MANAGEMENT PREROGATIVEGR No. 162053, March 3, 2007ST. LUKE’S MEDICAL CENTER EMPLOYEE’S ASSOCIATION-AFW (SLMCEA-AFW) AND MARIBEL S. SANTOS, Petitioners, versus NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE’S MEDICAL AZCUNA, J.:

Challenged in this petition for review on certiorari is the Decision[1] of the Court of Appeals (CA) dated January 29, 2004 in CA-G.R. SP No. 75732 affirming the decision[2] dated August 23, 2002 rendered by the National Labor Relations Commission (NLRC) in NLRC CA No. 026225-00.

The antecedent facts are as follows:Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of private respondent St. Luke’s Medical Center, Inc. (SLMC) on October 13, 1984. She is a graduate of Associate in Radiologic Technology from The Family Clinic Incorporated School of Radiologic Technology.On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the “Radiologic Technology Act of 1992.” Said law requires that no person shall practice or offer to practice as a radiology and/or x-ray technologist in the Philippines without having obtained the proper certificate of registration from the Board of Radiologic Technology. On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR Director of private respondent SLMC issued a final notice to all practitioners of Radiologic Technology to comply with the requirement of Republic Act No. 7431 by December 31, 1995; otherwise, the unlicensed employee will be transferred to an area which does not require a license to practice if a slot is available.On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner Maribel S. Santos requiring the latter to comply with Republic Act. No. 7431 by taking and passing the forthcoming examination scheduled in June 1997; otherwise, private respondent SLMC may be compelled to retire her from employment should there be no other position available where she may be absorbed.On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary Services issued a memorandum to petitioner Maribel S. Santos directing the latter to submit her PRC Registration form/Examination Permit per Memorandum dated March 4, 1997.On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to petitioner Maribel S. Santos advising her that only a license can assure her of her continued employment at the Institute of Radiology of the private respondent SLMC and that the latter is giving her the last chance to take and pass the forthcoming board examination scheduled in June 1998; otherwise, private respondent SLMC shall be constrained to take action which may include her separation from employment.On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner Maribel S. Santos informing the latter that the management of private respondent SLMC has approved her retirement in lieu of separation pay.On November 26, 1998, the Personnel Manager of private respondent SLMC issued a “Notice of Separation from the Company” to petitioner Maribel S. Santos effective December 30, 1998 in view of the latter’s refusal to accept private respondent SLMC’s offer for early retirement. The notice also states that while said private respondent exerted its efforts to transfer petitioner Maribel S. Santos to other position/s, her qualifications do not fit with any of the present vacant positions in the hospital.In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine Association of Radiologic Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of private respondent SLMC, requesting the latter to give “due consideration” to the organization’s three (3) regular members of his organization (petitioner Maribel S. Santos included) “for not passing yet the Board of Examination for X-ray Technology,” “by giving them an assignment in any department of your hospital awaiting their chance to pass the future Board Exam.”On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a “Notice of Separation from the Company” to petitioner Maribel S. Santos effective February 5, 1999 after the latter failed to present/ submit her appeal for rechecking to the Professional Regulation Commission (PRC) of the recent board examination which she took and failed.On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent SLMC for illegal dismissal and non-payment of salaries, allowances and other monetary benefits. She likewise prayed for the award of moral and exemplary damages plus attorney’s fees.In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal Counsel, in a letter dated September 22, 1999 addressed to Ms. Rita Marasigan, Human Resources Director of private respondent

SLMC, requested the latter to accommodate petitioner Maribel S. Santos and assign her to the vacant position of CSS Aide in the hospital arising from the death of an employee more than two (2) months earlier.In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:Gentlemen:Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant regular position of a CSS Aide in Ms. Maribel Santos’ behalf.The position is indeed vacant. Please refer to our Recruitment Policy for particulars especially on minimum requirements of the job and the need to meet said requirements, as well as other pre-employment requirements, in order to be considered for the vacant position. As a matter of fact, Ms. Santos is welcome to apply for any vacant position on the condition that she possesses the necessary qualifications.As to the consensus referred to in your letter, may I correct you that the agreement is, regardless of the vacant position Ms. Santos decides to apply, she must go through the usual application procedures. The formal letter, I am afraid, will not suffice for purposes of recruitment processing. As you know, the managers requesting to fill any vacancy has a say on the matter and correctly so. The manager’s inputs are necessarily factored into the standard recruitment procedures. Hence, the need to undergo the prescribed steps.Indeed we have gone through the mechanics to accommodate Ms. Santos’ transfer while she was employed with SLMC given the prescribed period. She was given 30 days from issuance of the notice of termination to look for appropriate openings which incidentally she wittingly declined to utilize. She did this knowing fully well that the consequences would be that her application beyond the 30-day period or after the effective date of her termination from SLMC would be considered a re-application with loss of seniority and shall be subjected to the pertinent application procedures.Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms. Santos at the time successfully managed to get herself transferred to E.R. because she opted to apply for the appropriate vacant position and qualified for it within the prescribed 30-day period. The other X-ray Technologist, on the other hand, as you may recall, was eventually terminated not just for his failure to comply with the licensure requirement of the law but for cause (refusal to serve a customer).Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the opportunity given her, or assuming she was not qualified for any vacant position even if she tried to look for one within the prescribed period, I simply cannot understand why she also refused the separation pay offered by Management in an amount beyond the minimum required by law only to re-apply at SLMC, which option would be available to her anyway even (if she) chose to accept the separation pay!Well, here’s hoping that our Union can timely influence our employees to choose their options well as it has in the past.(Signed)RITA MARASIGANSubsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of private respondent SLMC wrote Mr. Angelito Calderon, President of petitioner union as follows:Dear Mr. Calderon:This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999, Ms. Rita Marasigan, HR Director, discussed with you and Mr. Greg Del Prado the terms regarding the re-hiring of Ms. Maribel Santos. Ms. Marasigan offered Ms. Santos the position of Secretary at the Dietary Department. In that meeting, Ms. Santos replied that she would think about the offer. To date, we still have no definite reply from her. Again, during the conference held on Dec. 14, 1999, Atty. Martir promised to talk to Ms. Santos, and inform us of her reply by Dec. 21, 1999. Again we failed to hear her reply through him.Please be informed that said position is in need of immediate staffing. The Dietary Department has already been experiencing serious backlog of work due to the said vacancy. Please note that more than 2 months has passed since Ms. Marasigan offered this compromise. Management cannot afford to wait for her decision while the operation of the said department suffers from vacancy.Therefore, Management is giving Ms. Santos until the end of this month to give her decision. If we fail to hear from her or from you as her representatives by that time, we will consider it as a waiver and we will be forced to offer the position to other applicants so as not to jeopardize the Dietary Department’s operation.For your immediate action.(Signed)JUDITH BETITAPersonnel Manager

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On September 5, 2000, the Labor Arbiter came out with a Decision ordering private respondent SLMC to pay petitioner Maribel S. Santos the amount of One Hundred Fifteen Thousand Five Hundred Pesos (P115,500.00) representing her separation pay. All other claims of petitioner were dismissed for lack of merit. Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent NLRC. On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision of the Labor Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its Resolution promulgated on December 27, 2002.Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned, affirmed the decision of the NLRC. Hence, this petition raising the following issues:I. Whether the CA overlooked certain material facts and circumstances on petitioners’ legal claim in relation to the complaint for illegal dismissal.II. Whether the CA committed grave abuse of discretion and erred in not resolving with clarity the issues on the merit of petitioner’s constitutional right of security of tenure.[3]For its part, private respondent St. Luke’s Medical Center, Inc. (SLMC) argues in its comment[4] that: 1) the petition should be dismissed for failure of petitioners to file a motion for reconsideration; 2) the CA did not commit grave abuse of discretion in upholding the NLRC and the Labor Arbiter’s ruling that petitioner was legally dismissed; 3) petitioner was legally and validly terminated in accordance with Republic Act Nos. 4226 and 7431; 4) private respondent’s decision to terminate petitioner Santos was made in good faith and was not the result of unfair discrimination; and 5) petitioner Santos’ non-transfer to another position in the SLMC was a valid exercise of management prerogative. The petition lacks merit.Generally, the Court has always accorded respect and finality to the findings of fact of the CA particularly if they coincide with those of the Labor Arbiter and the NLRC and are supported by substantial evidence.[5] True this rule admits of certain exceptions as, for example, when the judgment is based on a misapprehension of facts, or the findings of fact are not supported by the evidence on record[6] or are so glaringly erroneous as to constitute grave abuse of discretion.[7] None of these exceptions, however, has been convincingly shown by petitioners to apply in the present case. Hence, the Court sees no reason to disturb such findings of fact of the CA.Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally dismissed by private respondent SLMC on the basis of her inability to secure a certificate of registration from the Board of Radiologic Technology. The requirement for a certificate of registration is set forth under R.A. No. 7431[8] thus:Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. — Unless exempt from the examinations under Sections 16 and 17 hereof, no person shall practice or offer to practice as a radiologic and/or x-ray technologist in the Philippines without having obtained the proper certificate of registration from the Board.It is significant to note that petitioners expressly concede that the sole cause for petitioner Santos’ separation from work is her failure to pass the board licensure exam for X-ray technicians, a precondition for obtaining the certificate of registration from the Board. It is argued, though, that petitioner Santos’ failure to comply with the certification requirement did not constitute just cause for termination as it violated her constitutional right to security of tenure. This contention is untenable. While the right of workers to security of tenure is guaranteed by the Constitution, its exercise may be reasonably regulated pursuant to the police power of the State to safeguard health, morals, peace, education, order, safety, and the general welfare of the people. Consequently, persons who desire to engage in the learned professions requiring scientific or technical knowledge may be required to take an examination as a prerequisite to engaging in their chosen careers.[9] The most concrete example of this would be in the field of medicine, the practice of which in all its branches has been closely regulated by the State. It has long been recognized that the regulation of this field is a reasonable method of protecting the health and safety of the public to protect the public from the potentially deadly effects of incompetence and ignorance among those who would practice medicine.[10] The same rationale applies in the regulation of the practice of radiologic and x-ray technology. The clear and unmistakable intention of the legislature in prescribing guidelines for persons seeking to practice in this field is embodied in Section 2 of the law:Sec. 2. Statement of Policy. — It is the policy of the State to upgrade the practice of radiologic technology in the Philippines for the purpose of protecting the public from the hazards posed by radiation as well as to ensure safe and proper diagnosis, treatment and research through the application of machines and/or equipment using radiation.[11]In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its decision dated August 23, 2002:The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State’s inherent police power. It should be noted that the police power embraces the power to prescribe regulations to promote the health, morals,

educations, good order, safety or general welfare of the people. The state is justified in prescribing the specific requirements for x-ray technicians and/or any other professions connected with the health and safety of its citizens. Respondent-appellee being engaged in the hospital and health care business, is a proper subject of the cited law; thus, having in mind the legal requirements of these laws, the latter cannot close its eyes and [let] complainant-appellant’s private interest override public interest. Indeed, complainant-appellant cannot insist on her “sterling work performance without any derogatory record” to make her qualify as an x-ray technician in the absence of a proper certificate of Registration from the Board of Radiologic Technology which can only be obtained by passing the required examination. The law is clear that the Certificate of Registration cannot be substituted by any other requirement to allow a person to practice as a Radiologic Technologist and/or X-ray Technologist (Technician).[12]No malice or ill-will can be imputed upon private respondent as the separation of petitioner Santos was undertaken by it conformably to an existing statute. It is undeniable that her continued employment without the required Board certification exposed the hospital to possible sanctions and even to a revocation of its license to operate. Certainly, private respondent could not be expected to retain petitioner Santos despite the inimical threat posed by the latter to its business. This notwithstanding, the records bear out the fact that petitioner Santos was given ample opportunity to qualify for the position and was sufficiently warned that her failure to do so would result in her separation from work in the event there were no other vacant positions to which she could be transferred. Despite these warnings, petitioner Santos was still unable to comply and pass the required exam. To reiterate, the requirement for Board certification was set by statute. Justice, fairness and due process demand that an employer should not be penalized for situations where it had no participation or control.[13]It would be unreasonable to compel private respondent to wait until its license is cancelled and it is materially injured before removing the cause of the impending evil. Neither can the courts step in to force private respondent to reassign or transfer petitioner Santos under these circumstances. Petitioner Santos is not in the position to demand that she be given a different work assignment when what necessitated her transfer in the first place was her own fault or failing. The prerogative to determine the place or station where an employee is best qualified to serve the interests of the company on the basis of the his or her qualifications, training and performance belongs solely to the employer.[14] The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts) managerial authority.[15]While our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.[16] Labor laws, to be sure, do not authorize interference with the employer's judgment in the conduct of the latter’s business. Private respondent is free to determine, using its own discretion and business judgment, all elements of employment, "from hiring to firing" except in cases of unlawful discrimination or those which may be provided by law. None of these exceptions is present in the instant case. The fact that another employee, who likewise failed to pass the required exam, was allowed by private respondent to apply for and transfer to another position with the hospital does not constitute unlawful discrimination. This was a valid exercise of management prerogative, petitioners not having alleged nor proven that the reassigned employee did not qualify for the position where she was transferred. In the past, the Court has ruled that an objection founded on the ground that one has better credentials over the appointee is frowned upon so long as the latter possesses the minimum qualifications for the position.[17] Furthermore, the records show that Ms. Santos did not even seriously apply for another position in the company.WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.SO ORDERED.ADOLFO S. AZCUNAAssociate JusticeWE CONCUR:REYNATO S. PUNO, ANGELINA SANDOVAL-GUTIERREZ, RENATO C. CORONA, CANCIO C. GARCIAG.R. No. 155421, July 7, 2004ELMER M. MENDOZA, Petitioner, versus RURAL BANK OF LUCBAN, Respondent.DECISIONPANGANIBAN, J.:The law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with business judgments of employers, provided they do not violate the law, collective bargaining agreements, and general principles of fair play and justice. The transfer of personnel from one area of operation to another is

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inherently a managerial prerogative that shall be upheld if exercised in good faith -- for the purpose of advancing business interests, not of defeating or circumventing the rights of employees. The CaseThe Court applies these principles in resolving the instant Petition for Review[1] under Rule 45 of the Rules of Court, assailing the June 14, 2002 Decision[2] and September 25, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 68030. The assailed Decision disposed as follows: “WHEREFORE, the petition for certiorari is hereby DISMISSED for lack of merit.”[4]The challenged Resolution denied petitioner’s Motion for Reconsideration.The FactsOn April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board Resolution Nos. 99-52 and 99-53, which read: “Board Res. No. 99-52 “‘RESOLVED AS IT IS HEREBY RESOLVED’ that in line with the policy of the bank to familiarize bank employees with the various phases of bank operations and further strengthen the existing internal control system[,] all officers and employees are subject to reshuffle of assignments. Moreover, this resolution does not preclude the transfer of assignment of bank officers and employees from the branch office to the head office and vice-versa.” “Board Res. No. 95-53 “Pursuant to Resolution No. 99-52, the following branch employees are hereby reshuffled to their new assignments without changes in their compensation and other benefits.NAME OF EMPLOYEES PRESENT ASSIGNMENT NEW ASSIGNMENTJOYCE V. ZETA Bank Teller C/A TellerCLODUALDO ZAGALA C/A Clerk Actg. AppraiserELMER L. MENDOZA Appraiser Clerk-Meralco CollectionCHONA R. MENDOZA Clerk-Meralco Bank Teller”[5] Collection In a letter dated April 30, 1999, Alejo B. Daya, the bank’s board chairman, directed Briccio V. Cada, the manager of the bank’s Tayabas branch, to implement the reshuffle.[6] The new assignments were to "be effective on May 1, 1999 without changes in salary, allowances, and other benefits received by the aforementioned employees."[7] On May 3, 1999, in an undated letter addressed to Daya, Petitioner Elmer Mendoza expressed his opinion on the reshuffle, as follows:-RE: The recent reshuffle of employees as per Board Resolution dated April 25, 1999-Dear Sir: -This is in connection with the aforementioned subject matter and which the undersigned received on April 25, 1999. -Needless to state, the reshuffling of the undersigned from the present position as Appraiser to Clerk-Meralco Collection is deemed to be a demotion without any legal basis. Before this action on your part[,] the undersigned has been besieged by intrigues due to [the] malicious machination of a certain public official who is bruited to be your good friend. These malicious insinuations were baseless and despite the fact that I have been on my job as Appraiser for the past six (6) years in good standing and never involved in any anomalous conduct, my being reshuffled to [C]lerk-[M]eralco [C]ollection is a blatant harassment on your part as a prelude to my termination in due time. This will constitute an unfair labor practice. -Meanwhile, may I beseech your good office that I may remain in my position as Appraiser until the reason [for] my being reshuffled is made clear. "Your kind consideration on this request will be highly appreciated."[8]On May 10, 1999, Daya replied:-Dear Mr. Mendoza, -Anent your undated letter expressing your resentment/comments on the recent management’s decision to reshuffle the duties of bank employees, please be informed that it was never the intention (of management) to downgrade your position in the bank considering that your due compensation as Bank Appraiser is maintained and no future reduction was intended. -Aside from giving bank employees a wider experience in various banking operations, the reshuffle will also afford management an effective tool in providing the bank a sound internal control system/check and balance and a basis in evaluating the performance of each employee. A continuing bankwide reshuffle of employees shall be made at the discretion of management which may include bank officers, if necessary as expressed in Board Resolution No.

99-53, dated April 25, 1999. Management merely shifted the duties of employees, their position title [may be] retained if requested formally. "Being a standard procedure in maintaining an effective internal control system recommended by the Bangko Sentral ng Pilipinas, we believe that the conduct of reshuffle is also a prerogative of bank management."[9] On June 7, 1999, petitioner submitted to the bank’s Tayabas branch manager a letter in which he applied for a leave of absence from work:-Dear Sir:-I wish I could continue working but due to the ailment that I always feel every now and then, I have the honor to apply for at least ten (10) days sick leave effective June 7, 1999."Hoping that this request [merits] your favorable and kind consideration and understanding."[10] On June 21, 1999, petitioner again submitted a letter asking for another leave of absence for twenty days effective on the same date.[11]On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before Arbitration Branch No. IV of the National Labor Relations Commission (NLRC). The Complaint -- for illegal dismissal, underpayment, separation pay and damages -- was filed against the Rural Bank of Lucban and/or its president, Alejo B. Daya; and its Tayabas branch manager, Briccio V. Cada. The case was docketed as NLRC Case SRAB-IV-6-5862-99-Q.[12] The labor arbiter’s June 14, 2000 Decision upheld petitioner’s claims as follows: “WHEREFORE, premises considered, judgment is hereby rendered as follows:1. Declaring respondents guilty of illegal dismissal.2. Ordering respondents to reinstate complainant to his former position without loss of seniority rights with full backwages from date of dismissal to actual reinstatement in the amount of P55,000.00 as of June 30, 2000.3. Ordering the payment of separation pay if reinstatement is not possible in the amount of P30,000.00 in addition to 13th month pay of P5,000.00 and the usual P10,000.00 annual bonus afforded the employees.4. Ordering the payment of unpaid salary for the period covering July 1-30, 1999 in the amount of P5,000.005. Ordering the payment of moral damages in the amount of P50,000.00.6. Ordering the payment of exemplary damages in the amount of P25,000.007. Ordering the payment of Attorney’s fees in the amount of P18,000.00 which is 10% of the monetary award.-[13]On appeal, the NLRC reversed the labor arbiter.[14] In its July 18, 2001 Resolution, it held:-We can conceive of no reason to ascribe bad faith or malice to the respondent bank for its implementation of its Board Resolution directing the reshuffle of employees at its Tayabas branch to positions other than those they were occupying. While at first the employees thereby affected would experience difficulty in adjusting to their new jobs, it cannot be gainsaid that the objective for the reshuffle is noble, as not only would the employees obtain additional knowledge, they would also be more well-rounded in the operations of the bank and thus help the latter further strengthen its already existing internal control system.-The only inconvenience, as [w]e see it, that the [petitioner] may have experienced is that from an appraiser he was made to perform the work of a clerk in the collection of Meralco payments, which he may have considered as beneath him and his experience, being a pioneer employee. But it cannot be discounted either that other employees at the Tayabas branch were similarly reshuffled. The only logical conclusion therefore is that the Board Resolution was not aimed solely at the [petitioner], but for all the other employees of the x x x bank as well. Besides, the complainant has not shown by clear, competent and convincing evidence that he holds a vested right to the position of Appraiser. x x x."How and by what manner a business concern conducts its affairs is not for this Commission to interfere with, especially so if there is no showing, as in the case at bar, that the reshuffle was motivated by bad faith or ill-will. x x x."[15]After the NLRC denied his Motion for Reconsideration,[16] petitioner brought before the CA a Petition for Certiorari[17] assailing the foregoing Resolution.Ruling of the Court of Appeals Finding that no grave abuse of discretion could be attributed to the NLRC, the CA Decision ruled thus: -The so-called ‘harassment’ which Mendoza allegedly experienced in the aftermath of the reshuffling of employees at the bank is but a figment of his imagination as there is no evidence extant on record which substantiates the same. His alleged demotion, the ‘cold shoulder’ stance, the things about his chair and table, and the alleged reason for the harassment are but allegations bereft of proof and are perforce inadmissible as self-serving statements and can never be considered repositories of truth nor serve as foundations of court decisions anent the resolution of the litigants’ rights. -When Mendoza was reshuffled to the position of clerk at the bank, he was not demoted as there was no [diminution] of his salary benefits and rank. He could even retain his position title, had he only requested for it

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pursuant to the reply of the Chairman of the bank’s board of directors to Mendoza’s letter protesting the reshuffle. There is, therefore, no cause to doubt the reasons which the bank propounded in support of its move to reshuffle its employees, viz:1. to ‘familiarize bank employees with the various phases of bank operations,’ and2. to ‘further strengthen the existing internal control system’ of the bank. -The reshuffling of its employees was done in good faith and cannot be made the basis of a finding of constructive dismissal."The fact that Mendoza was no longer included in the bank’s payroll for July 1 to 15, 1999 does not signify that the bank has dismissed the former from its employ. Mendoza separated himself from the bank’s employ when, on June 24, 1999, while on leave, he filed the illegal dismissal case against his employer for no apparent reason at all."[18] Hence, this Petition.[19]The IssuesPetitioner raises the following issues for our consideration:-I. Whether or not the petitioner is deemed to have voluntarily separated himself from the service and/or abandoned his job when he filed his Complaint for constructive and consequently illegal dismissal;-II. Whether or not the reshuffling of private respondent’[s] employees was done in good faith and cannot be made as the basis of a finding of constructive dismissal, even as the [petitioner’s] demotion in rank is admitted by both parties;-III. Whether or not the ruling in the landmark case of Ruben Serrano vs. NLRC [and Isetann Department Store (323 SCRA 445)] is applicable to the case at bar;-IV. Whether or not the Court of Appeals erred in dismissing the petitioner’s money claims, damages, and unpaid salaries for the period July 1-30, 1999, although this was not disputed by the private respondent; and"V. Whether or not the entire proceedings before the Honorable Court of Appeals and the NLRC are a nullity since the appeal filed by private respondent before the NLRC on August 5, 2000 was on the 15th day or five (5) days beyond the reglem[e]ntary period of ten (10) days as provided for by law and the NLRC Rules of Procedure."[20] In short, the main issue is whether petitioner was constructively dismissed from his employment.The Court’s RulingThe Petition has no merit. Main Issue:Constructive DismissalConstructive dismissal is defined as an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.[21] Petitioner argues that he was compelled to file an action for constructive dismissal, because he had been demoted from appraiser to clerk and not given any work to do, while his table had been placed near the toilet and eventually removed.[22] He adds that the reshuffling of employees was done in bad faith, because it was designed primarily to force him to resign.[23]Management Prerogative to Transfer Employees Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often decline to interfere in legitimate business decisions of employers.[24] Indeed, labor laws discourage interference in employers’ judgments concerning the conduct of their business.[25] The law must protect not only the welfare of employees, but also the right of employers.In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of operation to another -- provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause.[26] This privilege is inherent in the right of employers to control and manage their enterprise effectively.[27] The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them.[28]Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice.[29] The test for determining the validity of the transfer of employees was explained in Blue Dairy Corporation v. NLRC[30] as follows:"[L]ike other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution

of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment."[31]Petitioner’s Transfer LawfulThe employer bears the burden of proving that the transfer of the employee has complied with the foregoing test. In the instant case, we find no reason to disturb the conclusion of the NLRC and the CA that there was no constructive dismissal. Their finding is supported by substantial evidence -- that amount of relevant evidence that a reasonable mind might accept as justification for a conclusion.[32] Petitioner’s transfer was made in pursuit of respondent’s policy to "familiarize bank employees with the various phases of bank operations and further strengthen the existing internal control system"[33] of all officers and employees. We have previously held that employees may be transferred -- based on their qualifications, aptitudes and competencies -- to positions in which they can function with maximum benefit to the company.[34] There appears no justification for denying an employer the right to transfer employees to expand their competence and maximize their full potential for the advancement of the establishment. Petitioner was not singled out; other employees were also reassigned without their express consent.Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and other benefits. This fact is clear in respondent’s Board Resolutions, the April 30, 1999 letter of Bank President Daya to Branch Manager Cada, and the May 10, 1999 letter of Daya to petitioner. On the other hand, petitioner has offered no sufficient proof to support his allegations. Given no credence by both lower tribunals was his bare and self-serving statement that he had been positioned near the comfort room, made to work without a table, and given no work assignment.[35] Purely conjectural is his claim that the reshuffle of personnel was a harassment in retaliation for an alleged falsification case filed by his relatives against a public official.[36] While the rules of evidence prevailing in courts of law are not controlling in proceedings before the NLRC,[37] parties must nonetheless submit evidence to support their contentions.Secondary Issues:Serrano v. NLRC Inapplicable Serrano v. NLRC[38] does not apply to the present factual milieu. The Court ruled therein that the lack of notice and hearing made the dismissal of the employee ineffectual, but not necessarily illegal.[39] Thus, the procedural infirmity was remedied by ordering payment of his full back wages from the time of his dismissal.[40] The absence of constructive dismissal in the instant case precludes the application of Serrano. Because herein petitioner was not dismissed, then he is not entitled to his claimed monetary benefits.Alleged Nullity of NLRC and CA Proceedings Petitioner argues that the proceedings before the NLRC and the CA were void, since respondent’s appeal before the NLRC had allegedly been filed beyond the reglementary period.[41] A careful scrutiny of his Petition for Review[42] with the appellate court shows that this issue was not raised there. Inasmuch as the instant Petition challenges the Decision of the CA, we cannot rule on arguments that were not brought before it. This ruling is consistent with the due-process requirement that no question shall be entertained on appeal, unless it has been raised in the court below.[43] WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the September 25, 2002 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner. SO ORDERED.ARTEMIO V. PANGANIBANAssociate JusticeW E C O N C U R :HILARIO G. DAVIDE, JR.CONSUELO YNARES-SANTIAGO ANTONIO T. CARPIOADOLFO S. AZCUNARECRUITMENT AND PLACEMENT OF WORKERSMARSAMAN MANNING AGENCY, INC. and DIAMANTIDES MARITIME, INC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and WILFREDO T. CAJERAS, respondents., G.R. No. 127195, 1999 Aug 25, 2nd DivisionMARSAMAN MANNING AGENCY, INC. (MARSAMAN) and its foreign principal DIAMANTIDES MARITIME, INC. (DIAMANTIDES) assail the Decision of public respondent National Labor Relations Commission dated 16

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September 1996 as well as its Resolution dated 12 November 1996 affirming the Labor Arbiter's decision finding them guilty of illegal dismissal and ordering them to pay respondent Wilfredo T. Cajeras salaries corresponding to the unexpired portion of his employment contract, plus attorney's fees.Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local manning agent of petitioner DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned and operated by DIAMANTIDES, for a contract period of ten (10) months with a monthly salary of US$600.00, evidenced by a contract between the parties dated 15 June 1995. Cajeras started work on 8 August 1995 but less than two (2) months later, or on 28 September 1995, he was repatriated to the Philippines allegedly by “mutual consent.”On 17 November 1995 private respondent Cajeras filed a complaint for illegal dismissal against petitioners with the NLRC National Capital Region Arbitration Branch alleging that he was dismissed illegally, denying that his repatriation was by mutual consent, and asking for his unpaid wages, overtime pay, damages, and attorney’s fees.[1] Cajeras alleged that he was assigned not only as Chief Cook Steward but also as assistant cook and messman in addition to performing various inventory and requisition jobs. Because of his additional assignments he began to feel sick just a little over a month on the job constraining him to request for medical attention. He was refused at first by Capt. Kouvakas Alekos, master of the MV Prigipos, who just ordered him to continue working. However a day after the ship’s arrival at the port of Rotterdam, Holland, on 26 September 1995 Capt. Alekos relented and had him examined at the Medical Center for Seamen. However, the examining physician, Dr. Wden Hoed, neither apprised private respondent about the diagnosis nor issued the requested medical certificate allegedly because he himself would forward the results to private respondent’s superiors. Upon returning to the vessel, private respondent was unceremoniously ordered to prepare for immediate repatriation the following day as he was said to be suffering from a disease of unknown origin.On 28 September 1995 he was handed his Seaman's Service Record Book with the following entry: "Cause of discharge - Mutual Consent."[2] Private respondent promptly objected to the entry but was not able to do anything more as he was immediately ushered to a waiting taxi which transported him to the Amsterdam Airport for the return flight to Manila. After his arrival in Manila on 29 September 1995 Cajeras complained to MARSAMAN but to no avail.[3]MARSAMAN and DIAMANTIDES, on the other hand, denied the imputation of illegal dismissal. They alleged that Cajeras approached Capt. Alekos on 26 September 1995 and informed the latter that he could not sleep at night because he felt something crawling over his body. Furthermore, Cajeras reportedly declared that he could no longer perform his duties and requested for repatriation. The following paragraph in the vessel's Deck Log was allegedly entered by Capt. Alekos, to wit:Cajeras approached me and he told me that he cannot sleep at night and that he feels something crawling on his body and he declared that he can no longer perform his duties and he must be repatriated.[4]Private respondent was then sent to the Medical Center for Seamen at Rotterdam where he was examined by Dr. Wden Hoed whose diagnosis appeared in a Medical Report as “paranoia” and “other mental problems.”[5] Consequently, upon Dr. Hoed’s recommendation, Cajeras was repatriated to the Philippines on 28 September 1995.On 29 January 1996 Labor Arbiter Ernesto S. Dinopol resolved the dispute in favor of private respondent Cajeras ruling that the latter's discharge from the MV Prigipos allegedly by “mutual consent” was not proved by convincing evidence. The entry made by Capt. Alekos in the Deck Log was dismissed as of little probative value because it was a mere unilateral act unsupported by any document showing mutual consent of Capt. Alekos, as master of the MV Prigipos, and Cajeras to the premature termination of the overseas employment contract as required by Sec. H of the Standard Employment Contract Governing the Employment of all Filipino Seamen on Board Ocean-Going Vessels. Dr. Hoed’s diagnosis that private respondent was suffering from “paranoia” and “other mental problems” was likewise dismissed as being of little evidentiary value because it was not supported by evidence on how the paranoia was contracted, in what stage it was, and how it affected respondent's functions as Chief Cook Steward which, on the contrary, was even rated “Very Good” in respondent's Service Record Book. Thus, the Labor Arbiter disposed of the case as follows:WHEREFORE, judgment is hereby rendered declaring the repatriation and dismissal of complaint Wilfredo T. Cajeras as illegal and ordering respondents Marsaman Manning Agency, Inc. and Diamantides Maritime, Inc. to jointly and severally pay complainant the sum of USD 5,100.00 or its peso equivalent at the time of payment plus USD 510.00 as 10% attorney’s fees it appearing that complainant had to engage the service of counsel to protect his interest in the prosecution of this case.The claims for nonpayment of wages and overtime pay are dismissed for having been withdrawn (Minutes, December 18, 1995). The claims for damages are likewise dismissed for lack of merit, since no evidence was presented to show that bad faith characterized the dismissal.[6]Petitioners appealed to the NLRC.[7] On 16 September 1996 the NLRC affirmed the appealed findings and conclusions of the Labor Arbiter.[8] The NLRC subscribed to the view that Cajeras’ repatriation by alleged mutual

consent was not proved by petitioners, especially after noting that private respondent did not actually sign his Seaman’s Service Record Book to signify his assent to the repatriation as alleged by petitioners. The entry made by Capt. Alekos in the Deck Log was not considered reliable proof that private respondent agreed to his repatriation because no opportunity was given the latter to contest the entry which was against his interest. Similarly, the Medical Report issued by Dr. Hoed of Holland was dismissed as being of dubious value since it contained only a sweeping statement of the supposed ailment of Cajeras without any elaboration on the factual basis thereof.Petitioners' motion for reconsideration was denied by the NLRC in its Resolution dated 12 November 1996.[9] Hence, this petition contending that the NLRC committed grave abuse of discretion: (a) in not according full faith and credit to the official entry by Capt. Alekos in the vessel’s Deck Log conformably with the rulings in Haverton Shipping Ltd. v. NLRC[10] and Wallem Maritime Services, Inc. v. NLRC;[11] (b) in not appreciating the Medical Report issued by Dr. Wden Hoed as conclusive evidence that respondent Cajeras was suffering from paranoia and other mental problems; (c) in affirming the award of attorney’s fees despite the fact that Cajeras' claim for exemplary damages was denied for lack of merit; and, (d) in ordering a monetary award beyond the maximum of three (3) months’ salary for every year of service set by RA 8042.We deny the petition. In the Contract of Employment[12] entered into with private respondent, petitioners convenanted strict and faithful compliance with the terms and conditions of the Standard Employment Contract approved by the POEA/DOLE[13] which provides:1. The employment of the seaman shall cease upon 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 x x x x (underscoring ours).Clearly, under the foregoing, the employment of a Filipino seaman may be terminated prior to the expiration of the stipulated period provided that the master and the seaman (a) mutually consent thereto and (b) reduce their consent in writing.In the instant case, petitioners do not deny the fact that they have fallen short of the requirement. No document exists whereby Capt. Alekos and private respondent reduced to writing their alleged “mutual consent” to the termination of their employment contract. Instead, petitioners presented the vessel's Deck Log wherein an entry unilaterally made by Capt. Alekos purported to show that private respondent himself asked for his repatriation. However, the NLRC correctly dismissed its evidentiary value. For one thing, it is a unilateral act which is vehemently denied by private respondent. Secondly, the entry in no way satisfies the requirement of a bilateral documentation to prove early termination of an overseas employment contract by mutual consent required by the Standard Employment Contract. Hence, since the latter sets the minimum terms and conditions of employment for the protection of Filipino seamen subject only to the adoption of better terms and conditions over and above the minimum standards,[14] the NLRC could not be accused of grave abuse of discretion in not accepting anything less.However petitioners contend that the entry should be considered prima facie evidence that respondent himself requested his repatriation conformably with the rulings in Haverton Shipping Ltd. v. NLRC[15] and Abacast Shipping and Management Agency, Inc. v. NLRC.[16] Indeed, Haverton says that a vessel’s log book is prima facie evidence of the facts stated therein as they are official entries made by a person in the performance of a duty required by law. However, this jurisprudential principle does not apply to win the case for petitioners. In Wallem Maritime Services, Inc. v. NLRC[17] the Haverton ruling was not given unqualified application because the log book presented therein was a mere typewritten collation of excerpts from what could be the log book.[18] The Court reasoned that since the log book was the only piece of evidence presented to prove just cause for the termination of respondent therein, the log book had to be duly identified and authenticated lest an injustice would result from a blind adoption of its contents which were but prima facie evidence of the incidents stated therein.In the instant case, the disputed entry in the Deck Log was neither authenticated nor supported by credible evidence. Although petitioners claim that Cajeras signed his Seaman’s Service Record Book to signify his conformity to the repatriation, the NLRC found the allegation to be actually untrue since no signature of private respondent appeared in the Record Book.Neither could the “Medical Report” prepared by Dr. Hoed be considered corroborative and conclusive evidence that private respondent was suffering from “paranoia” and “other mental problems,” supposedly just causes for his repatriation. Firstly, absolutely no evidence, not even an allegation, was offered to enlighten the NLRC or this Court as to Dr. Hoed's qualifications to diagnose mental illnesses. It is a matter of judicial notice that there are various specializations in medical science and that a general practitioner is not competent to diagnose any and all kinds of illnesses and diseases. Hence, the findings of doctors who are not proven experts are not binding on this Court.[19] Secondly, the Medical Report prepared by Dr. Hoed contained only a general statement that private respondent was suffering from “paranoia” and “other mental problems” without providing the details on how the diagnosis was arrived at or in what stage the illness was. If Dr. Hoed indeed competently examined private respondent then he would have been able to discuss at length the circumstances and precedents of his diagnosis. Petitioners cannot rely on the

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presumption of regularity in the performance of official duties to make the Medical Report acceptable because the presumption applies only to public officers from the highest to the lowest in the service of the Government, departments, bureaus, offices, and/or its political subdivisions,[20] which Dr. Wden Hoed was not shown to be. Furthermore, neither did petitioners prove that private respondent was incompetent or continuously incapacitated for the duties for which he was employed by reason of his alleged mental state. On the contrary his ability as Chief Cook Steward, up to the very moment of his repatriation, was rated “Very Good” in his Seaman’s Service Record Book as correctly observed by public respondent.Considering all the foregoing we cannot ascribe grave abuse of discretion on the part of the NLRC in ruling that petitioners failed to prove just cause for the termination of private respondent's overseas employment. Grave abuse of discretion is committed only when the judgment is rendered in a capricious, whimsical, arbitrary or despotic manner, which is not true in the present case.[21]With respect to attorney’s fees, suffice it to say that in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum award of ten percent (10%) of the monetary award by way of attorney’s fees is legally and morally justifiable under Art. 111 of the Labor Code,[22] Sec. 8, Rule VIII, Book III of its Implementing Rules,[23] and par. 7, Art. 2208[24] of the Civil Code.[25] The case of Albenson Enterprises Corporation v. Court of Appeals[26] cited by petitioners in arguing against the award of attorney’s fees is clearly not applicable, being a civil action for damages which deals with only one of the eleven (11) instances when attorney’s fees could be recovered under Art. 2208 of the Civil Code.Lastly, on the amount of salaries due private respondent, the rule has always been that an illegally dismissed worker whose employment is for a fixed period is entitled to payment of his salaries corresponding to the unexpired portion of his employment.[27] However on 15 July 1995, RA 8042 otherwise known as the “Migrant Workers and Overseas Filipinos Act of 1995” took effect, Sec. 10 of which provides:Sec. 10. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term whichever is less (underscoring ours).The Labor Arbiter, rationalizing that the aforesaid law did not apply since it became effective only one (1) month after respondent's overseas employment contract was entered into on 15 June 1995, simply awarded private respondent his salaries corresponding to the unexpired portion of his employment contract, i.e., for 8.6 months. The NLRC affirmed the award and the Office of the Solicitor General (OSG) fully agreed. But petitioners now insist that Sec. 10, RA 8042 is applicable because although private respondent’s contract of employment was entered into before the law became effective his alleged cause of action, i.e., his repatriation on 28 September 1995 without just, valid or authorized cause, occurred when the law was already in effect. Petitioners' purpose in so arguing is to invoke the law in justifying a lesser monetary award to private respondent, i.e., salaries for three (3) months only pursuant to the last portion of Sec. 10 as opposed to the salaries for 8.6 months awarded by the Labor Arbiter and affirmed by the NLRC.We agree with petitioners that Sec. 10, RA 8042, applies in the case of private respondent and to all overseas contract workers dismissed on or after its effectivity on 15 July 1995 in the same way that Sec. 34,[28] RA 6715,[29] is made applicable to locally employed workers dismissed on or after 21 March 1989.[30] However, we cannot subscribe to the view that private respondent is entitled to three (3) months’ salary only. A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months’ salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the words “for every year of the unexpired term” which follows the words “salaries x x x for three months.” To follow petitioners’ thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect[31] since the law-making body is presumed to know the meaning of the words employed in the statue and to have used them advisedly.[32] Ut res magis valeat quam pereat.[33]WHEREFORE, the questioned Decision and Resolution dated 16 September 1996 and 12 November 1996, respectively, of public respondent National Labor Relations Commission are AFFIRMED. Petitioners MARSAMAN MANNING AGENCY, INC., and DIAMANTIDES MARITIME, INC., are ordered, jointly and severally, to pay private respondent WILFREDO T. CAJERAS his salaries for the unexpired portion of his employment contract or USD$5,100.00, reimburse the latter's placement fee with twelve percent (12%) interest per annum conformably with Sec. 10 of RA 8042, as well as attorney's fees of ten percent (10%) of the total monetary award. Costs against petitioners.

SO ORDERED.Mendoza, Quisumbing, and Buena, JJ., concur.GR No. 125903, November 15, 2000PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ROMULO SAULO, AMELIA DE LA CRUZ, and CLODUALDO DE LA CRUZ, accused. / ROMULO SAULO, accused-appellant.D E C I S I O N

GONZAGA-REYES, J.:Accused-appellant, together with Amelia de la Cruz and Clodualdo de la Cruz, were charged with violation of

Article 38 (b) of the Labor Code[1] for illegal recruitment in large scale in an information which states - CRIM. CASE NO. Q-91-21911The undersigned Assistant City Prosecutor accuses ROMULO SAULO, AMELIA DE LA CRUZ and

CLODUALDO DE LA CRUZ, of the crime of ILLEGAL RECRUITMENT IN LARGE SCALE (ART. 38(b) in relation to Art. 39(a) of the Labor Code of the Philippines, as amended by P.D. No. 2018, committed as follows:

That on or about the period comprised from April 1990 to May 1990 in Quezon City, Philippines, and within the jurisdiction of the Honorable Court, the above-named accused, conspiring together, confederating with and mutually helping one another, by falsely representing themselves to have the capacity to contract, enlist and recruit workers for employment abroad, did, then and there, wilfully, unlawfully and feloniously for a fee, recruit and promise employment/job placement abroad to LEODEGARIO MAULLON, BENY MALIGAYA and ANGELES JAVIER, without first securing the required license or authority from the Department of Labor and Employment, in violation of said law.

That the crime described above is committed in large scale as the same was perpetrated against three (3) persons individually or as [a] group penalized under Articles 38 and 39 as amended by PD 2018 of the Labor Code (P.D. 442).

CONTRARY TO LAW.[2]In addition, accused were charged with three counts of estafa (Criminal Case Nos. Q-91-21908, Q-91-21909 and

Q-91-21910). Except for the names of the complainants, the dates of commission of the crime charged, and the amounts involved, the informations[3] were identical in their allegations -

CRIM. CASE NO. Q-91-21908The undersigned Assistant City Prosecutor accuses ROMULO SAULO, AMELIA DE LA CRUZ AND

CLODUALDO DE LA CRUZ of the crime of ESTAFA (Art. 315, par. 2 (a) RPC), committed as follows:That on or about the period comprised from April 1990 to May 1990, in Quezon City, Philippines, and within the

jurisdiction of this Honorable Court, the above-named accused, conspiring together, confederating with and mutually helping one another, with intent of gain, by means of false pretenses and/or fraudulent acts executed prior to or simultaneously with the commission of the fraud, did, then and there wilfully, unlawfully and feloniously defraud one BENY MALIGAYA, in the following manner, to wit: on the date and in the place aforementioned, accused falsely pretended to the offended party that they had connection and capacity to deploy workers for overseas employment and that they could secure employment/placement for said Beny Maligaya and believing said misrepresentations, the offended party was later induced to give accused, as in fact she did give the total amount of P35,000.00, Philippine Currency, and once in possession of the said amount and far from complying with their commitment and despite repeated demands made upon them to return said amount, did, then and there wilfully, unlawfully and feloniously and with intent to defraud, misappropriate, misapply and convert the same to their own personal use and benefit, to the damage and prejudice of said offended party in the aforementioned amount and in such amount as may be awarded under the provisions of the Civil Code.

CONTRARY TO LAW.Upon arraignment, accused-appellant pleaded not guilty to all the charges against him. Meanwhile accused

Amelia de la Cruz and Clodualdo de la Cruz have remained at large.During trial, the prosecution sought to prove the following material facts and circumstances surrounding the

commission of the crimes:Benny Maligaya, having learned from a relative of accused-appellant that the latter was recruiting workers for

Taiwan, went to accused-appellant's house in San Francisco del Monte, Quezon City, together with Angeles Javier and Amelia de la Cruz, in order to discuss her chances for overseas employment. During that meeting which took place sometime in April or May, 1990, accused-appellant told Maligaya that she would be able to leave for Taiwan as a factory worker once she gave accused-appellant the fees for the processing of her documents. Sometime in May, 1990, Maligaya also met with Amelia de la Cruz and Clodualdo de la Cruz at their house in Baesa, Quezon City and they assured her that they were authorized by the Philippine Overseas Employment Administration (POEA) to recruit workers for Taiwan. Maligaya paid accused-appellant and Amelia de la Cruz the amount of P35,000.00, which is

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evidenced by a receipt dated May 21, 1990 signed by accused-appellant and Amelia de la Cruz (Exhibit A in Crim. Case No. Q-91-21908). Seeing that he had reneged on his promise to send her to Taiwan, Maligaya filed a complaint against accused-appellant with the POEA.[4]

Angeles Javier, a widow and relative by affinity of accused-appellant, was told by Ligaya, accused-appellant's wife, to apply for work abroad through accused-appellant. At a meeting in accused-appellant's Quezon City residence, Javier was told by accused-appellant that he could get her a job in Taiwan as a factory worker and that she should give him P35,000.00 for purposes of preparing Javier's passport. Javier gave an initial amount of P20,000.00 to accused-appellant, but she did not ask for a receipt as she trusted him. As the overseas employment never materialized, Javier was prompted to bring the matter before the POEA.[5]

On April 19, 1990, Leodigario Maullon, upon the invitation of his neighbor Araceli Sanchez, went to accused-appellant's house in order to discuss his prospects for gaining employment abroad. As in the case of Maligaya and Javier, accused-appellant assured Maullon that he could secure him a job as a factory worker in Taiwan if he paid him P30,000.00 for the processing of his papers. Maullon paid P7,900.00 to accused-appellant's wife, who issued a receipt dated April 21, 1990 (Exhibit A in Crim. Case No. Q-91-21910). Thereafter, Maullon paid an additional amount of P6,800.00 in the presence of accused-appellant and Amelia de la Cruz, which payment is also evidenced by a receipt dated April 25, 1990 (Exhibit B in Crim. Case No. Q-91-21910). Finally, Maullon paid P15,700.00 to a certain Loreta Tumalig, a friend of accused-appellant, as shown by a receipt dated September 14, 1990 (Exhibit C in Crim. Case No. Q-91-21910). Again, accused-appellant failed to deliver on the promised employment. Maullon thus filed a complaint with the POEA.[6]

The prosecution also presented a certification dated July 26, 1994 issued by the POEA stating that accused are not licensed to recruit workers for overseas employment (Exhibit A in Crim. Case No. Q-91-21911).[7]

In his defense, accused-appellant claimed that he was also applying with Amelia de la Cruz for overseas employment. He asserts that it was for this reason that he met all three complainants as they all went together to Amelia de la Cruz' house in Novaliches, Quezon City sometime in May, 1990 in order to follow up their applications. Accused-appellant flatly denied that he was an overseas employment recruiter or that he was working as an agent for one. He also denied having received any money from any of the complainants or having signed any of the receipts introduced by the prosecution in evidence. It is accused-appellant's contention that the complainants were prevailed upon by accused-appellant's mother-in-law, with whom he had a misunderstanding, to file the present cases against him.[8]

The trial court found accused-appellant guilty of three counts of estafa and of illegal recruitment in large scale. It adjudged:

WHEREFORE, this Court finds the accused Romulo Saulo:A. In Criminal Case No. Q-91-21908, guilty beyond reasonable doubt of Estafa under Article 315, paragraph 2(a)

of the Revised Penal Code as amended, without any mitigating or aggravating circumstances, and this Court hereby sentences the accused Romulo Saulo to suffer the indeterminate penalty of imprisonment of three (3) years, four (4) months and one (1) day of prision correccional as minimum to seven (7) years and one (1) day of prision mayor as maximum, and to indemnify the complainant Beny Maligaya in the amount of P35,000.00, with interest thereon at 12% per annum until the said amount is fully paid, with costs against the said accused.

B. In Criminal Case No. Q-91-21909, guilty beyond reasonable doubt of Estafa under Article 315, paragraph 2(a) of the Revised Penal Code as amended, without any mitigating or aggravating circumstances, and this Court hereby sentences the accused Romulo Saulo to suffer the indeterminate penalty of imprisonment of two (2) years, four (4) months and one (1) day of prision correccional as minimum to six (6) years and one (1) day of prision mayor as maximum, and to indemnify the complainant Angeles Javier in the amount of P20,000.00 with interest thereon at 12% per annum until the said amount is fully paid, with costs against said accused.

C. In Criminal Case No. Q-91-21910, guilty beyond reasonable doubt of Estafa under Article 315, paragraph 2(a) of the Revised Penal Code as amended, without any mitigating or aggravating circumstances, and this Court hereby sentences the accused Romulo Saulo to suffer the indeterminate penalty of imprisonment of two (2) years, four (4) months and one (1) day of prision correccional as minimum to six (6) years and one (1) day of prision mayor as maximum, and to indemnify the complainant Leodigario Maullon in the amount of P30,400.00 with interest thereon at 12% per annum until the said amount is fully paid, with costs against said accused.

D. In Criminal Case No. Q-91-21911, guilty beyond reasonable doubt of Illegal Recruitment in Large Scale as defined and punished under Article 38 (b) in relation to Article 39 (a) of the Labor Code of the Philippines as amended, and this Court sentences the accused Romulo Saulo to suffer the penalty of life imprisonment and to pay a fine of One Hundred Thousand Pesos (P100,000.00).

Being a detention prisoner, the accused Romulo Saulo shall be entitled to the benefits of Article 29 of the Revised Penal Code as amended.

SO ORDERED.[9]

The Court finds no merit in the instant appeal. The essential elements of illegal recruitment in large scale, as defined in Art. 38 (b) of the Labor Code and

penalized under Art. 39 of the same Code, are as follows: (1) the accused engages in the recruitment and placement of workers, as defined under Article 13 (b) or in any

prohibited activities under Article 34 of the Labor Code; (2) accused has not complied with the guidelines issued by the Secretary of Labor and Employment, particularly

with respect to the securing of a license or an authority to recruit and deploy workers, whether locally or overseas; and

(3) accused commits the same against three (3) or more persons, individually or as a group.[10]Under Art. 13 (b) of the Labor Code, 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; 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."

After a careful and circumspect review of the records, the Court finds that the trial court was justified in holding that accused-appellant was engaged in unlawful recruitment and placement activities. The prosecution clearly established that accused-appellant promised the three complainants - Benny Maligaya, Angeles Javier and Leodigario Maullon - employment in Taiwan as factory workers and that he asked them for money in order to process their papers and procure their passports. Relying completely upon such representations, complainants entrusted their hard-earned money to accused-appellant in exchange for what they would later discover to be a vain hope of obtaining employment abroad. It is not disputed that accused-appellant is not authorized[11] nor licensed[12] by the Department of Labor and Employment to engage in recruitment and placement activities. The absence of the necessary license or authority renders all of accused-appellant's recruitment activities criminal.

Accused-appellant interposes a denial in his defense, claiming that he never received any money from the complainants nor processed their papers. Instead, accused-appellant insists that he was merely a co-applicant of the complainants and similarly deceived by the schemes of Amelia and Clodualdo de la Cruz. He contends that the fact that Benny Maligaya and Angleles Javier went to the house of Amelia and Clodualdo de la Cruz in Novaliches, Quezon City, to get back their money and to follow-up their application proves that complainants knew that it was the de la Cruz' who received the processing fees, and not accused-appellant. Further, accused-appellant argues that complainants could not have honestly believed that he could get them their passports since they did not give him any of the necessary documents, such as their birth certificate, baptismal certificate, NBI clearance, and marriage contract.

Accused-appellant's asseverations are self-serving and uncorroborated by clear and convincing evidence. They cannot stand against the straightforward and explicit testimonies of the complainants, who have identified accused-appellant as the person who enticed them to part with their money upon his representation that he had the capability of obtaining employment for them abroad. In the absence of any evidence that the prosecution witnesses were motivated by improper motives, the trial court's assessment of the credibility of the witnesses shall not be interfered with by this Court.[13]

The fact that accused-appellant did not sign all the receipts issued to complainants does not weaken the case of the prosecution. A person charged with illegal recruitment may be convicted on the strength of the testimonies of the complainants, if found to be credible and convincing.[14] The absence of receipts to evidence payment does not warrant an acquittal of the accused, and it is not necessarily fatal to the prosecution's cause.[15]

Accused-appellant contends that he could not have committed the crime of illegal recruitment in large scale since Nancy Avelino, a labor and employment officer at the POEA, testified that licenses for recruitment and placement are issued only to corporations and not to natural persons. This argument is specious and illogical. The Labor Code states 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."[16] Corrolarily, a nonlicensee or nonholder of authority is any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor, or whose license or authority has been suspended, revoked, or canceled by the POEA or the Secretary.[17] It also bears stressing that agents or representatives appointed by a licensee or a holder of authority but whose appointments are not previously authorized by the POEA fall within the meaning of the term nonlicensee or nonholder of authority.[18] Thus, any person, whether natural or juridical, that engages in recruitment activities without the necessary license or authority shall be penalized under Art. 39 of the Labor Code.

It is well established in jurisprudence that a person may be charged and convicted for both illegal recruitment and estafa. The reason for this is that illegal recruitment is a malum prohibitum, whereas estafa is malum in se, meaning that the criminal intent of the accused is not necessary for conviction in the former, but is required in the latter.[19]

Labor Standards | To digest (old cases) | Ajean Tuazon| 7

The elements of estafa under Art. 315, paragraph 2 (a), of the Revised Penal Code are: (1) that the accused has defrauded another by abuse of confidence or by deceit, and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party or third person.[20] The trial court was correct in holding accused-appellant liable for estafa in the case at bench. Owing to accused-appellant's false assurances that he could provide them with work in another country, complainants parted with their money, to their damage and prejudice, since the promised employment never materialized.

Under Art. 315 of the Revised Penal Code, the penalty for the crime of estafa is 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 under the provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal, as the case may be.

xxx xxx xxxUnder 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. 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 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 daysMaximum Period : From 6 years, 8 months and 21 days to 8 yearspursuant 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.[21]

Accordingly, the following penalties shall be imposed upon accused-appellant:In Criminal Case No. Q-91-21908 where accused-appellant defrauded Benny Maligaya in the amount of

P35,000.00, one year for the additional amount of P13,000.00 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 mayor minimum. Thus, accused-appellant shall suffer the indeterminate penalty of four (4) years, and two (2) months of prision correccional medium, as minimum to nine (9) years of prision mayor as maximum.[22] Accused-appellant shall also pay Benny Maligaya P35,000.00 by way of actual damages.

In Criminal Case No. Q-91-21909 where accused-appellant defrauded Angeles Javier in the amount of P20,000.00, accused-appellant shall 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. Accused-appellant shall also pay Angeles Javier P20,000.00 by way of actual damages.

In Criminal Case No. Q-91-21910 where accused-appellant defrauded Leodigario Maullon in the amount of P30,400.00, accused-appellant shall suffer the indeterminate penalty of four (4) years and two (2) months of prision correccional medium, as minimum to eight (8) years of prision mayor, as maximum.[23] Accused-appellant shall also pay Leodigario Maullon P30,400.00 by way of actual damages.

In addition, for the crime of illegal recruitment in large scale (Criminal Case No. Q-91-21911) and pursuant to Article 39 (a) of the Labor Code, accused-appellant shall suffer the penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000.00).

WHEREFORE, the March 6, 1996 Decision of the trial court finding accused-appellant guilty beyond reasonable doubt of the crime of illegal recruitment in large scale and estafa is hereby AFFIRMED subject to the following modifications:

In Criminal Case No. Q-91-21908 where accused-appellant defrauded Benny Maligaya in the amount of P35,000.00, one year for the additional amount of P13,000.00 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 mayor minimum. Thus, accused-appellant shall suffer the indeterminate penalty of four (4) years, and two (2) months of prision correccional medium, as minimum to nine (9) years of prision mayor as maximum. Accused-appellant shall also pay Benny Maligaya P35,000.00 by way of actual damages.

In Criminal Case No. Q-91-21909 where accused-appellant defrauded Angeles Javier in the amount of P20,000.00, accused-appellant shall 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. Accused-appellant shall also pay Angeles Javier P20,000.00 by way of actual damages.

In Criminal Case No. Q-91-21910 where accused-appellant defrauded Leodigario Maullon in the amount of P30,400.00, accused-appellant shall suffer the indeterminate penalty of four (4) years and two (2) months of prision correccional medium, as minimum to eight (8) years of prision mayor, as maximum. Accused-appellant shall also pay Leodigario Maullon P30,400.00 by way of actual damages.

In addition, for the crime of illegal recruitment in large scale (Criminal Case No. Q-91-21911) and pursuant to Article 39 (a) of the Labor Code, accused-appellant shall suffer the penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000.00).

Costs against accused-appellant.SO ORDERED.Melo, (Chairman), Vitug, and Panganiban, JJ., concur.

APPRENTICES248 SCRA 654G.R. No. L-114337, September 29, 1995NITTO ENTERPRISES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, and ROBERTO CAPILI, respondents.D E C I S I O N

KAPUNAN, J.:This is a 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 letters 3 which reads:August 2, 1990Wala 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) minuto 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 P715.00Medicines (sic) and others 317.04Bibigyan 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 confirmasyon at pag-ayon na ang lahat ng nakasulat sa itaas ay totoo.

xxx xxx xxxNaiintindihan 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

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Roberto CapiliOn 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 Capili 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 any 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.

SO ORDERED. 7 The NLRC declared that private respondent was a regular employee of petitioner by ruling thus: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 complaint being for illegal dismissal (among others) it then behooves upon respondent, pursuant to Art. 277(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. 1 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 ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE RESPONDENT.

We find no merit in the petitionPetitioner 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.

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.

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 qua 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 t he Labor Code provides that the State aims to "establish 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") deserve 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. mphasis 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

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employer's decision to dismiss him (Sec. 13, BP130, 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 inexistent (Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs. NLRC, 168 SCRA 122, Ruffy vs. NLRC. 182 SCRA 365 L [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 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.Padilla, Davide, Jr., Bellosillo and Hermosisima, Jr., JJ., concur.

CENTURY CANNING CORPORATION, Petitioner, versus COURT OF APPEALS and GLORIA C. PALAD, Respondents., G.R. No. 152894, 2007 Aug 17, 2nd DivisionD E C I S I O NCARPIO, J.:The Case This is a petition for review[1] of the Decision[2] dated 12 November 2001 and the Resolution dated 5 April 2002 of the Court of Appeals in CA-G.R. SP No. 60379.The Facts On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad) as “fish cleaner” at petitioner’s tuna and sardines factory. Palad signed on 17 July 1997 an apprenticeship agreement[3] with petitioner. Palad received an apprentice allowance of P138.75 daily. On 25 July 1997, petitioner submitted its apprenticeship program for approval to the Technical Education and Skills Development Authority (TESDA) of the Department of Labor and Employment (DOLE). On 26 September 1997, the TESDA approved petitioner’s apprenticeship program.[4] According to petitioner, a performance evaluation was conducted on 15 November 1997, where petitioner gave Palad a rating of N.I. or “needs improvement” since she scored only 27.75% based on a 100% performance indicator. Furthermore, according to the performance evaluation, Palad incurred numerous tardiness and absences. As a consequence, petitioner issued a termination notice[5] dated 22 November 1997 to Palad, informing her of her termination effective at the close of business hours of 28 November 1997. Palad then filed a complaint for illegal dismissal, underpayment of wages, and non-payment of pro-rated 13th month pay for the year 1997. On 25 February 1999, the Labor Arbiter dismissed the complaint for lack of merit but ordered petitioner to pay Palad her last salary and her pro-rated 13th month pay. The dispositive portion of the Labor Arbiter’s decision reads: WHEREFORE, premises considered, judgment is hereby rendered declaring that the complaint for illegal dismissal filed by the complainant against the respondents in the above-entitled case should be, as it is hereby DISMISSED for lack of merit. However, the respondents are hereby ordered to pay the complainant the amount of ONE THOUSAND SIX HUNDRED THIRTY-TWO PESOS (P1,632.00), representing her last salary and the amount of SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT (P7,228.00) PESOS representing her prorated 13th month pay. All other issues are likewise dismissed.

SO ORDERED.[6] On appeal, the National Labor Relations Commission (NLRC) affirmed with modification the Labor Arbiter’s decision, thus: WHEREFORE, premises considered, the decision of the Arbiter dated 25 February 1999 is hereby MODIFIED in that, in addition, respondents are ordered to pay complainant’s backwages for two (2) months in the

amount of P7,176.00 (P138.75 x 26 x 2 mos.). All other dispositions of the Arbiter as appearing in the dispositive portion of his decision are AFFIRMED. SO ORDERED.[7] Upon denial of Palad’s motion for reconsideration, Palad filed a special civil action for certiorari with the Court of Appeals. On 12 November 2001, the Court of Appeals rendered a decision, the dispositive portion of which reads: WHEREFORE, in view of the foregoing, the questioned decision of the NLRC is hereby SET ASIDE and a new one entered, to wit:(a) finding the dismissal of petitioner to be illegal;(b) ordering private respondent to pay petitioner her underpayment in wages;(c) ordering private respondent to reinstate petitioner to her former position without loss of seniority rights and to pay her full backwages computed from the time compensation was withheld from her up to the time of her reinstatement;(d) ordering private respondent to pay petitioner attorney’s fees equivalent to ten (10%) per cent of the monetary award herein; and(e) ordering private respondent to pay the costs of the suit. SO ORDERED.[8]The Ruling of the Court of Appeals The Court of Appeals held that the apprenticeship agreement which Palad signed was not valid and binding because it was executed more than two months before the TESDA approved petitioner’s apprenticeship program. The Court of Appeals cited Nitto Enterprises v. National Labor Relations Commission,[9] where it was held that prior approval by the DOLE of the proposed apprenticeship program is a condition sine qua non before an apprenticeship agreement can be validly entered into. The Court of Appeals also held that petitioner illegally dismissed Palad. The Court of Appeals ruled that petitioner failed to show that Palad was properly apprised of the required standard of performance. The Court of Appeals likewise held that Palad was not afforded due process because petitioner did not comply with the twin requirements of notice and hearing.The Issues Petitioner raises the following issues:1. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE; and2. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE RESPONDENT.[10]The Ruling of the Court The petition is without merit. Registration and Approval by the TESDA of Apprenticeship Program Required Before Hiring of Apprentices The Labor Code defines an apprentice as a worker who is covered by a written apprenticeship agreement with an employer.[11] One of the objectives of Title II (Training and Employment of Special Workers) of the Labor Code is to establish apprenticeship standards for the protection of apprentices.[12] In line with this objective, Articles 60 and 61 of the Labor Code provide: ART. 60. Employment of apprentices. — Only employers in the highly technical industries may employ apprentices and only in apprenticeable occupations approved by the Minister of Labor and Employment. mphasis supplied)ART. 61. Contents of apprenticeship agreements. — Apprenticeship agreements, including the wage 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 percent of the applicable minimum wage, may be entered into only in accordance with apprenticeship programs duly approved by the Minister of Labor and Employment. The Ministry shall develop standard model programs of apprenticeship. mphasis supplied) In Nitto Enterprises v. National Labor Relations Commission,[13] the Court cited Article 61 of the Labor Code and held that an apprenticeship program should first be approved by the DOLE before an apprentice may be hired, otherwise the person hired will be considered a regular employee. The Court held:

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.

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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 qua 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 x x x. mphasis supplied)[14] Republic Act No. 7796[15] (RA 7796), which created the TESDA, has transferred the authority over apprenticeship programs from the Bureau of Local Employment of the DOLE to the TESDA.[16] RA 7796 emphasizes TESDA’s approval of the apprenticeship program as a pre-requisite for the hiring of apprentices. Such intent is clear under Section 4 of RA 7796:SEC. 4. Definition of Terms. — As used in this Act:x x xj) “Apprenticeship” training within employment with compulsory related theoretical instructions involving a contract between an apprentice and an employer on an approved apprenticeable occupation;k) “Apprentice” is a person undergoing training for an approved apprenticeable occupation during an established period assured by an apprenticeship agreement;l) “Apprentice Agreement” is a contract wherein a prospective employer binds himself to train the apprentice who in turn accepts the terms of training for a recognized apprenticeable occupation emphasizing the rights, duties and responsibilities of each party;m) “Apprenticeable Occupation” is an occupation officially endorsed by a tripartite body and approved for apprenticeship by the Authority [TESDA]; mphasis supplied) In this case, the apprenticeship agreement was entered into between the parties before petitioner filed its apprenticeship program with the TESDA for approval. Petitioner and Palad executed the apprenticeship agreement on 17 July 1997 wherein it was stated that the training would start on 17 July 1997 and would end approximately in December 1997.[17] On 25 July 1997, petitioner submitted for approval its apprenticeship program, which the TESDA subsequently approved on 26 September 1997.[18] Clearly, the apprenticeship agreement was enforced even before the TESDA approved petitioner’s apprenticeship program. Thus, the apprenticeship agreement is void because it lacked prior approval from the TESDA. The TESDA’s approval of the employer’s apprenticeship program is required before the employer is allowed to hire apprentices. Prior approval from the TESDA is necessary to ensure that only employers in the highly technical industries may employ apprentices and only in apprenticeable occupations.[19] Thus, under RA 7796, employers can only hire apprentices for apprenticeable occupations which must be officially endorsed by a tripartite body and approved for apprenticeship by the TESDA. This is to ensure the protection of apprentices and to obviate possible abuses by prospective employers who may want to take advantage of the lower wage rates for apprentices and circumvent the right of the employees to be secure in their employment. The requisite TESDA approval of the apprenticeship program prior to the hiring of apprentices was further emphasized by the DOLE with the issuance of Department Order No. 68-04 on 18 August 2004. Department Order No. 68-04, which provides the guidelines in the implementation of the Apprenticeship and Employment Program of the government, specifically states that no enterprise shall be allowed to hire apprentices unless its apprenticeship program is registered and approved by TESDA.[20] Since Palad is not considered an apprentice because the apprenticeship agreement was enforced before the TESDA’s approval of petitioner’s apprenticeship program, Palad is deemed a regular employee performing the job of a “fish cleaner.” Clearly, the job of a “fish cleaner” is necessary in petitioner’s business as a tuna and sardines factory. Under Article 280[21] of the Labor Code, an employment is deemed 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.Illegal Termination of Palad We shall now resolve whether petitioner illegally dismissed Palad. Under Article 279[22] of the Labor Code, an employer may terminate the services of an employee for just causes[23] or for authorized causes.[24] Furthermore, under Article 277(b)[25] of the Labor Code, the employer must send the employee who is about to be terminated, a written notice stating the causes for termination and must give the employee the opportunity to be heard and to defend himself. Thus, to constitute valid dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or authorized cause; and (2) the employee must be afforded an opportunity to be heard and to defend himself.[26] In this case, the Labor Arbiter held that petitioner terminated Palad for habitual absenteeism and poor efficiency of performance. Under Section 25, Rule VI, Book II of the Implementing Rules of the Labor Code, habitual absenteeism and poor efficiency of performance are among the valid causes for which the employer may terminate the apprenticeship agreement after the probationary period. However, the NLRC reversed the finding of the Labor Arbiter on the issue of the legality of Palad’s termination: As to the validity of complainant’s dismissal in her status as an apprentice, suffice to state that the findings of the Arbiter that complainant was dismissed due to failure to meet the standards is nebulous. What clearly appears is that complainant already passed the probationary status of the apprenticeship agreement of 200 hours at the time she was terminated on 28 November 1997 which was already the fourth month of the apprenticeship period of 1000 hours. As such, under the Code, she can only be dismissed for cause, in this case, for poor efficiency of performance on the job or in the classroom for a prolonged period despite warnings duly given to the apprentice. We noted that no clear and sufficient evidence exist to warrant her dismissal as an apprentice during the agreed period. Besides the absence of any written warnings given to complainant reminding her of “poor performance,” respondents’ evidence in this respect consisted of an indecipherable or unauthenticated xerox of the performance evaluation allegedly conducted on complainant. This is of doubtful authenticity and/or credibility, being not only incomplete in the sense that appearing thereon is a signature (not that of complainant) side by side with a date indicated as “1/16/98”. From the looks of it, this signature is close to and appertains to the typewritten position of “Division/Department Head”, which is below the signature of complainant’s immediate superior who made the evaluation indicated as “11-15-97.” The only conclusion We can infer is that this evaluation was made belatedly, specifically, after the filing of the case and during the progress thereof in the Arbitral level, as shown that nothing thereon indicate that complainant was notified of the results. Its authenticity therefor, is a big question mark, and hence lacks any credibility. Evidence, to be admissible in administrative proceedings, must at least have a modicum of authenticity. This, respondents failed to comply with. As such, complainant is entitled to the payment of her wages for the remaining two (2) months of her apprenticeship agreement.[27] mphasis supplied) Indeed, it appears that the Labor Arbiter’s conclusion that petitioner validly terminated Palad was based mainly on the performance evaluation allegedly conducted by petitioner. However, Palad alleges that she had no knowledge of the performance evaluation conducted and that she was not even informed of the result of the alleged performance evaluation. Palad also claims she did not receive a notice of dismissal, nor was she given the chance to explain. According to petitioner, Palad did not receive the termination notice because Palad allegedly stopped reporting for work after being informed of the result of the evaluation. Under Article 227 of the Labor Code, the employer has the burden of proving that the termination was for a valid or authorized cause.[28] Petitioner failed to substantiate its claim that Palad was terminated for valid reasons. In fact, the NLRC found that petitioner failed to prove the authenticity of the performance evaluation which petitioner claims to have conducted on Palad, where Palad received a performance rating of only 27.75%. Petitioner merely relies on the performance evaluation to prove Palad’s inefficiency. It was likewise not shown that petitioner ever apprised Palad of the performance standards set by the company. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal.[29] Furthermore, Palad was not accorded due process. Even if petitioner did conduct a performance evaluation on Palad, petitioner failed to warn Palad of her alleged poor performance. In fact, Palad denies any knowledge of the performance evaluation conducted and of the result thereof. Petitioner likewise admits that Palad did not receive the notice of termination[30] because Palad allegedly stopped reporting for work. The records are bereft of evidence to show that petitioner ever gave Palad the opportunity to explain and defend herself. Clearly, the two requisites for a valid dismissal are lacking in this case. WHEREFORE, we AFFIRM the Decision dated 12 November 2001 and the Resolution dated 5 April 2002 of the Court of Appeals in CA-G.R. SP No. 60379. SO ORDERED.

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ANTONIO T. CARPIOAssociate JusticeWE CONCUR: LEONARDO A. QUISUMBING, CONCHITA CARPIO MORALES, DANTE O. TINGA, PRESBITERO J. VELASCO, JR.HANDICAPPED WORKERS310 SCRA 186MARITES 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 & RICO TIMOSA, petitioners vs. NATIONAL LABOR RELATIONS COMMISSION & FAR EAST BANK AND TRUST COMPANY, respondents., G.R. No. 122917, 1999 Jul 12, 3rd Division)D E C I S I O NPANGANIBAN, 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 treatment is rooted not merely on charity or accommodation, but on justice for all. The CaseChallenged in the Petition for Certiorari1 [Rollo, pp. 3-39.] before us is the June 20, 1995 Decision2 [Rollo, pp. 46-65.] of the National Labor Relations Commission (NLRC),3 [Penned by Presiding Comm. Lourdes C. Javier and concurred in by Comm. Joaquin A. Tanodra. The other member, Comm. Ireneo B. Bernardo, dissented.] which affirmed the August, 22 1994 ruling of Labor Arbiter Cornelio L. Linsangan. The labor arbiter’s Decision disposed as follows:4 [Rollo, p. 113.]"WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint for lack of merit."Also assailed is the August 4, 1995 Resolution5 [Rollo, pp. 73-74.] of the NLRC, which denied the Motion for Reconsideration.The FactsThe facts were summarized by the NLRC in this wise:6 [NLRC Decision, pp. 2-10; rollo, pp. 47-55.] "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: ‘EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERSThis 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 deaf-mutes, 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;

WHEREAS, the EMPLOYEE is one of those handicapped workers who [were] recommended for possible employment with the BANK; 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: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.2. The EMPLOYEE shall perform among others, the following duties and responsibilities: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.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 of disabled 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. x x x x x x x x x "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 of the respondent Bank’s corporate philosophy as well as its 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 adopted the special program to help tide over a group of handicapped workers such as deaf-mutes like the complainants who

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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 sorters 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 dismissed, viz:7 [Petition, p. 12; rollo, p. 14.] "NAME OF PETITIONER WORKPLACE Date Hired Date Dismissed1. MARITES BERNARDO Intramuros 12 NOV 90 17 NOV 932. ELVIRA GO DIAMANTE Intramuros 24 JAN 90 11 JAN 943. REBECCA E. DAVID Intramuros 16 APR 90 23 OCT 934. DAVID P. PASCUA Bel-Air 15 OCT 88 21 NOV 945. RAQUEL ESTILLER Intramuros 2 JUL 92 4 JAN 946. ALBERT HALLARE West 4 JAN 91 9 JAN 947. EDMUND M. CORTEZ Bel-Air 15 JAN 91 3 DEC 938. JOSELITO O. AGDON Intramuros 5 NOV 90 17 NOV 939. GEORGE P. LIGUTAN, JR. Intramuros 6 SEPT 89 19 JAN 9410. CELSO M. YAZAR Intramuros 8 FEB 93 8 AUG 9311. ALEX G. CORPUZ Intramuros 15 FEB 93 15 AUG 9312. RONALD M. DELFIN Intramuros 22 FEB 93 22 AUG 9313. ROWENA M. TABAQUERO Intramuros 22 FEB 93 22 AUG 9314. CORAZON C. DELOS REYES Intramuros 8 FEB 93 8 AUG 9315. ROBERT G. NOORA Intramuros 15 FEB 93 15 AUG 9316. MILAGROS O. LEQUIGAN Intramuros 1 FEB 93 1 AUG 9317. ADRIANA F. TATLONGHARI Intramuros 22 JAN 93 22 JUL 9318. IKE CABANDUCOS Intramuros 24 FEB 93 24 AUG 9319. COCOY NOBELLO Intramuros 22 FEB 93 22 AUG 9320. DORENDA CATIMBUHAN Intramuros 15 FEB 93 15 AUG 9321. ROBERT MARCELO West 31 JUL 938 1 AUG 9322. LILIBETH Q. MARMOLEJO West 15 JUN 90 21 NOV 9323. JOSE E. SALES West 6 AUG 92 12 OCT 9324. ISABEL MAMAUAG West 8 MAY 92 10 NOV 9325. VIOLETA G. MONTES Intramuros 2 FEB 90 15 JAN 9426. ALBINO TECSON Intramuros 7 NOV 91 10 NOV 9327. MELODY V. GRUELA West 28 OCT 91 3 NOV 9328. BERNADETH D. AGERO West 19 DEC 90 27 DEC 9329. CYNTHIA DE VERA Bel-Air 26 JUN 90 3 DEC 9330. LANI R. CORTEZ Bel-Air 15 OCT 88 10 DEC 9331. MA. ISABEL B. CONCEPCION West 6 SEPT 90 6 FEB 9432. DINDO VALERIO Intramuros 30 MAY 93 30 NOV 9333. ZENAIDA MATA Intramuros 10 FEB 93 10 AUG 9334. ARIEL DEL PILAR Intramuros 24 FEB 93 24 AUG 9335. MARGARET CECILIA CANOZA Intramuros 27 JUL 90 4 FEB 9436. THELMA SEBASTIAN Intramuros 12 NOV 90 17 NOV 9337. MA. JEANETTE CERVANTES West 6 JUN 92 7 DEC 9338. JEANNIE RAMIL Intramuros 23 APR 90 12 OCT 9339. ROZAIDA PASCUAL Bel-Air 20 APR 89 29 OCT 9340. PINKY BALOLOA West 3 JUN 91 2 DEC 9341. ELIZABETH VENTURA West 12 MAR 90 FEB 94 [SIC]42. GRACE S. PARDO West 4 APR 90 13 MAR 9443. RICO TIMOSA Intramuros 28 APR 93 28 OCT 93"8 [This is a typographical error on the part of the petitioner, for it is unlikely that the Contract of Employment was terminated the day after it was executed. In fact, Annex "C" of petitioners’ Position Paper, which was submitted before the labor arbiter, shows that Petitioner Robert Marcelo was hired on July 31, 1992, not 1993 (Rollo, p. 10)]

As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners. Hence, this recourse to this Court.9 [The case was deemed submitted for resolution on December 1, 1998, when the Memorandum of the private respondent was received by the Court. The case was given due course on December 8, 1997.]The Ruling of the NLRCIn 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 xxx 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 [NLRC Decision, p. 18; rollo, p. 63.]The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, "considering the prevailing circumstances/milieu of the case."IssuesIn 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 [Petitioners’ Memorandum, p. 3; rollo, p. 474.]In the main, the Court will resolve whether petitioners have become regular employees.This Court’s RulingThe 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 employment was illegal. Preliminary Matter: Propriety of CertiorariRespondent 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 respondents 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 Employees?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 [Respondent’s Memorandum, p. 10; rollo, p.523.] 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 duty-bound to protect and uphold, not as a matter of compassion but as a consequence of law and justice.

