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LABOR

1. INTL SCHOOL ALLIANCE OF EDUCATORS (ISAE) v. QUISUMBING


FACTS: Petitioners work under private respondent International School. The
school hires both local and foreign hires. Foreign hires are granted with more
benefits and higher 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 who work with substantially equal qualifications, skillsm effort, and
responsibility under similar conditions should be paid similar salaries. If an
employer accords the same rank and position, the presumption is that they
perform equal work. Here, both groups have similar functions which they
perform under similar conditions. There is no evidence that foreign hires
perform 25% more efficient than local hires. The dislocation factor and tenure
are properly accorded by the benefits they received.
International School (IS) pays its teachers who are hired from abroad, or
foreign-hires, a higher 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 foreigners must be given a higher salary both to
attract them to teach here, and to compensate them for the significant
economic disadvantages involved in coming here. The Teachers Union
cries discrimination.
HELD: Discrimination exists. Equal pay for equal work is a principal long
honored in this jurisdiction, as it rests on fundamental norms of justice
1. Art. XIII, Sec. 1 of the Constitution (Social Justice and Human Rights)
exhorts Congress to give the highest priority to the enactment of measures
that protect and ennhance the right od all people to human dignity, reduce
social, economic, and political inequalitites. The Constitution also provides
that labor is entitled to humane conditions of work.. These conditions are not
restricted to the physical workplace, but include as well the manner by which
employers treat their employees. Lastly, the Constitution directs the State to
promote equality of employment opportunities for all, regardless of sex,
race, or creed. It would be an affront to both the spirit and the letter of these
provisions if the State closes its eyes to unequal and discriminatory terms and
conditions of employment.
2. International law, which springs from general principles of law,
likewise proscribes discrimination. General principles of law include
principles of equity, i.e., fairness and justice, based on the test of what is
reasonable. The Universal Declaration of Human Rights and numerous other
international Conventions all embody the general principle against
discrimination, the very antithesis of fairness and justice. The Philippines,
through its Constitution, has incorporated this principle as part of its national
laws.


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 any other 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
Unions 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 Secretarys 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 managements 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
eight hours 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 petition which challenges the validity and legality
of the
Decision
1
of public respondent National Labor Relations
Commission
2
promulgated on April 23, 1992 in NLRC NCR CA No.
002522-91 entitled "Angel V. Esquejo vs. PAL Employees Savings and
Loan Association" which Decision modified (slightly as to amount) the
earlier decision
3
dated November 11, 1991 of the labor arbiter granting
private respondent's claim of overtime pay.
The Facts and the Case Below
On October 10, 1990, private respondent filed with public respondent a
complaint docketed as NLRC NCR Case No. 10-05457-90 for non-
payment of overtime pay and non-payment of the P25.00 statutory
minimum wage increase mandated by Republic Act No. 6727.
Subsequently, private respondent filed a supplemental complaint for
illegal suspension with payer for reinstatement and payment of
backwages. However, before the case was submitted for resolution,
private respondent filed a "Motion to Withdraw Supplemental
Complaint" on the ground that a separate action for illegal suspension,
illegal dismissal, etc. had been filed and was pending before another
labor arbiter. Hence, the issue decide by public respondent and which
is under review by this Court in this petition involves only his claim for
overtime pay.
On November 26, 1990, private respondent filed his position
paper
4
with the labor arbiter alleging the following facts constituting his
cause of action:
Complaint (herein private respondent) started working with
respondent (PESALA) sometime last March 1, 1986 as a
company guard and was receiving a monthly basic salary of
P1,990.00 plus an emergency allowance in the amount of
P510.00. He was required to work a (sic) twelve (12) hours a
day, a (sic) xerox copies of his appointment are hereto attached
and marked as Annexes "C" and "D" of this position paper;
That on December 10, 1986, respondent Board of Directors in
its board meeting held on November 21, 1986 approved a
salary adjustment for the complainant increasing his monthly
basic salary to P2,310.00 and an emergency allowance of
P510.00, a xerox copy of the salary adjustment is hereto
attached and marked as Annex "E" hereof;
That on August 25, 1987, because of his impressive
performance on his assigned job, another adjustment was
approved by the President of the association increasing his
monthly basic salary to P2,880.00, a xerox copy of the salary
adjustment is hereto attached and marked as Annex "F" hereof;
That from January 4, 1988 up to June 1990, several salary
adjustments were made by the respondent on the monthly basic
salary of the complainant including a letter of appreciation for
being as (sic) one of the outstanding performers during the first
half of 1988, the latest salary prior to the filing of the complaint
was P3,720.00, a (sic) xerox copies of all documents relative to
the salary adjustments are hereto attached and marked as
annexes "G", "H", and "K" of this position paper;
That during his entire period of employment with respondent,
the former was required to perform overtime work without any
additional compensation from the latter. It was also at this point
wherein the respondent refused to give the 25.00 increase on
the minimum wage rates as provided for by law. On October 12,
1990, complainant was suspended for the period of thirty seven
(37) days for an offense allegedly committed by the respondent
sometime last August 1989.
On December 13, 1990, petitioner PESALA filed its position
paper
5
alleging among other things:
On 01 March, 1986, complainant was appointed in a permanent
status as the company guard of respondent. In the Appointment
Memorandum dated February 24, 1986 which has the
conformity of complaint, it is expressly stipulated therein that
complainant is to receive a monthly salary of P1,900.00 plus
P510.00 emergency allowance for a twelve (12) hours work per
day with one (1) day off. A copy of said appointment
memorandum is hereto attached as Annex "A" and made an
integral part hereof.
On 01 December, 1986, the monthly salary of complainant was
increased to P2,310,00 plus P510.00 emergency allowance.
Latter, or on 01 January, 1988, the monthly salary of
complainant was again increased to P3,420.00. And still later, or
on 01 February, 1989, complainant's monthly salary was
increased are hereto attached as Annexes "B", "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 position of a guard will be abolished effective
November 30, 1989, and that complainant will be re-assigned to
the position of a ledger custodian effective December 1, 1989.
Pursuant to the above-mentioned letter-agreement of Mr.
Jornales, complaint was formally appointed by respondent as its
ledger custodian on December 1, 1989. The monthly salary of
complainant as ledger custodian starting on December 1, 1989
was P3,720,00 for forty (40) working hours a week or eight (8)
working hours a day. a copy of said Appointment memorandum
is hereto attached as Annex "C" and made an integral part
hereof.
On 29 August, 1990, complainant was administratively charged
with a serious misconduct or disobedience of the lawful orders
of respondent or its officers, and gross and habitual neglect of
his duties, committed as follows:
1. Sometime in August, 1989, you
(referring to complainant Esquejo)
forwarded the checks corresponding
to the withdrawals of Mr. Jose
Jimenez and Mr. Anselmo dela
Banda of Davao and Iloilo Station,
respectively, without the signature of
the Treasurer and the President of
PESALA, in violation of your duty
and function that you should see to it
that the said checks should be
properly signed by the two PESALA
officials before you send out said
checks to their addresses. As a
result of which, there was a
substantial delay in the transmission
of the checks to its owners resulting
to an embarrassment on the part of
the PESALA officers and damage
and injury to the recipients (sic) of
the checks since they needed the
money badly.
2. Sometime in August, 1989, before
you (complainant) went on your
vacation, you failed to leave or
surrender the keys of the office,
especially the keys of the keys to the
main and back doors which resulted
to damage, injury and
embarrassment to PESALA. This is
a gross violation of your assigned
duties and you disobeyed the
instruction of your Superior.
xxx xxx xxx
Herein complainant was informed of the aforequoted charges
against him and was given the opportunity to be heard and
present evidence in his behalf as shown by the Notice of
Hearing (Annex "D" hereof) sent to him. Complainant did in fact
appeared (sic) at the hearing, assisted by his counsel, Atty.
Mahinardo G. Mailig, and presented his evidence in the form of
a Counter-Affidavit. A copy of said Counter-Affidavit is hereto
attached as Annex "E" and made an integral part hereof.
On 12 October, 1990, after due deliberation on the merits of the
administrative charges filed against herein complainant, the
Investigating Officer in the person of Capt. Rogelio Enverga
resolved the same imposing a penalty of suspension of herein
complainant, thus:
"PENALTY: 1. For the
first offense, you
(referring to complaint
Esquejo) are
suspended for a period
of thirty (30) working
days without pay
effective October 15,
1990.
2. For the second
offense, your (sic) are
suspended for a period
of seven (7) working
days whiteout pay
effective from the date
first suspension will
expire".
On March 7, 1991, private respondent filed a detailed and itemized
computation of his money claims totaling P107,495.90, to which
petitioner filed its comment on April 28, 1991. The computation filed on
March 7, 1991 was later reduced to P65,302.80. To such revised
computation, the petitioner submitted its comment on April 28, 1991.
WHEREFORE, judgment is hereby rendered:
1. Granting the claim for overtime
pay covering the period October 10,
1987 to November 30, 1989 in the
amount of P28,344.55.
2. The claim for non-payment of
P25.00 salary increase pursuant to
Republic Act No. 6727 is dismissed
for lack of merit.
Aggrieved by the aforesaid decision, petitioner appealed to public
respondent NLRC only to be rejected on April 23, 1992 via the herein
assailed Decision, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, the award is reduced to
an amount of TWENTY EIGHT THOUSAND SIXTY-SIX PESOS
AND 45/100 (P28,066.45). In all other respects, the Decision
under review is hereby AFFIRMED and the appeal DISMISSED
for lack of merit.
No motion for reconsideration of the Decision was filed by the
petitioner.
6

What transpired afterwards is narrated by the Solicitor General in his
memorandum,
7
which we presume to be correct since petitioner did
not contradict the same in its memorandum:
. . . Petitioner did not appeal the Decision of respondent NLRC.
When it became final, the parties were called to a conference on
June 29, 1992 to determine the possibility of the parties'
voluntary compliance with the Decision (Order of Labor Arbiter
Linsangan. dated July 23, 1992).
. . . In their second conference, held on July 15, 1992, petitioner
proposed to private respondent a package compromise
agreement in settlement of all pending claims. Private
respondent for his part demanded (P150,000.00 as settlement
of his complaint which was turned down by petitioner as too
excessive. Unfortunately, no positive results were achieved.
As a result, pleading was filed by petitioner captioned: Motion to
Defer Execution and Motion to Re-Compute alleged overtime
pay. Petitioner states that "quite recently, the Employee Payroll
Sheets pertaining to the salaries, overtime pay, vacation and
sick leave of Angel Esquejo were located".
. . . Petitioner's Motion to Defer Execution and Motion to Re-
Compute respondent's overtime pay was denied in an Order
dated July 23, 1992.
. . . Petitioner moved to reconsider the Denial Order on July 27,
1992. Private respondent opposed.
In the meantime, petitioner filed the instant special civil action
for certiorari before this Court on July 10, 1992. Later, on July 17,
1992, citing as reason that ". . . quite recently, the Employee Payroll
Sheets which contained the salaries and overtime pay received by
respondent Esquejo were located in the bodega of the petitioner and
based on said Payroll Sheets, it appears that substantial overtime pay
have been paid to respondent Esquejo in the amount of P24,238.22 for
the period starting January 1987 up to November 1989". petitioner
asked this Court for the issuance of a temporary restraining order or
writ of preliminary injunction. On the same date of July 17, 1992, a
"Supplemental Petition Based On Newly Discovered Evidence" was
filed by petitioner to which was attached photocopies of payroll sheets
of the aforestated period.
On July 29, 1992, this court issued a temporary restraining order
enjoining the respondents from enforcing the Decision dated April 23,
1992 issued in NLRC NCR No. 002522-91, the case below subject of
the instant petition.
The Issues
Four issues have been raised by the petitioner in its effort to obtain a
reversal of the assailed Decision, to wit:
I
THE RESPONDENT NLRC COMMITTED A
GRAVE ABUSE OF DISCRETION WHEN IT
RULED THAT PRIVATE RESPONDENT IS
ENTITLED TO OVERTIME PAY WHEN THE
SAME IS A GROSS CONTRAVENTION OF THE
CONTRACT OF EMPLOYMENT BETWEEN
PETITIONER AND RESPONDENT ESQUEJO
AND A PATENT VIOLATION OF ARTICLES
1305, 1306 AND 1159 OF THE CIVIL CODE.
II
THE RESPONDENT NLRC COMMITTED A
GRAVE ABUSE OF DISCRETION IF AWARDING
OVERTIME PAY OF P28,066.45 TO PRIVATE
RESPONDENT WHEN THE SAME IS A CLEAR
VIOLATION OF ARTICLE 22 OF THE CIVIL
CODE ON UNJUST ENRICHMENT.
III
THE RESPONDENT NLRC COMMITTED A
GRAVE ABUSED OF DISCRETION WHEN IT
RULED THAT PRIVATE RESPONDENT WAS
NOT PAID THE OVERTIME PAY BASED ON
THE COMPUTATION OF LABOR ARBITER
CORNELIO LINSANGAN WHICH WAS
AFFIRMED BY SAID RESPONDENT NLRC
WHEN THE SAME IS NOT SUPPORTED BY
SUBSTANTIAL EVIDENCE AND IT,
THEREFORE, VIOLATED THE CARDINAL
PRIMARY RIGHTS OF PETITIONER AS
PRESCRIBED IN "AND TIBAY VS. CIR." 69 PHIL.
635.
IV
WHETHER OR NOT THE PETITIONER'S
SUPPLEMENTAL PETITION BASED ON NEWLY
DISCOVERED EVIDENCE MAY BE ADMITTED
AS PART OF ITS EVIDENCE IT BEING VERY
VITAL TO THE JUDICIOUS DETERMINATION
OF THE CASE. (Rollo, p. 367)
In essence the above issued boil down to this query: Is an employee entitled
to overtime pay for work rendered in excess of the regular eight hour day
given the fact that he entered into a contract of labor specifying a work-day of
twelve hours at a fixed monthly rate above the legislated minimum wage?
The Court's Ruling
At the outset, we would like to rectify the statement made by the Solicitor
General that the "petitioner did not appeal from the Decision of (public)
respondent NLRC". The elevation of the said case by appeal is not possible.
The only remedy available from an order or decision of the NLRC is a petition
for certiorari under Rule 65 of the Rules of Court alleging lack or excess of
jurisdiction or grave abuse of discretion.
8
The general rule now is that the
special civil action of certiorari should be instituted within a period of three
months.
9
Hence, when the petition was filed on July 10, 1992, three months
had not yet elapsed from petitioner's receipt of the assailed Decision (should
really be from receipt of the order denying the motion for reconsideration).
However, aside from failing to show clearly grave abuse of discretion on the
part of respondent NLRC, which we shall discuss shortly, the petitioner also
failed to comply with the mandatory requirement of filing a motion for
reconsideration from the Decision of the public respondent before resorting to
the remedy of certiorari. We have previously held that:
. . . The implementing rules of respondent NLRC are
unequivocal in requiring that a motion for reconsideration of the
order, resolution, or decision of respondent commission should
be seasonably filed as a precondition for pursuing any further or
subsequent remedy, otherwise the said order, resolution, or
decision shall become final and executory after ten calendar
days from receipts thereof. Obviously, the rationale therefor is
that the law intends to afford the NLRC an opportunity to rectify
such errors or mistakes it may have lapsed into before resort to
the courts of justice can be had. This merely adopts the rule that
the function of a motion for reconsideration is to point out to the
court the error that it may have committed and to give it a
chance to correct itself.
10

