ABELLA v. NLRC

G.R. No. 71813 July 20, 1987, PARAS, J.

(Labor Standards: Proper Construction and Interpretation of labor Laws)

FACTS

PETITIONER Abella leased a farmland from Ramona for a period of 10 years and renewable for another 10 years at the option of the former. Abella hired the private respondents Quitco and Dionele. Abella renewed the lease for another ten years. At the expiration of the lease, she dismissed both private respondents and turned over the hacienda to the owners. Private respondents filed a complaint against petitioner. for overtime pay, reinstatement, and illegal dismissal. The Labor Arbiter ruled that the dismissal was warranted by the cessation of business, but the respondents are entitled to separation pay, invoking Art. 284 of the Labor Code, as amended.

ISSUEWhether or not private respondents are entitled to separation pay.

RULING

The Court upheld the ruling of the Labor Arbiter that Article 284 is the applicable law in this case. Art 284, as amended refers to employment benefits to farm hands who were not parties to petitioner's lease contract with the owner of Hacienda Danao-Ramona. That contract cannot have the effect of annulling subsequent legislation designed to protect the interest of the working class.It is well-settled 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. It is the kind of interpretation which gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New 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." 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.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 71813 July 20, 1987

ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners, vs.THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and RICARDO DIONELE, SR., respondents.

PARAS, J.:

This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of Labor and Employment affirming the July 16, 1982 Decision of the Labor Arbiter, which ruled in favor of granting separation pay to private respondents.

On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Monteverde, Negros Occidental, known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable, at her option, for another ten (10) years (Rollo, pp. 16-20).

On August 13, 1970, she opted to extend the lease contract for another ten (10) years (Ibid, pp. 26-27).

During the existence of the lease, she employed the herein private respondents. Private respondent Ricardo Dionele, Sr. has been a regular farm worker since 1949 and he was promoted to Cabo in 1963. On the other hand, private respondent Romeo Quitco started as a regular employee in 1968 and was promoted to Cabo in November of the same year.

Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over the hacienda to the owners thereof on October 5, 1981, who continued the management, cultivation and operation of the farm (Rollo, pp. 33; 89).

On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry of Labor and Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement with backwages. After the parties had presented their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982 (Ibid, pp. 29-31), ruled that the dismissal is warranted by the cessation of business, but granted the private respondents separation pay. Pertinent portion of the dispositive portion of the Decision reads:

In the instant case, the respondent closed its business operation not by reason of business reverses or losses. Accordingly, the award of termination pay in complainants' favor is warranted.

WHEREFORE, the respondent is hereby ordered to pay the complainants separation pay at the rate of half-month salary for every year of service, a fraction of six (6) months being considered one (1) year. (Rollo pp. 29-30)

On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution dated April 8, 1985 (Ibid, pp. 3940), affirmed the decision and dismissed the appeal for lack of merit.

On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid, pp. 41-45), but the same was denied in a Resolution dated June 10, 1985 (Ibid, p. 46). Hence, the present petition (Ibid, pp. 3-8).

The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require the respondents to comment (Ibid, p. 58). In compliance therewith, private respondents filed their Comment on October 23, 1985 (Ibid, pp. 53-55); and the Solicitor General on December 17, 1985 (Ibid, pp. 71-73-B).

On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and public respondents (Ibid, pp. 80-81).

The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due course to the petition; and to require the parties to submit simultaneous memoranda (Ibid., p. 83). In compliance therewith, the Solicitor General filed his Memorandum on June 18, 1986 (Ibid, pp. 89-94); and petitioner on July 23, 1986 (Ibid, pp. 96-194).

The petition is devoid of merit.

The sole issue in this case is —

WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.

Petitioner claims that since her lease agreement had already expired, she is not liable for payment of separation pay. Neither could she reinstate the complainants in the farm as this is a complete cessation or closure of a business operation, a just cause for employment termination under Article 272 of the Labor Code.

On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the private respondents is Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of which, specifically provides:

Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:

x x x x x x x x x

Art. 284. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establisment or undertaking unless the closing is for the purpose of circumventing the provisions of this title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.1avvphi1

There is no question that Article 284 of the Labor Code as amended by BP 130 is the law applicable in this case.

Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination. The Labor Arbiter does not argue the justification of the termination of employment but applied Article 284 as amended, which provides for the rights of the employees under the circumstances of termination.

Petitioner then contends that the aforequoted provision violates the constitutional guarantee against impairment of obligations and contracts, because when she leased Hacienda Danao-Ramona on June 27, 1960, neither she nor the lessor contemplated the creation of the obligation to pay separation pay to workers at the end of the lease.

Such contention is untenable.

This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA 368-369 [1977]) where the Supreme Court ruled:

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the details. The prohibition is not to read with literal exactness like a mathematical formula for it prohibits unreasonable impairment only. In spite of the constitutional prohibition the State continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguard said interest may modify or abrogate contracts already in effect. For not only are existing laws read into contracts in order to fix the obligations as between the parties but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. All contracts made with reference to any matter that is subject to regulation under the police power must be understood as made in reference to the possible exercise of that power. Otherwise, important and valuable reforms may be precluded by the simple device of entering into contracts for the purpose of doing that which otherwise maybe prohibited. ...

In order to determine whether legislation unconstitutionally impairs contract of obligations, no unchanging yardstick, applicable at all times and under all circumstances, by which the validity of each statute may be measured or determined, has been fashioned, but every case must be determined upon its own circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general good of the people, and when the means adopted must be legitimate, i.e. within the scope of the reserved power of the state construed in harmony with the constitutional limitation of that power. (Citing Basa vs. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113], November 19, 1974; 61 SCRA 93,102-113]).

The purpose of Article 284 as amended is obvious-the protection of the workers whose employment is terminated because of the closure of establishment and reduction of personnel. Without said law, employees like private respondents in the case at bar will lose the benefits to which they are entitled — for the thirty three years of service in the case of Dionele and fourteen years in the case of Quitco. Although they were absorbed by the new management of the hacienda, in the absence of any showing that the latter has assumed the responsibilities of the former employer, they will be considered as new employees and the years of service behind them would amount to nothing.

Moreover, to come under the constitutional prohibition, the law must effect a change in the rights of the parties with reference to each other and not with reference to non-parties.

As correctly observed by the Solicitor General, Article 284 as amended refers to employment benefits to farm hands who were not parties to petitioner's lease contract with the owner of Hacienda Danao-Ramona. That contract cannot have the effect of annulling subsequent legislation designed to protect the interest of the working class.

In any event, it is well-settled 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. (Volshel Labor Union v. Bureau of Labor Relations, 137 SCRA 43 [1985]). It is the kind of interpretation which gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New 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." 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. (Sarmiento v. Employees Compensation Commission, 144 SCRA 422 [1986] citing Cristobal v. Employees Compensation Commission, 103 SCRA 329; Acosta v. Employees Compensation Commission, 109 SCRA 209).

PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982 Decision of the Labor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and Employment are hereby AFFIRMED.

SO ORDERED.

Teehankee, C.J., Yap, Fernando, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-48926 December 14, 1987

MANUEL SOSITO, petitioner, vs.AGUINALDO DEVELOPMENT CORPORATION, respondent.

CRUZ, J.:

We gave due course to this petition and required the parties to file simultaneous memoranda on the sole question of whether or not the petitioner is entitled to separation pay under the retrenchment program of the private respondent.

The facts are as follows:

Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and was in charge of logging importation, with a monthly salary of P675.00, 1 when he went on indefinite leave with the consent of the company on January 16, 1976. 2 On July 20, 1976, the private respondent, through its president, announced a retrenchment program and offered separation pay to employees in the active service as of June 30, 1976, who would tender their resignations not later than July 31, 1976. The petitioner decided to accept this offer and so submitted his resignation on July 29, 1976, "to avail himself of the gratuity benefits" promised. 3 However, his resignation was not acted upon and he was never given the separation pay he expected. The petitioner complained to the Department of Labor, where he was sustained by the labor arbiter. 4 The company was ordered to pay Sosito the sum of P 4,387.50, representing his salary for six and a half months. On appeal to the National Labor Relations Commission, this decision was reversed and it was held that the petitioner was not covered by the retrenchment program. 5 The petitioner then came to us.

For a better understanding of this case, the memorandum of the private respondent on its retrenchment program is reproduced in full as follows:

July 20, 1976

Memorandum To: ALL EMPLOYEES

Re: RETRENCHMENT PROGRAM

As you are all aware, the operations of wood-based industries in the Philippines for the last two (2) years were adversely affected by the worldwide decline in the demand for and prices of logs and wood products. Our company was no exception to this general decline in the market, and has suffered tremendous losses. In 1975 alone, such losses amounted to nearly P20,000,000.00.

The company has made a general review of its operations and has come to the unhappy decision of the need to make adjustments in its manpower strength if it is to survive. This is indeed an unfortunate and painful decision to make, but it leaves the company no alternative but to reduce its tremendous and excessive overhead expense in order to prevent an ultimate closure.

Although the law allows the Company, in a situation such as this, to drastically reduce it manpower strength without any obligation to pay separation benefits, we recognize the need to provide our employees some financial assistance while they are looking for other jobs.

The Company therefore is adopting a retrenchment program whereby employees who are in the active service as of June 30, 1976 will be paid separation benefits in an amount equivalent to the employee's one-half (1/2) month's basic salary multiplied by his/her years of service with the Company. Employees interested in availing of the separation benefits offered by the Company must manifest such intention by submitting written letters of resignation to the Management not later than July 31, 1976. Those whose resignations are accepted shall be informed accordingly and shall be paid their separation benefits.

After July 31, 1976, this offer of payment of separation benefits will no longer be available. Thereafter, the Company shall apply for a clearance to terminate the services of such number of employees as may be necessary in order to reduce the manpower strength to such desired level as to prevent further losses.

(SGD.) JOSE G. RICAFORT

President

N.B.

For additional information

and/or resignation forms,

please see Mr. Vic Maceda

or Atty. Ben Aritao. 6

It is clear from the memorandum that the offer of separation pay was extended only to those who were in the active service of the company as of June 30, 1976. It is equally clear that the petitioner was not eligible for the promised gratuity as he was not actually working with the company as of the said date. Being on indefinite leave, he was not in the active service of the private respondent although, if one were to be technical, he was still in its employ. Even so, during the period of indefinite leave, he was not entitled to receive any salary or to enjoy any other benefits available to those in the active service.