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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.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 [Approved on March 24, 1992.] 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:"Section 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 [176 SCRA 615, 621, August 21, 1989, per Fernan, CJ.] 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 indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists." 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 [CENECO v. NLRC, 236 SCRA 108, September 1, 1994, per Puno, J.] 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 [Ibid.; Article 281, Labor Code.] 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 [Articles 282 to 284 of the Code.] 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 [Article 279 of the Labor Code as amended.] 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,19 [Respondent’s Memorandum, p. 16; rollo, p. 529.] petitioners are hereby awarded separation pay in lieu of reinstatement.20 [Zarate v. Olegario, 263 SCRA 1, October 7, 1996.]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 RulingRespondent bank, citing Brent School v. Zamora21 [181 SCRA 802, February 6, 1990.] 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 [Article 1700 of the Civil Code provides: "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. x x x."] 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 [Pakistan Airlines Corporation v. Ople, 190 SCRA 90, September 28, 1990, per Feliciano, J. See also Servidad v. NLRC, GR No. 128682, March 18, 1999; Villa v. NLRC, 284 SCRA 105, January 14, 1998.] 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 [Respondent’s Memorandum, p. 15; rollo, p. 528.] 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 [253 SCRA 440, 450, February 9, 1996, per Kapunan, J.] 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 x x x but on the nature of the activities performed by the employee, and to some extent, the length of performance and its continued existence."

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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 [A.M. Oreta & Co. v. NLRC, 176 SCRA 208, August 10, 1989.] 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 [GR No. 122327, August 19, 1998, per Martinez, J.]"Article 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. "x x x x x x x x x"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 fixed-term 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 qualified persons, 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 [Manifestation of the Office of the Solicitor General; rollo, pp. 354-375.]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., 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. 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.SO ORDERED. Romero (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.BONIFACIO NAKPIL, Petitioner, versus MANILA TOWERS DEVELOPMENT CORPORATION, Respondent., G.R. No. 160867, 2006 Sep 20, 1st Division)D E C I S I O NCALLEJO, SR., J.: This is a consolidation of two Petitions for Review, assailing the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 72289 dated August 25, 2003 and the Resolution dated November 19, 2003 denying the motion for reconsideration thereof.The AntecedentsA 14-storey high rise building was constructed at 777 Ongpin St., Sta. Cruz, Manila. Sometime in 1964, its owner, Cheong Kiao Ang, leased the building to about 200 Filipino Chinese tenants who used the same for either residential or commercial purposes. One of these tenants was Atty. Bonifacio Nakpil who leased Room 204 in the mezzanine floor. He used the unit as his law office.[2] The tenants of the building later formed the House International Building Tenants Association, Inc. (HIBTAI).The property was mortgaged with the Government Service Insurance System (GSIS) as security for a loan Ang had earlier obtained. Upon failure to pay the loan, the GSIS had the real estate mortgage foreclosed and the property

sold at public auction, with GSIS as the winning bidder. The latter, in turn, sold the property to the Centertown Marketing Corporation (CMC) which assigned all its rights to its sister-corporation, the Manila Tower Development Corporation (MTDC) for P21,000,000.00. The HIBTAI protested, claiming that its members had the priority to buy the property.[3] The tenants refused to pay their rentals and instead remitted them to HIBTAI.On June 29, 1981, the City Engineer wrote the MTDC, through Luis Javellana, requesting that the defects of the building be corrected. The City Engineer warned the MTDC that the defects were serious and would endanger the lives of the tenants if not immediately corrected. The City Engineer reiterated his request in a letter dated July 10, 1981 to MTDC urging that the building be immediately repaired. However, before the MTDC could make the necessary repairs, the HIBTAI, on October 2, 1982, filed a complaint against the GSIS for injunction and damages in the Court of First Instance (CFI) of Manila.On January 31, 1983, the court rendered judgment dismissing the complaint. However, on February 23, 1983, HIBTAI filed another complaint for annulment of contract and damages in the CFI of Manila, docketed as Civil Case No. 83-15875, against the CMC, MTDC and GSIS. It averred that under Presidential Decree (P.D.) No. 1517, the tenants had the priority right to purchase the property. The court rendered judgment dismissing the complaint, prompting HIBTAI to appeal the decision to the appellate court. The ruling of the trial court was later affirmed on February 4, 1986. HIBTAI assailed the ruling in this Court via petition for review. On June 30, 1987, this Court rendered judgment affirming the decision of the CA.[4] According to the Court, the tenants of the building, not the HIBTAI, were the real parties-in-interest as parties-plaintiffs.About eight (8) years later, on October 12, 1995, Atty. Samuel S. Samuela, the building administrator, wrote Architect Juan A. Maravillas, Jr., then Officer-in-Charge (OIC), Office of the Building Official, City of Manila, requesting for an immediate ocular inspection of the building to determine its safety. The letter mentioned that, as far back as 1981, the City Engineer and Building Official had ordered the building condemned after inspection. Atty. Samuela stated that when the MTDC was about to initiate the repairs on the building, the tenants filed several suits against it; this prevented MTDC from complying with the said order. During the pendency of these cases, the tenants likewise took control of the building and even illegally put up structures in the building without MTDC’s consent. He pleaded to the Building Official to give priority to his request to prevent undue injuries and protect the lives of the tenants.[5]The City Building Official granted the request and scheduled an ocular inspection of the building at 2:00 p.m. on October 24, 1995.[6]With prior notices to the tenants and in the presence of a representative of HIBTAI, Amado Ramoneda, the representatives of the Office of the Building Official conducted an ocular inspection of the building.[7] On November 3, 1995, they submitted a Building Inspection Report with the following findings:I. STRUCTURAL ASPECT (Sec. 3.1 Rule VII-IRR)1. Cracks on the exterior interior walls are prominent which manifest earthquake movement and decrease in seismic resistance. Damages to beams and columns are feasible.II. ELECTRICAL ASPECT (Sec. 3.3 Rule VII-IRR)2. Wiring system are already old, obsolete and not properly maintained; 3. Some junction boxes are not properly covered thus exposing the wiring connections;4. Usage of dangling extension cords and octopus wiring connections were likewise observed. III. SANITARY/PLUMBING ASPECT (Sec. 3.5 Rule VII-IRR) 5. Defective sanitary/plumbing installations;6. Poor drainage system that caused the stagnation of waste water within the back part (Ground Floor) of the building;7. All sanitary/plumbing fixtures on vacated 9th, 10th & 11th floors, due to lack of proper maintenance has los[t] their trap seals, this allowed the escape of toxicating sewer gas from the system. IV. ARCHITECTURAL ASPECT (Sec. 3.6 Rule VII-IRR). 8. Steel frames and roofings at deck are rusted/corroded and inadequately maintained;9. Broken window glass panes and rusted steel casement; 10. Inadequate light and ventilation resulting from illegal constructions at the required open space areas;11. Illegal use of 14th floor as sauna bath parlor which is non-conforming to City Ordinance. OTHERS 12. Non-compliance with the provisions of BP 344, the Law to Enhance Mobility of Disabled Persons;13. Illegal construction at the estero easement area and at the required open spaces in violations of Section 3.8 Rule VII-IRR.[8] nderscoring supplied)The City Building Official recommended that the windows glass/frames be repaired and the illegally appended structures removed. It was also recommended that the use of the sauna bath be discontinued and the old electrical

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wiring system and fixtures be replaced. He also stated that the structural integrity of the building was questionable, and that structural testing was needed.[9] Consequently, on November 10, 1995, the City Building Official wrote a letter to the building administrator, ordering him to cause the tenants to vacate the building and undertake the necessary repairs and rehabilitation of the building. The following warning was also issued: Failure to comply herewith shall constrain this Office to impose further administrative sanctions in accordance with the provisions of the National Building Code PD. 1096, as well as the other existing laws and ordinances. This is without prejudice to further legal action that may be taken under the provisions of Articles 482 and 694 to 707 of the Civil Code of the Philippines.[10] However, the MTDC did not respond to the letter. On January 24, 1996, the City Building Official issued a Closure Order to the MTDC and ordered the building administrator to cause the tenants to vacate the building within fifteen (15) days from notice and to commence its repair. He also directed MTDC to file an application for the necessary permits before the start of the actual repairs, together with a certification on structural stability from the building’s structural designer and to attach thereto the results of the structural testing as well as the recommendation/evaluation reports, scope of project activities, repair/renovation plans and retrofitting plans. The order would only be lifted after the defects or deficiencies of the subject building or structure shall have been corrected or substantially complied with in accordance with Section 21, Rule VIII-IRR, P.D. No. 1096, without prejudice to further action that may be taken under the provisions of Articles 482, and 694 to 707 of the Civil Code, as well as other existing laws and ordinances.[11] The City Building Official conducted a reinspection of the building and, on March 26, 1996, made the following recommendation: It is recommended that because of: 1) the adamant refusal of the owners of the building to correct the serious defects noted by this Office as early as 1981 up to the present, notwithstanding notices to this effect; 2) the directive of national as well as local leaders to intensify the campaign against buildings which are dangerous to life and limb as exemplified in the tragic Ozone case in Quezon City; and 3) the possibility of City officials incurring criminal as well as administrative liabilities for failure to take positive steps to protect the lives of the people against ruinous or dangerous buildings. The persistence of the owners of the building in not undertaking the required urgent repairs allegedly because of suits filed against them, gives this Office no better alternative but to recommend that the City Engineer be authorized and directed to make the necessary repairs and all expenses thereto be shouldered by the owners of the building and also to order the occupants of the building to immediately vacate the premises to give way to the repair and to ensure the protection of their lives and property. Approval of this request is urgently needed.[12] The City Mayor approved the recommendation and directed the repairs of the building by the City Building Official with the expenses therefor to be charged against the account of MTDC.[13] On June 28, 1996, notices were sent to the tenants, giving them fifteen (15) days within which to vacate the building to give way to its general repair.[14] However, at the time, Atty. Nakpil was in the United States for medical treatment, and his secretary was left behind to take care of the law office. Felix Ong, one of the tenants in the building and the President of the HIBTAI, filed a petition for prohibition with a plea for a writ of preliminary injunction and/or a temporary restraining order (TRO) with damages against the MTDC, City Engineer and Police Major Franklin Gacutan, docketed as Civil Case No. 96-79267. Ong prayed that a TRO be issued to enjoin respondents from conducting repair and rehabilitation work within the building, which the court granted.Clemente Sy, who claimed to be the Barangay Captain of Barangay No. 297, Zone 29 where the building was located and the incumbent President of the House International Building Tenants Association, filed a similar petition against the same respondents, including MTDC.[15] At about 4:00 p.m. on July 19, 1996, a group of men led by Engr. Melvin Balagot, the Chief Slum Clearance and Demolition Services of the Office of the City Building Official, entered the building and, in compliance with the order of the City Mayor as recommended by the City Building Official, commenced the repairs and tore down some of the structures. However, the repair works were temporarily suspended on July 22, 1996 as a result of the TRO issued by the court in favor of Ong in Civil Case No. 96-79267.On July 23, 1996, Engr. Balagot submitted the following Report:1. That all the occupants thereat already vacated the premises to give way for the repair work of the subject structure except for the unit occupied by the security guards at the ground floor; 2. That most of the interior walls were already dismantled by this Office to give way for immediate replacement. 3. It is likewise reported that the said building is not safe for occupancy for the meantime.

For your information and further instruction. (SGD)MELVIN Q. BALAGOTEngineer VChief, Slum Clearance and Demolition Services.[16]Upon his arrival in the Philippines, Atty. Nakpil filed, on November 5, 1996, a complaint in the Regional Trial Court (RTC) of Manila against the MTDC, seeking for actual, moral, and exemplary damages, attorney’s fees, litigation expenses, costs of suit and other reliefs. The case was docketed as Civil Case No. 65980. He alleged that the MTDC, through its agents and representatives and the policemen who accompanied the demolition team, forced the guard to open the gate to the building, and, thereafter, 200 people armed with hammer and crowbars started destroying the mezzanine floor of the building on July 19, 1996. His room was destroyed, the walls and partitions were completely hammered down, and the electricity was cut off. His personal belongings were either scattered, thrown away, or stolen. He pointed out that he had been renting the premises and complying with the conditions of the lease since 1965. The MTDC violated his right as lessee to the possession of the premises, unlawfully depriving him of said possession without any lawful authority or court order.[17]Atty. Nakpil prayed that MTDC be ordered to pay the following:a) P100,000 for actual damages, representing the value of the personal belongings and important papers which were lost and/or stolen by the representatives of the defendant during the actual demo[li]tion and tearing or hammering down of the walls and partitions of the room of the plaintiff;b) The sum of P500,000.00 as moral damages;c) The sum of P100,000.00 as exemplary damages;d) The sum equivalent to 20% of the amount due to the plaintiff as attorney’s fees; ande) The sum of P50,000 as litigation expenses, plus costs of suit.Plaintiff prays for such other relief and remedies he is entitled to in the premises.[18]Meantime, the trial court dismissed the complaint of Ong in Civil Case No. 96-79267. In view of this development, the Office of the Mayor sent a letter dated March 6, 1998 to the President and officers of the MTDC, and the owners of the building, directing them to undertake immediate repairs within three (3) days from receipt thereof, otherwise, it will undertake the repair and all expenses shall be charged against them.[19] The Office of the Mayor made it clear that the order became necessary to protect the people from any injury as a consequence of the dilapidated and serious deterioration of the building. The MTDC forthwith applied for a demolition permit with the Office of the Building Official which was granted on March 30, 1998.[20] The MTDC later had the building demolished.In due course, the complaint and summons were served on MTDC on April 14, 1998 in Civil Case No. 65980.[21] In its answer to the complaint, MTDC alleged that it was the City of Manila which caused the repair of the building, following the tragic Ozone fire incident in Quezon City. Consequently, it was not liable for Atty. Nakpil’s claims.Atty. Nakpil testified that he had been a lessee of Room 204 and used the room as a law office; on July 19, 1996, he was in the United States for treatment when his daughter informed him, through phone, that his place was being demolished. He rushed back home and arrived in Manila on July 30, 1996, and discovered that he had no more office to speak of. The demolition team (the sheriff, policemen and laborers), armed with crowbars, looted the room and destroyed the pipes and cabinets and scattered his things.[22] He lost some of his books, a tanguile table, three paintings, two manual typewriters, all valued at P100,000.00. He averred that he had been in the law practice for 30 years, all spent in Room 204; because of the demolition of his office, he could not resume his law practice. For his part, Joseph Villanueva declared that, since 1973, he had leased a portion of the mezzanine floor, Room 200, which he used as his clinic. At around 3:00 p.m. on July 19, 1996, a group of employees of the City Engineer’s Office, accompanied by policemen and sheriffs, gained entry into the building, cut the electric current, and destroyed the pipes with the use of heavy equipments and crowbars. They demolished the mezzanine and upper floors and other parts of the building. Around 20 members of the demolition crew entered the office of Atty. Nakpil. Some members of the demolition crew looted the room and took everything they could carry. He stated that what he and the tenants received were notices to repair and not notice of demolition. Atty. Nakpil presented Engr. Guillermo de Leon who testified that he was requested to conduct an ocular inspection of the building. As per his report dated August 9, 1990, he assessed the building to be safe, sound and stable. The building was not destroyed by the earthquake on July 6, 1990. He found hairline cracks, caused probably by temperature. He never used any instrument to determine the structural stability because there was no danger. He stated that upon inspection, he found no hairline cracks and that the building could be saved by plastering; in fact, it could withstand any earthquake.

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Carmelita Tan, a member of the HIBTAI, testified that she owned a grocery store in the ground floor and in the mezzanine. At about 4:00 p.m. on July 19, 1996, 100 persons, carrying hammers and crowbars and long irons, gained entry into the building. She rushed to the mezzanine and saw that ten of them were in the law office of Atty. Nakpil and that the door and partitions were damaged. The lights were off at the time.MTDC adduced testimonial and documentary evidence that the Office of the City Engineer, through Engr. Melvin Balagot, Jr., commenced the repairs of the building on July 19, 1996, with the assistance of the employees of the City Engineer’s Office, laborers and policemen who were tasked to check the flow of traffic. They removed the cracked interior walls of the building with crowbars, hammers and other instruments, and some portions of the ceiling which needed to be replaced.[23] However, they did not remove the walls and partitions in the mezzanine floor.[24] They started the work on the 9th and 10th floors of the building,[25] but had to stop due to the temporary restraining order from the RTC of Manila on the complaint of Felix Ong. During the ocular inspection of the building on August 8, 1996 conducted by the Clerk of Court in connection with Civil Case No. 96-79267, the Office of Atty. Nakpil was unoccupied.[26]On May 20, 2001, the court rendered judgment in favor of MTDC and ordered the dismissal of the complaint. The trial court declared that Atty. Nakpil failed to prove that the building was demolished on July 30, 1996 and failed to link MTDC to the incident on July 19, 1996 and the loss of the personal properties of Atty. Nakpil. As admitted by one of his witnesses (Villanueva), the employees of the City Engineer’s office were the ones who demolished the building, while Carmelita Tan declared that she did not know who those people were.[27]Atty. Nakpil appealed to the CA. On August 25, 2003, the CA rendered judgment granting the appeal and reversing the decision of the RTC. The fallo of the decision reads:WHEREFORE premises considered, the appealed decision of the Regional Trial Court, Branch 152 in Civil Case No. is hereby REVERSED and SET ASIDE. A new one is hereby rendered ordering defendant-appellee, Manila Towers to pay herein plaintiff-appellant Bonifacio Nakpil the amount of P50,000.00 as nominal damages.SO ORDERED.[28]The CA held that MTDC was remiss in its duty as lessor under Article 1654, that is, to make the necessary repairs on the building. This led to the demolition of the leased premises, thereby disturbing the peaceful and adequate enjoyment of the lessee. Thus, the failure of MTDC to fulfill such obligation entitled Atty. Nakpil to damages. The appellate court cited Goldstein v. Roces.[29] However, the CA also ruled that no actual damages could be awarded to Atty. Nakpil since he failed to present competent evidence to prove the actual damages sustained. Neither can moral damages be awarded to him since he likewise failed to prove bad faith or any fraudulent act on the part of MTDC. Thus, no exemplary damages could likewise be awarded, and, consequently, he was not entitled to attorney’s fees. According to the CA, the most that could be adjudged in his favor was nominal damages for violation of his right.[30]The parties filed their respective motions for reconsideration of the decision, which the CA denied in its Resolution dated November 19, 2003.[31]The parties filed their respective petitions for review on certiorari in this Court, seeking to reverse the decision and resolution of the appellate court.In G.R. No. 160867, Nakpil, petitioner therein, contends that, while actual damages must be proven as a general rule and the amount of damages must possess at least a degree of certainty, it is not necessary to prove exactly how much the loss was; it is enough that loss is proven. He insists that he has presented proof that he suffered losses when his office was demolished and the value he gave was a fair and reasonable assessment thereof. He maintains that as of June 1995, there were already 245 volumes of the Supreme Court Reports Annotated (SCRA). In 1998, the value of each volume of the SCRA was P520.00; hence, the value of 245 volumes would be P127,400.00, a matter which the court can take judicial notice of. Assuming that the evidence he presented is not sufficient to entitle him to an award of actual damages, the P50,000.00 nominal damages awarded to him is too minimal. He maintains that he is entitled to moral damages because the MTDC had the building demolished to have him evicted from his office; he suffered mental anguish and was embarrassed by his eviction; he had his law office for more than 30 years and considered it his second home. On the other hand, in G.R. No. 160886, MTDC, petitioner therein, avers that it cannot be made liable for actual, moral and exemplary damages because it had not been remiss in its duty to make the necessary repairs; it was prohibited from taking possession of the property by the tenants who had filed several suits against it.[32] It alleged that it acquired the building from the GSIS in 1981, and it was the HIBTAI that had been managing the affairs of the said building and collected the rentals from the tenants. It pointed out that in CA-G.R. No. 04393, the CA ruled that the HIBTAI had no right to collect the rentals. Moreover, HIBTAI did not use the rentals to make the necessary repairs but used it instead to pay its accounts and obligations. By their own actions, the tenants of the subject building prevented MTDC from performing its duty to maintain them in their peaceful possession and enjoyment of

the property. Moreover, Nakpil failed to prove that it had anything to do with the demolition/repairs and the loss of his personal property. Nakpil counters that while MTDC may have failed to make the necessary repairs because it was prevented by the tenants’ association from doing so, there is no showing that it failed to maintain him in the peaceful and adequate possession of the leased premises for the same reason. He contends that MTDC allowed the city to demolish the building even when the order was only for its repair. He posits that the MTDC is liable for damages because the MTDC, not a third person, deprived him of his possession of the leased premises.[33] The threshold issues are: (1) whether or not the MTDC is liable for actual, moral and exemplary damages to Nakpil; and (2) whether the award of P50,000.00 for nominal damages has factual and legal basis. The Ruling of the Court The petition of the MTDC in G.R. No. 160886 is meritorious. The petition of Nakpil in G.R. No. 160867 is denied for lack of merit. Article 1654 of the Civil Code enumerates the obligations of the lessor: (1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended;(2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use for which it has been devoted, unless there is a stipulation to the contrary;(3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. Failure of the lessor to fulfill any of these obligations will render the lessor liable for damages.[34] In contracts, the obligor (lessor) who acted in good faith is liable for damages that are the material and probable consequence of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time the obligation was contracted. In case of fraud, bad faith, malice or wanton attitude, he shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation.[35]We do not agree with the ruling of the CA that the MTDC committed a breach of its lease contract with Nakpil when it failed to comply with its obligation as lessor, and that the MTDC is liable for nominal damages. Breach of contract is the failure without legal reason to comply with the terms of a contract. It is also defined as the failure, without legal excuse, to perform any promise which forms the whole or part of the contract.[36] There is no factual and legal basis for any award for damages to respondent.The duty to maintain the lessee in the peaceful and adequate enjoyment of the lease for the duration of the contract is merely a warranty that the lessee shall not be disturbed in his legal, and not physical, possession.[37] In the early case of Goldstein v. Roces,[38] the Court, citing the commentaries of Manresa, pointed out that the obligation to maintain the lessee in the peaceful and adequate enjoyment of the leased property seeks to protect the lessee not only from acts of third persons but also from the acts of the lessor, thus: The lessor must see that the enjoyment is not interrupted or disturbed, either by others’ acts [save in the case provided for in the article 1560 (now Article 1664)], or by his own. By his own acts, because, being the person principally obligated by the contract, he would openly violate it if, in going back on his agreement, he should attempt to render ineffective in practice the right in the thing he had granted to the lessee; and by others’ acts, because he must guarantee the right he created, for he is obliged to give warranty in the manner we have set forth in our commentary on article 1553, and, in this sense, it is incumbent upon him to protect the lessee in the latter’s peaceful enjoyment.[39]When the act of trespass is done by third persons, it must be distinguished whether it is trespass in fact or in law because the lessor is not liable for a trespass in fact or a mere act of trespass by a third person.[40] In the Goldstein case, trespass in fact was distinguished from legal trespass, thus: “if the act of trespass is not accompanied or preceded by anything which reveals a juridic intention on the part of the trespasser, in such wise that the lessee can only distinguish the material fact, stripped of all legal form or reasons, we understand it to be trespass in fact only (de mero hecho).”[41] Further, the obligation under Article 1654(3) arises only when acts, termed as legal trespass (perturbacion de derecho), disturb, dispute, object to, or place difficulties in the way of the lessee’s peaceful enjoyment of the premises that in some manner cast doubt upon the right of the lessor by virtue of which the lessor himself executed the lease.[42]What is evident in the present case is that the disturbance on the leased premises on July 19, 1996 was actually done by the employees under the City Engineer of Manila and the City Building Official on orders of the City Mayor without the participation of the MTDC. It bears stressing that the City Building Official is authorized and mandated under Section 214 of the National Building Code to order the repair, maintenance or demolition of the building found or declared to be dangerous or ruinous, depending upon the degree of danger to life, health, safety and/or well-being of the general public and its occupants as provided in Section 215 thereof. This is without prejudice to the provisions of Articles 482, 694 and 707 of the New Civil Code. Sections 214 and 215 of the National Building Code read:SECTION 214. Dangerous and Ruinous Buildings or Structures

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Dangerous buildings are those which are herein declared as such or are structurally unsafe or not provided with safe egress, or which constitute a fire hazard, or are otherwise dangerous to human life, or which in relation to existing use, constitute a hazard to safety or health or public welfare because of inadequate maintenance, dilapidation, obsolescence, or abandonment; or which otherwise contribute to the pollution of the site or the community to an intolerable degree.SECTION 215. Abatement of Dangerous BuildingWhen any building or structure is found or declared to be dangerous or ruinous, the Building Official shall order its repair, vacation or demolition depending upon the degree of danger to life, health, or safety. This is without prejudice to further action that may be taken under the provisions of Articles 482 and 694 to 707 of the Civil Code of the Philippines.When the personnel of the City Building Official/City Engineer in coordination with the Philippine National Police undertook the repair/rehabilitation of the building, they did so in the lawful performance of their duties, independently of and separate from the obligation of the MTDC to effect the required immediate repair/rehabilitation of the building.Admittedly, the MTDC requested the City Building Official for the inspection of the building to determine its safety, conformably with its obligation under Article 1654 of the New Civil Code to maintain peaceful and adequate enjoyment of the tenants of the leased premises, and to insure the personal safety of the tenants and their properties. At the time, the Ozone Bar and Grill in Quezon City had just been burned down, and many lives were lost. There is no question that the possession by respondent of the leased premises had been disturbed by the attempt of the personnel of the City Building Official to repair and rehabilitate the building due to MTDC’s failure to undertake the same. Any act or omission by the lessor which causes a substantial interference with the actual possession of the lessee will constitute a breach of the obligation of quiet enjoyment. In some jurisdictions, the lessor’s failure to make repairs or alterations to the leased premises as required by public authorities, particularly those that are substantial and structural in nature, constitutes constructive eviction, which makes the lessor liable for damages.[43] Such conclusion is grounded on the fact that the lessors, in those cases, were obliged to make structural and substantial repairs on the leased property. The same doctrine could very well be applied in our jurisdiction considering that, under our laws, the lessor is likewise obliged to make the necessary repairs on the leased premises which would undoubtedly include those that are structural and substantial in nature. In fact, there may be a constructive eviction if the landlord does a wrongful act or is guilty of any default or neglect whereby the leased premises are rendered unsafe, unfit, or unsuitable for occupancy, in whole, or in substantial part, for the purposes for which they were leased.[44]It bears stressing, however, that two factors must exist before there can be a constructive eviction: (1) an act or omission by the landlord, or someone acting under his authority, which permanently interferes with the tenant’s beneficial enjoyment or use of the leased premises; and (2) an abandonment of possession by the lessee within a reasonable time.[45]Nakpil failed to establish any of the foregoing factors. The City Building Official was tasked merely to repair/rehabilitate the building and not to demolish the same and cause the placement eviction of the tenants. Neither did respondent abandon the leased premises. Admittedly, the MTDC failed to make the necessary repairs in the building despite requests of the City Building Official as early as June 29, 1981 and July 10, 1981. However, the MTDC cannot be faulted for such failure. No less than the HIBTAI or its members prevented MTDC from instituting the necessary repairs. Even Villanueva, Nakpil’s witness, admitted that HIBTAI objected to the orders of the City Building Official for the repair of the building.[46]Moreover, a complaint for injunction and damages was filed by the HIBTAI on October 2, 1982 against the MTDC. Even after the dismissal of the complaint, on January 31, 1983, the HIBTAI filed a complaint against the GSIS, CMC and MTDC with the RTC of Manila for the nullification of the deed of conditional sale between the GSIS and the CMC and the deed of assignment executed by the defendant CMC and the MTDC over the property. Plaintiff alleged therein that its members, presumably including Nakpil, the tenants in the building had the priority right under P.D. No. 1517 to purchase the property; that the CMC was not qualified to purchase the property from the GSIS under its Articles of Information and, hence, the deed of conditional sale was ultra vires; consequently, the deed of assignment executed by the CMC and its sister corporation was null and void. The tenants in the building, including Nakpil, refused to pay rentals and remitted the same to the HIBTAI which used the money partly to finance its suits against the MTDC, thus depriving the latter from generating funds for the repair of the building. In fine, the tenants, through the HIBTAI, already controlled the premises. The RTC dismissed the complaint of HIBTAI. The Intermediate Appellate Court affirmed the dismissal on February 4, 1986. The HIBTAI filed a petition for review in this Court and, on June 30, 1987, the petition was denied for lack of merit.[47] The Court ruled that the HIBTAI had no personality to assail the contracts and to invoke P.D. No. 1517 for its members, including Nakpil. Shortly, thereafter, in 1988, a complaint was filed against the GSIS by one of the tenants

entitled Dy v. Government Service Insurance System.[48] In 1994, a similar complaint was filed against the GSIS by another tenant entitled Cruz v. GSIS.[49]Even Nakpil admitted that the MTDC was prevented by the HIBTAI and its members from undertaking any repairs in the building. The only recourse of the MTDC was for the repair/rehabilitation of the building through the Office of the City Engineer/City Building Official. Thus, in 1995, it requested for an immediate ocular inspection of the building to determine the condition and safety of the building under Sections 214 and 215 of the National Building Code. The MTDC had no involvement in the actual repairs/rehabilitation of the building, nor in the selection, supervision and control of the laborers to initially repair/rehabilitate the building. Moreover, Atty. Nakpil failed to present preponderance of evidence to prove that any of the laborers under the Office of the City Building Official/City Engineer carried away his books, table, painting, and typewriter. Villanueva merely testified that the laborers carried away “things they could carry.” The evidence of Nakpil shows that the mezzanine floor was dark, as the lights had been turned off to prevent a conflagration. If at all the laborers had taken any of the materials from any of the rooms in the building, these were building materials which they were authorized to carry away under Section 10, Rule II of the Implementing Rules of the National Building Code which reads:10. The building/structure as repaired or in case of demolition, the building materials gathered after the demolition thereof shall be held by the OBO until full reimbursement of the cost of repair, renovation, demolition and removal is made by the owner which, in no case, shall extend beyond thirty (30) days from the date of completion of the repair, renovation, demolition and removal. After such period, said building materials of the building thus repaired, renovated or removed shall be sold at public auction to satisfy the claim of the OBO. Any amount in excess of the claim of the government realized from the sale of the building and/or building materials shall be delivered to the owner. Assuming that Atty. Nakpil lost any of his personal properties, at the very least, he should have inquired from the office of the City Engineer/City Building Official and requested that they be returned to him.WHEREFORE, premises considered, the petition in G.R. No 160867 is DENIED. The petition in G.R. No. 160886 is GRANTED. The Decision of the Court of Appeals is REVERSED AND SET ASIDE. The decision of the Regional Trial Court is AFFIRMED. No costs.SO ORDERED.ROMEO J. CALLEJO, SR. WE CONCUR:ARTEMIO V. PANGANIBAN, CONSUELO YNARES-SANTIAGO, MA. ALICIA AUSTRIA-MARTINEZ, MINITA V. CHICO-NAZARIOEMPLOYER-EMPLOYEE RELATIONSHIP(DEALCO FARMS, INC., Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION (5th DIVISION), CHIQUITO BASTIDA, and ALBERT CABAN, Respondents., G.R. No. 153192, 2009 Jan 30, 3rd Division)DECISIONNACHURA, J.:Under review are Resolutions[1] of the Court of Appeals (CA) in CA-G.R. SP No. 68972 denying due course to and dismissing petitioner Dealco Farms, Inc.’s petition for certiorari.Petitioner is a corporation engaged in the business of importation, production, fattening and distribution of live cattle for sale to meat dealers, meat traders, meat processors, canned good manufacturers and other dealers in Mindanao and in Metro Manila. Petitioner imports cattle by the boatload from Australia into the ports of General Santos City, Subic, Batangas, or Manila. In turn, these imported cattle are transported to, and housed in, petitioner’s farms in Polomolok, South Cotabato, or in Magalang, Pampanga, for fattening until the cattle individually reach the market weight of 430 to 450 kilograms.Respondents Albert Caban and Chiquito Bastida were hired by petitioner on June 25, 1993 and October 29, 1994, respectively, as escorts or “comboys” for the transit of live cattle from General Santos City to Manila. Respondents’ work entailed tending to the cattle during transportation. It included feeding and frequently showering the cattle to prevent dehydration and to develop heat resistance. On the whole, respondents ensured that the cattle would be safe from harm or death caused by a cattle fight or any such similar incident.Upon arrival in Manila, the cattle are turned over to and received by the duly acknowledged buyers or customers of petitioner, at which point, respondents’ work ceases. For every round trip travel which lasted an average of 12 days, respondents were each paid P1,500.00. The 12-day period is occasionally extended when petitioner’s customers are delayed in receiving the cattle. In a month, respondents usually made two trips.On October 15, 1999, respondents Bastida and Caban, together with Ramon Maquinsay and Roland Parrocha, filed a Complaint for illegal dismissal with claims for separation pay with full backwages, salary differentials, service

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incentive leave pay, 13th month pay, damages, and attorney’s fees against petitioner, Delfin Alcoriza[2] and Paciano Danilo Ramis[3] before the National Labor Relations Commission (NLRC), Sub-Regional Arbitration Branch No. XI, General Santos City. Although the four complainants collectively filed a case against petitioner, Maquinsay and Parrocha never appeared in any of the conferences and/or hearings before the Labor Arbiter. Neither did they sign the verification page of complainants’ position paper. Most importantly, Maquinsay and Parrocha executed affidavits in favor of petitioner praying for the dismissal of the complaint insofar as they were concerned.It appears that, on August 19, 1999, respondents were told by a Jimmy Valenzuela, a hepe de viaje, that he had been instructed by Ramis to immediately effect their replacement. Valenzuela proffered no reason for respondents’ replacement. Respondents’ repeated attempts to see and meet with Ramis, as well as to write Alcoriza, proved futile, compelling them to file an illegal dismissal case against petitioner and its officers.In all, respondents alleged in their position paper that: (1) they were illegally dismissed, as they never violated any of petitioner’s company rules and policies; (2) their dismissal was not due to any just or authorized cause; and (3) petitioner did not observe due process in effecting their dismissal, failing to give them written notice thereof. Thus, respondents prayed for money claims, i.e., salary differentials, service incentive leave pay, cost of living allowance (COLA) and 13th month pay.Petitioner, however, paints a different picture. Petitioner asserts that the finished cattle are sold to traders and middlemen who undertake transportation thereof to Manila for distribution to the wet markets. In fact, according to petitioner, the buyers and end-users of their finished cattle actually purchase the cattle as soon as they are considered ready for the market. Petitioner claims that once the finished cattle are bought by the buyers, these buyers act separately from, and independently of, petitioner’s business. In this regard, the buyers themselves arrange, through local representatives, for the (a) hauling from petitioner’s farm to the port area; (b) shipment of the finished cattle to Manila; and (c) escort or “comboy” services to feed and water the cattle during transit.In its position paper, petitioner relates only one instance when it engaged the services of respondents as “comboys.” Petitioner maintains that their arrangement with respondents was only on a “per-trip” or “per-contract” basis to escort cattle to Manila which contemplated the cessation of the engagement upon return of the ship to the port of origin – the General Santos City port.Petitioner further narrates that sometime in 1998, and well into 1999, its import of cattle from Australia substantially decreased due to the devalued dollar. Consequently, petitioner was forced to downsize, and the sale and shipments to Manila were drastically reduced. Thus, petitioner and/or its buyers no longer retained escort or “comboy” services.Ultimately, petitioner denies the existence of an employer-employee relationship with respondents. Petitioner posits that: (a) respondents are independent contractors who offer “comboy” services to various shippers and traders of cattle, not only to petitioner; (b) in the performance of work on board the ship, respondents are free from the control and supervision of the cattle owner since the latter is interested only in the result thereof; (c) in the alternative, respondents can only be considered as casual employees performing work not necessary and desirable to the usual business or trade of petitioner, i.e., cattle fattening to market weight and production; and (d) respondents likewise failed to complete the one-year service period, whether continuous or broken, set forth in Article 280[4] of the Labor Code, as petitioner’s shipments were substantially reduced in 1998-1999, thereby limiting the escort or “comboy” activity for which respondents were employed.On June 30, 2000, the Labor Arbiter found that respondents were employees of petitioner, thus:[Petitioner] admits having engaged the services of [respondents] as caretakers or “comboys” (convoys) though it qualifies that it was on a “per trip” or “per contract” basis. It also admits paying their remuneration of P1,500.00 per trip. It tacitly admits having terminated [respondents’] services when it said that [respondents] were among the group of escorts who were no longer accommodated due to the decrease in volume of imports and shipments. [Petitioner] also undoubtedly exercised control and supervision over [respondents’] work as caretakers considering that the value of the cattle shipped runs into hundreds of thousands of pesos. The preparation of the cattle for shipment, manning and feeding them prior to and during transit, and making a report upon return to General Santos City to tally the records of the cattle shipped out versus cattle that actually reached Manila are certainly all in accordance with [petitioner’s] instructions.Thus, all the four elements in the determination of an employer-employee relationship being present, [x x x] [respondents] were, therefore, employees of [petitioner].x x x [Respondents] also performed activities which are usually necessary or desirable in the usual business or trade of [petitioner] (Art. 280, Labor Code). [Petitioner’s] contention, to the contrary, is erroneous. Transporting the cattle to its main market in Manila is an essential and component aspect of [petitioner’s] operation. As held by [the NLRC’s] Fifth Division in one case:Complainant’s task of escorting the livestock shipped to Manila, taking care of the livestock in transit, is an activity which is necessary and desirable in the usual business or trade of respondent. It is of judicial notice that the bulk of the market for livestock of big livestock raisers such as respondent is in Manila. Hogs do not swim, they are shipped.

When in transit (usually two-and-one-half days) they do not queue to the mess hall, they are fed. x x x The caretaker is a component of the business, a part of the scheme of the operation. (NFL and Ricardo Garcia v. Bibiana Farms, Inc., NLRC CA No. XI-065089-99 (rab-xi-01-50026-98); prom. April 28, 2000).More, it also appears that [respondents] had rendered service for more than one year doing the same task repeatedly, thus, even assuming they were casual employees they may be considered regular employees with respect to the activity in which they were employed and their employment shall continue while such activity exists (last par. of Art. 280). [Respondents], in fact, were hired on October 29, 1994 (Bastida) and June 25, 1993 (Caban), a fact which [petitioner] dismally failed to refute.Given the foregoing, [petitioner’s] contention that [respondents] were independent contractors and free lancers deserves little consideration. Its argument that its usual trade or business (importation/production and fattening) ends in General Santos City, and does not include transporting the cattle, does not persuade us.[Petitioner’s] witnesses tried to corroborate [its] contention that [respondents] also offered their services to various shippers and traders of cattle, not only to [petitioner]. Former complainants Maquinsay and Parrocha mentioned the names of these traders/buyers or shippers as Lozano Farms, Bibiana Farms and other big cattle feedlot farms in SOCSARGEN (Annexes “A” and “E,” [petitioner’s] position paper.) But not a modicum of evidence was adduced to prove payment of [respondent’s] services by any of these supposed traders or that [respondents] received instructions from them. There is also no record that shows that the trader/s actually shipped livestock and engaged the services of caretakers.[5]Accordingly, the Labor Arbiter granted respondents’ claim for separation pay, COLA and union service fees. The Labor Arbiter awarded respondents: (a) separation pay of one month for every year of service; (b) COLA, as petitioner failed to prove payment thereof or its exemption therefrom; and (c) union service fees fixed at 10% of the total monetary award. The Labor Arbiter computed respondents’ total monetary awards as follows:NAME SEPARATION PAY COLA SUB-TOTALChiquito Bastida P15,000.00 P2,400.00 P17,400.00Albert Caban 18,000.00 2,400.00 20,400.00

P37,800.00Plus 10% Union Service Fees3,780.00

TOTAL ------ P41,580.00[6]However, the Labor Arbiter denied respondents’ claim for backwages, 13th month pay, salary differential, service incentive leave pay and damages, to wit:But we deny the “claim” for backwages which was merely inserted in the prayer portion of [respondents’] position paper. Reasons are abundant why we decline to grant the same. In their complaint, [respondents] prayed for separation pay (not reinstatement with consequent backwages) thereby indicating right from the start that they do not want to work with [petitioner] again. More importantly[,] during the conference held on January 6, 2000, [petitioner] manifested its willingness to reinstate [respondents] to their former work as [comboys] under the same terms and conditions but [respondents] answered that they do not want to return to work and instead are asking for payment of their separation pay. Finally[,] [respondents] do not dispute that [petitioner’s] downsizing of its escorts in 1999 was due to a legitimate cause, i.e., dollar devaluation.Also to go are [respondents’] labor standard claims for 13th month pay and service incentive leave pay as well as the claim for damages. We also deny the “claim” for salary differentials.[Respondents] are not entitled to their claims for 13th month pay and service incentive leave pay because they were paid on task basis. The claim for damages is denied for lack of factual and legal basis as there is no showing that respondent acted in bad faith in downsizing the number of its caretakers. It even appears that the same is due to a legitimate cause. The “claim” for salary differentials is denied on two grounds: (1) [these are] not prayed for in their complaint; and (2) for lack of merit. It takes not more than 3 days for the Gen. Santos-Manila trip. Even if we include counting the return trip that would be total of six (6) days to the maximum. [Respondents] were paid P1,500.00 per trip. Or, since they made an average of 2 trips/month they were paid P3,000.00 for a twelve (12) days’ work (or the equivalent of P250.00/day).[7]On appeal to the NLRC, the Fifth Division affirmed the Labor Arbiter’s ruling on the existence of an employer-employee relationship between the parties and the total monetary award of P41,580.00 representing respondents’ separation pay, COLA and union service fees. The NLRC declared:After a judicious review of the records of this case, we found no cogent reason to disturb the findings of the branch.The presence of the four (4) elements in the determination of an employer-employee relationship has been clearly established by the facts and evidence on record, starting with the admissions of [petitioner] who acknowledged the engagement of [respondents] as escorts of their cattles shipped from General Santos to Manila, and the

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compensation of the latter at a fee of P1,500.00 per trip. The dates claimed by [respondents] that they were engaged remain not disputed by [petitioner] as observed by the branch.The element of control, jurisprudentially considered the most essential element of the four, has not been demolished by any evidence to the contrary. The branch has noticed that the preparation of the shipment of cattle, manning and feeding them while in transit, and making a report upon their return to General Santos that the cattle shipped and which reached Manila actually tallied were all indicators of instructions, supervision and control by [petitioner] on [respondents’] performance of work as escorts for which they were hired. This we agree on all four[s]. The livestock shipment would cost thousands of pesos and the certainty of it reaching its destination would be the only thing any operator would consider at all [time] and under all circumstances. Nothing more, nothing less. It is illogical for [petitioner] to argue that the shipment was not necessary [or] desirable to their business, as their business was mainly livestock production, because they were undeniably the owners of the cattle escorted by [respondents]. Should losses of a shipment occur due to [respondents’] neglect these would still be [petitioners’] loss, and nobody else’s.At this point, we emphasize the fact that even on appeal [petitioner] declines to refute, by way of evidence, the finding of the branch that they failed to prove the payment of [respondents’] services by any of the supposed traders, or that said traders actually shipped livestock. This is the point where the case of NFL v. Bibiana Farms cited by [petitioner] differs from the instant case in that bills of lading issued to, thus, in the name of the hog shippers were submitted as proof that said shippers engaged, compensated and supervised the escorts or convoys in their work, and not the hog raisers.[8]Undaunted, petitioner filed a petition for certiorari before the CA. As previously adverted to, the CA denied due course and dismissed the petition for the following procedural flaws:1) other material portions of the record referred to in the petition are not attached thereto such as the Complaint for illegal dismissal and position papers of the parties, in violation of Sec. 3, Rule 46 of the 1997 Rules of Civil Procedure; and2) there is no written explanation why personal service was not resorted to, as required under Sec. 11, Rule 13, Ibid.[9]Petitioner’s motion for reconsideration was, likewise, denied by the appellate court.Hence, this appeal positing the following issues:1. Whether the CA gravely abused its discretion when it dismissed the petition for certiorari based on technical rules of procedure.2. Whether the NLRC gravely abused its discretion when it affirmed the Labor Arbiter’s ruling on the existence of an employer-employee relationship between the parties.3. Corollary thereto, whether the NLRC gravely erred when it affirmed the Labor Arbiter’s finding that respondents were illegally dismissed by petitioner and the consequent award of money claims to respondents.At the outset, we observe that petitioner raises extraneous issues which were obviously not passed upon by appellate court when the latter denied due course and dismissed outright the petition for certiorari. As such, the instant petition for review on certiorari directly assails the NLRC’s decision which mainly involves factual issues, such as whether respondents were employees of petitioner and if they are entitled to their money claims.Petitioner is unconcerned with the CA’s reasons for dismissing the petition and, in fact, declares that the dismissal was done with grave abuse of discretion for sticking to the provisions of the Rules of Court – a “mere technicality” as petitioner cavalierly puts it. Petitioner asseverates that the CA dismissal “defeat[s] substantial justice considering that [it] has a strong cause of action against [respondents].” In all, petitioner submits that it had faithfully complied with Section 11, Rule 13 of the Rules of Court by submitting an explanation and a duly notarized affidavit of service of Maria Fe Sobrevega. Petitioner likewise points out that the Explanation for the resort to service of the petition for certiorari via registered mail is found on page 30 thereof. Curiously, however, only the copy of the same document submitted to the CA lacked an Explanation.We completely agree with the appellate court’s forthright dismissal of the petition for certiorari.Even if we are to overlook petitioner’s account on the curious case of the missing Explanation only in the CA’s copy of the petition, petitioner’s non-compliance with the requisites for the filing a petition for certiorari remains. We detect petitioner’s ploy to sidestep a more fatal procedural error, i.e., the failure to attach copies of all pleadings and documents relevant and pertinent to the petition for certiorari set forth in paragraph 2, Section 1, Rule 65 of the Rules of Court which reads:The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.[10]Corollary thereto, the second paragraph of Section 6, Rule 65, the first paragraph of Section 2, Rule 56, and the last paragraph of Section 3, Rule 46 respectively read:

SEC. 6. Order to comment. — x x xIn petitions for certiorari before the Supreme Court and the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. x x xSEC. 2. Rules applicable. — The procedure in original cases for certiorari, prohibition, mandamus, quo warranto and habeas corpus shall be in accordance with the applicable provisions of the Constitution, laws, and Rules 46, 48, 49, 51, 52 and this Rules[.] x x xSEC. 3. Contents and filing of petition; effect of non-compliance with requirements. — x x xThe failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition.Quite apparent from the foregoing is that the CA did not err, much less commit grave abuse of discretion, in denying due course to and dismissing the petition for certiorari for its procedural defects. Petitioner’s failure to attach copies of all pleadings and documents relevant and pertinent to its petition for certiorari warranted the outright dismissal thereof.Petitioner, however, invokes the righteous ends of substantial justice as would exempt it from adherence to procedural rules. Petitioner claims that the merits of its case necessitate a liberal interpretation of the Rules of Court leading to a reversal of the appellate court’s outright dismissal of its petition.Regrettably, upon an evaluation of the merits of the petition, we do not find cause to disturb the findings of the Labor Arbiter, affirmed by the NLRC, which are supported by substantial evidence.The well-entrenched rule is that factual findings of administrative or quasi-judicial bodies, which are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence.[11] Section 5, Rule 133 defines substantial evidence as “that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.”Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to in labor cases.[12] We may take cognizance of and resolve factual issues only when the findings of fact and conclusions of law of the Labor Arbiter are inconsistent with those of the NLRC and the CA.[13]In the case at bench, both the Labor Arbiter and the NLRC were one in their conclusion that respondents were not independent contractors, but employees of petitioner. In determining the existence of an employer-employee relationship between the parties, both the Labor Arbiter and the NLRC examined and weighed the circumstances against the four-fold test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control the employees’ conduct, or the so-called “control test.”[14] Of the four, the power of control is the most important element. More importantly, the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof.[15]Naturally, both petitioner’s and respondents’ claims are on opposite poles. Respondents aver that they were regular employees of petitioner, designated as escorts or “comboys” for the latter’s cattle. Petitioner, on the other hand, denies that claim, and simultaneously asserts that respondents are free lance escorts who offer their services to the buyers, middlemen and traders of petitioner. Petitioner further asserts that its business is only confined to the fattening of cattle and their sale once they reach the required market weight. According to petitioner, its business does not include the shipment of cattle, which is undertaken by the middlemen, traders and buyers, who, as owners thereof, engage respondents’ services to care for the cattle while in transit. Thus, petitioner ultimately asserts that respondents, at that juncture, were under the control and supervision of these middlemen, traders and buyers.To support the foregoing contentions, petitioner simply presents the affidavits of Maquinsay and Parrocha, original complainants before the Labor Arbiter, praying for the withdrawal of the complaint for illegal dismissal insofar as they are concerned. Maquinsay and Parrocha both allege that their engagement with petitioner is on a “per-trip” or “per-contract” basis, and that they and their fellow “comboys” or escorts, herein respondents, did not offer their services to petitioner alone.Paying no heed to petitioner’s narration of the contemplated arrangement with respondents, the Labor Arbiter pointed out the following:[Maquinsay and Parrocha, petitioner’s] witnesses, tried to corroborate [petitioner’s] contention that complainants also offered their services to various shippers and traders of cattle, not only to [petitioner]. Former complainants Maquinsay and Parrocha mentioned the names of these traders/buyers or shippers as Lozano Farms, Bibiana Farms and other big cattle feedlot farms in SOCSARGEN (Annexes “A” and “B”, [petitioner’s] position paper). But not a modicum of evidence was adduced to prove payment of [respondents’] services by any of these supposed traders or that [respondents] received instructions from them. There is also no record that the trader/s actually shipped livestock and engaged the services of caretakers.[16]Echoing the same observation, the NLRC declared, thus:

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At this point, we emphasize the fact that even on appeal [petitioner] decline to refute, by way of evidence, the finding of the branch that they failed to prove the payment of [respondents’] services by any of the supposed traders, or that said traders actually shipped livestock. This is the point where the case of NFL v. Bibiana Farms cited by [petitioner] differ from the instant case in that bills of lading issued to, thus, in the name of the hog shippers were submitted as proof that said shippers engaged, compensated and supervised the escorts or convoys in their work, and not the hog raisers.[17]Yet, petitioner is adamant that its lack of documentary evidence should not be taken against it since Maquinsay and Parrocha, two of the original complainants, attest to the nature of a “comboy’s” or escort’s work.Significantly, Maquinsay’s and Parrocha’s affidavits proffer no reason why, in the first place, they filed, along with herein respondents, the complaint for illegal dismissal against petitioner. Maquinsay and Parrocha made an absolute turnaround and retracted their previous claim of regular employee status without proof to support their allegations as against the claim of the remaining complainants, herein respondents.Conveniently, for its purposes, petitioner claims that Maquinsay’s and Parrocha’s affidavits “substantiate the claim of petitioner that indeed shipping arrangements and accommodation of escorts, which are informal in nature and, thus, unrecorded, are under the responsibility, control and supervision of the buyers and traders.” Essentially, petitioner insists that the affidavits of Maquinsay and Parrocha should bear more weight than the claims of respondents in their complaint and position paper.We reject petitioner’s self-serving contention. Having failed to substantiate its allegation on the relationship between the parties, we stick to the settled rule in controversies between a laborer and his master that doubts reasonably arising from the evidence should be resolved in the former’s favor.[18] The policy is reflected in no less than the Constitution,[19] Labor Code[20] and Civil Code.[21]Moreover, petitioner’s other contention that the shipment and the escort of live cattle is not part of its business, thus, at most, respondents may only be considered as casual employees, likewise fails to persuade.First. Petitioner failed to disprove respondents’ claim that they were hired by petitioner as “comboys” from 1993 and 1994, respectively. In fact, petitioner admits that respondents were engaged, at one point, as “comboys,” on a “per trip” or “per contract” basis. This assertion petitioner failed anew to substantiate. Noteworthy is the fact that Maquinsay’s and Parrocha’s affidavit merely contain a statement that the offer of their services as “comboys” or escorts was not limited to petitioner alone. The affidavits simply aver that they, including herein respondents, were engaged by Dealco on a “per trip” basis, which commenced upon embarkation on a ship for Manila and terminated upon their return to the port of origin. Maquinsay and Parrocha did not state that respondents’ engagement by petitioner was on a one-time basis. As a result, petitioner’s claim remains an unsubstantiated and bare-faced allegation.Second. Even assuming that respondents’ task is not part of petitioner’s regular course of business, this does not preclude their attainment of regular employee status.Article 280 of the Labor Code explicitly 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 a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.[22]Undoubtedly, respondents were regular employees of petitioner with respect to the escort or “comboy” activity for which they had been engaged since 1993 and 1994, respectively, without regard to continuity or brokenness of the service.Lastly, considering that we have sustained the Labor Arbiter’s and the NLRC’s finding of an employer-employee relationship between the parties, we likewise sustain the administrative bodies’ finding of respondents’ illegal dismissal. Accordingly, we are not wont to disturb the award of separation pay, claims for COLA and union service fees fixed at 10% of the total monetary award, as these were based on the finding that respondents were dismissed without just or authorized cause.WHEREFORE, the petition is DENIED. The Resolution dated July 29, 2001 of the NLRC in NLRC CA No. M-005974-2000 (RAB-11-10-50453-99) is hereby AFFIRMED. Costs against the petitioner.SO ORDERED.ANTONIO EDUARDO B. NACHURA

WE CONCUR: MA. ALICIA AUSTRIA-MARTINEZ, DANTE O. TINGA, MINITA V. CHICO-NAZARIO, DIOSDADO M. PERALTAEFREN P. PAGUIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION, ROBINA Y. GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GO and ALDA IGLESIA, respondents., G.R. No. 147816, 2003 May 9, 1st Division)D E C I S I O NVITUG, J.:On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement with petitioner Efren P. Paguio, appointing the latter to be an account executive of the firm.[1] Again, petitioner was to solicit advertisements for "The Manila Times," a newspaper of general circulation, published by respondent company. Petitioner, for his efforts, was to receive compensation consisting of a 15% commission on direct advertisements less withholding tax and a 10% commission on agency advertisements based on gross revenues less agency commission and the corresponding withholding tax. The commissions, released every fifteen days of each month, were to be given to petitioner only after the clients would have paid for the advertisements. Apart from commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the contentious points raised by the parties had something to do with the following stipulations of the agreement; viz:"12. You are not an employee of the Metromedia Times Corporation nor does the company have any obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties."13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30) days prior to effectivity of termination."[2]On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from respondent firm -"Dear Mr. Paguio,"Please be advised of our decision to terminate your services as Account Executive of Manila Times effective September 30, 1992."This is in accordance with our contract signed last July 1, 1992."[3]Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself, i.e., pirating clients from his co-executives and failing to produce results, no definite cause for petitioner’s termination was given. Aggrieved, petitioner filed a case before the labor arbiter, asking that his dismissal be declared unlawful and that his reinstatement, with entitlement to backwages without loss of seniority rights, be ordered. Petitioner also prayed that respondent company officials be held accountable for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages.In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with petitioner outside of the contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines.[4] Asserting their right to terminate the contract with petitioner, respondents pointed to the last provision thereof stating that both parties could opt to end the contract provided that either party would serve, thirty days prior to the intended date of termination, the corresponding notice to the other.The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent Metromedia Times Corporation and its officers to reinstate petitioner to his former position, without loss of seniority rights, and to pay him his commissions and other remuneration accruing from the date of dismissal on 15 August 1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general manager of respondent corporation, be held liable to petitioner for moral damages in the amount of P20,000.00.On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and declared the contractual relationship between the parties as being for a fixed-term employment. The NLRC declared a fixed-term employment to be lawful as long as "it was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the worker and absent any other circumstances vitiating his consent."[5] The finding of the NLRC was primarily hinged on the assumption that petitioner, on account of his educated stature, having indeed personally prepared his pleadings without the aid of counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the NLRC held: "The decisive determinant would not be the activities that the employee (was) called upon to perform but rather, the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which (would) necessarily come, although it (might) not be known when."[6]

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Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings of the commission. In his petition for review on certiorari, petitioner raised the following issues for resolution:"WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT’S COMPANY IS FOR A FIXED PERIOD."WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL."WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES."[7]The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and respondent company - was it or was it not one of regular employment?A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of the following factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment of wages, c) the presence or absence of the power of dismissal; and d) the presence or absence of the power to control the conduct of the putative employee or the power to control the employee with respect to the means or methods by which his work is to be accomplished.[8] The "control test" assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is performed or services are rendered under the control and supervision of the party contracting for the service, not only as to the result of the work but also as to the manner and details of the performance desired.[9]An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by respondent Metromedia Times Corporation not only of the right to control the results to be achieved but likewise the manner and the means used in reaching that end.[10] Metromedia Times Corporation exercised such control by requiring petitioner, among other things, to submit a daily sales activity report and also a monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed and monitored the sales activities of petitioner.The Labor Code, in Article 280 thereof, 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 proceeding 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."Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. Even in these latter cases, where such person has rendered at least one year of service, regardless of the nature of the activity performed or of whether it is continuous or intermittent, the employment is considered regular as long as the activity exists, it not being indispensable that he be first issued a regular appointment or be formally declared as such before acquiring a regular status.[11]That petitioner performed activities which were necessary and desirable to the business of the employer, and that the same went on for more than a year, could hardly be denied. Petitioner was an account executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued operation of the business of respondent corporation. Robina Gokongwei, its President, herself admitted that the income generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly, respondent corporation recognized petitioner’s invaluable contribution to the business when it renewed, not just once but five times, its contract with petitioner.Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been called upon to perform.[12] The law affords protection to an employee, and it will not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to deprive the employee of his security of tenure.[13] The sheer inequality that characterizes employer-employee relations, where the scales generally tip against the employee, often scarcely provides him real and better options.The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal must be for a just or authorized cause and must comply with the rudimentary due process of notice and hearing. It is not shown that respondent company has fully bothered itself with either of these requirements in terminating the services of

petitioner. The notice of termination recites no valid or just cause for the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his defense.The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the part of respondents, particularly by respondent Liberato I. Gomez, and the award of moral damages must thus be deleted.WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No. 527773 and that of the National Labor Relations Commission are hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which award is deleted.SO ORDERED.Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.[1] The letter contract dated 22 June 1992 read -Dear Mr. Paguio:This letter is to appoint you as Account Executive for The Manila Times for a period of twelve (12) months effective July 1, 1992 to June 30, 1993, and to set forth the terms and conditions of your contract.1. As account executive, you will use your best efforts to obtain advertisements exclusively for us and for such projects that The Manila Times may decide to do from time to time.2. You are authorized to solicit advertisements and quote advertising rates in accordance with and subject to all the terms and conditions in our rate cards.3. All advertisements are subject to acceptance by us and we reserve the right in our absolute discretion to reject or omit any advertisements.4. You will be paid fifteen (15) percent commission on direct advertisements less corresponding withholding tax.5. You will be paid ten (10) percent commission on agency advertisements based on gross ad revenues less agency commission and corresponding withholding tax.6. Walk-in advertisements, not solicited by the Advertising staff, are not commissionable.7. All payments must be paid direct to Metromedia Times Corporation. In no case, however, will commission be paid until and unless the advertisements, whether agency or direct, have been paid for, subject to the corresponding withholding taxes authorized by law.8. Commissions earned on paid advertisements covering the period from the first (1st) to the fifteenth (15) of every month shall be payable at the end of the same month; commissions earned on paid advertisements covering the period from the sixteenth (16th ) to the end of the month shall be payable on the fifteenth (15) of the succeeding month.9. You will be entitled to a monthly allowance of P2,000.00 provided that you meet a monthly quota of P30,000.00 in advertising lineage. But should you fail to meet your quota, your allowance shall be charged against your future account.10 For all ex-deal arrangements, the barter agreement and your commission will be subject to the written approval of the President and Treasurer on a case-to-case basis.11. You will be paid your approved commission only after the payment for the liquidation (sold and/or consumed) of the goods received from the advertiser has been completed.12. You are not an employee of Metromedia Times Corporation nor does the Company have any obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties.13. Either party may terminate this agreement at any time by giving written notice to the other thirty (30) days prior to the effectivity of termination.If these terms and conditions are acceptable to you, please indicate your conformity by signing below. (Rollo, pp. 41-42.)TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P. TUVIERA, Petitioners, versus ROBERTO C. SERVAÑA, Respondent., G.R. No. 167648, 2008 Jan 28, 2nd Division)D E C I S I O NTinga, J.:This petition for review under Rule 45 assails the 21 December 2004 Decision[1] and 8 April 2005 Resolution[2] of the Court of Appeals declaring Roberto Servaña (respondent) a regular employee of petitioner Television and Production Exponents, Inc. (TAPE). The appellate court likewise ordered TAPE to pay nominal damages for its failure to observe statutory due process in the termination of respondent’s employment for authorized cause.

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TAPE is a domestic corporation engaged in the production of television programs, such as the long-running variety program, “Eat Bulaga!”. Its president is Antonio P. Tuviera (Tuviera). Respondent Roberto C. Servaña had served as a security guard for TAPE from March 1987 until he was terminated on 3 March 2000. Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular company guard. He was detailed at Broadway Centrum in Quezon City where “Eat Bulaga!” regularly staged its productions. On 2 March 2000, respondent received a memorandum informing him of his impending dismissal on account of TAPE’s decision to contract the services of a professional security agency. At the time of his termination, respondent was receiving a monthly salary of P6,000.00. He claimed that the holiday pay, unpaid vacation and sick leave benefits and other monetary considerations were withheld from him. He further contended that his dismissal was undertaken without due process and violative of existing labor laws, aggravated by nonpayment of separation pay.[3] In a motion to dismiss which was treated as its position paper, TAPE countered that the labor arbiter had no jurisdiction over the case in the absence of an employer-employee relationship between the parties. TAPE made the following assertions: (1) that respondent was initially employed as a security guard for Radio Philippines Network (RPN-9); (2) that he was tasked to assist TAPE during its live productions, specifically, to control the crowd; (3) that when RPN-9 severed its relationship with the security agency, TAPE engaged respondent’s services, as part of the support group and thus a talent, to provide security service to production staff, stars and guests of “Eat Bulaga!” as well as to control the audience during the one-and-a-half hour noontime program; (4) that it was agreed that complainant would render his services until such time that respondent company shall have engaged the services of a professional security agency; (5) that in 1995, when his contract with RPN-9 expired, respondent was retained as a talent and a member of the support group, until such time that TAPE shall have engaged the services of a professional security agency; (6) that respondent was not prevented from seeking other employment, whether or not related to security services, before or after attending to his “Eat Bulaga!” functions; (7) that sometime in late 1999, TAPE started negotiations for the engagement of a professional security agency, the Sun Shield Security Agency; and (8) that on 2 March 2000, TAPE issued memoranda to all talents, whose functions would be rendered redundant by the engagement of the security agency, informing them of the management’s decision to terminate their services.[4]TAPE averred that respondent was an independent contractor falling under the talent group category and was working under a special arrangement which is recognized in the industry.[5] Respondent for his part insisted that he was a regular employee having been engaged to perform an activity that is necessary and desirable to TAPE’s business for thirteen (13) years.[6] On 29 June 2001, Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a regular employee of TAPE. The Labor Arbiter relied on the nature of the work of respondent, which is securing and maintaining order in the studio, as necessary and desirable in the usual business activity of TAPE. The Labor Arbiter also ruled that the termination was valid on the ground of redundancy, and ordered the payment of respondent’s separation pay equivalent to one (1)-month pay for every year of service. The dispositive portion of the decision reads: WHEREFORE, complainant’s position is hereby declared redundant. Accordingly, respondents are hereby ordered to pay complainant his separation pay computed at the rate of one (1) month pay for every year of service or in the total amount of P78,000.00.[7]On appeal, the National Labor Relations Commission (NLRC) in a Decision[8] dated 22 April 2002 reversed the Labor Arbiter and considered respondent a mere program employee, thus: We have scoured the records of this case and we find nothing to support the Labor Arbiter’s conclusion that complainant was a regular employee.x x x x The primary standard to determine regularity of employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. This connection can be determined by considering the nature and work performed and its relation to the scheme of the particular business or trade in its entirety. x x x Respondent company is engaged in the business of production of television shows. The records of this case also show that complainant was employed by respondent company beginning 1995 after respondent company transferred from RPN-9 to GMA-7, a fact which complainant does not dispute. His last salary was P5,444.44 per month. In such industry, security services may not be deemed necessary and desirable in the usual business of the employer. Even without the performance of such services on a regular basis, respondent’s company’s business will not grind to a halt.x x x x Complainant was indubitably a program employee of respondent company. Unlike [a] regular employee, he did not observe working hours x x x. He worked for other companies, such as M-Zet TV Production, Inc. at the same

time that he was working for respondent company. The foregoing indubitably shows that complainant-appellee was a program employee. Otherwise, he would have two (2) employers at the same time.[9] Respondent filed a motion for reconsideration but it was denied in a Resolution[10] dated 28 June 2002. Respondent filed a petition for certiorari with the Court of Appeals contending that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. Respondent asserted that he was a regular employee considering the nature and length of service rendered.[11] Reversing the decision of the NLRC, the Court of Appeals found respondent to be a regular employee. We quote the dispositive portion of the decision: IN LIGHT OF THE FOREGOING, the petition is hereby GRANTED. The Decision dated 22 April 2002 of the public respondent NLRC reversing the Decision of the Labor Arbiter and its Resolution dated 28 June 2002 denying petitioner’s motion for reconsideration are REVERSED and SET ASIDE. The Decision dated 29 June 2001 of the Labor Arbiter is REINSTATED with MODIFICATION in that private respondents are ordered to pay jointly and severally petitioner the amount of P10,000.00 as nominal damages for non-compliance with the statutory due process. SO ORDERED.[12] Finding TAPE’s motion for reconsideration without merit, the Court of Appeals issued a Resolution[13] dated 8 April 2005 denying said motion. TAPE filed the instant petition for review raising substantially the same grounds as those in its petition for certiorari before the Court of Appeals. These matters may be summed up into one main issue: whether an employer-employee relationship exists between TAPE and respondent. On 27 September 2006, the Court gave due course to the petition and considered the case submitted for decision.[14] At the outset, it bears emphasis that the existence of employer-employee relationship is ultimately a question of fact. Generally, only questions of law are entertained in appeals by certiorari to the Supreme Court. This rule, however, is not absolute. Among the several recognized exceptions is when the findings of the Court of Appeals and Labor Arbiters, on one hand, and that of the NLRC, on the other, are conflicting,[15] as obtaining in the case at bar. Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and method by which the work is to be accomplished.[16] The most important factor involves the control test. Under the control test, there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end.[17]In concluding that respondent was an employee of TAPE, the Court of Appeals applied the “four-fold test” in this wise:First. The selection and hiring of petitioner was done by private respondents. In fact, private respondents themselves admitted having engaged the services of petitioner only in 1995 after TAPE severed its relations with RPN Channel 9.By informing petitioner through the Memorandum dated 2 March 2000, that his services will be terminated as soon as the services of the newly hired security agency begins, private respondents in effect acknowledged petitioner to be their employee. For the right to hire and fire is another important element of the employer-employee relationship.Second. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. . . Payment as admitted by private respondents was given by them on a monthly basis at a rate of P5,444.44.Third. Of the four elements of the employer-employee relationship, the “control test” is the most important. x x xThe bundy cards representing the time petitioner had reported for work are evident proofs of private respondents’ control over petitioner more particularly with the time he is required to report for work during the noontime program of “Eat Bulaga!” If it were not so, petitioner would be free to report for work anytime even not during the noontime program of “Eat Bulaga!” from 11:30 a.m. to 1:00 p.m. and still gets his compensation for being a “talent.” Precisely, he is being paid for being the security of “Eat Bulaga!” during the above-mentioned period. The daily time cards of petitioner are not just for mere record purposes as claimed by private respondents. It is a form of control by the management of private respondent TAPE.[18] TAPE asseverates that the Court of Appeals erred in applying the “four-fold test” in determining the existence of employer-employee relationship between it and respondent. With respect to the elements of selection, wages and dismissal, TAPE proffers the following arguments: that it never hired respondent, instead it was the latter who offered his services as a talent to TAPE; that the Memorandum dated 2 March 2000 served on respondent was for the discontinuance of the contract for security services and not a termination letter; and that the talent fees given to respondent were the pre-agreed consideration for the services rendered and should not be construed as wages.

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Anent the element of control, TAPE insists that it had no control over respondent in that he was free to employ means and methods by which he is to control and manage the live audiences, as well as the safety of TAPE’s stars and guests.[19] The position of TAPE is untenable. Respondent was first connected with Agro-Commercial Security Agency, which assigned him to assist TAPE in its live productions. When the security agency’s contract with RPN-9 expired in 1995, respondent was absorbed by TAPE or, in the latter’s language, “retained as talent.”[20] Clearly, respondent was hired by TAPE. Respondent presented his identification card[21] to prove that he is indeed an employee of TAPE. It has been in held that in a business establishment, an identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it.[22] Respondent claims to have been receiving P5,444.44 as his monthly salary while TAPE prefers to designate such amount as talent fees. Wages, as defined in the Labor Code, are 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 service rendered or to be rendered. It is beyond dispute that respondent received a fixed amount as monthly compensation for the services he rendered to TAPE. The Memorandum informing respondent of the discontinuance of his service proves that TAPE had the power to dismiss respondent. Control is manifested in the bundy cards submitted by respondent in evidence. He was required to report daily and observe definite work hours. To negate the element of control, TAPE presented a certification from M-Zet Productions to prove that respondent also worked as a studio security guard for said company. Notably, the said certificate categorically stated that respondent reported for work on Thursdays from 1992 to 1995. It can be recalled that during said period, respondent was still working for RPN-9. As admitted by TAPE, it absorbed respondent in late 1995.[23]TAPE further denies exercising control over respondent and maintains that the latter is an independent contractor.[24] Aside from possessing substantial capital or investment, a legitimate job contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.[25] TAPE failed to establish that respondent is an independent contractor. As found by the Court of Appeals:We find the annexes submitted by the private respondents insufficient to prove that herein petitioner is indeed an independent contractor. None of the above conditions exist in the case at bar. Private respondents failed to show that petitioner has substantial capital or investment to be qualified as an independent contractor. They likewise failed to present a written contract which specifies the performance of a specified piece of work, the nature and extent of the work and the term and duration of the relationship between herein petitioner and private respondent TAPE.[26]TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in classifying respondent as a program employee and equating him to be an independent contractor. Policy Instruction No. 40 defines program employees as—x x x those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast Media Council within three (3) days from its consummation.[27]TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in the policy instruction. It did not even present its contract with respondent. Neither did it comply with the contract-registration requirement. Even granting arguendo that respondent is a program employee, stills, classifying him as an independent contractor is misplaced. The Court of Appeals had this to say:We cannot subscribe to private respondents’ conflicting theories. The theory of private respondents that petitioner is an independent contractor runs counter to their very own allegation that petitioner is a talent or a program employee. An independent contractor is not an employee of the employer, while a talent or program employee is an employee. The only difference between a talent or program employee and a regular employee is the fact that a regular employee is entitled to all the benefits that are being prayed for. This is the reason why private respondents try to

seek refuge under the concept of an independent contractor theory. For if petitioner were indeed an independent contractor, private respondents will not be liable to pay the benefits prayed for in petitioner’s complaint.[28]More importantly, respondent had been continuously under the employ of TAPE from 1995 until his termination in March 2000, or for a span of 5 years. Regardless of whether or not respondent had been performing work that is necessary or desirable to the usual business of TAPE, respondent is still considered a regular employee under 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 engagement of the employee or where the work or service to be performed is seasonal in nature and 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.As a regular employee, respondent cannot be terminated except for just cause or when authorized by law.[29] It is clear from the tenor of the 2 March 2000 Memorandum that respondent’s termination was due to redundancy. Thus, the Court of Appeals correctly disposed of this issue, viz:Article 283 of the Labor Code provides that 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 or service, whichever is higher. x x x xWe uphold the finding of the Labor Arbiter that “complainant [herein petitioner] was terminated upon [the] management’s option to professionalize the security services in its operations. x x x” However, [we] find that although petitioner’s services [sic] was for an authorized cause, i.e., redundancy, private respondents failed to prove that it complied with service of written notice to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. It bears stressing that although notice was served upon petitioner through a Memorandum dated 2 March 2000, the effectivity of his dismissal is fifteen days from the start of the agency’s take over which was on 3 March 2000. Petitioner’s services with private respondents were severed less than the month requirement by the law. Under prevailing jurisprudence the termination for an authorized cause requires payment of separation pay. Procedurally, if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Deparment of Labor and Employment written notice 30 days prior to the effectivity of his separation. Where the dismissal is for an authorized cause but due process was not observed, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be liable for non-compliance with procedural requirements of due process. x x x xUnder recent jurisprudence, the Supreme Court fixed the amount of P30,000.00 as nominal damages. The basis of the violation of petitioners’ right to statutory due process by the private respondents warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. We believe this form of damages would serve to deter employer from future violations of the statutory due process rights of the employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Considering the circumstances in the case at bench, we deem it proper to fix it at P10,000.00.[30]In sum, we find no reversible error committed by the Court of Appeals in its assailed decision. However, with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that he acted with malice or bad faith in terminating respondent, he cannot be held solidarily liable with TAPE.[31] Thus, the Court of Appeals ruling on this point has to be modified.WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION in that only petitioner Television and Production Exponents, Inc. is liable to pay respondent the amount of P10,000.00 as nominal damages for non-compliance with the statutory due process and petitioner Antonio P. Tuviera is accordingly absolved from liability.

