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Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-28952 December 29, 1971BENITO C. MANUEL,petitioner,vs.GENERAL AUDITING OFFICE, respondent.Bengzon, Villegas & Zarraga for petitioner.

Office of the Solicitor General Antonio P. Barredo and Solicitor Buenaventura J. Guerrero for

respondent.

FERNANDO, J.:This Court is faced with a question raised for the first time in this petition for the review of aruling of an order of respondent General Auditing Office. It is whether or not an elective official

may be entitled in the event that he voluntarily retires or be separated from the service withoutfault on his part to the commutation of his vacation and sick leave. The answer of respondentwas in the negative, relying primarily on a civil service rule purportedly in accordance with theapplicable Administrative Code provision. In thus denying the claim of petitioner, there was aneglect or disregard of the controlling section of such Code 1as well as of the equally controllingstatutory language in another enactment, which specifically speaks of both an elective orappointive official as being entitled, to such benefits under such circumstances. 2A reversal isthus indicated.The facts are undisputed. Petitioner Benito C. Manuel applied for retirement, effective December31, 1967, according to law, 3after having to his credit more than (20) years of service in thegovernment, included in which were four successive terms as Mayor of Lingayen, Pangasinan

from January 1, 1952 to December 31, 1967. Such application was approved on December 5,1967. He had likewise sought the commutation of his vacation and sick leave, filing with theMunicipal Treasurer of Lingayen, Pangasinan on December 22, 1967 a communication to thateffect. In his memorandum filed with respondent General Auditing Office to which the matterwas referred, he stressed that he was entitled to unused vacation and sick leave earned from May31, 1957 (date of effectivity Republic Act No. 1616) to December 31, 1967, or a period of 10years and 7 months, and since his highest salary was P600.00 a month, the total amount whichshould accrue to him is P6,000.00, (one month for every year). Respondent Office in turn askedfor the view of the Commission of Civil Service in an indorsement dated January 25, 196 Thereply, coming on February 22, 1968 was that such claim for the commutation of the money valueof his leave from January 1, 1952 to December 31, 1967 could not favorably considered. Such aconclusion was based on his reading of Section 2187 of the Revised Administrate Code, 4whichfor him implied that such a leave must be enjoyed during the year in which earned and that itcould not be cumulative. There was likewise reliance on Section 9 of Civil Service Rule XVIwhich speaks categorically to that effect. 5Respondent General Auditing Office on March 1,1968 ruled that his application for commutation of his leave earned as Mayor during the periodfrom January 1, 1952 to December 31, 1967 could not thus be allowed in audit. Hence thisappeal to this Court.

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The appeal is meritorious. As was clearly pointed out in the able brief of counsel for petitioner,the Bengzon, Villegas & Zarraga Law Firm, the controlling statutory provisions call for areversal of the ruling of respondent.1. It is expressly provided under Section 286 of the Revised Administrative Code that vacationand sick leave shall be cumulative, any part thereof not taken within the calendar year earned

being carried over the succeeding years with the employee voluntarily retiring or being separatedfrom the service without fault on his part, being entitled to the commutation of all suchaccumulated vacation or sick leave to his credit provided that it shall in no case exceed ten (10)months. 6The statute 7providing for voluntary retirement is even more explicit. Thus:"Retirement is likewise allowed to any official or employee, appointive or elective, regardless ofage and employment status, who has rendered a total of at least twenty years of service, the lastthree years of which are continuous. 8Further: "Officials and employees retired under this Actshall be entitled to the commutation of the unused vacation and sick leave, based on the highestrate received, which they have to their credit at the time of retirement." 9

There cannot be the least doubt therefore that the petitioner, who was a municipal mayor and assuch an elective official for sixteen (16) years, having to his credit four (4) successive terms as

Mayor of Lingayen, Pangasinan could not be denied his plea for the commutation for vacationand sick leave. The law speaks categorically including him within its terms. It must, as insistedby counsel for petitioner, be obeyed. Whatever rights are granted petitioner must be respected.There is here no room interpretation, simply the application of legal norms from anyambiguity. 10

2. Why then did respondent decide otherwise? It may have been due to a misreading of Section2187 of the Revised Administrative Code. What must have misled respondent was a failure totake due note that this section deals solely with a situation when a municipal mayor is absentfrom his office because of illness. It does not cover therefore the specific case here presented ofthe right of the elective official to a commutation of his vacation and sick leave upon hisretirement or separation from the service through no fault of his own. Moreover it must have feltjustified in view of the endorsement of the Commission of the Civil Service, who applied Section9 of Civil Service Rule XVI, included in which is the express injunction that the leave is notcumulative. Further reflection ought to have cautioned it that certainly this rule is far from beingapplicable as on its face it is based on the aforesaid Section 2187, which as noted is not in point.If, however, to be considered as having pertinence and relevance, it cannot as an administrativeorder supplant the plain and explicit statutory command. Why such should be the case isexplained in a recent decision, Teoxon v. Member of the Board of Administrators. 11Thus: "Therecognition of the power of administrative officials to promulgate rules in the implementation ofthe statute, necessarily limited to what is provided for in the legislative enactment, may be foundin the early case ofUnited States v. Barrias decided in 1908. Then came, in a 1914decision, United States v. Tupasi Molina, a delineation of the scope of such competence. Thus:'Of course the regulations adopted under legislative authority by a particular department must bein harmony with the provisions of the law, and for the sole purpose of carrying into effect itsgeneral provisions. By such regulations, of course, the law itself can not be extended. So long,however, as the regulations relate solely to carrying into effect the provisions of the law, they arevalid.' In 1936, inPeople v. Santos, this Court expressed its disapproval of an administrativeorder 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 anadministrative order betrays inconsistency or repugnancy to the provisions of the Act, 'the

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mandate of the Act must prevail and must be followed.' Justice Barrera, speaking for the Courtin Victorias Milling Company, Inc. v. Social Security Commission, citing Parker as well as Davisdid tersely sum up the matter thus: 'A rule is binding on the courts so long as the procedure fixedfor its promulgation is followed and its scope is within the statutory 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 thecourts that finally determine what the law means.' " 12The succeeding paragraph in such adecision is likewise in point. Thus: "It cannot be otherwise as the Constitution limits theauthority of the President, in whom all executive power resides, to take care that the laws befaithfully executed. No lesser administrative executive office or agency then can, contrary to theexpress 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 thelegislative enactment. Its terms must be followed. The statute requires adherence to, departurefrom, its provisions. No deviation is allowable. In the terse language of the present Chief Justice,administrative agency 'cannot amend an act of Congress.' " 13

3. Nothing can be clearer therefore than that the claim of petitioner to a commutation of his

vacation and sick leave not exceeding ten (10) months must be upheld, inasmuch as the factsshow that the total amount sought to be paid to him was precisely in accordance with thecontrolled legal provisions. The ruling now on review must be versed and petitioner's pleagranted.WHEREFORE, the ruling of March 1, 1968 of respondent office refusing to allow in audit theclaim of petitioner Benito C. Manuel for commutation of his leave earned as Mayor for theperiod January 1, 1952 to December 31, 1967 is reversed and the application of petition for suchcommutation granted. Without pronouncement as to costs.Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Villamor

and Makasiar, concur.

Republic of the PhilippinesSUPREME COURTManila

EN BANCG.R. No. L-63915 April 24, 1985LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OFATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.[MABINI],petitioners,vs.HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON.

JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President ,MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang Records Office,and FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents.ESCOLIN, J.:Invoking the people's right to be informed on matters of public concern, a right recognized inSection 6, Article IV of the 1973 Philippine Constitution, 1 as well as the principle that laws to bevalid and enforceable must be published in the Official Gazette or otherwise effectively

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promulgated, petitioners seek a writ of mandamus to compel respondent public officials topublish, and/or cause the publication in the Official Gazette of various presidential decrees,letters of instructions, general orders, proclamations, executive orders, letter of implementationand administrative orders.Specifically, the publication of the following presidential issuances is sought:

a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200,234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368,404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566,573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923,935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246,1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150,153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213,215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346,

349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445,473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610,611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837-839, 878-879, 881, 882,939-940, 964,997,1149-1178,1180-1278.c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526,1529, 1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723,1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829,1831-1832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858,1860, 1866, 1868, 1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963,1965-1966, 1968-1984, 1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563,567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852, 854-857.f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122, 123.g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.

