Professional Documents
Culture Documents
ilities under Wage Order No. 1; and with the Office of the
vs. Regional Director, MOLE-NCR, a similar case (NCR-FSD-10-118- 83);
THE SECRETARY OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR OF
THE NATIONAL CAPITAL REGION, DEPARTMENT OF LABOR AND EMPLOYMENT
'WHEREAS, RCPI is one of the parties in the above cases and is herein
and UNITED RCPI COMMUNICATIONS LABOR ASSOCIATION (URCPICLA)-
represented by its duly authorized representative/s while the
FUR, respondents.
complainant/employees of RCPI are the other real parties in interest in the said
cases and are represented herein by BMRCPI-NFL, the duly certified bargaining
Ermitao, Asuncion, Manzano & Associates for petitioner. agent of the said complainant/employees;
The Solicitor General for public respondent. WHEREAS, it is to the actual interest and benefit of the parties mentioned in the
preceding WHEREAS (the herein parties) that this Compromise Agreement be
entered into by and between them for the purpose of novating the above
Abad, Leano & Associates for respondent URCPICLA.
mentioned cases, particularly any and all decisions therein, with the view of re-
defining the parties' rights and obligations under the various Presidential
Decrees and/or Wage Orders subjects of the above mentioned cases.
REGALADO, J.: NOW, THEREFORE, for and in consideration of the foregoing premises and the
terms and conditions herein stated, the parties have agreed and bound
This petition for certiorari seeks the annulment of the orders issued by public themselves as follows: THAT
respondents in NWC Ref. No. W01-13, viz: (1) the order of May 7, 1986 of
respondent Regional Director requiring petitioner Radio Communications of the 1. RCPI by way of a compromise settlement acknowledges its alleged liability
Philippines, Inc. (hereinafter, RCPI) and its employees represented by Buklod ng under PD 1713 (mandatory third year) and Wage Order 1 (first and third year)
Manggagawa sa RCPI-NFL (BMRCPI-NFL, for brevity) to pay private respondent subject of the cases mentioned in the first WHEREAS hereof;
United RCPI Communications Labor Association (URCPICLA-FUR for short) its
15% union service fee of P427,845.60, jointly and severally, and accordingly
2. As consideration for the dismissal with prejudice of the above-captioned
directing the issuance of a writ of execution and garnishment of RCPI's bank
cases and the novation thereof and of all decisions in said cases, the parties
account for the satisfaction of said fee; (2) the order of August 16, 1986 of
hereby further agree that:
respondent Secretary of Labor and Employment modifying the foregoing order
by reducing the union service fee to 10% of the awarded amounts and holding
petitioner solely liable for the payment of such fee; and (3) the order, dated a) On November 30, 1985, RCPI shall pay to each of its employees/complainants
March 20, 1987, of respondent Secretary denying petitioner's motion for 30% of whatever is due him/her under PD 1713 (mandatory third year) and
reconsideration. Wage Order 1 (first and third year) subject of the cases mentioned in the first
WHEREAS hereof;
The records 1 show that on May 4, 1981, petitioner, a domestic corporation
engaged in the telecommunications business, filed with the National Wages b) The balance of 70% due to each employee/complainant under PD 1713
Council an application for exemption from the coverage of Wage Order No. (mandatory third year) and Wage Order 1 (first and third year) subject of the
1. 2 The application was opposed by respondent URCPICLA-FUR, a labor cases mentioned in the first WHEREAS hereof shall be the subject of re-opening
organization affiliated with the Federation of Unions of Rizal (FUR). On May 22, and/or negotiation by the parties on July 31, 1986 for the purpose of reaching a
1981, the National Wages Council, through its Chairman, rendered a letter- compromise settlement thereon on terms mutually acceptable. Against this 30%
decision 3 disapproving said application and ordering the petitioner to pay its shall be deducted in full all personal cash advances of every covered employee;
covered employees the mandatory living allowance of P2.00 daily effective
March 22, 1981. Said letter-decision was affirmed by the Office of the President
c) Of and from the aforesaid total amount due every employee, 10% thereof
in O.P. Case No. 1882 and, subsequently, this Court in its resolution of July 15,
shall be considered as attorney's fee due Atty. Rodolfo Capocyan, the same to
1985 in G.R. No. 70148 dismissed RCPI's petition for certiorari for lack of merit.
be deducted from the remaining 70% and distributed to Atty. R. Capocyan at the
Entry of final judgment was issued by the Court on July 15, 1985. 4
time of the distribution of the remaining 70%. In this connection, Atty. Rodolfo
Capocyan manifest (sic) that he is authorized by the covered employee (sic) to
Furthermore, it is not denied that as early as March 13, 1985, before the collect 10% of whatever is/are due them as attorney's fees and undertakes and
aforesaid case was elevated to this Court, respondent union filed a motion for binds himself to submit to RCPI the required individual check-off authorization
the issuance of a writ of execution, asserting therein its claim to 15% of the total with respect to the 30%. He and the herein union assume sole responsibility for
backpay due to all its members as "union service fee" for having successfully and shall hold RCPI free and harmless from any claim, suit or complaint arising
prosecuted the latter's claim for payment of wages and for reimbursement of from the deduction of this 10% attorney's fee,'
expenses incurred by FUR and prayed for the segregation and remittance of said
amount to FUR thru its National President. 5
xxx
WHEREAS, there are now pending with the National Labor Relations On November 22, 1985, respondent Union filed an Urgent Motion for Lien (15%
Commission Case No. NLRC-NCR- 11-5265-83 (NFL, et al. vs. RCPI) relative to Union Service Fee) calling attention to a Resolution passed and approved by the
RCPI's alleged liabilities under P.D. 1713 and Wage Orders 1, 2 and 3 and NLRC URCPICLA-FUR Legislative Board on June 4, 1984 declaring respondent union
Certified Case No. 0356, with the National Wages Council and the Office of the entitled to a sum equivalent to 15% of the total backpay received by each RCPI
Regional Director, Ministry of Labor and Employment, National Capital Region employee from RCPI as union service fee and reimbursement of expenses
NWC Case Ref. No. WO-1-13 (O.P. Case No. 1882, S.C. G.R. No. 70148) relative incurred in successfully handling the instant case. Respondent Union prayed
that RCPI be required to deposit with the Cashier of the National Capital Region, We hold in the negative.