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SO ORDERED.DANTE O. TINGA WE CONCUR: LEONARDO A. QUISUMBING, ANTONIO T. CARPIO, CONCHITA CARPIO MORALES, PRESBITERO J. VELASCO, JR.CALAMBA MEDICAL CENTER, INC., Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION, RONALDO LANZANAS AND MERCEDITHA* LANZANAS, Respondents., G.R. No. 176484, 2008 Nov 25, 2nd DivisionD E C I S I O NCARPIO MORALES, J.:The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) in March 1992 and August 1995, respectively, as part of its team of resident physicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly “retainer” of P4,800.00 each.[1] It appears that resident physicians were also given a percentage share out of fees charged for out-patient treatments, operating room assistance and discharge billings, in addition to their fixed monthly retainer.[2] The work schedules of the members of the team of resident physicians were fixed by petitioner’s medical director Dr. Raul Desipeda (Dr. Desipeda). And they were issued identification cards[3] by petitioner and were enrolled in the Social Security System (SSS).[4] Income taxes were withheld from them.[5] On March 7, 1998, Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital, inadvertently overheard a telephone conversation of respondent Dr. Lanzanas with a fellow employee, Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas and Miscala were discussing the low “census” or admission of patients to the hospital.[6] Dr. Desipeda whose attention was called to the above-said telephone conversation issued to Dr. Lanzanas a Memorandum of March 7, 1998 reading: As a Licensed Resident Physician employed in Calamba Medical Center since several years ago, the hospital management has committed upon you utmost confidence in the performance of duties pursuant thereto. This is the reason why you were awarded the privilege to practice in the hospital and were entrusted hospital functions to serve the interest of both the hospital and our patients using your capability for independent judgment. Very recently though and unfortunately, you have committed acts inimical to the interest of the hospital, the details of which are contained in the hereto attached affidavit of witness. You are therefore given 24 hours to explain why no disciplinary action should be taken against you. Pending investigation of your case, you are hereby placed under 30-days [sic] preventive suspension effective upon receipt hereof.[7] (Emphasis, italics and underscoring supplied)Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved in the said incident, any work schedule after sending her husband Dr. Lanzanas the memorandum,[8] nor inform her the reason therefor, albeit she was later informed by the Human Resource Department (HRD) officer that that was part of petitioner’s cost-cutting measures.[9] Responding to the memorandum, Dr. Lanzanas, by letter of March 9, 1998,[10] admitted that he spoke with Miscala over the phone but that their conversation was taken out of context by Dr. Trinidad. On March 14, 1998,[11] the rank-and-file employees union of petitioner went on strike due to unresolved grievances over terms and conditions of employment.[12]On March 20, 1998, Dr. Lanzanas filed a complaint for illegal suspension[13] before the National Labor Relations Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha subsequently filed a complaint for illegal dismissal.[14]In the meantime, then Sec. Cresenciano Trajano of the Department of Labor and Employment (DOLE) certified the labor dispute to the NLRC for compulsory arbitration and issued on April 21, 1998 return-to-work Order to the striking union officers and employees of petitioner pending resolution of the labor dispute.[15]In a memorandum[16] of April 22, 1998, Dr. Desipeda echoed the April 22, 1998 order of the Secretary of Labor directing all union officers and members to return-to-work “on or April 23, 1998, except those employees that were already terminated or are serving disciplinary actions.” Dr. Desipeda thus ordered the officers and members of the union to “report for work as soon as possible” to the hospital’s personnel officer and administrator for “work scheduling, assignments and/or re-assignments.” Petitioner later sent Dr. Lanzanas a notice of termination which he received on April 25, 1998, indicating as grounds therefor his failure to report back to work despite the DOLE order and his supposed role in the striking union, thus:

On April 23, 1998, you still did not report for work despite memorandum issued by the CMC Medical Director implementing the Labor Secretary’s ORDER. The same is true on April 24, 1998 and April 25, 1998,--you still did not report for work [sic].You are likewise aware that you were observed (re: signatories [sic] to the Saligang Batas of BMCMC-UWP) to be unlawfully participating as member in the rank-and-file union’s concerted activities despite knowledge that your position in the hospital is managerial in nature (Nurses, Orderlies, and staff of the Emergency Room carry out your orders using your independent judgment) which participation is expressly prohibited by the New Labor Code and which prohibition was sustained by the Med-Arbiter’s ORDER dated February 24, 1998. (Emphasis and italics in the original; underscoring partly in the original and partly supplied)For these reasons as grounds for termination, you are hereby terminated for cause from employment effective today, April 25, 1998, without prejudice to further action for revocation of your license before the Philippine [sic] Regulations [sic] Commission.[17] (Emphasis and underscoring supplied)Dr. Lanzanas thus amended his original complaint to include illegal dismissal.[18] His and Dr. Merceditha’s complaints were consolidated and docketed as NLRC CASE NO. RAB-IV-3-9879-98-L. By Decision[19] of March 23, 1999, Labor Arbiter Antonio R. Macam dismissed the spouses’ complaints for want of jurisdiction upon a finding that there was no employer-employee relationship between the parties, the fourth requisite or the “control test” in the determination of an employment bond being absent. On appeal, the NLRC, by Decision[20] of May 3, 2002, reversed the Labor Arbiter’s findings, disposing as follows: WHEREFORE, the assailed decision is set aside. The respondents are ordered to pay the complainants their full backwages; separation pay of one month salary for every year of service in lieu of reinstatement; moral damages of P500,000.00 each; exemplary damages of P250,000.00 each plus ten percent (10%) of the total award as attorney’s fees. SO ORDERED.[21] Petitioner’s motion for reconsideration having been denied, it brought the case to the Court of Appeals on certiorari. The appellate court, by June 30, 2004 Decision,[22] initially granted petitioner’s petition and set aside the NLRC ruling. However, upon a subsequent motion for reconsideration filed by respondents, it reinstated the NLRC decision in an Amended Decision[23] dated September 26, 2006 but tempered the award to each of the spouses of moral and exemplary damages to P100,000.00 and P50,000.00, respectively and omitted the award of attorney’s fees. In finding the existence of an employer-employee relationship between the parties, the appellate court held: x x x. While it may be true that the respondents are given the discretion to decide on how to treat the petitioner’s patients, the petitioner has not denied nor explained why its Medical Director still has the direct supervision and control over the respondents. The fact is the petitioner’s Medical Director still has to approve the schedule of duties of the respondents. The respondents stressed that the petitioner’s Medical Director also issues instructions or orders to the respondents relating to the means and methods of performing their duties, i.e. admission of patients, manner of characterizing cases, treatment of cases, etc., and may even overrule, review or revise the decisions of the resident physicians. This was not controverted by the petitioner. The foregoing factors taken together are sufficient to constitute the fourth element, i.e. control test, hence, the existence of the employer-employee relationship. In denying that it had control over the respondents, the petitioner alleged that the respondents were free to put up their own clinics or to accept other retainership agreement with the other hospitals. But, the petitioner failed to substantiate the allegation with substantial evidence. (Emphasis and underscoring supplied)[24]The appellate court thus declared that respondents were illegally dismissed. x x x. The petitioner’s ground for dismissing respondent Ronaldo Lanzanas was based on his alleged participation in union activities, specifically in joining the strike and failing to observe the return-to-work order issued by the Secretary of Labor. Yet, the petitioner did not adduce any piece of evidence to show that respondent Ronaldo indeed participated in the strike. x x x.In the case of respondent Merceditha Lanzanas, the petitioner’s explanation that “her marriage to complainant Ronaldo has given rise to the presumption that her sympat[hies] are likewise with her husband” as a ground for her dismissal is unacceptable. Such is not one of the grounds to justify the termination of her employment.[25] nderscoring supplied)The fallo of the appellate court’s decision reads:WHEREFORE, the instant Motion for Reconsideration is GRANTED, and the Court’s decision dated June 30, 2004, is SET ASIDE. In lieu thereof, a new judgment is entered, as follows:WHEREFORE, the petition is DISMISSED. The assailed decision dated May 3, 2002 and order dated September 24, 2002 of the NLRC in NLRC NCR CA No. 019823-99 are AFFIRMED with the MODIFICATION that the moral and exemplary damages are reduced to P100,000.00 each and P50,000.00 each, respectively.

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SO ORDERED.[26] (Emphasis and italics in the original; underscoring supplied)Preliminarily, the present petition calls for a determination of whether there exists an employer-employee relationship[27] between petitioner and the spouses-respondents.Denying the existence of such relationship, petitioner argues that the appellate court, as well as the NLRC, overlooked its twice-a-week reporting arrangement with respondents who are free to practice their profession elsewhere the rest of the week. And it invites attention to the uncontroverted allegation that respondents, aside from their monthly retainers, were entitled to one-half of all suturing, admitting, consultation, medico-legal and operating room assistance fees.[28] These circumstances, it stresses, are clear badges of the absence of any employment relationship between them. This Court is unimpressed. Under the “control test,” an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task.[29]Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, the element of control is absent.[30]As priorly stated, private respondents maintained specific work-schedules, as determined by petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eight hours each week and which were strictly to be observed under pain of administrative sanctions. That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any department or ward for that matter, respondents’ work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its medical director, no operations can be undertaken in those areas. For control test to apply, it is not essential for the employer to actually supervise the performance of duties of the employee, it being enough that it has the right to wield the power.[31] With respect to respondents’ sharing in some hospital fees, this scheme does not sever the employment tie between them and petitioner as this merely mirrors additional form or another form of compensation or incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the Labor Code, thus: “Wage” paid to any employee shall mean the remuneration or earning, 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. x x x (Emphasis and underscoring supplied),Respondents were in fact made subject to petitioner-hospital’s Code of Ethics,[32] the provisions of which cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and offenses against persons, property and the hospital’s interest. More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents, namely, the identification cards it issued them, the payslips[33] and BIR W-2 (now 2316) Forms which reflect their status as employees, and the classification as “salary” of their remuneration. Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under the SSS Law[34] is premised on the existence of an employer-employee relationship,[35] except in cases of compulsory coverage of the self-employed. It would be preposterous for an employer to report certain persons as employees and pay their SSS premiums as well as their wages if they are not its employees.[36]And if respondents were not petitioner’s employees, how does it account for its issuance of the earlier-quoted March 7, 1998 memorandum explicitly stating that respondent is “employed” in it and of the subsequent termination letter indicating respondent Lanzanas’ employment status. Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employer-employee relationship exists between the resident physicians and the training hospitals, unless there is a training agreement between them, and the training program is duly accredited or approved by the appropriate government agency. In respondents’ case, they were not undergoing any specialization training. They were considered non-training general practitioners,[37] assigned at the emergency rooms and ward sections. Turning now to the issue of dismissal, the Court upholds the appellate court’s conclusion that private respondents were illegally dismissed. Dr. Lanzanas was neither a managerial nor supervisory employee but part of the rank-and-file. This is the import of the Secretary of Labor’s Resolution of May 22, 1998 in OS A-05-15-98 which reads: x x x xIn the motion to dismiss it filed before the Med-Arbiter, the employer (CMC) alleged that 24 members of petitioner are supervisors, namely x x x Rolando Lanzonas [sic] x x x.

A close scrutiny of the job descriptions of the alleged supervisors narrated by the employer only proves that except for the contention that these employees allegedly supervise, they do not however recommend any managerial action. At most, their job is merely routinary in nature and consequently, they cannot be considered supervisory employees.They are not therefore barred from membership in the union of rank[-]and[-]file, which the petitioner [the union] is seeking to represent in the instant case.[38] (Emphasis and underscoring supplied)x x x xAdmittedly, Dr. Lanzanas was a union member in the hospital, which is considered indispensable to the national interest. In labor disputes adversely affecting the continued operation of a hospital, Article 263(g) of the Labor Code provides: ART. 263. STRIKES, PICKETING, AND LOCKOUTS.—x x x x(g) x x x xx x x x. In labor disputes adversely affecting the continued operation of such hospitals, clinics or medical institutions, it shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel, whose movement and services shall be unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially emergency cases, for the duration of the strike or lockout. In such cases, the Secretary of Labor and Employment is mandated to immediately assume, within twenty-four hours from knowledge of the occurrence of such strike or lockout, jurisdiction over the same or certify to the Commission for compulsory arbitration. For this purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions and/or injunctions as are issued by the Secretary of Labor and Employment or the Commission, under pain of immediate disciplinary action, including dismissal or loss of employment status or payment by the locking-out employer of backwages, damages and other affirmative relief, even criminal prosecution against either or both of them.x x x x (Emphasis and underscoring supplied)An assumption or certification order of the DOLE Secretary automatically results in a return-to-work of all striking workers, whether a corresponding return-to-work order had been issued.[39] The DOLE Secretary in fact issued a return-to-work Order, failing to comply with which is punishable by dismissal or loss of employment status.[40] Participation in a strike and intransigence to a return-to-work order must, however, be duly proved in order to justify immediate dismissal in a “national interest” case. As the appellate court as well as the NLRC observed, however, there is nothing in the records that would bear out Dr. Lanzanas’ actual participation in the strike. And the medical director’s Memorandum[41] of April 22, 1998 contains nothing more than a general directive to all union officers and members to return-to-work. Mere membership in a labor union does not ipso facto mean participation in a strike. Dr. Lanzanas’ claim that, after his 30-day preventive suspension ended on or before April 9, 1998, he was never given any work schedule[42] was not refuted by petitioner. Petitioner in fact never released any findings of its supposed investigation into Dr. Lanzanas’ alleged “inimical acts.” Petitioner thus failed to observe the two requirements,before dismissal can be effected - notice and hearing - which constitute essential elements of the statutory process; the first to apprise the employee of the particular acts or omissions for which his dismissal is sought, and the second to inform the employee of the employer's decision to dismiss him.[43] Non-observance of these requirements runs afoul of the procedural mandate.[44] The termination notice sent to and received by Dr. Lanzanas on April 25, 1998 was the first and only time that he was apprised of the reason for his dismissal. He was not afforded, however, even the slightest opportunity to explain his side. His was a “termination upon receipt” situation. While he was priorly made to explain on his telephone conversation with Miscala,[45] he was not with respect to his supposed participation in the strike and failure to heed the return-to-work order. As for the case of Dr. Merceditha, her dismissal was worse, it having been effected without any just or authorized cause and without observance of due process. In fact, petitioner never proferred any valid cause for her dismissal except its view that “her marriage to [Dr. Lanzanas] has given rise to the presumption that her sympath[y] [is] with her husband; [and that when [Dr. Lanzanas] declared that he was going to boycott the scheduling of their workload by the medical doctor, he was presumed to be speaking for himself [and] for his wife Merceditha.”[46] Petitioner’s contention that Dr. Merceditha was a member of the union or was a participant in the strike remained just that. Its termination of her employment on the basis of her conjugal relationship is not analogous to any of the causes enumerated in Article 282[47] of the Labor Code. Mere suspicion or belief, no matter how strong, cannot substitute for factual findings carefully established through orderly procedure.[48] The Court even notes that after the proceedings at the NLRC, petitioner never even mentioned Dr. Merceditha’s case. There is thus no gainsaying that her dismissal was both substantively and procedurally infirm.

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Adding insult to injury was the circulation by petitioner of a “watchlist” or “watch out list”[49] including therein the names of respondents. Consider the following portions of Dr. Merceditha’s Memorandum of Appeal: 3. Moreover, to top it all, respondents have circulated a so called “Watch List” to other hospitals, one of which [was] procured from Foothills Hospital in Sto. Tomas, Batangas [that] contains her name. The object of the said list is precisely to harass Complainant and malign her good name and reputation. This is not only unprofessional, but runs smack of oppression as CMC is trying permanently deprived [sic] Complainant of her livelihood by ensuring that she is barred from practicing in other hospitals. 4. Other co-professionals and brothers in the profession are fully aware of these “watch out” lists and as such, her reputation was not only besmirched, but was damaged, and she suffered social humiliation as it is of public knowledge that she was dismissed from work. Complainant came from a reputable and respected family, her father being a retired full Colonel in the Army, Col. Romeo A. Vente, and her brothers and sisters are all professionals, her brothers, Arnold and Romeo Jr., being engineers. The Complainant has a family protection [sic] to protect. She likewise has a professional reputation to protect, being a licensed physician. Both her personal and professional reputation were damaged as a result of the unlawful acts of the respondents.[50] While petitioner does not deny the existence of such list, it pointed to the lack of any board action on its part to initiate such listing and to circulate the same, viz:20. x x x. The alleged watchlist or “watch out list,” as termed by complainants, were merely lists obtained by one Dr. Ernesto Naval of PAMANA Hospital. Said list was given by a stockholder of respondent who was at the same time a stockholder of PAMAN[A] Hospital. The giving of the list was not a Board action.[51] (Emphasis and underscoring supplied)The circulation of such list containing names of alleged union members intended to prevent employment of workers for union activities similarly constitutes unfair labor practice, thereby giving a right of action for damages by the employees prejudiced.[52] A word on the appellate court’s deletion of the award of attorney’s fees. There being no basis advanced in deleting it, as exemplary damages were correctly awarded,[53] the award of attorney’s fees should be reinstated.WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 75871 is AFFIRMED with MODIFICATION in that the award by the National Labor Relations Commission of 10% of the total judgment award as attorney’s fees is reinstated. In all other aspects, the decision of the appellate court is affirmed.SO ORDERED. CONCHITA CARPIO MORALESWE CONCUR: LEONARDO A. QUISUMBING, DANTE O. TINGA, PRESBITERO J. VELASCO, JR., ARTURO D. BRIONWORKING CONDITIONS AND REST PERIODHOURS OF WORKENGINEER LEONCIO V. SALAZAR, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and H.L. CARLOS CONSTRUCTION, CO. INC., respondents., G.R. No. 109210, 1996 Apr 17, 1st Division)KAPUNAN, J.:This is a petition for certiorari * to annul the decision of the National Labor Relations Commission in NLRC Case No. 002855-92 dated 27 .November 1992 which affirmed in toto the decision of the Labor Arbiter in NLRC NCR-00-09-05335-91 dated 29 January 1992 dismissing the complaint filed by petitioner for lack of merit. The NLRC's resolution dated 22 February 1993 is similarly impugned for denying petitioner's motion for reconsideration.The antecedent facts are as follows: On 17 April 1990, private respondent, at a monthly salary of P4,500.00, employed petitioner as construction/project engineer for the construction of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral contract, petitioner would also receive a share in the profits after completion of the project and that petitioner's services in excess of eight (8) hours on regular days and services rendered on weekends and legal holidays shall be compensable overtime at the rate of P27.85 per hour.On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr. Nestor A. Delantar informing him of the termination of his services effective on 30 April 1991. Reproduced hereunder is the abovementioned memorandum:April 16, 1991MEMORANDUM TO: LEONCIO V. SALAZARProject EngineerMONTE DE PIEDAD BLDG. PROJECTQuezon City

Due to the impending completion of the aforementioned project and the lack of up-coming contracted works for our company in the immediate future, volume of work for our engineering and technical personnel has greatly been diminished.In view of this, you are hereby advised to wind up all technical reports including accomplishments, change orders, etc.Further, you are advised that your services are being terminated effective at the close of office hours on April 30, 1991.This, however, has no prejudice to your re-employment in this company in its local and overseas projects should the need for your services arises.Thank you for your invaluable services rendered to this company.(Sgd.) NESTOR A. DELANTAR Project managerNoted By:(Sgd.) Mario B. Cornista Vice President 1On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair labor practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay, commission, allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila. 2On 29 January 1992, Labor Arbiter Raul T. Aquino rendered a decision, the dispositive portion of which reads, thus:WHEREFORE, responsive to the foregoing, the instant case is hereby DISMISSED for lack of merits.SO ORDERED. 3The Labor Arbiter ruled that petitioner was a managerial employee and therefore exempt from payment of benefits such as overtime pay, service incentive leave pay and premium pay for holidays and rest days. Petitioner, Labor Arbiter Aquino further declared, was also not entitled to separation pay. He was hired as a project employee and his services were terminated due to the completion of the project. 4The Labor Arbiter, likewise, denied petitioner's claim for a share in the project's profits, reimbursement of legal expenses and unpaid wages for lack of basis. 5On 14 April 1992, petitioner appealed to the National Labor Relations Commission (NLRC).On 27 November 1992, the NLRC rendered the assailed decision, the dispositive portion of which reads as follows:WHEREFORE, premises considered, the appeal is hereby Dismissed and the assailed decision is Affirmed en toto.SO ORDERED. 6On 29 January 1993, petitioner filed a motion for reconsideration which the NLRC denied for lack of merit on 22 February 1993. 7Hence, the instant petition wherein the following issues were raised:I. Granting for the sake of argument without conceding, that complainant-petitioner herein was a managerial employee, was his verbal contract to be paid his overtime services as stated in paragraph 2(b) of this Petition invalid? and the payments of such overtime services as evidenced by Exhibits "B" to "B-24" (the genuineness and authenticity of which are not disputed) are they not evidentiary and of corroborative value to the true unwritten agreement between the parties in this case?II. Is there any portion of the Labor Code that prohibits contracts between employer and employee giving the latter the benefit of being paid overtime services, as in this particular case?III. Where an employee was induced to accept a low or distorted salary or wage level, because of an incentive promise to receive a bigger compensation than that which would be his true and correct wage level as shown by documents for the payment of his distorted wages and overtime services, is it not legally proper, in the alternative to claim payment of the differential of his undistorted salary or wage level when the promised incentive compensation is denied by his employer after the completion of the job for which he has employed?IV. Is the Certificate of employment issued to an employee by his employer, assailable by mere affidavits of denials to the effect that said Certificate was issued because of the insistence of the employee that it be made to include a period he did not work, but which such fact of insistence or request is also denied by the employee, because he really worked during the period included in said Certificate?V. Is the employer liable for the payment of the attorney's pay incurred by his employee in a work connected criminal prosecution against him for an act done by another employee assigned by same employer to do the act which was the subject of the criminal prosecution? 8Petitioner prays that judgment be rendered, thus:1. That the decision of the NLRC and its resolution denying the Motion for Reconsideration be set aside on grounds of grave abuse of discretion and;2. That private respondent be ordered to pay petitioner the following:

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a. the premium pays for his overtime services of 368 hours on ordinary days at 25%; 272 hours on Saturdays at 30%; 272 hours on Sundays plus 24 hours on legal holidays at 200% computed at the rate of P27.85 per hour of undistorted wage level; b. in the alternative, to pay at least one (1) percent of 4.5 million pesos profit share, or the sum total of the differential of his salaries, in the amount of P2,184.00 per month, since April 17, 1990 to April 30, 1991, his undistorted salary being P6,684.00 per month; and to pay his unpaid salary for 15 days - May 1 to 15, 1991, with his undistorted salary rate; c. the amount of P3,000.00 reimbursement for what he paid his defense counsel in that criminal action which should have instead been against respondent's general manager; d. Separation pay of at least one month salary, he having been terminated unreasonably without cause, and three days service incentive leave pay; and to pay the costs; 9Before proceeding to the merits of the petition, we shall first resolve the procedural objection raised. Private respondent prays for the outright dismissal of the instant petition on grounds of wrong mode of appeal, it being in the form of a petition for review on certiorari (Rule 45 of the Revised Rules of Court) and not a special civil action for certiorari (Rule 65 thereof) which is the correct mode of appeal from decisions of the NLRC.Although we agree with private respondent that appeals to the Supreme Court from decisions of the NLRC should be in the form of a special civil action for certiorari under Rule 65 of the Revised Rules of Court, this rule is not inflexible. In a number of cases, 10 this Court has resolved to treat as special civil actions for certiorari petitions erroneously captioned as petitions for review on certiorari "in the interest of justice." In People's Security, Inc. v. NLRC, 11 we elaborated, thus:Indeed, this Court has time and again declared that the only way by which a labor case may reach the Supreme Court is through a petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or grave abuse of discretion (Pearl S. Buck Foundation v. NLRC, 182 SCRA 446 [1990]).This petition should not be dismissed on a mere technicality however. "Dismissal of appeal purely on technical grounds is frowned upon where the policy of the courts is to encourage hearings of appeal on their merits. The rules of procedure ought not to be applied in a very rigid technical sense, rules of procedure are used only to help secure, not override substantial justice. If a technical and rigid enforcement of the rules is made, their aim would be defeated" (Tamayo v. Court of Appeals, 209 SCRA 518, 522 [1992] citing Gregorio v. Court of Appeals, 72 SCRA 120 [1976]). Consequently, in the interest of justice, the instant petition for review shall be treated as a special civil action on certiorari. Moving on to the merits, stated differently, the issues for our resolution are the following: 1) Whether or not petitioner is entitled to overtime pay, premium pay for services rendered on rest days and holidays and service incentive leave pay, pursuant to Articles 87, 93, 94 and 95 of the Labor Code; 2) Whether or not petitioner is entitled to a share in the profits of the construction project;. 3) Whether or not petitioner rendered services from 1 May to 15 May 1991 and is, therefore, entitled to unpaid wages; 4) Whether or not private respondent is liable to reimburse petitioner's legal expenses and; 5) Whether or not petitioner is entitled to separation pay.On the first issue, the NLRC concurred with the Labor Arbiter's ruling that petitioner was a managerial employee and, therefore, exempt from payment of overtime pay, premium pay for holidays and rest days and service incentive leave pay under the law. The NLRC declared that:Book III on conditions of employment exempts managerial employees from its coverage on the grant of certain economic benefits, which are the ones the complainant-appellant was demanding from respondent. It is an undisputed fact that appellant was a managerial employee and such, he was not entitled to the economic benefits he sought to recover. 12Petitioner claims that since he performs his duties in the project site or away from the principal place of business of his employer (herein private respondent), he falls under the category of "field personnel." However, petitioner accentuates that his case constitutes the exception to the exception because his actual working hours can be determined as evidenced by the disbursement vouchers containing payments of petitioner's salaries and overtime services. 13 Strangely, petitioner is of the view that field personnel may include managerial employees.We are constrained to disagree with petitioner.In his original complaint, petitioner stated that the nature of his work is "supervisory-engineering." 14 Similarly, in his own petition and in other pleadings submitted to this Court, petitioner confirmed that his job was to supervise the laborers in the construction project 15 Hence, although petitioner cannot strictly be classified as a managerial employee under Art. 82 of the Labor Code, 16 and sec. 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor Code, 17 nonetheless he is still not entitled to payment of the aforestated benefits because he falls squarely

under another exempt category "officers or members of a managerial staff" as defined under sec. 2(c) of the abovementioned implementing rules:Sec. 2. Exemption. The provisions of this Rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: xxx xxx xxx (c) Officers or members of a managerial staff if they perform the following duties and responsibilities:(1) The primary duty consists of the performance of work directly related to management policies of their 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 work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above.A case in point is National Sugar Refineries Corporation v. NLRC. 18 On the issue of "whether supervisory employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers or members of the managerial staff under Article 82, Book III of the same Code and hence not entitled to overtime, rest day and holiday pay," 19 this Court ruled:A cursory perusal of the Job Value Contribution Statements of the union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling, communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective departments. . . .Xxx xxx xxxFrom the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I, Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consists of the management of a department of the establishment in which they are employed; (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work hereinbefore described.Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be considered as officers or members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday pay. 20The aforequoted rationale equally applies to petitioner herein considering in the main his supervisory duties as private respondent's project engineer, duties which, it is significant to note, petitioner does not dispute.Petitioner, likewise, claims that the NLRC failed to give due weight and consideration to the fact that private respondent compensated him for his overtime services as indicated in the various disbursement vouchers he submitted as evidence.Petitioner's contention is unmeritorious. That petitioner was paid overtime benefits does not automatically and necessarily denote that petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are entitled to the overtime premiums and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the Labor Code and the exemptions thereto. As previously determined, petitioner falls under the exemptions and therefore has no legal claim to the said benefits. It is well and good that petitioner was compensated for his overtime services. However, this does not translate into a right on the part of petitioner to demand additional payment when, under the law, petitioner is clearly exempted therefrom.Going to the second issue, petitioner insists that private respondent promised him a share in the profits after completion of the construction project. It is because of this oral agreement, petitioner elucidates, that he agreed to a monthly salary of P4,500.00, an amount which he claims is too low for a professional civil engineer like him with the rank of project engineer.Arguing further, petitioner states that payment of his overtime services, as shown by the aforementioned disbursement vouchers, proves the existence of this verbal agreement since payment of his overtime services constitutes part of this so-called understanding.

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We cannot accede to petitioner's demand. Nowhere in the disbursement vouchers can we find even the remotest hint of a profit-sharing agreement between petitioner and private respondent. Petitioner's rationalization stretches the imagination way too far.Thus, we concur with the ruling of the Labor Arbiter:As to the issue of profit sharing, we simply cannot grant the same on the mere basis of complainant's allegation that respondent verbally promised him that he is entitled to a share in the profits derive(d) from the projects. Benefits or privileges of this nature (are) usually in writing, besides complainant failed to (establish) that said benefits or privileges (have) been given to any of respondent('s) employees as a matter of practice or policy. 21Anent the third issue, petitioner alleges that on 30 April 1991, before closing hours, private respondent's project manager, Engineer Nestor Delantar advised him to continue supervising the "finishing touches on many parts of the building which took him and the assisting laborers until 15 May 1991." 22As proof of his extended service, petitioner presented the certificate of service issued by Engr. Delantar attesting to petitioner's employment as project engineer from April 1990 to May 1991. 23In contrast, private respondent argues that the abovementioned certificate was issued solely to accommodate petitioner who needed the same for his work application abroad. It further stressed that petitioner failed to prove he actually worked during the aforestated period.On this score, we rule for the petitioner. The purpose for which the said certificate was issued becomes irrelevant. The fact remains that private respondent knowingly and voluntarily issued the certificate. Mere denials and self-serving statements to the effect that petitioner allegedly promised not to use the certificate against private respondent are not sufficient to overturn the same. Hence, private respondent is estopped from assailing the contents of its own certificate of service.During the construction of the Monte de Piedad building, a criminal complaint for unjust vexation was filed by one Salvador Flores against the officers of the Monte de Piedad & Savings Bank, the owner thereof, for constructing a bunkhouse in front of his (Flores) apartment and making it difficult for him to enter the same.Petitioner avers that he was implicated in the complaint for the sole reason that he was the construction engineer of the project. Hence, private respondent, being the employer, is obligated to pay petitioner's legal expenses, particularly, reimbursement of the fees petitioner paid his counsel amounting to P3,000.00. Petitioner argues that private respondent's act of giving allowances to enable petitioner to attend the hearings, as shown in the disbursement voucher submitted as evidence, 24 constitutes an admission of the aforestated obligation.We agree with petitioner. Although not directly implicated in the criminal complaint, private respondent is nonetheless obligated to defray petitioner's legal expenses. Petitioner was included in the complaint not in his personal capacity but in his capacity as project engineer of private respondent and the case arose in connection with his work as such. At the construction site, petitioner is the representative of private respondent being its employee and he acts for and in behalf of private respondent. Hence, the inclusion of petitioner in the complaint for unjust vexation, which was work-related, is equivalent to inclusion of private respondent itself.On the last issue, we rule that petitioner is a project employee and, therefore, not entitled to separation pay.The applicable provision is Article 280 of the Labor Code which defines the term "project employee," thus: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 period 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. 25In the case at bench, it was duly established that private respondent hired petitioner as project or construction engineer specifically for its Monte de Piedad building project. In his own words, petitioner declared:xxx xxx xxx2. That complainant-petitioner herein, by virtue of an oral agreement entered into with private respondent herein through its proprietor, president and general manager, Engr. Honorio L. Carlos, on April 17, 1990, began to work as a licensed Civil Engineer as construction or engineer of its contracted project, the Monte de Piedad Bank Building, at Cubao, Quezon City, on the following terms and conditions, to wit: . . . 26Accordingly, as project employee, petitioner's services are deemed coterminous with the project, that is, petitioner's services may be terminated as soon as the project for which he was hired is completed. 27There can be no dispute that petitioner's dismissal was due to the completion of the construction of the Monte de Piedad building. Petitioner himself stated that it took him and his assisting laborers until 15 May 1991 to complete the "finishing touches" on the said building. 28Petitioner, thus, has no legal right to demand separation pay. 29 Policy Instruction No. 20 entitled "Stabilizing Employer-Employee Relations in the Construction Industry" explicitly mandates that:

xxx xxx xxxProject 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 a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for statistical purposes.Xxx xxx xxxDepartment Order No. 19 of the Department of Labor and Employment (DOLE) entitled "Guidelines Governing the Employment of Workers in the Construction Industry" promulgated on 1 April 1993, reiterates the same rule. 30WHEREFORE, premises considered, the assailed decision is hereby MODIFIED as follows: 1) Private respondent is ordered to pay petitioner for services rendered from 1 May to 15 May 1991; and, 2) Private respondent is ordered to reimburse petitioner's legal expenses in the amount of P3,000.00.In all other respects, the impugned decision is hereby AFFIRMED.SO ORDERED.Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.SAN MIGUEL BREWERY INC., ETC., petitioner, vs. DEMOCRATIC LABOR ORGANIZATION, ET AL., respondents., G.R. No. L-18353, 1963 July 31, En BancD E C I S I O NBAUTISTA ANGELO, J.:On January 27, 1953, the Democratic Labor Association filed a complaint against the San Miguel Brewery, Inc., embodying 12 demands for the betterment of the conditions of employment of its members. The company filed its answer to the complaint specifically denying its material averments and answering the demands point by point. The company asked for the dismissal of the complaint.At the hearing held sometime in September, 1955, the union manifested its desire to confine its claim to its demands for overtime, night-shift differential pay, and attorney's fees, although it was allowed to present evidence on service rendered during Sundays and holidays, or on its claim for additional separation pay and sick and vacation leave compensation.After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was commissioned to receive the evidence, rendered decision expressing his disposition with regard to the points embodied in the complaint on which evidence was presented. Specifically, the disposition insofar as those points covered by this petition for review are concerned, is as follows:1. With regard to overtime compensation, Judge Bautista held that the provisions of the Eight-Hour Labor Law apply to the employees concerned for those working in the field or engaged in the sale of the company's products outside its premises and consequently they should be paid the extra compensation accorded them by said law in addition to the monthly salary and commission earned by them, ragardless of the meal allowance given to employees who work up to late at night.2. As to employees who work at night, Judge Bautista decreed that they be paid their corresponding salary differentials for work done at night prior to January 1, 1949 with the present qualification: 25% on the basis of their salary to those who work from 6:00 to 12:00 p.m., and 75% to those who work from 12:01 to 6:00 in the morning.3. With regard to work done during Sundays and holidays, Judge Bautista also decreed that the employees concerned be paid an additional compensation of 25% as provided for in Commonwealth Act No. 444 even if they had been paid a compensation on monthly salary basis.The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment of accumulated vacation and sick leave and attorney's fees, as well as the award of additional separation pay, were either dismissed, denied, or set aside.Its motion for reconsideration having been denied by the industrial court en banc, which affirmed the decision of the court a quo with few exceptions, the San Miguel Brewery, Inc. interposed the present petition for review.Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect that outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor Law, the pertinent facts are as follows:After the morning roll call, the employees leave the plant of the company to go on their respective sales routes either at 7:00 a.m. for soft drinks trucks, or 8:00 a.m. for beer trucks. They do not have a daily time record. The company never require them to start their work as outside sales personnel earlier than the above schedule.The sales routes are so planned that they can be completed within 8 hours at most, or that the employees could make their sales on their routes within such number of hours variable in the sense that sometimes they can be completed in less than 8 hours, sometimes 6 or 7 hours, or more. The moment these outside or field employees leave the plant and while in their sales routes they are on their own; and often times when the sales are completed,

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or when making short trip deliveries only, they go back to the plant, load again, and make another round of sales. These employees receive monthly salaries and sales commission in variable amounts. The amount of compensation they receive is uncertain depending upon their individual efforts or industry. Besides the monthly salary, they are paid sales commission that range from P30, P40, sometimes P60, P70, to sometimes P90, P100, and P109 a month, at the rate of P.01 to P.01 1/2 per case.It is contended that since the employees concerned are paid a commission on the sales they make outside of the required 8 hours besides the fixed salary that is paid to them, the Court of Industrial Relations erred in ordering that they be paid an overtime compensation as required by the Eight-Hour Labor Law for the reason that the commission they are paid already takes the place of such overtime compensation. Indeed, it is claimed, overtime compensation is an additional pay for work or service rendered in excess if 8 hours a day by an employee, and if the employee is already given extra compensation for labor performed in excess of 8 hours a day, he is not covered by the law. His situation, the company contends, can be likened to an employee who is paid on piecework, "pakiao", or commission basis, which is expressly excluded from the operation of the Eight-Hour Labor Law. 1 We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application where an employee or laborer is paid in a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made to work beyond the requisite period of 8 hours, he should be paid the additional compensation prescribed by law. This law has no application when the employee or laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the time employed. The philosophy behind this exemption is that his earnings are in the form of commission based on the gross receipts of the day. His participation depends upon his industry so that the more hours he employs in the work the greater are his gross returns and the higher his commission. This philosophy is better explained in Jewel Tea Co. v. Williams, C.G.A. Okl., 118 F. 2d 202, as follows:"The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a great extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day."True it is that the employees concerned are paid a fixed salary for their month of service, such as Benjamin Sevilla, a salesman, P215; Mariano Ruedas, a truck driver, P155; Alberto Alpaza and Alejandro Empleo, truck helpers, P125 each, and sometimes they work in excess of the required 8-hour period of work, but for their extra work they are paid a commission which is in lieu of the extra compensation to which they are entitled. The record shows that these employees during the period of their employment were paid sales commission ranging from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month depending on the volume of their sales and their rate of commission per case. And so, insofar as the extra work they perform, they can be considered as employees paid on piecework, "pakiao" or commission basis. The Department of Labor, called upon to implement the Eight-Hour Labor Law, is of this opinion when on December 9, 1957 it made the ruling on a query submitted to it, thru the Director of the Bureau of Labor Standards, to the effect that field sales personnel receiving regular monthly salaries, plus commission, are not subject to the Eight-Hour Labor Law. Thus, on this point, said official stated:". . . Moreover, when a fieldman receives a regular monthly salary plus commission on percentage basis of his sales, it is also the established policy of the Office to consider his commission as payment for the extra time he renders in excess of eight hours, thereby classifying him as if he were on piecework basis, and therefore, technically speaking, he is not subject to the Eight Hours Labor Law."We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor Law applies to the employees composing the outside service force and ordering that they be paid the corresponding additional compensation.With regard to the claim for night salary differentials, the industrial court found that claimants Magno Johnson and Jose Sanchez worked with the respondent company during the periods specified by them in their testimony and that watchmen Zoilo Lliga, Inocentes Prescillas and Daniel Cauyca rendered night duties once every three weeks continuously during the period of their employment and that they were never given any additional compensation aside from their monthly regular salaries. The court found that the company started paying night differentials only in January, 1949 but never before that time. And so it ordered that the employees concerned be paid 25% additional compensation for those who worked from 6:00 to 12:00 p.m. and 75% additional compensation for those who worked from 12:01 to 6:00 in the morning. It is now contended that this ruling is erroneous because an award for night shift differentials cannot be given retroactive effect but can only be entertained from the date of demand which was on January 27, 1953, citing in support thereof our ruling in Earnshaws Docks & Honolulu Iron Work v. The Court of Industrial Relations, et al., L-8896, January 25, 1957.This ruling, however, has no application here for it appears that before the filing of the petition concerning this claim a similar one had already been filed long ago which had been the subject of negotiations between the union and the

company which culminated in a strike in 1952. Unfortunately, however, the strike fizzled out and the strikers were ordered to return to work with the understanding that the claim for night salary differentials should be settled in court. It is perhaps for this reason that the court a quo granted this claim in spite of the objection of the company to the contrary.The remaining point to be determined refers to the claim for pay for Sundays and holidays for service performed by some claimants who were watchmen or security guards. It is contended that these employees are not entitled to extra pay for work done during these days because they are paid on a monthly basis and are given one day off which may take the place of the work they may perform either on Sunday or any holiday.We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act No. 444 expressly provides that no person, firm or corporation may compel an employee or laborer to work during Sundays and legal holidays unless he is paid an additional sum of 25% of his regular compensation. This proviso is mandatory, regardless of the nature of compensation. The only exception is with regard to public utilities who perform some public service.WHEREFORE, the decision of the industrial court is hereby modified as follows; the award with regard to extra work performed by those employed in the outside or field sales force is set aside. The rest of the decision insofar as work performed on Sundays and holidays covering watchmen and security guards, as well as the award for night salary differentials is affirmed. No costs.Bengzon, C.J. Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, and Makalintal, JJ., concur.MERCURY DRUG CO., INC., petitioner, vs. NARDO DAYAO, ET AL., respondents., G.R. No. L-30452, 1982 September 30, 2nd DivisionGUTIERREZ, JR., J.:This is a petition for review on certiorari of the decision of the Court of Industrial Relations dated March 30, 1968 in Case No. 1926-V and the Resolution of the Court en banc dated July 6, 1968 denying two separate motions for reconsideration filed by petitioners and respondents.The factual background of Case No. 1926-V is summarized by the respondent Court of Industrial Relations as follows:"This is a verified petition dated March 17, 1964 which was subsequently amended on July 31, 1964 filed by Nardo Dayao and 70 others against Mercury Drug Co., Inc., and/or Mariano Que, President & General Manager, and Mercury Drug Co., Inc., Employees Association praying, with respect to respondent corporation and its president and general manager: 1) payment of their unpaid back wages for work done on Sundays and legal holidays plus 26% additional compensation from date of their employment up to June 30, 1962; 2) payment of extra compensation on work done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their former positions with back salaries; and, as against the respondent union, for its disestablishment and the refund of all monies it had collected from petitioners."In separate motions, respondent management and respondent union move to dismiss, the first on the ground that:"I. The petition states no cause of action."II. This Court has no jurisdiction over the subject of the claims of petitioners Januario Referente and Oscar Echalar."III. There is another action pending between the same parties, namely, Mercury Drug Co., Inc., and/or Mariano Que and Nardo Dayao.While on the other hand, the second alleges that this Court has no jurisdiction over the acts complained of against the respondent union."For reasons stated in the Order dated March 24, 1966, this Court resolved the motions to dismiss, as follows: "1. Ground No. 1 of management's motion to dismiss was denied for lack of merit. "2. Its second ground was found meritorious and, accordingly Januario Referente and Oscar Echalar were dropped as party petitioners in this case. "3. The third ground was denied, holding that there still exists the employer-employee relationship between Nardo Dayao and the management. "4. With respect to the fourth ground, the Court held that on the basis of section 7-A of C.A. No. 444, as amended by R.A. No. 1993, 'it can be safely said that, counting backward the three (3) year prescriptive period from the date of the filing of the instant petition - March 20, 1964 - all of petitioners' claims have not yet prescribed.' "5. In so far as respondent union's motion is concerned, the Court held that 'petitioners' cause of action against the respondent; Association should be dismissed without prejudice to the refiling of the same as an unfair labor practice case.'"Only the respondent management moved to reconsider the Order of March 24, 1965 but the same was denied by the Court en banc in a resolution dated August 26, 1965. Respondent submitted an answer to the amended petition

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which was subsequently amended on January 6, 1966, containing some admissions and some denials of the material averments of the amended petition. By way of affirmative and special defenses, respondents alleged that petitioners have no cause of action against Mariano Que because their employer is respondent Mercury Drug Company, Inc., an existing corporation which has a separate and distinct personality from its incorporators, stockholders and/or officers, that the company being a service enterprise is excluded from the coverage of the Eight Hour Labor Law, as amended; that no court has the power to set wages, rates of pay, hours of employment or other conditions of employment to the extent of disregarding an agreement thereon between the respondent company and the petitioners, and of fixing night differential wages; that the petitioners were fully paid for services rendered under the terms and conditions of the individual contracts of employment; that the petition having been verified by only three of the petitioners without showing that the others authorized the inclusion of their names as petitioners does not confer jurisdiction to this Court; that there is no employer-employee relationship between management and petitioner Nardo Dayao and that his claim has been released and/or barred by another action; and that petitioners' claims accruing before March 20, 1961 have prescribed." (Annex "P", pp. 110-112, rollo).After hearing on the merits, the respondent court rendered its decision. The dispositive portion of the March 30, 1968 decision reads:"IN VIEW OF THE FOREGOING, the Court hereby resolves that:"1. The claim of the petitioners for payment of backwages corresponding to the first four hours work rendered on every other Sunday and first four hours on legal holidays should be denied for lack of merit."2. Respondent Mercury Drug Company, Inc. is hereby ordered to pay the sixty-nine (69) petitioners: "(a) An additional sum equivalent to 25% of their respective basic or regular salaries for services rendered on Sundays and legal holidays during the period from March 20, 1961 up to June 30, 1962; and "(b) Another additional sum or premium equivalent to 25% of their respective basic or regular salaries for nighttime services rendered from March 20, 1961 up to June 30, 1962."3. Petitioners' petition to convert them to monthly employees should be, as it is hereby, denied for lack of merit."4. Respondent Mariano Que, being an officer and acted only as an agent in behalf of the respondent corporation, should be absolved from the money claims of herein petitioners whose employer, according to the pleadings and evidence, is the Mercury Drug Company, Inc."To expedite the computation of the money award, the Chief Court Examiner or his authorized representative is hereby directed to proceed to the office of the respondent corporation at Bambang Street, Sta. Cruz, Manila, the latter to make available to said employee its records, like time records, payrolls and other pertinent papers, and compute the money claims awarded in this decision and, upon the completion thereof, to submit his report as soon as possible for further disposition of the Court."Not satisfied with the decision, the respondents filed a motion for its reconsideration. The motion for reconsideration, was however, denied by the Court en banc in its Resolution dated July 6, 1968.Petitioner Mercury Drug Company, Inc., assigned the following errors in this petition:I. RESPONDENT CIR ERRED IN DECLARING THE CONTRACTS OF EMPLOYMENT, EXHIBITS "A" AND "B", NULL AND VOID AS BEING CONTRARY TO PUBLIC POLICY AND IN SUSTAINING, ACCORDINGLY, PRIVATE RESPONDENTS' CLAIMS FOR 25% SUNDAY AND LEGAL HOLIDAY PREMIUMS BECAUSE SUCH DECLARATION AND AWARD ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, THUS INFRINGING UPON THE CARDINAL RIGHTS OF THE PETITIONER; AND ALSO BECAUSE THE VALIDITY OF SAID CONTRACTS OF EMPLOYMENT HAS NOT BEEN RAISED.II. RESPONDENT CIR ERRED IN SUSTAINING PRIVATE RESPONDENTS' CLAIMS FOR NIGHTTIME WORK PREMIUMS NOT ONLY BECAUSE OF THE DECLARE POLICY ON COLLECTIVE BARGAINING FREEDOM EXPRESSED IN REPUBLIC ACT 875 AND THE EXPRESS PROHIBITION IN SECTION 7 OF SAID STATUTE, BUT ALSO BECAUSE OF THE WAIVER OF SAID CLAIMS AND THE TOTAL ABSENCE OF EVIDENCE THEREON.III. RESPONDENT CIR ERRED IN MAKING AWARDS IN FAVOR OF THE PRIVATE RESPONDENTS WHO NEITHER GAVE EVIDENCE NOR EVEN APPEARED TO SHOW THEIR INTEREST.Three issues are discussed by the petitioner in its first assignment of error. The first issue refers to its allegation that the respondent Court erred in declaring the contracts of employment null and void and contrary to law. This allegation is premised upon the following finding of the respondent court:"But the Court finds merit in the claim for the payment of additional compensation for work done on Sundays and holidays. While an employer may compel his employees to perform service on such days, the law nevertheless imposes upon him the obligation to pay his employees at least 25% additional of their basic or regular salaries."'No person firm or corporation, business establishment or place of center of labor shall compel an employee or laborer to work during Sundays and legal holidays unless he is paid an additional sum of at least twenty-five per centum of his regular remuneration. PROVIDED, HOWEVER, That this prohibition shall not apply to public utilities

performing some public service such as supplying gas, electricity, power, water, or providing means of transportation or communication.' (Section 4 C. A. No. 444) Although a service enterprise, respondent company's employees are within the coverage of C. A. No. 444, as amended known as the Eight Hour Labor Law, for they do not fall within the category or class employees or laborers excluded from its provisions. (Section 2, ibid.) "The Court is not impressed by the argument that under the contracts of employment the petitioners are not entitled to such claim for the reason that the same are contrary to law. Payment of extra or additional pay for services rendered during Sundays and legal holidays is mandated by law. Even assuming that the petitioners had agreed to work on Sundays and legal holidays without any further consideration than their monthly salaries, they are not barred nevertheless from claiming what is due them, because such agreement is contrary to public policy and is declared null and void by law."'Any agreement or contract between employer and the laborer or employee contrary to the provisions of this Act shall be null and void ab initio.'"Under the cited statutory provision, the petitioners are justified to receive additional amount equivalent to 25% of their respective basic or regular salaries for work done on Sundays and legal holidays for the period from March 20, 1961 to June 30, 1962." (Decision, pp. 119-120, rollo)From a perusal of the foregoing statements of the respondent court, it can be seen readily that the petitioner-company based its arguments in its first assignment of error on the wrong premise. The contracts of employment signed by the private respondents are on a standard form, an example of which is that of private respondent Nardo Dayao quoted hereunder: "Mercury Drug Co., Inc. 1580 Bambang, ManilaOctober 30, 1959Mr. Nardo Dayao1015 Sta. CatalinaRizal Ave., Exten.Dear Mr. Dayao:You are hereby appointed as Checker, in the Checking Department of MERCURY DRUG CO., INC., effective July 1, 1959 and you shall receive an annual compensation the amount of Two Thousand four hundred pesos only P2,400.000, that includes the additional compensation for work on Sundays and legal holidays.Your firm being a Service Enterprise, you will be required to perform work every day in a year as follows:8 Hours work on regular days and all special Holidays that may be declared but with the 25 % additional compensation; 4 Hours work on every other Sundays of the month;.For any work performed in excess of the hours as above mentioned, yon shall be paid 25 % additional compensation per hour.This appointment may be terminated without notice for cause and without cause upon thirty days written notice.This supersedes your appointment of July 1, 1959. Very truly yours, MERCURY DRUG CO., INC. (Sgd.) MARIANO QUE General ManagerACCEPTED WITH FULL CONFORMITY: (Sgd.) NARDO DAYAO'" (EXH. "A" and "1") (Decision, pp. 114-115, rollo)These contracts were not declared by the respondent court null and void in their entirety. The respondent court, on the basis of the conflicting evidence presented by the parties, in effect: 1) rejected the theory of the petitioner company that the 25% additional compensation claimed by the private respondents for the four-hour work they rendered during Sundays and legal holidays provided in their contracts of employment were covered by the private respondents' respective monthly salaries; 2) gave credence to private respondents', (Nardo Dayao, Ernesto Talampas and Josias Federico) testimonies that the 25% additional compensation was not included in the private respondents' respective monthly salaries and 3) ruled that any agreement in a contract of employment which would exclude the 25% additional compensation for work done during Sundays and holidays is null and void as mandated by law.On the second issue, the petitioner-company reiterated its stand that under the respective contracts of employment the private respondents, the subject 25% additional compensation had already been included in the latter's

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respective monthly salaries. This contention is based on the testimony of its lone witness, Mr. Jacinto Concepcion and pertinent exhibits. Thus:"Exhibit A shows that for the period of October 30, 1960, the annual compensation of private respondent Nardo Dayao, including the additional compensation for the work he renders during the first four (4) hours on every other Sunday and on the eight (8) Legal Holidays at the time was P2,400.00 or P200.00 per month. These amounts did not represent basic salary only, but they represented the basic daily wage of Nardo Dayao considered to be in the amount of P7.36 x 305 ordinary working days at the time or in the total amount of P2,144.80. So plus the amount of P156.40 which is the equivalent of the Sunday and Legal Holiday rate at P9.20 basic rate of P7.36 plus 25% thereof or P1.84) x 17, the latter figure representing 13 Sundays and 4 Legal Holidays of 8 hours each. . . . Xxx xxx xxx"That the required minimum 25% Sunday and Legal Holiday additional compensation was paid to and received by the employees for the work they rendered on every other Sunday and on the eight Legal Holidays for the period October, 1959 to June 30, 1962 is further corroborated by Exhibits 5, 6, 8, 9 and 9-A and the testimony of Mr. Jacinto Concepcion thereon." (Brief for the Petitioner, pp. 24, 27).The aforesaid computations were not given credence by the respondent court. In fact the same computations were not even mentioned in the court's decision which shows that the court found such computations incredible. The computations, supposedly patterned after the WAS Interpretative Bulletin No. 2 of the Department Labor demonstrated in Exhibits "6", "7", "8", "9", and "9-A", miserably failed to show the exact and correct annual salary as stated in the respective contracts of employment of the respondent employees. The figures arrived at in each case did not tally with the annual salaries on the employees' contracts of employment, the difference varying from P1.20 to as much as P14.40 always against the interest of the employees. The petitioner's defense consists of mathematical computations made after the filing of the case in order to explain a clear attempt to make its employees work without the extra compensation provided by law on Sundays and legal holidays. In not giving weight to the evidence of the petitioner-company, the respondent court sustained the private respondents' evidence to the effect that their 25% additional compensation for work done on Sundays and Legal Holidays were not included in their respective monthly salaries. The private respondents presented evidence through the testimonies of Nardo Dayao, Ernesto Talampas, and Josias Federico who are themselves among the employees who filed the case for unfair labor practice in the respondent court and are private respondents herein. The petitioner-company's contention that the respondent court's conclusion on the issue of the 25% additional compensation for work done on Sundays and legal holidays during the first four hours that the private respondents had to work under their respective contracts of employment was not supported by substantial evidence is, therefore, unfounded. Much less do We find any grave abuse of discretion on the part of the respondent court in its interpretation of the employment contract's provision on salaries. In view of the controlling doctrine that a grave abuse of discretion must be shown in order to warrant our disturbing the findings of the respondent court, the reversal of the court's findings on this matter is unwarranted. (Sanchez vs. Court of Industrial Relations, 27 SCRA 490).The last issue raised in the first assignment of error refers to a procedural matter. The petitioner-company contends that the question as to whether or not the contracts of employment were null and void was not put in issue, hence, the respondent court pursuant to the Rules of Court should have refrained from the ruling that such contracts of employment were null and void. In this connection We restate our finding that the respondent court did not declare the contracts of employment null and void in their entirely. Only the objectionable features violative of law were nullified. But even granting that the Court of Industrial Relations declared the contracts of employment wholly void, it could do so notwithstanding the procedural objection. In Sanchez v. Court of Industrial Relations, supra, this Court speaking through then Justice, now Chief Justice Enrique M. Fernando, stated:xxx xxx xxx"Moreover, petitioners appear to be oblivious of the statutory mandate that respondent Court in the hearing, investigation and determination of any question or controversy and in the exercise of any of its duties or power is to act 'according to justice and equity and substantial merits of the case, without regard to technicalities or legal forms and shall not be bound by any technical rules of legal evidence' informing its mind 'in such manner as it may deem just and equitable.' Again, this Court has invariably accorded the most hospitable scope to the breadth and amplitude with which such provision is couched. So it has been from the earliest case decided in 1939 to a 1967 decision."Two issues are raised in the second assignment of error by the petitioner-company. The first hinges on the jurisdiction of the respondent court to award additional compensation for nighttime work. Petitioner wants Us to re-examine Our rulings on the question of nighttime work. It contends that the respondent court has no jurisdiction to award additional compensation for nighttime work because of the declared policy on freedom of collective bargaining expressed in Republic Act 875 and the express prohibition in Section 7 of the said statute. a re-examination of the decisions on nighttime pay differential was the focus of attention in Rheem of the Philippines, Inc. et al. v. Ferrer, et

al (19 SCRA 130). The earliest cases cited by the petitioner-company, Naric v. Naric Workers Union, L-12075, May 29, 1959 and Philippine Engineers' Syndicate v. Bautista, L-16440, February 29, 1964, were discussed lengthily. Thus -xxx xxx xxx"2. On the claim for night differentials, no extended discussion is necessary. To be read as controlling here is Philippine Engineers' Syndicate, Inc. vs. Hon. Jose S. Bautista, et al., L-16440, February 29, 1964, where this Court, speaking thru Mr. Chief Justice Cesar Bengzon, declared -"'Only one issue is raised: whether or not upon the enactment of Republic Act 875, the CIR lost its jurisdiction over claims for additional compensation for regular night work. Petitioner says that this Act reduced the jurisdiction of respondent court and limited it to specific cases which this Court has defined as: '. . . (1) when the labor dispute affects an industry which is indispensable to the national interest and is so certified by the President to the industrial court (Sec. 10, Republic Act 875); (2) when the controversy refers to minimum wage under the Minimum Wage Law (Republic Act 602); (3) when it involves hours of employment under the Eight-Hour Labor Law (Commonwealth Act 444) and (4) when it involves an unfair labor practice [Sec. 5 (a), Republic Act 875]', [Paflu, et al. vs. Tan, et al., 52 Off. Gaz, No. 13, 5836]."Petitioner insists that respondents' case falls in none of these categories because as held in two previous cases, night work is not overtime but regular work; and that respondent court's authority to try the case cannot be implied from its 'general jurisdiction and broad powers' under Commonwealth Act 103 because Republic Act 875 precisely curbed such powers limiting them to certain specific litigations, beyond which it is not permitted to act."We believe petitioner to be in error. Its position collides with our ruling in the Naric case [National Rice & Corn Corp. (NARIC) vs. NARIC Workers' Union, et al., G.R. No. 12075, May 29, 1959] where we held:"'While it is true that this Court made the above comment in the aforementioned case, it does not intend to convey the idea that work done at night cannot also be an overtime work. The comment only served to emphasize that the demand which the Shell Company made upon its laborers is not merely overtime work but night work and so there was need to differentiate night from daytime work. In fact, the company contended that there was no law that required the payment of additional compensation for night work unlike an overtime work which is covered by Commonwealth Act No. 444 (Eight-Hour Labor Law). And this court in that case said that while there was no law actually requiring payment of additional compensation for night work, the industrial court has the power to determine the wages that night workers should receive under Commonwealth Act No. 103, and so it justified the additional compensation in the Shell case for 'hygienic, medical, moral, cultural and sociological reasons.'"xxx xxx xxxTrue, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases thereafter, We held that the broad powers conferred by Commonwealth Act 103 on the CIR may have been curtailed by Republic Act 875 which limited them to the four categories therein expressed in line with the public policy of allowing settlement of industrial disputes via the collective bargaining process; but We find no cogent reason for concluding that a suit of this nature - for extra compensation for night work falls outside the domain of the industrial court. Withal, the record does not show that the employer-employee relation between the 64 respondents and the petitioner had ceased.After the passage of Republic Act 875, this Court has not only upheld the industrial court's assumption of jurisdiction over cases for salary differentials and overtime pay [Chua Workers Union (NLU) vs. City Automotive Co., et al., G.R. No. L-11655, April 29, 1959; Prisco vs. CIR, et al., G.R. No. L-13806, May 23, 1960] or for payment of additional compensation for work rendered on Sundays and holidays and for night work [Nassco vs. Almin, et al., G.R. No. L-9055, November 28, 1958; Detective & Protective Bureau, Inc. vs. Felipe Guevara, et al., G.R. No. L-8738, May 31, 1957] but has also supported such court's ruling that work performed at night should be paid more than work done at daytime, and that if that work is done beyond the worker's regular hours of duty, he should also be paid additional compensation for overtime work. [Naric vs. Naric Workers' Union, et al., G.R. No. L-12075, May 29, 1959, citing shell Co. vs. National Labor Union, 81 Phil. 315]. Besides, to hold that this case for extra compensation now falls beyond the powers of the industrial court to decides, would amount to a further curtailment of the jurisdiction of said court to an extent which may defeat the purpose of the Magna Carta to the prejudice of labor.' [Luis Recato Dy, et al vs. CIR, G.R. No. L-17788, May 25, 1962]"The petitioner-company's arguments on the respondent court's alleged lack of jurisdiction over additional compensation for work done at night by the respondents is without merit. The other issue raised in the second assignment of error is premised on the petitioner-company's contention that the respondent court's ruling on the additional compensation for nighttime work is not supported by substantial evidence.This contention is untenable. Pertinent portions of the respondent court's decision read:xxx xxx xxx"There is no serious disagreement between the petitioners and respondent management on the facts recited above. The variance in the evidence is only with respect to the money claims. Witnesses for petitioners declared they

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worked on regular days and on every other Sunday and also during all holidays; that for services rendered on Sundays and holidays they were not paid for the first four (4) hours and what they only received was the overtime compensation corresponding to the number of hours after or in excess of the first fort hours; and that such payment is being indicated in the overtime pay for work done in excess of eight hours on regular working days. It is also claimed that their nighttime services could well be seen on their respective daily time records. . . . (p. 116, rollo)The respondent court's ruling on additional compensation for work done at night is, therefore, not without evidence. Moreover, the petitioner-company did not deny that the private respondents rendered nighttime work. In fact, no additional evidence was necessary to prove that the private respondents were entitled to additional compensation for whether or not they were entitled to the same is a question of law which the respondent court answered correctly. The "waiver rule" is not applicable in the case at bar. Additional compensation for nighttime work is founded on public policy, hence the same cannot be waived. (Article 6, Civil Code). On this matter, We believe that the respondent court acted according to justice and equity and the substantial merits of the case, without regard to technicalities or legal forms and should be sustained.The third assignment of error is likewise without merit. The fat that only three of the private respondents testified in court foes not adversely affect the interests of the other respondents in the case. The ruling in Dimayuga v. Court of Industrial Relations (G.R. No. L-0213, May 27, 1957) has been abandoned in later rulings of this Court. IN Philippine Land-Air-Sea labor Union (PLASLU) v. Sy Indong Company Rice And Corn Mill (11 SCRA 277) We had occasion to re-examine the ruling in Dimayuga. We stated: "The latter reversed the decision of the trial Judge as regards the reinstatement with backwages of . . . upon the theory that this is not a class suit; that, 'consequently, it is necessary and imperative that they should personally testify and prove the charges in the complaint', and that, having failed to do so, the decision of the trial Judge in their favor is untenable under the rule laid down in Dimayuga vs. Court of Industrial Relations, G.R. No. L-0213 (May 27, 1957)."We do not share the view taken in the resolution appealed from. As the trial Judge correctly said, in his dissent from said resolution:xxx xxx xxxIn the case of Sanchez v. Court of Industrial Relations, supra, this Court stated:"To the reproach against the challenged order in the brief of petitioners in view of only two of the seven claimants testifying, a statement by this Court in Ormoc Sugar Co., Inc. vs. OSCO Workers Fraternity Labor Union would suffice by way of refutation. Thus: 'This Court fully agrees with the respondent that quality and not quantity of witnesses should be the primordial consideration in the appraisal of evidence.' Barely eight days later, in another decision, the above statement was given concrete expression. Thus: 'The bases of the awards were not only the respective affidavits of the claimants but the testimonies of 24 witnesses (because 6 were not given credence by the court below) who identified the said 239 claimants. The contention of petitioners on this point is therefore unfounded'. Moreover in Philippine Land-Air-Sea Labor Union (PLASLU) v. Sy Indong Company Rice & Corn Mill, this Court, through the present Chief Justice, rejected as untenable the theory of the Court of Industrial Relations concerning the imperative needs of all the claimants to testify personally and prove their charges in the complaint. As tersely put: 'We do not share the view taken in the resolution appealed from."The petitioner's contention that its employees fully understood what they signed when they entered into the contracts of employment and that they should be bound by their voluntary commitment's is anachronistic in this time and age. The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the week and, for some stores, up to very late at night because of the nature of the pharmaceutical retail business. The respondents knew that they had to work Sundays and holidays and at night, not as exceptions to the rule but a part of the regular course of employment. Presented with contracts setting their compensation on an annual basis with an express waiver of extra compensation for work on Sundays and holidays, the workers did not have much choice. The private respondents were at a disadvantage insofar as the contractual relationship was concerned. Workers in our country do not have the luxury or freedom of declining job openings or filing resignations even when some terms and conditions of employment are not only onerous and inequitous but illegal. It is precisely because of this situation that the framers of the Constitution embodied the provisions on social justice (Section 6, Article II) and protection to labor (Section 9, Article II) in the Declaration of Principles And State Policies.It is pursuant to these constitutional mandates that the courts are ever vigilant to protect the rights of workers who are places in contractually disadvantageous positions and who sign waivers or provisions contrary to law and public policy. WHEREFORE, the petition is hereby dismissed. The decision and resolution appealed from are affirmed with costs against the petitioner.SO ORDERED.Teehankee (Chairman), Makasiar, Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.

WEEKLY REST PERIODREMERCO GARMENTS MANUFACTURING, petitioner, vs. HON. MINISTER OF LABOR AND EMPLOYMENT and ZENAIDA BUSTAMANTE, LUZ RAYMUNDO and RUTH CORPUZ, respondents., G.R. Nos. L-56176-77, 1985 Feb 28, 2nd DivisionCUEVAS, J.:Petitioner Remerco Garments Manufacturing seeks the nullification of the decision 1 of the Minister of Labor and Employment dated January 21, 1981, declaring the dismissal of Zenaida Bustamante, Luz Raymundo and Ruth Corpuz, (its employees) illegal, and ordering their reinstatement to their former positions without loss of seniority rights and privileges and with full backwages. The said decision set aside, on appeal, the order 2 of Acting Director, National Capital Region, MOLE, dated March 6, 1978, granting petitioner's clearance application to terminate the employment of its three (3) employees. Private respondents Zenaida Bustamante, Luz Raymundo and Ruth Corpuz were the employees of Remerco Garments Manufacturing, a domestic corporation engaged in the business of manufacturing and exporting of men's, ladies' and children's dresses.This case arose from three (3) applications for clearance to terminate employment filed by the petitioner on three (3) separate dates. The first, against Ruth Corpuz filed on October 5, 1978 for allegedly defacing company's property by placing a check mark on a jacket with a chalk; the second, filed on October 16, 1978 against Luz Raymundo for insubordination for refusal to work on her rest day; and the third, against Zenaida Bustamante on November 10, 1980, for abandonment for failing to report for work after the expiration of her suspension on October 23, 1978. The said employees sought to be dismissed opposed the clearance application by filing separate complaints for illegal dismissal docketed as Case Nos. R4-STF-10-6695-78 and R4-STF-10-6670-78.The antecedent facts appearing on record are as follows:During the period of their employment with petitioner, Luz Raymundo and Zenaida Bustamante were given three consecutive warnings. The first, on June 24; then on July 24; and the third one, on October 15, 1978 for alleged refusal to render overtime work. Finally, they were penalized with one week's suspension effective October 16, 1978.It appears that Luz Raymundo was required to work on October 15, 1978, a Sunday, despite her request for exemption to work on that Sunday, her rest day. Her request was disapproved. For failure to report for work despite denial of her request, she was notified of her dismissal effective upon expiration of her suspension. Thereafter or more specifically on October 16, 1978, petitioner filed a clearance application to dismiss her on grounds of insubordination. Raymundo opposed said application by filing a complaint for illegal dismissal and for money claims.With respect to Zenaida Bustamante, she failed to report for work despite the expiration of her suspension on October 23, 1978. Petitioner contends that said failure constitutes abandonment which it later invoke as ground for clearance application to dismiss her from employment filed on November 10, 1978. Like Raymundo, Zenaida Bustamante opposed the clearance application by filing a complaint for illegal dismissal claiming that her alleged failure to report for work was due to illness, as in fact, she was treated by one Dr. Lorenzo Yuson for fever and severe stomach ache on October 15, 1978. Ruth Corpuz, like the two aforenamed co-respondents of hers, was also given a warning for refusal to render overtime work on another date, August 30, 1978. She was subsequently dismissed on October 4, 1978 for having written a chalk mark on a nylon jacket for export allegedly a violation of Rule 26 of petitioner's rules and regulations, which provides: "Employees are strictly prohibited from defacing or writing on walls of the factory, toilets or any other company property." The clearance application for her dismissal was filed only on October 5, 1978 which she also opposed by filing a complaint for illegal dismissal.The case was submitted for conciliation proceedings, but no settlement was arrived at, whereupon, the Acting Director of National Capital Region, MOLE, required the parties to submit their respective position papers, after which, the case was deemed submitted for resolution.On March 6, 1979, the Acting Director of National Capital Region, MOLE, issued an order granting petitioner's application for clearance to terminate the employment of private respondents and dismissing their complaints for lack of merit.Private respondents appealed the order to the National Labor Relations Commission on March 22, 1979. Meanwhile, the Acting Director of the National Capital Region, MOLE, elevated the records of the case to the Labor Appeals and Review Staff, Office of the Minister of Labor on April 17, 1979. 3On January 20, 1981, the Minister of Labor rendered a decision reversing the appealed order and directed petitioner to reinstate private respondents Luz Raymundo, Zenaida Bustamante and Ruth Corpuz to their former positions without loss of seniority rights and privileges and with full backwages.Petitioner's motion for reconsideration was denied by the Minister of Labor in an order 4 dated February 9, 1981.Hence, this petition for certiorari.

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After the Solicitor General and private respondents filed their respective COMMENTS on the petition in compliance with the resolution of this Court of March 16, 1981, petitioner filed on June 25, 1981 a motion 5 which reads:"PETITIONER respectfully states that one of the private respondents, Ruth Corpuz de Leon, has executed a sworn statement manifesting her desire to withdraw the complaint against petitioner in Case No. R4-STF-10-6695-78, Region 4, Ministry of Labor, absolving petitioner from any and all of the charges contained in the complaint, and stating that she did not execute and sign the appeal to the respondent National Labor Relations Commission and had no intention of doing so and it was private respondent Luz Raymundo who signed her name on the appeal. A copy of the affidavit is hereto attached and made integral part hereof.WHEREFORE, it is respectfully prayed that an order issue vacating the decision of the respondent Minister of Labor and Employment, subject matter of the petition, insofar as it orders reinstatement of Ruth Corpuz de Leon without loss of seniority right and privilege and with full backwages, absolving petitioner from her complaint in Case No. R4-STF-10-6695-78, Region 4, Ministry of Labor and striking out the comment of private respondents in this case as to her."In a Resolution 6 dated November 4, 1981, this Court, acting on the aforequoted motion, the Comment 7 of private respondents Luz Raymundo and Zenaida Bustamante thereon, and the Reply 8 of petitioner thereto, as well as the motion to dismiss 9 personally filed by Ruth Corpuz de Leon assisted by her husband Jesus de Leon and her complaint/claim which was confirmed by petitioner in its Comment 10 on said motion to dismiss, GRANTED the dismissal of the complaint/claim of respondent Ruth Corpuz de Leon against petitioner.Meanwhile, the petition was given due course.Petitioner would want Us to annul the decision of the Minister of Labor assailed to have been rendered without and/or lack of jurisdiction, and in lieu thereof, sustain the order of the Acting Director of the National Capital Region, MOLE, granting the clearance application to dismiss Luz Raymundo, Zenaida Bustamante and Ruth Corpuz. As herein earlier stated, Ruth Corpuz had withdrawn her complaint/claim against petitioner, hence, the resolution of the instant appeal applies only to Luz Raymundo and Zenaida Bustamante, the two (2) remaining employees.In support of the jurisdictional issue raised, petitioner contends that private respondents' appeal from the order dated March 6, 1979 of the Acting Director of the National Capital Region granting the application for clearance to dismiss them was not perfected on time for failure to furnish petitioner a copy of the appeal pursuant to Article 223 of the New Labor Code and Section 9, Rule XIII of its Implementing Rules and Regulations, thus making the order appealed from, final and executory. Further, it is the contention of petitioner that it was denied due process of law because it was not given the opportunity to present evidence to rebut private respondents' documentary evidence allegedly submitted only on appeal.Stripped of procedural technicalities, the decisive issue before Us - is whether or not sufficient legal grounds exist under the relevant facts and applicable law to justify the dismissal of private respondents Luz Raymundo and Zenaida Bustamante.Our answer is in the negative.While it is true that it is the sole prerogative of the management to dismiss or lay-off an employee, the exercise of such a prerogative, however, must be made without abuse of discretion, for what is at stake is not only private respondents' positions but also their means of livelihood. Basically, the right of an employer to dismiss an employee differs from and should not be confused with the manner in which such right is exercised. It must not be oppressive and abusive since it affects one's person and property. 11In the case of Luz Raymundo, she was charged of insubordination for allegedly refusing to work on a Sunday, October 15, 1978, which was her rest day. The records show that the day before, she requested exemption from work on that Sunday. In fact, she was granted a clearance slip (Exhibit "B") allowing her to be absent on that Sunday by her immediate supervisor (Department Head). She had a valid ground, therefore, not to work on that Sunday, and her failure to report that day can not be considered as gross insubordination. The disapproval of her request by top management reasonably creates the impression of a hostile attitude characterizing the efforts of petitioner (Management) of easing out with undue haste the services of private respondents. Besides, petitioner has not shown that Luz Raymundo's failure to report for work on that Sunday, October 15, 1978, constitutes one of the just causes for termination under Article 283 of the New Labor Code. On the other hand, in the case of Zenaida Bustamante, she allegedly abandoned her employment by failing to report for work after the expiration of her suspension on October 23, 1978. Like Luz Raymundo, her one week suspension arose from her failure to report for work on a Sunday, October 15, 1978 which as explained in her opposition to the clearance application, was not without reason because on that day, she was ill and in fact treated by Dr. Lorenzo Yuson for fever and severe stomach ache as shown by the medical certificate (Exhibit "C"). On the consequent charge of abandonment, it must be noted that Zenaida Bustamante filed a complaint for illegal dismissal on November 15, 1978 to oppose the clearance application to dismiss her.

Of course, it is a recognized principle that abandonment of work by an employee is inconsistent with the immediate filing of a complaint for illegal dismissal. 12 It would be illogical for Zenaida Bustamante to abandon her job and then immediately file an action seeking her reinstatement. At that time, no employee would recklessly abandon her job knowing fully well the acute unemployment problem then existing and the difficulty of looking for a means of livelihood.The illegality of the dismissal of the herein private respondents, under the facts and circumstances disclosed, becomes even more apparent in the light of the express provision of the Constitution, requiring the State to assure the workers "security of tenure" and "just and humane conditions of work." 13 The constitutional mandate of security of tenure and just and humane conditions of work, both as aspects of the protection accorded to labor, militates against the severity of the sanction imposed on private respondents. The penalty of dismissal from the service, even assuming petitioner's charges to be true, is too severe a penalty. It is a penalty out of proportion to the offense committed - failure to report for work on a Sunday (October 15, 1978) - when after all, suspension would suffice. The dismissal came as an afterthought because private respondents were already suspended for one week. The lack of sympathetic understanding of the underlying reasons for their absence aggravated by the indecent haste attendant to the efforts of petitioner to terminate the services of private respondents portray a total disregard of the constitutional mandate of "security of tenure" and "just and humane conditions of work" which the State is mandated to protect. The New Labor Code is clear on this point. It is the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty four (24) hours after every six (6) consecutive normal work days. 14 Even if there really existed an urgency to require work on a rest day, (which is not in the instant case) outright dismissal from employment is so severe a consequence, more so when justifiable grounds exist for failure to report for work. From the other standpoint, We find the objections raised grounded on procedural technicalities devoid of merit. The mere failure to furnish copy of the appeal memorandum to adverse party is not a fatal defect. We have consistently adhered to the principle clearly held in Alonso vs. Villamor 15 that "technicality when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from court." In a more forceful language, Mr. Chief Justice Enrique M. Fernando, speaking for the Court, in Meracap vs. International Ceramics Manufacturing Co., Inc. 16 stated "for the strictly juridical standpoint, it cannot be too strongly stressed, to follow Davis in his masterly work, Discretionary Justice, that where a decision may be made to rest on informed judgment rather than rigid rules, all the equities of the case must be accorded their due weight. Finally, labor law determinations, to quote from Bultmann, should be not only secundum retionem but also secundum caritatem." More recently, we held that in appeals in labor cases, non-service of the copy of the appeal or appeal memorandum to the adverse party is not a jurisdictional defect, and does not justify dismissal of the appeal. 17 Likewise, it was held that dismissal of an employee's appeal on a purely technical ground is inconsistent with the constitutional mandate on protection to labor. 18Petitioner's belated claim of lack of jurisdiction on the ground that it was the Minister of Labor, and not the National Labor Relations Commission, which acted on the appeal pursuant to Article 217 of the New Labor, lacks merit. The records of the case were forwarded by the Acting Director of the National Capital Region to the Labor Appeals and Review Staff, Office of the Minister of Labor in an order dated April 17, 1979 with the knowledge of petitioner. Having failed to manifest its objection, but chose instead to await the decision of the Minister of Labor, petitioner is now estopped from questioning the exercise of jurisdiction by the Minister of Labor after an adverse decision have been rendered against it. We cannot countenance petitioner's stance of speculating on the possibility of a favorable decision from the Minister of Labor and later on question the latter's jurisdiction after an adverse decision.As regards the due process argument, petitioner contend that it was denied the opportunity to cross-examine private respondents and rebut their documentary evidence allegedly submitted only on appeal. At the inception of the case however, both parties, after failing to arrive at an amicable settlement, agreed to submit their case for resolution on the basis of their respective position papers. While private respondents insisted on its claim that they have submitted their documentary evidence together with their position papers, petitioner, on the other hand, claim otherwise. Surprisingly though, it is only after the rendition of an adverse decision that petitioner now raised this matter of non-submission of documentary evidence. And petitioner did not insist on this alleged non-submission of evidence apparently because the Acting Director of the National Capital Region decided the case in its favor.Even on the assumption that no documentary evidence was ever submitted by private respondents, still, on appeal, the entire record of the case was reviewed by the respondent Minister of Labor and in fact, decided the case on the merits. Besides, a motion for reconsideration filed by petitioner invoking due process cured the defect based on the alleged lack of procedural due process. 19 On its argument that it was denied the opportunity to rebut private respondents' documentary evidence allegedly submitted only on appeal, it is interesting to note that in the application for clearance to dismiss employees, the employer is required to present evidence before the former can present any

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contrary evidence. Petitioner's technical objections pointedly create an impression of the weakness of its stand or the merits of the case. Notwithstanding the foregoing, We are convinced, after a closer examination of the records, that indeed there is no reasonable ground for the outright dismissal of Luz Raymundo and Zenaida Bustamante.Petitioner therefore is under obligation to REINSTATE Luz Raymundo and Zenaida Bustamante to their former or substantially equivalent positions without loss of seniority rights and privileges with three-year (3) backwages 20 to be computed from October 23, 1978, the date of expiration of their suspension.WHEREFORE, finding the instant petition to be without merit, the same is hereby DISMISSED. The appealed decision of the Minister of Labor and Employment dated January 21, 1981 is hereby AFFIRMED.Petitioner Remerco Garments Manufacturing is hereby ordered to reinstate Luz Raymundo and Zenaida Bustamante to their former or substantially equivalent position without loss of seniority rights and privileges with three-year (3) backwages computed from October 23, 1978.No costs.SO ORDERED.Makasiar, Concepcion Jr., Abad Santos and Escolin, JJ., concur. Aquino, J., no part.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., G.R. No. 142824, 2001 Dec 19, 1st Division)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 workplace without 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 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 order[4] 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 x.”[6] 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 interim, 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 the 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 - PresidentCarmelo Santos - Vice-PresidentMarites Montejo - Treasurer/Board MemberRico Gonzales - AuditorRod Abuan - DirectorSegundino Flores - DirectorHernando Clemente - Directorwho 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

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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-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 x x x.’ 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 it 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”[13] when 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 a.m. 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 Appeal 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 eight-hour 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 nag-uutos 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

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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 dalawaang 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-ovetime 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 ----- PresidenteCarmelo Santos ----- Bise-PresidenteNanding Clemente -- DirectorTess Montejo------- Chief StewardSegundo Flores ------ DirectorEnrico Gonzales ----- AuditorBoy Alcantara ------- Shop StewardRod Abuan ----------- Directorat 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-ovetime" 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 "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang umalis.x x x"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 M. 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. xxx[19]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)sometime 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: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 xxx (their collective bargaining) agreement.”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 x.[24]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.Davide, Jr., C.J., (Chairman), Pardo, and Ynares-Santiago, JJ., concur. Puno, J., on official leave. -----------------------------------------------------------------------------------------------------------------------------------------------------------TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO RICHA, RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL, JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and 561 OTHERS, HEREIN REPRESENTED BY KORONADO B. APUZEN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON, HONORABLE CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and STANDARD (PHILIPPINES) FRUIT CORPORATION, respondents., G.R. No. 78210, 1989 February 28, 2nd Division)PARAS, J.:This is a petition for review on certiorari of the decision of the National Labor Relations Commission dated December 12, 1986 in NLRC Case No. 2327 MC-XI-84 entitled Teofilo Arica et al. vs. Standard (Phil.) Fruits Corporation (STANFILCO) which affirmed the decision of Labor Arbiter Pedro C. Ramos, NLRC, Special Task Force, Regional Arbitration Branch No. XI, Davao City dismissing the claim of petitioners.This case stemmed from a complaint filed on April 9, 1984 against private respondent Stanfilco for assembly time, moral damages and attorney's fees, with the aforementioned Regional Arbitration Branch No. XI, Davao City.After the submission by the parties of their respective position papers (Annex "C", pp. 30-40; Annex "D", Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a decision dated October 9, 1985 (Annex "E", Rollo, pp. 51-58) in favor of private respondent STANFILCO, holding that:"Given these facts and circumstances, we cannot but agree with respondent that the pronouncement in that earlier case, i.e. the thirty-minute assembly time long practiced cannot be considered waiting time or work time and, therefore, not compensable, has become the law of the case which can no longer be disturbed without doing violence to the time-honored principle of res-judicata."WHEREFORE, in view of the foregoing considerations, the instant complaint should therefore be, as it is hereby, DISMISSED.SO ORDERED." (Rollo, p. 58)On December 12, 1986, after considering the appeal memorandum of complainant and the opposition of respondents, the First Division of public respondent NLRC composed of Acting Presiding Commissioner Franklin Drilon, Commissioner Conrado Maglaya, Commissioner Rosario D. Encarnacion as Members, promulgated its Resolution, upholding the Labor Arbiters' decision. The Resolution's dispositive portion reads:"Surely, the customary functions referred to in the above-quoted provision of the agreement includes the long-standing practice and institutionalized non-compensable assembly time. This, in effect, estopped complainants from pursuing this case."The Commission cannot ignore these hard facts, and we are constrained to uphold the dismissal and closure of the case."WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.

