labor cases (midterms)

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LABOR

1. INT’L SCHOOL ALLIANCE OF EDUCATORS (ISAE) v. QUISUMBING

FACTS: Petitioners work under private respondent International School. The schoolhires both local and foreign hires. Foreign hires are granted with more benefits andhigher salary. Respondent says this is because of dislocation factor and limited tenure.Petitioners contested the difference in salary rates between foreign and local hires.They claim that it is discriminatory to Filipinos and it constitutes racial discrimination.

HELD: There is violation of equal protection. Equal pay for equal work, persons whowork with substantially equal qualifications, skillsm effort, and responsibility under similar conditions should be paid similar salaries. If an employer accords the same rankand position, the presumption is that they perform equal work. Here, both groups havesimilar functions which they perform under similar conditions. There is no evidence thatforeign hires perform 25% more efficient than local hires. The dislocation factor andtenure are properly accorded by the benefits they received.

International School (IS) pays its teachers who are hired from abroad, or foreign-hires, ahigher salary than its local-hires, whether the latter are Filipino or not (most are Filipino,but some are American). It justifies this under the ‗dislocation factor‘ – that foreignersmust be given a higher salary both to attract them to teach here, and to compensatethem for the ―significant economic disadvantages‖ involved in coming here. TheTeacher‘s Union cries discrimination. HELD: Discrimination exists. Equal pay for equal work is a principal long honored inthis jurisdiction, as it rests on fundamental norms of justice1. Art. XIII, Sec. 1 of the Constitution (Social Justice and Human Rights) exhortsCongress to give the highest priority to the enactment of measures that protect andennhance the right od all people to human dignity, reduce social, economic, and politicalinequalitites.‖ The Constitution also provides that labor is entitled to ―humane conditionsof work.‖. These conditions are not restricted to the physical workplace, but include aswell the manner by which employers treat their employees. Lastly, the Constitutiondirects the State to promote ―equality of employment opportunities for all,‖ ―…regardlessof sex, race, or creed.‖ It would be an affront to both the spirit and the letter of theseprovisions if the State closes its eyes to unequal and discriminatory terms andconditions of employment.2. International law, which springs from general principles of law, likewiseproscribes discrimination. General principles of law include principles of equity, i.e.,fairness and justice, based on the test of what is reasonable. The Universal Declarationof Human Rights and numerous other international Conventions all embody the generalprinciple against discrimination, the very antithesis of fairness and justice. ThePhilippines, through its Constitution, has incorporated this principle as part of its nationallaws.



2. Standard Chartered Bank Employees Union Vs. Confesor

Confidential Employees – Exclusion as Appropriate Bargaining Unit

The 1998-2000 Collective Bargaining Agreement between the Standard Chartered Bank

employees Union and the Standard Chartered Bank expired so the parties tried to

renew it but then a deadlock ensued. Under the old CBA, the following are excluded as

appropriate bargaining unit:

A. All covenanted and assistant officers (now called National Officers)

B. One confidential secretary of each of the:

1. Chief Executive, Philippine Branches

2. Deputy Chief Executive/Head, Corporate Banking Group

3. Head, Finance

4. Head, Human Resources

5. Manager, Cebu

6. Manager, Iloilo

7. Covenanted Officers provided said positions shall be filled by new recruits.

C. The Chief Cashiers and Assistant Cashiers in Manila, Cebu and Iloilo, and in anyother branch that the BANK may establish in the country.

D. Personnel of the Telex Department

E. All Security Guards

F. Probationary employees, without prejudice to Article 277 (c) of the Labor Code, as

amended by R.A. 6715, casuals or emergency employees; and

G. One (1) HR Staff

But then in the renewal sought by SCBEU-NUBE, they only wanted the exclusion to

apply only to the following employees from the appropriate bargaining unit – all

managers who are vested with the right to hire and fire employees, confidential

employees, those with access to labor relations materials, Chief Cashiers, Assistant

Cashiers, personnel of the Telex Department and one Human Resources (HR) staff.



SCBEU-NUBE also averred that employees assigned in an acting capacity for at least a

week should be given salary raise.

A notice of strike was given to the Department of Labor due to this deadlock. Then

DOLE Secretary Patricia Sto. Tomas issued an order dismissing the Union‘s plea.

ISSUE: Whether or not the confidential employees sought to be removed from the

exclusion as appropriate bargaining unit by SCBEU-NUBE holds ground.

HELD: No. Whether or not the employees sought to be excluded from the appropriate

bargaining unit are confidential employees is a question of fact, which is not a proper

issue in a petition for review under Rule 45 of the Rules of Court. SCBEU-NUBE insists

that the foregoing employees are not confidential employees; however, it failed to

buttress its claim. Aside from its generalized arguments, and despite the Secretary‘s

finding that there was no evidence to support it, SCBEU-NUBE still failed to substantiate

its claim. SCBEU-NUBE did not even bother to state the nature of the duties and

functions of these employees, depriving the Court of any basis on which it may be

concluded that they are indeed confidential employees.

With regards to the salary increase of employees in acting capacities, the Supreme

Court agreed with the Court of Appeals that a restrictive provision would curtail

management‘s prerogative, and at the same time, recognized that employees should

not be made to work in an acting capacity for long periods of time without adequate

compensation. The usual rule that ―employees in acting capacities for at least a month

should be given salary raise‖ is upheld.

3. PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION VS. NLRC

G.R. No. 105963 August 22, 1996

PAL EMPLOYEES SAVING AND LOAN ASSOCIATION, INC. (PESALA), petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION AND ANGEL V.ESQUEJO, respondents.

PANGANIBAN, J .: p

Is an employee entitled to overtime pay for work rendered in excess of eighthours a day, given the fact that his employment contract specifies a twelve-hour workday at a fixed monthly salary rate that is above the legal minimum wage?This is the principal question answered by this Court in resolving this petitionwhich challenges the validity and legality of theDecision

1of public respondent National Labor Relations

Commission 2 promulgated on April 23, 1992 in NLRC NCR CA No. 002522-91



entitled "Angel V. Esquejo vs. PAL Employees Savings and Loan Association"which Decision modified (slightly as to amount) the earlier decision

3dated

November 11, 1991 of the labor arbiter granting private respondent's claim of overtime pay.

The Facts and the Case Below

On October 10, 1990, private respondent filed with public respondent a complaintdocketed as NLRC NCR Case No. 10-05457-90 for non-payment of overtime payand non-payment of the P25.00 statutory minimum wage increase mandated byRepublic Act No. 6727.

Subsequently, private respondent filed a supplemental complaint for illegalsuspension with payer for reinstatement and payment of backwages. However,before the case was submitted for resolution, private respondent filed a "Motionto Withdraw Supplemental Complaint" on the ground that a separate action for

illegal suspension, illegal dismissal, etc. had been filed and was pending beforeanother labor arbiter. Hence, the issue decide by public respondent and which isunder review by this Court in this petition involves only his claim for overtime pay.

On November 26, 1990, private respondent filed his position paper 4

with thelabor arbiter alleging the following facts constituting his cause of action:

Complaint (herein private respondent) started working with respondent(PESALA) sometime last March 1, 1986 as a company guard and wasreceiving a monthly basic salary of P1,990.00 plus an emergencyallowance in the amount of P510.00. He was required to work a (sic )

twelve (12) hours a day, a (sic ) xerox copies of his appointment are heretoattached and marked as Annexes "C" and "D" of this position paper;

That on December 10, 1986, respondent Board of Directors in its boardmeeting held on November 21, 1986 approved a salary adjustment for thecomplainant increasing his monthly basic salary to P2,310.00 and anemergency allowance of P510.00, a xerox copy of the salary adjustment ishereto attached and marked as Annex "E" hereof;

That on August 25, 1987, because of his impressive performance on hisassigned job, another adjustment was approved by the President of the

association increasing his monthly basic salary to P2,880.00, a xerox copyof the salary adjustment is hereto attached and marked as Annex "F"hereof;

That from January 4, 1988 up to June 1990, several salary adjustmentswere made by the respondent on the monthly basic salary of thecomplainant including a letter of appreciation for being as (sic ) one of theoutstanding performers during the first half of 1988, the latest salary prior



to the filing of the complaint was P3,720.00, a (sic ) xerox copies of alldocuments relative to the salary adjustments are hereto attached andmarked as annexes "G", "H", and "K" of this position paper;

That during his entire period of employment with respondent, the former

was required to perform overtime work without any additionalcompensation from the latter. It was also at this point wherein therespondent refused to give the 25.00 increase on the minimum wage ratesas provided for by law. On October 12, 1990, complainant was suspendedfor the period of thirty seven (37) days for an offense allegedly committedby the respondent sometime last August 1989.

On December 13, 1990, petitioner PESALA filed its position paper 5 allegingamong other things:

On 01 March, 1986, complainant was appointed in a permanent status as

the company guard of respondent. In the Appointment Memorandumdated February 24, 1986 which has the conformity of complaint, it isexpressly stipulated therein that complainant is to receive a monthly salaryof P1,900.00 plus P510.00 emergency allowance for a twelve (12) hourswork per day with one (1) day off. A copy of said appointmentmemorandum is hereto attached as Annex "A" and made an integral parthereof.

On 01 December, 1986, the monthly salary of complainant was increasedto P2,310,00 plus P510.00 emergency allowance. Latter, or on 01January, 1988, the monthly salary of complainant was again increased to

P3,420.00. And still later, or on 01 February, 1989, complainant's monthlysalary was increased are hereto attached as Annexes "B", "B-1" and "B-2"and are made integral parts hereof.

On 29, November, 1989, the manager of respondent in the person of Sulpicio Jornales wrote to complainant informing the latter that the positionof a guard will be abolished effective November 30, 1989, and thatcomplainant will be re-assigned to the position of a ledger custodianeffective December 1, 1989.

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

complaint was formally appointed by respondent as its ledger custodianon December 1, 1989. The monthly salary of complainant as ledger custodian starting on December 1, 1989 was P3,720,00 for forty (40)working hours a week or eight (8) working hours a day. a copy of said

Appointment memorandum is hereto attached as Annex "C" and made anintegral part hereof.



On 29 August, 1990, complainant was administratively charged with aserious misconduct or disobedience of the lawful orders of respondent or its officers, and gross and habitual neglect of his duties, committed asfollows:

1. Sometime in August, 1989, you (referring tocomplainant Esquejo) forwarded the checkscorresponding to the withdrawals of Mr. JoseJimenez and Mr. Anselmo dela Banda of Davao and Iloilo Station, respectively, withoutthe signature of the Treasurer and thePresident of PESALA, in violation of your dutyand function that you should see to it that thesaid checks should be properly signed by thetwo PESALA officials before you send out saidchecks to their addresses. As a result of which,

there was a substantial delay in thetransmission of the checks to its ownersresulting to an embarrassment on the part of the PESALA officers and damage and injury tothe recipients (sic ) of the checks since theyneeded the money badly.

2. Sometime in August, 1989, before you(complainant) went on your vacation, you failedto leave or surrender the keys of the office,especially the keys of the keys to the main and

back doors which resulted to damage, injuryand embarrassment to PESALA. This is agross violation of your assigned duties and youdisobeyed the instruction of your Superior.

xxx xxx xxx

Herein complainant was informed of the aforequoted charges against himand was given the opportunity to be heard and present evidence in hisbehalf as shown by the Notice of Hearing (Annex "D" hereof) sent to him.Complainant did in fact appeared (sic ) at the hearing, assisted by hiscounsel, Atty. Mahinardo G. Mailig, and presented his evidence in theform of a Counter-Affidavit. A copy of said Counter-Affidavit is heretoattached as Annex "E" and made an integral part hereof.

On 12 October, 1990, after due deliberation on the merits of theadministrative charges filed against herein complainant, the InvestigatingOfficer in the person of Capt. Rogelio Enverga resolved the sameimposing a penalty of suspension of herein complainant, thus:



"PENALTY: 1. For the firstoffense, you (referring tocomplaint Esquejo) aresuspended for a period of thirty(30) working days without pay

effective October 15, 1990.

2. For the second offense, your (sic ) are suspended for a periodof seven (7) working dayswhiteout pay effective from thedate first suspension will expire".

On March 7, 1991, private respondent filed a detailed and itemized computationof his money claims totaling P107,495.90, to which petitioner filed its commenton April 28, 1991. The computation filed on March 7, 1991 was later reduced to

P65,302.80. To such revised computation, the petitioner submitted its commenton April 28, 1991.

WHEREFORE, judgment is hereby rendered:

1. Granting the claim for overtime pay coveringthe period October 10, 1987 to November 30,1989 in the amount of P28,344.55.

2. The claim for non-payment of P25.00 salaryincrease pursuant to Republic Act No. 6727 is

dismissed for lack of merit.

Aggrieved by the aforesaid decision, petitioner appealed to public respondentNLRC only to be rejected on April 23, 1992 via the herein assailed Decision, thedispositive portion of which reads as follows:

WHEREFORE, premises considered, the award is reduced to an amountof TWENTY EIGHT THOUSAND SIXTY-SIX PESOS AND 45/100(P28,066.45). In all other respects, the Decision under review is hereby

AFFIRMED and the appeal DISMISSED for lack of merit.

No motion for reconsideration of the Decision was filed by the petitioner.

6

What transpired afterwards is narrated by the Solicitor General in hismemorandum,

7which we presume to be correct since petitioner did not

contradict the same in its memorandum:

. . . Petitioner did not appeal the Decision of respondent NLRC. When itbecame final, the parties were called to a conference on June 29, 1992 to



determine the possibility of the parties' voluntary compliance with theDecision (Order of Labor Arbiter Linsangan. dated July 23, 1992).

. . . In their second conference, held on July 15, 1992, petitioner proposedto private respondent a package compromise agreement in settlement of

all pending claims. Private respondent for his part demanded(P150,000.00 as settlement of his complaint which was turned down bypetitioner as too excessive. Unfortunately, no positive results wereachieved.

As a result, pleading was filed by petitioner captioned: Motion to Defer Execution and Motion to Re-Compute alleged overtime pay. Petitioner states that "quite recently, the Employee Payroll Sheets pertaining to thesalaries, overtime pay, vacation and sick leave of Angel Esquejo werelocated".

. . . Petitioner's Motion to Defer Execution and Motion to Re-Computerespondent's overtime pay was denied in an Order dated July 23, 1992.

. . . Petitioner moved to reconsider the Denial Order on July 27, 1992.Private respondent opposed.

In the meantime, petitioner filed the instant special civil action for certiorari beforethis Court on July 10, 1992. Later, on July 17, 1992, citing as reason that ". . .quite recently, the Employee Payroll Sheets which contained the salaries andovertime pay received by respondent Esquejo were located in the bodega of thepetitioner and based on said Payroll Sheets, it appears that substantial overtime

pay have been paid to respondent Esquejo in the amount of P24,238.22 for theperiod starting January 1987 up to November 1989". petitioner asked this Courtfor the issuance of a temporary restraining order or writ of preliminary injunction.On the same date of July 17, 1992, a "Supplemental Petition Based On NewlyDiscovered Evidence" was filed by petitioner to which was attached photocopiesof payroll sheets of the aforestated period.

On July 29, 1992, this court issued a temporary restraining order enjoining therespondents from enforcing the Decision dated April 23, 1992 issued in NLRCNCR No. 002522-91, the case below subject of the instant petition.

The Issues

Four issues have been raised by the petitioner in its effort to obtain a reversal of the assailed Decision, to wit:

I



THE RESPONDENT NLRC COMMITTED A GRAVE ABUSEOF DISCRETION WHEN IT RULED THAT PRIVATERESPONDENT IS ENTITLED TO OVERTIME PAY WHENTHE SAME IS A GROSS CONTRAVENTION OF THECONTRACT OF EMPLOYMENT BETWEEN PETITIONER

AND RESPONDENT ESQUEJO AND A PATENTVIOLATION OF ARTICLES 1305, 1306 AND 1159 OF THECIVIL CODE.

II

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSEOF DISCRETION IF AWARDING OVERTIME PAY OFP28,066.45 TO PRIVATE RESPONDENT WHEN THESAME IS A CLEAR VIOLATION OF ARTICLE 22 OF THECIVIL CODE ON UNJUST ENRICHMENT.

III

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSED OF DISCRETION WHEN IT RULED THATPRIVATE RESPONDENT WAS NOT PAID THE OVERTIMEPAY BASED ON THE COMPUTATION OF LABOR

ARBITER CORNELIO LINSANGAN WHICH WAS AFFIRMED BY SAID RESPONDENT NLRC WHEN THESAME IS NOT SUPPORTED BY SUBSTANTIALEVIDENCE AND IT, THEREFORE, VIOLATED THE

CARDINAL PRIMARY RIGHTS OF PETITIONER ASPRESCRIBED IN "AND TIBAY VS. CIR." 69 PHIL. 635.

IV

WHETHER OR NOT THE PETITIONER'S SUPPLEMENTALPETITION BASED ON NEWLY DISCOVERED EVIDENCEMAY BE ADMITTED AS PART OF ITS EVIDENCE ITBEING VERY VITAL TO THE JUDICIOUSDETERMINATION OF THE CASE. (Rollo, p. 367)

In essence the above issued boil down to this query: Is an employee entitled to overtimepay for work rendered in excess of the regular eight hour day given the fact that heentered into a contract of labor specifying a work-day of twelve hours at a fixed monthlyrate above the legislated minimum wage?

The Court's Ruling



At the outset, we would like to rectify the statement made by the Solicitor General thatthe "petitioner did not appeal from the Decision of (public) respondent NLRC". Theelevation of the said case by appeal is not possible. The only remedy available from anorder or decision of the NLRC is a petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or grave abuse of discretion. 8 The general

rule now is that the special civil action of certiorari should be instituted within a period of three months. 9 Hence, when the petition was filed on July 10, 1992, three months hadnot yet elapsed from petitioner's receipt of the assailed Decision (should really be fromreceipt of the order denying the motion for reconsideration).

However, aside from failing to show clearly grave abuse of discretion on the part of respondent NLRC, which we shall discuss shortly, the petitioner also failed to complywith the mandatory requirement of filing a motion for reconsideration from the Decisionof the public respondent before resorting to the remedy of certiorari . We have previouslyheld that:

. . . The implementing rules of respondent NLRC are unequivocal inrequiring that a motion for reconsideration of the order, resolution, or decision of respondent commission should be seasonably filed as aprecondition for pursuing any further or subsequent remedy, otherwise thesaid order, resolution, or decision shall become final and executory after ten calendar days from receipts thereof. Obviously, the rationale therefor is that the law intends to afford the NLRC an opportunity to rectify sucherrors or mistakes it may have lapsed into before resort to the courts of

justice can be had. This merely adopts the rule that the function of amotion for reconsideration is to point out to the court the error that it mayhave committed and to give it a chance to correct itself. 10

Additionally, the allegations in the petition clearly show that petitioner failed to file a motion for reconsideration of the assailed Resolution beforefiling the instant petition. As correctly argued by private respondentRolando Tan, such failure constitutes a fatal infirmity. . . . Theunquestioned rule in this jurisdiction is that certiorari will only if there is noappeal or any other plain, speedy an adequate remedy in the ordinarycourse of law against the acts of public respondent. In the instant case,the plain and adequate remedy expressly provided by law was a motionfor reconsideration of the assailed decision, based on a palpable or patenterrors, to be made under oath and filed within ten (10) calendar days fromreceipt of the questioned decision. And for failure to avail of the correctremedy expressly provided by law, petitioner has permitted the subjectResolution to become final and executory after the lapse of the ten dayperiod within which to file such motion for reconsideration.

11

In brief, the filing of the instant petition was premature and did not toll the running of the3 month period. Thus, the assailed Decision became final and executory. On thisground alone, this petition must therefore be dismissed.



However, in view of the importance of the substantial query raised in the petition, wehave resolved to decide the case on the merits also.

The First Issue: Was Overtime Pay Included?

The main disagreement between the parties centers on how the contract of employmentof the private respondent should be interpreted. The terms and conditions thereof readsas follows:

Date: February 24, 1986NAME : ESQUEJO, ANGELNATURE OF ACTION : APPOINTMENTFROM :POSITION TITLE : COMPANY GUARDTO :STATUS : PERMANENT

EFFECTIVE DATE : MARCH 1, 1986FROM : P1,990.00 per monthplus P510.00 emergencyallowance

SALARY :TO :

REMARKS : To confirm permanentappointment as companyguard who will render 12

hours a day with one (1)day off

RECOMMENDED BY: APPROVED BY:

(Signed) (Signed)SULPICIO B. JORNALES CATALINO F. BANEZ

(Signed) ANGEL V. ESQUEJO 12

Petitioner faults the public respondent when it said that there was "no meeting of mindsbetween the parties," since the employment contract "explicitly states without anyequivocation" that the overtime pay for work rendered for four (4) hours in excess of theeight (8) hour regular working period is already included in the P1,990.00 basic salary."This is very clear from the fact that the appointment states 12 hours a day work."

