G.R. No.

172161

March 2, 2011

SLL INTERNATIONAL CABLES SPECIALIST and SONNY L.

LAGON, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN
LOPEZ, EDGARDO ZUIGA and DANILO CAETE, Respondents.
DECISION
MENDOZA, J.:
Assailed in this petition for review on certiorari are the January 11, 2006
Decision1 and the March 31, 2006 Resolution2 of the Court of
Appeals (CA), in CA-G.R. SP No. 00598 which affirmed with modification the
March 31, 2004 Decision3 and December 15, 2004 Resolution4 of the
National Labor Relations Commission (NLRC). The NLRC Decision found the
petitioners, SLL International Cables Specialist (SLL) and its manager, Sonny
L. Lagon(petitioners), not liable for the illegal dismissal of Roldan Lopez,
Danilo Caete and Edgardo Zuiga (private respondents) but held them
jointly and severally liable for payment of certain monetary claims to said
respondents.
A chronicle of the factual antecedents has been succinctly summarized by
the CA as follows:
Sometime in 1996, and January 1997, private respondents Roldan Lopez
(Lopez for brevity) and Danilo Caete (Caete for brevity), and Edgardo
Zuiga (Zuiga for brevity) respectively, were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three were paid the full minimum
wage and other benefits but since they were only trainees, they did not report
for work regularly but came in as substitutes to the regular workers or in
undertakings that needed extra workers to expedite completion of work. After
their training, Zuiga, Caete and Lopez were engaged as project employees
by the petitioners in their Islacom project in Bohol. Private respondents
started on March 15, 1997 until December 1997. Upon the completion of
their project, their employment was also terminated. Private respondents
received the amount of P145.00, the minimum prescribed daily wage for
Region VII. In July 1997, the amount of P145 was increased to P150.00 by
the Regional Wage Board (RWB) and in October of the same year, the latter
was increased to P155.00. Sometime in March 1998, Zuiga and Caete were
engaged again by Lagon as project employees for its PLDT Antipolo, Rizal
project, which ended sometime in (sic) the late September 1998. As a
consequence, Zuiga and Caetes employment was terminated. For this
project, Zuiga and Caete received only the wage of P145.00 daily. The
minimum prescribed wage for Rizal at that time was P160.00.
Sometime in late November 1998, private respondents re-applied in the
Racitelcom project of Lagon in Bulacan. Zuiga and Caete were reemployed. Lopez was also hired for the said specific project. For this, private
respondents received the wage of P145.00. Again, after the completion of
their project in March 1999, private respondents went home to Cebu City.

On May 21, 1999, private respondents for the 4th time worked with Lagons
project in Camarin, Caloocan City with Furukawa Corporation as the general
contractor. Their contract would expire on February 28, 2000, the period of
completion of the project. From May 21, 1997-December 1999, private
respondents received the wage ofP145.00. At this time, the minimum
prescribed rate for Manila was P198.00. In January to February 28, the three
received the wage of P165.00. The existing rate at that time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa
Corporation, the Camarin project was not completed on the scheduled date of
completion. Face[d] with economic problem[s], Lagon was constrained to cut
down the overtime work of its worker[s][,] including private respondents.
Thus, when requested by private respondents on February 28, 2000 to work
overtime, Lagon refused and told private respondents that if they insist, they
would have to go home at their own expense and that they would not be
given anymore time nor allowed to stay in the quarters. This prompted
private respondents to leave their work and went home to Cebu. On March 3,
2000, private respondents filed a complaint for illegal dismissal, nonpayment of wages, holiday pay, 13th month pay for 1997 and 1998 and
service incentive leave pay as well as damages and attorneys fees.
In their answers, petitioners admit employment of private respondents but
claimed that the latter were only project employees[,] for their services were
merely engaged for a specific project or undertaking and the same were
covered by contracts duly signed by private respondents. Petitioners further
alleged that the food allowance ofP63.00 per day as well as private
respondents allowance for lodging house, transportation, electricity, water
and snacks allowance should be added to their basic pay. With these,
petitioners claimed that private respondents received higher wage rate than
that prescribed in Rizal and Manila.
Lastly, petitioners alleged that since the workplaces of private respondents
were all in Manila, the complaint should be filed there. Thus, petitioners
prayed for the dismissal of the complaint for lack of jurisdiction and utter
lack of merit. (Citations omitted.)
On January 18, 2001, Labor Arbiter Reynoso Belarmino (LA) rendered his
decision5 declaring that his office had jurisdiction to hear and decide the
complaint filed by private respondents. Referring to Rule IV, Sec. 1 (a) of the
NLRC Rules of Procedure prevailing at that time,6 the LA ruled that it had
jurisdiction because the "workplace," as defined in the said rule, included the
place where the employee was supposed to report back after a temporary
detail, assignment or travel, which in this case was Cebu.
As to the status of their employment, the LA opined that private respondents
were regular employees because they were repeatedly hired by petitioners
and they performed activities which were usual, necessary and desirable in
the business or trade of the employer.
With regard to the underpayment of wages, the LA found that private
respondents were underpaid. It ruled that the free board and lodging,
electricity, water, and food enjoyed by them could not be included in the

computation of their wages because these were given without their written
consent.
The LA, however, found that petitioners were not liable for illegal dismissal.
The LA viewed private respondents act of going home as an act of
indifference when petitioners decided to prohibit overtime work.7
In its March 31, 2004 Decision, the NLRC affirmed the findings of the LA. In
addition, the NLRC noted that not a single report of project completion was
filed with the nearest Public Employment Office as required
by the Department of Labor and Employment (DOLE) Department Order No.
19, Series of 1993.8 The NLRC later denied9 the motion for
reconsideration10 subsequently filed by petitioners.
When the matter was elevated to the CA on a petition for certiorari, it
affirmed the findings that the private respondents were regular employees. It
considered the fact that they performed functions which were the regular and
usual business of petitioners. According to the CA, they were clearly
members of a work pool from which petitioners drew their project employees.
The CA also stated that the failure of petitioners to comply with the simple
but compulsory requirement to submit a report of termination to the nearest
Public Employment Office every time private respondents employment was
terminated was proof that the latter were not project employees but regular
employees.
The CA likewise found that the private respondents were underpaid. It ruled
that the board and lodging, electricity, water, and food enjoyed by the private
respondents could not be included in the computation of their wages because
these were given without their written consent. The CA added that the private
respondents were entitled to 13th month pay.
The CA also agreed with the NLRC that there was no illegal dismissal. The CA
opined that it was the petitioners prerogative to grant or deny any request
for overtime work and that the private respondents act of leaving the
workplace after their request was denied was an act of abandonment.
In modifying the decision of the labor tribunal, however, the CA noted that
respondent Roldan Lopez did not work in the Antipolo project and, thus, was
not entitled to wage differentials. Also, in computing the differentials for the
period January and February 2000, the CA disagreed in the award of
differentials based on the minimum daily wage of P223.00, as the prevailing
minimum daily wage then was only P213.00. Petitioners sought
reconsideration but the CA denied it in its March 31, 2006 Resolution.11
In this petition for review on certiorari,12 petitioners seek the reversal and
setting aside of the CA decision anchored on this lone:
GROUND/ASSIGNMENT OF ERROR
THE PUBLIC RESPONDENT NLRC COMMITTED A SERIOUS ERROR IN LAW
IN AWARDING WAGE DIFFERENTIALS TO THE PRIVATE COMPLAINANTS
ON THE BASES OF MERE TECHNICALITIES, THAT IS, FOR LACK OF
WRITTEN CONFORMITY x x x AND LACK OF NOTICE TO THE DEPARTMENT
OF LABOR AND EMPLOYMENT (DOLE)[,] AND THUS, THE COURT OF

APPEALS GRAVELY ERRED IN AFFIRMING WITH MODIFICATION THE NLRC

DECISION IN THE LIGHT OF THE RULING IN THE CASE OF JENNY M.
AGABON and VIRGILIO AGABON vs, NLRC, ET AL., GR NO. 158963,
NOVEMBER 17, 2004, 442 SCRA 573, [AND SUBSEQUENTLY IN THE CASE
OF GLAXO
WELLCOME
PHILIPPINES,
INC.
VS. NAGAKAKAISANG
EMPLEYADO NG WELLCOME-DFA (NEW DFA), ET AL., GR NO. 149349, 11
MARCH 2005], WHICH FINDS APPLICATION IN THE INSTANT CASE BY
ANALOGY.13
Petitioners reiterated their position that the value of the facilities that the
private respondents enjoyed should be included in the computation of the
"wages" received by them. They argued that the rulings in Agabon v.
NLRC14and Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado Ng
Wellcome-DFA15 should be applied by analogy, in the sense that the lack of
written acceptance of the employees of the facilities enjoyed by them should
not mean that the value of the facilities could not be included in the
computation of the private respondents "wages."
On November 29, 2006, the Court resolved to issue a Temporary Restraining
Order (TRO) enjoining the public respondent from enforcing the NLRC and CA
decisions until further orders from the Court.
After a thorough review of the records, however, the Court finds no merit in
the petition.
This petition generally involves factual issues, such as, whether or not there
is evidence on record to support the findings of the LA, the NLRC and the CA
that private respondents were project or regular employees and that their
salary differentials had been paid. This calls for a re-examination of the
evidence, which the Court cannot entertain. Settled is the rule that factual
findings of labor officials, who are deemed to have acquired expertise in
matters within their respective jurisdiction, are generally accorded not only
respect but even finality, and bind the Court when supported by substantial
evidence. It is not the Courts function to assess and evaluate the evidence
all over again, particularly where the findings of both the Labor tribunals and
the CA concur. 16
As a general rule, on payment of wages, a party who alleges payment as a
defense has the burden of proving it.17Specifically with respect to labor cases,
the burden of proving payment of monetary claims rests on the employer, the
rationale being that the pertinent personnel files, payrolls, records,
remittances and other similar documents which will show that overtime,
differentials, service incentive leave and other claims of workers have been
paid are not in the possession of the worker but in the custody and
absolute control of the employer.18
In this case, petitioners, aside from bare allegations that private respondents
received wages higher than the prescribed minimum, failed to present any
evidence, such as payroll or payslips, to support their defense of payment.
Thus, petitioners utterly failed to discharge the onus probandi.
Private respondents, on the other hand, are entitled to be paid the minimum
wage, whether they are regular or non-regular employees.

Section 3, Rule VII of the Rules to Implement the Labor Code 19 specifically
enumerates those who are not covered by the payment of minimum wage.
Project employees are not among them.
On whether the value of the facilities should be included in the computation
of the "wages" received by private respondents, Section 1 of DOLE
Memorandum Circular No. 2 provides that an employer may provide
subsidized meals and snacks to his employees provided that the subsidy
shall not be less that 30% of the fair and reasonable value of such facilities.
In such cases, the employer may deduct from the wages of the employees not
more than 70% of the value of the meals and snacks enjoyed by the latter,
provided that such deduction is with the written authorization of the
employees concerned.
Moreover, before the value of facilities can be deducted from the employees
wages, the following requisites must all be attendant: first, proof must be
shown that such facilities are customarily furnished by the trade; second, the
provision of deductible facilities must be voluntarily accepted in writing by
the employee; and finally, facilities must be charged at reasonable
value.20 Mere availment is not sufficient to allow deductions from employees
wages.21
These requirements, however, have not been met in this case. SLL failed to
present any company policy or guideline showing that provisions for meals
and lodging were part of the employees salaries. It also failed to provide proof
of the employees written authorization, much less show how they arrived at
their valuations. At any rate, it is not even clear whether private respondents
actually enjoyed said facilities.
The Court, at this point, makes a distinction between "facilities" and
"supplements." It is of the view that the food and lodging, or the electricity
and water allegedly consumed by private respondents in this case were not
facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big
Wedge Co.,22 the two terms were distinguished from one another in this wise:
"Supplements," therefore, constitute extra remuneration or special privileges
or benefits given to or received by the laborers over and above their ordinary
earnings or wages. "Facilities," on the other hand, are items of expense
necessary for the laborer's and his family's existence and subsistence so that
by express provision of law (Sec. 2[g]), they form part of the wage and when
furnished by the employer are deductible therefrom, since if they are not so
furnished, the laborer would spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an
extra remuneration above and over his basic or ordinary earning or wage is
supplement; and when said benefit or privilege is part of the laborers' basic
wages, it is a facility. The distinction lies not so much in the kind of benefit
or item (food, lodging, bonus or sick leave) given, but in the purpose for
which it is given.23 In the case at bench, the items provided were given freely
by SLL for the purpose of maintaining the efficiency and health of its workers
while they were working at their respective projects.1avvphi1
For said reason, the cases of Agabon and Glaxo are inapplicable in this case.
At any rate, these were cases of dismissal with just and authorized causes.

The present case involves the matter of the failure of the petitioners to
comply with the payment of the prescribed minimum wage.
The Court sustains the deletion of the award of differentials with respect to
respondent Roldan Lopez. As correctly pointed out by the CA, he did not
work for the project in Antipolo.
WHEREFORE, the petition is DENIED. The temporary restraining order
issued by the Court on November 29, 2006 is deemed, as it is hereby
ordered, DISSOLVED.
SO ORDERED.

G.R. No. L-44169 December 3, 1985

ROSARIO A. GAA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES
CORPORATION, and CESAR R. ROXAS, Deputy Sheriff of
Manila, respondents.
Federico C. Alikpala and Federico Y. Alikpala, Jr. for petitioner.
Borbe and Palma for private respondent.
PATAJO, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals promulgated on March 30, 1976, affirming the decision of the Court
of First Instance of Manila.
It appears that respondent Europhil Industries Corporation was formerly one
of the tenants in Trinity Building at T.M. Kalaw Street, Manila, while
petitioner Rosario A. Gaa was then the building administrator. On December
12, 1973, Europhil Industries commenced an action (Civil Case No. 92744) in
the Court of First Instance of Manila for damages against petitioner "for
having perpetrated certain acts that Europhil Industries considered a
trespass upon its rights, namely, cutting of its electricity, and removing its
name from the building directory and gate passes of its officials and
employees" (p. 87 Rollo). On June 28, 1974, said court rendered judgment in
favor of respondent Europhil Industries, ordering petitioner to pay the former
the sum of P10,000.00 as actual damages, P5,000.00 as moral damages,
P5,000.00 as exemplary damages and to pay the costs.
The said decision having become final and executory, a writ of garnishment
was issued pursuant to which Deputy Sheriff Cesar A. Roxas on August 1,
1975 served a Notice of Garnishment upon El Grande Hotel, where petitioner
was then employed, garnishing her "salary, commission and/or
remuneration." Petitioner then filed with the Court of First Instance of Manila
a motion to lift said garnishment on the ground that her "salaries,
commission and, or remuneration are exempted from execution under Article
1708 of the New Civil Code. Said motion was denied by the lower Court in an
order dated November 7, 1975. A motion for reconsideration of said order
was likewise denied, and on January 26, 1976 petitioner filed with the Court
of Appeals a petition for certiorari against filed with the Court of Appeals a
petition for certiorari against said order of November 7, 1975.
On March 30, 1976, the Court of Appeals dismissed the petition
for certiorari. In dismissing the petition, the Court of Appeals held that
petitioner is not a mere laborer as contemplated under Article 1708 as the
term laborer does not apply to one who holds a managerial or supervisory
position like that of petitioner, but only to those "laborers occupying the
lower strata." It also held that the term "wages" means the pay given" as hire
or reward to artisans, mechanics, domestics or menial servants, and laborers
employed in manufactories, agriculture, mines, and other manual occupation
and usually employed to distinguish the sums paid to persons hired to

perform manual labor, skilled or unskilled, paid at stated times, and

measured by the day, week, month, or season," citing 67 C.J. 285, which is
the ordinary acceptation of the said term, and that "wages" in Spanish is
"jornal" and one who receives a wage is a "jornalero."
In the present petition for review on certiorari of the aforesaid decision of the
Court of Appeals, petitioner questions the correctness of the interpretation of
the then Court of Appeals of Article 1708 of the New Civil Code which reads
as follows:
ART. 1708. The laborer's wage shall not be subject to
execution or attachment, except for debts incurred for food,
shelter, clothing and medical attendance.
It is beyond dispute that petitioner is not an ordinary or rank and file laborer
but "a responsibly place employee," of El Grande Hotel, "responsible for
planning, directing, controlling, and coordinating the activities of all
housekeeping personnel" (p. 95, Rollo) so as to ensure the cleanliness,
maintenance and orderliness of all guest rooms, function rooms, public
areas, and the surroundings of the hotel. Considering the importance of
petitioner's function in El Grande Hotel, it is undeniable that petitioner is
occupying a position equivalent to that of a managerial or supervisory
position.
In its broadest sense, the word "laborer" includes everyone who performs any
kind of mental or physical labor, but as commonly and customarily used and
understood, it only applies to one engaged in some form of manual or
physical labor. That is the sense in which the courts generally apply the term
as applied in exemption acts, since persons of that class usually look to the
reward of a day's labor for immediate or present support and so are more in
need of the exemption than are other. (22 Am. Jur. 22 citing Briscoe vs.
Montgomery, 93 Ga 602, 20 SE 40;Miller vs. Dugas, 77 Ga 4 Am St Rep
192; State ex rel I.X.L. Grocery vs. Land, 108 La 512, 32 So 433; Wildner vs.
Ferguson, 42 Minn 112, 43 NW 793; 6 LRA 338; Anno 102 Am St Rep. 84.
In Oliver vs. Macon Hardware Co., 98 Ga 249 SE 403, it was held that in
determining whether a particular laborer or employee is really a "laborer," the
character of the word he does must be taken into consideration. He must be
classified not according to the arbitrary designation given to his calling, but
with reference to the character of the service required of him by his employer.
In Wildner vs. Ferguson, 42 Minn 112, 43 NW 793, the Court also held that
all men who earn compensation by labor or work of any kind, whether of the
head or hands, including judges, laywers, bankers, merchants, officers of
corporations, and the like, are in some sense "laboring men." But they are
not "laboring men" in the popular sense of the term, when used to refer to a
must presume, the legislature used the term. The Court further held in said
case:
There are many cases holding that contractors, consulting or
assistant engineers, agents, superintendents, secretaries of
corporations and livery stable keepers, do not come within
the meaning of the term. (Powell v. Eldred, 39 Mich,
554, Atkin v. Wasson, 25 N.Y. 482; Short v. Medberry, 29

Hun. 39; Dean v. De Wolf, 16 Hun. 186; Krausen v.

Buckel, 17 Hun. 463; Ericson v. Brown, 39 Barb. 390; Coffin
v. Reynolds, 37 N.Y. 640; Brusie v. Griffith, 34 Cal. 306; Dave
v. Nunan,62 Cal. 400).
Thus, in Jones vs. Avery, 50 Mich, 326, 15 N.W. Rep. 494, it was held that a
traveling salesman, selling by sample, did not come within the meaning of a
constitutional provision making stockholders of a corporation liable for "labor
debts" of the corporation.
In Kline vs. Russell 113 Ga. 1085, 39 SE 477, citing Oliver vs. Macon
Hardware Co., supra, it was held that a laborer, within the statute exempting
from garnishment the wages of a "laborer," is one whose work depends on
mere physical power to perform ordinary manual labor, and not one engaged
in services consisting mainly of work requiring mental skill or business
capacity, and involving the exercise of intellectual faculties.
So, also in Wakefield vs. Fargo, 90 N.Y. 213, the Court, in construing an act
making stockholders in a corporation liable for debts due "laborers, servants
and apprentices" for services performed for the corporation, held that a
"laborer" is one who performs menial or manual services and usually looks to
the reward of a day's labor or services for immediate or present support. And
in Weymouth vs. Sanborn, 43 N.H. 173, 80 Am. Dec. 144, it was held that
"laborer" is a term ordinarily employed to denote one who subsists by
physical toil in contradistinction to those who subsists by professional skill.
And in Consolidated Tank Line Co. vs. Hunt, 83 Iowa, 6, 32 Am. St. Rep. 285,
43 N.W. 1057, 12 L.R.A. 476, it was stated that "laborers" are those persons
who earn a livelihood by their own manual labor.
Article 1708 used the word "wages" and not "salary" in relation to "laborer"
when it declared what are to be exempted from attachment and execution.
The term "wages" as distinguished from "salary", applies to the compensation
for manual labor, skilled or unskilled, paid at stated times, and measured by
the day, week, month, or season, while "salary" denotes a higher degree of
employment, or a superior grade of services, and implies a position of office:
by contrast, the term wages " indicates considerable pay for a lower and less
responsible character of employment, while "salary" is suggestive of a larger
and more important service (35 Am. Jur. 496).
The distinction between wages and salary was adverted to in Bell vs. Indian
Livestock Co. (Tex. Sup.), 11 S.W. 344, wherein it was said: "'Wages' are the
compensation given to a hired person for service, and the same is true of
'salary'. The words seem to be synonymous, convertible terms, though we
believe that use and general acceptation have given to the word 'salary' a
significance somewhat different from the word 'wages' in this: that the former
is understood to relate to position of office, to be the compensation given for
official or other service, as distinguished from 'wages', the compensation for
labor." Annotation 102 Am. St. Rep. 81, 95.
We do not think that the legislature intended the exemption in Article 1708
of the New Civil Code to operate in favor of any but those who are laboring
men or women in the sense that their work is manual. Persons belonging to
this class usually look to the reward of a day's labor for immediate or present

support, and such persons are more in need of the exemption than any
others. Petitioner Rosario A. Gaa is definitely not within that class.
We find, therefore, and so hold that the Trial Court did not err in denying in
its order of November 7, 1975 the motion of petitioner to lift the notice of
garnishment against her salaries, commission and other remuneration from
El Grande Hotel since said salaries, Commission and other remuneration due
her from the El Grande Hotel do not constitute wages due a laborer which,
under Article 1708 of the Civil Code, are not subject to execution or
attachment.
IN VIEW OF THE FOREGOING, We find the present petition to be without
merit and hereby AFFIRM the decision of the Court of Appeals, with costs
against petitioner.
SO ORDERED.

G.R. No. L-50999 March 23, 1990

JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,
vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR
ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.
Raul E. Espinosa for petitioners.
Lucas Emmanuel B. Canilao for petitioner A. Manuel.
Atienza, Tabora, Del Rosario & Castillo for private respondent.
MEDIALDEA, J.:
This is a petition for certiorari seeking to modify the decision of the National
Labor Relations Commission in NLRC Case No. RB-IV-20840-78-T entitled,
"Jose Songco and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M),
Inc., Respondent-Appellee" and NLRC Case No. RN- IV-20855-78-T
entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc.,
Respondent-Appellee," which dismissed the appeal of petitioners herein and
in effect affirmed the decision of the Labor Arbiter ordering private
respondent to pay petitioners separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service.
The antecedent facts are as follows:
Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig)
filed with the Department of Labor (Regional Office No. 4) an application
seeking clearance to terminate the services of petitioners Jose Songco, Romeo
Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly
on the ground of retrenchment due to financial losses. This application was
seasonably opposed by petitioners alleging that the company is not suffering
from any losses. They alleged further that they are being dismissed because
of their membership in the union. At the last hearing of the case, however,
petitioners manifested that they are no longer contesting their dismissal. The
parties then agreed that the sole issue to be resolved is the basis of the
separation pay due to petitioners. Petitioners, who were in the sales force of
Zuellig received monthly salaries of at least P40,000. In addition, they
received commissions for every sale they made.
The collective Bargaining Agreement entered into between Zuellig and F.E.
Zuellig Employees Association, of which petitioners are members, contains
the following provision (p. 71, Rollo):
ARTICLE XIV Retirement Gratuity
Section l(a)-Any employee, who is separated from
employment due to old age, sickness, death or permanent
lay-off not due to the fault of said employee shall receive
from the company a retirement gratuity in an amount
equivalent to one (1) month's salary per year of service. One
month of salary as used in this paragraph shall be deemed
equivalent to the salary at date of retirement; years of service

shall be deemed equivalent to total service credits, a fraction

of at least six months being considered one year, including
probationary employment. (Emphasis supplied)
On the other hand, Article 284 of the Labor Code then prevailing provides:
Art. 284. Reduction of personnel. The termination of
employment of any employee due to the installation of labor
saving-devices, redundancy, retrenchment to prevent losses,
and other similar causes, shall entitle the employee affected
thereby to separation pay. In case of termination due to the
installation of labor-saving devices or redundancy, the
separation pay shall be equivalent to one (1) month pay or to
at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent
losses and other similar causes, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year. (Emphasis supplied)
In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing
the Labor Code provide:
xxx
Sec. 9(b). Where the termination of employment is due to
retrechment initiated by the employer to prevent losses or
other similar causes, or where the employee suffers from a
disease and his continued employment is prohibited by law
or is prejudicial to his health or to the health of his coemployees, the employee shall be entitled to termination pay
equivalent at least to his one month salary, or to one-half
month pay for every year of service, whichever is higher, a
fraction of at least six (6) months being considered as one
whole year.
xxx
Sec. 10. Basis of termination pay. The computation of the
termination pay of an employee as provided herein shall be
based on his latest salary rate, unless the same was reduced
by the employer to defeat the intention of the Code, in which
case the basis of computation shall be the rate before its
deduction. (Emphasis supplied)
On June 26,1978, the Labor Arbiter rendered a decision, the dispositive
portion of which reads (p. 78, Rollo):
RESPONSIVE TO THE FOREGOING, respondent should be
as it is hereby, ordered to pay the complainants separation
pay equivalent to their one month salary (exclusive of
commissions, allowances, etc.) for every year of service that
they have worked with the company.

SO ORDERED.
The appeal by petitioners to the National Labor Relations Commission was
dismissed for lack of merit.
Hence, the present petition.
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary
Abandonment and Withdrawal of Petition dated April 7, 1980 filed by
petitioner Romeo Cipres, based on the ground that he wants "to abide by the
decision appealed from" since he had "received, to his full and complete
satisfaction, his separation pay," resolved to dismiss the petition as to him.
The issue is whether or not earned sales commissions and allowances should
be included in the monthly salary of petitioners for the purpose of
computation of their separation pay.
The petition is impressed with merit.
Petitioners' position was that in arriving at the correct and legal amount of
separation pay due them, whether under the Labor Code or the CBA, their
basic salary, earned sales commissions and allowances should be added
together. They cited Article 97(f) of the Labor Code which includes
commission as part on one's salary, to wit;
(f) 'Wage' paid to any employee shall mean the remuneration
or earnings, however designated, capable of being expressed
in terms of money, whether fixed or ascertained on a time,
task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of
employment for work done or to be done, or for services
rendered or to be rendered, and includes the fair and
reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by
the employer to the employee. 'Fair reasonable value' shall
not include any profit to the employer or to any person
affiliated with the employer.
Zuellig argues that if it were really the intention of the Labor Code as well as
its implementing rules to include commission in the computation of
separation pay, it could have explicitly said so in clear and unequivocal
terms. Furthermore, in the definition of the term "wage", "commission" is
used only as one of the features or designations attached to the word
remuneration or earnings.
Insofar as the issue of whether or not allowances should be included in the
monthly salary of petitioners for the purpose of computation of their
separation pay is concerned, this has been settled in the case of Santos v.
NLRC, et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We
ruled that "in the computation of backwages and separation pay, account
must be taken not only of the basic salary of petitioner but also of her
transportation and emergency living allowances." This ruling was reiterated
in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987, 155 SCRA 124

and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524,
January 20, 1989.
We shall concern ourselves now with the issue of whether or not earned sales
commission should be included in the monthly salary of petitioner for the
purpose of computation of their separation pay.
Article 97(f) by itself is explicit that commission is included in the definition
of the term "wage". It has been repeatedly declared by the courts that where
the law speaks in clear and categorical language, there is no room for
interpretation or construction; there is only room for application (Cebu
Portland Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August
22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455,
June 28,1973, 51 SCRA 381). A plain and unambiguous statute speaks for
itself, and any attempt to make it clearer is vain labor and tends only to
obscurity. How ever, it may be argued that if We correlate Article 97(f) with
Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor
Code and Sections 9(b) and 10 of the Implementing Rules, there appears to
be an ambiguity. In this regard, the Labor Arbiter rationalized his decision in
this manner (pp. 74-76, Rollo):
The definition of 'wage' provided in Article 96 (sic) of the
Code can be correctly be (sic) stated as a general definition.
It is 'wage ' in its generic sense. A careful perusal of the same
does not show any indication that commission is part of
salary. We can say that commission by itself may be
considered a wage. This is not something novel for it cannot
be gainsaid that certain types of employees like agents, field
personnel and salesmen do not earn any regular daily,
weekly or monthly salaries, but rely mainly on commission
earned.
Upon the other hand, the provisions of Section 10, Rule 1,
Book VI of the implementing rules in conjunction with
Articles 273 and 274 (sic) of the Code specifically states that
the basis of the termination pay due to one who is sought to
be legally separated from the service is 'his latest salary
rates.
x x x.
Even Articles 273 and 274 (sic) invariably use 'monthly pay
or monthly salary'.
The above terms found in those Articles and the particular
Rules were intentionally used to express the intent of the
framers of the law that for purposes of separation pay they
mean to be specifically referring to salary only.
.... Each particular benefit provided in the Code and other
Decrees on Labor has its own pecularities and nuances and
should be interpreted in that light. Thus, for a specific
provision, a specific meaning is attached to simplify matters
that may arise there from. The general guidelines in (sic) the

formation of specific rules for particular purpose. Thus, that

what should be controlling in matters concerning
termination pay should be the specific provisions of both
Book VI of the Code and the Rules. At any rate, settled is the
rule that in matters of conflict between the general provision
of law and that of a particular- or specific provision, the
latter should prevail.
On its part, the NLRC ruled (p. 110, Rollo):
From the aforequoted provisions of the law and the
implementing rules, it could be deduced that wage is used in
its generic sense and obviously refers to the basic wage rate
to be ascertained on a time, task, piece or commission basis
or other method of calculating the same. It does not,
however, mean that commission, allowances or analogous
income necessarily forms part of the employee's salary
because to do so would lead to anomalies (sic), if not absurd,
construction of the word "salary." For what will prevent the
employee from insisting that emergency living allowance,
13th month pay, overtime, and premium pay, and other
fringe benefits should be added to the computation of their
separation pay. This situation, to our mind, is not the real
intent of the Code and its rules.
We rule otherwise. The ambiguity between Article 97(f), which defines the
term 'wage' and Article XIV of the Collective Bargaining Agreement, Article
284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules,
which mention the terms "pay" and "salary", is more apparent than real.
Broadly, the word "salary" means a recompense or consideration made to a
person for his pains or industry in another man's business. Whether it be
derived from "salarium," or more fancifully from "sal," the pay of the Roman
soldier, it carries with it the fundamental idea of compensation for services
rendered. Indeed, there is eminent authority for holding that the words
"wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38
Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89
App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin
word "salarium," is often used interchangeably with "wage", the etymology of
which is the Middle English word "wagen". Both words generally refer to one
and the same meaning, that is, a reward or recompense for services
performed. Likewise, "pay" is the synonym of "wages" and "salary" (Black's
Law Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary"
have the same meaning, and commission is included in the definition of
"wage", the logical conclusion, therefore, is, in the computation of the
separation pay of petitioners, their salary base should include also their
earned sales commissions.
The aforequoted provisions are not the only consideration for deciding the
petition in favor of the petitioners.
We agree with the Solicitor General that granting, in gratia argumenti, that
the commissions were in the form of incentives or encouragement, so that
the petitioners would be inspired to put a little more industry on the jobs

particularly assigned to them, still these commissions are direct

remuneration services rendered which contributed to the increase of income
of Zuellig . Commission is the recompense, compensation or reward of an
agent, salesman, executor, trustees, receiver, factor, broker or bailee, when
the same is calculated as a percentage on the amount of his transactions or
on the profit to the principal (Black's Law Dictionary, 5th Ed., citing Weiner
v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a
salesman and the reason for such type of remuneration for services rendered
demonstrate clearly that commission are part of petitioners' wage or salary.
We take judicial notice of the fact that some salesmen do not receive any
basic salary but depend on commissions and allowances or commissions
alone, are part of petitioners' wage or salary. We take judicial notice of the
fact that some salesman do not received any basic salary but depend on
commissions and allowances or commissions alone, although an employeremployee relationship exists. Bearing in mind the preceeding dicussions, if
we adopt the opposite view that commissions, do not form part of wage or
salary, then, in effect, We will be saying that this kind of salesmen do not
receive any salary and therefore, not entitled to separation pay in the event of
discharge from employment. Will this not be absurd? This narrow
interpretation is not in accord with the liberal spirit of our labor laws and
considering the purpose of separation pay which is, to alleviate the
difficulties which confront a dismissed employee thrown the the streets to
face the harsh necessities of life.
Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the
salary base that should be used in computing the separation pay, We held
that:
The commissions also claimed by petitioner ('override
commission' plus 'net deposit incentive') are not properly
includible in such base figure since such commissions must
be earned by actual market transactions attributable to
petitioner.
Applying this by analogy, since the commissions in the present case were
earned by actual market transactions attributable to petitioners, these
should be included in their separation pay. In the computation thereof, what
should be taken into account is the average commissions earned during their
last year of employment.
The final consideration is, in carrying out and interpreting the Labor Code's
provisions and its implementing regulations, the workingman's welfare
should be the primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal and compassionate
spirit of the law as provided for in Article 4 of the Labor Code which states
that "all doubts in the implementation and interpretation of the provisions of
the Labor Code including its implementing rules and regulations shall be
resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152
SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763, July
12,1989), and Article 1702 of the Civil Code which provides that "in case of
doubt, all labor legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.

ACCORDINGLY, the petition is hereby GRANTED. The decision of the

respondent National Labor Relations Commission is MODIFIED by including
allowances and commissions in the separation pay of petitioners Jose Songco
and Amancio Manuel. The case is remanded to the Labor Arbiter for the
proper computation of said separation pay.
SO ORDERED.

G.R. No. 127422

April 17, 2001

LMG CHEMICALS CORPORATION, LMG CHEMICALS

CORPORATION, petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT,
THE HON. LEONARDO A. QUISUMBING, and CHEMICAL WORKER'S
UNION, respondents.
SANDOVAL-GUTIERREZ, J.:
Before us is a petition certiorari with prayer for a temporary restraining order
and a writ of preliminary injunction under Rule 65 of the 1997 Rules of Civil
Procedure, as amended, seeking to nullify the orders dated October 7, 1996
and December 17, 1996, issued by the then Secretary of Labor and
Employment, Hon. Leonardo A. Quisumbing,1 in OS-AJ-05-10(1)-96, "IN RE:
LABOR DISPUTE AT LMB CHEMICALS CORPORATION"
The facts as culled from the records are:
LMG Chemicals Corporation, (petitioner) is a domestic corporation engaged
in the manufacture and sale of various kinds of chemical substances,
including aluminum sulfate which is essential in purifying water, and
technical grade sulfuric acid used in thermal power plants. Petitioner has
three divisions, namely: the Organic Division, Inorganic Division and the
Pinamucan Bulk Carriers. There are two unions within petitioner's Inorganic
Division. One union represents the daily paid employees and the other union
represents the monthly paid employees. Chemical Workers Union,
respondent, is a duly registered labor organization acting as the collective
bargaining agent of all the daily paid employees of petitioner's Inorganic
Division.
Sometime in December 1995, the petitioner and the respondent started
negotiation for a new Collective Bargaining Agreement (CBA) as their old CBA
was about to expire. They were able to agree on the political provisions of the
new CBA, but no agreement was reached on the issue of wage increase. The
economic issues were not also settled.
The positions of the parties with respect to wage issue were:
"Petitioner Company
P40 per day on the first year
P40 per day on the second year
P40 per day on the third year
Respondent Union

"P142 for the first 18 months

P73 for the second 18 months"
With the CBA negotiations at a deadlock, on March 6, 1996, respondent
union filed a Notice of Strike with the National Conciliation and Mediation
Board, National Capital Region. Despite several conferences and efforts of the
designated conciliator-mediator, the parties failed to reach an amicable
settlement.
On April 16, 1996, respondent union staged a strike. IN an attempt to end
the strike early, petitioner, on April 24, 1996, made an improved offer of
P135 per day, spread over the period of three years, as follows:
"P55 per day on the first year;
P45 per day on the second year;
P35 per day on the third year."
On May 9, 1996, another conciliation meeting was held between the parties.
In that meeting, petitioner reiterated its improved offer of P135 per day which
was again rejected by the respondent union.
On May 20, 1996, the Secretary of Labor and Employment, finding the
instant labor dispute impressed with national interest, assumed jurisdiction
over the same.
In compliance with the directive of the Labor Secretary, the parties submitted
their respective positive papers both dated June 21, 1996.
In its position paper, petitioner made a turn-around, stating that it could no
longer afford to grant its previous offer due to serious financial losses during
the early months of 1996. It then made the following offer:
Zero increase in the first year;
P30 per day increase in the second year; and
P20 per day increase in the third year.
In its reply to petitioner's position paper, respondent union claimed it had a
positive performance in terms of income during the covered period.
On October 7, 1996, the Secretary of Labor and Employment issued the first
assailed order, pertinent portions of which read:
"xxx. In the light of the Company's last offer and the Union's last
position, We decree that the Company's offer of P135 per day
wage increase be further increased to P140 per (day), which shall
be incorporated in the new CBA, as follows:

P350 per day on the first 18 months, and

P90 per day for the first 18 months, and

P150 per day for the next 18 months"

P50 per day for the next 18 months.

In the course of the negotiations, respondent union pruned down the

originally proposed wage increase quoted above to P215 per day, broken
down as follows:

After all, the Company had granted its supervisory employees an

increase of P4,500 per month or P166 per day, more or less, if
the period reckoned is 27 working days.

In regard to the division of the three-year period into two subperiods of 18 months each, this office take cognizance of the
same practice under the old CBA.
2. Other economic demands
Considering the financial condition of the Company, all other
economic demands except those provided in No. 3 below are
rejected. The provisions in the old CBA as well as those
contained in the Company's Employee's Primer of Benefits as of
Aug. 1, 1994 shall be retained and incorporated in the new CBA.
3. Effectivity of the new CBA
Article 253-A of the Labor Code, as amended, provides that when
no new CBA is signed during a period of six months from the
expiry date of the old CBA, the retroactivity period shall be
according to the parties' agreement, Inasmuch as the parties
could not agree on this issue and since this Office has assumed
jurisdiction, then this matter now lies at the discretion of the
Secretary of labor and Employment. Thus the new Collective
Bargaining Agreement which the parties will sign pursuant to
this Order shall retroact to January 1, 1996.
x

Forthwith, petitioner filed a motion for reconsideration but was denied by the
Secretary in his order dated December 16, 1996.
Petitioner now contends that in issuing the said orders, respondent Secretary
gravely abused his discretion, thus:
I
"THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
IN DISREGARDING THE EVIDENCE OF PETITIONER'S FINANCIAL
LOSSES AND IN GRANTING A P140.00 WAGE INCREASE TO THE
RESPONDENT UNION.
II
THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
IN DECREEING THAT THE NEW COLLECTIVE BARGAINING
AGREEMENT TO BE SIGNED BY THE PARTIES SHALL RETROACT
TO JANUARY 1, 1996."
Anent the first ground, petitioner asserts that the decreed amount of P140
wage increase has no basis in fact and in law. Petitioner insists that public
respondent Secretary whimsically presumed that the company can survive
despite the losses being suffered by its Inorganic Division and its additional
losses caused by the strike held by respondent union. Petitioner further
contends that respondent Secretary disregarded its evidence showing that for
the first part of 1996, its Inorganic Division suffered serious losses
amounting to P15.651 million. Hence, by awarding wage increase without

any basis, respondent Secretary gravely abused his discretion and violated
petitioner's right to due process.
We are not persuaded.
As aptly stated by the Solicitor General in his comment on the petition dated
July 1, 1996, respondent Secretary considered all the evidence and
arguments adduced by both parties. In ordering the wage increase, the
Secretary ratiocinated as follows:
"xxx
In the Company's Supplemental Comment, it says that it has
three divisions, namely: the Organic Division, Inorganic Division
and the Pinamucan Bulk Carriers. The Union in this instant
dispute represent the daily wage earners in the Inorganic
Division. The respective income of the three divisions is shown
in Annex B to the Company's Supplemental Comment. The
Organic Division posted an income of P369,754,000 in 1995.
The Inorganic Division realized an income of P261,288,000 in
the same period. The tail ender is the Pinamucan Bulk Carriers
Division with annual income of P11,803,000 for the same
period. Total Company income for the period was P642,845,000.
It is a sound business practice that a Company's income from all
sources are collated to determine its true financial condition.
Regardless of whether one division or another losses or gains in
its yearly operation is not material in reckoning a Company's
financial status. In fact, the loss in one is usually offset by the
gains in the others. It is not a good business practice to isolate
the employees or workers of one division, which incurred an
operating loss for a particular period. That will create
demoralization among its ranks, which will ultimately affect
productivity. The eventual loser will be the company.
So, even if We believe the position of the company that its
Inorganic Division lost last year and during the early months of
this year, it would not be a good argument to deny them of any
salary increase. When the Company made the offer of P135 per
day for the three year period, it was presumed to have studied
its financial condition properly, taking into consideration its
past performance and projected income. In fact, the Company
realized a net income of P10,806,678 for 1995 in all its
operations, which could be one factor why it offered the wage
increase package of P135 per day for the Union
members.1wphi1.nt
Besides, as a major player in the country's corporate field,
reneging from a wage increase package it previously offered and
later on withdrawing the same simply because this Office had
already assumed jurisdiction over its labor dispute with the
Union cannot be countenanced. It will be worse if the employer
is allowed to withdraw its offer on the ground that the union
staged a strike and consequently subsequently suffered business

setbacks in its income projections. To sustain the Company's

position is like hanging the proverbial sword of Damocles over
the Union's right to concerted activities, ready to fall when the
latter clamors for better terms and conditions of employment.
But we cannot also sustain the Union's demand for an increase
of P215 per day. If we add the overload factors such as the
increase in SSS premiums, medicare and medicaid, and other
multiplier costs, the Company will be saddled with additional
labor cost, and its projected income for the CBS period may not
be able to absorb the added cost without impairing its viability.
xxx"
Verily, petitioner's assertion that respondent Secretary failed to consider the
evidence on record lacks merit. It was only the Inorganic Division of the
petitioner corporation that was sustaining losses. Such incident does not
justify the withholding of any salary increase as petitioner's income from all
sources are collated for the determination of its true financial condition. As
correctly stated by the Secretary, "the loss in one is usually offset by the
gains in the others."
Moreover, petitioner company granted its supervisory employees, during the
pendency of the negotiations between the parties, a wage increase of P4,500
per month or P166 per day, more or less. Petitioner justified this by saying
that the said increase was pursuant to its earlier agreement with the
supervisions. Hence, the company had no choice but to abide by such
agreement even if it was already sustaining losses as a result of the strike of
the rank-and-file employees.
Petitioner's actuation is actually a discrimination against respondent union
members. If it could grant a wage increase to its supervisors, there is no valid
reason why it should deny the same to respondent union members.
Significantly, while petitioner asserts that it sustained losses in the first part
of 1996, yet during the May 9, 1996 conciliation meeting, it made the offer of
P135 daily wage to the said union members.
This Court, therefore, holds that respondent Secretary did not gravely abuse
his discretion in ordering the wage increase. Grave abuse of discretion
implies whimsical and capricious exercise of power which, in the instant
case, is not obtaining.
On the second ground, petitioner contends that public respondent committed
grave abuse of discretion when he ordered that the new CBA which the
parties will sign shall retroact to January 1, 1996, citing the cases of Union
of Filipro Employees vs. NLRC,2 and Pier 8 Arrastre and Stevedoring Services,
Inc. vs. Roldan Confesor.3
Invoking the provisions of Article 253-A of the Labor Code, petitioner insists
that public respondent's discretion on the issue of the date of the effectivity
of the new CBA is limited to either: (1) leaving the matter of the date of
effectivity of the new CBA is limited to either: (1) leaving the matter of the
date of effectivity of the new CBA to the agreement of the parties or (2)
ordering that the terms of the new CBA be prospectively applied.

It must be emphasized that respondent Secretary assumed jurisdiction over

the dispute because it is impressed with national interest. As noted by the
Secretary, "the petitioner corporation was then supplying the sulfate
requirements of MWSS as well as the sulfuric acid of NAPOCOR, and
consequently, the continuation of the strike would seriously affect the water
supply of Metro Manila and the power supply of the Luzon Grid." Such
authority of the Secretary to assume jurisdiction carries with it the power to
determine the retroactivity of the parties' CBA.
It is well settled in our jurisprudence that the authority of the Secretary of
Labor to assume jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to national interest includes
and extends to all questions and controversies arising therefrom. The power
is plenary and discretionary in nature to enable him to effectively and
efficiently dispose of the primary dispute.4
In St. Luke's Medical Center, Inc. vs. Torres5, a deadlock developed during
the CBA negotiations between the management and the union. The Secretary
of Labor assumed jurisdiction and ordered that their CBA shall retroact to
the date of the expiration of the previous CBA. The management claimed that
the Secretary of Labor gravely abused his discretion. This Court held:
"xxx
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 the petitioner. Under the
circumstances of the case, Art. 253-A cannot be properly applied
to herein case. As correctly stated by public respondent in his
assailed Order of April 12, 1991
'Anent the alleged lack of basis for retroactivity
provisions awarded, We would stress that the provision
of law invoked by the Hospital, Article 253-A of the
Labor Code, speaks of agreement by and between the
parties, and not arbitral awards.'
Therefore in the absence of the specific provision of law
prohibiting retroactivity of the effectivity of the 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 powers to determine the effectivity
thereof."
Finally, to deprive respondent Secretary of such power and discretion would
run counter to the well-established rule that all doubts in the interpretation
of labor laws should be resolved in favor of labor. In upholding the assailed
orders of respondent Secretary, this Court is only giving meaning to this rule.
Indeed, the Court should help labor authorities in providing workers
immediate benefits, without being hampered by arbitration or litigation
processes that prove to be not only nerve-wracking but financially
burdensome in the long run.
As we said in Maternity Children's Hospital vs. Secretary of Labor 6:

"Social Justice Legislation, to be truly meaningful and rewarding

to our workers, must not be hampered in its application by long
winded-arbitration and litigation. Rights must be asserted and
benefits received with the least inconvenience. Labor laws are
meant to promote, not to defeat, social justice."
WHEREFORE, the instant petition is DENIED. The assailed orders of the
Secretary of Labor dated October 7, 1996 and December 16, 1996
are AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 112546 March 13, 1996

leaves. However, it appears that, during the life of the petitioner corporation,
from the beginning of its operations in 1981 until its closure in 1992, it had
been giving separation pay equivalent to thirty (30) days' pay for every year of
service. Moreover, inasmuch as the region where North Davao operated was
plagued by insurgency and other peace and order problems, the employees
had to collect their salaries at a bank in Tagum, Davao del Norte, some 58
kilometers from their workplace and about 2 1/2 hours' travel time by public
transportation; this arrangement lasted from 1981 up to 1990.

NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION

TRUST, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
ANTONIO M. VILLANUEVA and WILFREDO GUILLEMA, respondents.
PANGANIBAN, J.:p
Is a company which is forced by huge business losses to close its business,
legally required to pay separation benefits to its employees at the time of its
closure in an amount equivalent to the separation pay paid to those who
were separated when the company was still a going concern? This is the
main question brought before this Court in this petition for certiorari under
Rule 65 of the Revised Rules of Court, which seeks to reverse and set aside
the Resolutions dated July 29, 1993 1 and September 27, 1993 2 of the
National Labor Relations Commission 3 (NLRC) in NLRC CA No. M-00139593.
The Resolution dated July 29, 1993 affirmed in toto the decision of the Labor
Arbiter in RAB-11-08-00672-92 and RAB-11-08-00713-92 ordering
petitioners to pay the complainants therein certain monetary claims.
The Resolution dated September 27, 1993 denied
reconsideration of the said July 29, 1993 Resolution.

the

motion

for

The Facts
Petitioner North Davao Mining Corporation (North Davao) was incorporated
in 1974 as a 100% privately-owned company. Later, the Philippine National
Bank (PNB) became part owner thereof as a result of a conversion into equity
of a portion of loans obtained by North Davao from said bank. On June 30,
1986, PNB transferred all its loans to and equity in North Davao in favor of
the national government which, by virtue of Proclamation No. 50 dated
December 8, 1986, later turned them over to petitioner Asset Privatization
Trust (APT). As of December 31, 1990 the national government hold 81.8% of
the common stock and 100% of the preferred stock of said company.4
Respondent Wilfredo Guillema is one among several employees of North
Davao who were separated by reason of the company's closure on May 31,
1992, and who were the complainants in the cases before the respondent
labor arbiter.
On May 31, 1992, petitioner North Davao completely ceased operations due
to serious business reverses. From 1988 until its closure in 1992, North
Davao suffered net losses averaging three billion pesos (P3,000,000,000.00)
per year, for each of the five years prior to its closure. All told, as of
December 31, 1991, or five months prior to its closure, its total liabilities had
exceeded its assets by 20,392 billion pesos, as shown by its financial
statements audited by the Commission on Audit. When it ceased operations,
its remaining employees were separated and given the equivalent of 12.5
days' pay for every year of service, computed on their basic monthly pay, in
addition to the commutation to cash of their unused vacation and sick

Subsequently, a complaint was filed with respondent Labor Arbiter by

respondent Wilfredo Guillema and 271 other separated employees for: (1)
additional separation pay of 17.5 days for every year of service; (2) back
wages equivalent to two days a month; (3) transportation allowance; (4)
hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment
medical clearance; and (8) future medical allowance, all of which amounted
to P58,022,878.31 as computed by private respondent. 5
On May 6, 1993, respondent Labor Arbiter rendered a decision ordering
petitioner North Davao to pay the complainants the following:
(a) Additional separation pay of 17.5 days for every year of
service;
(b) Backwages equivalent to two (2) days a month times the
number of years of service but not to exceed three (3) years;
(c) Transportation allowance at P80 a month times the
number of years of service but not to exceed three (3) years.
The benefits awarded by respondent Labor Arbiter amounted to
P10,240,517.75. Attorney's fees equivalent to ten percent (10%) thereof were
also granted. 6
On appeal, respondent NLRC affirmed the decision in toto. Petitioner North
Davao's motion for reconsideration was likewise denied. Hence, this petition.
The Parties' Submissions and the Issues
In affirming the Labor Arbiter's decision, respondent NLRC ruled that "since
(North Davao) has been paying its employees separation pay equivalent to
thirty (30) days pay for every year of service," knowing fully well that the law
provides for a lesser separation pay, then such company policy "has ripened
into an obligation," and therefore, depriving now the herein private
respondent and others similarly situated of the same benefits would be
discriminatory. 7 Quoting from Businessday Information Systems and
Services, Inc. (BISSI) vs. NLRC, 8 it said that petitioners "may not pay
separation benefits unequally for such discrimination breeds resentment and
ill-will among those who have been treated less generously than others." It
also cited Abella vs. NLRC, 9 as authority for saying that Art. 283 of the Labor
Code protects workers in case of closure of the establishment.
To justify the award of two days a month in backwages and P80 per month of
transportation allowance, respondent Commission ruled:

As to the appellants' claim that complainants-appellees' time

spent in collecting their wages at Tagum, Davao is not
compensable allegedly because it was on official time can not
be given credence. No iota of evidence has been presented to
back up said contention. The same is true with appellants'
assertion that the claim for transportation expenses is
without basis since they were incurred by the complainants.
Appellants should have submitted the payrolls to prove that
complainants appellees were not the ones who personally
collected their wages and/or the bus/jeep trip tickets or
vouchers to show that the complainants-appellees were
provided with free transportation as claimed.
Petitioner, through the Government Corporate Counsel, raised the following
grounds for the allowance of the petition:
1. The NLRC acted with grave abuse of discretion in
affirming without legal basis the award of additional
separation pay to private respondents who were separated
due to serious business losses on the part of petitioner.
2. The NLRC acted with grave abuse of discretion in
affirming without sufficient factual basis the award of
backwages and transportation expenses to private
respondents.
3. There is no appeal, nor any plain, speedy and adequate
remedy in the ordinary course of the law.
and the following issues:
1. Whether or not an employer whose business operations
ceased due to serious business losses or financial reverses is
obliged to pay separation pay to its employees separated by
reason of such closure.
2. Whether or not time spent in collecting wages in a place
other than the place of employment is compensable
notwithstanding that the same is done during official time.
3. Whether or not private respondents are entitled to
transportation expenses in the absence of evidence that
these expenses were incurred.
The First Issue: Separation Pay
To resolve this issue, it is necessary to revisit the provision of law adverted to
by the parties in their submissions, namely, Art. 283 of the Labor Code,
which reads as follows:
Art. 283. Closure of establishment and reduction of
personnel. The employer may also terminate the
employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment

or undertaking unless the closing is for the purpose of

circumventing the provisions of this Title, by serving a
written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment
to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year. (emphasis supplied)
The underscored portion of Art. 283 governs the grant of separation benefits
"in case of closures or cessation of operation" of business establishments
"NOT due to serious business losses or financial reverses . . . ". Where,
however, the closure was due to business losses as in the instant case, in
which the aggregate losses amounted to over P20 billion the Labor Code
does not impose any obligation upon the employer to pay separation benefits,
for obvious reasons. There is no need to belabor this point. Even the public
respondents, in their Comment 10 filed by the Solicitor General, impliedly
concede this point.
However, respondents tenaciously insist on the award of separation pay,
anchoring their claim solely on petitioner North Davao's long-standing policy
of giving separation pay benefits equivalent to 30-days' pay, which policy had
been in force in the years prior to its closure. Respondents contend that, by
denying the same separation benefits to private respondent and the others
similarly situated, petitioners discriminated against them. They rely on this
Court's ruling in Businessday Information Systems and Services, Inc. (BISSI)
vs. NLRC, (supra). In said case, petitioner BISSI, after experiencing financial
reverses, decided "as a retrenchment measure" to lay-off some employees on
May 16, 1988 and gave them separation pay equivalent to one-half (1/2)
month pay for every year of service. BISSI retained some employees in an
attempt to rehabilitate its business as a trading company. However, barely
two and a half months later, these remaining employees were likewise
discharged because the company decided to cease business operations
altogether. Unlike the earlier terminated employees, the second batch
received separation pay equivalent to a full month's salary for every year of
service, plus a mid-year bonus. This Court ruled that "there was
impermissible discrimination against the private respondents in the payment
of their separation benefits. The law requires an employer to extend equal
treatment to its employees. It may not, in the guise of exercising management
prerogatives, grant greater benefits to some and less to others. . . ."
In resolving the present case, it bears keeping in mind at the outset that the
factual circumstances of BISSI are quite different from the current case. The
Court noted that BISSI continued to suffer losses even after the

retrenchment of the first batch of employees: clearly, business did not

improve despite such drastic measure. That notwithstanding, when BISSI
finally shut down, it could well afford to (and actually did) pay off its
remaining employees with MORE separation benefits as compared with those
earlier laid off; obviously, then, there was no reason for BISSI to skimp on
separation pay for the first batch of discharged employees. That it was able to
pay one-month separation benefit for employees at the time of closure of its
business meant that it must have been also in a position to pay the same
amount to those who were separated prior to closure. That it did not do so
was a wrongful exercise of management prerogatives. That is why the Court
correctly faulted it with "impermissible discrimination." Clearly, it exercised
its management prerogatives contrary to "general principles of fair play and
justice."
In the instant case however, the company's practice of giving one month's
pay for every year of service could no longer be continued precisely because
the company could not afford it anymore. It was forced to close down on
account of accumulated losses of over P20 billion. This could not be said of
BISSI. In the case of North Davao, it gave 30-days' separation pay to its
employees when it was still a going concern even if it was already losing
heavily. As a going concern, its cash flow could still have sustained the
payment of such separation benefits. But when a business enterprise
completely ceases operations, i.e., upon its death as a going business
concern, its vital lifeblood its cashflow literally dries up. Therefore, the
fact that less separation benefits ware granted when the company finally met
its business death cannot be characterized as discrimination. Such action
was dictated not by a discriminatory management option but by its complete
inability to continue its business life due to accumulated losses. Indeed, one
cannot squeeze blood out of a dry stone. Nor water out of parched land.
As already stated, Art. 283 of the Labor Code does not obligate an employer
to pay separation benefits when the closure is due to losses. In the case
before us, the basis for the claim of the additional separation benefit of 17.5
days is alleged discrimination, i.e., unequal treatment of employees, which is
proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the
facts and circumstances of the present case, the grant of a lesser amount of
separation pay to private respondent was done, not by reason of
discrimination, but rather, out of sheer financial bankruptcy a fact that is
not controlled by management prerogatives. Stated differently, the total
cessation of operation due to mind-boggling losses was a supervening fact
that prevented the company from continuing to grant the more generous
amount of separation pay. The fact that North Davao at the point of its forced
closure voluntarily paid any separation benefits at all although not
required by law and 12.5-days worth at that, should have elicited
admiration instead of condemnation. But to require it to continue being
generous when it is no longer in a position to do so would certainly be
unduly oppressive, unfair and most revolting to the conscience. As this Court
held in Manila Trading & Supply Co. vs. Zulueta, 11 and reiterated in San
Miguel Corporation vs. NLRC 12 and later, in Allied Banking Corporation
vs. Castro, 13 "(t)he law, in protecting the rights of the laborer, authorizes
neither oppression nor self-destruction of the employer."

At this juncture, we note that the Solicitor General in his Comment

challenges the petitioners' assertion that North Davao, having closed down,
no longer has the means to pay for the benefits. The Solicitor General
stresses that North Davao was among the assets transferred by PNB to the
national government, and that by virtue of Proclamation No. 50 dated
December 8, 1986, the APT was constituted trustee of this government asset.
He then concludes that "(i)t would, therefore, be incongruous to declare that
the National Government, which should always be presumed to be solvent,
could not pay now private respondents' money claims." Such argumentation
is completely misplaced. Even if the national government owned or controlled
81.8% of the common stock and 100% of the preferred stock of North Davao,
it remains only a stockholder thereof, and under existing laws and prevailing
jurisprudence, a stockholder as a rule is not directly, individually and/or
personally liable for the indebtedness of the corporation. The obligation of
North Davao cannot be considered the obligation of the national government,
hence, whether the latter be solvent or not is not material to the instant case.
The respondents have not shown that this case constitutes one of the
instances where the corporate veil may be pierced. 14 From another angle,
the national government is not the employer of private respondent and his
co-complainants, so there is no reason to expect any kind of bailout by the
national government under existing law and jurisprudence.
The Second and Third Issues:
Back Wages and Transportation Allowance
Anent the award of back wages and transportation allowance, the issues
raised in connection therewith are factual, the determination of which is best
left to the respondent NLRC. It is well settled that this Court is bound by the
findings of fact of the NLRC, so long as said findings are supported by
substantial evidence 15.
As the Solicitor General pointed out in his comment:
It is undisputed that because of security reasons, from the
time of its operations, petitioner NDMC maintained its policy
of paying its workers at a bank in Tagum, Davao del Norte,
which usually took the workers about two and a half (2 1/2)
hours of travel from the place of work and such travel time is
not official.
Records also show that on February 12, 1992, when an
inspection was conducted by the Department of Labor and
Employment at the premises of petitioner NDMC at Amacan,
Maco, Davao del Norte, it was found out that petitioners had
violated labor standards law, one of which is the place of
payment of wages (p. 109, Vol. 1, Record)
Section 4, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code provides that:
Sec. 4. Place of payment. (a) As a general rule, the place of
payment
shall
be
at
or
near
the
place
of
undertaking. Payment in a place other than the workplace
shall be permissible only under the following circumstances:

(1) When payment cannot be effected at or near the place of

work by reason of the deterioration of peace and order
conditions, or by reason of actual or impending emergencies
caused by fire, flood, epidemic or other calamity rendering
payment thereat impossible;
(2) When the employer provides free transportation to the
employees back and forth; and
(3) Under any analogous circumstances; provided that the
time spent by the employees in collecting their wages shall
be considered as compensable hours worked.

On the contrary, it will be petitioners'

burden or duty to present evidence of
compliance of the law on labor standards,
rather than for private respondents to prove
that they were not paid/provided by
petitioners
of
their
backwages
and
transportation expenses.
Other than the bare denials of petitioners, the above findings stand
uncontradicted. Indeed we are not at liberty to set aside findings of facts of
the NLRC, absent any capriciousness, arbitrariness, or abuse or complete
lack of basis. In Maya Farms Employees Organizations vs. NLRC, 16 , we held:

(b) xxx xxx xxx

This Court has consistently ruled that findings of fact of

administrative agencies ad quasi-judicial bodies which have
acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but
even finality and are binding upon this Court unless there is
a showing of grave abuse of discretion, or where it is clearly
shown that they were arrived at arbitrarily or in disregard of
the evidence on record.

(Emphasis supplied)
Accordingly, in his Order dated April 14, 1992 (p. 109, Vol.
1, Record), the Regional Director, Regional Office No. XI,
Department of Labor and Employment, Davao City, ordered
petitioner NDMC, among others, as follows:
WHEREFORE, . . . . Respondent is further
ordered to pay its workers salaries at the
plantsite at Amacan, New Leyte, Maco,
Davao del Norte or whenever not possible,
through the bank in Tagum, Davao del Norte
as already been practiced subject, however
to the provisions of Section 4 of Rule VIII,
Book III of the rules implementing the Labor
Code as amended.
Thus, public respondent Labor Arbiter Antonio M. Villanueva
correctly held that:
From the evidence on record, we find that
the hours spent by complainants in
collecting salaries at a bank in Tagum,
Davao del Norte shall be considered
compensable hours worked. Considering
further the distance between Amacan, Maco
to Tagum which is 2 1/2 hours by travel and
the risks in commuting all the time in
collecting complainants' salaries, would
justify the granting of backwages equivalent
to two (2) days in a month as prayed for.
Corollary to the above findings, and for
equitable
reasons, we
likewise
hold
respondents liable for the transportation
expenses incurred by complainants at
P40.00 round trip fare during pay days.
(p. 10, Decision; p. 207, Vol. 1, Record)

WHEREFORE, judgment is hereby rendered MODIFYING the assailed

Resolution by SETTING ASIDE and deleting the award for "additional
separation pay of 17.5 days for every year of service", and AFFIRMING it in
all other aspects. No costs.
SO ORDERED.

G.R. No. 168654

March 25, 2009

ZAYBER JOHN B. PROTACIO, Petitioner,

vs.
LAYA MANANGHAYA & CO. and/or MARIO T.
MANANGHAYA, Respondents.
DECISION
TINGA, J.:
Before the Court is a petition for review on certiorari1 under Rule 45 of the
1997 Rules of Civil Procedure, assailing the decision 2 and resolution3 of the
Court of Appeals in CA-G.R. SP No. 85038. The Court of Appeals decision
reduced the monetary award granted to petitioner by the National Labor
Relations Commission (NLRC) while the resolution denied petitioners motion
for reconsideration for lack of merit.
The following factual antecedents are matters of record.
Respondent KPMG Laya Mananghaya & Co. (respondent firm) is a general
professional partnership duly organized under the laws of the Philippines.
Respondent firm hired petitioner Zayber John B. Protacio as Tax Manager on
01 April 1996. He was subsequently promoted to the position of Senior Tax
Manager. On 01 October 1997, petitioner was again promoted to the position
of Tax Principal.4
However, on 30 August 1999, petitioner tendered his resignation effective 30
September 1999. Then, on 01 December 1999, petitioner sent a letter to
respondent firm demanding the immediate payment of his 13th month pay,
the cash commutation of his leave credits and the issuance of his 1999
Certificate of Income Tax Withheld on Compensation. Petitioner sent to
respondent firm two more demand letters for the payment of his
reimbursement claims under pain of the legal action.5
Respondent firm failed to act upon the demand letters. Thus, on 15
December 1999, petitioner filed before the NLRC a complaint for the nonissuance of petitioners W-2 tax form for 1999 and the non-payment of the
following benefits: (1) cash equivalent of petitioners leave credits in the
amount of P55,467.60; (2) proportionate 13th month pay for the year 1999;
(3) reimbursement claims in the amount of P19,012.00; and (4) lump sum
pay for the fiscal year 1999 in the amount of P674,756.70. Petitioner also
sought moral and exemplary damages and attorneys fees. Respondent Mario
T. Managhaya was also impleaded in his official capacity as respondent firms
managing partner.6
In his complaint,7 petitioner averred, inter alia, that when he was promoted
to the position of Tax Principal in October 1997, his compensation package
had consisted of a monthly gross compensation of P60,000.00, a 13th month
pay and a lump sum payment for the year 1997 in the amount
of P240,000.00 that was paid to him on 08 February 1998.
According to petitioner, beginning 01 October 1998, his compensation
package was revised as follows: (a) monthly gross compensation
of P95,000.00, inclusive of nontaxable allowance; (b) 13th month pay; and (c)

a lump sum amount in addition to the aggregate monthly gross

compensation. On 12 April 1999, petitioner received the lump sum amount
of P573,000.00 for the fiscal year ending 1998.8
Respondent firm denied it had intentionally delayed the processing of
petitioners claims but alleged that the abrupt departure of petitioner and
three other members of the firms Tax Division had created problems in the
determination of petitioners various accountabilities, which could be finished
only by going over voluminous documents. Respondents further averred that
they had been taken aback upon learning about the labor case filed by
petitioner when all along they had done their best to facilitate the processing
of his claims.9
During the pendency of the case before the Labor Arbiter, respondent firm on
three occasions sent check payments to petitioner in the following amounts:
(1) P71,250.00, representing petitioners 13th month pay; (2)P54,824.18, as
payments for the cash equivalent of petitioners leave credits and
reimbursement claims; and (3)P10,762.57, for the refund of petitioners taxes
withheld on his vacation leave credits. Petitioners copies of his withholding
tax certificates were sent to him along with the check payments.10 Petitioner
acknowledged the receipt of the 13th month pay but disputed the
computation of the cash value of his vacation leave credits and
reimbursement claims.11
On 07 June 2002, Labor Arbiter Eduardo J. Carpio rendered a decision,12 the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering respondents to jointly
and solidarily pay complainant the following:
P12,681.00 - representing the reimbursement claims of complainant;
P28,407.08 - representing the underpayment of the cash equivalent
of the unused leave credits of complainant;
P573,000.00 - representing complainants 1999 year-end lump sum
payment; and
10% of the total judgment awards way of attorneys fees.
SO ORDERED.13
The Labor Arbiter awarded petitioners reimbursement claims on the ground
that respondent firms refusal to grant the same was not so much because
the claim was baseless but because petitioner had failed to file the requisite
reimbursement forms. He held that the formal defect was cured when
petitioner filed several demand letters as well as the case before him. 14
The Labor Arbiter held that petitioner was not fully paid of the cash
equivalent of the leave credits due him because respondent firm had
erroneously based the computation on a basic pay of P61,000.00. He held
that the evidence showed that petitioners monthly basic salary
was P95,000.00 inclusive of the other benefits that were deemed included
and integrated in the basic salary and that respondent firm had computed
petitioners 13th month pay based on a monthly basic pay of P95,000.00;

thus, the cash commutation of the leave credits should also be based on this
figure.15

CONSTITUTIONAL REQUIREMENT THAT COURT DECISIONS MUST STATE

THE LEGAL AND FACTUAL BASIS [THEREOF].

The Labor Arbiter also ruled that petitioner was entitled to a year-end
payment of P573,000.00 on the basis of the company policy of granting
yearly lump sum payments to petitioner during all the years of service and
that respondent firm had failed to give petitioner the same benefit for the
year 1999 without any explanation.16

II

Aggrieved, respondent firm appealed to the NLRC. On 21 August 2003, the

NLRC rendered a modified judgment,17 the dispositive portion of which
states:
WHEREFORE, the Decision dated June 7, 2002 is hereby Affirmed with the
modification that the complainant is only entitled to receive P2,301.00 as
reimbursement claims. The award of P12,681.00 representing the
reimbursement claims of complainant is set aside for lack of basis.

III.
WHETHER PUBLIC RESPONDENT COURT OF APPEALS WANTONLY
ABUSED ITS DISCRETION IN EMPLOYING A LARGER DIVISOR TO
COMPUTE PETITIONERS DAILY SALARY RATE THEREBY DIMINISHING HIS
BENEFITS, IN [VIOLATION] OF THE LABOR CODE.
IV.

SO ORDERED.18
From the amount of P12,681.00 awarded by the Labor Arbiter as payment for
the reimbursement claims, the NLRC lowered the same to P2,301.00
representing the amount which remained unpaid.19 As regards the issues on
the lump sum payments and cash equivalent of the leave credits, the NLRC
affirmed the findings of the Labor Arbiter.
Respondents filed a motion for reconsideration20 but the NLRC denied the
motion for lack of merit.21 Hence, respondents elevated the matter to the
Court of Appeals via a petition for certiorari.22
In the assailed Decision dated 19 April 2005, the Court of Appeals further
reduced the total money award to petitioner, to wit:
WHEREFORE, in the light of the foregoing, the assailed resolution of public
respondent NLRC dated August 21, 2003 in NLRC NCR Case No. 30-1200927-99 (CA No. 032304-02) is hereby MODIFIED, ordering petitioner firm
to pay private respondent the following:
(1) P2,301.00
claims;

WHETHER PUBLIC RESPONDENT COURT OF APPEALS COMMITTED

GRAVE ABUSE OF DISCRETION AND ACTED IN WANTON EXCESS OF
JURISDICTION IN TAKING COGNIZANCE OF [RESPONDENTS] PETITION
FOR CERTIORARI WHEN THE RESOLUTION THEREOF HINGES ON MERE
EVALUATION OF EVIDENCE.

representing

private

respondents

reimbursement

(2) P9,802.83 representing the underpayment of the cash equivalent

of private respondents unused leave credits;
(3) P10,000.00 attorneys fees.
SO ORDERED.23
Petitioner sought reconsideration. In the assailed Resolution dated 27 June
2005, the Court of Appeals denied petitioners motion for reconsideration for
lack of merit.
Hence, the instant petition, raising the following issues:
I.
WHETHER PUBLIC RESPONDENT COURT OF APPEALS SUMMARY DENIAL
OF PETITIONERS MOTION FOR RECONSIDERATION VIOLATES THE

WHETHER PUBLIC RESPONDENT COURT OF APPEALS CAPRICIOUSLY

ABUSED ITS DISCRETION IN REVERSING THE [CONCURRING] FINDINGS
OF BOTH LABOR ARBITER AND NLRC ON THE COMPENSABLE NATURE
OF PETITIONERS YEAR END [LUMP] SUM PLAY [sic] CLAIM.24
Before delving into the merits of the petition, the issues raised by petitioner
adverting to the Constitution must be addressed. Petitioner contends that the
Court of Appeals resolution which denied his motion for reconsideration
violated Article VIII, Section 14 of the Constitution, which states:
Section 14. No decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court
shall be refused due course or denied without stating the legal basis therefor.
Obviously, the assailed resolution is not a "decision" within the meaning of
the Constitutional requirement. This mandate is applicable only in cases
"submitted for decision," i.e., given due course and after filing of briefs or
memoranda and/or other pleadings, as the case may be.25 The requirement
is not applicable to a resolution denying a motion for reconsideration of the
decision. What is applicable is the second paragraph of the above-quoted
Constitutional provision referring to "motion for reconsideration of a decision
of the court." The assailed resolution complied with the requirement therein
that a resolution denying a motion for reconsideration should state the legal
basis of the denial. It sufficiently explained that after reading the pleadings
filed by the parties, the appellate court did not find any cogent reason to
reverse itself.
Next, petitioner argues that the Court of Appeals erred in giving due course
to the petition for certiorari when the resolution thereof hinged on mere
evaluation of evidence. Petitioner opines that respondents failed to make its
case in showing that the Labor Arbiter and the NLRC had exercised their
discretion in an arbitrary and despotic manner.

As a general rule, in certiorari proceedings under Rule 65 of the Rules of

Court, the appellate court does not assess and weigh the sufficiency of
evidence upon which the Labor Arbiter and the NLRC based their conclusion.
The query in this proceeding is limited to the determination of whether or not
the NLRC acted without or in excess of its jurisdiction or with grave abuse of
discretion in rendering its decision. However, as an exception, the appellate
court may examine and measure the factual findings of the NLRC if the same
are not supported by substantial evidence.26 The Court has not hesitated to
affirm the appellate courts reversals of the decisions of labor tribunals if they
are not supported by substantial evidence.27
The Court is not unaware that the appellate court had reexamined and
weighed the evidence on record in modifying the monetary award of the
NLRC. The Court of Appeals held that the amount of the year-end lump sum
compensation was not fully justified and supported by the evidence on
record. The Court fully agrees that the lump sum award of P573,000.00 to
petitioner seemed to have been plucked out of thin air. Noteworthy is the fact
that in his position paper, petitioner claimed that he was entitled to the
amount of P674,756.70.28 The variance between the claim and the amount
awarded, with the record bereft of any proof to support either amount only
shows that the appellate court was correct in holding that the award was a
mere speculation devoid of any factual basis. In the exceptional circumstance
as in the instant case, the Court finds no error in the appellate courts review
of the evidence on record.
After an assessment of the evidence on record, the Court of Appeals reversed
the findings of the NLRC and the Labor Arbiter with respect to the award of
the year-end lump sum pay and the cash value of petitioners leave credits.
The appellate court held that while the lump sum payment was in the nature
of a proportionate share in the firms annual income to which petitioner was
entitled, the payment thereof was contingent upon the financial position of
the firm. According to the Court of Appeals, since no evidence was adduced
showing the net income of the firm for fiscal year ending 1999 as well as
petitioners corresponding share therein, the amount awarded by the labor
tribunals was a baseless speculation and as such must be deleted.29
On the other hand, the NLRC affirmed the Labor Arbiters award of the lump
sum payment in the amount ofP573,000.00 on the basis that the payment
thereof had become a company policy which could not be withdrawn
arbitrarily. Furthermore, the NLRC held that respondent firm had failed to
controvert petitioners claim that he was responsible for generating
some P7,365,044.47 in cash revenue during the fiscal year ending 1999.
The evidence on record establishes that aside from the basic monthly
compensation,30 petitioner received a yearly lump sum amount during the
first two years31 of his employment, with the payments made to him after the
annual net incomes of the firm had been determined. Thus, the amounts
thereof varied and were dependent on the firms cash position and financial
performance.32 In one of the letters of respondent Mananghaya to petitioner,
the amount was referred to as petitioners "share in the incentive
compensation program."33

While the amount was drawn from the annual net income of the firm, the
distribution thereof to non-partners or employees of the firm was not, strictly
speaking, a profit-sharing arrangement between petitioner and respondent
firm contrary to the Court of Appeals finding. The payment thereof to nonpartners of the firm like herein petitioner was discretionary on the part of the
chairman and managing partner coming from their authority to fix the
compensation of any employee based on a share in the partnerships net
income.34 The distribution being merely discretionary, the year-end lump
sum payment may properly be considered as a year-end bonus or incentive.
Contrary to petitioners claim, the granting of the year-end lump sum
amount was precisely dependent on the firms net income; hence, the same
was payable only after the firms annual net income and cash position were
determined.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is
something given in addition to what is ordinarily received by or strictly due
the recipient.35 A bonus is granted and paid to an employee for his industry
and loyalty which contributed to the success of the employers business and
made possible the realization of profits.36 Generally, a bonus is not a
demandable and enforceable obligation. It is so only when it is made part of
the wage or salary or compensation. When considered as part of the
compensation and therefore demandable and enforceable, the amount is
usually fixed. If the amount would be a contingent one dependent upon the
realization of the profits, the bonus is also not demandable and
enforceable.37
In the instant case, petitioners claim that the year-end lump sum
represented the balance of his total compensation package is incorrect. The
fact remains that the amounts paid to petitioner on the two occasions varied
and were always dependent upon the firms financial position.
Moreover, in Philippine Duplicators, Inc. v. NLRC,38 the Court held that if the
bonus is paid only if profits are realized or a certain amount of productivity
achieved, it cannot be considered part of wages. If the desired goal of
production is not obtained, of the amount of actual work accomplished, the
bonus does not accrue.39 Only when the employer promises and agrees to
give without any conditions imposed for its payment, such as success of
business or greater production or output, does the bonus become part of the
wage.40
Petitioners assertion that he was responsible for generating revenues
amounting to more than P7 million remains a mere allegation in his
pleadings. The records are absolutely bereft of any supporting evidence to
substantiate the allegation.
The granting of a bonus is basically a management prerogative which cannot
be forced upon the employer who may not be obliged to assume the onerous
burden of granting bonuses or other benefits aside from the employees basic
salaries or wages.41 Respondents had consistently maintained from the start
that petitioner was not entitled to the bonus as a matter of right. The
payment of the year-end lump sum bonus based upon the firms productivity
or the individual performance of its employees was well within respondent
firms prerogative. Thus, respondent firm was also justified in declining to

give the bonus to petitioner on account of the latters unsatisfactory

performance.
Petitioner failed to present evidence refuting respondents allegation and
proof that they received a number of complaints from clients about
petitioners "poor services." For purposes of determining whether or not
petitioner was entitled to the year-end lump sum bonus, respondents were
not legally obliged to raise the issue of substandard performance with
petitioner, unlike what the Labor Arbiter had suggested. Of course, if what
was in question was petitioners continued employment vis--vis the
allegations of unsatisfactory performance, then respondent firm was required
under the law to give petitioner due process to explain his side before
instituting any disciplinary measure. However, in the instant case, the
granting of the year-end lump sum bonus was discretionary and conditional,
thus, petitioner may not question the basis for the granting of a mere
privilege.1avvph!1
With regard to the computation of the cash equivalent of petitioners leave
credits, the Court of Appeals used a base figure of P71,250.00 representing
petitioners monthly salary as opposed to P95,000.00 used by the Labor
Arbiter and NLRC. Meanwhile, respondents insist on a base figure of
only P61,000.00, which excludes the advance incentive pay of P15,000.00,
transportation allowance of P15,000.00 and representation allowance
ofP4,000.00, which petitioner regularly received every month. Because of a
lower base figure (representing the monthly salary) used by the appellate
court, the cash equivalent of petitioners leave credits was lowered
fromP28,407.08 to P9,802.83.lawphil.net
The monthly compensation of P71,250.00 used as base figure by the Court of
Appeals is totally without basis. As correctly held by the Labor Arbiter and
the NLRC, the evidence on record reveals that petitioner was receiving a
monthly compensation of P95,000.00 consisting of a basic salary
of P61,000.00, advance incentive pay ofP15,000.00, transportation allowance
of P15,000.00 and representation allowance of P4,000.00. These amounts
totaling P95,000.00 are all deemed part of petitioners monthly compensation
package and, therefore, should be the basis in the cash commutation of the
petitioners leave credits. These allowances were customarily furnished by
respondent firm and regularly received by petitioner on top of the basic
monthly pay of P61,000.00. Moreover, the Labor Arbiter noted that
respondent firms act of paying petitioner a 13th month-pay at the rate
of P95,000.00 was an admission on its part that petitioners basic monthly
salary was P95,000.00
The Court of Appeals, Labor Arbiter and NLRC used a 30-working day divisor
instead of 26 days which petitioner insists. The Court of Appeals relied on
Section 2, Rule IV, Book III42 of the implementing rules of the Labor Code in
using the 30-working day divisor. The provision essentially states that
monthly-paid employees are presumed to be paid for all days in the month
whether worked or not.
The provision has long been nullified in Insular Bank of Asia and American
Employees Union (IBAAEU) v. Hon. Inciong, etc., et al.,43 where the Court
ruled that the provision amended the Labor Codes provisions on holiday pay

by enlarging the scope of their exclusion.44 In any case, the provision is

inapplicable to the instant case because it referred to the computation of
holiday pay for monthly-paid employees.
Petitioners claim that respondent firm used a 26-working day divisor is
supported by the evidence on record. In a letter addressed to
petitioner,45 respondents counsel expressly admitted that respondent used a
26-working day divisor. The Court is perplexed why the tribunals below used
a 30-day divisor when there was an express admission on respondents part
that they used a 26-day divisor in the cash commutation of leave credits.
Thus, with a monthly compensation of P95,000.00 and using a 26-working
day divisor, petitioners daily rate is P3,653.85.46 Based on this rate,
petitioners cash equivalent of his leave credits of 23.5 is P85,865.48.47 Since
petitioner has already received the amount P46,009.67, a balance
of P39,855.80 remains payable to petitioner.
WHEREFORE, the instant petition for review on certiorari is PARTLY
GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 85038
is AFFIRMED with the MODIFICATION that respondents are liable for the
underpayment of the cash equivalent of petitioners leave credits in the
amount of P39,855.80.
SO ORDERED.

G.R. No. 180866

March 2, 2010

LEPANTO CERAMICS, INC., Petitioner,

vs.
LEPANTO CERAMICS EMPLOYEES ASSOCIATION, Respondent.
DECISION
PEREZ, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 1 of the
1997 Rules of Civil Procedure filed by petitioner Lepanto Ceramics, Inc.
(petitioner), assailing the: (1) Decision2 of the Court of Appeals, dated 5 April
2006, in CA-G.R. SP No. 78334 which affirmed in toto the decision of the
Voluntary Arbitrator3 granting the members of the respondent association a
Christmas Bonus in the amount of Three Thousand Pesos (P3,000.00), or the
balance of Two Thousand Four Hundred Pesos (P2,400.00) for the year 2002,
and the (2) Resolution4 of the same court dated 13 December 2007 denying
Petitioners Motion for Reconsideration.
The facts are:
Petitioner Lepanto Ceramics, Incorporated is a duly organized corporation
existing and operating by virtue of Philippine Laws. Its business is primarily
to manufacture, make, buy and sell, on wholesale basis, among others, tiles,
marbles, mosaics and other similar products.5
Respondent Lepanto Ceramics Employees Association (respondent
Association) is a legitimate labor organization duly registered with the
Department of Labor and Employment. It is the sole and exclusive bargaining
agent in the establishment of petitioner.6
In December 1998, petitioner gave a P3,000.00 bonus to its employees,
members of the respondent Association.7
Subsequently, in September 1999, petitioner and respondent Association
entered into a Collective Bargaining Agreement (CBA) which provides for,
among others, the grant of a Christmas gift package/bonus to the members
of the respondent Association.8 The Christmas bonus was one of the
enumerated "existing benefit, practice of traditional rights" which "shall
remain in full force and effect."
The text reads:
Section 8. All other existing benefits, practice of traditional rights
consisting of Christmas Gift package/bonus, reimbursement of
transportation expenses in case of breakdown of service vehicle and
medical services and safety devices by virtue of company policies by the
UNION and employees shall remain in full force and effect.
Section 1. EFFECTIVITY
This agreement shall become effective on September 1, 1999 and shall
remain in full force and effect without change for a period of four (4)
years or up to August 31, 2004 except as to the representation aspect
which shall be effective for a period of five (5) years. It shall bind each

and every employee in the bargaining unit including the present and
future officers of the Union.
In the succeeding years, 1999, 2000 and 2001, the bonus was not in cash.
Instead, petitioner gave each of the members of respondent Association Tile
Redemption Certificates equivalent to P3,000.00.9 The bonus for the year
2002 is the root of the present dispute. Petitioner gave a year-end cash
benefit of Six Hundred Pesos (P600.00) and offered a cash advance to
interested employees equivalent to one (1) month salary payable in one
year.10 The respondent Association objected to the P600.00 cash benefit and
argued that this was in violation of the CBA it executed with the petitioner.
The parties failed to amicably settle the dispute. The respondent Association
filed a Notice of Strike with the National Conciliation Mediation Board,
Regional Branch No. IV, alleging the violation of the CBA. The case was
placed under preventive mediation. The efforts to conciliate failed. The case
was then referred to the Voluntary Arbitrator for resolution where the
Complaint was docketed as Case No. LAG-PM-12-095-02.
In support of its claim, respondent Association insisted that it has been the
traditional practice of the company to grant its members Christmas bonuses
during the end of the calendar year, each in the amount of P3,000.00 as an
expression of gratitude to the employees for their participation in the
companys continued existence in the market. The bonus was either in cash
or in the form of company tiles. In 2002, in a speech during the Christmas
celebration, one of the companys top executives assured the employees of
said bonus. However, the Human Resources Development Manager informed
them that the traditional bonus would not be given as the companys
earnings were intended for the payment of its bank loans. Respondent
Association argued that this was in violation of their CBA.
The petitioner averred that the complaint for nonpayment of the 2002
Christmas bonus had no basis as the same was not a demandable and
enforceable obligation. It argued that the giving of extra compensation was
based on the companys available resources for a given year and the workers
are not entitled to a bonus if the company does not make profits. Petitioner
adverted to the fact that it was debt-ridden having incurred net losses for the
years 2001 and 2002 totaling to P1.5 billion; and since 1999, when the CBA
was signed, the companys accumulated losses amounted to over P2.7 billion.
Petitioner further argued that the grant of a one (1) month salary cash
advance was not meant to take the place of a bonus but was meant to show
the companys sincere desire to help its employees despite its precarious
financial condition. Petitioner also averred that the CBA provision on a
"Christmas gift/bonus" refers to alternative benefits. Finally, petitioner
emphasized that even if the CBA contained an unconditional obligation to
grant the bonus to the respondent Association, the present difficult economic
times had already legally released it therefrom pursuant to Article 1267 of
the Civil Code.11
The Voluntary Arbitrator rendered a Decision dated 2 June 2003, declaring
that petitioner is bound to grant each of its workers a Christmas bonus
of P3,000.00 for the reason that the bonus was given prior to the effectivity of
the CBA between the parties and that the financial losses of the company is

not a sufficient reason to exempt it from granting the same. It stressed that
the CBA is a binding contract and constitutes the law between the parties.
The Voluntary Arbitrator further expounded that since the employees had
already been given P600.00 cash bonus, the same should be deducted from
the claimed amount of P3,000.00, thus leaving a balance of P2,400.00. The
dispositive portion of the decision states, viz:
Wherefore, in view of the foregoing respondent LCI is hereby ordered to pay
the members of the complainant union LCEA their respective Christmas
bonus in the amount of three thousand (P3,000.00) pesos for the year 2002
less the P600.00 already given or a balance of P2,400.00.12
Petitioner sought reconsideration but the same was denied by the Voluntary
Arbitrator in an Order dated 27 June 2003, in this wise:
The Motion for Reconsideration filed by the respondent in the above-entitled
case which was received by the Undersigned on June 26, 2003 is hereby
denied pursuant to Section 7 Rule XIX on Grievance Machinery and
Voluntary Arbitration; Amending The Implementing Rules of Book V of the
Labor Code of the Philippines; to wit:
Section 7. Finality of Award/Decision The decision, order, resolution or
award of the voluntary arbitrator or panel of voluntary arbitrators shall be
final and executory after ten (10) calendar days from receipt of the copy of
the award or decision by the parties and it shall not be subject of a motion
for reconsideration.13
Petitioner elevated the case to the Court of Appeals via a Petition for
Certiorari under Rule 65 of the Rules of Court docketed as CA-G.R. SP No.
78334.14 As adverted to earlier, the Court of Appeals affirmed in toto the
decision of the Voluntary Arbitrator. The appellate court also denied
petitioners motion for reconsideration.
In affirming respondent Associations right to the Christmas bonus, the
Court of Appeals held:
In the case at bar, it is indubitable that petitioner offered private respondent
a Christmas bonus/gift in 1998 or before the execution of the 1999 CBA
which incorporated the said benefit as a traditional right of the employees.
Hence, the grant of said bonus to private respondent can be deemed a
practice as the same has not been given only in the 1999 CBA. Apparently,
this is the reason why petitioner specifically recognized the grant of a
Christmas bonus/gift as a practice or tradition as stated in the CBA. x x x.
xxxx
Evidently, the argument of petitioner that the giving of a Christmas bonus is
a management prerogative holds no water. There were no conditions specified
in the CBA for the grant of said benefit contrary to the claim of petitioner that
the same is justified only when there are profits earned by the company. As
can be gleaned from the CBA, the payment of Christmas bonus was not
contingent upon the realization of profits. It does not state that if the
company derives no profits, there are no bonuses to be given to the
employees. In fine, the payment thereof was not related to the profitability of
business operations.

Moreover, it is undisputed that petitioner, aside from giving the mandated

13th month pay, has further been giving its employees an additional
Christmas bonus at the end of the year since 1998 or before the effectivity of
the CBA in September 1999. Clearly, the grant of Christmas bonus from
1998 up to 2001, which brought about the filing of the complaint for alleged
non-payment of the 2002 Christmas bonus does not involve the exercise of
management prerogative as the same was given continuously on or about
Christmas time pursuant to the CBA. Consequently, the giving of said bonus
can no longer be withdrawn by the petitioner as this would amount to a
diminution of the employees existing benefits.15
Not to be dissuaded, petitioner is now before this Court. The only issue
before us is whether or not the Court of Appeals erred in affirming the ruling
of the voluntary arbitrator that the petitioner is obliged to give the members
of the respondent Association a Christmas bonus in the amount of P3,000.00
in 2002.16
We uphold the rulings of the voluntary arbitrator and of the Court of
Appeals. Findings of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdictions, are generally
accorded not only respect but even finality, and bind us when supported by
substantial evidence. This is the rule particularly where the findings of both
the arbitrator and the Court of Appeals coincide.17
As a general proposition, an arbitrator is confined to the interpretation and
application of the CBA. He does not sit to dispense his own brand of
industrial justice: his award is legitimate only in so far as it draws its essence
from the CBA.18 That was done in this case.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is
something given in addition to what is ordinarily received by or strictly due
the recipient. A bonus is granted and paid to an employee for his industry
and loyalty which contributed to the success of the employers business and
made possible the realization of profits.19
A bonus is also granted by an enlightened employer to spur the employee to
greater efforts for the success of the business and realization of bigger
profits.20
Generally, a bonus is not a demandable and enforceable obligation. For a
bonus to be enforceable, it must have been promised by the employer and
expressly agreed upon by the parties.21 Given that the bonus in this case is
integrated in the CBA, the same partakes the nature of a demandable
obligation. Verily, by virtue of its incorporation in the CBA, the Christmas
bonus due to respondent Association has become more than just an act of
generosity on the part of the petitioner but a contractual obligation it has
undertaken.22
A CBA refers to a negotiated contract between a legitimate labor organization
and the employer, concerning wages, hours of work and all other terms and
conditions of employment in a bargaining unit. As in all other contracts, the
parties to a CBA may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided these are not contrary to
law, morals, good customs, public order or public policy.23

It is a familiar and fundamental doctrine in labor law that the CBA is the law
between the parties and they are obliged to comply with its provisions. 24 This
principle stands strong and true in the case at bar.1avvphi1
A reading of the provision of the CBA reveals that the same provides for the
giving of a "Christmas gift package/bonus" without qualification. Terse and
clear, the said provision did not state that the Christmas package shall be
made to depend on the petitioners financial standing. The records are also
bereft of any showing that the petitioner made it clear during CBA
negotiations that the bonus was dependent on any condition. Indeed, if the
petitioner and respondent Association intended that the P3,000.00 bonus
would be dependent on the company earnings, such intention should have
been expressed in the CBA.
It is noteworthy that in petitioners 1998 and 1999 Financial Statements, it
took note that "the 1997 financial crisis in the Asian region adversely affected
the Philippine economy."25
From the foregoing, petitioner cannot insist on business losses as a basis for
disregarding its undertaking. It is manifestly clear that petitioner was very
much aware of the imminence and possibility of business losses owing to the
1997 financial crisis. In 1998, petitioner suffered a net loss
of P14,347,548.00.26 Yet it gave a P3,000.00 bonus to the members of the
respondent Association. In 1999, when petitioners very own financial
statement reflected that "the positive developments in the economy have yet
to favorably affect the operations of the company,"27 and reported a loss
of P346,025,733.00,28 it entered into the CBA with the respondent
Association whereby it contracted to grant a Christmas gift package/bonus
to the latter. Petitioner supposedly continued to incur losses in the years
200029 and 2001. Still and all, this did not deter it from honoring the CBA
provision on Christmas bonus as it continued to give P3,000.00 each to the
members of the respondent Association in the years 1999, 2000 and 2001.
All given, business losses are a feeble ground for petitioner to repudiate its
obligation under the CBA. The rule is settled that any benefit and
supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution
of benefits is founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full protection.30
Hence, absent any proof that petitioners consent was vitiated by fraud,
mistake or duress, it is presumed that it entered into the CBA voluntarily
and had full knowledge of the contents thereof and was aware of its
commitments under the contract.
The Court is fully aware that implementation to the letter of the subject CBA
provision may further deplete petitioners resources. Petitioners remedy
though lies not in the Courts invalidation of the provision but in the parties
clarification of the same in subsequent CBA negotiations. Article 253 of the
Labor Code is relevant:
Art. 253. Duty to bargain collectively when there exists a collective
bargaining agreement. - When there is a collective bargaining agreement, the
duty to bargain collectively shall also mean that neither party shall terminate

nor modify such agreement during its lifetime. However, either party can
serve a written notice to terminate or modify the agreement at least sixty (60)
days prior to its expiration date. It shall be the duty of both parties to keep
the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the sixty (60)-day period and/or
until a new agreement is reached by the parties.
WHEREFORE, Premises considered, the petition is DENIED for lack of merit.
The Decision of the Court of Appeals dated 5 April 2006 and the Resolution
of the same court dated 13 December 2007 in CA-G.R. SP No. 78334
areAFFIRMED.
SO ORDERED.

G.R. No. 167760

March 7, 2007

MANILA JOCKEY CLUB EMPLOYEES LABOR UNION-PTGWO, Petitioner,

vs.
MANILA JOCKEY CLUB, INC., Respondent.
DECISION
GARCIA, J.:
Challenged in this petition for review under Rule 45 of the Rules of Court is
the decision1 dated December 17, 2004 of the Court of Appeals (CA), as
reiterated in its resolution2 of April 4, 2005, dismissing the petition for review
of herein petitioner in CA-G.R. SP No. 69240, entitled Manila Jockey Club
Employees Labor Union- PTGWO v. Manila Jockey Club, Inc.
The facts:
Petitioner Manila Jockey Club Employees Labor Union-PTGWO and
respondent Manila Jockey Club, Inc., a corporation with a legislative
franchise to conduct, operate and maintain horse races, entered into a
Collective Bargaining Agreement (CBA) effective January 1, 1996 to
December 31, 2000. The CBA governed the economic rights and obligations
of respondents regular monthly paid rank-and-file employees.3 In the CBA,
the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon
and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday, as
contained under Section 1, Article IV,4 of the same CBA, to wit:
Section 1. Both parties to this Agreement agree to observe the seven-hour
work schedule herewith scheduled to be from 9:00 a.m. to 12:00 noon and
1:00 p.m. to 5 p.m. on work week of Monday to Saturday. All work performed
in excess of seven (7) hours work schedule and on days not included within
the work week shall be considered overtime and paid as such. Except those
monthly compensation which includes work performed during Saturday,
Sunday, and Holiday when races are held at the Club.
xxx xxx xxx
Accordingly, overtime on an ordinary working day shall be remunerated in an
amount equivalent to the worker's regular basic wage plus twenty five
percent (25%) thereof. Where the employee is permitted or suffered to work
on legally mandated holidays or on his designated rest day which is not a
legally mandated holiday, thirty percent (30%) shall be added to his basic
wage for a seven hour work; while work rendered in excess of seven hours on
legally mandated holidays and rest days not falling within the aforestated
categories day shall be additionally compensated for the overtime work
equivalent to his rate for the first seven hours on a legally mandated holiday
or rest day plus thirty percent (30%) thereof.
The CBA likewise reserved in respondent certain management prerogatives,
including the determination of the work schedule, as provided under Section
2, Article XI:
Section 2. The COMPANY shall have exclusive control in the management of
the offices and direction of the employees. This shall include, but shall not be

limited to, the right to plan, direct and control office operations, to hire,
assign and transfer employees from one job to another or from one
department to another; to promote, demote, discipline, suspend, discharge or
terminate employees for proper cause and/or in accordance with law, to
relieve employees from duty because of lack of work or for other legitimate
reasons; or to introduce new or improved methods or facilities; or to change
existing methods or facilities to change the schedules of work; and to make
and enforce rules and regulations to carry out the functions of management,
provided, however, that the COMPANY will not use these rights for the
purpose of discrimination against any employee because of his membership
in the UNION. Provided, further, that the prerogatives provided for under this
Section shall be subject to, and in accordance with pertinent directives,
proclamations and their implementing rules and regulations.
On April 3, 1999, respondent issued an inter-office memorandum declaring
that, effective April 20, 1999, the hours of work of regular monthly-paid
employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held,
that is, every Tuesday and Thursday. The memorandum, however,
maintained the 9:00 a.m. to 5:00 p.m. schedule for non-race days.
On October 12, 1999, petitioner and respondent entered into an Amended
and Supplemental CBA retaining Section 1 of Article IV and Section 2 of
Article XI, supra, and clarified that any conflict arising therefrom shall be
referred to a voluntary arbitrator for resolution.
Subsequently, before a panel of voluntary arbitrators of the National
Conciliation and Mediation Board (NCMB), petitioner questioned the above
office memorandum as violative of the prohibition against non-diminution of
wages and benefits guaranteed under Section 1, Article IV, of the CBA which
specified the work schedule of respondent's employees to be from 9:00 a.m.
to 5:00 p.m. Petitioner claimed that as a result of the memorandum, the
employees are precluded from rendering their usual overtime work from 5:00
p.m. to 9:00 p.m.
The NCMBs panel of voluntary arbitrators, in a decision dated October 18,
2001, upheld respondent's prerogative to change the work schedule of
regular monthly-paid employees under Section 2, Article XI, of the CBA.
Petitioner moved for reconsideration but the panel denied the motion.
Dissatisfied, petitioner then appealed the panels decision to the CA in CAG.R. SP No. 69240. In the herein assailed decision of December 17, 2004, the
CA upheld that of the panel and denied petitioners subsequent motion for
reconsideration via its equally challenged resolution of April 4, 2005.
Hence, petitioners present recourse, raising the following issues:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT RESPONDENT MJCI DID NOT RELINQUISH PART OF ITS
MANAGEMENT PREROGATIVE WHEN IT STIPULATED A WORK SCHEDULE
IN THE CBA.
II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN

HOLDING THAT RESPONDENT MJCI DID NOT VIOLATE THE NONDIMINUTION PROVISION CONTAINED IN ARTICLE 100 OF THE LABOR
CODE.
We DENY.
Respondent, as employer, cites the change in the program of horse races as
reason for the adjustment of the employees work schedule. It rationalizes
that when the CBA was signed, the horse races started at 10:00 a.m. When
the races were moved to 2:00 p.m., there was no other choice for
management but to change the employees' work schedule as there was no
work to be done in the morning. Evidently, the adjustment in the work
schedule of the employees is justified.
We are not unmindful that every business enterprise endeavors to increase
profits. As it is, the Court will not interfere with the business judgment of an
employer in the exercise of its prerogative to devise means to improve its
operation, provided that it does not violate the law, CBAs, and the general
principles of justice and fair play. We have thus held that management is free
to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time,
place and manner of work, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, layoff of
workers and discipline, dismissal, and recall of workers.5
While it is true that Section 1, Article IV of the CBA provides for a 7-hour
work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m.
from Mondays to Saturdays, Section 2, Article XI, however, expressly
reserves on respondent the prerogative to change existing methods or
facilities to change the schedules of work. As aptly ruled by the CA:
x x x. Such exact language lends no other meaning but that while respondent
may have allowed the initial determination of the work schedule to be done
through collective bargaining, it expressly retained the prerogative to change
it.
Moreover, it cannot be said that in agreeing to Section 1 of Article IV,
respondent already waived that customary prerogative of management to set
the work schedule. Had that been the intention, Section 2 of Article XI would
not have made any reference at all to the retention by respondent of that
prerogative. The CBA would have instead expressly prohibited respondent
from exercising it. x x x As it were, however, the CBA expressly recognized in
respondent the prerogative to change the work schedule. This effectively
rules out any notion of waiver on the part of respondent of its prerogative to
change the work schedule.
The same provision of the CBA also grants respondent the prerogative to
relieve employees from duty because of lack of work. Petitioners argument,
therefore, that the change in work schedule violates Article 100 of the Labor
Code because it resulted in the diminution of the benefit enjoyed by regular
monthly-paid employees of rendering overtime work with pay, is untenable.
Section 1, Article IV, of the CBA does not guarantee overtime work for all the
employees but merely provides that "all work performed in excess of seven (7)

hours work schedule and on days not included within the work week shall be
considered overtime and paid as such.".5
While it is true that Section 1, Article IV of the CBA provides for a 7-hour
work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m.
from Mondays to Saturdays, Section 2, Article XI, however, expressly
reserves on respondent the prerogative to change existing methods or
facilities to change the schedules of work. As aptly ruled by the CA:
x x x. Such exact language lends no other meaning but that while respondent
may have allowed the initial determination of the work schedule to be done
through collective bargaining, it expressly retained the prerogative to change
it.
Moreover, it cannot be said that in agreeing to Section 1 of Article IV,
respondent already waived that customary prerogative of management to set
the work schedule. Had that been the intention, Section 2 of Article XI would
not have made any reference at all to the retention by respondent of that
prerogative. The CBA would have instead expressly prohibited respondent
from exercising it. x x x As it were, however, the CBA expressly recognized in
respondent the prerogative to change the work schedule. This effectively
rules out any notion of waiver on the part of respondent of its prerogative to
change the work schedule.
The same provision of the CBA also grants respondent the prerogative to
relieve employees from duty because of lack of work. Petitioners argument,
therefore, that the change in work schedule violates Article 100 of the Labor
Code because it resulted in the diminution of the benefit enjoyed by regular
monthly-paid employees of rendering overtime work with pay, is untenable.
Section 1, Article IV, of the CBA does not guarantee overtime work for all the
employees but merely provides that "all work performed in excess of seven (7)
hours work schedule and on days not included within the work week shall be
considered overtime and paid as such."
Respondent was not obliged to allow all its employees to render overtime
work everyday for the whole year, but only those employees whose services
were needed after their regular working hours and only upon the instructions
of management. The overtime pay was not given to each employee
consistently, deliberately and unconditionally, but as a compensation for
additional services rendered. Thus, overtime pay does not fall within the
definition of benefits under Article 100 of the Labor Code on prohibition
against elimination or diminution of benefits.
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be presumed that every labor
dispute will be automatically decided in favor of labor. The partiality for labor
has not in any way diminished our belief that justice in every case is for the
deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.6
WHEREFORE, the instant petition is DENIED and the assailed decision and
resolution of the CA are AFFIRMED.
Costs against petitioner.

SO ORDERED.

G.R. No. 176985

April 1, 2013

RICARDO E. VERGARA, JR., Petitioner,

vs.
COCA-COLA BOTTLERS PHILIPPINES, INC., Respondent.
DECISION
PERALTA, J.:
Before Us is a petition for review on certiorari under Rule 45 of the Rules of
Civil Procedure assailing the January 9, 2007 Decision 1 and March 6, 2007
Resolution2 of the Court of Appeals (CA) in CA .. G.R. SP No. 94622, which
affirmed the January 31, 2006 Decision3 and March 8, 2006 Resolution4 of
the National Labor Relations Commission (NLRC) modifying the September
30, 2003 Decision5 of the Labor Arbiter (LA) by deleting the sales
management incentives in the computation of petitioner's retirement
benefits.
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola
Bottlers Philippines, Inc. from May 1968 until he retired on January 31,
2002 as a District Sales Supervisor (DSS) for Las Pias City, Metro Manila.
As stipulated in respondents existing Retirement Plan Rules and Regulations
at the time, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs
shall be considered in the computation of retirement benefits, as follows:
Basic Monthly Salary + Monthly Average Performance Incentive (which is the
total performance incentive earned during the year immediately preceding
12 months) No. of Years in Service.6
Claiming his entitlement to an additional PhP474,600.00 as Sales
Management Incentives (SMI)7 and to the amount of PhP496,016.67 which
respondent allegedly deducted illegally, representing the unpaid accounts of
two dealers within his jurisdiction, petitioner filed a complaint before the
NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits,
Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and
Exemplary Damages, and Attorneys Fees."8
After a series of mandatory conference, both parties partially settled with
regard the issue of merit increase and length of service. 9 Subsequently, they
filed their respective Position Paper and Reply thereto dealing on the two
remaining issues of SMI entitlement and illegal deduction.
On September 30, 2003, the LA rendered a Decision 10 in favor of petitioner,
directing respondent to reimburse the amount illegally deducted from
petitioners retirement package and to integrate therein his SMI privilege.
Upon appeal of respondent, however, the NLRC modified the award and
deleted the payment of SMI.
Petitioner then moved to partially execute the reimbursement of illegal
deduction, which the LA granted despite respondents opposition. 11 Later,
without prejudice to the pendency of petitioners petition for certiorari before
the CA, the parties executed a Compromise Agreement12 on October 4, 2006,
whereby petitioner acknowledged full payment by respondent of the amount
of PhP496,016.67 covering the amount illegally deducted.

The CA dismissed petitioners case on January 9, 2007 and denied his

motion for reconsideration two months thereafter. Hence, this present
petition to resolve the singular issue of whether the SMI should be included
in the computation of petitioners retirement benefits on the ground of
consistent company practice. Petitioner insistently avers that many DSSs
who retired without achieving the sales and collection targets were given the
average SMI in their retirement package.
We deny.
This case does not fall within any of the recognized exceptions to the rule
that only questions of law are proper in a petition for review on certiorari
under Rule 45 of the Rules of Court. Settled is the rule that factual findings
of labor officials, who are deemed to have acquired expertise in matters
within their respective jurisdiction, are generally accorded not only respect
but even finality, and bind us when supported by substantial
evidence.13Certainly, it is not Our function to assess and evaluate the
evidence all over again, particularly where the findings of both the CA and
the NLRC coincide.
In any event, even if this Court would evaluate petitioner's arguments on its
supposed merits, We still find no reason to disturb the CA ruling that
affirmed the NLRC. The findings and conclusions of the CA show that the
evidence and the arguments of the parties had all been carefully considered
and passed upon. There are no relevant and compelling facts to justify a
different resolution which the CA failed to consider as well as no factual
conflict between the CA and the NLRC decisions.
Generally, employees have a vested right over existing benefits voluntarily
granted to them by their employer.14Thus, any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer.15 The principle of non-diminution of benefits is
actually founded on the Constitutional mandate to protect the rights of
workers, to promote their welfare, and to afford them full protection. 16 In
turn, said mandate is the basis of Article 4 of the Labor Code which states
that "all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations, shall be rendered in favor
of labor."17
There is diminution of benefits when the following requisites are present: (1)
the grant or benefit is founded on a policy or has ripened into a practice over
a long period of time; (2) the practice is consistent and deliberate; (3) the
practice is not due to error in the construction or application of a doubtful or
difficult question of law; and (4) the diminution or discontinuance is done
unilaterally by the employer.18
To be considered as a regular company practice, the employee must prove by
substantial evidence that the giving of the benefit is done over a long period
of
time,
and
that
it
has
been
made
consistently
and
deliberately.19Jurisprudence has not laid down any hard-and-fast rule as to
the length of time that company practice should have been exercised in order
to constitute voluntary employer practice.20 The common denominator in
previously decided cases appears to be the regularity and deliberateness of

the grant of benefits over a significant period of time. 21 It requires an

indubitable showing that the employer agreed to continue giving the benefit
knowing fully well that the employees are not covered by any provision of the
law or agreement requiring payment thereof.22 In sum, the benefit must be
characterized by regularity, voluntary and deliberate intent of the employer to
grant the benefit over a considerable period of time.23
Upon review of the entire case records, We find no substantial evidence to
prove that the grant of SMI to all retired DSSs regardless of whether or not
they qualify to the same had ripened into company practice. Despite more
than sufficient opportunity given him while his case was pending before the
NLRC, the CA, and even to this Court, petitioner utterly failed to adduce
proof to establish his allegation that SMI has been consistently, deliberately
and voluntarily granted to all retired DSSs without any qualification or
conditions whatsoever. The only two pieces of evidence that he stubbornly
presented throughout the entirety of this case are the sworn statements of
Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former
DSSs of respondent who retired in 2000 and 1998, respectively. They claimed
that the SMI was included in their retirement package even if they did not
meet the sales and collection qualifiers.24 However, juxtaposing these with
the evidence presented by respondent would reveal the frailty of their
statements.
The declarations of Hidalgo and Velazquez were sufficiently countered by
respondent through the affidavits executed by Norman R. Biola (Biola),
Moises D. Escasura (Escasura), and Ma. Vanessa R. Balles (Balles). 25 Biola
pointed out the various stop-gap measures undertaken by respondent
beginning 1999 in order to arrest the deterioration of its accounts receivables
balance, two of which relate to the policies on the grant of SMI and to the
change in the management structure of respondent upon its re-acquisition
by San Miguel Corporation. Escasura represented that he has personal
knowledge of the circumstances behind the retirement of Hidalgo and
Velazquez. He attested that contrary to petitioners claim, Hidalgo was in fact
qualified for the SMI. As for Velazquez, Escasura asserted that even if he
(Velazquez) did not qualify for the SMI, respondents General Manager in its
Calamba plant still granted his (Velazquez) request, along with other
numerous concessions, to achieve industrial peace in the plant which was
then experiencing labor relations problems. Lastly, Balles confirmed that
petitioner failed to meet the trade receivable qualifiers of the SMI. She also
cited the cases of Ed Valencia (Valencia) and Emmanuel Gutierrez
(Gutierrez), both DSSs of respondent who retired on January 31, 2002 and
December 30, 2002, respectively. She noted that, unlike Valencia, Gutierrez
also did not receive the SMI as part of his retirement pay, since he failed to
qualify under the policy guidelines. The verity of all these statements and
representations stands and holds true to Us, considering that petitioner did
not present any iota of proof to debunk the same.1wphi1
Therefore, respondent's isolated act of including the SMI in the retirement
package of Velazquez could hardly be classified as a company practice that
may be considered an enforceable obligation. To repeat, the principle against
diminution of benefits is applicable only if the grant or benefit is founded on
an express policy or has ripened into a practice over a long period of time

which is consistent and deliberate; it presupposes that a company practice,

policy and tradition favorable to the employees has been clearly established;
and that the payments made by the company pursuant to it have ripened
into benefits enjoyed by them.26 Certainly, a practice or custom is, as a
general rule, not a source of a legally demandable or enforceable
right.27 Company practice, just like any other fact, habits, customs, usage or
patterns of conduct, must be proven by the offering party who must allege
and establish specific, repetitive conduct that might constitute evidence of
habit or company practice.28
To close, We rule that petitioner could have salvaged his case had he step up
to disprove respondents contention that he miserably failed to meet the
collection qualifiers of the SMI. Respondent argues that
An examination of the Companys aged trial balance reveals that petitioner
did not meet the trade receivable qualifier. On the contrary, the said trial
balance reveals that petitioner had a large amount of uncollected overdue
accounts. For the year 2001, his percentage collection efficiency for current
issuance was at an average of 13.5% a month as against the required 70%.
For the same, petitioners collection efficiency was at an average of 60.25%
per month for receivables aged 1-30 days, which is again, way below the
required 90%. For receivables aged 31-60 days during said year, petitioners
collection efficiency was at an average of 56.17% per month, which is
approximately half of the required 100%. Worse, for receivables over 60 days
old, petitioners average collection efficiency per month was a reprehensively
low 14.10% as against the required 100%.29
The above data was repeatedly raised by respondent in its Rejoinder (To
Complainants Reply) before the LA,30Memorandum of Appeal31 and
Opposition (To Complainant-Appellees Motion for Reconsideration)32 before
the NLRC, and Comment (On the Petition),33 Memorandum (For the Private
Respondent),34 and Comment (On the Motion for Reconsideration)35 before
the CA. Instead of frontally rebutting the data, petitioner treated them with
deafening silence; thus, reasonably and logically implying lack of evidence to
support the contrary.
WHEREFORE, the petition is DENIED. The January 9, 2007 Decision and
March 6, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 94622,
which affirmed the January 31, 2006 Decision and March 8, 2006 Resolution
of the NLRC deleting the LA's inclusion of sales management incentives in
the computation of petitioner's retirement benefits, is hereby AFFIRMED.
SO ORDERED.

G.R. No. 121439

January 25, 2000

AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO), petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Fourth Division),
RODOLFO M. RETISO and 165 OTHERS,1respondents.
GONZAGA-REYES, J.:
In his petition for certiorari and prohibition with prayer for writ of preliminary
injunction and/or temporary restraining order, petitioner assails (a) the
decision dated April 20, 1995, of public respondent National Labor Relations
Commission (NLRC), Fourth (4th) Division, Cebu City, in NLRC Case No. V0143-94 reversing the February 25, 1994 decision of Labor Arbiter Dennis D.
Juanon and ordering petitioner to pay wages in the aggregate amount of
P6,485,767.90 to private respondents, and (b) the resolution dated July 28,
1995 denying petitioner's motion for reconsideration, for having been issued
with grave abuse of discretion.
A temporary restraining order was issued by this Court on October 9, 1995
enjoining public respondent from executing the questioned decision upon a
surety bond posted by petitioner in the amount of P6,400,000.00.2
The facts as found by the Labor Arbiter are as follows:3
These are consolidated cases/claims for non-payment of salaries and
wages, 13th month pay, ECOLA and other fringe benefits as rice,
medical and clothing allowances, submitted by complainant Rodolfo
M. Retiso and 163 others, Lyn E. Banilla and Wilson B. Sallador
against respondents Aklan Electric Cooperative, Inc. (AKELCO), Atty.
Leovigildo Mationg in his capacity as General Manager; Manuel
Calizo, in his capacity as Acting Board President, Board of Directors,
AKELCO.
Complainants alleged that prior to the temporary transfer of the
office of AKELCO from Lezo Aklan to Amon Theater, Kalibo, Aklan,
complainants were continuously performing their task and were duly
paid of their salaries at their main office located at Lezo, Aklan.
That on January 22, 1992, by way of resolution of the Board of
Directors of AKELCO allowed the temporary transfer holding of office
at Amon Theater, Kalibo, Aklan per information by their Project
Supervisor, Atty. Leovigildo Mationg, that their head office is closed
and that it is dangerous to hold office thereat;
Nevertheless, majority of the employees including herein
complainants continued to report for work at Lezo Aklan and were
paid of their salaries.
That on February 6, 1992, the administrator of NEA, Rodrigo
Cabrera, wrote a letter addressed to the Board of AKELCO, that he is
not interposing any objections to the action taken by respondent
Mationg. . .

That on February 11, 1992, unnumbered resolution was passed by

the Board of AKELCO withdrawing the temporary designation of
office at Kalibo, Aklan, and that the daily operations must be held
again at the main office of Lezo, Aklan;4
That complainants who were then reporting at the Lezo office from
January 1992 up to May 1992 were duly paid of their salaries, while
in the meantime some of the employees through the instigation of
respondent Mationg continued to remain and work at Kalibo, Aklan;
That from June 1992 up to March 18, 1993, complainants who
continuously reported for work at Lezo, Aklan in compliance with the
aforementioned resolution were not paid their salaries;
That on March 19, 1993 up to the present, complainants were again
allowed to draw their salaries; with the exception of a few
complainants who were not paid their salaries for the months of April
and May 1993;
Per allegations of the respondents, the following are the facts:
1. That these complainants voluntarily abandoned their
respective work/job assignments, without any justifiable
reason and without notifying the management of the Aklan
Electric Cooperative, Inc. (AKELCO), hence the cooperative
suffered damages and systems loss;
2. That the complainants herein defied the lawful orders and
other issuances by the General Manager and the Board of
Directors of the AKELCO. These complainants were
requested to report to work at the Kalibo office . . . but
despite these lawful orders of the General Manager, the
complainants did not follow and wilfully and maliciously
defied said orders and issuance of the General Manager; that
the Board of Directors passed a Resolution resisting and
denying the claims of these complainants, . . . under the
principle of "no work no pay" which is legally justified; That
these complainants have "mass leave" from their customary
work on June 1992 up to March 18, 1993 and had a "sitdown" stance for these periods of time in their alleged protest
of the appointment of respondent Atty. Leovigildo Mationg as
the new General Manager of the Aklan Electric Cooperative,
Inc. (AKELCO) by the Board of Directors and confirmed by
the
Administrator
of
the
National
Electrification
Administration (NEA), Quezon City; That they engaged in ". .
. slowdown mass leaves, sit downs, attempts to damage,
destroy or sabotage plant equipment and facilities of the
Aklan Electric Cooperative, Inc. (AKELCO).
On February 25, 1994, a decision was rendered by Labor Arbiter Dennis D.
Juanon dismissing the complaints.5
Dissatisfied with the decision, private
respondent Commission.

respondents

appealed

to the

On appeal, the NLRC's Fourth Division, Cebu City,6 reversed and set aside
the Labor Arbiter's decision and held that private respondents are entitled to
unpaid wages from June 16, 1992 to March 18, 1993, thus:7
The evidence on records, more specifically the evidence submitted by
the complainants, which are: the letter dated April 7, 1993 of Pedrito
L. Leyson, Office Manager of AKELCO (Annex "C"; complainants'
position paper; Rollo, p. 102) addressed to respondent Atty.
Leovigildo T. Mationg; respondent AKELCO General Manager; the
memorandum of said Atty. Mationg dated 14 April 1993, in answer
to the letter of Pedrito Leyson (Annex "D" complainants' position
paper); as well as the computation of the unpaid wages due to
complainants (Annexes "E" to "E-3"; complainants' position
paper, Rollo, pages 1024 to 1027) clearly show that complainants
had rendered services during the period-June 16, 1992 to March 18,
1993. The record is bereft of any showing that the respondents had
submitted any evidence, documentary or otherwise, to controvert
this asseveration of the complainants that services were rendered
during this period. "Subjecting these evidences submitted by the
complainants to the crucible of scrutiny, We find that respondent
Atty. Mationg responded to the request of the Office Manager, Mr.
Leyson, which We quote, to wit:
Rest assured that We shall recommend your aforesaid
request to our Board of Directors for their consideration and
appropriate action. This payment, however, shall be subject,
among others, to the availability of funds.
This assurance is an admission that complainants are entitled to
payment for services rendered from June 16, 1992 to March 18,
1993, specially so that the recommendation and request comes from
the office manager himself who has direct knowledge regarding the
services and performance of employees under him. For how could
one office manager recommend payment of wages, if no services were
rendered by employees under him. An office manager is the most
qualified person to know the performance of personnel under him.
And therefore, any request coming from him for payment of wages
addressed to his superior as in the instant case shall be given
weight.
Furthermore, the record is clear that complainants were paid of their
wages and other fringe benefits from January, 1992 to May, 1992
and from March 19, 1993 up to the time complainants filed the
instant cases. In the interegnum, from June 16, 1992 to March 18,
1993, complainants were not paid of their salaries, hence these
claims. We could see no rhyme nor reason in respondents' refusal to
pay complainants salaries during this period when complainants had
worked and actually rendered service to AKELCO.
While the respondents maintain that complainants were not paid
during this interim period under the principle of "no work, no pay",
however, no proof was submitted by the respondents to substantiate
this allegation. The labor arbiter, therefore, erred in dismissing the

claims of the complainants, when he adopted the "no work, no pay"

principle advanced by the respondents.1wphi1.nt
WHEREFORE, in view of the foregoing, the appealed decision dated
February 25, 1994 is hereby Reversed and Set Aside and a new one
entered ordering respondent AKELCO to pay complainants their
claims amounting to P6,485,767.90 as shown in the computation
(Annexes "E" to "E-3").
A motion for reconsideration was filed by petitioner but the same was denied
by public respondent in a resolution dated July 28, 1995.8
Petitioner brought the case to this Court alleging that respondent NLRC
committed grave abuse of discretion citing the following grounds:9
1. PUBLIC RESPONDENT COMMITTED GRAVE DISCRETION IN
REVERSING THE FACTUAL FINDINGS AND CONCLUSIONS OF THE
LABOR ARBITER, AND DISREGARDING THE EXPRESS ADMISSION
OF PRIVATE RESPONDENTS THAT THEY DEFIED PETITIONER'S
ORDER TRANSFERRING THE PETITIONER'S OFFICIAL BUSINESS
OFFICE FROM LEZO TO KALIBO AND FOR THEM TO REPORT
THEREAT.
2. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN CONCLUDING THAT PRIVATE RESPONDENTS
WERE REALLY WORKING OR RENDERING SERVICE ON THE BASIS
OF THE COMPUTATION OF WAGES AND THE BIASED
RECOMMENDATION SUBMITTED BY LEYSON WHO IS ONE OF THE
PRIVATE RESPONDENTS WHO DEFIED THE LAWFUL ORDERS OF
PETITIONER.
3. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN CONSIDERING THE ASSURANCE BY PETITIONER'S
GENERAL MANAGER MATIONG TO RECOMMEND THE PAYMENT
OF THE CLAIMS OF PRIVATE RESPONDENTS AS AN ADMISSION
OF LIABILITY OR A RECOGNITION THAT COMPENSABLE
SERVICES WERE ACTUALLY RENDERED.
4. GRANTING THAT PRIVATE RESPONDENTS CONTINUED TO
REPORT AT THE LEZO OFFICE, IT IS STILL GRAVE ABUSE OF
DISCRETION FOR PUBLIC RESPONDENT TO CONSIDER THAT
PETITIONER IS LEGALLY OBLIGATED TO RECOGNIZE SAID
CIRCUMSTANCE AS COMPENSABLE SERVICE AND PAY WAGES TO
PRIVATE RESPONDENTS FOR DEFYING THE ORDER FOR THEM
TO REPORT FOR WORK AT THE KALIBO OFFICE WHERE THE
OFFICIAL BUSINESS AND OPERATIONS WERE CONDUCTED.
5. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION AND SERIOUS, PATENT AND PALPABLE ERROR IN
RULING THAT THE "NO WORK, NO PAY" PRINCIPLE DOES NOT
APPLY FOR LACK OF EVIDENTIARY SUPPORT WHEN PRIVATE
RESPONDENTS ALREADY ADMITTED THAT THEY DID NOT
REPORT FOR WORK AT THE KALIBO OFFICE.

6. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION IN ACCORDING WEIGHT AND CREDIBILITY TO THE
SELF-SERVING AND BIASED ALLEGATIONS OF PRIVATE
RESPONDENTS, AND ACCEPTING THEM AS PROOF, DESPITE THE
ESTABLISHED
FACT
AND
ADMISSION
THAT
PRIVATE
RESPONDENTS DID NOT REPORT FOR WORK AT THE KALIBO
OFFICE, OR THAT THEY WERE NEVER PAID FOR ANY WAGES
FROM THE TIME THEY DEFIED PETITIONER'S ORDERS.
Petitioner contends that public respondent committed grave abuse of
discretion in finding that private respondents are entitled to their wages from
June 16, 1992 to March 18, 1993, thus disregarding the principle of "no
work, no pay". It alleges that private respondents stated in their pleadings
that they not only objected to the transfer of petitioner's business office to
Kalibo but they also defied the directive to report thereat because they
considered the transfer illegal. It further claims that private respondents
refused to recognize the authority of petitioner's lawful officers and agents
resulting in the disruption of petitioner's business operations in its official
business office in Lezo, Aklan, forcing petitioner to transfer its office from
Lezo to Kalibo transferring all its equipments, records and facilities; that
private respondents cannot choose where to work, thus, when they defied the
lawful orders of petitioner to report at Kalibo, private respondents were
considered dismissed as far as petitioner was concerned. Petitioner also
disputes private respondents' allegation that they were paid their salaries
from January to May 1992 and again from March 19, 1993 up to the present
but not for the period from June 1992 to March 18, 1993 saying that private
respondents illegally collected fees and charges due petitioner and
appropriated the collections among themselves for which reason they are
claiming salaries only for the period from June 1992 to March 1993 and that
private respondents were paid their salaries starting only in April 1993 when
petitioner's Board agreed to accept private respondents back to work at
Kalibo office out of compassion and not for the reason that they rendered
service at the Lezo office. Petitioner also adds that compensable service is
best shown by timecards, payslips and other similar documents and it was
an error for public respondent to consider the computation of the claims for
wages and benefits submitted merely by private respondents as substantial
evidence.
The Solicitor General filed its Manifestation in lieu of Comment praying that
the decision of respondent NLRC be set aside and payment of wages claimed
by private respondents be denied for lack of merit alleging that private
respondents could not have worked for petitioner's office in Lezo during the
stated period since petitioner transferred its business operation in Kalibo
where all its records and equipments were brought; that computations of the
claims for wages and benefits submitted by private respondents to petitioner
is not proof of rendition of work. Filing its own Comment, public respondent
NLRC claims that the original and exclusive jurisdiction of this Court to
review decisions or resolutions of respondent NLRC does not include a
correction of its evaluation of evidence as factual issues are not fit subject
for certiorari.

Private respondents, in their Comment, allege that review of a decision of

NLRC in a petition for certiorari under Rule 65 does not include the
correctness of its evaluation of the evidence but is confined to issues of
jurisdiction or grave abuse of discretion and that factual findings of
administrative bodies are entitled great weight, and accorded not only respect
but even finality when supported by substantial evidence. They claim that
petitioner's Board of Directors passed an unnumbered resolution on
February 11, 1992 returning back the office to Lezo from Kalibo Aklan with a
directive for all employees to immediately report at Lezo; that the letter-reply
of Atty. Mationg to the letter of office manager Leyson that he will recommend
the payment of the private respondents' salary from June 16, 1992 to March
18, 1993 to the Board of Directors was an admission that private respondent
are entitled to such payment for services rendered. Private respondents state
that in appreciating the evidence in their favor, public respondent NLRC at
most may be liable for errors of judgment which, as differentiated from errors
of jurisdiction, are not within the province of the special civil action
of certiorari.
Petitioner filed its Reply alleging that review of the decision of public
respondent is proper if there is a conflict in the factual findings of the labor
arbiter and the NLRC and when the evidence is insufficient and insubstantial
to support NLRC's factual findings; that public respondent's findings that
private respondent rendered compensable services were merely based on
private respondents' computation of claims which is self-serving; that the
alleged unnumbered board resolution dated February 11, 1992, directing all
employees to report to Lezo Officer was never implemented because it was
not a valid action of AKELCO's legitimate board.
The sole issue for determination is whether or not public respondent NLRC
committed grave abuse of discretion amounting to excess or want of
jurisdiction when it reversed the finding of the Labor Arbiter that private
respondent refused to work under the lawful orders of the petitioner AKELCO
management; hence they are covered by the "no work, no pay" principle and
are thus not entitled to the claim for unpaid wages from June 16, 1992 to
March 18, 1993.
We find merit in the petition.
At the outset, we reiterate the rule that in certiorari proceedings under Rule
65, this Court does not assess and weigh the sufficiency of evidence upon
which the labor arbiter and public respondent NLRC based their resolutions.
Our query is limited to the determination of whether or not public
respondent NLRC acted without or in excess of its jurisdiction or with grave
abuse of discretion in rendering the assailed resolutions.10 While
administrative findings of fact are accorded great respect, and even finality
when supported by substantial evidence, nevertheless, when it can be shown
that administrative bodies grossly misappreciated evidence of such nature as
to compel a contrary conclusion, this court had not hesitated to reverse their
factual findings.11 Factual findings of administrative agencies are not
infallible and will be set aside when they fail the test of
arbitrariness.12Moreover, where the findings of NLRC contradict those of the

labor arbiter, this Court, in the exercise of its equity jurisdiction, may look
into the records of the case and reexamine the questioned findings.13
We find cogent reason, as shown by the petitioner and the Solicitor General,
not to affirm the factual findings of public respondent NLRC.
We do not agree with the finding that private respondents had rendered
services from June 16, 1992 to March 18, 1993 so as to entitle them to
payment of wages. Public respondent based its conclusion on the following:
(a) the letter dated April 7, 1993 of Pedrito L. Leyson, Office Manager of
AKELCO addressed to AKELCO's General Manager, Atty. Leovigildo T.
Mationg, requesting for the payment of private respondents' unpaid wages
from June 16, 1992 to March 18, 1993; (b) the memorandum of said Atty.
Mationg dated 14 April 1993, in answer to the letter request of Pedrito
Leyson where Atty. Mationg made an assurance that he will recommend such
request; (c) the private respondents' own computation of their unpaid wages.
We find that the foregoing does not constitute substantial evidence to
support the conclusion that private respondents are entitled to the payment
of wages from June 16, 1992 to March 18, 1993. Substantial evidence is that
amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion.14 These evidences relied upon by public
respondent did not establish the fact that private respondents actually
rendered services in the Kalibo office during the stated period.
The letter of Pedrito Leyson to Atty. Mationg was considered by public
respondent as evidence that services were rendered by private respondents
during the stated period, as the recommendation and request came from the
office manager who has direct knowledge regarding the services and
performance of employees under him. We are not convinced. Pedrito Leyson
is one of the herein private respondents who are claiming for unpaid wages
and we find his actuation of requesting in behalf of the other private
respondents for the payment of their backwages to be biased and selfserving, thus not credible.
On the other hand, petitioner was able to show that private respondents did
not render services during the stated period. Petitioner's evidences show that
on January 22, 1992, petitioner's Board of Directors passed a resolution
temporarily transferring the Office from Lezo, Aklan to Amon Theater, Kalibo,
Aklan upon the recommendation of Atty. Leovigildo Mationg, then project
supervisor, on the ground that the office at Lezo was dangerous and unsafe.
Such transfer was approved by then NEA Administrator, Rodrigo E. Cabrera,
in a letter dated February 6, 1992 addressed to petitioner's Board of
Directors.15 Thus, the NEA Administrator, in the exercise of supervision and
control over all electric cooperatives, including petitioner, wrote a letter dated
February 6, 1992 addressed to the Provincial Director PC/INP Kalibo Aklan
requesting for military assistance for the petitioner's team in retrieving the
electric cooperative's equipments and other removable facilities and/or
fixtures consequential to the transfer of its principal business address from
Lezo to Kalibo and in maintaining peace and order in the cooperative's
coverage area.16 The foregoing establishes the fact that the continuous
operation of the petitioner's business office in Lezo Aklan would pose a
serious and imminent threat to petitioner's officials and other employees,

hence the necessity of temporarily transferring the operation of its business

office from Lezo to Kalibo. Such transfer was done in the exercise of a
management prerogative and in the absence of contrary evidence is not
unjustified. With the transfer of petitioner's business office from its former
office, Lezo, to Kalibo, Aklan, its equipments, records and facilities were also
removed from Lezo and brought to the Kalibo office where petitioner's official
business was being conducted; thus private respondents' allegations that
they continued to report for work at Lezo to support their claim for wages has
no basis.
Moreover, private respondents in their position paper admitted that they did
not report at the Kalibo office, as Lezo remained to be their office where they
continuously reported, to wit:17
On January 22, 1991 by way of a resolution of the Board of Directors
of AKELCO it allowed the temporary holding of office at Amon
Theater, Kalibo, Aklan, per information by their project supervisor,
Atty. Leovigildo Mationg that their head office is closed and that it is
dangerous to hold office thereat.
Nevertheless, majority of the employees including the herein
complainants, continued to report for work at Lezo, Aklan and were
paid of their salaries.
xxx

xxx

xxx

The transfer of office from Lezo, Aklan to Kalibo, Aklan being illegal
for failure to comply with the legal requirements under P.D. 269, the
complainants remained and continued to work at the Lezo Office
until they were illegally locked out therefrom by the respondents.
Despite the illegal lock out however, complainants continued to
report daily to the location of the Lezo Office, prepared to continue in
the performance of their regular duties.
Complainants thus could not be considered to have abandoned their
work as Lezo remained to be their office and not Kalibo despite the
temporary transfer thereto. Further the fact that they were allowed to
draw their salaries up to May, 1992 is an acknowledgment by the
management that they are working during the period.
xxx

xxx

xxx

It must be pointed out that complainants worked and continuously

reported at Lezo office despite the management holding office at
Kalibo. In fact, they were paid their wages before it was withheld and
then were allowed to draw their salaries again on March 1993 while
reporting at Lezo up to the present.
Respondents' acts and payment of complainants' salaries and again
from March 1993 is an unequivocal recognition on the part of
respondents that the work of complainants is continuing and
uninterrupted and they are therefore entitled to their unpaid wages
for the period from June 1992 to March 1993.

The admission is detrimental to private respondents' cause. Their excuse is

that the transfer to Kalibo was illegal but we agree with the Labor Arbiter
that it was not for private respondents to declare the management's act of
temporarily transferring the AKELCO office to Kalibo as an illegal act. There
is no allegation nor proof that the transfer was made in bad faith or with
malice. The Labor Arbiter correctly rationalized in its decision as follows:18
We do not subscribe to complainants theory and assertions. They, by
their own allegations, have unilaterally committed acts in violation of
management's/respondents'
directives
purely
classified
as
management prerogative. They have taken amongst themselves
declaring management's acts oftemporarily transferring the holding
of the AKELCO office from Lezo to Kalibo, Aklan as illegal. It is never
incumbent upon themselves to declare the same as such. It is lodged
in another forum or body legally mantled to do the same. What they
should
have
done
was
first
to
follow
management's
orders temporarilytransferring office for it has the first presumption
of legality. Further, the transfer was only temporary. For:
The employer as owner of the business, also has inherent
rights, among which are the right to select the persons to be
hired and discharge them for just and valid cause; to
promulgate and enforce reasonable employment rules and
regulations and to modify, amend or revoke the same; to
designate the work as well as the employee or employees to
perform it; to transfer or promote employees; to schedule,
direct, curtail or control company operations; to introduce or
install new or improved labor or money savings methods,
facilities or devices; to create, merge, divide, reclassify and
abolish departments or positions in the company and to sell
or close the business.
xxx

xxx

xxx

Even as the law is solicitous of the welfare of the employees

it must also protect the right of an employer to exercise what
are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve
its purpose can not be denied. The transfer of assignment of
a medical representative from Manila to the province has
therefore been held lawful where this was demanded by the
requirements of the drug company's marketing operations
and the former had at the time of his employment
undertaken to accept assignment anywhere in the
Philippines. (Abbot Laboratories (Phils.), Inc., et al. vs.
NLRC, et al., G.R. No. L-76959, Oct. 12, 1987).
It is the employer's prerogative to abolish a position which it deems
no longer necessary, and the courts, absent any findings of malice on
the part of the management, cannot erase that initiative simply to
protect the person holding office (Great Pacific Life Assurance
Corporation vs. NLRC, et al., G.R. No. 88011, July 30, 1990).

Private respondents claim that petitioner's Board of Directors passed an

unnumbered resolution dated February 11, 1992 returning back the office
from its temporary office in Kalibo to Lezo. Thus, they did not defy any lawful
order of petitioner and were justified in continuing to remain at Lezo office.
This allegation was controverted by petitioner in its Reply saying that such
unnumbered resolution was never implemented as it was not a valid act of
petitioner's Board. We are convinced by petitioner's argument that such
unnumbered resolution was not a valid act of petitioners legitimate Board
considering the subsequent actions taken by the petitioner's Board of
Directors decrying private respondents inimical act and defiance, to wit (1)
Resolution No. 411, s. of 1992 on September 9, 1992, dismissing all AKELCO
employees who were on illegal strike and who refused to return to work
effective January 31, 1992 despite the directive of the NEA project supervisor
and petitioner's acting general manager;19(2) Resolution No. 477, s. of 1993
dated March 10, 1993 accepting back private respondents who staged illegal
strike, defied legal orders and issuances, out of compassion, reconciliation,
Christian values and humanitarian reason subject to the condition of "no
work, no pay"20 (3) Resolution No. 496, s. of 1993 dated June 4, 1993,
rejecting the demands of private respondents for backwages from June 16,
1992 to March 1993 adopting the policy of "no work, no pay" as such
demand has no basis, and directing the COOP Legal Counsel to file criminal
cases against employees who misappropriated collections and officers who
authorized disbursements of funds without legal authority from the NEA and
the AKELCO Board.21 If indeed there was a valid board resolution
transferring back petitioner's office to Lezo from its temporary office in
Kalibo, there was no need for the Board to pass the above-cited resolutions.
We are also unable to agree with public respondent NLRC when it held that
the assurance made by Atty. Mationg to the letter-request of office manager
Leyson for the payment of private respondents' wages from June 1992 to
March 1993 was an admission on the part of general manager Mationg that
private respondents are indeed entitled to the same. The letter reply of Atty.
Mationg to Leyson merely stated that he will recommend the request for
payment of backwages to the Board of Directors for their consideration and
appropriate action and nothing else, thus, the ultimate approval will come
from the Board of Directors. We find well-taken the argument advanced by
the Solicitor General as follows:22
The allegation of private respondents that petitioner had already
approved payment of their wages is without basis. Mationg's offer to
recommend the payment of private respondents' wages is hardly
approval of their claim for wages. It is just an undertaking to
recommend payment. Moreover, the offer is conditional. It is subject
to the condition that petitioner's Board of Directors will give its
approval and that funds were available. Mationg's reply to Leyson's
letter for payment of wages did not constitute approval or assurance
of payment. The fact is that, the Board of Directors of petitioner
rejected private respondents demand for payment (Board Resolution
No. 496, s. 1993).
We are accordingly constrained to overturn public respondent's findings that
petitioner is not justified in its refusal to pay private respondents' wages and

other fringe benefits from June 16, 1992 to March 18, 1993; public
respondents stated that private respondents were paid their salaries from
January to May 1992 and again from March 19, 1993 up to the present. As
cited earlier, petitioner's Board in a Resolution No. 411 dated September 9,
1992 dismissed private respondents who were on illegal strike and who
refused to report for work at Kalibo office effective January 31, 1992; since
no services were rendered by private respondents they were not paid their
salaries. Private respondents never questioned nor controverted the
Resolution dismissing them and nowhere in their Comment is it stated that
they questioned such dismissal. Private respondents also have not rebutted
petitioner's claim that private respondents illegally collected fees and charges
due petitioner and appropriated the collections among themselves to satisfy
their salaries from January to May 1992, for which reason, private
respondents are merely claiming salaries only for the period from June 16,
1992 to March 1993.
Private respondents were dismissed by petitioner effective January 31, 1992
and were accepted back by petitioner, as an act of compassion, subject to the
condition of "no work, no pay" effective March 1993 which explains why
private respondents were allowed to draw their salaries again. Notably, the
letter-request of Mr. Leyson for the payment of backwages and other fringe
benefits in behalf of private respondents was made only in April 1993, after a
Board Resolution accepting them back to work out of compassion and
humanitarian reason. It took private respondents about ten months before
they requested for the payment of their backwages, and the long inaction of
private respondents to file their claim for unpaid wages cast doubts as to the
veracity of their claim.
The age-old rule governing the relation between labor and capital, or
management and employee of a "fair day's wage for a fair day's labor"
remains as the basic factor in determining employees' wages. If there is no
work performed by the employee there can be no wage or pay unless, of
course, the laborer was able, willing and ready to work but was illegally
locked out, suspended or dismissed,23 or otherwise illegally prevented from
working,24 a situation which we find is not present in the instant case. It
would neither be fair nor just to allow private respondents to recover
something they have not earned and could not have earned because they did
not render services at the Kalibo office during the stated period.
Finally, we hold that public respondent erred in merely relying on the
computations of compensable services submitted by private respondents.
There must be competent proof such as time cards or office records to show
that they actually rendered compensable service during the stated period to
entitle them to wages. It has been established that the petitioner's business
office was .transferred to Kalibo and all its equipments, records and facilities
were transferred thereat and that it conducted its official business in Kalibo
during the period in question. It was incumbent upon private respondents to
prove that they indeed rendered services for petitioner, which they failed to
do. It is a basic rule in evidence that each party must prove his affirmative
allegation. Since the burden of evidence lies with the party who asserts the
affirmative allegation, the plaintiff or complainant has to prove his affirmative
allegations in the complaint and the defendant or the respondent has to

prove the affirmative

counterclaim.25

allegation

in

his

affirmative

defenses

and

WHEREFORE, in view of the foregoing, the petition for CERTIORARI is

GRANTED. Consequently the decision of public respondent NLRC dated April
20, 1995 and the Resolution dated July 28, 1995 in NLRC Case No. V-014394 are hereby REVERSED and SET ASIDE for having been rendered with
grave abuse of discretion amounting to lack or excess of jurisdiction. Private
respondents complaint for payment of unpaid wages before the Labor Arbiter
is DISMISSED.1wphi1.nt
SO ORDERED.

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 Secretary of Labor and Employment; DR. BRIAN
MACCAULEY in his capacity as the Superintendent of International
School-Manila; and INTERNATIONAL SCHOOL, INC., respondents.
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, 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.1wphi1.nt
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 localhires.1avvphi1 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 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 along 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 foreignhires 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.
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 applications 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 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).
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 Constitution8 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 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;
xxx

xxx

xxx

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 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 localhires 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 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.1avvphi1
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 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. 79351 November 28, 1989

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner,
vs.
THE HON. SECRETARY OF LABOR, CRESENCIA DIFONTORUM, ET
AL., respondents.
The Chief Legal Counsel for petitioner.
Dante P. Sindac for private respondents.
CORTES, J.:
Petitioner Development Bank of the Philippines seeks the nullification of an
order dated July 29, 1987 and issued by the Undersecretary of Labor and
Employment, affirming that of National Capital Region Officer-in-Charge
Romeo A. Young, directing the petitioner to deliver the properties of Riverside
Mills Corporation (RMC) which it had in its possession to the Ministry (now
Department) of Labor and Employment (MOLE) for proper disposition in Case
No. NCR-LSED-7-334-84 pursuant to Article 110 of the Labor Code.
Labor Case No. NCR-LSED-7-334-84 involves a complaint for illegal
dismissal, unfair labor practice, illegal deductions from salaries and violation
of the minimum wage law filed by private respondents herein against RMC.
On July 3, 1985, a decision was rendered by Director Severo M. Pucan of the
National Capital Region, MOLE, ordering RMC to pay private respondents
backwages and separation benefits. A corresponding writ of execution was
issued on October 22, 1985 directing the sheriff to collect the amount of ONE
MILLION TWO HUNDRED FIFTY-SIX THOUSAND SIX HUNDRED SEVENTYEIGHT PESOS AND SEVENTY SIX CENTAVOS (P1,256,678.76) from RMC
and, in case of failure to collect, to execute the writ by selling the goods and
chattel of RMC not exempt from execution or, in case of insufficiency thereof,
the real or immovable properties of RMC.

(NAMAWU-MIF) [G.R. No. 50402, August 19, 1982, 115 SCRA 873] support
the conclusion that private respondents still enjoyed a preferential lien for
the payment of their backwages and separation benefits over the properties
of RMC which were foreclosed by petitioner [Rollo, pp. 21-22].
Petitioner then filed its motion for reconsideration on December 24,1986
contending that Article 110 of the Labor Code finds no application in the case
at bar for the following reasons: (1) The properties sought to be delivered
have ceased to belong to RMC in view of the fact that petitioner had
foreclosed on the mortgage, and the properties have been sold and delivered
to third parties; (2) The requisite condition for the application of Article 110
of the Labor Code is not present since no bankruptcy or insolvency
proceedings over RMC properties and assets have been undertaken [Rollo,
pp. 24-28]. In an order dated July 29, 1987, petitioner's motion for
reconsideration was denied for lack of merit by Undersecretary Dionisio C.
dela Serna.
Hence, petitioner filed this special civil action for certiorari with prayer for the
issuance of a writ of preliminary injunction. On August 27, 1987, this Court
issued a temporary restraining order enjoining public respondent from
enforcing or carrying out its order dated July 29, 1987. After considering the
allegations made and issues raised in the petition, comments thereto and
reply, the Court, on March 14, 1988, resolved to give due course to the
petition and to require the parties to submit their respective memoranda.
Petitioner and private respondent submitted their memoranda, while public
respondent adopted as its memorandum the comment it had previously
submitted.
After a careful study of the various arguments adduced, as well as the legal
provisions and jurisprudence on the matter, the Court finds the petition
impressed with merit. Indeed, the assailed Order suffers from infirmities
which must be rectified by the grant of a writ of certiorari in favor of
petitioner.

However, on May 23, 1986, the writ of execution was returned unserved and
unsatisfied, with the information that the company premises of RMC had
been padlocked and foreclosed by petitioner. It appears that petitioner had
instituted extra-judicial foreclosure proceedings as early as 1983 on the
properties and other assets of RMC as a result of the latter's failure to meet
its obligations on the loans it secured from petitioner.

Firstly, public respondent acted with grave abuse of discretion amounting to

lack or excess of jurisdiction in enforcing private respondents' right of first
preference under Article 110 of the Labor Code notwithstanding the absence
of bankruptcy, liquidation or insolvency proceedings against RMC.

Consequently, private respondents filed with the MOLE a "Motion for Delivery
of Properties of the [RMC] in the Possession of the [DBP] to the [MOLE] for
Proper Disposition," stating that pursuant to Article 110 of the Labor Code,
they enjoy first preference over the mortgaged properties of RMC for the
satisfaction of the judgment rendered in their favor notwithstanding the
foreclosure of the same by petitioner as mortgage creditor [Rollo, pp. 16-17].
Petitioner filed its opposition.

Article 110. WORKER PREFERENCE IN CASE OF

BANKRUPTCY.In the event of bankruptcy or liquidation of
an employer's business, his workers shall enjoy first
preference as regards wages due them for services rendered
during the period prior to the bankruptcy or liquidation, any
provision of law to the contrary notwithstanding. Unpaid
wages shall be paid in full before other creditors may
establish any claim to a share in the assets of the employer
[Emphasis supplied].

In an order signed by Officer-in-Charge Romeo A. Young and dated December

11, 1986, private respondents' motion was granted based on the finding that
Article 110 of the Labor Code and the ruling laid down in Philippine
Commercial and Industrial Bank v. Natural Mines and Allied Workers'

Article 110 of the Labor Code and Section 10, Rule VIII, Book III of the
Omnibus Rules Implementing the Labor Code provide the following:

Section 10. PAYMENT OF WAGES IN CASE OF

BANKRUPTCY. Unpaid wages earned by the employees

before the declaration of bankruptcy or judicial liquidation of

the employer's business shall be given first preference and
shall be paid in full before other creditors may establish any
claim to a share in the assets of the employer.
It is clear from the wording of the law that the preferential right accorded to
employees and workers under Article 110 may be invoked only during
bankruptcy or judicial liquidation proceedings against the employer. The law
is unequivocal and admits of no other construction.
Respondents contend that the terms "bankruptcy" or "liquidation" are broad
enough to cover a situation where there is a cessation of the operation of the
employer's business as in the case at bar. However, this very same
contention was struck down as unmeritorious in the case of Development
Bank of the Philippines vs. Hon. Labor Arbiter Ariel C. Santos [G.R. Nos.
78261-62, March 8, 1989] involving a group of RMC employees which sought
to enforce its preference of credit Article 110 against DBP over certain RMC
real properties. In that case, the Court laid down the ruling that Article 110
of the Labor Code, which cannot be viewed in isolation of, and must always
be reckoned with the provisions of the Civil Code on concurrence and
preference of credits, may not be invoked by employees or workers of RMC
like private respondents herein, in the absence of a formal declaration of
bankruptcy or a judicial liquidation order of RMC.
The rationale for making the application of Article 110 of the Labor Code
contingent upon the institution of bankruptcy or judicial liquidation
proceedings against the employer is premised upon the very nature of a
preferential right of credit. A preference of credit bestows upon the preferred
creditor an advantage of having his credit satisfied first ahead of other claims
which may be established against the debtor. Logically, it becomes material
only when the properties and assets of the debtor are insufficient to pay his
debts in full; for if the debtor is amply able to pay his various creditors in
full, how can the necessity exist to determine which of his creditors shall be
paid first or whether they shall be paid out of the proceeds of the sale of the
debtor's specific property? Indubitably, the preferential right of credit attains
significance only after the properties of the debtor have been inventoried and
liquidated, and the claims held by his various creditors have been
established [Kuenzle & Streiff (Ltd.) v. Villanueva, 41 Phil. 611 (1916);
Barrette v. Villanueva, G.R. No. L-14938, December 29, 1962, 6 SCRA 928;
Philippine Savings Bank v. Lantin, G.R. No. L-33929, September 2, 1983,
124 SCRA 476].
In this jurisdiction, bankruptcy, insolvency and general judicial liquidation
proceedings provide the only proper venue for the enforcement of a creditor's
preferential right such as that established in Article 110 of the Labor Code,
for these are in rem proceedings binding against the whole world where all
persons having any interest in the assets of the debtor are given the
opportunity to establish their respective credits [Philippine Savings Bank v.
Lantin, supra; Development Bank of the Philippines v. Santos supra].
Secondly, public respondent's Order directing petitioner to deliver to the
MOLE the properties it had foreclosed from RMC for the purpose of executing
the judgment rendered against RMC in Case No. NCR-LSED 7-334-84

violates the basic rule that the power of a court or tribunal in the execution
of its judgment extends only over properties unquestionably belonging to the
judgment debtor [Special Services Corporation v. Centro La Paz, G.R. No. L44100, April 28, 1983, 121 SCRA 748; National Mines and Allied Workers'
Union v. Vera, G.R. No. L-44230, November 19, 1984, 133 SCRA 295].
It appears on record, and remains undisputed by respondents, that
petitioner had extra-judicially foreclosed the subject properties from RMC as
early as 1983 and purchased the same at public auction, and that RMC had
failed to exercise its right to redeem. Thus, when Officer-in-Charge Young
issued on December 11, 1986 the order which directed the delivery of these
properties to the MOLE, RMC had ceased to be the absolute owner thereof
[See Dizon v. Gaborra, G.R. No. L-36821, June 22, 1978, 83 SCRA 688].
Consequently, the order was directed against properties which no longer
belonged to the judgment debtor RMC.
However, respondents, in citing the case of PCIB v. NAMAWU-MIF [supra],
argue that by virtue of Article 110 of the Labor Code, an "automatic first lien"
was created in favor of private respondents on RMC propertiesa "lien"
which predated the foreclosure of the subject properties by petitioner, and
remained vested on these properties even after its sale to petitioner and other
parties.
There is no merit to this contention. It proceeds from a misconception which
must be corrected.
What Article 110 of the Labor Code establishes is not a lien, but a preference
of credit in favor of employees [See Republic v. Peralta, G.R. No. 56568, May
20, 1987, 150 SCRA 37]. This simply means that during bankruptcy,
insolvency or liquidation proceedings involving the existing properties of the
employer, the employees have the advantage of having their unpaid wages
satisfied ahead of certain claims which may be proved therein.
It bears repeating that a preference of credit points out solely the order in
which creditors would be paid from the properties of a debtor inventoried and
appraised during bankruptcy, insolvency or liquidation proceedings.
Moreover, a preference does not exist in any effective way prior to, and apart
from, the institution of these proceedings, for it is only then that the legal
provisions on concurrence and preference of credits begin to apply. Unlike a
lien, a preference of credit does not create in favor of the preferred creditor a
charge or proprietary interest upon any particular property of the debtor.
Neither does it vest as a matter of course upon the mere accrual of a money
claim against the debtor. Certainly, the debtor could very well sell, mortgage
or pledge his property, and convey good title thereon, to third parties free
from such preference [Kuenzle & Streiff v. Villanueva,supra].
Incidentally, the Court is not unmindful of the 1989 amendments to the
article introduced by Section 1, R.A. No. 6715 [March 21, 1989]. Article 110
of the Labor Code as amended reads:
WORKER PREFERENCE IN CASE OF BANKRUPTCY. In
the event of bankruptcy or liquidation of an employer's
business, his workers shall enjoy first preference as regards
their unpaid wages and other monetary claims, any provision

of law to the contrary notwithstanding. Such unpaid

wages and monetary claims shall be paid in full before the
claims of the Government and other creditors may be paid.
[Amendments indicated.]
However, these amendments only relate to the scheme of concurrence and
preference of credits; they do not affect the issues heretofore discussed
regarding the applicability of Article 110 to the attendant facts.
WHEREFORE, considering the foregoing, the present petition is hereby
GRANTED. The assailed order dated July 29, 1987 is SET ASIDE and the
temporary restraining order issued by the Court on August 27, 1987 is made
PERMANENT.
SO ORDERED.

