American Wire and Cable Union v. American Wire and Cable Co.

, April 29, 2005

SECOND DIVISION

[G.R. No. 155059. April 29, 2005]

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION, petitioner, vs. AMERICAN WIRE AND CABLE CO., INC.
and THE COURT OF APPEALS, respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a special civil action for certiorari, assailing the Decision[1] of the Special Eighth Division of the Court of Appeals
dated 06 March 2002. Said Decision upheld the Decision[2]and Order[3] of Voluntary Arbitrator Angel A. Ancheta of the National
Conciliation and Mediation Board (NCMB) dated 25 September 2001 and 05 November 2001, respectively, which declared the
private respondent herein not guilty of violating Article 100 of the Labor Code, as amended. Assailed likewise, is the Resolution [4] of
the Court of Appeals dated 12 July 2002, which denied the motion for reconsideration of the petitioner, for lack of merit.

THE FACTS

The facts of this case are quite simple and not in dispute.

American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There are two unions in
this company, the American Wire and Cable Monthly-Rated Employees Union (Monthly-Rated Union) and the American Wire and
Cable Daily-Rated Employees Union (Daily-Rated Union).

On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and Employment (DOLE) by
the two unions for voluntary arbitration. They alleged that the private respondent, without valid cause, suddenly and unilaterally
withdrew and denied certain benefits and entitlements which they have long enjoyed. These are the following:

a. Service Award;

b. 35% premium pay of an employees basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy
Wednesday, December 23, 26, 27, 28 and 29;

c. Christmas Party; and

d. Promotional Increase.

A promotional increase was asked by the petitioner for fifteen (15) of its members who were given or assigned new job
classifications. According to petitioner, the new job classifications were in the nature of a promotion, necessitating the grant of an
increase in the salaries of the said 15 members.

On 21 June 2001, a Submission Agreement was filed by the parties before the Office for Voluntary Arbitration. Assigned as
Voluntary Arbitrator was Angel A. Ancheta.

On 04 July 2001, the parties simultaneously filed their respective position papers with the Office of the Voluntary Arbitrator,
NCMB, and DOLE.

On 25 September 2001, a Decision[5] was rendered by Voluntary Arbitrator Angel A. Ancheta in favor of the private
respondent. The dispositive portion of the said Decision is quoted hereunder:

WHEREFORE, with all the foregoing considerations, it is hereby declared that the Company is not guilty of violating Article 100 of
the Labor Code, as amended, or specifically for withdrawing the service award, Christmas party and 35% premium for work
rendered during Holy Week and Christmas season and for not granting any promotional increase to the alleged fifteen (15) Daily-
Rated Union Members in the absence of a promotion. The Company however, is directed to grant the service award to deserving
employees in amounts and extent at its discretion, in consultation with the Unions on grounds of equity and fairness. [6]

A motion for reconsideration was filed by both unions[7] where they alleged that the Voluntary Arbitrator manifestly erred in
finding that the company did not violate Article 100 of the Labor Code, as amended, when it unilaterally withdrew the subject
benefits, and when no promotional increase was granted to the affected employees.

On 05 November 2001, an Order[8] was issued by Voluntary Arbitrator Angel A. Ancheta. Part of the Order is quoted
hereunder:

Considering that the issues raised in the instant case were meticulously evaluated and length[i]ly discussed and explained based on
the pleadings and documentary evidenc[e] adduced by the contending parties, we find no cogent reason to change, modify, or
disturb said decision.

WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as they are hereby, denied for lack of merit. Our decision
dated 25 September 2001 is affirmed en toto.[9]

An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated Union before the Court of
Appeals[10] and docketed as CA-G.R. SP No. 68182. The petitioner averred that Voluntary Arbitrator Angel A. Ancheta erred in
finding that the company did not violate Article 100 of the Labor Code, as amended, when the subject benefits were unilaterally
withdrawn. Further, they assert, the Voluntary Arbitrator erred in adopting the companys unaudited Revenues and Profitability
Analysis for the years 1996-2000 in justifying the latters withdrawal of the questioned benefits. [11]

On 06 March 2002, a Decision in favor of herein respondent company was promulgated by the Special Eighth Division of the
Court of Appeals in CA-G.R. SP No. 68182. The decretal portion of the decision reads:

WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED, for lack
of merit. The Decision of Voluntary Arbitrator Angel A. Ancheta dated September 25, 2001 and his Order dated November 5, 2001
in VA Case No. AAA-10-6-4-2001 are hereby AFFIRMED and UPHELD.[12]

A motion for reconsideration[13] was filed by the petitioner, contending that the Court of Appeals misappreciated the facts of the
case, and that it committed serious error when it ruled that the unaudited financial statement bears no importance in the instant
case.

The Court of Appeals denied the motion in its Resolution dated 12 July 2002[14] because it did not present any new matter
which had not been considered in arriving at the decision. The dispositive portion of the Resolution states:

WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.[15]

Dissatisfied with the court a quos ruling, petitioner instituted the instant special civil action for certiorari,[16] citing grave abuse
of discretion amounting to lack of jurisdiction.

ASSIGNMENT OF ERRORS

The petitioner assigns as errors the following:

THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT VIOLATE ARTICLE 100 OF THE LABOR
CODE, AS AMENDED, WHEN IT UNILATERALLY WITHDREW THE BENEFITS OF THE MEMBERS OF PETITIONER UNION,
TO WIT: 1) 35% PREMIUM PAY; 2) CHRISTMAS PARTY AND ITS INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH
IN TRUTH AND IN FACT SAID BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME IMMEMORIAL, AS A
MATTER OF LONG ESTABLISHED COMPANY PRACTICE, WITH THE FURTHER FACT THAT THE SAME NOT BEING
DEPENDENT ON PROFITS.

II

THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK, LINE AND SINKER, THE RESPONDENT COMPANYS
SELF SERVING AND UNAUDITED REVENUES AND PROFITABILITY ANALYSIS FOR THE YEARS 1996-2000 WHICH THEY
SUBMITTED TO FALSELY JUSTIFY THEIR UNLAWFUL ACT OF UNILATERALLY AND SUDDENLY WITHDRAWING OR
DENYING FROM THE PETITIONER THE SUBJECT BENEFITS/ENTITLEMENTS.
 III

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE AWARD IS NOT DEPENDENT ON PROFIT
BUT ON SERVICE AND THUS, CANNOT BE UNILATERALLY WITHDRAWN BY RESPONDENT COMPANY.

ISSUE

Synthesized, the solitary issue that must be addressed by this Court is whether or not private respondent is guilty of violating
Article 100 of the Labor Code, as amended, when the benefits/entitlements given to the members of petitioner union were
withdrawn.

THE COURTS RULING

Before we address the sole issue presented in the instant case, it is best to first discuss a matter which was raised by the
private respondent in its Comment. The private respondent contends that this case should have been dismissed outright because of
petitioners error in the mode of appeal. According to it, the petitioner should have elevated the instant case to this Court through a
petition for review on certiorari under Rule 45, and not through a special civil action for certiorari under Rule 65, of the 1997 Rules
on Civil Procedure.[17]

Assuming arguendo that the mode of appeal taken by the petitioner is improper, there is no question that the Supreme Court
has the discretion to dismiss it if it is defective. However, sound policy dictates that it is far better to dispose the case on the merits,
rather than on technicality.[18]

The Supreme Court may brush aside the procedural barrier and take cognizance of the petition as it raises an issue of
paramount importance. The Court shall resolve the solitary issue on the merits for future guidance of the bench and bar. [19]

With that out of the way, we shall now resolve whether or not the respondent company is guilty of violating Article 100 of the
Labor Code, as amended.

Article 100 of the Labor Code provides:

ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in this Book shall be construed to
eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

The petitioner submits that the withdrawal of the private respondent of the 35% premium pay for selected days during the Holy
Week and Christmas season, the holding of the Christmas Party and its incidental benefits, and the giving of service awards violated
Article 100 of the Labor Code. The grant of these benefits was a customary practice that can no longer be unilaterally withdrawn by
private respondent without the tacit consent of the petitioner. The benefits in question were given by the respondent to the petitioner
consistently, deliberately, and unconditionally since time immemorial. The benefits/entitlements were not given to petitioner due to
an error in interpretation, or a construction of a difficult question of law, but simply, the grant has been a practice over a long period
of time. As such, it cannot be withdrawn from the petitioner at respondents whim and caprice, and without the consent of the former.
The benefits given by the respondent cannot be considered as a bonus as they are not founded on profit. Even assuming that it can
be treated as a bonus, the grant of the same, by reason of its long and regular concession, may be regarded as part of regular
compensation.[20]

With respect to the fifteen (15) employees who are members of petitioner union that were given new job classifications, it
asserts that a promotional increase in their salaries was in order. Salary adjustment is a must due to their promotion. [21]

On respondent companys Revenues and Profitability Analysis for the years 1996-2000, the petitioner insists that since the
former was unaudited, it should not have justified the companys sudden withdrawal of the benefits/entitlements. The normal and/or
legal method for establishing profit and loss of a company is through a financial statement audited by an independent auditor.[22]

The petitioner cites our ruling in the case of Saballa v. NLRC,[23] where we held that financial statements audited by
independent auditors constitute the normal method of proof of the profit and loss performance of the company. Our ruling in the
case of Bogo-Medellin Sugarcane Planters Association, Inc., et al. v. NLRC, et al.[24] was likewise invoked. In this case, we held:

The Court has previously ruled that financial statements audited by independent external auditors constitute the normal method of
proof of the profit and loss performance of a company.

On the matter of the withdrawal of the service award, the petitioner argues that it is the employees length of service which is
taken as a factor in the grant of this benefit, and not whether the company acquired profit or not. [25]
 In answer to all these, the respondent corporation avers that the grant of all subject benefits has not ripened into practice that
the employees concerned can claim a demandable right over them. The grant of these benefits was conditional based upon the
financial performance of the company and that conditions/circumstances that existed before have indeed substantially changed
thereby justifying the discontinuance of said grants. The companys financial performance was affected by the recent political turmoil
and instability that led the entire nation to a bleeding economy. Hence, it only necessarily follows that the companys financial
situation at present is already very much different from where it was three or four years ago. [26]

On the subject of the unaudited financial statement presented by the private respondent, the latter contends that the cases
cited by the petitioner indeed uniformly ruled that financial statements audited by independent external auditors constitute the
normal method of proof of the profit and loss performance of a company. However, these cases do not require that the only legal
method to ascertain profit and loss is through an audited financial statement. The cases only provide that an audited financial
statement is the normal method.[27]

The respondent company likewise asseverates that the 15 members of petitioner union were not actually promoted. There
was only a realignment of positions.[28]

From the foregoing contentions, it appears that for the Court to resolve the issue presented, it is critical that a determination
must be first made on whether the benefits/entitlements are in the nature of a bonus or not, and assuming they are so, whether they
are demandable and enforceable obligations.

In the case of Producers Bank of the Philippines v. NLRC[29] we have characterized what a bonus is, viz:

A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the
employers business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to
spur the employee to greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is a
management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is
not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee.

Based on the foregoing pronouncement, it is obvious that the benefits/entitlements subjects of the instant case are all
bonuses which were given by the private respondent out of its generosity and munificence. The additional 35% premium pay for
work done during selected days of the Holy Week and Christmas season, the holding of Christmas parties with raffle, and the cash
incentives given together with the service awards are all in excess of what the law requires each employer to give its employees.
Since they are above what is strictly due to the members of petitioner-union, the granting of the same was a management
prerogative, which, whenever management sees necessary, may be withdrawn, unless they have been made a part of the wage or
salary or compensation of the employees.

The consequential question therefore that needs to be settled is if the subject benefits/entitlements, which are bonuses, are
demandable or not. Stated another way, can these bonuses be considered part of the wage or salary or compensation making them
enforceable obligations?

The Court does not believe so.

For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties,[30] or it
must have had a fixed amount[31] and had been a long and regular practice on the part of the employer. [32]

The benefits/entitlements in question were never subjects of any express agreement between the parties. They were never
incorporated in the Collective Bargaining Agreement (CBA). As observed by the Voluntary Arbitrator, the records reveal that these
benefits/entitlements have not been subjects of any express agreement between the union and the company, and have not yet been
incorporated in the CBA. In fact, the petitioner has not denied having made proposals with the private respondent for the service
award and the additional 35% premium pay to be made part of the CBA.[33]

The Christmas parties and its incidental benefits, and the giving of cash incentive together with the service award cannot be
said to have fixed amounts. What is clear from the records is that over the years, there had been a downtrend in the amount given
as service award.[34] There was also a downtrend with respect to the holding of the Christmas parties in the sense that its location
changed from paid venues to one which was free of charge, [35] evidently to cut costs. Also, the grant of these two aforementioned
bonuses cannot be considered to have been the private respondents long and regular practice. To be considered a regular practice,
the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and
deliberate.[36] The downtrend in the grant of these two bonuses over the years demonstrates that there is nothing consistent about it.
Further, as held by the Court of Appeals:

Anent the Christmas party and raffle of prizes, We agree with the Voluntary Arbitrator that the same was merely sponsored by the
respondent corporation out of generosity and that the same is dependent on the financial performance of the company for a
particular year[37]

The additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season cannot be
held to have ripened into a company practice that the petitioner herein have a right to demand. Aside from the general averment of
the petitioner that this benefit had been granted by the private respondent since time immemorial, there had been no evidence
adduced that it had been a regular practice. As propitiously observed by the Court of Appeals:
. . . [N]otwithstanding that the subject 35% premium pay was deliberately given and the same was in excess of that provided by the
law, the same however did not ripen into a company practice on account of the fact that it was only granted for two (2) years and
with the express reservation from respondent corporations owner that it cannot continue to rant the same in view of the companys
current financial situation.[38]

To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to penalize him for his past
generosity.[39]

Having thus ruled that the additional 35% premium pay for work rendered during selected days of the Holy Week and
Christmas season, the holding of Christmas parties with its incidental benefits, and the grant of cash incentive together with the
service award are all bonuses which are neither demandable nor enforceable obligations of the private respondent, it is not
necessary anymore to delve into the Revenues and Profitability Analysis for the years 1996-2000 submitted by the private
respondent.

On the alleged promotion of 15 members of the petitioner union that should warrant an increase in their salaries, the factual
finding of the Voluntary Arbitrator is revealing, viz:

Considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with respect to the 15 employees, the
Daily Rated Unions claim for promotional increase likewise fall[s] there being no promotion established under the records at hand.[40]

WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the Court of Appeals dated 06 March
2002 and 12 July 2002, respectively, which affirmed and upheld the decision of the Voluntary Arbitrator, are hereby AFFIRMED. No
pronouncement as to costs.

SO ORDERED.