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"SO ORDERED." (Annex "H", Rollo, pp. 86-89).On January 15, l987, petitioners filed a Motion for Reconsideration which was opposed by private respondent (Annex "I" Rollo, pp. 90-91; Annex "J," Rollo, pp. 92-96).Public respondent NLRC, on January 30, 1987, issued resolution denying for lack of merit petitioners' motion for reconsideration (Annex "K", Rollo, p. 97).Hence this petition for review on certiorari filed on May 7, 1987.The Court in the resolution of May 4, 1988 gave due course to this petition. Petitioners assign the following issues: 1) Whether or not the 30-minute activity of the petitioners before the scheduled working time is compensable nder the Labor Code. 2) Whether or not res judicata applies when the facts obtaining in the prior case and in the case at bar are significantly different from each other in that there is merit in the case at bar. 3) Whether or not there is finality in the decision of Secretary Ople in view of the compromise agreement novating it and the withdrawal of the appeal. 4) Whether or not estoppel and laches lie in decisions for the enforcement of labor standards (Rollo, p. 10).Petitioners contend that the preliminary activities as workers of respondents STANFILCO in the assembly area is compensable as working time (from 5:30 to 6:00 o'clock in the morning) since these preliminary activities are necessarily and primarily for private respondent's benefit.These preliminary activities of the workers are as follows: (a) First there is the roll call. This is followed by getting their individual work assignments from the foreman. (b) Thereafter, they are individually required to accomplish the Laborer's Daily Accomplishment Report during which they are often made to explain about their reported accomplishment the following day. (c ) Then they go to the stockroom to get the working materials, tools and equipment. (d) Lastly, they travel to the field bringing with them their tools, equipment and materials.All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11).Contrary to this contention, respondent avers that the instant complaint is not new, the very same claim having been brought against herein respondent by the same group of rank and file employees in the case of Associated Labor Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76 which was filed way back April 27, 1976 when ALU was the bargaining agent of respondent's rank and file workers. The said case involved a claim for "waiting time", as the complainants purportedly were required to assemble at a designated area at least 30 minutes prior to the start of their scheduled working hours "to ascertain the work force available for the day by means of a roll call, for the purpose of assignment or reassignment of employees to such areas in the plantation where they are most needed." (Rollo, pp. 64-65).Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case (Associated Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76) where significant findings of facts and conclusions had already been made on the matter.The Minister of Labor held:"The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as 'waiting time' within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code . . ."Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of the employees, and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other personal pursuits. They are not new employees as to require the company to deliver long briefings regarding their respective work assignments. Their houses are situated right on the area where the farms are located, such that after the roll call, which does not necessarily require the personal presence, they can go back to their houses to attend to some chores. In short, they are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures. The CBA does not contain any provision to this effect; the record is also bare of any proof on this point. This, therefore, demonstrates the indubitable fact that the thirty (30)-minute assembly time was not primarily intended for the interests of the employer, but ultimately for the employees to indicate their availability or non-availability for work during every working day." (Annex "E", Rollo, p. 57).Accordingly, the issues are reduced to the sole question as to whether public respondent National Labor Relations Commission committed a grave abuse of discretion in its resolution of December 17, 1986. The facts on which this decision was predicated continue to be the facts of the case in this questioned resolution of the National Labor Relations Commission.

It is clear that herein petitioners are merely reiterating the very same claim which they fled through the ALU and which records show had already long been considered terminated and closed by this Court in G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling that petitioners' claim is already barred by res judicata.Be that as it may, petitioners' claim that there was a change in the factual scenario which are "substantial changes in the facts" makes respondent firm now liable for the same claim they earlier filed against respondent which was dismissed. It is thus axiomatic that the non-compensability of the claim having been earlier established, constitute the controlling legal rule or decision between the parties and remains to be the law of the case making this petition without merit.As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar principle of res judicata. There will be no end to this controversy if the light of the Minister of Labor's decision dated May 12, 1979 that had long acquired the character of finality ---- and which already resolved that petitioners' thirty (30)-minute assembly time is not compensable, the same issue can be re-litigated again." (Rollo, p. 183).This Court has held:"In this connection account should be taken of the cognate principle that res judicata operates to bar not only the relitigation in a subsequent action of the issues squarely raised, passed upon and adjudicated in the first suit, but also the ventilation in said subsequent suit of any other issue which could have been raised in the first but was not The law provides that 'the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action . . . litigating for the same thing and in the same capacity.' So, even if new causes of action are asserted in the second action (e.g. fraud, deceit, undue machinations in connection with their execution of the convenio de transaccion), this would not preclude the operation of the doctrine of res judicata. Those issues are also barred, even if not passed upon in the first. They could have been, but were not, there raised." (Vda. de Buncio v. Estate of the late Anita de Leon, 156 SCRA 352 [1987]).Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired expertise because their jurisdiction is confined to specific matters are accorded not only respect but at times even finality if such findings are supported by substantial evidence (Special Events & Central Shipping Office Workers Union v. San Miguel Corporation, 122 SCRA 557 [1983]; Dangan v. NLRC, 127 SCRA 706 [1984]; Phil. Labor Alliance Council v. Bureau of Labor Relations, 75 SCRA 162 [1977]; Mamerto v. Inciong, 118 SCRA 265 [1982]; National Federation of Labor Union (NAFLU) v. Ople, 143 SCRA 124 [1986]; Edi-Staff Builders International, Inc. v. Leogardo, Jr., 152 SCRA 453 [1987]; Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]).The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex "E", Petition) pointed out in detail the basis of his findings and conclusions, and no cogent reason can be found to disturb these findings nor of those of the National Labor Relations Commission which affirmed the same. PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the decision of the National Labor Relations Commission is AFFIRMED.SO ORDERED.Melencio-Herrera (Chairman), Padilla and Regalado, JJ., concur.Separate OpinionsSARMIENTO, J., dissenting:It is my opinion that res judicata is not a bar.The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI-76) relied upon by the respondents as basis for claims of res judicata, is not, to my mind, a controlling precedent. In that case, it was held that the thirty-minute "waiting time" complained of was a mere "assembly time" and not a waiting time as the term is known in law, and hence, a compensable hour of work. Thus:The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as 'waiting time' within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code . . .Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of the employees, and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other personal pursuits. They are not new employees as to require the company to deliver long briefings regarding their respective work assignments. Their houses are situated right on the area where the farms are located, such that after the roll call, which does not necessarily require the personal presence, they can go back to their houses to attend to some chores.In short, they are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures. The CBA does not contain any provision to this effect; the record is also bare of any proof on this point. This, therefore, demonstrates the

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indubitable fact that the thirty (30)-minute assembly time was not primarily intended for the interests of the employer, but ultimately for the employees to indicate their availability or non-availability for work during every working day. (Decision, 6.) Precisely, it is the petitioners' contention that the assembly time in question had since undergone dramatic changes, thus: (a) First there is the roll call. This is followed by getting their individual work assignments from the foreman. (b) Thereafter, they are individually required to accomplish the Laborer's Daily Accomplishment Report during which they are often made to explain about their reported accomplishment the following day. (c ) Then they go to the stockroom to, at the working materials, tools and equipment. (d) Lastly, they travel to the field bringing with them their tools, equipment and materials.(Supra, 4-5.)The petitioners have vehemently maintained that in view thereof, the instant case should be distinguished from the first case. And I do not believe that the respondents have successfully rebutted these allegations. The Solicitor General relies solely on the decision of then Minister Ople, the decision the petitioners precisely reject in view of the changes in the conditions of the parties. The private respondent on the other hand insists that these practices were the same practices taken into account in ALU v. STANFILCO. If this were so, the Ople decision was silent thereon. It is evident that the Ople decision was predicated on the absence of any insinuation of obligatoriness in the course or after the assembly activities on the part of the employees. (". . . [T]hey are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures;" supra, 6.) As indicated, however, by the petitioners, things had since changed, and remarkably so, and the latter had since been placed under a number of restrictions. My considered opinion is that the thirty-minute assembly time had become, in truth and fact, a "waiting time" as contemplated by the Labor Code.I vote, then, to grant the petition.HOLIDAYSPRODUCERS BANK OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and PRODUCERS BANK EMPLOYEES ASSOCIATION,[1] respondents., G.R. No. 100701, 2001 Mar 28, 3rd Division GONZAGA-REYES, J.:Before us is a special civil action for certiorari with prayer for preliminary injunction and/or restraining order seeking the nullification of (1) the decision of public respondent in NLRC-NCR Case No. 02-00753-88, entitled “Producers Bank Employees Association v. Producers Bank of the Philippines,” promulgated on 30 April 1991, reversing the Labor Arbiter’s dismissal of private respondent’s complaint and (2) public respondent’s resolution dated 18 June 1991 denying petitioner’s motion for partial reconsideration.The present petition originated from a complaint filed by private respondent on 11 February 1988 with the Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC), charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition, private respondent prayed for damages.[2]On 31 March 1989, Labor Arbiter Nieves V. de Castro found private respondent’s claims to be unmeritorious and dismissed its complaint.[3] In a complete reversal, however, the NLRC[4] granted all of private respondent’s claims, except for damages.[5] The dispositive portion of the NLRC’s decision provides –WHEREFORE, premises considered, the appealed Decision is, as it is hereby, SET ASIDE and another one issued ordering respondent-appellee to pay complainant-appellant:1. The unpaid bonus (mid-year and Christmas bonus) and 13th month pay;2. Wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding adjustment thereof; and3. Holiday pay under Article 94 of the Labor Code, but not to exceed three (3) years.The rest of the claims are dismissed for lack of merit.SO ORDERED.Petition filed a Motion for Partial Reconsideration, which was denied by the NLRC in a Resolution issued on 18 June 1991. Hence, recourse to this Court.Petitioner contends that the NLRC gravely abused its discretion in ruling as it did for the succeeding reasons stated in its Petition –1. On the alleged diminution of benefits, the NLRC gravely abused its discretion when (1) it contravened the Supreme Court decision in Traders Royal Bank v. NLRC, et al., G.R. No. 88168, promulgated on August 30, 1990, (2) its ruling is not justified by law and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA, and (4) the so-called “company practice invoked by it has no legal and moral bases” (p. 2, Motion for Partial Reconsideration, Annex “H”);

2. On the alleged non-compliance with Wage Order No. 6, the NLRC again gravely abused its discretion when it patently and palpably erred in holding that it is “more inclined to adopt the stance of appellant (private respondent UNION) in this issue since it is more in keeping with the law and its implementing provisions and the intendment of the parties as revealed in their CBA” without giving any reason or justification for such conclusions as the stance of appellant (private respondent UNION) does not traverse the clear and correct finding and conclusion of the Labor Arbiter.Furthermore, the petitioner, under conservatorship and distressed, is exempted under Wage Order No. 6.Finally, the “wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding adjustment thereof” (par. 2, dispositive portion, NLRC Decision), has prescribed (p. 12, Motion for Partial Reconsideration, Annex “H”).3. On the alleged non-payment of legal holiday pay, the NLRC again gravely abused its discretion when it patently and palpably erred in approving and adopting “the position of appellant (private respondent UNION)” without giving any reason or justification therefor which position does not squarely traverse or refute the Labor Arbiter’s correct finding and ruling (p. 18, Motion for Partial Reconsideration, Annex “H”).[6]On 29 July 1991, the Court granted petitioner’s prayer for a temporary restraining order enjoining respondents from executing the 30 April 1991 Decision and 18 June 1991 Resolution of the NLRC.[7]Coming now to the merits of the petition, the Court shall discuss the issues ad seriatim.BonusesAs to the bonuses, private respondent declared in its position paper[8] filed with the NLRC that –1. Producers Bank of the Philippines, a banking institution, has been providing several benefits to its employees since 1971 when it started its operation. Among the benefits it had been regularly giving is a mid-year bonus equivalent to an employee’s one-month basic pay and a Christmas bonus equivalent to an employee’s one whole month salary (basic pay plus allowance);2. When P.D. 851, the law granting a 13th month pay, took effect, the basic pay previously being given as part of the Christmas bonus was applied as compliance to it (P.D. 851), the allowances remained as Christmas bonus;3. From 1981 up to 1983, the bank continued giving one month basic pay as mid-year bonus, one month basic pay as 13th month pay but the Christmas bonus was no longer based on the allowance but on the basic pay of the employees which is higher;4. In the early part of 1984, the bank was placed under conservatorship but it still provided the traditional mid-year bonus;5. By virtue of an alleged Monetary Board Resolution No. 1566, the bank only gave a one-half (1/2) month basic pay as compliance of the 13th month pay and none for the Christmas bonus. In a tabular form, here are the bank’s violations:YEAR MID-YEAR BONUS CHRISTMAS BONUS 13TH MO. PAYprevious years one mo. basic one mo. basic one mo. basic1984 [one mo. basic] - none - one-half mo. basic1985 one-half mo. Basic - none - one-half mo. basic1986 one-half mo. basic one-half mo. basic one mo. basic1987 one-half mo. basic one-half mo. basic one mo. basicPrivate respondent argues that the mid-year and Christmas bonuses, by reason of their having been given for thirteen consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by petitioner without violating Article 100 of Presidential Decree No. 442[9] which prohibits the diminution or elimination of benefits already being enjoyed by the employees. Although private respondent concedes that the grant of a bonus is discretionary on the part of the employer, it argues that, by reason of its long and regular concession, it may become part of the employee’s regular compensation.[10]On the other hand, petitioner asserts that it cannot be compelled to pay the alleged bonus differentials due to its depressed financial condition, as evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to petitioner, it sustained losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter. Moreover, petitioner points out that the collective bargaining agreement of the parties does not provide for the payment of any mid-year or Christmas bonus. On the contrary, section 4 of the collective bargaining agreement states that –Acts of Grace. Any other benefits or privileges which are not expressly provided in this Agreement, even if now accorded or hereafter accorded to the employees, shall be deemed purely acts of grace dependent upon the sole judgment and discretion of the BANK to grant, modify or withdraw.[11]A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. It is an act of generosity granted by an

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enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.[12] The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient.[13] Thus, a bonus is not a demandable and enforceable obligation,[14] except when it is made part of the wage, salary or compensation of the employee.[15]However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay. To hold otherwise would be to penalize the employer for his past generosity. Thus, in Traders Royal Bank v. NLRC,[16] we held that –It is clear x x x that the petitioner may not be obliged to pay bonuses to its employees. The matter of giving them bonuses over and above their lawful salaries and allowances is entirely dependent on the profits, if any, realized by the Bank from its operations during the past year.From 1979-1985, the bonuses were less because the income of the Bank had decreased. In 1986, the income of the Bank was only 20.2 million pesos, but the Bank still gave out the usual two (2) months basic mid-year and two months gross year-end bonuses. The petitioner pointed out, however, that the Bank weakened considerably after 1986 on account of political developments in the country. Suspected to be a Marcos-owned or controlled bank, it was placed under sequestration by the present administration and is now managed by the Presidential Commission on Good Government (PCGG).In light of these submissions of the petitioner, the contention of the Union that the granting of bonuses to the employees had ripened into a company practice that may not be adjusted to the prevailing financial condition of the Bank has no legal and moral bases. Its fiscal condition having declined, the Bank may not be forced to distribute bonuses which it can no longer afford to pay and, in effect, be penalized for its past generosity to its employees.Private respondent’s contention, that the decrease in the mid-year and year-end bonuses constituted a diminution of the employees’ salaries, is not correct, for bonuses are not part of labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits, which are provided by the Labor Code.This doctrine was reiterated in the more recent case of Manila Banking Corporation v. NLRC[17] wherein the Court made the following pronouncements –By definition, 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. 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, especially so if it is incapable of doing so.xxx xxx xxxClearly then, a bonus is an amount given ex gratia to an employee by an employer on account of success in business or realization of profits. How then can an employer be made liable to pay additional benefits in the nature of bonuses to its employees when it has been operating on considerable net losses for a given period of time?Records bear out that petitioner Manilabank was already in dire financial straits in the mid-80’s. As early as 1984, the Central Bank found that Manilabank had been suffering financial losses. Presumably, the problems commenced even before their discovery in 1984. As earlier chronicled, the Central Bank placed petitioner bank under comptrollership in 1984 because of liquidity problems and excessive interbank borrowings. In 1987, it was placed under receivership and ordered to close operation. In 1988, it was ordered liquidated.It is evident, therefore, that petitioner bank was operating on net losses from the years 1984, 1985 and 1986, thus, resulting to its eventual closure in 1987 and liquidation in 1988. Clearly, there was no success in business or realization of profits to speak of that would warrant the conferment of additional benefits sought by private respondents. No company should be compelled to act liberally and confer upon its employees additional benefits over and above those mandated by law when it is plagued by economic difficulties and financial losses. No act of enlightened generosity and self-interest can be exacted from near empty, if not empty coffers.It was established by the labor arbiter[18] and the NLRC[19] and admitted by both parties[20] that petitioner was placed under conservatorship by the Monetary Board, pursuant to its authority under Section 28-A of Republic Act No. 265,[21] as amended by Presidential Decree No. 72,[22] which provides –Sec. 28-A. Appointment of conservator. - Whenever, on the basis of a report submitted by the appropriate supervising and examining department, the Monetary Board finds that a bank is in a state of continuing inability or unwillingness to maintain a condition of solvency and liquidity deemed adequate to protect the interest of depositors and creditors, the Monetary Board may appoint a conservator to take charge of the assets, liabilities, and the management of that banking institution, collect all monies and debts due said bank and exercise all powers necessary to preserve the assets of the bank, reorganize the management thereof and restore its viability. He shall have the power to overrule or revoke the actions of the previous management and board of directors of the bank, any provision of law to the contrary notwithstanding, and such other powers as the Monetary Board shall deem necessary.

xxx xxx xxxUnder Section 28-A, the Monetary Board may place a bank under the control of a conservator when it finds that the bank is continuously unable or unwilling to maintain a condition of solvency or liquidity. In Central Bank of the Philippines v. Court of Appeals,[23] the Court declared that the order placing petitioner herein under conservatorship had long become final and its validity could no longer be litigated upon. Also, in the same case, the Court found that sometime in August, 1983, some news items triggered a bank-run in petitioner which resulted in continuous over-drawings on petitioner’s demand deposit account with the Central Bank; the over-drawings reached P143.955 million by 17 January 1984; and as of 13 February 1990, petitioner had over-drawings of up to P1.233 billion, which evidences petitioner’s continuing inability to maintain a condition of solvency and liquidity, thus justifying the conservatorship. Our findings in the Central Bank case coincide with petitioner’s claims that it continuously suffered losses from 1984 to 1988 as follows -YEAR NET LOSSES IN MILLIONS OF PESOS1984 P 144.4181985 P 144.9401986 P 132.9401987 P 84.182January-February 1988 P 9.271These losses do not include the interest expenses on the overdraft loan of the petitioner to the Central Bank, which interest as of July 31, 1987, amounted to P610.065 Million, and penalties on reserve deficiencies which amounted to P89.029 Million. The principal balance of the overdraft amounted to P971.632 Million as of March 16, 1988.[24]Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses triggered by a bank-run which began in 1983. In such a depressed financial condition, petitioner cannot be legally compelled to continue paying the same amount of bonuses to its employees. Thus, the conservator was justified in reducing the mid-year and Christmas bonuses of petitioner’s employees. To hold otherwise would be to defeat the reason for the conservatorship which is to preserve the assets and restore the viability of the financially precarious bank. Ultimately, it is to the employees’ advantage that the conservatorship achieve its purposes for the alternative would be petitioner’s closure whereby employees would lose not only their benefits, but their jobs as well.13th Month PayWith regard to the 13th month pay, the NLRC adopted the position taken by private respondent and held that the conservator was not justified in diminishing or not paying the 13th month pay and that petitioner should have instead applied for an exemption, in accordance with section 7 of Presidential Decree No. 851 (PD 851), as amended by Presidential Decree No. 1364, but that it did not do so.[25] The NLRC held that the actions of the conservator ran counter to the provisions of PD 851.

In its position paper,[26] private respondent claimed that petitioner made the following payments to its members –YEAR MID-YEAR BONUS 13TH MO. PAY CHRISTMAS BONUS1984 1 month basic ½ month basic None1985 ½ month basic ½ month basic None1986 ½ month basic 1 month basic ½ month basic1987 ½ month basic 1 month basic ½ month basic

However, in its Memorandum[27] filed before this Court, private respondent revised its claims as follows –YEAR MID-YEAR BONUS 13TH MO. PAY CHRISTMAS BONUS1984 1 month basic None ½ month basic1985 ½ month basic None ½ month basic1986 ½ month basic ½ month basic 1 month basic1987 ½ month basic ½ month basic 1 month basic1988 ½ month basic ½ month basic 1 month basicPetitioner argues that it is not covered by PD 851 since the mid-year and Christmas bonuses it has been giving its employees from 1984 to 1988 exceeds the basic salary for one month (except for 1985 where a total of one month basic salary was given). Hence, this amount should be applied towards the satisfaction of the 13th month pay, pursuant to Section 2 of PD 851.[28]PD 851, which was issued by President Marcos on 16 December 1975, requires all employers to pay their employees receiving a basic salary of not more than P1,000 a month,[29] regardless of the nature of the

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employment, a 13th month pay, not later than December 24 of every year.[30] However, employers already paying their employees a 13th month pay or its equivalent are not covered by the law. Under the Revised Guidelines on the Implementation of the 13th-Month Pay Law,[31] the term “equivalent” shall be construed to include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary. The intention of the law was to grant some relief – not to all workers – but only to those not actually paid a 13th month salary or what amounts to it, by whatever name called. It was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent – whether out of pure generosity or on the basis of a binding agreement. To impose upon an employer already giving his employees the equivalent of a 13th month pay would be to penalize him for his liberality and in all probability, the employer would react by withdrawing the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given due credit.[32]In the case at bar, even assuming the truth of private respondent’s claims as contained in its position paper or Memorandum regarding the payments received by its members in the form of 13th month pay, mid-year bonus and Christmas bonus, it is noted that, for each and every year involved, the total amount given by petitioner would still exceed, or at least be equal to, one month basic salary and thus, may be considered as an “equivalent” of the 13th month pay mandated by PD 851. Thus, petitioner is justified in crediting the mid-year bonus and Christmas bonus as part of the 13th month pay.Wage Order No. 6Wage Order No. 6, which came into effect on 1 November 1984, increased the statutory minimum wage of workers, with different increases being specified for agricultural plantation and non-agricultural workers. The bone of contention, however, involves Section 4 thereof which reads -All wage increase in wage and/or allowance granted by employers between June 17, 1984 and the effectivity of this Order shall be credited as compliance with the minimum wage and allowance adjustments prescribed herein provided that where the increases are less than the applicable amount provided in this Order, the employer shall pay the difference. Such increases shall not include anniversary wage increases provided in collective bargaining agreements unless the agreement expressly provide otherwise.On 16 November 1984, the parties entered into a collective bargaining agreement providing for the following salary adjustments –Article VIII. Section 1. Salary Adjustments. – Cognizant of the effects of, among others, price increases of oil and other commodities on the employees’ wages and earnings, and the certainty of continued governmental or statutory actions adjusting employees’ minimum wages, earnings, allowances, bonuses and other fringe benefits, the parties have formulated and agreed on the following highly substantial packaged increases in salary and allowance which take into account and cover (a) any deflation in income of employees because of such price increases and inflation and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and benefits, during the next three (3) years of this Agreement:(i) Effective March 1, 1984 – P225.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1, 1984.(ii) Effective March 1, 1985 – P125.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1, 1985.(iii) Effective March 1, 1986 – P125.00 per month as salary increase plus P100.00 per month as increase in allowance to employees within the bargaining unit on March 1, 1986.In addition, the collective bargaining agreement of the parties also included a provision on the chargeability of such salary or allowance increases against government-ordered or legislated income adjustments –Section 2. Pursuant to the MOLE Decision dated October 2, 1984 and Order dated October 24, 1984, the first-year salary and allowance increases shall be chargeable against adjustments under Wage Order No. 5, which took effect on June 16, 1984. The chargeability of the foregoing salary increases against government-ordered or legislated income adjustments subsequent to Wage Order No. 5 shall be determined on the basis of the provisions of such government orders or legislation.Petitioner argues that it complied with Wage Order No. 6 because the first year salary and allowance increase provided for under the collective bargaining agreement can be credited against the wage and allowance increase mandated by such wage order. Under Wage Order No. 6, all increases in wages or allowances granted by the employer between 17 June 1984 and 1 November 1984 shall be credited as compliance with the wage and allowance adjustments prescribed therein. Petitioner asserts that although the collective bargaining agreement was signed by the parties on 16 November 1984, the first year salary and allowance increase was made to take effect retroactively, beginning from 1 March 1984 until 28 February 1985. Petitioner maintains that this period encompasses the period of creditability provided for under Wage Order No. 6 and that, therefore, the balance remaining after applying the first year salary and allowance increase in the collective bargaining agreement to the

increase mandated by Wage Order No. 5, in the amount of P125.00, should be made chargeable against the increase prescribed by Wage Order No. 6, and if not sufficient, petitioner is willing to pay the difference.[33]On the other hand, private respondent contends that the first year salary and allowance increases under the collective bargaining agreement cannot be applied towards the satisfaction of the increases prescribed by Wage Order No. 6 because the former were not granted within the period of creditability provided for in such wage order. According to private respondent, the significant dates with regard to the granting of the first year increases are 9 November 1984 – the date of issuance of the MOLE Resolution, 16 November 1984 – the date when the collective bargaining agreement was signed by the parties and 1 March 1984 – the retroactive date of effectivity of the first year increases. Private respondent points out that none of these dates fall within the period of creditability under Wage Order No. 6 which is from 17 June 1984 to 1 November 1984. Thus, petitioner has not complied with Wage Order No. 6.[34]The creditability provision in Wage Order No. 6 is based on important public policy, that is, the encouragement of employers to grant wage and allowance increases to their employees higher than the minimum rates of increases prescribed by statute or administrative regulation. Thus, we held in Apex Mining Company, Inc. v. NLRC[35] that –[t]o obliterate the creditability provisions in the Wage Orders through interpretation or otherwise, and to compel employers simply to add on legislated increases in salaries or allowances without regard to what is already being paid, would be to penalize employers who grant their workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interest of labor is concerned. The creditability provisions in the Wage Orders prevent the penalizing of employers who are industry leaders and who do not wait for statutorily prescribed increases in salary or allowances and pay their workers more than what the law or regulations require.Section 1 of Article VIII of the collective bargaining agreement of the parties states that “…the parties have formulated and agreed on the following highly substantial packaged increases in salary and allowance which take into account and cover (a) any deflation in income of employees because of such price increases and inflation and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and benefits, during the next three (3) years of this Agreement…” The unequivocal wording of this provision manifests the clear intent of the parties to apply the wage and allowance increases stipulated in the collective bargaining agreement to any statutory wage and allowance adjustments issued during the effectivity of such agreement - from 1 March 1984 to 28 February 1987. Furthermore, contrary to private respondent’s contentions, there is nothing in the wording of Section 2 of Article VIII of the collective bargaining agreement that would prevent petitioner from crediting the first year salary and allowance increases against the increases prescribed by Wage Order No. 6.It would be inconsistent with the abovestated rationale underlying the creditability provision of Wage Order No. 6 if, after applying the first year increase to Wage Order No. 5, the balance was not made chargeable to the increases under Wage Order No. 6 for the fact remains that petitioner actually granted wage and allowance increases sufficient to cover the increases mandated by Wage Order No. 5 and part of the increases mandated by Wage Order No. 6.Holiday PayArticle 94 of the Labor Code provides that every worker shall be paid his regular daily wage during regular holidays[36] and that 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. In this case, the Labor Arbiter found that the divisor used by petitioner in arriving at the employees’ daily rate for the purpose of computing salary-related benefits is 314.[37] This finding was not disputed by the NLRC.[38] However, the divisor was reduced to 303 by virtue of an inter-office memorandum issued on 13 August 1986, to wit -To increase the rate of overtime pay for rank and filers, we are pleased to inform that effective August 18, 1986, the acting Conservator approved the use of 303 days as divisor in the computation of Overtime pay. The present Policy of 314 days as divisor used in the computation for cash conversion and determination of daily rate, among others, still remain, Saturdays, therefore, are still considered paid rest days.Corollarily, the Acting Convservator also approved the increase of meal allowance from P25.00 to P30.00 for a minimum of four (4) hours of work for Saturdays.Proceeding from the unambiguous terms of the above quoted memorandum, the Labor Arbiter observed that the reduction of the divisor to 303 was for the sole purpose of increasing the employees’ overtime pay and was not meant to replace the use of 314 as the divisor in the computation of the daily rate for salary-related benefits.[39]Private respondent admits that, prior to 18 August 1986, petitioner used a divisor of 314 in arriving at the daily wage rate of monthly-salaried employees. Private respondent also concedes that the divisor was changed to 303 for purposes of computing overtime pay only. In its Memorandum, private respondent states that –49. The facts germane to this issue are not debatable. The Memorandum Circular issued by the Acting Conservator is clear. Prior to August 18, 1986, the petitioner bank used a divisor of 314 days in arriving at the daily wage rate of the monthly-salaried employees. Effective August 18, 1986, this was changed. It adopted the following formula:

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Basic salary x 12 months = Daily Wage Rate 303 days50. By utilizing this formula even up to the present, the conclusion is inescapable that the petitioner bank is not actually paying its employees the regular holiday pay mandated by law. Consequently, it is bound to pay the salary differential of its employees effective November 1, 1974 up to the present.xxx xxx xxx54. Since it is a question of fact, the Inter-office Memorandum dated August 13, 1986 (Annex “E”) provides for a divisor of 303 days in computing overtime pay. The clear import of this document is that from the 365 days in a year, we deduct 52 rest days which gives a total of 313 days. Now, if 313 days is the number of working days of the employees then, there is a disputable presumption that the employees are paid their holiday pay. However, this is not so in the case at bar. The bank uses 303 days as its divisor. Hence, it is not paying its employees their corresponding holiday pay.[40]In Union of Filipro Employees v. Vivar, Jr.[41] the Court held that “[t]he divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee’s salary and in the computation of his daily rate.” This was also our ruling in Chartered Bank Employees Association v. Ople,[42] as follows –It is argued that even without the presumption found in the rules and in the policy instruction, the company practice indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. The petitioner contends otherwise.One strong argument in favor of the petitioner’s stand is the fact that the Chartered Bank, in computing overtime compensation for its employees, employs a “divisor” of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays form the total number of calendar days in a year. If the employees are already paid for all non-working days, the divisor should be 365 and not 251.Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a year, since Saturdays are considered paid rest days, as stated in the inter-office memorandum. Thus, the use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein.We agree with the labor arbiter that the reduction of the divisor to 303 was done for the sole purpose of increasing the employees’ overtime pay, and was not meant to exclude holiday pay from the monthly salary of petitioner’s employees. In fact, it was expressly stated in the inter-office memorandum - also referred to by private respondent in its pleadings - that the divisor of 314 will still be used in the computation for cash conversion and in the determination of the daily rate. Thus, based on the records of this case and the parties’ own admissions, the Court holds that petitioner has complied with the requirements of Article 94 of the Labor Code.DamagesAs to private respondent’s claim for damages, the NLRC was correct in ruling that there is no basis to support the same.WHEREFORE, for the reasons above stated, the 30 April 1991 Decision of public respondent in NLRC-NCR Case No. 02-00753-88, entitled “Producers Bank Employees Association v. Producers Bank of the Philippines,” and its 18 June 1991 Resolution issued in the same case are hereby SET ASIDE, with the exception of public respondent’s ruling on damages.SO ORDERED.Melo, (Chairman), Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.LILIA P. LABADAN Petitioner, versus FOREST HILLS ACADEMY/NAOMI CABALUNA and PRESIDING COMISSIONER SALIC B. DUMARPA, COMMISSIONER PROCULO T. SARMEN, COMMISSIONER NOVITO C. CAGAYAN, Respondents., G.R. No. 172295, 2008 Dec 23, 2nd DivisionCARPIO MORALES, J.:Lilian L. Labadan (petitioner) was hired by private respondent Forest Hills Mission Academy (Forest Hills) in July 1989 as an elementary school teacher. From 1990 up to 2002, petitioner was registrar and secondary school teacher. On August 18, 2003, petitioner filed a complaint[1] against respondent Forest Hills and its administrator respondent Naomi Cabaluna for illegal dismissal, non-payment of overtime pay, holiday pay, allowances, 13th month pay, service incentive leave, illegal deductions, and damages.In her Position Paper,[2] petitioner alleged that she was allowed to go on leave from Forest Hills, and albeit she had exceeded her approved leave period, its extension was impliedly approved by the school principal because she received no warning or reprimand and was in fact retained in the payroll up to 2002.[3]

Petitioner further alleged that since 1990, tithes to the Seventh Day Adventist church have been illegally deducted from her salary; and she was not paid overtime pay for overtime service, 13th month pay, five days service incentive leave pay, and holiday pay; and that her SSS contributions have not been remitted.Claiming that strained relations between her and Forest Hill have rendered reinstatement not feasible, petitioner prayed for separation pay in lieu of reinstatement.In its Position Paper,[4] Forest Hills claimed as follows: In July 2001, petitioner was permitted to go on leave for two weeks but did not return for work after the expiration of the period. Despite petitioner’s undertaking to report “soon,” she never did even until the end of School Year 2001-2002. It thus hired a temporary employee to accomplish the needed reports. When she finally returned for work, classes for the School Year 2002-2003 were already on-going. To belie petitioner’s claim that she was dismissed, Forest Hills submitted a list of faculty members and staff from School Year 1998-1999 up to School Year 2001 to 2002 which included her name.[5]With regard to the charge for illegal deduction, Forest Hills claimed that the Seventh Day Adventist Church requires its members to pay tithes equivalent to 10% of their salaries, and petitioner was hired on account of her being a member thereof, and petitioner never questioned the deduction of the tithe from her salary. With regard to the charge for non-payment of overtime pay, holiday pay, and allowances, Forest Hills noted that petitioner proffered no evidence to support the same.The Labor Arbiter decided in favor of petitioner, disposing as follows:WHEREFORE, judgment is hereby rendered:1. Finding respondents Forest Hills Academy and/or Naomi Cabaluna guilty of illegally dismissing the complainant;2. Directing respondent to pay complainant Lilia P. Labadan the total amount of P152,501.02 representing her monetary award x x x.Complainant’s other claim[s] are hereby dismissed for lack of merit and/or failure to substantiate.SO ORDERED.[6]The National Labor Relations Commission (NLRC), finding the Labor Arbiter to have misappreciated the facts of the case, reversed and set aside his decision and dismissed petitioner’s complaint by Resolution of June 30, 2005.[7]On petitioner’s Petition for Certiorari,[8] the Court of Appeals, by Resolution[9] of December 15, 2005, dismissed the petition for deficient amount of appellate docket fee, non-attachment of Affidavit of Service, absence of written explanation why the petition was filed through registered mail instead of through personal service, and non-attachment of copies of the Complaint and the Answer filed before the Labor Arbiter. Petitioner’s Motion for Reconsideration having been denied,[10] she filed the present Petition for Review on Certiorari,[11] faulting the Court of Appeals x x x IN DISMISSING THE PETITION ON THE GROUND OF TECHNICALITIES[;]x x x IN NOT DECIDING ON THE MERITS WHETHER OR NOT HONORABLE COMMISSIONERS OF THE 5TH DIVISION HAVE COMMITTED AN ACT OF GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION:A. IN REVERSING THE FINDINGS OF THE EXECUTIVE LABOR ARBITER THAT HEREIN PETITIONER-COMPLAINANT WAS NOT DISMISSED FROM HER WORK AS A TEACHER and AT THE SAME TIME THE REGISTRAR;B. IN FINDING THAT BY A PROLONGED ABSENCE OF ONE YEAR MORE OR LESS, PETITIONER WAIVED HER 13TH MONTH PAY AND SERVICE INCENTIVE LEAVES AS SHE FAILED TO STATE SUCH CLAIMS IN HER AFFIDAVIT THAT WAS ATTACHED [TO] HER POSITION PAPER, and;C. THAT THE DECISION/RESOLUTION RENDERED BY THE HONORABLE COMMISSIONERS OF THE 5TH DIVISION WAS TAINTED WITH GRAVE ABUSE OF DISCRETION AS IT WAS INCOMPLETE AND UNLAWFUL[.][12] (Italics and emphasis in the original)Non-payment of docket fee at the time of the filing of a petition does not automatically call for its dismissal as long as the fee is paid within the applicable prescriptive or reglementary period.[13] While petitioner paid the P30 deficient amount of the docket fee on February 7, 2006,[14] it was beyond the 60-day period for filing the petition for certiorari. Nevertheless, the Court, in the interest of substantial justice, brushes aside this and the other technicalities cited by the Court of Appeals in its Resolution of December 15, 2005[15] and, instead of remanding the case to the appellate court, now hereby decides the case on the merits.While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for a valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal.[16] The records do not show that petitioner was dismissed from the service. They in fact show that despite petitioner’s absence from July 2001 to March 2002 which, by her own admission, exceeded her approved leave,[17] she was still considered a member of the Forest Hills faculty[18] which retained her in its payroll.[19]Petitioner argues, however, that she was constructively dismissed when Forest Hills merged her class with another “so much that when she reported back to work, she has no more claims to hold and no more work to do.”[20]

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Petitioner, however, failed to refute Forest Hills’ claim that when she expressed her intention to resume teaching, classes were already ongoing for School Year 2002-2003. It bears noting that petitioner simultaneously held the positions of secondary school teacher and registrar and, as the NLRC noted, she could have resumed her work as registrar had she really wanted to continue working with Forest Hills.[21]Petitioner’s affidavit and those of her former colleagues,[22] which she attached to her Position Paper, merely attested that she was dismissed from her job without valid cause, but gave no particulars on when and how she was dismissed.There being no substantial proof that petitioner was dismissed, she is not entitled to separation pay or backwages.Respecting petitioner’s claim for holiday pay, Forest Hills contends that petitioner failed to prove that she actually worked during specific holidays. Article 94 of the Labor Code provides, however, that(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;(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[.]The provision that a worker is entitled to twice his regular rate if he is required to work on a holiday implies that the provision entitling a worker to his regular rate on holidays applies even if he does not work.The petitioner is likewise entitled to service incentive leave under Article 95 of the Labor Code which provides that(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishment exempted from granting this benefit by the Secretary of Labor after considering the viability or financial condition of such establishment.x x x x,and to 13th month pay under Presidential Decree No. 851.[23]As for petitioner’s claims for overtime pay, it must be denied, for other than the uncorroborated affidavits of her colleagues, there is no concrete proof that she is entitled thereto.[24] And so must her claim for allowances, no proof to her entitlement thereto having been presented.On the deduction of 10% tithe, Article 113 of the Labor Code instructs:ART. 113. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor, as does Rule VIII, Section 10 of the Rules Implementing Book III of the Labor Code reading:SEC. 10. Deductions from the wages of the employees may be made by the employer in any of the following cases:(a) When the deductions are authorized by law, including deductions for the insurance premiums advanced by the employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the individual employee himself;(b) When the deductions are with the written authorization of the employees for payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction. (Emphasis and underscoring supplied)In the absence then of petitioner’s written conformity to the deduction of the 10% tithe from her salary, the deduction made by Forest Hills was illegal.Finally, on petitioner’s claim that Forest Hills did not remit her SSS contributions, Villar v. National Labor Relations Commission[25] enlightens:x x x [T]he burden of proving payment of monetary claims rests on the employer. x x xx x x xThe reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents – which will show that overtime, differentials, service incentive leave and other claims of workers have been paid – are not in the possession of the worker but in the custody and absolute control of the employer.[26] nderscoring supplied)Forest Hills having glossed over this claim, the same must be granted.Finally, insofar as petitioner was compelled to litigate her money claims, an award of attorney’s fees equivalent to 10% of the final judgment award is in order.[27]

WHEREFORE, the Court of Appeals Resolution of December 15, 2005 is SET ASIDE. The petition is GRANTED insofar as petitioner’s claims for illegal deductions, holiday pay, service incentive leave pay, 13th month pay, and non-remittance of SSS contributions are concerned. Respondents are accordingly ORDERED to refund to petitioner the amount of the illegal deductions from her salary; to pay her holiday pay, service incentive leave pay, and 13th month pay; to remit her contributions to the SSS; and to pay her attorney’s fees equivalent to 10% of the final judgment award. The case is accordingly REMANDED to the Labor Arbiter for computation of the amount of such money claims.SO ORDERED.CONCHITA CARPIO MORALES (Associate Justice)WE CONCUR:LEONARDO A. QUISUMBING (Associate Justice, Chairperson), DANTE O. TINGA (Associate Justice), PRESBITERO J. VELASCO, JR. (Associate Justice) ARTURO D. BRION (Associate Justice)ENTITLEMENT OF MONTHLY PAID EMPLOYEES TO REGULAR HOLIDAY PAYINSULAR 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.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:"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: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:'Art. 208. 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 10 workers.'(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 thirtieth of December and the day designated by law for holding a general election.'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 4 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) . . ."(b) Ordering respondent to pay wages to all its employees fro all regular holidays since November 1, 1974" (pp. 97-99, rec.).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.

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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:"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:"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 e 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".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:"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. . . . ".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 all 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:

"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.).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.).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:"The Chief, Research and Information Division of this Commission is hereby directed to designate a Socio-Economic 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:"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 Code's provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion (p. 11, rec.).Article 94 of the Labor Code, as amended by P.D. 850, provides:"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:"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."xxx xxx xxx".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 III 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

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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. RB-1789-75, 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: ". . . the Secretary of Labor has-exceeded his authority when he included paragraph (k) in Section 1 of the Rules implementing P.D. 1123.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. . . . . "'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 what 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:"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 obligation. (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil 324).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 in 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 party. This would certainly result in endless litigations thereby rendering inutile the rule of law.

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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 1 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: "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 authority 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 demands of public policy and public interest - which are also responsive to the tenets of equity - requiring that all 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 xxxIn the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this Court said:"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 (L-7044, 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 overmastering 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 not be deprived arbitrarily without injustice" (Rookledge v. Gariwood, 65 N.W. 2d 785, 791).It 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,

talics supplied). And "(I)t has been likewise established that a violation of a constitutional right divests 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.Guerrero, Escolin and Cuevas, JJ., concur. Aquino and Abad Santos, JJ., concur in the result. Concepcion, Jr., J., took no part.CEZAR ODANGO in his behalf and in behalf of 32 complainants, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and ANTIQUE ELECTRIC COOPERATIVE, INC., respondents., G.R. No. 147420, 2004 Jun 10, 1st DivisionCARPIO, J.:The CaseBefore the Court is a petition for review[1] assailing the Court of Appeals’ Resolutions of 27 September 2000[2] and 7 February 2001 in CA-G.R. SP No. 51519. The Court of Appeals upheld the Decision[3] dated 27 November 1997 and the Resolution dated 30 April 1998 of the National Labor Relations Commission ("NLRC") in NLRC Case No. V-0048-97. The NLRC reversed the Labor Arbiter’s Decision of 29 November 1996, which found respondent Antique Electric Cooperative ("ANTECO") liable for petitioners’ wage differentials amounting to P1,017,507.73 plus attorney’s fees of 10%.Antecedent FactsPetitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half of Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment ("DOLE") found ANTECO liable for underpayment of the monthly salaries of its employees. On 10 September 1989, the DOLE directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay.Thus, on various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC Sub-Regional Branch VI, Iloilo City, praying for payment of wage differentials, damages and attorney’s fees. Labor Arbiter Rodolfo G. Lagoc ("Labor Arbiter") heard the consolidated complaints.On 29 November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage differentials amounting to P1,017,507.73 and attorney’s fees of 10%. Florentino Tongson, whose case the Labor Arbiter dismissed, was the sole exception.ANTECO appealed the Decision to the NLRC on 24 December 1996. On 27 November 1997, the NLRC reversed the Labor Arbiter’s Decision. The NLRC denied petitioners’ motion for reconsideration in its Resolution dated 30 April 1998. Petitioners then elevated the case to this Court through a petition for certiorari, which the Court dismissed for petitioners’ failure to comply with Section 11, Rule 13 of the Rules of Court. On petitioners’ motion for reconsideration, the Court on 13 January 1999 set aside the dismissal. Following the doctrine in St. Martin Funeral Home v. NLRC,[4] the Court referred the case to the Court of Appeals.On 27 September 2000, the Court of Appeals issued a Resolution dismissing the petition for failure to comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege the specific instances where the NLRC abused its discretion. The appellate court denied petitioners’ motion for reconsideration on 7 February 2001.Hence, this petition.The Labor Arbiter’s RulingThe Labor Arbiter reasoned that ANTECO failed to refute petitioners’ argument that monthly-paid employees are considered paid for all the days in a month under Section 2, Rule IV of Book 3 of the Implementing Rules of the Labor Code (“Section 2”).[5] Petitioners claim that this includes not only the 10 legal holidays, but also their un-worked half of Saturdays and all of Sundays.The Labor Arbiter gave credence to petitioners’ arguments on the computation of their wages based on the 304 divisor used by ANTECO in converting the leave credits of its employees. The Labor Arbiter agreed with petitioners that ANTECO’s use of 304 as divisor is an admission that it is paying its employees for only 304 days a year instead

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of the 365 days as specified in Section 2. The Labor Arbiter concluded that ANTECO owed its employees the wages for 61 days, the difference between 365 and 304, for every year.The NLRC’s RulingOn appeal, the NLRC reversed the Labor Arbiter’s ruling that ANTECO underpaid its employees. The NLRC pointed out that the Labor Arbiter’s own computation showed that the daily wage rates of ANTECO’s employees were above the minimum daily wage of P124. The lowest paid employee of ANTECO was then receiving a monthly wage of P3,788. The NLRC applied the formula in Section 2 [(Daily Wage Rate = (Wage x 12)/365)] to the monthly wage of P3,788 to arrive at a daily wage rate of P124.54, an amount clearly above the minimum wage.The NLRC noted that while the reasoning in the body of the Labor Arbiter’s decision supported the view that ANTECO did not underpay, the conclusion arrived at was the opposite. Finally, the NLRC ruled that the use of 304 as a divisor in converting leave credits is more favorable to the employees since a lower divisor yields a higher rate of pay.The Ruling of the Court of AppealsThe Court of Appeals held that the petition was insufficient in form and substance since it "does not allege the essential requirements of the extra-ordinary special action of certiorari." The Court of Appeals faulted petitioners for failing to recite "where and in what specific instance public respondent abused its discretion." The appellate court characterized the allegations in the petition as "sweeping" and clearly falling short of the requirement of Section 3, Rule 46 of the Rules of Court.The IssuesPetitioners raise the following issues:I. WHETHER THE COURT OF APPEALS IS CORRECT IN DISMISSING THE CASE.II. WHETHER PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIM.[6]The Ruling of the CourtThe petition has no merit.On the sufficiency of the petitionPetitioners argue that the Court of Appeals erred in dismissing their petition because this Court had already ruled that their petition is sufficient in form and substance. They argue that this precludes any judgment to the contrary by the Court of Appeals. Petitioners cite this Court’s Resolution dated 13 January 1999 as their basis. This Resolution granted petitioners’ motion for reconsideration and set aside the dismissal of their petition for review.Petitioners’ reliance on our 16 September 1998 Resolution is misplaced. In our Resolution, we dismissed petitioners’ case for failure to comply with Section 11, Rule 13 of the Rules of Court.[7] The petition lacked a written explanation on why service was made through registered mail and not personally.The error petitioners committed before the Court of Appeals is different. The appellate court dismissed their petition for failure to comply with the first paragraph of Section 3 of Rule 46[8] in relation to Rule 65 of the Rules of Court, outlining the necessary contents of a petition for certiorari. This is an entirely different ground. The previous dismissal was due to petitioners’ failure to explain why they resorted to service by registered mail. This time the content of the petition itself is deficient. Petitioners failed to allege in their petition the specific instances where the actions of the NLRC amounted to grave abuse of discretion.There is nothing in this Court’s Resolution dated 13 January 1999 that remotely supports petitioners’ argument. What we resolved then was to reconsider the dismissal of the petition due to a procedural defect and to refer the case to the Court of Appeals for its proper disposition. We did not in any way rule that the petition is sufficient in form and substance.Petitioners also argue that their petition is clear and specific in its allegation of grave abuse of discretion. They maintain that they have sufficiently complied with the requirement in Section 3, Rule 46 of the Rules of Court.Again, petitioners are mistaken.We quote the relevant part of their petition:REASONS RELIED UPON FOR ALLOWANCE OF PETITION12. This Honorable court can readily see from the facts and circumstances of this case, the petitioners were denied of their rights to be paid of 4 hours of each Saturday, 51 rest days and 10 legal holidays of every year since they started working with respondent ANTECO.13. The respondent NLRC while with open eyes knew that the petitioners are entitled to salary differentials consisting of 4 hours pay on Saturdays, 51 rest days and 10 legal holidays plus 10% attorney’s fees as awarded by the Labor Arbiter in the above-mentioned decision, still contrary to law, contrary to existing jurisprudence issued arbitrary, without jurisdiction and in excess of jurisdiction the decision vacating and setting aside the said decision of the Labor Arbiter, to the irreparable damage and prejudice of the petitioners.

14. That the respondent NLRC in grave abuse of discretion in the exercise of its function, by way of evasion of positive duty in accordance with existing labor laws, illegally refused to reconsider its decision dismissing the petitioners’ complaints.15. That there is no appeal, nor plain, speedy and adequate remedy in law from the above-mentioned decision and resolution of respondent NLRC except this petition for certiorari.[9]These four paragraphs comprise the petitioners’ entire argument. In these four paragraphs petitioners ask that a writ of certiorari be issued in their favor. We find that the Court of Appeals did not err in dismissing the petition outright. Section 3, Rule 46 of the Rules of Court requires that a petition for certiorari must state the grounds relied on for the relief sought. A simple perusal of the petition readily shows that petitioners failed to meet this requirement.

The appellate court’s jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of jurisdiction or grave abuse of discretion.[10] An extraordinary remedy, a petition for certiorari is available only and restrictively in truly exceptional cases. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction.[11] It does not include correction of the NLRC’s evaluation of the evidence or of its factual findings. Such findings are generally accorded not only respect but also finality.[12] A party assailing such findings bears the burden of showing that the tribunal acted capriciously and whimsically or in total disregard of evidence material to the controversy, in order that the extraordinary writ of certiorari will lie.[13]We agree with the Court of Appeals that nowhere in the petition is there any acceptable demonstration that the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction. Petitioners merely stated generalizations and conclusions of law. Rather than discussing how the NLRC acted capriciously, petitioners resorted to a litany of generalizations.Petitions that fail to comply with procedural requisites, or are unintelligible or clearly without legal basis, deserve scant consideration. Section 6, Rule 65 of the Rules of Court requires that every petition be sufficient in form and substance before a court may take further action. Lacking such sufficiency, the court may dismiss the petition outright.The insufficiency in substance of this petition provides enough reason to end our discussion here. However, we shall discuss the issues raised not so much to address the merit of the petition, for there is none, but to illustrate the extent by which petitioners have haphazardly pursued their claim.On the right of the petitioners to wage differentialsPetitioners claim that the Court of Appeals gravely erred in denying their claim for wage differentials. Petitioners base their claim on Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. Petitioners argue that under this provision monthly-paid employees are considered paid for all days of the month including un-worked days. Petitioners assert that they should be paid for all the 365 days in a year. They argue that since in the computation of leave credits, ANTECO uses a divisor of 304, ANTECO is not paying them 61 days every year.Petitioners’ claim is without basisWe have long ago declared void Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. In Insular Bank of Asia v. Inciong,[14] we ruled as follows:Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the Secretary (then Minister) of Labor are null and void since in the guise of clarifying the Labor Code’s provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion.The Labor Code is clear that monthly-paid employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly-paid employees from the said benefits by inserting, under Rule IV, Book III of the implementing rules, Section 2 which provides that monthly-paid employees are presumed to be paid for all days in the month whether worked or not.Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis, petitioners’ claim for wage differentials must fail.Even assuming that Section 2, Rule IV of Book III is valid, petitioners’ claim will still fail. The basic rule in this jurisdiction is “no work, no pay.” The right to be paid for un-worked days is generally limited to the ten legal holidays in a year.[15] Petitioners’ claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. In effect, petitioners demand that ANTECO should pay them on Sundays, the un-worked half of Saturdays and other days that they do not work at all. Petitioners’ line of reasoning is not only a violation of the “no work, no pay” principle, it also gives rise to an invidious classification, a violation of the equal protection clause. Sustaining petitioners’ argument will make monthly-paid employees a privileged class who are paid even if they do not work.The use of a divisor less than 365 days cannot make ANTECO automatically liable for underpayment. The facts show that petitioners are required to work only from Monday to Friday and half of Saturday. Thus, the minimum

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allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days means that ANTECO’s workers are deprived of their holiday pay for some or all of the ten legal holidays. The 304 days divisor used by ANTECO is clearly above the minimum of 287 days.Finally, petitioners cite Chartered Bank Employees Association v. Ople[16] as an analogous situation. Petitioners have misread this case.In Chartered Bank, the workers sought payment for un-worked legal holidays as a right guaranteed by a valid law. In this case, petitioners seek payment of wages for un-worked non-legal holidays citing as basis a void implementing rule. The circumstances are also markedly different. In Chartered Bank, there was a collective bargaining agreement that prescribed the divisor. No CBA exists in this case. In Chartered Bank, the employer was liable for underpayment because the divisor it used was 251 days, a figure that clearly fails to account for the ten legal holidays the law requires to be paid. Here, the divisor ANTECO uses is 304 days. This figure does not deprive petitioners of their right to be paid on legal holidays.A final note. ANTECO’s defense is likewise based on Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code although ANTECO’s interpretation of this provision is opposite that of petitioners. It is deplorable that both parties premised their arguments on an implementing rule that the Court had declared void twenty years ago in Insular Bank. This case is cited prominently in basic commentaries.[17] And yet, counsel for both parties failed to consider this. This does not speak well of the quality of representation they rendered to their clients. This controversy should have ended long ago had either counsel first checked the validity of the implementing rule on which they based their contentions.WHEREFORE, the petition is DENIED. The Resoution of the Court of Appeals DISMISSING CA-G.R. SP No. 51519 is AFFIRMED.SO ORDERED.Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Azcuna, JJ., concur.RULE IN CASE TWO REGULAR HOLIDAYS FALLING ON THE SAME DAYASIAN TRANSMISSION CORPORATION, Petitioner, versus The Hon. COURT OF APPEALS, Thirteenth Division, HON. FROILAN M. BACUNGAN as Voluntary Arbitrator, KISHIN A. LALWANI, Union, Union representative to the Panel Arbitrators; BISIG NG ASIAN TRANSMISSION LABOR UNION (BATLU); HON. BIENVENIDO T. LAGUESMA in his capacity as Secretary of Labor and Employment; and DIRECTOR CHITA G. CILINDRO in her capacity as Director of Bureau of Working Conditions, Respondents., G. R. No. 144664, 2004 Mar 15, 3rd DivisionCARPIO MORALES, J.:Petitioner, Asian Transmission Corporation, seeks via petition for certiorari under Rule 65 of the 1995 Rules of Civil Procedure the nullification of the March 28, 2000 Decision[1] of the Court of Appeals denying its petition to annul 1) the March 11, 1993 “Explanatory Bulletin”[2] of the Department of Labor and Employment (DOLE) entitled “Workers’ Entitlement to Holiday Pay on April 9, 1993, Araw ng Kagitingan and Good Friday”, which bulletin the DOLE reproduced on January 23, 1998, 2) the July 31, 1998 Decision[3] of the Panel of Voluntary Arbitrators ruling that the said explanatory bulletin applied as well to April 9, 1998, and 3) the September 18, 1998[4] Resolution of the Panel of Voluntary Arbitration denying its Motion for Reconsideration. The following facts, as found by the Court of Appeals, are undisputed:The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which[,] apart from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal holiday]. The bulletin reads: “On the correct payment of holiday compensation on April 9, 1993 which apart from being Good Friday is also Araw ng Kagitingan, i.e., two regular holidays falling on the same day, this Department is of the view that the covered employees are entitled to at least two hundred percent (200%) of their basic wage even if said holiday is unworked. The first 100% represents the payment of holiday pay on April 9, 1993 as Good Friday and the second 100% is the payment of holiday pay for the same date as Araw ng Kagitingan.Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng Kagitingan x x x x Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted to pay its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA) existing between petitioner and BATLU, the controversy was submitted for voluntary arbitration. x x x x On July 31, 1998, the Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay its covered employees “200%

and not just 100% of their regular daily wages for the unworked April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitignan and Maundy Thursday.” (Emphasis and underscoring supplied)Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads: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;(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 thirtieth of December and the day designated by law for holding a general election, which was amended by Executive Order No. 203 issued on June 30, 1987, such that the regular holidays are now:1. New Year’s Day January 12. Maundy Thursday Movable Date3. Good Friday Movable Date4. Araw ng Kagitingan April 9 (Bataan and Corregidor Day)5. Labor Day May 16. Independence Day June 127. National Heroes Day Last Sunday of August8. Bonifacio Day November 309. Christmas Day December 2510. Rizal Day December 30In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU), the Voluntary Arbitrator held that Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which is determined by a legal formula which is not changed by the fact that there are two holidays falling on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy Thursday; and that that the law, as amended, enumerates ten regular holidays for every year should not be interpreted as authorizing a reduction to nine the number of paid regular holidays “just because April 9 (Araw ng Kagitingan) in certain years, like 1993 and 1998, is also Holy Friday or Maundy Thursday.” In the assailed decision, the Court of Appeals upheld the findings of the Voluntary Arbitrator, holding that the Collective Bargaining Agreement (CBA) between petitioner and BATLU, the law governing the relations between them, clearly recognizes their intent to consider Araw ng Kagitingan and Maundy Thursday, on whatever date they may fall in any calendar year, as paid legal holidays during the effectivity of the CBA and that “[t]here is no condition, qualification or exception for any variance from the clear intent that all holidays shall be compensated.”[5] The Court of Appeals further held that “in the absence of an explicit provision in law which provides for [a] reduction of holiday pay if two holidays happen to fall on the same day, any doubt in the interpretation and implementation of the Labor Code provisions on holiday pay must be resolved in favor of labor.”By the present petition, petitioners raise the following issues: I. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ERRONEOUSLY INTERPRETING THE TERMS OF THE COLLECTIVE BARGAINING AGREEMENT BETWEEN THE PARTIES AND SUBSTITUTING ITS OWN JUDGMENT IN PLACE OF THE AGREEMENTS MADE BY THE PARTIES THEMSELVESII. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT ANY DOUBTS ABOUT THE VALIDITY OF THE POLICIES ENUNCIATED IN THE EXPLANATORY BULLETIN WAS LAID TO REST BY THE REISSUANCE OF THE SAID EXPLANATORY BULLETINIII. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN UPHOLDING THE VALIDITY OF THE EXPLANATORY BULLETIN EVEN WHILE ADMITTING THAT THE SAID BULLEITN WAS NOT AN EXAMPLE OF A JUDICIAL, QUASI-JUDICIAL, OR ONE OF THE RULES AND REGULATIONS THAT [Department of Labor and Employment] DOLE MAY PROMULGATEIV. WHETHER OR NOT THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) BY ISSUING EXPLANATORY BULLETIN DATED MARCH 11, 1993, IN THE GUISE OF PROVIDING GUIDELINES ON ART. 94 OF THE LABOR CODE, COMMITTED GRAVE ABUSE OF DISCRETION, AS IT LEGISLATED AND INTERPRETED LEGAL PROVISIONS IN SUCH A MANNER AS TO CREATE OBLIGATIONS WHERE NONE ARE INTENDED BY THE LAWV. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN SUSTAINING THE SECRETARY OF THE DEPARTMENT OF LABOR IN REITERATING ITS

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EXPLANATORY BULLETIN DATED MARCH 11, 1993 AND IN ORDERING THAT THE SAME POLICY OBTAINED FOR APRIL 9, 1998 DESPITE THE RULINGS OF THE SUPREME COURT TO THE CONTRARYVI. WHETHER OR NOT RESPONDENTS’ ACTS WILL DEPRIVE PETITIONER OF PROPERTY WITHOUT DUE PROCESS BY THE “EXPLANATORY BULLETIN” AS WELL AS EQUAL PROTECTION OF LAWSThe petition is devoid of merit.At the outset, it bears noting that instead of assailing the Court of Appeals Decision by petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, petitioner lodged the present petition for certiorari under Rule 65. [S]ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party fails to do so within the reglementary period, and the decision accordingly becomes final and executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of his deliberate inaction. The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 and not a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65, respectively, of the 1997 Rules of Civil Procedure. Rule 45 is clear that the decisions, final orders or resolutions of the Court of Appeals in any case, i.e., regardless of the nature of the action or proceeding involved, may be appealed to this Court by filing a petition for review, which would be but a continuation of the appellate process over the original case. Under Rule 45 the reglementary period to appeal is fifteen (15) days from notice of judgment or denial of motion for reconsideration.x x xFor the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must show that he has no plain, speedy and adequate remedy in the ordinary course of law against its perceived grievance. A remedy is considered “plain, speedy and adequate” if it will promptly relieve the petitioner from the injurious effects of the judgment and the acts of the lower court or agency. In this case, appeal was not only available but also a speedy and adequate remedy.[6] The records of the case show that following petitioner’s receipt on August 18, 2000 of a copy of the August 10, 2000 Resolution of the Court of Appeals denying its Motion for Reconsideration, it filed the present petition for certiorari on September 15, 2000, at which time the Court of Appeals decision had become final and executory, the 15-day period to appeal it under Rule 45 having expired. Technicality aside, this Court finds no ground to disturb the assailed decision.Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor.[7] Its purpose is not merely “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.”[8] It is also intended to enable the worker to participate in the national celebrations held during the days identified as with great historical and cultural significance. Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (last Sunday of August), Bonifacio Day (November 30) and Rizal Day (December 30) were declared national holidays to afford Filipinos with a recurring opportunity to commemorate the heroism of the Filipino people, promote national identity, and deepen the spirit of patriotism. Labor Day (May 1) is a day traditionally reserved to celebrate the contributions of the working class to the development of the nation, while the religious holidays designated in Executive Order No. 203 allow the worker to celebrate his faith with his family. As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidays.[9] The provision is mandatory,[10] regardless of whether an employee is paid on a monthly or daily basis.[11] Unlike a bonus, which is a management prerogative,[12] holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the same date should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive. It is elementary, under 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.[13] In the case at bar, there is nothing in the law which provides or indicates that the entitlement to ten days of holiday pay shall be reduced to nine when two holidays fall on the same day. Petitioner’s assertion that Wellington v. Trajano[14] has “overruled” the DOLE March 11, 1993 Explanatory Bulletin does not lie. In Wellington, the issue was whether monthly-paid employees are entitled to an additional day’s pay if a holiday falls on a Sunday. This Court, in answering the issue in the negative, observed that in fixing the monthly salary of its employees, Wellington took into account “every working day of the year including the holidays specified by law and excluding only Sunday.” In the instant case, the issue is whether daily-paid employees are entitled to be paid for two regular holidays which fall on the same day.[15]

In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working man’s welfare should be the primordial and paramount consideration.[16] Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides that “Nothing in the law or the rules shall justify an employer in withdrawing or reducing any benefits, supplements or payments for unworked regular holidays as provided in existing individual or collective agreement or employer practice or policy.”[17] From the pertinent provisions of the CBA entered into by the parties, petitioner had obligated itself to pay for the legal holidays as required by law. Thus, the 1997-1998 CBA incorporates the following provision:ARTICLE XIVPAID LEGAL HOLIDAYSThe following legal holidays shall be paid by the COMPANY as required by law:1. New Year’s Day (January 1st)2. Holy Thursday (moveable)3. Good Friday (moveable)4. Araw ng Kagitingan (April 9th)5. Labor Day (May 1st)6. Independence Day (June 12th)7. Bonifacio Day [November 30]8. Christmas Day (December 25th)9. Rizal Day (December 30th)10. General Election designated by law, if declared public non-working holiday11. National Heroes Day (Last Sunday of August) Only an employee who works on the day immediately preceding or after a regular holiday shall be entitled to the holiday pay.A paid legal holiday occurring during the scheduled vacation leave will result in holiday payment in addition to normal vacation pay but will not entitle the employee to another vacation leave.Under similar circumstances, the COMPANY will give a day’s wage for November 1st and December 31st whenever declared a holiday. When required to work on said days, the employee will be paid according to Art. VI, Sec. 3B hereof.[18] WHEREFORE, the petition is hereby DISMISSED. SO ORDERED.CONCHITA CARPIO MORALES (Associate Justice)WE CONCUR: JOSE C. VITUG (Associate Justice, Chairman), ANGELINA SANDOVAL-GUTIERREZ (Associate Justice), RENATO C. CORONA (Associate Justice)SERVICE INCENTIVE LEAVEAUTO BUS TRANSPORT SYSTEMS, INC., Petitioner, versus ANTONIO BAUTISTA, Respondent., G.R. No. 156367, 2005 May 16, 2nd DivisionCHICO-NAZARIO, J.:Before Us is a Petition for Review on Certiorari assailing the Decision[1] and Resolution[2] of the Court of Appeals affirming the Decision[3] of the National Labor Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13th month pay and service incentive leave pay) by deleting the award of 13th month pay to respondent.THE FACTSSince 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis.On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning.Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite

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respondent’s pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination.Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.Petitioner, on the other hand, maintained that respondent’s employment was replete with offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein respondent was involved.Furthermore, petitioner avers that in the exercise of its management prerogative, respondent’s employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000.On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision,[4] the dispositive portion of which reads:WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED.However, still based on the above-discussed premises, the respondent must pay to the complainant the following:a. his 13th month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87;b. his service incentive leave pay for all the years he had been in service with the respondent, presently computed at P13,788.05.All other claims of both complainant and respondent are hereby dismissed for lack of merit.[5]Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads: [T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides: “Section 3. Employers covered. – The Decree shall apply to all employers except to:xxx xxx xxx e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work, irrespective of the time consumed in the performance thereof. xxx.”Records show that complainant, in his position paper, admitted that he was paid on a commission basis.In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13th month pay to the complainant.WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13th month pay. The other findings are AFFIRMED.[6]In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001.Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which reads:WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decision of respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.[7]Hence, the instant petition.ISSUES1. Whether or not respondent is entitled to service incentive leave;2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondent’s claim of service incentive leave pay.RULING OF THE COURTThe disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis-à-vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.Book III, Rule V: SERVICE INCENTIVE LEAVESECTION 1. Coverage. – This rule shall apply to all employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; . . .A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not

apply to employees classified as “field personnel.” The phrase “other employees whose performance is unsupervised by the employer” must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those “whose actual hours of work in the field cannot be determined with reasonable certainty.”[8] The same is true with respect to the phrase “those who are engaged on task or contract basis, purely commission basis.” Said phrase should be related with “field personnel,” applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.[9] Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.Therefore, petitioner’s contention that respondent is not entitled to the grant of service incentive leave just because he was paid on purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel.According to Article 82 of the Labor Code, “field personnel” shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association[10] which states that:As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. [Emphasis ours]To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee would ever be considered a field personnel because every employer, in one way or another, exercises control over his employees. Petitioner further argues that the only criterion that should be considered is the nature of work of the employee in that, if the employee’s job requires that he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel.We are not persuaded. At this point, it is necessary to stress that the definition of a “field personnel” is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee’s performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s time and performance are constantly supervised by the employer.As observed by the Labor Arbiter and concurred in by the Court of Appeals:It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductor’s reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in the case at bar. The driver, the complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be considered a field personnel.[11]We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner’s business. Accordingly, respondent is entitled to the grant of service incentive leave.The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to.The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period under Article 291 of the Labor Code is applicable to respondent’s claim of service incentive leave pay.

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Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period.It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.[12]To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers’ right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291.[13]Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint.[14]It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year.[15] Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC:[16]The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that “[e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.” Service incentive leave is a right which accrues to every employee who has served “within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year.” It is also “commutable to its money equivalent if not used or exhausted at the end of the year.” In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.[17] [ talics supplied]Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment.Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employee’s services, as the case may be.The above construal of Art. 291, vis-à-vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman’s welfare should be the primordial and paramount consideration.[18] 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.[19]In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits.

Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code.WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.SO ORDERED.MINITA V. CHICO-NAZARIO (Associate Justice)WE CONCUR: REYNATO S. PUNO (Associate Justice, Chairman), MA. ALICIA AUSTRIA-MARTINEZ (Associate Justice), ROMEO J. CALLEJO, SR. (Associate Justice), DANTE O. TINGA (Associate Justice)RICARDO G. PALOMA, Petitioner, versus PHILIPPINE AIRLINES, INC. and THE NATIONAL LABOR RELATIONS COMMISSION, Respondents., G.R. No. 148415, 2008 Jul 14, 2nd DivisionVELASCO, JR., J.:The CaseBefore us are these two consolidated petitions for review under Rule 45 separately interposed by Ricardo G. Paloma and Philippine Airlines, Inc. (PAL) to nullify and set aside the Amended Decision[1] dated May 31, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 56429, as effectively reiterated in its Resolution[2] of January 14, 2003. The FactsPaloma worked with PAL from September 1957, rising from the ranks to retire, after 35 years of continuous service, as senior vice president for finance. In March 1992, or some nine (9) months before Paloma retired on November 30, 1992, PAL was privatized.By way of post-employment benefits, PAL paid Paloma the total amount of PhP 5,163,325.64 which represented his separation/retirement gratuity and accrued vacation leave pay. For the benefits thus received, Paloma signed a document denominated Release and Quitclaim[3] but inscribed the following reservation therein: “Without prejudice to my claim for further leave benefits embodied in my aide memoire transmitted to Mr. Roberto Anonas covered by my 27 Nov. 1992 letter x x x.”The leave benefits Paloma claimed being entitled to refer to his 450-day accrued sick leave credits which PAL allegedly only paid the equivalent of 18 days. He anchored his entitlement on Executive Order No. (EO) 1077[4] dated January 9, 1986, and his having accumulated a certain number of days of sick leave credits, as acknowledged in a letter of Alvia R. Leaño, then an administrative assistant in PAL. Leaño’s letter dated November 12, 1992 pertinently reads:At your request, we are pleased to confirm herewith the balance of your sick leave credits as they appear in our records: 230 days.According to our existing policy, an employee is entitled to accumulate sick leave with pay only up to a maximum of 230 days.Had there been no ceiling as mandated by Company policy, your sick leave credits would have totaled 450 days to date.[5]Answering Paloma’s written demands for conversion to cash of his accrued sick leave credits, PAL asserted having paid all of Paloma’s commutable sick leave credits due him pursuant to company policy made applicable to PAL officers starting 1990. The company leave policy adverted to grants PAL’s regular ground personnel a graduated sick leave benefits, those having rendered at least 25 years of service being entitled to 20 days of sick leave for every year of service. An employee, under the policy, may accumulate sick leaves with pay up to 230 days. Subject to defined qualifications, sick leave credits in excess of 230 days shall be commutable to cash at the employee’s option and shall be paid in lump sum on or before May 31st of the following year they were earned.[6] Per PAL’s records, Paloma appears to have, for the period from 1990 to 1992, commuted 58 days of his sick leave credits, broken down as follows: 20 days each in 1990 and 1991 and 18 days in 1992.Subsequently, Paloma filed before the Arbitration Branch of the National Labor Relations Commission (NLRC) a Complaint[7] for Commutation of Accrued Sick Leaves Totaling 392 days. In the complaint, docketed as NLRC-NCR-Case No. 00-08-05792-94, Paloma alleged having accrued sick leave credits of 450 days commutable upon his retirement pursuant to EO 1077 which allows retiring government employees to commute, without limit, all his accrued vacation and sick leave credits. And of the 450-day credit, Paloma added, he had commuted only 58 days, leaving him a balance of 392 days of accrued sick leave credits for commutation. Ruling of the Labor ArbiterIssues having been joined with the filing by the parties of their respective position papers,[8] the labor arbiter rendered on June 30, 1995 a Decision[9] dispositively reading:

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WHEREFORE, premises considered, respondent PHILIPPINE AIRLINE[S], INC. is hereby ordered to pay within ten (10) days from receipt hereof herein complainant Ricardo G. Paloma, the sum of Six Hundred Seventy Five Thousand Pesos (P675,000.00) representing his one Hundred sixty two days [162] accumulated sick leave credits, plus ten (10%) percent attorney’s fees of P67,500.00, or a total sum of P742,500.00.SO ORDERED.The labor arbiter held that PAL is not covered by the civil service system and, accordingly, its employees, like Paloma, cannot avail themselves of the beneficent provision of EO 1077. This executive issuance, per the labor arbiter’s decision, applies only to government officers and employees covered by the civil service, exclusive of the members of the judiciary whose leave and retirement system is covered by a special law. However, the labor arbiter ruled that Paloma is entitled to a commutation of his alternative claim for 202 accrued sick leave credits less 40 days for 1990 and 1991. Thus, the grant of commutation for 162 accrued leave credits.Both parties appealed[10] the decision of the labor arbiter to the NLRC.Ruling of the NLRC in NLRC NCR CA No. 009652-95(NLRC-NCR-Case No. 00-08-05792-94)On November 26, 1997, the First Division of the NLRC rendered a Decision affirming that of the labor arbiter, thus: WHEREFORE, as recommended, both appeals are DISMISSED. The decision of Labor Arbiter Felipe T. Garduque II dated June 30, 1995 is AFFIRMED.SO ORDERED.[11]Both parties moved for reconsideration. In its Resolution of November 10, 1999, the NLRC, finding Paloma to have, upon his retirement, commutable accumulated sick leave credits of 230 days, modified its earlier decision, disposing as follows:In view of all the foregoing, our decision dated November 26, 1997, be modified by increasing the sick leave benefits of complainant to be commuted to cash from 162 days to 230 days.SO ORDERED.[12]From the above modificatory resolution of the NLRC, PAL went to the CA on a petition for certiorari under Rule 65, the recourse docketed as CA-G.R. SP No. 56429.Ruling of the CA in its April 28, 2000 DecisionBy a Decision dated April 28, 2000, the CA found for PAL, thus: WHEREFORE, the petition is granted. Public respondent’s November 10, 1999 Resolution is set aside. And the complaint of Ricardo Paloma is hereby DISMISSED. Without costs.SO ORDERED.[13]In time, Paloma sought reconsideration.[14]The May 31, 2001 Amended DecisionOn May 31, 2001, the CA issued the assailed Amended Decision reversing its April 28, 2000 Decision. The fallo of the Amended Decision reads:WHEREFORE, premises considered, our Judgment, dated 28 April 2000 is hereby vacated and, set aside, and another one entered reinstating the Resolution, dated 10 November 1999, issued by the public respondent National Labor Relations Commission in NLRC NCR Case No. 00-08-05792-94 [NLRC NCR CA No. 009652-95], entitled Ricardo G. Paloma v. Philippine Airlines, Incorporated, with the only modification that the total sums granted by Labor Arbiter Felipe T. Garduque II (P742,500.00, inclusive of the ten percent (10%) attorney’s fees), as affirmed by public respondent National Labor Relations Commission, First Division, in said NLRC Case No. 00-08-05792-94, shall earn legal interest from the date of the institution of the complaint until fully paid/discharged. (Art. 2212, New Civil Code). SO ORDERED.[15]Justifying its amendatory action, the CA stated that EO 1077 applies to PAL and necessarily to Paloma on the following rationale: Section 2(1) of Article IX(B) of the 1987 Constitution applies prospectively and, thus, the expressed limitation therein on the applicability of the civil service law only to government-owned and controlled corporations (GOCCs) with original charters does not preclude the applicability of EO 1077 to PAL and its then employees. This conclusion, the CA added, becomes all the more pressing considering that PAL, at the time of the issuance of EO 1077, was still a GOCC and that Paloma had already 29 years of service at that time. The appellate court also stated that since PAL had then no existing retirement program, the provisions of EO 1077 shall serve as a retirement program for Paloma who had meanwhile acquired vested rights under the EO pursuant to Arts. 100[16] and 287[17] of the Labor Code.Significantly, despite affirmatively positing the applicability of EO 1077, the Amended Decision still deferred to PAL’s existing policy on the 230-day limit for accrued sick leave with pay that may be credited to its employees. Incongruously, while the CA reinstated the November 10, 1999 Resolution of the NLRC, it decreed the implementation of the labor arbiter’s Decision dated June 30, 1995. As may be recalled, the NLRC, in its November

10, 1999 Resolution, allowed a 230-day sick leave commutation, up from the 162 days granted under the June 30, 1995 Decision of the labor arbiter.Paloma immediately appealed the CA’s Amended Decision via a Petition for Review on Certiorari under Rule 45, docketed as G.R. No. 148415. On the other hand, PAL first sought reconsideration of the Amended Decision, coming to us after the CA, per its January 14, 2003 Resolution, denied the desired reconsideration. In net effect then, PAL’s Petition for Review on Certiorari, docketed as G.R. No. 156764, assails both the Amended Decision and Resolution of the CA.The IssuesIn G.R. No. 148415, Paloma raises the sole issue of:WHETHER OR NOT THE [CA], IN HOLDING THAT E.O. NO. 1077 IS APPLICABLE TO PETITIONER AND YET APPLYING COMPANY POLICY BY AWARDING THE CASH EQUIVALENT OF ONLY 162 DAYS SICK LEAVE CREDITS INSTEAD OF THE 450 DAYS SICK LEAVE CREDITS PETITIONER IS ENTITLED TO UNDER E.O. NO. 1077, DECIDED A QUESTION OF SUBSTANCE IN A MANNER CONTRARY TO LAW AND APPLICABLE JURISPRUDENCE.[18]In G.R. No. 156764, PAL raises the following issues for our consideration:1. May an employee of a non-government corporation [invoke EO] 1077 which the then President Ferdinand E. Marcos issued on January 9, 1986, solely for the benefit of government officers and employees covered by the civil service?2. Can a judicial body modify or alter a company policy by ordering the commutation of sick leave credits which, under company policy is non-commutable?[19]The issues submitted boil down to the question of whether or not EO 1077, before PAL’s privatization, applies to its employees, and corollarily, whether or not Paloma is entitled to a commutation of his accrued sick leave credits. Subsumed to the main issue because EO 1077 applies only to government employees subject to civil service law is the question of whether or not PAL—which, as early as 1960 until its privatization, had been considered as a government-controlled corporation—is covered by and subject to the limitations peculiar under the civil service system. There can be no quibbling, as a preliminary consideration, about PAL having been incorporated as a private corporation whose controlling stocks were later acquired by the GSIS, which is wholly owned by the government. Through the years before GSIS divested itself of its controlling interests over the airline, PAL was considered a government-controlled corporation, as we said as much in Phil. Air Lines Employees’ Assn. v. Phil. Air Lines, Inc.,[20] a case commenced in August 1958 and finally resolved by the Court in 1964. The late Blas Ople, former Labor Secretary and a member of the 1986 Constitutional Commission, described PAL and other like entities spun off from the GSIS as “second generation corporations functioning as private subsidiaries.”[21] Before the coming into force of the 1973 Constitution, a subsidiary of a wholly government-owned corporation or a government corporation with original charter was covered by the Labor Code. Following the ratification of the 1973 Constitution, these subsidiaries theoretically came within the pale of the civil service on the strength of this provision: “[T]he civil service embraces every branch, agency, subdivision and instrumentality of the Government, including every [GOCC] x x x.”[22] Then came the 1987 Constitution which contextually delimited the coverage of the civil service only to a GOCC “with original charter.”[23]The Court’s RulingConsidering the applicable law and jurisprudence in the light of the undisputed factual milieu of the instant case, the setting aside of the assailed amended decision and resolution of the CA is indicated. Core Issue: Applicability of EO 1077Insofar as relevant, EO 1077 dated January 9, 1986, entitled Revising the Computation of Creditable Vacation and Sick Leaves of Government Officers and Employees, provides:WHEREAS, under existing law and civil service regulations, the number of days of vacation and sick leaves creditable to a government officer or employee is limited to 300 days;WHEREAS, by special law, members of the judiciary are not subject to such restriction;WHEREAS, it is the continuing policy of the government to institute to the extent possible a uniform and equitable system of compensation and benefits and to enhance the morale and performance in the civil service.x x x xNOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and direct the following:Section 1. Any officer [or] employee of the government who retires or voluntary resigns or is separated from the service through no fault of his own and whose leave benefits are not covered by special law, shall be entitled to the commutation of all the accumulated vacation and/or sick leaves to his credit, exclusive of Saturdays, Sundays, and

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holidays, without limitation as to the number of days of vacation and sick leaves that he may accumulate. ( mphasis supplied.)\Paloma maintains that he comes within the coverage of EO 1077, the same having been issued in 1986, before he severed official relations with PAL, and at a time when the applicable constitutional provision on the coverage of the civil service made no distinction between GOCCs with original charters and those without, like PAL which was incorporated under the Corporation Code. Implicit in Paloma’s contention is the submission that he earned the bulk of his sick leave credits under the aegis of the 1973 Constitution when PAL, being then a government-controlled corporation, was under civil service coverage. The contention is without merit.PAL never ceased to be operated as a private corporation, and was not subjected to the Civil Service LawThe Court can allow that PAL, during the period material, was a government-controlled corporation in the sense that the GSIS owned a controlling interest over its stocks. One stubborn fact, however, remains: Through the years, PAL functioned as a private corporation and managed as such for profit. Their personnel were never considered government employees. It may perhaps not be amiss for the Court to take judicial notice of the fact that the civil service law and rules and regulations have not actually been made to apply to PAL and its employees. Of governing application to them was the Labor Code. Consider: (a) Even during the effectivity of the 1973 Constitution but prior to the promulgation on January 17, 1985 of the decision in No. L-64313 entitled National Housing Corporation v. Juco,[24] the Court no less recognized the applicability of the Labor Code to, and the authority of the NLRC to exercise jurisdiction over, disputes involving discipline, personnel movements, and dismissal in GOCCs, among them PAL;[25] (b) Company policy and collective bargaining agreements (CBAs), instead of the civil service law and rules, govern the terms and conditions of employment in PAL. In fact, Ople rhetorically asked how PAL can be covered by the civil service law when, at one time, there were three (3) CBAs in PAL, one for the ground crew, one for the flight attendants, and one for the pilots;[26] and (c) When public sector unionism was just an abstract concept, labor unions in PAL with the right to engage in strike and other concerted activities were already active.[27] Not to be overlooked of course is the 1964 case of Phil. Air Lines Employees’ Assn., wherein the Court stated that “the Civil Service Law has not been actually applied to PAL.”[28] Given the foregoing considerations, Paloma cannot plausibly be accorded the benefits of EO 1077 which, to stress, was issued to narrow the gap between the leave privileges between the members of the judiciary, on one hand, and other government officers and employees in the civil service, on the other. That PAL and Paloma may have, at a time, come within the embrace of the civil service by virtue of the 1973 Constitution is of little moment at this juncture. As held in National Service Corporation v. National Labor Relations Commission (NASECO),[29] the issue of whether or not a given GOCC falls within the ambit of the civil service subject, vis-à-vis disputes respecting terms and conditions of employment, to the jurisdiction of the Civil Service Commission or the NLRC, as the case may be, resolves itself into the question of which between the 1973 Constitution, which does not distinguish between a GOCC with or without an original charter, and the 1987 Constitution, which does, is in place. To borrow from the 1988 NASECO ruling, it is the 1987 Constitution, which delimits the coverage of the civil service, that should govern this case because it is the Constitution in place at the time the case was decided, even if, incidentally, the cause of action accrued during the effectivity of the 1973 Constitution. This has been the consistent holding of the Court in subsequent cases involving GOCCs without original charters.[30]It cannot be overemphasized that when Paloma filed his complaint for commutation of sick leave credits, private interests already controlled, if not owned, PAL. Be this as it may, Paloma, when he filed said complaint, cannot even assert being covered by the civil service and, hence, entitled to the benefits attached to civil service employment, such as the right under EO 1077 to accumulate and commute leave credits without limit. In all, then, Paloma, while with PAL, was never a government employee covered by the civil service law. As such, he did not acquire any vested rights on the retirement benefits accorded by EO 1077.Paloma not entitled to the benefits granted in EO 1077; existing company policy on the matter appliesWhat governs Paloma’s entitlement to sick leave benefits and the computation and commutation of creditable benefits is not EO 1077, as the labor arbiter and originally the NLRC correctly held, but PAL’s company policy on the matter which, as found below, took effect in 1990. The text of the policy is reproduced in the CA’s April 28, 2000 Decision and sets out the following pertinent rules: POLICYRegular employees shall be entitled to a yearly period of sick leave with pay, the exact number of days to be determined on the basis of the employee’s category and length of service in the company.RULESA. For ground personnel2. Sick leave shall be granted only upon certification by a company physician that an employee is incapable of discharging his duties due to illness or injury x x x.

x x x x3. Sick leave entitlement accrues from the date of an employee’s regular employment x x x.In case of direct conversion from temporary/daily/project/contract to regular status, regular employment shall be deemed to have begun on the date of the employee’s conversion as a regular employee.x x x x4. An employee may accumulate sick leave with pay up to Two Hundred Thirty (230) days;An employee who has accumulated seventy-five (75) days sick leave credit at the end of each year may, at his option, commute seventy-five percent (75%) of his current sick leave entitlement to cash and the other twenty-five percent (25%) to be added to his accrued sick leave credits up to two hundred thirty (230) calendar days.The seventy-five percent (75%) commutable to cash as above provided, shall be paid up in lump sum on or before May 31st of the following year.Sick leave credits in excess of two hundred thirty (230) days shall be commutable to cash at the employee’s option, and shall be paid in lump sum on or before May 31st of the following year it was earned.[31] (Emphasis ours.)As may be gathered from the records, accrued sick leave credits in excess of 230 days were not, if earned before 1990 when the above policy took effect, commutable to cash; they were simply forfeited. Those earned after 1990, but still subject to the 230-day threshold rule, were commutable to cash to the extent of 75% of the employee’s current entitlement, and payable on or before May 31st of the following year, necessarily implying that the privilege to commute is time-bound. It appears that Paloma had, as of 1990, more than 230 days of accrued sick leave credits. Following company policy, Paloma was deemed to have forfeited the monetary value of his leave credits in excess of the 230-day ceiling. Now, then, it is undisputed that he earned additional accrued sick leave credits of 20 days in 1990 and 1991 and 18 days in 1992, which he duly commuted pursuant to company policy and received with the corresponding cash value. Therefore, PAL is correct in contending that Paloma had received whatever was due on the commutation of his accrued sick leave credits in excess of the 230 days limit, specifically the 58 days commutation for 1990, 1991, and 1992. No commutation of 230 days accrued sick leave creditsThe query that comes next is how the 230 days accrued sick leave credits Paloma undoubtedly had when he retired are to be treated. Is this otherwise earned credits commutable to cash? These should be answered in the negative.The labor arbiter granted 162 days commutation, while the NLRC allowed the commutation of the maximum 230 days. The CA, while seemingly affirming the NLRC’s grant of 230 days commutation, actually decreed a 162-day commutation. We cannot sustain any of the dispositions thus reached for lack of legal basis, for PAL’s company policy upon which either disposition was predicated did not provide for a commutation of the first 230 days accrued sick leave credits employees may have upon their retirement. Hence, the NLRC and the CA, by their act of allowing commutation to cash, erred as they virtually read in the policy something not written or intended therein. Indeed, no law provides for commutation of unused or accrued sick leave credits in the private sector. Commutation is allowed by way of voluntary endowment by an employer through a company policy or by a CBA. None of such medium presently obtains and it would be incongruous if the Court fills up the vacuum.Confronted with a similar situation as depicted above, the Court, in Baltazar v. San Miguel Brewery, Inc., declared as follows:In connection with the question of whether or not appellee is entitled to the cash value of six months accumulated sick leave, it appears that while under the last paragraph of Article 5 of appellant’s Rules and Regulations of the Health, Welfare and Retirement Plan (Exhibit 3), unused sick leave may be accumulated up to a maximum of six months, the same is not commutable or payable in cash upon the employee’s option.In our view, the only meaning and import of said rule and regulation is that if an employee does not choose to enjoy his yearly sick leave of thirty days, he may accumulate such sick leave up to a maximum of six months and enjoy this six months sick leave at the end of the sixth year but may not commute it to cash.[32]In fine, absent any provision in the applicable company policy authorizing the commutation of the 230 days accrued sick leave credits existing upon retirement, Paloma may not, as a matter of enforceable right, insist on the commutation of his sick leave credits to cash.As PAL’s senior vice-president for finance upon his retirement, Paloma knew or at least ought to have known the company policy on accrued sick leave credits and how it was being implemented. Had he acted on that knowledge in utmost good faith, these proceedings would have not come to pass. WHEREFORE, the petition under G.R. No. 148415 is hereby DISMISSED for lack of merit, while the petition under G.R. No. 156764 is hereby GIVEN DUE COURSE. The Amended Decision dated May 31, 2001 of the CA in CA-G.R. SP No. 56429 and its Resolution of January 14, 2003 are hereby ANNULLED and SET ASIDE, and the CA Decision dated April 28, 2000 is accordingly REINSTATED. Costs against Ricardo G. Paloma.

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SO ORDERED.PRESBITERO J. VELASCO, JR. (Associate Justice)WE CONCUR: LEONARDO A. QUISUMBING (Associate Justice, Chairperson), CONCHITA CARPIO MORALES (Associate Justice), DANTE O. TINGA (Associate Justice), ARTURO D. BRION (Associate Justice)SERVICE CHARGES MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO LAM, Petitioners, versus ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO ALAMARES, AMADO ALAMARES, EDGARDO TORREFRANCA, LOURDES CAMIGLA, TEODORO LAURENARIA, WENEFREDO LOVERES, LUIS GUADES, AMADO MACANDOG, PATERNO LLARENA, GREGORIO NICERIO, JOSE ATRACTIVO, MIGUEL TORREFRANCA, and SANTOS BROñOLA, Respondents., G.R. No. 157634, 2005 May 16, 2nd DivisionPUNO, J.:This is a petition for certiorari to reverse and set aside the Decision issued by the Court of Appeals (CA)[1] in CA-G.R. SP No. 68642, entitled “Rolando Adana, Wenefredo Loveres, et. al. vs. National Labor Relations Commission (NLRC), Mayon Hotel & Restaurant/Pacita O. Po, et al.,” and the Resolution[2] denying petitioners’ motion for reconsideration. The assailed CA decision reversed the NLRC Decision which had dismissed all of respondents’ complaints,[3] and reinstated the Joint Decision of the Labor Arbiter[4] which ruled that respondents were illegally dismissed and entitled to their money claims.The facts, culled from the records, are as follows:[5]Petitioner Mayon Hotel & Restaurant is a single proprietor business registered in the name of petitioner Pacita O. Po,[6] whose mother, petitioner Josefa Po Lam, manages the establishment.[7] The hotel and restaurant employed about sixteen (16) employees. Records show that on various dates starting in 1981, petitioner hotel and restaurant hired the following people, all respondents in this case, with the following jobs:[8]1. Wenefredo Loveres - Accountant and Officer-in-charge2. Paterno Llarena - Front Desk Clerk3. Gregorio Nicerio - Supervisory Waiter4. Amado Macandog - Roomboy5. Luis Guades - Utility/Maintenance Worker6. Santos Broñola - Roomboy7. Teodoro Laurenaria - Waiter8. Eduardo Alamares - Roomboy/Waiter9. Lourdes Camigla - Cashier10. Chona Bumalay - Cashier11. Jose Atractivo - Technician12. Amado Alamares - Dishwasher and Kitchen Helper13. Roger Burce - Cook14. Rolando Adana - Waiter15. Miguel Torrefranca - Cook16. Edgardo Torrefranca - CookDue to the expiration and non-renewal of the lease contract for the rented space occupied by the said hotel and restaurant at Rizal Street, the hotel operations of the business were suspended on March 31, 1997.[9] The operation of the restaurant was continued in its new location at Elizondo Street, Legazpi City, while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street, Legazpi City.[10] Only nine (9) of the sixteen (16) employees continued working in the Mayon Restaurant at its new site.[11]On various dates of April and May 1997, the 16 employees filed complaints for underpayment of wages and other money claims against petitioners, as follows:[12] Wenefredo Loveres, Luis Guades, Amado Macandog and Jose Atractivo for illegal dismissal, underpayment of wages, nonpayment of holiday and rest day pay; service incentive leave pay (SILP) and claims for separation pay plus damages;Paterno Llarena and Gregorio Nicerio for illegal dismissal with claims for underpayment of wages; nonpayment of cost of living allowance (COLA) and overtime pay; premium pay for holiday and rest day; SILP; nightshift differential pay and separation pay plus damages;Miguel Torrefranca, Chona Bumalay and Lourdes Camigla for underpayment of wages; nonpayment of holiday and rest day pay and SILP;Rolando Adana, Roger Burce and Amado Alamares for underpayment of wages; nonpayment of COLA, overtime, holiday, rest day, SILP and nightshift differential pay;

Eduardo Alamares for underpayment of wages, nonpayment of holiday, rest day and SILP and night shift differential pay;Santos Broñola for illegal dismissal, underpayment of wages, overtime pay, rest day pay, holiday pay, SILP, and damages;[13] andTeodoro Laurenaria for underpayment of wages; nonpayment of COLA and overtime pay; premium pay for holiday and rest day, and SILP. On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr. rendered a Joint Decision in favor of the employees. The Labor Arbiter awarded substantially all of respondents’ money claims, and held that respondents Loveres, Macandog and Llarena were entitled to separation pay, while respondents Guades, Nicerio and Alamares were entitled to their retirement pay. The Labor Arbiter also held that based on the evidence presented, Josefa Po Lam is the owner/proprietor of Mayon Hotel & Restaurant and the proper respondent in these cases.On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and all the complaints were dismissed.Respondents filed a motion for reconsideration with the NLRC and when this was denied, they filed a petition for certiorari with the CA which rendered the now assailed decision. After their motion for reconsideration was denied, petitioners now come to this Court, seeking the reversal of the CA decision on the following grounds:I. The Honorable Court of Appeals erred in reversing the decision of the National Labor Relations Commission (Second Division) by holding that the findings of fact of the NLRC were not supported by substantial evidence despite ample and sufficient evidence showing that the NLRC decision is indeed supported by substantial evidence;II. The Honorable Court of Appeals erred in upholding the joint decision of the labor arbiter which ruled that private respondents were illegally dismissed from their employment, despite the fact that the reason why private respondents were out of work was not due to the fault of petitioners but to causes beyond the control of petitioners.III. The Honorable Court of Appeals erred in upholding the award of monetary benefits by the labor arbiter in his joint decision in favor of the private respondentS, including the award of damages to six (6) of the private respondents, despite the fact that the private respondents have not proven by substantial evidence their entitlement thereto and especially the fact that they were not illegally dismissed by the petitioners.IV. The Honorable Court of Appeals erred in holding that Pacita Ong Po is the owner of the business establishment, petitioner Mayon Hotel and Restaurant, thus disregarding the certificate of registration of the business establishment ISSUED by the local government, which is a public document, and the unqualified admissions of complainants-private respondents.[14] In essence, the petition calls for a review of the following issues:1. Was it correct for petitioner Josefa Po Lam to be held liable as the owner of petitioner Mayon Hotel & Restaurant, and the proper respondent in this case?2. Were respondents Loveres, Guades, Macandog, Atractivo, Llarena and Nicerio illegally dismissed?3. Are respondents entitled to their money claims due to underpayment of wages, and nonpayment of holiday pay, rest day premium, SILP, COLA, overtime pay, and night shift differential pay?It is petitioners’ contention that the above issues have already been threshed out sufficiently and definitively by the NLRC. They therefore assail the CA’s reversal of the NLRC decision, claiming that based on the ruling in Castillo v. NLRC,[15] it is non sequitur that the CA should re-examine the factual findings of both the NLRC and the Labor Arbiter, especially as in this case the NLRC’s findings are allegedly supported by substantial evidence. We do not agree.There is no denying that it is within the NLRC’s competence, as an appellate agency reviewing decisions of Labor Arbiters, to disagree with and set aside the latter’s findings.[16] But it stands to reason that the NLRC should state an acceptable cause therefore, otherwise it would be a whimsical, capricious, oppressive, illogical, unreasonable exercise of quasi-judicial prerogative, subject to invalidation by the extraordinary writ of certiorari.[17] And when the factual findings of the Labor Arbiter and the NLRC are diametrically opposed and this disparity of findings is called into question, there is, necessarily, a re-examination of the factual findings to ascertain which opinion should be sustained.[18] As ruled in Asuncion v. NLRC,[19]Although, it is a legal tenet that factual findings of administrative bodies are entitled to great weight and respect, we are constrained to take a second look at the facts before us because of the diversity in the opinions of the Labor Arbiter and the NLRC. A disharmony between the factual findings of the Labor Arbiter and those of the NLRC opens the door to a review thereof by this Court.[20]The CA, therefore, did not err in reviewing the records to determine which opinion was supported by substantial evidence.Moreover, it is explicit in Castillo v. NLRC[21] that factual findings of administrative bodies like the NLRC are affirmed only if they are supported by substantial evidence that is manifest in the decision and on the records. As stated in Castillo:

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[A]buse of discretion does not necessarily follow from a reversal by the NLRC of a decision of a Labor Arbiter. Mere variance in evidentiary assessment between the NLRC and the Labor Arbiter does not automatically call for a full review of the facts by this Court. The NLRC’s decision, so long as it is not bereft of substantial support from the records, deserves respect from this Court. As a rule, the original and exclusive jurisdiction to review a decision or resolution of respondent NLRC in a petition for certiorari under Rule 65 of the Rules of Court does not include a correction of its evaluation of the evidence but is confined to issues of jurisdiction or grave abuse of discretion. Thus, the NLRC’s factual findings, if supported by substantial evidence, are entitled to great respect and even finality, unless petitioner is able to show that it simply and arbitrarily disregarded the evidence before it or had misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had been properly appreciated. (citations omitted)[22]After careful review, we find that the reversal of the NLRC’s decision was in order precisely because it was not supported by substantial evidence. 1. Ownership by Josefa Po LamThe Labor Arbiter ruled that as regards the claims of the employees, petitioner Josefa Po Lam is, in fact, the owner of Mayon Hotel & Restaurant. Although the NLRC reversed this decision, the CA, on review, agreed with the Labor Arbiter that notwithstanding the certificate of registration in the name of Pacita Po, it is Josefa Po Lam who is the owner/proprietor of Mayon Hotel & Restaurant, and the proper respondent in the complaints filed by the employees. The CA decision states in part:[Despite] the existence of the Certificate of Registration in the name of Pacita Po, we cannot fault the labor arbiter in ruling that Josefa Po Lam is the owner of the subject hotel and restaurant. There were conflicting documents submitted by Josefa herself. She was ordered to submit additional documents to clearly establish ownership of the hotel and restaurant, considering the testimonies given by the [respondents] and the non-appearance and failure to submit her own position paper by Pacita Po. But Josefa did not comply with the directive of the Labor Arbiter. The ruling of the Supreme Court in Metropolitan Bank and Trust Company v. Court of Appeals applies to Josefa Po Lam which is stated in this wise:When the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power to produce evidence which from its very nature must overthrow the case made against him if it is not founded on fact, and he refuses to produce such evidence, the presumption arises that the evidence[,] if produced, would operate to his prejudice, and support the case of his adversary.Furthermore, in ruling that Josefa Po Lam is the real owner of the hotel and restaurant, the labor arbiter relied also on the testimonies of the witnesses, during the hearing of the instant case. When the conclusions of the labor arbiter are sufficiently corroborated by evidence on record, the same should be respected by appellate tribunals, since he is in a better position to assess and evaluate the credibility of the contending parties.[23] (citations omitted)Petitioners insist that it was error for the Labor Arbiter and the CA to have ruled that petitioner Josefa Po Lam is the owner of Mayon Hotel & Restaurant. They allege that the documents they submitted to the Labor Arbiter sufficiently and clearly establish the fact of ownership by petitioner Pacita Po, and not her mother, petitioner Josefa Po Lam. They contend that petitioner Josefa Po Lam’s participation was limited to merely (a) being the overseer; (b) receiving the month-to-month and/or year-to-year financial reports prepared and submitted by respondent Loveres; and (c) visitation of the premises.[24] They also put emphasis on the admission of the respondents in their position paper submitted to the Labor Arbiter, identifying petitioner Josefa Po Lam as the manager, and Pacita Po as the owner.[25] This, they claim, is a judicial admission and is binding on respondents. They protest the reliance the Labor Arbiter and the CA placed on their failure to submit additional documents to clearly establish ownership of the hotel and restaurant, claiming that there was no need for petitioner Josefa Po Lam to submit additional documents considering that the Certificate of Registration is the best and primary evidence of ownership. We disagree with petitioners. We have scrutinized the records and find the claim that petitioner Josefa Po Lam is merely the overseer is not borne out by the evidence.First. It is significant that only Josefa Po Lam appeared in the proceedings with the Labor Arbiter. Despite receipt of the Labor Arbiter’s notice and summons, other notices and Orders, petitioner Pacita Po failed to appear in any of the proceedings with the Labor Arbiter in these cases, nor file her position paper.[26] It was only on appeal with the NLRC that Pacita Po signed the pleadings.[27] The apathy shown by petitioner Pacita Po is contrary to human experience as one would think that the owner of an establishment would naturally be concerned when all her employees file complaints against her.Second. The records of the case belie petitioner Josefa Po Lam’s claim that she is merely an overseer. The findings of the Labor Arbiter on this question were based on credible, competent and substantial evidence. We again quote the Joint Decision on this matter: Mayon Hotel and Restaurant is a [business name] of an enterprise. While [petitioner] Josefa Po Lam claims that it is her daughter, Pacita Po, who owns the hotel and restaurant when the latter purchased the same from one Palanos in

1981, Josefa failed to submit the document of sale from said Palanos to Pacita as allegedly the sale was only verbal although the license to operate said hotel and restaurant is in the name of Pacita which, despite our Order to Josefa to present the same, she failed to comply (p. 38, tsn. August 13, 1998). While several documentary evidences were submitted by Josefa wherein Pacita was named therein as owner of the hotel and restaurant (pp. 64, 65, 67 to 69; vol. I, rollo)[,] there were documentary evidences also that were submitted by Josefa showing her ownership of said enterprise (pp. 468 to 469; vol. II, rollo). While Josefa explained her participation and interest in the business as merely to help and assist her daughter as the hotel and restaurant was near the former’s store, the testimonies of [respondents] and Josefa as well as her demeanor during the trial in these cases proves (sic) that Josefa Po Lam owns Mayon Hotel and Restaurant. [Respondents] testified that it was Josefa who exercises all the acts and manifestation of ownership of the hotel and restaurant like transferring employees from the Greatwall Palace Restaurant which she and her husband Roy Po Lam previously owned; it is Josefa to whom the employees submits (sic) reports, draws money for payment of payables and for marketing, attending (sic) to Labor Inspectors during ocular inspections. Except for documents whereby Pacita Po appears as the owner of Mayon Hotel and Restaurant, nothing in the record shows any circumstance or manifestation that Pacita Po is the owner of Mayon Hotel and Restaurant. The least that can be said is that it is absurd for a person to purchase a hotel and restaurant in the very heart of the City of Legazpi verbally. Assuming this to be true, when [petitioners], particularly Josefa, was directed to submit evidence as to the ownership of Pacita of the hotel and restaurant, considering the testimonies of [respondents], the former should [have] submitted the lease contract between the owner of the building where Mayon Hotel and Restaurant was located at Rizal St., Legazpi City and Pacita Po to clearly establish ownership by the latter of said enterprise. Josefa failed. We are not surprised why some employers employ schemes to mislead Us in order to evade liabilities. We therefore consider and hold Josefa Po Lam as the owner/proprietor of Mayon Hotel and Restaurant and the proper respondent in these cases.[28]Petitioners’ reliance on the rules of evidence, i.e., the certificate of registration being the best proof of ownership, is misplaced. Notwithstanding the certificate of registration, doubts were cast as to the true nature of petitioner Josefa Po Lam’s involvement in the enterprise, and the Labor Arbiter had the authority to resolve this issue. It was therefore within his jurisdiction to require the additional documents to ascertain who was the real owner of petitioner Mayon Hotel & Restaurant. Article 221 of the Labor Code is clear: technical rules are not binding, and the application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice.[29] The rule of evidence prevailing in court of law or equity shall not be controlling in labor cases and it is the spirit and intention of the Labor Code that the Labor Arbiter shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process.[30] Labor laws mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process.[31] Similarly, the fact that the respondents’ complaints contained no allegation that petitioner Josefa Po Lam is the owner is of no moment. To apply the concept of judicial admissions to respondents — who are but lowly employees - would be to exact compliance with technicalities of law that is contrary to the demands of substantial justice. Moreover, the issue of ownership was an issue that arose only during the course of the proceedings with the Labor Arbiter, as an incident of determining respondents’ claims, and was well within his jurisdiction.[32]Petitioners were also not denied due process, as they were given sufficient opportunity to be heard on the issue of ownership.[33] The essence of due process in administrative proceedings is simply an opportunity to explain one’s side or an opportunity to seek reconsideration of the action or ruling complained of.[34] And there is nothing in the records which would suggest that petitioners had absolute lack of opportunity to be heard.[35] Obviously, the choice not to present evidence was made by petitioners themselves.[36] But more significantly, we sustain the Labor Arbiter and the CA because even when the case was on appeal with the NLRC, nothing was submitted to negate the Labor Arbiter’s finding that Pacita Po is not the real owner of the subject hotel and restaurant. Indeed, no such evidence was submitted in the proceedings with the CA nor with this Court. Considering that petitioners vehemently deny ownership by petitioner Josefa Po Lam, it is most telling that they continue to withhold evidence which would shed more light on this issue. We therefore agree with the CA that the failure to submit could only mean that if produced, it would have been adverse to petitioners’ case.[37] Thus, we find that there is substantial evidence to rule that petitioner Josefa Po Lam is the owner of petitioner Mayon Hotel & Restaurant.2. Illegal Dismissal: claim for separation payOf the sixteen employees, only the following filed a case for illegal dismissal: respondents Loveres, Llarena, Nicerio, Macandog, Guades, Atractivo and Broñola.[38]The Labor Arbiter found that there was illegal dismissal, and granted separation pay to respondents Loveres, Macandog and Llarena. As respondents Guades, Nicerio and Alamares were already 79, 66 and 65 years old

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respectively at the time of the dismissal, the Labor Arbiter granted retirement benefits pursuant to Article 287 of the Labor Code as amended.[39] The Labor Arbiter ruled that respondent Atractivo was not entitled to separation pay because he had been transferred to work in the restaurant operations in Elizondo Street, but awarded him damages. Respondents Loveres, Llarena, Nicerio, Macandog and Guades were also awarded damages.[40]The NLRC reversed the Labor Arbiter, finding that “no clear act of termination is attendant in the case at bar” and that respondents “did not submit any evidence to that effect, but the finding and conclusion of the Labor Arbiter [are] merely based on his own surmises and conjectures.”[41] In turn, the NLRC was reversed by the CA.It is petitioners contention that the CA should have sustained the NLRC finding that none of the above-named respondents were illegally dismissed, or entitled to separation or retirement pay. According to petitioners, even the Labor Arbiter and the CA admit that when the illegal dismissal case was filed by respondents on April 1997, they had as yet no cause of action. Petitioners therefore conclude that the filing by respondents of the illegal dismissal case was premature and should have been dismissed outright by the Labor Arbiter.[42] Petitioners also claim that since the validity of respondents’ dismissal is a factual question, it is not for the reviewing court to weigh the conflicting evidence.[43]We do not agree. Whether respondents are still working for petitioners is a factual question. And the records are unequivocal that since April 1997, when petitioner Mayon Hotel & Restaurant suspended its hotel operations and transferred its restaurant operations in Elizondo Street, respondents Loveres, Macandog, Llarena, Guades and Nicerio have not been permitted to work for petitioners. Respondent Alamares, on the other hand, was also laid-off when the Elizondo Street operations closed, as were all the other respondents. Since then, respondents have not been permitted to work nor recalled, even after the construction of the new premises at Peñaranda Street and the reopening of the hotel operations with the restaurant in this new site. As stated by the Joint Decision of the Labor Arbiter on July 2000, or more than three (3) years after the complaint was filed:[44][F]rom the records, more than six months had lapsed without [petitioner] having resumed operation of the hotel. After more than one year from the temporary closure of Mayon Hotel and the temporary transfer to another site of Mayon Restaurant, the building which [petitioner] Josefa allege[d] w[h]ere the hotel and restaurant will be transferred has been finally constructed and the same is operated as a hotel with bar and restaurant nevertheless, none of [respondents] herein who were employed at Mayon Hotel and Restaurant which was also closed on April 30, 1998 was/were recalled by [petitioner] to continue their services... Parenthetically, the Labor Arbiter did not grant separation pay to the other respondents as they had not filed an amended complaint to question the cessation of their employment after the closure of Mayon Hotel & Restaurant on March 31, 1997.[45] The above factual finding of the Labor Arbiter was never refuted by petitioners in their appeal with the NLRC. It confounds us, therefore, how the NLRC could have so cavalierly treated this uncontroverted factual finding by ruling that respondents have not introduced any evidence to show that they were illegally dismissed, and that the Labor Arbiter’s finding was based on conjecture.[46] It was a serious error that the NLRC did not inquire as to the legality of the cessation of employment. Article 286 of the Labor Code is clear — there is termination of employment when an otherwise bona fide suspension of work exceeds six (6) months.[47] The cessation of employment for more than six months was patent and the employer has the burden of proving that the termination was for a just or authorized cause.[48]Moreover, we are not impressed by any of petitioners’ attempts to exculpate themselves from the charges. First, in the proceedings with the Labor Arbiter, they claimed that it could not be illegal dismissal because the lay-off was merely temporary (and due to the expiration of the lease contract over the old premises of the hotel). They specifically invoked Article 286 of the Labor Code to argue that the claim for separation pay was premature and without legal and factual basis.[49] Then, because the Labor Arbiter had ruled that there was already illegal dismissal when the lay-off had exceeded the six-month period provided for in Article 286, petitioners raise this novel argument, to wit:It is the firm but respectful submission of petitioners that reliance on Article 286 of the Labor Code is misplaced, considering that the reason why private respondents were out of work was not due to the fault of petitioners. The failure of petitioners to reinstate the private respondents to their former positions should not likewise be attributable to said petitioners as the private respondents did not submit any evidence to prove their alleged illegal dismissal. The petitioners cannot discern why they should be made liable to the private respondents for their failure to be reinstated considering that the fact that they were out of work was not due to the fault of petitioners but due to circumstances beyond the control of petitioners, which are the termination and non-renewal of the lease contract over the subject premises. Private respondents, however, argue in their Comment that petitioners themselves sought the application of Article 286 of the Labor Code in their case in their Position Paper filed before the Labor Arbiter. In refutation, petitioners humbly submit that even if they invoke Article 286 of the Labor Code, still the fact remains, and this bears stress and emphasis, that the temporary suspension of the operations of the establishment

arising from the non-renewal of the lease contract did not result in the termination of employment of private respondents and, therefore, the petitioners cannot be faulted if said private respondents were out of work, and consequently, they are not entitled to their money claims against the petitioners.[50] It is confounding how petitioners have fashioned their arguments. After having admitted, in effect, that respondents have been laid-off since April 1997, they would have this Court excuse their refusal to reinstate respondents or grant them separation pay because these same respondents purportedly have not proven the illegality of their dismissal.Petitioners’ arguments reflect their lack of candor and the blatant attempt to use technicalities to muddle the issues and defeat the lawful claims of their employees. First, petitioners admit that since April 1997, when hotel operations were suspended due to the termination of the lease of the old premises, respondents Loveres, Macandog, Llarena, Nicerio and Guades have not been permitted to work. Second, even after six months of what should have been just a temporary lay-off, the same respondents were still not recalled to work. As a matter of fact, the Labor Arbiter even found that as of the time when he rendered his Joint Decision on July 2000 — or more than three (3) years after the supposed “temporary lay-off,” the employment of all of the respondents with petitioners had ceased, notwithstanding that the new premises had been completed and the same operated as a hotel with bar and restaurant. This is clearly dismissal — or the permanent severance or complete separation of the worker from the service on the initiative of the employer regardless of the reasons therefor.[51]On this point, we note that the Labor Arbiter and the CA are in accord that at the time of the filing of the complaint, respondents had no cause of action to file the case for illegal dismissal. According to the CA and the Labor Arbiter, the lay-off of the respondents was merely temporary, pending construction of the new building at Peñaranda Street.[52]While the closure of the hotel operations in April of 1997 may have been temporary, we hold that the evidence on record belie any claim of petitioners that the lay-off of respondents on that same date was merely temporary. On the contrary, we find substantial evidence that petitioners intended the termination to be permanent. First, respondents Loveres, Macandog, Llarena, Guades, Nicerio and Alamares filed the complaint for illegal dismissal immediately after the closure of the hotel operations in Rizal Street, notwithstanding the alleged temporary nature of the closure of the hotel operations, and petitioners’ allegations that the employees assigned to the hotel operations knew about this beforehand. Second, in their position paper submitted to the Labor Arbiter, petitioners invoked Article 286 of the Labor Code to assert that the employer-employee relationship was merely suspended, and therefore the claim for separation pay was premature and without legal or factual basis.[53] But they made no mention of any intent to recall these respondents to work upon completion of the new premises. Third, the various pleadings on record show that petitioners held respondents, particularly Loveres, as responsible for mismanagement of the establishment and for abuse of trust and confidence. Petitioner Josefa Po Lam’s affidavit on July 21, 1998, for example, squarely blamed respondents, specifically Loveres, Bumalay and Camigla, for abusing her leniency and causing petitioner Mayon Hotel & Restaurant to sustain “continuous losses until it is closed.” She then asserts that respondents “are not entitled to separation pay for they were not terminated and if ever the business ceased to operate it was because of losses.”[54] Again, petitioners make the same allegation in their memorandum on appeal with the NLRC, where they alleged that three (3) years prior to the expiration of the lease in 1997, the operation of the Hotel had been sustaining consistent losses, and these were solely attributed to respondents, but most especially due to Loveres’s mismanagement and abuse of petitioners’ trust and confidence.[55] Even the petition filed in this court made reference to the separation of the respondents due to “severe financial losses and reverses,” again imputing it to respondents’ mismanagement.[56] The vehemence of petitioners’ accusation of mismanagement against respondents, especially against Loveres, is inconsistent with the desire to recall them to work. Fourth, petitioners’ memorandum on appeal also averred that the case was filed “not because of the business being operated by them or that they were supposedly not receiving benefits from the Labor Code which is true, but because of the fact that the source of their livelihood, whether legal or immoral, was stopped on March 31, 1997, when the owner of the building terminated the Lease Contract.”[57] Fifth, petitioners had inconsistencies in their pleadings (with the NLRC, CA and with this Court) in referring to the closure,[58] i.e., in the petition filed with this court, they assert that there is no illegal dismissal because there was “only a temporary cessation or suspension of operations of the hotel and restaurant due to circumstances beyond the control of petitioners, and that is, the non-renewal of the lease contract...”[59] And yet, in the same petition, they also assert that: (a) the separation of respondents was due to severe financial losses and reverses leading to the closure of the business; and (b) petitioner Pacita Po had to close shop and was bankrupt and has no liquidity to put up her own building to house Mayon Hotel & Restaurant.[60] Sixth, and finally, the uncontroverted finding of the Labor Arbiter that petitioners terminated all the other respondents, by not employing them when the Hotel and Restaurant transferred to its new site on Peñaranda Street.[61] Indeed, in this same memorandum, petitioners referred to all respondents as “former employees of Mayon Hotel & Restaurant.”[62]

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These factors may be inconclusive individually, but when taken together, they lead us to conclude that petitioners really intended to dismiss all respondents and merely used the termination of the lease (on Rizal Street premises) as a means by which they could terminate their employees.Moreover, even assuming arguendo that the cessation of employment on April 1997 was merely temporary, it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months, pursuant to Article 286 of the Labor Code.We are not impressed by petitioners’ claim that severe business losses justified their failure to reinstate respondents. The evidence to prove this fact is inconclusive. But more important, serious business losses do not excuse the employer from complying with the clearance or report required under Article 283 of the Labor Code and its implementing rules before terminating the employment of its workers.[63] In the absence of justifying circumstances, the failure of petitioners to observe the procedural requirements set out under Article 284, taints their actuations with bad faith, especially since they claimed that they have been experiencing losses in the three years before 1997. To say the least, if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents, then petitioners should have complied with the requirements of written notice. The requirement of law mandating the giving of notices was intended not only to enable the employees to look for another employment and therefore ease the impact of the loss of their jobs and the corresponding income, but more importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination.[64] And even assuming that the closure was due to a reason beyond the control of the employer, it still has to accord its employees some relief in the form of severance pay.[65]While we recognize the right of the employer to terminate the services of an employee for a just or authorized cause, the dismissal of employees must be made within the parameters of law and pursuant to the tenets of fair play.[66] And in termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a just or authorized cause.[67] 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.[68]Under these circumstances, the award of damages was proper. As a rule, moral damages are recoverable where the dismissal of the 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.[69] We believe that the dismissal of the respondents was attended with bad faith and meant to evade the lawful obligations imposed upon an employer.To rule otherwise would lead to the anomaly of respondents being terminated from employment in 1997 as a matter of fact, but without legal redress. This runs counter to notions of fair play, substantial justice and the constitutional mandate that labor rights should be respected. If doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter — the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.[70] It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be resolved in the former’s favor.[71] The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection of labor.[72]We therefore reinstate the Labor Arbiter’s decision with the following modifications:(a) Separation pay for the illegal dismissal of respondents Loveres, Macandog and Llarena; (Santos Broñola cannot be granted separation pay as he made no such claim);(b) Retirement pay for respondents Guades, Nicerio, and Alamares, who at the time of dismissal were entitled to their retirement benefits pursuant to Article 287 of the Labor Code as amended;[73] and(c) Damages for respondents Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñola.3. Money claimsThe CA held that contrary to the NLRC’s ruling, petitioners had not discharged the burden of proving that the monetary claims of the respondents have been paid.[74] The CA thus reinstated the Labor Arbiter’s grant of respondents’ monetary claims, including damages. Petitioners assail this ruling by repeating their long and convoluted argument that as there was no illegal dismissal, then respondents are not entitled to their monetary claims or separation pay and damages. Petitioners’ arguments are not only tiring, repetitive and unconvincing, but confusing and confused — entitlement to labor standard benefits is a separate and distinct concept from payment of separation pay arising from illegal dismissal, and are governed by different provisions of the Labor Code. We agree with the CA and the Labor Arbiter. Respondents have set out with particularity in their complaint, position paper, affidavits and other documents the labor standard benefits they are entitled to, and which they alleged that petitioners have failed to pay them. It was therefore petitioners’ burden to prove that they have paid these money claims. One who pleads payment has the burden of proving it, and even where the employees must allege

nonpayment, the general rule is that the burden rests on the defendant to prove nonpayment, rather than on the plaintiff to prove non payment.[75] This petitioners failed to do. We also agree with the Labor Arbiter and the CA that the documents petitioners submitted, i.e., affidavits executed by some of respondents during an ocular inspection conducted by an inspector of the DOLE; notices of inspection result and Facility Evaluation Orders issued by DOLE, are not sufficient to prove payment.[76] Despite repeated orders from the Labor Arbiter,[77] petitioners failed to submit the pertinent employee files, payrolls, records, remittances and other similar documents which would show that respondents rendered work entitling them to payment for overtime work, night shift differential, premium pay for work on holidays and rest day, and payment of these as well as the COLA and the SILP – documents which are not in respondents’ possession but in the custody and absolute control of petitioners.[78] By choosing not to fully and completely disclose information and present the necessary documents to prove payment of labor standard benefits due to respondents, petitioners failed to discharge the burden of proof.[79] Indeed, petitioners’ failure to submit the necessary documents which as employers are in their possession, inspite of orders to do so, gives rise to the presumption that their presentation is prejudicial to its cause.[80] As aptly quoted by the CA:[W]hen the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power to produce evidence which from its very nature must overthrow the case made against him if it is not founded on fact, and he refuses to produce such evidence, the presumption arises that the evidence, if produced, would operate to his prejudice, and support the case of his adversary.[81]Petitioners next claim that the cost of the food and snacks provided to respondents as facilities should have been included in reckoning the payment of respondents’ wages. They state that although on the surface respondents appeared to receive minimal wages, petitioners had granted respondents other benefits which are considered part and parcel of their wages and are allowed under existing laws.[82] They claim that these benefits make up for whatever inadequacies there may be in compensation.[83] Specifically, they invoked Sections 5 and 6, Rule VII-A, which allow the deduction of facilities provided by the employer through an appropriate Facility Evaluation Order issued by the Regional Director of the DOLE.[84] Petitioners also aver that they give five (5) percent of the gross income each month as incentives. As proof of compliance of payment of minimum wages, petitioners submitted the Notice of Inspection Results issued in 1995 and 1997 by the DOLE Regional Office.[85]The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of respondents’ minimum wage. As stated in the Labor Arbiter’s decision:[86]While [petitioners] submitted Facility Evaluation Orders (pp. 468, 469; vol. II, rollo) issued by the DOLE Regional Office whereby the cost of meals given by [petitioners] to [respondents] were specified for purposes of considering the same as part of their wages, We cannot consider the cost of meals in the Orders as applicable to [respondents]. [Respondents] were not interviewed by the DOLE as to the quality and quantity of food appearing in the applications of [petitioners] for facility evaluation prior to its approval to determine whether or not [respondents] were indeed given such kind and quantity of food. Also, there was no evidence that the quality and quantity of food in the Orders were voluntarily accepted by [respondents]. On the contrary; while some [of the respondents] admitted that they were given meals and merienda, the quality of food serve[d] to them were not what were provided for in the Orders and that it was only when they filed these cases that they came to know about said Facility Evaluation Orders (pp. 100; 379[,] vol. II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa herself, who applied for evaluation of the facility (food) given to [respondents], testified that she did not inform [respondents] concerning said Facility Evaluation Orders (p. 34, tsn[,] August 13, 1998).Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could not be deducted without compliance with certain legal requirements. As stated in Mabeza v. NLRC,[87] the employer simply cannot deduct the value from the employee's wages without satisfying the following: (a) proof that such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c) the facilities are charged at fair and reasonable value. The records are clear that petitioners failed to comply with these requirements. There was no proof of respondents’ written authorization. Indeed, the Labor Arbiter found that while the respondents admitted that they were given meals and merienda, the quality of food served to them was not what was provided for in the Facility Evaluation Orders and it was only when they filed the cases that they came to know of this supposed Facility Evaluation Orders.[88] Petitioner Josefa Po Lam herself admitted that she did not inform the respondents of the facilities she had applied for.[89]Considering the failure to comply with the above-mentioned legal requirements, the Labor Arbiter therefore erred when he ruled that the cost of the meals actually provided to respondents should be deducted as part of their salaries, on the ground that respondents have availed themselves of the food given by petitioners.[90] The law is clear that mere availment is not sufficient to allow deductions from employees’ wages. More important, we note the uncontroverted testimony of respondents on record that they were required to eat in the hotel and restaurant so that they will not go home and there is no interruption in the services of Mayon Hotel &

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Restaurant. As ruled in Mabeza, food or snacks or other convenience provided by the employers are deemed as supplements if they are granted for the convenience of the employer. The criterion in making a distinction between a supplement and a facility does not so much lie in the kind (food, lodging) but the purpose.[91] Considering, therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as petitioners’ business.[92] The deduction of the cost of meals from respondents’ wages, therefore, should be removed. We also do not agree with petitioners that the five (5) percent of the gross income of the establishment can be considered as part of the respondents’ wages. We quote with approval the Labor Arbiter on this matter, to wit: While complainants, who were employed in the hotel, receive[d] various amounts as profit share, the same cannot be considered as part of their wages in determining their claims for violation of labor standard benefits. Although called profit share[,] such is in the nature of share from service charges charged by the hotel. This is more explained by [respondents] when they testified that what they received are not fixed amounts and the same are paid not on a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also, [petitioners] failed to submit evidence that the amounts received by [respondents] as profit share are to be considered part of their wages and had been agreed by them prior to their employment. Further, how can the amounts receive[d] by [respondents] be considered as profit share when the same [are] based on the gross receipt of the hotel[?] No profit can as yet be determined out of the gross receipt of an enterprise. Profits are realized after expenses are deducted from the gross income.On the issue of the proper minimum wage applicable to respondents, we sustain the Labor Arbiter. We note that petitioners themselves have admitted that the establishment employs “more or less sixteen (16) employees,”[93] therefore they are estopped from claiming that the applicable minimum wage should be for service establishments employing 15 employees or less.As for petitioners repeated invocation of serious business losses, suffice to say that this is not a defense to payment of labor standard benefits. The employer cannot exempt himself from liability to pay minimum wages because of poor financial condition of the company. The payment of minimum wages is not dependent on the employer’s ability to pay.[94]Thus, we reinstate the award of monetary claims granted by the Labor Arbiter.4. ConclusionThere is no denying that the actuations of petitioners in this case have been reprehensible. They have terminated the respondents’ employment in an underhanded manner, and have used and abused the quasi-judicial and judicial processes to resist payment of their employees’ rightful claims, thereby protracting this case and causing the unnecessary clogging of dockets of the Court. They have also forced respondents to unnecessary hardship and financial expense. Indeed, the circumstances of this case would have called for exemplary damages, as the dismissal was effected in a wanton, oppressive or malevolent manner,[95] and public policy requires that these acts must be suppressed and discouraged.[96]Nevertheless, we cannot agree with the Labor Arbiter in granting exemplary damages of P10,000.00 each to all respondents. While it is true that other forms of damages under the Civil Code may be awarded to illegally dismissed employees,[97] any award of moral damages by the Labor Arbiter cannot be based on the Labor Code but should be grounded on the Civil Code.[98] And the law is clear that exemplary damages can only be awarded if plaintiff shows proof that he is entitled to moral, temperate or compensatory damages.[99]As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo and Broñola specifically claimed damages from petitioners, then only they are entitled to exemplary damages. [sjgs1] Finally, we rule that attorney’s fees in the amount to P10,000.00 should be granted to each respondent. It is settled that in actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and interest, he is entitled to an award of attorney's fees.[100] This case undoubtedly falls within this rule. IN VIEW WHEREOF, the petition is hereby DENIED. The Decision of January 17, 2003 of the Court of Appeals in CA-G.R. SP No. 68642 upholding the Joint Decision of July 14, 2000 of the Labor Arbiter in RAB V Case Nos. 04-00079-97 and 04-00080-97 is AFFIRMED, with the following MODIFICATIONS:(1) Granting separation pay of one-half (1/2) month for every year of service to respondents Loveres, Macandog and Llarena;(2) Granting retirement pay for respondents Guades, Nicerio, and Alamares;(3) Removing the deductions for food facility from the amounts due to all respondents;(4) Awarding moral damages of P20,000.00 each for respondents Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñola;(5) Deleting the award of exemplary damages of P10,000.00 from all respondents except Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñola; and(6) Granting attorney’s fees of P10,000.00 each to all respondents.

The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the total monetary benefits awarded and due to the employees concerned in accordance with the decision. The Labor Arbiter is ORDERED to submit his compliance thereon within thirty (30) days from notice of this decision, with copies furnished to the parties.SO ORDERED.REYNATO S. PUNO (Associate Justice)WE CONCUR: MA. ALICIA AUSTRIA-MARTINEZ (Associate Justice), ROMEO J. CALLEJO, SR. (Associate Justice), DANTE O. TINGA (Associate Justice), MINITA V. CHICO-NAZARIO (Associate Justice)WAGESPHILEX GOLD PHILIPPINES, INC., GERARDO H. BRIMO, LEONARD P. JOSEF, and JOSE B. ANIEVAS, Petitioners, versus PHILEX BULAWAN SUPERVISORS UNION, represented by its President, JOSE D. PAMPLIEGA, Respondents., G.R. No. 149758, 2005 Aug 25, 1st DivisionAZCUNA, J.:This is a petition for review on certiorari, with prayer for the issuance of a temporary restraining and/or status quo order, assailing the Decision of the Court of Appeals in CA-G.R. SP No. 57701 promulgated on April 23, 2001 and its Resolution, promulgated on August 29, 2001, denying petitioner’s Motion for Reconsideration. The said Decision of the Court of Appeals reversed and set aside the Resolution dated February 29, 2000 of the Voluntary Arbitrator and reinstated the Voluntary Arbitrator’s Resolution dated January 14, 2000 with modification. The antecedents[1] of the case are as follows:Respondent Philex Bulawan Supervisors Union (“Philex Supervisors Union”) is the sole and exclusive bargaining representative of all supervisors of petitioner Philex Gold Philippines, Incorporated (“Philex Gold”), a gold mining company with mine site at Vista Alegre, Nabulao, Sipalay, Negros Occidental. On July 2, 1997, respondent union entered into a Collective Bargaining Agreement (CBA) with petitioner company effective August 1, 1996 up to July 31, 2001.It appears, however, that after the signing of the CBA, Philex Gold made the employees of Philex Mining Corporation from Padcal, Tuba, Benguet, its regular supervisory employees effective July 1, 1997. Some of the so-called “ex-Padcal” supervisors began to work in the Bulawan mines of Philex Mining Corporation in 1992 as ordinary rank-and-file workers. When Philex Gold was incorporated in 1996 to exclusively handle gold mining, it took over the operations of the Bulawan mines and absorbed some of the ex-Padcal employees.Philex Gold conveyed to Philex Supervisors Union the status of the ex-Padcal supervisors in November 1997 upon the insistence of the union to be informed of their standing.It turned out that the ex-Padcal supervisors were maintained under a confidential payroll, receiving a different set of benefits and higher salaries compared to the locally hired supervisors of similar rank and classification doing parallel duties and functions.Philex Supervisors Union filed a Complaint[2] against Philex Gold with the National Conciliation and Mediation Board (NCMB), Bacolod City, for the payment of wage differential and damages and the rectification of the discriminatory salary structure and benefits between the ex-Padcal supervisors and the local-hires.After the submission of the parties’ respective position papers and rejoinders/supplemental position papers, the Voluntary Arbitrator rendered a decision on January 14, 2000 in favor of respondent Union. As regards the supervisors’ wage rates[3] which was submitted by Philex Gold, the Voluntary Arbitrator held:The Wage rates of the employers as classified and classed by them are not also reasonable and undiscriminatory.This is shown by the fact that the maximum rate for S-4 at P18,065 per month is higher than the minimum rate for S-5, the highest category at P13,295 a month only. The rate difference between the maximum rate of S-4 and the minimum rate for S-5 is P4,770, the maximum rate of S-4 being higher than the minimum rate of S-5.Simply stated, an S-4 employee getting the maximum salary of P18,065 a month will merely get a reduced or diminished salary of P13,295 upon his promotion to S-5, the highest class or category of supervisors upon his promotion. This condition is not an ideal labor relation but a situation which will surely ignite labor conflicts and disputes in the work place.In whatever shade or color that we shall look upon the issue of whether or not the herein employer can be held liable to pay the wage differential pay to the LOCALLY HIRED SUPERVISORS due to its obvious discriminatory wage policy, one thing stands out—supervisors of the same ranks are not paid the same rates of pay.This inequitable rates of pay being implemented by respondents result naturally into the herein employers’ discriminatory wage policy which Article 248 (e) of the LABOR CODE prohibits and defines as UNFAIR LABOR PRACTICE OF EMPLOYERS.[4]The dispositive portion of the Decision reads:

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WHEREFORE, in view of all the FOREGOING, judgment is hereby decreed ORDERING the respondent PHILEX GOLD PHILIPPINES, INC./GERARD H. BRIMO/LEONARD P. JOSEF/JOSE B. ANIEVAS, JOINTLY and SEVERALLY to:1. Readjust the MONTHLY RATES OF PAY of locally hired SUPERVISORS in the categories of S-1 to S-5 RANKS in the same level/or amount with that of PADCAL SUPERVISORS of the same RANKS namely:S-1 ----------------- P13,081.60S-2 ----------------- P13,893.60S-3 ----------------- P15,209.60S-4 ----------------- P17,472.00S-5 ----------------- P20,300.00effective November 1, 1998 and to pay Wage differential pay from November 1, 1998 up to the date of the Decision to all affected locally hired supervisors.2. To revise or modify its existing wage rates per supervisory ranking, making the maximum rate of a lower category lower than the minimum rate of the next higher category; and,

3. Pay to the UNION ATTORNEY’S FEES at 5% of the total sum of the Wage differential pay awarded within ten (10) days from receipt of this Decision.The respondent is further ordered to deposit with the cashier of the NCMB the sum which is equivalent to the wage differential pay computed at a differential of P5,501.24 per person/supervisor per month from November 1, 1998 up to the date of this decision, for S-1; P5,663.24 per month per supervisor, for S-2; P5,979.24 per supervisor per month, for S-3; P7,065.75 per supervisor per month for S-4 and P8,428.46 per supervisor per month for S-5, and the ATTORNEY’S FEE which is 5% of the total wage differential pay also within ten (10) days from receipt of this decision.SO ORDERED.[5]Philex Supervisors Union filed a Motion for Partial Reconsideration dated January 20, 2000, seeking, among others, the modification of the effectivity of the readjustment of the monthly rates of pay of the locally hired supervisors and of the computation of their wage differential from November 1, 1998 to August 1, 1997 although the discrimination in wages started upon the regularization of the ex-Padcal supervisors on July 1, 1997. On January 25, 2000, Philex Gold also filed a motion for reconsideration, which was allegedly filed a day late, contending that it was denied due process as the Voluntary Arbitrator decided the case without its supplemental position paper, that the decision undermined the collective bargaining process between the parties relative to wage differentials, and that there was neither unlawful discrimination nor wage distortion between the ex-Padcal supervisors and the locally hired supervisors. On February 29, 2000, the Voluntary Arbitrator issued the assailed Resolution modifying his earlier Decision dated January 14, 2000, this time finding that there was no discrimination in the determination of the rates of pay of the supervisors. The Voluntary Arbitrator, however, readjusted the amount of wages of local supervisors by adding or increasing their wages in the uniform sum of P800.00 a month effective October 1, 1999 “to erase the shadows of inequities among the various grades of supervisors.” The dispositive portion of the Decision reads:WHEREFORE, IN VIEW of the foregoing, the Decision dated January 14, 2000 is hereby modified in the following manner, to wit: 1. The respondent employer is hereby ordered to re-adjust the wage rates of S-1 to S-5 supervisors by adding or increasing their wages in the uniform sum of P800.00 a month each effective October 1, 1999; and to compute and pay their differential pay from October 1, 1999 up to the time it is paid and implemented;2. The respondent is further ordered to pay Attorney’s Fee to the Union’s lawyer at 5% of the total amount of WAGE DIFFERENTIAL PAY; 3. Finally, the respondent employer is ordered to deposit to the cashier of the NCMB the WAGE DIFFERENTIAL PAY and the Attorney’s Fee adjudged within 10 days from receipt of this Resolution.SO ORDERED. [6]On March 13, 2000, respondent Union filed a petition for review before the Court of Appeals raising the following issues: (1) whether or not the Voluntary Arbitrator erred in admitting petitioner’s motion for reconsideration which was filed beyond the reglementary period; (2) whether or not the Voluntary Arbitrator erred in modifying his decision by finding petitioner to be liable to its locally hired members in the sum of P800 per month as wage adjustment effective October 1999; and (3) whether or not the Voluntary Arbitrator erred in failing to grant 10 percent attorney’s fees on the total awards.On March 2, 2000, petitioners filed a Manifestation of Compliance with the Voluntary Arbitrator alleging that on account of its payment to respondent union members of monetary benefits (in the amount of P1,000) provided by the Amendments and Supplement to the CBA, it has complied with the Resolution dated February 29, 2000.

In a Resolution dated April 4, 2000, the Voluntary Arbitrator denied[7] said Manifestation of Compliance for lack of merit. While CA-G.R. SP No. 57701 was pending, respondent Union filed on April 8, 2000 a Motion for Issuance of Writ of Execution of the Resolution dated February 29, 2000. In an Order dated June 27, 2000, the Voluntary Arbitrator issued a Writ of Execution enforcing the Resolution dated February 29, 2000.On June 29, 2000, Philex Gold filed a Motion to Lift Writ of Execution, which was not acted upon by the Voluntary Arbitrator. On July 10, 2000, Philex Gold filed a petition for review before the Court of Appeals, docketed as CA-G.R. SP No. 60065, questioning the propriety and validity of the Voluntary Arbitrator’s Order granting execution pending appeal. Said petition was denied for lack of merit.On April 23, 2001, the Court of Appeals rendered the assailed Decision, in CA-G.R. SP No. 57701, finding that petitioners failed to prove that they did not discriminate against the locally hired supervisors in paying them lower salaries than the ex-Padcal supervisors. It held, thus:

Philex Gold’s attempt to explain the disparity in the salary rates between “ex-Padcal” supervisors and the local-hires failed to convince Us. It presented a salary structure for supervisors classified into five categories, namely: “S-1, S-2, S-3, S-4, and S-5” with different rates of pay. Each classification is further divided in terms of wage rates into minimum, medium, and maximum. While the “ex-Padcal” supervisors received the maximum for each category, presumably because of seniority in employment, longer work experience in gold mining, specialized skills, and the “dislocation factor”, the local-hires received the minimum.This explanation is fraught with inconsistencies. First, the CBA between the parties did not disclose this multi-tiered classification of supervisors (Rollo, pp. 36-37, 46-74). Second, as found by the voluntary arbitrator in his original decision, the local-hires actually received salaries less than those they were supposed to be entitled (Rollo, p. 41). Third, the minimum wage rate for a higher category happened to be lesser than the maximum rate of a lower category such that a supervisor with a rank of “S-1” maximum would get less upon his promotion to “S-2” minimum (Rollo, pp. 38-39, 90). And finally, this pay structure was kept from the knowledge of the union and was only revealed in the course of the proceedings before the voluntary arbitrator. These factors only accentuate the fact which Philex Gold tried to hide, that is, it unduly favored the “ex-Padcal” supervisors over the local-hires through a system of confidential salary structure.The long honored legal truism of “equal pay for equal work,” meaning, “persons who work with substantially equal qualification, skill, effort and responsibility, under similar conditions, should be paid similar salaries,” has been institutionalized in our jurisdiction. Such that “if an employer accords employees the same position and rank, the presumption is that these employees perform equal work” as “borne by logic and human experience.” The ramification is that “(i)f 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.” (International School Alliance of Educators v. Quisumbing, et al., G.R. No. 128845, June 1, 2000).Philex Gold having failed to discharge this burden, We opt therefore to reinstate, albeit with modification, the original decision dated 14 January 2000 of the voluntary arbitrator as the same is duly supported by the pleadings filed before Us.[8] The dispositive portion of the Decision reads:WHEREFORE, premises considered, the assailed resolution of 29 February 2000 is REVERSED and SET ASIDE and a new one entered REINSTATING the 14 January 2000 decision subject to the MODIFICATION that the readjustment of the monthly rates of pay of locally hired supervisors as well as their wage differential pay be made effective 1 August 1997 up to the finality of this decision. This case is REMANDED to the voluntary arbitrator for the proper computation of wage differential and attorney’s fees. No costs.SO ORDERED.[9] Petitioners’ motion for reconsideration was denied by the appellate court in its Resolution dated August 29, 2001.Petitioners thus filed this petition with a prayer for the issuance of a temporary restraining order. The Court issued a temporary restraining order enjoining the execution of the Decision of the Court of Appeals dated April 23, 2001 and its Resolution dated August 29, 2001 after petitioners posted a cash bond.Petitioners raise the following issues:1. Section 4, Rule 43 and Luzon Development Bank [v. Association of Luzon Development Bank Employees, 249 SCRA 162 (1995)] provide that the decision of a voluntary arbitrator becomes final after 15 days from notice of the award. Assuming the validity of service on Philex Gold’s liaison office, instead of its counsel’s address on record, did

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the Court of Appeals commit an error in law by stating that the Decision dated 14 January 2000 of VA Sitjar became “final and executory” after eleven days from notice?2. Granting arguendo that Philex Gold had only a period of 10 days within which to seek reconsideration of the Sitjar Decision, did the period begin to run upon service of said Decision at an address which is not theaddress on record or upon the actual receipt thereof by Philex Gold’s counsel?3. VA Sitjar found petitioners Brimo, Josef and Jose B. Anievas, in their capacity as corporate officers, jointly and severally liable for the alleged obligation of Philex Gold to pay wage differentials to PBSU. Did the Court of Appeals commit an error in law in affirming VA Sitjar when the latter disposed of an issue not submitted to him for arbitration and in directing solidary liability between Philex Gold and its top officers despite the absence of any finding of malice, bad faith, or gross negligence? 4. In leveling the wages of the Padcal Supervisors and the Locally-Hired Supervisors, the Court of Appeals applied the egalitarian doctrine of “equal pay for equal work” in International School Alliance of Educators v. Quisumbing. Does “equal pay for equal work” unqualifiedly remove management prerogative to institute qualitative difference in pay and benefits on the basis of seniority, skill, experience and other valid factors in the same class of workers doing the same kind of work?[10]

The relevant issues in this case are as follows:(1) Whether the notice sent through petitioner company’s Liaison Office can be considered as notice to counsel;(2) Whether the petitioners-corporate officers are solidarily liable with Philex Gold in any liability to respondent Union; (3) Whether the doctrine of “equal pay for equal work” should not remove management prerogative to institute difference in salary on the basis of seniority, skill, experience and the dislocation factor in the same class of supervisory workers doing the same kind of work. First Issue : Whether the notice sent through petitioner company’s Liaison Office can be considered as notice to counselPetitioners contend that the Court of Appeals erred in holding that their motion for reconsideration of the Decision of the Voluntary Arbitrator dated January 14, 2000 was filed out of time.Indeed, the Court of Appeals found that “[b]ased on the certification issued by the voluntary arbitrator himself, the decision was received by the respondents (petitioners herein) on 14 January 2000 (Rollo, p. 123), and they filed their motion for reconsideration on 25 January 2000, or on the eleventh day from receipt of the decision.” The appellate court ruled that the late filing rendered the decision final and executory as regards the petitioners, and that the Voluntary Arbitrator erred in admitting petitioners’ motion for reconsideration. Petitioners argue that the service of the Voluntary Arbitrator’s Decision on Philex Gold’s Liaison Office at Libertad St., Bacolod City on January 14, 2000 was improper since their counsel’s address of record was at Vista Alegre, Nabulao, Sipalay, Negros Occidental 6113. Petitioners state that Philex Gold’s Liaison Office forwarded said Decision to their counsel only the next day or on January 15, 2000, which should be the date of notice to counsel and the basis for computation of the period to file a motion for reconsideration of said Decision.The contention is meritorious.Section 4, Rule III of the NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings states:Section 4. Service of Pleadings, Notices and Awards. – Copies of pleadings, notices or copies of [an] award may be served through personal service or by registered mails on the parties to the dispute: Provided, that where a party is represented by counsel or authorized representative, service shall be made on the latter. Service by registered mail is complete upon receipt by the addressee or his agents.[11]In this case, petitioners were represented before the Voluntary Arbitrator by Attys. Deogracias G. Contreras Jr. and Weldy U. Manlong. Hence, under the NCMB Guidelines, service of pleadings, notices and awards should be made on petitioners’ counsel. The Court noted that in petitioners’ Position Paper and Supplemental Position Paper filed with the Voluntary Arbitrator, the address of petitioners’ counsel was indicated as Vista Alegre, Nabulao, Sipalay, Negros Occidental, 6113. However, the Decision of the Voluntary Arbitrator dated January 14, 2000 was sent through the Liaison Office of Philex Gold, thus: ATTY. WENDY U. MANLONGCounsel for the RespondentsPHILEX GOLD PHILIPPINES, INC.GERARDO BRIMO, LEONARD P. JOSEF,JOSE B. ANIEVASC/O Liaison Office, Libertad St.Bacolod City

Even the Court of Appeals stated that “based on the certification issued by the voluntary arbitrator himself, the decision was received by the respondents on 14 January 2000. . . .” Said service on Philex Gold’s Liaison Office or on the petitioners themselves cannot be considered as notice in law to petitioners’ counsel. Under the circumstances, reliance may be placed on the assertion of petitioners that a copy of the Decision of the Voluntary Arbitrator dated January 14, 2000 was delivered to their counsel the next day or on January 15, 2000, which must be deemed as the date of notice to counsel of said Decision.[12] Hence, when petitioners’ motion for reconsideration was filed on January 25, 2000, it was filed within the 10-day reglementary period under Article 262-A of the Labor Code. The Court of Appeals, therefore, erred in holding that said motion for reconsideration was filed out of time.Second Issue : Whether the petitioners-corporate officers are solidarily liable with Philex Gold in any liability to respondent UnionPetitioners officers contend that they should not be adjudged solidarily liable with Philex Gold. The contention is meritorious. A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it.[13] The rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities.[14] However, it is possible for a corporate director, trustee or officer to be held solidarily liable with the corporation in the following instances:1. When directors and trustees or, in appropriate cases, the officers of a corporation--(a) vote for or assent to patently unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing the corporate affairs;(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other persons.2. When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto.3. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the Corporation.4. When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action.[15]The corporate officers in this case have not been proven to fall under any of the aforecited instances; hence, they cannot be held solidarily liable with the company in the payment of any liability. Third Issue : Whether the doctrine of “equal pay for equal work” should not remove management prerogative to institute difference in salary within the same supervisory levelPetitioners submit that the “equal pay for equal work” doctrine in International School Alliance of Educators v. Quisumbing,[16] which the Court of Appeals cited to support its Decision should be narrowly construed to apply to a situation where invidious discrimination exists by reason of race or ethnicity, but not where valid factors exist to justify distinctive treatment of employees even if they do the same work. Petitioners explained that the ex-Padcal supervisors were paid higher because of their longer years of service, experience, their training and skill in the underground mining method wanting in the local supervisors, and their relocation to Bulawan, Negros Occidental. They assert that the differential treatment of the ex-Padcal supervisors is not arbitrary, malicious or discriminatory but justified by the circumstances of their relocation and integration in the new mining operation in Bulawan. The Court is not persuaded by petitioners’ contention. Petitioners admit that the “same class of workers [are] doing the same kind of work.” This means that an ex-Padcal supervisor and a locally hired supervisor of equal rank do the same kind of work. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work.[17] Hence, the doctrine of “equal pay for equal work” in International School Alliance of Educators was correctly applied by the Court of Appeals. Petitioners now contend that the doctrine of “equal pay for equal work” should not remove management prerogative to institute difference in salary on the basis of seniority, skill, experience and the dislocation factor in the same class of supervisory workers doing the same kind of work.[18] In this case, the Court cannot agree because petitioners failed to adduce evidence to show that an ex-Padcal supervisor and a locally hired supervisor of the same rank are initially paid the same basic salary for doing the same kind of work. They failed to differentiate this basic salary from any kind of salary increase or additional benefit which may have been given to the ex-Padcal supervisors due to their seniority, experience and other factors. The records only show that an ex-Padcal supervisor is paid a higher salary than a locally hired supervisor of the same rank. Therefore, petitioner failed to prove with satisfactory evidence that it has not discriminated against the locally hired supervisor in view of the unequal salary.

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To reiterate the ruling of Philippine-Singapore Transport Services, Inc. v. NLRC,[19] which was cited by the Court of Appeals in its Decision:. . .It is noteworthy to state that an employer is free to manage and regulate, according to his own discretion and judgment, all phases of employment, which includes hiring, work assignments, working methods, time, place and manner of work, supervision of workers, working regulations, transfer of employees, lay-off of workers, and the discipline, dismissal and recall of work. While the law recognizes and safeguards this right of an employer to exercise what are clearly management prerogatives, such right should not be abused and used as a tool of oppression against labor. The company’s prerogative must be exercised in good faith and with due regard to the rights of labor. A priori, they are not absolute prerogatives but are subject to legal limits, collective bargaining agreements and the general principles of fair play and justice.[20] ( mphasis supplied.)WHEREFORE, the petition is hereby DENIED. No reversible error was committed by the Court of Appeals in its Decision in CA-G.R. SP No. 57701 and in its Resolution promulgated on August 29, 2001. The Temporary Restraining Order issued by the Court is LIFTED.

