Académique Documents
Professionnel Documents
Culture Documents
DECISION
DEL CASTILLO, J p:
Rules of procedure must be used to achieve speedy and
efficient administration of justice and not derail it. When strict
application of the rules on verification and non-forum shopping
will result in patent denial of substantial justice, these rules may
be construed liberally. After all, the ends of justice are better
served when cases are determined on the merits, not on mere
technicality. 1
This Petition for Review on Certiorari assails the
Resolution 2 dated July 12, 2012 of the Court of Appeals (CA) in
CA-G.R. SP No. 125333. The CA dismissed the Petition
for Certiorari filed therewith because of the purported defective
Verification/Certificate of Non-Forum Shopping with Undertaking
appended to the Petition; and of petitioners' violation of Section
3, Rule 46 of the Rules of Court. Also challenged is the CA
Resolution 3 dated October 22, 2012 which denied the Motion for
Reconsideration for lack of merit.
Factual Antecedents
The case stemmed from an amended Complaint 4 for illegal
dismissal and money claims filed by Drs. Lynman Bacolor (Dr.
Bacolor), Jeffrey R. Galura (Dr. Galura), Helen B. Torres (Dr.
Helen), Fritzie C. Villegas (Dr. Villegas), Raymond Canlas (Dr.
Canlas), Zheila C. Torres (Dr. Zheila) and Dax Tidula (Dr. Tidula)
against VL Makabali Hospital, Inc. (the Hospital), Alejandro S.
Makabali, its owner and President, and Melchor Catambing
(Catambing), its Emergency Room (ER) Manager. 5
Allegedly, the Hospital engaged Drs. Bacolor; Galura, Villegas
and Canlas as resident physicians assigned in its ER for one year,
commencing October 2000 until October 2001. It engaged Drs.
Helen and Zheila, also as ER resident physicians, starting March
2001 until March 2002, and January 2002 until January 2003,
respectively. Despite the expiration of their contracts, the
Hospital continued to employ Drs. Bacolor, Galura, Villegas,
Canlas, Helen and Zheila (petitioners). 6
Petitioners stated that on May 3, 2006, Catambing and one
Dr. Lopez instructed them to resign, and re-apply to the Hospital
as resident physicians under a one-year fixed term contract. They
further alleged that Catambing and Dr. Lopez later directed them
to sign a waiver and offered them "gratitude" pay of P27,000.00
but they refused to resign; and because of their refusal,
respondents demoted them as assistant physicians in the
Operating Room (OR) of the Hospital. 7
Additionally, petitioners insisted that to compel them to
resign, respondents issued notices to explain to Drs. Bacolor,
Galura, Helen, Villegas and Canlas. In particular, Drs. Bacolor,
Galura and Helen were charged with dishonesty for allegedly
directing patients to secure laboratory examinations outside the
Hospital; while Drs. Villegas and Canlas were charged with
violation of timekeeping procedure and habitual violation of rules
and regulations. 8 CAIHTE
Consequently, petitioners filed a case for constructive illegal
dismissal against respondents. They argued that despite their
complaint, respondents still conducted an administrative
investigation against them. 9 On June 30, 2006, Drs. Bacolor and
Galura received notices of termination from the Hospital. 10
Petitioners contended that they were constructively
dismissed when respondents demoted them as assistant
physicians in the OR of the Hospital. 11 They stated that such
demotion was neither necessary nor temporary, and was
arbitrarily done to force them to resign. They further averred that
Drs. Bacolor and Galura were actually illegally dismissed after they
were given respective notices of termination. 12
On the other hand, Dr. Tidula stated that the Hospital
engaged him as resident physician for a year commencing on
January 1, 2001 to December 31, 2001; the Hospital renewed his
contract for the year 2002 to 2003; and after his contract expired,
the Hospital continued to engage his services. 13
Dr. Tidula likewise alleged that in 2005, several resident
physicians in the Hospital resigned. As a result, the remaining
resident physicians were made to fill in their duties. Allegedly, it
was agreed upon that when a resident doctor was absent, a
reliever would take his place; and the reliever's fee would be
charged against the salary of the absent doctor. Dr. Tidula claimed
that the reliever shall punch in the time card of the absent doctor
for recording, accounting and expediency purposes. 14
Furthermore, Dr. Tidula asserted that in February 2006, Dr.
Amelita Lising (Dr. Lising), who was a resident physician, went on
leave. He averred that being the acting Chief Resident, he
implemented the agreement regarding the designation of
reliever. He stated that the relievers of Dr. Lising were made to
punch in and out her time card to prove that they had taken her
place; and they received salary from that intended for Dr.
Lising. 15
Dr. Tidula narrated that on May 3, 2006, he and his fellow
residents were directed to resign with the promise that they
would be re-engaged under a fixed term of one year. He averred
that Catambing and Dr. Lopez also instructed him and the other
resident physicians to tender their resignation and sign a waiver
in favor of the Hospital. He alleged that they were also offered
P27,000.00 as financial assistance; however, he and the other
resident physicians refused to resign. 16
Additionally, Dr. Tidula alleged that on May 16, 2006, he was
ordered to report exclusively at the OR of the Hospital as assistant
physician; and this demotion was a result of his refusal to resign.
Consequently, he filed a complaint for constructive dismissal
against the Hospital. 17
Later, Catambing gave Dr. Tidula a Notice 18 of dismissal for
violation of timekeeping procedure. Dr. Tidula stated that he
inquired from Catambing why he was not given any notice to
explain. Purportedly, Catambing informed him that a notice to
explain was sent through a private courier. Upon verification, Dr.
Tidula discovered that the notice was delivered to a person
unknown to him. He informed the Hospital about the matter but
the Hospital insisted that he was given the opportunity to explain
and was invited to an investigation, as such, the sanction against
him remains. 19
Dr. Tidula argued that he was illegally dismissed since he did
not receive a notice to explain; and he did not violate any of the
company rules. 20
For their part, respondents asserted that Drs. Tidula, Bacolor
and Galura were validly dismissed. In particular, they alleged that
Dr. Tidula violated timekeeping procedure of the Hospital when
he punched in Dr. Lising's time card on February 2, 6, 10 and 12,
2006. 21 On the other hand, Drs. Bacolor and Galura were found
guilty of referring patients to other clinics for laboratory
examination in February 2006. 22
Moreover, respondents claimed that the Hospital did not
dismiss Drs. Helen, Villegas and Canlas; thus, they should be
dropped from the complaint. They added that Dr. Zheila was
never cited for any infraction but she abandoned her work as she
had been absent since July 2006. 23
Ruling of the Labor Arbiter
On July 23, 2010, the LA rendered a Decision 24 finding
respondents guilty of illegally dismissing petitioners and Dr.
Tidula, as well as ordering respondents to pay them backwages
from the time of their dismissal until finality of the Decision, and
separation pay. The LA also ordered the Hospital to pay
petitioners and Dr. Tidula moral damages of P100,000.00 each
and exemplary damages of P100,000.00 each, and attorney's
fees. DETACa
The Hospital appealed to the National Labor Relations
Commission (NLRC). 25
Ruling of the National Labor Relations Commission
On November 11, 2011, the NLRC reversed and set aside the
LA Decision and dismissed the complaints. 26 It held that there
was no showing that petitioners and Dr. Tidula were demoted,
and that such demotion amounted to constructive dismissal. It
ruled that "it would be difficult to discern the differences between
the duties of a resident and assistant physician, as both
indubitably perform doctor's duties." 27 Also, the NLRC decreed
that Dr. Zheila did not even sign the verification and certificate of
non-forum shopping in this case.
Moreover, the NLRC gave credence to respondents' position
that Drs. Bacolor and Galura were validly dismissed because they
repeatedly referred patients to another clinic for laboratory
examinations. It ruled that such was an act of deceit because the
Hospital offered the same services.
On April 18, 2012, the NLRC denied petitioners and Dr.
Tidula's motion for reconsideration. 28
Aggrieved, petitioners filed a Petition for Certiorari with the
CA ascribing grave abuse of discretion on the part of the NLRC in
giving due course to the appeal despite its alleged lack of appeal
bond; and in reversing the LA Decision.
The Petition was accompanied by three separate
Verifications/Certificates of Non-Forum Shopping signed by Drs.
Galura, Bacolor and Helen. 29 Atty. Carlos Raphael N. Francisco
executed and signed a Verification/Certificate of Non-Forum
Shopping with Undertaking in behalf of Drs. Villegas, Canlas and
Zheila. 30
Ruling of the Court of Appeals
On July 12, 2012, the CA issued the assailed Resolution, the
pertinent portions of which read:
The Petition for Certiorari contains the following
infirmities, hence is DISMISSED:
1. The Verification/Certification of Non-
Forum Shopping With Undertaking attached
to the Petition is executed by Atty. Carlos
Raphael N. Francisco, allegedly [sic] counsel
of record of petitioners Fritzie C. Villegas,
Raymond Canlas and Zeila C. Torres, not by
the three petitioners themselves, in
violation of Rule 7, Section 5 of the Rules of
Court, and the ruling in Far Eastern Shipping
Company v. Court of Appeals, et al.