G.R. No. 128003

July 26, 2000

RUBBERWORLD [PHILS.], INC., and JULIE YAO ONG, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, AQUINO MAGSALIN,
PEDRO MAIBO, RICARDO BORJA, ALICIA M. SAN PEDRO AND
FELOMENA B. TOLIN, respondents.
DECISION
PARDO, J.:
What is before the Court for resolution is a petition to annul the resolution of
the National Labor Relations Commission (NLRC),1 affirming the laborarbiter's award but deleting the moral and exemplary damages.
The facts are as follows:
Petitioner Rubberworld (Phils.), Inc. [hereinafter Rubberworld], a corporation
established in 1965, was engaged in manufacturing footwear, bags and
garments.
Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin Camitan, Alicia
M. San Pedro, and Felomena Tolin were employed as dispatcher,
warehouseman, issue monitor, foreman, jacks cementer and outer sole
attacher, respectively.
On August 26, 1994, Rubberworld filed with the Department of Labor and
Employment a notice of temporary shutdown of operations to take effect on
September 26, 1994. Before the effectivity date, however, Rubberworld was
forced to prematurely shutdown its operations.
On November 11, 1994, private respondents filed with the National Labor
Relations Commission a complaint2against petitioner for illegal dismissal and
non-payment of separation pay.
On November 22, 1994, Rubberworld filed with the Securities and Exchange
Commission (SEC) a petition for declaration of suspension of payments with
a proposed rehabilitation plan.3
On December 28, 1994, SEC issued the following order:
"Accordingly, with the creation of the Management Committee, all actions for
claims against Rubberworld Philippines, Inc. pending before any court,
tribunal, office, board, body, Commission or sheriff are hereby deemed
SUSPENDED.
"Consequently, all pending incidents for preliminary injunctions, writ or
attachments, foreclosures and the like are hereby rendered moot and
academic.
"SO ORDERED."4
On January 24, 1995, petitioners submitted to the labor arbiter a motion to
suspend the proceedings invoking the SEC order dated December 28, 1994.
The labor arbiter did not act on the motion and ordered the parties to submit
their respective position papers.

On December 10, 1995, the labor arbiter rendered a decision, which

provides:
"In the light of the foregoing, respondents are hereby declared guilty of
ILLEGAL SHUTDOWN and that respondents are ordered to pay complainants
their separation pay equivalent to one (1) month pay for every year of service.
Considering the malicious act of closing the business precipitately without
due regard to the rights of complainants, moral damages and exemplary
damage in the sum of P 50,000.00 and P 30,000.00 respectively is hereby
awarded for each of the complainants.
Finally 10 % of all sums owing to complainants is hereby adjudged as
attorney's fees.
SO ORDERED."5
On February 5, 1996, petitioners appealed to the National Labor Relations
Commission (NLRC) alleging abuse of discretion and serious errors in the
findings of facts of the labor arbiter.
On August 30, 1996, NLRC issued a resolution, the dispositive portion of
which reads:
"PREMISES CONSIDERED, the decision appealed from is hereby, AFFIRMED
with MODIFICATION in that the award of moral and exemplary damages is
hereby, DELETED.
SO ORDERED."6
On November 20, 1996, NLRC denied petitioners' motion for reconsideration.
Hence, this petition.7
The issue is whether or not the Department of Labor and Employment, the
Labor Arbiter and the National Labor Relations Commission may legally act
on the claims of respondents despite the order of the Securities and
Exchange Commission suspending all actions against a company under
rehabilitation by a management committee created by the Securities and
Exchange Commission.
Presidential Decree No. 902-A is clear that "all actions for claims against
corporations, partnerships or associations under management or
receivership pending before any court, tribunal, board or body shall be
suspended accordingly." The law did not make any exception in favor of labor
claims.8
"The justification for the automatic stay of all pending actions for claims is to
enable the management committee or the rehabilitation receiver to effectively
exercise its/his powers free from any judicial or extra judicial interference
that might unduly hinder or prevent the 'rescue' of the debtor company. To
allow such other actions to continue would only add to the burden of the
management committee or rehabilitation receiver, whose time, effort and
resources would be wasted in defending claims against the corporation
instead of being directed toward its restructuring and rehabilitation."9

Thus, the labor case would defeat the purpose of an automatic

stay.1wphi1 To rule otherwise would open the floodgates to numerous
claims and would defeat the rescue efforts of the management committee.
Besides, even if an award is given to private respondents, the ruling could
not be enforced as long as petitioner is under management committee. 10
This finds ratiocination in that the power to hear and decide labor disputes is
deemed suspended when the Securities and Exchange Commission puts the
corporation under rehabilitation.
Thus, when NLRC proceeded to decide the case despite the SEC suspension
order, the NLRC acted without or in excess of its jurisdiction to hear and
decide cases. As a consequence, any resolution, decision or order that it
rendered or issued without jurisdiction is a nullity.
WHEREFORE, the petition is hereby GRANTED. The decision of the labor
arbiter dated December 10, 1995 and the NLRC resolution dated August 30,
1996, are SET ASIDE.
No costs.
SO ORDERED.

G.R. No. 159577

May 3, 2006

CHARLITO PEARANDA, Petitioner,

vs.
BAGANGA PLYWOOD CORPORATION and HUDSON CHUA, Respondents.
DECISION
PANGANIBAN, CJ:
Managerial employees and members of the managerial staff are exempted
from the provisions of the Labor Code on labor standards. Since petitioner
belongs to this class of employees, he is not entitled to overtime pay and
premium pay for working on rest days.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court,
assailing the January 27, 20032 and July 4, 20033 Resolutions of the Court
of Appeals (CA) in CA-GR SP No. 74358. The earlier Resolution disposed as
follows:

"Upon the other hand, respondent [BPC] is a domestic corporation duly

organized and existing under Philippine laws and is represented herein by its
General Manager HUDSON CHUA, [the] individual respondent. Respondents
thru counsel allege that complainants separation from service was done
pursuant to Art. 283 of the Labor Code. The respondent [BPC] was on
temporary closure due to repair and general maintenance and it applied for
clearance with the Department of Labor and Employment, Regional Office No.
XI to shut down and to dismiss employees (par. 2 position paper). And due to
the insistence of herein complainant he was paid his separation benefits
(Annexes C and D, ibid). Consequently, when respondent [BPC] partially
reopened in January 2001, [Pearanda] failed to reapply. Hence, he was not
terminated from employment much less illegally. He opted to severe
employment when he insisted payment of his separation benefits.
Furthermore, being a managerial employee he is not entitled to overtime pay
and if ever he rendered services beyond the normal hours of work, [there]
was no office order/or authorization for him to do so. Finally, respondents
allege that the claim for damages has no legal and factual basis and that the
instant complaint must necessarily fail for lack of merit."10

is

The labor arbiter ruled that there was no illegal dismissal and that
petitioners Complaint was premature because he was still employed by
BPC.11 The temporary closure of BPCs plant did not terminate his
employment, hence, he need not reapply when the plant reopened.

On the other hand, the Decision of the National Labor Relations Commission
(NLRC) challenged in the CA disposed as follows:

According to the labor arbiter, petitioners money claims for illegal dismissal
was also weakened by his quitclaim and admission during the clarificatory
conference that he accepted separation benefits, sick and vacation leave
conversions and thirteenth month pay.12

"WHEREFORE, premises
hereby DISMISSED."4

considered,

the

instant

petition

The latter Resolution denied reconsideration.

"WHEREFORE, premises considered, the decision of the Labor

Arbiter below awarding overtime pay and premium pay for rest day to
complainant is hereby REVERSED and SET ASIDE, and the
complaint in the above-entitled case dismissed for lack of merit.5
The Facts
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an
employee of Baganga Plywood Corporation (BPC) to take charge of the
operations and maintenance of its steam plant boiler.6 In May 2001,
Pearanda filed a Complaint for illegal dismissal with money claims against
BPC and its general manager, Hudson Chua, before the NLRC.7
After the parties failed to settle amicably, the labor arbiter8 directed the
parties to file their position papers and submit supporting documents.9 Their
respective allegations are summarized by the labor arbiter as follows:
"[Pearanda] through counsel in his position paper alleges that he was
employed by respondent [Baganga] on March 15, 1999 with a monthly salary
of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally
terminated on December 19, 2000. Further, [he] alleges that his services
[were] terminated without the benefit of due process and valid grounds in
accordance with law. Furthermore, he was not paid his overtime pay,
premium pay for working during holidays/rest days, night shift differentials
and finally claims for payment of damages and attorneys fees having been
forced to litigate the present complaint.

Nevertheless, the labor arbiter found petitioner entitled to overtime pay,

premium pay for working on rest days, and attorneys fees in the total
amount of P21,257.98.13
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which deleted the award of
overtime pay and premium pay for working on rest days. According to the
Commission, petitioner was not entitled to these awards because he was a
managerial employee.14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed Pearandas
Petition for Certiorari. The appellate court held that he failed to: 1) attach
copies of the pleadings submitted before the labor arbiter and NLRC; and 2)
explain why the filing and service of the Petition was not done by personal
service.15
In its later Resolution dated July 4, 2003, the CA denied reconsideration on
the ground that petitioner still failed to submit the pleadings filed before the
NLRC.16
Hence this Petition.17
The Issues

Petitioner states the issues in this wise:

"The [NLRC] committed grave abuse of discretion amounting to excess or lack
of jurisdiction when it entertained the APPEAL of the respondent[s] despite
the lapse of the mandatory period of TEN DAYS.1avvphil.net
"The [NLRC] committed grave abuse of discretion amounting to an excess or
lack of jurisdiction when it rendered the assailed RESOLUTIONS dated May
8, 2002 and AUGUST 16, 2002 REVERSING AND SETTING ASIDE the
FACTUAL AND LEGAL FINDINGS of the [labor arbiter] with respect to the
following:
"I. The finding of the [labor arbiter] that [Pearanda] is a regular,
common employee entitled to monetary benefits under Art. 82 [of the
Labor Code].
"II. The finding that [Pearanda] is entitled to the payment of
OVERTIME PAY and OTHER MONETARY BENEFITS."18
The Courts Ruling
The Petition is not meritorious.
Preliminary Issue:
Resolution on the Merits
The CA dismissed Pearandas Petition on purely technical grounds,
particularly with regard to the failure to submit supporting documents.
In Atillo v. Bombay,19 the Court held that the crucial issue is whether the
documents accompanying the petition before the CA sufficiently supported
the allegations therein. Citing this case, Piglas-Kamao v. NLRC20 stayed the
dismissal of an appeal in the exercise of its equity jurisdiction to order the
adjudication on the merits.
The Petition filed with the CA shows a prima facie case. Petitioner attached
his evidence to challenge the finding that he was a managerial employee. 21 In
his Motion for Reconsideration, petitioner also submitted the pleadings
before the labor arbiter in an attempt to comply with the CA
rules.22 Evidently, the CA could have ruled on the Petition on the basis of
these attachments. Petitioner should be deemed in substantial compliance
with the procedural requirements.
Under these extenuating circumstances, the Court does not hesitate to grant
liberality in favor of petitioner and to tackle his substantive arguments in the
present case. Rules of procedure must be adopted to help promote, not
frustrate, substantial justice.23 The Court frowns upon the practice of
dismissing cases purely on procedural grounds.24 Considering that there was
substantial compliance,25 a liberal interpretation of procedural rules in this
labor case is more in keeping with the constitutional mandate to secure
social justice.26
First Issue:
Timeliness of Appeal

Under the Rules of Procedure of the NLRC, an appeal from the decision of the
labor arbiter should be filed within 10 days from receipt thereof.27
Petitioners claim that respondents filed their appeal beyond the required
period is not substantiated. In the pleadings before us, petitioner fails to
indicate when respondents received the Decision of the labor arbiter. Neither
did the petitioner attach a copy of the challenged appeal. Thus, this Court
has no means to determine from the records when the 10-day period
commenced and terminated. Since petitioner utterly failed to support his
claim that respondents appeal was filed out of time, we need not belabor
that point. The parties alleging have the burden of substantiating their
allegations.28
Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial employee, and therefore,
entitled to the award granted by the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the
coverage of labor standards. Labor standards provide the working conditions
of employees, including entitlement to overtime pay and premium pay for
working on rest days.29 Under this provision, managerial employees are
"those whose primary duty consists of the management of the establishment
in which they are employed or of a department or subdivision."30
The Implementing Rules of the Labor Code state that managerial employees
are those who meet the following conditions:
"(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department or
subdivision thereof;
"(2) They customarily and regularly direct the work of two or more
employees therein;
"(3) They have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to the hiring and
firing and as to the promotion or any other change of status of other
employees are given particular weight."31
The Court disagrees with the NLRCs finding that petitioner was a managerial
employee. However, petitioner was a member of the managerial staff, which
also takes him out of the coverage of labor standards. Like managerial
employees, officers and members of the managerial staff are not entitled to
the provisions of law on labor standards.32 The Implementing Rules of the
Labor Code define members of a managerial staff as those with the following
duties and responsibilities:
"(1) The primary duty consists of the performance of work directly
related to management policies of the employer;
"(2) Customarily and regularly exercise discretion and independent
judgment;

"(3) (i) Regularly and directly assist a proprietor or a managerial

employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or (ii)
execute under general supervision work along specialized or
technical lines requiring special training, experience, or knowledge;
or (iii) execute under general supervision special assignments and
tasks; and
"(4) who do not devote more than 20 percent of their hours worked in
a workweek to activities which are not directly and closely related to
the performance of the work described in paragraphs (1), (2), and (3)
above."33
As shift engineer, petitioners duties and responsibilities were as follows:
"1. To supply the required and continuous steam to all consuming
units at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well
as operation of boiler and accessories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety while working.
"6. Recommend parts and supplies purchases.
"7. To recommend personnel actions such as: promotion, or
disciplinary action.
"8. To check water from the boiler, feedwater and softener,
regenerate softener if beyond hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to
time."34
The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that
petitioner was a member of the managerial staff. His duties and
responsibilities conform to the definition of a member of a managerial staff
under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His
work involved overseeing the operation of the machines and the performance
of the workers in the engineering section. This work necessarily required the
use of discretion and independent judgment to ensure the proper functioning
of the steam plant boiler. As supervisor, petitioner is deemed a member of
the managerial staff.35
Noteworthy, even petitioner admitted that he was a supervisor. In his
Position Paper, he stated that he was the foreman responsible for the
operation of the boiler.36 The term foreman implies that he was the
representative of management over the workers and the operation of the
department.37 Petitioners evidence also showed that he was the supervisor of

the steam plant.38 His classification as supervisor is further evident from the
manner his salary was paid. He belonged to the 10% of respondents 354
employees who were paid on a monthly basis; the others were paid only on a
daily basis.39
On the basis of the foregoing, the Court finds no justification to award
overtime pay and premium pay for rest days to petitioner.
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.

G.R. Nos. 169295-96

November 20, 2006

REMINGTON INDUSTRIAL SALES CORPORATION, Petitioner,

vs.
ERLINDA CASTANEDA, Respondent.
DECISION
PUNO, J.:
Before this Court is the Petition for Review on Certiorari1 filed by Remington
Industrial Sales Corporation to reverse and set aside the Decision2 of the
Fourth Division of the Court of Appeals in CA-G.R. SP Nos. 64577 and
68477, dated January 31, 2005, which dismissed petitioners consolidated
petitions for certiorari, and its subsequent Resolution, 3 dated August 11,
2005, which denied petitioners motion for reconsideration.
The antecedent facts of the case, as narrated by the Court of Appeals, are as
follows:
The present controversy began when private respondent, Erlinda Castaneda
("Erlinda") instituted on March 2, 1998 a complaint for illegal dismissal,
underpayment of wages, non-payment of overtime services, non-payment of
service incentive leave pay and non-payment of 13th month pay against
Remington before the NLRC, National Capital Region, Quezon City. The
complaint impleaded Mr. Antonio Tan in his capacity as the Managing
Director of Remington.
Erlinda alleged that she started working in August 1983 as company cook
with a salary of Php 4,000.00 for Remington, a corporation engaged in the
trading business; that she worked for six (6) days a week, starting as early as
6:00 a.m. because she had to do the marketing and would end at around
5:30 p.m., or even later, after most of the employees, if not all, had left the
company premises; that she continuously worked with Remington until she
was unceremoniously prevented from reporting for work when Remington
transferred to a new site in Edsa, Caloocan City. She averred that she
reported for work at the new site in Caloocan City on January 15, 1998, only
to be informed that Remington no longer needed her services. Erlinda
believed that her dismissal was illegal because she was not given the notices
required by law; hence, she filed her complaint for reinstatement without loss
of seniority rights, salary differentials, service incentive leave pay, 13th
month pay and 10% attorneys fees.
Remington denied that it dismissed Erlinda illegally. It posited that Erlinda
was a domestic helper, not a regular employee; Erlinda worked as a cook and
this job had nothing to do with Remingtons business of trading in
construction or hardware materials, steel plates and wire rope products. It
also contended that contrary to Erlindas allegations that the (sic) she worked
for eight (8) hours a day, Erlindas duty was merely to cook lunch and
"merienda", after which her time was hers to spend as she pleased.
Remington also maintained that it did not exercise any degree of control
and/or supervision over Erlindas work as her only concern was to ensure
that the employees lunch and "merienda" were available and served at the
designated time. Remington likewise belied Erlindas assertion that her work

extended beyond 5:00 p.m. as she could only leave after all the employees
had gone. The truth, according to Remington, is that Erlinda did not have to
punch any time card in the way that other employees of Remington did; she
was free to roam around the company premises, read magazines, and to even
nap when not doing her assigned chores. Remington averred that the illegal
dismissal complaint lacked factual and legal bases. Allegedly, it was Erlinda
who refused to report for work when Remington moved to a new location in
Caloocan City.
In a Decision4 dated January 19, 1999, the labor arbiter dismissed the
complaint and ruled that the respondent was a domestic helper under the
personal service of Antonio Tan, finding that her work as a cook was not
usually necessary and desirable in the ordinary course of trade and business
of the petitioner corporation, which operated as a trading company, and that
the latter did not exercise control over her functions. On the issue of illegal
dismissal, the labor arbiter found that it was the respondent who refused to
go with the family of Antonio Tan when the corporation transferred office and
that, therefore, respondent could not have been illegally dismissed.
Upon appeal, the National Labor Relations Commission (NLRC) rendered a
Decision,5 dated November 23, 2000, reversing the labor arbiter, ruling, viz:
We are not inclined to uphold the declaration below that complainant is a
domestic helper of the family of Antonio Tan. There was no allegation by
respondent that complainant had ever worked in the residence of Mr. Tan.
What is clear from the facts narrated by the parties is that complainant
continuously did her job as a cook in the office of respondent serving the
needed food for lunch and merienda of the employees. Thus, her work as
cook inured not for the benefit of the family members of Mr. Tan but solely
for the individual employees of respondent.
Complainant as an employee of respondent company is even bolstered by no
less than the certification dated May 23, 1997 issued by the corporate
secretary of the company certifying that complainant is their bonafide
employee. This is a solid evidence which the Labor Arbiter simply brushed
aside. But, such error would not be committed here as it would be at the
height of injustice if we are to declare that complainant is a domestic helper.
Complainants work schedule and being paid a monthly salary of P4,000.00
are clear indication that she is a company employee who had been employed
to cater to the food needed by the employees which were being provided by
respondent to form part of the benefit granted them.
With regard to the issue of illegal dismissal, we believe that there is more
reason to believe that complainant was not dismissed because allegedly she
was the one who refused to work in the new office of respondent. However,
complainants refusal to join the workforce due to poor eyesight could not be
considered abandonment of work or voluntary resignation from employment.
Under the Labor Code as amended, an employee who reaches the age of sixty
years old (60 years) has the option to retire or to separate from the service
with payment of separation pay/retirement benefit.

In this case, we notice that complainant was already 60 years old at the time
she filed the complaint praying for separation pay or retirement benefit and
some money claims.
Based on Article 287 of the Labor Code as amended, complainant is entitled
to be paid her separation pay/retirement benefit equivalent to one-half (1/2)
month for every year of service. The amount of separation pay would be
based on the prescribed minimum wage at the time of dismissal since she
was then underpaid. In as much as complainant is underpaid of her wages,
it behooves that she should be paid her salary differential for the last three
years prior to separation/retirement.
xxx

xxx

xxx

WHEREFORE, premises considered, the assailed decision is hereby, SET

ASIDE, and a new one is hereby entered ordering respondents to pay
complainant the following:
1. Salary differential - P12,021.12 2. Service Incentive Leave Pay - 2,650.00
3. 13th Month Pay differential - 1,001.76 4. Separation Pay/retirement
benefit - 36,075.00
Total - P51,747.88
SO ORDERED.
Petitioner moved to reconsider this decision but the NLRC denied the motion.
This denial of its motion prompted petitioner to file a Petition for
Certiorari6 with the Court of Appeals, docketed as CA-G.R. SP No. 64577, on
May 4, 2001, imputing grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of the NLRC in (1) reversing in toto the decision of
the labor arbiter, and (2) awarding in favor of respondent salary differential,
service incentive leave pay, 13th month pay differential and separation
benefits in the total sum of P51,747.88.
While the petition was pending with the Court of Appeals, the NLRC rendered
another Decision7 in the same case on August 29, 2001. How and why
another decision was rendered is explained in that decision as follows:
On May 17, 2001, complainant filed a Manifestation praying for a resolution
of her Motion for Reconsideration and, in support thereof, alleges that,
sometime December 18, 2000, she mailed her Manifestation and Motion for
Reconsideration registered as Registered Certificate No. 188844; and that the
said mail was received by the NLRC, through a certain Roland Hernandez, on
December 26, 2000. Certifications to this effect was issued by the Postmaster
of the Sta. Mesa Post Office bearing the date May 11, 2001 (Annexes A and B,
Complainants Manifestation).
Evidence in support of complainants having actually filed a Motion for
Reconsideration within the reglementary period having been sufficiently
established, a determination of its merits is thus, in order.
On the merits, the NLRC found respondents motion for reconsideration
meritorious leading to the issuance of its second decision with the following
dispositive portion:

WHEREFORE, premises considered, the decision dated November 23, 2000,

is MODIFIED by increasing the award of retirement pay due the complainant
in the total amount of SIXTY TWO THOUSAND FOUR HUNDRED THIRTYSEVEN and 50/100 (P62,437.50). All other monetary relief so adjudged
therein are maintained and likewise made payable to the complainant.
SO ORDERED.
Petitioner challenged the second decision of the NLRC, including the
resolution denying its motion for reconsideration, through a second Petition
for Certiorari8 filed with the Court of Appeals, docketed as CA-G.R. SP No.
68477 and dated January 8, 2002, this time imputing grave abuse of
discretion amounting to lack of or excess of jurisdiction on the part of the
NLRC in (1) issuing the second decision despite losing its jurisdiction due to
the pendency of the first petition for certiorari with the Court of Appeals, and
(2) assuming it still had jurisdiction to issue the second decision
notwithstanding the pendency of the first petition for certiorari with the
Court of Appeals, that its second decision has no basis in law since
respondents motion for reconsideration, which was made the basis of the
second decision, was not filed under oath in violation of Section 14, Rule
VII9 of the New Rules of Procedure of the NLRC and that it contained no
certification as to why respondents motion for reconsideration was not
decided on time as also required by Section 10, Rule VI10 and Section 15,
Rule VII11 of the aforementioned rules.
Upon petitioners motion, the Court of Appeals ordered the consolidation of
the two (2) petitions, on January 24, 2002, pursuant to Section 7, par. b(3),
Rule 3 of the Revised Rules of the Court of Appeals. It summarized the
principal issues raised in the consolidated petitions as follows:
1. Whether respondent is petitioners regular employee or a domestic
helper;
2. Whether respondent was illegally dismissed; and
3. Whether the second NLRC decision promulgated during the
pendency of the first petition for certiorari has basis in law.
On January 31, 2005, the Court of Appeals dismissed the consolidated
petitions for lack of merit, finding no grave abuse of discretion on the part of
the NLRC in issuing the assailed decisions.
On the first issue, it upheld the ruling of the NLRC that respondent was a
regular employee of the petitioner since the former worked at the company
premises and catered not only to the personal comfort and enjoyment of Mr.
Tan and his family, but also to that of the employees of the latter. It agreed
that petitioner enjoys the prerogative to control respondents conduct in
undertaking her assigned work, particularly the nature and situs of her work
in relation to the petitioners workforce, thereby establishing the existence of
an employer-employee relationship between them.
On the issue of illegal dismissal, it ruled that respondent has attained the
status of a regular employee in her service with the company. It noted that
the NLRC found that no less than the companys corporate secretary certified
that respondent is a bonafide company employee and that she had a fixed

schedule and routine of work and was paid a monthly salary of P4,000.00;
that she served with petitioner for 15 years starting in 1983, buying and
cooking food served to company employees at lunch and merienda; and that
this work was usually necessary and desirable in the regular business of the
petitioner. It held that as a regular employee, she enjoys the constitutionally
guaranteed right to security of tenure and that petitioner failed to discharge
the burden of proving that her dismissal on January 15, 1998 was for a just
or authorized cause and that the manner of dismissal complied with the
requirements under the law.
Finally, on petitioners other arguments relating to the alleged irregularity of
the second NLRC decision, i.e., the fact that respondents motion for
reconsideration was not under oath and had no certification explaining why
it was not resolved within the prescribed period, it held that such violations
relate to procedural and non-jurisdictional matters that cannot assume
primacy over the substantive merits of the case and that they do not
constitute grave abuse of discretion amounting to lack or excess of
jurisdiction that would nullify the second NLRC decision.
The Court of Appeals denied petitioners contention that the NLRC lost its
jurisdiction to issue the second decision when it received the order indicating
the Court of Appeals initial action on the first petition for certiorari that it
filed. It ruled that the NLRCs action of issuing a decision in installments was
not prohibited by its own rules and that the need for a second decision was
justified by the fact that respondents own motion for reconsideration
remained unresolved in the first decision. Furthermore, it held that under
Section 7, Rule 65 of the Revised Rules of Court,12 the filing of a petition for
certiorari does not interrupt the course of the principal case unless a
temporary restraining order or a writ of preliminary injunction has been
issued against the public respondent from further proceeding with the case.
From this decision, petitioner filed a motion for reconsideration on February
22, 2005, which the Court of Appeals denied through a resolution dated
August 11, 2005.
Hence, the present petition for review.
The petitioner raises the following errors of law: (1) the Court of Appeals
erred in affirming the NLRCs ruling that the respondent was petitioners
regular employee and not a domestic helper; (2) the Court of Appeals erred in
holding that petitioner was guilty of illegal dismissal; and (3) the Court of
Appeals erred when it held that the issuance of the second NLRC decision is
proper.
The petition must fail. We affirm that respondent was a regular employee of
the petitioner and that the latter was guilty of illegal dismissal.
Before going into the substantive merits of the present controversy, we shall
first resolve the propriety of the issuance of the second NLRC decision.
The petitioner contends that the respondents motion for reconsideration,
upon which the second NLRC decision was based, was not under oath and
did not contain a certification as to why it was not decided on time as
required under the New Rules of Procedure of the NLRC. 13 Furthermore, the

former also raises for the first time the contention that respondents motion
was filed beyond the ten (10)-calendar day period required under the same
Rules,14 since the latter received a copy of the first NLRC decision on
December 6, 2000, and respondent filed her motion only on December 18,
2000. Thus, according to petitioner, the respondents motion for
reconsideration was a mere scrap of paper and the second NLRC decision
has no basis in law.
We do not agree.
It is well-settled that the application of technical rules of procedure may be
relaxed to serve the demands of substantial justice, particularly in labor
cases.15 Labor cases must be decided according to justice and equity and the
substantial merits of the controversy.16 Rules of procedure are but mere tools
designed to facilitate the attainment of justice.17 Their strict and rigid
application, which would result in technicalities that tend to frustrate rather
than promote substantial justice, must always be avoided.18
This Court has consistently held that the requirement of verification is
formal, and not jurisdictional. Such requirement is merely a condition
affecting the form of the pleading, non-compliance with which does not
necessarily render it fatally defective. Verification is simply intended to
secure an assurance that the allegations in the pleading are true and correct
and not the product of the imagination or a matter of speculation, and that
the pleading is filed in good faith.19 The court may order the correction of the
pleading if verification is lacking or act on the pleading although it is not
verified, if the attending circumstances are such that strict compliance with
the rules may be dispensed with in order that the ends of justice may thereby
be served.20
Anent the argument that respondents motion for reconsideration, on which
the NLRCs second decision was based, was filed out of time, such issue was
only brought up for the first time in the instant petition where no new issues
may be raised by a party in his pleadings without offending the right to due
process of the opposing party.
Nonetheless, the petitioner asserts that the respondent received a copy of the
NLRCs first decision on December 6, 2000, and the motion for
reconsideration was filed only on December 18, 2000, or two (2) days beyond
the ten (10)-calendar day period requirement under the New Rules of
Procedure of the NLRC and should not be allowed.21
This contention must fail.
Under Article 22322 of the Labor Code, the decision of the NLRC shall be final
and executory after ten (10) calendar days from the receipt thereof by the
parties.
While it is an established rule that the perfection of an appeal in the manner
and within the period prescribed by law is not only mandatory but
jurisdictional, and failure to perfect an appeal has the effect of rendering the
judgment final and executory, it is equally settled that the NLRC may
disregard the procedural lapse where there is an acceptable reason to excuse
tardiness in the taking of the appeal.23 Among the acceptable reasons

recognized by this Court are (a) counsel's reliance on the footnote of the
notice of the decision of the Labor Arbiter that "the aggrieved party may
appeal. . . within ten (10) working days";24 (b) fundamental consideration of
substantial justice;25 (c) prevention of miscarriage of justice or of unjust
enrichment, as where the tardy appeal is from a decision granting separation
pay which was already granted in an earlier final decision; 26 and (d) special
circumstances of the case combined with its legal merits 27 or the amount and
the issue involved.28
We hold that the particular circumstances in the case at bar, in accordance
with substantial justice, call for a liberalization of the application of this rule.
Notably, respondents last day for filing her motion for reconsideration fell on
December 16, 2000, which was a Saturday. In a number of cases,29 we have
ruled that if the tenth day for perfecting an appeal fell on a Saturday, the
appeal shall be made on the next working day. The reason for this ruling is
that on Saturdays, the office of the NLRC and certain post offices are closed.
With all the more reason should this doctrine apply to respondents filing of
the motion for reconsideration of her cause, which the NLRC itself found to
be impressed with merit. Indeed, technicality should not be permitted to
stand in the way of equitably and completely resolving the rights and
obligations of the parties for the ends of justice are reached not only through
the speedy disposal of cases but, more importantly, through a meticulous
and comprehensive evaluation of the merits of a case.
Finally, as to petitioners argument that the NLRC had already lost its
jurisdiction to decide the case when it filed its petition for certiorari with the
Court of Appeals upon the denial of its motion for reconsideration, suffice it
to state that under Section 7 of Rule 6530 of the Revised Rules of Court, the
petition shall not interrupt the course of the principal case unless a
temporary restraining order or a writ of preliminary injunction has been
issued against the public respondent from further proceeding with the case.
Thus, the mere pendency of a special civil action for certiorari, in connection
with a pending case in a lower court, does not interrupt the course of the
latter if there is no writ of injunction.31 Clearly, there was no grave abuse of
discretion on the part of the NLRC in issuing its second decision which
modified the first, especially since it failed to consider the respondents
motion for reconsideration when it issued its first decision.
Having resolved the procedural matters, we shall now delve into the merits of
the petition to determine whether respondent is a domestic helper or a
regular employee of the petitioner, and whether the latter is guilty of illegal
dismissal.
Petitioner relies heavily on the affidavit of a certain Mr. Antonio Tan and
contends that respondent is the latters domestic helper and not a regular
employee of the company since Mr. Tan has a separate and distinct
personality from the petitioner. It maintains that it did not exercise control
and supervision over her functions; and that it operates as a trading
company and does not engage in the restaurant business, and therefore
respondents work as a cook, which was not usually necessary or desirable to
its usual line of business or trade, could not make her its regular employee.
This contention fails to impress.

In Apex Mining Company, Inc. v. NLRC,32 this Court held that a househelper
in the staff houses of an industrial company was a regular employee of the
said firm. We ratiocinated that:
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the
terms "househelper" or "domestic servant" are defined as follows:
"The term househelper as used herein is synonymous to the term domestic
servant and shall refer to any person, whether male or female, who renders
services in and about the employers home and which services are usually
necessary or desirable for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and enjoyment of the
employers family."
The foregoing definition clearly contemplates such househelper or domestic
servant who is employed in the employers home to minister exclusively to
the personal comfort and enjoyment of the employers family. Such definition
covers family drivers, domestic servants, laundry women, yayas, gardeners,
houseboys and similar househelps.
xxx

xxx

xxx

The criteria is the personal comfort and enjoyment of the family of the
employer in the home of said employer. While it may be true that the nature
of the work of a househelper, domestic servant or laundrywoman in a home
or in a company staffhouse may be similar in nature, the difference in their
circumstances is that in the former instance they are actually serving the
family while in the latter case, whether it is a corporation or a single
proprietorship engaged in business or industry or any other agricultural or
similar pursuit, service is being rendered in the staffhouses or within the
premises of the business of the employer. In such instance, they are
employees of the company or employer in the business concerned entitled to
the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant
is assigned to certain aspects of the business of the employer that such
househelper or domestic servant may be considered as such an employee.
The Court finds no merit in making any such distinction. The mere fact that
the househelper or domestic servant is working within the premises of the
business of the employer and in relation to or in connection with its
business, as in its staffhouses for its guest or even for its officers and
employees, warrants the conclusion that such househelper or domestic
servant is and should be considered as a regular employee of the employer
and not as a mere family househelper or domestic servant as contemplated
in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended.
In the case at bar, the petitioner itself admits in its position paper 33 that
respondent worked at the company premises and her duty was to cook and
prepare its employees lunch and merienda. Clearly, the situs, as well as the
nature of respondents work as a cook, who caters not only to the needs of
Mr. Tan and his family but also to that of the petitioners employees, makes
her fall squarely within the definition of a regular employee under the
doctrine enunciated in the Apex Mining case. That she works within
company premises, and that she does not cater exclusively to the personal

comfort of Mr. Tan and his family, is reflective of the existence of the
petitioners right of control over her functions, which is the primary indicator
of the existence of an employer-employee relationship.
Moreover, it is wrong to say that if the work is not directly related to the
employer's business, then the person performing such work could not be
considered an employee of the latter. The determination of the existence of an
employer-employee relationship is defined by law according to the facts of
each case, regardless of the nature of the activities involved.34 Indeed, it
would be the height of injustice if we were to hold that despite the fact that
respondent was made to cook lunch and merienda for the petitioners
employees, which work ultimately redounded to the benefit of the petitioner
corporation, she was merely a domestic worker of the family of Mr. Tan.
We note the findings of the NLRC, affirmed by the Court of Appeals, that no
less than the companys corporate secretary has certified that respondent is
a bonafide company employee;35 she had a fixed schedule and routine of
work and was paid a monthly salary of P4,000.00;36 she served with the
company for 15 years starting in 1983, buying and cooking food served to
company employees at lunch and merienda, and that this service was a
regular feature of employment with the company.37
Indubitably, the Court of Appeals, as well as the NLRC, correctly held that
based on the given circumstances, the respondent is a regular employee of
the petitioner.1wphi1
Having determined that the respondent is petitioners regular employee, we
now proceed to ascertain the legality of her dismissal from employment.
Petitioner contends that there was abandonment on respondents part when
she refused to report for work when the corporation transferred to a new
location in Caloocan City, claiming that her poor eyesight would make long
distance travel a problem. Thus, it cannot be held guilty of illegal dismissal.
On the other hand, the respondent claims that when the petitioner relocated,
she was no longer called for duty and that when she tried to report for work,
she was told that her services were no longer needed. She contends that the
petitioner dismissed her without a just or authorized cause and that she was
not given prior notice, hence rendering the dismissal illegal.
We rule for the respondent.
As a regular employee, respondent enjoys the right to security of tenure
under Article 27938 of the Labor Code and may only be dismissed for a
just39 or authorized40 cause, otherwise the dismissal becomes illegal and the
employee becomes entitled to reinstatement and full backwages computed
from the time compensation was withheld up to the time of actual
reinstatement.
Abandonment is the deliberate and unjustified refusal of an employee to
resume his employment.41 It is a form of neglect of duty; hence, a just cause
for termination of employment by the employer under Article 282 of the
Labor Code, which enumerates the just causes for termination by the
employer.42 For a valid finding of abandonment, these two factors should be
present: (1) the failure to report for work or absence without valid or

justifiable reason; and (2) a clear intention to sever employer-employee

relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the employee
has no more intention to work.43 The intent to discontinue the employment
must be shown by clear proof that it was deliberate and unjustified. 44 This,
the petitioner failed to do in the case at bar.
Alongside the petitioners contention that it was the respondent who quit her
employment and refused to return to work, greater stock may be taken of the
respondents immediate filing of her complaint with the NLRC. Indeed, an
employee who loses no time in protesting her layoff cannot by any reasoning
be said to have abandoned her work, for it is well-settled that the filing of an
employee of a complaint for illegal dismissal with a prayer for reinstatement
is proof enough of her desire to return to work, thus, negating the employers
charge of abandonment.45
In termination cases, the burden of proof rests upon the employer to show
that the dismissal is for a just and valid cause; failure to do so would
necessarily mean that the dismissal was illegal. 46 The employers case
succeeds or fails on the strength of its evidence and not on the weakness of
the employees defense.47 If doubt exists between the evidence presented by
the employer and the employee, the scales of justice must be tilted in favor of
the latter.48
IN VIEW WHEREOF, the petition is DENIED for lack of merit. The assailed
Decision dated January 31, 2005, and the Resolution dated August 11,
2005, of the Court of Appeals in CA-G.R. SP Nos. 64577 and 68477 are
AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 96078 January 9, 1992

HILARIO RADA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and
PHILNOR CONSULTANTS AND PLANNERS, INC., respondents.
Cabellero, Calub, Aumentado & Associates Law Offices for petitioner.
REGALADO, J.:
In this special civil action for certiorari, petitioner Rada seeks to annul the
decision of respondent National Labor Relations Commission (NLRC), dated
November 19, 1990, reversing the decision of the labor arbiter which ordered
the reinstatement of petitioner with backwages and awarded him overtime
pay. 1
The facts, as stated in the Comment of private respondent Philnor
Consultants and Planners, Inc. (Philnor), are as follows:
Petitioner's initial employment with this Respondent was
under a "Contract of Employment for a Definite Period" dated
July 7, 1977, copy of which is hereto attached and made an
integral part hereof as Annex A whereby Petitioner was hired
as "Driver" for the construction supervision phase of the
Manila North Expressway Extension, Second Stage
(hereinafter referred to as MNEE Stage 2) for a term of "about
24 months effective July 1, 1977.
xxx xxx xxx
Highlighting the nature of Petitioner's employment, Annex
A specifically provides as follows:
It is hereby understood that the Employer
does not have a continuing need for the
services of the Employee beyond the
termination date of this contract and that
the Employee's services shall automatically,
and without notice, terminate upon the
completion of the above specified phase of
the project; and that it is further understood
that the engagement of his/her services is
coterminus with the same and not with the
whole project or other phases thereof
wherein other employees of similar position
as he/she have been hired. (Par. 7,
emphasis supplied)
Petitioner's first contract of employment expired on June 30,
1979. Meanwhile, the main project, MNEE Stage 2, was not
finished on account of various constraints, not the least of
which was inadequate funding, and the same was extended

and remained in progress beyond the original period of 2.3

years. Fortunately for the Petitioner, at the time the first
contract of employment expired, Respondent was in need of
Driver for the extended project. Since Petitioner had the
necessary experience and his performance under the first
contract of employment was found satisfactory, the position
of Driver was offered to Petitioner, which he accepted. Hence
a second Contract of Employment for a Definite Period of 10
months, that is, from July 1, 1979 to April 30, 1980 was
executed between Petitioner and Respondent on July 7,
1979. . . .
In March 1980 some of the areas or phases of the project
were completed, but the bulk of the project was yet to be
finished. By that time some of those project employees whose
contracts of employment expired or were about to expire
because of the completion of portions of the project were
offered another employment in the remaining portion of the
project. Petitioner was among those whose contract was
about to expire, and since his service performance was
satisfactory, respondent renewed his contract of employment
in April 1980, after Petitioner agreed to the offer.
Accordingly, a third contract of employment for a definite
period was executed by and between the Petitioner and the
Respondent whereby the Petitioner was again employed as
Driver for 19 months, from May 1, 1980 to November 30,
1981, . . .
This third contract of employment was subsequently
extended for a number of times, the last extension being for
a period of 3 months, that is, from October 1, 1985 to
December 31, 1985, . . .
The last extension, from October 1, 1985 to December 31,
1985 (Annex E) covered by an "Amendment to the Contract
of Employment with a Definite Period," was not extended any
further because Petitioner had no more work to do in the
project. This last extension was confirmed by a notice on
November 28, 1985 duly acknowledged by the Petitioner the
very next day, . . .
Sometime in the 2nd week of December 1985, Petitioner
applied for "Personnel Clearance" with Respondent dated
December 9, 1985 and acknowledged having received the
amount of P3,796.20 representing conversion to cash of
unused leave credits and financial assistance. Petitioner also
released Respondent from all obligations and/or claims, etc.
in a "Release, Waiver and Quitclaim" . . .2
Culled from the records, it appears that on May 20, 1987, petitioner filed
before the NLRC, National Capital Region, Department of Labor and
Employment, a Complaint for non-payment of separation pay and overtime
pay. On June 3, 1987, Philnor filed its Position Paper alleging, inter alia, that

petitioner was not illegally terminated since the project for which he was
hired was completed; that he was hired under three distinct contracts of
employment, each of which was for a definite period, all within the estimated
period of MNEE Stage 2 Project, covering different phases or areas of the said
project; that his work was strictly confined to the MNEE Stage 2 Project and
that he was never assigned to any other project of Philnor; that he did not
render overtime services and that there was no demand or claim for him for
such overtime pay; that he signed a "Release, Waiver and Quitclaim"
releasing Philnor from all obligations and claims; and that Philnor's business
is to provide engineering consultancy services, including supervision of
construction services, such that it hires employees according to the
requirements of the project manning schedule of a particular contract. 3
On July 2, 1987, petitioner filed an Amended Complaint alleging that he was
illegally dismissed and that he was not paid overtime pay although he was
made to render three hours overtime work form Monday to Saturday for a
period of three years.
On July 7, 1987, petitioner filed his Position Paper claiming that he was
illegally dismissed since he was a regular employee entitled to security of
tenure; that he was not a project employee since Philnor is not engaged in
the construction business as to be covered by Policy Instructions No. 20; that
the contract of employment for a definite period executed between him and
Philnor is against public policy and a clear circumvention of the law designed
merely to evade any benefits or liabilities under the statute; that his position
as driver was essential, necessary and desirable to the conduct of the
business of Philnor; that he rendered overtime work until 6:00 p.m. daily
except Sundays and holidays and, therefore, he was entitled to overtime
pay. 4
In his Reply to Respondent's Position Paper, petitioner claimed that he was a
regular employee pursuant to Article 278(c) of the Labor Code and, thus, he
cannot be terminated except for a just cause under Article 280 of the Code;
and that the public respondent's ruling in Quiwa vs. Philnor Consultants and
Planners, Inc. 5 is not applicable to his case since he was an administrative
employee working as a company driver, which position still exists and is
essential to the conduct of the business of Philnor even after the completion
of his contract of employment. 6 Petitioner likewise avers that the contract of
employment for a definite period entered into between him and Philnor was a
ploy to defeat the intent of Article 280 of the Labor Code.
On July 28, 1987, Philnor filed its Respondent's Supplemental Position
Paper, alleging therein that petitioner was not a company driver since his job
was to drive the employees hired to work at the MNEE Stage 2 Project to and
from the filed office at Sto. Domingo Interchange, Pampanga; that the office
hours observed in the project were from 7:00 a.m. to 4:00 p.m. Mondays
through Saturdays; that Philnor adopted the policy of allowing certain
employees, not necessarily the project driver, to bring home project vehicles
to afford fast and free transportation to and from the project field office
considering the distance between the project site and the employees'
residence, to avoid project delays and inefficiency due to employee tardiness
caused by transportation problem; that petitioner was allowed to use a

project vehicle which he used to pick up and drop off some ten employees
along Epifanio de los Santos Avenue (EDSA), on his way home to Marikina,
Metro Manila; that when he was absent or on leave, another employee living
in Metro Manila used the same vehicle in transporting the same employees;
that the time used by petitioner to and from his residence to the project site
from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to 6:00 p.m., or about three
hours daily, was not overtime work as he was merely enjoying the benefit and
convenience of free transportation provided by Philnor, otherwise without
such vehicle he would have used at least four hours by using public
transportation and spent P12.00 daily fare; that in the case of Quiwa
vs. Philnor Consultants and Planners, Inc., supra, the NLRC upheld Philnor's
position that Quiwa was a project employee and he was not entitled to
termination pay under Policy Instructions No. 20 since his employment was
coterminous with the completion of the project.
On August 25, 1987, Philnor filed its Respondent's Reply/Comments to
Complainant's Rejoinder and Reply, submitting therewith two letters dated
January 5, 1985 and February 6, 1985, signed by MNEE Stage 2 Project
employees, including herein petitioner, where they asked what termination
benefits could be given to them as the MNEE Stage 2 Project was nearing
completion, and Philnor's letter-reply dated February 22, 1985 informing
them that they are not entitled to termination benefits as they are
contractual/project employees.
On August 31, 1989, Labor Arbiter Dominador M. Cruz rendered a
decision 7 with the following dispositive portion:
WHEREFORE, in view of all the foregoing considerations,
judgment is hereby rendered:
(1) Ordering the respondent company to reinstate the
complainant to his former position without loss of seniority
rights and other privileges with full backwages from the time
of his dismissal to his actual reinstatement;
(2) Directing the respondent company to pay the
complainant overtime pay for the three excess hours of work
performed during working days from January 1983 to
December 1985; and
(3) Dismissing all other claims for lack of merit.
SO ORDERED.
Acting on Philnor's appeal, the NLRC rendered its assailed decision dated
November 19, 1990, setting aside the labor arbiter's aforequoted decision and
dismissing petitioner's complaint.
Hence this petition wherein petitioner charges respondent NLRC with grave
abuse of discretion amounting to lack of jurisdiction for the following
reasons:
1. The decision of the labor arbiter, dated August 31, 1989, has already
become final and executory;

2. The case of Quiwa vs. Philnor Consultants and Planners, Inc. is not binding
nor is it applicable to this case;
3. The petitioner is a regular employee with eight years and five months of
continuous services for his employer, private respondent Philnor;
4. The claims for overtime services, reinstatement and full backwages are
valid and meritorious and should have been sustained; and
5. The decision of the labor arbiter should be reinstated as it is more in
accord with the facts, the law and evidence.
The petition is devoid of merit.
1. Petitioner questions the jurisdiction of respondent NLRC in taking
cognizance of the appeal filed by Philnor in spite of the latter's failure to file a
supersedeas bond within ten days from receipt of the labor arbiter's decision,
by reason of which the appeal should be deemed to have been filed out of
time. It will be noted, however, that Philnor was able to file a bond although
it was made beyond the 10-day reglementary period.
While it is true that the payment of the supersedeas bond is an essential
requirement in the perfection of an appeal, however, where the fee had been
paid although payment was delayed, the broader interests of justice and the
desired objective of resolving controversies on the merits demands that the
appeal be given due course. Besides, it was within the inherent power of the
NLRC to have allowed late payment of the bond, considering that the
aforesaid decision of the labor arbiter was received by private respondent on
October 3, 1989 and its appeal was duly filed on October 13, 1989. However,
said decision did not state the amount awarded as backwages and overtime
pay, hence the amount of the supersedeas bond could not be determined. It
was only in the order of the NLRC of February 16, 1990 that the amount of
the supersedeas bond was specified and which bond, after an extension
granted by the NLRC, was timely filed by private respondent.
Moreover, as provided by Article 221 of the Labor Code, "in any proceeding
before the Commission or any of the Labor Arbiters, the rules of evidence
prevailing in Courts of law or equity shall not be controlling and it is the
spirit and intention of this Code that the Commission and its members and
the Labor Arbiters shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively without regard to technicalities of
law or procedure, all in the interest of due process. 8 Finally, the issue of
timeliness of the appeal being an entirely new and unpleaded matter in the
proceedings below it may not now be raised for the first time before this
Court. 9
2. Petitioner postulates that as a regular employee, he is entitled to security
of tenure, hence he cannot be terminated without cause. Private respondent
Philnor believes otherwise and asserts that petitioner is merely a project
employee who was terminated upon the completion of the project for which
he was employed.
In holding that petitioner is a regular employee, the labor arbiter found that:

. . . There is no question that the complainant was employed

as driver in the respondent company continuously from July
1, 1977 to December 31, 1985 under various contracts of
employment. Similarly, there is no dispute that respondent
Philnor Consultant & Planner, Inc., as its business name
connotes, has been engaged in providing to its client(e)le
engineering consultancy services. The record shows that
while the different labor contracts executed by the parties
stipulated definite periods of engaging the services of the
complainant, yet the latter was suffered to continue
performing his job upon the expiration of one contract and
the renewal of another. Under these circumstances, the
complaint has obtained the status of regular employee, it
appearing that he has worked without fail for almost eight
years, a fraction of six months considered as one whole year,
and that his assigned task as driver was necessary and
desirable in the usual trade/business of the respondent
employer. Assuming to be true, as spelled out in the
employment contract, that the Employer has no "continuing
need for the services of the Employe(e) beyond the
termination date of this contract and that the Employee's
services shall automatically, and without notice, terminate
upon completion of the above specified phase of the project,"
still we cannot see our way clear why the complainant was
hired and his services engaged contract after contract
straight from 1977 to 1985 which, to our considered view,
lends credence to the contention that he worked as regular
driver ferrying early in the morning office personnel to the
company main office in Pampanga and bringing back late in
the afternoon to Manila, and driving company executives for
inspection of construction workers to the jobsites. All told,
we believe that the complainant, under the environmental
facts obtaining in the case at bar, is a regular employee, the
provisions
of
written
agreement
to
the
contrary notwithstanding and regardless of the oral
understanding of the parties . . . 10
On the other hand, respondent NLRC declared that, as between the
uncorroborated and unsupported assertions of petitioners and those of
private respondent which are supported by documents, greater credence
should be given the latter. It further held that:
Complainant was hired in a specific project or undertaking
as driver. While such project was still on-going he was hired
several times with his employment period fixed every time
his contract was renewed. At the completion of the specific
project or undertaking his employment contract was not
renewed.
We reiterate our ruling in the case of (Quiwa) vs. Philnor
Consultants and Planners, Inc., NLRC RAB III 5-1738-84, it is
being applicable in this case, viz.:

. . . While it is true that the activities

performed by him were necessary or
desirable in the usual business or trade of
the respondent as consultants, planners,
contractor and while it is also true that the
duration of his employment was for a period
of about seven years, these circumstances
did
not
make
him
a
regular employee in contemplation of Article
281 of (the) Labor Code. . . . 11
Our ruling in Sandoval Shipyards, Inc. vs. National Labor
Commission, et al. 12 is applicable to the case at bar. Thus:

Relations

We hold that private respondents were project employees

whose work was coterminous with the project or which they
were hired. Project employees, as distinguished from regular
or non-project employees, are mentioned in section 281 of
the Labor Code as those "where the employment has been
fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the
engagement of the employee."
Policy Instructions No. 20 of the Secretary of Labor, which
was issued to stabilize employer-employee relations in the
construction industry, provides:
Project employees are those employed in connection
with a particular construction project. Non-project
(regular) employees are those employed by a
construction company without reference to any
particular project.
Project employees are not entitled to termination pay
if they are terminated as a result of the completion of
the project or any phase thereof in which they are
employed, regardless of the number of projects in
which they have been employed by a particular
construction company. Moreover, the company is
not required to obtain clearance from the Secretary
of Labor in connection with such termination.
The petitioner cited three of its own cases wherein the
National Labor Relations Commission, Deputy Minister of
Labor and Employment Inciong and the Director of the
National Capital Region held that the layoff of its project
employees was lawful. Deputy Minister Inciong in TFU Case
No. 1530, In Re Sandoval Shipyards, Inc. Application for
Clearance to Terminate Employees, rendered the following
ruling on February 26, 1979;
We feel that there is merit in the contention of the applicant
corporation. To our mind, the employment of the employees
concerned were fixed for a specific project or undertaking.For

the nature of the business the corporation is engaged into is

one which will not allow it to employ workers for an indefinite
period.
It is significant to note that the corporation does not
construct vessels for sale or otherwise which will demand
continuous productions of ships and will need permanent or
regular workers. It merely accepts contracts for shipbuilding
or for repair of vessels form third parties and, only, on
occasion when it has work contract of this nature that it
hires workers to do the job which, needless to say, lasts only
for less than a year or longer.
The completion of their work or project automatically
terminates their employment, in which case, the employer is,
under the law, only obliged to render a report on the
termination of the employment. (139-140, Rollo of G.R. No.
65689) (Emphasis supplied)
In Cartagenas, et al. vs. Romago Electric Company, Inc., et al.,
held that:

13

we likewise

As an electrical contractor, the private respondent depends

for its business on the contracts it is able to obtain from real
estate developers and builders of buildings. Since its work
depends on the availability of such contracts or "projects,"
necessarily the duration of the employment's of this work
force is not permanent but co-terminus with the projects to
which they are assigned and from whose payrolls they are
paid. It would be extremely burdensome for their employer
who, like them, depends on the availability of projects, if it
would have to carry them as permanent employees and pay
them wages even if there are no projects for them to work on.
(Emphasis supplied.)
It must be stressed herein that although petitioner worked with Philnor as a
driver for eight years, the fact that his services were rendered only for a
particular project which took that same period of time to complete
categorizes him as a project employee. Petitioner was employed for one
specific project.
A non-project employee is different in that the employee is hired for more
than one project. A non-project employee, vis-a-vis a project employee, is best
exemplified in the case of Fegurin, et al. vs. National Labor Relations
Commission, et al. 14 wherein four of the petitioners had been working with
the company for nine years, one for eight years, another for six years, the
shortest term being three years. In holding that petitioners are regular
employees, this Court therein explained:
Considering the nature of the work of petitioners, that of
carpenter, laborer or mason, their respective jobs would
actually be continuous and on-going. When a project to
which they are individually assigned is completed, they
would be assigned to the next project or a phase thereof. In

other words, they belonged to a "work pool" from which the

company would draw workers for assignment to other
projects at its discretion. They are, therefore, actually "nonproject employees."
From the foregoing, it is clear that petitioner is a project employee
considering that he does not belong to a "work pool" from which the company
would draw workers for assignment to other projects at its discretion. It is
likewise apparent from the facts obtaining herein that petitioner was utilized
only for one particular project, the MNEE Stage 2 Project of respondent
company. Hence, the termination of herein petitioner is valid by reason of the
completion of the project and the expiration of his employment contract.
3. Anent the claim for overtime compensation, we hold that petitioner is
entitled to the same. The fact that he picks up employees of Philnor at
certain specified points along EDSA in going to the project site and drops
them off at the same points on his way back from the field office going home
to Marikina, Metro Manila is not merely incidental to petitioner's job as a
driver. On the contrary, said transportation arrangement had been adopted,
not so much for the convenience of the employees, but primarily for the
benefit of the employer, herein private respondent. This fact is inevitably
deducible from the Memorandum of respondent company:
The herein Respondent resorted to the above transport
arrangement because from its previous project construction
supervision experiences, Respondent found out that project
delays and inefficiencies resulted from employees' tardiness;
and that the problem of tardiness, in turn, was aggravated
by transportation problems, which varied in degrees in
proportion to the distance between the project site and the
employees' residence. In view of this lesson from experience,
and as a practical, if expensive, solution to employees'
tardiness and its concomitant problems, Respondent
adopted the policy of allowing certain employees not
necessarily project drivers to bring home project vehicles,
so that employees could be afforded fast, convenient and free
transportation to and from the project field office. . . . 15
Private respondent does not hesitate to admit that it is usually the project
driver who is tasked with picking up or dropping off his fellow employees.
Proof thereof is the undisputed fact that when petitioner is absent, another
driver is supposed to replace him and drive the vehicle and likewise pick up
and/or drop off the other employees at the designated points on EDSA. If
driving these employees to and from the project site is not really part of
petitioner's job, then there would have been no need to find a replacement
driver to fetch these employees. But since the assigned task of fetching and
delivering employees is indispensable and consequently mandatory, then the
time required of and used by petitioner in going from his residence to the
field office and back, that is, from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m.
to around 6:00 p.m., which the labor arbiter rounded off as averaging three
hours each working day, should be paid as overtime work. Quintessentially,

petitioner should be given overtime pay for the three excess hours of work
performed during working days from January, 1983 to December, 1985.
WHEREFORE, subject to the modification regarding the award of overtime
pay to herein petitioner, the decision appealed from is AFFIRMED in all other
respects.
SO ORDERED.

G.R. No. L-18939

August 31, 1964

NATIONAL WATERWORKS and SEWERAGE AUTHORITY, petitioner,

vs.
NWSA CONSOLIDATED UNIONS, ET AL., respondents.
Govt. Corp. Counsel Simeon M. Gopengco and Asst. Govt. Corp. Counsel Arturo
B. Santos for petitioner.
Cipriano Cid and Associates and Israel Bocobo for respondents.
Alfredo M. Montesa for intervenor-respondent.
BAUTISTA ANGELO, J.:
Petitioner National Waterworks & Sewerage Authority is a government-owned
and controlled corporation created under Republic Act No. 1383, while
respondent NWSA Consolidated Unions are various labor organizations
composed of laborers and employees of the NAWASA. The other respondents
are intervenors Jesus Centeno, et al., hereinafter referred to as intervenors.
Acting on a certification of the President of the Philippines, the Court of
Industrial Relations conducted a hearing on December 5, 1957 on the
controversy then existing between petitioner and respondent unions which
the latter embodied in a "Manifesto" dated December 51, 1957, namely:
implementation of the 40-Hour Week Law (Republic Act No. 1880); alleged
violations of the collective bargaining agreement dated December 28, 1956
concerning "distress pay"; minimum wage of P5.25; promotional
appointments and filling of vacancies of newly created positions; additional
compensation for night work; wage increases to some laborers and
employees; and strike duration pay. In addition, respondent unions raised
the issue of whether the 25% additional compensation for Sunday work
should be included in computing the daily wage and whether, in determining
the daily wage of a monthly-salaried employee, the salary should be divided
by 30 days.
On December 13, 1957, petitioner and respondent unions, conformably to a
suggestion of the Court of Industrial Relations, submitted a joint stipulation
of facts on the issues concerning the 40-Hour Week Law, "distress pay,"
minimum wage of P5.25, filling of vacancies, night compensation, and salary
adjustments, reserving the right to present evidence on matters not covered
therein. On December 4, 1957, respondent intervenors filed a petition in
intervention on the issue for additional compensation for night work. Later,
however, they amended their petition by including a new demand for
overtime pay in favor of Jesus Centeno, Cesar Cabrera, Feliciano Duiguan,
Cecilio Remotigue, and other employees receiving P4,200.00 per annum or
more.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts
be admitted and approved by this Honorable Court, without prejudice to the
parties adducing other evidence to prove their case not covered by this
stipulation of facts. 1wph1.t
On February 5, 1958, petitioner filed a motion to dismiss the claim for
overtime pay alleging that respondent Court of Industrial Relations was
without jurisdiction to pass upon the same because, as mere intervenors, the

latter cannot raise new issues not litigated in the principal case, the same
not being the lis mota therein involved. To this motion the intervenors filed
an opposition. Thereafter, respondent court issued an order allowing the
issue to be litigated. Petitioner's motion to reconsider having been denied, it
filed its answer to the petition for intervention. Finally, on January 16, 1961,
respondent court rendered its decision stating substantially as follows:
The NAWASA is an agency not performing governmental functions and,
therefore, is liable to pay additional compensation for work on Sundays and
legal holidays conformably to Commonwealth Act No. 444, known as the
Eight-Hour Labor Law, even if said days should be within the staggered five
work days authorized by the President; the intervenors do not fall within the
category of "managerial employees" as contemplated in Republic Act 2377
and so are not exempt from the coverage of the Eight-Hour Labor Law; even
those intervenors attached to the General Auditing Office and the Bureau of
Public Works come within the purview of Commonwealth Act No. 444; the
computation followed by NAWASA in computing overtime compensation is
contrary to Commonwealth Act 444; the undertime of a worker should not be
set-off against the worker in determining whether the latter has rendered
service in excess of eight hours for that day; in computing the daily wage of
those employed on daily basis, the additional 25% compensation for Sunday
work should be included; the computation used by the NAWASA for monthly
salaried employees to wit, dividing the monthly basic pay by 30 is erroneous;
the minimum wage awarded by respondent court way back on November 25,
1950 in Case No. 359-V entitled MWD Workers Union v. Metropolitan Water
District, applies even to those who were employed long after the
promulgation of the award and even if their workers are hired only as
temporary, emergency and casual workers for a definite period and for a
particular project; the authority granted to NAWASA by the President to
stagger the working days of its workers should be limited exclusively to those
specified in the authorization and should not be extended to others who are
not therein specified; and under the collective bargaining agreement entered
into between the NAWASA and respondent unions on December 28, 1956, as
well as under Resolution No. 29, series of 1957 of the Grievance Committee,
even those who work outside the sewerage chambers should be paid 25%
additional compensation as "distress pay."
Its motion for reconsideration having been denied, NAWASA filed the present
petition for review raising merely questions of law. Succinctly, these
questions are:
1. Whether NAWASA is performing governmental functions and,
therefore, essentially a service agency of the government;
2. Whether NAWASA is a public utility and, therefore, exempted from
paying additional compensation for work on Sundays and legal
holidays;
3. Whether the intervenors are "managerial employees" within the
meaning of Republic Act 2377 and, therefore, not entitled to the
benefits of Commonwealth Act No. 444, as amended;

4. Whether respondent Court of Industrial Relations has jurisdiction

to adjudicate overtime pay considering that this issue was not among
the demands of respondent union in the principal case but was
merely dragged into the case by the intervenors;

function corporation because it enjoys that attribute of sovereignty. Petitioner

likewise invokes the opinion of the Secretary of Justice which holds that the
NAWASA being essentially a service agency of the government can be
classified as a corporation performing governmental function.

5. Whether those attached to the General Auditing Office and the

Bureau of Public Works come within the purview of Commonwealth
Act No. 444, as amended;

With this contention, we disagree. While under republic Act No. 1383 the
NAWASA is considered as a public corporation it does not show that it was so
created for the government of a portion of the State. It should be borne in
mind that there are two kinds of public corporation, namely, municipal and
non-municipal. A municipal corporation in its strict is the body politic
constituted by the inhabitants of a city or town for the purpose of local
government thereof. It is the body politic established by law particularly as
an agency of the State to assist in the civil government of the country chiefly
to regulate the local and internal affairs of the city or town that is
incorporated (62 C.J.S., p. 61). Non- municipal corporations, on the other
hand, are public corporations created as agencies of the State for limited
purposes to take charge merely of some public or state work other than
community government (Elliot, Municipal Corporations, 3rd ed., p. 7;
McQuillin, Mun. Corp., 3rd ed., Vol. 1, p. 476).

6. In determining whether one has worked in excess of eight hours,

whether the undertime for that day should be set off;
7. In computing the daily wage, whether the additional compensation
for Sunday work should be included;
8. What is the correct method to determine the equivalent daily wage
of a monthly salaried employee, especially in a firm which is a public
utility?;
9. Considering that the payment of night compensation is not by
virtue of any statutory provision but emanates only from an award of
respondent Court of Industrial Relations, whether the same can be
made retroactive and cover a period prior to the promulgation of the
award;
10. Whether the minimum wage fixed and awarded by respondent
Court of Industrial Relations in another case (MWD Workers Union v.
MWD CIR Case No. 359-V) applies to those employed long after the
promulgation thereof, whether hired as temporary, emergency and
casual workers for a definite period and for a specific project;
11. How should the collection bargaining agreement of December 28,
1956 and Resolution No. 29, series of 1957 of the Grievance
Committee be interpreted and construed insofar as the stipulations
therein contained relative to "distress pay" is concerned?; and
12. Whether, under the first indorsement of the President of the
Philippines dated August 12, 1957, which authorizes herein
petitioner to stagger the working days of its employees and laborers,
those whose services are indispensably continuous throughout the
year may be staggered in the same manner as the pump, valve, filter
and chlorine operators, guards, watchmen, medical services, and
those attached to the recreational facilities.
DISCUSSION OF THE ISSUES
1. Is NAWASA an agency that performs governmental functions and,
therefore, essentially a service agency of the government? Petitioner sustains
the affirmative because, under Republic Act No. 1383, it is a public
corporation, and such it exist a an agency independent of the Department of
Public Works of our government. It also contends that under the same Act
the Public Service Commission does not have control, supervision or
jurisdiction over it in the fixing of rates concerning of the operation of the
service. It can also incur indebtedness or issue bonds that are exempt from
taxation which circumstance implies that it is essentially a government-

The National Waterworks and Sewerage Authority was not created for
purposes of local government. It was created for the "purpose of consolidating
and centralizing all waterworks, sewerage and drainage system in the
Philippines under one control and direction and general supervision." The
NAWASA therefore, though a public corporation, is not a municipal
corporation, because it is not an agency of the State to regulate or administer
the local affairs of the town, city, or district which is incorporated.
Moreover, the NAWASA, by its charter, has personality and power separate
and distinct from the government. It is an independent agency of the
government although it ids placed, for administrative purposes, under the
Department of Public Works and Communications. It has continuous
succession under its corporate name and sue and be sued in court. It has
corporate power to exercised by its board of directors; it has its own assets
and liabilities; and it may charge rates for its services.
In Bacani vs. National Coconut Corporation, 53 O.G., 2798, we stated: "To
recapitulate, we may mention that the term 'Government of the Republic of
the Philippines'... refers only to that government entity through which the
functions of the government are exercised as an attribute of sovereignty, and
in this are included those arms through which political authority is made
effective whether they be provincial, municipal or other form of local
government. These are what we call municipal corporations. They do not
include government entities which are given a corporate personality separate
and distinct from the government and which are governed by the Corporation
Law. Their powers, duties and liabilities have to be determined in the light of
that law and of their corporate charter."
The same conclusion may be reached by considering the powers, functions
and activities of the NAWASA which are enumerated in Section 2, Republic
Act No. 1383, among others, as follows:

(e) To construct, maintain and operate mains pipes, water reservoirs,

machinery, and other waterworks for the purpose of supplying water
to the inhabitants of its zone, both domestic and other purposes; to
purify the source of supply, regulate the control and use, and
prevent the waste of water; and to fix water rates and provide for the
collection of rents therefor;
(f) To construct, maintain and operate such system of sanitary
sewers as may be necessary for the proper sanitation of the cities
and towns comprising the Authority and to charge and collect such
sums for construction and rates for this service as may be
determined by the Board to be equitable and just;
(g) To acquire, purchase, hold, transfer, sell, lease, rent, mortgage,
encumber, and otherwise dispose of real and personal property,
including rights and franchises, within the Philippines, as authorized
by the purpose for which the Authority was created and reasonably
and necessarily required of the transaction of the lawful business of
the same, unless otherwise provided in this Act;
The business of providing water supply and sewerage service, as this Court
held, "may for all practical purposes be likened to an industry engaged in by
coal companies, gas companies, power plants, ice plants, and the like"
(Metropolitan Water District v. Court of Industrial Relations, et al., L-4488,
August 27, 1952). These are but mere ministrant functions of government
which are aimed at advancing the general interest of society. As such they
are optional (Bacani v. National Coconut Corporation, supra). And it has
been held that "although the state may regulate the service and rates of
water plants owned and operated by municipalities, such property is not
employed for governmental purposes and in the ownership operation thereof
the municipality acts in its proprietary capacity, free from legislative
interference" (1 McQuillin, p. 683). In Mendoza v. De Leon, 33 Phil., 508, 509,
this Court also held:
Municipalities of the Philippine Islands organized under the
Municipal Code have both governmental and corporate or business
functions. Of the first class are the adoption of regulations against
fire and disease, preservation of the public peace, maintenance of
municipal prisons, establishment of primary schools and postoffices, etc. Of the latter class are the establishment of municipal
waterworks for the use of the inhabitants, the construction and
maintenance of municipal slaughterhouses, markets, stables,
bathing establishments, wharves, ferries, and fisheries. ...
On the strength of the foregoing considerations, our conclusions is that the
NAWASA is not an agency performing governmental functions. Rather, it
performs proprietary functions, and as such comes within the coverage of
Commonwealth Act No. 444.
2. We agree with petitioner that the NAWASA is a public utility because its
primary function is to construct, maintain and operate water reservoirs and
waterworks for the purpose of supplying water to the inhabitants, as well as
consolidate and centralize all water supplies and drainage systems in the

Philippines. We likewise agree with petitioner that a public utility is exempt

from paying additional compensation for work on Sundays and legal holidays
conformably to Section 4 of Commonwealth Act No. 444 which provides that
the prohibition, regarding employment of Sundays and holidays unless an
additional sum of 25% of the employee's regular remuneration is paid shall
not apply to public utilities such as those supplying gas, electricity, power,
water or providing means of transportation or communication. In other
words, the employees and laborers of NAWASA can be made to work on
Sundays and legal holidays without being required to pay them an additional
compensation of 25%.
It is to be noted, however, that in the case at bar it has been stipulated that
prior to the enactment of Republic Act No. 1880, providing for the
implementation of the 40-Hour Week Law, the Metropolitan Water District
had been paying 25% additional compensation for work on Sundays and
legal holidays to its employees and laborers by virtue of Resolution No. 47,
series of 1948, of its board of Directors, which practice was continued by the
NAWASA when the latter took over the service. And in the collective
bargaining agreement entered into between the NAWASA and respondent
unions it was agreed that all existing benefits enjoyed by the employees and
laborers prior to its effectivity shall remain in force and shall form part of the
agreement, among which certainly is the 25% additional compensation for
work on Sundays and legal holidays therefore enjoyed by said laborers and
employees. It may, therefore, be said that while under Commonwealth Act
No. 444 a public utility is not required to pay additional compensation to its
employees and workers for work done on Sundays and legal holidays, there
is, however, no prohibition for it to pay such additional compensation if it
voluntarily agrees to do so. The NAWASA committed itself to pay this
additional compensation. It must pay not because of compulsion of law but
because of contractual obligation.
3. This issue raises the question whether the intervenors are "managerial
employees" within the meaning of Republic Act 2377 and as such are not
entitled to the benefits of Commonwealth Act No. 444, as amended. Section 2
of Republic Act 2377 provides:
Sec. 2. This Act shall apply to all persons employed in any industry
or occupation, whether public or private with the exception of farm
laborers, laborers who prefer to be paid on piece work basis,
managerial employees, outside sales personnel, domestic servants,
persons in the personal service of another and members of the family
of the employer working for him.
The term "managerial employee" in this Act shall mean either (a) any
person whose primary duty consists of the management of the
establishment in which he is employed or of a customarily recognized
department or subdivision thereof, or (b) ally officer or member of the
managerial staff.
One of the distinguishing characteristics managerial employee may be known
as expressed in the explanatory note of Republic Act No. 2377 is that he is
not subject to the rigid observance of regular office hours. The true worth of
his service does not depend so much on the time he spends in office but

more on the results he accomplishes. In fact, he is free to go out of office

anytime.
On the other hand, in the Fair Labor Standards Act of the United States,
which was taken into account by the sponsors of the present Act in defining
the degree of work of a managerial employee, we find interesting the following
dissertation of the nature of work o a managerial employee:
Decisions have consumed and applied a regulation in substance
providing that the term "professional" employee shall mean any
employee ... who is engaged in work predominantly intellectual and
varied in character, and requires the consistent exercise of discretion
and judgment in its performance and is of such a character that the
output produced or the result accomplished cannot be standardized
in relation to a given period of time, and whose hours of work of the
same nature as that performed by non-exempt employees do not
exceed twenty percent of the hours worked in the work week by the
non-exempt employees, except where such work is necessarily
incident to work of a professional nature; and which requires, first,
knowledge of an advanced type in a field of science or learning
customarily acquired by a prolonged course or specialized
intellectual instruction and study, or, second, predominantly original
and creative in character in a recognized field of artistic
endeavor. Stranger v. Vocafilm Corp., C.C.A. N.Y., 151 F. 2d 894, 162
A.L.R. 216; Hofer v. Federal Cartridge Corp., D.C. Minn. 71 F. Supp.
243; Aulen v. Triumph Explosive, D.C. Md., 58 P. Supp. 4." (56 C.J.S.,
p. 666).
Under the provisions of the Fair Labor Standards Act 29 U.S.C.A.,
Section 23 (a) (1), executive employees are exempted from the
statutory requirements as to minimum wages and overtime pay. ...
Thus the exemption attaches only where it appears that the
employee's primary duty consists of the management of the
establishment or of a customarily recognized department or
subdivision thereof, that he customarily and regularly directs the
work of other employees therein, that he has the authority to hire or
discharge other employees or that his suggestions and
recommendations as to the hiring or discharging and as to the
advancement and promotion or any other change of status of other
employees are given particular weight, that he customarily and,
regularly exercises discretionary powers, ... . (56 C.J.S., pp. 666668.)
The term "administrative employee" ordinarily applies only to an
employee who is compensated for his services at a salary or fee of not
less than a prescribed sum per month, and who regularly and
directly assists an employee employed in a bona fide executive or
administrative capacity, where such assistance is nonmanual in
nature and requires the exercise of discretion and independent
judgment; or who performs under only general supervision,
responsible non-manual office or field work, directly related to
management policies or general business operations, along

specialized or technical lines' requiring special training experience, or

knowledge, and the exercise of discretion and independent judgment;
... . (56 C.J.S., p. 671.)
The reason underlying each exemption is in reality apparent.
Executive, administrative and professional workers are not usually
employed at hourly wages nor is it feasible in the case of such
employees to provide a fixed hourly rate of pay nor maximum hours
of labor, Helena Glendale Perry Co. v. Walling, C.C.A. Ark. 132 F. 2d
616, 619. (56 C.J.S., p. 664.)
The philosophy behind the exemption of managerial employees from the 8Hour Labor Law is that such workers are not usually employed for every
hour of work but their compensation is determined considering their special
training, experience or knowledge which requires the exercise of discretion
and independent judgment, or perform work related to management policies
or general business operations along specialized or technical lines. For these
workers it is not feasible to provide a fixed hourly rate of pay or maximum
hours of labor.
The intervenors herein are holding position of responsibility. One of them is
the Secretary of the Board of Directors. Another is the private secretary of the
general manager. Another is a public relations officer, and many other chiefs
of divisions or sections and others are supervisors and overseers. Respondent
court, however, after examining carefully their respective functions, duties
and responsibilities found that their primary duties do not bear any direct
relation with the management of the NAWASA, nor do they participate in the
formulation of its policies nor in the hiring and firing of its employees. The
chiefs of divisions and sections are given ready policies to execute and
standard practices to observe for their execution. Hence, it concludes, they
have little freedom of action, as their main function is merely to carry out the
company's orders, plans and policies.
To the foregoing comment, we agree. As a matter of fact, they are required to
observe working hours and record their time work and are not free to come
and go to their offices, nor move about at their own discretion. They do not,
therefore, come within the category of "managerial employees" within the
meaning of the law.
4. Petitioner's claim is that the issue of overtime compensation not having
been raised in the original case but merely dragged into it by intervenors,
respondent court cannot take cognizance thereof under Section 1, Rule 13, of
the Rules of Court.
Intervenors filed a petition for intervention alleging that being employees of
petitioner who have worked at night since 1954 without having been fully
compensated they desire to intervene insofar as the payment of their night
work is concerned. Petitioner opposed the petition on the ground that this
matter was not in the original case since it was not included in the dispute
certified by the President of the Philippines to the Court of Industrial
Relations. The opposition was overruled. This is now assigned as error.
There is no dispute that the intervenors were in the employ of petitioner
when they intervened and that their claim refers to the 8-Hour Labor Law

and since this Court has held time and again that disputes that call for the
application of the 8-Hour Labor Law are within the jurisdiction of the Court
of Industrial Relations if they arise while the employer-employee relationship
still exists, it is clear that the matter subject of intervention comes within the
jurisdiction of respondent court.1 The fact that the question of overtime
payment is not included in the principal casein the sense that it is not one of
the items of dispute certified to by the President is of no moment, for it comes
within the sound discretion of the Court of Industrial Relations. Moreover, in
labor disputes technicalities of procedure should as much as possible be
avoided not only in the interest of labor but to avoid multiplicity of action.
This claim has no merit.
5. It is claimed that some intervenors are occupying positions in the General
Auditing Office and in the Bureau of Public Works for they are appointed
either by the Auditor General or by the Secretary of Public Works and,
consequently, they are not officers of the NAWASA but of the insular
government, and as such are not covered by the Eight-Hour Labor Law.
The status of the GAO employees assigned to, and working in, governmentcontrolled corporations has already been decided by this Court in National
Marketing Corporation, et al. v. Court of Industrial Relations, et al., L-17804,
January 31, 1963. In said case, this Court said:
We agree with appellants that members of the auditing force can not
be regarded as employees of the PRISCO in matters relating to their
compensation. They are appointed and supervised by the Auditor
General, have an independent tenure, and work subject to his orders
and instructions, and not to those of the management of appellants.
Above all, the nature of their functions and duties, for the purpose of
fiscal control of appellants' operations, imperatively demands, as a
matter of policy, that their positions be completely independent from
interference or inducement on the part of the supervised
management, in order to assure a maximum of impartiality in the
auditing functions. Both independence and impartiality require that
the employees in question be utterly free from apprehension as to
their tenure and from expectancy of benefits resulting from any
action of the management, since in either case there would be an
influence at work that could possibly lead, if not to positive
malfeasance, to, laxity and indifference that would gradually erode
and endanger the critical supervision entrusted to these auditing
employees.
The inclusion of their items in the PRISCO budget should be viewed
as no more than a designation by the national government of the
fund or source from which their emoluments are to be drawn, and
does not signify that they are thereby made PRISCO employees.
The GAO employees assigned to the NAWASA are exactly in the same
position regarding their status, compensation and right to overtime pay as
the rest of the GAO employees assigned to the defunct PRISCO, and following
our ruling in the PRISCO case, we hold that the GAO employees herein are
not covered by the 8-Hour Labor Law, but by other pertinent laws on the
matter.

The same thing may be said with regard to the employer of the Bureau of
Public Works assigned to, and working in, the NAWASA. Their position is the
same as that of the GAO employees. Therefore, they are not also covered by
the 8-Hour Labor Law.
The respondent court, therefore, erred in considering them as employees of
the NAWASA for the mere reason that they are paid out of its fund and are
subject to its administration and supervision.
6. A worker is entitled to overtime pay only for work in actual service beyond
eight hours. If a worker should incur in undertime during his regular daily
work, should said undertime be deducted in computing his overtime work?
Petitioner sustains the affirmative while respondent unions the negative, and
respondent court decided the dispute in favor of the latter. Hence this error.
There is merit in the decision of respondent court that the method used by
petitioner in offsetting the overtime with the undertime and at the same time
charging said undertime to the accrued leave of the employee is unfair, for
under such method the employee is made to pay twice for his undertime
because his leave is reduced to that extent while he was made to pay for it
with work beyond the regular working hours. The proper method should be
to deduct the undertime from the accrued leave but pay the employee the
overtime to which he is entitled. This method also obviates the irregular
schedule that would result if the overtime should be set off against the
undertime for that would place the schedule for working hours dependent on
the employee.
7. and 8. How is a daily wage of a weekly employee computed in the light of
Republic Act 1880?
According to petitioner, the daily wage should be computed exclusively on the
basic wage, without including the automatic increase of 25% corresponding
to the Sunday differential. To include said Sunday differential would be to
increase the basic pay which is not contemplated by said Act. Respondent
court disagrees with this manner of computation. It holds that Republic Act
1880 requires that the basic weekly wage and the basic monthly salary
should not be diminished notwithstanding the reduction in the number of
working days a week. If the automatic increase corresponding to the salary
differential should not be included there would be a diminution of the weekly
wage of the laborer concerned. Of course, this should only benefit those who
have been working seven days a week and had been regularly receiving 25%
additional compensation for Sunday work before the effectivity of the Act.
It is evident that Republic Act 1880 does not intend to raise the wages of the
employees over what they are actually receiving. Rather, its purpose is to
limit the working days in a week to five days, or to 40 hours without however
permitting any reduction in the weekly or daily wage of the compensation
which was previously received. The question then to be determined is: what
is meant by weekly or daily wage? Does the regular wage include differential
payments for work on Sundays or at nights, or is it the total amount received
by the laborer for whatever nature or concept?
It has been held that for purposes of computing overtime compensation a
regular wage includes all payments which the parties have agreed shall be

received during the work week, including piece work wages, differential
payments for working at undesirable times, such as at night or on Sundays
and holidays, and the cost of board and lodging customarily furnished the
employee (Walling v. Yangermah-Reynolds Hardwook Co., 325 U.S. 419;
Walling v. Harischfeger Corp., 325 U.S. 427.) The "regular rate" of pay also
ordinarily includes incentive bonus or profit-sharing payments made in
addition to the normal basic pay (56 C.J.S., pp. 704-705), and it was also
held that the higher rate for night, Sunday and holiday work is just as much
a regular rate as the lower rate for daytime work. The higher rate is merely
an inducement to accept employment at times which are not as desirable
from a workman's standpoint (International L. Ass'n v. National Terminals
Corp. C.C. Wise, 50 F. Supp. 26, affirmed C.C.A. Carbunao v. National
Terminals Corp. 139 F. 2d 853).
Respondent court, therefore, correctly included such differential pay in
computing the weekly wages of those employees and laborers who worked
seven days a week and were continuously receiving 25% Sunday differential
for a period of three months immediately preceding the implementation of
Republic Act 1880.
The next issue refers to the method of computing the daily rate of a monthlysalaried employee. Petitioner in computing this daily rate divides the monthly
basic pay of the employee by 30 in accordance with Section 254 of the
Revised Administrative Code which in part provides that "In making payment
for part of a month, the amount to be paid for each day shall be determined
by dividing the monthly pay into as many parts as there are days in the
particular month." The respondent court disagrees with this method and
holds that the way to determine the daily rate of a monthly employee is to
divide the monthly salary by the actual number of working hours in the
month. Thus, according to respondent court, Section 8 (g) of Republic Act No.
1161, as amended by Republic Act 1792, provides that the daily rate of
compensation is the total regular compensation for the customary number of
hours worked each day. In other words, according to respondent court, the
correct computation shall be (a) the monthly salary divided by the actual of
working hours in a month or (b) the regular monthly compensation divided
by the number of working days in a month.
This finding of respondent court should be modified insofar as the employees
of the General Auditing Office and of the Bureau of Public Works assigned to
work in the NAWASA are concerned for, as already stated, they are
government employees and should be governed by Section 254 of the Revised
Administrative Code. This section provides that in making payments for part
of a month, the amount to be paid for each day shall be determined by
dividing the monthly pay. Into as many parts as there are days in the
particular month. With this modification we find correct the finding of the
respondent court on this issue.
9. The Court of Industrial Relations awarded an additional 25% night
compensation to some, workers with retroactive effect, that is, effective even
before the presentation of the claim, provided that they had been given
authorization by the general manager to perform night work. It is petitioner's
theory that since there is no statute requiring payment of additional

compensation for night work but it can only be granted either by the
voluntary act of the employer or by an award of the industrial court under its
compulsory arbitration power, such grant should only be prospective in
operation, and not retroactive, as authorized by the court.
It is of common occurrence that a working man who has already rendered
night time service takes him a long time before he can muster enough
courage to confront his employer with the demand for payment for it for fear
of possible reprisal. It happens that many months or years are allowed to
pass by before he could be made to present such claim against his employer,
and so it is neither fair nor just that he be deprived of what is due him
simply because of his silence for fear of losing the means of his livelihood.
Hence, it is not erroneous for the Court of Industrial Relations to make the
payment of such night compensation retroactive to the date when the work
was actually performed.
The power of the Court of Industrial Relations to order the payment of
compensation for overtime service prior to the date of the filing of the claim
has been recognized by this Court (Luzon Stevedoring Co., Inc. v. Luzon
Marine Department Union, et al., L-9265, April 29, 1957). The same reasons
given therein for the retroactivity of overtime compensation may also be given
for the retroactivity of payment of night compensation, as such reasoning
runs along the line already above-stated.
10. The Court of Industrial Relations in its resolution dated November 25,
1950 issued in Case No. 359-V entitled MWD Workers Union, et al. v.
Metropolitan Water District, fixed the following rates of minimum daily wage:
P5.25 for those working in Manila and suburbs; P4.50 for those working in
Quezon City; and P4.00 for those working in Ipo. Montalban and Balara. It
appears that in spite of the notice to terminate said award filed with the
court on December 29, 1953, the Metropolitan Water District continued
paying the above wages and the NAWASA which succeeded it adopted the
same rates for sometime. In September, 1955, the NAWASA hired the
claimants as temporary workers and it is now contended that said rates
cannot apply to these workers.
The Court of Industrial Relations, however, held that the discontinuance of
this minimum wage rate was improper and ordered the payment of the
difference to said workers from the date the payment of said rates was
discontinued, advancing, among others, the following reasons: that the
resolution of November 25, 1950 is applicable not only to those laborers
already in the service but also to those who may be employed thereafter; the
notice of determination of said award given on December 29, 1953 is not
legally effective because the same was given without hearing and the
employer continued paying the minimum wages even after the notice of
termination; and there is no showing that the minimum wages violate Civil
Service Law or the principles underlying the WAPCO.
We find no valid reason to disagree with the foregoing finding of the Court of
Industrial Relations considering that the award continued to be valid and
effective in spite of the notice of termination given by the employer. No good
reason is seen why such award should not apply to those who may be
employed after its approval by the court there being nothing therein that may

prevent its extension to them. Moreover, the industrial court can at any time
during the effectiveness of an award or reopen any question involved therein
under Section 17 of Commonwealth Act No. 103, and such is what said court
has done when it made the award extensive to the new employees, more so
when they are similarly situated. To do otherwise would be to foster
discrimination.
11. This issue has to do with the meaning of "distress pay." Paragraph 3,
Article VIII, of the collective bargaining agreement entered into between the
employer and respondent unions, provides:
Because of the peculiar nature of the function of those employees
and laborers of the Sewerage Division who actually work in the
sewerage chambers, causing "unusual distress" to them, they shall
receive extra compensation equivalent to twenty-five (25%) of their
basic wage.
Pursuant to said agreement, a grievance committee was created composed of
representatives of management and labor which adopted the following
resolution:
Resolution No. 9
Series of 1957
BE IT RESOLVED, That the employees and laborers of the Sewerage
Division who actually work in the sewerage chambers causing
unusual distress to them, be paid extra compensation equivalent to
25% of their basic wage, as embodied in Article VIII, Paragraph 3 of
the Collective Bargaining Agreement; PROVIDED, however, that any
employee who may be required to work actually in the sewerage
chambers shall also be paid 25% extra compensation and,
PROVIDED FURTHER, that the term "sewerage chambers" shall
include pits, trenches, and other excavations that are necessary to
tap the sewer line, and PROVIDED FINALLY that this will not
prejudice any laborer or employee who may be included in one way
or another in the term "unusual distress" within the purview of
Paragraph 3 of Article VIII, of the Collective Bargaining Agreement.
And in a conference held between management and labor on November 25,
1957, the following was agreed upon: "Distress Management agreed to pay
effective October 1, 1956 25% additional compensation for those who
actually work in and outside sewerage chambers in accordance with
Resolution No. 9 of the Grievance Committee."
The question that arose in connection with this distress pay is with regard to
the meaning of the phrase "who actually work in and outside sewerage
chambers." Petitioner contends that the distress pay should be given only to
those who actually work inside the sewerage chambers while the union
maintains that such pay should be given to all those whose work have to do
with the sewerage chambers, whether inside or outside. The Court of
Industrial Relations sustained the latter view holding that the distress pay
should be given to those who actually work in and outside the sewerage
chambers effective October 1, 1956. This view is now disputed by petitioner.

The solution of the present issue hinges upon the interpretation of paragraph
3, Article VIII of the collective bargaining agreement, copied above, as
explained by Resolution No. 9, and the agreement of November 25, 1957,
also copied above, which stipulation has to be interpreted as a whole
pursuant to Article 1374 of the Civil Code. As thus interpreted, we find that
those who are entitled to the distress pay are those employees and laborers
who work in the sewerage chambers whether they belong to the sewerage
division or not, and by sewerage chambers should be understood to mean as
the surroundings where the work is actually done, not necessarily "inside the
sewerage chambers." This is clearly inferred from the conference held in the
Department of Labor on November 25, 1957 where it was agreed that the
compensation should be paid to those who work "in and outside" the
sewerage chambers in accordance with the terms of Resolution No. 9 of the
Grievance Committee. It should be noted that according to said resolution,
sewerage chambers include "pits, trenches, and other excavations that are
necessary to tap the sewer lines." And the reason given for this extra
compensation is the "unusual distress" that is caused to the laborers by
working in the sewerage chambers in the form and extent above-mentioned.
It is clear then that all the laborers whether of the sewerage division or not
assigned to work in and outside the sewerage chambers and suffer in
unusual distress because of the nature of their work are entitled to the extra
compensatory. And this conclusion is further bolstered by the findings of the
industrial court regarding the main activities of the sewerage division.
Thus, the Court of Industrial Relations found that the sewerage division has
three main activities, to wit: (a) cooperation of the sewerage pumping
stations; (b) cleaning and maintenance of sewer mains; and (c) installation
and repairs of house sewer connections.
The pump operators and the sewer attendants in the seven pumping stations
in Manila, according to the industrial court, suffer unusual distress. The
pump operators have to go to the wet pit to see how the cleaning of the
screen protecting the pump is being performed, and go also to the dry pit
abutting the wet pit to make repairs in the breakdown of the pumps.
Although the operators used to stay near the motor which is but a few meters
from the pump, they unavoidably smell the foul odor emitting from the pit.
Thesewerage attendants go down and work in the wet pit containing
sewerage materials in order to clean the screen.
A group assigned to the cleaning and maintenance of the sewer mains which
are located in the middle of the streets of Manila is usually composed of
a capataz and four sewerage attendants. These attendants are rotated in
going inside the manholes, operation of the window glass, bailing out from
the main to the manhole and in supplying the water service as necessity
demand. These attendants come into contact with dirt, stink, and smell,
darkness and heat inside and near the sewage pipes. The capataz goes from
one manhole to another seeing to it that the work is properly performed and
as such also suffers unusual distress although to a lesser degree.
The group resigned to the third kind of activity is also usually composed of
a capataz and four attendants. Their work is to connect sewer pipes from
houses to the sewer mains and to do this they excavate the trench across the

street from the proper line to the sewer main and then they install the pipe
after tapping the sewer main. In the tapping, the sewer pipe is opened and so
the sewerage gets out and fills up the trench and the men have to wade in
and work with the sewerage water. The capataz has to go near the filthy
excavations or trenches full of filthy sewerage, matter to aid the attendants in
making pipe connections, especially when these are complicated.
It cannot therefore be gainsaid that all there laborers suffer unusual distress.
The wet pits, trenches, manholes, which are full of sewage matters, are filthy
sources of germs and different diseases. They emit foul and filthy odor
dangerous to health. Those working in such places and exposed directly to
the distress of contamination.
Premises considered, the decision of the Court of Industrial Relations in this
respect should be modified in the sense that all employees and laborers,
whether or not they belong to the sewerage division, who actually work in
and outside the sewerage chambers, should be paid the distress pay or the
extra compensation equivalent to 25% of their basic wage effective October 1,
1956.
12. On August 6, 1957, the NAWASA requested the President of the
Philippines for exemption from Executive Order No. 251 which prescribes the
office hours to be observed in government and government-owned or
controlled corporations in order that it could stagger the working hours of its
employees and laborers. The request is based on the fact that there are
essential and indispensable phases in the operation of the NAWASA that are
required to be attended to continuously for twenty-four hours for the entire
seven days of the week without interruption some of which being the work
performed by pump operators, valve operators, filter operators, chlorine
operators, watchmen and guards, and medical personnel. This request was
granted and, accordingly, the NAWASA staggered the work schedule of the
employees and laborers performing the activities above-mentioned.
Respondent unions protested against this staggering schedule of work and
this protest having been unheeded, they brought the matter to the Court of
Industrial Relations.
In resolving this issue, the industrial court justified the staggering of the
work days of those holding positions as pump operators, valve operators,
filter operators, chlorine operators, watchmen and guards, and those in the
medical service for the reason that the same was made pursuant to the
authority granted by the President who in the valid exercise of the powers
conferred upon him by Republic Act No. 1880 could prescribe the working
days of employees and laborers in government-owned and controlled
corporations depending upon the exigencies of the service. The court,
however, stated that the staggering should not apply to the personnel in the
construction, sewerage, maintenance, machineries and shops because they
work below 365 days a year and their services are not continuous to require
staggering. From this portion of the decision, the petitioner appeals.
Considering that respondent court found that the workers in question work
less than 365 days a year and their services are not continuous to require
staggering, we see no reason to disturb this finding. This is contrary to the
very essence of the request that the staggering should be made only with

regard to those phases of the operation of the NAWASA that have to be

attended to continuously for twenty-four hours without interruption which
certainly cannot apply to the workers mentioned in the last part of the
decision of the respondent court on the matter.
RECAPITULATION
In resume, this Court holds:
(1) The NAWASA, though a public corporation, does not perform
governmental functions. It performs proprietary functions, and
hence, it is covered by Commonwealth Act No. 444;
(2) The NAWASA is a public utility. Although pursuant to Section 4 of
Commonwealth Act 444 it is not obliged to pay an additional sum of
25% to its laborers for work done on Sundays and legal holidays, yet
it must pay said additional compensation by virtue of the contractual
obligation it assumed under the collective bargaining agreement;
(3) The intervenors are not "managerial employees" as defined in
Republic Act No. 2377, hence they are covered by Commonwealth
Act No. 444, as amended;
(4) The Court of Industrial Relations has jurisdiction to adjudicate
overtime pay in the case at bar there being an employer-employee
relationship existing between intervenors and petitioner;
(5) The GAO employees assigned to work in the NAWASA cannot be
regarded as employees of the NAWASA on matters relating to
compensation. They are employees of the national government and
are not covered by the Eight-Hour Labor Law. The same may be said
of the employees of the Bureau of Public Works assigned to work in
the NAWASA;
(6) The method used by the NAWASA in off-setting the overtime with
the undertime and at the same time charging said undertime to the
accrued leave is unfair;
(7) The differential pay for Sundays is a part of the legal wage. Hence,
it was correctly included in computing the weekly wages of those
employees and laborers who worked seven days a week and were
regularly receiving the 25% salary differential for a period of three
months prior to the implementation of Republic Act 1880. This is so
even if petitioner is a public utility in view of the contractual
obligation it has assumed on the matter;
(8) In the computation of the daily wages of employees paid by the
month distinction should be made between government employees
like the GAO employees and those who are not. The computation for
government employees is governed by Section 254 of the Revised
Administrative Code while for others the correct computation is the
monthly salary divided by the actual number of working hours in the
month or the regular monthly compensation divided by the number
of working days in the month;

(9) The Court of Industrial Relations did not err in ordering the
payment of night compensation from the time such services were
rendered. The laborer must be compensated for nighttime work as of
the date the same was rendered;
(10) The rates of minimum pay fixed in CIR Case No. 359-V are
applicable not only to those who were already in the service as of the
date of the decision but also to those who were employed subsequent
to said date;
(11) All the laborers, whether assigned to the sewerage division or
not who are actually working inside or outside the sewerage
chambers are entitled to distress pay; and
(12) There is no valid reason to disturb the finding of the Court of
Industrial Relations that the work of the personnel in the
construction, sewerage, maintenance, machineries and shops of
petitioner is not continous as to require staggering.
CONCLUSION
With the modification indicated in the above resume as elaborated in this
decision, we hereby affirm the decision of respondent court in all other
respects, without pronouncement as to costs.

G.R. No. L-31341 March 31, 1976

PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA) and
PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION
(PALSA), petitioners,
vs.
PHILIPPINE AIR INES, INC., respondent.
G.R. No. L-31341-43 March 31, 1976
PHILIPPINE AIR LINES, INC., petitioner,
vs.
PHILIPPINE AIR LINES EMPLOYEES' ASSOCIATION, PHILIPPINE AIR
LINES SUPERVISORS' ASSOCIATION, and the COURT OF INDUSTRIAL
RELATIONS, respondents.
Siguion Reyna, Montecillo, Belo & Ongsiako for Philippines Air lines, Inc.
Laquihon & Legayada for Philippine Air Lines Supervisors' Association
(PALEA).
MAKASIAR, J.:
Before US are consolidated petitions to review the Court of industrial
Relations en banc resolution dated October 9, 1969 in CIR Case No. 43-IPA.
In G.R. No. L-31341 (PALEA vs. PAL), petitioners question the date of
effectivity of the adjudicated pay differentials due to the monthly-salaried
employees of Philippine Air Lines, Inc.
In G.R. No. L-31343 (PAL vs. PALEA), petitioner assails the reversal by the
Court of Industrial Relations of its earlier resolution on the method employed
by the Philippine Air Lines in computing the basic daily and hourly rate of its
monthly salaried employees.
On February 14, 1963, the Philippine Air Lines Employees' Association
(PALEA) and the Philippine Air Lines Supervisors' Association (PALSA)
petitioners in G.R. No. L-31341 and respondents in G.R. No. 31343
commenced an action against the Philippine Air Lines (PAL) in the Court of
Industrial Relations, praying that PAL be ordered to revise its method of
computing the basic daily and hourly rate of its monthly salaried employees,
and necessarily, to pay them their accrued sala differentials.
Sought to be revised is PAL's formula in computing wages of
its employees:
Monthly salary x 12 365 (No. of calendar = x (Basic dailr
rate) days in a year)
x 8 = Basic hourly rate
The unions would like PAL to modify the above formula in this wise:
Monthly salary x 12 No. of actual working = x (Basic daily
rate) days

x 8 = Basic hourly rate

On May 23, 1964, the Court of Industrial Relations, through Presiding Judge
Jose S. Bautista, issued an order denying the unions' prayer for a modified
wage formula. Pertinent portion of the order reads:
On the issue of rate of pay, PALSA and PALEA seek to
change the long standing method in PAL of computing the
basic daily and hourly rate of monthly salaried employees for
the purpose of determining overtime pay, Sunday and legal
holiday premium pay, night differential pay, vacation and
sick leave pay, to wit, the monthly salary multiplied by 12
and dividing the product thereof by 365 and then the
quotient by 8. PALEA and PALSA claim that the method of
computing the basic daily and hourly rate of monthly
salaried employees of PAL prior to the implementation of the
40-hour week schedule in PAL should be by dividing the
monthly salary by 26 working days, and after the 40-hour
week schedule, by dividing the monthly salary by 20 working
days, and then dividing the quotient thereof in each case by
8. From the records, however, it appears that for may years
since 1952, and even previously, PAL has been consistently
and regularly determining the basic and hourly rates of
monthly salaried employees by multiplying the monthly
salary by 12 momths and dividing the product by 365 days
to arive at the basic daily rate, and dividing the quotient by 8
to compute the basic hourly rate. There has been no attempt
to revise this formula notwithstanding the various
negotiations PAL and with the unions ever since its
operations, and it was only on July 18, 1962, when PALSA,
for the first time, proposed that it be changed in accordance
with what is now alleged in the petition. This, however, was a
mere proposal by PALSA for the adoption of a new formula; it
was not a demand for the application of a formula claimed to
be correct under the law. Under this circumstance, PALSA
and PALEA are estopped from questioning the correctness
and propriety of PAL's method of determining the basic
hourly and daily rate of pay of its monthly salaried
personnel, and considering the long period of time that
elapsed before they brought their petition, are barred from
insisting or demanding a different rate of pay formula.
xxx xxx xxx
Upon the foregoing, the Court, therefore, declares PAL's
method of computing the basic daily and hourly rate of its
monthly salaried employees as legal and proper, and denies
the petition of PALSA and PALEA.
xxx xxx xxx
(pp. 47-48, 49, rec. G.R. No. L-31343).

On May 30, 1964, complaining unions promptly moved for

reconsideration of the above-sais order (p. 51, rec. G.R. No. L-31343).

the

On June 9, 1964, the unions filed their memorandum in support of their

motion for reconsideration alleging that the questioned order is (a) contrary
to law, and (b) contrary to evidence adduced during the trial (p. 53, ree G.R.
No. L-31343).

I
For easy comprehension, WE start with the Philippine Air Lines, Inc. versus
Philippine Air Lines Employees Association, Philippine Air Lines Supervisors
Association, and the Court of Industrial Relations, G.R. No. L-31343.
In this appeal PAL emphasizes three assignments of error, to wit:
1. RESPONDENT CIR ERRED AND COMMITTED GRAVE
ABUSE OF DISCRETION IN HOLDING THAT THE METHOD
OF COMPUTATION USED BY PAL IN DETERMINING TIIE
BASIC DAILY OR HOURLY RATE OF ITS MONTLY SALARIED
EMPLOYEES WHICH IS:

The unions attributed error to PAL's wage formula, particularly in the use of
365 days as divisor. The unions contended that the use of 365 days as
divisor would necessarily include off-days which, under the terms of the
collective bargaining agreements entered into between the parties,
were not paid days. This is so since for work done on an off-day, an employee
was paid 100% plus 25%, or 100% plus 37- of his regular working hour
rate.

MONTHLY SALARY x 1 365 (NO. OF CALENDAR DAYS IN

YEAR) = x (BASIC DAILY RATE)

On the issue of prescription, the unions pointed out:

x 8 = BASIC HOURLY RATE 8

With respect to the period of prescription, it is clear that

since the claim arises from the written contracts or collective
bargaining agreements between the petitioner unions and
the PAL, the action thereon prescribes in ten years from the
time the right of action accrues, in accordance with Article
1144 of the New Civil Code. .... (p. 68, rec., G.R. No. L31343).

IS NOT CORRECT, CONSIDERING THAT PAL, A PUBLIC

UTILITY WHERE THERE IS WORK EVERYDAY OF THE
WEEK FOR MANY YEARS EVEN BEFORE REPUBLIC ACT
602 AND WITH THE CONSENT AND APPROVAL OF THE
EMPLOYEES, CONSISTENT WITH SECTION 19 OF
REPUBLIC ACT 602 PROHIBITING REDUCTION OF WAGES
FOR OFF DAYS-WHICH WAS SUSTAINED BY THIS
HONORABLE COURT IN AUTOMOTIVE PARTS & EQUIPMENT
CO., INC. VS. JOSE B. LINGAD,G.R. NO. L- 26406, OCTOBER
31, 1969 HAS BEEN TREATING OFFSITE DAYS, 11 AS
SATURDAYS, SUNDAYS, COMPANY OBSERVED HOLIDAYS
OR ANY OTHER DESIGNATED HOLIDAYS AS PAID DAYS.

On June 26, 1964, the Philippine Air Lines answered point by point the
unions' memorandum, in a prompt reply.
On October 9, 1969, the Court of Industrial Relations, through Presiding
Judge Arsenio I. Martinez, ordered the reversal of its decision dated May 34,
1964 and sustained the unions' method of age computation.

2. RESPONDENT CIR ERRED AND COMMITTED GRAVE

ABUSE OF DISCRETION IN NOT FINDING. THAT
RESPONDENT UNIONS, BY THEIR LONG PERIOD OF
CONSENT, ACQUIESCENCE, INACTION AND ACCEPTANCE
OF BENEFITS THEREUNDER, ARE ESTOPPED AND
BARRED FROM CLAIMING THAT PAL'S FORMULA FOR
DETERMINING THE BASIC DAILY AND HOURLY RATE OF
PAY IS INCORRECT.

The industrial court, however, ordered the computation of pay differentials in

accordance with the sustained method of computation effective only July 1,
1957.
Said the Court of Industrial Relations in this regard:
... In this connection, however, it will be noted as previously
stated, that this case was considered as an incident of Case
No. 39-IPA, in which the issues involved were related to the
respondent PAL of the 40-Hour Week Law (Rep. Act 1880)
from the date of its effectivity July 1, 1957. ...

3. RESPONDENT CIR ERED AND ACTED IN EXCESS OF ITS

JURISDICTION
IN
SENTENCING
PAL
TO
PAY
DIFFERENTIALS FOR OVERTIME WORK, NIGHTWORK,
HOLIDAY AND SUNDAY PAY FROM JULY 1, 1957
CONSIDERING
THAT
UNDER
THE
THREE-YEAR
PRESCRIPTIVE PERIOD PROVIDED IN SECTION 7-a OF
COMMONWEALTH ACT NO. 444, AS AMENDED, THE
EIGHT-HOUR LABOR LAW, RESPONDENT UNIONS,
ASSUMING THEY HAD ANY CAUSE OF ACTION, COULD
RECOVER ONLY FROM FEBRUARY 14, 1960 UP TO THE
PRESENT, SINCE RESPONDENT UNIONS FILED THEIR
ACTION ONLY ON FEBRUARY 14, 1963.

This Cout therefore belives that in justice and equity and

substantial merits of the case, the aforesaid pay differentials
due to the employees involved herein by the application of
the correct methods of computation of the rate of pay should
be paid by the respondent also beginning July 1, 1957 (p.
117, rec., G.R. No. L-31343).
From the above resolution, both parties appealed to this COURT. The
Philippine Air Lines filed its appeal petition on December 13, 1969, while
PALEA filed its petition for review on certiorari on January 3, 1970.

PAL's maiden argument has a strong tendency to mislead. In an effort to

emphasize that off-days are paid and therefore should be reckoned with in
determing the divisor for computing daily and hourly rate, PAL leans heavily
on what it considers as additional payment of 125% or 137 %, as the case
may be, of an employee's basic hourly rate, given to a worker who worked on
his off-days. PAL would like us to believe that the word "Additional" all but
accentuates the existence of a regular basic rate; otherwise, the 125% or
137% shall be in addition to what?
The industrial court, however, had this to say:
Moreover, it will be noted that before September 4, 1961, a
monthly salaried employee of PAL had to work 304 days only
in a year,a nd after said date, he had to work only 258 days
in ayear, to be entitled to his equivalent yearly salary. When
he worked on his off-day, he was paid accordingly (125% or
137%), indicating that his off-days were not with pay. It
seems illogical for said employe to be paid 125% or 137 % of
his basic daily rate, if such off-days are already wtih pay, as
indicated by the company (p. 107, rec., G.R. No. L-31343,
emphasis supplied).

PAL maintains that the NAWASA doctrine should not apply to a public utility
like PAL which, from the nature of its operations, requires a whole-yearround, uninterrupted work by personnel. What PAL apparently forgets is that
just like it, NAWASA is also a public utility which likewise requires its
workers to work the whole year round. Moreover, the NAWASA is a
government-owned corporation to which PAL is akin, it being a
government-controlled corporation.
As will later be stated herein, PAL inked with the representative unions of the
employees collective bargaining agreements wherein it bound itself to duly
compensate employer working on their off-days. The same situation obtained
in the NAWASA case, wherein WE held:
And in the collective bargaining agreement entered into
between the NAWASA and respondent unions it was agreed
that all existing benefits enjoyed by the employees and
laborers prior to its effectivity shall remain in force and shall
form part of the agreement, among which certainly is the
25% additional compensation for work on Sundays and legal
holidays theretofore enjoyed by said laborers and employees.
It may, therefore, be said that while under Commonwealth
Act No. 444 a public utility is not required to pay additional
compensation to its employees and workers for work done on
Sundays and legal holidays, there is, however, no prohibition
ofr it to pay such additional compensation if it voluntarily
agrees to do so. The NAWASA committed itself to pay this
additional compensation. It must pay not because of
compulsion of law but because of contractual obligation (11
SCRA 766, 776).

WE agree.
There should hardly be any doubt that off-days are not paid days, Precisely,
off-days are rest days for the worker. He is not required to work on such
days. This finds support not only in the basic principle in labor that the basis
of remuneration or compensation is actual service rendered, but in the ever
pervading labor spirit aimed at humanizing the conditions of hie working
man.
Since during his off-days an employee is not compelled to work he cannot,
conversely, demand for his corresponding pay. If, however, a worker works
on his off-day, our welfare laws duly reward him with a premium higher than
what he would receive when he works on his regular working day.
Such being the case, the divisor in computing an employee's basic daily rate
should be the actual working days in a yar The number of off-days are not to
be counted precisely because on such off-days, an employee is not required
to work.
Simple common sense dictates that should an employee opt not to work
which he can legally do on an off-day, and for such he gets no pay, he
would be unduly robbed of a portion of his legitimate pay if and when in
computing his basic daily and hourly rate, such off-day is deemed subsumed
by the divisor. For it is elementary in the fundamental process of division
that with a constant dividend, the bigger your divisor is, the smaller our
quotient will be.
It bears emphasis that OUR view above constitutes the rationale behind the
landmark ruling, surprisingly, by the same trial Judge Jose S. Bautista of the
Court of Industrial Relations, in National Waterworks and Sewerage Authority
vs. NWSA Consolidated Unions, et al., (G.R. No. L-18938, August 31, 1964, 11
SCRA 766, 793-794), to which decision WE gave OUR affirmance.

The settled NAWASA doctrine should not be disturbed.

B
PAL also vigorously argues that the unions' longstanding silence with
respect, and acquiescence, to PAL's method of computation has placed them
in estoppel to impugn the correctness of the questioned wage formula. PAL
furthermore contends that laches has likewise set in precisely because of
stich long-standing inaction.
Our jurisprudence on estoppel is, however, to the effect that:
... (I)t is meet to recall that "mere innocent silence will not
work estoppel. There must also be some element of turpitude
or neglignece connected with the silence by which another is
misled to his injury" (Civil Code of the philippines by
Tolentino, Vol. IV, p. 600) ... [Beronilla vs. GSISK, G.R. No.
L-21723, Nov. 26, 1970, 36 SCRA 44, 46, 55, emphasis
supplied].
In the case befor US, it is not denied that PAL's formula of determining daily
and hourly rate of pay has been decided and adopted by
it unilaterally without the knowedge and express consent of the employees. It
was only later on that the employees came to know of the formula's

irregularity and its being violative of the collective bargaining agreements

previously executed by PAL and the unions. Precisely, PALSA immediately
proposed that PAL and the unions. Precisely, PALSA immediately proposed
that PAL use the correct method of computation, which proposa PAL chose to
ignore.
Clearly, therefore, the alleged long-standing silence by the PAL employees is
in truth and in fact innocent silence,which cannot place a party in estoppel.
The rationale for this is not difficult to see. The doctrine of estoppel had its
origin in equity. As such, its applicability depends, to a large extent, on the
circumstances surrounding a particular case. Where, therefore, the neglect
or omission alleged to haveplaced a party in estoppel cannot be invoked. This
was the essence of OUR ruling in the case of Mirasol vs. Municipality of
Tabaco (43 Phil. 610, 614). And this, in quintessence, was the compelling
reason why in Lodovica vs. Court of Appeals (L-29678, July 18, 1975, 65
SCRA 154, 158), WE held that a party who had no knowledge of or gave no
consent to a transaction may not be estopped by it.
Furthermore, jurisprudence likewise fortifies the position that in the interest
of public policy, estoppel and laches cannot arrest recover of evertime
compensation. The case of Manila Terminal Co. vs. CIR (G.R. NO. L-9265,
April 29, 1957, 91 Phil. 625), is squarely in point. In this case We intoned.
The principle of estoppel and laches cannot well be invoked
agains the Association. In the first place, it would be
contrary to the spirit of the Eight-Hour Labor Law, under
which, as already seen, the laborers cannot waive their right
to extra compensation. In the second place, the law
principally obligates the employer to observe it, as much so
that it punishes the employer for its employer for its violation
and leaves the employee or laborer is in such a
disadvantageous position as to be naturally reluctant or even
apprehensive in asserting any claim which may cause the
employher to devise a way for exercising his right to
terminate the employment.
If the principle of estoppel and laches is to be applied, it may
bring about a situation, whereby theemployee or laborer, who
cannot expressly renounce their right to extra compensation
under the Eight-Hour Labor Law, may be compelled to
accomplish the same thing by mere silence or lapse of
time, thereby frustrating the purpose of the law by
indirection (91 Phil. 625, 633, emphasis supplied).
In another count, the unilateral adoption by PAL of an irregular wage formula
being an act against public policy, the doctrine of estoppel cannot give
validity to the same (Auyong Hian vs. Court of Tax Appeals, 59 SCRA 110,
112).
II
G.R. No. L-31341 is an appeal from that portion of the en banc resolution of
the Court of Industrial Relations dated October 9, 1969 in case 43-IPA

making the payment of the adjudicated pay differentials effective only from
July 1, 1957.
In their lone assignment of error, February 14, 1953, or ten (10) years from
the date of the filing of their original complaint; because the claim for pay
differentials is based on written contracts i.e., the collective bargaining
agreements between PAL and the employees' representative uniuons and
under Article 1144(1) of the Civil Code, actions based on written contracts
prescribe in ten (10) years.
PAL, on the other hand, maintains that the employees' claim for pay
differential is"an action to enforce a cause of action under the Eight-Hour
Labor Law (CA No. 444, as amended): (p. 592, rec., G.R. No. L-31341). As
such, the applicable provision is Section 7-a of CA No. 4444, which reads:
Sec. 7-a. Any action to enforce any cause of action under
this Act shall be commenced within three years after the
cause of action accrued, otherwise such action shall be
forever barred; provided, however, that actions already
commenced before the effecitve date of this Act shall not be
affected by the period herein prescribed (As amended by Rep.
Act No. 1993, approved June 22, 1957, emphasis supplied).
Moreover, PAL argues that even assuming that the issue calls for the
application of Article 1144(1) of the New Civil Code, a general law, still in
case of conflict, Commonwealth ACt No. 444, as amended, should prevail
because the latter is a special law.
WE believe that the present case calls for the application of the Civil Code
provisions on the prescriptive period in the filing of actions based on written
contracts. The rason should be fairly obvious. Petitioners' claim
fundamentally involves the strict compliance by PAL of the pvosions on wage
computation embodied in the collective bargaining agreements inked between
it and the employees representative unions. These collective bargaining
agreements were: the PAS-PALEA collective bargaining agreement of 195253; the PAL-PALEA collective bargaining agreement of 1956-59; the PALPALEA collective bargaining agreement of 1959-61 (with Article VI as
supplement); the PAL-PALEA agreement of September 4, 1961; the PAL-ACAP
collective bargaining agreement of 1952-54; the PAL-ACAP collective
bargaining agreement of September 6, 1955; the PAL-ACAP collective
bargaining agreement of 1959-61; the PAL-PALSA collective bargaining
agreement of 1959-62; and the supplementary PAL-PALSA collective
bargaining agreement (pp. 54-55, rec., G.R. No. L-31343).
The three-year prescribed period fixed in the Eight-Hour Labor Law (CA No.
444, as amended) will apply, if the claim for differentials for overtime work is
solely based on said law, and not on a collective bargaining agreement or any
other contract. In the instant cases, the claim for overtime compensation is
not so much because of Commonwealth Act No. 444, as amended, but
because the claim is a demandable right of the employees, by reason of the
above-mentioned collective bargaining agreements. That is precisely why
petitioners did not make any reference as to the computation for overtime
work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 444), and

instead inissited that work computation provided in the collective bargaining

agreements between the parties be observed. Since the claim for pay
differentials is principally anchored on the written contracts between the
litigants, the ten-year prescriptive period between the litigants, the ten-year
prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern. (General Insurance and Surety Corp. vs. Republic, L-13873, January
31, 1963, 7 SCRA 4; Heirs of the Deceased Juan Sindiong vs. Committee on
Burnt Areas and Improvements of Cebu, L-15975, April 30, 1964, 10 SCRA
715; Conde vs. Cuenca and Malaga, L-9405, July 31, 1956; Veluz vs. Veluz,
L-23261, July 31, 1968, 24 SCRA 559).
Finally, granting arguendo that there is doubt as to what labor legislation to
apply to the grievances of the employees in the cases at bar, it is OUR view
that that legislation which would enhance the plight of the workers should be
followed, consonant with the express pronouncement of the New Civil Code
that:
In case of doubt, all labor legislation and labor contracts
should be construed in favor of the safety and decent living
of the laborer (Article 1702).
WHEREFORE, THE APPEALED RESOLUTION IS HEREBY AFFIRMED, WITH
THE MODIFICATION THAT PAY DIFFERENTIALS BE PAID EFFECTIVE
FEBRUARY 14, 1953. WITH COSTS AGAINST PHILIPPINE AIR LINES, INC. IN
BOTH CASES.

G.R. No. 105963 August 22, 1996

PAL EMPLOYEES SAVING AND LOAN ASSOCIATION, INC.
(PESALA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND ANGEL V.
ESQUEJO, respondents.
PANGANIBAN, J.:p
Is an employee entitled to overtime pay for work rendered in excess of eight
hours a day, given the fact that his employment contract specifies a twelvehour workday at a fixed monthly salary rate that is above the legal minimum
wage? This is the principal question answered by this Court in resolving this
petition
which
challenges
the
validity
and
legality
of
the
Decision 1 of
public
respondent
National
Labor
Relations
Commission 2 promulgated on April 23, 1992 in NLRC NCR CA No. 00252291 entitled "Angel V. Esquejo vs. PAL Employees Savings and Loan
Association" which Decision modified (slightly as to amount) the earlier
decision 3 dated November 11, 1991 of the labor arbiter granting private
respondent's claim of overtime pay.
The Facts and the Case Below
On October 10, 1990, private respondent filed with public respondent a
complaint docketed as NLRC NCR Case No. 10-05457-90 for non-payment of
overtime pay and non-payment of the P25.00 statutory minimum wage
increase mandated by Republic Act No. 6727.
Subsequently, private respondent filed a supplemental complaint for illegal
suspension with payer for reinstatement and payment of backwages.
However, before the case was submitted for resolution, private respondent
filed a "Motion to Withdraw Supplemental Complaint" on the ground that a
separate action for illegal suspension, illegal dismissal, etc. had been filed
and was pending before another labor arbiter. Hence, the issue decide by
public respondent and which is under review by this Court in this petition
involves only his claim for overtime pay.
On November 26, 1990, private respondent filed his position paper 4 with the
labor arbiter alleging the following facts constituting his cause of action:
Complaint (herein private respondent) started working with
respondent (PESALA) sometime last March 1, 1986 as a company
guard and was receiving a monthly basic salary of P1,990.00 plus an
emergency allowance in the amount of P510.00. He was required to
work a (sic) twelve (12) hours a day, a (sic) xerox copies of his
appointment are hereto attached and marked as Annexes "C" and "D"
of this position paper;
That on December 10, 1986, respondent Board of Directors in its
board meeting held on November 21, 1986 approved a salary
adjustment for the complainant increasing his monthly basic salary
to P2,310.00 and an emergency allowance of P510.00, a xerox copy

of the salary adjustment is hereto attached and marked as Annex "E"

hereof;
That on August 25, 1987, because of his impressive performance on
his assigned job, another adjustment was approved by the President
of the association increasing his monthly basic salary to P2,880.00, a
xerox copy of the salary adjustment is hereto attached and marked
as Annex "F" hereof;
That from January 4, 1988 up to June 1990, several salary
adjustments were made by the respondent on the monthly basic
salary of the complainant including a letter of appreciation for being
as (sic) one of the outstanding performers during the first half of
1988, the latest salary prior to the filing of the complaint was
P3,720.00, a (sic) xerox copies of all documents relative to the salary
adjustments are hereto attached and marked as annexes "G", "H",
and "K" of this position paper;
That during his entire period of employment with respondent, the
former was required to perform overtime work without any additional
compensation from the latter. It was also at this point wherein the
respondent refused to give the 25.00 increase on the minimum wage
rates as provided for by law. On October 12, 1990, complainant was
suspended for the period of thirty seven (37) days for an offense
allegedly committed by the respondent sometime last August 1989.
paper

On December 13, 1990, petitioner PESALA filed its position

alleging among other things:
On 01 March, 1986, complainant was appointed in a
permanent status as the company guard of respondent. In
the Appointment Memorandum dated February 24, 1986
which has the conformity of complaint, it is expressly
stipulated therein that complainant is to receive a monthly
salary of P1,900.00 plus P510.00 emergency allowance for a
twelve (12) hours work per day with one (1) day off. A copy of
said appointment memorandum is hereto attached as Annex
"A" and made an integral part hereof.
On 01 December, 1986, the monthly salary of complainant
was increased to P2,310,00 plus P510.00 emergency
allowance. Latter, or on 01 January, 1988, the monthly
salary of complainant was again increased to P3,420.00. And
still later, or on 01 February, 1989, complainant's monthly
salary was increased are hereto attached as Annexes "B", "B1" and "B-2" and are made integral parts hereof.
On 29, November, 1989, the manager of respondent in the
person of Sulpicio Jornales wrote to complainant informing
the latter that the position of a guard will be abolished
effective November 30, 1989, and that complainant will be
re-assigned to the position of a ledger custodian effective
December 1, 1989.

Pursuant to the above-mentioned letter-agreement of Mr.

Jornales, complaint was formally appointed by respondent
as its ledger custodian on December 1, 1989. The monthly
salary of complainant as ledger custodian starting on
December 1, 1989 was P3,720,00 for forty (40) working
hours a week or eight (8) working hours a day. a copy of said
Appointment memorandum is hereto attached as Annex "C"
and made an integral part hereof.
On 29 August, 1990, complainant was administratively
charged with a serious misconduct or disobedience of the
lawful orders of respondent or its officers, and gross and
habitual neglect of his duties, committed as follows:
1. Sometime in August, 1989, you (referring to
complainant Esquejo) forwarded the checks
corresponding to the withdrawals of Mr. Jose
Jimenez and Mr. Anselmo dela Banda of Davao and
Iloilo Station, respectively, without the signature of
the Treasurer and the President of PESALA, in
violation of your duty and function that you should
see to it that the said checks should be properly
signed by the two PESALA officials before you send
out said checks to their addresses. As a result of
which, there was a substantial delay in the
transmission of the checks to its owners resulting to
an embarrassment on the part of the PESALA
officers and damage and injury to the recipients (sic)
of the checks since they needed the money badly.
2. Sometime in August, 1989, before you
(complainant) went on your vacation, you failed to
leave or surrender the keys of the office, especially
the keys of the keys to the main and back doors
which
resulted
to
damage,
injury
and
embarrassment to PESALA. This is a gross violation
of your assigned duties and you disobeyed the
instruction of your Superior.
xxx xxx xxx
Herein complainant was informed of the aforequoted charges
against him and was given the opportunity to be heard and
present evidence in his behalf as shown by the Notice of
Hearing (Annex "D" hereof) sent to him. Complainant did in
fact appeared (sic) at the hearing, assisted by his counsel,
Atty. Mahinardo G. Mailig, and presented his evidence in the
form of a Counter-Affidavit. A copy of said Counter-Affidavit
is hereto attached as Annex "E" and made an integral part
hereof.
On 12 October, 1990, after due deliberation on the merits of
the administrative charges filed against herein complainant,

the Investigating Officer in the person of Capt. Rogelio

Enverga resolved the same imposing a penalty of suspension
of herein complainant, thus:
"PENALTY: 1. For the first offense, you (referring to
complaint Esquejo) are suspended for a period of
thirty (30) working days without pay effective
October 15, 1990.
2. For the second offense, your (sic) are suspended
for a period of seven (7) working days whiteout pay
effective from the date first suspension will expire".
On March 7, 1991, private respondent filed a detailed and itemized
computation of his money claims totaling P107,495.90, to which
petitioner filed its comment on April 28, 1991. The computation filed
on March 7, 1991 was later reduced to P65,302.80. To such revised
computation, the petitioner submitted its comment on April 28,
1991.
WHEREFORE, judgment is hereby rendered:
1. Granting the claim for overtime pay covering the period
October 10, 1987 to November 30, 1989 in the amount of
P28,344.55.
2. The claim for non-payment of P25.00 salary increase
pursuant to Republic Act No. 6727 is dismissed for lack of
merit.
Aggrieved by the aforesaid decision, petitioner appealed to public
respondent NLRC only to be rejected on April 23, 1992 via the herein
assailed Decision, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, the award is reduced to
an amount of TWENTY EIGHT THOUSAND SIXTY-SIX
PESOS AND 45/100 (P28,066.45). In all other respects, the
Decision under review is hereby AFFIRMED and the appeal
DISMISSED for lack of merit.
No motion for reconsideration of the Decision was filed by
the petitioner. 6
What transpired afterwards is narrated by the Solicitor General in
his memorandum, 7 which we presume to be correct since petitioner
did not contradict the same in its memorandum:
. . . Petitioner did not appeal the Decision of respondent
NLRC. When it became final, the parties were called to a
conference on June 29, 1992 to determine the possibility of
the parties' voluntary compliance with the Decision (Order of
Labor Arbiter Linsangan. dated July 23, 1992).
. . . In their second conference, held on July 15, 1992,
petitioner proposed to private respondent a package
compromise agreement in settlement of all pending claims.

Private respondent for his part demanded (P150,000.00 as

settlement of his complaint which was turned down by
petitioner as too excessive. Unfortunately, no positive results
were achieved.

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF

DISCRETION IF AWARDING OVERTIME PAY OF P28,066.45 TO
PRIVATE RESPONDENT WHEN THE SAME IS A CLEAR VIOLATION
OF ARTICLE 22 OF THE CIVIL CODE ON UNJUST ENRICHMENT.

As a result, pleading was filed by petitioner captioned:

Motion to Defer Execution and Motion to Re-Compute
alleged overtime pay. Petitioner states that "quite recently,
the Employee Payroll Sheets pertaining to the salaries,
overtime pay, vacation and sick leave of Angel Esquejo were
located".

III

. . . Petitioner's Motion to Defer Execution and Motion to ReCompute respondent's overtime pay was denied in an Order
dated July 23, 1992.
. . . Petitioner moved to reconsider the Denial Order on July
27, 1992. Private respondent opposed.
In the meantime, petitioner filed the instant special civil action
for certiorari before this Court on July 10, 1992. Later, on July 17,
1992, citing as reason that ". . . quite recently, the Employee Payroll
Sheets which contained the salaries and overtime pay received by
respondent Esquejo were located in the bodega of the petitioner and
based on said Payroll Sheets, it appears that substantial overtime
pay have been paid to respondent Esquejo in the amount of
P24,238.22 for the period starting January 1987 up to November
1989". petitioner asked this Court for the issuance of a temporary
restraining order or writ of preliminary injunction. On the same date
of July 17, 1992, a "Supplemental Petition Based On Newly
Discovered Evidence" was filed by petitioner to which was attached
photocopies of payroll sheets of the aforestated period.
On July 29, 1992, this court issued a temporary restraining order
enjoining the respondents from enforcing the Decision dated April
23, 1992 issued in NLRC NCR No. 002522-91, the case below subject
of the instant petition.
The Issues
Four issues have been raised by the petitioner in its effort to obtain a
reversal of the assailed Decision, to wit:
I
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF
DISCRETION WHEN IT RULED THAT PRIVATE RESPONDENT IS
ENTITLED TO OVERTIME PAY WHEN THE SAME IS A GROSS
CONTRAVENTION OF THE CONTRACT OF EMPLOYMENT
BETWEEN PETITIONER AND RESPONDENT ESQUEJO AND A
PATENT VIOLATION OF ARTICLES 1305, 1306 AND 1159 OF THE
CIVIL CODE.
II

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSED OF

DISCRETION WHEN IT RULED THAT PRIVATE RESPONDENT WAS
NOT PAID THE OVERTIME PAY BASED ON THE COMPUTATION OF
LABOR ARBITER CORNELIO LINSANGAN WHICH WAS AFFIRMED
BY SAID RESPONDENT NLRC WHEN THE SAME IS NOT
SUPPORTED BY SUBSTANTIAL EVIDENCE AND IT, THEREFORE,
VIOLATED THE CARDINAL PRIMARY RIGHTS OF PETITIONER AS
PRESCRIBED IN "AND TIBAY VS. CIR." 69 PHIL. 635.
IV
WHETHER OR NOT THE PETITIONER'S SUPPLEMENTAL PETITION
BASED ON NEWLY DISCOVERED EVIDENCE MAY BE ADMITTED
AS PART OF ITS EVIDENCE IT BEING VERY VITAL TO THE
JUDICIOUS DETERMINATION OF THE CASE. (Rollo, p. 367)
In essence the above issued boil down to this query: Is an employee entitled
to overtime pay for work rendered in excess of the regular eight hour day
given the fact that he entered into a contract of labor specifying a work-day of
twelve hours at a fixed monthly rate above the legislated minimum wage?
The Court's Ruling
At the outset, we would like to rectify the statement made by the Solicitor
General that the "petitioner did not appeal from the Decision of (public)
respondent NLRC". The elevation of the said case by appeal is not possible.
The only remedy available from an order or decision of the NLRC is a petition
for certiorari under Rule 65 of the Rules of Court alleging lack or excess of
jurisdiction or grave abuse of discretion. 8 The general rule now is that the
special civil action of certiorari should be instituted within a period of three
months. 9 Hence, when the petition was filed on July 10, 1992, three months
had not yet elapsed from petitioner's receipt of the assailed Decision (should
really be from receipt of the order denying the motion for reconsideration).
However, aside from failing to show clearly grave abuse of discretion on the
part of respondent NLRC, which we shall discuss shortly, the petitioner also
failed to comply with the mandatory requirement of filing a motion for
reconsideration from the Decision of the public respondent before resorting
to the remedy of certiorari. We have previously held that:
. . . The implementing rules of respondent NLRC are
unequivocal in requiring that a motion for reconsideration of
the order, resolution, or decision of respondent commission
should be seasonably filed as a precondition for pursuing
any further or subsequent remedy, otherwise the said order,
resolution, or decision shall become final and executory after
ten calendar days from receipts thereof. Obviously, the
rationale therefor is that the law intends to afford the NLRC

an opportunity to rectify such errors or mistakes it may have

lapsed into before resort to the courts of justice can be had.
This merely adopts the rule that the function of a motion for
reconsideration is to point out to the court the error that it
may have committed and to give it a chance to correct
itself. 10
Additionally, the allegations in the petition clearly show that
petitioner failed to file a motion for reconsideration of the
assailed Resolution before filing the instant petition. As
correctly argued by private respondent Rolando Tan, such
failure constitutes a fatal infirmity. . . . The unquestioned
rule in this jurisdiction is that certiorari will only if there is
no appeal or any other plain, speedy an adequate remedy in
the ordinary course of law against the acts of public
respondent. In the instant case, the plain and adequate
remedy expressly provided by law was a motion for
reconsideration of the assailed decision, based on a palpable
or patent errors, to be made under oath and filed within ten
(10) calendar days from receipt of the questioned decision.
And for failure to avail of the correct remedy expressly
provided by law, petitioner has permitted the subject
Resolution to become final and executory after the lapse of
the ten day period within which to file such motion for
reconsideration. 11
In brief, the filing of the instant petition was premature and did not toll the
running of the 3 month period. Thus, the assailed Decision became final and
executory. On this ground alone, this petition must therefore be dismissed.
However, in view of the importance of the substantial query raised in the
petition, we have resolved to decide the case on the merits also.
The First Issue: Was Overtime Pay Included?
The main disagreement between the parties centers on how the contract of
employment of the private respondent should be interpreted. The terms and
conditions thereof reads as follows:
Date: February 24, 1986
NAME : ESQUEJO, ANGEL
NATURE OF ACTION : APPOINTMENT
FROM :
POSITION TITLE : COMPANY GUARD
TO :
STATUS : PERMANENT
EFFECTIVE DATE : MARCH 1, 1986
FROM : P1,990.00 per month
plus P510.00 emergency
allowance
SALARY :
TO :

REMARKS : To confirm permanent

appointment as company
guard who will render 12
hours a day with one (1)
day off
RECOMMENDED BY: APPROVED BY:
(Signed) (Signed)
SULPICIO B. JORNALES CATALINO F. BANEZ
(Signed)
ANGEL V. ESQUEJO 12
Petitioner faults the public respondent when it said that there was "no
meeting of minds between the parties," since the employment contract
"explicitly states without any equivocation" that the overtime pay for work
rendered for four (4) hours in excess of the eight (8) hour regular working
period is already included in the P1,990.00 basic salary. "This is very clear
from the fact that the appointment states 12 hours a day work." 13 By its
computations, 14petitioner tried to illustrate the private respondent was paid
more than the legally required minimum salary then prevailing.
To prove its contention, petitioner argues that:
The legal minimum wage prescribed by our statutes, the legally
computed overtime pay and monthly salaries being paid by petitioner
to respondent Esquejo would show that indeed, the overtime pay has
always been absorbed and included in the said agreed monthly
salaries.
In 1986, the legal minimum salary of Esquejo is computed as follows
(per Appointment Memoranda dated February 4, 1986 and June 6,
1986 [Annex "C" and "D" of Annex "B" of this Petition]):
54
x
314
------------12 months = P1,413.00 monthly salary

days

The hourly overtime pay is computed as follows:

54/8 hours = P6.75 x 4 hrs. = P27.00
P27.00 x 1.25 = P33.75 x 20 (should be 26)days =
P887.50
(should be P877.50)
P1,413.00

legal
minimum
wage
+
887.50(877.50)

legal
overtime
pay
--------------P2,290.50

amount
due
to
respondent
Esquejo under the law
P2,500.00 gross salary of Esquejo per contract
-2,290.50
----------

P209.50 Difference (Rolllo, p. 371).

On the other hand, private respondent in his position paper claims that
overtime pay is not so incorporated and should be considered apart from the
P1,990.00 basic salary. 15
We find for the private respondent and uphold the respondent NLRC's ruling
that he is entitled to overtime pay.
Based on petitioner's own computation, it appears that the basic salary plus
emergency allowance given to private respondent did not actually include the
overtime pay claimed by private respondent. Following the computations it
would appear that by adding the legal minimum monthly salary which at the
time was P1,413.00 and the legal overtime minimum monthly salary which at
the time was P1,413.00 and the legal overtime pay of P877.50, the total
amount due the private respondent as basic salary should have been
P2,290.50. By adding the emergency cost of living allowance (ECOLA) of
P510.00 as provided by the employment contract, the total basic salary plus
emergency allowance should have amounted to P2,800.50. However,
petitioner admitted that it actually paid private respondent P1,990.00 as
basic salary plus P510.00 emergency allowance or a total of only P2,500.00.
Undoubtedly, private respondent was shortchanged in the amount of
P300.50. Petitioner's own computations thus clearly establish that private
respondent's claim for overtime pay is valid.
Side Issue: Meeting of the Minds?
The petitioner contends that the employment contract between itself and the
private respondent "perfectly satisfies" the requirements of Article 1305 of the
Civil Code as to the "meeting of the minds" such that there was a "legal and
valid contract" entered into by the parties. Thus, private respondent "cannot
be allowed to question the said salary arrangements for the extra 4 hours
overtime pay after the lapse of 4 years and claim only now that the same is
not included in the terms of the employment contracts." 16
We disagree. Public respondent correctly found no such agreement as to
overtime pay. In fact. the contract was definite only as to the number of
hours of work to be rendered but vague as to what is covered by the salary
stipulated. Such ambiguity was resolved by the public respondent, thus:
In resolving the issue of whether or not complainant's
overtime pay for the four (4) hours of work rendered in
excess of the normal eight hour work period is incorporated
in the computation of his monthly salary, respondent
invokes its contract of employment with the complainant.
Said contract appears to be in the nature of a document
identifiable as an appointment memorandum which took
effect on March 1, 1986 (Records, p. 56) by virtue of which
complaint expressed conformity to his appointment as
company guard with a work period of twelve (12) hours a day
with one (1) day off. Attached to this post is a basic salary of
P1,900.00 plus P510.00 emergency allowance. It is (a)
cardinal rule in the interpretation of a contract that if the
terms thereof are clear and leave no doubt upon the

intention of the contracting parties, then the literal meaning

of its stipulations shall control. (Art. 1370, Civil Code of the
Philippines).
To
this,
respondent
seeks
refuge.
Circumstances, however, do not allow us to consider this
rule in the light of complainant's claim for overtime pay
which is an evident indication that as to this matter, it
cannot be said that there was a meeting of the minds
between the parties, it appearing that respondent considered
the four (4) hours work in excess of the eight hours as
overtime work and compensated by way of complainant's
monthly salary while on the latter's part, said work rendered
is likewise claimed as overtime work but yet unpaid in view
of complainant's being given only his basic salary.
Complainant claims that the basic salary could not possibly
include therein the overtime pay for his work rendered in
excess of eight hours. Hence, respondent's Appointment
Memorandum cannot be taken and accorded credit as it is
so worded in view of this ambiguity. We therefore proceeded
to determine the issue in the light of existing law related
thereto. while it is true that the complainant received a
salary rate which is higher that the minimum provided by
law, it does not however follow that any additional
compensation due the complainant can be offset by his
salary in excess of the minimum, especially in the absence of
an express agreement to that effect. To consider otherwise
would be in disregard of the rule of non-diminution of
benefits which are above the minimum being extended to the
employees. Furthermore, such arrangement is likewise in
disregard of the manner required by the law on how overtime
compensation must be determined. There is further the
possibility that in view of subsequent increases in the
minimum wage, the existing salary for twelve (12) hours
could no longer account for the increased wage level together
with the overtime rate for work rendered in excess of eight
hours. This fertile ground for a violation of a labor standards
provision can be effectively thwarted if there is a clear and
definite delineation between an employee's regular and
overtime compensation. It is, further noted that a reading of
respondent's Appointment Memoranda issued to the
complainant on different dates (Records, pp. 56-60) shows
that the salary being referred to by the respondent which
allegedly included complainant's overtime pay, partakes of
the nature of a basic salary and as such, does not
contemplate any other compensation above thereof including
complaint's overtime pay. We therefore affirm complainant's
entitlement to the latter benefit. 17
Petitioner also insists that private respondent's delay in asserting his
right/claim demonstrates his agreement to the inclusion of overtime pay in
his monthly salary rate. This argument is specious. First of all, delay cannot
be attributed to the private respondent. He was hired on March 1, 1986. His

twelve-hour work periods continued until November 30, 1989. On October

10, 1990 (just before he was suspended) he filed his money claims with the
labor arbiter. Thus, the public respondent in upholding the decision of the
arbiter computed the money claims for the three years period from the date
claims were filed, with the computation starting as of October 10, 1987
onwards.
In connection with the foregoing, we should add that even if there had been a
meeting of the minds in the instant case, the employment contract could not
have effectively shielded petitioner from the just and valid claims of private
respondent. Generally speaking, contracts are respected as the law between
the contracting, parties, and they may establish such stipulation, clause,
terms and conditions as they may see fit; and for as long as such agreements
are not contrary to law, morals, good customs, public policy or public order,
they shall have the fore of law between them. 18 However, ". . ., while it is the
inherent and inalienable right of every man to have the most liberty of
contracting, and agreements voluntarily and fairly made will be held valid
and enforced in the courts, the general right to contract is subject to the
limitation that the agreement must not be in violation of the Constitution,
the statute of some rule of law (12 Am. Jur. pp. 641-642)." 19 And under the
Civil Code, contracts of labor are explicitly subject to the police power of the
State because they are not ordinary contracts but are impressed with public
interest. 20 Inasmuch as in this particular instance the contract is question
would have been deemed in violation of pertinent labor laws, the provisions
of said laws would prevail over the terms of the contract, and private
respondent would still be entitled to overtime pay.
Moreover, we cannot agree with petitioner's assertion that by judging the
intention of the parties from their contemporaneous acts it would appear that
the "failure of respondent Esquejo to claim such alleged overtime pay since
1986 clearly demonstrate(s) that the agreement on his gross salary as
contained in his appointment paper is conclusive on the matter of the
inclusion of overtime pay." (Rollo, pp. 13-15; also, Rollo, pp. 378-380). This is
simply not the case here. The interpretation of the provision in question
having been put in issue, the Court is constrained to determine which
interpretation is more in accord with the intent of the parties. 21 To ascertain
the intent of the parties, the Court is bound to look at their
contemporaneous and subsequent acts. 22 Private respondent's silence and
failure to claim his overtime pay since 1986 cannot be considered as proving
the understanding on his part that the rate provided in his employment
contract covers overtime pay. Precisely, that is the very question raised by
private respondent with the arbiter, because contrary to the claim of
petitioner, private respondent believed that he was not paid his overtime pay
and that such pay is not covered by the rate agreed upon and stated in his
Appointment Memorandum. The subsequent act of private respondent in
filing money claims negates the theory that there was clear agreements as to
the inclusion of his overtime pay in the contracted salary rate. When an
employee fails to assert his right immediately upon violation thereof, such
failure cannot ipso facto be deemed as a waiver of the oppression. We must
recognize that the worker and his employer are not equally situated. When a
worker keeps silent inspite of flagrant violations of his rights, it may be

because he is seriously fearful of losing his job. And the dire consequences
thereof on his family and his dependents prevent him from complaining. In
short, his thoughts of sheer survival weight heavily against launching an
attack upon his more powerful employer.
The petitioner contends that the agreed salary rate in the employment
contract should be deemed to cover overtime pay, otherwise serious
distortions in wages would result "since a mere company guard will be
receiving a salary much more that the salaries of other employees who are
much higher in rank and position than him in the company." (Rollo, p. 16)
We find this argument flimsy and undeserving of consideration. How can
paying an employee the overtime pay due him cause serious distortions in
salary rates or scales? And how can "other employees" be aggrieved when
they did not render any overtime service?
Petitioner's allegation that private respondent is guilty of laches is likewise
devoid of merit. Laches is defined as failure or neglect for an unreasonable
and unexplained length of time to do that which, by exercising due diligence,
could or should have been done earlier. It is negligence or omission to assert
a right within an unreasonable time, warranting the presumption that the
party entitled to assert it has either abandoned or declined to assert it 23 The
question of laches is addressed to the sound discretion of the court, and
since it is an equitable doctrine, its application is controlled by equitable
considerations. It cannot work to defeat justice or to perpetrate fraud and
injustice. 24 Laches cannot be charged against any worker when he has not
incurred undue delay in the assertion of his rights. Private respondent filed
his complaint within the three-year reglementary period. He did not sleep on
his rights for an unreasonable length of time. 25
Second Issue: Unjust Enrichment?
Petitioner contends that the award of overtime pay is "plain and simple
unjust and illegal enrichment." Such award "in effect sanctioned and
approved the grant of payment to respondent Esquejo which will result in
double payment for the overtime work rendered by paid employee." 26 Also,
per petitioner, "(n)othing in the Labor Code nor in the Rules and Regulations
issued in the implementation thereof prohibits the manner of paying the
overtime pay (by) including the same in the salary." 27
This is begging the issue. To reiterate, the main question raised before the
labor tribunals is whether the provision on wages in the contract of
employment already included the overtime pay for four (4) working hours
rendered six days a week in excess of the regular eight-hour work. And we
hold that the tribunals below were correct in ruling that the stipulated pay
did not include overtime. Hence, there can be no undue enrichment in
claiming what legally belongs to private respondent.
Third Issue: Basic of NLRC's Decision?
Petitioner assails respondent NLRC for adopting that portion of the decision
of the labor arbiter, which reads as follows:
. . . Our conclusion is quite clear considering the fact that at
the time of his employment in March 1986, during which the

minimum wage was P37.00 a day for 8 hours work,

complaint's total take-home-pay working 12 hours a day
including ECOLA, was only P2,500.00 a month. And
immediately prior to his appointment as Ledger Custodian
effective December 1, 1989, with the working hours reduced
to 8 hours a week, complainant's monthly salary was
P3,420.00 (instead of P5,161.01 minimum monthly with 4
hours overtime work everyday, or a difference of P1,741.01 a
month).
Accordingly, the claim for overtime pay reckoned from
October 10, 1987 up to November 30, 1989 should be, as it
is hereby, granted. 28 (Rollo, p. 201).
Petitioner believes that by adopting the above-quoted portion of the arbiter's
decision, respondent NLRC violated the cardinal rule that its decisions must
be supported by substantial evidence. In doing so, petitioner claims that the
NLRC violated is primary rights as enunciated in the case of Ang Tibay
vs. CIR 29. In other words, petitioner holds the view that the arbiter's
decision failed to explain how the amount of P5,161.01 was arrived at. 30
Petitioner is in error. The public respondent did not adopt in toto the
aforequoted portion of the arbiter's decision. It made its own computations
and arrived at a slightly different amount, with a difference of P278.10 from
the award granted by the labor arbiter. To refute petitioner's claim, public
respondent attached (as Annexes "1", "1-A" "1-B" and "1-C") to its Comment,
the computations made by the labor arbiter in arriving at the sum of
P5,161,00. On the other hand, public respondent made its own computation
in its assailed Decision and arrived at a slightly different figure from the
computed by the labor arbiter:
Respondent claims that the award of P28,344.55 is bereft of
any factual basis. Records show that as per computation of
the office of the Fiscal Examiner, (Records, p. 116) the said
amount was arrived at. The computation was however based
on the assumption that the complainant regularly reported
for work. Records however show that the complainant
absented himself from work for one day in August 1989.
(Records, p. 63) For this unworked day, no overtime pay
must be due. As to the rest of his period of employment
subject to the three year limitation rule which dates from
October 10, 1987 up to his appointment as Ledger
Custodian on December 1, 1989 after which his regular work
period was already reduced to eight hours, there being no
showing that the complainant absented himself from work,
and he being then required to work for period of twelve hours
daily, We therefore rule on complainant's entitlement to
overtime compensation for the duration of the aforesaid
period in excess of one working day. Consequently,
complainant's overtime pay shall be computed as follow:
OVERTIME
PAY:
(4
HRS/DAY)
October 10, 1987 December 13, 1987 =

2.10
mos.
P54/8hrs. = P6.75 x 4 hrs. = P27.00
P27 x 1.25 = P33.75 x 26 x 2.10 mos. =
P1,842.75

December 14, 1987 June 30, 1989 =

18.53
mos.
P64/8 hrs. = P8 x 4 hrs. = P32.00
P32 x 1.25 = P40 x 26 x 18.53 = P19,271.20

July 1, 1989 November 30, 1989 = 5 mos.

P89/8 hrs. = P11.12 x 4 hrs. = P44.50
P44.50 x 1.25 = P55.62 x 25 x 5 mos. =
P6,952.50
(P6,953.125)

TOTAL OVERTIME PAY

P28,066.45 (P28,067.075)" (Rollo, pp. 210212)
Prescinding therefrom, it is evident that petitioner had no basis to argue that
respondent NLRC committed any grave abuse of discretion in quoting the
questioned portion of the labor arbiter's holding.
Fourth Issue: Newly Discovered Evidence?
In its Supplemental Petition filed on July 17, 1996, petitioner alleges in part:
2. That only recently, the petitioner was able to locate the
Employees Payroll Sheets which contained the salaries,
overtime pay, vacation and sick leaves of respondent Esquejo
which pertains to the period starting from January 1, 1987
up to November 1989. Therefore, said total amount of
overtime pay paid to and received by respondent Esquejo
should be deducted from the computed amount of
P28,066.45 based on the questioned decision; (Rollo, p. 220).
Contrary to petitioner's claim however, said documents consisting of
payroll sheets, cannot be considered as "newly-discovered evidence"
since said papers were in its custody and possession all along,
petitioner being the employer of private respondent
Furthermore, petitioner offers no satisfactory explanation why these
documents were unavailable at the time the case was being heard by
the labor arbiter. In its Memorandum, petitioner excused itself for its
failure to present such evidence before the labor arbiter and
respondent NLRC by saying that "petitioner('s office) appeared to be
in disorder or in a state of confusion since the then officers (of
petitioner) were disqualified by the Monetary Board on grounds of
misappropriation of funds of the association and other serious
irregularities. There was no formal turn-over of the documents from
the disqualified set of officer to the new officers of petitioner." 31 We

find such excuse weak and unacceptable, the same not being
substantiated by any evidence on record. Moreover, payroll records
are normally not in the direct custody and possession of corporate
officers but of their subordinates, i.e., payroll clerks and the like. In
the normal course of business, such payroll sheets are not the
subject of formal turnovers by outgoing officers to their successors of
office. And if indeed it is true that the petitioner had been looking for
such records or documents during the pendency of the case with the
labor arbiter and with public respondent, petitioner never alleged
such search before the said labor tribunals a quo. Hence, such bare
allegations of facts cannot be fairly appreciated in this petition
for certiorari, which is concerned only with grave abuse of discretion
of lack (or excess) of jurisdiction.
The Solicitor General quotes with approval a portion of private
respondent's Opposition to petitioner's motion for reconsideration
thus:
It is clear from the payroll, although the substantial pages
thereof do not show that the net amount indicated therein
have been received or duly acknowledged to have been
received by the complainant, THAT OVERTIME PAYMENTS
THAT WERE MADE REFER TO WORK RENDERED DURING
COMPLAINANT'S OFF DAYS. What has been rightfully,
claimed by the complainant and awarded by this Honorable
Office is the overtime works (sic) rendered by the
complainant daily for six (6) days a week computed at four
(4) hours per day. This computation is based on the evidence
thus submitted by the parties. All appointment by the
respondent carries (sic) with it (sic) that the basic salary of
the complainant is equivalent to 12 hours work everyday for
six (6) days a week, hence, the four (4) hours overtime daily
was not considered and therefore not paid by the
respondent. (Rollo, p. 327).
It has been consistently held that factual issued are not proper subjects of a
petition for certiorari, as the power of the Supreme Court to review labor
cases is limited to questions of jurisdiction and grave abuse of
discretion. 32The introduction in this petition of so-called newly discovered
evidence is unwarranted. This Court is not a trier of facts and it is not its
function to examine and evaluate the evidence presented (or which ought to
have been presented) in the tribunals below. 33
WHEREFORE, in view of the foregoing considerations, the Petition is
DISMISSED, the temporary restraining order issued on July 30, 1992
LIFTED, and the assailed decision of the public respondent AFFIRMED. Cost
against petitioner.