The respondents, through the Solicitor General, would have this case dismissed outright on theground that petitioners have no legal personality or standing to bring the instant petition. Theview is submitted that in the absence of any showing that petitioners are personally and directlyaffected or prejudiced by the alleged non-publication of the presidential issuances inquestion 2 said petitioners are without the requisite legal personality to institute this mandamusproceeding, they are not being "aggrieved parties" within the meaning of Section 3, Rule 65 ofthe Rules of Court, which we quote:

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SEC. 3.Petition for Mandamus.When any tribunal, corporation, board orperson unlawfully neglects the performance of an act which the law specificallyenjoins as a duty resulting from an office, trust, or station, or unlawfully excludesanother from the use a rd enjoyment of a right or office to which such other isentitled, and there is no other plain, speedy and adequate remedy in the ordinary

course of law, the person aggrieved thereby may file a verified petition in theproper court alleging the facts with certainty and praying that judgment berendered commanding the defendant, immediately or at some other specified time,to do the act required to be done to Protect the rights of the petitioner, and to paythe damages sustained by the petitioner by reason of the wrongful acts of thedefendant.

Upon the other hand, petitioners maintain that since the subject of the petition concerns a publicright and its object is to compel the performance of a public duty, they need not show anyspecific interest for their petition to be given due course.The issue posed is not one of first impression. As early as the 1910 case ofSeverino vs.

Governor General,

3

this Court held that while the general rule is that "a writ of mandamuswould be granted to a private individual only in those cases where he has some private orparticular interest to be subserved, or some particular right to be protected, independent of thatwhich he holds with the public at large," and "it is for the public officers exclusively to apply forthe writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469],"nevertheless, "when the question is one of public right and the object of the mandamus is toprocure the enforcement of a public duty, the people are regarded as the real party in interest andthe relator at whose instigation the proceedings are instituted need not show that he has any legalor special interest in the result, it being sufficient to show that he is a citizen and as suchinterested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as aproper party to the mandamus proceedings brought to compel the Governor General to call aspecial election for the position of municipal president in the town of Silay, Negros Occidental.Speaking for this Court, Mr. Justice Grant T. Trent said:

We are therefore of the opinion that the weight of authority supports theproposition that the relator is a proper party to proceedings of this character whena public right is sought to be enforced. If the general rule in America wereotherwise, we think that it would not be applicable to the case at bar for the reason'that it is always dangerous to apply a general rule to a particular case withoutkeeping in mind the reason for the rule, because, if under the particularcircumstances the reason for the rule does not exist, the rule itself is notapplicable and reliance upon the rule may well lead to error'No reason exists in the case at bar for applying the general rule insisted upon bycounsel for the respondent. The circumstances which surround this case aredifferent from those in the United States, inasmuch as if the relator is not a properparty to these proceedings no other person could be, as we have seen that it is notthe duty of the law officer of the Government to appear and represent the peoplein cases of this character.

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The reasons given by the Court in recognizing a private citizen's legal personality in theaforementioned case apply squarely to the present petition. Clearly, the right sought to beenforced by petitioners herein is a public right recognized by no less than the fundamental law ofthe land. If petitioners were not allowed to institute this proceeding, it would indeed be difficultto conceive of any other person to initiate the same, considering that the Solicitor General, the

government officer generally empowered to represent the people, has entered his appearance forrespondents in this case.

Respondents further contend that publication in the Official Gazette is not a sine qua nonrequirement for the effectivity of laws where the laws themselves provide for their owneffectivity dates. It is thus submitted that since the presidential issuances in question containspecial provisions as to the date they are to take effect, publication in the Official Gazette is notindispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code:

Art. 2. Laws shall take effect after fifteen days following the completion of theirpublication in the Official Gazette, unless it is otherwise provided, ...

The interpretation given by respondent is in accord with this Court's construction of said article.In a long line of decisions, 4 this Court has ruled that publication in the Official Gazette isnecessary in those cases where the legislation itself does not provide for its effectivity date-forthen the date of publication is material for determining its date of effectivity, which is thefifteenth day following its publication-but not when the law itself provides for the date when itgoes into effect.

Respondents' argument, however, is logically correct only insofar as it equates the effectivity oflaws with the fact of publication. Considered in the light of other statutes applicable to the issueat hand, the conclusion is easily reached that said Article 2 does not preclude the requirement ofpublication in the Official Gazette, even if the law itself provides for the date of its effectivity.Thus, Section 1 of Commonwealth Act 638 provides as follows:

Section 1. There shall be published in the Official Gazette [1] all importantlegisiative acts and resolutions of a public nature of the, Congress of thePhilippines; [2] all executive and administrative orders and proclamations, exceptsuch as have no general applicability; [3] decisions or abstracts of decisions of theSupreme Court and the Court of Appeals as may be deemed by said courts ofsufficient importance to be so published; [4] such documents or classes ofdocuments as may be required so to be published by law; and [5] such documentsor classes of documents as the President of the Philippines shall determine fromtime to time to have general applicability and legal effect, or which he mayauthorize so to be published. ...

The clear object of the above-quoted provision is to give the general public adequate notice ofthe various laws which are to regulate their actions and conduct as citizens. Without such noticeand publication, there would be no basis for the application of the maxim "ignorantia legis nonexcusat." It would be the height of injustice to punish or otherwise burden a citizen for thetransgression of a law of which he had no notice whatsoever, not even a constructive one.

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Perhaps at no time since the establishment of the Philippine Republic has the publication of lawstaken so vital significance that at this time when the people have bestowed upon the President apower heretofore enjoyed solely by the legislature. While the people are kept abreast by the massmedia of the debates and deliberations in the Batasan Pambansaand for the diligent ones,ready access to the legislative recordsno such publicity accompanies the law-making process

of the President. Thus, without publication, the people have no means of knowing whatpresidential decrees have actually been promulgated, much less a definite way of informingthemselves of the specific contents and texts of such decrees. As the Supreme Court of Spainruled: "Bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Realesdecretos, Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas porel Gobierno en uso de su potestad. 5

The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published inthe Official Gazette ... ." The word "shall" used therein imposes upon respondent officials animperative duty. That duty must be enforced if the Constitutional right of the people to beinformed on matters of public concern is to be given substance and reality. The law itself makes

a list of what should be published in the Official Gazette. Such listing, to our mind, leavesrespondents with no discretion whatsoever as to what must be included or excluded from suchpublication.

The publication of all presidential issuances "of a public nature" or "of general applicability" ismandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penaltiesfor their violation or otherwise impose a burden or. the people, such as tax and revenuemeasures, fall within this category. Other presidential issuances which apply only to particularpersons or class of persons such as administrative and executive orders need not be published onthe assumption that they have been circularized to all concerned. 6

It is needless to add that the publication of presidential issuances "of a public nature" or "ofgeneral applicability" is a requirement of due process. It is a rule of law that before a person maybe bound by law, he must first be officially and specifically informed of its contents. As JusticeClaudio Teehankee said in Peralta vs. COMELEC7:

In a time of proliferating decrees, orders and letters of instructions which all formpart of the law of the land, the requirement of due process and the Rule of Lawdemand that the Official Gazette as the official government repository promulgateand publish the texts of all such decrees, orders and instructions so that the peoplemay know where to obtain their official and specific contents.