Additionally, the allegations in the petition clearly show that
petitioner failed to file a motion for reconsideration of the
assailed Resolution before filing the instant petition. As correctly
argued by private respondent Rolando Tan, such failure
constitutes a fatal infirmity. . . . The unquestioned rule in this
jurisdiction is that certiorari will only if there is no appeal or any
other plain, speedy an adequate remedy in the ordinary course
of law against the acts of public respondent. In the instant case,
the plain and adequate remedy expressly provided by law was a
motion for reconsideration of the assailed decision, based on a
palpable or patent errors, to be made under oath and filed within
ten (10) calendar days from receipt of the questioned decision.
And for failure to avail of the correct remedy expressly provided
by law, petitioner has permitted the subject Resolution to
become final and executory after the lapse of the ten day period
within which to file such motion for reconsideration.
11

In brief, the filing of the instant petition was premature and did not toll the
running of the 3 month period. Thus, the assailed Decision became final and
executory. On this ground alone, this petition must therefore be dismissed.
However, in view of the importance of the substantial query raised in the
petition, we have resolved to decide the case on the merits also.
The First Issue: Was Overtime Pay Included?
The main disagreement between the parties centers on how the contract of
employment of the private respondent should be interpreted. The terms and
conditions thereof reads as follows:
Date: February 24, 1986
NAME : ESQUEJO, ANGEL
NATURE OF ACTION : APPOINTMENT
FROM :
POSITION TITLE : COMPANY GUARD
TO :
STATUS : PERMANENT
EFFECTIVE DATE : MARCH 1, 1986
FROM : P1,990.00 per month
plus P510.00 emergency
allowance
SALARY :
TO :

REMARKS : To confirm permanent
appointment as company
guard who will render 12
hours a day with one (1)
day off

RECOMMENDED BY: APPROVED BY:
(Signed) (Signed)
SULPICIO B. JORNALES CATALINO F. BANEZ
(Signed)
ANGEL V. ESQUEJO
12

Petitioner faults the public respondent when it said that there was "no meeting
of minds between the parties," since the employment contract "explicitly
states without any equivocation" that the overtime pay for work rendered for
four (4) hours in excess of the eight (8) hour regular working period is already
included in the P1,990.00 basic salary. "This is very clear from the fact that
the appointment states 12 hours a day work."
13
By its
computations,
14
petitioner tried to illustrate the private respondent was paid
more than the legally required minimum salary then prevailing.
To prove its contention, petitioner argues that:
The legal minimum wage prescribed by our statutes, the legally
computed overtime pay and monthly salaries being paid by
petitioner to respondent Esquejo would show that indeed, the
overtime pay has always been absorbed and included in the
said agreed monthly salaries.
In 1986, the legal minimum salary of Esquejo is computed as
follows (per Appointment Memoranda dated February 4, 1986
and June 6, 1986 [Annex "C" and "D" of Annex "B" of this
Petition]):
54 x 314 days
-------------
12 months = P1,413.00 monthly salary
The hourly overtime pay is computed as follows:
54/8 hours = P6.75 x 4 hrs. = P27.00
P27.00 x 1.25 = P33.75 x 20 (should be 26)days =
P887.50
(should be P877.50)
P1,413.00 legal minimum wage
+ 887.50(877.50) legal overtime pay
---------------
P2,290.50 amount due to respondent
Esquejo under the law
P2,500.00 gross salary of Esquejo per contract
-2,290.50
----------
P209.50 Difference (Rolllo, p. 371).
On the other hand, private respondent in his position paper claims that
overtime pay is not so incorporated and should be considered apart from the
P1,990.00 basic salary.
15

We find for the private respondent and uphold the respondent NLRC's ruling
that he is entitled to overtime pay.
Based on petitioner's own computation, it appears that the basic salary plus
emergency allowance given to private respondent did not actually include the
overtime pay claimed by private respondent. Following the computations it
would appear that by adding the legal minimum monthly salary which at the
time was P1,413.00 and the legal overtime minimum monthly salary which at
the time was P1,413.00 and the legal overtime pay of P877.50, the total
amount due the private respondent as basic salary should have been
P2,290.50. By adding the emergency cost of living allowance (ECOLA) of
P510.00 as provided by the employment contract, the total basic salary plus
emergency allowance should have amounted to P2,800.50. However,
petitioner admitted that it actually paid private respondent P1,990.00 as basic
salary plus P510.00 emergency allowance or a total of only P2,500.00.
Undoubtedly, private respondent was shortchanged in the amount of
P300.50. Petitioner's own computations thus clearly establish that private
respondent's claim for overtime pay is valid.
Side Issue: Meeting of the Minds?
The petitioner contends that the employment contract between itself and the
private respondent "perfectly satisfies" the requirements of Article 1305 of the
Civil Code as to the "meeting of the minds" such that there was a "legal and
valid contract" entered into by the parties. Thus, private respondent "cannot
be allowed to question the said salary arrangements for the extra 4 hours
overtime pay after the lapse of 4 years and claim only now that the same is
not included in the terms of the employment contracts."
16

We disagree. Public respondent correctly found no such agreement as to
overtime pay. In fact. the contract was definite only as to the number of hours
of work to be rendered but vague as to what is covered by the salary
stipulated. Such ambiguity was resolved by the public respondent, thus:
In resolving the issue of whether or not complainant's overtime
pay for the four (4) hours of work rendered in excess of the
normal eight hour work period is incorporated in the
computation of his monthly salary, respondent invokes its
contract of employment with the complainant. Said contract
appears to be in the nature of a document identifiable as an
appointment memorandum which took effect on March 1, 1986
(Records, p. 56) by virtue of which complaint expressed
conformity to his appointment as company guard with a work
period of twelve (12) hours a day with one (1) day off. Attached
to this post is a basic salary of P1,900.00 plus P510.00
emergency allowance. It is (a) cardinal rule in the interpretation
of a contract that if the terms thereof are clear and leave no
doubt upon the intention of the contracting parties, then the
literal meaning of its stipulations shall control. (Art. 1370, Civil
Code of the Philippines). To this, respondent seeks refuge.
Circumstances, however, do not allow us to consider this rule in
the light of complainant's claim for overtime pay which is an
evident indication that as to this matter, it cannot be said that
there was a meeting of the minds between the parties, it
appearing that respondent considered the four (4) hours work in
excess of the eight hours as overtime work and compensated
by way of complainant's monthly salary while on the latter's part,
said work rendered is likewise claimed as overtime work but yet
unpaid in view of complainant's being given only his basic
salary. Complainant claims that the basic salary could not
possibly include therein the overtime pay for his work rendered
in excess of eight hours. Hence, respondent's Appointment
Memorandum cannot be taken and accorded credit as it is so
worded in view of this ambiguity. We therefore proceeded to
determine the issue in the light of existing law related thereto.
while it is true that the complainant received a salary rate which
is higher that the minimum provided by law, it does not however
follow that any additional compensation due the complainant
can be offset by his salary in excess of the minimum, especially
in the absence of an express agreement to that effect. To
consider otherwise would be in disregard of the rule of non-
diminution of benefits which are above the minimum being
extended to the employees. Furthermore, such arrangement is
likewise in disregard of the manner required by the law on how
overtime compensation must be determined. There is further the
possibility that in view of subsequent increases in the minimum
wage, the existing salary for twelve (12) hours could no longer
account for the increased wage level together with the overtime
rate for work rendered in excess of eight hours. This fertile
ground for a violation of a labor standards provision can be
effectively thwarted if there is a clear and definite delineation
between an employee's regular and overtime compensation. It
is, further noted that a reading of respondent's Appointment
Memoranda issued to the complainant on different dates
(Records, pp. 56-60) shows that the salary being referred to by
the respondent which allegedly included complainant's overtime
pay, partakes of the nature of a basic salary and as such, does
not contemplate any other compensation above thereof
including complaint's overtime pay. We therefore affirm
complainant's entitlement to the latter benefit.
1
7
Petitioner also insists that private respondent's delay in asserting his
right/claim demonstrates his agreement to the inclusion of overtime pay in his
monthly salary rate. This argument is specious. First of all, delay cannot be
attributed to the private respondent. He was hired on March 1, 1986. His
twelve-hour work periods continued until November 30, 1989. On October 10,
1990 (just before he was suspended) he filed his money claims with the labor
arbiter. Thus, the public respondent in upholding the decision of the arbiter
computed the money claims for the three years period from the date claims
were filed, with the computation starting as of October 10, 1987 onwards.
In connection with the foregoing, we should add that even if there had been a
meeting of the minds in the instant case, the employment contract could not
have effectively shielded petitioner from the just and valid claims of private
respondent. Generally speaking, contracts are respected as the law between
the contracting, parties, and they may establish such stipulation, clause,
terms and conditions as they may see fit; and for as long as such agreements
are not contrary to law, morals, good customs, public policy or public order,
they shall have the fore of law between them.
18
However, ". . ., while it is the
inherent and inalienable right of every man to have the most liberty of
contracting, and agreements voluntarily and fairly made will be held valid and
enforced in the courts, the general right to contract is subject to the limitation
that the agreement must not be in violation of the Constitution, the statute of
some rule of law (12 Am. Jur. pp. 641-642)."
19
And under the Civil Code,
contracts of labor are explicitly subject to the police power of the State
because they are not ordinary contracts but are impressed with public
interest.
20
Inasmuch as in this particular instance the contract is question
would have been deemed in violation of pertinent labor laws, the provisions of
said laws would prevail over the terms of the contract, and private respondent
would still be entitled to overtime pay.
Moreover, we cannot agree with petitioner's assertion that by judging the
intention of the parties from their contemporaneous acts it would appear that
the "failure of respondent Esquejo to claim such alleged overtime pay since
1986 clearly demonstrate(s) that the agreement on his gross salary as
contained in his appointment paper is conclusive on the matter of the
inclusion of overtime pay." (Rollo, pp. 13-15; also, Rollo, pp. 378-380). This is
simply not the case here. The interpretation of the provision in question
having been put in issue, the Court is constrained to determine which
interpretation is more in accord with the intent of the parties.
21
To ascertain
the intent of the parties, the Court is bound to look at their contemporaneous
and subsequent acts.
22
Private respondent's silence and failure to claim his
overtime pay since 1986 cannot be considered as proving the understanding
on his part that the rate provided in his employment contract covers overtime
pay. Precisely, that is the very question raised by private respondent with the
arbiter, because contrary to the claim of petitioner, private respondent
believed that he was not paid his overtime pay and that such pay is not
covered by the rate agreed upon and stated in his Appointment
Memorandum. The subsequent act of private respondent in filing money
claims negates the theory that there was clear agreements as to the inclusion
of his overtime pay in the contracted salary rate. When an employee fails to
assert his right immediately upon violation thereof, such failure cannot ipso
facto be deemed as a waiver of the oppression. We must recognize that the
worker and his employer are not equally situated. When a worker keeps silent
inspite of flagrant violations of his rights, it may be because he is seriously
fearful of losing his job. And the dire consequences thereof on his family and
his dependents prevent him from complaining. In short, his thoughts of sheer
survival weight heavily against launching an attack upon his more powerful
employer.
The petitioner contends that the agreed salary rate in the employment
contract should be deemed to cover overtime pay, otherwise serious
distortions in wages would result "since a mere company guard will be
receiving a salary much more that the salaries of other employees who are
much higher in rank and position than him in the company." (Rollo, p. 16) We
find this argument flimsy and undeserving of consideration. How can paying
an employee the overtime pay due him cause serious distortions in salary
rates or scales? And how can "other employees" be aggrieved when they did
not render any overtime service?
Petitioner's allegation that private respondent is guilty of laches is likewise
devoid of merit. Laches is defined as failure or neglect for an unreasonable
and unexplained length of time to do that which, by exercising due diligence,
could or should have been done earlier. It is negligence or omission to assert
a right within an unreasonable time, warranting the presumption that the party
entitled to assert it has either abandoned or declined to assert it
23
The
question of laches is addressed to the sound discretion of the court, and since
it is an equitable doctrine, its application is controlled by equitable
considerations. It cannot work to defeat justice or to perpetrate fraud and
injustice.
24
Laches cannot be charged against any worker when he has not
incurred undue delay in the assertion of his rights. Private respondent filed his
complaint within the three-year reglementary period. He did not sleep on his
rights for an unreasonable length of time.
25

Second Issue: Unjust Enrichment?
Petitioner contends that the award of overtime pay is "plain and simple unjust
and illegal enrichment." Such award "in effect sanctioned and approved the
grant of payment to respondent Esquejo which will result in double payment
for the overtime work rendered by paid employee."
26
Also, per petitioner,
"(n)othing in the Labor Code nor in the Rules and Regulations issued in the
implementation thereof prohibits the manner of paying the overtime pay (by)
including the same in the salary."
2
7
This is begging the issue. To reiterate, the main question raised before the
labor tribunals is whether the provision on wages in the contract of
employment already included the overtime pay for four (4) working hours
rendered six days a week in excess of the regular eight-hour work. And we
hold that the tribunals below were correct in ruling that the stipulated pay did
not include overtime. Hence, there can be no undue enrichment in claiming
what legally belongs to private respondent.
Third Issue: Basic of NLRC's Decision?
Petitioner assails respondent NLRC for adopting that portion of the decision
of the labor arbiter, which reads as follows:
. . . Our conclusion is quite clear considering the fact that at the
time of his employment in March 1986, during which the
minimum wage was P37.00 a day for 8 hours work, complaint's
total take-home-pay working 12 hours a day including ECOLA,
was only P2,500.00 a month. And immediately prior to his
appointment as Ledger Custodian effective December 1, 1989,
with the working hours reduced to 8 hours a week,
complainant's monthly salary was P3,420.00 (instead of
P5,161.01 minimum monthly with 4 hours overtime work
everyday, or a difference of P1,741.01 a month).
Accordingly, the claim for overtime pay reckoned from October
10, 1987 up to November 30, 1989 should be, as it is hereby,
granted.
28
(Rollo, p. 201).
Petitioner believes that by adopting the above-quoted portion of the arbiter's
decision, respondent NLRC violated the cardinal rule that its decisions must
be supported by substantial evidence. In doing so, petitioner claims that the
NLRC violated is primary rights as enunciated in the case of Ang Tibay
vs. CIR 29. In other words, petitioner holds the view that the arbiter's decision
failed to explain how the amount of P5,161.01 was arrived at.
30