G.R. No. 142824

December 19, 2001

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO

GONZALES and MA. THERESA MONTEJO,petitioners,
vs.
INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A.
QUISUMBING, SECRETARY OF LABOR AND EMPLOYMENT, respondents.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the decision, promulgated
on 29 December 1999, and the resolution, promulgated on 05 April 2000, of
the Court of Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive
bargaining agent of the rank-and-file employees of Interphil Laboratories,
Inc., a company engaged in the business of manufacturing and packaging
pharmaceutical products. They had a Collective Bargaining Agreement (CBA)
effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993, Allesandro
G. Salazar,1 Vice-President-Human Resources Department of respondent
company, was approached by Nestor Ocampo, the union president, and
Hernando Clemente, a union director. The two union officers inquired about
the stand of the company regarding the duration of the CBA which was set to
expire in a few months. Salazar told the union officers that the matter could
be best discussed during the formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They
inquired once more about the CBA status and received the same reply from
Salazar. In April 1993, Ocampo requested for a meeting to discuss the
duration and effectivity of the CBA. Salazar acceded and a meeting was held
on 15 April 1993 where the union officers asked whether Salazar would be
amenable to make the new CBA effective for two (2) years, starting 01 August
1993. Salazar, however, declared that it would still be premature to discuss
the matter and that the company could not make a decision at the moment.
The very next day, or on 16 April 1993, all the rank-and-file employees of the
company refused to follow their regular two-shift work schedule of from 6:00
a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00
a.m., respectively, the employees stopped working and left their
workplacewithout sealing the containers and securing the raw materials they
were working on. When Salazar inquired about the reason for their refusal to
follow their normal work schedule, the employees told him to "ask the union
officers." To minimize the damage the overtime boycott was causing the
company, Salazar immediately asked for a meeting with the union officers. In
the meeting, Enrico Gonzales, a union director, told Salazar that the
employees would only return to their normal work schedule if the company
would agree to their demands as to the effectivity and duration of the new
CBA. Salazar again told the union officers that the matter could be better
discussed during the formal renegotiations of the CBA. Since the union was
apparently unsatisfied with the answer of the company, the overtime boycott
continued. In addition, the employees started to engage in a work slowdown

campaign during the time they were working, thus substantially delaying the
production of the company.2
On 14 May 1993, petitioner union submitted with respondent company its
CBA proposal, and the latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor
Relations Commission (NLRC) a petition to declare illegal petitioner union's
"overtime boycott" and "work slowdown" which, according to respondent
company, amounted to illegal strike. The case, docketed NLRC-NCR Case No.
00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the National
Conciliation and Mediation Board (NCMB) an urgent request for preventive
mediation aimed to help the parties in their CBA negotiations.3 The parties,
however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with the Office of the Secretary of Labor and
Employment a petition for assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike
citing unfair labor practice allegedly committed by respondent company. On
12 February 1994, the union staged a strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an
assumption order4 over the labor dispute. On 02 March 1994, Secretary
Confesor issued an order directing respondent company to "immediately
accept all striking workers, including the fifty-three (53) terminated union
officers, shop stewards and union members back to work under the same
terms and conditions prevailing prior to the strike, and to pay all the unpaid
accrued year end benefits of its employees in 1993."5 On the other hand,
petitioner union was directed to "strictly and immediately comply with the
return-to-work orders issued by (the) Office x x x6 The same order
pronounced that "(a)ll pending cases which are direct offshoots of the instant
labor dispute are hereby subsumed herewith."7
In the i, the case before Labor Arbiter Caday continued. On 16 March 1994,
petitioner union filed an "Urgent Manifestation and Motion to Consolidate the
Instant Case and to Suspend Proceedings" seeking the consolidation of the
case with the labor dispute pending before the Secretary of Labor. Despite
objection by respondent company, Labor Arbiter Caday held in abeyance the
proceedings before him. However, on 06 June 1994, Acting Labor Secretary
Jose S. Brillantes, after finding that the issues raised would require a formal
hearing and the presentation of evidentiary matters, directed Labor Arbiters
Caday and M. Sol del Rosario to proceed with the hearing of the cases before
them and to thereafter submit their report and recommendation to his office.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation
to the then Secretary of Labor Leonardo A. Quisumbing.8 Then Secretary
Quisumbing approved and adopted the report in his Order, dated 13 August
1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter Manuel R.
Caday to be supported by substantial evidence, this Office hereby

RESOLVES to APPROVE and ADOPT the same as the decision in this

case, and judgment is hereby rendered:
(1) Declaring the 'overtime boycott' and 'work slowdown' as illegal
strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo

President

Carmelo Santos

Vice-President

Marites Montejo

Treasurer/Board Member

Rico Gonzales

Auditor

Rod Abuan

Director

Segundino Flores

Director

Hernando Clemente Director

who spearheaded and led the overtime boycott and work slowdown,
to have lost their employment status; and
(3) Finding the respondents guilty of unfair labor practice for
violating the then existing CBA which prohibits the union or any
employee during the existence of the CBA from staging a strike or
engaging in slowdown or interruption of work and ordering them to
cease and desist from further committing the aforesaid illegal acts.
Petitioner union moved for the reconsideration of the order but its motion
was denied. The union went to the Court of Appeals via a petition
for certiorari. In the now questioned decision promulgated on 29 December
1999, the appellate court dismissed the petition. The union's motion for
reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS,
LIKE THE HONORABLE PUBLIC RESPONDENT IN THE
PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT COMPLETELY DISREGARDED "PAROL
EVIDENCE RULE" IN THE EVALUATION AND APPRECIATION OF
EVIDENCE PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO
LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT

DECLARE PRIVATE RESPONDENT'S ACT OF EXTENDING

SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL INVOLVED
OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF
THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED,
THERE WAS ANY MISDEED COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO
LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT
THE SECRETARY OF LABOR AND EMPLOYMENT HAS
JURISDICTION OVER A CASE (A PETITION TO DECLARE STRIKE
ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE
THE LABOR ARBITER.9
We sustain the questioned decision.
On the matter of the authority and jurisdiction of the Secretary of Labor and
Employment to rule on the illegal strike committed by petitioner union, it is
undisputed that the petition to declare the strike illegal before Labor Arbiter
Caday was filed long before the Secretary of Labor and Employment issued
the assumption order on 14 February 1994. However, it cannot be denied
that the issues of "overtime boycott" and "work slowdown" amounting to
illegal strike before Labor Arbiter Caday are intertwined with the labor
dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner
union even asked Labor Arbiter Caday to suspend the proceedings before
him and consolidate the same with the case before the Secretary of Labor.
When Acting Labor Secretary Brillantes ordered Labor Arbiter Caday to
continue with the hearing of the illegal strike case, the parties acceded and
participated in the proceedings, knowing fully well that there was also a
directive for Labor Arbiter Caday to thereafter submit his report and
recommendation to the Secretary. As the appellate court pointed out, the
subsequent participation of petitioner union in the continuation of the
hearing was in effect an affirmation of the jurisdiction of the Secretary of
Labor.
The appellate court also correctly held that the question of the Secretary of
Labor and Employment's jurisdiction over labor and labor-related disputes
was already settled in International Pharmaceutical, Inc. vs. Hon. Secretary of
Labor and Associated Labor Union (ALU)10 where the Court declared:
In the present case, the Secretary was explicitly granted by Article
263(g) of the Labor Code the authority to assume jurisdiction over a
labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, and decide the same
accordingly. Necessarily, this authority to assume jurisdiction over
the said labor dispute must include and extend to all questions and
controversies arising therefrom, including cases over which the labor
arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but
contemplates, exceptions thereto. This is evident from the opening
proviso therein reading '(e)xcept as otherwise provided under this
Code . . .' Plainly, Article 263(g) of the Labor Code was meant to

make both the Secretary (or the various regional directors) and the
labor arbiters share jurisdiction, subject to certain conditions.
Otherwise, the Secretary would not be able to effectively and
efficiently dispose of the primary dispute. To hold the contrary may
even lead to the absurd and undesirable result wherein the Secretary
and the labor arbiter concerned may have diametrically opposed
rulings. As we have said, '(i)t is fundamental that a statute is to be
read in a manner that would breathe life into it, rather than defeat it.
In fine, the issuance of the assailed orders is within the province of
the Secretary as authorized by Article 263(g) of the Labor Code and
Article 217(a) and (5) of the same Code, taken conjointly and
rationally construed to subserve the objective of the jurisdiction
vested in the Secretary.11
Anent the alleged misappreciation of the evidence proffered by the parties, it
is axiomatic that the factual findings of the Labor Arbiter, when sufficiently
supported by the evidence on record, must be accorded due respect by the
Supreme Court.12 Here, the report and recommendation of Labor Arbiter
Caday was not only adopted by then Secretary of Labor Quisumbing but was
likewise affirmed by the Court of Appeals. We see no reason to depart from
their findings.
Petitioner union maintained that the Labor Arbiter and the appellate court
disregarded the "parol evidence rule"13when they upheld the allegation of
respondent company that the work schedule of its employees was from 6:00
a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 am. According to petitioner
union, the provisions of their CBA on working hours clearly stated that the
normal working hours were "from 7:30 a.m. to 4:30 p.m."14 Petitioner union
underscored that the regular work hours for the company was only eight (8)
hours. It further contended that the Labor Arbiter as well as the Court of
Appeals should not have admitted any other evidence contrary to what was
stated in the CBA.
The reliance on the parol evidence rule is misplaced. In labor cases pending
before the Commission or the Labor Arbiter, the rules of evidence prevailing
in courts of law or equity are not controlling.15 Rules of procedure and
evidence are not applied in a very rigid and technical sense in labor
cases.16 Hence, the Labor Arbiter is not precluded from accepting and
evaluating evidence other than, and even contrary to, what is stated in the
CBA.
In any event, the parties stipulated:
Section 1. Regular Working Hours A normal workday shall consist
of not more than eight (8) hours. The regular working hours for the
Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift
work shall be maintained; however the company may change the
prevailing work time at its discretion, should such change be
necessary in the operations of the Company. All employees shall
observe such rules as have been laid down by the company for the
purpose of effecting control over working hours.17

It is evident from the foregoing provision that the working hours may be
changed, at the discretion of the company, should such change be necessary
for its operations, and that the employees shall observe such rules as have
been laid down by the company. In the case before us, Labor Arbiter Caday
found that respondent company had to adopt a continuous 24-hour work
daily schedule by reason of the nature of its business and the demands of its
clients. It was established that the employees adhered to the said work
schedule since 1988. The employees are deemed to have waived the eighthour schedule since they followed, without any question or complaint, the
two-shift schedule while their CBA was still in force and even prior thereto.
The two-shift schedule effectively changed the working hours stipulated in
the CBA. As the employees assented by practice to this arrangement, they
cannot now be heard to claim that the overtime boycott is justified because
they were not obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:
Respondents' attempt to deny the existence of such regular overtime
schedule is belied by their own awareness of the existence of the
regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to
6:00 A.M. of the following day that has been going on since 1988.
Proof of this is the case undisputedly filed by the union for and in
behalf of its members, wherein it is claimed that the company has
not been computing correctly the night premium and overtime pay
for work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M.
to 6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro G. Salazar
during hearing on August 9, 1994). In fact, the union Vice-President
Carmelo C. Santos, demanded that the company make a
recomputation of the overtime records of the employees from 1987
(Exh. "P"). Even their own witness, union Director Enrico C.
Gonzales, testified that when in 1992 he was still a Quality Control
Inspector at the Sucat Plant of the company, his schedule was
sometime at 6:00 A.M. to 6:00 P.M., sometime at 6:00 A.M. to 2:00
P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00
A.M., and when on the 6 to 6 shifts, he received the commensurate
pay (t.s.n. pp. 7-9, hearing of January 10, 1994). Likewise, while in
the overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which were
passed around daily for the employees to sign, his name appeared
but without his signatures, he however had rendered overtime
during those dates and was paid because unlike in other
departments, it has become a habit to them to sign the overtime
schedule weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The
awareness of the respondent union, its officers and members about
the existence of the regular overtime schedule of 6:00 A.M. to 6:00
P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be further
shown in the discussion of the second issue.18
As to the second issue of whether or not the respondents have
engaged in "overtime boycott" and "work slowdown" from April 16,
1993 up to March 7, 1994, both amounting to illegal strike, the
evidence presented is equally crystal clear that the "overtime boycott"

and "work slowdown" committed by the respondents amounted to

illegal strike.
As undisputably testified to by Mr. Alessandro G. Salazar, the
company's Vice-President-Human Resources Department, sometime
in February, 1993, he was approached by the union President Nestor
Ocampo and Union Director Hernando Clemente who asked him as
to what was the stand of the company regarding the duration of the
CBA between the company and which was set to expire on July 31,
1993. He answered that the matter could be best discussed during
the formal renegotiations which anyway was to start soon. This
query was followed up sometime in March, 1993, and his answer
was the same. In early April, 1993, the union president requested for
a meeting to discuss the duration and effectivity of the CBA.
Acceding to the request, a meeting was held on April 15, 1993
wherein the union officers asked him if he would agree to make the
new CBA effective on August 1, 1993 and the term thereof to be valid
for only two (2) years. When he answered that it was still premature
to discuss the matter, the very next day, April 16, 1993, all the rank
and file employees of the company refused to follow their regular
two-shift work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to
6:00 A.M., when after the 8-hours work, they abruptly stopped
working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place
of work without sealing the containers and securing the raw
materials they were working on. When he saw the workers leaving
before the end of their shift, he asked them why and their reply was
"asked (sic) the union officers." Alarmed by the overtime boycott and
the damage it was causing the company, he requested for a meeting
with the union officers. In the meeting, he asked them why the
regular work schedule was not being followed by the employees, and
union Director Enrico Gonzales, with the support of the other union
officers, told him that if management would agree to a two-year
duration for the new CBA and an effectivity date of August 1, 1993,
all employees will return to the normal work schedule of two 12-hour
shifts. When answered that the management could not decide on the
matter at the moment and to have it discussed and agreed upon
during the formal renegotiations, the overtime boycott continued and
the employees at the same time employed a work slowdown
campaign during working hours, causing considerable delay in the
production and complaints from the clients/customers (Exh. "O",
Affidavit of Alessandro G. Salazar which formed part of his direct
testimony). This testimonial narrations of Salazar was, as earlier
said, undisputed because the respondents' counsel waived his cross
examination (t.s.n. p. 15, hearing on August 9, 1994).
Aside from the foregoing undisputed testimonies of Salazar, the
testimonies of other Department Managers pointing to the union
officers as the instigators of the overtime boycott and work
slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a union
member at the time the concerted activities of the respondents took
place, is quoted hereunder:

"2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon

na si Nestor Ocampo ang lahat ng taga-maintenance ng
bawat departamento upang dumalo sa isang miting. Sa
miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng
Unyon, na mayroon ilalabas na memo ang Unyon na naguutos sa mga empleyado ng Kompanya na mag-imbento ng
sari-saring dahilan para lang hindi sila makapagtrabaho ng
"overtime". Sinabihan rin ako ni Tessie Montejo na siya
namang Treasurer ng Unyon na 'Manny, huwag ka na lang
pumasok sa Biyernes para hindi ka masabihan ng
magtrabaho ng Sabado at Linggo' na siya namang araw ng
"overtime" ko x x x
"3. Nakalipas ang dalawang buwan at noong unang bahagi
ng Abril 1993, miniting kami ng Shop Stewards namin na
sina Ariel Abenoja, Dany Tansiongco at Vicky Baron.
Sinabihan kami na huwag ng mag-overtime pag nagbigay ng
senyas ang Unyon ng "showtime."
"4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si
Danny Tansiongco ng "showtime". Dahil dito wala ng
empleyadong nag-overtime at sabay-sabay silang umalis,
maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18,
1993 na Sabado at Linggo.
"5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel
Abenoja Shop Steward, sa opisina ng Unyon. Nadatnan ko
doon ang halos lahat ng opisyales ng Unyon na sina:
Nestor Ocampo

Presidente

Carmelo Santos

Bise-Presidente

Nanding Clemente Director

TessMontejo

Chief Steward

Segundo Flores

Director

Enrico Gonzales

Auditor

Boy Alcantara

Shop Steward

Rod Abuan

Director

at marami pang iba na hindi ko na maala-ala. Pagpasok ko,

ako'y pinaligiran ng mga opisyales ng Unyon. Tinanong ako

ni Rod Aguan kung bakit ako "nag-overtime" gayong

"Binigyan ka na namin ng instruction na huwag pumasok,
pinilit mo pa ring pumasok." "Management ka ba o
Unyonista." Sinagot ko na ako ay Unyonista. Tinanong niya
muli kung bakit ako pumasok. Sinabi ko na wala akong
maibigay na dahilan para lang hindi pumasok at "magovertime." Pagkatapos nito, ako ay pinagmumura ng mga
opisyales ng Unyon kaya't ako ay madaliang umalis.

x x x (T)he concerted activity in question would still be illicit because

contrary to the workers' explicit contractual commitment "that there
shall be no strikes, walkouts, stoppage or slowdown of work,
boycotts, secondary boycotts, refusal to handle any merchandise,
picketing, sit-down strikes of any kind, sympathetic or general
strikes, or any other interference with any of the operations of the
COMPANY during the term of x x x (their collective bargaining)
agreement."

xxx

What has just been said makes unnecessary resolution of SMC's

argument that the workers' concerted refusal to adhere to the work
schedule in force for the last several years, is a slowdown, an
inherently illegal activity essentially illegal even in the absence of a
no-strike clause in a collective bargaining contract, or statute or rule.
The Court is in substantial agreement with the petitioner's concept of
a slowdown as a "strike on the installment plan;" as a willful
reduction in the rate of work by concerted action of workers for the
purpose of restricting the output of the employer, in relation to a
labor dispute; as an activity by which workers, without a complete
stoppage of work, retard production or their performance of duties
and functions to compel management to grant their demands. The
Court also agrees that such a slowdown is generally condemned as
inherently illicit and unjustifiable, because while the employees
"continue to work and remain at their positions and accept the wages
paid to them," they at the same time "select what part of their
allotted tasks they care to perform of their own volition or refuse
openly or secretly, to the employer's damage, to do other work;" in
other words, they "work on their own terms." x x x24

xxx

xxx

Likewise, the respondents' denial of having a hand in the work

slowdown since there was no change in the performance and work
efficiency for the year 1993 as compared to the previous year was
even rebuffed by their witness Ma. Theresa Montejo, a Quality
Control Analyst. For on cross-examination, she (Montejo) admitted
that she could not answer how she was able to prepare the
productivity reports from May 1993 to February 1994 because from
April 1993 up to April 1994, she was on union leave. As such, the
productivity reports she had earlier shown was not prepared by her
since she had no personal knowledge of the reports (t.s.n. pp. 32-35,
hearing of February 27, 1995). Aside from this admission, the
comparison made by the respondents was of no moment, because
the higher production for the years previous to 1993 was reached
when the employees regularly rendered overtime work. But
undeniably, overtime boycott and work slowdown from April 16,
1993 up to March 7, 1994 had resulted not only in financial losses to
the company but also damaged its business reputation.
Evidently, from all the foregoing, respondents' unjustified unilateral
alteration of the 24-hour work schedule thru their concerted
activities of "overtime boycott" and "work slowdown" from April 16,
1993 up to March 7, 1994, to force the petitioner company to accede
to their unreasonable demands, can be classified as a strike on an
installment basis, as correctly called by petitioner company x x x19
It is thus undisputed that members of the union by their own volition
decided not to render overtime services in April 1993.20 Petitioner union even
admitted this in its Memorandum, dated 12 April 1999, filed with the Court
of Appeals, as well as in the petition before this Court, which both stated that
"(s)ometime in April 1993, members of herein petitioner, on their own volition
and in keeping with the regular working hours in the Company x x x decided
not to render overtime".21 Such admission confirmed the allegation of
respondent company that petitioner engaged in "overtime boycott" and "work
slowdown" which, to use the words of Labor Arbiter Caday, was taken as a
means to coerce respondent company to yield to its unreasonable demands.
More importantly, the "overtime boycott" or "work slowdown" by the
employees constituted a violation of their CBA, which prohibits the union or
employee, during the existence of the CBA, to stage a strike or engage in
slowdown or interruption of work.22 In Ilaw at Buklod ng Manggagawa vs.
NLRC ,23 this Court ruled:

Finally, the Court cannot agree with the proposition that respondent
company, in extending substantial separation package to some officers of
petitioner union during the pendency of this case, in effect, condoned the
illegal acts they committed.
Respondent company correctly postured that at the time these union officers
obtained their separation benefits, they were still considered employees of the
company. Hence, the company was merely complying with its legal
obligations.25 Respondent company could have withheld these benefits
pending the final resolution of this case. Yet, considering perhaps the
financial hardships experienced by its employees and the economic situation
prevailing, respondent company chose to let its employees avail of their
separation benefits. The Court views the gesture of respondent company as
an act of generosity for which it should not be punished.
WHEREFORE, the petition is DENIED DUE COURSE and the 29 December
1999 decision of the Court of Appeals is AFFIRMED.
SO ORDERED.

G.R. No. 159832

May 5, 2006

MERCEDITA
ACUA,
MYRNA
RAMONES,
and
JULIET
MENDEZ, Petitioners,
vs.
HON. COURT OF APPEALS and JOIN INTERNATIONAL CORPORATION
and/or ELIZABETH ALAON,Respondents.
DECISION
QUISUMBING, J.:
This petition seeks the review and reversal of the Court of
Appeals Decision1 dated January 27, 2003, in CA-G.R. SP No. 70724,
entitled Join International Corporation and/or Elizabeth Alaon v. National
Labor Relations Commission (Third Division), Mercedita Acua, Juliet Mendez,
and Myrna Ramones, setting aside the resolutions of the NLRC and
dismissing the complaint of petitioners.
Petitioners are Filipino overseas workers deployed by private respondent Join
International Corporation (JIC), a licensed recruitment agency, to its
principal, 3D Pre-Color Plastic, Inc., (3D) in Taiwan, Republic of China,
under a uniformly-worded employment contract for a period of two years.
Herein private respondent Elizabeth Alaon is the president of Join
International Corporation.
Sometime in September 1999, petitioners filed with private respondents
applications for employment abroad. They submitted their passports, NBI
clearances, medical clearances and other requirements and each paid a
placement fee of P14,850, evidenced by official receipts2 issued by private
respondents.
After their papers were processed, petitioners claimed they signed a
uniformly-worded employment contract3 with private respondents which
stipulated that they were to work as machine operators with a monthly
salary of NT$15,840.00, exclusive of overtime, for a period of two years.
On December 9, 1999, with 18 other contract workers they left for Taiwan.
Upon arriving at the job site, a factory owned by 3D, they were made to sign
another contract which stated that their salary was only NT$11,840.00.4They
were likewise informed that the dormitory which would serve as their living
quarters was still under construction. They were requested to temporarily
bear with the inconvenience but were assured that their dormitory would be
completed in a short time.5
Petitioners alleged that they were brought to a "small room with a cement
floor so dirty and smelling with foul odor (sic)". Forty women were jampacked
in the room and each person was given a pillow. Since the ladies comfort
room was out of order, they had to ask permission to use the mens comfort
room.6 Petitioners claim they were made to work twelve hours a day, from
8:00 p.m. to 8:00 a.m.
The petitioners averred that on December 16, 1999, due to unbearable
working conditions, they were constrained to inform management that they
were leaving. They booked a flight home, at their own expense. Before they

left, they were made to sign a written waiver.7 In addition, petitioners were
not paid any salary for work rendered on December 11-15, 1999.8
Immediately upon arrival in the Philippines, petitioners went to private
respondents office, narrated what happened, and demanded the return of
their placement fees and plane fare. Private respondents refused.
On December 28, 1999, private respondents offered a settlement. Petitioner
Mendez received P15,080.9 The next day, petitioners Acua and Ramones
went back and received P13,64010 and P16,200,11 respectively. They claim
they signed a waiver, otherwise they would not be refunded.12
On January 14, 2000, petitioners Acua and Mendez invoking Republic Act
No. 8042,13 filed a complaint for illegal dismissal and nonpayment/underpayment of salaries or wages, overtime pay, refund of
transportation fare, payment of salaries/wages for 3 months, moral and
exemplary damages, and refund of placement fee before the National Labor
Relations Commission (NLRC). Petitioner Ramones filed her complaint on
January 20, 2000.
The Labor Arbiter ruled in favor of petitioners, declaring that Myrna
Ramones, Juliet Mendez and Mercedita Acua did not resign voluntarily from
their jobs. Thus, private respondents were ordered to pay jointly and
severally, in Philippine Peso, at the rate of exchange prevailing at the time of
payment, the following:
1. MERCEDITA ACUA
a.
Unexpired
NT$95,000.00
Portion
b. Salary
days

for

2,436.92

c. Overtime pay
for 4 hrs. in 4 1,523.07
days

NT$98,960.00
d. Refund of placement fee
(Less:

Amount

received

PHP45,000.00
per 13,640.00

31,360.00

Quitclaim)

a.
Unexpired
NT$95,000.00
Portion

e. Moral damages

25,000.00

f. Exemplary damages

40,000.00

b. Salary
days

for

2,436.92

c. Overtime pay
for 4 hrs. in 4 1,523.07
days

2. JULIET C. MENDEZ
a.
Unexpired
NT$95,000.00
Portion

NT$98,960.00
b. Salary
days

for

2,436.92

d. Refund of placement fee

c. Overtime pay
for 4 hrs. in 4 1,523.07
days

(Less:
Amount
Quitclaim)

NT$98,960.00
d. Refund of placement fee
(Less:
Amount
Quitclaim)

received

PHP45,000.00
per

16,200.00

28,800.00

e. Moral damages

25,000.00

f. Exemplary damages

40,000.0015

PHP45,000.00
per 15,080.0014

29,920.00

e. Moral damages

25,000.00

f. Exemplary damages

40,000.00

3. MYRNA R. RAMONES

received

The Labor Arbiter likewise ordered the payment of attorneys fees equivalent
to ten percent (10%) of the award which totaled NT$296,880.00
and P285,080.00 The other claims were dismissed for lack of merit.
Private respondents thereafter appealed the decision to the National Labor
Relations Commission. The NLRC ruled that the inclusion of Alaon as party
respondent in this case had no basis since respondent JIC, being a juridical
person, has a legal personality, separate and distinct from its officers. 16 It
partially granted the appeal and ordered that the amounts
of P15,080, P13,640 and P16,200 received under the quitclaim by Mendez,
Acua and Ramones, respectively, be deducted from their respective awards.
They were awarded attorneys fees equivalent to ten percent (10%) of their
awarded labor-standards claims for unpaid wages and overtime pays. No
moral and exemplary damages and placement fees were awarded. 17 Private
respondents motion for partial reconsideration was denied.
On appeal, the Court of Appeals ruled for private respondents. It set aside
the resolutions dated February 26, 2002 and December 10, 2001 of the
NLRC and dismissed the complaint of petitioners.18
In their petition before us, petitioners raise the following issues:

I
Whether or not public respondent court of appeals erred and/or GRAVELY
abused its discretion, amounting to lack of jurisdiction, in taking cognizance
of the petition for certiorari filed by the private respondents, despite the fact
that the nlrcs resolution of December 10, 2001 had already become final and
executory, private respondents motion for partial reconsideration with the
nlrc having been filed out of time
II
Alternatively, whether or not public respondent court of appeals erred in
setting aside the resolutions of the nlrc, and in dismissing the complaint of
the petitioners.19
Prefatorily, petitioners aver that private respondents Verification and
Certification of the Petition for Certiorari stated that the copy of the
resolution of the NLRC dated December 10, 2001 was received on January 4,
2002 and its partial motion for reconsideration filed on January 29, 2002, or
15 days beyond the reglementary period. However, a perusal of the Partial
Motion for Reconsideration20 filed by private respondents show that the
NLRC Resolution dated December 10, 2001 was in fact received by private
respondents on January 24, 2002 and not on January 4, 2002. Hence, the
appeal was properly filed within the 10-day reglementary period.
In this petition the issue left for resolution is whether petitioners were
illegally dismissed under Rep. Act No. 8042, thus entitling them to benefits
plus damages.
The Labor Arbiter and the NLRC found that petitioners admitted they
resigned from their jobs without force, coercion, intimidation and pressure
from private respondents principal abroad.21
According to the Labor Arbiter, while it may be true that petitioners were not
coerced into giving up their jobs, the deplorable, oppressive and sub-human
working conditions drove petitioners to resign. In effect, according to the
Labor Arbiter, the petitioners did not voluntarily resign.22
The NLRC also ruled that there was constructive dismissal since working
under said conditions was unbearable.23
As we have held previously, constructive dismissal covers the involuntary
resignation resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution
in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to an employee.24
In this case, the appellate court found that petitioners did not deny that the
accommodations were not as homely as expected. In the petitioners
memorandum, they admitted that they were told by the principal, upon their
arrival, that the dormitory was still under construction and were requested to
bear with the temporary inconvenience and the dormitory would soon be
finished. We likewise note that petitioners did not refute private respondents
assertion that they had deployed approximately sixty other workers to their

principal, and to the best of their knowledge, no other worker assigned to the
same principal has resigned, much less, filed a case for illegal dismissal.25
To our mind these cited circumstances do not reflect malice by private
respondents nor do they show the principals intention to subject petitioners
to unhealthy accommodations. Under these facts, we cannot rule that there
was constructive dismissal.
Private respondents also claim that petitioners were not entitled to overtime
pay, since they had offered no proof that they actually rendered overtime
work. Petitioners, on the other hand, say that they could not show any
documentary proof since their employment records were all in the custody of
the principal employer. It was sufficient, they claim, that they alleged the
same with particularity.
On this matter, we rule for the petitioners. The claim for overtime pay should
not have been disallowed because of the failure of the petitioners to
substantiate them.26 The claim of overseas workers against foreign employers
could not be subjected to same rules of evidence and procedure easily
obtained by complainants whose employers are locally based.27 While
normally we would require the presentation of payrolls, daily time records
and similar documents before allowing claims for overtime pay, in this case,
that would be requiring the near-impossible.
To our mind, it is private respondents who could have obtained the records of
their principal to refute petitioners claim for overtime pay. By their failure to
do so, private respondents waived their defense and in effect admitted the
allegations of the petitioners.
It is a time-honored rule that in controversies between a worker and his
employer, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writing should be resolved in the workers
favor.28 The policy is to extend the applicability of the decree 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 to labor.29 Accordingly, we rule that private respondents are
solidarily liable with the foreign principal for the overtime pay claims of
petitioners.
On the award of moral and exemplary damages, we hold that such award
lacks legal basis. Moral and exemplary damages are recoverable only where
the dismissal of an employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to
morals, good customs or public policy.30 The person claiming moral damages
must prove the existence of bad faith by clear and convincing evidence, for
the law always presumes good faith.31 Petitioners allege they suffered
humiliation, sleepless nights and mental anguish, thinking how they would
pay the money they borrowed for their placement fees.32 Even so, they failed
to prove bad faith, fraud or ill motive on the part of private
respondents.33 Moral damages cannot be awarded. Without the award of
moral damages, there can be no award of exemplary damages, nor attorneys
fees.34

Quitclaims executed by the employees are commonly frowned upon as

contrary to public policy and ineffective to bar claims for the full measure of
the workers legal rights, considering the economic disadvantage of the
employee and the inevitable pressure upon him by financial
necessity.35 Nonetheless, the so-called "economic difficulties and financial
crises" allegedly confronting the employee is not an acceptable ground to
annul the compromise agreement36 unless it is accompanied by a gross
disparity between the actual claim and the amount of the settlement. 37
A perusal of the records reveals that petitioners were not in any way
deceived, coerced or intimidated into signing a quitclaim waiver in the
amounts of P13,640, P15,080 and P16,200 respectively. Nor was there a
disparity between the amount of the quitclaim and the amount actually due
the petitioners.
Conformably then the petitioners are entitled to the following amounts in
Philippine Peso at the rate of exchange prevailing at the time of payment:
1. MERCEDITA ACUA
a. Salary for 4 days

NT $ 2,436.92

NT $ 3,959.99

2. JULIET C. MENDEZ
NT $ 2,436.92

b. Overtime pay for 4 hours in 4 days 1,523.07

NT $ 3,959.99

3. MYRNA R. RAMONES

NT $ 2,436.92

b. Overtime pay for 4 hours in 4 days 1,523.07

NT $ 3,959.99
According to the Bangko Sentral Treasury Department, the prevailing
exchange rates on December 1999 was NT$1 to P1.268805. Hence, after
conversion to Philippine pesos, the amount of the quitclaim paid to
petitioners was actually higher than the amount due them.
WHEREFORE, the petition is DISMISSED, without prejudice to the filing of
illegal recruitment complaint against the respondents pursuant to Section
6(i) of The Migrant Workers and Overseas Filipino Act of 1995 (Rep. Act No.
8042).
SO ORDERED.

b. Overtime pay for 4 hours in 4 days 1,523.07

a. Salary for 4 days

a. Salary for 4 days

G.R. No. 112546 March 13, 1996

leaves. However, it appears that, during the life of the petitioner corporation,
from the beginning of its operations in 1981 until its closure in 1992, it had
been giving separation pay equivalent to thirty (30) days' pay for every year of
service. Moreover, inasmuch as the region where North Davao operated was
plagued by insurgency and other peace and order problems, the employees
had to collect their salaries at a bank in Tagum, Davao del Norte, some 58
kilometers from their workplace and about 2 1/2 hours' travel time by public
transportation; this arrangement lasted from 1981 up to 1990.

NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION

TRUST, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
ANTONIO M. VILLANUEVA and WILFREDO GUILLEMA, respondents.
PANGANIBAN, J.:p
Is a company which is forced by huge business losses to close its business,
legally required to pay separation benefits to its employees at the time of its
closure in an amount equivalent to the separation pay paid to those who
were separated when the company was still a going concern? This is the
main question brought before this Court in this petition for certiorari under
Rule 65 of the Revised Rules of Court, which seeks to reverse and set aside
the Resolutions dated July 29, 1993 1 and September 27, 1993 2 of the
National Labor Relations Commission 3 (NLRC) in NLRC CA No. M-00139593.
The Resolution dated July 29, 1993 affirmed in toto the decision of the Labor
Arbiter in RAB-11-08-00672-92 and RAB-11-08-00713-92 ordering
petitioners to pay the complainants therein certain monetary claims.
The Resolution dated September 27, 1993 denied
reconsideration of the said July 29, 1993 Resolution.

the

motion

for

The Facts
Petitioner North Davao Mining Corporation (North Davao) was incorporated
in 1974 as a 100% privately-owned company. Later, the Philippine National
Bank (PNB) became part owner thereof as a result of a conversion into equity
of a portion of loans obtained by North Davao from said bank. On June 30,
1986, PNB transferred all its loans to and equity in North Davao in favor of
the national government which, by virtue of Proclamation No. 50 dated
December 8, 1986, later turned them over to petitioner Asset Privatization
Trust (APT). As of December 31, 1990 the national government hold 81.8% of
the common stock and 100% of the preferred stock of said company.4
Respondent Wilfredo Guillema is one among several employees of North
Davao who were separated by reason of the company's closure on May 31,
1992, and who were the complainants in the cases before the respondent
labor arbiter.
On May 31, 1992, petitioner North Davao completely ceased operations due
to serious business reverses. From 1988 until its closure in 1992, North
Davao suffered net losses averaging three billion pesos (P3,000,000,000.00)
per year, for each of the five years prior to its closure. All told, as of
December 31, 1991, or five months prior to its closure, its total liabilities had
exceeded its assets by 20,392 billion pesos, as shown by its financial
statements audited by the Commission on Audit. When it ceased operations,
its remaining employees were separated and given the equivalent of 12.5
days' pay for every year of service, computed on their basic monthly pay, in
addition to the commutation to cash of their unused vacation and sick

Subsequently, a complaint was filed with respondent Labor Arbiter by

respondent Wilfredo Guillema and 271 other separated employees for: (1)
additional separation pay of 17.5 days for every year of service; (2) back
wages equivalent to two days a month; (3) transportation allowance; (4)
hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment
medical clearance; and (8) future medical allowance, all of which amounted
to P58,022,878.31 as computed by private respondent. 5
On May 6, 1993, respondent Labor Arbiter rendered a decision ordering
petitioner North Davao to pay the complainants the following:
(a) Additional separation pay of 17.5 days for every year of
service;
(b) Backwages equivalent to two (2) days a month times the
number of years of service but not to exceed three (3) years;
(c) Transportation allowance at P80 a month times the
number of years of service but not to exceed three (3) years.
The benefits awarded by respondent Labor Arbiter amounted to
P10,240,517.75. Attorney's fees equivalent to ten percent (10%) thereof were
also granted. 6
On appeal, respondent NLRC affirmed the decision in toto. Petitioner North
Davao's motion for reconsideration was likewise denied. Hence, this petition.
The Parties' Submissions and the Issues
In affirming the Labor Arbiter's decision, respondent NLRC ruled that "since
(North Davao) has been paying its employees separation pay equivalent to
thirty (30) days pay for every year of service," knowing fully well that the law
provides for a lesser separation pay, then such company policy "has ripened
into an obligation," and therefore, depriving now the herein private
respondent and others similarly situated of the same benefits would be
discriminatory. 7 Quoting from Businessday Information Systems and
Services, Inc. (BISSI) vs. NLRC, 8 it said that petitioners "may not pay
separation benefits unequally for such discrimination breeds resentment and
ill-will among those who have been treated less generously than others." It
also cited Abella vs. NLRC, 9 as authority for saying that Art. 283 of the Labor
Code protects workers in case of closure of the establishment.
To justify the award of two days a month in backwages and P80 per month of
transportation allowance, respondent Commission ruled:

As to the appellants' claim that complainants-appellees' time

spent in collecting their wages at Tagum, Davao is not
compensable allegedly because it was on official time can not
be given credence. No iota of evidence has been presented to
back up said contention. The same is true with appellants'
assertion that the claim for transportation expenses is
without basis since they were incurred by the complainants.
Appellants should have submitted the payrolls to prove that
complainants appellees were not the ones who personally
collected their wages and/or the bus/jeep trip tickets or
vouchers to show that the complainants-appellees were
provided with free transportation as claimed.
Petitioner, through the Government Corporate Counsel, raised the following
grounds for the allowance of the petition:
1. The NLRC acted with grave abuse of discretion in
affirming without legal basis the award of additional
separation pay to private respondents who were separated
due to serious business losses on the part of petitioner.
2. The NLRC acted with grave abuse of discretion in
affirming without sufficient factual basis the award of
backwages and transportation expenses to private
respondents.
3. There is no appeal, nor any plain, speedy and adequate
remedy in the ordinary course of the law.
and the following issues:
1. Whether or not an employer whose business operations
ceased due to serious business losses or financial reverses is
obliged to pay separation pay to its employees separated by
reason of such closure.
2. Whether or not time spent in collecting wages in a place
other than the place of employment is compensable
notwithstanding that the same is done during official time.
3. Whether or not private respondents are entitled to
transportation expenses in the absence of evidence that
these expenses were incurred.
The First Issue: Separation Pay
To resolve this issue, it is necessary to revisit the provision of law adverted to
by the parties in their submissions, namely, Art. 283 of the Labor Code,
which reads as follows:
Art. 283. Closure of establishment and reduction of
personnel. The employer may also terminate the
employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment

or undertaking unless the closing is for the purpose of

circumventing the provisions of this Title, by serving a
written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment
to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year. (emphasis supplied)
The underscored portion of Art. 283 governs the grant of separation benefits
"in case of closures or cessation of operation" of business establishments
"NOT due to serious business losses or financial reverses . . . ". Where,
however, the closure was due to business losses as in the instant case, in
which the aggregate losses amounted to over P20 billion the Labor Code
does not impose any obligation upon the employer to pay separation benefits,
for obvious reasons. There is no need to belabor this point. Even the public
respondents, in their Comment 10 filed by the Solicitor General, impliedly
concede this point.
However, respondents tenaciously insist on the award of separation pay,
anchoring their claim solely on petitioner North Davao's long-standing policy
of giving separation pay benefits equivalent to 30-days' pay, which policy had
been in force in the years prior to its closure. Respondents contend that, by
denying the same separation benefits to private respondent and the others
similarly situated, petitioners discriminated against them. They rely on this
Court's ruling in Businessday Information Systems and Services, Inc. (BISSI)
vs. NLRC, (supra). In said case, petitioner BISSI, after experiencing financial
reverses, decided "as a retrenchment measure" to lay-off some employees on
May 16, 1988 and gave them separation pay equivalent to one-half (1/2)
month pay for every year of service. BISSI retained some employees in an
attempt to rehabilitate its business as a trading company. However, barely
two and a half months later, these remaining employees were likewise
discharged because the company decided to cease business operations
altogether. Unlike the earlier terminated employees, the second batch
received separation pay equivalent to a full month's salary for every year of
service, plus a mid-year bonus. This Court ruled that "there was
impermissible discrimination against the private respondents in the payment
of their separation benefits. The law requires an employer to extend equal
treatment to its employees. It may not, in the guise of exercising management
prerogatives, grant greater benefits to some and less to others. . . ."
In resolving the present case, it bears keeping in mind at the outset that the
factual circumstances of BISSI are quite different from the current case. The
Court noted that BISSI continued to suffer losses even after the

retrenchment of the first batch of employees: clearly, business did not

improve despite such drastic measure. That notwithstanding, when BISSI
finally shut down, it could well afford to (and actually did) pay off its
remaining employees with MORE separation benefits as compared with those
earlier laid off; obviously, then, there was no reason for BISSI to skimp on
separation pay for the first batch of discharged employees. That it was able to
pay one-month separation benefit for employees at the time of closure of its
business meant that it must have been also in a position to pay the same
amount to those who were separated prior to closure. That it did not do so
was a wrongful exercise of management prerogatives. That is why the Court
correctly faulted it with "impermissible discrimination." Clearly, it exercised
its management prerogatives contrary to "general principles of fair play and
justice."
In the instant case however, the company's practice of giving one month's
pay for every year of service could no longer be continued precisely because
the company could not afford it anymore. It was forced to close down on
account of accumulated losses of over P20 billion. This could not be said of
BISSI. In the case of North Davao, it gave 30-days' separation pay to its
employees when it was still a going concern even if it was already losing
heavily. As a going concern, its cash flow could still have sustained the
payment of such separation benefits. But when a business enterprise
completely ceases operations, i.e., upon its death as a going business
concern, its vital lifeblood its cashflow literally dries up. Therefore, the
fact that less separation benefits ware granted when the company finally met
its business death cannot be characterized as discrimination. Such action
was dictated not by a discriminatory management option but by its complete
inability to continue its business life due to accumulated losses. Indeed, one
cannot squeeze blood out of a dry stone. Nor water out of parched land.
As already stated, Art. 283 of the Labor Code does not obligate an employer
to pay separation benefits when the closure is due to losses. In the case
before us, the basis for the claim of the additional separation benefit of 17.5
days is alleged discrimination, i.e., unequal treatment of employees, which is
proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the
facts and circumstances of the present case, the grant of a lesser amount of
separation pay to private respondent was done, not by reason of
discrimination, but rather, out of sheer financial bankruptcy a fact that is
not controlled by management prerogatives. Stated differently, the total
cessation of operation due to mind-boggling losses was a supervening fact
that prevented the company from continuing to grant the more generous
amount of separation pay. The fact that North Davao at the point of its forced
closure voluntarily paid any separation benefits at all although not
required by law and 12.5-days worth at that, should have elicited
admiration instead of condemnation. But to require it to continue being
generous when it is no longer in a position to do so would certainly be
unduly oppressive, unfair and most revolting to the conscience. As this Court
held in Manila Trading & Supply Co. vs. Zulueta, 11 and reiterated in San
Miguel Corporation vs. NLRC 12 and later, in Allied Banking Corporation
vs. Castro, 13 "(t)he law, in protecting the rights of the laborer, authorizes
neither oppression nor self-destruction of the employer."

At this juncture, we note that the Solicitor General in his Comment

challenges the petitioners' assertion that North Davao, having closed down,
no longer has the means to pay for the benefits. The Solicitor General
stresses that North Davao was among the assets transferred by PNB to the
national government, and that by virtue of Proclamation No. 50 dated
December 8, 1986, the APT was constituted trustee of this government asset.
He then concludes that "(i)t would, therefore, be incongruous to declare that
the National Government, which should always be presumed to be solvent,
could not pay now private respondents' money claims." Such argumentation
is completely misplaced. Even if the national government owned or controlled
81.8% of the common stock and 100% of the preferred stock of North Davao,
it remains only a stockholder thereof, and under existing laws and prevailing
jurisprudence, a stockholder as a rule is not directly, individually and/or
personally liable for the indebtedness of the corporation. The obligation of
North Davao cannot be considered the obligation of the national government,
hence, whether the latter be solvent or not is not material to the instant case.
The respondents have not shown that this case constitutes one of the
instances where the corporate veil may be pierced. 14 From another angle,
the national government is not the employer of private respondent and his
co-complainants, so there is no reason to expect any kind of bailout by the
national government under existing law and jurisprudence.
The Second and Third Issues:
Back Wages and Transportation Allowance
Anent the award of back wages and transportation allowance, the issues
raised in connection therewith are factual, the determination of which is best
left to the respondent NLRC. It is well settled that this Court is bound by the
findings of fact of the NLRC, so long as said findings are supported by
substantial evidence 15.
As the Solicitor General pointed out in his comment:
It is undisputed that because of security reasons, from the
time of its operations, petitioner NDMC maintained its policy
of paying its workers at a bank in Tagum, Davao del Norte,
which usually took the workers about two and a half (2 1/2)
hours of travel from the place of work and such travel time is
not official.
Records also show that on February 12, 1992, when an
inspection was conducted by the Department of Labor and
Employment at the premises of petitioner NDMC at Amacan,
Maco, Davao del Norte, it was found out that petitioners had
violated labor standards law, one of which is the place of
payment of wages (p. 109, Vol. 1, Record)
Section 4, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code provides that:
Sec. 4. Place of payment. (a) As a general rule, the place of
payment
shall
be
at
or
near
the
place
of
undertaking. Payment in a place other than the workplace
shall be permissible only under the following circumstances:

(1) When payment cannot be effected at or near the place of

work by reason of the deterioration of peace and order
conditions, or by reason of actual or impending emergencies
caused by fire, flood, epidemic or other calamity rendering
payment thereat impossible;
(2) When the employer provides free transportation to the
employees back and forth; and
(3) Under any analogous circumstances; provided that the
time spent by the employees in collecting their wages shall
be considered as compensable hours worked.

On the contrary, it will be petitioners'

burden or duty to present evidence of
compliance of the law on labor standards,
rather than for private respondents to prove
that they were not paid/provided by
petitioners
of
their
backwages
and
transportation expenses.
Other than the bare denials of petitioners, the above findings stand
uncontradicted. Indeed we are not at liberty to set aside findings of facts of
the NLRC, absent any capriciousness, arbitrariness, or abuse or complete
lack of basis. In Maya Farms Employees Organizations vs. NLRC, 16 , we held:

(b) xxx xxx xxx

This Court has consistently ruled that findings of fact of

administrative agencies ad quasi-judicial bodies which have
acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but
even finality and are binding upon this Court unless there is
a showing of grave abuse of discretion, or where it is clearly
shown that they were arrived at arbitrarily or in disregard of
the evidence on record.

(Emphasis supplied)
Accordingly, in his Order dated April 14, 1992 (p. 109, Vol.
1, Record), the Regional Director, Regional Office No. XI,
Department of Labor and Employment, Davao City, ordered
petitioner NDMC, among others, as follows:
WHEREFORE, . . . . Respondent is further
ordered to pay its workers salaries at the
plantsite at Amacan, New Leyte, Maco,
Davao del Norte or whenever not possible,
through the bank in Tagum, Davao del Norte
as already been practiced subject, however
to the provisions of Section 4 of Rule VIII,
Book III of the rules implementing the Labor
Code as amended.
Thus, public respondent Labor Arbiter Antonio M. Villanueva
correctly held that:
From the evidence on record, we find that
the hours spent by complainants in
collecting salaries at a bank in Tagum,
Davao del Norte shall be considered
compensable hours worked. Considering
further the distance between Amacan, Maco
to Tagum which is 2 1/2 hours by travel and
the risks in commuting all the time in
collecting complainants' salaries, would
justify the granting of backwages equivalent
to two (2) days in a month as prayed for.
Corollary to the above findings, and for
equitable
reasons, we
likewise
hold
respondents liable for the transportation
expenses incurred by complainants at
P40.00 round trip fare during pay days.
(p. 10, Decision; p. 207, Vol. 1, Record)

WHEREFORE, judgment is hereby rendered MODIFYING the assailed

Resolution by SETTING ASIDE and deleting the award for "additional
separation pay of 17.5 days for every year of service", and AFFIRMING it in
all other aspects. No costs.
SO ORDERED.

G.R. No. 121004 January 28, 1998

ROMEO LAGATIC, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CITYLAND DEVELOPMENT
CORPORATION, STEPHEN ROXAS, JESUS GO, GRACE LIUSON, and
ANDREW LIUSON, respondents.
ROMERO, J.:
Petitioner seeks, in this petition for certiorari under Rule 65, the reversal of
the resolution of the National Labor Relations Commission dated May 12,
1995, affirming the February 17, 1994, decision of Labor Arbiter Ricardo C.
Nora finding that petitioner had been validly dismissed by private respondent
Cityland Development Corporation (hereafter referred to as Cityland) and that
petitioner was not entitled to separation pay, premium pay and overtime pay.
The facts of the case are as follows:
Petitioner Romeo Lagatic was employed in May 1986 by Cityland, first as a
probationary sales agent, and later on as a marketing specialist. He was
tasked with soliciting sales for the company, with the corresponding duties of
accepting call-ins, referrals, and making client calls and cold calls. Cold calls
refer to the practice of prospecting for clients through the telephone
directory. Cityland, believing that the same is an effective and cost-efficient
method of finding clients, requires all its marketing specialists to make cold
calls. The number of cold calls depends on the sales generated by each: more
sales mean less cold calls. Likewise, in order to assess cold calls made by the
sales staff, as well as to determine the results thereof, Cityland requires the
submission of daily progress reports on the same.
On October 22, 1991, Cityland issued a written reprimand to petitioner for
his failure to submit cold call reports for September 10, October 1 and 10,
1991. This notwithstanding, petitioner again failed to submit cold call reports
for September 2, 5, 8, 10, 11, 12, 15, 17, 18, 19, 20, 22, and 28, as well as
for October 6, 8, 9, 10, 12, 13 and 14, 1992. Petitioner was required to
explain his inaction, with a warning that further non-compliance would
result in his termination from the company. In a reply dated October 18,
1992, petitioner claimed that the same was an honest omission brought
about by his concentration on other aspects of his job. Cityland found said
excuse inadequate and, on November 9, 1992, suspended him for three days,
with a similar warning.
Notwithstanding the aforesaid suspension and warning, petitioner again
failed to submit cold call reports for February 5, 6, 8, 10 and 12, 1993. He
was verbally reminded to submit the same and was even given up to
February 17, 1993 to do so. Instead of complying with said directive,
petitioner, on February 16, 1993, wrote a note, "TO HELL WITH COLD
CALLS! WHO CARES?" and exhibited the same to his co-employees. To
worsen matters, he left the same lying on his desk where everyone could see
it.

On February 23, 1993, petitioner received a memorandum requiring him to

explain why Cityland should not make good its previous warning for his
failure to submit cold call reports, as well as for issuing the written
statement aforementioned. On February 24, 1993, he sent a letter-reply
alleging that his failure to submit cold call reports should trot be deemed as
gross insubordination. He denied any knowledge of the damaging statement,
"TO HELL WITH COLD CALLS!"
Finding petitioner guilty of gross insubordination, Cityland served a notice of
dismissal upon him on February 26, 1993. Aggrieved by such dismissal,
petitioner filed a complaint against Cityland for illegal dismissal, illegal
deduction, underpayment, overtime and rest day pay, damages and
attorney's fees. The labor arbiter dismissed the petition for lack of merit. On
appeal, the same was affirmed by the NLRC; hence the present recourse.
Petitioner raises the following issues:
1. WHETHER OR NOT RESPONDENT NLRC GRAVELY ABUSED ITS
DISCRETION 1N NOT FINDING THAT PETITIONER WAS ILLEGALLY
DISMISSED;
2. WHETHER OR NOT RESPONDENT NLRC GRAVELY ABUSED ITS
DISCRETION IN RULING THAT PETITIONER IS NOT ENTITLED TO
SALARY DIFFERENTIALS, BACKWAGES, SEPARATION PAY,
OVERTIME PAY, REST DAY PAY, UNPAID COMMISSIONS, MORAL
AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES.
The petition lacks merit.
To constitute a valid dismissal from employment, two requisites must be met,
namely: (1) the employee must be afforded due process, and (2) the dismissal
must be for a valid cause. 1 In the case at bar, petitioner contends that his
termination was illegal on both substantive and procedural aspects. It is his
submission that the failure to submit a few cold calls does not qualify as
willful disobedience, as, in his experience, cold calls are one of the least
effective means of soliciting sales. He thus asserts that a couple of cold call
reports need not be accorded such tremendous significance as to warrant his
dismissal for failure to submit them on time.
These arguments are specious. Petitioner loses sight of the fact that "(e)xcept
as provided for, or limited by, special laws, an employer is free to regulate,
according
to
his
discretion
and
judgment,
all
aspects
of
employment."2 Employers may, thus, make reasonable rules and regulations
for the government of their employees, and when employees, with knowledge
of an established rule, enter the service, the rule becomes a part of the
contract of employment. 3 It is also generally recognized that company
policies and regulations, unless shown to be grossly oppressive or contrary to
law, are generally valid and binding on the parties and must be complied
with. 4 "Corollarily, an employee may be validly dismissed for violation of a
reasonable company rule or regulation adopted for the conduct of the
company business. An employer cannot rationally be expected to retain the
employment of a person whose . . . lack of regard for his employer's rules . . .
has so plainly and completely been bared." 5 Petitioner's continued infraction
of company policy requiring cold call reports, as evidenced by the 28

instances of non-submission of aforesaid reports, justifies his dismissal. He

cannot be allowed to arrogate unto himself the privilege of setting company
policy on the effectivity of solicitation methods. To do so would be to sanction
oppression and the self-destruction of the employer.
Moreover, petitioner made it worse for himself when he wrote the statement,
"TO HELL WITH COLD CALLS! WHO CARES?" When required to explain, he
merely denied ally knowledge of the same. Cityland, on the other hand,
submitted the affidavits of his co-employees attesting to his authorship of the
same. Petitioner's only defense is denial. The rule, however, is that denial, if
unsubstantiated by clear and convincing evidence, is negative and selfserving evidence which has no weight in law. 6 More telling, petitioner, while
making much capital out of his lack of opportunity to confront the affiants,
never, in all of his pleadings, categorically denied writing the same. He only
denied knowledge of the allegation that he issued such a statement.
Based on the foregoing, we find petitioner guilty of willful disobedience.
Willful disobedience requires the concurrence of at least two requisites: the
employee's assailed conduct must have been willful or intentional, the
willfulness being characterized by a wrongful and perverse attitude; and the
order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to
discharge. 7
Petitioner's failure to comply with Cityland's policy of requiring cold call
reports is clearly willful, given the 28 instances of his failure to do so, despite
a previous reprimand and suspension. More than that, his written statement
shows his open defiance and disobedience to lawful rules and regulations of
the company. Likewise, said company policy of requiring cold calls and the
concomitant reports thereon is clearly reasonable and lawful, sufficiently
known to petitioner, and in connection with the duties which he had been
engaged to discharge. There is, thus, just cause for his dismissal.
On the procedural aspect, petitioner claims that he was denied due process.
Well settled is the dictum that the twin requirements of notice and hearing
constitute the elements of due process in the dismissal of employees. Thus,
the employer must furnish the employee with two written notices before the
termination of employment can be effected. The first apprises the employee of
the particular acts or omissions for which his dismissal is sought; the second
informs him of the employer's decision to dismiss him. 8
In the case at bar, petitioner was notified of the charges against him in a
memorandum dated February 19, 1993, which he received on February 23,
1993. He submitted a letter-reply thereto on February 24, 1993, wherein he
asked that his failure to submit cold call reports be not interpreted as gross
insubordination. 9 He was given notice of his termination on February 26,
1993. This chronology of events clearly show that petitioner was served with
the required written notices.
Nonetheless, petitioner contends that he has not been given the benefit of an
effective hearing. He alleges that he was not adequately informed of the
results of the investigation conducted by the company, nor was he able to
confront the affiants who attested to his writing the statement, "TO HELL

WITH COLD CALLS!" While we have held that in dismissing employees, the
employee must be afforded ample opportunity to be heard, "ample
opportunity" connoting every kind of assistance that management must
afford the employee to enable him to prepare adequately for his defense, 10 it
is also true that the requirement of a hearing is complied with as long as
there was an opportunity to be heard, and not necessarily that an actual
hearing be conducted. 11 Petitioner had an opportunity to be heard as he
submitted a letter-reply to the charge. He, however, adduced no other
evidence on his behalf. In fact, he admitted his failure to submit cold call
reports, praying that the same be not considered as gross insubordination.
As held by this Court in Bernardo vs. NLRC, 12 there is no necessity for a
formal hearing where an employee admits responsibility for an alleged
misconduct. As to the written statement, "TO HELL WITH COLD CALLS!,"
petitioner merely denied knowledge of the same. He failed to submit
controverting evidence thereon although the memorandum of February 19,
1993, clearly charged that he had shown said statement to several sales
personnel. Denials are weak forms of defenses, particularly when they are
not substantiated by clear and convincing evidence. Given the foregoing, we
hold that petitioner's constitutional right to due process has not been
violated.
As regards the second issue, petitioner contends that he is entitled to
amounts illegally deducted from his commissions, to unpaid overtime, rest
day and holiday premiums, to moral and exemplary damages, as well as
attorney's fees and costs.
Petitioner anchors his claim for illegal deductions of commissions on
Cityland's formula for determining commissions, viz:
COMMISSIONS = Credits Earned (CE) less CUMULATIVE NEGATIVE
(CN) less AMOUNTS RECEIVED (AR)
= (CE - CN) - AR where CE = Monthly Sales Volume x
Commission
Rate
(CR)
AR
=
Monthly
Compensation/.75
CR = 4.5%
Under said formula, an increase in salary would entail an increase in AR,
thus diminishing the amount of commissions that petitioner would receive.
Petitioner construes the same as violative of the non-diminution of benefits
clause embodied in the wage orders applicable to petitioner. Inasmuch as
Cityland has paid petitioner commissions based on a higher AR each time
there has been a wage increase, the difference between the original AR and
the subsequent ARs have been viewed by petitioner as illegal deductions, to
wit:
Wage
Order

Date
of
Effectivity

Amount
of
Increase

Corresponding
Increase
in
Quota (AR)

Duration
Up
To
2/26/93

Total

P265.75

62 mos.

the privilege of sales personnel to earn a commission, not that they are
entitled to a fixed amount thereof.

P
96,973.22 13

With respect to petitioner's claims for overtime pay, rest day pay and holiday
premiums, Cityland maintains that Saturday and Sunday call-ins were
voluntary activities on the part of sales personnel who wanted to realize more
sales and thereby earn more commissions. It is their contention that sales
personnel were clamoring for the "privilege" to attend Saturday and Sunday
call-ins, as well as to entertain walk-in clients at project sites during
weekends, that Cityland had to stagger the schedule of sales employees to
give everyone a chance to do so. But simultaneously, Cityland claims that the
same were optional because call-ins and walk-ins were not scheduled every
weekend. If there really were a clamor on the part of sales staff to
"voluntarily" work on weekends, so much so that Cityland needed to
schedule them, how come no call-ins or walk-ins were scheduled on some
weekends?

1/1/88

RA
6727

7/1/89

780.75

1,040.00

44 mos.

45,760.00

NCR
01

11/1/90

785.75

1,046.67

28 mos.

29,306.76

NCR
01-A

P 353.33

RA
6640

Grand Total

P
1,906.46

Petitioner even goes as far as to claim that with the use of Cityland's formula,
he is indebted to the company in the amount of P1,410.00, illustrated as
follows:
Petitioner' s Basic Salary = P 4,230.00
= 4,230.00/.75
A.R. = 5,640.00
Petitioner's Basic Salary AR = P 1,410.00
While it is true that an increase in salary would cause an increase in AR,
with the same being deducted from credits earned, thus lessening his
commissions, the fact remains that petitioner still receives his basic salary
without deductions. Petitioner's argument that he is indebted to respondent
by P1,410.00 is fallacious as his basic salary remains the same and he
continues to receive the same, regardless of his collections. The failure to
attain a CE equivalent to the AR of P5,640.00 only means that the difference
would be credited to his CN for the next month. Clearly, the purpose of the
same is to encourage sales personnel to accelerate their sales in order for
them to earn commissions.
Additionally, there is no law which requires employers to pay commissions,
and when they do so, as stated in the letter-opinion of the Department of
Labor and Employment dated February 19, 1993, "there is no law which
prescribes a method for computing commissions. The determination of the
amount of commissions is the result of collective bargaining negotiations,
individual employment contracts or established employer practice." 14 Since
the formula for the computation of commissions was presented to and
accepted by petitioner, such prescribed formula is in order. As to the
allegation that said formula diminishes the benefits being received by
petitioner whenever there is a wage increase, it must be noted that his
commissions are not meant to be in a fixed amount. In fact, there was no
assurance that he would receive any commission at all. Non-diminution of
benefits, as applied here, merely means that the company may not remove

In addition to the above, the labor arbiter and the NLRC sanctioned
respondent's practice of offsetting rest day or holiday work with equivalent
time on regular workdays on the ground that the same is authorized by
Department Order 21, Series of 1990. As correctly pointed out by petitioner,
said D.O. was misapplied in this case. The D.O. involves the shortening of
the workweek from six days to five days but with prolonged hours on those
five days. Under this scheme, non-payment of overtime premiums was
allowed in exchange for longer weekends for employees. In the instant case,
petitioner's workweek was never compressed. Instead, he claims payment for
work over and above his normal 5 1/2 days of work in a week. Applying by
analogy the principle that overtime cannot be offset by undertime, to allow
off-setting would prejudice the worker. He would be deprived of the
additional pay for the rest day work he has rendered and which is utilized to
offset his equivalent time off on regular workdays. To allow Cityland to do so
would be to circumvent the law on payment of premiums for rest day and
holiday work.
Notwithstanding the foregoing discussion, petitioner failed to show his
entitlement to overtime and rest day pay due, to the lack of sufficient
evidence as to the number of days and hours when he rendered overtime and
rest day work. Entitlement to overtime pay must first be established by proof
that said overtime work was actually performed, before an employee may
avail of said benefit. 15 To support his allegations, petitioner submitted in
evidence minutes of meetings wherein he was assigned to work on weekends
and holidays at Cityland's housing projects. Suffice it to say that said
minutes do not prove that petitioner actually worked on said dates. It is a
basic rule in evidence that each party must prove his affirmative
allegations. 16 This petitioner failed to do. He explains his failure to submit
more concrete evidence as being due to the decision rendered by the labor
arbiter without resolving his motion for the production and inspection of
documents in the control of Cityland. Petitioner conveniently forgets that on
January 27, 1994, he agreed to submit the case for decision based on the
records available to the labor arbiter. This amounted to an abandonment of
above-said motion, which was then pending resolution.

Lastly, with the finding that petitioner's dismissal was for a just and valid
cause, his claims for moral and exemplary damages, as well as attorney's
fees, must fail.
WHEREFORE, premises considered, the assailed Resolution is AFFIRMED
and this petition is hereby DISMISSED for lack of merit. Costs against
petitioner.
SO ORDERED.

G.R. No. L-65482 December 1, 1987

JOSE RIZAL COLLEGE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE
OF TEACHERS/OFFICE WORKERS,respondents.
PARAS, J.:
This is a petition for certiorari with prayer for the issuance of a writ of
preliminary injunction, seeking the annulment of the decision of the National
Labor Relations Commission * in NLRC Case No. RB-IV 23037-78 (Case No.
R4-1-1081-71) entitled "National Alliance of Teachers and Office Workers and
Juan E. Estacio, Jaime Medina, et al. vs. Jose Rizal College" modifying the
decision of the Labor Arbiter as follows:
WHEREFORE, in view of the foregoing considerations, the
decision appealed from is MODIFIED, in the sense that
teaching personnel paid by the hour are hereby declared to
be entitled to holiday pay.
SO ORDERED.
The factual background of this case which is undisputed is as follows:
Petitioner is a non-stock, non-profit educational institution duly organized
and existing under the laws of the Philippines. It has three groups of
employees categorized as follows: (a) personnel on monthly basis, who receive
their monthly salary uniformly throughout the year, irrespective of the actual
number of working days in a month without deduction for holidays; (b)
personnel on daily basis who are paid on actual days worked and they
receive unworked holiday pay and (c) collegiate faculty who are paid on the
basis of student contract hour. Before the start of the semester they sign
contracts with the college undertaking to meet their classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to
1977, private respondent National Alliance of Teachers and Office Workers
(NATOW) in behalf of the faculty and personnel of Jose Rizal College filed
with the Ministry of Labor a complaint against the college for said alleged
non-payment of holiday pay, docketed as Case No. R04-10-81-72. Due to the
failure of the parties to settle their differences on conciliation, the case was
certified for compulsory arbitration where it was docketed as RB-IV-2303778 (Rollo, pp. 155-156).
After the parties had submitted their respective position papers, the Labor
Arbiter ** rendered a decision on February 5, 1979, the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. The faculty and personnel of the respondent Jose Rizal
College who are paid their salary by the month uniformly in
a school year, irrespective of the number of working days in
a month, without deduction for holidays, are presumed to be

already paid the 10 paid legal holidays and are no longer

entitled to separate payment for the said regular holidays;
2. The personnel of the respondent Jose Rizal College who
are paid their wages daily are entitled to be paid the 10
unworked regular holidays according to the pertinent
provisions of the Rules and Regulations Implementing the
Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who
by contract are paid compensation per student contract hour
are not entitled to unworked regular holiday pay considering
that these regular holidays have been excluded in the
programming of the student contact hours. (Rollo. pp. 26-27)
On appeal, respondent National Labor Relations Commission in a decision
promulgated on June 2, 1982, modified the decision appealed from, in the
sense that teaching personnel paid by the hour are declared to be entitled to
holiday pay (Rollo. p. 33).
Hence, this petition.
The sole issue in this case is whether or not the school faculty who according
to their contracts are paid per lecture hour are entitled to unworked holiday
pay.
Labor Arbiter Julio Andres, Jr. found that faculty and personnel employed by
petitioner who are paid their salaries monthly, are uniformly paid throughout
the school year regardless of working days, hence their holiday pay are
included therein while the daily paid employees are renumerated for work
performed during holidays per affidavit of petitioner's treasurer (Rollo, pp.
72-73).
There appears to be no problem therefore as to the first two classes or
categories of petitioner's workers.
The problem, however, lies with its faculty members, who are paid on an
hourly basis, for while the Labor Arbiter sustains the view that said
instructors and professors are not entitled to holiday pay, his decision was
modified by the National Labor Relations Commission holding the contrary.
Otherwise stated, on appeal the NLRC ruled that teaching personnel paid by
the hour are declared to be entitled to holiday pay.
Petitioner maintains the position among others, that it is not covered by
Book V of the Labor Code on Labor Relations considering that it is a nonprofit institution and that its hourly paid faculty members are paid on a
"contract" basis because they are required to hold classes for a particular
number of hours. In the programming of these student contract hours, legal
holidays are excluded and labelled in the schedule as "no class day. " On the
other hand, if a regular week day is declared a holiday, the school calendar is
extended to compensate for that day. Thus petitioner argues that the advent
of any of the legal holidays within the semester will not affect the faculty's
salary because this day is not included in their schedule while the calendar
is extended to compensate for special holidays. Thus the programmed
number of lecture hours is not diminished (Rollo, pp. 157- 158).

The Solicitor General on the other hand, argues that under Article 94 of the
Labor Code (P.D. No. 442 as amended), holiday pay applies to all employees
except those in retail and service establishments. To deprive therefore
employees paid at an hourly rate of unworked holiday pay is contrary to the
policy considerations underlying such presidential enactment, and its
precursor, the Blue Sunday Law (Republic Act No. 946) apart from the
constitutional mandate to grant greater rights to labor (Constitution, Article
II, Section 9). (Reno, pp. 76-77).

On the other hand, both the law and the Implementing Rules governing
holiday pay are silent as to payment on Special Public Holidays.

In addition, respondent National Labor Relations Commission in its decision

promulgated on June 2, 1982, ruled that the purpose of a holiday pay is
obvious; that is to prevent diminution of the monthly income of the workers
on account of work interruptions. In other words, although the worker is
forced to take a rest, he earns what he should earn. That is his holiday pay.
It is no excuse therefore that the school calendar is extended whenever
holidays occur, because such happens only in cases of special holidays
(Rollo, p. 32).

It is readily apparent that the declared purpose of the holiday pay which is
the prevention of diminution of the monthly income of the employees on
account of work interruptions is defeated when a regular class day is
cancelled on account of a special public holiday and class hours are held on
another working day to make up for time lost in the school calendar.
Otherwise stated, the faculty member, although forced to take a rest, does
not earn what he should earn on that day. Be it noted that when a special
public holiday is declared, the faculty member paid by the hour is deprived of
expected income, and it does not matter that the school calendar is extended
in view of the days or hours lost, for their income that could be earned from
other sources is lost during the extended days. Similarly, when classes are
called off or shortened on account of typhoons, floods, rallies, and the like,
these faculty members must likewise be paid, whether or not extensions are
ordered.

Subject holiday pay is provided for in the Labor Code (Presidential Decree No.
442, as amended), which reads:

Petitioner alleges that it was deprived of due process as it was not notified of
the appeal made to the NLRC against the decision of the labor arbiter.

Art. 94. Right to holiday pay (a) Every worker shall be paid
his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less
than ten (10) workers;

The Court has already set forth what is now known as the "cardinal primary"
requirements of due process in administrative proceedings, to wit: "(1) the
right to a hearing which includes the right to present one's case and submit
evidence in support thereof; (2) the tribunal must consider the evidence
presented; (3) the decision must have something to support itself; (4) the
evidence must be substantial, and substantial evidence means such evidence
as a reasonable mind might accept as adequate to support a conclusion; (5)
the decision must be based on the evidence presented at the hearing, or at
least contained in the record and disclosed to the parties affected; (6) the
tribunal or body of any of its judges must act on its or his own independent
consideration of the law and facts of the controversy, and not simply accept
the views of a subordinate; (7) the board or body should in all controversial
questions, render its decisions in such manner that the parties to the
proceeding can know the various issues involved, and the reason for the
decision rendered. " (Doruelo vs. Commission on Elections, 133 SCRA 382
[1984]).

(b) The employer may require an employee to work on any

holiday but such employee shall be paid a compensation
equivalent to twice his regular rate; ... "
and in the Implementing Rules and Regulations, Rule IV, Book III,
which reads:
SEC. 8. Holiday pay of certain employees. (a) Private
school teachers, including faculty members of colleges and
universities, may not be paid for the regular holidays during
semestral vacations. They shall, however, be paid for the
regular holidays during Christmas vacations. ...
Under the foregoing provisions, apparently, the petitioner, although a nonprofit institution is under obligation to give pay even on unworked regular
holidays to hourly paid faculty members subject to the terms and conditions
provided for therein.
We believe that the aforementioned implementing rule is not justified by the
provisions of the law which after all is silent with respect to faculty members
paid by the hour who because of their teaching contracts are obliged to work
and consent to be paid only for work actually done (except when an
emergency or a fortuitous event or a national need calls for the declaration of
special holidays). Regular holidays specified as such by law are known to
both school and faculty members as no class days;" certainly the latter do
not expect payment for said unworked days, and this was clearly in their
minds when they entered into the teaching contracts.

The records show petitioner JRC was amply heard and represented in the
instant proceedings. It submitted its position paper before the Labor Arbiter
and the NLRC and even filed a motion for reconsideration of the decision of
the latter, as well as an "Urgent Motion for Hearing En Banc" (Rollo, p. 175).
Thus, petitioner's claim of lack of due process is unfounded.
PREMISES CONSIDERED, the decision of respondent National Labor
Relations Commission is hereby set aside, and a new one is hereby
RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay
for regular holidays, whether the same be during the regular semesters of the
school year or during semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly
rate on days declared as special holidays or for some reason classes are

called off or shortened for the hours they are supposed to have taught,
whether extensions of class days be ordered or not; in case of extensions said
faculty members shall likewise be paid their hourly rates should they teach
during said extensions.
SO ORDERED.

G.R. No. L-52415 October 23, 1984

retail and service establishments regularly

employing less than 10 workers.

INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION

(IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and
INSULAR BANK OF ASIA AND AMERICA,respondents.

(b) The term "holiday" as used in this

chapter, shall include: New Year's Day,
Maundy Thursday, Good Friday, the ninth of
April the first of May, the twelfth of June,
the fourth of July, the thirtieth of November,
the twenty-fifth and the thirtieth of
December and the day designated by law for
holding a general election.

Sisenando R. Villaluz, Jr. for petitioner.

Abdulmaid Kiram Muin colloborating counsel for petitioner.
The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law
Office and Sycip, Salazar, Feliciano & Hernandez Law Office for respondents.
MAKASIAR, J.:
This is a petition for certiorari to set aside the order dated November 10,
1979, of respondent Deputy Minister of Labor, Amado G. Inciong, in NLRC
case No. RB-IV-1561-76 entitled "Insular Bank of Asia and America
Employees' Union (complainant-appellee), vs. Insular Bank of Asia and
America" (respondent-appellant), the dispositive portion of which reads as
follows: t.hqw
xxx xxx xxx
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set
aside and a new judgment. promulgated dismissing the
instant case for lack of merit (p. 109 rec.).
The antecedent facts culled from the records are as follows:
On June 20, 1975, petitioner filed a complaint against the respondent bank
for the payment of holiday pay before the then Department of Labor, National
Labor Relations Commission, Regional Office No. IV in Manila. Conciliation
having failed, and upon the request of both parties, the case was certified for
arbitration on July 7, 1975 (p. 18, NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in
the above-entitled case, granting petitioner's complaint for payment of
holiday pay. Pertinent portions of the decision read: t.hqw
xxx xxx xxx
The records disclosed that employees of respondent bank
were not paid their wages on unworked regular holidays as
mandated by the Code, particularly Article 208, to
wit: t.hqw
Art. 208. Right to holiday pay.
(a) Every worker shall be paid his regular
daily wage during regular holidays, except in

xxx xxx xxx

This conclusion is deduced from the fact that the daily rate of
pay of the bank employees was computed in the past with the
unworked regular holidays as excluded for purposes of
determining
the
deductible
amount
for
absences
incurred Thus, if the employer uses the factor 303 days as a
divisor in determining the daily rate of monthly paid
employee, this gives rise to a presumption that the monthly
rate does not include payments for unworked regular
holidays. The use of the factor 303 indicates the number of
ordinary working days in a year (which normally has 365
calendar days), excluding the 52 Sundays and the 10 regular
holidays. The use of 251 as a factor (365 calendar days less
52 Saturdays, 52 Sundays, and 10 regular holidays) gives
rise likewise to the same presumption that the unworked
Saturdays, Sundays and regular holidays are unpaid. This
being the case, it is not amiss to state with certainty that the
instant claim for wages on regular unworked holidays is
found to be tenable and meritorious.
WHEREFORE, judgment is hereby rendered:
(a) xxx xxxx xxx
(b) Ordering respondent to pay wages to all its employees for
all regular h(olidays since November 1, 1974 (pp. 97-99, rec.,
underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it complied
with the order of Arbiter Ricarte T. Soriano by paying their holiday pay up to
and including January, 1976.
On December 16, 1975, Presidential Decree No. 850 was promulgated
amending, among others, the provisions of the Labor Code on the right to
holiday pay to read as follows: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be
paid his regular daily wages during regular holidays, except
in retail and service establishments regularly employing less
than ten (10) workers;

(b) The employer may require an employee to work on any

holiday but such employee shall be paid a compensation
equivalent to twice his regular rate and
(c) As used in this Article, "holiday" includes New Year's Day,
Maundy Thursday, Good Friday, the ninth of April, the first
of May, the twelfth of June, the fourth of July, the thirtieth
of November, the twenty-fifth and the thirtieth of December,
and the day designated by law for holding a general election.
Accordingly, on February 16, 1976, by authority of Article 5 of the same
Code, the Department of Labor (now Ministry of Labor) promulgated the rules
and regulations for the implementation of holidays with pay. The
controversial section thereof reads: t.hqw
Sec. 2. Status of employees paid by the month. Employees
who are uniformly paid by the month, irrespective of the
number of working days therein, with a salary of not less
than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether
worked or not.
For this purpose, the monthly minimum wage shall not be
less than the statutory minimum wage multiplied by 365
days divided by twelve" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary
of Labor (now Minister) interpreting the above-quoted rule, pertinent portions
of which read: t.hqw
xxx xxx xxx
The ten (10) paid legal holidays law, to start with, is intended
to benefit principally daily employees. In the case of monthly,
only those whose monthly salary did not yet include
payment for the ten (10) paid legal holidays are entitled to
the benefit.
Under the rules implementing P.D. 850, this policy has been
fully clarified to eliminate controversies on the entitlement of
monthly paid employees, The new determining rule is this: If
the monthly paid employee is receiving not less than P240,
the maximum monthly minimum wage, and his monthly pay
is uniform from January to December, he is presumed to be
already paid the ten (10) paid legal holidays. However, if
deductions are made from his monthly salary on account of
holidays in months where they occur, then he is still entitled
to the ten (10) paid legal holidays. ..." (emphasis supplied).
Respondent bank, by reason of the ruling laid down by the aforecited rule
implementing Article 94 of the Labor Code and by Policy Instruction No. 9,
stopped the payment of holiday pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of execution to
enforce the arbiter's decision of August 25, 1975, whereby the respondent

bank was ordered to pay its employees their daily wage for the unworked
regular holidays.
On September 10, 1975, respondent bank filed an opposition to the motion
for a writ of execution alleging, among others, that: (a) its refusal to pay the
corresponding unworked holiday pay in accordance with the award of Labor
Arbiter Ricarte T. Soriano dated August 25, 1975, is based on and justified
by Policy Instruction No. 9 which interpreted the rules implementing P. D.
850; and (b) that the said award is already repealed by P.D. 850 which took
effect on December 16, 1975, and by said Policy Instruction No. 9 of the
Department of Labor, considering that its monthly paid employees are not
receiving less than P240.00 and their monthly pay is uniform from January
to December, and that no deductions are made from the monthly salaries of
its employees on account of holidays in months where they occur (pp. 64-65,
NLRC rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a
writ of execution, issued an order enjoining the respondent bank to continue
paying its employees their regular holiday pay on the following grounds: (a)
that the judgment is already final and the findings which is found in the
body of the decision as well as the dispositive portion thereof is res
judicata or is the law of the case between the parties; and (b) that since the
decision had been partially implemented by the respondent bank, appeal
from the said decision is no longer available (pp. 100-103, rec.).
On November 17, 1976, respondent bank appealed from the above-cited
order of Labor Arbiter Soriano to the National Labor Relations Commission,
reiterating therein its contentions averred in its opposition to the motion for
writ of execution. Respondent bank further alleged for the first time that the
questioned order is not supported by evidence insofar as it finds that
respondent bank discontinued payment of holiday pay beginning January,
1976 (p. 84, NLRC rec.).
On June 20, 1978, the National Labor Relations Commission promulgated its
resolution en banc dismissing respondent bank's appeal, the dispositive
portion of which reads as follows: t.hqw
In view of the foregoing, we hereby resolve to dismiss, as we
hereby dismiss, respondent's appeal; to set aside Labor
Arbiter Ricarte T. Soriano's order of 18 October 1976 and, as
prayed for by complainant, to order the issuance of the
proper writ of execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only on February
9, 1979 or almost eight. (8) months after it was promulgated, while copies
were served on the respondent bank on February 13, 1979.
On February 21, 1979, respondent bank filed with the Office of the Minister
of Labor a motion for reconsideration/appeal with urgent prayer to stay
execution, alleging therein the following: (a) that there is prima facie evidence
of grave abuse of discretion, amounting to lack of jurisdiction on the part of
the National Labor Relations Commission, in dismissing the respondent's
appeal on pure technicalities without passing upon the merits of the appeal

and (b) that the resolution appealed from is contrary to the law and
jurisprudence (pp. 260-274, NLRC rec.).

Code's provisions on holiday pay, they in effect amended them by enlarging

the scope of their exclusion (p. 1 1, rec.).

On March 19, 1979, petitioner filed its opposition to the respondent bank's
appeal and alleged the following grounds: (a) that the office of the Minister of
Labor has no jurisdiction to entertain the instant appeal pursuant to the
provisions of P. D. 1391; (b) that the labor arbiter's decision being final,
executory and unappealable, execution is a matter of right for the petitioner;
and (c) that the decision of the labor arbiter dated August 25, 1975 is
supported by the law and the evidence in the case (p. 364, NLRC rec.).

Article 94 of the Labor Code, as amended by P.D. 850, provides: t.hqw

On July 30, 1979, petitioner filed a second motion for execution pending
appeal, praying that a writ of execution be issued by the National Labor
Relations Commission pending appeal of the case with the Office of the
Minister of Labor. Respondent bank filed its opposition thereto on August 8,
1979.
On August 13, 1979, the National Labor Relations Commission issued an
order which states: t.hqw
The Chief, Research and Information Division of this
Commission is hereby directed to designate a SocioEconomic Analyst to compute the holiday pay of the
employees of the Insular Bank of Asia and America from
April 1976 to the present, in accordance with the Decision of
the Labor Arbiter dated August 25, 1975" (p. 80, rec.).
On November 10, 1979, the Office of the Minister of Labor, through Deputy
Minister Amado G. Inciong, issued an order, the dispositive portion of which
states: t.hqw
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set
aside and a new judgment promulgated dismissing the
instant case for lack of merit (p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent Amado G.
Inciong with abuse of discretion amounting to lack or excess of jurisdiction.
The issue in this case is: whether or not the decision of a Labor Arbiter
awarding payment of regular holiday pay can still be set aside on appeal by
the Deputy Minister of Labor even though it has already become final and
had been partially executed, the finality of which was affirmed by the
National Labor Relations Commission sitting en banc, on the basis of an
Implementing Rule and Policy Instruction promulgated by the Ministry of
Labor long after the said decision had become final and executory.
WE find for the petitioner.
I
WE agree with the petitioner's contention that Section 2, Rule IV, Book III of
the implementing rules and Policy Instruction No. 9 issued by the then
Secretary of Labor are null and void since in the guise of clarifying the Labor

Art. 94. Right to holiday pay. (a) Every worker shall be

paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less
than ten (10) workers. ...
The coverage and scope of exclusion of the Labor Code's holiday pay
provisions is spelled out under Article 82 thereof which reads: t.hqw
Art. 82. Coverage. The provision of this Title shall apply to
employees in all establishments and undertakings, whether
for profit or not, but not to government employees, managerial
employees, field personnel members of the family of the
employer who are dependent on him for support domestic
helpers, persons in the personal service of another, and
workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly paid employees are
not excluded from the benefits of holiday pay. However, the implementing
rules on holiday pay promulgated by the then Secretary of Labor excludes
monthly paid employees from the said benefits by inserting, under Rule IV,
Book Ill of the implementing rules, Section 2, which provides that:
"employees who are uniformly paid by the month, irrespective of the number
of working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in the
month whether worked or not. "
Public respondent maintains that "(T)he rules implementing P. D. 850 and
Policy Instruction No. 9 were issued to clarify the policy in the
implementation of the ten (10) paid legal holidays. As interpreted, 'unworked'
legal holidays are deemed paid insofar as monthly paid employees are
concerned if (a) they are receiving not less than the statutory minimum wage,
(b) their monthly pay is uniform from January to December, and (c) no
deduction is made from their monthly salary on account of holidays in
months where they occur. As explained in Policy Instruction No, 9, 'The ten
(10) paid legal holidays law, to start with, is intended to benefit principally
daily paid employees. In case of monthly, only those whose monthly salary
did not yet include payment for the ten (10) paid legal holidays are entitled to
the benefit' " (pp. 340-341, rec.). This contention is untenable.
It is elementary in the rules of statutory construction that when the language
of the law is clear and unequivocal the law must be taken to mean exactly
what it says. In the case at bar, the provisions of the Labor Code on the
entitlement to the benefits of holiday pay are clear and explicit - it provides
for both the coverage of and exclusion from the benefits. In Policy Instruction
No. 9, the then Secretary of Labor went as far as to categorically state that
the benefit is principally intended for daily paid employees, when the law

clearly states that every worker shall be paid their regular holiday pay. This
is a flagrant violation of the mandatory directive of Article 4 of the Labor
Code, which states that "All doubts in the implementation and interpretation
of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." Moreover, it shall always be
presumed that the legislature intended to enact a valid and permanent
statute which would have the most beneficial effect that its language permits
(Orlosky vs. Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded his statutory
authority granted by Article 5 of the Labor Code authorizing him to
promulgate the necessary implementing rules and regulations.
Public respondent vehemently argues that the intent and spirit of the holiday
pay law, as expressed by the Secretary of Labor in the case of Chartered
Bank Employees Association v. The Chartered Bank (NLRC Case No. RB1789-75, March 24, 1976), is to correct the disadvantages inherent in the
daily compensation system of employment holiday pay is primarily
intended to benefit the daily paid workers whose employment and income are
circumscribed by the principle of "no work, no pay." This argument may
sound meritorious; but, until the provisions of the Labor Code on holiday pay
is amended by another law, monthly paid employees are definitely included
in the benefits of regular holiday pay. As earlier stated, the presumption is
always in favor of law, negatively put, the Labor Code is always strictly
construed against management.
While it is true that the contemporaneous construction placed upon a statute
by executive officers whose duty is to enforce it should be given great weight
by the courts, still if such construction is so erroneous, as in the instant
case, the same must be declared as null and void. It is the role of the
Judiciary to refine and, when necessary, correct constitutional (and/or
statutory) interpretation, in the context of the interactions of the three
branches of the government, almost always in situations where some agency
of the State has engaged in action that stems ultimately from some legitimate
area of governmental power (The Supreme Court in Modern Role, C. B.
Swisher 1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs. National Labor
Relations Commission (106 SCRA 444, July 31, 1981) where the Secretary of
Labor enlarged the scope of exemption from the coverage of a Presidential
Decree granting increase in emergency allowance, this Court ruled
that: t.hqw
... the Secretary of Labor has exceeded his authority when he
included paragraph (k) in Section 1 of the Rules implementing P. D.
1 1 23.
xxx xxx xxx
Clearly, the inclusion of paragraph k contravenes the statutory
authority granted to the Secretary of Labor, and the same is
therefore void, as ruled by this Court in a long line of cases . . .
.. t.hqw

The recognition of the power of administrative

officials to promulgate rules in the administration of
the statute, necessarily limited to what is provided
for in the legislative enactment, may be found in the
early case of United States vs. Barrios decided in
1908. Then came in a 1914 decision, United States
vs. Tupasi Molina (29 Phil. 119) delineation of the
scope of such competence. Thus: "Of course the
regulations adopted under legislative authority by a
particular department must be in harmony with the
provisions of the law, and for the sole purpose of
carrying into effect its general provisions. By such
regulations, of course, the law itself cannot be
extended. So long, however, as the regulations relate
solely to carrying into effect the provisions of the
law, they are valid." In 1936, in People vs.
Santos, this Court expressed its disapproval of an
administrative order that would amount to an excess
of the regulatory power vested in an administrative
official We reaffirmed such a doctrine in a 1951
decision, where we again made clear that where an
administrative order betrays inconsistency or
repugnancy to the provisions of the Act, 'the
mandate of the Act must prevail and must be
followed. Justice Barrera, speaking for the Court in
Victorias Milling inc. vs. Social Security Commission,
citing Parker as well as Davis did tersely sum up the
matter thus: "A rule is binding on the Courts so long
as the procedure fixed for its promulgation is
followed and its scope is within the statutory
authority granted by the legislature, even if the
courts are not in agreement with the policy stated
therein or its innate wisdom. ... On the other hand,
administrative interpretation of the law is at best
merely advisory, for it is the courts that finally
determine chat the law means."
"It cannot be otherwise as the Constitution limits the
authority of the President, in whom all executive
power resides, to take care that the laws be faithfully
executed. No lesser administrative executive office or
agency then can, contrary to the express language of
the Constitution assert for itself a more extensive
prerogative. Necessarily, it is bound to observe the
constitutional mandate. There must be strict
compliance with the legislative enactment. Its terms
must be followed the statute requires adherence to,
not departure from its provisions. No deviation is
allowable. In the terse language of the present Chief
Justice, an administrative agency "cannot amend an
act of Congress." Respondents can be sustained,

therefore, only if it could be shown that the rules

and regulations promulgated by them were in
accordance with what the Veterans Bill of Rights
provides" (Phil. Apparel Workers Union vs. National
Labor Relations Commission, supra, 463, 464, citing
Teozon vs. Members of the Board of Administrators,
PVA 33 SCRA 585; see also Santos vs. Hon. Estenzo,
et al, 109 Phil. 419; Hilado vs. Collector of Internal
Revenue, 100 Phil. 295; Sy Man vs. Jacinto &
Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese
and Trinidad, 43 Phil. 259).
This ruling of the Court was recently reiterated in the case of American Wire
& Cable Workers Union (TUPAS) vs. The National Labor Relations Commission
and American Wire & Cable Co., Inc., G.R. No. 53337, promulgated on June
29, 1984.
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to
implement the Labor Code and Policy instruction No. 9 issued by the then
Secretary of Labor must be declared null and void. Accordingly, public
respondent Deputy Minister of Labor Amado G. Inciong had no basis at all to
deny the members of petitioner union their regular holiday pay as directed by
the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated
August 25, 1975, had already become final, and was, in fact, partially
executed by the respondent bank.
However, public respondent maintains that on the authority of De Luna vs.
Kayanan, 61 SCRA 49, November 13, 1974, he can annul the final decision
of Labor Arbiter Soriano since the ensuing promulgation of the integrated
implementing rules of the Labor Code pursuant to P.D. 850 on February 16,
1976, and the issuance of Policy Instruction No. 9 on April 23, 1976 by the
then Secretary of Labor are facts and circumstances that transpired
subsequent to the promulgation of the decision of the labor arbiter, which
renders the execution of the said decision impossible and unjust on the part
of herein respondent bank (pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna relied upon by the
public respondent is not a labor case wherein the express mandate of the
Constitution on the protection to labor is applied. Thus Article 4 of the Labor
Code provides that, "All doubts in the implementation and interpretation of
the provisions of this Code, including its implementing rules and regulations,
shall be resolved in favor of labor and Article 1702 of the Civil Code provides
that, " In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.
Consequently, contrary to public respondent's allegations, it is patently
unjust to deprive the members of petitioner union of their vested right

acquired by virtue of a final judgment on the basis of a labor statute

promulgated following the acquisition of the "right".
On the question of whether or not a law or statute can annul or modify a
judicial order issued prior to its promulgation, this Court, through Associate
Justice Claro M. Recto, said: t.hqw
xxx xxx xxx
We are decidedly of the opinion that they did not. Said order,
being unappealable, became final on the date of its issuance
and the parties who acquired rights thereunder cannot be
deprived thereof by a constitutional provision enacted or
promulgated subsequent thereto. Neither the Constitution nor
the statutes, except penal laws favorable to the accused, have
retroactive effect in the sense of annulling or modifying vested
rights, or altering contractual obligations" (China Ins. &
Surety Co. vs. Judge of First Instance of Manila, 63 Phil.
324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this
Court said: "... when a court renders a decision or promulgates a resolution
or order on the basis of and in accordance with a certain law or rule then in
force, the subsequent amendment or even repeal of said law or rule may not
affect the final decision, order, or resolution already promulgated, in the
sense of revoking or rendering it void and of no effect." Thus, the amendatory
rule (Rule IV, Book III of the Rules to Implement the Labor Code) cannot be
given retroactive effect as to modify final judgments. Not even a law can
validly annul final decisions (In re: Cunanan, et al., Ibid).
Furthermore, the facts of the case relied upon by the public respondent are
not analogous to that of the case at bar. The case of De Luna speaks of final
and executory judgment, while iii the instant case, the final judgment is
partially executed. just as the court is ousted of its jurisdiction to annul or
modify a judgment the moment it becomes final, the court also loses its
jurisdiction to annul or modify a writ of execution upon its service or
execution; for, otherwise, we will have a situation wherein a final and
executed judgment can still be annulled or modified by the court upon mere
motion of a panty This would certainly result in endless litigations thereby
rendering inutile the rule of law.
Respondent bank counters with the argument that its partial compliance was
involuntary because it did so under pain of levy and execution of its assets
(p. 138, rec.). WE find no merit in this argument. Respondent bank clearly
manifested its voluntariness in complying with the decision of the labor
arbiter by not appealing to the National Labor Relations Commission as
provided for under the Labor Code under Article 223. A party who waives his
right to appeal is deemed to have accepted the judgment, adverse or not, as
correct, especially if such party readily acquiesced in the judgment by
starting to execute said judgment even before a writ of execution was issued,
as in this case. Under these circumstances, to permit a party to appeal from
the said partially executed final judgment would make a mockery of the
doctrine of finality of judgments long enshrined in this jurisdiction.

Section I of Rule 39 of the Revised Rules of Court provides that "... execution
shall issue as a matter of right upon the expiration of the period to appeal ...
or if no appeal has been duly perfected." This rule applies to decisions or
orders of labor arbiters who are exercising quasi-judicial functions since "...
the rule of execution of judgments under the rules should govern all kinds of
execution of judgment, unless it is otherwise provided in other laws" Sagucio
vs. Bulos 5 SCRA 803) and Article 223 of the Labor Code provides that "...
decisions, awards, or orders of the Labor Arbiter or compulsory arbitrators
are final and executory unless appealed to the Commission by any or both of
the parties within ten (10) days from receipt of such awards, orders, or
decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal period deprives the
courts of jurisdiction to alter the final judgment and the judgment becomes
final ipso jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2
PHILAJUR 436, 440, January 31, 1978; see also Soliven vs. WCC, 77 SCRA
621; Carrero vs. WCC and Regala vs. WCC, decided jointly, 77 SCRA 297;
Vitug vs. Republic, 75 SCRA 436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423,
October 31, 1961, where the lower court modified a final order, this Court
ruled thus: t.hqw
xxx xxx xxx
The lower court was thus aware of the fact that it was
thereby altering or modifying its order of January 8, 1959.
Regardless of the excellence of the motive for acting as it did,
we are constrained to hold however, that the lower court had
no authorities to make said alteration or modification. ...
xxx xxx xxx
The equitable considerations that led the lower court to take
the action complained of cannot offset the dem ands of
public policy and public interest which are also responsive
to the tenets of equity requiring that an issues passed
upon in decisions or final orders that have become
executory, be deemed conclusively disposed of and definitely
closed for, otherwise, there would be no end to litigations,
thus setting at naught the main role of courts of justice,
which is to assist in the enforcement of the rule of law and
the maintenance of peace and order, by settling justiciable
controversies with finality.
xxx xxx xxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30,
1982, this Court said: t.hqw
xxx xxx xxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically
stated that the rule is absolute that after a judgment
becomes final by the expiration of the period provided by the

rules within which it so becomes, no further amendment or

correction can be made by the court except for clerical errors
or mistakes. And such final judgment is conclusive not only
as to every matter which was offered and received to sustain
or defeat the claim or demand but as to any other admissible
matter which must have been offered for that purpose (L7044, 96 Phil. 526). In the earlier case of Contreras and
Ginco vs. Felix and China Banking Corp., Inc. (44 O.G.
4306), it was stated that the rule must be adhered to
regardless of any possible injustice in a particular case for
(W)e have to subordinate the equity of a particular situation to
the over-mastering need of certainty and immutability of
judicial pronouncements
xxx xxx xxx
III
The despotic manner by which public respondent Amado G. Inciong divested
the members of the petitioner union of their rights acquired by virtue of a
final judgment is tantamount to a deprivation of property without due
process of law Public respondent completely ignored the rights of the
petitioner union's members in dismissing their complaint since he knew for a
fact that the judgment of the labor arbiter had long become final and was
even partially executed by the respondent bank.
A final judgment vests in the prevailing party a right recognized and
protected by law under the due process clause of the Constitution (China Ins.
& Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324). A final
judgment is "a vested interest which it is right and equitable that the
government should recognize and protect, and of which the individual could
no. be deprived arbitrarily without injustice" (Rookledge v. Garwood, 65 N.W.
2d 785, 791).
lt is by this guiding principle that the due process clause is interpreted.
Thus, in the pithy language of then Justice, later Chief Justice, Concepcion
"... acts of Congress, as well as those of the Executive, can deny due process
only under pain of nullity, and judicial proceedings suffering from the same
flaw are subject to the same sanction, any statutory provision to the contrary
notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110 Phil. 118,
emphasis supplied), And "(I)t has been likewise established that a violation of
a constitutional right divested the court of jurisdiction; and as a consequence
its judgment is null and void and confers no rights" (Phil. Blooming Mills
Employees Organization vs. Phil. Blooming Mills Co., Inc., 51 SCRA 211,
June 5, 1973).
Tested by and pitted against this broad concept of the constitutional
guarantee of due process, the action of public respondent Amado G. Inciong
is a clear example of deprivation of property without due process of law and
constituted grave abuse of discretion, amounting to lack or excess of
jurisdiction in issuing the order dated November 10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF
PUBLIC RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR

ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY

REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND
AMERICA
SO ORDERED.

G.R. No. L-75038 August 23, 1993

ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD,
BENJAMIN BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID
ORO, NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, and
DOMINGO SAGUIT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and
BROAD STREET TAILORING and/or RODOLFO ZAPANTA, respondents.
Balguma, Macasaet & Associates for petitioners.
Teresita Gandionco Oledan for private respondents.
NOCON, J.:
A basic factor underlying the exercise of rights and the filing of claims for
benefits under the Labor Code and other presidential issuances or labor
legislations is the status and nature of one's employment. Whether an
employer-employee relationship exist and whether such employment is
managerial in character or that of a rank and file employee are primordial
considerations before extending labor benefits. Thus, petitioners in this case
seek a definitive ruling on the status and nature of their employment with
Broad Street Tailoring and pray for the nullification of the resolution dated
May 12, 1986 of the National Labor Relations Commissions in NLRC Case
No. RB-IV- 21558-78-T affirming the decision of Labor Arbiter Ernilo V.
Pealosa dated May 28, 1979, which held eleven of them as independent
contractors and the remaining one as employee but of managerial rank.
The facts of the case shows that petitioner Elias Villuga was employed as
cutter in the tailoring shop owned by private respondent Rodolfo Zapanta
and known as Broad Street Tailoring located at Shaw Boulevard,
Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary of
P840.00 and a monthly transportation allowance of P40.00. In addition to his
work as cutter, Villuga was assigned the chore of distributing work to the
shop's tailors or sewers when both the shop's manager and assistant
manager would be absent. He saw to it that their work conformed with the
pattern he had prepared and if not, he had them redone, repaired or resewn.
The other petitioners were either ironers, repairmen and sewers. They were
paid a fixed amount for every item ironed, repaired or sewn, regardless of the
time consumed in accomplishing the task. Petitioners did not fill up any time
record since they did not observe regular or fixed hours of work. They were
allowed to perform their work at home especially when the volume of work,
which depended on the number of job orders, could no longer be coped up
with.
From February 17 to 22, 1978, petitioner Villuga failed to report for work
allegedly due to illness. For not properly notifying his employer, he was
considered to have abandoned his work.
In a complaint dated March 27, 1978, filed with the Regional Office of the
Department of Labor, Villuga claimed that he was refused admittance when

he reported for work after his absence, allegedly due to his active
participation in the union organized by private respondent's tailors. He
further claimed that he was not paid overtime pay, holiday pay, premium pay
for work done on rest days and holidays, service incentive leave pay and 13th
month pay.
Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro
also claimed that they were dismissed from their employment because they
joined the Philippine Social Security Labor Union (PSSLU). Petitioners Andres
Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela, Flora Escobido, Justilita
Cabaneg and Domingo Saguit claimed that they stopped working because
private respondents gave them few pieces of work to do after learning of their
membership with PSSLU. All the petitioners laid claims under the different
labor standard laws which private respondent allegedly violated.
On May 28, 1979, Labor Arbiter Ernilo V. Pealosa rendered a decision
ordering the dismissal of the complaint for unfair labor practices, illegal
dismissal and other money claims except petitioner Villuga's claim for 13th
month pay for the years 1976, 1977 and 1980. The dispositive portion of the
decision states as follows:
WHEREFORE, premises considered, the respondent Broad
Street Tailoring and/or Rodolfo Zapanta are hereby ordered
to pay complainant Elias Villuga the sum of ONE
THOUSAND TWO HUNDRED FORTY-EIGHT PESOS AND
SIXTY-SIX CENTAVOS (P1,248.66) representing his 13th
month pay for the years 1976, 1977 and 1978. His other
claims in this case are hereby denied for lack of merit.
The complaint insofar as the other eleven (11) complainants
are concerned should be, as it is hereby dismissed for want
of jurisdiction. 1
On appeal, the National Labor Relations Commission affirmed the questioned
decision in a resolution dated May 12, 1986, the dispositive portion of which
states as follows:
WHEREFORE, premises considered, the decision appealed
from is, as it is hereby AFFIRMED, and the appeal
dismissed. 2
Presiding Commissioner Guillermo C. Medina merely concurred in the result
while Commissioner Gabriel M. Gatchalian rendered a dissenting opinion
which states as follows:
I am for upholding employer-employee relationship as
argued by the complainants before the Labor Arbiter and on
appeal. The further fact that the proposed decision
recognizes complainant's status as piece-rate worker all the
more crystallizes employer-employee relationship the
benefits prayed for must be granted. 3
Hence, petitioners filed this instant certiorari case on the following grounds:

1. That the respondent National Labor Relations Commission

abused
its
discretion
when
it
ruled
that
petitioner/complainant, Elias Villuga falls within the
category of a managerial employee;
2. . . . when it ruled that the herein petitioners were not
dismissed by reason of their union activities;
3. . . . when it ruled that petitioners Andres Abad, Benjamin
Brizuela, Norlito Ladia, Marcelo Aguilan, David Oro, Nelia
Brizuela, Flora Escobido, Justilita Cabaneg and Domingo
Saguit were not employees of private respondents but were
contractors.
4. . . . when it ruled that petitioner Elias Villuga is not
entitled to overtime pay and services for Sundays and Legal
Holidays; and
5. . . . when it failed to grant petitioners their respective
claims under the provisions of P.D. Nos. 925, 1123 and
851. 4
Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code,
to be a member of a managerial staff, the following elements must concur or
co-exist, to wit: (1) that his primary duty consists of the performance of work
directly related to management policies; (2) that he customarily and regularly
exercises discretion and independent judgment in the performance of his
functions; (3) that he regularly and directly assists in the management of the
establishment; and (4) that he does not devote his twenty per cent of his time
to work other than those described above.
Applying the above criteria to petitioner Elias Villuga's case, it is undisputed
that his primary work or duty is to cut or prepare patterns for items to be
sewn, not to lay down or implement any of the management policies, as there
is a manager and an assistant manager who perform said functions. It is true
that in the absence of the manager the assistant manager, he distributes and
assigns work to employees but such duty, though involving discretion, is
occasional and not regular or customary. He had also the authority to order
the repair or resewing of defective item but such authority is part and parcel
of his function as cutter to see to it that the items cut are sewn correctly lest
the defective nature of the workmanship be attributed to his "poor cutting."
Elias Villuga does not participate in policy-making. Rather, the functions of
his position involve execution of approved and established policies.
InFranklin Baker Company of the Philippines v. Trajano, 5 it was held that
employees who do not participate in policy-making but are given ready
policies to execute and standard practices to observe are not managerial
employees. The test of "supervisory or managerial status" depends on
whether a person possesses authority that is not merely routinary or clerical
in nature but one that requires use of independent judgment. In other words,
the functions of the position are not managerial in nature if they only execute
approved and established policies leaving little or no discretion at all whether
to implement said policies or not. 6

Consequently, the exclusion of Villuga from the benefits claimed under

Article 87 (overtime pay and premium pay for holiday and rest day work),
Article 94, (holiday pay), and Article 95 (service incentive leave pay) of the
Labor Code, on the ground that he is a managerial employee is unwarranted.
He is definitely a rank and file employee hired to perform the work of the
cutter and not hired to perform supervisory or managerial functions. The fact
that he is uniformly paid by the month does not exclude him from the
benefits of holiday pay as held in the case ofInsular Bank of America
Employees Union v. Inciong. 7 He should therefore be paid in addition to the
13th month pay, his overtime pay, holiday pay, premium pay for holiday and
rest day, and service incentive leave pay.
As to the dismissal of the charge for unfair labor practices of private
respondent consisting of termination of employment of petitioners and acts of
discrimination against members of the labor union, the respondent
Commission correctly held the absence of evidence that Mr. Zapanta was
aware of petitioners' alleged union membership on February 22, 1978 as the
notice of union existence in the establishment with proposal for recognition
and collective bargaining negotiation was received by management only an
March 3, 1978. Indeed, self-serving allegations without concrete proof that
the private respondent knew of their membership in the union and
accordingly reacted against their membership do not suffice.
Nor is private respondent's claim that petitioner Villuga abandoned his work
acceptable. For abandonment to constitute a valid cause for dismissal, there
must be a deliberate and unjustified refusal of the employee to resume his
employment. Mere absence is not sufficient, it must be accompanied by overt
acts unerringly pointing to the fact that the employee simply does not want
to work anymore. 8 At any rate, dismissal of an employee due to his
prolonged absence without leave by reason of illness duly established by the
presentation of a medical certificate is not justified. 9 In the case at bar,
however, considering that petitioner Villuga absented himself for four (4)
days without leave and without submitting a medical certificate to support
his claim of illness, the imposition of a sanction is justified, but surely, not
dismissal, in the light of the fact that this is petitioner's first offense. In lieu
of reinstatement, petitioner Villuga should be paid separation pay where
reinstatement can no longer be effected in view of the long passage of time or
because of the realities of the situation. 10 But petitioner should not be
granted backwages in addition to reinstatement as the same is not just and
equitable under the circumstances considering that he was not entirely free
from blame. 11
As to the other eleven petitioners, there is no clear showing that they were
dismissed because the circumstances surrounding their dismissal were not
even alleged. However, we disagree with the finding of respondent
Commission that the eleven petitioners are independent contractors.
For an employer-employee relationship to exist, the following elements are
generally considered: "(1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to
control the employee's conduct." 12

Noting that the herein petitioners were oftentimes allowed to perform their
work at home and were paid wages on a piece-rate basis, the respondent
Commission apparently found the second and fourth elements lacking and
ruled that "there is no employer-employee relationship, for it is clear that
respondents are interested only in the result and not in the means and
manner and how the result is obtained."
Respondent Commission is in error. The mere fact that petitioners were paid
on a piece-rate basis is no argument that herein petitioners were not
employees. The term "wage" has been broadly defined in Article 97 of the
Labor Code as remuneration or earnings, capable of being expressed in terms
of money whether fixed or ascertained on a time, task, piece or commission
basis. . . ." The facts of this case indicate that payment by the piece is just a
method of compensation and does not define the essence of the
relation. 13 The petitioners were allowed to perform their work at home does
not likewise imply absence of control and supervision. The control test calls
merely for the existence of a right to control the manner of doing the work,
not the actual exercise of the right. 14
In determining whether the relationship is that of employer and employee or
one of an independent contractor, "each case must be determined on its own
facts
and
all the
features
of the relationship
are
to be
considered." 15Considering that petitioners who are either sewers, repairmen
or ironer, have been in the employ of private respondent as early as 1972 or
at the latest in 1976, faithfully rendering services which are desirable or
necessary for the business of private respondent, and observing
management's approved standards set for their respective lines of work as
well as the customers' specifications, petitioners should be considered
employees, not independent contractors.
Independent contractors are those who exercise independent employment,
contracting to do a piece of work according to their own methods and without
being subjected to control of their employer except as to the result of their
work. By the nature of the different phases of work in a tailoring shop where
the customers' specifications must be followed to the letter, it is
inconceivable that the workers therein would not be subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar
workers hired in the tailoring department, although paid weekly wages on
piece work basis, are employees not independent contractors. Accordingly, as
regular employees, paid on a piece-rate basis, petitioners are not entitled to
overtime pay, holiday pay, premium pay for holiday/rest day and service
incentive leave pay. Their claim for separation pay should also be defined for
lack of evidence that they were in fact dismissed by private respondent. They
should be paid, however, their 13th month pay under P.D. 851, since they
are employees not independent contractors.
WHEREFORE, in view of the foregoing reasons, the assailed decision of
respondent National Labor Relations Commission is hereby MODIFIED by
awarding

(a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for
holiday and rest day, service incentive leave pay and separation pay, in
addition to his 13th month pay; and
(b) in favor of the rest of the petitioners, their respective 13th month pay.
The case is hereby REMANDED to the National Labor Relations Commission
for the computation of the claims herein-above mentioned.
SO ORDERED.

G.R. No. 145561

June 15, 2005

HONDA PHILS., INC., petitioner,

vs.
SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA, respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review under Rule 45 seeks the reversal of the Court of
Appeals decision1 dated September 14, 20002 and its resolution3 dated
October 18, 2000, in CA-G.R. SP No. 59052. The appellate court affirmed the
decision dated May 2, 2000 rendered by the Voluntary Arbitrator who ruled
that petitioner Honda Philippines, Inc.s (Honda) pro-rated payment of the
13th and 14th month pay and financial assistance to its employees was
invalid.
As found by the Court of Appeals, the case stems from the Collective
Bargaining Agreement (CBA) forged between petitioner Honda and
respondent union Samahan ng Malayang Manggagawa sa Honda (respondent
union) which contained the following provisions:

On November 22, 1999, the management of Honda issued a

memorandum4 announcing its new computation of the 13th and 14th month
pay to be granted to all its employees whereby the thirty-one (31)-day long
strike shall be considered unworked days for purposes of computing said
benefits. As per the companys new formula, the amount equivalent to 1/12
of the employees basic salary shall be deducted from these bonuses, with a
commitment however that in the event that the strike is declared legal,
Honda shall pay the amount deducted.
Respondent union opposed the pro-rated computation of the bonuses in a
letter dated November 25, 1999. Honda sought the opinion of the Bureau of
Working Conditions (BWC) on the issue. In a letter dated January 4,
2000,5 the BWC agreed with the pro-rata payment of the 13th month pay as
proposed by Honda.
The matter was brought before the Grievance Machinery in accordance with
the parties existing CBA but when the issue remained unresolved, it was
submitted for voluntary arbitration. In his decision6 dated May 2, 2000,
Voluntary Arbitrator Herminigildo C. Javen invalidated Hondas computation,
to wit:

Section 6. 14th Month Pay

WHEREFORE, in view of all foregoing premises being duly considered and

evaluated, it is hereby ruled that the Companys implementation of pro-rated
13th Month pay, 14th Month pay and Financial Assistance [is] invalid. The
Company is thus ordered to compute each provision in full month basic pay
and pay the amounts in question within ten (10) days after this Decision
shall have become final and executory.

The COMPANY shall grant a 14th Month Pay, computed on the same basis as
computation of 13th Month Pay.

The three (3) days Suspension of the twenty one (21) employees is hereby
affirmed.

Section 7. The COMPANY agrees to continue the practice of granting, in its

discretion, financial assistance to covered employees in December of each
year, of not less than 100% of basic pay.

SO ORDERED.7

Section 3. 13th Month Pay

The COMPANY shall maintain the present practice in the implementation [of]
the 13th month pay.

This CBA is effective until year 2000. In the latter part of 1998, the parties
started re-negotiations for the fourth and fifth years of their CBA. When the
talks between the parties bogged down, respondent union filed a Notice of
Strike on the ground of bargaining deadlock. Thereafter, Honda filed a Notice
of Lockout. On March 31, 1999, then Department of Labor and Employment
(DOLE) Secretary Laguesma assumed jurisdiction over the labor dispute and
ordered the parties to cease and desist from committing acts that would
aggravate the situation. Both parties complied accordingly.
On May 11, 1999, however, respondent union filed a second Notice of Strike
on the ground of unfair labor practice alleging that Honda illegally contracted
out work to the detriment of the workers. Respondent union went on strike
and picketed the premises of Honda on May 19, 1999. On June 16, 1999,
DOLE Acting Secretary Felicisimo Joson, Jr. assumed jurisdiction over the
case and certified the same to the National Labor Relations Commission
(NLRC) for compulsory arbitration. The striking employees were ordered to
return to work and the management accepted them back under the same
terms prior to the strike staged.

Hondas Motion for Partial Reconsideration was denied in a resolution dated

May 22, 2000. Thus, a petition was filed with the Court of Appeals, however,
the petition was dismissed for lack of merit.
Hence, the instant petition for review on the sole issue of whether the prorated computation of the 13th month pay and the other bonuses in question
is valid and lawful.
The petition lacks merit.
A collective bargaining agreement refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of
work and all other terms and conditions of employment in a bargaining
unit.8 As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs, public order or
public policy.9 Thus, where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance therewith is mandated by the
express policy of the law.10
In some instances, however, the provisions of a CBA may become
contentious, as in this case. Honda wanted to implement a pro-rated

computation of the benefits based on the "no work, no pay" rule. According to
the company, the phrase "present practice" as mentioned in the CBA refers to
the manner and requisites with respect to the payment of the bonuses, i.e.,
50% to be given in May and the other 50% in December of each year.
Respondent union, however, insists that the CBA provisions relating to the
implementation of the 13th month pay necessarily relate to the computation
of the same.
We agree with the findings of the arbitrator that the assailed CBA provisions
are far from being unequivocal. A cursory reading of the provisions will show
that they did not state categorically whether the computation of the 13th
month pay, 14th month pay and the financial assistance would be based on
one full months basic salary of the employees, or pro-rated based on the
compensation actually received. The arbitrator thus properly resolved the
ambiguity in favor of labor as mandated by Article 1702 of the Civil
Code.11 The Court of Appeals affirmed the arbitrators finding and added that
the computation of the 13th month pay should be based on the length of
service and not on the actual wage earned by the worker.
We uphold the rulings of the arbitrator and the Court of Appeals. Factual
findings of labor officials, who are deemed to have acquired expertise in
matters within their respective jurisdiction, are generally accorded not only
respect but even finality, and bind us when supported by substantial
evidence. It is not our function to assess and evaluate the evidence all over
again, particularly where the findings of both the arbiter and the Court of
Appeals coincide.12
Presidential Decree No. 851, otherwise known as the 13th Month Pay Law,
which required all employers to pay their employees a 13 th month pay, was
issued to protect the level of real wages from the ravages of worldwide
inflation. It was enacted on December 16, 1975 after it was noted that there
had been no increase in the minimum wage since 1970 and the Christmas
season was an opportune time for society to show its concern for the plight of
the working masses so that they may properly celebrate Christmas and New
Year.13
Under the Revised Guidelines on the Implementation of the 13 th month pay
issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No.
851 was removed. It further provided that the minimum 13 th month pay
required by law shall not be less than one-twelfth (1/12) of the total basic
salary earned by an employee within a calendar year. The guidelines
pertinently provides:
The "basic salary" of an employee for the purpose of computing the
13th month pay shall include allremunerations or earnings paid by his
employer for services rendered but does not include allowances and
monetary benefits which are not considered or integrated as part of the
regular or basic salary, such as the cash equivalent of unused vacation and
sick leave credits, overtime premium, night differential and holiday pay, and
cost-of-living allowances.14 (Emphasis supplied)
For employees receiving regular wage, we have interpreted "basic salary" to
mean, not the amount actually received by an employee, but 1/12 of their

standard monthly wage multiplied by their length of service within a given

calendar year. Thus, we exclude from the computation of "basic salary"
payments for sick, vacation and maternity leaves, night differentials, regular
holiday pay and premiums for work done on rest days and special
holidays.15 In Hagonoy Rural Bank v. NLRC,16 St. Michael Academy v.
NLRC,17 Consolidated Food Corporation v. NLRC,18 and similar cases, the
13th month pay due an employee was computed based on the employees
basic monthly wage multiplied by the number of months worked in a
calendar year prior to separation from employment.
The revised guidelines also provided for a pro-ration of this benefit only in
cases of resignation or separation from work. As the rules state, under these
circumstances, an employee is entitled to a pay in proportion to the length of
time he worked during the year, reckoned from the time he started working
during the calendar year.19 The Court of Appeals thus held that:
Considering the foregoing, the computation of the 13th month pay should be
based on the length of service and not on the actual wage earned by the
worker. In the present case, there being no gap in the service of the workers
during the calendar year in question, the computation of the 13th month pay
should not be pro-rated but should be given in full.20 (Emphasis supplied)
More importantly, it has not been refuted that Honda has not implemented
any pro-rating of the 13th month pay before the instant case. Honda did not
adduce evidence to show that the 13 th month, 14th month and financial
assistance benefits were previously subject to deductions or pro-rating or
that these were dependent upon the companys financial standing. As held by
the Voluntary Arbitrator:
The Company (Honda) explicitly accepted that it was the strike held that
prompt[ed] them to adopt a pro-rata computation, aside [from] being in [a]
state of rehabilitation due to 227M substantial losses in 1997, 114M in 1998
and 215M lost of sales in 1999 due to strike. This is an implicit acceptance
that prior to the strike, a full month basic pay computation was the "present
practice" intended to be maintained in the CBA.21
The memorandum dated November 22, 1999 which Honda issued shows that
it was the first time a pro-rating scheme was to be implemented in the
company. It was a convenient coincidence for the company that the work
stoppage held by the employees lasted for thirty-one (31) days or exactly one
month. This enabled them to devise a formula using 11/12 of the total
annual salary as base amount for computation instead of the entire amount
for a 12-month period.
That a full month payment of the 13th month pay is the established practice
at Honda is further bolstered by the affidavits executed by Feliteo Bautista
and Edgardo Cruzada. Both attested that when they were absent from work
due to motorcycle accidents, and after they have exhausted all their leave
credits and were no longer receiving their monthly salary from Honda, they
still received the full amount of their 13th month, 14th month and financial
assistance pay.22
The case of Davao Fruits Corporation v. Associated Labor Unions, et
al.23 presented an example of a voluntary act of the employer that has

ripened into a company practice. In that case, the employer, from 1975 to
1981, freely and continuously included in the computation of the 13th month
pay those items that were expressly excluded by the law. We have held that
this act, which was favorable to the employees though not conforming to law,
has ripened into a practice and therefore can no longer be withdrawn,
reduced, diminished, discontinued or eliminated. Furthermore, in Sevilla
Trading Company v. Semana,24 we stated:
With regard to the length of time the company practice should have been
exercised to constitute voluntary employer practice which cannot be
unilaterally withdrawn by the employer, we hold that jurisprudence has not
laid down any rule requiring a specific minimum number of years. In the
above quoted case of Davao Fruits Corporation vs. Associated Labor
Unions, the company practice lasted for six (6) years. In another case, Davao
Integrated Port Stevedoring Services vs. Abarquez, the employer, for three (3)
years and nine (9) months, approved the commutation to cash of the
unenjoyed portion of the sick leave with pay benefits of its intermittent
workers. While in Tiangco vs. Leogardo, Jr. the employer carried on the
practice of giving a fixed monthly emergency allowance from November 1976
to February 1980, or three (3) years and four (4) months. In all these cases,
this Court held that the grant of these benefits has ripened into
company practice or policy which cannot be peremptorily
withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of
including non-basic benefits such as paid leaves for unused sick leave and
vacation leave in the computation of their 13th-month pay for at least two (2)
years. This, we rule likewise constitutes voluntary employer practice
which cannot be unilaterally withdrawn by the employer without
violating Art. 100 of the Labor Code.25 (Emphasis supplied)
Lastly, the foregoing interpretation of law and jurisprudence is more in
keeping with the underlying principle for the grant of this benefit. It is
primarily given to alleviate the plight of workers and to help them cope with
the exorbitant increases in the cost of living. To allow the pro-ration of the
13th month pay in this case is to undermine the wisdom behind the law and
the mandate that the workingmans welfare should be the primordial and
paramount consideration.26 What is more, the factual milieu of this case is
such that to rule otherwise inevitably results to dissuasion, if not a deterrent,
for workers from the free exercise of their constitutional rights to selforganization and to strike in accordance with law.27
WHEREFORE, the instant petition is DENIED. The decision and the
resolution of the Court of Appeals dated September 14, 2000 and October 18,
2000, respectively, in CA-G.R. SP No. 59052, affirming the decision rendered
by the Voluntary Arbitrator on May 2, 2000, are hereby AFFIRMED in toto.
SO ORDERED.

G.R. No. 149013 August 31, 2006

HOUSE OF SARA LEE, Petitioner,
vs.
CYNTHIA F. REY, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before this Court is a Petition for Certiorari under Rule 45 seeking to reverse
and set aside the Decision1 dated August 25, 2000 of the Court of Appeals
(CA) in CA-G.R. SP No. 51653 which affirmed the Decision dated October 29,
1998 of the National Labor Relations Commission (NLRC); and the CA
Resolution2 dated July 4, 2001 which denied the petitioner's3 Motion for
Reconsideration.
The case originated from a Complaint for illegal dismissal instituted on
September 24, 1996 by the respondent against the petitioner before the
NLRC Arbitration Branch No. 10 in Cagayan de Oro City. The Complaint
prayed for reinstatement with full backwages without loss of seniority rights,
payment of 13th, 14th and 15th month pay, and the award of moral damages
and attorneys fees.
The essential facts:
The House of Sara Lee (petitioner) is engaged in the direct selling of a variety
of product lines for men and women, including cosmetics, intimate apparels,
perfumes, ready to wear clothes and other novelty items, through its various
outlets nationwide. In the pursuit of its business, the petitioner engages and
contracts with dealers to sell the aforementioned merchandise. These
dealers, known either as "Independent Business Managers" (IBMs) or
"Independent Group Supervisors" (IGSs), depending on whether they sell
individually or through their own group, would obtain at discounted rates the
merchandise from the petitioner on credit and then sell the same products to
their own customers at fixed prices also determined by the petitioner. In
turn, the dealers are paid "Services Fees," or sales commissions, the amount
of which depends on the volume and value of their sales. Under existing
company policy, the dealers must remit to the petitioner the proceeds of their
sales within a designated credit period, which would either be 38 days for
IGSs or 52 days for IBMs, counted from the day the said dealers acquired the
merchandise from the petitioner. To discourage late remittances, the
petitioner imposes a "Credit Administration Charge," or simply, a penalty
charge, on the value of the unremitted payment. Additionally, if the dealer
concerned has overdue payments or is said to be in "default," he or she
cannot purchase additional products from the petitioner. The dealers under
this system earn income through a profit margin between the discounted
purchase price they pay on credit to the petitioner and the fixed selling price
their customers will have to pay. On top of this margin, the dealer is given
the Service Fee, a sales commission, based on the volume of sales generated
by him or her. Due to the sheer volume of sales generated by all of its outlets,
the petitioner has found the need to strictly monitor the 38- or 52-day
"rolling due date" of each of its IBMs and IGSs through the employment of
"Credit Administration Supervisors" (CAS) for each branch. The primary duty

of the CAS is to strictly monitor each of these deadlines, to supervise the

credit and collection of payments and outstanding accounts due to the
petitioner from its independent dealers and various customers, and to screen
prospective IBMs. To discharge these responsibilities, the CAS is provided
with a computer equipped with control systems through which data is readily
generated. Under this organizational setup, the CAS is under the direct and
immediate supervision of the Branch Operations Manager (BOM).
Cynthia Rey (respondent), at the time of her dismissal from employment, or
on June 25, 1996, held the position of Credit Administration Supervisor or
CAS at the Cagayan de Oro City branch of the petitioner. Respondent was
first employed by the petitioner in July 16, 1993 as an Accounts Receivable
Clerk at its Caloocan City branch. In November 1993, respondent was
transferred to the Cagayan de Oro City branch retaining the same position.
In January 1994, respondent was elevated to the position of CAS. At that
time, the Branch Operations Manager or BOM of the Cagayan de Oro City
branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent
was temporarily assigned to the Butuan City branch.
Sometime in June 1995, while respondent was still working in Butuan City,
she allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro
outlet, a certain Ms. Magi Caroline Mendoza, to change the credit term of one
of the IBMs of the petitioner, a certain Ms. Mariam Rey-Petilla, who happens
to be respondents sister-in-law, from the 52-day limit to an "unauthorized"
term of 60 days. The respondent made the instruction, the petitioner avers,
just before the computer data for the computation of the Service Fee accruing
to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this
allegedly unauthorized act of respondent to her Branch Operations Manager,
Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM
Villagracia discreetly verified the records and discovered that it was not only
the 52-day credit term of IBM Rey-Petilla that had been extended by the
respondent, but there were several other IBMs whose credit terms had been
similarly extended beyond the periods allowed by company policy. BOM
Villagracia then summoned the respondent and required her to explain the
unauthorized credit extensions. The petitioner alleges that during that
confrontation, respondent admitted her infractions and begged the BOM not
to elevate or disclose the matter further to higher authorities. In a letter
dated June 22, 1995, Villagracia formally reported the matter to higher
management, stating that respondent, "in tears and remorse" and confiding
"her sincerest apology," personally admitted that the credit terms of certain
IBMs were adjusted in the computer for purposes of computing the Service
Fees.4 On June 24, 1995, Villagracia formally served a "show-cause" letter to
respondent and placed her on "indefinite suspension" effective on the same
day.5 On June 27, 1995, respondent submitted her explanation denying the
accusations made against her and stated that the "discrepancies" in the
service fees may have been the result of deadlines falling on holidays, after
"reconsiderations" had been requested by the IBM concerned and with the
full knowledge of and approval by BOM Villagracia as part of his campaign to
increase collections.6 Additionally, in the same letter-response, respondent
vehemently denied that she waived her right to explain as well as any

admission she allegedly made before Villagracia, and she pointed to the latter
as the author of the "discrepancies."7
As a consequence of the discovery of the foregoing alleged "anomalous
practice" of extending the credit terms of certain IBMs, management
undertook an audit of the Cagayan de Oro City and Butuan City branches.
During the process, the petitioner alleges, respondent was interviewed by the
auditors before whom she again openly admitted her infractions. Upon being
furnished a copy of the Auditors Report, portions of which read:
xxxx
OBJECTIVE OF THE AUDIT UNDERTAKEN
This activity has been conducted to establish facts that would determine
whether Ms. Cynthia Rey did change the credit terms or not for whatever
reason resulting in the companys payments of undue service fees.
AUDIT FINDINGS
We conducted examination of Service Fee Report for 15 selected IBMs with
the largest service fee pay-outs fromNovember 1993 up to April 1995 for
Cagayan de Oro Branch and from February 1995 to March 1995 for Butuan
Service Center. Set forth are the results of this activity:
CAGAYAN DE ORO BRANCH
FINDING
In all 15 samples, credit terms were changed by then CAS Cynthia Rey
beyond 52 days to as high as 90 days as evidenced by the IBM Credit Terms
Exception Report . . . . The exception report revealed that the CAS with User
ID "credit1" often changes/increases the credit terms of several IBMs, since
February 1994, usually a day before or during SF cut-off dates (20th, 21st,
22nd, or 23rd of the month) and would return it to original credit terms after
completion of SF print-outs. Total SF discrepancy for the 15 samples as a
result of credit term adjustment amounts to P 211K x x x x
It is apparent that credit term adjustments resulted in payment of significant
amount of undue service fees. Such fraudulent practice clearly favors the
interest of the IBMs to the detriment of the company. This constitutes
conflict of interest and should be dealt with accordingly.
xxx
FINDING
Ms. Cynthia Rey was on maternity leave from March 07, 1994 up to May 30,
1994 during which time no changing of credit term was recorded by the
parameter 23.8.2. This simply means that no credit term adjustment was
made during the period Ms. Rey was on leave. Again, this confirms that
without Ms. Rey around, nobody ever changed/adjusted the credit terms
beyond 52 days.
xxxx
BUTUAN SERVICE CENTER

FINDING
On a concurrent capacity as OIC and CAS of Butuan Service Center starting
sometime February 1995, Ms. Cynthia Rey changed the credit terms of IBMs
as shown in the IBM Credit Terms Exception Report . . . . Total discrepancies
for February and March 1995 Service Fees as a result of the credit term
adjustments amounts to P3,716.44 . . . . Analysis showed that credit terms
used by Cynthia for each of the IBMs/IBMC/IGSs ranged from 55 to 90 days
xxxx
Surprised with the Exception Reports, Ms. Rey admitted having done the
credit term adjustments at Butuan. Her statements therefore showed
inconsistencies as she previously denied this allegation. However, she cited
no clear reasons for such malpractice.
Recommendation
Materiality of the amount involved is not the issue at hand. Her admission to
the auditor of the violation committed does not absolve her from being meted
disciplinary actions as determined by management. We would like to
emphasize that any leniency on this case might have far reaching
implications to the branch operations and the company as a whole.
x x x.8
Petitioner, on July 29, 1995, directed respondent again to explain, but in
more detail, the alleged "anomalies" uncovered by the audit. After requesting
more time to review the report and submit her comment, on July 31, 1995,
respondent requested instead that a formal investigation be conducted in the
presence of her lawyer.9 In the meantime, respondents suspension was
lifted, but without prejudice to the outcome of the administrative
investigation.10 On September 7, 1995, the petitioner conducted a formal
hearing which was attended by respondent and her counsel of
record.11 Subsequently, respondent and her counsel affixed their respective
signatures on the transcripts of the hearing.12
Meanwhile, on April 15, 1996, BOM Villagracia resigned. Upon his
resignation, respondent managed the Cagayan de Oro branch for three
months pending the appointment of a new BOM.
On the basis of the hearing, the alleged voluntary admissions of respondent,
and the findings of the auditors report, the petitioner, on June 25, 1996,
formally dismissed the respondent for breach of trust and confidence.13
On September 24, 1996, as stated above, respondent filed her Complaint for
illegal dismissal, backwages and damages, with the Labor Arbiter. On April
30, 1998, the Labor Arbiter rendered a decision in favor of the respondent,
the dispositive portion of which states:
WHEREFORE, in view of all the foregoing, judgment is hereby entered
ordering [petitioner] House of Sara Lee to immediately pay [respondent]
Cynthia F. Rey the sum of P177,052.05 as full backwages from July 1, 1996
up to the date of this decision; 13th month pay in the sum of P18,666.67 and
separation pay in the sum of P40,000.00 and likewise to pay the sum of

P23,571.72 equivalent to 10% of the aggregate monetary award as attorneys

fees.
The rest of the claims are dismissed for lack of merit.
SO ORDERED.14
To the Labor Arbiter, the question to be resolved is whether the petitioner
validly terminated respondents employment on the ground of loss of trust
and confidence. In declaring the termination illegal, the Labor Arbiter held
that the petitioner, as employer, failed to discharge its burden of proof in
showing that the dismissal was for a just or authorized cause; that, in
particular, the petitioner failed to establish that respondent was the very
person who allegedly manipulated the credit terms of certain IBMs through
the computer terminals, since other employees had access to the same; that
respondents alleged admissions before Villagracia, her BOM, and M.D.
Sabayle, the company auditor, are based on self-serving evidence; that the
petitioner failed to substantiate the loss ofP211,000.00 which it imputed to
the respondent; that the petitioner failed to show that it apprised its
employees of the terms of the company policy which respondent allegedly
violated, or, in other words, that respondent was not fully informed of the
possible sanctions for such acts; that reinstatement would be impractical
under the circumstances since the relations of the parties were already
strained, hence, the award of full backwages and separation pay is justified;
that petitioner failed to refute the claim for 13th month pay, hence, as a
statutory relief, respondent should be awarded the same; and that the claims
for 14th and 15th month pay as well as moral and exemplary damages
should be denied for having no legal basis.
Aggrieved, the petitioner appealed to the NLRC. On October 29, 1998, the
NLRC rendered its Decision dismissing the appeal. In affirming the Decision
of the Labor Arbiter, the NLRC additionally held that if indeed benefits
accrued to the IBMs by virtue of the credit term extensions, it was BOM
Villagracia who benefited from this scheme which he himself adopted; that
the auditors report showed that the scheme had been a "long standing
practice" of the branch office of the petitioner; that after Villagracia resigned,
respondent was left to manage the Cagayan de Oro branch which, at that
time, registered the highest growth rate and for which reason respondent
earned a commendation from the petitioner; and that the loss of trust and
confidence advanced by the petitioner is negated by the fact that respondent,
after Villagracias resignation, was allowed to manage the Cagayan de Oro
City branch and by the fact that she was commended for her good
performance.
The petitioner appealed to the CA under Rule 65. On August 25, 2000, the
CA dismissed the Petition on the sole ground that factual issues are not
proper subjects for a special civil action of certiorari.
The petitioner is now before this Court under Rule 45, assigning the following
errors:
I.

IN DISMISSING THE PETITION FOR CERTIORARI ASSAILING THE

RESOLUTIONS OF THE NATIONAL LABOR RELATIONS COMMISSION IN
THE LABOR CASE BELOW ON THE GROUND THAT FACTUAL ISSUES ARE
NOT THE PROPER SUBJECT OF CERTIORARI, THE COURT OF APPEALS
HAS IN EFFECT DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD
WITH LAW AND JURISPRUDENCE.
II.
IN DOING SO, THE COURT OF APPEALS DEVIATED FROM ESTABLISHED
DOCTRINES LONG SETTLED BY CONSISTENT JURISPRUDENCE
ENUNCIATED BY THIS HONORABLE COURT.15
We grant the petition.
As a preliminary matter, we shall resolve the procedural concern raised by
the respondent. She maintains that no grave abuse of discretion was
committed by the NLRC. This is incorrect.
In the recent case of Manila Memorial Park Cemetery, Inc. v. Panado,16 we
held that where the NLRC or the labor arbiter acted capriciously and
whimsically in total disregard of evidence material to or even decisive of the
controversy, the extraordinary writ of certiorari will lie.17 While as a general
rule, the factual findings of administrative agencies are not subject to review
by this Court, it is equally established that we will not uphold erroneous
conclusions which are contrary to the evidence, because the agency a quo,
for that reason, would be guilty of a grave abuse of discretion. Nor is this
Court bound by conclusions which are not supported by substantial
evidence.18 The substantial evidence rule does not authorize any finding just
as long as there is any evidence to support it. It does not excuse
administrative agencies from considering contrary evidence which fairly
detracts from the evidence supporting a finding.19
In this case, the NLRC and the CA consistently ignored the following facts
established in the record:
a) respondent, during the formal hearing on September 7, 1995, in the
presence of her counsel, clearly admitted in several instances that, beginning
June 1994, she herself actually extended, on a monthly basis, the credit
terms of certain IBMs from the company-fixed 52 days to as high as 90
days;20
b) as Credit Administration Supervisor, she knew the appropriate credit
terms (38 days for IGSs and 52 days for IBMs) under the company guidelines
and which would serve as the bases for the computation of the correct
Service Fees or sales commissions;21
c) she was fully aware of the financial implications whenever she would
extend the credit terms, in that all late remittances by the IBMs concerned
would be considered in the computation of their Service Fees which would
not otherwise be due to them under company guidelines;22
d) the computation of the Service Fees, on many occasions, had been
finalized, processed, and printed out;23

e) she changed the credit terms in the Cagayan de Oro branch under the
alleged "blanket approval" of BOM Villagracia;24
f) she changed the credit terms in the Cagayan de Oro branch since it was a
"standard practice" in Caloocan City where she had been previously
assigned;25
g) during her stint in the Butuan City branch, she admitted that there had
been no such "blanket approval," but she nonetheless kept changing the
credit terms because, according to her, this had become "standard practice"
in the Cagayan de Oro branch as well;26
h) in several instances, she acted on her own accord and without the
requisite authority in extending the credit terms, since there were no specific
nor direct instructions from Villagracia to change those terms;27
i) she even assisted Mr. Villagracia and Ms. Mendoza in the process of
changing the credit terms since they were ignorant of the procedure;28
j) she would change the credit terms whenever the IBMs concerned would
ask for "reconsideration;"29 and finally,
k) her statements suffered notable inconsistencies, oscillating between
denying or not remembering the alleged act and categorically admitting
having done them.30
The consideration of the foregoing facts, as disclosed in the record, justifies a
different conclusion. Although numerous exceptions to the general rule have
been fairly established in case law, it must be stressed that the meticulous
constitution of the factual findings are functions that principally lie with the
NLRC and the CA as well as the other tribunals that may come under the
review power of the Supreme Court. It is a strict judicial policy to hand down
an incisive ruling in the first instance in order to relieve this Court from
exercising its extraordinary powers of excavating the facts, so that the Court
may thoroughly devote its energies to the disposition of questions of law, and
only questions of law, under the extent of Rule 45.
Contrary to the findings of the NLRC and the CA, the Court holds that
respondent was dismissed for a just cause.
Law31 and jurisprudence have long recognized the right of employers to
dismiss employees by reason of loss of trust and confidence.32 More so, in the
case of supervisors or personnel occupying positions of responsibility, loss of
trust justifies termination.33 Loss of confidence as a just cause for dismissal
is premised on the fact that an employee concerned holds a position of trust
and confidence. This situation applies where a person is entrusted with
confidence on delicate matters, such as the custody, handling, or care and
protection of the employers property. But, in order to constitute a just cause
for dismissal, the act complained of must be "work-related," such that the
employee concerned is unfit to continue working for the employer.34
The degree of proof required in labor cases is not as stringent as in other
types of cases.35 It must be noted, however, that recent decisions of this
Court have distinguished the treatment of managerial employees from that of
rank-and-file personnel in the application of the doctrine of loss of trust and

confidence.36 With respect to rank-and-file personnel, loss of trust and

confidence as ground for valid dismissal requires proof of involvement in the
alleged events in question, and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But as to a managerial
employee, the mere existence of a basis for believing that such employee has
breached the trust of his employer would suffice for his dismissal. Hence, in
the case of managerial employees, proof beyond reasonable doubt is not
required; it is sufficient that there is some basis for the loss of confidence, as
when the employer has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence
demanded by his position.37
In the present case, the respondent is not an ordinary rank-and-file
employee. The nature of her work requires a substantial amount of trust and
confidence on the part of the employer. Being the Credit Administration
Supervisor of the Cagayan de Oro and Butuan City branches of the
petitioner, respondent occupied a highly sensitive and critical position and
may thus be dismissed on the ground of loss of trust and confidence. The
duties of the respondent included the strict monitoring of the 38- or 52-day
"rolling due date" of each of its IBMs and IGSs, as well as the supervision of
the credit and collection of payments and outstanding accounts due to the
petitioner from its dealers. More importantly, respondent has a direct hand
in the preparation and computation of the Service Fees or sales commissions
accruing to each dealer. The computation of these commissions depends on
whether the dealer concerned was able to remit the sales proceeds within the
38-day or 52-day rolling deadline.
Clearly, respondents position involves a high degree of responsibility
requiring trust and confidence. The position carried with it the duty to
observe proper company procedures in the fulfillment of her job, as it relates
closely to the financial interests of the company. Respondents unauthorized
extensions of the credit periods of the dealers are prejudicial to the interest of
the petitioner and bear serious financial implications: First, the dealer
concerned is allowed to withhold remittances to the company for his or her
credit purchases beyond the expiration of the 38- or 52-day rolling deadline;
second, the Credit Administration Charges or interest penalties are not
imposed on the erring dealer; third, the dealer concerned is allowed to
purchase goods on credit despite the fact that he or she has not remitted
payment, which is against company policy; and fourth, undue Service Fees
were unknowingly paid by the company to certain IBMs. Moreover,
respondent was not guilty of one-time unauthorized extension of the credit
terms, but of repeated acts over the course of several months. Her bare,
unsubstantiated and uncorroborated denial of her participation in the
anomalies does not prove her innocence nor disprove her alleged
guilt,38 especially considering that she would vacillate between admitting and
denying the charges. On the contrary, such denial or failure to rebut the
serious accusations hurled against her militate against her innocence and
strengthen the adverse averments of the petitioner.39 The requirement that
there must be some basis or reasonable ground to believe that the employee
is responsible for the misconduct was sufficiently met in this case.