13By

its computations,14 petitioner tried to illustrate the private respondent was paid morethan the legally required minimum salary then prevailing.



To prove its contention, petitioner argues that:

The legal minimum wage prescribed by our statutes, the legally computedovertime pay and monthly salaries being paid by petitioner to respondentEsquejo would show that indeed, the overtime pay has always been

absorbed and included in the said agreed monthly salaries.

In 1986, the legal minimum salary of Esquejo is computed as follows (per Appointment Memoranda dated February 4, 1986 and June 6, 1986[Annex "C" and "D" of Annex "B" of this Petition]):

54 x 314 days-------------12 months = P1,413.00 monthly salary

The hourly overtime pay is computed as follows:

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

P1,413.00 — legal minimum wage+ 887.50(877.50) — legal overtime pay---------------P2,290.50 — amount due to respondentEsquejo under the law

P2,500.00 — gross salary of Esquejo per contract-2,290.50----------

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

On the other hand, private respondent in his position paper claims that overtime pay isnot so incorporated and should be considered apart from the P1,990.00 basic salary. 15

We find for the private respondent and uphold the respondent NLRC's ruling that he isentitled to overtime pay.

Based on petitioner's own computation, it appears that the basic salary plus emergencyallowance given to private respondent did not actually include the overtime pay claimedby private respondent. Following the computations it would appear that by adding thelegal minimum monthly salary which at the time was P1,413.00 and the legal overtimeminimum monthly salary which at the time was P1,413.00 and the legal overtime pay of P877.50, the total amount due the private respondent as basic salary should have beenP2,290.50. By adding the emergency cost of living allowance (ECOLA) of P510.00 as



provided by the employment contract, the total basic salary plus emergency allowanceshould have amounted to P2,800.50. However, petitioner admitted that it actually paidprivate respondent P1,990.00 as basic salary plus P510.00 emergency allowance or atotal of only P2,500.00. Undoubtedly, private respondent was shortchanged in theamount of P300.50. Petitioner's own computations thus clearly establish that private

respondent's claim for overtime pay is valid.

Side Issue: Meeting of the Minds?

The petitioner contends that the employment contract between itself and the privaterespondent "perfectly satisfies" the requirements of Article 1305 of the Civil Code as tothe "meeting of the minds" such that there was a "legal and valid contract" entered intoby the parties. Thus, private respondent "cannot be allowed to question the said salaryarrangements for the extra 4 hours overtime pay after the lapse of 4 years and claimonly now that the same is not included in the terms of the employment contracts."

16

We disagree. Public respondent correctly found no such agreement as to overtime pay.In fact. the contract was definite only as to the number of hours of work to be renderedbut vague as to what is covered by the salary stipulated. Such ambiguity was resolvedby the public respondent, thus:

In resolving the issue of whether or not complainant's overtime pay for thefour (4) hours of work rendered in excess of the normal eight hour workperiod is incorporated in the computation of his monthly salary,respondent invokes its contract of employment with the complainant. Saidcontract appears to be in the nature of a document identifiable as anappointment memorandum which took effect on March 1, 1986 (Records,

p. 56) by virtue of which complaint expressed conformity to hisappointment as company guard with a work period of twelve (12) hours aday with one (1) day off. Attached to this post is a basic salary of P1,900.00 plus P510.00 emergency allowance. It is (a) cardinal rule in theinterpretation of a contract that if the terms thereof are clear and leave nodoubt upon the intention of the contracting parties, then the literal meaningof its stipulations shall control. (Art. 1370, Civil Code of the Philippines).To this, respondent seeks refuge. Circumstances, however, do not allowus to consider this rule in the light of complainant's claim for overtime paywhich is an evident indication that as to this matter, it cannot be said thatthere was a meeting of the minds between the parties, it appearing thatrespondent considered the four (4) hours work in excess of the eight hoursas overtime work and compensated by way of complainant's monthlysalary while on the latter's part, said work rendered is likewise claimed asovertime work but yet unpaid in view of complainant's being given only hisbasic salary. Complainant claims that the basic salary could not possiblyinclude therein the overtime pay for his work rendered in excess of eighthours. Hence, respondent's Appointment Memorandum cannot be takenand accorded credit as it is so worded in view of this ambiguity. We



therefore proceeded to determine the issue in the light of existing lawrelated thereto. while it is true that the complainant received a salary ratewhich is higher that the minimum provided by law, it does not however follow that any additional compensation due the complainant can be offsetby his salary in excess of the minimum, especially in the absence of an

express agreement to that effect. To consider otherwise would be indisregard of the rule of non-diminution of benefits which are above theminimum being extended to the employees. Furthermore, sucharrangement is likewise in disregard of the manner required by the law onhow overtime compensation must be determined. There is further thepossibility that in view of subsequent increases in the minimum wage, theexisting salary for twelve (12) hours could no longer account for theincreased wage level together with the overtime rate for work rendered inexcess of eight hours. This fertile ground for a violation of a labor standards provision can be effectively thwarted if there is a clear anddefinite delineation between an employee's regular and overtime

compensation. It is, further noted that a reading of respondent's Appointment Memoranda issued to the complainant on different dates(Records, pp. 56-60) shows that the salary being referred to by therespondent which allegedly included complainant's overtime pay, partakesof the nature of a basic salary and as such, does not contemplate anyother compensation above thereof including complaint's overtime pay. Wetherefore affirm complainant's entitlement to the latter benefit.

17

Petitioner also insists that private respondent's delay in asserting his right/claimdemonstrates his agreement to the inclusion of overtime pay in his monthly salary rate.This argument is specious. First of all, delay cannot be attributed to the privaterespondent. He was hired on March 1, 1986. His twelve-hour work periods continueduntil November 30, 1989. On October 10, 1990 (just before he was suspended) he filedhis money claims with the labor arbiter. Thus, the public respondent in upholding thedecision of the arbiter computed the money claims for the three years period from thedate claims were filed, with the computation starting as of October 10, 1987 onwards.

In connection with the foregoing, we should add that even if there had been a meetingof the minds in the instant case, the employment contract could not have effectivelyshielded petitioner from the just and valid claims of private respondent. Generallyspeaking, contracts are respected as the law between the contracting, parties, and theymay establish such stipulation, clause, terms and conditions as they may see fit; and for as long as such agreements are not contrary to law, morals, good customs, publicpolicy or public order, they shall have the fore of law between them. 18 However, ". . .,while it is the inherent and inalienable right of every man to have the most liberty of contracting, and agreements voluntarily and fairly made will be held valid and enforcedin the courts, the general right to contract is subject to the limitation that the agreementmust not be in violation of the Constitution, the statute of some rule of law (12 Am. Jur.pp. 641-642)." 19 And under the Civil Code, contracts of labor are explicitly subject to thepolice power of the State because they are not ordinary contracts but are impressed



with public interest. 20 Inasmuch as in this particular instance the contract is questionwould have been deemed in violation of pertinent labor laws, the provisions of said lawswould prevail over the terms of the contract, and private respondent would still beentitled to overtime pay.

Moreover, we cannot agree with petitioner's assertion that by judging the intention of theparties from their contemporaneous acts it would appear that the "failure of respondentEsquejo to claim such alleged overtime pay since 1986 clearly demonstrate(s) that theagreement on his gross salary as contained in his appointment paper is conclusive onthe matter of the inclusion of overtime pay." (Rollo, pp. 13-15; also, Rollo, pp. 378-380).This is simply not the case here. The interpretation of the provision in question havingbeen put in issue, the Court is constrained to determine which interpretation is more inaccord with the intent of the parties. 21 To ascertain the intent of the parties, the Court isbound to look at their contemporaneous and subsequent acts. 22 Private respondent'ssilence and failure to claim his overtime pay since 1986 cannot be considered asproving the understanding on his part that the rate provided in his employment contract

covers overtime pay. Precisely, that is the very question raised by private respondentwith the arbiter, because contrary to the claim of petitioner, private respondent believedthat he was not paid his overtime pay and that such pay is not covered by the rateagreed upon and stated in his Appointment Memorandum. The subsequent act of private respondent in filing money claims negates the theory that there was clear agreements as to the inclusion of his overtime pay in the contracted salary rate. Whenan employee fails to assert his right immediately upon violation thereof, such failurecannot ipso facto be deemed as a waiver of the oppression. We must recognize that theworker and his employer are not equally situated. When a worker keeps silent inspite of flagrant violations of his rights, it may be because he is seriously fearful of losing his job.

And the dire consequences thereof on his family and his dependents prevent him fromcomplaining. In short, his thoughts of sheer survival weight heavily against launching anattack upon his more powerful employer.

The petitioner contends that the agreed salary rate in the employment contract shouldbe deemed to cover overtime pay, otherwise serious distortions in wages would result"since a mere company guard will be receiving a salary much more that the salaries of other employees who are much higher in rank and position than him in the company."(Rollo, p. 16) We find this argument flimsy and undeserving of consideration. How canpaying an employee the overtime pay due him cause serious distortions in salary ratesor scales? And how can "other employees" be aggrieved when they did not render anyovertime service?

Petitioner's allegation that private respondent is guilty of laches is likewise devoid of merit. Laches is defined as failure or neglect for an unreasonable and unexplainedlength of time to do that which, by exercising due diligence, could or should have beendone earlier. It is negligence or omission to assert a right within an unreasonable time,warranting the presumption that the party entitled to assert it has either abandoned or declined to assert it

23The question of laches is addressed to the sound discretion of the

court, and since it is an equitable doctrine, its application is controlled by equitable



Petitioner is in error. The public respondent did not adopt in toto the aforequoted portionof the arbiter's decision. It made its own computations and arrived at a slightly differentamount, with a difference of P278.10 from the award granted by the labor arbiter. Torefute petitioner's claim, public respondent attached (as Annexes "1", "1-A" "1-B" and"1-C") to its Comment, the computations made by the labor arbiter in arriving at the sum

of P5,161,00. On the other hand, public respondent made its own computation in itsassailed Decision and arrived at a slightly different figure from the computed by thelabor arbiter:

Respondent claims that the award of P28,344.55 is bereft of any factualbasis. Records show that as per computation of the office of the FiscalExaminer, (Records, p. 116) the said amount was arrived at. Thecomputation was however based on the assumption that the complainantregularly reported for work. Records however show that the complainantabsented himself from work for one day in August 1989. (Records, p. 63)For this unworked day, no overtime pay must be due. As to the rest of his

period of employment subject to the three year limitation rule which datesfrom October 10, 1987 up to his appointment as Ledger Custodian onDecember 1, 1989 after which his regular work period was alreadyreduced to eight hours, there being no showing that the complainantabsented himself from work, and he being then required to work for periodof twelve hours daily, We therefore rule on complainant's entitlement toovertime compensation for the duration of the aforesaid period in excessof one working day. Consequently, complainant's overtime pay shall becomputed as follow:

OVERTIME PAY: (4 HRS/DAY)

October 10, 1987 — December 13, 1987 = 2.10 mos.P54/8hrs. = P6.75 x 4 hrs. = P27.00P27 x 1.25 = P33.75 x 26 x 2.10 mos. = P1,842.75————

December 14, 1987 — June 30, 1989 = 18.53 mos.P64/8 hrs. = P8 x 4 hrs. = P32.00P32 x 1.25 = P40 x 26 x 18.53 = P19,271.20—————

July 1, 1989 — November 30, 1989 = 5 mos.P89/8 hrs. = P11.12 x 4 hrs. = P44.50P44.50 x 1.25 = P55.62 x 25 x 5 mos. = P6,952.50(P6,953.125)————

TOTAL OVERTIME PAY

P28,066.45 (P28,067.075)" (Rollo, pp. 210-212)



Prescinding therefrom, it is evident that petitioner had no basis to argue that respondentNLRC committed any grave abuse of discretion in quoting the questioned portion of thelabor arbiter's holding.

Fourth Issue: Newly Discovered Evidence?

In its Supplemental Petition filed on July 17, 1996, petitioner alleges in part:

2. That only recently, the petitioner was able to locate the EmployeesPayroll Sheets which contained the salaries, overtime pay, vacation andsick leaves of respondent Esquejo which pertains to the period startingfrom January 1, 1987 up to November 1989. Therefore, said total amountof overtime pay paid to and received by respondent Esquejo should bededucted from the computed amount of P28,066.45 based on thequestioned decision; (Rollo, p. 220).

Contrary to petitioner's claim however, said documents consisting of payrollsheets, cannot be considered as "newly-discovered evidence" since said paperswere in its custody and possession all along, petitioner being the employer of private respondent

Furthermore, petitioner offers no satisfactory explanation why these documentswere unavailable at the time the case was being heard by the labor arbiter. In itsMemorandum, petitioner excused itself for its failure to present such evidencebefore the labor arbiter and respondent NLRC by saying that "petitioner('s office)appeared to be in disorder or in a state of confusion since the then officers (of petitioner) were disqualified by the Monetary Board on grounds of

misappropriation of funds of the association and other serious irregularities.There was no formal turn-over of the documents from the disqualified set of officer to the new officers of petitioner."

31We find such excuse weak and

unacceptable, the same not being substantiated by any evidence on record.Moreover, payroll records are normally not in the direct custody and possessionof corporate officers but of their subordinates, i .e., payroll clerks and the like. Inthe normal course of business, such payroll sheets are not the subject of formalturnovers by outgoing officers to their successors of office. And if indeed it is truethat the petitioner had been looking for such records or documents during thependency of the case with the labor arbiter and with public respondent, petitioner never alleged such search before the said labor tribunals a quo. Hence, suchbare allegations of facts cannot be fairly appreciated in this petition for certiorari ,which is concerned only with grave abuse of discretion of lack (or excess) of

jurisdiction.

The Solicitor General quotes with approval a portion of private respondent'sOpposition to petitioner's motion for reconsideration thus:



It is clear from the payroll, although the substantial pages thereof do notshow that the net amount indicated therein have been received or dulyacknowledged to have been received by the complainant, THATOVERTIME PAYMENTS THAT WERE MADE REFER TO WORKRENDERED DURING COMPLAINANT'S OFF DAYS. What has been

rightfully, claimed by the complainant and awarded by this HonorableOffice is the overtime works (sic ) rendered by the complainant daily for six(6) days a week computed at four (4) hours per day. This computation isbased on the evidence thus submitted by the parties. All appointment bythe respondent carries (sic ) with it (sic ) that the basic salary of thecomplainant is equivalent to 12 hours work everyday for six (6) days aweek, hence, the four (4) hours overtime daily was not considered andtherefore not paid by the respondent. (Rollo, p. 327).

It has been consistently held that factual issued are not proper subjects of a petitionfor certiorari , as the power of the Supreme Court to review labor cases is limited to

questions of jurisdiction and grave abuse of discretion.

32

The introduction in this petitionof so-called newly discovered evidence is unwarranted. This Court is not a trier of factsand it is not its function to examine and evaluate the evidence presented (or whichought to have been presented) in the tribunals below. 33

WHEREFORE, in view of the foregoing considerations, the Petition is DISMISSED, thetemporary restraining order issued on July 30, 1992 LIFTED, and the assailed decisionof the public respondent AFFIRMED. Cost against petitioner.

4. PT&T VS. NLRC

Facts:Grace de Guzman, private respondent, was initially hired as a reliever

by PT&T, petitioner, specificallyas a ―Supernumerary Project Worker, for a

fixed period due to a certain employee who‘s having a maternity leave.Un de r

the agreement she s igned, her employment was to immedia te ly

terminate upon the expirat ion of the agreed period. Thereafter, PT&T

again hired Grace as reliever for the succeeding periods, this time as a

replacement to anempl oyee who went on leave. The re l ie ver statu s

was then formal ly comple ted unt i l she was asked aga in to

jo inPT&T as a p roba t ionary emp loyee cover ing 150 days. In the

job app l i ca t ion form, she ind icated in the por t ion o f the

c iv i l s ta tus there in that she was s ing le a l though she had cont rac tedmar r iage a f ew mont hs ear l i er . Grace hasalso made the same

representation on her two successive reliever agreements. The branch

supervisor of PT&Thavi ng disco vered the disc repan cy sent Grace a

memorandum requ i r ing her to exp la in the sa id d iscrepancy andshe

was reminded about the company ‘s pol icy o f not accept ing marr ied

women for employment . In her rep ly , shesta ted that she wasn‘ t



aware o f such po l icy a t that t ime and a l l a long she hadn‘ t

del ibe rat el y hid den her tru e civ i l status. However, PT&T remained

unconvinced of this reasoning pledge by Grace and thus she was dismissed

f romthe company. Grace contes ted by in i t ia t in g a compla in t fo r

i l lega l d ismissa l and wi th a c la im for non-payment o f cost o f l i v ing

a l lowances. Issue:Whether or not PT&T is l iab le aga ins t Grace ‘s

i l l ega l d i smissa l due to ce r ta in company po l icy .Ru l i ng : Mar r iage as a

spec ia l cont rac t cannot be res t r ic ted by d iscr iminatory po l ic ies o f

pr ivate individuals or corporat ions. Where‘s a company policy disqualified

from work any woman worker who contracts marriage, theSu pr em e Co ur t

inva l idated such po l icy as i t no t on ly runs a fou l the const i tu t iona l

prov is ion on equal pro tec t ion but a lso on the fundamenta l po l icy o f

th e St at e to wa rd ma rr ia ge .The danger of such policy against marriage

followed by PT&T is that it strike at the very essence, idealsan d pu rp os e of

marr iage as an inv io lab le soc ia l ins t i tu t ion and u l t imate ly o f thefamily as the foundation of thenation. Therefore, PT&T is deemed liable

for Grace‘s illegal dismissal and the latter shall claim for damages.

5. DAVAO INTEGRATED PORT SERVICES VS. ABARQUEZ

In this petition for certiorari , petitioner Davao Integrated Port Services Corporation seeks to reversethe Award 1issued on September 10, 1991 by respondent Ruben V. Abarquez, in his capacity asVoluntary Arbitrator of the National Conciliation and Mediation Board, Regional Arbitration Branch XI inDavao City in Case No. AC-211-BX1-10-003-91 which directed petitioner to grant and extend theprivilege of commutation of the unenjoyed portion of the sick leave with pay benefits to itsintermittent field workers who are members of the regular labor pool and the present regular extrapool in accordance with the Collective Bargaining Agreement (CBA) executed between petitioner andprivate respondent Association of Trade Unions (ATU-TUCP), from the time it was discontinued andhenceforth.chanroblesvirtualawlibrary chanroblesvirtual law library

The facts are as follows: chanroblesvirtual law library

Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondentATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file workers of petitioner-company, entered into a collective bargaining agreement (CBA) on October 16, 1985 which, underSections 1 and 3, Article VIII thereof, provide for sick leave with pay benefits each year to itsemployees who have rendered at least one (1) year of service with the company, thus:

ARTICLE VIII chanroblesvirtual law library

Sec. 1. Sick Leaves - The Company agrees to grant 15 days sick leave with pay each year to every

regular non-intermittent worker who already rendered at least one year of service with the company.However, such sick leave can only be enjoyed upon certification by a company designated physician,and if the same is not enjoyed within one year period of the current year, any unenjoyed portionthereof, shall be converted to cash and shall be paid at the end of the said one year period. Andprovided however, that only those regular workers of the company whose work are not intermittent,are entitled to the herein sick leave privilege.

xxx xxx xxx chanroblesvirtual law library



Sec. 3. - All intermittent field workers of the company who are members of the Regular Labor Poolshall be entitled to vacation and sick leaves per year of service with pay under the following schedulebased on the number of hours rendered including overtime, to wit:

Hours of Service Per Vacation Sick LeaveCalendar Year Leave

Less than 750 NII NII751 - 825 6 days 6 days826 - 900 7 7901 - 925 8 8926 - 1,050 9 91,051 - 1,125 10 101,126 - 1,200 11 111,201 - 1,275 12 121,276 - 1,350 13 131,351 - 1,425 14 141,426 - 1,500 15 15 chanroblesvirtuallaw library

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the

above provided Sections 1 and 2 hereof, respectively.

Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were reproduced

under Sections 1 and 3, Article VIII of the new CBA, but the coverage of the said benefits wasexpanded to include the "present Regular Extra Labor Pool as of the signing of this Agreement."Section 3, Article VIII, as revised, provides, thus:

Sec. 3. - All intermittent field workers of the company who are members of the Regular Labor Pool andpresent Regular Extra Labor Pool as of the signing of his agreement shall be entitled to vacation andsick leaves per year of service with pay under the following schedule based on the number of hoursrendered including overtime, to wit:

Hours of Service Per Vacation Sick Leave

Calendar Year Leave

Less than 750 NII NII751 - 825 6 days 6 days826 - 900 7 7901 - 925 8 8926 - 1,050 9 9

1,051 - 1,125 10 101,126 - 1,200 11 111,201 - 1,275 12 121,276 - 1,350 13 131,351 - 1,425 14 141,426 - 1,500 15 15 chanroblesvirtuallaw library

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with theabove provided Sections 1 and 2 hereof, respectively.