Petitioner is in error. The public respondent did not adopt in toto the
aforequoted portion of the arbiter's decision. It made its own computations
and arrived at a slightly different amount, with a difference of P278.10 from
the award granted by the labor arbiter. To refute petitioner's claim, public
respondent attached (as Annexes "1", "1-A" "1-B" and "1-C") to its Comment,
the computations made by the labor arbiter in arriving at the sum of
P5,161,00. On the other hand, public respondent made its own computation
in its assailed Decision and arrived at a slightly different figure from the
computed by the labor arbiter:
Respondent claims that the award of P28,344.55 is bereft of any
factual basis. Records show that as per computation of the
office of the Fiscal Examiner, (Records, p. 116) the said amount
was arrived at. The computation was however based on the
assumption that the complainant regularly reported for work.
Records however show that the complainant absented himself
from work for one day in August 1989. (Records, p. 63) For this
unworked day, no overtime pay must be due. As to the rest of
his period of employment subject to the three year limitation rule
which dates from October 10, 1987 up to his appointment as
Ledger Custodian on December 1, 1989 after which his regular
work period was already reduced to eight hours, there being no
showing that the complainant absented himself from work, and
he being then required to work for period of twelve hours daily,
We therefore rule on complainant's entitlement to overtime
compensation for the duration of the aforesaid period in excess
of one working day. Consequently, complainant's overtime pay
shall be computed as follow:
OVERTIME PAY: (4 HRS/DAY)
October 10, 1987 December 13, 1987 = 2.10
mos.
P54/8hrs. = P6.75 x 4 hrs. = P27.00
P27 x 1.25 = P33.75 x 26 x 2.10 mos. = P1,842.75

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

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

TOTAL OVERTIME PAY
P28,066.45 (P28,067.075)" (Rollo, pp. 210-212)
Prescinding therefrom, it is evident that petitioner had no basis to argue that
respondent NLRC committed any grave abuse of discretion in quoting the
questioned portion of the labor arbiter's holding.
Fourth Issue: Newly Discovered Evidence?
In its Supplemental Petition filed on July 17, 1996, petitioner alleges in part:
2. That only recently, the petitioner was able to locate the
Employees Payroll Sheets which contained the salaries,
overtime pay, vacation and sick leaves of respondent Esquejo
which pertains to the period starting from January 1, 1987 up to
November 1989. Therefore, said total amount of overtime pay
paid to and received by respondent Esquejo should be
deducted from the computed amount of P28,066.45 based on
the questioned decision; (Rollo, p. 220).
Contrary to petitioner's claim however, said documents consisting of
payroll sheets, cannot be considered as "newly-discovered evidence"
since said papers were in its custody and possession all along,
petitioner being the employer of private respondent
Furthermore, petitioner offers no satisfactory explanation why these
documents were unavailable at the time the case was being heard by
the labor arbiter. In its Memorandum, petitioner excused itself for its
failure to present such evidence before the labor arbiter and
respondent NLRC by saying that "petitioner('s office) appeared to be in
disorder or in a state of confusion since the then officers (of petitioner)
were disqualified by the Monetary Board on grounds of
misappropriation of funds of the association and other serious
irregularities. There was no formal turn-over of the documents from the
disqualified set of officer to the new officers of petitioner."
31
We find
such excuse weak and unacceptable, the same not being
substantiated by any evidence on record. Moreover, payroll records
are normally not in the direct custody and possession of corporate
officers but of their subordinates, i.e., payroll clerks and the like. In the
normal course of business, such payroll sheets are not the subject of
formal turnovers by outgoing officers to their successors of office. And
if indeed it is true that the petitioner had been looking for such records
or documents during the pendency of the case with the labor arbiter
and with public respondent, petitioner never alleged such search
before the said labor tribunals a quo. Hence, such bare allegations of
facts cannot be fairly appreciated in this petition for certiorari, which is
concerned only with grave abuse of discretion of lack (or excess) of
jurisdiction.
The Solicitor General quotes with approval a portion of private
respondent's Opposition to petitioner's motion for reconsideration thus:
It is clear from the payroll, although the substantial pages
thereof do not show that the net amount indicated therein have
been received or duly acknowledged to have been received by
the complainant, THAT OVERTIME PAYMENTS THAT WERE
MADE REFER TO WORK RENDERED DURING
COMPLAINANT'S OFF DAYS. What has been rightfully,
claimed by the complainant and awarded by this Honorable
Office is the overtime works (sic) rendered by the complainant
daily for six (6) days a week computed at four (4) hours per day.
This computation is based on the evidence thus submitted by
the parties. All appointment by the respondent carries (sic) with
it (sic) that the basic salary of the complainant is equivalent to
12 hours work everyday for six (6) days a week, hence, the four
(4) hours overtime daily was not considered and therefore not
paid by the respondent. (Rollo, p. 327).
It has been consistently held that factual issued are not proper subjects of a
petition for certiorari, as the power of the Supreme Court to review labor
cases is limited to questions of jurisdiction and grave abuse of
discretion.
32
The introduction in this petition of so-called newly discovered
evidence is unwarranted. This Court is not a trier of facts and it is not its
function to examine and evaluate the evidence presented (or which ought to
have been presented) in the tribunals below.
33

WHEREFORE, in view of the foregoing considerations, the Petition is
DISMISSED, the temporary restraining order issued on July 30, 1992
LIFTED, and the assailed decision of the public respondent AFFIRMED. Cost
against petitioner.
4. PT&T VS. NLRC
Fact s: Grace de Guzman, pri vate respondent, was initiall y hired as
a reliever by PT&T, petitioner, specifical l yas a Supernumerary
Project Worker, for a fixed period due to a certain employee whos
having a maternity l eave.Under t he agr eement she si gned, her
empl oyment was t o i mmedi at el y t er mi nat e upon t he
expi r at i on of t he agr eed period. Thereafter, PT&T again hired
Grace as reliever for the succeeding periods, thi s time as a
replacement to anempl oyee who went on l eave. The r el i ever
st at us was t hen f or mal l y compl et ed unt i l she was asked
agai n t o j oi nPT&T as a pr obat i onar y empl oyee cover i ng 150
days. I n t he j ob appl i cat i on f or m, she i ndi cat ed i n t he
por t i on of t he ci vi l st at us t her ei n t hat she was si ngl e
al t hough she had cont r act ed mar r i age a f ew mont hs ear l i er .
Gr ace hasalso made the same representation on her two
successi ve reliever agreements. The branch supervisor of
PT&Thavi ng di scover ed t he di scr epancy sent Gr ace a
memor andum r equi r i ng her t o expl ai n t he sai d di scr epancy
andshe was r emi nded about t he company s pol i cy of
not accept i ng mar r i ed women f or empl oyment . I n her r epl y,
shest at ed t hat she wasn t awar e of such pol i cy at t hat t i me
and al l al ong she hadn t del i ber at el y hi dden her t r ue
ci vi l status. However, PT&T remained unconvinced of this reasoning
pledge by Grace and thus she was dismissed fromt he company.
Gr ace cont est ed by i ni t i at i ng a compl ai nt f or i l l egal
di smi ssal and wi t h a cl ai m f or non- payment of cost of l i vi ng
al l owances. I ssue: Whet her or not PT&T i s l i abl e agai nst
Gr ace s i l l egal di smi ssal due t o cer t ai n company
pol i cy. Ru l i n g : Mar r i age as a speci al cont r act cannot be
r est r i ct ed by di scr i mi nat or y pol i ci es of pr i vat e i ndi vi dual s
or corporations. Wheres a company pol icy di squalified from work
any woman worker who contracts marri age, theSupr eme Cour t
i nval i dat ed such pol i cy as i t not onl y r uns af oul t he
const i t ut i onal pr ovi si on on equal pr ot ect i on but al so on t he
f undament al pol i cy of t he St at e t owar d mar r i age. The danger
of such policy against marriage followed by PT&T is that it strike at
the very essence, idealsand pur pose of mar r i age as an
i nvi ol abl e soci al i nst i t ut i on and ul t i mat el y of t he f ami l y as
t he f oundat i on of t henation. Therefore, PT&T is deemed liable for
Graces il legal dismi ssal 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 reverse the Award
1
issued on September 10, 1991 by respondent Ruben V. Abarquez, in
his capacity as Voluntary Arbitrator of the National Conciliation and Mediation Board,
Regional Arbitration Branch XI in Davao City in Case No. AC-211-BX1-10-003-91 which
directed petitioner to grant and extend the privilege of commutation of the unenjoyed
portion of the sick leave with pay benefits to its intermittent field workers who are
members of the regular labor pool and the present regular extra pool in accordance with
the Collective Bargaining Agreement (CBA) executed between petitioner and private
respondent Association of Trade Unions (ATU-TUCP), from the time it was discontinued
and henceforth.chanroblesvirtualawl ibrary chanrobles vi rtual law library
The facts are as follows: chanrobles vi rtual law l ibrary
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private
respondent ATU-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, under Sections 1 and 3, Article VIII thereof, provide for sick
leave with pay benefits each year to its employees who have rendered at least one (1)
year of service with the company, thus:
ARTICLE VIIIchanrobles vi rtual law li brary
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 portion thereof, shall be converted to cash and shall be
paid at the end of the said one year period. And provided however, that only those regular
workers of the company whose work are not intermittent, are entitled to the herein sick
leave privilege.
xxx xxx xxxchanrobles virtual law l ibrary
Sec. 3. - All intermittent field workers of the company who are members of the Regular
Labor Pool shall be entitled to vacation and sick leaves per year of service with pay under
the following schedule based on the number of hours rendered including overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 - 825 6 days 6 days
826 - 900 7 7
901 - 925 8 8
926 - 1,050 9 9
1,051 - 1,125 10 10
1,126 - 1,200 11 11
1,201 - 1,275 12 12
1,276 - 1,350 13 13
1,351 - 1,425 14 14
1,426 - 1,500 15 15 chanrobles virtual law l ibrary
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 was expanded 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 and present Regular Extra Labor Pool as of the signing of his agreement shall
be entitled to vacation and sick leaves per year of service with pay under the following
schedule based on the number of hours rendered including overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 - 825 6 days 6 days
826 - 900 7 7
901 - 925 8 8
926 - 1,050 9 9
1,051 - 1,125 10 10
1,126 - 1,200 11 11
1,201 - 1,275 12 12
1,276 - 1,350 13 13
1,351 - 1,425 14 14
1,426 - 1,500 15 15 chanrobles virtual law l ibrary
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.
During the effectivity of the CBA of October 16, 1985 until three (3) months after its
renewal on April 15, 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. Any unenjoyed 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
accordance with the schedule provided in Section 3, Article VIII of the CBA.chanroblesvirtualawli brary chanrobles virtual law li brary
The commutation of the unenjoyed portion of the sick leave with pay benefits of the
intermittent workers or its conversion to cash was, however, discontinued or withdrawn
when petitioner-company under a new assistant manager, Mr. Benjamin Marzo (who
replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June 1989), stopped the
payment of its cash equivalent on the ground that they are not entitled to the said benefits
under Sections 1 and 3 of the 1989 CBA.chanroblesvi rtualawlibrary chanrobles vi rtual law li brary
The Union objected to the said discontinuance of commutation or conversion to cash of the
unenjoyed sick leave with pay benefits of petitioner's intermittent workers contending that
it is a deviation from the true intent of the parties that negotiated the CBA; that it would
violate the principle in labor laws that benefits already extended shall not be taken away
and that it would result in discrimination between the non-intermittent and the
intermittent workers of the petitioner-company.chanroblesvirtualawl ibrary chanrobles vi rtual 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 the National 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 Ruben Abarquez, Jr. to act as voluntary arbitrator.chanroblesvirtualawl ibrarychanrobles vi rtual law library
After the parties had filed their respective position papers,
2
public 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 1 and 3 of the 1989 CBA, the dispositive portion of which
reads:
WHEREFORE, premises considered, the management of the respondent Davao Integrated
Port Stevedoring Services Corporation is hereby directed to grant and extend the sick
leave privilege of the commutation of the unenjoyed portion of the sick leave of all the
intermittent field workers who are members of the regular labor pool and the present
extra pool in accordance with the CBA from the time it was discontinued and
henceforth.chanroblesvi rtual awlibrary chanrobles virtual law li brary
SO ORDERED.
Petitioner-company disagreed with the aforementioned ruling of public respondent, hence,
the instant petition.chanroblesvirtualawli brary chanrobles vi rtual law library
Petitioner-company argued that it is clear from the language and intent of the last
sentence of Section 1, Article VIII of the 1989 CBA that only the regular workers whose
work are not intermittent are entitled to the benefit of conversion to cash of the unenjoyed
portion of sick leave, thus: ". . . And provided, however, that only those regular workers of
the Company whose work are not intermittent are entitled to the herein sick leave
privilege." chanrobles vi rtual law library
Petitioner-company further argued that while the intermittent workers were paid the cash
equivalent of their unenjoyed sick leave with pay benefits during the previous
management of Mr. Beltran who misinterpreted 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 leave with pay benefits. An error in
payment, according to petitioner-company, can never ripen into a practice.chanroblesvirtualawli brary chanrobles vi rtual law li brary
We find the arguments unmeritorious.chanroblesvirtualawl ibrary chanrobles vi rtual law library
A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers
to a contract executed upon request of either the employer or the exclusive bargaining
representative incorporating the 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 arising under such agreement.chanroblesvirtualawlibrary chanrobles virtual law library
While the terms and conditions of a CBA constitute the law between the parties,
3
it is not,
however, an ordinary contract to which is applied the principles of law governing ordinary
contracts.
4
A CBA, as a labor contract within the contemplation of Article 1700 of the Civil
Code of the Philippines which governs the relations between labor and capital, is not
merely contractual in nature but impressed with public interest, thus, it must yield to the
common good. As such, it must be construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon it, giving
due consideration to the context in which it is negotiated and purpose which it is intended
to serve.
5
chanrobles virtual law l ibrary
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from
the other related section on sick leave with pay benefits, specifically Section 3 thereof, in
its attempt to justify the discontinuance or withdrawal of the privilege of commutation or
conversion to cash of the unenjoyed portion of the sick leave benefit to regular
intermittent workers. The manner they were deprived 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 likewise
discriminatory 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 is found in Section 1, Article VIII, only the regular non-intermittent
workers and no other can avail of the said privilege because of the proviso found in the
last sentence thereof.chanroblesvirtualawl ibrary chanrobles vi rtual law library
It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits
which apply to 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 are governed by Section 1, Article VIII of the 1989 CBA; and (2)
intermittent field workers who are members of the regular labor pool and the present
regular extra labor pool as of the signing of the agreement on April 15, 1989 or those
workers who have irregular working days and are governed by Section 3, Article VIII of
the 1989 CBA.chanroblesvi rtualawlibrary chanrobles vi rtual law li brary
It is not disputed that both classes of workers are entitled to sick leave with pay benefits
provided they comply with the conditions set forth under Section 1 in relation to the last
paragraph of Section 3, 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 a company-designated physician.chanroblesvi rtualawlibrarychanrobles virtual law l ibrary
Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity
leave and vacation leave benefits, among others, are by their nature, intended to be
replacements for regular income which otherwise would not be earned because an
employee is not working during the period of said leaves.
6
They are non-contributory in
nature, in the sense that the employees contribute nothing to the operation of the
benefits.
7
By their nature, upon agreement of the parties, they are intended to alleviate
the economic condition of the workers.chanroblesvirtualawl ibrary chanrobles vi rtual law li brary
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 regular intermittent workers from the privilege of
commutation or conversion to cash of the unenjoyed portion of their sick leave with pay
benefits, if qualified. For the phrase "herein sick leave privilege," as used in the last
sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with pay
which, as mandated by Section 1, only the non-intermittent workers are entitled to. This
fixed 15-day sick leave with pay benefit should be distinguished from the variable number
of days of sick leave, not to 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 provided therein. It is only fair and reasonable
for petitioner-company not to stipulate a fixed 15-day sick leave with 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 contractual
provisions. Interpretatio fienda est ut res magis valeat quam pereat. Such interpretation is
to be adopted, that the thing may continue to have efficacy rather than fail.
8
chanrobles vi rtual law library
We find the same to be a reasonable and practical distinction readily discernible in Section
1, in relation to Section 3, Article VIII of the 1989 CBA between the two classes of workers
in the company insofar as sick leave with pay benefits are concerned. Any other distinction
would cause discrimination on the part of intermittent workers contrary to the intention of
the parties that mutually agreed in incorporating the questioned provisions in the 1989
CBA.chanroblesvirtualawl ibrary chanrobles vi rtual law library
Public respondent correctly observed that the parties to the CBA clearly intended the same
sick leave privilege to be accorded the intermittent workers in the same way that they are
both given the same treatment with respect to vacation leaves - non-commutable and
non-cumulative. If they are treated equally with respect to vacation leave privileges, with
more reason should they be on par with each other with respect to sick leave
privileges.
9
Besides, if the intention were otherwise, during its renegotiation, why did not
the parties expressly stipulate in the 1989 CBA that regular intermittent workers are not
entitled to commutation of the unenjoyed portion of their sick leave with pay benefits? chanrobles vi rtual 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 unenjoyed portion of their sick leave with pay benefits during the lifetime
of the CBA of October 16, 1985 until three (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 not unilaterally withdraw, or diminish such
benefits.
10
It is a fact that petitioner-company had, on several instances in the past,
granted and paid the cash equivalent of the unenjoyed portion of the sick leave benefits of
some intermittent workers.
11
Under the circumstances, these may be deemed to have
ripened into company practice or policy which cannot be peremptorily withdrawn.
12
chanrobles virtual law l ibrary
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 his decision is misplaced. Article 261 of the Labor Code is clear.
The questioned directive of the herein public respondent is the necessary consequence of
the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor
Code "to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement." We, therefore, find that 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 with and is absolutely correct.chanroblesvirtualawl ibrary chanrobles vi rtual law library
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of
public respondent dated September 10, 1991 is hereby AFFIRMED. No costs.chanroblesvirtualawl ibrary chanrobles vi rtual law li brary
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 Mercados 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 Relations Commission (NLRC).
[1]