Ministry of Labor and Employment an amount equivalent to 15% of the total
amount due to the covered employees as union service fee. Copy of this motion
The contention of petitioner that the challenged order of May 7, 1986 was
was received by the Office of the President, RCPI on November 28, 1985.
issued with grave abuse of discretion, for supposedly imposing an additional
obligation in the form of attorney's fees not contemplated in the decision of the
xxx National Wages Council, is bereft of merit.
'Acting on the Urgent Motion for Lien, Director Severo M. Pucan issued an Order While it is true that the original decision of said Council; did not expressly
dated November 25, 1985 awarding to URCPICLA-FUR and FUR 15% of the total provide for payment of attorney's fees, that particular aspect or deficiency is
backpay of RCPI employees as their union service fees, and directing RCPI to deemed to have been supplied, if not modified pro tanto, by the compromise
deposit said amount with the cashier of the Regional Office for proper agreement subsequently executed between the parties. A cursory perusal of
disposition to said awardees. said agreement shows an unqualified admission by petitioner that "from the
aforesaid total amount due every employee, 10% thereof shall be considered as
attorney's fee, 14 although, as hereinafter discussed, it sought to withhold it
Despite notice of the Order of November 25, 1985, and its accompanying letter
from respondent union. Considering, however, that respondent union was
requesting the management of RCPI to withhold the 15% union service fee from
categorically found by the Labor Secretary to have been responsible for the
each employee affected, petitioner paid in full the covered employees on
successful prosecution of the case to its ultimate conclusion in behalf of its
November 29, 1985, without deducting the union service fee of 15%. In its
member, employees of herein petitioner, its right to fees for services rendered,
motion for reconsideration and to set aside the Order of November 25, 1985,
or what it termed as "union service fee," is indubitable.
petitioner argued that said Order has been rendered moot and academic by the
fact that it had already paid in full the award under the decision of the National
Wages Council. It proposed instead that URCPICLA and/or FUR re-direct their The further pretension of petitioner that respondent union is not entitled to
efforts at collection to the rank and file employees of RCPI. It also attacked the attorney's fee or union service fee because it is not a member of the Bar is both
questioned order as null and void ab anitio for lack of jurisdiction and due untenable and in disregard of the liberalized scheme and theory of
process. representation for labor adopted in the Labor Code.
On December 16, 1985, respondent Union filed a petition praying for As explained by the order of the Deputy Minister of August 18, 1986
garnishment of petitioner's funds in its depository banks to effect remittance of hereinbefore adverted to
its 15% union service fee in view of the payment in full by the latter of the
wages due its covered employees. Petitioner moved to dismiss the petition for
... The appearance of labor federations and local unions as counsel in labor
garnishment as illegal, irregular and highly anomalous. This was opposed by
proceedings has been given legal sanction and we need only cite Art. 222 of the
respondent Union. 10
Labor Code which allows non-lawyers to represent their organization or
members thereof.
At this juncture, the record shows that on December 19, 1985, said Regional
Director issued an order declaring the decision fully satisfied and lifting all the
It is undisputed that oppositor (private respondent herein) was the counsel on
garnishments effected pursuant thereto "(C)onsidering that the Alias Writ of
record of the RCPI employees in their claim for EC0LA under Wage Order No. 1
Execution dated 26 September 1985 in this case had already been fully
since the inception of the proceedings at the National Wages Council up to the
satisfied. 11
Supreme Court. It had therefore a valid claim for attorney's fee which it called
union service fee'. .. 15 (Emphasis supplied).
However, it appears that thereafter, in an order dated May 7, 1986, NCR officer-
in-charge Romeo A. Young found petitioner RCPI and its employees jointly and
As affirmed and further clarified by respondent Secretary of Labor and
severally liable for the payment of the 15% union service fee amounting to
Employment in his order of March 20, 1987
P427,845.60 to private respondent URCPICLA-FUR and consequently ordered
the garnishment of petitioner's bank account to enforce said claim. It was his
position that although the decision of the National Wages Council did not 'While the claim for union service fee was initially directed against the union
categorically require payment of the 15% service fee directly to URCPICLA-FUR it members, there is no dispute that the claim was basically for attorney's fee. As a
had acted as the counsel of record of petitioner's employees, hence said matter of fact, RCPI admitted that the union service fee is 'for Compensation for
payment could be authorized by applying suppletorily the provisions of Section services rendered by the union. ... 16
37, Rule 138 of the Rules of Court on attorney's lien. Said order further noted
that the transaction entered into by petitioner in favor of BMRCPI-NFL in the We also cannot but look askance and take a quizzical view of the aforequoted
guise of a compromise agreement, was made without the consent of URCPICLA- compromise agreement on which petitioner anchors its main arguments.
FUR in clear defraudation of the latter's right to the 15% union service fee justly
due it. 12
Aside from the fact that, as already stated, the same was concluded behind the
back of private respondent, so to speak, and with another labor union and a
Acting on petitioners "Omnibus Motion" seeking, among others, a lawyer neither of whom prior thereto had a hand in the recovery of benefits for
reconsideration of said order of May 7, 1986, which motion was treated as an the RCPI employees concerned, there are certain indicia which cast serious
appeal, respondent Secretary of Labor and Employment issued an order on doubts on the motives and actuations therein of petitioner.
August 18, 1986 modifying the order appealed from by holding petitioner solely
liable to respondent union for 10% of the awarded amounts as attorney's fees,
on the rationale that: As already stated, as early as March 13, 1985, private respondent had moved for
the deduction of said fee from the total backpay awarded in the decision of the
Council. It reiterated such claim in its motion for a writ of execution filed on
... oppositor's claim for attorney's fee was the ultimate consequence of the non- September 10, 1985 after this Court had dismissed the petition for certiorari
compliance of RCPI with Wage Order No. 1. The RCPI employees were forced to filed by petitioner in G.R. No. 70148. Petitioner was fully aware of these
avail of the services of oppositor as counsel, RCPI having continuously withheld proceedings since it even filed its opposition thereto on September 23, 1985,
payment of said benefit. They were forced to litigate up to the Supreme Court but in the aforestated order of November 25, 1985, private respondent was
for the protection of their interest. In the case of Cristobal vs. ECC, I,49280 awarded 15% of the total backpay of the RCPI employees as its union service
promulgated February 26, 1981, 103 SCRA 339, the Supreme Court ruled that fee, with petitioner being directed to deposit said amount with the NCR office.
