioner.
WHICH RESPONDENT COURT OF APPEALS CONSIDERED AS
MATERIAL PORTIONS OF THE RECORD DESPITE THE FACT
THAT THE SUBJECT DOCUMENTS SOUGHT TO BE PRODUCED
HAVE ACTUALLY BEEN REPRODUCED OR SUBSTANTIALLY
Labor Standards Notes and Cases 1st
batch
COVERED BY THE QUESTIONED JUDGMENT, ORDER OR
RESOLUTION FILED/SUBMITTED BEFORE IT.
2. COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION IN DISMISSING THE PETITION, AND IN DENYING
THE MOTION FOR RECONSIDERATION THEREOF ON THE
GROUND THAT THERE IS NO COGENT REASON FOR IT TO
OVERTURN ITS DISMISSAL, DESPITE CLEAR AND CONVINCING
EVIDENCE, EXTANT ON THE RECORDS SHOWING THAT THE
NATIONAL LABOR RELATIONS COMMISSIONS (NLRC)
DECISION AND RESOLUTION WERE FLAWED, A PALPABLE OR
PATENT ERROR, WHICH MAY BE SUMMARIZED, TO WIT:
(A) IN DECLARING THAT PETITIONER HAD RESIGNED FROM
HIS EMPLOYMENT, AND NOT RETRENCHED OR TERMINATED
DESPITE A DOCUMENTARY EVIDENCE EXTANT ON THE
RECORD ISSUED BY PRIVATE RESPONDENTS DATED JANUARY
19, 1998 GIVING FORMAL NOTICE TO YOU (PETITIONER) OF
YOUR TERMINATION DUE TO RETRENCHMENT EFFECTIVE
JANUARY 20, 1998.
(B) IN HOLDING AGAIN, AND DENYING PETITIONERS VALID
CLAIMS DESPITE DOCUMENTARY EVIDENCE OR THE
EXISTENCE OF A CONTRACT OF EMPLOYMENT STATING THAT:
(1) EMPLOYEES (INCLUDING PETITIONER AS GENERAL
MANAGER) AS A MATTER OF COMPANY POLICY AND/OR
PRACTICE) WHO ARE RETRENCHED ARE ENTITLED TO
INCENTIVES INCLUDING 15-DAYS VACATION LEAVE AND 15-
DAYS SICK LEAVE WITH PAY; A FACT ADMITTED NO LESS BY
PRIVATE RESPONDENTS OWN WITNESS, MS. MA. ROWENA
LOPEZ (FORMER PERSONNEL MANAGER OR PHILMALAY)
WHO EXECUTED AN AFFIDAVIT ADMITTING THE SAME.
(2) PETITIONERS ENTITLEMENT AS PER CONTRACT TO A
BRAND NEW CAR (OR AT LEAST TO THE CASH EQUIVALENT
THEREOF); $100,000.00 LIFE INSURANCE POLICY (OR IN
DEFAULT THEREOF AT LEAST TO THE PREMIUMS THEREIN),
AND OFFICE RENTALS FOR THE USE OF THE PETITIONERS
PRIVATE RESIDENCE AS OFFICE OF RESPONDENTS.
(3) PETITIONER IS ENTITLED, TO MORAL AND EXEMPLARY
DAMAGES DUE TO PRIVATE RESPONDENTS ACTS OF BAD
FAITH IN REQUIRING PETITIONER TO EXECUTE A LETTER OF
RESIGNATION, WHEN IN FACT HE WAS ADMITTEDLY
TERMINATED THRU RETRENCHMENT, AND ITS REFUSAL TO
PAY HIM HIS VALID CLAIMS, DESPITE HIS CONTRACT OF
EMPLOYMENT, COMPANY POLICY, AND LETTER OF
TERMINATION ISSUED BY PRIVATE RESPONDENTS.
41
(4) PETITIONERS ENTITLEMENT TO 10% OF THE TOTAL
AMOUNT OF THE AWARD OF ATTORNEYS FEES AS PROVIDED
FOR BY LAW AND AS PER PETITIONERS CONTRACT WITH
COUNSEL, AND NOT ONLY 10% OF THE TOTAL AWARD
REPRESENTING UNDER PAYMENT OF SALARY, 13TH MONTH
PAY, AND CASH EQUIVALENT OF SICK LEAVE AND IN
ORDERING PRIVATE RESPONDENT TO PROVIDE LEGAL
COUNSEL TO PETITIONER IN CRIM. CASE NO. Q-93-46421,
WHEN THE SUBJECT CASE HAD ALREADY BEEN DISMISSED AT
THE EXPENSE OF PETITIONER WHO HAD PREVIOUSLY HIRED
HIS OWN COUNSEL OF CHOICE FOR THE PURPOSE.
The issues for resolution are: (1) whether or not the Court of
Appeals erred in dismissing the petition; and (2) whether or
not the decision of the Labor Arbiter should be reinstated.