It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the private respondent. He has insulated himself from the insecurities of the floundering firm but at the same time would demand the benefits it offers. Being on indefinite leave from the company, he could seek and try other employment and remain there if he should find it acceptable; but if not, he could go back to his former work and argue that he still had the right to return as he was only on leave.

There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary, the record shows that he voluntarily sought the indefinite leave which the private respondent granted. It is strange that the company should agree to such an open-ended arrangement, which is obviously one-sided. The company would not be free to replace the petitioner but the petitioner would have a right to resume his work as and when he saw fit.

We note that under the law then in force the private respondent could have validly reduced its work force because of its financial reverses without the obligation to grant separation pay. This was permitted under the original Article 272(a), of the Labor Code, 7 which was in force at the time. To its credit, however, the company voluntarily offered gratuities to those who would agree to be phased out pursuant to the terms and conditions of its retrenchment program, in recognition of their loyalty and to tide them over their own financial difficulties. The Court feels that such compassionate measure deserves commendation and support but at the same time rules that it should be available only to those who are qualified therefore. We hold that the petitioner is not one of them.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.

WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs against the petitioner.

SO ORDERED.

Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.

Footnotes

7 "Art. 272. Termination by employer.-An employer may terminate an employment without a definite period for any of the following just causes:

"(a) the closing or cessation of operation of the establishment or enterprise, or where the employer has to reduce his work force by more than one-half due to serious business reverses, unless the closing is for the purpose of circumventing the provisions of this Chapter; ... . "

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents.

Jose Mario C. Bunag for petitioner.

The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.

Zoilo V. de la Cruz for private respondent.

D E C I S I O N

REGALADO, J p:

The main issue presented for resolution in this original petition for certiorari is 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 are not entitled to overtime rest day and holiday pay.

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool Supervisor.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. The JE Program was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions.

We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work.

On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery.

Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.

On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows:

"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directed to —

1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay enjoyed by them instead of the P100.00 special allowance which was implemented on June 11, 1988; and

2. pay the individual members of complainant union the difference in money value between the P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought to have received from June 1, 1988.

All other claims are hereby dismissed for lack of merit.

SO ORDERED."

In finding for the members therein respondent union, the labor ruled that the along span of time during which the benefits were being paid to the supervisors has accused the payment thereof to ripen into contractual obligation; at the complainants cannot be estopped from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits therefrom, considering that respondent union was formed only a year after the implementation of the Job Evaluation Program, hence there was no way for the individual supervisors to express their collective response thereto prior to the formation of the union; and the comparative computations presented by the private respondent union showed that the P100.00 special allowance given NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been discontinued, which arrangement, therefore, amounted to a diminution of benefits.

On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they do not participate in the formulation of management policies nor in the hiring or firing of employees; and their main function is to carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was denied in a resolution of public respondent dated August 30, 1991. 4

Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent commission committed a grave abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff who are not entitled to overtime, rest day and holiday pay; and in making petitioner assume the "double burden" of giving the benefits due to rank-and-file employees together with those due to supervisors under the JE Program.

We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue.

The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime, rest day and holiday pay. Before this can be resolved, however it must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code.

It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads:

"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book."

Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, and in ruling that the latter are not managerial employees, adopted the definition stated in the aforequoted statutory provision.

Petitioner, however, avers that for purposes of determining whether or not the members of respondent union are entitled to overtime, rest day and holiday pay, said employees should be considered as "officers or members of the managerial staff" as defined under Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code, to wit:

"Art. 82 Coverage. — The provisions 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.

"As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff." (Emphasis supplied.)

xxx xxx xxx

'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

(b) Managerial employees, if they meet all of the following conditions, namely:

(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof:

(2) They customarily and regularly direct the work of two or more employees therein:

(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight.

(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 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 above."

It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 5

This is one such case where we are inclined to tip the scales of justice in favor of the employer.

The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work performed, rather than the title of the employee's position. 6

Consequently, while generally this Court is not supposed to review the factual findings of respondent commission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation from the rule.

A cursory perusal of the Job Value Contribution Statements 7 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. More specifically, their duties and functions include, among others, the following operations whereby the employee:

1) assists the department superintendent in the following:

a) planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning complement;

c) decision making by providing relevant information data and other inputs;

d) attaining the company's set goals and objectives by giving his full support;

e) selecting the appropriate man to handle the job in the department; and

f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more productive;

4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their development/advancement;

5) represents the superintendent or the department when appointed and authorized by the former;

6) coordinates and communicates with other inter and intra department supervisors when necessary;

7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment performance, quality of service and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed abnormality within the refinery;

10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented; and

11) performs other related tasks as may be assigned by his immediate superior.

From 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 consist 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 and 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.

The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union members are supervisory employees and this is one instance where the nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious. The

controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been made along that line and its corresponding conceptual criteria.

II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefits to the union members has ripened into a contractual obligation.

A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to the rank-and-file employees such as overtime, rest day and holiday pay, simply because they were treated in the same manner as rank-and-file employees, and their basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact is apparent from the clarification made by petitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it lucidly explained:

"But, complainants no longer occupy the same positions they held before the JE Program. Those positions formerly classified as 'supervisory' and found after the JE Program to be rank-and-file were classified correctly and continue to receive overtime, holiday and restday pay. As to them, the practice subsists.

"However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-defined and in most cases their organizational positions re-designated to confirm their superior rank and duties. Thus, after the JE program, complainants cannot be said to occupy the same positions." 9

It bears mention that this positional submission was never refuted nor controverted by respondent union in any of its pleadings filed before herein public respondent or with this Court. Hence, it can be safely concluded therefrom that the members of respondent union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as members or officers of the managerial staff considering that they were then treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary employer practice, which cannot be 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. 10

The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowingly fully well that said employees are not covered by the law requiring payment thereof. 11 In the case at bar, respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure generosity.

B. It remains undisputed that the implementation of the JE Program, the members of private respondent union were re-classified under levels S-5 S-8 which were considered under the program as managerial staff purposes of compensation and benefits, that they occupied re-evaluated positions, and that their basic pay was increased by an average of 50% of their basic salary prior to the JE Program. In other words, after the JE Program there was an ascent in position, rank and salary. This in essence is a promotion which is defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. 12

Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom.

As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As the sating goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive.

Not so long ago, on this particular score, we had the occasion to hold that:

". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspects of employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. Such management prerogative may be availed of without

fear of any liability so long as it is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating on circumventing the rights of employees under special laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite." 13

WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion, and the basic complaint of private respondent union is DISMISSED.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-49582 January 7, 1986

CBTC EMPLOYEES UNION, petitioner, vs.THE HONORABLE JACOBO C. CLAVE, Presidential Executive Assistant, and COMMERCIAL BANK & TRUST COMPANY OF THE PHILIPPINES, respondents.

Francisco F. Angeles for petitioner.

Pacis, Reyes, De Leon & Cruz Law, Office for respondent CBTC.

Edmundo R. AbigaN, Jr. for respondent Union.

DE LA FUENTE, J.:

Petition for certiorari seeking to annul and set aside the decision of the respondent Presidential Executive Assistant 1 affirming that of the Acting Secretary of Labor who reversed the decision of the National Labor Relations Comission which upheld the Voluntary Arbitrator's order directing the private respondent bank to pay its monthly paid employees their "legal holiday pay."

Petitioner Commercial Bank and Trust Company Employees' Union (Union for short) lodged a complaint with the Regional Office No. IV, Department of Labor, against private respondent bank (Comtrust) for non-payment of the holiday pay benefits provided for under Article 95 of the Labor Code in relation to Rule X, Book III of the Rules and Regulations Implementing the Labor Code.

Failing to arrive at an amicable settlement at conciliation level, the parties opted to submit their dispute for voluntary arbitration. The issue presented was: "Whether the permanent employees of the Bank within the collective bargaining unit paid on a monthly basis are entitled to holiday pay effective November 1, 1974, pursuant to Article 95 (now Article 94) of the Labor Code, as amended and Rule X (now Rule IV), Book III of the Rules and Regulations Implementing the Labor Code. "

In addition, the disputants signed a Submission Agreement stipulating as final, unappealable and executory the decision of the Arbitrator, including subsequent issuances for clarificatory and/or relief purposes, notwithstanding Article 262 of the Labor Code which allow appeal in certain instances. 2

In the course of the hearing, the Arbitrator apprised the parties of an interpretative bulletin on "holiday pay" about to be issued by the Department of Labor. Whereupon, the Union filed a Manifestation 3 which insofar as relevant stated:

6. That complainant union . . . has manifested its apprehension on the contents of the said Interpretative Bulletin in view of a well-nigh irresistible move on the part of the employers to exclude permanent workers similarly situated as the employees of Comtrust from the coverage of the holiday pay benefit despite the express and self-explanatory provisions of the law, its implementing rules and opinions thereon . . . .

7. That in the event that said Interpretative Bulletin regarding holiday pay would be adverse to the present claim . . . in that it would in effect exclude the said employees from enjoyment of said benefit, whether wholly or partially, complainant union respectfully reserves the right to take such action as may be appropriate to protect its interests, a question of law being involved. . . . An Interpretative Bulletin which was inexistent at the time the said commitment was made and which may be contrary to the law itself should not bar the right of the union to claim for its holiday pay benefits.

On April 22, 1976, the Arbitrator handed down an award on the dispute. Relevant portions thereof read as follows:

The uncontroverted facts of this case are as follows:

(1) That the complainant Union is the recognized sole and exclusive collective bargaining representative of all the permanent rank-and-file employees of the Bank with an existing Collective Bargaining Agreement covering the period from July 1, 1974 up to June 30, 1977;

(2) That ... the standard workweek of the Bank generally consists of five (5) days of eight (8) hours each day which, . . . said five days are generally from Monday thru Friday; and, as a rule, Saturdays, Sundays and the regular holidays are not considered part of the standard workweek.

(3) That, in computing the equivalent daily rate of its employees covered by the CBA who are paid on a monthly basis, the following computation is used, as per the provisions of Section 4, Article VII, of the CBA (Annex "A"):

Daily Rate = Basic Monthly Salary plus CLA x 12 250

Basic Hourly Rate = Daily Rate 8

(4) That the divisor of '250', . . . was arrived at by subtracting the 52 Sundays, 52 Saturdays, the 10 regular holidays and December 31 (secured thru bargaining), or a total of 115 off-days from the 365 days of the year or a difference of 250 days.