The Court therefore declares that presidential issuances of general application, which have notbeen published, shall have no force and effect. Some members of the Court, quite apprehensiveabout the possible unsettling effect this decision might have on acts done in reliance of thevalidity of those presidential decrees which were published only during the pendency of thispetition, have put the question as to whether the Court's declaration of invalidity apply to P.D.swhich had been enforced or implemented prior to their publication. The answer is all toofamiliar. In similar situations in the past this Court had taken the pragmatic and realistic courseset forth in Chicot County Drainage District vs. Baxter Bank8 to wit:

The courts below have proceeded on the theory that the Act of Congress, havingbeen found to be unconstitutional, was not a law; that it was inoperative,conferring no rights and imposing no duties, and hence affording no basis for the

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challenged decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L.Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broadstatements as to the effect of a determination of unconstitutionality must be takenwith qualifications. The actual existence of a statute, prior to such adetermination, is an operative fact and may have consequences which cannot

justly be ignored. The past cannot always be erased by a new judicial declaration.The effect of the subsequent ruling as to invalidity may have to be considered invarious aspects-with respect to particular conduct, private and official. Questionsof rights claimed to have become vested, of status, of prior determinationsdeemed to have finality and acted upon accordingly, of public policy in the lightof the nature both of the statute and of its previous application, demandexamination. These questions are among the most difficult of those which haveengaged the attention of courts, state and federal and it is manifest from numerousdecisions that an all-inclusive statement of a principle of absolute retroactiveinvalidity cannot be justified.

Consistently with the above principle, this Court inRutter vs. Esteban 9 sustained the right of a

party under the Moratorium Law, albeit said right had accrued in his favor before said law wasdeclared unconstitutional by this Court.Similarly, the implementation/enforcement of presidential decrees prior to their publication inthe Official Gazette is "an operative fact which may have consequences which cannot be justlyignored. The past cannot always be erased by a new judicial declaration ... that an all-inclusivestatement of a principle of absolute retroactive invalidity cannot be justified."From the report submitted to the Court by the Clerk of Court, it appears that of the presidentialdecrees sought by petitioners to be published in the Official Gazette, only Presidential DecreesNos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been sopublished. 10Neither the subject matters nor the texts of these PDs can be ascertained since nocopies thereof are available. But whatever their subject matter may be, it is undisputed that noneof these unpublished PDs has ever been implemented or enforced by the government. InPesiganvs. Angeles,11 the Court, through Justice Ramon Aquino, ruled that "publication is necessary toapprise the public of the contents of [penal] regulations and make the said penalties binding onthe persons affected thereby. " The cogency of this holding is apparently recognized byrespondent officials considering the manifestation in their comment that "the government, as amatter of policy, refrains from prosecuting violations of criminal laws until the same shall havebeen published in the Official Gazette or in some other publication, even though some criminallaws provide that they shall take effect immediately.

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette allunpublished presidential issuances which are of general application, and unless so published,they shall have no binding force and effect.SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

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On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Managerof NASECO, to explain her side before Perez and NASECO's Committee on Personnel Affairs inconnection with the administrative charges filed against her. After said meeting, on the samedate, Credo was placed on "Forced Leave" status for 1 5 days, effective 8 November 1983. 3

Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint,docketed as Case No. 114944-83, with the Arbitration Branch, National Capital Region, Ministryof Labor and Employment, Manila, against NASECO for placing her on forced leave, withoutdue process. 4

Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee onPersonnel Affairs deliberated and evaluated a number of past acts of misconduct or infractionsattributed to her. 5 As a result of this deliberation, said committee resolved:

1. That, respondent [Credo] committed the following offenses in the Code of Discipline,viz:

OFFENSE vs. Company Interest & Policies

No. 3 Any discourteous act to customer, officer and employee of client company or officer ofthe Corporation.

OFFENSE vs. Public Moral

No. 7 Exhibit marked discourtesy in the course of official duties or use of profane or insultinglanguage to any superior officer.

OFFENSE vs. Authority

No. 3 Failure to comply with any lawful order or any instructions of a superior officer.

2. That, Management has already given due consideration to respondent's [Credo]scandalous actuations for several times in the past. Records also show that she was reprimandedfor some offense and did not question it. Management at this juncture, has already met itsmaximum tolerance point so it has decided to put an end to respondent's [Credo] being anundesirable employee. 6

The committee recommended Credo's termination, with forfeiture of benefits. 7

On 1 December 1983, Credo was called age to the office of Perez to be informed that she wasbeing charged with certain offenses. Notably, these offenses were those which NASECO'sCommittee on Personnel Affairs already resolved, on 22 November 1983 to have beencommitted by Credo.

In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo wasmade to explain her side in connection with the charges filed against her; however, due to her

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failure to do so, 8 she was handed a Notice of Termination, dated 24 November 1983, and madeeffective 1 December 1983. 9 Hence, on 6 December 1983, Credo filed a supplementalcomplaint for illegal dismissal in Case No. 11-4944-83, alleging absence of just or authorizedcause for her dismissal and lack of opportunity to be heard. 10

After both parties had submitted their respective position papers, affidavits and otherdocumentary evidence in support of their claims and defenses, on 9 May 1984, the labor arbiterrendered a decision: 1) dismissing Credo's complaint, and 2) directing NASECO to pay Credoseparation pay equivalent to one half month's pay for every year of service. 11

Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on28 November 1984, rendered a decision: 1) directing NASECO to reinstate Credo to her formerposition, or substantially equivalent position, with six (6) months' backwages and without loss ofseniority rights and other privileges appertaining thereto, and 2) dismissing Credo's claim forattorney's fees, moral and exemplary damages. As a consequence, both parties filed theirrespective motions for reconsideration, 12 which the NLRC denied in a resolution of 16 January

1985. 13Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as graveabuse of discretion the dispositive portion of the 28 November 1984 decision which orderedCredo's reinstatement with backwages. 14Petitioners contend that in arriving at said questionedorder, the NLRC acted with grave abuse of discretion in finding that: 1) petitioners violated therequirements mandated by law on termination, 2) petitioners failed in the burden of proving thatthe termination of Credo was for a valid or authorized cause, 3) the alleged infractionscommitted by Credo were not proven or, even if proved, could be considered to have beencondoned by petitioners, and 4) the termination of Credo was not for a valid or authorized cause.15

On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretionthe dispositive portion of the 28 November 1984 decision which dismissed her claim forattorney's fees, moral and exemplary damages and limited her right to backwages to only six (6)months. 16

As guidelines for employers in the exercise of their power to dismiss employees for just causes,the law provides that:

Section 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnishhim a written notice stating the particular acts or omission constituting the grounds for hisdismissal.

xxx xxx xxx

Section 5. Answer and Hearing. The worker may answer the allegations stated againsthim in the notice of dismissal within a reasonable period from receipt of such notice. Theemployer shall afford the worker ample opportunity to be heard and to defend himself with theassistance of his representative, if he so desires.

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Section 6. Decision to dismiss. The employer shall immediately notify a worker inwriting of a decision to dismiss him stating clearly the reasons therefor. 17

These guidelines mandate that the employer furnish an employee sought to be dismissed two (2)

written notices of dismissal before a termination of employment can be legally effected. Theseare the notice which apprises the employee of the particular acts or omissions for which hisdismissal is sought and the subsequent notice which informs the employee of the employer'sdecision to dismiss him.

Likewise, a reading of the guidelines in consonance with the express provisions of law onprotection to labor 18(which encompasses the right to security of tenure) and the broader dictatesof procedural due process necessarily mandate that notice of the employer's decision to dismissan employee, with reasons therefor, can only be issued after the employer has afforded theemployee concerned ample opportunity to be heard and to defend himself.

In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal.Although she was apprised and "given the chance to explain her side" of the charges filed againsther, this chance was given so perfunctorily, thus rendering illusory Credo's right to security oftenure. That Credo was not given ample opportunity to be heard and to defend herself is evidentfrom the fact that the compliance with the injunction to apprise her of the charges filed againsther and to afford her a chance to prepare for her defense was dispensed in only a day. This is noteffective compliance with the legal requirements aforementioned.

The fact also that the Notice of Termination of Credo's employment (or the decision to dismissher) was dated 24 November 1983 and made effective 1 December 1983 shows that NASECOwas already bent on terminating her services when she was informed on 1 December 1983 of thecharges against her, and that any hearing which NASECO thought of affording her after 24November 1983 would merely be pro forma or an exercise in futility.

Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry proceduresin the company's Statement of Billings Adjustment did not warrant the severe penalty ofdismissal of the NLRC correctly held that:

... on the charge of gross discourtesy, the CPA found in its Report, dated 22 November 1983 that,"In the process of her testimony/explanations she again exhibited a conduct unbecoming in frontof NASECO Officers and argued to Mr. S. S. Lloren in a sarcastic and discourteous manner,notwithstanding, the fact that she was inside the office of the Acctg. General Manager." Let it benoted, however, that the Report did not even describe how the so called "conduct unbecoming"or "discourteous manner" was done by complainant. Anent the "sarcastic" argument ofcomplainant, the purported transcript 19 of the meeting held on 7 November 1983 does notindicate any sarcasm on the part of complainant. At the most, complainant may have soundedinsistent or emphatic about her work being more complete than the work of Ms. de Castro, yet,the complaining officer signed the work of Ms. de Castro and did not sign hers.

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As to the charge of insubordination, it may be conceded, albeit unclear, that complainant failedto place same corrections/additional remarks in the Statement of Billings Adjustments asinstructed. However, under the circumstances obtaining, where complainant strongly felt that shewas being discriminated against by her superior in relation to other employees, we are of theconsidered view and so hold, that a reprimand would have sufficed for the infraction, but

certainly not termination from services. 20

As this Court has ruled:

... where a penalty less punitive would suffice, whatever missteps may be committed by laborought not to be visited with a consequence so severe. It is not only because of the law's concernfor the working man. There is, in addition, his family to consider. Unemployment brings untoldhardships and sorrows on those dependent on the wage-earner. 21

Of course, in justifying Credo's termination of employment, NASECO claims as additionallawful causes for dismissal Credo's previous and repeated acts of insubordination, discourtesy

and sarcasm towards her superior officers, alleged to have been committed from 1980 to July1983. 22

If such acts of misconduct were indeed committed by Credo, they are deemed to have beencondoned by NASECO. For instance, sometime in 1980, when Credo allegedly "reacted in ascandalous manner and raised her voice" in a discussion with NASECO's Acting head of thePersonnel Administration 23 no disciplinary measure was taken or meted against her. Nor wasshe even reprimanded when she allegedly talked 'in a shouting or yelling manner" with theActing Manager of NASECO's Building Maintenance and Services Department in 1980 24 orwhen she allegedly "shouted" at NASECO's Corporate Auditor "in front of his subordinatesdisplaying arrogance and unruly behavior" in 1980, or when she allegedly shouted at NASECO'sInternal Control Consultant in 1981. 25 But then, in sharp contrast to NASECO's penchant forignoring the aforesaid acts of misconduct, when Credo committed frequent tardiness in Augustand September 1983, she was reprimanded. 26

Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven,NASECO's condonation thereof is gleaned from the fact that on 4 October 1983, Credo wasgiven a salary adjustment for having performed in the job "at least [satisfactorily]" 27 and shewas then rated "Very Satisfactory" 28as regards job performance, particularly in terms of qualityof work, quantity of work, dependability, cooperation, resourcefulness and attendance.

Considering that the acts or omissions for which Credo's employment was sought to be legallyterminated were insufficiently proved, as to justify dismissal, reinstatement is proper. For "absentthe reason which gave rise to [the employee's] separation from employment, there is no intentionon the part of the employer to dismiss the employee concerned." 29 And, as a result of havingbeen wrongfully dismissed, Credo is entitled to three (3) years of backwages without deductionand qualification. 30

However, while Credo's dismissal was effected without procedural fairness, an award ofexemplary damages in her favor can only be justified if her dismissal was effected in a wanton,

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fraudulent, oppressive or malevolent manner. 31A judicious examination of the record manifestsno such conduct on the part of management. However, in view of the attendant circumstances inthe case, i.e., lack of due process in effecting her dismissal, it is reasonable to award her moraldamages. And, for having been compelled to litigate because of the unlawful actuations ofNASECO, a reasonable award for attorney's fees in her favor is in order.

In NASECO's comment 32 in G.R. No. 70295, it is belatedly argued that the NLRC has nojurisdiction to order Credo's reinstatement. NASECO claims that, as a government corporation(by virtue of its being a subsidiary of the National Investment and Development Corporation(NIDC), a subsidiary wholly owned by the Philippine National Bank (PNB), which in turn is agovernment owned corporation), the terms and conditions of employment of its employees aregoverned by the Civil Service Law, rules and regulations. In support of this argument, NASECOcitesNational Housing Corporation vs. JUCO, 33 where this Court held that "There should nolonger be any question at this time that employees of government-owned or controlledcorporations are governed by the civil service law and civil service rifles and regulations."

It would appear that, in the interest of justice, the holding in said case should not be givenretroactive effect, that is, to cases that arose before its promulgation on 17 January 1985. To dootherwise would be oppressive to Credo and other employees similarly situated, because underthe same 1973 Constitution ,but prior to the ruling in National Housing Corporation vs. Juco, thisCourt had recognized the applicability of the Labor Code to, and the authority of the NLRC toexercise jurisdiction over, disputes involving terms and conditions of employment in governmentowned or controlled corporations, among them, the National Service Corporation(NASECO). 34

Furthermore, in the matter of coverage by the civil service of government-owned or controlledcorporations, the 1987 Constitution starkly varies from the 1973 Constitution, upon whichNational Housing Corporation vs. Juco is based. Under the 1973 Constitution, it was providedthat:

The civil service embraces every branch, agency, subdivision, and instrumentality of theGovernment, including every government-owned or controlled corporation. ... 35

On the other hand, the 1987 Constitution provides that:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies of theGovernment, including government-owned or controlled corporations with original charter. 36(Emphasis supplied)

Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court inthe National Housing . Corporation case in the following manner

The infirmity of the respondents' position lies in its permitting a circumvention or emasculationof Section 1, Article XII-B of the constitution. It would be possible for a regular ministry ofgovernment to create a host of subsidiary corporations under the Corporation Code funded by awilling legislature. A government-owned corporation could create several subsidiary

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corporations. These subsidiary corporations would enjoy the best of two worlds. Their officialsand employees would be privileged individuals, free from the strict accountability required bythe Civil Service Decree and the regulations of the Commission on Audit. Their incomes wouldnot be subject to the competitive restrains of the open market nor to the terms and conditions ofcivil service employment. Conceivably, all government-owned or controlled corporations could

be created, no longer by special charters, but through incorporations under the general law. TheConstitutional amendment including such corporations in the embrace of the civil service wouldcease to have application. Certainly, such a situation cannot be allowed to exist. 37

appear relegated to relative insignificance by the 1987 Constitutional provision that the CivilService embraces government-owned or controlled corporations with original charter; and,therefore, by clear implication, the Civil Service does not include government-owned orcontrolled corporations which are organized as subsidiaries of government-owned or controlledcorporations under the general corporation law.

The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional

intent and meaning in the use of the phrase "with original charter." ThusTHE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is recognized.

MR. ROMULO. I beg the indulgence of the Committee. I was reading the wrong provision.

I refer to Section 1, subparagraph I which reads:

The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of thegovernment, including government-owned or controlled corporations.

My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the Commissionerplease state his previous question?

MR. ROMULO. The phrase on line 4 of Section 1, subparagraph 1, under the Civil ServiceCommission, says: "including government-owned or controlled corporations.' Does that includea corporation, like the Philippine Airlines which is government-owned or controlled?

MR. FOZ. I would like to throw a question to the Commissioner. Is the Philippine Airlinescontrolled by the government in the sense that the majority of stocks are owned by thegovernment?

MR. ROMULO. It is owned by the GSIS. So, this is what we might call a tertiarycorporation. The GSIS is owned by the government. Would this be covered because theprovision says "including government-owned or controlled corporations."

MR. FOZ. The Philippine Airlines was established as a private corporation. Later on, thegovernment, through the GSIS, acquired the controlling stocks. Is that not the correct situation?

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MR. ROMULO. That is true as Commissioner Ople is about to explain. There wasapparently a Supreme Court decision that destroyed that distinction between a government-owned corporation created under the Corporation Law and a government-owned corporationcreated by its own charter.

MR. FOZ. Yes, we recall the Supreme Court decision in the case of NHA vs. Juco to theeffect that all government corporations irrespective of the manner of creation, whether by specialcharter or by the private Corporation Law, are deemed to be covered by the civil service becauseof the wide-embracing definition made in this section of the existing 1973 Constitution. But werecall the response to the question of Commissioner Ople that our intendment in this provision isjust to give a general description of the civil service. We are not here to make any declaration asto whether employees of government-owned or controlled corporations are barred from theoperation of laws, such as the Labor Code of the Philippines.