The allowance of the petition on the ground of substantial
compliance with the Rules is not a novel occurrence in our
jurisdiction. As consistently held by the Court, rules of
procedure should not be applied in a very technical sense, for
they are adopted to help secure, not override, substantial
justice.[15] In Ramos v. Court of Appeals,[16] the Court of
Appeals dismissed a petition for review of the decision of the
Regional Trial Court because the petitioner failed to attach to
the petition a certified true copy of the Metropolitan Trial
Courts decision in addition to the certified true copy of the
assailed decision of the RTC. Holding that the Court of
Appeals should have given due course to the petition
considering that petitioner subsequently submitted a certified
true copy of the decision of the MeTC, we held:
Petitioner is right that the MeTCs decision cannot be
considered a disputed decision. The phrase is the equivalent
of ruling, order or decision appealed from in Rule 32, 2 of the
1964 Rules made applicable to appeals from decisions of the
then Courts of First Instance to the Court of Appeals by R.A.
No. 296, as amended by R.A. No. 5433. Since petitioner was
not appealing from the decision of the MeTC in her favor, she
was not required to attach a certified true copy but only a
true or plain copy of the aforesaid decision of the MeTC. The
reason is that inclusion of the decision is part of the
requirement to attach to the petition for review other
material portion of the record as would support the
allegations of the petition. Indeed, petitioner referred to the
MeTC decision in many parts of her petition for review in the
Court of Appeals for support of her theory.
Labor Standards Notes and Cases 1st
batch
Nonetheless, the Court of Appeals should have reconsidered
its dismissal of petitioners appeal after petitioner submitted a
certified true copy of the MeTCs decision. It was clear from
the petition for review that the RTC incurred serious errors in
awarding damages to private respondents which were made
without evidence to support the award and without any
explanation[17]
In Jaro v. Court of Appeals,[18] we applied the rule on
substantial compliance because the petitioner amended his
defective petition and attached thereto the relevant annexes
certified according to the rules. Thus
There is ample jurisprudence holding that the subsequent
and substantial compliance of an appellant may call for the
relaxation of the rules of procedure. In Cusi-Hernandez vs.
Diaz and Piglas-Kamao vs. National Labor Relations
Commission, we ruled that the subsequent submission of the
missing documents with the motion for reconsideration
amounts to substantial compliance. The reasons behind the
failure of the petitioners in these two cases to comply with
the required attachments were no longer scrutinized. What
we found noteworthy in each case was the fact that the
petitioners therein substantially complied with the formal
requirements[19]
The same leniency should be applied to the instant case
considering that petitioner subsequently submitted with his
motion for reconsideration the certified true copy of the
Labor Arbiters decision, the complainants position paper and
the respondents memorandum of appeal. Clearly, petitioner
had demonstrated willingness to comply with the
requirements set by the rules. If we are to apply the rules of
procedure in a very rigid and technical sense, as the Court of
Appeals did in this case, the ends of justice would be
defeated.
The pleadings and documents filed extensively discussed the
issues raised by the parties. Such being the case, there is
sufficient basis to resolve the instant controversy.[20] Labor
laws mandate the speedy disposition of cases, with the least
attention to technicalities but without sacrificing the
fundamental requisites of due process.[21] Remanding the
case to the Court of Appeals will only frustrate speedy justice
and, in any event, would be a futile exercise, as in all
probability the case would end up with this Court.[22] We
shall thus rule on the substantial claims of the parties.
42
Was the termination of petitioners employment caused by
retrenchment or by voluntary resignation?
The Court finds that petitioners dismissal from service was
due to retrenchment. This is evident from the termination
letter sent by Philmalay to petitioner, to wit
We regret to inform you that in view of the prevailing market
conditions and the continuous losses being incurred by the
company, the management has decided to cut down on
expenses and prevent further losses through retrenchment of
some of our personnel effective January 19, 1998.
In compliance with the requirement of the law, this will serve
as a formal notice to you of your termination due to
retrenchment effective January 20, 1998. To provide you with
sufficient time to seek alternative employment, you need not
report for work (unless otherwise requested) starting January
20, 1998. Notwithstanding the above mentioned affectivity
date, you may come down to the office and receive your
separation benefits pursuant to the Labor Code[23]
While it is true that petitioner tendered his resignation letter
to respondents requesting that he be given the same benefits
granted by the company to resigned/retrenched employees,
there is no showing that respondents accepted his
resignation. Acceptance of a resignation tendered by an
employee is necessary to make the resignation effective.[24]
No such acceptance, however, was shown in the instant case.
What appears in the record is a letter terminating the services
of petitioner due to retrenchment effective January 20, 1998.
Verily, said letter should be interpreted as a non-acceptance
of petitioners resignation effective December 31, 1997. As
correctly pointed out by the Labor Arbiter, if respondents
considered petitioner resigned as of December 31, 1997, then
there would be no need to retrench him.
The length of service of petitioner, which the NLRC correctly
reduced to 8 years, as well as the solidary liability of
respondent corporations are no longer assailed here.