Considering the above uncontroverted facts, the principal question to be resolved is whether or not the monthly pay of the covered employees already includes what Article 94 of the Labor Code requires as regular holiday pay benefit in the amount of his regular daily wage (100% if unworked or 200% if worked) during the regular holidays enumerated therein, i.e., Article 94(c) of the Labor Code.

In its latest Memorandum, filed on March 26, 1976, the Bank relies heavily on the provisions of Section 2, Rule IV, Book 111, of the Rules and Regulations implementing particularly Article 94 (formerly Article 208) of the Labor Code, which Section reads as follows:

SECTION 2. Status of employees paid by the month -Employees who are uniformly paid by the month, irrespective of the number of' working days therein with a salary of not less than the statutory or established minimum wage, shall be presumed to be paid for all days in the month whether worked or not.

For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve. (Emphasis supplied).

While admitting that there has virtually been no change effected by Presidential Decree No. 850, which amended the Labor Code, other than the re-numbering of the original Article 208 of said Code to what is now Article 94, the Bank, however, attaches a great deal of significance in the above-quoted Rule as to render the question at issue 'moot and academic'.

On the other hand, the Union maintains, in its own latest Memorandum, filed also on March 26, 1976, that the legal presumption established in the above-quoted Rule is merely a disputable presumption. This contention of the Union is now supported by a pronouncement categorically to that effect by no less than the National Labor Relations Commission (NLRC) in the case of The Chartered Bank Employees Association vs. The Chartered Bank. NLRC Case No. (s) RB-IV-1739-75 (RO4-5-3028-75), which reads, in part, as follows:

. . . A disputable presumption was sea in that it would be presumed the salary of monthly-paid employees may already include rest days, such as Saturdays, Sundays, special and legal holidays, worked or unworked, in effect connoting that evidence to the contrary may destroy such a supposed legal presumption. Indeed, the Rule merely sets a presumption. It does not conclusively presume that the salary of monthly-paid employees already includes unworked holidays. . . .

The practice of the Bank of paying its employees a sum equivalent to Base pay plus Premium on Saturdays, Sundays and special and legal holidays, destroys the legal presumption that monthly pay is for an days of the month. For if the monthly pay is payment for all days of the month, then why should the employee be paid again for working on such rest days. (Emphasis supplied)

There is no reason at present not to adopt the above ruling of the Honorable Comission, especially considering the fact that this Arbitrator, in asking a query on the nature of the presumption established by the above Rule, from the Director of Labor Standards in the PMAP Conference held at the Makati Hotel on March 13, 1976, was given the categorical answer that said presumption is merely disputable. This answer from the Labor Standards Director is significant inasmuch as it is his office, the Bureau of Labor Standards, that is reportedly instrumental in the preparation of the implementing Rules, particularly on Book III of the Labor Code on Conditions of Employment, to which group the present Rule under discussion belongs.

So, rather than rendering moot and academic the issue at hand, as suggested by the Bank, the more logical step to take is to determine whether or not there is sufficient evidence to overcome the disputable presumption established by the Rule.

It is unquestioned, and as provided for in the CBA itself, that the divisor used in determining the daily rate of the monthly-paid employees is '250'.

xxx xxx xxx

Against this backdrop, certain relevant and logical conclusions result, namely:

(A) The Bank maintains that, since its inception or start of operations in 1954, all monthly-paid employees in the Bank are paid their monthly salaries without any deduction for unworked Saturdays, Sundays, legals and special holidays. On the other hand, it also maitains that, as a matter of fact, 'always conscious of its employee who has to work, on respondent's rest days of Saturdays and Sundays or on a legal holiday, an employee who works overtime on any of said days is paid one addition regular pay for the day plus 50% of said regular pay (Bank's Memorandum, page 3, filed January 21, 1976). . . .

xxx xxx xxx

On the other hand, there is more reason to believe that, if the Bank has never made any deduction from its monthly-paid employees for unworked Saturdays, Sundays, legal and special holidays, it is because there is really nothing to deduct properly since the monthly, salary never really included pay for such unworked days-and which give credence to the conclusion that the divisor '250' is the proper one to use in computing the equivalent daily rate of the monthly-paid employees.

(B) The Bank further maintains that the holiday pay is intended only for daily-paid workers. In this regard, the NLRC has this to say , in the same above-quoted Chartered Bank case:

It is contended that holiday pay is primarily for daily wage earners. Let us examine the law, more specifically Article 95 (now Article 94) of the Labor Code to see whether it supports this contention. The words used in the Decree are 'every worker', while the framers of the Implementing Rules preferred the use of the phrase 'all employees.' Both the decree itself and the Rules mentioned enumerated the excepted workers. It is a basic rule of statutory construction that putting an exception limits or modifies the enumeration or meaning made in the law. it is thus easy to see that a mere reading of the Decree and of the Rules would show that the monthly-paid employees of the Bank are not expressly included in the enumeration of the exception.

Special notice is made of the fact that the criteria at once readable from the exception referred to is the nature of the job and the number of employees involved, and not whether the employee is a daily-wage earner or a regular monthly-paid employee.

There is no reason at all to digress from the above-quoted observation of the Honorable Commission for purposes of the present case.

xxx xxx xxx

Finally, inasmuch as Article 94 of the Labor Code is one of its so-called self-executing provisions, conjointly with its corresponding implementing Rules, it is to be taken to have taken effect, as of November 1, 1974, as per Section I (1), Rule IV, Book III , of the Implementing Rules.

WHEREAS, all the above premises considered, this Arbitrator rules that:

(1) All the monthly-paid employees of the Bank herein represented by the Union and as governed by their Collective Bargaining Agreement, are entitled to the holiday pay benefits as provided for in Article 94 of the labor Code and as implemented by Rule IV, Book III, of the corresponding implementing Rules, except for any day or any longer period designated by lawor holding a general election or referendum;

(2) Paragraph (1) hereof means that any covered employee who does not work on any of the regular holidays enumerated in Article 94 (c) of the Labor Code, except that which is designated for election or referendum purposes, is still entitled to receive an amount equivalent to his regular daily wage in addition to his monthly salary. If he work on any of the regular holidays, other than that which is designated for election or referendum purposes, he is entitled to twice, his regular daily wage in addition to his monthly salary. The 50% premium pay provided for in the CBA for working on a rest day (which has been interpreted by the parties to include the holidays) shall be deemed already included in the 200% he receives for working on a regular holiday. With respect to the day or any longer period designated by law for holding a general election or referendum, if the employee does not work on such day or period he shall no longer be entitled to receive any additional amount other than his monthly salary which is deemed to include already his regular daily wage for such day or period. If he works on such day or period, he shall be entitled to an amount equivalent to his regular daily wage (100%) for that day or period in addition to his monthly salary. The 50% premium pay provided for in the CBA for working on that day or period shall be deemed already included in the additional 100% he receives for working on such day or period; and

(3) The Bank is hereby ordered to pay all the above employees in accordance with the above paragraphs (1) and (2), retroactive from November 1, 1974.

SO ORDERED.

April 22, 1976, Manila, Philippines. 4

The next day, on April 23, 1976, the Department of Labor released Policy Instructions No. 9, hereinbelow quoted:

The Rules implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal holidays. Before PD 850, the number of working days a year in a firm was considered important in determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he was considered definitely already paid. If he was working for less than 313, there was no certainty whether the ten (10) paid legal holidays were already paid to him or not.

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 PD 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 P 240, 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.

These new interpretations must be uniformly and consistently upheld.

This issuance shall take effect immediately.

After receipt of a copy of the award, private respondent filed a motion for reconsideration, followed by a supplement thereto. Said motion for reconsideration was denied. A copy of the order of denial was received by private respondent on July 8, 1976.

Said private respondent interposed an appeal to the National Labor Relations Commission (NLRC), contending that the Arbitrator demonstrated gross incompetence and/or grave abuse of discretion when he entirely premised the award on the Chartered Bank case and failed to apply Policy Instructions No. 9. This appeal was dismissed on August 16, 1976, by the NLRC because it was filed way beyond the ten-day period for perfecting an appeal and because it contravened the agreement that the award shall be final and unappealable.

Private respondent then appealed to the Secretary of Labor. On June 30, 1977, the Acting Secretary of Labor reversed the NLRC decision and ruled that the appeal was filed on time and that a review of the case was inevitable as the money claim exceeded P100,000.00. 5 Regarding the timeliness of the appeal, it was pointed out that the labor Department had on several occasions treated a motion for reconsideration (here, filed before the Arbitrator) as an appeal to the proper appellate body in consonance with the spirit of the Labor Code to afford the parties a just, expeditious and inexpensive disposition of their claims, liberated from the strict technical rules obtaining in the ordinary courts.

Anent the issue whether or not the agreement barred the appeal, it was noted that the Manifestation, supra, "is not of slight significance because it has in fact abrogated complainant's commitment to abide with the decision of the Voluntary Arbitrator without any reservation" and amounted to a "virtual repudiation of the agreement vesting finality" 6 on the arbitrator's disposition.

And on the principal issue of holiday pay, the Acting Secretary, guided by Policy Instructions No. 9, applied the same retrospectively, among other things.

In due time, the Union appealed to the Office of the President. In affirming the assailed decision, Presidential Executive Assistant Jacobo C. Clave relied heavily on the Manifestation and Policy Instructions No. 9.

Hence, this petition.

On January 10, 1981, petitioner filed a motion to substitute the Bank of the Philippine Islands as private respondent, as a consequence of the Articles of Merger executed by said bank and Commercial Bank & Trust Co. which inter alia designated the former as the surviving corporate entity. Said motion was granted by the Court.

We find the petitioner impressed with merit.

In excluding the union members of herein petitioner from the benefits of the holiday pay law, public respondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to implement Article 94 of the labor Code promulgated by the then Secretary of labor and Policy Instructions No. 9.

In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, 7 this Court's Second Division, speaking through former Justice Makasiar, expressed the view and declared that the aforementioned section and interpretative bulletin are null and void, having been promulgated by the then Secretary of Labor in excess of his rule-making authority. It was pointed out, inter alia, that in the guise of clarifying the provisions on holiday pay, said rule and policy instructions in effect amended the law by enlarging the scope of the exclusions. We further stated that the then Secretary of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees whereas the law clearly states that every worker shall be paid their regular holiday pay-which is incompatible with the mandatory directive, in Article 4 of the Labor Code, that "all doubts in the implementation and interpretation of the provisions of Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor." Thus, there was no basis at all to deprive the union members of their right to holiday pay.