2. The Petition does not indicate in its title
that Dax Tidula is a party respondent,
although in the portion entitled 'Parties' he
is so named, and does not indicate the
address of Dax Tidula, all in violation of Rule
46, Section 3 of the Rules of Court, in
relation to Rule 65 of the same Rules.
SO ORDERED. 31
On October 22, 2012, the CA denied petitioners' Motion for
Reconsideration. 32
Aggrieved, petitioners filed this Petition raising the following
assignment of errors:
[1] THE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY NOT PROBABLY IN
ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE HONORABLE COURT WHEN THE
COURT OF APPEALS DISMISSED THE PETITION
FOR CERTIORARI OF THE PETITIONERS DESPITE THE
FACT THAT SEVERAL OF THE PETITIONERS HAD
VALIDLY EXECUTED VERIFICATIONS AND
CERTIFICATES OF NON-FORUM SHOPPING WHICH
WERE ATTACHED TO SAID PETITION
FOR CERTIORARI;
[2] THE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY NOT PROBABLY IN
ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE HONORABLE COURT WHEN THE
COURT OF APPEALS DISMISSED THE PETITION
FOR CERTIORARI OF THE PETITIONERS DESPITE THE
FACT THAT THE PETITIONERS HAD SUBSTANTIALLY
COMPLIED WITH THE RULES ON THE EXECUTION
OF A VERIFICATION AND CERTIFICATE OF NON-
FORUM SHOPPING; aDSIHc
[3] THE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY NOT PROBABLY IN
ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE HONORABLE COURT WHEN THE
COURT OF APPEALS DISMISSED THE PETITION
FOR CERTIORARI OF THE PETITIONERS DESPITE THE
FACT THAT THE ONLY KNOWN ADDRESS OF
RESPONDENT TIDULA WAS INCLUDED IN THE
PETITION FOR CERTIORARI AND THAT
RESPONDENT TIDULA, THROUGH HIS COUNSEL,
WAS SERVED WITH A COPY OF SUCH PETITION
FOR CERTIORARI;
[4] THE COURT OF APPEALS SANCTIONED A DEPARTURE
BY THE NLRC IN NLRC CASE NO[.] RAB. III-06-10180-
06 FROM THE ACCEPTED OR USUAL COURSE OF
JUDICIAL PROCEEDINGS AS THE COURT OF
APPEALS ALLOWED THE NLRC TO VIRTUALLY
EXTEND THE PERIOD OF THE RESPONDENT
HOSPITAL TO FILE AN APPEAL FOR ALMOST FOUR
MONTHS FROM THE EXPIRATION OF THE PERIOD
TO FILE SUCH APPEAL;
[5] THE COURT OF APPEALS SANCTIONED A DEPARTURE
BY THE NLRC IN NLRC CASE NO[.] RAB. III-06-10180-
06 FROM THE ACCEPTED OR USUAL COURSE OF
JUDICIAL PROCEEDINGS AS THE COURT OF
APPEALS ALLOWED THE NLRC TO GIVE DUE
COURSE TO AN APPEAL THAT WAS CLEARLY FILED
OUT OF TIME AND TO MODIFY THE DECISION OF
THE LABOR ARBITER THAT WAS ALREADY FINAL
AND EXECUTORY; and
[6] THE COURT OF APPEALS SANCTIONED A DEPARTURE
BY THE NLRC IN NLRC CASE NO[.] RAB. III-06-10180-
06 FROM THE ACCEPTED OR USUAL COURSE OF
JUDICIAL PROCEEDINGS AS THE COURT OF
APPEALS TOLERATED THE GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION COMMITTED BY THE NLRC IN
REVERSING IN TOTO THE DECISION OF THE LABOR
ARBITER DESPITE THE FACT THAT SUCH REVERSAL
IS NOT SUPPORTED BY ANY EVIDENCE ON RECORD
AND BY THE APPLICABLE LAWS. 33
Petitioners argue that the verifications executed by three of
the six petitioners and the verification executed by their counsel
constituted full compliance with the required verification. They
contended that the three petitioners who made their verification
are real parties-in-interest, and their counsel who also verified the
Petition had been in possession of authentic and relevant records
of the case.
Also, petitioners posit that the failure of Drs. Villegas, Canlas
and Zheila to execute a certificate of non-forum shopping should
not have caused the dismissal of the Petition for Certiorari. They
insist that under justifiable circumstances, the signature of one of
the petitioners in the certificate against forum shopping
substantially complies with the rules. They further point out that
all of them share a common interest and invoke a common cause
of action under the same set of facts.
Moreover, petitioners submit that they complied with
Section 3, Rule 46 of the Rules of Court. They contend that they
included Dr. Tidula in the Petition for Certiorari as respondent
because he remains interested in the reversal of the NLRC
Decision and Resolution. They add that from the inception of the
case, all pleadings had been coursed through Dr. Tidula's counsel;
and they are unaware of the address of Dr. Tidula as he never
indicated it in his position paper. Hence, they maintain that it is
fair that in the present proceeding, any pleading intended for Dr.
Tidula be sent to his counsel.
In addition, petitioners state that the non-inclusion of Dr.
Tidula is not a fatal defect but a mere typographical error which
does not prejudice the rights of any party.
Finally, petitioners fault the CA in not finding that the NLRC
committed grave abuse of discretion in giving due course to the
Hospital's appeal despite its failure to post appeal bond within the
period to perfect an appeal. They also maintain that the NLRC
committed grave abuse of discretion in holding that they were not
illegally dismissed by respondents.
The Hospital, on the other hand, asserts that the CA correctly
dismissed the Petition because it was filed by a counsel who had
no authority from petitioners; and that the Certificate against
Forum Shopping attached thereto was fatally defective. It also
declares that the Petition for Certiorari improperly impleaded Dr.
Tidula as respondent. Lastly, it contends that petitioners are not
entitled to money claims.
Our Ruling
The Petition is meritorious.
In Altres v. Empleo, 34 the Court summarized the basic
tenets involving non-compliance with the requirements on, or
filing of defective verification and certificate against forum
shopping, to wit:
1) A distinction must be made between non-
compliance with the requirement on or submission of
defective verification, and non-compliance with the
requirement on or submission of defective certification
against forum shopping.
2) As to verification, non-compliance therewith or a
defect therein does not necessarily render the pleading
fatally defective. The court may order its submission or
correction or act on the pleading if the attending
circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of
justice may be served thereby.
3) Verification is deemed substantially complied with
when one who has ample knowledge to swear to the
truth of the allegations in the complaint or petition
signs the verification, and when matters alleged in the
petition have been made in good faith or are true and
correct.
4) As to certification against forum shopping, non-
compliance therewith or a defect therein, unlike in
verification, is generally not curable by its subsequent
submission or correction thereof, unless there is a need
to relax the Rule on the ground of "substantial
compliance" or presence of "special circumstances or
compelling reasons".
5) The certification against forum shopping must be
signed by all the plaintiffs or petitioners in a case;
otherwise, those who did not sign will be dropped as
parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or
petitioners share a common interest and invoke a
common cause of action or defense, the signature of
only one of them in the certification against forum
shopping substantially complies with the Rule.
6) Finally, the certification against forum shopping
must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable
reasons, the party-pleader is unable to sign, he must
execute a Special Power of Attorney designating his
counsel of record to sign on his behalf. ETHIDa
The CA dismissed the Petition for Certiorari on the ground
that the Verification/Certificate of Non-Forum Shopping executed
by petitioners' counsel on behalf of Drs. Villegas, Canlas and Zheila
violated Section 5, Rule 7 of the Rules of Court. 35
As properly pointed out by the CA, the
Verification/Certificate of Non-Forum Shopping with Undertaking
executed by petitioners' counsel is not valid. As stated in Altres, a
certificate against forum shopping must be signed by the party
and in case his counsel signs the same on his behalf, the counsel
must be armed with a special power of attorney. Since
petitioners' counsel is not shown to have been authorized by Drs.
Villegas, Canlas and Zheila to sign a certificate of non-forum
shopping on their behalf, the execution of said certificate by
counsel violates the foregoing rules.
Nonetheless, the CA failed to consider the concept of
"substantial compliance" to the requirements of verification and
certificate of non-forum shopping, as it has been shown that three
of the six petitioners executed their own verification and
certificate against forum shopping.
The verification of a pleading is a formal and not a
jurisdictional requirement. It is intended to assure that the
allegations in a pleading are true and correct. As such, the court
may order the correction of unverified pleadings, or it may act on
them and waive strict compliance with the rules. 36
The verification requirement is deemed substantially
complied with when a person who has sufficient knowledge to
swear to the truth of the allegations in the complaint or petition
signs the verification; and matters alleged therein have been
made in good faith or are true and correct. Thus, there is
substantial compliance if at least one of the petitioners makes a
proper verifcation. 37
In Ateneo de Naga University v. Manalo, 38 the signature of
one of three petitioners therein was considered substantial
compliance with the verification requirement. The Court held that
Fr. Tabora, the petitioner who signed the verification, has
sufficient knowledge to swear to the truth of the allegations in the
petition filed with the CA; and his signature was ample assurance
that the allegations have been made in good faith or are true and
correct.
In SKM Art Craft Corporation v. Bauca, 39 the Court held that
the verification and certificate against forum shopping signed by
nine out of 23 respondents substantially complied with the
verification requirement since they have common interest and
cause of action. The Court likewise stated that the apparent merit
of the petition and the conflicting findings of the LA and the NLRC
also justified the decision of the CA to resolve the case on the
merits.