MR. ROMULO. Yes.

MR. OPLE. May I be recognized, Mr. Presiding Officer, since my name has been mentionedby both sides.

MR. ROMULO. I yield part of my time.

THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is recognized.

MR. OPLE. In connection with the coverage of the Civil Service Law in Section 1 (1), may Ivolunteer some information that may be helpful both to the interpellator and to the Committee.Following the proclamation of martial law on September 21, 1972, this issue of the coverage ofthe Labor Code of the Philippines and of the Civil Service Law almost immediately arose. I am,in particular, referring to the period following the coming into force and effect of theConstitution of 1973, where the Article on the Civil Service was supposed to take immediateforce and effect. In the case of LUZTEVECO, there was a strike at the time. This was agovernment-controlled and government-owned corporation. I think it was owned by the PNOCwith just the minuscule private shares left. So, the Secretary of Justice at that time, SecretaryAbad Santos, and myself sat down, and the result of that meeting was an opinion of the Secretaryof Justice which 9 became binding immediately on the government that government corporationswith original charters, such as the GSIS, were covered by the Civil Service Law and corporationsspun off from the GSIS, which we called second generation corporations functioning as privatesubsidiaries, were covered by the Labor Code. Samples of such second generation corporationswere the Philippine Airlines, the Manila

Hotel and the Hyatt. And that demarcation worked very well. In fact, all of these companies Ihave mentioned as examples, except for the Manila Hotel, had collective bargaining agreements.In the Philippine Airlines, there were, in fact, three collective bargaining agreements; one, for theground people or the PALIA one, for the flight attendants or the PASAC and one for the pilots ofthe ALPAC How then could a corporation like that be covered by the Civil Service law? But, asthe Chairman of the Committee pointed out, the Supreme Court decision in the case of NHA vs.Juco unrobed the whole thing. Accordingly, the Philippine Airlines, the Manila Hotel and the

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Hyatt are now considered under that decision covered by the Civil Service Law. I also recall thatin the emergency meeting of the Cabinet convened for this purpose at the initiative of theChairman of the Reorganization Commission, Armand Fabella, they agreed to allow the CBA'sto lapse before applying the full force and effect of the Supreme Court decision. So, we were inthe awkward situation when the new government took over. I can agree with Commissioner

Romulo when he said that this is a problem which I am not exactly sure we should address in thedeliberations on the Civil Service Law or whether we should be content with what the Chairmansaid that Section 1 (1) of the Article on the Civil Service is just a general description of thecoverage of the Civil Service and no more.

Thank you, Mr. Presiding Officer.

MR. ROMULO. Mr. Presiding Officer, for the moment, I would be satisfied if theCommittee puts on records that it is not their intent by this provision and the phrase "includinggovernment-owned or controlled corporations" to cover such companies as the PhilippineAirlines.

MR. FOZ. Personally, that is my view. As a matter of fact, when this draft was made, myproposal was really to eliminate, to drop from the provision, the phrase "including government-owned or controlled corporations."

MR. ROMULO. Would the Committee indicate that is the intent of this provision?

MR. MONSOD. Mr. Presiding Officer, I do not think the Committee can make such astatement in the face of an absolute exclusion of government-owned or controlled corporations.However, this does not preclude the Civil Service Law to prescribe different rules andprocedures, including emoluments for employees of proprietary corporations, taking intoconsideration the nature of their operations. So, it is a general coverage but it does not preclude adistinction of the rules between the two types of enterprises.

MR. FOZ. In other words, it is something that should be left to the legislature to decide. As Isaid before, this is just a general description and we are not making any declaration whatsoever.

MR. MONSOD. Perhaps if Commissioner Romulo would like a definitive understanding ofthe coverage and the Gentleman wants to exclude government-owned or controlled corporationslike Philippine Airlines, then the recourse is to offer an amendment as to the coverage, if theCommissioner does not accept the explanation that there could be a distinction of the rules,including salaries and emoluments.

MR. ROMULO. So as not to delay the proceedings, I will reserve my right to submit suchan amendment.

xxx xxx xxx

THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is recognized.

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MR. ROMULO. On page 2, line 5, I suggest the following amendment after "corporations":Add a comma (,) and the phrase EXCEPT THOSE EXERCISING PROPRIETARYFUNCTIONS.

THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?

SUSPENSION OF SESSION

MR. MONSOD. May we have a suspension of the session?

THE PRESIDING OFFICER (Mr. Trenas). The session is suspended.

It was 7:16 p.m.

RESUMPTION OF SESSION

At 7:21 p.m., the session was resumed.THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.

Commissioner Romulo is recognized.

MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment tonow read as follows: "including government-owned or controlled corporations WITHORIGINAL CHARTERS." The purpose of this amendment is to indicate that governmentcorporations such as the GSIS and SSS, which have original charters, fall within the ambit of thecivil service. However, corporations which are subsidiaries of these chartered agencies such asthe Philippine Airlines, Manila Hotel and Hyatt are excluded from the coverage of the civilservice.

THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?

MR. FOZ. Just one question, Mr. Presiding Officer. By the term "original charters," whatexactly do we mean?

MR. ROMULO. We mean that they were created by law, by an act of Congress, or byspecial law.

MR. FOZ. And not under the general corporation law.

MR. ROMULO. That is correct. Mr. Presiding Officer.

MR. FOZ. With that understanding and clarification, the Committee accepts the amendment.

MR. NATIVIDAD. Mr. Presiding officer, so those created by the general corporation law areout.

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MR. ROMULO. That is correct: 38

On the premise that it is the 1987 Constitution that governs the instant case because it is theConstitution in place at the time of decision thereof, the NLRC has jurisdiction to accord relief to

the parties. As an admitted subsidiary of the NIDC, in turn a subsidiary of the PNB, theNASECO is a government-owned or controlled corporation without original charter.

Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurringopinion in Gomez vs. Government Insurance Board (L-602, March 31, 1947, 44 O.G. No. 8, pp.2687, 2694; also published in 78 Phil. 221) on the effectivity of the principle of social justiceembodied in the 1935 Constitution, said:

Certainly, this principle of social justice in our Constitution as generously conceived and sotersely phrased, was not included in the fundamental law as a mere popular gesture. It was meantto (be) a vital, articulate, compelling principle of public policy. It should be observed in the

interpretation not only of future legislation, but also of all laws already existing on November 15,1935. It was intended to change the spirit of our laws, present and future. Thus, all the lawswhich on the great historic event when the Commonwealth of the Philippines was born, weresusceptible of two interpretations strict or liberal, against or in favor of social justice, now haveto be construed broadly in order to promote and achieve social justice. This may seem novel toour friends, the advocates of legalism but it is the only way to give life and significance to theabove-quoted principle of the Constitution. If it was not designed to apply to these existing laws,then it would be necessary to wait for generations until all our codes and all our statutes shallhave been completely charred by removing every provision inimical to social justice, before thepolicy of social justice can become really effective. That would be an absurd conclusion. It ismore reasonable to hold that this constitutional principle applies to all legislation in force onNovember 15, 1935, and all laws thereafter passed.

WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMEDwith modifications. Petitioners in G.R. No. 69870, who are the private respondents in G.R. No.70295, are ordered to: 1) reinstate Eugenia C. Credo to her former position at the time of hertermination, or if such reinstatement is not possible, to place her in a substantially equivalentposition, with three (3) years backwages, from 1 December 1983, without qualification ordeduction, and without loss of seniority rights and other privileges appertaining thereto, and 2)pay Eugenia C. Credo P5,000.00 for moral damages and P5,000.00 for attorney's fees.

If reinstatement in any event is no longer possible because of supervening events, petitioners inG.R. No. 69870, who are the private respondents in G.R. No. 70295 are ordered to pay EugeniaC. Credo, in addition to her backwages and damages as above described, separation payequivalent to one-half month's salary for every year of service, to be computed on her monthlysalary at the time of her termination on 1 December 1983.