Whether petitioner is considered resigned on December 31,
1997 or retrenched on January 20, 1998, his length of
employment reckoned from August 24, 1989 would still be 8
years. Moreover, respondents did not appeal from the
decision of the NLRC and in fact sought its affirmance in their
Opposition to the motion for reconsideration[25] and
Comment to the motion for reconsideration[26] filed before
the NLRC and the Court of Appeals, respectively. So also,
petitioner is estopped from claiming that he was illegally
Labor Standards Notes and Cases 1st
batch
dismissed and that his retrenchment was without basis. His
request for benefits granted to retrenched employees during
such time when respondent was in the process of retrenching
its employees is tantamount to a recognition of the existence
of a valid cause for retrenchment. What remains to be
resolved by the Court is the validity of the NLRCs
deletion/modification of the awards of (1) unpaid salary; (2)
vacation leave; (3) car and insurance policy/premiums; (4)
moral and exemplary damages; (5) reimbursement for
expenses for legal services; (6) rental payment; and (7)
attorneys fees.
As regards the award of unpaid salary, the NLRC was correct
in holding that petitioner is not entitled to compensation
from January 1, 1998 to January 19, 1998, because he was not
able to prove that he rendered services during said period. In
the same vein, there is no basis in awarding moral and
exemplary damages, inasmuch as respondents were not
shown to have acted in bad faith in initially refusing to award
separation pay equivalent to 1 month salary for every year of
service. Respondents even offered to pay petitioner
separation pay, albeit in an amount not acceptable to
petitioner. Moral damages are recoverable only where the act
complained of is tainted by bad faith or fraud, or where it is
oppressive to labor, and done in a manner contrary to morals,
good customs, or public policy. Exemplary damages may be
awarded only if the act was done in a wanton, oppressive, or
malevolent manner.[27] None of these circumstances exist in
the present case.
The NLRC also correctly ruled that the car and insurance
benefits are granted only during the course of employment;
hence, they should not be part of petitioners separation
package. Likewise, petitioners claim for payment of rental for
the use of his house as office of Philmalay should be denied
for having been ventilated in the wrong forum. Not all money
claims that may be asserted by an employee against his
employer are within the jurisdiction of the NLRC. Money
claims of workers which fall within the jurisdiction of Labor
Arbiters are those which arise out of employer-employee
relationship. Obviously, the demand for rental payment is not
a labor dispute; rather, it is based on contractual relations
independent of employer-employee relationship. Hence, the
jurisdiction thereon is with the regular courts.[28]
Since respondents did not appeal from the decision of the
NLRC, it is presumed that they are satisfied with the
adjudications therein, including the order of NLRC directing
them to provide legal services to petitioner in the illegal
43
recruitment case filed against the latter while he was still
employed by respondents. This is in accord with the doctrine
that a party who has not appealed cannot obtain from the
appellate court any affirmative relief other than the ones
granted in the appealed decision.[29] Nonetheless,
respondents cannot be ordered to reimburse the amount of
P200,000.00 for the legal services of the law firm allegedly
hired by petitioner because he failed to establish that he
indeed hired the services of a law firm and that he spent
P200,000.00 as a consequence thereof.
Petitioner is, however, entitled to the award of vacation leave
as part of respondents retrenchment incentives. In granting
sick leave but deleting vacation leave benefits, the NLRC
based its ruling on the affidavit of one Ms. Rowena Lopez, a
former personnel of Philmalay, viz:
3. That based on company policy and/or practice the rank-
and-file employees are entitled to 15-days vacation leave and
15-days sick leaves. However, the vacation leave must be
availed of within the year or applied to the remaining period
of employment for those who resigned or go on terminal
leave. In case of sick leaves all unused sick leaves are also
commutable to cash;
4. That employees who were retrenched are entitled to the
following incentives:
(a) One (1) month additional leave with pay effective after
their last day of employment to enable them to look for a
new job;
(b) Plus one (1) month separation pay for every year of
service; and
(c) 15-days vacation leave and 15-days sick leave with pay as
stated in paragraph 3 hereof.[30]
The foregoing expressly states that a retrenched employee is
entitled to 15-day vacation leave. Paragraph 4 is the
retrenchment package granted to retrenched employees,
whereas paragraph 3 refers to the feasibility of commutation
of unused sick and vacation leaves. Except for the sentence
entitling employees to vacation and sick leaves, the last 2
sentences in paragraph 3 have nothing to do with the
retrenchment benefits in paragraph 4. Note that the 15-day
vacation and sick leave with pay in paragraph 4(c) are not
qualified by the word unused. The 15-day vacation and sick
leaves are granted to retrenched employees as part of the
Labor Standards Notes and Cases 1st
batch
retrenchment benefits regardless of whether or not they have
unused sick and vacation leaves at the time of the
retrenchment. Moreover, the applicability of the said
provisions to petitioner was not disputed by respondents.
They even invoked the same in manifesting conformity to the
deletion by the NLRC of the award of 15-day vacation leave
for every year of service. At any rate, any ambiguity therein
must be resolved strictly against the respondents, who
drafted these provisions.[31] Hence, petitioner is entitled not
only to 15 days sick leave but also to 15 days vacation leave
with pay
The Labor Arbiters computation of petitioners 15-day sick
leave pay must be modified. The NLRC, which affirmed the
Labor Arbiters decision, reduced petitioners number of years
of service from 9 to 8 years but it did not make the
corresponding adjustment in the determination of petitioners
sick leave pay which used 9 years as the basis in the
computation thereof. Accordingly, the awards of 15-day sick
leave and 15-day vacation leave for every year of service must
be computed using 8 years as its basis.