The NLRC and the CA held that there were other co-employees who had
access to the same computer terminals, hence, it cannot be pinpointed who
was responsible. Even if this is true, as respondent argues, this point is not
material. It must be stressed that the respondent was the Credit
Administration Supervisor, one tasked to directly supervise each and every
collectible due to the petitioner. Recently, this Court has held that even if the
employee had no actual and direct participation in the alleged anomalies, his
failure to detect any anomaly that would normally fall within the scope of his
work reflects his ineffectiveness and amounts to gross negligence and
incompetence, which are, likewise, justifiable grounds for his dismissal; and
that it is not necessary to prove the employees direct participation in the
irregularity, for what is material is that his actuations were more than
sufficient to sow in his employer the seed of mistrust and loss of
confidence.40 The records show that respondent, by her very own admission,
actually participated in the foregoing irregularities. Although the petitioner
could not directly and wholly attribute the monetary loss of P211,000.00
linked to the 15 samples as reflected in the Auditors Report, to the
actuations of the respondent, it is conceded in all quarters that the repeated
and unauthorized extensions of the credit terms no doubt have serious
financial implications that affect the company as a whole. Whether the
petitioner was financially prejudiced is immaterial.41 What matters is not the
amount involved, rather, it is the fraudulent scheme in which the respondent
was involved, and which constitutes a clear betrayal of trust and confidence.
In fact, there are indications that these acts had been done before, and
probably would have continued had it not been discovered.42
The Court is not impressed with respondents claim that Villagracia, her
BOM at that time, "cleverly pinned her down" as the culprit; that he deleted
from the computer files all the credit extensions that took place; and that he
"created a scenario" for a graceful exit. There is nothing in the record that
would substantiate these bare allegations. Nor can the Court accept
respondents assertion that she was never apprised of the company policies
with respect to the allowable credit terms. As Credit Administration
Supervisor, the respondent cannot feign ignorance of the irregularity as she
was sufficiently aware that the credit extensions she made were beyond
acceptable limits. By her very own admission, and in the presence of her
counsel, she was fully aware of the company-fixed rolling due dates for the
dealers and that their commissions were to be determined by their timely
remittances of the sales proceeds. In other words, respondent was aware of
the financial implications of her extension of the credit terms, especially the
outcome where the consideration of late remittances, after the extension,
would unduly inflate the sales commissions. It is also an established fact
that the petitioner, to ensure the correct computation of the commissions,
installed internal control systems in the computer terminals and that
respondent, through "practice" and "experience," acquired the proficiency
and computer literacy as to be able to override these control systems in order
to make the changes43 in clear deviation from company policy.
But the respondent, quoting the agencies a quo, insists that her extensions
of the credit terms of certain dealers were predicated on a "long standing
policy" in the Cagayan de Oro branch, and that this "arrangement" had the

"blessings of the manager." She did not prove these allegations. While case
law provides that where a violation of company policy or breach of company
rules and regulations was found to have been tolerated by management, then
the same could not serve as a basis for termination,44 in this case respondent
failed to show that her extensions of the credit terms were condoned by
management. Her BOM, Mr. Villagracia, categorically denied that he had
given her the requisite and direct authority to change the credit terms. When
the respondent, while in Butuan City, instructed Ms. Mendoza, the Accounts
Receivable Clerk of the Cagayan de Oro outlet, to change the credit terms of
IBM Mariam Rey-Petilla, respondents sister-in-law,45 to an unauthorized
term of 60 days, she reported this instruction to Villagracia who, in turn,
verified the records and reported his findings to higher management.
Villagracia even reprimanded Ms. Mendoza for carrying out respondents
instructions.46 As a consequence, higher management immediately
undertook an audit of the Cagayan de Oro and Butuan City branches where
the respondent had been assigned. And, as a consequence, an Auditors
Report was issued, expressly finding the respondent guilty of violating
company policy. Respondent was again directed by the higher authorities to
explain, in more detail, the anomalies uncovered by the audit. The foregoing
activities negate the suggestion that management tolerated respondents
unauthorized extension of credit terms. Despite the marked inconsistencies
of her statements during the formal investigation, respondent only offered the
following explanation: because of the alleged "standard practice" in the
Caloocan City branch where she worked as an Accounts Receivable Clerk,
she assumed that the extensions can be done in the Cagayan de Oro City
branch and where she allegedly procured the "blanket approval" of BOM
Villagracia; and that, since this "standard practice" had allegedly taken root
in Cagayan de Oro City (mainly owing to her activities), she assumed that the
same can be carried over to the Butuan City branch, even without any
"blanket approval" of her BOM. These declarations, self-serving as they are,
taken together, are also not demonstrative of any acquiescence on the part of
management. Even if the Court were to accept her allegation that Villagracia
deleted the pertinent files and destroyed evidence otherwise favorable to her,
she must at least show how such evidence, if hypothetically produced, would
constitute an adequate defense against the charge of carrying out
unauthorized acts. At any rate, even if the Court finds credible her
accusation that Villagracia "cleverly pinned her down" as the culprit, she will
not be exonerated for that reason alone, since it is established that she
directly and actively participated in the acts which amounted to violations of
company policy. Certainly the prerogative lies with the company to hold
Villagracia accountable, if indeed he was: the option to discipline lies with
the employer. But since Villagracia was not made a party in this proceeding,
further discussion on the point is useless.
Respondent argues that the loss of trust and confidence as Credit
Administration Supervisor had been effectively negated by the fact that she
was made to occupy the position of Branch Operations Manager for three
months immediately after Villagracia resigned. This act of the petitioner,
respondent reasons, is an express recognition of her capability and integrity
or trustworthiness as an employee.47 To support this contention, she
adduces several cash advance slips which she signed as BOM as evidence of

her appointment.48 Even in light of this "promotion," it must be noted that at

the time she occupied this position, which the petitioner asserts was done in
an acting capacity only, the investigation over the anomalies committed by
respondent had been pending. The Memorandum dated August 21, 1995
reinstating respondent and granting her request to conduct a formal
investigation with the presence of counsel expressly stated that the
reinstatement is "without prejudice" to "a reinvestigation" of her
case.49 Pending the final outcome of the investigation, respondent, as with all
persons, has in her favor the presumption of innocence, and for this reason
she may even be entitled to a promotion in due course. But after due
investigation and marshalling of facts, after the employer forms a moral
conviction that indeed the employee breached its trust and confidence, and
despite such promotion, the employer may then proceed to dismiss the erring
employee.
As stated, the rules on termination of employment and the penalties for
infractions, insofar as fiduciary employees are concerned, are not necessarily
the same as those applicable to the termination of employment of ordinary
employees. Employers, generally, are allowed a wider latitude of discretion in
terminating the employment of managerial personnel or those of similar rank
performing functions which by their nature require the employers trust and
confidence, than in the case of ordinary rank-and-file employees.50 There can
be no doubt that the respondents continuance in the sensitive fiduciary
position of Credit Administration Supervisor would be patently inimical to
the interests of the petitioner. It would be oppressive and unjust to order the
petitioner to take her back, for the law, in protecting the rights of the
employee, authorizes neither oppression nor self-destruction of the
employer.51
The award of 13th month pay must be deleted. Respondent is not a rankand-file employee and is, therefore, not entitled to thirteenth-month pay.52
However, the NLRC and the CA are correct in refusing to award 14th and
15th month pay as well as the "monthly salary increase of 10 percent per
year for two years based on her latest salary rate." The respondent must
show that these benefits are due to her as a matter of right. 53 The rule in
these cases is, she who alleges, not she who denies, must prove. Mere
allegations by the respondent do not suffice in the absence of proof
supporting the same.54 With respect to salary increases in particular, the
respondent must likewise show that she has a vested right to the same, such
that her salary increases can be made a component in the computation of
backwages. What is evident is that salary increases are a mere expectancy.
They are by nature volatile and dependent on numerous variables, including
the companys fiscal situation, the employees future performance on the job,
or the employees continued stay in a position.55 In short, absent any proof,
there is no vested right to salary increases.56
The claims for moral and exemplary damages, as correctly held by the NLRC
and the CA, should be denied for having no basis in fact and law.57 The
award of attorneys fees should likewise be deleted for the same reason. 58
And last, the Court is constrained to delete the award of separation pay.
Well-settled is the rule that separation pay shall be allowed only in those

instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on her moral character.59 Inasmuch
as the reason for which the respondent was validly separated involves her
integrity, which is required for the position of Credit Administration
Supervisor, she is not worthy of compassion as to deserve separation pay for
her length of service.60
WHEREFORE, the petition is GRANTED. The challenged Decision and
Resolution of the Court of Appeals are hereby SET ASIDE and a new one
entered DECLARING respondents dismissal valid. The complaint of
respondent is DISMISSED.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 151966 July 8, 2005

JPL MARKETING PROMOTIONS, Petitioner,
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION,
NOEL GONZALES, RAMON ABESA III and FAUSTINO
ANINIPOT, Respondents.
DECISION
Tinga, J.:
This is a petition for review of the Decision1 of the Court of Appeals in CAG.R. SP No. 62631 dated 03 October 2001 and its Resolution2 dated 25
January 2002 denying petitioners Motion for Reconsideration, affirming
theResolution of the National Labor Relations Commission (NLRC), Second
Division, dated 27 July 2000, awarding separation pay, service incentive
leave pay, and 13th month pay to private respondents.
JPL Marketing and Promotions (hereinafter referred to as "JPL") is a domestic
corporation engaged in the business of recruitment and placement of
workers. On the other hand, private respondents Noel Gonzales, Ramon
Abesa III and Faustino Aninipot were employed by JPL as merchandisers on
separate dates and assigned at different establishments in Naga City and
Daet, Camarines Norte as attendants to the display of California Marketing
Corporation (CMC), one of petitioners clients.
On 13 August 1996, JPL notified private respondents that CMC would stop
its direct merchandising activity in the Bicol Region, Isabela, and Cagayan
Valley effective 15 August 1996.3 They were advised to wait for further notice
as they would be transferred to other clients. However, on 17 October
1996,4 private respondents Abesa and Gonzales filed before the National
Labor Relations Commission Regional Arbitration Branch (NLRC) Sub V
complaints for illegal dismissal, praying for separation pay, 13th month pay,
service incentive leave pay and payment for moral damages.5 Aninipot filed a
similar case thereafter.
After the submission of pertinent pleadings by all of the parties and after
some clarificatory hearings, the complaints were consolidated and submitted
for resolution. Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the
complaints for lack of merit.6 The Labor Arbiter found that Gonzales and
Abesa applied with and were employed by the store where they were
originally assigned by JPL even before the lapse of the six (6)-month period
given by law to JPL to provide private respondents a new assignment. Thus,
they may be considered to have unilaterally severed their relation with JPL,
and cannot charge JPL with illegal dismissal.7 The Labor Arbiter held that it
was incumbent upon private respondents to wait until they were reassigned
by JPL, and if after six months they were not reassigned, they can file an
action for separation pay but not for illegal dismissal. 8 The claims for 13th
month pay and service incentive leave pay was also denied since private
respondents were paid way above the applicable minimum wage during their
employment.9

Private respondents appealed to the NLRC. In its Resolution,10 the Second

Division of the NLRC agreed with the Labor Arbiters finding that when
private respondents filed their complaints, the six-month period had not yet
expired, and that CMCs decision to stop its operations in the areas was
beyond the control of JPL, thus, they were not illegally dismissed. However, it
found that despite JPLs effort to look for clients to which private respondents
may be reassigned it was unable to do so, and hence they are entitled to
separation pay.11 Setting aside the Labor Arbiters decision, the NLRC
ordered the payment of:
1. Separation pay, based on their last salary rate and counted from the first
day of their employment with the respondent JPL up to the finality of this
judgment;
2. Service Incentive Leave pay, and 13th month pay, computed as in No.1
hereof.12
Aggrieved, JPL filed a petition for certiorari under Rule 65 of the Rules of
Court with the Court of Appeals, imputing grave abuse of discretion on the
part of the NLRC. It claimed that private respondents are not by law entitled
to separation pay, service incentive leave pay and 13th month pay.
The Court of Appeals dismissed the petition and affirmed in toto the NLRC
resolution. While conceding that there was no illegal dismissal, it justified the
award of separation pay on the grounds of equity and social justice. 13 The
Court of Appeals rejected JPLs argument that the difference in the amounts
of private respondents salaries and the minimum wage in the region should
be considered as payment for their service incentive leave and 13th month
pay.14 Notwithstanding the absence of a contractual agreement on the grant
of 13th month pay, compliance with the same is mandatory under the law.
Moreover, JPL failed to show that it was exempt from paying service incentive
leave pay. JPL filed a motion for reconsideration of the said resolution, but
the same was denied on 25 January 2002.15
In the instant petition for review, JPL claims that the Court of Appeals
committed
reversible
error
in
rendering
the
assailed Decision and Resolution.16 The instant case does not fall under any
of the instances where separation pay is due, to wit: installation of laborsaving devices, redundancy, retrenchment or closing or cessation of business
operation,17 or disease of an employee whose continued employment is
prejudicial to him or co-employees,18 or illegal dismissal of an employee but
reinstatement is no longer feasible.19 Meanwhile, an employee who
voluntarily resigns is not entitled to separation unless stipulated in the
employment contract, or the collective bargaining agreement, or is sanctioned
by established practice or policy of the employer.20 It argues that private
respondents good record and length of service, as well as the social justice
precept, are not enough to warrant the award of separation pay. Gonzales
and Aninipot were employed by JPL for more than four (4) years, while Abesa
rendered his services for more than two (2) years, hence, JPL claims that
such short period could not have shown their worth to JPL so as to reward
them with payment of separation pay.21

In addition, even assuming arguendo that private respondents are entitled to

the benefits awarded, the computation thereof should only be from their first
day of employment with JPL up to 15 August 1996, the date of termination of
CMCs contract, and not up to the finality of the 27 July 2000 resolution of
the NLRC.22 To compute separation pay, 13th month pay, and service
incentive leave pay up to 27 July 2000 would negate the findings of both the
Court of Appeals and the NLRC that private respondents were not unlawfully
terminated.23 Additionally, it would be erroneous to compute service
incentive leave pay from the first day of their employment up to the finality of
the NLRC resolution since an employee has to render at least one (1) year of
service before he is entitled to the same. Thus, service incentive leave pay
should be counted from the second year of service.24
On the other hand, private respondents maintain that they are entitled to the
benefits being claimed as per the ruling of this Court in Serrano v. NLRC, et
al.25 They claim that their dismissal, while not illegal, was tainted with bad
faith.26 They allege that they were deprived of due process because the notice
of termination was sent to them only two (2) days before the actual
termination.27 Likewise, the most that JPL offered to them by way of
settlement was the payment of separation pay of seven (7) days for every year
of service.28
Replying to private respondents allegations, JPL disagrees that the notice it
sent to them was a notice of actual termination. The said memo merely
notified them of the end of merchandising for CMC, and that they will be
transferred to other clients.29 Moreover, JPL is not bound to observe the
thirty (30)-day notice rule as there was no dismissal to speak of. JPL
counters that it was private respondents who acted in bad faith when they
sought employment with another establishment, without even the courtesy of
informing JPL that they were leaving for good, much less tender their
resignation.30 In addition, the offer of seven (7) days per year of service as
separation pay was merely an act of magnanimity on its part, even if private
respondents are not entitled to a single centavo of separation pay.31
The case thus presents two major issues, to wit: whether or not private
respondents are entitled to separation pay, 13th month pay and service
incentive leave pay, and granting that they are so entitled, what should be
the reckoning point for computing said awards.
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized
only in cases of dismissals due to any of these reasons: (a) installation of
labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the
employer's business; and (e) when the employee is suffering from a disease
and his continued employment is prohibited by law or is prejudicial to his
health and to the health of his co-employees. However, separation pay shall
be allowed as a measure of social justice in those cases where the employee
is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character, but only when he was illegally
dismissed.32 In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules
to Implement the Labor Code provides for the payment of separation pay to
an employee entitled to reinstatement but the establishment where he is to
be reinstated has closed or has ceased operations or his present position no

longer exists at the time of reinstatement for reasons not attributable to the
employer.
The common denominator of the instances where payment of separation pay
is warranted is that the employee was dismissed by the employer. 33 In the
instant case, there was no dismissal to speak of. Private respondents were
simply not dismissed at all, whether legally or illegally. What they received
from JPL was not a notice of termination of employment, but a memo
informing them of the termination of CMCs contract with JPL. More
importantly, they were advised that they were to be reassigned. At that time,
there was no severance of employment to speak of.
Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of
the operation of a business or undertaking for a period not exceeding six (6)
months, wherein an employee/employees are placed on the so-called
"floating status." When that "floating status" of an employee lasts for more
than six months, he may be considered to have been illegally dismissed from
the service. Thus, he is entitled to the corresponding benefits for his
separation, and this would apply to suspension either of the entire business
or of a specific component thereof.34
As clearly borne out by the records of this case, private respondents sought
employment from other establishments even before the expiration of the six
(6)-month period provided by law. As they admitted in their comment, all
three of them applied for and were employed by another establishment after
they received the notice from JPL.35 JPL did not terminate their employment;
they themselves severed their relations with JPL. Thus, they are not entitled
to separation pay.
The Court is not inclined in this case to award separation pay even on the
ground of compassionate justice. The Court of Appeals relied on the
cases36 wherein the Court awarded separation pay to legally dismissed
employees on the grounds of equity and social consideration. Said cases
involved employees who were actually dismissed by their employers, whether
for cause or not. Clearly, the principle applies only when the employee is
dismissed by the employer, which is not the case in this instance. In seeking
and obtaining employment elsewhere, private respondents effectively
terminated their employment with JPL.
In addition, the doctrine enunciated in the case of Serrano37 cited by private
respondents has already been abandoned by our ruling in Agabon v. National
Labor Relations Commission.38 There we ruled that an employer is liable to
pay indemnity in the form of nominal damages to a dismissed employee if, in
effecting such dismissal, the employer failed to comply with the requirements
of due process. However, private respondents are not entitled to the payment
of damages considering that there was no violation of due process in this
case. JPLs memo dated 13 August 1996 to private respondents is not a
notice of termination, but a mere note informing private respondents of the
termination of CMCs contract and their re-assignment to other clients. The
thirty (30)-day notice rule does not apply.

Nonetheless, JPL cannot escape the payment of 13th month pay and service
incentive leave pay to private respondents. Said benefits are mandated by law
and should be given to employees as a matter of right.
Presidential Decree No. 851, as amended, requires an employer to pay its
rank and file employees a 13th month pay not later than 24 December of
every year. However, employers not paying their employees a 13th month pay
or its equivalent are not covered by said law.39 The term "its equivalent" was
defined by the laws implementing guidelines as including Christmas bonus,
mid-year bonus, cash bonuses and other payment amounting to not less
than 1/12 of the basic salary but shall not include cash and stock dividends,
cost-of-living-allowances and all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits.40
On the other hand, service incentive leave, as provided in Art. 95 of the Labor
Code, is a yearly leave benefit of five (5) days with pay, enjoyed by an
employee who has rendered at least one year of service. Unless specifically
excepted, all establishments are required to grant service incentive leave to
their employees. The term "at least one year of service" shall mean service
within twelve (12) months, whether continuous or broken reckoned from the
date the employee started working.41 The Court has held in several instances
that "service incentive leave is clearly demandable after one year of service." 42
Admittedly, private respondents were not given their 13th month pay and
service incentive leave pay while they were under the employ of JPL. Instead,
JPL provided salaries which were over and above the minimum wage. The
Court rules that the difference between the minimum wage and the actual
salary received by private respondents cannot be deemed as their 13th
month pay and service incentive leave pay as such difference is not
equivalent to or of the same import as the said benefits contemplated by law.
Thus, as properly held by the Court of Appeals and by the NLRC, private
respondents are entitled to the 13th month pay and service incentive leave
pay.
However, the Court disagrees with the Court of Appeals ruling that the 13th
month pay and service incentive leave pay should be computed from the start
of employment up to the finality of the NLRC resolution. While computation
for the 13th month pay should properly begin from the first day of
employment, the service incentive leave pay should start a year after
commencement of service, for it is only then that the employee is entitled to
said benefit. On the other hand, the computation for both benefits should
only be up to 15 August 1996, or the last day that private respondents
worked for JPL. To extend the period to the date of finality of the NLRC
resolution would negate the absence of illegal dismissal, or to be more
precise, the want of dismissal in this case. Besides, it would be unfair to
require JPL to pay private respondents the said benefits beyond 15 August
1996 when they did not render any service to JPL beyond that date. These
benefits are given by law on the basis of the service actually rendered by the
employee, and in the particular case of the service incentive leave, is granted
as a motivation for the employee to stay longer with the employer. There is no
cause for granting said incentive to one who has already terminated his
relationship with the employer.

The law in protecting the rights of the employees authorizes neither

oppression nor self-destruction of the employer. It should be made clear that
when the law tilts the scale of justice in favor of labor, it is but recognition of
the inherent economic inequality between labor and management. The intent
is to balance the scale of justice; to put the two parties on relatively equal
positions. There may be cases where the circumstances warrant favoring
labor over the interests of management but never should the scale be so
tilted if the result is an injustice to the employer. Justitia nemini neganda
est (Justice is to be denied to none).43
WHEREFORE,
the
petition
is
GRANTED
IN
PART.
The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 62631
are hereby MODIFIED. The award of separation pay is deleted. Petitioner is
ordered to pay private respondents their 13th month pay commencing from
the date of employment up to 15 August 1996, as well as service incentive
leave pay from the second year of employment up to 15 August 1996. No
pronouncement as to costs.
SO ORDERED.

G.R. No. 107994 August 14, 1995

PHILIPPINE AGRICULTURAL COMMERCIAL AND INDUSTRIAL WORKERS
UNION (PACIWU)-TUCP, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND VALLACAR TRANSIT,
INC., respondents.
KAPUNAN, J.:
This is a petition for certiorari seeking to reverse the decision of the National
Labor Relations Commission (NLRC) in NLRC Case No. V-0159-92 which
dismissed the appeal of petitioner union and in effect, affirmed the decision
of the Labor Arbiter ordering the dismissal of the complaint of petitioner for
payment of 13th month pay to the drivers and conductors of respondent
company.
Petitioner Philippine Agricultural Commercial and Agricultural Workers
Union TUCP is the exclusive bargaining agent of the rank and file
employees of respondent Vallacar Transit, Inc. Petitioner union instituted a
complaint with NLRC Regional Arbitration Branch No. VI, Bacolod City, for
payment of 13th month pay in behalf of the drivers and conductors of
respondent company's Visayan operation on the ground that although said
drivers and conductors are compensated on a "purely commission" basis as
described in their Collective Bargaining Agreement (CBA), they are
automatically entitled to the basic minimum pay mandated by law should
said commission be less than their basic minimum for eight (8) hours work. 1
In its position paper, respondent Vallacar Transit, Inc. contended that since
said drivers and conductors are compensated on a purely commission basis,
they are not entitled to 13th month pay pursuant to the exempting
provisions enumerated in paragraph 2 of the Revised Guidelines on the
Implementation of the Thirteenth Month Pay Law. 2 It further contended that
Section 2 of Article XIV of the Collective Bargaining Agreement (CBA)
concluded on October 17, 1988 expressly provided that "drivers and
conductors paid on a purely commission are not legally entitled to 13th
month pay." Said CBA, being the law between the parties, must be respected,
respondent opined.
On May 22, 1992, Labor Arbiter Reynaldo Gulmatico rendered a decision
dismissing the complaint. 3
The appeal of the petitioner to the National Labor Relations Commission was
likewise dismissed 4 so was the motion for reconsideration of the said
decision. 5
Hence, the present petition.
The principal issue posed for consideration is whether or not the bus drivers
and conductors of respondent Vallacar Transit, Inc. are entitled to 13th
month pay.
We rule in the affirmative.

It may be recalled that on December 16, 1975, P.D. 851, otherwise known as
the "13th Month Pay" Law, was promulgated. The same prescribed payment
of 13th month pay in the following terms:
Sec. 1. All employers are hereby required to pay all their employees
receiving a basic salary of not more than P1,000.00 a month,
regardless of the nature of the employment, a 13th month pay not
later than December 24 of every year.
Sec. 2. Employers already paying their employees a 13th month pay
or its equivalent are not covered by this Decree.
The Rules and Regulations Implementing P.D. No. 851, issued by the then
Secretary of Labor and Employment on December 22, 1975, defined the
following basic terms:
xxx xxx xxx
(a) 13th 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 employer for services rendered, but may not include
cost of living allowances granted pursuant to Presidential Decree No.
525 or Letter of Instructions No. 174, profitsharing 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.
xxx xxx xxx
On August 13, 1986, President Corazon C. Aquino, exercising both executive
and legislative authority, issued Memorandum Order No. 28 which provided
as follows:
xxx xxx xxx
Sec.1. of Presidential Decree No. 851 is hereby modified to the extent
that all employers are hereby required to pay all their rank-and-file
employees a 13th month pay not later than December 24 of every
year.
xxx xxx xxx
In connection with and in implementation of Memorandum Order No. 28, the
then Minister of Labor and Employment issued MOLE Explanatory Bulletin
No. 86-12 on November 24, 1986. Item No. 5 (a) of the said issuance read:
xxx xxx xxx
Employees who are paid a fixed or guaranteed wage plus commission
are also entitled to the mandated 13th month pay, based on their
total earning(s) during the calendar year, i.e., on both their fixed and
guaranteed wage and commission.
xxx xxx xxx
(emphasis ours)

From the foregoing legal milieu, it is clear that every employee receiving a
commission in addition to a fixed or guaranteed wage or salary, is entitled to
a 13th month pay. For purposes of entitling rank and file employees a 13th
month pay, it is immaterial whether the employees concerned are paid a
guaranteed wage plus commission or a commission with guaranteed wage
inasmuch as the botton line is that they receive a guaranteed wage. This is
correctly construed in the MOLE Explanatory Bulletin No. 86-12.
In the case at bench, while the bus drivers and conductors of respondent
company are considered by the latter as being compensated on a commission
basis, they are not paid purely by what they receive as commission. As
admitted by respondent company, the said bus drivers and conductors are
automatically entitled to the basic minimum pay mandated by law in case
the commissions they earned be less than their basic minimum for eight (8)
hours work. 6 Evidently therefore, the commissions form part of the wage or
salary of the bus drivers and conductors. A contrary interpretation would
allow an employer to skirt the law and would result in an absurd situation
where an employee who receives a guaranteed minimum basic pay cannot be
entitled to a 13th month pay simply because he is technically referred to by
his employer per the CBA as an employee compensated on a purely
commission basis. Such would be a narrow interpretation of the law,
certainly not in accord with the liberal spirit of our labor laws. Moreover,
what is controlling is not the label attached to the remuneration that the
employee receives but the nature of the remuneration 7 and the purpose for
which the 13th month pay was given to alleviate the plight of the working
masses who are receiving low wages. This is extant from the "WHEREASES"
of PD 851, to wit:
WHEREAS, it is necessary to further protect the level of real wages
from the ravage of world-wide inflation.
WHEREAS, there has been no increase in the legal minimum wage
since 1970.
WHEREAS, the Christmas season is an opportune time for society to
show its concern for the plight of the working masses so they may
properly celebrate Christmas and New Year.
Misplaced legal hermeneutics cannot be countenanced to evade paying the
rank and file what is due to them under the law.
Commission is the recompense, compensation, reward of an employee, agent,
salesman, executor, trustee, receiver, factor, broker or bailee, when the same
is calculated as a percentage on the amount of his transactions or on the
profit of the principal. 8 While said commissions may be in the form of
incentives or encouragement to inspire said bus drivers and conductors to
put a little more zeal and industry on their jobs, still, it is safe to say that the
same are direct remunerations for services rendered, given the small
remuneration they receive for the services they render, 9 which is precisely
the reason why private respondent allowed the drivers and conductors a
guaranteed minimum wage. The conclusion is ineluctable that said
commissions are part of their salary. In Philippine Duplicators, Inc. v. National
Labor Relations Commission, 10 we had the occasion to estate that:

. . . Article 97 (f) of the Labor Code defines the term "wage" (which is
equivalent to "salary," as used in P.D. No. 851 and Memorandum
Order No. 28) in the following terms:
(f) "Wage" paid to any employee shall mean the
remuneration or earnings, however designated,
capable of being expressed in term of money, money,
whether fixed or ascertained on a time, task, piece,
or commission basis, or other method of calculating
the same, which is payable by an employer to
employee under a written or unwritten contract of
employment for work done or to be done, or for
services rendered or to be rendered, and includes
the fair and reasonable value, as determined by the
Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to
the employee. "Fair and reasonable value" shall not
include any profit to the employer or to any person
affiliated with the employer.
In the instant case, there is no question that the sales commissions
earned by salesmen who make or close a sale of duplicating
machines distributed by petitioner corporation, constitute part of the
compensation or remuneration paid to salesmen for serving as
salesmen, and hence as part of the "wage" or "salary" of petitioner's
salesmen. Indeed, it appears that petitioner pays its salesmen a
small fixed or guaranteed wage; the greater part of the salesmen's
wages or salaries being composed of the sales or incentive
commissions earned on actual sales closed by them. No doubt this
particular salary structure was intended for the benefit of petitioner
corporation, on the apparent assumption that thereby its salesmen
would be moved to greater enterprise and diligence and close more
sales in the expectation of increasing their sales commissions. This,
however, does not detract from the character of such commissions as
part of the salary or wage paid to each or its salesmen for rendering
services to petitioner corporation. 11
In sum, the 13th month pay of the bus drivers and conductors who are paid
a fixed or guaranteed minimum wage in case their commissions be less than
the statutory minimum, and commissions only in case where the same is
over and above the statutory minimum, must be equivalent to one-twelfth
(1/12) of their total earnings during the calendar year.
WHEREFORE, the petition is hereby GRANTED. The decision of respondent
National Labor Relations Commission is hereby REVERSED and SET ASIDE.
The case is remanded to the labor Arbiter for the proper computation of 13th
month pay.
SO ORDERED.

G.R. No. 110068 February 15, 1995

PHILIPPINE DUPLICATORS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE
DUPLICATORS EMPLOYEES UNION-TUPAS,respondents.
RESOLUTION
FELICIANO, J.:
On 11 November 1993, this Court, through its Third Division, rendered a
decision dismissing the Petition forCertiorari filed by petitioner Philippine
Duplicators, Inc. (Duplicators) in G.R. No. 110068. The Court upheld the
decision of public respondent National Labor Relations Commission (NLRC),
which affirmed the order of Labor Arbiter Felipe T. Garduque II directing
petitioner to pay 13th month pay to private respondent employees computed
on the basis of their fixed wages plus sales commissions. The Third Division
also denied with finality on 15 December 1993 the Motion for
Reconsideration filed (on 12 December 1993) by petitioner.
On 17 January 1994, petitioner Duplicators filed (a) a Motion for Leave to
Admit Second Motion for Reconsideration and (b) a Second Motion for
Reconsideration. This time, petitioner invoked the decision handed down by
this Court, through its Second Division, on 10 December 1993 in the two (2)
consolidated cases of Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la
Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B.Trajano, in G.R.
Nos. 92174 and 102552, respectively. In its decision, the Second
Division inter alia declared null and void the second paragraph of Section 5
(a) 1 of the Revised Guidelines issued by then Secretary of Labor Drilon.
Petitioner submits that the decision in the Duplicators case should now be
considered as having been abandoned or reversed by the BoieTakeda decision, considering that the latter went "directly opposite and
contrary to" the conclusion reached in the former. Petitioner prays that the
decision rendered in Duplicators be set aside and another be entered
directing the dismissal of the money claims of private respondent Philippine
Duplicators' Employees' Union.
In view of the nature of the issues raised, the Third Division of this Court
referred the petitioner's Second Motion for Reconsideration, and its Motion
for Leave to Admit the Second Motion for Reconsideration, to the Court en
banc en consulta. The Court en banc, after preliminary deliberation, and
inorder to settle the condition of the relevant case law, accepted G.R. No.
110068 as a banc case.
Deliberating upon the arguments contained in petitioner's Second Motion for
Reconsideration, as well as its Motion for Leave to Admit the Second Motion
for Reconsideration, and after review of the doctrines embodied, respectively,
in Duplicators and Boie-Takeda, we consider that these Motions must fail.
The decision rendered in Boie-Takeda cannot serve as a precedent under the
doctrine of stare decisis. The Boie-Takeda decision was promulgated a month
after this Court, (through its Third Division), had rendered the decision in the
instant case. Also, the petitioner's (first) Motion for Reconsideration of the

decision dated 10 November 1993 had already been denied, with finality, on
15 December 1993, i.e.; before the Boie-Takeda decision became final on 5
January 1994.
Preliminarily, we note that petitioner Duplicators did not put in issue the
validity of the Revised Guidelines on the Implementary on of the 13th Month
Pay Law, issued on November 16, 1987, by then Labor Secretary Franklin M.
Drilon, either in its Petition for Certiorari or in its (First) Motion for
Reconsideration. In fact, petitioner's counsel relied upon these Guidelines
and asserted their validity in opposing the decision rendered by public
respondent NLRC. Any attempted change in petitioner's theory, at this late
stage of the proceedings, cannot be allowed.
More importantly, we do not agree with petitioner that the decision in BoieTakeda is "directly opposite or contrary to" the decision in the present
(Philippine Duplicators). To the contrary, the doctrines enunciated in these
two (2) cases in fact co-exist one with the other. The two (2) cases present
quite different factual situations (although the same word "commissions" was
used or invoked) the legal characterizations of which must accordingly differ.
The Third Division in Durplicators found that:
In the instant case, there is no question that the sales
commission earned by the salesmen who make or close a
sale of duplicating machines distributed by petitioner
corporation, constitute part of the compensation or
remuneration paid to salesmen for serving as salesmen, and
hence as part of the "wage" or salary of petitioner's salesmen.
Indeed, it appears that petitioner pays its salesmen a small
fixed or guaranteed wage; the greater part of the salesmen's
wages or salaries being composed of the sales or incentive
commissions earned on actual sales closed by them. No
doubt this particular galary structure was intended for the
benefit of the petitioner corporation, on the apparent
assumption that thereby its salesmen would be moved to
greater enterprise and diligence and close more sales in the
expectation of increasing their sales commissions. This,
however, does not detract from the character of such
commissions as part of the salary or wage paid to each of its
salesmen for rendering services to petitioner corporation.
In other words, the sales commissions received for every duplicating machine
sold constituted part of the basic compensation or remuneration of the
salesmen of Philippine Duplicators for doing their job. The portion of the
salary structure representing commissions simply comprised an automatic
increment to the monetary value initially assigned to each unit of work
rendered by a salesman. Especially significant here also is the fact that the
fixed or guaranteed portion of the wages paid to the Philippine Duplicators'
salesmen represented only 15%-30% of an employee's total earnings in a
year. We note the following facts on record:
Salesmen's Total Earnings and 13th Month Pay
For the Year 1986 2

Name of Total Amount Paid Montly Fixed

Salesman Earnings as 13th Month Pay Wages x 12 3

Carrasco, 50,201.20 403.75*

Cicero

Baylon, P76,610.30 P1,350.00 P16,200.00

Benedicto

Punzalan, 24,351.89 1,266.00 15,192.00

Reynaldo

Bautista 90,780.85 1,182.00 14,184.00

Salvador

Poblador, 25,516.75 323.00*

Alberto

Brito, 64,382.75 1,238.00 14,856.00

Tomas

Cruz, 32,950.45 323.00*

Danilo

Bunagan, 89,287.75 1,266.00 15,192.00

Jorge

Baltazar, 15,681.35 323.00*

Carlito

Canilan, 74,678.17 1,350.00 16,200.00

Rogelio
Dasig, 54,625.16 1,378,00 16,536.00
Jeordan
Centeno, 51,854.15 1,266.04 15,192.00
Melecio, Jr.
De los Santos 73,551.39 1,322.00 15,864.00
Ricardo
del Mundo, 108,230.35 1,406.00 16,872.00
Wilfredo
Garcia, 93,753.75 1,294.00 15,528.00
Delfin
Navarro, 98,618.71 1,266.00 15,192.00
Ma. Teresa
Ochosa, 66,275.65 1,406.00 16,872.00
Rolano
Quisumbing, 101,065.75 1,406.00 16,872.00
Teofilo
Rubina, 42,209.73 1,266.00 15,192.00
Emma
Salazar, 64,643.65 1,238.00 14,856.00
Celso
Sopelario, 52,622.27 1,350.00 16,200.00
Ludivico
Tan, 30,127.50 1,238.00 14,856.00
Leynard
Talampas, 146,510.25 1,434.00 17,208.00
Pedro
Villarin, 41,888.10 1,434.00 17,208.00
Constancio

Considering the above circumstances, the Third Division held, correctly, that
the sales commissions were an integral part of the basic salary structure of
Philippine Duplicators' employees salesmen. These commissions are not
overtime payments, nor profit-sharing payments nor any other fringe benefit.
Thus, the salesmen's commissions, comprising a pre-determined percent of
the selling price of the goods sold by each salesman, were properly included
in the term "basic salary" for purposes of computing their 13th month pay.
In Boie-Takeda the so-called commissions "paid to or received by medical
representatives of Boie-Takeda Chemicals or by the rank and file employees
of Philippine Fuji Xerox Co.," were excluded from the term "basic salary"
because these were paid to the medical representatives and rank-and-file
employees as "productivity bonuses." 4 The Second Division characterized
these payments as additional monetary benefits not properly included in the
term "basic salary" in computing their 13th month pay. We note that
productivity bonuses are generally tied to the productivity, or capacity for
revenue production, of a corporation; such bonuses closely resemble profitsharing payments and have no clear director necessary relation to the
amount of work actually done by each individual employee. More generally, a
bonus is an amount granted and paid ex gratia to the employee; its payment
constitutes an act of enlightened generosity and self-interest on the part of
the employer, rather than as a demandable or enforceable obligation.
In Philippine Education Co. Inc. (PECO) v. Court of Industrial Relations, 5 the
Court explained the nature of a bonus in the following general terms:
As a rule a bonus is an amount granted and paid to an
employee for his industry loyalty which contributed to the
success of the employer's business and made possible the
realization of profits. It is an act of generosity of the employer
for which the employee ought to be thankful and grateful. It
is also granted by an enlightened employer to spur the
employee to greater efforts for the success of the business and
realization of bigger profits. . . . . From the legal point of view
a bonus is not and mandable and enforceable obligation. It is
so when It is made part of the wage or salary or
compensation. In such a case the latter would be a fixed
amount and the former would be a contingent one dependent
upon the realization of profits. . . . 6 (Emphasis supplied)

In Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge

Association, 7 the Court amplified:

Mutual

Benefit

. . . . Whether or not [a] bonus forms part of waqes depends

upon the circumstances or conditions for its payment. If it is
an additional compensation which the employer promised
and agreed to give without any conditions imposed for its
payment, such as success of business or greater production
or output, then it is part of the wage. But if it is paid only if
profits are realized or a certain amount of productivity
achieved, it cannot be considered part of wages. . . . It is also
paid on the basis of actual or actual work accomplished. If
the desired goal of production is not obtained, or the amount
of actual work accomplished, the bonus does not accrue. . .
. 8 (Emphasis supplied)
More recently, the non-demandable character of a bonus was stressed by the
Court in Traders Royal Bank v.National Labor Relations Commission: 9
A bonus is a "gratuity or act of liberality of the giver which the
recipient has no right to demand as a matter of right." (Aragon
v. Cebu Portland Cement Co., 61 O.G. 4567). "It is something
given in addition to what is ordinarily received by or strictly
due the recipient." The granting of a bonus is basically a
management prerogative which cannot be forced upon the
employer "who may not be obliged to assume the onerous
burden of granting bonuses or other benefits aside from the
employee's basic salaries or wages . . ." (Kamaya Point Hotel
v. NLRC, 177 SCRA 160 [1989]). 10(Emphasis supplied)
If an employer cannot be compelled to pay a productivity bonus to his
employees, it should follow that such productivity bonus, when given, should
not be deemed to fall within the "basic salary" of employees when the time
comes to compute their 13th month pay.
It is also important to note that the purported "commissions" paid by the
Boie-Takeda Company to its medical representatives could not have been
"sales commissions" in the same sense that Philippine Duplicators paid its
salesmen Sales commissions. Medical representatives are not salesmen; they
do not effect any sale of any article at all. In common commercial practice, in
the Philippines and elsewhere, of which we take judicial notice, medical
representatives are employees engaged in the promotion of pharmaceutical
products or medical devices manufactured by their employer. They promote
such products by visiting identified physicians and inform much physicians,
orally and with the aid of printed brochures, of the existence and chemical
composition and virtues of particular products of their company. They
commonly leave medical samples with each physician visited; but those
samples are not "sold" to the physician and the physician is, as a matter of
professional ethics, prohibited from selling such samples to their patients.
Thus, the additional payments made to Boie-Takeda's medical
representatives were not in fact sales commissions but rather partook of the
nature of profit-sharing bonuses.

The doctrine set out in the decision of the Second Division is, accordingly,
that additional payments made to employees, to the extent they partake of the
nature of profit-sharing payments, are properly excluded from the ambit of the
term "basic salary" for purposes of computing the 13th month pay due to
employees. Such additional payments are not "commissions" within the
meaning of the second paragraph of Section 5 (a) of the Revised Guidelines
Implementing 13th Month Pay.
The Supplementary Rules and Regulations Implementing P.D. No. 851
subsequently issued by former Labor Minister Ople sought to clarify the
scope of items excluded in the computation of the 13th month pay; viz.:
Sec. 4. Overtime pay, earnings and other remunerations
which are not part of the basic salary shall not be included in
the computation of the 13th month pay.
We observe that the third item excluded from the term "basic salary" is cast
in open ended and apparently circular terms: "other remunerations which
are not part of the basic salary." However, what particular types of earnings
and remuneration are or are not properly included or integrated in the basic
salary are questions to be resolved on a case to case basis, in the light of the
specific and detailed facts of each case. In principle, where these earnings
and remuneration are closely akin to fringe benefits, overtime pay or profitsharing payments, they are properlyexcluded in computing the 13th month
pay. However, sales commissions which are effectively an integral portion of
the basic salary structure of an employee, shall be included in determining
his 13th month pay.
We recognize that both productivity bonuses and sales commissions may
have an incentive effect. But there is reason to distinguish one from the other
here. Productivity bonuses are generally tied to the productivity or profit
generation of the employer corporation. Productivity bonuses are not directly
dependent on the extent an individual employee exerts himself. A
productivity bonus is something extra for which no specific additional
services are rendered by any particular employee and hence not legally
demandable, absent a contractual undertaking to pay it. Sales commissions,
on the other hand, such as those paid in Duplicators, are intimately related
to or directly proportional to the extent or energy of an employee's endeavors.
Commissions are paid upon the specific results achieved by a salesmanemployee. It is a percentage of the sales closed by a salesman and operates
as an integral part of such salesman's basic pay.
Finally, the statement of the Second Division in Boie-Takeda declaring null
and void the second paragraph of Section 5(a) of the Revised Guidelines
Implementing the 13th Month Pay issued by former Labor Secretary Drilon,
is properly understood as holding that that second paragraph provides no
legal basis for including within the term "commission" there used additional
payments to employees which are, as a matter of fact, in the nature of profitsharing payments or bonuses. If and to the extent that such second
paragraph is so interpreted and applied, it must be regarded as invalid as
having been issued in excess of the statutory authority of the Secretary of
Labor. That same second paragraph however, correctly recognizes that
commissions, like those paid in Duplicators, may constitute part of the basic

salary structure of salesmen and hence should be included in determining

the 13th month pay; to this extent, the second paragraph is and remains
valid.
ACCORDINGLY, the Motions for (a) Leave to File a Second Motion for
Reconsideration and the (b) aforesaid Second Reconsideration are DENIED
for lack of merit. No further pleadings will be entertained.

G.R. No. 118978 May 23, 1997

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE
GUZMAN, respondents.
REGALADO, J.:
Seeking relief through the extraordinary writ of certiorari, petitioner
Philippine Telegraph and Telephone Company (hereafter, PT & T) invokes the
alleged concealment of civil status and defalcation of company funds as
grounds to terminate the services of an employee. That employee, herein
private respondent Grace de Guzman, contrarily argues that what really
motivated PT & T to terminate her services was her having contracted
marriage during her employment, which is prohibited by petitioner in its
company policies. She thus claims that she was discriminated against in
gross violation of law, such a proscription by an employer being outlawed by
Article 136 of the Labor Code.
Grace de Guzman was initially hired by petitioner as a reliever, specifically as
a "Supernumerary Project Worker," for a fixed period from November 21,
1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity
leave.1 Under the Reliever Agreement which she signed with petitioner
company, her employment was to be immediately terminated upon expiration
of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and
from July 19, 1991 to August 8, 1991, private respondent's services as
reliever were again engaged by petitioner, this time in replacement of one
Erlinda F. Dizon who went on leave during both periods. 2 After August 8,
1991, and pursuant to their Reliever Agreement, her services were
terminated.
On September 2, 1991, private respondent was once more asked to join
petitioner company as a probationary employee, the probationary period to
cover 150 days. In the job application form that was furnished her to be filled
up for the purpose, she indicated in the portion for civil status therein that
she was single although she had contracted marriage a few months earlier,
that is, on May 26, 1991. 3

1992, 6 which she readily contested by initiating a complaint for illegal

dismissal, coupled with a claim for non-payment of cost of living allowances
(COLA), before the Regional Arbitration Branch of the National Labor
Relations Commission in Baguio City.
At the preliminary conference conducted in connection therewith, private
respondent volunteered the information, and this was incorporated in the
stipulation of facts between the parties, that she had failed to remit the
amount of P2,380.75 of her collections. She then executed a promissory note
for that amount in favor of petitioner 7. All of these took place in a formal
proceeding and with the agreement of the parties and/or their counsel.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a
decision declaring that private respondent, who had already gained the
status of a regular employee, was illegally dismissed by petitioner. Her
reinstatement, plus payment of the corresponding back wages and COLA,
was correspondingly ordered, the labor arbiter being of the firmly expressed
view that the ground relied upon by petitioner in dismissing private
respondent was clearly insufficient, and that it was apparent that she had
been discriminated against on account of her having contracted marriage in
violation of company rules.
On appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiter and, in its decision dated April 29, 1994,
it ruled that private respondent had indeed been the subject of an unjust and
unlawful discrimination by her employer, PT & T. However, the decision of
the labor arbiter was modified with the qualification that Grace de Guzman
deserved to be suspended for three months in view of the dishonest nature of
her acts which should not be condoned. In all other respects, the NLRC
affirmed the decision of the labor arbiter, including the order for the
reinstatement of private respondent in her employment with PT & T.
The subsequent motion for reconsideration filed by petitioner was rebuffed by
respondent NLRC in its resolution of November 9, 1994, hence this special
civil action assailing the aforestated decisions of the labor arbiter and
respondent NLRC, as well as the denial resolution of the latter.

It now appears that private respondent had made the same representation in
the two successive reliever agreements which she signed on June 10, 1991
and July 8, 1991. When petitioner supposedly learned about the same later,
its branch supervisor in Baguio City, Delia M. Oficial, sent to private
respondent a memorandum dated January 15, 1992 requiring her to explain
the discrepancy. In that memorandum, she was reminded about the
company's policy of not accepting married women for employment. 4

1. Decreed in the Bible itself is the universal norm that women should be
regarded with love and respect but, through the ages, men have responded to
that injunction with indifference, on the hubristic conceit that women
constitute the inferior sex. Nowhere has that prejudice against womankind
been so pervasive as in the field of labor, especially on the matter of equal
employment opportunities and standards. In the Philippine setting, women
have traditionally been considered as falling within the vulnerable groups or
types of workers who must be safeguarded with preventive and remedial
social legislation against discriminatory and exploitative practices in hiring,
training, benefits, promotion and retention.

In her reply letter dated January 17, 1992, private respondent stated that
she was not aware of PT&T's policy regarding married women at the time,
and that all along she had not deliberately hidden her true civil
status. 5Petitioner nonetheless remained unconvinced by her explanations.
Private respondent was dismissed from the company effective January 29,

The Constitution, cognizant of the disparity in rights between men and

women in almost all phases of social and political life, provides a gamut of
protective provisions. To cite a few of the primordial ones, Section 14, Article
II 8on the Declaration of Principles and State Policies, expressly recognizes
the role of women in nation-building and commands the State to ensure, at

all times, the fundamental equality before the law of women and men.
Corollary thereto, Section 3 of Article XIII 9 (the progenitor whereof dates
back to both the 1935 and 1973 Constitution) pointedly requires the State to
afford full protection to labor and to promote full employment and equality of
employment opportunities for all, including an assurance of entitlement to
tenurial security of all workers. Similarly, Section 14 of Article
XIII 10 mandates that the State shall protect working women through
provisions for opportunities that would enable them to reach their full
potential.
2. Corrective labor and social laws on gender inequality have emerged with
more frequency in the years since the Labor Code was enacted on May 1,
1974 as Presidential Decree No. 442, largely due to our country's
commitment as a signatory to the United Nations Convention on the
Elimination of All Forms of Discrimination Against Women (CEDAW). 11
Principal among these laws are Republic Act No. 6727 12 which explicitly
prohibits discrimination against women with respect to terms and conditions
of employment, promotion, and training opportunities; Republic Act No.
6955 13 which bans the "mail-order-bride" practice for a fee and the export of
female labor to countries that cannot guarantee protection to the rights of
women workers; Republic Act No. 7192 14 also known as the "Women in
Development and Nation Building Act," which affords women equal
opportunities with men to act and to enter into contracts, and for
appointment, admission, training, graduation, and commissioning in all
military or similar schools of the Armed Forces of the Philippines and the
Philippine National Police; Republic Act No. 7322 15 increasing the maternity
benefits granted to women in the private sector; Republic Act No.
7877 16 which outlaws and punishes sexual harassment in the workplace
and in the education and training environment; and Republic Act No.
8042, 17 or the "Migrant Workers and Overseas Filipinos Act of 1995," which
prescribes as a matter of policy, inter alia, the deployment of migrant
workers, with emphasis on women, only in countries where their rights are
secure. Likewise, it would not be amiss to point out that in the Family
Code, 18 women's rights in the field of civil law have been greatly enhanced
and expanded.
In the Labor Code, provisions governing the rights of women workers are
found in Articles 130 to 138 thereof. Article 130 involves the right against
particular kinds of night work while Article 132 ensures the right of women
to be provided with facilities and standards which the Secretary of Labor may
establish to ensure their health and safety. For purposes of labor and social
legislation, a woman working in a nightclub, cocktail lounge, massage clinic,
bar or other similar establishments shall be considered as an employee
under Article 138. Article 135, on the other hand, recognizes a woman's right
against discrimination with respect to terms and conditions of employment
on account simply of sex. Finally, and this brings us to the issue at hand,
Article 136 explicitly prohibits discrimination merely by reason of the
marriage of a female employee.
3. Acknowledged as paramount in the due process scheme is the
constitutional guarantee of protection to labor and security of tenure. Thus,

an employer is required, as a condition sine qua non prior to severance of the

employment ties of an individual under his employ, to convincingly establish,
through substantial evidence, the existence of a valid and just cause in
dispensing with the services of such employee, one's labor being regarded as
constitutionally protected property.
On the other hand, it is recognized that regulation of manpower by the
company falls within the so-called management prerogatives, which
prescriptions encompass the matter of hiring, supervision of workers, work
assignments, working methods and assignments, as well as regulations on
the transfer of employees, lay-off of workers, and the discipline, dismissal,
and recall of employees. 19 As put in a case, an employer is free to regulate,
according to his discretion and best business judgment, all aspects of
employment, "from hiring to firing," except in cases of unlawful
discrimination or those which may be provided by law. 20
In the case at bar, petitioner's policy of not accepting or considering as
disqualified from work any woman worker who contracts marriage runs afoul
of the test of, and the right against, discrimination, afforded all women
workers by our labor laws and by no less than the Constitution. Contrary to
petitioner's assertion that it dismissed private respondent from employment
on account of her dishonesty, the record discloses clearly that her ties with
the company were dissolved principally because of the company's policy that
married women are not qualified for employment in PT & T, and not merely
because of her supposed acts of dishonesty.
That it was so can easily be seen from the memorandum sent to private
respondent by Delia M. Oficial, the branch supervisor of the company, with
the reminder, in the words of the latter, that "you're fully aware that the
company is not accepting married women employee (sic), as it was verbally
instructed to you." 21 Again, in the termination notice sent to her by the same
branch supervisor, private respondent was made to understand that her
severance from the service was not only by reason of her concealment of her
married status but, over and on top of that, was her violation of the
company's policy against marriage ("and even told you that married women
employees
are
not
applicable
[sic]
or
accepted
in
our
company.") 22 Parenthetically, this seems to be the curious reason why it was
made to appear in the initiatory pleadings that petitioner was represented in
this case only by its said supervisor and not by its highest ranking officers
who would otherwise be solidarily liable with the corporation. 23
Verily, private respondent's act of concealing the true nature of her status
from PT & T could not be properly characterized as willful or in bad faith as
she was moved to act the way she did mainly because she wanted to retain a
permanent job in a stable company. In other words, she was practically
forced by that very same illegal company policy into misrepresenting her civil
status for fear of being disqualified from work. While loss of confidence is a
just cause for termination of employment, it should not be simulated. 24 It
must rest on an actual breach of duty committed by the employee and not on
the employer's caprices. 25 Furthermore, it should never be used as a
subterfuge for causes which are improper, illegal, or unjustified. 26

In the present controversy, petitioner's expostulations that it dismissed

private respondent, not because the latter got married but because she
concealed that fact, does have a hollow ring. Her concealment, so it is
claimed, bespeaks dishonesty hence the consequent loss of confidence in her
which justified her dismissal.
Petitioner would asseverate, therefore, that while it has nothing against
marriage, it nonetheless takes umbrage over the concealment of that fact.
This improbable reasoning, with interstitial distinctions, perturbs the Court
since private respondent may well be minded to claim that the imputation of
dishonesty should be the other way around.
Petitioner would have the Court believe that although private respondent
defied its policy against its female employees contracting marriage, what
could be an act of insubordination was inconsequential. What it submits as
unforgivable is her concealment of that marriage yet, at the same time,
declaring that marriage as a trivial matter to which it supposedly has no
objection. In other words, PT & T says it gives its blessings to its female
employees contracting marriage, despite the maternity leaves and other
benefits it would consequently respond for and which obviously it would have
wanted to avoid. If that employee confesses such fact of marriage, there will
be no sanction; but if such employee conceals the same instead of proceeding
to the confessional, she will be dismissed. This line of reasoning does not
impress us as reflecting its true management policy or that we are being
regaled with responsible advocacy.
This Court should be spared the ennui of strained reasoning and the tedium
of propositions which confuse through less than candid arguments. Indeed,
petitioner glosses over the fact that it was its unlawful policy against married
women, both on the aspects of qualification and retention, which compelled
private respondent to conceal her supervenient marriage. It was, however,
that very policy alone which was the cause of private respondent's secretive
conduct now complained of. It is then apropos to recall the familiar saying
that he who is the cause of the cause is the cause of the evil caused.
Finally, petitioner's collateral insistence on the admission of private
respondent that she supposedly misappropriated company funds, as an
additional ground to dismiss her from employment, is somewhat insincere
and self-serving. Concededly, private respondent admitted in the course of
the proceedings that she failed to remit some of her collections, but that is an
altogether different story. The fact is that she was dismissed solely because of
her concealment of her marital status, and not on the basis of that supposed
defalcation of company funds. That the labor arbiter would thus consider
petitioner's submissions on this supposed dishonesty as a mere afterthought,
just to bolster its case for dismissal, is a perceptive conclusion born of
experience in labor cases. For, there was no showing that private respondent
deliberately misappropriated the amount or whether her failure to remit the
same was through negligence and, if so, whether the negligence was in
nature simple or grave. In fact, it was merely agreed that private respondent
execute a promissory note to refund the same, which she did, and the matter
was deemed settled as a peripheral issue in the labor case.

Private respondent, it must be observed, had gained regular status at the

time of her dismissal. When she was served her walking papers on January
29, 1992, she was about to complete the probationary period of 150 days as
she was contracted as a probationary employee on September 2, 1991. That
her dismissal would be effected just when her probationary period was
winding down clearly raises the plausible conclusion that it was done in
order to prevent her from earning security of tenure. 27 On the other hand,
her earlier stints with the company as reliever were undoubtedly those of a
regular employee, even if the same were for fixed periods, as she performed
activities which were essential or necessary in the usual trade and business
of PT & T. 28 The primary standard of determining regular employment is the
reasonable connection between the activity performed by the employee in
relation to the business or trade of the employer. 29
As an employee who had therefore gained regular status, and as she had
been dismissed without just cause, she is entitled to reinstatement without
loss of seniority rights and other privileges and to full back wages, inclusive
of allowances and other benefits or their monetary equivalent. 30 However, as
she had undeniably committed an act of dishonesty in concealing her status,
albeit under the compulsion of an unlawful imposition of petitioner, the
three-month suspension imposed by respondent NLRC must be upheld to
obviate the impression or inference that such act should be condoned. It
would be unfair to the employer if she were to return to its fold without any
sanction whatsoever for her act which was not totally justified. Thus, her
entitlement to back wages, which shall be computed from the time her
compensation was withheld up to the time of her actual reinstatement, shall
be reduced by deducting therefrom the amount corresponding to her three
months suspension.
4. The government, to repeat, abhors any stipulation or policy in the nature
of that adopted by petitioner PT & T. The Labor Code state, in no uncertain
terms, as follows:
Art. 136. Stipulation against marriage. It shall be unlawful
for an employer to require as a condition of employment or
continuation of employment that a woman shall not get
married, or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of
marriage.
This provision had a studied history for its origin can be traced to Section 8
of Presidential Decree No. 148, 31better known as the "Women and
Child Labor Law," which amended paragraph (c), Section 12 of Republic Act
No. 679, 32 entitled "An Act to Regulate the Employment of Women and
Children, to Provide Penalties for Violations Thereof, and for Other Purposes."
The forerunner to Republic Act No. 679, on the other hand, was Act No. 3071
which became law on March 16, 1923 and which regulated the employment
of women and children in shops, factories, industrial, agricultural, and
mercantile establishments and other places of labor in the then Philippine
Islands.

It would be worthwhile to reflect upon and adopt here the rationalization

in Zialcita, et al. vs. Philippine Air Lines, 33a decision that emanated from the
Office of the President. There, a policy of Philippine Air Lines requiring that
prospective flight attendants must be single and that they will be
automatically separated from the service once they marry was declared void,
it being violative of the clear mandate in Article 136 of the Labor Code with
regard to discrimination against married women. Thus:
Of first impression is the incompatibility of the respondent's
policy or regulation with the codal provision of law.
Respondent is resolute in its contention that Article 136 of
the Labor Code applies only to women employed in ordinary
occupations and that the prohibition against marriage of
women engaged in extraordinary occupations, like flight
attendants, is fair and reasonable, considering the
pecularities of their chosen profession.
We cannot subscribe to the line of reasoning pursued by
respondent. All along, it knew that the controverted policy
has already met its doom as early as March 13, 1973 when
Presidential Decree No. 148, otherwise known as the Women
and Child Labor Law, was promulgated. But for the timidity
of those affected or their labor unions in challenging the
validity of the policy, the same was able to obtain a
momentary reprieve. A close look at Section 8 of said decree,
which amended paragraph (c) of Section 12 of Republic Act
No. 679, reveals that it is exactly the same provision
reproduced verbatim in Article 136 of the Labor Code, which
was promulgated on May 1, 1974 to take effect six (6)
months later, or on November 1, 1974.
It cannot be gainsaid that, with the reiteration of the same
provision in the new Labor Code, all policies and acts against
it are deemed illegal and therefore abrogated. True, Article
132 enjoins the Secretary of Labor to establish standards
that will ensure the safety and health of women employees
and in appropriate cases shall by regulation require
employers to determine appropriate minimum standards for
termination in special occupations, such as those of flight
attendants, but that is precisely the factor that militates
against the policy of respondent. The standards have not yet
been established as set forth in the first paragraph, nor has
the Secretary of Labor issued any regulation affecting flight
attendants.
It is logical to presume that, in the absence of said standards
or regulations which are as yet to be established, the policy
of respondent against marriage is patently illegal. This finds
support in Section 9 of the New Constitution, which
provides:
Sec. 9. The State shall afford protection to labor, promote full
employment and equality in employment, ensure equal work

opportunities regardless of sex, race, or creed, and regulate

the relations between workers and employees. The State
shall assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and
humane conditions of work . . . .
Moreover, we cannot agree to the respondent's proposition
that termination from employment of flight attendants on
account of marriage is a fair and reasonable standard
designed for their own health, safety, protection and welfare,
as no basis has been laid therefor. Actually, respondent
claims that its concern is not so much against the continued
employment of the flight attendant merely by reason of
marriage as observed by the Secretary of Labor, but rather
on the consequence of marriage-pregnancy. Respondent
discussed at length in the instant appeal the supposed ill
effects of pregnancy on flight attendants in the course of
their employment. We feel that this needs no further
discussion as it had been adequately explained by the
Secretary of Labor in his decision of May 2, 1976.
In a vain attempt to give meaning to its position, respondent
went as far as invoking the provisions of Articles 52 and 216
of the New Civil Code on the preservation of marriage as an
inviolable social institution and the family as a basic social
institution, respectively, as bases for its policy of nonmarriage. In both instances, respondent predicates absence
of a flight attendant from her home for long periods of time
as contributory to an unhappy married life. This is pure
conjecture not based on actual conditions, considering that,
in this modern world, sophisticated technology has narrowed
the distance from one place to another. Moreover,
respondent overlooked the fact that married flight attendants
can program their lives to adapt to prevailing circumstances
and events.
Article 136 is not intended to apply only to women employed
in ordinary occupations, or it should have categorically
expressed so. The sweeping intendment of the law, be it on
special or ordinary occupations, is reflected in the whole text
and supported by Article 135 that speaks of nondiscrimination on the employment of women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque
Mining & Industrial Corporation 34considered as void a policy of the same
nature. In said case, respondent, in dismissing from the service the
complainant, invoked a policy of the firm to consider female employees in the
project it was undertaking as separated the moment they get married due to
lack of facilities for married women. Respondent further claimed that
complainant was employed in the project with an oral understanding that
her services would be terminated when she gets married. Branding the policy
of the employer as an example of "discriminatory chauvinism" tantamount to

denying equal employment opportunities to women simply on account of

their sex, the appellate court struck down said employer policy as unlawful
in view of its repugnance to the Civil Code, Presidential Decree No. 148 and
the Constitution.
Under American jurisprudence, job requirements which establish employer
preference or conditions relating to the marital status of an employee are
categorized as a "sex-plus" discrimination where it is imposed on one sex and
not on the other. Further, the same should be evenly applied and must not
inflict adverse effects on a racial or sexual group which is protected by
federal job discrimination laws. Employment rules that forbid or restrict the
employment of married women, but do not apply to married men, have been
held to violate Title VII of the United States Civil Rights Act of 1964, the main
federal statute prohibiting job discrimination against employees and
applicants on the basis of, among other things, sex. 35
Further, it is not relevant that the rule is not directed against all women but
just against married women. And, where the employer discriminates against
married women, but not against married men, the variable is sex and the
discrimination is unlawful. 36 Upon the other hand, a requirement that a
woman employee must remain unmarried could be justified as a "bona fide
occupational qualification," or BFOQ, where the particular requirements of
the job would justify the same, but not on the ground of a general principle,
such as the desirability of spreading work in the workplace. A requirement of
that nature would be valid provided it reflects an inherent quality reasonably
necessary for satisfactory job performance. Thus, in one case, a no-marriage
rule applicable to both male and female flight attendants, was regarded as
unlawful since the restriction was not related to the job performance of the
flight attendants. 37
5. Petitioner's policy is not only in derogation of the provisions of Article 136
of the Labor Code on the right of a woman to be free from any kind of
stipulation against marriage in connection with her employment, but it
likewise assaults good morals and public policy, tending as it does to deprive
a woman of the freedom to choose her status, a privilege that by all accounts
inheres in the individual as an intangible and inalienable right. 38 Hence,
while it is true that the parties to a contract may establish any agreements,
terms, and conditions that they may deem convenient, the same should not
be contrary to law, morals, good customs, public order, or public
policy. 39 Carried to its logical consequences, it may even be said that
petitioner's policy against legitimate marital bonds would encourage illicit or
common-law relations and subvert the sacrament of marriage.
Parenthetically, the Civil Code provisions on the contract of labor state that
the relations between the parties, that is, of capital and labor, are not merely
contractual, impressed as they are with so much public interest that the
same should yield to the common good. 40 It goes on to intone that neither
capital nor labor should visit acts of oppression against the other, nor impair
the interest or convenience of the public. 41 In the final reckoning, the danger
of just such a policy against marriage followed by petitioner PT & T is that it
strikes at the very essence, ideals and purpose of marriage as an inviolable
social institution and, ultimately, of the family as the foundation of the

nation. 42 That it must be effectively interdicted here in all its indirect,

disguised or dissembled forms as discriminatory conduct derogatory of the
laws of the land is not only in order but imperatively required.
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and
Telephone Company is hereby DISMISSED for lack of merit, with double
costs against petitioner.
SO ORDERED.

G.R. No. 166379 October 20, 2005

LAKPUE DRUG, INC., LA CROESUS PHARMA, INC., TROPICAL
BIOLOGICAL PHILS., INC. (all known as LAKPUE GROUP OF
COMPANIES) and/or ENRIQUE CASTILLO, JR., Petitioners,
vs.
MA. LOURDES BELGA, Respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us is a petition for review of the July 28, 2004 Decision1 of the Court
of Appeals in CA-G.R. SP No. 80616 which reversed and set aside the April
14, 2003 Decision2 of the National Labor Relations Commission (NLRC) in
NLRC NCR 00-09-04981-01; and its December 17, 2004 Resolution3 denying
the motion for reconsideration.
Petitioner Tropical Biological Phils., Inc. (Tropical), a subsidiary of Lakpue
Group of Companies, hired on March 1, 1995 respondent Ma. Lourdes Belga
(Belga) as bookkeeper and subsequently promoted as assistant cashier. On
March 19, 2001, Belga brought her daughter to the Philippine General
Hospital (PGH) for treatment of broncho-pneumonia. On her way to the
hospital, Belga dropped by the house of Marylinda O. Vegafria, Technical
Manager of Tropical, to hand over the documents she worked on over the
weekend and to give notice of her emergency leave.
While at the PGH, Belga who was pregnant experienced labor pains and gave
birth on the same day. On March 22, 2001, or two days after giving birth,
Tropical summoned Belga to report for work but the latter replied that she
could not comply because of her situation. On March 30, 2001, Tropical sent
Belga another memorandum ordering her to report for work and also
informing her of the clarificatory conference scheduled on April 2, 2001.
Belga requested that the conference be moved to April 4, 2001 as her
newborn was scheduled for check-up on April 2, 2001. When Belga attended
the clarificatory conference on April 4, 2001, she was informed of her
dismissal effective that day.
Belga thus filed a complaint with the Public Assistance and Complaint Unit
(PACU) of the Department of Labor and Employment (DOLE). Attempts to
settle the case failed, hence the parties brought the case before the NLRCNCR.
Tropical, for its part, averred that it hired Belga on March 1, 1995 as a
bookkeeper and later promoted to various positions the last of which was as
"Treasury Assistant". Tropical claimed that this position was not merely
clerical because it included duties such as assisting the cashier in preparing
deposit slips, bills purchased, withdrawal slips, provisional receipts,
incoming and outgoing bank transactions, postdated checks, suppliers
checklist and issuance of checks, authorities to debit and doing liaison work
with banks.
Tropical also alleged that Belga concealed her pregnancy from the company.
She did not apply for leave and her absence disrupted Tropicals financial
transactions. On March 21, 2001, it required Belga to explain her

unauthorized absence and on March 30, 2001, it informed her of a

conference scheduled on April 2, 2001. Tropical claimed that Belga refused to
receive the second memorandum and did not attend the conference. She
reported for work only on April 4, 2001 where she was given a chance to
explain.
On April 17, 2001, Tropical terminated Belga on the following grounds: (1)
Absence without official leave for 16 days; (2) Dishonesty, for deliberately
concealing her pregnancy; (3) Insubordination, for her deliberate refusal to
heed and comply with the memoranda sent by the Personnel Department on
March 21 and 30, 2001 respectively.4
The Labor Arbiter ruled in favor of Belga and found that she was illegally
dismissed, thus:
WHEREFORE, the termination of complainant is hereby declared illegal.
ACCORDINGLY, she should be reinstated with full backwages, which as of
May 31, 2002, now amounts to P122, 248.71.
Ten (10%) percent of the total monetary award as attorneys fees is likewise
ordered.
SO ORDERED.5
Tropical appealed to the NLRC, which reversed the findings of the labor
arbiter in its Decision dated April 14, 2003, thus:
WHEREFORE, in the light of the foregoing, the assailed Decision is
REVERSED and SET ASIDE. We thereby render judgment:
(1) declaring complainant-appellees dismissal valid; and
(2) nullifying complainant-appellees monetary claims.
SO ORDERED.6
Upon denial of the motion for reconsideration on September 24, 2003,7 Belga
filed a petition for certiorari with the Court of Appeals which found in favor of
Belga, thus:
WHEREFORE, premises considered, the Decision promulgated on April 14,
2003 and the Resolution promulgated on September 24, 2003 of the public
respondent National Labor Relations Commission are hereby REVERSED
and SET ASIDE. The decision of the Labor Arbiter dated June 15, 2002 is
hereby REINSTATED.
SO ORDERED.8
Hence, Tropical filed the instant petition claiming that:
I.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN
HOLDING THAT RESPONDENT WAS ILLEGALLY DISMISSED.
II.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN

DISREGARDING THE FINDINGS OF THE NATIONAL LABOR RELATIONS
COMMISSION.9

subordination.11 In the instant case, the memoranda were given to Belga two
days after she had given birth. It was thus physically impossible for Belga to
report for work and explain her absence, as ordered.

The petition lacks merit.

Tropical avers that Belgas job as Treasury Assistant is a position of

responsibility since she handles vital transactions for the company. It adds
that the nature of Belgas work and the character of her duties involved
utmost trust and confidence.

Tropicals ground for terminating Belga is her alleged concealment of

pregnancy. It argues that such non-disclosure is tantamount to dishonesty
and impresses upon this Court the importance of Belgas position and the
gravity of the disruption her unexpected absence brought to the company.
Tropical also charges Belga with insubordination for refusing to comply with
its directives to report for work and to explain her absence.
Tropical cites the following paragraphs of Article 282 of the Labor Code as
legal basis for terminating Belga:
Article 282. Termination by employer. An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
....
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative; ....
We have defined misconduct as a transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. The
misconduct to be serious must be of such grave and aggravated character
and not merely trivial and unimportant. Such misconduct, however serious,
must, nevertheless, be in connection with the employees work to constitute
just cause for his separation.10
In the instant case, the alleged misconduct of Belga barely falls within the
situation contemplated by the law. Her absence for 16 days was justified
considering that she had just delivered a child, which can hardly be
considered a forbidden act, a dereliction of duty; much less does it imply
wrongful intent on the part of Belga. Tropical harps on the alleged
concealment by Belga of her pregnancy. This argument, however, begs the
question as to how one can conceal a full-term pregnancy. We agree with
respondents position that it can hardly escape notice how she grows bigger
each day. While there may be instances where the pregnancy may be
inconspicuous, it has not been sufficiently proven by Tropical that Belgas
case is such.
Belgas failure to formally inform Tropical of her pregnancy can not be
considered as grave misconduct directly connected to her work as to
constitute just cause for her separation.
The charge of disobedience for Belgas failure to comply with the memoranda
must likewise fail. Disobedience, as a just cause for termination, must be
willful or intentional. Willfulness is characterized by a wrongful and perverse
mental attitude rendering the employees act inconsistent with proper

Time and again, we have recognized the right of employers to dismiss

employees by reason of loss of trust and confidence. However, we emphasize
that such ground is premised on the fact that the employee concerned holds
a position of responsibility or trust and confidence.12 In order to constitute a
just cause for dismissal, the act complained of must be "work-related" such
as would show the employee concerned to be unfit to continue working for
the employer.13 More importantly, the loss of trust and confidence must be
based on the willful breach of the trust reposed in the employee by his
employer. A breach of trust is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.14
Belga was an assistant cashier whose primary function was to assist the
cashier in such duties as preparation of deposit slips, provisional receipts,
post-dated checks, etc. As correctly observed by the Court of Appeals, these
functions are essentially clerical. For while ostensibly, the documents that
Belga prepares as Assistant Cashier pertain to her employers property, her
work does not call for independent judgment or discretion. Belga simply
prepares the documents as instructed by her superiors subject to the latters
verification or approval. Hence, her position cannot be considered as one of
responsibility or imbued with trust and confidence.
Furthermore, Tropical has not satisfactorily shown how and to what extent it
had suffered damages because of Belgas absences. For while it may be true
that the company was caught unprepared and unable to hire a temporary
replacement, we are not convinced that Belgas absence for 16 days has
wreaked havoc on Tropicals business as to justify her termination from the
company. On the other hand, it is undisputed that Belga has worked for
Tropical for 7 years without any blemish on her service record. In fact, the
company admitted in its petition that she "has rendered seven (7) years of
service in compliance with [the companys] rules". 15 And her fidelity to her
work is evident because even in the midst of an emergency, she managed to
transmit to the company the documents she worked on over the weekend so
that it would not cause any problem for the company.
All told, we find that the penalty of dismissal was too harsh in light of the
circumstances obtaining in this case. While it may be true that Belga ought
to have formally informed the company of her impending maternity leave so
as to give the latter sufficient time to find a temporary replacement, her
termination from employment is not commensurate to her lapse in judgment.
Even assuming that there was just cause for terminating Belga, her
dismissal is nonetheless invalid for failure of Tropical to observe the twinnotice requirement. The March 21, 2001 memorandum merely informed her

to report for work and explain her absences. The March 30, 2001
memorandum demanded that she report for work and attend a clarificatory
conference. Belga received the first memorandum but allegedly refused to
receive the second.
In Electro System Industries Corporation v. National Labor Relations
Commission,16 we held that, in dismissing an employee, the employer has the
burden of proving that the worker has been served two notices: (1) one to
apprise him of the particular acts or omissions for which his dismissal is
sought, and (2) the other to inform him of his employers decision to dismiss
him. The first notice must state that the dismissal is sought for the act or
omission charged against the employee, otherwise the notice cannot be
considered sufficient compliance with the rules. It must also inform outright
that an investigation will be conducted on the charges particularized therein
which, if proven, will result to his dismissal. Further, we held that a notation
in the notice that the employee refused to sign is not sufficient proof that the
employer attempted to serve the notice to the employee.
An employee who was illegally dismissed from work is entitled to
reinstatement without loss of seniority rights, and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.17 Thus, Belga is entitled
to be reinstated to her former or equivalent position and to the payment of
full backwages from the time she was illegally dismissed until her actual
reinstatement.
WHEREFORE, the instant petition is DENIED. The July 28, 2004 Decision of
the Court of Appeals in CA-G.R. SP No. 80616 and its December 17, 2004
Resolution are AFFIRMED in toto.
SO ORDERED.

G.R. No. 164774

April 12, 2006

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN

CHUA, Petitioners,
vs.
RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E.
ESTRELLA, Respondents.
DECISION
PUNO, J.:
We are called to decide an issue of first impression: whether the policy of the
employer banning spouses from working in the same company violates the
rights of the employee under the Constitution and the Labor Code or is a
valid exercise of management prerogative.
At bar is a Petition for Review on Certiorari of the Decision of the Court of
Appeals dated August 3, 2004 in CA-G.R. SP No. 73477 reversing the
decision of the National Labor Relations Commission (NLRC) which affirmed
the ruling of the Labor Arbiter.
Petitioner Star Paper Corporation (the company) is a corporation engaged in
trading principally of paper products. Josephine Ongsitco is its Manager of
the Personnel and Administration Department while Sebastian Chua is its
Managing Director.
The evidence for the petitioners show that respondents Ronaldo D. Simbol
(Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all
regular employees of the company.1
Simbol was employed by the company on October 27, 1993. He met Alma
Dayrit, also an employee of the company, whom he married on June 27,
1998. Prior to the marriage, Ongsitco advised the couple that should they
decide to get married, one of them should resign pursuant to a company
policy promulgated in 1995,2 viz.:
1. New applicants will not be allowed to be hired if in case he/she
has [a] relative, up to [the] 3rd degree of relationship, already
employed by the company.
2. In case of two of our employees (both singles [sic], one male and
another female) developed a friendly relationship during the course of
their employment and then decided to get married, one of them
should resign to preserve the policy stated above.3
Simbol resigned on June 20, 1998 pursuant to the company policy.4
Comia was hired by the company on February 5, 1997. She met Howard
Comia, a co-employee, whom she married on June 1, 2000. Ongsitco likewise
reminded them that pursuant to company policy, one must resign should
they decide to get married. Comia resigned on June 30, 2000.5
Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a
co-worker. Petitioners stated that Zuiga, a married man, got Estrella

pregnant. The company allegedly could have terminated her services due to
immorality but she opted to resign on December 21, 1999.6
The respondents each signed a Release and Confirmation Agreement. They
stated therein that they have no money and property accountabilities in the
company and that they release the latter of any claim or demand of whatever
nature.7
Respondents offer a different version of their dismissal. Simbol and Comia
allege that they did not resign voluntarily; they were compelled to resign in
view of an illegal company policy. As to respondent Estrella, she alleges that
she had a relationship with co-worker Zuiga who misrepresented himself as
a married but separated man. After he got her pregnant, she discovered that
he was not separated. Thus, she severed her relationship with him to avoid
dismissal due to the company policy. On November 30, 1999, she met an
accident and was advised by the doctor at the Orthopedic Hospital to
recuperate for twenty-one (21) days. She returned to work on December 21,
1999 but she found out that her name was on-hold at the gate. She was
denied entry. She was directed to proceed to the personnel office where one
of the staff handed her a memorandum. The memorandum stated that she
was being dismissed for immoral conduct. She refused to sign the
memorandum because she was on leave for twenty-one (21) days and has not
been given a chance to explain. The management asked her to write an
explanation. However, after submission of the explanation, she was
nonetheless dismissed by the company. Due to her urgent need for money,
she later submitted a letter of resignation in exchange for her thirteenth
month pay.8
Respondents later filed a complaint for unfair labor practice, constructive
dismissal, separation pay and attorneys fees. They averred that the
aforementioned company policy is illegal and contravenes Article 136 of the
Labor Code. They also contended that they were dismissed due to their union
membership.
On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the
complaint for lack of merit, viz.:
[T]his company policy was decreed pursuant to what the respondent
corporation perceived as management prerogative. This management
prerogative is quite broad and encompassing for it covers hiring, work
assignment, working method, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of workers. Except as provided for or limited by special
law, an employer is free to regulate, according to his own discretion and
judgment all the aspects of employment.9 (Citations omitted.)
On appeal to the NLRC, the Commission affirmed the decision of the Labor
Arbiter on January 11, 2002. 10
Respondents filed a Motion for Reconsideration but was denied by the NLRC
in a Resolution11 dated August 8, 2002. They appealed to respondent
court via Petition for Certiorari.

In its assailed Decision dated August 3, 2004, the Court of Appeals reversed
the NLRC decision, viz.:

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living for the laborer.

WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of the
National Labor Relations Commission is hereby REVERSED and SET ASIDE
and a new one is entered as follows:

The Labor Code is the most comprehensive piece of legislation protecting

labor. The case at bar involves Article 136 of the Labor Code which provides:

(1) Declaring illegal, the petitioners dismissal from employment and

ordering private respondents to reinstate petitioners to their former
positions without loss of seniority rights with full backwages from
the time of their dismissal until actual reinstatement; and
(2) Ordering private respondents to pay petitioners attorneys fees
amounting to 10% of the award and the cost of this suit.13
On appeal to this Court, petitioners contend that the Court of Appeals erred
in holding that:
1. x x x the subject 1995 policy/regulation is violative of the
constitutional rights towards marriage and the family of employees
and of Article 136 of the Labor Code; and
2. x x x respondents resignations were far from voluntary.14
We affirm.
The 1987 Constitution15 states our policy towards the protection of labor
under the following provisions, viz.:
Article II, Section 18. The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their welfare.
xxx
Article XIII, Sec. 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, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.
The Civil Code likewise protects labor with the following provisions:
Art. 1700. The relation between capital and labor are not merely contractual.
They are so impressed with public interest that labor contracts must yield to
the common good. Therefore, such contracts are subject to the special laws
on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects.

Art. 136. It shall be unlawful for an employer to require as a condition of

employment or continuation of employment that a woman employee shall not
get married, or to stipulate expressly or tacitly that upon getting married a
woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee
merely by reason of her marriage.
Respondents submit that their dismissal violates the above provision.
Petitioners allege that its policy "may appear to be contrary to Article 136 of
the Labor Code" but it assumes a new meaning if read together with the first
paragraph of the rule. The rule does not require the woman employee to
resign. The employee spouses have the right to choose who between them
should resign. Further, they are free to marry persons other than coemployees. Hence, it is not the marital status of the employee, per se, that is
being discriminated. It is only intended to carry out its no-employment-forrelatives-within-the-third-degree-policy which is within the ambit of the
prerogatives of management.16
It is true that the policy of petitioners prohibiting close relatives from working
in the same company takes the nature of an anti-nepotism employment
policy. Companies adopt these policies to prevent the hiring of unqualified
persons based on their status as a relative, rather than upon their
ability.17 These policies focus upon the potential employment problems
arising from the perception of favoritism exhibited towards relatives.
With more women entering the workforce, employers are also enacting
employment policies specifically prohibiting spouses from working for the
same company. We note that two types of employment policies involve
spouses: policies banning only spouses from working in the same
company (no-spouse employment policies), and those banning all
immediate family members, including spouses, from working in the same
company (anti-nepotism employment policies).18
Unlike in our jurisdiction where there is no express prohibition on marital
discrimination,19 there are twenty state statutes 20 in the United States
prohibiting marital discrimination. Some state courts 21 have been confronted
with the issue of whether no-spouse policies violate their laws prohibiting
both marital status and sex discrimination.
In challenging the anti-nepotism employment policies in the United States,
complainants utilize two theories of employment discrimination:
the disparate treatment and the disparate impact. Under the disparate
treatment analysis, the plaintiff must prove that an employment policy is
discriminatory on its face. No-spouse employment policies requiring an
employee of a particular sex to either quit, transfer, or be fired are facially
discriminatory. For example, an employment policy prohibiting the employer
from hiring wives of male employees, but not husbands of female employees,
is discriminatory on its face.22

On the other hand, to establish disparate impact, the complainants must

prove that a facially neutral policy has a disproportionate effect on a
particular class. For example, although most employment policies do not
expressly indicate which spouse will be required to transfer or leave the
company, the policy often disproportionately affects one sex.23
The state courts rulings on the issue depend on their interpretation of the
scope of marital status discrimination within the meaning of their respective
civil rights acts. Though they agree that the term "marital status"
encompasses discrimination based on a person's status as either married,
single, divorced, or widowed, they are divided on whether the term has
a broader meaning. Thus, their decisions vary.24
The courts narrowly25 interpreting marital status to refer only to a person's
status as married, single, divorced, or widowed reason that if the legislature
intended a broader definition it would have either chosen different language
or specified its intent. They hold that the relevant inquiry is if one is married
rather than to whom one is married. They construe marital status
discrimination to include only whether a person is single, married, divorced,
or widowed and not the "identity, occupation, and place of employment of
one's spouse." These courts have upheld the questioned policies and ruled
that they did not violate the marital status discrimination provision of their
respective state statutes.
The courts that have broadly26 construed the term "marital status" rule that
it encompassed the identity, occupation and employment of one's spouse.
They strike down the no-spouse employment policies based on the broad
legislative intent of the state statute. They reason that the no-spouse
employment policy violate the marital status provision because it arbitrarily
discriminates against all spouses of present employees without regard to the
actual effect on the individual's qualifications or work performance. 27 These
courts also find the no-spouse employment policy invalid for failure of the
employer to present any evidence of business necessity other than the
general perception that spouses in the same workplace might adversely affect
the business.28 They hold that the absence of such a bona fide occupational
qualification29 invalidates a rule denying employment to one spouse due to
the current employment of the other spouse in the same office.30 Thus, they
rule that unless the employer can prove that the reasonable demands of the
business require a distinction based on marital status and there is no better
available or acceptable policy which would better accomplish the business
purpose, an employer may not discriminate against an employee based on
the identity of the employees spouse.31 This is known as the bona fide
occupational qualification exception.
We note that since the finding of a bona fide occupational qualification
justifies an employers no-spouse rule, the exception is interpreted strictly
and narrowly by these state courts. There must be a compelling business
necessity for which no alternative exists other than the discriminatory
practice.32 To justify a bona fide occupational qualification, the employer
must prove two factors: (1) that the employment qualification is reasonably
related to the essential operation of the job involved; and, (2) that there is a

factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.33
The concept of a bona fide occupational qualification is not foreign in our
jurisdiction. We employ the standard ofreasonableness of the company
policy which is parallel to the bona fide occupational qualification
requirement. In the recent case of Duncan Association of DetailmanPTGWO and Pedro Tecson v. Glaxo Wellcome Philippines, Inc.,34 we
passed on the validity of the policy of a pharmaceutical company prohibiting
its employees from marrying employees of any competitor company. We held
that Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information from
competitors. We considered the prohibition against personal or marital
relationships with employees of competitor companies upon Glaxos
employeesreasonable under the circumstances because relationships of that
nature might compromise the interests of Glaxo. In laying down the assailed
company policy, we recognized that Glaxo only aims to protect its interests
against the possibility that a competitor company will gain access to its
secrets and procedures.35
The requirement that a company policy must be reasonable under the
circumstances to qualify as a valid exercise of management prerogative was
also at issue in the 1997 case of Philippine Telegraph and Telephone
Company v. NLRC.36 In said case, the employee was dismissed in violation
of petitioners policy of disqualifying from work any woman worker who
contracts marriage. We held that the company policy violates the right
against discrimination afforded all women workers under Article 136 of the
Labor Code, but established a permissible exception, viz.:
[A] requirement that a woman employee must remain unmarried could be
justified as a "bona fide occupational qualification," or BFOQ, where the
particular requirements of the job would justify the same, but not on the
ground of a general principle, such as the desirability of spreading work in
the workplace. A requirement of that nature would be valid provided it
reflects an inherent quality reasonably necessary for satisfactory job
performance.37 (Emphases supplied.)
The cases of Duncan and PT&T instruct us that the requirement of
reasonableness must be clearly established to uphold the questioned
employment policy. The employer has the burden to prove the existence of a
reasonable business necessity. The burden was successfully discharged in
Duncan but not in PT&T.
We do not find a reasonable business necessity in the case at bar.
Petitioners sole contention that "the company did not just want to have two
(2) or more of its employees related between the third degree by affinity
and/or consanguinity"38 is lame. That the second paragraph was meant to
give teeth to the first paragraph of the questioned rule39 is evidently not the
valid reasonable business necessity required by the law.
It is significant to note that in the case at bar, respondents were hired after
they were found fit for the job, but were asked to resign when they married a
co-employee. Petitioners failed to show how the marriage of Simbol, then a

Sheeting Machine Operator, to Alma Dayrit, then an employee of the

Repacking Section, could be detrimental to its business operations. Neither
did petitioners explain how this detriment will happen in the case of Wilfreda
Comia, then a Production Helper in the Selecting Department, who married
Howard Comia, then a helper in the cutter-machine. The policy is premised
on the mere fear that employees married to each other will be less efficient. If
we uphold the questioned rule without valid justification, the employer can
create policies based on an unproven presumption of a perceived danger at
the expense of an employees right to security of tenure.

avoid embarrassment and humiliation, she would not have gone back to
work at all. Nor would she have filed a suit for illegal dismissal and pleaded
for reinstatement. We have held that in voluntary resignation, the employee
is compelled by personal reason(s) to dissociate himself from employment. It
is done with the intention of relinquishing an office, accompanied by the act
of abandonment. 44 Thus, it is illogical for Estrella to resign and then file a
complaint for illegal dismissal. Given the lack of sufficient evidence on the
part of petitioners that the resignation was voluntary, Estrellas dismissal is
declared illegal.

Petitioners contend that their policy will apply only when one employee
marries a co-employee, but they are free to marry persons other than coemployees. The questioned policy may not facially violate Article 136 of the
Labor Code but it creates a disproportionate effect and under the disparate
impact theory, the only way it could pass judicial scrutiny is a showing that
it is reasonable despite the discriminatory, albeit disproportionate, effect.
The failure of petitioners to prove a legitimate business concern in imposing
the questioned policy cannot prejudice the employees right to be free from
arbitrary discrimination based upon stereotypes of married persons working
together in one company.40

IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No.

73477 dated August 3, 2004 isAFFIRMED.1avvphil.net

Lastly, the absence of a statute expressly prohibiting marital discrimination

in our jurisdiction cannot benefit the petitioners. The protection given to
labor in our jurisdiction is vast and extensive that we cannot prudently draw
inferences from the legislatures silence 41 that married persons are not
protected under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present undisputed
proof of a reasonable business necessity, we rule that the questioned policy
is an invalid exercise of management prerogative. Corollarily, the issue as to
whether respondents Simbol and Comia resigned voluntarily has become
moot and academic.
As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling
on the singular fact that her resignation letter was written in her own
handwriting. Both ruled that her resignation was voluntary and thus valid.
The respondent court failed to categorically rule whether Estrella voluntarily
resigned but ordered that she be reinstated along with Simbol and Comia.
Estrella claims that she was pressured to submit a resignation letter because
she was in dire need of money. We examined the records of the case and find
Estrellas contention to be more in accord with the evidence. While findings of
fact by administrative tribunals like the NLRC are generally given not only
respect but, at times, finality, this rule admits of exceptions, 42 as in the case
at bar.
Estrella avers that she went back to work on December 21, 1999 but was
dismissed due to her alleged immoral conduct. At first, she did not want to
sign the termination papers but she was forced to tender her resignation
letter in exchange for her thirteenth month pay.
The contention of petitioners that Estrella was pressured to resign because
she got impregnated by a married man and she could not stand being looked
upon or talked about as immoral43 is incredulous. If she really wanted to

SO ORDERED.

G.R. No. 155831

February 18, 2008

MA. LOURDES T. DOMINGO, petitioner,

vs.
ROGELIO I. RAYALA, respondent.
x-------------------------x
G.R. No. 155840

February 18, 2008

ROGELIO I. RAYALA, petitioner,

vs.
OFFICE OF THE PRESIDENT; RONALDO V. ZAMORA, in his capacity as
Executive Secretary; ROY V. SENERES, in his capacity as Chairman of
the National Labor Relations Commission (in lieu of RAUL T. AQUINO, in
his capacity as Acting Chairman of the National labor Relations
Commission); and MA. LOURDES T. DOMINGO, respondents.
x-------------------------x
G.R. No. 158700

February 18, 2008

The REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF

THE PRESIDENT; and ALBERTO G. ROMULO, in his capacity as
Executive Secretary, petitioners,
vs.
ROGELIO I. RAYALA, respondent.
DECISION
NACHURA, J.:
Sexual harassment is an imposition of misplaced "superiority" which is
enough to dampen an employees spirit and her capacity for advancement. It
affects her sense of judgment; it changes her life.1
Before this Court are three Petitions for Review on Certiorari assailing the
October 18, 2002 Resolution of the CAs Former Ninth Division2 in CA-G.R.
SP No. 61026. The Resolution modified the December 14, 2001 Decision 3of
the Court of Appeals Eleventh Division, which had affirmed the Decision of
the Office of the President (OP) dismissing from the service then National
Labor Relations Commission (NLRC) Chairman Rogelio I. Rayala (Rayala) for
disgraceful and immoral conduct.
All three petitions stem from the same factual antecedents.
On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then
Stenographic Reporter III at the NLRC, filed a Complaint for sexual
harassment against Rayala before Secretary Bienvenido Laguesma of the
Department of Labor and Employment (DOLE).
To support the Complaint, Domingo executed an Affidavit narrating the
incidences of sexual harassment complained of, thus:
xxxx
4. Sa simula ay pabulong na sinasabihan lang ako ni Chairman
Rayala ng mga salitang "Lot, gumaganda ka yata?"

5. Sa ibang mga pagkakataon nilalapitan na ako ni Chairman at

hahawakan ang aking balikat sabay pisil sa mga ito habang ako ay
nagta-type at habang nagbibigay siya ng diktasyon. Sa mga
pagkakataong ito, kinakabahan ako. Natatakot na baka mangyari sa
akin ang mga napapabalitang insidente na nangyari na noon tungkol
sa mga sekretarya niyang nagbitiw gawa ng mga mahahalay na
panghihipo ni Chairman.
6. Noong ika-10 ng Setyembre, 1998, nang ako ay nasa 8 th Floor,
may nagsabi sa akin na kailangan akong bumaba sa 7 th Floor kung
nasaan ang aming opisina dahil sa may koreksyon daw na gagawin
sa mga papel na tinayp ko. Bumaba naman ako para gawin ito.
Habang ginagawa ko ito, lumabas si Chairman Rayala sa silid ni Mr.
Alex Lopez. Inutusan ako ni Chairman na sumunod sa kaniyang
silid. Nang nasa silid na kami, sinabi niya sa akin:
Chairman: Lot, I like you a lot. Naiiba ka sa lahat.
At pagkatapos ako ay kaniyang inusisa tungkol sa mga personal na
bagay sa aking buhay. Ang ilan dito ay tungkol sa aking mga
magulang, kapatid, pag-aaral at kung may boyfriend na raw ba ako.
Chairman: May boyfriend ka na ba?
Lourdes: Dati nagkaroon po.
Chairman: Nasaan na siya?
Lourdes: Nag-asawa na ho.
Chairman: Bakit hindi kayo nagkatuluyan?
Lourdes: Nainip po.
Chairman: Pagkatapos mo ng kurso mo ay kumuha ka ng
Law at ako ang bahala sa iyo, hanggang ako pa ang
Chairman dito.
Pagkatapos ay kumuha siya ng pera sa kaniyang amerikana at
inaabot sa akin.
Chairman: Kuhanin mo ito.
Lourdes: Huwag na ho hindi ko kailangan.
Chairman: Hindi sige, kuhanin mo. Ayusin mo ang dapat
ayusin.
Tinanggap ko po ang pera ng may pag-aalinlangan. Natatakot at
kinakabahan na kapag hindi ko tinanggap ang pera ay baka siya
magagalit kasabay na rito ang pagtapon sa akin kung saan-saan
opisina o kaya ay tanggalin ako sa posisyon.
Chairman: Paglabas mo itago mo ang pera. Ayaw ko ng may
makaka-alam nito. Just the two of us.
Lourdes: Bakit naman, Sir?

Chairman: Basta. Maraming tsismosa diyan sa labas. But I

dont give them a damn. Hindi ako mamatay sa kanila.
Tumayo na ako at lumabas. Pumanhik na ako ng 8 th Floor at
pumunta ako sa officemate ko na si Agnes Magdaet. Ikinwento ko
ang nangyari sa akin sa opisina ni Chairman. Habang kinikwento ko
ito kay Agnes ay binilang namin ang pera na nagkakahalaga ng
tatlong libong piso (PHP 3,000). Sinabi ni Agnes na isauli ko raw ang
pera, pero ang sabi ko ay natatakot ako baka magalit si Sir. Nagsabi
agad kami kay EC Perlita Velasco at sinalaysay ko ang nangyari.
Sinabi niya na isauli ko ang pera at noong araw ding iyon ay
nagpasiya akong isauli na nga ito ngunit hindi ako nagkaroon ng
pagkakataon dahil marami siyang naging bisita. Isinauli ko nga ang
pera noong Lunes, Setyembre 14, 1998.
7. Noong huling linggo ng Setyembre, 1998, ay may tinanong din sa
akin si Chairman Rayala na hindi ko masikmura, at sa aking
palagay at tahasang pambabastos sa akin.
Chairman: Lot, may ka live-in ka ba?
Lourdes: Sir, wala po.
Chairman: Bakit malaki ang balakang mo?
Lourdes: Kayo, Sir ha! Masama sa amin ang may ka live-in.
Chairman: Bakit, ano ba ang relihiyon ninyo?
Lourdes: Catholic, Sir. Kailangan ikasal muna.
Chairman: Bakit ako, hindi kasal.
Lourdes: Sir, di magpakasal kayo.
Chairman: Huh. Ibahin na nga natin ang usapan.
8. Noong Oktubre 29, 1998, ako ay pumasok sa kwarto ni Chairman
Rayala. Ito ay sa kadahilanang ang fax machine ay nasa loob ng
kaniyang kwarto. Ang nag-aasikaso nito, si Riza Ocampo, ay nakaleave kaya ako ang nag-asikaso nito noong araw na iyon. Nang
mabigyan ko na ng fax tone yung kausap ko, pagharap ko sa kanan
ay nakaharang sa dadaanan ko si Chairman Rayala. Tinitingnan ako
sa mata at ang titig niya ay umuusad mula ulo hanggang dibdib
tapos ay ngumiti na may mahalay na pakahulugan.
9. Noong hapon naman ng pareho pa ring petsa, may nag-aapply na
sekretarya sa opisina, sinabi ko ito kay Chairman Rayala:
Lourdes: Sir, si Pinky po yung applicant, mag-papainterview
po yata sa inyo.
Chairman: Sabihin mo magpa-pap smear muna siya
Chairman: O sige, i-refer mo kay Alex. (Alex Lopez, Chief of
Staff).

10. Noong Nobyembre 9, 1998, ako ay tinawag ni Chairman Rayala

sa kaniyang opisina upang kuhanin ko ang diktasyon niya para kay
ELA Oscar Uy. Hindi pa kami nakakatapos ng unang talata, may
pumasok na bisita si Chairman, si Baby Pangilinan na sinamahan ni
Riza Ocampo. Pinalabas muna ako ni Chairman. Nang maka-alis na
si Ms. Pangilinan, pinapasok na niya ako ulit. Umupo ako. Lumapit
sa likuran ko si Chairman, hinawakan ang kaliwang balikat ko na
pinipisil ng kanang kamay niya at sinabi:
Chairman: Saan na ba tayo natapos?
Palakad-lakad siya sa aking likuran habang nag-didikta. Huminto
siya pagkatapos, at nilagay niya ang kanang kamay niya sa aking
kanang balikat at pinisil-pisil ito pagkatapos ay pinagapang niya ito
sa kanang bahagi ng aking leeg, at pinagapang hanggang kanang
tenga at saka kiniliti. Dito ko inalis ang kaniyang kamay sa
pamamagitan ng aking kaliwang kamay. At saka ko sinabi:
Lourdes: Sir, yung kamay ninyo alisin niyo!
Natapos ko rin ang liham na pinagagawa niya pero halos hindi ko na
maintindihan ang na-isulat ko dahil sa takot at inis na
nararamdaman ko.4
After the last incident narrated, Domingo filed for leave of absence and asked
to be immediately transferred. Thereafter, she filed the Complaint for sexual
harassment on the basis of Administrative Order No. 250, the Rules and
Regulations Implementing RA 7877 in the Department of Labor and
Employment.
Upon receipt of the Complaint, the DOLE Secretary referred the Complaint to
the OP, Rayala being a presidential appointee. The OP, through then
Executive Secretary Ronaldo Zamora, ordered Secretary Laguesma to
investigate the allegations in the Complaint and create a committee for such
purpose. On December 4, 1998, Secretary Laguesma issued Administrative
Order (AO) No. 280, Series of 1998,5 constituting a Committee on Decorum
and Investigation (Committee) in accordance with Republic Act (RA) 7877,
the Anti-Sexual Harassment Act of 1995.6
The Committee heard the parties and received their respective evidence. On
March 2, 2000, the Committee submitted its report and recommendation to
Secretary Laguesma. It found Rayala guilty of the offense charged and
recommended the imposition of the minimum penalty provided under AO
250, which it erroneously stated as suspension for six (6) months.
The following day, Secretary Laguesma submitted a copy of the Committee
Report and Recommendation to the OP, but with the recommendation that
the penalty should be suspension for six (6) months and one (1) day, in
accordance with AO 250.
On May 8, 2000, the OP, through Executive Secretary Zamora, issued AO
119,7 the pertinent portions of which read:
Upon a careful scrutiny of the evidence on record, I concur with the
findings of the Committee as to the culpability of the respondent

[Rayala], the same having been established by clear and convincing

evidence. However, I disagree with the recommendation that
respondent be meted only the penalty of suspension for six (6)
months and one (1) day considering the circumstances of the case.
What aggravates respondents situation is the undeniable
circumstance that he took advantage of his position as the superior
of the complainant. Respondent occupies the highest position in the
NLRC, being its Chairman. As head of said office, it was incumbent
upon respondent to set an example to the others as to how they
should conduct themselves in public office, to see to it that his
subordinates work efficiently in accordance with Civil Service Rules
and Regulations, and to provide them with healthy working
atmosphere wherein co-workers treat each other with respect,
courtesy and cooperation, so that in the end the public interest will
be benefited (City Mayor of Zamboanga vs. Court of Appeals, 182
SCRA 785 [1990]).
What is more, public service requires the utmost integrity and
strictest discipline (Gano vs. Leonen, 232 SCRA 99 [1994]). Thus, a
public servant must exhibit at all times the highest sense of honesty
and integrity, and "utmost devotion and dedication to duty" (Sec. 4
(g), RA 6713), respect the rights of others and shall refrain from
doing acts contrary to law, and good morals (Sec. 4(c)). No less than
the Constitution sanctifies the principle that a public office is a
public trust, and enjoins all public officers and employees to serve
with the highest degree of responsibility, integrity, loyalty and
efficiency (Section 1, Article XI, 1987 Constitution).
Given these established standards, I see respondents acts not just
[as] a failure to give due courtesy and respect to his co-employees
(subordinates) or to maintain good conduct and behavior but
defiance of the basic norms or virtues which a government official
must at all times uphold, one that is contrary to law and "public
sense of morality." Otherwise stated, respondent to whom stricter
standards must apply being the highest official [of] the NLRC had
shown an attitude, a frame of mind, a disgraceful conduct, which
renders him unfit to remain in the service.
WHEREFORE, in view of the foregoing, respondent Rogelio I. Rayala,
Chairman, National Labor Relations Commission, is found guilty of
the grave offense of disgraceful and immoral conduct and is
herebyDISMISSED from the service effective upon receipt of this
Order.
SO ORDER[ED].
Rayala filed a Motion for Reconsideration, which the OP denied in a
Resolution8 dated May 24, 2000. He then filed a Petition for Certiorari and
Prohibition with Prayer for Temporary Restraining Order under Rule 65 of
the Revised Rules on Civil Procedure before this Court on June 14,
2000.9 However, the same was dismissed in a Resolution dated June 26,
2000 for disregarding the hierarchy of courts.10 Rayala filed a Motion for

Reconsideration11 on August 15, 2000. In its Resolution12 dated September

4, 2000, the Court recalled its June 26 Resolution and referred the petition
to the Court of Appeals (CA) for appropriate action.
The CA rendered its Decision13 on December 14, 2001. It held that there was
sufficient evidence on record to create moral certainty that Rayala committed
the acts he was charged with. It said:
The complainant narrated her story complete with details. Her
straightforward and uninhibited testimony was not emasculated by
the declarations of Commissioner Rayala or his witnesses. x x x
Moreover, Commissioner Rayala has not proven any vicious motive
for Domingo and her witnesses to invent their stories. It is very
unlikely that they would perjure themselves only to accommodate
the alleged conspiracy to oust petitioner from office. Save for his
empty conjectures and speculations, Rayala failed to substantiate his
contrived conspiracy. It is a hornbook doctrine that conspiracy must
be proved by positive and convincing evidence (People v. Noroa, 329
SCRA 502 [2000]). Besides, it is improbable that the complainant
would concoct a story of sexual harassment against the highest
official of the NLRC and thereby expose herself to the possibility of
losing her job, or be the subject of reprisal from her superiors and
perhaps public ridicule if she was not telling the truth.
It also held that Rayalas dismissal was proper. The CA pointed out that
Rayala was dismissed for disgraceful and immoral conduct in violation of RA
6713, the Code of Conduct and Ethical Standards for Public Officials and
Employees. It held that the OP was correct in concluding that Rayalas acts
violated RA 6713:
Indeed, [Rayala] was a public official, holding the Chairmanship of
the National Labor Relations Commission, entrusted with the sacred
duty of administering justice. Occupying as he does such an exalted
position, Commissioner Rayala must pay a high price for the honor
bestowed upon him. He must comport himself at all times in such a
manner that the conduct of his everyday life should be beyond
reproach and free from any impropriety. That the acts complained of
were committed within the sanctuary of [his] office compounded the
objectionable nature of his wrongdoing. By daring to violate the
complainant within the solitude of his chambers, Commissioner
Rayala placed the integrity of his office in disrepute. His disgraceful
and immoral conduct warrants his removal from office.14
Thus, it dismissed the petition, to wit:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby
DISMISSED and Administrative Order No. 119 as well [as] the
Resolution of the Office of the President in O.P. Case No. 00-E-9118
dated May 24, 2000 are AFFIRMED IN TOTO. No cost.
SO ORDERED.15
Rayala timely filed a Motion for Reconsideration. Justices Vasquez and
Tolentino voted to affirm the December 14 Decision. However, Justice Reyes

dissented mainly because AO 250 states that the penalty imposable is

suspension for six (6) months and one (1) day.16 Pursuant to the internal
rules of the CA, a Special Division of Five was constituted.17 In its October
18, 2002 Resolution, the CA modified its earlier Decision:
ACCORDINGLY, the Decision dated December [14], 2001 is
MODIFIED to the effect that the penalty of dismissal is DELETED
and instead the penalty of suspension from service for the maximum
period of one (1) year is HEREBY IMPOSED upon the petitioner. The
rest of the challenged decision stands.
SO ORDERED.
Domingo filed a Petition for Review18 before this Court, which we denied in
our February 19, 2003 Resolution for having a defective verification. She filed
a Motion for Reconsideration, which the Court granted; hence, the petition
was reinstated.
Rayala likewise filed a Petition for Review19 with this Court essentially
arguing that he is not guilty of any act of sexual harassment.
Meanwhile, the Republic filed a Motion for Reconsideration of the CAs
October 18, 2002 Resolution. The CA denied the same in its June 3, 2003
Resolution, the dispositive portion of which reads:
ACCORDINGLY, by a majority vote, public respondents Motion for
Reconsideration, (sic) is DENIED.
SO ORDERED.
The Republic then filed its own Petition for Review.20
On June 28, 2004, the Court directed the consolidation of the three (3)
petitions.
G.R. No. 155831
Domingo assails the CAs resolution modifying the penalty imposed by the
Office of the President. She raises this issue:
The Court of Appeals erred in modifying the penalty for the
respondent from dismissal to suspension from service for the
maximum period of one year. The President has the prerogative to
determine the proper penalty to be imposed on an erring Presidential
appointee. The President was well within his power when he fittingly
used that prerogative in deciding to dismiss the respondent from the
service.21
She argues that the power to remove Rayala, a presidential appointee, is
lodged with the President who has control of the entire Executive
Department, its bureaus and offices. The OPs decision was arrived at after
affording Rayala due process. Hence, his dismissal from the service is a
prerogative that is entirely with the President.22
As to the applicability of AO No. 250, she argues that the same was not
intended to cover cases against presidential appointees. AO No. 250 refers
only to the instances wherein the DOLE Secretary is the disciplining

authority, and thus, the AO does not circumscribe the power of the President
to dismiss an erring presidential appointee.
G.R. No. 155840
In his petition, Rayala raises the following issues:
I. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS,
THE ACTS OF HEREIN PETITIONER DO NOT CONSTITUTE
SEXUAL HARASSMENT AS LAID DOWN BY THE En Banc RULING
IN THE CASE OFAQUINO vs. ACOSTA, ibid., AS WELL AS IN THE
APPLICATION OF EXISTING LAWS.
II. CONTRARY TO THE FINDINGS OF THE HONORABLE COURT
OF APPEALS, INTENT IS AN INDISPENSABLE ELEMENT IN A
CASE FOR SEXUAL HARASSMENT. THE HONORABLE COURT
ERRED IN ITS FINDING THAT IT IS AN OFFENSE THAT IS
MALUM PROHIBITUM.
III. THE INVESTIGATION COMMITTEE, THE OFFICE OF THE
PRESIDENT, AND NOW, THE HONORABLE COURT OF APPEALS,
HAS MISAPPLIED AND EXPANDED THE DEFINITION OF SEXUAL
HARASSMENT IN THE WORKPLACE UNDER R.A. No. 7877, BY
APPLYING DOLE A.O. 250, WHICH RUNS COUNTER TO THE
RECENT PRONOUNCEMENTS OF THIS HONORABLE SUPREME
COURT.23
Invoking Aquino v. Acosta,24 Rayala argues that the case is the definitive
ruling on what constitutes sexual harassment. Thus, he posits that for
sexual harassment to exist under RA 7877, there must be: (a) demand,
request, or requirement of a sexual favor; (b) the same is made a precondition to hiring, re-employment, or continued employment; or (c) the
denial thereof results in discrimination against the employee.
Rayala asserts that Domingo has failed to allege and establish any sexual
favor, demand, or request from petitioner in exchange for her continued
employment or for her promotion. According to Rayala, the acts imputed to
him are without malice or ulterior motive. It was merely Domingos
perception of malice in his alleged acts a "product of her own
imagination"25 that led her to file the sexual harassment complaint.
Likewise, Rayala assails the OPs interpretation, as upheld by the CA, that
RA 7877 is malum prohibitum such that the defense of absence of malice is
unavailing. He argues that sexual harassment is considered an offense
against a particular person, not against society as a whole. Thus, he claims
that intent is an essential element of the offense because the law requires as
a conditio sine qua non that a sexual favor be first sought by the offender in
order to achieve certain specific results. Sexual harassment is committed
with the perpetrators deliberate intent to commit the offense.26
Rayala next argues that AO 250 expands the acts proscribed in RA 7877. In
particular, he assails the definition of the forms of sexual harassment:
Rule IV

FORMS OF SEXUAL HARASSMENT

Section 1. Forms of Sexual Harassment. Sexual harassment may
be committed in any of the following forms:
a) Overt sexual advances;
b) Unwelcome or improper gestures of affection;
c) Request or demand for sexual favors including but not limited to
going out on dates, outings or the like for the same purpose;
d) Any other act or conduct of a sexual nature or for purposes of
sexual gratification which is generally annoying, disgusting or
offensive to the victim.27
He posits that these acts alone without corresponding demand, request, or
requirement do not constitute sexual harassment as contemplated by the
law.28 He alleges that the rule-making power granted to the employer in
Section 4(a) of RA 7877 is limited only to procedural matters. The law did not
delegate to the employer the power to promulgate rules which would provide
other or additional forms of sexual harassment, or to come up with its own
definition of sexual harassment.29
G.R. No. 158700
The Republic raises this issue:
Whether or not the President of the Philippines may validly
dismiss respondent Rayala as Chairman of the NLRC for
committing acts of sexual harassment.30
The Republic argues that Rayalas acts constitute sexual harassment under
AO 250. His acts constitute unwelcome or improper gestures of affection and
are acts or conduct of a sexual nature, which are generally annoying or
offensive to the victim.31
It also contends that there is no legal basis for the CAs reduction of the
penalty imposed by the OP. Rayalas dismissal is valid and warranted under
the circumstances. The power to remove the NLRC Chairman solely rests
upon the President, limited only by the requirements under the law and the
due process clause.
The Republic further claims that, although AO 250 provides only a one (1)
year suspension, it will not prevent the OP from validly imposing the penalty
of dismissal on Rayala. It argues that even though Rayala is a presidential
appointee, he is still subject to the Civil Service Law. Under the Civil Service
Law, disgraceful and immoral conduct, the acts imputed to Rayala,
constitute grave misconduct punishable by dismissal from the service.32 The
Republic adds that Rayalas position is invested with public trust and his
acts violated that trust; thus, he should be dismissed from the service.
This argument, according to the Republic, is also supported by Article 215 of
the Labor Code, which states that the Chairman of the NLRC holds office
until he reaches the age of 65 only during good behavior.33 Since Rayalas

security of tenure is conditioned upon his good behavior, he may be removed

from office if it is proven that he has failed to live up to this standard.
All the issues raised in these three cases can be summed up in two ultimate
questions, namely:
(1) Did Rayala commit sexual harassment?
(2) If he did, what is the applicable penalty?
Initially, however, we must resolve a procedural issue raised by Rayala. He
accuses the Office of the Solicitor General (OSG), as counsel for the Republic,
of forum shopping because it filed a motion for reconsideration of the
decision in CA-G.R. SP No. 61026 and then filed a comment in G.R. No.
155840 before this Court.
We do not agree.
Forum shopping is an act of a party, against whom an adverse judgment or
order has been rendered in one forum, of seeking and possibly securing a
favorable opinion in another forum, other than by appeal or special civil
action for certiorari.34 It consists of filing multiple suits involving the same
parties for the same cause of action, either simultaneously or successively,
for the purpose of obtaining a favorable judgment.35
There is forum shopping when the following elements concur: (1) identity of
the parties or, at least, of the parties who represent the same interest in both
actions; (2) identity of the rights asserted and relief prayed for, as the latter is
founded on the same set of facts; and (3) identity of the two preceding
particulars such that any judgment rendered in the other action will amount
to res judicata in the action under consideration or will constitute litis
pendentia.36
Reviewing the antecedents of these consolidated cases, we note that the CA
rendered the assailed Resolution on October 18, 2002. The Republic filed its
Motion for Reconsideration on November 22, 2002. On the other hand,
Rayala filed his petition before this Court on November 21, 2002. While the
Republics Motion for Reconsideration was pending resolution before the CA,
on December 2, 2002, it was directed by this Court to file its Comment on
Rayalas petition, which it submitted on June 16, 2003.
When the CA denied the Motion for Reconsideration, the Republic filed its
own Petition for Review with this Court on July 3, 2003. It cited in its
"Certification and Verification of a Non-Forum Shopping" (sic), that there was
a case involving the same facts pending before this Court denominated as
G.R. No. 155840. With respect to Domingos petition, the same had already
been dismissed on February 19, 2003. Domingos petition was reinstated on
June 16, 2003 but the resolution was received by the OSG only on July 25,
2003, or after it had filed its own petition.37
Based on the foregoing, it cannot be said that the OSG is guilty of forum
shopping. We must point out that it was Rayala who filed the petition in the
CA, with the Republic as the adverse party. Rayala himself filed a motion for
reconsideration of the CAs December 21, 2001 Decision, which led to a more
favorable ruling, i.e., the lowering of the penalty from dismissal to one-year

suspension. The parties adversely affected by this ruling (Domingo and the
Republic) had the right to question the same on motion for reconsideration.
But Domingo directly filed a Petition for Review with this Court, as did
Rayala. When the Republic opted to file a motion for reconsideration, it was
merely exercising a right. That Rayala and Domingo had by then already filed
cases before the SC did not take away this right. Thus, when this Court
directed the Republic to file its Comment on Rayalas petition, it had to
comply, even if it had an unresolved motion for reconsideration with the CA,
lest it be cited for contempt.

Sec. 3. Work, Education or Training-related Sexual Harassment

Defined. Work, education or training-related sexual harassment is
committed by an employer, manager, supervisor, agent of the
employer, teacher, instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral ascendancy over
another in a work or training or education environment, demands,
requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for
submission is accepted by the object of said Act.

Accordingly, it cannot be said that the OSG "file[d] multiple suits involving
the same parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable judgment."

(a) In a work-related or employment environment, sexual harassment

is committed when:

We now proceed to discuss the substantive issues.

It is noteworthy that the five CA Justices who deliberated on the case were
unanimous in upholding the findings of the Committee and the OP. They
found the assessment made by the Committee and the OP to be a
"meticulous and dispassionate analysis of the testimonies of the complainant
(Domingo), the respondent (Rayala), and their respective witnesses." 38 They
differed only on the appropriate imposable penalty.
That Rayala committed the acts complained of and was guilty of sexual
harassment is, therefore, the common factual finding of not just one, but
three independent bodies: the Committee, the OP and the CA. It should be
remembered that when supported by substantial evidence, factual findings
made by quasi-judicial and administrative bodies are accorded great respect
and even finality by the courts.39 The principle, therefore, dictates that such
findings should bind us.40
Indeed, we find no reason to deviate from this rule. There appears no valid
ground for this Court to review the factual findings of the CA, the OP, and
the Investigating Committee. These findings are now conclusive on the Court.
And quite significantly, Rayala himself admits to having committed some of
the acts imputed to him.
He insists, however, that these acts do not constitute sexual harassment,
because Domingo did not allege in her complaint that there was a demand,
request, or requirement of a sexual favor as a condition for her continued
employment or for her promotion to a higher position.41 Rayala urges us to
apply to his case our ruling in Aquino v. Acosta.42
We find respondents insistence unconvincing.

(1) The sexual favor is made as a condition in the hiring or in the

employment, re-employment or continued employment of said
individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant
the sexual favor results in limiting, segregating or classifying the
employee which in a way would discriminate, deprive or diminish
employment opportunities or otherwise adversely affect said
employee;
(2) The above acts would impair the employees rights or privileges
under existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or
offensive environment for the employee.
This section, in relation to Section 7 on penalties, defines the criminal aspect
of the unlawful act of sexual harassment. The same section, in relation to
Section 6, authorizes the institution of an independent civil action for
damages and other affirmative relief.
Section 4, also in relation to Section 3, governs the procedure for
administrative cases, viz.:
Sec. 4. Duty of the Employer or Head of Office in a Work-related,
Education or Training Environment. It shall be the duty of the
employer or the head of the work-related, educational or training
environment or institution, to prevent or deter the commission of
acts of sexual harassment and to provide the procedures for the
resolution, settlement or prosecution of acts of sexual harassment.
Towards this end, the employer or head of office shall:

Basic in the law of public officers is the three-fold liability rule, which states
that the wrongful acts or omissions of a public officer may give rise to civil,
criminal and administrative liability. An action for each can proceed
independently of the others.43 This rule applies with full force to sexual
harassment.

(a) Promulgate appropriate rules and regulations in

consultation with and jointly approved by the employees or
students or trainees, through their duly designated
representatives, prescribing the procedure for the
investigation or sexual harassment cases and the
administrative sanctions therefor.

The law penalizing sexual harassment in our jurisdiction is RA 7877. Section

3 thereof defines work-related sexual harassment in this wise:

Administrative sanctions shall not be a bar to prosecution in

the proper courts for unlawful acts of sexual harassment.

The said rules and regulations issued pursuant to this

section (a) shall include, among others, guidelines on proper
decorum in the workplace and educational or training
institutions.
(b) Create a committee on decorum and investigation of
cases on sexual harassment. The committee shall conduct
meetings, as the case may be, with other officers and
employees, teachers, instructors, professors, coaches,
trainors and students or trainees to increase understanding
and prevent incidents of sexual harassment. It shall also
conduct the investigation of the alleged cases constituting
sexual harassment.
In the case of a work-related environment, the committee shall be
composed of at least one (1) representative each from the
management, the union, if any, the employees from the supervisory
rank, and from the rank and file employees.
In the case of the educational or training institution, the committee
shall be composed of at least one (1) representative from the
administration, the trainors, teachers, instructors, professors or
coaches and students or trainees, as the case maybe.
The employer or head of office, educational or training institution
shall disseminate or post a copy of this Act for the information of all
concerned.
The CA, thus, correctly ruled that Rayalas culpability is not to be determined
solely on the basis of Section 3, RA 7877, because he is charged with the
administrative offense, not the criminal infraction, of sexual harassment. 44 It
should be enough that the CA, along with the Investigating Committee and
the Office of the President, found substantial evidence to support the
administrative charge.
Yet, even if we were to test Rayalas acts strictly by the standards set in
Section 3, RA 7877, he would still be administratively liable. It is true that
this provision calls for a "demand, request or requirement of a sexual favor."
But it is not necessary that the demand, request or requirement of a sexual
favor be articulated in a categorical oral or written statement. It may be
discerned, with equal certitude, from the acts of the offender. Holding and
squeezing Domingos shoulders, running his fingers across her neck and
tickling her ear, having inappropriate conversations with her, giving her
money allegedly for school expenses with a promise of future privileges, and
making statements with unmistakable sexual overtones all these acts of
Rayala resound with deafening clarity the unspoken request for a sexual
favor.
Likewise, contrary to Rayalas claim, it is not essential that the demand,
request or requirement be made as a condition for continued employment or
for promotion to a higher position. It is enough that the respondents acts
result in creating an intimidating, hostile or offensive environment for the
employee.45 That the acts of Rayala generated an intimidating and hostile
environment for Domingo is clearly shown by the common factual finding of

the Investigating Committee, the OP and the CA that Domingo reported the
matter to an officemate and, after the last incident, filed for a leave of
absence and requested transfer to another unit.
Rayalas invocation of Aquino v. Acosta46 is misplaced, because the factual
setting in that case is different from that in the case at bench. In Aquino,
Atty. Susan Aquino, Chief of the Legal and Technical Staff of the Court of Tax
Appeals (CTA), charged then CTA Presiding Judge (now Presiding Justice)
Ernesto Acosta of sexual harassment. She complained of several incidents
when Judge Acosta allegedly kissed her, embraced her, and put his arm
around her shoulder. The case was referred to CA Justice Josefina G.
Salonga for investigation. In her report, Justice Salonga found that "the
complainant failed to show by convincing evidence that the acts of Judge
Acosta in greeting her with a kiss on the cheek, in a `beso-beso fashion, were
carried out with lustful and lascivious desires or were motivated by malice or
ill motive. It is clear from the circumstances that most of the kissing
incidents were done on festive and special occasions," and they "took place in
the presence of other people and the same was by reason of the exaltation or
happiness of the moment." Thus, Justice Salonga concluded:
In all the incidents complained of, the respondent's pecks on the
cheeks of the complainant should be understood in the context of
having been done on the occasion of some festivities, and not the
assertion of the latter that she was singled out by Judge Acosta in
his kissing escapades. The busses on her cheeks were simply
friendly and innocent, bereft of malice and lewd design. The fact that
respondent judge kisses other people on the cheeks in the 'besobeso' fashion, without malice, was corroborated by Atty. Florecita P.
Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili, who stated
that they usually practice 'beso-beso' or kissing on the cheeks, as a
form of greeting on occasions when they meet each other, like
birthdays, Christmas, New Year's Day and even Valentine's Day, and
it does not matter whether it is Judge Acosta's birthday or their
birthdays. Theresa Cinco Bactat, a lawyer who belongs to
complainant's department, further attested that on occasions like
birthdays, respondent judge would likewise greet her with a peck on
the cheek in a 'beso-beso' manner. Interestingly, in one of several
festive occasions, female employees of the CTA pecked respondent
judge on the cheek where Atty. Aquino was one of Judge Acosta's
well wishers.
In sum, no sexual harassment had indeed transpired on those six
occasions. Judge Acosta's acts of bussing Atty. Aquino on her cheek
were merely forms of greetings, casual and customary in nature. No
evidence of intent to sexually harass complainant was apparent, only
that the innocent acts of 'beso-beso' were given malicious
connotations by the complainant. In fact, she did not even relate to
anyone what happened to her. Undeniably, there is no manifest
sexual undertone in all those incidents.47
This Court agreed with Justice Salonga, and Judge Acosta was exonerated.

To repeat, this factual milieu in Aquino does not obtain in the case at bench.
While in Aquino, the Court interpreted the acts (of Judge Acosta) as casual
gestures of friendship and camaraderie, done during festive or special
occasions and with other people present, in the instant case, Rayalas acts of
holding and squeezing Domingos shoulders, running his fingers across her
neck and tickling her ear, and the inappropriate comments, were all made in
the confines of Rayalas office when no other members of his staff were
around. More importantly, and a circumstance absent in Aquino, Rayalas
acts, as already adverted to above, produced a hostile work environment for
Domingo, as shown by her having reported the matter to an officemate and,
after the last incident, filing for a leave of absence and requesting transfer to
another unit.
Rayala also argues that AO 250 does not apply to him. First, he argues that
AO 250 does not cover the NLRC, which, at the time of the incident, was
under the DOLE only for purposes of program and policy coordination.
Second, he posits that even assuming AO 250 is applicable to the NLRC, he
is not within its coverage because he is a presidential appointee.
We find, however, that the question of whether or not AO 250 covers Rayala
is of no real consequence. The events of this case unmistakably show that
the administrative charges against Rayala were for violation of RA 7877; that
the OP properly assumed jurisdiction over the administrative case; that the
participation of the DOLE, through the Committee created by the Secretary,
was limited to initiating the investigation process, reception of evidence of the
parties, preparation of the investigation report, and recommending the
appropriate action to be taken by the OP. AO 250 had never really been
applied to Rayala. If it was used at all, it was to serve merely as an auxiliary
procedural guide to aid the Committee in the orderly conduct of the
investigation.
Next, Rayala alleges that the CA erred in holding that sexual harassment is
an offense malum prohibitum. He argues that intent is an essential element in
sexual harassment, and since the acts imputed to him were done allegedly
without malice, he should be absolved of the charges against him.
We reiterate that what is before us is an administrative case for sexual
harassment. Thus, whether the crime ofsexual harassment is malum in
se or malum prohibitum is immaterial.
We also reject Rayalas allegations that the charges were filed because of a
conspiracy to get him out of office and thus constitute merely political
harassment. A conspiracy must be proved by clear and convincing evidence.
His bare assertions cannot stand against the evidence presented by
Domingo. As we have already ruled, the acts imputed to Rayala have been
proven as fact. Moreover, he has not proven any ill motive on the part of
Domingo and her witnesses which would be ample reason for her to conjure
stories about him. On the contrary, ill motive is belied by the fact that
Domingo and her witnesses all employees of the NLRC at that time stood
to lose their jobs or suffer unpleasant consequences for coming forward and
charging their boss with sexual harassment.

Furthermore, Rayala decries the alleged violation of his right to due process.
He accuses the Committee on Decorum of railroading his trial for violation of
RA 7877. He also scored the OPs decision finding him guilty of "disgraceful
and immoral conduct" under the Revised Administrative Code and not for
violation of RA 7877. Considering that he was not tried for "disgraceful and
immoral conduct," he argues that the verdict is a "sham and total nullity."
We hold that Rayala was properly accorded due process. In previous cases,
this Court held that:
[i]n administrative proceedings, due process has been recognized to
include the following: (1) the right to actual or constructive notice of
the institution of proceedings which may affect a respondents legal
rights; (2) a real opportunity to be heard personally or with the
assistance of counsel, to present witnesses and evidence in ones
favor, and to defend ones rights; (3) a tribunal vested with
competent jurisdiction and so constituted as to afford a person
charged administratively a reasonable guarantee of honesty as well
as impartiality; and (4) a finding by said tribunal which is supported
by substantial evidence submitted for consideration during the
hearing or contained in the records or made known to the parties
affected.48
The records of the case indicate that Rayala was afforded all these procedural
due process safeguards. Although in the beginning he questioned the
authority of the Committee to try him,49 he appeared, personally and with
counsel, and participated in the proceedings.
On the other point raised, this Court has held that, even in criminal cases,
the designation of the offense is not controlling, thus:
What is controlling is not the title of the complaint, nor the
designation of the offense charged or the particular law or part
thereof allegedly violated, these being mere conclusions of law made
by the prosecutor, but the description of the crime charged and the
particular facts therein recited. The acts or omissions complained of
must be alleged in such form as is sufficient to enable a person of
common understanding to know what offense is intended to be
charged, and enable the court to pronounce proper judgment. No
information for a crime will be sufficient if it does not accurately and
clearly allege the elements of the crime charged. Every element of the
offense must be stated in the information. What facts and
circumstances are necessary to be included therein must be
determined by reference to the definitions and essentials of the
specified crimes. The requirement of alleging the elements of a crime
in the information is to inform the accused of the nature of the
accusation against him so as to enable him to suitably prepare his
defense.50
It is noteworthy that under AO 250, sexual harassment amounts to
disgraceful and immoral conduct.51 Thus, any finding of liability for sexual
harassment may also be the basis of culpability for disgraceful and immoral
conduct.

With the foregoing disquisitions affirming the finding that Rayala committed
sexual harassment, we now determine the proper penalty to be imposed.
Rayala attacks the penalty imposed by the OP. He alleges that under the
pertinent Civil Service Rules, disgraceful and immoral conduct is punishable
by suspension for a period of six (6) months and one (1) day to one (1) year.
He also argues that since he is charged administratively, aggravating or
mitigating circumstances cannot be appreciated for purposes of imposing the
penalty.
Under AO 250, the penalty for the first offense is suspension for six (6)
months and one (1) day to one (1) year, while the penalty for the second
offense is dismissal.52 On the other hand, Section 22(o), Rule XVI of the
Omnibus Rules Implementing Book V of the Administrative Code of
198753 and Section 52 A(15) of the Revised Uniform Rules on Administrative
Cases in the Civil Service 54 both provide that the first offense of disgraceful
and immoral conduct is punishable by suspension of six (6) months and one
(1) day to one (1) year. A second offense is punishable by dismissal.
Under the Labor Code, the Chairman of the NLRC shall hold office during
good behavior until he or she reaches the age of sixty-five, unless sooner
removed for cause as provided by law or becomes incapacitated to
discharge the duties of the office.55
In this case, it is the President of the Philippines, as the proper disciplining
authority, who would determine whether there is a valid cause for the
removal of Rayala as NLRC Chairman. This power, however, is qualified by
the phrase "for cause as provided by law." Thus, when the President found
that Rayala was indeed guilty of disgraceful and immoral conduct, the Chief
Executive did not have unfettered discretion to impose a penalty other than
the penalty provided by law for such offense. As cited above, the imposable
penalty for the first offense of either the administrative offense of sexual
harassment or for disgraceful and immoral conduct is suspension of six (6)
months and one (1) day to one (1) year. Accordingly, it was error for the Office
of the President to impose upon Rayala the penalty of dismissal from the
service, a penalty which can only be imposed upon commission of a second
offense.
Even if the OP properly considered the fact that Rayala took advantage of his
high government position, it still could not validly dismiss him from the
service. Under the Revised Uniform Rules on Administrative Cases in the Civil
Service,56 taking undue advantage of a subordinate may be considered as an
aggravating circumstance57and where only aggravating and no mitigating
circumstances are present, the maximum penalty shall be imposed.58 Hence,
the maximum penalty that can be imposed on Rayala is suspension for one
(1) year.
Rayala holds the exalted position of NLRC Chairman, with the rank
equivalent to a CA Justice. Thus, it is not unavailing that rigid standards of
conduct may be demanded of him. In Talens-Dabon v. Judge Arceo,59 this
Court, in upholding the liability of therein respondent Judge, said:
The actuations of respondent are aggravated by the fact that
complainant is one of his subordinates over whom he exercises

control and supervision, he being the executive judge. He took

advantage of his position and power in order to carry out his lustful
and lascivious desires. Instead of he being in loco parentis over his
subordinate employees, respondent was the one who preyed on
them, taking advantage of his superior position.
In yet another case, this Court declared:
As a managerial employee, petitioner is bound by more exacting work
ethics. He failed to live up to his higher standard of responsibility
when he succumbed to his moral perversity. And when such moral
perversity is perpetrated against his subordinate, he provides a
justifiable ground for his dismissal for lack of trust and confidence. It
is the right, nay, the duty of every employer to protect its employees
from oversexed superiors.60
It is incumbent upon the head of office to set an example on how his
employees should conduct themselves in public office, so that they may work
efficiently in a healthy working atmosphere. Courtesy demands that he
should set a good example.61
Rayala has thrown every argument in the book in a vain effort to effect his
exoneration. He even puts Domingos character in question and casts doubt
on the morality of the former President who ordered, albeit erroneously, his
dismissal from the service. Unfortunately for him, these are not significant
factors in the disposition of the case. It is his character that is in question
here and sadly, the inquiry showed that he has been found wanting.
WHEREFORE, the foregoing premises considered, the October 18, 2002
Resolution of the Court of Appeals in CA-G.R. SP No. 61026
is AFFIRMED. Consequently, the petitions in G.R. Nos. 155831, 155840,
and 158700 areDENIED. No pronouncement as to costs.
SO ORDERED.

A.M. No. CTA-01-1

April 2, 2002

ATTY. SUSAN M. AQUINO, complainant,

vs.
HON. ERNESTO D. ACOSTA, Presiding Judge, Court of Tax
Appeals, respondent.
SANDOVAL-GUTIERREZ, J.:
The present administrative case filed with this Court originated from a sworn
affidavit-complaint1 of Atty. Susan M. Aquino, Chief of the Legal and
Technical Staff of the Court of Tax Appeals (CTA), charging Judge Ernesto
Acosta, Presiding Judge of the same court, with sexual harassment under
R.A. 7877 and violation of the Canons of Judicial Ethics and Code of
Professional Responsibility.
In her affidavit-complaint, complainant alleged several instances when
respondent judge sexually harassed her.
On November 21, 2000, she reported for work after her vacation in the
United States, bringing gifts for the three judges of the CTA, including
respondent. In the afternoon of the same day, he entered her room and
greeted her by shaking her hand. Suddenly, he pulled her towards him and
kissed her on her cheek.

complainant sat in front of respondent's table and asked him what he wanted
to know about the Senate bill. Respondent seemed to be at a loss for words
and kept glancing at Ruby who was searching for something at the
secretary's desk. Forthwith, respondent approached Ruby, asked her what
she was looking for and stepped out of the office. When he returned, Ruby
said she found what she was looking for and left. Respondent then
approached complainant saying, "me gusto akong gawin sa iyo kahapon pa."
Thereupon, he tried to "grab" her. Complainant instinctively raised her hands
to protect herself but respondent held her arms tightly, pulled her towards
him and kissed her. She pushed him away, then slumped on a chair
trembling. Meantime, respondent sat on his chair and covered his face with
his hands. Thereafter, complainant left crying and locked herself inside a
comfort room. After that incident, respondent went to her office and tossed a
note3 stating, "sorry, it won't happen again."
In his comment, respondent judge denied complainant's allegation that he
sexually harassed her six times. He claimed that he has always treated her
with respect, being the head of the CTA Legal Staff. In fact, there is no strain
in their professional relationship.
On the first incident, he explained that it was quite unlikely that complainant
would ask him to go to her office on such date in order to give him a
"pasalubong."

On December 28, 2000, while respondent was on official leave, he called

complainant by phone, saying he will get something in her office. Shortly
thereafter, he entered her room, shook her hand and greeted her, "Merry
Christmas." Thereupon, he embraced her and kissed her. She was able to
free herself by slightly pushing him away. Complainant submitted the Joint
Affidavit2 of Ma. Imelda C. Samonte and Anne Benita M. Santos, CTA Tax
Specialists, to prove that respondent went to her office that day.

With respect to the second incident on December 28, he claimed it could not
have happened as he was then on official leave.

On the first working day in January, 2001, respondent phoned complainant,

asking if she could see him in his chambers in order to discuss some
matters. When complainant arrived there, respondent tried to kiss her but
she was able to evade his sexual attempt. She then resolved not to enter his
chambers alone.

As to the fourth episode, he averred that he and complainant had been

attending the deliberations of the Bicameral Conference Committee at the
Senate on the bill expanding the jurisdiction of the CTA. Hence, when the bill
was finally approved that particular day, respondent, in jubilation and in the
presence of other people, gave complainant a spontaneous peck on her
cheek. He could not recall any resentment on her part when he kissed her.
She even congratulated him in return, saying "Justice ka na Judge." Then he
treated her to a lunch to celebrate the event. Respondent recounted several
times when they would return to the CTA in the evening after attending the
committee hearings in Congress to retrieve complainant's personal
belongings from her office. Surely, if he had malice in his mind, those
instances would have been the perfect opportunities for him to sexually
harass her.

Weeks later, after the Senate approved the proposed bill expanding the
jurisdiction of the CTA, while complainant and her companions were
congratulating and kissing each other, respondent suddenly placed his arms
around her shoulders and kissed her.
In the morning of February 14, 2001, respondent called complainant,
requesting her to go to his office. She then asked Ruby Lanuza, a clerk in the
Records Section, to accompany her. Fortunately, when they reached his
chambers, respondent had left.
The last incident happened the next day. At around 8:30 a.m., respondent
called complainant and asked her to see him in his office to discuss the
Senate bill on the CTA. She again requested Ruby to accompany her. The
latter agreed but suggested that they should act as if they met by accident in
respondent's office. Ruby then approached the secretary's table which was
separated from respondent's office by a transparent glass. For her part,

Anent the third incident, respondent explained that he went to the various
offices of the CTA to extend New Year's greetings to the personnel. He also
greeted complainant with a casual buss on her cheek and gave her a
calendar. In turn, she also greeted him.

As to the fifth incident, respondent alleged that he did not call complainant
to harass her, but to discuss with her and Elizabeth Lozano, HRMO III, and
Elsie T. Forteza, Administrative Officer, the health plan for the CTA officers
and employees. The fact that such meeting took place was confirmed by a
Certification issued by Lozano.4
Regarding the sixth incident, respondent narrated his version as follows:
Complainant arrived in his office past 9 a.m. that day, followed by another

court employee, Ruby Lanuza. He proceeded to discuss the CTA Expansion

Bill with complainant. Then he went for a while to the rest room. When he
returned, Ruby had already left but complainant was still there. Forthwith,
he remarked that he forgot to greet her on Valentine's Day, the day before.
He approached complainant to give her a casual buss on the cheek. But she
suddenly stood and raised her arms to cover her face, causing her to lose her
balance. So he held her arms to prevent her from falling. Her rejection came
as a surprise to him and made him feel quite embarrassed. Shortly,
complainant excused herself and left the room. Stunned at the thought that
she might misinterpret his gesture, he sent her a short note of apology.
Respondent further explained that the structure of his office, being seen
through a transparent glass divider, makes it impossible for anyone to
commit any improper conduct inside.
In a Resolution dated August 21, 2001, this Court referred the instant case
to Justice Josefina G. Salonga of the Court of Appeals for investigation,
report and recommendation.
Justice Salonga set the hearing of the case on November 6, 2001. However,
the parties, through counsel, manifested that "they will not be adducing any
further evidence." On November 7, 2001, Justice Salonga issued an Order
directing them to submit their memoranda simultaneously, after which, the
case shall be considered submitted for resolution.
On January 9, 2002, Justice Salonga forwarded to this Court her Report on
Investigation and Recommendation, thus:
"We find for the respondent.
"The complainant failed to show by convincing evidence that the acts
of Judge Acosta in greeting her with a kiss on the cheek, in a 'besobeso' fashion, were carried out with lustful and lascivious desires or
were motivated by malice or ill-motive. It is clear under the
circumstances that most of the kissing incidents were done on festive
and special occasions. In fact, complainant's testimony that she was
sexually harassed on November 21, 2000, is hardly believable.
Notably, complainant declared in her affidavit-complaint that she
brought some 'pasalubongs' for the respondent judge from her trip
abroad. Therefore, Atty. Aquino could not have been 'taken aback' by
the respondent's act of greeting her in a friendly manner and
thanking her by way of a kiss on the cheek. Moreover, it was
established that Judge Acosta was on official leave of absence from
December 26-29, 2000. This was corroborated by Ricardo Hebia, the
driver of respondent judge, in his Panunumpa (Affidavit) dated March
26, 2001, where he stated among others, to wit:
x xx
"Corollarily, the joint affidavit of Ms. Santos and Ms. Samonte
attesting to the fact that respondent dropped by at the third floor of
the CTA and greeted them Happy New Year, even if it true, can not
be given any evidentiary weight. Clearly, they did not make any
categorical statement that they had witnessed or seen Judge Acosta
making sexual advances on the complainant. Nor did they even

attribute any malicious acts on respondent constituting sexual

harassment.
"In addition, the respondent admitted that when he handed a
calendar and greeted complainant with a buss, complainant
reciprocated by greeting him a Happy New Year. The allegation of
Atty. Aquino that the respondent merely used the calendars as
'props' to kiss her on the cheek and that she was singled out by
respondent is not supported by any convincing evidence. The
affidavit of Ms. Aurora U. Aso and Renelyn L. Larga that Ms. Carmen
Acosta gave them calendars for the office of Attys. Margarette
Guzman and Felizardo O. Consing, is immaterial and irrelevant, as
Judge Acosta had stated that he handed to complainant Aquino, a
2001 calendar in the course of greeting her with a buss on the cheek.
Said affidavit could not account for the calendars distributed to the
other offices in the CTA, more specifically, the Legal and Technical
Staff headed by Atty. Aquino.
"Moreover, the claim of the complainant that she was sexually
harassed immediately after the final reading of the bill anent the
expansion of the CTA at the Senate, can not be accorded great
evidentiary value. The alleged kissing incident took place in the
presence of other people and the same was by reason of the
exaltation or happiness of the moment, due to the approval of the
subject bill. Quite interesting to note, is that Atty. Aquino
reciprocated by congratulating respondent and remarking "justice ka
na judge" after the latter had bussed her on the cheek. Complainant
even failed to dispute the fact that after the kissing incident, she
joined Judge Acosta and his driver for lunch at a seafood restaurant
in Luneta. There was even a time that she allowed the respondent
judge to accompany her to the office alone and at nighttime at that,
to retrieve her car keys and bag when they returned to the CTA after
the hearing at the Senate on the CTA expansion bill. These acts are
not at square with the behavior of one who has been sexually
harassed, for the normal reaction of a victim of sexual harassment
would be to avoid the harasser or decline his invitations after being
offended. In fact, this occasion could have provided the respondent
judge with the right opportunity to commit malicious acts or to
sexually harass complainant, but then Judge Acosta never even
attempted to do so. Undoubtedly, it could be said that no strained
relations existed between Atty. Aquino and Judge Acosta at that
moment.
"Neither can the alleged continuous call of Judge Acosta on
complainant in the morning of February 14, 2001 to see him in his
office, be considered as acts constituting sexual harassment. Atty.
Aquino failed to state categorically in her affidavit-complaint that
respondent demanded sexual advances or favors from her, or that
the former had committed physical conduct of sexual nature against
her. The telephone calls were attributed malicious implications by
the complainant. To all intents and purposes, the allegation was
merely a product of her imagination, hence, the same deserves no

weight in law. Indeed, Atty. Aquino's own version, indicates that she
well knew that the purpose of the respondent in calling her in the
morning of February 14, 2001 was to discuss the CTA Health Plan
which was disapproved by the Supreme Court and not for the
respondent to demand sexual favors from her. This was corroborated
by Atty. Margarette Guzman in her affidavit dated February 28,
2001, attached to the complainant's affidavit, where she stated:
x xx
"Finally, while Judge Acosta admitted having pecked Atty. Aquino on
her cheek, which was avoided by the latter, the same was not meant
to sexually harass her. Judge Acosta's act of extending his post
Valentine greeting to complainant was done in good faith and sans
any malice. This is so because immediately after the complainant
had displayed annoyance to the kissing episode, Judge Acosta
immediately extended an apology by way of a handwritten note
saying that the incident won't happen again.
"Parenthetically, the undersigned is convinced that Ms. Lanuza's
affidavit that she supposedly accompanied complainant to
respondent's office as she allegedly had a previous 'bad experience'
with the latter when he was still an Associate Judge, was merely
concocted to add flavor to the baseless imputations hurled against
Judge Acosta. The accusation is implausible as Ms. Lanuza did not
seem to complain about the alleged bad experience she had with
Judge Acosta or relate it to anyone until ten (10) years later. It must
be stressed that Ms. Lanuza is a biased-witness who harbored ill
feelings against the respondent, as she was reprimanded by Judge
Acosta for habitual absenteeism and tardiness in 1996. More
importantly, Ms. Lanuza did not even attest that she was a witness
to the alleged sexual advances of Judge Acosta.
"In all the incidents complained of, the respondent's pecks on the
cheeks of the complainant should be understood in the context of
having been done on the occasion of some festivities, and not the
assertion of the latter hat she was singled out by Judge Acosta in his
kissing escapades. The busses on her cheeks were simply friendly
and innocent, bereft of malice and lewd design. The fact that
respondent judge kisses other people on the cheeks in the 'besobeso' fashion, without malice, was corroborated by Atty. Florecita P.
Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili, who stated
that they usually practice 'beso-beso' or kissing on the cheeks, as a
form of greeting on occasions when they meet each other, like
birthdays, Christmas, New Year's Day and even Valentine's Day, and
it does not matter whether it is Judge Acosta's birthday or their
birthdays. Theresa Cinco Bactat, a lawyer who belongs to
complainant's department, further attested that on occasions like
birthdays, respondent judge would likewise greet her with a peck on
the cheek in a 'beso-beso' manner. Interestingly, in one of several
festive occasions, female employees of the CTA pecked respondent

judge on the cheek where Atty. Aquino was one of Judge Acosta's
well wishers. (Annex "8" to Comment, p. 65, Rollo)
"In sum, no sexual harassment had indeed transpired on those six
occasions. Judge Acosta's acts of bussing Atty. Aquino on her cheek
were merely forms of greetings, casual and customary in nature. No
evidence of intent to sexually harass complainant was apparent, only
that the innocent acts of 'beso-beso'were given malicious
connotations by the complainant. In fact, she did not even relate to
anyone what happened to her. Undeniably, there is no manifest
sexual undertone in all those incidents."5
Justice Salonga then made the following recommendation:
"Considering the above, the undersigned respectfully recommends
that the administrative complaint for sexual harassment and
violations of the Canons of Judicial Ethics and the Code of
Professional Responsibility be DISMISSED and accordingly,
respondent Presiding Judge Ernesto D. Acosta be exonerated
therefrom; that in view of these charges which might have tainted the
image of the Court, though unsubstantiated they may be, Judge
Acosta is WARNED to refrain from doing similar acts, or any act for
that matter on the complainant and other female employees of the
Court of Tax Appeals, which in any manner may be interpreted as
lustful advances."6
We agree with the findings of Justice Salonga.
Administrative complaints against members of the judiciary are viewed by
this Court with utmost care, for proceedings of this nature affect not only the
reputation of the respondents concerned, but the integrity of the entire
judiciary as well.
We have reviewed carefully the records of this case and found no convincing
evidence to sustain complainant's charges. What we perceive to have been
committed by respondent judge are casual gestures of friendship and
camaraderie, nothing more, nothing less. In kissing complainant, we find no
indication that respondent was motivated by malice or lewd design.
Evidently, she misunderstood his actuations and construed them as workrelated sexual harassment under R.A. 7877.
As aptly stated by the Investigating Justice:
"A mere casual buss on the cheek is not a sexual conduct or favor
and does not fall within the purview of sexual harassment under R.A.
No. 7877. Section 3 (a) thereof provides, to wit:
'Sec. 3. Work, Education or Training - related Sexual
Harassment Defined. - Work, education or training-related
sexual harassment is committed by an employer, employee,
manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person
who, having authority, influence or moral ascendancy over
another in a work or training or education environment,
demands, requests or otherwise requires any sexual favor

from the other, regardless of whether the demand, request or

requirement for submission is accepted by the object of said
Act.
a) In a work-related or employment environment, sexual
harassment is committed when:
1) The sexual favor is made as a condition in the
hiring or in the employment, re-employment or
continued employment of said individual, or in
granting said individual favorable compensation,
terms, conditions, promotions or privileges; or the
refusal to grant sexual favor results in limiting,
segregating or classifying the employee which in
anyway would discriminate, deprive or diminish
employment opportunities or otherwise adversely
affect said employees;
2) The above acts would impair the employee's right
or privileges under existing labor laws; or
3) The above acts would result in an intimidating,
hostile, or offensive environment for the employee.'
"Clearly, under the foregoing provisions, the elements of sexual
harassment are as follows:
1) The employer, employee, manager, supervisor, agent of
the employer, teacher, instructor, professor, coach, trainor,
or any other person has authority, influence or moral
ascendancy over another;
2) The authority, influence or moral ascendancy exists in a
working environment;
3) The employer, employee, manager, supervisor, agent of
the employer, teacher, instructor, professor, coach, or any
other person having authority, influence or moral
ascendancy makes a demand, request or requirement of a
sexual favor.
"In her Complaint-affidavit, Reply and Sur-rejoinder, complainant
did not even allege that Judge Acosta demanded, requested or
required her to give him a buss on the cheek which, she resented.
Neither did Atty. Aquino establish by convincing evidence that the
busses on her cheek, which she considers as sexual favors,
discriminated against her continued employment, or resulted in an
intimidating, hostile or offensive environment. In fact, complainant
continued to perform her work in the office with the usual normalcy.
Obviously, the alleged sexual favor, if there ever was, did not
interfere with her working condition (Annexes "9" - "9-FFF").
Moreover, Atty. Aquino also continued to avail of benefits and leaves
appurtenant to her office and was able to maintain a consistent
outstanding performance. On top of this, her working area which, is
at the third floor of the CTA, is far removed from the office of Judge

Acosta located at the fourth floor of the same building. Resultantly,

no hostile or intimidating working environment is apparent.
"Based on the foregoing findings, there is no sufficient evidence to
create a moral certainty that Judge Acosta committed the acts
complained of; that Atty. Aquino's determination to seek justice for
herself was not substantiated by convincing evidence; that the
testimony of respondent judge and his witnesses are credible and
therefore, should be given weight and probative value; that the
respondent's acts undoubtedly do not bear the marks of misconduct,
impropriety or immorality, either under R.A. No. 7877 or the Canons
of Judicial Ethics and the Code of Professional Responsibility."7
Indeed, from the records on hand, there is no showing that respondent judge
demanded, requested or required any sexual favor from complainant in
exchange for "favorable compensation, terms, conditions, promotion or
privileges" specified under Section 3 of R.A. 7877. Nor did he, by his
actuations, violate the Canons of Judicial Ethics or the Code of Professional
Responsibility.
While we exonerate respondent from the charges herein, however, he is
admonished not to commit similar acts against complainant or other female
employees of the Court of Tax Appeals, otherwise, his conduct may be
construed as tainted with impropriety.
We laud complainant's effort to seek redress for what she honestly believed to
be an affront to her honor. Surely, it was difficult and agonizing on her part
to come out in the open and accuse her superior of sexual harassment.
However, her assessment of the incidents is misplaced for the reasons
mentioned above.
WHEREFORE, respondent Judge Ernesto D. Acosta is hereby EXONERATED
of the charges against him. However, he is ADVISED to be more circumspect
in his deportment.
SO ORDERED.

G.R. No. 94951 April 22, 1991

4. Separation Pay

APEX MINING COMPANY, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA
CANDIDO, respondents.

(One-month for

Bernabe B. Alabastro for petitioner.

or in the total of FIFTY FIVE THOUSAND ONE HUNDRED

SIXTY ONE PESOS AND 42/100 (P55,161.42).

Angel Fernandez for private respondent.

every year of
service [1973-19881) 25,119.30

SO ORDERED. 1
GANCAYCO, J.:p
Is the househelper in the staff houses of an industrial company a domestic
helper or a regular employee of the said firm? This is the novel issue raised in
this petition.
Private respondent Sinclita Candida was employed by petitioner Apex Mining
Company, Inc. on May 18, 1973 to perform laundry services at its staff house
located at Masara, Maco, Davao del Norte. In the beginning, she was paid on
a piece rate basis. However, on January 17, 1982, she was paid on a monthly
basis at P250.00 a month which was ultimately increased to P575.00 a
month.
On December 18, 1987, while she was attending to her assigned task and
she was hanging her laundry, she accidentally slipped and hit her back on a
stone. She reported the accident to her immediate supervisor Mila de la Rosa
and to the personnel officer, Florendo D. Asirit. As a result of the accident
she was not able to continue with her work. She was permitted to go on leave
for medication. De la Rosa offered her the amount of P 2,000.00 which was
eventually increased to P5,000.00 to persuade her to quit her job, but she
refused the offer and preferred to return to work. Petitioner did not allow her
to return to work and dismissed her on February 4, 1988.
On March 11, 1988, private respondent filed a request for assistance with
the Department of Labor and Employment. After the parties submitted their
position papers as required by the labor arbiter assigned to the case on
August 24, 1988 the latter rendered a decision, the dispositive part of which
reads as follows:
WHEREFORE, Conformably With The Foregoing, judgment is
hereby rendered ordering the respondent, Apex Mining
Company, Inc., Masara, Davao del Norte, to pay the
complainant, to wit:
1 Salary
Differential P16,289.20
2. Emergency Living
Allowance 12,430.00
3. 13th Month Pay
Differential 1,322.32

Not satisfied therewith, petitioner appealed to the public respondent National

Labor Relations Commission (NLRC), wherein in due course a decision was
rendered by the Fifth Division thereof on July 20, 1989 dismissing the appeal
for lack of merit and affirming the appealed decision. A motion for
reconsideration thereof was denied in a resolution of the NLRC dated June
29, 1990.
Hence, the herein petition for review by certiorari, which appopriately should
be a special civil action for certiorari, and which in the interest of justice, is
hereby treated as such. 2 The main thrust of the petition is that private
respondent should be treated as a mere househelper or domestic servant and
not as a regular employee of petitioner.
The petition is devoid of merit.
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the
terms "househelper" or "domestic servant" are defined as follows:
The term "househelper" as used herein is synonymous to the
term "domestic servant" and shall refer to any person,
whether male or female, who renders services in and about
the employer's home and which services are usually
necessary or desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal comfort
and enjoyment of the employer's family. 3
The foregoing definition clearly contemplates such househelper or domestic
servant who is employed in the employer's home to minister exclusively to
the personal comfort and enjoyment of the employer's family. Such definition
covers family drivers, domestic servants, laundry women, yayas, gardeners,
houseboys and other similar househelps.
The definition cannot be interpreted to include househelp or laundrywomen
working in staffhouses of a company, like petitioner who attends to the needs
of the company's guest and other persons availing of said facilities. By the
same token, it cannot be considered to extend to then driver, houseboy, or
gardener exclusively working in the company, the staffhouses and its
premises. They may not be considered as within the meaning of a
"househelper" or "domestic servant" as above-defined by law.
The criteria is the personal comfort and enjoyment of the family of the
employer in the home of said employer. While it may be true that the nature
of the work of a househelper, domestic servant or laundrywoman in a home

or in a company staffhouse may be similar in nature, the difference in their

circumstances is that in the former instance they are actually serving the
family while in the latter case, whether it is a corporation or a single
proprietorship engaged in business or industry or any other agricultural or
similar pursuit, service is being rendered in the staffhouses or within the
premises of the business of the employer. In such instance, they are
employees of the company or employer in the business concerned entitled to
the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant
is assigned to certain aspects of the business of the employer that such
househelper or domestic servant may be considered as such as employee.
The Court finds no merit in making any such distinction. The mere fact that
the househelper or domestic servant is working within the premises of the
business of the employer and in relation to or in connection with its
business, as in its staffhouses for its guest or even for its officers and
employees, warrants the conclusion that such househelper or domestic
servant is and should be considered as a regular employee of the employer
and not as a mere family househelper or domestic servant as contemplated
in Rule XIII, Section l(b), Book 3 of the Labor Code, as amended.
Petitioner denies having illegally dismissed private respondent and maintains
that respondent abandoned her work. This argument notwithstanding, there
is enough evidence to show that because of an accident which took place
while private respondent was performing her laundry services, she was not
able to work and was ultimately separated from the service. She is, therefore,
entitled to appropriate relief as a regular employee of petitioner. Inasmuch as
private respondent appears not to be interested in returning to her work for
valid reasons, the payment of separation pay to her is in order.
WHEREFORE, the petition is DISMISSED and the appealed decision and
resolution of public respondent NLRC are hereby AFFIRMED. No
pronouncement as to costs.
SO ORDERED.

G.R. No. 87210 July 16, 1990

FILOMENA BARCENAS, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), Rev. SIM DEE
the present Head Monk of the Manila Buddha Temple, MANUEL CHUA,
in his capacity as the President and Chairman of the Board of Directors
of the Poh Toh Buddhist Association of the Philippines, Inc., and in his
private capacity,respondents.
L.B. Camins for petitioner.
Lino M. Patajo and Jose J. Torrefranca for private respondents.
MEDIALDEA, J.:
This petition for review on certiorari (which We treat as a special civil action
for certiorari) seeks to annul the decision of the National Labor Relations
Commission dated November 29, 1988, which reversed the decision of the
Labor Arbiter dated February 10, 1988 in NLRC NCR Case No. 12-4861-86
(Filomena Barcenas v. Rev. Sim See, etc., et al.) on the ground that no
employer-employee relationship exists between the parties.
Petitioner alleged in her position paper the following facts:
In 1978, Chua Se Su (Su for short) in his capacity as the Head Monk of the
Buddhist Temple of Manila and Baguio City and as President and Chairman
of the Board of Directors of the Poh Toh Buddhist Association of the Phils.
Inc. hired the petitioner who speaks the Chinese language as secretary and
interpreter. Petitioner's position required her to receive and assist Chinese
visitors to the temple, act as tourist guide for foreign Chinese visitors, attend
to the callers of the Head Monk as well as to the food for the temple visitors,
run errands for the Head Monk such as paying the Meralco, PLDT, MWSS
bills and act as liaison in some government offices. Aside from her pay and
allowances under the law, she received an amount of P500.00 per month
plus free board and lodging in the temple. In December, 1979, Su assumed
the responsibility of paying for the education of petitioner's nephew. In 1981,
Su and petitioner had amorous relations. In May, 1982, of five months before
giving birth to the alleged son of Su on October 12, 1982, petitioner was sent
home to Bicol. Upon the death of Su in July, 1983, complainant remained
and continued in her job. In 1985, respondent Manuel Chua (Chua, for
short) was elected President and Chairman of the Board of the Poh Toh
Buddhist Association of the Philippines, Inc. and Rev. Sim Dee for short) was
elected Head Buddhist Priest. Thereafter, Chua and Dee discontinued
payment of her monthly allowance and the additional P500.00 effective 1983.
In addition, petitioner and her son were evicted forcibly from their quarters in
the temple by six police officers. She was brought first to the Police precinct
in Tondo and then brought to Aloha Hotel where she was compelled to sign a
written undertaking not to return to the Buddhist temple in consideration of
the sum of P10,000.00. Petitioner refused and Chua shouted threats against
her and her son. Her personal belongings including assorted jewelries were
never returned by respondent Chua.

Chua and DEE on the other hand, claimed that petitioner was never an
employee of the Poh Toh Temple but a servant who confined herself to the
temple and to the personal needs of the late Chua Se Su and thus, her
position is coterminous with that of her master.
On February 10, 1988, the Labor Arbiter rendered a decision, the dispositive
portion of which states:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the complainant Filomena Barcenas,
and the respondent corporation is hereby ordered to pay her
the following:
1. P26,575.00 backwages from August 9, 1986 up to date
hereof.,
2. P14,650.00 as separation pay;
3. P18,000.00 as unpaid wages from August, 1983 up to
August 8, 1986; and
4. P10,000.00 moral damages.
Complainant's charge of unfair labor practice is hereby
dismissed for lack of merit.
SO ORDERED.

