Page |1

Labor cases
THIRD DIVISION
G.R. No. 197303

June 4, 2014

APQ SHIPMANAGEMENT CO., LTD., and APQ CREW

MANAGEMENT USA, INC., Petitioners,
vs.
ANGELITO L. CASEAS, Respondent.
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the Rules of
Court seeks to review, reverse and set aside the January 24, 2011
Decision1 and the June 1, 2011 Resolution 2 of the Court of Appeals
(CA). in CA-GR. SP No. 112997, which annulled and set aside the
October 14, 2009 Decision of the National Labor Relations
Commission (NLRCJ in NLRC LAC No. 04-000220-09, where
respondent Angelito L. Caseas (Caseas) was seeking disability
and other benefits against petitioner APQ Shipmanagement Co.,
Ltd. (APQ) and petitioner-principal APQ Crew Management USA,
Inc. (Crew Management).3
It appears from the records that in June 2004, Casenas was hired
by APQ, acting for and in behalf of its principal, Crew
Management, as Chief Mate for vessel MV Perseverance for a
period of eight (8) months starting from June 16, 2004 to February
16, 2005,with a basic monthly salary of US$840.00, for forty-eight
(48) hours a week, with US$329.00 as overtime pay.

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In his Position Paper,4 Casenas further alleged that on June 16,
2004, he left Manila to join his assigned vessel in Miami, Florida,
USA, though the vessel could not leave the Florida port because of
its incomplete documents for operation; that consequently, he
was transferred to another vessel, MV HAITIEN PRIDE, which was
in Haiti, although again because of incomplete documents, the
vessel could not leave the port and remained at Cap Haitien; that
together with the rest of the vessel's officers and crew, he was left
to fend for himself; that they were not provided food and water
and had to fish for their own food and were not paid their salaries;
that he suffered extreme stress and anxiety because of the
uncertainty of the situation; that his employment contract was
extended by APQ from the original eight (8) months to twenty-six
(26) months; that the vessel eventually left for Bahamas; that he
felt he became weaker and got tired easily; that despite his
unpaid wages and weakened condition, he performed his duties as
Chief Mate diligently; that in August 2006, he began to suffer
shortness of breath, headache and chest pains; that he was then
brought to the Grand Bahamas Health Services and was
diagnosed with hypertension and was given medicines; that he
was then repatriated due to his condition and he arrived in the
Philippines on August 30, 2006; that within three (3) days
thereafter, he reported to APQ for post-employment medical
examination where the company-designated physician later
diagnosed him with Ischemic Heart Disease; that a certain Dr.
Ariel G. Domingo likewise examined him, confirming and certifying
that he was suffering from Essential Hypertension and Ischemic
Heart Disease; that he was declared "unfit for sea service"; that as
a result, he was not able to work for more than 120 days from his
repatriation; that another medical examination was conducted by
Dr. Lina R. Cero, showing that he was suffering from Essential
Hypertension with Cariomegally Ischemic Heart Disease and
Indirect Inguinal Hernia Right; that he was then advised to take his
maintenance medications for life; that APQ refused to provide him
further medical attention, thus, he incurred medical expenses in
the amount of 6,390.00 by November 2006; that he demanded

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payment of permanent total disability benefits, sickness allowance
and medical expenses to which he was entitled under the POEA
Standard Employment Contract (POEA-SEC), but APQ refused to
pay; that he, together with other crew members, sent a series of
letters and e-mails to the representatives of the shipowners
regarding their unpaid wages, but despite efforts, APQ still refused
to pay their salaries; that demands for payment were also made
to the president of APQ, but the same were refused; and that
ultimately, he was compelled to seek redress and filed a
complaint for permanent total disability benefits, reimbursement
of medical expenses, sickness allowance, non-payment of salaries
representing the extended portion of the employment contract,
damages, and attorney's fees.
APQ, on the other hand, alleged in its Position Paper 5 that upon
expiration of the contract, Caseas refused to return to the
Philippines until he finally did on August 30, 2006; 6 that
thereafter, Caseas demanded payment of his wages, overtime
and vacation pay for the alleged extended portion of the contract;
that it could not be held liable for claims pertaining to the
extended portion of the contract for it did not consent to it; that,
in fact, as early as January 2005, it had been making
arrangements, through American Airlines/American Eagle, for
Caseas repatriation at the end of his contract in February 2005;
that Caseas was fully paid of his wages and other benefits for the
duration of his 8-month contract; and that Caseas suffered
illness after the expiration of the contract, hence, it could not be
made liable to pay him any benefits for his injury/illness.7
Caseas, however, disputed the position of APQ, claiming that his
contract of employment was duly extended. 8He denied that APQ
had been making arrangements for his repatriation as early as
January 2005. To prove that his contract was extended, he
submitted the following documents:

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1. Deck Logbook, dated 14 August 2006;
2. Report of Mr. Steve Mastroropolous, dated 16 May
2006;
3. Letter, dated 24 April 2006 of Mr. Alex P. Quillope,
President of the respondent APQ to OWWA, admitting
that there was no food and water for the crew of MV
"HAITIEN PRIDE."9
APQ countered that the abovementioned documents did not prove
mutual consent of the parties as provided in Caseas
employment contract. His contract expired on August 1, 2005
and, thus, he had no legal basis to claim any salary after the said
period.10 Caseas became ill in August 2006 or more than one (1)
year after the expiration of his employment contract.11
Labor Arbiter Decision
On November 20, 2008, the Labor Arbiter (LA)rendered the
Decision12 dismissing Caseas' complaint. He was of the view that
the employment contract was not extended pursuant to the terms
and conditions of the contract. Caseas failed to prove mutual
consent of the parties to the extension of the contract. He
rendered services on MV Haitien Pride from August 1, 2005 to
April 30, 2006, after the expiration of his contract with APQ on
board the vessel MV Perseverance on February 15, 2005.
The LA pointed out that the illness/disease suffered by Caseas
was sustained while serving on board MVCap Haitien Pride, which
was outside the period of his contractual employment. Thus,
Caseas' claims could not be awarded.
NLRC Resolution

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On June 22, 2009, the NLRC resolved the appeal by reversing and
setting aside the LA decision. Based on the records, it found that
the employment contract was extended. The illness, Essential
Hypertension, suffered by Caseas was a compensable disease
under Section 32-A, No. 20 of the POEA-SEC. Hence, NLRC ruled
that Caseas was entitled to his claims because the illness was
sustained within the duration of his employment contract.
On October 14, 2009, the NLRC, acting on the motion for
reconsideration filed by APQ, reconsidered and set aside the June
22, 2009 NLRC Resolution. It explained that the documentary
evidence presented only proved the extension of contract but not
the consent given to it by APQ. Caseas failed to present the new
contract duly signed by APQ or Crew Management, or any proof
that they consented to the extension. The NLRC explained that
Caseas directly dealt with the shipowner to the exclusion of APQ
and Crew Management, hence, his recourse was against the
shipowner. Thus, APQ could not be held liable for the unpaid
salaries, as well as the permanent disability benefits, because
these were claims that accrued after the expiration of the
employment contract.
Caseas moved for a reconsideration, but the NLRC denied his
motion in its Resolution, dated November 27, 2009.
CA Decision
Caseas filed a petition for certiorari under Rule 65 before the CA,
assailing the October 14, 2009 decision and the November 27,
2009 resolution of the NLRC. On January 24, 2011, the CA granted
the petition and nullified and set aside the questioned NLRC
decision and resolution.

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The CA reinstated the earlier June 22, 2009 NLRC Resolution. In so
ruling, the CA cited the case of Place well International Services
Corporation v. Camote,13 where it was written:
xxx a subsequently executed side agreement of an overseas
contract worker with the foreign employer is void, simply because
it is against our existing laws, morals and public policy. The
subsequent agreement cannot supersede the terms of the
standard employment contract approved by the POEA. Assuming
arguendo that petitioner entered into an agreement with the
foreign principal for an extension of his contract of employment,
sans approval by the POEA, the contract that governs petitioner's
employment is still the POEA-SEC until his repatriation. As far as
Philippine law is concerned, petitioner's contract of employment
with respondents was concluded only at the time of his
repatriation on August 30, 2006.
Further, the CA explained that a declaration from the company
designated physician as to the fitness or unfitness of a seafarer to
continue his sea-duties is sanctioned by Section 20(B)(3) of the
POEA-SEC. There being no declaration made by the companydesignated physician within the 120-day period as to the fitness of
Caseas, the CA opined that he was undoubtedly entitled to
disability benefits.
APQ filed a motion for reconsideration, while Caseas filed his
Comment/Opposition. On June 1, 2011, the CA denied the motion
for lack of merit.
Hence, this petition.
GROUNDS

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THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND
SETTING ASIDE THE DECISION AND RESOLUTION OF THE NLRC
DATED 14 OCTOBER 2009 AND 27 NOVEMBER 2009, AND
REINSTATING THE NLRCS RESOLUTION DATED 22 JUNE 2009,
CONSIDERING THAT:
A. PRIVATE RESPONDENTS CONTRACT OF EMPLOYMENT
WAS NEVER EXTENDED BY THE COMPANY NOR BY THE
PRINCIPAL
B. PRIVATE RESPONDENTS CLAIM FOR DISABILITY
BENEFITS, SICKNESS ALLOWANCE AND UNPAID WAGES
ALL ACCRUED AFTER THE EXPIRATION OF THE CONTRACT
OF EMPLOYMENT14
The pivotal issue for resolution is whether or not the employment
contract of Caseas was extended with the consent of APQ/Crew
Management.
The Court rules in the affirmative.
At the outset, it is to be emphasized that the Court is not a trier of
facts and, thus, its jurisdiction is limited only to reviewing errors of
law. The rule, however, admits of certain exceptions, one of which
is where the findings of fact of the lower tribunals and the
appellate court are contradictory. Such is the case here. Thus, the
Court is constrained to review and resolve the factual issue in
order to settle the controversy.
Employment contracts of seafarers on board foreign ocean-going
vessels are not ordinary contracts. They are regulated and an
imprimatur by the State is necessary. While the seafarer and his
employer are governed by their mutual agreement, the POEA
Rules and Regulations require that the POEA-SEC be integrated in

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every seafarers contract.15 In this case, there is no dispute that
Caseas employment contract was duly approved by the POEA
and that it incorporated the provisions of the POEA-SEC.
As earlier stated, the controversy started when Caseas claimed
sickness and disability benefits as well as unpaid wages from the
petitioners upon his return to the Philippines. The petitioners, on
the other hand, refused to pay, arguing that Caseas sickness
was contracted after his employment contract expired.
Regarding the issue of extension and its corresponding
consequences, two cases were cited by the parties in their
pleadings. The first was Sunace International Management
Services, Inc. v. NLRC16 (Sunace)and the second was Placewell
International Services Corporation v. Camote 17 (Placewell).
In Sunace, the Court ruled that the theory of imputed knowledge
ascribed the knowledge of the agent to the principal, not the other
way around. The knowledge of the principal-foreign employer
could not, therefore, be imputed to its agent. As there was no
substantial proof that Sunace knew of, and consented to be bound
under, the 2-year employment contract extension, it could not be
said to be privy thereto. As such, it and its owner were not held
solidarily liable for any of the complainants claims arising from
the 2-year employment extension.18
In Placewell, the Court concluded that the original POEA-approved
employment contract subsisted and, thus, the solidary liability of
the agent with the principal continued. It ruled that:
R.A. No. 8042 explicitly prohibits the substitution or alteration to
the prejudice of the worker, of employment contracts already
approved and verified by the Department of Labor and
Employment (DOLE) from the time of actual signing thereof by the

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parties up to and including the period of the expiration of the
same without the approval of the DOLE. Thus, we held in Chavez
v. Bonto-Perez,19 that the subsequently executed side agreement
of an overseas contract worker with her foreign employer which
reduced her salary below the amount approved by the POEA is
void because it is against our existing laws, morals and public
policy. The said side agreement cannot supersede her standard
employment contract approved by the POEA.
xxx
Moreover, we find that there was no proper dismissal of
respondent by SAAD; the "termination" of respondent was clearly
a ploy to pressure him to agree to a lower wage rate for continued
employment. Thus, the original POEA-approved employment
contract of respondent subsists despite the so-called new
agreement with SAAD. Consequently, the solidary liability of
petitioner with SAAD for respondents money claims continues in
accordance with Section 10 of R.A. 8042.20
APQs primary argument revolves around the fact of expiration of
Caseas employment contract, which it claims was not extended
as it was without its consent. While the contract stated that any
extension must be made by mutual consent of the parties, it,
however, incorporated Department Order (DO)No. 4 and
Memorandum Circular No. 09, both series of 2000, which provided
for the Standard Terms and Conditions Governing the Employment
of Filipino Seafarers on Board Ocean Going Vessels. Sections 2 and
18 thereof provide:
SECTION 2. COMMENCEMENT/ DURATION OF CONTRACT
A. The Employment contract between the employer and
the seafarer shall commence upon actual departure of

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the seafarer from the airport or seaport in the point of
hire and with a POEA approved contract. It shall be
effective until the seafarers date of arrival at the point of
hire upon termination of his employment pursuant to
Section 18 of this Contract.
B. The period of employment shall be for a period
mutually agreed upon by the seafarer and the employer
but not to exceed 12 months. Any extension of the
contract shall be subject to the mutual consent of both
parties.
xxx
SECTION 18. TERMINATION OF EMPLOYMENT
A. The employment of the seafarer shall cease when the
seafarer completes his period of contractual service
aboard the vessel, signs off from the vessel and arrives
at the point of hire.
B. The employment of the seafareris also terminated
when the seafarer arrives at the point of hire for any of
the following reasons:
1. When the seafarer signs off and is
disembarked for medical reasons pursuant to
Section 20 (B)[5] of this Contract.
xxx
[Emphases supplied]

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It is to be observed that both provisions require the seafarer to
arrive at the point of hire as it signifies the completion of the
employment contract, and not merely its expiration. Similarly, a
seafarers employment contract is terminated even before the
contract expires as soon as he arrives at the point of hire and
signs off for medical reasons, due to shipwreck, voluntary
resignation or for other just causes. In a nutshell, there are three
(3) requirements necessary for the complete termination of the
employment contract: 1]termination due to expiration or other
reasons/causes; 2]signing off from the vessel; and 3]arrival at the
point of hire. In this case, there was no clear showing that
Caseas signed off from the vessel upon the expiration of his
employment contract, which was in February or April 2005. He did
not arrive either in Manila, his point of hire, because he was still
on board the vessel MV Haitien Pride on the supposed date of
expiration of his contract. It was only on August 14, 2006 that he
signed off21 from MV Haitien Pride and arrived in Manila on August
30, 2006.
In Interorient Maritime Enterprises, Inc. v. NLRC,22 the Court held
that the obligations and liabilities of the local agency and its
foreign principal do not end upon the expiration of the contracted
period as they were duty bound to repatriate the seaman to the
point of hire to effectively terminate the contract of
employment.23
APQ avers that Caseas transferred from MV Perseverance to MV
Haitien Pride, which was not the ship specifically mentioned in his
contract. Section 15 of the POEA-SEC guides the Court on this. It
reads:
Section 15. Transfer Clause The seafarer agrees to be transferred
at any port to any vessel owned or operated, manned or managed
by the same employer, provided it is accredited to the same
manning agent and provided further that the position of the

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seafarer and the rate of his wages and terms of services are in no
way inferior and the total period of employment shall not exceed
that originally agreed upon.
Any form of transfer shall be documented and made available
when necessary.
APQ did not argue that MV Haitien Pride was not operated or
managed by Crew Management. It did not claim either that said
vessel was not accredited by it. The logical conclusion, therefore,
is that MV Haitien Pride was operated/managed by Crew
Management and accredited by APQ.
Thus, Caseas transfer should have been documented and made
part of its records for future purposes, but no documentation has
been shown.
Even assuming arguendo that MV Haitien Pride was not related in
any way with either Crew Management or APQ, it is with more
reason that the transfer should have been properly documented
pursuant to the above provision because it necessitated the
termination of his employment contract and his repatriation to the
Philippines, pursuant to Section 26(A) of the POEA-SEC. The said
provision specifically provides that:
Section 26. Change of Principal.
A. When there is change of principal of the vessel
necessitating the termination of employment of the
seafarer before the date indicated in the Contract, the
seafarer shall be entitled to earned wages, repatriation at
employers expense and one month basic pay as
termination pay.

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B. If by mutual agreement, the seafarer continues his
service on board the same vessel, such service shall be
treated as a new contract. The seafarer shall be entitled
to earned wages only.
C. In case arrangement has been made for the seafarer
to join another vessel to complete his contract, the
seafarer shall be entitled to basic wage until the date
joining the other vessel.
Meanwhile, Caseas claimed that his transfer was due to the fact
that MV Perseverance could not leave port because of incomplete
documents for its operation. This was not disputed. To the mind of
the Court, having incomplete documents for the vessels
operation renders it unseaworthy. While seaworthiness is
commonly equated with the physical aspect and condition of the
vessel for voyage as its ability to withstand the rigors of the sea, it
must not be forgotten that a vessel should be armed with the
necessary documents required by the maritime rules and
regulations, both local and international. It has been written that
vessel seaworthiness further extends to cover the documents
required to ensure that the vessel can enter and leave ports
without problems.24
Accordingly, Caseas contract should have been terminated and
he should have been repatriated to the Philippines because a
seafarer cannot be forced to sail with an unseaworthy vessel,
pursuant to Section 24 of the POEA-SEC.25 There was, however, no
showing that his contract was terminated by reason of such
transfer. It is necessary to reiterate that MV Haitien Pride appears
to be manned by, and accredited with, the same principal/ agency.
His joining the said vessel could only mean that it was for the
purpose of completing his contract as the transfer was made well
within the period of his employment contract on board MV
Perseverance.

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APQ further claims that that there was an agreement between
Caseas and the shipowner, but there was no concrete proof
adduced to show that indeed a new agreement for the extension
of the contract was ever made. Granting that a new agreement for
the extension was made, the acts of APQ and Crew Management
proved that there was implied consent to the extension.
APQ attempts to impress upon the Court that Caseas contract
already expired and that he had a new employer during the
alleged extension of the contract by relying on the December 16,
2005 Letter of the POEA. APQ alleged in its Memorandum26 that:
In a letter dated 16 December 2005 letter, the POEA confirmed
that the Contract expired on April 2005 but he was not allowed
repatriation by the owner of the Vessel, his new employer [See
Annex "6" of Comment attached as Annex "z" of this Petition.] A
perusal of the said letter, however, discloses that nowhere was it
stated that Caseas was allowed repatriation by the owner of the
vessel, his new employer. What was clearly stated therein was
that Caseas was not allowed repatriation by his employer for
some reason. Insofar as Philippine law is concerned, the employer
referred to in the said letter remains to be the foreign
principal/manning agency as stated in the POEA-approved
employment contract.
Finally, there was no showing as to why Caseas
repatriated to the Philippines upon the expiration of his
It was expressly provided therein that the contract was
(8) months, plus or minus two (2) months, that is, until
2005 or at most, April 2005.

was not
contract.
for eight
February

On its claim of lack of consent, APQ insists that as proof of its

intention not to extend Caseas contract, it already arranged his
plane ticket as early as January & February 2005, in anticipation of

P a g e | 15
the expiration of the contract, attaching the e-mail copy of the
American Airlines E-ticket &
Itinerary.
Again, a scrutiny of the records reveals otherwise. The e-mail and
eticket consistently relied upon by the petitioners clearly showed
that the eticket was issued on January 18, 2006, which flight was
scheduled on January 23 (Monday) bound for Miami and January
25 (Wednesday) bound for Manila. There were two (2) other etickets arranged for Caseas which showed a flight schedule on
February 8 (Wednesday) and February 15 (Wednesday), both
bound for Manila from Miami. These e-mails and etickets were
sent by Crew Management to APQ viafax. Crew Management also
executed the letter,27 dated February 24, 2006, addressed to
DOLEOWWA in response to the report of the wife of Caseas to
DOLE regarding his repatriation. Crew Management stated in said
letter, copy furnished APQ, that it had already issued an air ticket
to Caseas, but he failed to claim it. The same letter assured the
DOLE-OWWA of its arranging the payment of wages and
repatriation of the crew members on-board MV Haitien Pride, as
well as its arranging another plane ticket for Caseas, if
necessary. Thus, these communications reveal that APQ had
actual knowledge that Caseas continued working on board the
said vessel after February/April 2005. Despite such knowledge,
APQ neither posed any objection to the extension of the contract
nor make any effort to protect itself from any responsibility that
might arise from the extension, if it did not indeed intend to
extend the employment contract. Tokeep on notifying a
person/party who was not anymore privy to any contract at all
makes no sense. Also, APQ sent OWWA another letter, 28 dated
April 24, 2006, giving information on the status of MV Haitien
Pride. The same letter confirmed that APQ and Crew Management
had constant communication with each other regarding the said

P a g e | 16
vessel and its crew. Alex P. Quillope, APQs President, even stated
in the same letter that:
Soon as I receive any information from them, I will at once inform
your good office as I have then already prepared my travel again
to Miami, Florida once MV Haitien Pride be on her sailing to
Miami.29
APQ cannot now feign ignorance of any extension of the contract
and claim that it did not consent to it.1wphi1 As it had
knowledge of the extended contract, APQ is solidarily liable with
Crew Management for Caseas claims. Caseas is, therefore,
entitled to the unpaid wages during the extended portion of his
contract.
As to his claim for medical and other benefits, there is no dispute
that the symptoms of Caseas illness began to manifest during
the term of his employment contract. The fact that the
manifestations of the illness only came about in August 2006 will
not bar a conclusion that he contracted the ailment while the
contract was subsisting. The overall state and condition that he
was exposed to over time was the very cause of his illness. Thus,
the CA was correct in reinstating the NLRC resolution awarding
sickness allowance as well as disability benefits in favor of
Caseas. Section 20(B)(3) of the 2000 POEA Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on
Board Ocean Going Vessels provides:
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
xxx
3. Upon sign-off from the vessel for medical treatment, the
seafarer is entitled to sickness allowance equivalent to his basic

P a g e | 17
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. If a doctor appointed by the seafarer
disagrees with the assessment, a third doctor may be agreed
jointly between the Employer and the seafarer. The third doctors
decision shall be final and binding on both parties.
xxx
In Magsaysay Maritime Corporation vs. NLRC,30 citing Vergara vs.
Hammonia Maritime Services, Inc., 31the Court reiterated that the
seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival
for diagnosis and treatment. For the duration of the treatment but
in no case to exceed 120 days, the seaman is on temporary total
disability as he is totally unable to work. He receives his basic
wage during this period until he is declared fit to work or his
temporary disability is acknowledged by the company to be
permanent, either partially or totally, as his condition is defined
under the POEA-SEC and by applicable Philippine laws. If the 120
days initial period is exceeded and no such declaration is made
because the seafarer requires further medical attention, then the
temporary total disability period may be extended up to a
maximum of 240 days, subject to the right of the employer to
declare within this period that a partial or total disability already

P a g e | 18
exists. The seaman may, of course, also be declared fit to work at
any time such declaration is justi1ied by his medical condition. 32
In this case, Casenas immediately reported to APQ for the
required post-employment medical examination upon his return to
the Philippines. He was referred to the company-designated
physician, who diagnosed him to be suffering from lschemic Heart
Disease, which was a manifestation of organ damage. 33 Caseas
likewise consulted two (2) other physicians who certified him to be
suffering from Essential Hypertension aside from Ischemic Heart
Disease.34 From the time of Caseas' diagnosis by the companydesignated physician, he was under the state of temporary total
disability, which lasted for at least 120 days as provided by law.
Such period could be extended up to 240 days, if further medical
attention was required.
There was, however, no showing of any justification to extend said
period. As the law requires, within 120 days from the time he was
diagnosed of his illness, the company-designated physician must
make a declaration as to the fitness or unfitness of Caseas As
correctly observed by the CA, however, the 120 day period lapsed
without such a declaration being made. 35 Caseas is now deemed
to be in a state of permanent total disability and, thus, clearly
entitled to the total disability benefits provided by law.
WHEREFORE, the petition is DENIED.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice
EN BANC

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G.R. No. 192571

July 23, 2013

ABBOTT
LABORATORIES,
PHILIPPINES,
CECILLE
A.
TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T. YABUTMISA,
TERESITA
C.
BERNARDO,
AND
ALLAN
G.
ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 are the
Decision2 dated December 10,2009 and Resolution3dated June 9,
2010 of the Court of Appeals (CA) in CA-G.R. SP No. 101045 which
pronounced that the National Labor Relations Commission (NLRC)
did not gravely abuse its discretion when it ruled that respondent
Pearlie Ann F. Alcaraz (Alcaraz) was illegally dismissed from her
employment.
The Facts
On June 27, 2004, petitioner Abbott Laboratories, Philippines
(Abbott) caused the publication in a major broadsheet newspaper
of its need for a Medical and Regulatory Affairs Manager
(Regulatory Affairs Manager) who would: (a) be responsible for
drug safety surveillance operations, staffing, and budget; (b) lead
the development and implementation of standard operating
procedures/policies for drug safety surveillance and vigilance; and
(c) act as the primary interface with internal and external
customers regarding safety operations and queries. 4 Alcaraz - who
was then a Regulatory Affairs and Information Manager at Aventis
Pasteur Philippines, Incorporated (another pharmaceutical
company like Abbott) showed interest and submitted her
application on October 4, 2004.5

P a g e | 20
On December 7, 2004, Abbott formally offered Alcaraz the
abovementioned position which was an item under the companys
Hospira Affiliate Local Surveillance Unit (ALSU) department. 6 In
Abbotts offer sheet.7 it was stated that Alcaraz was to be
employed on a probationary basis. 8 Later that day, she accepted
the said offer and received an electronic mail (e-mail) from
Abbotts Recruitment Officer, petitioner Teresita C. Bernardo
(Bernardo), confirming the same. Attached to Bernardos e-mail
were Abbotts organizational chart and a job description of
Alcarazs work.9
On February 12, 2005, Alcaraz signed an employment contract
which stated, inter alia, that she was to be placed on probation for
a period of six (6) months beginning February 15, 2005 to August
14, 2005. The said contract was also signed by Abbotts General
Manager, petitioner Edwin Feist (Feist):10
PROBATIONARY EMPLOYMENT
Dear Pearl,
After
having
successfully
passed
the
pre-employment
requirements, you are hereby appointed as follows:
Position Title : Regulatory Affairs Manager
Department : Hospira
The terms of your employment are:
Nature of Employment : Probationary
Effectivity : February 15, 2005 to August 14, 2005
Basic Salary : P110,000.00/ month

P a g e | 21
It is understood that you agree to abide by all existing policies,
rules and regulations of the company, as well as those, which may
be hereinafter promulgated.
Unless renewed, probationary appointment expires on the date
indicated subject to earlier termination by the Company for any
justifiable reason.
If you agree to the terms and conditions of your employment,
please signify your conformity below and return a copy to HRD.
Welcome to Abbott!
Very truly yours,
Sgd.
EDWIN D. FEIST
General Manager
CONFORME:
Sgd.
PEARLIE ANN FERRER-ALCARAZ
During Alcarazs pre-employment orientation, petitioner Allan G.
Almazar (Almazar), Hospiras Country Transition Manager, briefed
her on her duties and responsibilities as Regulatory Affairs
Manager, stating that: (a) she will handle the staff of Hospira ALSU
and will directly report to Almazar on matters regarding Hopiras
local operations, operational budget, and performance evaluation
of the Hospira ALSU Staff who are on probationary status; (b) she
must implement Abbotts Code of Good Corporate Conduct (Code
of Conduct), office policies on human resources and finance, and
ensure that Abbott will hire people who are fit in the
organizational discipline; (c) petitioner Kelly Walsh (Walsh),
Manager of the Literature Drug Surveillance Drug Safety of
Hospira, will be her immediate supervisor; (d) she should always

P a g e | 22
coordinate with Abbotts human resource officers in the
management and discipline of the staff; (e) Hospira ALSU will spin
off from Abbott in early 2006 and will be officially incorporated
and known as Hospira, Philippines. In the interim, Hospira ALSU
operations will still be under Abbotts management, excluding the
technical aspects of the operations which is under the control and
supervision of Walsh; and (f) the processing of information and/or
raw material data subject of Hospira ALSU operations will be
strictly confined and controlled under the computer system and
network being maintained and operated from the United States.
For this purpose, all those involved in Hospira ALSU are required
to use two identification cards: one, to identify them as Abbotts
employees and another, to identify them as Hospira employees.11
On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa),
Abbotts Human Resources (HR) Director, sent Alcaraz an e-mail
which contained an explanation of the procedure for evaluating
the performance of probationary employees and further indicated
that Abbott had only one evaluation system for all of its
employees. Alcaraz was also given copies of Abbotts Code of
Conduct and Probationary Performance Standards and Evaluation
(PPSE) and Performance Excellence Orientation Modules
(Performance Modules) which she had to apply in line with her
task of evaluating the Hospira ALSU staff.12
Abbotts PPSE procedure mandates that the job performance of a
probationary employee should be formally reviewed and
discussed with the employee at least twice: first on the third
month and second on the fifth month from the date of
employment. The necessary Performance Improvement Plan
should also be made during the third-month review in case of a
gap between the employees performance and the standards set.
These performance standards should be discussed in detail with
the employee within the first two (2) weeks on the job. It was
equally required that a signed copy of the PPSE form must be
submitted to Abbotts Human Resources Department (HRD) and
shall serve as documentation of the employees performance
during his/her probationary period. This shall form the basis for
recommending the confirmation or termination of the
probationary employment.13

P a g e | 23
During the course of her employment, Alcaraz noticed that some
of the staff had disciplinary problems. Thus, she would reprimand
them for their unprofessional behavior such as non-observance of
the dress code, moonlighting, and disrespect of Abbott officers.
However, Alcarazs method of management was considered by
Walsh to be "too strict." 14 Alcaraz approached Misa to discuss
these concerns and was told to "lie low" and let Walsh handle the
matter. Misa even assured her that Abbotts HRD would support
her in all her management decisions.15
On April 12, 2005, Alcaraz received an e-mail from Misa
requesting immediate action on the staffs performance
evaluation as their probationary periods were about to end. This
Alcaraz eventually submitted.16
On April 20, 2005, Alcaraz had a meeting with petitioner Cecille
Terrible (Terrible), Abbotts former HR Director, to discuss certain
issues regarding staff performance standards. In the course
thereof, Alcaraz accidentally saw a printed copy of an e-mail sent
by Walsh to some staff members which essentially contained
queries regarding the formers job performance. Alcaraz asked if
Walshs action was the normal process of evaluation. Terrible said
that it was not.17
On May 16, 2005, Alcaraz was called to a meeting with Walsh and
Terrible where she was informed that she failed to meet the
regularization standards for the position of Regulatory Affairs
Manager.18 Thereafter, Walsh and Terrible requested Alcaraz to
tender her resignation, else they be forced to terminate her
services. She was also told that, regardless of her choice, she
should no longer report for work and was asked to surrender her
office identification cards. She requested to be given one week to
decide on the same, but to no avail.19
On May 17, 2005, Alcaraz told her administrative assistant,
Claude Gonzales (Gonzales), that she would be on leave for that
day. However, Gonzales told her that Walsh and Terrible already
announced to the whole Hospira ALSU staff that Alcaraz already
resigned due to health reasons.20

P a g e | 24
On May 23, 2005, Walsh, Almazar, and Bernardo personally
handed to Alcaraz a letter stating that her services had been
terminated effective May 19, 2005. 21 The letter detailed the
reasons for Alcarazs termination particularly, that Alcaraz: (a)
did not manage her time effectively; (b) failed to gain the trust of
her staff and to build an effective rapport with them; (c) failed to
train her staff effectively; and (d) was not able to obtain the
knowledge and ability to make sound judgments on case
processing and article review which were necessary for the proper
performance of her duties.22 On May 27, 2005, Alcaraz received
another copy of the said termination letter via registered mail.23
Alcaraz felt that she was unjustly terminated from her
employment and thus, filed a complaint for illegal dismissal and
damages against Abbott and its officers, namely, Misa, Bernardo,
Almazar, Walsh, Terrible, and Feist. 24 She claimed that she should
have already been considered as a regular and not a probationary
employee given Abbotts failure to inform her of the reasonable
standards for her regularization upon her engagement as required
under Article 29525 of the Labor Code. In this relation, she
contended that while her employment contract stated that she
was to be engaged on a probationary status, the same did not
indicate the standards on which her regularization would be
based.26 She further averred that the individual petitioners
maliciously connived to illegally dismiss her when: (a) they
threatened her with termination; (b) she was ordered not to enter
company premises even if she was still an employee thereof; and
(c) they publicly announced that she already resigned in order to
humiliate her.27
On the contrary, petitioners maintained that Alcaraz was validly
terminated from her probationary employment given her failure to
satisfy the prescribed standards for her regularization which were
made known to her at the time of her engagement. 28
The LA Ruling
In a Decision dated March 30, 2006, 29 the LA dismissed Alcarazs
complaint for lack of merit.