The antecedent facts are as follows:
Private respondent International Catholic Migration Commission
(ICMC) is a 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 the agencies accredited by the
Philippine government to operate the refugee processing 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 Orientation Training Program at the refugee processing
center. The employment contract provided 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.
. . . .
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 latters services were terminated for his failure to meet
the requirements of 1. classroom performance . . . up to the
standards set in the Guide for Instruction; 2. regular attendance in
the mandated teacher training, and in the scheduled team meetings,
one-on-one conferences with the supervisor, etc.; 3. compliance with
ICMC and PRPC policies and procedures.
On February 4, 1986, petitioner filed a complaint for illegal
dismissal, unfair labor practice, underpayment of wages, accrued
leave pay, 14th month pay, damages, attorneys fees, and expenses
of litigation. The complaint was filed against private respondents
ICMC and its Project Director Jon Darrah, Personnel Officer Alex Dy-
Reyes, Program Officer of the Cultural Orientation Program Carrie
Wilson, and Supervisor of the Cultural Orientation Program Marivic
Soliven. Petitioner alleged that there was no objective evaluation of
his performance to warrant his dismissal and that he should have
been considered a regular employee from the start because ICMC
failed to acquaint him 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 and disability benefits; moral,
and exemplary, and nominal damages plus interest on the above
claims with attorneys fees.
Answering the complaint, ICMC claimed that petitioner failed to
qualify for regular employment because he showed no interest in
improving his professional performance both in and out of the
classroom after he had been periodically evaluated (observation
summary from August 20 to October 2, 1985 and evaluation
summary of December 14, 1985); that petitioner was paid his salary
up to December 31, 1985, two weeks pay in lieu of notice, and 14th
month pay pro-rata; and that his accrued leave balance had already
been converted to cash.
After the parties had formally offered their evidence, private
respondents submitted their memorandum on July 31, 1989 in which,
among other things, they invoked ICMCs diplomatic immunity on the
basis of the Memorandum of Agreement signed on July 15,
1988 between the Philippine government and ICMC.
The Labor Arbiter held that petitioners legal immunity under the
Memorandum could not be given retroactive effect since [that would]
deprive complainants property right without due process and impair
the obligation of contract of employment. In addition, he expressed
doubt about petitioners legal immunity on the ground that it was
provided for by agreement and not through an act of Congress.
Accordingly, the Labor Arbiter ordered ICMC to reinstate petitioner
as regular teacher without loss of seniority rights and to pay him one
year backwages, other benefits, and ten percent attorneys fees for a
total sum of P70,944.85.
Both parties appealed to the NLRC. On August 13, 1990,
petitioner moved to dismiss private respondents appeal because of
the latters failure to post a cash/surety bond. In its order of October
13, 1992, however, the NLRC ordered the case dismissed on the
ground that, under the Memorandum of Agreement between the
Philippine government and ICMC, the latter was immune from suit.
Petitioner moved for reconsideration, arguing among other
things, that the Memorandum of Agreement could not be given
retroactive effect and that in any case ICMC had waived its immunity
by consenting to be sued.
However, petitioners motion was denied by the NLRC in its
resolution dated 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 in the 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 immunity from suit. The Court holds it
did. Consequently, both the Labor Arbiter and the NLRC had no
jurisdiction over the case.
First. Petitioners contention that the Memorandum of Agreement
is not an act of Congress which is needed to repeal or supersede
the provision of the Labor Code on the jurisdiction of the NLRC and
of the Labor Arbiter is untenable. The grant of immunity to ICMC is in
virtue of the Convention on the Privileges 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 force
and effect of law, considering that under the Constitution,
the Philippinesadopts the generally accepted principles of
international law as part of the law of the land.
[3]
The Memorandum of
Agreement in question merely carries out the Philippine
governments obligation under the Convention. In International
Catholic Migration Commission v. Calleja,
[4]
this Court 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 ICMCs immunity can
not apply because this case was filed below before the signing of the
Memorandum on July 15, 1988. Petitioner cites in support the
statement of this Court in the aforesaid 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 complaint against ICMC for payment of
salary for the unexpired portion of a six-month probationary
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
dismissal by 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, the Memorandum should not be made to apply
to him.
This Court did not really reject ICMCs invocation of immunity for
causes of action accruing prior to the execution of the Memorandum.
It left open the possibility that ICMC may have been tacitly enjoying
diplomatic immunity beforehand. It is important to note that in the
1989 case ICMC did not invoke its immunity notwithstanding the fact
that the Memorandum took effect while the case was pending before
the Court.
[8]

Moreover, in the 1990 ICMC case, ICMCs immunity was in fact
upheld despite the fact that at the time the case arose, the
Memorandum recognizing ICMCs status as a specialized agency
had not yet been signed. In that case, the petition for certification
election among its rank and file employees was filed on July 14,
1986 and the order directing a certification election was made when
ICMCs request for recognition as a specialized agency was still
pending in the Department of Foreign Affairs. Yet this Court held that
the subsequent execution of the Memorandum was a bar to the
granting of the petition 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 is instructive. Art. III, 4 of the Convention provides
for immunity from every form of legal process. Thus, even if private
respondents had been served summons and subpoenas prior to the
execution of the Memorandum, they, as officers of ICMC, can claim
immunity under the same in order to prevent enforcement of an
adverse judgment, since a writ of execution is a legal process
within the meaning of Article III, 4.
[9]

Third. Another question is whether ICMC can invoke its immunity
because it only did so in its memorandum before the Labor Arbiter. It
is contended that ICMC waived its immunity in any event. Art. III, 4
of the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations requires, however, that
the waiver of the privilege must be express. There was no such
waiver of immunity in this case. Nor can ICMC be estopped from
claiming 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 ICMCs
immunity from suit deprives petitioner of due process. As pointed out
in International Catholic Migration Commission v. Calleja,
[11]
petitioner
is not exactly without remedy 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 Certiorari
1
under Rule 45 of the Rules of Court is
the Decision
2
of the Court of Appeals dated 7 November 2006 in CA-G.R. SP No. 90083.
The appellate courts Decision granted the Special Civil Action for Certiorari filed by
respondent San Sebastian College-Recoletos, Manila (SSC-R), and annulled the
Decision
3
dated 23 November 2004 and the Resolution
4
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 22 October 2001, Moreno became a member of the
permanent college faculty.
6
She was also offered the chairmanship
7
of the Business
Finance and Accountancy Department of her college on 13 September 2002.
Subsequently, reports and rumors of Morenos unauthorized external teaching
engagements allegedly 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 Department submitted its report,
8
which stated that
Moreno indeed had unauthorized teaching assignments at the Centro Escolar University
during the first semester of the School Year 2002-2003, and at the College of 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 memorandum
9
from the Dean of her college,
requiring her to explain the reports regarding her unauthorized teaching engagements.
The said activities allegedly violated Section 2.2 of Article II of SSC-Rs 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 allowed by CHED rules and regulations. Faculty members are
required to report all other teaching assignments elsewhere within two (2) weeks from
start of the classes every semester.
On 28 October 2002, Moreno sent a written explanation
11
in which she admitted her
failure to secure any written permission before she taught in other schools. Moreno
explained that the said teaching engagements were merely transitory in nature as the
aforesaid schools urgently needed lecturers and 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 familys poor financial conditions.
A Special Grievance Committee was then formed in order to investigate and make
recommendations regarding Morenos case. The said committee was composed of Dean
Abraham Espejo of the College of Law, as chairman, and Messrs. Dindo Bunag and
Ramon Montierro, as members.
In a letter
12
dated 11 November 2002, the grievance committee required Moreno to
answer the following 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 did not 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 until 2002, because she
needed to support her mother and sister, her masteral studies, and her sisters canteen
business, all of which coincided with the payment of the emergency loan from the SSC-R
administrators that paid for her mothers illness; that she did not deny teaching part-time
in the aforementioned schools; and that she did not wish to resign because she felt she
deserved a second chance.
On the same day that Moreno sent her letter, the grievance committee issued its
resolution,
14
which unanimously found that she violated the prohibition against a full-time
faculty having an unauthorized external teaching load. The majority of the grievance
committee members recommended Morenos dismissal from employment in accordance
with the school manual, but Dean Espejo dissented and called 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 committee and, 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 as NLRC-NCR Case No. 11-10077-02, seeking reinstatement, money claims,
backwages, separation pay if reinstatement is not viable, and attorneys fees.
In the Decision
16
dated 30 April 2003, Labor Arbiter Veneranda C. Guerrero dismissed
Morenos complaint 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 to pay 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 Morenos due acceptance of the appointment as a member
of the Permanent Faculty meant that she was bound to the condition therein not to
accept any outside teaching assignments without permission. Morenos admission of her
violation was likewise said to have 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 in dismissing Moreno. Except
for her unpaid salary for fifteen (15) days, which was not controverted, the rest of
Morenos money claims were denied for being unsubstantiated.
On appeal by Moreno, the NLRC reversed the rulings of the Labor Arbiter in a Decision
dated 23 November 2004, the relevant portion of which reads:
The four (4) applications for leave of absence adduced in evidence by the respondent
[SSC-R] are all undated. If the absences indicated in the said documents were the only
absences incurred by the complainant [Moreno] in her four-year tenure, it cannot be said
that she had a poor attendance. In fact, the contrary would be true. On the other hand, it
is conceded that in the yearly evaluation of the performance of teachers, she consistently
landed among the five best teachers. Thus, neither can it be said that her moonlighting
activities adversely affected her work performance. Likewise, the undisputed fact that
she was asked to be the chairman of Business Finance and Accountancy for SY 2002-
2003 should be considered. This last circumstance could only mean that she was very
good at her job.
There are other extenuating circumstances that should have been taken into
consideration in determining the propriety of the penalty of dismissal meted upon the
complainant. These circumstances are the fact that it was her first offense in four years
of unblemished employment, and the 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 and employee on the subject of dismissal cannot preclude the State from
inquiring whether its rigid application would work too harshly on the employee. (Gelmart
Industries Phils. Inc. vs. NLRC, 176 SCRA 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
the complainant [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 in keeping with the generally accepted principles of law.
WHEREFORE, the decision appealed from is hereby REVERSED. The respondent
[SSC-R] is hereby ordered to REINSTATE the complainant [Moreno] to her former
position, and to pay her full backwages counted from November 16, 2003 up to the date
of her actual reinstatement.
17

SSC-R filed a Motion for Reconsideration
18
of the NLRC Decision, which was denied for
lack of merit in a Resolution
19
dated 31 March 2005.1avvphi 1
Thus, SSC-R instituted with the Court of Appeals a Petition for Certiorari under Rule 65
of the Rules of Court, with a prayer for the issuance of a temporary restraining order
and/or a writ of preliminary injunction,
20
docketed as CA-G.R. SP No. 90083, alleging
grave abuse of discretion on the part of the NLRC.
In a Decision
21
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 reinstating the 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 it reversed 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 employers lawful orders, as a just cause for dismissal of an
employee, envisages the concurrence of at least two (2) requisites: the employees
assailed conduct must have been willful or intentional, the willfulness being characterized
by a wrongful or perverse attitude; and the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been
engaged to discharge.
The foregoing requisites are all present in this case. The prohibition against unauthorized
outside teaching engagements found in the Faculty Manual and in private respondents
[Moreno] appointment letter are deemed reasonable under the circumstances. In fact,
the petitioners [SSC-R] policy is actually permissive since it allows other teaching
engagements so long as its president approves of the same.
Concededly, this policy was made known to private respondent [Moreno] for as
mentioned earlier, it is found not only in the Faculty Manual, but more importantly, it is
explicitly stated in her appointment letter. By her own admission, it cannot be clearer
that, in spite of her knowledge thereof, private respondent [Moreno] willfully disobeyed
the said prohibition. When she accepted the teaching opportunities 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 upon the
petitioners [SSC-R] discovery of such concealment deserve scant consideration.
The policy is obviously in connection with the private respondents [Moreno] duties as a
faculty member. It is designed to ensure that the petitioners [SSC-R] teaching staff is
well fit to function accordingly, not only for its benefit, but chiefly, for the students who are
under their care and instruction. Private respondent [Moreno] argues that
notwithstanding her violations, her commitments with petitioner [SSC-R] were never
compromised. Be that as it may, this fact cannot absolve her. She may be fit at the time
when her infractions were revealed, but there is no assurance 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 31 March 2005 Resolution of the National Labor Relations Commission (Second
Division) are hereby ANNULLED and SET ASIDE. The National Labor Relations
Commission is permanently enjoined from executing its 31 March 2005 Resolution. The
Decision of the Labor Arbiter dated 30 April 2003 is hereby REINSTATED and
AFFIRMED.
Accordingly, Moreno now impugns before this Court the Court of Appeals Decision dated
07 November 2006 raising the following issues:
I.
WHETHER OR NOT THE DISMISSAL OF PETITIONER WAS PROPER AND
LAWFUL.
II.
WHETHER OR NOT PETITIONER IS ENTITLED TO THE RELIEF SHE SEEKS
AGAINST RESPONDENT.
Moreno insists that her right to security of tenure is a more significant consideration in
this case than the strict application of a school policy. She laments that her dismissal
from employment for failing to secure the necessary permission is too harsh and
undeserved a penalty.
The most basic of tenets in employee termination cases is that no worker shall be
dismissed from employment without the observance of substantive and procedural due
process. Substantive due process means that the ground upon which the dismissal is
based is one of the just or authorized causes enumerated in the Labor Code. Procedural
due process, on the other hand, requires that an employee be apprised of the charge
against him, given reasonable time to answer the same, allowed ample opportunity to be
heard and defend himself, and assisted by a representative if the employee so
desires.
22
The employee must be furnished two written notices: the first notice apprises
the employee of the particular acts or omissions for which his dismissal is sought, and
the second is a subsequent notice which informs the employee of the employer's
decision to dismiss him.
23