Finally, the award of attorneys fees must also be modified. In
Traders Royal Bank Employees Union-Independent v. National
Labor Relations Commission,[32] it was held that there are
two commonly accepted concepts of attorney's fees, the so-
called ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer
by his client for the legal services he has rendered to the
latter. The basis of this compensation is the fact of his
employment by and his agreement with the client. In its
extraordinary concept, attorneys fees are deemed indemnity
for damages ordered by the court to be paid by the losing
party in a litigation. The instances where these may be
awarded are those enumerated in Article 2208 of the Civil
Code, specifically par. 7 thereof which pertains to actions for
recovery of wages, and is payable not to the lawyer but to the
client, unless they have agreed that the award shall pertain to
the lawyer as additional compensation or as part thereof. The
extraordinary concept of attorneys fees is the one
contemplated in Article 111 of the Labor Code, which
provides:
Art. 111. Attorneys fees. (a) In cases of unlawful withholding
of wages, the culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages recovered
The afore-quoted Article 111 is an exception to the declared
policy of strict construction in the awarding of attorneys fees.
44
Although an express finding of facts and law is still necessary
to prove the merit of the award, there need not be any
showing that the employer acted maliciously or in bad faith
when it withheld the wages. There need only be a showing
that the lawful wages were not paid accordingly, as in this
case.[33]
In carrying out and interpreting the Labor Code's provisions
and its implementing regulations, the employees welfare
should be the primordial and paramount consideration. This
kind of interpretation gives meaning and substance to the
liberal and compassionate spirit of the law as provided in
Article 4 of the Labor Code which states that [a]ll doubts in
the implementation and interpretation of the provisions of
[the Labor] Code including its implementing rules and
regulations, shall be resolved in favor of labor, and Article
1702 of the Civil Code which provides that [i]n case of doubt,
all labor legislation and all labor contracts shall be construed
in favor of the safety and decent living for the laborer.[34]
In the case at bar, what was withheld from petitioner was not
only his salary, vacation and sick leave pay, and 13th month
pay differential, but also his separation pay. Hence, pursuant
to current jurisprudence, separation pay must be included in
the basis for the computation of attorneys fees. Petitioner is
entitled to attorneys fees equivalent to 10% of his total
monetary award.[35]
WHEREFORE, in view of all the foregoing, the instant petition
is GRANTED. The assailed Resolutions dated January 28, 2002
and July 22, 2002 of the Court of Appeals in CA-G.R. SP No.
67431, are REVERSED and SET ASIDE. The Decision of the
National Labor Relations Commission in NLRC NCR CA
023679-2000, is MODIFIED. In addition to the awards of
underpayment of salary, 13th month pay differential, sick
leave pay and separation pay, respondents are ordered to pay
petitioner vacation leave pay and 10% attorneys fees, the
basis of which shall be the total monetary award. Petitioners
vacation leave and sick leave pay shall be computed on the
basis of his 8 years of service with respondents. For this
purpose, the case is ordered REMANDED to the Labor Arbiter
for the computation of the amounts due petitioner.
SO ORDERED.
Labor Standards Notes and Cases 1st
batch
G & M PHILIPPINES, INC., G.R. No. 162308
Petitioner, - versus ROMIL V. CUAMBOT,* Promulgated:
Respondent.
November 22, 2006
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the Decision[1] of the Court of
Appeals (CA) in CA-G.R. SP No. 64744, as well as the
Resolution[2] dated February 20, 2004 denying the motion for
reconsideration thereof.
The antecedent facts are as follows:
On November 7, 1994, respondent Romil V. Cuambot applied
for deployment to Saudi Arabia as a car body builder with
petitioner G & M Philippines, Inc., a duly licensed placement
and recruitment agency. Respondents application was duly
processed and he later signed a two-year employment
contract to work at the Al Waha Workshop in Unaizah City,
Gassim, Kingdom of Saudi Arabia. He left the country on
January 5, 1995. However, respondent did not finish his
contract and returned to the Philippines barely six months
later, on July 24, 1995. On July 26, 1995, he filed before the
National Labor Relations Commission (NLRC) a complaint for
unpaid wages, withheld salaries, refund of plane ticket and
repatriation bond, later amended to include illegal dismissal,
claim for the unexpired portion of his employment contract,
actual, exemplary and moral damages, and attorneys fees.
The complaint was docketed as NLRC-NCR Case No. 00-07-
05252-95.
Respondent narrated that he began working for Mohd Al
Motairi,[3] the President and General Manager of the Al
Waha Workshop, on January 8, 1995. Along with his Filipino
co-workers, he was subjected to inhuman and unbearable
working conditions, to wit:
1. [He] was required to work from 7:00 oclock in the
morning to 10:00 oclock in the evening everyday, except
Friday, or six (6) hours overtime work daily from the usual
eight (8) working hours per day.