During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on April15, 1989, or until July 1989 (a total of three (3) years and nine (9) months), all the field workers of petitioner who are members of the regular labor pool and the present regular extra labor pool who

had rendered at least 750 hours up to 1,500 hours were extended sick leave with pay benefits. Anyunenjoyed portion thereof at the end of the current year was converted to cash and paid at the end of the said one-year period pursuant to Sections 1 and 3, Article VIII of the CBA. The number of days of



their sick leave per year depends on the number of hours of service per calendar year in accordancewith the schedule provided in Section 3, Article VIII of the CBA. chanroblesvirtualawlibrary chanroblesvirtual law library

The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittentworkers or its conversion to cash was, however, discontinued or withdrawn when petitioner-companyunder a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon thelatter's resignation in June 1989), stopped the payment of its cash equivalent on the ground that theyare not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA. chanroblesvirtualawlibrary chanroblesvirtual law library

The Union objected to the said discontinuance of commutation or conversion to cash of the unenjoyedsick leave with pay benefits of petitioner's intermittent workers contending that it is a deviation fromthe true intent of the parties that negotiated the CBA; that it would violate the principle in labor lawsthat benefits already extended shall not be taken away and that it would result in discriminationbetween the non-intermittent and the intermittent workers of the petitioner-company.chanroblesvirtualawlibrary chanroblesvirtual law library

Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3,Article VIII of the 1989 CBA, the Union brought the matter for voluntary arbitration before theNational Conciliation and Mediation Board, Regional Arbitration Branch XI at Davao City by way of complaint for enforcement of the CBA. The parties mutually designated public respondent RubenAbarquez, Jr. to act as voluntary arbitrator. chanroblesvirtualawlibrary chanroblesvirtual law library

After the parties had filed their respective position papers, 2public respondent Ruben Abarquez, Jr.issued on September 10, 1991 an Award in favor of the Union ruling that the regular intermittent

workers are entitled to commutation of their unenjoyed sick leave with pay benefits under Sections 1and 3 of the 1989 CBA, the dispositive portion of which reads:

WHEREFORE, premises considered, the management of the respondent Davao Integrated PortStevedoring Services Corporation is hereby directed to grant and extend the sick leave privilege of thecommutation of the unenjoyed portion of the sick leave of all the intermittent field workers who aremembers of the regular labor pool and the present extra pool in accordance with the CBA from thetime it was discontinued and henceforth. chanroblesvirtualawlibrary chanroblesvirtual law library

SO ORDERED.

Petitioner-company disagreed with the aforementioned ruling of public respondent, hence, the instantpetition.chanroblesvirtualawlibrary chanroblesvirtual law library

Petitioner-company argued that it is clear from the language and intent of the last sentence of Section1, Article VIII of the 1989 CBA that only the regular workers whose work are not intermittent areentitled to the benefit of conversion to cash of the unenjoyed portion of sick leave, thus: ". . . Andprovided, however, that only those regular workers of the Company whose work are not intermittentare entitled to the herein sick leave privilege." chanroblesvirtual law library

Petitioner-company further argued that while the intermittent workers were paid the cash equivalentof their unenjoyed sick leave with pay benefits during the previous management of Mr. Beltran whomisinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA, it was well within petitioner-

company's rights to rectify the error it had committed and stop the payment of the said sick leavewith pay benefits. An error in payment, according to petitioner-company, can never ripen into apractice.chanroblesvirtualawlibrary chanroblesvirtual law library

We find the arguments unmeritorious.chanroblesvirtualawlibrary chanroblesvirtual law library

A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contractexecuted upon request of either the employer or the exclusive bargaining representative incorporatingthe agreement reached after negotiations with respect to wages, hours of work and all other terms



and conditions of employment, including proposals for adjusting any grievances or questions arisingunder such agreement.chanroblesvirtualawlibrary chanroblesvirtual law library

While the terms and conditions of a CBA constitute the law between the parties, 3it is not, however, anordinary contract to which is applied the principles of law governing ordinary contracts. 4A CBA, as alabor contract within the contemplation of Article 1700 of the Civil Code of the Philippines whichgoverns the relations between labor and capital, is not merely contractual in nature but impressedwith public interest, thus, it must yield to the common good. As such, it must be construed liberallyrather than narrowly and technically, and the courts must place a practical and realistic constructionupon it, giving due consideration to the context in which it is negotiated and purpose which it isintended to serve. 5 chanroblesvirtuallaw library

It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the otherrelated section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justifythe discontinuance or withdrawal of the privilege of commutation or conversion to cash of theunenjoyed portion of the sick leave benefit to regular intermittent workers. The manner they weredeprived of the privilege previously recognized and extended to them by petitioner-company during

the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989,or a period of three (3) years and nine (9) months, is not only tainted with arbitrariness but likewisediscriminatory in nature. Petitioner-company is of the mistaken notion that since the privilege of

commutation or conversion to cash of the unenjoyed portion of the sick leave with pay benefits isfound in Section 1, Article VIII, only the regular non-intermittent workers and no other can avail of thesaid privilege because of the proviso found in the last sentence thereof. chanroblesvirtualawlibrary chanroblesvirtual law library

It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which applyto two (2) distinct classes of workers in petitioner's company, namely: (1) the regular non-intermittent workers or those workers who render a daily eight-hour service to the company and aregoverned by Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who aremembers of the regular labor pool and the present regular extra labor pool as of the signing of theagreement on April 15, 1989 or those workers who have irregular working days and are governed bySection 3, Article VIII of the 1989 CBA.chanroblesvirtualawlibrary chanroblesvirtual law library

It is not disputed that both classes of workers are entitled to sick leave with pay benefits providedthey comply with the conditions set forth under Section 1 in relation to the last paragraph of Section3, to wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with the company; and (2) the application must be accompanied by a certification from acompany-designated physician.chanroblesvirtualawlibrary chanroblesvirtual law library

Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave andvacation leave benefits, among others, are by their nature, intended to be replacements for regularincome which otherwise would not be earned because an employee is not working during the period of said leaves. 6They are non-contributory in nature, in the sense that the employees contribute nothingto the operation of the benefits. 7By their nature, upon agreement of the parties, they are intended toalleviate the economic condition of the workers.chanroblesvirtualawlibrary chanroblesvirtual law library

After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light of the facts and circumstances attendant in the instant case, we find and so hold that the last sentence

of Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does not bar the regularintermittent workers from the privilege of commutation or conversion to cash of the unenjoyed portionof their sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as usedin the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with paywhich, as mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-daysick leave with pay benefit should be distinguished from the variable number of days of sick leave, notto exceed 15 days, extended to intermittent workers under Section 3 depending on the number of hours of service rendered to the company, including overtime pursuant to the schedule providedtherein. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day sick leavewith pay for its regular intermittent workers since, as the term "intermittent" implies, there is



irregularity in their work-days. Reasonable and practical interpretation must be placed on contractualprovisions. Interpretatio fienda est ut res magis valeat quam pereat. Such interpretation is to beadopted, that the thing may continue to have efficacy rather than fail. 8 chanroblesvirtual law library

We find the same to be a reasonable and practical distinction readily discernible in Section 1, inrelation to Section 3, Article VIII of the 1989 CBA between the two classes of workers in the companyinsofar as sick leave with pay benefits are concerned. Any other distinction would cause discriminationon the part of intermittent workers contrary to the intention of the parties that mutually agreed inincorporating the questioned provisions in the 1989 CBA.chanroblesvirtualawlibrary chanroblesvirtual law library

Public respondent correctly observed that the parties to the CBA clearly intended the same sick leaveprivilege to be accorded the intermittent workers in the same way that they are both given the sametreatment with respect to vacation leaves - non-commutable and non-cumulative. If they are treatedequally with respect to vacation leave privileges, with more reason should they be on par with eachother with respect to sick leave privileges. 9Besides, if the intention were otherwise, during itsrenegotiation, why did not the parties expressly stipulate in the 1989 CBA that regular intermittentworkers are not entitled to commutation of the unenjoyed portion of their sick leave with paybenefits? chanroblesvirtual law library

Whatever doubt there may have been early on was clearly obliterated when petitioner-company

recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyedportion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 untilthree (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of commutation or conversion to cash, being an existing benefit, the petitioner-company may notunilaterally withdraw, or diminish such benefits. 10 It is a fact that petitioner-company had, on severalinstances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leavebenefits of some intermittent workers. 11 Under the circumstances, these may be deemed to haveripened into company practice or policy which cannot be peremptorily withdrawn. 12

chanroblesvirtual law library

Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the

commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in hisdecision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the hereinpublic respondent is the necessary consequence of the exercise of his arbitral power as VoluntaryArbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arisingfrom the interpretation or implementation of the Collective Bargaining Agreement." We, therefore, findthat no grave abuse of discretion was committed by public respondent in issuing the award (decision).Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted withand is absolutely correct.chanroblesvirtualawlibrary chanroblesvirtual law library

WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of publicrespondent dated September 10, 1991 is hereby AFFIRMED. No costs.chanroblesvirtualawlibrary chanroblesvirtual law library

6. PNOC ENERGY DEVELOPMENT CORPORATION VS. NLRC

In June 1985, Danilo Mercado was dismissed by PNOC-Energy Development Corporation (PNOC-EDC) due

to serious acts of dishonesty allegedly committed by Mercado. Mercado then filed a complaint for illegal

dismissal against PNOC-EDC. PNOC-EDC filed a motion to dismiss on the ground that the Labor arbiter

and/or the National Labor Relations Commission (NLRC) has no jurisdiction over PNOC-EDC because it is

a subsidiary of the Philippine National Oil Company (PNOC), a government owned or controlled

corporation, and as a subsidiary, it is also a GOCC and as such, the proper forum for Mercado’s suit is the

Civil Service Commission.

ISSUE: Whether or not PBOC-EDC is correct.



HELD: No. The issue in this case has been decided already in the case of PNOC-EDC vs Leogardo . It is

true that PNOC is a GOCC and that PNOC-EDC, being a subsidiary of PNOC, is likewise a GOCC. It is also

true that under the 1973 Constitution, all GOCCs are under the jurisdiction of the CSC. However, the

1987 Constitution change all this as it now provides:

The Civil Service embraces all branches, subdivisions, instrumentalities and agencies of the

Government, including government-owned or controlled corporations with original charters.

(Article IX-B, Section 2 [1]) [emphasis supplied]

Hence, the above provision sets the rule that the mere fact that a corporation is a GOCC does not

automatically place it under the CSC. Under this provision, the test in determining whether a GOCC is

subject to the Civil Service Law is the manner of its creation such that government corporations created

by special charter are subject to its provisions while those incorporated under the general Corporation

Law are not within its coverage.

In the case at bar, PNOC-EDC, even though it is a GOCC, was incorporated under the general Corporation

Law – it does not have its own charter, hence, it is under the jurisdiction of the MOLE.

Even though the facts of this case occurred while the 1973 Constitution was still in force, the provisions

of the 1987 Constitution regarding the legal matters [procedural aspect] are applicable because it is the

law in force at the time of the decision.

7. EBRO VS. NLRC

This is a petition for certiorari to set aside the order dated October 13,1992 and the resolution dated March 3, 1993 of the National Labor RelationsCommission (NLRC).[1]

The antecedent facts are as follows:

Private respondent International Catholic Migration Commission (ICMC) isa non-profit agency engaged in international humanitarian and voluntary work.It is duly registered with the United Nations Economic and Social Council(ECOSOC) and enjoys Consultative Status, Category II. It was one of theagencies accredited by the Philippine government to operate the refugeeprocessing center at Sabang, Morong, Bataan.

On June 24, 1985, private respondent ICMC employed petitioner Jose G.Ebro III to teach ―English as a Second Language and Cultural OrientationTraining Program‖ at the refugee processing center. The employment contractprovided in pertinent part:

Salary: Your monthly salary for the first 6 months probationary period is P3,155.00

inclusive of cost of living allowance. Upon being made regular after successful

completion of the six (6) months probationary period your monthly salary will be

adjusted to P3,445.00 inclusive of cost of living allowance.

http://www.uberdigests.info/2012/12/pnoc-energy-development-corporation-vs-vicente-leogardo/



http://sc.judiciary.gov.ph/jurisprudence/1996/sept1996/110187.htm#_edn1







. . . .

Termination of Employment: Employment may be terminated by ICMC in any of the

following situations:

a. A cessation or reduction in program operation, by Department of State order,

b. Unsuccessful completion of probationary period, at any time during that period,

c. For due cause, in cases of violation of provisions detailed in ICMC Personnel

Policies and administrative regulations,

d. For just and authorized causes expressly provided for or authorized by law,

e. For reasons of inadequate or deficient professional performance based on

relevant guidelines and procedures relating to the position,

f. In cases where, as a member of the PRPC community, ICMC is directed to

take action.

If either party wishes to terminate employment, a notice of two (2) weeks should be

given in writing to the other party.

After six months, ICMC notified petitioner that effective December 21,1985, the latter‘s services were terminated for his failure to meet the

requirements of ―1. classroom performance . . . up to the standards set in theGuide for Instruction; 2. regular attendance in the mandated teacher training,and in the scheduled team meetings, one-on-one conferences with thesupervisor, etc.; 3. compliance with ICMC and PRPC policies andprocedures.‖

On February 4, 1986, petitioner filed a complaint for illegal dismissal,unfair labor practice, underpayment of wages, accrued leave pay, 14th monthpay, damages, attorney‘s fees, and expenses of litigation. The complaint wasfiled against private respondents ICMC and its Project Director Jon Darrah,Personnel Officer Alex Dy-Reyes, Program Officer of the Cultural OrientationProgram Carrie Wilson, and Supervisor of the Cultural Orientation ProgramMarivic Soliven. Petitioner alleged that there was no objective evaluation of his performance to warrant his dismissal and that he should have beenconsidered a regular employee from the start because ICMC failed to acquainthim with the standards under which he must qualify as such. He prayed for reinstatement with backwages; P3,155.00 for probationary and P3,445.00 for regular salary adjustments; value of lodging or dormitory privileges; cost of



insurance coverage for group life, medical, death, dismemberment anddisability benefits; moral, and exemplary, and nominal damages plus intereston the above claims with attorney‘s fees.

Answering the complaint, ICMC claimed that petitioner failed to qualify for

regular employment because he showed no interest in improving hisprofessional performance both in and out of the classroom after he had beenperiodically evaluated (observation summary from August 20 to October 2,1985 and evaluation summary of December 14, 1985); that petitioner waspaid his salary up to December 31, 1985, two weeks pay in lieu of notice, and14th month pay pro-rata; and that his accrued leave balance had alreadybeen converted to cash.

After the parties had formally offered their evidence, private respondentssubmitted their memorandum on July 31, 1989 in which, among other things,they invoked ICMC‘s diplomatic immunity on the basis of the Memorandum of

Agreement signed on July 15, 1988 between the Philippine government andICMC.

The Labor Arbiter held that petitioner‘s legal immunity under theMemorandum could not be given retroactive effect since ―[that would] deprivecomplainant‘s property right without due process and impair the obligation of contract of employment.‖ In addition, he expressed doubt about petitioner‘slegal immunity on the ground that it was provided for by agreement and notthrough an act of Congress. Accordingly, the Labor Arbiter ordered ICMC toreinstate petitioner as regular teacher without loss of seniority rights and to

pay him one year backwages, other benefits, and ten percent attorney‘s feesfor a total sum of P70,944.85.

Both parties appealed to the NLRC. On August 13, 1990, petitioner movedto dismiss private respondent‘s appeal because of the latter‘s fai lure to post acash/surety bond. In its order of October 13, 1992, however, the NLRCordered the case dismissed on the ground that, under the Memorandum of

Agreement between the Philippine government and ICMC, the latter wasimmune from suit.

Petitioner moved for reconsideration, arguing among other things, that the

Memorandum of Agreement could not be given retroactive effect and that inany case ICMC had waived its immunity by consenting to be sued.

However, petitioner‘s motion was denied by the NLRC in its resolutiondated March 4, 1993.[2] Hence this petition presenting the following issues:







a) Whether private respondents have perfected their appeal and whether public

respondent may, on appeal, entertain or review private respondents’ claim of

immunity;

b) Whether a mere Memorandum of Agreement entered into by the Secretary of

Foreign Affairs with respondent International Catholic Migration Commission,which is not a law, can divest the Labor Arbiter and the National Labor

Relations Commission of their jurisdiction over the subject matter and over the

persons of respondents in the pending case;

c) Whether the Memorandum of Agreement may be given retroactive effect;

d) Whether the dismissal of the case based on the claim of immunity will deprive

petitioner of his property without due process of law;

e) Whether the dismissal of the case based on the claim of immunity will result inthe impairment of the obligations assumed by respondent International Catholic

Migration Commission under its contract of employment with petitioner;

f) Assuming for the sake of argument that the Memorandum of Agreement has

validly conferred immunity on private respondents, whether they may be

considered as having waived such immunity;

g) Upon the same consideration, whether private respondents may be considered

estopped from claiming immunity. The basic issue in this case is whether the

Memorandum of Agreement executed on July 15, 1988 gave ICMC immunityfrom suit. The Court holds it did. Consequently, both the Labor Arbiter and

the NLRC had no jurisdiction over the case.

First . Petitioner‘s contention that the Memorandum of Agreement is not anact of Congress which is needed to ―repeal or supersede‖ the provision of theLabor Code on the jurisdiction of the NLRC and of the Labor Arbiter isuntenable. The grant of immunity to ICMC is in virtue of the Convention on thePrivileges and Immunities of Specialized Agencies of the United Nations,adopted by the UN General Assembly on November 21, 1947, and concurred

in by the Philippine Senate on May 17, 1949. This Convention has the forceand effect of law, considering that under the Constitution,the Philippinesadopts the generally accepted principles of international law aspart of the law of the land.[3] The Memorandum of Agreement in questionmerely carries out the Philippine government‘s obligation under theConvention. In International Catholic Migration Commission v. Calleja,[4] thisCourt explained the grant of immunity to ICMC in this wise:











The grant of immunity from local jurisdiction to ICMC . . . is clearly necessitated by

their international character and respective purposes. The objective is to avoid the

danger of partiality and interference by the host country in their internal workings.

The exercise of jurisdiction by the Department of Labor in these instances would

defeat the very purpose of immunity, which is to shield the affairs of international

organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member States of the organization, and

to ensure the unhampered performance of their functions.

Second . Petitioner argues that in any case ICMC‘s immunity can not applybecause this case was filed below before the signing of the Memorandum onJuly 15, 1988. Petitioner cites in support the statement of this Court in theaforesaid case of International Catholic Migration Commission v.Calleja,[5] distinguishing that case from an earlier case

[6]

also involving ICMC,

wherein the NLRC, as well as the Court, took cognizance of a complaintagainst ICMC for payment of salary for the unexpired portion of a six-monthprobationary employment. The Court held:[7]

[N]ot only did the facts of said controversy [ICMC v. NLRC, 169 SCRA 606 (1989)]

occur between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status

of a specialized agency with corresponding immunities, but also because ICMC in

that case did not invoke its immunity and, therefore, may be deemed to have waived

it, assuming that during that period (1983-1985) it was tacitly recognized as enjoying

such immunity.

Here, according to petitioner, his employment and subsequent dismissalby ICMC took place in 1985, prior to the execution of the Memorandum of

Agreement on July 15, 1988 and, therefore, like in the 1989 ICMC case, theMemorandum should not be made to apply to him.

This Court did not really reject ICMC‘s invocation of immunity for causes of action accruing prior to the execution of the Memorandum. It left open thepossibility that ICMC may have been tacitly enjoying diplomatic immunitybeforehand. It is important to note that in the 1989 case ICMC did not invokeits immunity notwithstanding the fact that the Memorandum took effect while

the case was pending before the Court.[8]

Moreover, in the 1990 ICMC case, ICMC‘s immunity was in fact uphelddespite the fact that at the time the case arose, the Memorandum recognizingICMC‘s status as a specialized agency had not yet been signed. In that case,the petition for certification election among its rank and file employees wasfiled on July 14, 1986 and the order directing a certification election was madewhen ICMC‘s request for recognition as a specialized agency was still



















pending in the Department of Foreign Affairs. Yet this Court held that thesubsequent execution of the Memorandum was a bar to the granting of thepetition for certification election.