In the more recent case of The Chartered Bank Employees Association vs. Hon. Ople, 8 this Court in an en banc decision had the occasion to reiterate the above-stated pronouncement. We added:

The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely, 'employees who are uniformly paid by the month'. While the additional exclusion is only in the form of a presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires.

In view of the foregoing, the challenged decision of public respondent has no leg to stand on as it was premised principally on the same Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9. This being the decisive issue to be resolved, We find no necessity to pass upon the other issues raised, such as the effects of the Union's Manifestation and the propriety of applying Policy Instructions No. 9 retroactively to the instant case.

WHEREFORE, the questioned decisions of the respondent Presidential Executive Assistant and the Acting Secretary of labor are hereby set aside, and the award of the Arbitrator reinstated. Costs against the private respondent.

IT IS SO ORDERED.

Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., and Patajo, JJ., concur.

Melencio-Herrera, J., took no part.

Republic of the Philippines

SUPREME COURTManila

SECOND DIVISION

G.R. No. 143258 August 15, 2003

PHILIPPINE AIRLINES, INC., petitioner, vs.JOSELITO PASCUA, ROBERT ABION, IRENEO ACOSTA, GARY NEPOMUCENO, JASON PALAD, CEFERINO de la CRUZ, JOEL SALGADO, WILFREDO RIVERA, ALEXANDER ANORE, FERNANDO BACCAY, EDILBERTO FAUNE, REYMAR KALAW, GARY G. MARASIGAN, RODOLFO ODO, JONATHAN RENGO, ARTHUR APOSTOL, EDUARDO BALICASAN, MATHIAS GLEAN, ALINORMAN HARANGOTE, CRISANTO CASTILLO, REX MARION CUERPO, EDGARDO del PRADO, RICARDO HERNANDEZ, PEDRO MERCADO JR., CESAR PAYOYO, RONALDO QUEROL, MAURELIO SIERRA, MANUEL VILLELA, LOUISEN FELIPE, LOBENEDICTO TIMBREZA, ANTONIO CABUG, ELISEO ESPIRITU, ARNEL BAUTISTA, ANTHONY ROBLES, DENNIS ARANDIA, CHARLIE BALUBAL, RHODERIC BITAS, ORLANDO CANDA, CHARLIE de la CRUZ, RIQUESENDO de la FUENTE, RENO DUQUE, JONATHAN FEBRE, ALVIN RIBERTA, NATHANIEL MALABAS, JUANITO SERUMA, FREDERICH de ASIS, ROMMEL ESTRADA, SYDFREY EVARISTO, ERICSON INTAL, FERDINAND GALANG, RUBEN PEROLINA, ROBERT McBURNEY, ENRIQUE SORIANO, ALVIN MANALAYSAY, NEMESIO MAALA, RAUL NEPOMUCENO, SAMUEL REYES, ERWIN MINA, MANUEL REYES, REYNALDO ORAPA, TEODORICO PADELIO, RANDY PIMENTEL, WILLIAM PATRIMONIO, JOEL RAMOS, OLEGARIO REYES, RAUL OCULTO, ROGELIO OLQUINDO, and LARRY VILLAFLOR. respondents.

QUISUMBING, J.:

For review is the decision dated January 26, 20001 of the Court of Appeals and its May 23, 20002 resolution in CA-G.R. SP No. 50351. The appellate court dismissed the petition for certiorari filed by petitioner to challenge the NLRC decision dated January 23, 1998,3 in NLRC NCR CA No. 010598-96, and likewise denied their motion for reconsideration.

The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows:

In April, August, and September of 1992, PAL hired private respondents as station attendants on a four or six-hour work-shift a day at five to six days a week.

The primary duty of private respondents who were assigned to PAL’s Air services Department and ASD/CARGO was to load cargo to departing, and unload cargo from arriving PAL international flights as well as flights of Cathay Pacific, Northwest Airlines and Thai Airlines with which PAL had service contract[s].

On certain occasions, PAL compelled private respondents to work overtime because of urgent necessity. The contracts with private respondents were extended twice, the last of which appears to have been for an indefinite period.

On February 3, 1994, private respondent Joselito Pascua, in his and on behalf of other 79 part-time station attendants, filed with the Department of Labor and Employment a complaint for:

(1) Regularization

(2) Underpayment of wages

(3) Overtime pay

(4) Thirteenth month pay

(5) Service incentive leave pay

(6) Full time of eight hours employment

(7) Recovery of benefits due to regular employees

(8) Night differential pay

(9) Moral damages and

(10) Attorney’s fees,

which was docketed as NLRC NCR Case No. 00-02-00953-94.

During the pendency of the case, PAL President Jose Antonio Garcia and PAL Chairman & Corporate Executive Officer Carlos G. Dominguez converted the employment status of private respondents from temporary part-time to regular part-time.

On February 24, 1995, private respondents dropped their money claim then pending before the Office of Executive Labor Arbiter Guanio, thus leaving for consideration their complaint for "regularization" - conversion of their employment status from part-time to regular (working on an 8-hour shift).

Finding private respondents’ remaining cause of action was rendered "moot and academic" by their supervening regularization and denying their prayer that their status as regular employees be given retroactive effect to "six months after their stint as temporary contractual employees," the Executive Labor Arbiter dismissed private respondents’ complaint.

On appeal, the NLRC, finding for private respondents, declared them as regular employees of PAL with an eight-hour work-shift. The pertinent portions of the NLRC decision reads:

… Respondent admits that complainants have been performing functions that are considered necessary or desirable in the usual business of PAL. There is no clear showing, however, that complainants’ employment had been fixed for a particular project or undertaking the completion or termination of which has been determined at the time of their engagement. Neither is there a clear showing that the work or services which they performed, was seasonal in nature and their employment for the duration of the season. Complainants were simply hired as part-time employees at the ASD and at the ASD/CARGO … to do ramp services.1âwphi1

Complainants can therefore be considered as casual employees for a definite period during the first year of their employment and, thereafter, as regular employees of respondents by operation of law. As such, they should be entitled to the compensation and other benefits provided in the Collective Bargaining Agreement for regular employees from or day after one year [of] service. Having been paid less than what they should receive, complainants are therefore, entitled to the differentials.4

Petitioner promptly filed a motion for reconsideration of the NLRC decision, which was denied in an order dated October 12, 1998. Consequently, petitioner filed with the Court of Appeals a special civil action for certiorari to annul the NLRC decision. On January 26, 2000, the Court of Appeals dismissed the said petition and by resolution issued on May 23, 2000, denied petitioner’s motion for reconsideration.

Hence, this appeal by certiorari where petitioner assigns the following errors:

- I -

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE NLRC DECISION WHICH RULED ON THE MERITS OF THE COMPLAINT, DESPITE THE FACT THAT THE CAUSE OF ACTION HAS ALREADY BECOME MOOT AND ACADEMIC WHEN THE PETITIONER ACCORDED REGULAR STATUS TO THE RESPONDENTS DURING THE ARBITRATION PROCEEDINGS.

- II -

EVEN IF WE ASSUME FOR THE SAKE OF ARGUMENT THAT THE COMPLAINT HAS NOT BEEN RENDERED MOOT AND ACADEMIC, STILL THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DECISION OF THE NLRC WHICH COMPELLED THE PETITIONER TO CHANGE THE RESPONDENTS’ EMPLOYMENT STATUS FROM PART-TIME TO FULL-TIME.5

Two principal issues need resolution: (1) Did petitioner’s act of converting respondents’ status from temporary to regular employees render the original complaint for "regularization" moot and academic? (2) Did the appellate court err when it upheld the decision of the NLRC to accord respondents regular full-time employment although petitioner, in the exercise of its management prerogative, requires only part-time services?

Petitioner contends that the NLRC could not change respondents’ status from part-time to full-time employment because respondents merely prayed in their original complaint for regular status as opposed to temporary or casual employment. Respondents’ temporary part-time status was already converted by petitioner to regular part-time status at the arbitration level, to put an end to the controversy. That being the case, the labor arbiter ordered the dismissal of the complaint for having become moot and academic, because the relief sought was already granted even prior to the termination of the dispute. Clearly, says petitioner, respondents’ cause of action for regularization had been extinguished when petitioner accorded the respondents regular status.6 It was grave abuse as well as error for the NLRC to touch the merits of an issue in effect already mooted at the arbiter’s level, according to petitioner.

On the second issue, petitioner argues that the NLRC could not lawfully impose the change of employment status of respondents from part-time to full-time employees.7 It has no authority or power to do so. According to petitioner, management of its business is a matter that falls within the exclusive domain of the employer. As such,

only the employer, and no one else, should determine the number of employees to be hired, the type of employees to be engaged, and the qualifications of each and every employee. The employer could engage part-time employees if its operational needs require such part-time employees. The NLRC should not substitute its judgment for that of the employer in this regard, says petitioner.8

Respondents, in their comment, aver that the conversion of their employment status from part-time temporary to part-time regular did not render inutile their original complaint, as in fact they have consistently asked for full-time regularization. According to respondents, in their pleadings they repeatedly sought not only regularization but in fact they also asked entitlement to benefits of regular full-time employees. Further, respondents claim that since petitioner needs the services of private respondents for eight (8) hours or more a day, it is with evident bad faith that petitioner continues to categorize them as mere "part-timers" rather than full-timers so the company could avoid payment of corresponding benefits due to respondents.9

On the first issue that the original complaint was rendered moot and academic by the subsequent regularization of respondents while the action was pending before the labor arbiter, we find that the petitioner’s assertion is not entirely true nor accurate. Petitioner insists that all respondents sought was the conversion of their temporary employment status to regular employment, without asking for a change from part-time to full time status. This claim, however, is belied by the very complaint initially filed with the labor arbiter. As stated by the OSG in its comment to the petition filed with the Court of Appeals, which we now quote aptly:

However, a thorough scrutiny of the appeal reveals that despite its lack of preciseness, private respondents were, in fact, ultimately assailing their part-time status, not just the retroactive date of their regularization as part-time employees. They contradicted the Labor Arbiter’s perception that hiring of part-time employees was justified by the peculiar nature of airport operations. Besides, even petitioner understood the heart of the appeal when it observed in their Answer to Appeal that "[a]ll that they wanted is to be converted to full time status."