'the defaulting employer or government agency remains liable for attorney's Yet, on November 29, 1985, petitioner, despite timely notice of said order and in
fees because it compelled the complainant to employ the services of counsel by total disregard thereof, directly paid its employees the full amount of their
unjustly refusing to recognize the validity of the claim.' Attorney's fee due the backpay, without deducting the union service fee. 17
oppositor is, thus, chargeable against RCPI. 13
'It would now appear that petitioner had a secret interest over the 10% fees due
and owing to private respondent and thru the manipulations of petitioner's
agents were given the appearance of attorney's fees' to a certain Atty. Rodolfo
Capocyan. It cannot be denied that by such fraudulent method, private GANCAYCO, J.:
respondent was deprived of its just and lawful fees. 19
Does the National Labor Relations Commission (NLRC) have jurisdiction to
Even the employment of the term "novation" in the compromise agreement resolve a claim for non-payment of stock subscriptions to a corporation?
appears to have been dictated by the dubious motive to secure dismissal with Assuming that it has, can an obligation arising therefrom be offset against a
prejudice of the decision of the National Wages Council. For, despite the money claim of an employee against the employer? These are the issues
express, albeit improper use of such term, there could have been no valid brought to this court through this petition for review of a decision of the NLRC
novation of the prior judgment for the simple reason that the pre-existing dated September 18, 1987.
obligation thereunder and the new one sought to be created are not absolutely
incompatible. On the contrary, the compromise agreement expressly recognizes The only remedy provided for by law from such a decision is a special civil action
the respective obligations of the parties in said judgment and precisely provides for certiorari under Rule 65 of the Rules of Court based on jurisdictional grounds
a method by which the same shall be extinguished, which method is, as or on alleged grave abuse of discretion amounting to lack or excess of
expressly stated in said contract, by installment payments. The contract, instead jurisdiction, not by way of an appeal by certiorari. Nevertheless, in the interest
of containing provisions incompatible with the obligations in the judgment, of justice, this petition is treated as a special civil action for certiorari.
expressly ratifies such obligations and contains provisions for satisfying them.
The said agreement simply gave the petitioner a method and more time for the
satisfaction of said judgment. It did not extinguish the obligations contained in Petitioner was employed in respondent corporation. On August 28, 1985,
the judgment, until the terms of said agreement had been fully complied with. respondent Jose M. Mirasol persuaded petitioner to subscribe to 1,500 shares
Had the petitioner continued to comply with the conditions of said agreement, of respondent corporation at P100.00 per share or a total of P150,000.00. He
it could have successfully invoked its provisions against the issuance of a writ of made an initial payment of P37,500.00. On September 1, 1975, petitioner was
execution upon said judgment. The contract and the punctual compliance with appointed President and General Manager of the respondent corporation.
its terms only delayed the right of the respondent union to the execution of the However, on January 2, 1986, he resigned.
judgment. The judgment was not satisfied and the obligations existing
thereunder still subsisted until the terms of the agreement had been fully On December 19, 1986, petitioner instituted with the NLRC a complaint against
complied with. 20 private respondents for the payment of his unpaid wages, his cost of living
allowance, the balance of his gasoline and representation expenses and his
Finally, petitioner cannot invoke the lack of an individual written authorization bonus compensation for 1986. Petitioner and private respondents submitted
from the employees as a shield for its fraudulent refusal to pay the service fee of their position papers to the labor arbiter. Private respondents admitted that
private respondent. Prior to the payment made to its employees, petitioner was there is due to petitioner the amount of P17,060.07 but this was applied to the
ordered by the Regional Director to deduct the 15% attorney's fee from the unpaid balance of his subscription in the amount of P95,439.93. Petitioner
total amount due its employees and to deposit the same with the Regional questioned the set-off alleging that there was no call or notice for the payment
Labor Office. Petitioner failed to do so allegedly because of the absence of of the unpaid subscription and that, accordingly, the alleged obligation is not
individual written authorizations. Be that as it may, the lack thereof was enforceable.
remedied and supplied by the execution of the compromise agreement whereby
the employees, expressly approved the 10% deduction and held petitioner RCPI In a decision dated April 28, 1987, the labor arbiter sustained the claim of
free from any claim, suit or complaint arising from the deduction thereof. When petitioner for P17,060.07 on the ground that the employer has no right to
petitioner was thereafter again ordered to pay the 10% fees to respondent withhold payment of wages already earned under Article 103 of the Labor Code.
union, it no longer had any legal basis or subterfuge for refusing to pay the Upon the appeal of the private respondents to public respondent NLRC, the
latter. decision of the labor arbiter was reversed in a decision dated September 18,
1987. The NLRC held that a stockholder who fails to pay his unpaid subscription
We agree that Article 222 of the Labor Code requiring an individual written on call becomes a debtor of the corporation and that the set-off of said
authorization as a prerequisite to wage deductions seeks to protect the obligation against the wages and others due to petitioner is not contrary to law,
employee against unwarranted practices that would diminish his compensation morals and public policy.
without his knowledge and consent. 21 However, for all intents and purposes,
the deductions required of the petitioner and the employees do not run counter Hence, the instant petition.
to the express mandate of the law since the same are not unwarranted or
without their knowledge and consent. Also, the deductions for the union service
The petition is impressed with merit.
fee in question are authorized by law and do not require individual check-off
authorizations. 22
Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute
between the stockholder and the corporation as in the matter of unpaid
On the foregoing considerations, We find no cogent reason to disturb the order
subscriptions. This controversy is within the exclusive jurisdiction of the
of the Secretary of Labor and Employment finding petitioner liable for the union
Securities and Exchange Commission. 1
service fee of private respondent.
Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the 1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at
said subject matter under the circumstances of this case, the unpaid No. 416 Magsaysay Ave., Baguio City.
subscriptions are not due and payable until a call is made by the corporation for
payment. 2 Private respondents have not presented a resolution of the board of
2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;
directors of respondent corporation calling for the payment of the unpaid
subscriptions. It does not even appear that a notice of such call has been sent to
petitioner by the respondent corporation. 3. That we are all (8) employees in the hotel and assigned in each respective
shifts;
What the records show is that the respondent corporation deducted the
amount due to petitioner from the amount receivable from him for the unpaid 4. That we have no complaints against the management of the Hotel Supreme as
subscriptions. 3 No doubt such set-off was without lawful basis, if not we are paid accordingly and that we are treated well.
premature. As there was no notice or call for the payment of unpaid
subscriptions, the same is not yet due and payable. 5. That we are executing this affidavit voluntarily without any force or
intimidation and for the purpose of informing the authorities concerned and to
Lastly, assuming further that there was a call for payment of the unpaid dispute the alleged report of the Labor Inspector of the Department of Labor
subscription, the NLRC cannot validly set it off against the wages and other and Employment conducted on the said establishment on February 2, 1991.
benefits due petitioner. Article 113 of the Labor Code allows such a deduction
from the wages of the employees by the employer, only in three instances, to IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May,
wit: 1991 at Baguio City, Philippines.
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any (Sgd.) (Sgd.) (Sgd.)
person, shall make any deduction from the wages of his employees, except: SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY
(a) In cases where the worker is insured with his consent by the employer, and (Sgd.) (Sgd.) (Sgd.)
the deduction is to recompense the employer for the amount paid by him as MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA.
premium on the insurance;
(Sgd.) (Sgd.)
(b) For union dues, in cases where the right of the worker or his union to JONATHAN PICART JOSE DIZON
checkoff has been recognized by the employer or authorized in writing by the
individual worker concerned; and
SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio
City, Philippines.
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.4
Asst. City Prosecutor
WHEREFORE, the petition is GRANTED and the questioned decision of the NLRC
dated September 18, 1987 is hereby set aside and another judgment is hereby Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to
rendered ordering private respondents to pay petitioner the amount of swear to the veracity and contents of the affidavit as instructed by
P17,060.07 plus legal interest computed from the time of the filing of the management. The affidavit was nevertheless submitted on the same day to the
complaint on December 19, 1986, with costs against private respondents. Regional Office of the Department of Labor and Employment in Baguio City.
SO ORDERED. As gleaned from the affidavit, the same was drawn by management for the sole
purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of
respondent's establishment on February 2, 1991) apparently adverse to the
NORMA MABEZA, petitioner, private respondent. 3
vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL
SUPREME, respondents. After she refused to proceed to the City Prosecutor's Office on the same day
the affidavit was submitted to the Cordillera Regional Office of DOLE
petitioner avers that she was ordered by the hotel management to turn over the
keys to her living quarters and to remove her belongings from the hotel
premises. 4 According to her, respondent strongly chided her for refusing to
KAPUNAN, J.: proceed to the City Prosecutor's Office to attest to the affidavit. 5 She thereafter
reluctantly filed a leave of absence from her job which was denied by
management. When she attempted to return to work on May 10, 1991, the
This petition seeking the nullification of a resolution of public respondent
hotel's cashier, Margarita Choy, informed her that she should not report to work
National Labor Relations Commission dated April 28, 1994 vividly illustrates why
and, instead, continue with her unofficial leave of absence. Consequently, on
courts should be ever vigilant in the preservation of the constitutionally
May 13, 1991, three days after her attempt to return to work, petitioner filed a
enshrined rights of the working class. Without the protection accorded by our
complaint for illegal dismissal before the Arbitration Branch of the National
laws and the tempering of courts, the natural and historical inclination of capital
Labor Relations Commission CAR Baguio City. In addition to her complaint for
to ride roughshod over the rights of labor would run unabated.
illegal dismissal, she alleged underpayment of wages, non-payment of holiday
pay, service incentive leave pay, 13th month pay, night differential and other
The facts of the case at bar, culled from the conflicting versions of petitioner benefits. The complaint was docketed as NLRC Case No. RAB-CAR-05-0198-91
and private respondent, are illustrative. and assigned to Labor Arbiter Felipe P. Pati.
Petitioner Norma Mabeza contends that around the first week of May, 1991, Responding to the allegations made in support of petitioner's complaint for
she and her co-employees at the Hotel Supreme in Baguio City were asked by illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter Pati
the hotel's management to sign an instrument attesting to the latter's that petitioner "surreptitiously left (her job) without notice to the
compliance with minimum wage and other labor standard provisions of management" 6 and that she actually abandoned her work. He maintained that
law. 1 The instrument provides: 2 there was no basis for the money claims for underpayment and other benefits
as these were paid in the form of facilities to petitioner and the hotel's other
employee. 7Pointing to the Affidavit of May 7, 1991, the private respondent
JOINT AFFIDAVIT
asserted that his employees actually have no problems with management. In a
supplemental answer submitted eleven (11) months after the original complaint
We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA for illegal dismissal was filed, private respondent raised a new ground, loss of
JUGUETA, ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE confidence, which was supported by a criminal complaint for Qualified Theft he
DIZON, all of legal ages (sic), Filipinos and residents of Baguio City, under oath, filed before the prosecutor's office of the City of Baguio against petitioner on
depose and say: July 4, 1991. 8
On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's In the instant case, respondent does not dispute the fact that petitioner tried to
complaint on the ground of loss of confidence. His disquisitions in support of his file a leave of absence when she learned that the hotel management was
conclusion read as follows: displeased with her refusal to attest to the affidavit. The fact that she made this
attempt clearly indicates not an intention to abandon but an intention to return
to work after the period of her leave of absence, had it been granted, shall have
It appears from the evidence of respondent that complainant carted away or
expired.
stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel
(Exhibits "9", "9-A," "9-B," "9-C" and "10" pages 12-14 TSN, December 1, 1992).