Article 282 of the Labor Code provides for the just causes for the termination of
employment, to wit:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representatives; and
(e) Other causes analogous to the foregoing.
In termination cases, the burden of proof rests on the employer to show that the
dismissal is for just cause. When there is no showing of a clear, valid and legal cause for
the termination of employment, the law considers the matter a case of illegal dismissal
and the burden is on the employer to prove that the termination was for a valid or
authorized cause.
24

Respondent SSC-R contends that Morenos dismissal from employment was valid
because she knowingly violated the prohibition embodied in the aforementioned Section
2.2 of Art. II of the SSC-R Faculty Manual, in accordance with Section 45
25
of the Manual
of Regulations for Private Schools, and which prohibition was likewise contained in
Morenos employment contract.
26
In so doing, Moreno allegedly committed serious
misconduct and willful disobedience against the school, and thereby submitted herself to
the corresponding penalty provided for in both the Faculty Manual and the employment
contract, which is termination for cause.
On the basis of the evidence on record, the Court finds that Moreno has indeed
committed misconduct against respondent SSC-R. Her admitted failure to obtain the
required permission from the school before she engaged in external teaching
engagements is a clear transgression of SSC-Rs policy. However, said misconduct falls
below the required level of gravity that would warrant dismissal as a penalty.
Under Art. 282(a) of the Labor Code, willful disobedience of the employers lawful orders
as a just cause for termination of employment envisages the concurrence of at least two
requisites: (1) the employees assailed conduct must have been willful or intentional, the
willfulness being characterized by a "wrongful and perverse attitude"; and (2) the
order violated must have been reasonable, lawful, made known to the employee and
must pertain to the duties which he has been engaged to discharge.
27

Similarly, with respect to serious misconduct, the Court has already ruled in National
Labor Relations Commission v. Salgarino
28
that:
Misconduct is defined as improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character and implies wrongful intent and not mere error of judgment. The
misconduct to be serious within the meaning of 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 the employee 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 complained of has violated some established rules or policies. It is equally
important and required that the act or 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 that Morenos misconduct was induced by a perverse and wrongful intent as
required in Art. 282(a) of the Labor Code. SSC-R merely anchored Morenos alleged bad
faith on the fact that she had full knowledge of the policy that was violated and that it was
relatively easy for her to secure the required 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
sustaining the dismissal of the employee. Even equipoise is not enough; the employer
must affirmatively show rationally 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
indeed harbored 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 teaching activities 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 more than a "lame excuse"
30
and
are "clearly an afterthought,"
31
considering that no evidence was offered to support them
and that Morenos salary was allegedly one of the highest among the universities in the
country.
In addition, even if dismissal for cause is the prescribed penalty for the misconduct
herein committed, in accordance with the SSC-R Faculty Manual and Morenos
employment contract, the Court 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 the promulgation 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, when prescribed, 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 into account 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 teaching engagements, as she was found by the
grievance committee to be one of the better professors in the Accounting
Department
33
and she was even offered the Chairmanship of her college.
34
Also, the fact
that Moreno merely wanted to alleviate her familys poor financial conditions is a
justification that SSC-R failed to refute. SSC-R likewise failed to prove any resulting
material damage or prejudice on its part as a consequence of Morenos misconduct. The
claim by SSC-R that the imposition of a lesser penalty would set a bad precedent
35
for
the other faculty members who comply with the school policies is too speculative for this
Court to even consider.
Finally, the Court notes that in Morenos contract of employment,
36
one of the provisions
therein categorically 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, just because the Faculty Manual
said so.
With regard to the observance of procedural due process, neither of the parties has put
the same into issue. Indeed, based on the evidence on record, Moreno was served with
the required twin notices and was afforded the opportunity to be heard. The first notice
was embodied in the memorandum
37
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 services were being terminated effective 16
November 2002 constituted the second required notice. Moreno was 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 to
which 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 with the substantive aspect of due process. Despite SSC-Rs observance of
procedural due process, it nonetheless failed to discharge its burden of proving the
legality of Morenos termination from employment. 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-R has adequate reasons to impose sanctions on her. However, this should
not be dismissal from employment. Because of the serious implications of this penalty,
"our Labor Code decrees that an employee cannot be dismissed, except for the most
serious causes."
41

Considering the presence of extenuating circumstances in the instant case, the Court
deems it appropriate to impose the penalty of suspension of one (1) year on Moreno, to
be counted from 16 November 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 suspension should 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
illegally dismissed are, firstly, that the employee becomes entitled to reinstatement
without loss of seniority rights; and secondly, the payment of backwages corresponding
to the period from his illegal dismissal up to his actual reinstatement. The two forms of
relief are, however, distinct and separate from 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 the inappropriateness or non-availability of
the other.
42

In accordance with Durabuilt Recapping Plant & Co. v. National Labor Relations
Commission,
43
the Court may not only mitigate, but also absolve entirely, the liability of
the employer to pay backwages where good faith is evident. Likewise, backwages may
be withheld from a dismissed employee where 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
oppressive manner. Indeed, the only mistake that the respondent school has committed
was to strictly apply the provisions of its Faculty Manual and its contract with Moreno
without regard for the aforementioned special circumstances that were attendant in this
case. Even then, Morenos right to procedural due process was fully respected, as she
was given the required twin notices and an ample opportunity to be heard. This fact was
not even disputed by Moreno herself.
With respect to Morenos claim for moral and exemplary damages, the same were never
satisfactorily pleaded and substantiated.
45
Thus, they are hereby denied. Neither is
Moreno entitled to the award of the monetary claims
46
in her petition, as no basis and
proof for the grant thereof were ever adduced.
The Court cannot likewise award attorneys fees to Moreno in view of the above-
mentioned finding of good faith on the part of SSC-R
47
. It is a well-settled principle that
even if a claimant is compelled to litigate with third persons or to incur expenses to
protect the claimants rights, attorneys fees may still not be awarded where no sufficient
showing of bad faith could be reflected in a partys persistence 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 Sebastian College-Recoletos, Manila, is hereby ordered to reinstate
Petitioner Jackqui R. Moreno without loss of 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 by Ricardo G. Paloma and Philippine Airlines, Inc. (PAL) to nullify and set
aside the Amended Decision
1
dated May 31, 2001 of the Court of Appeals (CA) in CA-
G.R. SP No. 56429, as effectively reiterated in its Resolution
2
of January 14, 2003.
The 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) months before Paloma retired on November 30, 1992, PAL was privatized.
By way of post-employment benefits, PAL paid Paloma the total amount of PhP
5,163,325.64 which represented his separation/retirement gratuity and accrued vacation
leave pay. For the benefits thus received, Paloma signed a document denominated
Release and Quitclaim
3
but inscribed the following reservation therein: "Without prejudice
to my claim for further leave benefits embodied in my aide memoire transmitted to Mr.
Roberto Anonas covered by my 27 Nov. 1992 letter x x x."
The leave benefits Paloma claimed being entitled to refer to his 450-day accrued sick
leave credits which PAL allegedly only paid the equivalent of 18 days. He anchored his
entitlement on Executive Order No. (EO) 1077
4
dated January 9, 1986, and his having
accumulated a certain number of days of sick leave credits, as acknowledged in a letter
of Alvia R. Leao, then an administrative assistant in PAL. Leaos letter dated
November 12, 1992 pertinently reads:
At your request, we are pleased to confirm herewith the balance of your sick leave
credits as they appear in our records: 230 days.
According to our existing policy, an employee is entitled to accumulate sick leave with
pay only up to a maximum of 230 days.
Had there been no ceiling as mandated by Company policy, your sick leave credits
would have totaled 450 days to date.
5

Answering Palomas written demands for conversion to cash of his accrued sick leave
credits, PAL asserted having paid all of Palomas commutable sick leave credits due him
pursuant to company policy made applicable to PAL officers starting 1990.
The company leave policy adverted to grants PALs regular ground personnel a
graduated sick leave benefits, those having rendered at least 25 years of service being
entitled to 20 days of sick leave for every year of service. An employee, under the policy,
may accumulate sick leaves with pay up to 230 days. Subject to defined qualifications,
sick leave credits in excess of 230 days shall be commutable to cash at the employees
option and shall be paid in lump sum on or before May 31st of the following year they
were earned.
6
Per PALs records, Paloma appears to have, for the period from 1990 to
1992, commuted 58 days of his sick leave credits, broken down as follows: 20 days each
in 1990 and 1991 and 18 days in 1992.
Subsequently, Paloma filed before the Arbitration Branch of the National Labor Relations
Commission (NLRC) a Complaint
7
for Commutation of Accrued Sick Leaves Totaling 392
days. In the complaint, docketed as NLRC-NCR-Case No. 00-08-05792-94, Paloma
alleged having accrued sick leave credits of 450 days commutable upon his retirement
pursuant to EO 1077 which allows retiring government employees to commute, without
limit, all his accrued vacation and sick leave credits. And of the 450-day credit, Paloma
added, he had commuted only 58 days, leaving him a balance of 392 days of accrued
sick leave credits for commutation.
Ruling of the Labor 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 Decision
9
dispositively reading:
WHEREFORE, premises considered, respondent PHILIPPINE AIRLINE[S], INC. is
hereby ordered to pay within ten (10) days from receipt hereof herein complainant
Ricardo G. Paloma, the sum of Six Hundred Seventy Five Thousand Pesos
(P675,000.00) representing his one Hundred sixty two days [162] accumulated sick leave
credits, plus ten (10%) percent attorneys fees of P67,500.00, or a total sum of
P742,500.00.
SO ORDERED.
The labor arbiter held that PAL is not covered by the civil service system and,
accordingly, its employees, like Paloma, cannot avail themselves of the beneficent
provision of EO 1077. This executive issuance, per the labor arbiters decision, applies
only to government officers and employees covered by the civil service, exclusive of the
members of the judiciary whose leave and retirement system is covered by a special law.
However, the labor arbiter ruled that Paloma is entitled to a commutation of his
alternative claim for 202 accrued sick leave credits less 40 days for 1990 and 1991.
Thus, the grant of commutation for 162 accrued leave credits.
Both parties appealed
10
the decision of the labor arbiter to the NLRC.
Ruling of the NLRC in NLRC NCR CA No. 009652-95
(NLRC-NCR-Case No. 00-08-05792-94)
On November 26, 1997, the First Division of the NLRC rendered a Decision affirming that
of the labor arbiter, thus:
WHEREFORE, as recommended, both appeals are DISMISSED. The decision of Labor
Arbiter Felipe T. Garduque II dated June 30, 1995 is AFFIRMED.
SO ORDERED.
11

Both parties moved for reconsideration. In its Resolution of November 10, 1999, the
NLRC, finding Paloma to have, upon his retirement, commutable accumulated sick leave
credits of 230 days, modified its earlier decision, disposing as follows:
In view of all the foregoing, our decision dated November 26, 1997, be modified by
increasing the sick leave benefits of complainant to be commuted to cash from 162 days
to 230 days.
SO ORDERED.
12

From the above modificatory resolution of the NLRC, PAL went to the CA on a petition
for certiorari under Rule 65, the recourse docketed as CA-G.R. SP No. 56429.
Ruling of the CA in its April 28, 2000 Decision
By a Decision dated April 28, 2000, the CA found for PAL, thus:
WHEREFORE, the petition is granted. Public respondents November 10, 1999
Resolution is set aside. And the complaint of Ricardo Paloma is hereby DISMISSED.
Without costs.
SO ORDERED.
13

In time, Paloma sought reconsideration.
14

The May 31, 2001 Amended Decision
On May 31, 2001, the CA issued the assailed Amended Decision reversing its April 28,
2000 Decision. The fallo of the Amended Decision reads:
WHEREFORE, premises considered, our Judgment, dated 28 April 2000 is hereby
vacated and, set aside, and another one entered reinstating the Resolution, dated 10
November 1999, issued by the public respondent National Labor Relations Commission
in NLRC NCR Case No. 00-08-05792-94 [NLRC NCR CA No. 009652-95], entitled
Ricardo G. Paloma v. Philippine Airlines, Incorporated, with the only modification that the
total sums granted by Labor Arbiter Felipe T. Garduque II (P742,500.00, inclusive of the
ten percent (10%) attorneys fees), as affirmed by public respondent National Labor
Relations Commission, First Division, in said NLRC Case No. 00-08-05792-94, shall earn
legal interest from the date of the institution of the complaint until fully paid/discharged.
(Art. 2212, New Civil Code).
SO ORDERED.
15

Justifying its amendatory action, the CA stated that EO 1077 applies to PAL and
necessarily to Paloma on the following rationale: Section 2(1) of Article IX(B) of the 1987
Constitution applies prospectively and, thus, the expressed limitation therein on the
applicability of the civil service law only to government-owned and controlled
corporations (GOCCs) with original charters does not preclude the applicability of EO
1077 to PAL and its then employees. This conclusion, the CA added, becomes all the
more pressing considering that PAL, at the time of the issuance of EO 1077, was still a
GOCC and that Paloma had already 29 years of service at that time. The appellate court
also stated that since PAL had then no existing retirement program, the provisions of EO
1077 shall serve as a retirement program for Paloma who had meanwhile acquired
vested rights under the EO pursuant to Arts. 100
16
and 287
17
of the Labor Code.
Significantly, despite affirmatively positing the applicability of EO 1077, the Amended
Decision still deferred to PALs existing policy on the 230-day limit for accrued sick leave
with pay that may be credited to its employees. Incongruously, while the CA reinstated
the November 10, 1999 Resolution of the NLRC, it decreed the implementation of the
labor arbiters Decision dated June 30, 1995. As may be recalled, the NLRC, in its
November 10, 1999 Resolution, allowed a 230-day sick leave commutation, up from the
162 days granted under the June 30, 1995 Decision of the labor arbiter.
Paloma immediately appealed the CAs Amended Decision via a Petition for Review on
Certiorari under Rule 45, docketed as G.R. No. 148415. On the other hand, PAL first
sought reconsideration of the Amended Decision, coming to us after the CA, per its
January 14, 2003 Resolution, denied the desired reconsideration. In net effect then,
PALs 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 TO
PETITIONER AND YET APPLYING COMPANY POLICY BY AWARDING THE CASH
EQUIVALENT OF ONLY 162 DAYS SICK LEAVE CREDITS INSTEAD OF THE 450
DAYS SICK LEAVE CREDITS PETITIONER IS ENTITLED TO UNDER E.O. NO. 1077,
DECIDED A QUESTION OF SUBSTANCE IN A MANNER CONTRARY TO LAW AND
APPLICABLE JURISPRUDENCE.
18