45
2. [He] was never paid x x x his monthly basic salary of
1,200 [Riyals] including his overtime pay for the six (6) hours
overtime work he rendered every working day during his
work in Saudi Arabia except for the amount of 100 [Riyals]
given every month for his meal allowance;
3. [He] was subjected to serious insult by respondent
Muthiri everytime he asked or demanded for his salary; and,
4. [S]ome of complainants letters that were sent by his
family were not given by respondent Muthiri and/or his staff x
x x.[4]
When respondent asked Motairi for his salary, he was told
that since a huge sum had been paid to the agency for his
recruitment and deployment, he would only be paid after the
said amount had already been recovered. He was also told
that his salary was only 800 Saudi Riyals (SAR) per month, in
contrast to the SAR1200 that was promised him under the
contract. Motairi warned that he would be sent home the
next time he demanded for his salary. Due to his familys
incessant letters asking for financial support, however,
respondent mustered the courage to again demand for his
salaries during the second week of July 1996. True to his
word, Motairi ordered him to pack up and leave. He was able
to purchase his plane ticket only through the contributions of
his fellow Filipinos. Motairi even accompanied him to the
airport when he bought his plane ticket. In the meantime, his
wife had been making inquiries about him.
To corroborate his claims, respondent submitted the following
documents: an undated letter[5] he had written addressed to
the Philippine Labor Attach in Riyadh, with Arabic translation;
[6] his wifes letter[7] dated June 28, 1995 addressed to the
Gulangco Monteverde Agency, Manila Head Office, asking for
a favor to help [her] husband to come home as early as
possible; a fax message[8] dated July 17, 1995 from a
representative of the Land Bank of the Philippines (LBP) to a
counterpart in Riyadh, asking for assistance to locate
respondent;[9] and the
reply[10] from the Riyadh LBP representative requesting for
contact numbers to facilitate communication with
respondent.
Respondent further claimed that his employers actuations
violated Articles 83 and 103 of the Labor Code. While he was
entitled to terminate his employment in accordance with
Labor Standards Notes and Cases 1st
batch
Article 285 (b) due to the treatment he received, he did not
exercise this right. He was nevertheless illegally dismissed by
his employer when he tried to collect the salaries due him.
Respondent further claimed that the reduction of his monthly
salary from SAR1,200 to SAR800 and petitioners failure to
furnish him a copy of the employment contract before his
departure amounted to prohibited practices under Article 34
(i) and (k) of the Labor Code.
Respondent prayed for the following relief:
WHEREFORE, premises considered, complainant most
respectfully prays unto this Honorable Office that the instant
complaint be given due course and that a decision be
rendered in his favor and against
respondents G & M (Phils.), Inc., Alwaha (sic) Workshop
and/or Muhamd (sic) Muthiri, as follows:
(1) Ordering the respondents to pay, jointly and severally,
complainant the unpaid salaries and overtime pay in the
amounts of P61,560.00 and P66,484.80, respectively,
including interests, until the same will be fully paid;
(2) Ordering the respondents to pay, jointly and severally,
complainant[s] salary for the unexpired portion of the
contract in the amount of P184,680.00, including interests,
until the same will be fully paid;
(3) Ordering the respondents to pay, jointly and severally,
complainant[s] actual expenses which he incurred in applying
for the job, including expenses in leaving for the job, including
expenses in leaving for Saudi Arabia and plane ticket, as well
as repatriation bond and incidental expenses in going home
to the Philippines in the amounts of P49,000.00 and
P20,000.00, respectively, including interests, until the same
will be fully paid;
(4) Ordering the respondents to pay, jointly and severally,
complainant moral damages in the amount of P150,000.00
and exemplary damages in the amount of P150,000.00,
including interests, until the same will be fully paid;
(5) Ordering the respondents to pay, jointly and severally,
complainant for and as attorneys fees in the amount of
P68,172.48 or the amount equivalent to 10% of the total
amount of the foregoing claims and damages that may be
awarded by the Honorable Office to the complainant.[11]
46
In its position paper, petitioner alleged that respondent was
deployed for overseas work as car body builder for its
Principal Golden Wings Est. for General Services and
Recruitment in Saudi Arabia for an employment period of 24
months, with a monthly salary of US$400.00.[12] It insisted
that respondent was religiously paid his salaries as they fell
due. After working for a little over seven months, respondent
pleaded with his employer to be allowed to return home
since there were family problems he had to settle personally.
Respondent even submitted a resignation letter[13] dated
July 23, 1995.
To support its claim that respondent had been paid his
salaries as they fell due, petitioner submitted in evidence
copies of seven payslip[14] authenticated by the Philippine
Labor Attach in Riyadh, Saudi Arabia. Petitioner asserted that
since respondent only worked for a little over seven months
and did not finish his contract, he should pay the cost of the
plane ticket. It pointed out that according to the standard
employment contract, the employer would provide the
employee with a free plane ticket for the flight home only if
the worker finishes his contract.
Respondent countered that his signatures in the purported
payslips were forged. He denied having received his salaries
for the said period, except only for the SAR100 as monthly
allowance. He pointed out that the authentication of the
alleged pay slips and resignation letter before the labor attach
in Riyadh is immaterial, since the documents themselves were
falsified.