The pleadings filed by private respondents consistently show that they wanted to become regular full-time employees, not only regular part-time employees. Although they repeatedly said "regular employees," not specifying whether it should be regular part-time or regular full-time, their intention should be read from the entirety of all their pleadings. Private respondents have consistently alleged that despite their part-time status, they actually work more than 8 hours daily. Private respondent Joselito Pascua confirmed this when he testified on November 24, 1995 (TSN, November 24, 1995, pp. 35-36). Ultimately, they want to be entitled to the many collective bargaining agreement (CBA) benefits which would be possible only if they were regular full-time employees since regular part-time employees are covered by the Personnel Policies and Procedures Manual, the relevant portion of which was introduced only for the first time in this Court. While regular part-time employees have their own package of benefits, it is safe to infer that the benefits under the CBA are better, being a result of negotiation, than those provided under the Personnel Policies and Procedures Manual which are unilaterally handed down by petitioner.10

An issue becomes moot and academic when it ceases to present a justiciable controversy, so that a declaration on the issue would be of no practical use or value. In that situation, there is no actual substantial relief to which respondents would be entitled and which would be negated by the dismissal of their original complaint.11 Here, it is readily apparent that the dismissal of the original complaint by the labor arbiter would negate the substantial relief to which respondents would have been entitled. They seek regular full-time employment and this claim is fully set forth in the original complaint. They specifically prayed for entitlement to benefits due to a regular full-time employee with seniority rights.12 The mere regularization of respondents would still not entitle them to all benefits under the CBA, which regular full-time employees enjoy. In fact, regular part-time employees are covered by the benefits under Personnel Policies and Procedures Manual, not the CBA. The dismissal then of the complaint by the labor arbiter is reversible error, and the NLRC still acted within its power and authority as a quasi-judicial agency in finding that respondents deserve more than just being regular employees but must be regular full-time employees.

We now come to the second issue, which touches on the valid exercise of management prerogative. According to petitioner, NLRC encroached upon this exclusive sphere of managerial decision, when it ruled that respondents should be made regular full-time employees instead of regular part-time employees, and the appellate court thereby erred in sustaining the NLRC. This contention does not quite ring true, much less persuade us. It must be borne in mind that the exercise of management prerogative is not absolute. While it may be conceded that management is in the best position to know its operational needs, the exercise of management prerogative cannot be utilized to circumvent the law and public policy on labor and social justice. That prerogative accorded management could not defeat the very purpose for which our labor laws exist: to balance the conflicting interests of labor and management, not to tilt the scale in favor of one over the other, but to guaranty that labor and management stand on equal footing when bargaining in good faith with each other. By its very nature, encompassing as it could be, management prerogative must be exercised always with the principles of fair play at heart and justice in mind.

Records show that respondents were first hired to work for a period of one year. Notwithstanding the fact that respondents perform duties that are usually necessary or desirable in the usual trade or business of petitioner, respondents were considered temporary employees as their engagement was fixed for a specific period. However,

equally borne by the records, is the fact that respondents’ employment was extended for more than two years. Evidently, there was a continued and repeated necessity for their services, which puts to naught the contention that respondents, beyond the one-year period, still continued to be temporary part-time employees. Article 280 of the Labor Code13 provides 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 actually exists.

The NLRC decision now assailed is one based on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.14 It bears stressing that findings of fact of quasi-judicial agencies like the NLRC which have acquired expertise in the specific matters entrusted to their jurisdiction are accorded by this Court not only respect but even finality if they are supported by substantial evidence.15 Here we find no compelling reason to go against the factual findings of the NLRC. The parties had ample opportunity to present below the necessary evidence and arguments in furtherance of their causes, and it is presumed that the quasi-judicial body rendered its decision taking into consideration the evidence and arguments thus presented. Such being the case, it is likewise presumed that the official duty of the NLRC to render its decision was regularly performed.16 Petitioner has not shown any compelling justification to warrant reversal of the NLRC findings. Absent any showing of patent error, or that the NLRC failed to consider a fact of substance that if considered would warrant a different result, we yield to the factual conclusions of that quasi-judicial agency. More so, when as here, these NLRC conclusions are affirmed by the appellate court.

It is basic to the point of being elementary that nomenclatures assigned to a contract shall be disregarded if it is apparent that the attendant circumstances do not support their use or designation. The same is true with greater force concerning contracts of employment, imbued as they are with public interest. Although respondents were initially hired as part-time employees for one year, thereafter the over-all circumstances with respect to duties assigned to them, number of hours they were permitted to work including over-time, and the extension of employment beyond two years can only lead to one conclusion: that they should be declared full-time employees. Thus, not without sufficient and substantial reasons, the claim of management prerogative by petitioner ought to be struck down for being contrary to law and policy, fair play and good faith.

In sum, we are in agreement with the Court of Appeals that the NLRC did not commit grave abuse of discretion simply because it overturned the labor arbiter’s decision. Grave abuse of discretion is committed when the judgment is rendered in a capricious, whimsical, arbitrary or despotic manner. An abuse of discretion does not necessarily follow just because there is a reversal by the NLRC of the decision of the labor arbiter. Neither does variance in the evidentiary assessment by the NLRC and by the labor arbiter warrant as a matter of course another full review of the facts. The NLRC’s decision, so long as it is not bereft of evidentiary support from the records, deserves respect from the Court.17

WHEREFORE, the petition is DENIED for lack of merit. The decision dated January 26, 2000 of the Court of Appeals and its resolution dated May 23, 2000, in CA-G.R. SP No. 50351 are AFFIRMED. Costs against petitioner.

SO ORDERED.

Bellosillo, Austria-Martinez, and Tinga, JJ., concur.Callejo, Sr., J., on leave.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 78763 July 12,1989

MANILA ELECTRIC COMPANY, petitioner, vs.THE NATIONAL LABOR RELATIONS COMMISSION, and APOLINARIO M. SIGNO, respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

Dominador Maglalang for private respondent.

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the resolution of the respondent National Labor Relations Commission dated March 12, 1987 (p. 28, Rollo) in NLRC Case No. NCR-8-3808-83, entitled, "Apolinario M. Signo, Complainant, versus Manila Electric Company, Respondents", affirming the decision of the Labor Arbiter which ordered the reinstatement of private respondent herein, Apolinario Signo, to his former position without backwages.

The antecedent facts are as follows:

Private respondent Signo was employed in petitioner company as supervisor-leadman since January 1963 up to the time when his services were terminated on May 18, 1983.

In 1981, a certain Fernando de Lara filed an application with the petitioner company for electrical services at his residence at Peñafrancia Subdivision, Marcos Highway, Antipolo, Rizal. Private respondent Signo facilitated the processing of the said application as well as the required documentation for said application at the Municipality of Antipolo, Rizal. In consideration thereof, private respondent received from Fernando de Lara the amount of P7,000.00. Signo thereafter filed the application for electric services with the Power Sales Division of the company.

It was established that the area where the residence of de Lara was located is not yet within the serviceable point of Meralco, because the place was beyond the 30-meter distance from the nearest existing Meralco facilities. In order to expedite the electrical connections at de Lara's residence, certain employees of the company, including respondent Signo, made it appear in the application that the sari-sari store at the corner of Marcos Highway, an entrance to the subdivision, is applicant de Lara's establishment, which, in reality is not owned by the latter.

As a result of this scheme, the electrical connections to de Lara's residence were installed and made possible. However, due to the fault of the Power Sales Division of petitioner company, Fernando de Lara was not billed for more than a year.

Petitioner company conducted an investigation of the matter and found respondent Signo responsible for the said irregularities in the installation. Thus, the services of the latter were terminated on May 18, 1983.

On August 10 1983, respondent Signo filed a complaint for illegal dismissal, unpaid wages, and separation pay.

After the parties had submitted their position papers, the Labor Arbiter rendered a decision (p. 79, Rollo) on April 29, 1985, which stated, inter alia:

Verily, complainant's act of inducing the Meralco employees to effectuate the installation on Engr. de Lara's residence prejudiced the respondent, and therefore, complainant himself had indeed became a participant in the transactions, although not directly, which turned out to be illegal, not to mention that some of the materials used therein belongs to Meralco, some of which were inferior quality. . . .

While complainant may deny the violation, he cannot do away with company's Code on Employee Discipline, more particularly Section 7, par. 8 and Section 6, par. 24 thereof However, as admitted by the respondent, the infraction of the above cited Code is punishable by reprimand to dismissal."

... . And in this case, while considering that complainant indeed committed the above-cited infractions of company Code of Employee Discipline, We shall also consider his records of uninterrupted twenty (20) years of service coupled with two (2) commendations for honesty. Likewise, We shall take note that subject offense is his first, and therefore, to impose the extreme penalty of dismissal is certainly too drastic. A penalty short of dismissal is more in keeping with justice, and adherence to compassionate society.

WHEREFORE, respondent Meralco is hereby directed to reinstate complainant Apolinario M. Signo to his former position as Supervisor Leadman without backwages, considering that he is not at all faultless. He is however, here warned, that commission of similar offense in the future, shall be dealt with more severely.

SO ORDERED.

Both parties appealed from the decision to the respondent Commission. On March 12, 1987, the respondent Commission dismissed both appeals for lack of merit and affirmed in toto the decision of the Labor Arbiter.

On June 23, 1987, the instant petition was filed with the petitioner contending that the respondent Commission committed grave abuse of discretion in affirming the decision of the Labor Arbiter. A temporary restraining order was issued by this Court on August 3, 1987, enjoining the respondents from enforcing the questioned resolution of the respondent Commission.

The issue to resolve in the instant case is whether or not respondent Signo should be dismissed from petitioner company on grounds of serious misconduct and loss of trust and confidence.

Petitioner contends that respondent Signo violated Sections 6 and 7 of the company's Code on Employee Discipline, which provide:

Section 6, Par. 24—Encouraging, inducing or threatening another employee to perform an act constituting a violation of this Code or of company work, rules or an offense in connection with the official duties of the latter, or allowing himself to be persuaded, induced or influenced to commit such offense.

Penalty—Reprimand to dismissal, depending upon the gravity of the offense.