The scope of immunity of the ICMC contained in the Convention on the

Privileges and Immunities of the Specialized Agencies of the United Nations isinstructive. Art. III, § 4 of the Convention provides for immunity from ―everyform of legal process.‖ Thus, even if private respondents had been servedsummons and subpoenas prior to the execution of the Memorandum, they, asofficers of ICMC, can claim immunity under the same in order to preventenforcement of an adverse judgment, since a writ of execution is ―a legalprocess‖ within the meaning of Article III, § 4.[9]

Third . Another question is whether ICMC can invoke its immunity becauseit only did so in its memorandum before the Labor Arbiter. It is contended thatICMC waived its immunity in any event. Art. III, § 4 of the Convention on thePrivileges and Immunities of the Specialized Agencies of the United Nationsrequires, however, that the waiver of the privilege must be express. There wasno such waiver of immunity in this case. Nor can ICMC be estopped fromclaiming diplomatic immunity since estoppel does not operate to confer

jurisdiction to a tribunal that has none over a cause of action.[10]

Fourth. Finally, neither can it be said that recognition of ICMC‘s immunityfrom suit deprives petitioner of due process. As pointed out in International Catholic Migration Commission v. Calleja,[11]petitioner is not exactly withoutremedy for whatever violation of rights it may have suffered for the following

reason:

Section 31 of the Convention on the Privileges and Immunities of the Specialized

Agencies of the United Nations provides that ―each specialized agency shall make

provision for appropriate modes of settlement of: (a) disputes arising out of contracts

or other disputes of private character to which the specialized agency is a

party.‖ Moreover, pursuant to Article IV of the Memorandum of Agreement between

ICMC and the Philippine Government, whenever there is any abuse of privilege by

ICMC, the Government is free to withdraw the privileges and immunities accorded.

Thus:

Article IV. Cooperation with Government Authorities. — 1. The Commission shall

cooperate at all times with the appropriate authorities of the Government to ensure the

observance of Philippine laws, rules and regulations, facilitate the proper

administration of justice and prevent the occurrences of any abuse of the privileges

and immunities granted its officials and alien employees in Article III of this

Agreement to the Commission.














2. In the event that the Government determines that there has been an abuse of the

privileges and immunities granted under this Agreement, consultations shall be held

between the Government and the Commission to determine whether any such abuse

has occurred and, if so, the Government shall withdraw the privileges and immunities

granted the Commission and its officials.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

8. UST VS. NLRC

9. MORENO VS. SAN SEBASTIAN COLLEGE

Assailed in this Petition for Review on Certiorar i1 under Rule 45 of the Rules of Court is the

Decision2 of the Court of Appeals dated 7 November 2006 in CA-G.R. SP No. 90083. The appellatecourt‘s Decision granted the Special Civil Action for Certiorari filed by respondent San SebastianCollege-Recoletos, Manila (SSC-R), and annulled the Decision3 dated 23 November 2004 and theResolution4 dated 31 March 2005 of the National Labor Relations Commission (NLRC) in NLRC-NCR-CA No. 037175-03.

The undisputed facts of the case are as follows:

Respondent SSC-R is a domestic corporation and an educational institution duly registered under the laws of the Philippines, located in C. M. Recto Avenue, Quiapo, Manila.

On 16 January 1999, SSC-R employed petitioner Jackqui R. Moreno (Moreno) as a teaching fellow.

On 23 October 2000, Moreno was appointed as a full-time college faculty member .5 Then, on 22October 2001, Moreno became a member of the permanent college faculty.6 She was also offeredthe chairmanship7 of the Business Finance and Accountancy Department of her college on 13September 2002.

Subsequently, reports and rumors of Moreno‘s unauthorized external teaching engagementsallegedly circulated and reached SSC-R. The Human Resource Department of the school thereafter conducted a formal investigation on the said activities. On 24 October 2002, the Departmentsubmitted its report,8 which stated that Moreno indeed had unauthorized teaching assignments at theCentro Escolar University during the first semester of the School Year 2002-2003, and at the Collegeof the Holy Spirit, Manila, during the School Years 2000-2001, 2001-2002 and the first semester of School Year 2002-2003.

On 27 October 2002, Moreno received a memorandum9 from the Dean of her college, requiring her to explain the reports regarding her unauthorized teaching engagements. The said activitiesallegedly violated Section 2.2 of Article II of SSC-R‘s Faculty Manual,10 which reads:

Administrative permission is required for all full-time faculty members to teach part-time elsewhere. If ever teaching permission is granted, the total teaching load should not exceed the maximum allowedby CHED rules and regulations. Faculty members are required to report all other teachingassignments elsewhere within two (2) weeks from start of the classes every semester.

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On 28 October 2002, Moreno sent a written explanation11 in which she admitted her failure to secureany written permission before she taught in other schools. Moreno explained that the said teachingengagements were merely transitory in nature as the aforesaid schools urgently needed lecturersand that she was no longer connected with them. Moreno further stated that it was never her intention to jeopardize her work in SSC-R and that she merely wanted to improve her family‘s poor financial conditions.

A Special Grievance Committee was then formed in order to investigate and makerecommendations regarding Moreno‘s case. The said committee was composed of Dean AbrahamEspejo of the College of Law, as chairman, and Messrs. Dindo Bunag and Ramon Montierro, asmembers.

In a letter 12 dated 11 November 2002, the grievance committee required Moreno to answer thefollowing series of questions concerning her case, to wit:

1. Did you teach in other schools without first obtaining the consent of your superiors in SSC-R?

2. Did you ever go beyond the maximum limit for an outside load?

3. Did you ever truthfully disclose completely to your superiors at SSC-R any outside Load?

4. Do you deny teaching in CEU?

5. Do you deny teaching at Holy Spirit?

Moreno answered the above queries in a letter 13 dated 12 November 2002. Moreno admitted she didnot formally disclose her teaching loads at the College of the Holy Spirit and at the Centro Escolar University for fear that the priest administrators may no longer grant her permission, as prior similar requests had already been declined; that the Dean of her college was aware of her external teaching

loads; that she went beyond the maximum limit for an outside load in the School Years 2000 until2002, because she needed to support her mother and sister, her masteral studies, and her sister‘scanteen business, all of which coincided with the payment of the emergency loan from the SSC-Radministrators that paid for her mother‘s illness; that she did not deny teaching part-time in theaforementioned schools; and that she did not wish to resign because she felt she deserved a secondchance.

On the same day that Moreno sent her letter, the grievance committee issued its resolution,14 whichunanimously found that she violated the prohibition against a full-time faculty having an unauthorizedexternal teaching load. The majority of the grievance committee members recommended Moreno‘sdismissal from employment in accordance with the school manual, but Dean Espejo dissented andcalled only for a suspension for one semester.

Thereafter, SSC-R sent a letter 15 to Moreno that was signed by the College President, informing her that they had approved and adopted the findings and recommendations of the grievance committeeand, in accordance therewith, her employment was to be terminated effective 16 November 2002.

Moreno thus instituted with the NLRC a complaint for illegal termination against SSC-R, docketed asNLRC-NCR Case No. 11-10077-02, seeking reinstatement, money claims, backwages, separationpay if reinstatement is not viable, and attorney‘s fees.






















In the Decision16 dated 30 April 2003, Labor Arbiter Veneranda C. Guerrero dism issed Moreno‘scomplaint for lack of merit, thus:

WHEREFORE, premises considered, judgment is hereby rendered dismissing the complaint for illegal dismissal for lack of merit. Respondent San Sebastian College-Recoletos is hereby ordered topay complainant Jackqui R. Moreno the amount of NINE THOUSAND ONE HUNDRED FORTY

THREE AND 75/100 PESOS (P9,143.75) representing her unpaid salaries.

All other claims are DISMISSED for lack of merit.

The Labor Arbiter ruled that Moreno‘s due acceptance of the appointment as a member of thePermanent Faculty meant that she was bound to the condition therein not to accept any outsideteaching assignments without permission. Moreno‘s admission of her violation was likewise said tohave rendered her liable for the penalty of dismissal as provided for in the SSC-R Faculty Manual.The Labor Arbiter held that SSC-R had adequately discharged the burden of proof imposed by law indismissing Moreno. Except for her unpaid salary for fifteen (15) days, which was not controverted,the rest of Moreno‘s money claims were denied for being unsubstantiated.

On appeal by Moreno, the NLRC reversed the rulings of the Labor Arbiter in a Decision dated 23November 2004, the relevant portion of which reads:

The four (4) applications for leave of absence adduced in evidence by the respondent [SSC-R] areall undated. If the absences indicated in the said documents were the only absences incurred by thecomplainant [Moreno] in her four-year tenure, it cannot be said that she had a poor attendance. Infact, the contrary would be true. On the other hand, it is conceded that in the yearly evaluation of theperformance of teachers, she consistently landed among the five best teachers. Thus, neither can itbe said that her moonlighting activities adversely affected her work performance. Likewise, theundisputed fact that she was asked to be the chairman of Business Finance and Accountancy for SY2002-2003 should be considered. This last circumstance could only mean that she was very good ather job.

There are other extenuating circumstances that should have been taken into consideration indetermining the propriety of the penalty of dismissal meted upon the complainant. Thesecircumstances are the fact that it was her first offense in four years of unblemished employment, andthe fact that she candidly admitted her fault. x x x

Moreover, it is settled that the existence of some rules agreed upon between the employer andemployee on the subject of dismissal cannot preclude the State from inquiring whether its rigidapplication would work too harshly on the employee. (Gelmart Industries Phils. Inc. vs. NLRC, 176SCRA 295 cited in Caltex Refinery Employees Association vs. NLRC, 246 SCRA 271).

Thus, in the instant case, it must be concluded that the penalty of dismissal meted upon thecomplainant [Moreno] was too harsh and unreasonable under the circumstances. At most, a one-

year suspension with a warning against the repetition of the same offense would have been more inkeeping with the generally accepted principles of law.

WHEREFORE, the decision appealed from is hereby REVERSED. The respondent [SSC-R] ishereby ordered to REINSTATE the complainant [Moreno] to her former position, and to pay her fullbackwages counted from November 16, 2003 up to the date of her actual reinstatement.17

SSC-R filed a Motion for Reconsideration18 of the NLRC Decision, which was denied for lack of meritin a Resolution19 dated 31 March 2005.1avvphi1

















Thus, SSC-R instituted with the Court of Appeals a Petition for Certiorari under Rule 65 of the Rulesof Court, with a prayer for the issuance of a temporary restraining order and/or a writ of preliminaryinjunction,20 docketed as CA-G.R. SP No. 90083, alleging grave abuse of discretion on the part of the NLRC.

In a Decision21 dated 7 November 2006, the appellate court granted the petition and annulled the

Decision dated 23 November 2004, and Resolution dated 31 March 2005 of the NLRC. In reinstatingthe Decision of the Labor Arbiter dated 30 April 2003, the Court of Appeals ruled in this wise:

In the case at bar, there is clearly grave abuse of discretion on the part of the NLRC when itreversed the Decision of the Labor Arbiter. Its conclusions are highly prejudicial to the interests of herein petitioner [SSC-R], considering the glaring infractions committed by private respondent[Moreno], which she even expressly admitted.

x x x x

"Willful disobedience of the employer‘s lawful orders, as a just cause for dismissal of an employee,envisages the concurrence of at least two (2) requisites: the employee‘s assailed conduct must have

been willful or intentional, the willfulness being characterized by a wrongful or perverse attitude; andthe order violated must have been reasonable, lawful, made known to the employee and mustpertain to the duties which he had been engaged to discharge.

The foregoing requisites are all present in this case. The prohibition against unauthorized outsideteaching engagements found in the Faculty Manual and in private respondent‘s [Moreno]appointment letter are deemed reasonable under the circumstances. In fact, the petitioner‘s [SSC -R]policy is actually permissive since it allows other teaching engagements so long as its presidentapproves of the same.

Concededly, this policy was made known to private respondent [Moreno] for as mentioned earlier, itis found not only in the Faculty Manual, but more importantly, it is explicitly stated in her appointmentletter. By her own admission, it cannot be clearer that, in spite of her knowledge thereof, privaterespondent [Moreno] willfully disobeyed the said prohibition. When she accepted the teachingopportunities offered to her by other schools and altogether concealed the same from the petitioner [SSC-R], she risked being administratively held liable therefor. Thus, the excuses she raised uponthe petitioner‘s [SSC-R] discovery of such concealment deserve scant consideration.

The policy is obviously in connection with the private respondent‘s [Moreno] duties as a facultymember. It is designed to ensure that the petitioner‘s [SSC-R] teaching staff is well fit to functionaccordingly, not only for its benefit, but chiefly, for the students who are under their care andinstruction. Private respondent [Moreno] argues that notwithstanding her violations, her commitments with petitioner [SSC-R] were never compromised. Be that as it may, this fact cannotabsolve her. She may be fit at the time when her infractions were revealed, but there is noassurance that her health would not deteriorate in time if she persists in carrying on a heavy

workload.

x x x x

WHEREFORE, the instant petition is GRANTED. The 23 November 2004 Decision and the 31March 2005 Resolution of the National Labor Relations Commission (Second Division) arehereby ANNULLED and SET ASIDE. The National Labor Relations Commission is permanentlyenjoined from executing its 31 March 2005 Resolution. The Decision of the Labor Arbiter dated 30

April 2003 is hereby REINSTATED and AFFIRMED.










thereby submitted herself to the corresponding penalty provided for in both the Faculty Manual andthe employment contract, which is termination for cause.

On the basis of the evidence on record, the Court finds that Moreno has indeed committedmisconduct against respondent SSC-R. Her admitted failure to obtain the required permission fromthe school before she engaged in external teaching engagements is a clear transgression of SSC-

R‘s policy. However, said misconduct falls below the required level of gravity that would warrantdismissal as a penalty.

Under Art. 282(a) of the Labor Code, willful disobedience of the em ployer‘s lawful orders as a justcause for termination of employment envisages the concurrence of at least two requisites: (1) theemployee‘s assailed conduct must have been willful or intentional, the willfulness beingcharacterized by a "wrongful and perverse attitude"; and (2) the order violated must have beenreasonable, lawful, made known to the employee and must pertain to the duties which he has beenengaged to discharge.27

Similarly, with respect to serious misconduct, the Court has already ruled in National Labor RelationsCommission v. Salgarino28 that:

Misconduct is defined as improper or wrong conduct. It is the transgression of some established anddefinite rule of action, a forbidden act, a dereliction of duty, willful in character and implieswrongful intent and not mere error of judgment. The misconduct to be serious within the meaningof the act must be of such a grave and aggravated character and not merely trivial or unimportant.Such misconduct, however serious, must nevertheless be in connection with the work of theemployee to constitute just cause from his separation.

In order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complainedof has violated some established rules or policies. It is equally important and required that the actor conduct must have been performed with wrongful intent. (Emphasis ours.)

After examining the records of the case, the Court finds that SSC-R miserably failed to prove thatMoreno‘s misconduct was induced by a perverse and wrongful intent as required in Art. 282(a) of theLabor Code. SSC-R merely anchored Moreno‘s alleged bad faith on the fact that she had fullknowledge of the policy that was violated and that it was relatively easy for her to secure therequired permission before she taught in other schools. This posture is utterly lacking.

It bears repeating that it is the employer that has the burden of proving the lawful cause sustainingthe dismissal of the employee. Even equipoise is not enough; the employer must affirmatively showrationally adequate evidence that the dismissal was for a justifiable cause.29

In the present case, SSC-R failed to adduce any concrete evidence to prove that Moreno indeedharbored perverse or corrupt motivations in violating the aforesaid school policy. In her letter of

explanation to the grievance committee dated 12 November 2002, Moreno explained in detail her role as the breadwinner and the grave financial conditions of her family. As previous requests for permission had already been denied, Moreno was thus prompted to engage in illicit teachingactivities in other schools, as she desperately needed them to augment her income. Instead of submitting controverting evidence, SSC-R simply dismissed the above statements as nothing morethan a "lame excuse"30 and are "clearly an afterthought,"31 considering that no evidence was offeredto support them and that Moreno‘s salary was allegedly one of the highest among the universities inthe country.























In addition, even if dismissal for cause is the prescribed penalty for the misconduct hereincommitted, in accordance with the SSC-R Faculty Manual and Moreno‘s employment contract, theCourt finds the same to be disproportionate to the offense.

Time and again, we have ruled that while an employer enjoys a wide latitude of discretion in thepromulgation of policies, rules and regulations on work-related activities of the employees, those

directives, however, must always be fair and reasonable, and the corresponding penalties, whenprescribed, must be commensurate to the offense involved and to the degree of the infraction.32

Special circumstances were present in the case at bar which should have been properly taken intoaccount in the imposition of the appropriate penalty. Moreno, in this case, had readily admitted her misconduct, which was undisputedly the first she has ever committed against the school. Her teaching abilities and administrative skills remained apparently unaffected by her external teachingengagements, as she was found by the grievance committee to be one of the better professors inthe Accounting Department33 and she was even offered the Chairmanship of her college.34 Also, thefact that Moreno merely wanted to alleviate her family‘s poor financial conditions is a justification thatSSC-R failed to refute. SSC-R likewise failed to prove any resulting material damage or prejudice onits part as a consequence of Moreno‘s misconduct. The claim by SSC-R that the imposition of alesser penalty would set a bad precedent35 for the other faculty members who comply with the schoolpolicies is too speculative for this Court to even consider.

Finally, the Court notes that in Moreno‘s contract of employment,36 one of the provisions thereincategorically stated that should a violation of any of the terms and conditions thereof be committed,the penalty that will be imposed would either be suspension or dismissal from employment. Thus,contrary to its position from the beginning, SSC-R clearly had the discretion to impose a lighter penalty of suspension and was not at all compelled to dismiss Moreno under the circumstances, justbecause the Faculty Manual said so.

With regard to the observance of procedural due process, neither of the parties has put the sameinto issue. Indeed, based on the evidence on record, Moreno was served with the required twinnotices and was afforded the opportunity to be heard. The first notice was embodied in the

memorandum37 dated 27 October 2002 sent by her College Dean, which required her to explain her unauthorized teaching assignments. The letter 38 by SSC-R that informed Moreno that her serviceswere being terminated effective 16 November 2002 constituted the second required notice. Morenowas also given the opportunity to explain her side when the special grievance committee asked her a series of questions pertaining to their investigation in a letter 39 dated 11 November 2002 and towhich she replied likewise through a letter 40 dated 12 November 2002.

In light of the foregoing, the Court holds that the dismissal of petitioner Moreno failed to comply withthe substantive aspect of due process. Despite SSC-R‘s observance of procedural due process, itnonetheless failed to discharge its burden of proving the legality of Moreno‘s termination fromemployment. Thus, the imposed penalty of dismissal is hereby declared as invalid.

In so ruling, this Court does not depreciate the misconduct committed by Moreno. Indeed, SSC-Rhas adequate reasons to impose sanctions on her. However, this should not be dismissal fromemployment. Because of the serious implications of this penalty, "our Labor Code decrees that anemployee cannot be dismissed, except for the most serious causes."41

Considering the presence of extenuating circumstances in the instant case, the Court deems itappropriate to impose the penalty of suspension of one (1) year on Moreno, to be counted from 16November 2002, the effective date of her illegal dismissal. However, given the period of time in










































which Moreno was actually prevented from working in the respondent school, the said suspensionshould already be deemed served.

Furthermore, the Court holds that Moreno should be reinstated to her former position, without loss of seniority rights and other privileges, but without payment of backwages.

As a general rule, the normal consequences of a finding that an employee has been illegallydismissed are, firstly, that the employee becomes entitled to reinstatement without loss of seniorityrights; and secondly, the payment of backwages corresponding to the period from his illegaldismissal up to his actual reinstatement. The two forms of relief are, however, distinct and separatefrom each other. Though the grant of reinstatement commonly carries with it an award of backwages, the appropriateness or non-availability of one does not carry with it theinappropriateness or non-availability of the other .42

In accordance with Durabuilt Recapping Plant & Co. v. National Labor Relations Commission,43 theCourt may not only mitigate, but also absolve entirely, the liability of the employer to pay backwageswhere good faith is evident. Likewise, backwages may be withheld from a dismissed employeewhere exceptional circumstances are availing.44

In the present case, the good faith of SSC-R is apparent. The termination of Moreno from her employment cannot be said to have been carried out in a malevolent, arbitrary or oppressivemanner. Indeed, the only mistake that the respondent school has committed was to strictly apply theprovisions of its Faculty Manual and its contract with Moreno without regard for the aforementionedspecial circumstances that were attendant in this case. Even then, Moreno‘s right to procedural dueprocess was fully respected, as she was given the required twin notices and an ample opportunity tobe heard. This fact was not even disputed by Moreno herself.

With respect to Moreno‘s claim for moral and exemplary damages, the same were never satisfactorily pleaded and substantiated.45 Thus, they are hereby denied. Neither is Moreno entitledto the award of the monetary claims46 in her petition, as no basis and proof for the grant thereof wereever adduced.