P a g e | 25
The LA rejected Alcarazs argument that she was not informed of
the reasonable standards to qualify as a regular employee
considering her admissions that she was briefed by Almazar on
her work during her pre-employment orientation meeting 30 and
that she received copies of Abbotts Code of Conduct and
Performance Modules which were used for evaluating all types of
Abbott employees.31 As Alcaraz was unable to meet the standards
set by Abbott as per her performance evaluation, the LA ruled
that the termination of her probationary employment was
justified.32 Lastly, the LA found that there was no evidence to
conclude that Abbotts officers and employees acted in bad faith
in terminating Alcarazs employment.33
Displeased with the LAs ruling, Alcaraz filed an appeal with the
National Labor Relations Commission (NLRC).
The NLRC Ruling
On
September
15,
2006,
the
NLRC
rendered
a
Decision,34 annulling and setting aside the LAs ruling, the
dispositive portion of which reads:
WHEREFORE, the Decision of the Labor Arbiter dated 31 March
2006 [sic] is hereby reversed, annulled and set aside and
judgment is hereby rendered:
1. Finding respondents Abbot [sic] and individual
respondents to have committed illegal dismissal;
2. Respondents are ordered to immediately reinstate
complainant to her former position without loss of
seniority rights immediately upon receipt hereof;
3. To jointly and severally pay complainant backwages
computed from 16 May 2005 until finality of this decision.
As of the date hereof the backwages is computed at

P a g e | 26
a. Backwages for 15 months -

PhP 1,650,000.0

b. 13th month pay -

110,000.00

TOTAL

PhP 1,760,000.0

4. Respondents are ordered to pay complainant moral

damages of P50,000.00 and exemplary damages
ofP50,000.00.
5. Respondents are also ordered to pay attorneys fees of
10% of the total award.
6. All other claims are dismissed for lack of merit.
SO ORDERED.35
The NLRC reversed the findings of the LA and ruled that there was
no evidence showing that Alcaraz had been apprised of her
probationary status and the requirements which she should have
complied with in order to be a regular employee. 36 It held that
Alcarazs receipt of her job description and Abbotts Code of
Conduct and Performance Modules was not equivalent to her
being actually informed of the performance standards upon which
she should have been evaluated on.37 It further observed that
Abbott did not comply with its own standard operating procedure
in evaluating probationary employees.38 The NLRC was also not
convinced that Alcaraz was terminated for a valid cause given
that petitioners allegation of Alcarazs "poor performance"
remained unsubstantiated.39
Petitioners filed a motion for reconsideration which was denied by
the NLRC in a Resolution dated July 31, 2007.40
Aggrieved, petitioners filed with the CA a Petition for Certiorari
with Prayer for Issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction, docketed as CA G.R. SP No. 101045

P a g e | 27
(First CA Petition), alleging grave abuse of discretion on the part of
NLRC when it ruled that Alcaraz was illegally dismissed.41
Pending resolution of the First CA Petition, Alcaraz moved for the
execution of the NLRCs Decision before the LA, which petitioners
strongly opposed. The LA denied the said motion in an Order
dated July 8, 2008 which was, however, eventually reversed on
appeal by the NLRC.42 Due to the foregoing, petitioners filed
another Petition for Certiorari with the CA, docketed as CA G.R. SP
No. 111318 (Second CA Petition), assailing the propriety of the
execution of the NLRC decision.43
The CA Ruling
With regard to the First CA Petition, the CA, in a Decision 44 dated
December 10, 2009, affirmed the ruling of the NLRC and held that
the latter did not commit any grave abuse of discretion in finding
that Alcaraz was illegally dismissed.
It observed that Alcaraz was not apprised at the start of her
employment of the reasonable standards under which she could
qualify as a regular employee.45 This was based on its examination
of the employment contract which showed that the same did not
contain any standard of performance or any stipulation that
Alcaraz shall undergo a performance evaluation before she could
qualify as a regular employee.46 It also found that Abbott was
unable to prove that there was any reasonable ground to
terminate Alcarazs employment.47 Abbott moved for the
reconsideration of the aforementioned ruling which was, however,
denied by the CA in a Resolution48 dated June 9, 2010.
The CA likewise denied the Second CA Petition in a Resolution
dated May 18, 2010 (May 18, 2010 Resolution) and ruled that the
NLRC was correct in upholding the execution of the NLRC
Decision.49 Thus, petitioners filed a motion for reconsideration.
While the petitioners motion for reconsideration of the CAs May
18, 2010 Resolution was pending, Alcaraz again moved for the

P a g e | 28
issuance of a writ of execution before the LA. On June 7, 2010,
petitioners received the LAs order granting Alcarazs motion for
execution which they in turn appealed to the NLRC through a
Memorandum of Appeal dated June 16, 2010 (June 16, 2010
Memorandum of Appeal ) on the ground that the implementation
of the LAs order would render its motion for reconsideration moot
and academic.50
Meanwhile, petitioners motion for reconsideration of the CAs May
18, 2010 Resolution in the Second CA Petition was denied via a
Resolution dated October 4, 2010.51 This attained finality on
January 10, 2011 for petitioners failure to timely appeal the
same.52 Hence, as it stands, only the issues in the First CA petition
are left to be resolved.
Incidentally, in her Comment dated November 15, 2010, Alcaraz
also alleges that petitioners were guilty of forum shopping when
they filed the Second CA Petition pending the resolution of their
motion for reconsideration of the CAs December 10, 2009
Decision i.e., the decision in the First CA Petition. 53 She also
contends that petitioners have not complied with the certification
requirement under Section 5, Rule 7 of the Rules of Court when
they failed to disclose in the instant petition the filing of the June
16, 2010 Memorandum of Appeal filed before the NLRC.54
The Issues Before the Court
The following issues have been raised for the Courts resolution:
(a) whether or not petitioners are guilty of forum shopping and
have violated the certification requirement under Section 5, Rule 7
of the Rules of Court; (b) whether or not Alcaraz was sufficiently
informed of the reasonable standards to qualify her as a regular
employee; (c) whether or not Alcaraz was validly terminated from
her employment; and (d) whether or not the individual petitioners
herein are liable.
The Courts Ruling

P a g e | 29
A. Forum Shopping and
Violation of Section 5, Rule 7
of the Rules of Court.
At the outset, it is noteworthy to mention that the prohibition
against forum shopping is different from a violation of the
certification requirement under Section 5, Rule 7 of the Rules of
Court. In Sps. Ong v. CA,55 the Court explained that:
x x x The distinction between the prohibition against forum
shopping and the certification requirement should by now be too
elementary to be misunderstood. To reiterate, compliance with the
certification against forum shopping is separate from and
independent of the avoidance of the act of forum shopping itself.
There is a difference in the treatment between failure to comply
with the certification requirement and violation of the prohibition
against forum shopping not only in terms of imposable sanctions
but also in the manner of enforcing them. The former constitutes
sufficient cause for the dismissal without prejudice to the filing of
the complaint or initiatory pleading upon motion and after
hearing, while the latter is a ground for summary dismissal
thereof and for direct contempt. x x x. 56
As to the first, forum shopping takes place when a litigant files
multiple suits involving the same parties, either simultaneously or
successively, to secure a favorable judgment. It exists where the
elements of litis pendentia are present, namely: (a) identity of
parties, or at least such parties who represent the same interests
in both actions; (b) identity of rights asserted and relief prayed
for, the relief being founded on the same facts; and (c) the
identity with respect to the two preceding particulars in the two
(2) cases is such that any judgment that may be rendered in the
pending case, regardless of which party is successful, would
amount to res judicata in the other case. 57
In this case, records show that, except for the element of identity
of parties, the elements of forum shopping do not exist. Evidently,
the First CA Petition was instituted to question the ruling of the
NLRC that Alcaraz was illegally dismissed. On the other hand, the

P a g e | 30
Second CA Petition pertains to the propriety of the enforcement of
the judgment award pending the resolution of the First CA Petition
and the finality of the decision in the labor dispute between
Alcaraz and the petitioners. Based on the foregoing, a judgment in
the Second CA Petition will not constitute res judicata insofar as
the First CA Petition is concerned. Thus, considering that the two
petitions clearly cover different subject matters and causes of
action, there exists no forum shopping.
As to the second, Alcaraz further imputes that the petitioners
violated the certification requirement under Section 5, Rule 7 of
the Rules of Court58 by not disclosing the fact that it filed the June
16, 2010 Memorandum of Appeal before the NLRC in the instant
petition.
In this regard, Section 5(b), Rule 7 of the Rules of Court requires
that a plaintiff who files a case should provide a complete
statement of the present status of any pending case if the latter
involves the same issues as the one that was filed. If there is no
such similar pending case, Section 5(a) of the same rule provides
that the plaintiff is obliged to declare under oath that to the best
of his knowledge, no such other action or claim is pending.
Records show that the issues raised in the instant petition and
those in the June 16, 2010 Memorandum of Appeal filed with the
NLRC likewise cover different subject matters and causes of
action. In this case, the validity of Alcarazs dismissal is at issue
whereas in the said Memorandum of Appeal, the propriety of the
issuance of a writ of execution was in question.
Thus, given the dissimilar issues, petitioners did not have to
disclose in the present petition the filing of their June 16, 2010
Memorandum of Appeal with the NLRC. In any event, considering
that the issue on the propriety of the issuance of a writ of
execution had been resolved in the Second CA Petition which in
fact had already attained finality the matter of disclosing the
June 16, 2010 Memorandum of Appeal is now moot and academic.

P a g e | 31
Having settled the foregoing procedural matter, the Court now
proceeds to resolve the substantive issues.
B. Probationary employment;
grounds for termination.
A probationary employee, like a regular employee, enjoys security
of tenure. However, in cases of probationary employment, aside
from just or authorized causes of termination, an additional
ground is provided under Article 295 of the Labor Code, i.e., the
probationary employee may also be terminated for failure to
qualify as a regular employee in accordance with the reasonable
standards made known by the employer to the employee at the
time of the engagement.59 Thus, the services of an employee who
has been engaged on probationary basis may be terminated for
any of the following: (a) a just or (b) an authorized cause; and (c)
when he fails to qualify as a regular employee in accordance with
reasonable standards prescribed by the employer.60
Corollary thereto, Section 6(d), Rule I, Book VI of the
Implementing Rules of the Labor Code provides that if the
employer fails to inform the probationary employee of the
reasonable standards upon which the regularization would be
based on at the time of the engagement, then the said employee
shall be deemed a regular employee, viz.:
(d) In all cases of probationary employment, the employer shall
make known to the employee the standards under which he will
qualify as a regular employee at the time of his engagement.
Where no standards are made known to the employee at that
time, he shall be deemed a regular employee.
In other words, the employer is made to comply with two (2)
requirements when dealing with a probationary employee: first,
the employer must communicate the regularization standards to
the probationary employee; and second, the employer must make
such communication at the time of the probationary employees
engagement. If the employer fails to comply with either, the

P a g e | 32
employee is deemed as a regular and not a probationary
employee.
Keeping with these rules, an employer is deemed to have made
known the standards that would qualify a probationary employee
to be a regular employee when it has exerted reasonable efforts
to apprise the employee of what he is expected to do or
accomplish during the trial period of probation. This goes without
saying that the employee is sufficiently made aware of his
probationary status as well as the length of time of the probation.
The exception to the foregoing is when the job is self-descriptive
in nature, for instance, in the case of maids, cooks, drivers, or
messengers.61 Also, in Aberdeen Court, Inc. v. Agustin,62 it has
been held that the rule on notifying a probationary employee of
the standards of regularization should not be used to exculpate an
employee who acts in a manner contrary to basic knowledge and
common sense in regard to which there is no need to spell out a
policy or standard to be met. In the same light, an employees
failure to perform the duties and responsibilities which have been
clearly made known to him constitutes a justifiable basis for a
probationary employees non-regularization.
In this case, petitioners contend that Alcaraz was terminated
because she failed to qualify as a regular employee according to
Abbotts standards which were made known to her at the time of
her engagement. Contrarily, Alcaraz claims that Abbott never
apprised her of these standards and thus, maintains that she is a
regular and not a mere probationary employee.
The Court finds petitioners assertions to be well-taken.
A punctilious examination of the records reveals that Abbott had
indeed complied with the above-stated requirements. This
conclusion is largely impelled by the fact that Abbott clearly
conveyed to Alcaraz her duties and responsibilities as Regulatory
Affairs Manager prior to, during the time of her engagement, and
the incipient stages of her employment. On this score, the Court

P a g e | 33
finds it apt to detail not only the incidents which point out to the
efforts made by Abbott but also those circumstances which would
show that Alcaraz was well-apprised of her employers
expectations that would, in turn, determine her regularization:
(a) On June 27, 2004, Abbott caused the publication in a
major broadsheet newspaper of its need for a Regulatory
Affairs Manager, indicating therein the job description for
as well as the duties and responsibilities attendant to the
aforesaid position; this prompted Alcaraz to submit her
application to Abbott on October 4, 2004;
(b) In Abbotts December 7, 2004 offer sheet, it was
stated that Alcaraz was to be employed on a
probationary status;
(c) On February 12, 2005, Alcaraz signed an employment
contract which specifically stated, inter alia, that she was
to be placed on probation for a period of six (6) months
beginning February 15, 2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbotts employment
offer, Bernardo sent her copies of Abbotts organizational
structure and her job description through e-mail;
(e) Alcaraz was made to undergo a pre-employment
orientation where Almazar informed her that she had to
implement Abbotts Code of Conduct and office policies
on human resources and finance and that she would be
reporting directly to Walsh;
(f) Alcaraz was also required to undergo a training
program as part of her orientation;
(g) Alcaraz received copies of Abbotts Code of Conduct
and Performance Modules from Misa who explained to
her the procedure for evaluating the performance of

P a g e | 34
probationary employees; she was further notified that
Abbott had only one evaluation system for all of its
employees; and
(h) Moreover, Alcaraz had previously worked for another
pharmaceutical company and had admitted to have an
"extensive training and background" to acquire the
necessary skills for her job.63
Considering the totality of the above-stated circumstances, it
cannot, therefore, be doubted that Alcaraz was well-aware that
her regularization would depend on her ability and capacity to
fulfill the requirements of her position as Regulatory Affairs
Manager and that her failure to perform such would give Abbott a
valid cause to terminate her probationary employment.
Verily, basic knowledge and common sense dictate that the
adequate performance of ones duties is, by and of itself, an
inherent and implied standard for a probationary employee to be
regularized; such is a regularization standard which need not be
literally spelled out or mapped into technical indicators in every
case. In this regard, it must be observed that the assessment of
adequate duty performance is in the nature of a management
prerogative which when reasonably exercised as Abbott did in
this case should be respected. This is especially true of a
managerial employee like Alcaraz who was tasked with the vital
responsibility of handling the personnel and important matters of
her department.
In fine, the Court rules that Alcarazs status as a probationary
employee and her consequent dismissal must stand.
Consequently, in holding that Alcaraz was illegally dismissed due
to her status as a regular and not a probationary employee, the
Court finds that the NLRC committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the
premise that Alcarazs receipt of her job description and Abbotts
Code of Conduct and Performance Modules was not equivalent to

P a g e | 35
being actually informed of the performance standards upon which
she should have been evaluated on.64 It, however, overlooked the
legal implication of the other attendant circumstances as detailed
herein which should have warranted a contrary finding that
Alcaraz was indeed a probationary and not a regular employee
more particularly the fact that she was well-aware of her duties
and responsibilities and that her failure to adequately perform the
same would lead to her non-regularization and eventually, her
termination.
Accordingly, by affirming the NLRCs pronouncement which is
tainted with grave abuse of discretion, the CA committed a
reversible error which, perforce, necessitates the reversal of its
decision.
C. Probationary employment;
termination procedure.
A different procedure is applied when terminating a probationary
employee; the usual two-notice rule does not govern. 65 Section 2,
Rule I, Book VI of the Implementing Rules of the Labor Code states
that "if the termination is brought about by the x x x failure of an
employee to meet the standards of the employer in case of
probationary employment, it shall be sufficient that a written
notice is served the employee, within a reasonable time from the
effective date of termination."
As the records show, Alcaraz's dismissal was effected through a
letter dated May 19, 2005 which she received on May 23, 2005
and again on May 27, 2005. Stated therein were the reasons for
her termination, i.e., that after proper evaluation, Abbott
determined that she failed to meet the reasonable standards for
her regularization considering her lack of time and people
management and decision-making skills, which are necessary in
the performance of her functions as Regulatory Affairs
Manager.66 Undeniably, this written notice sufficiently meets the
criteria set forth above, thereby legitimizing the cause and
manner of Alcarazs dismissal as a probationary employee under
the parameters set by the Labor Code.67

P a g e | 36
D. Employers violation of
company policy and
procedure.
Nonetheless, despite the existence of a sufficient ground to
terminate Alcarazs employment and Abbotts compliance with
the Labor Code termination procedure, it is readily apparent that
Abbott breached its contractual obligation to Alcaraz when it
failed to abide by its own procedure in evaluating the performance
of a probationary employee.
Veritably, a company policy partakes of the nature of an implied
contract between the employer and employee. In Parts Depot, Inc.
v. Beiswenger,68 it has been held that:
Employer statements of policy . . . can give rise to contractual
rights in employees without evidence that the parties mutually
agreed that the policy statements would create contractual rights
in the employee, and, hence, although the statement of policy is
signed by neither party, can be unilaterally amended by the
employer without notice to the employee, and contains no
reference to a specific employee, his job description or
compensation, and although no reference was made to the policy
statement in pre-employment interviews and the employee does
not learn of its existence until after his hiring. Toussaint, 292 N.W .
2d at 892. The principle is akin to estoppel. Once an employer
establishes an express personnel policy and the employee
continues to work while the policy remains in effect, the policy is
deemed an implied contract for so long as it remains in effect. If
the employer unilaterally changes the policy, the terms of the
implied contract are also thereby changed.1wphi1 (Emphasis
and underscoring supplied.)
Hence, given such nature, company personnel policies create an
obligation on the part of both the employee and the employer to
abide by the same.

P a g e | 37
Records show that Abbotts PPSE procedure mandates, inter alia,
that the job performance of a probationary employee should be
formally reviewed and discussed with the employee at least twice:
first on the third month and second on the fifth month from the
date of employment. Abbott is also required to come up with a
Performance Improvement Plan during the third month review to
bridge the gap between the employees performance and the
standards set, if any.69 In addition, a signed copy of the PPSE form
should be submitted to Abbotts HRD as the same would serve as
basis for recommending the confirmation or termination of the
probationary employment.70
In this case, it is apparent that Abbott failed to follow the abovestated procedure in evaluating Alcaraz. For one, there lies a hiatus
of evidence that a signed copy of Alcarazs PPSE form was
submitted to the HRD. It was not even shown that a PPSE form
was completed to formally assess her performance. Neither was
the performance evaluation discussed with her during the third
and fifth months of her employment. Nor did Abbott come up with
the necessary Performance Improvement Plan to properly gauge
Alcarazs performance with the set company standards.
While it is Abbotts management prerogative to promulgate its
own company rules and even subsequently amend them, this
right equally demands that when it does create its own policies
and thereafter notify its employee of the same, it accords upon
itself the obligation to faithfully implement them. Indeed, a
contrary interpretation would entail a disharmonious relationship
in the work place for the laborer should never be mired by the
uncertainty of flimsy rules in which the latters labor rights and
duties would, to some extent, depend.
In this light, while there lies due cause to terminate Alcarazs
probationary employment for her failure to meet the standards
required for her regularization, and while it must be further
pointed out that Abbott had satisfied its statutory duty to serve a
written notice of termination, the fact that it violated its own
company procedure renders the termination of Alcarazs

P a g e | 38
employment procedurally infirm, warranting the payment of
nominal damages. A further exposition is apropos.
Case law has settled that an employer who terminates an
employee for a valid cause but does so through invalid procedure
is liable to pay the latter nominal damages.
In Agabon v. NLRC (Agabon),71 the Court pronounced that where
the dismissal is for a just cause, the lack of statutory due process
should not nullify the dismissal, or render it illegal, or ineffectual.
However, the employer should indemnify the employee for the
violation of his statutory rights.72 Thus, in Agabon, the employer
was ordered to pay the employee nominal damages in the amount
of P30,000.00.73
Proceeding from the same ratio, the Court modified Agabon in the
case of Jaka Food Processing Corporation v. Pacot (Jaka) 74 where it
created a distinction between procedurally defective dismissals
due to a just cause, on one hand, and those due to an authorized
cause, on the other.
It was explained that if the dismissal is based on a just cause
under Article 282 of the Labor Code (now Article 296) but the
employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because
the dismissal process was, in effect, initiated by an act imputable
to the employee; if the dismissal is based on an authorized cause
under Article 283 (now Article 297) but the employer failed to
comply with the notice requirement, the sanction should be stiffer
because the dismissal process was initiated by the employers
exercise of his management prerogative.75 Hence, in Jaka, where
the employee was dismissed for an authorized cause of
retrenchment76 as contradistinguished from the employee in
Agabon who was dismissed for a just cause of neglect of duty 77
the Court ordered the employer to pay the employee nominal
damages at the higher amount of P50,000.00.

P a g e | 39
Evidently, the sanctions imposed in both Agabon and Jaka proceed
from the necessity to deter employers from future violations of
the statutory due process rights of employees. 78 In similar regard,
the Court deems it proper to apply the same principle to the case
at bar for the reason that an employers contractual breach of its
own company procedure albeit not statutory in source has the
parallel effect of violating the laborers rights. Suffice it to state,
the contract is the law between the parties and thus, breaches of
the same impel recompense to vindicate a right that has been
violated. Consequently, while the Court is wont to uphold the
dismissal of Alcaraz because a valid cause exists, the payment of
nominal damages on account of Abbotts contractual breach is
warranted in accordance with Article 2221 of the Civil Code.79
Anent the proper amount of damages to be awarded, the Court
observes that Alcarazs dismissal proceeded from her failure to
comply with the standards required for her regularization. As such,
it is undeniable that the dismissal process was, in effect, initiated
by an act imputable to the employee, akin to dismissals due to
just causes under Article 296 of the Labor Code. Therefore, the
Court deems it appropriate to fix the amount of nominal damages
at the amount of P30,000.00, consistent with its rulings in both
Agabon and Jaka.
E. Liability of individual
petitioners as corporate
officers.
It is hornbook principle that personal liability of corporate
directors, trustees or officers attaches only when: (a) they assent
to a patently unlawful act of the corporation, or when they are
guilty of bad faith or gross negligence in directing its affairs, or
when there is a conflict of interest resulting in damages to the
corporation, its stockholders or other persons; (b) they consent to
the issuance of watered down stocks or when, having knowledge
of such issuance, do not forthwith file with the corporate secretary
their written objection; (c) they agree to hold themselves
personally and solidarily liable with the corporation; or (d) they

P a g e | 40
are made by specific provision of law personally answerable for
their corporate action.80
In this case, Alcaraz alleges that the individual petitioners acted in
bad faith with regard to the supposed crude manner by which her
probationary employment was terminated and thus, should be
held liable together with Abbott. In the same vein, she further
attributes the loss of some of her remaining belongings to them.81
Alcarazs contention fails to persuade.
A judicious perusal of the records show that other than her
unfounded assertions on the matter, there is no evidence to
support the fact that the individual petitioners herein, in their
capacity as Abbotts officers and employees, acted in bad faith or
were motivated by ill will in terminating
Alcarazs services. The fact that Alcaraz was made to resign and
not allowed to enter the workplace does not necessarily indicate
bad faith on Abbotts part since a sufficient ground existed for the
latter to actually proceed with her termination. On the alleged loss
of her personal belongings, records are bereft of any showing that
the same could be attributed to Abbott or any of its officers. It is a
well-settled rule that bad faith cannot be presumed and he who
alleges bad faith has the onus of proving it. All told, since Alcaraz
failed to prove any malicious act on the part of Abbott or any of its
officers, the Court finds the award of moral or exemplary damages
unwarranted.
WHEREFORE, the petition is GRANTED. The Decision dated
December 10, 2009 and Resolution dated June 9, 2010 of the
Court of Appeals in CA-G.R. SP No. 101045 are hereby REVERSED
and SET ASIDE. Accordingly, the Decision dated March 30, 2006 of
the Labor Arbiter is REINSTATED with the MODIFICATION that
petitioner Abbott Laboratories, Philippines be ORDERED to pay
respondent Pearlie Ann F. Alcaraz nominal damages in the amount
of P30,000.00 on account of its breach of its own company
procedure.

P a g e | 41
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
SECOND DIVISION
G.R. No. 162813

February 12, 2007

FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER

UY, Petitioners,
vs.
JIMMY LEBATIQUE and THE HONORABLE COURT OF
APPEALS, Respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for review on certiorari assailing the
Decision1 dated September 30, 2003 of the Court of Appeals in
CA-G.R. SP No. 76196 and its Resolution 2 dated March 15, 2004
denying the motion for reconsideration. The appellate court had
reversed the Decision3 dated October 15, 2002 of the National
Labor Relations Commission (NLRC) setting aside the
Decision4 dated June 27, 2001 of the Labor Arbiter.
Petitioner Far East Agricultural Supply, Inc. (Far East) hired on
March 4, 1996 private respondent Jimmy Lebatique as truck driver
with a daily wage of P223.50. He delivered animal feeds to the
companys clients.

P a g e | 42
On January 24, 2000, Lebatique complained of nonpayment of
overtime work particularly on January 22, 2000, when he was
required to make a second delivery in Novaliches, Quezon City.
That same day, Manuel Uy, brother of Far Easts General Manager
and petitioner Alexander Uy, suspended Lebatique apparently for
illegal use of company vehicle. Even so, Lebatique reported for
work the next day but he was prohibited from entering the
company premises.
On January 26, 2000, Lebatique sought the assistance of the
Department of Labor and Employment (DOLE) Public Assistance
and Complaints Unit concerning the nonpayment of his overtime
pay. According to Lebatique, two days later, he received a
telegram from petitioners requiring him to report for work. When
he did the next day, January 29, 2000, Alexander asked him why
he was claiming overtime pay. Lebatique explained that he had
never been paid for overtime work since he started working for
the company. He also told Alexander that Manuel had fired him.
After talking to Manuel, Alexander terminated Lebatique and told
him to look for another job.
On March 20, 2000, Lebatique filed a complaint for illegal
dismissal and nonpayment of overtime pay. The Labor Arbiter
found that Lebatique was illegally dismissed, and ordered his
reinstatement and the payment of his full back wages, 13th
month pay, service incentive leave pay, and overtime pay. The
dispositive portion of the decision is quoted herein in full, as
follows:
WHEREFORE, we find the termination of complainant illegal. He
should thus be ordered reinstated with full backwages. He is
likewise ordered paid his 13th month pay, service incentive leave
pay and overtime pay as computed by the Computation and
Examination Unit as follows:

P a g e | 43
a) Backwages:
01/25/00 - 10/31/00 = 9.23 mos.
P 223.50 x 26 x 9.23 = P 53,635.53
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53
13th Month
8,727.13

Pay:

1/12

of P 104,725.53

Service Incentive Leave Pay

01/25/00 10/31/00 = 9.23 mos.
P 223.50 x 5/12 x 9.23 = P 859.54
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29
115,130.95
b) Overtime Pay: (3 hours/day)
03/20/97 4/30/97 = 1.36 mos.
P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50
05/01/97 02/05/98 = 9.16 mos.

P a g e | 44
P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
02/06/98 10/30/99 = 20.83 mos.
P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39
10/31/99 01/24/00 = 2.80 mos.
P 223.50/8 x 1.25
= 7,626.94 81,528.77

26

2.80

TOTAL AWARD P 196,659.72

SO ORDERED.5
On appeal, the NLRC reversed the Labor Arbiter and dismissed the
complaint for lack of merit. The NLRC held that there was no
dismissal to speak of since Lebatique was merely suspended.
Further, it found that Lebatique was a field personnel, hence, not
entitled to overtime pay and service incentive leave pay.
Lebatique sought reconsideration but was denied.
Aggrieved, Lebatique filed a petition for certiorari with the Court
of Appeals.1awphi1.net
The Court of Appeals, in reversing the NLRC decision, reasoned
that Lebatique was suspended on January 24, 2000 but was
illegally dismissed on January 29, 2000 when Alexander told him
to look for another job. It also found that Lebatique was not a field
personnel and therefore entitled to payment of overtime pay,
service incentive leave pay, and 13th month pay.
It reinstated the decision of the Labor Arbiter as follows:

P a g e | 45
WHEREFORE, premises considered, the decision of the NLRC
dated 27 December 2002 is hereby REVERSEDand the Labor
Arbiters decision dated 27 June 2001 REINSTATED.
SO ORDERED.6
Petitioners moved for reconsideration but it was denied.
Hence, the instant petition wherein petitioners assign the
following errors:
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION
OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15
OCTOBER 2002 AND IN RULING THAT THE PRIVATE RESPONDENT
WAS ILLEGALLY DISMISSED.
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION
OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15
OCTOBER 2002 AND IN RULING THAT PRIVATE RESPONDENT IS
NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED TO
OVERTIME PAY AND SERVICE INCENTIVE LEAVE PAY.
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE
PETITION FOR CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT
TO ATTACH CERTIFIED TRUE COPIES OF THE QUESTIONED
DECISION AND RESOLUTION OF THE PUBLIC RESPONDENT.7
Simply stated, the principal issues in this case are: (1) whether
Lebatique was illegally dismissed; and (2) whether Lebatique was
a field personnel, not entitled to overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from
service but merely suspended for a day due to violation of

P a g e | 46
company rules; (2) Lebatique was not barred from entering the
company premises since he never reported back to work; and (3)
Lebatique is estopped from claiming that he was illegally
dismissed since his complaint before the DOLE was only on the
nonpayment of his overtime pay.
Also, petitioners maintain that Lebatique, as a driver, is not
entitled to overtime pay since he is a field personnel whose time
outside the company premises cannot be determined with
reasonable certainty. According to petitioners, the drivers do not
observe regular working hours unlike the other office employees.
The drivers may report early in the morning to make their
deliveries or in the afternoon, depending on the production of
animal feeds and the traffic conditions. Petitioners also aver that
Lebatique worked for less than eight hours a day.8
Lebatique for his part insists that he was illegally dismissed and
was not merely suspended. He argues that he neither refused to
work nor abandoned his job. He further contends that
abandonment of work is inconsistent with the filing of a complaint
for illegal dismissal. He also claims that he is not a field personnel,
thus, he is entitled to overtime pay and service incentive leave
pay.
After consideration of the submission of the parties, we find that
the petition lacks merit. We are in agreement with the decision of
the Court of Appeals sustaining that of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on
the employer to prove that the termination was for a valid
cause.9 In this case, petitioners failed to discharge such burden.
Petitioners aver that Lebatique was merely suspended for one day
but he abandoned his work thereafter. To constitute abandonment
as a just cause for dismissal, there must be: (a) absence without

P a g e | 47
justifiable reason; and (b) a clear intention, as manifested by
some overt act, to sever the employer-employee relationship. 10
The records show that petitioners failed to prove that Lebatique
abandoned his job. Nor was there a showing of a clear intention
on the part of Lebatique to sever the employer-employee
relationship. When Lebatique was verbally told by Alexander Uy,
the companys General Manager, to look for another job,
Lebatique was in effect dismissed. Even assuming earlier he was
merely suspended for illegal use of company vehicle, the records
do not show that he was afforded the opportunity to explain his
side. It is clear also from the sequence of the events leading to
Lebatiques dismissal that it was Lebatiques complaint for
nonpayment of his overtime pay that provoked the management
to dismiss him, on the erroneous premise that a truck driver is a
field personnel not entitled to overtime pay.
An employee who takes steps to protest his layoff cannot by any
stretch of imagination be said to have abandoned his work and
the filing of the complaint is proof enough of his desire to return to
work, thus negating any suggestion of abandonment. 11 A contrary
notion would not only be illogical but also absurd.
It is immaterial that Lebatique had filed a complaint for
nonpayment of overtime pay the day he was suspended by
managements unilateral act. What matters is that he filed the
complaint for illegal dismissal on March 20, 2000, after he was
told not to report for work, and his filing was well within the
prescriptive period allowed under the law.
On the second issue, Article 82 of the Labor Code is decisive on
the question of who are referred to by the term "field personnel."
It provides, as follows:

P a g e | 48
ART. 82. Coverage. - The provisions of this title [Working
Conditions and Rest Periods] shall apply to employees in all
establishments and undertakings whether for profit or not, but not
to government employees, managerial employees, field
personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in appropriate
regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable
certainty.
In Auto Bus Transport Systems, Inc. v. Bautista, 12 this Court
emphasized that the definition of a "field personnel" is not merely
concerned with the location where the employee regularly
performs his duties but also with the fact that the employees
performance is unsupervised by the employer. We held that field
personnel are those who regularly perform their duties away from
the principal place of business of the employer and whose actual
hours of work in the field cannot be determined with reasonable
certainty. Thus, in order to determine whether an employee is a
field employee, it is also necessary to ascertain if actual hours of
work in the field can be determined with reasonable certainty by
the employer. In so doing, an inquiry must be made as to whether
or not the employees time and performance are constantly
supervised by the employer.13

P a g e | 49
As correctly found by the Court of Appeals, Lebatique is not a field
personnel as defined above for the following reasons: (1)
company drivers, including Lebatique, are directed to deliver the
goods at a specified time and place; (2) they are not given the
discretion to solicit, select and contact prospective clients; and (3)
Far East issued a directive that company drivers should stay at the
clients premises during truck-ban hours which is from 5:00 to
9:00 a.m. and 5:00 to 9:00 p.m. 14 Even petitioners admit that the
drivers can report early in the morning, to make their deliveries,
or in the afternoon, depending on the production of animal
feeds.15 Drivers, like Lebatique, are under the control and
supervision of management officers. Lebatique, therefore, is a
regular employee whose tasks are usually necessary and
desirable to the usual trade and business of the company. Thus,
he is entitled to the benefits accorded to regular employees of Far
East, including overtime pay and service incentive leave pay.
Note that all money claims arising from an employer-employee
relationship shall be filed within three years from the time the
cause of action accrued; otherwise, they shall be forever
barred.16 Further, if it is established that the benefits being
claimed have been withheld from the employee for a period
longer than three years, the amount pertaining to the period
beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the
aggrieved employee shall be limited to the amount of the benefits
withheld within three years before the filing of the complaint. 17
Lebatique timely filed his claim for service incentive leave pay,
considering that in this situation, the prescriptive period
commences at the time he was terminated. 18 On the other hand,
his claim regarding nonpayment of overtime pay since he was
hired in March 1996 is a different matter. In the case of overtime
pay, he can only demand for the overtime pay withheld for the
period within three years preceding the filing of the complaint on

P a g e | 50
March 20, 2000. However, we find insufficient the selected time
records presented by petitioners to compute properly his overtime
pay. The Labor Arbiter should have required petitioners to present
the daily time records, payroll, or other documents in
managements control to determine the correct overtime pay due
Lebatique.
WHEREFORE, the petition is DENIED for lack of merit. The
Decision dated September 30, 2003 of the Court of Appeals in CAG.R. SP No. 76196 and its Resolution dated March 15, 2004
are AFFIRMED with MODIFICATIONto the effect that the case is
hereby REMANDED to the Labor Arbiter for further proceedings
to determine the exact amount of overtime pay and other
monetary benefits due Jimmy Lebatique which herein petitioners
should pay without further delay.
Costs against petitioners.
SO ORDERED.
LEONARDO
Associate Justice

A.