Attorneys Fees

NPC Driver and Mechanics Association v. NPC, G.R. No. 156208, September 17, 2008

RESOLUTION

CHICO-NAZARIO, J.:

For our resolution are several incidents in the above-entitled case that arose
and were submitted to us after the promulgation of our Decision[1] on 26
September 2006.

The factual antecedents of the case at bar are briefly recounted below:

Petitioners originally filed before us the present special civil action

for Injunction to enjoin respondents from implementing National Power Board
(NPB) Resolutions No. 2002-124 and No. 2002-125, both dated 18 November
2002, directing, among other things, the termination of all employees of the
National Power Corporation (NPC) on 31 January 2003 in line with the
restructuring of the NPC.
 The assailed NPB Resolutions were issued in compliance with the
provisions of Republic Act No. 9136, otherwise known as the Electric Power
Industry Reform Act of 2001 (EPIRA Law), which took effect on 26 June
2001. The EPIRA Law provided a framework for the restructuring of the electric
power industry, including the privatization of the assets of the NPC and its
transition to the desired competitive structure.

Pursuant to the EPIRA Law, a new NPB was constituted, composed of

the Secretary of Finance as Chairman, with the Secretary of Energy, the Secretary
of Budget and Management, the Secretary of Agriculture, the Director-General of
the National Economic and Development Authority, the Secretary of Environment
and Natural Resources, the Secretary of Interior and Local Government, the
Secretary of the Department of Trade and Industry, and the President of the NPC
as members.

Also in accordance with the EPIRA Law, the Department of Energy (DOE)
created the Energy Restructuring Steering Committee (Restructuring Committee)
to manage the privatization and restructuring of the NPC, the National
Transmission Corporation (TRANSCO), and the Power Sector Assets and
Liabilities Management Corporation (PSALM). The Restructuring Committee
proposed a new NPC Table of Organization to serve as the overall organizational
framework for the realigned functions of the NPC mandated under the EPIRA
Law, which was approved by the NPB in NPB Resolution No. 2002-53 dated 11
April 2002.

After reviewing the proposed 2002 NPC Restructuring Plan and assisting in
the implementation of its Phase I (Realignment), the Restructuring Committee
recommended to the NPB the adoption of measures pertaining to the separation
and hiring of NPC personnel. The NPB agreed in the recommendation of the
Restructuring Committee and found the need to accordingly amend or refine its
Restructuring Plan. The NPB passed NPB Resolution No. 2002-124 on 18
November 2002, providing for the Guidelines on the Separation Program of the
NPC and the Selection and Placement of Personnel in the NPC Table of
Organization. Under said Resolution, all NPC personnel shall be legally terminated
on 31 January 2003, and shall be entitled to separation benefits. The NPB approved
on the same day NPB Resolution No. 2002-125, constituting a Transition Team to
manage and implement the Separation Program of NPC.
 Petitioners, then employed by the NPC, opposed NPB Resolutions No.
2002-124 and No. 2002-125 on the ground that these were not passed by a majority
of the NPB.Only three NPB members were actually present during the 18
November 2002 meeting and personally signed the Resolutions in question. Four
other NPB members merely sent their representatives or alternates to attend the
said meeting, who signed the assailed Resolutions on their behalf.

In their Petition before us, petitioners prayed for the following:

1. A TEMPORARY RESTRAINING ORDER (TRO) to be issued

immediately ex parte upon the filing of this petition enjoining, prohibiting and
restraining respondents from implementing the questioned [NPB] Resolutions
and, thus, maintain and pressure the status quo pending resolution of the prayer
for issuance of a writ of preliminary injunction;

2. Upon notice and hearing, a writ of preliminary injunction be issued

enjoining, prohibiting and restraining respondents from implementing the
questioned [NPB] Resolutions pending the final resolution and decision of the
present petition[; and]

3. After hearing on the merits[,] to grant the petition and declare the writ
of preliminary injunction perpetual and permanent.

Other reliefs and remedies as may be just and equitable are also prayed
for.[2]

We did not issue a TRO or a preliminary injunction, the NPC proceeded

with the termination of the employment of petitioners on 31 January 2003 pursuant
to the assailed Resolutions.

In our Decision dated 26 September 2006, we sustained the position of the

petitioners. We found that there was undue delegation of what was already a
delegated power by certain NPB members when they sent their representatives to
attend board meetings, and pass and sign board resolutions. The Court reasoned
that:
In enumerating under Section 48 those who shall compose the National
Power Board of Directors, the legislature has vested upon these persons
the power to exercise their judgment and discretion in running the affairs
of the NPC. Discretion may be defined as the act or the liberty to decide
according to the principles of justice and ones ideas of what is right and
proper under the circumstances, without willfulness or
favor.[] Discretion, when applied to public functionaries, means a power
or right conferred upon them by law of acting officially in certain
circumstances, according to the dictates of their own judgment and
conscience, uncontrolled by the judgment or conscience of others. It is to
be presumed that in naming the respective department heads as members
of the board of directors, the legislature chose these secretaries of the
various executive departments on the basis of their personal
qualifications and acumen which made them eligible to occupy their
present positions as department heads. Thus, the department secretaries
cannot delegate their duties as members of the NPB, much less their
power to vote and approve board resolutions, because it is their personal
judgment that must be exercised in the fulfillment of such responsibility.

There is no question that the enactment of the assailed Resolutions

involves the exercise of discretion and not merely a ministerial act that
could be validly performed by a delegate, thus, the rule enunciated in the
case of Binamira v. Garrucho is relevant in the present controversy, to
wit:

An officer to whom a discretion is entrusted cannot

delegate it to another, the presumption being that he was
chosen because he was deemed fit and competent to
exercise that judgment and discretion, and unless the power
to substitute another in his place has been given to him, he
cannot delegate his duties to another.

In those cases in which the proper execution of the

office requires, on the part of the officer, the exercise of
judgment or discretion, the presumption is that he was
chosen because he was deemed fit and competent to
exercise that judgment and discretion, and, unless power to
substitute another in his place has been given to him, he
cannot delegate his duties to another.
 xxxx

In the case at bar, it is not difficult to comprehend that in

approving NPB Resolutions No. 2002-124 and No. 2002-125, it is the
representatives of the secretaries of the different executive departments
and not the secretaries themselves who exercised judgment in passing
the assailed Resolution, as shown by the fact that it is the signatures of
the respective representatives that are affixed to the questioned
Resolutions. This, to our mind, violates the duty imposed upon the
specifically enumerated department heads to employ their own sound
discretion in exercising the corporate powers of the NPC. Evidently, the
votes cast by these mere representatives in favor of the adoption of the
said Resolutions must not be considered in determining whether or not
the necessary number of votes was garnered in order that the assailed
Resolutions may be validly enacted. Hence, there being only three valid
votes cast out of the nine board members, namely those of [Department
of Energy] Secretary Vincent S. Perez, Jr.; Department of Budget and
Management Secretary Emilia T. Boncodin; and NPC OIC-President
Rolando S. Quilala, NPB Resolutions No. 2002-124 and No. 2002-125
are void and are of no legal effect.[3]

Hence, we ultimately decreed

WHEREFORE, premises considered, National Power Board Resolutions

No. 2002-124 and No. 2002-125 are hereby declared VOID and WITHOUT
LEGAL EFFECT. The Petition for Injunction is hereby GRANTED and
respondents are hereby [ENJOINED] from implementing said NPB Resolutions
No. 2002-124 and No. 2002-125.[4]

Respondent NPC filed a Motion for Reconsideration (Of Decision dated 26

September 2006),[5] which we denied with finality in a Resolution[6] dated 24
January 2007.Respondent NPC subsequently filed a Motion for Leave to File
2nd Motion for Reconsideration (Of Decision dated 26 September 2006) with
Motion to Refer Case En Consultato the Court En Banc,[7] attaching thereto its
Second Motion for Reconsideration.[8] However, in a Resolution[9] dated 4 June
2007, we denied both motions of respondent NPC.
 Several more pleadings were filed following the promulgation of our
Decision of 26 September 2006.

Petitioners filed a Motion for Clarification and/or Amplification,[10] with the

following averments:

3. It appears that the assailed NPB resolutions were implemented by

respondents after this petition was filed and pending resolution thereof effected,
among others, the reorganization of the National Power Corporation (NPC), and
termination of all NPC personnel as of January 31, 2003;

4. As this Honorable Court has ruled in its Decision that [NPB]

Resolutions No. 2002-124 and No. 2002-125 are VOID and WITHOUT
LEGAL EFFECT, it is petitioners considered position that its logical
implications/consequences are, as follows:

1. The reorganization of NPC is null and void, which

means that NPC must revert to its organizational structure prior to
the implementation of [NPB] Resolution Nos. 2002-124 and 2002-
125 (status quo ante);

2. The termination of all NPC personnel on January 31,

2003 is void and illegal, which entitles them to reinstatement to
their previous positions and payment of back wages and other
benefits and wage adjustments reckoned from January 31,
2003 until their actual reinstatement.

5. This motion is being made in order to clarify and/or amplify the

Decision in this case as to its logical and necessary implications/consequences
when the same will be eventually executed.

Petitioners, thus, pray that we clarify and/or amplify our Decision of 26

September 2006 by confirming their afore-quoted position as regards their
reinstatement and payment of backwages/salaries, etc., as the logical and necessary
implications/consequences of the said Decision rendered in their favor.

Shortly thereafter, counsels for petitioner, namely, Atty. Cornelio P. Aldon

(Atty. Aldon) of the Cornelio P. Aldon Law Office and Atty. Victoriano V. Orocio
(Atty. Orocio) of V.V. Orocio and Associates Law Offices, filed, on their own
behalf, a Motion for Approval of Charging (Attorneys) Lien.[11] Their Motion
alleged that on 7 December 2002, a Mr. Zol D. Medina (Medina), in his own
individual capacity and on behalf of all similarly affected/situated NPC personnel,
entered into a legal retainer agreement with Atty. Aldon and Atty. Orocio for the
urgent and immediate filing with the Supreme Court of a petition for injunction
with prayer for TRO and/or preliminary injunction, in order to enjoin the
implementation of NPB Resolutions No. 2002-124 and No. 2002-125. The
agreement contains the following terms and conditions:

1. No Acceptance Fee;

2. Miscellaneous/out-of-pocket expenses in the amount of P25,000.00;

3. Twenty Five Percent (25%) of whatever amounts/monies are recovered in favor

of said NPC personnel contingent on the success of the case.[12]

Pursuant to the foregoing agreement, Atty. Aldon and Atty. Orocio filed
before us, on behalf of petitioners, the instant Petition for Injunction, Reply to the
respondents Comment, and petitioners Memorandum. With the promulgation of
our Decision dated 26 September 2006 enjoining the implementation of NPB
Resolutions No. 2002-124 and No. 2002-125, and issuance of our Resolution dated
24 January 2007 denying with finality respondents Motion for Reconsideration,
Atty. Aldon and Atty. Orocio assert their right to attorneys fees and pray that we
issue a resolution to the following effect:

1. Declaring that movants (Atty. Cornelio P. Aldon and Atty. Victoriano V.

Orocio) are entitled to charge and collect the aforementioned attorneys fees of
Twenty Five Percent (25%) of the amounts/monies recovered in favor of all
personnel of the National Power Corporation who were terminated effective
as of January 31, 2003 pursuant to [NPB] Resolutions Nos. 2002-124 and
2002-125;

2. Directing the entry into the records of the instant case the aforementioned
attorneys fee.
 Other remedies just and equitable under the premises are also prayed for.[13]

Atty. Aldon and Atty. Orocio sent copies of their Notice of Attorneys Lien
dated 11 April 2007 to Medina,[14] the Office of the Solicitor General
(OSG),[15] and the Clerk of Court of the Supreme Court Third Division.[16]
Atty. Aldon and Atty. Orocio would later follow up by filing
an Ex Parte Manifestation and Motion seeking the favorable resolution of their
pending Motion for Clarification and/or Amplification and Motion for Approval of
Charging (Attorneys) Lien.

In the meantime, pleadings were filed by some of the petitioners, by

themselves or by counsels other than Atty. Aldon and Atty. Orocio, to wit:

(1) A Manifestation[17] was filed by petitioners Jimmy

D. Salman (Salman),[18] Vicente B. Cirio, Jr., and Necitas B. Gama, on their behalf
and on behalf of the NPC employees they represent, alleging that in a
letter[19] dated 10 April 2007, they already terminated the services of Atty. Aldon;
and in a letter[20] dated 19 April 2007, they directed Atty. Orocio to refrain from
acting as their lawyer for they never authorized him or his law firm to represent
them in the present case. Consequently, they requested that all Court notices and
processes in this case be forwarded and sent instead to the persons and address
indicated in the Manifestation. In a Resolution[21] dated 8 October 2007, we noted
the Manifestation of Salman, et al., and granted their prayer that they be sent Court
notices and processes regarding this case;

(2) A Request for the Issuance of an Entry of Judgment[22] to implement

our 26 September 2006 Decision was filed by
Atty. Casan B. Macabanding (Atty. Macabanding), as collaborating counsel for
petitioners, which we granted in our Resolution dated 4 June 2007. However,
taking into account the filing of the succeeding pleadings, the entry of judgment
has not been made;

(3) A Request for the Issuance of an Entry of Final Judgment[23] was filed by
Atty. Ariel V. Villanueva (Atty. Villanueva), as collaborating counsel for the
petitioners, in view of the finality of our Decision dated 26 September 2006; and

(4) A Manifestation and Motion[24] filed by Atty. Macabanding for the

petitioners, praying that judgment already be entered in the case in accordance with
our Resolution of 4 June 2007, since all the new pleadings filed by the parties were
meant only to delay the proceedings.
Also submitted to us and made part of the records of the Petition at bar are
the following:

(1) Copies of the letters written by Eriberto P. dela Pea and other NPC
employees dismissed by virtue of NPB Resolutions No. 2002-124 and No. 2002-
125, addressed to NPC President Cyril C. del Carr (Del Carr),[25] seeking their
reinstatement; to Salman,[26] asking for unity and reconciliation; and to Vice
President Noli De Castro[27] and Pampanga Governor Reverend Father
Eduardo Panlilio,[28] calling attention to their plight and requesting assistance in the
immediate resolution of their case;

(2) A copy of the letter[29] dated 14 January 2008 written by Atty. Reynaldo
A. Vitorillo (Atty. Vitorillo), as counsel for Porfirio C. Batalia, Jr., Victor
B. Racaza, Jr., Fred B. Sadlucap, Allan
J. Baguio, Sagrado D. Galacio, Valentin C. Bacalso, Reynaldo W. Hinaloc,
Scribner D. Tamiroy, Teodolfo Sabejon, Rudy Lopez, Nestor Paderanga,
Loreto Areliano, Jr., Casino Roa, Servillano B. Payusan, and other regular
employees of NPC who were dismissed pursuant to NPB Resolutions No. 2002-
124 and No. 2002-125, addressed to NPC President Del Callar. According to
Atty. Vitorillo, following the promulgation of our Decision dated 26 September
2006 declaring said NPB Resolutions null and void, a fortiori, and by operation of
law, our clients deserve forthwith reinstatement with full backwages; and

(3) A letter[30] dated 3 March 2008 written by Yolanda M. Hernandez

addressed to Justice Consuelo Ynares-Santiago imploring for help in attaining a
final judgment in the instant case, which we noted in a Resolution dated 10 March
2008.