Furthermore, while absence from work for a prolonged period may suggest
abandonment in certain instances, mere absence of one or two days would not
In fact, this was the reason why respondent Peter Ng lodged a criminal
be enough to sustain such a claim. The overt act (absence) ought
complaint against complainant for qualified theft and perjury. The fiscal's office
to unerringly point to the fact that the employee has no intention to return to
finding a prima facie evidence that complainant committed the crime of
work, 18 which is patently not the case here. In fact, several days after she had
qualified theft issued a resolution for its filing in court but dismissing the charge
been advised to take an informal leave, petitioner tried to resume working with
of perjury (Exhibit "4" for respondent and Exhibit "B-7" for complainant). As a
the hotel, to no avail. It was only after she had been repeatedly rebuffed that
consequence, complainant was charged in court for the said crime (Exhibit "5"
she filed a case for illegal dismissal. These acts militate against the private
for respondent and Exhibit "B-6" for the complainant).
respondent's claim that petitioner abandoned her job. As the Solicitor General
in his manifestation observed:
With these pieces of evidence, complainant committed serious misconduct
against her employer which is one of the just and valid grounds for an employer
Petitioner's absence on that day should not be construed as abandonment of
to terminate an employee (Article 282 of the Labor Code as amended). 9
her job. She did not report because the cashier told her not to report anymore,
and that private respondent Ng did not want to see her in the hotel premises.
On April 28, 1994, respondent NLRC promulgated its assailed But two days later or on the 10th of May, after realizing that she had to clarify
Resolution 10 affirming the Labor Arbiter's decision. The resolution her employment status, she again reported for work. However, she was
substantially incorporated the findings of the Labor Arbiter. 11 Unsatisfied, prevented from working by private respondents. 19
petitioner instituted the instant special civil action for certiorari under Rule 65 of
the Rules of Court on the following grounds: 12
We now come to the second cause raised by private respondent to support his
contention that petitioner was validly dismissed from her job.
1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO
Loss of confidence as a just cause for dismissal was never intended to provide
GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE ALLEGED
employers with a blank check for terminating their employees. Such a vague, all-
LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE PART
encompassing pretext as loss of confidence, if unqualifiedly given the seal of
OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL
approval by this Court, could readily reduce to barren form the words of the
OF THE COMPLAINANT FROM HER EMPLOYMENT;
constitutional guarantee of security of tenure. Having this in mind, loss of
confidence should ideally apply only to cases involving employees occupying
2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS positions of trust and confidence or to those situations where the employee is
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO routinely charged with the care and custody of the employer's money or
GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR property. To the first class belong managerial employees, i.e., those vested with
ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS ON the powers or prerogatives to lay down management policies and/or to hire,
THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION transfer, suspend, lay-off, recall, discharge, assign or discipline employees or
PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH effectively recommend such managerial actions; and to the second class belong
IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF WAGES cashiers, auditors, property custodians, etc., or those who, in the normal and
AND BENEFITS; routine exercise of their functions, regularly handle significant amounts of
money or property. Evidently, an ordinary chambermaid who has to sign out for
3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS linen and other hotel property from the property custodian each day and who
COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO has to account for each and every towel or bedsheet utilized by the hotel's
GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE guests at the end of her shift would not fall under any of these two classes of
ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR employees for which loss of confidence, if ably supported by evidence, would
PRACTICE COMMITTED BY THE RESPONDENT. normally apply. Illustrating this distinction, this Court in Marina Port Services,
Inc. vs. NLRC, 20 has stated that:
Given the seriousness of the second cause (qualified theft) of the petitioner's
Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare
dismissal, it is noteworthy that the private respondent never even bothered to
claim that the reason the monetary benefits received by petitioner between
inform petitioner of the charges against her. Neither was petitioner given the
opportunity to explain the loss of the articles. It was only almost two months respondent Willy Co acquired the great bulk of the partnership interest. The
after petitioner had filed a complaint for illegal dismissal, as an afterthought, partnership now constituted solely by Willy Co and Emmanuel Zapanta
that the loss was reported to the police and added as a supplemental answer to continued to use the old firm name of Jade Mountain, though they moved the
petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of firm's main office from Makati to Mandaluyong, Metropolitan Manila. A
notice and hearing prior to her termination violated her constitutional right to Supplement to the Memorandum Agreement relating to the operation of the
due process. Under the circumstance an award of One Thousand Pesos marble quarry was entered into with the Cruz spouses in February of 1988. 2 The
(P1,000.00) on top of payment of the deficiency in wages and benefits for the actual operations of the business enterprise continued as before. All the
period aforestated would be proper. employees of the partnership continued working in the business, all, save
petitioner Benjamin Yu as it turned out.
WHEREFORE, premises considered, the RESOLUTION of the National Labor
Relations Commission dated April 24, 1994 is REVERSED and SET ASIDE, with On 16 November 1987, having learned of the transfer of the firm's main office
costs. For clarity, the economic benefits due the petitioner are hereby from Makati to Mandaluyong, petitioner Benjamin Yu reported to the
summarized as follows: Mandaluyong office for work and there met private respondent Willy Co for the
first time. Petitioner was informed by Willy Co that the latter had bought the
business from the original partners and that it was for him to decide whether or
1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date
not he was responsible for the obligations of the old partnership, including
of petitioner's illegal dismissal;
petitioner's unpaid salaries. Petitioner was in fact not allowed to work anymore
in the Jade Mountain business enterprise. His unpaid salaries remained unpaid. 3
2) Service incentive leave pay; night differential pay and 13th month pay for the
same period;
On 21 December 1988. Benjamin Yu filed a complaint for illegal dismissal and
recovery of unpaid salaries accruing from November 1984 to October 1988,
3) Separation pay equal to one month's salary for every year of petitioner's moral and exemplary damages and attorney's fees, against Jade Mountain, Mr.
continuous service with the private respondent starting with her job at the Willy Co and the other private respondents. The partnership and Willy Co
Belfront Hotel; denied petitioner's charges, contending in the main that Benjamin Yu was never
hired as an employee by the present or new partnership. 4
4) Full backwages, without qualification or deduction, from the date of
petitioner's illegal dismissal up to the date of promulgation of this decision In due time, Labor Arbiter Nieves Vivar-De Castro rendered a decision holding
pursuant to our ruling in Bustamante vs. NLRC. 34 that petitioner had been illegally dismissed. The Labor Arbiter decreed his
reinstatement and awarded him his claim for unpaid salaries, backwages and
5) P1,000.00. attorney's fees. 5
ORDERED. On appeal, the National Labor Relations Commission ("NLRC") reversed the
decision of the Labor Arbiter and dismissed petitioner's complaint in a
Resolution dated 29 November 1990. The NLRC held that a new partnership
BENJAMIN YU, petitioner, consisting of Mr. Willy Co and Mr. Emmanuel Zapanta had bought the Jade
vs. Mountain business, that the new partnership had not retained petitioner Yu in
NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS his original position as Assistant General Manager, and that there was no law
COMPANY LIMITED, WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU requiring the new partnership to absorb the employees of the old partnership.