QUISUMBING

SECOND DIVISION
G.R. No. 188949

July 26, 2010

CENTRAL
AZUCARERA
vs.
CENTRAL
AZUCARERA
DE
NLU, Respondent.
DECISION

DE
TARLAC

TARLAC, Petitioner,
LABOR

UNION-

P a g e | 51
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule
45 of the Rules of Court, assailing the Decision 1dated May 28,
2009, and the Resolution2 dated July 28, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 106657.
The factual antecedents of the case are as follows:
Petitioner is a domestic corporation engaged in the business of
sugar manufacturing, while respondent is a legitimate labor
organization which serves as the exclusive bargaining
representative of petitioners rank-and-file employees. The
controversy stems from the interpretation of the term "basic pay,"
essential in the computation of the 13th-month pay.
The facts of this case are not in dispute. In compliance with
Presidential Decree (P.D.) No. 851, petitioner granted its
employees the mandatory thirteenth (13th) - month pay since
1975. The formula used by petitioner in computing the 13thmonth pay was: Total Basic Annual Salary divided by twelve (12).
Included in petitioners computation of the Total Basic Annual
Salary were the following: basic monthly salary; first eight (8)
hours overtime pay on Sunday and legal/special holiday; night
premium pay; and vacation and sick leaves for each year.
Throughout the years, petitioner used this computation until
2006.3
On November 6, 2004, respondent staged a strike. During the
pendency of the strike, petitioner declared a temporary cessation
of operations. In December 2005, all the striking union members
were allowed to return to work. Subsequently, petitioner declared
another temporary cessation of operations for the months of April
and May 2006. The suspension of operation was lifted on June

P a g e | 52
2006, but the rank-and-file employees were allowed to report for
work on a fifteen (15) day-per-month rotation basis that lasted
until September 2006. In December 2006, petitioner gave the
employees their 13th-month pay based on the employees total
earnings during the year divided by 12.4
Respondent objected to this computation. It averred that
petitioner did not adhere to the usual computation of the 13thmonth pay. It claimed that the divisor should have been eight (8)
instead of 12, because the employees worked for only 8 months in
2006. It likewise asserted that petitioner did not observe the
company practice of giving its employees the guaranteed amount
equivalent to their one month pay, in instances where the
computed 13th-month pay was less than their basic monthly pay. 5
Petitioner and respondent tried to thresh out their differences in
accordance with the grievance procedure as provided in their
collective bargaining agreement. During the grievance meeting,
the representative of petitioner explained that the change in the
computation of the 13th-month pay was intended to rectify an
error in the computation, particularly the concept of basic pay
which should have included only the basic monthly pay of the
employees.6
For failure of the parties to arrive at a settlement, respondent
applied for preventive mediation before the National Conciliation
and Mediation Board. However, despite four (4) conciliatory
meetings, the parties still failed to settle the dispute. On March
29, 2007, respondent filed a complaint against petitioner for
money
claims
based
on
the
alleged
diminution
of
benefits/erroneous computation of 13th-month pay before the
Regional Arbitration Branch of the National Labor Relations
Commission (NLRC).7

P a g e | 53
On October 31, 2007, the Labor Arbiter rendered a
Decision8 dismissing the complaint and declaring that the
petitioner had the right to rectify the error in the computation of
the 13th-month pay of its employees.9 The fallo of the Decision
reads:
WHEREFORE, premises considered, the complaint filed by the
complainants against the respondents should be DISMISSED with
prejudice for utter lack of merit.
SO ORDERED.10
Respondents filed an appeal. On August 14, 2008, the NLRC
rendered a Decision11 reversing the Labor Arbiter. The dispositive
portion of the Decision reads:
WHEREFORE, the decision appealed is reversed and set aside and
respondent-appellee Central Azucarera de Tarlac is hereby
ordered to adhere to its established practice of granting 13th[-]
month pay on the basis of gross annual basic which includes basic
pay, premium pay for work in rest days and special holidays, night
shift differential and paid vacation and sick leaves for each year.
Additionally, respondent-appellee is ordered to observe the
guaranteed one[-]month pay by way of 13th month pay.
SO ORDERED.

12

Petitioner filed a motion for reconsideration. However, the same

was denied in a Resolution dated November 27, 2008. Petitioner
then filed a petition for certiorari under Rule 65 of the Rules of
Court before the CA.13

P a g e | 54
On May 28, 2009, the CA rendered a Decision 14 dismissing the
petition, and affirming the decision and resolution of the NLRC,
viz.:
WHEREFORE, the foregoing considered, the petition is hereby
DISMISSED and the assailed August 14, 2008 Decision and
November 27, 2008 Resolution of the NLRC, are hereby AFFIRMED.
No costs.
SO ORDERED.15
Aggrieved, petitioner filed the instant petition, alleging that the
CA committed a reversible error in affirming the Decision of the
NLRC, and praying that the Decision of the Labor Arbiter be
reinstated.
The petition is denied for lack of merit.
The 13th-month pay mandated by Presidential Decree (P.D.) No.
851 represents an additional income based on wage but not part
of the wage. It is equivalent to one-twelfth (1/12) of the total basic
salary earned by an employee within a calendar year. All rankand-file employees, regardless of their designation or employment
status and irrespective of the method by which their wages are
paid, are entitled to this benefit, provided that they have worked
for at least one month during the calendar year. If the employee
worked for only a portion of the year, the 13th-month pay is
computed pro rata.16
Petitioner argues that there was an error in the computation of the
13th-month pay of its employees as a result of its mistake in
implementing P.D. No. 851, an error that was discovered by the
management only when respondent raised a question concerning
the computation of the employees

P a g e | 55
13th-month pay for 2006. Admittedly, it was an error that was
repeatedly committed for almost thirty (30) years. Petitioner
insists that the length of time during which an employer has
performed a certain act beneficial to the employees, does not
prove that such an act was not done in error. It maintains that for
the claim of mistake to be negated, there must be a clear showing
that the employer had freely, voluntarily, and continuously
performed the act, knowing that he is under no obligation to do
so. Petitioner asserts that such voluntariness was absent in this
case.17
The Rules and Regulations Implementing P.D. No. 851,
promulgated on December 22, 1975, defines 13th-month pay and
basic salary as follows:
Sec. 2. Definition of certain terms. - As used in this issuance:
(a) "Thirteenth-month pay" shall mean one twelfth (1/12)
of the basic salary of an employee within a calendar
year; (b) "Basic salary" shall include all remunerations or
earnings paid by an employer to an employee for
services rendered but may not include cost-of-living
allowances granted pursuant to Presidential Decree No.
525 or Letter of Instructions No. 174, profit-sharing
payments, and all allowances and monetary benefits
which are not considered or integrated as part of the
regular or basic salary of the employee at the time of the
promulgation of the Decree on December 16, 1975.
On January 16, 1976, the Supplementary Rules and Regulations
Implementing P.D. No. 851 was issued. The Supplementary Rules
clarifies that overtime pay, earnings, and other remuneration that
are not part of the basic salary shall not be included in the
computation of the 13th-month pay.

P a g e | 56
On November 16, 1987, the Revised Guidelines on the
Implementation of the 13th-Month Pay Law was issued.
Significantly, under this Revised Guidelines, it was specifically
stated that the minimum 13th-month pay required by law shall
not be less than one-twelfth (1/12) of the total basic salary earned
by an employee within a calendar year.1avvphi1
Furthermore, the term "basic salary" of an employee for the
purpose of computing the 13th-month pay was interpreted to
include all remuneration or earnings paid by the employer for
services rendered, but does not include allowances and monetary
benefits which are not integrated as part of the regular or basic
salary, such as the cash equivalent of unused vacation and sick
leave credits, overtime, premium, night differential and holiday
pay, and cost-of-living allowances. However, these salary-related
benefits should be included as part of the basic salary in the
computation of the 13th-month pay if, by individual or collective
agreement, company practice or policy, the same are treated as
part of the basic salary of the employees.
Based on the foregoing, it is clear that there could have no
erroneous interpretation or application of what is included in the
term "basic salary" for purposes of computing the 13th-month pay
of employees. From the inception of P.D. No. 851 on December 16,
1975, clear-cut administrative guidelines have been issued to
insure uniformity in the interpretation, application, and
enforcement of the provisions of P.D. No. 851 and itsimplementing
regulations.
As correctly ruled by the CA, the practice of petitioner in giving
13th-month pay based on the employees gross annual earnings
which included the basic monthly salary, premium pay for work on
rest days and special holidays, night shift differential pay and
holiday pay continued for almost thirty (30) years and has ripened

P a g e | 57
into a company policy or practice which cannot be unilaterally
withdrawn.
Article 100 of the Labor Code, otherwise known as the NonDiminution Rule, mandates that benefits given to employees
cannot be taken back or reduced unilaterally by the employer
because the benefit has become part of the employment contract,
written or unwritten. 18 The rule against diminution of benefits
applies if it is shown that the grant of the benefit is based on an
express policy or has ripened into a practice over a long period of
time and that the practice is consistent and deliberate.
Nevertheless, the rule will not apply if the practice is due to error
in the construction or application of a doubtful or difficult question
of law. But even in cases of error, it should be shown that the
correction is done soon after discovery of the error. 19
The argument of petitioner that the grant of the benefit was not
voluntary and was due to error in the interpretation of what is
included in the basic salary deserves scant consideration. No
doubtful or difficult question of law is involved in this case. The
guidelines set by the law are not difficult to decipher. The
voluntariness of the grant of the benefit was manifested by the
number of years the employer had paid the benefit to its
employees. Petitioner only changed the formula in the
computation of the 13th-month pay after almost 30 years and
only after the dispute between the management and employees
erupted. This act of petitioner in changing the formula at this time
cannot be sanctioned, as it indicates a badge of bad faith.
Furthermore, petitioner cannot use the argument that it is
suffering from financial losses to claim exemption from the
coverage of the law on 13th-month pay, or to spare it from its
erroneous unilateral computation of the 13th-month pay of its
employees. Under Section 7 of the Rules and Regulations
Implementing P.D. No. 851, distressed employers shall qualify for

P a g e | 58
exemption from the requirement of the Decree only upon prior
authorization by the Secretary of Labor. 20 In this case, no such
prior authorization has been obtained by petitioner; thus, it is not
entitled to claim such exemption.
WHEREFORE, the Decision dated May 28, 2009 and the Resolution
dated July 28, 2009 of the Court of Appeals in CA-G.R. SP No.
106657 are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
Night work /night shift diff
SECOND DIVISION
G.R. No. 194884

October 22, 2014

IMASEN
PHILIPPINE
MANUFACTURING
CORPORATION, Petitioner,
vs.
RAMONCHITO T. ALCON and JOANN S. PAPA, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari 1 the challenge
to the June 9, 2010 decision 2 and the December 22, 2010
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 110327.
This CA decision nullified the December 24, 2008 decision 4 of the

P a g e | 59
National Labor Relations Commission (NLRC) in NLRC CA No.
043915-05 (NLRC CASE No. RAB IV-12-1661-02-L). The NLRC
ruling, in turn, affirmed the December 10, 2004 decision 5 of the
Labor Arbiter (LA), dismissing the illegal dismissal complaint filed
by respondents Ramonchito T. Alcon and Joann S. Papa
(collectively referred to as respondents).
The Factual Antecedents
Petitioner Imasen Philippine Manufacturing Corporation is a
domestic corporation engaged in the manufacture of auto seatrecliners and slide-adjusters. It hired the respondents as manual
welders in 2001.
On October 5, 2002, the respondents reported for work on the
second shift from 8:00 pm to 5:00 am of the following day. At
around 12:40 am, Cyrus A. Altiche, Imasens security guard on
duty, went to patrol and inspect the production plants premises.
When Altiche reached Imasens Press Area, he heard the sound of
a running industrial fan. Intending to turn the fan off, he followed
the sound that led him to the plants "Tool and Die" section.
At the "Tool and Die" section, Altiche saw the respondents having
sexual intercourse on the floor, using a piece of carton as
mattress. Altiche immediately went back to the guard house and
relayed what he saw to Danilo S. Ogana, another security guard
on duty.
On Altiches request, Ogana madea follow-up inspection. Ogana
went to the "Tool and Die" section and saw several employees,
including the respondents, already leaving the area. He noticed,
however, that Alcon picked up the carton that Altiche claimed the
respondents used as mattress during their sexual act, and
returned it to the place where the cartons were kept. Altiche then

P a g e | 60
submitted a handwritten report6 of the incident to Imasens
Finance and Administration Manager.
On October 14, 2002, Imasen issued the respondents separate
interoffice memoranda7 informing them of Altichesreport on the
October 5, 2002 incident and directing them to submit their
individual explanation. The respondents complied with the
directive; they claimed that they were merely sleeping in the "Tool
and Die" section at the time of the incident. They also claimed
that other employees were near the area, making the commission
of the act charged impossible.
On October 22, 2002, Imasen issued the respondents another
interoffice memorandum8 directing them to appear atthe formal
hearing of the administrative charge against them. The hearing
was conducted on October 30, 2002,9 presided by a mediator and
attended by the representatives of Imasen, the respondents,
Altiche and Ogana. Altiche and Ogana reiterated the narrations in
Altiches handwritten report.
On December 4, 2002, Imasen issued the respondents separate
interoffice memoranda10 terminating their services. It found the
respondents guilty of the act charged which it considered as
"gross misconduct contrary to the existing policies, rules and
regulations of the company."
On December 5, 2002, the respondents filed before the LA the
Complaint11 for illegal dismissal. The respondents maintained their
version of the incident.
In the December 10, 2004 decision, 12 the LA dismissed the
respondents complaint for lack of merit. The LA found the
respondents dismissal valid, i.e., for the just cause of gross
misconduct and with due process. The LA gave weight to Altiches

P a g e | 61
account of the incident, which Ogana corroborated, over the
respondentsmere denial of the incident and the unsubstantiated
explanation that other employees were present near the "Tool and
Die" section, making the sexual act impossible. The LA
additionally pointed out that the respondents did not show any ill
motive or intent on the part of Altiche and Ogano sufficient to
render their accounts of the incident suspicious.
The NLRCs ruling
In its December 24, 2008 decision,13 the NLRC dismissed the
respondents appeal14 for lack of merit. In affirming the LAs ruling,
the NLRC declared that Imasen substantially and convincingly
proved just cause for dismissing the respondents and complied
with the required due process.
The respondents filed before the CA a petition for certiorari 15 after
the NLRC denied their motion for reconsideration 16 in its May 29,
2009 resolution.17
The CAs ruling
In its June 9, 2010 decision,18 the CA nullified the NLRCs ruling.
The CA agreed with the labor tribunals findings regarding the
infraction charged engaging in sexual intercourse on October 5,
2002 inside company premises and Imasens observance of due
process in dismissing the respondents from employment.
The CA, however, disagreed with the conclusion that the
respondents sexual intercourse inside company premises
constituted serious misconduct that the Labor Code considers
sufficient tojustify the penalty of dismissal. The CA pointed out
that the respondents act, while provoked by "reckless passion in
an inviting environment and time," was not done with wrongful

P a g e | 62
intent or with the grave or aggravated character that the law
requires. To the CA, the penalty of dismissal is not commensurate
to the respondents act, considering especially that the
respondents had not committed any infraction in the past.
Accordingly, the CA reduced the respondents penalty to a
threemonth suspension and ordered Imasen to: (1) reinstate the
respondents to their former position without loss of seniority
rights and other privileges; and (2) pay the respondents
backwages from December 4, 2002 until actual reinstatement,
less the wages corresponding to the three-month suspension.
Imasen filed the present petition after the CA denied its motion for
Reconsideration19 in the CAs December 22, 2010 resolution. 20
The Petition
Imasen argues in this petition that the act of engaging in sexual
intercourse inside company premises during work hours is serious
misconduct by whatever standard it is measured. According to
Imasen, the respondents infraction is an affront to its core values
and high ethical work standards, and justifies the dismissal. When
the CA reduced the penalty from dismissal to three-month
suspension, Imasen points out that the CA, in effect, substituted
its own judgment with its (Imasens) own legally protected
management prerogative.
Lastly, Imasen questions the CAs award of backwages in the
respondents favor. Imasen argues that the respondents would
virtually gain from their infraction as they would be paid eight
years worth of wages without having rendered any service; eight
(8) years, in fact, far exceeds their actual period of service prior to
their dismissal.

P a g e | 63
The Case for the Respondents
The respondents argue in their comment21 that the elements of
serious misconduct that justifies an employees dismissal are
absent in this case, adopting thereby the CAs ruling. Hence, to
the respondents, the CA correctly reversed the NLRCs ruling; the
CA, in deciding the case, took a wholistic consideration of all the
attendant facts, i.e., the time, the place, the persons involved,
and the surrounding circumstances before, during, and after the
sexual intercourse, and not merely the infraction committed.
The Issue
The sole issue for this Courts resolution is whether the
respondents infraction engaging in sexual intercourse inside
company premises during work hours amounts to serious
misconduct within the terms of Article 282 (now Article 296) of the
Labor Code justifying their dismissal.
The Courts Ruling
We GRANT the petition.
We find that the CA reversibly erred when it nullified the NLRCs
decision for grave abuse of discretion the NLRCs decision.
Preliminary considerations: tenurial security vis--vis management
prerogative
The law and jurisprudence guaranteeto every employee security
of tenure. This textual and the ensuing jurisprudential
commitment to the cause and welfare of the working class
proceed from the social justice principles of the Constitution that

P a g e | 64
the Court zealously implements out of its concern for those with
less in life. Thus, the Court will not hesitate to strike down as
invalid any employer act that attempts to undermine workers
tenurial security. All these the State undertakes under Article 279
(now Article 293)22 of the Labor Code which bar an employer from
terminating the services of an employee, except for just or
authorized cause and upon observance of due process.
In protecting the rights of the workers, the law, however, does not
authorize the oppression or self-destruction of the employer. 23 The
constitutional commitment to the policy of social justice cannot be
understood to mean that every labor dispute shall automatically
be decided in favor of labor. 24 The constitutional and legal
protection equally recognize the employers right and prerogative
to manage its operation according to reasonable standards and
norms of fair play.
Accordingly, except as limited by special law, an employer is free
to regulate, according to his own judgment and discretion, all
aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to
beused, processes to be followed, supervision of workers, working
regulations, transfer of employees, worker supervision, layoff of
workers and the discipline, dismissal and recall of workers. 25 As a
general proposition, an employer has free reign over every aspect
of its business, including the dismissal of his employees as long as
the exercise of its management prerogativeis done reasonably, in
good faith, and in a manner not otherwise intended to defeat or
circumvent the rights of workers.
In these lights, the Courts task inthe present petition is to balance
the conflicting rights of the respondents to security of tenure, on
one hand, and of Imasen to dismiss erring employees pursuant to
the legitimate exercise of its management prerogative, on the
other.

P a g e | 65
Managements right to dismiss an employee; serious misconduct
as just cause for the dismissal
The just causes for dismissing an employee are provided under
Article 28226 (now Article 296)27 of the Labor Code. Under Article
282(a), serious misconduct by the employee justifies the
employer in terminating his or her employment.
Misconduct is defined as an improper or wrong conduct. It is a
transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. 28 To
constitute a valid cause for the dismissal within the text and
meaning of Article 282 of the Labor Code, the employees
misconduct must be serious, i.e., of such grave and aggravated
character and not merely trivial or unimportant.29
Additionally, the misconduct must be related to the performance
of the employees duties showing him tobe unfit to continue
working for the employer.30 Further, and equally important and
required, the act or conduct must have been performed with
wrongful intent.31
To summarize, for misconduct or improper behavior to be a just
cause for dismissal, the following elements must concur: (a) the
misconduct must be serious; (b) it must relate to the performance
of the employees duties showing that the employee has become
unfit to continue working for the employer;32 and (c) it must have
been performed with wrongful intent.
The respondents infraction amounts to serious misconduct within
the terms of Article 282 (now Article296) of the Labor Code
justifying their dismissal

P a g e | 66
Dismissal situations (on the ground of serious misconduct)
involving sexual acts, particularly sexual intercourse committed
by employees inside company premises and during workhours,
are not usual violations33 and are not found in abundance under
jurisprudence. Thus, in resolving the present petition, we are
largely guided by the principles we discussed above, as applied to
the totality of the circumstances that surrounded the petitioners
dismissal.
In other words, we view the petitioners act from the prism of the
elements that must concur for an act to constitute serious
misconduct, analyzed and understood within the context of the
overall circumstances of the case. In taking this approach, weare
guided, too, by the jurisdictional limitations that a Rule 45 review
of the CAs Rule 65 decision in labor cases imposes on our
discretion.34
In addressing the situation that we are faced with in this petition,
we determine whether Imasen validly exercised its prerogative as
employer to dismiss the respondents-employees who, within
company premises and during work hours, engaged in sexual
intercourse. As framed within our limited Rule 45 jurisdiction, the
question that we ask is: whether the NLRC committed grave abuse
of discretion in finding that the respondents act amounted to
what Article 282 of the Labor Code textually considers as serious
misconduct to warrant their dismissal.
After due consideration, we find the NLRC legally correct and well
within its jurisdiction when it affirmed the validity of the
respondents dismissal on the ground of serious misconduct.
Sexual acts and intimacies between two consenting adults belong,
as a principled ideal, to the realm of purely private
relations.1wphi1 Whether aroused by lust or inflamed by sincere

P a g e | 67
affection, sexual acts should be carried out at such place, time
and circumstance that, by the generally accepted norms of
conduct, will not offend public decency nor disturb the generally
held or accepted social morals. Under these parameters, sexual
acts between two consenting adults do not have a place in the
work environment.
Indisputably, the respondents engaged in sexual intercourse
inside company premisesand during work hours. These
circumstances, by themselves, are already punishablemisconduct.
Added to these considerations, however, is the implication that
the respondents did not only disregard company rules but
flaunted their disregard in a manner that could reflect adversely
on the status of ethics and morality in the company.
Additionally, the respondents engaged in sexual intercourse in an
area where co-employees or other company personnel have ready
and available access. The respondents likewise committed their
act at a time when the employees were expected to be and had,
in fact, been at their respective posts, and when they themselves
were supposed to be, as all other employees had in fact been,
working.
Under these factual premises and inthe context of legal
parameters we discussed, we cannot help but consider the
respondents misconduct to be of grave and aggravated character
so that the company was justified in imposing the highest penalty
available dismissal. Their infraction transgressed the bounds of
sociallyand morally accepted human public behavior, and at the
same time showedbrazen disregard for the respect that their
employer expected of them as employees. By their misconduct,
the respondents, in effect, issued an open invitation for othersto
commit the same infraction, with like disregard for their
employers rules, for the respect owed to their employer, and for
their co-employees sensitivities. Taken together, these

P a g e | 68
considerations reveal a depraved disposition that the Court
cannot but consider as a valid cause for dismissal. In ruling as we
do now, we considered the balancing between the respondents
tenurial rights and the petitioners interests the need to defend
their management prerogative and to maintain as well a high
standard of ethics and morality in the workplace. Unfortunately for
the respondents, in this balancing under the circumstances ofthe
case, we have to rule against their tenurial rights in favor of the
employers management rights.
All told, the respondents misconduct,under the circumstances of
this case, fell within the terms of Article 282 (now Article 296) of
the Labor Code. Consequently, we reverse the CAs decision for its
failure to recognize that no grave abuse of discretion attended the
NLRCs decision to support the respondents dismissal for serious
misconduct.
WHEREFORE, in light of these considerations, we hereby GRANT
the petition. We REVERSE the decision dated June 9, 2010 and the
resolution dated December 22, 2010 of the Court of Appeals in
CA-G.R. SP No. 110327 and REINSTATE the decision dated
December 24, 2008 of the National Labor Relations Commission in
NLRC CA No. 043915-05 (NLRC Case No. RAB IV-12-1661-02-L).
SO ORDERED.
ARTURO
Associate Justice

D.

SECOND DIVISION
G.R. No. 199338

January 21, 2013

BRION

P a g e | 69
ELEAZAR
S.
vs.
RURAL BANK OF NABUNTURAN,
OROPEZA, Respondents.

PADILLO,** Petitioner
INC.

and

MARK

S.

DECISION
PERLAS-BERNABE, J.:
Before the Court is a Petition for Review on Certiorari 1 assailing
the June 28, 2011 Decision2 and October 27, 2011 Resolution3 of
the Cagayan de Oro City Court of Appeals (CA) in CA-G.R. SP No
03669-MIN which revoked and set aside the National Labor
Relations Commission's (NLRCs) Resolutions dated December 29,
20094 and March 31, 20105 and reinstated the Labor Arbiter's
(LA's) Decision dated March 13, 20096 with modification.
The Facts
On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo),
was employed by respondent Rural Bank of Nabunturan, Inc.
(Bank) as its SA Bookkeeper. Due to liquidity problems which
arose sometime in 2003, the Bank took out retirement/insurance
plans with Philippine American Life and General Insurance
Company (Philam Life) for all its employees in anticipation of its
possible closure and the concomitant severance of its personnel.
In this regard, the Bank procured Philam Plan Certificate of Full
Payment No. 88204, Plan Type 02FP10SC, Agreement No.
PP98013771 (Philam Life Plan) in favor of Padillo for a benefit
amount of P100,000.00 and which was set to mature on July 11,
2009.7
On October 14, 2004, respondent Mark S. Oropeza (Oropeza), the
President of the Bank, bought majority shares of stock in the Bank

P a g e | 70
and took over its management which brought about its gradual
rehabilitation. The Banks finances improved and eventually, its
liquidity was regained.8
During the latter part of 2007, Padillo suffered a mild stroke due to
hypertension which consequently impaired his ability to
effectively pursue his work. In particular, he was diagnosed with
Hypertension S/P CVA (Cerebrovascular Accident) with short term
memory loss, the nature of which had been classified as a total
disability.9 On September 10, 2007, he wrote a letter addressed to
respondent Oropeza expressing his intention to avail of an early
retirement package. Despite several follow-ups, his request
remained unheeded.
On October 3, 2007, Padillo was separated from employment due
to his poor and failing health as reflected in a Certification dated
December 4, 2007 issued by the Bank. Not having received his
claimed retirement benefits, Padillo filed on September 23, 2008
with the NLRC Regional Arbitration Branch No. XI of Davao City a
complaint for the recovery of unpaid retirement benefits. He
asserted, among others, that the Bank had adopted a policy of
granting its aging employees early retirement packages, pointing
out that one of his co-employees, Nenita Lusan (Lusan), was
accorded
retirement
benefits
in
the
amount
of P348,672.7210 when she retired at the age of only fifty-three
(53). The Bank and Oropeza (respondents) countered that the
claim of Padillo for retirement benefits was not favorably acted
upon for lack of any basis to grant the same.11
The LA Ruling
On March 13, 2009, the LA issued a Decision 12 dismissing Padillos
complaint but directed the Bank to pay him the amount
of P100,000.00 as financial assistance, treated as an advance

P a g e | 71
from the amounts receivable under the Philam Life Plan. 13 It found
Padillo disqualified to receive any benefits under Article 300
(formerly, Article 287) of the Labor Code of the Philippines (Labor
Code)14 as he was only fifty-five (55) years old when he resigned,
while the law specifically provides for an optional retirement age
of sixty (60) and compulsory retirement age of sixty-five (65).
Dissatisfied with the LAs ruling, Padillo elevated the matter to the
NLRC.
The NLRC Ruling
On December 29, 2009, the NLRCs Fifth Division reversed and set
aside the LAs ruling and ordered respondents to pay Padillo the
amount of P164,903.70 as separation pay, on top of
the P100,000.00 Philam Life Plan benefit.15 Relying on the case of
Abaquin Security and Detective Agency, Inc. v. Atienza
(Abaquin),16 the NLRC applied the Labor Code provision on
termination on the ground of disease particularly, Article 297
thereof (formerly, Article 323) holding that while Padillo did
resign, he did so only because of his poor health
condition.17 Respondents moved for reconsideration but the same
was denied by the NLRC in its Resolution dated March 31,
2010.18 Aggrieved, respondents filed a petition for certiorari with
the CA.
The CA Ruling
On June 28, 2011, the CA granted respondents petition for
certiorari and rendered a decision setting aside the NLRCs
December 29, 2009 and March 31, 2010 Resolutions, thereby
reinstating the LAs March 13, 2009 Decision but with
modification. It directed the respondents to pay Padillo the
amount of P50,000.00 as financial assistance exclusive of

P a g e | 72
the P100,000.00 Philam Life Plan benefit which already matured
on July 11, 2009.
The CA held that Padillo could not, absent any agreement with the
Bank, receive any retirement benefits pursuant to Article 300 of
the Labor Code considering that he was only fifty-five (55) years
old when he retired.19 It likewise found the evidence insufficient to
prove that the Bank has an existing company policy of granting
retirement benefits to its aging employees. Finally, citing the case
of Villaruel v. Yeo Han Guan (Villaruel),20 it pronounced that
separation pay on the ground of disease under Article 297 of the
Labor Code should not be given to Padillo because he was the one
who initiated the severance of his employment and that even
before September 10, 2007, he already stopped working due to
his poor and failing health. 21
Nonetheless, Padillo was still awarded the amount of P50,000.00
as financial assistance, in addition to the benefits accruing under
the Philam Life Plan, considering his twenty-nine (29) years of
service with no derogatory record and that he was severed not by
reason of any infraction on his part but because of his failing
physical condition.22
Displeased with the CAs ruling, Padillo (now substituted by his
legal heirs due to his death on February 24, 2012) filed the instant
petition contending that the CA erred when it: (a) deviated from
the factual findings of the NLRC; (b) misapplied the case of
Villaruel vis--vis the factual antecedents of this case; (c)
drastically reduced the computation of financial assistance
awarded by the NLRC; (d) failed to rule on the consequences of
respondents bad faith; and (e) reversed and set aside the NLRCs
December 29, 2009 Resolution.23
The Ruling of the Court

P a g e | 73
The petition is partly meritorious.
At the outset, it must be maintained that the Labor Code provision
on termination on the ground of disease under Article 297 24 does
not apply in this case, considering that it was the petitioner and
not the Bank who severed the employment relations. As borne
from the records, the clear import of Padillos September 10, 2007
letter25 and the fact that he stopped working before the foregoing
date and never reported for work even thereafter show that it was
Padillo who voluntarily retired and that he was not terminated by
the Bank.
As held in Villaruel,26 a precedent which the CA correctly applied,
Article 297 of the Labor Code contemplates a situation where the
employer, and not the employee, initiates the termination of
employment on the ground of the latters disease or sickness, viz:
A plain reading of the [Article 297 of the Labor Code] clearly
presupposes that it is the employer who terminates the services
of the employee found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial
to his health as well as to the health of his co-employees. It does
not contemplate a situation where it is the employee who severs
his or her employment ties. This is precisely the reason why
Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the
Labor Code, directs that an employer shall not terminate the
services of the employee unless there is a certification by a
competent public health authority that the disease is of such
nature or at such a stage that it cannot be cured within a period of
six (6) months even with proper medical treatment. (Emphasis,
underscoring and words in brackets supplied)

P a g e | 74
Thus, given the inapplicability of Article 297 of the Labor Code to
the case at bar, it necessarily follows that petitioners claim for
separation pay anchored on such provision must be denied.
Further, it is noteworthy to point out that the NLRCs application of
Abaquin27 was gravely misplaced considering its dissimilar factual
milieu with the present case.
To elucidate, a careful reading of Abaquin shows that the Court
merely awarded termination pay on the ground of disease in favor
of security guard28 Antonio Jose because he belonged to a "special
class of employees x x x deprived of the right to ventilate
demands collectively."29 Thus, notwithstanding the fact that it was
Antonio Jose who voluntarily resigned because of his sickness and
it was not the security agency which terminated his employment,
the Court held that Jose "deserve[d] the full measure of the laws
benevolence" and still granted him separation pay because of his
situation, particularly, the fact that he could not have organized
with other employees belonging to the same class for the purpose
of bargaining with their employer for greater benefits on account
of the prohibition under the old law.
In this case, it cannot be said that Padillo belonged to the same
class of employees prohibited to self-organize which, at present,
consist of: (1) managerial employees; 30 and (2) confidential
employees who assist persons who formulate, determine, and
effectuate management policies in the field of labor
relations.31 Therefore,
absent
this
equitable
peculiarity,
termination pay on the ground of disease under Article 297 of the
Labor Code and the Courts ruling in Abaquin should not be
applied.