The two incidents which we will principally address in this Resolution are
the Motion for Clarification and/or Amplification filed by petitioners and a Motion
for Approval of Charging (Attorneys) Lien filed by Atty. Aldon and Atty. Orocio.

Motion for Clarification and/or Amplification

We stress that neither the EPIRA Law mandating the reorganization of the
NPC nor NPB Resolution No. 2002-53 approving the new NPC Table of
Organization was made subject of the instant Petition; and, resultantly, neither was
affected by the injunction we granted in our Decision dated 26 September 2006.
Our 26 September 2006 Decision declared void and without legal effect
NPB Resolutions No. 2002-124 and No. 2002-125. Hence, we granted the Petition
at bar and enjoined the implementation of these two NPB Resolutions. To recall,
NPB Resolution No. 2002-124 approved the Guidelines on the Separation Program
of the NPC and the Selection and Placement of Personnel in the NPC Table of
Organization. It terminated the employment of all NPC personnel on 31 January
2003, and provided for their separation benefits. NPB Resolution No. 2002-125
constituted a Transition Team to implement the Separation Program of the NPC.

Simply put, the NPC can still pursue its reorganization in accordance with its
new Table of Organization; but it cannot implement the same by terminating
petitioners employment on 31 January 2003 pursuant to NPB Resolutions No.
2002-124 and No. 2002-125, which were passed with fatal defects. To validly
implement the reorganization of NPC, the NPB is not precluded by our Decision
of 26 September 2006 from passing another resolution, in accord with law and
jurisprudence, approving a new separation program for its employees.

We, however, have to sustain petitioners position in their Motion for

Clarification and/or Amplification that our declaration of nullity of NPB
Resolutions No. 2002-124 and No. 2002-125 and our injunction on the
implementation of the same logically and necessarily meant that the termination of
the employment of petitioners on 31 January 2003 was illegal.

As a general rule, being illegally dismissed from service, petitioners are

entitled to reinstatement to their former positions or to equal
positions. Nonetheless, we must consider the fact that absent a TRO and/or a
preliminary injunction, the NPC was still able to proceed with its reorganization
prior to the promulgation of our Decision on 26 September 2006. We cannot
simply ignore the effects of such reorganization which has been implemented and
in place for over five years now and issue, as the petitioners pray for, a status quo
ante order. We refer by way of analogy to the effect of a decision adjudging an
executive or a legislative act void:

The decision now on appeal reflects the orthodox view that an

unconstitutional act, for that matter an executive order or a municipal
ordinance likewise suffering from that infirmity, cannot be the source of
any legal rights or duties. Nor can it justify any official act taken under
it. Its repugnancy to the fundamental law once judicially declared results
in its being to all intents and purposes a mere scrap of paper. As the new
Civil Code puts it: "When the courts declare a law to be inconsistent
with the Constitution, the former shall be void and the latter shall
govern. Administrative or executive acts, orders and regulations shall be
valid only when they are not contrary to the laws or the Constitution. It
is understandable why it should be so, the Constitution being supreme
and paramount. Any legislative or executive act contrary to its terms
cannot survive.
 Such a view has support in logic and possesses the merit of
simplicity. It may not however be sufficiently realistic. 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 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 governmental 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." This language has been quoted with approval in a
resolution in Araneta v. Hill [93 Phil. 1002 (1953)] and the decision
in Manila 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 v. Cuerva and Co. [G.R. No. L-21114, 28 November 1967,
21 SCRA 1095].[31]

Since we cannot discount the impossibility of petitioners reinstatement,

as their former positions or any equivalent positions may no longer be available
after the reorganization, petitioners may be accordingly awarded separation pay in
lieu of reinstatement, based on a validly approved separation program of the
NPC.[32]
 Petitioners are further entitled to backwages together with wage adjustments
and all other benefits which they would have received if they had not been illegally
terminated from employment, from 31 January 2003 until they are actually
reinstated or paid their separation pay.

We also take note that petitioners have already received separation benefits
under NPB Resolutions No. 2002-124 and No. 2002-125. The amount thereof shall
then be taken into account and offset against the amount they are entitled to receive
as backwages and separation pay (in lieu of reinstatement) under a validly
approved separation program of the NPC.

Motion for Approval of Charging (Attorneys) Lien

Atty. Aldon and Atty. Orocio move for the approval of their charging lien
pursuant to the provisions of Section 37, Rule 138[33] of the Rules of Court and
their legal retainer agreement.[34]

A charging or special lien is an attorney's specific lien for compensation on

the fund or judgment which he has recovered by means of his professional services
for his client in a particular case. Such charging lien covers only the services
rendered by an attorney in the action in which the judgment was obtained and takes
effect after the attorney shall have caused a statement of his claim of such lien to
be entered into the records of the particular action with written notice thereof to his
client and to the adverse party. It presupposes that the attorney has secured a
favorable money judgment for his client and grants the attorney "the same right
and power over such judgments and executions as his client would have to enforce
his lien and secure the payment of his just fees and disbursements." Called upon at
all times to exert utmost zeal with unstinted fidelity in upholding his client's cause
and subject to appropriate disciplinary action if he should fail to live up to such
exacting standard, the attorney in return is given the assurance through his liens -
retaining and charging - that the collection of his lawful fees and disbursements is
not rendered difficult, if not altogether thwarted, by an unappreciative client. He is
thereby given an effective hold on his client to assure payment of his services in
keeping with his dignity as an officer of the court.[35]

In the case before us, Atty. Aldon and Atty. Orocio represented all the NPC
employees terminated from employment by virtue of NPB Resolutions No. 2002-
124 and No. 2002-125 as petitioners in what they referred to as a class suit, with
nary a resistance from any of the petitioners. They were petitioners counsels-of-
record from the time the Petition for Injunction was instituted until we rendered
our Decision on 26 September 2006, granting the Petition and enjoining the
implementation of the challenged NPB Resolutions. Again, by virtue of the efforts
of Atty. Aldon and Atty. Orocio who filed the Motion for Clarification and/or
Amplification on behalf of petitioners, we have recognized herein petitioners rights
to backwages and reinstatement or separation pay (in lieu
of reintstatement). Evidently, Atty. Aldon and Atty. Orocio faithfully
accomplished their duty to promote and protect their clients rights.

It was only after the promulgation of our Decision dated 26 September 2006
granting the Petition, and during the pendency of the Motion for Clarification
and/or Amplification filed by Atty. Aldon and Atty. Orocio on behalf of
petitioners, that Salman, et al., filed a Manifestation before us on 2 May 2007, to
which they attached their letter dated 10 April 2007 to Atty. Aldon terminating his
services; and another letter dated 19 April 2007 to Atty. Orocio, directing him to
refrain from acting as their lawyer. The timing alone of the Manifestation and
letters of Salman, et al., is already highly suspicious and divulges the obvious
motive of Salman, et al., to evade their obligation to pay Atty. Aldon and
Atty. Orocio their attorneys fees for the legal services they had rendered and which
resulted in a ruling by this Court favorable to petitioners.

During the same period, several other pleadings were filed and letters
submitted to us by collaborating counsels for petitioners who never previously
appeared or participated in this case.
 It was these apparent attempts of several petitioners to suddenly end and/or
denounce their attorney-client relationship with Atty. Aldon and Atty. Orocio
which prompted the latter two to send Notices of Attorneys Liens dated 11 April
2007 to the parties and to file before us on 12 April 2007 their Motion for
Approval of Charging (Attorneys) Lien, to protect their right to collect their
attorneys fees.

A client cannot, in the absence of the lawyers fault, consent or waiver,

deprive the lawyer of his just fees already earned. While a client has the right to
discharge his lawyer at any time, dismiss or settle his action or even waive the
whole of his interest in favor of the adverse party, he cannot by taking any such
step deprive the lawyer of what is justly due him as attorneys fees unless the
lawyer, by his action, waives or forfeits his right thereto.[36]

We have in the past disapproved of any and every effort of clients benefited
by counsels services to deprive them of their hard-earned honorarium and
condemned such attitude. Lawyers are as much entitled to judicial protection
against injustice on the part of their clients as the clients are against abuses on the
part of counsel. The duty of the court is not only to see that lawyers act in a proper
and lawful manner, but also to see that lawyers are paid their just and lawful
fees. Thus, in J.K. Mercado and Sons Agricultural Enterprises, Inc. v. De
Vera,[37] citing Albano v. Coloma,[38] we stressed:

While, indeed, the practice of law is not a business venture, a

lawyer, nevertheless, is entitled to be duly compensated for professional
services rendered. So, also, he must be protected against clients who
wrongly refuse to give him his just due. In Albano vs. Coloma, this Court
has said:

Counsel, any counsel, who is worthy of his hire, is

entitled to be fully recompensed for his services. With his
capital consisting solely of his brains and with his skill,
acquired at tremendous cost not only in money but in the
expenditure of time and energy, he is entitled to the
protection of any judicial tribunal against any attempt on
the part of a client to escape payment of his fees. It is
indeed ironic if after putting forth the best that is in him to
 secure justice for the party he represents, he himself would
not get his due.Such an eventuality this Court is determined
to avoid. It views with disapproval any and every effort of
those benefited by counsels services to deprive him of his
hard-earned honorarium. Such an attitude deserves
condemnation.[39]

We take note that according to their legal retainer agreement, Atty. Aldon
and Atty. Orocio received no acceptance fee when they took on petitioners
case. The only other amount that they were to receive by virtue of said agreement
was the P25,000.00 out-of-pocket expense. Their attorneys fees thereunder were
absolutely contingent on their winning the case, which they, in fact, did.

The allegation of Salman, et al., that the contingency on which Atty. Aldon
may collect his attorneys fees was the granting of the TRO deserves scant
consideration in light of the clear and simple wording of the legal retainer
agreement that the said fees were contingent on the success of the case. Even
though Atty. Aldon and Atty. Orocio failed to secure the provisional remedy of a
TRO, they were able to win for petitioners a perpetual injunction against the
implementation of NPB Resolutions No. 2002-124 and No. 2001-125. Atty. Aldon
and Atty. Orocio may have lost the battle (for the TRO), but they ultimately won
the war (for the injunction) for petitioners. Equally without merit was the assertion
of Salman, et al., that they never authorized Atty. Orocio to appear as their
counsel. Both Atty. Aldon and Atty. Orocio signed the legal retainer
agreement. Atty. Orocioappeared as co-counsel of Atty. Aldon upon the filing of
the Memorandum for petitioners. And even though Atty. Orocio did not sign the
other pleadings for petitioners previous to their Memorandum, it did not discount
the possibility that he still rendered legal services to petitioners for the prosecution
of their case other than the preparation and filing of the pleadings, such as the
conduct of the necessary research and other legwork. Finally, Atty. Aldon and
Atty. Orocio jointly filed their Motion for Approval of Charging (Attorneys) Lien,
which only shows that Atty. Aldon himself recognizes the equal participation of
Atty. Orocio in the present case as co-counsel of petitioners.
 While we duly recognize the right of Atty. Aldon and Atty. Orocio to a
charging lien on the amounts recoverable by petitioners pursuant to our 26
September 2006Decision, nevertheless, we deem it proper to reduce the
same. Under Section 24, Rule 138 of the Rules of Court, a written contract for
services shall control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable. The amounts which petitioners may recover as
the logical and necessary consequence of our Decision of 26 September 2006, i.e.,
backwages and separation pay (in lieu of reinstatement), are essentially the same
awards which we grant to illegally dismissed employees in the private sector. In
such cases, our Labor Code explicitly limits attorneys fees to a maximum of 10%
of the recovered amount.[40] Considering by analogy the said limit on attorneys fees
in this case of illegal dismissal of petitioners by respondent NPC, a government-
owned and controlled corporation; plus the facts that petitioners have suffered
deprivation of their means of livelihood for the last five years; and the fact that this
case was originally filed before us, without any judicial or administrative
proceedings below; as well as the fundamental ethical principle that the practice of
law is a profession and not a commercial enterprise,[41] we approve in favor of
Atty. Aldon and Atty. Orocio a charging lien of 10% (instead of 25%) on the
amounts recoverable by petitioners from NPC pursuant to our Decision dated 26
September 2006.

We leave the computation of the actual amounts due the petitioners and the
enforcement of payment thereof by execution to the proper forum in appropriate
proceedings, for this Court is not a trier of facts. It is not equipped to receive
evidence and determine the truth of the factual allegations of the parties on this
matter.[42] But even prior to the determination of the exact amounts to be paid to
petitioners by respondent NPC pursuant to our Decision dated 26 September 2006,
we may already allow herein the recording of the charging lien of Atty. Aldon and
Atty. Orocio to establish their right to 10% of such awards.[43]

With the recording of their charging lien, Atty. Aldon and Atty. Orocio shall
have the same right and power over such judgments and executions as their clients,
petitioners, would have, to enforce their lien and secure the payment of their
attorneys fees.[44] The lien shall attach to the proceeds of the judgment and the
client who receives the same, without paying his attorney who was responsible for
its recovery, shall hold said proceeds in trust for his lawyer to the extent of the
value of the lawyers recorded lien. After the charging lien has attached, the
attorney is, to the extent of said lien, to be regarded as an equitable assignee of the
judgment or funds produced by his efforts.[45] And the judgment debtor who, in
disregard of the charging lien, satisfies the judgment debt without reserving so
much thereof as may be sufficient to pay the attorneys fees and advances may be
held liable for the full value of the lien, which may be enforced by execution.[46]

IN VIEW OF THE FOREGOING, we hereby RESOLVE to:

(1) PARTIALLY GRANT the Motion for Clarification and/or

Amplification of petitioners by affirming that, as a logical and necessary
consequence of our Decision dated 26 September 2006 declaring null and without
effect NPB Resolutions No. 2002-124 and No. 2002-125 and enjoining the
implementation of the same, petitioners have the right to reinstatement, or
separation pay in lieu of reinstatement, pursuant to a validly approved Separation
Program; plus backwages, wage adjustments, and other benefits accruing from 31
January 2003 to the date of their reinstatement or payment of separation pay; but
deducting therefrom the amount of separation benefits which they previously
received under the null NPB Resolutions;

(2) PARTIALLY GRANT the Motion for Approval of Charging

(Attorneys) Lien of Atty. Aldon and Atty. Orocio and ORDER the entry in the
records of this case of their ten percent (10%) charging lien on the amounts
recoverable by petitioners from respondent NPC by virtue of our Decision dated 26
September 2006; and

(3) ORDER that Entry of Judgment be finally made in due course in the
case at bar.