Respondents appealed to the National Labor Relations Commission which, as

earlier stated, reversed the above decision of the Labor Arbiter. Hence, this
instant petition.
A painstaking review of the records compels Us to dismiss the petition.
At the outset, however, We agree with the petitioner's claim that she was a
regular employee of the Manila Buddhist Temple as secretary and interpreter
of its Head Monk, Su As Head Monk, President and Chairman of the Board of
Directors of the Poh Toh Buddhist Association of the Philippines, Su was
empowered to hire the petitioner under Article V of the By-laws of the
Association which states:
. . . (T)he President or in his absence, the Vice President
shall represent the Association in all its dealings with the
public, subject to the Board, shall have the power to enter
into any contract or agreement in the name of the
Association, shall manage the active business operation of
the Association, shall deal with the bank or banks . . . 2
Respondent NLRC represented by its Legal Offices 3 argues that since
petitioner was hired without the approval of the Board of Directors of the Poh
Toh Buddhist Association of the Philippines, Inc., she was not an employee of
respondents. This argument is specious. The required Board approval would
appear to relate to the acts of the President in representing the association
"in all its dealings with the public." And, even granting that prior Board
approval is required to confirm the hiring of the petitioner, the same was

already granted, albeit, tacitly. It must be noted that petitioner was hired in
1978 and no whimper of protest was raised until this present controversy.
Moreover, the work that petitioner performed in the temple could not be
categorized as mere domestic work. Thus, We find that petitioner, being
proficient in the Chinese language, attended to the visitors, mostly Chinese,
who came to pray or seek advice before Buddha for personal or business
problems; arranged meetings between these visitors and Su and supervised
the preparation of the food for the temple visitors; acted as tourist guide of
foreign visitors; acted as liaison with some goverment offices; and made the
payment for the temple's Meralco, MWSS and PLDT bills. Indeed, these tasks
may not be deemed activities of a household helper. They were essential and
important to the operation and religious functions of the temple.
In spite of this finding, her status as a regular employee ended upon her
return to Bicol in May, 1982 to await the birth of her love-child allegedly by
Su The records do not show that petitioner filed any leave from work or that
a leave was granted her. Neither did she return to work after the birth of her
child on October 12, 1982, whom she named Robert Chua alias Chua Sim
Tiong. The NLRC found that it was only in July, 1983 after Su died that she
went back to the Manila Buddhist Temple. Petitioner's pleadings failed to
rebut this finding. Clearly, her return could not be deemed as a resumption
of her old position which she had already abandoned. Petitioner herself
supplied the reason for her return. She stated:
. . . (I)t was the death-bed instruction to her by Chua Se Su
to stay at the temple and to take care of the two boys and to
see to it that they finish their studies to become monks and
when they are monks to eventually take over the two temples
as their inheritance from their father Chua Se Su. 4
Thus, her return to the temple was no longer as an employee but rather as
Su's mistress who is bent on protecting the proprietary and hereditary rights
of her son and nephew. In her pleadings, the petitioner claims that they were
forcefully evicted from the temple, harassed and threatened by respondents
and that the Poh Toh Buddhist Association is a trustee corporation with the
children as cestui que trust. These claims are not proper in this labor case.
They should be appropriately threshed out in the complaints already filed by
the petitioner before the civil courts. Due to these claims, We view the
respondents' offer of P10,000.00 as indicative more of their desire to evict the
petitioner and her son from the temple rather than an admission of an
employer-employee relations.
Anent the petitioner's claim for unpaid wages since May, 1982 which she
filed only in 1986, We hold that the same has already prescribed. Under
Article 292 of the Labor Code, all money claims arising from employeremployee relations must be filed within three years from the time the cause
of action accrued, otherwise they shall forever be barred.
Finally, while petitioner contends that she continued to work in the temple
after Su died, there is, however, no proof that she was re-hired by the new
Head Monk. In fact, she herself manifested that respondents made it clear to
her in no uncertain terms that her services as well as her presence and that

of her son were no longer needed.5 However, she persisted and continued to
work in the temple without receiving her salary because she expected Chua
and Dee to relent and permit the studies of the two boys. 6 Consequently,
under these circumstances, no employer-employee relationship could have
arisen.
ACCORDINGLY, the decision of the National Labor Relations Commission
dated November 29, 1988 is hereby AFFIRMED for the reasons aforestated.
No costs.
SO ORDERED.

G.R. No. L-16298

September 29, 1962

ESTEBAN CUAJAO, plaintiff-appellant,

vs.
CHUA LO TAN, ET AL., defendants,
CHUA LO TAN, defendant-appellant.
Jose A. Javier for plaintiff-appellant.
Nicolas V. Benedicto, Jr. for defendant-appellant.
CONCEPCION, J.:
In his complaint, filed on November 29, 1956, plaintiff Esteban Cuajao seeks
to recover from defendants Chua Lo Tan and Chua Luan & Co., Inc., the
aggregate sum of P2,015.80 allegedly representing hospitalization expenses
in the sum of P435.80 and vacation leave pay, as former driver of said
defendants, in the sum of P1,580.00, with interest thereon, aside from
attorney's fees and costs. Defendants filed separate answer admitting some
allegations of the complaint, denying other allegations thereof and setting up
several affirmative defenses, as counterclaim for damages. Subsequently, the
complaint was, on motion of defendant Chua Luan & Co., Inc., dismissed as
regards this defendant. In due course, the Court of First Instance of Manila
later rendered a decision rejecting plaintiff's claim for vacation leave and
sentencing defendant Chua Lo Tan to pay to plaintiff the sum of P435.80 as
hospitalization expenses, with interest thereon, from the filing of said
complaint until fully paid, as well as the costs. Both parties have appealed
from this decision: plaintiff, insofar as his claim for vacation leave was
concerned; and Chua Lo Tan, as regards the hospitalization expenses.
The main facts are not disputed. As the family driver of Chua Lo Tan,
plaintiff earned P5.00 a day from August 1, 1951 to November 4, 1956.
Plaintiff was hospitalized for nineteen (19) days in 1951, thirteen (13) days in
1952, and three (3) days in 1953, and spent altogether P435.80 for
hospitalization and medicine. During the period of his employment, he did
not enjoy any vacation leave, which at the rate of four (4) days a month, as
provided in Article 1695 of the Civil Code of the Philippines, would have
aggregated, if accumulated, to 316 days vacation leave, worth, at the rate of
P5.00 a day, P1,580.00. This notwithstanding, the lower court held that
plaintiff is not entitled to recover the latter amount, upon ground of waiver of
his right thereto, in view of his failure to demand payment of said vacation
leave, as right thereto accrued.
Plaintiff maintains that there has been no such waiver on his part, he having
testified that seasonable demands had been made by him upon Chua Lo Tan.
The lower court, however, gave credence to the testimony of the latter to the
contrary and, we believe, correctly, plaintiff having remained in the service of
Chua Lo Tan for about six (6) years, despite the fact that Chua Lo Tan had
allegedly not heeded such demands. Moreover, we cannot review the findings
of fact of said court on this point, plaintiff having stated in the notice therein
filed by him that he appealed directly to the Supreme Court, to raise the
questions of law specified in his notice of appeal.1awphl.nt

Plaintiff insists that his right to vacation leave cannot be waived, but this
Court has already held otherwise Sun Ripe Coconut Products, Inc. vs. National
Labor Union, L-7964 (51 Off. Gaz., 5133-5137), in which we declared:
The purpose of vacation leave is to afford to a laborer chance to get a
much-needed rest to replenish his worn out energies and acquire a
new vitality to enable him to efficient perform his duties, and not
merely to give him additional salary or bounty. This privilege must be
demanded in its opportunity time and if he allows the years to go by
in silence, he was it. It becomes a mere concession or act of grace of
the employer. (See also, Philippine Air Lines, Inc. vs. Balanguit, et
al., 53 Off. Gaz., 8549; Tanguilig, et al., vs. Theo H. Davis and Co., L9144, May 30, 1959.)
Upon the other hand, the award for hospitalization expenses is based upon
Article 1689 of the Civil Code of the Philippines which, Chua Lo Tan
maintains, does not justify said award. Said article reads:
Household service shall always be reasonably compensated. Any
stipulation that household service is without compensation shall be
void. Such compensation shall be in addition to the house helper's
lodging, food, and medical attendance.
The issue is whether the phrase "medical attendance" as used in this
provision, includes "expenses of capitalization". The question is one of first
impression in this jurisdiction, although the Court of Appeals has decided it
in the negative in Zamora vs. Sy, 52 Off. Gaz., 1513. Neither does it appear to
be settled either in the American or in the British jurisprudence. In fact, it
would seem that the right to "medical attendance" exclusive of
hospitalization is purely statutory in character. What is more, even where
specifically conferred at by statute, said right to medical attendance is
deemed subject to the "rule of necessity" (People vs. Pierson, 103, 16 N.Y.
921, 68 N.E. 243), in the sense that said right is dependent upon the need
for said medical attendance. Hence, the question whether "expenses of
hospitalization" are included in "medical attendance", should not, and
cannot, be decided in abstract. The determination of the issue must depend
upon the circumstances surrounding each case.
In the one at bar, plaintiff has done no more than testify about the fact of his
hospitalization and the illness for which he had been treated - namely,
hemorrhoid aside - from identifying and presenting the bills allegedly paid by
him therefor. There is absolutely no evidence expert or otherwise
regarding the necessity of his confinement in a hospital. He did not even try
to prove that Chua Lo Tan had been advised of his (plaintiff's) illness or of his
hospitalization, either prior or subsequently thereto. Needless to say it is only
fair that, except in cases of extreme urgency, the party who may have to
defray the cost of medical attendance and/or hospitalization, be given a say
which Chua Lo Tan has not had - in the choice of the physician who will
treat the patient and/or the hospital in which he will be confined. In these
circumstances, we find that even if the expenses of hospitalization could,
in proper cases, be deemed to be within the purview of "medical attendance",
on which we do not express an opinion the lower court on erred in
sentencing Chua Lo Tan to pay said expenses of hospitalization.

WHEREFORE, the award for said expenses is set aside and, with this
modification, the decision appealed from is hereby affirmed in all other
respect, without costs. It is so ordered.

G.R. No. 114337 September 29, 1995

NITTO ENTERPRISES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI,
respondents.
KAPUNAN, J.:
This petition for certiorari under Rule 65 of the Rules of Court seeking to
annul the decision 1 rendered by public respondent National Labor Relations
Commission, which reversed the decision of the Labor Arbiter.
Briefly, the facts of the case are as follows:
Petitioner Nitto Enterprises, a company engaged in the sale of glass and
aluminum products, hired Roberto Capili sometime in May 1990 as an
apprentice machinist, molder and core maker as evidenced by an
apprenticeship agreement 2 for a period of six (6) months from May 28, 1990
to November 28, 1990 with a daily wage rate of P66.75 which was 75% of the
applicable minimum wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a
piece of glass which he was working on, accidentally hit and injured the leg
of an office secretary who was treated at a nearby hospital.
Later that same day, after office hours, private respondent entered a
workshop within the office premises which was not his work station. There,
he operated one of the power press machines without authority and in the
process injured his left thumb. Petitioner spent the amount of P1,023.04 to
cover the medication of private respondent.
The following day, Roberto Capili was asked to resign in a letter 3 which
reads:
August 2, 1990
Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa
kung papaano gamitin and "TOOL" sa pagbuhat ng salamin, sarili niyang
desisyon ang paggamit ng tool at may disgrasya at nadamay pa ang isang
sekretarya ng kompanya.
Sa araw ding ito limang (5) minute ang nakakalipas mula alas-singko ng
hapon siya ay pumasok sa shop na hindi naman sakop ng kanyang trabaho.
Pinakialaman at kinalikot ang makina at nadisgrasya niya ang kanyang
sariling kamay.
Nakagastos ang kompanya ng mga sumusunod:
Emergency and doctor fee P715.00
Medecines (sic) and others 317.04

Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang

matanggal ang tahi ng kanyang kamay.
Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at
ika-4 ng Agosto, 1990.
Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng
kanyang kamay, pagkatapos ng siyam na araw mula ika-2 ng Agosto.
Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang
resignasyon, kasama ng kanyang comfirmasyon at pag-ayon na ang lahat sa
itaas ay totoo.
Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay
aking pagkakasala sa hindi pagsunod sa alintuntunin ng kompanya.
(Sgd.) Roberto Capili
Roberto Capili
On August 3, 1990 private respondent executed a Quitclaim and Release in
favor of petitioner for and in consideration of the sum of P1,912.79. 4
Three days after, or on August 6, 1990, private respondent formally filed
before the NLRC Arbitration Branch, National Capital Region a complaint for
illegal dismissal and payment of other monetary benefits.
On October 9, 1991, the Labor Arbiter rendered his decision finding the
termination of private respondent as valid and dismissing the money claim
for lack of merit. The dispositive portion of the ruling reads:
WHEREFORE, premises considered, the termination is valid and for cause,
and the money claims dismissed for lack of merit.
The respondent however is ordered to pay the complainant the amount of
P500.00 as financial assistance.
SO ORDERED. 5
Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the
dismissal of Roberto Capilian was valid. First, private respondent who was
hired as an apprentice violated the terms of their agreement when he acted
with gross negligence resulting in the injury not only to himself but also to
his fellow worker. Second, private respondent had shown that "he does not
have the proper attitude in employment particularly the handling of
machines without authority and proper training. 6
On July 26, 1993, the National Labor Relations Commission issued an order
reversing the decision of the Labor Arbiter, the dispositive portion of which
reads:
WHEREFORE, the appealed decision is hereby set aside. The respondent is
hereby directed to reinstate complainant to his work last performed with
backwages computed from the time his wages were withheld up to the time
he is actually reinstated. The Arbiter of origin is hereby directed to further

hear complainant's money claims and to dispose them on the basis of law
and evidence obtaining.

ADEQUATELY PROVEN THE EXISTENCE OF A VALID

TERMINATING THE SERVICE OF PRIVATE RESPONDENT.

SO ORDERED. 7

We find no merit in the petition.

The NLRC declared that private respondent was a regular employee of

petitioner by ruling thus:

Petitioner assails the NLRC's finding that private respondent Roberto Capili
cannot plainly be considered an apprentice since no apprenticeship program
had yet been filed and approved at the time the agreement was executed.

As correctly pointed out by the complainant, we cannot understand how an

apprenticeship agreement filed with the Department of Labor only on June 7,
1990 could be validly used by the Labor Arbiter as basis to conclude that the
complainant was hired by respondent as a plain "apprentice" on May 28,
1990. Clearly, therefore, the complainant was respondent's regular employee
under Article 280 of the Labor Code, as early as May 28,1990, who thus
enjoyed the security of tenure guaranteed in Section 3, Article XIII of our
1987 Constitution.
The complainant being for illegal dismissal (among others) it then behooves
upon respondent, pursuant to Art. 227(b) and as ruled in Edwin Gesulgon
vs. NLRC, et al. (G.R. No. 90349, March 5, 1993, 3rd Div., Feliciano, J.) to
prove that the dismissal of complainant was for a valid cause. Absent such
proof, we cannot but rule that the complainant was illegally dismissed. 8
On January 28, 1994, Labor Arbiter Libo-on called for a conference at which
only private respondent's representative was present.
On April 22, 1994, a Writ of Execution was issued, which reads:
NOW, THEREFORE, finding merit in [private respondent's] Motion for
Issuance of the Writ, you are hereby commanded to proceed to the premises
of [petitioner] Nitto Enterprises and Jovy Foster located at No. l 74 Araneta
Avenue, Portero, Malabon, Metro Manila or at any other places where their
properties are located and effect the reinstatement of herein [private
respondent] to his work last performed or at the option of the respondent by
payroll reinstatement.
You are also to collect the amount of P122,690.85 representing his
backwages as called for in the dispositive portion, and turn over such
amount to this Office for proper disposition.
Petitioner filed a motion for reconsideration but the same was denied.
Hence, the instant petition for certiorari.
The issues raised before us are the following:
I
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS
NOT AN APPRENTICE.
II
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN HOLDING THAT PETITIONER HAD NOT

CAUSE

IN

Petitioner further insists that the mere signing of the apprenticeship

agreement already established an employer-apprentice relationship.
Petitioner's argument is erroneous.
The law is clear on this matter. Article 61 of the Labor Code provides:
Contents of apprenticeship agreement. Apprenticeship agreements,
including the main rates of apprentices, shall conform to the rules issued by
the Minister of Labor and Employment. The period of apprenticeship shall
not exceed six months. Apprenticeship agreements providing for wage rates
below the legal minimum wage, which in no case shall start below 75% per
cent of the applicable minimum wage, may be entered into only in
accordance with apprenticeship program duly approved by the Minister of
Labor and Employment. The Ministry shall develop standard model programs
of apprenticeship. (emphasis supplied)
In the case at bench, the apprenticeship agreement between petitioner and
private respondent was executed on May 28, 1990 allegedly employing the
latter as an apprentice in the trade of "care maker/molder." On the same
date, an apprenticeship program was prepared by petitioner and submitted
to the Department of Labor and Employment. However, the apprenticeship
Agreement was filed only on June 7, 1990. Notwithstanding the absence of
approval by the Department of Labor and Employment, the apprenticeship
agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the
requirements of the law. It is mandated that apprenticeship agreements
entered into by the employer and apprentice shall be entered only in
accordance with the apprenticeship program duly approved by the Minister
of Labor and Employment.
Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is, therefore, a condition sine quo non before an
apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of
Labor and Employment is a preliminary step towards its final approval and
does not instantaneously give rise to an employer-apprentice relationship.
Article 57 of the Labor Code provides that the State aims to "establish a
national apprenticeship program through the participation of employers,
workers and government and non-government agencies" and "to establish
apprenticeship standards for the protection of apprentices." To translate
such objectives into existence, prior approval of the DOLE to any
apprenticeship program has to be secured as a condition sine qua non before

any such apprenticeship agreement can be fully enforced. The role of the
DOLE in apprenticeship programs and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private
respondent has no force and effect in the absence of a valid apprenticeship
program duly approved by the DOLE, private respondent's assertion that he
was hired not as an apprentice but as a delivery boy ("kargador" or
"pahinante") deserves credence. He should rightly be considered as a regular
employee of petitioner as defined by Article 280 of the Labor Code:
Art. 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of
the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph:Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
(Emphasis supplied)
and pursuant to the constitutional mandate to "protect the rights of workers
and promote their welfare." 9
Petitioner further argues that, there is a valid cause for the dismissal of
private respondent.
There is an abundance of cases wherein the Court ruled that the twin
requirements of due process, substantive and procedural, must be complied
with, before valid dismissal exists. 10 Without which, the dismissal becomes
void.
The twin requirements of notice and hearing constitute the essential
elements of due process. This simply means that the employer shall afford
the worker ample opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires.
Ample opportunity connotes every kind of assistance that management must
accord the employee to enable him to prepare adequately for his defense
including legal representation. 11
As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC: 12
The law requires that the employer must furnish the worker sought to be
dismissed with two (2) written notices before termination of employee can be
legally effected: (1) notice which apprises the employee of the particular acts
or omissions for which his dismissal is sought; and (2) the subsequent notice
which informs the employee of the employer's decision to dismiss him (Sec.

13, BP 130; Sec. 2-6 Rule XIV, Book V, Rules and Regulations Implementing
the Labor Code as amended). Failure to comply with the requirements taints
the dismissal with illegality. This procedure is mandatory, in the absence of
which, any judgment reached by management is void and in existent
(Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs.
NLRC, 168 SCRA 122; Ruffy vs. NLRC. 182 SCRA 365 [1990]).
The fact is private respondent filed a case of illegal dismissal with the Labor
Arbiter only three days after he was made to sign a Quitclaim, a clear
indication that such resignation was not voluntary and deliberate.
Private respondent averred that he was actually employed by petitioner as a
delivery boy ("kargador" or "pahinante").
He further asserted that petitioner "strong-armed" him into signing the
aforementioned resignation letter and quitclaim without explaining to him
the contents thereof. Petitioner made it clear to him that anyway, he did not
have a choice. 13
Petitioner cannot disguise the summary dismissal of private respondent by
orchestrating the latter's alleged resignation and subsequent execution of a
Quitclaim and Release. A judicious examination of both events belies any
spontaneity on private respondent's part.
WHEREFORE, finding no abuse of discretion committed by public
respondent National Labor Relations Commission, the appealed decision is
hereby AFFIRMED.
SO ORDERED.

G.R. No. 165377

February 16, 2010

LOLITA REYES doing business under the name and style, SOLID
BROTHERS WEST MARKETING,Petitioner,
vs.
CENTURY CANNING CORPORATION, Respondent.
DECISION
PERALTA, J.:
Before us is a Petition for Review on Certiorari seeking the reversal of the
Decision1 dated September 16, 2004 of the Court of Appeals (CA) in CA-G.R.
CV No. 67975, which reversed and set aside the Decision 2 of the Regional
Trial Court (RTC), Branch 267, Pasig City, in Civil Case No. 66863.
The antecedent facts as found by the Court of Appeals are as follows:
Plaintiff corporation, Century Canning Corporation, is engaged in the
business of manufacturing, processing, and distribution of canned goods,
particularly, Century Tuna. Defendant Lolita Reyes is a businesswoman
doing business under the name and style Solid Brothers West Marketing.
The facts as gathered by the Court a quo are as follows:
In the subject case, Plaintiff Century Canning Corporation tried to establish
the fact that defendant Lolita Reyes had applied for and was granted "credit
line" from the former thereby allowing the latter to allegedly obtain and
secure Century tuna canned goods. And when the defendant's obligation to
pay became due and demandable, the same failed to pay as she refused to
pay her unsettled accounts in the total amount of P787,191.27. However,
due to the constant and diligent efforts exerted by the representatives of the
plaintiff to collect the alleged unpaid obligations of the defendant, the later
returned some unsold Century tuna canned goods, the value of which
atP323,697.64 was deducted from the principal obligation thereby leaving
the amount of P463,493.63 as the unsettled account of defendant Reyes.
That because of the refusal of the defendant to satisfactorily and completely
settle her unpaid account, the plaintiff was constrained to refer the matter to
its legal counsel, who consequently sent a demand letter, and accordingly
filed the instant case in Court after the defendant failed to comply and satisfy
the demand letter to pay.
In her Answer with Compulsory Counterclaim, defendant averred that she
has no transaction with the plaintiff for the purchase of the alleged canned
goods in question, inasmuch as she is not engaged in the canned goods
business but in auto airconditioning, parts and car accessories in Banaue,
Quezon City.3
Trial thereafter ensued.
On April 28, 2000, the RTC rendered its decision, the dispositive portion of
which reads:
WHEREFORE, premises considered, the instant complaint is hereby ordered
DISMISSED. The prayer for counterclaim of defendant in the form of moral
damages, exemplary damages, and attorney's fees is hereby granted.

Accordingly, let judgment be rendered in favor of defendant's counterclaim,

and plaintiff Century Canning Corporation is directed to pay defendant Lolita
Reyes moral damages in the amount of P50,000.00, exemplary damages in
the amount of P25, 000.00 and attorney's fees in the amount of P20,000.00
as well as to pay the costs of the suit.4
SO ORDERED.
In so ruling, the RTC found that respondent failed to substantiate its
allegations that petitioner is liable to pay a certain sum of money. It based its
conclusion on the fact that petitioner's signature in the Credit Application
Form submitted by respondent was significantly different from the signature
appearing in petitioner's COMELEC voter's identification card (ID) and her
Community Tax Certificate (CTC) which she proffered to be her usual, true,
and genuine signature. It also found that petitioner's signature did not
appear in the five sales invoices presented by respondent where the former
acknowledged receipt of the delivered canned good; that there was no explicit
authority such as a written document showing the appointment of a certain
Oscar Delumen as petitioner's authorized representative to transact business
and/or receive canned goods for and on petitioner's behalf; that there was
also no showing that respondent requested or asked for Delumen's authority
to transact or receive the goods on petitioner's behalf inasmuch as the
amount involved was of considerable value. The RTC did not give credence to
the testimonial as well as the documentary evidence presented by respondent
for being self-serving. It awarded damages to petitioner taking into
consideration the mental anguish she suffered by reason of the case and for
being forced to litigate to protect her right.
Respondent filed its appeal with the CA. Petitioner filed her appellee's brief,
and respondent filed a Reply thereto.
On September 16, 2004, the CA granted the appeal, the dispositve portion of
which reads:
WHEREFORE, premises considered, the appeal is hereby GRANTED. The
assailed decision of the Regional Trial Court is REVERSED and SET ASIDE
and the defendant-appellee held liable for the amount claimed by the
plaintiff-appellant.5
In reversing the RTC, the CA found that the RTC's conclusion that
petitioner's signature in the Credit application form was different from her
signature in the CTC and voter's ID was contrary to the RTC's observation
during the September 9, 1999 hearing, where it made a remark that "as far
as the strokes, there seemed to be a similarity, because signatures
sometimes differed in size; but as far as the strokes were concerned, they
seemed to be the same." The CA found that in the credit application form,
where petitioner's certificate of registration of business name was attached, a
certain Oscar Delumen represented himself as petitioner's former sales
operations manager; that the existence and authenticity of both documents
were never refuted by petitioner; that the fact that Delumen was acting for
and on petitioner's behalf was not controverted, except by mere denial. The
CA noted that in Delumen's Comments on Motion to Cite him in Contempt of
Court, he stated that "when he saw on his desk the RTC Order of December

27, 1999, directing him to pay a fine of P1,000.00 as form of wastage fee, he
immediately brought the said Order to petitioner and was assured by the
latter that she would have her lawyer attend to and take care for him"; that
this statement proved that petitioner and Delumen knew each other; and
that the RTC should have required Delumen's testimony, as he was a vital
witness to the case, but the RTC opted to forego with the same.
The CA gave credence to the respondent's witnesses, who testified that they
had previously met with petitioner when they attempted to collect her unpaid
accounts; that petitioner even tried to settle her indebtedness through
monthly installments until such time that the debt was fully paid; that
petitioner even returned some of the goods previously delivered to her to
reduce her accountabilities; that the testimonies of these witnesses belied
petitioner's defense that she never transacted business with respondent,
because, if she did not transact with the latter, she would not have
entertained respondent's officers and would not have offered settlement and
returned the goods. The CA concluded that the positive declarations of
respondent's witnesses could not be overturned by petitioner's general denial
that she never transacted business with respondent.
Hence, this petition where petitioner raises the issue that:
THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN
GRANTING RESPONDENT'S APPEAL AND HOLDING PETITIONER LIABLE
TO PAY RESPONDENT'S CLAIM.
Petitioner contends that the CA misquoted or misapplied the remarks made
by the RTC during the trial of the case, since the observation "as far as the
strokes, there seems to be a similarity" refers to that between petitioner's
signature appearing in her community tax certificate and the verification in
her answer, and not between petitioner's alleged signatures in the credit
application form and her community tax certificate and voter's ID. She
argues that contrary to the CA finding that she never refuted the existence
and authenticity of the credit application form, she categorically denied
having executed the same by claiming that the signature appearing therein
was not hers; that she not only denied her signature in the credit application
form, but she also presented documents showing her genuine signature. She
also claimed that the CA's finding that Delumen was acting on her behalf
was not established by competent evidence during the trial of the case, as the
only evidence submitted by respondent to prove the authority of Delumen
was the credit application form; that said credit application form has no
probative value for being self-serving, and its genuineness and authenticity
were not established.
Petitioner contended that the Comment on Motion to Cite in Contempt of
Court submitted by Delumen, which the CA claimed to have proven the fact
that petitioner and Delumen knew each other, was not formally offered as
part of respondent's evidence, and Delumen was not even presented during
the trial; that the CA erred in concluding that petitioner returned some of the
canned goods to respondent, relying on the statement of account which was
self-serving, and no copy of the same was sent to the petitioner; and that the
statement of account where the amount of P323,697.64 was deducted was
merely based on the credit memo, which respondent's witness did not

prepare himself. There was no evidence that the goods were received by
petitioner, as even the sales invoices did not bear her signatures; and the fact
that the goods were received by Delumen because he was petitioner's general
manager was not established.
The issue presented before Us is whether the CA correctly found that
petitioner was liable to pay respondent's claim.1avvphi1 This is a factual
issue.
The Court is not a trier of facts, its jurisdiction being limited to reviewing
only errors of law that may have been committed by the lower courts. 6 As a
general rule, petitions for review under Rule 45 of the Rules of Civil
Procedure filed before this Court may only raise questions of law. 7 However,
jurisprudence has recognized several exceptions to this rule.8
In this case, the factual findings of the Court of Appeals are contrary to those
of the RTC; thus, we find it proper to review the evidence.
It is a basic rule in evidence that each party to a case must prove his own
affirmative allegations by the degree of evidence required by law.9 In civil
cases, the party having the burden of proof must establish his case by
preponderance of evidence,10 or that evidence that is of greater weight or is
more convincing than that which is in opposition to it. It does not mean
absolute truth; rather, it means that the testimony of one side is more
believable than that of the other side, and that the probability of truth is on
one side than on the other.
We find no merit in the petition.
The RTC dismissed respondent's complaint, as it found that the signature
appearing in the credit application form, alleged to be that of petitioner, was
significantly different from the signature in the CTC and voter's ID that
petitioner claimed to show her usual and genuine signature. However, the CA
found that such conclusion was contrary to the RTC's observation made
during the trial, when the latter said that "there seems to be a similarity in
strokes because a signature sometimes differs on the size." While the CA's
finding on this matter was erroneous, since a reading of the transcript of
stenographic notes of the September 9, 1999 hearing, when the alleged
observation regarding the similarity in strokes was made by the RTC, shows
that the RTC was comparing petitioner's signatures in her voter's ID and her
CTC with her signature in the Verification in her Answer. We still affirm the
CA's reversal of the RTC decision.
While petitioner denies having any transaction with respondent regarding the
sale and delivery to her of respondent's canned goods, a review of the
evidence shows otherwise. Records show that respondent submitted a
certificate of registration of business name under petitioner's name and with
her photo, which was marked as respondent's Exhibit "L."11 Notably,
respondent's formal offer of evidence12 stated that the purpose of Exhibit "L"
was to show that petitioner had submitted such certificate as one of her
supporting documents in applying as a distributor of respondent's products,
and also for the purpose of contradicting petitioner's allegation that she had
no transaction with respondent.13 In petitioner's Objections/Comment to
respondent's offer of evidence,14 she offered no objection to this exhibit.15 In

fact, in the same Comment, petitioner prayed that the other exhibits be
denied admission for the purpose for which they were offered, except Exhibit
"L."16 In effect, petitioner admitted the purpose for which Exhibit "L" was
offered, i.e., one of the documents she submitted to respondent to be a
distributor of the latter's products. Thus, such admission belies her
allegation in her Answer with compulsory counterclaim that she had no
transaction with respondent for the purchase of the canned goods, 17 as well
as her testimony on direct examination that she did not know respondent.18
Although petitioner denies her signature in the credit application form, the
entries19 therein show informations whose veracity even admitted by
petitioner. Such entries include the residential address at 132 Zamora Street,
Caloocan, which was petitioner's previous residence prior to her transfer to
Banaue, Quezon City;20 and shows Eliseo Dy as authorized signatory of two
bank accounts, whom petitioner admitted on cross-examination to be her
live-in partner for 23 years.21 Notable also is the fact that the tax account
number appearing in the credit application form was the same tax account
number stated in petitioner's CTC, which she presented to reflect her true
and usual signature.22 It was also in the credit application form where the
name of Oscar Delumen, with his signature affixed thereto, appears as
petitioner's operations manager.
Petitioner claims that there was no evidence showing that she received the
canned goods delivered by respondent, as the sales invoices evidencing such
delivery were not signed by her. The sales invoices were signed by Delumen,
her operations manager. While petitioner denies having received the canned
goods and knowing Delumen, respondent presented two witnesses who
categorically declared and positively identified petitioner as the person whom
they met several times in her store and residence for the purpose of collecting
her unpaid obligations with respondent.
George Navarez, respondent's former Credit and Collection Supervisor,
testified that petitioner was their former customer who failed to pay the
purchases and deliveries covered by five sales invoices;23 that he knew
petitioner since he had met her several times when he was collecting her
unpaid obligations;24 that in one of his visits to petitioner, the latter offered
to pay P50,000.00 a month as partial settlement of her total indebtedness
with respondent; and that to reduce her debt, petitioner even returned some
of the canned goods delivered to her.25Navarez, on cross examination,
testified that he was the one who personally received the canned goods that
petitioner returned, as he was there in the store when the goods were pulled
out;26 that the transaction regarding the returned goods was contained in
three credit memos, which served as the bases for the amount deducted from
petitioner's debt.27 On re-direct, he clarified that the amount of P323,697.64
was the amount of the returned canned goods which was reflected as
deductions in the statement of account,28 and that the statement of account
was prepared by a clerk and approved by him.29
Manuel Conti Uy, respondent's Regional Sales Manager, testified that he met
petitioner several times when he presented to her the five unpaid sales
invoices30 that, in one instance, petitioner, who was with Eliseo Dy who could
not speak because of a throat infection, asked him to just pull out the

remaining unsold goods for application to her total indebtedness;31 that he

told her that he would still have to ask the approval of their credit and
collection department. Uy then came back with Navarez and, in the presence
of petitioner, initiated the pull-out of the goods;32 that after deducting the
amount of the returned canned goods, the remaining balance
wasP463,493.63;33 and when he made another visit, i.e., a few days after
Eliseo's death, he presented to petitioner the statement of account where the
amount of the returned goods was deducted, but petitioner still refused to
pay.34
Notably, petitioner did not even rebut, either in her direct testimony or in
rebuttal, the testimonies of Navarez and Uy that they met with her several
times, and talked with her regarding the collection of her indebtedness and
the pull-out of the canned goods. In fact, in Uy's testimony, he also
mentioned Eliseo's death, and that Uy even allowed few days to pass before
going to petitioner's place to collect so as to give petitioner time to comfort
herself. Eliseo's death sometime in October 1997 was confirmed by
petitioner.
We agree with the CA when it said that if indeed petitioner did not transact
with respondent, she should not have entertained respondent's collecting
officers and should not have offered settlement or returned some of the
canned goods.
The testimonies of respondent's witnesses were further bolstered by the
absence of any motive on their part to falsely testify against petitioner; thus,
their testimonies are hereby accorded full faith and credit.
Petitioner's defense consists of denial. We have held that denial, if
unsubstantiated by clear and convincing evidence, is a negative and selfserving evidence that has no weight in law and cannot be given greater
evidentiary value over the testimony of credible witnesses who testified on
affirmative matters.35
We find that respondent has sufficiently established petitioner's liability in
the amount of P463,493.63. Such amount must be paid with legal interest
from the filing of the complaint on June 25, 1998, until fully paid. As held in
the landmark case of Eastern Shipping Lines, Inc. v. Court of Appeals,36 to
wit:
1. When the obligation is breached, and it consists in the payment of
a sum of money, i.e., a loan or forbearance of money, the interest
due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
xxxx
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 12% per

annum from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of credit.
WHEREFORE, the decision dated September 16, 2004 of the Court of
Appeals in CA-G.R. CV No. 67975 is hereby AFFIRMED.
SO ORDERED.

G.R. No. 109114 September 14, 1993

HOLIDAY INN MANILA and/or HUBERT LINER and BABY
DISQUITADO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and
ELENA HONASAN, respondents.
Inocentes, De Leon, Leogardo, Atienza, Manaye & Azucena Law Office for
petitioners.
Florante M. Yambot for private respondent.
CRUZ, J.:
The employer has absolute discretion in hiring his employees in accordance
with his standards of competence and probity. This is his prerogative. Once
hired, however, the employees are entitled to the protection of the law even
during the probation period and more so after they have become members of
the regular force. The employer does not have the same freedom in the hiring
of his employees as in their dismissal.
Elena Honasan applied for employment with the Holiday Inn and was on
April 15, 1991, accepted for "on-the-job training" as a telephone operator for
a period of three weeks. 1 For her services, she received food and
transportation allowance. 2 On May 13, 1992, after completing her training,
she was employed on a "probationary basis" for a period of six months ending
November
12,
1991. 3
Her employment contract stipulated that the Hotel could terminate her
probationary employment at any time prior to the expiration of the six-month
period in the event of her failure (a) to learn or progress in her job; (b) to
faithfully observe and comply with the hotel rules and the instructions and
orders of her superiors; or (c) to perform her duties according to hotel
standards.
On November 8, 1991, four days before the expiration of the stipulated
deadline, Holiday Inn notified her of her dismissal, on the ground that her
performance had not come up to the standards of the Hotel. 4
Through counsel, Honasan filed a complaint for illegal dismissal, claiming
that she was already a regular employee at the time of her separation and so
was entitled to full security of tenure. 5 The complaint was dismissed on April
22, 1992 by the Labor Arbiter, 6 who held that her separation was justified
under Article 281 of the Labor Code providing as follows:
Probationary employment shall not exceed six (6) months
from the date the employee started working, unless it is
covered by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged
on a probationary basis may be terminated for a just cause
or when he fails to qualify as a regular employee in

accordance with reasonable standards made known by the

employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period
shall be considered a regular employee.
On appeal, this decision was reversed by the NLRC, which held that Honasan
had become a regular employee and so could not be dismissed as a
probationer. 7 In its own decision dated November 27, 1992, the NLRC
ordered the petitioners to reinstate Honasan "to her former position without
loss of seniority rights and other privileges with backwages without
deduction and qualification." Reconsideration was denied in a resolution
dated January 26, 1993. 8
The petitioners now fault the NLRC for having entertained Honasan's appeal
although it was filed out of time and for holding that Honasan was already a
regular employee at the time of her dismissal, which was made 4 days days
before the expiration of the probation period.
The petition has no merit.
On the timeliness of the appeal, it is well-settled that all notices which a
party is entitled to receive must be coursed through his counsel of record.
Consequently, the running of the reglementary period is reckoned from the
date of receipt of the judgment by the counsel of the appellant. 9 Notice to the
appellant himself is not sufficient notice. 10Honasan's counsel received the
decision of the Labor Arbiter on May 18, 1992. 11 Before that, however, the
appeal had already been filed by Honasan herself, on May 8, 1992. 12 The
petitioners claim that she filed it on the thirteenth but this is irrelevant. Even
if the latter date was accepted, the appeal was nevertheless still filed on time,
in fact even before the start of the reglementary period.
On the issue of illegal dismissal, we find that Honasan was placed by the
petitioner on probation twice, first during her on-the-job training for three
weeks, and next during another period of six months, ostensibly in
accordance with Article 281. Her probation clearly exceeded the period of six
months prescribed by this article.
Probation is the period during which the employer may determine if the
employee is qualified for possible inclusion in the regular force. In the case at
bar, the period was for three weeks, during Honasan's on-the-job training.
When her services were continued after this training, the petitioners in effect
recognized that she had passed probation and was qualified to be a regular
employee.
Honasan was certainly under observation during her three-week on-the-job
training. If her services proved unsatisfactory then, she could have been
dropped as early as during that period. But she was not. On the contrary,
her services were continued, presumably because they were acceptable,
although she was formally placed this time on probation.
Even if it be supposed that the probation did not end with the three-week
period of on-the-job training, there is still no reason why that period should
not be included in the stipulated six-month period of probation. Honasan
was accepted for on-the-job training on April 15, 1991. Assuming that her

probation could be extended beyond that date, it nevertheless could continue

only up to October 15, 1991, after the end of six months from the earlier
date. Under this more lenient approach, she had become a regular employee
of Holiday Inn and acquired full security of tenure as of October 15, 1991.
The consequence is that she could no longer be summarily separated on the
ground invoked by the petitioners. As a regular employee, she had acquired
the protection of Article 279 of the Labor Code stating as follows:
Art. 279. Security of Tenure In cases of regular
employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his
compensation was withheld from him up to the time of his
actual reinstatement.
The grounds for the removal of a regular employee are enumerated in Articles
282, 283 and 284 of the Labor Code. The procedure for such removal is
prescribed in Rule XIV, Book V of the Omnibus Rules Implementing the
Labor Code. These rules were not observed in the case at bar as Honasan
was simply told that her services were being terminated because they were
found to be unsatisfactory. No administrative investigation of any kind was
undertaken to justify this ground. She was not even accorded prior notice, let
alone a chance to be heard.
We find in the Hotel's system of double probation a transparent scheme to
circumvent the plain mandate of the law and make it easier for it to dismiss
its employees even after they shall have already passed probation. The
petitioners had ample time to summarily terminate Honasan's services
during her period of probation if they were deemed unsatisfactory. Not having
done so, they may dismiss her now only upon proof of any of the legal
grounds for the separation of regular employees, to be established according
to the prescribed procedure.
The policy of the Constitution is to give the utmost protection to the working
class when subjected to such maneuvers as the one attempted by the
petitioners. This Court is fully committed to that policy and has always been
quick to rise in defense of the rights of labor, as in this case.
WHEREFORE, the petition is DISMISSED, with costs against petitioners. It is
so ordered.

G.R. No. 122917 July 12, 1999

EMPLOYMENT CONTRACT FOR

MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID,

DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M.
CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M.
YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M.
TABAQUERO, CORAZON C. DELOS REYES, ROBERT G. NOORA,
MILAGROS O. LEQUIGAN, ADRIANA F. TATLONGHARI, IKE
CABANDUCOS, COCOY NOBELLO, DORENDA CANTIMBUHAN, ROBERT
MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL
MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY V.
GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R. CORTEZ,
MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL
DEL PILAR, MARGARET CECILIA CANOZA, THELMA SEBASTIAN, MA.
JEANETTE CERVANTES, JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY
BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO and
TIMOSA,petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK AND
TRUST COMPANY, respondents.

HANDICAPPED WORKERS

PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified disabled
persons be granted the same terms and conditions of employment as
qualified able-bodied employees. Once they have attained the status of
regular workers, they should be accorded all the benefits granted by law,
notwithstanding written or verbal contracts to the contrary. This treatments
is rooted not merely on charity or accomodation, but on justice for all.

This Contract, entered into by and between:

FAR EAST BANK AND TRUST COMPANY, a universal banking
corporation duly organized and existing under and by virtue of the
laws of the Philippines, with business address at FEBTC Building,
Muralla, Intramuros, Manila, represented herein by its Assistant Vice
President, MR. FLORENDO G. MARANAN, (hereinafter referred to as
the "BANK");
-and, years old, of legal age, , and residing
at (hereinafter referred to as the ("EMPLOYEE").
WITNESSETH : That
WHEREAS, the BANK, cognizant of its social responsibility, realizes
that there is a need to provide disabled and handicapped persons
gainful employment and opportunities to realize their potentials,
uplift their socio-economic well being and welfare and make them
productive, self-reliant and useful citizens to enable them to fully
integrate in the mainstream of society;
WHEREAS, there are certain positions in the BANK which may be
filled-up by disabled and handicapped persons, particularly deafmutes, and the BANK ha[s] been approached by some civic-minded
citizens and authorized government agencies [regarding] the
possibility of hiring handicapped workers for these positions;

The Case

WHEREAS, the EMPLOYEE is one of those handicapped workers

who [were] recommended for possible employment with the BANK;

Challenged in the Petition for Certiorari 1 before us is the June 20, 1995
Decision 2 of the National Labor Relations Commission (NLRC), 3 which
affirmed the August, 22 1994 ruling of Labor Arbiter Cornelio L. Linsangan.
The labor arbiter's Decision disposed as follows: 4

NOW, THEREFORE, for and in consideration of the foregoing

premises and in compliance with Article 80 of the Labor Code of the
Philippines as amended, the BANK and the EMPLOYEE have entered
into this Employment Contract as follows:

WHEREFORE, judgment is hereby rendered dismissing the abovementioned complaint for lack of merit.

1. The BANK agrees to employ and train the EMPLOYEE, and the
EMPLOYEE agrees to diligently and faithfully work with the BANK,
as Money Sorter and Counter.

Also assailed is the August 4, 1995 Resolution

the Motion for Reconsideration.

of the NLRC, which denied

2. The EMPLOYEE shall perform among others, the following

duties and responsibilities:

The Facts
The facts were summarized by the NLRC in this wise:

Complainants numbering 43 (p. 176, Records) are deaf-mutes who

were hired on various periods from 1988 to 1993 by respondent Far
East Bank and Trust Co. as Money Sorters and Counters through a
uniformly worded agreement called "Employment Contract for
Handicapped Workers". (pp. 68 & 69, Records) The full text of said
agreement is quoted below:

i. Sort out bills according to color;

ii. Count each denomination per hundred, either
manually or with the aid of a counting machine;
iii. Wrap and label bills per hundred;
iv. Put the wrapped bills into bundles; and

v. Submit bundled bills to the bank teller for

verification.
3. The EMPLOYEE shall undergo a training period of one (1)
month, after which the BANK shall determine whether or not
he/she should be allowed to finish the remaining term of
this Contract.
4. The EMPLOYEE shall be entitled to an initial
compensation of P118.00 per day, subject to adjustment in
the sole judgment of the BANK, payable every 15th and end
of the month.1wphi1.nt
5. The regular work schedule of the EMPLOYEE shall be five
(5) days per week, from Mondays thru Fridays, at eight (8)
hours a day. The EMPLOYEE may be required to perform
overtime work as circumstance may warrant, for which
overtime work he/she [shall] be paid an additional
compensation of 125% of his daily rate if performed during
ordinary days and 130% if performed during Saturday or [a]
rest day.
6. The EMPLOYEE shall likewise be entitled to the following
benefits:
i. Proportionate 13th month pay based on his basic
daily wage.
ii. Five (5) days incentive leave.
iii. SSS premium payment.
7. The EMPLOYEE binds himself/herself to abide [by] and
comply with all the BANK Rules and Regulations and
Policies, and to conduct himself/herself in a manner
expected of all employees of the BANK.
8. The EMPLOYEE acknowledges the fact that he/she had
been employed under a special employment program of the
BANK, for which reason the standard hiring requirements of
the BANK were not applied in his/her case. Consequently,
the EMPLOYEE acknowledges and accepts the fact that the
terms and conditions of the employment generally observed
by the BANK with respect to the BANK's regular employee
are not applicable to the EMPLOYEE, and that therefore, the
terms and conditions of the EMPLOYEE's employment with
the BANK shall be governed solely and exclusively by this
Contract and by the applicable rules and regulations that
the Department of Labor and Employment may issue in
connection
with
the
employment
ofdisabled and
handicapped workers. More specifically, the EMPLOYEE
hereby acknowledges that the provisions of Book Six of the
Labor Code of the Philippines as amended, particularly on
regulation of employment and separation pay are not
applicable to him/her.

9. The Employment Contract shall be for a period of six (6)

months or from to unless earlier terminated by the
BANK for any just or reasonable cause. Any continuation or
extension of this Contract shall be in writing and therefore
this Contract will automatically expire at the end of its terms
unless renewed in writing by the BANK.
IN WITNESS WHEREOF, the parties, have hereunto affixed
their signature[s] this day of , at
Intramuros, Manila, Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in
1989 another two (2); in 1990, nineteen (19); in 1991 six (6); in 1992,
six (6) and in 1993, twenty-one (21). Their employment[s] were
renewed every six months such that by the time this case arose,
there were fifty-six (56) deaf-mutes who were employed by
respondent under the said employment agreement. The last one was
Thelma Malindoy who was employed in 1992 and whose contract
expired on July 1993.
xxx xxx xxx
Disclaiming that complainants were regular employees, respondent
Far East Bank and Trust Company maintained that complainants
who are a special class of workers the hearing impaired employees
were hired temporarily under [a] special employment arrangement
which was a result of overtures made by some civic and political
personalities to the respondent Bank; that complainant[s] were hired
due to "pakiusap" which must be considered in the light of the
context career and working environment which is to maintain and
strengthen a corps of professionals trained and qualified officers and
regular employees who are baccalaureate degree holders from
excellent schools which is an unbending policy in the hiring of
regular employees; that in addition to this, training continues so that
the regular employee grows in the corporate ladder; that the idea of
hiring handicapped workers was acceptable to them only on a special
arrangement basis; that it was adopted the special program to help
tide over a group of workers such as deaf-mutes like the
complainants who could do manual work for the respondent Bank;
that the task of counting and sorting of bills which was being
performed by tellers could be assigned to deaf-mutes that the
counting and sorting of money are tellering works which were always
logically and naturally part and parcel of the tellers' normal
functions; that from the beginning there have been no separate items
in the respondent Bank plantilla for sortes or counters; that the
tellers themselves already did the sorting and counting chore as a
regular feature and integral part of their duties (p. 97, Records); that
through the "pakiusap" of Arturo Borjal, the tellers were relieved of
this task of counting and sorting bills in favor of deaf-mutes without
creating new positions as there is no position either in the
respondent or in any other bank in the Philippines which deals with
purely counting and sorting of bills in banking operations.

Petitioners specified when each of them was hired and dimissed, viz: 7
NAME OF PETITIONER

WORKPLACE Date Hired Date

Dismissed

1. MARITES BERNARDO

Intramuros

12-Nov-90

17-Nov-93

2. ELVIRA GO DIAMANTE

Intramuros

24-Jan-90

11-Jan-94

3. REBECCA E. DAVID

Intramuros

16-Apr-90

23-Oct-93

4. DAVID P. PASCUAL

Bel-Air

15-Oct-88

21-Nov-94

5. RAQUEL ESTILLER

Intramuros

2-Jul-92

4-Jan-94

6. ALBERT HALLARE

West

4-Jan-91

9-Jan-94

7. EDMUND M. CORTEZ

Bel-Air

15-Jan-91

3-Dec-93

8. JOSELITO O. AGDON

Intramuros

5-Nov-90

17-Nov-93

9. GEORGE P. LIGUTAN JR.

Intramuros

6-Sep-89

19-Jan-94

10. CELSO M. YAZAR

Intramuros

8-Feb-93

8-Aug-93

11. ALEX G. CORPUZ

Intramuros

15-Feb-93

15-Aug-93

12. RONALD M. DELFIN

Intramuros

22-Feb-93

22-Aug-93

13. ROWENA M. TABAQUERO

Intramuros

22-Feb-93

22-Aug-93

14. CORAZON C. DELOS REYES

Intramuros

8-Feb-93

8-Aug-93

15. ROBERT G. NOORA

Intramuros

15-Feb-93

15-Aug-93

16. MILAGROS O. LEQUIGAN

Intramuros

1-Feb-93

1-Aug-93

17. ADRIANA F. TATLONGHARI

Intramuros

22-Jan-93

22-Jul-93

18. IKE CABUNDUCOS

Intramuros

24-Feb-93

24-Aug-93

19. COCOY NOBELLO

Intramuros

22-Feb-93

22-Aug-93

20. DORENDA CATIMBUHAN

Intramuros

15-Feb-93

21. ROBERT MARCELO

West

31 JUL 93 1-Aug-93
8

22. LILIBETH Q. MARMOLEJO

West

15-Jun-90 21-Nov-93

23. JOSE E. SALES

West

6-Aug-92

12-Oct-93

24. ISABEL MAMAUAG

West

8-May-92

10-Nov-93

25. VIOLETA G. MONTES

Intramuros

2-Feb-90

15-Jan-94

26. ALBINO TECSON

Intramuros

7-Nov-91

10-Nov-93

27. MELODY B. GRUELA

West

28-Oct-91

3-Nov-93

28. BERNADETH D. AGERO

West

19-Dec-90

27-Dec-93

29. CYNTHIA DE VERA

Bel-Air

26-Jun-90 3-Dec-93

30. LANI R. CORTEZ

Bel-Air

15-Oct-88

10-Dec-93

6-Sep-90

6-Feb-94

31.
MARIA
B.CONCEPCION

ISABEL West

15-Aug-93

32. DINDO VALERIO

Intramuros

30-May-93 30-Nov-93

33. ZENAIDA MATA

Intramuros

10-Feb-93

10-Aug-93

34. ARIEL DEL PILAR

Intramuros

24-Feb-93

24-Aug-93

35. MARGARET CECILIA CANOZA Intramuros

27-Jul-90

4-Feb-94

36. THELMA SEBASTIAN

Intramuros

12-Nov-90

17-Nov-93

37. MA. JEANETTE CERVANTES

West

6-Jun-92

7-Dec-93

38. JEANNIE RAMIL

Intramuros

23-Apr-90

12-Oct-93

39. ROZAIDA PASCUAL

Bel-Air

20-Apr-89

29-Oct-93

40. PINKY BALOLOA

West

3-Jun-91

41. ELIZABETH VENTURA

West

12-Mar-90 FEB 94 [sic]

42. GRACE S. PARDO

West

4-Apr-90

43. RICO TIMOSA

Intramuros

28-Apr-93

2-Dec-93

13-Mar-94
28-Oct-93

As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against
herein petitioners. Hence, this recourse to this Court. 9
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be
deemed regular employees under Article 280 of the Labor Code, as amended,
Respondent Commission ratiocinated as follows:
We agree that Art. 280 is not controlling herein. We give due
credence to the conclusion that complainants were hired as
an accommodation to [the] recommendation of civic oriented
personalities whose employment[s] were covered by . . .
Employment Contract[s] with special provisions on duration
of contract as specified under Art. 80. Hence, as correctly
held by the Labor Arbiter a quo, the terms of the contract
shall be the law between the parties. 10
The NLRC also declared that the Magna Carta for Disabled Persons was not
applicable, "considering the prevailing circumstances/milieu of the case."
Issues
In their Memorandum, petitioners cite the following grounds in support of
their cause:
I. The Honorable Commission committed grave abuse of discretion in
holding that the petitioners money sorters and counters working
in a bank were not regular employees.
II. The Honorable Commission committed grave abuse of discretion
in holding that the employment contracts signed and renewed by the
petitioners which provide for a period of six (6) months were
valid.
III. The Honorable Commission committed grave abuse of discretion
in not applying the provisions of the Magna Carta for the Disabled
(Republic Act No. 7277), on proscription against discrimination
against disabled persons. 11
In the main, the Court will resolve whether petitioners have become regular
employees.
This Court's Ruling

The petition is meritorious. However, only the employees, who worked for
more than six months and whose contracts were renewed are deemed
regular. Hence, their dismissal from employement was illegal.
Preliminary Matter:
Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the
findings of facts of the NLRC is not allowed in a petition for certiorari.
Specifically, it maintains that the Court cannot pass upon the findings of
public respondent that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public
respondents in a certiorari proceeding. In resolving whether the petitioners
have become regular employees, we shall not change the facts found by the
public respondent. Our task is merely to determine whether the NLRC
committed grave abuse of discretion in applying the law to the established
facts, as above-quoted from the assailed Decision.
Main Issue
Are Petitioners Regular Employee?
Petitioners maintain that they should be considered regular employees,
because their task as money sorters and counters was necessary and
desirable to the business of respondent bank. They further allege that their
contracts served merely to preclude the application of Article 280 and to bar
them from becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired
only as "special workers and should not in any way be considered as part of
the regular complement of the Bank." 12 Rather, they were "special" workers
under Article 80 of the Labor Code. Private respondent contends that it never
solicited the services of petitioners, whose employment was merely an
"accommodation" in response to the requests of government officials and
civic-minded citizens. They were told from the start, "with the assistance of
government representatives," that they could not become regular employees
because there were no plantilla positions for "money sorters," whose task
used to be performed by tellers. Their contracts were renewed several times,
not because of need "but merely for humanitarian reasons." Respondent
submits that "as of the present, the "special position" that was created for the
petitioners no longer exist[s] in private respondent [bank], after the latter had
decided not to renew anymore their special employment contracts."
At the outset, let it be known that this Court appreciates the nobility of
private respondent's effort to provide employment to physically impaired
individuals and to make them more productive members of society. However,
we cannot allow it to elude the legal consequences of that effort, simply
because it now deems their employment irrelevant. The facts, viewed in light
of the Labor Code and the Magna Carta for Disabled Persons, indubitably
show that the petitioners, except sixteen of them, should be deemed regular
employees. As such, they have acquired legal rights that this Court is dutybound to protect and uphold, not as a matter of compassion but as a
consequence of law and justice.

The uniform employment contracts of the petitioners stipulated that they

shall be trained for a period of one month, after which the employer shall
determine whether or not they should be allowed to finish the 6-month term
of the contract. Furthermore, the employer may terminate the contract at any
time for a just and reasonable cause. Unless renewed in writing by the
employer, the contract shall automatically expire at the end of the
term.1wphi1.nt
According to private respondent, the employment contracts were prepared in
accordance with Article 80 of the Labor code, which provides;
Art. 80. Employment agreement. Any employer who employs
handicapped workers shall enter into an employment agreement with
them, which agreement shall include:
(a) The names and addresses of the handicapped
workers to be employed;
(b) The rate to be paid the handicapped workers
which shall be not less than seventy five (75%) per
cent of the applicable legal minimum wage;
(c) The duration of employment period; and
(d) The work to be performed by handicapped
workers.
The employment agreement shall be subject to inspection by the
Secretary of Labor or his duly authorized representatives.
The stipulations in the employment contracts indubitably conform with the
aforecited provision. Succeeding events and the enactment of RA No. 7277
(the Magna Carta for Disabled Persons), 13 however, justify the application of
Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56
handicapped workers and renewed the contracts of 37 of them. In fact, two of
them worked from 1988 to 1993. Verily, the renewal of the contracts of the
handicapped workers and the hiring of others lead to the conclusion that
their tasks were beneficial and necessary to the bank. More important, these
facts show that they were qualified to perform the responsibilities of their
positions. In other words, their disability did not render them unqualified or
unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a
qualified disabled employee should be given the same terms and conditions
of employment as a qualified able-bodied person. Section 5 of the Magna
Carta provides:
Sec. 5. Equal Opportunity for Employment. No disabled
person shall be denied access to opportunities for suitable
employment. A qualified disabled employee shall be subject
to the same terms and conditions of employment and the
same compensation, privileges, benefits, fringe benefits,
incentives or allowances as a qualified able bodied person.

The fact that the employees were qualified disabled persons necessarily
removes the employment contracts from the ambit of Article 80. Since the
Magna Carta accords them the rights of qualified able-bodied persons, they
are thus covered by Article 280 of the Labor Code, which provides:
Art. 280. Regular and Casual Employment. The provisions
of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the
employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the
engagement of the employee or where the work or services to
be performed is seasonal in nature and the employment is
for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered as regular employee with respect to the activity in
which he is employed and his employment shall continue
while such activity exists.
The test of whether an employee is regular was laid down in De Leon
v. NLRC, 14 in which this Court held:
The primary standard, therefore, of determining regular
employment is the reasonable connection between the
particular activity performed by the employee in relation to
the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can
be determined by considering the nature of the work
performed and its relation to the scheme of the particular
business or trade in its entirety. Also if the employee has
been performing the job for at least one year, even if the
performance is not continuous and merely intermittent, the
law deems repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensibility
of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity,
and while such activity exist.
Without a doubt, the task of counting and sorting bills is necessary and
desirable to the business of respondent bank. With the exception of sixteen of
them, petitioners performed these tasks for more than six months. Thus, the
following twenty-seven petitioners should be deemed regular employees:
Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual,
Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George
P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta

G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de

Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza,
Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual,
Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo.
As held by the Court, "Articles 280 and 281 of the Labor Code put an end to
the pernicious practice of making permanent casuals of our lowly employees
by the simple expedient of extending to them probationary appointments, ad
infinitum." 15 The contract signed by petitioners is akin to a probationary
employment, during which the bank determined the employees' fitness for
the job. When the bank renewed the contract after the lapse of the six-month
probationary period, the employees thereby became regular employees. 16 No
employer is allowed to determine indefinitely the fitness of its employees.
As regular employees, the twenty-seven petitioners are entitled to security of
tenure; that is, their services may be terminated only for a just or authorized
cause. Because respondent failed to show such cause, 17 these twenty-seven
petitioners are deemed illegally dismissed and therefore entitled to back
wages and reinstatement without loss of seniority rights and other
privileges. 18 Considering the allegation of respondent that the job of money
sorting is no longer available because it has been assigned back to the tellers
to whom it originally belonged, 18 petitioners are hereby awarded separation
pay in lieu of reinstatement. 20
Because the other sixteen worked only for six months, they are not deemed
regular employees and hence not entitled to the same benefits.
Applicability of the
Brent Ruling
Respondent bank, citing Brent School v. Zamora 21 in which the Court upheld
the validity of an employment contract with a fixed term, argues that the
parties entered into the contract on equal footing. It adds that the petitioners
had in fact an advantage, because they were backed by then DSWD Secretary
Mita Pardo de Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the
fact that the petitioners were disabled, and that the bank had to determine
their fitness for the position. Indeed, its validity is based on Article 80 of the
Labor Code. But as noted earlier, petitioners proved themselves to
be qualified disabled persons who, under the Magna Carta for Disabled
Persons, are entitled to terms and conditions of employment enjoyed
by qualified able-bodied individuals; hence, Article 80 does not apply because
petitioners are qualified for their positions. The validation of the limit
imposed on their contracts, imposed by reason of their disability, was a
glaring instance of the very mischief sought to be addressed by the new law.
Moreover, it must be emphasized that a contract of employment is impressed
with public interest. 22 Provisions of applicable statutes are deemed written
into the contract, and the "parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by
simply contracting with each other." 23 Clearly, the agreement of the parties
regarding the period of employment cannot prevail over the provisions of the

Magna Carta for Disabled Persons, which mandate that petitioners must be
treated as qualified able-bodied employees.
Respondent's reason for terminating the employment of petitioners is
instructive. Because the Bangko Sentral ng Pilipinas (BSP) required that
cash in the bank be turned over to the BSP during business hours from 8:00
a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of
money. Thus, it reasons that this task "could not be done by deaf mutes
because of their physical limitations as it is very risky for them to travel at
night." 24 We find no basis for this argument. Travelling at night involves
risks to handicapped and able-bodied persons alike. This excuse cannot
justify the termination of their employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely "accommodated" employees.
This fact does not change the nature of their employment. As earlier noted,
an employee is regular because of the nature of work and the length of
service, not because of the mode or even the reason for hiring them.
Equally unavailing are private respondent's arguments that it did not go out
of its way to recruit petitioners, and that its plantilla did not contain their
positions. In L. T. Datu v. NLRC, 25 the Court held that "the determination of
whether employment is casual or regular does not depend on the will or word
of the employer, and the procedure of hiring . . . but on the nature of the
activities performed by the employee, and to some extent, the length of
performance and its continued existence."
Private respondent argues that the petitioners were informed from the start
that they could not become regular employees. In fact, the bank adds, they
agreed with the stipulation in the contract regarding this point. Still, we are
not persuaded. The well-settled rule is that the character of employment is
determined not by stipulations in the contract, but by the nature of the work
performed. 26 Otherwise, no employee can become regular by the simple
expedient of incorporating this condition in the contract of employment.
In this light, we iterate our ruling in Romares v. NLRC: 27
Art. 280 was emplaced in our statute books to prevent the
circumvention of the employee's right to be secure in his
tenure by indiscriminately and completely ruling out all
written and oral agreements inconsistent with the concept of
regular employment defined therein. Where an employee has
been engaged to perform activities which are usually
necessary or desirable in the usual business of the employer,
such employee is deemed a regular employee and is entitled
to security of tenure notwithstanding the contrary provisions
of his contract of employment.
xxx xxx xxx
At this juncture, the leading case of Brent School,
Inc. v. Zamora proves
instructive.
As
reaffirmed
in
subsequent cases, this Court has upheld the legality of fixedterm employment. It ruled that the decisive determinant in

"term employment" should not be the activities that the

employee is called upon to perform but the day certain
agreed upon the parties for the commencement and
termination of their employment relationship. But this Court
went on to say that where from the circumstances it is
apparent that the periods have been imposed to preclude
acquisition of tenurial security by the employee, they should
be struck down or disregarded as contrary to public policy
and morals.
In rendering this Decision, the Court emphasizes not only the constitutional
bias in favor of the working class, but also the concern of the State for the
plight of the disabled. The noble objectives of Magna Carta for Disabled
Persons are not based merely on charity or accommodation, but on justice
and the equal treatment of qualifiedpersons, disabled or not. In the present
case, the handicap of petitioners (deaf-mutes) is not a hindrance to their
work. The eloquent proof of this statement is the repeated renewal of their
employment contracts. Why then should they be dismissed, simply because
they are physically impaired? The Court believes, that, after showing their
fitness for the work assigned to them, they should be treated and granted the
same rights like any other regular employees.
In this light, we note the Office of the Solicitor General's prayer joining the
petitioners' cause. 28
WHEREFORE, premises considered, the Petition is hereby GRANTED. The
June 20, 1995 Decision and the August 4, 1995 Resolution of the NLRC are
REVERSED and SET ASIDE. Respondent Far East Bank and Trust Company
is hereby ORDERED to pay back wages and separation pay to each of the
following twenty-seven (27) petitioners, namely, Marites Bernardo, Elvira Go
Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert
Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Liliberh
Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino
Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R.
Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma
Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky
Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is hereby directed
to compute the exact amount due each of said employees, pursuant to
existing laws and regulations, within fifteen days from the finality of this
Decision. No costs.1wphi1.nt
SO ORDERED.

G.R. No. 110861 November 14, 1994

ORO ENTERPRISES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and LORETO L.
CECILIO, respondents.
Reyes, Navarro & Associates for petitioner.
Jose C. Espinas for private respondent.
VITUG, J.:
In this petition for certiorari, Oro Enterprises, Inc., seeks a reversal of the
22nd March 1993 decision and 29th May 1993 order of respondent National
Labor Relations Commission (NLRC) directing petitioner to pay private
respondent Loreto Cecilio retirement pay in the amount of P61,500.00.
Private respondent was first employed by petitioner in August of 1949. After
working continuously with the company for forty one (41) years, private
respondent manifested, on 03 September 1990, her intention to retire from
work by filing with petitioner a "Claim for Retirement Pay."
In her claim, private respondent pleaded that "the retirement pay she (was)
receiving from the Social Security System in the total sum of five
hundred pesos (P500.00) a month could hardly (suffice to) meet her daily
subsistence . . . ." 1
On 15 September 1990, petitioner wrote private respondent, informing her
that it was in no financial position to give her any retirement benefit apart
from the retirement pay she was already receiving from the Social Security
System ("SSS"). Nonetheless, she was offered a house and lot located in San
Jose, del Monte, Bulacan, in accordance with a "plan" 2 which was then still
being conceived by the company president for retiring employees. The offer
did not materialize, nor did the proposed company plan come into being, for
one reason or another.
On 26 September 1990, private respondent filed her complaint with the
Office of the Labor Arbiter (docketed as NLRC Case No. 00-09-05167-90). In
her position paper, she reiterated
. . . that she has been employed and faithfully worked for
petitioner continuously for forty-one (41) years until she
reached the age of 65 on 19 August 1990; that when she
requested petitioner for her "retirement or termination pay,"
the President of the company refused to comply; and that the
lot being offered to her which is located in Bulacan would
not meet her basic needs for subsistence in the remaining
years of her life." 3
On 04 October 1990, petitioner filed its own position paper, stating
that

. . . private respondent was not dismissed from the service

but voluntarily stopped working on September 15, 1990;
that it has no collective bargaining agreement or any other
agreement or established policy concerning payment of
retirement benefits to employees who reach a certain age
except that which is required by the Social Security Law;
that it has not agreed, whether expressly or impliedly, to pay
any retirement benefit to private respondent or any of its
employees; and that inLlora Motors, Inc., and/or Constantino
Carlota, Jr. vs. Honorable Franklin Drilon, et al., (G.R. No.
82895, Nov. 7, 1989), this Honorable Court . . . ruled that
payment of retirement benefits cannot be required in the
absence of a collective bargaining agreement or other
contractual
basis
or
any established employer policy providing the grant of such
retirement benefits. 4
On 11 February 1991, Labor Arbiter Edilberto J. Pangan, to whom the case
was assigned, rendered a decision, the dispositive portions of which read:
DAHIL DITO, inuutusan ang Oro Enterprises, Inc. na
bayaran and nagsusumbong na si Bb. Loreto L. Cecilio ng
kanyang bayad sa pamamahinga (Retirement Benefits),
batay sa kalahating buwan sahod sa bawat isang taong
paglilingkod (half month pay for every year of service),
nagkakahalaga ng ANIMNAPU AT TATLONG LIBONG PISO
(P63,000.00).
Gayon din, ipinag-uutos na bayaran ng sampung bahagi
(10%) nang nasabing halaga o ANIM NA LIBO AT TATLONG
DAANG PISO (P6,300.00) bilang bayad sa manananggol, sa
paghahain ng usaping ito.
At ang kabuuang dapat ibayad ng isinusumbong ay
ANIMNAPU AT SIYAM NA LIBO AT TATLONG DAANG PISO
(P69,300.00).
Sapagkat salat sa sapat na batayan, ang kahilingan sa
bayad pinsala, ay IPINAG-KAKAIT (DENIED).
IPINAG-UUTOS. 5
Petitioner appealed to the NLRC. Private respondent likewise interposed her
own appeal insofar as the decision denied her claim for damages.
During the pendency of the appeal, or on 07 January 1993, Republic Act
("R.A.") No. 7641 6 took effect, providing among other things, thusly:
Art. 287. Retirement. Any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment
contract.
xxx xxx xxx

In the absence of a retirement plan or agreement providing

for retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more,
but not beyond sixty five (65) years which is hereby declared
the compulsory retirement age, who has served at least five
(5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one half (1/2)
month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term
"one half (1/2) month salary" shall mean fifteen (15) days
plus one twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive
leaves.
xxx xxx xxx
Violation of this provision is hereby declared unlawful and
subject to the penal provisions under Article 288 of this
Code. 7
On 22 March 1993, the NLRC rendered its decision awarding to private
respondent a retirement pay on the basis of Republic Act 7641; hence
WHEREFORE, the respondent is hereby directed to pay
complainant a retirement pay of P61,500.00. Since
complainant's cause of action became meritorious only out of
the curative effect of R.A. 7641, her award of 10% attorney's
fee must fail. 8
Petitioner filed a motion for reconsideration. In an Order, dated 19 May 1993,
the NLRC denied the motion for lack of merit.
In the instant petition, Oro Enterprises ascribes grave abuse of discretion on
the part of the NLRC in applying R.A. No. 7641. Petitioner argues that the
law, which became effective only on 07 January 1993, cannot be given any
such retroactive effect as to cover private respondent who, at the age of 65
years, retired from employment with petitioner on 03 September 1990.
At the time private respondent supposedly ceased to work with petitioner,
Article 287 of the Labor Code, then in force, provided:
Art. 287. Retirement. Any employee maybe retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment
contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining or other
agreement.
Rule 1, Book VI, of the Implementing Rules of the Labor Code, in
turn, expressed:

Sec. 13. Retirement. In the absence of any collective

bargaining agreement or other applicable agreement
concerning terms and conditions of employment which
provides for retirement at an older age, an employee maybe
retired upon reaching the age of sixty (60) years.
Sec. 14. Retirement benefits. (a) An employee who is
retired pursuant to a bonafide retirement plan or in
accordance with the applicable individual or collective
agreement or established employer policy shall be entitled to
all the retirement benefits provided therein or to termination
pay equivalent at least to one-half month salary for every
year of service, whichever is higher, a fraction of at least six
(6) months being considered as one whole year.
Private respondent, sustained by the Labor Arbiter, posits that there being no
collective bargaining agreement ("CBA") that granted retirement benefits,
conformably with Section 14 of the Implementing Rules aforequoted, she
should be entitled to a "termination pay equivalent at least to one-half month
salary for every year of service . . . .
This particular issue has long been put to rest. In Llora Motors,
Inc., vs. Drilon, 179 SCRA 175, Mr. Justice Florentino P. Feliciano, speaking
for the Court in an eruditely written ponencia, explained:
Section 14 (a) refers to "termination pay equivalent to at least
one-half (1/2) month for every year of service" while Section
14 (b) mentions "termination pay to which the employee
would have been entitled had there been no such retirement
fund" as well as "termination pay the employee is entitled to
receive." It should be recalled that Sections 13 and 14 are
found in Implementing Rule I which deals with both
"termination of employment" and "retirement." It is
important to keep the two (2) concepts of "termination pay"
and "retirement benefits" separate and distinct from each
other. Termination pay or separation pay is required to be
paid by an employer in particular situations identified by the
Labor Code itself or by Implementing Rule I. 9 Termination
pay where properly due and payable under some applicable
provision of the Labor Code or under Section 4 (b) of
Implementing Rule I, must be paid whether or not an
additional retirement plan has been set up under an
agreement with the employer or under an "established
employer policy."
What needs to be stressed, however, is that Section 14 of
Implementing Rule I, like Article 287 of the Labor Code, does
not purport to require "termination pay" to be paid to an
employee who may want to retire but for whom no additional
retirement plan had been set up prior agreement with the
employer. Thus, Section 14 itself speaks of an employee
"who is retired pursuant to a bona-fide retirement plan or in
accordance with the applicable individual or collective

agreement or established employer policy." What Section 14

of Implementing Rule I may be seen to be saying is that
where termination pay is otherwise payable to an employee
under an applicable provision of the Labor Code, and an
additional or consensual retirement plan exists, then
payments under such retirement plan may be credited
against the termination pay that is due, subject, however, to
certain conditions. These conditions are: (a) that payments
under the additional retirement plan cannot have the effect
of reducing the amount of termination pay due and payable
to less than one-half (1/2) month's salary for every year of
service and (b) the employee cannot be made to contribute to
the termination pay that he is entitled to receive under some
provision of the Labor Code; in other words, the employee is
entitled to the full amount of his termination pay plus at
least the return of his own contributions to the additional
retirement plan. 10
While there apparently was some kind of a retirement plan then being
devised by the company president for its retiring employees, it was, however,
never formalized or implemented. The Labor Arbiter found thusly:
Sa usaping pinag-uusapan ay mayroong plano sa
pamamahinga (retirement plan) at ito nga, ay ang sinasabing
lote na ipagkakaloob sa mga manggagawang may mahigit na
sampung (10) taong paglilingkod, ngunit hanggang ngayon
ay ito ay isang panaginip lamang. Wala pa, ni isang naisakatuparan. At isa pa, napakalayo ang nasabing pook (San
Jose del Monte, Bulacan) para sa isang katulad ng
nagsusumbong upang doon siya tuluyan pumanaw, sa
kabila ng kanyang pag-iisa. Kaya't ang sinasabing lote ay
pansamantalang pang-palubag-loob lamang, at hindi
seryosong biyaya o tunay na alay-biyaya. 11
It then goes without saying, applying Llora Motors, that the beneficial
provisions of Section 14 of Implementative Rules cannot properly be invoked
by private respondent.
Instead, the pivotal issue, in our view, is whether or not R.A. 7641 can
favorably apply to private respondent's case.
RA 7641 is undoubtedly a social legislation. The law has been enacted as a
labor protection measure and as a curative statute that absent a
retirement plan devised by, an agreement with, or a voluntary grant from, an
employer can respond, in part at least, to the financial well-being of
workers during their twilight years soon following their life of labor. There
should be little doubt about the fact that the law can apply to labor
contracts still existing at the time the statute has taken effect, and that its
benefits can be reckoned not only from the date of the law's enactment but
retroactively to the time said employment contracts have started. On this
score, the case ofAllied Investigation Bureau, Inc., vs. Ople, 91 SCRA 265,
finds strong relevance:

1. There is no question that petitioner had agreed to grant

retirement benefits to private respondent. It would, however,
limit such retirement benefits only from the date of the
effectivity of the Labor Code. That is its contention. The
refutation given in the Comment of Solicitor General Estelito
P. Mendoza is persuasive. As was pointed out, "in the
computation thereof, public respondents acted judiciously in
reckoning the retirement pay from the time private
respondent started working with petitioner since respondent
employee's application for retirement benefits and the
company's approval of the same make express mention of
Sections 13 and 14, Rule 1, Book VI of the Implementing
Rules and Regulations of the Labor Code as the basis for
retirement pay. Section 14 (a) of said rule provides that an
employee who is retired pursuant to a bona-fide retirement
plan or in accordance with the applicable individual or
collective agreement or established employer policy shall be
entitled to all the retirement benefits provided therein or to
termination pay equivalent to at least one-half month salary
for every year of service, whichever is higher, a fraction of at
least six (6) months being considered as one whole year.''
Further it was stated: "This position taken by public
respondents squares with the principle that social legislation
should be interpreted in favor of workers in the light of the
Constitutional mandate that the State shall afford protection
to labor."
2. Petitioner's insistence that the retirement benefits should
date only from the time that the present Labor Code came
into force could be based on the assumption that it should
not be given a retroactive effect. That would be to ignore the
well-settled principle that police power legislation intended to
promote public welfare applies to existing contracts. It was
held in Ongsiako v. Gamboa, decided in 1950, that a police
power measure being remedial in character covers existing
situations; otherwise, it would be self-defeating. Abe v. Foster
Wheeler Corporation, this Court, speaking through Justice
Barrera, is even more in point. In that case, the contracts of
employment were entered into at a time when there was no
law granting the workers said right. Such being the case, it
was then contended that the application as to them of the
subsequent enactment would amount to an impairment of
contractual obligations. In refuting such a view, it was made
clear in the opinion that "constitutional guaranty of nonimpairment . . . is limited by the exercise of the police power
of the State, in the interest of public health, safety, morals
and general welfare." The latest reiteration of such a doctrine
came in Gutierrez v. Cantada, decided barely a month ago.
3. Nor is it accurate to assert that the right to retirement
benefits started from the enactment of the present Labor

Code. That would be to ignore the social justice and

protection to labor provisions of the 1935 Constitution. In
the leading case of Antamok Goldfields Mining Company
v. Court of Industrial Relations, decided in 1940, a concurring
opinion of Justice Laurel to this effect was cited: "By and
large, these provisions in our Constitution all evince and
express the need of shifting emphasis to community interest
with a view to affirmative enhancement of human values." He
had occasion to repeat it in his well-known definition of
social justice in Calalang v. Williams, decided the same year.
Thus: "Social justice
is "neither
communism, nor
despositism, 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
component 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." The
present Civil Code, which took effect on August 13, 1950,
has a chapter on labor contracts, the first article of which
recognizes that the relations between capital and labor "are
not merely contractual. They are so impressed with public
interest that labor contracts must yield to the common
good."
Republic Act 7641 took effect on 07 January 1993, while the appeal of
private respondent was still pending consideration by the NLRC. Still for
determination at the time was, among other things, the issue of whether or
not private respondent has, in fact, been effectively retired.
Petitioner asserts that private respondent has never reported for work after
the rejection of her application for retirement benefits. This claim is denied
by private respondent, who avers that she did report for work again but that
petitioner has refused to accept her on the ground of abandonment of duty.
The Labor Arbiter has made these findings:
Sa sinasabi ng isinusumbong na ang nagsusumbong daw ay
kusang-loob na tinalikuran ang paglilingkod (abandonment
of work) ay mahirap paniwalaan. Ang isang manggagawa na
iningatan ang matapat niyang paglilingkod sa loob ng
mahabang panahon, ay hindi basta na lamang lilisan at
ipahahamak ito. Ang isang manggagawa na sa kanyang
huling taon nang paglilingkod, ay walang dahilan na karakaraka na lilisan ito upang ang biyayang tatanggapin ay
masalalay sa alinlangan. Ang sinasabing pag-lisan ay hindi

na-aayon sa katutuhanan ng pangyayari (natural course of

events), kaya't hindi namin ito masasang-ayunan.
Ang katotohanan nito, ay noong malaman ni Gng. Marietta
G. Holmgren, Pangulo ng isinusumbong (Oro Enterprises,
Inc.) na ang nagsusumbong ay naglilingkod pa, ay nagalit ito
at ang sabi, "pag nalaman ng SSS na nag(papa)trabaho pa
ako na retired na, ay malilintikan kami (referring to Oro
Enterprises, Inc.) sa SSS. . . ." Kaya't noong siya
(naglilingkod) ay pumasok noong Setyembre 15, 1990, ay
sinabihan siya na ito na ang kahulihulihan niyang araw ng
paglilingkod. At simula noon ay hindi na siya pumasok. At
ang sinasabing ulat ng pagputol ng paglilingkod (letter of
termination) na may petsang Oktubre 12, 1990, ay walang
sapat na batayan. 12
The NLRC, in turn, has said:
After all, the least that could be said here is that the
complainant filed her claim for retirement pay only on
January
7,
1993
the
date
R.A.
No. 7641 took effect and that against the backdrop that she
retired only on September 15, 1990, her monetary claim
could be treated as well filed within the three (3) years
prescriptive period set by law . . . . 13
Given the above findings, which must be accorded due respect, we cannot
see our way clear to attributing to NLRC grave abuse of discretion in
concluding thereby that private respondent's claim for retirement benefits
should accordingly be held to fall within the ambit of Republic Act No. 7641.
Grave abuse of discretion, albeit an elastic phrase, 14 has always been
understood as a capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, such as, to exemplify, "where the power is
exercised in an arbitrary or despotic manner." 15
WHEREFORE, the petition for certiorari is DISMISSED, and the decision of
the NLRC is AFFIRMED.
SO ORDERED

G.R. No. 143686

January 15, 2002

PHILIPPINE AIRLINES, INC., petitioner,

vs.
AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent.
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari seeking to annul and set aside the
March 2, 2000 Decision1 and the June 19, 2000 Resolution2 of the Court of
Appeals3 in CA-G.R. SP No. 54403 which affirmed the Order4 dated June 13,
1998 and Resolution5 dated June 1, 1991 of the Secretary of Labor and
Employment in NCMB-NCR-N.S. 12-514-97.
The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL)
and respondent Airline Pilots Association of the Philippines (ALPAP), the
exclusive bargaining representative of all commercial airline pilots of
petitioner, stemmed from petitioner's act of unilaterally retiring airline pilot
Captain Albino Collantes under Section 2, Article VII, of the 1967 PAL-ALPAP
Retirement Plan. Contending, inter alia, that the retirement of Captain
Collantes constituted illegal dismissal and union busting, ALPAP filed a
Notice of Strike with the Department of Labor and Employment (DOLE).
Pursuant of Article 263 (g) of the Labor Code, the Secretary of the DOLE
(hereafter referred to as Secretary) assumed jurisdiction over the labor
dispute.
On June 13, 1998, the Secretary issued the assailed order upholding PAL's
action of unilaterally retiring Captain Collantes and recognizing the same as
a valid exercise of its option under Section 2, Article VII, of the 1967 PALALPAP Retirement Plan. The Secretary further ordered that the basis of the
computation of Captain Collantes' retirement benefits should be Article 287
of the Labor Code (as amended by Republic Act No. 7641) and not Section 2,
Article VII, of the PAL-ALPAP Retirement Plan. The Secretary added that in
the exercise of its option to retire pilots, PAL should first consult the pilot
concerned before implementing his retirement. The dispositive portion of the
said order reads:
WHEREFORE, premises considered, this Office hereby issues the
following resolutions:
(1) PAL's action on Captain Albino Collantes is hereby recognized as
a valid exercise of its option under Sections 1 and 2, Article VII of the
1976 Retirement Plan. However, the retirement benefits provided
under Section 2 shall be adjusted to comply with Section 5, of
Republic Act No. 7641.
(2) Said 1967 Retirement Plan which was incorporated as Article
XXVII of the PAL-ALPAP Collective Bargaining Agreement, is hereby
sustained. In the interest of justice, however, this Office holds that
whenever PAL exercises its option under Section 2, it shall consult
the pilot involved before the retirement is implemented.
(3) PAL is not guilty of gross violation of the CBA insofar as the Wet
Lease Agreement is concerned; and

(4) The coverage of Section 6, Article 1 of the PAL-ALPAP Collective

Bargaining Agreement is limited only to union dues and other fees
and assessments which are rightfully remitted to and are due ALPAP.
The above dispositions shall be without prejudice to the parties'
arriving at a voluntary settlement of the dispute, especially in
connection with employer-employee relations in PAL. Accordingly,
the National Conciliation and Mediation Board (NCMB) is hereby
directed to continue assisting the parties in arriving at such a
settlement.
The department takes notice of the Ex-parte Manifestation filed by
PAL on June 10, 1998.
SO ORDERED.6
A motion for reconsideration of the foregoing order was denied by the
Secretary on June 1, 1991.
On September 24, 1999, PAL filed with the Court of Appeals a petition for
certiorari with prayer for injunction and temporary restraining order. On
March 2, 2000, and June 19, 2000, however, the Court of Appeals denied the
petition and the motion for reconsideration of petitioner, respectively. Hence,
PAL appealed to this Court, contending that:
I
THE QUESTION OF WHETHER OR NOT THE AMOUNT OF
RETIREMENT PAY TO BE PAID UNDER SECTION 2, ARTICLE VII OF
THE PAL-ALPAP RETIREMENT PLAN OF 1967 SHOULD BE
INCREASED WAS NOT IN NCMB-NCR CASE NO. 12514-97.
II
A JUDGMENT THAT GOES BEYOND THE ISSUES AND PURPORTS
TO ADJUDICATE SOMETHING UPON WHICH THE PARTIES WERE
NOT HEARD IS IRREGULAR AND INVALID SINCE IT AMOUNTS TO
A DENIAL OF DUE PROCESS.
III
THE LAW GRANTS TO THE CONTRACTING PARTIES THE
EXCLUSIVE RIGHT TO DETERMINE FOR THEMSELVES THE
PROVISIONS OF A COLLECTIVE BARGAINING AGREEMENT.
IV
THE SECRETARY OF LABOR AND EMPLOYMENT CANNOT AMEND
THE CBA AND THE PAL-ALPAP RETIREMENT PLAN OF 1967
WITHOUT VIOLATING THE PROSCRIPTION AGAINST THE
IMPAIRMENT OF CONTRACTS.
V
ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND
EMPLOYMENT MAY AMEND THE CBA AND THE PAL-ALPAP
RETIREMENT PLAN OF 1967, IT IS LEGALLY INCORRECT AND

INIQUITOUS TO COMPEL PETITIONER TO PAY RETIREMENT PAY

IN ACCORDANCE WITH ARTICLE 287 OF THE LABOR CODE.
VI
ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND
EMPLOYMENT MAY AMEND THE CBA AND THE PAL-ALPAP
RETIREMENT PLAN OF 1967, IT IS LEGALLY INCORRECT TO
COMPEL PETITIONER TO CONSULT THE PILOT CONCERNED
BEFORE RETIREMENT IS IMPLEMENTED.7
The Court of Appeals, applying the second paragraph of Article 287 of the
Labor Code, held that an employee's retirement benefits under any collective
bargaining and other agreement shall not be less than those provided in the
Labor Code.8 Hence, Article 287 of the Labor Code and not the 1967 PALALPAP Retirement Plan, should govern the computation of the benefits to be
awarded to Captain Collantes.
The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states:
SECTION 1. Normal Retirement. (a) Any member who completed
twenty (20) years of service as a pilot for PAL or has flown 20,000
hours for PAL shall be eligible for normal retirement. The normal
retirement date is the date on which he completes twenty (20) years
of service, or on which he logs his 20,000 hours as a pilot for PAL.
The member who retires on his normal retirement shall be entitled to
either (a) a lump sum payment of P100,000.00 or (b) to such
termination pay benefits to which he may be entitled to under
existing laws, whichever is the greater amount.
SECTION 2. Late Retirement. Any member who remains in the
service of the Company after his normal retirement date may retire
either at his option or at the option of the Company and when so
retired he shall be entitled either (a) to a lump sum payment of
P5,000.00 for each completed year of service rendered as a pilot, or
(b) to such termination pay benefits to which he may be entitled
under existing laws, whichever is the greater amount.9
A pilot who retires after twenty years of service or after flying 20,000 hours
would still be in the prime of his life and at the peak of his career, compared
to one who retires at the age of 60 years old. Based on this peculiar
circumstance that PAL pilots are in, the parties provided for a special scheme
of retirement different from that contemplated in the Labor Code. Conversely,
the provisions of Article 287 of the Labor Code could not have contemplated
the situation of PAL's pilots. Rather, it was intended for those who have no
more plans of employment after retirement, and are thus in need of financial
assistance and reward for the years that they have rendered service.
In any event, petitioner contends that its pilots who retire below the
retirement age of 60 years not only receive the benefits under the 1967 PALALPAP Retirement Plan but also an equity of the retirement fund under the
PAL Pilots' Retirement Benefit Plan,10 entered into between petitioner and
respondent on May 30, 1972.

The PAL Pilots' Retirement Benefit Plan11 is a retirement fund raised from
contributions exclusively from petitioner of amounts equivalent to 20% of
each pilot's gross monthly pay. Upon retirement, each pilot stands to receive
the full amount of the contribution. In sum, therefore, the pilot gets an
amount equivalent to 240% of his gross monthly income for every year of
service he rendered to petitioner. This is in addition to the amount of not less
than P100,000.00 that he shall receive under the 1967 Retirement Plan.
On the other hand, Article 287 of the Labor Code:
Art. 287. Retirement. - Any employee may be retired upon reaching
the retirement age established in the collective bargaining agreement
or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and
any collective bargaining agreement and other agreements: provided,
however, That an employee's retirement benefits under any collective
bargaining and other agreements shall not be less than those
provided herein.1wphi1.nt
In the absence of a retirement plan or agreement plant providing for
retirement benefits of employees in the establishment, an employee
upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared as the compulsory
retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one
whole year.
Unless the parties provide for broader inclusions, the term 'one-half
(1/2) month salary' shall mean fifteen (15) days plus one-twelfth
(1/12) of the 13th month pay and the cash equivalent of not more
than five (5) days of service incentive leaves. xxx xxx xxx.
In short, the retirement benefits that a pilot would get under the provisions
of the above-quoted Article 287 of the Labor Code are less than those that he
would get under the applicable retirement plans of petitioner.
Finally, on the issue of whether petitioner should consult the pilot concerned
before exercising its option to retire pilots, we rule that this added
requirement, in effect, amended the terms of Article VII, Section 2 of the 1976
PAL-ALPAP Retirement Plan. The option of an employer to retire its
employees is recognized as valid.12 In the earlier case of Bulletin Publishing
Corp. v. Sanchez,13 this Court held:
The aforestated sections explicitly declare, in no uncertain terms,
that retirement of an employee may be done upon initiative and
option of the management. And where there are cases of voluntary
retirement, the same is effective only upon the approval of
management. The fact that there are some supervisory employees
who have not yet been retired after 25 years with the company or
have reached the age of sixty merely confirms that it is the singular

prerogative of management, at its option, to retire supervisors or

rank-and-file members when it deems fit. There should be no unfair
labor practice committed by management if the retirement of private
respondents were made in accord with the agreed option. That there
were numerous instances wherein management exercised its option
to retire employees pursuant to the aforementioned provisions,
appears to be a fact which private respondents have not
controverted. It seems only now when the question of the legality of a
supervisors union has arisen that private respondents attempt to
inject the dubious theory that the private respondents are entitled to
form a union or go on strike because there is allegedly no retirement
policy provided for their benefit. As above noted, this assertion does
not appear to have any factual basis.14
Surely, the requirement to consult the pilots prior to their retirement defeats
the exercise by management of its option to retire the said employees. It gives
the pilot concerned an undue prerogative to assail the decision of
management. Due process only requires that notice be given to the pilot of
petitioner's decision to retire him. Hence, the Secretary of Labor overstepped
the boundaries of reason and fairness when he imposed on petitioner the
additional requirement of consulting each pilot prior to retiring him.
Furthermore, when the Secretary of Labor and Employment imposed the
added requirement that petitioner should consult its pilots prior to
retirement, he resolved a question which was outside of the issues raised,
thereby depriving petitioner an opportunity to be heard on this point.15
WHEREFORE, in view of all the foregoing, the petition is GRANTED. The
March 2, 2000 Decision and the June 19, 2000 Resolution of the Court of
Appeals in CA-G.R. SP No. 54403 are REVERSED and SET ASIDE. The
Order of the Secretary of Labor in NCMB-NCR-N.S. 12-514-97, dated June
13, 1998, is MODIFIED as follows: The retirement benefits to be awarded to
Captain Albino Collantes shall be based on the 1967 PAL-ALPAP Retirement
Plan and the PAL Pilots' Retirement Benefit Plan. The directive contained in
subparagraph (2) of the dispositive portion thereof, which required petitioner
to consult the pilot involved before exercising its option to retire him,
isDELETED. The said Order is AFFIRMED in all other respects.
SO ORDERED

G.R. No. 117174 November 13, 1996

CAPITOL WIRELESS, INC., petitioner,
vs.
HONORABLE SECRETARY MA. NIEVES R. CONFESOR and KILUSANG
MANGGAGAWA NG CAPWIRE KMC-NAFLU, respondents.
BELLOSILLO, J.:
Petitioner Capitol Wireless, Inc., and respondent Kilusang Manggagawa ng
Capwire KMC-AFLU (Union) entered into a Collective Bargaining Agreement
(CBA) on 15 November 1990 covering a period of five (5) years. Towards the
end of the third year of their CBA the parties renegotiated the economic
aspects of the agreement. On 18 July 1993 when the negotiations were ongoing petitioner dismissed on the ground of redundancy eight (8) out of its
eleven (11) couriers who were Union members.
As a consequence, respondent Union filed a notice of strike with National
Concillation and Mediation Board (NCMB) on the ground of bargaining
deadlock and unfair labor practice, specifically, for illegal dismissal and
violations of the CBA. Conciliation proceedings were conducted by the NCMB
but the same yielded negative results. On 20 August 1993 respondent Union
went on strike. On the same day, respondent Secretary assumed jurisdiction
over the controversy.
In the coference held on 14 September 1993 the parties agreed to confine the
scope of the dispute to the following issues: (a) unfair labor practice,
consisting of CBA violations and acts inimical to the worker's right to selforganization; (b) redundancy, affecting the dismissed employes; and (c) CBA
deadlock, which includes all items covered by respondent Union's proposals.
On 2 May 1994 respondent Secretary of Labor resolved the controversy in
this manner: (1) the parties were ordered to modify the fourth and fifth years
ofthe CBA in accordance with the dispositions she found just and
equitable 1 the same to be retroactive to 1 July 1993 and effective until 30
June 1995 or until superseded by a new agreement; (2) all other provisions of
the existing CBA were deemed retained but all new demands of respondent
Union that were not passed upon by her were deemed denied; (3) the
dismissal of the eight (8) employees on teh ground of redundancy was
uphled, but due to defective implementation by petitioner the leatter was
ordered to pay each of the former an indemnity equivalent to two (2) month's
salary based on their adjusted rate for the fourth year in addition to the
separation benefits due to them under the law and the CBA, and if still
unpaid, petitioner to pay the same immediately; and, (4) the charge of unfair
labor practice was dismissed for lack of merit. 2
On 28 July 1994 the motion for reconsideration of petitioner was
denied. 3
Petitioner imputes grave abuse of discretion on respondent Secretary of
Labor for holding that it failed to accord due process to the dismissed
employees; in not applying to the letter the ruling in Wenphil

Corp. v. NLRC; 4 and, in awarding retirement benefits beyond those granted

by R.A. 7641. 5
Petitioner argues that what it implemented was not retrenchment but
redundancy program, as such, respondent Secretary of Labor should not
have relied upon Asiaworld Publishing House Inc. v. Ople 6 in holding that the
dismissed employees were not accorded procedural due process. The
additional requirements enumerated in Asiaworld are inapplicable to the
present case because that case involved retrenchment, and petitioner's basis
in deciding those to be covered by the redundancy program was the area
serviced by the couriers. All areas outside the vicinity of its bead office, which
were the areas of delivery of the dismissed employees, were declared
redundant.
Petitioner misses the point. Its violation of due process consists in its failure,
as found by respondent Secretary of Labor, to apprise respondent Union of
any fair and reasonable criteria for implementation of its redundancy
program. In Asiaworld we laid down the principle that in selecting the
employees to be dismissed a fair and reasonable criteria must be used, such
as but not limited to: (a) less preferred status (e.g., temporary employee), (b)
efficiency and (c) seniority. Although the case of Asiaworld dealt with
retrenchment, still the principle is applicable to the present case because in
effecting the dismissals petitioner had to select from among its employees.
We agree with respondent Secretary of Labor in her observation and
conclusion that the implementation by petitioner of its redundancy program
was inconsistent with established principles of procedural due process. She
elaborated on this point in her resolution of the motion for reconsideration.
Thus
Whether it is redundancy or retrenchment, no employee may
be dismissed without observance of the rudiments of good
faith. This is the point of our assailed order. If the Company
(were) really convinced of the reasons for dismissal, the least
it could have done to the employees affected was to observe
fair play and transparency in implementing the decision to
dismiss. To stress, the redundancy was implemented
without the Company so much apprising the Union of any
fair and reasonable criteria for implementation.
As a matter of fact, this Office called the parties to a
conference on 14 March 1994, at which the Company was
given an opportunity to clarify the criteria it used in effecting
redundancy. Represented by Ms. Ma. Lourdes Mendoza of
Mercado and Associates, its counsel of record, the Company
submitted quitclaims which do not contain any amounts
purportedly executed by five of the eight dismissed
employees. More importantly, the minutes of the conference
show that within two days thereafter, the Company
committed to submit a pleading to explain the criteria it used
in effecting the redundancy; where no such submission is
made by 17 March 1994, the case shall be deemed

submitted for resolution. The Company never complied

within this commitment.
As has been made clear, even this Office recognized that an
authorized cause for dismissal did exist; what it could not
countenance is the means employed by the Company in
making the cause effective. But no matter what kind of
justification the Company presents now, this has become
moot, academic and irrelevant. The same should have been
communicated to the affected employees prior to or
simultaneously with the implementation of the redundancy,
or at the very least, before the assailed order was rendered.
In any event, the explanation being advanced by the
Company now purportedly based on areas of assignment
loses significance from the more compelling viewpoint of
efficiency and seniority. For instance, during the period
covered by the Company's own time and motion analysis,
Rogelio Varona delivered 96 messages but was dismissed;
Resurrecion Bordeos delivered only an average of 75 but was
retained. In terms of seniority, the Company itself states the
"Ms. Bordeos holds the same position/area as Rogelio
Varona, however, she was retained because she is more
senior than the latter." The Company should look at its own
evidence again. Bordeos had only 16 years of service. Varona
had 19, Nieves 18, and Valle, Basig and Santos 17, yet all
five were dismissed.
One should also consider that the redundancy was
implemented at the height of bargaining negotiations. The
bargaining process could have been the best opportunity for
the Company to apprise the Union of the necessity for
redundancy. For unknown reasons, the Company did not
take advantage of it. Intended or not, the redundancy
reinforced the conditions for a deadlock, giving the Union
members the impression that it was being used by the
Company to obtain a bargaining leverage. 7
Petitioner argues next that granting that procedural due process was not
afforded the dismissed employees, still, the award of two (2) months salary
for each of them is not in accord with existing jurisprudence.
The Wenphildoctrine teaches, as in other cases, that where the dismissal of
an employee is for a just cause but without due process, the employer must
indemnify the dismissed employee.
Petitioner must have failed to read the full text of Wenphil or simply chose to
ignore the sentence immediately succeeding the P1,000.00 indemnity
enunciated therein. The case is explicit that the measure of the award
depends on the facts of each case and the gravity of the omission committed
by the employer. In fact, in the recent case of Reta v. NLRC, 8 the Court saw
fit to impose P10,000.00 as penalty for the employer's failure to comply with
the due process requirement. The ratiocination of respondent Secretary of
Labor should have put petitioner's argument at rest

. . . Wenphil, however, simply provides the authority to

impose the indemnity; it is not meant to be definitive as to
the amount of indemnity applicable in all cases, this being
dependent on the particular circumstances of a case. Indeed,
in the later case of Maritime Seahorse v. NLRC, G.R. No.
84712, 5 May 1989, the Supreme Court applied
the Wenphil doctrine but awarded an indemnity of
P5,000.00. Clearly, there is a recognition that the amount of
indemnity to be awarded is subject to the discretion of the
agency making the award, considering all attendant
circumstances. 9
Lastly, petitioner argues that the retirement benefits granted by respondent
Secretary of Labor are in excess of what is required of it under the law and
what the Union demands. In particular, R.A. 7641 grants to the employee
retirement pay equivalent to 21.82 days per year of service only but
respondent Secretary of Labor granted the equivalent of 22.5 days. To this,
six (6) more days were granted for compulsory retirement and three (3) days
for optional retirement. The existing provisions of the CBA, the respective
proposals of the parties, and the award of respondent Secretary of Labor are
reproduced hereunder
EXISTING PROVISIONS OF THE CBA
a. Normal Retirement
Compulsory upon reaching 60 years of age or after
35 years of continuous service, whichever comes
first, provided that those who reach 55 or have 10
years of uninterrupted service may be retired at
employee's or Company's option.
PETITIONER'S PROPOSAL
a. Normal Retirement
60 years old R.A. 7641
b. Optional Retirement
55 years old or 10 years of continuous service 1/2
month's basic salary for every year of continuous
service plus 1 day equivalent pay
UNION'S PROPOSAL
a. Normal Retirement
150% of basic salary
b. Optional Retirement
50% of basic salary commencing in the 5th year of
service.
SECRETARY'S AWARD
a. Compulsory Retirement

An employee shall be compulsorily retired upon

reaching the age of sixty (60), or after thirty-five (35)
years of continuous service, whichever comes first.
An employee shall be entitled to a retirement benefit
of 1/2 month salary plus six (6) days multiplied by
the number of years in service.
b. Optional Retirement
At his option, an employee may entire upon reaching
the age of fifty-five (55) or more if he has served for
at least five (5) years; provided, however, that any
employee who is under fifty-five (55) years old may
retire if he has rendered at least ten (10) years of
continuous service.
Such an employee shall be entitled to a retirement
benefit of 1/2 month salary plus three (3) days
multiplied by the number of years in service.
For purposes of computing compulsory and optional
retirement benefits and to align the current
retirement plan with the minimum standards of Art.
287 of the Labor Code, as amended by R.A. 7641,
and Sec. 5 (5.2) of its implementing rules, "1/2
month salary" means 22.5 days salary, exclusive of
leave conversion benefits.
Article 287 of the Labor Code, as amended by R.A. 764l, provides
Art. 287. Retirement. Any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment
contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement
and other agreements: provided, however, That an
employee's retirement benefits under any collective
bargaining and other agreements shall not be less than those
provided herein.
In the absence of a retirement plan or agreement providing
for retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more,
but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five
(5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term

"one-half (1/2) month salary" shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive
leaves . . . . (emphasis supplied).
The records fail to disclose that petitioner bothered to inform the Court how
it arrived at 21.82 days as basis in the computation of the retirement pay.
Anyway, it is clear in the law that the term "one-half (1/2) month salary"
means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of
the 13th month pay plus 5 days of service incentive leave. In this regard,
there is no reason for petitioner to complain that the retirement benefits
granted by respondent Secretary of Labor exceeded the requirements of the
law.
With respect to the additional six (6) days for compulsory retirement and
three (3) days for optional retirement, these may appear in excess of the
requirements of the law and the demand of respondent Union. Yet, it should
be noted that the law merely establishes the minimum retirement benefits as
it recognizes that an employee may receive more under existing laws and any
CBA or other agreements. Besides, respondent Secretary of Labor had to
break the bargaining deadlock. After taking into account all the
circumstances, public respondent found it expedient to strike a reasonable
middle ground between the parties' respective positions. Unless there are
cogent reasons, and we do not find any, this Court will not alter, modify or
reverse the factual findings of the Secretary of Labor because, by reason of
her official position, she is considered to have acquired expertise as her
jurisdiction is confined to specific matters. 10
As we perceive it, by design or otherwise, petitioner's arguments only scratch
the surface, so to speak. They do not extend beneath, as our studies of
jurisprudence and the law disclose. Otherwise, the baselessness of the
instant petition and the absence of any abuse of discretion, much less grave,
would have earlier been exposed.
WHEREFORE, the petition is DISMISSED. The Order of 2 May 1994 of
respondent Secretary of Labor and her Resolution of 28 July 1994 are
AFFIRMED.
SO ORDERED.

G.R. No. 161787

April 27, 2011

MASING AND SONS DEVELOPMENT CORPORATION and CRISPIN

CHAN, Petitioners,
vs.
GREGORIO P. ROGELIO, Respondent.
DECISION

the SSS. Thus, in 1991, he availed himself of the SSS retirement benefits,
and in order to facilitate the grant of such benefits, he entered into an
internal arrangement with Chan and MSDC to the effect that MSDC would
issue a certification of his separation from employment notwithstanding that
he would continue working as a laborer in the Ibajay Branch.
The certification reads as follows:3

BERSAMIN, J.:

CRISPIN AMIGO CHAN COPRA DEALER

IBAJAY, AKLAN

In any controversy between a laborer and his master, doubts reasonably

arising from the evidence are resolved in favor of the laborer.

August 10, 1991

We re-affirm this principle, as we uphold the decision of the Court of Appeals

(CA) that reversed the uniform finding that there existed no employment
relationship between the petitioners, as employers, and the respondent, as
employee, made by the National Labor Relations Commission (NLRC) and the
Labor Arbiter (LA).
Petitioners Masing and Sons Development Corporation (MSDC) and Crispin
Chan assail the October 24, 2003 decision,1 whereby the CA reversed the
decision dated January 28, 2000 of the NLRC that affirmed the decision of
the LA (dismissing the claim of the respondent for retirement benefits on the
ground that he had not been employed by the petitioners but by another
employer).
Antecedents
On May 19, 1997, respondent Gregorio P. Rogelio (Rogelio) brought against
Chan a complaint for retirement pay pursuant to Republic Act No. 7641,2 in
relation to Article 287 of the Labor Code, holiday and rest days premium pay,
service incentive leave, 13th month pay, cost of living allowances (COLA),
underpayment of wages, and attorneys fees. On January 20, 1998, Rogelio
amended his complaint to include MSDC as a co-respondent. His version
follows.
Rogelio was first employed in 1949 by Pan Phil. Copra Dealer, MSDCs
predecessor, which engaged in the buying and selling of copra in Ibajay,
Aklan, with its main office being in Kalibo, Aklan. Masing Chan owned and
managed Pan Phil. Copra Dealer, and the Branch Manager in Ibajay was a
certain So Na. In 1965, Masing Chan changed the business name of Pan
Phil. Copra Dealer to Yao Mun Tek, and appointed Jose Conanan Yap Branch
Manager in Ibajay. In the 1970s, the business name of Yao Mun Tek was
changed to Aklan Lumber and General Merchandise, and Leon Chan became
the Branch Manager in Ibajay. Finally, in 1984, Masing Chan adopted the
business name of Masing and Sons Development Corporation (MSDC),
appointing Wynne or Wayne Lim (Lim) as the Branch Manager in Ibajay.
Crispin Chan replaced his father, Masing Chan, in 1990 as the manager of
the entire business.
In all that time, Rogelio worked as a laborer in the Ibajay Branch, along with
twelve other employees. In January 1974, Rogelio was reported for Social
Security System (SSS) coverage. After paying contributions to the SSS for
more than 10 years, he became entitled to receive retirement benefits from

CERTIFICATION OF SEPARATION FROM EMPLOYMENT

To whom it may concern:
This is to certify that my employee, GREGORIO P. ROGELIO bearing SSS ID
No. 07-0495213-7 who was first covered effective January, 1974 up to June
30, 1989 inclusive, is now officially separated from my employ effective the
1st of July, 1989.
Please be guided accordingly.
(SGD.) CRISPIN AMIGO CHAN
Proprietor
SSS ID No. 07-0595800-4
On March 17, 1997, Rogelio was paid his last salary. Lim, then the Ibajay
Branch Manager, informed Rogelio that he was deemed retired as of that
date. Chan confirmed to Rogelio that he had already reached the compulsory
retirement age when he went to the main office in Kalibo to verify his status.
Rogelio was then 67 years old.
Considering that Rogelio was supposedly receiving a daily salary of P70.00
until 1997, but did not receive any 13th month pay, service incentive leave,
premium pay for holidays and rest days and COLA, and even any retirement
benefit from MSDC upon his retirement in March 1997, he commenced his
claim for such pay and benefits.
In substantiation, Rogelio submitted the January 19, 1998 affidavits of his
co-workers, namely: Domingo Guevarra,4 Juanito Palomata,5 and Ambrosio
Seeres,6 whereby they each declared under oath that Rogelio had already
been working at the Ibajay Branch by the time that MSDCs predecessor had
hired them in the 1950s to work in that branch; and that MSDC and Chan
had continuously employed them until their own retirements, that is,
Guevarra in 1994, and Palomata and Seeres in 1997. They thereby
corroborated the history of MSDC and the names of the various Branch
Managers as narrated by Rogelio, and confirmed that like Rogelio, they did
not receive any retirement benefits from Chan and MSDC upon their
retirement.
In their defense, MSDC and Chan denied having engaged in copra buying in
Ibajay, insisting that they did not ever register in such business in any
government agency. They asserted that Lim had not been their agent or
employee, because he had been an independent copra buyer. They averred,

however, that Rogelio was their former employee, hired on January 3, 1977
and retired on June 30, 1989;7 and that Rogelio was thereafter employed by
Lim starting from July 1, 1989 until the filing of the complaint.
MSDC and Chan submitted the affidavit of Lim, whereby Lim stated that
Rogelio was one of his employees from 1989 until the termination of his
services.8 They also submitted SSS Form R-1A, Lims SSS Report of
Employee-Members (showing that Rogelio and Palomata were reported as
Lims employees);9 Lims application for registration as copra buyer;10 Chans
affidavit;11 and the affidavit of Guevarra12 and Seeres,13 whereby said
affiants denied having executed or signed the January 19, 1998 affidavits
submitted by Rogelio.
In his affidavit, Guevarra recanted the statement attributed to him that he
had been employed by Chan and MSDC, and declared that he had been an
employee
of Lim. Likewise, Guevarras daughter
executed
an
affidavit,14averring that his father had been an employee of Lim and that his
father had not signed the affidavit dated January 19, 1998.
On April 5, 1999, the LA dismissed the complaint against Chan and MSDC,
ruling thus:
From said evidence, it is our considered view that there exists no employeremployee relationship between the parties effective July 1, 1989 up to the
date of the filing of the instant complaint complainant was an employee of
Wynne O. Lim. Hence, his claim for retirement should have been filed against
the latter for he admitted that he was the employer of herein complainant in
his sworn statement dated June 9, 1998.
Complainants claim for retirement benefits against herein respondents
under RA No. 7641 has been barred by prescription considering the fact that
it partakes of the nature of a money claim which prescribed after the lapse of
three years after its accrual.
The rest of the claims are also dismissed for the same accrued during
complainants employment with Wynne O. Lim.
WHEREFORE, PREMISES CONSIDERED, this
DISMISSED for lack of merit.

case

is

hereby

SO ORDERED.15
Rogelio appealed, but the NLRC affirmed the decision of the LA on January
28, 2000, observing that there could be no double retirement in the private
sector; that with the double retirement, Rogelio would be thereby enriching
himself at the expense of the Government; and that having retired in 1991,
Rogelio could not avail himself of the benefits under Republic Act No. 7641
entitled An Act Amending Article 287 of Presidential Decree No. 442, As
Amended, Otherwise Known as The Labor Code Of The Philippines, By
Providing for Retirement Pay to Qualified Private Sector Employees in the
Absence Of Any Retirement Plan in the Establishment, which took effect only
on January 7, 1993.16
The NLRC denied Rogelios motion for reconsideration.

Ruling of the CA
Rogelio commenced a special civil action for certiorari in the CA, charging the
NLRC with grave abuse of discretion in denying to him the benefits under
Republic Act No. 7641, and in rejecting his money claims on the ground of
prescription.
On October 24, 2003, the CA promulgated its decision,17 holding that Rogelio
had substantially established that he had been an employee of Chan and
MSDC, and that the benefits under Republic Act No. 7641 were apart from
the retirement benefits that a qualified employee could claim under the
Social Security Law, conformably with the ruling in Oro Enterprises, Inc. v.
NLRC (G.R. No. 110861, November 14, 1994, 238 SCRA 105).
The CA decreed:
WHEREFORE, premises considered, the Decision of the public
respondent NLRC is hereby VACATED and SET ASIDE. This case is
remanded to the Labor Arbiter for the proper computation of the
retirement benefits of the petitioner based on Article 287 of the Labor
Code, as amended, to be pegged at the minimum wage prevailing in
Ibajay, Aklan as of March 17, 1997, and attorneys fees based on the
same. Without costs.
SO ORDERED.
Chan and MSDCs motion for reconsideration was denied by the CA.
Issues
In this appeal, Chan and MSDC contend that the CA erred: (a) in taking
cognizance of Rogelios petition for certiorari despite the decision of the NLRC
having become final and executory almost two months before the petition
was filed; (b) in concluding that Rogelio had remained their employee from
July 6, 1989 up to March 17, 1997; and (c) in awarding retirement benefits
and attorneys fees to Rogelio.
Ruling
The petition for review is barren of merit.
I
Certiorari was timely commenced in the CA
Anent the first error, the Court finds that the CA did not err in taking
cognizance of the petition for certiorari of Rogelio.
Based on the records, Rogelio received the NLRCs denial of his motion for
reconsideration on January 16, 2003. He then had 60 days from January 16,
2003, or until March 17, 2003, within which to file his petition for certiorari.
It is without doubt, therefore, that his filing was timely considering that the
CA received his petition for certiorari at 2:44 oclock in the afternoon of
March 17, 2003.
The petitioners insistence, that the issuance of the entry of judgment with
respect to the NLRCs decision precluded Rogelio from filing a petition for

certiorari, was unwarranted. It ought to be without debate that the finality of

the NLRCs decision was of no consequence in the consideration of whether
or not he could bring a special civil action for certiorari within the period of
60 days for doing so under Section 4, Rule 65, Rules of Court, simply
because the question being thereby raised was jurisdictional.

in evidence by the petitioner; (4) SSS report executed by Wayne Lim of his
initial list of employees as of July 1, 1989 which includes the petitioner. On
appeal, the respondents further submitted documentary evidence showing
that Wayne Lim registered his business name on July 11, 1989 and
apparently went into business buying copra.

II

At this point, we should note the following factual discrepancies in the

evidence on hand: First, the respondents issued certificates stating the
commencement of petitioners employment on different dates, i.e. January
1974 and January 1977, although the earlier date referred only to the period
when petitioner was first placed under the coverage of the SSS, which need
not necessarily refer to the commencement of his employment. Secondly,
while respondent Crispin Amigo Chan denied having ever engaged in copra
buying in Ibajay, the certificates he issued both dated in 1991 state
otherwise, for he declared himself as a "copra dealer" with address in Ibajay.
Then there is the statement of the petitioner that Wayne Lim was the
respondents manager in their branch office in Ibajay since 1984, a statement
that respondents failed to disavow. Instead, respondents insisted on their
non sequitur argument that they had never engaged in copra buying
activities in Ibajay, and that Wayne Lim was in business all by himself in
regard to such activity.

Respondent remained the petitioners

employee despite his supposed separation
Did Rogelio remain the employee of the petitioners from July 6, 1989 up to
March 17, 1997?
The issue of whether or not an employer-employee relationship existed
between the petitioners and the respondent in that period was essentially a
question of fact.18 In dealing with such question, substantial evidence that
amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion19 is sufficient. Although no particular form
of evidence is required to prove the existence of the relationship, and any
competent and relevant evidence to prove the relationship may be
admitted,20 a finding that the relationship exists must nonetheless rest on
substantial evidence.
Generally, the Court does not review errors that raise factual questions,
primarily because the Court is not a trier of facts. However, where, like now,
there is a conflict between the factual findings of the Labor Arbiter and the
NLRC, on the one hand, and those of the CA, on the other hand,21 it is
proper, in the exercise of our equity jurisdiction, to review and re-evaluate
the factual issues and to look into the records of the case and re-examine the
questioned findings.
The CA delved on and resolved the issue of the existence of an employeremployee relationship between the petitioners and the respondent thusly:
As to the factual issue, the petitioners evidence consists of his own
statements and those of his alleged co-worker from 1950 until 1997, Juanito
Palomata, who unlike his former co-workers Domingo Guevarra and
Ambrosio Seeres, did not disown the "Sinumpaang Salaysay" he executed,
in corroboration of petitioners allegations; and the Certification dated August
10, 1991 stating that petitioner was first placed under coverage of the SSS in
January 1974 to June 30, 1989 and was separated from service effective July
1, 1989, a certification executed by respondent Crispin Amigo Chan which,
petitioner maintains, was only intended for his application for retirement
benefits with the SSS.
Private respondents evidence, on the other hand, consisted of respondent
Crispin Amigo Chans counter statements as well as documentary evidence
consisting of (1) Wayne Lims Affidavit which petitioner acknowledged in his
Reply dated July 11, 1998, par. 8, admitting to being the employer of
petitioner from July 1, 1989 until the filing of the complaint; (2) Certification
dated October 22, 1991 showing petitioners employment with respondents to
have been between January 3, 1977 until July 1, 1989; (3) Affidavits of
Guevarra and Seeres disowning their signatures in the affidavits submitted

The denial on respondents part of their copra buying activities in Ibajay begs
the obvious question: What were petitioner and his witness Juanito Palomata
then doing for respondents as laborers in Ibajay prior to July 1, 1989?
Indeed, what did petitioner do for the respondents as the latters laborer prior
to July 1, 1989, which was different from what he did after said date? The
records showed that he continued doing the same job, i.e. as laborer and
trusted employee tasked with the responsibility of getting money from the
Kalibo office of respondents which was used to buy copra and pay the
employees salaries. He did not only continue doing the same thing but he
apparently did the same at or from the same place, i.e. the bodega in Ibajay,
which his co-worker Palomata believed to belong to the respondent Masing &
Sons. Since respondents admitted to employing petitioner from 1977 to
1989, we have to conclude that, indeed, the bodega in Ibajay was owned by
respondents at least prior to July 1, 1989 since petitioner had consistently
stated that he worked for the respondents continuously in their branch office
in Ibajay under different managers and nowhere else.
We believe that the respondents strongest evidence in regard to the alleged
separation of petitioner from service effective July 1, 1989 would be the
affidavit of Wayne Lim, owning to being the employer of petitioner since July
1, 1989 and the SSS report that he executed listing petitioner as one of his
employees since said date. But in light of the incontrovertible physical reality
that petitioner and his co-workers did go to work day in and day out for such
a long period of time, doing the same thing and in the same place, without
apparent discontinuity, except on paper, these documents cannot be taken at
their face value. We note that Wayne Lim apparently inherited, at least on
paper, ten (10) employees of respondent Crispin Amigo Chan, including
petitioner, all on the same day, i.e. on July 1, 1989. We note, too, that while
there exists an initial report of employees to the SSS by Wayne Lim, no other
document apart from his affidavit and business registration was offered by

respondents to bolster their contention, irrespective of the fact that Wayne

Lim was not a party respondent. What were the circumstances underlying
such alleged mass transfer of employment? Unfortunately, the evidence for
the respondents does not provide us with ready answers. We could conclude
that respondents sold their business in Ibajay and assets to Wayne Lim on
July 1, 1989; however, as pointed out above, respondent Crispin Amigo Chan
himself said that he was a "copra dealer" from Ibajay in August and October
of 1991. Whether or not he was registered as a copra buyer is immaterial,
given that he declared himself a "copra dealer" and had apparently engaged
in the activity of buying copra, as shown precisely by the employment of
petitioner and Palomata. If Wayne Lim, from being the respondents manager
in Ibajay became an independent businessman and took over the
respondents business in Ibajay along with all their employees, why did not
the respondents simply state that fact for the record? More importantly, why
did the petitioner and Palomata continue believing that Wayne Lim was only
the respondents manager? Given the long employment of petitioner with the
respondents, was it possible for him and his witness to make such mistake?
We do not think so. In case of doubt, the doubt is resolved in favor of labor,
in favor of the safety and decent living for the laborer as mandated by Article
1702 of the Civil Code. The reality of the petitioners toil speaks louder than
words. xxx22

That an employees retirement benefits under any collective bargaining and

other agreements shall not be less than those provided herein.

We agree with the CAs factual findings, because they were based on the
evidence and records of the case submitted before the LA. The CA essentially
complied with the guidepost that the substantiality of evidence depends on
both its quantitative and its qualitative aspects.23 Indeed, the records
substantially established that Chan and MSDC had employed Rogelio until
1997. In contrast, Chan and MSDC failed to adduce credible substantiation
of their averment that Rogelio had been Lims employee from July 1989 until
1997. Credible proof that could outweigh the showing by Rogelio to the
contrary was demanded of Chan and MSDC to establish the veracity of their
allegation, for their mere allegation of Rogelios employment under Lim did
not constitute evidence,24 but they did not submit such proof, sadly failing to
discharge their burden of proving their own affirmative allegation. 25 In this
regard, as we pointed out at the start, the doubts reasonably arising from the
evidence are resolved in favor of the laborer in any controversy between a
laborer and his master.

Was Rogelio entitled to the retirement benefits under Article 287 of the Labor
Code, as amended by Republic Act No. 7641?

III
Respondent entitled to retirement benefits
from the petitioners
Article 287 of the Labor Code, as amended by Republic Act No. 7641,
provides:
Article 287. Retirement. Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.
In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any
collective bargaining agreement and other agreements; Provided, however,

In the absence of a retirement plan or agreement providing for retirement

benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five
(5) years in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one
whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th
month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.
Retail, service and agricultural establishments or operations employing not
more than ten (10) employees or workers are exempted from the coverage of
this provision.
Violation of this provision is hereby declared unlawful and subject to the
penal provisions provided under Article 288 of this Code.

The CA held so in its decision, to wit:

Having reached the conclusion that petitioner was an employee of the
respondents from 1950 to March 17, 1997, and considering his
uncontroverted allegation that in the Ibajay branch office where he was
assigned, respondents employed no less than 12 workers at said later date,
thus affording private respondents no relief from the duty of providing
retirement benefits to their employees, we see no reason why petitioner
should not be entitled to the retirement benefits as provided for under Article
287 of the Labor Code, as amended. The beneficent provisions of said law, as
applied in Oro Enterprises Inc. v. NLRC, is apart from the retirement benefits
that can be claimed by a qualified employee under the social security law.
Attorneys fees are also granted to the petitioner. But the monetary benefits
claimed by petitioner cannot be granted on the basis of the evidence at
hand.26
We concur with the CAs holding. The third paragraph of the aforequoted
provision of the Labor Code entitled Rogelio to retirement benefits as a
necessary consequence of the finding that Rogelio was an employee of MSDC
and Chan. Indeed, there should be little, if any, doubt that the benefits under
Republic Act No. 7641, which was enacted as a labor protection measure and
as a curative statute to respond, in part at least, to the financial well-being of
workers during their twilight years soon following their life of labor, can be
extended not only from the date of its enactment but retroactively to the time
the employment contracts started.27

WHEREFORE, the Court denies the petition for review on certiorari, and
affirms the decision promulgated on October 24, 2003 in CA-G.R. SP
No.75983.
Costs of suit to be paid by the petitioners.
SO ORDERED.

G.R. No. 119160 January 30, 1997

PEOPLE OF THE PHILIPPINES, plaintiff-appelle,
vs.
EDITHA SEORON Y LIMORA, accused-appellant.
FRANCISCO, J.:
Appellant Editha L. Seoron and her co-accused Aquilino Ilano and one John
Doe, both at large, were charged in four separate informations with one
count of illegal recruitment in large scale 1 and three counts of estafa 2 before
the Regional Trial Court of Pasay City. 3 When arraigned, appellant pleaded
not guilty. Trial thereafter ensued. On October 25, 1994, the trial court
rendered a decision convicting appellant as charged and sentencing her "to
suffer a penalty of life imprisonment and to pay a fine of one hundred
thousand pesos (P100,000.00)" 4 for illegal recruitment, and "to suffer a
penalty of three (3) times of arresto mayor in its maximum period as
minimum (or two (2) years ten (10) months and twenty one (21) days)
to prision mayor in its minimum period as maximum (or to eight (8) years)
and to compensate the private complainants the sum of fifty nine thousand
pesos (P59,000.00)" 5 for the three counts of estafa. Dissatisfied, appellant
interposed the instant appeal with the following assignment of errors, thus:
I
THE LOWER COURT ERRED IN NOT FINDING THAT THE
PROSECUTION FAILED TO PROVE THE GUILT OF THE
ACCUSED-APPELLANT
EDITHA
SEORON
BEYOND
REASONABLE DOUBT IN THE ILLEGAL RECRUITMENT,
(LARGE SCALE) CASE.
II
THE LOWER COURT ERRED IN CONVICTING ACCUSEDAPPELLANT EDITHA SEORON OF THE CRIME OF
ILLEGAL
RECRUITMENT,
(LARGE
SCALE)
AND
SENTENCING HER TO SUFFER A PENALTY OF LIFE
IMPRISONMENT AND TO PAY A FINE OF ONE HUNDRED
THOUSAND PESOS (P100,000.00). 6
Aptly narrated in the People's brief and supported by the evidence on record
are the following facts:
At the consolidated hearing of the cases filed against
appellant, complainants Cesar Virtucio, Ronilo Bueno and
Greg Corsega testified for the prosecution.
Cesar Virtucio testified that sometime in October 1991, he
met appellant at accused Aquilino Ilano's house in Malibay,
Pasay City, when he (Virtucio) and other applicants applied
for jobs abroad (tsn, May 27, 1993, p. 6). During the meeting
at Ilano's residence, Virtucio and his companions were given
job application forms which they filled up as told (ibid, p. 9).

Thereafter, Virtucio paid Ilano, in the presence of appellant,

the amount of P20,000.00 as placement fee (Exhibit "B").
After paying the placement fee, Virtucio and his companions
were told by appellant to follow-up their applications at her
office or at Padre Faura, Manila (ibid, p. 14). Appellant failed
to send Virtucio and his companions abroad, hence, he
(Virtucio), together with applicants Ronilo Bueno and Greg
Corsega, filed a complaint for illegal Recruitment and Estafa
against appellant, a certain John Doe and Aquilino Ilano
before the National Bureau of Investigation (ibid, p. 18).
"Greg Corsega, one of the three (3) complainants, testified
that accused Aquilino Ilano introduced him to appellant as
the person who will process his papers for employment
abroad (tsn, June 30, 1993, pp. 8 to 9). Thereafter, Ilano
demanded from Corsega the amount of Twenty Thousand
Pesos (P20,000.00) as placement fee (ibid). The amount of
Twenty Thousand Pesos (P20,000.00) was given to Ilano in
the presence of appellant and it was at this juncture that
appellant promised Corsega and his companions (Virtucio
and Bueno) that they will be called as a group to sign a
contract. However, appellant's promise to deploy Corsega,
Virtucio and Bueno for employment abroad never
materialized, prompting him (Corsega), Virtucio and Bueno
to file a complaint for Illegal Recruitment and Estafa against
appellant, John Doe and Aquilino Ilano before the National
Bureau of Investigation.
Ronilo Bueno testified that he was initially referred by
Aquilino Ilano to his (Ilano's) secretary in order to sign
papers for employment abroad (August 31, 1993, p. 4). After
signing some papers, Bueno was required by Ilano to pay the
amount of P19,000.00 for the processing of his passport and
visa (ibid, p. 5).
The amount of P19,000.00 was immediately paid to Ilano in
the presence of appellant (ibid, p. 7). Whereupon, Ilano told
Bueno that the money will be given to appellant who will be
responsible in the processing of their papers for employment
abroad (ibid, p. 9). The promise to deploy Bueno, Virtucio
and Corsega abroad did not materialize, hence, the three
(Bueno, Virtucio and Corcega) went to appellant, who
showed them the list of the money paid by them. At the same
time, appellant advised the three to wait for notice of their
employment abroad (ibid., pp. 9 to 10). Again, nothing
happened to their applications and this prompted Bueno and
his companions (Virtucio and Corcega) to file charges of
Illegal Recruitment and Estafa against Aquilino Ilano, John
Doe and appellant before the National Bureau of
Investigation.

Bueno, Virtucio and Corcega uniformly testified that before

the filing of Illegal Recruitment and Estafa cases against
Aquilino Ilano, John Doe and appellant before the National
Bureau of Investigation, they (Bueno, Virtucio and Corcega)
asked for the return of their money. Consequently, appellant
issued Interbank Check No. 05263108 in the amount of
P135,000.00 in words but P130,000.00 in figures. They also
testified that the amount covers the payment given by nine
(9) applicants including complainants (tsn, May 27, 1993, p.
16 and tsn, June 30, 1993, pp. 33 to 34). However,
Interbank Check No. 05263108 was never encashed as an
inquiry from the bank revealed that the check was not
sufficiently funded (ibid., p. 38).
The prosecution presented as its last witness Socorro
Landas, an employee of the Philippine Overseas Employment
Administration (POEA), who testified that appellant is not
licensed
by
the
Philippine
Overseas
Employment
Administration to be a recruiter (tsn, February 11, 1993, pp.
2 to 5).7
On the other hand, as lone witness for her defense, accused
EDITHA SEORON, testified that she only met the private
complainants at the National Bureau of Investigation on
September 1993, that she has nothing to do with the
receipts of payment to Greg Corsega; and Cesar Virtucio
which receipts were signed by Aquilino Ilano. She admitted
having issued check No. 05263108 (Exh. C) just to
accommodate co-accused Aquilino Ilano who promised that
he will be the one to put funds on said check. 8
At the outset, the Court observes that appellant confines her appeal to her
conviction for illegal recruitment as she neither questioned nor assailed her
convictions for the three (3) counts of estafa. The failure to appeal therefrom
rendered the estafa convictions final and executory; hence, this review shall
be limited to the illegal recruitment case.
In essence, the centerpiece of appellant's defense dwells on the alleged
insufficiency of the prosecution's evidence to prove her guilt as "[t]here is
nothing on record . . . which says that placement fees received by Aquilino
Ilano from the three (3) private complainants was turned over to
[her]". 9 Appellant asserts that she never issued or signed any receipts and
that as a matter of fact "[t]he receipts of payment of alleged placement fees
were received and receipted by accused Aquilino Ilano." 10 Appellant also
harps on her being a mere accommodation party in the issuance of the
Interbank Check in the amount of P135,000.00 and "that after the check
bounced", she contends that "no notice whatsoever was given to
[her]". 11 Thus, appellant concludes that the prosecution failed to discharge
its burden of proof thereby necessitating her acquittal.
We are not persuaded.

Illegal recruitment is defined under Article 38 (a) of the Labor Code, as

amended, as "(a)ny recruitment activities, including the prohibited practices
enumerated under Article 34 of this Code, to be undertaken by non-licensees
or non-holders of authority." Article 13 (b) of the Code defines "recruitment
and placement" as
[A]ny act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals,
contract services, promising or advertising for employment,
locally or abroad,whether for profit or not: Provided, that any
person or entity which in any manner, offers or promises for
a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.
To prove illegal recruitment, two elements must be shown namely: (1) the
person charged with the crime must have undertaken recruitment activities,
or any of the activities enumerated in Article 34 of the Labor Code, as
amended; and (2) said person does not have a license 12 or authority 13 to do
so. 14 Contrary to appellant's mistaken notion, therefore, it is not the
issuance or signing of receipts for the placement fees that makes a case for
illegal recruitment, but rather the undertaking of recruitment activities
without the necessary license or authority. And in this case, evidence on
record belie appellant's assertion that she did not engage in any recruitment
activity and that the fees paid by the applicants were not turned over to her
possession as shown by the following testimony of private complainant
Virtucio, thus:
Fiscal Untalan:
Q: Now, you said that you together with your co-complainant
were recruited by the accused at Malibay, Pasay City, now,
in connection with that recruitment of applicant, do you
remember when was your transaction if there was any?
A: Before we were recruited she gave us an application paper
which we filled up and she told us to file (sic) it up.
Q: And did you comply?
A: Yes, sir."
xxx xxx xxx
Q: Now, after having paid that placement fee of P20,000.00
to the accused, what happened next?
A: She told us to follow it up at her residence and also at her
office in Padre Faura.
Q: And what happened to your follow up?
A: Nothing, sir." (tsn, May 27, 1993, pp. 9-10, 13-14.)

15

which testimony was corroborated by prosecution witness Ronilo

Bueno. Thus:
Fiscal Untalan:

Q: Is this promised of Ilano materialized? (sic)

A: We asked for the refund of the money we have paid.

A: No, sir.

Q: Now, what else aside from that?

Q: Do you know the reason why?

A: When the check she issued to us bounced we filed the

complaint before the NBI.

A: Ilano told us that our money will be paid to Edith and that
Edith would be the one to attend to our papers.

Q: Before filing any case with the NBI did you make any
investigation as to the capacity of the agency whether they
are authorized?

Q: After knowing that information what did you do?

A: We went to Edith.

A: Yes, sir.

Q: You said, we, who are your companions?

Q: Where did you verify its authority?

A: Corsega and Virtucio.

A: POEA.

Q: What happened when you together with Corsega and

Virtucio went to Editha Seoron?
A: She showed to us the list of the money that we paid and
told us to wait.
Q: And then what did you do, did you wait?
A: Yes, sir.
Q: What happened?
A: Nothing happened and "tumagal"
Q: You said nothing happened and "tumagal" for how long?
A: Almost a year.
Q: After that period of time what did you do together with the
others?
A: We filed a complaint before the NBI.
Q: Before you filed this complaint did you ask the return of
your money before the accused?
A: Yes, sir.
Q: What was the answer?
A: Edith issued a check.
Q: What check?
A: Interbank check.
xxx xxx xxx
Fiscal Untalan:
Q: Now, when you filed your application to the accused for a
job abroad particularly in Taiwan and you were failed to be
deployed together with your companions, what did you do?
(sic)

Q: What happened there?

A: That they were not legitimate to recruit (sic)." (tsn, August
31, 1993, pp 9-12) 16
Appellant made a distinct impression that she had the ability to send
applicants for work abroad. She, however, does not possess any license or
authority to recruit which fact was confirmed by the duly authenticated
certification 17 issued by the Manager of the Licensing Branch of the POEA,
and by the testimony of Ms. Socorro Landas representing the Licensing
Division of the Philippine Overseas Employment Administration (POEA). It is
the lack of necessary license or authority that renders the recruitment
activity, as in this case, unlawful or criminal. 18
Appellant's residual arguments that she was just an accommodation maker
in the issuance of the check and that private complainants failed to notify
her after the check bounced do not merit serious consideration. It has to be
emphasized that appellant is not being prosecuted for violation of the antibouncing check law 19 where the foregoing contentions may have an impact,
but for illegal recruitment which the prosecution was able to establish
beyond reasonable doubt.
WHEREFORE, the trial court's decision is hereby AFFIRMED.
SO ORDERED.

G.R. No. 121179 July 2, 1998

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ANTONINE B. SALEY a.k.a. ANNIE B. SALEY, accused-appellant.
VITUG, J.:
The case before the Court focuses on the practice of some "illegal recruiters"
who would even go to the extent of issuing forged tourist visas to aspiring
overseas contract workers. These unsuspecting job applicants are made to
pay exorbitant "placement" fees for nothing really since, almost invariably,
they find themselves unable to leave for their purported country of
employment or, if they are able to, soon find themselves unceremoniously
repatriated. This Court once described their plight in a local proverb as being
"naghangad ng kagitna, isang salop ang nawala." 1
In this appeal from the 3rd March 1995 decision of the Regional Trial Court
of La Trinidad, Benguet, Branch 10, 2appellant Antonine B. Saley, a.k.a.
Annie B. Saley, seeks a reversal of the verdict finding her guilty beyond
reasonable doubt of eleven counts of estafa punishable under the Revised
Penal Code and six counts of illegal recruitment, one committed in large
scale, proscribed by the Labor Code.
Appellant was indicted in eleven separate informations for estafa under
Article 315, paragraph 2(1), of the Revised Penal Code. The cases (naming the
complainants and stating the amounts therein involved) include: (1) Criminal
Case No. 92-CR-1397 3 (Francisco T. Labadchan P45,000.00); (2) Criminal
Case No. 92-CR-1414 (Victoria Asil P33,000.00); (3) Criminal Case No. 92CR-1415 (Cherry Pi-ay P18,000.00); (4) Criminal Case No. 92-CR-1426
(Corazon del Rosario P40,000.00); (5) Criminal Case No. 92-CR-1428
(Arthur Juan P24,200.00); (6) Criminal Case No. 93-CR-1644 (Alfredo C.
Arcega P25,000.00); (7) Criminal Case No. 93-CR-1646 (Brando B. Salbino
P25,000.00); (8) Criminal Case No. 93-CR-1647 (Mariano Damolog
P25,000.00); (9) Criminal Case No. 93-CR-1649 (Lorenzo Belino
P25,000.00); (10) Criminal Case No. 93-CR-1651 (Peter Arcega
P25,000.00) and (11) Criminal Case No. 93-CR-1652 (Adeline Tiangge
P18,500.00).
Except for the name of the offended party, the amount involved and the date
of the commission of the crime, the following information in Criminal Case
No. 93-CR-1652 typified the other informations for the crime of estafa:
That in or about the month of December, 1991, and
sometime prior to or subsequent thereto, at Buyagan,
Municipality of La Trinidad, Province of Benguet, Philippines,
and within the jurisdiction of this Honorable Court, the
above-named accused, with intent to defraud ADELINE
TIANGGE y MARCOS and by means of deceit through false
representations and pretenses made by her prior to or
simultaneous with the commission of the fraud, did then

and there willfully, unlawfully and feloniously defraud said

ADELINE TIANGGE y MARCOS, by then and there
representing herself as a duly authorized or licensed
recruiter for overseas employment, when in truth and in fact
she was not, thereby inducing the said ADELINE TIANGGE y
MARCOS to give and deliver to her the total amount of
EIGHTEEN
THOUSAND
FIVE
HUNDRED
PESOS
(P18,500.00), Philippine Currency, for placement abroad and
after
having
received
it,
she
appropriated
and
misappropriated the same for her own use and benefit and
despite-repeated demands made upon (her) to return the
same, she refused, failed, neglected, and still refuses, fails
and neglects to comply therewith, all to the damage and
prejudice of ADELINE TIANGGE y MARCOS in the total sum
aforesaid.
Contrary to law.

For the violation of Article 38, in relation to Article 39, of the Labor Code, five
separate informations were also instituted against appellant on various
dates. These cases (with the names of the complainants) include: (1) Criminal
Case No. 92-CR-1396 (Francisco T. Labadchan); (2) Criminal Case No. 92CR-1413 (Cherry Pi-ay); (3) Criminal Case No. 92-CR-1416 (Victoria Asil); (4)
Criminal Case No. 92-CR-1425 (Corazon del Rosario) and (5) Criminal Case
No. 92-CR-1427 (Arthur Juan). The typical information in these indictments
read:
That sometime in the month of April, 1991 and subsequent
thereto at Buyagan, Municipality of La Trinidad, Province of
Benguet, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, did then and
there willfully, unlawfully and knowingly recruit one
ARTHUR JUAN for overseas employment, by then and there
ably misrepresenting herself as a duly authorized or licensed
recruiter when in truth and in fact she fully knew it to be
false but by reason of her said misrepresentations which
were completely relied upon by Arthur Juan, she was able to
obtain from the latter the total amount of TWENTY FOUR
THOUSAND
TWO
HUNDRED
PESOS
(P24,200.00),
Philippine Currency, all to the damage and prejudice of
Arthur Juan in the total sum aforesaid.
Contrary to Law.

The information in Criminal Case No. 93-CR-1645 for illegal recruitment in

large scale under Article 38, paragraph 1, of Presidential Decree No. 442
(Labor Code), as amended, filed on 16 April 1993, read:
That in or about the months of August and September,
1992, in the Municipality of La Trinidad, Province of
Benguet, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, did then and
there willfully, unlawfully and knowingly recruit the

following: PETER ARCEGA, LORENZO BELINO, MARIANO

DAMOLOG, FIDEL OPDAS, BRANDO B. SALBINO, DEMBER
LEON and ALFREDO C. ARCEGA for overseas employment,
by then and there misrepresenting herself as a duly
authorized or licensed recruiter when in truth and in fact
she was not and by reason of her said misrepresentation
which was completely relied upon by the said complainants
whom she recruited, either individually or as a group
amounting to illegal recruitment in large scale causing
economic sabotage, she was able to obtain and received from
them the aggregate total amount of ONE HUNDRED
SEVENTY
FIVE
THOUSAND
PESOS
(P175,000.00),
Philippine Currency, all to the damage and prejudice of the
foregoing complainants in the total sum aforesaid.
Contrary to law.

Appellant pleaded not guilty to all the charges of illegal recruitment and
estafa. The criminal cases filed were raffled off to two (2) branches of the
Regional Trial Court of Benguet; later, however, the cases were consolidated
at the instance of the prosecution.
Parenthetically, appellant jumped bail pending trial but she was soon
arrested by agents of the Criminal Investigation Service ("CIS").
The Evidence for the Prosecution.
In Criminal Case No. 92-CR-1397 and Criminal Case No. 92-CR1396
Francisco Labadchan, a 25-year-old employee in the Navy Base in Pacdal,
Baguio City, was introduced to appellant by Crispin Perez. In September
1991, the two went to the house of Conchita Tagle at Kilometer 3, La
Trinidad, Benguet, who was known to be recruiting workers for abroad. After
Labadchan had expressed interest in applying for a job in Korea, Tagle told
Labadchan to prepare P45,000.00, P30,000.00 of which was to be paid that
month and the balance of P15,000.00 before his departure for abroad.
Labadchan paid Tagle the amount of P30,000.00 on 23 September 1991.
Appellant, in turn, received that amount when she went to La Trinidad to
"brief" him. She told Labadchan that his flight would be on the 9th of October
1991 and that he should have paid by then the balance of P15,000.00 of the
fees. He paid Tagle the P15,000.00 balance on 05 October 1991. When he
requested her to make a receipt, Tagle included the amount in the old receipt
for the P30,000.00 previously given. Appellant handed over to Labadchan
some papers to fill up and gave last-minute instructions before she boarded a
green-colored aircraft.
On 08 October 1991, Labadchan and his wife went to Manila and stayed, as
so instructed by Tagle, at the Prince Hotel near the terminal of the Dangwa
bus company in Dimasalang, Manila. There, he met other people, among
them, his co-complainant Arthur Juan. In the morning of 09 October 1991,
Labadchan and the others were told to go to the airport with Tagle, where
appellant was supposed to give the travel papers including passports and
plane tickets for Korea. At the airport, however, appellant told the group that

their flight had been re-scheduled for 11 October 1991. Labadchan returned
to Baguio City.
On 11 October 1991, Labadchan returned to the airport only to be told this
time, however, that his passport was still with the Department of Foreign
Affairs. Appellant told her husband to accompany Labadchan to the Foreign
Affairs office. When Labadchan received the passport, he saw that while his
picture appeared on it, the passport was made out in the name of a person
from Negros Occidental. Labadchan had to imitate the signature on the
passport just so he could get it. Back at the airport, he was allowed inside
the terminal but only to be later sent out because the ticket he had was one
intended for passage from Korea and not to Korea. Asserting that he and
company were mere "chance passengers," appellant sent them all home with
a promise that another departure date would be set. She also took back the
"show money" of US$1,000.00.
Appellant would repeatedly schedule a departure date but nothing tangible
came out of her assurances. Finally, Labadchan was able to get appellant to
promise that the money he had given her would be refunded. When this
promise neither materialized, Labadchan finally reported the matter to the
National Bureau of Investigation ("NBI"). In that office, appellant executed a
promissory note stating that she would return the amount of P46,500.00,
which included the amount of P1,500.00 allegedly used for getting a
passport, to Labadchan. 7
In Criminal Case No. 92-CR-1414 and Criminal Case No. 92-CR1416
Victoria Asil, a 40-year-old housewife from Imelda Village, Roxas Street,
Baguio City, heard from her elder sister, Feling Derecto, that appellant was
recruiting workers for abroad. During the second week of January 1992, she,
along with her husband Gabriel, went to appellant's house in Buyagan, La
Trinidad. Appellant assured her that she could have a job in a factory in
Korea. Appellant asked for an advance fee of P25,000.00 of the P40,000.00
agreed fee. Victoria gave appellant the "advance fee" on 13 January 1992 at
her (Victoria's) shop in Shopper's Lane, Baguio City which appellant
acknowledged by issuing a receipt for the amount. She told Victoria to be at
appellant's house in Buyagan after three weeks.
When Victoria went to appellant's house as so directed, appellant told her
that her flight had been postponed supposedly because prior applicants had
to be accommodated first. Victoria met appellant seven more times only to be
ultimately told that the latter had been allegedly "fooled" by the "main office"
in Manila. Appellant, nevertheless, demanded an additional P5,000.00 from
Victoria so that she could leave on 18 April 1992. Victoria gave appellant the
amount of P5,000.00 at her shop on 31 March 1992 for which appellant gave
a corresponding receipt.
When on 18 April 1992 still "nothing happened," Victoria demanded from
appellant a refund. Appellant gave her an "advance" of P15,000.00. An
acknowledgment receipt with appellant's signature affixed thereon would
evidence that payment. Appellant, however, failed to return the rest of the
promised refund. 8

In Criminal Case No. 92-CR-1413 and Criminal Case No 92-CR1415

Cherry Pi-ay, a 26-year-old nursing student from Acop, Tublay, Benguet, was
visited once in March 1991 by appellant who encouraged Cherry to apply for
work in a textile or a plastic factory in Korea with a monthly salary of
US$800.00. Appellant told Cherry that the moment she would pay the
amount of P45,000.00, she could be deployed in Korea. Cherry prepared her
bio-data and gave it to appellant at the latter's residence during the first
week of April 1991.
Cherry was able to leave the country on 04 July 1991 after having paid the
total amount of P45,000.00. Appellant told her that a certain Ramil would
meet her at the airport in Korea. When she arrived, a Filipina, named Marlyn,
instead met her. Marlyn introduced herself as appellant's friend and
accompanied Cherry to a certain house owned by a Korean. There, Cherry
met, among other compatriots, Corazon del Rosario and Jane Kipas. Cherry
soon realized that she was not going to have a job in the factory promised by
appellant. Instead, she was made to work for the Korean applying rugby on
and folding leather jackets. About a month later, men from the Korean
Immigration accosted her and the others. Brought in for questioning by
Immigration officials, Cherry and her companions were informed that they
were illegal workers. After the investigation, Cherry and her group were
allowed to go but on 08 August 1991, all were deported.
Back to the Philippines, the deportees were assured by appellant that they
would get a refund of their money. Cherry executed a sworn statement
narrating her experience in Korea. 9
Ayson Acbaya-an, Cherry's "boyfriend" who later was to become her
husband, corroborated Cherry's testimony that appellant first received
P18,000.00 from Cherry. Thereafter, appellant also received P27,000.00 from
Cherry, fifteen thousand pesos (P15,000.00) of which amount came from
him. In both instances, appellant signed receipts for the payments. The
receipts were among Cherry's papers confiscated in Korea. 10
In Criminal Case No. 92-CR-1425 and Criminal Case No. 92-CR1426
Corazon del Rosario, a 34-year-old housemaid from 48 Happy Homes, Baguio
City, had known appellant, an acquaintance, since 1980. One day in
December 1990, she happened to chance upon appellant at a PLDT
telephone booth in Kilometer 4, La Trinidad, Baguio City. Appellant,
representing herself to be an authorized recruiter, tried to persuade Corazon
to work abroad. Corazon showed interest. From then on, appellant would
visit Corazon in her brother's house in Kilometer 4. Ultimately, appellant was
able to convince Corazon that, for a fee of P40,000.00, she could be sent to
Korea. Corazon gave appellant the amount of P15,000.00. She paid the
balance of P25,000.00 in May 1991. The payments were both made in the
presence of Cherry Pi-ay and Jane Kipas. Appellant issued the corresponding
receipts for these amounts.
Corazon took the flight for Korea on 28 June 1991. Appellant had instructed
Corazon, upon landing in Korea, to call up a certain Ramil. At the airport,

Corazon, including her companions among them Jane Kipas, kept on dialing
the number but each time only a Korean woman would answer the call.
Later, that evening, a certain Marlyn, who introduced herself as appellant's
friend, took them to a hotel. There, Marlyn took their "show money" of
US$1,000.00. The group stayed overnight in the hotel and the following
morning, a Korean took them to a house proximately two hours away by car
from the airport. For about a month, they did nothing but apply rugby on
leather jackets, for which they were not paid, until a policeman arrived and
took all ten of them to the airport. All that the immigration and airport
personnel would tell them was that they should be thankful they were only
being repatriated home. Immigration and airport authorities confiscated
everything that they had.
At home, appellant promised to return Corazon's money. Not having received
the promised refund, Corazon went to the CIS stationed at Camp Dangwa
where, on 28 July 1992, she executed her sworn statement. 11
Avelina Velasco Samidan, a friend of Corazon and in whose house the latter
would stay whenever she was in Baguio, corroborated the testimony of
Corazon that she gave to appellant the amount of P15,000.00, ten thousand
pesos of which amount Corazon borrowed from Avelina, and that some time
in April 1991, Corazon withdrew P25,000.00 from the bank which she
likewise paid to appellant. 12
In Criminal Case No. 92-CR-1427 and Criminal Case No. 92-CR1428
Arthur Juan, a 30-year-old farmer from Dumulpot, Tublay, Benguet, first
met appellant in her house at Buyagan, La Trinidad, Benguet, when he,
together with Maxima Gomez, Tirso Gomez and Francisco Labadchan, went
to see appellant who was said to be recruiting workers for Korea. Juan
promptly submitted his bio-data form after being told that he could work in a
factory in Korea at US$400.00 a month. Appellant quoted a processing fee of
P40,000.00. Juan initially paid the amount of P6,500.00 in April 1991. On
09 October 1991, the scheduled date of the flight, Juan went to the airport
and gave appellant another P15,000.00; the final balance of the fees were, by
their agreement, to be remitted to appellant on a salary deduction basis.
Appellant then told Juan that he could not leave on that day (09 October
1991) because the airplane was already full. Appellant took back Juan's
passport, telling Juan that he should be able to depart in a few days.
Appellant, however, kept on rescheduling the flight for about five more times
until it became clear to Juan that he had been deceived. Juan paid out a
total amount of P24,200.00, including the US$100.00 that would have been
his pocket money, to appellant. The latter executed receipts for the amounts.
Juan executed a sworn statement narrating the unfortunate incident.