SO ORDERED.

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Fernan, C.J., Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur.

Narvasa, J., is on leave.

Gutierrez, Jr., J., in the result.

Republic of the PhilippinesSUPREME COURTManilaEN BANC

G.R. No. L-49677 May 4, 1989

TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES, petitioner,vs.NATIONAL HOUSING CORPORATION and ATTY. VIRGILIO SY, as Officer-in-Charge ofthe Bureau of Labor Relations, respondents.

Bonifacio V. Tupaz for petitioner.

The Government Corporate Counsel for respondent NHC.

Raul E. Espinosa for intervenor PACIWU.

REGALADO, J.:

The employees of the public sector comprise the largest bloc of workers in our national workforce. Governmental bureaucracy is continually being reorganized to cope with the growingcomplexity of the problems and needs of political and administrative governance. As the increasein the number of government employees grows space, the need to enhance their welfarecorrespondingly becomes more imperative. While it may be assumed that the Government isexerting efforts to advance the interests of its employees, it is quite understandable that theemployees themselves should actively seek arrangements where by they can participate more

meaningfully in management and employment relationships. There is, thus, a proliferation ofunions or employees' organizations, each seeking concomitant representational recognition.

The antecedent facts which led to the filing of this special civil action for certiorari are clear andundisputed. The juridical status and relevant circumstances of respondent corporation have beenestablished in a case of illegal dismissal filed against it, as previously decided by the Court andhereinafter discussed. However, submitted this time for Our resolution is a controversy on the

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propriety of and requirements for certification elections in government-owned or controlledcorporations like the respondent.

Respondent National Housing Corporation (hereinafter referred to as NHC) is a corporationorganized in 1959 in accordance with Executive Order No. 399, otherwise known as the Uniform

Charter of Government Corporations, dated January 1, 1951. Its shares of stock are and havebeen one hundred percent (100%) owned by the Government from its incorporation under Act459, the former corporation law. The government entities that own its shares of stock are theGovernment Service Insurance System, the Social Security System, the Development Bank ofthe Philippines, the National Investment and Development Corporation and the People'sHomesite and Housing Corporation. 1 Petitioner Trade Unions of the Philippines and AlliedServices (TUPAS, for brevity) is a legitimate labor organization with a chapter in NHC.

On July 13, 1977, TUPAS filed a petition for the conduct of a certification election withRegional Office No. IV of the Department of Labor in order to determine the exclusivebargaining representative of the workers in NHC. It was claimed that its members comprised the

majority of the employees of the corporation. 2 The petition was dismissed by med-arbiterEusebio M. Jimenez in an order, dated November 7, 1977, holding that NHC "being agovernment-owned and/or controlled corporation its employees/workers are prohibited to form,join or assist any labor organization for purposes of collective bargaining pursuant to Section 1,Rule II, Book V of the Rules and Regulations Implementing the Labor Code." 3

From this order of dismissal, TUPAS appealed to the Bureau of Labor Relations 4 where, actingthereon in BLR Case No. A-984-77 (RO4-MED-1090-77), Director Carmelo C. Noriel reversedthe order of dismissal and ordered the holding of a certification election. 5 This order was,however, set aside by Officer-in-Charge Virgilio S.J. Sy in his resolution of November 21, 19786 upon a motion for reconsideration of respondent NHC.

In the instant petition for certiorari, TUPAS seeks the reversal of the said resolution and praysthat a certification election be held among the rank and file employees of NHC.

In retrospect, it will be recalled that in a former case of illegal dismissal involving the samerespondent corporation, 7We had ruled that the employees of NHC and of other governmentowned or controlled corporations were governed by civil service laws, rules and regulationspursuant to the 1973 Constitution which provided that "the civil service embraces every branch,agency, subdivision and instrumentality of the government, including government-owned orcontrolled corporations." 8

It was therein stressed that to allow subsidiary corporations to be excluded from the civil servicelaws would be to permit the circumvention or emasculation of the above-quoted constitutionalprovision. As perceptively analyzed therein, "(i)t would be possible for a regular ministry ofgovernment to create a host of subsidiary corporations under the Corporation Code funded by awilling legislature. A government-owned corporation could create several subsidiarycorporations. These subsidiary corporation rations would enjoy the best of two worlds. Theirofficials and employees would be privileged individuals, free from the strict accountabilityrequired by the Civil Service Decree and the regulations of the Commission on Audit. Their

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incomes would not be subject to the competitive restraints of the open market nor to the termsand conditions of civil service employment."

The rule, however, was modified in the 1987 Constitution, the corresponding provision whereofdeclares that "(t)he civil service embraces all branches, subdivisions, instrumentalities and

agencies of the government, including government-owned or controlled corporations withoriginal charters." 9

Consequently, the civil service now covers only government owned or controlled corporationswith original or legislative charters, that is those created by an act of Congress or by special law,and not those incorporated under and pursuant to a general legislation. As We recently held

..., the situations sought to be avoided by the 1973 Constitution and expressed by this Court inthe National Housing Corporation case ... appear relegated to relative insignificance by the 1987Constitutional provision that the Civil Service embraces government-owned controlledcorporations with original charters and therefore, by clear implication, the Civil Service does not

include government-owned or controlled corporations which are organized as subsidiaries ofgovernment-owned or controlled corporations under the general corporation law.10

While the aforecited cases sought different reliefs, that is, reinstatement consequent to illegaldismissal, the same lis mota determinative of the present special civil action was involvedtherein.

The workers or employees of NHC undoubtedly have the right to form unions or employees'organizations. The right to unionize or to form organizations is now explicitly recognized andgranted to employees in both the governmental and the private sectors. The Bill of Rightsprovides that "(t)he right of the people, including those employed in the public and privatesectors, to form unions, associations or societies for purposes not contrary to law shall not beabridged" 11

This guarantee is reiterated in the second paragraph of Section 3, Article XIII, on Social Justiceand Human Rights, which mandates that the State "shall guarantee the rights of all workers toself-organization, collective bargaining and negotiations, and peaceful concerted activities,including the right to strike in accordance with law ...."

Specifically with respect to government employees, the right to unionize is recognized inParagraph (5), Section 2, Article IX B 12 which provides that "(t)he right to self-organizationshall not be denied to government employees." The rationale of and justification for thisinnovation which found expression in the aforesaid provision was explained by its proponents asfollows:

... The government is in a sense the repository of the national sovereignty and, in that respect, itmust be held in reverence if not in awe. It symbolizes the unity of the nation, but it does performa mundane task as well. It is an employer in every sense of the word except that terms andconditions of work are set forth through a Civil Service Commission. The government is thebiggest employer in the Philippines. There is an employer-employee relationship and we all

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know that the accumulated grievances of several decades are now beginning to explode in ourfaces among government workers who feel that the rights afforded by the Labor Code, forexample, to workers in the private sector have been effectively denied to workers in governmentin what looks like a grotesque, (sic) a caricature of the equal protection of the laws. For example,... there were many occasions under the old government when wages and cost of living

allowances were granted to workers in the private sector but denied to workers in thegovernment for some reason or another, and the government did not even state the reasons why.The government employees were being discriminated against. As a general rule, the majority ofthe world's countries now entertain public service unions. What they really add up to is that theemployees of the government form their own association. Generally, they do not bargain forwages because these are fixed in the budget but they do acquire a forum where, among otherthings, professional and self-development is (sic) promoted and encouraged. They also act aswatchdogs of their own bosses so that when graft and corruption is committed, generally, it is theunions who are no longer afraid by virtue of the armor of self-organization that become thepublic's own allies for detecting graft and corruption and for exposing it.... 13

There is, therefore, no impediment to the holding of a certification election among the workers ofNHC for it is clear that they are covered by the Labor Code, the NHC being a government-owned and/or controlled corporation without an original charter. Statutory implementation of thelast cited section of the Constitution is found in Article 244 of the Labor Code, as amended byExecutive Order No. 111, thus:

... Right of employees in the public service Employees of the government corporationsestablished under the Corporation Code shall have the right to organize and to bargaincollectively with their respective employers. All other employees in the civil service shall havethe right to form associations for purposes not contrary to law.