SO ORDERED.
Wage Distortion (Art. 124)

Elements

P. I. Manufacturing Inc. v. P. I. Manufacturing Supervisors, G.R. No. 167217, February 4, 2008

DECISION

SANDOVAL-GUTIERREZ, J.:

The Court has always promoted the policy of encouraging employers to

grant wage and allowance increases to their
employees higher than the minimum rates of increases prescribed by statute or
administrative regulation. Consistent with this, the Court also adopts the policy
that requires recognition and validation of wage increases given by employers
either unilaterally or as a result of collective
[1]
bargaining negotiations in an effort to correct wage distortions.

Before us is a motion for reconsideration of our Resolution dated April 18,

2005 denying the present petition for review
on certiorari for failure of the petitioner to showthat a reversible
error has been committed by the Court of Appeals in its (a) Decision
dated July 21, 2004 and (b) Resolution dated February 18, 2005.

The facts are:

Petitioner P.I. Manufacturing, Incorporated is a domestic corporation

engaged in the manufacture and sale of household appliances. On the other hand,
respondent P.I. Manufacturing Supervisors and Foremen Association
(PIMASUFA) is an organization of petitioners supervisors and foremen, joined in
this case by its federation, the National Labor Union (NLU).
 On December 10, 1987, the President signed into law Republic Act (R.A.)
No. 6640[2] providing, among others, an increase in the statutory minimum wage
and salary rates of employees and workers in the private sector. Section 2 provides:

SEC. 2. The statutory minimum wage rates of workers and

employees in the private sector, whether agricultural or non-agricultural,
shall be increased by ten pesos (P10.00) per day, except non-agricultural
workers and employees outside Metro Manila who shall receive an
increase of eleven pesos (P11.00) per day: Provided, That those already
receiving above the minimum wage up to one hundred pesos
(P100.00) shall receive an increase of ten pesos (P10.00)
per day. Excepted from the provisions of this Act are domestic helpers
and persons employed in the personal service of another.

Thereafter, on December 18, 1987, petitioner and respondent PIMASUFA

entered into a new Collective Bargaining Agreement (1987 CBA) whereby the
supervisors were granted an increase of P625.00 per
month and the foremen, P475.00 per month. The increases were made retroactive
to May 12, 1987, or prior to the passage of R.A. No. 6640,and every year
thereafter until July 26, 1989. The pertinent portions of the 1987 CBA read:

ARTICLE IV
SALARIES AND OVERTIME

Section 1. The COMPANY shall grant to all regular supervisors and

foremen within the coverage of the unit represented by the ASSOCIATION, wage
or salary increases in the amount set forth as follows:

A. For FOREMEN

Effective May 12, 1987, an increase of P475,00 per month to all qualified
regular foremen who are in the service of the COMPANY as of said date and who
are still in its employ on the signing of this Agreement, subject to the
conditions set forth in sub-paragraph (d) hereunder;

a) Effective July 26, 1988, an increase of P475.00 per

month/employee to all covered foremen;
 b) Effective July 26, 1989, an increase of P475.00 per month/per
employee to all covered foremen;

c) The salary increases from May 12, 1987 to November 30,

1987 shall be excluding and without increment on fringe benefits and/or premium
and shall solely be on basic salary.

B. For SUPERVISORS

a) Effective May 12, 1987, an increase of P625.00 per

month/employee to all qualified regular supervisors who are in the service of the
COMPANY as of said date and who are still in its employ on the signing of the
Agreement, subject to the conditions set forth in subparagraph (d) hereunder;

b) Effective July 26, 1988, an increase of P625.00 per

month/employee to all covered supervisors;

c) Effective July 26, 1989, an increase of P625.00 per

month/employee to all covered supervisors;

d) The salary increase from May 12, 1987 to November 30,

1987 shall be excluding and without increment on fringe benefits and/or
premiums and shall solely be on basic salary.

On January 26, 1989, respondents PIMASUFA and NLU filed a complaint

with the Arbitration Branch of the National Labor Relations Commission (NLRC),
docketed as NLRC-NCR Case No. 00-01-00584, charging petitioner with violation
of R.A. No. 6640.[3] Respondents attached to their complaint a numerical
illustration of wage distortion resulting from the implementation of R.A. No. 6640.

On March 19, 1990, the Labor Arbiter rendered his Decision in favor of
respondents. Petitioner was ordered to give the members of respondent
PIMASUFA wage increases equivalent to 13.5% of their basic pay they were
receiving prior to December 14, 1987. The Labor Arbiter held:

As regards the issue of wage distortion brought about by the

implementation of R.A. 6640
 It is correctly pointed out by the union that employees cannot
waive future benefits, much less those mandated by law. That is against
public policy as it would render meaningless the law. Thus, the waiver in
the CBA does not bar the union from claiming adjustments in pay as a
result of distortion of wages brought about by the implementation of
R.A. 6640.

Just how much are the supervisors and foremen entitled to correct
such distortion is now the question. Pursuant to the said law, those who
on December 14, 1987 were receiving less than P100.00 are all entitled
to an automatic across- the-board increase of P10.00 a day. The
percentage in increase given those who received benefits under R.A.
6640 should be the same percentage given to the supervisors and
foremen.

The statutory minimum pay then was P54.00 a day. With the
addition of P10.00 a day, the said minimum pay raised to P64.00 a day.
The increase of P10.00 a day is P13.5% of the minimum wage prior
to December 14, 1987. The same percentage of the pay of members of
petitioner prior to December 14, 1987 should be given them.

Finally, the claim of respondent that the filing of the present case,
insofar as the provision of R.A. 6640 is concerned, is premature does not
deserve much consideration considering that as of December 1988,
complainant submitted in grievance the aforementioned issue but the
same was not settled.[4]

On appeal by petitioner, the NLRC, in its Resolution dated January 8, 1991,

affirmed the Labor Arbiters judgment.

Undaunted, petitioner filed a petition for certiorari with this Court. However,
we referred the petition to the Court of Appeals pursuant to our ruling in St.
Martin Funeral Homes v. NLRC.[5] It was docketed therein as CA-G.R. SP No.
54379.
 On July 21, 2004, the appellate court rendered its Decision affirming the
Decision of the NLRC with modification by raising the 13.5% wage increase
to 18.5%. We quote the pertinent portions of the Court of Appeals Decision, thus:

Anent the fourth issue, petitioner asseverates that the wage

distortion issue is already barred by Sec. 2 Article IV of the Contract
denominated as The Company and Supervisors and Foremen Contract
dated December 18, 1987 declaring that it absolves, quit claims and
releases the COMPANY for any monetary claim they have, if any
there might be or there might have been previous to the signing of
this agreement. Petitioner interprets this as absolving it from any wage
distortion brought about by the implementation of the new minimum
wage law. Since the contract was signed on December 17, 1987, or after
the effectivity of Republic Act No. 6640, petitioner claims that private
respondent is deemed to have waived any benefit it may have under the
new law.

We are not persuaded.

Contrary to petitioners stance, the increase resulting from any

wage distortion caused by the implementation of Republic Act 6640 is
not waivable. As held in the case of Pure Foods Corporation vs.
National Labor Relations Commission, et al.:

Generally, quitclaims by laborers are frowned upon

as contrary to public policy and are held to be ineffective to
bar recovery for the full measure of the workers rights. The
reason for the rule is that the employer and the employee
do not stand on the same footing.

Moreover, Section 8 of the Rules Implementing RA 6640 states:

No wage increase shall be credited as compliance

with the increase prescribed herein unless expressly
provided under valid individual written/collective
agreements; and provided further that such wage increase
was granted in anticipation of the legislated wage increase
under the act. But such increases shall not include
 anniversary wage increases provided in collective
bargaining agreements.

Likewise, Article 1419 of the Civil Code mandates that:

When the law sets, or authorizes the setting of a

minimum wage for laborers, and a contract is agreed upon
by which a laborer accepts a lower wage, he shall be
entitled to recover the deficiency.

Thus, notwithstanding the stipulation provided under Section 2 of the

Company and Supervisors and Foremen Contract, we find the members
of private respondent union entitled to the increase of their basic pay due
to wage distortion by reason of the implementation of RA 6640.

On the last issue, the increase of 13.5% in the supervisors and foremens
basic salary must further be increased to 18.5% in order to correct the
wage distortion brought about by the implementation of RA 6640. It
must be recalled that the statutory minimum pay before RA 6640
was P54.00 a day. The increase of P10.00 a day under RA 6640 on the
prior minimum pay of P54.00 is 18.5% and not 13.5%. Thus, petitioner
should be made to pay the amount equivalent to 18.5% of the basic pay
of the members or private respondent union in compliance with the
provisions of Section 3 of RA 6640.

Petitioner filed a motion for reconsideration but it was denied by the

appellate court in its Resolution dated February 18, 2005.

Hence, the present recourse, petitioner alleging that the Court of Appeals
erred:

1) In awarding wage increase to respondent supervisors and

foremen to cure an alleged wage distortion that resulted from the
implementation of R.A. No. 6640.

2) In disregarding the wage increases granted under the 1987 CBA

correcting whatever wage distortion that may have been created
by R.A. No. 6640.
 3) In awarding wage increase equivalent to 18.5% of the basic pay
of the members of respondent PIMASUFA in violation of the
clear provision of R.A. No. 6640 excluding from its coverage
employees receiving wages higher than P100.00.

4) In increasing the NLRCs award of wage increase from 13.5% to

18.5%, which increase is very much higher than the P10.00 daily
increase mandated by R.A. No. 6640.

Petitioner contends that the findings of the NLRC and the Court of Appeals
as to the existence of a wage distortion are not supported by evidence; that Section
2 of R.A. No. 6640 does not provide for an increase in the wages of employees
receiving more than P100.00; and that the 1987 CBA has obliterated any possible
wage distortion because the increase granted to the members of respondent
PIMASUFA in the amount of P625.00 and P475.00 per month substantially
widened the gap between the foremen and supervisors and as against the rank and
file employees.

Respondents PIMASUFA and NLU, despite notice, failed to file their

respective comments.

In a Minute Resolution dated April 18, 2005, we denied the petition for
petitioners failure to show that the Court of Appeals committed a reversible error.

Hence, this motion for reconsideration.

We grant the motion.

In the ultimate, the issue here is whether the implementation of R.A. No.
6640 resulted in a wage distortion and whether such distortion was cured or
remedied by the 1987 CBA.
 R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly
defines wage distortion as:

x x x a situation where an increase in prescribed wage rates results

in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups
in an establishment as to effectively obliterate the distinctions embodied
in such wage structure based on skills, length of service, or other logical
bases of differentiation.

Otherwise stated, wage distortion means the disappearance or virtual

disappearance of pay differentials between lower and higher positions in an
enterprise because of compliance with a wage order.[6]

In this case, the Court of Appeals correctly ruled that a wage distortion
occurred due to the implementation of R.A. No. 6640. The numerical illustration
submitted by respondents[7] shows such distortion, thus:
II WAGE DISTORTION REGARDING RA-6640 (P10.00 per day increase
effective December 31, 1987)

Illustration of Wage Distortion and corresponding wage adjustments

as provided in RA-6640

RATE RATE AFTER P109.01 P118.80 P128.08

BEFORE INCREASEOF
INCREASE OVER- OVER- OVER-
OF RA-
NAME OF SUPERVISOR (S) 6640 P10.00 PASSED PASSED PASSED
RA-
AND P108.80 P118.08 P123.76
6640 P10.00
FOREMAN (F) RATE AFTER RATE AFTER RATE AFTER
 ADJUSTMENT ADJUSTMENT ADJUSTMENT

P10.00 P10.00 P10.00

1. ALCANTARA, V(S) P 99.01 P 109.01

2. MORALES, A(F) 94.93 104.93

3. SALVO, R (F) 96.45 106.45

Note: No. 1 to 3 with increase of RA-6640

4.BUENCUCHILLO, C (S) 102.38 102.38 P 112.38

5. MENDOZA, D(F) 107.14 107.14 117.14

6. DEL PRADO, M(S) 108.80 108.80 118.80

7. PALENSO, A (F) 109.71 109.71 P 119.71

8. OJERIO, E (S) 111.71 111.71 121.71

9. REYES, J (S) 114.98 114.98 124.98

10. PALOMIQUE, S(F) 116.79 116.79 126.79

11. PAGLINAWAN, A (S) 116.98 116.98 126.98

12. CAMITO, M (S) 117.04 117.04 127.04

13. TUMBOCON, P(S) 117.44 117.44 127.44

14. SISON JR., B (S) 118.08 118.08 128.08

15. BORJA, R (S) 119.80 119.80 P 129.80

16. GINON, D (S) 123.76 123.76 133.76

17. GINON, T (S) 151.49 151.49

18. ANDRES, M (S) 255.72 255.72

Note: No. 4 to 18 no increase in R.A. No. 6640

 Notably, the implementation of R.A. No. 6640 resulted in the increase
of P10.00 in the wage rates of Alcantara, supervisor,
and Morales and Salvo, both foremen. They are petitioners lowest paid
supervisor and foremen. As a consequence, the increased wage rates of foremen
Morales and Salvo exceeded that of supervisor Buencuchillo.Also, the increased
wage rate of supervisor Alcantara exceeded those
of supervisors Buencuchillo and Del Prado. Consequently, the P9.79 gap or
difference between the wage rate of supervisor Del Prado and that of supervisor
Alcantara was eliminated. Instead, the latter
gained a P.21 lead over Del Prado. Like a domino effect, these gaps or differences
between and among the wage rates of all the above employees have
been substantially altered and reduced. It is therefore undeniable that
the increase in the wage rates by virtue of R.A. No. 6640 resulted in wage
distortion or the
elimination of the intentional quantitative differences in the wage rates of the ab
ove employees.

However, while we find the presence of wage distortions, we are convinced

that the same were cured or remedied when respondent
PIMASUFA entered into the 1987 CBA withpetitioner after the effectivity of R.A.
No. 6640. The 1987 CBA increased the monthly salaries of the supervisors
by P625.00 and the foremen, by P475.00, effective May 12,
1987. These increases re-established and broadened the gap, not
only between the supervisors and the foremen, but also between them and the rank-
and-file employees. Significantly, the 1987 CBA wage increases
almost doubled that of the P10.00 increase under R.A. No.
6640. The P625.00/month means P24.03 increase per day for the
supervisors, while the P475.00/month means P18.26 increase per day for the
foremen. These increases were to be observed every year, starting May 12,
1987 until July 26, 1989. Clearly, the gap between the wage rates of the
supervisors and those of the foremen was inevitably re-
established. It continued to broaden through the years.