P a g e | 75
What remains applicable, however, is the Labor Code provision on
retirement. In particular, Article 300 of the Labor Code as
amended by Republic Act Nos. 764132 and 855833 partly provides:
Art. 300. Retirement. Any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive
such retirement benefits as he may have earned under existing
laws and any collective bargaining agreement and other
agreements: Provided, however, That an employee's retirement
benefits under any collective bargaining and other agreements
shall not be less than those provided herein.1wphi1
In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more, but
not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years
in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months
being considered as one whole year.
Unless the parties provide for broader inclusions, the term one
half (1/2) month salary shall mean fifteen (15) days plus onetwelfth (1/12) of the 13th month pay and the cash equivalent of
not more than five (5) days of service incentive leaves. (Emphasis
and underscoring supplied)
Simply stated, in the absence of any applicable agreement, an
employee must (1) retire when he is at least sixty (60) years of
age and (2) serve at least (5) years in the company to entitle

P a g e | 76
him/her to a retirement benefit of at least one-half (1/2) month
salary for every year of service, with a fraction of at least six (6)
months being considered as one whole year.
Notably, these age and tenure requirements are cumulative and
non-compliance with one negates the employees entitlement to
the retirement benefits under Article 300 of the Labor Code
altogether.
In this case, it is undisputed that there exists no retirement plan,
collective bargaining agreement or any other equivalent contract
between the parties which set out the terms and condition for the
retirement of employees, with the sole exception of the Philam
Life Plan which premiums had already been paid by the Bank.
Neither was it proven that there exists an established company
policy of giving early retirement packages to the Banks aging
employees. In the case of Metropolitan Bank and Trust Company v.
National Labor Relations Commission, it has been pronounced that
to be considered a company practice, the giving of the benefits
should have been done over a long period of time, and must be
shown to have been consistent and deliberate. 34 In this relation,
petitioners bare allegation of the solitary case of Lusan cannot
assuming such fact to be true sufficiently establish that the
Banks grant of an early retirement package to her (Lusan)
evolved into an established company practice precisely because
of the palpable lack of the element of consistency. As such,
petitioners reliance on the Lusan incident cannot bolster their
claim.
All told, in the absence of any applicable contract or any evolved
company policy, Padillo should have met the age and tenure
requirements set forth under Article 300 of the Labor Code to be
entitled to the retirement benefits provided therein. Unfortunately,

P a g e | 77
while Padillo was able to comply with the five (5) year tenure
requirement as he served for twenty-nine (29) years he,
however, fell short with respect to the sixty (60) year age
requirement given that he was only fifty-five (55) years old when
he retired. Therefore, without prejudice to the proceeds due under
the Philam Life Plan, petitioners claim for retirement benefits
must be denied.
Nevertheless, the Court concurs with the CA that financial
assistance should be awarded but at an increased amount. With a
veritable understanding that the award of financial assistance is
usually the final refuge of the laborer, considering as well the
supervening length of time which had sadly overtaken the point of
Padillos death an employee who had devoted twenty-nine (29)
years of dedicated service to the Bank the Court, in light of the
dictates of social justice, holds that the CAs financial assistance
award should be increased from P50,000.00 to P75,000.00, still
exclusive of the P100,000.00 benefit receivable by the petitioners
under the Philam Life Plan which remains undisputed.1wphi1
Finally, the Court finds no bad faith in any of respondents
actuations as they were within their right, absent any proof of its
abuse, to ignore Padillos misplaced claim for retirement benefits.
Respondents obstinate refusal to accede to Padillos request is
precisely justified by the fact that there lies no basis under any
applicable agreement or law which accords the latter the right to
demand any retirement benefits from the Bank. While the Court
mindfully notes that damages may be recoverable due to an
abuse of right under Article 2135 in conjunction with Article 19 of
the Civil Code of the Philippines, 36 the following elements must,
however, obtain: ( 1) there is a legal right or duty; (2) exercised in
bad faith; and (3) for the sole intent of prejudicing or injuring
another.37Records reveal that none of these elements exists in the
case at bar and thus, no damages on account of abuse of right
may he recovered.

P a g e | 78
Neither can the grant of an early retirement package to Lusan
show that Padillo was unfairly discriminated upon. Records show
that the same was merely an isolated incident and petitioners
have failed to show that any had faith or motive attended such
disparate treatment between Lusan and Padillo. lrrefragably also,
there is no showing that other Bank employees were accorded the
same benefits as that of Lusan which thereby dilutes the
soundness of petitioners' imputation of discrimination and bad
faith. Verily, it is axiomatic that held f8ith can never be presumed
it must be proved by clear and convincing evidence. 38 This
petitioners were unable to prove in the case at bar.
WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the
assailed Court of Appeals' Decision dated June 28, 2011 Decision
and October 27, 2011 Resolution in CA-G.R. SP No. 03669-MIN are
hereby MODIFIED, increasing the 8Ward of financial assist8nce of
F50,000.00 to P75,000.00, exclusive of the P 100,000.00 benefit
under the Phil am Life Plan.
SO ORDERED.
ESTELA
Associate Justice

M.

PERLAS-BERNABE

THIRD DIVISION
G.R. No. 157775

October 19, 2007

LEYTE
IV
ELECTRIC
COOPERATIVE,
INC., Petitioner,
vs.
LEYECO IV Employees Union-ALU, Respondent.
DECISION

P a g e | 79
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule
45 of the Rules of Court assailing the Resolution1 dated September
4, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 72336
which dismissed outright petitioner's Petition for Certiorari for
adopting a wrong mode of appeal and the CA Resolution 2 dated
February 28, 2003 which denied petitioner's Motion for
Reconsideration.
The facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner)
and Leyeco IV Employees Union-ALU (respondent) entered into a
Collective Bargaining Agreement (CBA)3 covering petitioner rankand-file employees, for a period of five (5) years effective January
1, 1998.
On June 7, 2000, respondent, through its Regional Vice-President,
Vicente P. Casilan, sent a letter to petitioner demanding holiday
pay for all employees, as provided for in the CBA.4
On June 20, 2000, petitioner, through its legal counsel, sent a
letter-reply to Casilan, explaining that after perusing all available
pay slips, it found that it had paid all employees all the holiday
pays enumerated in the CBA.5
After exhausting the procedures of the grievance machinery, the
parties agreed to submit the issues of the interpretation and
implementation of Section 2, Article VIII of the CBA on the
payment of holiday pay, for arbitration of the National Conciliation
and Mediation Board (NCMB), Regional Office No. VIII in Tacloban
City.6The parties were required to submit their respective position
papers, after which the dispute was submitted for decision.

P a g e | 80
While admitting in its Position Paper 7 that the employees were
paid all of the days of the month even if there was no work,
respondent alleged that it is not prevented from making separate
demands for the payment of regular holidays concomitant with
the provisions of the CBA, with its supporting documents
consisting of a letter demanding payment of holiday pay,
petitioner's reply thereto and respondent's rejoinder, a
computation in the amount of P1,054,393.07 for the unpaid legal
holidays, and several pay slips.
Petitioner, on the other hand, in its Position Paper, 8 insisted
payment of the holiday pay in compliance with the CBA
provisions, stating that payment was presumed since the formula
used in determining the daily rate of pay of the covered
employees is Basic Monthly Salary divided by 30 days or Basic
Monthly Salary multiplied by 12 divided by 360 days, thus with
said formula, the employees are already paid their regular and
special days, the days when no work is done, the 51 un-worked
Sundays and the 51 un-worked Saturdays.
On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr.
rendered a Decision9 in favor of respondent, holding petitioner
liable for payment of unpaid holidays from 1998 to 2000 in the
sum of P1,054,393.07. He reasoned that petitioner miserably
failed to show that it complied with the CBA mandate that holiday
pay be "reflected during any payroll period of occurrence" since
the payroll slips did not reflect any payment of the paid holidays.
He found unacceptable not only petitioner's presumption of
payment of holiday pay based on a formula used in determining
and computing the daily rate of each covered employee, but also
petitioner's further submission that the rate of its employees is
not less than the statutory minimum wage multiplied by 365 days
and divided by twelve.

P a g e | 81
On
April
11,
2001,
petitioner
filed
a
Motion
for
Reconsideration10 but it was denied by the Voluntary Arbitrator in
a Resolution11 dated June 17, 2002. Petitioner received said
Resolution on June 27, 2002.12
Thirty days later, or on July 27, 2002, 13 petitioner filed a Petition
for Certiorari14 in the CA, ascribing grave abuse of discretion
amounting to lack of jurisdiction to the Voluntary Arbitrator: (a) for
ignoring that in said company the divisor for computing the
applicable daily rate of rank-and-file employees is 360 days which
already includes payment of 13 un-worked regular holidays under
Section 2, Article VIII of the CBA; 15 and (b) for holding the
petitioner liable for the unpaid holidays just because the payroll
slips submitted as evidence did not show any payment for the
regular holidays.16
In a Resolution17 dated September 4, 2002, the CA dismissed
outright petitioner's Petition for Certiorari for adopting a wrong
mode of appeal. It reasoned:
Considering that what is assailed in the present recourse is a
Decision of a Voluntary Arbitrator, the proper remedy is a petition
for review under Rule 43 of the 1997 Rules of Civil Procedure;
hence, the present petition for certiorari under Rule 65 filed on
August 15, 2002, should be rejected, as such a petition cannot be
a substitute for a lost appeal. And in this case, the period for
appeal via a petition for review has already lapsed since the
petitioner received a copy of the Resolution denying its motion for
reconsideration on June 27, 2002, so that its last day to appeal
lapsed on July 12, 2002.
x x x x18

P a g e | 82
Petitioner filed a Motion for Reconsideration 19 but it was denied by
the CA in a Resolution20 dated February 28, 2003.
Hence, the present petition anchored on the following grounds:
(1) The Honorable Court of Appeals erred in rejecting the
petition for certiorari under Rule 65 of the Rules of Court
filed by herein petitioner to assail the Decision of the
Voluntary Arbitrator.21
(2) Even if decisions of voluntary arbitrator or panel of
voluntary arbitrators are appealable to the Honorable
Court of Appeals under Rule 43, a petition for certiorari
under Rule 65 is still available if it is grounded on grave
abuse of discretion. Hence, the Honorable Court of
Appeals erred in rejecting the petition for certiorari under
Rule 65 of the Rules of Court filed by herein petitioner.22
(3) The Honorable Court of Appeals erred in refusing to
rule on the legal issue presented by herein petitioner in
the petition for certiorari that it had filed and in putting
emphasis instead on a technicality of procedure. The
legal issues needs a clear-cut ruling by this Honorable
Court for the guidance of herein petitioner and private
respondent.23
Petitioner contends that Rule 65 of the Rules of Court is the
applicable mode of appeal to the CA from judgments issued by a
voluntary arbitrator since Rule 43 only allows appeal from
judgments of particular quasi-judicial agencies and voluntary
arbitrators authorized by law and not those judgments and orders
issued under the Labor Code; that the petition before the CA did
not raise issues of fact but was founded on jurisdictional issues
and, therefore, reviewable through a special civil action

P a g e | 83
for certiorari under Rule 65; that technicalities of law and
procedure should not be utilized to subvert the ends of substantial
justice.
In its Comment,24 respondent avers that Luzon Development Bank
v. Association of Luzon Development Bank Employees 25 laid down
the prevailing rule that judgments of the Voluntary Arbitrator are
appealable to the CA under Section 1, Rule 43 of the Rules of
Court; that having failed to file the appropriate remedy due to the
lapse of the appeal period, petitioner cannot simply invoke Rule
65 for its own convenience, as an alternative remedy.
In its Reply,26 petitioner submits that the ruling in Luzon
Development Bank does not expressly exclude the filing of a
petition for certiorari under Rule 65 of the Rules of Court to assail
a decision of a voluntary arbitrator. It reiterates that technicalities
of law and procedure should not be utilized to subvert the ends of
substantial justice.
It has long been settled in the landmark case Luzon Development
Bank that a voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency; hence,
his decisions and awards are appealable to the CA. This is so
because the awards of voluntary arbitrators become final and
executory upon the lapse of the period to appeal; 27 and since their
awards determine the rights of parties, their decisions have the
same effect as judgments of a court. Therefore, the proper
remedy from an award of a voluntary arbitrator is a petition for
review to the CA, following Revised Administrative Circular No. 195, which provided for a uniform procedure for appellate review of
all adjudications of quasi-judicial entities, which is now embodied
in Section 1, Rule 43 of the 1997 Rules of Civil Procedure, which
reads:

P a g e | 84
SECTION 1. Scope. This Rule shall apply to appeals from
judgments or final orders of the Court of Tax Appeals and from
awards, judgments, final orders or resolutions of or authorized by
any quasi-judicial agency in the exercise of its quasi-judicial
functions. Among these agencies are the Civil Service
Commission, Central Board of Assessment Appeals, Securities and
Exchange Commission, Office of the President, Land Registration
Authority, Social Security Commission, Civil Aeronautics Board,
Bureau of Patents, Trademarks and Technology Transfer, National
Electrification Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of Agrarian Reform
under Republic Act No. 6657, Government Service Insurance
System, Employees Compensation Commission, Agricultural
Inventions Board, Insurance Commission, Philippine Atomic
Energy Commission, Board of Investments, Construction Industry
Arbitration Commission, and voluntary arbitrators authorized
by law.28 (Emphasis supplied)
Section 2, Rule 43 of the 1997 Rules of Civil Procedure which
provides that:
SEC. 2. Cases not covered. - This Rule shall not apply to
judgments or final orders issued under the Labor Code of the
Philippines.
did not alter the Court's ruling in Luzon Development Bank.
Section 2, Rule 42 of the 1997 Rules of Civil Procedure, is nothing
more than a reiteration of the exception to the exclusive appellate
jurisdiction of the CA, 29as provided for in Section 9, Batas
Pambansa Blg. 129,30 as amended by Republic Act No. 7902:31
(3) Exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial Courts
and quasi-judicial agencies, instrumentalities, boards or

P a g e | 85
commissions, including the Securities and Exchange Commission,
the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction
of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442,
as amended, the provisions of this Act and of subparagraph (1) of
the third paragraph and subparagraph (4) of the fourth paragraph
of Section 17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development
Bank but, nevertheless, held that the decisions of voluntary
arbitrators issued pursuant to the Labor Code do not come within
its ambit, thus:
x x x. The fact that [the voluntary arbitrators] functions and
powers are provided for in the Labor Code does not place him
within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also
provided for in the Labor Code, Circular No. 1-91, which is the
forerunner of the present Revised Administrative Circular No. 195, laid down the procedure for the appealability of its decisions
to the Court of Appeals under the foregoing rationalization, and
this was later adopted by Republic Act No. 7902 in amending Sec.
9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or
panel of arbitrators should likewise be appealable to the Court of
Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasijudicial agencies, boards and commissions enumerated therein.
This would be in furtherance of, and consistent with, the original
purpose of Circular No. 1-91 to provide a uniform procedure for

P a g e | 86
the appellate review of adjudications of all quasi-judicial entities
not expressly excepted from the coverage of Sec. 9 of B.P. 129 by
either the Constitution or another statute. Nor will it run counter
to the legislative intendment that decisions of the NLRC be
reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary
arbitrator are excluded from the jurisdiction of the NLRC or the
labor arbiter.32
This ruling has been repeatedly reiterated in subsequent
cases33 and continues to be the controlling doctrine. Thus, the
general rule is that the proper remedy from decisions of voluntary
arbitrators is a petition for review under Rule 43 of the Rules of
Court.
Nonetheless, a special civil action for certiorari under Rule 65 of
the Rules of Court is the proper remedy for one who complains
that the tribunal, board or officer exercising judicial or quasijudicial functions acted in total disregard of evidence
material to or decisive of the controversy.34 As this Court
elucidated in Garcia v. National Labor Relations Commission 35 [I]n Ong v. People, we ruled that certiorari can be properly
resorted to where the factual findings complained of are not
supported by the evidence on record. Earlier, in Gutib v.
Court of Appeals, we emphasized thus:
[I]t has been said that a wide breadth of discretion is granted a
court of justice in certiorari proceedings. The cases in which
certiorari will issue cannot be defined, because to do so would be
to destroy its comprehensiveness and usefulness. So wide is the
discretion of the court that authority is not wanting to show
that certiorari is more discretionary than either prohibition or
mandamus. In the exercise of our superintending control over

P a g e | 87
inferior courts, we are to be guided by all the circumstances of
each particular case "as the ends of justice may require." So it is
that the writ will be granted where necessary to prevent a
substantial wrong or to do substantial justice. 36
In addition, while the settled rule is that an independent action
for certiorari may be availed of only when there is no appeal or
any plain, speedy and adequate remedy in the ordinary course of
law37 and certiorari is not a substitute for the lapsed remedy of
appeal,38 there are a few significant exceptions when the
extraordinary remedy of certiorari may be resorted to despite the
availability of an appeal, namely: (a) when public welfare and the
advancement of public policy dictate; (b) when the broader
interests of justice so require; (c) when the writs issued are
null; and (d) when the questioned order amounts to an oppressive
exercise of judicial authority.39
In this case, while the petition was filed on July 27, 2002, 40 15
days after July 12, 2002, the expiration of the 15-day
reglementary period for filing an appeal under Rule 43, the
broader interests of justice warrant relaxation of the rules on
procedure. Besides, petitioner alleges that the Voluntary
Arbitrators conclusions have no basis in fact and in law; hence,
the petition should not be dismissed on procedural grounds.
The Voluntary Arbitrator gravely abused its discretion in giving a
strict or literal interpretation of the CBA provisions that the
holiday pay be reflected in the payroll slips. Such literal
interpretation ignores the admission of respondent in its Position
Paper41 that the employees were paid all the days of the
month even if not worked. In light of such admission,
petitioner's submission of its 360 divisor in the computation of
employees salaries gains significance.

P a g e | 88
In Union of Filipro Employees v. Vivar, Jr. 42 the Court held that
"[t]he divisor assumes an important role in determining whether
or not holiday pay is already included in the monthly paid
employees salary and in the computation of his daily rate". This
ruling was applied in Wellington Investment and Manufacturing
Corporation v. Trajano,43 Producers Bank of the Philippines v.
National Labor Relations Commission 44 and Odango v. National
Labor Relations Commission,45 among others.46
In Wellington,47 the monthly salary was fixed by Wellington to
provide for compensation for every working day of the year
including the holidays specified by law and excluding only
Sundays. In fixing the salary, Wellington used what it called the
"314 factor"; that is, it simply deducted 51 Sundays from the 365
days normally comprising a year and used the difference, 314, as
basis for determining the monthly salary. The monthly salary thus
fixed actually covered payment for 314 days of the year, including
regular and special holidays, as well as days when no work was
done by reason of fortuitous cause, such as transportation strike,
riot, or typhoon or other natural calamity, or cause not
attributable to the employees.
In Producers Bank,48 the employer used the divisor 314 in arriving
at the daily wage rate of monthly salaried employees. The divisor
314 was arrived at by subtracting all Sundays from the total
number of calendar days in a year, since Saturdays are
considered paid rest days. The Court held that the use of 314 as a
divisor leads to the inevitable conclusion that the ten legal
holidays are already included therein.
In Odango v. National Labor Relations Commission,49 the Court
ruled that the use of a divisor that was less than 365 days cannot
make the employer automatically liable for underpayment of
holiday pay. In said case, the employees were required to work
only from Monday to Friday and half of Saturday. Thus, the

P a g e | 89
minimum allowable divisor is 287, which is the result of 365 days,
less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any
divisor below 287 days meant that the employees were deprived
of their holiday pay for some or all of the ten legal holidays. The
304-day divisor used by the employer was clearly above the
minimum of 287 days.
In this case, the employees are required to work only from
Monday to Friday.1wphi1 Thus, the minimum allowable divisor is
263, which is arrived at by deducting 51 un-worked Sundays and
51 un-worked Saturdays from 365 days. Considering that
petitioner used the 360-day divisor, which is clearly above the
minimum, indubitably, petitioner's employees are being given
their holiday pay.
Thus, the Voluntary Arbitrator should not have simply brushed
aside petitioner's divisor formula. In granting respondent's claim
of non-payment of holiday pay, a "double burden" was imposed
upon petitioner because it was being made to pay twice for its
employees' holiday pay when payment thereof had already been
included in the computation of their monthly salaries. Moreover, it
is absurd to grant respondent's claim of non-payment when they
in fact admitted that they were being paid all of the days of the
month even if not worked. By granting respondent's claim, the
Voluntary Arbitrator sanctioned unjust enrichment in favor of the
respondent and caused unjust financial burden to the petitioner.
Obviously, the Court cannot allow this.
While the Constitution is committed to the policy of social
justice50 and the protection of the working class, 51 it should not be
supposed that every labor dispute would automatically be decided
in favor of labor. Management also has it own rights which, as
such, are entitled to respect and enforcement in the interest of
simple fair play. Out of concern for those with less privileges in
life, this Court has inclined more often than not toward the worker

P a g e | 90
and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded us to the rule that justice is
in every case for the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine. 52
WHEREFORE, the petition for review is GRANTED. The
Resolutions dated September 4, 2002 and February 28, 2003 of
the Court of Appeals in CA-G.R. SP No. 72336 are REVERSED and
SET ASIDE. The Decision dated March 1, 2001 and Resolution
dated June 17, 2002 of the Voluntary Arbitrator are declared NULL
and VOID.
SO ORDERED.
MA.
Associate Justice

ALICIA

AUSTRIA-MARTINEZ

EN BANC

G.R. No. 79255 January 20, 1992

UNION
OF
FILIPRO
EMPLOYEES
(UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS
COMMISSION and NESTL PHILIPPINES, INC. (formerly
FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

P a g e | 91

GUTIERREZ, JR., J.:

This labor dispute stems from the exclusion of sales personnel
from the holiday pay award and the change of the divisor in the
computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle
Philippines, Inc.) filed with the National Labor Relations
Commission (NLRC) a petition for declaratory relief seeking a
ruling on its rights and obligations respecting claims of its monthly
paid employees for holiday pay in the light of the Court's decision
in Chartered Bank Employees Association v. Ople (138 SCRA 273
[1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to
submit the case for voluntary arbitration and appointed
respondent Benigno Vivar, Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing
Filipro to:
pay its monthly paid employees holiday pay
pursuant to Article 94 of the Code, subject only
to the exclusions and limitations specified in
Article 82 and such other legal restrictions as
are provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of
the award to three years, (2) the exclusion of salesmen, sales
representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from

P a g e | 92
the award of the holiday pay, and (3) deduction from the holiday
pay award of overpayment for overtime, night differential,
vacation and sick leave benefits due to the use of 251 divisor.
(Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective
from the date of effectivity of the Labor Code, that their sales
personnel are not field personnel and are therefore entitled to
holiday pay, and that the use of 251 as divisor is an established
employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order
declaring that the effectivity of the holiday pay award shall
retroact to November 1, 1974, the date of effectivity of the Labor
Code. He adjudged, however, that the company's sales personnel
are field personnel and, as such, are not entitled to holiday pay.
He likewise ruled that with the grant of 10 days' holiday pay, the
divisor should be changed from 251 to 261 and ordered the
reimbursement of overpayment for overtime, night differential,
vacation and sick leave pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial
reconsideration. Respondent Arbitrator treated the two motions as
appeals and forwarded the case to the NLRC which issued a
resolution dated May 25, 1987 remanding the case to the
respondent arbitrator on the ground that it has no jurisdiction to
review decisions in voluntary arbitration cases pursuant to Article
263 of the Labor Code as amended by Section 10, Batas
Pambansa Blg. 130 and as implemented by Section 5 of the rules
implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator
refused to take cognizance of the case reasoning that he had no

P a g e | 93
more jurisdiction to continue as arbitrator because he had
resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday
pay; and
2) Whether or not, concomitant with the award of holiday pay, the
divisor should be changed from 251 to 261 days and whether or
not the previous use of 251 as divisor resulted in overpayment for
overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not
field personnel under Article 82 of the Labor Code. The
respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay.
Said article defines field personnel as "non-agritultural employees
who regularly perform their duties away from the principal place
of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable
certainty."
The controversy centers on the interpretation of the clause
"whose actual hours of work in the field cannot be determined
with reasonable certainty."
It is undisputed that these sales personnel start their field work at
8:00 a.m. after having reported to the office and come back to the
office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.

P a g e | 94
The petitioner maintains that the period between 8:00 a.m. to
4:00 or 4:30 p.m. comprises the sales personnel's working hours
which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours
of work in the field be reasonably ascertained. The company has
no way of determining whether or not these sales personnel, even
if they report to the office before 8:00 a.m. prior to field work and
come back at 4:30 p.m, really spend the hours in between in
actual field work.
We concur with the following disquisition by the respondent
arbitrator:
The requirement for the salesmen and other
similarly situated employees to report for work
at the office at 8:00 a.m. and return at 4:00 or
4:30 p.m. is not within the realm of work in the
field as defined in the Code but an exercise of
purely management prerogative of providing
administrative control over such personnel. This
does not in any manner provide a reasonable
level of determination on the actual field work of
the employees which can be reasonably
ascertained. The theoretical analysis that
salesmen and other similarly-situated workers
regularly report for work at 8:00 a.m. and return
to their home station at 4:00 or 4:30 p.m.,
creating the assumption that their field work is
supervised, is surface projection. Actual field
work begins after 8:00 a.m., when the sales
personnel follow their field itinerary, and ends
immediately before 4:00 or 4:30 p.m. when they
report back to their office. The period between
8:00 a.m. and 4:00 or 4:30 p.m. comprises their

P a g e | 95
hours of work in the field, the extent or scope
and result of which are subject to their
individual capacity and industry and which
"cannot be determined with reasonable
certainty." This is the reason why effective
supervision over field work of salesmen and
medical representatives, truck drivers and
merchandisers
is
practically
a
physical
impossibility. Consequently, they are excluded
from the ten holidays with pay award. (Rollo, pp.
36-37)
Moreover, the requirement that "actual hours of work in the field
cannot be determined with reasonable certainty" must be read in
conjunction with Rule IV, Book III of the Implementing Rules which
provides:
Rule IV Holidays with Pay
Sec. 1. Coverage This rule shall apply to all
employees except:
xxx xxx xxx
(e) Field personnel and other employees whose
time and performance is unsupervised by the
employer . . . (Emphasis supplied)
While contending that such rule added another element not found
in the law (Rollo, p. 13), the petitioner nevertheless attempted to
show that its affected members are not covered by the
abovementioned rule. The petitioner asserts that the company's
sales personnel are strictly supervised as shown by the SOD

P a g e | 96
(Supervisor of the Day) schedule and the company circular dated
March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that
the aforementioned rule did not add another element to the Labor
Code definition of field personnel. The clause "whose time and
performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours
of work in the field cannot be determined with reasonable
certainty." The former clause is still within the scope and purview
of Article 82 which defines field personnel. Hence, in deciding
whether or not an employee's actual working hours in the field
can be determined with reasonable certainty, query must be
made as to whether or not such employee's time and
performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the
least signify that these sales personnel's time and performance
are supervised. The purpose of this schedule is merely to ensure
that the sales personnel are out of the office not later than 8:00
a.m. and are back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the
number of actual hours spent in field work by an employee
through the imposition of sanctions on absenteeism contained in
the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are
given incentive bonus every quarter based on their performance
is proof that their actual hours of work in the field can be
determined with reasonable certainty.
The Court thinks otherwise.

P a g e | 97
The criteria for granting incentive bonus are: (1) attaining or
exceeding sales volume based on sales target; (2) good collection
performance; (3) proper compliance with good market hygiene;
(4) good merchandising work; (5) minimal market returns; and (6)
proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given
incentive bonuses precisely because of the difficulty in measuring
their actual hours of field work. These employees are evaluated
by the result of their work and not by the actual hours of field
work which are hardly susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8
SCRA 613 [1963]), the Court had occasion to discuss the nature of
the job of a salesman. Citing the case of Jewel Tea
Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman
are fairly apparent. Such a salesman, to a
greater extent, works individually. There are no
restrictions respecting the time he shall work
and he can earn as much or as little, within the
range of his ability, as his ambition dictates. In
lieu of overtime he ordinarily receives
commissions as extra compensation. He works
away from his employer's place of business, is
not subject to the personal supervision of his
employer, and his employer has no way of
knowing the number of hours he works per day.
While in that case the issue was whether or not salesmen were
entitled to overtime pay, the same rationale for their exclusion as
field personnel from holiday pay benefits also applies.