Respondent further claimed that petitioner required him to
pay a P10,000.00 placement fee and that he had to borrow
P2,000.00 from a relative. He was then told that the amount
would be considered as an advance payment and that the
balance would be deducted from his salary. He was not,
however, given any receipt. He insisted that the employment
contract which he signed indicated that he was supposed to
receive a monthly salary of SAR1,200 for working eight hours
a day, excluding overtime pay. He was repeatedly promised to
be furnished a copy of the contract and was later told that it
would be given to his wife, Minda. However, she was also
given the run-around and was told that the contract had
already been given to her husband.
To counter the allegation of forgery, petitioner claimed that
there was a great possibility that respondent had changed his
signature while abroad so that he could file a complaint for
Labor Standards Notes and Cases 1st
batch
illegal dismissal upon his return. The argument that the stroke
and handwriting on the payslip was written by one and the
same person is mere conjecture, as respondent could have
requested someone, i.e., the cashier, to prepare the
resignation letter for him. While it is the employer who fills up
the pay slip, respondent could have asked another employee
to prepare the resignation letter, particularly if he
(respondent) did not know how to phrase it himself.
Moreover, it could not be presumed that the payslip and
resignation letter were prepared by one and the same person,
as respondent is not a handwriting expert. Petitioner further
pointed out that respondent has different signatures, not only
in the pleadings submitted before the Labor Arbiter, but also
in respondents personal documents.
On January 30, 1997, Labor Arbiter Jose De Vera ruled in favor
of respondent on the following ratiocination:
What convinced this Arbitration Branch about the unreliability
of the complainants signature in the payslip is the close
semblance of the handwritings in the payslips and the
handwritings in the purported handwritten resignation of the
complainant. It unmistakably appears to this Arbitration
Branch that the payslips as well as the handwritten letter-
resignation were prepared by one and the same person. If it
were true that the handwritten letter-resignation was
prepared by the complainant, it follows that he also prepared
the payslips because the handwritings in both documents are
exactly the same and identical. But [this] is quite unbelievable
that complainant himself as the payee prepared the payslips
with the corresponding entries therein in his own
handwriting. Under the circumstances, the only logical
conclusion is that both the payslips and the handwritten
letter-resignation were prepared and signed by one and the
same person definitely not the complainant.
With the foregoing findings and conclusions, this Arbitration
Branch is of the well-considered view that complainant was
not paid his salaries from January 5, 1995 up to July 23, 1995
and that he was unjustifiably dismissed from his employment
when he repeatedly demanded for his unpaid salaries.
Respondents are, therefore, liable to pay the complainant his
salaries from January 5, 1995 up to July 23, 1995 which
amount to US$2,640.00 (US$400 x 6.6 mos). Further,
respondents are also liable to the complainant for the latters
salaries for the unexpired portion of his contract up to the
maximum of three (3) months pursuant to Section 10 of RA
8042, which amount to US$1,200.00. Respondents must also
refund complainants plane fare for his return flight. And
47
finally, being compelled to litigate his claims, it is but just and
x x x that complainant must be awarded attorneys fees at the
rate of ten percent (10%) of the judgment award.
WHEREFORE, all the foregoing premises considered,
judgment is hereby rendered ordering the respondents to pay
complainant the aggregate sum of US$3,840.00 or its
equivalent in Philippine Currency at the exchange rate
prevailing at the time of payment, and to refund complainants
plane fare for his return flight. Further, respondents are
ordered to pay complainant attorneys fees at the rate of Ten
percent (10%) of the foregoing judgment award.[15]
Petitioner appealed the Decision of the Labor Arbiter to the
NLRC, alleging that the Labor Arbiter, not being a handwriting
expert, committed grave abuse of discretion amounting to
lack of jurisdiction in finding for respondent. In its
Decision[16] dated December 9, 1997, the NLRC upheld this
contention and remanded the case to the Arbitration Branch
of origin for referral to the government agency concerned for
calligraphy examination of the questioned documents.[17]
The case was then re-raffled to Labor Arbiter Enrico Angelo
Portillo. On September 11, 1998, the parties agreed to a
resetting to enable petitioner to secure the original copies of
documents from its foreign principal. However, on December
9, 1998, the parties agreed to submit the case for resolution
based on the pleadings and on the evidence on record.
This time, the complaint was dismissed for lack of merit.
According to Labor Arbiter Portillo, aside from respondents
bare allegations, he failed to substantiate his claim of poor
working conditions and long hours of employment. The fact
that he executed a handwritten resignation letter is enough
evidence of the fact that he voluntarily resigned from work.
Moreover, respondent failed to submit any evidence to refute
the pay slips duly signed and authenticated by the labor
attach in Saudi Arabia, inasmuch as their probative value
cannot be impugned by mere self-serving allegations. The
Labor Arbiter concluded that as between the oral allegations
of workers that they were not paid monetary benefits and the
documentary evidence presented by employer, the latter
should prevail. [18]
Respondent appealed the decision before the NLRC, alleging
that the Labor Arbiter failed to consider the genuineness of
the signature which appears in the purported resignation
letter dated July 23, 1995, as well as those that appear in the
Labor Standards Notes and Cases 1st
batch
seven pay slips. He insisted that these documents should have
been endorsed to the National Bureau of Investigation
Questioned Documents Division or the Philippine National
Police Crime Laboratory for calligraphy examination.