Interestingly, such gap as re-established by virtue of the CBA is more than a

substantial compliance with R.A. No. 6640. We hold that the Court of
Appeals erred in not taking into account the provisions of the CBA viz-a-viz the
wage increase under the said law. In National Federation of Labor
v. NLRC,[8] we held:
 We believe and so hold that the re-establishment of a significant
gap or differential between regular employees and casual employees by
operation of the CBA was more than substantial compliance with the
requirements of the several Wage Orders (and of Article 124 of the
Labor Code). That this re-establishment of a significant differential
was the result of collective bargaining negotiations, rather than of a
special grievance procedure, is not a legal basis for ignoring it. The
NLRC En Banc was in serious error when it disregarded the differential
of P3.60 which had been restored by 1 July 1985 upon the ground that
such differential represent[ed] negotiated wage increase[s] which
should not be considered covered and in compliance with the Wage
Orders. x x x

In Capitol Wireless, Inc. v. Bate,[9] we also held:

x x x The wage orders did not grant across-the-board increases to all

employees in the National Capital Region but limited such increases
only to those already receiving wage rates not more than P125.00 per
day under Wage Order Nos. NCR-01 and NCR-01-A and P142.00 per
day under Wage Order No. NCR-02. Since the wage orders specified
who among the employees are entitled to the statutory wage increases,
then the increases applied only to those mentioned therein. The
provisions of the CBA should be read in harmony with the wage
orders, whose benefits should be given only to those employees
covered thereby.

It has not escaped our attention that requiring petitioner to pay all the members of
respondent PIMASUFA a wage increase of 18.5%, over and above the
negotiated wage increases provided under the 1987 CBA, is highly
unfair and oppressive to the former. Obviously, it was not the intention of R.A. No.
6640 to grant an across-the-board increase in pay to all the employees of
petitioner. Section 2 of R.A. No. 6640 mandates only the following increases in the
private sector: (1) P10.00 per day for the employees in the private sector, whether
agricultural or non-agricultural, who are receiving the statutory minimum wage
rates; (2) P11.00 per day for non-agricultural workers and employees outside
Metro Manila; and (3) P10.00 per day for those already receiving the minimum
wage up to P100.00. To be sure, only those receiving wages P100.00 and below
are entitled to the P10.00 wage
increase. The apparent intention of the law is only to
[10]
upgrade the salaries or wages of the employees specified therein. As the
numerical illustration shows, almost all of the members of respondent PIMASUFA
have been receiving wage rates above P100.00 and, therefore, not entitled to
the P10.00 increase. Only three (3) of them are receiving wage
rates below P100.00, thus, entitled to such increase. Now, to direct petitioner to
grant an across-the-board increase to all of them, regardless of the amount of
wages they are already receiving, would be harsh and unfair to the former. As we
ruled in Metropolitan Bank and Trust Company Employees Union ALU-TUCP v.
NLRC:[11]

x x x To compel employers simply to add on legislative

increases in salaries or allowances without regard to what is already
being paid, would be to penalize employers who grant their workers
more than the statutory prescribed minimum rates of increases.
Clearly, this would be counter-productive so far as securing the
interests of labor is concerned.

Corollarily, the Court of Appeals erred in citing Pure Foods Corporation v. National
Labor Relations Commission[12] as basis in disregarding the provisions of the 1987
CBA.The case involves, not wage distortion, but illegal dismissal of employees
from the service. The Release and Quitclaim executed therein by the Pure Foods
employees were intended to preclude them from questioning the termination of
their services, not their entitlement to wage increase on account of a wage
distortion.

At this juncture, it must be stressed that a CBA constitutes the law between the
parties when freely and voluntarily entered into.[13] Here, it has not been shown
that respondent PIMASUFA was coerced or forced by petitioner to sign the 1987
CBA. All of its thirteen (13) officers signed the CBA with the assistance of
respondent NLU. They signed it fully aware of the passage of R.A. No. 6640. The
duty to bargain requires that the parties deal with each other with open and fair
minds. A sincere endeavor to overcome obstacles and difficulties that may arise,
so that employer-employee relations may be stabilized and industrial strife
eliminated, must be apparent.[14] Respondents cannot invoke the beneficial
provisions of the 1987 CBA but disregard the concessions it voluntary extended
to petitioner. The goal of collective bargaining is the making of agreements that
will stabilize business conditions and fix fair standards of working
conditions.[15] Definitely, respondents posture contravenes this goal.

In fine, it must be emphasized that in the resolution of labor cases, this Court has
always been guided by the State policy enshrined in the Constitution that the
rights of workers and the promotion of their welfare shall be protected. However,
consistent with such policy, the Court cannot favor one party, be it labor or
management, in arriving at a just solution to a controversy if the party
concerned has no valid support to its claim, like respondents here.

WHEREFORE, we GRANT petitioners motion for reconsideration

and REINSTATE the petition we likewise GRANT. The assailed Decision of the
Court of Appeals in CA-G.R. SP No. 54379 is REVERSED.

SO ORDERED.

Corrections of Wage Distortion

National Federation of Labor v. NLRC, 234 SCRA 311

DECISION

DE LEON, JR., J.:

Before us is a special civil action for certiorari to set aside and annul two (2)
resolutions of the National Labor Relations Commission promulgated on April [1]

24, 1996 and August 29, 1996 denying the award of separation pay to
[2] [3]

petitioners.
The pertinent facts are as follows:

Petitioners are bona fide members of the National Federation of Labor (NFL),
a legitimate labor organization duly registered with the Department of Labor
and Employment. They were employed by private respondents Charlie Reith
and Susie Galle Reith, general manager and owner, respectively, of the 354-
hectare Patalon Coconut Estate located at Patalon, Zamboanga City. Patalon
Coconut Estate was engaged in growing agricultural products and in raising
livestock.

In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law (CARL), which mandated
the compulsory acquisition of all covered agricultural lands for distribution to
qualified farmer beneficiaries under the so-called Comprehensive Agrarian
Reform Programme (CARP).

Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the
Patalon Estate Agrarian Reform Association (PEARA), a cooperative
accredited by the Department of Agrarian Reform (DAR), of which petitioners
are members and co-owners.

As a result of this acquisition, private respondents shut down the operation of

the Patalon Coconut Estate and the employment of the petitioners was
severed on July 31, 1994. Petitioners did not receive any separation pay.

On August 1, 1994, the cooperative took over the estate. A certain Abelardo
Sangadan informed respondents of such takeover via a letter which was
received by the respondents on July 26, 1994. Being beneficiaries of the
Patalon Coconut Estate pursuant to the CARP, the petitioners became part-
owners of the land.[4]

On April 25, 1995, petitioners filed individual complaints before the Regional
Arbitration Branch (RAB) of the National Labor Relations Commission (NLRC)
in Zamboanga City, praying for their reinstatement with full backwages on the
ground that they were illegally dismissed. The petitioners were represented by
their labor organization, the NFL.

On December 12, 1995, the RAB rendered a decision, the dispositive portion
of which provides:

"WHEREFORE, in view of the foregoing, judgment is hereby

rendered dismissing complainants charge for illegal dismissal for
lack of merit, but ordering respondents thru [sic] its owner-
manager or its duly authorized representative to pay complainants
separation pay in view of the latters cessation of operations or
forced sale, and for 13th month differential pay in the amount, as
follows, for:

Names Separation Pay 13th Mo. Pay Diff. Total

Abelardo Sangadan P23,879.06 N o n e P23,879.06

Luciano Ramos 43,605.24 P711.25 44,316.49

Nestor Tilasan 19,726.18 401.46 20,127.64

Gregorio Tilasan 25,955.50 N o n e 25,955.50

Joaquin Garcia 7,267.54 1,211.25 8,478.79

Rogelio Sabaitan 21,798.00 1,211.25 23,009.25

Castro Leonardo, Jr. 25,955.50 63.10 26,018.60

Pilardo Potenciano 5,191.10 911.25 6,102.35

Ronillo Potenciano 7,267.54 N o n e 7,267.54

Jovencio Bartolome 8,305.76 477.25 8,783.01

Santiago Sabaitan 4,152.88 1,011.25 5,164.13

Juanito Concerman 7,267.54 611.25 7,928.79

George Tumilas 16,611.52 1,011.25 17,622.77

Patrocinio Domingo 2,076.44 1,011.25 3,087.69

Avelino Francisco 3,114.66 1,211.25 4,325.91

Meliton Sangadan 15,573.30 392.50 15,965.80

Alexander Geronimo 15,573.00 N o n e 15,573.30

Joaquin Geronimo 24,917.28 1,211.25 26,128.53

Ramil Macaso 6,229.32 861.25 7,090.57

Lamberto Joven 16,611.62 1,011.25 17,622.77

 Cristino Garina 35,299.48 849.65 36,149.13

Sammy Gantaan 14,535.08 961.25 15,496.33

Nacial Ustalan 38,414.14 79.95 38,494.09

Edwin Ustalan 7,267.54 1,011.25 8,278.79

Roland Potenciano 5,191.10 911.25 6,102.35

Rody Concerman 7,267.54 691.25 7,958.79

Elmer Domingo 3,114.66 1,211.25 4,325.91

Aranquez Sangada 45,681.68 711.25 46,392.93

Unding Boleng 31,146.60 N o n e 31,146.60

Eduardo Boleng 35,299.48 759.30 36,058.78

Roberto Paneo 23,876.06 911.25 24,787.31

Henry Sangadan 16,611.52 1,011.25 17,622.77

Total Benefits P586,774.22

"FURTHER, complainants claim for Muslim Holiday, overtime pay and rest day
pay should be dismissed for lack of merit, too."[5]

Appeal was taken by private respondents to public respondent NLRC. [6]

On April 24, 1996, the NLRC issued a resolution, the dispositive portion of
which provides:

"WHEREFORE, the decision appealed from is hereby modified in

favor of the following findings:

1) Respondents are not guilty of illegally dismissing complainants.

Respondents cessation of operation was not due to a unilateral
action on their part resulting in the cutting off of the employment
relationship between the parties. The severance of employer-
employee relationship between the parties came about
INVOLUNTARILY, as a result of an act of the State.
Consequently, complainants are not entitled to any separation
pay.
 2) The award of 13th month pay differential is, however, Set
Aside. Any award of 13th month pay differentials to complainants
should be computed strictly based on their reduced pay,
equivalent to six (6) hours work, Monday to Friday, pursuant to
what the parties agreed in the November 18, 1991 Compromise
Agreement."

SO ORDERED. [7]

Petitioners filed a motion for reconsideration which was denied by the NLRC
in its resolution dated August 29, 1996.
[8]

Hence, this petition.

The issue is whether or not an employer that was compelled to cease its
operation because of the compulsory acquisition by the government of its land
for purposes of agrarian reform, is liable to pay separation pay to its affected
employees.

The petition is bereft of merit.

Petitioners contend that they are entitled to separation pay citing Article 283 of
the Labor Code which reads:

"ART. 283. Closure of establishment and reduction of

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

It is clear that Article 283 of the Labor Code applies in cases of closures of
establishment and reduction of personnel. The peculiar circumstances in the
case at bar, however, involves neither the closure of an establishment nor a
reduction of personnel as contemplated under the aforesaid article. When the
Patalon Coconut Estate was closed because a large portion of the estate was
acquired by DAR pursuant to CARP, the ownership of that large portion of the
estate was precisely transferred to PEARA and ultimately to the petitioners as
members thereof and as agrarian lot beneficiaries. Hence, Article 283 of the
Labor Code is not applicable to the case at bench.

Even assuming, arguendo, that the situation in this case were a closure of the
business establishment called Patalon Coconut Estate of private respondents,
still the petitioners/employees are not entitled to separation pay. The closure
contemplated under Article 283 of the Labor Code is a unilateral and voluntary
act on the part of the employer to close the business establishment as may be
gleaned from the wording of the said legal provision that "The
employer may also terminate the employment of any employee due
to...". The use of the word "may," in a statute, denotes that it is directory in
[9]

nature and generally permissive only. The "plain meaning rule" or verba
[10]

legis in statutory construction is thus applicable in this case. Where the words
of a statute are clear, plain and free from ambiguity, it must be given its literal
meaning and applied without attempted interpretation. [11]

In other words, Article 283 of the Labor Code does not contemplate a situation
where the closure of the business establishment is forced upon the employer
and ultimately for the benefit of the employees.

As earlier stated, the Patalon Coconut Estate was closed down because a
large portion of the said estate was acquired by the DAR pursuant to the
CARP. Hence, the closure of the Patalon Coconut Estate was not effected
voluntarily by private respondents who even filed a petition to have said estate
exempted from the coverage of RA 6657. Unfortunately, their petition was
denied by the Department of Agrarain Reform. Since the closure was due to
the act of the government to benefit the petitioners, as members of the
Patalon Estate Agrarian Reform Association, by making them agrarian lot
beneficiaries of said estate, the petitioners are not entitled to separation pay.
The termination of their employment was not caused by the private
respondents. The blame, if any, for the termination of petitioners employment
can even be laid upon the petitioner-employees themselves inasmuch as they
formed themselves into a cooperative, PEARA, ultimately to take over, as
agrarian lot beneficiaries, of private respondents landed estate pursuant to RA
6657. The resulting closure of the business establishment, Patalon Coconut
Estate, when it was placed under CARP, occurred through no fault of the
private respondents.

While the Constitution provides that "the State x x x shall protect the rights of
workers and promote their welfare", that constitutional policy of providing full
protection to labor is not intended to oppress or destroy capital and
management. Thus, the capital and management sectors must also be
protected under a regime of justice and the rule of law.

WHEREFORE, the petition is DISMISSED. The Resolutions of the National

Labor Relations Commission dated April 24, 1996 and August 29, 1996 are
hereby AFFIRMED. No costs.

SO ORDERED.

Administration and Enforcement

DOLE Regional Directors Jurisdiction

Peoples Broadcasting Service (Bombo Radyo) v. Secretary of Labor, G.R. No. 179652, March 6, 2012

RESOLUTION

VELASCO, JR., J.:

In a Petition for Certiorari under Rule 65, petitioner Peoples Broadcasting Service,
Inc. (Bombo Radyo Phils., Inc.) questioned the Decision and Resolution of the
Court of Appeals (CA) dated October 26, 2006 and June 26, 2007, respectively, in
C.A. G.R. CEB-SP No. 00855.