The Court cannot likewise award attorney‘s fees to Moreno in view of the above-mentioned finding of good faith on the part of SSC-R47. It is a well-settled principle that even if a claimant is compelled tolitigate with third persons or to incur expenses to protect the claimant‘s rights, attorney‘s fees maystill not be awarded where no sufficient showing of bad faith could be reflected in a party‘spersistence in a case other than an erroneous conviction of the righteousness of his cause.48

WHEREFORE, the Petition for Review is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No 90083 dated 7 November 2006 is hereby REVERSED. Respondent San SebastianCollege-Recoletos, Manila, is hereby ordered to reinstate Petitioner Jackqui R. Moreno without lossof seniority rights and other privileges. No pronouncement as to cost.

SO ORDERED.

10, PALOMA VS. NLRC

Before us are these two consolidated petitions for review under Rule 45 separately interposed byRicardo G. Paloma and Philippine Airlines, Inc. (PAL) to nullify and set aside the AmendedDecision1 dated May 31, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 56429, as effectivelyreiterated in its Resolution2 of January 14, 2003.




















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The Facts

Paloma worked with PAL from September 1957, rising from the ranks to retire, after 35 years of continuous service, as senior vice president for finance. In March 1992, or some nine (9) monthsbefore Paloma retired on November 30, 1992, PAL was privatized.

By way of post-employment benefits, PAL paid Paloma the total amount of PhP 5,163,325.64 whichrepresented his separation/retirement gratuity and accrued vacation leave pay. For the benefits thusreceived, Paloma signed a document denominated Release and Quitclaim3 but inscribed thefollowing reservation therein: "Without prejudice to my claim for further leave benefits embodied inmy aide memoire transmitted to Mr. Roberto Anonas covered by my 27 Nov. 1992 letter x x x."

The leave benefits Paloma claimed being entitled to refer to his 450-day accrued sick leave creditswhich PAL allegedly only paid the equivalent of 18 days. He anchored his entitlement on ExecutiveOrder No. (EO) 10774dated January 9, 1986, and his having accumulated a certain number of daysof sick leave credits, as acknowledged in a letter of Alvia R. Leaño, then an administrative assistantin PAL. Leaño‘s letter dated November 12, 1992 pertinently reads:

At your request, we are pleased to confirm herewith the balance of your sick leave credits as theyappear in our records: 230 days.

According to our existing policy, an employee is entitled to accumulate sick leave with pay only up toa maximum of 230 days.

Had there been no ceiling as mandated by Company policy, your sick leave credits would havetotaled 450 days to date.5

Answering Paloma‘s written demands for conversion to cash of his accrued sick leave credits, PALasserted having paid all of Paloma‘s commutable sick leave credits due him pursuant to companypolicy made applicable to PAL officers starting 1990.

The company leave policy adverted to grants PAL‘s regular ground personnel a graduated sick leavebenefits, those having rendered at least 25 years of service being entitled to 20 days of sick leave for every year of service. An employee, under the policy, may accumulate sick leaves with pay up to230 days. Subject to defined qualifications, sick leave credits in excess of 230 days shall becommutable to cash at the employee‘s option and shall be paid in lump sum on or before May 31stof the following year they were earned.6 Per PAL‘s records, Paloma appears to have, for the periodfrom 1990 to 1992, commuted 58 days of his sick leave credits, broken down as follows: 20 dayseach in 1990 and 1991 and 18 days in 1992.

Subsequently, Paloma filed before the Arbitration Branch of the National Labor RelationsCommission (NLRC) a Complaint7 for Commutation of Accrued Sick Leaves Totaling 392 days. Inthe complaint, docketed as NLRC-NCR-Case No. 00-08-05792-94, Paloma alleged having accrued

sick leave credits of 450 days commutable upon his retirement pursuant to EO 1077 which allowsretiring government employees to commute, without limit, all his accrued vacation and sick leavecredits. And of the 450-day credit, Paloma added, he had commuted only 58 days, leaving him abalance of 392 days of accrued sick leave credits for commutation.

Ruling of the Labor Arbiter





















Issues having been joined with the filing by the parties of their respective position papers ,8 the labor arbiter rendered on June 30, 1995 a Decision9 dispositively reading:

WHEREFORE, premises considered, respondent PHILIPPINE AIRLINE[S], INC. is hereby orderedto pay within ten (10) days from receipt hereof herein complainant Ricardo G. Paloma, the sum of Six Hundred Seventy Five Thousand Pesos (P675,000.00) representing his one Hundred sixty two

days [162] accumulated sick leave credits, plus ten (10%) percent attorney‘s fees of P67,500.00, or a total sum of P742,500.00.

SO ORDERED.

The labor arbiter held that PAL is not covered by the civil service system and, accordingly, itsemployees, like Paloma, cannot avail themselves of the beneficent provision of EO 1077. Thisexecutive issuance, per the labor arbiter‘s decision, applies only to government officers andemployees covered by the civil service, exclusive of the members of the judiciary whose leave andretirement system is covered by a special law.

However, the labor arbiter ruled that Paloma is entitled to a commutation of his alternative claim for

202 accrued sick leave credits less 40 days for 1990 and 1991. Thus, the grant of commutation for 162 accrued leave credits.

Both parties appealed10 the decision of the labor arbiter to the NLRC.

Ruling of the NLRC in NLRC NCR CA No. 009652-95(NLRC-NCR-Case No. 00-08-05792-94)

On November 26, 1997, the First Division of the NLRC rendered a Decision affirming that of thelabor arbiter, thus:

WHEREFORE, as recommended, both appeals are DISMISSED. The decision of Labor Arbiter

Felipe T. Garduque II dated June 30, 1995 is AFFIRMED.

SO ORDERED.11

Both parties moved for reconsideration. In its Resolution of November 10, 1999, the NLRC, findingPaloma to have, upon his retirement, commutable accumulated sick leave credits of 230 days,modified its earlier decision, disposing as follows:

In view of all the foregoing, our decision dated November 26, 1997, be modified by increasing thesick leave benefits of complainant to be commuted to cash from 162 days to 230 days.

SO ORDERED.12

From the above modificatory resolution of the NLRC, PAL went to the CA on a petition for certiorariunder Rule 65, the recourse docketed as CA-G.R. SP No. 56429.

Ruling of the CA in its April 28, 2000 Decision

By a Decision dated April 28, 2000, the CA found for PAL, thus:






















WHEREFORE, the petition is granted. Public respondent‘s November 10, 1999 Resolution is setaside. And the complaint of Ricardo Paloma is hereby DISMISSED. Without costs.

SO ORDERED.13

In time, Paloma sought reconsideration.14

The May 31, 2001 Amended Decision

On May 31, 2001, the CA issued the assailed Amended Decision reversing its April 28, 2000Decision. The fallo of the Amended Decision reads:

WHEREFORE, premises considered, our Judgment, dated 28 April 2000 is hereby vacated and, setaside, and another one entered reinstating the Resolution, dated 10 November 1999, issued by thepublic respondent National Labor Relations Commission in NLRC NCR Case No. 00-08-05792-94[NLRC NCR CA No. 009652-95], entitled Ricardo G. Paloma v. Philippine Airlines, Incorporated, withthe only modification that the total sums granted by Labor Arbiter Felipe T. Garduque II(P742,500.00, inclusive of the ten percent (10%) attorney‘s fees), as affirmed by public respondent

National Labor Relations Commission, First Division, in said NLRC Case No. 00-08-05792-94, shallearn legal interest from the date of the institution of the complaint until fully paid/discharged. (Art.2212, New Civil Code).

SO ORDERED.15

Justifying its amendatory action, the CA stated that EO 1077 applies to PAL and necessarily toPaloma on the following rationale: Section 2(1) of Article IX(B) of the 1987 Constitution appliesprospectively and, thus, the expressed limitation therein on the applicability of the civil service lawonly to government-owned and controlled corporations (GOCCs) with original charters does notpreclude the applicability of EO 1077 to PAL and its then employees. This conclusion, the CA added,becomes all the more pressing considering that PAL, at the time of the issuance of EO 1077, was

still a GOCC and that Paloma had already 29 years of service at that time. The appellate court alsostated that since PAL had then no existing retirement program, the provisions of EO 1077 shallserve as a retirement program for Paloma who had meanwhile acquired vested rights under the EOpursuant to Arts. 10016 and 28717 of the Labor Code.

Significantly, despite affirmatively positing the applicability of EO 1077, the Amended Decision stilldeferred to PAL‘s existing policy on the 230-day limit for accrued sick leave with pay that may becredited to its employees. Incongruously, while the CA reinstated the November 10, 1999 Resolutionof the NLRC, it decreed the implementation of the labor arbiter‘s Decision dated June 30, 1995. Asmay be recalled, the NLRC, in its November 10, 1999 Resolution, allowed a 230-day sick leavecommutation, up from the 162 days granted under the June 30, 1995 Decision of the labor arbiter.

Paloma immediately appealed the CA‘s Amended Decision via a Petition for Review on Certiorari

under Rule 45, docketed as G.R. No. 148415. On the other hand, PAL first sought reconsideration of the Amended Decision, coming to us after the CA, per its January 14, 2003 Resolution, denied thedesired reconsideration. In net effect then, PAL‘s Petition for Review on Certiorari, docketed as G.R.No. 156764, assails both the Amended Decision and Resolution of the CA.

The Issues

In G.R. No. 148415, Paloma raises the sole issue of:






















WHETHER OR NOT THE [CA], IN HOLDING THAT E.O. NO. 1077 IS APPLICABLE TOPETITIONER AND YET APPLYING COMPANY POLICY BY AWARDING THE CASH EQUIVALENTOF ONLY 162 DAYS SICK LEAVE CREDITS INSTEAD OF THE 450 DAYS SICK LEAVE CREDITSPETITIONER IS ENTITLED TO UNDER E.O. NO. 1077, DECIDED A QUESTION OF SUBSTANCEIN A MANNER CONTRARY TO LAW AND APPLICABLE JURISPRUDENCE.18

In G.R. No. 156764, PAL raises the following issues for our consideration:

1. May an employee of a non-government corporation [invoke EO] 1077 which the thenPresident Ferdinand E. Marcos issued on January 9, 1986, solely for the benefit of government officers and employees covered by the civil service?

2. Can a judicial body modify or alter a company policy by ordering the commutation of sickleave credits which, under company policy is non-commutable?19

The issues submitted boil down to the question of whether or not EO 1077, before PAL‘sprivatization, applies to its employees, and corollarily, whether or not Paloma is entitled to acommutation of his accrued sick leave credits. Subsumed to the main issue because EO 1077

applies only to government employees subject to civil service law is the question of whether or notPAL—which, as early as 1960 until its privatization, had been considered as a government-controlled corporation—is covered by and subject to the limitations peculiar under the civil servicesystem.

There can be no quibbling, as a preliminary consideration, about PAL having been incorporated as aprivate corporation whose controlling stocks were later acquired by the GSIS, which is wholly ownedby the government. Through the years before GSIS divested itself of its controlling interests over theairline, PAL was considered a government-controlled corporation, as we said as much in Phil. Air Lines Employees‘ Assn. v. Phil. Air Lines, Inc.,20 a case commenced in August 1958 and finallyresolved by the Court in 1964. The late Blas Ople, former Labor Secretary and a member of the1986 Constitutional Commission, described PAL and other like entities spun off from the GSIS as"second generation corporations functioning as private subsidiaries."21 Before the coming into force

of the 1973 Constitution, a subsidiary of a wholly government-owned corporation or a governmentcorporation with original charter was covered by the Labor Code. Following the ratification of the1973 Constitution, these subsidiaries theoretically came within the pale of the civil service on thestrength of this provision: "[T]he civil service embraces every branch, agency, subdivision andinstrumentality of the Government, including every [GOCC] x x x."22 Then came the 1987Constitution which contextually delimited the coverage of the civil service only to a GOCC "withoriginal charter."23

The Court’s Ruling

Considering the applicable law and jurisprudence in the light of the undisputed factual milieu of theinstant case, the setting aside of the assailed amended decision and resolution of the CA is

indicated.

Core Issue: Applicability of EO 1077

Insofar as relevant, EO 1077 dated January 9, 1986, entitled Revising the Computation of CreditableVacation and Sick Leaves of Government Officers and Employees, provides:

WHEREAS, under existing law and civil service regulations, the number of days of vacation and sickleaves creditable to a government officer or employee is limited to 300 days;



























WHEREAS, by special law, members of the judiciary are not subject to such restriction;

WHEREAS, it is the continuing policy of the government to institute to the extent possible a uniformand equitable system of compensation and benefits and to enhance the morale and performance inthe civil service.

x x x x

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of thepowers vested in me by the Constitution, do hereby order and direct the following:

Section 1. Any officer [or] employee of the government who retires or voluntary resigns or isseparated from the service through no fault of his own and whose leave benefits are not covered byspecial law, shall be entitled to the commutation of all the accumulated vacation and/or sick leavesto his credit, exclusive of Saturdays, Sundays, and holidays, without limitation as to the number of days of vacation and sick leaves that he may accumulate. (Emphasis supplied.)

Paloma maintains that he comes within the coverage of EO 1077, the same having been issued in

1986, before he severed official relations with PAL, and at a time when the applicable constitutionalprovision on the coverage of the civil service made no distinction between GOCCs with originalcharters and those without, like PAL which was incorporated under the Corporation Code. Implicit inPaloma‘s contention is the submission that he earned the bulk of his sick leave credits under theaegis of the 1973 Constitution when PAL, being then a government-controlled corporation, wasunder civil service coverage.

The contention is without merit.

PAL never ceased to be operated as a private corporation, and was not subjected to the CivilService Law

The Court can allow that PAL, during the period material, was a government-controlled corporationin the sense that the GSIS owned a controlling interest over its stocks. One stubborn fact, however,remains: Through the years, PAL functioned as a private corporation and managed as such for profit. Their personnel were never considered government employees. It may perhaps not be amissfor the Court to take judicial notice of the fact that the civil service law and rules and regulations havenot actually been made to apply to PAL and its employees. Of governing application to them was theLabor Code. Consider: (a) Even during the effectivity of the 1973 Constitution but prior to thepromulgation on January 17, 1985 of the decision in No. L-64313 entitled National HousingCorporation v. Juco,24 the Court no less recognized the applicability of the Labor Code to, and theauthority of the NLRC to exercise jurisdiction over, disputes involving discipline, personnelmovements, and dismissal in GOCCs, among them PAL;25 (b) Company policy and collectivebargaining agreements (CBAs), instead of the civil service law and rules, govern the terms andconditions of employment in PAL. In fact, Ople rhetorically asked how PAL can be covered by the

civil service law when, at one time, there were three (3) CBAs in PAL, one for the ground crew, onefor the flight attendants, and one for the pilots;26 and (c) When public sector unionism was just anabstract concept, labor unions in PAL with the right to engage in strike and other concerted activitieswere already active.27

Not to be overlooked of course is the 1964 case of Phil. Air Lines Employees’ Assn., wherein theCourt stated that "the Civil Service Law has not been actually applied to PAL."28























Given the foregoing considerations, Paloma cannot plausibly be accorded the benefits of EO 1077which, to stress, was issued to narrow the gap between the leave privileges between the membersof the judiciary, on one hand, and other government officers and employees in the civil service, onthe other. That PAL and Paloma may have, at a time, come within the embrace of the civil service byvirtue of the 1973 Constitution is of little moment at this juncture. As held in National ServiceCorporation v. National Labor Relations Commission (NASECO),29 the issue of whether or not a

given GOCC falls within the ambit of the civil service subject, vis-à-vis disputes respecting terms andconditions of employment, to the jurisdiction of the Civil Service Commission or the NLRC, as thecase may be, resolves itself into the question of which between the 1973 Constitution, which doesnot distinguish between a GOCC with or without an original charter, and the 1987 Constitution,which does, is in place. To borrow from the 1988 NASECO ruling, it is the 1987 Constitution, whichdelimits the coverage of the civil service, that should govern this case because it is the Constitutionin place at the time the case was decided, even if, incidentally, the cause of action accrued duringthe effectivity of the 1973 Constitution. This has been the consistent holding of the Court insubsequent cases involving GOCCs without original charters.30

It cannot be overemphasized that when Paloma filed his complaint for commutation of sick leavecredits, private interests already controlled, if not owned, PAL. Be this as it may, Paloma, when hefiled said complaint, cannot even assert being covered by the civil service and, hence, entitled to thebenefits attached to civil service employment, such as the right under EO 1077 to accumulate andcommute leave credits without limit. In all, then, Paloma, while with PAL, was never a governmentemployee covered by the civil service law. As such, he did not acquire any vested rights on theretirement benefits accorded by EO 1077.

Paloma not entitled to the benefits granted in EO 1077; existing company policy on the matter applies

What governs Paloma‘s entitlement to sick leave benefits and the computation and commutation of creditable benefits is not EO 1077, as the labor arbiter and originally the NLRC correctly held, butPAL‘s company policy on the matter which, as found below, took effect in 1990. The text of thepolicy is reproduced in the CA‘s April 28, 2000 Decision and sets out the following pertinent rules:

POLICY

Regular employees shall be entitled to a yearly period of sick leave with pay, the exact number of days to be determined on the basis of the employee‘s category and length of service in thecompany.

RULES

A. For ground personnel

2. Sick leave shall be granted only upon certification by a company physician that an employee is

incapable of discharging his duties due to illness or injury x x x.

x x x x

3. Sick leave entitlement accrues from the date of an employee‘s regular employment x x x.











In case of direct conversion from temporary/daily/project/contract to regular status, regular employment shall be deemed to have begun on the date of the employee‘s conversion as a regular employee.

x x x x

4. An employee may accumulate sick leave with pay up to Two Hundred Thirty (230) days;

An employee who has accumulated seventy-five (75) days sick leave credit at the end of each year may, at his option, commute seventy-five percent (75%) of his current sick leave entitlement to cashand the other twenty-five percent (25%) to be added to his accrued sick leave credits up to twohundred thirty (230) calendar days.

The seventy-five percent (75%) commutable to cash as above provided, shall be paid up in lumpsum on or before May 31st of the following year.

Sick leave credits in excess of two hundred thirty (230) days shall be commutable to cash atthe employee’s option, and shall be paid in lump sum on or before May 31st of the following

year it was earned.31

(Emphasis ours.)

As may be gathered from the records, accrued sick leave credits in excess of 230 days were not, if earned before 1990 when the above policy took effect, commutable to cash; they were simplyforfeited. Those earned after 1990, but still subject to the 230-day threshold rule, were commutableto cash to the extent of 75% of the employee‘s current entitlement, and payable on or before May31st of the following year, necessarily implying that the privilege to commute is time-bound.

It appears that Paloma had, as of 1990, more than 230 days of accrued sick leave credits. Followingcompany policy, Paloma was deemed to have forfeited the monetary value of his leave credits inexcess of the 230-day ceiling. Now, then, it is undisputed that he earned additional accrued sickleave credits of 20 days in 1990 and 1991 and 18 days in 1992, which he duly commuted pursuant

to company policy and received with the corresponding cash value. Therefore, PAL is correct incontending that Paloma had received whatever was due on the commutation of his accrued sickleave credits in excess of the 230 days limit, specifically the 58 days commutation for 1990, 1991,and 1992.

No commutation of 230 days accrued sick leave credits

The query that comes next is how the 230 days accrued sick leave credits Paloma undoubtedly hadwhen he retired are to be treated. Is this otherwise earned credits commutable to cash? Theseshould be answered in the negative.

The labor arbiter granted 162 days commutation, while the NLRC allowed the commutation of themaximum 230 days. The CA, while seemingly affirming the NLRC‘s grant of 230 days commutation,actually decreed a 162-day commutation. We cannot sustain any of the dispositions thus reached for lack of legal basis, for PAL‘s company policy upon which either disposition was predicated did notprovide for a commutation of the first 230 days accrued sick leave credits employees may have upontheir retirement. Hence, the NLRC and the CA, by their act of allowing commutation to cash, erredas they virtually read in the policy something not written or intended therein. Indeed, no law providesfor commutation of unused or accrued sick leave credits in the private sector. Commutation isallowed by way of voluntary endowment by an employer through a company policy or by a CBA.None of such medium presently obtains and it would be incongruous if the Court fills up the vacuum.







Confronted with a similar situation as depicted above, the Court, in Baltazar v. San Miguel Brewery,Inc ., declared as follows:

In connection with the question of whether or not appellee is entitled to the cash value of six monthsaccumulated sick leave, it appears that while under the last paragraph of Article 5 of appellant‘sRules and Regulations of the Health, Welfare and Retirement Plan (Exhibit 3), unused sick leave

may be accumulated up to a maximum of six months, the same is not commutable or payable incash upon the employee‘s option.

In our view, the only meaning and import of said rule and regulation is that if an employee does notchoose to enjoy his yearly sick leave of thirty days, he may accumulate such sick leave up to amaximum of six months and enjoy this six months sick leave at the end of the sixth year but may notcommute it to cash.32

1avv phi1

In fine, absent any provision in the applicable company policy authorizing the commutation of the230 days accrued sick leave credits existing upon retirement, Paloma may not, as a matter of enforceable right, insist on the commutation of his sick leave credits to cash.