P a g e | 98
The petitioner union also assails the respondent arbitrator's ruling
that, concomitant with the award of holiday pay, the divisor
should be changed from 251 to 261 days to include the additional
10 holidays and the employees should reimburse the amounts
overpaid by Filipro due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which
ordered payment of ten holidays certainly adds
to or accelerates the basis of conversion and
computation by ten days. With the inclusion of
ten holidays as paid days, the divisor is no
longer 251 but 261 or 262 if election day is
counted. This is indeed an extremely difficult
legal question of interpretation which accounts
for what is claimed as falling within the concept
of "solutio indebti."
When the claim of the Union for payment of ten
holidays was granted, there was a consequent
need to abandon that 251 divisor. To maintain it
would create an impossible situation where the
employees would benefit with additional ten
days with pay but would simultaneously enjoy
higher benefits by discarding the same ten days
for purposes of computing overtime and night
time services and considering sick and vacation
leave credits. Therefore, reimbursement of such
overpayment with the use of 251 as divisor
arises concomitant with the award of ten
holidays with pay. (Rollo, p. 34)

P a g e | 99
The divisor assumes an important role in determining whether or
not holiday pay is already included in the monthly paid
employee's salary and in the computation of his daily rate. This is
the thrust of our pronouncement in Chartered Bank Employees
Association v. Ople (supra). In that case, We held:
It is argued that even without the presumption
found in the rules and in the policy instruction,
the company practice indicates that the monthly
salaries of the employees are so computed as to
include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's
stand is the fact that the Chartered Bank, in
computing overtime compensation for its
employees, employs a "divisor" of 251 days. The
251 working days divisor is the result of
subtracting all Saturdays, Sundays and the ten
(10) legal holidays from the total number of
calendar days in a year. If the employees are
already paid for all non-working days, the divisor
should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since
September 1, 1980, is as follows:
monthly rate x 12 months

251 days

P a g e | 100
Following the criterion laid down in the Chartered Bank case, the
use of 251 days' divisor by respondent Filipro indicates that
holiday pay is not yet included in the employee's salary, otherwise
the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no
intervening salary increases, is a constant figure for the purpose
of computing overtime and night differential pay and
commutation of sick and vacation leave credits. Necessarily, the
daily rate should also be the same basis for computing the 10
unpaid holidays.
The respondent arbitrator's order to change the divisor from 251
to 261 days would result in a lower daily rate which is violative of
the prohibition on non-diminution of benefits found in Article 100
of the Labor Code. To maintain the same daily rate if the divisor is
adjusted to 261 days, then the dividend, which represents the
employee's annual salary, should correspondingly be increased to
incorporate the holiday pay. To illustrate, if prior to the grant of
holiday pay, the employee's annual salary is P25,100, then
dividing such figure by 251 days, his daily rate is P100.00 After
the payment of 10 days' holiday pay, his annual salary already
includes holiday pay and totals P26,100 (P25,100 + 1,000).
Dividing this by 261 days, the daily rate is still P100.00. There is
thus no merit in respondent Nestle's claim of overpayment of
overtime and night differential pay and sick and vacation leave
benefits, the computation of which are all based on the daily rate,
since the daily rate is still the same before and after the grant of
holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by
mistake, due to its use of 251 days as divisor must fail in light of
the Labor Code mandate that "all doubts in the implementation
and interpretation of this Code, including its implementing rules
and regulations, shall be resolved in favor of labor." (Article 4).

P a g e | 101
Moreover, prior to September 1, 1980, when the company was on
a 6-day working schedule, the divisor used by the company was
303, indicating that the 10 holidays were likewise not paid. When
Filipro shifted to a 5-day working schebule on September 1, 1980,
it had the chance to rectify its error, if ever there was one but did
not do so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday
pay should be computed from November 1, 1974. This ruling was
not questioned by the petitioner union as obviously said decision
was favorable to it. Technically, therefore, respondent Nestle
should have filed a separate petition raising the issue of effectivity
of the holiday pay award. This Court has ruled that an appellee
who is not an appellant may assign errors in his brief where his
purpose is to maintain the judgment on other grounds, but he
cannot seek modification or reversal of the judgment or
affirmative relief unless he has also appealed. (Franco v.
Intermediate Appellate Court, 178 SCRA 331 [1989], citing La
Campana Food Products, Inc. v. Philippine Commercial and
Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to
fully settle the issues so that the execution of the Court's decision
in this case may not be needlessly delayed by another petition,
the Court resolved to take up the matter of effectivity of the
holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the
holiday pay award is 1985 when the Chartered Bank decision,
promulgated on August 28, 1985, became final and executory,
and not from the date of effectivity of the Labor Code. Although
the Court does not entirely agree with Nestle, we find its claim
meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU)
v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the
IBAA case, the Court declared that Section 2, Rule IV, Book III of

P a g e | 102
the implementing rules and Policy Instruction No. 9, issued by the
then Secretary of Labor on February 16, 1976 and April 23, 1976,
respectively, and which excluded monthly paid employees from
holiday pay benefits, are null and void. The Court therein
reasoned that, in the guise of clarifying the Labor Code's
provisions on holiday pay, the aforementioned implementing rule
and policy instruction amended them by enlarging the scope of
their exclusion. The Chartered Bank case reiterated the above
ruling and added the "divisor" test.
However, prior to their being declared null and void, the
implementing rule and policy instruction enjoyed the presumption
of validity and hence, Nestle's non-payment of the holiday benefit
up to the promulgation of the IBAA case on October 23, 1984 was
in compliance with these presumably valid rule and policy
instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA
429 [1971], the Court discussed the effect to be given to a
legislative or executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the
declaration of nullity such challenged legislative
or executive act must have been in force and
had to be complied with. This is so as until after
the judiciary, in an appropriate case, declares its
invalidity, it is entitled to obedience and respect.
Parties may have acted under it and may have
changed their positions. What could be more
fitting than that in a subsequent litigation regard
be had to what has been done while such
legislative or executive act was in operation and

P a g e | 103
presumed to be valid in all respects. It is now
accepted as a doctrine that prior to its being
nullified, its existence as a fact must be
reckoned with. This is merely to reflect
awareness that precisely because the judiciary
is the government organ which has the final say
on whether or not a legislative or executive
measure is valid, a period of time may have
elapsed before it can exercise the power of
judicial review that may lead to a declaration of
nullity. It would be to deprive the law of its
quality of fairness and justice then, if there be
no recognition of what had transpired prior to
such adjudication.
In the language of an American Supreme Court
decision: "The actual existence of a statute,
prior
to
such
a
determination
of
[unconstitutionality], is an operative fact and
may have consequences which cannot justly be
ignored. The past cannot always be erased by a
new judicial declaration. The effect of the
subsequent ruling as to invalidity may have to
be considered in various aspects, with
respect to particular relations, individual and
corporate, and particular conduct, private and
official." (Chicot County Drainage Dist. v. Baxter
States Bank, 308 US 371, 374 [1940]). This
language has been quoted with approval in a
resolution in Araneta v. Hill (93 Phil. 1002
[1952]) and the decision inManila Motor Co.,
Inc. v. Flores (99 Phil. 738 [1956]). An even
more recent instance is the opinion of Justice
Zaldivar speaking for the Court in Fernandez

P a g e | 104
v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp.
434-435)
The "operative fact" doctrine realizes that in declaring a law or
rule null and void, undue harshness and resulting unfairness must
be avoided. It is now almost the end of 1991. To require various
companies to reach back to 1975 now and nullify acts done in
good faith is unduly harsh. 1984 is a fairer reckoning period under
the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not
far-fetched that Nestle, relying on the implicit validity of the
implementing rule and policy instruction before this Court nullified
them, and thinking that it was not obliged to give holiday pay
benefits to its monthly paid employees, may have been moved to
grant other concessions to its employees, especially in the
collective bargaining agreement. This possibility is bolstered by
the fact that respondent Nestle's employees are among the
highest paid in the industry. With this consideration, it would be
unfair to impose additional burdens on Nestle when the nonpayment of the holiday benefits up to 1984 was not in any way
attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be
effective, not from the date of promulgation of the Chartered Bank
case nor from the date of effectivity of the Labor Code, but from
October 23, 1984, the date of promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby
MODIFIED. The divisor to be used in computing holiday pay shall
be 251 days. The holiday pay as above directed shall be
computed from October 23, 1984. In all other respects, the order
of the respondent arbitrator is hereby AFFIRMED.

P a g e | 105
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Padilla, Bidin,
Medialdea, Grio-Aquino, Regalado, Davide, Jr. and Romero, JJ.,
concur.
THIRD DIVISION
G.R. No. 146073

January 13, 2003

JERRY E. ACEDERA, ANTONIO PARILLA, AND OTHERS LISTED

IN
ANNEX
"A,"1, petitioners-appellants,
vs.
INTERNATIONAL CONTAINER TERMINAL SERVICES, INC.
(ICTSI), NATIONAL LABOR RELATIONS COMMISSION and
HON. COURT OF APPEALS, respondents-appellees.
CARPIO-MORALES, J.:
For consideration is the petition for review on certiorari assailing
the decision of the Court of Appeals affirming that of the National
Labor Relations Commission (NLRC) which affirmed the decision of
the Labor Arbiter denying herein petitioners-appellants
Complaint-in-Intervention with Motion for Intervention.
The antecedent facts are as follows:
Petitioners-appellants Jerry Acedera, et al. are employees of
herein private respondent International Container Terminal
Services, Inc. (ICTSI) and are officers/members of Associated Port
Checkers & Workers Union-International Container Terminal
Services, Inc. Local Chapter (APCWU-ICTSI), a labor organization

P a g e | 106
duly registered as a local affiliate of the Associated Port Checkers
& Workers Union (APCWU).
When ICTSI started its operations in 1988, it determined the rate
of pay of its employees by using 304 days, the number of days of
work of the employees in a year, as divisor. 2
On September 28, 1990, ICTSI entered into its first Collective
Bargaining Agreement (CBA) with APCWU with a term of five years
effective until September 28, 1995.3 The CBA was renegotiated
and thereafter renewed through a second CBA that took effect on
September 29, 1995, effective for another five years. 4 Both CBAs
contained an identically-worded provision on hours and days of
work reading:
Article IX
Regular Hours of Work and Days of Labor
Section 1. The regular working days in a week shall be
five (5) days on any day from Monday to Sunday, as may
be scheduled by the COMPANY, upon seven (7) days prior
notice unless any of this day is declared a special
holiday.5 (Italics omitted)
In accordance with the above-quoted provision of the CBA, the
employees work week was reduced to five days or a total of 250
days a year. ICTSI, however, continued using the 304-day divisor
in computing the wages of the employees.6
On November 10, 1990, the Regional Tripartite Wage and
Productivity Board (RTWPB) in the National Capital Region decreed
a P17.00 daily wage increase for all workers and employees
receiving P125.00 per day or lower in the National Capital

P a g e | 107
Region.7 The then president of APCWU, together with some union
members, thus requested the ICTSIs Human Resource
Department/Personnel Manager to compute the actual monthly
increase in the employees wages by multiplying the RTWPB
mandated increase by 365 days and dividing the product by 12
months.8
Heeding the proposal and following the implementation of the
new wage order, ICTSI stopped using 304 days as divisor and
started using 365 days in determining the daily wage of its
employees and other consequential compensation, even if the
employees work week consisted of only five days as agreed upon
in the CBA.9
In early 1997, ICTSI went on a retrenchment program and laid off
its on-call employees.10 This prompted the APCWU-ICTSI to file a
notice of strike which included as cause of action not only the
retrenchment of the employees but also ICTSIs use of 365 days
as divisor in the computation of wages. 11 The dispute respecting
the
retrenchment
was
resolved
by
a
compromise
settlement12 while that respecting the computation of wages was
referred to the Labor Arbiter.13
On February 26, 1997, APCWU, on behalf of its members and
other employees similarly situated, filed with the Labor Arbiter a
complaint against ICTSI which was dismissed for APCWUs failure
to file its position paper.14Upon the demand of herein petitionersappellants, APCWU filed a motion to revive the case which was
granted. APCWU thereupon filed its position paper on August 22,
1997.15
On December 8, 1997, petitioners-appellants filed with the Labor
Arbiter a Complaint-in-Intervention with Motion to Intervene.16 In

P a g e | 108
the petition at bar, they justified their move to intervene in this
wise:
[S]hould the union succeed in prosecuting the case and
in getting a favorable reward it is actually they that
would benefit from the decision. On the other hand,
should the union fail to prove its case, or to prosecute
the case diligently, the individual workers or members of
the union would suffer great and immeasurable loss.
[t]hey wanted to insure by their intervention that the
case would thereafter be prosecuted with all due
diligence and would not again be dismissed for lack of
interest to prosecute on the part of the union.17
The Labor Arbiter rendered a decision, the dispositive portion of
which reads:
WHEREFORE, decision is hereby rendered declaring that
the correct divisor in computing the daily wage and other
labor standard benefits of the employees of respondent
ICTSI who are members of complainant Union as well as
the other employees similarly situated is two hundred
fifty (250) days such that said respondent is hereby
ordered to pay the employees concerned the differentials
representing the underpayment of said salaries and other
benefits reckoned three (3) years back from February 26,
1997, the date of filing of this complaint or computed
from February 27 1994 until paid, but for purposes of
appeal, the salary differentials are temporarily computed
for one year in the amount of Four Hundred Sixty Eight
Thousand Forty Pesos (P468,040.00).18

P a g e | 109
In the same decision, the Labor Arbiter denied petitionersappellants Complaint-in-Intervention with Motion for Intervention
upon a finding that they are already well represented by APCWU.19
On appeal, the NLRC reversed the decision of the Labor Arbiter
and dismissed APCWUs complaint for lack of merit. 20 The denial of
petitioners-appellants intervention was, however, affirmed.21
Unsatisfied with the decision of the NLRC, APCWU filed a petition
for certiorari with the Court of Appeals while petitioners-appellants
filed theirs with this Court which referred the petition 22 to the
Court of Appeals.
The Court of Appeals dismissed APCWUs petition on the following
grounds: failure to allege when its motion for reconsideration of
the NLRC decision was filed, failure to attach the necessary
appendices to the petition, and failure to file its motion for
extension to file its petition within the reglementary period. 23
As for petitioners-appellants petition for certiorari, it was
dismissed by the Court of Appeals in this wise:
It is clear from the records that herein petitioners,
claiming to be employees of respondent ICTSI,
arealready well represented by its employees union,
APCWU, in the petition before this Court (CA-G.R. SP. No.
53266) although the same has been dismissed. The
present petition is, therefore a superfluity that deserves
to be dismissed. Furthermore, only Acedera signed the
Certificate of non-forum shopping. On this score alone,
this petition should likewise be dismissed. We find that
the same has no merit considering that herein petitioners
have not presented any meritorious argument that would
justify the reversal of the Decision of the NLRC.

P a g e | 110
Article IX of the CBA provides:
Regular Hours of Work and Days of Labor
"Section 1. The regular working days in a week
shall be five (5) days on any day from Monday
to Sunday, as may be scheduled by the
COMPANY, upon seven (7) days prior notice
unless any of this day is declared a special
holiday."
This provision categorically states the required number of
working days an employee is expected to work for a
week. It does not, however, indicate the manner in which
an employees salary is to be computed. In fact, nothing
in the CBA makes any referral to any divisor which should
be the basis for determining the salary. The NLRC,
therefore, correctly ruled that" xxx the absence of any
express or specific provision in the CBA that 250 days
should be used as divisor altogether makes the position
of the Union untenable."
xxx
Considering that herein petitioners themselves requested
that 365 days be used as the divisor in computing their
wage increase and later did not raise or object to the
same during the negotiations of the new CBA, they are
clearly estopped to now complain of such computation
only because they no longer benefit from it. Indeed, the
365 divisor for the past seven (7) years has already
become practice and law between the company and its
employees.24 (Emphasis supplied)

P a g e | 111
xxx
Hence, the present petition of petitioners-appellants who fault the
Court of Appeals as follows:
I
. . . in rejecting the CBA of the parties as the source of
the divisor to determine the workers daily rate totally
disregarded the applicable landmark decisions of the
Honorable Supreme Court on the matter.
II
. . . [IN] disregard[ING] applicable decisions of this
Honorable Court when it ruled that the petitionersappellants are already in estoppel.
III
. . . in ruling that the petitioners-appellants have no legal
right to intervene in and pursue this case and that their
intervention is a superfluity.
IV
. . . in holding, although merely as an obiter dictum, that
only petitioner Jerry Acedera signed the certificate of
non-forum shopping.25
The third assigned error respecting petitioners-appellants right to
intervene shall first be passed upon, it being determinative of
their right to raise the other assigned errors.

P a g e | 112
Petitioners-appellants anchor their right to intervene on Rule 19 of
the 1997 Rules of Civil Procedure, Section 1 of which reads:
Section 1. Who may intervene.- A person who has legal
interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, or is so
situated to be adversely affected by a distribution or
other disposition of property in the custody of the court
or of an officer thereof may, with leave of court, be
allowed to intervene in the action. The court shall
consider whether or not the intervention will unduly
delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenors right
may be fully protected in a separate proceeding.
They stress that they have complied with the requisites for
intervention because (1) they are the ones who stand to gain or
lose by the direct legal operation and effect of any judgment that
may be rendered in this case, (2) no undue delay or prejudice
would result from their intervention since their Complaint-inIntervention with Motion for Intervention was filed while the Labor
Arbiter was still hearing the case and before any decision thereon
was rendered, and (3) it was not possible for them to file a
separate case as they would be guilty of forum shopping because
the only forum available for them was the Labor Arbiter. 26
Petitioners-appellants, however, failed to consider, in addition to
the rule on intervention, the rule on representation, thusly:
Sec. 3. Representatives as parties.- Where the action is
allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary capacity,
the beneficiary shall be included in the title of the case
and shall be deemed to be the real party in interest. A

P a g e | 113
representative may be a trustee of an express trust, a
guardian, an executor or administrator, or a party
authorized by law or these Rules. . . 27 (Emphasis
supplied)
A labor union is one such party authorized to represent its
members under Article 242(a) of the Labor Code which provides
that a union may act as the representative of its members for the
purpose of collective bargaining. This authority includes the power
to represent its members for the purpose of enforcing the
provisions of the CBA. That APCWU acted in a representative
capacity "for and in behalf of its Union members and other
employees similarly situated," the title of the case filed by it at
the Labor Arbiters Office so expressly states.
While a party acting in a representative capacity, such as a union,
may be permitted to intervene in a case, ordinarily, a person
whose interests are already represented will not be permitted to
do the same28 except when there is a suggestion of fraud or
collusion or that the representative will not act in good faith for
the protection of all interests represented by him. 29
Petitioners-appellants cite the dismissal of the case filed by ICTSI,
first by the Labor Arbiter, and later by the Court of Appeals. 30 The
dismissal of the case does not, however, by itself show the
existence of fraud or collusion or a lack of good faith on the part
of APCWU. There must be clear and convincing evidence of fraud
or collusion or lack of good faith independently of the dismissal.
This, petitioners-appellants failed to proffer.
Petitioners-appellants likewise express their fear that APCWU
would not prosecute the case diligently because of its "sweetheart
relationship" with ICTSI.31 There is nothing on record, however, to
support this alleged relationship which allegation surfaces as a

P a g e | 114
mere afterthought because it was never raised early on. It was
raised only in petitioners-appellants reply to ICTSIs comment in
the petition at bar, the last pleading submitted to this Court,
which was filed on June 20, 2001 or more than 42 months after
petitioners-appellants filed their Complaint-in-Intervention with
Motion to Intervene with the Labor Arbiter.
To reiterate, for a member of a class to be permitted to intervene
in a representative action, fraud or collusion or lack of good faith
on the part of the representative must be proven. It must be
based on facts borne on record. Mere assertions, as what
petitioners-appellants proffer, do not suffice.
The foregoing discussion leaves it unnecessary to discuss the
other assigned errors.
WHEREFORE, the present petition is hereby denied.
SO ORDERED.
Puno, J., (Chairman),
Corona, JJ., concur.

Panganiban,

Sandoval-Gutierrez,

and

House helper rate

SECOND DIVISION
G.R. No.190486

November 26, 2014

STANLEY
FINE
FURNITURE,
ELENAAND
CARLOS
WANG, Petitioners,
vs.
VICTOR T. GALLANO AND ENRIQUITO SIAREZ, Respondents.

P a g e | 115
DECISION
LEONEN, J.:
To terminate the employment of workers simply because they
asserted their legal rights by filing a complaint is illegal. It violates
their right to security of tenure an'd should not be tolerated.
In this petition for review 1 on certiorari filed by Elena Briones, 2 we
are asked to reverse the decision 3 of the Court of Appeals in CAG.R. SP No. 101145. The Court of Appeals found grave abuse of
discretion on the part of the National Labor Relations Commission,
and reinstated the decision of the Labor Arbiter dated August 2,
2006 finding that respondents Victor Gallano and Enriquito Siarez
were illegally dismissed.4
Stanley Fine Furniture (Stanley Fine), through its owners Elena and
Carlos Wang, hired respondents Victor T. Gallano and Enriquito
Siarez in 1995 as painters/carpenters. Victor and Enriquito each
received 215.00 basic salary per day.5
On May 26, 2005, Victor and Enriquito filed a labor complaint 6 for
underpayment/non-payment of salaries, wages, Emergency Cost
of Living Allowance (ECOLA), and 13th month pay. They indicated
in the complaint form that they were "still working" 7 for Stanley
Fine.
Victor and Enriquito filed an amended complaint 8 on May 31,
2005, for actual illegal dismissal, underpayment/non-payment of
overtime pay, holiday pay, premium for holiday pay, service
incentive leave pay, 13th month pay, ECOLA, and Social Security
System (SSS) benefit. In the amended complaint, Victor and
Enriqui to claimed that they were dismissed on May 26,
2005.9 Victor and Enriquito were allegedly scolded for filing a

P a g e | 116
complaint for money claims. Later on, they were not allowed to
work.10
On the other hand, petitioner Elena Briones claimed that Victor
and Enriquito were "required to explain their absences for the
month of May 2005, but they refused."11
In the decision12 dated August 2, 2006, the Labor Arbiter found
that Victor and Enriqui to were illegally dismissed. The Labor
Arbiter noted the following contradictory statements inStanley
Fines position paper, thus:
Also, Stanley Fine was forced todeclare them dismissed due to
their failure to report back to work for a considerable length of
time and also, due to the filing of an unmeritorious labor case
against it by the two complainants. . . .
....
The main claim of the complainants is their allegation that they
were dismissed. They were NOT DISMISSED. 13(Emphasis in the
original)
The Labor Arbiter resolved these contradictory statements in the
following manner:
In fact, the admission that complainants were dismissed due to
the filing of a case against them by complainants is a blatant
transgression of the Labor Code that no retaliatory measure shall
be levelled against an employee by reason of an action
commenced against an employer. This is virtually a confession of
judgment and a death [k]nell to the cause of respondents. It
actually lends credence tothe fact that complainants were
dismissed upon respondents knowledge of the complaint before

P a g e | 117
the NLRC as attested by the fact that four days after the filing of
the complaint, the same was amended to include illegal
dismissal.14
The Labor Arbiter also awarded moral and exemplary damages to
respondents, reasoning that: Finding malice, and ill-will in the
dismissal of complainants, which exhibits arrogance and defiance
of labor laws on the part of respondents, moral and exemplary
damages for P50,000 and P30,000 respectively for each of the
complainants are hereby granted.
WHEREFORE, premises considered, respondents are hereby
declared guilty of illegal dismissal. As a consequence, they are
ORDERED to reinstate complainant to their former position and
pay jointly and severally complainants full backwages from date
of dismissal until actual reinstatement[.] 15
On
appeal,
the
National
Labor
Relations
Commission
reversed16 the Labor Arbiters decision, ruling that the Labor
Arbiter erred in considering the statement, "due to the filing ofan
unmeritorious labor case," as an admission against interest.17 The
National Labor Relations Commission held that:
Contrary to the findings of the Labor Arbiter below . . .
respondents-appellants allegations in paragraph 5 of their
position paper is not an admission that they dismissed
complainants-appellees
moreso
[sic],
in
retaliation
for
complainants-appellees filing a complaint against them. Had the
Labor Arbiter been more circumspect analyzing the facts brought
before him by the herein parties pleadings, he could have easily
discerned that complainants-appellees were merely required to
explain their unauthorized absences they committed for the
month of May 2005 alone. Complainants-appellees did notdeny
knowledge of the memoranda issued to them on May 23, 25 and

P a g e | 118
27, 2005 for complainant-appellee Siarez and June 1, 2005 memo
for Gallano. That they simply refused receipt of them cannot
extricate themselves from its legal effects as the last of which
clearly show that itwas sent to them thru the mails.
....
The same holds true with the findings of the Labor Arbiter below
that respondents-appellants evidence, Annexes "7" to "74"
"cannot be admissible in evidence" for being mere xerox copies
and "are easily subjected to interpolation and tampering."
Suffice it to state that these pieces of evidence were adduced
during the arbitral proceedings below, where complainantsappellees were afforded the opportunity to controvert and deny its
truthfulness and veracity that complainants-appellees never
objected thereto or deny its authenticity, certainly did not render
said documents tampered or interpolated.
WHEREFORE, in view of the foregoing, the decision appealed from
is hereby REVERSEDand SET ASIDE.Respondents-appellants are
however ordered to reinstate complainants-appellees to their
former position without loss of seniority rights and benefits
appurtenant thereto, without backwages.
SO ORDERED.18
Victor and Enriquito filed a motion for reconsideration, 19 which the
National
Labor
Relations
Commission
denied
in
the
resolution20 dated August 15, 2007.
Thus, Victor and Enriquito filed a petition for certiorari before the
Court of Appeals. Generally, petitions for certiorari are limited to
the determination and correction of grave abuse of discretion

P a g e | 119
amounting to lack or excess of jurisdiction. However,the Court of
Appeals reviewed the findings of facts and of law of the labor
tribunals, considering that the Labor Arbiter and the National
Labor Relations Commission had different findings. 21
The Court of Appeals found that Stanley Fine failed to show any
valid cause for Victor and Enriquitos termination and to comply
with the twonotice rule.22 Also, the Court of Appeals noted that
Stanley Fines statements that it was "forced to declare them
dismissed"23 due to their absences and "due to the filing of an
unmeritorious labor case against it by the two complainants" 24
were admissions against interest and binding upon Stanley Fine.
Thus: An admission against interest is the best evidence which
affords the greatest certainty of the facts in dispute since no man
would declare anything against himself unless such declaration is
true. Thus, an admission against interest binds the person who
makes the same, and absent any showing that this was made thru
palpable mistake, no amount of rationalization can offset it. 25
The Court of Appeals also held that the immediate amendment of
Victor and Enriquitos complaint negated their alleged
abandonment.26
With regard to the National Labor Relations Commissions deletion
of the monetary award, the Court of Appeals ruled that:
Notably, private respondents claim of payment is again belied by
their own admission in their position paper that they failed to pay
petitioners their ECOLA and to ask for exemption from payment of
said benefits to their employees. In any event, private
respondents allegation of payment of money claims is not
supported by substantial evidence. The Labor Arbiter found that
the documents presented by private respondents were mere

P a g e | 120
photocopies, with no appropriate signatures of petitioners and
could be easily subjected to interpolation and tampering. 27
The Court of Appeals, thus, granted the petition, set aside the
resolutions of the National Labor Relations Commission, and
reinstated the decision of the Labor Arbiter.28 The dispositive
portion of its decision reads:
WHEREFORE, the assailed Resolutions dated June 18, 2007 and
August 15, 2007 of public respondent NLRC are set aside and the
Labor Arbiters Decision dated August 2, 2006 is reinstated.
SO ORDERED.29
Stanley Fine filed a motion for reconsideration,30 which the Court
of Appeals denied in the resolution31 dated November 27, 2009.
On December 21, 2009, Stanley Fine, Elena, and Carlos Wang filed
a motion for extension of time to file petition for review on
certiorari.32
On January 21, 2010, Elena Briones filed a petition for
review.33 Elena
alleged
that
she
is
the
"registered
owner/proprietress of the business operation doing business under
the name and style Stanley Fine Furniture." 34She argued that the
Court of Appeals erred in ruling that Victor and Enriquito were
illegally dismissed considering that she issued several
memoranda to them, but they refused to accept the memoranda
and explain their absences. 35 As to the statement, "due to the
filing of an unmeritorious labor case," 36 it was error on the part of
her former counsel which should not bind her. 37 Further, the
monetary claims should not have been awarded because these
were based on the allegations in the complaint form, 38 whereas
Elena presented documentary evidence to show that Victor and

P a g e | 121
Enriquitos money claims had been paid. They never rebutted her
documentary evidence.39As to the award of moral and exemplary
damages and attorneys fees, Victor and Enriquito did not present
any evidence to support their claim, thus, it was error for the
Court of Appeals to have reinstated the Labor Arbiters decision.40
In compliance with this courts resolution 41 dated February 17,
2010, Victor and Enriquito filed their comment 42and argued that
the petition should be denied because Elena "is neither the
respondent, party in interest or representatives as parties." 43 With
regard to Victors two absences and Enriquitos five absences,
these should not be interpreted as refusal to go back to work
tantamount
to
abandonment.44 Considering
that
Elenas
arguments had been passed upon by the labor tribunals and the
Court of Appeals, this petition should be denied. 45
Elena filed her reply46 and posited that she has legal standing to
file the petition for review because she isthe owner/proprietress of
Stanley Fine.47 In addition, she argued that Victor and Enriquito
knew that she, Elena, is the real party-in-interest because during
the pendency of the labor case, she filed an ex-parte
manifestation, attaching her Department of Trade and Industry
certificate of registration of business name, 48 showing that the
registration is under her maiden name, Elena Y. Briones. As per
the Department of Trade and Industrys certification,49 Stanley
Fine is a sole proprietorship owned by "Elena Briones Yam-Wang."
Thus, this court is asked to resolve procedural and substantive
issues in this petition as follows:>
1. Whether Elena Briones has standing to file this petition
for review on certiorari;

P a g e | 122
2. Whether the Court of Appeals erred in ruling that
Victor Gallano and Enriquito Siarez were illegally
dismissed;
3. Whether the Court of Appeals erred when it agreed
with the Labor Arbiter that the statement, "filing of an
unmeritorious labor case," is an admission against
interest and binding against Stanley Fine Furniture; and
4. Whether the Court of Appeals erred in awarding the
monetary claims and damages to Victor Gallano and
Enriquito Siarez, considering that they did not produce
evidence to support their claims.
I.
Petitioner Elena Briones has standing to file this case
On this issue, petitioners claimed that Elena Briones is not the real
party-in-interest; hence, the decision of the Court of Appeals is
final and executory since the petition for review was not properly
filed.50
In her reply, Elena argued that she is the sole proprietor of Stanley
Fine, a fact known to respondents. 51 As the sole proprietor, she
has standing to file this petition.52
Respondents cannot deny Elena Briones standing to file this
petition considering that in their amended complaint filed before
the Labor Arbiter, they wrote "Stanley Fine Furniture, Elina [sic]
Briones Wang as ownerand Carlos Wang" as their employers.53
Also, respondents did not refute Elenas allegation that Stanley
Fine is a sole proprietorship. In Excellent Quality Apparel, Inc. v.
Win Multi-Rich Builders, Inc.,54 this court stated that:

P a g e | 123
A sole proprietorship does not possess a juridical personality
separate and distinct from the personality of the owner of the
enterprise. The law merely recognizes the existence of a sole
proprietorship as a form of business organization conducted for
profit by a single individual and requires its proprietor or owner to
secure licenses and permits, register its business name, and pay
taxes to the national government. The law does not vest a
separate legal personality on the sole proprietorship or empower
it to file or defend an action in court. 55 (Emphasis supplied) Thus,
Stanley Fine, being a sole proprietorship, does not have a
personality separate and distinct from its owner, Elena Briones.
Elena, being the proprietress of Stanley Fine, can be considered as
a real party-in-interest and has standing to file this petition for
review.
II.
Review of procedural parameters
In her petition for review, Elena raised the following issues: (a)
whether "the filing of an Establishment Termination Report" 56 is an
act of dismissal; (b) whether counsels allegation that an
employee was dismissed due to the filing of an "unmeritorious"
case against the employer is binding; 57 (c) whether a Labor Arbiter
can award monetary claims based on the allegations in the
complaint form;58 and (d) whether the award of moral and
exemplary damages and attorneys fees is proper even without
supporting evidence.59
In a Rule 45 petition for review of a Court of Appeals decision
rendered under Rule 65, this court is guided by the following rules:
[I]n a Rule 45 review (of the CA decision rendered under Rule 65),
the question of law that confronts the Court is the legal
correctness of the CA decision i.e., whether the CA correctly