In this case, three out of six petitioners signed three separate
verifications appended to the Petition for Certiorari. Their
signatures are sufficient assurance that the allegations in the
Petition were made in good faith, or are true and correct. Thus,
there is substantial compliance with the verification requirement.
On the other hand, as a rule, the certificate against forum
shopping must be signed by all plaintiffs or petitioners; otherwise,
those who did not sign will be dropped as parties to the case.
Under reasonable or justifiable situations, such as when the
plaintiffs or petitioners share a common interest and invoke a
common cause of action or defense, the signature of one of them
in the certificate against forum shopping is considered substantial
compliance with the rules. 40
In Abaria v. National Labor Relations Commission, 41 47 out
of 88 petitioners signed the certificate against forum shopping.
The Court ruled that the petitioning employees shared a common
interest and cause of action when they filed the case for illegal
dismissal. The Court decreed that when petitioners therein
appealed to the CA, they pursued the case as a collective body,
invoking one argument in support of their cause of action, which
is, the illegal dismissal purportedly committed by their employer
when union members resorted to strike due to the employer's
refusal to bargain with officers of the local chapter.
Furthermore, in Torres v. Specialized Packaging
Development Corp., 42 the Court allowed the relaxation of the
rules on submission of certificate against forum shopping. One of
the compelling grounds for the allowance of said certificate
therein where only two of 25 petitioners signed the same was the
"apparent merits of the substantive aspects of the case." It noted
that the varying views of the LA and the NLRC give ample basis for
the necessity of a review on the merits and the outright dismissal
of the petition was prejudicial to the parties' substantive rights.
Here, three of six petitioners signed the certificate of non-
forum shopping. At the least, the CA could have ordered that
those who did not sign it be dropped as parties, but not the
outright dismissal of the Petition.
The Court, nevertheless, holds that there are justifiable
reasons for the relaxation of the rules on the filing of a certificate
of non-forum shopping and that the certificate against forum
shopping signed by three out of six petitioners suffices.
Specifically, petitioners' cause of action revolves on the
same issue, that is, respondents illegally dismissed them under
similar circumstances. They were all resident physicians who were
purportedly 1) re-employed by the Hospital even after the
expiration of their respective one year contracts; 2) forced to
resign and offered to be re-engaged as fixed term employees but
declined; 3) demoted; 4) accused of violations of the Hospital
rules and regulations; and, 5) dismissed.
Moreover, substantial justice dictates that the Petition
for Certiorari be given due course and be resolved on the merits.
This is especially so since the findings of the LA are contrary to
those of the NLRC, 43 particularly on the issues of whether
respondents illegally dismissed petitioners and of whether they
were afforded due process of law.
The requirement of strict compliance with the rules on filing
of certificate against forum shopping highlights the mandatory
character of the submission of such certificate. However, this
mandatory requirement allows substantial compliance provided
that there are justifiable circumstances for the relaxation of the
rules. 44
Furthermore, the CA dismissed the Petition
for Certiorari because it did not indicate in its title that Dr. Tidula
is a party respondent and the Petition did not state Dr. Tidula's
actual address. The CA held that these omissions violate Section
3, 45Rule 46 of the Rules of Court, in relation to Rule 65 thereof.
We do not agree.
Since Dr. Tidula was included as one of the respondents in
the body of the Petition, then the CA could have clarified with
petitioners the non-inclusion of Dr. Tidula in the title and could
have ordered the title rectified. cSEDTC
Likewise, the Court finds that the failure to state the address
of Dr. Tidula is insufficient to cause the dismissal of the Petition.
The lack of address of Dr. Tidula is not a fatal defect as he had
been represented by his counsel in the case. The indication that
the party "could be served with process care of his counsel was
substantial compliance with the Rules." And, when a party has
appeared through counsel, service is to be made upon the
counsel, unless the court expressly orders that it be made upon
the party. 46
In view of the foregoing, a remand of the case to the CA for
proper disposition on the merits is deemed proper.
WHEREFORE, the Petition is GRANTED. The July 12, 2012
and October 22, 2012 Resolutions of the Court of Appeals in CA-
G.R. SP No. 125333 are REVERSED and SET ASIDE. The case
is REMANDED to the Court of Appeals for appropriate disposition.
SO ORDERED.
||| (Bacolor v. VL Makabali Memorial Hospital, Inc., G.R. No.
204325, [April 18, 2016])
RESOLUTION
DEL CASTILLO, ** J p:
This is a Petition for Review on Certiorari 1 of the Court of
Appeals (CA) Decision 2 dated August 9, 2011 and
Resolution 3 dated December 7, 2011 in CA-G.R. SP No. 117199,
which affirmed the National Labor Relations Commission (NLRC)
Resolution 4 dated June 29, 2010 and Resolution 5 dated
September 27, 2010 denying the appeal of petitioners U-Bix
Corporation and Edilberto B. Bravo (petitioners) from Labor
Arbiter Enrique S. Flores, Jr.'s (Labor Arbiter Flores) Order 6dated
April 16, 2010 approving the recomputation of the monetary
award in favor of respondent Valerie Anne H. Hollero
(respondent) and ordering the issuance of a writ of execution.
Factual Antecedents
Petitioners filed a complaint against respondent for
reimbursement of training costs plus interest, exemplary
damages, attorney's fees and litigation expenses, docketed as
NLRC-NCR-Case No. 00-05-03696-97. On the other hand,
respondent filed against petitioners a complaint for illegal
dismissal, unpaid wages, backwages, moral and exemplary
damages, and attorney's fees, docketed as NLRC-NCR-Case No.
00-08-05988-97. The two complaints were later on consolidated.
In a Decision 7 dated February 8, 1999, the Labor Arbiter
found respondent's dismissal to be valid; she was also ordered to
reimburse the amount spent by petitioners for her training, with
interest at the rate of 12% per annum. 8
On appeal, the NLRC reversed the Labor Arbiter's Decision.
Finding respondent to have been illegally dismissed, it awarded
her backwages from the date of her dismissal up to the date of
the NLRC Decision and separation pay in lieu of reinstatement due
to strained relations. Anent petitioners' complaint for
reimbursement, the NLRC held that the same is one for collection
of sum of money over which it has no jurisdiction. Hence, the
dispositive portion of the NLRC Resolution dated July 12, 1999: 9
WHEREFORE, premises considered, the assailed
decision dated February 8, 1999, is hereby REVERSED
and SET ASIDE and a new one entered as follows:
A. Dismissing the complaint of the [petitioner] U-
BIX CORPORATION, in NLRC NCR Case No. 00-05-
03696-97 for lack of jurisdiction; and
B. Finding the dismissal of [respondent] Valerie
Anne H. Hollero in NLRC NCR Case No. 00-08-05988-97
to be illegal thereby ordering [petitioners] U-BIX
CORPORATION/Edilberto B. Bravo to pay the former
the following:
1. Backwages P520,000.00
2. Separation Pay 60,000.00; and
––––––––––––
TOTAL P580,000.00
===========
DEL CASTILLO, J p:
A contractor is presumed to be a labor-only contractor, unless it
proves that it has the substantial capital, investment, tools and the
like. However, where the principal is the one claiming that the
contractor is a legitimate contractor, the burden of proving the
supposed status of the contractor rests on the principal. 1
This Petition for Review on Certiorari 2 assails the Decision 3 dated
May 10, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 01291
which granted the Petition for Certiorari filed therewith, reversed
and set aside the February 18, 2005 Decision 4 and August 24, 2005
Resolution 5 of the National Labor Relations Commission (NLRC) in
NLRC Case No. V-000481-2003 and dismissed the Complaint for
illegal dismissal filed by petitioners Avelino Alilin (Alilin), Teodoro
Calesa (Calesa), Charlie Hindang (Hindang), Eutiquio Gindang
(Gindang), Allan Sungahid (Sungahid), Maximo Lee (Lee), Jose G.
Morato (Morato), Rex Gabilan (Gabilan) and Eugema L. Laurente
(Laurente) against respondent Petron Corporation (Petron). Also
assailed in this Petition is the CA Resolution 6 dated March 30, 2007
which denied petitioners' Motion for Reconsideration 7 and
Supplemental Motion for Reconsideration. 8
Factual Antecedents
Petron is a domestic corporation engaged in the oil business. It owns
several bulk plants in the country for receiving, storing and
distributing its petroleum products.
In 1968, Romualdo D. Gindang Contractor, which was owned and
operated by Romualdo D. Gindang (Romualdo), started recruiting
laborers for fielding to Petron's Mandaue Bulk Plant. When
Romualdo died in 1989, his son Romeo D. Gindang (Romeo), through
Romeo D. Gindang Services (RDG), took over the business and
continued to provide manpower services to Petron. Petitioners were
among those recruited by Romualdo D. Gindang Contractor and RDG
to work in the premises of the said bulk plant, with the
corresponding dates of hiring and work duties, to wit:
Employees Date of Hiring Duties
Eugema L.