Private respondent Jandeleon Juezan filed a complaint against petitioner

with the Department of Labor and Employment (DOLE) Regional Office No. VII,
Cebu City, for illegal deduction, nonpayment of service incentive leave, 13th
month pay, premium pay for holiday and rest day and illegal diminution of
benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and
Philhealth.[1] After the conduct of summary investigations, and after the parties
submitted their position papers, the DOLE Regional Director found that private
respondent was an employee of petitioner, and was entitled to his money
claims.[2] Petitioner sought reconsideration of the Directors Order, but failed. The
Acting DOLE Secretary dismissed petitioners appeal on the ground that petitioner
submitted a Deed of Assignment of Bank Deposit instead of posting a cash or
surety bond.When the matter was brought before the CA, where petitioner claimed
that it had been denied due process, it was held that petitioner was accorded due
process as it had been given the opportunity to be heard, and that the DOLE
Secretary had jurisdiction over the matter, as the jurisdictional limitation imposed
by Article 129 of the Labor Code on the power of the DOLE Secretary under Art.
128(b) of the Code had been repealed by Republic Act No. (RA) 7730.[3]

In the Decision of this Court, the CA Decision was reversed and set aside, and the
complaint against petitioner was dismissed. The dispositive portion of the Decision
reads as follows:

WHEREFORE, the petition is GRANTED. The Decision dated

26 October 2006 and the Resolution dated 26 June 2007 of the Court of
Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET
ASIDE. The Order of the then Acting Secretary of the Department of
Labor and Employment dated 27 January 2005 denying petitioners
appeal, and the Orders of the Director, DOLE Regional Office No. VII,
dated 24 May 2004 and 27 February 2004, respectively,
are ANNULLED. The complaint against petitioner is DISMISSED.[4]
The Court found that there was no employer-employee relationship between
petitioner and private respondent. It was held that while the DOLE may make a
determination of the existence of an employer-employee relationship, this function
could not be co-extensive with the visitorial and enforcement power provided in
Art. 128(b) of the Labor Code, as amended by RA 7730. The National Labor
Relations Commission (NLRC) was held to be the primary agency in determining
the existence of an employer-employee relationship. This was the interpretation of
the Court of the clause in cases where the relationship of employer-employee still
exists in Art. 128(b).[5]

From this Decision, the Public Attorneys Office (PAO) filed a Motion for
Clarification of Decision (with Leave of Court). The PAO sought to clarify as to
when the visitorial and enforcement power of the DOLE be not considered as co-
extensive with the power to determine the existence of an employer-employee
relationship.[6] In its Comment,[7] the DOLE sought clarification as well, as to the
extent of its visitorial and enforcement power under the Labor Code, as amended.

The Court treated the Motion for Clarification as a second motion for
reconsideration, granting said motion and reinstating the petition.[8] It is apparent
that there is a need to delineate the jurisdiction of the DOLE Secretary vis--vis that
of the NLRC.

Under Art. 129 of the Labor Code, the power of the DOLE and its duly
authorized hearing officers to hear and decide any matter involving the recovery of
wages and other monetary claims and benefits was qualified by the proviso that the
complaint not include a claim for reinstatement, or that the aggregate money
claims not exceed PhP 5,000. RA 7730, or an Act Further Strengthening the
Visitorial and Enforcement Powers of the Secretary of Labor, did away with the
PhP 5,000 limitation, allowing the DOLE Secretary to exercise its visitorial and
enforcement power for claims beyond PhP 5,000. The only qualification to this
expanded power of the DOLE was only that there still be an existing employer-
employee relationship.

It is conceded that if there is no employer-employee relationship, whether it

has been terminated or it has not existed from the start, the DOLE has no
jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the
first sentence reads, Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-employee
still exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect to the
labor standards provisions of this Code and other labor legislation based on the
findings of labor employment and enforcement officers or industrial safety
engineers made in the course of inspection. It is clear and beyond debate that an
employer-employee relationship must exist for the exercise of the visitorial and
enforcement power of the DOLE. The question now arises, may the DOLE make a
determination of whether or not an employer-employee relationship exists, and if
so, to what extent?
 The first portion of the question must be answered in the affirmative.

The prior decision of this Court in the present case accepts such answer, but
places a limitation upon the power of the DOLE, that is, the determination of the
existence of an employer-employee relationship cannot be co-extensive with the
visitorial and enforcement power of the DOLE. But even in conceding the power
of the DOLE to determine the existence of an employer-employee relationship, the
Court held that the determination of the existence of an employer-employee
relationship is still primarily within the power of the NLRC, that any finding by the
DOLE is merely preliminary.
This conclusion must be revisited.

No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure was
laid down where the DOLE would only make a preliminary finding, that the power
was primarily held by the NLRC. The law did not say that the DOLE would first
seek the NLRCs determination of the existence of an employer-employee
relationship, or that should the existence of the employer-employee relationship be
disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the
power to determine whether or not an employer-employee relationship exists, and
from there to decide whether or not to issue compliance orders in accordance with
Art. 128(b) of the Labor Code, as amended by RA 7730.

The DOLE, in determining the existence of an employer-employee

relationship, has a ready set of guidelines to follow, the same guide the courts
themselves use. The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; (4) the employers power to control
the employees conduct.[9] The use of this test is not solely limited to the NLRC.
The DOLE Secretary, or his or her representatives, can utilize the same test, even
in the course of inspection, making use of the same evidence that would have been
presented before the NLRC.
 The determination of the existence of an employer-employee relationship by
the DOLE must be respected. The expanded visitorial and enforcement power of
the DOLE granted by RA 7730 would be rendered nugatory if the alleged
employer could, by the simple expedient of disputing the employer-employee
relationship, force the referral of the matter to the NLRC. The Court issued the
declaration that at least a prima facie showing of the absence of an employer-
employee relationship be made to oust the DOLE of jurisdiction. But it is precisely
the DOLE that will be faced with that evidence, and it is the DOLE that will weigh
it, to see if the same does successfully refute the existence of an employer-
employee relationship.
If the DOLE makes a finding that there is an existing employer-employee
relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The
DOLE would have no jurisdiction only if the employer-employee relationship has
already been terminated, or it appears, upon review, that no employer-employee
relationship existed in the first place.

The Court, in limiting the power of the DOLE, gave the rationale that such
limitation would eliminate the prospect of competing conclusions between the
DOLE and the NLRC. The prospect of competing conclusions could just as well
have been eliminated by according respect to the DOLE findings, to the exclusion
of the NLRC, and this We believe is the more prudent course of action to take.

This is not to say that the determination by the DOLE is beyond question or
review. Suffice it to say, there are judicial remedies such as a petition for certiorari
under Rule 65 that may be availed of, should a party wish to dispute the findings of
the DOLE.

It must also be remembered that the power of the DOLE to determine the
existence of an employer-employee relationship need not necessarily result in an
affirmative finding. The DOLE may well make the determination that no
employer-employee relationship exists, thus divesting itself of jurisdiction over the
case. It must not be precluded from being able to reach its own conclusions, not by
the parties, and certainly not by this Court.
 Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is
fully empowered to make a determination as to the existence of an employer-
employee relationship in the exercise of its visitorial and enforcement power,
subject to judicial review, not review by the NLRC.

There is a view that despite Art. 128(b) of the Labor Code, as amended by
RA 7730, there is still a threshold amount set by Arts. 129 and 217 of the Labor
Code when money claims are involved, i.e., that if it is for PhP 5,000 and below,
the jurisdiction is with the regional director of the DOLE, under Art. 129, and if
the amount involved exceeds PhP 5,000, the jurisdiction is with the labor arbiter,
under Art. 217. The view states that despite the wording of Art. 128(b), this would
only apply in the course of regular inspections undertaken by the DOLE, as
differentiated from cases under Arts. 129 and 217, which originate from
complaints. There are several cases, however, where the Court has ruled that Art.
128(b) has been amended to expand the powers of the DOLE Secretary and his
duly authorized representatives by RA 7730. In these cases, the Court resolved that
the DOLE had the jurisdiction, despite the amount of the money claims
involved. Furthermore, in these cases, the inspection held by the DOLE regional
director was prompted specifically by a complaint. Therefore, the initiation of a
case through a complaint does not divest the DOLE Secretary or his duly
authorized representative of jurisdiction under Art. 128(b).

To recapitulate, if a complaint is brought before the DOLE to give effect to

the labor standards provisions of the Labor Code or other labor legislation, and
there is a finding by the DOLE that there is an existing employer-employee
relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the
DOLE finds that there is no employer-employee relationship, the jurisdiction is
properly with the NLRC. If a complaint is filed with the DOLE, and it is
accompanied by a claim for reinstatement, the jurisdiction is properly with the
Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor
Arbiter has original and exclusive jurisdiction over those cases involving wages,
rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement. If a complaint is filed with the NLRC,
and there is still an existing employer-employee relationship, the jurisdiction is
properly with the DOLE. The findings of the DOLE, however, may still be
questioned through a petition for certiorari under Rule 65 of the Rules of Court.

In the present case, the finding of the DOLE Regional Director that there
was an employer-employee relationship has been subjected to review by this
Court, with the finding being that there was no employer-employee relationship
between petitioner and private respondent, based on the evidence
presented. Private respondent presented self-serving allegations as well as self-
defeating evidence.[10] The findings of the Regional Director were not based on
substantial evidence, and private respondent failed to prove the existence of an
employer-employee relationship. The DOLE had no jurisdiction over the case, as
there was no employer-employee relationship present. Thus, the dismissal of the
complaint against petitioner is proper.

WHEREFORE, the Decision of this Court in G.R. No. 179652 is

hereby AFFIRMED, with the MODIFICATION that in the exercise of the
DOLEs visitorial and enforcement power, the Labor Secretary or the latters
authorized representative shall have the power to determine the existence of an
employer-employee relationship, to the exclusion of the NLRC.

SO ORDERED.

Visitorial and Enforcement Power

Meteoro v. Creative Creatures, G.R. No. 171275, July 13, 2009

DECISION

NACHURA, J.:

Assailed in this petition for review on certiorari are the Court of Appeals
Decision[1] dated May 31, 2005 and Resolution[2] dated January 27, 2006 in CA-
G.R. SP No. 76942.
The facts of the case are as follows:

Respondent is a domestic corporation engaged in the business of producing,

providing, or procuring the production of set designs and set construction services
for television exhibitions, concerts, theatrical performances, motion pictures and
the like. It primarily caters to the production design requirements of ABS-CBN
Broadcasting Corporation in Metro Manila and nationwide.[3] On the other hand,
petitioners were hired by respondent on various dates as artists, carpenters and
welders. They were tasked to design, create, assemble, set-up and dismantle props,
and provide sound effects to respondents various TV programs and movies.[4]

Sometime in February and March 1999, petitioners filed their respective

complaints for non-payment of night shift differential pay, overtime pay, holiday
pay, 13th month pay, premium pay for Sundays and/or rest days, service incentive
leave pay, paternity leave pay, educational assistance, rice benefits, and illegal
and/or unauthorized deductions from salaries against respondent, before the
Department of Labor and Employment (DOLE), National Capital Region
(NCR). Their complaints were consolidated and docketed as NCR00-9902-IS-
011.[5]
After the inspection conducted at respondents premises, the labor inspector noted
that the records were not made available at the time of the inspection; that
respondent claimed that petitioners were contractual employees and/or independent
talent workers; and that petitioners were required to punch their cards.[6]

In its position paper, respondent argued that the DOLE-NCR had no jurisdiction
over the complaint of the petitioners because of the absence of an employer-
employee relationship. It added that petitioners were free-lance individuals,
performing special services with skills and expertise inherently exclusive to them
like actors, actresses, directors, producers, and script writers, such that they were
treated as special types of workers.[7]

Petitioners, on the other hand, averred that they were employees of

respondent, as the elements of an employer-employee relationship existed.
Meanwhile, on April 12, 1999, petitioners filed a complaint for illegal dismissal
against petitioner, with prayer for payment of overtime pay, premium pay for
holiday and rest day, holiday pay, service incentive leave pay, 13 th month pay and
attorneys fees before the National Labor Relations Commission (NLRC). The case
was docketed as NLRC-NCR Case No. 00-04-04459-9.[8]

On October 11, 1999, DOLE Regional Director Maximo Baguyot Lim issued an
Order[9] directing respondent to pay petitioners the total amount
of P2,694,709.00. The dispositive portion of the Order reads as follows:

WHEREFORE, premises considered, this Office finds merit in the

complaint. Accordingly, Respondent Creative Creatures, Inc. and/or Mr.
Edmond Ty, is hereby ordered to pay thirty three (33) Complainants,
within ten (10) days from receipt hereof, the total amount of TWO
MILLION SIX HUNDRED NINETY FOUR THOUSAND SEVEN
HUNDRED NINE PESOS (P2,694,709.00) representing unpaid
13th month pay, vacation and sick leave benefits, regular holiday pay,
rest day and holiday premiums, overtime pay, educational allowance,
and rice allowance presented as follows:

xxxx

Failure to pay Complainants within the given period will constrain

this Office to issue a WRIT OF EXECUTION for the immediate
enforcement of this order.

SO ORDERED.[10]

The Regional Director sustained petitioners claim on the existence of an employer-

employee relationship using the determinants set forth by the Labor Code,
specifically, the elements of control and supervision, power of dismissal, payment
of wages, and the selection and engagement of employees. He added that since the
petitioners had worked for more than one year doing the same routine work, they
were regular employees with respect to the activity in which they were
employed. Lastly, he upheld the DOLE-NCRs jurisdiction to hear and determine
cases in violation of labor standards law.[11]

On appeal, then DOLE Secretary Patricia A. Sto. Tomas affirmed the findings of
the DOLE Regional Director.[12] In upholding the jurisdiction of the DOLE-NCR,
she explained that the Secretary of Labor or his duly authorized representative is
allowed to use his visitorial and enforcement powers to give effect to labor
legislation, regardless of the amount involved, pursuant to Article 128 of the Labor
Code, as amended by Republic Act (R.A.) No. 7730.
For failure to obtain a favorable decision, respondent elevated the matter to the
Court of Appeals in CA-G.R. SP No. 76942. On May 31, 2005, the appellate court
rendered the assailed decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the instant petition

is GRANTED. For lack of jurisdiction, the Orders dated October 18,
2002 and February 5, 2003, issued by respondent Secretary are hereby
declared NULL and VOID. However, in view of the filing of a similar
case before the NLRC, referral of the instant case to the NLRC for
appropriate determination is no longer necessary.

SO ORDERED.[13]

While recognizing the visitorial and enforcement powers of the Regional Director
and his jurisdiction to entertain money claims, the appellate court noted that Article
128 of the Labor Code provides an instance when he (Regional Director) may be
divested of jurisdiction. The CA pointed out that respondent had consistently
disputed the existence of employer-employee relationship, thereby placing the case
beyond the jurisdiction of the Regional Director.

Petitioners now come before this Court in this petition for review
on certiorari raising the lone issue of:

Whether or not the Court of Appeals committed an error when it ruled

that the instant case falls within the exception clause of Article 128 (b)
of the Labor Code, as amended, and in annulling and setting aside the
Orders of the Secretary of Labor which affirmed the Order of the
Regional Director of DOLE-NCR awarding the claims of the petitioners
for benefits under the Labor Standards laws, namely, 13 th month benefit,
overtime pay, night shift differentials, premium on rest days, vacation
and sick leave and other benefits accorded to employees of the
responden[t] in the exercise of its visitorial powers pursuant to Article
128 (b) of the Labor Code as amended.[14]
 In fine, we are tasked to determine which body/tribunal has jurisdiction over
petitioners money claims --- the DOLE Secretary or his duly authorized
representative, or the NLRC.