No costs.SO ORDERED.ADOLFO S. AZCUNA (Associate Justice)WE CONCUR: HILARIO G. DAVIDE, JR. (Chief Justice, Chairman), LEONARDO A. QUISUMBING (Associate Justice), CONSUELO YNARES-SANTIAGO (Associate Justice), ANTONIO T. CARPIO (Associate Justice)MARCOPPER MINING CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL MINES AND ALLIED WORKERS' UNION (NAMAWU-MIF), respondents., G.R. No. 103525, 1996 Mar 29, 1st Division)KAPUNAN, J.:Social justice and full protection to labor guaranteed by the fundamental law of this land is not some romantic notion, high in rhetoric but low in substance. The case at bench provides yet another example of harmonizing and balancing 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." 1In this petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court, Marcopper Mining Corporation impugns the decision rendered by the National Labor Relations Commission (NLRC) on 18 November 1991 in RAB-IV-12-258888 dismissing petitioner's appeal, and the resolution issued by the said tribunal dated 20 December 1991 denying petitioner's motion for reconsideration.There is no disagreement as to the following facts:On 23 August 1984, Marcopper Mining Corporation, a corporation duly organized and existing under the laws of the Philippines, engaged in the business of mineral prospecting, exploration and extraction, and private respondent NAMAWU-MIF, a labor federation duly organized and registered with the Department of Labor and Employment (DOLE), to which the Marcopper Employees Union (the exclusive bargaining agent of all rank-and-file workers of petitioner) is affiliated, entered into a Collective Bargaining Agreement (CBA) effective from 1 May 1984 until 30 April 1987.Sec. 1, Art. V of the said Collective Bargaining Agreement provides:Sec. 1. The COMPANY agrees to grant general wage increase to all employees within the bargaining unit as follows: Increase per day on Effectivity the Basic Wage May 1, 1985 5% May 1, 1986 5%It is expressly understood that this wage increase shall be exclusive of any increase in the minimum wage and/or mandatory living allowance that may be promulgated during the life of this Agreement. 2Prior to the expiration of the aforestated Agreement, on 25 July 1986, petitioner and private respondent executed a Memorandum of Agreement (MOA) wherein the terms of the CBA, specifically on matters of wage increase and facilities allowance, were modified as follows:1. The COMPANY hereby grants a wage increase of 10% of the basic rate to all employees and workers within the bargaining units (sic) as follows. (a) 5% effective May 1, 1986. This will mean that the members of the bargaining unit will get an effective increase of 10% from May 1, 1986. (b) 5% effective May 1, 1987.

2. The COMPANY hereby grants an increase of the facilities allowance from P50.00 to P100.00 per month effective May 1, 1986. 3In compliance with the amended CBA, petitioner implemented the initial 5% wage increase due on 1 May 1986. 4On 1 June 1987, Executive Order (E.O.) No. 178 was promulgated mandating the integration of the cost of living allowance under Wage Orders Nos. 1, 2, 3, 5 and 6 into the basic wage of workers, its effectivity retroactive to 1 May 1987. 5 Consequently, effective on 1 May 1987, the basic wage rate of petitioner's laborers categorized as non-agricultural workers was increased by P9.00 per day. 6Petitioner implemented the second five percent (5%) wage increase due on 1 May 1987 and thereafter added the integrated COLA. 7Private respondent, however, assailed the manner in which the second wage increase was effected. It argued that the COLA should first be integrated into the basic wage before the 5% wage increase is computed. 8Consequently, on 15 December 1988, the union filed a complaint for underpayment of wages before the Regional Arbitration Branch IV, Quezon City.On 24 July 1989, the Labor Arbiter promulgated a decision in favor of the union. The dispositive part reads, thus:WHEREFORE consistent with the tenor hereof, judgment is rendered directing respondent company to pay the wage differentials due its rank-and-file workers retroactive to 1 May 1987.SO ORDERED. 9The Labor Arbiter ruled in this wise:First and foremost, the written instrument and the intention of the parties must be brought to the fore. And talking of intention, we conjure to sharp focus the provision embossed in Section 1, Article V of the collective agreement, viz:.Xxx xxx xxxIt is expressly understood that this wage increase shall be exclusive of increase in the minimum wage and/or mandatory living allowance that may be promulgated during the life of this Agreement. The foregoing phrase albeit innocuously framed offers the cue. This ushers us to the inner sanctum of what really was the intention of the parties to the contract. Treading along its lines, it becomes readily discernible that this portion of the contract is the "stop-lock" gate or known in its technical term as the "non-chargeability" clause. There can be no quibbling that on the strength of this provision, the wage/allowance granted under this accord cannot be credited to similar form of benefit that may be thereafter ordained by the government through legislation. That the parties therefore were consciously aware at the time of the conclusion of the agreement of the never-ending rise in the cost of living is a logical corollary. And while this upward trend may not be a welcome phenomenon, there was the intention to yield and comply in the event of an imposition. Of course, there cannot likewise be any rivalry that if the Executive Order were to retroact to 2 May 1987 or a day after the last contractual increase, this question will not arise. It is in this sense of fairness that we cannot allow this "one (1) day" to be an insulating medium to deny the workers the benediction endowed by Executive Order No. 178. 10Petitioner appealed the Labor Arbiter's decision and on 18 November 1991 the NLRC rendered its decision sustaining the Labor Arbiter's ruling. The dispositive portion states:WHEREFORE in view of the foregoing, the Decision of the Labor Arbiter is hereby AFFIRMED and the appeal filed is hereby DISMISSED for lack of merit.SO ORDERED. 11The NLRC declared:. . . Increments to the laborers' financial gratification, be they in the form of salary increases or changes in the salary scale are aimed at one thing improvement of the economic predicament of the laborers. As such, they should be viewed in the light of the State's avowed policy to protect labor. Thus, having entered into an agreement with its employees, an employer may not be allowed to renege on its obligation under a collective bargaining agreement should, at the same time, the law grants the employees the same or better terms and conditions of employment. Employee benefits derived from law are exclusive of benefits arrived at through negotiation and agreement unless otherwise provided by the agreement itself or by law. (Meycauayan College v. Hen. Franklin N. Drilon, 185 SCRA 50). 12Petitioner's motion for reconsideration was denied by the NLRC in its resolution dated 20 December 1991.In the present petition, Marcopper challenges the NLRC decision on the following grounds:I. PUBLIC RESPONDENT NLRC ACTED WITH GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF LABOR ARBITER JOAQUIN TANODRA DIRECTING MARCOPPER TO PAY WAGE DIFFERENTIALS DUE ITS RANK-AND-FILE EMPLOYEES RETROACTIVE TO 1 MAY 1987 CONSIDERING THAT SANS E.O 178, THE FUNDAMENTAL MEANING OF THE BASIC WAGE IS CLEARLY DIFFERENT FROM, AND DOES NOT INCLUDE THE COLA AT THE TIME THE CBA WAS ENTERED INTO. THUS, PUBLIC RESPONDENTS READING OF THE CBA, AS AMENDED BY THE MEMORANDUM OF AGREEMENT DATED 25 JULY 1986, ULTIMATELY

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DISREGARDED THE ORDINARY MEANING OF THE PHRASE "BASIC WAGE", OTHERWISE INTENDED BY THE PARTIES DURING THE TIME THE CBA WAS EXECUTED.II. THE LABOR ARBITER AND PUBLIC RESPONDENT NLRC'S RELIANCE ON THE LAST PARAGRAPH OF SECTION 1, ARTICLE V OF THE CBA WHICH STATES: "IT IS EXPRESSLY UNDERSTOOD THAT THIS WAGE INCREASE SHALL BE EXCLUSIVE OF ANY INCREASE IN THE MINIMUM WAGE AND/OR MANDATORY LIVING ALLOWANCE THAT MAY BE PROMULGATED DURING THE LIFE OF THIS AGREEMENT" IS MISPLACED AND WITHOUT BASIS BECAUSE SAID PROVISION HARDLY OFFERS A HINT AS TO WHAT BASIC WAGE THE PARTIES HAD IN MIND AT THE TIME THEY EXECUTED THE CBA AS AMENDED BY THE MEMORANDUM OF AGREEMENT.III. PETITIONER COMPUTED THE 5% WAGE INCREASE BASED ON THE UNINTEGRATED BASIC WAGE IN ACCORDANCE WITH THE INTENT AND TERMS OF THE CBA, AS AMENDED BY THE MEMORANDUM OF AGREEMENT. THIS WAS IN FULL ACCORD AND IN FAITHFUL COMPLIANCE WITH E.O 178. HENCE, PETITIONER DID NOT COMMIT ANY UNDERPAYMENT.IV. THE DOCTRINE OF LIBERAL INTERPRETATION IN FAVOR OF LABOR IN CASE OF DOUBT IS NOT APPLICABLE TO THE INSTANT CASE. 13Stripped of the non-essentials, the question for our resolution is what should be the basis for the computation of the CBA increase, the basic wage without the COLA or the so-called "integrated" basic wage which, by mandate of E.O. No. 178, includes the COLA.It is petitioner's contention that the basic wage referred to in the CBA pertains to the "unintegrated" basic wage. Petitioner maintains that the rules on interpretation of contracts, particularly Art. 1371 of the New Civil Code which states that:Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered.should govern. Accordingly, applying the aforequoted provision in the case at bench, petitioner concludes that it was clearly not the intention of the parties (petitioner and private respondent) to include the COLA in computing the CBA/MOA mandated increase since the MOA was entered into a year before E.O. No. 178 was enacted even though their effectivity dates coincide. In other words, the situation "contemporaneous" to the execution of the amendatory MOA was that there was yet no law requiring the integration of the COLA into the basic wage. 14 Petitioner, therefore, cannot be compelled to undertake an obligation it never assumed or contemplated under the CBA or MOA.Siding with the petitioner, the Solicitor General opines that for the purpose of complying with the obligations imposed by the CBA, the integrated COLA should not be considered due to the exclusivity of the benefits under the said CBA and E.O. No. 178. He explains thus:A collective bargaining agreement is a contractual obligation. It is distinct from an obligation imposed by law. The terms and conditions of a CBA constitute the law between the parties. Thus, employee benefits derived from either the law or a contract should be treated as distinct and separate from each other.(Meycauayan College vs. Drilon, supra.)xxx xxx xxxVery clearly, the CBA and E.O. 178 provided for the exclusiveness of the benefits to be given or awarded to the employees of petitioner. Thus, when petitioner computed the 5% wage increase based on the unintegrated basic wage, it complied with its contractual obligations under the CBA. When it thereafter integrated the COLA into the basic wage, it complied also with the mandate of E.O. 178. Petitioner, therefore, complied with its contractual obligations in the CBA as well as with the legal mandate of the law. Consequently, petitioner is not guilty of underpayment.To follow the theory of private respondent, that is to integrate first the COLA into the basic wage and thereafter compute the 5% wage increase therefrom, would violate the "exclusiveness" of the benefits granted under the CBA and under E.O. 178. 15Private respondent counters by asserting that the purpose, nature and essence of CBA negotiation is to obtain wage increases and benefits over and above what the law provides and that the principle of non-diminution of benefits should prevail.The NLRC, which filed its own comment, likewise, made the following assertions:. . . However, to state outright that the parties intended the basic wage to remain invariable even after the advent of EO 178 is unfounded and presumptuous a claim as such inevitably works to the utmost disadvantage of the workers and runs counter to the constitutional guarantee of affording protection to labor. Evidently, the rationale for the integration of the COLA with the basic wage was primarily to increase the base wage for purposes of computation of such items as overtime and premium pay, fringe benefits, etc. To adopt the statement and claim of the petitioner would then redound to depriving the workers of the full benefits the law intended for them, which in the final analysis

was solely for the purpose of alleviating their plight due to the continuous undue hardship they suffer caused by the ever escalating prices of prime commodities. 16We rule for the respondents..The principle that the CBA is the law between the contracting parties stands strong and true. 17 However, the present controversy involves not merely an interpretation of CBA provisions. More importantly, it requires a determination of the effect of an executive order on the terms and the conditions of the CBA. This is, and should be, the focus of the instant case.It is unnecessary to delve too much on the intention of the parties as to what they allegedly meant by the term "basic wage" at the time the CBA and MOA were executed because there is no question that as of 1 May 1987, as mandated by E.O. No. 178, the basic wage of workers, or the statutory minimum wage, was increased with the integration of the COLA. As of said date, then, the term "basic wage" includes the COLA. This is what the law ordains and to which the collective bargaining agreement of the parties must conform.Petitioner's arguments eventually lose steam in the light of the fact that compliance with the law is mandatory and beyond contractual stipulation by and between the parties; consequently, whether or not petitioner intended the basic wage to include the COLA becomes immaterial. There is evidently nothing to construe and interpret because the law is clear and unambiguous. Unfortunately for petitioner, said law, by some uncanny coincidence, retroactively took effect on the same date the CBA increase became effective. Therefore, there cannot be any doubt that the computation of the CBA increase on the basis of the "integrated" wage does not constitute a violation of the CBA.Petitioner's contention that under the Rules Implementing E.O. No. 178, the definition of the term "basic wage" has remained unchanged is off the mark since said definition expressly allows integration of monetary benefits into the regular pay of employees:Chapter 1. Definition of Terms and Coverage.Sec. 1. Definition of Terms.Xxx xxx xxx(j) "Basic Wage" means all regular remuneration or earnings paid by an employer for services rendered on normal working days and hours but does not include cost-of-living allowances, profit-sharing payments, premium payments, 13th month pay, and other monetary benefits which are not considered as part of or integrated into the regular salary of the employee on the date the Order became effective. What E.O. No. 178 did was exactly to integrate the COLA under Wage Orders Nos. 1, 2, 3, 5 and 6 into the basic pay so as to increase the statutory daily minimum wage. Section 2 of the Rules is quite explicit:Sec. 2. Amount to be Integrated. Effective on the dates specified, as a result of the integration, the basic rate of covered workers shall be increased by the following amounts: Integration of monetary benefits into the basic pay of workers is not a new method of increasing the minimum wage. 18 But even so, we are still guided by our ruling in Davao Integrated Port Stevedoring Services v. Abarquez, 19 which we herein reiterate:While the terms and conditions of the CBA constitute the law between the parties, it is not, however, an ordinary contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. As such it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that "when the pendulum of judgment swings to and fro and the forces are equal on both sides, the same must be stilled in favor of labor." While petitioner acknowledges that all doubts in the interpretation of the Labor Code shall be resolved in favor of labor, 20 it insists that what is involved here is the amended CBA which is essentially a contract between private persons. What petitioner has lost sight of is the avowed policy of the State, enshrined in our Constitution, to accord utmost protection and justice to labor, a policy, we are, likewise, sworn to uphold..Philippine Telegraph & Telephone Corporation v. NLRC, 21 we categorically stated that:When conflicting interests of labor and capital are to be weighed on the scales of social justice, the heavier influence of the latter should be counter-balanced by sympathy and compassion the law must accord the underprivileged worker.Likewise, in Terminal Facilities and Services Corporation v. NLRC, 22 we declared:Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social justice policy.The purpose of E.O. No. 178 is to improve the lot of the workers covered by the said statute. We are bound to ensure its fruition.WHEREFORE, premises considered, the petition is hereby DISMISSED.

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SO ORDERED.Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.13 th MONTH PAY SEVILLA TRADING COMPANY, petitioner, vs. A.V.A. TOMAS E. SEMANA, SEVILLA TRADING WORKERS UNION - SUPER, respondents., G.R. No. 152456, 2004 Apr 28, 2nd Division)PUNO, J.:On appeal is the Decision[1] of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 sustaining the Decision[2] of Accredited Voluntary Arbitrator Tomas E. Semana dated 13 November 2000, as well as its subsequent Resolution[3] dated 06 March 2002 denying petitioner’s Motion for Reconsideration.The facts of the case are as follows:For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short), a domestic corporation engaged in trading business, organized and existing under Philippine laws, added to the base figure, in its computation of the 13th-month pay of its employees, the amount of other benefits received by the employees which are beyond the basic pay. These benefits included:(a) Overtime premium for regular overtime, legal and special holidays;(b) Legal holiday pay, premium pay for special holidays;(c) Night premium;(d) Bereavement leave pay;(e) Union leave pay;(f) Maternity leave pay;(g) Paternity leave pay;(h) Company vacation and sick leave pay; and(i) Cash conversion of unused company vacation and sick leave.Petitioner claimed that it entrusted the preparation of the payroll to its office staff, including the computation and payment of the 13th-month pay and other benefits. When it changed its person in charge of the payroll in the process of computerizing its payroll, and after audit was conducted, it allegedly discovered the error of including non-basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its employees. It cited the Rules and Regulations Implementing P.D. No. 851 (13th-Month Pay Law), effective December 22, 1975, Sec. 2(b) which stated that:“Basic salary” shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to P.D. No. 525 or Letter of Instruction No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.Petitioner then effected a change in the computation of the thirteenth month pay, as follows: 13th-month pay = net basic pay 12 monthswhere:net basic pay = gross pay – (non-basic pay or other benefits)Now excluded from the base figure used in the computation of the thirteenth month pay are the following:a) Overtime premium for regular overtime, legal and special holidays;b) Legal holiday pay, premium pay for special holidays;c) Night premium;d) Bereavement leave pay;e) Union leave pay;f) Maternity leave pay;g) Paternity leave pay;h) Company vacation and sick leave pay; andi) Cash conversion of unused vacation/sick leave.Hence, the new computation reduced the employees’ thirteenth month pay. The daily piece-rate workers represented by private respondent Sevilla Trading Workers Union – SUPER (Union, for short), a duly organized and registered union, through the Grievance Machinery in their Collective Bargaining Agreement, contested the new computation and reduction of their thirteenth month pay. The parties failed to resolve the issue.On March 24, 2000, the parties submitted the issue of “whether or not the exclusion of leaves and other related benefits in the computation of 13th-month pay is valid” to respondent Accredited Voluntary Arbitrator Tomas E. Semana (A.V.A. Semana, for short) of the National Conciliation and Mediation Board, for consideration and resolution.

The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of employees’ benefits as provided for in Art. 100 of the Labor Code, as amended. They claimed that paid leaves, like sick leave, vacation leave, paternity leave, union leave, bereavement leave, holiday pay and other leaves with pay in the CBA should be included in the base figure in the computation of their 13th-month pay.On the other hand, petitioner insisted that the computation of the 13th-month pay is based on basic salary, excluding benefits such as leaves with pay, as per P.D. No. 851, as amended. It maintained that, in adjusting its computation of the 13th-month pay, it merely rectified the mistake its personnel committed in the previous years.A.V.A. Semana decided in favor of the Union. The dispositive portion of his Decision reads as follows:WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared that:1. The company is hereby ordered to include sick leave and vacation leave, paternity leave, union leave, bereavement leave and other leave with pay in the CBA, premium for work done on rest days and special holidays, and pay for regular holidays in the computation of the 13th-month pay to all covered and entitled employees;2. The company is hereby ordered to pay corresponding backwages to all covered and entitled employees arising from the exclusion of said benefits in the computation of 13th-month pay for the year 1999.

Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It filed before the Court of Appeals, a “Manifestation and Motion for Time to File Petition for Certiorari” on January 19, 2001. A month later, on February 19, 2001, it filed its Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure for the nullification of the Decision of the Arbitrator. In addition to its earlier allegations, petitioner claimed that assuming the old computation will be upheld, the reversal to the old computation can only be made to the extent of including non-basic benefits actually included by petitioner in the base figure in the computation of their 13th-month pay in the prior years. It must exclude those non-basic benefits which, in the first place, were not included in the original computation. The appellate court denied due course to, and dismissed the petition.Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as follows:1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD COMPUTATION OF THE 13TH-MONTH PAY ON THE BASIS THAT THE OLD COMPUTATION HAD RIPENED INTO PRACTICE IS WITHOUT LEGAL BASIS.2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN COMPUTATION WHICH WILL CAUSE GRAVE AND IRREPARABLE DAMAGE TO EMPLOYERS.[4]First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse decision of the arbitrator is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, not a petition for certiorari under Rule 65. Section 1 of Rule 43 states:RULE 43Appeals from the Court of Tax Appeals andQuasi-Judicial Agencies to the Court of AppealsSECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. [ mphasis supplied.]It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute for an appeal, where the latter remedy is available, as it was in this case. Petitioner Sevilla Trading failed to file an appeal within the fifteen-day reglementary period from its notice of the adverse decision of A.V.A. Semana. It received a copy of the decision of A.V.A. Semana on December 20, 2000, and should have filed its appeal under Rule 43 of the 1997 Rules of Civil Procedure on or before January 4, 2001. Instead, petitioner filed on January 19, 2001 a “Manifestation and Motion for Time to File Petition for Certiorari,” and on February 19, 2001, it filed a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. Clearly, petitioner Sevilla Trading had a remedy of appeal but failed to use it.A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a petition for review on certiorari under Rule 45 (Rule 43, in the case at bar) of the Rules of Court. Rule 65 is an independent action that cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45 (Rule 43,

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in the case at bar), especially if such loss or lapse was occasioned by one’s own neglect or error in the choice of remedies.[5]Thus, the decision of A.V.A. Semana had become final and executory when petitioner Sevilla Trading filed its petition for certiorari on February 19, 2001. More particularly, the decision of A.V.A. Semana became final and executory upon the lapse of the fifteen-day reglementary period to appeal, or on January 5, 2001. Hence, the Court of Appeals is correct in holding that it no longer had appellate jurisdiction to alter, or much less, nullify the decision of A.V.A. Semana.Even assuming that the present petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a proper action, we still find no grave abuse of discretion amounting to lack or excess of jurisdiction committed by A.V.A. Semana. “Grave abuse of discretion” has been interpreted to mean “such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.”[6] We find nothing of that sort in the case at bar.On the contrary, we find the decision of A.V.A. Semana to be sound, valid, and in accord with law and jurisprudence. A.V.A. Semana is correct in holding that petitioner’s stance of mistake or error in the computation of the thirteenth month pay is unmeritorious. Petitioner’s submission of financial statements every year requires the services of a certified public accountant to audit its finances. It is quite impossible to suggest that they have discovered the alleged error in the payroll only in 1999. This implies that in previous years it does not know its cost of labor and operations. This is merely basic cost accounting. Also, petitioner failed to adduce any other relevant evidence to support its contention. Aside from its bare claim of mistake or error in the computation of the thirteenth month pay, petitioner merely appended to its petition a copy of the 1997-2002 Collective Bargaining Agreement and an alleged “corrected” computation of the thirteenth month pay. There was no explanation whatsoever why its inclusion of non-basic benefits in the base figure in the computation of their 13th-month pay in the prior years was made by mistake, despite the clarity of statute and jurisprudence at that time.The instant case needs to be distinguished from Globe Mackay Cable and Radio Corp. vs. NLRC,[7] which petitioner Sevilla Trading invokes. In that case, this Court decided on the proper computation of the cost-of-living allowance (COLA) for monthly-paid employees. Petitioner Corporation, pursuant to Wage Order No. 6 (effective 30 October 1984), increased the COLA of its monthly-paid employees by multiplying the P3.00 daily COLA by 22 days, which is the number of working days in the company. The Union disagreed with the computation, claiming that the daily COLA rate of P3.00 should be multiplied by 30 days, which has been the practice of the company for several years. We upheld the contention of the petitioner corporation. To answer the Union’s contention of company practice, we ruled that:Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate . . . The test of long practice has been enunciated thus:. . . Respondent Company agreed to continue giving holiday pay knowing fully well that said employees are not covered by the law requiring payment of holiday pay.” (Oceanic Pharmacal Employees Union [FFW] vs. Inciong, 94 SCRA 270 [1979])Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid down.Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law . . .In the above quoted case, the grant by the employer of benefits through an erroneous application of the law due to absence of clear administrative guidelines is not considered a voluntary act which cannot be unilaterally discontinued. Such is not the case now. In the case at bar, the Court of Appeals is correct when it pointed out that as early as 1981, this Court has held in San Miguel Corporation vs. Inciong[8] that:Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th-month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus.Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary:a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174;b) Profit sharing payments;

c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-month pay.The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as “fringe” benefits. Likewise, the catch-all exclusionary phrase “all allowances and monetary benefits which are not considered or integrated as part of the basic salary” shows also the intention to strip basic salary of any and all additions which may be in the form of allowances or “fringe” benefits.Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more empathic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay.While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary.The all-embracing phrase “earnings and other remunerations” which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find any “earnings and other remunerations” expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose.In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction or application of the law. When petitioner Sevilla Trading still included over the years non-basic benefits of its employees, such as maternity leave pay, cash equivalent of unused vacation and sick leave, among others in the computation of the 13th-month pay, this may only be construed as a voluntary act on its part. Putting the blame on the petitioner’s payroll personnel is inexcusable.In Davao Fruits Corporation vs. Associated Labor Unions, we likewise held that:[9]The “Supplementary Rules and Regulations Implementing P.D. No. 851” which put to rest all doubts in the computation of the thirteenth month pay, was issued by the Secretary of Labor as early as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without excluding the subject items therein until 1981. Petitioner continued its practice in December 1981, after promulgation of the aforequoted San Miguel decision on February 24, 1981, when petitioner purportedly “discovered” its mistake.From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of its employees’ thirteenth month pay, without the payments for sick, vacation and maternity leave, premium for work done on rest days and special holidays, and pay for regular holidays. The considerable length of time the questioned items had been included by petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake.A company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of Sec. 10 of the Rules and Regulations Implementing P.D. No. 851, and Art. 100 of the Labor Code of the Philippines which prohibit the diminution or elimination by the employer of the employees’ existing benefits. [Tiangco vs. Leogardo, Jr., 122 SCRA 267 (1983)]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,[10] the company practice lasted for six (6) years. In another case, Davao Integrated Port Stevedoring Services vs. Abarquez,[11] 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.,[12] 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

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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:Art. 100. Prohibition against elimination or diminution of benefits. – Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.IN VIEW WHEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 and its Resolution dated 06 March 2002 are hereby AFFIRMED.SO ORDERED.Quisumbing, Austria-Martinez, and Tinga, JJ., concur.Callejo, Sr., J., no part.JPL MARKETING PROMOTIONS, Petitioner, versus COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, NOEL GONZALES, RAMON ABESA III and FAUSTINO ANINIPOT, Respondents., G.R. No. 151966, 2005 Jul 8, 2nd Division)Tinga, J.:This is a petition for review of the Decision[1] of the Court of Appeals in CA-G.R. SP No. 62631 dated 03 October 2001 and its Resolution[2] dated 25 January 2002 denying petitioner’s Motion for Reconsideration, affirming the Resolution 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 petitioner’s 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 Arbiter’s finding that when private respondents filed their complaints, the six-month period had not yet expired, and that CMC’s 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 JPL’s 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 Arbiter’s 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 JPL’s 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 labor-saving 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 CMC’s 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 CMC’s 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.

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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 cases[36] 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 Serrano[37] 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. JPL’s 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 CMC’s 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 law’s 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.DANTE O. TINGA (Associate Justice)WE CONCUR: REYNATO S. PUNO (Associate Justice, Chairman), MA. ALICIA AUSTRIA-MARTINEZ (Associate Justice), ROMEO J. CALLEJO, SR. (Associate Justice), MINITA V. CHICO-NAZARIO (Associate Justice) LETRAN CALAMBA FACULTY and EMPLOYEES ASSOCIATION, Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION and COLEGIO DE SAN JUAN DE LETRAN CALAMBA, INC., Respondents., G.R. No. 156225, 2008 Jan 29, 3rd DivisionAUSTRIA-MARTINEZ, J.:Assailed in the present Petition for Review on Certiorari under Rule 45 of the Rules of Court is the Decision[1] of the Court of Appeals (CA) promulgated on May 14, 2002 in CA-G.R. SP No. 61552 dismissing the special civil action for certiorari filed before it; and the Resolution[2] dated November 28, 2002, denying petitioner's Motion for Reconsideration.The facts of the case are as follows:On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner) filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint[3] against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. Petitioner alleged in its Position Paper that:x x x x2) [It] has filed this complaint in behalf of its members whose names and positions appear in the list hereto attached as Annex “A”.3) In the computation of the thirteenth month pay of its academic personnel, respondent does not include as basis therefor their compensation for overloads. It only takes into account the pay the faculty members receive for their teaching loads not exceeding eighteen (18) units. The teaching overloads are rendered within eight (8) hours a day.4) Respondent has not paid the wage increases required by Wage Order No. 5 to its employees who qualify thereunder.5) Respondent has not followed the formula prescribed by DECS Memorandum Circular No. 2 dated March 10, 1989 in the computation of the compensation per unit of excess load or overload of faculty members. This has resulted in the diminution of the compensation of faculty members.6) The salary increases due the non-academic personnel as a result of job grading has not been given. Job grading has been an annual practice of the school since 1980; the same is done for the purpose of increasing the salaries of non-academic personnel and as the counterpart of the ranking systems of faculty members.7) Respondent has not paid to its employees the balances of seventy (70%) percent of the tuition fee increases for the years 1990, 1991 and 1992.8) Respondent has not also paid its employees the holiday pay for the ten (10) regular holidays as provided for in Article 94 of the Labor Code.9) Respondent has refused without justifiable reasons and despite repeated demands to pay its obligations mentioned in paragraphs 3 to 7 hereof.x x x x[4]The complaint was docketed as NLRC Case No. RAB-IV-10-4560-92-L.On January 29, 1993, respondent filed its Position Paper denying all the allegations of petitioner.On March 10, 1993, petitioner filed its Reply. Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the respondent for money claims with Regional Office No. IV of the Department of Labor and Employment (DOLE).On the other hand, pending resolution of NLRC Case No. RAB-IV-10-4560-92-L, respondent filed with Regional Arbitration Branch No. IV of the NLRC a petition to declare as illegal a strike staged by petitioner in January 1994.

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Subsequently, these three cases were consolidated. The case for money claims originally filed by petitioner with the DOLE was later docketed as NLRC Case No. RAB-IV-11-4624-92-L, while the petition to declare the subject strike illegal filed by respondent was docketed as NLRC Case No. RAB-IV-3-6555-94-L.On September 28, 1998, the Labor Arbiter (LA) handling the consolidated cases rendered a Decision with the following dispositive portion:WHEREFORE, premises considered, judgment is hereby rendered, as follows:1. The money claims cases (RAB-IV-10-4560-92-L and RAB-IV-11-4624-92-L) are hereby dismissed for lack of merit;2. The petition to declare strike illegal (NLRC Case No. RAB-IV-3-6555-94-L) is hereby dismissed, but the officers of the Union, particularly its President, Mr. Edmundo F. Marifosque, Sr., are hereby reprimanded and sternly warned that future conduct similar to what was displayed in this case will warrant a more severe sanction from this Office.SO ORDERED.[5]Both parties appealed to the NLRC.On July 28, 1999, the NLRC promulgated its Decision[6] dismissing both appeals. Petitioner filed a Motion for Reconsideration[7] but the same was denied by the NLRC in its Resolution[8] dated June 21, 2000.

Petitioner then filed a special civil action for certiorari with the CA assailing the above-mentioned NLRC Decision and Resolution.On May 14, 2002, the CA rendered the presently assailed judgment dismissing the petition.Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution promulgated on November 28, 2002.Hence, herein petition for review based on the following assignment of errors:I. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE FACTUAL FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION CANNOT BE REVIEWED IN CERTIORARI PROCEEDINGS.II. THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO RULE SQUARELY ON THE ISSUE OF WHETHER OR NOT THE PAY OF FACULTY MEMBERS FOR TEACHING OVERLOADS SHOULD BE INCLUDED AS BASIS IN THE COMPUTATION OF THEIR THIRTEENTH MONTH PAY.III. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IS SUPPORTED BY SUBSTANTIAL EVIDENCE AND IN NOT GRANTING PETITIONER'S MONETARY CLAIMS.[9]Citing Agustilo v. Court of Appeals,[10] petitioner contends that in a special civil action for certiorari brought before the CA, the appellate court can review the factual findings and the legal conclusions of the NLRC.As to the inclusion of the overloads of respondent's faculty members in the computation of their 13th-month pay, petitioner argues that under the Revised Guidelines on the Implementation of the 13th-Month Pay Law, promulgated by the Secretary of Labor on November 16, 1987, the basic pay of an employee includes remunerations or earnings paid by his employer for services rendered, and that excluded therefrom are the cash equivalents of unused vacation and sick leave credits, overtime, premium, night differential, holiday pay and cost-of-living allowances. Petitioner claims that since the pay for excess loads or overloads does not fall under any of the enumerated exclusions and considering that the said overloads are being performed within the normal working period of eight hours a day, it only follows that the overloads should be included in the computation of the faculty members' 13th-month pay.To support its argument, petitioner cites the opinion of the Bureau of Working Conditions of the DOLE that payment of teaching overload performed within eight hours of work a day shall be considered in the computation of the 13th-month pay.[11]Petitioner further contends that DOLE-DECS-CHED-TESDA Order No. 02, Series of 1996 (DOLE Order) which was relied upon by the LA and the NLRC in their respective Decisions cannot be applied to the instant case because the DOLE Order was issued long after the commencement of petitioner's complaints for monetary claims; that the prevailing rule at the time of the commencement of petitioner's complaints was to include compensations for overloads in determining a faculty member's 13th-month pay; that to give retroactive application to the DOLE Order issued in 1996 is to deprive workers of benefits which have become vested and is a clear violation of the constitutional mandate on protection of labor; and that, in any case, all doubts in the implementation and interpretation of labor laws, including implementing rules and regulations, should be resolved in favor of labor.Lastly, petitioner avers that the CA, in concluding that the NLRC Decision was supported by substantial evidence, failed to specify what constituted said evidence. Thus, petitioner asserts that the CA acted arbitrarily in affirming the Decision of the NLRC.In its Comment, respondent contends that the ruling in Agustilo is an exception rather than the general rule; that the general rule is that in a petition for certiorari, judicial review by this Court or by the CA in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or its

determination but is limited only to issues of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction; that before a party may ask that the CA or this Court review the factual findings of the NLRC, there must first be a convincing argument that the NLRC acted in a capricious, whimsical, arbitrary or despotic manner; and that in its petition for certiorari filed with the CA, herein petitioner failed to prove that the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion.Respondent argues that Agustilo is not applicable to the present case because in the former case, the findings of fact of the LA and the NLRC are at variance with each other; while in the present case, the findings of fact and conclusions of law of the LA and the NLRC are the same.Respondent also avers that in a special civil action for certiorari, the discretionary power to review factual findings of the NLRC rests upon the CA; and that absent any findings by the CA of the need to resolve any unclear or ambiguous factual findings of the NLRC, the grant of the writ of certiorari is not warranted.Further, respondent contends that even granting that the factual findings of the CA, NLRC and the LA may be reviewed in the present case, petitioner failed to present valid arguments to warrant the reversal of the assailed decision.Respondent avers that the DOLE Order is an administrative regulation which interprets the 13th-Month Pay Law (P.D. No. 851) and, as such, it is mandatory for the LA to apply the same to the present case.Moreover, respondent contends that the Legal Services Office of the DOLE issued an opinion dated March 4, 1992,[12] that remunerations for teaching in excess of the regular load, which includes overload pay for work performed within an eight-hour work day, may not be included as part of the basic salary in the computation of the 13th-month pay unless this has been included by company practice or policy; that petitioner intentionally omitted any reference to the above-mentioned opinion of the Legal Services Office of the DOLE because it is fatal to its cause; and that the DOLE Order is an affirmation of the opinion rendered by the said Office of the DOLE.Furthermore, respondent claims that, contrary to the asseveration of petitioner, prior to the issuance of the DOLE Order, the prevailing rule is to exclude excess teaching load, which is akin to overtime, in the computation of a teacher's basic salary and, ultimately, in the computation of his 13th-month pay.As to respondent's alleged non-payment of petitioner's consolidated money claims, respondent contends that the findings of the LA regarding these matters, which were affirmed by the NLRC and the CA, have clear and convincing factual and legal bases to stand on.The Court’s RulingThe Court finds the petition bereft of merit.As to the first and third assigned errors, petitioner would have this Court review the factual findings of the LA as affirmed by the NLRC and the CA, to wit.With respect to the alleged non-payment of benefits under Wage Order No. 5, this Office is convinced that after the lapse of the one-year period of exemption from compliance with Wage Order No. 5 (Exhibit “1-B), which exemption was granted by then Labor Minister Blas Ople, the School settled its obligations to its employees, conformably with the agreement reached during the management-employees meeting of June 26, 1985 (Exhibits “4-B” up to “4-D”, also Exhibit “6-x-1”). The Union has presented no evidence that the settlement reached during the June 26, 1985 meeting was the result of coercion. Indeed, what is significant is that the agreement of June 26, 1985 was signed by Mr. Porferio Ferrer, then Faculty President and an officer of the complaining Union. Moreover, the samples from the payroll journal of the School, identified and offered in evidence in these cases (Exhibits “1-C” and 1-D”), shows that the School paid its employees the benefits under Wage Order No. 5 (and even Wage Order No. 6) beginning June 16, 1985.Under the circumstances, therefore, the claim of the Union on this point must likewise fail.The claim of the Union for salary differentials due to the improper computation of compensation per unit of excess load cannot hold water for the simple reason that during the Schoolyears in point there were no classes from June 1-14 and October 17-31. This fact was not refuted by the Union. Since extra load should be paid only when actually performed by the employees, no salary differentials are due the Union members.The non-academic members of the Union cannot legally insist on wage increases due to “Job Grading”. From the records it appears that “Job Grading” is a system adopted by the School by which positions are classified and evaluated according to the prescribed qualifications therefor. It is akin to a merit system whereby salary increases are made dependent upon the classification, evaluation and grading of the position held by an employee.The system of Job Grading was initiated by the School in Schoolyear 1989-1990. In 1992, just before the first of the two money claims was filed, a new Job Grading process was initiated by the School.Under the circumstances obtaining, it cannot be argued that there were repeated grants of salary increases due to Job Grading to warrant the conclusion that some benefit was granted in favor of the non-academic personnel that could no longer be eliminated or banished under Article 100 of the Labor Code. Since the Job Grading exercises of

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the School were neither consistent nor for a considerable period of time, the monetary claims attendant to an increase in job grade are non-existent.The claim of the Union that its members were not given their full share in the tuition fee increases for the Schoolyears 1989-1990, 1990-1991 and 1991-1992 is belied by the evidence presented by the School which consists of the unrefuted testimony of its Accounting Coordinator, Ms. Rosario Manlapaz, and the reports extrapolated from the journals and general ledgers of the School (Exhibits “2”, “2-A” up to “2-G”). The evidence indubitably shows that in Schoolyear 1989-1990, the School incurred a deficit of P445,942.25, while in Schoolyears 1990-1991 and 1991-1992, the School paid out, 91% and 77%, respectively, of the increments in the tuition fees collected.As regards the issue of non-payment of holiday pay, the individual pay records of the School's employees, a sample of which was identified and explained by Ms. Rosario Manlapaz (Exhibit “3”), shows that said School employees are paid for all days worked in the year. Stated differently, the factor used in computing the salaries of the employees is 365, which indicates that their regular monthly salary includes payment of wages during all legal holidays.[13]This Court held in Odango v. National Labor Relations Commission[14] that: The appellate court’s jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of jurisdiction or grave abuse of discretion. An extraordinary remedy, a petition for certiorari is available only and restrictively in truly exceptional cases. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of the NLRC’s evaluation of the evidence or of its factual findings. Such findings are generally accorded not only respect but also finality. A party assailing such findings bears the burden of showing that the tribunal acted capriciously and whimsically or in total disregard of evidence material to the controversy, in order that the extraordinary writ of certiorari will lie.[15]In the instant case, the Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which supports the labor tribunals' findings of fact.Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous.[16] It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below.[17] In a petition for review on certiorari, this Court’s jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous.[18] Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases.[19] Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality.[20] They 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 utter disregard of the evidence on record.[21] We find none of these exceptions in the present case.In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual findings of the LA, the NLRC and the CA, specially when such findings are supported by substantial evidence and there is no cogent basis to reverse the same, as in this case.[22]The second assigned error properly raises a question of law as it involves the determination of whether or not a teacher's overload pay should be considered in the computation of his or her 13th-month pay. In resolving this issue, the Court is confronted with conflicting interpretations by different government agencies.On one hand is the opinion of the Bureau of Working Conditions of the DOLE dated December 9, 1991, February 28, 1992 and November 19, 1992 to the effect that if overload is performed within a teacher's normal eight-hour work per day, the remuneration that the teacher will get from the additional teaching load will form part of the basic wage.[23]This opinion is affirmed by the Explanatory Bulletin on the Inclusion of Teachers' Overload Pay in the 13th-Month Pay Determination issued by the DOLE on December 3, 1993 under then Acting DOLE Secretary Cresenciano B. Trajano. Pertinent portions of the said Bulletin read as follows:1. Basis of the 13th-month pay computationThe Revised Implementing Guidelines of the 13th-Month Pay Law (P.D. 851, as amended) provides that an employee shall be entitled to not less than 1/12 of the total basic salary earned within a calendar year for the purpose of computing such entitlement. The basic wage of an employee shall include: “x x x all remunerations or earnings paid by his employer for services rendered but do not include allowances or 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. However, these salary-related benefits should be included as part of the basic salary in the

computation of the 13th month pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.”Basic wage is defined by the Implementing Rules of RA 6727 as follows: “Basic Wage” means all remuneration or earnings paid by an employer to a worker for services rendered on normal working days and hours but does not include cost of living allowances, 13th-month pay or other monetary benefits which are not considered as part of or integrated into the regular salary of the workers xxx.The foregoing definition was based on Article 83 of the Labor Code which provides that “the normal hours of work of any employee shall not exceed eight (8) hours a day.” This means that the basic salary of an employee for the purpose of computing the 13th-month pay shall include all remunerations or earnings paid by an employer for services rendered during normal working hours.2. Overload work/payOverload on the other hand means “the load in excess of the normal load of private school teachers as prescribed by the Department of Education, Culture and Sports (DECS) or the policies, rules and standards of particular private schools.” In recognition of the peculiarities of the teaching profession, existing DECS and School Policies and Regulations for different levels of instructions prescribe a regular teaching load, the total actual teaching or classroom hours of which a teacher can generally perform in less than eight (8) hours per working day. This is because teaching may also require the teacher to do additional work such as handling an advisory class, preparation of lesson plans and teaching aids, evaluation of students and other related activities. Where, however a teacher is engaged to undertake actual additional teaching work after completing his/her regular teaching load, such additional work is generally referred to as overload. In short, additional work in excess of the regular teaching load is overload work. Regular teaching load and overload work, if any, may constitute a teacher's working day.Where a teacher is required to perform such overload within the eight (8) hours normal working day, such overload compensation shall be considered part of the basic pay for the purpose of computing the teacher's 13th-month pay. “Overload work” is sometimes misunderstood as synonymous to “overtime work” as this term is used and understood in the Labor Code. These two terms are not the same because overtime work is work rendered in excess of normal working hours of eight in a day (Art. 87, Labor Code). Considering that overload work may be performed either within or outside eight hours in a day, overload work may or may not be overtime work.3. Concluding StatementIn the light of the foregoing discussions, it is the position of this Department that all basic salary/wage representing payments earned for actual work performed during or within the eight hours in a day, including payments for overload work within eight hours, form part of basic wage and therefore are to be included in the computation of 13th-month pay mandated by PD 851, as amended.[24] nderscoring supplied)On the other hand, the Legal Services Department of the DOLE holds in its opinion of March 4, 1992 that remunerations for teaching in excess of the regular load shall be excluded in the computation of the 13th-month pay unless, by school policy, the same are considered as part of the basic salary of the qualified teachers.[25]This opinion is later affirmed by the DOLE Order, pertinent portions of which are quoted below: x x x2. In accordance with Article 83 of the Labor Code of the Philippines, as amended, the normal hours of work of school academic personnel shall not exceed eight (8) hours a day. Any work done in addition to the eight (8) hours daily work shall constitute overtime work.3. The normal hours of work of teaching or academic personnel shall be based on their normal or regular teaching loads. Such normal or regular teaching loads shall be in accordance with the policies, rules and standards prescribed by the Department of Education, Culture and Sports, the Commission on Higher Education and the Technical Education and Skills Development Authority. Any teaching load in excess of the normal or regular teaching load shall be considered as overload. Overload partakes of the nature of temporary extra assignment and compensation therefore shall be considered as an overload honorarium if performed within the 8-hour work period and does not form part of the regular or basic pay. Overload performed beyond the eight-hour daily work is overtime work.[26] mphasis supplied)It was the above-quoted DOLE Order which was used by the LA as basis for ruling against herein petitioner.The petitioner’s claim that the DOLE Order should not be made to apply to the present case because said Order was issued only in 1996, approximately four years after the present case was initiated before the Regional Arbitration Branch of the NLRC, is not without basis. The general rule is that administrative rulings and circulars shall not be given retroactive effect.[27]Nevertheless, it is a settled rule that when an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law and the administrative interpretation is at best advisory for it is the courts that finally determine what the law means.[28]

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In the present case, while the DOLE Order may not be applicable, the Court finds that overload pay should be excluded from the computation of the 13th-month pay of petitioner's members.In resolving the issue of the inclusion or exclusion of overload pay in the computation of a teacher's 13th-month pay, it is decisive to determine what “basic salary” includes and excludes.In this respect, the Court's disquisition in San Miguel Corporation v. Inciong[29] is instructive, to wit:Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus.Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary:a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174;b) Profit sharing payments;c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-month pay.The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as “fringe” benefits. Likewise, the catch-all exclusionary phrase “all allowances and monetary benefits which are not considered or integrated as part of the basic salary” shows also the intention to strip basic salary of any and all additions which may be in the form of allowances or “fringe” benefits.Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay.While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary.The all-embracing phrase “earnings and other remunerations” which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find any “earnings and other remunerations” expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose.This conclusion finds strong support under the Labor Code of the Philippines. To cite a few provisions: “Art. 87 – Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, additional compensation equivalent to his regular wage plus at least twenty-five (25%) percent thereof.”It is clear that overtime pay is an additional compensation other than and added to the regular wage or basic salary, for reason of which such is categorically excluded from the definition of basic salary under the Supplementary Rules and Regulations Implementing Presidential Decree 851. In Article 93 of the same Code, paragraph “c.) work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the regular wage of the employee.”It is likewise clear that premium for special holiday which is at least 30% of the regular wage is an additional compensation other than and added to the regular wage or basic salary. For similar reason it shall not be considered in the computation of the 13th -month pay.[30]In the same manner that payment for overtime work and work performed during special holidays is considered as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is being paid for additional work performed in excess of the regular teaching load.The peculiarity of an overload lies in the fact that it may be performed within the normal eight-hour working day. This is the only reason why the DOLE, in its explanatory bulletin, finds it proper to include a teacher's overload pay in the

determination of his or her 13th-month pay. However, the DOLE loses sight of the fact that even if it is performed within the normal eight-hour working day, an overload is still an additional or extra teaching work which is performed after the regular teaching load has been completed. Hence, any pay given as compensation for such additional work should be considered as extra and not deemed as part of the regular or basic salary.Moreover, petitioner failed to refute private respondent's contention that excess teaching load is paid by the hour, while the regular teaching load is being paid on a monthly basis; and that the assignment of overload is subject to the availability of teaching loads. This only goes to show that overload pay is not integrated with a teacher's basic salary for his or her regular teaching load. In addition, overload varies from one semester to another, as it is dependent upon the availability of extra teaching loads. As such, it is not legally feasible to consider payments for such overload as part of a teacher's regular or basic salary. Verily, overload pay may not be included as basis for determining a teacher's 13th-month pay.WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.SO ORDERED.MA. ALICIA AUSTRIA-MARTINEZ (Associate Justice)WE CONCUR: CONSUELO YNARES-SANTIAGO (Associate Justice, Chairperson), RENATO C. CORONA (Associate Justice), ANTONIO EDUARDO B. NACHURA (Associate Justice) RUBEN T. REYES (Associate Justice)

PROHIBITION REGARDING WAGES([1992V551] COMMANDO SECURITY AGENCY, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NEMESIO DECIERDO, respondent., G.R. No. 95844, 1992 July 20, 1st Division)GRIÑO-AQUINO, J.:Petitioner assails the resolutions of the National Labor Relations Commission dated May 26, 1989 and September 25, 1990, affirming with modification the decision of the Labor Arbiter in NLRC Case No. 11-0200075-88.Private respondent Nemesio Decierdo was a security guard of the petitioner since February 1981. In April 1987, petitioner entered into a contract to provide guarding services to the Alsons Development and Investment Corporation (ALSONS for brevity) at its Aldevinco Building on Claro M. Recto Avenue, Davao City, for a period of one year, i.e., from April 11, 1987 to April 10, 1988, unless renewed under such terms and conditions as may be mutually acceptance. The number of guards to be assigned by the petitioner would depend on ALSON's demand, sometimes two (2) guards on a daily shift, and sometimes four (4) guards. Decierdo was one of the guards assigned to the Aldevinco Building by the petitioner.On February 9, 1988, Maria Mila D. Samonte, Properties Administration Head on ALSONS, requested the petitioner for a "periodic reshuffling" of guards. The pertinent portion of her letter reads:"Our corporation offers spaces to tenants including services of maintenance and security. The latter causes us to hire your agency's services. It is therefore clearly understood that Aldevinco assures tenants of security of their properties found in Aldevinco's compound, and likewise Commando Security Service Agency assures Aldevinco the same. "We hope that the above shall be clearly explained to the incoming guards, we requested for a period reshuffling. We do extend our gratitude to your immediate services in response to or request in the past." (pp. 45-A-46, Rollo.)Pursuant to that reasonable request of its client, petitioner on February 10, 1988 served the following recall order on Decierdo:"Report to this HQs for instruction. You are hereby recalled from your present post at Aldevinco Bldg. as per Rotation Policy Order by the management effective 11 February 1988." (p. 46, Rollo.)On the same date, February 10, 1988, Detail Order 02-016 was issued to Decierdo assigning him to the Pacific Oil Company in Bunawan, Davao City, with instruction to report to the manager, but Decierdo refused to accept the assignment as shown by the annotation at the bottom of the Order, viz:"Refused to accept assignment he is going to rest for a while." (p. 54, Rollo.)On February 11, 1988, which was the effective date of the detail order, Decierdo filed a complaint for illegal dismissal, unfair labor practice, underpayment of wages, overtime pay, night premium, 13th month pay, holiday pay, rest day pay and incentive leave pay.On June 28, 1988, the Executive Labor Arbiter rendered a decision, the dispositive portion of which reads as follows:"WHEREFORE, in consideration of all the foregoing, judgment is hereby rendered:"1. Ordering respondent Commando Security Agency to pay complaint Security Agency to pay complainant Nemesio Decierdo the total amount of THIRTY-THREE THOUSAND EIGHT HUNDRED SEVENTY-SEVEN AND

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92/100 PESOS (P33,877.92). as salary, holiday and rest day pay differentials, 13th month pay differentials and service incentive leave pay; and"2. Dismissing the complaint for illegal dismissal, unfair labor practice, overtime pay and night premium for lack of merit." (pp. 19-20, Rollo.)Petitioner appealed to the NLRC which on May 26, 1989, affirmed with modification the decision of the Labor Arbiter, to wit:"WHEREFORE, the appealed Decision is hereby AFFIRMED with the modification that the amount of P1,498.39 representing complainant's accountability with (sic) respondent is hereby ordered deducted from the total award." (p. 58, Rollo.)Hence, this petition for certiorari alleging that the NLRC gravely abused its discretion:1. in failing to make a clear pronouncement that Decierdo had abandoned his employment as he went on AWOL and therefore is considered resigned; 2. in denying petitioner due process of law, or a right to be heard;3. in not considering that Decierdo is in estoppel; and4. in not holding that petitioner is entitled to a 25% share of his monthly salary as agreed between them.The petition for certiorari is without merit.The first ground of the petition is not well taken for the NLRC did find that Decierdo had given up his job and chose separation pay in lieu or reinstatement."Anent the first issue, suffice it to state that there was no need for the Executive Labor Arbiter to fix a period within which to require complainant to report for work considering that the latter is no longer interested in his job and had claimed for separation benefits in lieu of reinstatement. Why respondent had begrudged the Labor Arbiter's 'failure' to fix a return-to-work period escapes us considering that the Labor Arbiter practically found complainant to have abandoned his job and, besides, complainant's claims for separation pay was not granted. If there was anyone who should have been interested in being recalled to work, it should have been complainant himself and not respondent." (pp. 54-55, Rollo.)As a result, the NLRC dismissed the charge of illegal dismissal and unfair labor practice against the petitioner and denied Decierdo's claim for separation pay.Regarding the petitioner's allegation that it was denied due process, we have time and again pointed out that procedural due process merely requires notice and opportunity to be heard (Var Orient Shipping Company vs. Achacoso, 161 SCRA 732, Bermejo vs. Barrios, 31 SCRA 764) which the petitioner was given when it filed its position paper. The petitioner was properly notified and even took part in the conciliation conference for the amicable settlement of the case. It was aware of the nature and specifics of the charges against it but failed to refute them expecting that a hearing would be called. However, the Labor Arbiter proceeded to decide the case based on the parties' position papers, the records submitted by petitioner, and the report and the computations made by the Corporate Auditing Examiner regarding the sums which Decierdo was entitled to recover. That procedure complied with the Revised Rules of the NLRC, particularly Sections 2 and 3, which provide:"Sec. 2. Submission of position papers. During the immediately thereafter, the Labor Arbiter shall require the parties to simultaneously submit to him their respective verified position papers, which shall cover only the issues raised in the complaint, accompanied by all supporting documents then available to them and the affidavits of their witnesses which shall take the place of their direct, testimony. The parties shall thereafter not be allowed to allege, or present evidence to prove, facts not referred to and any cause or causes of action not included in their complaint or position papers, affidavits and other documents. The parties shall furnish each other with copies of the position papers, together with the supporting affidavits and documents submitted by them."Sec. 3. Determination of necessity of hearing. Immediately after the submission by the parties of their position papers and supporting proofs, the Labor Arbiter shall determine whether there is a need for a formal hearing or investigation. At this state, he may, in his discretion, and for the purpose of making such determination, elicit pertinent facts or information, including documentary evidence, if any, from any party or witness to complete, as far as possible, the facts of the case. Facts or information so elicited may serve as basis for his clarification or simplication and limitation of the issues in the case, encouraging for this purpose the submission by the parties of admissions and stipulations of fact to abbreviate the proceedings. He shall participate actively in the preparation of such stipulations, making suggestions on what facts the parties need not prove." ( nderscoring supplied.) The NLRC correctly held that:". . . the Executive Labor Arbiter did not err when she dispensed with a full blown hearing there being no necessity for one. Under Section 3 of the same rule as above-cited, the Labor Arbiter may, in his sound discretion, dispense with a hearing and require, instead, the parties to file their respective position papers together with all the supporting proofs. . . . all that respondent had to do was present its payrolls and other records which it is required to keep and

maintain (see Sec. 6-12, Rule X, Book III of Omnibus Rules Implementing the Labor Code) and it could already be determined on the face thereof if complainant's monetary claims had actually been paid or not, . . . complainant's entitlements were computed by the Corporate Auditing Examiner (p. 63, Records) on the basis of respondent's records which was secured by virtue of a subpoena duces tecum (p. 43, record). Respondent should have met head-on the accuracy of correctness of the computations and not skirt the issue by dwelling merely on technicalities by complaining that the records were irregularly procured." (p. 56, Rollo.)Petitioner's contention that Decierdo is estopped from complaining about the 25% deduction from his salary representing petitioner's share in procuring job placement for him, is not well taken. That provision of the employment contract was illegal and inequitous, hence, null and void.The constitutional provisions on social justice (Sections 9 and 10, Article II) and protection to labor (Sec. 18, Article II) in the declaration of Principles and State Policies, impose upon the courts the duty to be ever vigilant in protecting the rights of workers who are placed in a contractually disadvantaged position and who sign waivers or provisions contrary to law and public policy (Mercury Drug Co., Inc. vs. Dayao, 117 SCRA 99, 116). We affirm the NLRC's ruling that:"It goes without saying that respondent may not deduct its so-called 'share' from the salaries of its guards without the latter's express consent and if such deductions are not allowed by law. This is notwithstanding any previous agreement or understanding between them. Any such agreement or contract is void ab initio being contrary to law and public policy (Mercury Drug Co. vs. Nardo Dayao, G.R. No. 30432, September 30, 1982)." (pp. 57-58, Rollo.)WHEREFORE, finding no abuse of discretion on the part of the National Labor Relations Commission in rendering the assailed decision, the petition for certiorari is DISMISSED for lack of merit.SO ORDERED.Cruz (Chairman), Medialdea and Bellosillo, JJ., concur.ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.), respondents., G.R. No. 119268, 2000 Feb 23, 2nd Division)QUISUMBING, J.:This special civil action for certiorari seeks to annul the decision1 [Rollo, pp. 16-22.] of public respondent promulgated on October 28, 1994, in NLRC NCR CA No. 003883-92, and its resolution2 [Id. at 23.] dated December 13, 1994 which denied petitioners motion for reconsideration.Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent’s taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners’ daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests.Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision3 [Id. at 25-32.] dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit.On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside the judgment of the labor arbiter. The labor tribunal declared that petitioners are employees of private respondent, and, as such, their dismissal must be for just cause and after due process. It disposed of the case as follows:"WHEREFORE, in view of all the foregoing considerations, the decision of the Labor Arbiter appealed from is hereby SET ASIDE and another one entered:1. Declaring the respondent company guilty of illegal dismissal and accordingly it is directed to reinstate the complainants, namely, Alberto A. Gonzales, Joel T. Morato, Gavino Panahon, Demetrio L. Calagos, Sonny M. Lustado, Romeo Q. Clariza, Luis de los Angeles, Amado Centino, Angel Jardin, Rosendo Marcos, Urbano Marcos, Jr., and Joel Ordeniza, to their former positions without loss of seniority and other privileges appertaining thereto; to pay the complainants full backwages and other benefits, less earnings elsewhere, and to reimburse the drivers the amount paid as washing charges; and2. Dismissing the charge of unfair [labor] practice for insufficiency of evidence. SO ORDERED."4 [Id. at 41.]

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Private respondent’s first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for reconsideration. This time, public respondent, in its decision5 [Id. at 16-22.] dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code, and disposed of the case as follows:"VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion under reconsideration is hereby given due course.Accordingly, the Resolution of August 10, 1994, and the Decision of April 28, 1994 are hereby SET ASIDE. The Decision of the Labor Arbiter subject of the appeal is likewise SET ASIDE and a NEW ONE ENTERED dismissing the complaint for lack of jurisdiction.No costs.SO ORDERED."6 [Id. at 21.]Expectedly petitioners sought reconsideration of the labor tribunal’s latest decision which was denied. Hence, the instant petition.In this recourse, petitioners allege that public respondent acted without or in excess of jurisdiction, or with grave abuse of discretion in rendering the assailed decision, arguing that:"I. THE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENT’S SECOND MOTION FOR RECONSIDERATION WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER THE NLRC RULES, AND TO GRANT THE SAME ON GROUNDS NOT EVEN INVOKED THEREIN.II. THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES IS ALREADY A SETTLED ISSUE CONSTITUTING RES JUDICATA, WHICH THE NLRC HAS NO MORE JURISDICTION TO REVERSE, ALTER OR MODIFY.III. IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER SUPPORTS THE VIEW THAT PETITIONERS-TAXI DRIVERS ARE EMPLOYEES OF RESPONDENT TAXI COMPANY."7 [Id. at 3.]The petition is impressed with merit.The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of power.8 [Arroyo vs. De Venecia, 277 SCRA 268, 294 (1997).] In labor cases, this Court has declared in several instances that disregarding rules it is bound to observe constitutes grave abuse of discretion on the part of labor tribunal.In Garcia vs. NLRC,9 [264 SCRA 261, 267 (1996).] private respondent therein, after receiving a copy of the labor arbiter’s decision, wrote the labor arbiter who rendered the decision and expressed dismay over the judgment. Neither notice of appeal was filed nor cash or surety bond was posted by private respondent. Nevertheless, the labor tribunal took cognizance of the letter from private respondent and treated said letter as private respondent’s appeal. In a certiorari action before this Court, we ruled that the labor tribunal acted with grave abuse of discretion in treating a mere letter from private respondent as private respondent’s appeal in clear violation of the rules on appeal prescribed under Section 3(a), Rule VI of the New Rules of Procedure of NLRC.In Philippine Airlines Inc. vs. NLRC,10 [263 SCRA 638, 657 (1996).] we held that the labor arbiter committed grave abuse of discretion when he failed to resolve immediately by written order a motion to dismiss on the ground of lack of jurisdiction and the supplemental motion to dismiss as mandated by Section 15 of Rule V of the New Rules of Procedure of the NLRC. In Unicane Workers Union-CLUP vs. NLRC,11 [261 SCRA 573, 583-584 (1996).] we held that the NLRC gravely abused its discretion by allowing and deciding an appeal without an appeal bond having been filed as required under Article 223 of the Labor Code. In Mañebo vs. NLRC,12 [229 SCRA 240, 248 (1994).] we declared that the labor arbiter gravely abused its discretion in disregarding the rule governing position papers. In this case, the parties have already filed their position papers and even agreed to consider the case submitted for decision, yet the labor arbiter still admitted a supplemental position paper and memorandum, and by taking into consideration, as basis for his decision, the alleged facts adduced therein and the documents attached thereto.In Gesulgon vs. NLRC,13 [219 SCRA 561, 566 (1993).] we held that public respondent gravely abused its discretion in treating the motion to set aside judgment and writ of execution as a petition for relief of judgment. In doing so, public respondent had, without sufficient basis, extended the reglementary period for filing petition for relief from judgment contrary to prevailing rule and case law.In this case before us, private respondent exhausted administrative remedy available to it by seeking reconsideration of public respondent’s decision dated April 28, 1994, which public respondent denied. With this motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it may have committed before resort to courts of justice can be had.14 [Biogenerics Marketing and Research Corp. vs. NLRC, 122725, September 8, 1999, p. 6.] Thus, when private respondent filed a second motion for reconsideration, public respondent should

have forthwith denied it in accordance with Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party, thus:"SEC. 14. Motions for Reconsideration. --- Motions for reconsideration of any order, resolution or decision of the Commission shall not be entertained except when based on palpable or patent errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision with proof of service that a copy of the same has been furnished within the reglementary period the adverse party and provided further, that only one such motion from the same party shall be entertained." [ mphasis supplied]The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry.15 [Mañebo vs. NLRC, 229 SCRA 240, 248 (1994).]As correctly pointed out by petitioner, the second motion for reconsideration filed by private respondent is indubitably a prohibited pleading16 [Rollo, p. 8.] which should have not been entertained at all. Public respondent cannot just disregard its own rules on the pretext of "satisfying the ends of justice",17 [Id. at 17.] especially when its disposition of a legal controversy ran afoul with a clear and long standing jurisprudence in this jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of rectifying an error or mistake. In our view, public respondent gravely abused its discretion in taking cognizance and granting private respondent’s second motion for reconsideration as it wrecks the orderly procedure in seeking reliefs in labor cases.

But, there is another compelling reason why we cannot leave untouched the flip-flopping decisions of the public respondent. As mentioned earlier, its October 28, 1994 judgment is not in accord with the applicable decisions of this Court. The labor tribunal reasoned out as follows:"On the issue of whether or not employer-employee relationship exists, admitted is the fact that complainants are taxi drivers purely on the ‘boundary system’. Under this system the driver takes out his unit and pays the owner/operator a fee commonly called ‘boundary’ for the use of the unit. Now, in the determination the existence of employer-employee relationship, the Supreme Court in the case of Sara, et al., vs. Agarrado, et al. (G.R. No. 73199, 26 October 1988) has applied the following four-fold test: ‘(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees conduct.’‘Among the four (4) requisites’, the Supreme Court stresses that ‘control is deemed the most important that the other requisites may even be disregarded’. Under the control test, an employer-employee relationship exists if the ‘employer’ has reserved the right to control the ‘employee’ not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. Otherwise, no such relationship exists.’ (Ibid.)Applying the foregoing parameters to the case herein obtaining, it is clear that the respondent does not pay the drivers, the complainants herein, their wages. Instead, the drivers pay a certain fee for the use of the vehicle. On the matter of control, the drivers, once they are out plying their trade, are free to choose whatever manner they conduct their trade and are beyond the physical control of the owner/operator; they themselves determine the amount of revenue they would want to earn in a day’s driving; and, more significantly aside from the fact that they pay for the gasoline they consume, they likewise shoulder the cost of repairs on damages sustained by the vehicles they are driving.Verily, all the foregoing attributes signify that the relationship of the parties is more of a leasehold or one that is covered by a charter agreement under the Civil Code rather than the Labor Code."18 [Rollo, pp. 18-20.]The foregoing ratiocination goes against prevailing jurisprudence.In a number of cases decided by this Court,19 [National Labor Union vs. Dinglasan, 98 Phil. 649, 652 (1956); Magboo vs. Bernardo, 7 SCRA 952, 954 (1963); Lantaco, Sr. vs. Llamas, 108 SCRA 502, 514 (1981).] we ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The management of the business is in the owner’s hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. We have applied by analogy the abovestated doctrine to the relationships between bus owner/operator and bus conductor,20 [Doce vs. Workmen’s Compensation Commission, 104 Phil. 946, 948 (1958).] auto-calesa

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owner/operator and driver,21 [Citizens’ League of Freeworkers vs. Abbas, 18 SCRA 71, 73 (1966).] and recently between taxi owners/operators and taxi drivers.22 [Martinez vs. NLRC, 272 SCRA 793, 800 (1997).] Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer.As consistently held by this Court, termination of employment must be effected in accordance with law. The just and authorized causes for termination of employment are enumerated under Articles 282, 283 and 284 of the Labor Code. The requirement of notice and hearing is set-out in Article 277 (b) of the said Code. Hence, petitioners, being employees of private respondent, can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, private respondent had no valid cause to terminate the employment of petitioners. Neither were there two (2) written notices sent by private respondent informing each of the petitioners that they had been dismissed from work. These lack of valid cause and failure on the part of private respondent to comply with the twin-notice requirement underscored the illegality surrounding petitioners’ dismissal.Under the law, 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.23 [Article 279, Labor Code.] It must be emphasized, though, that recent judicial pronouncements24 [Bustamante vs. NLRC, 265 SCRA 61, 69-70 (1996); Highway Copra Traders vs. NLRC, 293 SCRA 350, 356 (1998); Jardine Davies Inc. vs. NLRC, GR-76272, July 28, 1999, p. 8; Pepsi-Cola Products Philippines Inc. vs. NLRC, GR-121324, September 30, 1999, p. 9.] distinguish between employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989, and those whose illegal dismissals were effected after such date. Thus, employees illegally dismissed prior to March 21, 1989, are entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after that date are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. The legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Considering that petitioners were terminated from work on August 1, 1991, they are entitled to full backwages on the basis of their last daily earnings.With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi units, we view the same as not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play.25 [Five J Taxi vs. NLRC, 235 SCRA 556, 562 (1994).] Hence, the drivers are not entitled to reimbursement of washing charges.WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public respondent dated October 28, 1994, is hereby SET ASIDE. The DECISION of public respondent dated April 28, 1994, and its RESOLUTION dated December 13, 1994, are hereby REINSTATED subject to MODIFICATION. Private respondent is directed to reinstate petitioners to their positions held at the time of the complained dismissal. Private respondent is likewise ordered to pay petitioners their full backwages, to be computed from the date of dismissal until their actual reinstatement. However, the order of public respondent that petitioners be reimbursed the amount paid as washing charges is deleted. Costs against private respondents.SO ORDERED.Bellosillo, (Chairman), Mendoza, and De Leon, Jr., JJ., concur.Buena, J., on official leave.LABOR ONLY CONTRACTING AND JOB CONTRACTINGJOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING CORPORATION, respondent., G.R. No. 138051, 2004 Jun 10, 1st DivisionCARPIO, J.:The CaseBefore this Court is a petition for review on certiorari[1] assailing the 26 March 1999 Decision[2] of the Court of Appeals in CA-G.R. SP No. 49190 dismissing the petition filed by Jose Y. Sonza (“SONZA”). The Court of Appeals affirmed the findings of the National Labor Relations Commission (“NLRC”), which affirmed the Labor Arbiter’s dismissal of the case for lack of jurisdiction. The FactsIn May 1994, respondent ABS-CBN Broadcasting Corporation (“ABS-CBN”) signed an Agreement (“Agreement”) with the Mel and Jay Management and Development Corporation (“MJMDC”). ABS-CBN was represented by its corporate officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela

Tiangco (“TIANGCO”), as EVP and Treasurer. Referred to in the Agreement as “AGENT,” MJMDC agreed to provide SONZA’s services exclusively to ABS-CBN as talent for radio and television. The Agreement listed the services SONZA would render to ABS-CBN, as follows:a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays; b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.[3]ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President, Eugenio Lopez III, which reads:Dear Mr. Lopez,We would like to call your attention to the Agreement dated May 1994 entered into by your goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA.As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his programs and career. We consider these acts of the station violative of the Agreement and the station as in breach thereof. In this connection, we hereby serve notice of rescission of said Agreement at our instance effective as of date.Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the other benefits under said Agreement.Thank you for your attention.Very truly yours,(Sgd.JOSE Y. SONZA - President and Gen. Manager[4]On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (“ESOP”).On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996.Meanwhile, ABS-CBN continued to remit SONZA’s monthly talent fees through his account at PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same bank where ABS-CBN deposited SONZA’s talent fees and other payments due him under the Agreement.In his Order dated 2 December 1996, the Labor Arbiter[5] denied the motion to dismiss and directed the parties to file their respective position papers. The Labor Arbiter ruled:In this instant case, complainant for having invoked a claim that he was an employee of respondent company until April 15, 1996 and that he was not paid certain claims, it is sufficient enough as to confer jurisdiction over the instant case in this Office. And as to whether or not such claim would entitle complainant to recover upon the causes of action asserted is a matter to be resolved only after and as a result of a hearing. Thus, the respondent’s plea of lack of employer-employee relationship may be pleaded only as a matter of defense. It behooves upon it the duty to prove that there really is no employer-employee relationship between it and the complainant.The Labor Arbiter then considered the case submitted for resolution. The parties submitted their position papers on 24 February 1997.On 11 March 1997, SONZA filed a Reply to Respondent’s Position Paper with Motion to Expunge Respondent’s Annex 4 and Annex 5 from the Records. Annexes 4 and 5 are affidavits of ABS-CBN’s witnesses Soccoro Vidanes and Rolando V. Cruz. These witnesses stated in their affidavits that the prevailing practice in the television and broadcast industry is to treat talents like SONZA as independent contractors.The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction.[6] The pertinent parts of the decision read as follows:x x xWhile Philippine jurisprudence has not yet, with certainty, touched on the “true nature of the contract of a talent,” it stands to reason that a “talent” as above-described cannot be considered as an employee by reason of the peculiar circumstances surrounding the engagement of his services.It must be noted that complainant was engaged by respondent by reason of his peculiar skills and talent as a TV host and a radio broadcaster. Unlike an ordinary employee, he was free to perform the services he undertook to render in accordance with his own style. The benefits conferred to complainant under the May 1994 Agreement are certainly very much higher than those generally given to employees. For one, complainant Sonza’s monthly talent fees amount to a staggering P317,000. Moreover, his engagement as a talent was covered by a specific contract. Likewise, he was not bound to render eight (8) hours of work per day as he worked only for such number of hours as may be necessary.

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The fact that per the May 1994 Agreement complainant was accorded some benefits normally given to an employee is inconsequential. Whatever benefits complainant enjoyed arose from specific agreement by the parties and not by reason of employer-employee relationship. As correctly put by the respondent, “All these benefits are merely talent fees and other contractual benefits and should not be deemed as ‘salaries, wages and/or other remuneration’ accorded to an employee, notwithstanding the nomenclature appended to these benefits. Apropos to this is the rule that the term or nomenclature given to a stipulated benefit is not controlling, but the intent of the parties to the Agreement conferring such benefit.”The fact that complainant was made subject to respondent’s Rules and Regulations, likewise, does not detract from the absence of employer-employee relationship. As held by the Supreme Court, “The line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means to achieve it.” (Insular Life Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November 15, 1989).x x x Emphasis supplied)[7]SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the Labor Arbiter’s decision. SONZA filed a motion for reconsideration, which the NLRC denied in its Resolution dated 3 July 1998.On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals assailing the decision and resolution of the NLRC. On 26 March 1999, the Court of Appeals rendered a Decision dismissing the case.[8]Hence, this petition.