As PAL‘s senior vice-president for finance upon his retirement, Paloma knew or at least ought tohave known the company policy on accrued sick leave credits and how it was being implemented.Had he acted on that knowledge in utmost good faith, these proceedings would have not come topass.

WHEREFORE, the petition under G.R. No. 148415 is hereby DISMISSED for lack of merit, while thepetition under G.R. No. 156764 is hereby GIVEN DUE COURSE. The Amended Decision dated May31, 2001 of the CA in CA-G.R. SP No. 56429 and its Resolution of January 14, 2003 are hereby

ANNULLED and SET ASIDE, and the CA Decision dated April 28, 2000 is accordinglyREINSTATED.

Costs against Ricardo G. Paloma.

SO ORDERED.

11. GSIS VS. RAOET

Facts:

The respondent‘s husband, Francisco, entered government service as an Engineer

Trainee at the National Irrigation Administration (NIA). He was then promoted to the

position of Engineer A – the position he held until his death on May 5, 2001.







In 2000, Francisco was diagnosed with Hypertension, Severe, Stage III, Coronary

Artery Disease, and he was confined at the Region I Medical Center from July 16 to July

25, 2000. As the GSIS considered this a work-related condition, Francisco was awarded

30 days Temporary Total Disability benefits, plus reimbursement of medical expenses

incurred during treatment.

On May 5, 2001, Francisco was rushed to the Dr. Marcelo M. Chan Memorial Hospital

because he was vomiting blood. He was pronounced dead on arrival at the hospital. His

death certificate listed the causes of his death as cardiac arrest.

The respondent, as widow, filed with the GSIS a claim for income benefits accruing from

the death of her husband, pursuant to Presidential Decree No. 626, as amended. The

GSIS denied the claim on the ground that the respondent did not submit any supporting

documents to show that Francisco‘s death was compensable. On appeal, the ECC

affirmed the findings of the GSIS since it could not determine if Francisco‘s death was

compensable due to the absence of documents supporting the respondent‘s claim.

The CA reversed the ECC decision. The appellate court held that while the Amended

Rules on Employees‘ Compensation does not list peptic ulcer as an occupational

disease, Francisco‘s death should be compensable since its immediate cause was

cardiac arrest.

Issue:

Is the CA correct in reversing the ruling of the ECC

Ruling:

Yes. To be entitled to compensation, a claimant must show that the sickness is either:

(1) a result of an occupational disease listed under Annex ―A‖ of the Amended Rules on

Employees‘ Compensation under the conditions Annex ―A‖ sets forth; or (2) if not so

listed, that the risk of contracting the disease is increased by the working conditions.

Based on Francisco‘s death certificate, the immediate cause of his death was cardiac

arrest; the antecedent cause was acute massive hemorrhage, and the underlying cause

was bleeding peptic ulcer disease.

In determining the compensability of an illness, the worker‘s employment need not be

the sole factor in the growth, development, or acceleration of a claimant‘s illness to

entitle him to the benefits provided for. It is enough that his employment contributed,

even if only in a small degree, to the development of the disease.



P.D. 626 is a social legislation whose primordial purpose is to provide meaningful

protection to the working class against the hazards of disability, illness, and other

contingencies resulting in loss of income. In employee compensation, persons charged

by law to carry out the Constitution‘s social justice objectives should adopt a liberal

attitude in deciding compensability claims and should not hesitate to grant

compensability where a reasonable measure of work-connection can be inferred. Only

this kind of interpretation can give meaning and substance to the law‘s compassionate

spirit as expressed in Article 4 of the Labor Code – that all doubts in the implementation

and interpretation of the provisions of the Labor Code, including their implementing

rules and regulations, should be resolved in favor of labor.

[1] 3. upon sign off from the vessel for medical treatment, the seafarer is entitled to

sickness allowance equivalent to his basic wage until he is declared fit to work or the

degree of permanent disability has been assessed by the company-designatedphysician but in no case shall this period exceed one-hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment medical

examination by a company-designated physician within three working days upon his

return except when he is physically incapacitated to do so, in which case a written

notice to the agency within the same period is deemed as compliance. Failure of the

seafarer to comply with the mandatory reporting requirement shall result in his forfeiture

of the right to claim the above benefits.

11. ARCO METAL PRODUCTS VS. SAMRM-NAFLU

TINGA, J .:

This treats of the Petition for Review1 of the Resolution2 and Decision3 of the Court of Appeals dated 9 December 2005 and 29 September 2005, respectively in CA-G.R. SP No.85089 entitled

Samahan ng mga Manggagawa sa Arco Metal-NAFLU (SAMARM-NAFLU) v. Arco Metal Products Co., Inc. and/or Mr. Salvador Uy/Accredited Voluntary Arbitrator Apron M.

Mangabat ,

4

which ruled that the 13

th

month pay, vacation leave and sick leave conversion tocash shall be paid in full to the employees of petitioner regardless of the actual service theyrendered within a year.

Petitioner is a company engaged in the manufacture of metal products, whereas respondentis the labor union of petitioner‘s rank and file employees. Sometime in December 2003,petitioner paid the 13th month pay, bonus, and leave encashment of three union members inamounts proportional to the service they actually rendered in a year, which is less than a full

http://www.lawphil.net/judjuris/juri2008/may2008/gr_170734_2008.html#fnt1















twelve (12) months. The employees were:

1. Rante Lamadrid Sickness 27 August 2003 to 27 February 2004

2. Alberto Gamban Suspension 10 June 2003 to 1 July 2003

3. Rodelio Collantes Sickness August 2003 to February 2004

Respondent protested the prorated scheme, claiming that on several occasions petitioner didnot prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. The payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and2004. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the NationalConciliation and Mediation Board (NCMB). The parties submitted the case for voluntaryarbitration.

The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that thegiving of the contested benefits in full, irrespective of the actual service rendered within oneyear has not ripened into a practice. He noted the affidavit of Joselito Baingan, manufacturinggroup head of petitioner, which states that the giving in full of the benefit was a mere error.He also interpreted the phrase "for each year of service" found in the pertinent CBAprovisions to mean that an employee must have rendered one year of service in order to beentitled to the full benefits provided in the CBA.5

Unsatisfied, respondent filed a Petition for Review6 under Rule 43 before the Court of Appeals, imputing serious error to Mangabat‘s conclusion. The Court of Appeals ruled thatthe CBA did not intend to foreclose the application of prorated payments of leave benefits tocovered employees. The appellate court found that petitioner, however, had an existingvoluntary practice of paying the aforesaid benefits in full to its employees, thereby rejectingthe claim that petitioner erred in paying full benefits to its seven employees. The appellatecourt noted that aside from the affidavit of petitioner‘s officer, it has not presented any

evidence in support of its position that it has no voluntary practice of granting the contestedbenefits in full and without regard to the service actually rendered within the year. It alsoquestioned why it took petitioner eleven (11) years before it was able to discover the allegederror. The dispositive portion of the court‘s decision reads:

WHEREFORE, premises considered, the instant petition is hereby GRANTED andthe Decision of Accredited Voluntary Arbiter Apron M. Mangabat in NCMB-NCR CaseNo. PM-12-345-03, dated June 18, 2004 is hereby AFFIRMED WITHMODIFICATION in that the 13th month pay, bonus, vacation leave and sick leaveconversions to cash shall be paid to the employees in full, irrespective of the actualservice rendered within a year .7

Petitioner moved for the reconsideration of the decision but its motion was denied, hence thispetition.

Petitioner submits that the Court of Appeals erred when it ruled that the grant of 13 th monthpay, bonus, and leave encashment in full regardless of actual service rendered constitutesvoluntary employer practice and, consequently, the prorated payment of the said benefitsdoes not constitute diminution of benefits under Article 100 of the Labor Code.8


















The petition ultimately fails.

First, we determine whether the intent of the CBA provisions is to grant full benefitsregardless of service actually rendered by an employee to the company. According topetitioner, there is a one-year cutoff in the entitlement to the benefits provided in the CBAwhich is evident from the wording of its pertinent provisions as well as of the existing law.

We agree with petitioner on the first issue. The applicable CBA provisions read:

ARTICLE XIV-VACATION LEAVE

Section 1. Employees/workers covered by this agreement who have rendered at leastone (1) year of service shall be entitled to sixteen (16) days vacation leave with payfor each year of service. Unused leaves shall not be cumulative but shall beconverted into its cash equivalent and shall become due and payable every1st Saturday of December of each year.

However, if the 1st Saturday of December falls in December 1, November 30 (Friday)

being a holiday, the management will give the cash conversion of leaves inNovember 29.

Section 2. In case of resignation or retirement of an employee, his vacation leaveshall be paid proportionately to his days of service rendered during the year.

ARTICLE XV-SICK LEAVE

Section 1. Employees/workers covered by this agreement who have rendered at leastone (1) year of service shall be entitled to sixteen (16) days of sick leave with pay for each year of service. Unused sick leave shall not be cumulative but shall beconverted into its cash equivalent and shall become due and payable every

1st

Saturday of December of each year.

Section 2. Sick Leave will only be granted to actual sickness duly certified by theCompany physician or by a licensed physician.

Section 3. All commutable earned leaves will be paid proportionately upon retirementor separation.

ARTICLE XVI – EMERGENCY LEAVE, ETC.

Section 1. The Company shall grant six (6) days emergency leave to employeescovered by this agreement and if unused shall be converted into cash and become

due and payable on the 1st

Saturday of December each year.

Section 2. Employees/workers covered by this agreement who have rendered at leastone (1) year of service shall be entitled to seven (7) days of Paternity Leave with payin case the married employee‘s legitimate spouse gave birth. Said benefit shall benon-cumulative and non-commutative and shall be deemed in compliance with thelaw on the same.

Section 3. Maternity leaves for married female employees shall be in accordance with



the SSS Law plus a cash grant of P1,500.00 per month.

x x x

ARTICLE XVIII- 13TH MONTH PAY & BONUS

Section 1. The Company shall grant 13 th Month Pay to all employees covered by thisagreement. The basis of computing such pay shall be the basic salary per day of theemployee multiplied by 30 and shall become due and payable every 1 st Saturday of December.

Section 2. The Company shall grant a bonus to all employees as practiced whichshall be distributed on the 2nd Saturday of December.

Section 3. That the Company further grants the amount of Two Thousand FiveHundred Pesos (P2,500.00) as signing bonus plus a free CBABooklet.9 (Underscoring ours)

There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick leave, one must have rendered at least one year of service. The clear wording of the provisions does not allow any other interpretation. Anent the 13th month payand bonus, we agree with the findings of Mangabat that the CBA provisions did not give anymeaning different from that given by the law, thus it should be computed at 1/12 of the totalcompensation which an employee receives for the whole calendar year. The bonus is alsoequivalent to the amount of the 13th month pay given, or in proportion to the actual servicerendered by an employee within the year.

On the second issue, however, petitioner founders.

As a general rule, in petitions for review under Rule 45, the Court, not being a trier of facts,

does not normally embark on a re-examination of the evidence presented by the contendingparties during the trial of the case considering that the findings of facts of the Court of

Appeals are conclusive and binding on the Court.10 The rule, however, admits of severalexceptions, one of which is when the findings of the Court of Appeals are contrary to that of the lower tribunals. Such is the case here, as the factual conclusions of the Court of Appealsdiffer from that of the voluntary arbitrator.

Petitioner granted, in several instances, full benefits to employees who have not served a fullyear, thus:

Name Reason Duration

1. Percival Bernas Sickness July 1992 to November 1992

2. Cezar Montero Sickness 21 Dec. 1992 to February 1993

3. Wilson Sayod Sickness May 1994 to July 1994

4. Nomer Becina Suspension 1 Sept. 1996 to 5 Oct. 1996

5. Ronnie Licuan Sickness 8 Nov. 1999 to 9 Dec. 1999

6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb. 2003











7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. 200311

Petitioner claims that its full payment of benefits regardless of the length of service to thecompany does not constitute voluntary employer practice. It points out that the payments hadbeen erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994,

1999, 2002 and 2003. According to petitioner, it was only in 2003 that the accountingdepartment discovered the error "when there were already three (3) employees involved withprolonged absences and the error was corrected by implementing the pro-rata payment of benefits pursuant to law and their existing CBA."12 It adds that the seven earlier cases of fullpayment of benefits went unnoticed considering the proportion of one employee concerned(per year) vis à vis the 170 employees of the company. Petitioner describes the situation as a"clear oversight" which should not be taken against it.13 To further bolster its case, petitioner argues that for a grant of a benefit to be considered a practice, it should have been practicedover a long period of time and must be shown to be consistent, deliberate and intentional,which is not what happened in this case. Petitioner tries to make a case out of the fact thatthe CBA has not been modified to incorporate the giving of full benefits regardless of thelength of service, proof that the grant has not ripened into company practice.

We disagree.

Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,discontinued or eliminated by the employer .14 The principle of non-diminution of benefits isfounded on the Constitutional mandate to "protect the rights of workers and promote their welfare,"15 and "to afford labor full protection."16 Said mandate in turn is the basis of Article 4of the Labor Code which states that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor." Jurisprudence is replete with cases which recognize the right of employees to benefitswhich were voluntarily given by the employer and which ripened into company practice. Thusin Davao Fruits Corporation v. Associated Labor Unions, et al .17 where an employer hadfreely and continuously included in the computation of the 13 th month pay those items that

were expressly excluded by the law, we held that the act which was favorable to theemployees though not conforming to law had thus ripened into a practice and could not bewithdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v.Semana,18 we ruled that the employer‘s act of including non-basic benefits in the computationof the 13th month pay was a voluntary act and had ripened into a company practice whichcannot be peremptorily withdrawn. Meanwhile in Davao Integrated Port Stevedoring Servicesv. Abarquez ,19 the Court ordered the payment of the cash equivalent of the unenjoyed sickleave benefits to its intermittent workers after finding that said workers had received thesebenefits for almost four years until the grant was stopped due to a different interpretation of the CBA provisions. We held that the employer cannot unilaterally withdraw the existingprivilege of commutation or conversion to cash given to said workers, and as also noted thatthe employer had in fact granted and paid said cash equivalent of the unenjoyed portion of the sick leave benefits to some intermittent workers.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of thelength of service rendered. True, there were only a total of seven employees who benefitedfrom such a practice, but it was an established practice nonetheless. Jurisprudence has notlaid down any rule specifying a minimum number of years within which a company practicemust be exercised in order to constitute voluntary company practice.20 Thus, it can be six (6)years,21 three (3) years,22 or even as short as two (2) years.23 Petitioner cannot shirk awayfrom its responsibility by merely claiming that it was a mistake or an error, supported only by






















































an affidavit of its manufacturing group head portions of which read:

5. 13th month pay, bonus, and cash conversion of unused/earned vacation leave, sickleave and emergency leave are computed and paid in full to employees whorendered services to the company for the entire year and proportionately to thoseemployees who rendered service to the company for a period less than one (1) year

or twelve (12) months in accordance with the CBA provision relative thereto.

6. It was never the intention much less the policy of the management to grant theaforesaid benefits to the employees in full regardless of whether or not the employeehas rendered services to the company for the entire year, otherwise, it would beunjust and inequitable not only to the company but to other employees as well .24

In cases involving money claims of employees, the employer has the burden of proving thatthe employees did receive the wages and benefits and that the same were paid inaccordance with law.25

Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it could have

easily presented other proofs, such as the names of other employees who did not fully servefor one year and thus were given prorated benefits. Experientially, a perfect attendance in theworkplace is always the goal but it is seldom achieved. There must have been other employees who had reported for work less than a full year and who, as a consequencereceived only prorated benefits. This could have easily bolstered petitioner‘s theory of mistake/error, but sadly, no evidence to that effect was presented.

IN VIEW HEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R.SP No. 85089 dated 29 September 2005 is and its Resolution dated 9 December 2005 areherebyAFFIRMED.

SO ORDERED.

12. MANOLO A. PENAFLOR VS. OUTDOOR CLOTHING MANUFACTURING

CORPORATION

Peñaflor was hired on September 2, 1999 as probationary Human Resource Department (HRD) Manager of

respondent Outdoor Clothing Manufacturing Corporation (Outdoor Clothing or the company). As HRD head,

Peñaflor was expected to (1) secure and maintain the right quality and quantity of people needed by the

company; (2) maintain the harmonious relationship between the employees and management in a role that

supports organizational goals and individual aspirations; and (3) represent the company in labor cases or

proceedings. Two staff members were assigned to work with him to assist him in undertaking these functions. Peñaflor claimed that his relationship with Outdoor Clothing went well during the first few months of his

employment; he designed and created the company’s Policy Manual, Personnel Handbook, Job Expectations, and

Organizational Set-Up during this period. His woes began when the company’s Vice President for

Operations, Edgar Lee (Lee), left the company after a big fight between Lee and Chief Corporate Officer

Nathaniel Syfu (Syfu). Because of his close association with Lee, Peñaflor claimed that he was among those

who bore Syfu’s ire. When Outdoor Clothing began undertaking its alleged downsizing program due to negative business returns,

Peñaflor alleged that his department had been singled out. On the pretext of retrenchment, Peñaflor’s two staff

members were dismissed, leaving him as the only member of Outdoor Clothing’s HRD and compelling him to

perform all personnel-related work. He worked as a one-man department, carrying out all clerical, administrative

and liaison work; he personally went to various government offices to process the company’s papers.











When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a bombing incident, the

company required Peñaflor to attend to her hospitalization needs; he had to work outside office premises to

undertake this task. As he was acting on the company’s orders, Peñaflor considered himself to be on official

business, but was surprised when the company deducted six days’ salary corresponding to the time he

assisted Padilla. According to Finance Manager Medylene Demogena (Demogena), he failed to submit his trip

ticket, but Peñaflor belied this claim as a trip ticket was required only when a company vehicle was used and he did

not use any company vehicle when he attended to his off-premises work. After Peñaflor returned from his field work on March 13, 2000, his officemates informed him that while he

was away, Syfu had appointed Nathaniel Buenaobra (Buenaobra) as the new HRD Manager. This information

was confirmed by Syfu’s memorandum of March 10, 2000 to the entire office stating that Buenaobra was the

concurrent HRD and Accounting Manager. Peñaflor was surprised by the news; he also felt betrayed and

discouraged. He tried to talk to Syfu to clarify the matter, but was unable to do so. Peñaflor claimed that under these

circumstances, he had no option but to resign. He submitted a letter to Syfu declaring his irrevocable resignation

from his employment with Outdoor Clothing effective at the close of office hours on March 15, 2000. Peñaflor then filed a complaint for illegal dismissal with the labor arbiter, claiming that he had been constructively

dismissed. He included in his complaint a prayer for reinstatement and payment of backwages, illegally deducted

salaries, damages, attorney’s fees, and other monetary claims. In his August 15, 2001 decision, the labor arbiter found that Peñaflor had been illegally dismissed. Outdoor Clothing

was consequently ordered to reinstate Peñaflor to his former or to an equivalent position, and to pay him his illegally

deducted salary for six days, proportionate 13th month pay, attorney’s fees, moral and exemplary damages.

Outdoor Clothing appealed the labor arbiter’s decision with the NLRC. It insisted that Peñaflor had not beenconstructively dismissed, claiming that Peñaflor tendered his resignation on March 1, 2000 because he saw no future

with the corporation due to its dire financial standing. The NLRC apparently found Outdoor Clothing’s submitted

memoranda sufficient to overturn the labor arbiter’s decision. It characterized Peñaflor’s resignation as a response,

not to the allegedly degrading and hostile treatment that he was subjected to by Syfu, but to Outdoor Clothin g’s

downward financial spiral. Buenaobra’s appointment was made only after Peñaflor had submitted his resignation

letter, and this was made to cover the vacancy Peñaflor’s resignation would create. Thus, Peñaflor was not eased out

from his position as HRD manager. No malice likewise was present in the company’s decision to dismiss Peñaflor’s

two staff members; the company simply exercised its management prerogative to address the financial problems it

faced. Peñaflor, in fact, drafted the dismissal letters of his staff members. In the absence of any illegal dismissal, no

basis existed for the monetary awards the labor arbiter granted. In a decision dated December 29, 2006, the CA affirmed the NLRC’s decision, stating that Peñaflor failed to present

sufficient evidence supporting his claim that he had been constructively dismissed. The CA ruled that Peñaflor’s

resignation was knowingly and voluntarily made.Faced with these CA actions, Peñaflor filed with us the present petition for review on certiorari.