We sustain the appellate courts conclusion that the instant case falls within
the exclusive jurisdiction of the NLRC.

The DOLE Secretary and her authorized representatives, such as the DOLE-
NCR Regional Director, have jurisdiction to enforce compliance with labor
standards laws under the broad visitorial and enforcement powers conferred by
Article 128 of the Labor Code, and expanded by Republic Act (R.A.) No.
7730,[15] to wit:[16]

Art. 128. Visitorial and Enforcement Power

(a) The Secretary of Labor or his duly authorized representatives,

including labor regulation officers, shall have access to employers
records and premises at anytime of the day or night whenever work is
being undertaken therein, and the right to copy therefrom, to question
any employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement
of this Code and of any labor law, wage order or rules and regulations
issued pursuant thereto.

(b) Notwithstanding the provisions of Article 129 and 217 of this

Code to the contrary, and in cases where the relationship of employer-
employee relation still exists, the Secretary of Labor and Employment or
his duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of this
Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers
made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution, to the appropriate authority
for the enforcement of their orders, except in cases where the employer
contests the findings of the labor employment and enforcement officer
and raises issues supported by documentary proofs which were not
considered in the course of inspection.
 xxxx

As it is now worded, and as consistently held in a number of cases,[17] the

visitorial and enforcement powers of the Secretary, exercised through his
representatives, encompass compliance with all labor standards laws and other
labor legislation, regardless of the amount of the claims filed by workers.

It is well to note that the Regional Directors visitorial and enforcement

powers have undergone a series of amendments. Confusion was engendered with
the promulgation of the decision in Servandos Inc. v. Secretary of Labor and
Employment.[18] In that case, this Court held that to harmonize Articles 217 (a)
(6),[19] 129,[20] and 128 of the Labor Code, the Secretary of Labor should be
deemed as clothed with plenary visitorial powers to order the inspection of all
establishments where labor is employed, and to look into all possible violations of
labor laws and regulations; but the power to hear and decide employees claims
exceeding P5,000.00 for each employee should be left to the Labor Arbiter as the
exclusive repository of the power to hear and decide such claims.

Jurisprudence, however, rendered the Servando ruling

inapplicable. In Guico, Jr. v. Quisumbing,[21] Allied Investigation Bureau, Inc. v.
Sec. of Labor,[22] and Cirineo Bowling Plaza, Inc. v. Sensing,[23] we had occasion to
explain that while it is true that under Articles 129 and 217 of the Labor Code, the
Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money
claim of each employee exceeds P5,000.00, these provisions of law do not
contemplate or cover the visitorial and enforcement powers of the Secretary of
Labor or his duly authorized representatives. Thus, we upheld the jurisdiction of
the Regional Director, notwithstanding the fact that the amount awarded
exceeded P5,000.00 per employee.

In order to do away with the jurisdictional limitations imposed by

the Servando ruling and to finally settle any lingering doubts on the extent of the
visitorial and enforcement powers of the Secretary of Labor and Employment,
R.A. 7730 was enacted, amending Article 128 (b) to its present formulation, so as
to free it from the jurisdictional restrictions found in Articles 129 and 217.
 This notwithstanding, the power of the Regional Director to hear and decide
the monetary claims of employees is not absolute. The last sentence of Article 128
(b) of the Labor Code, otherwise known as the exception clause, provides an
instance when the Regional Director or his representatives may be divested of
jurisdiction over a labor standards case.

Under prevailing jurisprudence, the so-called exception clause has the

following elements, all of which must concur:
(a) that the employer contests the findings of the labor regulations officer
and raises issues thereon;

(b) that in order to resolve such issues, there is a need to examine

evidentiary matters; and

(c) that such matters are not verifiable in the normal course of
inspection.[24]

In the present case, the CA aptly applied the exception clause. At the earliest
opportunity, respondent registered its objection to the findings of the labor
inspector. The labor inspector, in fact, noted in its report that respondent alleged
that petitioners were contractual workers and/or independent and talent workers
without control or supervision and also supplied with tools and apparatus
pertaining to their job.[25] In its position paper, respondent again insisted that
petitioners were not its employees. It then questioned the Regional Directors
jurisdiction to entertain the matter before it, primarily because of the absence of an
employer-employee relationship. Finally, it raised the same arguments before the
Secretary of Labor and the appellate court. It is, therefore, clear that respondent
contested and continues to contest the findings and conclusions of the labor
inspector.

To resolve the issue raised by respondent, that is, the existence of

an employer-employee relationship, there is need to examine evidentiary
matters. The following elementsconstitute the reliable yardstick to determine such
relationship: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employers power to control the
employees conduct.[26] There is no hard and fast rule designed to establish the
aforesaid elements. Any competent and relevant evidence to prove the relationship
may be admitted. Identification cards, cash vouchers, social security registration,
appointment letters or employment contracts, payrolls, organization charts, and
personnel lists, serve as evidence of employee status.[27] These pieces of evidence
are readily available, as they are in the possession of either the employee or the
employer; and they may easily be looked into by the labor inspector (in the course
of inspection) when confronted with the question of the existence or absence of an
employer-employee relationship.

Some businessmen, however, try to avoid an employer-employee

relationship from arising in their enterprises, because that juridical relation spawns
obligations connected with workmens compensation, social security, medicare,
termination pay, and unionism.[28] Thus, in addition to the above-mentioned
documents, other pieces of evidence are considered in ascertaining the true nature
of the parties relationship. This is especially true in determining the element of
control. The most important index of an employer-employee relationship is the so-
called control test, that is, whether the employer controls or has reserved the right
to control the employee, not only as to the result of the work to be done, but also as
to the means and methods by which the same is to be accomplished.[29]

In the case at bar, whether or not petitioners were independent

contractors/project employees/free lance workers is a question of fact that
necessitates the examination of evidentiary matters not verifiable in the normal
course of inspection. Indeed, the contracts of independent services, as well as the
check vouchers, were kept and maintained in or about the premises of the
workplace and were, therefore, verifiable in the course of inspection. However,
respondent likewise claimed that petitioners were not precluded from working
outside the service contracts they had entered into with it (respondent); and that
there were instances when petitioners abandoned their service contracts with the
respondent, because they had to work on another project with a different
company. Undoubtedly, the resolution of these issues requires the examination of
evidentiary matters not verifiable in the normal course of inspection. Verily, the
Regional Director and the Secretary of Labor are divested of jurisdiction to decide
the case.
 We would like to emphasize that to contest means to raise questions as to the
amounts complained of or the absence of violation of labor standards laws; or, as
in the instant case, issues as to the complainants right to labor standards
benefits. To be sure, raising lack of jurisdiction alone is not the contest
contemplated by the exception clause.[30] It is necessary that the employer contest
the findings of the labor regulations officer during the hearing or after receipt of
the notice of inspection results.[31] More importantly, the key requirement for the
Regional Director and the DOLE Secretary to be divested of jurisdiction is that the
evidentiary matters be not verifiable in the course of inspection.Where the
evidence presented was verifiable in the normal course of inspection, even if
presented belatedly by the employer, the Regional Director, and later the DOLE
Secretary, may still examine it; and these officers are not divested of jurisdiction to
decide the case.[32]

In sum, respondent contested the findings of the labor inspector during and
after the inspection and raised issues the resolution of which necessitated the
examination of evidentiary matters not verifiable in the normal course of
inspection. Hence, the Regional Director was divested of jurisdiction and should
have endorsed the case to the appropriate Arbitration Branch of the
NLRC.[33] Considering, however, that an illegal dismissal case had been filed by
petitioners wherein the existence or absence of an employer-employee relationship
was also raised, the CA correctly ruled that such endorsement was no longer
necessary.

WHEREFORE, premises considered, the petition is DENIED for lack of

merit. The Court of Appeals Decision dated May 31, 2005 and its Resolution dated
January 27, 2006 in CA-G.R. SP No. 76942, are AFFIRMED.
SO ORDERED.

Bay Haven, Inc. v. Abuan, G.R. No. 160859, July 30, 2008
 DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking a reversal of the Decision[1] of the Court of Appeals (CA) dated July 15, 2003,
which denied the petition for certiorari filed by Bay Haven, Inc., Johnny T. Co and Vivian
Te-Fernandez (Te) (petitioners) seeking the annulment of the Resolutions dated April 18,
2000 and September 19, 2001, issued by Undersecretary Jose M. Espaol, Jr. (DOLE
Undersecretary) and Secretary Patricia Sto. Tomas (DOLE Secretary), respectively, of the
Department of Labor and Employment (DOLE), as well as the
[2]
Resolution dated November 5, 2003 of the CA, which denied petitioners' motion for
reconsideration.
The following are the antecedent facts.

Upon complaint of Florentino Abuan, one of herein respondents, the DOLE, in the
exercise of its visitorial, inspection and enforcement powers, through its Regional Director
for the National Capital Region (NCR), issued an Order dated November 7, 1997
commanding petitioners to pay respondents a total of P638,187.15 corresponding to the
latter's claims for underpayment as petitioners' workers.[3]

The Regional Director based his Order on the results of the inspection conducted on April
23, 1997 by one of its inspectors who found that petitioner New Bay Haven Restaurant,
located at the Army and Navy Club, Kalaw St., Manila, under the ownership or
management of petitioner Te, committed the following violations:

Labor Standards Law:

1. Underpayment of minimum wage.
2. Underpayment of thirteenth month pay.
3. Underpayment of regular holiday pay.
4. Underpayment of special holiday pay.
5. Non-payment of night shift differential pay.
Occupational Safety and Health Standards.
1. Non-registration of the firm under Rule 1020 of OSHS.[4]
On December 18, 1997, New Bay-Haven Restaurant and its co-petitioner Te filed with the
DOLE-NCR Regional Office a Motion for Reconsideration of the November 7,
1997 order, alleging that the office had no jurisdiction over the case and that the order was
issued in denial of petitioners' right to due process.[5] They argued that jurisdiction over the
case was lodged with the National Labor Relations Commission (NLRC), and not the
DOLE-NCR, due to the amount of the claims involved. They added that their right to due
process was also denied because the order was issued without them being furnished copies
of the complaint and the inspection report and without being notified of the hearings held in
the case.[6]

On June 16, 1998, the DOLE-NCR Assistant Regional Director, acting for the Regional
Director, issued an Order granting petitioners' motion for reconsideration as he found merit
in petitioners' allegation of absence of due process in the issuance of the first order.[7] The
order, however, stated that the DOLE had jurisdiction over the case, pursuant to
the Labor Code, as amended by Republic Act (R.A.) No. 7730, that intends to strengthen
the visitorial and enforcement powers of the Secretary of Labor and
Employment.[8] Consequently, another hearing for the case was set.

During the hearing on September 14, 1998, petitioners submitted their Position Paper
attaching thereto payroll sheets and waivers and quitclaims allegedly signed by the
respondents to prove that petitioner properly paid respondents the amounts due them.[9]

Respondents Florentino Abuan, Francisco Abentajado, Mario Guray, Juan Villaruz,

Jerry Asense and Joselito Razon, however, outrightly denied the validity of the payroll
sheets and quitclaims. In their Joint Affidavit dated October 29, 1998, respondents claimed
that the actual daily pay they received was much smaller than the amounts stated in the
payroll and they denied having received the cash amount stated in the quitclaims.[10] They
added that they were merely forced to sign the payrolls and quitclaims in blank and in one
sitting after they were accepted as applicants for their positions.[11]

On December 29, 1998, the DOLE-NCR Regional Director, giving credence to the
affidavit of the respondents denying the validity of the payroll sheets and quitclaims, issued
an Order denying petitioners' motion for reconsideration of the Order dated November 7,
1997.[12] The Order held petitioners New Bay Haven Restaurant, Bay Haven, Inc., its
President Johnny T. Co, and/or Vivian Te as the ones liable as employers of
respondents. However, the liability of petitioners was reduced to P468,444.16.[13]

On January 18, 1999, petitioners filed a Motion for Reconsideration of the Order
dated December 29, 1998.[14] In the motion, petitioners insisted that their documentary
evidence proved that their obligations to respondents had been discharged and that the
DOLE had no jurisdiction over the case.[15]

Treating the motion for reconsideration as an appeal, the DOLE Undersecretary issued a
Resolution dated April 18, 2000, denying the appeal filed by petitioners,[16] upholding the
Regional Director's finding that the quitclaims could not be relied upon to deny
respondents' claims, and reiterating that the DOLE had jurisdiction to decide the case.[17]

On May 12, 2000, petitioners filed a Motion for Reconsideration[18] of the April 18,
2000 Resolution which was denied by DOLE Secretary Sto. Tomas in a
Resolution[19] dated September 19, 2001.

Aggrieved, petitioners filed a Petition for Certiorari under Rule 65 of the Rules of Court
with the CA, seeking to annul and set aside the April 18, 2000 Resolution and the
September 19, 2001 Resolution,[20] docketed as CA-G.R. No. 68397.
On July 15, 2003, the CA rendered its Decision,[21] dismissing the petition, ruling that the
DOLE had jurisdiction over the labor standards case and that petitioners did not present
enough evidence to refute the claims made by respondents.

Petitioners filed a Motion for Reconsideration of the Decision which the CA denied in its
Resolution[22] dated November 5, 2003.

Hence, herein petition assigning the following errors of the CA:

1. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

AND REVERSIBLE ERROR WHEN IT UPHELD THE JURISDICTION
OF THE REGIONAL DIRECTOR FOR THE NATIONAL CAPITAL
REGION OF THE DEPARTMENT OF LABOR AND EMPLOYMENT
IN CASE NO. NCR-00-9703-RI-048-SPL ENTITLED FLORENTINO
ABUAN, ET AL., COMPLAINANTS VERSUS NEW BAY HAVEN
RESTAURANT, ET AL., RESPONDENTS; AND THE APPELLATE
 JURISDICTION OF THE OFFICE OF THE SECRETARY OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT IN CASE NO. OS-
LS-005-019-099.

2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

AND REVERSIBLE ERROR WHEN IT SUSTAINED THE RULING
OF THE REGIONAL DIRECTOR OF DOLE-NCR AND THE OFFICE
OF THE SECRETARY OF THE DOLE WHICH DECLARED THAT
RESPONDENTS CALPITO MENDOLES AND RENE CORALES ARE
EMPLOYEES OF BAY HAVEN, INC., DESPITE LACK OF
EVIDENCE TO SUPPORT THE RULING ON THE EXISTENCE OF
EMPLOYER-EMPLOYEE RELATIONSHIP.