In G.R. No. 156764, PAL raises the following issues for our consideration:
1. May an employee of a non-government corporation [invoke EO] 1077 which
the then President Ferdinand E. Marcos issued on January 9, 1986, solely for the
benefit of government officers and employees covered by the civil service?
2. Can a judicial body modify or alter a company policy by ordering the
commutation of sick leave credits which, under company policy is non-
commutable?
19

The issues submitted boil down to the question of whether or not EO 1077, before PALs
privatization, applies to its employees, and corollarily, whether or not Paloma is entitled
to a commutation of his accrued sick leave credits. Subsumed to the main issue because
EO 1077 applies only to government employees subject to civil service law is the
question of whether or not PALwhich, as early as 1960 until its privatization, had been
considered as a government-controlled corporationis covered by and subject to the
limitations peculiar under the civil service system.
There can be no quibbling, as a preliminary consideration, about PAL having been
incorporated as a private corporation whose controlling stocks were later acquired by the
GSIS, which is wholly owned by the government. Through the years before GSIS
divested itself of its controlling interests over the airline, PAL was considered a
government-controlled corporation, as we said as much in Phil. Air Lines Employees
Assn. v. Phil. Air Lines, Inc.,
20
a case commenced in August 1958 and finally resolved by
the Court in 1964. The late Blas Ople, former Labor Secretary and a member of the 1986
Constitutional Commission, described PAL and other like entities spun off from the GSIS
as "second generation corporations functioning as private subsidiaries."
21
Before the
coming into force of the 1973 Constitution, a subsidiary of a wholly government-owned
corporation or a government corporation with original charter was covered by the Labor
Code. Following the ratification of the 1973 Constitution, these subsidiaries theoretically
came within the pale of the civil service on the strength of this provision: "[T]he civil
service embraces every branch, agency, subdivision and instrumentality of the
Government, including every [GOCC] x x x."
22
Then came the 1987 Constitution which
contextually delimited the coverage of the civil service only to a GOCC "with original
charter."
23

The Courts Ruling
Considering the applicable law and jurisprudence in the light of the undisputed factual
milieu of the instant case, the setting aside of the assailed amended decision and
resolution of the CA is indicated.
Core Issue: Applicability of EO 1077
Insofar as relevant, EO 1077 dated January 9, 1986, entitled Revising the Computation
of Creditable Vacation and Sick Leaves of Government Officers and Employees,
provides:
WHEREAS, under existing law and civil service regulations, the number of days of
vacation and sick leaves creditable to a government officer or employee is limited to 300
days;
WHEREAS, by special law, members of the judiciary are not subject to such restriction;
WHEREAS, it is the continuing policy of the government to institute to the extent possible
a uniform and equitable system of compensation and benefits and to enhance the morale
and performance in the civil service.
x x x x
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue
of the powers vested in me by the Constitution, do hereby order and direct the following:
Section 1. Any officer [or] employee of the government who retires or voluntary resigns
or is separated from the service through no fault of his own and whose leave benefits are
not covered by special law, shall be entitled to the commutation of all the accumulated
vacation and/or sick leaves to his credit, exclusive of Saturdays, Sundays, and 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 constitutional provision on the coverage of the civil service made no distinction
between GOCCs with original charters and those without, like PAL which was
incorporated under the Corporation Code. Implicit in Palomas contention is the
submission that he earned the bulk of his sick leave credits under the aegis of the 1973
Constitution when PAL, being then a government-controlled corporation, was under civil
service coverage.
The contention is without merit.
PAL never ceased to be operated as a private corporation, and was not subjected
to the Civil Service Law
The Court can allow that PAL, during the period material, was a government-controlled
corporation in the sense that the GSIS owned a controlling interest over its stocks. One
stubborn fact, however, remains: Through the years, PAL functioned as a private
corporation and managed as such for profit. Their personnel were never considered
government employees. It may perhaps not be amiss for the Court to take judicial notice
of the fact that the civil service law and rules and regulations have not actually been
made to apply to PAL and its employees. Of governing application to them was the Labor
Code. Consider: (a) Even during the effectivity of the 1973 Constitution but prior to the
promulgation on January 17, 1985 of the decision in No. L-64313 entitled National
Housing Corporation v. Juco,
24
the Court no less recognized the applicability of the Labor
Code to, and the authority of the NLRC to exercise jurisdiction over, disputes involving
discipline, personnel movements, and dismissal in GOCCs, among them PAL;
25
(b)
Company policy and collective bargaining agreements (CBAs), instead of the civil service
law and rules, govern the terms and conditions of employment in PAL. In fact, Ople
rhetorically asked how PAL can be covered by the civil service law when, at one time,
there were three (3) CBAs in PAL, one for the ground crew, one for the flight attendants,
and one for the pilots;
26
and (c) When public sector unionism was just an abstract
concept, labor unions in PAL with the right to engage in strike and other concerted
activities were already active.
27

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

Given the foregoing considerations, Paloma cannot plausibly be accorded the benefits of
EO 1077 which, to stress, was issued to narrow the gap between the leave privileges
between the members of the judiciary, on one hand, and other government officers and
employees in the civil service, on the other. That PAL and Paloma may have, at a time,
come within the embrace of the civil service by virtue of the 1973 Constitution is of little
moment at this juncture. As held in National Service Corporation v. National Labor
Relations Commission (NASECO),
29
the issue of whether or not a given GOCC falls
within the ambit of the civil service subject, vis--vis disputes respecting terms and
conditions of employment, to the jurisdiction of the Civil Service Commission or the
NLRC, as the case may be, resolves itself into the question of which between the 1973
Constitution, which does not distinguish between a GOCC with or without an original
charter, and the 1987 Constitution, which does, is in place. To borrow from the 1988
NASECO ruling, it is the 1987 Constitution, which delimits the coverage of the civil
service, that should govern this case because it is the Constitution in place at the time
the case was decided, even if, incidentally, the cause of action accrued during the
effectivity of the 1973 Constitution. This has been the consistent holding of the Court in
subsequent cases involving GOCCs without original charters.
30

It cannot be overemphasized that when Paloma filed his complaint for commutation of
sick leave credits, private interests already controlled, if not owned, PAL. Be this as it
may, Paloma, when he filed said complaint, cannot even assert being covered by the
civil service and, hence, entitled to the benefits attached to civil service employment,
such as the right under EO 1077 to accumulate and commute leave credits without limit.
In all, then, Paloma, while with PAL, was never a government employee covered by the
civil service law. As such, he did not acquire any vested rights on the retirement benefits
accorded by EO 1077.
Paloma not entitled to the benefits granted in EO 1077; existing company policy on
the matter applies
What governs Palomas entitlement to sick leave benefits and the computation and
commutation of creditable benefits is not EO 1077, as the labor arbiter and originally the
NLRC correctly held, but PALs company policy on the matter which, as found below,
took effect in 1990. The text of the policy is reproduced in the CAs 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 employees category and length of
service in the company.
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 employees 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 employees
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 cash and the other twenty-five percent (25%) to be added to his
accrued sick leave credits up to two hundred thirty (230) calendar days.
The seventy-five percent (75%) commutable to cash as above provided, shall be paid up
in lump sum on or before May 31st of the following year.
Sick leave credits in excess of two hundred thirty (230) days shall be commutable
to cash at the employees option, and shall be paid in lump sum on or before May
31st of the following year it was earned.
31
(Emphasis ours.)
As may be gathered from the records, accrued sick leave credits in excess of 230 days
were not, if earned before 1990 when the above policy took effect, commutable to cash;
they were simply forfeited. Those earned after 1990, but still subject to the 230-day
threshold rule, were commutable to cash to the extent of 75% of the employees current
entitlement, and payable on or before May 31st of the following year, necessarily
implying that the privilege to commute is time-bound.
It appears that Paloma had, as of 1990, more than 230 days of accrued sick leave
credits. Following company policy, Paloma was deemed to have forfeited the monetary
value of his leave credits in excess of the 230-day ceiling. Now, then, it is undisputed that
he earned additional accrued sick leave credits of 20 days in 1990 and 1991 and 18 days
in 1992, which he duly commuted pursuant to company policy and received with the
corresponding cash value. Therefore, PAL is correct in contending that Paloma had
received whatever was due on the commutation of his accrued sick leave credits in
excess of the 230 days limit, specifically the 58 days commutation for 1990, 1991, and
1992.
No commutation of 230 days accrued sick leave credits
The query that comes next is how the 230 days accrued sick leave credits Paloma
undoubtedly had when he retired are to be treated. Is this otherwise earned credits
commutable to cash? These should be answered in the negative.
The labor arbiter granted 162 days commutation, while the NLRC allowed the
commutation of the maximum 230 days. The CA, while seemingly affirming the NLRCs
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 PALs company
policy upon which either disposition was predicated did not provide for a commutation of
the first 230 days accrued sick leave credits employees may have upon their retirement.
Hence, the NLRC and the CA, by their act of allowing commutation to cash, erred as
they virtually read in the policy something not written or intended therein. Indeed, no law
provides for commutation of unused or accrued sick leave credits in the private sector.
Commutation is allowed by way of voluntary endowment by an employer through a
company policy or by a CBA. None of such medium presently obtains and it would be
incongruous if the Court fills up the vacuum.
Confronted with a similar situation as depicted above, the Court, in Baltazar v. San
Miguel Brewery, Inc., declared as follows:
In connection with the question of whether or not appellee is entitled to the cash value of
six months accumulated sick leave, it appears that while under the last paragraph of
Article 5 of appellants Rules and Regulations of the Health, Welfare and Retirement
Plan (Exhibit 3), unused sick leave may be accumulated up to a maximum of six months,
the same is not commutable or payable in cash upon the employees option.
In our view, the only meaning and import of said rule and regulation is that if an
employee does not choose to enjoy his yearly sick leave of thirty days, he may
accumulate such sick leave up to a maximum of six months and enjoy this six months
sick leave at the end of the sixth year but may not commute it to cash.
32
1avvphi 1
In fine, absent any provision in the applicable company policy authorizing the
commutation of the 230 days accrued sick leave credits existing upon retirement,
Paloma may not, as a matter of enforceable right, insist on the commutation of his sick
leave credits to cash.
As PALs senior vice-president for finance upon his retirement, Paloma knew or at least
ought to have known the company policy on accrued sick leave credits and how it was
being implemented. Had he acted on that knowledge in utmost good faith, these
proceedings would have not come to pass.
WHEREFORE, the petition under G.R. No. 148415 is hereby DISMISSED for lack of
merit, while the petition underG.R. No. 156764 is hereby GIVEN DUE COURSE. The
Amended Decision dated May 31, 2001 of the CA in CA-G.R. SP No. 56429 and its
Resolution of January 14, 2003 are hereby ANNULLED and SET ASIDE, and the CA
Decision dated April 28, 2000 is accordingly REINSTATED.
Costs against Ricardo G. Paloma.
SO ORDERED.
11. GSIS VS. RAOET
Facts:

The respondents 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
Franciscos death was compensable. On appeal, the ECC affirmed the
findings of the GSIS since it could not determine if Franciscos death was
compensable due to the absence of documents supporting the respondents
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, Franciscos 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 Franciscos 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 workers employment
need not be the sole factor in the growth, development, or acceleration of a
claimants 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 Constitutions 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 laws 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-designated physician but in no case shall this period exceed
one-hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment
medical examination by a company-designated physician within three working
days upon his return except when he is physically incapacitated to do so, in
which case a written notice to the agency within the same period is deemed
as compliance. Failure of the seafarer to comply with the mandatory reporting
requirement shall result in his forfeiture of the right to claim the above
benefits.
11. ARCO METAL PRODUCTS VS. SAMRM-NAFLU
TINGA, J .:
This treats of the Petition for Review
1
of the Resolution
2
and Decision
3
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 to cash shall be paid in full to the employees of petitioner regardless of the
actual service they rendered within a year.
Petitioner is a company engaged in the manufacture of metal products, whereas
respondent is the labor union of petitioners rank and file employees. Sometime in
December 2003, petitioner paid the 13
th
month pay, bonus, and leave encashment of
three union members in amounts proportional to the service they actually rendered in a
year, which is less than a full 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 did not 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, and 2004. 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 National Conciliation and Mediation Board (NCMB). The parties
submitted the case for voluntary arbitration.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that
the giving of the contested benefits in full, irrespective of the actual service rendered
within one year has not ripened into a practice. He noted the affidavit of Joselito Baingan,
manufacturing group 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 CBA provisions to mean that an employee must have rendered one year of
service in order to be entitled to the full benefits provided in the CBA.
5

Unsatisfied, respondent filed a Petition for Review
6
under Rule 43 before the Court of
Appeals, imputing serious error to Mangabats conclusion. The Court of Appeals ruled
that the CBA did not intend to foreclose the application of prorated payments of leave
benefits to covered employees. The appellate court found that petitioner, however, had
an existing voluntary practice of paying the aforesaid benefits in full to its employees,
thereby rejecting the claim that petitioner erred in paying full benefits to its seven
employees. The appellate court noted that aside from the affidavit of petitioners officer, it
has not presented any evidence in support of its position that it has no voluntary practice
of granting the contested benefits in full and without regard to the service actually
rendered within the year. It also questioned why it took petitioner eleven (11) years
before it was able to discover the alleged error. The dispositive portion of the courts
decision reads:
WHEREFORE, premises considered, the instant petition is
hereby GRANTED and the Decision of Accredited Voluntary Arbiter Apron M.
Mangabat in NCMB-NCR Case No. PM-12-345-03, dated June 18, 2004 is
hereby AFFIRMED WITH MODIFICATION in that the 13
th
month pay, bonus,
vacation leave and sick leave conversions to cash shall be paid to the employees
in full, irrespective of the actual service rendered within a year.
7