The Rulings of the NLRC and Court of AppealsThe Court of Appeals affirmed the NLRC’s finding that no employer-employee relationship existed between SONZA and ABS-CBN. Adopting the NLRC’s decision, the appellate court quoted the following findings of the NLRC:x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as an agent of complainant Sonza, the principal. By all indication and as the law puts it, the act of the agent is the act of the principal itself. This fact is made particularly true in this case, as admittedly MJMDC ‘is a management company devoted exclusively to managing the careers of Mr. Sonza and his broadcast partner, Mrs. Carmela C. Tiangco.’ (Opposition to Motion to Dismiss)Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC, and not between ABS-CBN and MJMDC. This is clear from the provisions of the May 1994 Agreement which specifically referred to MJMDC as the ‘AGENT’. As a matter of fact, when complainant herein unilaterally rescinded said May 1994 Agreement, it was MJMDC which issued the notice of rescission in behalf of Mr. Sonza, who himself signed the same in his capacity as President.Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically, the parties to the said agreements are ABS-CBN and Mr. Sonza. And it is only in the May 1994 Agreement, which is the latest Agreement executed between ABS-CBN and Mr. Sonza, that MJMDC figured in the said Agreement as the agent of Mr. Sonza.We find it erroneous to assert that MJMDC is a mere ‘labor-only’ contractor of ABS-CBN such that there exist[s] employer-employee relationship between the latter and Mr. Sonza. On the contrary, We find it indubitable, that MJMDC is an agent, not of ABS-CBN, but of the talent/contractor Mr. Sonza, as expressly admitted by the latter and MJMDC in the May 1994 Agreement.It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to the regular courts, the same being in the nature of an action for alleged breach of contractual obligation on the part of respondent-appellee. As squarely apparent from complainant-appellant’s Position Paper, his claims for compensation for services, ‘13th month pay’, signing bonus and travel allowance against respondent-appellee are not based on the Labor Code but rather on the provisions of the May 1994 Agreement, while his claims for proceeds under Stock Purchase Agreement are based on the latter. A portion of the Position Paper of complainant-appellant bears perusal:‘Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bound itself to pay complainant a signing bonus consisting of shares of stocks…with FIVE HUNDRED THOUSAND PESOS (P500,000.00).Similarly, complainant is also entitled to be paid 13th month pay based on an amount not lower than the amount he was receiving prior to effectivity of (the) Agreement’.Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel benefit amounting to at least One Hundred Fifty Thousand Pesos (P150,000.00) per year.’Thus, it is precisely because of complainant-appellant’s own recognition of the fact that his contractual relations with ABS-CBN are founded on the New Civil Code, rather than the Labor Code, that instead of merely resigning from ABS-CBN, complainant-appellant served upon the latter a ‘notice of rescission’ of Agreement with the station, per his

letter dated April 1, 1996, which asserted that instead of referring to unpaid employee benefits, ‘he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but reserves the right to such recovery of the other benefits under said Agreement.’ (Annex 3 of the respondent ABS-CBN’s Motion to Dismiss dated July 10, 1996).Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the Stock Purchase Agreement by respondent-appellee that complainant-appellant filed his complaint. Complainant-appellant’s claims being anchored on the alleged breach of contract on the part of respondent-appellee, the same can be resolved by reference to civil law and not to labor law. Consequently, they are within the realm of civil law and, thus, lie with the regular courts. As held in the case of Dai-Chi Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994, an action for breach of contractual obligation is intrinsically a civil dispute.[9] Emphasis supplied)The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA and ABS-CBN is a factual question that is within the jurisdiction of the NLRC to resolve.[10] A special civil action for certiorari extends only to issues of want or excess of jurisdiction of the NLRC.[11] Such action cannot cover an inquiry into the correctness of the evaluation of the evidence which served as basis of the NLRC’s conclusion.[12] The Court of Appeals added that it could not re-examine the parties’ evidence and substitute the factual findings of the NLRC with its own.[13]The IssueIn assailing the decision of the Court of Appeals, SONZA contends that:

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRC’S DECISION AND REFUSING TO FIND THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE THE WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING.[14]The Court’s RulingWe affirm the assailed decision.No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the NLRC ruling which upheld the Labor Arbiter’s dismissal of the case for lack of jurisdiction.The present controversy is one of first impression. Although Philippine labor laws and jurisprudence define clearly the elements of an employer-employee relationship, this is the first time that the Court will resolve the nature of the relationship between a television and radio station and one of its “talents.” There is no case law stating that a radio and television program host is an employee of the broadcast station.The instant case involves big names in the broadcast industry, namely Jose “Jay” Sonza, a known television and radio personality, and ABS-CBN, one of the biggest television and radio networks in the country.SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of ABS-CBN. On the other hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction because SONZA was an independent contractor.Employee or Independent Contractor?The existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual findings of the Labor Arbiter and the NLRC not only respect but also finality when supported by substantial evidence.[15] Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[16] A party cannot prove the absence of substantial evidence by simply pointing out that there is contrary evidence on record, direct or circumstantial. The Court does not substitute its own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible.[17]SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case law has consistently held that the elements of an employer-employee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is accomplished.[18] The last element, the so-called “control test”, is the most important element.[19]A. Selection and Engagement of EmployeeABS-CBN engaged SONZA’s services to co-host its television and radio programs because of SONZA’s peculiar skills, talent and celebrity status. SONZA contends that the “discretion used by respondent in specifically selecting and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant belies respondent’s claim of independent contractorship.”Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-

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CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel department just like any other employee.In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must consider all the circumstances of the relationship, with the control test being the most important element.B. Payment of WagesABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN granted him benefits and privileges “which he would not have enjoyed if he were truly the subject of a valid job contract.”All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBN’s employee, there would be no need for the parties to stipulate on benefits such as “SSS, Medicare, x x x and 13th month pay”[20] which the law automatically incorporates into every employer-employee contract.[21] Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.[22]SONZA’s talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZA’s unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship.The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement.C. Power of DismissalFor violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent losses as provided under labor laws.[23]During the life of the Agreement, ABS-CBN agreed to pay SONZA’s talent fees as long as “AGENT and Jay Sonza shall faithfully and completely perform each condition of this Agreement.”[24] Even if it suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZA’s talent fees during the life of the Agreement. This circumstance indicates an independent contractual relationship between SONZA and ABS-CBN.SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement to continue paying SONZA’s talent fees during the remaining life of the Agreement even if ABS-CBN cancelled SONZA’s programs through no fault of SONZA.[25]SONZA assails the Labor Arbiter’s interpretation of his rescission of the Agreement as an admission that he is not an employee of ABS-CBN. The Labor Arbiter stated that “if it were true that complainant was really an employee, he would merely resign, instead.” SONZA did actually resign from ABS-CBN but he also, as president of MJMDC, rescinded the Agreement. SONZA’s letter clearly bears this out.[26] However, the manner by which SONZA terminated his relationship with ABS-CBN is immaterial. Whether SONZA rescinded the Agreement or resigned from work does not determine his status as employee or independent contractor.D. Power of ControlSince there is no local precedent on whether a radio and television program host is an employee or an independent contractor, we refer to foreign case law in analyzing the present case. The United States Court of Appeals, First Circuit, recently held in Alberty-Vélez v. Corporación De Puerto Rico Para La Difusión Pública (“WIPR”)[27] that a television program host is an independent contractor. We quote the following findings of the U.S. court:Several factors favor classifying Alberty as an independent contractor. First, a television actress is a skilled position requiring talent and training not available on-the-job. x x x In this regard, Alberty possesses a master’s degree in public communications and journalism; is trained in dance, singing, and modeling; taught with the drama department at the University of Puerto Rico; and acted in several theater and television productions prior to her affiliation with “Desde Mi Pueblo.” Second, Alberty provided the “tools and instrumentalities” necessary for her to perform. Specifically, she provided, or obtained sponsors to provide, the costumes, jewelry, and other image-related supplies and services necessary for her appearance. Alberty disputes that this factor favors independent contractor status because WIPR provided the “equipment necessary to tape the show.” Alberty’s argument is misplaced. The equipment necessary for Alberty to conduct her job as host of “Desde Mi Pueblo” related to her appearance on the show. Others provided equipment for filming and producing the show, but these were not the primary tools that Alberty used to perform her particular function. If we accepted this argument, independent contractors could never

work on collaborative projects because other individuals often provide the equipment required for different aspects of the collaboration. x x xThird, WIPR could not assign Alberty work in addition to filming “Desde Mi Pueblo.” Alberty’s contracts with WIPR specifically provided that WIPR hired her “professional services as Hostess for the Program Desde Mi Pueblo.” There is no evidence that WIPR assigned Alberty tasks in addition to work related to these tapings. x x x[28] Emphasis supplied)Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control test is the most important test our courts apply in distinguishing an employee from an independent contractor.[29] This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well – the less control the hirer exercises, the more likely the worker is considered an independent contractor.[30]First, SONZA contends that ABS-CBN exercised control over the means and methods of his work.SONZA’s argument is misplaced. ABS-CBN engaged SONZA’s services specifically to co-host the “Mel & Jay” programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN’s control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings.[31] ABS-CBN could not dictate the contents of SONZA’s script. However, the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests.[32] The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests.We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZA’s work.[33] ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule “for more effective programming.”[34] ABS-CBN’s sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZA’s work.SONZA claims that ABS-CBN’s power not to broadcast his shows proves ABS-CBN’s power over the means and methods of the performance of his work. Although ABS-CBN did have the option not to broadcast SONZA’s show, ABS-CBN was still obligated to pay SONZA’s talent fees... Thus, even if ABS-CBN was completely dissatisfied with the means and methods of SONZA’s performance of his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZA’s show but ABS-CBN must still pay his talent fees in full.[35]Clearly, ABS-CBN’s right not to broadcast SONZA’s show, burdened as it was by the obligation to continue paying in full SONZA’s talent fees, did not amount to control over the means and methods of the performance of SONZA’s work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance of his work - how he delivered his lines and appeared on television - did not meet ABS-CBN’s approval. This proves that ABS-CBN’s control was limited only to the result of SONZA’s work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZA’s talent fees in full until the expiry of the Agreement.In Vaughan, et al. v. Warner, et al.,[36] the United States Circuit Court of Appeals ruled that vaudeville performers were independent contractors although the management reserved the right to delete objectionable features in their shows. Since the management did not have control over the manner of performance of the skills of the artists, it could only control the result of the work by deleting objectionable features.[37]SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the “Mel & Jay” programs. However, the equipment, crew and airtime are not the “tools and instrumentalities” SONZA needed to perform his job. What SONZA principally needed were his talent or skills and the costumes necessary for his appearance. [38] Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his work. ABS-CBN’s sole concern was for SONZA to display his talent during the airing of the programs.[39]A radio broadcast specialist who works under minimal supervision is an independent contractor.[40] SONZA’s work as television and radio program host required special skills and talent, which SONZA admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows.Second, SONZA urges us to rule that he was ABS-CBN’s employee because ABS-CBN subjected him to its rules and standards of performance. SONZA claims that this indicates ABS-CBN’s control “not only [over] his manner of work but also the quality of his work.”

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The Agreement stipulates that SONZA shall abide with the rules and standards of performance “covering talents”[41] of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreement refers to the “Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics.”[42] The KBP code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and standards of performance referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN.In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former.[43] In this case, SONZA failed to show that these rules controlled his performance. We find that these general rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs that comply with standards of the industry. We have ruled that:Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an employer-employee relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it.[44]The Vaughan case also held that one could still be an independent contractor although the hirer reserved certain supervision to insure the attainment of the desired result. The hirer, however, must not deprive the one hired from performing his services according to his own initiative.[45]Lastly, SONZA insists that the “exclusivity clause” in the Agreement is the most extreme form of control which ABS-CBN exercised over him.This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control.The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry.[46] This practice is not designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The broadcast station normally spends substantial amounts of money, time and effort “in building up its talents as well as the programs they appear in and thus expects that said talents remain exclusive with the station for a commensurate period of time.”[47] Normally, a much higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent fees partially compensates for exclusivity, as in the present case.MJMDC as Agent of SONZA SONZA protests the Labor Arbiter’s finding that he is a talent of MJMDC, which contracted out his services to ABS-CBN. The Labor Arbiter ruled that as a talent of MJMDC, SONZA is not an employee of ABS-CBN. SONZA insists that MJMDC is a “labor-only” contractor and ABS-CBN is his employer.In a labor-only contract, there are three parties involved: (1) the “labor-only” contractor; (2) the employee who is ostensibly under the employ of the “labor-only” contractor; and (3) the principal who is deemed the real employer. Under this scheme, the “labor-only” contractor is the agent of the principal. The law makes the principal responsible to the employees of the “labor-only contractor” as if the principal itself directly hired or employed the employees.[48] These circumstances are not present in this case.There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-CBN. MJMDC merely acted as SONZA’s agent. The Agreement expressly states that MJMDC acted as the “AGENT” of SONZA. The records do not show that MJMDC acted as ABS-CBN’s agent. MJMDC, which stands for Mel and Jay Management and Development Corporation, is a corporation organized and owned by SONZA and TIANGCO. The President and General Manager of MJMDC is SONZA himself. It is absurd to hold that MJMDC, which is owned, controlled, headed and managed by SONZA, acted as agent of ABS-CBN in entering into the Agreement with SONZA, who himself is represented by MJMDC. That would make MJMDC the agent of both ABS-CBN and SONZA.As SONZA admits, MJMDC is a management company devoted exclusively to managing the careers of SONZA and his broadcast partner, TIANGCO. MJMDC is not engaged in any other business, not even job contracting. MJMDC does not have any other function apart from acting as agent of SONZA or TIANGCO to promote their careers in the broadcast and television industry.[49]Policy Instruction No. 40

SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979 finally settled the status of workers in the broadcast industry. Under this policy, the types of employees in the broadcast industry are the station and program employees.Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law. There is no legal presumption that Policy Instruction No. 40 determines SONZA’s status. A mere executive issuance cannot exclude independent contractors from the class of service providers to the broadcast industry. The classification of workers in the broadcast industry into only two groups under Policy Instruction No. 40 is not binding on this Court, especially when the classification has no basis either in law or in fact.Affidavits of ABS-CBN’s WitnessesSONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanes and Rolando Cruz without giving his counsel the opportunity to cross-examine these witnesses. SONZA brands these witnesses as incompetent to attest on the prevailing practice in the radio and television industry. SONZA views the affidavits of these witnesses as misleading and irrelevant.While SONZA failed to cross-examine ABS-CBN’s witnesses, he was never prevented from denying or refuting the allegations in the affidavits. The Labor Arbiter has the discretion whether to conduct a formal (trial-type) hearing after the submission of the position papers of the parties, thus:Section 3. Submission of Position Papers/Memorandumx x xThese verified position papers shall cover only those claims and causes of action raised in the complaint excluding those that may have been amicably settled, and shall be accompanied by all supporting documents including the affidavits of their respective witnesses which shall take the place of the latter’s direct testimony. x x xSection 4. Determination of Necessity of Hearing. – Immediately after the submission of the parties of their position papers/memorandum, the Labor Arbiter shall motu propio determine whether there is need for a formal trial or hearing. At this stage, he may, at his discretion and for the purpose of making such determination, ask clarificatory questions to further elicit facts or information, including but not limited to the subpoena of relevant documentary evidence, if any from any party or witness.[50]The Labor Arbiter can decide a case based solely on the position papers and the supporting documents without a formal trial.[51] The holding of a formal hearing or trial is something that the parties cannot demand as a matter of right.[52] If the Labor Arbiter is confident that he can rely on the documents before him, he cannot be faulted for not conducting a formal trial, unless under the particular circumstances of the case, the documents alone are insufficient. The proceedings before a Labor Arbiter are non-litigious in nature. Subject to the requirements of due process, the technicalities of law and the rules obtaining in the courts of law do not strictly apply in proceedings before a Labor Arbiter.Talents as Independent ContractorsABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents like SONZA as independent contractors. SONZA argues that if such practice exists, it is void for violating the right of labor to security of tenure.The right of labor to security of tenure as guaranteed in the Constitution[53] arises only if there is an employer-employee relationship under labor laws. Not every performance of services for a fee creates an employer-employee relationship. To hold that every person who renders services to another for a fee is an employee - to give meaning to the security of tenure clause - will lead to absurd results.Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft. This Court will not interpret the right of labor to security of tenure to compel artists and talents to render their services only as employees. If radio and television program hosts can render their services only as employees, the station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to freedom of the press.Different Tax Treatment of Talents and BroadcastersThe National Internal Revenue Code (“NIRC”)[54] in relation to Republic Act No. 7716,[55] as amended by Republic Act No. 8241,[56] treats talents, television and radio broadcasters differently. Under the NIRC, these professionals are subject to the 10% value-added tax (“VAT”) on services they render. Exempted from the VAT are those under an employer-employee relationship.[57] This different tax treatment accorded to talents and broadcasters bolters our conclusion that they are independent contractors, provided all the basic elements of a contractual relationship are present as in this case.

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Nature of SONZA’s ClaimsSONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive leave, signing bonus, travel allowance, and amounts due under the Employee Stock Option Plan. We agree with the findings of the Labor Arbiter and the Court of Appeals that SONZA’s claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and implementation of the May 1994 Agreement. In effect, SONZA’s cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.[58]WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs against petitioner.SO ORDERED.Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Azcuna, JJ., concur.([2005V396] WACK WACK GOLF & COUNTRY CLUB, Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION, MARTINA G. CAGASAN, CARMENCITA F. DOMINGUEZ, and BUSINESS STAFFING AND MANAGEMENT, INC., Respondents., G.R. No. 149793, 2005 Apr 15, 2nd Division)CALLEJO, SR., J.: This is a petition for review of the Resolution[1] of the Court of Appeals (CA) in CA-G.R. SP No. 63658, dismissing the petition for certiorari before it for being insufficient in form and the subsequent resolution denying the motion for reconsideration thereof.The undisputed antecedent facts are as follows:On November 29, 1996, a fire destroyed a large portion of the main clubhouse of the Wack Wack Golf and Country Club (Wack Wack), including its kitchen. In view of the reconstruction of the whole clubhouse complex, Wack Wack filed a notice with the Department of Labor and Employment (DOLE) on April 14, 1997 that it was going to suspend the operations of the Food and Beverage (F & B) Department one (1) month thereafter. Notices to 54 employees (out of a complement of 85 employees in the department) were also sent out, informing them that they need not report for work anymore after April 14, 1997 but that they would still be paid their salaries up to May 14, 1997. They were further told that they would be informed once full operations in Wack Wack resume.The Wack Wack Golf Employees Union branded the suspension of operations of the F & B Department as arbitrary, discriminatory and constitutive of union-busting, so they filed a notice of strike with the DOLE’s National Conciliation and Mediation Board (NCMB). Several meetings between the officers of Wack Wack and the Union, headed by its President, Crisanto Baluyot, Sr., and assisted by its counsel, Atty. Pedro T. De Quiroz, were held until the parties entered into an amicable settlement. An Agreement[2] was forged whereby a special separation benefit/retirement package for interested Wack Wack employees, especially those in the F & B Department was offered. The terms and conditions thereof reads as follows: 1. The UNION and the affected employees of F & B who are members of the UNION hereby agree to accept the special separation benefit package agreed upon between the CLUB management on the one hand, and the UNION officers and the UNION lawyer on the other, in the amount equivalent to one-and-one-half months salary for every year of service, regardless of the number of years of service rendered. That, in addition, said employees shall also receive the other benefits due them, namely, the cash equivalent of unused vacation and sick leave credits, proportionate 13th month pay; and other benefits, if any, computed without premium;2. That the affected F & B employees who have already signified intention to be separated from the service under the special separation benefit package shall receive their separation pay as soon as possible;3. That the same package shall, likewise, be made available to other employees who are members of the bargaining unit and who may or may not be affected by future similar suspensions of operations. The UNION re-affirms and recognizes that it is the sole prerogative of the management of the Club to suspend part or all of its operations as may be necessitated by the exigencies of the situation and the general welfare of its membership. The closure of the West Course, which is scheduled for conversion to an All-Weather Championship golf course, is cited as an example. It is, however, agreed that if a sufficient number of employees, other than F & B employees, would apply for availment of the package within the next two months, the Club may no longer go through the process of formally notifying the Department of Labor. The processing and handling of benefits for these other employees shall be done over a transition period within one year;4. All qualified employees who may have been separated from the service under the above package shall be considered under a priority basis for employment by concessionaires and/or contractors, and even by the Club upon full resumption of operations, upon the recommendation of the UNION. The Club may even persuade an employee-applicant for availment under the package to remain on his/her job, or be assigned to another position.[3]

Respondent Carmencita F. Dominguez, who was then working in the Administrative Department of Wack Wack, was the first to avail of the special separation package.[4] Computed at 1½ months for every year ofservice pursuant to the Agreement, her separation pay amounted to P91,116.84, while economic benefits amounted to P6,327.53.[5] On September 18, 1997, Dominguez signed a Release and Quitclaim[6] in favor of Wack Wack.Respondent Martina B. Cagasan was Wack Wack’s Personnel Officer who, likewise, volunteered to avail of the separation package.[7] On September 30, 1997, she received from Wack Wack the amount of P469,495.66 as separation pay and other economic benefits amounting to P17,010.50.[8] A Release and Quitclaim[9] was signed on September 30, 1997.The last one to avail of the separation package was Crisanto Baluyot, Sr. who, in a Letter[10] dated January 16, 1998 addressed to Mr. Bienvenido Juan, Administrative Manager of Wack Wack, signified his willingness to avail of the said early retirement package. The total amount of P688,290.30[11] was received and the Release and Quitclaim[12] signed on May 14, 1998.On October 15, 1997, Wack Wack entered into a Management Contract[13] with Business Staffing and Management, Inc. (BSMI), a corporation engaged in the business as Management Service Consultant undertaking and managing for a fee projects which are specialized and technical in character like marketing, promotions, merchandising, financial management, operation management and the like.[14] BSMI was to provide management services for Wack Wack in the following operational areas:

1. Golf operations management;2. Management and maintenance of building facilities;3. Management of food and beverage operation;4. Management of materials and procurement functions;5. To provide and undertake administrative and support services for the [said] projects.[15]Pursuant to the Agreement, the retired employees of Wack Wack by reason of their experience were given priority by BSMI in hiring. On October 21, 1997, respondents Cagasan and Dominguez filed their respective applications[16] for employment with BSMI. They were eventually hired by BSMI to their former positions in Wack Wack as project employees and were issued probationary contracts.[17]Aside from BSMI, Wack Wack also engaged several contractors which were assigned in various operating functions of the club, to wit:1. Skills and Talent Employment Promotion (STEP) whose 90 workers are designated as locker attendants, golf bag attendants, nurses, messengers, technical support engineer, golf director, agriculturist, utilities and gardeners; 2. Marvel Manpower Agency - whose 19 employees are designated as sweepers, locker attendants, drive range attendant, telephone operator, workers and secretaries;3. City Service Corporation – contractor for janitorial services for the whole club;4. Microstar Business and Management Services, Inc. whose 15 employees are designated in the Finance and Accounting departments.[18]Due to these various management service contracts, BSMI undertook an organizational analysis and manpower evaluation to determine its efficacy, and to streamline its operations. In the course of its assessment, BSMI saw that the positions of Cagasan and Dominguez were redundant. In the case of respondent Cagasan, her tasks as personnel officer were likewise being taken cared of by the different management service contractors; on the other hand, Dominguez’s work as telephone operator was taken over by the personnel of the accounting department. Thus, in separate Letters[19] dated February 27, 1998, the services of Dominguez and Cagasan were terminated. With respect to Baluyot, he applied for the position of Chief Porter on May 12, 1998. The position, however, was among those recommended to be abolished by the BSMI, so he was offered the position of Caddie Master Aide with a starting salary of P5,500.00 a month. Baluyot declined the offer. Pending Wack Wack’s approval of the proposed abolition of the position of Chief Porter, Baluyot was temporarily accepted to the position with a monthly salary of P12,000.00. In July 1998, Baluyot decided not to accept the position of Caddie Master Aide; thus, BSMI continued with its plan to abolish the said position of Chief Porter and Baluyot was dismissed from the service.Thereafter, the three (3) employees filed their respective complaints with the National Labor Relations Commission (NLRC) for illegal dismissal and damages against Wack Wack and BSMI.The complainants averred that they were dismissed without cause. They accepted the separation package upon the assurance that they would be given their former work and assignments once the Food and Beverage Department of Wack Wack resumes its operations. On the other hand, the respondents therein alleged that the dismissal of the complainants were made pursuant to a study and evaluation of the different jobs and positions and found them to be redundant.In a Decision[20] dated January 25, 2000, the Labor Arbiter found that the dismissal of Dominguez and Cagasan was for a valid and authorized cause, and dismissed their complaints.

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The position of personnel manager occupied by Martina Cagasan was redundated as it is allegedly not necessary, because her functions will be taken over [by] the field superintendent and the company’s personnel and operations manager. The work of Carmencita Dominguez on the other hand as telephone operator will be taken over by the accounting department personnel. Such move really are intended to streamline operations. While admittedly, they are still necessary in the operations of Wack Wack, their jobs can be assigned to some other personnel, who will be performing dual functions and does save Wack Wack money. This is feasible on account of the fact that they are functions pertaining to administrative work.[21]As to Baluyot, however, the Labor Arbiter found that while the position of chief porter had been abolished, the caddie master aide had been created. Their functions were one and the same. The porters, upon instructions from the chief porter, are the ones who bring down the golf bags of the players from the vehicle. The caddie master receives them and counts the number of clubs inside the golf set. After the game, the same procedure is repeated before the golf sets are loaded once more into the vehicle.[22] The Labor Arbiter found that the dismissal of Baluyot as ChiefPorter was unjustified and can not be considered redundant in the case at bar. It was a means resorted to in order to unduly sever Baluyot’s relationship with BSMI without justifiable cause. The Labor Arbiter therefore found Baluyot’s dismissal to be illegal. The dispositive portion of the decision reads as follows:CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered dismissing the complaints of Carmencita F. Dominguez and Martina Cagasan for lack of merit. Finding Crisanto Baluyot’s dismissal to be illegal. Consequently, he should immediately be reinstated to his former position as Chief Porter or Caddie Master, and paid his backwages which, as of December 31, 1999, has accumulated in the sum of P180,000.00 by BSMI.All other claims are dismissed for lack of merit.[23]Since Baluyot no longer appealed the decision, complainants Dominguez and Cagasan filed a Partial Appeal on the ground of prima facie abuse of discretion on the part of the Labor Arbiter and serious errors in his findings of facts and law. Their claims were anchored on the Agreement between the Union and management, that they were promised to be rehired upon the full resumption of operations of Wack Wack. They asserted that Wack Wack and BSMI should not avoid responsibility to their employment, by conniving with each other to render useless and meaningless the Agreement. BSMI also appealed to the NLRC, alleging that the Labor Arbiter committed grave abuse of discretion in finding Baluyot’s dismissal to be illegal, when in fact his position as Chief Porter was abolished pursuant to a bona fide reorganization of Wack Wack. It was not motivated by factors other than the promotion of the interest and welfare of the company.On September 27, 2000, the NLRC rendered its Decision[24] ordering Wack Wack to reinstate Carmencita F. Dominguez and Martina Cagasan to their positions in respondent Wack Wack Golf & Country Club with full backwages and other benefits from the date of their dismissal until actually reinstated. It anchored its ruling on the Agreement dated June 16, 1997 reached between the Union and Wack Wack, particularly Section 4[25] thereof. The NLRC directed Wack Wack to reinstate the respondents and pay their backwages since “Business Staffing and Management, Inc. (BSMI) is a contractor who [merely] supplies workers to respondent Wack Wack. It has nothing to do with the grievance of the complainants with their employer, respondent Wack Wack.”Wack Wack and BSMI filed a motion for reconsideration which was denied in the Resolution[26] dated December 15, 2000. Wack Wack, now the petitioner, consequently filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 63658 alleging the following:A. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND DENIAL OF DUE PROCESS IN HOLDING THAT RESPONDENTS CAGASAN AND DOMINGUEZ HAVE REGAINED THEIR JOBS OR EMPLOYMENT PURSUANT TO THE AGREEMENT BETWEEN PETITIONER AND WACK WACK GOLF EMPLOYEES UNION.B. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND DENIAL OF DUE PROCESS IN RULING THAT RESPONDENT BSMI IS NOT AN INDEPENDENT CONTRACTOR BUT A MERE SUPPLIER OF WORKERS TO THE PETITIONER.C. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND DENIAL OF DUE PROCESS IN HOLDING PETITIONER LIABLE FOR THE REINSTATEMENT OF RESPONDENTS CAGASAN AND DOMINGUEZ AND FOR THE PAYMENT OF THEIR SUPPOSED BACKWAGES DESPITE THE ABSENCE OF EMPLOYER-EMPLOYEE RELATION BETWEEN THEM.[27]Likewise, BSMI also assailed the resolutions of the NLRC and filed its own petition for certiorari with the CA, docketed as CA-G.R. SP No. 63553.[28] A perusal of the petition which is attached to the records reveal that BSMI ascribes grave abuse of discretion on the part of the NLRC in ruling that: (a) the private respondents have regained their employment pursuant to the Agreement between Wack Wack and the Wack Wack Golf Employees Union; (b)

the dismissal of private respondents was made pursuant to the petitioner’s exercise of its management prerogatives; and (c) the petitioner (BSMI) is liable for the reinstatement of private respondents and the payment of their backwages.[29] On April 3, 2001, the CA (Twelfth Division) dismissed the petition on the ground that the petitioner therein failed to attach an Affidavit of Service as required in Section 11, Rule 13 of the 1997 Rules of Civil Procedure. Moreover, the verification and certification against forum shopping was insufficient for having been executed by the general manager who claimed to be the duly-authorized representative of the petitioner, but did not show any proof of authority, i.e., a board resolution, to the effect.A motion for reconsideration was, consequently, filed appending thereto the requisite documents of proof of authority. It asserted that in the interest of substantial justice, the CA should decide the case on its merits.BSMI filed a Comment[30] to the Motion for Reconsideration of the petitioner, also urging the CA to set aside technicalities and to consider the legal issues involved: (a) whether or not there is a guaranty of employment in favor of the complainants under the Agreement between the petitioner and the Union; (b) whether or not the termination of the employment of the complainants, based on redundancy, is legal and valid; and (c) who are the parties liable for the reinstatement of the complainants and the payment of backwages. It further added that it shares the view of the petitioner, that the assailed resolutions of the NLRC are tainted with legal infirmities. For this reason, it was also constrained to file its own petition for certiorari with the CA, docketed as CA-G.R. SP No. 63553 pending with the Special Fourth Division, just to stress that there is no guaranty of perpetual employment in favor of the complainants. On August 31, 2001, the CA denied petitioner’s motion for reconsideration. The petitioner is now before the Court, assailing the twin resolutions of the CA. It points out that BSMI has filed its petition for certiorari before the CA one day late and yet, the Special Fourth Division admitted the petition in the interest of substantial justice, and directed the respondents to file a comment thereon;[31] whereas, in the instant case, the mere lack of proof of authority of Wack Wack’s General Manager to sign the certificate of non-forum shopping was considered fatal by the CA’s Twelfth Division. It further asserts that its petition for certiorari is meritorious, considering that the NLRC committed grave abuse of discretion in ordering Wack Wack to reinstate the respondents Cagasan and Dominguez, and to pay their backwages when indubitable evidence shows that the said respondents were no longer employees of Wack Wack when they filed their complaints with the Labor Arbiter.There is merit in the petition. In Novelty Philippines, Inc. v. Court of Appeals,[32] the Court recognized the authority of the general manager to sue on behalf of the corporation and to sign the requisite verification and certification of non-forum shopping. The general manager is also one person who is in the best position to know the state of affairs of the corporation. It was also error for the CA not to admit the requisite proof of authority when in the Novelty case, the Court ruled that the subsequent submission of the requisite documents constituted substantial compliance with procedural rules. There isample jurisprudence holding that the subsequent and substantial compliance of an appellant may call for the relaxation of the rules of procedure in the interest of justice.[33] While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the swift unclogging of court dockets is a laudable objective, it nevertheless must not be met at the expense of substantial justice.[34] It was, therefore, reversible error for the CA to have dismissed the petition for certiorari before it. The ordinary recourse for us to take is to remand the case to the CA for proper disposition on the merits; however, considering that the records are now before us, we deem it necessary to resolve the instant case in order to ensure harmony in the rulings and expediency.Indeed, the merits of the case constitute special or compelling reasons for us to overlook the technical rules in this case. With the dismissal of its petition for certiorari before the CA, the petitioner by virtue of the NLRC decision is compelled to reinstate respondents Cagasan and Dominguez and pay their full backwages from the time of their dismissal until actual reinstatement when the attendant circumstances, however, show that the respondents had no cause of action against the petitioner for illegal dismissal and damages.It must be recalled that said respondents availed of the special separation package offered by the petitioner. This special separation package was thought of and agreed by the two parties (Wack Wack and the Union) after a series of discussions and negotiations to avert any labor unrest due to the closure of Wack Wack.[35] Priority was given to the employees of the F & B Department, but was, likewise, offered to the other employees who may wish to avail of the separation package due to the reconstruction of Wack Wack. Respondents do not belong to the F & B Department and yet, on their own volition opted to avail of the special separation package. The applications which were similarly worded read as follows:TO : WACK WACK GOLF & COUNTRY CLUB BOARD OF DIRECTORS AND MANAGEMENTBased on the information that the Club and the employees’ Union have reached an agreement on a special separation benefit package equivalent to one-and-one-half months salary for every year of service, regardless of the number of years of service, for employees who have been affected and may be affected by ongoing as well as

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forthcoming Club renovation, construction and related activities and reportedly even for those who may not be affected but wish to avail of an early retirement under the above package arrangement, I hereby register my desire to be separated from the Club and receive the benefits under the above stated package.[36]Thereafter, the respondents signed their respective release and quitclaims after receiving their money benefits.It cannot be said that the respondents in the case at bar did not fully comprehend and realize the consequences of their acts. Herein respondents are not unlettered persons who need special protection. They held responsible positions in the petitioner-employer, so they presumably understood the contents of the documents they signed. There is no showing that the execution thereof was tainted with deceit or coercion. Further, the respondents were paid hefty amounts of separation pay indicating that their separation from the company was for a valuable consideration. Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking.[37] As in contracts, these quitclaims amount to a valid and binding compromise agreement between the parties which deserve to be respected.[38]We reiterate what was stated in the case of Periquet v. NLRC [39] that: Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. …[40]When the respondents voluntarily signed their quitclaims and accepted the separation package offered by the petitioner, they, thenceforth, already ceased to be employees of the petitioner. Nowhere does it appear in the Agreement that the petitioner assured the respondents of continuous employment in Wack Wack. Qualified employees were given priority in being hired by its concessionaires and/or contractors such as BSMI when it entered into a management contract with the petitioner.This brings us to the threshold issue on whether or not BSMI is an independent contractor or a labor-only contractor. The NLRC posits that BSMI is merely a supplier of workers or a labor-only contractor; hence, the petitioner remains to be the principal employer of the respondents and liable for their reinstatement and payment of backwages.The ruling of the NLRC is wrong. An independent contractor is one who undertakes “job contracting,” i.e., a person who: (a) carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (b) has substantial capital or investment in the form of tools, equipments, machineries, work premises and other materials which are necessary in the conduct of the business. Jurisprudential holdings are to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employer’s power with respect to the hiring, firing, and payment of the contractor’s workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.[41]There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial business establishments. Its Articles of Incorporation proves its sufficient capitalization. In December 1993, Labor Secretary Bienvenido Laguesma, in the case of In re Petition for Certification Election Among the Regular Rank-and-File Employees Workers of Byron-Jackson (BJ) Services International Incorporated, Federation of Free Workers (FFW)-Byron Jackson Services Employees Chapter,[42] recognized BSMI as an independent contractor. As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee relationship between the contractor and the workers.[43]BSMI admitted that it employed the respondents, giving the said retired employees some degree of priority merely because of their work experience with the petitioner, and in order to have a smooth transition of operations.[44] In accordance with its own recruitment policies, the respondents were made to sign applications for employment, accepting the condition that they were hired by BSMI as probationary employees only. Not being contrary to law, morals, good custom, public policy and public order, these employment contracts, which the parties are bound are considered valid. Unfortunately, after a study and evaluation of its personnel organization, BSMI was impelled to terminate the services of the respondents on the ground of redundancy. This right to hire and fire is another element

of the employer-employee relationship[45] which actually existed between the respondents and BSMI, and not with Wack Wack.There being no employer-employee relationship between the petitioner and respondents Cagasan and Dominguez, the latter have no cause of action for illegal dismissal and damages against the petitioner. Consequently, the petitioner cannot be validly ordered to reinstate the respondents and pay them their claims for backwages. WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals and the NLRC are SET ASIDE and REVERSED. The complaints of respondents Cagasan and Dominguez are DISMISSED. No costs. SO ORDERED.ROMEO J. CALLEJO, SR. (Associate Justice) WE CONCUR: REYNATO S. PUNO (Associate Justice, Chairman), MA. ALICIA AUSTRIA-MARTINEZ DANTE O. TINGA, MINITA V. CHICO-NAZARIO([2003V626] [1/2] San Miguel Corporation, petitioner, vs. MAERC Integrated Services, Inc.; and Emerberto Orque, ROGELIO PRADO, JR., EDDIE SELLE, ALEJANDRO ANNABIEZA, ANNIAS JUAMO-AS, CONSORCIO MANLOLOYO, ANANIAS ALCONTIN, REY GESTOPA, EDGARDO NUÑEZ, JUNEL CABATINGAN, PAUL DUMAQUETA, FELIMON ECHAVEZ, VITO SEALANA, DENECIA PALAO, ROBERTO LAPIZ, BALTAZAR LABIO, LEONARDO BONGO, EL CID ICALINA, JOSE DIOCAMPO, ADELO CANTILLAS, ISAIAS BRANZUELA, RAMON ROSALES, GAUDENCIO PESON, HECTOR CABAÑOG, EDGARDO DAGMAYAN, ROGELIO CRUZ, ROLANDO ESPINA, BERNARDINO REGIDOR, ARNELIO SUMALINOG, GUMERSINDO ALCONTIN, LORETO NUÑEZ, JOEBE BOY DAYON, CONRADO MESANQUE, MARCELO PESCADOR, MARCELINO JABAGAT, VICENTE DEVILLERES, VICENTE ALIN, RODOLFO PAHUGOT, RUEL NAVARES, DANILO ANABIEZA, ALEX JUEN, JUANITO GARCES, SILVINO LIMBAGA, AURELIO JURPACIO, JOVITO LOON, VICTOR TENEDERO, SASING MORENO, WILFREDO HORTEZUELA, JOSELITO MELENDEZ, ALFREDO GESTOPA, REGINO GABUYA, JORGE GAMUZARNO, LOLITO COCIDO, EFRAIM YUBAL, VENERANDO ROAMAR, GERARDO BUTALID, HIPOLITO VIDAS, VENGELITO FRIAS, VICENTE CELACIO, CORLITO PESTAÑAS, ERVIN HYROSA, ROMMEL GUERERO, RODRIGO ENERLAS, FRANCISCO CARBONILLA, NICANOR CUIZON, PEDRO BRIONES, RODOLFO CABALHUG, TEOFILO RICARDO, DANILO R. DIZON, ALBERTO EMBONG, ALFONSO ECHAVEZ, GONZALO RORACEÑA, MARCELO CARACINA, RAUL BORRES, LINO TONGALAMOS, ARTEMIO BONGO, JR., ROY AVILA, MELCHOR FREGLO, RAUL CABILLADA, EDDIE CATAB, MELENCIO DURANO, ALLAN RAGO, DOMINADOR CAPARIDA, JOVITO CATAB, ALBERT LASPIÑAS, ALEX ANABIEZA, NESTOR REYNANTE, EULOGIO GESTOPA, MARIO BOLO, EDERLITO A. BALOCANO, JOEL PEPITO, REYNALDO LUDIA, MANUEL CINCO, ALLAN AGUSTIN, PABLITO POLEGRATES, CLYDE PRADO, DINDO MISA, ROGER SASING, RAMON ARCALLANA, GABRIEL SALAS, EDWIN SASAN, DIOSDADO BARRIGA, MOISES SASAN, SINFORIANO CANTAGO, LEONARDO MARTURILLAS, MARIO RANIS, ALEJANDRO RANIDO, JEROME PRADO, RAUL OYAO, VICTOR CELACIO, GERALDO ROQUE, ZOSIMO CARARATON, VIRGILIO ZANORIA, JOSE ZANORIA, ALLAN ZANORIA, VICTORINO SENO, TEODULO JUMAO-AS, ALEXANDER HERA, ANTHONY ARANETA, ALDRIN SUSON, VICTOR VERANO, RUEL SUFRERENCIA, ALFRED NAPARATE, WENCESLAO BACLOHON, EDUARDO LANGITA, FELIX ORDENEZA, ARSENIO LOGARTA, EDUARDO DELA VEGA, JOVENTINO CANOOG, ROGELIO ABAPO, RICARDO RAMAS, JOSE BANDIALAN, ANTONIO BASALAN, LYNDON BASALAN, WILFREDO ALIVIANO, BIENVENIDO ROSARIO, JESUS CAPANGPANGAN, RENATO MENDOZA, ALEJANDRO CATANDEJAN, RUBEN TALABA, FILEMON ECHAVEZ, MARCELINO CARACENA, IGNACIO MISA, FELICIANO AGBAY, VICTOR MAGLASANG, ARTURO HEYROSA, ALIPIO TIROL, ROSENDO MONDARES, ANICETO LUDIA, REYNALDO LAVANDERO, REUYAN HERCULANO, TEODULO NIQUE, EMERBERTO ORQUE, ZOSIMO BAOBAO, MEDARDO SINGSON, ANTONIO PATALINGHUG, ERNESTO SINGSON, ROBERTO TORRES, CESAR ESCARIO, LEODEGARIO DOLLECIN, ALBERTO ANOBA, RODRIGO BISNAR, ZOSIMO BINGAS, ROSALIO DURAN, SR., ROSALIO DURAN, JR., ROMEO DURAN, ANTONIO ABELLA, MARIANO REPOLLO, POLEGARPO DEGAMO, MARIO CEREZA, ANTONIO LAOROMILLA, PROCTUSO MAGALLANES, ELADIO TORRES, WARLITO DEMANA, HENRY GEDARO, DOISEDERIO GEMPERAO, ANICETO GEMPERAO, JERRY CAPAROSO, SERLITO NOYNAY, LUCIANO RECOPELACION, JUANITO GARCES, FELICIANO TORRES, RANILO VILLAREAL, FERMIN ALIVIANO, JUNJIE LAVISTE, TOMACITO DE CASTRO, JOSELITO CAPILINA, SAMUEL CASQUEJO, LEONARDO NATAD, BENJAMIN SAYSON, PEDRO INOC, EDWARD FLORES, EDWIN SASAN, JOSE REY INOT, EDGAR CORTES, ROMEO LOMBOG, NICOLAS RIBO, JAIME RUBIN, ORLANDO REGIS, RICKY ALCONZA, RUDY TAGALOG, VICTORINO TAGALOG, EDWARD COLINA, RONIE GONZAGA, PAUL CABILLADA, WILFREDO MAGALONA, JOEL PEPITO, PROSPERO MAGLASANG, ALLAN AGUSTIN, FAUSTO BARGAYO, NOMER SANCHEZ, JOLITO ALIN, BIRNING REGIDOR, GARRY DIGNOS, EDWIN DIGNOS, DARIO DIGNOS, ROGELIO DIGNOS, JIMMY CABIGAS, FERNANDO ANAJAO, ALEX FLORES, FERNANDO REMEDIO,

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TOTO MOSQUIDA, ALBERTO YAGONIA, VICTOR BARIQUIT, IGNACIO MISA, ELISEO VILLARENO, MANUEL LAVANDERO, VIRCEDE, MARIO RANIS, JAIME RESPONSO, MARIANITO AGUIRRE, MARCIAL HERUELA, GODOFREDO TUÑACAO, PERFECTO REGIS, ROEL DEMANA, ELMER CASTILLO, WINEFREDO CALAMOHOY, RUDY LUCERNAS, ANTONIO CAÑETE, EFRAIM YUBAL, JESUS CAPANGPANGAN, DAMIAN CAPANGPANGAN, TEOFILO CAPANGPANGAN, NILO CAPANGPANGAN, CORORENO CAPANGPANGAN, EMILIO MONDARES, PONCIANO AGANA, VICENTE DEVILLERES, MARIO ALIPAN, ROMANITO ALIPAN, ALDEON ROBINSON, FORTUNATO SOCO, CELSO COMPUESTO, WILLIAM ITORALDE, ANTONIO PESCADOR, JEREMIAS RONDERO, ESTROPIO PUNAY, LEOVIJILDO PUNAY, ROMEO QUILONGQUILONG, WILFREDO GESTOPA, ELISEO SANTOS, HENRY ORIO, JOSE YAP, NICANOR MANAYAGA, TEODORO SALINAS, ANICETO MONTERO, RAFAELITO VERZOSA, ALEJANDRO RANIDO, HENRY TALABA, ROMULO TALABA, DIOSDADO BESABELA, SYLVESTRE TORING, EDILBERTO PADILLA, ALLAN HEROSA, ERNESTO SUMALINOG, ARISTON VELASCO, JR., FERNANDO LOPEZ, ALFONSO ECHAVEZ, NICANOR CUIZON, DOMINADOR CAPARIDA, ZOSIMO CORORATION, ARTEMIO LOVERANES, DIONISIO YAGONIA, VICTOR CELOCIA, HIPOLITO VIDAS, TEODORO ARCILLAS, MARCELINO HABAGAT, GAUDIOSO LABASAN, LEOPOLDO REGIS, AQUILLO DAMOLE, WILLY ROBLE and NIEL ZANORIA, respondents., G.R. No. 144672, 2003 Jul 10, 2nd Division)BELLOSILLO , J.:TWO HUNDRED NINETY-ONE (291) workers filed their complaints (nine [9] complaints in all) against San Miguel Corporation (petitioner herein) and Maerc Integrated Services, Inc. (respondent herein), for illegal dismissal, underpayment of wages, non-payment of service incentive leave pays and other labor standards benefits, and for separation pays from 25 June to 24 October 1991. The complainants alleged that they were hired by San Miguel Corporation (SMC) through its agent or intermediary Maerc Integrated Services, Inc. (MAERC) to work in two (2) designated workplaces in Mandaue City: one, inside the SMC premises at the Mandaue Container Services, and another, in the Philphos Warehouse owned by MAERC. They washed and segregated various kinds of empty bottles used by SMC to sell and distribute its beer beverages to the consuming public. They were paid on a per piece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis. Complainants alleged that long before SMC contracted the services of MAERC a majority of them had already been working for SMC under the guise of being employees of another contractor, Jopard Services, until the services of the latter were terminated on 31 January 1988.SMC denied liability for the claims and averred that the complainants were not its employees but of MAERC, an independent contractor whose primary corporate purpose was to engage in the business of cleaning, receiving, sorting, classifying, etc., glass and metal containers.It appears that SMC entered into a Contract of Services with MAERC engaging its services on a non-exclusive basis for one (1) year beginning 1 February 1988. The contract was renewed for two (2) more years in March 1989. It also provided for its automatic renewal on a month-to-month basis after the two (2)-year period and required that a written notice to the other party be given thirty (30) days prior to the intended date of termination, should a party decide to discontinue with the contract.In a letter dated 15 May 1991, SMC informed MAERC of the termination of their service contract by the end of June 1991. SMC cited its plans to phase out its segregation activities starting 1 June 1991 due to the installation of labor and cost-saving devices. When the service contract was terminated, complainants claimed that SMC stopped them from performing their jobs; that this was tantamount to their being illegally dismissed by SMC who was their real employer as their activities were directly related, necessary and desirable to the main business of SMC; and, that MAERC was merely made a tool or a shield by SMC to avoid its liability under the Labor Code.MAERC for its part admitted that it recruited the complainants and placed them in the bottle segregation project of SMC but maintained that it was only conveniently used by SMC as an intermediary in operating the project or work directly related to the primary business concern of the latter with the end in view of avoiding its obligations and responsibilities towards the complaining workers.The nine (9) cases[1] were consolidated. On 31 January 1995 the Labor Arbiter rendered a decision holding that MAERC was an independent contractor.[2] He dismissed the complaints for illegal dismissal but ordered MAERC to pay complainants' separation benefits in the total amount of P2,334,150.00. MAERC and SMC were also ordered to jointly and severally pay complainants their wage differentials in the amount of P845,117.00 and to pay attorney's fees in the amount of P317,926.70.The complainants appealed the Labor Arbiter's finding that MAERC was an independent contractor and solely liable to pay the amount representing the separation benefits to the exclusion of SMC, as well as the Labor Arbiter's failure to grant the Temporary Living Allowance of the complainants. SMC appealed the award of attorney's fees.

The National Labor Relations Commission (NLRC) ruled in its 7 January 1997 decision that MAERC was a labor-only contractor and that complainants were employees of SMC.[3] The NLRC also held that whether MAERC was a job contractor or a labor-only contractor, SMC was still solidarily liable with MAERC for the latter's unpaid obligations, citing Art. 109[4] of the Labor Code. Thus, the NLRC modified the judgment of the Labor Arbiter and held SMC jointly and severally liable with MAERC for complainants' separation benefits. In addition, both respondents were ordered to pay jointly and severally an indemnity fee of P2,000.00 to each complainant.SMC moved for a reconsideration which resulted in the reduction of the award of attorney's fees from P317,926.70 to P84,511.70. The rest of the assailed decision was unchanged.[5]On 12 March 1998, SMC filed a petition for certiorari with prayer for the issuance of a temporary restraining order and/or injunction with this Court which then referred the petition to the Court of Appeals.On 28 April 2000 the Court of Appeals denied the petition and affirmed the decision of the NLRC.[6] The appellate court also denied SMC's motion for reconsideration in a resolution[7] dated 26 July 2000. Hence, petitioner seeks a review of the Court of Appeals’ judgment before this Court.Petitioner poses the same issues brought up in the appeals court and the pivotal question is whether the complainants are employees of petitioner SMC or of respondent MAERC. Relying heavily on the factual findings of the Labor Arbiter, petitioner maintained that MAERC was a legitimate job contractor. It directed this Court's attention to the undisputed evidence it claimed to establish this assertion: MAERC is a duly organized stock corporation whose primary purpose is to engage in the business of cleaning, receiving, sorting, classifying, grouping, sanitizing, packing, delivering, warehousing, trucking and shipping any glass and/or metal containers and that it had listed in its general information sheet two hundred seventy-eight (278) workers, twenty-two (22) supervisors, seven (7) managers/officers and a board of directors; it also voluntarily entered into a service contract on a non-exclusive basis with petitioner from which it earned a gross income of P42,110,568.24 from 17 October 1988 to 27 November 1991; the service contract specified that MAERC had the selection, engagement and discharge of its personnel, employees or agents or otherwise in the direction and control thereof; MAERC admitted that it had machinery, equipment and fixed assets used in its business valued at P4,608,080.00; and, it failed to appeal the Labor Arbiter's decision which declared it to be an independent contractor and ordered it to solely pay the separation benefits of the complaining workers.We find no basis to overturn the Court of Appeals and the NLRC. Well-established is the principle that findings of fact of quasi-judicial bodies, like the NLRC, are accorded with respect, even finality, if supported by substantial evidence.[8] Particularly when passed upon and upheld by the Court of Appeals, they are binding and conclusive upon the Supreme Court and will not normally be disturbed.[9]This Court has invariably held that in ascertaining an employer-employee relationship, the following factors are considered: (a) the selection and engagement of employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the power to control an employee's conduct, the last being the most important.[10] Application of the aforesaid criteria clearly indicates an employer-employee relationship between petitioner and the complainants.Evidence discloses that petitioner played a large and indispensable part in the hiring of MAERC's workers. It also appears that majority of the complainants had already been working for SMC long before the signing of the service contract between SMC and MAERC in 1988.The incorporators of MAERC admitted having supplied and recruited workers for SMC even before MAERC was created.[11] The NLRC also found that when MAERC was organized into a corporation in February 1988, the complainants who were then already working for SMC were made to go through the motion of applying for work with Ms. Olga Ouano, President and General Manager of MAERC, upon the instruction of SMC through its supervisors to make it appear that complainants were hired by MAERC. This was testified to by two (2) of the workers who were segregator and forklift operator assigned to the Beer Marketing Division at the SMC compound and who had been working with SMC under a purported contractor Jopard Services since March 1979 and March 1981, respectively. Both witnesses also testified that together with other complainants they continued working for SMC without break from Jopard Services to MAERC. As for the payment of workers' wages, it is conceded that MAERC was paid in lump sum but records suggest that the remuneration was not computed merely according to the result or the volume of work performed. The memoranda of the labor rates bearing the signature of a Vice-President and General Manager for the Vismin Beer Operations[12] as well as a director of SMC[13] appended to the contract of service reveal that SMC assumed the responsibility of paying for the mandated overtime, holiday and rest day pays of the MAERC workers.[14] SMC also paid the employer's share of the SSS and Medicare contributions, the 13th month pay, incentive leave pay and maternity benefits.[15] In the lump sum received, MAERC earned a marginal amount representing the contractor’s share. These lend credence to the complaining workers' assertion that while MAERC paid the wages of the complainants, it merely acted as an agent of SMC.

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Petitioner insists that the most significant determinant of an employer-employee relationship, i.e., the right to control, is absent. The contract of services between MAERC and SMC provided that MAERC was an independent contractor and that the workers hired by it "shall not, in any manner and under any circumstances, be considered employees of the Company, and that the Company has no control or supervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor's obligations under the Contract."[16]In deciding the question of control, the language of the contract is not determinative of the parties' relationship; rather, it is the totality of the facts and surrounding circumstances of each case.[17]Despite SMC’s disclaimer, there are indicia that it actively supervised the complainants. SMC maintained a constant presence in the workplace through its own checkers. Its asseveration that the checkers were there only to check the end result was belied by the testimony of Carlito R. Singson, head of the Mandaue Container Service of SMC, that the checkers were also tasked to report on the identity of the workers whose performance or quality of work was not according to the rules and standards set by SMC. According to Singson, "it (was) necessary to identify the names of those concerned so that the management [referring to MAERC] could call the attention to make these people improve the quality of work."[18]Viewed alongside the findings of the Labor Arbiter that the MAERC organizational set-up in the bottle segregation project was such that the segregators/cleaners were supervised by checkers and each checker was also under a supervisor who was in turn under a field supervisor, the responsibility of watching over the MAERC workers by MAERC personnel became superfluous with the presence of additional checkers from SMC.Reinforcing the belief that the SMC exerted control over the work performed by the segregators or cleaners, albeit through the instrumentality of MAERC, were letters by SMC to the MAERC management. These were letters[19] written by a certain Mr. W. Padin[20] addressed to the President and General Manager of MAERC as well as to its head of operations,[21] and a third letter[22] from Carlito R. Singson also addressed to the President and General Manager of MAERC. More than just a mere written report of the number of bottles improperly cleaned and/or segregated, the letters named three (3) workers who were responsible for the rejection of several bottles, specified the infraction committed in the segregation and cleaning, then recommended the penalty to be imposed. Evidently, these workers were reported by the SMC checkers to the SMC inspector.While the Labor Arbiter dismissed these letters as merely indicative of the concern in the end-result of the job contracted by MAERC, we find more credible the contention of the complainants that these were manifestations of the right of petitioner to recommend disciplinary measures over MAERC employees. Although calling the attention of its contractors as to the quality of their services may reasonably be done by SMC, there appears to be no need to instruct MAERC as to what disciplinary measures should be imposed on the specific workers who were responsible for rejections of bottles. This conduct by SMC representatives went beyond a mere reminder with respect to the improperly cleaned/segregated bottles or a genuine concern in the outcome of the job contracted by MAERC.Control of the premises in which the contractor's work was performed was also viewed as another phase of control over the work, and this strongly tended to disprove the independence of the contractor.[23] In the case at bar, the bulk of the MAERC segregation activities was accomplished at the MAERC-owned PHILPHOS warehouse but the building along with the machinery and equipment in the facility was actually being rented by SMC. This is evident from the memoranda of labor rates which included rates for the use of forklifts and the warehouse at the PHILPHOS area, hence, the NLRC’s conclusion that the payment for the rent was cleverly disguised since MAERC was not in the business of renting warehouses and forklifts.[24]Other instances attesting to SMC’s supervision of the workers are found in the minutes of the meeting held by the SMC officers on 5 December 1988. Among those matters discussed were the calling of SMC contractors to have workers assigned to segregation to undergo and pass eye examination to be done by SMC EENT company doctor and a review of compensation/incentive system for segregators to improve the segregation activities.[25]But the most telling evidence is a letter by Mr. Antonio Ouano, Vice-President of MAERC dated 27 May 1991 addressed to Francisco Eizmendi, SMC President and Chief Executive Officer, asking the latter to reconsider the phasing out of SMC’s segregation activities in Mandaue City. The letter was not denied but in fact used by SMC to advance its own arguments. [26]Briefly, the letter exposed the actual state of affairs under which MAERC was formed and engaged to handle the segregation project of SMC. It provided an account of how in 1987 Eizmendi approached the would-be incorporators of MAERC and offered them the business of servicing the SMC bottle-washing and segregation department in order to avert an impending labor strike. After initial reservations, MAERC incorporators accepted the offer and before long trial segregation was conducted by SMC at the PHILPHOS warehouse.[27]The letter also set out the circumstances under which MAERC entered into the Contract of Services in 1988 with the assurances of the SMC President and CEO that the employment of MAERC's services would be long term to enable it to recover its investments. It was with this understanding that MAERC undertook borrowings from banking

institutions and from affiliate corporations so that it could comply with the demands of SMC to invest in machinery and facilities. In sum, the letter attested to an arrangement entered into by the two (2) parties which was not reflected in the Contract of Services. A peculiar relationship mutually beneficial for a time but nonetheless ended in dispute when SMC decided to prematurely end the contract leaving MAERC to shoulder all the obligations to the workers.Petitioner also ascribes as error the failure of the Court of Appeals to apply the ruling in Neri v. NLRC.[28] In that case, it was held that the law did not require one to possess both substantial capital and investment in the form of tools, equipment, machinery, work premises, among others, to be considered a job contractor. The second condition to establish permissible job contracting[29] was sufficiently met if one possessed either attribute.Accordingly, petitioner alleged that the appellate court and the NLRC erred when they declared MAERC a labor-only contractor despite the finding that MAERC had investments amounting to P4,608,080.00 consisting of buildings, machinery and equipment.However, in Vinoya v. NLRC,[30] we clarified that it was not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises, etc., to be considered an independent contractor. In fact, jurisprudential holdings were to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether the contractor was carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the workers; the power of the employer with respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.[31]In Neri, the Court considered not only the fact that respondent Building Care Corporation (BBC) had substantial capitalization but noted that BCC carried on an independent business and performed its contract according to its own manner and method, free from the control and supervision of its principal in all matters except as to the results thereof.[32] The Court likewise mentioned that the employees of BCC were engaged to perform specific special services for their principal.[33] The status of BCC had also been passed upon by the Court in a previous case where it was found to be a qualified job contractor because it was "a big firm which services among others, a university, an international bank, a big local bank, a hospital center, government agencies, etc." Furthermore, there were only two (2) complainants in that case who were not only selected and hired by the contractor before being assigned to work in the Cagayan de Oro branch of FEBTC but the Court also found that the contractor maintained effective supervision and control over them.In comparison, MAERC, as earlier discussed, displayed the characteristics of a labor-only contractor. Moreover, while MAERC’s investments in the form of buildings, tools and equipment amounted to more than P4 Million, we cannot disregard the fact that it was the SMC which required MAERC to undertake such investments under the understanding that the business relationship between petitioner and MAERC would be on a long term basis. Nor do we believe MAERC to have an independent business. Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its segregation division, none of its workers was also ever assigned to any other establishment, thus convincing us that it was created solely to service the needs of SMC. Naturally, with the severance of relationship between MAERC and SMC followed MAERC’s cessation of operations, the loss of jobs for the whole MAERC workforce and the resulting actions instituted by the workers.Petitioner also alleged that the Court of Appeals erred in ruling that "whether MAERC is an independent contractor or a labor-only contractor, SMC is liable with MAERC for the latter's unpaid obligations to MAERC's workers."On this point, we agree with petitioner as distinctions must be made. In legitimate job contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages.[34] The principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees' wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.On the other hand, in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees.This distinction between job contractor and labor-only contractor, however, will not discharge SMC from paying the separation benefits of the workers, inasmuch as MAERC was shown to be a labor-only contractor; in which case, petitioner's liability is that of a direct employer and thus solidarily liable with MAERC.SMC also failed to comply with the requirement of written notice to both the employees concerned and the Department of Labor and Employment (DOLE) which must be given at least one (1) month before the intended date

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of retrenchment.[35] The fines imposed for violations of the notice requirement have varied.[36] The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.[37] For its failure, petitioner was justly ordered to indemnify each displaced worker P2,000.00.The NLRC and the Court of Appeals affirmed the Labor Arbiter’s award of separation pay to the complainants in the total amount of P2,334,150.00 and of wage differentials in the total amount of P845,117.00. These amounts are the aggregate of the awards due the two hundred ninety-one (291) complainants as computed by the Labor Arbiter. The following is a summary of the computation of the benefits due the complainants which is part of the Decision of the Labor Arbiter.S U M M A R YNAME SALARY DIFFERENTIAL SEPARATION PAY TOTAL

Case No. O6-1165-91 1. Rogelio Prado, Jr P3,056.00 P8,190.00 P11,246.00 2. Eddie Selle 3,056.00 8,190.00 11,246.00 3. Alejandro Annabieza 3,056.00 8,190.00 11,246.00 4. Ananias Jumao-as 3,056.00 8,190.00 11,246.00 5. Consorcio Manloloyo 3,056.00 8,190.00 11,246.00 6. Anananias Alcotin 3,056.00 8,190.00 11,246.00 7. Rey Gestopa 2,865.00 8,190.00 11,055.00 8. Edgardo Nuñez 2,865.00 8,190.00 11,055.00 9. Junel Cabatingan 2,865.00 8,190.00 11,055.00 10. Paul Dumaqueta 2,865.00 8,190.00 11,055.00 11. Felimon Echavez 2,843.00 8,190.00 10,673.00 12. Vito Sealana 2,843.00 8,190.00 10,673.00 13. Denecia Palao 2,843.00 8,190.00 10,673.00 14. Roberto Lapiz 3,056.00 8,190.00 11,246.00 15. Baltazar Labio 3,056.00 8,190.00 11,246.00 16. Leonardo Bongo 3,056.00 8,190.00 11,246.00 17. El Cid Icalina 3,056.00 8,190.00 11,246.00 18. Jose Diocampo 3,056.00 8,190.00 11,246.00 19. Adelo Cantillas 3,056.00 8,190.00 11,246.00 20. Isaias Branzuela 3,056.00 8,190.00 11,246.00 21. Ramon Rosales 3,056.00 8,190.00 11,246.00 22. Gaudencio Peson 3,056.00 8,190.00 11,246.00 23. Hector Cabañog 3,056.00 8,190.00 11,246.00 24. Edgardo Dagmayan 3,056.00 8,190.00 11,246.00 25. Rogelio Cruz 3,056.00 8,190.00 11,246.00 26. Rolando Espina 3,056.00 8,190.00 11,246.00 27. Bernardino Regidor 3,056.00 8,190.00 11,246.00 28. Arnelio Sumalinog 3,056.00 8,190.00 11,246.00 29. Gumersindo Alcontin 3,056.00 8,190.00 11,246.00 30. Loreto Nuñez 3,056.00 8,190.00 11,246.00 31. Joebe Boy Dayon 3,056.00 8,190.00 11,246.00 32. Conrado Mesanque 3,056.00 8,190.00 11,246.00 33. Marcelo Pescador 3,056.00 8,190.00 11,246.00 34. Marcelino Jabagat 3,056.00 8,190.00 11,246.00 35. Vicente Devilleres 3,056.00 8,190.00 11,246.00 36. Vicente Alin 3,056.00 8,190.00 11,246.00 37. Rodolfo Pahugot 3,056.00 8,190.00 11,246.00 38. Ruel Navares 3,056.00 8,190.00 11,246.00 39. Danilo Anabieza 3,056.00 8,190.00 11,246.00 40. Alex Juen 3,056.00 8,190.00 11,246.00 41. Juanito Garces 3,056.00 8,190.00 11,246.00 42. Silvino Limbaga 3,056.00 8,190.00 11,246.00 43. Aurelio Jurpacio 3,056.00 8,190.00 11,246.00 44. Jovito Loon 3,056.00 8,190.00 11,246.00

45. Victor Tenedero 3,056.00 8,190.00 11,246.00 46. Sasing Moreno 3,056.00 8,190.00 11,246.00 47. Wilfredo Hortezuela 3,056.00 8,190.00 11,246.00 48. Joselito Melendez 3,056.00 8,190.00 11,246.00 49. Alfredo Gestopa 3,056.00 8,190.00 11,246.00 50. Regino Gabuya 3,056.00 8,190.00 11,246.00 51. Jorge Gamuzarno 3,056.00 8,190.00 11,246.00 52. Lolito Cocido 3,056.00 8,190.00 11,246.00 53. Efraim Yubal 3,056.00 8,190.00 11,246.00 54. Venerando Roamar 3,056.00 8,190.00 11,246.00 55. Gerardo Butalid 3,056.00 8,190.00 11,246.00 56. Hipolito Vidas 3,056.00 8,190.00 11,246.00 57. Vengelito Frias 3,056.00 8,190.00 11,246.00 58. Vicente Celacio 3,056.00 8,190.00 11,246.00 59. Corlito Pestañas 3,056.00 8,190.00 11,246.00 60. Ervin Hyrosa 3,056.00 8,190.00 11,246.00 61. Rommel Guerero 3,056.00 8,190.00 11,246.00 62. Rodrigo Enerlas 3,056.00 8,190.00 11,246.00

63. Francisco Carbonilla 3,056.00 8,190.00 11,246.00 64. Nicanor Cuizon 3,056.00 8,190.00 11,246.00 65. Pedro Briones 3,056.00 8,190.00 11,246.00 66. Rodolfo Cabalhug 3,056.00 8,190.00 11,246.00 67. Teofilo Ricardo 3,056.00 8,190.00 11,246.00 68. Danilo R. Dizon 3,056.00 8,190.00 11,246.00 69. Alberto Embong 3,056.00 8,190.00 11,246.00 70. Alfonso Echavez 3,056.00 8,190.00 11,246.00 71. Gonzalo Roraceña 3,056.00 8,190.00 11,246.00 72. Marcelo Caracina 3,056.00 8,190.00 11,246.00 73. Raul Borres 3,056.00 8,190.00 11,246.00 74. Lino Tongalamos 3,056.00 8,190.00 11,246.00 75. Artemio Bongo, Jr. 3,056.00 8,190.00 11,246.00 76. Roy Avila 3,056.00 8,190.00 11,246.00 77. Melchor Freglo 3,056.00 8,190.00 11,246.00 78. Raul Cabillada 3,056.00 8,190.00 11,246.00 79. Eddie Catab 3,056.00 8,190.00 11,246.00 80. Melencio Durano 3,056.00 8,190.00 11,246.00 81. Allan Rago 3,056.00 8,190.00 11,246.00 82. Dominador Caparida 3,056.00 8,190.00 11,246.00 83. Jovito Catab 3,056.00 8,190.00 11,246.00 84. Albert Laspiñas 3,056.00 8,190.00 11,246.00 85. Alex Anabieza 3,056.00 8,190.00 11,246.00 86. Nestor Reynante 3,056.00 8,190.00 11,246.00 87. Eulogio Estopa 3,056.00 8,190.00 11,246.00 88. Mario Bolo 3,056.00 8,190.00 11,246.00 89. Ederlito A. Balocano 3,056.00 8,190.00 11,246.00 90. Joel Pepito 3,056.00 8,190.00 11,246.00 91. Reynaldo Ludia 3,056.00 5,460.00 8,516.00 92. Manuel Cinco 3,056.00 5,460.00 8,516.00 93. Allan Agustin 3,056.00 8,190.00 11,246.00 94. Pablito Polegrates 3,056.00 8,190.00 11,246.00 95. Clyde Prado 3,056.00 8,190.00 11,246.00 96. Dindo Misa 3,056.00 8,190.00 11,246.00 97. Roger Sasing 3,056.00 8,190.00 11,246.00 98. Ramon Arcallana 3,056.00 8,190.00 11,246.00 99. Gabriel Salas 3,056.00 8,190.00 11,246.00100. Edwin Sasan 3,056.00 8,190.00 11,246.00

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101. Diosdado Barriga 3,056.00 8,190.00 11,246.00102. Moises Sasan 3,056.00 8,190.00 11,246.00103. Sinforiano Cantago 3,056.00 8,190.00 11,246.00104. Leonardo Marturillas 3,056.00 8,190.00 11,246.00105. Mario Ranis 3,056.00 8,190.00 11,246.00106. Alejandro Ranido 3,056.00 8,190.00 11,246.00107. Jerome Prado 3,056.00 8,190.00 11,246.00108. Raul Oyao 3,056.00 8,190.00 11,246.00109. Victor Celacio 3,056.00 5,460.00 8,516.00TOTAL P330,621.00 P884,520.00 P1,215141.00Case No. 07-1177-91110. Gerardo Roque 3,056.00 P5,460.00 P8,516.00Case No. 07-1176-91111. Zosimo Cararaton P3,056.00 P8,192.00 11,246.00Case No. 07-1219-91112. Virgilio Zanoria P3,056.00 P5,460.00 P8,516.00113. Jose Zanoria 3,056.00 5,460.00 8,516.00114. Allan Zanoria 3,056.00 5,460.00 8,516.00115. Victorino Seno 3,056.00 5,460.00 8,516.00116. Teodulo Jumao-as 3,056.00 5,460.00 8,516.00117. Alexander Hera 3,056.00 5,460.00 8,516.00118. Anthony Araneta 3,056.00 5,460.00 8,516.00119. Aldrin Suson 3,056.00 5,460.00 8,516.00120. Victor Verano 3,056.00 5,460.00 8,516.00121. Ruel Sufrerencia 3,056.00 5,460.00 8,516.00122. Alfred Naparate 3,056.00 5,460.00 8,516.00123. Wenceslao Baclohon 3,056.00 8,190.00 11,246.00124. Eduardo Langita 3,056.00 8,190.00 11,246.00TOTAL P39,728.00 P76,440.00 P116,168.00Case No. 07-1283-91125. Feliz Ordeneza P2,816.00 P8,190.00 P11,006.00126. Arsenio Logarta 3,056.00 8,190.00 11,246.00127. Eduardo dela Vega 3,056.00 8,190.00 11,246.00128. Joventino Canoog 3,056.00 8,190.00 11,246.00TOTAL P11,984.00 P32,760.00 P44,744.00Case No. 10-1584-91129. Regelio Abapo P3,056.00 8,190.00 11,246.00Case No. 08-1321-91130. Ricardo Ramas P3,056.00 P8,190.00 P11,246.00Case No. 09-1507-91131. Jose Bandialan P2,816.00 P8,190.00 P11,006.00132. Antonio Basalan 2,816.00 8,190.00 11,006.00133. Lyndon Basalan 2,816.00 8,190.00 11,006.00134. Wilfredo Aliviano 2,816.00 8,190.00 11,006.00135. Bienvenido Rosario 2,816.00 8,190.00 11,006.00136. Jesus Capangpangan 2,816.00 8,190.00 11,006.00137. Renato Mendoza 2,816.00 8,190.00 11,006.00138. Alejandro Catandejan 2,816.00 8,190.00 11,006.00139. Ruben Talaba 2,816.00 8,190.00 11,006.00140. Filemon Echavez 2,816.00 8,190.00 11,006.00141. Marcelino Caracena 2,816.00 8,190.00 11,006.00142. Ignacio Misa 2,816.00 8,190.00 11,006.00143. Feliciano Agbay 2,816.00 8,190.00 11,006.00144. Victor Maglasang 2,816.00 8,190.00 11,006.00145. Arturo Heyrosa 2,816.00 8,190.00 11,006.00146. Alipio Tirol 2,816.00 8,190.00 11,006.00147. Rosendo Mondares 2,816.00 8,190.00 11,006.00

148. Aniceto Ludia 2,816.00 8,190.00 11,006.00149. Reynaldo Lavandero 2,816.00 8,190.00 11,006.00150. Reuyan Herculano 2,816.00 8,190.00 11,006.00151. Teodula Nique 2,816.00 8,190.00 11,006.00TOTAL P59,136.00 P171,990.00 P231,126.00Case No. 06-1145-91152. Emerberto Orque P2,816.00 P8,190.00 P11,006.00153. Zosimo Baobao 2,816.00 8,190.00 11,006.00154. Medardo Singson 2,816.00 8,190.00 11,006.00155. Antonio Patalinghug 2,816.00 8,190.00 11,006.00156. Ernesto Singson 2,816.00 8,190.00 11,006.00157. Roberto Torres 2,816.00 8,190.00 11,006.00158. Cesar Escario 2,816.00 8,190.00 11,006.00159. Leodegario Dollecin 2,816.00 8,190.00 11,006.00160 Alberto Anoba 2,816.00 8,190.00 11,006.00161. Rodrigo Bisnar 2,816.00 8,190.00 11,006.00162. Zosimo Bingas 2,816.00 8,190.00 11,006.00163. Rosalio Duran, Sr. 2,816.00 8,190.00 11,006.00164. Rosalio Duran, Jr. 2,816.00 8,190.00 11,006.00165. Romeo Duran 2,816.00 8,190.00 11,006.00166. Antonio Abella 2,816.00 8,190.00 11,006.00167. Mariano Repollo 2,816.00 8,190.00 11,006.00168. Polegarpo Degamo 2,816.00 8,190.00 11,006.00169. Mario Cereza 2,816.00 8,190.00 11,006.00170. Antonio Laoronilla 2,816.00 8,190.00 11,006.00171. Proctuso Magallanes 2,816.00 8,190.00 11,006.00172. Eladio Torres 2,816.00 8,190.00 11,006.00173. Warlito Demana 2,816.00 8,190.00 11,006.00174. Henry Gedaro 2,816.00 8,190.00 11,006.00175. Doisederio Gemperao 2,816.00 8,190.00 11,006.00176. Aniceto Gemperao 2,816.00 8,190.00 11,006.00177. Jerry Caparoso 2,816.00 8,190.00 11,006.00178. Serlito Noynay 2,816.00 8,190.00 11,006.00179. Luciano Recopelacion 2,816.00 8,190.00 11,006.00180. Juanito Garces 2,816.00 8,190.00 11,006.00181. Feliciano Torres 2,816.00 8,190.00 11,006.00182. Ranilo Villareal 2,816.00 8,190.00 11,006.00183. Fermin Aliviano 2,816.00 8,190.00 11,006.00184. Junjie Laviste 2,816.00 8,190.00 11,006.00185. Tomacito de Castro 2,816.00 8,190.00 11,006.00186. Joselito Capilina 2,816.00 8,190.00 11,006.00187. Samuel Casquejo 2,816.00 8,190.00 11,006.00188. Leonardo Natad 2,816.00 8,190.00 11,006.00189. Benjamin Sayson 2,816.00 8,190.00 11,006.00190. Pedro Inoc 2,816.00 8,190.00 11,006.00191. Edward Flores 2,816.00 8,190.00 11,006.00192. Edwin Sasan 2,816.00 8,190.00 11,006.00193. Jose Rey Inot 2,816.00 8,190.00 11,006.00194. Edgar Cortes 2,816.00 8,190.00 11,006.00195. Romeo Lombog 2,816.00 8,190.00 11,006.00196. Nicolas Ribo 2,816.00 8,190.00 11,006.00197. Jaime Rubin 2,816.00 8,190.00 11,006.00198. Orlando Regis 2,816.00 8,190.00 11,006.00199. Ricky Alconza 2,816.00 8,190.00 11,006.00200. Rudy Tagalog 2,816.00 8,190.00 11,006.00201. Victorino Tagalog 2,816.00 8,190.00 11,006.00202. Edward Colina 2,816.00 8,190.00 11,006.00

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203. Ronie Gonzaga 2,816.00 8,190.00 11,006.00204. Paul Cabillada 2,816.00 8,190.00 11,006.00205. Wilfredo Magalona 2,816.00 8,190.00 11,006.00206. Joel Pepito 2,816.00 8,190.00 11,006.00207. Prospero Maglasang 2,816.00 8,190.00 11,006.00208. Allan Agustin 2,816.00 8,190.00 11,006.00209. Fausto Bargayo 2,816.00 8,190.00 11,006.00210. Nomer Sanchez 2,816.00 8,190.00 11,006.00211. Jolito Alin 2,816.00 8,190.00 11,006.00212. Birning Regidor 2,816.00 8,190.00 11,006.00213. Garry Dignos 2,816.00 8,190.00 11,006.00214. Edwin Dignos 2,816.00 8,190.00 11,006.00215. Dario Dignos 2,816.00 8,190.00 11,006.00216. Rogelio Dignos 2,816.00 8,190.00 11,006.00217. Jimmy Cabigas 2,816.00 8,190.00 11,006.00218. Fernando Anajao 2,816.00 8,190.00 11,006.00219. Alex Flores 2,816.00 8,190.00 11,006.00220. Fernando Remedio 2,816.00 8,190.00 11,006.00221. Toto Mosquido 2,816.00 8,190.00 11,006.00222. Alberto Yagonia 2,816.00 8,190.00 11,006.00223. Victor Bariquit 2,816.00 8,190.00 11,006.00224. Ignacio Misa 2,816.00 8,190.00 11,006.00225. Eliseo Villareno 2,816.00 8,190.00 11,006.00226. Manuel Lavandero 2,816.00 8,190.00 11,006.00227. Vircede 2,816.00 8,190.00 11,006.00228. Mario Ranis 2,816.00 8,190.00 11,006.00229. Jaime Responso 2,816.00 8,190.00 11,006.00230. Marianito Aguirre 2,816.00 8,190.00 11,006.00231. Marcial Heruela 2,816.00 8,190.00 11,006.00232. Godofredo Tuñacao 2,816.00 8,190.00 11,006.00233. Perfecto Regis 2,816.00 8,190.00 11,006.00234. Roel Demana 2,816.00 8,190.00 11,006.00235. Elmer Castillo 2,816.00 8,190.00 11,006.00236. Wilfredo Calamohoy 2,816.00 8,190.00 11,006.00237. Rudy Lucernas 2,816.00 8,190.00 11,006.00238. Antonio Cañete 2,816.00 8,190.00 11,006.00239. Efraim Yubal 2,816.00 8,190.00 11,006.00240. Jesus Capangpangan 2,816.00 8,190.00 11,006.00241. Damian Capangpangan 2,816.00 8,190.00 11,006.00242. Teofilo Capangpangan 2,816.00 8,190.00 11,006.00243. Nilo Capangpangan 2,816.00 8,190.00 11,006.00244. Cororeno Capangpangan 2,816.00 8,190.00 11,006.00245. Emilio Mondares 2,816.00 8,190.00 11,006.00246. Ponciano Agana 2,816.00 8,190.00 11,006.00247. Vicente Devilleres 2,816.00 8,190.00 11,006.00248. Mario Alipan 2,816.00 8,190.00 11,006.00249. Romanito Alipan 2,816.00 8,190.00 11,006.00250. Aldeon Robinson 2,816.00 8,190.00 11,006.00251. Fortunato Soco 2,816.00 8,190.00 11,006.00252. Celso Compuesto 2,816.00 8,190.00 11,006.00253. William Itoralde 2,816.00 8,190.00 11,006.00254. Antonio Pescador 2,816.00 8,190.00 11,006.00255. Jeremias Rondero 2,816.00 8,190.00 11,006.00256. Estropio Punay 2,816.00 8,190.00 11,006.00257. Leovijildo Punay 2,816.00 8,190.00 11,006.00258. Romeo Quilongquilong 2,816.00 8,190.00 11,006.00259. Wilfredo Gestopa 2,816.00 8,190.00 11,006.00