SHIAN JENG and CHEN HO-FU, respondents. Benjamin Yu, therefore, had not been illegally dismissed by the new partnership
which had simply declined to retain him in his former managerial position or any
other position. Finally, the NLRC held that Benjamin Yu's claim for unpaid wages
Jose C. Guico for petitioner.
should be asserted against the original members of the preceding partnership,
but these though impleaded had, apparently, not been served with summons in
Wilfredo Cortez for private respondents. the proceedings before the Labor Arbiter. 6
Petitioner Benjamin Yu was formerly the Assistant General Manager of the The basic contention of petitioner is that the NLRC has overlooked the principle
marble quarrying and export business operated by a registered partnership with that a partnership has a juridical personality separate and distinct from that of
the firm name of "Jade Mountain Products Company Limited" ("Jade each of its members. Such independent legal personality subsists, petitioner
Mountain"). The partnership was originally organized on 28 June 1984 with Lea claims, notwithstanding changes in the identities of the partners. Consequently,
Bendal and Rhodora Bendal as general partners and Chin Shian Jeng, Chen Ho- the employment contract between Benjamin Yu and the partnership Jade
Fu and Yu Chang, all citizens of the Republic of China (Taiwan), as limited Mountain could not have been affected by changes in the latter's membership. 7
partners. The partnership business consisted of exploiting a marble deposit
found on land owned by the Sps. Ricardo and Guillerma Cruz, situated in Two (2) main issues are thus posed for our consideration in the case at bar: (1)
Bulacan Province, under a Memorandum Agreement dated 26 June 1984 with whether the partnership which had hired petitioner Yu as Assistant General
the Cruz spouses. 1 The partnership had its main office in Makati, Metropolitan Manager had been extinguished and replaced by a new partnerships composed
Manila. of Willy Co and Emmanuel Zapanta; and (2) if indeed a new partnership had
come into existence, whether petitioner Yu could nonetheless assert his rights
Benjamin Yu was hired by virtue of a Partnership Resolution dated 14 March under his employment contract as against the new partnership.
1985, as Assistant General Manager with a monthly salary of P4,000.00.
According to petitioner Yu, however, he actually received only half of his In respect of the first issue, we agree with the result reached by the NLRC, that
stipulated monthly salary, since he had accepted the promise of the partners is, that the legal effect of the changes in the membership of the partnership was
that the balance would be paid when the firm shall have secured additional the dissolution of the old partnership which had hired petitioner in 1984 and the
operating funds from abroad. Benjamin Yu actually managed the operations and emergence of a new firm composed of Willy Co and Emmanuel Zapanta in 1987.
finances of the business; he had overall supervision of the workers at the marble
quarry in Bulacan and took charge of the preparation of papers relating to the
The applicable law in this connection of which the NLRC seemed quite
exportation of the firm's products.
unaware is found in the Civil Code provisions relating to partnerships. Article
1828 of the Civil Code provides as follows:
Sometime in 1988, without the knowledge of Benjamin Yu, the general partners
Lea Bendal and Rhodora Bendal sold and transferred their interests in the
Art. 1828. The dissolution of a partnership is the change in the relation of the
partnership to private respondent Willy Co and to one Emmanuel Zapanta. Mr.
partners caused by any partner ceasing to be associated in the carrying on as
Yu Chang, a limited partner, also sold and transferred his interest in the
distinguished from the winding up of the business. (Emphasis supplied)
partnership to Willy Co. Between Mr. Emmanuel Zapanta and himself, private
Article 1830 of the same Code must also be noted: partner, who continues the business without liquidation of partnership affairs,
either alone or with others;
Art. 1830. Dissolution is caused:
(3) When any Partner retires or dies and the business of the dissolved
partnership is continued as set forth in Nos. 1 and 2 of this Article, with the
(1) without violation of the agreement between the partners;
consent of the retired partners or the representative of the deceased partner,
but without any assignment of his right in partnership property;
xxx xxx xxx
(4) When all the partners or their representatives assign their rights in
(b) by the express will of any partner, who must act in good faith, when no partnership property to one or more third persons who promise to pay the debts
definite term or particular undertaking is specified; and who continue the business of the dissolved partnership;
xxx xxx xxx (5) When any partner wrongfully causes a dissolution and remaining partners
continue the businessunder the provisions of article 1837, second paragraph,
(2) in contravention of the agreement between the partners, where the No. 2, either alone or with others, and without liquidation of the partnership
circumstances do not permit a dissolution under any other provision of this affairs;
article, by the express will of any partner at any time;
(6) When a partner is expelled and the remaining partners continue the business
xxx xxx xxx either alone or with others without liquidation of the partnership affairs;
(Emphasis supplied) The liability of a third person becoming a partner in the partnership continuing
the business, under this article, to the creditors of the dissolved partnership
shall be satisfied out of the partnership property only, unless there is a
In the case at bar, just about all of the partners had sold their partnership stipulation to the contrary.
interests (amounting to 82% of the total partnership interest) to Mr. Willy Co
and Emmanuel Zapanta. The record does not show what happened to the
remaining 18% of the original partnership interest. The acquisition of 82% of the When the business of a partnership after dissolution is continued under any
partnership interest by new partners, coupled with the retirement or conditions set forth in this article the creditors of the retiring or deceased
withdrawal of the partners who had originally owned such 82% interest, was partner or the representative of the deceased partner, have a prior right to any
enough to constitute a new partnership. claim of the retired partner or the representative of the deceased partner
against the person or partnership continuing the business on account of the
retired or deceased partner's interest in the dissolved partnership or on account
The occurrence of events which precipitate the legal consequence of dissolution of any consideration promised for such interest or for his right in partnership
of a partnership do not, however, automatically result in the termination of the property.
legal personality of the old partnership. Article 1829 of the Civil Code states
that:
Nothing in this article shall be held to modify any right of creditors to set
assignment on the ground of fraud.