13

In Criminal Case No. 93-CR-1652

Adeline Tiangge, a 43-year-old housekeeper from Bangao, Buguias, Benguet,
learned that appellant was recruiting workers for abroad. Adeline,
accompanied by her sister, went to see appellant at her house in Buyagan
some time in December 1991. There were others, like her, who also went to
see appellant. When she produced the required identification pictures and

P1,500.00 for passport processing, appellant told Adeline that she could be a
factory worker in Korea with a monthly salary of US$350.00. Appellant
agreed to be paid by Adeline the additional P35,000.00 balance by
installment. The first installment of P17,000.00 was paid on 15 February
1992, evidenced by a receipt signed by "Antonine Saley," with the remaining
P18,000.00 being payable before getting on her flight for abroad.
Adeline waited in Baguio City for word on her departure. Adeline, together
with some other applicants, thrice went to appellant's office at the Shopper's
Lane to check. She also went to Dimasalang, Manila, in front of the Dangwa
terminal, for a like purpose. Appellant informed her that she just had to wait
for her flight. Adeline, exasperated, finally demanded a refund of the amount
she had paid but appellant merely gave her P100.00 for her fare back to
Benguet. 14
0
The sum of the evidence, infra., in Criminal Case No. 93-CR-1645 for illegal
recruitment in large scale had been submitted to likewise constitute the
evidence to establish the People's case, respectively, in
Criminal Case No. 93-CR-1644
Alfredo Arcega, a 42-year-old hotel employee from 16 Q.M. Subdivision,
Baguio City, heard from a former co-worker, Fidel Opdas, that appellant was
recruiting workers for overseas employment. Interested, he, in the company
of his nephew, Peter Arcega, went to appellant's house in Buyagan, La
Trinidad. There, he met job applicants Dembert Leon, Mariano Damolog and
Brando Salbino. Appellant assured the group that they could get employed in
Taiwan for a monthly salary of P12,000.00 to P15,000.00. She told them that
the processing and placement fees would amount to P40,000.00 each. Arcega
and his companions agreed.
On 17 August 1992, Arcega paid appellant P10,000.00 in Dimasalang,
Manila. Appellant issued a cash voucher for the amount. She told Arcega to
just wait "for the results." On 30 September 1992, appellant asked Arcega for
another P15,000.00 which amount he paid. With him at the time were his
nephew Peter Arcega, as well as Dembert Leon, Mariano Damolog, Lorenzo
Belino and Brando Salbino. Appellant issued a receipt and affixed thereon
her signature. Appellant told Arcega that with the payment, his employment
abroad was assured. She stressed, however, that the balance of P15,000.00
should be paid before his departure for Taiwan. After following up the matter
with appellant in October 1992 and then in December 1992, he finally gave
up. Arcega went to the POEA office in Magsaysay Avenue, Baguio City, and
when he learned that appellant had pending cases for illegal recruitment, he
also filed his own complaint and executed an affidavit before Atty. Justinian
Licnachan. 15
Criminal Case No. 93-CR-1646
Brando Salbino, a 36-year-old resident of East Quirino Hill, Baguio City,
used to be a "forester" of the DENR. In July 1992, he met appellant at her
Buyagan residence after his brother-in-law, Fidel Opdas, had said that she
was recruiting workers for abroad. Appellant told him that she could help

him get employed in Taiwan with a P12,000.00 monthly salary. Salbino

submitted various documents required by appellant. On 11 August 1992,
Salbino paid appellant the amount of P10,000.00 at her Dimasalang
"temporary office" so that, according to her, his travel papers could be
processed. The payment was receipted. On 30 September 1992, he paid her
another P15,000.00, for which appellant again issued an acknowledgment
receipt.
Appellant told Salbino to merely wait in Baguio City. When she failed to show
up, he went to appellant's house in Buyagan to verify. She was not there. The
following week, he went to Manila with Fidel Opdas hoping to see her.
Appellant's where abouts could not be determined. Having failed to locate
her, Salbino and his companions went to the POEA office in Magsaysay,
Baguio City. It was at the POEA office that they were to learn that appellant
was not in the list of licensed recruiters. He, along with the others, then
executed an affidavit-complaint before Atty. Licnachan. 16
Criminal Case No. 93-CR-1647
Mariano Damolog, a 33 year-old farmer from 26 P. Burgos Street, Baguio
City, went to appellant's residence in Buyagan in July 1992 when informed
by Fidel Opdas, his co-worker at the MIDO Restaurant, that appellant was
recruiting workers for Taiwan. Appellant herself later told Damolog that she
was licensed to recruit workers. He forthwith applied for a position at a
factory in Taiwan with a salary of between US$400.00 and US$500.00 a
month. He, after being required to pay a processing fee, paid the amount of
P10,000.00 to appellant at her Manila office. Appellant gave him a cash
voucher. Damolog was then supposed to just wait in Baguio City for a
telegram.
When he did not receive word from appellant, Damolog went to Manila to see
what had happened to his application. Appellant was again told to simply
stand by in Baguio City. After several days, Opdas, who had meanwhile gone
to Manila, told Damolog to see appellant in Manila. In Manila, appellant told
Damolog to sign a bio-data form for "screening purposes." Like Peter Arcega,
Fred Arcega, Brando Salbino and Lorenzo Belino, he was also asked to pay
another P15,000.00. The group went back to Baguio City to raise the amount
of P15,000.00 each. On 30 September 1992, he, together with Fred and Peter
Arcega, Brando Salbino and Lorenzo Belino, returned to Manila. Damolog
handed over his P15,000.00 to appellant who issued an acknowledgment
receipt, signed by "Annie Saley" which, according to appellant, was her name.
Appellant assured him that he would be among the first to go to Taiwan by
December 1992.
December 1992 came but no word was received prompting Damolog and his
companions to repair to appellant's house in Buyagan. She was not home.
Damolog proceeded to Manila where appellant told him to wait a few more
days. When still "nothing happened," Damolog and his companions went to
the POEA office where Atty. Licnachan issued a certification stating that
appellant was not authorized to recruit workers. Damolog and his
companions filed a joint affidavit-complaint executed before Atty.
Licnachan 17 against appellant.

Criminal Case No. 93-CR-1649

Lorenzo Belino, a 37-year-old farmer from Tawang, La Trinidad, Benguet,
was in Manila in August 1992 looking for employment. Fidel Opdas, a
companion in his trip to Manila, mentioned that perhaps appellant could
help. Belino saw appellant who then told him about the prospect of getting
employed in Taiwan. Appellant invited him to see her on 20 September 1992
in Buyagan.
On the appointed date, Belino found Mariano Damolog, Fidel Opdas, Brando
Salbino, Dembert Leon, Alfredo Arcega and Peter Arcega already in
appellant's residence in Buyagan. Appellant asked P10,000.00 from each of
them if they wanted her to be "responsible for representing" them to get
themselves employed in Taiwan with a monthly income of P15,000.00. When
the group agreed, appellant made them fill up and sign a bio-data form.
Appellant also made them understand that they would each have to pay her
the total amount of P40,000.00, P10,000.00 of which was to be forthwith
paid and the balance to be paid as and when everything would have been
arranged for their flight to Taiwan.
On 23 September 1992, Belino paid appellant the amount of P10,000.00 at
her Dimasalang office. Appellant issued a cash voucher therefor. Belino
returned to Baguio City. Five days later, Belino went down to Manila after
appellant had sent word that he had to come to Manila. On 30 September
1992, Belino paid in Manila the amount of P15,000.00 demanded by
appellant. Appellant signed her name as "Annie Saley" on the receipt.
Appellant informed Belino that he should wait for her telephone call
regarding the schedule of his flight. He waited but when no calls came,
Belino and Opdas decided to visit appellant in her house in Buyagan.
Appellant asked to be given until January to deploy them in Taiwan.
February 1993 came, and still there was no news from appellant. In March
1993, Belino and others, namely, Fidel Opdas, Brando Salbino, Dembert
Leon and Alfredo Arcega, 18 decided to file a complaint against appellant with
the POEA in Magsaysay Avenue, Baguio City, where their sworn statements
were taken.
Criminal Case No. 93-CR-1651
Peter Arcega, a 27-year-old cashier from 317 Magsaysay Avenue, Baguio
City, also paid the amount of P10,000.00 to appellant for a promised job
overseas. A cash voucher was signed by appellant to acknowledge the
payment. Peter, subsequently, also paid the amount of P15,000.00 to
appellant for which the latter issued a receipt signed by "Annie Saley." He
was among those who signed the affidavit-complaint before the POEA.
Testifying in Criminal Case No. 93-CN-1645, 19 as a corroborative witness,
Dembert Leon, a 25 year-old unemployed from 52-F Tandang Sora Street,
Baguio City, said that he, desiring to get an employment abroad, likewise
went to see appellant at her residence in Buyagan. Accompanied by Fidel
Opdas, Leon was told by appellant to complete the necessary papers,
including his bio-data, barangay clearance, ID and NBI clearance. Leon
applied to be a factory worker in Taiwan. He was assured a monthly salary of
P12,000.00, but first, appellant told him, he should commit to pay a

placement fee of P40,000.00 of which amount P10,000.00 had to be paid

forthwith. Leon paid and a cash voucher, dated 08 September 1992, was
issued by appellant. On 30 September 1992, he paid appellant another
P15,000.00 for which another acknowledgment receipt was issued. The
remaining P15,000.00 was agreed to be paid at the airport before his flight to
Taiwan. No further word came from appellant. Finally, in December 1992,
when he and the others called her up, appellant informed them to wait until
January 1993. January came and still nothing happened. In March 1993,
Leon and the others went to the POEA office to lodge a complaint against
appellant. 20
Jose B. Matias, an Attorney II at the POEA Regional Station Unit in Baguio
City, received a request for verification on whether or not appellant was a
licensed recruiter. In response, he advised that appellant was not authorized
to recruit "in the City of Baguio and in the region" from 1989 "to the present."
Atty. Matias issued a certification to that effect.
0
The Case for the Defense.
The defense posited the theory that appellant merely assisted the
complainants in applying for overseas employment with duly accredited
travel agencies for and from which she derived a commission. 21
According to the 37-year-old appellant, she used to be the liaison officer of
the Friendship Recruitment Agency from 1983 to 1986. In that capacity, she
would submit to the POEA "contracts for processing job orders for
applicants" and assist applicants prior to their departure at the airport.
When the licensed agency closed in 1986, she went to Baguio where she
engaged in the purchase and sale of vegetables and flowers. Even then,
however, she would not hesitate extending help to applicants for overseas
employment by recommending licensed agencies which could assist said
applicants in going abroad. She named the Dynasty Travel and Tours and
the Mannings International as such licensed agencies. She had, in the
process, been able to help workers, like Cherry Pi-ay, Corazon del Rosario,
Arthur Juan and Francisco Labadchan to name some, sent abroad. 22
Cherry Pi-ay was able to leave for Kuwait. In 1991, Cherry went to see her
again, this time asking for assistance in getting an employment in Korea. She
accompanied Cherry to the Dynasty Travel and Tours in Manila that enabled
her to get a tourist visa to Korea. Appellant herself later gave Cherry her
tourist visa. For Cherry's visa and plane ticket, appellant received from
Cherry P15,000.00 and US$250.00. Appellant issued a receipt therefor and
delivered the amounts to the Dynasty Travel and Tours which, in turn,
issued her a receipt. The CIS men who arrested her in Manila confiscated
that receipt. In August 1991, Cherry came back and asked her to look for
another travel agency saying she did not like the work she had in Korea. 23
Norma Bao-idang, a former client of the Friendship Recruitment Agency,
introduced Corazon del Rosario to appellant. Since the agency had already
been closed, appellant referred Corazon to Mannings International in Kalaw
Street, Ermita, Manila. Corazon was able to leave for Abu Dhabi where she
worked as a domestic helper. In 1991, Corazon again sought appellant's

assistance in getting an employment in Korea. Appellant introduced her to

Dynasty Travel and Tours which, in turn, helped Corazon get a
tourist visa for Korea. She did ask for P15,000.00 and US$250.00 from
Corazon but these amounts, being for Corazon's ticket and hotel
accommodation, were turned over to Dynasty Travel and Tours. She also
knew that Corazon was able to leave for Korea because she herself handed
over to Corazon her tourist visa and ticket. Appellant received P2,000.00
from Dynasty Travel and Tours by way of commission. She was also issued a
receipt by that travel agency showing that she had turned over to it the
amounts received from Corazon but the CIS men took the receipts and other
documents from her. When Corazon returned home in 1991 after going to
Korea, she again sought appellant's help in looking for a travel agency that
could assist her in going back to that country. 24
Appellant came to know Arthur Juan through a vegetable vendor named
Maxima Gomez. He asked her for help in securing a tourist visa. Appellant
was able to assist him and others, like Francisco Labadchan, Tirso Gomez
and Romeo Balao, by referring them to the Dynasty Travel and Tours.
Appellant asked from them the amounts of P15,000.00 and US$250.00
which she turned over to the travel agency. Again, she was issued a receipt
by that agency but that, too, was confiscated by the CIS agents who arrested
her. Of the men who sought her help in going abroad, seven "were able to
leave." The others had been re-scheduled to leave but they failed to arrive at
the airport.
Labadchan and Juan met appellant during the first week of January 1993.
She gave them back the plane ticket and the amount of US$250.00 so that
they could ask for a refund from the travel agency. The next time she saw
Labadchan was at the NBI office when NBI Director Limmayog invited her for
questioning. Appellant tried her best to look for a job for Labadchan but the
transaction she had with Fast International failed to push through. 25
Appellant helped Victoria Asil secure a tourist visa. The latter's sister was a
former client at the Friendship Recruitment Agency who was able to work in
Saudi Arabia in 1985. She introduced Victoria to the Dynasty Travel and
Tours. Appellant asked Victoria to advance P15,000.00 and US$250.00 for
her ticket and hotel accommodation. Victoria gave appellant the amount, and
the latter issued corresponding receipts. She turned over the amount to the
travel agency which, in turn, issued a receipt to appellant. The CIS, however,
confiscated all the documents in her attache case. 26 Appellant was able to
process Victoria's visa for Korea but when someone informed the latter that
she could have a visa for Taiwan, Victoria opted to change her destination.
Appellant told Victoria that her visa and ticket for Korea had already been
obtained but Victoria insisted on a refund of her money. Appellant returned
to her P15,000.00 that was supposed to be the amount to be exchanged into
dollars for her "show money." Victoria issued a receipt for the amount but
appellant entrusted it to her former lawyer. Appellant handed over the plane
ticket to Victoria. 27
Mercedes Quimson (Kimson) introduced appellant to Adeline Tiangge. When
Adeline said that she was interested in securing a tourist visa for Korea,
appellant took her to the Dynasty Travel and Tours. Appellant asked from

Adeline the amount of P17,000.00 for her plane ticket. Appellant was able to
buy a plane ticket and to get a passport for Adeline. The latter, however, later
said that she was no longer interested in going to Korea and that her
passport application should, instead, be "diverted to Hongkong." In fact,
Adeline was able to leave for Hongkong. Adeline filed a case against appellant
because when Adeline sought a refund from Dynasty Travel and Tours, the
agency only gave her P5,000.00 or just a half of the P10,000.00 she
wanted. 28
Fidel Opdas was appellant's client at the Friendship Agency who was able to
leave for Saudi Arabia. He asked her if she could find a job for him in
Taiwan. When appellant told him that she knew someone who could help,
Opdas brought along Mariano Damolog. Appellant introduced them to
Marites Tapia and Carol Cornelio of Dynasty Travel and Tours who told
Opdas and Damolog to submit the necessary documents for their application
for work in Taiwan. In May 1993, Opdas returned with Brando Salbino who
also talked to Marites and Carol. Opdas submitted to appellant the
documents required by Marites and Carol. Appellant, in turn, gave the
papers to Marites and Carol. When, later, Opdas went to see appellant, he
brought along Dembert Leon and Lorenzo Belino. Appellant requested Opdas
to accompany the two to Marites and Carol with whom they discussed what
would be necessary "for their application for Taiwan. Still later when Opdas
came back with Peter and Alfredo Arcega to see appellant, she again referred
them to Marites and Carol. The job applicants each gave appellant
P10,000.00 which the latter turned over to Marites and Carol. The two gave
her receipts but these were in the same attache case that was seized by the
CIS agents and never returned. The group subsequently withdrew their
applications although it was only Opdas who received a P15,000.00
refund. 29
In a bid to prove that CIS agents indeed took away her attache case
containing documents that could bail her out of the charges, appellant
presented Danilo A. Deladia, one of the three policemen who arrested her.
Equipped with a warrant of arrest issued by Judge Luis Dictado of Branch 8,
the policemen went to the house of appellant's cousin at 2320-B San
Antonio, Sampaloc, Manila at 3:00 p.m. of 25 August 1993. According to
Deladia, however, they did not get anything from appellant because their
mission was only to arrest her. At the counter intelligence branch of the CIS,
he did not even hear appellant requesting for the return of a brief
case. 30 Apparently because of what had turned out to be Deladia's adverse
testimony, the defense presented George Santiago who claimed to be at the
boarding house when appellant was arrested. Santiago said that he had
allowed the CIS agents to enter the boarding house. Santiago did not see
what might have happened in appellant's room but what he did see was that
when the agents all came out, they had with them an attache case. Santiago,
accompanied by his cousin Atty. Lomboan, went to the CIS in Camp Crame
where one of the men asked P50,000.00 for the release of appellant. Santiago
did not see any brief case in the office but one of the men told them that they
would "produce" appellant and the attache case if they could "produce" the
amount of P50,000.00. 31

On cross-examination, however, Santiago admitted that the P50,000.00 was

meant for "bonding purposes" and that they did not make a formal request
for the release of the brief case. 32
The defense next attempted to shift, albeit unsuccessfully, the responsibility
for the crime from appellant to Maritess and Carol. Presented at the witness
stand was Oscar Gaoyen, a 30-year-old farmer, who testified that appellant
had failed to assist him in going to Korea to work "because it was difficult."
While following up his application in Manila, he met Marites and Carol in
front of the Dangwa station in Dimasalang and he was told that they knew
someone who could "transfer his application to Taiwan." He said that even
after he had paid appellant P50,000.00, nothing happened constraining him
to file charges against her. Appellant returned P15,000.00 of the money to
him. 33
Appellant filed, before the trial court could promulgate its decision, a "Motion
to Reopen Trial" with an urgent motion to defer promulgation on the ground
of newly discovered evidence. 34 In its order of 03 March 1995, the trial court,
noting that the "newly discovered evidence" consisted of affidavits of
desistance of seven complainants, found no merit in the motion. It held that
"presentation of the same does not give valid ground for possible amendment
of the decision as the private complainants had already testified." It agreed
with the prosecutor that "the affidavits of desistance only (had) the effect of
satisfying the civil liability." 35
The Judgment of the Trial Court.
On 03 March 1995, the trial court rendered its decision finding appellant
guilty beyond reasonable doubt of the crimes charged. It found implausible
appellant's claim that she was merely an agent of Dynasty Travel and Tours
and/or Maritess Tapia and Carol Cornelio. If what she claimed were true,
said the court, appellant could have presented her principals; instead, that
failure exposed her to the "adverse inference and legal presumption that
evidence suppressed would be adverse if produced." It also found "hard to
believe," the "self-serving" claim of appellant that her brief case, supposedly
containing receipts of her remittances to the travel agencies, was confiscated
by the CIS and remained unaccounted for. The trial court concluded:
In fine, accused gave the distinct assurance, albeit false, that
she had the ability to send the complainants abroad for work
deployment, thereby employing false pretenses to defraud
them. This was despite her knowing very well that she was
not legally authorized. The complainants willingly parted
with their money in the hope of overseas employment
deceitfully promised them by the accused. What makes
matters worse is that these amounts given to the accused
come from hard-earned money, or worse, could have been
borrowed from money lenders who have no qualms about
collecting usurious interest rates. Complainants who
faithfully relied on the accused did not hesitate to
painstakingly raise or even beg or borrow money just so they
could give a decent future to their families even to the extent
of leaving them for far-off lands. But now, all their dreams

are gone, their hopes shattered. Some may not have even
been able to pay back what they borrowed nor recoup their
losses. Now, more than ever, their future appears bleaker.
But this time, a glimmering light appears at the end of the
tunnel as the Court steps in to lay down the iron fist of the
law so as to serve the accused a lesson, a bitter one, with the
hope that those who are trekking or those who are about to
trek the same pilfered path that the accused took will
reconsider their pursuits before it would be too late, and in
the end, this form of fraud which invariably victimizes the
poor will forever be stopped. 36
All given, the trial court then decreed as follows:
WHEREFORE, in all the above-mentioned cases, the Court
finds accused Antonine B. Saley, also known as Annie B.
Saley, GUILTY beyond
reasonable
doubt of the
corresponding crime as charged in the informations and
hereby sentences her in each case, except in Criminal Case
NO. 93-CR-1645 where an indeterminate sentence is not
applicable, to suffer an indeterminate sentence for the
duration hereunder given, and to pay the costs, as well as
the damages due the private complainants, to wit:
Criminal Case No. 92-CR-1396
Imprisonment from Four (4) Years as MINIMUM to Six
(6) Years as MAXIMUM and to pay Francisco T.
Labadchan P45,000.00 for actual damages, plus
costs.
Criminal Case No. 92-CR-1397
Imprisonment from Three (3) Years, Six (6) Months
and Twenty-One (21) Days of prision correccional as
MINIMUM to Seven (7) Years, Four (4) Months and
One (1) Day ofprision mayor as MAXIMUM and to pay
Francisco T. Labadchan P45,000.00 for actual
damages, plus costs.
Criminal Case No. 92-CR-1413
Imprisonment from Four (4) Years as MINIMUM to Six
(6) Years as MAXIMUM and to pay Cherry Pi-ay
P20,000.00 for moral damages, plus costs.
Criminal Case No. 92-CR-1414
Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay Victoria As-il P15,000.00 for actual
damages, plus costs.

Criminal Case No. 92-CR-1415

Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay Cherry Pi-ay P20,000.00 for moral
damages, plus costs.
Criminal Case No. 92-CR-1416
Imprisonment from Four (4) Years as MINIMUM to Six
(6) Years as MAXIMUM and to pay Victoria As-il
P15,000.00 for actual damages, plus costs.
Criminal Case No. 92-CR-1425
Imprisonment from Four (4) Years as MINIMUM to Six
(6) Years as MAXIMUM and to pay Corazon del
Rosario P20,000.00 for moral damages, plus costs.
Criminal Case No. 92-CR-1426
Imprisonment from One (1) Year, Seven (7) Months
and Eleven (11) Days of prision correccional as
MINIMUM to Six (6) Years, Five (5) Months and Eleven
(11) Days ofprision mayor as MAXIMUM and to pay
Corazon del Rosario P20,000.00 for moral damages,
plus costs.
Criminal Case No. 92-CR-1427
Imprisonment from Four (4) Years as MINIMUM to Six
(6) Years as MAXIMUM and to pay the costs.
Criminal Case No. 92-CR-1428
Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay the costs.
Criminal Case No. 93-CR-1644
Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay Alfredo C. Arcega P25,000.00 for actual
damages, plus costs.
Criminal Case No. 93-CR-1645
To suffer the penalty of life imprisonment and to pay
a fine of One Hundred Thousand Pesos
(P100,000.00), with subsidiary imprisonment in case

of insolvency, and to pay the costs. She shall also pay

Twenty-Five Thousand Pesos (P25,000.00) each to
Peter Arcega, Lorenzo Belino, Mariano Damolog,
Brando Salbino, Dembert Leon and Alfredo Arcega for
actual damages, plus costs.
Criminal Case No. 93-CR-1646
Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay Brando B. Salbino P25,000.00 for actual
damages, plus costs.
Criminal Case No. 93-CR-1647
Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay Mariano Damolog P25,000.00 for actual
damages, plus costs.
Criminal Case No. 93-CR-1649
Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay Lorenzo Belino P25,000.00 for actual
damages, plus costs.
Criminal Case No. 93-CR-1651
Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay Peter Arcega P25,000.00 for actual
damages, plus costs.
Criminal Case No. 93-CR-1652
Imprisonment from One (1) Year, Eight (8) Months and
Twenty-One (21) Days of prision correccional as
MINIMUM to Five (5) Years, Five (5) Months and
Eleven (11) Days ofprision correccional as MAXIMUM
and to pay Adeline Tiangge y Marcos P17,000.00 for
actual damages, plus costs.
With respect to accused Conchita Tagle in Criminal Cases
Nos. 92-CR-1396 and 92-CR-1397, let these cases be sent to
the files without prejudice to their revival as soon as she

shall have been arrested and brought to the jurisdiction of

this Court.
In order that Conchita Tagle may not escape the clutches of
the law, let Alias Warrants of Arrest issue addressed to the
PNP Chief of Police, La Trinidad, Benguet and the National
Bureau of Investigation (NBI) in Manila and in Baguio City.
Further, the Commission of Immigration and Deportation
(CID), Manila is ordered to include her name in the its HoldDeparture List.
SO ORDERED.

37

Appellant filed a motion for reconsideration of the decision asserting that the
trial court had erred in giving credence to the testimonies of the complaining
witnesses and in finding her guilty of the crimes charged despite the "failure"
of the prosecution to fully establish the elements of the crimes beyond
reasonable doubt. 38 Finding no merit in the motion, the trial court, on 03
April 1995, denied a reconsideration of its decision. 39 The following day,
appellant filed a notice of appeal. 40 The trial court gave due course to the
appeal on 17 April 1995. 41
The Instant Appeal.
Appellant continues to profess before this Court her innocence of the
accusation. She reiterates her assertion that the trial court has erred in
giving credence to the testimonies of the complaining witnesses and in
finding her guilty beyond reasonable doubt of the various offenses she has
been charged with by the prosecution. 42 She avers that her transactions
with the complainants have been "limited to her assisting them secure their
respective travel visaspecifically for tourist" and that "her assistance to them
(has been) only to refer them to travel agencies" such as the Dynasty Travel
and Tours and the Mannings International. She insists that she has remitted
the amounts solicited from the complainants to the travel agencies, or to
Maritess Tapia and Carol Cornelio, earning only the commissions "for
bringing in clients interested in getting tourist visas." 43
At the outset, it might be explained that this appeal involves the conviction of
appellant not only for the crime of illegal recruitment in large scale for which
the penalty of life imprisonment is imposed but also for other offenses for
which lesser penalties have been meted by the trial court upon appellant.
This Court has appellate jurisdiction over ordinary appeals in criminal cases
directly from the Regional Trial Courts when the penalty imposed isreclusion
perpetua or
higher. 44 The Rules of Court, allows, however, the appeal of criminal cases
involving penalties lower than reclusion perpetua or life imprisonment under
the circumstances stated in Section 3, Rule 122, of the Revised Rules of
Criminal Procedure. Thus
(c) The appeal to the Supreme Court in cases where the
penalty imposed is life imprisonment, or where a lesser
penalty is imposed but involving offenses committed on the
same occasion or arising out of the same occurrence that
gave rise to the more serious offense for which the penalty of

death or life imprisonment is imposed shall be by filing a

notice of appeal in accordance with paragraph (a) of this
Section.
In giving due course to the notice of appeal filed by appellant, the
trial court has directed that the "entire records of the seventeen
cases" should be forwarded to this Court. 45 It might be observed
that this appeal, which has been assigned only one docket number,
involves cases, although spawned under different circumstances
could be said to somehow be linked to the incident giving rise to the
case for illegal recruitment in large scale. The cases have thus been
correctly consolidated and heard jointly below. The appeal made
directly to this Court of the seventeen cases, each of which
incidentally should have been assigned a separate docket number in
this Court, is properly taken.
Art. 38 (a) of the Labor Code considers illegal any recruitment activity
"undertaken by non-licensees or non-holders of authority." Recruitment is
defined by Article 13, paragraph (b), of the same Code as referring
. . . to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and
includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or
not; Provided, That any person or entity which, in any
manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and
placement.
Illegal recruitment is committed when two elements concur:
1) That the offender has no valid license or authority required
by law to enable one to lawfully engage in recruitment and
placement of workers; and
2) That the offender undertakes either any activity within the
meaning of recruitment and placement defined under Article
13(b), or any prohibited practices enumerated under Article
34. 46
Any person who commits the prohibited acts enumerated in Article
13(b) of the Labor Code shall be liable under Article 38(a)
thereof. 47 The proviso in Article 13(b) "lays down a rule of evidence
that where a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or
entity dealing with them shall be deemed to be engaged in the act of
recruitment and placement." 48 The article also provides that
recruitment includes the act of referral or "the act of passing along or
forwarding of an applicant for employment after an initial interview
of a selected applicant for employment to a selected employer,
placement officer or bureau." 49
The Court agrees with the trial court that appellant, indeed, violated the law
against illegal recruitment.

The prosecution was able to prove by overwhelming evidence that appellant

did represent herself as being in a position to get for the aspiring overseas
contract workers good-paying jobs abroad. Appellant was thus able to
demand and receive various amounts from the applicants. The latter would
then be briefed by appellant on the requirements for employment overseas.
Appellant herself testified, thus:
Q From 1986 when separated from Friendship Recruitment
Agency and before you were put to jail did you have any
occupation?
A Yes, sometimes we brought vegetables and flowers to
Manila for resale.
Q Aside from buying and selling vegetables down in Manila
did you have any other source of income?
A Sometimes I helped some applicants who are interested to
go abroad and asked if I know some agencies who can assist
them to go abroad.
Q Were you able to assist some people to look for an agency
to assist them to go abroad?
A Yes, sir.
Q Were you being paid when you assist these people
applying for overseas employment?
A Yes, sir.
Q By whom?
A The travel agencies give me some amount of commission.
Q What are the names of these agencies which you know?
A Dynasty Travel and Tours and Mannings International.
xxx xxx xxx
Q Do you know also if this Dynasty Travel and Tours and
Mannings International is duly licensed by the government
to recruit applicants abroad?
A Yes, sir.
Q Do you have any document to prove that it is registered?
A Yes, sir.
Q Where is that?
A Mannings International is a licensed agency and Dynasty
Travel and Tours is licensed to issue tickets for applicants to
go abroad.

Q You said that Dynasty Travel and Tours is licensed to

issue tickets for applicants going abroad what do you mean
by applicants going abroad?
A Those applicants to work as a contract worker and who are
ready to leave for abroad and they are being issued tickets.
Q Were you actually able to help or assist some overseas
worker-applicants?
A Yes, sir.
Q Do you remember some of them?
A Cherry Piay, Corazon del Rosario, Arthur Juan, Francisco
Labadchan and others." (Emphasis supplied.) 50
Appellant at one point claimed that she had helped complainants
only in acquiring for them plane tickets and tourist visas. On crossexamination, however, she admitted that she had made referrals of
job applicants to recruitment agencies. 51 She evidently knew all
along that the persons she was dealing with were applicants for
employment abroad.
The law requires that the above activities of appellant should have first been
authorized by the POEA. 52 Rule II, Book II, of the POEA Rules and
Regulations Governing Overseas Employment provides:
Sec. 11. Appointment of Representatives. Every appointment of
representatives or agents of licensed agency shall be subject to prior
approval or authority of the Administration.
The approval may be issued upon submission of or compliance with
the following requirements:
a. Proposed appointment or special power of attorney;
b. Clearances of the proposed representative or agent from
NBI;
c. A sworn or verified statement by the designating or
appointing person or company assuming full responsibility for
all acts of the agent or representative done in connection with
the recruitment and placement of workers.
Approval by the Administration of the appointment or designation
does not authorize the agent or representative to establish a branch
or extension office of the licensed agency represented.
Any revocation or amendment in the appointment should be
communicated to the Administration. Otherwise, the designation or
appointment shall be deemed as not revoked or amended.
The claim that appellant did not categorically represent herself as a licensed
recruiter, or that she merely helped the complainants secure "tourist visas,"
could not make her less guilty of illegal recruitment, 53 it being enough that

he or she gave the impression of having had the authority to recruit workers
for deployment abroad. 54
The fact that, with the exception of the cases involving Cherry Pi-ay and
Corazon del Rosario, only the complainant in each of the cases, have testified
against appellant in the illegal recruitment cases does not thereby make the
case for the prosecution weak. The rule has always been that the testimony
of witnesses is to be weighed, not that the witnesses be numbered, and it is
not an uncommon experience to have a conclusion of guilt reached on the
basis of the testimony of a single witness. 55 Corroborative evidence is
necessary only when there are reasons to warrant the suspicion that the
witness has perjured himself or that his observations have veered from the
truth. 56
The absence of receipts to evidence payment to an indictee in a criminal case
for illegal recruitment does not warrant an acquittal of the accused, and it is
not necessarily fatal to the prosecution's cause. As long as the prosecution is
able to establish through credible testimonial evidence that the accused has
involved himself in an act of illegal recruitment, a conviction for the offense
can very well be justified. 57
Altogether, the evidence against appellant has established beyond any
discernible shadow of doubt that appellant is indeed guilty of illegal
recruitment on various counts. Being neither a licensee nor a holder of
authority to recruit, appellant must suffer under Article 39(c) of the Labor
Code the penalty of imprisonment of not less than four years nor more than
eight years or a fine of not less than P20,000.00 nor more than P100,000.00
or both such imprisonment and fine, at the discretion of the court. In
imposing the penalty, the provisions of the Revised Penal Code on the
application of the circumstances that could modify the criminal liability of an
accused cannot be considered, these provisions being inapplicable to special
laws. 58
Under the Indeterminate Sentence Law, 59 whenever the offense is
punishable by a special law, the court shall impose on the accused an
indeterminate sentence, "the maximum term of which shall not exceed the
maximum fixed by said law and the minimum shall not be less than the
minimum term prescribed by the same." 60 Accordingly, in imposing the
penalty of four (4) years to six (6) years on appellant for each of the five cases
of illegal recruitment, the trial court has acted correctly.
Illegal recruitment is committed in large scale if it is perpetrated against
three or more persons "individually or as a group." Its requisites are that: (1)
the person charged with the crime must have undertaken recruitment
activities as so defined by law, (2) the same person does not have a license or
authority to do that, and (3) the questioned act is committed against three or
more persons. 61 The prosecution has been able to successfully show that,
for a fee, appellant, not being authorized to recruit workers for abroad, did so
in Criminal Case No. 93-CR-1645 against seven complainants. For this
offense, Article 39(a) of the Labor Code imposes the penalty of life
imprisonment and a fine of one hundred thousand pesos (P100,000.00). This
penalty was thus likewise aptly meted out upon appellant by the trial court.

Conviction for these various offenses under the Labor Code does not bar the
punishment of the offender for estafa. Illegal recruitment is a malum
prohibitum offense where criminal intent of the accused is not necessary for
conviction while estafa is malum in se which requires criminal intent to
warrant conviction. 62 Under Article 315, paragraph 2(a), 63 of the Revised
Penal Code, the elements of the offense (estafa) are that (1) the accused has
defrauded another by abuse of confidence or by means of deceit and (2)
damage or prejudice capable of pecuniary estimation is caused to the
offended party or third person. 64 Clearly, these elements have sufficiently
been shown in the cases under review.
The penalty for the crime is prescribed by Article 315, first to fourth
paragraphs, of the Revised Penal Code as follows:
1st. The penalty of prision correccional in its maximum
period to prision mayor in its minimum period, if the amount
of the fraud is over 12,000 pesos but does not exceed 22,000
pesos, and if such amount exceeds the latter sum, the
penalty provided in this paragraph shall be imposed in its
maximum period, adding one year for each additional 10,000
pesos; but the total penalty which may be imposed shall not
exceed twenty years. In such cases, and in connection with
the accessory penalties which may be imposed and for the
purpose of the other provisions of this Code, the penalty
shall be termed prision mayor or reclusion temporal, as the
case may be.
2nd. The penalty of prision correccional in its minimum and
medium periods, if the amount of the fraud is over 6,000
pesos but does not exceed 12,000 pesos;
3rd. The penalty of arresto mayor in its maximum period
to prision correccional in its minimum period if such amount
is over 200 pesos but does not exceed 6,000 pesos; and
4th. By arresto mayor in its maximum period, if such
amount does not exceed 200 pesos, provided that in the four
cases mentioned, the fraud be committed by any of the
following means: . . . .
In the case of People vs. Gabres,
that

65

the Court has had occasion to so state

Under the Indeterminate Sentence Law, the maximum term

of the penalty shall be "that which, in view of the attending
circumstances, could be properly imposed" under the
Revised Penal Code, and the minimum shall be "within the
range of the penalty next lower to that prescribed" for the
offense. The penalty next lower should be based on the
penalty prescribed by the Code for the offense, without first
considering any modifying circumstance attendant to the
commission of the crime. The determination of the minimum
penalty is left by law to the sound discretion of the court and
it can be anywhere within the range of the penalty next lower

without any reference to the periods into which it might be

subdivided. The modifying circumstances are considered
only in the imposition of the maximum term of the
indeterminate sentence.
The fact that the amounts involved in the instant case
exceed P22,000.00 should not be considered in the initial
determination of the indeterminate penalty; instead, the
matter should be so taken as analogous to modifying
circumstances in the imposition of the maximum term of the
full indeterminate sentence. This interpretation of the law
accords with the rule that penal laws should be construed in
favor of the accused. Since the penalty prescribed by law for
the estafa charge against accused-appellant is prision
correccional maximum
to prision mayor minimum, the
penalty
next
lower
would
then
be prision
correccional minimum to medium. Thus, the minimum term
of the indeterminate sentence should be anywhere within six
(6) months and one (1) day to four (4) years and two (2)
months . . . . 66
The Court reiterates the above rule, however, in fixing the maximum
term, the prescribed penalty of prision correccional maximum period
to prision mayor minimum period should be divided into "three equal
portions of time," each of which portion shall be deemed to form one
period; hence
Minimum Period Medium Period Maximum Period
From 4 years, 2 months From 5 years, 5 months From 6 years, 8
months
and 1 day to 5 years, and 11 days to 6 years, and 21 days to 8 years
5 months and 10 days 8 months and 20 days
in consonance with Article 65,
Revised Penal Code.

67

in relation to Article 64,

68

of the

When the amount involved in the offense exceeds P22,000.00, the penalty
prescribed in Article 315 of the Code "shall be imposed in its maximum
period," adding one year for each additional P10,000.00 although the total
penalty which may be imposed shall not exceed 20 years. The maximum
penalty should then be termed as prision mayor or reclusion temporal as the
case may be. In fine, the one year period, whenever applicable, shall be
added to the maximum period of the principal penalty of anywhere from 6
years, 8 months and 21 days to 8 years.
Accordingly, with respect to the cases of estafa filed by the complainants who
individually charged appellant with illegal recruitment, the applicable
penalties would, respectively, be, as follows:
In Criminal Case No. 92-CR-1397 where appellant defrauded Francisco T.
Labadchan in the amount of P45,000.00, two years for the additional amount
of P23,000.00 in excess of P22,000.00 provided for in Article 315 shall be

added to the maximum period of the prescribed penalty of prision

correccional maximum to prision mayorminimum (or added to anywhere from
6 years, 8 months and 21 days to 8 years). As such, aside from paying
Labadchan the amount of P45,000.00 by way of actual damages, the Court
deems it proper to sentence appellant to the indeterminate penalty of three
(3) years, six (6) months and twenty-one (21) days of prision
correccionalmedium to eight (8) years, eight (8) months and twenty-one (21)
days of prision mayor medium.
In Criminal Case No. 92-CR-1414, appellant defrauded Victoria Asil in the
amount of P15,000.00. Hence, aside from paying Victoria Asil the amount of
P15,000.00 by way of actual damages, appellant shall also suffer the
indeterminate penalty of one (1) year, eight (8) months and twenty-one (21)
days of prision correccional medium to five (5) years, five (5) months and
eleven (11) days of prision correccional maximum.
In Criminal Case No. 92-CR-1415 where appellant defrauded Cherry Pi-ay in
the amount of P18,000.00, appellant, besides paying Cherry Pi-ay that
amount by way of actual damages, shall also suffer the indeterminate
penalty of one (1) year, eight (8) months and twenty-one (21) days of prision
correccional minimum to five (5) years, five (5) months and eleven (11) days
of prision correccional maximum.
In Criminal Case No. 92-CR-1426 where appellant defrauded Corazon del
Rosario in the amount of P40,000.00, appellant shall suffer the
indeterminate penalty of two (2) years, four (4) months and one (1) day
of prision correccional medium to seven (7) years, eight (8) months and
twenty-one (21) days of prision mayor minimum.
In Criminal Case No. 92-CR-1428 where appellant fraudulently solicited the
amount of P24,200.00 from Arthur Juan, appellant shall pay him actual
damages in that amount and shall suffer the indeterminate penalty of from
one (1) year, eight (8) months and twenty-one (21) days (imposed by the
court a quo) of prision correccionalminimum period to six (6) years, eight (8)
months and twenty-one (21) days of prision mayor minimum.
In Criminal Case No. 92-CR-1652 where appellant defrauded Adeline Tiangge
the amount of P18,500.00, appellant shall pay her the same amount as
actual damages and shall suffer the indeterminate penalty of from one (1)
year,
eight
(8)
months
and
twenty-one
(21)
days
of prision
correccional minimum to five (5) years, five (5) months and eleven (11) days
of prision correccional maximum.
In Criminal Case No. 93-CR-1645, the prosecution has successfully
established its case against appellant for illegal recruitment in large scale.
Evidently banking on her reputation in the community as a job recruiter,
appellant was able to make the seven complainants believe that they could
land various jobs in Taiwan. Confident of her assurances, each complainant
parted with P25,000.00 for supposed processing and placement fees.
It would appear that of the seven complainants for illegal recruitment in large
scale, only five 69 of them filed separate charges of estafa against appellant.
Accordingly, appellant was only and could only be held liable for five counts
of estafa arising from the charge of illegal recruitment in large scale. Since

appellant collected the amount of P25,000.00 from each of the five (5)
victims, she must be held subject to the penalty in its maximum period
or prision mayor in its minimum period (not any higher on account of the fact
that the amount in excess of P22,000.00 provided for by Article 315 of the
Revised Penal Code is less than P10,000.00). 70 Applying the Indeterminate
Sentence Law, and there being no attending circumstances, appellant shall
bear, the indeterminate penalty of one (1) year, eight (8) months and twentyone (21) days ofprision correccional medium as minimum penalty to six (6)
years, eight (8) months and twenty-one (21) days of prision mayor minimum
as maximum penalty for each offense. In addition, appellant should pay the
five (5) victims the amount of P25,000.00 each as actual damages.
The actual damages awarded here shall be subject to diminution or
cancellation should it be shown that appellant had already paid the
complainants.

6) In Criminal Case No. 93-CR-1644, accused-appellant is sentenced to an

indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to six (6)
years, eight (8) months and twenty-one (21) days of prision mayor minimum
period as MAXIMUM and to pay Alfredo Arcega the amount of P25,000.00 by
way of actual damages.
7) In Criminal Case No. 93-CR-1646, accused-appellant is sentenced to an
indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to six (6)
years, eight (8) months and twenty-one (21) days of prision mayor minimum
period as MAXIMUM and to pay Brando Salbino the amount of P25,000.00
by way of actual damages.

WHEREFORE, the Decision finding appellant guilty beyond reasonable doubt

of the crimes of illegal recruitment, illegal recruitment in large scale and
estafa is hereby AFFIRMED subject to the modifications hereunder specified,
and only to the extent thereof, in the following cases:

8) In Criminal Case No. 93-CR-1647, accused-appellant is sentenced to an

indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to six (6)
years, eight (8) months and twenty-one (21) days of prision mayor minimum
period as MAXIMUM and to pay Mariano Damolog the amount of P25,000.00
by way of actual damages.

1) In Criminal Case No. 92-CR-1397, accused-appellant is sentenced to an

indeterminate penalty of imprisonment of from three (3) years, six (6) months
and twenty-one (21) days of prision correccional medium period as MINIMUM,
to eight (8) years, eight (8) months and twenty-one (21) days of prision
mayor medium period as MAXIMUM and to pay Francisco T. Labadchan the
amount of P45,000.00 by way of actual damages.

9) In Criminal Case No. 93-CR-1649, accused-appellant is sentenced to an

indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to six (6)
years, eight (8) months and twenty-one (21) days of prision mayor minimum
period as MAXIMUM and to pay Lorenzo Belino the amount of P25,000.00 by
way of actual damages.

2) In Criminal Case No. 92-CR-1414, accused-appellant is sentenced to an

indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to five (5)
years, five (5) months and eleven (11) days of prision correccional maximum
period as MAXIMUM and to pay Victoria Asil the amount of P15,000.00 by
way of actual damages.

10) In Criminal Case No. 93-CR-1651, accused-appellant is sentenced to an

indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to six (6)
years, eight (8) months and twenty-one (21) days of prision mayor minimum
period as MAXIMUM and to pay Peter Arcega the amount of P25,000.00 by
way of actual damages.

3) In Criminal Case No. 92-CR-1415, accused-appellant is sentenced to an

indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to five (5)
years, five (5) months and eleven (11) days of prision correccional maximum
period as MAXIMUM.

11) In Criminal Case No. 92-CR-1652, accused-appellant is sentenced to an

indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to five (5)
years, five (5) months and eleven (11) days of prision correccional maximum
period as MAXIMUM and to pay Adeline Tiangge the amount of P17,000.00
by way of actual damages.

4) In Criminal Case No. 92-CR-1426, accused-appellant is sentenced to an

indeterminate penalty of imprisonment of from two (2) years, four (4) months
and one (1) day of prision correccional medium period as MINIMUM, to seven
(7) years, eight (8) months and twenty-one (21) days of prision
mayor minimum period as MAXIMUM.
5) In Criminal Case No. 92-CR-1428, accused-appellant is sentenced to an
indeterminate penalty of from one (1) year, eight (8) months and twenty-one
(21) days of prision correccional minimum period as MINIMUM, to six (6)
years, eight (8) months and twenty-one (21) days of prision mayor minimum
period as MAXIMUM.

The awards of damages in Criminal Cases No. 92-CR-1396, No. 92-CR-1413,

No. 92-CR-1416, No. 92-CR-1425, and No. 92-CR-1427, all for illegal
recruitment, as well as No. 93-CR-1645 for illegal recruitment in large scale,
except for the award of P25,000.00 by way of actual damages to Dember
Leon (no estafa case having been instituted), are DELETED, either because
similar awards have already been provided for by the trial court, or for
insufficiency of proof, in the estafa cases aforenumbered.
Costs against accused-appellant.
SO ORDERED.

G.R. Nos. L-58674-77 July 11, 1990

PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of
Zambales & Olongapo City, Branch III and SERAPIO ABUG, respondents.
CRUZ, J:
The basic issue in this case is the correct interpretation of Article 13(b) of
P.D. 442, otherwise known as the Labor Code, reading as follows:
(b) Recruitment and placement' refers to any act of
canvassing, enlisting, contracting, transporting, hiring, or
procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed
engaged in recruitment and placement.
Four informations were filed on January 9, 1981, in the Court of First
Instance of Zambales and Olongapo City alleging that Serapio Abug, private
respondent herein, "without first securing a license from the Ministry of
Labor as a holder of authority to operate a fee-charging employment agency,
did then and there wilfully, unlawfully and criminally operate a private fee
charging employment agency by charging fees and expenses (from) and
promising employment in Saudi Arabia" to four separate individuals named
therein, in violation of Article 16 in relation to Article 39 of the Labor Code. 1
Abug filed a motion to quash on the ground that the informations did not
charge an offense because he was accused of illegally recruiting only one
person in each of the four informations. Under the proviso in Article 13(b), he
claimed, there would be illegal recruitment only "whenever two or more
persons are in any manner promised or offered any employment for a fee. " 2
Denied at first, the motion was reconsidered and finally granted in the
Orders of the trial court dated June 24 and September 17, 1981. The
prosecution is now before us on certiorari. 3
The posture of the petitioner is that the private respondent is being
prosecuted under Article 39 in relation to Article 16 of the Labor Code;
hence, Article 13(b) is not applicable. However, as the first two cited articles
penalize acts of recruitment and placement without proper authority, which
is the charge embodied in the informations, application of the definition of
recruitment and placement in Article 13(b) is unavoidable.
The view of the private respondents is that to constitute recruitment and
placement, all the acts mentioned in this article should involve dealings with
two or m re persons as an indispensable requirement. On the other hand,
the petitioner argues that the requirement of two or more persons is imposed
only where the recruitment and placement consists of an offer or promise of
employment to such persons and always in consideration of a fee. The other

acts mentioned in the body of the article may involve even only one person
and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should
speak only of an offer or promise of employment if the purpose was to apply
the requirement of two or more persons to all the acts mentioned in the basic
rule. For its part, the petitioner does not explain why dealings with two or
more persons are needed where the recruitment and placement consists of
an offer or promise of employment but not when it is done through
"canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on the
basic rule nor to provide an exception thereto but merely to create a
presumption. The presumption is that the individual or entity is engaged in
recruitment and placement whenever he or it is dealing with two or more
persons to whom, in consideration of a fee, an offer or promise of
employment is made in the course of the "canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of) workers. "
The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the
basic rule in Article 13(b) win constitute recruitment and placement even if
only one prospective worker is involved. The proviso merely lays down a rule
of evidence that where a fee is collected in consideration of a promise or offer
of employment to two or more prospective workers, the individual or entity
dealing with them shall be deemed to be engaged in the act of recruitment
and placement. The words "shall be deemed" create that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code,
for example, regarding the failure of a public officer to produce upon lawful
demand funds or property entrusted to his custody. Such failure shall
beprima facie evidence that he has put them to personal use; in other words,
he shall be deemed to have malversed such funds or property. In the instant
case, the word "shall be deemed" should by the same token be given the force
of a disputable presumption or of prima facie evidence of engaging in
recruitment and placement. (Klepp vs. Odin Tp., McHenry County 40 ND
N.W. 313, 314.)
It is unfortunate that we can only speculate on the meaning of the
questioned provision for lack of records of debates and deliberations that
would otherwise have been available if the Labor Code had been enacted as a
statute rather than a presidential decree. The trouble with presidential
decrees is that they could be, and sometimes were, issued without previous
public discussion or consultation, the promulgator heeding only his own
counsel or those of his close advisers in their lofty pinnacle of power. The not
infrequent results are rejection, intentional or not, of the interest of the
greater number and, as in the instant case, certain esoteric provisions that
one cannot read against the background facts usually reported in the
legislative journals.
At any rate, the interpretation here adopted should give more force to the
campaign against illegal recruitment and placement, which has victimized

many Filipino workers seeking a better life in a foreign land, and investing
hard- earned savings or even borrowed funds in pursuit of their dream, only
to be awakened to the reality of a cynical deception at the hands of theirown
countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set
aside and the four informations against the private respondent reinstated. No
costs.
SO ORDERED.

G.R. No. 197528

September 5, 2012

PERT/CPM MANPOWER EXPONENT CO., INC., Petitioner,

vs.
ARMANDO A. VINUY A, LOUIE M. ORDOVEZ, ARSENIO S. LUMANTA,.
JR., ROBELITO S. ANIPAN, VIRGILIO R. ALCANTARA, MARINO M. ERA,
SANDY 0. ENJAMBRE and NOEL T. LADEA, Respondents.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 assailing the
decision2 dated May 9, 2011 and the resolution3dated June 23, 2011 of the
Court of Appeals (CA) in CA-G.R. SP No. 114353.
The Antecedents
On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez,
Arsenio S. Lumanta, Jr., Robelito S. Anipan, Virgilio R. Alcantara, Marino M.
Era, Sandy O. Enjambre and Noel T. Ladea (respondents) filed a complaint
for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co.,
Inc. (agency), and its President Romeo P. Nacino.
The respondents alleged that the agency deployed them between March 29,
2007 and May 12, 2007 to work as aluminum fabricator/installer for the
agencys principal, Modern Metal Solution LLC/MMS Modern Metal Solution
LLC (Modern Metal) in Dubai, United Arab Emirates.
The respondents employment contracts,4 which were approved by the
Philippine Overseas Employment Administration (POEA), provided for a twoyear employment, nine hours a day, salary of 1,350 AED with overtime pay,
food allowance, free and suitable housing (four to a room), free
transportation, free laundry, and free medical and dental services. They each
paid a P 15,000.00 processing fee.5
On April 2, 2007, Modern Metal gave the respondents, except Era,
appointment letters6 with terms different from those in the employment
contracts which they signed at the agencys office in the Philippines. Under
the letters of appointment, their employment was increased to three years at
1,000 to 1,200 AED and food allowance of 200 AED.
The respondents claimed that they were shocked to find out what their
working and living conditions were in Dubai. They were required to work
from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half
hours. When they rendered overtime work, they were most of the time either
underpaid or not paid at all. Their housing accommodations were cramped
and were shared with 27 other occupants. The lodging house was in Sharjah,
which was far from their jobsite in Dubai, leaving them only three to four
hours of sleep a day because of the long hours of travel to and from their
place of work; there was no potable water and the air was polluted.
When the respondents received their first salaries (at the rates provided in
their appointment letters and with deductions for placement fees) and
because of their difficult living and working conditions, they called up the

agency and complained about their predicament. The agency assured them
that their concerns would be promptly addressed, but nothing happened.
On May 5, 2007, Modern Metal required the respondents to sign new
employment contracts,7 except for Era who was made to sign later. The
contracts reflected the terms of their appointment letters. Burdened by all
the expenses and financial obligations they incurred for their deployment,
they were left with no choice but to sign the contracts. They raised the matter
with the agency, which again took no action.
On August 5, 2007, despondent over their unbearable living and working
conditions and by the agencys inaction, the respondents expressed to
Modern Metal their desire to resign. Out of fear, as they put it, that Modern
Metal would not give them their salaries and release papers, the respondents,
except Era, cited personal/family problems for their resignation. 8 Era
mentioned the real reason "because I dont (sic) want the company policy"9
for his resignation.
It took the agency several weeks to repatriate the respondents to the
Philippines. They all returned to Manila in September 2007. Except for
Ordovez and Enjambre, all the respondents shouldered their own airfare.
For its part, the agency countered that the respondents were not illegally
dismissed; they voluntarily resigned from their employment to seek a better
paying job. It claimed that the respondents, while still working for Modern
Metal, applied with another company which offered them a higher pay.
Unfortunately, their supposed employment failed to materialize and they had
to go home because they had already resigned from Modern Metal.
The agency further alleged that the respondents even voluntarily signed
affidavits of quitclaim and release after they resigned. It thus argued that
their claim for benefits, under Section 10 of Republic Act No. (R.A.) 8042,
damages and attorneys fees is unfounded.
The Compulsory Arbitration Rulings
On April 30, 2008, Labor Arbiter Ligerio V. Ancheta rendered a
Decision10 dismissing the complaint, finding that the respondents voluntarily
resigned from their jobs. He also found that four of them Alcantara, Era,
Anipan and Lumanta even executed a compromise agreement (with
quitclaim and release) before the POEA. He considered the POEA recourse a
case of forum shopping.
The respondents appealed to the National Labor Relations Commission
(NLRC). They argued that the labor arbiter committed serious errors in (1)
admitting in evidence the quitclaims and releases they executed in Dubai,
which were mere photocopies of the originals and which failed to explain the
circumstances behind their execution; (2) failing to consider that the
compromise agreements they signed before the POEA covered only the refund
of their airfare and not all their money claims; and (3) ruling that they
violated the rule on non-forum shopping.
On May 12, 2009, the NLRC granted the appeal.11 It ruled that the
respondents had been illegally dismissed. It anchored its ruling on the new
employment contracts they were made to sign in Dubai. It stressed that it is

illegal for an employer to require its employees to execute new employment

papers, especially those which provide benefits that are inferior to the POEAapproved contracts.
The NLRC rejected the quitclaim and release executed by the respondents in
Dubai. It believed that the respondents executed the quitclaim documents
under duress as they were afraid that they would not be allowed to return to
the Philippines if they did not sign the documents. Further, the labor
tribunal disagreed with the labor arbiters opinion that the compromise
agreement they executed before the POEA had effectively foreclosed the illegal
dismissal complaint before the NLRC and that the respondents had been
guilty of forum shopping. It pointed out that the POEA case involved predeployment issues; whereas, the complaint before the NLRC is one for illegal
dismissal and money claims arising from employment.

LOUIE
Anipan,
ROBELITO

150 x 4 = 600 AED

USD 400

8100 AED

P 20,000.00

Enjambre,
SANDY

150 x 4 = 600 AED

USD 400

8100 AED

P 20,000.00

Lumanta,
ARSENIO

250 x 5 = 1250 AED

USD 400

8100 AED

P 20,000.00

Consequently, the NLRC ordered the agency, Nacino and Modern Metal to
pay, jointly and severally, the respondents, as follows:
WHEREFORE, the Decision dated 30 April 2008 is hereby REVERSED and
SET ASIDE, a new Decision is hereby issued ordering the respondents
PERT/CPM MANPOWER EXPONENTS CO., INC., ROMEO NACINO, and
MODERN METAL SOLUTIONS, INC. to jointly and severally, pay the
complainants the following:

Employee

Underpaid
Salary

Placement
fee

Salary
for
the
unexpired
Exemplary
portion
of
Damages
the contract
(1350 x 6
months)

Vinuya,
ARMANDO

150 x 6 = 900 AED

USD 400

8100 AED

P 20,000.00

Alcantara
VIRGILIO

150 X 4 = 600 AED

USD 400

8100 AED

P 20,000.00

Era,
MARINO

350 x 4 = 1400 AED

USD 400

8100 AED

P 20,000.00

Ladea,
NOEL

150 x 5 = 750 AED

USD 400

8100 AED

P 20,000.00

Ordovez,

250 X 3 = 750 AED

USD 400

8100 AED

P 20,000.00

TOTAL:

6,850 AED

US$3,200

64,800 AED

P 400,000.00

or their peso equivalent at the time of actual payment plus attorneys fees
equivalent to 10% of the judgment award.12
The agency moved for reconsideration, contending that the appeal was never
perfected and that the NLRC gravely abused its discretion in reversing the
labor arbiters decision.The respondents, on the other hand, moved for
partial reconsideration, maintaining that their salaries should have covered
the unexpired portion of their employment contracts, pursuant to the Courts
ruling in Serrano v. Gallant Maritime Services, Inc.13
The NLRC denied the agencys motion for reconsideration, but granted the
respondents motion.14 It sustained the respondents argument that the
award needed to be adjusted, particularly in relation to the payment of their
salaries, consistent with the Courts ruling in Serrano. The ruling declared
unconstitutional the clause, "or for three (3) months for every year of the
unexpired term, whichever is less," in Section 10, paragraph 5, of R.A. 8042,
limiting the entitlement of illegally dismissed overseas Filipino workers to
their salaries for the unexpired term of their contract or three months,
whichever is less. Accordingly, it modified its earlier decision and adjusted
the respondents salary entitlement based on the following matrix:

Employee

Duration
of
Contract

Departure
date

Date
dismissed

Unexpired
portion of
contract

Vinuya,

2 years

29

19 months
and
21

March

August

The CA Decision
ARMANDO

Alcantara,
VIRGILIO

2 years

Era,
MARINO

2 years

Ladea,
NOEL

Ordovez,
LOUIE

2 years

2 years

2007

2007

days

3
April
2007

8
August
2007

20 months
and 5 days

12
2007

8
August
2007

21 months
and 4 days

May

29 March
2007

3
April
2007

8
August
2007

26
2007

July

19 months
and
21
days

21 months
and
23
days

The CA dismissed the petition for lack of merit.16 It upheld the NLRC ruling
that the respondents were illegally dismissed. It found no grave abuse of
discretion in the NLRCs rejection of the respondents resignation letters, and
the accompanying quitclaim and release affidavits, as proof of their voluntary
termination of employment.
The CA stressed that the filing of a complaint for illegal dismissal is
inconsistent with resignation. Moreover, it found nothing in the records to
substantiate the agencys contention that the respondents resignation was of
their own accord; on the contrary, it considered the resignation letters
"dubious for having been lopsidedly-worded to ensure that the petitioners
(employers) are free from any liability."17
The appellate court likewise refused to give credit to the compromise
agreements that the respondents executed before the POEA. It agreed with
the NLRCs conclusion that the agreements pertain to the respondents
charge of recruitment violations against the agency distinct from their illegal
dismissal complaint, thus negating forum shopping by the respondents.
Lastly, the CA found nothing legally wrong in the NLRC correcting itself
(upon being reminded by the respondents), by adjusting the respondents
salary award on the basis of the unexpired portion of their contracts, as
enunciated in the Serrano case.
The agency moved for, but failed to secure, a reconsideration of the CA
decision.18
The Petition

Anipan,
ROBELITO

Enjambre,
SANDY

2 years

2 years

3
April
2007

29 March
2007

8
August
2007

26
2007

July

20 months
and 5 days

20 months
and 3 days

The agency is now before the Court seeking a reversal of the CA dispositions,
contending that the CA erred in:
1. affirming the NLRCs finding that the respondents were illegally
dismissed;
2. holding that the compromise agreements before the POEA pertain
only to the respondents charge of recruitment violations against the
agency; and
3. affirming the NLRCs award to the respondents of their salaries for
the unexpired portion of their employment contracts, pursuant to the
Serrano ruling.

Lumanta,
ARSENIO

2 years

29 March
2007

8
August
2007

19 months
and
21
days15

Again, the agency moved for reconsideration, reiterating its earlier arguments
and, additionally, questioning the application of the Serrano ruling in the
case because it was not yet final and executory. The NLRC denied the
motion, prompting the agency to seek recourse from the CA through a
petition for certiorari.

The agency insists that it is not liable for illegal dismissal, actual or
constructive. It submits that as correctly found by the labor arbiter, the
respondents voluntarily resigned from their jobs, and even executed affidavits
of quitclaim and release; the respondents stated family concerns for their
resignation. The agency posits that the letters were duly proven as they were
written unconditionally by the respondents. It, therefore, assails the
conclusion that the respondents resigned under duress or that the
resignation letters were dubious.
The agency raises the same argument with respect to the compromise
agreements, with quitclaim and release, it entered into with Vinuya, Era,

Ladea, Enjambre, Ordovez, Alcantara, Anipan and Lumanta before the POEA,
although it submitted evidence only for six of them. Anipan, Lumanta,
Vinuya and Ladea signing one document;19Era20 and Alcantara21 signing a
document each. It points out that the agreement was prepared with the
assistance of POEA Conciliator Judy Santillan, and was duly and freely
signed by the respondents; moreover, the agreement is not conditional as it
pertains to all issues involved in the dispute between the parties.
On the third issue, the agency posits that the Serrano ruling has no
application in the present case for three reasons. First, the respondents were
not illegally dismissed and, therefore, were not entitled to their money claims.
Second, the respondents filed the complaint in 2007, while the Serrano
ruling came out on March 24, 2009. The ruling cannot be given retroactive
application. Third, R.A. 10022, which was enacted on March 8, 2010 and
which amended R.A. 8042, restored the subject clause in Section 10 of R.A.
8042, declared unconstitutional by the Court.
The Respondents Position
In their Comment (to the Petition) dated September 28, 2011,22 the
respondents ask the Court to deny the petition for lack of merit. They dispute
the agencys insistence that they resigned voluntarily. They stand firm on
their submission that because of their unbearable living and working
conditions in Dubai, they were left with no choice but to resign. Also, the
agency never refuted their detailed narration of the reasons for giving up
their employment.
The respondents maintain that the quitclaim and release affidavits,23 which
the agency presented, betray its desperate attempt to escape its liability to
them. They point out that, as found by the NLRC, the affidavits are readymade documents; for instance, in Lumantas24 and Eras25 affidavits, they
mentioned a certain G & A International Manpower as the agency which
recruited them a fact totally inapplicable to all the respondents. They
contend that they had no choice but to sign the documents; otherwise, their
release papers and remaining salaries would not be given to them, a
submission which the agency never refuted.
On the agencys second line of defense, the compromise agreement (with
quitclaim and release) between the respondents and the agency before the
POEA, the respondents argue that the agreements pertain only to their
charge of recruitment violations against the agency. They add that based on
the agreements, read and considered entirely, the agency was discharged
only with respect to the recruitment and pre-deployment issues such as
excessive placement fees, non-issuance of receipts and placement
misrepresentation, but not with respect to post-deployment issues such as
illegal dismissal, breach of contract, underpayment of salaries and
underpayment and nonpayment of overtime pay. The respondents stress that
the agency failed to controvert their contention that the agreements came
about only to settle their claim for refund of their airfare which they paid for
when they were repatriated.
Lastly, the respondents maintain that since they were illegally dismissed, the
CA was correct in upholding the NLRCs award of their salaries for the

unexpired portion of their employment contracts, as enunciated in Serrano.

They point out that the Serrano ruling is curative and remedial in nature
and, as such, should be given retroactive application as the Court declared in
Yap v. Thenamaris Ships Management.26 Further, the respondents take
exception to the agencys contention that the Serrano ruling cannot, in any
event, be applied in the present case in view of the enactment of R.A. 10022
on March 8, 2010, amending Section 10 of R.A. 8042. The amendment
restored the subject clause in paragraph 5, Section 10 of R.A. 8042 which
was struck down as unconstitutional in Serrano.
The respondents maintain that the agency cannot raise the issue for the first
time before this Court when it could have raised it before the CA with its
petition for certiorari which it filed on June 8, 2010;27 otherwise, their right to
due process will be violated. The agency, on the other hand, would later
claim that it is not barred by estoppel with respect to its reliance on R.A.
10022 as it raised it before the CA in CA-G.R. SP No. 114353.28 They further
argue that RA 10022 cannot be applied in their case, as the law is an
amendatory statute which is, as a rule, prospective in application, unless the
contrary is provided.29 To put the issue to rest, the respondents ask the
Court to also declare unconstitutional Section 7 of R.A. 10022.
Finally, the respondents submit that the petition should be dismissed
outright for raising only questions of fact, rather than of law.
The Courts Ruling
The procedural question
We deem it proper to examine the facts of the case on account of the
divergence in the factual conclusions of the labor arbiter on the one hand,
and, of the NLRC and the CA, on the other.30 The arbiter found no illegal
dismissal in the respondents loss of employment in Dubai because they
voluntarily resigned; whereas, the NLRC and the CA adjudged them to have
been illegally dismissed because they were virtually forced to resign.
The merits of the case
We find no merit in the petition. The CA committed no reversible error
and neither did it commit grave abuse of discretion in affirming the
NLRCs illegal dismissal ruling.
The agency and its principal, Modern Metal, committed flagrant violations of
the law on overseas employment, as well as basic norms of decency and fair
play in an employment relationship, pushing the respondents to look for a
better employment and, ultimately, to resign from their jobs.
First. The agency and Modern Metal are guilty of contract substitution. The
respondents entered into a POEA-approved two-year employment contract,31
with Modern Metal providing among others, as earlier discussed, for a
monthly salary of 1350 AED. On April 2, 2007, Modern Metal issued to them
appointment letters32 whereby the respondents were hired for a longer threeyear period and a reduced salary, from 1,100 AED to 1,200 AED, among
other provisions. Then, on May 5, 2007, they were required to sign new
employment contracts33 reflecting the same terms contained in their
appointment letters, except that this time, they were hired as "ordinary

laborer," no longer aluminum fabricator/installer. The respondents

complained with the agency about the contract substitution, but the agency
refused or failed to act on the matter.
The fact that the respondents contracts were altered or substituted at the
workplace had never been denied by the agency.1wphi1 On the contrary, it
admitted that the contract substitution did happen when it argued, "as to
their claim for underpayment of salary, their original contract mentioned
1350 AED monthly salary, which includes allowance while in their
Appointment Letters, they were supposed to receive 1,300 AED. While there
was a difference of 50 AED monthly, the same could no longer be claimed by
virtue of their Affidavits of Quitclaims and Desistance."34
Clearly, the agency and Modern Metal committed a prohibited practice and
engaged in illegal recruitment under the law. Article 34 of the Labor Code
provides:
Art. 34. Prohibited Practices. It shall be unlawful for any individual, entity,
licensee, or holder of authority:
xxxx
(i) To substitute or alter employment contracts approved and verified by the
Department of Labor from the time of actual signing thereof by the parties up
to and including the periods of expiration of the same without the approval of
the Secretary of Labor.
Further, Article 38 of the Labor Code, as amended by R.A. 8042,35 defined
"illegal recruitment" to include the following act:
(i) To substitute or alter to the prejudice of the worker, employment contracts
approved and verified by the Department of Labor and Employment from the
time of actual signing thereof by the parties up to and including the period of
the expiration of the same without the approval of the Department of Labor
and Employment.
Second. The agency and Modern Metal committed breach of contract.
Aggravating the contract substitution imposed upon them by their employer,
the respondents were made to suffer substandard (shocking, as they put it)
working and living arrangements. Both the original contracts the
respondents signed in the Philippines and the appointment letters issued to
them by Modern Metal in Dubai provided for free housing and transportation
to and from the jobsite. The original contract mentioned free and suitable
housing.36 Although no description of the housing was made in the letters of
appointment except: "Accommodation: Provided by the company," it is but
reasonable to think that the housing or accommodation would be "suitable."
As earlier pointed out, the respondents were made to work from 6:30 a.m. to
6:30 p.m., with a meal break of one to one and a half hours, and their
overtime work was mostly not paid or underpaid. Their living quarters were
cramped as they shared them with 27 other workers. The lodging house was
in Sharjah, far from the jobsite in Dubai, leaving them only three to four
hours of sleep every workday because of the long hours of travel to and from
their place of work, not to mention that there was no potable water in the
lodging house which was located in an area where the air was polluted. The

respondents complained with the agency about the hardships that they were
suffering, but the agency failed to act on their reports. Significantly, the
agency failed to refute their claim, anchored on the ordeal that they went
through while in Modern Metals employ.
Third. With their original contracts substituted and their oppressive working
and living conditions unmitigated or unresolved, the respondents decision to
resign is not surprising. They were compelled by the dismal state of their
employment to give up their jobs; effectively, they were constructively
dismissed. A constructive dismissal or discharge is "a quitting because
continued employment is rendered impossible, unreasonable or unlikely, as,
an offer involving a demotion in rank and a diminution in pay."37
Without doubt, the respondents continued employment with Modern Metal
had become unreasonable. A reasonable mind would not approve of a
substituted contract that pays a diminished salary from 1350 AED a
month in the original contract to 1,000 AED to 1,200 AED in the
appointment letters, a difference of 150 AED to 250 AED (not just 50 AED as
the agency claimed) or an extended employment (from 2 to 3 years) at such
inferior terms, or a "free and suitable" housing which is hours away from the
job site, cramped and crowded, without potable water and exposed to air
pollution.
We thus cannot accept the agencys insistence that the respondents
voluntarily resigned since they personally prepared their resignation
letters38 in their own handwriting, citing family problems as their common
ground for resigning. As the CA did, we find the resignation letters
"dubious,"39 not only for having been lopsidedly worded to ensure that the
employer is rendered free from any liability, but also for the odd coincidence
that all the respondents had, at the same time, been confronted with urgent
family problems so that they had to give up their employment and go home.
The truth, as the respondents maintain, is that they cited family problems as
reason out of fear that Modern Metal would not give them their salaries and
their release papers. Only Era was bold enough to say the real reason for his
resignation to protest company policy.
We likewise find the affidavits40of quitclaim and release which the
respondents executed suspect. Obviously, the affidavits were prepared as a
follow through of the respondents supposed voluntary resignation. Unlike
the resignation letters, the respondents had no hand in the preparation of
the affidavits. They must have been prepared by a representative of Modern
Metal as they appear to come from a standard form and were apparently
introduced for only one purpose to lend credence to the resignation letters.
In Modern Metals haste, however, to secure the respondents affidavits, they
did not check on the model they used. Thus, Lumantas affidavit41mentioned
a G & A International Manpower as his recruiting agency, an entity totally
unknown to the respondents; the same thing is true for Eras affidavit.42 This
confusion is an indication of the employers hurried attempt to avoid liability
to the respondents.
The respondents position is well-founded. The NLRC itself had the same
impression, which we find in order and hereunder quote:

The acts of respondents of requiring the signing of new contracts upon

reaching the place of work and requiring employees to sign quitclaims before
they are paid and repatriated to the Philippines are all too familiar stories of
despicable labor practices which our employees are subjected to abroad.
While it is true that quitclaims are generally given weight, however, given the
facts of the case, We are of the opinion that the complainants-appellants
executed the same under duress and fear that they will not be allowed to
return to the Philippines.43
Fourth. The compromise agreements (with quitclaim and release) 44 between
the respondents and the agency before the POEA did not foreclose their
employer-employee relationship claims before the NLRC. The respondents,
except Ordovez and Enjambre, aver in this respect that they all paid for their
own airfare when they returned home45 and that the compromise agreements
settled only their claim for refund of their airfare, but not their other
claims.46 Again, this submission has not been refuted or denied by the
agency.
On the surface, the compromise agreements appear to confirm the agencys
position, yet a closer examination of the documents would reveal their true
nature. Copy of the compromise agreement is a standard POEA document,
prepared in advance and readily made available to parties who are involved
in disputes before the agency, such as what the respondents filed with the
POEA ahead (filed in 2007) of the illegal dismissal complaint before the NLRC
(filed on March 5, 2008).
Under the heading "Post-Deployment," the agency agreed to pay Era47 and
Alcantara48 P 12,000.00 each, purportedly in satisfaction of the respondents
claims arising from overseas employment, consisting of unpaid salaries,
salary differentials and other benefits, including money claims with the
NLRC. The last document was signed by (1) Anipan, (2) Lumanta, (3) Ladea,
(4) Vinuya, (5) Jonathan Nangolinola, and (6) Zosimo Gatchalian (the last
four signing on the left hand side of the document; the last two were not
among those who filed the illegal dismissal complaint).49
The agency agreed to pay them a total of P 72,000.00. Although there was no
breakdown of the entitlement for each of the six, but guided by the
compromise agreement signed by Era and Alcantara, we believe that the
agency paid them P 12,000.00 each, just like Era and Alcantara.
The uniform insubstantial amount for each of the signatories to the
agreement lends credence to their contention that the settlement pertained
only to their claim for refund of the airfare which they shouldered when they
returned to the Philippines. The compromise agreement, apparently, was
intended by the agency as a settlement with the respondents and others with
similar claims, which explains the inclusion of the two (Nangolinola and
Gatchalian) who were not involved in the case with the NLRC. Under the
circumstances, we cannot see how the compromise agreements can be
considered to have fully settled the respondents claims before the NLRC
illegal dismissal and monetary benefits arising from employment. We thus
find no reversible error nor grave abuse of discretion in the rejection by the
NLRC and the CA of said agreements.

Fifth. The agencys objection to the application of the Serrano ruling in the
present case is of no moment. Its argument that the ruling cannot be given
retroactive effect, because it is curative and remedial, is untenable. It points
out, in this respect, that the respondents filed the complaint in 2007, while
the Serrano ruling was handed down in March 2009. The issue, as the
respondents correctly argue, has been resolved in Yap v. Thenamaris Ships
Management,50 where the Court sustained the retroactive application of the
Serrano ruling which declared unconstitutional the subject clause in Section
10, paragraph 5 of R.A. 8042, limiting to three months the payment of
salaries to illegally dismissed Overseas Filipino Workers.
Undaunted, the agency posits that in any event, the Serrano ruling has been
nullified by R.A. No. 10022, entitled "An Act Amending Republic Act No.
8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act
of 1995, As Amended, Further Improving the Standard of Protection and
Promotion of the Welfare of Migrant Workers, Their Families and Overseas
Filipinos in Distress, and For Other Purposes."51 It argues that R.A. 10022,
which lapsed into law (without the Signature of the President) on March 8,
2010, restored the subject clause in the 5th paragraph, Section 10 of R.A.
8042. The amendment, contained in Section 7 of R.A. 10022, reads as
follows:
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant workers salary, the worker shall be entitled to
the full reimbursement "of" his placement fee and the deductions made with
interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.52 (emphasis ours)
This argument fails to persuade us. Laws shall have no retroactive effect,
unless the contrary is provided.53 By its very nature, the amendment
introduced by R.A. 10022 restoring a provision of R.A. 8042 declared
unconstitutional cannot be given retroactive effect, not only because there
is no express declaration of retroactivity in the law, but because retroactive
application will result in an impairment of a right that had accrued to the
respondents by virtue of the Serrano ruling - entitlement to their salaries for
the unexpired portion of their employment contracts.
All statutes are to be construed as having only a prospective application,
unless the purpose and intention of the legislature to give them a
retrospective effect are expressly declared or are necessarily implied from the
language used.54 We thus see no reason to nullity the application of the
Serrano ruling in the present case. Whether or not R.A. 1 0022 is
constitutional is not for us to rule upon in the present case as this is an
issue that is not squarely before us. In other words, this is an issue that
awaits its proper day in court; in the meanwhile, we make no pronouncement
on it.
WHEREFORE, premises considered, the petition is DENIED. The assailed
Decision dated May 9, 2011 and the Resolution dated June 23, 2011 of the
Court of Appeals in CA-G.R. SP No. 114353 are AFFIRMED. Let this
Decision be brought to the attention of the Honorable Secretary of Labor and

Employment and the Administrator of the Philippine Overseas Employment

Administration as a black mark in the deployment record of petitioner
Pert/CPM Manpower Exponent Co., Inc., and as a record that should be
considered in any similar future violations.
Costs against the petitioner.
SO ORDERED.

G.R. No. 142981

August 20, 2002

PEOPLE OF THE PHILIPPINES, appellee,

vs.
CARMELITA ALVAREZ, appellant.
PANGANIBAN, J.:
In illegal recruitment, mere failure of the complainant to present written
receipts for money paid for acts constituting recruitment activities is not fatal
to the prosecution, provided the payment can be proved by clear and
convincing testimonies of credible witnesses.
The Case
Before us is an appeal from the January 28, 2000 Decision 1 of the Regional
Trial Court (RTC) of Quezon City, Branch 93, in Criminal Case No. Q-9458179. The assailed Decision disposed as follows:
"WHEREFORE, the foregoing premises, the court finds the accused
CARMELITA ALVAREZ guilty of Illegal Recruitment committed in
large scale constituting economic sabotage. Accordingly, the court
sentences her to serve [the] penalty of life imprisonment and to pay a
fine [of] P100,000.00. She is further ordered to indemnify the
following complaining witnesses in the amounts indicated opposite
their names:
Arnel Damian

P 16,500.00

Joel Serna

P 18,575 plus US$50.00

Antonio Damian

P 6,975.00 plus US$50.00

Roberto Alejandro P 47,320.00"2

The July 18, 1994 Information3 was filed by State Prosecutor Zenaida M.
Lim. It charged Carmelita Alvarez with "illegal recruitment committed in large
scale," under Article 13(b) in relation to Articles 38(a), 34 and 39 of the Labor
Code of the Philippines, as follows:
"That sometime between the period from November, 1993 to March,
1994, in Quezon City, Metro Manila, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, did
then and there willfully, unlawfully and feloniously recruit the herein
complainants, namely: JESUS G. ESMA, JR., JOEL G. SERNA,
ARNEL C. DAMIAN, ANTONIO C. DAMIAN, RUBEN F. RIOLA,
LORETA S. BOLOTAOLA, EDGAR R. BARCENAS, DENO A.
MANACAP, JERRY NEIL D. ABANILLA, ROBERTO ALEJANDRO,
ESTER S. BONDOC and JOSEPHINE LOMOCSO as contract workers
in Taiwan for and in consideration of the sum ranging
from P12,300.00 to P48,600.00, as placement and processing fees,

and x x x which the complainants delivered and paid to herein

accused the said amount, without said accused first having secured
the necessary license or authority from the Philippine Overseas
Employment Administration."4
On arraignment, appellant, assisted by Atty. Donato Mallabo, pleaded not
guilty.5 After trial in due course, the RTC rendered the assailed Decision.
The Facts
Version of the Prosecution
The evidence for the prosecution is summarized by the Office of the Solicitor
General (OSG) as follows:
"Arnel Damian is one of the complainants in the case at bar. He
testified that he was introduced to appellant by Reynaldo Abrigo,
who was then the boyfriend of Teresita Gonzales (daughter of
appellant Carmelita Alvarez) at appellants house in 25-B West
Santiago St., San Francisco del Monte, Quezon City. During said
meeting, appellant convinced complainant that if he could produce
[t]wenty-[f]ive [t]housand [p]esos (P25,000.00), he would be deployed
to Taiwan as a factory worker and would be receiving a salary of
$600.00.
"On December 27, 1993, complainant gave appellant [t]welve
[t]housand [f]ive [h]undred [p]esos (P12,500) for which he was issued
a receipt (Exhibit A) with the words FOR PROCESSING FEE written
therein by appellant herself. Aside from the processing fee,
complainant also gave appellant [t]wo [t]housand [f]ive [h]undred
[p]esos ([P]2,500.00) for medical expenses and one thousand five
hundred pesos (P1,500.00) for the passport, but was not issued a
receipt for said payments.
"According to complainant, while waiting for the results of his
medical examination, he received a call informing him that appellant
was arrested. Becoming suspicious, complainant then went to the
Philippine Overseas and Employment Administration (POEA) to verify
whether appellant had a license to recruit. As per Certification issued
by the POEA on June 1, 1994, he found out that appellant was not
licensed to recruit. Realizing that appellant would never be able to
send complainant to Taiwan, he filed a complaint against appellant
with the POEA.
"On cross-examination, complainant clarified that Reynaldo Abrigo
did not actually introduce him to appellant, but merely gave
appellants address and telephone number. Thereafter, complainant
went to appellants house together with Ruben Riola and Michael
Lumahan. In addition, complainant stated under cross-examination
that appellant told him that according to the medical examination
results, complainant was unfit to work. Consequently, he demanded
the return of his money but appellant failed to do so.
"Antonio Damian is also one of the complainants in the case at bar.
He testified that he is the brother of Arnel Damian and that when his

brother failed the medical examination, his brother Arnel

immediately demanded from appellant the return of the processing
fee. However, appellant could not return the money to him anymore.
Instead, appellant asked Arnel to look for another applicant in order
to save the processing fee. For which reason, Arnel asked his brother
Antonio to apply in his stead. During his first meeting with appellant
on January 4, 1994, complainant Antonio Damian was asked to pay
[t]wo [t]housand [f]ive [h]undred [p]esos (P2,500.00) for medical
examination. Subsequently, he also gave [n]ine [h]undred [p]esos
(P900.00) for insurance; [s]eventy-[f]ive [p]esos (P75.00) for Predeparture Orientation Seminar; [f]ifty [d]ollars ($50.00) as part of the
processing fee; and [t]hree [t]housand [f]ive [h]undred [p]esos
(P3,500.00) for the birth certificate. All of these were personally given
to appellant but no receipts were issued by appellant. As with all the
other complainants, appellant promised Antonio that he would work
as factory worker in Taiwan and that he would receive a salary of
[t]wenty-[f]ive [t]housand [p]esos (P25,000.00). After waiting for two
(2) months, Antonio learned that appellant was arrested. Hence, he
filed his complaint with the POEA against appellant.
"Joel Serna came to know of appellant also through Reynaldo
Abrigo. He met appellant at her house at 25-B West Santiago St.,
San Francisco Del Monte, Quezon City on February 8, 1994. Like the
others, Joel was promised employment in Taiwan as factory worker
and was also asked to pay various fees. Appellant gave him a list of
the fees to be paid which included: Processing fee P12,500.00;
Medical examination P2,395.00; Passport P1,500.00; Visa fee $50.00; and Insurance P900.00. Appellants telephone number was
also included in said list. According to complainant Joel, said list
was personally prepared by appellant in his presence. Complainant
Joel paid the various fees but was never issued any receipt for said
payment despite demands from appellant. Upon learning that
appellant was arrested for illegal recruitment, he went to the POEA
and filed his complaint against appellant.
"Roberto Alejandro testified that Onofre Ferrer, a provincemate,
informed him that there were applicants needed for the job in
Taiwan. On March 6, 1994, both of them went to appellants house
where complainant Roberto was told by appellant that she had the
capacity to send him to Taiwan but he must first undergo medical
examination.
"Later, when Roberto was informed that he passed the medical
examination, appellant told him to bring [f]orty [t]housand [p]esos
(P40,000) as processing fee and other documentary requirements. A
receipt was issued by appellant for the payment of said amount.
"On March 9, 1994 appellant advised him to pay an additional [f]ive
[t]housand (P5,000.00) which he personally delivered to appellant on
March 11, 1994. A receipt was also issued by appellant for said
amount.

"After three (3) months of waiting and follow-up without any positive
results, complainant filed his complaint against appellant with the
POEA.
"David Umbao was presented on rebuttal by the prosecution and
testified that on June 1, 1994, an entrapment operation was
conducted against Carmelita Alvarez where Jerry Neil Abadilla and
an agent by the name of Conchita Samones gave appellant the
amount of P5,000.00 with a P500.00 bill marked as payment for the
renewal of the promise of deployment. After appellant took the
money, she was immediately apprehended. Two witnesses were
present during the entrapment operations, one from the barangay
and one from the homeowners association. The affidavit of arrest
setting out the details of the entrapment operation and the arrest
was collectively executed by the entrapment team."6 (Citations
omitted)
Version of the Defense
In her Brief,7 appellant submits her own version of the facts as follows:
"CARMELITA ALVAREZ testified that sometime in 1991, she met
Director Angeles Wong at the Office of the Deputy Administrator of
the POEA, Manuel Quimson, who happened to be her compadre.
Sometime in November 1993, Director Wong called her about a
direct-hire scheme from Taiwan which is a job order whereby people
who want to work abroad can apply directly with the POEA. The said
director told her that there were six (6) approved job orders from
Labor Attache Ellen Canasa. Seeing this as a good opportunity for
her son, Edelito Gonzales, who was then a new graduate, she
recommended him and his sons friends, namely, Reynaldo Abrigo,
Renato Abrigo and two others surnamed Lucena, for employment.
Unfortunately, Director Wong called off the scheduled departure
because the quota of workers for deployment was not met. To remedy
the situation, she approached Josephine Lomocso and a certain
recruiter named Romeo Dabilbil, who also recommends people to
Director Wong with ready passports. When the thirty (30) slots
needed for the direct-hiring scheme were filed up, Director Wong set
the tentative schedule of departure on February 23, 1994. In view of
the said development, Mr. Dabilbil contacted the recruits from Cebu
who even stayed at her (Conchitas) place in Capiz Street, Del Monte,
Quezon City for three (3) days to one (1) week while waiting to be
deployed. On the night of their scheduled departure and while they
were having their despidida party, Director Wong sent a certain Ross
to inform them that a telex was received by him informing him
(Director Wong) that the factory where the recruits were supposed to
work was gutted by a fire. She was later advised by Director Wong to
wait for the deployment order to come from Taiwan. While the people
from Cebu were staying in her house waiting for development, the
accused even advised them to file a complaint against Mr. Dabilbil
before the Presidential Anti-Crime Commission at Camp Crame.
Surprisingly, she was also arrested for illegal recruitment on May 31,

1994 and thereafter learned that on June 1, 1994, the Damian

brothers filed a complaint against her before the POEA. After her
apprehension, the accused further testified that there was some sort
of negotiation between her lawyer, Atty. Orlando Salutandre, and the
apprehending officer, Major Umbao, regarding her release. According
to her, if she [would] be able to raise the amount of [t]hirty
[t]housand [p]esos (P30,000.00), Major Umbao [would] not anymore
refer her for inquest, but would only recommend her case for further
investigation and then she would be released. Since she failed to
raise the said amount, she was brought to the inquest fiscal.

Her defense that she merely wanted to provide jobs for her son-in-law and
his friends was rejected, because she had subsequently retracted her
allegation implicating Director Wong of the POEA in her illegal recruitment
activities. As she victimized more than three (3) persons, the RTC convicted
her of illegal recruitment committed in large scale.

"REYNALDO ABRIGO testified that it was Director Angeles Wong

who was actually recruiting workers for deployment abroad because
of a certain document which Alvarez showed to them bearing the
name of the said POEA Official.

"The court a quo gravely erred in finding accused-appellant

Carmelita Alvarez guilty beyond reasonable doubt for illegal
recruitment in large scale."10

"EDELITO GONZALES testimony merely corroborated the testimony

of defense witnesses Carmencita Alvarez and Reynaldo Abrigo.
xxx

xxx

xxx

"SUR-REBUTTAL EVIDENCE:
"MARITES ABRIGO testified that while she was in the living room
and her mother, accused Carmelita Alvarez, was in her room inside
their house on May 31, 1994, a group of persons arrived and asked
where her mother was. After telling them that her mother was inside
her room resting, a certain Major Umbao, together with some other
persons, went straight to her mothers room and knocked on the
door. When her mother opened it and peeped through the opening of
the door, they immediately grabbed her. She was not able to do
anything also, other than to tell them that she has to consult first
her lawyer. When her mother was brought to the POEA office she
was told that they have to produce P30,000.00."8 (Citations omitted)
Ruling of the Trial Court
The trial court accorded full credibility to the prosecution witnesses. It held
that complainants had not been impelled by ill motives in filing the case
against appellant. They all positively identified her as the person who,
without the requisite license from the government, had collected from them
processing and placement fees in consideration of jobs in Taiwan.
The trial court was convinced that appellant had deceived complainants by
making them believe that she could deploy them abroad to work, and that
she was thus able to milk them of their precious savings. The lack of receipts
for some amounts that she received from them did not discredit their
testimonies. Besides, her precise role in the illegal recruitment was
adequately demonstrated through other means.
Further affirming her illegal recruitment activities was the entrapment
conducted, in which she was caught receiving marked money from a certain
Jerry Neil Abadilla, to whom she had promised a job abroad.

Hence, this appeal.9

Issue
Appellant submits this lone assignment of error:

More specifically, appellant questions the sufficiency of the prosecution

evidence showing the following: (1) that she engaged in acts of illegal
recruitment enumerated in Article 38 of the Labor Code, (2) that she was not
licensed to recruit, (3) that she received money from complainants despite
the absence of receipts, and (4) that her acts constituted illegal recruitment
in large scale.
This Courts Ruling
The appeal has no merit.
Main Issue:
Bases for Her Conviction
Appellant denies that she engaged in any act of illegal recruitment and
claims that she only recommended, through Director Wong of the POEA, her
son-in-law and his friends for a direct-hire job in Taiwan.
We disagree. Prior to the enactment of RA No. 8042, the crime of illegal
recruitment was defined under Article 38(a) in relation to Articles 13(b) and
34 and penalized under Article 39 of the Labor Code. It consisted of any
recruitment activity, including the prohibited practices enumerated under
Article 34 of the Code, undertaken by a non-licensee or non-holder of
authority. It is committed when two elements concur: (1) the offenders have
no valid license or authority required by law to enable them to lawfully
engage in the recruitment and placement of workers; and (2) the offenders
undertake either any activity within the meaning of recruitment and
placement defined under Article 13(b) or any prohibited practices enumerated
under Article 34.11
Under Article 13(b), recruitment and placement refers to "any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers[;] and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not." In the simplest
terms, illegal recruitment is committed when a person, who is not authorized
by the government, gives the impression that he or she has the power to send
workers abroad.12
It is clear from the testimonies of the prosecution witnesses that appellant
recruited them. On direct examination, Arnel Damian testified thus:

"Q
When was that when Reynaldo Abondo introduced you to
the accused?

A
City.

In her house at No. 25-B West Santiago St., SFDM, Quezon

Last week of November. I cannot remember the exact date.

What other things did she told you, if there was any?

Where were you when you were introduced to the accused?

A
I would subject myself to a medical examination and after
this, I would give her a processing fee.

A
At 25 V. West Santiago St., San Francisco del Monte, Quezon
City, in the house of Mrs. Alvarez.
xxx

xxx

xxx

What was the purpose of that processing fee?

So I could leave immediately for Taiwan.

When you arrived at that place, whom did you see?

Why are you going to Taiwan?

Mrs. Alvarez.

I need a job.

What happened during your first meeting.

We were recruited by her.

Q
If you give Mrs. Alvarez the processing fee, she will help you
to go to Taiwan?

What did she tell you?

A
That if we could come up with the amount of P25,000.00 but
she was only asking for P12,500.00 as processing fee.
Q

What else did she tell you?

A
That we were to act as replacement of three persons who
backed out.

Yes, sir."14

Antonio Damian, brother of Arnel, also testified to the same effect.

"ATTY. DIGNADICE:
Q
Will you please tell this Hon. Court the circumstances why
you came to know Carmelita Alvarez?
A

I met Carmelita Alvarez on January 4, 1994.

Did she tell you where were you going?

COURT: (to the witness)

We were told to go to Taiwan as factory worker.

Under what circumstances did you happen to know her?

Did she tell you how much salary will you receive?

$600.00."13

ATTY. DIGNADICE:

Appellant had also recruited for a similar job in Taiwan, Joel Serna who
testified as follows:
"Q
Will you please inform the Hon. Court why do you know
Carmelita Alvarez?
A
I came to know her when her daughter became the girlfriend
of my friend and I was told that she is recruiting workers for Taiwan.
Q
After knowing that she was recruiting workers for Taiwan,
what did you do, if any?
A
I inquired from her and I was assured that the employment
was not fake and I was told to pay a processing fee.

I went to her house.

Why did you go to her house?

Because I applied to her for work abroad.

Why did you apply for work abroad to her?

A
Because of a brother who applied to her but failed the
medical examination.
xxx

xxx

Q
Alvarez?

xxx

Arnel Damian applied for work abroad with Carmelita

Yes, sir.

When you said kanya or her to whom are you referring to?

Was he able to leave for abroad?

Carmelita Alvarez.

No, sir.

Do you still remember when was that?

Why?

February 8, 1994.

Because he failed the medical examination.

Where did you meet?

xxx

xxx

xxx

What happened next after that?

A
Because my brother failed with the medical examination,
Carmelita Alvarez cannot return the processing fee in the amount
of P12,000.00 so she told my brother to look for another applicant.
ATTY. DIGNADICE:
Q
Did your brother look for another applicant as his
replacement?
A

He asked me to take my place to save the P12,000.00."15

Roberto Alejandro testified that appellant had also told him she could send
him to Taiwan to work.
"Q

When you reached that place whom did you see there?

Who told you to pay the processing fee?

Mrs. Carmelita Alvarez.

This processing fee is for what?

A
So that she could process the papers with the POEA, for the
facilitation with the POEA[,] so that we could be included in the first
batch."17
"Q
What happened on that date after paying the tax
of P1,500.00.
A

We were promised to leave on February 23, 1993.

Q
Will you please elaborate more on the promise, what kind of
promise was it, if you could remember?

Mrs. Alvarez.

And what happened during that first meeting?

She told me that she has the capacity of sending to Taiwan."16

Q
Alvarez?

More telling is Ruben Riolas testimony on appellants specific acts

constituting illegal recruitment.
"Q
Can you tell the Hon. Court what transpired with that first
meeting of yours with Carmelita Alvarez at Capiz District?
A
When I got there, I was with two companions, because we
were replacements of the three others who backed out. We were
asked by the mother if we were the friends of her daughter and sonin-law who is from the church?
Q

What was your answer?

I said yes.

Was there anything that transpired during that meeting?

A
We were asked by her if we were interested to work as Factory
workers in Taiwan.
Q

What was your answer, if any?

We said we are interested if it is true.

Q
After knowing that you are interested to work as factory
worker in Taiwan, what did Carmelita Alvarez do if there was any?
A
We were shown a document stating that such person was
receiving $600.00 salary.
xxx

xxx

xxx

Q
After knowing that you will be receiving the same amount if
you work as factory worker in Taiwan, what did you do, if any?
A

We were told to immediately pay the processing fee.

xxx
A
xxx

That would be the latest date that we could leave for Taiwan.
Would you somehow remember the words of Carmelita
xxx

xxx

Na papaalisin niya kami.

xxx

xxx

Why did you celebrate a dispededa?

Because we were about to leave.

Who told you?

Carmelita Alvarez.

xxx

xxx

xxx

Why were you celebrating this party?

Because we will be leaving the following day."18

Furthermore, appellant committed other acts showing that she was engaged
in illegal recruitment. Enumerated inPeople v. Manungas Jr.19 as acts
constituting recruitment within the meaning of the law were collecting
pictures, birth certificates, NBI clearances and other necessary documents
for the processing of employment applications in Saudi Arabia; and collecting
payments for passport, training fees, placement fees, medical tests and other
sundry expenses.20
In this case, the prosecution proved that appellant had received varying
amounts of money from complainants for the processing of their employment
applications for Taiwan. Arnel Damian paid to appellant P12,500 for the
processing fee,21 P2,500 for the medical fee and P1,500 for his
passport.22 Serna paid P12,000 for the processing fee,23 P3,000 for his birth
certificate and passport,24 P75 for a "Departure and Orientation
Seminar,"25 P900 for the insurance fee and $50 for his visa.26 Antonio
Damian paid P2,500 for the medical fee,27P900 for the insurance, P75 for the

"Pre-Departure and Orientation Seminar" (PDOS) fee, $50 for the processing
fee and P3,500 for his birth certificate.28 Roberto Alejandro paid P40,000 for
the processing fee29 and P5,000 for the insurance.30 Riola paid P1,900 for his
passport, P12,500 for the processing fee, P900 for the insurance fee,P75 for
the PDOS fee, P1,500 for the insurance and $50 for travel tax.31
The trial court found complainants to be credible and convincing witnesses.
We are inclined to give their testimonies due consideration. The best arbiter
of the issue of the credibility of the witnesses and their testimonies is the
trial court. When the inquiry is on that issue, appellate courts will generally
not disturb the findings of the trial court, considering that the latter was in a
better position to decide the question, having heard the witnesses themselves
and observed their deportment and manner of testifying during the trial. Its
finding thereon will not be disturbed, unless it plainly overlooked certain
facts of substance and value which, if considered, may affect the result of the
case.32 We find no cogent reason to overrule the trial court in this case.

We disagree. The Court has already ruled that the absence of receipts in a
case for illegal recruitment is not fatal, as long as the prosecution is able to
establish through credible testimonial evidence that accused-appellant has
engaged in illegal recruitment.38 Such case is made, not by the issuance or
the signing of receipts for placement fees, but by engagement in recruitment
activities without the necessary license or authority.39
In People v. Pabalan,40 the Court held that the absence of receipts for some of
the amounts delivered to the accused did not mean that the appellant did not
accept or receive such payments. Neither in the Statute of Frauds nor in the
rules of evidence is the presentation of receipts required in order to prove the
existence of a recruitment agreement and the procurement of fees in illegal
recruitment cases. Such proof may come from the testimonies of witnesses. 41
Besides, the receipts issued by petitioner to Arnel Damian and Roberto
Alejandro already suffice to prove her guilt.42
Illegal Recruitment in Large Scale

No License
Appellant denies that she engaged in acts of recruitment and placement
without first complying with the guidelines issued by the Department of
Labor and Employment. She contends that she did not possess any license
for recruitment, because she never engaged in such activity.
We are not persuaded. In weighing contradictory declarations and
statements, greater weight must be given to the positive testimonies of the
prosecution witnesses than to the denial of the defendant. 33 Article 38(a)
clearly shows that illegal recruitment is an offense that is essentially
committed by a non-licensee or non-holder of authority. Anon-licensee means
any person, corporation or entity to which the labor secretary has not issued
a valid license or authority to engage in recruitment and placement; or whose
license or authority has been suspended, revoked or cancelled by the POEA
or the labor secretary.34 A license authorizes a person or an entity to operate
a private employment agency, while authority is given to those engaged in
recruitment and placement activities.35
Likewise constituting illegal recruitment and placement activities are agents
or representatives whose appointments by a licensee or holder of authority
have not been previously authorized by the POEA.36
That appellant in this case had been neither licensed nor authorized to
recruit workers for overseas employment was certified by Veneranda C.
Guerrero, officer-in-charge of the Licensing and Regulation Office; and Ma.
Salome S. Mendoza, manager of the Licensing Branch -- both of the
Philippine Overseas Employment Administration.37Yet, as complainants
convincingly proved, she recruited them for jobs in Taiwan.
Absence of Receipts
Appellant contends that the RTC erred when it did not appreciate in her favor
the failure of Complainants Serna and Antonio Damian to present, as proofs
that she had illegally recruited them, receipts that she had allegedly issued
to them.

Since only two complainants were able to show receipts issued by appellant,
petitioner claims that the prosecution failed to prove illegal recruitment in
large scale.
We disagree. The finding of illegal recruitment in large scale is justified
wherever the elements previously mentioned concur with this additional
element: the offender commits the crime against three (3) or more persons,
individually or as a group.43 Appellant recruited at least three persons. All
the witnesses for the prosecution categorically testified that it was she who
had promised them that she could arrange for and facilitate their
employment in Taiwan as factory workers.
As for the defense that appellant had only referred complainants to Director
Wong, her public apology and retraction44 belied her denials. After examining
the transcripts, we concur with the RTC that her averment that she was
being prosecuted for her refusal to give grease money to Major Umbao in
exchange for her freedom does not disprove the fact that she was caught
in flagrante delicto in an entrapment operation.
We find appellants conviction for the crime charged sufficiently supported by
evidence; therefore, it should be sustained.
WHEREFORE,
the
appeal
is DENIED and
Decision AFFIRMED. Costs against appellant.
SO ORDERED.

the

assailed

G.R. Nos. 140067-71

August 29, 2002

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
NENITA MARIA OLIVIA GALLARDO (at large), and REMEDIOS
MALAPIT, accused,
REMEDIOS MALAPIT, accused-appellant.
DECISION
YNARES-SANTIAGO, J.:
Remedios Malapit and Nenita Maria Olivia Gallardo were charged with one (1)
count of illegal recruitment committed in large-scale, three (3) counts of
estafa, and one (1) count of simple illegal recruitment before the Regional
Trial Court of Baguio City, Branch 3.1 The Informations read as follows:
Criminal Case No. 15320-R (Illegal Recruitment Committed in Large Scale)2
The undersigned (Public Prosecutor) accuses NENITA MARIA OLIVIA
GALLARDO and REMEDIOS MALAPIT of the crime of ILLEGAL
RECRUITMENT COMMITTED IN LARGE SCALE, defined and penalized under
Article 13(b) in relation to Article 38(b), 34, and 39 of P.D. No. 442, otherwise
known as the New Labor Code of the Philippines, as amended by P.D. No.
1693, 1920, 2018 and R.A. No. 8042, committed as follows:
That during the period from January 1997 to June, 1997, in the City of
Baguio, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, conspiring, confederating and mutually aiding one
another, did then and there willfully, unlawfully and feloniously for a fee,
recruit and promise employment as contract workers in Canada, to the
herein complainants, namely: Rommel Suni, Myrna Castro, Marilyn Mariano,
Bryna Paul Wong, Mary Grace Lanozo, Ana Liza Aquino, Marie Purificacion
Abenoja, Florence Bacoco and Lorna Domingo, without said accused having
first secured the necessary license or authority from the Department of Labor
and Employment.

Criminal Case No. 15327-R (Estafa)4

That on June 6, 1997 in the City of Baguio, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, conspiring,
confederating and mutually aiding one another, did then and there willfully,
unlawfully and feloniously defraud one MARIE PURIFICACION ABENOJA by
way of false pretenses, which are executed prior to or simultaneously with
the commission of the fraud, as follows, to wit: the accused knowing fully
well that he/she they is/are not authorized job recruiters for persons
intending to secure work abroad convinced said Marie Purificacion Abenoja
and pretended that he/she/they could secure a job for him/her abroad, for
and in consideration of the sum of P36,500.00, when in truth and in fact
they could not; the said Marie Purificacion Abenoja deceived and convinced
by the false pretenses employed by the accused parted away the total sum of
P36,500.00 in favor of the accused, to the damage and prejudice of the said
Marie Purificacion Abenoja in the aforementioned amount of THIRTY SIX
THOUSAND FIVE HUNDRED PESOS (P36,500.00), Philippine currency.
Criminal Case No. 15570-R (Illegal Recruitment)5
The under signed (Public Prosecutor) accuses NENITA MARIA OLIVIAGALLARDO and REMEDIOS MALAPIT of the crime of ILLEGAL
RECRUITMENT, defined and penalized under Article 13(b) in relation to
Article 38(b), 34, and 39 of Presidential Decree No. 442, otherwise known as
the New Labor Code of the Philippines, as amended by R.A. No. 8042,
committed as follows:
That on or about the 6th day of June, 1997, in the City of Baguio,
Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused, conspiring, confederating and mutually aiding one another,
did then and there willfully, unlawfully and feloniously for a fee, recruit and
promise employment as contract worker in Canada, to the herein
complainant ARACELI D. ABENOJA, without said accused having first
secured the necessary license or authority from the Department of Labor and
Employment.

Criminal Case No. 15323-R (Estafa)3

Criminal Case No. 15571-R (Estafa)6

That in March 1997 in the City of Baguio, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, conspiring,
confederating and mutually aiding one another did then and there willfully,
unlawfully and feloniously defraud one MARILYN MARIANO by way of false
pretenses, which are executed prior to or simultaneously with the
commission of the fraud, as follows; to wit: the accused knowing fully well
that he/she they is/are not authorized job recruiters for persons intending to
secure work abroad convinced said Marilyn Mariano and pretended that
he/she/they could secure a job for him/her abroad, for and in consideration
of the sum of P36,500.00, when in truth and in fact they could not; the said
Marilyn Mariano deceived and convinced by the false pretenses employed by
the accused parted away the total sum of P36,500.00, in favor of the
accused, to the damage and prejudice of the said Marilyn Mariano in the
aforementioned amount of THIRTY SIX THOUSAND FIVE HUNDRED PESOS
(P36,500.00), Philippine Currency.

That on or about the 11th day of June, 1997 in the City of Baguio,
Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused, conspiring, confederating & mutually aiding one another,
did then and there willfully, unlawfully and feloniously defraud one ARACELI
D. ABENOJA by way of false pretenses, which are executed prior to or
simultaneously with the commission of the fraud, as follows; to wit: the
accused knowing fully well that he/she/they is/are not authorized job
recruiters for persons intending to secure work abroad convinced said Araceli
D. Abenoja and pretended that he/she/they could secure a job for him/her
abroad, for and in consideration of the sum of P35,000.00, when in truth and
in fact they could not; the said Araceli D. Abenoja deceived and convinced by
the false pretenses employed by the accused parted away the total sum of
P35,000.00 in favor of the accused, to the damage and prejudice of the said
Araceli D. Abenoja in the aforementioned amount of THIRTY FIVE
THOUSAND PESOS (P35,000.00), Philippine currency.

Only accused-appellant Remedios Malapit was brought to the jurisdiction of

the trial court. Her co-accused, Nenita Maria Olivia Gallardo, remained at
large.
Upon arraignment, accused-appellant pleaded "not guilty" to all charges. The
five (5) cases were consolidated and tried jointly.
Marie Purificacion Abenoja and Marilyn Mariano met accused-appellant at
her beauty parlor in Lopez Building, Session Road, Baguio City. Marie met
accused-appellant sometime in January 1997 through her friend, Florence
Bacoco. A month later, Marilyn was introduced to accused-appellant by
Grace Lanozo, a fellow nurse at the PMA Hospital.
Marie claims that accused-appellant enticed her to apply for work as a
caregiver in Canada. Accused-appellant showed her a piece of paper
containing a job order saying that Canada was in need of ten (10) caregivers
and some messengers. Accused-appellant also promised her that she will be
receiving a salary of CN$2,700.00 (Canadian Dollars) and will be able to leave
for Canada in a months time. Heeding accused-appellants guaranty, Marie
eventually applied for the overseas job opportunity.
On June 6, 1997, accused-appellant introduced Marie to co-accused Nenita
Maria Olivia-Gallardo in Tandang Sora, Quezon City. On the same day, Marie
submitted herself to a physical examination and personally handed to
Gallardo a partial payment of P18,000.00, for which the latter issued a
receipt.7 Marie made another payment in the amount of P52,000.00, for
which accused-appellant issued a provisional receipt.8 This amount included
the placement fee of her sister, Araceli Abenoja, who became interested in the
opportunity to work abroad. Accused-appellant issued to Marie the
receipt9 for Araceli in the amount of P35,000.00, signed by Gallardo.

her medical check-up,

P15,000.0013 for her visa.

P20,000.0012 for

processing

of

papers

and

Marilyn was further made to accomplish a form, prepared by both accusedappellant and Gallardo, at the residence of accused-appellant in Baguio City.
Thereafter, she was informed that the processing of her papers abroad shall
commence within the next three months. She was also made to attend a
meeting conducted by both accused-appellant and Gallardo at the formers
house in Baguio City, together with other interested applicants.
After three months of waiting with no forthcoming employment abroad,
Marilyn and the other applicants proceeded to the Philippine Overseas
Employment Agency, Regional Administrative Unit, of the Cordillera
Administrative Region in Baguio City, where they learned that accusedappellant and Gallardo were not authorized recruiters.14Marilyn confronted
accused-appellant about this, whereupon the latter assured her that it was a
direct hiring scheme. Thereafter, Marilyn reported accused-appellant and
Gallardo to the NBI. 15
After trial on the merits, accused-appellant was found guilty of the crimes of
Illegal Recruitment in Large Scale and Estafa on three (3) counts. The
dispositive portion of the decision reads:
WHEREFORE, the Court finds accused Remedios Malapit GUILTY beyond
reasonable doubt with the crimes of Illegal Recruitment in Large Scale, and
Estafa in three (3) counts, and she is hereby sentenced as follows:
1. To suffer Life Imprisonment at the Correctional Institution for
Women, Mandaluyong City in Criminal Cases Nos. 15320-R and
15770-R for Illegal Recruitment in Large Scale; to pay a Fine to the
Government in the amount of One Hundred Thousand (P100,000.00)
Pesos; and to pay private complainants, Marie Purificacion Abenoja,
the amount of Thirty Five Thousand (P35,000.00) Pesos; Araceli
Abenoja also the amount of Thirty Five Thousand (P35,000.00)
Pesos; and Marilyn Mariano, the amount of Thirty Six Thousand Five
Hundred (P36,500.00) Pesos, all amounts with legal interest.

Three months lapsed without any news on Maries deployment to Canada.

Her sister, Araceli, had already left for work abroad through the efforts of
their other town-mate. The weekly follow-ups made by Marie to accusedappellant pertaining to her application and that of Aracelis were to no avail.
Accused-appellant just promised Marie that she will return her money.
Realizing that she had been hoodwinked, Marie decided to file a complaint
against the accused-appellant and Gallardo with the National Bureau of
Investigation. She no longer verified the authority of both accused-appellant
and Gallardo in recruiting workers overseas because she was told by
Gallardo that she is a direct recruiter.10

2. To suffer Imprisonment at the same Institution from Six (6) Years,

Five (5) Months, and Eleven (11) Days as Minimum to Seven (7)
Years, Eight (8) Months, and Twenty (20) Days as Maximum of
Prision Mayor for each Estafa case in Criminal Cases Nos. 15323-R,
15327-R, and 15571-R.

Marilyn Mariano, on the other hand, was told by accused-appellant that she
was recruiting nurses from Baguio City and was looking for one more
applicant to complete the first batch to fly to Canada. After giving her all the
information about the job opportunity in Canada, accused-appellant
encouraged her to meet Gallardo. Not long after, Grace Lanozo accompanied
her to meet Gallardo at the latters house in Quezon City.

Accused-appellant is now before us on the following assignment of errors:

Gallardo required her to undergo a medical check-up, to complete her

application papers within the soonest possible time and to prepare money to
defray the expenses for her deployment to Canada. Upon the instruction of
accused-appellant, Marilyn paid a total amount of P36,000.00 to Gallardo,
which was evidenced by a receipt. Of this amount, the P1,500.00 11 was for

II

3. To pay costs of suit.16

I
THE TRIAL COURT ERRED IN CONCLUDING THAT THE PROSECUTION
SUCCEEDED IN PROVING THE GUILT OF ACCUSED-APPELLANT BEYOND
REASONABLE DOUBT FOR THE CRIME OF ILLEGAL RECRUITMENT.

THE TRIAL COURT ERRED IN CONCLUDING THAT THE PROSECUTION

SUCCEEDED IN PROVING THE GUILT OF ACCUSED-APPELLANT BEYOND
REASONABLE DOUBT FOR THREE COUNTS OF ESTAFA.
III
THE TRIAL COURT ERRED IN NOT DISMISSING CRIMINAL CASES NOS.
15570-R AND 15571-R FOR ABSENCE OF EVIDENCE RESULTING FROM
THE FAILURE OF THE COMPLAINING WITNESS TO APPEAR AND
SUBSTANTIATE HER COMPLAINT.
IV
GRANTING ARGUENDO THAT ACCUSED-APPELLANT COMMITTED
ILLEGAL RECRUITMENT, THE TRIAL COURT ERRED IN CONVICTING HER
OF ILLEGAL RECRUITMENT IN LARGE SCALE.
Accused-appellant maintains that she did not commit any of the activities
enumerated in the Labor Code on illegal recruitment in connection with the
applications of the private complainants. It was Nenita Maria Olivia Gallardo
who convinced and promised private complainants employment overseas. It
was also Gallardo who received and misappropriated the money of private
complainants. Accordingly, she cannot be convicted of estafa.
We do not agree.
Illegal recruitment is committed when two (2) essential elements concur:
(1) that the offender has no valid license or authority required by law
to enable him to lawfully engage in the recruitment and placement of
workers, and
(2) that the offender undertakes any activity within the meaning of
"recruitment and placement" defined under Article 13(b), or any
prohibited practices enumerated under Article 34 of the Labor
Code.17
Article 13(b) of the Labor Code defines recruitment and placement as:
Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring,
or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not:
Provided, that any person or entity which, in any manner, offers or promises
for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement.
In the case at bar, the first element is present. Nonette Legaspi-Villanueva,
the Overall Supervisor of the Regional Office of the POEA in Baguio City,
testified that per records, neither accused-appellant nor Gallardo were
licensed or authorized to recruit workers for overseas employment in the City
of Baguio or in any part of the Cordillera Region.
The second essential element is likewise present. Accused-appellant
purported to have the ability to send Marie Purificacion Abenoja, Araceli
Abenoja and Marilyn Mariano for employment abroad through the help of her
co-accused Gallardo, although without any authority or license to do so.

Accused-appellant was the one who persuaded them to apply for work as a
caregiver in Canada by making representations that there was a job market
therefor.18 She was also the one who helped them meet Gallardo in order to
process their working papers and personally assisted Marie, Araceli and
Marilyn in the completion of the alleged requirements. 19 Accused-appellant
even provided her house in Baguio City as venue for a meeting with other
applicants that she and Gallardo conducted in connection with the purported
overseas employment in Canada.20 Accused-appellant, therefore, acted as an
indispensable participant and effective collaborator of co-accused Gallardo,
who at one time received placement fees21 on behalf of the latter from both
Marie and Araceli Abenoja. The totality of the evidence shows that accusedappellant was engaged in the recruitment and placement of workers for
overseas employment under the above-quoted Article 13 (b) of the Labor
Code. Hence, she cannot now feign ignorance on the consequences of her
unlawful acts.
Accused-appellants claim that the other private complainants in Criminal
Case No. 15320-R, for illegal recruitment in large scale, have executed their
individual affidavits of desistance pointing to Gallardo as the actual recruiter,
deserves scant consideration. The several Orders22 issued by the trial court
show that the dismissal of the complaints of the other private complainants
were based on their failure to substantiate and prosecute their individual
complaints despite due notice.*
The foregoing notwithstanding, the existence of the adverted affidavits of
desistance does not appear in the records of this case and, thus, may not be
given any probative weight by this Court. Any evidence that a party desires to
submit for the consideration of the court must be formally offered by him,
otherwise, it is excluded and rejected.23 Evidence not formally offered before
the trial court cannot be considered on appeal, for to consider them at such
stage will deny the other parties their right to rebut them.24 By opting not to
present them in court, such affidavits of desistance are generally hearsay
and have no probative value since the affiants thereof were not placed on the
witness stand to testify thereon.25 The reason for the rule prohibiting the
admission of evidence that has not been formally offered is to afford the other
party the chance to object to their admissibility.26
All told, the evidence against accused-appellant has established beyond a
shadow of doubt that she actively collaborated with co-accused Gallardo in
illegally recruiting the complainants in this case. As correctly pointed out by
the trial court, the private complainants in this case would not have been
induced to apply for a job in Canada were it not for accused-appellants
information, recruitment, and introduction of the private complainants to her
co-accused Gallardo.
Likewise untenable are accused-appellants claims that she did not represent
herself as a licensed recruiter,27and that she merely helped complainants
avail of the job opportunity. It is enough that she gave the impression of
having had the authority to recruit workers for deployment abroad. In fact,
even without consideration for accused-appellants "services", she will still be
deemed as having engaged in recruitment activities, since it was sufficiently
demonstrated that she promised overseas employment to private

complainants.28 Illegal recruitment is committed when it is shown that the

accused-appellant gave the private complainants the distinct impression that
she had the power or ability to send complainants abroad for work such that
the latter were convinced to part with their money in order to be
employed.29 To be engaged in the practice and placement, it is plain that
there must at least be a promise or offer of an employment from the person
posing as a recruiter whether locally or abroad.30

evidence, conviction can be had on the basis of circumstantial evidence,

provided that the established circumstances constitute an unbroken chain
which leads one to one fair and reasonable conclusion which points to the
accused, to the exclusion of all others, as the guilty person, i.e., the
circumstances proved must be consistent with each other, consistent with
the hypothesis that the accused is guilty, and at the same time inconsistent
with any other hypothesis except that of guilty.

Undoubtedly, the acts of accused-appellant showed unity of purpose with

those of co-accused Gallardo. All these acts establish a common criminal
design mutually deliberated upon and accomplished through coordinated
moves. There being conspiracy, accused-appellant shall be equally liable for
the acts of her co-accused even if she herself did not personally reap the
fruits of their execution.

The rules on evidence and precedents sustain the conviction of an accused

through circumstantial evidence, as long as the following requisites are
present: (1) there must be more than one circumstance; (2) the inference
must be based on proven facts; and (3) the combination of all circumstances
produces a conviction beyond reasonable doubt of the guilt of the accused.

While accused-appellant is guilty of illegal recruitment, we do not agree with

the trial court that the same qualifies as large scale.
Accused-appellants conviction of the illegal recruitment in large scale was
based on her recruitment of Marie Purificacion Abenoja and Marilyn Mariano,
private complainants in Criminal Case No. 15320-R, and Araceli Abenoja,
private complainant in Criminal Case No. 15570-R. It was error for the trial
court to consider the three private complainants in the two criminal cases
when it convicted accused-appellant of illegal recruitment committed in large
scale. The conviction of illegal recruitment in large scale must be based on a
finding in each case of illegal recruitment of three or more persons, whether
individually or as a group. In People v. Reichl, et al.,31 we reiterated the rule
we laid down in People v. Reyes32 that:
x x x When the Labor Code speaks of illegal recruitment "committed against
three (3) or more persons individually or as a group," it must be understood
as referring to the number of complainants in each case who are
complainants therein, otherwise, prosecutions for single crimes of illegal
recruitment can be cumulated to make out a case of large scale illegal
recruitment. In other words, a conviction for large-scale illegal recruitment
must be based on a finding in each case of illegal recruitment of three or
more persons whether individually or as a group. (Underscoring ours)
Accused-appellant likewise assails the decision of the trial court in Criminal
Cases Nos. 15570-R and 15571-R for simple illegal recruitment and estafa,
respectively, saying that these two criminal cases should have been
dismissed for lack of evidence. The only evidence presented in these cases
was the testimony of Marie Purificacion Abenoja, Araceli Abenojas sister, on
her alleged payment of the placement fees for Aracelis application. By
Aracelis failure to testify, she failed to prove the facts and circumstances
surrounding her alleged recruitment and the person accountable therefor.

The circumstantial evidence in the case at bar, when scrutinized and taken
together, leads to no other conclusion than that accused-appellant and coaccused Gallardo conspired in recruiting and promising a job overseas to
Araceli Abenoja. Moreover, Marie Purificacion Abenoja had personal
knowledge of the facts and circumstances surrounding the charges filed by
her sister, Araceli, for simple illegal recruitment and estafa. Marie was privy
to the recruitment of Araceli as she was with her when both accusedappellant and Gallardo required Araceli to undergo physical examination to
find out whether the latter was fit for the job abroad. 34 Accused-appellant
even admitted that she was the one who introduced Marie and Araceli to
Gallardo when they went to the latters house.35 Marie was the one who
shouldered the placement fee of her sister Araceli.36
Furthermore, the private complainants in this case did not harbor any ill
motive to testify falsely against accused-appellant and Gallardo. Accusedappellant failed to show any animosity or ill-feeling on the part of the
prosecution witnesses which could have motivated them to falsely accuse her
and Gallardo. It would be against human nature and experience for strangers
to conspire and accuse another stranger of a most serious crime just to
mollify their hurt feelings.37 As such, the testimony of private complainants
that accused-appellant was the person who transacted with them, promised
them jobs and received money therefor, was correctly given credence and
regarded as trustworthy by the trial court.
In sum, accused-appellant is only guilty of two (2) counts of illegal
recruitment. Under Section 7 of Republic Act No. 804238 otherwise known as
the "Migrant Workers Act of 1995," any person found guilty of illegal
recruitment shall suffer the penalty of imprisonment of not less than six (6)
years and one (1) day but not more than twelve (12) years and a fine of not
less than two hundred thousand pesos (P200,000.00) nor more than five
hundred thousand pesos (P500,000.00).

We are not persuaded. In People v. Gallarde,33 we held:

The provisions of the Indeterminate Sentence Law are applicable, as held

in People v. Simon:39

Direct evidence of the commission of a crime is not the only matrix

wherefrom a trial court may draw its conclusion and finding of guilt. The
prosecution is not always tasked to present direct evidence to sustain a
judgment of conviction; the absence of direct evidence does not necessarily
absolve an accused from any criminal liability. Even in the absence of direct

It is true that Section 1 of said law, after providing for indeterminate

sentence for an offense under the Revised Penal Code, states that "if the
offense is punished by any other law, the court shall sentence the accused to
an indeterminate sentence, the maximum term of which shall not exceed the

maximum fixed by said law and the minimum shall not be less than the
minimum term prescribed by the same." We hold that this quoted portion of
the section indubitably refers to an offense under a special law wherein the
penalty imposed was not taken from and is without reference to the Revised
Penal Code, as discussed in the preceding illustrations, such that it may be
said that the "offense is punished" under that law.
Guided by the foregoing principle, accused-appellant shall be made to suffer
a prison term of six (6) years and one (1) day, as minimum, to twelve (12)
years, as maximum, and to pay a fine of P200,000.00, for each count of
illegal recruitment.
The Court likewise affirms the conviction of accused-appellant for estafa on
three (3) counts. It is settled that a person may be charged and convicted
separately of illegal recruitment under the Labor Code and estafa under the
Revised Penal Code, Article 315, paragraph 2(a). As we held in People v.
Yabut:40
In this jurisdiction, it is settled that a person who commits illegal
recruitment may be charged and convicted separately of illegal recruitment
under the Labor Code and estafa under par. 2 (a) of Art. 315 of the Revised
Penal Code. The offense of illegal recruitment is malum prohibitum where the
criminal intent of the accused is not necessary for conviction, while estafa
is malum in se where the criminal intent of the accused is crucial for
conviction. Conviction for offenses under the Labor Code does not bar
conviction for offenses punishable by other laws. Conversely, conviction for
estafa under par. 2 (a) of Art. 315 of the Revised Penal Code does not bar a
conviction for illegal recruitment under the Labor Code. It follows that ones
acquittal of the crime of estafa will not necessarily result in his acquittal of
the crime of illegal recruitment in large scale, and vice versa.1wphi1
The prosecution has proven beyond reasonable doubt that accused-appellant
was guilty of estafa under the Revised Penal Code, Article 315 paragraph (2)
(a), which provides that estafa is committed:
2. By means of any of the following false pretenses or fraudulent acts
executed prior to or simultaneously with the commission of fraud:
(a) By using fictitious name or falsely pretending to possess power, influence,
qualifications, property, credit, agency, business or imaginary transactions,
or by means of other similar deceits.
The evidence is clear that in falsely pretending to possess the power to deploy
persons for overseas placement, accused-appellant deceived Marie, Araceli
and Marilyn into believing that the recruitment would give them greener
opportunities as caregivers in Canada. Accused-appellants assurance
constrained the private complainants to part with their hard-earned money
in exchange for a slot in the overseas job in Canada. The elements of deceit
and damage for this form of estafa are indisputably present. Hence, the
conviction of accused-appellant for three (3) counts of estafa in Criminal
Cases Nos. 15323-R, 15327-R and 15571-R should be upheld.
Under the Revised Penal Code, an accused found guilty of estafa shall be
sentenced to:

x x x The penalty of prision correccional in its maximum period to prision

mayor in its minimum period, if the amount of the fraud is over 12,000 but
does not exceed 22,000 pesos, and if such amount exceeds the latter sum,
the penalty provided in this paragraph shall be imposed in its maximum
period, adding one year for each additional 10,000 pesos; x x x.
In applying the provisions of the Indeterminate Sentence Law, we had
occasion to reiterate our ruling in People v. Ordono41 in the very recent case
of People v. Angeles,42 to wit:
Under the Indeterminate Sentence Law, the maximum term of the penalty
shall be "that which, in view of the attending circumstances, could be
properly imposed" under the Revised Penal Code, and the minimum shall be
"within the range of the penalty next lower to that prescribed for the offense."
The penalty next lower should be based on the penalty prescribed by the
Code for the offense, without first considering any modifying circumstances
attendant to the commission of the crime. The determination of the minimum
penalty is left by law to the sound discretion of the court and it can be
anywhere within the range of the penalty next lower without any reference to
the periods into which it might be subdivided. The modifying circumstances
are considered only in the imposition of the maximum term of the
indeterminate sentence.
Similarly, in People v. Saulo,43 we further elucidated on how to apply the
Indeterminate Sentence Law for the charge of estafa:
Since the penalty prescribed by law for the estafa charge against accusedappellant is prision correccionalmaximum to prision mayor minimum, the
penalty next lower in degree is prision correccional minimum to medium.
Thus, the minimum term of the indeterminate sentence should be anywhere
within six (6) months and one (1) day to four (4) years and two (2) months.
In fixing the maximum term, the prescribed penalty of prision
correccional maximum to prision mayor minimum should be divided into
three equal portions of time, each of which portion shall be deemed to form
one period, as follows
Minimum Period: From 4 years, 2 months and 1 day to 5 years, 5 months
and 10 days
Medium Period: From 5 years, 5 months and 11 days to 6 years, 8 months
and 20 days
Maximum Period: From 6 years, 8 months and 21 days to 8 years
pursuant to Article 65, in relation to Article 64, of the Revised Penal Code.
When the amounts involved in the offense exceeds P22,000, the penalty
prescribed in Article 315 of the Revised Penal Code shall be imposed in its
maximum period, adding one year for each additional P10,000.00, although
the total penalty which may be imposed shall not exceed twenty (20) years.
In Criminal Case No. 15323-R, Marilyn Mariano testified that upon
instruction of accused-appellant she gave accused Gallardo a total of
P36,500.00.

In Criminal Case Nos. 15327-R and 15571-R, Marie Purificacion Abenoja

testified that she gave the amounts of P18,000.00 and P52,000.00 to accused
Gallardo and accused-appellant. Out of the amount of P52,000.00,
P35,000.00 was intended to answer for the placement fee of her sister Araceli
Abenoja, the private complainant in Criminal Case No. 15571-R. The
remaining P17,000.00 formed part of the balance of Maries placement fee.
Accordingly, accused-appellant shall be criminally liable for the amount of
P35,000.00 in Criminal Cases No. 15327-R and P35,000.00 in Criminal Case
No. 15571-R.
WHEREFORE, in view of the foregoing, the appealed Decision of the Regional
Trial Court of Baguio City, Branch 3 is AFFIRMED with the following
MODIFICATIONS:
(1) In Criminal Case No. 15320-R, accused-appellant Remedios
Malapit is found GUILTY beyond reasonable doubt of the crime of
Simple Illegal Recruitment only, and is sentenced to suffer a prison
term of six (6) years and one (1) day, as minimum, to twelve (12)
years, as maximum, and to pay a fine of P200,000.00.
(2) In Criminal Case No. 15323-R, accused-appellant Remedios
Malapit is found GUILTY beyond reasonable doubt of the crime of
Estafa and sentenced to suffer a prison term of four (4) years and
two (2) months of prision correccional, as minimum, to nine (9) years
and four (4) months of prision mayor, as maximum, and is
ORDERED to indemnify Marilyn Mariano the amount of P36,500.00.
(3) In Criminal Case No. 15327-R, accused-appellant Remedios
Malapit is found GUILTY beyond reasonable doubt of the crime of
Estafa and sentenced to suffer a prison term of four (4) years and
two (2) months of prision correccional, as minimum, to nine (9) years
and four (4) months of prision mayor, as maximum, and is
ORDERED to indemnify Marie Purificacion Abenoja the amount of
P35,000.00.
(4) In Criminal Case No. 15570-R, accused-appellant Remedios
Malapit is found GUILTY beyond reasonable doubt of the crime of
Simple Illegal Recruitment and is sentenced to suffer a prison term of
six (6) years and one (1) day, as minimum, to twelve (12) years, as
maximum, and to pay a fine of P200,000.00.
(5) In Criminal Case No. 15571-R, accused-appellant Remedios
Malapit is found GUILTY beyond reasonable doubt of the crime of
Estafa and sentenced to suffer a prison term of four (4) years and
two (2) months of prision correccional, as minimum, to nine (9) years
and four (4) months of prision mayor, as maximum, and is
ORDERED to indemnify Araceli Abenoja the amount of P35,000.00
SO ORDERED.

G.R. Nos. 115338-39 September 16, 1997

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
LANIE ORTIZ-MIYAKE, accused-appellant.
REGALADO, J.:
Accused-appellant Lanie Ortiz-Miyake was charged with illegal recruitment in
large scale in the Regional Trial Court of Makati on a complaint initiated by
Elenita Marasigan, Imelda Generillo and Rosamar del Rosario. In addition,
she was indicted for estafa by means of false pretenses in the same court, the
offended party being Elenita Marasigan alone.
The information in the charge of illegal recruitment in large scale in Criminal
Case No. 92-6153 reads as follows:
That in or about the period comprised from June 1992 to August
1992, in the Municipality of Paraaque, Metro Manila, Philippines
and within the jurisdiction of this Honorable Court, the above-named
accused, falsely representing herself to have the capacity and power
to contract, enlist and recruit workers for employment abroad did
then and there willfully, unlawfully, and feloniously collect for a fee,
recruit and promise employment/job placement abroad to the
following persons, to wit: 1) Rosamar del Rosario; 2) Elenita
Marasigan; 3) Imelda Generillo, without first securing the required
license or authority from the Department of Labor and Employment,
thus amounting to illegal recruitment in large scale, in violation of
the aforecited law. 1
The information in the charge for estafa in Criminal Case No. 92-6154
alleges:
That in or about or sometime in the month of August, 1992, in the
Municipality of Paraaque, Metro Manila, Philippines and within the
jurisdiction of this Honorable Court, the above-named accused, by
means of false pretenses executed prior to or simultaneously with
the commission of the fraud, falsely pretending to have the capacity
and power to send complainant Elenita Marasigan to work abroad,
succeeded in inducing the latter to give and deliver to her the total
sum of P23,000.00, the accused knowing fully well that the said
manifestations and representation are false and fraudulent and
calculated only to deceive the said complainant to part with her
money, and, once in possession thereof, the said accused did then
and there willfully, unlawfully and feloniously appropriate, apply and
convert the same to her own personal use and benefit, to the damage
and prejudice of the said Elenita Marasigan, in the aforementioned
amount of P23,000.00. 2
Upon arraignment, appellant pleaded not guilty to the charges and the cases
were tried jointly in Branch 145 of the Regional Trial Court of Makati.

Of the three complainants in the case for illegal recruitment in large scale,
Marasigan was the only one who testified at the trial. The two other
complainants, Generillo and Del Rosario, were unable to testify as they were
then abroad.
Marasigan testified that she was a 32 year-old unmarried sales
representative in 1992 when she was introduced to appellant by her cocomplainants. 3 Appellant promised Marasigan a job as a factory worker in
Taiwan for a P5,000.00 fee. At that time, Marasigan had a pending
application for overseas employment pending in a recruitment agency.
Realizing that the fee charged by appellant was much lower than that of the
agency, Marasigan withdrew her money from the agency and gave it to
appellant. 4
Marasigan paid appellant P5,000.00, but she was later required to make
additional payments. By the middle of the year, she had paid a total of
P23,000.00 on installment basis. 5 Save for two receipts, 6 Marasigan was not
issued receipts for the foregoing payments despite her persistence in
requesting for the same.
Marasigan was assured by appellant that obtaining a Taiwanese visa would
not be a problem. 7 She was also shown a plane ticket to Taiwan, allegedly
issued in her name. 8 Appellant issued Marasigan a photocopy of her plane
ticket,9 the original of which was promised to be given to her before her
departure. 10
Marasigan was never issued a visa. 11 Neither was she given the promised
plane ticket. Unable to depart for Taiwan, she went to the travel agency
which issued the ticket and was informed that not only was she not booked
by appellant for the alleged flight, but that the staff in the agency did not
even know appellant.
Later, Marasigan proceeded to the supposed residence of appellant and was
informed that appellant did not live there. 12 Upon verification with the
Philippine Overseas Employment Administration (POEA), it was revealed that
appellant was not authorized to recruit workers for overseas
employment. 13 Marasigan wanted to recover her money but, by then,
appellant could no longer be located.
The prosecution sought to prove that Generillo and Del Rosario, the two
other complainants in the illegal recruitment case, were also victimized by
appellant. In lieu of their testimonies, the prosecution presented as witnesses
Lilia Generillo, the mother of Imelda Generillo, and Victoria Amin, the sister
of Del Rosario.
Lilia Generillo claimed that she gave her daughter P8,000.00 to cover her
application
for
placement
abroad
which
was
made
through
appellant. 14 Twice, she accompanied her daughter to the residence of
appellant so that she could meet her; however, she was not involved in the
transactions between her daughter and appellant. 15 Neither was she around
when payments were made to appellant. Imelda Generillo was unable to leave
for abroad and Lilia Generillo concluded that she had become a victim of
illegal recruitment.

The prosecution presented Victoria Amin, the sister of Rosamar Del Rosario,
to show that the latter was also a victim of illegal recruitment. Victoria Amin
testified that appellant was supposed to provide her sister a job abroad. She
claimed that she gave her sister a total of P10,000.00 which was intended to
cover the latter's processing fee.16
Victoria Amin never met appellant and was not around when her sister made
payments. She assumed that the money was paid to appellant based on
receipts, allegedly issued by appellant, which her sister showed her. 17 Del
Rosario was unable to leave for abroad despite the representations of
appellant. Victoria Amin claimed that her sister, like Marasigan and
Generillo, was a victim of illegal recruitment.
The final witness for the prosecution was Riza Balberte, 18 a representative of
the POEA, who testified that appellant was neither licensed nor authorized to
recruit workers for overseas employment, POEA certificate certification. 19
Upon the foregoing evidence, the prosecution sought to prove that although
two of the three complainants in the illegal recruitment case were unable to
testify, appellant was guilty of committing the offense against all three
complainants and, therefore, should be convicted as charged.
On the other hand, appellant, who was the sole witness for the defense,
denied that she recruited the complainants for overseas employment and
claimed that the payments made to her were solely for purchasing plane
tickets at a discounted rate as she had connections with a travel agency. 20
She denied that she was paid by Marasigan the amount of P23,000.00,
claiming that she was paid only P8,000.00, as shown by a receipt. She
further insisted that, through the travel agency, 21 she was able to purchase
discounted plane tickets for the complainants upon partial payment of the
ticket prices, the balance of which she guaranteed. According to her, the
complainants were supposed to pay her the balance but because they failed
to do so, she was obliged to pay the entire cost of each ticket.
The evidence presented by the parties were thus contradictory but the trial
court found the prosecution's evidence more credible. On December 17,
1993, judgment was rendered by said court convicting appellant of both
crimes as charged. 22
In convicting appellant of illegal recruitment in large scale, the lower court
adopted a previous decision of Branch 78 of the Metropolitan Trial Court of
Paraaque as a basis for the judgment. Said previous decision was a
conviction for estafa promulgated on July 26, 1993, 23 rendered in Criminal
Cases Nos. 74852-53, involving the same circumstances in the instant case,
wherein complainants Generillo and Del Rosario charged appellant with two
counts of estafa. This decision was not appealed and had become final and
executory.
In thus convicting appellant in the illegal recruitment case, the decision
therein of the Regional Trial Court stated that the facts in the foregoing
estafa cases were the same as those in the illegal recruitment case before it.
It, therefore, adopted the facts and conclusions established in the earlier

decision as its own findings of facts and as its retionale for the conviction in
the case before it. 24
In Criminal Case No. 92-6153, the Makati court sentenced appellant to serve
the penalty of life imprisonment for illegal recruitment in large scale, as well
as to pay a fine of P100,000.00. Appellant was also ordered to reimburse the
complainants the following payments made to her, viz.: (a) Marasigan,
P23,000.00; (b) Generillo, P2,500.00; and (c) Del Rosario, P2,500.00.
In the same judgment and for the estafa charged in Criminal Case No. 926154, the Makati court sentenced appellant to suffer imprisonment of four (4)
years and two (2) months of prision correccional, as minimum, to eight (8)
years of prision mayor, as maximum, and to pay the costs.
In the instant petition, appellant seeks the reversal of the foregoing judgment
of the Regional Trial Court of Makati convicting her of illegal recruitment in
large scale and estafa. Specifically, she insists that the trial court erred in
convicting her of illegal recruitment in large scale as the evidence presented
was insufficient.
Moreover, appellant claims that she is not guilty of acts constituting illegal
recruitment, in large scale or otherwise, because contrary to the findings of
the trial court, she did not recruit the complainants but merely purchased
plane tickets for them. Finally, she contends that in convicting her of estafa,
the lower court erred as she did not misappropriate the money paid to her by
Marasigan, hence there was no damage to the complainants which would
substantiate the conviction.
We uphold the finding that appellant is guilty but we are, compelled to
modify the judgment for the offenses she should be convicted of and the
corresponding penalties therefor.
Appellant maintains that her conviction for illegal recruitment in large scale
is erroneous. It is her view that in the prosecution of a case for such offense,
at least three complainants are required to appear as witnesses in the trial
and, since Marasigan was the only complainant presented as a witness, the
conviction was groundless.
The Solicitor General also advocates the conviction of appellant for simple
illegal recruitment which provides a lower penalty. The Court finds the
arguments of the Solicitor General meritorious and adopts his position.
The Labor Code defines recruitment and placement as ". . . any act of
canvassing, enlisting, contracting transporting, utilizing, hiring or procuring
workers and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not . . . ." 25
Illegal recruitment is likewise defined and made punishable under the Labor
Code, thus:
Art. 38. Illegal Recruitment.
(a) Any recruitment activities, including the prohibited practices
enumerated under Article 34 of this Code, to be undertaken by non-

licensees or non-holders of authority shall be deemed illegal and

punishable under Article 39 of this Code. . . .
(b) Illegal recruitment when committed by a syndicate or in large
scale shall be considered an offense involving economic sabotage and
shall be penalized in accordance with Article 39 hereof.
. . . Illegal recruitment is deemed committed in large scale if
committed against three (3) or more persons individually or as a
group.
Art. 39. Penalties.
(a) The penalty of life imprisonment and a fine of One Hundred
Thousand Pesos (P100,000.00) shall be imposed if Illegal
Recruitment constitutes economic sabotage as defined herein;
xxx xxx xxx
(c) Any person who is neither a licensee nor a holder of authority
under this Title found violating any provision thereof or its
implementing rules and regulations shall, upon conviction thereof,
suffer the penalty of imprisonment of not less than four (4) years nor
more than eight (8) years or a fine of not less than P20,000.00 nor
more than P100,000.00, or both such imprisonment and fine, at the
discretion of the court. . . . 26
During the pendency of this case, Republic Act No. 8042, otherwise known
as the "Migrant Workers and Overseas Filipinos Act of 1995," was passed
increasing the penalty for illegal recruitment. This new law, however, does
not apply to the instant case because the offense charged herein was
committed in 1992, before the effectivity of said Republic Act No. 8042.
Hence, what are applicable are the aforecited Labor Code provisions.
It is evident that in illegal recruitment cases, the number of persons
victimized is determinative. Where illegal recruitment is committed against a
lone victim, the accused may be convicted of simple illegal recruitment which
is punishable with a lower penalty under Article 39(c) of the Labor Code.
Corollarily, where the offense is committed against three or more persons, it
is qualified to illegal recruitment in large scale which provides a higher
penalty under Article 39(a) of the same Code.
The position of the Solicitor General is that the conviction of appellant should
be merely for the lesser offense of simple illegal recruitment. He submits that
the Regional Trial Court of Makati erred in convicting appellant of illegal
recruitment in large scale because the conviction was based on an earlier
decision of the Metropolitan Trial Court of Paraaque where appellant was
found guilty of estafa committed against Generillo and Del Rosario.
It is argued that the Makati court could not validly adopt the facts embodied
in the decision of the Paraaque court to show that illegal recruitment was
committed against Generillo and Del Rosario as well. Illegal recruitment was
allegedly proven to have been committed against only one person,
particularly, Elenita Marasigan. Appellant, therefore, may only be held guilty
of simple illegal recruitment and not of such offense in large scale.

He further submits that the adoption by the Makati court of the facts in the
decision of the Paraaque court for estafa to constitute the basis of the
subsequent conviction for illegal recruitment is erroneous as it is a violation
of the right of appellant to confront the witnesses, that is, complainants
Generillo and Del Rosario, during trial before it. He cites the pertinent
provision of Rule 115 of the Rules of Court, to wit:
Sec. 1. Rights of accused at the trial. In all criminal prosecutions, the
accused shall be entitled:
xxx xxx xxx
(f) To confront and cross-examine the witnesses against him at the
trial. Either party may utilize as part of its evidence the testimony of
a witness who is deceased, out of or cannot, with due diligence be
found in the Philippines, unavailable or otherwise unable testify,
given in another case or proceeding, judicial or administrative,
involving the same parties and subject matter, the adverse party
having had the opportunity to cross-examine him.
xxx xxx xxx
It will be noted that the principle embodied in the foregoing rule is likewise
found in the following provision of Rule 130:
Sec. 47. Testimony or deposition at a former proceeding. The
testimony or deposition of a witness deceased or unable to testify,
given in a former case or proceeding, judicial or administrative,
involving the same parties and subject matter, may be given in
evidence against the adverse party who had the opportunity to crossexamine him.
Under the aforecited rules, the accused in a criminal case is guaranteed the
right of confrontation. Such right has two purposes: first, to secure the
opportunity of cross-examination; and, second, to allow the judge to observe
the deportment and appearance of the witness while testifying. 27
This right, however, is not absolute as it is recognized that it is sometimes
impossible to recall or produce a witness who has already testified in a
previous proceeding, in which event his previous testimony is made
admissible as a distinct piece of evidence, by way of exception to the hearsay
rule. 28 The previous testimony is made admissible because it makes the
administration of justice orderly and expeditious. 29
Under these rules, the adoption by the Makati trial court of the facts stated
in the decision of the Paraaque trial court does not fall under the exception
to the right of confrontation as the exception contemplated by law covers only
the utilization of testimonies of absent witnesses made in previous
proceedings, and does not include utilization of previous decisions or
judgments.
In the instant case, the prosecution did not offer the testimonies made by
complainants Generillo and Del Rosario in the previous estafa case. Instead,
what was offered, admitted in evidence, and utilized as a basis for the

conviction in the case for illegal recruitment in large scale was the previous
decision in the estafa case.
A previous decision or judgment, while admissible in evidence, may only
prove that an accused was previously convicted of a crime. 30 It may not be
used to prove that the accused is guilty of a crime charged in a subsequent
case, in lieu of the requisite evidence proving the commission of the crime, as
said previous decision is hearsay. To sanction its being used as a basis for
conviction in a subsequent case would constitute a violation of the right of
the accused to confront the witnesses against him.
As earlier stated, the Makati court's utilization of and reliance on the
previous decision of the Paraaque court must be rejected. Every conviction
must be based on the findings of fact made by a trial court according to its
appreciation of the evidence before it. A conviction may not be based merely
on the findings of fact of another court, especially where what is presented is
only its decision sans the transcript of the testimony of the witnesses who
testified therein and upon which the decision is based.
Furthermore, this is not the only reason why appellant may not be held liable
for illegal recruitment in large scale. An evaluation of the evidence presented
before the trial court shows us that, apart from the adopted decision in the
previous estafa case, there was no other basis for said trial court's
conclusion that illegal recruitment in large scale was committed against all
three complainants.
The distinction between simple illegal recruitment and illegal recruitment in
large scale are emphasized by jurisprudence. Simple illegal recruitment is
committed where a person: (a) undertakes any recruitment activity defined
under Article 13(b) or any prohibited practice enumerated under Articles 34
and 38 of the Labor Code; and (b) does not have a license or authority to
lawfully engage in the recruitment and placement of workers. 31 On the other
hand, illegal recruitment in large scale further requires a third element, that
is, the offense is committed against three or more persons, individually or as
a group. 32
In illegal recruitment in large scale, while the law does not require that at
least three victims testify at the trial, it is necessary that there is sufficient
evidence proving that the offense was committed against three or more
persons. This Court agrees with the trial court that the evidence presented
sufficiently proves that illegal recruitment was committed by appellant
against Marasigan, but the same conclusion cannot be made as regards
Generillo and Del Rosario as well.
The testimonies of Generillo's mother, Lilia Generillo, and Del Rosario's
sister, Victoria Amin, reveal that these witnesses had no personal knowledge
of the actual circumstances surrounding the charges filed by Generillo and
Del Rosario for illegal recruitment in large scale. Neither of these witnesses
was privy to the transactions between appellant and each of the two
complainants. The witnesses claimed that appellant illegally recruited
Generillo and Del Rosario. Nonetheless, we find their averments to be
unfounded as they were not even present when Generillo and Del Rosario
negotiated with and made payments to appellant.

For insufficiency of evidence and in the absence of the third element of illegal
recruitment in large scale, particularly, that "the offense is committed against
three or more persons," we cannot affirm the conviction for illegal
recruitment in large scale. Nonetheless, we agree with the finding of the trial
court that appellant illegally recruited Marasigan, for which she must be held
liable for the lesser offense of simple illegal recruitment.
Appellant's defense that she did not recruit Marasigan but merely purchased
a plane ticket for her is belied by the evidence as it is undeniable that she
represented to Marasigan that she had the ability to send people to work as
factory workers in Taiwan. Her pretext that the fees paid to her were merely
payments for a plane ticket is a desperate attempt to exonerate herself from
the charges and cannot be sustained.
Furthermore, no improper motive may be attributed to Marasigan in charging
appellant. The fact that Marasigan was poor does not make her so heartless
as to contrive a criminal charge against appellant. She was a simple woman
with big dreams and it was appellant's duplicity which reduced those dreams
to naught. Marasigan had no motive to testify falsely against appellant except
to tell the truth. 33
Besides, if there was anyone whose testimony needed corroboration, it was
appellant as there was nothing in her testimony except the bare denial of the
accusations. 34 If appellant really intended to purchase a plane ticket and not
to recruit Marasigan, she should have presented evidence to support this
claim. Also, in her testimony, appellant named an employee in the travel
agency who was allegedly her contact person for the purchase of the ticket.
She could have presented that person, or some other employee of the agency,
to show that the transaction was merely for buying a ticket. Her failure to do
the foregoing acts belies her pretensions.
The Court likewise affirms the conviction of appellant for estafa which was
committed against Marasigan. Conviction under the Labor Code for illegal
recruitment does not preclude punishment under the Revised Penal Code for
the felony of estafa. 35 This Court is convinced that the prosecution proved
beyond reasonable doubt that appellant violated Article 315(2) (a) of the
Revised Penal Code which provides that estafa is committed:
2. By means of any of the following false pretenses or fraudulent acts
executed prior to or simultaneously with the commission of the
fraud:
(a) By using fictitious name or falsely pretending to possess power,
influence, qualifications, property, credit, agency, business or
imaginary transactions, or by means of other similar deceits.
The evidence is clear that in falsely pretending to possess power to deploy
persons for overseas placement, appellant deceived the complainant into
believing that she would provide her a job in Taiwan. Her assurances made
Marasigan exhaust whatever resources she had to pay the placement fee
required in exchange for the promised job. The elements of deceit and
damage for this form of estafa are indisputably present, hence the conviction
for estafa in Criminal Case No. 92-6154 should be affirmed.

Under the Revised Penal Code, an accused found guilty of estafa shall be
sentenced to:
. . . The penalty of prision correccional in its maximum period
to prision mayor in its minimum period, if the amount of the fraud is
over 12,000 but does not exceed 22,000 pesos, and if such amount
exceeds the latter sum, the penalty provided in this paragraph shall
be imposed in its maximum period, adding one year for each
additional 10,000 pesos. . . . 36
The amount involved in the estafa case is P23,000.00. Applying the
Indeterminate Sentence Law, the maximum penalty shall be taken from the
maximum period of the foregoing basic penalty, specifically, within the range
of imprisonment from six (6) years, eight (8) months and twenty-one (21)
days to eight (8) years.
On the other hand, the minimum penalty of the indeterminate sentence shall
be within the range of the penalty next lower in degree to that provided by
law, without considering the incremental penalty for the amount in excess of
P22,000.00. 37 That penalty immediately lower in degree is prison
correccional in its minimum and medium periods, with a duration of six (6)
months and one (1) day to four (4) years and two (2) months. On these
considerations, the trial court correctly fixed the minimum and maximum
terms of the indeterminate sentence in the estafa case.
While we must be vigilant and should punish, to the fullest extent of the law,
those who prey upon the desperate with empty promises of better lives, only
to feed on their aspirations, we must not be heedless of the basic rule that a
conviction may be sustained only where it is for the correct offense and the
burden of proof of the guilt of the accused has been met by the prosecution.
WHEREFORE, the judgment of the court a quo finding accused-appellant
Lanie Ortiz-Miyake guilty beyond reasonable doubt of the crimes of illegal
recruitment in large scale (Criminal Case No. 92-6153) and estafa (Criminal
Case No. 92-6154) is hereby MODIFIED, as follows.
1) Accused-appellant is declared guilty beyond reasonable doubt of simple
illegal recruitment, as defined in Article 38(a) of the Labor Code, as amended.
She is hereby ordered to serve an indeterminate sentence of four (4) years, as
minimum, to eight (8) years, as maximum, and to pay a fine of P100,000.00.
2) In Criminal Case No. 92-6154 for estafa, herein accused-appellant is
ordered to serve an indeterminate sentence of four (4) years and two (2)
months of prision correccional, as minimum, to eight (8) years of prision
mayor, as maximum, and to reimburse Elenita Marasigan the sum of
P23,000.00.
In all other respects, the aforestated judgment is AFFIRMED, with costs
against accused-appellant in both instances.
SO ORDERED.