The records do not show that supervening factual events have mooted the present action. It ismeet, however, to also call attention to the fact that, insofar as certification elections areconcerned, subsequent statutory developments have rendered academic even the distinctionbetween the two types of government-owned or controlled corporations and the laws governingemployment relations therein, as hereinbefore discussed. For, whether the employees of NHC arecovered by the Labor Code or by the civil service laws, a certification election may beconducted.

For employees in corporations and entities covered by the Labor Code, the determination of theexclusive bargaining representative is particularly governed by Articles 255 to 259 of said Code.Article 256 provides for the procedure when there is a representation issue in organizedestablishments, while Article 257 covers unorganized establishments. These Labor Codeprovisions are fleshed out by Rules V to VII, Book V of the Omnibus Implementing Rules.

With respect to other civil servants, that is, employees of all branches, subdivisions,instrumentalities and agencies of the government including government-owned or controlledcorporations with original charters and who are, therefore, covered by the civil service laws, theguidelines for the exercise of their right to organize is provided for under Executive Order No.180. Chapter IV thereof, consisting of Sections 9 to 12, regulates the determination of the "sole

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and exclusive employees representative"; Under Section 12, "where there are two or more dulyregistered employees' organizations in the appropriate organization unit, the Bureau of LaborRelations shall, upon petition order the conduct of certification election and shall certify thewinner as the exclusive representative of the rank-and-file employees in said organizationalunit."

Parenthetically, note should be taken of the specific qualification in the Constitution that theState "shall guarantee the rights of all workers to self-organization, collective bargaining, andpeaceful concerted activities, including the right to strike in accordance with law" and that theyshall also participate in policy and decision-making processes affecting their rights and benefitsas may be provided by law." 14 (Emphasis supplied.)

ON THE FOREGOING CONSIDERATIONS, the assailed resolution of the Bureau of LaborRelations, dated November 21, 1978, is ANNULLED and SET ASIDE and the conduct of acertification election among the affected employees of respondent National Housing Corporationin accordance with the rules therefor is hereby GRANTED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISION

G.R. No. 98107 August 18, 1997

BENJAMIN C. JUCO, petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION and NATIONAL HOUSINGCORPORATION, respondents.

HERMOSISIMA, JR., J.:This is a petition for certiorari to set aside the Decision of the National Labor RelationsCommission (NLRC) dated March 14, 1991, which reversed the Decision dated May 21, 1990 ofLabor Arbiter Manuel R Caday, on the ground of lack of jurisdiction.

Petitioner Benjamin C. Juco was hired as a project engineer of respondent National HousingCorporation (NHC) from November 16, 1970 to May 14, 1975. On May 14, 1975, he was

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separated from the service for having been implicated in a crime of theft and/or malversation ofpublic funds.

On March 25, 1977, petitioner filed a complaint for illegal dismissal against the NHC with theDepartment of Labor.

On September 17, 1977, the Labor Arbiter rendered a decision dismissing the complaint on theground that the NLRC had no jurisdiction over the case. 1

Petitioner then elevated the case to the NLRC which rendered a decision on December 28, 1982,reversing the decision of the Labor Arbiter. 2

Dissatisfied with the decision of the NLRC, respondent NHC appealed before this Court and onJanuary 17, 1985, we rendered a decision, the dispositive portion thereof reads as follows:

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the respondent

National Labor Relations Commission is SET ASIDE. The decision of the Labor Arbiterdismissing the case before it for lack of jurisdiction is REINSTATED. 3

On January 6, 1989, petitioner filed with the Civil Service Commission a complaint for illegaldismissal, with preliminary mandatory injunction. 4

On February 6, 1989, respondent NHC moved for the dismissal of the complaint on the groundthat the Civil Service Commission has no jurisdiction over the case. 5

On April 11, 1989, the Civil Service Commission issued an order dismissing the complaint forlack of jurisdiction. It ratiocinated that:

The Board finds the comment and/or motion to dismiss meritorious. It was not disputed thatNHC is a government corporation without an original charter but organized/created under theCorporation Code.

Article IX, Section 2 (1) of the 1987 Constitution provides:

The civil service embraces all branches, subdivisions, instrumentalities and agencies of theGovernment, including government owned and controlled corporations with original charters.(emphasis supplied)

From the aforequoted constitutional provision, it is clear that respondent NHC is not within thescope of the civil service and is therefore beyond the jurisdiction of this Board. Moreover, it ispertinent to state that the 1987 Constitution was ratified and became effective on February 2,1987.

WHEREFORE, for lack of jurisdiction, the instant complaint is hereby dismissed. 6

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The terms and conditions of employment of all government employees, including employees ofgovernment-owned and controlled corporations shall be governed by the Civil Service Law,rules and regulations . . . .

The 1973 Constitution, Article II-B, Section 1(1), on the other hand provided:

The Civil Service embraces every branch, agency, subdivision and instrumentality of thegovernment, including government-owned or controlled corporations.

Although we had earlier ruled in National Housing Corporation v.Juco, 11 that employees of government-owned and/or controlled corporations, whether createdby special law or formed as subsidiaries under the general Corporation Law, are governed by theCivil Service Law and not by the Labor Code, this ruling has been supplanted by the 1987Constitution. Thus, the said Constitution now provides:The civil service embraces all branches, subdivisions, instrumentalities, and agencies of theGovernment, including government owned or controlled corporations with original charter.

(Article IX-B, Section 2[1])In National Service Corporation (NASECO) v. National Labor Relations Commission, 12 wehad the occasion to apply the present Constitution in deciding whether or not the employees ofNASECO are covered by the Civil Service Law or the Labor Code notwithstanding that the casearose at the time when the 1973 Constitution was still in effect. We ruled that the NLRC hasjurisdiction over the employees of NASECO on the ground that it is the 1987 Constitution thatgoverns because it is the Constitution in place at the time of the decision. Furthermore, we ruledthat the new phrase "with original charter" means that government-owned and controlledcorporations refer to corporations chartered by special law as distinguished from corporationsorganized under the Corporation Code. Thus, NASECO which had been organized under thegeneral incorporation statute and a subsidiary of the National Investment DevelopmentCorporation, which in turn was a subsidiary of the Philippine National Bank, is exluded from thepurview of the Civil Service Commission.

We see no cogent reason to depart from the ruling in the aforesaid case.

In the case at bench, the National Housing Corporation is a government owned corporationorganized in 1959 in accordance with Executive Order No. 399, otherwise known as the UniformCharter of Government Corporation, dated January 1, 1959. Its shares of stock are and have beenone hundred percent (100%) owned by the Government from its incorporation under Act 1459,the former corporation law. The government entities that own its shares of stock are theGovernment Service Insurance System, the Social Security System, the Development Bank ofthe Philippines, the National Investment and Development Corporation and the People'sHomesite and Housing Corporation. 13 Considering the fact that the NHA had been incorporatedunder Act 1459, the former corporation law, it is but correct to say that it is a government-ownedor controlled corporation whose employees are subject to the provisions of the Labor Code. Thisobservation is reiterated in the recent case of Trade Union of the Philippines and Allied Services(TUPAS) v. National Housing

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Corporation, 14 where we held that the NHA is now within the jurisdiction of the Department ofLabor and Employment, it being a government-owned and/or controlled corporation without anoriginal charter. Furthermore, we also held that the workers or employees of the NHC (nowNHA) undoubtedly have the right to form unions or employee's organization and that there is noimpediment to the holding of a certification election among them as they are covered by the

Labor Code.Thus, the NLRC erred in dismissing petitioner's complaint for lack of jurisdiction because therule now is that the Civil Service now covers only government-owned or controlled corporationswith original charters. 15 Having been incorporated under the Corporation Law, its relations withits personnel are governed by the Labor Code and come under the jurisdiction of the NationalLabor Relations Commission.

One final point. Petitioners have been tossed from one forum to another for a simple illegaldismissal case. It is but apt that we put an end to his dilemna in the interest of justice.