Petitioner moved for the reconsideration of the decision but its motion was denied, hence
this petition.
Petitioner submits that the Court of Appeals erred when it ruled that the grant of
13
th
month pay, bonus, and leave encashment in full regardless of actual service
rendered constitutes voluntary employer practice and, consequently, the prorated
payment of the said benefits does 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 benefits
regardless of service actually rendered by an employee to the company. According to
petitioner, there is a one-year cutoff in the entitlement to the benefits provided in the CBA
which 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
least one (1) year of service shall be entitled to sixteen (16) days vacation leave
with pay for each year of service. Unused leaves shall not be cumulative but shall
be converted into its cash equivalent and shall become due and payable every
1
st
Saturday of December of each year.
However, if the 1
st
Saturday of December falls in December 1, November 30
(Friday) being a holiday, the management will give the cash conversion of leaves
in November 29.
Section 2. In case of resignation or retirement of an employee, his vacation leave
shall 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
least one (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 be converted into its cash equivalent and shall become due and payable
every 1
st
Saturday of December of each year.
Section 2. Sick Leave will only be granted to actual sickness duly certified by the
Company physician or by a licensed physician.
Section 3. All commutable earned leaves will be paid proportionately upon
retirement or separation.
ARTICLE XVI EMERGENCY LEAVE, ETC.
Section 1. The Company shall grant six (6) days emergency leave to employees
covered by this agreement and if unused shall be converted into cash and
become due and payable on the 1
st
Saturday of December each year.
Section 2. Employees/workers covered by this agreement who have rendered at
least one (1) year of service shall be entitled to seven (7) days of Paternity Leave
with pay in case the married employees legitimate spouse gave birth. Said
benefit shall be non-cumulative and non-commutative and shall be deemed in
compliance with the law 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- 13
TH
MONTH PAY & BONUS
Section 1. The Company shall grant 13
th
Month Pay to all employees covered by
this agreement. The basis of computing such pay shall be the basic salary per
day of the employee 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 which
shall be distributed on the 2
nd
Saturday of December.
Section 3. That the Company further grants the amount of Two Thousand Five
Hundred Pesos (P2,500.00) as signing bonus plus a free CBA
Booklet.
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
13
th
month pay and bonus, we agree with the findings of Mangabat that the CBA
provisions did not give any meaning different from that given by the law, thus it should be
computed at 1/12 of the total compensation which an employee receives for the whole
calendar year. The bonus is also equivalent to the amount of the 13
th
month pay given, or
in proportion to the actual service rendered 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
contending parties 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
several exceptions, 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 Appeals differ from that of the voluntary arbitrator.
Petitioner granted, in several instances, full benefits to employees who have not served a
full year, 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. 2003
11

Petitioner claims that its full payment of benefits regardless of the length of service to the
company does not constitute voluntary employer practice. It points out that the payments
had been 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
accounting department discovered the error "when there were already three (3)
employees involved with prolonged 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 full payment of benefits went unnoticed
considering the proportion of one employee concerned (per year) vis 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 practiced over 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 that the
CBA has not been modified to incorporate the giving of full benefits regardless of the
length 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 is founded 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 4 of the Labor Code which states that "all doubts in the implementation
and interpretation of this Code, including its implementing rules and regulations shall be
rendered in favor of labor." Jurisprudence is replete with cases which recognize the right
of employees to benefits which were voluntarily given by the employer and which ripened
into company practice. Thus in Davao Fruits Corporation v. Associated Labor Unions, et
al.
17
where an employer had freely 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 the employees though not conforming to law had thus ripened
into a practice and could not be withdrawn, reduced, diminished, discontinued or
eliminated. In Sevilla Trading Company v. Semana,
18
we ruled that the employers act of
including non-basic benefits in the computation of the 13
th
month pay was a voluntary act
and had ripened into a company practice which cannot be peremptorily withdrawn.
Meanwhile in Davao Integrated Port Stevedoring Services v. Abarquez,
19
the Court
ordered the payment of the cash equivalent of the unenjoyed sick leave benefits to its
intermittent workers after finding that said workers had received these benefits 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 existing privilege
of commutation or conversion to cash given to said workers, and as also noted that the
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 the
length of service rendered. True, there were only a total of seven employees who
benefited from such a practice, but it was an established practice nonetheless.
Jurisprudence has not laid down any rule specifying a minimum number of years within
which a company practice must 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 away from 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. 13
th
month pay, bonus, and cash conversion of unused/earned vacation leave,
sick leave and emergency leave are computed and paid in full to employees who
rendered services to the company for the entire year and proportionately to those
employees 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 the
aforesaid benefits to the employees in full regardless of whether or not the
employee has rendered services to the company for the entire year, otherwise, it
would be unjust 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
that the employees did receive the wages and benefits and that the same were paid in
accordance 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
serve for one year and thus were given prorated benefits. Experientially, a perfect
attendance in the workplace 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 consequence received only prorated benefits. This could have easily bolstered
petitioners 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 are herebyAFFIRMED.
SO ORDERED.