Section 7, Par. 8—Soliciting or receiving money, gift, share, percentage or benefits from any person, personally or through the mediation of another, to perform an act prejudicial to the Company.

Penalty—Dismissal. (pp. 13-14, Rollo)

Petitioner further argues that the acts of private respondent constituted breach of trust and caused the petitioner company economic losses resulting from the unbilled electric consumption of de Lara; that in view thereof, the dismissal of private respondent Signo is proper considering the circumstances of the case.

The power to dismiss is the normal prerogative of the employer. An employer, generally, can dismiss or lay-off an employee for just and authorized causes enumerated under Articles 282 and 283 of the Labor Code. However, the right of an employer to freely discharge his employees is subject to regulation by the State, basically in the exercise of its paramount police power. This is so because the preservation of the lives of the citizens is a basic duty of the State, more vital than the preservation of corporate profits (Euro-Linea, Phil. Inc. v. NLRC, G.R. No. 75782, December 1, 1987,156 SCRA 78).

There is no question that herein respondent Signo is guilty of breach of trust and violation of company rules, the penalty for which ranges from reprimand to dismissal depending on the gravity of the offense. However, as earlier stated, the respondent Commission and the Labor Arbiter found that dismissal should not be meted to respondent Signo considering his twenty (20) years of service in the employ of petitioner, without any previous derogatory record, in addition to the fact that petitioner company had awarded him in the past, two (2) commendations for honesty. If ever the petitioner suffered losses resulting from the unlisted electric consumption of de Lara, this was found to be the fault of petitioner's Power Sales Division.

We find no reason to disturb these findings. Well-established is the principle that findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality. Judicial review by this Court on 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 to issues of jurisdiction or grave abuse of discretion (Special Events and Central Shipping Office Workers Union v. San Miguel Corporation, G.R. Nos. L-51002-06, May 30,1983,122 SCRA 557).

This Court has held time and again, in a number of decisions, that notwithstanding the existence of a valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be imposed, as it is too severe a penalty if the latter has been employed for a considerable length of time in the service of his employer. (Itogon-Suyoc Mines, Inc. v. NLRC, et al., G.R. No. L- 54280, September 30,1982,117 SCRA 523; Meracap v. International Ceramics Manufacturing Co., Inc., et al., G.R. Nos. L-48235-36, July 30,1979, 92 SCRA 412; Sampang v. Inciong, G.R. No. 50992, June 19,1985,137 SCRA 56; De Leon v. NLRC, G.R. No. L-52056, October 30,1980, 100 SCRA 691; Philippine Airlines, Inc. v. PALEA, G.R. No. L-24626, June 28, 1974, 57 SCRA 489).

In a similar case, this Court ruled:

As repeatedly been held by this Court, an employer cannot legally be compelled to continue with the employment of a person who admittedly was guilty of breach of trust towards his employer and whose continuance in the service of the latter is patently inimical to its interest. The law in protecting the rights of the laborers, authorized neither oppression nor self- destruction of the employer.

However, taking into account private respondent's 'twenty-three (23) years of service which undisputedly is unblemished by any previous derogatory record' as found by the respondent Commission itself, and since he has been under preventive suspension during the pendency of this case, in the absence of a showing that the continued employment of private respondent would result in petitioner's oppression or self-destruction, We are of the considered view that his dismissal is a drastic punishment. ... .

xxx xxx xxx

The ends of social and compassionate justice would therefore be served if private respondent is reinstated but without backwages in view of petitioner's obvious good faith. (Itogon- Suyoc Mines, Inc. v. NLRC, et al., 11 7 SCRA 528)

Further, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140).

In view of the foregoing, reinstatement of respondent Signo is proper in the instant case, but without the award of backwages, considering the good faith of the employer in dismissing the respondent.

ACCORDINGLY, premises considered, the petition is hereby DISMISSED and the assailed decision of the National Labor Relations Commission dated March 12, 1987 is AFFIRMED. The temporary restraining order issued on August 3, 1987 is lifted.

SO ORDERED.

Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.

FIRST DIVISION[G.R. No. 154448. August 15, 2003]

DR. PEDRITO F. REYES, petitioner, vs. COURT OF APPEALS, PHIL. MALAY POULTRY BREEDERS, INC. and LEONG HUP POULTRY FARM SDN, BHD., Mr. Francis T.N. Lau, President and Chairman of the Board and Mr. Chor Tee Lim, Director, respondents.D E C I S I O NYNARES-SANTIAGO, J.:

Assailed in this petition for review under Rule 45 of the Revised Rules of Court are the January 28, 2002[1] and July 22, 2002[2] Resolutions[3] of the Court of Appeals in CA-G.R. SP No. 67431, which dismissed the petition for certiorari filed by petitioner for failure to attach to the petition the duplicate original or certified true copy of the Labor Arbiter’s decision as well as the relevant pleadings.

The facts show that on August 24, 1989, respondent Leong Hup Poultry Farms SDN. BHD (Leung Hup) of Malaysia, thru its Managing Director Francis T. Lau, appointed petitioner Pedrito F. Reyes as Technical/Sales Manager with a net salary of US$4,500.00 a month. His duties consisted of selling parent stock day-old chicks and providing technical assistance to clients of the company in Malaysia and other Asian countries.[4] Sometime in 1992, the company formed Philippine Malay Poultry Breeders, Inc., (Philmalay) in the Philippines. Petitioner was appointed General Manager thereof with a monthly salary of US$5,500.00.

In 1996-1997, respondents suffered losses which caused them to reduce production and retrench employees in Philmalay. On June 30, 1997, petitioner gave verbal notice to respondent Francis T. Lau that he will serve as General Manager of Philmalay until December 31, 1997 only.[5] In a letter dated January 12, 1998, petitioner confirmed his verbal notice of resignation and requested that he be given the same benefits granted to retrenched and resigned employees of the company, consisting of separation pay equivalent to 1 month salary for every year of service and the monetary equivalent of his sick leave and vacation leave. He likewise requested for the following:

1. payment of underpaid salary for the period December 1989 – December 31, 1997 together with the additional one month salary payable in December of every year which was paid at the rate of P26.00 instead of the floating rate;

2. brand new car (Galant Super Saloon) or its equivalent;

3. life insurance policy in the amount of US$100,000.00 from December 1, 1989 to December 31, 1997, or the premiums due thereon;

4. office rentals at the rate of US$300.00 or its peso equivalent for the use of his residence as office of Philmalay for the period December 1, 1989 to July 1996; and

5. retention of the services of the law firm Quasha Ancheta Pena and Nolasco Law Firm, which was hired by respondents to defend him in the illegal recruitment case filed against him in connection with his employment with respondents.[6]

In a letter dated January 19, 1998, respondent Philmalay retrenched petitioner effective January 20, 1998 and promised to pay him separation benefits pursuant to the provisions of the Labor Code.[7] He was, however, offered a separation pay equivalent to four months only, or the total amount of P578,600.00 (P144,650 x 4). The offer was not accepted by petitioner and efforts to settle the impasse proved futile.

Petitioner filed with the Arbitration Branch of the National Labor Relations Commission a complaint[8] for underpayment of wages and non-payment of separation pay, sick leave, vacation leave and other benefits against respondents.

On December 22, 1999, the Labor Arbiter rendered a decision[9] in favor of petitioner, the dispositive portion of which reads:

PREMISES CONSIDERED, judgment is hereby rendered in favor of the complainant and against the respondents, as follows:

1. To order respondents to pay jointly and severally the complainant, the following:

(a) Unpaid salary from January 1, 1998 to January 19, 1998, the same to be computed in the following manner:

19 = days % 31 days of January ‘98

= 0.613 month x US$5,500.00

= US$3,370.00

(b) Underpayment of salary, the same to be computed at net US$5,500.00 or its peso-equivalent from July 1, 1997 to December 31, 1997, together with the additional one (1) salary payable every year, the same to be paid at the rate of P26.30 instead of the following rate computed as follows:

July 1997 - P27.66 – P1.36 - P7, 480.00

August 1997 - 29.33 – 3.02 - 16, 665.00

September - 32.39 - 6.09 - 33, 495.00

October 1997 - 34.46 - 8.16 - 44, 880.00

November 1997 - 34.51 - 8.21 - 45, 155.00

December 1997 - 37.17 - 10.57- 59, 785.00

P207,460.00

(c) 13th month pay for December 1997 computed as follows: December 1997 – P37.17 – P10.57 – P59,785.00.

2. To order respondents to pay jointly and severally the complainant the following:

(a) Unused vacation and sick leaves from December 01, 1989 to December 31, 1997 based on the same salary, to be computed as follows:

i) Vacation Leave – Fifteen (15) days for every year of services x 9 years = 135 days

135 days % 26 working days a month

= 5.2 months

= US$28,600.00

ii) Sick Leave – Fifteen (15) Days for every [year] of service x 9 years = 135 days

135 days % 26 working days a month

= 5.2 months x US$5,500.00 / month

= US$28,600.00

3) To order respondents to pay jointly and severally the complainant his separation pay equivalent to one (1) month pay for very year of service at the rate of US $5,500.00 or its peso equivalent from December 1, 1989 to January 19, 1998, computed as follows:

9 years x US$5,500.00 = US$49,500.00

4) To order respondents to pay jointly and severally the complainant’s other claims and benefits:

a) A brand new car (Galant super saloon) or its equivalent in the sum of P945,100.00;

b) Office rentals for the use of his residence situated at No. 38 Don Wilfredo St., Don Enrique Heights Diliman, Quezon City, [from] 01 December 1989 to July 1996 at the rate of US$300.00 or its peso equivalent to US$23,700.00;

c) Life insurance policy for US$100,000.00 from December 1, 1989 to December 31, 1997, or if the same was not secured the premiums due thereon for the above period, the same to be computed as follows:

US$2,736.50 x 9 years = US$24,628.50

d) The services of the Law firm of Quasha Ancheta Peña and Nolasco be continued to be retained by the two (2) companies to represent complainant in the illegal recruitment case before the Regional Trial Court of Quezon City, Branch 96, docketed as Crim. Case No. Q-93-46421, entitled “People of the Philippines vs. Dr. Antonio B. Mangahas, et al.,” filed against … him in connection with his employment by Leong Hup, or in default thereof to pay the attorney’s fees of the new counsel, that may be hired by the complainant to defend him in the said case estimated in the sum of P200,000.00, more or less;

5) To order the respondents to pay jointly and severally the complainant moral damages in the sum of P2.5 million and exemplary damages of P2.5 million;

6) To order the respondents to pay jointly and severally the complainant in the sum equivalent to ten percent (10%) of the total claim as and for attorney’s fees.