WHEREFORE, the decision of the NLRC in NLRC NCR-04-02036089 dated March 14, 1991 is

hereby REVERSED and the Decision of the Labor Arbiter dated May 21, 1990 isREINSTATED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISION

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

ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMINBRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA,FLORA ESCOBIDO, JUSTILITA CABANIG, and DOMINGO SAGUIT, petitioners,vs.NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and BROADSTREET TAILORING and/or RODOLFO ZAPANTA, respondents.

Balguma, Macasaet & Associates for petitioners.Teresita Gandionco Oledan for private respondents.

NOCON, J.:

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A basic factor underlying the exercise of rights and the filing of claims for benefits under theLabor Code and other presidential issuances or labor legislations is the status and nature of one'semployment. Whether an employer-employee relationship exist and whether such employment ismanagerial in character or that of a rank and file employee are primordial considerations beforeextending labor benefits. Thus, petitioners in this case seek a definitive ruling on the status and

nature of their employment with Broad Street Tailoring and pray for the nullification of theresolution dated May 12, 1986 of the National Labor Relations Commissions in NLRC Case No.RB-IV- 21558-78-T affirming the decision of Labor Arbiter Ernilo V. Pealosa dated May 28,1979, which held eleven of them as independent contractors and the remaining one as employeebut of managerial rank.

The facts of the case shows that petitioner Elias Villuga was employed as cutter in the tailoringshop owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring locatedat Shaw Boulevard, Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salaryof P840.00 and a monthly transportation allowance of P40.00. In addition to his work as cutter,Villuga was assigned the chore of distributing work to the shop's tailors or sewers when both the

shop's manager and assistant manager would be absent. He saw to it that their work conformedwith the pattern he had prepared and if not, he had them redone, repaired or resewn.

The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amountfor every item ironed, repaired or sewn, regardless of the time consumed in accomplishing thetask. Petitioners did not fill up any time record since they did not observe regular or fixed hoursof work. They were allowed to perform their work at home especially when the volume of work,which depended on the number of job orders, could no longer be coped up with.

From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due toillness. For not properly notifying his employer, he was considered to have abandoned his work.

In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor,Villuga claimed that he was refused admittance when he reported for work after his absence,allegedly due to his active participation in the union organized by private respondent's tailors. Hefurther claimed that he was not paid overtime pay, holiday pay, premium pay for work done onrest days and holidays, service incentive leave pay and 13th month pay.

Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed thatthey were dismissed from their employment because they joined the Philippine Social SecurityLabor Union (PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, NeliaBrizuela, Flora Escobido, Justilita Cabaneg and Domingo Saguit claimed that they stoppedworking because private respondents gave them few pieces of work to do after learning of theirmembership with PSSLU. All the petitioners laid claims under the different labor standard lawswhich private respondent allegedly violated.

On May 28, 1979, Labor Arbiter Ernilo V. Pealosa rendered a decision ordering the dismissalof the complaint for unfair labor practices, illegal dismissal and other money claims exceptpetitioner Villuga's claim for 13th month pay for the years 1976, 1977 and 1980. The dispositiveportion of the decision states as follows:

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WHEREFORE, premises considered, the respondent Broad Street Tailoring and/or RodolfoZapanta are hereby ordered to pay complainant Elias Villuga the sum of ONE THOUSANDTWO HUNDRED FORTY-EIGHT PESOS AND SIXTY-SIX CENTAVOS (P1,248.66)representing his 13th month pay for the years 1976, 1977 and 1978. His other claims in this case

are hereby denied for lack of merit.

The complaint insofar as the other eleven (11) complainants are concerned should be, as it ishereby dismissed for want of jurisdiction. 1

On appeal, the National Labor Relations Commission affirmed the questioned decision in aresolution dated May 12, 1986, the dispositive portion of which states as follows:

WHEREFORE, premises considered, the decision appealed from is, as it is hereby AFFIRMED,and the appeal dismissed. 2

Presiding Commissioner Guillermo C. Medina merely concurred in the result whileCommissioner Gabriel M. Gatchalian rendered a dissenting opinion which states as follows:

I am for upholding employer-employee relationship as argued by the complainants before theLabor Arbiter and on appeal. The further fact that the proposed decision recognizescomplainant's status as piece-rate worker all the more crystallizes employer-employeerelationship the benefits prayed for must be granted. 3

Hence, petitioners filed this instant certiorari case on the following grounds:

1. That the respondent National Labor Relations Commission abused its discretion when itruled that petitioner/complainant, Elias Villuga falls within the category of a managerialemployee;

2. . . . when it ruled that the herein petitioners were not dismissed by reason of their unionactivities;

3. . . . when it ruled that petitioners Andres Abad, Benjamin Brizuela, Norlito Ladia,Marcelo Aguilan, David Oro, Nelia Brizuela, Flora Escobido, Justilita Cabaneg and DomingoSaguit were not employees of private respondents but were contractors.

4. . . . when it ruled that petitioner Elias Villuga is not entitled to overtime pay and servicesfor Sundays and Legal Holidays; and

5. . . . when it failed to grant petitioners their respective claims under the provisions of P.D.Nos. 925, 1123 and 851. 4

Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a memberof a managerial staff, the following elements must concur or co-exist, to wit: (1) that his primaryduty consists of the performance of work directly related to management policies; (2) that he

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customarily and regularly exercises discretion and independent judgment in the performance ofhis functions; (3) that he regularly and directly assists in the management of the establishment;and (4) that he does not devote his twenty per cent of his time to work other than those describedabove.

Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primarywork or duty is to cut or prepare patterns for items to be sewn, not to lay down or implement anyof the management policies, as there is a manager and an assistant manager who perform saidfunctions. It is true that in the absence of the manager the assistant manager, he distributes andassigns work to employees but such duty, though involving discretion, is occasional and notregular or customary. He had also the authority to order the repair or resewing of defective itembut such authority is part and parcel of his function as cutter to see to it that the items cut aresewn correctly lest the defective nature of the workmanship be attributed to his "poor cutting."Elias Villuga does not participate in policy-making. Rather, the functions of his position involveexecution of approved and established policies. In Franklin Baker Company of the Philippines v.Trajano, 5 it was held that employees who do not participate in policy-making but are given

ready policies to execute and standard practices to observe are not managerial employees. Thetest of "supervisory or managerial status" depends on whether a person possesses authority that isnot merely routinary or clerical in nature but one that requires use of independent judgment. Inother words, the functions of the position are not managerial in nature if they only executeapproved and established policies leaving little or no discretion at all whether to implement saidpolicies or not. 6

Consequently, the exclusion of Villuga from the benefits claimed under Article 87 (overtime payand premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95(service incentive leave pay) of the Labor Code, on the ground that he is a managerial employeeis unwarranted. He is definitely a rank and file employee hired to perform the work of the cutterand not hired to perform supervisory or managerial functions. The fact that he is uniformly paidby the month does not exclude him from the benefits of holiday pay as held in the case of InsularBank of America Employees Union v. Inciong. 7 He should therefore be paid in addition to the13th month pay, his overtime pay, holiday pay, premium pay for holiday and rest day, andservice incentive leave pay.

As to the dismissal of the charge for unfair labor practices of private respondent consisting oftermination of employment of petitioners and acts of discrimination against members of the laborunion, the respondent Commission correctly held the absence of evidence that Mr. Zapanta wasaware of petitioners' alleged union membership on February 22, 1978 as the notice of unionexistence in the establishment with proposal for recognition and collective bargainingnegotiation was received by management only an March 3, 1978. Indeed, self-serving allegationswithout concrete proof that the private respondent knew of their membership in the union andaccordingly reacted against their membership do not suffice.

Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. Forabandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustifiedrefusal of the employee to resume his employment. Mere absence is not sufficient, it must beaccompanied by overt acts unerringly pointing to the fact that the employee simply does not

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want to work anymore. 8 At any rate, dismissal of an employee due to his prolonged absencewithout leave by reason of illness duly established by the presentation of a medical certificate isnot justified. 9 In the case at bar, however, considering that petitioner Villuga absented himselffor four (4) days without leave and without submitting a medical certificate to support his claimof illness, the imposition of a sanction is justified, but surely, not dismissal, in the light of the

fact that this is petitioner's first offense. In lieu of reinstatement, petitioner Villuga should