THE ISSUE and THE COURT’S RULING The Court finds the petition meritorious. The petition turns on the question of whether Peñaflor’s undisputed resignation was a voluntary or a forced one, in

the latter case making it a constructive dismissal equivalent to an illegal dismissal. A critical fact necessary in

resolving this issue is whether Peñaflor filed his letter of resignation before or after the appointment of Buenaobra as

the new/concurrent HRD manager. This question also gives rise to the side issue of when Buenaobra’s appointment

was made. If the resignation letter was submitted before Syfu’s appointment of Buenaobra as new HRD manager,

little support exists for Peñaflor’s allegation that he had been forced to resign due to the prevailing abusive and

hostile working environment. Buenaobra’s appointment would then be simply intended to cover the vacancy created

by Peñaflor’s resignation. On the other hand, if the resignation letter was submitted after the appointment of

Buenaobra, then factual basis exists indicating that Peñaflor had been constructively dismissed as his resignation

was a response to the unacceptable appointment of another person to a position he still occupied. The question of when Peñaflor submitted his resignation letter arises because this letter – undisputably made – was

undated. Despite Peñaflor’s claim of having impressive intellectual and academic credentials, his resignation letter,

for some reason, was undated. Thus, the parties have directly opposing claims on the matter. Peñaflor claims that he

wrote and filed the letter on the same date he made his resignation effective – March 15, 2000. Outdoor Clothing, on

the other hand, contends that the letter was submitted on March 1, 2000, for which reason Syfu issued a

memorandum of the same date appointing Buenaobra as the concurrent HRD manager; Syfu’s memorandum cited

Peñaflor’s intention to resign so he could devote his time to teaching. The company further cites in support of its

case Buenaobra’s March 3, 2000 memorandum accepting his appointment. Another piece of evidence is the Syfu

memorandum of March 10, 2000, which informed the office of the appointment of Buenaobra as the concurrent



Head of HRD – the position that Peñaflor occupied. Two other memoranda are alleged to exist, namely, the AWOL

memoranda of March 6 and 11, 2000, allegedly sent to Penaflor. Several reasons arising directly from these pieces of evidence lead us to conclude that Peñaflor did indeed submit

his resignation letter on March, 15, 2000, i.e., on the same day that it was submitted. The circumstances and other evidence surrounding Peñaflor’s resignation support his claim that he was practically

compelled to resign from the company. Foremost among these is the memorandum of March 10, 2000 signed by Syfu informing the whole office ("To: All

concerned") about the designation of Buenaobra as concurrent Accounting and HRD Manager. In contrast with the

suspect memoranda we discussed above, this memorandum properly bore signatures acknowledging receipt and

dates of receipt by at least five company officials, among them the readable signature of Demogene and one

Agbayani; three of them acknowledged receipt on March 13, 2000, showing that indeed it was only on that day that

the appointment of Buenaobra to the HRD position was disclosed. This evidence is fully consistent with Peñaflor’s

position that it was only in the afternoon of March 13, 2000 that he was told, informally at that, that Buenaobra had

taken over his position. It explains as well why as late as March 13, 2000, Peñaflor still prepared and signed a

security report, and is fully consistent with his position that on that day he was still working on the excuse letter of

certain sales personnel of the company. In our view, it is more consistent with human experience that Peñaflor indeed learned of the appointment of

Buenaobra only on March 13, 2000 and reacted to this development through his resignation letter after realizing that

he would only face hostility and frustration in his working environment. Three very basic labor law principles

support this conclusion and militate against the company’s case.

The first is the settled rule that in employee termination disputes, the employer bears the burden of proving that theemployee’s dismissal was for just and valid cause. That Peñaflor did indeed file a letter of resignation does not help

the company’s case as, other than the fact of resignation, the company must still prove that the employee voluntarily

resigned. There can be no valid resignation where the act was made under compulsion or under circumstances

approximating compulsion, such as when an employee’s act of handing in his resignation was a reaction to

circumstances leaving him no alternative but to resign. In sum, the evidence does not support the existence of

voluntariness in Peñaflor’s resignation. Last but not the least, we have repeatedly given significance in

abandonment and constructive dismissal cases to the employee’s reaction to the termination of his employment and

have asked the question: is the complaint against the employer merely a convenient afterthought subsequent to

abandonment or a voluntary resignation? We find from the records that Peñaflor sought almost immediate official

recourse to contest his separation from service through a complaint for illegal dismissal. This is not the act of one

who voluntarily resigned; his immediate complaints characterize him as one who deeply felt that he had been

wronged.

13. HILARIO S. RAMIREZ VS. CA

Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 182626 December 4, 2009HILARIO S. RAMIREZ, Petitioner,vs.

HON. COURT OF APPEALS, Cebu City, HON. NLRC, 4th Division, Cebu City andMARIO S. VALCUEBA, Respondents.D E C I S I O NCHICO-NAZARIO, J.:

This is a Petition for Review under Rule 45 of the Rules of Court assailing the (a) 13July 2007Resolution1 of the Court of Appeals which dismissed the Petition for Certiorari under Rule 65



filed by petitioner Hilario Ramirez for failure to properly verify his petition and to statematerialdates and (b) the 7 March 2008 Resolution2 of the same court denying petitioner‘sMotion for reconsideration.

The facts are:Respondent Mario Valcueba (Valcueba) filed a Complaint3 for illegal dismissal andnonpaymentof wage differential, 13th month pay differential, holiday pay, premium pay for holidaysand restdays, and service incentive leaves with claims for moral and exemplary damages andattorney‘s fees, against Hilario Ramirez (Ramirez). Valcueba claimed that Ramirez hired him asmechanicon 28 May 1999. By 2002, he was paid a daily wage of P140.00, which was increasedto

P165.00 a day in 2003 and to P190.00 in 2005. He was not paid for holidays and restdays. Hewas not also paid the complete amount of his 13th month pay. On 27 February 2006,JosephineTorres, secretary of Ramirez, informed Valcueba that he would not be allowed to returnto workunless he agreed to work on pakyaw basis.4 Aggrieved, he filed this case.Ramirez, on the other hand, presented a different version of the antecedents, assertingthatValcueba was first hired as construction worker, then as helper of the mechanic, andeventuallyas mechanic. There were three categories of mechanics at the workplace. First werethemechanics assigned to specific stations. Second were the mechanics paid on pakyawbasis; andfinally, those who were classified as rescue/emergency mechanics. Valcueba belongedto the lastcategory. As emergency/rescue mechanic, he was assigned to various stations toperformemergency/rescue work. On 26 February 2006, while he was assigned at the Babagstation,Ramirez directed him to proceed to Calawisan, Lapu-lapu City, as a unit had developedenginetrouble and the mechanic assigned in that area was absent. Valcueba did not report totheCalawisan station. In fact, he did not report for work anymore, as he allegedly intendedto returnto Mindanao.5

Further, Ramirez insisted that Valcueba was never terminated from his employment. Onthe



contrary, it was the latter who abandoned his job. On 26 February 2006, Valcueba, asrescue or emergency mechanic, temporarily assigned at Babag Station, did not report atCalawisan, LapulapuCity when Ramirez ordered him to answer an emergency call, which required him to fix

Ramirez‘s troubled taxi unit. The mechanic assigned in the area was then absent at thattime. Therefusal of Valcueba to obey the lawful order of Ramirez was bolstered by his failure toreport for work the following day, 27 February 2006. Valcueba advanced no reason regarding hisfailure toanswer an emergency call of duty, nor did he file an application for a leave of absencewhen hefailed to report for work that day.

After hearing, the Labor Arbiter rendered her decision, where she pointed out that:The allegation of complainant that his refusal to work on pakiao basis prompted

respondentHilario Ramirez to dismiss him from the service is not substantiated by any piece of evidence.Not even a declaration under oath by any affiant attesting to the credibility of complainant‘s allegation is presented. No documentary evidence purporting to clearly indicate thatcomplainantwas discharged was submitted for Our judicious consideration. A fortiori, there is reasonfor Usto doubt complainant‘s submission that he was dismissed from his employmentgrounded ondisobedience to the lawful order of respondent.On the side of respondent Ramirez, he insisted that complainant was never terminatedfrom hisemployment. On the contrary, he alleged that it was complainant who abandoned his

job. Asrescue or emergency mechanic temporarily assigned at Babag Station, on February 26,2006,complainant did not report at Calawisan, Lapu-Lapu City when respondent Ramirezordered himto answer an emergency call, which required him to fix the respondent‘s troubled taxiunit. Themechanic assigned in the area was then absent at that time. The refusal of complainantto obeythe lawful order of respondent Ramirez is bolstered by his failure to report for work thefollowing day, February 27, 2006. Complainant advanced no reason as to why he failedtoanswer an emergency call of duty nor did he file an application for a leave of absencewhen hefailed to report for work that day.



Nonetheless, as the records are bereft of any evidence that respondent sentcomplainant a letter which advised the latter to report for work, We do not rule out a case of abandonmentbecausethe overt act of not answering an emergency call is not insufficient to constitute

abandonment.Consequently, there being no dismissal nor abandonment involved in this case, it isbest that theparties to this case should be restored to their previous employment relations.Complainant mustgo back to work within ten (10) days from receipt of this judgment, while respondentmustaccept complainant back to work, also within ten (10) days from receipt of this decision.6

In the end, the Labor Arbiter decreed:WHEREFORE, VIEWED FROM THE FOREGOING, judgment is hereby rendereddeclaring

respondent HILARIO RAMIREZ, OWNER OF H.R. TAXI, NOT GUILTY of illegallydismissing complainant from the service, it appearing that there is no dismissal to speakof in thiscase. Consequently, complainant is ordered to report back for work within ten (10) daysfromreceipt hereof, and respondent Hilario Ramirez must complainant (sic) back to work assoon asthe latter would express his intention to report for work or within the same period of ten(10)days from receipt hereof, whichever comes first. Proof of compliance hereof, must besubmittedwithin the same period (sic), complainant would be guilty of abandonment andrespondent of illegal dismissal.In addition, respondent HILARIO RAMIREZ, owner of H.R. Taxi, is hereby ordered topaycomplainant MARIO S. VALCUEBA the following:a. Wage Differential - P30,538.00b. 13th Month Pay - 15,287.98Total Award - P45,825.98Philippine currency, within ten (10) days from receipt hereof, through the Cashier of this

Arbitration Branch.Other claims are DISMISSED for failure to substantiate.7

Records show that Ramirez received the Labor Arbiter‘s decision on 5 June 2006. Hefiled aMotion for Reconsideration and/or Memorandum of Appeal with Urgent Motion toReduce

Appeal Bond8 on the 9th day of the reglementary period or on 14 June 2006 before theNationalLabor Relations Commission (NLRC).



Resolving the motion, the NLRC issued a Resolution9 dated 29 September 2006, whichreads:Upon a careful perusal of the motion to reduce bond, however, the Commission foundthat thesame does not comply with Section 6, Rule VI of the NLRC Rules of Procedure.

x x x xRespondent has not offered a meritorious ground for the reduction of the appeal bondand theamount of P10,000.00 he posted is not a reasonable amount in relation to the monetaryaward of P45,825.98. Consequently, his motion to reduce appeal bond shall not be entertainedand hisappeal is dismissed for non-perfection due to lack of an appeal bond.The NLRC then held:WHEREFORE, premises considered, the appeal of respondent is hereby DISMISSEDfor nonperfection

due to want of an appeal bond.10

Ramirez filed a Motion for Reconsideration, which the NLRC resolved in a Resolutiondated 20December 2006 in this wise:The mere filing of a motion to reduce bond without complying with the requisites of meritoriousgrounds and posting of a bond in a reasonable amount in relation to the monetaryaward does notstop the running of the period to perfect an appeal. Thus, respondent‘s failure to abidewith therequisites so mentioned has not perfected his appeal. Verily, since the assailedDecision of theLabor Arbiter contains a monetary award in favor of complainant, it behooves uponrespondentto post the required bond.While the filing of a motion to reduce bond can be considered as a motion of preferencein caseof an appeal, the same holds true only when such motion complies with therequirements statedabove. Consequently, respondent‘s motion to reduce bond which missed to comply withsuchrequisites does not deserve to be entertained nor to be given a preferred resolution.WHEREFORE, premises considered, the motion for reconsideration of respondent isherebyDENIED for lack of merit.11

The decision of the Labor Arbiter became final and executory on 19 February 2007 andwasentered in the Book of Entries of Judgment on 4 May 2007. 12

Ramirez went up to the Court of Appeals. The case was docketed as CA-G.R. SP No.02614. In a



resolution dated 13 July 2007,13 the Court of Appeals dismissed the Petition outright for failureof Ramirez to properly verify his petition and to state material dates.Ramirez‘s Motion for Reconsideration was denied by the Court of Appeals in aresolution dated

7 March 2008;14 hence, this petition where Ramirez prays that the "dismissal resolutionissued bythe Court of Appeals be set aside and in its stead to give due course to this petition bydismissingthe unwarranted claims imposed by the NLRC for being highly speculative, with noevidence tosupport of (sic)."15

The issues are:IPUBLIC RESPONDENT COURT OF APPEALS ERRED IN NOT CONSIDERING THESUBSTANTIAL COMPLIANCE OF THE FILED PETITION.

IITHE DISMISSAL RESOLUTION (ANNEX "A") HAS NOT RESOLVED THE LEGALISSUES RAISED IN CA-G.R. SP NO. 02614.16

The case presents no novel issue.We first resolve the propriety of dismissal by the NLRC.

At the outset, it should be stressed that the right to appeal is not a natural right or a partof dueprocess; it is merely a statutory privilege, and may be exercised only in the manner prescribed byand in accordance with the provisions of law. The party who seeks to avail himself of the samemust comply with the requirements of the rules. Failing to do so, he loses the right toappeal.17

Article 223 of the Labor Code provides for the procedure in case of appeal to the NLRC: Art. 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final andexecutoryunless appealed to the Commission by any or both parties within ten (10) calendar daysfromreceipt of such decisions, awards, or orders. Such appeal may be entertained only onany of thefollowing grounds:a. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;b. If the decision, order or award was secured through fraud or coercion, including graftand corruption;c. If made purely on questions of law; andd. If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury to the appellant.In case of a judgment involving a monetary award, an appeal by the employer may beperfected



only upon the posting of a cash or surety bond issued by a reputable bonding companydulyaccredited by the Commission in the amount equivalent to the monetary award in the

judgmentappealed from. (Emphasis supplied.)

Sections 4(a) and 6 of Rule VI of the New Rules of Procedure of the NLRC, asamended,reaffirms the explicit jurisdictional principle in Article 223 even as it allows in justifiablecasesthe reduction of the appeal bond. The relevant provision states:SECTION 4. Requisites for Perfection of Appeal. - (a) The appeal shall be: 1) filedwithin thereglementary period provided in Section 1 of this Rule; 2) verified by the appellanthimself inaccordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a

memorandum of appeal which shall state the grounds relied upon and the arguments insupportthereof, the relief prayed for, and with a statement of the date the appellant received theappealeddecision, resolution or order; for in three (3) legibly type written or printed copies; and 5)accompanied by i) proof payment of the required appeal fee; ii) posting of a cash or surety bondas provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv)proof of service upon the other parties.x x x xSECTION 6. Bond. — In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon thepostingof a bond, which shall either be in the form of cash deposit or surety bond equivalent inamountto the monetary award, exclusive of damages and attorney's fees.x x x xNo motion to reduce bond shall be entertained except on meritorious grounds, and onlyupon theposting of a bond in a reasonable amount in relation to the monetary award.The mere filing of a motion to reduce bond without complying with the requisites in thepreceding paragraphs shall not stop the running of the period to perfect an appeal.Under the Rules, appeals involving monetary awards are perfected only uponcompliance withthe following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of thememorandum of appeal; and (3) payment of the required cash or surety bond.18

The posting of a bond is indispensable to the perfection of an appeal in cases involvingmonetary



awards from the decision of the labor arbiter. The intention of the lawmakers to makethe bond amandatory requisite for the perfection of an appeal by the employer is clearly expressedin theprovision that an appeal by the employer may be perfected "only upon the posting of a

cash or surety bond." The word "only" in Articles 223 of the Labor Code makes it unmistakablyplainthat the lawmakers intended the posting of a cash or surety bond by the employer to betheessential and exclusive means by which an employer's appeal may be perfected. Theword "may"refers to the perfection of an appeal as optional on the part of the defeated party, butnot to thecompulsory posting of an appeal bond, if he desires to appeal. The meaning and theintention of

the legislature in enacting a statute must be determined from the language employed;and wherethere is no ambiguity in the words used, then there is no room for construction.19

Clearly, the filing of the bond is not only mandatory but also a jurisdictional requirementthatmust be complied with in order to confer jurisdiction upon the NLRC. Non-compliancewith therequirement renders the decision of the Labor Arbiter final and executory. Thisrequirement isintended to assure the workers that if they prevail in the case, they will receive themoney

judgment in their favor upon the dismissal of the employer's appeal.It is intended to discourage employers from using an appeal to delay or evade their obligation tosatisfy their employees‘ just and lawful claims.20

In this case, although Ramirez posted an appeal bond, the same was insufficient, as itwas notequivalent to the monetary award of the Labor Arbiter. Moreover, when Ramirez soughtareduction of the bond, he merely said that the bond was excessive and baseless withoutamplifying why he considered it as such.21

Colby Construction and Management Corporation v. National Labor RelationsCommission22

succinctly elucidates that an employer who files a motion to reduce the appeal bond isstillrequired to post the full amount of cash or surety bond within the ten-day reglementaryperiod,even pending resolution of his motion.Very recently, in Mcburnie v. Guanzon, the respondents therein filed their memorandumof



appeal and motion to reduce bond on the 10th or last day of the reglementary period. Althoughthey posted an initial appeal bond, the same was inadequate compared to the monetaryaward.The Court found no basis for therein respondent‘s contention that the awards of the

Labor Arbiter were null and excessive. We emphasized in that case that it behooves the Courtto giveutmost regard to the legislative and administrative intent to strictly require the employer to post acash or surety bond securing the full amount of the monetary award within the 10-dayreglementary period. Nothing in the Labor Code or the NLRC Rules of Procedureauthorizes theposting of a bond that is less than the monetary award in the judgment, or deems suchinsufficient posting as sufficient to perfect the appeal.23

By stating that the bond is excessive and baseless without more, and without proof that

he isincapable of raising the amount of the bond, Ramirez did not even come near tosubstantiallycomplying with the requirements of Art. 223 of the Labor Code and NLRC Rule of Procedure.Given that Ramirez is involved in taxi business, he has not shown that he had difficultyraisingthe amount of the bond or was unable to raise the amount specified in the award of theLabor

Arbiter. All given, the NLRC justifiably denied the motion to reduce bond, as it had no basisupon whichit could actually and completely determine Ramirez‘s motion to reduce bond. We have consistently enucleated that a mere claim of excessive bond without more does notsuffice. Thus,in Ong v. Court of Appeals,24 this Court held that the NLRC did not act with grave abuseof discretion when it denied petitioner‘s motion, for the same failed to elucidate why theamount of the bond was either unjustified or prohibitive.In Calabash Garments, Inc. v. National Labor Relations Commission,25 it was held that"asubstantial monetary award, even if it runs into millions, does not necessarily give theemployerappellanta `meritorious case‘ and does not automatically warrant a reduction of the appealbond."It is clear from both the Labor Code and the NLRC Rules of Procedure that there islegislativeand administrative intent to strictly apply the appeal bond requirement, and the Courtshould give



utmost regard to this intention. There is a concession to the employer, in excludingdamages andattorney's fees from the computation of the appeal bond. Not even the filing of a motiontoreduce bond is deemed to stay the period for requiring an appeal. Nothing in the Labor

Code or the NLRC Rules of Procedure authorizes the posting of a bond that is less than themonetaryaward in the judgment, or would deem such insufficient postage as sufficient to perfecttheappeal.On the other hand, Article 223 indubitably requires that the appeal be perfected onlyupon theposting of the cash or surety bond which is equivalent to the monetary award in the

judgmentappealed from. The clear intent of both statutory and procedural law is to require the

employer topost a cash or surety bond securing the full amount of the monetary award within theten (10)-day reglementary period. While the bond may be reduced upon motion by the employer,there isthat proviso in Rule VI, Section [6] that the filing of such motion does not stay thereglementaryperiod. The qualification effectively requires that unless the NLRC grants the reductionof thecash bond within the ten (10)-day reglementary period, the employer is still expected topost thecash or surety bond securing the full amount within the said ten (10)-day period. If theNLRCdoes eventually grant the motion for reduction after the reglementary period haselapsed, thecorrect relief would be to reduce the cash or surety bond already posted by theemployer withinthe ten (10)-day period.26 (Emphases supplied.)While in certain instances, we allow a relaxation in the application of the rules to setright anarrant injustice, we never intend to forge a weapon for erring litigants to violate the ruleswithimpunity. The liberal interpretation and application of rules apply only to proper cases of demonstrable merit and under justifiable causes and circumstances, but none obtains inthis case.The NLRC had, therefore, the full discretion to grant or deny Ramirez‘s motion toreduce theamount of the appeal bond. The finding of the labor tribunal that Ramirez did notpresent



sufficient justification for the reduction thereof cannot be said to have been done withgraveabuse of discretion.27

While Section 6, Rule VI of the NLRC‘s New Rules of Procedure allows the Commissionto

reduce the amount of the bond, the exercise of the authority is not a matter of right onthe part of the movant, but lies within the sound discretion of the NLRC upon a showing of meritoriousgrounds.28

It is daylight-clear from the foregoing that while the bond may be reduced upon motionby theemployer, this is subject to the conditions that (1) the motion to reduce the bond shall bebasedon meritorious grounds; and (2) a reasonable amount in relation to the monetary awardis posted

by the appellant; otherwise, the filing of the motion to reduce bond shall not stop therunning of the period to perfect an appeal. The qualification effectively requires that unless theNLRCgrants the reduction of the cash bond within the 10-day reglementary period, theemployer is stillexpected to post the cash or surety bond securing the full amount within the said 10-dayperiod.We have always stressed that Article 223, which prescribes the appeal bondrequirement, is arule of jurisdiction and not of procedure. There is little leeway for condoning a liberalinterpretation thereof, and certainly none premised on the ground that its requirementsare meretechnicalities. It must be emphasized that there is no inherent right to an appeal in alabor case, asit arises solely from grant of statute, namely, the Labor Code.For the same reason, we have repeatedly emphasized that the requirement for postingthe suretybond is not merely procedural but jurisdictional and cannot be trifled with. Non-compliance withsuch legal requirements is fatal and has the effect of rendering the judgment final andexecutory.29

That settled, we next resolve the issue of whether or not the Court of Appeals correctlydismissedthe petition of Ramirez. The Court of Appeals found that he committed the followingfataldefects in his petition:1. Failure of petitioner to properly verify the petition in accordance with A.M. No. 00-2-10-SC amending Section 4, Rule 7 in relation to Section 1, Rule 65 of the Rules of Court



which now requires that a pleading must be verified by an affidavit that the affiant hasread the pleading and the allegations therein are true and correct of his personalknowledge or based on authentic records, as a consequence of which the petition istreated as an unsigned pleading, which under Section 3, Rule 7 of the Rules of Court,produces no legal effect.