P a g e | 124
determined the presence or absence of grave abuse of discretion
in the NLRC decision before it, and not on the basis of whether the
NLRC decision on the merits of the case was correct. . . .
Specifically, in reviewing a CA labor ruling under Rule 45 of the
Rules of Court, the Courts review is limited to:
(1) Ascertaining the correctness of the CAs decision in
finding the presence or absence of a grave abuse of
discretion. This is done by examining, on the basis of the
parties presentations, whether the CA correctly
determined that at the NLRC level, all the adduced pieces
of evidence were considered; no evidence which should
not have been considered was considered; and the
evidence presented supports the NLRC findings; and
(2) Deciding any other jurisdictional error that attended
the
CAs
interpretation
or
application
of
the
law.60(Citation omitted)
Thus, the proper issue in this case is whether the Court of Appeals
correctly determined the presence of grave abuse of discretion on
the part of the National Labor Relations Commission. III.
There was no just cause in the dismissal of respondents
The Court of Appeals found grave abuse of discretion on the part
of the National Labor Relations Commission when it reversed the
Labor Arbiters decision. The Court of Appeals held that
respondents were illegally dismissed because no valid causefor
dismissal was shown. Also, there was no compliance withthe twonotice requirement.61
Elena admitted that no notices of dismissal were issued to
respondents. However, memoranda were given to respondents,

P a g e | 125
requiring them to explain their absences. She claimed that the
notices to explain disprove respondents allegation that there was
intent to dismiss them.62
Grounds for termination of employment are provided under the
Labor Code.63 Just causes for termination ofan employee are
provided under
Article 282 of the Labor Code: ARTICLE 282. Termination by
employer.- An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(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.
Although abandonment of work is not included in the
enumeration, this court has held that "abandonment is a form of

P a g e | 126
neglect of duty."64 To prove abandonment, two elements must
concur:
1. Failure to report for work orabsence without valid or
justifiable reason; and
2. A clear intention to sever the employer-employee
relationship.65
In Hodieng Concrete Products v. Emilia,66 this court held that:
Absence must be accompanied by overt acts unerringly pointing
to the fact that the employee simply does not want to work
anymore. And the burden of proof to show that there was
unjustified refusal to go back to work rests on the employer. 67
The Court of Appeals ruled that the alleged abandonment of work
is negated by the immediate filing of the complaint for illegal
dismissal on May 31, 2005.68 The Court of Appeals further stated
that:
Long standing is the rule that the filing of the complaint for illegal
dismissal negates the allegation of abandonment. Human
experience dictates that no employee in his right mind would go
through the trouble of filing a case unless the employer had
indeed terminated the services of the employee.69
In this case, Elena failed to pinpoint the overt acts of respondents
that show they had abandoned their work. There was a mere
allegation that she was "forced to declare them dismissed dueto
their failure to report back to work for a considerable length of
time"but no evidence to prove the intent to abandon work. 70 It is
the burden of the employer to prove that the employee was not

P a g e | 127
dismissed or, if dismissed, that such dismissal
illegal.71Unfortunately for Elena, she failed to do so.

was

not

IV.
Generally, errors of counsel bind the client
Elenas position paper states the following:
5. Also, Stanley Fine was forced to declare them
dismissed due to their failure to report back to work for a
considerable length of time and also, due to the filing of
an unmeritorious labor case against itby the two
complainants. . . . (Emphasis supplied)
....
8. The main claim of the complainants is their allegation
that they were dismissed. They were NOT DISMISSED.
Management was [sic] has only instructed them to
submit a written explanation for their absence before
they would be allowed back to work. . . . 72 (Underscoring
in the original)
Elena argued that the use of the word "unmeritorious" should not
be taken against her because it is commonly used in pleadings.
Also, the use of the word "unmeritorious" came from her previous
counsel.73 In an effort to persuade this court, Elena further argued
in her reply that the statement "unmeritorious case" was a
mistake committed by her former counsel which should not bind
her, considering its grave consequence.74
On the other hand, respondents alleged in their position
paper75 that they were requesting from their employer an increase

P a g e | 128
in pay to comply with the minimum wage law.76 However, they
were reprimanded and were told "not to work anymore." 77
Respondents filed a reply78 to Elenas position paper and argued
that:
6. The words "Nag complain pa kayo sa Labor ha, tanggal na
kayo" were clear, unequivocal and categorical. These
circumstances were sufficient to create the impression in the mind
of complainants and correctly so that their services were being
terminated. The acts of respondents were indicative of their
intention to dismiss complainants from their employment.79
On this issue, the National Labor Relations Commission held that
the phrase, "filing of an unmeritorious labor complaint," 80 if read
together with the other allegations in Elenas position paper,
would show that respondents were not dismissed but simply
required to explain their absences.81
On the other hand, the Court of Appeals agreed with the Labor
Arbiter that Elenas statement is an admission against interest
and binding upon her. The Court of Appeals explained that:
An admission against interest is the best evidence which affords
the greatest certainty of the facts in dispute since no man would
declare anything against himself unless such declaration is true.
Thus, an admission against interest binds the person who makes
the same, and absent any showing that this was made thru
palpable mistake, no amount of rationalization can offset it. 82
The general rule is that errors of counsel bind the client. The
reason behind this rule was discussed in Building Care Corporation
v. Macaraeg:83

P a g e | 129
It is however, an oft-repeated ruling that the negligence and
mistakes of counsel bind the client.1wphi1 A departure from this
rule would bring about never-ending suits, so long as lawyers
could allege their own fault or negligence to support the
clientscase and obtain remedies and reliefs already lost by
operation of law. The only exception would be, where the lawyers
gross negligence would result in the grave injustice of depriving
his client of the due process of law.84 (Citations omitted)
There is not an iota of proof that the lawyer committed gross
negligence in this case. That counsel did not reflect his clients
true intentions is a bare allegation. It is not a mere afterthought
meant to escape liability for such illegal act. Elenas counsel
reflected the true reason for dismissing respondents. Both position
papers state that Elena dismissed respondents because of the
filing of a labor complaint. Thus, the Court of Appeals did not err
in affirming the Labor Arbiters ruling that the statement,
"unmeritorious labor complaint," is an admission against interest.
V.
Non-compliance
due
process
illegal dismissal

with
supports

the

procedural
finding
of

Assuming that the statement, "filing of an unmeritorious labor

case," is not an admission against interest, still, the Court of
Appeals did not err in reinstating the Labor Arbitersdecision.
Elena admitted85 that no notices of dismissal were issued.
Elena pointed out that there is no evidence showing that at the
time she sent the memoranda, she already knew of the complaint
for money claims filed by respondents.86 The allegation that she
told respondents "Nag complain pa kayo sa Labor ha, sige tanggal
na kayo"87 is hearsay and inadmissible.88

P a g e | 130
In cases of termination of employment, Article 277(b) of the Labor
Code provides that:
ARTICLE 277. Miscellaneous provisions.
....
(b) Subject to the constitutional right of workers to security of
tenure and their right to be protected against dismissal except for
a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes
for termination and shall afford the latter ample opportunity to be
heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules
and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the worker to
contest the validity or legality of his dismissal by filing a complaint
with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a
valid or authorized cause shall rest on the employer[.]
Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing
the Labor Code further provides:
Section 2. Security of tenure. . . .
....
(d) In all cases of termination of employment, the following
standards of due process shall be substantially observed:

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For termination of employment based on just causes as defined in
Article 282 of the Code:
(i) A written notice served on the employee specifying the ground
or grounds for termination, and giving said employee reasonable
opportunity within which to explain his side.
(ii) A hearing or conference during which the employee
concerned, with the assistance of counsel if heso desires is given
opportunity to respond to the charge, present his evidence, or
rebut the evidence presented against him.
(iii) A written notice of termination served on the employee,
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination. King of
Kings Transport, Inc. v. Mamac89 extensively discussed the twonotice requirement and the procedure that must be observed in
cases of termination, thus:
(1) The first written noticeto be served on the employees
should contain the specific causes or grounds for
termination against them, and a directive that the
employees are given the opportunity to submit their
written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules
means every kind of assistance that management must
accord to the employees to enable them to prepare
adequately for their defense. This should be construed as
a period of at least five (5) calendar days from receipt of
the notice to give the employees an opportunity to study
the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover,
in order to enable the employees to intelligently prepare

P a g e | 132
their explanation and defenses, the notice should contain
a detailed narration of the facts and circumstances that
will serve as basis for the charge against the employees.
A general description of the charge will not suffice.
Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among
the grounds under Art. 282 is being charged against the
employees.
(2) After serving the first notice, the employers should
schedule and conduct a hearing or conference wherein
the employees will be given the opportunity to: (1)
explain and clarify their defenses to the charge against
them; (2) present evidence insupport of their defenses;
and (3) rebut the evidence presented against them by
the management. During the hearing or conference, the
employees are given the chance to defend themselves
personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to
cometo an amicable settlement.
(3) After determining that termination of employment is
justified, the employers shall serve the employees a
written notice of termination indicating that: (1) all
circumstances involving the charge against the
employees have been considered; and (2) grounds have
been established to justify the severance of their
employment.90 (Emphasis in the original, citation
omitted)
Elena presented photocopies of the memoranda to prove that
notices to explain were sent to respondents. These photocopies
were not considered by the Labor Arbiter, on the ground that they
had no probative value. Elena argued that even if the annexes

P a g e | 133
were mere photocopies, they formed part of the position paper,
which is a verified pleading under oath.91 Elena also cited Lee v.
Regional Trial Court of Quezon City, Branch 85 92 where this court
allegedly ruled that photocopies of documents attached to a
verified motion, which have not been controverted, are
admissible.93
In Lee v. Regional Trial Court of Quezon City, Branch 85, this court
stated the following:
Before we discuss the substance of private respondents motion,
we note that attached to it weremere photocopies of the
supporting documents and not "certified true copies of documents
or papers involved therein" as required by the Rules of Court.
However, given that the motion was verified and petitioners, who
were given a chance to oppose or comment on it, made no
objection thereto, we brush aside the defect in form and proceed
to discuss the merits of the motion.94 (Citation omitted)
A review of the decision in Lee v. Regional Trial Court of Quezon
City, Branch 85 shows that the case involved an omnibus motion
to cite Jose C. Lee and the other parties in indirect contempt, and
to impose disciplinary sanctions or disbar Jose C. Lees
counsel.95 The statement cited by Elena is not the controlling
doctrine in that case. In addition, it appears that this court
brushed aside "the defect in form" in the exercise of its discretion
and, thus, it should not be taken as the controllingdoctrine.
Hence, no error can be attributed to the Court of Appeals when it
agreed with the Labor Arbiters ruling that the photocopies of the
memoranda have no probative value since they are mere
photocopies.96
Even if this court considers Annexes 1 to 5, 97 these pieces of
evidence would not save Elenas cause. Annexes 1 to 3 are the

P a g e | 134
memoranda issued to Enriquito with a notation that he refused to
sign. Annex 2 is dated May 25, 2005, but the date when Enriquito
allegedly refused to sign is not indicated. 98 Annex 3 is dated May
23, 2005, but again, the memorandum does not show when it was
served upon Enriquito and the date he refused to sign. 99 It is quite
possible that these memoranda were antedated.
Annex 4 is dated June 1, 2005 and was sent to Enriquito Siarez via
registered mail.100 Annex 5 is the memorandum issued to Victor
Gallano and is likewise dated June 1, 2005. 101 Respondents were
allegedly dismissed on May 26, 2005; 102 hence, Annex 1 dated
May 27, 2005,103 Annex 4 dated June 1, 2005, and Annex 5 also
dated June 1, 2005, were issued as a mere afterthought.
VI.
The
Court
of
Appeals
awarding money claims and damages

did

not

err

in

With regard to the award of money claims, 104 Elena likewise

argues that the Labor Arbiter erred in notadmitting Annexes 7 to
74, citing Lee v. Regional Trial Court of Quezon City, Branch 85. On
this matter, the Court of Appeals quoted the Labor Arbiters
decision, stating that:
With respect to Annexes 7 to 74 to prove compliance of labor
standards, the same cannot be admissible in evidence because
they are mere Xerox copies which are easily subjected to
interpolation and tampering.
Besides, Annex 69 which purports to be payment of 13th month
pay for 2004 of complainant Gallano but no amount is indicated.
Again, Annex 71 states 13th month pay for P4,500.00 for
complainant Gallano yet there is no signature of Gallano

P a g e | 135
acknowledging receipt thereof. If one document is tainted with
fraud, all other Xerox documents are fraudulent.105
In their comment, respondents argued that Elenas claim of
payment is refuted by her own admission that she did not pay
respondents ECOLA and she even asked for exemption from
paying them.106
The Court of Appeals found that, indeed, Elena admitted that
respondents were not paid their ECOLA and that she asked for
exemption from doing so.107 In addition, Elenas allegations of
payment of the other monetary claims, such as 13th month pay,
holiday pay, and premium for holiday pay, were not supported by
substantial evidence.108
A review of the records reveals that even if the Court of Appeals
considered the vouchers marked as Annexes 7 to 74 and
submitted by Elena, these would only disprove her claim of
payment.
Annexes 7 to 74109 are vouchers showing payment of holiday pay,
13th month pay, and service incentive leave pay to respondents.
However, not all vouchers were signed by them. Further, in some
of the vouchers, the amount given to respondents was not
written. Hence, these vouchers do not prove Elena's claim of
payment.
As to the award of money claims, including moral and exemplary
damages, Elena argued that respondents did not present evidence
to prove their entitlement to damages.110
Considering
the
circumstances
surrounding
respondents'
dismissal, the Court of Appeals did not err in upholding the Labor
Arbiter's award of moral and exemplary damages. Indeed, there

P a g e | 136
was malice when, as a retaliatory measure, petitioners dismissed
respondents because they filed a labor complaint. Further, Elena
violated respondents' rights to substantive and procedural due
process when she failed to issue notices to explain and notices of
termination.
Gone are the days when workers were reduced to mendicant
despondency by their employers.1wphi1 Within our legal order,
workers have legal rights and procedures to claim these rights.
The only way for employers to avoid legal action from their
workers is to give them what they may be due in law and.as
human beings. Businesses thrive through the acumen of their
owners and entrepreneurs. But, none of them will exist without
the outcome of the sacrifices and toil of their workers. Our
economy thrives through this partnership based upon mutual
respect. At the very least, these are the values which are
congealed in our present laws.
Apparently, in this case, the owners forgot that labor is not merely
a factor of production. It is a human product no matter how
modest it may seem to them.
WHEREFORE, premises considered, the Court of Appeals' decision
dated July 28, 2009, and its resolution dated November 27, 2009,
reinstating the Labor Arbiter's decision dated August 2, 2006, are
hereby AFFIRMED.
SO ORDERED.
MARVIC
Associate Justice
FIRST DIVISION

M.V.F.

LEONEN

P a g e | 137
G.R. No. 188595

August 28, 2013

SEA POWER SHIPPING ENTERPRISES, INC., AND/OR BULK

CARRIERS LIMITED AND SPECIAL MARITIME ENTERPRISES,
AND
M/V
MAGELLAN, PETITIONERS,
vs.
NENITA P. SALAZAR, ON BEHALF OF DECEASED ARMANDO
L. SALAZAR, RESPONDENT.
DECISION
SERENO, CJ.:
Before this Court is a Rule 45 petition, 1 seeking a reversal of the
Court of Appeals (CA) Decision2 and Resolution3 in CA-G.R. SP No.
104593. The CA awarded death benefits, minor child's allowance
and burial expenses on top of the sickness allowance,
hospitalization expenses, moral damages, and attorney's fees
granted by the National Labor Relations Commission (NLRC) to
respondent Nenita P. Salazar (Salazar) as the beneficiary of the
deceased seafarer, Armando L. Salazar (Armando).
The antecedent facts are as follows:
On 11 April 2003, Armando was employed 4 as an Able Seaman by
petitioner Sea Power Shipping Enterprises, Inc. (agency) on behalf
of its principal, Atlantic Bulk Carriers Limited, for a term of nine
months plus a three month-consented extension. At the time of
his employment, he had already passed his pre-employment
medical examination and had been declared "fit to work."
On 20 April 2003, Armando boarded the M/V Magellan. After 17
months, his contract ended, and on 8 September 2004, he
returned to our shores.5 Two days after, he was taken to the Tanza

P a g e | 138
Family General Hospital, where he was confined in the Intensive
Care Unit (ICU) for three days. According to medical reports, he
suffered from pneumonia.
Because of his confinement, Armando was unable to see the
agencys physician for a post-employment medical examination
(PEME) that was supposed to be conducted within 72 hours from
his repatriation. Nevertheless, on the 7th or 8th day of Armandos
confinement, Salazar informed petitioners of her husbands
condition and even asked them for the insurance proceeds. The
agency denied her claims. It reasoned that without the requisite
PEME required by the 2005 Philippine Overseas Employment
Administration Standard Employment Contract for Seafarers
(POEA Contract), his beneficiaries could not avail themselves of
the sickness allowance.
Armando checked in and out of several hospitals thereafter. At the
Philippine General Hospital where he was transferred in October
2004, he was diagnosed as suffering from lung carcinoma with
brain metastases.6 On 1 March 2005, he succumbed to metastatic
lung carcinoma and died of cardio-respiratory arrest, secondary to
acute respiratory failure, and secondary to multi-organ failure. 7
Subsequently, his widow instituted before the labor arbiter (LA) a
collection suit8 against petitioners for seafarer benefits under
Section 20 of the POEA Contract. Salazar sought the payment of
hospitalization
and
medical expenses, burial expenses,
compensation and death benefits, minor childs allowance for
their daughter Alice, moral and exemplary damages, and
attorneys fees.
Salazar insisted that the agency owed her both death and illness
benefits, because her husband died of an illness that he had
contracted while he was at sea. She narrated that Armando used

P a g e | 139
to work as an Able Seaman in the ship cargo without any
protective gear. She further alleged that his work environment
exposed him to deleterious elements emanating from the cargo.
In turn, these conditions caused him to suffer constant headaches,
which led to the worsening of his health.
Petitioners denied liability. According to the agency, claims for
death benefits, minor childs allowance, and burial expenses
under Section 20(A) of the POEA Contract (Death Benefits) would
only prosper if the seafarer died during his employment term.
Considering that Armando died six months after his repatriation, it
argued that Salazar could not claim death benefits.
The agency further disputed the benefits under Section 20(B) of
the POEA Contract, consisting of medical expenses and sickness
allowance (Illness Benefits). In support of its allegation, it
highlighted the fact that Armando never reported or complained
of any health problem while at sea. As regards the causality
between his lung cancer and his work, it categorically denied that
he had been exposed to effluvia or emission from any machinery
that would have triggered the formation of cancer. The agency
contended that as an Able Seaman, Armando only worked as a
deck contingent.9 Unfortunately, as per the records, none of the
parties or the courts a quo provided any reference depicting his
actual tasks.
In her Decision,10 the LA denied all of respondents monetary
claims. The LA explained that for the benefits under the POEA
Contract to arise, a claimant must show that the death of the
seafarer, as well as the illness that caused his death, (1)
transpired during his service and (2) resulted from his work
conditions.

P a g e | 140
In this case, the LA appreciated that Armando could not have
contracted lung cancer during his service, since there was no
report in the ships records of any of his alleged health problems.
Since he died after his repatriation, respondents claim for death
benefits was denied. Lastly, the LA ruled that the beneficiaries of
Armando were prevented from claiming benefits under the POEA
Contract, because the seafarer had not gone through the
mandatory PEME within 72 hours from his repatriation.
Aggrieved, respondent appealed to the NLRC. Citing Internet
websites, she included in her appeal the job description of an Able
Seaman as reasonable proof that the work of Armando increased
the risk of his lung cancer. 11 She also highlighted the statements
in her own Affidavit to bolster her claim that Armando suffered
from constant headaches while at sea.12
This time around, respondent obtained a favorable ruling from the
NLRC, which awarded her illness benefits.13 It ruled that the
immediate confinement of Armando a mere two days after his
arrival could only mean that he was already in a deteriorating
physical condition when he disembarked.
As regards the lack of a medical report during his service, the
NLRC took judicial notice of the "evil practice" of denying sick
seafarers "the necessary medical attention during the period of
their employment so that their employers could later on disclaim
liability for their injury, illness or death on the ground that they
did not sustain any injury or suffer any illness during the period in
question."14
Finally, the NLRC held that petitioners failed to dispute the legal
presumption in Section 32 in relation to Section 20(B)(4) of the
POEA Contract characterizing lung cancer as a work-related

P a g e | 141
illness. Thus, the NLRC ordered petitioners to pay respondent the
following amounts:15
The amount of P47,144.00 representing the cost of seafarer
Salazars medicines and hospitalization;
The equivalent in Philippine currency at the time of actual
payment of US$1,540.00 representing seafarer Salazars sickness
allowance (US$385 x 4 mos. = US$1,540.00);
The amount of P500,000.00 as moral damages; and
Ten percent (10%) of the total judgment award as and for
attorneys fees.
Noticeably, the NLRC did not award death benefits to respondent.
It simply stated that the death of Armando was not compensable,
because he did not die during the term of his contract.
Dissatisfied with the grant of illness benefits only, Salazar filed a
Motion for Reconsideration16 in order to claim death benefits. For
their part, petitioners filed a Motion for Reconsideration,17 praying
that the LA Decision denying all of respondents claims be
reinstated. In a minute Resolution, 18 the NLRC denied both
motions.
Through a Rule 65 petition, respondent assailed before the CA the
denial of death benefits by the LA and the NLRC. 19 On the other
hand, petitioners no longer instituted an action for certiorari. At
this point therefore, the NLRCs grant of monetary awards
consisting of illness benefits, moral damages, and attorneys fees
are already final and binding on both parties.

P a g e | 142
In the original action for certiorari, Salazar argued that since the
NLRC already found that Armando had contracted a work-related
illness, it must also grant her death benefits, notwithstanding that
her husband died after his repatriation. Petitioners no longer filed
a comment or memorandum to address her argument. 20
In its assailed Decision, the CA granted respondents additional
claim for death benefits, thereby reversing the rulings of both the
LA and the NLRC. Heavily relying on Wallem Maritime Services,
Inc. v. NLRC,21 the CA pieced together these various circumstances
to conclude that the death of Armando resulting from a workrelated illness was compensable: (1) he was declared fit to work at
the start of his service; (2) he handled the cargo of the ship and
was thus exposed to hazardous elements; and (3) he was confined
in the ICU two days after his repatriation. After making this
inference, the CA no longer gave significance to the fact that he
failed to report his health problems while he was at sea, and that
he did not go through the mandatory PEME within 72 hours from
his repatriation. The CA explained thus:22
While it may be true that there was no record to prove that
Armando was ill while on board the vessel as there was no report
of any illness on his part, nor did he ask for medical attention
during the term of his contract, medical history and human
experience would show that lung carcinoma does not just develop
in one day or much less, deteriorate that fast. The fact that
Armando was hospitalized and confined at the ICU two days after
he was repatriated, would prove that Armandos illness was
already in its advance [sic] stage. While his death may have
occurred after his contract was terminated, it is safe to presume
that his illness was work- related or that his work aggravated his
illness.
xxxx

P a g e | 143
Admittedly, Armando did not report to private respondents within
the required period of 72 hours upon his arrival. However, for a
person who is terminally ill, such as Armando, it is
understandable, as he is physically incapacitated to do it. The
mere fact that he was confined at the ICU two days after his
repatriation bespeaks of his condition. Private respondents cannot
deny that they were notified of this fact as petitioner Salazar went
to their office on the 7th or 8th day of Armandos first
confinement and asked for her husbands insurance proceeds and
assistance only to be rebuffed. This is more than sufficient notice
to private respondents of Armandos condition. (Underscoring
supplied)
Moreover, the CA rejected the contention that Armando died after
his service in this wise:23
x x x. It would be error to conclude that death benefits are
recoverable only when the seafarers death occurs during the
period of his contract when evidence show that at the time he was
repatriated he was already terminally ill but was not given medical
attention. From the time he was confined at the ICU he never
recovered and was in and out of the hospital several times. He
may not have died during the period of his contract, but it is
enough that the employment had contributed even in a small
degree to the development of the disease and in bringing about
his death.
As a result, the CA granted respondent death benefits consisting
of the following:24
1. US$50,000.00 as death benefits;
2. US$7,000.00 as the minor childs allowance; and

P a g e | 144
3. US$1,000.00 as burial expenses.
Petitioners moved for reconsideration, but their motion was
denied by the CA.25 Consequently, they filed the present Rule 45
petition. They strongly refute not only the additional grant of
death benefits, but also the award of illness benefits already given
by the NLRC.
Petitioners harp on the absence of substantial evidence to prove
that the illness of Armando during his service, if it already existed
at the time, was work-related. They also fault the CA for only
making a "safe presumption" that his alleged work-related illness
led to his demise. Aside from emphasizing respondents lack of
proof, petitioners advance the argument that death benefits
cannot be awarded to respondent, because her husband did not
die during the term of his contract. In turn, respondent counters in
her Comment26 that since the NLRC found that Armando
contracted a work-related illness resulting in the grant of illness
benefits, it then follows that death benefits are likewise due to
her.
Through this Petition for Review on Certiorari, this Court now
reviews whether the CA correctly deemed that the LA and the
NLRC committed a grave abuse of discretion amounting to the
lack or excess of jurisdiction in refusing to award death benefits
on top of the illness benefits allegedly due to respondent.
RULING OF THE COURT
In compensation proceedings for seafarers, this Court refers to the
provisions of the POEA Contract as it memorializes the minimum
rights of a seafarer and the concomitant obligations of an
employer.27 Section 20(A) thereof pertinently discusses the rules
on granting death benefits. Nevertheless, on account of the liberal

P a g e | 145
interpretation permeating seafarers agreements, 28 we also
consider the possibility of compensation for the death of the
seafarer under Section 32-A of the POEA Contract.
Death Benefits under Section 20(A) of the POEA Contract
Section 20(A) of the POEA Contract, and a long line of
jurisprudence explaining the provision,29 require that for
respondent to be entitled to death benefits, Armando must have
suffered a work-related death during the term of his contract. The
provision reads:
SECTION 20. COMPENSATION AND BENEFITS
A. COMPENSATION AND BENEFITS FOR DEATH
1. In case of work-related death of the seafarer, during the term of
his contract the employer shall pay his beneficiaries the Philippine
Currency equivalent to the amount of Fifty Thousand US dollars
(US$50,000) and an additional amount of Seven Thousand US
dollars (US$7,000) to each child under the age of twenty-one (21)
but not exceeding four (4) children, at the exchange rate
prevailing during the time of payment.
xxxx
4. The other liabilities of the employer when the seafarer dies as a
result of work-related injury or illness during the term of
employment are as follows:
xxxx

P a g e | 146
c. The employer shall pay the beneficiaries of the seafarer the
Philippines currency equivalent to the amount of One Thousand
US dollars (US$1,000) for burial expenses at the exchange rate
prevailing during the time of payment.
Here, it is undisputed that Armando died on 1 March 2005 or six
months after his repatriation. Thus, on the basis of Section 20(A),
his beneficiaries are precluded from receiving death benefits. In
relying upon this provision, both the LA and the NLRC correctly
exercised their discretion in denying respondents claims for death
benefits.
Death Benefits under Section 32-A of the POEA Contract
Under its auspices, however, the CA found that the labor courts
had gravely abused their discretion in refusing to grant death
benefits to respondent. According to the CA, petitioners must pay
USD 58,000 death benefits under Section 20(B)(4) in relation to
Section 32 of the POEA Contract.
Section 20(B)(4) of the POEA Contract provides that "those
illnesses not listed in Section 32 of this Contract are disputably
presumed as work related." Given that Armandos lung cancer is
not listed under Section 32,30 it follows that the CA correctly
afforded respondent the benefit of the presumption under the law.
However, the CA failed to appreciate that Section 20(B)(4) only
affords a disputable presumption. In Leonis Navigation Co., Inc. v.
Villamater,31 we explained that the legal presumption in Section
20(B)(4) should be read together with the requirements specified
by Section 32-A of the POEA Contract.
Unlike Section 20(A), Section 32-A of the POEA Contract considers
the possibility of compensation for the death of the seafarer

P a g e | 147
occurring after the termination of the employment contract on
account of a work-related illness. But, for death under this
provision to be compensable, the claimant must fulfill the
following:
The seafarer's work must involve the risks describe herein;
The disease was contracted as a result of the seafarer's exposure
to the described risks;
The disease was contracted within a period of exposure and under
such other factors necessary to contract it;
There was no notorious negligence on the part of the seafarer.
In fulfilling these requisites, respondent must present no less than
substantial evidence. Substantial evidence is more than a mere
scintilla. It must reach the level of relevant evidence as a
reasonable mind might accept as sufficient to support a
conclusion.32
Given these parameters, the CA was expected to weigh
substantial pieces of evidence proving that Armandos death was
compensable because (1) he was ill during the term of his
contract; (2) his illness was work- related, as his work involves
considerable exposure to the risks of contracting his illness; and
(3) his contracted illness caused his death. Unfortunately, the CA
failed to establish its factual basis for awarding respondent her
death benefits claim.
Firstly, as admitted by respondent, there was no documentation or
account of any illness contracted by Armando aboard M/V
Magellan. In fact, the NLRC and the CA acknowledged in their
rulings this gap in the records as discussed above. Without any

P a g e | 148
record of illness during his voyage, it is thus difficult to say that he
acquired or developed lung cancer during his service.
Notwithstanding the lack of evidence, the CA resorted to
inference. It made much about the circumstances that Armando
was initially declared fit to work, and that he was then confined
within two days after his disembarkation. Based on these facts, it
inferred that his lung cancer was contracted during his service
because that illness "does not just develop in one day, or much
less, deteriorate that fast." 33
In so ruling, the CA analogously applied our pronouncement in
Wallem v. Maritime Services, Inc.34 In that case, we granted death
compensation to the beneficiaries of the deceased seafarer who
was also confined two days after his repatriation.
However, Wallem does not apply to the case of Armando. Apart
from the time element between his confinement and repatriation,
other special considerations distinguish these two cases. In
Wallem, the seafarers deteriorating state of health at the time he
disembarked was established not only by the proximity of his
confinement to his repatriation, but also by the fact that his
employment contract was preterminated by "mutual consent."
The courts in that case have consistently interpreted such
mutually agreed pretermination to mean that the seafarer had
contracted illness aboard the ship. In contrast, respondent can
only rely on the element of proximity to deduce that Armando
suffered the fatal illness during his service.
Secondly, neither the LA nor the NLRC made a factual
determination of Armandos actual work as an Able Seaman.
Respondents website definition of an Able Seaman was not even
recognized in the NLRC Decision. Hence, at the level of the labor
tribunals, there was already no premise on which to base the

P a g e | 149
conclusion that Armandos work involved considerable exposure
to the risks of contracting lung cancer.
Nevertheless, on certiorari, the CA held that there was a
reasonable connection between the job of Armando and his lung
disease. It even stated that it was undisputed 35 that he had
worked in the cargo section of the vessel.
The CAs appreciation is manifestly erroneous. A plain reading of
the pleadings on record will easily reveal that the parties
vehemently contested the actual job description of Armando.
Petitioners claimed that he worked with the deck contingent, while
respondent asserted that he was assigned to the ships cargo.
These conflicting contentions were not resolved by either the LA
or the NLRC. Therefore, since the CA proceeded from a disputed
and unresolved factual claim, its resulting inference on the work
connection may be disregarded. Indeed, no ruling shall be
rendered by any court without clearly and distinctly stating
therein the facts on which the ruling is based. 36
In any event, even if it were proven that Armando worked in the
cargo section of the ship, the CA must still find justification for
how his work environment caused his constant headaches,
whether he recovered from his ailment, 37 and how it worsened
into the alleged fatal illness.38
This explanation need not show a direct causal connection; but
positive propositions39 on employment factors like age, position,
actual work, dietary provisions,40 exposure to substances,41 and
possibility of recovery42 have been considered by the Court as
adequate in compensation proceedings. In this instance, the NLRC
and the CA failed to discuss the employment conditions that had
led to the ailment of Armando.