260. Eliseo Santos 2,816.00 8,190.00 11,006.00261. Henry Orio 2,816.00 8,190.00 11,006.00262. Jose Yap 2,816.00 8,190.00 11,006.00263. Nicanor Manayaga 2,816.00 8,190.00 11,006.00264. Teodoro Salinas 2,816.00 8,190.00 11,006.00265. Aniceto Montero 2,816.00 8,190.00 11,006.00266. Rafaelito Versoza 2,816.00 8,190.00 11,006.00267. Alejandro Ranido 2,816.00 8,190.00 11,006.00268. Henry Talaba 2,816.00 8,190.00 11,006.00269. Romulo Talaba 2,816.00 8,190.00 11,006.00270. Diosdado Besabela 2,816.00 8,190.00 11,006.00271. Sylvestre Toring 2,816.00 8,190.00 11,006.00272. Edilberto Padilla 2,816.00 8,190.00 11,006.00273. Allan Herosa 2,816.00 8,190.00 11,006.00274. Ernesto Sumalinog 2,816.00 8,190.00 11,006.00275. Ariston Velasco, Jr. 2,816.00 8,190.00 11,006.00276. Fernando Lopez 2,816.00 8,190.00 11,006.00277. Alfonso Echavez 2,816.00 8,190.00 11,006.00278. Nicanor Cuizon 2,816.00 8,190.00 11,006.00279. Dominador Caparida 2,816.00 8,190.00 11,006.00280. Zosimo Cororation 2,816.00 8,190.00 11,006.00281. Artemio Loveranes 2,816.00 8,190.00 11,006.00282. Dionisio Yagonia 2,816.00 8,190.00 11,006.00283. Victor Celocia 2,816.00 8,190.00 11,006.00284. Hipolito Vidas 2,816.00 8,190.00 11,006.00285. Teodoro Arcillas 2,816.00 8,190.00 11,006.00286. Marcelino Habagat 2,816.00 8,190.00 11,006.00287. Gaudioso Labasan 2,816.00 8,190.00 11,006.00288. Leopoldo Regis 2,816.00 8,190.00 11,006.00289. Aquillo Damole 2,816.00 8,190.00 11,006.00290. Willy Roble 2,816.00 8,190.00 11,006.00TOTAL P391,424.00 P1,138,410.00 P1,529,834.00R E C A PCASE NO. SALARY SEPARATION TOTAL DIFFERENTIAL PAY06-1165-91 P330,621.00 P884,520.00 P1,215,141.0007-1177-91 3,056.00 5,460.00 8,516.0006-1176-91 3,056.00 8,190.00 11,246.0007-1219-91 39,728.00 76,440.00 116,168.0007-1283-91 11,984.00 32,760.00 44,744.0010-1584-91 3,056.00 8,190.00 11,246.0008-1321-91 3,056.00 8,190.00 11,246.0009-1507-91 59,136.00 171,990.00 231,126.0006-1145-91 391,424.00 1,138,410.00 1,529,834.00GRAND TOTAL P845,117.00 P2,334,150.00 P3,179,267.00However, certain matters have cropped up which require a review of the awards to some complainants and a recomputation by the Labor Arbiter of the total amounts.A scrutiny of the enumeration of all the complainants shows that some names38 appear twice by virtue of their being included in two (2) of the nine (9) consolidated cases. A check of the Labor Arbiter’s computation discloses that most of these names were awarded different amounts of separation pay or wage differential in each separate case where they were impleaded as parties because the allegations of the length and period of their employment for the separate cases, though overlapping, were also different. The records before us are incomplete and do not aid in verifying whether these names belong to the same persons but at least three (3) of those names were found to have identical signatures in the complaint forms they filed in the separate cases. It is likely therefore that the Labor Arbiter erroneously granted some complainants separation benefits and wage differentials twice. Apart from this, we also discovered some names that are almost identical.39 It is possible that the minor variance in the spelling of some

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names may have been a typographical error and refer to the same persons although the records seem to be inconclusive.Furthermore, one of the original complainants40 was inadvertently omitted by the Labor Arbiter from his computations.41 The counsel for the complainants promptly filed a motion for inclusion/correction42 which motion was treated as an appeal of the Decision as the Labor Arbiter was prohibited by the rules of the NLRC from entertaining any motion at that stage of the proceedings.43 The NLRC for its part acknowledged the omission44 but both the Commission and subsequently the Court of Appeals failed to rectify the oversight in their decisions.Finally, the NLRC ordered both MAERC and SMC to pay P84,511.70 in attorneys fees which is ten percent (10%) of the salary differentials awarded to the complainants in accordance with Art. 111 of the Labor Code. The Court of Appeals also affirmed the award. Consequently, with the recomputation of the salary differentials, the award of attorney’s fees must also be modified.WHEREFORE, the petition is denied. The assailed Decision of the Court of Appeals dated 28 April 2000 and the Resolution dated 26 July 2000 are affirmed with MODIFICATION. Respondent Maerc Integrated Services, Inc. is declared to be a labor-only contractor. Accordingly, both petitioner San Miguel Corporation and respondent Maerc Integrated Services, Inc., are ordered to jointly and severally pay complainants (private respondents herein) separation benefits and wage differentials as may be finally recomputed by the Labor Arbiter as herein directed, plus attorney’s fees to be computed on the basis of ten percent (10%) of the amounts which complainants may recover pursuant to Art. 111 of the Labor Code, as well as an indemnity fee of P2,000.00 to each complainant.The Labor Arbiter is directed to review and recompute the award of separation pays and wage differentials due complainants whose names appear twice or are notably similar, compute the monetary award due to complainant Niel Zanoria whose name was omitted in the Labor Arbiter’s Decision and immediately execute the monetary awards as found in the Labor Arbiter’s computations insofar as those complainants whose entitlement to separation pay and wage differentials and the amounts thereof are no longer in question. Costs against petitioner.SO ORDERED.Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.Quisumbing, J., on leave.([2008V254] PHILIPPINE AIRLINES, INC., Petitioner, versus ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARESUSA, JEFFREY LLENOS, ROQUE PILAPIL, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERRIE ALEGRES, BENEDICTO AUXTERO, EDUARDO MAGDADARAUG, NELSON M. DULCE, and ALLAN BENTUZAL, Respondents., G.R. No. 146408, 2008 Feb 29, 2nd Division)CARPIO MORALES, J.:Petitioner Philippine Airlines as Owner, and Synergy Services Corporation (Synergy) as Contractor, entered into an Agreement[1] on July 15, 1991 whereby Synergy undertook to “provide loading, unloading, delivery of baggage and cargo and other related services to and from [petitioner]’s aircraft at the Mactan Station.”[2]The Agreement specified the following “Scope of Services” of Contractor Synergy:1.2 CONTRACTOR shall furnish all the necessary capital, workers, loading, unloading and delivery materials, facilities, supplies, equipment and tools for the satisfactory performance and execution of the following services (the Work):a. Loading and unloading of baggage and cargo to and from the aircraft;b. Delivering of baggage from the ramp to the baggage claim area;c. Picking up of baggage from the baggage sorting area to the designated parked aircraft;d. Delivering of cargo unloaded from the flight to cargo terminal;e. Other related jobs (but not janitorial functions) as may be required and necessary;CONTRACTOR shall perform and execute the aforementioned Work at the following areas located at Mactan Station, to wit:a. Ramp Areab. Baggage Claim Areac. Cargo Terminal Area, andd. Baggage Sorting Area[3] nderscoring supplied)And it expressly provided that Synergy was “an independent contractor and . . . that there w[ould] be no employer-employee relationship between CONTRACTOR and/or its employees on the one hand, and OWNER, on the other.”[4]On the duration of the Agreement, Section 10 thereof provided:

10. 1 Should at any time OWNER find the services herein undertaken by CONTRACTOR to be unsatisfactory, it shall notify CONTRACTOR who shall have fifteen (15) days from such notice within which to improve the services. If CONTRACTOR fails to improve the services under this Agreement according to OWNER’S specifications and standards, OWNER shall have the right to terminate this Agreement immediately and without advance notice.10.2 Should CONTRACTOR fail to improve the services within the period stated above or should CONTRACTOR breach the terms of this Agreement and fail or refuse to perform the Work in such a manner as will be consistent with the achievement of the result therein contracted for or in any other way fail to comply strictly with any terms of this Agreement, OWNER at its option, shall have the right to terminate this Agreement and to make other arrangements for having said Work performed and pursuant thereto shall retain so much of the money held on the Agreement as is necessary to cover the OWNER’s costs and damages, without prejudice to the right of OWNER to seek resort to the bond furnished by CONTRACTOR should the money in OWNER’s possession be insufficient.x x x x nderscoring supplied)Except for respondent Benedicto Auxtero (Auxtero), the rest of the respondents, who appear to have been assigned by Synergy to petitioner following the execution of the July 15, 1991 Agreement, filed on March 3, 1992 complaints before the NLRC Regional Office VII at Cebu City against petitioner, Synergy and their respective officials for underpayment, non-payment of premium pay for holidays, premium pay for rest days, service incentive leave pay, 13th month pay and allowances, and for regularization of employment status with petitioner, they claiming to be “performing duties for the benefit of [petitioner] since their job is directly connected with [its] business x x x.”[5]Respondent Auxtero had initially filed a complaint against petitioner and Synergy and their respective officials for regularization of his employment status. Later alleging that he was, without valid ground, verbally dismissed, he filed a complaint against petitioner and Synergy and their respective officials for illegal dismissal and reinstatement with full backwages.[6] The complaints of respondents were consolidated.By Decision[7] of August 29, 1994, Labor Arbiter Dominador Almirante found Synergy an independent contractor and dismissed respondents’ complaint for regularization against petitioner, but granted their money claims. The fallo of the decision reads: WHEREFORE, foregoing premises considered, judgment is hereby rendered as follows:(1) Ordering respondents PAL and Synergy jointly and severally to pay all the complainants herein their 13th month pay and service incentive leave benefits;x x x x(3) Ordering respondent Synergy to pay complainant Benedicto Auxtero a financial assistance in the amount of P5,000.00.The awards hereinabove enumerated in the aggregate total amount of THREE HUNDRED TWENTY-TWO THOUSAND THREE HUNDRED FIFTY NINE PESOS AND EIGHTY SEVEN CENTAVOS (P322,359.87) are computed in detail by our Fiscal Examiner which computation is hereto attached to form part of this decision.The rest of the claims are hereby ordered dismissed for lack of merit.[8] nderscoring supplied)On appeal by respondents, the NLRC, Fourth Division, Cebu City, vacated and set aside the decision of the Labor Arbiter by Decision[9] of January 5, 1996, the fallo of which reads:WHEREFORE, the Decision of the Labor Arbiter Dominador A. Almirante, dated August 29, 1994, is hereby VACATED and SET ASIDE and judgment is hereby rendered:1. Declaring respondent Synergy Services Corporation to be a ‘labor-only’ contractor;2. Ordering respondent Philippine Airlines to accept, as its regular employees, all the complainants, . . . and to give each of them the salaries, allowances and other employment benefits and privileges of a regular employee under the Collective Bargaining Agreement subsisting during the period of their employment;x x x x4. Declaring the dismissal of complainant Benedicto Auxtero to be illegal and ordering his reinstatement as helper or utility man with respondent Philippine Airlines, with full backwages, allowances and other benefits and privileges from the time of his dismissal up to his actual reinstatement; and5. Dismissing the appeal of respondent Synergy Services Corporation, for lack of merit.[10] (Emphasis and underscoring supplied)Only petitioner assailed the NLRC decision via petition for certiorari before this Court.By Resolution[11] of January 25, 1999, this Court referred the case to the Court of Appeals for appropriate action and disposition, conformably with St. Martin Funeral Homes v. National Labor Relations Commission which was promulgated on September 16, 1998.The appellate court, by Decision of September 29, 2000, affirmed the Decision of the NLRC.[12] Petitioner’s motion for reconsideration having been denied by Resolution of December 21, 2000,[13] the present petition was filed, faulting the appellate court

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I.. . . IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION DECISION WHICH IMPOSED THE RELATIONSHIP OF EMPLOYER-EMPLOYEE BETWEEN PETITIONER AND THE RESPONDENTS HEREIN.II.. . . IN AFFIRMING THE RULING OF THE NATIONAL LABOR RELATIONS COMMISSION ORDERING THE REINSTATEMENT OF RESPONDENT AUXTERO DESPITE THE ABSENCE [OF] ANY FACTUAL FINDING IN THE DECISION THAT PETITIONER ILLEGALLY TERMINATED HIS EMPLOYMENT.III.. . . [IN ANY EVENT IN] COMMITT[ING] A PATENT AND GRAVE ERROR IN UPHOLDING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION WHICH COMPELLED THE PETITIONER TO EMPLOY THE RESPONDENTS AS REGULAR EMPLOYEES DESPITE THE FACT THAT THEIR SERVICES ARE IN EXCESS OF PETITIONER COMPANY’S OPERATIONAL REQUIREMENTS.[14] nderscoring supplied)Petitioner argues that the law does not prohibit an employer from engaging an independent contractor, like Synergy, which has substantial capital in carrying on an independent business of contracting, to perform specific jobs.Petitioner further argues that its contracting out to Synergy various services like janitorial, aircraft cleaning, baggage-handling, etc., which are directly related to its business, does not make respondents its employees.Petitioner furthermore argues that none of the four (4) elements of an employer-employee relationship between petitioner and respondents, viz: selection and engagement of an employee, payment of wages, power of dismissal, and the power to control employee’s conduct, is present in the case.[15] Finally, petitioner avers that reinstatement of respondents had been rendered impossible because it had reduced its personnel due to heavy losses as it had in fact terminated its service agreement with Synergy effective June 30, 1998[16] as a cost-saving measure.The decision of the case hinges on a determination of whether Synergy is a mere job-only contractor or a legitimate contractor. If Synergy is found to be a mere job-only contractor, respondents could be considered as regular employees of petitioner as Synergy would then be a mere agent of petitioner in which case respondents would be entitled to all the benefits granted to petitioner’s regular employees; otherwise, if Synergy is found to be a legitimate contractor, respondents’ claims against petitioner must fail as they would then be considered employees of Synergy.The statutory basis of legitimate contracting or subcontracting is provided in Article 106 of the Labor Code which reads:ART. 106. CONTRACTOR OR SUBCONTRACTOR. — Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under the Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, AND the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (Emphasis, capitalization and underscoring supplied)Legitimate contracting and labor-only contracting are defined in Department Order (D.O.) No. 18-02, Series of 2002 (Rules Implementing Articles 106 to 109 of the Labor Code, as amended) as follows:Section 3. Trilateral relationship in contracting arrangements. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service. (Emphasis and underscoring supplied)Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are [sic] present:

(i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; OR(ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. (Emphasis, underscoring and capitalization supplied) “Substantial capital or investment” and the “right to control” are defined in the same Section 5 of the Department Order as follows:"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. (Emphasis and underscoring supplied) From the records of the case, it is gathered that the work performed by almost all of the respondents – loading and unloading of baggage and cargo of passengers – is directly related to the main business of petitioner. And the equipment used by respondents as station loaders, such as trailers and conveyors, are owned by petitioner.[17]Petitioner asserts, however, that mere compliance with substantial capital requirement suffices for Synergy to be considered a legitimate contractor, citing Neri v. National Labor Relations Commission.[18] Petitioner’s reliance on said case is misplaced.In Neri, the Labor Arbiter and the NLRC both determined that Building Care Corporation had a capital stock of P1 million fully subscribed and paid for.[19] The corporation’s status as independent contractor had in fact been previously confirmed in an earlier case[20] by this Court which found it to be serving, among others, a university, an international bank, a big local bank, a hospital center, government agencies, etc.”In stark contrast to the case at bar, while petitioner steadfastly asserted before the Labor Arbiter and the NLRC that Synergy has a substantial capital to engage in legitimate contracting, it failed to present evidence thereon. As the NLRC held:The decision of the Labor Arbiter merely mentioned on page 5 of his decision that respondent SYNERGY has substantial capital, but there is no showing in the records as to how much is that capital. Neither had respondents shown that SYNERGY has such substantial capital. x x x[21] nderscoring supplied)It was only after the appellate court rendered its challenged Decision of September 29, 2002 when petitioner, in its Motion for Reconsideration of the decision, sought to prove, for the first time, Synergy’s substantial capitalization by attaching photocopies of Synergy’s financial statements, e.g., balance sheets, statements of income and retained earnings, marked as “Annexes ‘A’ – ‘A-4.’”[22] More significantly, however, is that respondents worked alongside petitioner’s regular employees who were performing identical work.[23] As San Miguel Corporation v. Aballa[24] and Dole Philippines, Inc. v. Esteva, et al.[25] teach, such is an indicium of labor-only contracting.For labor-only contracting to exist, Section 5 of D.O. No. 18-02 which requires any of two elements to be present is, for convenience, re-quoted:(i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal, OR(ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. (Emphasis and CAPITALIZATION supplied) Even if only one of the two elements is present then, there is labor-only contracting. The control test element under the immediately-quoted paragraph (ii), which was not present in the old Implementing Rules (Department Order No. 10, Series of 1997),[26] echoes the prevailing jurisprudential trend[27] elevating such element as a primary determinant of employer-employee relationship in job contracting agreements. One who claims to be an independent contractor has to prove that he contracted to do the work according to his own methods and without being subject to the employer’s control except only as to the results.[28]While petitioner claimed that it was Synergy’s supervisors who actually supervised respondents, it failed to present evidence thereon. It did not even identify who were the Synergy supervisors assigned at the workplace. Even the parties’ Agreement does not lend support to petitioner’s claim, thus:Section 6. Qualified and Experienced Worker: Owner’s Right to Dismiss Workers.CONTRACTOR shall employ capable and experienced workers and foremen to carry out the loading, unloading and delivery Work as well as provide all equipment, loading, unloading and delivery equipment, materials, supplies and tools necessary for the performance of the Work. CONTRACTOR shall upon OWNER’S request furnish the latter with information regarding the qualifications of the former’s workers, to prove their capability and experience.

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Contractor shall require all its workers, employees, suppliers and visitors to comply with OWNER’S rules, regulations, procedures and directives relative to the safety and security of OWNER’S premises, properties and operations. For this purpose, CONTRACTOR shall furnish its employees and workers identification cards to be countersigned by OWNER and uniforms to be approved by OWNER. OWNER may require CONTRACTOR to dismiss immediately and prohibit entry into OWNER’S premises of any person employed therein by CONTRACTOR who in OWNER’S opinion is incompetent or misconducts himself or does not comply with OWNER’S reasonable instructions and requests regarding security, safety and other matters and such person shall not again be employed to perform the services hereunder without OWNER’S permission.[29] (Underscoring partly in the original and partly supplied; mphasis supplied)Petitioner in fact admitted that it fixes the work schedule of respondents as their work was dependent on the frequency of plane arrivals.[30] And as the NLRC found, petitioner’s managers and supervisors approved respondents’ weekly work assignments and respondents and other regular PAL employees were all referred to as “station attendants” of the cargo operation and airfreight services of petitioner.[31]Respondents having performed tasks which are usually necessary and desirable in the air transportation business of petitioner, they should be deemed its regular employees and Synergy as a labor-only contractor.[32]

The express provision in the Agreement that Synergy was an independent contractor and there would be “no employer-employee relationship between [Synergy] and/or its employees on one hand, and [petitioner] on the other hand” is not legally binding and conclusive as contractual provisions are not valid determinants of the existence of such relationship. For it is the totality of the facts and surrounding circumstances of the case[33] which is determinative of the parties’ relationship.Respecting the dismissal on November 15, 1992[34] of Auxtero, a regular employee of petitioner who had been working as utility man/helper since November 1988, it is not legally justified for want of just or authorized cause therefor and for non-compliance with procedural due process. Petitioner’s claim that he abandoned his work does not persuade.[35] The elements of abandonment being (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship manifested by some overt acts,[36] the onus probandi lies with petitioner which, however, failed to discharge the same.Auxtero, having been declared to be a regular employee of petitioner, and found to be illegally dismissed from employment, should be entitled to salary differential[37] from the time he rendered one year of service until his dismissal, reinstatement plus backwages until the finality of this decision.[38] In view, however, of the long period of time[39] that had elapsed since his dismissal on November 15, 1992, it would be appropriate to award separation pay of one (1) month salary for each year of service, in lieu of reinstatement.[40]As regards the remaining respondents, the Court affirms the ruling of both the NLRC and the appellate court, ordering petitioner to accept them as its regular employees and to give each of them the salaries, allowances and other employment benefits and privileges of a regular employee under the pertinent Collective Bargaining Agreement.Petitioner claims, however, that it has become impossible for it to comply with the orders of the NLRC and the Court of Appeals, for during the pendency of this case, it was forced to reduce its personnel due to heavy losses caused by economic crisis and the pilots’ strike of June 5, 1998.[41] Hence, there are no available positions where respondents could be placed.And petitioner informs that “the employment contracts of all if not most of the respondents . . . were terminated by Synergy effective 30 June 1998 when petitioner terminated its contract with Synergy.”[42] Other than its bare allegations, petitioner presented nothing to substantiate its impossibility of compliance. In fact, petitioner waived this defense by failing to raise it in its Memorandum filed on June 14, 1999 before the Court of Appeals.[43] Further, the notice of termination in 1998 was in disregard of a subsisting temporary restraining order[44] to preserve the status quo, issued by this Court in 1996 before it referred the case to the Court of Appeals in January 1999. So as to thwart the attempt to subvert the implementation of the assailed decision, respondents are deemed to be continuously employed by petitioner, for purposes of computing the wages and benefits due respondents.Finally, it must be stressed that respondents, having been declared to be regular employees of petitioner, Synergy being a mere agent of the latter, had acquired security of tenure. As such, they could only be dismissed by petitioner, the real employer, on the basis of just or authorized cause, and with observance of procedural due process.WHEREFORE, the Court of Appeals Decision of September 29, 2000 is AFFIRMED with MODIFICATION.Petitioner PHILIPPINE AIRLINES, INC. is ordered to:(a) accept respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P.

CAMPOS, JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARESUSA, JEFFREY LLENOS, ROQUE PILAPIL, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERRIE ALEGRES, EDUARDO MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL as its regular employees in their same or substantially equivalent positions, and pay the wages and benefits due them as regular employees plus salary differential corresponding to the difference between the wages and benefits given them and those granted to petitioner’s other regular employees of the same rank; and(b) pay respondent BENEDICTO AUXTERO salary differential; backwages from the time of his dismissal until the finality of this decision; and separation pay, in lieu of reinstatement, equivalent to one (1) month pay for every year of service until the finality of this decision.There being no data from which this Court may determine the monetary liabilities of petitioner, the case is REMANDED to the Labor Arbiter solely for that purpose.SO ORDERED.CONCHITA CARPIO MORALES (Associate Justice)WE CONCUR: (ON OFFICIAL LEAVE) LEONARDO A. QUISUMBING (Associate Justice, Chairperson) ANTONIO T. CARPIO (Associate Justice, Acting Chairperson), ADOLFO S. AZCUNA (Associate Justice) DANTE O. TINGAPRESBITERO J. VELASCO, JR.MARANAW HOTELS AND RESORT CORP., Petitioner, versus COURT OF APPEALS, SHERYL OABEL AND MANILA RESOURCE DEVELOPMENT CORP., Respondents., G.R. No. 149660, 2009 Jan 20, 1st DivisionPUNO, C.J.:Before the Court is a petition for review on certiorari assailing a resolution issued by the Court of Appeals. The resolution denied the petition for review filed by petitioner Maranaw Hotels and Resort Corp. The present proceedings emanate from a complaint for regularization, subsequently converted into one for illegal dismissal, filed before Labor Arbiter Madjayran H. Ajan by private respondent Sheryl Oabel.It appears that private respondent Oabel was initially hired by petitioner as an extra beverage attendant on April 24, 1995. This lasted until February 7, 1997.[1] Respondent worked in Century Park Hotel, an establishment owned by the petitioner.On September 16, 1996,[2] petitioner contracted with Manila Resource Development Corporation.[3] Subsequently, private respondent Oabel was transferred to MANRED, with the latter deporting itself as her employer.[4] MANRED has intervened at all stages of these proceedings and has consistently claimed to be the employer of private respondent Oabel. For the duration of her employment, private respondent Oabel performed the following functions:Secretary, Public Relations Department: February 10, 1997 – March 6, 1997Gift Shop Attendant: April 7, 1997 – April 21, 1997Waitress: April 22, 1997 – May 20, 1997Shop Attendant: May 21, 1997 – July 30, 1998[5]On July 20, 1998, private respondent filed before the Labor Arbiter a petition for regularization of employment against the petitioner. On August 1, 1998, however, private respondent Oabel was dismissed from employment.[6] Respondent converted her petition for regularization into a complaint for illegal dismissal.Labor Arbiter Madjayran H. Ajan rendered a decision on July 13, 1999, dismissing the complaint against the petitioner. The decision held:While complainant alleged that she has been working with the respondent hotel in different department (sic) of the latter on (sic) various capacities (although not all departments are part and parcel of the hotels), complainant never disputed the fact that her work with the same were on a per function basis or on a “need basis” – co-terminus with the function she was hired for….Considering that complainant job (sic) with the respondent hotel was on a per function basis or on a “need basis”, complainant could not even be considered as casual employee or provisional employee. Respondent hotel consider (sic) complainant, at most, a project employee which does not ripened (sic) into regular employee (sic).[7]Private respondent appealed before the National Labor Relations Commission (NLRC). The NLRC reversed the ruling of the Labor Arbiter and held that: (1) MANRED is a labor-only contractor, and (2) private respondent was illegally dismissed.Of the first holding, the NLRC observed that under the very terms of the service contract, MANRED shall provide the petitioner not specific jobs or services but personnel and that MANRED had insufficient capitalization and was not sufficiently equipped to provide specific jobs.[8] The NLRC likewise observed that the activities performed by the private respondent were directly related to and usually necessary or desirable in the business of the petitioner.[9]With respect to the termination of private respondent’s employment, the NLRC held that it was not effected for a valid or just cause and was therefore illegal. The dispositive portion of the ruling reads thus:WHEREFORE, the decision appealed from is hereby REVERSED. xxxx Respondents Century Park Hotel and Manila Resource Development Corporation are hereby declared jointly and severally liable for the following awards

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in favor of complainant: 1) her full backwages and benefits from August 1, 1998 up to the date of her actual reinstatement; 2) her salary differentials, share in the service charges, service incentive leave pay and 13th month pay from July 20, 1995 to July 31, 1998.SO ORDERED.[10]Petitioner subsequently appealed before the Court of Appeals. In a resolution, the appellate court dismissed the petition on account of the failure of the petitioner to append the board resolution authorizing the counsel for petitioner to file the petition before the Court of Appeals. The Court of Appeals held:After a careful perusal of the records of the case, We resolve to DISMISS the present petition on the ground of non-compliance with the rule on certification against forum shopping taking into account that the aforesaid certification was subscribed and verified by the Personnel Director of petitioner corporation without attaching thereto his authority to do so for and in behalf of petitioner corporation per board resolution or special power of attorney executed by the latter.[11] Petitioner duly filed its motion for reconsideration which was denied by the Court of Appeals in a resolution dated August 30, 2001.[12]In the present petition for review, the petitioner invokes substantial justice as justification for a reversal of the resolution of the Court of Appeals.[13] Petitioner likewise contends that the filing of a motion for reconsideration with the certificate of non-forum shopping attached constitutes substantial compliance with the requirement.[14]There is no merit to the petition.Well-settled is the rule that the certificate of non-forum shopping is a mandatory requirement. Substantial compliance applies only with respect to the contents of the certificate but not as to its presence in the pleading wherein it is required.Petitioner’s contention that the filing of a motion for reconsideration with an appended certificate of non forum-shopping suffices to cure the defect in the pleading is absolutely specious. It negates the very purpose for which the certification against forum shopping is required: to inform the Court of the pendency of any other case which may present similar issues and involve similar parties as the one before it. The requirement applies to both natural and juridical persons. Petitioner relies upon this Court’s ruling in Digital Microwave Corp. v. Court of Appeals[15] to show that its Personnel Director has been duly authorized to sign pleadings for and in behalf of the petitioner. Petitioner, however, has taken the ruling in Digital Microwave out of context. The portion of the ruling in Digital Microwave upon which petitioner relies was in response to the issue of impossibility of compliance by juridical persons with the requirements of Circular 28-91.[16] The Court’s identification of duly authorized officers or directors as the proper signatories of a certificate of non forum-shopping was in response to that issue. The ruling does not, however, ipso facto clothe a corporate officer or director with authority to execute a certificate of non-forum shopping by virtue of the former’s position alone.Any doubt on the matter has been resolved by the Court’s ruling in BPI Leasing Corp. v. Court of Appeals[17] where this Court emphasized that the lawyer acting for the corporation must be specifically authorized to sign pleadings for the corporation.[18] Specific authorization, the Court held, could only come in the form of a board resolution issued by the Board of Directors that specifically authorizes the counsel to institute the petition and execute the certification, to make his actions binding on his principal, i.e., the corporation.[19] This Court has not wavered in stressing the need for strict adherence to procedural requirements. The rules of procedure exist to ensure the orderly administration of justice. They are not to be trifled with lightly.For this reason alone, the petition must already be dismissed. However, even if this grave procedural infirmity is set aside, the petition must still fail. In the interest of averting further litigation arising from the present controversy, and in light of the respective positions asserted by the parties in the pleadings and other memoranda filed before this Court, the Court now proceeds to resolve the case on the merits.Petitioner posits that it has entered into a service agreement with intervenor MANRED. The latter, in turn, maintains that private respondent Oabel is its employee and subsequently holds itself out as the employer and offers the reinstatement of private respondent.Notably, private respondent’s purported employment with MANRED commenced only in 1996, way after she was hired by the petitioner as extra beverage attendant on April 24, 1995. There is thus much credence in the private respondent’s claim that the service agreement executed between the petitioner and MANRED is a mere ploy to circumvent the law on employment, in particular that which pertains on regularization.In this regard, it has not escaped the notice of the Court that the operations of the hotel itself do not cease with the end of each event or function and that there is an ever present need for individuals to perform certain tasks necessary in the petitioner’s business. Thus, although the tasks themselves may vary, the need for sufficient manpower to carry them out does not. In any event, as borne out by the findings of the NLRC, the petitioner determines the nature of the tasks to be performed by the private respondent, in the process exercising control.

This being so, the Court finds no difficulty in sustaining the finding of the NLRC that MANRED is a labor-only contractor.[20] Concordantly, the real employer of private respondent Oabel is the petitioner.It appears further that private respondent has already rendered more than one year of service to the petitioner, for the period 1995-1998, for which she must already be considered a regular employee, pursuant to 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 service 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. mphasis supplied)IN VIEW WHEREOF, the present petition is DENIED. The resolution of the Court of Appeals dated June 15, 2001 is affirmed.Costs against petitioner.SO ORDERED.REYNATO S. PUNO (Chief Justice)WE CONCUR: ANTONIO T. CARPIO (Associate Justice), RENATO C. CORONA, ADOLFO S. AZCUNA, TERESITA J. LEONARDO-DE CASTROTITLE 3: WORKING CONDITIONS FOR SPECIAL GROUP OF EMPLOYEESEMPLOYMENT OF WOMENPHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner vs. NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN, respondents., G.R. No. 118978, 1997 May 23, 2nd DivisionREGALADO, 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. 3It 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. 4In 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. 5 Petitioner nonetheless remained unconvinced by her explanations. Private respondent was dismissed from the company effective January 29, 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.

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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.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.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 8 on 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). 11Principal 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. 20In 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. 23Verily, 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. 26In 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.

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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. 29As 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, 31 better known as the "Women andChild 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, 33 a 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 non-marriage. 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 non-discrimination on the employment of women.The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial Corporation 34 considered 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. 35Further, 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

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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.Romero, Puno, Mendoza and Torres, Jr., JJ., concur.LAKPUE DRUG, INC., LA CROESUS PHARMA, INC., TROPICAL BIOLOGICAL PHILS., INC. (all known as LAKPUE GROUP OF COMPANIES) and/or ENRIQUE CASTILLO, JR., Petitioners, versus MA. LOURDES BELGA, Respondent., G.R. No. 166379, 2005 Oct 20, 1st DivisionYNARES-SANTIAGO, J.:Before us is a petition for review of the July 28, 2004 Decision[1] of the Court of Appeals in CA-G.R. SP No. 80616 which reversed and set aside the April 14, 2003 Decision[2] of the National Labor Relations Commission (NLRC) in NLRC NCR 00-09-04981-01; and its December 17, 2004 Resolution[3] 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 NLRC-NCR.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, supplier’s 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 Tropical’s 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 attorney’s 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-appellee’s dismissal valid; and(2) nullifying complainant-appellee’s 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]The petition lacks merit.Tropical’s 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 Belga’s 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 employee’s 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 respondent’s 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 Belga’s case is such.Belga’s 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 Belga’s 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 employee’s act inconsistent with proper 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.Tropical avers that Belga’s job as Treasury Assistant is a position of responsibility since she handles vital transactions for the company. It adds that the nature of Belga’s work and the character of her duties involved utmost trust and confidence. 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

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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 employer’s property, her work does not call for independent judgment or discretion. Belga simply prepares the documents as instructed by her superiors subject to the latter’s 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 Belga’s 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 Belga’s absence for 16 days has wreaked havoc on Tropical’s 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 company’s] 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 twin-notice 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 employer’s 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.CONSUELO YNARES-SANTIAGO (Associate Justice)WE CONCUR: HILARIO G. DAVIDE, JR. (Chief Justice), LEONARDO A. QUISUMBING, ANTONIO T. CARPIO, ADOLFO S. AZCUNAEMPLOYMENT OF HOUSEHELPERSAPEX MINING COMPANY, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA CANDIDO, respondents.GANCAYCO, J.: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 Sinclitica Candido 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 P2,000.00 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 P16,289.202. Emergency Living Allowance 12,430.003. 13th Month Pay Differential 1,322.32.4. Separation Pay (One-month for every year ofservice [1973-1988]) 25,119.30or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND 42/100 (P55,161.42).SO ORDERED." 1 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 appropriately 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 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 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 laundry women 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 the 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,

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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.Narvasa (Chairman), Cruz, Griño-Aquino and Medialdea, JJ., concur.FILOMENA BARCENAS, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), Rev. SIM DEE, the present Head Monk of the Manila Buddah 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., G.R. No. 87210, 1990 July 16, 1st DivisionMEDIALDEA, 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 (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 co-terminous 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, 986; and "4. P10,000.00 moral damages."Complainant's charge of unfair labor practice is hereby dismissed for lack of merit."SO ORDERED." 1 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 . . . ." Respondent NLRC represented by its Legal Officer 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 government 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 lovechild 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 employer-employee 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.Narvasa (Chairman), Cruz, Gancayco and Griño-Aquino, JJ., concur.BOOK 4: HEALTH SAFETY AND SOCIAL WELFARE BENEFITSSOCIAL SECURITY ACT OF 1997REYNALDO CANO CHUA, doing business under the name & style PRIME MOVER CONSTRUCTION DEVELOPMENT, Petitioner, versus COURT OF APPEALS, SOCIAL SECURITY COMMISSION, SOCIAL SECURITY SYSTEM, ANDRES PAGUIO, PABLO CANALE, RUEL PANGAN, AURELIO PAGUIO, ROLANDO

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TRINIDAD, ROMEO TAPANG and CARLOS MALIWAT, Respondents., G.R. No. 125837, 2004 Oct 6, 2nd DivisionTinga, J.:This is a petition for review of the Decision[1] of the Court of Appeals in CA-G.R. CV No. 38269 dated 06 March 1996, and its Resolution dated 30 July 1996 denying petitioner’s Motion for Reconsideration,[2] affirming the Order of the Social Security Commission (SSC) dated 1 February 1995[3] which held that private respondents were regular employees of the petitioner and ordered petitioner to pay the Social Security System (SSS) for its unpaid contributions, as well as penalty for the delayed remittance thereof. On 20 August 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo Tapang and Carlos Maliwat (hereinafter referred to as respondents) filed a Petition[4] with the SSC for SSS coverage and contributions against petitioner Reynaldo Chua, owner of Prime Mover Construction Development, claiming that they were all regular employees of the petitioner in his construction business.[5] Private respondents claimed that they were assigned by petitioner in his various construction projects continuously in the following capacity, since the period indicated, and with the corresponding basic salaries,[6] to wit:Andres Paguio Carpenter 1977 P 42/dayPablo Canale Mason 1977 42/dayRuel Pangan Mason 1979 39/dayAurelio Paguio Fine grading 1979 42/dayRomeo Tapang Fine grading 1979 42/dayRolando Trinidad Carpenter 1983 (Jan.) 39/dayCarlos Maliwat Mason 1977 42/dayPrivate respondents alleged that petitioner dismissed all of them without justifiable grounds and without notice to them and to the then Ministry of Labor and Employment. They further alleged that petitioner did not report them to the SSS for compulsory coverage in flagrant violation of the Social Security Act.[7]In his Answer,[8] petitioner claimed that private respondents had no cause of action against him, and assuming there was any, the same was barred by prescription and laches. In addition, he claimed that private respondents were not regular employees, but project employees whose work had been fixed for a specific project or undertaking the completion of which was determined at the time of their engagement. This being the case, he concluded that said employees were not entitled to coverage under the Social Security Act.[9]Meanwhile, the SSS filed a Petition in Intervention[10] alleging that it has an interest in the petition filed by private respondents as it is charged with the implementation and enforcement of the provisions of the Social Security Act. The SSS stated that it is the mandatory obligation of every employer to report its employees to the SSS for coverage and to remit the required contribution, including the penalty imposed for late premium remittances. On 01 February 1995, the SSC issued its Order[11] which ruled in favor of private respondents. The SSC, relying on NLRC Case No. RAB-III-8-2373-85,[12] declared private respondents to be petitioner’s regular employees.[13] It ordered petitioner to pay the SSS the unpaid SS/EC and Medicare contributions plus penalty for the delayed remittance thereof, without prejudice to any other penalties which may have accrued.[14] The SSC denied the Motion for Reconsideration[15] of petitioner for lack of merit.[16]Petitioner elevated the matter to the Court of Appeals via a Petition for Review.[17] He claimed that private respondents were project employees, whose periods of employment were terminated upon completion of the project. Thus, he claimed, no employer-employee relation existed between the parties.[18] There being no employer-employee relationship, private respondents are not entitled to coverage under the Social Security Act.[19] In addition, petitioner claimed that private respondents’ length of service did not change their status from project to regular employees.[20]Moreover, granting that private respondents were entitled to coverage under the Act, petitioner claimed that the SSC erred in imposing penalties since his failure to include private respondents under SSS coverage was neither willful nor deliberate, but due to the honest belief that project employees are not regular employees.[21] Likewise, he claimed that the SSC erred in ordering payment of contributions and penalties even for long periods between projects when private respondents were not working.[22]Petitioner also questioned the failure to apply the rules on prescription of actions and of laches, claiming that the case, being one for the injury to the rights of the private respondents, should have been filed within four (4) years from the time their cause of action accrued, or from the time they were hired as project employees. He added that private respondents “went into a long swoon, folded their arms and closed their eyes”[23] and filed their claim only in 1985, or six (6) years or eight (8) years after they were taken in by petitioner.[24] In resolving the petition, the Court of Appeals synthesized the issues in the petition, to wit: (1) whether private respondents were regular employees of petitioner, and whether their causes of action as such are barred by

prescription or laches; (2) if so, whether petitioner is now liable to pay the SSS contributions and penalties during the period of employment.[25] The Court of Appeals, citing Article 280 of the Labor Code,[26] declared that private respondents were all regular employees of the petitioner in relation to certain activities since they all worked either as masons, carpenters and fine graders in petitioner’s various construction projects for at least one year, and that their work was necessary and desirable to petitioner’s business which involved the construction of roads and bridges.[27] It cited the case of Mehitabel Furniture Company, Inc. v. NLRC,[28] particularly the ruling therein which states:By petitioner’s own admission, the private respondents have been hired to work on certain special orders that as a matter of business policy it cannot decline. These projects are necessary or desirable in its usual business or trade, otherwise they would not have accepted …. Significantly, such special orders are not really seasonal but more or less regular, requiring the virtually continuous services of the “temporary workers.” The NLRC also correctly observed that “if we were to accept respondent’s theory, it would have no regular workers because all of its orders would be special undertakings or projects.” The petitioner could then hire all its workers on a contract basis only and prevent them from attaining permanent status….Furthermore, the NLRC has determined that the private respondents have worked for more than one year in the so-called “special projects” of the petitioner and so fall under the second condition specified in the above-quoted provision (Article 280, Labor Code).[29]The Court of Appeals rejected the claim of prescription, stating that the filing of private respondents’ claims was well within the twenty (20)-year period provided by the Social Security Act.[30] It found that the principle of laches could not also apply to the instant case since delay could not be attributed to private respondents, having filed the case within the prescriptive period, and that there was no evidence that petitioner lacked knowledge that private respondents would assert their rights.[31]Petitioner filed a Motion for Reconsideration,[32] claiming that the Court of Appeals overlooked (1) the doctrine that length of service of a project employee is not the controlling test of employment tenure, and (2) petitioner’s failure to place private respondents under SSS coverage was in good faith. The motion was denied for lack of merit.[33]In the present Petition for Review, petitioner again insists that private respondents were not regular, but project, employees and thus not subject to SSS coverage. In addition, petitioner claims that assuming private respondents were subject to SSS coverage, their petition was barred by prescription and laches. Moreover, petitioner invokes the defense of good faith, or his honest belief that project employees are not regular employees under Article 280 of the Labor Code.Petitioner’s arguments are mere reiterations of his arguments submitted before the SSC and the Court of Appeals. More importantly, petitioner wants this Court to review factual questions already passed upon by the SSC and the Court of Appeals which are not cognizable by a petition for review under Rule 45. Well-entrenched is the rule that the Supreme Court’s jurisdiction in a petition for review is limited to reviewing or revising errors of law allegedly committed by the appellate court, the findings of fact being generally conclusive on the Court and it is not for the Court to weigh evidence all over again.[34] Stripped of the lengthy, if not repetitive, disquisition of the private parties in the case, and also of the public respondents, on the nature of private respondents’ employment, the controversy boils down to one issue: the entitlement of private respondents to compulsory SSS coverage.The Social Security Act was enacted pursuant to the policy of the government “to develop, establish gradually and perfect a social security system which shall be suitable to the needs of the laborers throughout the Philippines, and shall provide protection against the hazards of disability, sickness, old age and death.”[35] It provides for compulsory coverage of all employees not over sixty years of age and their employers.[36] Well-settled is the rule that the mandatory coverage of Republic Act No. 1161, as amended, is premised on the existence of an employer-employee relationship, the essential elements of which are: (a) selection and engagement of the employee; (b) payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor.[37] There is no dispute that private respondents were employees of petitioner. Petitioner himself admitted that they worked in his construction projects,[38] although the period of their employment was allegedly co-terminus with their phase of work.[39] Even without such admission from petitioner, the existence of an employer-employee relationship between the parties can easily be determined by the application of the “control test,”[40] the elements of which are enumerated above. It is clear that private respondents are employees of petitioner, the latter having control over the results of the work done, as well as the means and methods by which the same were accomplished. Suffice it to say that regardless of the nature of their employment, whether it is regular or project, private respondents are subject of the compulsory coverage under the SSS Law, their employment not falling under the exceptions provided by the law.[41] This rule is in accord with the Court’s ruling in Luzon Stevedoring Corp. v. SSS[42] to the effect that all

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employees, regardless of tenure, would qualify for compulsory membership in the SSS, except those classes of employees contemplated in Section 8(j) of the Social Security Act.[43] This Court also finds no reason to deviate from the finding of the Court of Appeals regarding the nature of employment of private respondents. Despite the insistence of petitioner that they were project employees, the facts show that as masons, carpenters and fine graders in petitioner’s various construction projects, they performed work which was usually necessary and desirable to petitioner’s business which involves construction of roads and bridges. In Violeta v. NLRC,[44] this Court ruled that to be exempted from the presumption of regularity of employment, the agreement between a project employee and his employer must strictly conform to the requirements and conditions under Article 280 of the Labor Code. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 are to be achieved.[45] This second requirement was not met in this case.Moreover, while it may be true that private respondents were initially hired for specific projects or undertakings, the repeated re-hiring and continuing need for their services over a long span of time—the shortest being two years and the longest being eight—have undeniably made them regular employees.[46] This Court has held that an employment ceases to be co-terminus with specific projects when the employee is continuously rehired due to the demands of the employer’s business and re-engaged for many more projects without interruption.[47] The Court likewise takes note of the fact that, as cited by the SSC, even the National Labor Relations Commission in a labor case involving the same parties, found that private respondents were regular employees of the petitioner.[48] Another cogent factor militates against the allegations of the petitioner. In the proceedings before the SSC and the Court of Appeals, petitioner was unable to show that private respondents were appraised of the project nature of their employment, the specific projects themselves or any phase thereof undertaken by petitioner and for which private respondents were hired. He failed to show any document such as private respondents’ employment contracts and employment records that would indicate the dates of hiring and termination in relation to the particular construction project or phases in which they were employed.[49] Moreover, it is peculiar that petitioner did not show proof that he submitted reports of termination after the completion of his construction projects, considering that he alleges that private respondents were hired and rehired for various projects or phases of work therein.Anent the issue of prescription, this Court rules that private respondents’ right to file their claim had not yet prescribed at the time of the filing of their petition, considering that a mere eight (8) years had passed from the time delinquency was discovered or the proper assessment was made. Republic Act No. 1161, as amended, prescribes a period of twenty (20) years, from the time the delinquency is known or assessment is made by the SSS, within which to file a claim for non-remittance against employers.[50]Likewise, this Court is in full accord with the findings of the Court of Appeals that private respondents are not guilty of laches. The principle of laches or “stale demands” ordains that the 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, or the negligence or omission to assert a right within a reasonable time, warrants a presumption that the party entitled to assert it either has abandoned it or declined to assert it.[51] In the instant case, this Court finds no proof that private respondents had failed or neglected to assert their right, considering that they filed their claim within the period prescribed by law.This Court finds no merit in petitioner’s protestations of good faith. In United Christian Missionary Society v. Social Security Commission,[52] this Court ruled that good faith or bad faith is irrelevant for purposes of assessment and collection of the penalty for delayed remittance of premiums, since the law makes no distinction between an employer who professes good reasons for delaying the remittance of premiums and another who deliberately disregards the legal duty imposed upon him to make such remittance.[53] For the same reasons, petitioner cannot now invoke the defense of good faith.WHEREFORE, the Petition is DENIED. The Decision and Resolution of the Court of Appeals promulgated on 6 March 1996 and 30 July 1996 respectively, are AFFIRMED. Costs against petitioner.SO ORDERED.DANTE O. TINGA - Associate Justice WE CONCUR: REYNATO S. PUNO, (On Leave) MA. ALICIA AUSTRIA-MARTINEZ, ROMEO J. CALLEJO, SR., MINITA V. CHICO-NAZARIOYOLANDA SIGNEY, Petitioner, versus SOCIAL SECURITY SYSTEM, EDITHA ESPINOSA-CASTILLO, and GINA SERVANO, representative of GINALYN and RODELYN SIGNEY, Respondents., G.R. No. 173582, 2008 Jan 28, 2nd DivisionTinga, J:

We are called to determine who is entitled to the social security benefits of a Social Security System (SSS) member who was survived not only by his legal wife, but also by two common-law wives with whom he had six children.This Petition for Review on Certiorari[1] under Rule 45 of the 1997 Rules of Civil Procedure assails the 31 March 2004 Decision[2] of the Court of Appeals affirming the resolution of the Social Security Commission (SSC),[3] as well as the 23 July 2004 Resolution[4] of the same court denying petitioner’s motion for reconsideration.The facts as culled from the records are as follows:Rodolfo Signey, Sr., a member of the SSS, died on 21 May 2001. In his member’s records, he had designated Yolanda Signey (petitioner) as primary beneficiary and his four children with her as secondary beneficiaries. On 6 July 2001, petitioner filed a claim for death benefits with the public respondent SSS.[5] She revealed in her SSS claim that the deceased had a common-law wife, Gina Servano (Gina), with whom he had two minor children namey, Ginalyn Servano (Ginalyn), born on 13 April 1996, and Rodelyn Signey (Rodelyn), born on 20 April 2000.[6]Petitioner’s declaration was confirmed when Gina herself filed a claim for the same death benefits on 13 July 2001 in which she also declared that both she and petitioner were common-law wives of the deceased and that Editha Espinosa (Editha) was the legal wife.In addition, in October 2001, Editha also filed an application for death benefits with the SSS stating that she was the legal wife of the deceased.[7]The SSS, through a letter dated 4 December 2001,[8] denied the death benefit claim of petitioner. However, it recognized Ginalyn and Rodelyn, the minor children of the deceased with Gina, as the primary beneficiaries under the SSS Law. The SSS also found that the 20 March 1992 marriage between petitioner and the deceased was null and void because of a prior subsisting marriage contracted on 29 October 1967 between the deceased and Editha, as confirmed with the Local Civil Registry of Cebu City.Thereafter, petitioner filed a petition[9] with the SSC in which she attached a waiver of rights[10] executed by Editha whereby the latter waived “any/all claims from National Trucking Forwarding Corporation (NTFC) under the supervision of National Development Corporation (NDC), Social Security System (SSS) and other (i)nsurance (b)enefits due to the deceased Rodolfo Signey Sr., who died intestate on May 21, 2001 at Manila Doctors,” and further declared that “I am legally married to Mr. Aquilino Castillo and not to Mr. Rodolfo P. Signey Sr.”[11]In a Resolution[12] dated 29 January 2003, the SSC affirmed the decision of the SSS. The SSC gave more weight to the SSS field investigation and the confirmed certification of marriage showing that the deceased was married to Editha on 29 October 1967, than to the aforestated declarations of Editha in her waiver of rights. It found that petitioner only relied on the waiver of Editha, as she failed to present any evidence to invalidate or otherwise controvert the confirmed marriage certificate. The SSC also found, based on the SSS field investigation report dated 6 November 2001 that even if Editha was the legal wife, she was not qualified to the death benefits since she herself admitted that she was not dependent on her deceased husband for support inasmuch as she was cohabiting with a certain Aquilino Castillo.[13] Considering that petitioner, Editha, and Gina were not entitled to the death benefits, the SSC applied Section 8(e) and (k) of Republic Act (RA) No. 8282, the SSS Law which was in force at the time of the member’s death on 21 May 2001, and held that the dependent legitimate and illegitimate minor children of the deceased member were also considered primary beneficiaries. The records disclosed that the deceased had one legitimate child, Ma. Evelyn Signey, who predeceased him, and several illegitimate children with petitioner and with Gina. Based on their respective certificates of live birth, the deceased SSS member’s four illegitimate children with petitioner could no longer be considered dependents at the time of his death because all of them were over 21 years old when he died on 21 May 2001, the youngest having been born on 31 March 1978. On the other hand, the deceased SSS member’s illegitimate children with Gina were qualified to be his primary beneficiaries for they were still minors at the time of his death, Ginalyn having been born on 13 April 1996, and Rodelyn on 20 April 2000.[14] The SSC denied the motion for reconsideration filed by petitioner in an Order[15] dated 9 April 2003. This order further elaborated on the reasons for the denial of petitioner’s claims. It held that the mere designation of petitioner and her children as beneficiaries by the deceased member was not the controlling factor in the determination of beneficiaries. Sections 13, 8(e) and 8(k) of the SSS Law, as amended, provide that dependent legal spouse entitled by law to receive support from the member and dependent legitimate, legitimated or legally adopted, and illegitimate children of the member shall be the primary beneficiaries of the latter.[16] Based on the certification dated 25 July 2001 issued by the Office of the Local Civil Registrar of Cebu City, the marriage of the deceased and Editha on 29 October 1967 at the Metropolitan Cathedral, Cebu City was duly registered under LCR Registry No. 2083 on 21 November 1967. The SSS field investigation reports verified the authenticity of the said certification.[17]The SSC did not give credence to the waiver executed by Editha, which manifested her lack of interest in the outcome of the case, considering that she was not entitled to the benefit anyway because of her admitted cohabitation with Aquilino Castillo. Moreover, the SSC held that considering that one of the requisites of a valid waiver is the existence of an actual right which could be renounced, petitioner in effect recognized that Editha had a

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right over the benefits of the deceased thereby enabling her to renounce said right in favor of petitioner and her children. The declaration by Editha that she was not married to the deceased is not only contrary to the records of the Local Civil Registrar of Cebu City which state that they were married on 29 October 1967 but also renders nugatory the waiver of right itself, for if she was not married to the deceased then she would have no rights that may be waived.Petitioner had argued that the illegitimate children of the deceased with Gina failed to show proof that they were indeed dependent on the deceased for support during his lifetime. The SSC observed that Section 8(e) of the SSS Law, as amended, provides among others that dependents include the legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully employed, and has not reached 21 years of age. The provision vested the right of the benefit to his illegitimate minor children, Ginalyn and Rodelyn, irrespective of any proof that they had been dependent on the support of the deceased.[18] Petitioner appealed the judgment of the SSC to the Court of Appeals by filing a Petition for Review[19] under Rule 43 of the 1997 Rules of Civil Procedure. The appellate court affirmed the decision of the SSC in its 31 March 2004 Decision. Resolving the determinative question of who between petitioner and the illegitimate children of the deceased are the primary beneficiaries lawfully entitled to the social security benefits accruing by virtue of the latter’s death, it held that based on Section 8(e) of R. A. No. 8282, a surviving spouse claiming death benefits as a dependent must be the legal spouse. Petitioner’s presentation of a marriage certificate attesting to her marriage to the deceased was futile, according to the appellate court, as said marriage is null and void in view of the previous marriage of the deceased to Editha as certified by the Local Civil Registrar of Cebu City.The appellate court also held that the law is clear that for a child to be qualified as dependent, he must be unmarried, not gainfully employed and must not be 21 years of age, or if over 21 years of age, he is congenitally or while still a minor has been permanently incapacitated and incapable of self-support, physically or mentally. And in this case, only the illegitimate children of the deceased with Gina namely, Ginalyn and Rodelyn, are the qualified beneficiaries as they were still minors at the time of the death of their father. Considering petitioner is disqualified to be a beneficiary and the absence of any legitimate children of the deceased, it follows that the dependent illegitimate minor children of the deceased should be entitled to the death benefits as primary beneficiaries, the Court of Appeals concluded.[20]The Court of Appeals denied the motion for reconsideration of petitioner in a Resolution[21] dated 23 July 2004. It found that there was no new matter of substance which would warrant a modification and/or reversal of the 31 March 2004 Decision. Hence, this petition for review on certiorari.Petitioner raises issues similar to the ones which have been adequately resolved by the SSC and the appellate court. The first issue is whether petitioner’s marriage with the deceased is valid. The second issue is whether petitioner has a superior legal right over the SSS benefits as against the illegitimate minor children of the deceased.There is no merit in the petition.We deemed it best not to disturb the findings of fact of the SSS which are supported by substantial evidence[22] and affirmed by the SSC and the Court of Appeals. Moreover, petitioner ought to be reminded of the basic rule that this Court is not a trier of facts.[23]It is a well-known rule that in proceedings before administrative bodies, technical rules of procedure and evidence are not binding.[24] The important consideration is that both parties were afforded an opportunity to be heard and they availed themselves of it to present their respective positions on the matter in dispute.[25] It must likewise be noted that under Section 2, Rule 1[26] of the SSC Revised Rules of Procedure, the rules of evidence prevailing in the courts of law shall not be controlling. In the case at bar, the existence of a prior subsisting marriage between the deceased and Editha is supported by substantial evidence. Petitioner, who has fully availed of her right to be heard, only relied on the waiver of Editha and failed to present any evidence to invalidate or otherwise controvert the confirmed marriage certificate registered under LCR Registry No. 2083 on 21 November 1967. She did not even try to allege and prove any infirmity in the marriage between the deceased and Editha. As to the issue of who has the better right over the SSS death benefits, Section 8(e) and (k) of R. A. No. 8282[27] is very clear. Hence, we need only apply the law. Under the principles of statutory construction, if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This plain meaning rule or verba legis, derived from the maxim index animi sermo est (speech is the index of intention), rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent by the use of such words as are found in the statute. Verba legis non est recedendum, or, from the words of a statute there should be no departure.[28]Section 8(e) and (k) of R.A. No. 8282 provides:SEC. 8. Terms Defined.—For the purposes of this Act, the following terms shall, unless the context indicates otherwise, have the following meanings:

x x x (e) Dependents — The dependent shall be the following:(1) The legal spouse entitled by law to receive support from the member;2) The legitimate, legitimated, or legally adopted, and illegitimate child who is unmarried, not gainfully employed and has not reached twenty-one years (21) of age, or if over twenty-one (21) years of age, he is congenitally or while still a minor has been permanently incapacitated and incapable of self-support, physically or mentally; and 3) The parent who is receiving regular support from the member. x x x(k) Beneficiaries — The dependent spouse until he or she remarries, the dependent legitimate, legitimated or legally adopted, and illegitimate children, who shall be the primary beneficiaries of the member: Provided, That the dependent illegitimate children shall be entitled to fifty percent (50%) of the share of the legitimate, legitimated or legally adopted children: Provided, further, That in the absence of the dependent legitimate, legitimated or legally adopted children of the member, his/her dependent illegitimate children shall be entitled to one hundred percent (100%) of the benefits. In their absence, the dependent parents who shall be the secondary beneficiaries of the member. In the absence of all of the foregoing, any other person designated by the member as his/her secondary beneficiary. SEC. 13. Death Benefits. — Upon the death of a member who has paid at least thirty-six (36) monthly contributions prior to the semester of death, his primary beneficiaries shall be entitled to the monthly pension: Provided, That if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to thirty-six (36) times the monthly pension. If he has not paid the required thirty-six (36) monthly contributions, his primary or secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to the SSS or twelve (12) times the monthly pension, whichever is higher. mphasis supplied). Whoever claims entitlement to the benefits provided by law should establish his or her right thereto by substantial evidence. Since petitioner is disqualified to be a beneficiary and because the deceased has no legitimate child, it follows that the dependent illegitimate minor children of the deceased shall be entitled to the death benefits as primary beneficiaries. The SSS Law is clear that for a minor child to qualify as a “dependent,[29]” the only requirements are that he/she must be below 21 years of age, not married nor gainfully employed.[30]In this case, the minor illegitimate children Ginalyn and Rodelyn were born on 13 April 1996 and 20 April 2000, respectively. Had the legitimate child of the deceased and Editha survived and qualified as a dependent under the SSS Law, Ginalyn and Rodelyn would have been entitled to a share equivalent to only 50% of the share of the said legitimate child. Since the legitimate child of the deceased predeceased him, Ginalyn and Rodelyn, as the only qualified primary beneficiaries of the deceased, are entitled to 100% of the benefits. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Cost against petitioner.SO ORDERED.DANTE O.T INGA - Associate JusticeWE CONCUR: LEONARDO A. QUISUMBING. ANTONIO T. CARPIO, CONCHITA CARPIO MORALES, PRESBITERO J. VELASCO, JR.GOVERNMENT INSURANCE ACT OF 1997([2004R1163E] GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner, versus COMMISSION ON AUDIT, Respondent., G.R. No. 138381, 2004 Nov 10, En Banc)YNARES-SANTIAGO, J.:On April 16, 2002, the Court promulgated a decision on these two consolidated cases partially granting the petition in G.R. No. 138381 (“first petition”) thereby reversing the Commission on Audit’s (COA) disallowance of certain fringe benefits granted to GSIS employees. As a result, the Court ordered the refund of amounts representing fringe benefits corresponding to those allowed in the first petition in favor of the respondents in G.R. No. 141625 (“second petition”). The benefits which the Court ordered to be refunded included increases in longevity pay, children’s allowance and management contribution to the Provident Fund as well as premiums for group personal accident insurance. On the other hand, the Court affirmed the COA disallowance of loyalty and service cash award as well as housing allowance in excess of that approved by the COA. Amounts corresponding to these benefits were previously deducted by GSIS from respondents’ retirement benefits in view of the COA disallowance in the first petition. COA did not seek reconsideration of the judgment ordering said refund, which thus became final and executory.On August 7, 2002, the respondents in the second petition, all GSIS retirees, filed a motion for amendatory and clarificatory judgment (“amendatory motion”).[1] They averred that we did not categorically resolve the issue raised

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in the second petition, namely: whether or not the GSIS may lawfully deduct any amount from their retirement benefits in light of Section 39 of Republic Act No. 8291. According to respondents, said provision of law clearly states that no amount whatsoever could be legally deducted from retirement benefits, even those amounts representing COA disallowances. They posit that we should have ordered refund not only of benefits allowed in the first petition, but all amounts claimed, regardless of whether or not these were allowed by the COA. These include items which were correctly disallowed by the COA in the first petition, as well as disallowed benefits under the second petition. The latter consists of initial payment of productivity bonus, accelerated implementation of the new salary schedule effective August 1, 1995, 1995 mid-year financial assistance and increase in clothing, rice and meal allowances. Respondents further insist that we should have awarded damages in their favor, citing the GSIS’ alleged bad faith in making the deductions. GSIS filed a comment[2] to respondents’ amendatory motion, as directed by the Court in a resolution dated September 3, 2002. GSIS posited that the other benefits not passed upon in the main judgment should be understood by respondents as having been impliedly denied by this Court. It also sought clarification of our decision insofar as it declared that there was no identity of subject matter between the COA proceedings, from which the first petition stemmed, and respondents’ claim under the second petition, which emanated from an order of the GSIS Board of Trustees (“Board”). As for the damages claimed by respondents, GSIS insists that it made the deductions in good faith for these were done in accordance with COA directives. Respondents filed a reply[3] to the comment of GSIS on September 9, 2002.Meanwhile, respondents filed a second motion, this time for leave to file a motion for discretionary and partial execution[4] (“motion for execution”). They prayed that GSIS be ordered to effect the refund, as finally adjudged in our decision, pending resolution of their amendatory motion as to the other deducted amounts. We granted the motion for execution on September 3, 2002. Subsequently, on December 26, 2002, counsel for respondents, Atty. Agustin Sundiam, filed a motion for entry and enforcement of attorney’s lien[5] (“motion for charging lien”) and a supplement[6] to this motion on January 10, 2003. He sought entry of a charging lien in the records of this case pursuant to Section 37 of Rule 138. He prayed for an order directing the GSIS to deduct, as his professional fees, 15% from respondents’ refund vouchers since the GSIS was already in the process of releasing his clients’ checks in compliance with our judgment in the first petition. The payment scheme was allegedly authorized by the Board of Directors of his clients, the GSIS Retirees Association, Inc. (GRIA), through a board resolution[7] that he has attached to the motion.Atty. Sundiam’s motion for charging lien was opposed by petitioner GSIS on the ground that it was through its efforts, and not Atty. Sundiam’s, that the retirees were able to obtain a refund.[8] Meanwhile, the GRIA confirmed the payment scheme it adopted with Atty. Sundiam and prayed for its approval.[9]Thereafter, on January 10, 2003, respondents filed another manifestation and motion as well as supplement thereto, claiming that GSIS was deducting new and unspecified sums from the amount it was refunding to respondents. These new deductions purportedly pertain to another set of COA disallowances.[10] On January 21, 2003, respondents again filed a motion[11] praying for the inclusion in the refundable amount of dividends on the management contribution to the Provident Fund (“motion for payment of dividends”). Respondents claimed that the contribution, which amounted to Fifty Million Pesos (P50M), was retained by GSIS for more than five years and thus earned a considerable sum of income while under its control. GSIS declared and paid dividends on said contribution to incumbent officials and employees, but refused to extend the same benefits to respondents/retirees.On March 6, 2003, GSIS filed a joint comment[12] to respondents’ two foregoing motions contending that the new deductions are legitimate. The deductions pertain to car loan arrearages, disallowed employees’ compensation claims and the like. As for the dividends on the Provident Fund contributions, respondents are not entitled to the same because while the first petition was pending, the contributions were not actually remitted to the fund but were withheld by COA pursuant to its earlier disallowance.On October 2, 2003, respondents filed another motion[13] for an order to compel the GSIS to pay dividends on the Provident Fund contributions pending resolution of their other motions. They also sought refund of Permanent Partial Disability (PPD) benefits that GSIS supposedly paid to some of the respondents, but once again arbitrarily deducted from the amount which the Court ordered to be refunded. In a minute resolution[14] dated November 11, 2003, we denied the last motion for lack of merit. We likewise denied with finality respondents’ motion for reconsideration from the denial of said motion.[15] We now resolve the matters raised by the parties. On the amendatory motion, it must be clarified that the question raised before this Court in the second petition was the issue of the Board’s jurisdiction to resolve respondents’ claim for refund of amounts representing deductions from their retirement benefits. What was assailed in the second petition was the appellate court’s ruling that the Board had jurisdiction over respondents’ claim since there was no identity of subject matter between the proceedings then

pending before the COA and the petition brought by respondents before the Board. The Court of Appeals did not rule on the main controversy of whether COA disallowances could be deducted from retirement benefits because the Board ordered the dismissal of respondents’ claim for alleged lack of jurisdiction, before it could even decide on the principal issue. Consequently, the only matter that was properly elevated to this Court was the issue of whether or not the Board had jurisdiction over respondents’ demands. We did not resolve the issue of whether or not the deductions were valid under Section 39 of RA 8291, for the simple reason that the Board, as well as the appellate court, did not tackle the issue. The doctrine of primary jurisdiction[16] would ordinarily preclude us from resolving the matter, which calls for a ruling to be first made by the Board. It is the latter that is vested by law with exclusive and original jurisdiction to settle any dispute arising under RA 8291, as well as other matters related thereto.[17] However, both the GSIS and respondents have extensively discussed the merits of the case in their respective pleadings and did not confine their arguments to the issue of jurisdiction. Respondents, in fact, submit that we should resolve the main issue on the ground that it is a purely legal question. Respondents further state that a remand of the case to the Board would merely result in unnecessary delay and needless expense for the parties. They thus urge the Court to decide the main question in order to finally put an end to the controversy. Indeed, the principal issue pending before the Board does not involve any factual question, as it concerns only the correct application of the last paragraph of Section 39, RA 8291. The parties agreed that the lone issue is whether COA disallowances could be legally deducted from retirement benefits on the ground that these were respondents’ monetary liabilities to the GSIS under the said provision. There is no dispute that the amounts deducted by GSIS represented COA disallowances. Thus, the only question left for the Board to decide is whether the deductions are allowed under RA 8291. Under certain exceptional circumstances, we have taken cognizance of questions of law even in the absence of an initial determination by a lower court or administrative body. In China Banking Corporation v. Court of Appeals,[18] the Court held: At the outset, the Court’s attention is drawn to the fact that since the filing of this suit before the trial court, none of the substantial issues have been resolved. To avoid and gloss over the issues raised by the parties, as what the trial court and respondent Court of Appeals did, would unduly prolong this litigation involving a rather simple case of foreclosure of mortgage. Undoubtedly, this will run counter to the avowed purpose of the rules, i.e., to assist the parties in obtaining just, speedy and inexpensive determination of every action or proceeding. The Court, therefore, feels that the central issues of the case, albeit unresolved by the courts below, should now be settled specially as they involved pure questions of law. Furthermore, the pleadings of the respective parties on file have amply ventilated their various positions and arguments on the matter necessitating prompt adjudication. In Roman Catholic Archbishop of Manila v. Court of Appeals,[19] the Court likewise held that the remand of a case is not necessary where the court is in a position to resolve the dispute based on the records before it. The Court will decide actions on the merits in order to expedite the settlement of a controversy and if the ends of justice would not be subserved by a remand of the case.Here, the primary issue calls for an application of a specific provision of RA 8291 as well as relevant jurisprudence on the matter. No useful purpose will indeed be served if we remand the matter to the Board, only for its decision to be elevated again to the Court of Appeals and subsequently to this Court. Hence, we deem it sound to rule on the merits of the controversy rather than to remand the case for further proceedings.The last paragraph of Section 39, RA 8291 specifically provides:SEC. 39. Exemption from Tax, Legal Process and Lien.- x x x x x x x x xThe funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and from all financial obligations of the members, including his pecuniary accountability arising from or caused or occasioned by his exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or work except when his monetary liability, contractual or otherwise, is in favor of the GSIS. It is clear from the above provision that COA disallowances cannot be deducted from benefits under RA 8291, as the same are explicitly made exempt by law from such deductions. Retirement benefits cannot be diminished by COA disallowances in view of the clear mandate of the foregoing provision. It is a basic rule in statutory construction that if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without interpretation. This is what is known as plain-meaning rule or verba legis.[20]Accordingly, the GSIS’ interpretation of Section 39 that COA disallowances have become monetary liabilities of respondents to the GSIS and therefore fall under the exception stated in the law is wrong. No interpretation of the

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said provision is necessary given the clear language of the statute. A meaning that does not appear nor is intended or reflected in the very language of the statute cannot be placed therein by construction.[21] Moreover, if we are to accept the GSIS’ interpretation, then it would be unnecessary to single out COA disallowances as among those from which benefits under RA 8291 are exempt. In such a case, the inclusion of COA disallowances in the enumeration of exemptions would be a mere surplusage since the GSIS could simply consider COA disallowances as monetary liabilities in its favor. Such a construction would empower the GSIS to withdraw, at its option, an exemption expressly granted by law. This could not have been the intention of the statute.That retirement pay accruing to a public officer may not be withheld and applied to his indebtedness to the government has been settled in several cases. In Cruz v. Tantuico, Jr.,[22] the Court, citing Hunt v. Hernandez,[23] explained the reason for such policy thus:x x x we are of the opinion that the exemption should be liberally construed in favor of the pensioner. Pension in this case is a bounty flowing from the graciousness of the Government intended to reward past services and, at the same time, to provide the pensioner with the means with which to support himself and his family. Unless otherwise clearly provided, the pension should inure wholly to the benefit of the pensioner. It is true that the withholding and application of the amount involved was had under section 624 of the Administrative Code and not by any judicial process, but if the gratuity could not be attached or levied upon execution in view of the prohibition of section 3 of Act No. 4051, the appropriation thereof by administrative action, if allowed, would lead to the same prohibited result and enable the respondents to do indirectly what they can not do directly under section 3 of Act No. 4051. Act No. 4051 is a later statute having been approved on February 21, 1933, whereas the Administrative Code of 1917 which embodies section 624 relied upon by the respondents was approved on March 10 of that year. Considering section 3 of Act No. 4051 as an exception to the general authority granted in section 624 of the Administrative Code, antagonism between the two provisions is avoided. nderscoring supplied) The above ruling was reiterated in Tantuico, Jr. v. Domingo,[24] where the Court similarly declared that benefits under retirement laws cannot be withheld regardless of the petitioner’s monetary liability to the government. The policy of exempting retirement benefits from attachment, levy and execution, as well as unwarranted deductions, has been embodied in a long line of retirement statutes. Act No. 4051,[25] which provides for the payment of gratuity to officers and employees of the Insular Government upon retirement due to reorganization, expressly provides in its Section 3 that “(t)he gratuity provided for in this Act shall not be attached or levied upon execution.” The law which established the GSIS, Commonwealth Act No. 186 (“CA No. 186”),[26] went further by providing as follows:SEC. 23. Exemptions from legal process and liens. – No policy of life insurance issued under this Act, or the proceeds thereof, except those corresponding to the annual premium thereon in excess of five hundred pesos per annum, when paid to any member thereunder, shall be liable to attachment, garnishment, or other process, or to be seized, taken, appropriated, or applied by any legal or equitable process or operation of law to pay any debt or liability of such member, or his beneficiary, or any other person who may have a right thereunder, either before or after payment; nor shall the proceeds thereof, when not made payable to a named beneficiary, constitute a part of the estate of the member for payment of his debt. Presidential Decree No. 1146,[27] which amended CA No. 186, likewise contained a provision exempting benefits from attachment, garnishment, levy or other processes. However, the exemption was expressly made inapplicable to “obligations of the member to the System, or to the employer, or when the benefits granted are assigned by the member with the authority of the System.”[28] The latest GSIS enactment, RA 8291,[29] provides for a more detailed and wider range of exemptions under Section 39. Aside from exempting benefits from judicial processes, it likewise unconditionally exempts benefits from quasi-judicial and administrative processes, including COA disallowances, as well as all financial obligations of the member. The latter includes any pecuniary accountability of the member which arose out of the exercise or performance of his official functions or duties or incurred relative to his position or work. The only exception to such pecuniary accountability is when the same is in favor of the GSIS. Thus, “monetary liability in favor of GSIS” refers to indebtedness of the member to the System other than those which fall under the categories of pecuniary accountabilities exempted under the law. Such liability may include unpaid social insurance premiums and balances on loans obtained by the retiree from the System, which do not arise in the performance of his duties and are not incurred relative to his work. The general policy, as reflected in our retirement laws and jurisprudence, is to exempt benefits from all legal processes or liens, but not from outstanding obligations of the member to the System. This is to ensure maintenance of the GSIS’ fund reserves in order to guarantee fulfillment of all its obligations under RA 8291. Notwithstanding the foregoing, however, we find it necessary to nonetheless differentiate between those benefits which were properly disallowed by the COA and those which were not.

Anent the benefits which were improperly disallowed, the same rightfully belong to respondents without qualification. As for benefits which were justifiably disallowed by the COA, the same were erroneously granted to and received by respondents who now have the obligation to return the same to the System.It cannot be denied that respondents were recipients of benefits that were properly disallowed by the COA. These COA disallowances would otherwise have been deducted from their salaries, were it not for the fact that respondents retired before such deductions could be effected. The GSIS can no longer recover these amounts by any administrative means due to the specific exemption of retirement benefits from COA disallowances. Respondents resultantly retained benefits to which they were not legally entitled which, in turn, gave rise to an obligation on their part to return the amounts under the principle of solutio indebiti. Under Article 2154 of the Civil Code,[30] if something is received and unduly delivered through mistake when there is no right to demand it, the obligation to return the thing arises. Payment by reason of mistake in the construction or application of a doubtful or difficult question of law also comes within the scope of solutio indebiti.[31] In the instant case, the confusion about the increase and payment of benefits to GSIS employees and executives, as well as its subsequent disallowance by the COA, arose on account of the application of RA 6758 or the Salary Standardization Law and its implementing rules, CCC No. 10. The complexity in the application of these laws is manifested by the several cases that have reached the Court since its passage in 1989.[32] The application of RA 6758 was made even more difficult when its implementing rules were nullified for non-publication.[33] Consequently, the delivery of benefits to respondents under an erroneous interpretation of RA 6758 gave rise to an actionable obligation for them to return the same. While the GSIS cannot directly proceed against respondents’ retirement benefits, it can nonetheless seek restoration of the amounts by means of a proper court action for its recovery. Respondents themselves submit that this should be the case,[34] although any judgment rendered therein cannot be enforced against retirement benefits due to the exemption provided in Section 39 of RA 8291. However, there is no prohibition against enforcing a final monetary judgment against respondents’ other assets and properties. This is only fair and consistent with basic principles of due process. As such, a proper accounting of the amounts due and refundable is in order. In rendering such accounting, the parties must observe the following guidelines: (1) All deductions from respondents’ retirement benefits should be refunded except those amounts which may properly be defined as “monetary liability to the GSIS”; (2) Any other amount to be deducted from retirement benefits must be agreed upon by and between the parties; and (3) Refusal on the part of respondents to return disallowed benefits shall give rise to a right of action in favor of GSIS before the courts of law.Conformably, any fees due to Atty. Sundiam for his professional services may be charged against respondents’ retirement benefits. The arrangement, however, must be covered by a proper agreement between him and his clients under (2) above.As to whether respondents are entitled to dividends on the provident fund contributions, the same is not within the issues raised before the Court. The second petition refers only to the legality of the deductions made by GSIS from respondents’ retirement benefits. There are factual matters that need to be threshed out in determining respondents’ right to the payment of dividends, in view of the GSIS’ assertion that the management contributions were not actually remitted to the fund. Thus, the payment of dividends should be the subject of a separate claim where the parties can present evidence to prove their respective assertions. The Court is in no position to resolve the matter since the material facts that would prove or disprove the claim are not on record. In the interest of clarity, we reiterate herein our ruling that there is no identity of subject matter between the COA proceedings, from which the first petition stemmed, and respondents’ claim of refund before the Board. While the first petition referred to the propriety of the COA disallowances per se, respondents’ claim before the Board pertained to the legality of deducting the COA disallowances from retirement benefits under Section 39 of RA 8291. Finally, on respondents claim that the GSIS acted in bad faith when it deducted the COA disallowances from their retirement benefits, except for bare allegations, there is no proof or evidence of the alleged bad faith and partiality of the GSIS. Moreover, the latter cannot be faulted for taking measures to ensure recovery of the COA disallowances since respondents have already retired and would be beyond its administrative reach. The GSIS merely acted upon its best judgment and chose to err in the side of prudence rather than suffer the consequence of not being able to account for the COA disallowances. It concededly erred in taking this recourse but it can hardly be accused of malice or bad faith in doing so. WHEREFORE, in view of the foregoing, the April 16, 2002 Decision in G.R. Nos. 138381 and 141625 is AMENDED. In addition to the refund of amounts corresponding to benefits allowed in G.R. No. 138381, the GSIS is ordered to

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REFUND all deductions from retirement benefits EXCEPT amounts representing monetary liability of the respondents to the GSIS as well as all other amounts mutually agreed upon by the parties.SO ORDERED. CONSUELO YNARES-SANTIAGO - Associate JusticeWE CONCUR: HILARIO G. DAVIDE, JR., REYNATO S. PUNO, ARTEMIO V. PANGANIBAN, LEONARDO A. QUISUMBING, ANGELINA SANDOVAL-GUTIERREZ, ANTONIO T. CARPIO MA. ALICIA AUSTRIA-MARTINEZ, RENATO C. CORONA, CONCHITA CARPIO-MORALES, ROMEO J. CALLEJO, SR. ADOLFO S. AZCUNA, DANTE O. TINGA, MINITA V. CHICO-NAZARIO, CANCIO C. GARCIA

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