June 1979 telephone operator/order taker
Laureate
Teodoro Calesa August 1, 1981 utility/tanker receiver/barge
loader/sounder/gauger
September 18,
Allan P. Sungahid filler/sealer/painter/tanker
1990
receiver/utility
September 18,
Maximo S. Lee gasul filler/painter/utility
1990
Avelino S. Alilin July 16, 1992 carpenter/driver
DEL CASTILLO, J p:
This Court's labor pronouncements must be read and applied with
utmost care and caution, taking to mind that in the very heart of the
judicial system, labor cases occupy a special place. More than the
State guarantees of protection of labor and security of tenure, labor
disputes involve the fundamental survival of the employees and
their families, who depend upon the former for all the basic
necessities in life.
This Petition for Review on Certiorari 1 seeks a modification of the
November 30, 2006 Decision 2 of the Court of Appeals (CA) in CA-
G.R. SP No. 00806. Also assailed is the November 15, 2007
Resolution 3 denying petitioner's Motion for Reconsideration.
Factual Antecedents
The facts, as found by the CA, are as follows:
This is a case for illegal dismissal with a claim for the
payment of salaries corresponding to the unexpired
term of the contract, damages and attorney's fees filed
by private respondent [Lorenzo T. Tangga-an] against
the petitioners [Philippine Transmarine Carriers, Inc.,
Universe Tankship Delaware LLC, and Carlos C.
Salinas 4 or herein respondents].
In his position paper, [Tangga-an] alleged that on
January 31, 200[2], he entered into an overseas
employment contract with Philippine Transmarine
Carriers, Inc. (PTC) for and in behalf of its foreign
employer, Universe Tankship Delaware, LLC. Under the
employment contract, he was to be employed for a
period of six months as chief engineer of the vessel the
S.S. "Kure". He was to be paid a basic salary of
US$5,000.00; vacation leave pay equivalent to 15 days a
months [sic]or US$2,500.00 per month and tonnage
bonus in the amount of US$700.00 a month. aDHScI
On February 11, 2002, [Tangga-an] was deployed. While
performing his assigned task, he noticed that while they
were loading liquid cargo at Cedros, Mexico, the vessel
suddenly listed too much at the bow. At that particular
time both the master and the chief mate went on shore
leave together, which under maritime standard was
prohibited. To avoid any conflict, he chose to ignore the
unbecoming conduct of the senior officers of the vessel.
On or about March 13, 2002, the vessel berthed at a port
in Japan to discharge its cargo. Thereafter, it sailed to the
U.S.A. While the vessel was still at sea, the master
required [Tangga-an] and the rest of the Filipino
Engineer Officers to report to his office where they were
informed that they would be repatriated on account of
the delay in the cargo discharging in Japan, which was
principally a duty belonging to the deck officers. He
imputed the delay to the non-readiness of the turbo
generator and the inoperation of the boom, since the
turbo generator had been prepared and synchronized
for 3.5 hours or even before the vessel arrived in Japan.
Moreover, upon checking the boom, they found the
same [sic]operational. Upon verification, they found out
that when the vessel berthed in Japan, the cargo hold
was not immediately opened and the deck officers
concerned did not prepare the stock. Moreover, while
cargo discharging was ongoing, both the master and the
chief mate again went on shore leave together at 4:00 in
the afternoon and returned to the vessel only after
midnight. To save face, they harped on the Engine
Department for their mistake. [Tangga-an] and the other
Engineering [O]fficers were ordered to disembark from
the vessel on April 2, 2002 and thereafter repatriated.
Thence, the complaint. DITEAc
[Philippine Transmarine Carriers, Inc., Universe Tankship
Delaware LLC, and Carlos C. Salinas] on the other hand,
contended that sometime on [sic] March 2002, during a
test of the cargo discharging conveyor system, [Tangga-
an] and his assistant engineers failed to start the
generator that supplied power to the conveyor. They
spent 3 hours trying to start the generator but failed. It
was only the third assistant engineer who previously
served in the same vessel who was able to turn on the
generator. When the master tried to call the engine
room to find out the problem, [Tangga-an] did not
answer and merely hang [sic] up. The master proceeded
to the engine room to find out the problem
by [sic] [Tangga-an] and his assistant engineers were
running around trying to appear [busy].
At another time, during a cargo discharging operation
requiring the use of a generator system and the
conveyor boom, [Tangga-an] was nowhere to be found.
Apparently, he went on shore leave resulting in a delay
of 2 hours because the machine could not be operated
well. Both incidents were recorded in the official
logbook. Due to the delay, protests were filed by the
charter [sic]. The master required [Tangga-an] to submit
a written explanation to which he did but blamed the
captain and the chief officer. He failed to explain why he
did not personally supervise the operation of the
generator system and the conveyor boom during the
cargo discharging operations. His explanation not having
been found satisfactory, [respondents] decided to
terminate [Tangga-an's] services. Thus, a notice of
dismissal was issued against [Tangga-an]. He arrived in
the Philippines on April 4, 2002. 5
Tangga-an filed a Complaint 6 for illegal dismissal with prayer for
payment of salaries for the unexpired portion of his contract, leave
pay, exemplary and moral damages, attorney's fees and interest.
On January 27, 2004, Labor Arbiter Jose G. Gutierrez rendered a
Decision 7 finding petitioner to have been illegally dismissed. The
Labor Arbiter noted that in petitioner's letter to respondent
Universe Tankship Delaware, LLC dated April 1, 2002 8 he
categorically denied any negligence on his part relative to the delay
in the discharge of the cargo while the vessel was berthed in Japan.
In view thereof, the Labor Arbiter opined that an investigation
should have been conducted in order to ferret out the truth instead
of dismissing petitioner outright. Consequently, petitioner's
dismissal was illegal for lack of just cause and for failure to comply
with the twin requirements of notice and hearing. 9 EcDTIH
As regards petitioner's claim for back salaries, the Labor Arbiter
found petitioner entitled not to four months which is equivalent to
the unexpired portion of his contract, but only to three months,
inclusive of vacation leave pay and tonnage bonus (or US$8,200 x 3
months = US$24,600) pursuant to Section 10 of Republic Act (RA)
No. 8042 or The Migrant Workers and Overseas Filipinos Act of
2005.
Regarding petitioner's claim for damages, the same was denied for
failure to prove bad faith on the part of the respondents. However,
attorney's fees equivalent to 10% of the total back salaries was
awarded because petitioner was constrained to litigate.
The dispositive portion of the Labor Arbiter's Decision, reads:
WHEREFORE, the foregoing premises considered,
judgment is hereby rendered finding [Tangga-an]
illegally dismissed from his employment and directing
the respondent Phil. Transmarine Carriers, Inc. to pay
[Tangga-an] the amount of US$24,600.00 PLUS
US$2,460.00 attorney's fees or a total aggregate amount
of US Dollars: TWENTY SEVEN THOUSAND SIXTY
(US$27,060.00) or its peso equivalent at the exchange
rate prevailing at the time of payment.
SO ORDERED. 10
Ruling of the National Labor Relations Commission
Respondents appealed to the National Labor Relations Commission
(NLRC). They claimed that the Labor Arbiter committed grave abuse
of discretion in finding that petitioner was illegally dismissed; in
awarding unearned vacation leave pay and tonnage bonus when the
law and jurisprudence limit recovery to the employee's basic salary;
and in awarding attorney's fees despite the absence of proof of bad
faith on their part.
On August 25, 2004, the NLRC issued its Decision, 11 the dispositive
portion of which reads:
WHEREFORE, the Decision dated January 27, 2004 of the
Labor Arbiter is AFFIRMED.
Respondents-appellants['] Memorandum of Appeal,
dated 23 March 2004 is DISMISSED for lack of merit.
SO ORDERED. 12 HSaIDc
The NLRC affirmed the finding of illegal dismissal. It held that no
notice of hearing was served upon petitioner, and no hearing
whatsoever was conducted on the charges against him. It ruled that
respondents could not dispense with the twin requirements of
notice and hearing, which are essential elements of procedural due
process. For this reason, no valid cause for termination has been
shown. The NLRC likewise found respondents guilty of bad faith in
illegally dismissing petitioner's services.
On the issue covering the award of unearned vacation leave pay and
tonnage bonus, the NLRC struck down respondents' arguments and
held that in illegal dismissal cases, the employee is entitled to all the
salaries, allowances and other benefits or their monetary
equivalents from the time his compensation is withheld from him
until he is actually reinstated, in effect citing Article 279 13 of
the Labor Code.It held that vacation leave pay and tonnage bonus
are provided in petitioner's employment contract, which thus
entitles the latter to the same in the event of illegal dismissal.
Finally, on the issue of attorney's fees, the NLRC held that since
respondents were found to be in bad faith for the illegal dismissal
and petitioner was constrained to litigate with counsel, the award of
attorney's fees is proper.
Respondents moved for reconsideration which was denied by the
NLRC in its March 18, 2005 Resolution. 14
Ruling of the Court of Appeals
Respondents went up to the CA by Petition for Certiorari, 15 seeking
to annul the Decision of the NLRC, raising essentially the same issues
taken up in the NLRC.
On November 30, 2006, the CA rendered the assailed Decision, the
dispositive portion of which reads, as follows:
WHEREFORE, premises considered, the instant petition
is PARTIALLY GRANTED. The Decision of public
respondent is MODIFIED in the following
manner: cDHCAE
a. [Tangga-an] is entitled to three (3) months salary
representing the unexpired portion of his contract in the
total amount of US$15,000.00 or its peso equivalent at
the exchange rate prevailing at the time of payment;
b. [Tangga-an's] placement fee should be reimbursed
with 12% interest per annum;
c. [T]he award of attorney's fees is deleted.