12. MANOLO A. PENAFLOR VS. OUTDOOR CLOTHING
MANUFACTURING CORPORATION
Peaflor 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, Peaflor 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.
Peaflor claimed that his relationship with Outdoor Clothing went well during the first few months of
his employment; he designed and created the companys Policy Manual, Personnel Handbook, Job
Expectations, and Organizational Set-Up during this period. His woes began when the companys 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,
Peaflor claimed that he was among those who bore Syfus ire.
When Outdoor Clothing began undertaking its alleged downsizing program due to negative business
returns, Peaflor alleged that his department had been singled out. On the pretext of retrenchment,
Peaflors two staff members were dismissed, leaving him as the only member of Outdoor Clothings
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 companys papers.
When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a bombing
incident, the company required Peaflor to attend to her hospitalization needs; he had to work
outside office premises to undertake this task. As he was acting on the companys orders,
Peaflor 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 Peaflor 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 Peaflor 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 Syfus memorandum of March 10, 2000 to the entire
office stating that Buenaobra was the concurrent HRD and Accounting Manager. Peaflor 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. Peaflor 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.
Peaflor 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, attorneys fees, and other monetary claims.
In his August 15, 2001 decision, the labor arbiter found that Peaflor had been illegally
dismissed. Outdoor Clothing was consequently ordered to reinstate Peaflor to his former or to an
equivalent position, and to pay him his illegally deducted salary for six days, proportionate 13th month
pay, attorneys fees, moral and exemplary damages.
Outdoor Clothing appealed the labor arbiters decision with the NLRC. It insisted that Peaflor had not
been constructively dismissed, claiming that Peaflor 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 Clothings submitted memoranda sufficient to overturn the labor arbiters decision. It
characterized Peaflors resignation as a response, not to the allegedly degrading and hostile treatment
that he was subjected to by Syfu, but to Outdoor Clothings downward financial spiral. Buenaobras
appointment was made only after Peaflor had submitted his resignation letter, and this was made to
cover the vacancy Peaflors resignation would create. Thus, Peaflor was not eased out from his
position as HRD manager. No malice likewise was present in the companys decision to dismiss
Peaflors two staff members; the company simply exercised its management prerogative to address
the financial problems it faced. Peaflor, 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 NLRCs decision, stating that Peaflor
failed to present sufficient evidence supporting his claim that he had been constructively dismissed.
The CA ruled that Peaflors resignation was knowingly and voluntarily made.Faced with these CA
actions, Peaflor filed with us the present petition for review on certiorari.
THE ISSUE and THE COURTS RULING
The Court finds the petition meritorious.
The petition turns on the question of whether Peaflors 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 Peaflor 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 Buenaobras appointment was made. If the resignation letter was submitted
before Syfus appointment of Buenaobra as new HRD manager, little support exists for Peaflors
allegation that he had been forced to resign due to the prevailing abusive and hostile working
environment. Buenaobras appointment would then be simply intended to cover the vacancy created by
Peaflors resignation. On the other hand, if the resignation letter was submitted after the appointment
of Buenaobra, then factual basis exists indicating that Peaflor 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 Peaflor submitted his resignation letter arises because this letter undisputably
made was undated. Despite Peaflors 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. Peaflor 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; Syfus memorandum cited Peaflors
intention to resign so he could devote his time to teaching. The company further cites in support of its
case Buenaobras 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 Peaflor 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 Peaflor 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 Peaflors 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 Peaflors 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, Peaflor 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 Peaflor 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
companys case.
The first is the settled rule that in employee termination disputes, the employer bears the burden of
proving that the employees dismissal was for just and valid cause. That Peaflor did indeed file a
letter of resignation does not help the companys 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 employees 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
Peaflors resignation. Last but not the least, we have repeatedly given significance in abandonment
and constructive dismissal cases to the employees 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 Peaflor 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 Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 182626 December 4, 2009
HILARIO S. RAMIREZ, Petitioner,
vs.
HON. COURT OF APPEALS, Cebu City, HON. NLRC, 4th Division, Cebu
City and
MARIO S. VALCUEBA, Respondents.
D E C I S I O N
CHICO-NAZARIO, J .:
This is a Petition for Review under Rule 45 of the Rules of Court assailing the
(a) 13 July 2007
Resolution1 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 state material
dates and (b) the 7 March 2008 Resolution2 of the same court denying
petitioners Motion for
reconsideration.
The facts are:
Respondent Mario Valcueba (Valcueba) filed a Complaint3 for illegal dismissal
and nonpayment
of wage differential, 13th month pay differential, holiday pay, premium pay for
holidays and rest
days, and service incentive leaves with claims for moral and exemplary
damages and attorneys
fees, against Hilario Ramirez (Ramirez). Valcueba claimed that Ramirez hired
him as mechanic
on 28 May 1999. By 2002, he was paid a daily wage of P140.00, which was
increased to
P165.00 a day in 2003 and to P190.00 in 2005. He was not paid for holidays
and rest days. He
was not also paid the complete amount of his 13th month pay. On 27
February 2006, Josephine
Torres, secretary of Ramirez, informed Valcueba that he would not be
allowed to return to work
unless 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,
asserting that
Valcueba was first hired as construction worker, then as helper of the
mechanic, and eventually
as mechanic. There were three categories of mechanics at the workplace.
First were the
mechanics assigned to specific stations. Second were the mechanics paid on
pakyaw basis; and
finally, those who were classified as rescue/emergency mechanics. Valcueba
belonged to the last
category. As emergency/rescue mechanic, he was assigned to various
stations to perform
emergency/rescue work. On 26 February 2006, while he was assigned at the
Babag station,
Ramirez directed him to proceed to Calawisan, Lapu-lapu City, as a unit had
developed engine
trouble and the mechanic assigned in that area was absent. Valcueba did not
report to the
Calawisan station. In fact, he did not report for work anymore, as he allegedly
intended to return
to Mindanao.5
Further, Ramirez insisted that Valcueba was never terminated from his
employment. On the
contrary, it was the latter who abandoned his job. On 26 February 2006,
Valcueba, as rescue or
emergency mechanic, temporarily assigned at Babag Station, did not report
at Calawisan, Lapulapu
City when Ramirez ordered him to answer an emergency call, which required
him to fix
Ramirezs troubled taxi unit. The mechanic assigned in the area was then
absent at that time. The
refusal of Valcueba to obey the lawful order of Ramirez was bolstered by his
failure to report for
work the following day, 27 February 2006. Valcueba advanced no reason
regarding his failure to
answer an emergency call of duty, nor did he file an application for a leave of
absence when he
failed 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 respondent
Hilario 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
complainants
allegation is presented. No documentary evidence purporting to clearly
indicate that complainant
was discharged was submitted for Our judicious consideration. A fortiori,
there is reason for Us
to doubt complainants submission that he was dismissed from his
employment grounded on
disobedience to the lawful order of respondent.
On the side of respondent Ramirez, he insisted that complainant was never
terminated from his
employment. On the contrary, he alleged that it was complainant who
abandoned his job. As
rescue or emergency mechanic temporarily assigned at Babag Station, on
February 26, 2006,
complainant did not report at Calawisan, Lapu-Lapu City when respondent
Ramirez ordered him
to answer an emergency call, which required him to fix the respondents
troubled taxi unit. The
mechanic assigned in the area was then absent at that time. The refusal of
complainant to obey
the lawful order of respondent Ramirez is bolstered by his failure to report for
work the
following day, February 27, 2006. Complainant advanced no reason as to
why he failed to
answer an emergency call of duty nor did he file an application for a leave of
absence when he
failed to report for work that day.
Nonetheless, as the records are bereft of any evidence that respondent sent
complainant a letter
which advised the latter to report for work, We do not rule out a case of
abandonment because
the 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 is best that the
parties to this case should be restored to their previous employment relations.
Complainant must
go back to work within ten (10) days from receipt of this judgment, while
respondent must
accept 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
rendered declaring
respondent HILARIO RAMIREZ, OWNER OF H.R. TAXI, NOT GUILTY of
illegally
dismissing complainant from the service, it appearing that there is no
dismissal to speak of in this
case. Consequently, complainant is ordered to report back for work within ten
(10) days from
receipt hereof, and respondent Hilario Ramirez must complainant (sic) back
to work as soon as
the 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 be submitted
within the same period (sic), complainant would be guilty of abandonment and
respondent of
illegal dismissal.
In addition, respondent HILARIO RAMIREZ, owner of H.R. Taxi, is hereby
ordered to pay
complainant MARIO S. VALCUEBA the following:
a. Wage Differential - P30,538.00
b. 13th Month Pay - 15,287.98
Total Award - P45,825.98
Philippine 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 Arbiters decision on 5 June
2006. He filed a
Motion for Reconsideration and/or Memorandum of Appeal with Urgent
Motion to Reduce
Appeal Bond8 on the 9th day of the reglementary period or on 14 June 2006
before the National
Labor Relations Commission (NLRC).
Resolving the motion, the NLRC issued a Resolution9 dated 29 September
2006, which reads:
Upon a careful perusal of the motion to reduce bond, however, the
Commission found that the
same does not comply with Section 6, Rule VI of the NLRC Rules of
Procedure.
x x x x
Respondent has not offered a meritorious ground for the reduction of the
appeal bond and the
amount of P10,000.00 he posted is not a reasonable amount in relation to the
monetary award of
P45,825.98. Consequently, his motion to reduce appeal bond shall not be
entertained and his
appeal 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
DISMISSED for nonperfection
due to want of an appeal bond.10
Ramirez filed a Motion for Reconsideration, which the NLRC resolved in a
Resolution dated 20
December 2006 in this wise:
The mere filing of a motion to reduce bond without complying with the
requisites of meritorious
grounds and posting of a bond in a reasonable amount in relation to the
monetary award does not
stop the running of the period to perfect an appeal. Thus, respondents failure
to abide with the
requisites so mentioned has not perfected his appeal. Verily, since the
assailed Decision of the
Labor Arbiter contains a monetary award in favor of complainant, it behooves
upon respondent
to post the required bond.
While the filing of a motion to reduce bond can be considered as a motion of
preference in case
of an appeal, the same holds true only when such motion complies with the
requirements stated
above. Consequently, respondents motion to reduce bond which missed to
comply with such
requisites does not deserve to be entertained nor to be given a preferred
resolution.
WHEREFORE, premises considered, the motion for reconsideration of
respondent is hereby
DENIED for lack of merit.11
The decision of the Labor Arbiter became final and executory on 19 February
2007 and was
entered 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 failure
of Ramirez to properly verify his petition and to state material dates.
Ramirezs Motion for Reconsideration was denied by the Court of Appeals in
a resolution dated
7 March 2008;14 hence, this petition where Ramirez prays that the "dismissal
resolution issued by
the Court of Appeals be set aside and in its stead to give due course to this
petition by dismissing
the unwarranted claims imposed by the NLRC for being highly speculative,
with no evidence to
support of (sic)."15
The issues are:
I
PUBLIC RESPONDENT COURT OF APPEALS ERRED IN NOT
CONSIDERING THE
SUBSTANTIAL COMPLIANCE OF THE FILED PETITION.
II
THE DISMISSAL RESOLUTION (ANNEX "A") HAS NOT RESOLVED THE
LEGAL
ISSUES 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 part of due
process; it is merely a statutory privilege, and may be exercised only in the
manner prescribed by
and in accordance with the provisions of law. The party who seeks to avail
himself of the same
must comply with the requirements of the rules. Failing to do so, he loses the
right to appeal.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
and executory
unless appealed to the Commission by any or both parties within ten (10)
calendar days from
receipt of such decisions, awards, or orders. Such appeal may be entertained
only on any of the
following 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 graft
and corruption;
c. If made purely on questions of law; and
d. 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 be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding
company duly
accredited by the Commission in the amount equivalent to the monetary
award in the judgment
appealed from. (Emphasis supplied.)
Sections 4(a) and 6 of Rule VI of the New Rules of Procedure of the NLRC,
as amended,
reaffirms the explicit jurisdictional principle in Article 223 even as it allows in
justifiable cases
the reduction of the appeal bond. The relevant provision states:
SECTION 4. Requisites for Perfection of Appeal. - (a) The appeal shall be: 1)
filed within the
reglementary period provided in Section 1 of this Rule; 2) verified by the
appellant himself in
accordance 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 in support
thereof, the relief prayed for, and with a statement of the date the appellant
received the appealed
decision, 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 bond
as 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 x
SECTION 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 the posting
of a bond, which shall either be in the form of cash deposit or surety bond
equivalent in amount
to the monetary award, exclusive of damages and attorney's fees.
x x x x
No motion to reduce bond shall be entertained except on meritorious
grounds, and only upon the
posting 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 the
preceding paragraphs shall not stop the running of the period to perfect an
appeal.
Under the Rules, appeals involving monetary awards are perfected only upon
compliance with
the following mandatory requisites, namely: (1) payment of the appeal fees;
(2) filing of the
memorandum 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
involving monetary
awards from the decision of the labor arbiter. The intention of the lawmakers
to make the bond a
mandatory requisite for the perfection of an appeal by the employer is clearly
expressed in the
provision 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
unmistakably plain
that the lawmakers intended the posting of a cash or surety bond by the
employer to be the
essential and exclusive means by which an employer's appeal may be
perfected. The word "may"
refers to the perfection of an appeal as optional on the part of the defeated
party, but not to the
compulsory posting of an appeal bond, if he desires to appeal. The meaning
and the intention of
the legislature in enacting a statute must be determined from the language
employed; and where
there 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
requirement that
must be complied with in order to confer jurisdiction upon the NLRC. Non-
compliance with the
requirement renders the decision of the Labor Arbiter final and executory.
This requirement is
intended to assure the workers that if they prevail in the case, they will
receive the money
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 to
satisfy their employees just and lawful claims.20
In this case, although Ramirez posted an appeal bond, the same was
insufficient, as it was not
equivalent to the monetary award of the Labor Arbiter. Moreover, when
Ramirez sought a
reduction of the bond, he merely said that the bond was excessive and
baseless without
amplifying why he considered it as such.21
Colby Construction and Management Corporation v. National Labor Relations
Commission22
succinctly elucidates that an employer who files a motion to reduce the
appeal bond is still
required to post the full amount of cash or surety bond within the ten-day
reglementary period,
even pending resolution of his motion.
Very recently, in Mcburnie v. Guanzon, the respondents therein filed their
memorandum of
appeal and motion to reduce bond on the 10th or last day of the reglementary
period. Although
they posted an initial appeal bond, the same was inadequate compared to the
monetary award.
The Court found no basis for therein respondents contention that the awards
of the Labor
Arbiter were null and excessive. We emphasized in that case that it behooves
the Court to give
utmost regard to the legislative and administrative intent to strictly require the
employer to post a
cash or surety bond securing the full amount of the monetary award within the
10-day
reglementary period. Nothing in the Labor Code or the NLRC Rules of
Procedure authorizes the
posting of a bond that is less than the monetary award in the judgment, or
deems such
insufficient posting as sufficient to perfect the appeal.23
By stating that the bond is excessive and baseless without more, and without
proof that he is
incapable of raising the amount of the bond, Ramirez did not even come near
to substantially
complying 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
difficulty raising
the amount of the bond or was unable to raise the amount specified in the
award of the Labor
Arbiter.
All given, the NLRC justifiably denied the motion to reduce bond, as it had no
basis upon which
it could actually and completely determine Ramirezs motion to reduce bond.
We have
consistently enucleated that a mere claim of excessive bond without more
does not suffice. Thus,
in Ong v. Court of Appeals,24 this Court held that the NLRC did not act with
grave abuse of
discretion when it denied petitioners motion, for the same failed to elucidate
why the amount of
the bond was either unjustified or prohibitive.
In Calabash Garments, Inc. v. National Labor Relations Commission,25 it was
held that "a
substantial monetary award, even if it runs into millions, does not necessarily
give the employerappellant
a `meritorious case and does not automatically warrant a reduction of the
appeal
bond."
It is clear from both the Labor Code and the NLRC Rules of Procedure that
there is legislative
and administrative intent to strictly apply the appeal bond requirement, and
the Court should give
utmost regard to this intention. There is a concession to the employer, in
excluding damages and
attorney's fees from the computation of the appeal bond. Not even the filing of
a motion to
reduce 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 the monetary
award in the judgment, or would deem such insufficient postage as sufficient
to perfect the
appeal.
On the other hand, Article 223 indubitably requires that the appeal be
perfected only upon the
posting of the cash or surety bond which is equivalent to the monetary award
in the judgment
appealed from. The clear intent of both statutory and procedural law is to
require the employer to
post a cash or surety bond securing the full amount of the monetary award
within the ten (10)-
day reglementary period. While the bond may be reduced upon motion by the
employer, there is
that proviso in Rule VI, Section [6] that the filing of such motion does not stay
the reglementary
period. The qualification effectively requires that unless the NLRC grants the
reduction of the
cash bond within the ten (10)-day reglementary period, the employer is still
expected to post the
cash or surety bond securing the full amount within the said ten (10)-day
period. If the NLRC
does eventually grant the motion for reduction after the reglementary period
has elapsed, the
correct relief would be to reduce the cash or surety bond already posted by
the employer within
the ten (10)-day period.26 (Emphases supplied.)
While in certain instances, we allow a relaxation in the application of the rules
to set right an
arrant injustice, we never intend to forge a weapon for erring litigants to
violate the rules with
impunity. The liberal interpretation and application of rules apply only to
proper cases of
demonstrable merit and under justifiable causes and circumstances, but none
obtains in this case.
The NLRC had, therefore, the full discretion to grant or deny Ramirezs
motion to reduce the
amount of the appeal bond. The finding of the labor tribunal that Ramirez did
not present
sufficient justification for the reduction thereof cannot be said to have been
done with grave
abuse of discretion.27
While Section 6, Rule VI of the NLRCs New Rules of Procedure allows the
Commission to
reduce the amount of the bond, the exercise of the authority is not a matter of
right on the part of
the movant, but lies within the sound discretion of the NLRC upon a showing
of meritorious
grounds.28
It is daylight-clear from the foregoing that while the bond may be reduced
upon motion by the
employer, this is subject to the conditions that (1) the motion to reduce the
bond shall be based
on meritorious grounds; and (2) a reasonable amount in relation to the
monetary award is posted
by the appellant; otherwise, the filing of the motion to reduce bond shall not
stop the running of
the period to perfect an appeal. The qualification effectively requires that
unless the NLRC
grants the reduction of the cash bond within the 10-day reglementary period,
the employer is still
expected to post the cash or surety bond securing the full amount within the
said 10-day period.
We have always stressed that Article 223, which prescribes the appeal bond
requirement, is a
rule of jurisdiction and not of procedure. There is little leeway for condoning a
liberal
interpretation thereof, and certainly none premised on the ground that its
requirements are mere
technicalities. It must be emphasized that there is no inherent right to an
appeal in a labor case, as
it arises solely from grant of statute, namely, the Labor Code.
For the same reason, we have repeatedly emphasized that the requirement
for posting the surety
bond is not merely procedural but jurisdictional and cannot be trifled with.
Non-compliance with
such legal requirements is fatal and has the effect of rendering the judgment
final and
executory.29
That settled, we next resolve the issue of whether or not the Court of Appeals
correctly dismissed
the petition of Ramirez. The Court of Appeals found that he committed the
following fatal
defects 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 has
read the pleading and the allegations therein are true and correct of his
personal
knowledge or based on authentic records, as a consequence of which the
petition is
treated 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 was
filed in violation of Section 3, Rule 46 of the Rules of Court.30
On Ramirezs 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 and correct.
Thus, the court may simply order the correction of unverified pleadings or act
on them and waive
strict 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
Moncielcoji
Corporation v. National Labor Relations Commission,32 the Court states the
rationale
Rules of procedure are tools designed to promote efficiency and orderliness
as well as to
facilitate attainment of justice, such that strict adherence thereto is required.
The application of
the Rules may be relaxed only when rigidity would result in a defeat of equity
and substantial
justice. But, petitioner has not presented any persuasive reason for this Court
to be liberal, even
pro hac vice. Thus, we sustain the dismissal of its petition by the Court of
Appeals on technical
grounds.
Again as in the NLRC, Ramirez has not shown any justifiable ground to set
aside technical rules
for 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
resolution of the
Court of Appeals dismissing Ramirezs petition on the ground of failure to
state material dates,
because in filing a special civil action for certiorari without indicating the
requisite material date
therein, Ramirez violated basic tenets of remedial law, particularly Rule 65 of
the Rules of Court,
which states:
SECTION 1. Petition for certiorari. x x x.
x x x x
The petition shall be accompanied by a certified true copy of the judgment,
order or resolution
subject thereof, copies of all pleadings and documents relevant and pertinent
thereto, and a sworn
certification of non-forum shopping as provided in the third paragraph of
Section 3, Rule 46.
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 x x .
In actions filed under Rule 65, the petition shall further indicate the material
dates showing when
notice of the judgment or final order or resolution subject thereof was
received, when a motion
for new trial or reconsideration, if any, was filed and when notice of the denial
thereof was
received.
x x x x
The failure of the petitioner to comply with any of the foregoing requirements
shall be sufficient
ground for the dismissal of the petition.
There are three material dates that must be stated in a petition for certiorari
brought under Rule
65. 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 date when
notice of the denial thereof was received. In the case before us, the petition
filed with the Court
of Appeals failed to indicate when the notice of the NLRC Resolution was
received and when the
Motion for Reconsideration was filed, in violation of Rule 65, Section 1 (2nd
par.) and Rule 46,
Section 3 (2nd par.). 1avvphi1
As explicitly stated in the aforementioned Rule, failure to comply with any of
the requirements
shall 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. In Santos
v. Court of Appeals,33 the court explains that the requirement is for purpose of
determining the
timeliness of the petition, thus:
The requirement of setting forth the three (3) dates in a petition for certiorari
under Rule 65 is for
the purpose of determining its timeliness. Such a petition is required to be
filed not later than
sixty (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 the
motion for reconsideration is hardly relevant. The Court of Appeals was not in
any position to
determine 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
why Ramirez
failed to observe procedural rules properly. 34
Quite apparent from the foregoing is that the Court of Appeals did not err,
much less commit
grave abuse of discretion, in denying due course to and dismissing the
petition for certiorari for
its procedural defects. Ramirezs failure to verify and state material dates as
required under the
rules warranted the outright dismissal of his petition.
We are not unmindful of exceptional cases where this Court has set aside
procedural defects to
correct a patent injustice. However, concomitant to a liberal application of the
rules of procedure
should be an effort on the part of the party invoking liberality to at least
explain its failure to
comply with the rules.
In sum, we find no sufficient justification to set aside the NLRC and Court of
Appeals
resolutions. Thus, the decision of the Labor Arbiter is already final and
executory and binding
upon this Court.35
The relaxation of procedural rules cannot be made without any valid reasons
proffered for or
underpinning it. To merit liberality, Ramirez must show reasonable cause
justifying his noncompliance
with the rules and must convince the court that the outright dismissal of the
petition
would defeat the administration of substantive justice. The desired leniency
cannot be accorded,
absent valid and compelling reasons for such procedural lapse. The appellate
court saw no
compelling need meriting the relaxation of the rules; neither do we see any.36
Wherefore, premises considered, the petition is Denied for lack of merit. The
Resolutions of the
Court of Appeals dated 13 July 2007 and 7 March 2008 and the Resolutions
of the NLRC dated
29 September 2006 and 20 December 2006 are AFFIRMED. Costs against
petitioner.
SO ORDERED.

OLISA VS. ESCARIO
Conformably with the long honored principle of a fair days wage
for a fair days labor, employees dismissed for joining an illegal strike
are not entitled to backwages for the period of the strike even if they are
reinstated by virtue of their being merely members of the striking union
who did not commit any illegal act during the strike.

We apply this principle in resolving this appeal via a petition for
review on certiorari of the decision dated August 18, 2003 of the Court
of Appeals (CA),
[1]
affirming the decisiondated November 29, 2001
rendered by the National Labor Relations Commission (NLRC) directing
their reinstatement of the petitioners to their former positions without
backwages, or, in lieu of reinstatement, the payment of separation pay
equivalent to one-half month per year of service.
[2]


Antecedents

The petitioners were among the regular employees of respondent
Pinakamasarap Corporation (PINA), a corporation engaged in
manufacturing and selling food seasoning. They were members of
petitioner Malayang Samahan ng mga Manggagawa sa Balanced Foods
(Union).



At 8:30 in the morning of March 13, 1993, all the officers and
some 200 members of the Union walked out of PINAs premises and
proceeded to the barangay office to show support for Juanito Caete, an
officer of the Union charged with oral defamation by Aurora Manor,
PINAs personnel manager, and Yolanda Fabella, Manors secretary.
[3]
It
appears that the proceedings in the barangay resulted in a settlement, and
the officers and members of the Union all returned to work thereafter.

As a result of the walkout, PINA preventively suspended all
officers of the Union because of the March 13, 1993 incident. PINA
terminated the officers of the Union after a month.

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 Unions officers, except Caete, 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 within the company premises on June 15, 1993 that effectively
barred with the use of threat and intimidation the ingress and egress of
PINAs 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 Unions officers and members to cease and desist
from barricading and obstructing the entrance to and exit from PINAs
premises, to refrain from committing any and all 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]


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 complainants 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 LAs 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 employment status 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 is hereby 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 NLRCs 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 Article 264 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
DISMISSED for 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 have lost 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 termination of 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 Unions 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 days wage for a fair days 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 employers 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 days
wage for a fair days labor remains as the basic factor in
determining the award thereof. 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. Compaia 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 reinstatementsans backwages is in order,
to conform to the policy of a fair days wage for a fair days labor.

Under the principle of a fair days wage for a fair days 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 latters
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 prevent reinstatement 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 employers 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
reinstatement of 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 PINAs 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.