7) Respondents’ counterclaims are hereby dismissed for lack of merit.

SO ORDERED.[10]

On appeal by respondents to the National Labor Relations Commission (NLRC), the Decision of the Labor Arbiter was modified by deleting the awards of – (1) US$3,370.00 representing unpaid salary for the period January 1, 1998 to January 19, 1998; (2) US$28,600.00 as vacation leave; (3) brand new car or its equivalent in the sum of P945,100.00; (4) US$23,700.00 as office rentals for the period of December 1, 1989 to July 1996; (5) US$100,000.00 life insurance policy or the equivalent premium in the amount of US$24,628.50; (6) P2.5 million as moral damages; and (7) P2.5 million as exemplary damages. The NLRC likewise reduced the amount of petitioner’s separation pay to US$44,400.00 after adjusting its computation based on the length of service of petitioner which it lowered from 9 years to 8 years; and by limiting the basis of the 10% attorneys fees to the total of the awards of underpayment of salary (P207,460.00), 13th month pay differential (P59,785.00) and cash equivalent of sick leave (US$28,600.00) only, and excluding therefrom the award of separation pay in the amount of US$44,400.00. The decretal portion of the said decision[11] states:

WHEREORE, premises considered, the Decision dated December 22, 1999 is hereby MODIFIED as follows:

Respondents are hereby ordered to pay jointly and severally the complainant, the following:

(a) underpayment of salary as computed in the appealed Decision in the amount of P207, 460.00;

(b) 13th month pay differential as computed in the appealed Decision in the amount of P59,785.00;

(c) monetary equivalent of complainant’s sick leave as computed in the appealed Decision in the amount of US$28,600.00;

(d) separation pay in the amount of US$44,000.00 as earlier computed in this Decision;

(e) attorney’s fees equivalent to ten (10%) percent of the total award based on the awards representing underpayment of salary, 13th month pay, [and] cash equivalent of sick leave.

Respondents are likewise directed to provide legal counsel to complainant as defendant in Criminal Case No. Q-93-46421.

The awards of unpaid wages from June 1-19, 1998, vacation leave in the amount of US$28,600, P945,000 for car, US23,700.00, for office rentals, life insurance policy in the amount of US$100,000.00 and moral and exemplary damages in the amount of 2.5 million pesos are hereby DELETED on grounds above-discussed.

SO ORDERED.[12]

Petitioner filed a motion for reconsideration, however, the same was denied.[13] Undaunted, petitioner filed a petition for certiorari with the Court of Appeals, which was dismissed on January 28, 2002 for failure to attach to the petition the following: “(1) complainant’s (petitioner) Position Paper filed before the Labor Arbiter; (2) Decision dated 22 December 1992 penned by Labor Arbiter Ariel Cadiente Santos; and (3) Memorandum of Appeal filed by the petitioner.”[14]

On February 21, 2002, petitioner filed a motion for reconsideration, attaching thereto a copy of the Labor Arbiter’s decision and the pleadings he failed to attach to the petition. The Court of Appeals, however, denied petitioner’s motion for reconsideration. Hence, the instant petition based on the following grounds:

1. COURT OF APPEALS COMMITTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION, IN ISSUING THE QUESTIONED RESOLUTION DISMISSING THE PETITION FOR CERTIORARI BASED ON TECHNICALITIES, THAT PETITIONER FAILED TO COMPLY WITH SEC. 1, RULE 65, RULES OF CIVIL PROCEDURE FOR FAILURE TO ATTACH THREE (3) DOCUMENTS CONSISTING OF:

Complainant’s (petitioner) Position Paper filed before the labor arbiter;

Decision dated 22 December 1999 penned by Labor Arbiter Ariel Cadiente Santos; and

Memorandum of Appeal filed by the petitioner.

WHICH RESPONDENT COURT OF APPEALS CONSIDERED AS MATERIAL PORTIONS OF THE RECORD DESPITE THE FACT THAT THE SUBJECT DOCUMENTS SOUGHT TO BE PRODUCED HAVE ACTUALLY BEEN REPRODUCED OR SUBSTANTIALLY COVERED BY THE QUESTIONED JUDGMENT, ORDER OR RESOLUTION FILED/SUBMITTED BEFORE IT.

2. COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN DISMISSING THE PETITION, AND IN DENYING THE MOTION FOR RECONSIDERATION THEREOF ON THE GROUND THAT THERE IS NO COGENT REASON FOR IT TO OVERTURN ITS DISMISSAL, DESPITE CLEAR AND CONVINCING EVIDENCE, EXTANT ON THE RECORDS SHOWING THAT THE NATIONAL LABOR RELATIONS COMMISSION’S (NLRC) DECISION AND RESOLUTION WERE FLAWED, A PALPABLE OR PATENT ERROR, WHICH MAY BE SUMMARIZED, TO WIT:

(A) IN DECLARING THAT PETITIONER HAD RESIGNED FROM HIS EMPLOYMENT, AND NOT RETRENCHED OR TERMINATED DESPITE A DOCUMENTARY EVIDENCE EXTANT ON THE RECORD ISSUED BY PRIVATE RESPONDENTS DATED JANUARY 19, 1998 GIVING “FORMAL NOTICE TO YOU (PETITIONER) OF YOUR TERMINATION DUE TO RETRENCHMENT EFFECTIVE JANUARY 20, 1998”.

(B) IN HOLDING AGAIN, AND DENYING PETITIONER’S VALID CLAIMS DESPITE DOCUMENTARY EVIDENCE OR THE EXISTENCE OF A CONTRACT OF EMPLOYMENT STATING THAT:

(1) EMPLOYEES (INCLUDING PETITIONER AS GENERAL MANAGER) AS A MATTER OF COMPANY POLICY AND/OR PRACTICE) WHO ARE RETRENCHED ARE ENTITLED TO INCENTIVES INCLUDING 15-DAYS VACATION LEAVE AND 15-DAYS SICK LEAVE WITH PAY; A FACT ADMITTED NO LESS BY PRIVATE RESPONDENTS’ OWN WITNESS, MS. MA. ROWENA LOPEZ (FORMER PERSONNEL MANAGER OR PHILMALAY) WHO EXECUTED AN AFFIDAVIT ADMITTING THE SAME.

(2) PETITIONER’S ENTITLEMENT AS PER CONTRACT TO A BRAND NEW CAR (OR AT LEAST TO THE CASH EQUIVALENT THEREOF); $100,000.00 LIFE INSURANCE POLICY (OR IN DEFAULT THEREOF AT LEAST TO THE PREMIUMS THEREIN), AND OFFICE RENTALS FOR THE USE OF THE PETITIONER’S PRIVATE RESIDENCE AS OFFICE OF RESPONDENTS.

(3) PETITIONER IS ENTITLED, TO MORAL AND EXEMPLARY DAMAGES DUE TO PRIVATE RESPONDENTS ACTS OF BAD FAITH IN REQUIRING PETITIONER TO EXECUTE A LETTER OF RESIGNATION, WHEN IN FACT HE WAS ADMITTEDLY TERMINATED THRU RETRENCHMENT, AND ITS REFUSAL TO PAY HIM HIS VALID CLAIMS, DESPITE HIS CONTRACT OF EMPLOYMENT, COMPANY POLICY, AND LETTER OF TERMINATION ISSUED BY PRIVATE RESPONDENTS.

(4) PETITIONER’S ENTITLEMENT TO 10% OF THE TOTAL AMOUNT OF THE AWARD OF ATTORNEY’S FEES AS PROVIDED FOR BY LAW AND AS PER PETITIONER’S CONTRACT WITH COUNSEL, AND NOT ONLY 10% OF THE TOTAL AWARD REPRESENTING UNDER PAYMENT OF SALARY, 13TH MONTH PAY, AND CASH EQUIVALENT OF SICK LEAVE AND IN ORDERING PRIVATE RESPONDENT TO PROVIDE LEGAL COUNSEL TO PETITIONER IN CRIM. CASE NO. Q-93-46421, WHEN THE SUBJECT CASE HAD ALREADY BEEN DISMISSED AT THE EXPENSE OF PETITIONER WHO HAD PREVIOUSLY HIRED HIS OWN COUNSEL OF CHOICE FOR THE PURPOSE.

The issues for resolution are: (1) whether or not the Court of Appeals erred in dismissing the petition; and (2) whether or not the decision of the Labor Arbiter should be reinstated.

The allowance of the petition on the ground of substantial compliance with the Rules is not a novel occurrence in our jurisdiction. As consistently held by the Court, rules of procedure should not be applied in a very technical sense, for they are adopted to help secure, not override, substantial justice.[15] In Ramos v. Court of Appeals,[16] the Court of Appeals dismissed a petition for review of the decision of the Regional Trial Court because the petitioner failed to attach to the petition a certified true copy of the Metropolitan Trial Court’s decision in addition to the certified true copy of the assailed decision of the RTC. Holding that the Court of Appeals should have given due course to the petition considering that petitioner subsequently submitted a certified true copy of the decision of the MeTC, we held:

Petitioner is right that the MeTC’s decision cannot be considered a “disputed decision.” The phrase is the equivalent of “ruling, order or decision appealed from” in Rule 32, §2 of the 1964 Rules made applicable to appeals from decisions of the then Courts of First Instance to the Court of Appeals by R.A. No. 296, as amended by R.A. No. 5433. Since petitioner was not appealing from the decision of the MeTC in her favor, she was not required to attach a certified true copy – but only a true or plain copy – of the aforesaid decision of the MeTC. The reason is that inclusion of the decision is part of the requirement to attach to the petition for review “other material portion of the record as would support the allegations of the petition.” Indeed, petitioner referred to the MeTC decision in many parts of her petition for review in the Court of Appeals for support of her theory.