SO ORDERED. 16
The CA adhered to the finding of illegal dismissal. But on the subject
of monetary awards, the CA considered only petitioner's monthly
US$5,000.00 basic salary and disregarded his monthly US$2,500.00
vacation leave pay and US$700.00 tonnage bonus. It likewise held
that petitioner's "unexpired portion of contract" for which he is
entitled to back salaries should only be three months pursuant to
Section 10 17 of RA 8042. In addition, petitioner should be paid back
his placement fee with interest at the rate of twelve per
cent (12%) per annum.
As to attorney's fees, the CA did not agree with the NLRC's finding
that bad faith on the part of respondents was present to justify the
award of attorney's fees. It held that there is nothing from the facts
and proceedings to suggest that respondents acted with dishonesty,
moral obliquity or conscious doing of wrong in terminating
petitioner's services.
Petitioner filed a Motion for (Partial) Reconsideration, 18 which was
denied in the assailed November 15, 2007 Resolution. Thus, he filed
the instant Petition. cEASTa
Issues
In this Petition, Tangga-an seeks a modification of the CA Decision
and the reinstatement of the monetary awards as decreed in the
Labor Arbiter's January 27, 2004 Decision, or in the alternative, the
grant of back salaries equivalent to four months which corresponds
to the unexpired portion of the contract, inclusive of vacation leave
pay and tonnage bonus, plus 10% thereof as attorney's fees. 19
Petitioner submits the following issues for resolution:
I. Whether . . . the CA's issuance of the writ
of certiorari reversing the NLRC decision is in accordance
with law[;]
II. Whether . . . the indemnity provided in Section 10, R.
A. 8042 . . . be limited only to the seafarer's basic
monthly salary or . . . include, based on civil law concept
of damages as well as Labor Code concept of backwages,
allowances/benefits or their monetary equivalent as a
further relief to restore the seafarer's income that was
lost by reason of his unlawful dismissal[;]
III. Whether . . . the indemnity awarded by the CA in
petitioner's favor consisting only of 3 months' basic
salaries [conform] with the proper interpretation of
Section 10 R. A. 8042 and with the ruling in Skippers
Pacific, Inc. v. Mira, et al., G.R. No. 144314, November
21, 2002 and related cases or is petitioner entitled to at
least 4 months salaries being the unexpired portion of
his contract[; and]
IV. Whether . . . the CA's disallowance of the award of
attorney's fees, based on the alleged absence of bad
faith on the part of respondent, is in accordance with law
or is the attorney's fees awarded by the NLRC to
petitioner, who was forced to litigate to enforce his
rights, justified . . .[.] 20
Petitioner's Arguments
Petitioner essentially contends that respondents' resort to an
original Petition for Certiorari in the CA is erroneous because the
issues they raised did not involve questions of jurisdiction but of fact
and law. He adds that the CA Decision went against the factual
findings of the labor tribunals which ought to be binding, given their
expertise in matters falling within their jurisdiction.
Petitioner likewise contends that the CA erred in excluding his
vacation leave pay and tonnage bonus in the computation of his back
salaries as they form part of his salaries and benefits under his
employment contract with the respondents, a covenant which is
deemed to be the law governing their relations. He adds that under
Article 279 of the Labor Code,he is entitled to full backwages
inclusive of allowances and other benefits or their monetary
equivalent from the time his compensation was withheld up to the
time he is actually reinstated.
Petitioner accuses the CA of misapplying the doctrine laid down
in Skippers Pacific, Inc. v. Skippers Maritime Services, Ltd. 21 He
points out that the CA wrongly interpreted and applied what the
Court said in the case, and that the pronouncement therein should
have benefited him rather than the respondents. DHCcST
Petitioner would have the Court reinstate the award of attorney's
fees, on the argument that the presence of bad faith is not necessary
to justify such award. He maintains that the grant of attorney's fees
in labor cases constitutes an exception to the general requirement
that bad faith or malice on the part of the adverse party must first
be proved.
Finally, petitioner prays that this Court reinstate the Labor Arbiter's
monetary awards in his January 27, 2004 Decision or, in the
alternative, to grant him full back salaries equivalent to the
unexpired portion of his contract, or four months, plus 10% thereof
as attorney's fees.
Respondents' Arguments
In seeking affirmance of the assailed CA issuances, respondents
basically submit that the CA committed no reversible error in
excluding petitioner's claims for vacation leave pay, tonnage bonus,
and attorney's fees. They support and agree with the CA's reliance
upon Skippers Pacific, Inc. v. Skippers Maritime Services, Ltd., 22 and
emphasize that in the absence of bad faith on their part, petitioner
may not recover attorney's fees.
Our Ruling
The Court grants the Petition.
There remains no issue regarding illegal dismissal. In spite of the
consistent finding below that petitioner was illegally dismissed,
respondents did not take issue, which thus renders all
pronouncements on the matter final.
In resolving petitioner's monetary claims, the CA utterly
misinterpreted the Court's ruling in Skippers Pacific, Inc. v. Skippers
Maritime Services, Ltd., 23 using it to support a view which the latter
case precisely ventured to strike down. In that case, the employee
was hired as the vessel's Master on a six-months employment
contract, but was able to work for only two months, as he was later
on illegally dismissed. The Labor Arbiter, NLRC, and the CA all took
the view that the complaining employee was entitled to his salary
for the unexpired portion of his contract, but limited to only three
months pursuant to Section 10 24 of RA 8042. The Court did not
agree and hence modified the judgment in said case. It held that,
following the wording of Section 10 and its ruling in Marsaman
Manning Agency, Inc. v. National Labor Relations
Commission, 25 when the illegally dismissed employee's
employment contract has a term of less than one year, he/she shall
be entitled to recovery of salaries representing the unexpired
portion of his/her employment contract. Indeed, there was nothing
even vaguely confusing in the Court's citation therein of Marsaman:
In Marsaman Manning Agency, Inc. vs. NLRC, involving
Section 10 of Republic Act No. 8042, we held:
[W]e cannot subscribe to the view that private
respondent is entitled to three (3) months salary
only. A plain reading of Sec. 10 clearly reveals that
the choice of which amount to award an illegally
dismissed overseas contract worker, i.e., whether
his salaries for the unexpired portion of his
employment contract or three (3) months salary for
every year of the unexpired term, whichever is
less, comes into play only when the employment
contract concerned has a term of at least one (1)
year or more. This is evident from the [wording]
"for every year of the unexpired term" which
follows the [wording] "salaries . . . for three
months." To follow petitioners' thinking that
private respondent is entitled to three (3) months
salary only simply because it is the lesser amount is
to completely disregard and overlook some words
used in the statute while giving effect to some. This
is contrary to the well-established rule in legal
hermeneutics that in interpreting a statute, care
should be taken that every part or word thereof be
given effect since the lawmaking body is presumed
to know the meaning of the words employed in the
statute and to have used them advisedly. Ut res
magis valeat quam pereat. CTacSE
It is not disputed that private respondent's
employment contract in the instant case was for six (6)
months. Hence, we see no reason to disregard the
ruling in Marsaman that private respondent should be
paid his salaries for the unexpired portion of his
employment contract. 26 (Emphases supplied)
At this juncture, the courts, especially the CA, should be reminded
to read and apply this Court's labor pronouncements with utmost
care and caution, taking to mind that in the very heart of the judicial
system, labor cases occupy a special place. More than the State
guarantees of protection of labor and security of tenure, labor
disputes involve the fundamental survival of the employees and
their families, who depend upon the former for all the basic
necessities in life.
Thus, petitioner must be awarded his salaries corresponding to the
unexpired portion of his six-months employment contract, or
equivalent to four months. This includes all his corresponding
monthly vacation leave pay and tonnage bonuses which are
expressly provided and guaranteed in his employment contract as
part of his monthly salary and benefit package. These benefits were
guaranteed to be paid on a monthly basis, and were not made
contingent. In fact, their monetary equivalent was fixed under the
contract: US$2,500.00 for vacation leave pay and US$700.00 for
tonnage bonus each month. Thus, petitioner is entitled to back
salaries of US$32,800 (or US$5,000 + US$2,500 + US$700 = US$8,200
x 4 months). "Article 279 of the Labor Code mandates that an
employee's full backwages shall be inclusive of allowances and other
benefits or their monetary equivalent." 27 As we have time and
again held, "[i]t is the obligation of the employer to pay an illegally
dismissed employee or worker the whole amount of the salaries or
wages, plus all other benefits and bonuses and general increases, to
which he would have been normally entitled had he not been
dismissed and had not stopped working." 28 This well-defined
principle has likewise been lost on the CA in the consideration of the
case. ADTEaI
The CA likewise erred in deleting the award of attorney's fees on the
ground that bad faith may not readily be attributed to the
respondents given the circumstances. The Court's discussion on the
award of attorney's fees in Kaisahan at Kapatiran ng mga
Manggagawa at Kawani sa MWC-East Zone Union v. Manila Water
Company, Inc., 29 speaking through Justice Brion, is instructive, viz.:
Article 111 of the Labor Code,as amended, governs the
grant of attorney's fees in labor cases:
'Art. 111. Attorney's fees. — (a) In cases of unlawful
withholding of wages, the culpable party may be
assessed attorney's fees equivalent to ten percent
of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or
accept, in any judicial or administrative
proceedings for the recovery of wages, attorney's
fees which exceed ten percent of the amount of
wages recovered.'