G.R. No. 173792

August 31, 2011

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
ROSARIO "ROSE" OCHOA, Accused-Appellant.
DECISION
LEONARDO-DE CASTRO, J.:
For Our consideration is an appeal from the Decision1 dated March 2, 2006
of the Court of Appeals in CA-G.R. CR.-H.C. No. 00888, which affirmed with
modification the Decision2 dated April 17, 2000 of the Regional Trial Court
(RTC), Quezon City, Branch 104, in Criminal Case Nos. 98-77300 to 9877303. The RTC found accused-appellant Rosario "Rose" Ochoa (Ochoa)
guilty of illegal recruitment in large scale, as defined and penalized under
Article II, Section 6 in relation to Section 7(b) of Republic Act No. 8042,
otherwise known as the "Migrant Workers and Overseas Filipinos Act of
1995," in Criminal Case No. 98-77300; and of the crime of estafa, as defined
and penalized in Article 315, paragraph 2(a) of the Revised Penal Code, in
Criminal Case Nos. 98-77301, 98-77302, and 98-77303.
The Information filed before the RTC and docketed as Criminal Case No. 9877300, charged Ochoa with illegal recruitment in large scale, allegedly
committed as follows:
That on or about the period covering the months of February 1997 up to
April 1998 or immediately before or subsequent thereto in Quezon City,
Philippines and within the jurisdiction of this Honorable Court, the above
name accused, did then and there willfully, unlawfully and feloniously recruit
Robert Gubat, Junior Agustin, Cesar Aquino, Richard Luciano, Fernando
Rivera, Mariano R. Mislang, Helen B. Palogo, Joebert Decolongon, Corazon S.
Austria, Cristopher A. Bermejo, Letecia D. Londonio, Alma Borromeo,
Francisco Pascual, Raymundo A. Bermejo and Rosemarie A. Bermejo for a
consideration ranging from P2,000.00 to P32,000.00 or a total amount
ofP124,000.00 as placement fee which the complainants paid to herein
accused without the accused having secured the necessary license from the
Department of Labor and Employment.3 (Emphases supplied.)
Three other Informations were filed before the RTC and docketed as Criminal
Case Nos. 98-77301, 98-77302, and 98-77303, this time charging Ochoa
with three counts of estafa, committed separately upon three private
complainants Robert Gubat (Gubat), Cesar Aquino (Cesar), and Junior
Agustin (Agustin), respectively. The Information in Criminal Case No. 9877301 accuses Ochoa of the following acts constituting estafa:
That on or about March 3, 1998 in Quezon City, Philippines and within the
jurisdiction of this Honorable Court, the above name accused did then and
there willfully, unlawfully and feloniously recruit and promise employment in
Taiwan to one ROBERT GUBAT for a consideration of P18,800.00 as
placement fee, knowing that she has no power, capacity or lawful authority
whatsoever and with no intention to fulfill her said promise, but merely as
pretext, scheme or excuse to get and exact money from said complainant, as

she did in fact collect and received the amount of P18,800.00 from said
Robert Gubat, to his damage and prejudice.4 (Emphases supplied.)
The two other Informations for estafa were similarly worded as the
aforequoted Information, except as to the name of the private complainants
and the amount purportedly collected by Ochoa from them, particularly:
Docket No.

Private Complainant

Amount Collected

Criminal Case No. 98-773025

Cesar Aquino

P19.000.00

Criminal Case No. 98-773036

Junior Agustin

P32,000.00

As prayed for by the State Prosecutor, all four criminal cases against Ochoa
before the RTC were consolidated. When arraigned, Ochoa pleaded not guilty.
Thereafter, joint trial of the four criminal cases ensued.
The prosecution presented as witnesses Cory Aquino (Cory) of the Philippine
Overseas Employment Agency (POEA) and private complainants Gubat,
Agustin, Francisco Pascual (Pascual), Rosemarie Bermejo (Rosemarie), Cesar,
Christopher Bermejo (Christopher), Joebert Decolongon (Decolongon), and
Fernando Rivera (Rivera).
According to private complainants, they were recruited by Ochoa from
January to March 1998 for various jobs in either Taiwan or Saudi Arabia,
under the following circumstances:
1. In the second week of February 1998, Ochoa was introduced to
Robert Gubat, a licensed electrical engineer and a resident of Pulang
Lupa, Las Pias, through a certain Nila, Gubats neighbor, who had
a pending application for work abroad with Ochoa. Ochoa talked to
Gubat on the telephone, and during their conversation, Ochoa told
Gubat that one of her applicants was already leaving for Taiwan. Per
Ochoas instruction, Gubat met with Francisco Pascual, who
accompanied him to Ochoas house in San Bartolome, Novaliches,
Quezon City, and personally introduced Gubat to Ochoa. Gubat
submitted his rsum to Ochoa, which Ochoa would bring to Axil
International Agency where Ochoa was working as a recruiter. Right
after browsing through Gubats rsum, Ochoa informed Gubat that
as an engineer, Gubat was qualified to work as a factory supervisor
and could leave for Taiwan in two weeks or in March 1998. Ochoa
also told Gubat that the total application expenses would amount to
100,000.00, and the downpayment was 50,000.00. Gubat was
able to actually pay Ochoa 18,800.00 as reservation fee at the
agency; processing fee for Gubats papers at the Department of
Foreign Affairs (DFA), Malacaang, and Embassy of Taiwan; and
medical examination fee. Ochoa, however, only issued to Gubat three
receipts, dated March 3, March 31, and April 6, all in the year 1998,
in the amount of P5,000.00 each or a total of P15,000.00. Gubat

started to worry when he was not able to leave for abroad as Ochoa
promised and when she failed to show up at their arranged meetings.
When Gubat was finally able to talk to Ochoa, Ochoa again promised
him that he would be leaving for abroad soon. Despite Ochoas
renewed promise, Gubat was still not able to leave the country.
Gubat then demanded that Ochoa return his documents and money.
When Ochoa failed to comply with his demand, Gubat filed a report
against Ochoa at Barangay (Brgy.) San Bartolome, Novaliches,
Quezon City. On May 21, 1998, he met the other private
complainants7 who had similar complaints against Ochoa. When
nothing came out of the confrontation with Ochoa at Brgy. San
Bartolome, Gubat and the other private complainants filed a joint
complaint against Ochoa before the National Bureau of Investigation
(NBI).8
2. The paths of Junior Agustin and Ochoa crossed on February 2,
1998. Agustin, a farmer, was staying at the home of Pascual, his
cousin, at No. 4 Gulod, Novaliches, Quezon City. When Ochoa
arrived at Pascuals home, Pascual introduced Ochoa to Agustin as a
recruiter for overseas workers in Taiwan. Interested in working
abroad, Agustin submitted his bio-data to Ochoa at the latters
residence at Phase 1, Lot 3, San Bartolome, Novaliches, Quezon City.
Ochoa promised Agustin that he would be fielded as a factory worker
in Taiwan for three years, earning a monthly salary of P18,000.00.
Ochoa then informed Agustin that the total placement fee for Taiwan
is P80,000.00. Agustin initially paid Ochoa the sum of P28,000.00 as
processing fee. Ochoa then promised that Agustin could leave for
Taiwan in two months. However, the two months passed, but there
was still no overseas employment for Agustin. Agustin was compelled
to file a complaint against Ochoa at Brgy. San Bartolome,
Novaliches, Quezon City. Agustin met the other private complainants
during the barangay hearing on May 21, 1998. Ochoa was also
present at said hearing. Given the unsuccessful barangay hearing,
Agustin and the other private complainants lodged a complaint
against Ochoa before the NBI.9
3. Francisco Pascual, presently jobless and a resident of Gulod,
Novaliches, Quezon City, learned from a neighbor of one Mrs.
Bermejo that her son was being helped by Ochoa, a recruiter, to find
a job abroad. Pascual went to Mrs. Bermejos house in January
1998, and met Ochoa for the first time. Ochoa invited Pascual to
apply for a job abroad, saying that the latter could leave within two
weeks. During Pascuals visit at Ochoas house at Blk. 1, Lot 1, San
Bartolome, Novaliches, Quezon City, Ochoa promised Pascual
employment as a driver salesman in Saudi Arabia, with a monthly
salary of P18,000.00. Ochoa told Pascual that the placement fee
would be P7,000.00 and that Pascual should already have his
medical examination so that the position in Saudi Arabia could be
reserved for him. Since his visa had not yet arrived, Pascual did not
pay any placement fee to Ochoa. Pascual did undergo medical
examination at St. Peter Medical Clinic in Ermita, Manila, for which

he paid P2,600.00 to Ochoa. Pascual though did not receive the

results of his medical examination because according to Ochoa, the
same was withheld by the clinic. Despite Ochoas promises, Pascual
was not able to leave for Saudi Arabia. At that time, Pascual was still
employed as a Field Coordinator with Selecta, but because of his
frequent absences, spent following-up on his application for work
abroad, he was fired. Pascual filed a complaint against Ochoa at
Brgy. San Bartolome, Novaliches, Quezon City. As nothing happened
during the confrontation with Ochoa at the barangay hearing on May
21, 1998, Pascual and the other private complainants filed a
complaint before the NBI.10
4. Rosemarie Bermejo came to know of Ochoa through Rivera, a
friend of Rosemaries mother. Rosemarie first met Ochoa at the
latters home in Quezon City sometime in January 1998. Rosemarie
was promised by Ochoa employment for three years in Saudi Arabia
as clerk/typist, earning US$400.00. Rosemarie was also instructed
by Ochoa to have a medical examination and secure a passport and
NBI clearance. Rosemarie and her brothers, who also applied for jobs
abroad, were accompanied by Ochoa to the St. Peter Medical Clinic
in Malate, Manila for their medical examination on February 27,
1998. Rosemarie and her brother each handed over to
Ochoa P2,600.00 for their medical examinations, and it was Ochoa
who gave the payment to the clinic. Rosemarie and her brothers then
spent P55.00 each to secure NBI clearances for travel abroad. In
addition, Rosemarie gave Ochoa P5,500.00 on April 17, 1998; and
although not secured by a receipt, said payment was witnessed by
Rosemaries mother and Imelda Panuga, the landlord of Rosemaries
mother, who lent Rosemarie the P5,500.00. During their initial
meeting in January 1998, Ochoa said that Rosemarie could already
leave for abroad in two weeks. Since Rosemarie was not able to
complete the requirements, her departure for Saudi Arabia was
moved to April 19, 1998. On April 19, 1998, Ochoa requested
Rosemarie to go to the office of Al Arab Agency located at Jalandoni
Building, Ermita, Manila, to which Ochoa was purportedly
connected. Rosemarie waited at the Al Arab Agency until noon, but
no one came to pick her up. Later, at the same day, Ochoa invited
Rosemarie to her house for the birthday celebration of her father.
There, Ochoa explained that Rosemarie was unable to leave for Saudi
Arabia because the Al Arab Agency has yet to secure Rosemaries
Overseas Employment Certificate (OEC). Ochoa advised Rosemarie to
stay at the rented apartment of Rosemaries mother because it was
close to Ochoas house and would be more convenient as Rosemarie
could leave for abroad any day soon. When none of Ochoas promises
came to fruition, Rosemarie, together with the other private
complainants, first sought redress from Brgy. San Bartolome,
Novaliches, Quezon City, and then from the NBI.11
5. It was Pascual who introduced Cesar Aquino, a resident of Cubao,
to Ochoa at the latters residence in San Bartolome, Novaliches,
Quezon City, sometime in February 1998. When Cesar directly asked

Ochoa if she was a recruiter, the latter answered in the affirmative.

Cesar applied to work as a factory worker in Taiwan. Ochoa told
Cesar that as a factory worker, he could earn at least P15,000.00 a
month. On March 13, 1998, Cesar handed over P17,000.00 to Ochoa
to cover his processing fee and medical examination. On the same
day, Cesar had his medical examination at St. Peter Medical Clinic.
Ochoa then promised that Cesar could leave two weeks thereafter.
When two weeks had passed and he was not able to leave for Taiwan,
Cesar demanded that Ochoa return his money. Ochoa failed to
comply with Cesars demand, and Cesar instituted a complaint
against Ochoa at Brgy. San Bartolome, Novaliches, Quezon City. At
the hearing attended by Ochoa, Cesar, and the other private
complainants before the Barangay Lupon, Ochoa signed a
Kasunduan, agreeing to return the money to private complainants.
Again, Ochoa failed to fulfill her promise to return the money paid by
Cesar, thus, the latter, together with the other complainants, filed a
complaint with the NBI.12
6. Christopher Bermejo met Ochoa at the house of his mother in
Novaliches, Quezon City in January 1998. Also present at the house
were Fernando Bermejo, Christophers brother, and Richard Luciano.
Ochoa promised that after a week, Christopher would already be
deployed to Saudi Arabia as an accountant, earning 250-350 Saudi
Riyals. As a result, Christopher immediately resigned from his job at
the Development Bank of the Philippines (DBP). Christophers
mother paid Ochoa P5,000.00 as processing fee for Christophers
application. A week passed and Ochoa failed to send Christopher to
Saudi Arabia for work. When Rosemarie and Raymundo Bermejo
(Raymundo), Christophers sister and brother, respectively, also
failed to leave for work abroad as promised by Ochoa, Christopher,
Rosemarie, and their mother went to see Ochoa at an office at the
Jalandoni Building, Ermita, Manila. Ochoa explained that
Christopher and his siblings could not leave yet because there are
other documents that still need to be accomplished. Ochoa said that
she would just notify Christopher and his siblings of their scheduled
departure. When they still did not receive any notification from
Ochoa, Rosemarie, Raymundo, and their mother returned to the
office at the Jalandoni Building and found out that their placement
fees were not given to said office. Christopher joined the other private
complainants in filing a complaint against Ochoa before the NBI.13
7. Joebert Decolongon is a resident of Sta. Maxima, Gulod,
Novaliches,
Quezon
City,
and
works
as
a
bus
conductor.lawphi1 Decolongon was introduced to Ochoa by Rivera,
Decolongons friend, at Riveras house on Villareal Street, Gulod,
Novaliches. Ochoa informed Decolongon that there was a vacancy for
the position of janitor in Saudi Arabia, with a monthly salary of 800
Saudi Riyals. Decolongon submitted his application, birth certificate,
and passport to Ochoa. Ochoa also went to Decolongons house and
collected from Decolongons wife the initial amount of P2,000.00 as
placement fee. The rest of Decolongons placement fees would be paid

by one-month salary deduction. Trusting Ochoa, neither Decolongon

nor his wife demanded a receipt. When Ochoa failed to deploy
Decolongon for employment abroad, Decolongon too filed a complaint
against Ochoa before Brgy. San Bartolome, Novaliches, Quezon City.
Without a successful resolution at the barangay level, Decolongon
joined the private complainants in filing a complaint against Ochoa
before the NBI.14
8. Sometime in January 1998, Ochoa was accompanied by a certain
Amy to Fernando Riveras residence at 27 Villareal Street,
Novaliches, Quezon City. Ochoa first talked to Riveras mother who
had previously worked abroad. Ochoa then also offered work to
Rivera, either as tea boy or janitor in the army in Riyadh, Saudi
Arabia. Rivera chose to work as a tea boy, with a salary of 800 to
1,000 Saudi Riyals. Ochoa said that Rivera would be deployed in the
first week of February 1998. Ochoa required Rivera to submit NBI
clearance, passport, and pictures, but Rivera submitted only his NBI
clearance. In January 1998, Rivera paid Ochoa P2,000.00 as she
would be the one to secure Riveras passport. In March 1998, Rivera
handed over his ring and necklace, worth of P10,000.00, to Ochoa to
cover his processing and medical examination fees. Rivera did not
require a receipt from Ochoa because he trusted Ochoa, who was his
mothers friend. When Rivera failed to leave in February 1998, Ochoa
explained that Riveras departure was postponed until March 1998
due to Ramadan. After the period of Ramadan, Rivera was still not
able to leave for Saudi Arabia. Rivera then filed a complaint against
Ochoa before Brgy. San Bartolome, Novaliches, Quezon City. Ochoa
promised to return to Rivera his jewelries and P2,000.00, but Ochoa
did not appear at the barangay hearing set on April 30, 1998. Thus,
Rivera and the other private complainants proceeded to file a
complaint against Ochoa before the NBI.15
Cory C. Aquino of the POEA authenticated the Certification dated June 3,
1998, issued by Hermogenes C. Mateo (Mateo), Director, Licensing Branch of
the POEA, that Ochoa, in her personal capacity, is neither licensed nor
authorized by the POEA to recruit workers for overseas employment. Cory
identified Director Mateos signature on the Certification, being familiar with
the same. The Certification was issued after a check of the POEA records
pursuant to a request for certification from the NBI. Cory, however, admitted
that she did not participate in the preparation of the Certification, as the
NBIs request for certification was through a counter transaction, and
another person was in charge of verification of counter transactions.16
Ochoa testified on her own behalf.
Ochoa stated under oath that she was employed by AXIL International
Services and Consultant (AXIL) as recruiter on December 20, 1997. AXIL had
a temporary license to recruit Filipino workers for overseas employment.
Ochoa worked at AXIL from 8:00 a.m. to 5:00 p.m. and was paid on a
commission basis. She admitted recruiting private complainants and
receiving from them the following amounts as placement and medical fees:

maximum, and to indemnify complainant Robert Gubat in the

amount of Eighteen Thousand Eight Hundred (P18,800.00) Pesos.

Private Complainant Amounts Collected

fees17

Robert Gubat

P18,000.00 for placement and medical

Junior Agustin

P22,000.00 for placement and medical fees18

Francisco Pascual

P 2,000.00 for medical fee19

Rosemarie Bermejo

P 2,600.00 for medical fee20

Cesar Aquino

P 19,000.00 for placement and medical fees21

Christopher Bermejo P 2,600.00 for medical fee22

Joebert Decolongon

P 6,000.00 for medical fee23

Fernando Rivera

P 2,000.00 for medical fee24

Ochoa claimed though that she remitted private complainants money to a

person named Mercy, the manager of AXIL, but AXIL failed to issue receipts
because the private complainants did not pay in full.25
On April 17, 2000, the RTC rendered a Decision finding Ochoa guilty beyond
reasonable doubt of the crimes of illegal recruitment in large scale (Criminal
Case No. 98-77300) and three counts of estafa (Criminal Case Nos. 9877301, 98-77302, 98-77303). The dispositive portion of said Decision reads:
WHEREFORE, judgment is hereby rendered as follows:
1. In Criminal Case No. 98-77300, the Court finds the accused,
ROSARIO "ROSE" OCHOA, guilty beyond reasonable doubt as
principal of ILLEGAL RECRUITMENT IN LARGE SCALE, defined and
penalized in Section 6 in relation to Section 7 (b) of Republic Act No.
8042, and sentences her to life imprisonment and a fine of One
Million Pesos.
2. In Criminal Case No. 98-77301, the Court finds the accused,
ROSARIO "ROSE" OCHOA, guilty beyond reasonable doubt as
principal of the crime of ESTAFA, defined and penalized in Article
315, paragraph 2 (a) of the Revised Penal Code, and sentences her to
an indeterminate penalty of two (2) years, eleven (11) months and
eleven (11) days of prision correccional as minimum to six (6) years,
eight (8) months and twenty (20) days of prision mayor, as

3. In Criminal Case No. 98-77302, the Court finds the accused,

ROSARIO "ROSE" OCHOA, guilty beyond reasonable doubt as
principal of the crime of ESTAFA, defined and penalized in Article
315, paragraph 2 (a) of the Revised Penal Code, and sentences her to
an indeterminate penalty of two (2) years, eleven (11) months and
eleven (11) days of prision correccional as minimum to six (6) years,
eight (8) months and twenty (20) days of prision mayor as maximum,
and to indemnify the complainant Cesar Aquino in the amount of
Seventeen Thousand (P17,000.00) Pesos.
4. In Criminal Case No. 98-77303, the Court finds the accused,
ROSARIO "ROSE" OCHOA, guilty beyond reasonable doubt as
principal of the crime of ESTAFA, defined and penalized in Article
315, paragraph 2 (a) of the Revised Penal Code, and sentences her to
an indeterminate penalty of two (2) years, eleven (11) months and
eleven (11) days of prision correccional as minimum to six (6) years,
eight (8) months and twenty-one (21) days of prision mayor as
maximum, and to indemnify complainant Junior Agustin in the
amount of Twenty-Eight Thousand (P28,000.00) Pesos.26
Ochoa filed a Notice of Appeal27 in which she stated her intention to appeal
the RTC judgment of conviction and prayed that the records of her case be
forwarded to the Court of Appeals. Ochoas appeal was docketed as CA-G.R.
CR. No. 24147 before the Court of Appeals.
In a Resolution28 dated August 8, 2000, the Court of Appeals granted
Ochoas First Motion for Extension of Time to file her brief.
Ochoa filed her Appellants Brief on September 4, 200029 while the People,
through the Office of the Solicitor General (OSG), filed its Appellees Brief on
March 1, 2001.30
The Special Fourteenth Division of the Court of Appeals promulgated its
Decision31 dated June 17, 2002 affirming the appealed RTC decision dated
April 17, 2000. Ochoa filed a Motion for Reconsideration,32 which the People
opposed for being bereft of merit.33
In its Resolution34 dated August 6, 2003, the Court of Appeals declared that
it had no jurisdiction over Ochoas appeal, ratiocinating thus:
We affirmed this judgment on 17 June 2002. While neither the accusedappellant nor the Office of the Solicitor General representing the people ever
raised the issue of jurisdiction, our second look at the suit proved worthwhile
because we came to realize that we mistakenly assumed jurisdiction over this
case where it does not obtain.
It was error to consider accused-appellants appeal from a trial court
judgment imposing life imprisonment in Criminal Case No. Q-98-77300 for
illegal recruitment in a large scale. Consequently, the judgment we rendered
dated 17 June 2002 is null and void. No less than Article VIII, 5(2)(d) of the
Constitution proscribes us from taking jurisdiction

SECTION 5. The Supreme Court shall have the following powers:

xxxx
(2) Review, revise, reverse, modify or affirm on appeal or certiorari as the law
or Rules of Court may provide, final judgments and orders of the lower court
in:
xxxx
(d) All criminal cases in which the penalty imposed is reclusion perpetua or
higher
17(1) of the Judiciary Act of 1948 reiterates
SECTION 17. Jurisdiction of the Supreme Court.
The Supreme Court shall have exclusive jurisdiction to review, revise,
reverse, modify or affirm on appeal, as the law or rules of court may provide,
final judgments and decrees of inferior courts as herein provided, in
(1) All criminal cases involving offenses for which the penalty imposed is life
imprisonment; and those involving offenses which, although not so
punished, arose out of the same occurrences or which may have been
committed by the accused on the same occasion as that giving rise to the
more serious offense, regardless of whether the accused are charged as
principals, accomplices, or accessories, or whether they have been tried
jointly or separately; x x x.
3 of Rule 122 of the Revised Rules of Criminal Procedure likewise declares
SEC. 3. How appeal taken.
(c) The appeal to the Supreme Court in cases where the penalty imposed by
the Regional Trial Court is reclusion perpetua or life imprisonment, or where
a lesser penalty is imposed but for offenses committed on the same occasion
or which arose out of the same occurrence that gave rise to the more serious
offense for which the penalty of death, reclusion perpetua, or life
imprisonment is impose[d], shall be by filing a notice of appeal in accordance
with paragraph (a) of this section.
Even if only in Criminal Case No. Q-98-77300 was the penalty of life
imprisonment meted out, we still cannot consider the appeal of the verdict in
Criminal Case Nos. 98-77301 to 98-77303 for as the Supreme Court clearly
clarified
An appeal of a single decision cannot be split between two courts. The
splitting of appeals is not conclusive to the orderly administration of justice
and invites possible conflict of dispositions between the reviewing courts.
Specifically, the Court of Appeals has no jurisdiction to review an appeal of a
judgment imposing an indeterminate sentence, if the same ruling also
imposes reclusion perpetua, life imprisonment and death for crimes arising
out of the same facts. In other words, the Supreme Court has exclusive
jurisdiction over appeals of criminal cases in which the penalty imposed
below is reclusion perpetua, life imprisonment or death, even if the same

decision orders, in addition, a lesser penalty or penalties for crimes arising

out of the same occurrence or facts.
It will be seen that Robert Gubat, private complainant in Criminal Case No.
Q-98-77301, Cesar Aquino, private complainant in Criminal Case No. Q-9877302 and Junior Agustin, private complainant in Criminal Case No. Q-9877303 were also the private complainant in the illegal recruitment in a large
scale suit, docketed as Criminal Case No. Q-98-77300. As gleaned from the
charges, the estafa cases were intimately related to or arose from the facts
and occurrences of the alleged illegal recruitment. Clearly, we have no
recourse but to refuse cognizance over the estafa cases as well.35
Despite its lack of jurisdiction over Ochoas appeal, the Court of Appeals did
not dismiss the same and merely ordered its transfer to us:
While the Supreme Court Circular No. 2-90 directs the dismissal of appeals
filed before the wrong court, the Supreme Court has in practice allowed the
transfer of records from this Court to the highest court. In which case, we
shall subscribe to this practice in the interest of substantial justice.
WHEREFORE, premises considered, our decision is declared NULL and
VOID. We order the TRANSFER of the records of Criminal Cases Nos. 9877300 to 98-77303 to the Supreme Court for proper action.36
In the Resolution37 dated September 17, 2003, we accepted Ochoas appeal
and informed both Ochoa and the OSG to file their respective additional
briefs. Ochoas appeal was then docketed as G.R. No. 159252.
On August 17, 2004, Ochoas counsel filed an explanation stating that he
had nothing more to add since he had already written and filed all necessary
pleadings, complete with all the necessary research and arguments. 38
In the meantime, People v. Mateo39 was promulgated on July 7, 2004, where
we held that an appeal from the decisions of the RTC, sentencing the accused
to life imprisonment or reclusion perpetua, should be made to the Court of
Appeals. Thus, in our Resolution40 dated March 11, 2005, the Court ordered
the transfer of the records of G.R. No. 159252 to the Court of Appeals for a
decision on the merit. We likewise directed the Court of Appeals to raffle the
said case to any of its regular divisions.
When Ochoas appeal was before the Court of Appeals a second time, it was
docketed as CA-G.R. CR.-H.C. No. 00888. The Court of Appeals, in a
Decision dated March 2, 2006, affirmed with modification the RTC Decision
dated April 17, 2000. The appellate court essentially affirmed the findings of
fact and law of the RTC, but reduced the award of damages in Criminal Case
No. 98-77301 and increased the prison sentence in Criminal Case No. 9877303. The decretal portion of said Decision reads:
WHEREFORE, judgment is hereby rendered as follows:
I. The judgment of the trial court in Criminal Case No. 98-77300
finding appellant Rosario Ochoa guilty beyond reasonable doubt of
Illegal Recruitment in Large Scale constituting economic sabotage
under Sec. 6 (l) and (m) in relation to Sec. 7(b) of R.A. No. 8042 and

sentencing her to life imprisonment and a fine of One Million Pesos

(P1,000,000.00) is AFFIRMED.
II. The judgment in Criminal Case No. 98-77301, finding appellant
guilty beyond reasonable doubt of estafa is MODIFIED. Appellant is,
hereby, ordered to indemnify Robert Gubat in the amount of
P15,000.00 only as and by way of actual damages.
III. The judgment in Criminal Case No. 98-77302, finding appellant
guilty beyond reasonable doubt of estafa is AFFIRMED.
IV. The judgment in Criminal Case No. 98-77303, finding appellant
guilty beyond reasonable doubt of estafa is MODIFIED. Appellant is,
hereby, sentenced to an indeterminate penalty of FOUR (4) YEARS
and TWO (2) MONTHS of prision correccional as minimum, to EIGHT
(8) YEARS OF prision mayor as maximum.41
Ochoas appeal is anchored on the following assignment of errors:
The lower court erred:
a. In admitting Exhibit "A" the POEA Certification when it was
already excluded during the bail hearing
b. In shifting the burden of the accused to prove that there was no
illegal recruitment
c. In finding that there was estafa
d. By not limiting liability of the accused to civil liability

only 42

We find no reversible error in the assailed Court of Appeals decision.

Illegal recruitment in large scale
Ochoa was charged with violation of Section 6 of Republic Act No. 8042. Said
provision broadens the concept of illegal recruitment under the Labor
Code43 and provides stiffer penalties, especially for those that constitute
economic sabotage, i.e., illegal recruitment in large scale and illegal
recruitment committed by a syndicate.
Section 6 of Republic Act No. 8042 defines illegal recruitment as follows:
SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines: Provided, That any such non-licensee or
non-holder who, in any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so engaged. It shall likewise
include the following acts, whether committed by any person, whether a nonlicensee, non-holder, licensee or holder of authority:
xxxx

(m) Failure to reimburse expenses incurred by the worker in connection with

his documentation and processing for purposes of deployment, in cases
where the deployment does not actually take place without the worker's fault.
Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if committed against three (3)
or more persons individually or as a group.
It is well-settled that to prove illegal recruitment, it must be shown that
appellant gave complainants the distinct impression that she had the power
or ability to send complainants abroad for work such that the latter were
convinced to part with their money in order to be employed.44 All eight
private complainants herein consistently declared that Ochoa offered and
promised them employment overseas. Ochoa required private complainants
to submit their bio-data, birth certificates, and passports, which private
complainants did. Private complainants also gave various amounts to Ochoa
as payment for placement and medical fees as evidenced by the receipts
Ochoa
issued
to
Gubat,45 Cesar,46 and
Agustin.47 Despite
private
complainants compliance with all the requirements Ochoa specified, they
were not able to leave for work abroad. Private complainants pleaded that
Ochoa return their hard-earned money, but Ochoa failed to do so.
Ochoa contends that Exhibit "A," the POEA certification which states that
Ochoa, in her personal capacity, is neither licensed nor authorized to recruit
workers for overseas employment was already rejected by the RTC during
the hearings on bail for being hearsay, and should not have been admitted by
the RTC after the trial on the merits of the criminal cases. Inadmissible
evidence during bail hearings do not become admissible evidence after formal
offer. Without the POEA certification, the prosecution had no proof that
Ochoa is unlicensed to recruit and, thus, she should be acquitted.
Ochoas contention is without merit.
We refer to the following ruling in Fullero v. People,48 wherein we rejected a
similar argument raised by petitioner therein against a certification issued by
an officer of the Professional Regulation Commission:
Regarding the third issue, petitioner contended that the prosecution's
documentary evidence, consisting of Exhibits "A," "C," "F," "G," "H," "I," "J,"
"K," "L," "M," "N," "O," "P," "Q" and "R" and their sub-markings, are
inadmissible in evidence based on the following reasons:
(1) Exhibit "A," which is the Certification of the PRC dated 17 January 1998,
confirming that petitioner's name does not appear in the registry books of
licensed civil engineers, was not properly identified during the trial. The
proper person to identify the certification should have been the signatory
therein which was PRC Director II Jose A. Arriola, or in his absence, a person
who actually witnessed the execution of the certification. Prosecution witness
Atayza, who was not present when the certification was executed, had
identified the certification during the trial. Thus, the contents of the
certification are mere hearsay; x x x.

xxxx
Section 36, Rule 130 of the Revised Rules on Evidence, states that a witness
can testify only to those facts which he knows of or comes from his personal
knowledge, that is, which are derived from his perception. A witness,
therefore, may not testify as to what he merely learned from others either
because he was told, or he read or heard the same. Such testimony is
considered hearsay and may not be received as proof of the truth of what he
has learned. This is known as the hearsay rule.
The law, however, provides for specific exceptions to the hearsay rule. One of
the exceptions is the entries in official records made in the performance of
duty by a public officer. In other words, official entries are admissible in
evidence regardless of whether the officer or person who made them was
presented and testified in court, since these entries are considered prima
facie evidence of the facts stated therein. Other recognized reasons for this
exception are necessity and trustworthiness. The necessity consists in the
inconvenience and difficulty of requiring the official's attendance as a witness
to testify to innumerable transactions in the course of his duty. This will also
unduly hamper public business. The trustworthiness consists in the
presumption of regularity of performance of official duty by a public officer.
Exhibit "A," or the Certification of the PRC dated 17 January 1998, was
signed by Arriola, Director II of the PRC, Manila. Although Arriola was not
presented in court or did not testify during the trial to verify the said
certification, such certification is considered as prima facie evidence of the
facts stated therein and is therefore presumed to be truthful, because
petitioner did not present any plausible proof to rebut its truthfulness.
Exhibit A is therefore admissible in evidence.49
In the case at bar, the POEA certification was signed by Dir. Mateo of the
POEA Licensing Branch. Although Dir. Mateo himself did not testify before
the RTC, the prosecution still presented Cory, Dir. Mateos subordinate at the
POEA Licensing Branch, to verify Dir. Mateos signature.
Also worth re-stating is the justification provided by the Court of Appeals for
the admissibility of the POEA certification, viz:
The certificate is admissible. It is true that the trial court, during the bail
hearings, rejected the certification for being hearsay because at that stage of
the proceedings, nobody testified yet on the document. However, as the trial
progressed, an officer of the POEA, specifically in its licensing branch, had
testified on the document. It does not follow, then, as appellant would want
this court to assume, that evidence rejected during bail hearings could not be
admissible during the formal offer of evidence.
This court admits that Ms. Cory Aquino was not the signatory of the
document. Nevertheless, she could testify on the veracity of the document
because she is one of the officers of the licensing branch of the POEA. Being
so, she could testify whether a certain person holds a license or not. It bears
stressing that Ms. Aquino is familiar with the signature of Mr. Mateo because
the latter is her superior. Moreover, as testified to by Ms. Aquino, that as a
policy in her office, before a certification is made, the office checks first

whether the name of the person requested to be verified is a reported

personnel of any licensed agency by checking their index and computer files.
As found in the offices records, appellant, in her personal capacity, is neither
licensed nor authorized to recruit workers for overseas employment. It bears
stressing, too, that this is not a case where a certification is rendered
inadmissible because the one who prepared it was not presented during the
trial. To reiterate, an officer of the licensing branch of the POEA, in the
person of Ms. Aquino, testified on the document. Hence, its execution could
be properly determined and the veracity of the statements stated therein
could be ascertained.50
More importantly, Ochoa could still be convicted of illegal recruitment even if
we disregard the POEA certification, for regardless of whether or not Ochoa
was a licensee or holder of authority, she could still have committed illegal
recruitment. Section 6 of Republic Act No. 8042 clearly provides that any
person, whether a non-licensee, non-holder, licensee or holder of authority
may be held liable for illegal recruitment for certain acts as enumerated in
paragraphs (a) to (m) thereof. Among such acts, under Section 6(m) of
Republic Act No. 8042, is the "[f]ailure to reimburse expenses incurred by the
worker in connection with his documentation and processing for purposes of
deployment, in cases where the deployment does not actually take place
without the workers fault." Ochoa committed illegal recruitment as described
in the said provision by receiving placement and medical fees from private
complainants, evidenced by the receipts issued by her, and failing to
reimburse the private complainants the amounts they had paid when they
were not able to leave for Taiwan and Saudi Arabia, through no fault of their
own.
Ochoa further argues in her defense that she should not be found personally
and criminally liable for illegal recruitment because she was a mere employee
of AXIL and that she had turned over the money she received from private
complainants to AXIL.
We are not convinced. Ochoas claim was not supported by any corroborating
evidence. The POEA verification dated September 23, 1998, also signed by
Dir. Mateo, and presented by Ochoa during trial, pertains only to the status
of AXIL as a placement agency with a "limited temporary authority" which
had already expired. Said verification did not show whether or not Ochoa was
employed by AXIL. Strangely, for an alleged employee of AXIL, Ochoa was not
able to present the most basic evidence of employment, such as appointment
papers, identification card (ID), and/or payslips. The receipts presented by
some of the private complainants were issued and signed by Ochoa herself,
and did not contain any indication that Ochoa issued and signed the same
on behalf of AXIL. Also, Ochoa was not able to present any proof that private
complainants money were actually turned over to or received by AXIL.
There is no reason for us to disturb the weight and credence accorded by the
RTC to the evidence of the prosecution, over that of the defense. As is wellsettled in this jurisdiction, greater weight is given to the positive
identification of the accused by the prosecution witnesses than the accuseds
denial and explanation concerning the commission of the crime.51 Likewise,
factual findings of the trial courts, including their assessment of the

witnesses credibility, are entitled to great weight and respect by the Supreme
Court, particularly when the Court of Appeals affirmed such findings. After
all, the trial court is in the best position to determine the value and weight of
the testimonies of witnesses. The absence of any showing that the trial court
plainly overlooked certain facts of substance and value that, if considered,
might affect the result of the case, or that its assessment was arbitrary,
impels the Court to defer to the trial courts determination according
credibility to the prosecution evidence.52Moreover, in the absence of any
evidence that the prosecution witnesses were motivated by improper motives,
the trial courts assessment of the credibility of the witnesses shall not be
interfered with by this Court.53
Under the last paragraph of Section 6 of Republic Act No. 8042, illegal
recruitment shall be considered an offense involving economic sabotage if
committed in a large scale, that is, committed against three or more persons
individually or as a group. Here, there are eight private complainants who
convincingly testified on Ochoas acts of illegal recruitment.
In view of the overwhelming evidence presented by the prosecution, we
uphold the verdict of the RTC, as affirmed by the Court of Appeals, that
Ochoa is guilty of illegal recruitment constituting economic sabotage.
Section 7(b) of Republic Act No. 8042 provides that the penalty of life
imprisonment and a fine of not less thanP500,000.00 nor more
than P1,000.000.00 shall be imposed when the illegal recruitment
constitutes economic sabotage. Thus:
Sec. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the
penalty of imprisonment of not less than six (6) years and one (1) day
but not more than twelve (12) years and a fine of not less than Two
hundred thousand pesos (P200,000.00) nor more than Five hundred
thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than Five
hundred thousand pesos (P500,000.00) nor more than One million
pesos (P1,000,000.00) shall be imposed if illegal recruitment
constitutes economic sabotage as defined herein.
Since the penalty of life imprisonment and a fine of P1,000,000.00 imposed
on Ochoa by the RTC, and affirmed by the Court of Appeals, are in accord
with the law, we similarly sustain the same.
Estafa
We affirm as well the conviction of Ochoa for estafa committed against three
private complainants in Criminal Case Nos. 98-77301, 98-77302, and 9877303. The very same evidence proving Ochoas criminal liability for illegal
recruitment also established her criminal liability for estafa.
It is settled that a person may be charged and convicted separately of illegal
recruitment under Republic Act No. 8042, in relation to the Labor Code, and
estafa under Article 315, paragraph 2(a) of the Revised Penal Code. We
explicated in People v. Cortez and Yabut54 that:

In this jurisdiction, it is settled that a person who commits illegal

recruitment may be charged and convicted separately of illegal recruitment
under the Labor Code and estafa under par. 2(a) of Art. 315 of the Revised
Penal Code. The offense of illegal recruitment is malum prohibitum where the
criminal intent of the accused is not necessary for conviction, while estafa is
malum in se where the criminal intent of the accused is crucial for
conviction. Conviction for offenses under the Labor Code does not bar
conviction for offenses punishable by other laws. Conversely, conviction for
estafa under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a
conviction for illegal recruitment under the Labor Code. It follows that ones
acquittal of the crime of estafa will not necessarily result in his acquittal of
the crime of illegal recruitment in large scale, and vice versa.55
Article 315, paragraph 2(a) of the Revised Penal Code defines estafa as:
Art. 315. Swindling (estafa). - Any person who shall defraud another by any
of the means mentioned hereinbelow x x x:
xxxx
2. By means of any of the following false pretenses or fraudulent acts
executed prior to or simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power,
influence, qualifications, property, credit, agency, business or imaginary
transactions; or by means of other similar deceits.
The elements of estafa are: (a) that the accused defrauded another by abuse
of confidence or by means of deceit, and (b) that damage or prejudice capable
of pecuniary estimation is caused to the offended party or third
person.56 Both elements are present in Criminal Case Nos. 98-77301, 9877302, and 98-77303. Ochoas deceit was evident in her false representation
to private complainants Gubat, Cesar, and Agustin that she possessed the
authority and capability to send said private complainants to Taiwan/Saudi
Arabia for employment as early as one to two weeks from completion of the
requirements, among which were the payment of placement fees and
submission of a medical examination report. Ochoa promised that there were
already existing job vacancies overseas for private complainants, even
quoting the corresponding salaries. Ochoa carried on the deceit by receiving
application documents from the private complainants, accompanying them to
the clinic for medical examination, and/or making them go to the offices of
certain recruitment/placement agencies to which Ochoa had actually no
connection at all. Clearly deceived by Ochoas words and actions, private
complainants Gubat, Cesar, and Aquino were persuaded to hand over their
money to Ochoa to pay for their placement and medical fees. Sadly, private
complainants Gubat, Cesar, and Aquino were never able to leave for work
abroad, nor recover their money.
The penalty for estafa depends on the amount of defraudation. According to
Article 315 of the Revised Penal Code:
Art. 315. Swindling (estafa). Any person who shall defraud another by any
of the means mentioned hereinbelow shall be punished by:

1st. The penalty of prision correccional in its maximum period to prision

mayor in its minimum period, if the amount of the fraud is over 12,000 pesos
but does not exceed 22,000 pesos, and if such amount exceeds the latter
sum, the penalty provided in this paragraph shall be imposed in its
maximum period, adding one year for each additional 10,000 pesos; but the
total penalty which may be imposed shall not exceed twenty years. In such
cases, and in connection with the accessory penalties which may be imposed
under the provisions of this Code, the penalty shall be termed prision mayor
or reclusion temporal, as the case may be.
It was established by evidence that in Criminal Case No. 98-77301, Gubat
was defrauded by Ochoa in the amount of P15,000.00; in Criminal Case No.
77-98302, Cesar paid Ochoa the sum of P17,000.00; and in Criminal Case
No. 77-98303, Agustin handed over to Ochoa a total of P28,000.00.
The prescribed penalty for estafa under Article 315 of the Revised Penal
Code, when the amount of the fraud is over P12,000.00 but not
exceeding P22,000.00, is prision correccional maximum to prision mayor
minimum (i.e., from 4 years, 2 months and 1 day to 8 years). If the amount of
fraud exceeds P22,000.00, the aforementioned penalty shall be imposed in
its maximum period, adding one year for each additional P10,000.00,
provided that the total penalty shall not exceed 20 years.1avvphi1
Under the Indeterminate Sentence Law, the minimum term shall be within
the range of the penalty next lower to that prescribed by the Revised Penal
Code, or anywhere within prision correccional minimum and medium (i.e.,
from 6 months and 1 day to 4 years and 2 months). 57 Consequently, the
minimum terms in Criminal Case Nos. 98-77301 and 98-77302 were
correctly fixed by the RTC and affirmed by the Court of Appeals at 2 years,
11 months, and 11 days of prision correccional. While the minimum term in
Criminal Case No. 98-77303 was increased by the Court of Appeals to 4
years and 2 months of prision correccional, it is still within the range of the
penalty next lower to that prescribed by Section 315 of the Revised Penal
Code.
The maximum term under the Indeterminate Sentence Law shall be that
which, in view of attending circumstances, could be properly imposed under
the rules of the Revised Penal Code. To compute the minimum, medium, and
maximum periods of the prescribed penalty for estafa when the amount of
fraud exceeds P12,000.00, the time included in prision correccional
maximum to prision mayor minimum shall be divided into three equal
portions, with each portion forming a period. Following this computation, the
minimum period for prision correccional maximum to prision mayor
minimum is from 4 years, 2 months, and 1 day to 5 years, 5 months, and 10
days; the medium period is from 5 years, 5 months, and 11 days to 6 years,
8 months, and 20 days; and the maximum period is from 6 years, 8 months,
and 21 days to 8 years. Any incremental penalty (i.e., 1 year for
every P10,000.00 in excess ofP22,000.) shall thus be added to anywhere from
6 years, 8 months, and 21 days to 8 years, at the discretion of the court,
provided that the total penalty does not exceed 20 years.58
In Criminal Case Nos. 98-77301 and 98-77302, the amounts of fraud were
more than P12,00.00 but not exceedingP22,000.00, and in the absence of

any mitigating or aggravating circumstance, the maximum term shall be

taken from the medium period of the penalty prescribed (i.e., 5 years, 5
months, and 11 days to 6 years, 8 months, and 20 days). Thus, the
maximum terms of 6 years, 8 months, and 20 days actually imposed by the
RTC and affirmed by the Court of Appeals in Criminal Case Nos. 98-77301
and 98-77302 are proper.
As for determining the maximum term in Criminal Case No. 98-77303, we
take into consideration that the amount of fraud was P28,000.00. Since the
amount of fraud exceeded P22,000.00, the maximum term shall be taken
from the maximum period of the prescribed penalty, which is 6 years, 8
months, and 21 days to 8 years; but since the amount of fraud
exceeded P22,000.00 by only P6,000.00 (less than P10,000.00), no
incremental penalty shall be imposed. Considering that the maximum term
of 8 years fixed by the Court of Appeals in Criminal Case No. 98-77303 is
within the maximum period of the proscribed penalty, we see no reason for
disturbing the same.
WHEREFORE, we DENY the present appeal for
lack
of merit
and AFFIRM the Decision dated March 2, 2006 of the Court of Appeals in
CA-G.R. CR.-H.C. No. 00888, affirming with modification the Decision dated
April 17, 2000 of the Regional Trial Court, Quezon City, Branch 104, in
Criminal Case Nos. 98-77300 to 98-77303, to read as follows:
1. In Criminal Case No. 98-77300, accused-appellant Rosario "Rose"
Ochoa is found guilty beyond reasonable doubt of illegal recruitment
in large scale, constituting economic sabotage, as defined and
penalized in Section 6(l) and (m), in relation to Section 7(b), of
Republic Act No. 8042, and is sentenced to life imprisonment and a
fine of One Million Pesos (P1,000.000.00);
2. In Criminal Case No. 98-77301, accused-appellant Rosario "Rose"
Ochoa is found guilty beyond reasonable doubt of the crime of estafa,
as defined and penalized in Article 315, paragraph 2(a) of the Revised
Penal Code, and is sentenced to an indeterminate penalty of two (2)
years, eleven (11) months, and eleven (11) days of prision
correccional, as minimum, to six (6) years, eight (8) months, and
twenty (20) days of prision mayor, as maximum, and to indemnify
private complainant Robert Gubat in the amount of Fifteen
Thousand Pesos (P15,000.00) as actual damages;
3. In Criminal Case No. 98-77302, accused-appellant Rosario "Rose"
Ochoa is found guilty beyond reasonable doubt of the crime of estafa,
as defined and penalized in Article 315, paragraph 2(a) of the Revised
Penal Code, and is sentenced to an indeterminate penalty of two (2)
years, eleven (11) months, and eleven (11) days of prision
correccional, as minimum, to six (6) years, eight (8) months, and
twenty (20) days of prision mayor, as maximum, and to indemnify
private complainant Cesar Aquino in the amount of Seventeen
Thousand Pesos (P17,000.00); and
4. In Criminal Case No. 98-77303, accused-appellant Rosario "Rose"
Ochoa is found guilty beyond reasonable doubt of the crime of estafa,

as defined and penalized in Article 315, paragraph 2(a) of the Revised

Penal Code, and is sentenced to an indeterminate penalty of four (4)
years and two (2) months of prision correccional, as minimum, to
eight (8) years of prision mayor, as maximum, and to indemnify
private complainant Junior Agustin in the amount of Twenty-Eight
Thousand Pesos (P28,000.00).
SO ORDERED.

G.R. No. 119361

February 19, 2001

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
CORAZON NAVARRA (At Large) RODOLFO NAVARRA, SR. and JOB
NAVARRA, accused.
RODOLFO NAVARRA, SR. and JOB NAVARRA, accused-appellants.
PARDO, J.:
Deceptis non decipientibus, jura subveniunt.*
It is a sad commentary that many of our countrymen migrate to other
countries for work. They leave all that is familiar and endure loneliness and
separation from their families and friends for the coveted dollar hoping that
such will better their lot and ensure their families a modicum of economic
stability.
What is more disheartening is that there are those who take advantage of the
hopefuls. These are the illegal recruiters. On them, we must let the full force
of the law fall, and fall heavily.
The Case
The case is an appeal from the decision of the Regional Trial Court, Branch
90, Quezon City1 finding accused Rodolfo Navarra, Sr. and Job Navarra
(hereafter "Rodolfo" and "Job", respectively) guilty beyond reasonable doubt of
illegal recruitment committed in a large scale resulting to economic sabotage
and sentencing each of them to life imprisonment, to pay a fine of one
hundred thousand (P100,000.00) pesos, each, without subsidiary
imprisonment in case of insolvency, and to return to complainants the sums
they received from them.
The Facts
Job and Rodolfo, along with Rodolfo's wife2 Corazon, operated an agency
which purported to have the authority to recruit and place workers for
employment in Taiwan. The agency 3 was named Rodolfo Navarra's Travel
Consultant and General Services ("RNTCGS"),4 which in the course of its
operation was able to victimize several hapless victims who never left
Philippine soil, and in due time, filed complaints with the Philippine Overseas
Employment Agency (hereafter "POEA") against accused for illegal
recruitment.
Neither RNTCGS nor Rodolfo, Corazon or Job in their personal capacities
were licensed or authorized by the Philippine Overseas Employment
Administration to recruit workers for overseas employment. 5
The trial court summarized the testimonies of complainants, thus:6
MERLIE VILLESCA identified Rodolfo as the one with whom she
applied to for employment in Taiwan on May 6, 1992, at the RNTCGS
office in Novaliches, Quezon City. As placement fee she paid fifteen
thousand pesos (P15,000.00) to Inday Padawan (Rodolfo's cook and
laundrywoman,7 hereafter, "Inday"), at Corazon and Rodolfo's house,
and another fifteen thousand pesos (P15,000.00) on December 22,

1992. She identified Job as the administrative officer of RNCTGS,

who entertained her and the other applicants during the times she
visited the agency's office to follow up her application.8
GLICERIA MARINAS singled out Job as the one who recruited her
for employment in Taiwan as a factory worker. She testified that she
was recruited by Job on April 24, 1992 at RNTCGS where she was
told that she and her co-applicants would leave for Taiwan two
months after they applied on April 24, 1992. She gave Job all the
requirements the agency asked for including her passport and birth
certificate. She was also required to pay a placement fee of twenty
thousand pesos (P20,000.00), although the receipt given to her was
only for the amount of fifteen thousand pesos (P15,000.00). She gave
her passport to Job and she handed the placement fee to Inday who
gave it to Corazon in her presence.9
BEINVENIDA AMUTAN testified that while in Rodolfo's house in
Novaliches, Quezon City, on May 11, 1992, Rodolfo promised her
that she would be able to leave for Taiwan upon payment of a twenty
thousand pesos (P20,000.00) placement fee. On April 11, 1992,
Beinvenida paid the amount to Inday who gave it to Corazon in
Beinvenida's presence. She never had the chance to go to Taiwan.
Upon investigation with the POEA, she discovered that RNTCGS was
not registered.10
ERNESTO AMUTAN testified that in April 1992, he filed an
application to work at a factory in Taiwan before Corazon in the
RNTCGS office. It was Corazon who interviewed him and asked him
to submit some requirements. While at the said office, he saw
Rodolfo there, who gave him the assurance that he would be able to
leave for Taiwan immediately. He was never deployed to Taiwan,
despite paying a placement fee of twenty thousand pesos
(P20,000.00).11
FLORIE ROSE RAMOS testified that she applied with RNTCGS as a
factory worker for Taiwan and that she paid a placement fee of
twenty five thousand pesos (P25,000.00) and another payment of one
thousand pesos (P1,000.00) as medical fee. She went to RNTCGS
during the last weeks of February, March and April 1992 and was
interviewed by Job. She was introduced to Rodolfo by her cocomplainant Evelyn Llacas. She was not able to leave for Taiwan,
neither was she able to retrieve her payments from RNTCGS for
when she went to the office on December 23, 1993, it had already
been raided by the CIS and POEA for recruiting for overseas
employment without license or authority.12
LIWAYWAY CRUZ testified that she visited Rodolfo and Corazon's
house and came to know that Rodolfo was the President of RNTCGS,
an agency which deported itself to her as and agency purporting to
have authority to recruit workers for placement in Taiwan. That on
April 1993, she went to Rodolfo's house to inquire about the
processing of her papers for employment in Taiwan. There she was

assured by Rodolfo that Corazon was in Taiwan and was already

taking care of her application.13
LOIDA MACASO testified that she came to know Rodolfo when she
visited Inday on December 3, 1991, at Rodolfo's house and Rodolfo
and Corazon recruited her to work as a factory worker in Taiwan. For
this purpose she paid the spouses ten thousand pesos (P10,000.00)
placement fee on January 8, 1992. She was never sent to Taiwan.14
On December 22, 1992, (PC) CIS agents arrested Inday Padawan after she
received placement fees from complainant Merlie Villesca.15 The amount
received was one thousand pesos (P1,000.00) in one hundred peso (P100.00)
bills, which were dusted with ultraviolet powder.16
On February 26, 1993, Assistant Provincial Prosecutor of Bulacan Emily G.
Reyes, on detail with the Department of Justice, filed with the Regional Trial
Court, Quezon City, Branch 90, an information against accused for illegal
recruitment committed in a large scale. We quote:17

"Let alias warrants of arrest be issued for accused Corazon Navarra,

said warrants to be served by both the National Bureau of
Investigation and the Eastern Police District Command.
"SO ORDERED."20
Hence, this appeal.21
Rodolfo and Job submit that the trial court gravely erred in disregarding
their defense of denial and in finding them guilty beyond reasonable doubt of
the offense charged.22
The Court's Ruling
We find the appeal without merit.
Bare denials, within clear and convincing evidence to support them, 23 can
not sway judgment. They are self-serving statements,24 that are inherently
weak and can easily be put forward.25

"That on or about February, 1992 and sometime prior and

subsequent thereto in Quezon City, Metro Manila, Philippines, and
within the jurisdiction of this Honorable Court above-named accused
conspiring, confederating and mutually helping one another,
representing themselves to have the capacity to contract, enlist and
transport workers for employment abroad, did then and there
willfully, unlawsfully and for a fee, recruit and promise
employment/job placement to MERLIE VILLESCA, GLICERIA
MARINAS, JOSE LLORET, BEINVENIDA AMUTAN, MELBA YACAS,
MARITES DE SAGUN, VILMA MARANA, ERNESTO AMUTAN, FLORIE
ROSE RAMOS, RONALD ALLAN SANTOS and HENRY DELA CRUZ
without first securing the required license and/or authority from
Philippine Overseas Employment Administration.

The rule is well-entrenched that as an appellate court, we will not disturb the
findings of the trial court on credibility of witnesses as it was in a better
position to appreciate the same. The rule is specially so given that there is no
showing that the trial court plainly overlooked certain facts of substance or
value, which, if considered, may affect the result of the case.26

"CONTRARY TO LAW."

A "nonlicensee or nonholder of authority" means any person, corporation or

entity without a valid license or authority to engage in recruitment or
placement from the Secretary of Labor, or whose license or authority has
been suspended, revoked or cancelled by the Philippine Overseas
Employment Administration or the Secretary of Labor. 28 Under Article 13(b)
of the Labor Code, "recruitment and placement" refer to:

On April 29, 1993, upon arraignment, Job pleaded "not guilty."18

On July 14, 1993, upon arraignment, Rodolfo likewise pleaded "not guilty."19
After due trial, on December 29, 1994, the trial court rendered a decision
convicting Rodolfo and Job, thus:
"ACCORDINGLY, the Court hereby finds both accused RODOLFO
NAVARRA, SR. and JOB NAVARRA guilty of the crime of Illegal
Recruitment Committed in a Large Scale Resulting to Economic
Sabotage, as charged in the Information, and hereby sentences each
of them to Life Imprisonment and also each of them to pay a fine of
P100,000.00, without subsidiary imprisonment incase of insolvency
pursuant to Art. 39 (a) of the Labor Code.
"They are likewise ordered to return to complainants Florie Rose
Ramos the sum of P25,000.00; to Ernesto Amutan, P15,000.00; to
Bienvenida Amutan, P15,000.00; to Loida (Loyda) Macaso,
P10,000.00; to Gliceria Marinas, P15,000.00; and to Merlie (Merly)
Villesca, P30,000.00.

Illegal recruitment has two essential elements: First, the offender has no
valid license or authority required by law to enable him to lawfully engage in
the recruitment and placement of workers. Second, the offender undertakes
any activity within the meaning of "recruitment and placement" defined
under Article 13 (b), or any prohibited practices enumerated under Article 34
of the Labor Code.27
Recruitment and Placement

"any act of canvassing, enlisting, contracting, transporting,

utilizing, hiring or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, that any person or entity
which in any manner, offers or promises for a fee employment to two
or more persons shall be deemed engaged in recruitment and
placement."
From the evidence adduced, accused-appellants committed acts of
recruitment and placement, such as promises to the complainants of
profitable employment abroad and acceptance of placement fees. Accusedappellants gave the impression that they had the power to send the
complainants to Taiwan for employment.29

With the certification from the Department of Labor and Employment stating
that RNTCGS was not authorized to recruit workers for overseas
employment,30 and promises by the accused of employment abroad for
complainants on payment of placements fees, the conclusion is inescapable
that accused are liable for illegal recruitment.31
Economic Sabotage
Article 38 (b) of the Labor Code, as amended by P. D. No. 2018 provides that
illegal recruitment shall be considered an offense involving economic
sabotage if any of the following qualifying circumstances exists: First, when
illegal recruitment is committed by a syndicate. For purposes of the law, a
syndicate exists when three or more persons conspire or confederate with
one another in carrying out any unlawful or illegal transaction, enterprise or
scheme.32 Second, there is economic sabotage when illegal recruitment is
committed in a large scale, as when it is committed against three or more
persons individually or as a group.33
The acts of accused-appellants showed unity of purpose. All these acts
establish a common criminal design mutually deliberated upon and
accomplished through coordinated moves.34
Even assuming that there was no conspiracy, the record clearly shows illegal
recruitment committed in a large scale, since at least six (6) complainants
were victims, which is more than the minimum number of persons required
by law to constitute illegal recruitment in a large scale, resulting in economic
sabotage.1wphi1.nt
Penalty Imposable
The penalty imposable on such offense is life imprisonment and a fine of one
hundred thousand pesos (P100,000.00).35
The Fallo
WHEREFORE, the Court AFFIRMS the decision of the Regional Trial Court,
Quezon City, Branch 90 in Criminal Case No. 93-42592, dated December 29,
1994.
Costs against accused-appellants.
SO ORDERED.

G.R. No. 99047

April 16, 2001

OMAR O. SEVILLA, petitioner,

vs.
I.T. (INTERNATIONAL) CORP./SAMIR MADDAH & TRAVELLERS
INSURANCE AND SURETY CORPORATION, DEPARTMENT OF LABOR
AND EMPLOYMENT and NATIONAL LABOR RELATIONS
COMMISSION (Second Division), respondents.
DE LEON, JR., J.:
This old petition, denominated as a petition for review on certiorari under
Rule 45 of the Revised Rules of Court Ishall be treated as a special civil
action for certiorari under Rule 65 for reasons which are hereinafter stated.
The petition seeks to reverse the Resolutlon 1 dated March 26, 1991 of public
respondent National Labor Relations Commission (NLRC), Second Division,
which set aside the Decision2 dated December 29, 1989 of the Philippine
Overseas Employment Administration Adjudication Office in POEA Case No.
(L) 88-12-1048.
The facts are as follows:
Sometime in November 1987, petitioner Omar Sevillana was contracted to
work as a driver by private respondent I.T. (International) Corporation (I.T.,
for brevity) for its foreign accredited principal, Samir Maddah (Samir, for
brevity), in Jeddah, Saudi Arabia. The agreed monthly salary was US
$370.00 for a period of two (2) years. Petitioner alleged, however, that when
he received his salaries from his employer, he was only paid US $100.00 a
month for twelve (12) months, instead of the agreed US $370.00 per
month. 1wphi1.nt
On November 2, 1988, after working twelve (12) months with his employer,
petitioner said that he was repatriated without any valid and justifiable
reason. Petitioner shouldered the cost of his return airfare in the amount of
US $630.00.
Thereafter, petitioner filed a complaint with the Philippine Overseas
Employment Administration (POEA, for brevity) for underpayment of salaries,
illegal dismissal, reimbursement of return airfare, moral damages and
attorney's fees against I.T, (International) Corporation, Samir Maddah and
Travellers Insurance and Surety Corporation (Travellers, for brevity).
In answer thereto, private respondent I.T denied the material allegations of
the petitioner but admitted that the petitioner was one of several workers it
deployed and employed abroad. I.T. argued that the petitioner continuously
worked with Samir for more than one (1) year until his blood pressure was
considered critical. Thus,Samir was forced to closely monitor the health
condition of the petitioner. When petitioner's blood pressure did not stabilize
and begun affecting his work as driver due to frequent headaches and
dizziness, I.T. alleged that Samirdecided to repatriate the petitioner to avoid
further injury and complication to his health. I.T. claimed that after the
petitioner had received all the benefits accorded to an employee consisting of
full salaries and separation pay, the petitioner refused to be repatriated and
instead decided to run away. Since then, the whereabouts of the petitioner

were unknown and I.T. only heard about the petitioner when the latter
reported to their office in the Philippines and later on filed the subject
complaint before the POEA Adjudication Office.
After both parties have submitted their respective position papers and their
evidence thereto, the POEA Adjudication Office, through Tomas Achacoso,
rendered a decision on December 29, 1989 holding the private respondents
herein jointly and severally liable to the petitioner. The dispositive portion of
the POEA decision reads
"WHEREFORE, premises considered, judgment is hereby rendered
ordering the respondents (International) Corporation, Madir and
Travellers Insurance & Surety Co~oration jointly and severally liable
to the complainants the following amounts or their peso equivalents
at the time of payment:
1. THREE THOUSAND TWO HUNDRED FORTY US DOLLARS (US
$3,240.00) representing complainant's salary differential for his
twelve months employment;
2. FOUR THOUSAND FOUR HUNDRED FORTY US DOLLARS (US
$4,440.00) representing complainant's salaries for the unexpired
portion of his employment contract;
3. TWO THOUSAND THREE HUNDRED SIX1Y NINE SAUDI RIY AL
(S.R. 2,369.00) representing the cost of complainant's return airfare;
4. 5% of the aforesaid amounts as attorney's fees.
All other claims of the complainant are dismissed.
SO ORDERED."3
Only private respondent I.T. appealed the aforesaid decision of the POEA
Adjudication Office to the NLRC Second Division which in turn reversed and
set aside the findings and ruling of the former in its Resolution dated March
26, 1991. The NLRC held that
xxxxxxxxx
The conclusions that could be inferred on the PAL Ticket is that
complainant at that particular time travelled from Saudi Arabia to
the Philippines -as to who paid the fare is subject of conflicting
allegations; and the Travel Exit Pass, the same being a document of
POEA, are proof of the contents thereof- the relevant fact in so far as
this case is concerned, is the agreed salary of complainant, $370.00not as to whether or not the complainant was underpaid. Thus, the
primary evidence from which the Administrator drew his conclusions
in the assailed decision is the affidavit of complainant where the
affiant was not subjected to cross examination to determine whether
or not he is telling the truth and the application (mis-application) of
the general principles of law.
Consequently, we find it disconcerning to stamp our imprimatur of
approval in the assailed decision considering (the) quantum of
evidence presented vis-il-vis (the) amount involved in the award.

Firstly, I.T. (Int'l) Corp. is a recruitment agency. It is not in the level

of the employer itself. At the (sic) most it is an agent of the employer.
The application, therefore, of the so called' common knowledge that
in employer to employee relationship, the former is the one who keep
records of payments, , and , in abetter position to present the same'
in the present case is akin to stretching the said principle to
ridiculous proportions. Both appellant and complainant-appellee
stand an (sic) -equal footing. No presumption arises. They both do
not have the employment records of the complainant. More serious
inquiry should have been resorted to such as the instrument of cross
examinating the witnesses presented by the parties, or even the use
of clarificatory questions by the Office a quo the witnesses would
have shed light as to who among the parties is telling the truth. But
records show that there is none.
Secondly, the POEA Administrator heavily relied upon the principle
of law that in illegal termination cases, the burden of proof lies on
the employer, and the employer not having presented sufficient
evidence to justify the dismissal ergo the dismissal is illegal. The
POEA Administrator misread the law. It is only when the employer
admits the dismissal, which is not so in this case, that the burden to
present proof that the dismissal is for cause hangs on the shoulders
of the employer.
Thirdly, considering that the payment of the PAL ticket is at issue
and there being no other evidence presented, except their respective
bare self-serving and conflicting allegations We find no sufficient
evidence to support a conclusion that one party paid for the ticket.
Basic in this jurisdiction is that he who asserts a right must prove it.
In labor disputes, the evidence mandated by law are these relevant
evidence which a reasonable and unbiased mind would accept to
support a conclusion. Failing to do this, We find no basis to the
award.
WHEREFORE, premises considered, the assailed decision is set aside
and a new one entered dismissing this one.
SO ORDERED."4
Dissatisfied, petitioner now come to us and assigns the following as errors
committed by the NLRC, to wit:
I
THE PUBLIC RESPONDENT ERRED IN HOLDING THAT THE
AFFIDAVIT OF COMIPLAINT CANNOT BE THE BASIS OF TRUTH
BECAUSE THE AFFIANT w AS NOT CROSS- EXAMINED .
II
THE PUBLIC RESPONDENT ERRED IN HOLDING THAT THE
COMPLAINANT-PETITIONER WAS NOT ILLEGALLY DISMISSED. .
III

THE PUBLIC RESPONDENT ERRED IN HOLDING THAT NEITHER

PARTY, THE COMPLAINANT AND RESPONDENT, COULD BE
AWARDED REIMBURSEMENT FOR THE PAL TICKET.
The Solicitor General, in his Comment5 to the petition, joined the
petitioner6 in arguing that although there was a failure to allege grave abuse
of discretion against the NLRC, this element of grave abuse of discretion is
present in the instant petition. The assailed resolution was issued in gross
violation of the settled principle that affidavits suffice as evidence in
proceedings before quasi-judicial bodies like the POEA.7
We find merit in the petition.
At the outset, we note that the instant petition was filed with this Court on
May 22, 1991 before the ruling of this Court in the case of the St. Martin
Funeral Home vs. NLRC8 on September 16, 1998 which required that judicial
review of labor cases should be filed in the Court of Appeals before the same
can be elevated to this Court following the doctrine on hierarchy of courts.
The prevailing jurisprudence then holds that judicial review of labor cases by
the Supreme Court may only be through a petition for certiorari under Rule
65 of the Rules of Court.9Moreover, in the interest of justice, this Court had
treated, in a number of cases, as special civil actions for certiorari petitions
erroneously captioned as petitions for review on certiorari. 10 It is in this light
that we so treat the present petition. Rules of procedure and evidence should
not be applied in a very rigid and technical sense in labor cases in order that
technicalities would not stand in the way of equitably and completely
resolving the rights and obligations of the parties.11
Furthermore, while we consider this petition as one for certiorari under Rule
65 of the Rules of Court, it is likewise significant to note that petitioner failed
to seasonably file a motion for reconsideration at the NLRC level before
recourse to this Court was made. As a general rule, this petition should have
been dismissed outright for failure to comply with a condition precedent in
order that this petition for certiorari shall lie. The filing of a motion for
reconsideration before resort to certiorari will lie is intended to afford the
public respondent an opportunity to correct any actual or fancied error
attributed to it by way of re-examination of the legal and factual aspects of
the case.12 However, this rule is subject to certain recognized
exceptions.13 Upon careful consideration of the case at bar, we find that this
case falls under one of those recognized exceptions, namely, that the assailed
order is a patent nullity, as will be shown later.
Anent the first issue, petitioner contends that public respondent NLRC acted
with grave abuse of discretion when it considered petitioner's complaintaffidavit as mere hearsay evidence since the petitioner was not crossexamined. Petitioner argues that private respondent I.T . waived its right to
cross-examine him when both parties agreed to submit their case for
decision before the POEA Adjudication Officer on the basis of each parties'
respective position papers, affidavits and other evidence extant on the record
below.
Petitioner's argument is well-taken. It must be stressed that labor laws
mandate the speedy disposition of cases, with the least attention to

technicalities but without sacrificing the fundamental requisites of due

process. In this light, the NLRC, like the labor arbiter, (in the case at bar, the
POEA Adjudication Officer) is authorized to decide cases based on the
position papers and other documents submitted, without resorting to
technical rules of evidence.14
We quote, with approval, the following observations of the Solicitor General:
"We are constrained to disagree with the ruling of the NLRC.
In the recently decided case of Rabago, et. al. vs. NLRC and
Philippine Tuberculosis Society, Inc.. G.R. No.82868, August 5.
1991. pp. 8-9, this Honorable Court held:
'We have said often enough that the findings of fact of quasi-judicial
agencies which have acquired expertise on the specific matters
entrusted to their jurisdiction are accorded by this Court not only
respect but finality if they are supported by substantial evidence
(Omar K. Al-Esayi and Company, Ltd. Vs. Flores, 183 SCRA 458;
Chua vs. NLRC, 182 SCRA 353; Pagkakaisa ng mga Manggagawa vs.
Ferrer-Calleja, 181 SCRA 119).'
' x x x The argument that the affidavit is hearsay because the affiants
were not presented for cross-examination is not persuasive because
the 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 only.It is also worth noting that ABC
has not presented any evidence of its own to disprove the
complainant's claim. As the Solicitor General correctly points out,
it would have been so easy to submit the complainant's employment
records which were in the custody of ABC, to show that they had
served (for) less than one year.' (Underscoring for emphasis)
Thus, it is clear that petitioner's affidavit of complaint may be made
the basis of truth even if affiant was not cross-examined.15
The fact alone that most of the documents submitted in evidence by an
employee were prepared by him does not make them self-serving since they
have been offered in the proceedings before the Labor Arbiter (in this case
before the POEA Adjudication Officer) and that ample opportunity was given to
the employer to rebut their veracit and authenticity. 16 The seriousness of the
allegations in the complaint-affidavit in the case at bar cannot just be
perfunctorily rejected absent any showing that the petitioner-affiant was
lying when he made the statements contained therein. There being none, it
was grave abuse of discretion on the part of the NLRC to ignore or simply
sweep under the rug the petitioner's complaint-affidavit and conclude that it
is a mere hearsay evidence without finding that there was adequate reason
not to believe the allegations contained therein. Accordingly, the NLRC ruling
that the complaint-affidavit is hearsay because the affiant was not crossexamined has no legal basis because the rules of evidence are not supposed
to be strictly observed in proceedings before the NLRC and the POEA
Adjudication Office. The NLRC failed to observe this well-entrenched doctrine
when this case was brought on appeal before it.

Neither can we warrant the ruling of the NLRC that herein private respondent
I.T. may only be considered as an agent of Samir, its foreign principal, and
that private respondent I.T. should not be expected to have access to the
employment records of its said foreign principal, thereby justifying the
latter's non-presentation of the needed documents before the POEA
Adjudication Office, and the absolution of I.T. from any liability to
petitioner.17 In so ruling, respondent NLRC disregarded the rule regarding
the solidary liability of the local employment agency with its foreign principal
in overseas employment contracts. Private employment agencies are held
jointly and severally liable with the foreign-based employer for any violation of
the recruitment agreement or contract of employment.18This joint and solidary
liability imposed by law against recruitment agencies and foreign employers
is meant to assure the aggrieved worker of immediate and sufficient
payment of what is due him.19 This is in line with the policy of the State to
protect and alleviate the plight of the working class. The fact, however, that
private respondent I.T. failed to fully air its position was mainly due to its
own inaction and negligence when it chose not to present countervailing
evidence on the records of salary payments and separation pay it
claimed Samir has paid to petitioner. Petitioner, on the other hand, cannot
be expected to have the proper facility to produce the same before the POEA
Adjudication Officer considering that their relations became sour due to the
present charges.
The NLRC's doubts in the factual findings of the POEA Adjudication Officer
should not have prompted it to reject outright the contention of the petitioner
contained in his complaint-affidavits, position paper and evidence submitted
to the POEA Adjudication Office. The NLRC is not precluded by the rules to
allow both parties ill submit additional evidence to prove their respective
claims even on appeal20 or to order the remand of the case to the
administrative agency concerned for further study and investigation upon
such issues. Since NLRC relied on the available evidence obtaining in the
records of this case, it should have followed the well-settled doctrine that if
doubts exist between the evidence presented by the employer (as represented
by the local employment agency in this case) and the employee, the doubts
must be resolved in favor of the employee.21
As regards the issue of petitioner's dismissal from employment, petitioner
claims that he was illegally dismissed; that respondent I.T. failed to
substantiate its claim that petitioner was repatriated because he (petitioner)
was found to have hypertension; and that respondent I.T. has the burden of
proving that petitioner was legally dismissed.
We rule for the petitioner."
When the NLRC declared that the burden of proof in dismissal cases shifts to
the employer only when the latter admits such dismissal, the NLRC ruled
erroneously in disregard of the law and prevailing jurisprudence on the
matter. As correctly articulated by the Solicitor General in his Comment to
this petition, thus
"Article 277(b) of the Labor Code puts the burden of proving that
the dismissal of an employee was for a valid or authorized cause
on the employer. It should be noted that the said provision of

law does not distinguish whether the employer admits or does

not admit the dismissal.
It is a well-known maxim in statutory construction that where the
law does not distinguish, the court should not distinguish (Robles vs.
Zambales Chromite Mining Co., 104 Phil. 688).
Moreover, Article 4 of the Labor Code provides:
'Art. 4. Construction in favor of labor. All doubts in the
implementation and interpretation of the provisions of this
Code, including its implementing rules and regulations, shall
be resolved in favor of labor.'
In Eastern Shipping Lines, Inc. vs. POEA 166 SCRA 533, this
Honorable Court held:
'When the conflicting interest of labor and capital are weighed on the
scales of social justice, the heavier influence of the latter must be
counterbalanced by the sympathy and compassion the law must
accord the underprivileged worker. This is only fair if he is to be
given the opportunity-and the right-to assert and defend his cause
not as a subordinate but as a peer of management, with which he
can negotiate on even plane. Labor is not a mere employee of capital
but its active and equal partner.'
Thus, it is clear that petitioner was illegally dismissed by private
respondent Samir Maddah."22
Time and again we have ruled that where there is no showing of a clear, valid
and legal cause for termination of employment, the law considers the case a
matter of illegal dismissal. The burden is on the employer to prove that the
termination of employment was for a valid and legal cause. For an employee's
dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the
employee must be afforded due process.23
A review of the record shows that neither of the two (2) conditions precedent
were shown to have been complied with by the private respondents. All that
private respondent I.T. did was to rely on its claim that petitioner was
repatriated by its foreign principal, respondent Samir Maddah, due to
hypertension with nary an evidence to support it. In all termination cases,
strict compliance by the employer with the demands of both procedural and
substantive due process is a condition sine qua non for the same to be
declared valid.24 Under Section 8, Rule I, Book VI of the Rules and
Regulations Implementing the Labor Code, for a disease to be a valid ground
for the dismissal of the employee, the continued employment of such
employee is prohibited by law or prejudicial to his health or the health of his
co-employees, there must be a certification by a competent public health
authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months, even with proper medical
treatment. This rule was correctly applied by the POEA Adjudication Office in
its Decision dated December 29, 1989, to wit:
"In so far as the issue of illegal dismissal is concerned, this Office
also finds it in the affirmative.

This Office in arriving at the aforesaid conclusion, takes into

consideration the express provision of the Labor Code [Art. 277, par.
(b)] that expressly provides that the burden of proving that the
termination was for a valid or authorized cause shall rest on the
employer (respondents in the instant case).
The defense of complainant's medical problems (alleged hypertension
of complainant) interposed by respondents to justify the dismissal of
the former is totally bereft of merit. The said defense of respondents
is not only uncorroborated by documentary evidence but is also not a
just or valid cause for termination of one's employment. While an
employer (respondents in this case) may validly terminate the
services of an employee who has been found to be suffering from any
disease, it is authorized only if his continued employment is
prohibited by law or is prejudicial to his health as well as to the
health of his co-employees (Art. 284, Labor Code). This is not present
in the instant case, for there is no finding from a medical practitioner
certifying that complainant is really hypertensive."25
Since the burden of proving the validity of the dismissal of the employee rests
on the employer, the latter should likewise bear the burden of showing that
the requisites for a valid dismissal due to a disease have been complied with.
In the absence of the required certification by a competent public health
authority, this Court has ruled against the validity of the employee's
dismissal.26 It is therefore incumbent upon the private respondents to prove
by the quantum of evidence required by law that petitioner was .,ot
dismissed, or if dismissed, that the dismissal was not illegal; otherwise, the
dismissal would be unjustified.27 This Court will not sanction a dismissal
premised on mere conjectures and suspicions, the evidence must be
substantial and not arbitrary and must be founded on clearly established
facts sufficient to warrant his separation from work.28 We find no cogent
reason to depart from the conclusion reached by the POEA Adjudication
Office in the case at bar.
We also find merit in the petitioner's claim of refund for his repatriation
plane ticket. The record shows that private respondent I.T. failed to
controvert this claim of petitioner during the arbitration level at the POEA
Adjudication Office. If at all, this belated claim of private respondent I.T., in
the absence of proof therefor, and contrary to its Memorandum dated
October 16, 1992 that respondent Samir had paid for the repatriation plane
ticket of the petitioner, is merely an afterthought that deserves scant
consideration from this Court. The POEA thus held that
"Noteworthy in the instant case is respondent's failure to deny
complainant's allegation that he was the one who shouldered the
cost ofhis return airfare in the amount of SR 2,369.00. Having failed
to deny the same, herein respondents are deemed to have admitted
the same. Considering that the complainant in this case was illegally
dismissed as mentioned earlier, the herein respondents are therefore
liable to the repatriation expenses (return airfare in this case) of the
herein complainant in the amount of SR 2,369.00 (per Annex 'A')."29

The solidary nature of the relationship of respondent I.T. as the local

employment agency, and respondent Samir, its foreign principal, vis-a-vis the
petitioner does not exempt respondent I.T. from presenting proof of its
alleged payment of the repatriation plane ticket. In the absence of proof to
the contrary, the evidence of petitioner in that regard, as pointed out by the
Solicitor General, merits the favorable consideration of this Court, to wit:
"It should be noted, however, that the only piece of evidence on the
issue of payment of return airfare presented by petitioner is a
"CERTIFICATION" signed by a certain Allan L. Timbayan, Labor
Attache' in Jeddah. Said Certification reads:
'This is to certify that Overseas Contract Worker OMAR
SEVILLANA, holder of passport No. DC 0605633, issued on
20 Nov. 1986 at Davao City, sought the assistance of this
Office in connection with his employment problem. He
stayed as stranded OCW at the Extension Office of the Labor
Attache', Consulate General of the Philippines.
'Subject stranded OCW purchased his own ticket No.
0742041113955 form Jeddah to Manila via Karachi. The
subject OCW was repatriated on 2 November 1988.
'This certification is issued upon the request of the stranded
(sic) OCW for whatever legal purpose it may serve.' (Annex
"C", Petition. Underscoring for emphasis).
Against this Certification, private respondents failed to adduce any
proof that the return ticket was purchased by the employer.
Considering that petitioner was illegally dismissed as earlier
discussed, private respondents are, therefore, liable for the
repatriation expenses of petitioner."30
The Court in Pacific Maritime Services, Inc. vs. Ranay31 reiterated the doctrine
regarding a claim of payment in labor cases, viz:
"As a general rule, one who pleads payment has the burden of
proving it. Even where the plaintiff must allege non-payment, the
general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment."
In view of all the foregoing, we hold that the assailed resolution of public I
espondent NLRC is a patent nullity; and that the same was issued in grave
abuse of discretion. The said resolution of public respondent NLRC, being a
patent nullity, immediate resort to this Court was justified even without a
prior motion for reconsideration therefor.
WHEREFORE, the assailed Resolution dated March 26, 1991 of public
respondent National Labor Relations Commission (Second Division) is
hereby REVERSED and SET ASIDE; and the Decision dated December 29,
1989 of the POEA Adjudication Office is hereby REINSTATED.1wphi1.nt
SO ORDERED.

G.R. No. 161757

January 25, 2006

SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC.Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division; HON.
ERNESTO S. DINOPOL, in his capacity as Labor Arbiter, NLRC; NCR,
Arbitration Branch, Quezon City and DIVINA A.
MONTEHERMOZO,Respondents.
DECISION
CARPIO MORALES, J.:
Petitioner, Sunace International Management Services (Sunace), a
corporation duly organized and existing under the laws of the Philippines,
deployed to Taiwan Divina A. Montehermozo (Divina) as a domestic helper
under a 12-month contract effective February 1, 1997.1 The deployment was
with the assistance of a Taiwanese broker, Edmund Wang, President of Jet
Crown International Co., Ltd.
After her 12-month contract expired on February 1, 1998, Divina continued
working for her Taiwanese employer, Hang Rui Xiong, for two more years,
after which she returned to the Philippines on February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a
complaint2 before the National Labor Relations Commission (NLRC) against
Sunace, one Adelaide Perez, the Taiwanese broker, and the employer-foreign
principal alleging that she was jailed for three months and that she was
underpaid.
The following day or on February 15, 2000, Labor Arbitration Associate
Regina T. Gavin issued Summons3 to the Manager of Sunace, furnishing it
with a copy of Divinas complaint and directing it to appear for mandatory
conference on February 28, 2000.
The scheduled mandatory conference was reset. It appears to have been
concluded, however.
On April 6, 2000, Divina filed her Position Paper 4 claiming that under her
original one-year contract and the 2-year extended contract which was with
the knowledge and consent of Sunace, the following amounts representing
income tax and savings were deducted:
Year Deduction for Income Tax Deduction for Savings
1997 NT10,450.00

NT23,100.00

1998 NT9,500.00

NT36,000.00

1999 NT13,300.00

NT36,000.00;5

and while the amounts deducted in 1997 were refunded to her, those
deducted in 1998 and 1999 were not. On even date, Sunace, by its

Proprietor/General Manager Maria Luisa Olarte, filed its Verified Answer and
Position Paper,6 claiming as follows, quoted verbatim:
COMPLAINANT IS NOT ENTITLED FOR THE REFUND OF HER 24
MONTHS SAVINGS
3. Complainant could not anymore claim nor entitled for the refund of her 24
months savings as she already took back her saving already last year and the
employer did not deduct any money from her salary, in accordance with
a Fascimile Message from the respondent SUNACEs employer, Jet Crown
International Co. Ltd., a xerographic copy of which is herewith attached
as ANNEX "2" hereof;
COMPLAINANT IS NOT ENTITLED TO REFUND OF HER 14 MONTHS TAX
AND PAYMENT OF ATTORNEYS FEES
4. There is no basis for the grant of tax refund to the complainant as the she
finished her one year contract and hence, was not illegally dismissed by her
employer. She could only lay claim over the tax refund or much more be
awarded of damages such as attorneys fees as said reliefs are available only
when the dismissal of a migrant worker is without just valid or lawful cause
as defined by law or contract.
The rationales behind the award of tax refund and payment of attorneys fees
is not to enrich the complainant but to compensate him for actual injury
suffered. Complainant did not suffer injury, hence, does not deserve to be
compensated for whatever kind of damages.
Hence, the complainant has NO cause of action against respondent SUNACE
for monetary claims, considering that she has been totally paid of all the
monetary benefits due her under her Employment Contract to her full
satisfaction.
6. Furthermore, the tax deducted from her salary is in compliance with the
Taiwanese law, which respondent SUNACE has no control and complainant
has to obey and this Honorable Office has no authority/jurisdiction to
intervene because the power to tax is a sovereign power which the Taiwanese
Government is supreme in its own territory. The sovereign power of taxation
of a state is recognized under international law and among sovereign states.
7. That respondent SUNACE respectfully reserves the right to file
supplemental Verified Answer and/or Position Paper to substantiate its
prayer for the dismissal of the above case against the herein respondent.
AND BY WAY OF x x x x (Emphasis and underscoring supplied)
Reacting to Divinas Position Paper, Sunace filed on April 25, 2000 an ". . .
answer to complainants position paper"7 alleging that Divinas 2-year
extension of her contract was without its knowledge and consent, hence, it
had no liability attaching to any claim arising therefrom, and Divina in fact
executed a Waiver/Quitclaim and Release of Responsibility and an Affidavit
of Desistance, copy of each document was annexed to said ". . . answer to
complainants position paper."

To Sunaces ". . . answer to complainants position paper," Divina filed a 2page reply,8 without, however, refuting Sunaces disclaimer of knowledge of
the extension of her contract and without saying anything about the Release,
Waiver and Quitclaim and Affidavit of Desistance.
The Labor Arbiter, rejected Sunaces claim that the extension of Divinas
contract for two more years was without its knowledge and consent in this
wise:
We reject Sunaces submission that it should not be held responsible for the
amount withheld because her contract was extended for 2 more years
without its knowledge and consent because as Annex "B"9 shows, Sunace
and Edmund Wang have not stopped communicating with each other and yet
the matter of the contracts extension and Sunaces alleged non-consent
thereto has not been categorically established.
What Sunace should have done was to write to POEA about the extension
and its objection thereto, copy furnished the complainant herself, her foreign
employer, Hang Rui Xiong and the Taiwanese broker, Edmund Wang.
And because it did not, it is presumed to have consented to the extension
and
should
be
liable
for
anything
that
resulted
thereform
(sic).10 (Underscoring supplied)
The Labor Arbiter rejected too Sunaces argument that it is not liable on
account of Divinas execution of a Waiver and Quitclaim and an Affidavit of
Desistance. Observed the Labor Arbiter:

10% thereof as attorneys fees since compelled to litigate, complainant had to

engage the services of counsel.
SO ORDERED.13 (Underescoring supplied)
On appeal of Sunace, the NLRC, by Resolution of April 30, 2002,14 affirmed
the Labor Arbiters decision.
Via petition for certiorari,15 Sunace elevated the case to the Court of Appeals
which dismissed it outright by Resolution of November 12, 2002,16 the full
text of which reads:
The petition for certiorari faces outright dismissal.
The petition failed to allege facts constitutive of grave abuse of discretion on
the part of the public respondent amounting to lack of jurisdiction when the
NLRC affirmed the Labor Arbiters finding that petitioner Sunace
International Management Services impliedly consented to the extension of
the contract of private respondent Divina A. Montehermozo. It is undisputed
that petitioner was continually communicating with private respondents
foreign employer (sic). As agent of the foreign principal, "petitioner cannot
profess ignorance of such extension as obviously, the act of the principal
extending complainant (sic) employment contract necessarily bound it."
Grave abuse of discretion is not present in the case at bar.
ACCORDINGLY, the petition is hereby DENIED DUE
COURSE and DISMISSED.17
SO ORDERED.

Should the parties arrive at any agreement as to the whole or any part of the
dispute, the same shall be reduced to writing and signed by the parties and
their respective counsel (sic), if any, before the Labor Arbiter.

(Emphasis on words in capital letters in the original; emphasis on words in

small letters and underscoring supplied)

The settlement shall be approved by the Labor Arbiter after being satisfied
that it was voluntarily entered into by the parties and after having explained
to them the terms and consequences thereof.

Its Motion for Reconsideration having been denied by the appellate court by
Resolution of January 14, 2004,18Sunace filed the present petition for review
on certiorari.

A compromise agreement entered into by the parties not in the presence of

the Labor Arbiter before whom the case is pending shall be approved by him,
if after confronting the parties, particularly the complainants, he is satisfied
that they understand the terms and conditions of the settlement and that it
was entered into freely voluntarily (sic) by them and the agreement is not
contrary to law, morals, and public policy.

The Court of Appeals affirmed the Labor Arbiter and NLRCs finding that
Sunace knew of and impliedly consented to the extension of Divinas 2-year
contract. It went on to state that "It is undisputed that [Sunace] was
continually communicating with [Divinas] foreign employer." It thus
concluded that "[a]s agent of the foreign principal, petitioner cannot profess
ignorance of such extension as obviously, the act of the principal extending
complainant (sic) employment contract necessarily bound it."

And because no consideration is indicated in the documents, we strike them

down as contrary to law, morals, and public policy.11
He accordingly decided in favor of Divina, by decision of October 9,
2000,12 the dispositive portion of which reads:
Wherefore, judgment is hereby rendered ordering respondents SUNACE
INTERNATIONAL SERVICES and its owner ADELAIDA PERGE, both in their
personal capacities and as agent of Hang Rui Xiong/Edmund Wang to jointly
and severally pay complainant DIVINA A. MONTEHERMOZO the sum of
NT91,950.00 in its peso equivalent at the date of payment, as refund for the
amounts which she is hereby adjudged entitled to as earlier discussed plus

Contrary to the Court of Appeals finding, the alleged continuous

communication was with the Taiwanese brokerWang, not with the foreign
employer Xiong.
The February 21, 2000 telefax message from the Taiwanese broker to
Sunace, the only basis of a finding of continuous communication,
reads verbatim:
xxxx
Regarding to Divina, she did not say anything about her saving in

police station. As we contact with her employer, she took back her
saving already last years. And they did not deduct any money from
her salary. Or she will call back her employer to check it again. If her
employer said yes! we will get it back for her.
Thank you and best regards.
(Sgd.)
Edmund Wang
President19
The finding of the Court of Appeals solely on the basis of the above-quoted
telefax message, that Sunace continually communicated with the foreign
"principal" (sic) and therefore was aware of and had consented to the
execution of the extension of the contract is misplaced. The message does not
provide evidence that Sunace was privy to the new contract executed after
the expiration on February 1, 1998 of the original contract. That Sunace and
the Taiwanese broker communicated regarding Divinas allegedly withheld
savings does not necessarily mean that Sunace ratified the extension of the
contract. As Sunace points out in its Reply 20 filed before the Court of
Appeals,
As can be seen from that letter communication, it was just an information
given to the petitioner that the private respondent had t[aken] already her
savings from her foreign employer and that no deduction was made on her
salary. It contains nothing about the extension or the petitioners consent
thereto.21
Parenthetically, since the telefax message is dated February 21, 2000, it is
safe to assume that it was sent to enlighten Sunace who had been directed,
by Summons issued on February 15, 2000, to appear on February 28, 2000
for a mandatory conference following Divinas filing of the complaint on
February 14, 2000.
Respecting the Court of Appeals following dictum:
As agent of its foreign principal, [Sunace] cannot profess ignorance of such
an extension as obviously, the act of its principal extending [Divinas]
employment contract necessarily bound it,22
it too is a misapplication, a misapplication of the theory of imputed
knowledge.
The theory of imputed knowledge ascribes the knowledge of the agent,
Sunace, to the principal, employer Xiong,not the other way around.23 The
knowledge of the principal-foreign employer cannot, therefore, be imputed to
its agent Sunace.
There being no substantial proof that Sunace knew of and consented to be
bound under the 2-year employment contract extension, it cannot be said to
be privy thereto. As such, it and its "owner" cannot be held solidarily liable
for any of Divinas claims arising from the 2-year employment extension. As
the New Civil Code provides,

Contracts take effect only between the parties, their assigns, and heirs,
except in case where the rights and obligations arising from the contract are
not transmissible by their nature, or by stipulation or by provision of law. 24
Furthermore, as Sunace correctly points out, there was an implied revocation
of its agency relationship with its foreign principal when, after the
termination of the original employment contract, the foreign principal directly
negotiated with Divina and entered into a new and separate employment
contract in Taiwan. Article 1924 of the New Civil Code reading
The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons.
thus applies.
In light of the foregoing discussions, consideration of the validity of the
Waiver and Affidavit of Desistance which Divina executed in favor of Sunace
is rendered unnecessary.
WHEREFORE, the petition is GRANTED. The challenged resolutions of the
Court of Appeals are herebyREVERSED and SET ASIDE. The complaint of
respondent Divina A. Montehermozo against petitioner isDISMISSED.
SO ORDERED.

G.R. No. 160444

August 29, 2012

WALL EM MARITIME SERVICES, INC., Petitioner,

vs.
ERNESTO C. TANAWAN, Respondent.

April 1998, Tanawan was paid sickness allowances equivalent to his monthly
salary.10

BERSAMIN, J.:

On March 31, 1988, while Tanawan was still under treatment by Dr. Lim, he
also sought the services of Dr. Rimando Saguin to assess the extent of his
disability due to the same injury. Dr. Saguin categorized the foot injury as
Grade 12 based on the Philippine Overseas Employment Administration
(POEA) Schedule of Disability.11

A seafarer, to be entitled to disability benefits, must prove that the injury was
suffered during the term of the employment, and must submit himself to the
company-designated physician for evaluation within three days from his
repatriation.

On August 25, 1998, due to the worsening condition of his right eye,
Tanawan also went to the clinic of Dr. Hernando D. Bunuan for a disability
evaluation, not of his foot injury but of an eye injury that he had supposedly
sustained while on board the vessel.12

The Case

Tanawans position paper narrated how he had sustained the eye injury,
stating that on October 5, 1997, the Chief Engineer directed him to spraypaint the loader of the vessel; that as he was opening a can of thinner, some
of the thinner accidentally splashed into his right eye; that he was rushed to
the Office of the Chief Mate for emergency treatment; and that the ship
doctor examined him five days later, and told him that there was nothing to
worry about and that he could continue working.13

DECISION

For review on certiorari is the decision promulgated on November 29,

2002,1 whereby the Court of Appeals (CA) annulled the decision rendered on
June 13, 2001 by the National Labor Relations Commission (NLRC) and
reinstated the decision dated January 21, 2000 of the Labor Arbiter.
Antecedents
On May 12, 1997, the petitioner, then acting as local agent of Scandic Ship
Management, Ltd., engaged Ernesto C. Tanawan as dozer driver assigned to
the vessel, M/V Eastern Falcon, for a period of 12 months. Under the
employment contract, Tanawan was entitled to a basic salary of
US$355.00/month, overtime pay of US$2.13/hour, and vacation leave pay of
US$35.00/month.2
On November 22, 1997, while Tanawan was assisting two co-workers in
lifting a steel plate aboard the vessel, a corner of the steel plate touched the
floor of the deck, causing the sling to slide and the steel plate to hit his left
foot. He was brought to a hospital in Malaysia where his left foot was placed
in a cast. His x-ray examination showed he had suffered multiple left toes
fracture (i.e., left 2nd proximal phalanx and 3rd to 5th metatarsal).3
Following Tanawans repatriation on November 28, 1997, his designated
physician, Dr. Robert D. Lim, conducted the evaluation and treatment of his
foot injury at Metropolitan Hospital, the designated hospital. Tanawan was
initially evaluated on December 1, 1997 and was referred to Metropolitan
Hospitals orthopedic surgeon who reviewed the x-rays and advised Tanawan
to continue with his immobilization to allow good fracture healing.4
On December 22, 1997, Tanawans cast was removed, and he was advised to
start motion exercises and partial weight bearing.5 He underwent physical
therapy for two months at the St. Camillus Hospital. 6 On March 26, 1998,
the orthopedic surgeon suggested pinning and bone grafting of the 5th
metatarsal bone after noticing that there was no callous formation there.7
On April 7, 1998, Tanawan underwent bone grafting and was discharged on
the next day.8 On May 21, 1998, conformably with the orthopedic surgeons
findings, Dr. Lim reported that Tanawan was already asymptomatic and
pronounced him fit to work.9 It is noted that from November 30, 1997 until

Dr. Bunuan referred him to Dr. Tim Jimenez, an ophthalmologist, who

diagnosed him to be suffering from a retinal detachment with vitreous
hemorrhage on the right eye for which surgical repair was needed. Dr.
Bunuan categorized his disability as Grade 7.14
On November 26, 1998, Tanawan filed in the Arbitration Branch of the NLRC
a complaint for disability benefits for the foot and eye injuries, sickness
allowance, damages and attorneys fees against the petitioner and its foreign
principal.
In its answer, the petitioner denied Tanawans claim for disability benefits for
his foot injury, averring that he was already fit to work based on Dr. Lims
certification;15 that he did not sustain the alleged eye injury while on board
the vessel because no such injury was reported;16 that the claim for sickness
allowance was already paid when he underwent treatment.17
Ruling of the Labor Arbiter
On January 21, 2000, the Labor Arbiter ruled in Tanawans favor,
viz:
WHEREFORE, premises considered, judgment is hereby rendered:
1) ORDERING respondents to pay the complainant, jointly and
severally, in Philippine Currency, based on the rate of exchange
prevailing at the time of actual payment, the following amounts
representing the complainants disability benefits:
a) Foot injury US$5,225.00
b) Eye injury US$20,900.00
2) AND ORDERING, FURTHERMORE, respondents to pay the
complainant attorneys fees equivalent to ten percent (10%) of the

total monetary awards granted to the aforesaid employee under this

Decision.

On November 29, 2002, the CA rendered its assailed decision in favor of

Tanawan,28 whose dispositive portion reads as follows:

All other claims are DISMISSED for lack of merit.

WHEREFORE, having found that public respondent NLRC committed grave

abuse of discretion, the Court hereby ANNULS the assailed Decision and
Resolution and REINSTATES the decision of the Labor Arbiter dated January
21, 2000.

SO ORDERED.18
The Labor Arbiter found sufficient evidence to support Tanawans claim for
disability benefits for the foot and eye injuries, according credence to the
medical certificate issued by Dr. Saguin classifying Tanawans foot injury as
Grade 12; Tanawans declaration which was not contradicted by the
petitionerthat some paint thinner splashed into his right eye on October 5,
1997; and the letter of Dr. Bunuan to the effect that the disability due to the
eye injury was classified as Grade 7.
The Labor Arbiter discounted Dr. Lims certification declaring Tanawan fit to
work on the ground that Dr. Lim had no personal knowledge of such fact
because it had been the orthopedic surgeon who had made the finding;
hence, the certification was hearsay evidence, not deserving of any probative
weight. The Labor Arbiter denied Tanawans claim for sickness allowance in
light of the showing that such claim had already been paid.19
The petitioner appealed to the NLRC. In its appeal, the petitioner contended
that Dr. Saguins certification was issued on March 31, 1998 while Tanawan
was still under treatment by Dr. Lim;20 that the disability grading by Dr.
Saguin had no factual or legal basis considering that Tanawan was later
declared fit to work on May 21, 1998 by the company-designated physician,
the only physician authorized to determine whether a seafarer was fit to work
or was disabled;21 that the medical report of the orthopedic surgeon who
actually treated Tanawan reinforced Dr. Lims fit-to-work certification,
because the report stated that Tanawan was already asymptomatic and could
go back to work anytime;22 that Tanawan failed to discharge his burden of
proof to establish that he had sustained the injury while on board the vessel;
that Tanawan did not submit himself to a post-employment medical
examination for the eye injury and did not mention such injury while he
underwent treatment for his foot injury, an indication that the eye injury was
only an afterthought;23 that there was also no evidence that the alleged eye
injury was directly caused by the thinner, the certification of Dr. Bunuan not
having stated its cause;24 and that a certification from an eye specialist, a
certain Dr. Willie Angbue-Te, showed the contrary, because the certification
attested that the splashing of some thinner on the eye would not in any way
lead to vitreous hemorrhage with retinal detachment, which was usually
caused by trauma, pre-existing lattice degeneration, diabetic retinopathy,
high myopia, retinal tear or retinal holes.25
Ruling of the NLRC
On June 13, 2001, the NLRC reversed the Labor Arbiters decision and
dismissed Tanawans complaint for lack of merit.26
After the NLRC denied his motion for reconsideration,27 Tanawan
commenced a special civil action for certiorari in the CA.
Ruling of the CA

SO ORDERED.
The CA discoursed that what was being compensated in disability
compensation was not the injury but the incapacity to work; that considering
that the foot injury incapacitated Tanawan from further working as dozer
driver for the petitioners principal, he should be given disability benefits;
that Dr. Lims certification had no probative weight because it was selfserving and biased infavor of the petitioner; that Tanawans claim for the eye
injury was warranted because the injury occurred during the term of the
employment contract; and that an injury, to be compensable, need not be
work-connected.29
On October 17, 2003, the CA
reconsideration for lack of merit.30

denied

the

petitioners

motion

for

Issues
Hence, this appeal, with the petitioner tendering the following issues:
1. WHETHER OR NOT THE STANDARD EMPLOYMENT CONTRACT OF THE
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION ("POEA") IS THE
LAW BETWEEN THE SEAMAN AND THE MANNING AGENT.
2. WHETHER OR NOT A COMPANY-DESIGNATED PHYSICIAN POSSESSES
THE LEGAL AUTHORITY TO DECLARE A SEAMAN FIT OR DISABLED
UNDER THE LAW.
3. WHETHER OR NOT A SEAMAN CAN CLAIM DISABILITY BENEFITS AFTER
HE FAILED TO REPORT HIS ALLEGED INJURY WITHIN THE THREE-DAY
REGLEMENTARY PERIOD AS REQUIRED AND IMPOSED BY LAW.31
The petitioner insists that under the POEA Standard Employment Contract
(POEA SEC), which governed the relationship between the seafarer and his
manning agent, it was the company-designated physician who would assess
and establish the fitness or disability of the repatriated seaman; that
Tanawans claim for any disability benefit had no basis because the
company-designated physician already pronounced him fit to work; that
Tanawan should have reported the eye injury to the company-designated
physician within three working days upon his arrival in the country pursuant
to Sec. 20(B)(3) of the POEA SEC; that his non-reporting now barred
Tanawan from recovering disability benefit for the eye injury; that to ignore
the application of the 3-day reglementary period would lead to the
indiscriminate filing of baseless claims against the manning agencies and
their foreign principals; and that more probative weight should be accorded
to the certification of Dr. Lim about the foot injury and the opinion of Dr.
Angbue-Te on the alleged eye injury.

On the other hand, Tanawan submits that the determination of the fitness or
disability of a seafarer was not the exclusive prerogative of the companydesignated physician; and that his failure to undergo a post-employment
medical examination for the eye injury within three days from his
repatriation did not bar his claim for disability benefits.32
Ruling
The petition is partly meritorious.
The employment of seafarers, and its incidents, including claims for death
benefits, are governed by the contracts they sign every time they are hired or
rehired. Such contracts have the force of law between the parties as long as
their stipulations are not contrary to law, morals, public order or public
policy. While the seafarers and their employers are governed by their mutual
agreements, the POEA rules and regulations require that the POEA SEC,
which contains the standard terms and conditions of the seafarers
employment in foreign ocean-going vessels, be integrated in every seafarers
contract.33
The pertinent provision of the 1996 POEA SEC, which was in effect at the
time of Tanawans employment, was Section 20(B), which reads:
SECTION 20. COMPENSATION AND BENEFITS
xxx
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS:
The liabilities of the employer when the seafarer suffers injury or illness
during the term of his contract are as follows:
1. The employer shall continue to pay the seafarer his wages during the time
he is on board the vessel;
2. If the injury or illness requires medical and/or dental treatment in a
foreign port, the employer shall be liable for the full cost of such medical,
serious dental, surgical and hospital treatment as well as board and lodging
until the seafarer is declared fit to work or to be repatriated.
However, if after repatriation, the seafarer still requires medical attention
arising from said injury or illness, he shall be so provided at cost to the
employer until such time he is declared fit or the degree of his disability has
been established by the company-designated physician.
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician, but in no case shall this period exceed one
hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post-employment
medical examination by a company-designated physician within three
working days upon his return except when he is physically incapacitated to
do so, in which case, a written notice to the agency within the same period is
deemed as compliance. Failure of the seafarer to comply with the mandatory

reporting requirement shall result in his forfeiture of the right to claim the
above benefits.
It is clear from the provision that the one tasked to determine whether the
seafarer suffers from any disability or is fit to work is the companydesignated physician. As such, the seafarer must submit himself to the
company-designated physician for a post employment medical examination
within three days from his repatriation. But the assessment of the companydesignated physician is not final, binding or conclusive on the seafarer, the
labor tribunals, or the courts. The seafarer may request a second opinion
and consult a physician of his choice regarding his ailment or injury, and the
medical report issued by the physician of his choice shall also be evaluated
on its inherent merit by the labor tribunal and the court.34
Tanawan submitted himself to Dr. Lim, the company-designated physician,
for a medical examination on December 1, 1997, which was within the 3-day
reglementary period from his repatriation. The medical examination
conducted focused on Tanawans foot injury, the cause of his repatriation.
Nothing was mentioned of an eye injury. Dr. Lim treated Tanawan for the foot
injury from December 1, 1997 until May 21, 1998, when Dr. Lim declared
him fit to work. Within that period that lasted 172 days, Tanawan was
unable to perform his job, an indication of a permanent disability. Under the
law, there is permanent disability if a worker is unable to perform his job for
more than 120 days, regardless of whether or not he loses the use of any part
of his body.35
That the company-designated physician did not render any finding of
disability is of no consequence. Disability should be understood more on the
loss of earning capacity rather than on the medical significance of the
disability.36 Even in the absence of an official finding by the companydesignated physician to the effect that the seafarer suffers a disability and is
unfit for sea duty, the seafarer may still be declared to be suffering from a
permanent disability if he is unable to work for more than 120 days.37 What
clearly determines the seafarers entitlement to permanent disability benefits
is his inability to work for more than 120 days. 38 Although the companydesignated physician already declared the seafarer fit to work, the seafarers
disability is still considered permanent and total if such declaration is made
belatedly (that is, more than 120 days after repatriation).39
After the lapse of the 120-day period from his repatriation, Tanawan
consulted Dr. Saguin, his own private physician, for the purpose of having an
evaluation of the degree of his disability. At that time, he was due to undergo
bone grafting and pinning of the 5th metatarsal bone, as Dr. Lim
recommended. Dr. Saguins finding that Tanawan had a Grade 12 disability
was, therefore, explicable and plausible.
On the other hand, Tanawans claim for disability benefits due to the eye
injury was already barred by his failure to report the injury and to have his
eye examined by a company-designated physician.40 The rationale for the
rule is that reporting the illness or injury within three days from repatriation
fairly makes it easier for a physician to determine the cause of the illness or
injury. Ascertaining the real cause of the illness or injury beyond the period
may prove difficult.41 To ignore the rule might set a precedent with negative

repercussions, like opening the floodgates to a limitless number of seafarers

claiming disability benefits, or causing unfairness to the employer who would
have difficulty determining the cause of a claimants illness because of the
passage of time. The employer would then have no protection against
unrelated disability claims.42
Tanawan did not report the eye injury either to the petitioner or to Dr. Lim
while he was undergoing treatment for the foot injury.1wphi1 Curiously, he
did not even offer any explanation as to why he had his eye examined only on
August 25, 1998, or after almost nine months from his repatriation.
Under the 1996 POEA SEC,43 it was enough to show that the injury or illness
was sustained during the term of the contract. The Court has declared that
the unqualified phrase "during the term" found in Section 20(B) thereof
covered all injuries or illnesses occurring during the lifetime of the contract. 44
It is the oft-repeated rule, however, that whoever claims entitlement to the
benefits provided by law should establish his right to the benefits by
substantial evidence.45 As such, Tanawan must present concrete proof
showing that he acquired or contracted the injury or illness that resulted to
his disability during the term of his employment contract.46 Proof of this
circumstance was particularly crucial in view of his non-reporting of the
injury to the petitioner. Yet, he did not present any proof of having sustained
the eye injury during the term of his contract. All that he submitted was his
bare allegation that his eye had been splashed with some thinner while he
was on board the vessel. He also did not adduce any proof demonstrating
that the splashing of thinner could have caused the retinal detachment with
vitreous hemorrhage. At the very least, he should have adduced proof that
would tie the accident to the eye injury. We note at this juncture that even
the certification by Dr. Bunuan provided no information on the possible
cause of the eye injury.
Consequently, the claim for disability benefit for the eye injury is denied in
view of Tanawans non-reporting of the injury to the petitioner and of his
failure to prove that the injury. was sustained during the term of his
employment.
WHEREFORE, the Court PARTIALLY GRANTS the petition for review;
and DELETES the award of US$20,900.00 as disability benefits for the eye
injury.
No pronouncement on costs of suit.
SO ORDERED.

G.R. No. 177907

August 29, 2012

FAIR SHIPPING CORP., and/or KOHYU MARINE CO., LTD., Petitioners,

vs.
JOSELITO T. MEDEL, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
In this Petition for Review on Certiorari1 under Rule 45, the Court is asked to
reverse and set aside the Decision2and Resolution3 of the Court of Appeals in
CA-G.R. SP No. 75893 dated November 20, 2006 and May 15, 2007,
respectively. In the assailed Decision, the Court of Appeals held that the
Second Division of the National Labor Relations Commission (NLRC)
committed grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing the Decision4 dated July 31, 2002 in NLRC OFW (M)
99-09-01462 (CA No. 029790-01). In the assailed resolution, the Court of
Appeals denied for lack of merit the Motion for Reconsideration 5 of herein
petitioners Fair Shipping Corporation and Kohyu Marine Co., Ltd. and the
Partial Motion for Reconsideration filed by herein respondent Joselito T.
Medel.
From the records of the case, we culled the following material facts:
On November 23, 1998, Medel was hired by Fair Shipping Corporation, for
and in behalf of its foreign principal Kohyu Marine Co., Ltd. Under the
Contract of Employment6 signed by Medel, the latter was employed as an
Able Seaman of the vessel M/V Optima for a period of 12 months with a
basic monthly salary of US$335.00, plus fixed overtime pay of US$136.00
and vacation leave with pay of two and a half (2.5) days per month. The
contract expressly stated that the terms and conditions of the revised
Employment Contract governing the employment of all seafarers, as approved
per Department Order No. 33 and Memorandum Circular No. 55, both series
of 1996 the 1996 POEA SEC,7 were to be strictly and faithfully observed by
the parties.
Medel boarded the M/V Optima on November 27, 1998 and commenced the
performance of his duties therein.8On March 1, 1999, while the M/V Optima
was docked at the Port of Vungtao in Ho Chi Minh City, Vietnam, Medel
figured in an unfortunate accident. During the conduct of emergency drills
aboard the vessel, one of Medels co-workers lost control of the manual
handle of a lifeboat, causing the same to turn uncontrollably; and it struck
Medel in the forehead. Medel was given first aid treatment and immediately
brought to the Choray Hospital in Ho Chi Minh City on said date.9
After undergoing surgical procedure to treat his fractured skull, Medel was
discharged from the hospital on March 13, 1999. Medels Discharge
Summary disclosed that he underwent the following treatment:
1/ Surgical procedure: An open wound, 5 cm long, in the left frontal region.
Extend [of] the wound up to 10 cm. The underlying frontal bone is found
completely shattered. The frontal sinus is broken. The fracture in the frontal
bone extends beyond the midline to the right parietal bone. The fractured
skull is depressed 1 cm. Frontal sinus is cleansed, its mucosa is cauterized.

A Gelfoam is packed into the frontal sinus. The broken fragments of the
frontal bone are removed. The remaining depressed frontal bone is elevated
to normal position. The fractured fronto-parietal bone is gouged out. A
rubber tube drain is placed into the wound. Skin is closed in 2 layers.
Post-op is uneventful. Left palpebral ptosis and dimmed vision are recorded.
Eye examination shows scattered retinal hemorrhages. Surgical incision
heals well. Left palpebral ptosis recovers nearly completely. Retinal
hemorrhage is markedly reduced, however, left vision is not yet fully
recovered.10
Medels attending physician then recommended his "[r]epatriation for further
treatment (at the patients request)" and that he should "see a neurosurgeon
and an ophthalmologist in the Philippines."11
Medel was repatriated to the Philippines on March 13, 1999 and was
admitted to the Metropolitan Hospital on the said date. In a letter dated
March 16, 1999, Dr. Robert D. Lim, the company-designated physician and
Medical Coordinator of the Metropolitan Hospital, informed petitioners that
Medel was seen by a neurologist, an ENT specialist, and an
ophthalmologist.12 Medel subsequently underwent a cranial CT scan and an
ultrasound on his left eye, which was also injured during the accident. 13 On
April 22, 1999, a posterior vitrectomy was performed on Medels left
eye;14 and on July 14 and July 19, 1999, Medels left eye was likewise
subjected to two sessions of argon laser retinopexy.15 Dr. Lim then reported
to petitioners that Medels condition was re-evaluated on July 22, 1999 and,
after consulting with the neurosurgeon at the Metropolitan Hospital, Medel
was advised to undergo cranioplasty to treat the bony defect in his
skull.16 On October 20, 1999, Medel was admitted to the hospital and
underwent the said surgical procedure.17 On October 25, 1999, Dr. Daniel L.
Ong, a neurologist at the Metropolitan Hospital, sent a report to Dr. Lim
stating thus:
DEAR DR. LIM,
RE: DELAY OF CRANIOPLASTY OF LEFT FRONTAL SINUS OPEN
DEPRESSED FRACTURE; S/P POST-CRANIOTOMY (MR. JOSELITO MEDEL)
THE REASON FOR THE DELAY IS DUE TO THE POOR SKIN CONDITION
AND THE POTENTIAL INFARCTION IN THIS PARTICULAR AREA IF DONE
TOO QUICKLY. THIS IS ALSO THE REASON FOR PROLONGED AN[T]IBIOTIC
COVERAGE AS PART OF THE INITIAL PREPARATORY TREATMENT,
USUALLY SIX MONTHS WAIT BEFORE A CRANIOPLASTY IN THIS CASE.
I THINK PATIENT CAN RESUME SEA DUTIES WITHOUT ANY DISABILITY.
THANK YOU.
(SIGNED)
DANIEL ONG, M.D.18
Months after, in a letter dated February 15, 2000, Dr. Lim informed
petitioners of Medels condition, the relevant portion of which states:

RE : MR. JOSELITO MEDEL

MV OPTIMA
FAIR SHIP. CORP.
: PATIENT WAS SEEN AND RE-EVALUATED FEBRUARY 11, 2000.
: HE WAS SEEN BY OUR NEUROLOGIST AND NEURO-SURGEON.
HIS WOUND IS HEALED. HIS PERIMETRY RESULT WAS GIVEN TO OUR
NEUROLOGIST AND HE OPINES THAT PATIENT IS NOW FIT TO WORK.
: HE WAS PRONOUNCED FIT TO RESUME SEA DUTIES AS OF FEBRUARY
11, 2000.
: HOWEVER, THE PATIENT REFUSED TO SIGN HIS CERTIFICATE OF
FITNESS TO WORK.
: FOR YOUR PERUSAL.19
In the interregnum, before Medel actually underwent the procedure of
cranioplasty, he claimed from petitioners the payment of permanent total
disability
benefits. Petitioners,
however, refused
to grant
the
same.20 Consequently, on September 7, 1999, Medel filed before the
Arbitration Branch of the NLRC a complaint21 against petitioners for
disability benefits in the amount of US$60,000.00, medical expenses, loss of
earning capacity, damages and attorneys fees. The case was docketed as
NLRC OFW (M) No. 99-09-01462. Medel claimed entitlement to permanent
total disability benefits as more than 120 days had passed since he was
repatriated for medical treatment but he was yet to be declared fit to work or
the degree of his disability determined by the company-designated physician.
On July 30, 2001, the Labor Arbiter issued a Decision 22 in favor of Medel,
holding that:

Vitreous Hemorrhage. Suggestion was Vitrectomy, Left eye. On June 28,

1999, Medel was re-evaluated, however, the ophthalmologist suggested Argon
Laser Retinopexy since he was noted to have Wrinkled Macula and Areas of
weakness in the Retina secondary to Trauma. He was then seen July 14,
1999 when he underwent first session of Argon Laser Retinopexy and for reevaluation on July 19, 1999 for second session. On July 23, 1999, he was
seen by the neurosurgeon who advised him to undergo the procedure of
cranioplasty to cover the bony defect of the skull to be done in October 1999.
With the foregoing, we are persuaded by Medels arguments that the claim for
disability benefits is not solely premised on the extent of his injury but also
on the consequences of the same to his profession as a seafarer which was
his only means of livelihood. We could imagine the nature of these
undertakings of seafarers where manual and strenuous activities are part of
the days work. Moreso, with the position of Medel being an ordinary seaman
which primarily comprises the vessel manpower and labor. Thus, to us, we
are convinced that Medel is entitled to the benefits under Section 20 B of the
POEA Memorandum Circular No. 55 and Section 30 A thereof which was
deemed incorporated to his POEA approved employment contract.
Further, the claim for attorneys fees is justified considering the above
discussed circumstances which in effect has constrained Medel to hire the
services of a legal counsel to protect his interest.23
The Labor Arbiter decreed as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered finding
petitioners jointly and severally liable to:
1) To pay Medel the amount of US$60,000.00 or its peso equivalent
at the prevailing exchange rate at the time of payment, representing
permanent and total disability; and

Upon the records, this Office is more than convinced that Medel is entitled to
a [sic] disability benefits which is equivalent to 120% of US$50,000.00 or
US$60,000.00 or its peso equivalent at the exchange rate prevailing at the
time of its payment.

2) To pay Medel the equivalent amount of ten (10%) percent of the

total judgment award, as and for attorneys fees;

As held by petitioners to be an undisputed fact, Medel suffered injury that

was sustained by him during the effectivity of his shipboard employment
contract and while engaged in the performance of his contracted duties.

Petitioners filed a Memorandum of Appeal25 before the NLRC, which was

docketed as NLRC CA No. 029790-01. In their appeal, petitioners alleged that
the disability compensation granted to Medel was improper because the same
was not based on a disability assessment issued by the company-designated
physician. As Medel was not disabled, they argued that he was not entitled to
any compensation, including attorneys fees.

Upon Medels arrival, petitioners referred him to the company designated

physician at Metropolitan Hospital on March 13, 1999, with impression,
"Head Injury with Open Fracture of the Left Frontal Bone: S/P Open
Reduction & Internal Fixation of Frontal Bone and Sinus; Cerebral
Concussion; Vitreous Hemorrhage, left eye secondary to trauma." Suggested
procedure was Ultrasound of the left eye. Subsequently, Medel was referred
to a neuro-surgeon. His cranial CT scan showed "Minimal Pneumocephalus;
Inferior Frontal Region;
Comminuted Fracture, Frontal Bone; Post craniotomy Defect, Left Frontal
Bone; changed within the Sphenoid which may relate to previous
hemorrhage and Negative for Mass effect nor Intracranial Intracerebral
Hemorrhage." His ultrasound of the left eye confirmed the presence of

All other claims are hereby dismissed for lack of merit.24

In its Decision dated July 31, 2002, the Second Division of the NLRC found
merit in the petitioners appeal and disposed of the same thus:
WHEREFORE, the appealed decision is SET ASIDE and a new one
entered by ordering Medels claim DISMISSED for lack of merit.26
The NLRC ruled that under Section 20(B)(2) of the 1996 POEA SEC, the
disability of a seafarer should be assessed by the company-designated
physician. The employer shall be liable for the seafarers medical treatment
until the latter is declared fit to work or his disability is assessed. Should the

seafarer recover, the NLRC posited that the contractual obligation of the
employer should cease. However, if the seafarer is found to be incapacitated,
the employers contractual obligation shall terminate only after the latter
pays the seafarers disability benefits. Furthermore, the NLRC stated that the
120 days referred to in Section 20(B)(3) of the POEA SEC 27 pertained to "the
maximum number of days to which a seafarer who signed-off from the vessel
for medical treatment is entitled to sickness wages."28 The NLRC ruled that
there was no evidence to prove that Medel was disabled, other than his
contention that his treatment had gone beyond 120 days. Medel was even
declared fit to resume sea duty. Thus, the NLRC held that Medel had no
basis for his claim of disability benefits.

I.

Medel filed a Motion for Reconsideration29 of the above NLRC Decision but
the same was denied in the NLRC Resolution30 dated November 21, 2002.

WHETHER OR NOT, IN DISABILITY COMPENSATION CLAIMS, THE

CONDITIONS PRECEDENT REQUIRED UNDER THE POEA CONTRACT
SHOULD BE LIGHTLY DISREGARDED ON MERE APPEAL TO THE
LIBERALITY OF LAWS TOWARDS FILIPINO SEAFARERS.36

Medel, thus, filed a Petition for Certiorari31 before the Court of Appeals,
which sought the reversal of the NLRC rulings for having been allegedly
issued with grave abuse of discretion amounting to lack or excess of
jurisdiction. Medels petition was docketed as CA-G.R. SP No. 75893.
On November 20, 2006, the Court of Appeals rendered the assailed decision,
the dispositive portion of which provides:
WHEREFORE, in view of the foregoing, the NLRC Decision dated July 31,
2002 is hereby REVERSEDand SET ASIDE. The decision of the Labor Arbiter
dated July 30, 2001 is hereby REINSTATED with respect only to the award
of disability benefits. The award of attorneys fees in the Labor Arbiters
decision is deleted.32
Citing the Courts ruling in Crystal Shipping, Inc. v. Natividad,33 the Court of
Appeals stated that an award of permanent total disability benefits is proper
when an employee is unable to perform his customary work for more than
120 days. Since Medels accident rendered him incapable of performing his
usual or customary work for more than 120 days, the Court of Appeals
concluded that he was entitled to permanent total disability benefits. The
Court of Appeals also refused to accept the veracity of the medical certificate
attesting to Medels fitness to resume sea duties as the same was issued by
Dr. Lim, a physician who the appellate court deemed as not privy to Medels
condition. The Court of Appeals did not, however, heed Medels claims for
moral and exemplary damages since petitioners neither abandoned him
during his period of disability, nor were they negligent in providing for his
medical treatment. Lastly, the Court of Appeals deleted the award of
attorneys fees.
Medel filed a Partial Motion for Reconsideration34 of the above decision as
regards the award of attorneys fees. On the other hand, petitioners filed their
Motion for Reconsideration,35 arguing that the provisions alone of the POEA
SEC should apply in determining what constitutes permanent total disability,
to the exclusion of the Labor Code provisions on disability compensation. In
the assailed Resolution dated May 15, 2007, the Court of Appeals denied for
lack of merit the respective motions of the parties.
Hence, petitioners instituted this petition, citing the following issues:

WHETHER OR NOT THE DISABILITY BENEFITS PROVIDED UNDER THE

POEA CONTRACT ARE SEPARATE AND DISTINCT FROM THOSE PROVIDED
UNDER THE LABOR CODE.
II.
WHETHER OR NOT UNDER THE POEA CONTRACT THE INABILITY TO
WORK FOR MORE THAN ONE HUNDRED TWENTY (120) DAYS IS TOTAL
AND PERMANENT DISABILITY.
III.

Petitioners argue that Medels claims for disability benefits should be

resolved by applying exclusively the provisions of the POEA SEC and the
relevant jurisprudence interpreting the same, without resorting to the
provisions of the Labor Code on disability benefits. Moreover, petitioners aver
that the 1996 POEA SEC does not state that the mere lapse of 120 days
automatically makes a seafarer permanently and totally disabled. In spite of
the lapse of 120 days, petitioners posit that the entitlement to disability
benefits would only come as a matter of course after the degree of the
seafarers disability had been established, which assessment shall be made
after the seafarer no longer responds to any medication or treatment. Thus, a
seafarer is entitled to receive permanent total disability benefits only if the
seafarer was declared by the company-designated physician to be suffering
from a Grade 1 impediment.
In the present case, petitioners insist that there was no disability assessment
from the company-designated physician. On the contrary, Medel was even
assessed to be physically fit to resume work. Petitioners then faulted the
Court of Appeals for rejecting the certification of Dr. Ong that Medel was fit to
resume sea duties. Petitioners insist that said doctor had personal knowledge
of Medels condition, as he was a member of a team of physicians tasked to
treat Medel. Petitioners maintain that Medel did not present evidence to
prove his incapacity, which would entitle him to the disability benefits that
he sought.
After thoroughly reviewing the records of this case, the Court concludes and
so declares that the instant petition lacks merit.
The
Applicable
Law
and
in the Award of Disability Benefits of Seafarers

Jurisprudence

The application of the provisions of the Labor Code to the contracts of

seafarers had long been settled by this Court. In Remigio v. National Labor
Relations Commission,37 we emphatically declared that:
The standard employment contract for seafarers was formulated by the POEA
pursuant to its mandate under E.O. No. 247 to "secure the best terms and

conditions of employment of Filipino contract workers and ensure

compliance therewith" and to "promote and protect the well-being of Filipino
workers overseas." Section 29 of the 1996 POEA SEC itself provides that "all
rights and obligations of the parties to the Contract, including the annexes
thereof, shall be governed by the laws of the Republic of the Philippines,
international conventions, treaties and covenants where the Philippines is a
signatory." Even without this provision, a contract of labor is so impressed
with public interest that the New Civil Code expressly subjects it to "the
special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects."

should be read in conjunction with the first paragraph of Section 20(B)(3) of

the 2000 POEA SEC, which states:

Thus, the Court has applied the Labor Code concept of permanent total
disability to the case of seafarers. x x x.38

As these provisions operate, the seafarer, upon sign-off from his vessel, must
report to the company-designated physician within three (3) days from arrival
for diagnosis and treatment. For the duration of the treatment but in no case
to exceed 120 days, the seaman is on temporary total disability as he is
totally unable to work. He receives his basic wage during this period until he
is declared fit to work or his temporary disability is acknowledged by the
company to be permanent, either partially or totally, as his condition is
defined under the POEA Standard Employment Contract and by applicable
Philippine laws. If the 120 days initial period is exceeded and no such
declaration is made because the seafarer requires further medical attention,
then the temporary total disability period may be extended up to a maximum
of 240 days, subject to the right of the employer to declare within this period
that a permanent partial or total disability already exists. The seaman may of
course also be declared fit to work at any time such declaration is justified by
his medical condition.

The Labor Code defines permanent total disability under Article 192(c)(1),
which states:
ART. 192. PERMANENT TOTAL DISABILITY. x x x
xxxx
(c) The following disabilities shall be deemed total and permanent:
(1) Temporary total disability lasting continuously for more than one hundred
twenty days, except as otherwise provided in the Rules. (Emphasis ours.)
This concept of permanent total disability is further explained in Section 2(b),
Rule VII of the Implementing Rules of Book IV of the Labor Code (Amended
Rules on Employees Compensation) as follows:
SEC. 2. Disability. x x x
(b) A disability is total and permanent if as a result of the injury or sickness
the employee is unable to perform any gainful occupation for a continuous
period exceeding 120 days, except as otherwise provided for in Rule X of
these Rules. (Emphasis ours.)
The exception in Rule X of the Implementing Rules of Book IV (Amended
Rules on Employees Compensation) as mentioned above, on the other hand,
pertains to an employees entitlement to temporary total disability benefits
under Section 2 of the aforesaid Rule X, to wit:
SEC. 2. Period of entitlement. (a) The income benefit shall be paid
beginning on the first day of such disability. If caused by an injury or
sickness it shall not be paid longer than 120 consecutive days except where
injury or sickness still requires medical attendance beyond 120 days but not
to exceed 240 days from onset of disability in which case benefit for
temporary total disability shall be paid. However, the System may declare the
total and permanent status at any time after 120 days of continuous
temporary total disability as may be warranted by the degree of actual loss or
impairment of physical or mental functions as determined by the System.
(Emphasis ours.)
In Vergara v. Hammonia Maritime Services, Inc.,39 the Court discussed how
the above-mentioned provisions of the Labor Code and its implementing rules

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed one
hundred twenty (120) days.
Correlating the aforementioned provision of the POEA SEC with the pertinent
labor laws and rules, Vergara teaches that:

xxxx
As we outlined above, a temporary total disability only becomes permanent
when so declared by the company physician within the periods he is allowed
to do so, or upon the expiration of the maximum 240-day medical treatment
period without a declaration of either fitness to work or the existence of a
permanent disability. x x x.40 (Emphases ours.)
Incidentally, although the contract involved in Vergara was the 2000 POEA
SEC, the Court applied the ruling therein to the case of Magsaysay Maritime
Corporation v. Lobusta,41 which involved the 1996 POEA SEC. As noted in
Lobusta, the first paragraph of Section 20(B)(3) of the 2000 POEA SEC was
copied verbatim from the first paragraph of Section 20(B)(3) of the 1996
POEA SEC.
From the foregoing exposition, Medels entitlement to permanent total
disability benefits becomes clear.1wphi1 Medel was accidentally injured on
board the M/V Optima on March 1, 1999, where he sustained an open
depressed fracture on the left frontal side of his forehead, as well as damage
to his left eye and frontal sinus. Since his repatriation to the Philippines on
March 13, 1999, Medel underwent medical treatment for his condition under
the supervision of Dr. Lim, the company-designated physician, at the
Metropolitan Hospital. He was initially given medications to manage his
condition and he went through surgical procedures to repair the damage to
his left eye on April 22, 1999, July 14, 1999 and July 19, 1999. Medels
condition was continuously evaluated by the hospitals ophthalmologist and

neurologist. On October 20, 1999, Medel went through the procedure of

cranioplasty to repair his fractured skull.42 According to Dr. Lim, Medel was
seen by the hospital neurologist and neurosurgeon on February 11, 2000, on
which date he was pronounced fit to resume sea duties.
Unmistakably, from the time Medel signed off from the vessel on March 13,
1999 up to the time his fitness to work was declared on February 11, 2000,
more than eleven (11) months, or approximately 335 days, have lapsed.
During this period, Medel was totally unable to pursue his occupation as a
seafarer. Following the guidelines laid down in Vergara, it is evident that the
maximum 240-day medical treatment period expired in this case without a
declaration of Medels fitness to work or the existence of his permanent
disability determined. Accordingly, Medels temporary total disability should
be deemed permanent and thus, he is entitled to permanent total disability
benefits.
With respect to the alleged earlier pronouncement of Dr. Ong as to the fitness
of Medel for sea duties, the Court is not thereby persuaded. To recall, the
said pronouncement was made on October 25, 1999 in a letter addressed to
Dr. Lim after the cranioplasty of Medel was undertaken on October 20, 1999.
After explaining the delay in the conduct of the said procedure, Dr. Ong
stated that he "think[s] patient can resume sea duties without any
disability."43 The statement of Dr. Ong, however, was not a categorical
attestation as to the actual fitness of Medel to resume his occupation as a
seafarer. Plainly, after Medel underwent cranioplasty to repair the fracture in
his skull, it is not farfetched to assume that he still needed additional time
for his wound to heal and to recuperate in order to restore himself to his
former state of health. In their Memorandum, petitioners even acknowledged
that despite the above opinion of Dr. Ong, Medel continued to avail of further
medical treatment and rehabilitation.44Medel also had to be evaluated by
specialists to assess his condition. In their Memorandum, petitioners related
that "ultimately, the company-designated physicians declared that petitioner
was 'fit to resume sea duties' by Medical Certificate dated 15 February
2000."45 The certificate signed by Dr. Lim petiinently stated that "MedeiJ was
seen by om neurologist and neuro-surgeon. His wound is healed. His
perimetry result was given to our neurologist and he opines that patient is
now fit to work." 46 The same certificate declared that "Medel was pronounced
fit to resume sea duties as of February 11, 2000." 47 To our mind, the
medical certificate of Dr. Lim dated February 15, 2000 is the definitive
declaration on the physical condition of Medel. Unfmiunately for petitioners,
however, this declaration was issued beyond the 240-day period as
mandated in Vergara. Consequently, we find no reason to overturn the Court
of Appeals' conclusion regarding Medel's right to disability benefits, albeit on
different legal grounds.
WHEREFORE, the instant Petition for Review on Certiorari is DENIED.
Petitioners Fair Shipping Corporation and Kohyu Marine Co., Ltd. are held
jointly and severally liable to pay Joselito T. Medel permanent total disability
benefits of US$60,000.00, to be paid in Philippine Peso at the exchange rate
prevailing at the time of actual payment. Costs against petitioners.
SO ORDERED.

G.R. No. 155359

January 31, 2006

SPOUSES PONCIANO AYA-AY, SR. and CLEMENCIA AYA-AY, Petitioners,

vs.
ARPAPHIL SHIPPING CORP., and MAGNA MARINE, INC.,Respondents.
DECISION
CARPIO MORALES, J.:
Challenged via petition for review on certiorari is the January 24, 2002
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 50576 which denied
due course to the petition for certiorari filed by spouses Ponciano, Sr. and
Clemencia Aya-ay (petitioners), a reconsideration of which decision was
denied by Resolution2 of September 10, 2002.
The facts as culled from the records are as follows:
Respondent Arpaphil Shipping Corporation (Arpaphil), a domestic manning
corporation, engaged the services of Ponciano Aya-ay, Jr. (Aya-ay) to work as
seaman for respondent Magna Marine, Inc. (Magna Marine), a Greek shipping
company.
After the parties executed an 11-month Contract of Employment3 dated
October 15, 1994 which bore the approval of the Philippine Overseas
Employment Administration (POEA), Aya-ay departed on October 26, 1994
from the Philippines on board the vessel M/V Panoria.4
On June 1, 1995, as Aya-ay was cleaning the vessels air compressor, a
sudden backflow of compressed air containing sand and rust hit his right
eye. As the vessel was then plying near the Port of Hawaii on its way to
Australia, Aya-ay asked the vessels captain, G. Livarados, that he be brought
to a hospital for medical treatment, but the captain advised to just "relax and
take it easy." His eye was washed with salt water and treated with eye drops,
and he was given oral antibiotics.
On arrival of the vessel at the Port of Brisbane, Australia on June 16, 1995,
Aya-ay was referred to Dr. Lawrence W. Hirst of the University of Queensland
who performed a corneal graft and vitrectomy.
In his Medical Report5 dated June 20, 1995, Dr. Hirst stated that Aya-ay had
a "large central corneal perforation with iris prolapse" which appeared to be a
result of a severe corneal infection. He concluded that "there was evidence of
infection in the front of the eye although the back of the eye was not grossly
infected."6
On examination on July 4, 1995 by Dr. John S. Ambler, also of the
University of Queensland, the doctor, in his Medical Certificate 7 of even date,
opined that Aya-ay had been totally incapacitated for work since June 16,
1995 and would remain to be so until August 16, 1995.
On examination by Dr. Michael Whitby, consultant physician for infectious
diseases at Brisbane, Australia, who was requested to be involved in the
"management" of the eye injury of Aya-ay, the doctor, in his letter8 to Dr.
Hirst dated July 10, 1995, noted the details of the continued treatment of

Aya-ays eye injury and stated that he had not made "any further
arrangements to follow the patient further."
On July 5, 1995, Ponciano was repatriated to Manila.9lavvph!l.et
In a Medical Report10 dated September 7, 1995, Dr. Ramon J. Ongsiako, Jr.
and Dr. Carmela Ongsiako-Isabela stated that Ponciano repaired to their
clinic on August 1, 1995 for redness and blurring of vision of his right eye,
and that upon examination, they found that there was corneal graft rejection
in Aya-ays affected area. They thus recommended a repeat corneal
transplant once the inflammation in his eye had subsided, and expenses to
be incurred therefor were, upon Aya-ays request, therein itemized.
In a Medical Report11 dated November 21, 1995, Dr. Ongsiako-Isabela stated
that Aya-ay was awaiting a corneal donor and directed that in the meantime
"he is to be cleared cardiopulmonary wise for surgery."
By still another Medical Report12 dated November 27, 1996, Dr. OngsiakoIsabela stated that:
Mr. Ponciano Aya-ay, Jr., was referred to Dr. Anthony King last November
21, 1995 for cardiac clearance prior to corneal transplant. At that time, he
was not complaining of any symptoms referrable to the heart, like chest
pains, palpitations, difficulty of breathing. Past medical history and family
history was (sic) unremarkable.
His physical exam showed a normal blood pressure of 130/85, normal
cardiac rate of 62 per minute. Cardiac exam was negative for murmurs or
abnormal heart sounds. There were no rales or wheezes. An
electrocardiogram (ECG) showed sinus arrhythmia which is a finding
compatible with his age. Attached is a copy of his ECG.
With these findings, Dr. Anthony King said that there was no evidence of an
active heart disease and granted Mr. Aya-ay cardiac clearance for the
procedure.13 (Underscoring supplied)
Aya-ays corneal transplant was thus scheduled on December 7, 1995.14 On
December 1, 1995, however, Aya-ay died. The Certificate of Death15 issued by
Dr. Isidoro A. Ayson, Medical Officer IV of the Caloocan Health Department,
indicates that the immediate cause of death was cerebro-vascular accident
(CVA).
Having died without issue, Aya-ays parents, herein petitioners, claimed
death benefits from herein respondents Arpaphil and Magna Marine which
claims were rejected.
Petitioners
thereupon
filed
on
August
2,
1996
an
Affidavit/Complaint16 before the National Labor Relations Commission
(NLRC), docketed as NLRC OCW Case No. 00-08-2327-96, praying that
respondents Arpaphil and Magna Marine be ordered to pay them death
compensation benefits in the amount of USD 50,000 under the POEA
Standard Employment Contract;17 burial assistance in the amount of USD
1,000; moral, actual and exemplary damages in an amount not less
than P300,000; and attorneys fees equivalent to 10% of the total claim.

Respondents in their Answer18 contended that since Aya-ays contractual

relationship with them had already ceased at the time of his death, the cause
of which was in no way related to the eye injury, they could not be held liable
for any death benefits.
After the parties had filed their respective position papers,19 Labor Arbiter
Renell Joseph R. Dela Cruz, by Decision20 of July 4, 1997, ordered Arpaphil
to indemnify herein petitioners death benefits in the amount of USD 50,000
and an additional USD 1,000 as burial assistance for the death of their son.
In granting death benefits and burial assistance to petitioners, the Labor
Arbiter held:
The death of complainants son is compensable. It is sufficient that the risk
of contracting the cause of death was set in motion or aggravated by a workrelated injury sustained during the lifetime of their sons contract of
employment.
Otherwise stated, where the primary injury is shown to have been suffered in
the course of employment, every natural consequences (sic) that flows from
the injury likewise arises out of employment.
In the case at bar, there is a proximate connection of the primary injury
sustained by the deceased to the cause of his death. The risk of contracting
cerebro-vascular accident (CVA) is greater during state of depression like
what the deceased was suffering and complaining before his untimely
demise.
As what actually happened the deceased felt so sorry for himself having been
deprived of his only means of livelihood at the prime of his youth and for
having to think that had the master of the vessel gave (sic) him prompt and
proper medical treatment he could have probably been saved from the
misfortune that befell upon him; a circumstance that alone should make the
respondents answerable.21 (Underscoring supplied)
On appeal, the NLRC, by Decision22 of October 31, 1997, set aside the July 4,
1997 Decision of the labor arbiter but ordered respondents to pay petitioners
the amount of P20,000 for humanitarian considerations in light of the
following considerations:
It is clear from the records that the deceased seaman sustained an injury to
his right eye while on board the MV Panoria. It is equally true that no
competent evidence has been adduced by the complainants to bolster their
contention that the work-sustained injury has a direct bearing and/or
influence on the cause of death. As the respondents have so aptly discussed,
and with which We agree, to wit:
"CVA or Cerebro-Vascular Accident, or stroke, is defined in the text
"Principles of Internal Medicine" (International Student Edition, McGraw Hill
Book Company, New York, 1966 Ed., Chap. 204, p. 1146) as follows:
The clinical picture resulting from vascular disease is in most instances so
distinctive that the diagnosis is more readily made than any other in the
realm of neurology. The cardinal feature is the stroke, a term which connotes
the sudden and dramatic development of a focal neurologic deficit. In its

severest forms, the patient falls hemiplegic and even unconscious an event
so striking as to deserve its own separate designation, namely, apoplexy,
stroke, shock, cerebrovascular accident. x x x.
xxxlavvphil.net
"The neurologic deficit in a stroke depends, of course, on the location of the
infarct or hemorrhage in the brain and the size of the lesion. Hemiplegia is
the classical sign of vascular disease and occurs chiefly with massive lesions
of the brainstem. In the most serious cases of hemorrhage, the patient
literally falls in his tracks, paralyzed on one side, and soon passes into deep
coma and dies within a few hours."
CVA is classified under the broad umbrella of the term "Cerebrovascular
Diseases, which is defined and the underlying causes for which are
discussed in the same above-cited text (Id. at p. 1146) as follows:
The term cerebrovascular disease is intended here to denote any disease in
which one or more of the blood vessels of the brain are primarily implicated
in a pathologic process. By pathologic process is meant any abnormality of
the vessel wall, an occlusion by thrombus or embolus, rupture of a vessel, a
failure of cerebral flow due to a fall in blood pressure, a change in the caliber
of the lumen, altered permeability of the vascular wall, or increased viscosity
or other quality of the blood. The pathologic process within the vessel may be
described not only according to its grosser aspects thrombosis, embolism,
rupture of a vessel, etc. but also in terms of the more basic vascular
disorders, i.e., hypertensive arteriosclerosis, arteritis, trauma, aneurism,
developmental malformation, etc.
Nothing therein can in any way support the complainants submission and
the Honorable Arbiters conclusion that CVA may result from an eye injury,
or from infection (which incidentally was already corrected), or from
depression. Thus, it is clear that respondents are not liable for death benefits
arising from seaman Aya-ays death.
Be that as it may, We are of the opinion that on grounds of humanitarian
considerations, the deceased seaman having, in his own little way, dedicated
his efforts to respondents endeavors, that the latter be ordered to grant the
complainants financial assistance in the amount of Twenty Thousand Pesos
(P20,000.00). (Underscoring in the original)
Petitioners Motion for Reconsideration23 of the October 31, 1997 NLRC
Decision having been denied for lack of merit by Resolution 24 of January 27,
1998, they filed a Petition for Certiorari with Prayer for the Issuance of a Writ
of Preliminary Injunction and/or Temporary Restraining Order 25 before this
Court, docketed as G.R. No. 133524.
After respondents and the NLRC, through the Office of the Solicitor General,
filed their respective Comments,26this Court referred the petition to the CA by
Resolution27 of December 9, 1998, in view of its ruling in St. Martin Funeral
Homes v. NLRC.28
By Decision of January 24, 2002,29 the CA denied due course to the petition,
it finding that indeed no substantial evidence enough to establish petitioners
entitlement to the various benefits and damages claimed was presented.

Their Motion for Reconsideration30 having been denied by the CA by

Resolution31 of September 10, 2002, petitioners filed the present petition for
review on certiorari32 raising the following issue:

a. If the seaman is incompetent, or is continuously incapacitated for the

duties for which he was employed by reason of illness or injury (Underscoring
supplied)

WHETHER THE PETITIONERS ARE ENTITLED TO CLAIM THE BENEFITS

UNDER THE POEA CONTRACT WHICH AROSE FROM THE DEATH OF THE
SEAFARER PONCIANO AYA-AY, JR. AND WHAT AMOUNT OF EVIDENCE IS
REQUIRED FROM THE PETITIONERS TO PROVE THEIR ENTITLEMENT
THERETO.33

Upon mutual consent of Aya-ay and respondents, he was on July 5, 1995

repatriated on account of his eye injury. Thus his employment had been
effectively terminated on that particular date.35

The pivotal issue for resolution is whether petitioners are entitled to the
death benefits provided for under the POEA Standard Employment Contract.
Part II, Section C, Nos. 1 and 3 of the POEA Standard Employment Contract
Governing the Employment of All Filipino Seamen on Board Ocean-Going
Vessels provide:
C. Compensation and Benefits
1. In case of death of the seaman during the term of his Contract, the
employer shall pay his beneficiaries the Philippine Currency equivalent to the
amount of US$50,000 and an additional amount of US$7,000 to each child
under the age of twenty-one (21) but not exceeding four children at the
exchange rate prevailing during the time of payment.
xxxx
3. The other liabilities of the employer when the seaman dies as a result of
injury or illness during the term of employment are as follows:
a. The employer shall pay the deceaseds beneficiary all outstanding
obligations due the seaman under this Contract.
xxxx
c. In all cases, the employer shall pay the beneficiaries of seamen the
Philippine Currency equivalent to the amount of US$1,000 for burial
expenses at exchange rate prevailing during the time of payment.
(Underscoring supplied)
In order to give effect to the aforequoted benefits, it must be shown that the
employee died during the effectivity of the contract of employment. 34
Part I, Section H, Nos. 1 and 2(a) of the POEA Standard Employment
Contract provide:
Section H. Termination of Employment
1. The employment of the seaman shall cease on expiration of the
contract period indicated in the Crew Contract unless the Master
and the Seaman, by mutual consent, in writing, agree to an early
termination in which case the seaman is entitled to earned wages
and benefits only.
2. The master shall have the right to discharge or sign off the
seaman at any place abroad in accordance with the terms and
conditions of this Contract and specifically for the following reasons:

At all events, under the October 15, 1994 Contract of Employment, Aya-ay
ceased to be an employee on September 26, 1995,36 hence, he was no longer
an employee when he died on December 1, 1995.
It is, therefore, crucial to determine whether Aya-ay died as a result of, or in
relation to, the eye injury he suffered during the term of his employment. If
the injury is the proximate cause,37 or at least increased the risk, of his
death for which compensation is sought, recovery may be had for said
death.38
Unless there is substantial evidence showing that: (a) the cause of Aya-ays
death was reasonably connected with his work; or (b) the sickness/ailment
for which he died is an accepted occupational disease; or (c) his working
conditions increased the risk of contracting the disease for which he died,
death compensation benefits cannot be awarded.39
Aya-ay died due to CVA or stroke, a disease not listed as a compensable
illness under Appendix 1 of the POEA Standard Employment Contract.
Hence, it was incumbent on petitioners to present substantial evidence, or
such relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion,40 that the eye injury sustained by Aya-ay during the
term of his employment with respondents caused, or increased the risk of,
CVA.
Substantial evidence is more than a mere scintilla. 41 The evidence must be
real and substantial, and not merely apparent; for the duty to prove workcausation or work-aggravation imposed by law is real and not merely
apparent.42
To buttress their position that there is a causal link between Aya-ays eye
injury and his death, petitioners argue as follows:
If only Aya-ay, Jr. was immediately medically treated by a competent doctor
and not by the respondents Captain with, among others, salt water, severe
corneal infection (admitted and stated in paragraph 11 of the respondents
Answer) could have been prevented. If the same was prevented, there will be
no need for a "corneal graft" (Annex "2", respondents Answer). If "corneal
graft" have (sic) been unnecessary, there will be no "corneal graft rejection"
and "repeat corneal transplantation" (Annex "4", respondents Answer). If not
because of the recommended "repeat corneal transplantation", Dr. Anthony
King could not have granted cardiac clearance. The seafarer was subjected to
extreme anxiety and depression about the thought of totally losing his right
eye. His blood pressure would not have risen and would not have suffered
from CVA or stroke. He would not have died on December 1, 1995. Clearly, it
is the negligence and fault of the respondents in taking for granted the
situation of Aya-ay, Jr. that led to his untimely demise. The complications in

his eye triggered the series of infections and operations and other procedures
on the poor seafarer. These (sic) series of events logically presented, were (sic)
more than enough to constitute substantial evidence.43
Refuting petitioners arguments, respondents aver that, among other things,
"there is no established link between seaman Aya-ays eye injury and the
CVA that killed him; otherwise stated, the former is not the cause of the
latter. CVA is not a natural consequence of such an injury."
That a seaman died several months after his repatriation for illness does not
necessarily mean that: (a) he died of the same illness; (b) his working
conditions increased the risk of contracting the illness which caused his
death; and (c) the death is compensable, unless there is some reasonable
basis to support otherwise.44
This Court finds that under the circumstances petitioners bare allegations
do not suffice to discharge the required quantum of proof of compensability.
Awards of compensation cannot rest on speculations or presumptions. 45 The
beneficiaries must present evidence to prove a positive proposition. 46
While petitioners attempted to scientifically establish that Aya-ays eye injury
resulted to, or increased the risk of, CVA by resorting to a "detailed medical
discussion" lifted from medical sources and subjecting them to their own
laymans interpretation and randomly applying them to the circumstances
attendant to the case, the same fails. Without an expert witness to evaluate
and explain how the statements contained in such medical sources actually
relate to the facts surrounding the case, they are insufficient to establish the
nexus to support their claims.
Petitioners nevertheless argue that there is no need to resort to the
intricacies of the Rules on Evidence to establish that the death of Aya-ay was
caused by the eye injury, citing Section 10, Rule VII of the Rules of Procedure
of the NLRC:
Section 10. Technical rules not binding. The rules of procedure and
evidence prevailing in courts of law and equity shall not be controlling and
the Commission shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively, without regard to technicalities of
law or procedure, all in the interest of due process.
That administrative quasi-judicial bodies like the NLRC are not bound by
technical rules of procedure in the adjudication of cases 47 does not mean
that the basic rules on proving allegations should be entirely dispensed with.
A party alleging a critical fact must still support his allegation with
substantial evidence. Any decision based on unsubstantiated allegation
cannot stand as it will offend due process.48
xxx the liberality of procedure in administrative actions is subject to
limitations imposed by basic requirements of due process. As this Court said
in Ang Tibay v. CIR, the provision for flexibility in administrative procedure
"does not go so far as to justify orders without a basis in evidence having
rational probative value." More specifically, as held in Uichico v. NLRC:
It is true that administrative and quasi-judicial bodies like the NLRC are not
bound by the technical rules of procedure in the adjudication of cases.

However, this procedural rule should not be construed as a license to

disregard certain fundamental evidentiary rules.49
While this Court commiserates with petitioners plight, absent substantial
evidence from which reasonable basis for the grant of death benefits prayed
for can be drawn, it is left with no alternative but to deny their petition.
WHEREFORE, the petition is DENIED. The Decision dated January 24, 2002
and the Resolution dated September 10, 2002 of the Court of Appeals
are AFFIRMED.
Costs against petitioners.
SO ORDERED.