Nonetheless, the Court of Appeals should have reconsidered its dismissal of petitioner’s appeal after petitioner submitted a certified true copy of the MeTC’s decision. It was clear from the petition for review that the RTC incurred serious errors in awarding damages to private respondents which were made without evidence to support the award and without any explanation…[17]

In Jaro v. Court of Appeals,[18] we applied the rule on substantial compliance because the petitioner amended his defective petition and attached thereto the relevant annexes certified according to the rules. Thus –

There is ample jurisprudence holding that the subsequent and substantial compliance of an appellant may call for the relaxation of the rules of procedure. In Cusi-Hernandez vs. Diaz and Piglas-Kamao vs. National Labor Relations Commission, we ruled that the subsequent submission of the missing documents with the motion for reconsideration amounts to substantial compliance. The reasons behind the failure of the petitioners in these two cases to comply with the required attachments were no longer scrutinized. What we found noteworthy in each case was the fact that the petitioners therein substantially complied with the formal requirements…[19]

The same leniency should be applied to the instant case considering that petitioner subsequently submitted with his motion for reconsideration the certified true copy of the Labor Arbiter’s decision, the complainant’s position paper and the respondent’s memorandum of appeal. Clearly, petitioner had demonstrated willingness to comply with the requirements set by the rules. If we are to apply the rules of procedure in a very rigid and technical sense, as the Court of Appeals did in this case, the ends of justice would be defeated.

The pleadings and documents filed extensively discussed the issues raised by the parties. Such being the case, there is sufficient basis to resolve the instant controversy.[20] Labor laws mandate the speedy disposition of cases, with the least attention to technicalities but without sacrificing the fundamental requisites of due process.[21] Remanding the case to the Court of Appeals will only frustrate speedy justice and, in any event, would be a futile exercise, as in all probability the case would end up with this Court.[22] We shall thus rule on the substantial claims of the parties.

Was the termination of petitioner’s employment caused by retrenchment or by voluntary resignation?

The Court finds that petitioner’s dismissal from service was due to retrenchment. This is evident from the termination letter sent by Philmalay to petitioner, to wit –

We regret to inform you that in view of the prevailing market conditions and the continuous losses being incurred by the company, the management has decided to cut down on expenses and prevent further losses through retrenchment of some of our personnel effective January 19, 1998.

In compliance with the requirement of the law, this will serve as a formal notice to you of your termination due to retrenchment effective January 20, 1998. To provide you with sufficient time to seek alternative employment, you need not report for work (unless otherwise requested) starting January 20, 1998. Notwithstanding the above mentioned affectivity date, you may come down to the office and receive your separation benefits pursuant to the Labor Code…[23]

While it is true that petitioner tendered his resignation letter to respondents requesting that he be given the same benefits granted by the company to resigned/retrenched employees, there is no showing that respondents accepted his resignation. Acceptance of a resignation tendered by an employee is necessary to make the resignation effective.[24] No such acceptance, however, was shown in the instant case. What appears in the record is a letter terminating the services of petitioner due to retrenchment effective January 20, 1998. Verily, said letter should be interpreted as a non-acceptance of petitioner’s resignation effective December 31, 1997. As correctly pointed out by the Labor Arbiter, if respondents considered petitioner resigned as of December 31, 1997, then there would be no need to retrench him.

The length of service of petitioner, which the NLRC correctly reduced to 8 years, as well as the solidary liability of respondent corporations are no longer assailed here. Whether petitioner is considered resigned on December 31, 1997 or retrenched on January 20, 1998, his length of employment reckoned from August 24, 1989 would still be 8 years. Moreover, respondents did not appeal from the decision of the NLRC and in fact sought its affirmance in their Opposition to the motion for reconsideration[25] and Comment to the motion for reconsideration[26] filed before the NLRC and the Court of Appeals, respectively. So also, petitioner is estopped from claiming that he was illegally dismissed and that his retrenchment was without basis. His request for benefits granted to retrenched employees during such time when respondent was in the process of retrenching its employees is tantamount to a recognition of the existence of a valid cause for retrenchment. What remains to be resolved by the Court is the validity of the NLRC’s deletion/modification of the awards of – (1) unpaid salary; (2) vacation leave; (3) car and insurance policy/premiums; (4) moral and exemplary damages; (5) reimbursement for expenses for legal services; (6) rental payment; and (7) attorney’s fees.

As regards the award of unpaid salary, the NLRC was correct in holding that petitioner is not entitled to compensation from January 1, 1998 to January 19, 1998, because he was not able to prove that he rendered services during said period. In the same vein, there is no basis in awarding moral and exemplary damages, inasmuch as respondents were not shown to have acted in bad faith in initially refusing to award separation pay equivalent to 1 month salary for every year of service. Respondents even offered to pay petitioner separation pay, albeit in an amount not acceptable to petitioner. Moral damages are recoverable only where the act complained of is tainted by bad faith or fraud, or where it is oppressive to labor, and done in a manner contrary to morals,

good customs, or public policy. Exemplary damages may be awarded only if the act was done in a wanton, oppressive, or malevolent manner.[27] None of these circumstances exist in the present case.

The NLRC also correctly ruled that the car and insurance benefits are granted only during the course of employment; hence, they should not be part of petitioner’s separation package. Likewise, petitioner’s claim for payment of rental for the use of his house as office of Philmalay should be denied for having been ventilated in the wrong forum. Not all money claims that may be asserted by an employee against his employer are within the jurisdiction of the NLRC. Money claims of workers which fall within the jurisdiction of Labor Arbiters are those which arise out of employer-employee relationship. Obviously, the demand for rental payment is not a labor dispute; rather, it is based on contractual relations independent of employer-employee relationship. Hence, the jurisdiction thereon is with the regular courts.[28]

Since respondents did not appeal from the decision of the NLRC, it is presumed that they are satisfied with the adjudications therein, including the order of NLRC directing them to provide legal services to petitioner in the illegal recruitment case filed against the latter while he was still employed by respondents. This is in accord with the doctrine that a party who has not appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the appealed decision.[29] Nonetheless, respondents cannot be ordered to reimburse the amount of P200,000.00 for the legal services of the law firm allegedly hired by petitioner because he failed to establish that he indeed hired the services of a law firm and that he spent P200,000.00 as a consequence thereof.

Petitioner is, however, entitled to the award of vacation leave as part of respondents’ retrenchment incentives. In granting sick leave but deleting vacation leave benefits, the NLRC based its ruling on the affidavit of one Ms. Rowena Lopez, a former personnel of Philmalay, viz:

3. That based on company policy and/or practice the rank-and-file employees are entitled to 15-days vacation leave and 15-days sick leaves. However, the vacation leave must be availed of within the year or applied to the remaining period of employment for those who resigned or go on terminal leave. In case of sick leaves all unused sick leaves are also commutable to cash;

4. That employees who were retrenched are entitled to the following incentives:

(a) One (1) month additional leave with pay effective after their last day of employment to enable them to look for a new job;

(b) Plus one (1) month separation pay for every year of service; and

(c) 15-days vacation leave and 15-days sick leave with pay as stated in paragraph 3 hereof.[30]

The foregoing expressly states that a retrenched employee is entitled to 15-day vacation leave. Paragraph 4 is the retrenchment package granted to retrenched employees, whereas paragraph 3 refers to the feasibility of commutation of unused sick and vacation leaves. Except for the sentence entitling employees to vacation and sick leaves, the last 2 sentences in paragraph 3 have nothing to do with the retrenchment benefits in paragraph 4. Note that the 15-day vacation and sick leave with pay in paragraph 4(c) are not qualified by the word “unused”. The 15-day vacation and sick leaves are granted to retrenched employees as part of the retrenchment benefits regardless of whether or not they have unused sick and vacation leaves at the time of the retrenchment. Moreover, the applicability of the said provisions to petitioner was not disputed by respondents. They even invoked the same in manifesting conformity to the deletion by the NLRC of the award of 15-day vacation leave for every year of service. At any rate, any ambiguity therein must be resolved strictly against the respondents, who drafted these provisions.[31] Hence, petitioner is entitled not only to 15 days sick leave but also to 15 days vacation leave with pay

The Labor Arbiter’s computation of petitioner’s 15-day sick leave pay must be modified. The NLRC, which affirmed the Labor Arbiter’s decision, reduced petitioner’s number of years of service from 9 to 8 years but it did not make the corresponding adjustment in the determination of petitioner’s sick leave pay which used 9 years as the basis in the computation thereof. Accordingly, the awards of 15-day sick leave and 15-day vacation leave for every year of service must be computed using 8 years as its basis.

Finally, the award of attorney’s fees must also be modified. In Traders Royal Bank Employees Union-Independent v. National Labor Relations Commission,[32] it was held that there are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney’s fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client. In its extraordinary concept, attorney’s fees are deemed indemnity for damages ordered by the court to be paid by the losing party in a litigation. The instances where these may be awarded are those enumerated in Article 2208 of the Civil Code, specifically par. 7 thereof which pertains to actions for recovery of wages, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. The extraordinary concept of attorney’s fees is the one contemplated in Article 111 of the Labor Code, which provides:

Art. 111. Attorney’s fees. – (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered…

The afore-quoted Article 111 is an exception to the declared policy of strict construction in the awarding of attorney’s fees. Although an express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly, as in this case.[33]

In carrying out and interpreting the Labor Code's provisions and its implementing regulations, the employee’s welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided in Article 4 of the Labor Code which states that “[a]ll doubts in the implementation and interpretation of the provisions of [the Labor] Code including its implementing rules and regulations, shall be resolved in favor of labor”, and Article 1702 of the Civil Code which provides that “[i]n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.”[34]

In the case at bar, what was withheld from petitioner was not only his salary, vacation and sick leave pay, and 13th month pay differential, but also his separation pay. Hence, pursuant to current jurisprudence, separation pay must be included in the basis for the computation of attorney’s fees. Petitioner is entitled to attorney’s fees equivalent to 10% of his total monetary award.[35]

WHEREFORE, in view of all the foregoing, the instant petition is GRANTED. The assailed Resolutions dated January 28, 2002 and July 22, 2002 of the Court of Appeals in CA-G.R. SP No. 67431, are REVERSED and SET ASIDE. The Decision of the National Labor Relations Commission in NLRC NCR CA 023679-2000, is MODIFIED. In addition to the awards of underpayment of salary, 13th month pay differential, sick leave pay and separation pay, respondents are ordered to pay petitioner vacation leave pay and 10% attorney’s fees, the basis of which shall be the total monetary award. Petitioner’s vacation leave and sick leave pay shall be computed on the basis of his 8 years of service with respondents. For this purpose, the case is ordered REMANDED to the Labor Arbiter for the computation of the amounts due petitioner.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.