Section 8, Rule VIII, Book III of its Implementing Rules
also provides, viz.:
'Section 8. Attorney's fees. — Attorney's fees in any
judicial or administrative proceedings for the
recovery of wages shall not exceed 10% of the
amount awarded. The fees may be deducted from
the total amount due the winning party.' IAcDET
We explained in PCL Shipping Philippines, Inc. v. National
Labor Relations Commission that there are two
commonly accepted concepts of attorney's fees — the
ordinary and extraordinary. In its ordinary concept, an
attorney's fee is the reasonable compensation paid to a
lawyer by his client for the legal services the former
renders; compensation is paid for the cost and/or results
of legal services per agreement or as may be assessed.
In its extraordinary concept, attorney's fees are
deemed indemnity for damages ordered by the court
to be paid by the losing party to the winning party. The
instances when these may be awarded are enumerated
in Article 2208 of the Civil Code, specifically in its
paragraph 7 on actions for recovery of wages, and
is payable not to the lawyer but to the client, unless the
client and his lawyer have agreed that the award shall
accrue to the lawyer as additional or part of
compensation.
We also held in PCL Shipping that Article 111 of
the Labor Code,as amended, contemplates
the extraordinary concept of attorney's fees and
that Article 111 is an exception to the declared policy of
strict construction in the award of attorney's fees.
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.
...
We similarly so ruled in RTG Construction, Inc. v.
Facto and in Ortiz v. San Miguel Corporation. In RTG
Construction, we specifically stated:
'Settled is the rule that in actions for recovery of
wages, or where an employee was forced to litigate
and, thus, incur expenses to protect his rights and
interests, a monetary award by way of attorney's
fees is justifiable under Article 111 of the Labor
Code; Section 8, Rule VIII, Book III of its
Implementing Rules; and paragraph 7, Article 2208
of the Civil Code. The award of attorney's fees is
proper, and 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.' DcTaEH
In PCL Shipping, we found the award of attorney's fees
due and appropriate since the respondent therein
incurred legal expenses after he was forced to file an
action for recovery of his lawful wages and other
benefits to protect his rights. From this perspective and
the above precedents, we conclude that the CA erred in
ruling that a finding of the employer's malice or bad faith
in withholding wages must precede an award of
attorney's fees under Article 111 of the Labor Code.To
reiterate, a plain showing that the lawful wages were not
paid without justification is sufficient. 30
In this case, it is already settled that petitioner's employment was
illegally terminated. As a result, his wages as well as allowances were
withheld without valid and legal basis. Otherwise stated, he was not
paid his lawful wages without any valid justification. Consequently,
he was impelled to litigate to protect his interests. Thus, pursuant to
the above ruling, he is entitled to receive attorney's fees. An award
of attorney's fees in petitioner's favor is in order in the amount of
US$3,280 (or US$32,800 x 10%).
WHEREFORE, the Petition is GRANTED. Petitioner Lorenzo T.
Tangga-an is hereby declared ENTITLED to back salaries for the
unexpired portion of his contract, inclusive of vacation leave pay and
tonnage bonus which is equivalent to US$32,800 plus US$3,280 as
attorney's fees or a total of US$36,080 or its peso equivalent at the
exchange rate prevailing at the time of payment.
SO ORDERED.
||| (Tangga-an v. Philippine Transmarine Carriers, Inc., G.R. No.
180636, [March 13, 2013], 706 PHIL 339-354)
[G.R. No. 178699. September 21, 2011.]
DECISION
DEL CASTILLO, J p:
The base figure in computing the award of back wages to an
illegally dismissed employee is the employee's basic salary plus
regular allowances and benefits received at the time of dismissal,
unqualified by any wage and benefit increases granted in the
interim. 1 ITADaE
By these consolidated Petitions for Review
on Certiorari, 2 the Bank of the Philippine Islands (BPI), BPI
Employees Union-Metro Manila (the Union) and Zenaida Uy (Uy)
seek modification of the Court of Appeals' (CA) Amended
Decision 3dated July 4, 2007 in CA-G.R. SP No. 92631. Said
Amended Decision computed Uy's back wages and other
monetary awards pursuant to the final and executory
Decision 4 dated March 31, 2005 of this Court in G.R. No. 137863
based on her salary rate at the time of her dismissal and
disregarded the salary increases granted in the interim as well as
other benefits which were not proven to have been granted at the
time of Uy's dismissal from the service.
Factual Antecedents
On December 14, 1995, Uy's services as a bank teller in BPI's
Escolta Branch was terminated on grounds of gross
disrespect/discourtesy towards an officer, insubordination and
absence without leave. Uy, together with the Union, thus filed a
case for illegal dismissal.
On December 31, 1997, the Voluntary Arbitrator 5 rendered
a Decision 6 finding Uy's dismissal as illegal and ordering BPI to
immediately reinstate Uy and to pay her full back wages, including
all her other benefits under the Collective Bargaining Agreement
(CBA) and attorney's fees. 7
On October 28, 1998, the CA affirmed with modification the
Decision of the Voluntary Arbitrator. Instead of reinstatement,
the CA ordered BPI to pay Uy her separation pay. Further, instead
of full back wages, the CA fixed Uy's back wages to three years. 8
The case eventually reached this Court when both parties
separately filed petitions for review on certiorari. While BPI's
petition which was docketed as G.R. No. 137856 was denied for
failure to comply with the requirements of a valid certification of
non-forum shopping, 9 Uy's and the Union's petition which was
docketed as G.R. No. 137863 was given due course.
On March 31, 2005, the Court rendered its Decision 10 in
G.R. No. 137863, the dispositive portion of which reads:
WHEREFORE, the instant petition is GRANTED. The
assailed 28 October 1998 Decision and 8 March 1999
Resolution of the Court of Appeals are
hereby MODIFIED as follows: 1) respondent BPI
is DIRECTED to pay petitioner Uy backwages from the
time of her illegal dismissal until her actual
reinstatement; and 2) respondent BPI is ORDERED to
reinstate petitioner Uy to her former position, or to a
substantially equivalent one, without loss of seniority
right and other benefits attendant to the position.
SO ORDERED. 11
Ruling of the Voluntary Arbitrator
After the Decision in G.R. No. 137863 became final and
executory, Uy and the Union filed with the Office of the Voluntary
Arbitrator a Motion for the Issuance of a Writ of Execution. 12
In Uy's computation, she based the amount of her back
wages on the current wage level and included all the increases in
wages and benefits under the CBA that were granted during the
entire period of her illegal dismissal. These include the following:
Cost of Living Allowance (COLA), Financial Assistance, Quarterly
Bonus, CBA Signing Bonus, Uniform Allowance, Medicine
Allowance, Dental Care, Medical and Doctor's Allowance, Teller's
Functional Allowance, Vacation Leave, Sick Leave, Holiday Pay,
Anniversary Bonus, Burial Assistance and Omega watch. 13
BPI disputed Uy's/Union's computation arguing that it
contains items which are not included in the term "back wages"
and that no proof was presented to show that Uy was receiving
all the listed items therein before her termination. It claimed that
the basis for the computation of back wages should be the
employee's wage rate at the time of dismissal. 14
In an Order dated December 6, 2005, 15 the Voluntary
Arbitrator agreed with Uy's/Union's contention that full back
wages should include all wage and benefit increases, including
new benefits granted during the period of dismissal. The
Voluntary Arbitrator opined that this Court's March 31, 2005
Decision in G.R. No. 137863 reinstated his December 31, 1997
Decision which ordered the payment of full back wages computed
from the time of dismissal until actual reinstatement including all
benefits under the CBA. Nonetheless, the Voluntary Arbitrator
excluded the claims for uniform allowance, anniversary bonus
and Omega watch for want of basis for their grant. ADaSET
The Voluntary Arbitrator thus granted the motion for
issuance of writ of execution and computed Uy's back wages in
the total amount of P3,897,197.89 as follows:
Basic Monthly Salary (BMS) P2,062,087.50
Cost of Living Allowance 56,100.00
Financial Assistance 39,000.00
Total Quarterly Bonuses 693,820.00
CBA Signing Bonus 32,500.00
Medicine Allowance 58,400.00
Dental Care 14,120.00
Medical and Doctor's Allowance 58,400.00
Teller's Functional Allowance 25,500.00
Vacation Leave 187,085.50
Sick Leave 187,085.50
Holiday Pay 128,808.65
Attorney's Fee 354,290.72
––––––––––––
Grand Total P3,897,197.89 16
==========
DECISION
DEL CASTILLO, J p:
The question at the heart of this case is whether petitioners,
former employees of the National Power Corporation (NPC) who
were separated from service due to the government's initiative of
restructuring the electric power industry, are entitled to their
retirement benefits in addition to the separation pay granted by
law.