P a g e | 150
Thirdly, for respondents to be entitled to death benefits under
Section 32-A of the POEA Contract, the CA must further find that
the alleged work- related illness of Armando caused his death.
At most, based on the allegations of respondent, Armando
claimed to have suffered from constant headaches aboard M/V
Magellan. However, there was no determination of the link
between his ailment (headaches) and his cause of death (lung
cancer). In Medline Management, Inc. v. Roslinda 43 citing
Hermogenes v. OSCO Shipping Services, Inc.44 and Gau Sheng
Phil., Inc. v. Joaquin,45 we have discussed death arising from a
seafarers illness in this wise:
Indeed, the death of a seaman several months after his
repatriation for illness does not necessarily mean that: (a) the
seaman died of the same illness; (b) his working conditions
increased the risk of contracting the illness which caused his
death; and (c) the death is compensable, unless there is some
reasonable basis to support otherwise.
Absent any semblance of causation, it cannot be inferred that the
death of Armando after the term of his contract is compensable, if
the inference is based solely on the circumstance that he was
confined within two days and died within six months after his
repatriation. Since the CA grounded its ruling mainly on this
factor, this Court resolves against the grant of death benefits to
respondent.
Our Conclusion: The Benefits Due to Respondent
In summary, the NLRC and the CA were excessively fixated on the
proximity of the time between the repatriation and the death of
the seafarer to automatically conclude that he contracted a fatal

P a g e | 151
illness during his service. The CA even stressed in its ruling that it
was safe to make that presumption.
This approach to case disposition by the CA making factual
findings based only on presumptions, 46 and absent the quantum of
evidence required in labor cases47 is an erroneous application of
the law on compensation proceedings. As we have ruled in
Gabunas, Sr. v. Scanmar Maritime Services, Inc., 48 citing
Government Service Insurance System v. Cuntapay, 49 claimants in
compensation proceedings must show credible information that
there is probably a relation between the illness and the work.
Probability, and not mere possibility, is required; otherwise, the
resulting conclusion would proceed from deficient proofs. 50 Thus,
since the CA crafted a legal conclusion out of conjectures and
without substantial evidence, we rule that a reversible error of law
attended its award of death benefits, minor childs allowance, and
burial expenses. For this reason, we delete the grant thereof to
respondent.1wphi1
Notably, in resolving a special civil action for certiorari, the CA
was only reviewing whether the NLRC gravely abused its
discretion amounting to lack or excess of jurisdiction in denying
the aforementioned benefits to respondent. 51 Given that there
were ample grounds to deny her claims based on Section 20( A) of
the POEA Contract and on the deatih of evidence of causality, the
CA should have sustained the NLRC's denial of her claims for
death benefits, minor child's allowance, and burial expenses.
In the course of resolving the propriety of awarding death
benefits, minor child's allowance, and burial expenses under
Section 20(A) of the POEA Contract, this Court inevitably finds that
grave abuse of discretion also attended the NLRC's grant of
medicine and hospitalization expenses and sickness allowance
under Section 20(B) of the POEA Contract, moral damages, and
attorney's fees to respondent. Specifically, we find that the labor

P a g e | 152
court failed to establish in the first place that, during the term of
his contract, Armando contracted an illness that was work related.
Nevertheless, since its findings albeit unsubstantiated-were no
longer appealed, we no longer address the same.
WHEREFORE, the Court PARTIALLY GRANTS the Petition for Review
on Certiorari. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 104593 are hereby AFFIRMED with
MODIFICATION, in that the imposition to respondent of death
benefits, minor child's allowance and burial expenses under
Section 20(A) of the POEA Contract in the total amount of USD
58,000 is DELETED. On the other hand, this Court SUSTAINS the
grant to respondent by the National Labor Relations Commission
in NLRC NCR CA NO. 049598-06 of the following amounts: PHP
47,144 as medicine and hospitalization expenses and USD 1,540
sickness allowance under Section 20(B) of the POEA Contract, PHP
500,000 as moral damages, and ten percent (10%) of the total
judgment award as and for attorney's fees.
SO ORDERED.
MARIA
LOURDES
Chief Justice, Chairperson

P.

A.

SERENO

Begun and held in Metro Manila, on Monday, the twenty-fourth

day of July, two thousand six.
REPUBLIC ACT NO. 9442

April 30, 2007

AN ACT AMENDING REPUBLIC ACT NO. 7277, OTHERWISE

KNOWN AS THE "MAGNA CARTA FOR DISABLED PERSONS,
AND FOR OTHER PURPOSES"

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Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
SECTION 1. A new chapter, to be denominated as "Chapter 8.
Other Privileges and Incentives" is hereby added to Title Two of
Republic Act No. 7277, otherwise known as the "Magna Carta for
Disabled Persons", with new Sections 32 and 33, to read as
follows:
"CHAPTER 8. Other Privileges and Incentives
"SEC. 32. Persons with disability shall be entitled to the
following:
(a) At least twenty percent (20%) discount from all
establishments relative to the utilization of all services in
hotels and similar lodging establishments; restaurants
and recreation centers for the exclusive use or
enjoyment of persons with disability;
(b) A minimum of twenty percent (20%) discount on
admission fees charged by the theaters, cinema houses,
concert halls, circuses, carnivals and other similar places
of culture, leisure and amusement for the exclusive use
or enjoyment of persons with disability;
(c) At least twenty percent (20%) discount for the
purchase of medicines in all drugstores for the exclusive
use or enjoyment of persons with disability;
(d) At least twenty percent (20%) discount on medical
and dental services including diagnostic and laboratory
fees such as, but not limited to x-rays, computerized
tomography scans and blood tests, in all government

P a g e | 154
facilities, subject to guidelines to be issued by the
Department of Health (DOH), in coordination with the
Philippine Health Insurance Corporation (PHILHEALTH);
(e) At least twenty percent (20%) discount on medical
and dental services including diagnostic and laboratory
fees, and professional fees of attending doctors in all
private hospitals and medical facilities, in accordance
with the rules and regulations to be issued by the DOH,
in coordination with the PHILHEALTH;
(f) At least twenty percent (20%) discount on fare for
domestic air and sea travel for the exclusive use or
enjoyment of persons with disability;
(g) At least twenty percent (20%) discount in public
railways, skyways and bus fare for the exclusive use and
enjoyment of persons with disability;
(h) Educational assistance to persons with disability, for
them to pursue primary, secondary, tertiary, post
tertiary, as well as vocational or technical education, In
both public and private schools, through the provision of
scholarships, grants, financial aids, subsidies and other
incentives to qualified persons with disability, including
support for books, learning materials, and uniform
allowance to the extent feasible:provided, that persons
with
disability
shall
meet
minimum
admission
requirements;
(i) To the extent practicable and feasible, the continuance
of the same benefits and privileges given by the
Government Service Insurance System (GSIS), Social

P a g e | 155
Security System (SSS), and PAG-IBIG, as the case may
be, as are enjoyed by those in actual service;
(j) To the extent possible, the government may grant
special discounts in special programs for persons with
disability on purchase of basic commodities, subject to
guidelines to be issued for the purpose by the
Department of Trade and Industry (DTI) and the
Department of Agriculture (DA); and
(k) Provision of express lanes for persons with disability
in all commercial and government establishments; in the
absence thereof, priority shall be given to them.
The abovementioned privileges are available only to
persons with disability who are Filipino citizens upon
submission of any of the following as proof of his/her
entitlement thereto:
(I) An identification card issued by the city or
municipal mayor the barangay captain of the
place where the person with disability resides;
(II) The passport of the persons with disability
concerned; or
(III) Transportation discount fare Identification
Card (ID) issued by the National Council for the
Welfare of Disabled Persons (NCWDP).
The privileges may not be claimed if the persons with
disability claims a higher discount as may be granted by
the commercial establishment and/or under other

P a g e | 156
existing laws or in combination with other discount
program/s.
The establishments may claim the discounts granted in
sub-sections (a), (b), (c), (e), (f) and (g) as tax deductions
based on the net cost of the goods sold or services
rendered: provided, however, That the cost of the
discount shall be allowed as deduction from gross income
for the same taxable year that the discount is
granted: provided, further, That the total amount of the
claimed tax deduction net of value-added tax if
applicable, shall be Included in their gross sales receipts
for tax purposes and shall be subject to proper
documentation and to the provisions of the National
Internal Revenue Code (NIRC), as amended."
"SEC. 33. Incentives. - Those caring for and living with a
person with disability shall be granted the following
incentives;
(a) persons with disability shall be treated as dependents
under Section 35(A) of the National Internal Revenue
Code, as amended and as such, individual taxpayers
caring for them shall be accorded the privileges granted
by the code Insofar as having dependents under the
same section are concerned; and
(b)
Individuals
or
nongovernmental
institutions
establishing
homes,
residential
communities
or
retirement villages solely to suit the needs and
requirements of persons with disability shall be accorded
the following:

P a g e | 157
(i) Realty tax holiday for the first five years of
operation; and
(ii) Priority in the building and/or maintenance of
provincial or municipal roads leading to the
aforesaid home residential community or
retirement village."
SEC. 2. Republic Act No. 7277 is hereby amended by inserting a
new title, chapter and section after Section 38 to be denominated
as Title 4, chapters 1 and 2 and Sections 39, 40, 41 and 42 to read
as follows:
"Title Four
Prohibitions on Verbal, Non-verbal
VilificationAgainst Persons with Disability

Ridicule

and

"CHAPTER 1. Deliverance from Public Ridicule.

"SEC. 39. Public Ridicule . - For purposes of this Chapter,
public ridicule shall be defined as an act of making fun or
contemptuous initiating or making mockery of persons
with disability whether in writing or in words, or in action
due to their impairment/s.
"SEC. 40. No individual, group or community shall
execute any of these acts of ridicule against persons with
disability in any time and place which could intimidate or
result in loss of self-esteem of the latter.
"CHAPTER 2. Deliverance from Vilification

P a g e | 158
"SEC. 41. Vilification. - For purposes of this chapter,
vilification shall be defined as:
(a) the utterance of slanderous and abusive statements
against a person with disability; and/or
(b) An activity in public which incites hatred towards
serious contempt for, or severe ridicule of persons with
disability."
"SEC. 42. Any individual, group or community is hereby
prohibited from vilifying any person with disability which
could result into loss of self-esteem of the latter."
SEC. 3. Section 46 of Republic Act No. 7277 is hereby amended to
read as follows:
"SEC. 46. Penal Clause. (a) Any person who violates any provision of this Act shall
suffer the following penalties:
(1) For the first violation, a fine of not less than
Fifty thousand pesos (P50,000.00) but not
exceeding One hundred thousand pesos
(P100,000.00) or imprisonment of not less than
six months but not more than two years, or both
at the discretion of the court; and
(2) For any subsequent violation, a fine of not
less than One hundred thousand pesos
(P100,000.00) but not exceeding Two hundred
thousand pesos (P200,000.00) or imprisonment

P a g e | 159
for not less than two years but not more than six
years, or both at the discretion of the court.
(b) Any person who abuses the privileges granted herein
shall be punished with imprisonment of not less than six
months or a fine of not less than Five thousand pesos
(P5,000.00), but not more than Fifty thousand pesos
(P50,000.00), or both, at the discretion of the court.
(c) If the violator is a corporation organization or any
similar entity, the officials thereof directly involved shall
be liable therefore.
(d) If the violator is an alien or a foreigner, he shall be
deported immediately after service of sentence without
further deportation proceedings.
Upon filing of an appropriate complaint, and after notice
and hearing the proper authorities may also cause the
cancellation or revocation of the business permit, permit
to operate, franchise and other similar privileges granted
to any business entity that fails to abide by the
provisions of this Act."
Sec. 4. The title of Republic Act No. 7277 is hereby amended to
read as the "Magna Carta for Persons with Disability", and all
references on the said law to "disabled persons" shall likewise be
amended to read as "persons with disability".
SEC. 5. The Department of Social Welfare and Development, the
National Council for the Welfare of Disabled Persons, and the
Bureau of Internal Revenue, in consultation with the concerned
Senate and House committees and other agencies, organizations,
establishments shall formulate an agencies, organizations,

P a g e | 160
establishments shall formulate an implementing rules and
regulations pertinent to the provisions of this Act within six
months after the effectivity of this Act.
SEC. 6. This Act shall take effect fifteen (15) days after its
publication in any two newspapers of general circulation.
REPUBLIC ACT No. 10524
AN ACT EXPANDING THE POSITIONS RESERVED FOR
PERSONS WITH DISABILITY, AMENDING FOR THE PURPOSE
REPUBLIC ACT NO. 7277, AS AMENDED, OTHERWISE
KNOWN AS THE MAGNA CARTA FOR PERSONS WITH
DISABILITY
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
Section 1. Equal Opportunity for Employment. Section 5 of
Republic Act No. 7277, as amended, is hereby amended to read as
follows:
"SEC. 5. Equal Opportunity for Employment. No person
with disability shall be denied access to opportunities for
suitable employment. A qualified employee with
disability shall be subject to the same terms and
conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or
allowances as a qualified able bodied person.
"At least one percent (1%) of all positions in all
government agencies, offices or corporal ions shall be
reserved for persons with disability: Provided, That
private corporations with more than one hundred (100)

P a g e | 161
employees are encouraged to reserve at least one
percent (1%) of all positions for persons with disability."
Section
2. Implementing Rules and Regulations. The
Department of Labor and Employment (DOLE), the Civil Service
Commission (CSC), the National Council on Disability Affairs
(NCDA), the Governance Commission for Government-Owned or
-Controlled Corporations (GCG), the Department of Health (DOH),
the Department of Social Welfare and Development (DSWD), and
the Bureau of Internal Revenue (BIR), in consultation with the
concerned Senate and House committees and other agencies,
organizations and establishments shall formulate an implementing
rules and regulations pertinent to the provisions of this Act within
six (6) months after the effectivity of this Act.
Section 3. Separability Clause. Should any provision of this Act
be found unconstitutional by a court of law, such provision shall
be severed from the remainder of this Act, and such action shall
not affect the enforceability of the remaining provisions of this
Act.
Section 4. Repealing Clause. All laws, presidential decrees,
executive orders, and rides and regulations inconsistent with the
provisions of this Act are hereby repealed or modified
accordingly.1wphi1
Section 5. Effectivity Clause. This Act shall lake effect fifteen
(15) days after its publication in any two (2) newspapers of
general circulation.
THIRD DIVISION

P a g e | 162
G.R. No. 122917 July 12, 1999
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E.
DAVID, DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT
HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON
GEORGE P. LIGUTAN JR., CELSO M. YAZAR, ALEX G.
CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO,
CORAZON C. DELOS REYES, ROBERT G. NOORA, MILAGROS
O.
LEQUIGAN,
ADRIANA
F.
TATLONGHARI,
IKE
CABANDUCOS, COCOY NOBELLO, DORENDA CANTIMBUHAN,
ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E.
SALES, ISABEL MAMAUAG, VIOLETA G. MONTES, ALBINO
TECSON, MELODY V. GRUELA, BERNADETH D. AGERO,
CYNTHIA DE VERA, LANI R. CORTEZ, MA. ISABEL B.
CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL
PILAR, MARGARET CECILIA CANOZA, THELMA SEBASTIAN,
MA. JEANETTE CERVANTES, JEANNIE RAMIL, ROZAIDA
PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S.
PARDO
and
TIMOSA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR EAST
BANK AND TRUST COMPANY, respondents.

PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified
disabled persons be granted the same terms and conditions of
employment as qualified able-bodied employees. Once they have
attained the status of regular workers, they should be accorded all
the benefits granted by law, notwithstanding written or verbal
contracts to the contrary. This treatments is rooted not merely on
charity or accomodation, but on justice for all.
The Case

P a g e | 163
Challenged in the Petition for Certiorari 1 before us is the June 20,
1995 Decision 2 of the National Labor Relations Commission
(NLRC), 3 which affirmed the August, 22 1994 ruling of Labor
Arbiter Cornelio L. Linsangan. The labor arbiter's Decision
disposed as follows: 4
WHEREFORE, judgment is hereby rendered
dismissing the above-mentioned complaint for
lack of merit.
Also assailed is the August 4, 1995 Resolution
denied the Motion for Reconsideration.

of the NLRC, which

The Facts
The facts were summarized by the NLRC in this wise:

Complainants numbering 43 (p. 176, Records)

are deaf-mutes who were hired on various
periods from 1988 to 1993 by respondent Far
East Bank and Trust Co. as Money Sorters and
Counters
through
a
uniformly
worded
agreement called "Employment Contract for
Handicapped Workers". (pp. 68 & 69, Records)
The full text of said agreement is quoted below:
EMPLOYMENT CONTRACT FOR
HANDICAPPED WORKERS
This Contract, entered into by
and between:
FAR EAST BANK AND TRUST
COMPANY, a universal banking
corporation duly organized

P a g e | 164
and existing under and by
virtue of the laws of the
Philippines,
with
business
address at FEBTC Building,
Muralla, Intramuros, Manila,
represented herein by its
Assistant Vice President, MR.
FLORENDO
G.
MARANAN,
(hereinafter referred to as the
"BANK");
-and, years
old, of legal age, , and
residing
at
(hereinafter
referred
to
as
the
("EMPLOYEE").
WITNESSETH : That
WHEREAS,
the
BANK,
cognizant
of
its
social
responsibility, realizes that
there is a need to provide
disabled and handicapped
persons gainful employment
and opportunities to realize
their potentials, uplift their
socio-economic well being and
welfare
and
make
them
productive, self-reliant and
useful citizens to enable them
to fully integrate in the
mainstream of society;
WHEREAS, there are certain
positions in the BANK which

P a g e | 165
may be filled-up by disabled
and handicapped persons,
particularly deaf-mutes, and
the
BANK
ha[s]
been
approached by some civicminded
citizens
and
authorized
government
agencies
[regarding]
the
possibility
of
hiring
handicapped workers for these
positions;
WHEREAS, the EMPLOYEE is
one of those handicapped
workers
who
[were]
recommended for possible
employment with the BANK;
NOW, THEREFORE, for and in
consideration of the foregoing
premises and in compliance
with Article 80 of the Labor
Code of the Philippines as
amended, the BANK and the
EMPLOYEE have entered into
this Employment Contract as
follows:
1. The BANK agrees to employ
and train the EMPLOYEE, and
the EMPLOYEE agrees to
diligently and faithfully work
with the BANK, as Money
Sorter and Counter.
2.
The
EMPLOYEE
shall
perform among others, the
following
duties
and
responsibilities:

P a g e | 166
i.
Sort
out
bills
accor
ding
to
color
;
ii.
Coun
t
each
deno
mina
tion
per
hund
red,
eithe
r
man
ually
or
with
the
aid
of a
coun
ting
mac
hine;
iii.
Wrap
and
label
bills
per

P a g e | 167
hund
red;
iv.
Put
the
wrap
ped
bills
into
bund
les;
and
v.
Sub
mit
bund
led
bills
to
the
bank
teller
for
verifi
catio
n.
3.
The
EMPLOYEE
shall
undergo a training period of
one (1) month, after which the
BANK shall determine whether
or not he/she should be
allowed to finish the remaining
term of this Contract.
4. The EMPLOYEE shall be
entitled
to
an
initial

P a g e | 168
compensation of P118.00 per
day, subject to adjustment in
the sole judgment of the
BANK, payable every 15th and
end of the month.1wphi1.nt
5. The regular work schedule
of the EMPLOYEE shall be five
(5) days per week, from
Mondays thru Fridays, at eight
(8)
hours
a
day.
The
EMPLOYEE may be required to
perform overtime work as
circumstance may warrant, for
which overtime work he/she
[shall] be paid an additional
compensation of 125% of his
daily rate if performed during
ordinary days and 130% if
performed during Saturday or
[a] rest day.
6.
The
EMPLOYEE
shall
likewise be entitled to the
following benefits:
i.
Prop
ortio
nate
13th
mont
h
pay
base
d on
his
basic
daily

P a g e | 169
wage
.
ii.
Five
(5)
days
incen
tive
leave
.
iii.
SSS
prem
ium
pay
ment
.
7.
The
EMPLOYEE
binds
himself/herself to abide [by]
and comply with all the BANK
Rules and Regulations and
Policies,
and
to
conduct
himself/herself in a manner
expected of all employees of
the BANK.
8.
The
EMPLOYEE
acknowledges the fact that
he/she had been employed
under a special employment
program of the BANK, for
which reason the standard
hiring requirements of the
BANK were not applied in
his/her case. Consequently,
the EMPLOYEE acknowledges

P a g e | 170
and accepts the fact that the
terms and conditions of the
employment
generally
observed by the BANK with
respect to the BANK's regular
employee are not applicable
to the EMPLOYEE, and that
therefore, the terms and
conditions of the EMPLOYEE's
employment with the BANK
shall be governed solely and
exclusively by this Contract
and by the applicable rules
and regulations that the
Department of Labor and
Employment may issue in
connection
with
the
employment
ofdisabled and
handicapped workers. More
specifically, the EMPLOYEE
hereby acknowledges that the
provisions of Book Six of the
Labor Code of the Philippines
as amended, particularly on
regulation of employment and
separation
pay
are
not
applicable to him/her.
9. The Employment Contract
shall be for a period of six (6)
months or from to
unless earlier terminated by
the BANK for any just or
reasonable
cause.
Any
continuation or extension of
this Contract shall be in
writing and therefore this
Contract will automatically
expire at the end of its terms

P a g e | 171
unless renewed in writing by
the BANK.
IN WITNESS WHEREOF, the
parties, have hereunto affixed
their signature[s] this day
of , at Intramuros,
Manila, Philippines.
In 1988, two (2) deaf-mutes were hired under
this Agreement; in 1989 another two (2); in
1990, nineteen (19); in 1991 six (6); in 1992, six
(6) and in 1993, twenty-one (21). Their
employment[s] were renewed every six months
such that by the time this case arose, there
were fifty-six (56) deaf-mutes who were
employed by respondent under the said
employment agreement. The last one was
Thelma Malindoy who was employed in 1992
and whose contract expired on July 1993.
xxx xxx xxx
Disclaiming that complainants were regular
employees, respondent Far East Bank and Trust
Company maintained that complainants who are
a special class of workers the hearing
impaired employees were hired temporarily
under [a] special employment arrangement
which was a result of overtures made by some
civic and political personalities to
the
respondent Bank; that complainant[s] were
hired due to "pakiusap" which must be
considered in the light of the context career and
working environment which is to maintain and
strengthen a corps of professionals trained and
qualified officers and regular employees who are
baccalaureate degree holders from excellent
schools which is an unbending policy in the

P a g e | 172
hiring of regular employees; that in addition to
this, training continues so that the regular
employee grows in the corporate ladder; that
the idea of hiring handicapped workers was
acceptable to them only on a special
arrangement basis; that it was adopted the
special program to help tide over a group of
workers
such
as
deaf-mutes
like
the
complainants who could do manual work for the
respondent Bank; that the task of counting and
sorting of bills which was being performed by
tellers could be assigned to deaf-mutes that the
counting and sorting of money are tellering
works which were always logically and naturally
part and parcel of the tellers' normal functions;
that from the beginning there have been no
separate items in the respondent Bank plantilla
for sortes or counters; that the tellers
themselves already did the sorting and counting
chore as a regular feature and integral part of
their duties (p. 97, Records); that through the
"pakiusap" of Arturo Borjal, the tellers were
relieved of this task of counting and sorting bills
in favor of deaf-mutes without creating new
positions as there is no position either in the
respondent or in any other bank in the
Philippines which deals with purely counting and
sorting of bills in banking operations.
Petitioners specified
dimissed, viz: 7

when

each

of

them

was

hired

and

TITIONER

WORKPLACE

Date Hired

Date D

BERNARDO

Intramuros

12-Nov-90

17-Nov

P a g e | 173

DIAMANTE

Intramuros

24-Jan-90

11-Jan

E. DAVID

Intramuros

16-Apr-90

23-Oct

ASCUAL

Bel-Air

15-Oct-88

21-Nov

STILLER

Intramuros

2-Jul-92

4-Jan-9

ALLARE

West

4-Jan-91

9-Jan-9

M. CORTEZ

Bel-Air

15-Jan-91

3-Dec-

O. AGDON

Intramuros

5-Nov-90

17-Nov

Intramuros

6-Sep-89

19-Jan

LIGUTAN JR.

P a g e | 174

. YAZAR

Intramuros

8-Feb-93

8-Aug-

CORPUZ

Intramuros

15-Feb-93

15-Aug

M. DELFIN

Intramuros

22-Feb-93

22-Aug

M. TABAQUERO

Intramuros

22-Feb-93

22-Aug

N C. DELOS REYES

Intramuros

8-Feb-93

8-Aug-

G. NOORA

Intramuros

15-Feb-93

15-Aug

S O. LEQUIGAN

Intramuros

1-Feb-93

1-Aug-

F. TATLONGHARI

Intramuros

22-Jan-93

22-Jul-

NDUCOS

Intramuros

24-Feb-93

24-Aug

P a g e | 175

OBELLO

Intramuros

22-Feb-93

22-Aug

A CATIMBUHAN

Intramuros

15-Feb-93

15-Aug

MARCELO

West

31 JUL 93 8

1-Aug-

Q. MARMOLEJO

West

15-Jun-90

21-Nov

ALES

West

6-Aug-92

12-Oct

AMAUAG

West

8-May-92

10-Nov

G. MONTES

Intramuros

2-Feb-90

15-Jan

ECSON

Intramuros

7-Nov-91

10-Nov

B. GRUELA

West

28-Oct-91

3-Nov-

P a g e | 176

ETH D. AGERO

West

19-Dec-90

27-Dec

DE VERA

Bel-Air

26-Jun-90

3-Dec-

ORTEZ

Bel-Air

15-Oct-88

10-Dec

ABEL B.CONCEPCION

West

6-Sep-90

6-Feb-

ALERIO

Intramuros

30-May-93

30-Nov

MATA

Intramuros

10-Feb-93

10-Aug

L PILAR

Intramuros

24-Feb-93

24-Aug

ET CECILIA CANOZA

Intramuros

27-Jul-90

4-Feb-

SEBASTIAN

Intramuros

12-Nov-90

17-Nov

P a g e | 177

ETTE CERVANTES

West

6-Jun-92

7-Dec-

RAMIL

Intramuros

23-Apr-90

12-Oct

Bel-Air

20-Apr-89

29-Oct

West

3-Jun-91

2-Dec-

West

12-Mar-90

FEB 94

West

4-Apr-90

13-Ma

Intramuros

28-Apr-93

28-Oct

PASCUAL

LOLOA

TH VENTURA

PARDO

OSA

As earlier noted, the labor arbiter and, on appeal, the NLRC ruled
against herein petitioners. Hence, this recourse to this Court. 9
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners
could not be deemed regular employees under Article 280 of the

P a g e | 178
Labor Code, as amended, Respondent Commission ratiocinated as
follows:
We agree that Art. 280 is not controlling herein.
We give due credence to the conclusion that
complainants were hired as an accommodation
to [the] recommendation of civic oriented
personalities
whose
employment[s]
were
covered by . . . Employment Contract[s] with
special provisions on duration of contract as
specified under Art. 80. Hence, as correctly held
by the Labor Arbiter a quo, the terms of the
contract shall be the law between the parties. 10
The NLRC also declared that the Magna Carta for Disabled Persons
was
not
applicable,
"considering
the
prevailing
circumstances/milieu of the case."
Issues
In their Memorandum, petitioners cite the following grounds in
support of their cause:
I. The Honorable Commission committed grave
abuse of discretion in holding that the
petitioners money sorters and counters
working in a bank were not regular
employees.
II. The Honorable Commission committed grave
abuse of discretion in holding that the
employment contracts signed and renewed by
the petitioners which provide for a period of
six (6) months were valid.
III. The Honorable Commission committed grave
abuse of discretion in not applying the

P a g e | 179
provisions of the Magna Carta for the Disabled
(Republic Act No. 7277), on proscription against
discrimination against disabled persons. 11
In the main, the Court will resolve whether petitioners have
become regular employees.
This Court's Ruling
The petition is meritorious. However, only the employees, who
worked for more than six months and whose contracts were
renewed are deemed regular. Hence, their dismissal from
employement was illegal.
Preliminary Matter:
Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a
review of the findings of facts of the NLRC is not allowed in a
petition for certiorari. Specifically, it maintains that the Court
cannot pass upon the findings of public respondent that
petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of
public respondents in a certiorari proceeding. In resolving whether
the petitioners have become regular employees, we shall not
change the facts found by the public respondent. Our task is
merely to determine whether the NLRC committed grave abuse of
discretion in applying the law to the established facts, as abovequoted from the assailed Decision.
Main Issue
Are Petitioners Regular Employee?

P a g e | 180
Petitioners maintain that they should be considered regular
employees, because their task as money sorters and counters was
necessary and desirable to the business of respondent bank. They
further allege that their contracts served merely to preclude the
application of Article 280 and to bar them from becoming regular
employees.
Private respondent, on the other hand, submits that petitioners
were hired only as "special workers and should not in any way be
considered as part of the regular complement of the
Bank." 12 Rather, they were "special" workers under Article 80 of
the Labor Code. Private respondent contends that it never
solicited the services of petitioners, whose employment was
merely an "accommodation" in response to the requests of
government officials and civic-minded citizens. They were told
from the start, "with the assistance of government
representatives," that they could not become regular employees
because there were no plantilla positions for "money sorters,"
whose task used to be performed by tellers. Their contracts were
renewed several times, not because of need "but merely for
humanitarian reasons." Respondent submits that "as of the
present, the "special position" that was created for the petitioners
no longer exist[s] in private respondent [bank], after the latter
had decided not to renew anymore their special employment
contracts."
At the outset, let it be known that this Court appreciates the
nobility of private respondent's effort to provide employment to
physically impaired individuals and to make them more productive
members of society. However, we cannot allow it to elude the
legal consequences of that effort, simply because it now deems
their employment irrelevant. The facts, viewed in light of the
Labor Code and the Magna Carta for Disabled Persons, indubitably
show that the petitioners, except sixteen of them, should be
deemed regular employees. As such, they have acquired legal
rights that this Court is duty-bound to protect and uphold, not as a
matter of compassion but as a consequence of law and justice.

P a g e | 181
The uniform employment contracts of the petitioners stipulated
that they shall be trained for a period of one month, after which
the employer shall determine whether or not they should be
allowed to finish the 6-month term of the contract. Furthermore,
the employer may terminate the contract at any time for a just
and reasonable cause. Unless renewed in writing by the employer,
the contract shall automatically expire at the end of the
term.1wphi1.nt
According to private respondent, the employment contracts were
prepared in accordance with Article 80 of the Labor code, which
provides;
Art. 80. Employment agreement. Any
employer who employs handicapped workers
shall enter into an employment agreement with
them, which agreement shall include:
(a) The names and addresses
of the handicapped workers to
be employed;
(b) The rate to be paid the
handicapped workers which
shall be not less than seventy
five (75%) per cent of the
applicable
legal
minimum
wage;
(c)
The
duration
employment period; and

of

(d) The work to be performed

by handicapped workers.