G.R. No. 142049

January 30, 2001

GERMAN MARINE AGENCIES, INC. and LUBECA MARINE MANAGEMENT

HK LTD., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FROILAN S. DE
LARA, respondents.
GONZAGA-REYES, J.:
On 17 October 1994, private respondent was hired by petitioners to work as
a radio officer on board its vessel, the M/V T.A. VOYAGER. Sometime in
June, 1995, while the vessel was docked at the port of New Zealand, private
respondent was taken ill. His worsening health condition was brought by his
crewmates to the attention of the master of the vessel. However, instead of
disembarking private respondent so that he may receive immediate medical
attention at a hospital in New Zealand, the master of he vessel proceeded to
Manila, a voyage of ten days, during which time the health of private
respondent rapidly deteriorated. Upon arrival in Manila, private respondent
was not immediately disembarked but was made to wait for several hours
until a vacant slot in the Manila pier was available for the vessel to dock.
Private respondent was confined in the Manila Doctors Hospital, wherein he
was treated by a team of medical specialists from 24 June 1995 to 26 July
1995.1wphi1.nt
After private respondent was discharged from the hospital, he demanded
from petitioners the payment of his disability benefits and the unpaid
balance of his sickness wages, pursuant to the Standard Employment
Contract of the parties. Having been assured by petitioners that all his
benefits would be paid in time, private respondent waited for almost a year,
to no avail. Eventually, petitioners told private respondent that, aside from
the sickness wages that he had already received, no other compensation or
benefit was forthcoming.1 Private respondent filed a complaint with the
National Labor Relations Commission (NLRC) for payment of disability
benefits and the balance of his sickness wages. On 31 July 1997, the labor
arbiter rendered a decision,2 the pertinent parts of which are quoted
hereunder
In the case at bar, there is no issue on the propriety or illegality of
complainant's discharge or release from employment as Radio
Operator. What complainant is pursuing is limited to compensation
benefits due a seaman pursuant to POEA Standard Employment
Contract, Part II, Section C, paragraph 4(c) and paragraph 5, which
reads:
"SECTION C. COMPENSATION BENEFIT
xxx

xxx

xxx

"4. The liabilities of the employer when the seaman suffers

injury or illness during the term of his contract are as
follows:
xxx

xxx

xxx

c. The employer shall pay the seaman his basic

wages from the time he leaves the vessel for medical
treatment. After discharge from the vessel, the
seaman is entitled to one hundred percent (100%) of
his basic wages until he is declared fit to work or the
degree of permanent disability has been assessed by
the company-designated physician, but is [sic] no
case shall this period exceed one hundred twenty
(120) days. For this purpose, the seaman shall
submit himself to a post-employment medical
examination by the company-designated physician
within three working days upon his return, except
when he is physically incapacitated to do so, in
which case the written notice to the agency within
the same period is deemed as compliance x x x.
"5. In case of permanent total or partial disability of the
seamen [sic] [during] the term of employment caused by
either injury or illness, the seamen [sic] shall be
compensated in accordance with the schedule of benefits
enumerated in Appendix 1 of this Contract. Computation of
his benefits arising from an illness or disease shall be
governed by the rates and the rules of compensation
applicable at the time of [sic] the illness or disease was
contracted."
The aforecited provisions of the POEA Standards [sic] Employment
Contract is clear and unmistakable that its literal meaning should be
preserved.
Thus, the only question at which the liability of respondents is
anchored is whether complainant was really fit to work in his
position as radio operator. If this is so, it could mean that he is not
entitled to disability compensation which respondents vigorously
disputed, citing in support the certification made by Dra. Victoria
Forendo [sic] Cayabyab, allegedly "the officially accredited and
designated physician of respondents, which is likewise, accredited
with the Philippine Overseas Employment Administration" where it is
stated that "Nothing [sic] his job description as a radio operator, Mr.
De Lara may be allowed to go back to work." (Annex D & E).
Complainant on the other hand disputes respondent's above posture
contending that the more persuasive and authentic evidence for
purposes of deciding his fitness or lack of fitness to work is the
certificate issued by Ms. Naneth [sic] Domingo-Reyes, MD, FPMA
where it appears that after submitting himself to another medical
examination by his attending physicians at the Manila Doctors
Hospital on December 4, 1996, to verify possible mistake in his post
treatment examination on March 25, 1996, firmly "was classified
under partial permanent disability and is not fit to go back to his
previous work due to mental state." (Annex "C", complainant's reply
to respondent's position paper).

We have gone into a judicious study and analysis of the arguments

and exhibits particularly the ones relied upon by the parties and find
that of the complainant worthy of consideration. Looking closely at
Annexes "D" and "E" of respondents' position paper, there is hardly
any clear affirmation that complainant was fully fit to resume his
work as radio operator. Although the document alluded to, declares
that complainant may be allowed to go back to work, the tenor of the
same seems uncertain that complainant is fit to resume his work,
and that assuming that such was the message, the words "may be"
can not be taken as overriding that coming from the Manila Doctor
Hospital which in the beginning handled the medical case of
complainant and to which respondents unconditionally referred him
and by reason of which six or seven medical especialists [sic] of the
hospital took turn [s] studying and reviewing his uncertain ailment
after release by respondents. Otherwise stated, unlike the message of
annexes D to E of respondents, annex "C" of complainant is clear
and unmistakable and confirm complainant's partial permanent
disability and his definite unfitness to go back to his previous work
due to his mental health. Some pronouncements in this exhibit
mentions also that when complainant was admitted an emerging
basis for drowsiness, behavioral change and off and on fever" and
different procedures were resorted along his case, like emergency CT
scan on the brain and his admission in June 24, 1995 was
catastropic, whereas, more could be said in three document[s] issued
by Dra. Victoria Florendo Cayabyab.
Finally, respondents contend that the annexes issued by Dr.
Domingo-Reyes of the Manila Doctors Hospital should not be given
weight because it is not issued by the hospital or doctor duly
accredited by the POEA. Neither would a close look on the applicable
provision for seamen show that a duly accredited hospital or doctor
is needed for purposes of the grant of compensation benefits to a
such [sic] or ailing seamen. We are more persuaded based on the
arguments of the complainant among others, that it is absurd to
require an ailing seaman in high seas or in a foreign land to still wait
until the ship where he is working land in the country to secure
treatment in a duly accredited hospital or doctor.
On the basis of the above therefore, and convinced that
complainant's "partial permanent disability" which was contracted in
the course or on account of his employment as radio operator in
foreign principal's vessel, he is entitled to disability benefit in
accordance with the schedule of benefits enumerated in Appendix 1
of the Contract, the maximum of which is US $50,000. But since the
amount prayed for is US$25,000.00 which were presume has a more
realistic basis, the same is hereby granted.
Concerning the sickness wage, respondents averred that the same
had already been paid. However, there is no evidence that the same
has been paid except the payment to the complainant of P49,546.00.
Since complainant's salary as US$870 and a seaman's sick wage
entitlement is fixed to a maximum of 120 days, his "sickness wages

would rest to a total sum of US$3,480 or its peso equivalent. On this,

complainant has been paid only [P]49,546.00 (US$1,943), thereby
leaving for complainant a balance of US$1,537. Finally, it is also
argued that as regards the balance, the same has been paid citing as
proof the Sickness Release and Quitclaim signed by complainant
(Annexes "C" & "C-1"). Complainant, on the other hand denied this,
and contended that the quitclaim and release is invalid. Considering
that there is no proof on record that this balance of US$1,537 was
paid, unlike the P49,546.00, the same is granted.
WHEREFORE, premises above-considered, a decision is hereby
issued ordering respondent German Marine Agencies Inc. to pay
complainant the following sums:
(a) Disability benefit - - - - - - - - - - - - - - - - - US$25,000.00
(b) Sickness wage balance - - - - - - - - - - - - - - - - - US
$1,137.00
all in the aggregate of Twenty Six Thousand One Hundred Thirty
Seven Dollars (US$26,137.00) or its peso equivalent, the claim for
damages being hereby dismissed for lack of merit, plus ten (10%)
percent attorney's fees.
SO ORDERED.
On 29 July 1998, the NLRC3 affirmed the labor arbiter's decision in toto and
declared that the latter's findings and conclusions were supported by
substantial evidence.4 After its motion for reconsideration was denied by the
NLRC on 20 May 1999, petitioners repaired to the Court of Appeals. 5 The
appellate court's assailed decision was promulgated on 1 December 1999,
upholding the decision of the NLRC, with the modification that petitioners
were ordered to pay private respondent exemplary damages in the amount of
P50,000.00. The appellate court reasoned out its decision,6 thus
The basic issue here is: Whether or not petitioner is liable to pay
private respondent's claim as awarded by the NLRC, and whether or
not there was abuse of discretion on the part of the NLRC in
affirming such decision on appeal? To resolve this issue, this Court
took time in looking closely at the pertinent provision of the Standard
Employment Contract Governing the Employment of Filipino
Seafarers on Board Ocean-Going Vessels, particularly PART II,
SECTION C, par. no. 4 (c), and par. no. 5, which states as follows:
"SECTION C. COMPENSATION BENEFIT
"4. The liabilities of the employer when the seaman suffers
injury or illness during the term of his contract are as
follows:
"xxx

xxx

xxx

c. The employer shall pay the seaman his basic wages from
the time he leaves the vessel for medical treatment. After
discharge from the vessel, the seaman is entitled to one

hundred percent (100%) of his basic wages until he is

declared fit to work or his degree of permanent disability has
been assessed by the company-designated physician, but in
no case shall this period exceed one hundred twenty (120)
days. x x x x.
"5. In case of permanent total or partial disability of the
seamen during the term of his employment caused by either
injury or illness the seamen shall be compensated in
accordance with the schedule of benefits enumerated in
Appendix 1 of his Contract. Computation of his benefits
arising from an illness or disease shall be governed by the
rates and the rules of compensation applicable at the time
the illness or disease was contracted.
xxx

xxx

xxx. . ."

A cursory reading of these applicable contractual provisions and a

thorough evaluation of the supporting evidence presented by both
parties, lends strong credence to the contentions and arguments
presented by private respondent.
The award of disability compensation has a clear and valid basis in
the Standard Employment Contract and the facts as supported by
the medical certificate issued by Dr. Nannette Domingo-Reyes of the
Manila Doctors Hospital. Petitioners' contention, that dr. DomingoReyes is not company designated is far from the truth. The
designation of the Manila Doctors Hospital by petitioners as the
company doctor for private respondent cannot be denied. Their very
act of committing private respondent for treatment at the Manila
Doctors Hospital under the care of its physician is tantamount to
company designation. The very act of paying the hospital bills by the
petitioners constitutes their confirmation of such designation. Hence,
petitioners cannot resort to the convenience of denying this fact just
to evade their obligation to pay private respondent of his claims for
disability benefit.
This Court also finds no basis on (sic) the petitioners' contention that
the company-designated [physician] must also be accredited with the
POEA before he can engaged in the medical treatment of a sick
seaman. There is nothing in the Standard Employment Contract that
provides this accreditation requirement, and even if there is, this
would be absurd and contrary to public policy as its effect will deny
and deprive the ailing seaman of his basic right to seek immediate
medical attention from any competent physician. The lack of POEA
accreditation of a physician who actually treated the ailing seaman
does not render the findings of such physician (declaring the seaman
permanently disabled) less authoritative or credible. To our mind, it
is the competence of the attending physician, not the POEA
accreditation, that determines the true health status of the patientseaman, which in this instant case, is [sic] the attending physicians
from the Manila Doctors Hospital.

As to the award of the balance of wages, this Court is inclined not to

disturb the factual findings of the NLRC. The failure of the
petitioners to present a strong and credible evidence supporting the
fact of alleged payment of the balance of sickness justified the award
of such claim. The long standing doctrine in labor cases that "in case
of doubt, the doubt is resolved in favor of labor" applies. For there
are indications that the evidence presented by petitioners appears to
be of dubious origin as private respondent challenged the petitioners
to present the original copy of the quitclaim and the vouchers in a
motion demanding from petitioners to produce the original copy of
those documents purporting to show that he had received the alleged
sum of P39,803.30, which allegedly shows the payment of the
balance of his sickness wages. This motion was vehemently opposed
by petitioners. To our mind, such opposition only created more
doubts and eroded the veracity and credence of petitioners'
documentary evidence.
As to the award of attorney's fees, the same is justified by the fact
that private respondent actually hired the services of a lawyer to
vindicate his right to claim for his disability benefit which is being
arbitrarily denied to him by petitioners. Had it not been for the
arbitrary denial of petitioners, private respondent could not have
been compelled to hire the services of a lawyer to pursue his claims
in court, for which he is presumed to have incurred costs.
With respect to private respondent's claim for damages, this Court
finds that the NLRC overlooked the attendance of negligence on the
part of petitioners in their failure to provide immediate medical
attention to private respondent. It further appears that negligence
not only exists but was deliberately perpetrated by petitioners by its
arbitrary refusal to commit the ailing private respondent to a hospital
in New Zealand or at any nearest port deprived of his right to
immediate medical attention by petitioners, which resulted to the
serious deterioration of his health that caused his permanent partial
disability. Such deprivation of immediate medical attention appears
deliberate by the clear manifestation from petitioners' own words
which states that, "the proposition of the complainant that
respondents should have taken the complainant to the nearest port of
New Zealand is easier said than done. It is worthy to note that
deviation from the route of the vessel will definitely result to loss of a
fortune in dollars not only to the respondents but likewise to the
owners of the cargoes being shipped by the said vessel."
By petitioners' own statement, they reveal their utter lack of concern
for their Filipino crew. This kind of attitude cannot be taken to pass
by this Court without appropriate sanction by way of payment of
exemplary damages, if only to show that the life of a Filipino crew
must be accorded due attention and respect by the petitioners. For
after all, had it not been for the toils of this crew, among others,
petitioners would not be doing as good in their business and
making "fortunes in dollars."

In affirming the decision of the Labor Arbiter, this Court finds that
the NLRC never abused its discretion nor exceeded its jurisdiction.
Hence, this Court finds no valid basis to disturb the findings of the
NLRC.
WHEREFORE, the decision of the NLRC dated 29 July 1998, and the
Order dated 20 May 1999, are hereby AFFIRMED, and in addition
thereto, petitioners are ordered to pay exemplary damages to private
respondent in the sum of Fifty Thousand Pesos (P50,000.00).
SO ORDERED.
Petitioners' motion for reconsideration was denied by the Court of Appeals in
its Resolution of 11 February 2000. Hence, the present appeal.
Disability Benefits
Petitioners contend that the existence and degree of a seaman's disability
must be declared by a "company-designated physician" who must be
accredited with the POEA. Following this line of reasoning, petitioners claim
that private respondent is not entitled to disability benefits because he was
found fit to return to work by Dr. Victoria Florendo Cayabyab, the designated
physician of petitioners, who is also accredited with the POEA.7
Disagreeing with petitioners' stand, the labor arbiter ruled that, for purposes
of determining compensation benefits under the Standard Employment
Contract, an ailing seaman need not have his condition assessed by a doctor
or hospital accredited with the POEA. Consequently, the labor arbiter gave
more weight to the opinion of the specialists from the Manila Doctors
Hospital who treated private respondent and declared him as having
sustained a partial permanent disability and unfit to go back to his previous
work.8 Meanwhile, the Court of Appeals held that petitioners' act of
committing private respondent for treatment at the Manila Doctors Hospital
and of paying his hospital bills therein is tantamount to "companydesignation," and therefore, the certificate issued by Dr. Nanette DomingoReyes of the Manila Doctors Hospital describing private respondent as
suffering from a partial permanent disability should be construed as decisive
in the matter of private respondent's entitlement to disability benefits. The
appellate court also declared that nothing in the Standard Employment
Contract requires the company-designated physician or hospital to also be
accredited with the POEA.9
In the case at bar, the parties are at odds as to the proper interpretation of
the POEA Standard Employment Contract Government the Employment of
All Filipino Seamen On Board Ocean-Going Vessels (Standard Employment
Contract), particularly Part II, Section C thereof, which provides that
xxx

xxx

xxx

4. The liabilities of the employer when the seaman suffers injury or

illness during the term of his contract are as follows:
a. The employer shall continue to pay the seaman his basic
wages during the time he is on board the vessel;

b. If the injury or illness requires medical and/or dental

treatment in a foreign port, the employer shall be liable for
the full cost of such medical, dental, surgical and hospital
treatment as well as board and lodging until the seaman is
declared fit to work or to be repatriated.
However, if after repatriation the seaman still requires
medical attention arising from said injury or illness, he shall
be so provided at cost to the employer until such time he is
declared fit or the degree of his disability has been
established by the company-designated physician.
c. The employer shall pay the seaman his basic wages from
the time he leaves the vessel for medical treatment. After
discharge from the vessel the seaman is entitled to one
hundred percent (100%) of his basic wages until he is
declared fit to work or the degree of permanent disability has
been assessed by the company-designated physician, but in
no case shall this period exceed one hundred twenty (120)
days. For this purpose, the seaman shall submit himself to a
post-employment medical examination by the companydesignated physician within three working days upon his
return except when he is physically incapacitated to do so, in
which case a written notice to the agency within the same
period is deemed as compliance. Failure of the seaman to
comply with the mandatory reporting requirement shall
result in his forfeiture of the right to claim the above
benefits.
xxx

xxx

xxx

5. In case of permanent total or partial disability of the seaman

during the term of employment caused by either injury or illness the
seaman shall be compensated in accordance with the schedule of
benefits enumerated in Appendix 1 of his Contract. Computation of
his benefits arising from an illness or disease shall be governed by
the rates and the rules of compensation applicable at the time the
illness or disease was contracted.
xxx

xxx

xxx

Petitioners' contention that the existence and grade of a seaman's disability

must be pronounced by a physician accredited by the POEA does not find
any support in the abovecited provision, nor in any other portion of the
Standard Employment Contract. In order to claim disability benefits under
the Standard Employment Contract, it is the "company-designated"
physician who must proclaim that the seaman suffered a permanent
disability, whether total or partial, due to either injury or illness, during the
term of the latter's employment. There is no provision requiring accreditation
by the POEA of such physician. In fact, aside from their own gratuitous
allegations, petitioners are unable to cite a single provision in the said
contract in support of their assertions or to offer any credible evidence to
substantiate their claim. If accreditation of the company-designated

physician was contemplated by the POEA, it would have expressly provided

for such a qualification, by specifically using the term "accreditation" in the
Standard Employment Contract, to denote its intention. For instance, under
the Labor Code it is expressly provided that physicians and hospitals
providing medical care to an injured or sick employee covered by the Social
Security System or Government Service Insurance System must be
accredited by the Employees Compensation Commission. 10 It is a cardinal
rule in the interpretation of contracts that if the terms of a contract are clear
and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall control.11 There I no ambiguity in the wording
of the Standard Employment Contract the only qualification prescribed for
the physician entrusted with the task of assessing the seaman's disability is
that he be "company-designated." When the language of the contract is
explicit, as in the case at bar, leaving no doubt as to the intention of the
drafters thereof, the courts may not read into it any other intention that
would contradict its plain import.12

factual basis for the award of $25,000.00 since there is no finding as to the
grade of permanent partial disability sustained by private respondent, in
accordance with Appendix 1 of the Standard Employment Contract (Schedule
of Disability or Impediment For Injuries Suffered and Diseases or Illness
Contracted), and therefore, no means of determining the exact amount of
compensation to which private respondent may be entitled.15

The word "designate" means to specify, to mark out and make known, to
identify by name, to indicate, to show, to distinguish by mark or description,
or to set apart for a purpose or duty.13 The Court agrees with the appellate
court's ruling that petitioners' act of committing private respondent for
treatment at the Manila Doctors Hospital and paying the hospital bills
therein is tantamount to "company-designation." By such unequivocal acts,
petitioners clearly set apart and distinguished the Manila Doctors Hospital,
together with its team of specialists, as the ones qualified to assess the
existence and degree of private respondent's disability and thereby resolve
the question of the latter's entitlement to disability benefits under the
Standard Employment Contract.

Traumatic head injuries that result to:

In addition to their having been effectively designated by petitioners, it was

the physicians from the Manila Doctors Hospital who examined and treated
private respondent for a little more than one month, subjecting the latter to a
series of medical procedures, such as medical therapy, neurological surgical
drainage for brain abscess, bilateral thalamic area S/P craniotomy (Burr
Hole), and opthalmological (orbit) surgery for socket revision and
reconstruction of his left eye. The extensive medical attention given to private
respondent enabled the Manila Doctors Hospital specialists to acquire a
detailed knowledge and familiarity with private respondent's medical
condition.14 No doubt such specialized knowledge enabled these physicians
to arrive at a much more accurate appraisal of private respondent's
condition, including the degree of any disability which he might have
sustained, as compared to another physician not privy to private
respondent's case from the very beginning. Thus, the appellate court was not
mistaken in giving more weight to the certificate issued by Dr. Nanette
Domingo-Reyes of the Manila Doctors Hospital dated December 4, 1996,
than to the one issued by Dr. Victoria Florendo Cayabyab.

3. Severe paralysis of both upper or lower extremities or one upper and Gr.
one lower extremity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1

On the strength of Dr. Domingo-Reyes's medical certificate which stated that

private respondent "can be classified under partial permanent disability and
is not fit to go back to his previous work due to his mental state," the labor
arbiter awarded $25,000.00 as disability benefits, which award was upheld
by the NLRC and the appellate court. Petitioners insist that there is no

The Court does not agree with petitioners' position. Under the Standard
Employment Contract the grade of disability suffered by the seaman must be
ascertained in accordance with Appendix 1 of such contract, which is
partially reproduced herein
Appendix 1
SCHEDULE OF DISABILITY OR IMPEDIMENT
FOR INJURIES SUFFERED AND OR ILLNESS CONTRACTED
HEAD

1. Apperture unfilled with bone not over three (3) inches without brain Gr.
injury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
2. Apperture unfilled with bone over three (3) inches without brain
injury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gr.
..
3

4. Moderate paralysis of two (2) extremities producing moderate Gr.

difficulty in movements with self care activities . . . . . . . . . . .
6
5. Slight paralysis affecting one extremity producing slight difficulty Gr.
with self-care activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
6. Severe mental disorder or Severe Complex Cerebral function
disturbance or post traumatic psychoneurosis which require
regular aid and attendance as to render worker permanently unable Gr.
to perform any work . . . . . . . . . . . . . . . . . . . . . . . . . .
1
7. Moderate mental disorder or moderate brain functional disturbance
which limits worker to the activities of daily living with some Gr.
directed care or attendance . . . . . . . . . . . . . . . . . . .
6

8. Slight mental disorder or disturbance that requires little attendance

or aid and which interferes to a slight degree with the working Gr.
capacity of the claimant . . . . . . . . . . . . . . . . . . . .
10
9. Incurable imbecility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gr.
1

Each grade under Appendix 1 has an equivalent disability allowance or

benefit expressed in terms of a percentage of the maximum amount of
$50,000.00. This is specified in Appendix 1-A of the Standard Employment
Contract

10 "

20.15%

11 "

14.93%

12 "

10.45%

13 "

6.72%

14 "

3.74%

APPENDIX 1-A
SCHEDULE OF DISABILITY ALLOWANCES

Impediment Grace

Maximum Rate: US$50,000.

To be paid in Philippine Currency equivalent at the exchange rate prevailing
during the time of payment.

Impediment

1 Maximum Rate

120.00%

2"

88.81%

3"

78.36%

4"

68.66%

5"

58.96%

6"

50.00%

7"

41.80%

8"

33.59%

9"

26.12%

Private respondent asked petitioner for disability benefits in the amount of

$25,000.00, or fifty percent (50%) of the maximum rate of $50,000.00,
which, under Appendix 1-A, is awarded when the seaman sustains a grade 6
disability. One of the grade 6 head injuries listed in Appendix 1, specifically
number seven (7), is described as a "moderate mental disorder or moderate
brain functional disturbance which limits worker to the activities of daily
living with some directed care or attendance." This coincides with Dr.
Domingo-Reyes' diagnosis of private respondent's condition, as follows
xxx

xxx

xxx

Work-ups and Management:

Patient was admitted on an emergency bases for drowsiness,
behavioral change and on and off fever. This started with headaches
since the first week of June 1995 while on duty (on voyage). Patient
progressively deteriorated and arrived here already dehydrated with
high grade fever. (emphasis supplied)
Emergency CT Scan of the brain revealed rounded masses in both
thalamus on the brain; the larger mass was situated at the right.
Burr hole at the right parietal and drainage of the right thalamic
abscess was done on June 26, 1995. Repair of shallow fornix of left
eye and biopsy was done for culture studies thereafter.
Mr. De Lara stayed in the hospital for 33 days and was still in
bedridden state when discharge. He became ambulant on midAugust 1996 but his cerebral functions (cognitive and behavioral)
remain impaired.

This is his 18th month of illness. His admission last June 24, 1995 is
considered catastrophic. He now can be classified under partial
permanent disability and is not fit to go back to his previous work
due to his mental state.16 (emphasis supplied)
xxx

xxx

xxx

Thus, the medical certificate of Dr. Domingo-Reyes is more than sufficient

basis for the award of disability benefits in the amount of $25,000.00 in favor
of private respondent.
Sickness wages
Petitioners assert that the award of $1,137.00, representing the balance of
the sickness wages owed to private respondent, is erroneous and in absolute
disregard of their documentary evidence particularly the three check
vouchers in the total amount of P89,354.80, all issued in 1995 in favor of
either private respondent or his wife, and the "Sickwages Release &
Quitclaim" which, according to petitioners, taken together would prove that
they had paid private respondent the total amount of P89,354.80, or
$3,480.00, corresponding to the 120 days sickness wages as required under
the Standard Employment Contract.
Contrary to petitioners' assertions, the labor arbiter held that only
P49,546.00 ($1,943.00) was paid by petitioners and that private respondent
is still entitled to the balance of the sickness wages in the amount of
$1,537.00. According to the labor arbiter, petitioners failed to prove that they
had paid this amount to private respondent, notwithstanding the document
entitled "Sickness Release & Quitclaim" introduced by petitioners in
evidence, which was not given credence.17 The NLRC and the Court of
Appeals concurred with the labor arbiter on this issue. The appellate court
held that the documentary evidence of petitioners was insufficient to support
their contentions.18
The Supreme Court has always accorded respect and finality to the findings
of fact of the NLRC, particularly if they coincide with those of the Labor
Arbiter, when supported by substantial evidence. The reason for this is that a
quasi-judicial agency like the NLRC has acquired a unique expertise because
its jurisdiction is confined to specific matters.19 Whether or not petitioners
actually paid the balance of the sickness wages to private respondent is a
factual question. In the absence of proof that the labor arbiter or the NLRC
had gravely abused their discretion, the Court shall deem conclusive and
cannot be compelled to overturn this particular factual finding. 20
Damages
We affirm the appellate court's finding that petitioners are guilty of
negligence in failing to provide immediate medical attention to private
respondent. It has been sufficiently established that, while the M/V T.A.
VOYAGER was docked at the port of New Zealand, private respondent was
taken ill, causing him to lose his memory and rendering him incapable of
performing his work as radio officer of the vessel. The crew immediately
notified the master of the vessel of private respondent's worsening condition.
However, instead of disembarking private respondent so that he may receive

immediate medical attention at a hospital in New Zealand or at a nearby

port, the master of the vessel proceeded with the voyage, in total disregard of
the urgency of private respondent'' condition. Private respondent was kept on
board without any medical attention whatsoever for the entire duration of the
trip from New Zealand to the Philippines, a voyage of ten days. To make
matters worse, when the vessel finally arrived in Manila, petitioners failed to
directly disembark private respondent for immediate hospitalization. Private
respondent was made to suffer a wait of several more hours until a vacant
slot was available at the pier for the vessel to dock. It was only upon the
insistence of private respondent's relatives that petitioners were compelled to
disembark private respondent and finally commit him to a hospital.21 There
is no doubt that the failure of petitioners to provide private respondent with
the necessary medical care caused the rapid deterioration and inevitable
worsening of the latter's condition, which eventually resulted in his
sustaining a permanent disability.1wphi1.nt
In light of the foregoing, petitioners are liable for moral damages for the
physical suffering and mental anguish caused to private respondent. 22 There
is no hard and fast rule in the determination of what would be a fair amount
of moral damages, since each case must be governed by its own peculiar
circumstances.23 In the present case, the Court considers the amount of
P50,000.00 in moral damages as proper.24
Meanwhile, exemplary damages are imposed by way of example or correction
for the public good, pursuant to Article 2229 of the Civil Code. They are
imposed not to enrich one party or impoverish another but to serve as a
deterrent against or as a negative incentive to curb socially deleterious
actions. While exemplary damages cannot be recovered as a matter of right,
they need not be proved, although plaintiff must show that he is entitled to
moral, temperate, or compensatory damages before the court may consider
the question of whether or not exemplary damages should be awarded.25 In
quasi-delicts, exemplary damages may be granted if the defendant acted with
gross negligence.26 Coming now to the case at bar, the appellate court found
that
negligence not only exists but was deliberately perpetrated by
petitioners by its arbitrary refusal to commit the ailing private
respondent to a hospital in New Zealand or at any nearest port
which resulted to the serious deterioration of his health that caused
his permanent partial disability. Such deprivation of immediate
medical attention appears deliberate by the clear manifestation from
petitioners' own words which states that, "the proposition of the
complainant that respondents should have taken the complainant to
the nearest port of New Zealand is easier said than done. It is worthy
to note that deviation from the route of the vessel will definitely result
to loss of a fortune in dollars not only to the respondents [petitioners
herein] but likewise to the owners of the cargoes being shipped by the
said vessel."
Petitioners never denied making this statement. Given the prevailing
circumstances, the appellate court's award of P50,000.00 as exemplary
damages is adequate, fair, and reasonable.27

Although the labor arbiter awarded attorney's fees, which award was
subsequently affirmed by the NLRC and the Court of Appeals, the basis for
the same was not discussed in his decision nor borne out by the records of
this case, and should therefore be deleted. There must always be a factual
basis for the award of attorney's fees.28This is consistent with the policy that
no premium should be placed on the right to litigate.29
WHEREFORE, the 1 December 1999 Decision and 11 February 2000
Resolution of the Court of Appeals are AFFIRMED, with the modification that
petitioners must also pay private respondent P50,000.00 as moral damages
and the award of attorney's fees is deleted. SO ORDERED.

G.R. No. 187032

October 18, 2010

EDGARDO M. PANGANIBAN, Petitioner,

vs.
TARA TRADING SHIPMANAGEMENT INC. AND SHINLINE SDN
BHD, Respondents.
DECISION
MENDOZA, J.:
While it is true that labor contracts are impressed with public interest and
the provisions of the POEA Standard Employment Contract must be
construed logically and liberally in favor of Filipino seamen in the pursuit of
their employment on board ocean-going vessels, absent substantial evidence
from which reasonable basis for the grant of benefits prayed for can be
drawn, We are left with no choice but to deny the claims of the employee, lest
We cause injustice to the employer. We must always remember that justice is
in every case for the deserving, to be dispensed with in the light of
established facts, the applicable law, and existing jurisprudence.1
This is a petition for review under Rule 45 of the Rules of Court challenging
the October 29, 2008 Decision2 of the Court of Appeals (CA), and its March 4,
2009 Resolution,3 in CA-G.R. SP No. 104343, reversing the March 25, 2008
Decision4 and April 30, 2008 Resolution5 of the National Labor Relations
Commission (NLRC) which affirmed the decision of the Labor Arbiter (LA)
favoring the petitioner.
THE FACTS:
In November 2005, petitioner was hired by respondent Tara Trading
Shipmanagement, Inc. (Tara), in behalf of its foreign principal, respondent
Shinline SDN BHD (Shinline) to work as an Oiler on board MV "Thailine
5"6 with a monthly salary of US$409.00.
Sometime in April 2006, petitioner began exhibiting signs of mental
instability. He was repatriated on May 24, 2006 for further medical
evaluation and management.7
Petitioner was referred by respondents to the Metropolitan Medical Center
where he was diagnosed to be suffering from "brief psychotic disorder."8
Despite his supposed total and permanent disability and despite repeated
demands for payment of disability compensation, respondents allegedly failed
and refused to comply with their contractual obligations. 9
Hence, petitioner filed a Complaint against respondents praying for the
payment of US$60,000.00 as total and permanent disability benefits,
reimbursement of medical and hospital expenses, moral and exemplary
damages, and attorneys fees equivalent to 10% of total claims.10
Respondents, on the other hand, maintained that petitioner requested for an
early repatriation and arrived at the point of hire on May 24, 2006; that while
on board the vessel, he confided to a co-worker, Henry Santos, that his
eating and sleeping disorders were due to some family problems; that Capt.
Zhao, the master of the vessel, even asked him if he wanted to see a doctor;

that he initially declined; that on May 22, 2006, petitioner approached Capt.
Zhao and requested for a vacation and early repatriation; that the said
request was granted; that upon arrival, petitioner was subjected to a
thorough psychiatric evaluation; and that after a series of check-ups, it was
concluded that his illness did not appear to be work-related. Respondents
argued that petitioner was not entitled to full and permanent disability
benefits under the Philippine Overseas Employment Administration Standard
Employment Contract (POEA SEC) because there was no declaration from the
company-designated physician that he was permanently and totally disabled
and that the claim for damages was without basis as no bad faith can be
attributed to them.11
On September 17, 2007, the LA ruled in favor of the petitioner.12 Specifically,
the LA held that:
The claim for total and permanent disability benefits is resolved in favor of
complainant. Respondents have stated that the cause of complainants
illness, brief psychotic disorder, is largely unknown. This being the case, it is
not therefore right to bluntly claim that the same is not work-related because
it is also possible that the illness may be caused by or aggravated by his
employment. As alleged by respondents, there are certain factors which may
bring about brief psychotic disorder such as "biological or psychological
vulnerability toward the development of psychotic symptoms." Complainant,
and all seamen for that matter, are subjected to stress because of the
rigorous and strenuous demands of being at sea for prolonged periods of
time, causing sensory deprivation and continuous isolation, to borrow the
words of complainants attending psychiatrist. As correctly argued by
complainant, while all seamen may be subjected to the same or greater
degree of stress, their respective abilities to cope with these factors are
different. There is therefore the risk that seamen, not only complainant, are
prone to contract brief psychotic disorder since they are most of the time at
sea and away from their loved ones.
As early as 27 June 2006, respondents designated physicians have declared
that complainants condition does not appear to be work-related. With this
declaration, respondents are bound to deny complainants claim for disability
benefits. He cannot therefore be faulted for filing the instant case in October
2006 without waiting for the evaluation of his disability impediment by the
company designated doctors. Moreover, the 120 days period lapsed without
the latter having declared the degree of complainants disability, if any.
Complainant is thus considered to be totally and permanently disabled as he
is no longer capable of earning wages in the same kind of work, or work of
similar nature that he was trained for or accustomed to perform. He is now
incapacitated to work, hence, his earning capacity is impaired.
Jurisprudence has declared that disability should not be understood more on
its medical significance but on loss of earning capacity.
With the foregoing, complainant is awarded total and permanent disability
benefits in the amount of US$ 60,000.00 or its equivalent in Philippine
Currency at the time of payment.

Complainant cannot however be awarded his claim for medical and

hospitalization expenses. He did not anymore pursue this charge in his
pleadings, hence, the same remained unsubstantiated. The same holds true
with his claim for moral and exemplary damages. Complainant failed to prove
bad faith or malice on respondents part in denying his claims.
Complainant is entitled to attorneys fees as he sought the assistance of his
counsel in pursuing his claims against respondents for his total and
permanent disability benefits. He is thus awarded an equivalent of ten
percent (10%) of his total claims as and by way of attorneys fees.
WHEREFORE, in view of the foregoing, respondents Tara Trading
Shipmanagement, Inc. and/or Shinline SDN. BHD, are hereby
ordered to pay complainant Edgardo M. Panganiban his total and
permanent disability benefit in the amount of US$60,000.00 plus
US$6,000.00 attorneys fees, in Philippine Currency, at the prevailing
rate of exchange at the time of payment.
All other claims are denied.
SO ORDERED.13
Respondents appealed to the NLRC. On March 25, 2008, the NLRC
affirmed the decision of the LA.14 The appeal of respondents was dismissed
for lack of merit.15 The NLRC reasoned out that "All material averments on
appeal are mere rehash or amplification of the substantive allegations
propounded in the proceedings below which were already discerned and
judiciously passed upon by the Labor Arbiter." 16
Respondents filed a motion for reconsideration but it was denied in a
resolution dated April 30, 2008.
Aggrieved, respondents filed a Petition for Certiorari with prayer for the
issuance of a writ of preliminary injunction and/or temporary restraining
order17 with the CA. In their petition, respondents presented the following
grounds:
A. Public respondent gravely abused its discretion and
committed serious error in ruling that the petitioners are liable
to private respondent for the payment of disability
compensation in the amount of US$ 60,000.00 considering the
facts as borne out by the evidence on record and the applicable
laws.
1. Public respondent committed grave abuse of
discretion in arriving at the findings of fact which are
not substantiated by the evidence on record.
2. Public respondent committed grave abuse of
discretion when it failed to consider the evidence which
proves the illness is not work related, thereby violating
petitioners right to procedural due process.
3. Public respondent erred in not finding in favor of the
expert opinion of the company-designated doctor on the

nature of the illness as against that of complainants

doctor in utter disregard of rules on evidence.
Without concrete proof that his assessment is biased and
self-serving, the medical opinion of the companydesignate physician should be accorded probative value
and not discarded merely on the basis of unfounded
allegation.
4. Public respondent committed grave abuse of
discretion when it affirmed the award of attorneys fees.
B. Public respondent committed grave abuse of discretion when
it affirmed the award of attorneys fees.18
On
October
29,
2008,
the CA reversed the
NLRC.19 Pertinently, the CA held that:

decision

of

the

We find that the NLRC (Sixth Division) committed grave abuse of discretion
in affirming the Decision of Labor Arbiter Cellan which awarded
US$60,000.00 total and permanent disability benefits and US$6,000.00
attorneys fees in favor of private respondent, as the findings of both the
Labor Arbiter and the NLRC (Sixth Division) are not anchored on substantial
evidence.
It is basic that a contract is the law between the parties. Obligations arising
from contracts have the force of law between the contracting parties and
should be complied with in good faith. Unless the stipulations in a contract
are contrary to law, morals, good customs, public order or public policy, the
same are binding as between the parties.
A seafarer is a contractual, not a regular employee, and his employment is
contractually fixed for a certain period of time. His employment, including
claims for death or illness compensations, is governed by the contract he
signs every time he is hired, and is not rooted from the provisions of the
Labor Code.
The Contract of Employment entered into by petitioners and private
respondent, and approved by the POEA on 25 October 2005, provides:
"The herein terms and conditions in accordance with Department Order No.
4 and Memorandum Circular No. 09, both Series of 2000, shall be strictly
and faithfully observed.
x x x Upon approval, the same shall be deemed an integral part of the:
Standard Terms and Conditions Governing the Employment of Filipino
Seafarers On Board Ocean-Going Vessels."
Section 20-B of the POEA Amended Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean Going
Vessels ("POEA-SEC" for brevity) provides that "COMPENSATION AND
BENEFITS FOR INJURY OR ILLNESS. The liabilities of the employer when
the seafarer suffers work-related injury or illness during the term of his
contract: x x x"

Under the Definition of Terms found in the Standard Contract, a work related
illness is defined as "any sickness resulting to disability or death as a result
of an occupational disease listed under Section 32-A of this contract with the
conditions set therein satisfied." In the instant case, the illness "brief
psychotic disorder" is not listed as an occupational disease.
In the instant case, it is an undisputed fact that private respondents illness
occurred during the term of his contract. The remaining issue to be
determined is whether or not private respondents illness of "brief psychotic
disorder" is work-related.
We find that private respondents brief psychotic disorder was not contracted
as a result of or caused by the seafarers work as an Oiler on board the vessel
M.V. Thailine 5.
A review of the evidence shows that the company-designated physician Dr.
Mylene Cruz-Balbon ("Dr. Balbon," for brevity) issued a certification dated 26
June 2006 certifying that private respondent has undergone medical
evaluation treatment at Robert D. Lim, M.D. Marine Medical Services,
Metropolitan Medical Center from 26 May 2006 up to the date of the
certification, due to "Brief Psychotic Disorder." x x x.
xxx

xxx

xxx

On the psychological test done on 30 May 2006 on private respondent, Dr.

Raymond L. Rosales ("Dr. Rosales," for brevity) Diplomate in Neurology and
Psychiatry and Associate Professor of the University of Santo Tomas Hospital,
who is the specialist to whom private respondent was referred by the
company-designated physician, commented that private respondent suffered
from hallucinations, persecutory delusions and paranoia; at present, he does
not exhibit these symptoms; no definite mood disturbance; no suicidal
intent; fair judgment and insight; the working diagnosis is brief psychotic
disorder; at this point, his condition does not appear to be work-related since
he claims to have no significant stressor at work and his symptoms were
most likely triggered by personal family problems; and he needs to be
followed up for atleast 3 months with regular intake of medications.
As to the question of which findings should prevail, that of the companydesignated physician or the private respondents personal physician, Section
20-B of the POEA-SEC provides:
2. x x x

xxx

However, if after repatriation, the seafarer still requires medical attention

arising from said injury or illness, he shall be so provided at cost to the
employer until such time he is declared fit or the degree of his disability has
been established by the company-designated physician.
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed one
hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment

medical examination by a company-designated physician within three
working days upon his return except when he is physically incapacitated to
do so, in which case, a written notice to the agency within the same period is
deemed as compliance. Failure of the seafarer to comply with the mandatory
reporting requirement shall result in his forfeiture of the right to claim the
above benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a third
doctor may be agreed jointly between the Employer and the seafarer. The
third doctors decision shall be final and binding on both parties. (Emphasis
supplied)
In order to claim disability benefits under the Standard Employment
Contract, it is the "company-designated" physician who must proclaim that
the seaman suffered a permanent disability, whether total or partial, due to
either injury or illness, during the term of the latters employment. It is a
cardinal rule in the interpretation of contracts that if the terms of a contract
are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of its stipulation shall control. There is no ambiguity in
the wording of the Standard Employment Contract the only qualification
prescribed for the physician entrusted with the task of assessing the
seamans disability is that he be "company-designated."
xxx

xxx

xxx

[E]ven private respondents co-employee Oiler Henry Santos stated in his

letter to the Master of the vessel that private respondent could not eat and
sleep because of a family problem. X x x.
xxx

xxx

xxx

From the foregoing disquisitions, private respondent is neither entitled to a

total and permanent disability of US$60,000.00 nor to attorneys fees of
US$6,000.00. Petitioners did not act with gross or evident bad faith in
denying the claim of private respondent. Thus, We find that the NLRC (Sixth
Division) acted with grave abuse of discretion in dismissing petitioners
appeal, affirming the Decision of Labor Arbiter Cellan, and denying
petitioners Motion for Reconsideration.
While it is true that labor contracts are impressed with public interest and
the provisions of the POEA Standard Employment Contract must be
construed fairly, reasonably and liberally in favor of Filipino seamen in the
pursuit of their employment on board ocean-going vessels, we should always
be mindful that justice is in every case for the deserving, to be dispensed
with in the light of established facts, the applicable law, and existing
jurisprudence. x x x.
xxx

xxx

xxx

WHEREFORE, premises considered, the Petition is GRANTED. The

Decision dated 25 March 2008 and Resolution dated 30 April 2008 of
the National Labor Relations Commission (Sixth Division) in NLRC
LAC NO. 11-000311-07; NLRC NCR OFW (M) CASE NO. 06-10-

03278-00 are REVERSED and SET ASIDE and private respondents

complaint is hereby DISMISSED.
However, solely for humanitarian considerations, petitioners are
hereby ORDERED to grant private respondent the amount of
Php50,000.00 by way of financial assistance, and to continue, at
their expense, the medical treatment of private respondent until the
final evaluation or assessment could be made, with regard to private
respondents medical condition.
SO ORDERED.20
Petitioners Motion for Reconsideration was denied by the CA in its
Resolution dated March 4, 2009.21
Hence, this Petition anchored on the following grounds--I
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN
IGNORING THE OVERWHELMING EVIDENCE THAT SUPPORTS
PETITIONERS ENTITLEMENT TO MAXIMUM DISABILITY BENEFITS IN
THE AMOUNT OF USD60,000.00
II
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN DENYING THE COMPLAINANTS DISABILITY BENEFITS
SOLELY BECAUSE THE COMPANY-DESIGNATED PHYSICIAN HAS
DECLARED PETITIONERS ILLNESS AS NOT WORK-RELATED
III
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT CONSIDERING THAT COMPLAINANT COULD NO
LONGER RETURN TO ACTIVE SEA DUTIES, A JOB HE WAS TRAINED
AND ACCUSTOMED TO PERFORM WITHOUT ENDANGERING HIS
HEALTH AND LIFE
IV
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
DISMISSING PETITONERS SEPARATE CLAIMS FOR DAMAGES AND
ATTORNEYS FEES.22
The Court denies the petition.
Preliminarily, considering the grounds raised by petitioner, it appears that he
denominated this petition as one under Rule 45, but he filed it as both a
petition for review under Rule 45 and a petition for certiorari under Rule 65
of the Rules of Court. The applicable rule is Rule 45, which clearly provides
that decisions, final orders or resolutions of the CA in any case, regardless of
the nature of the action or proceeding involved, may be appealed to this
Court through a petition for review. This remedy is a continuation of the
appellate process over the original case. Recourse under Rule 65 cannot be
allowed either as an add-on or as a substitute for appeal.23

The procedural infirmity notwithstanding, the Court shall treat this petition
as one filed under Rule 45 only and shall consider the alleged grave abuse of
discretion on the part of the CA as an allegation of reversible error.
The pivotal issue to be resolved is whether or not the CA is correct in denying
petitioners entitlement to full and total disability benefits amounting to
US$60,000.00 and attorneys fees in the amount of US$6,000.00.
The Court resolves the issue in the affirmative.
It need not be overemphasized that in the absence of substantial evidence,
working conditions cannot be accepted to have caused or at least increased
the risk of contracting the disease, in this case, brief psychotic disorder.
Substantial
evidence
is
more
than
a
mere
scintilla.http://sc.judiciary.gov.ph/jurisprudence/2006/jan2006/G.R.
No.
155359.htm - _ftn41 The evidence must be real and substantial, and not
merely apparent; for the duty to prove work-causation or work-aggravation
imposed by law is real and not merely apparent.24
Even in case of death of a seafarer, the grant of benefits in favor of the heirs
of the deceased is not automatic. As in the case of Rivera v. Wallem Maritime
Services, Inc.,25 without a post-medical examination or its equivalent to show
that the disease for which the seaman died was contracted during his
employment or that his working conditions increased the risk of contracting
the ailment, the employer/s cannot be made liable for death compensation.
In fact, in Mabuhay Shipping Services, Inc. v. NLRC,26 the Court held that the
death of a seaman even during the term of employment does not
automatically give rise to compensation. Several factors must be taken into
account such as the circumstances which led to the death, the provisions of
the contract, and the right and obligation of the employer and the seaman
with due regard to the provisions of the Constitution on the due process and
equal protection clauses.
Petitioner points out that his illness is work-related simply because had it
been a land-based employment, petitioner would have easily gone home and
attended to the needs of his family.27
The Court cannot submit to this argument. This is not the "work-related"
instance contemplated by the provisions of the employment contract in order
to be entitled to the benefits. Otherwise, every seaman would automatically
be entitled to compensation because the nature of his work is not land-based
and the submission of the seaman to the company-designated physician as
to the nature of the illness suffered by him would just be an exercise of
futility.
The fact is that the petitioner failed to establish, by substantial evidence, that
his brief psychotic disorder was caused by the nature of his work as oiler of
the company-owned vessel. In fact, he failed to elaborate on the nature of his
job or to specify his functions as oiler of respondent company. The Court,
therefore, has difficulty in finding any link between his position as oiler and
his illness.
The Court cannot give less importance either to the fact that petitioner was a
seaman for 10 years serving 10 to 18-month contracts and never did he have

any problems with his earlier contracts. 28 The Court can only surmise that
the brief psychotic disorder suffered by him was brought about by a family
problem. His daughter was sick and, as a seafarer, he could not just decide
to go home and be with his family.29 Even the psychiatric report30prepared by
the evaluating private psychiatrist of petitioner shows that the hospitalization
of petitioners youngest daughter caused him poor sleep and appetite. Later,
he started hearing voices and developed fearfulness.
Although strict rules of evidence are not applicable in claims for
compensation and disability benefits, the Court cannot just disregard the
provisions of the POEA SEC. Significantly, a seaman is a contractual and not
a regular employee. His employment is contractually fixed for a certain period
of time. Petitioner and respondents entered into a contract of employment. It
was approved by the POEA on October 25, 2005 and, thus, served as the law
between the parties. Undisputedly, Section 20-B of the POEA Amended
Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean-Going Vessels (POEA-SEC) provides for
compensation and benefits for injury or illness suffered by a seafarer. It says
that, in order to claim disability benefits under the Standard Employment
Contract, it is the company-designated physician who must proclaim that
the seaman suffered a permanent disability, whether total or partial, due to
either injury or illness, during the term of the latters employment. In German
Marine Agencies, Inc. v. NLRC,31 the Courts discussion on the seafarers
claim for disability benefits is enlightening. Thus:
[In] order to claim disability benefits under the Standard Employment
Contract, it is the "company-designated" physician who must proclaim that
the seaman suffered a permanent disability, whether total or partial, due to
either injury or illness, during the term of the latters employment. There is
no provision requiring accreditation by the POEA of such physician. In fact,
aside from their own gratuitous allegations, petitioners are unable to cite a
single provision in the said contract in support of their assertions or to offer
any credible evidence to substantiate their claim. If accreditation of the
company-designated physician was contemplated by the POEA, it would have
expressly provided for such a qualification, by specifically using the term
"accreditation" in the Standard Employment Contract, to denote its intention.
For instance, under the Labor Code, it is expressly provided that physicians
and hospitals providing medical care to an injured or sick employee covered
by the Social Security System or the Government Service Insurance System
must be accredited by the Employees Compensation Commission. It is a
cardinal rule in the interpretation of contracts that if the terms of a contract
are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of its stipulation shall control. There is no ambiguity in
the wording of the Standard Employment Contract the only qualification
prescribed for the physician entrusted with the task of assessing the
seamans disability is that he be company-designated. When the language of
the contract is explicit, as in the case at bar, leaving no doubt as to the
intention of the drafters thereof, the courts may not read into it any other
intention that would contradict its plain import. [Emphasis supplied]

In this case, the findings of respondents designated physician that petitioner

has been suffering from brief psychotic disorder and that it is not workrelated must be respected.
The Court commiserates with the petitioner, but absent substantial evidence
from which reasonable basis for the grant of benefits prayed for can be
drawn, the Court is left with no choice but to deny his petition, lest an
injustice be caused to the employer. Otherwise stated, while it is true that
labor contracts are impressed with public interest and the provisions of the
POEA SEC must be construed logically and liberally in favor of Filipino
seamen in the pursuit of their employment on board ocean-going vessels, still
the rule is that justice is in every case for the deserving, to be dispensed with
in the light of established facts, the applicable law, and existing
jurisprudence.32
Lastly, it appears premature at this time to consider petitioners disability as
permanent and total because the severity of his ailment has not been
established with finality to render him already incapable of performing the
work of a seafarer. In fact, the medical expert termed his condition
as brief psychotic disorder. The Court also takes note, as the CA correctly
did, that petitioner did not finish his treatment with the company-designated
physician, hence, there is no final evaluation yet on petitioner.
All told, no reversible error was committed by the CA in rendering the
assailed Decision and issuing the questioned Resolution.
WHEREFORE, the October 29, 2008 Decision of the Court of Appeals and its
March 4, 2009 Resolution in CA-G.R. SP No. 104343, are AFFIRMED./p>
SO ORDERED.

G.R. No. 175894

November 14, 2008

NYK-FIL SHIP MANAGEMENT INC., and/or JOSEPHINE J. FRANCISCO

and TMM CO. LTD, TOKYO, JAPAN, petitioners,
vs.
ALFONSO T. TALAVERA, respondent.
DECISION
CARPIO MORALES, J.:
Alfonso T. Talavera (respondent) entered into a nine-month contract of
employment with petitioner NYK-Fil Ship Management, Inc. (NYK-Fil) and/or
Josephine J. Francisco, acting for and in behalf of petitioner TMM Co., Ltd. Tokyo, Japan, as a fitter on board the M.T. Tachiho vessel. As a fitter, he
performed repair and maintenance and welding works which called for him to
move heavy equipment and materials.
After respondent started working in June 2003, he, on several occasions, felt
slight pains in his back and other parts of his body. He thus had frequent
consultations with the ship medical officer who gave him analgesics. The
pain persisted and became more severe as it radiated to his feet, hence, he
consulted a clinic in Oman on August 16, 2003 and was diagnosed to have
ureteric colic with urinary tract infection.
The following day or on August 17, 2003, respondent was repatriated to the
Philippines following which he consulted the Sachly International Health
Partners, Inc. (SHIP), a company-designated clinic, which diagnosed him to
have lumbar strain with plantar fascitis and urinary tract infection.
Respondent thus went through daily physical rehabilitation therapy. After
undergoing a Magnetic Resonance Imaging (MRI) and other tests, he was
finally diagnosed to have "chronic bilateral L6 radiculopathies probably
secondary to a lumbar canal" and "motility-like dyspepsia." He was later
deemed fit to resume sea duties by specialists of the SHIP.1
Respondent sought a second opinion from an orthopedic expert who
diagnosed him to have "lumbar spondylopathy, lumbar disk protrusion, L5S1" and declared him unfit for further sea duties.2 The doctor recommended
a partial permanent disability with Grade 8 impediment based on the
Philippine Overseas Employment Administration (POEA) Contract.3
Respondent thereupon sought to claim illness allowance and disability
benefits from petitioners. His claim was denied in view of the declaration by
the company-designated physicians that he was fit to work, drawing
respondent to file a complaint4 against petitioners, docketed as NLRC-NCR
Case No. (M) 04-05-01242-00, for disability benefits, illness allowance,
damages and attorney's fees, invokingSections 1 and 3 of Article XXI of the
Collective Bargaining Agreement (CBA) between the All Japan Seamen's
Union/Associated Marine Officers' and Seamen's Union of the Philippines
and Global Marine Co., Ltd. as well as Sections 20 (B) (3) and 20 (B) (6) of the
POEA Standard Employment Contract.5
By Decision6 of June 28, 2005, the Labor Arbiter, finding that respondent
was "not yet fit to perform his usual task as fitter" and noting that he had

been declared unfit for further sea duty, awarded him "100% compensation
as disability benefit" in the amount of $88,000 inclusive of attorney's fees. It
denied, however, his prayer for illness allowance and damages, such
allowance having already been paid and the claim for damages not having
been justified.7
Petitioners alleged to have received the Labor Arbiter's decision on July 13,
2005 and thus had until July 23, 2005 to file their memorandum on appeal.
July 23, 2005 being a Saturday and the following Monday, July 25, 2005,
being a special non-working holiday, petitioners filed their Memorandum on
Appeal8 on July 26, 2005 before the National Labor Relations Commission
(NLRC).
The NLRC dismissed petitioners' appeal for having been filed out of time, 9 it
finding that "per Registry Receipt address[ed] to [petitioners' counsel]," copy
of the Labor Arbiter's decision was received by them on July 12, 2005, hence,
"the ten (10) day reglementary period within which to perfect an appeal was
up to July 22, 2005."
Petitioners filed a Motion for Reconsideration of the NLRC order, their
counsel contending that:
x x x The aforementioned decision by the Labor Arbiter was received
by the Makati Central Post Office on 12 July 2005 but the same was
not delivered to the undersigned law office until 13 July 2005 by
Letter Carrier JACOB ZETA. Attached hereto as Annex "A" is a
certification issued by Ms. Emily A. Gianan, Chief, Administrative
Unit of the Makati Central Post Office stating that the records of their
office reflect the undersigned's manifestation that the decision was
received by JANICE CANTALOPEZ [of the office of petitioners'
counsel] on 13 July 2005, as stated in [petitioners'] Memorandum on
Appeal dated 26 July 2005.
As the Honorable Commission is well aware, 25 July 2005 was
declared a special non-working holiday. Thus, the filing by the
Respondents-Appellants of their Memorandum on Appeal on the next
working day, 26 July 2005, was timely and indubitably within the
reglementary period.10(Underscoring supplied)
The NLRC denied petitioners' Motion for Reconsideration by Resolution of
January 31, 2006, declaring that:
x x x [T]he appeal was filed out of time based on the Registry Return
Receipt returned by the Post Office to this Commission, which forms
part of the records of the case showing that a copy of the decision
was received by respondents['] counsel on July 12, 2005, and not on
July 13, 2005 as alleged in respondents' Motion for Reconsideration.
The certification of Ms. Emily A. Gianan of the Makati Central Post
office cannot invalidate the same official Registry Return Receipt that
the very same post office sent back to this Commission showing the
date of receipt by respondents['] counsel as July 12, 2005 on the face
thereof.11 (Emphasis and underscoring supplied)

Petitioners thereupon filed a Petition for Certiorari before the Court of

Appeals,12 their counsel alleging that:
x x x Upon being confronted with the registry return card after the
denial of Petitioners' Motion for Reconsideration by Public
Respondent, Ms. Cantalopez [of the office of petitioners' counsel]
realized that she had inadvertently and mistakenly entered the date
"12" and not "13". She had actually received the decision of the Labor
Arbiter on 13 July 2005 and had later that same day recorded that
date accurately on the undersigned's copy of the Decision and in an
"incoming" logbook, along with other incoming correspondences
addressed to the undersigned law firm, before routing these to the
appropriate attorney's, as is the Firm's standard practice and
internal operating procedure. This may be considered as akin to
a mere typographical error and should not be given the extreme
punishment of dismissal of Petitioner's Appeal. x x x13 (Underscoring
supplied)
Attached to the petition was the affidavit of Cantalopez of the office of
petitioners' counsel and a copy of the pertinent page of the logbook of the
same office14 reflecting the receipt on July 13, 2005 of the Labor Arbiter's
decision.
The Court of Appeals dismissed the petition for, inter alia, failure to show
that Marcelo R. Raenes (Raeses), Vice President of petitioner NYK-FIL Ship
Management who signed the verification and certification of non-forum
shopping, was authorized to sign for and in behalf of the said
company.15Petitioners filed a Motion for Reconsideration,16 attaching a copy
of the Board Resolution of NYK-Fil Ship Management, Inc. authorizing
Raeses to sign the required verification and certification "at any stage of the
subject case." Their
motion was
denied,17 hence, the present
Petition18 raising the sole issue of:
WHETHER A TOTALLY NEW BOARD RESOLUTION AUTHORIZING A
CORPORATE OFFICER TO SIGN THE VERIFICATION AND
CERTIFICATION OF NON-FORUM SHOPPING IS SPECIFICALLY
REQUIRED IN THE FILING OF A PETITION FOR REVIEW ON
CERTIORARI UNDER RULE 65, BEFORE THE COURT OF APPEALS,
EVEN IF A PREVIOUS BOARD RESOLUTION HAD ALREADY BEEN
ISSUED IN FAVOR OF THE VERY SAME CORPORATE OFFICER
AUTHORIZING HIM TO SIGN FOR AND IN BEHALF OF THE
COMPANY "AT ANY STAGE" OF THE CASE.19

said petitioner had substantially complied with the requirements of the law.
Any defect in the signing of the verification and certification of non-forum
shopping is thus deemed cured. If this Court had, in some instances, allowed
the belated filing of the certification against forum shopping, or even excused
the non-compliance therewith, this Court a fortiori should allow the timely
submission of such requirements, albeit the proof of the authority of the
signatory was put forward only after.22
While the normal course of action would be to remand the case to the
appellate court for decision on the merits, it is well within the conscientious
exercise of this Court's broad review powers to choose to render judgment on
the merits, all material facts having been duly laid before it as would buttress
its ultimate conclusion, in the public interest and for the expeditious
administration of justice.
Petitioners insist that they received notice of the Labor Arbiter's decision on
July 13, 2005 and not on July 12, 2005 as indicated by their counsel's
employee Cantalopez in the Registry Return Card. It is a generally accepted
rule that when service is made by registered mail, the service is deemed
complete and effective upon actual receipt by the addressee as shown by the
Registry Return Card.23 Between the Registry Return Card on one hand, and
the Certification issued by Ms. Emily A. Gianan, Chief, Administrative Unit of
the Makati Central Post Office that copy of the Labor Arbiter's decision was
served on petitioners' counsel on July 13, 2005 and the entry of petitioners'
counsel's office logbook stating that copy of the decision was received on July
13, 2005, on the other, the Registry Return Card commands more
weight.24 The Registry Return Card is considered as the official record of the
NLRC. It is presumed to be accurate, unless proven otherwise, unlike a
written record or note of a party which is often self-serving and easily
fabricated.25
Nevertheless, this Court deems it proper to relax procedural rules in the
interest of substantial justice26 in view of the partial merit of petitioners'
appeal before the NLRC.
Before the NLRC petitioners raised the following issues:
I
WHETHER THE COMPLAINANT-APPELLEE IS ENTITLED TO
DISABILITY BENEFITS, DESPITE THE FACT THAT THE COMPANYDESIGNATED PHYSICIAN HAD ASSESSED HIM AS FIT TO RESUME
SEA DUTIES.

Annexed to the petition is a Secretary's Certificate attesting to the conduct of

a special meeting of the Board of Directors of petitioner NYK-Fil Ship
Management, Inc. in which said petitioner "is now ratifying the actions of its
Vice President Raeses and submit such ratification to this Honorable
Supreme Court."20

II

The law allows a corporation to ratify the unauthorized acts of its corporate
officer.21 With the ratification by petitioner NYK-Fil of Raeses' accomplishing
of the verification and certification of non-forum shopping which
accompanied petitioners' petition for certiorari before the Court of Appeals,

III

WHETHER THE COMPLAINANT-APPELLEE IS ENTITLED TO

DISABILITY BENEFITS, DESPITE THE FACT THAT HIS ILLNESS OR
INJURY IS NOT WORK-RELATED.
WHETHER THE COMPLAINANT-APPELLEE IS ENTITLED TO
DISABILITY BENEFITS, DESPITE THE FACT THAT HIS ILLNESS OR
INJURY WAS NOT CAUSED BY AN ACCIDENT.

IV
WHETHER
COMPLAINANT-APPELLEE
ATTORNEY'S FEES.27

IS

ENTITLED

TO

Respecting petitioners' argument that a company-designated physician

declared respondent fit to resume sea duties, the right of a seafarer to seek a
second opinion is recognized by the POEA Standard Employment Contract of
2000, the CBA governing the relationship between petitioners and
respondent, and jurisprudence.
Section 20 (B) (3) of the POEA Standard Employment Contract of 2000
provides:
SECTION 20. COMPENSATION AND BENEFITS FOR INJURY AND
ILLNESS
The liabilities of the employer when the seafarer suffers workrelated injury or illness during the term of his contract are as
follows:
xxxx

The CBA governing the relationship between petitioners and respondent

contains provisions similar to the aforecited provision of the POEA Standard
Employment Contract of 2000, thus:
SECTION 2. The disability suffered by the Seafarer shall be
determined by a doctor appointed by the Company, and the
Company shall provide disability compensation to the Seafarer in
accordance with the percentage specified in the table below which is
appropriate to this disability.
xxxx
SECTION 5. If a doctor appointed by the Union disagrees with the
assessment of the Company doctor in SECTION 2, 3, or 4, a third
doctor shall be mutually agreed between the Company and the
Union, and the decision of this doctor shall be binding on both
parties.29
From the following findings of respondent's physician, respondent is entitled
to the benefits under the POEA Standard Employment Contract of 2000:
IMPRESSION:

3. Upon sign-off from the vessel for medical treatment, the

seafarer is entitled to sickness allowance equivalent to his
basic wage until he is declared fit to work or the degree of
permanent disability has been assessed by the companydesignated physician but in no case shall this period exceed
one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a postemployment medical examination by a company-designated
physician within three working days upon his return except
when he is physically incapacitated to do so, in which case,
a written notice to the agency within the same period is
deemed as compliance. Failure of the seafarer to comply with
the mandatory reporting requirement shall result in his
forfeiture of the right to claim the above benefits.
If a doctor appointed by the seafarer disagrees with the
assessment, a third doctor may be agreed jointly between
the Employer and the seafarer. The third doctor's decision
shall be final and binding on both parties. (Emphasis and
underscoring supplied)
This provision substantially incorporates the 1996 POEA Standard
Employment Contract. Passing on the 1996 POEA Standard Employment
Contract, this Court held that "[w]hile it is the company-designated physician
who must declare that the seaman suffers a permanent disability during
employment, it does not deprive the seafarer of his right to seek a second
opinion," hence, the Contract "recognizes the prerogative of the seafarer to
request a second opinion and, for this purpose, to consult a physician of his
choice."28

Lumbar spondylopathy
Lumbar disc protrusion, L5-S1
Mr. Talavera's back pain has improved since his physical therapy.
However, he still experiences pain and discomfort with exertion. He
also now has started to complain of numbness that radiates down
his thighs. His diagnostic tests are significant for degenerative
changes and disc protrusion which are conditions due to wear and
tear. That is, with more exposure to activities producing back stress,
more injuries, and disability are to be expected. He has lost his preinjury capacity, and I now recommend a partial permanent
disability with Grade 8 Impediment based on the POEA contract.
He is UNFIT for further sea duties.
xxxx
Degenerative disc disease is a wear and tear condition and is
associated with degenerative changes in the articular cartilage. In the
vertebral column, the fact joints are involved. A single episode of
trauma may not initially be significant, but repeated trauma, such as
excessive and strenuous physical activities may play a role.
Through degeneration, wear and tear or trauma, the annulus
fibrosus containing the soft disc material (nucleus pulposus) may
tear. This results in protrusion of the disc or even extrusion of disc
material into the spinal canal or neural foramen. In addition, the
nerve fibers of the affected root are also compressed and this
situation leads to radiculopathy in the appropriate muscles. When
the nerve roots become compressed, the herniated disc becomes
significant. The most common complaint in patients with a herniated

disc is that of severe low back pain developing immediately or within

a few hours after an injury.
The mainstay of therapy for a herniated lumbar disc is conservative
treatment, that is, nonsurgical. The mechanism of injury is often an
episode of trauma or a continued mechanical stress of postural or
occupational type. Therefore, torsional stresses on the back, and
activities such as lifting and repetitive bending should be avoided.
The more these patients do, the more they hurt.
Prolonged relief is less likely if no permanent modification in the
patient's activities is made. Over time, as the patient resumes his
normal work of increased loading, twisting, or bending and extension
of the back, the patient exposes himself to dangers of enhancing the
herniated disc to a more severe form.
Mr. Talavera should therefore refrain from activities producing
torsional stress on the back and those that require repetitive bending
and lifting. His symptoms are also heightened by prolonged sitting
and standing. His functional capacity has diminished making it
unsafe for him to work at his previous occupation. He is UNFIT to
resume his sea duties.30 (Emphasis in the original; underscoring
supplied)
Petitioners argue, however, that respondent's injury or illness is not workrelated.31 They rely on their designated physician's Reply to Medical Query,
stating that respondent's conditions could also be attributed to age, genetics,
weight, bone diseases, infections, and unknown factors. 32 They also call
attention to Article XXI, Section 1 of the CBA which requires that disability
be the result of an accident to be compensable.33
Indeed, under Section 1 of the CBA which reads:
SECTION 1: A Seafarer who suffers permanent disability as a result
of an accident, regardless of fault but excluding injuries caused by a
Seafarer's willful act, whilst in the employment of the Company,
including accidents occurring while traveling to or from the Ship,
and whose ability to work is reduced as a result thereof, shall in
addition to sick pay, be entitled to compensation according to the
provisions of the Agreement. The copy/ies of the medical certificate
and other relevant medical reports shall be made available by the
Company to the Seafarer,34
disability must be the result of an accident to be compensable.
There is no proof that respondent incurred disability as a result of an
accident. Neither is there proof, however, that, following Section 3 of Article
XXI of the CBA which reads:
xxxx
SECTION 3: Permanent Medical Unfitness - A Seafarer whose
disability, in accordance with SECTION 1, is assessed at 50% or
more under the attached APPENDIX B shall, for the purpose of this
section be regarded as permanently unfit for further sea service in

any capacity and entitled to 100% compensation, i.e. US$80,000 for

officers and ratings above AB and US$60,000 for ratings, AB and
below. Furthermore, any Seafarer assessed at less than 50%
disability under the Contract but certified as permanently unfit for
further sea service in any capacity by the Company doctor, shall also
be entitled to 100% compensation35 (Underscoring supplied),
respondent had a rating above AB and that his disability was assessed at
50% or more under Appendix "B" of the CBA to merit the award of 100%
compensation or $80,000 disability benefit and 10% thereof or $8,000
attorney's fees.
For disability to be compensable under Section 20 (B) of the 2000 POEA
Standard Employment Contract, it must be the result of a work-related
injury or illness,36 unlike the 1996 POEA Standard Employment Contract in
which it was sufficient that the seafarer suffered injury or illness during the
term of his employment.37 The 2000 POEA Standard Employment Contract
defines "work-related injury" as "injury(ies) resulting in disability or death
arising out of and in the course of employment" and "work-related illness" as
"any sickness resulting to disability or death as a result of an occupational
disease listed under Section 32-A of this contract with the conditions set
therein satisfied."
In More Maritime Agencies, Inc. v. NLRC,38 this Court, noting that the therein
private respondent's job required him to enter a manhole accessible only in a
crouching position and carry a 20-liter canister to collect carbon, mud, and
oil deposited inside the cylinders of the ship's air trunk, 39 found that his
chronic low back pain, which indicated a slipped disc, was work-related. This
Court, addressing the therein petitioner's argument that the therein
respondent's chronic low back pain was due to a pre-existing condition,
expounded on the nature of a work-related injury or illness:
x x x Compensability of an ailment does not depend on whether the
injury or disease was pre-existing at the time of the employment but
rather if the disease or injury is work-related oraggravated his
condition. It is indeed safe to presume that, at the very least,
the arduous nature of Hormicillada's employment had contributed to
the aggravation of his injury, if indeed it was pre-existing at the time
of his employment. Therefore, it is but just that he be duly
compensated for it. It is not necessary, in order for an employee to
recover compensation, that he must have been in perfect condition or
health at the time he received the injury, or that he be free from
disease. Every workman brings with him to his employment certain
infirmities, and while the employer is not the insurer of the health of
his employees, he takes them as he finds them, and assumes the
risk of having a weakened condition aggravated by some injury
which might not hurt or bother a perfectly normal, healthy
person.40 (Underscoring, emphasis, and italics supplied)
In the case at bar, a reasonable connection between the respondent's injuries
and the nature of his job has been established. Thus, as in the above cited
case, it is safe to presume that the arduous nature of the respondent's job

caused the respondent's illness or at least aggravated any pre-existing

condition he might have had, and is thus work-related.
The earlier-quoted findings of respondent's physician indicate that "repeated
trauma such as excessive and strenuous physical activities may play a role"
in producing back stress, more injuries and disability, hence, his advice for
respondent to "refrain from activities producing torsional stress on the back
and those that require repetitive bending and lifting" as he is "UNFIT to
resume his sea duties."
Petitioners' physician herself stated that among the causes of respondent's
conditions are trauma, biomechanical stress, and repeated motion on a
joint.41 Her observation that "there was no overt and direct assault or
physical injury that may have contributed to the MRI findings of Mr.
Talavera's lumbar spine"42 and petitioners' argument that no record of an
accident was presented43 do not persuade. As respondent's physician
explained, "A single episode of trauma may not initially be significant, but
repeated trauma, such as excessive and strenuous physical activities may
play a role."44
In their Reply45 to respondent's Position Paper, petitioners did not contest or
disprove respondent's claim that prior to June 2003, he had concluded three
contracts with them and that every time he was scheduled for deployment,
he was subjected to medical examination by petitioners' designated physician
and had always been declared "fit to work."46 Petitioners failed too to refute,
respondent's following claims:
Complainant Talavera as Fitter performed repair and maintenance
works, like hydraulic line return and other supply lines of the vessel;
he did all the welding works and assist[ed] the First and Second
Engineer during overhauling works of generators, engines and others
[sic] engineering works as directed by lifting, carrying, pushing,
pulling and moving heavy equipment and materialsand constantly
performed overtime works because the ship was old and always
repair jobs are almost anywhere inside the vessel. He found himself
with very few hours rest period.
On several occasions due to his excessive arduous and stressful,
both physical and mental works, he felt slight pains in his back and
other parts of his body, [b]ut ignored the same due to the demands of
his works and because his superiors are very strict with regards to
[the] time table in a given task.47 (Underscoring supplied)
Undoubtedly then, respondent is, under the 2000 POEA Standard
Employment Contract, entitled to compensation. His disability benefit, on
account of the priorly stated partial permanent disability withGrade
8 Impediment based on the 2000 POEA Standard Employment Contract,
computed in accordance with Section 20 (B) (6)48 vis a vis Section 3249 of the
2000 Standard Employment Contract, thus:
US$50,000 x 33.59%

amounts to US$16,795. The attorney's fees awarded by the labor arbiter

"equivalent to ten percent (10%) of the judgment award"50 is thus reduced to
US$1,679.50.
WHEREFORE, the assailed Resolutions of the Court of Appeals dated May
19, 2006 and December 4, 2006 are SET ASIDE.
The
Decision
of
the
Labor
Arbiter
dated
June
28,
2005
is AFFIRMED with MODIFICATION. The disability benefit awarded to the
respondent Alfonso T. Talavera is reduced to US$16,795 in accordance with
Section 20 (B) (6) vis a vis Section 32 of the 2000 Philippine Overseas
Employment Administration Standard Terms and Conditions Governing the
Employment of Seafarers on Board Ocean Going Vessels, as amended by
Department Order No. 4 and Memorandum Circular No. 9, both series of
2000. The award of attorney's fees is correspondingly reduced to
US$1,679.50.
SO ORDERED.

G.R. No. 178127

April 16, 2009

VIRGEN SHIPPING CORPORATION, CAPT. RENATO MORENTE &

ODYSSEY MARITIME PTE. LTD., NATIONAL LABOR RELATIONS
COMMISSION, Petitioners,
vs.
JESUS B. BARRAQUIO, Respondent.
DECISION
CARPIO MORALES, J.:
Assailed via petition for review on certiorari is the Court of Appeals 1 Decision
of November 13, 2006 holding Virjen Shipping Corporation, Capt. Renato
Morente and Odyssey Maritime PTE. Ltd. (petitioners) liable to Jesus B.
Barraquio (respondent) for payment of sickness allowance equivalent to 120
days, disability benefits, accrued interest, moral damages, exemplary
damages and attorneys fees.
By a contract forged on February 29, 2000, petitioner Odyssey Maritime,
PTE. Ltd., through its local manning agent co-petitioner Virjen Shipping
Corporation, hired respondent as chief cook on board the vessel M/T Golden
Progress for a period of ten (10) months.
Before the contract was executed, respondent was made to undergo the
routine Pre-Employment Medical Examination (PEME) at S.M. Lazo Medical
Clinic, Inc. and was found to be fit to work by the attending physician Dr.
Jose Dante V. Jacinto.
On March 23, 2000, respondent boarded the above-named vessel and
commenced to perform his duty as chief cook.
Twenty one (21) days later or on April 13, 2000, while the vessel was docked
in Korea, respondent requested medical attention due to chest pains and
hypertension and was brought to the Hyundai Surgical Center. The attending
physician made no pronouncement as to respondents fitness for work but
made the following diagnosis:
Impression) (1) Suspected ischemic heart disease (2) Hypertension
Treatment) Calcium channel block medication. Jao Ho Lee"2 (Emphasis and
underscoring supplied)
Subsequently or on April 26, 2000, respondent, by letter of even date
addressed to Captain Thomas Cristino, Crewing Manager of petitioner Virjen,
wrote, quoted verbatim:
"With much regret, I would like to say my sincere sorry for having me
decided to quit my job. Poor Health is the main reason and thus affecting
the performance of my duty.
However too, if somebody is going to disembark this coming May in
Singapore may I respectfully request your permission to allow me to join said
disembarkation crew. Just in case it is not possible, then I will patiently wait
to those are scheduled by early June."

As well, it is clear to me that I am responsible for my airfare and to joining

crew as my replacement since I have not complied with the terms of the
contract.
Thank you very much to your kind consideration & understanding & hope
this irrevocable resignation be granted on proper time so as to allow me to
accommodate the due expenses for repatriation."3 (Emphasis and
underscoring supplied)
Upon arrival of the vessel in Singapore and prior to his disembarkation,
respondent again requested on May 13, 2000 medical treatment for abscess
in his left thumb. Dr. Ivan Chan of Gleneagles Maritime Medical Centre who
attended to respondent stated in his report:
Name/Age: Jesus B. Barraquio/50
Rank/Nationality: CCK/Filipino
Agent/Vessel: Heng Fu Kot/Golden Progress
Allergy: Nil
HISTORY: Painful swelling left thumb for 10 days. History of
hypertension for 3 years, on calciblock. Medication finished.
Cholesterol normal.
xxxx
DIAGNOSIS: ABSCESS LEFT THUMB; HYPERTENSION
xxxx
RECOMMENDATIONS:
DISPOSITION: Fit to sail.4 (Emphasis and underscoring in the original; italics
supplied)
Respondent was allowed by petitioners to disembark. He arrived in the
Philippines on May 15, 2000. On August 2, 2000, respondent signed a
Statement of Account acknowledging set-off of his vacation leave pay in the
amount of P15,188.75 from the cost of finding respondents replacement and
the cost of repatriation in the amount of P38, 373.65. For the balance of P23,
184.90, respondent signed a promissory note in favor of petitioner Virjen.
A year later or on August 1, 2001, respondent filed a complaint for nonpayment of 120 days sickness allowance under Section 20 (B) paragraph 2 of
the Standard Employment Contract for Seafarers5 , disability benefits, legal
interest computed from date of formal demand, reimbursement of medical
expenses, and damages.
In his Complaint, respondent alleged that due to constant verbal abuse from
the ship master, Captain Marino Kasala, he suffered dizziness, chest pains,
headaches and irregular sleep leading to hypertension; that he was forced to
execute the request for disembarkation for fear that his health would worsen;
and that medical findings in his PEME that he was fit to sail is binding upon
petitioners and proof that his condition developed while on board.

Taking a contrary stand, petitioners countered that hypertension cannot

develop in a short span of time; and in any event, respondent committed
misrepresentation in his PEME as to his health.

On respondents petition for certiorari, the Court of Appeals reversed the

NLRC Decision in light of the observation that respondents hypertension
probably developed while on board the vessel, viz:

By Decision of April 1, 2002, Labor Arbiter Renaldo O. Hernandez rendered

judgment in favor of respondent, disposing as follows:

Thus, We are constrained to declare compensability primarily

because evidence points that petitioners hypertension was probably
developed while on board the vessel. After all, strict rules of evidence are not
applicable in claims for compensation. In fact, in NFD International Manning
Agents, Inc. vs. NLRC, the High Court held that probability and not the
ultimate degree of certainty is the test of proof in compensation
proceedings.8(Citations omitted, italics in the original, emphasis and
underscoring supplied)

WHEREFORE, premises considered, judgment is entered finding respondents

foreign principal and manning agency and its president/chairman Eng.
Emilio A. Santiago and the rest of the corporate officers liable to pay to
complainant his money claims as above discussed, thus ORDERING said
respondents and officers in solido:
1) to reimburse to complainant his receipted cost of medical
expenses incurred to Annex "J-8." Complainants Affidavit dated 01
July 2002) of P1,270.00;
2) to pay complainant his sickness allowance up to maximum
equivalent of basic wage x 120 days or US $ 2,320.00 under Sec. 20
(B) in par. 2, Standard Employment Contract for Seafarers;
3) to pay complainant his disability benefits in accordance with the
schedule of benefits in Sec. 30 of the Contract with disability rating
of Grade 6 pursuant to Schedule of Disability Allowance in Sec. 30-A
of the POEA SEC, with impediment percentage of 50% equivalent to
US $25,000.00; and finally,
4) to pay complainant moral and exemplary damages in the
combined amount of two hundred thousand pesos (P200,000.00) and
10% of the entire award as attorneys fees.
SO ORDERED.6
On appeal, the National Labor Relations Commission (NLRC) First Division
by Decision of August 30, 2002reversed the ruling of the Labor Arbiter
and dismissed the complaint for lack of merit.7 Albeit echoing the same
factual background, the NLRC found respondents resignation voluntary,
hence, he cannot claim entitlement to the benefits under the Standard
Employment Contract of the Philippine Overseas Employment Administration
(POEA). Thus, the NLRC First Division declared:
The aforequoted handwritten resignation, the terms and conditions of which
are very clear and explicit that he is quitting his job and even executed a
promissory note to pay the amount of P23,184.90 representing the balance of
his repatriation and his replacements expenses.
Further, complainant-appellee (respondent) even signed the Statement of
Account after he signed-off from the vessel on August 02, 2000. The same
shows the balance due Virjen Shipping Corporation which apparently may be
construed that complainant-appellee knew from the beginning that he is
liable for his and his replacement transportation because he pre-terminated
his employment contract. (Underscoring supplied)

The appellate court thus disposed:

WHEREFORE, the petition is GRANTED. The assailed NLRC Decision is
hereby NULLIFIED and the Labor Arbiter Decision REINSTATED with the
MODIFICATION that the name Engr. Emilio Santiago and the rest of the
corporate officers are ordered deleted from its dispositive portion.
SO ORDERED.9 (Emphasis in the original; underscoring supplied)
Hence, the present petition, petitioners positing the following arguments:
1. . That there is no disharmony between the factual findings of the
Labor Arbiter and those of the NLRC. The findings of the NLRC are
more in accord with the evidence presented in the proceedings.
2. That private respondents resignation letter was voluntary and
made upon his own instance, the petitioners (sic) argument of
involuntariness has no factual basis and is a mere afterthought.
Having resigned from his position, private respondent is not entitled
to his monetary claims.
3. Assuming, without admitting, that private respondent was
medically repatriated as "poor health" was stated as the reason for
his resignation only bolsters the view that private respondent knew
of his history of hypertension prior to boarding the MV "Golden
Progress" and that he concealed such material information in his
pre-employment medical examination (PEME for brevity).
4. Private respondents PEME is not binding against the petitioners
with respect to the determination of his true state of health and that
petitioners willful and fraudulent concealment of his known preexisting medical condition bars him from receiving disability benefits.
(Underscoring supplied)
As a general rule, only questions of law may be raised and resolved by the
Court as regards petitions brought under Rule 45 of the Rules of Court. The
reason being that the Court is not a trier of facts, hence, it is not duty bound
to re-examine the evidence on record.
Where, as in the present case, the NLRC and the Labor Arbiter arrived at
conflicting decisions and the findings of the Labor Arbiter, as partly affirmed

by the appellate court, appear to be contrary to the evidence at hand, the

Court finds the need to review the records to distill the facts.
From a considered review, the Court finds that respondents resignation was
voluntary.
Resignation is defined as the voluntary act of an employee who finds himself
in a situation where he believes that personal reasons cannot be sacrificed in
favor of the exigency of the service and he has no other choice but to
disassociate himself from his employment.10
Respondents resignation can be gleaned from the unambiguous terms of his
letter to Captain Cristino.
As earlier reflected, respondent returned home upon docking in Singapore on
May 13, 2000 after he was treated for the abscess in his left thumb and
diagnosed with hypertension. His return home is in consonance with his
request in his letter of April 26, 2000 to the crewing manager.
Respondents bare claim that he was forced to execute his resignation letter
deserves no merit. Bare allegations of threat or force do not constitute
substantial evidence to support a finding of forced resignation. 11 That such
claim was proferred a year later all the more renders his contention bereft of
merit.
It bears noting that in respondents previous contract with petitioner aboard
another accredited vessel, M/T Ocean Blossom, he also requested for early
repatriation, citing domestic reasons. Respondent is thus charged with
awareness of the consequences of pre-termination, this being his second time
to so request. Captain Cristinos alleged statement that respondent had to
shoulder the repatriation expenses cannot thus be construed as compulsion.
Respondent claims entitlement under Section 20 (B) [2] of the Standard
Employment Contract of the POEA, which must be read in conjunction with
Section 20 (B) [3], viz:
SECTION 20. COMPENSATION AND BENEFITS
B. x x x
(2) If the injury or illness requires medical and/or dental treatment in a
foreign port, the employer shall be liable for the full cost of such medical,
serious, dental, surgical and hospital treatment as well as board and lodging
until the seafarer is declared fit to work or to be repatriated.
However, if after repatriation, the seafarer still requires medical attention
arising from said injury or illness, he shall be provided at cost to the
employer until such time he is declared fit and the degree of his disability
has been established by the company-designated physician.
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed one
hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment

medical examination by a company-designated physician within three
working days upon his return except when he is physically incapacitated to
do so, in which case a written notice to the agency within the same period is
deemed as compliance. Failure of the seafarer to comply with the mandatory
reporting requirement shall result in the forfeiture of his right to claim the
above benefits.
If the doctor appointed by the seafarer disagrees with the assessment, a third
doctor may be agreed jointly between the Employer and the seafarer. The
third doctors decision shall be final and binding on both parties.
(Underscoring supplied)
If respondent was indeed repatriated for medical reasons, he was, under the
above-said provision, required to undergo post-employment medical
examination by a company-designated physician within three working days
from arrival. Contending that he complied therewith, he invites attention to
the written annotation "Reported To Office May 17/00" on the medical
report from Gleneagles Maritime Medical Centre.1avvphi1
The provision requires respondent to submit himself to a post-medical
employment examination by a company designated physician within three
working days from arrival or, in respondents case, three working days after
May 15, 2000, a Monday, when he arrived by ship or not later than May 18,
2000. Respondent sought examination-treatment on May 17 June 30, 2000
from Dr. Romina Alpasan who appears to be a physician of his choice. 12 He
only tried to look for a company-designated physician after treatment by Dr.
Alpasan. Clearly, he did not comply with the 3-day requirement to seek the
services of a company-designated physician for purposes of post-employment
medical examination.
Respondent goes on to claim that he underwent treatment for Ischemic heart
disease which developed while employed by petitioners. Ischemic heart
disease is a condition in which fatty deposits (atheroma) accumulate in the
cells lining the wall of the coronary arteries. These fatty deposits build up
gradually and irregularly, however, in the large branches of the two main
coronary arteries which encircle the heart and are the main source of its
blood supply. This process, called atherosclerosis, leads to narrowing or
hardening of the blood vessels supplying blood to the heart muscle (the
coronary arteries) resulting in ischemia - or the inability to provide adequate
oxygen - to heart muscle and this can cause damage to the heart muscle .
Complete occlusion of the blood vessel leads to a heart attack.
Finally, respondent claims that in light of the opinion of the physician in
Korea that he had "suspected ischemic heart," petitioners affirmed his
medical repatriation. As reflected in the immediately preceding paragraph,
however, ischemic heart disease cannot develop in a short span of time that
respondent served as chief cook for petitioners. In fact, as indicated above,
the Gleneagles Maritime Medical Centre doctor who treated respondent in
May 2000 for abscess in his left hand had noted respondents "[h]istory of
hypertension for 3 years." Moreover, the Korean physician did not make any
recommendation as to respondents bill of health for petitioners to assume
that he was fit for repatriation.

IN FINE, respondents actions show that he voluntarily resigned.

WHEREFORE, the Court of Appeals Decision of November 13, 2006 is
REVERSED and the NLRC Decision of August 30, 2002 is REINSTATED.
SO ORDERED.

G.R. No. 190804

October 11, 2010

Dr. Raymond Rosales (Dr. Rosales) of the Metropolitan Hospital who

examined respondent on March 19, 2005 diagnosed him too to be suffering
from Depressive Disorder and issued a Medical Certification 5 that respondent
was "unfit for sea duty."

PHILIPPINE TRANSMARINE CARRIERS, INC., GLOBAL NAVIGATION,

LTD., Petitioners,
vs.
SILVINO A. NAZAM, Respondent.

Petitioners maintained in its Position Paper6 that respondents repatriation

was due to his letter-request to be relieved from work; and that respondents
alleged hypertension could not have been acquired during his brief stay on
board the vessel.

DECISION
CARPIO MORALES, J.:
Seafarer Silvino Nazam (respondent) was hired by petitioner Philippine
Transmarine Carriers, Inc. (Transmarine) on behalf of its principal-copetitioner Global Navigation, Ltd. for the position of Bosun under a 9-month
contract,1with a salary of US$535 per month.
Respondent was deployed on August 26, 2004 at Ulsan, South Korea on
board the vessel M/V Maersk Durban, but was repatriated to the Philippines
twenty three days later or on September 18, 2004, pursuant to his
handwritten letter2 dated September 16, 2004 requesting that he be relieved.
The letter stated, quoted verbatim:
SEPT 16 2004
TO MASTER: T.H. GEMULLA
MAERSK DURBAN
RELIEV [sic] REQUEST
I
AM
BOSUN
SILVINO
A.
NAZAM
RELIEVE BECAUSE OF PERSONAL REASONS

REQUEST

MY

(SGD)
BOSUN SILVINO A. NAZAM
On October 5, 2004, respondent filed with the National Labor Relations
Commission (NLRC) a complaint3 for payment of disability benefits, sickness
allowance, damages, and attorneys fees, alleging that the hostile working
conditions at the vessel exposed him to humiliation and verbal and mental
abuse from the Chief Officer and Master, causing him to suffer hypertension
and depression.
Respondent further alleged that he was made to sign blank documents by
the Master of the vessel; he was ousted from his post as Bosun; his request
for medical assistance on reaching the port of Yokohama, Japan was not
granted; and his request for post-employment medical examination upon
repatriation was denied by petitioner Transmarine.
Three weeks after filing his complaint or on October 27, 2004, respondent
consulted with an independent physician, Dr. Jesus Alberto Q. Poblete (Dr.
Poblete), who diagnosed4 him to be suffering from "Major Depression with
Psychotic Features R/O Traumatic Disorder."

By Decision7 of August 29, 2006, Labor Arbiter Ramon Valentin C. Reyes

found for respondent and directed petitioners to pay him permanent total
disability benefits amounting to US$60,000; sickness allowance of US$2,140;
and moral and exemplary damages of P50,000 each and 10% of the total
award by way of attorneys fees.
In finding for respondent, the arbiter held that since respondents premedical employment records showed that he was fit for sea duty, he could
only have acquired the illnesses complained of during his duty at the vessel.
The Arbiter added that while "major depression" is not listed as an
occupational disease respondent had proven that it was work-related and the
risk of contracting it was increased by the working conditions aboard the
vessel.
On appeal, the NLRC set aside the Labor Arbiters Decision by Decision8 of
January 31, 2008 and dismissed respondents complaint, noting that
respondent indeed made a request to be relieved; that respondent failed to
undergo the mandatory post-employment medical examination; that
respondent failed to show that his repatriation was due to a work-related
illness; and that depression is not an occupational disease, hence, not
compensable.
The NLRC further noted that respondent sought medical assistance only a
month after his repatriation, and the certification issued by Dr. Poblete did
not include a disability assessment. Respondents motion for reconsideration
was denied by Resolution9 of April 25, 2008, hence, he appealed to the Court
of Appeals.
By Decision10 of September 30, 2009, the appellate court reversed the
decision of the NLRC and reinstated that of the Labor Arbiter, holding that
respondents depression which rendered him unfit to work was a direct result
of the demands of his shipboard employment and the harsh and inhumane
treatment of the vessels officers towards him.
Petitioners motion for reconsideration was denied by the appellate court by
Resolution11 dated December 17, 2009, hence, the present petition for review
on certiorari.
The petition is meritorious.
For an injury or illness to be duly compensated under the terms of the
Philippine Overseas Employment Administration-Standard Employment
Contract (POEA-SEC), there must be a showing that the injury or illness and
the ensuing disability occurred during the effectivity of the employment

contract. Additionally, Section 20(B) of the POEA-SEC, paragraph (3)

requires:
xxxx
3. upon sign off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed onehundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a postemployment medical examination by a company-designated physician
within three working days upon his return except when he is physically
incapacitated to do so, in which case a written notice to the agency
within the same period is deemed as compliance. Failure of the seafarer
to comply with the mandatory reporting requirement shall result in his
forfeiture of the right to claim the above benefits. (emphasis and
underscoring supplied)
Respondent was thus required to undergo post-employment medical
examination by a company-designated physician within three working days
from arrival. He failed to comply with the requirement, however, without
explanation or justification therefor. Hence, he forfeited his right to claim
disability benefits.
Respondents claim of having reported to petitioner Transmarines office
within three days from his arrival in the Philippines remains just that. As
duly observed by the NLRC, respondent merely consulted a private
practitionermore than one month after his arrival three weeks after he had
already filed his complaint for disability benefits; and he secured a medical
certification that he was unfit for sea duty from another private physician
only on March, 2005 or six months after his arrival.
Technicality aside, for a disease to be compensable Section 32-A of the
POEA-SEC requires proof of the existence of the following conditions:
SECTION 32-A OCCUPATIONAL DISEASES
For an occupational disease and the resulting disability or death to be
compensable, all of the following conditions must be satisfied:
1. The seafarer's work must involve the risks described herein;
2. The disease was contracted as a result of the seafarer's exposure
to the describe risks;
3. The disease was contracted within a period of exposure and under
such other factors necessary to contract it; and
4. There was no notorious negligence on the part of the seafarer.
(emphasis supplied)
Specifically with respect to mental diseases, for the same to be compensable,
the POEA-SEC requires that it must be due to traumatic injury to the
head12 which did not occur in this case. While disability should be

understood less on its medical significance but more on the loss of earning
capacity, the appellate courts sweeping observations that "the hostile
working environment and the emotional turmoil suffered by [herein]
respondent from his employers caused him mental and emotional stress that
led to severe mental disorder and rendered him permanently unable to
perform any work," and that "his working condition increased the risk of
sustaining" the illness complained of do not lie.
By respondents claim, he became depressed due to the frequent verbal
abuse he received from his German superiors within less than one month
that he was on board the vessel. Aside from a "To whom it may concern"
handwritten letter of respondent13 attached to his Position Paper filed before
the arbiter detailing the alleged instances of verbal abuse, which letter bears
the alleged signatures of some of respondents colleagues, respondent failed
to proffer concrete proof that, if indeed he was subjected to abuse, it directly
resulted in his depression.
WHEREFORE, the petition is GRANTED. The Court of Appeals Decision
dated September 30, 2009 and the Resolution dated December 17, 2009 are
REVERSED AND SET ASIDE and the National Labor Relations Commission
Decision dated January 31, 2008 and Resolution dated April 25, 2008
dismissing respondents complaint are REINSTATED.
SO ORDERED.

G.R. No. 175491

December 10, 2012

CREW AND SHIP MANAGEMENT INTERNATIONAL INC. and SALENA

INC., Petitioners,
vs.
JINA T. SORIA, Respondent.
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court
assails the May 31, 2006 Decision 1 and the November 14, 2006
Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 85350, which set
aside the April 30, 2004 Resolution3 of the National Labor Relations
Commission (NLRC), dismissing the complaint of Jina T. Soria4 (respondent),
on behalf of her late husband Zosimo J. Soria (Zosimo), for death
compensation benefits.
The Factual and Procedural Antecedents
On August 7, 1995, Zosimo entered into a one-year contract of
Employment5 with Salena Inc., through its local manning agent, Crew and
Ship Management International Inc. (petitioners). He was employed as an
Assistant Cook on board M.V. Sofia, later renamed M.V. Apollo, with a basic
monthly salary of US$200.00.
On June 5, 1996, Zosimo, during his routine duty inside M.V. Apollos engine
room, suffered burns on his left knee when it accidentally brushed the hot
engine. The vessels medical officer immediately attended and treated
Zosimos injury with the appropriate medication.
On June 9, 1996, M.V. Apollo arrived at New Orleans from Masinloc,
Zambales, Philippines. On June 16, 1996,M.V. Apollo departed New Orleans
and reached Guayaquil, Ecuador, on June 26, 1996. From June 9, 1996 to
June 26, 1996, there were no reported complaints from Zosimo.
On June 28, 1996, per M.V. Apollos Masters Report,6 Zosimo requested for
medical attention. Subsequently, Zosimo was confined in a hospital in
Ecuador where the cleaning and dressing of the wound and skin grafting over
the burn areas with skin taken from the left lateral aspect of the left thigh
were performed. On July 10, 1996, Zosimo was discharged from the hospital
and deemed fit for repatriation.
Upon his repatriation to the Philippines, Zosimo immediately went to Legaspi
City. On July 13, 1996, Zosimo sought medical attention for his burn
wounds in Ago General Hospital, Legaspi City. In the Medical
Certificate,7 Zosimo was diagnosed with a "Healed Wound With Viable Skin
Graft, Non-Infected; Dried Wound At Harvest Site, Lateral Aspect Of Left
Thigh."
On July 19, 1996, or nine days after repatriation to the Philippines, Zosimo
reported to petitioners office in San Juan, Metro Manila, for payment of his
contractual receivables. He was referred to Fatima Medical Clinic (FMC), the
petitioners designated hospital. FMCs Medical Report8 disclosed that

Zosimos "wound is dry not infected with viable skin graft."9 The same
medical report also declared that Zosimo complained of "slight difficulty in
flexing of left knee joint." 10 He was advised to return for another check-up
after one week.
On July 31, 1996, Zosimo died at the Ospital ng Makati. As stated in the
Medico-Legal Report11 of the Philippine National Police (PNP) Crime
Laboratory, the cause of Zosimos death was "Pneumonia with Congestion of
all visceral organs."
On July 7, 1999, respondent filed a Complaint12 for
benefits, child allowance, burial expenses, moral and
and attorneys fees against petitioners before the
Respondent alleged, among others, that Zosimo died
burns he sustained on board M.V. Apollo.

death compensation
exemplary damages,
Labor Arbiter (LA).
of tetanus from the

In the Decision,13 dated January 31, 2000, LA Fatima Jambaro-Franco (LA

Jambaro-Franco) dismissed the complaint for lack of merit. LA JambaroFranco reasoned in this wise:
x x x x.
A perusal of the death certificate of seaman Zosimo Soria shows that the
cause of death was "Pneumonia with Congestion of All Visceral Organs."
Even the Medico-Legal Report No. M-1197-96 dated August 5, 1996 also
confirmed that the cause of Sorias death was "Pneumonia with Congestion of
All Visceral Organs." Verily, the cause of seaman Sorias death was not the
burn he suffered on his left knee but was due to pneumonia which he could
have contracted locally while he was in his province. Under these
circumstances, it would be unfair and unjust to hold respondent liable for
his death benefits inasmuch as his illness was not work-related.
Moreover, the records show that when seaman Soria died, his employment
contract had already lapsed/expired. Under Section 20 (A) of the terms and
conditions of the POEA Standard Employment Contract, it provides that "in
case of the death of his seafarer during the term of his contract, the employer
shall pay his beneficiaries x x x." Verily, considering that seaman Soria died
after his contract was already terminated, it follows that his employer is not
liable to pay his beneficiaries.
In trying to justify her claims, complainant advanced the theory that her
husband died of tetanus. However, except for her bare allegation that the
death was due to tetanus, no evidence was adduced in support thereof. Mr.
Sorias Medical Report, Death Certificate and Autopsy Report, do not state
that he died of tetanus. On the other hand, said documents unequivoca[b]ly
stated that the cause of his (Sorias) death was pneumonia. Thus, negating
complainants claim.
Pneumonia has been defined as a disease of the lungs characterized by
inflammation and consolidation followed by resolution and caused by
infection and irritants while tetanus is an acute infectious disease
characterized by tonic spasms of voluntary muscles especially of the jaw and
caused by the specific toxin of a tacillus. Evidently, pneumonia and tetanus
are two different illnesses.

Furthermore, pneumonia is not in anyway related to the burn injury on his

left knee [that] seaman Soria suffered. The latter could have acquired this
illness while on vacation in his province after his disembarkation. Evidently,
his death is not at all compensable.
x x x x.14
Not satisfied with the ruling, respondent appealed to the NLRC. The NLRC,
after referring the case to LA Thelma M. Concepcion (LA Concepcion),
reversed LA Jambaro-Francos ruling in its October 20, 2003 Decision.15
The NLRC, based on the report and recommendation of LA Concepcion, ruled
that Zosimos death was compensable. It held that the infection of the skin
burns that required skin grafting led to the inception of tetanus which
ripened into pneumonia. Clearly, the infection of the skin burns which
caused the onset of tetanus took place during the term of Zosimos
employment. It reasoned out that the petitioners failed to show that the
pneumonia was not a late complication of tetanus from his skin burns.
Petitioners moved for reconsideration of the NLRCs October 20, 2003
Decision.
In its April 30, 2004 Resolution,16 the NLRC granted petitioners Motion for
Reconsideration and reinstated the LAs January 31, 2000 Decision. In
reversing itself, the NLRC explained:
It cannot be gainsaid that the rights and obligations of the parties to this
case are primarily governed by the terms and conditions of employment
embodied in the POEA Standard Employment Contract Governing the
Employment of Seafarers on board Ocean Going Vessels.
More particularly, Section 18. (B) 1 of the Standard Contract provides that
the employment of the seafarer is terminated when the seafarer signs-off and
is disembarked for medical reasons pursuant to Section 20 (B) 4, and arrives
at his point of origin. Section 20 (B) 4 in turn provides for the liability of the
employer for the full cost of reparation.
When the seafarer was thus repatriated on July 10, 1996 after undergoing
surgery and treatment and declared fit to be repatriated, the above-cited
contractual provisions became operative. The contract, accordingly, was
deemed terminated.
That the seafarer subsequently died cannot be sufficient basis to hold
respondents liable for benefits under the contract. The seafarers admitted
failure to report to the respondent agency for post-deployment medical
examination within the mandatory 72-hours reportorial period militates
against his right, or that of his beneficiary, to demand compliance with the
so-called residual obligations of the employer. On the contrary the evidence
adduced by complainant establishes that the deceased had proceeded to the
province.
x x x.
Given all the attending circumstances as confirmed by the documentary
evidence on record, we are convinced, as duly concluded by the Labor Arbiter

that the cause of the seafarers death cannot be traced to the burns or
injuries sustained while he was on board the vessel.
Indeed, the complainant has not established a causality between the injury
sustained on board the vessel, and the cause of death.
We assiduously perused the records and conclude that the complainant has
failed to prove that her husband, subsequent to his repatriation, had
experienced and/or manifested the symptoms of tetanus the source of which
could be ascribed to the 3rd degree burns he had suffered on board.
Moreover, the seafarers act of proceeding to the province without reporting to
the respondent agency must be deemed as a supervening event that
adversely limits his right or that of his beneficiaries to claim benefits under
the contract.
Where, as in this case, the cause of death has not been evidently shown to be
due to the injury suffered on board and during the term of the contract, no
liability can be adjudged against the employers for the subsequent death of
the seafarer.
In so ruling, we simply defer to the basic rule in evidence that each party
must prove his affirmative allegation. While technical rules are not followed
in the NLRC, this does not mean that rules on proving allegations are entirely
dispensed with. Bare allegations are not enough; these must be supported by
substantial evidence at the very least.
Accordingly, complainants unsubstantiated allegations that her husband
had manifested and complained of symptoms of tetanus, being wanting in
evidentiary support cannot outweigh and overcome the probative value of the
medical certificates, autopsy findings and medical reports indubitably
showing that the deceased had died of pneumonia.
And, while it may be conceded that pneumonia can be caused by or traced to
tetanus, as what the complainant has attempted to establish, such
conclusion may not be drawn in this case as to render the death
compensable, considering the attendance of the supervening event, and the
fact that no such reference to a possible infection has been made in any of
the medical reports that would link the injuries resulting from the burns, to
the actual cause of death.
x x x.17 [Underscoring supplied]
Aggrieved by the NLRC Resolution, respondent elevated the case to the
CA via a petition for certiorari under Rule 65 of the Rules of Court alleging
grave abuse of discretion on the part of the NLRC in dismissing her claim for
death benefits.
In its Decision, dated 31 May 2006, the CA set aside the questioned NLRC
Resolution and ordered petitioners to pay the claimed benefits of respondent,
the dispositive portion of the Decision reads:
WHEREFORE, the instant petition is GRANTED. The assailed NLRC
Resolution dated April 30, 20204 (sic) is SET ASIDE. The NLRC
decision
promulgated
on
October
20,
2003

is REINSTATED with MODIFICATION. Thus, private respondents

are hereby ordered to pay petitioner the claimed death benefits, child
allowances, and burial expenses in the total amount of
US$65,000.00 or its peso equivalent, to be computed at the time of
payment, plus ten percent (10%) of the aforementioned total
monetary award as attorneys fees.
SO ORDERED.
The CA was of the view that petitioners failed to negate the causal confluence
of the burn injury suffered by Zosimo while on board the vessel, the onset of
tetanus and the complication of pneumonia which was indicated as Zosimos
cause of death. It stressed that "strict rules of evidence, x x x, are not
applicable in claims for compensation and disability benefits." 18 The CA
emphasized that it was enough that the hypothesis on which the employees
claim was based was probable. Zosimos failure to report for post
employment medical examination at petitioners office within the mandatory
period of seventy two (72) hours from his return to the Philippines, as
required
by
the
Philippine
Overseas
Employment
Administration (POEA) Standard Employment Contract19 (SEC), should not be
automatically taken against him. The CA cited Wallem Maritime Services, Inc.
v. National Labor Relations Commission,20 which justified the exception from
the application of the 72-hour requirement, by showing that a seaman who
was terminally ill and in need of medical attention could not be expected to
immediately comply with the medical examination and thus given the right to
claim benefits due him.
Petitioners moved for reconsideration, but their motion was denied by the CA
in its November 14, 2006 Resolution.
Hence, this petition.
THE ISSUE
WHETHER OR NOT THE COURT OF APPEALS ERRED IN AWARDING
DEATH BENEFITS TO THE RESPONDENT.
Petitioners argument
In support of their position, petitioners assert that respondents declaration
that the death of Zosimo was compensable because the latter died due to
tetanus had no factual basis. Tetanus was never established, much less
existed, in the case. Based on the Autopsy Report21 submitted by respondent,
the cause of death was "Pneumonia with congestion of all visceral organs,"
not a burn injury or tetanus. Moreover, the death of Zosimo occurred
outside, and not during the term, of the seamans contract as the seafarer
signed-off and was disembarked for medical reasons pursuant to Section 18
(B) 1 of the POEA SEC.22 For said reason, it is not compensable.
Respondents contention
Respondent counters that the entitlement to the benefits by Zosimos family
should not be defeated by the fault of the people who failed to indicate in the
proper documents that Zosimo indeed died of tetanus. Zosimos death, on

July 31, 1996, was still within the contract period as he joined the M.V.
Apollo on September 7, 1995, for a 12-month employment contract.
The Courts Ruling
The petition is meritorious.
In petitions for review on certiorari, only questions of law may be raised, the
only exception being when the factual findings of the appellate court are
erroneous, absurd, speculative, conjectural, conflicting, or contrary to the
findings culled by the court of origin.23 Considering the conflicting findings of
the LA and the NLRC and those of the CA, the Court is constrained to resolve
the factual issues together with the legal ones.
The employment of seafarers, including claims for death benefits, is governed
by the contracts they sign every time they are hired or rehired, as long as the
stipulations therein are not contrary to law, morals, public order, or public
policy, they have the force of law between the parties.24
POEA Memorandum Circular No. 41, series of 1989, or the "Revised
Standard Employment Contract of All Filipino Seamen On Board OceanGoing Vessels," as amended by POEA Memorandum Circular No. 05, series of
1994,25was the applicable contract then between Zosimo and petitioners. It
provided for the minimum requirements prescribed by the government for the
Filipino seafarers overseas employment.
Significantly, Section C (4) (c) of the 1989 POEA SEC states:
SECTION C. COMPENSATION AND BENEFITS
xxx
4. The liabilities of the employer when the seaman suffers injury or illness
during the term of his contract are as follows:
xxx
c. The employer shall pay the seaman his basic wages from the time he
leaves the vessel for medical treatment. After discharge from the vessel the
seaman is entitled to one hundred percent (100%) of his basic wages until he
is declared fit to work or the degree of permanent disability has been
assessed by the company-designated physician but in no case shall this
period exceed one hundred-twenty (120) days. For this purpose, the
seaman shall submit himself to a postemployment medical examination
by the companydesignated physician within three working days upon
his return except when he is physically incapacitated to do so, in which
case a written notice to the agency within the same period is deemed as
compliance. Failure of the seaman to comply with the mandatory
reporting requirement shall result in his forfeiture of the right to claim
the above benefits. [Emphases and underscoring supplied]
From the records, it appears that Zosimo failed to comply with the
mandatory 72-hour post-employment medical examination deadline as
provided for in said Section C(4)(c) of the 1989 POEA SEC. It was only on
July 19, 1996, or nine days upon his arrival to the Philippines, that Zosimo
sought medical attention from FMC, petitioners designated physician.

The mandate of the aforementioned provision is to make the postemployment examination within three (3) working days from the seafarers
arrival/repatriation to the Philippines compulsory, except when the seafarer
is physically incapacitated to do so, before a claim for disability or death
benefits can validly prosper. The purpose of the 3-day mandatory reporting
requirement can easily be ascertained. Within 3 days from repatriation, it
would be fairly manageable for the physician to identify whether the disease
for which the seaman died was contracted during the term of his employment
or that his working conditions increased the risk of contracting the ailment.
In this case, the respondent did not adduce evidence to justify Zosimos noncompliance with the mandatory rule. Considering, however, that he had a
physical infirmity, the Court gives respondent the benefit of the doubt.
Nonetheless, the Court is of the considered view that respondent likewise
failed to adduce substantial evidence showing that the pneumonia, which her
husband contracted, was caused by tetanus as a result of the burn injury.
The rule is that, in labor cases, substantial evidence or such relevant
evidence as a reasonable mind might accept as sufficient to support a
conclusion is required. The oft-repeated rule is that whoever claims
entitlement to the benefits provided by law should establish his or her right
thereto by substantial evidence. Substantial evidence is more than a mere
scintilla.26 Any decision based on unsubstantiated allegations cannot stand
as it will offend due process.27
In arguing for the compensability of Zosimo's death, respondent claims that
the burn injury suffered by him on board M.V. Apollo brought about the
tetanus infection which eventually led to pneumonia causing his death.
The Court, however, finds difficulty in accepting this.
The injury sustained by Zosimo on board the vessel was undeniably a burn
injury defined as "injuries of skin or other tissue caused by thermal,
radiation, chemical, or electrical contact."28 On the other hand, the various
pieces of documentary evidence 29 categorically and solely establish that
Zosimo died of pneumonia, "a breathing (respiratory) condition in which
there is an infection of the lungs."30 Respondent, however, failed to adduce
even a speck of evidence to establish any reasonable connection between the
burn injury and pneumonia. Logically, the Court cannot and should not
jump into the unwarranted conclusion that pneumonia was related to, or
was brought about by his burn injury.
Respondent attempted to impress upon the Court that Zosimo suffered
tetanus, an acute poisoning from a neurotoxin produced by Clostridium
tetani,31 which was a complication of his burn injury that eventually led to
pneumonia. There is, however, absolutely no evidence in the records of this
case to substantiate her position, except her bare allegation. Respondent
could not present any medical report, medical opinion, or medical certificate
that, at the very least, contained the word tetanus to support her claim. Even
her husbands own physician did not indicate such probable connection.
Thus, the Court agrees with the NLRC when it wrote:
And, while the seafarer may have undergone medical consultation, the
evidence on record unequivocal[b]ly shows that the injury that caused his

repatriation had healed, and there is no showing, nor can any reasonable
inference be made, that the deceased had complained about any
symptoms of tetanus. Considering that the July 13, 1996 medical
certificate was issued by the deceaseds physician, and not by the
respondents designated physician, the same may not be impugned as
coming from a polluted source, and accordingly, the declarations therein are
binding upon the seafarer and his beneficiaries. Hence, the finding that the
wound is "not infected" must be given full weight and credence.
Additional evidence on record likewise establish the fact that when the
seafarer reported to the respondent agency on July 19, 1996 and was
referred to the latters designated physician, no proof of infection was
elicited from the medical examination. The medical report issued by the
company-designated physician isconsistent with that provided by the
seafarers physician. In like manner, there is no showing that the seafarer
had complained or manifested symptoms of tetanus. The fact that
said medical report sustains the independent doctors finding that there
is no infection on the wound bolsters the respondents assertion that the
injury did not cause, nor did it contribute to the cause of death.1wphi1
Given all the attending circumstances as confirmed by the documentary
evidence on record, we are convinced, as duly concluded by the Labor Arbiter
that the cause of the seafarer's death cannot be traced to the burns or
injuries sustained while he was on board the vessel. 32 [Emphases supplied]
While the Court adheres to the principle of liberality in favor of the seafarer
in construing the POEA-SEC, it cannot allow claims for compensation based
on conjectures and probabilities. When there is no evidence on record to
permit compensability, the Court has no choice but to deny the claim, lest
injustice is caused to the employer.33
The Court emphasizes that Its commitment to the cause of labor does not
prevent it from finding for the employer when it is right and just. The Court
is always mindful that justice is in every case for the deserving, to be
dispensed with in the light of established facts, the applicable law, and
existing jurisprudence. 34
WHEREFORE, the petition is GRANTED. The May 31, 2006 Decision and the
November 14, 2006 Resolution of the Court of Appeals, in CA-G.R. SP No.
85350, are hereby REVERSED and SET ASIDE. The January 31,2000
Decision of the Labor Arbiter is REINSTATED.
SO ORDERED.

G.R. No. 90204 May 11, 1990

MANUEL BELARMINO, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT
SERVICE INSURANCE SYSTEM,respondents.
GRIO-AQUINO, J.:
This seven-year-old case involves a claim for benefits for the death of a lady
school teacher which the public respondents disallowed on the ground that
the cause of death was not work-connected.
Before her death on February 19, 1982, petitioner's wife, Oania Belarmino,
was a classroom teacher of the Department of Education, Culture and Sports
assigned at the Buracan Elementary School in Dimasalang, Masbate (p.
13, Rollo). She had been a classroom teacher since October 18, 1971, or for
eleven (11) years. Her husband, the petitioner, is also a public school
teacher.

We agree with the decision of the system, hence we dismiss

this appeal. Postpartum septicemia is an acute infectious
disease of the puerperium resulting from the entrance into
the blood of bacteria usually streptococci and their toxins
which cause dissolution of the blood, degenerative changes
in the organs and the symptoms of intoxication. The cause of
this condition in the instant case was the infected vaginal
lacerations resulting from the decedent's delivery of her child
which took place at home. The alleged accident in school
could not have been the cause of septicemia, which in this
case is clearly caused by factors not inherent in employment
or in the working conditions of the deceased. (pp. 1415, Rollo.)
Hence, this petition for review.
After a careful consideration of the petition and the annexes thereof, as well
as the comments of the public respondents, we are persuaded that the public
respondents' peremptory denial of the petitioner's claim constitutes a grave
abuse of discretion.

On January 14, 1982, at nine o'clock in the morning, while performing her
duties as a classroom teacher, Mrs. Belarmino who was in her 8th month of
pregnancy, accidentally slipped and fell on the classroom floor. Moments
later, she complained of abdominal pain and stomach cramps. For several
days, she continued to suffer from recurrent abdominal pain and a feeling of
heaviness in her stomach, but, heedless of the advice of her female coteachers to take a leave of absence, she continued to report to the school
because there was much work to do. On January 25, 1982, eleven (11) days
after her accident, she went into labor and prematurely delivered a baby girl
at home (p. 8, Rollo).

Rule III, Section 1 of the Amended Rules on Employees' Compensation

enumerates the grounds for compensability of injury resulting in disability or
death of an employee, as follows:

Her abdominal pains persisted even after the delivery, accompanied by high
fever and headache. She was brought to the Alino Hospital in Dimasalang,
Masbate on February 11, 1982. Dr. Alfonso Alino found that she was
suffering from septicemia post partum due to infected lacerations of the
vagina. She was discharged from the hospital after five (5) days on February
16, 1982, apparently recovered but she died three (3) days later. The cause of
death was septicemia post partum. She was 33 years old, survived by her
husband and four (4) children, the oldest of whom was 11 years old and the
youngest, her newborn infant (p. 9, Rollo).

(2) The employee must have been performing

his official functions; and

On April 21, 1983, a claim for death benefits was filed by her husband. On
February 14, 1984, it was denied by the Government Service Insurance
System (GSIS) which held that 'septicemia post partum the cause of death, is
not an occupational disease, and neither was there any showing that
aforesaid ailment was contracted by reason of her employment. . . . The
alleged accident mentioned could not have precipitated the death of the wife
but rather the result of the infection of her lacerated wounds as a result of
her delivery at home" (p. 14 Rollo).
On appeal to the Employees Compensation Commission, the latter issued
Resolution No. 3913 dated July 8, 1988 holding:

Sec. 1. Grounds (a) For the injury and the resulting

disability or death to be compensable, the injury must be the
result of an employment accident satisfying all of the
following conditions:
(1) The employee must have been injured at
the place where his work requires him to be;

(3) If the injury is sustained elsewhere, the

employee must have been executing an
order for the employer.
(b) For the sickness and the resulting disability or death to
be compensable, the sickness must be the result of an
occupational disease listed under Annex "A" of these Rules
with the conditions set therein satisfied; otherwise, proof
must be shown that the risk of contracting the disease is
increased by the working conditions.
(c) Only injury or sickness that occurred on or after January
1, 1975 and the resulting disability or death shall be
compensable under these Rules.
The illness, septicemia post partum which resulted in the death of Oania
Belarmino, is admittedly not listed as an occupational disease in her
particular line of work as a classroom teacher. However, as pointed out in the
petition, her death from that ailment is compensable because an employment

accident and the conditions of her employment contributed to its

development. The condition of the classroom floor caused Mrs. Belarmino to
slip and fall and suffer injury as a result. The fall precipitated the onset of
recurrent abdominal pains which culminated in the premature termination of
her pregnancy with tragic consequences to her. Her fall on the classroom
floor brought about her premature delivery which caused the development of
post partum septicemia which resulted in death. Her fall therefore was the
proximate or responsible cause that set in motion an unbroken chain of
events, leading to her demise.
. . . what is termed in American cases the proximate cause,
not implying however, as might be inferred from the word
itself, the nearest in point of time or relation, but rather, [is]
the efficient cause, which may be the most remote of an
operative chain. It must be that which sets the others in
motion and is to be distinguished from a mere preexisting
condition upon which the effective cause operates, and must
have been adequate to produce the resultant damage without
the intervention of an independent cause. (Atlantic Gulf vs.
Insular Government, 10 Phil. 166,171.)
The proximate legal cause is that acting first and producing
the injury, either immediately or by setting other events in
motion, all constituting a natural and continuous chain of
events, each having a close causal connection with its
immediate predecessor the final event in the chain
immediately effecting the injury as a natural and probable
result of the cause which first acted, under such
circumstances that the person responsible for the first event
should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or
default that an injury to some person might probably result
therefrom. (Bataclan v. Medina, 102 Phil. 181.)
Thus in Enriquez v. WCC, 93 SCRA 366, 372, this Court ruled:
. . . Verily, the right to compensation extends to disability
due to disease supervening upon and proximately and
naturally resulting from a compensable injury (82 Am. Jur.
132). Where the primary injury is shown to have arisen in
the course of employment, every natural consequence that
flows from the injury likewise arises out of the employment,
unless it is the result of an independent intervening cause
attributable to complainants own negligence or misconduct (
I Larson Workmen's Compensation Law 3-279 [1972]).
Simply stated, all the medical consequences and sequels
that flow from the primary injury are compensable. (Ibid.)
Mrs. Belarmino's fall was the primary injury that arose in the course of her
employment as a classroom teacher, hence, all the medical consequences
flowing from it: her recurrent abdominal pains, the premature delivery of her
baby, her septicemia post partum and death, are compensable.

There is no merit in the public respondents' argument that the cause of the
decedent's post partum septicemia "was the infected vaginal lacerations
resulting from the decedent's delivery of her child at home" for the incident in
school could not have caused septicemia post partum, . . . the necessary
precautions to avoid infection during or after labor were (not) taken" (p.
29, Rollo).
The argument is unconvincing. It overlooks the fact that septicemia post
partum is a disease of childbirth, and premature childbirth would not have
occurred if she did not accidentally fall in the classroom.
It is true that if she had delivered her baby under sterile conditions in a
hospital operating room instead of in the unsterile environment of her
humble home, and if she had been attended by specially trained doctors and
nurses, she probably would not have suffered lacerations of the vagina and
she probably would not have contracted the fatal infection. Furthermore, if
she had remained longer than five (5) days in the hospital to complete the
treatment of the infection, she probably would not have died. But who is to
blame for her inability to afford a hospital delivery and the services of trained
doctors and nurses? The court may take judicial notice of the meager salaries
that the Government pays its public school teachers. Forced to live on the
margin of poverty, they are unable to afford expensive hospital care, nor the
services of trained doctors and nurses when they or members of their
families are in. Penury compelled the deceased to scrimp by delivering her
baby at home instead of in a hospital.
The Government is not entirely blameless for her death for it is not entirely
blameless for her poverty. Government has yet to perform its declared policy
"to free the people from poverty, provide adequate social services, extend to
them a decent standard of living, and improve the quality of life for all (Sec.
7, Art. II, 1973 Constitution and Sec. 9, Art. II, 1987 Constitution). Social
justice for the lowly and underpaid public school teachers will only be an
empty shibboleth until Government adopts measures to ameliorate their
economic condition and provides them with adequate medical care or the
means to afford it. "Compassion for the poor is an imperative of every
humane society" (PLDT v. Bucay and NLRC, 164 SCRA 671, 673). By their
denial of the petitioner's claim for benefits arising from the death of his wife,
the public respondents ignored this imperative of Government, and thereby
committed a grave abuse of discretion.
WHEREFORE, the petition for certiorari is granted. The respondents
Employees Compensation Commission and the Government Service
Insurance System are ordered to pay death benefits to the petitioner and/or
the dependents of the late Oania Belarmino, with legal rate of interest from
the filing of the claim until it is fully paid, plus attorney's fees equivalent to
ten (10%) percent of the award, and costs of suit.
SO ORDERED.

G.R. No. L-58445 April 27, 1989

ZAIDA G. RARO, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT
SERVICE INSURANCE SYSTEM (Bureau of Mines and GeoSciences), respondents.
GUTIERREZ, JR., J.:
Jurisprudence on the compensability of cancer ailments has of late become a
source of confusion among the claimants and the government agencies
enforcing the employees' compensation law. The strongly lingering influence
of the principles of 94 presumption of compensability" and "aggravation"
found in the defunct Workmen's Compensation Act but expressly discarded
under the present compensation scheme has led to conflict and
inconsistency in employees' compensation decisions.
The problem is attributable to the inherent difficulty in applying the new
principle of "proof of increased risk." There are two approaches to a solution
in cases where it cannot be proved that the risk of contracting an illness not
listed as an occupational disease was increased by the claimant's working
conditions. The one espoused by the petitioner insists that if a claimant
cannot prove the necessary work connection because the causes of the
disease are still unknown, it must be presumed that working conditions
increased the risk of contracting the ailment. On the other hand, the
respondents state that if there is no proof of the required work connection,
the disease is not compensable because the law says so.
The petitioner states that she was in perfect health when employed as a clerk
by the Bureau of Mines and Geo-Sciences at its Daet, Camarines Norte
regional office on March 17, 1975. About four years later, she began suffering
from severe and recurrent headaches coupled with blurring of vision. Forced
to take sick leaves every now and then, she sought medical treatment in
Manila. She was then a Mining Recorder in the Bureau.
The petitioner was diagnosed at the Makati Medical Center to be suffering
from brain tumor. By that time, her memory, sense of time, vision, and
reasoning power had been lost.
A claim for disability benefits filed by her husband with the Government
Service Insurance System (GSIS) was denied. A motion for reconsideration
was similarly denied. An appeal to the Employees' Compensation
Commission resulted in the Commission's affirming the GSIS decision.
The following issues are raised in this petition:
1. Whether brain tumor which causes are unknown but
contracted during employment is compensable under the
present compensation laws.
2. Whether the presumption of compensability is absolutely
inapplicable under the present compensation laws when a
disease is not listed as occupational disease. (p. 17, Rollo)

The key argument of the petitioner is based on the fact that medical science
cannot, as yet, positively identify the causes of various types of cancer. It is a
disease that strikes people in general. The nature of a person's employment
appears to have no relevance. Cancer can strike a lowly paid laborer or a
highly paid executive or one who works on land, in water, or in the bowels of
the earth. It makes the difference whether the victim is employed or
unemployed, a white collar employee or a blue collar worker, a housekeeper,
an urban dweller or a resident of a rural area.
It is not also correct to say that all cancers are not compensable. The list of
occupational diseases prepared by the Commission includes some cancers as
compensable, namely
Occupational Diseases Nature of Employment
xxx xxx xxx xxx
16. Cancer of stomach and other Woodworkers, wood
products lymphatic and blood forming vessels; industry
carpenters, nasal cavity and sinuses and employees in pulp
and paper mills and plywood mills.
17. Cancer of the lungs, liver Vinyl chloride workers, and
brain plastic workers.
(Annex A, Amended Rules on Employees Compensation)
The petitioner questions the above listing. We see no arbitrariness in the
Commission's allowing vinyl chloride workers or plastic workers to be
compensated for brain cancer. There are certain cancers which are
reasonably considered as strongly induced by specific causes. Heavy doses of
radiation as in Chernobyl, USSR, cigarette smoke over a long period for lung
cancer, certain chemicals for specific cancers, and asbestos dust, among
others, are generally accepted as increasing the risks of contracting specific
cancers. What the law requires for others is proof.
The first thing that stands in the way of the petition is the law itself.
Presidential Decree No. 422, as amended, the Labor Code of the Philippines
defines "sickness" as follows:
ART. 167. Definition of Terms. As used in this Title unless
the context indicates otherwise:
xxx xxx xxx
(1) Sickness means any illness definitely accepted as an
occupational disease listed by the Commission, or any
illness caused by employment subject to proof by the
employee that the risk of contracting the same is by working
conditions. For this purpose, the Co on is empowered to
determine and approve occupational and work- related
illnesses that may be considered compensable sable based
on hazards of employment. (PD 1368, May 1, 1978).

Section 1 (b), Rule III of the Amended Rules on Employees Compensation

clearly defines who are entitled. It provides:
SECTION 1.
xxx xxx xxx
(b) For the sickness and the resulting disability or death to
be compensable, the sickness must be the result of an
occupational disease under Annex A of these rules with the
conditions set therein satisfied; otherwise, proof must be
shown that the risk of contracting the disease is increase by
the working conditions. (Emphasis supplied)

are paid by employers to a trust fund and claims are paid from the trust fund
to those who can prove entitlement.
In Sarmiento v. Employees' Compensation Commission (supra), we affirmed
the validity of the new law by explaining the present system as follows:
We cannot give serious consideration to the petitioner's
attack against the constitutionality of the new law on
employee's compensation. It must be noted that the
petitioner filed his claim under the provisions of this same
law. It was only when his claim was rejected that he now
questions the constitutionality of this law on appeal by
certiorari.

The law, as it now stands requires the claimant to prove a positive thing the
illness was caused by employment and the risk of contracting the disease is
increased by the working conditions. To say that since the proof is not
available, therefore, the trust fund has the obligation to pay is contrary to the
legal requirement that proof must be adduced. The existence of otherwise
non-existent proof cannot be presumed .

The Court has recognized the validity of the present law and
has granted and rejected claims according to its provisions.
We find in it no infringement of the worker's constitutional
rights.

In Navalta v. Government Service Insurance System (G.R. No. 46684, April 27,
1988) this Court recognized the fact that cancer is a disease of still unknown
origin which strikes; people in all walks of life, employed or unemployed.
Unless it be shown that a particular form of cancer is caused by specific
working conditions (e. g. chemical fumes, nuclear radiation, asbestos dust,
etc.) we cannot conclude that it was the employment which increased the
risk of contracting the disease .

The new law establishes a state insurance fund built up by

the contributions of employers based on the salaries of their
employees. The injured worker does not have to litigate his
right to compensation. No employer opposes his claim There
is no notice of injury nor requirement of controversion. The
sick worker simply files a claim with a new neutral
Employees'
Compensation
Commission
which
then
determines on the basis of the employee's supporting papers
and medical evidence whether or not compensation may be
paid. The payment of benefits is more prompt. The cost of
administration is low. The amount of death benefits has also
been doubled.

To understand why the "Presumption of compensability" together with the

host of decisions interpreting the "arising out of and in the course of
employment" provision of the defunct law has been stricken from the present
law, one has to go into the distinctions between the old workmen's
compensation law and the present scheme.
On January 1, 1975, the Workmen's Compensation Act was replaced by a
novel scheme under the new Labor Code. The new law discarded, among
others, the concepts of "presumption of compensability" and "aggravation"
and substituted a system based on social security principles. The present
system is also administered by social insurance agencies the Government
Service Insurance System and Social Security System under the
Employees' Compensation Commission. The intent was to restore a sensible
equilibrium between the employer's obligation to pay workmen's
compensation and the employee's right to receive reparation for workconnected death or disability. (Sulit v. Employees' Compensation
Commission, 98 SCRA 483 [1980]; Armena v. Employees' Compensation
Commission, 122 SCRA 851 [1983]; Erese v. Employees' Compensation
Commission, 138 SCRA 192 [1985]; De Jesus v. Employees' Compensation
Commission, 142 SCRA 92 [1986]; Sarmiento v. Employees' Compensation
Commission, et al., GR No. 65680, May 11, 1988).
Instead of an adversarial contest by the worker or his family against the
employer, we now have a social insurance scheme where regular premiums

xxx xxx xxx

On the other hand, the employer's duty is only to pay the

regular monthly premiums to the scheme. It does not look
for insurance companies to meet sudden demands for
compensation payments or set up its own fund to meet these
contingencies. It does not have to defend itself from
spuriously documented or long past claims.
The new law applies the social security principle in the
handling of workmen's compensation. The Commission
administers and settles claims from a fired under its
exclusive control. The employer does not intervene in the
compensation process and it has no control, as in the past,
over payment of benefits. The open ended Table of
Occupational Diseases requires no proof of causation. A
covered claimant suffering from an occupational disease is
automatically paid benefits.
Since there is no employer opposing or fighting a claim for
compensation, the rules on presumption of compensability
and controversion cease to have importance. The lopsided

situation of an employer versus one employee, which called

for equalization through the various rules and concepts
favoring the claimant, is now absent.
xxx xxx xxx
The petitioner's challenge is really against the desirability of
the new law. There is no serious attempt to assail it on
constitutional grounds.
The wisdom of the present scheme of workmen's
compensation is a matter that should be addressed to the
President and Congress, not to this Court. Whether or not
the former workmen's compensation program with its
presumptions, controversions, adversarial procedures, and
levels of payment is preferable to the present scheme must
be decided by the political departments. The present law was
enacted in the belief that it better complies with the mandate
on social justice and is more advantageous to the greater
number of working men and women. Until Congress and the
President decide to improve or amend the law, our duty is to
apply it. (at pp. 4, 5, and 6)
The non-adversarial nature of employees' compensation proceedings is
crucial to an understanding of the present scheme. There is a widespread
misconception that the poor employee is still arrayed against the might and
power of his rich corporate employer. Hence, he must be given all kinds of
favorable presumptions. This is fallacious. It is now the trust fund and not
the employer which suffers if benefits are paid to claimants who are not
entitled under the law. The employer joins its employees in trying to have
their claims approved. The employer is spared the problem of proving
a negative proposition that the disease was not caused by employment. It is a
government institution which protects the stability and integrity of the State
Insurance Fund against the payment of non-compensable claims. The
employee, this time assisted by his employer, is required to prove
a positive proposition, that the risk of contracting the is increased by working
conditions.
The social insurance aspect of the present law is the other important feature
which distinguishes it from the old and familiar system.
Employees' compensation is based on social security principles. All covered
employers throughout the country are required by law to contribute fixed and
regular premiums or contributions to a trust fund for their employees.
Benefits are paid from this trust fund. At the time the amount of
contributions was being fixed, actuarial studies were undertaken. The
actuarially determined number of workers who would probably file claims
within any given year is important in insuring the stability of the said fund
and making certain that the system can pay benefits when due to all who are
entitled and in the increased amounts fixed by law.
We have no actuarial expertise in this Court. If diseases not intended by the
law to be compensated are inadvertently or recklessly included, the integrity
of the State Insurance Fund is endangered. Compassion for the victims of

diseases not covered by the law ignores the need to show a greater concern
for the trust fund to winch the tens of millions of workers and their families
look for compensation whenever covered accidents, salary and deaths occur.
As earlier stated, if increased contributions or premiums must be paid in
order to give benefits to those who are now excluded, it is Congress which
should amend the law after proper actuarial studies. This Court cannot
engage in judicial legislation on such a complex subject with such far
reaching implications.
We trust that the public respondents and the Social Security System are
continually evaluating the actuarial soundness of the trust funds they
administer. In this way, more types of cancers and other excluded diseases
may be included in the list of covered occupational diseases. Or legislation
may be recommended to Congress either increasing the contribution rates of
employers, increasing benefit payments, or making it easier to prove
entitlement. We regret that these are beyond the powers of this Court to
accomplish.
For the guidance of the administrative agencies and practising lawyers
concerned, this decision expressly supersedes the decisions in Panotes v.
Employees' Compensation Commission [128 SCRA 473 (1984)]; Mercado v.
Employees' Compensation Commission [127 SCRA 664 (1984)]; Ovenson v.
Employees' Compensation Commission [156 SCRA 21 (1987)]; Nemaria v.
Employees' Compensation Commission [155 SCRA 166 (1987)] and other
cases with conclusions different from those stated above.
WHEREFORE, the petition is hereby DISMISSED The questioned decision of
the public respondents is AFFIRMED.
SO ORDERED.

G.R. No. 94167 January 21, 1991

MABUHAY SHIPPING SERVICES, INC. AND SKIPPERS MARITIME CO.,
LTD., petitioners,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION)
AND CECILIA SENTINA, respondents.
Victorino Alba for petitioners.
Rodolfo B. Dizon for private respondent.
GANCAYCO, J.:p
The employer is exempted from liability for burial expenses for a seaman who
commits suicide. How about in a case of one who ran amuck or who in a
state of intoxication provoked a fight as a result of which he was killed? Is
the employer similarly exempt from liability? This is the issue in this case.
Romulo Sentina was hired as a 4th Engineer by petitioner Mabuhay Shipping
Services, Inc. (MSSI) for and in behalf of co-petitioner, Skippers Maritime Co.,
Ltd. to work aboard the M/V Harmony I for a period of one year. He reported
for duty aboard said vessel on July 13, 1987.
On January 16, 1988 at about 3 p.m., while the vessel was docked alongside
Drapetona Pier, Piraeus, Greece, Sentina arrived aboard the ship from shore
leave visibly drunk. He went to the messhall and took a fire axe and
challenged those eating therein. He was pacified by his shipmates who led
him to his cabin. However, later he went out of his cabin and proceeded to
the messhall. He became violent. He smashed and threw a cup towards the
head of an oiler Emmanuel Ero, who was then eating. Ero touched his head
and noticed blood. This infuriated Ero which led to a fight between the two.
After the shipmates broke the fight, Sentina was taken to the hospital where
he passed away on January 17, 1988. 1 Ero was arrested by the Greek
authorities and was jailed in Piraeus.
On October 26, 1988, private respondents filed a complaint against
petitioners with the Philippine Overseas Employment Administration (POEA)
for payment of death benefits, burial expenses, unpaid salaries on board and
overtime pay with damages docketed as POEA Case No. (M) 88-10-896. After
submission of the answer and position papers of the parties a decision was
rendered by the POEA on July 11, 1989, the dispositive part of which reads
as follows:
WHEREFORE, in view of all the foregoing, judgment is
hereby rendered ordering Mabuhay Shipping Services, Inc.
and Skippers Maritime Co., Ltd. to pay complainant Cecilia
S. Sentina the sum of TWO HUNDRED THIRTY THOUSAND
PESOS (P230,000.00) representing the deceased's death
benefit and burial compensation, the sum of THREE
HUNDRED FIFTY US DOLLARS (US$350.00) or its peso
equivalent at the time of payment representing unpaid

shipboard pay and fixed overtime pay plus ten percent (10%)
of the total judgment award by way of and as attorney's fees.
All other claims are ordered dismissed
SO ORDERED. 2
A motion for reconsideration and/or appeal was filed by petitioners which the
respondent First Division of the National Labor Relations Commission (NLRC)
disposed of in a resolution dated March 31, 1990 dismissing the appeal and
affirming the appealed decision. 3
A motion for reconsideration thereof filed by petitioners was denied by said
public respondent in a resolution dated June 29, 1990.
Hence, the herein petition for certiorari wherein the following grounds are
invoked:
The Hon. NLRC, gravely abused its discretion in holding that
"The payment of Death Compensation Benefit only requires
that the seaman dies during the term of the contract, and no
other."
That the Hon. NLRC, gravely abused its discretion in holding
that even if the subject seaman's death resulted from the
fight he himself created, such nonetheless does not
constitute a "deliberate or wilfull act on his own life."
That the Hon. NLRC, gravely abused its discretion in
holding, that the death of the late 4/Engr Romulo Sentina is
compensable. 4
The petition is impressed with merit.
Part II, Section C, No. 6 of the POEA Standard Format for Filipino seamen
employed in ocean going vessels states that
No compensation shall be payable in respect of any injury,
incapacity, disability or death resulting from a deliberate or
willful act on his own life by the seaman, provided
however that the employer can prove that such injury,
incapacity, disability or death is directly attributable to the
seamen.
The same provision of the standard format also provides
In case of death of the seaman during the term of his
contract, the employer shall pay his beneficiaries the amount
of
xxx xxx xxx
b. P210,000.00 for other officers including radio operators
and master electrician. (Memo Circular No. 5 effective March
1, 1986)
In interpreting the aforequoted provision in its decision, the POEA held that
payment of death compensation benefits only requires that the seaman

should die during the term of the contract and no other. It further held that
the saving provision relied upon by petitioners refers only to suicide where
the seaman deliberately and intentionally took his own life. 5
Public respondent in affirming the said POEA decision made the following
disquisition
It is not difficult for us to understand the intent of the
aforequoted "Part II, Section C, No. 6 of the POEA Standard
Format" that to avoid death compensation, two conditions
must be met:
a) the subject death much have resulted "from a deliberate or
willful act on his own life by the seaman;" and
b) such death "directly attributable to the seaman" must
have been proven by the "employer."
Thus, even if arguendo, the appellants may successfully
prove that the subject seaman's death resulted from the fight
he himself created, such, nonetheless does not constitute a
"deliberate or willful act on his own life." On this ground
alone, the instant appeal would already fail. 6
The mere death of the seaman during the term of his employment does not
automatically give rise to compensation. The circumstances which led to the
death as well as the provisions of the contract, and the right and obligation of
the employer and seaman must be taken into consideration, in consonance
with the due process and equal protection clauses of the Constitution. There
are limitations to the liability to pay death benefits.
When the death of the seaman resulted from a deliberate or willful act on his
own life, and it is directly attributable to the seaman, such death is not
compensable. No doubt a case of suicide is covered by this provision.
By the same token, when as in this case the seaman, in a state of
intoxication, ran amuck, or committed an unlawful aggression against
another, inflicting injury on the latter, so that in his own defense the latter
fought back and in the process killed the seaman, the circumstances of the
death of the seaman could be categorized as a deliberate and willful act on
his own life directly attributable to him. First he challenged everyone to a
fight with an axe. Thereafter, he returned to the messhall picked up and
broke a cup and hurled it at an oiler Ero who suffered injury. Thus provoked,
the oiler fought back The death of seaman Sentina is attributable to his
unlawful aggression and thus is not compensable.
Even under Article 172 of the Labor Code, the compensation for workers
covered by the Employees Compensation and State Insurance Fund are
subject to the limitations on liability.
Art. 172. Limitations of liability. The State Insurance Fund
shall be liable for the compensation to the employee or his
dependents except when the disability or death was
occasioned by the employee's intoxication, willful intent to

injure or kill himself or another, notorious negligence, or

otherwise provided under this Title.
Private respondent pointed out that petitioner MSSI endorsed the claim for
compensation of private respondents. Said petitioner admits this fact but
asserts that it was not favorably acted upon by its principal, petitioner
Skippers Maritime Co., Inc. because of the circumstances that led to the
death of Sentina.
WHEREFORE, the petition is GRANTED. The questioned decision of the
POEA dated July 11, 1989 and the resolutions of public respondent dated
May 31, 1990 and June 29, 1990 affirming the same are hereby set aside
and another judgment is hereby rendered dismissing the complaint.
SO ORDERED.

G.R. No. 86994 June 30, 1993

JAIME LOOT, petitioner,
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM (Development Bank of the
Philippines), respondents.
The Government Corporate Counsel for respondent GSIS.
ROMERO, J.:
Petitioner, a lawyer, retired at age sixty-five (65) as Special Assistant in the
Development Bank of the Philippines (DBP) on September 27, 1980. He
started serving the government in 1939 as a clerk in the Bureau of Health
and had a short stint as a military officer from 1941 to 1947, after which, he
started working as a stenographer at the DBP.
Sometime in 1969, when he was branch manager of the DBP in Puerto
Princesa, he began complaining of headache and chest pain. He consulted
physicians at the DBP but he was referred to the St. Luke's Hospital where
he was disposed as suffering from hypertensive cardiovascular disease.
One year after his retirement in 1980, petitioner filed with the Government
Service Insurance System (GSIS) a claim for compensation benefits under
Presidential Decree No. 626, 1 as amended. Attached to his claim was a
certification from his attending physician at the United Doctors Medical
Center, Dr. Antonio F. Guytingco, stating that petitioner was suffering from
"arteriosclerotic hypertensive cardiovascular disease" and "left ventricular
hypertrophy by voltage criteria" and that his degree of disability was
"permanent total." 2
Evaluating petitioner's medical records, the GSIS considered him to have
only partial permanent disability (PPD), and awarded him medical benefits
from September 1980 to March 1982 or for nineteen (19) months. Petitioner
requested a reconsideration of the GSIS' evaluation which was, however,
denied on the ground that, based on the Implementing Rules of Employees
Compensation Program, the degree of his disability at the time of his
separation from government service fell under the category of PPD only, and
that any sickness, injury or death which might arise after retirement could
not be considered work-related within the contemplation of law.
Still dissatisfied with the GSIS' explanation, petitioner persistently wrote
letters claiming additional benefits, attaching thereto medical certificates
issued by his attending physician. The GSIS re-evaluated his case but found
no reason to alter or even amend its denial of petitioner's claims. The
November 11, 1987 reply of Dr. Orlando C. Misa, Vice-President and Medical
Director, Medical Services Center of the GSIS, reads in part:
xxx xxx xxx
We would like to reiterate our previous stand of denial on
your request to convert your approved claim illness or
Arteriosclerotic Heart Disease with Left Ventricular

Hypertrophy and its resulting disability at the time you were

separated or retired from the service from Permanent Partial
Disability to Permanent Total Disability. We agree with Dr. A.
Guytinqco of UDMC that your approved claim illness is
irreversible and incurable hence considered permanent but we
believe that the same is not a total disability.
Probably, Dr. A. Guytingco is not aware of the System's
(GSIS) and Commission's (ECC) criteria and basis of
classifying the degree of disability of a particular illness or
injury. Your disability may be likened to a person with an
amputated arm or leg which you may view as permanent
total but under our criteria and basis, it falls only under
Permanent Partial (Permanent loss of an arm or leg but
partial considering that the loss is only one arm or one leg as
the case may be). The reason why you were barred from
being employed or engaging in any gainful pursuit was
probably due to your age since you reached the compulsory
age of 65 years old when you retired from the service.
Considering your mental capabilities as evidenced by your
letters to the System, we think you can still engage in a selfemployed pursuit since your profession does not fall under
laborer. Considering also that your approved claim illness
did not result in a Neurologic deficit at the time your retired
from the service, there is no deterrent for you to engage into
a blue collar job.
The evaluation of a degree of disability is a medical
specialization and should be done by knowledgeable
physician trained on disability evaluation. If there is
specialist in the different lines in medicine, the physicians
involved in the field of evaluating the degree of disability can
also be called a specialist on such field. 3 (Emphasis
supplied.)
Hence, petitioner elevated his case to the Employees Compensation
Commission (ECC).
In a decision which was unanimously approved by the ECC on September
21, 1988 under Resolution No. 3986, the denial of petitioner's claims was
affirmed. The ECC held:
We have conducted a careful review of the case, including
the additional evidences submitted. All the foregoing
circumstances considered, appellant's claim does not merit a
PTD award. Based on the ECC schedule of Compensation, it
states, "that patients with organic heart disease, whose
ordinary physical activity is slightly, limited, shall be
awarded 25% NSD." Appellant's arteriosclerotic heart disease
with left Ventricular Hypotrophy falls under PPD only, and
does not meet the criteria for a PTD. Moreover, appellant was
already awarded the maximum benefits commensurate to

the degree of his disability at the time he retired from

government service. 4
Capitalizing on the concurrence of Dr. Misa of the GSIS with the findings of
his attending physician that his ailment is incurable, irreversible and
progressive, petitioner filed the instant petition raising these issues: "(1) Is
the degree of Petitioner's disease, Arteriosclerotic Heart Disease with Left
Ventricle Hypertrophy, a permanent total disability as interpreted by law? (2)
Alternatively, assuming arguendo that Petitioner's disease is permanent
partial disability only, is Petitioner entitled to the full benefit of 50
months provided by law for PPD?"
In view of the GSIS' stand that the law applicable in petitioner's case is the
Workmen's Compensation Law or Act No. 3428, as amended, and not
Presidential Decree No. 626, as amended, we shall first determine said issue.
Art. 206 of the said Presidential Decree specifically provides that it shall
apply "only to injury, sickness, disability or death occurring on or after
January 1, 1975." 5 The records indisputably show that petitioner became ill
as early as 1969. Workmen's Compensation cases are governed by the law in
force at the time the claimant contracted his illness. 6Therefore, petitioner's
case is clearly excluded from the application of P.D. No. 626 and he can
invoke the doctrine of compensability under the Workmen's Compensation
Act. 7
Although it appears that the GSIS granted the petitioner's claim under P.D.
No. 626 as shown by the fact that its counsel contends herein that the GSIS
should be refunded by the DBP with whatever amount of the claim it had
paid to petitioner because liability under the Workmen's Compensation Law
is chargeable to the employer, 8 it is not too late in the day to correct such
erroneous application of the law.
Permanent total disability or "total and permanent disability" under Sec. 15
of the Workmen's Compensation Law means "disablement of an employee to
earn wages in the same kind of work, or work of a similar nature that (s)he
was trained for, or accustomed to perform, or any kind of work which a
person of her (his) mentality and attainment could do." 9 The Court further
explained in the Gonzaga case that such disability "does not mean an
absolute
helplessness
but rather an incapacity to perform gainful work which is expected to be
permanent . . . . Total disability does not require that the employee be
absolutely disabled, or totally paralyzed. What is necessary is that the injury
must be such that she cannot pursue her usual work and earn therefrom . . .
. It is not the injury which is compensated but the incapacity to work
resulting in the impairment of one's earning capacity . . . ."
Petitioner asserts that his ailment has prevented him from seeking
employment, practicing his profession, or engaging in a gainful occupation or
even pursuing a self-help project since his retirement without risking a
sudden stroke and eventual death as he has been under his doctors'
ministrations. He cites Dr. Guytingco's report to buttress his assertion.
While we do not question the competence of GSIS physicians in determining
the extent of an employee's disability, yet we cannot close our eyes to the fact

that these physicians place more reliance on reports rather that on personal
examination of an employee, which is what happened in the instant case. It
must be conceded that the findings of the medical staff of the GSIS should be
given due weight. 10 However, a claimant may not just cite the findings of a
physician in support of his claim in order to be entitled to a monetary
benefit. As this Court said in Marte v. Employees' Compensation
Commission, 11 "no physician in his right mind and who is aware of the farreaching and serious effect that his statements would cause on a money
claim filed with a government agency, would issue certifications
indiscriminately, without even minding his own interests and protection." In
signing a medical report, a physician, especially a specialist, stakes his
reputation. We, thus, accord greater weight to Dr. Guytingco's findings.
Moreover, the ECC's contention that petitioner suppressed evidence by his
failure to present certifications of other physicians who attended to him
during his hospitalization at the Philippine General Hospital cannot adversely
affect petitioner's rights under the Workmen's Compensation Act. The
respondents are estopped from claiming noncompensability in view of their
agreement with the finding that petitioner deserves medical benefits although
they disagree on the extent of his disability. In fact, respondents have failed
to rebut substantially petitioner's claim for medical benefits as an employee
who sustained permanent and total disability. Inasmuch as the case falls
under the Workmen's Compensation Act, noncontroversion of a claim
renders the presumption of compensability conclusive. 12
The respondents' apprehension that petitioner's health may have been
aggravated by his advanced age considering that he retired some thirteen
years earlier and thus he must be seventy-eight (78) years old by now,
deserves scant consideration. This Court said in Bautista v. Workmen's
Compensation Commission, 13 that:
While we do not discount the possibility that such ailments
may be "caused by the aging process" . . . nonetheless that
fact alone will not be sufficient to remove the ailment from
the periphery of compensable disabling diseases under the
Workmen's Compensation Act. The law applies to the young
as well as to the aged, and while advancing age may be a
contributing factor to the occurrence of an injury, the
constant physical and mental exertions, strain and tension
in teaching children of tender age for a period of almost 37
years are equally contributing and aggravating causes which
render the resulting disabling injury or ailment compensable
under the law.
In the same manner, the strain and tension caused by managing a branch of
a bank may have aggravated petitioner's ailment, such that aggravation
persisted even after he had retired from the service. His longevity inspite of a
debilitating ailment should not stand in the way of his availment of the
benefits provided for by the Workmen's Compensation Act. Being a social
legislation, said law should be liberally construed to attain its objective of
amelioration of workmens' plight to prevent them from becoming objects of

charity. 14 Worth quoting is the portion of the decision in Laginlin v. WCC,

wherein the Court said:
The fact that petitioner received a retirement benefit from his
employer does not bar him from being entitled to a disability
compensation benefit under the Workmen's Compensation
Act, having in mind that the purpose of the disability benefit
is separate and distinct from the retirement benefit given to
an employee upon reaching the age of retirement. The
disability benefit under the Act is to compensate the worker
for his actual loss, for his disablement to earn wages in the
same kind of work which he is engaged in or work of similar
nature. On the other hand, the retirement benefit is intended
to help the employee enjoy the remaining years of his life,
lessening the burden of worrying for his financial support
and as a form of reward for his loyalty and service to the
employer. 15
As to who shall be liable for the payment of the petitioner's medical benefits,
Sec. 2 of the Workmen's Compensation Act explicitly provides that the
employer shall be liable to pay compensation. Thus, we agree with
respondent GSIS that DBP should reimburse it whatever amount it had paid
petitioner.
WHEREFORE, the decision of the Employees' Compensation Commission is
hereby REVERSED and SET ASIDE. The Development Bank of the
Philippines shall PAY petitioner medical benefits as a permanently and totally
disabled person under the Workmen's Compensation Act and the same bank
shall reimburse the GSIS whatever amount the latter had paid petitioner in
terms of medical benefits. No costs.
SO ORDERED.