Absent explicit statutory authority, we cannot provide
our imprimatur to the grant of separation pay and retirement
benefits from one single act of involuntary separation from the
service, lest there be duplication of purpose and depletion of
government resources. Within the context of government
reorganization, separation pay and retirement benefits arising
from the same cause, are in consideration of the same services
and granted for the same purpose. Whether denominated as
separation pay or retirement benefits, these financial benefits
reward government service and provide monetary assistance to
employees involuntarily separated due to bona
fide reorganization.
This is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court on a pure question of law against the
Decision 1 dated December 23, 2004 rendered by the Regional
Trial Court (RTC), Branch 101, Quezon City in SCA No. Q-03-50681
(for Declaratory Relief) entitled National Power Corporation v.
Napocor Employees and Workers Union (NEWU),NAPOCOR
Employees Consolidated Union (NECU),NPC Executive Officers
Association, Inc. (NPC-EXA),Esther Galvez and Efren Herrera, for
and on their behalf and in behalf of other separated, unrehired,
and retired employees of the National Power Corporation, the
Department of Budget and Management (DBM),the Office of the
Solicitor General (OSG),the Civil Service Commission (CSC) and the
Commission on Audit (COA). Said Decision ruled that the
petitioners are not entitled to receive retirement benefits
under Commonwealth Act No. 186 (CA No. 186), 2 as amended,
over and above the separation benefits they received
under Republic Act (RA) No. 9136, 3 otherwise known as
the Electric Power Industry Reform Act of 2001 (EPIRA). CAaDTH
Legal and factual background
RA No. 9136 was enacted on June 8, 2001 to provide a
framework for the restructuring of the electric power industry,
including the privatization of NPC's assets and liabilities. 4 One
necessary consequence of the reorganization was the
displacement of employees from the Department of Energy, the
Energy Regulatory Board, the National Electrification
Administration and the NPC. To soften the blow from the
severance of employment, Congress provided in Section 63 of
the EPIRA, for a separation package superior than those provided
under existing laws, as follows:
SEC. 63. Separation Benefits of Officials and Employees
of Affected Agencies. — National government
employees displaced or separated from the service as a
result of the restructuring of the [electric power]
industry and privatization of NPC assets pursuant to this
Act, shall be entitled to either a separation pay and
other benefits in accordance with existing laws, rules or
regulations or be entitled to avail of the privileges
provided under a separation plan which shall be one
and one-half month salary for every year of service in
the government:Provided, however, That those who
avail of such privilege shall start their government
service anew if absorbed by any government-owned
successor company. In no case shall there be any
diminution of benefits under the separation plan until
the full implementation of the restructuring and
privatization. ...(Emphasis supplied)
The implementing rules of the EPIRA, approved by the Joint
Congressional Power Commission on February 27, 2002, 5further
expounded on the separation benefits, viz.:
RULE 33. Separation Benefits. —
Section 1. General Statement on Coverage.—
This Rule shall apply to all employees in the National
Government service as of June 26, 2001 regardless of
position, designation or status, who are displaced or
separated from the service as a result of the
restructuring of the electric [power] industry and
privatization of NPC assets: Provided, however, That the
coverage for casual or contractual employees shall be
limited to those whose appointments were approved or
attested [to] by the Civil Service Commission (CSC).
Section 2. Scope of Application. —
This Rule shall apply to affected personnel of DOE, ERB,
NEA and NPC.
Section 3. Separation and Other Benefits.—
(a) The separation benefit shall consist of either a
separation pay and other benefits granted in
accordance with existing laws, rules and regulations or
a separation plan equivalent to one and one half (1-
1/2) months' salary for every year of service in the
government, whichever is higher;Provided, That the
separated or displaced employee has rendered at least
one (1) year of service at the time of effectivity of the
Act. ScaHDT
xxx xxx xxx
(e) For this purpose, "Salary",as a rule, refers to the basic
pay including the thirteenth (13th) month pay received
by an employee pursuant to his appointment, excluding
per diems, bonuses, overtime pay, honoraria,
allowances and any other emoluments received in
addition to the basic pay under existing laws.
(f) Likewise, "Separation" or "Displacement" refers to
the severance of employment of any official or
employee, who is neither qualified under existing laws,
rules and regulations nor has opted to retire under
existing laws,as a result of the Restructuring of the
electric power industry or Privatization of NPC assets
pursuant to the Act. (Emphasis supplied)
On February 28, 2003, all NPC employees, including the
petitioners, were separated from the service. As a result, all the
employees who held permanent positions at the NPC as of June
26, 2001 opted for and were paid the corresponding separation
pay equivalent to one and a half months' salary per year of
service. Nonetheless, in addition to the separation package
mandated by the EPIRA, a number of NPC employees also claimed
retirement benefits under CA No. 186, 6 as amended by RA No.
660 7 and RA No. 1616. 8 Under these laws, government
employees who have rendered at least 20 years of service are
entitled to a gratuity equivalent to one month's salary for every
year of service for the first 20 years, one and a half months' salary
for every year of service over 20 but below 30 years, and two
months' salary for every year of service in excess of 30 years. 9
The NPC, on the other hand, took the position that the grant
of retirement benefits to displaced employees in addition to
separation pay was inconsistent with the constitutional
proscription on the grant of a double gratuity. Unable to amicably
resolve this matter with its former employees, the NPC filed on
September 18, 2003, a Petition for Declaratory Relief 10against
several parties, 11 including the petitioners, before the RTC of
Quezon City, to obtain confirmation that RA No. 9136did not
specifically authorize NPC to grant retirement benefits in addition
to separation pay. 12 The case was docketed as SCA No. Q-03-
50681 and raffled to Branch 101 of said court.
After submission of the respondents' respective Answers
and Comments, 13 the parties agreed that the court a quo would
resolve the case based on the arguments raised in their
memoranda 14 since only a question of law was involved. 15 In
due course, the court a quo rendered the assailed Decision,
finding that employees who received the separation benefit
under RA No. 9136 are no longer entitled to retirement benefits:
The aforementioned law speaks of two (2) options for
the employee to choose from, that is: (1) to receive
separation pay and other benefits in accordance with
existing laws, rules, and regulations or (2) to avail of the
privileges provided under a separation plan (under R.A.
9136), which shall be one and one half months' salary for
every year of service in the government. CHEDAc
Under Section 3(f) of Rule 33 of the Implementing Rules
and Regulations of R.A. 9136, "separation or
displacement refers to the severance of employment of
any official or employee, who is neither qualified under
existing laws, rules, and regulations nor has opted to
retire under existing laws as a result of the Restructuring
of the electric power industry or Privatization of NPC
assets pursuant to the act". Thus, it is clear that the
receipt of benefits under the EPIRA law, by employees
who opted to retire under such law bars the receipt of
retirement benefits under R.A. 1616.
Moreover, Section 8 of Article IX-B of the 1987
Constitution prohibits the grant of both separation pay
and retirement benefits. . . .
xxx xxx xxx
In said constitutional provision, it is ...clear that
additional or indirect compensation is barred by law and
only [allowed] when so specifically authorized by law.
Furthermore, on the Private Respondents' contention
that the second paragraph should be applied in their
[case],the same will not hold water. This is so because
"retirement benefits" [are] not synonymous to pension
or gratuities as contemplated by law.
R.A. 9136 did not clearly and unequivocally authorize
the payment of additional benefits to Private
Respondents as the benefits referred to in such law
should not be interpreted to include retirement benefits
in addition to their separation pay. Separation from
service due to [the] restructuring of the [electric] power
industry should not be interpreted to mean "retirement"
as both are different in every respect. The law
specifically defines the meaning of "separation" by
virtue of the restructuring. ...
xxx xxx xxx
Thus, the Respondent-Employees are not entitled to
receive retirement benefits under Republic Act No.
1616 over and above the separation benefits they
received under Republic Act No. 9136. 16
Petitioners sought recourse from the assailed Decision
directly before this court on a pure question of law. The
Department of Budget and Management (DBM) submitted its
Comment on June 30, 2005, 17 while the NPC, through the Office
of the Solicitor General, filed its Comment on August 23,
2005. 18 Petitioners then filed their Consolidated Reply by
registered mail on November 18, 2005. 19 After the parties filed
their respective memoranda, 20 the case was submitted for
decision.
Petitioners' arguments
Before us, petitioners argue that:
1) The EPIRA does not bar the application of CA No. 186,
as amended. Petitioners are therefore entitled to
their retirement pay in addition to separation pay.
2) Petitioners have vested rights over their retirement
benefits.
3) The payment of both retirement pay and separation
pay does not constitute double compensation, as
theConstitution provides that "pensions or
gratuities shall not be considered as additional,
double or indirect compensation". TEDaAc
Respondents' arguments
Respondents NPC and the DBM, on the other hand, maintain
that:
1) Section 63 of RA No. 9136 and Section 3, Rule 33 of its
Implementing Rules and Regulations do not
authorize the grant of retirement benefits in
addition to the separation pay already received.
Rather, Section 63 requires separated employees
to choose between a separation plan under existing
laws or the separation package under the EPIRA.
2) The grant of both separation pay and retirement
benefit amounts to double gratuity in direct
contravention of the Constitution.
3) No law authorizes the payment of both separation pay
and retirement benefits to petitioners.