P a g e | 182
The employment agreement shall be subject to
inspection by the Secretary of Labor or his duly
authorized representatives.
The stipulations in the employment contracts indubitably conform
with the aforecited provision. Succeeding events and the
enactment of RA No. 7277 (the Magna Carta for Disabled
Persons), 13 however, justify the application of Article 280 of the
Labor Code.
Respondent bank entered into the aforesaid contract with a total
of 56 handicapped workers and renewed the contracts of 37 of
them. In fact, two of them worked from 1988 to 1993. Verily, the
renewal of the contracts of the handicapped workers and the
hiring of others lead to the conclusion that their tasks were
beneficial and necessary to the bank. More important, these facts
show that they were qualified to perform the responsibilities of
their positions. In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates
that a qualified disabled employee should be given the same
terms and conditions of employment as a qualified able-bodied
person. Section 5 of the Magna Carta provides:
Sec. 5. Equal Opportunity for Employment. No
disabled person shall be denied access to
opportunities for suitable employment. A
qualified disabled employee shall be subject to
the same terms and conditions of employment
and the same compensation, privileges,
benefits,
fringe
benefits,
incentives
or
allowances as a qualified able bodied person.
The fact that the employees were qualified disabled persons
necessarily removes the employment contracts from the ambit of
Article 80. Since the Magna Carta accords them the rights of

P a g e | 183
qualified able-bodied persons, they are thus covered by Article
280 of the Labor Code, which provides:
Art. 280. Regular and Casual Employment.
The provisions of written agreement to the
contrary notwithstanding and regardless of the
oral agreement of the parties, an employment
shall be deemed to be regular where the
employee has been engaged to perform
activities which are usually necessary or
desirable in the usual business or trade of the
employer, except where the employment has
been fixed for a specific project or undertaking
the completion or termination of which has been
determined at the time of the engagement of
the employee or where the work or services to
be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if
it is not covered by the preceding paragraph:
Provided, That, any employee who has rendered
at least one year of service, whether such
service is continuous or broken, shall be
considered as regular employee with respect to
the activity in which he is employed and his
employment shall continue while such activity
exists.
The test of whether an employee is regular was laid down in De
Leon v. NLRC, 14 in which this Court held:
The primary standard, therefore, of determining
regular
employment
is
the
reasonable
connection between the particular activity
performed by the employee in relation to the
usual trade or business of the employer. The
test is whether the former is usually necessary
or desirable in the usual business or trade of the

P a g e | 184
employer. The connection can be determined by
considering the nature of the work performed
and its relation to the scheme of the particular
business or trade in its entirety. Also if the
employee has been performing the job for at
least one year, even if the performance is not
continuous and merely intermittent, the law
deems repeated and continuing need for its
performance as sufficient evidence of the
necessity if not indispensibility of that activity to
the business. Hence, the employment is
considered regular, but only with respect to
such activity, and while such activity exist.
Without a doubt, the task of counting and sorting bills is
necessary and desirable to the business of respondent bank. With
the exception of sixteen of them, petitioners performed these
tasks for more than six months. Thus, the following twenty-seven
petitioners should be deemed regular employees: Marites
Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual,
Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O.
Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales,
Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V.
Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma.
Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian,
Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky
Baloloa, Elizabeth Ventura and Grace S. Pardo.
As held by the Court, "Articles 280 and 281 of the Labor Code put
an end to the pernicious practice of making permanent casuals of
our lowly employees by the simple expedient of extending to
them probationary appointments, ad infinitum." 15 The contract
signed by petitioners is akin to a probationary employment,
during which the bank determined the employees' fitness for the
job. When the bank renewed the contract after the lapse of the
six-month probationary period, the employees thereby became
regular employees. 16 No employer is allowed to determine
indefinitely the fitness of its employees.

P a g e | 185
As regular employees, the twenty-seven petitioners are entitled to
security of tenure; that is, their services may be terminated only
for a just or authorized cause. Because respondent failed to show
such cause, 17 these twenty-seven petitioners are deemed illegally
dismissed and therefore entitled to back wages and reinstatement
without loss of seniority rights and other privileges. 18 Considering
the allegation of respondent that the job of money sorting is no
longer available because it has been assigned back to the tellers
to whom it originally belonged, 18 petitioners are hereby awarded
separation pay in lieu of reinstatement. 20
Because the other sixteen worked only for six months, they are
not deemed regular employees and hence not entitled to the
same benefits.
Applicability of the
Brent Ruling
Respondent bank, citing Brent School v. Zamora 21 in which the
Court upheld the validity of an employment contract with a fixed
term, argues that the parties entered into the contract on equal
footing. It adds that the petitioners had in fact an advantage,
because they were backed by then DSWD Secretary Mita Pardo de
Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was
premised on the fact that the petitioners were disabled, and that
the bank had to determine their fitness for the position. Indeed, its
validity is based on Article 80 of the Labor Code. But as noted
earlier, petitioners proved themselves to be qualified disabled
persons who, under the Magna Carta for Disabled Persons, are
entitled to terms and conditions of employment enjoyed
by qualified able-bodied individuals; hence, Article 80 does not
apply because petitioners are qualified for their positions. The
validation of the limit imposed on their contracts, imposed by
reason of their disability, was a glaring instance of the very
mischief sought to be addressed by the new law.

P a g e | 186
Moreover, it must be emphasized that a contract of employment
is impressed with public interest. 22 Provisions of applicable
statutes are deemed written into the contract, and the "parties
are not at liberty to insulate themselves and their relationships
from the impact of labor laws and regulations by simply
contracting with each other." 23 Clearly, the agreement of the
parties regarding the period of employment cannot prevail over
the provisions of the Magna Carta for Disabled Persons, which
mandate that petitioners must be treated as qualified able-bodied
employees.
Respondent's reason for terminating the employment of
petitioners is instructive. Because the Bangko Sentral ng Pilipinas
(BSP) required that cash in the bank be turned over to the BSP
during business hours from 8:00 a.m. to 5:00 p.m., respondent
resorted to nighttime sorting and counting of money. Thus, it
reasons that this task "could not be done by deaf mutes because
of their physical limitations as it is very risky for them to travel at
night." 24 We find no basis for this argument. Travelling at night
involves risks to handicapped and able-bodied persons alike. This
excuse cannot justify the termination of their employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely "accommodated"
employees. This fact does not change the nature of their
employment. As earlier noted, an employee is regular because of
the nature of work and the length of service, not because of the
mode or even the reason for hiring them.
Equally unavailing are private respondent's arguments that it did
not go out of its way to recruit petitioners, and that its plantilla did
not contain their positions. In L. T. Datu v. NLRC, 25 the Court held
that "the determination of whether employment is casual or
regular does not depend on the will or word of the employer, and
the procedure of hiring . . . but on the nature of the activities
performed by the employee, and to some extent, the length of
performance and its continued existence."

P a g e | 187
Private respondent argues that the petitioners were informed from
the start that they could not become regular employees. In fact,
the bank adds, they agreed with the stipulation in the contract
regarding this point. Still, we are not persuaded. The well-settled
rule is that the character of employment is determined not by
stipulations in the contract, but by the nature of the work
performed. 26 Otherwise, no employee can become regular by the
simple expedient of incorporating this condition in the contract of
employment.
In this light, we iterate our ruling in Romares v. NLRC:

27

Art. 280 was emplaced in our statute books to

prevent the circumvention of the employee's
right to be secure in his tenure by
indiscriminately and completely ruling out all
written and oral agreements inconsistent with
the concept of regular employment defined
therein. Where an employee has been engaged
to perform activities which are usually
necessary or desirable in the usual business of
the employer, such employee is deemed a
regular employee and is entitled to security of
tenure notwithstanding the contrary provisions
of his contract of employment.
xxx xxx xxx
At this juncture, the leading case of Brent
School, Inc. v. Zamora proves instructive. As
reaffirmed in subsequent cases, this Court has
upheld the legality of fixed-term employment. It
ruled that the decisive determinant in "term
employment" should not be the activities that
the employee is called upon to perform but the
day certain agreed upon the parties for the
commencement and termination of their
employment relationship. But this Court went on
to say that where from the circumstances it is

P a g e | 188
apparent that the periods have been imposed to
preclude acquisition of tenurial security by the
employee, they should be struck down or
disregarded as contrary to public policy and
morals.
In rendering this Decision, the Court emphasizes not only the
constitutional bias in favor of the working class, but also the
concern of the State for the plight of the disabled. The noble
objectives of Magna Carta for Disabled Persons are not based
merely on charity or accommodation, but on justice and the equal
treatment of qualifiedpersons, disabled or not. In the present
case, the handicap of petitioners (deaf-mutes) is not a hindrance
to their work. The eloquent proof of this statement is the repeated
renewal of their employment contracts. Why then should they be
dismissed, simply because they are physically impaired? The
Court believes, that, after showing their fitness for the work
assigned to them, they should be treated and granted the same
rights like any other regular employees.
In this light, we note the Office of the Solicitor General's prayer
joining the petitioners' cause. 28
WHEREFORE, premises considered, the Petition is hereby
GRANTED. The June 20, 1995 Decision and the August 4, 1995
Resolution of the NLRC are REVERSED and SET ASIDE. Respondent
Far East Bank and Trust Company is hereby ORDERED to pay back
wages and separation pay to each of the following twenty-seven
(27) petitioners, namely, Marites Bernardo, Elvira Go Diamante,
Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare,
Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Liliberh
Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes,
Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de
Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia
Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil,
Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S.
Pardo. The NLRC is hereby directed to compute the exact amount
due each of said employees, pursuant to existing laws and

P a g e | 189
regulations, within fifteen days from the finality of this Decision.
No costs.1wphi1.nt
SO ORDERED.
Romero, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
THIRD DIVISION
G.R. No. 187698

August 9, 2010

RODOLFO
J.
vs.
SEVERINO
SANTOS
TRANSIT
SANTOS, Respondents.

SERRANO, Petitioner,
and/or

SEVERINO

DECISION
CARPIO MORALES, J.:
Petitioner Rodolfo J. Serrano was hired on September 28, 1992 as
bus conductor by respondent Severino Santos Transit, a bus
company owned and operated by its co-respondent Severino
Santos.
After 14 years of service or on July 14, 2006, petitioner applied for
optional retirement from the company whose representative
advised him that he must first sign the already prepared Quitclaim
before his retirement pay could be released. As petitioners
request to first go over the computation of his retirement pay was
denied, he signed the Quitclaim on which he wrote "U.P." (under
protest) after his signature, indicating his protest to the amount

P a g e | 190
ofP75,277.45 which he received, computed by the company at 15
days per year of service.
Petitioner soon after filed a complaint1 before the Labor Arbiter,
alleging that the company erred in its computation since under
Republic Act No. 7641, otherwise known as the Retirement Pay
Law, his retirement pay should have been computed at 22.5 days
per year of service to include the cash equivalent of the 5-day
service incentive leave (SIL) and 1/12 of the 13th month pay which
the company did not.
The company maintained, however, that the Quitclaim signed by
petitioner barred his claim and, in any event, its computation was
correct since petitioner was not entitled to the 5-day SIL and prorated 13th month pay for, as a bus conductor, he was paid on
commission basis. Respondents, noting that the retirement
differential pay amounted to only P1,431.15, explained that in the
computation of petitioners retirement pay, five months were
inadvertently not included because some index cards containing
his records had been lost.
By Decision2 of February 15, 2007, Labor Arbiter Cresencio Ramos,
Jr. ruled in favor of petitioner, awarding himP116,135.45 as
retirement pay differential, and 10% of the total monetary award
as attorneys fees. In arriving at such computation, the Labor
Arbiter ratiocinated:
In the same Labor Advisory on Retirement Pay Law, it was likewise
decisively made clear that "the law expanded the concept of "onehalf month salary" from the usual one-month salary divided by
two", to wit:
B. COMPUTATION OF RETIREMENT PAY

P a g e | 191
A covered employee who retires pursuant to RA 7641 shall be
entitled to retirement pay equivalent to at least one-half ( 1/12)
month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.
The law is explicit that "one-half month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5) days service incentive
leaves"
unless
the
parties
provide
for
broader
inclusions. Evidently, the law expanded the concept of "one-half
month salary" from the usual one-month salary divided by two.
The retirement pay is equal to half-months pay per year of
service. But "half-months pay" is "expanded" because it means
not just the salary for 15 days but also one-twelfth of the 13thmonth pay and the cash value of five-day service incentive
leave. THIS IS THE MINIMUM. The retirement pay package can be
improved upon by voluntary company policy, or particular
agreement with the employee, or through a collective bargaining
agreement." (The Labor Code with Comments and Cases, C.A.
Azcunea, Vol. II, page 765, Fifth Edition 2004).
Thus, having established that 22.5 days pay per year of service is
the correct formula in arriving at the complete retirement pay of
complainant and inasmuch as complainants daily earning is
based on commission earned in a day, which varies each day, the
next critical issue that needs discernment is the determination of
what is a fair and rational amount of daily earning of complainant
to be used in the computation of his retirement pay.
While complainant endeavored to substantiate his claim that he
earned average daily commission of P700.00, however, the
documents he presented are not complete, simply representative
copies, therefore unreliable. On the other haNd, while respondents

P a g e | 192
question complainants use of P700.00 (daily income) as basis in
determining the latters correct retirement pay, however it does
not help their defense that they did not present a single
Conductors Trip Report to contradict the claim of complainant.
Instead, respondents adduced a handwritten summary of
complainants monthly income from 1993 until June 2006. It must
be noted also that complainant did not contest the amounts
stated on the summary of his monthly income as reported by
respondents. Given the above considerations, and most
importantly that complainant did not dispute the figures stated in
that document, we find it logical, just and equitable for both
parties to rely on the summary of monthly income provided by
respondent, thus, we added complainants monthly income from
June 2005 until June 2006 or the last twelve months and we
arrived at P189,591.30) and we divided it by twelve (12) to arrive
at complainants average monthly earning of P15,799.28.
Thereafter, the average monthly of P15,799.28 is divided by
twenty-six (26) days, the factor commonly used in determining
the regular working days in a month, to arrive at his average daily
income of P607.66. Finally, P607.66 (average daily income) x 22.5
days = P13,672.35 x 14 (length of service) =P191,412.90
(COMPLETE RETIREMENT PAY). However, inasmuch as complainant
already receivedP75,277.45, the retirement differential pay due
him is P116,135.45 (P191,412.90 P75,277.45). (underscoring
partly in the original and partly supplied)
The National Labor Relations Commission (NLRC) to which
respondents appealed reversed the Labor Arbiters ruling and
dismissed petitioners complaint by Decision3 dated April 23,
2008. It, however, ordered respondents to pay retirement
differential in the amount of P2,365.35.
Citing R & E Transport, Inc. v. Latag, 4 the NLRC held that since
petitioner was paid on purely commission basis, he was excluded
from the coverage of the laws on 13th month pay and SIL pay,

P a g e | 193
hence, the 1/12 of the 13th month pay and the 5-day SIL should not
be factored in the computation of his retirement pay.
Petitioners motion for reconsideration having been denied by
Resolution5 of June 27, 2008, he appealed to the Court of Appeals.
By the assailed Decision 6 of February 11, 2009, the appellate
court affirmed the NLRCs ruling, it merely holding that it was
based on substantial evidence, hence, should be respected.
Petitioners motion for reconsideration was denied, hence, the
present petition for review on certiorari.
The petition is meritorious.
Republic Act No. 7641 which was enacted on December 9,
1992 amended Article 287 of the Labor Code by providing for
retirement pay to qualified private sector employees in the
absence of any retirement plan in the establishment. The
pertinent provision of said law reads:
Section 1. Article 287 of Presidential Decree No. 442, as amended,
otherwise known as the Labor Code of the Philippines, is hereby
amended to read as follows:
xxxx
In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement
age, who has served at least five (5) yearsin the said

P a g e | 194
establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half ( 1/2) month
salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term
one-half (1/2) month salary shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service
incentive leaves.
Retail, service and agricultural establishments or
operations employing not more than (10) employees or
workers are exempted from the coverage of this provision.
x x x x (emphasis and underscoring supplied)
Further, the Implementing Rules of said law provide:
RULE
Retirement Benefits

II

SECTION 1.
General Statement on Coverage. This Rule shall apply to all
employees in the private sector, regardless of their
position, designation or status and irrespective of the
method by which their wages are paid, except to those
specifically exempted under Section 2 hereof. As used herein,
the term "Act" shall refer to Republic Act No. 7641 which took
effect on January 7, 1993.
SECTION 2

P a g e | 195
Exemptions. This Rule shall not apply to the following
employees:
2.1 Employees of the National Government and its political
subdivisions, including Government-owned and/or controlled
corporations, if they are covered by the Civil Service Law and its
regulations.
2.2 Domestic helpers and persons in the personal service of
another.
2.3 Employees
of
retail,
service
and
agricultural
establishment or operations regularly employing not more
than ten (10) employees. As used in this sub-section;
xxxx
SECTION
Retirement Benefits.

5.1 In the absence of an applicable agreement or retirement plan,

an employee who retires pursuant to the Act shall be entitled to
retirement pay equivalent to at least one-half () month salary
for every year of service, a fraction of at least six (6) months
being considered as one whole year.
5.2 Components of One-half () Month Salary. For the
purpose of determining the minimum retirement pay due an
employee under this Rule, the term "one-half month salary" shall
include all of the following:
(a) Fifteen (15) days salary of the employee based
on his latest salary rate. As used herein, the term

P a g e | 196
"salary" includes all remunerations paid by an
employer to his employees for services rendered
during normal working days and hours, whether
such payments are fixed or ascertained on a time,
task, piece of commission basis, or other method of
calculating the same, and includes the fair and
reasonable value, as determined by the Secretary of
Labor and Employment, of food, lodging or other facilities
customarily furnished by the employer to his employees.
The term does not include cost of living allowances,
profit-sharing payments and other monetary benefits
which are not considered as part of or integrated into the
regular salary of the employees.
(b) The cash equivalent of not more than five (5)
days of service incentive leave;
(c) One-twelfth of the 13th month pay due the
employee.
(d) All other benefits that the employer and employee
may agree upon that should be included in the
computation of the employees retirement pay.
x x x x (emphasis supplied)
Admittedly, petitioner worked for 14 years for the bus company
which did not adopt any retirement scheme. Even if petitioner as
bus conductor was paid on commission basis then, he falls within
the coverage of R.A. 7641 and its implementing rules. As thus
correctly ruled by the Labor Arbiter, petitioners retirement pay
should include the cash equivalent of the 5-day SIL and 1/12 of the
13th month pay.

P a g e | 197
The affirmance by the appellate court of the reliance by the NLRC
on R & E Transport, Inc. is erroneous. In said case, the Court held
that a taxi driver paid according to the "boundary system" is not
entitled to the 13th month and the SIL pay, hence, his retirement
pay should be computed on the sole basis of his salary.
For purposes, however, of applying the law on SIL, as well as on
retirement, the Court notes that there is adifference between
drivers paid under the "boundary system" and conductors who are
paid on commission basis.
In practice, taxi drivers do not receive fixed wages. They retain
only those sums in excess of the "boundary" or fee they pay to
the owners or operators of the vehicles. 7 Conductors, on the other
hand, are paid a certain percentage of the bus earnings for the
day.
It bears emphasis that under P.D. 851 or the SIL Law, the
exclusion from its coverage of workers who are paid on a purely
commission basis is only with respect to field personnel. The more
recent case of Auto Bus Transport Systems, Inc., v.
Bautista8 clarifies that an employee who is paid on purely
commission basis is entitled to SIL:
A careful perusal of said provisions of law will result in the
conclusion that the grant of service incentive leave has been
delimited by the Implementing Rules and Regulations of the Labor
Code to apply only to those employees not explicitly excluded by
Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees
classified as "field personnel." The phrase "other employees
whose performance is unsupervised by the employer" must not be
understood as a separate classification of employees to which
service incentive leave shall not be granted. Rather, it serves as

P a g e | 198
an amplification of the interpretation of the definition of field
personnel under the Labor Code as those "whose actual hours of
work in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who
are engaged on task or contract basis, purely commission
basis." Said phrase should be related with "field
personnel," applying the rule on ejusdem generis that general
and unlimited terms are restrained and limited by the particular
terms that they follow.Hence, employees engaged on task or
contract basis or paid on purely commission basis are not
automatically exempted from the grant of service
incentive leave, unless, they fall under the classification of
field personnel.
xxxx
According to Article 82 of the Labor Code, "field personnel"
shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of
business or branch office of the employer and whose
actual hours of work in the field cannot be determined
with reasonable certainty. This definition is further elaborated
in the Bureau of Working Conditions (BWC), Advisory Opinion to
Philippine
Technical-Clerical
Commercial
Employees
Association which states that:
As a general rule, [field personnel] are those whose performance
of their job/service is not supervised by the employer or his
representative, the workplace being away from the principal office
and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If
required
to
be
at
specific
places
at
specific

P a g e | 199
times, employees including drivers cannot be said to be
field personnel despite the fact that they are performing
work away from the principal office of the employee.
x x x x (emphasis, italics and underscoring supplied)
WHEREFORE, the petition is GRANTED. The Court of Appeals
Decision of February 11, 2009 and Resolution of April 28, 2009
are REVERSED and SET ASIDE and the Labor Arbiters Decision
dated February 15, 2007 isREINSTATED.
SO ORDERED.
CONCHITA
Associate Justice

CARPIO

MORALES

SECOND DIVISION
G.R. No. 188659

February 13, 2013

HEIRS OF MANUEL H. RIDAD, APOLINARIO G. BACTOL,

EMERITA C. GULINAO and LYDIA S . JUSAY,Petitioners,
vs.
GREGORIO ARANETA UNIVERSITY FOUNDATION, Respondent.
DECISION
PEREZ, J.:
For review is the Decision 1 of the Special Former Ninth Division of
the Court of Appeals dated 18 December 2008 which annulled and
set aside the Decision2 of the National Labor Relations

P a g e | 200
Commission (NLRC) of 31 August 2004, as well as the Labor
Arbiter's Decision3 dated 30 September 2002.
Three cases4 had already been brought up to this Court in a span
of 3 decades all stemming from the Reorganization, Retrenchment
and Restructuring (RRR) Program implemented by respondent
Gregorio Araneta University Foundation (GAUF) way back in 1984.
At that time, Cesar Mijares, then President of GAUF, wrote to then
Minister of Labor and Employment Blas F. Ople requesting the
approval of the RRR Program of GAUF. The latter approved the
RRR Program with a reminder that the implementation thereof
shall be instituted without prejudice to whatever benefits may
have accrued in favor of the employees concerned. The RRR
Program took effect on 1 January 1984.
The Court, in all its decisions in the GAUF cases, recognized the
adoption of the RRR Program on the ground of serious business
losses and financial reverses suffered by GAUF.
As just noted, the instant controversy traces its roots to the same
RRR Program adopted by GAUF in 1984.
Petitioners were former officers and employees of GAUF, as below
indicated, with the corresponding dates of hiring and retirement,
basic salaries, and amount of retirement benefits received, to wit:
Last Position Held

External
Officer

Date of Hiring

Relations June 1, 1974

Date
of Amount
Retirement
Received

B
S

Oct. 16, 2000

P193,359.50

P a g e | 201
Head
of
Services

Engineering Aug. 20, 1969

Jan. 16, 2001

P268,103.49

Director
of
Physical June 11, 1973
Plant and Facilities and
General Services

Nov. 11, 2000

P337,917.97

Dean
of
Education

May 31, 2000

P187,315.57

(
i

College

of June 1967

It appears that petitioners were retrenched in view of the RRR

Program but were re-hired in January 1984. Consequently, GAUF
set the reckoning period for the computation of petitioners
retirement benefits to January 1984. Section 374, Article CVI of
GAUFs Manual of Policies provided for a computation of the
retirement benefits as follows:
Section 374. In addition to the above privileges and benefits,
faculty members and non-academic personnel of the University
further enjoy the following:
Gratuity or Retirement - A gratuity or retirement is likewise
extended by the University to all faculty members and employees
who retire or resign from the University in accordance with the
following schedule, the payment of which, shall be subject to
availability of funds:
Length of Service Benefits
7-9 years: 50% of monthly salary per year of
service

P a g e | 202
10-12 years: 60% of monthly salary per year of
service
13-15 years: 70% of monthly salary per year of
service
16-18 years: 80% of monthly salary per year of
service
19-21 years: 90% of monthly salary per year of
service
22-24 years: 95% of monthly salary per year of
service
25 years and up: 100% of monthly salary per
year of service5
Petitioners signed individual quitclaims upon receipt of their
retirement pay.
Claiming that the computation of their retirement benefits should
be reckoned from the date of their original hiring, petitioners filed
a Complaint before the Labor Arbiter. Petitioners alleged that they
were not paid separation benefits during the implementation of
the RRR Program. They likewise sought the inclusion of their
monthly honorarium in the computation of their 13th month pay.
In its position paper, GAUF averred that pursuant to the RRR
Program, petitioners were all separated from employment in 1984
and paid their separation benefits in the form of off-setting of their
outstanding obligations to GAUF such as tuition fees and the value
of the lots in the Gonzales Estate area owned by GAUF and sold to

P a g e | 203
petitioners. The said settlement was embodied in a compromise
agreement.6 GAUF added that petitioners were re-employed on 1
January 1984, hence this date should be the reckoning point for
the purpose of computing the separation pay.
On 30 September 2002, the Labor Arbiter ruled, thus:
WHEREFORE, judgment is rendered ordering respondent
GREGORIO ARANETA FOUNDATION to pay all Complainants the
balance of their retirement/separation benefit as follows:
Manuel H. Ridad P129,784.88
Apolinario G. Bactol P210,757.93
Emerita C. Gulinao P273,316.12
The award of complainant Lydia Jusay will be computed the
moment she submits proof of her monthly salary.
Ten percent of the total award as attorneys fees
Other claims are dismissed for lack of merit. 7
The Labor Arbiters award of retirement pay pertained to the
period when petitioners were originally hired until 31 December
1983 because he found that the records were bereft of any proof
that the petitioners were paid their retirement benefits before 1
January 1984. The Labor Arbiter merely confirmed the existence
of GAUFs receivables from petitioner consisting of tuition fees of
the latters dependents and the value of the lots sold by GAUF to
respondents in the following amounts:

P a g e | 204
Value of Lot

Receivables

Total

P1,613.06

P10,788.66

P12,391.

actol

11,887.92

9,036.10

20,924.0

nao

6,478.07

8,517.25

14,995.3

8,878.30

7,883.30

16,781.6

The Labor Arbiter ruled that these receivables should be offset

against the retirement benefits due to each employee. The Labor
Arbiter also held that the honoraria received by petitioners are not
considered as part of the basic salary for the computation of the
13th month pay. With respect to the retirement benefits of
petitioners from 1 January 1984 until the effectivity of their
retirement or separation, the Labor Arbiter approved the amount
as computed and submitted by GAUF.
Both parties filed their respective appeals. The NLRC noted that
GAUF failed to comply with the compromise agreement which
embodied the settlement of all monetary claims of GAUF
employees, including the sale of parcels of land owned by GAUF.
The NLRC added that the titles of said parcels of land were
rescinded by the trial court in a separate litigation. Nevertheless,
the NLRC affirmed the Decision of the Labor Arbiter.
GAUF then appealed to the Court of Appeals. In the assailed 18
December 2008 Decision, the appellate court resolved to grant
the petition of GAUF:

P a g e | 205
WHEREFORE, the petition is GRANTED. Setting aside the NLRCs
August 31, 2004 decision as well as the Labor Arbiters decision
dated
September
30,
2002,
the
Complaint
below
is DISMISSED for being devoid of merit.9
The issue that went up to the Court of Appeals is whether or not
the petitioners were paid separation benefits for services
rendered for the period ending in 1984. Notably, the Court of
Appeals pointed out that the Labor Arbiters ruling on retirement
benefits of petitioners from 1 January 1984 until the effectivity of
their retirement or separation in 2000s was unassailed, thus, that
aspect of the decision has already attained finality. For the service
period under question, the appellate court upheld the validity of
the compromise agreement. The appellate court emphasized that
the Labor Arbiter recognized the compromise agreement when he
offset the value of lots from the retirement benefits of petitioners.
Petitioners now seek the review of the Decision of the Court of
Appeals, submitting the following grounds for our consideration:
-ATHE COURT OF APPEALS HAS DECIDED NOT IN ACCORD
WITH THE APPLICABLE DECISIONS OF THE SUPREME
COURT WHEN IT RULED THAT PETITIONERS WERE
DEEMED TO HAVE BEEN SEVERED FROM THEIR
EMPLOYMENT UPON THE IMPLEMENTATION OF RRR
PROGRAM IN 1984[.]
-BTHE COURT OF APPEALS HAS SERIOUSLY ERRED IN
COMPLETELY DISREGARDING THE FINDINGS OF THE
LABOR ARBITER AND THE NATIONAL LABOR RELATIONS

P a g e | 206
COMMISSION THAT PETITIONERS WERE NOT PAID THEIR
SEPARATION BENEFITS DURING THE EFFECTIVE DATE OF
THE RRR PROGRAM[.]
-CTHE COURT OF APPEALS HAS GROSSLY MISCONSTRUED
THE DECISION OF THE LABOR ARBITER AND MADE AN
ERRONEOUS CONCLUSION THAT THE PETITIONERS
CLAIMS FOR THEIR RETIREMENT/BENEFITS IN 1984 WERE
MADE SUBJECT OF A COMPROMISE AGREEMENT OR
CONTRACT TO SELL.10
There is no question about the validity of the RRR Program
implemented in 1984.1wphi1 Petitioners however argue that
they could not be considered severed from their employment in
1984 because they were not paid separation benefits during the
implementation of the RRR program. To the contrary, GAUF insists
that petitioners received in full their retirement benefits.
Well-settled is the rule that once the employee has set out with
particularity in his complaint, position paper, affidavits and other
documents the labor standard benefits he is entitled to, and which
he alleged that the employer failed to pay him, it becomes the
employers burden to prove that it has paid these money claims.
One who pleads payment has the burden of proving it, and even
where the employees must allege non-payment, the general rule
is that the burden rests on the employer to prove payment, rather
than on the employees to prove non-payment.11 The reason for
the rule is that the pertinent personnel files, payrolls, records,
remittances, and other similar documents which will show that
overtime, differentials, service incentive leave, and other claims
of the worker have been paid are not in the possession of the
worker but in the custody and absolute control of the employer.12

P a g e | 207
In unison, the Labor Arbiter and the NLRC concluded that
petitioners were not paid their separation benefits. The Court of
Appeals overturned the factual findings of these labor tribunals
and found that petitioners were duly paid their retirement
benefits. In view of these conflicting findings, we are constrained
to review the facts on record.
We underscore the fact that there are supposed to be two (2)
payments in the form of retirement/separation pay made by GAUF
to petitioners first, in 1984 and second, in 2000-2001. The first
payment is the subject of the instant petition.
The retirement pay of petitioners in 1984 should be reckoned from
the date of their hiring and computed in accordance with Section
374, Article CVI of GAUFs Manual of Policies. Moreover, the basic
pay of petitioners should be based on the amount of their last pay
in 31 December 1983. The correct computation should be:
Retirement/Separation Pay = Basic Pay (Percentage depending on
the years of service) x Years of Service.
To illustrate:
Basic
(1983)

Pay %

Years of Service

Retirement
Separation

P1,237

50%

P5556.50

actol

P1,486

70%

13

P13522.60

nao

P1,486

60%

10

P8,916.00

P2,132

50%

P7,462.00

P a g e | 208

GAUF claims to have paid the following amounts to the

petitioners:
1wphi1
Retirement
Separation
under the law

/ Amount given by GAUF

Pay

P5,556.50

P7,422.00

actol

P13,522.60

P14,562.80

nao

P8,916.00

P9,807.60

P7,462.00

P16,781.60

The actual amounts given by GAUF were clearly more than the
amounts mandated by law. As to whether these amounts were
given to petitioners, GAUF insisted that they have in fact fully
settled these obligations through offsetting of receivables in
accordance with the compromise agreement. While this
agreement bears the seal of judicial approval, the enforcement of
this agreement is another matter. The NLRC uncovered that
matters pertaining to settlement in kind which involved several
parcels of lands were not complied with because the titles to said
lands were subject of then ongoing litigation and was later on
rescinded by the trial court. Therefore, these amounts relating to
receivables on parcel of lands cannot be given credit.

P a g e | 209
However, the receivables pertaining to tuition fees remain
uncontested. Petitioners never questioned these amounts and in
fact, they argued before the Labor Arbiter that the tuition fees of
their dependents "have been applied to their money claims, such
as wage increases, but which were never paid." 13 Thus, these
tuition fee receivables can be offset to the separation pay due to
the employees. They are as follow:
Receivables

P10,788.66

actol

P9,036.10

nao

P8,517.25
P7,883.3014
It is therefore evident that GAUF had granted petitioners their
separation pay in amounts more than what they are entitled to
receive under the law. Thus, there was full compliance with the
RRR Program for the payment of separation pay.
The amounts adjudged by the Labor Arbiter were clearly
arbitrary.1wphi1 He did not provide a detailed computation as to
how the monetary awards were arrived at. GAUF was correct in
surmising that the amounts were more or less computed on the
basis of their actual and latest salaries in 2000, less the amount of
receivables, which is a clear error.

P a g e | 210
WHEREFORE, premises considered, the petition is DENIED. The
assailed Decision and Resolution of the Court of Appeals
arc AFFIRMED.
SO ORDERED.
JOSE PORTUGAL PEREZ