2. Petitioner failed to indicate in the petition the material dates showing when notice of the resolution subject hereof was received and when the motion for reconsideration wasfiled in violation of Section 3, Rule 46 of the Rules of Court. 30

On Ramirez‘s failure to verify his petition, it is true that verification is merely a formal requirement intended to secure an assurance that matters that are alleged are true andcorrect.Thus, the court may simply order the correction of unverified pleadings or act on themand waivestrict compliance with the rules.31 However, this Court invariably sustains the Court of

Appeals‘ dismissal of the petition on technical grounds under this provision, unless

considerations of equity and substantial justice present cogent reasons to hold otherwise. In MoncielcojiCorporation v. National Labor Relations Commission,32 the Court states the rationale – Rules of procedure are tools designed to promote efficiency and orderliness as well astofacilitate attainment of justice, such that strict adherence thereto is required. Theapplication of the Rules may be relaxed only when rigidity would result in a defeat of equity andsubstantial

justice. But, petitioner has not presented any persuasive reason for this Court to beliberal, evenpro hac vice. Thus, we sustain the dismissal of its petition by the Court of Appeals ontechnicalgrounds.

Again as in the NLRC, Ramirez has not shown any justifiable ground to set asidetechnical rulesfor his failure to comply with the requirement regarding the verification of his petition.For the same reasons above, we also find no reversible error in the assailed resolutionof theCourt of Appeals dismissing Ramirez‘s petition on the ground of failure to state materialdates,because in filing a special civil action for certiorari without indicating the requisitematerial datetherein, Ramirez violated basic tenets of remedial law, particularly Rule 65 of the Rulesof Court,which states:SECTION 1. Petition for certiorari. – x x x.x x x xThe petition shall be accompanied by a certified true copy of the judgment, order or resolution



subject thereof, copies of all pleadings and documents relevant and pertinent thereto,and a sworncertification of non-forum shopping as provided in the third paragraph of Section 3, Rule46.On the other hand, the pertinent provision under Rule 46 is explicit:

Sec. 3. Contents and filing of petition; effect of non-compliance with requirements. – x xx .In actions filed under Rule 65, the petition shall further indicate the material datesshowing whennotice of the judgment or final order or resolution subject thereof was received, when amotionfor new trial or reconsideration, if any, was filed and when notice of the denial thereof wasreceived.x x x xThe failure of the petitioner to comply with any of the foregoing requirements shall be

sufficientground for the dismissal of the petition.There are three material dates that must be stated in a petition for certiorari broughtunder Rule65. First, the date when notice of the judgment or final order or resolution was received;second,the date when a motion for new trial or for reconsideration was filed; and third, the datewhennotice of the denial thereof was received. In the case before us, the petition filed withthe Courtof Appeals failed to indicate when the notice of the NLRC Resolution was received andwhen theMotion for Reconsideration was filed, in violation of Rule 65, Section 1 (2nd par.) andRule 46,Section 3 (2nd par.). 1avvphi1

As explicitly stated in the aforementioned Rule, failure to comply with any of therequirementsshall be sufficient ground for the dismissal of the petition.The rationale for this strict provision of the Rules of Court is not difficult to appreciate. InSantosv. Court of Appeals,33 the court explains that the requirement is for purpose of determining thetimeliness of the petition, thus:The requirement of setting forth the three (3) dates in a petition for certiorari under Rule65 is for the purpose of determining its timeliness. Such a petition is required to be filed not later thansixty (60) days from notice of the judgment, order or Resolution sought to be assailed.Therefore,



that the petition for certiorari was filed forty-one (41) days from receipt of the denial of themotion for reconsideration is hardly relevant. The Court of Appeals was not in anyposition todetermine when this period commenced to run and whether the motion for

reconsideration itself was filed on time since the material dates were not stated. x x x.In the instant case, the petition was bereft of any persuasive explanation as to whyRamirezfailed to observe procedural rules properly. 34

Quite apparent from the foregoing is that the Court of Appeals did not err, much lesscommitgrave abuse of discretion, in denying due course to and dismissing the petition for certiorari for its procedural defects. Ramirez‘s failure to verify and state material dates as requiredunder the

rules warranted the outright dismissal of his petition.We are not unmindful of exceptional cases where this Court has set aside proceduraldefects tocorrect a patent injustice. However, concomitant to a liberal application of the rules of procedureshould be an effort on the part of the party invoking liberality to at least explain its failuretocomply with the rules.In sum, we find no sufficient justification to set aside the NLRC and Court of Appealsresolutions. Thus, the decision of the Labor Arbiter is already final and executory andbindingupon this Court.35

The relaxation of procedural rules cannot be made without any valid reasons profferedfor or underpinning it. To merit liberality, Ramirez must show reasonable cause justifying hisnoncompliancewith the rules and must convince the court that the outright dismissal of the petitionwould defeat the administration of substantive justice. The desired leniency cannot beaccorded,absent valid and compelling reasons for such procedural lapse. The appellate court sawnocompelling need meriting the relaxation of the rules; neither do we see any.36

Wherefore, premises considered, the petition is Denied for lack of merit. TheResolutions of theCourt of Appeals dated 13 July 2007 and 7 March 2008 and the Resolutions of theNLRC dated29 September 2006 and 20 December 2006 are AFFIRMED. Costs against petitioner.SO ORDERED.



On April 14, 1993, PINA filed a complaint for unfair labor practice (ULP)

and damages. The complaint was assigned to then Labor Arbiter Raul Aquino, who

ruled in his decision dated July 13, 1994 that the March 13, 1993 incident was an

illegal walkout constituting ULP; and that all the Union’s officers, except Cañete,had thereby lost their employment.[4]

On April 28, 1993, the Union filed a notice of strike, claiming that PINA

was guilty of union busting through the constructive dismissal of its

officers.[5] On May 9, 1993, the Unionheld a strike vote, at which a majority of 190

members of the Union voted to strike.[6] The strike was held in the afternoon

of June 15, 1993.[7]

PINA retaliated by charging the petitioners with ULP and abandonment of

work, stating that they had violated provisions on strike of the collective

bargaining agreement (CBA), such as: (a) sabotage by the insertion of foreign

matter in the bottling of company products; (b) decreased production output by

slowdown; (c) serious misconduct, and willful disobedience and insubordination to

the orders of the Management and its representatives; (d ) disruption of the work

place by invading the premises and perpetrating commotion and disorder, and by

causing fear and apprehension; (e) abandonment of work since June 28, 1993

despite notices to return to work individually sent to them; and ( f ) picketing withinthe company premises on June 15, 1993 that effectively barred with the use of

threat and intimidation the ingress and egress of PINA’s officials, employees,

suppliers, and customers. [8]

On September 30, 1994, the Third Division of the National Labor Relations

Commission (NLRC) issued a temporary restraining order (TRO), enjoining the

Union’s officers and members to cease and desist from barricading and obstructing

the entrance to and exit from PINA’s premises, to refrain from committing any andall forms of violence, and to remove all forms of obstructions such as streamers,

placards, or human barricade.[9]

On November 29, 1994, the NLRC granted the writ of preliminary

injunction.[10]

http://sc.judiciary.gov.ph/jurisprudence/2010/september2010/160302.htm#_ftn5






























On August 18, 1998, Labor Arbiter Jose G. de Vera (LA) rendered a

decision, to wit:

WHEREFORE, all the foregoing premises being considered,

judgment is hereby rendered declaring the subject strike to be illegal.

The complainant’s prayer for decertification of the respondent

union being outside of the jurisdiction of this Arbitration Branch may

not be given due course.

And finally, the claims for moral and exemplary damages for want

of factual basis are dismissed.

SO ORDERED.[11]

On appeal, the NLRC sustained the finding that the strike was illegal, but

reversed the LA’s ruling that there was abandonment, viz :

However, we disagree with the conclusion that respondents’ union

members should be considered to have abandoned their employment.

Under Article 264 of the Labor Code, as amended, the union

officers who knowingly participate in the illegal strike may be declared

to have lost their employment status. However, mere participation of a

union member in the illegal strike does not mean loss of employmentstatus unless he participates in the commission of illegal acts during the

strike. While it is true that complainant thru individual memorandum

directed the respondents to return to work (pp. 1031-1112, Records)

there is no showing that respondents deliberately refused to return to

work. A worker who joins a strike does so precisely to assert or improve

the terms and conditions of his work. If his purpose is to abandon his

work, he would not go to the trouble of joining a strike ( BLTB v. NLRC ,

212 SCRA 794).

WHEREFORE, premises considered, the Decision appealed from ishereby MODIFIED in that complainant company is directed to reinstate

respondents named in the complaint to their former positions but without

backwages. In the event that reinstatement is not feasible complainant

company is directed to pay respondents separation pay at one (1/2) half

month per year of service.







SO ORDERED.[12]

Following the denial of their motion for reconsideration, the petitioners

assailed the NLRC’s decision through a petition for certiorari in the Court of

Appeals (CA), claiming that the NLRC gravely abused its discretion in not

awarding backwages pursuant to Article 279 of the Labor Code, and in not

declaring their strike as a good faith strike.

On August 18, 2003, the CA affirmed the NLRC.[13] In denying the

petitioners’ claim for full backwages, the CA applied the third paragraph of Article

264(a) instead of Article 279 of the Labor Code, explaining that the only instance

under Article 264 when a dismissed employee would be reinstated with full

backwages was when he was dismissed by reason of an illegal lockout; that Article264 was silent on the award of backwages to employees participating in a lawful

strike; and that a reinstatement with full backwages would be granted only when

the dismissal of the petitioners was not done in accordance with Article 282

(dismissals with just causes) and Article 283 (dismissals with authorized causes) of

the Labor Code.

The CA disposed thus:[14]

WHEREFORE, premises considered, the Petition is DISMISSEDfor lack of merit and the assailed 29 November 2001 Decision of

respondent Commission in NLRC NRC CA No. 009701-95 is hereby

AFFIRMED in toto. No costs.

SO ORDERED.[15]

On October 13, 2003, the CA denied the petitioners’ motion for

reconsideration.[16]

Hence, this appeal via petition for review on certiorari.

Issue























The petitioners posit that they are entitled to full backwages from the date of

dismissal until the date of actual reinstatement due to their not being found to have

abandoned their jobs. They insist that the CA decided the question in a manner

contrary to law and jurisprudence.

Ruling

We sustain the CA, but modify the decision on the amount of the backwages

in order to accord with equity and jurisprudence.

I

Third Paragraph of Article 264 (a ),

Labor Code , is Applicable

The petitioners contend that they are entitled to full backwages by virtue of

their reinstatement, and submit that applicable to their situation is Article 279, not

the third paragraph of Article 264(a), both of the Labor Code.

We do not agree with the petitioners.

Article 279 provides:

Article 279. Security of Tenure. – In cases of regular employment,

the employer shall not terminate the services of an employee except for a

just cause or when authorized by this Title. An employee who isunjustly

dismissed from work shall be entitled to reinstatement without loss of

seniority rights and other privileges and to his full backwages, inclusive

of allowances, and to his other benefits or their monetary equivalent

computed from the time his compensation was withheld from him up to

the time of his actual reinstatement.

By its use of the phrase unjustly dismissed , Article 279 refers to a dismissal

that is unjustly done, that is, the employer dismisses the employee without

observing due process, either substantive or procedural. Substantive due process

requires the attendance of any of the just or authorized causes for terminating an



employee as provided under Article 278 (termination by employer), or Article 283

(closure of establishment and reduction of personnel), or Article 284 (disease as

ground for termination), all of the Labor Code; while procedural due process

demands compliance with the twin-notice requirement.[17]

In contrast, the third paragraph of Article 264(a) states:

Art. 264. Prohibited activities. – (a) xxx

Any worker whose employment has been terminated as a

consequence of an unlawful lockout shall be entitled to reinstatement

with full backwages. Any union officer who knowingly participates in an

illegal strike and any worker or union officer who knowingly participates

in the commission of illegal acts during a strike may be declared to havelost his employment status; Provided, That mere participation of a

worker in a lawful strike shall not constitute sufficient ground for

termination of his employment, even if a replacement had been hired by

the employer during such lawful strike.

xxx

Contemplating two causes for the dismissal of an employee, that is: ( a)

unlawful lockout; and (b) participation in an illegal strike, the third paragraph of

Article 264(a) authorizes the award of full backwages only when the terminationof employment is a consequence of an unlawful lockout. On the consequences of

an illegal strike, the provision distinguishes between a union officer and a union

member participating in an illegal strike. A union officer who knowingly

participates in an illegal strike is deemed to have lost his employment status, but a

union member who is merely instigated or induced to participate in the illegal

strike is more benignly treated. Part of the explanation for the benign consideration

for the union member is the policy of reinstating rank-and-file workers who are

misled into supporting illegal strikes, absent any finding that such workers

committed illegal acts during the period of the illegal strikes.[18]

The petitioners were terminated for joining a strike that was later declared to

be illegal. The NLRC ordered their reinstatement or, in lieu of reinstatement, the

payment of their separation pay, because they were mere rank-and-file workers

whom the Union’s officers had misled into joining the illegal strike. They were not











unjustly dismissed from work. Based on the text and intent of the two aforequoted

provisions of the Labor Code, therefore, it is plain that Article 264(a) is the

applicable one.

II Petitioners not entitled to backwages

despite their reinstatement:

A fair day’s wage for a fair day’s labor

The petitioners argue that the finding of no abandonment equated to a

finding of illegal dismissal in their favor. Hence, they were entitled to full

backwages.

The petitioners’ argument cannot be sustained.

The petitioners’ participation in the illegal strike was precisely what

prompted PINA to file a complaint to declare them, as striking employees, to have

lost their employment status. However, the NLRC ultimately ordered their

reinstatement after finding that they had not abandoned their work by joining the

illegal strike. They were thus entitled only to reinstatement, regardless of whether

or not the strike was the consequence of the employer’s ULP,[19] considering that a

strike was not a renunciation of the employment relation.[20]

As a general rule, backwages are granted to indemnify a dismissed employee

for his loss of earnings during the whole period that he is out of his job.

Considering that an illegally dismissed employee is not deemed to have left his

employment, he is entitled to all the rights and privileges that accrue to him from

the employment.[21] The grant of backwages to him is in furtherance and

effectuation of the public objectives of the Labor Code, and is in the nature of a

command to the employer to make a public reparation for his illegal dismissal of the employee in violation of the Labor Code.[22]

That backwages are not granted to employees participating in an illegal

strike simply accords with the reality that they do not render work for the employer



















during the period of the illegal strike.[23] According to G&S Transport Corporation

v. Infante:[24]

With respect to backwages, the principle of a ―fair day’s wage for a

fair day’s labor‖ remains as the basic factor in determining the awardthereof. If there is no work performed by the employee there can be

no wage or pay unless, of course, the laborer was able, willing and

ready to work but was illegally locked out, suspended or dismissed

or otherwise illegally prevented from working. xxx In Philippine

Marine Officers’ Guild v. Compañia Maritima, as affirmed in Philippine

Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union,

the Court stressed that for this exception to apply, it is required that

the strike be legal, a situation that does not obtain in the case at bar.

(emphasis supplied)

The petitioners herein do not deny their participation in the June 15,

1993 strike. As such, they did not suffer any loss of earnings during their absence

from work. Their reinstatement sans backwages is in order, to conform to the

policy of a fair day’s wage for a fair day’s labor .

Under the principle of a fair day’s wage for a fair day’s labor , the

petitioners were not entitled to the wages during the period of the strike (even if the

strike might be legal), because they performed no work during the strike. Verily, it

was neither fair nor just that the dismissed employees should litigate against their

employer on the latter’s time.[25] Thus, the Court deleted the award of backwages

and held that the striking workers were entitled only to reinstatement in Philippine

Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond

Hotel Employees Union,[26] considering that the striking employees did not render

work for the employer during the strike.

III

Appropriate Amount for Separation Pay Is One Month per Year of Service

The petitioners were ordered reinstated because they were union members

merely instigated or induced to participate in the illegal strike. By joining the



















strike, they did not renounce their employment relation with PINA but remained as

its employees.

The absence from an order of reinstatement of an alternative relief should

the employer or a supervening event not within the control of the employee preventreinstatement negates the very purpose of the order. The judgment favorable to the

employee is thereby reduced to a mere paper victory, for it is all too easy for the

employer to simply refuse to have the employee back. To safeguard the spirit of

social justice that the Court has advocated in favor of the working man, therefore,

the right to reinstatement is to be considered renounced or waived only when the

employee unjustifiably or unreasonably refuses to return to work upon being so

ordered or after the employer has offered to reinstate him.[27]

However, separation pay is made an alternative relief in lieu of reinstatement

in certain circumstances, like: (a) when reinstatement can no longer be effected in

view of the passage of a long period of time or because of the realities of the

situation; (b) reinstatement is inimical to the employer’s interest; (c) reinstatement

is no longer feasible; (d ) reinstatement does not serve the best interests of the

parties involved; (e) the employer is prejudiced by the workers’ continued

employment; ( f ) facts that make execution unjust or inequitable have supervened;

or ( g ) strained relations between the employer and employee.[28]

Here, PINA manifested that the reinstatement of the petitioners would not be

feasible because: (a) it would ―inflict disruption and oppression upon the

employer‖; (b) ―petitioners [had] stayed away‖ for more than 15 years; (c) its

machines had depreciated and had been replaced with newer, better ones; and (d ) it

now sold goods through independent distributors, thereby abolishing the positions

related to sales and distribution.[29]

Under the circumstances, the grant of separation pay in lieu of reinstatementof the petitioners was proper. It is not disputable that the grant of separation pay or

some other financial assistance to an employee is based on equity, which has been

defined as justice outside law, or as being ethical rather than jural and as belonging

to the sphere of morals than of law.[30]This Court has granted separation pay as a

measure of social justice even when an employee has been validly dismissed, as


















long as the dismissal has not been due to serious misconduct or reflective of

personal integrity or morality.[31]

What is the appropriate amount for separation pay?

In G & S Transport ,[32] the Court awarded separation pay equivalent to one

month salary per year of service considering that 17 years had passed from the

time when the striking employees were refused reinstatement. In Association of

Independent Unions in the Philippines v. NLRC ,[33] the Court allowed separation

pay equivalent to one month salary per year of service considering that eight years

had elapsed since the employees had staged their illegal strike.

Here, we note that this case has dragged for almost 17 years from the time of the illegal strike. Bearing in mind PINA’s manifestation that the positions that the

petitioners used to hold had ceased to exist for various reasons, we hold that

separation pay equivalent to one month per year of service in lieu of reinstatement

fully aligns with the aforecited rulings of the Court on the matter.

WHEREFORE, we affirm the decision dated August 18, 2003 of the Court

of Appeals, subject to the modification to the effect that in lieu of reinstatement the

petitioners are granted backwages equivalent of one month for every year of

service.

SO ORDERED.













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