The NLRC dismissed the appeal for lack of merit in a
Resolution[19] dated December 27, 2000. It held that the
questioned documents could not be endorsed to the agency
concerned since mere photocopies had been submitted in
evidence. The records also revealed that petitioner had
communicated to the foreign employer abroad, who sent the
original copies, but there was no response from respondent.
It also stressed that during the December 9, 1998 hearing, the
parties agreed to submit the case for resolution on the basis
of the pleadings and the evidence on record; if respondent
had wanted to have the documents endorsed to the NBI or
the PNP, he should have insisted that the documents be
examined by a handwriting expert of the government. Thus,
respondent was estopped from assailing the Labor Arbiters
ruling.
Unsatisfied, respondent elevated the matter to the CA via
petition for certiorari. He pointed out that he merely acceded
to the submission of the case for resolution due to the
inordinate delays in the case. Moreover, the questioned
documents were within petitioners control, and it was
petitioner that repeatedly failed to produce the original
copies.
The CA reversed the ruling of the NLRC. According to the
appellate court, a visual examination of the questioned
signatures would instantly reveal significant differences in the
handwriting movement, stroke, and structure, as well as the
quality of lines of the signatures; Labor Arbiter Portillo
committed patent error in examining the signatures, and it is
the decision of Labor Arbiter De Vera which must be upheld.
The CA also pointed out the initial ruling of the NLRC (Second
Division) dated December 9, 1997 which set aside the earlier
decision of Labor Arbiter De Vera included a special directive
to the Arbitration Branch of origin to endorse the questioned
documents for calligraphy examination. However, respondent
Cuambot failed to produce original copies of the documents;
hence, Labor Arbiter Portillo proceeded with the case and
ruled in favor of petitioner G.M.Phils. The dispositive portion
of the CA ruling reads:
IN VIEW OF ALL THE FOREGOING, the instant petition is
hereby GRANTED. Accordingly, the assailed Resolutions dated
48
27 December 2000 and 12 February 2001, respectively, of the
NLRC Second Division are hereby SET ASIDE and the Decision
dated 20 February 1997 rendered by Labor Arbiter Jose De
Vera is hereby REINSTATED.[20]
Petitioner filed a motion for reconsideration, which the CA
denied for lack of merit in its Resolution[21] dated February
20, 2004.
Hence, the present petition, where petitioner claims that
THE COURT OF APPEALS GRAVELY ERRED ON A MATTER OF
LAW IN HOLDING THAT LABOR ARBITER ENRICO PORTILLO
GRAVELY ABUSED HIS DISCRETION WHEN HE HELD THAT THE
SIGNATURES APPEARING ON THE QUESTIONED DOCUMENTS
ARE THOSE OF THE PETITIONER.[22]
Petitioner points out that most of the signatures which Labor
Arbiter De Vera used as standards for comparison with the
signatures appearing on the questioned documents were
those in the pleadings filed by the respondent long after the
questioned documents had been supposedly signed by him. It
claims that respondent affixed his signatures on the pleadings
in question and intentionally made them different from his
true signature so that he could later on conveniently impugn
their authenticity. Petitioner claims that had Labor Arbiter De
Vera taken pains in considering these circumstances, he could
have determined that respondent may have actually
intentionally given a different name and slightly changed his
signature in his application, which name and signature he
used when he signed the questioned letter of resignation and
payslips, only to conveniently disown the same when he came
back to the country to file the present case.[23] Thus,
according to petitioner, the CA clearly committed a palpable
error of law when it reversed the ruling of the NLRC, which in
turn affirmed Labor Arbiter Portillos decision.
For his part, respondent contends that petitioners arguments
were already raised in the pleadings filed before Labor Arbiter
De Vera which had already been passed upon squarely in the
Labor Arbiters Decision of January 30, 1997.
The determinative issues in this case are essentially factual in
nature - (a) whether the signatures of respondent in the
payslips are mere forgeries, and (b) whether respondent
executed the resignation letter. Generally, it is not our
function to review findings of fact. However, in case of a
divergence in the findings and conclusions of the NLRC on the
one hand, and those of the Labor Arbiter and the CA on the
Labor Standards Notes and Cases 1st
batch
other, the Court may examine the evidence presented by the
parties to determine whether or not the employee was
illegally dismissed or voluntarily resigned from employment.
[24] The instant case thus falls within the exception.
We have carefully examined the evidence on record and find
that the petition must fail.
In its Decision[25] dated December 9, 1997, the NLRC had
ordered the case remanded to the Labor Arbiter precisely so
that the questioned documents purportedly signed/executed
by respondent could be subjected to calligraphy examination
by experts. It is precisely where a judgment or ruling fails to
make findings of fact that the case may be remanded to the
lower tribunal to enable it to determine them.[26] However,
instead of referring the questioned documents to the NBI or
the PNP as mandated by the Commissions ruling, Labor
Arbiter Portillo proceeded to rule in favor of petitioner,
concluding that respondents signatures were not forged, and
as such, respondents separation from employment was purely
voluntary. In fine, then, the Labor Arbiter gravely abused his
discretion when he ruled in favor of petitioner without
abiding by the Commissions directive.