Issue
The sole issue in this case is whether or not NPC employees who
were separated from the service because of the reorganization of
the electric power industry and who received their separation pay
under RA No. 9136 are still entitled to receive retirement benefits
under CA No. 186, as amended.
Our Ruling
We deny the petition and affirm the court a quo's Decision
dated December 23, 2004 in SCA No. Q-03-50681.
Absent clear and unequivocal statutory authority, the grant of
both separation pay and retirement benefits violates the
constitutional proscription on additional compensation.
Section 8 of Article IX (B) of the Constitution provides that
"[n]o elective or appointive public officer or employee shall
receive additional, double, or indirect compensation, unless
specifically authorized by law". In prior decisions, we have ruled
that there must be a clear and unequivocal statutory provision to
justify the grant of both separation pay and retirement benefits
to an employee. 21 Here, absent an express provision of law, the
grant of both separation and retirement benefits would amount
to double compensation from one single act of separation from
employment.
Petitioners claim that Section 9 of RA No. 6656 22 amounts
to sufficient statutory basis for the grant of both retirement
benefits and separation pay. Section 9 provides:
...Unless also separated for cause, all officers and
employees, who have been separated pursuant to
reorganization shall, if entitled thereto, be paid
the appropriate separation pay and retirement and
other benefits under existing laws within ninety (90)
days from the date of the effectivity of their separation
or from the date of the receipt of the resolution of their
appeals as the case may be. Provided, That application
for clearance has been filed and no action thereon has
been made by the corresponding department or agency.
Those who are not entitled to said benefits shall be paid
a separation gratuity in the amount equivalent to one (1)
month salary for every year of service. Such separation
pay and retirement benefits shall have priority of
payment out of the savings of the department or agency
concerned. (Emphasis supplied) ADCIca
Unfortunately for the petitioners, their interpretation has
little legal precedent. The CSC has previously ruled that
employees similarly situated to petitioners herein were not
entitled to both separation pay and retirement benefits; instead,
the concerned employee must either avail of the separation
benefit or opt to retire if qualified under existing laws. In CSC
Resolution No. 021112, 23 the CSC interpreted the phrase
"separation pay and retirement" in RA No. 6656 as follows:
...While the aforequoted provision of law used the
conjunctive "and" between the words "separation pay"
and "retirement",this does not mean that both benefits
shall be given to an affected employee. This
interpretation is supported by the phrase "if entitled
thereto" found before the phrase "be paid the
appropriate separation pay and retirement and other
benefits under existing laws".Thus, payment of both
separation and retirement benefits is not absolute.
Also, in CSC Resolution No. 00-1957, 24 the CSC declared:
The aforequoted provision of law says: 'separation pay
and retirement and other benefits under existing
laws'.Be it noted that the conjunctive 'and' is used
between 'separation pay and retirement',which in its
elementary sense would mean that they are to be taken
jointly. (Ruperto G. Martin, Statutory Construction, sixth
edition, p. 88) Obviously, therefore, 'separation pay and
retirement' refer to only one benefit, of which an
employee affected by the reorganization, if entitled
thereto, must be paid plus other benefits under existing
laws, i.e., terminal leave pay, etc.
Further, in Cajiuat v. Mathay, 25 we found that in the
absence of express provisions to the contrary, gratuity laws
should be construed against the grant of double compensation.
Cajiuat involved employees of the Rice and Corn Administration
who exercised their option to retire under CA No. 186 and
received the appropriate retirement benefits. Subsequently, the
Rice and Corn Administration was abolished by Presidential
Decree No. 4. 26 Said Decree also provided for the payment of a
gratuity in Section 26, paragraph 3:
Permanent officials and employees of the Rice and Corn
Administration who cannot be absorbed by the
Administration, or who cannot transfer or to be
transferred to other agencies, or who prefer to retire, if
qualified for retirement, or to be laid off, shall be given
gratuity equivalent to one month salary for every year of
service but in no case more than twenty-four months
salary, in addition to all other benefits to which they are
entitled under existing laws and regulations. ...
On the basis of this provision, the retired employees of the
Rice and Corn Administration claimed that they were entitled to
the separation gratuity, over and above the retirement benefits
already received. We disagreed and held that:
. . . [t]here must be a provision, clear and unequivocal,
to justify a double pension. The general language
employed in paragraph 3, Section 26 of Presidential
Decree No. 4 fails to meet that test. All that it states is
that permanent employees of the Rice and Corn
Administration who are retirable are entitled to gratuity
equivalent to one month salary for every year of service
but in no case more than twenty four months salary in
addition to other benefits to which they are entitled
under existing laws and regulations. To grant double
gratuity is unwarranted. No reliance can be placed [on]
the use of the term "other benefits" found in the
paragraph relied upon. As clearly stated in the
memorandum of the Solicitor General, they refer to
"those receivable by a retiree under the general
retirement laws", like the refund of contributions to the
retirement fund and the money value of the
accumulated vacation and sick leaves of said official
employee. The clause "in addition to all other benefits to
which they are entitled under existing laws and
regulations" was inserted to insure the payment to the
retiree of the refund of the contributions to the
retirement fund and the money value of the
accumulated vacation and sick leaves of said official or
employee. 27 aTHASC
Nothing in the EPIRA justifies the grant of both the separation
package and retirement benefits.
The EPIRA, a legislative enactment dealing specifically with
the privatization of the electric power industry, provides:
SEC. 63. Separation Benefits of Officials and Employees
of Affected Agencies. — National government
employees displaced or separated from the service as a
result of the restructuring of the [electric power]
industry and privatization of NPC assets pursuant to this
Act, shall be entitled to either a separation pay and
other benefits in accordance with existing laws, rules or
regulations or be entitled to avail of the privileges
provided under a separation plan which shall be one
and one-half month[s'] salary for every year of service
in the government:Provided, however, That those who
avail of such privilege shall start their government
service anew if absorbed by any government-owned
successor company. In no case shall there be any
diminution of benefits under the separation plan until
the full implementation of the restructuring and
privatization. ...(Emphasis supplied)
A careful reading of Section 63 of the EPIRA affirms that said
law did not authorize the grant of both separation pay and
retirement benefits. Indeed, the option granted was either to "a
separation pay and other benefits in accordance with existing
laws, rules and regulations" or to "a separation plan which shall
be one and one-half months' salary for every year of service in the
government". The options were alternative, not cumulative.
Having chosen the separation plan, they cannot now claim
additional retirement benefits under CA No. 186.
This position finds further support in Section 3 (f), Rule 33
of RA No. 9136's Implementing Rules and Regulations, which
provides:
(f) likewise, "separation" or "displacement" refers to the
severance of employment of any official or employee,
who is neither qualified under existing laws, rules and
regulations nor has opted to retire under existing laws,
as a result of the restructuring of the electric power
industry or privatization of NPC assets pursuant to the
act.
As worded, Rule 33, Section 3 (f) of the Implementing Rules
and Regulations of RA No. 9136 precludes the receipt of both
separation and retirement benefits. A separated or displaced
employee, as defined by the implementing rules, does not include
one who is qualified or has opted to retire under existing laws.
Consequently, a separated employee must choose between
retirement under applicable laws or separation pay under
the EPIRA.
Within the context of reorganization, petitioners cannot claim a
vested right over their retirement benefits.
Petitioners claim that having religiously paid their premiums,
they have vested rights to their retirement gratuities which may
not be revoked or impaired. However, petitioners fail to consider
that under the retirement laws that they themselves invoke,
separation from the service, whether voluntary or involuntary, is
a distinct compensable event from retirement. 28 Nothing in said
laws permits an employee to claim both separation pay and
retirement benefits in the event of separation from the service
due to reorganization. acHCSD
Thus, absent an express provision of law to the contrary,
separation due to reorganization gives rise to two possible
scenarios: first, when the separated employee is not yet entitled
to retirement benefits, second, when the employee is qualified to
retire. In the first case, the employee's separation pay shall be
computed based on the period of service rendered in the
government prior to the reorganization. In the second case,
where an employee is qualified to retire, he or she may opt to
claim separation or retirement benefits.
Contradistinction with Laraño v. Commission on Audit
We are, of course, aware that in Laraño v. Commission on
Audit 29 we held that employees, who were separated from the
service because of the reorganization of the Metropolitan
Waterworks and Sewerage System (MWSS) and Local Waterworks
and Utilities Administration (LWUA) pursuant to RA No. 8041,
were entitled to both a separation package and retirement
benefits. 30
In Laraño, however, the Early Retirement Incentive Plan
submitted to and approved by then President Fidel V. Ramos
explicitly provided for a separation package that would be
given over and above the existing retirement benefits.Therein
lies the fundamental difference. Hence, unlike in this case, there
was specific authority for the grant of both separation pay and
retirement benefits.
WHEREFORE,the petition is DENIED. The Decision dated
December 23, 2004 of the Regional Trial Court of Quezon City,
Branch 101 in SCA No. Q-03-50681 holding that petitioners are
not entitled to receive retirement benefits under Commonwealth
Act No. 186, as amended is AFFIRMED with MODIFICATION that
petitioners are entitled to a refund of their contributions to the
retirement fund, and the monetary value of any accumulated
vacation and sick leaves.
SO ORDERED.
||| (Herrera v. National Power Corp., G.R. No. 166570, [December
18, 2009], 623 PHIL 383-415)