[o]n dissolution the partnership is not terminated, but continues until the
winding up of partnership affairs is completed.
xxx xxx xxx
In the ordinary course of events, the legal personality of the expiring partnership
persists for the limited purpose of winding up and closing of the affairs of the (Emphasis supplied)
partnership. In the case at bar, it is important to underscore the fact that the
business of the old partnership was simply continued by the new Under Article 1840 above, creditors of the old Jade Mountain are also creditors
partners, without the old partnership undergoing the procedures relating to of the new Jade Mountain which continued the business of the old one without
dissolution and winding up of its business affairs. In other words, the new liquidation of the partnership affairs. Indeed, a creditor of the old Jade
partnership simply took over the business enterprise owned by the preceeding Mountain, like petitioner Benjamin Yu in respect of his claim for unpaid wages,
partnership, and continued using the old name of Jade Mountain Products is entitled to priority vis-a-visany claim of any retired or previous partner insofar
Company Limited, without winding up the business affairs of the old as such retired partner's interest in the dissolved partnership is concerned. It is
partnership, paying off its debts, liquidating and distributing its net assets, and not necessary for the Court to determine under which one or mare of the above
then re-assembling the said assets or most of them and opening a new business six (6) paragraphs, the case at bar would fall, if only because the facts on record
enterprise. There were, no doubt, powerful tax considerations which underlay are not detailed with sufficient precision to permit such determination. It is,
such an informal approach to business on the part of the retiring and the however, clear to the Court that under Article 1840 above, Benjamin Yu is
incoming partners. It is not, however, necessary to inquire into such matters. entitled to enforce his claim for unpaid salaries, as well as other claims relating
to his employment with the previous partnership, against the new Jade
What is important for present purposes is that, under the above described Mountain.
situation, not only the retiring partners (Rhodora Bendal, et al.) but also the new
partnership itself which continued the business of the old, dissolved, one, are It is at the same time also evident to the Court that the new partnership was
liable for the debts of the preceding partnership. In Singson, et al. v. Isabela Saw entitled to appoint and hire a new general or assistant general manager to run
Mill, et al, 8 the Court held that under facts very similar to those in the case at the affairs of the business enterprise take over. An assistant general manager
bar, a withdrawing partner remains liable to a third party creditor of the old belongs to the most senior ranks of management and a new partnership is
partnership. 9 The liability of the new partnership, upon the other hand, in the entitled to appoint a top manager of its own choice and confidence. The non-
set of circumstances obtaining in the case at bar, is established in Article 1840 of retention of Benjamin Yu as Assistant General Manager did not therefore
the Civil Code which reads as follows: constitute unlawful termination, or termination without just or authorized
cause. We think that the precise authorized cause for termination in the case at
Art. 1840. In the following cases creditors of the dissolved partnership bar was redundancy. 10 The new partnership had its own new General Manager,
are also creditors of the person or partnership continuing the business: apparently Mr. Willy Co, the principal new owner himself, who personally ran
the business of Jade Mountain. Benjamin Yu's old position as Assistant General
Manager thus became superfluous or redundant. 11 It follows that petitioner
(1) When any new partner is admitted into an existing partnership, or when any Benjamin Yu is entitled to separation pay at the rate of one month's pay for
partner retires and assigns (or the representative of the deceased partner each year of service that he had rendered to the old partnership, a fraction of at
assigns) his rights in partnership property to two or more of the partners, or to least six (6) months being considered as a whole year.
one or more of the partners and one or more third persons, if the business is
continued without liquidation of the partnership affairs;
While the new Jade Mountain was entitled to decline to retain petitioner
Benjamin Yu in its employ, we consider that Benjamin Yu was very shabbily
(2) When all but one partner retire and assign (or the representative of a treated by the new partnership. The old partnership certainly benefitted from
deceased partner assigns) their rights in partnership property to the remaining the services of Benjamin Yu who, as noted, previously ran the whole marble
quarrying, processing and exporting enterprise. His work constituted value- BSPA was a single proprietorship owned, managed and operated by the late
added to the business itself and therefore, the new partnership similarly Felipe Bacani. It was registered with the Bureau of Trade and Industry as a
benefitted from the labors of Benjamin Yu. It is worthy of note that the new business name in 1957. Upon its expiration, the registration was renewed on
partnership did not try to suggest that there was any cause consisting of some July 1, 1987 for a term of five (5) years ending 1992.
blameworthy act or omission on the part of Mr. Yu which compelled the new
partnership to terminate his services. Nonetheless, the new Jade Mountain did
On December 31, 1989, Felipe Bacani retired the business name and BSPA
not notify him of the change in ownership of the business, the relocation of the
ceased to operate effective on that day. At that time, respondent Alicia Bacani,
main office of Jade Mountain from Makati to Mandaluyong and the assumption
daughter of Felipe Bacani, was BSPA's Executive Directress.
by Mr. Willy Co of control of operations. The treatment (including the refusal to
honor his claim for unpaid wages) accorded to Assistant General Manager
Benjamin Yu was so summary and cavalier as to amount to arbitrary, bad faith On January 15, 1990 Felipe Bacani died. An intestate proceeding was instituted
treatment, for which the new Jade Mountain may legitimately be required to for the settlement of his estate before the Regional Trial Court, National Capital
respond by paying moral damages. This Court, exercising its discretion and in Region, Branch 155, Pasig, Metro Manila.
view of all the circumstances of this case, believes that an indemnity for moral
damages in the amount of P20,000.00 is proper and reasonable. Earlier, on October 26, 1989, respondent Bacani Security and Allied Services Co.,
Inc. (BASEC, for brevity) had been organized and registered as a corporation
In addition, we consider that petitioner Benjamin Yu is entitled to interest at the with the Securities and Exchange Commission. The following were the
legal rate of six percent (6%) per annum on the amount of unpaid wages, and of incorporators with their respective shareholdings:
his separation pay, computed from the date of promulgation of the award of the
Labor Arbiter. Finally, because the new Jade Mountain compelled Benjamin Yu ALICIA BACANI 25,250 shares
to resort to litigation to protect his rights in the premises, he is entitled to LYDIA BACANI 25,250 shares
attorney's fees in the amount of ten percent (10%) of the total amount due from AMADO P. ELEDA 25,250 shares
private respondent Jade Mountain. VICTORIA B. AURIGUE 25,250 shares
FELIPE BACANI 20,000 shares
WHEREFORE, for all the foregoing, the Petition for Certiorari is GRANTED DUE
COURSE, the Comment filed by private respondents is treated as their Answer to The primary purpose of the corporation was to "engage in the business of
the Petition for Certiorari, and the Decision of the NLRC dated 29 November providing security" to persons and entities. This was the same line of business
1990 is hereby NULLIFIED and SET ASIDE. A new Decision is hereby ENTERED that BSPA was engaged in. Most of the petitioners, after losing their jobs in
requiring private respondent Jade Mountain Products Company Limited to pay BSPA, were employed in BASEC.