We note, however, that a remand of the case at this juncture
would only result in unnecessary delay, especially considering
that this case has been pending since 1995. Indeed, it is this
Courts duty to settle, whenever possible, the entire
controversy in a single proceeding, leaving no root or branch
to bear the seeds of future litigation.[27] Hence, the case
shall be fully resolved on its merits.
We find that petitioners failure to submit the original copies
of the pay slips and the resignation letter raises doubts as to
the veracity of its claim that they were actually
signed/penned by respondent. The failure of a party to
produce the original copy of the document which is in issue
has been taken against such party, and has even been
considered as a mere bargaining chip, a dilatory tactic so that
such party would be granted the opportunity to adduce
controverting evidence.[28] In fact, petitioner did not even
present in evidence the original copy of the employment
contract, much less a machine copy, giving credence to
respondents claim that he was not at all given a copy of the
employment contract after he signed it. What petitioner
presented was a mere photocopy of the OCW Info Sheet[29]
issued by the Philippine Overseas Employment Administration
as well as the Personal Data Sheet[30] which respondent filled
49
up. It bears stressing that the original copies of all these
documents, including the employment contract, were in the
possession of petitioner, or, at the very least, petitioners
principal.
Moreover, as correctly noted by the CA, the opinions of
handwriting experts, although helpful in the examination of
forged documents because of the technical procedure
involved in the analysis, are not binding upon the courts.[31]
As such, resort to these experts is not mandatory or
indispensable to the examination or the comparison of
handwriting. A finding of forgery does not depend entirely on
the testimonies of handwriting experts, because the judge
must conduct an independent examination of the questioned
signature in order to arrive at a reasonable conclusion as to
its authenticity.[32] No less than Section 22, Rule 132 of the
Rules of Court explicitly authorizes the court, by itself, to
make a comparison of the disputed handwriting with writings
admitted or treated as genuine by the party against whom the
evidence is offered or proved to be genuine to the satisfaction
of the judge. Indeed, the authenticity of signatures is not a
highly technical issue in the same sense that questions
concerning, e.g., quantum physics or topology, or molecular
biology, would constitute matters of a highly technical nature.
The opinion of a handwriting expert on the genuineness of a
questioned signature is certainly much less compelling upon a
judge than an opinion rendered by a specialist on a highly
technical issue.[33]
Even a cursory perusal of the resignation letter[34] and the
handwritten pay slips will readily show that they were written
by only one person. A mere layman will immediately notice
that the strokes and letters in the documents are very similar,
if not identical, to one another. It is also quite apparent from a
comparison of the signatures in the pay slips that they are
inconsistent, irregular, with uneven and faltering strokes.
We also find it unbelievable that after having waited for so
long to be deployed to Saudi Arabia and with the hopes of
opportunity to earn a better living within his reach,
respondent would just suddenly decide to abandon his work
and go home due to family problems. At the very least,
respondent could have at least specified the reason or
elaborated on the details of such an urgent matter so as not
to jeopardize future employment opportunities.
That respondent also filed the complaint immediately gives
more credence to his claim that he was illegally dismissed. He
Labor Standards Notes and Cases 1st 50
batch

arrived in the Philippines on July 24, 1995, and immediately
filed his complaint for illegal dismissal two days later, on July
26, 1995.
We are not impervious of petitioners claim that respondent
could have asked another person to execute the resignation
letter for him. However, petitioner failed to present even an
affidavit from a representative of its foreign principal in order
to support this allegation.
petitioner was unable to present ample evidence to prove its
claim that respondent had received all his salaries and
benefits in full.
IN LIGHT OF ALL THE FOREGOING, the Petition is DENIED for
lack of merit. The Decision of the Court of Appeals in CA-G.R.
SP No. 64744 is AFFIRMED. Costs against the petitioners.
SO ORDERED.

Indeed, the rule is that all doubts in the implementation and

the interpretation of the Labor Code shall be resolved in favor
of labor,[35] in order to give effect to the policy of the State to
afford protection to labor, promote full employment, ensure
equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employers, and
to assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane
conditions of work.[36] We reiterate the following
pronouncement in Nicario v. National Labor Relations
Commission:[37]

It is a well-settled doctrine, that if doubts exist between the

evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. It is a
time-honored rule that in controversies between a laborer
and his master, doubts reasonably arising from the evidence,
or in the interpretation of agreements and writing should be
resolved in the formers favor. The policy is to extend the
doctrine to a greater number of employees who can avail of
the benefits under the law, which is in consonance with the
avowed policy of the State to give maximum aid and
protection of labor.
Moreover, one who pleads payment has the burden of
proving it. The reason for the rule is that the pertinent
personnel files, payrolls, records, remittances and other
similar documents which will show that overtime,
differentials, service incentive leave, and other claims of
workers have been paid are not in the possession of the
worker but in the custody and absolute control of the
employer. Thus, the burden of showing with legal certainty
that the obligation has been discharged with payment falls on
the debtor, in accordance with the rule that one who pleads
payment has the burden of proving it.[38] Only when the
debtor introduces evidence that the obligation has been
extinguished does the burden shift to the creditor, who is
then under a duty of producing evidence to show why
payment does not extinguish the obligation.[39] In this case,