3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

AND REVERSIBLE ERROR WHEN IT UPHELD THE MONETARY
AWARD OF P25,952.83 TO RESPONDENT ROLANDO NAELGA
WHO WAS NOT ONE OF THOSE WHOSE CLAIMS WAS [sic]
MADE THE SUBJECT OF THE FINDINGS OF THE LABOR AND
[sic] EMPLOYMENT AND ENFORCEMENT OFFICER OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT.

4. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

AND REVERSIBLE ERROR WHEN IT SUSTAINED THE AWARD
OF OVERTIME PAY DESPITE ABSENCE OF EVIDENCE TO SHOW
THAT OVERTIME WORK HAD INDEED BEEN RENDERED.
Respondents did not file a comment on the petition, but instead filed a
Memorandum[23] simultaneous with petitioners' filing of their Memorandum.[24]

In their Memorandum, respondents aver that the decision of the DOLE-NCR, as upheld by
the DOLE Secretary, was rendered in the exercise of its jurisdiction, specifically
its visitorial and enforcement powers as conferred by law.[25] They also allege that
petitioners were given the opportunity to present evidence to refute respondents' claims, but
failed to do so.[26]

We summarize the issues as follows: 1) whether the DOLE Secretary and her authorized
representatives have jurisdiction to impose the monetary liability against petitioners; and 2)
whether the DOLE-NCR, as upheld by the DOLE Secretary and the CA committed an
error in awarding the claims of respondents.
We deny the petition.

The DOLE Secretary and her authorized representatives such as the DOLE-NCR Regional
Director, have jurisdiction to enforce compliance with labor standards laws under the
broad visitorialand enforcement powers conferred by Article 128 of the Labor Code, and
expanded by R.A. No. 7730, to wit:

Art. 128. Visitorial and Enforcement Power. -

(a) The Secretary of Labor and Employment or his duly authorized

representatives, including labor regulation officers, shall have access to
employer's records and premises at any time of the day or night whenever work
is being undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be necessary
to determine violations or which may aid in the enforcement of this Code and of
any labor law, wage order or rules and regulations issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to
the contrary, and in cases where the relationship of employer-employee
still exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give
effect to the labor standards provisions of this Code and
other labor legislation based on the findings of laboremployment and
enforcement officers or industrial safety engineers made in the course of
inspection. The Secretary or his duly authorized representatives shall issue writs
of execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of
the labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection.

An order issued by the duly authorized representative of the Secretary

of Labor and Employment under this article may be appealed to the latter. In
case said order involves a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Secretary of Labor and Employment
and Employment in the amount equivalent to the monetary award in the order
appealed from. (Emphasis supplied)

The Court has held that the visitorial and enforcement powers of the Secretary, exercised
through his representatives, encompass compliance with all labor standards laws and
other laborlegislation, regardless of the amount of the claims filed by workers.[27] This has
been the rule since R.A. No. 7730 was enacted on June 2, 1994, amending Article 128(b)
of the Labor Code, to expand the visitorial and enforcement powers of the DOLE
Secretary. Under the former rule, the DOLE Secretary had jurisdiction only in cases where
the amount of the claim does not exceed P5,000.00.

Petitioners argue, however, that DOLE-NCR should not have taken jurisdiction of the case,
because in respondent Abuan's complaint, one of the entries reads as follows:

Is there anything that the Department of Labor and Employment can do to be of

further assistance to you?
[Answer:] Illegal dismissal, no overtime, no holiday pay.[28]

Petitioners contend that the complaint's own allegation of illegal dismissal meant that no
more employer-employee relationship existed between petitioners and respondents,
depriving DOLE-NCR and the Secretary of Labor and Employment of jurisdiction to
entertain the complaint.[29] This allegedly is a requirement under Art. 128(b) of
the Labor Code, hereinbefore quoted.

Petitioners' contentions are untenable. While it may be true that as far as

respondent Abuan is concerned, his allegation of illegal dismissal had deprived the DOLE
of jurisdiction as per Art. 217 of the Labor Code,[30] the same does not hold for the rest of
the respondents, who do not claim to have been illegally dismissed. For one, petitioners
failed to raise this matter with the Regional Director or even the DOLE Secretary, thus,
preventing the issue from being clarified.

The records also clearly indicate that the Regional Director and the DOLE Secretary
resolved the case based only on the following violations found by the labor inspection
officer, which do not include illegal dismissal, thus:

1. Underpayment of minimum wage.

2. Underpayment of thirteenth month pay.
3. Underpayment of regular holiday pay.
4. Underpayment of special holiday pay.
5. Non-payment of night shift differential pay.
6. Non-registration of the firm under Rule 1020 of OSHS.
The above-mentioned violations are within the jurisdiction of the DOLE Secretary and his
representatives to address. The questioned Orders dated December 29, 1998, April 18,
2000 and September 19, 2001 did not mention illegal dismissal, and properly so, because
there was no such finding in the inspector's report.[31] Being in the nature of compliance
orders, said orders, under Art. 128(b) of the Labor Code, are strictly based on the findings
of labor employment and enforcement officers x x x made in the course of inspection, and
not on any complaint filed. Though a complaint may initiate the case or an inspection, its
allegations may not necessarily be upheld by the labor inspector or the Regional Director.

Moreover, Abuan's allegation of illegal dismissal was his personal accusation, and did not
necessarily apply to all the other employees. The records also do not support a contrary
finding. But Abuan's other allegations of underpayment and other potential violations
of labor laws and regulations were within the obligation of the Regional Director to
investigate, especially insofar as they affect Abuan's remaining co-workers. Under
Art. 128, the Regional Director can conduct inspections and check all violations
of labor laws, and enforce compliance measures for the benefit of allemployees, without
being compelled to rely on a complaint that has been filed or its allegations. In fact, the
article is silent on whether the filing of a complaint is even required to initiate the exercise
of the inspection and enforcement powers.

Petitioners also insinuate that they were effectively denied due process at the earlier stages
of the controversy, as they claim that during the inspection, the inspector did not even
bother to talk to any them.[32] Again, petitioners are raising serious, factual allegations in
this late stage of their appeal. They never mentioned this alleged infraction in the very first
motion they filed or in their Motion for Reconsideration[33] of the Regional Director's Order
dated November 7, 1997. Neither did they raise it in their Position
Paper[34] dated September 14, 1998, depriving the concerned officer, that is,
the labor inspector, of the chance to deny or refute such serious allegations.

Petitioners themselves cannot deny that due process was afforded them after the
inspection. For one thing, their motion for reconsideration of the Order dated November 7,
1997 was granted, which resulted in the re-opening of the proceedings and the holding of
subsequent hearings. In these hearings, petitioners were given the chance to air their
side. Petitioners also submitted their position paper, in which they summarized all their
arguments and presented their documentary evidence, such as a contract of lease, payroll
sheets and quitclaims, to refute the respondents' claims, as well as the inspector's
findings. In the petition now before us, petitioners themselves claim that they seasonably
contested the findings of the labor inspector.[35] Taking all these into consideration, the
ineluctable conclusion is that the demands of due process were satisfied, as petitioners had
been given all the opportunity to be heard. It has been held that
where opportunity to be heard, either through oral arguments or pleadings, is accorded,
there is no denial of due process.[36]

Next, petitioners argue that the regional director was divested of jurisdiction because
petitioners contested the findings of the labor inspection officer. This, allegedly, is in
accordance with Art. 128(b) of the Labor Code, which states:

Art. 128. Visitorial and Enforcement Power. -

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists,
the Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to
the labor standards provisions of this Code and other labor legislation based on
the findings of labor employment and enforcement officers or industrial safety
engineers made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the
findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course
of inspection.

x x x x (Emphasis supplied)

Again, petitioners fail to persuade. The mere disagreement by the employer with the
findings of the labor officer, or the simple act of presenting controverting evidence, does
not automatically divest the DOLE Secretary or any of his authorized representatives such
as the regional directors, of jurisdiction to exercise their visitorial and enforcement powers
under the Labor Code.
 Under prevailing jurisprudence, the so-called exception clause in Art. 128(b) of
the Labor Code has the following elements, which must all concur to divest the regional
director of jurisdiction over workers' claims:

(a) that the employer contests the findings of the labor regulations officer
and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and
(c) that such matters are not verifiable in the normal course of
inspection.[37]

Thus, in SSK Parts Corporation v. Camas,[38] in which the employer contested the
Regional Director's finding of violations of labor standards, but such issue was resolved by
an examination of evidentiary matters which were verifiable in the ordinary course of
inspection, it was held that there was no more need to indorse the case to the arbitration
branch of the NLRC. In Ex-BataanVeterans Security Agency, Inc. v. Secretary
of Labor,[39] the Court held:

The Court notes that EBVSAI did not contest the findings of
the labor regulations officer during the hearing or after receipt of the notice of
inspection results. It was only in its supplemental motion for reconsideration
before the Regional Director that EBVSAI questioned the findings of
the labor regulations officer and presented documentary evidence to controvert
the claims of private respondents. But even if this was the case, the Regional
Director and the Secretary of Labor still looked into and
considered EBVSAIs documentary evidence and found that such did not
warrant the reversal of the Regional Directors order. The Secretary
of Labor also doubted the veracity and authenticity
of EBVSAIs documentary evidence. Moreover, the pieces of evidence
presented by EBVSAI were verifiable in the normal course of
inspection because all employment records of the employees should be kept
and maintained in or about the premises of the workplace, which in this case is
in Ambuklao Plant, the establishment where private respondents were regularly
assigned.[40] (Emphasis supplied)

Thus, the key requirement for the Regional Director and the DOLE Secretary to be
divested of jurisdiction is that the evidentiary matters are not verifiable in the course of
inspection. Where the evidence presented was verifiable in the normal course of inspection,
even if presented belatedly by the employer, the Regional Director, and later the
DOLE Secretary, may still examine them; and these officers are not divested of jurisdiction
to decide the case.

In the present case, petitioners' pieces of evidence of the alleged contract of lease,
payroll sheets, and quitclaims were all verifiable in the normal course of inspection and,
granting that they were not examined by the labor inspector, they have nevertheless been
thoroughly examined by the Regional Director and the DOLE Secretary. For these reasons,
the exclusion clause of Art.128(b) does not apply.

In addition, the findings of the said officers on the invalidity or low probative value of these
documents are findings of a factual nature which this Court will accord with great
respect.[41]

As to the quitclaims, we need only to reiterate the policy laid down in AFP Mutual Benefit
Association, Inc. v. AFP-MBAI-EU,[42] which states:

In labor jurisprudence, it is well established that quitclaims and/or complete

releases executed by the employees do not estop them from pursuing their
claims arising from the unfair labor practice of the employer.The basic reason
for this is that such quitclaims and/or complete releases are against public policy
and, therefore, null and void. The acceptance of termination pay does not divest
a laborer of the right to prosecute his employer for unfair labor practice
acts. (Cario vs. ACCFA, L-19808, September 29, 1966, 18 SCRA
163; Philippine Sugar Institute vs. CIR, L-13475, September 29, 1960, 109 Phil.
452; Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 SCRA 694, 704)

In the Cario case, supra, the Supreme Court, speaking thru Justice Sanchez,
said:

Acceptance of those benefits would not amount to estoppel. The reason is

plain. Employer and employee, obviously, do not stand on the same footing. The
employer drove the employee to the wall. The latter must have to get hold of
money. Because, out of job, he had to face the harsh necessities of life. He thus
found himself in no position to resist money proffered. His, then, is a case of
adherence, not of choice. One thing sure, however, is that petitioners did not relent
their claim. They pressed it. They are deemed not to have waived any of their
rights. Renuntiatio non praesumitur.
The principle enunciated above, however, should benefit only the respondents in the
present case who outrightly denied the quitclaims' validity, because it may be supposed that
those who did not protest petitioners' presentation of the quitclaims in evidence have
admitted the same by their silence.[43] In such instance, only respondents
Francisco Abentajado, Mario Guray, Juan Villaruz, Jerry Asense and Joselito Razon are
deemed to have blocked the quitclaims' applicability against them.[44]

Anent the second issue, petitioners contend that the Regional Director and the DOLE
Secretary committed error in their award of the various claims of respondents, specifically
citing the award to certain respondents whom they deny having worked as their employees.

Here, there is merit in petitioners' contentions. Although the basic rule is that questions of
facts like this may not be addressed in a petition for review, there are certain exceptions,
such as when the judgment is based on a misapprehension of facts.[45] At the earliest
possible opportunity, that is, as early as the position paper filed on September 14, 1998,
petitioners already denied being the employers of the respondents Calpito Mendoles and
Rene Corales. Later, in their Motion for Reconsideration[46] dated January 8, 2004,
petitioners also disclaimed liability to Rolando Naelga, who was not in the labor inspector's
and Regional Director's original list of petitioners' workers and against whom petitioners
were not afforded the chance to present countervailing evidence. Since then, petitioners
have consistently denied liability as employers of these respondents. These respondents,
however, not only failed to controvert this denial by petitioners, they also did not
participate in the proceedings of the case, as shown by the records. Thus, there was a
failure to prove the existence of an employer-employee relationship between petitioners
and these particular respondents. Respondents could have easily proven their relationship
by presenting any of the following: their appointment letters or employment contracts,
payrolls, organization charts, Social Security System registration, personnel list, as well as
the testimonies of co-employees to confirm their status,[47] but failed to do so. We can only
conclude, therefore, that there is no substantial evidence to prove petitioners' obligations to
these respondents.

However, we do not sustain petitioners' allegation that the Regional Director and the
DOLE Secretary erroneously awarded overtime pay to the respondents, despite the lack of
proof that overtime work had been rendered. Suffice it to state that petitioners' own
evidence, which are the payroll sheets they submitted to the Regional Director,[48] show
that respondents indeed rendered overtime work. This amounts to an admission by
petitioners, which may be used in evidence against them.[49] Aptly, this then became one of
the bases of the Regional Director's award of overtime pay to respondents.

In summary, we hold that only the awards granted to the following respondents be
affirmed:

1. Juan Villaruz
2. Francisco Abentajado
3. Jerry Asense
4. Mario Guray
5. Joselito Razon

The award in favor of Florentino Abuan is deleted, as his claim for illegal dismissal is
within the original and exclusive jurisdiction of the Labor Arbiter, and outside of the
jurisdiction of the DOLE Secretary and the Regional Director. The awards granted to the
rest of the respondents are likewise deleted for lack of evidence to prove petitioners'
liability as to them.

WHEREFORE, the decision appealed from is AFFIRMED, with

the MODIFICATION that only respondents Juan Villaruz, Francisco Abentajado,
Jerry Asense, Mario Guray, and JoselitoRazon be GRANTED their monetary awards
while the awards given to the rest of the respondents are DELETED.

No costs.

SO ORDERED.