to petitioner Benjamin Yu the following amounts:
(c) indemnity for moral damages in the amount of P20,000.00; On March 1, 1992, the Labor Arbiter rendered a decision upholding the right of
the petitioners. The dispositive portion of his decision reads:
(d) six percent (6%) per annum legal interest computed on items (a) and (b)
above, commencing on 26 December 1989 and until fully paid; and CONFORMABLY WITH THE FOREGOING, the judgment is hereby rendered
finding complainants entitled to their money claims as herein above computed
and to be paid by all the respondents hereinin solidum except BSPA which has
(e) ten percent (10%) attorney's fees on the total amount due from private
already been retired from business.
respondent Jade Mountain.
Respondents are further ordered to pay attorney's fees equivalent to five (5)
Costs against private respondents.
percent of the awarded money claims.
No appeal lies to review decisions of the NLRC. Nonetheless the petition in this
MENDOZA, J.: case was treated as a special civil action of certiorari to determine whether the
NLRC did not commit a grave abuse of its discretion in reversing the Labor
Arbiter's decision.
This is a petition for review of the decision of the First Division 1 of the National
Labor Relations Commission, setting aside the decision of the Labor Arbiter
which held private respondents jointly and severally liable to the petitioners for The issues in this case are two fold: first, whether Bacani Security and Allied
overtime and legal holiday pay. Services Co. Inc. (BASEC) and Alicia Bacani can be held liable for claims of
petitioners against Bacani Security and Protective Agency (BSPA) and,second, if
the claims were the personal liability of the late Felipe Bacani, as owner of BSPA,
The facts of this case are as follows:
whether the Labor Arbiter had jurisdiction to decide the claims.
The rationale for the rule is that upon the death of the defendant, a testate or
As correctly found by the NLRC, BASEC is an entity separate and distinct from
intestate proceeding shall be instituted in the proper court wherein all his
that of BSPA. BSPA is a single proprietorship owned and operated by Felipe
creditors must appear and file their claims which shall be paid proportionately
Bacani. Hence its debts and obligations were the personal obligations of its
out of the property left by the deceased. The objective is to avoid duplicity of
owner. Petitioners' claim which are based on these debts and personal
procedure. Hence the ordinary actions must be taken out from the ordinary
obligations, did not survive the death of Felipe Bacani on January 15, 1990 and
courts. 6 Under Art. 110 of the Labor Code, money claims of laborers enjoy
should have been filed instead in the intestate proceedings involving his estate.
preference over claims of other creditors in case of bankruptcy or liquidation of
the employer's business.
Indeed, the rule is settled that unless expressly assumed labor contracts are not
enforceable against the transferee of an enterprise. The reason for this is that
WHEREFORE, the petition for certiorari is DISMISSED.
labor contracts are in personam. 2 Consequently, it has been held that claims for
backwages earned from the former employer cannot be filed against the new
owners of an enterprise. 3Nor is the new operator of a business liable for claims SO ORDERED.
for retirement pay of employees. 4
AVON DALE GARMENTS, INC., petitioner,
Petitioners claim, however, that BSPA was intentionally retired in order to allow vs.
expansion of its business and even perhaps an increase in its capitalization for NATIONAL LABOR RELATIONS COMMISSION, LILIA DUMANTAY, ET
credit purpose. According to them, the Bacani family merely continued the AL., respondents.
operation of BSPA by creating BASEC in order to avoid the obligations of the
former. Petitioners anchor their claim on the fact that Felipe Bacani, after
RESOLUTION
having ceased to operate BSPA, became an incorporator of BASEC together with
his wife and daughter. Petitioners urge piercing the veil of corporate entity in
order to hold BASEC liable for BSPA's obligations.
The doctrine of piercing the veil of corporate entity is used whenever a court FRANCISCO, J.:
finds that the corporate fiction is being used to defeat public convenience,
justify wrong, protect fraud, or defend crime, or to confuse legitimate issues, or This special civil action for certiorari seeks to set aside the decision of the
that a corporation is the mere alter ego or business conduit of a person or National Labor Relations Commission, dated August 31, 1994, in NLRC CA
where the corporation is so organized and controlled and its affairs are so 005068-93, for allegedly having been rendered with grave abuse of discretion.
conducted as to make it merely an instrumentality, agency, conduit or adjunct
of another corporation. 5 It is apparent, therefore, that the doctrine has no
application to this case where the purpose is not to hold the individual Private respondents were employees of petitioner Avon Dale Garments, Inc. and
stockholders liable for the obligations of the corporation but, on the contrary, to its predecessor-in-interest, Avon Dale Shirt Factory. Following a dispute brought
hold the corporation liable for the obligations of a stockholder or stockholders. about by the rotation of workers, a compromise agreement was entered into
Piercing the veil of corporate entity means looking through the corporate form between petitioner and private respondents wherein the latter were terminated
to the individual stockholders composing it. Here there is no reason to pierce from service and given their corresponding separation pay.
the veil of corporate entity because there is no question that petitioners' claims,
assuming them to be valid, are the personal liability of the late Felipe Bacani. It However, upon refusal of the petitioner to include in the computation of private
is immaterial that he was also a stockholder of BASEC. respondents' separation pay the period during which the latter were employed
by Avon Dale Shirt Factory, private respondents filed a complaint with the labor
Indeed, the doctrine is stood on its head when what is sought is to make a arbiter claiming a deficiency in their separation pay (docketed as NLRC-NCR-00-
corporation liable for the obligations of a stockholder. But there are several 02-00810-93). According to private respondents, their previous employment
reasons why BASEC is not liable for the personal obligations of Felipe Bacani. For with petitioner's predecessor-in-interest, Avon Dale Shirt Factory, should be
one, BASEC came into existence before BSPA was retired as a business concern. credited in computing their separation pay considering that Avon Dale Shirt
BASEC was incorporated on October 26, 1989 and its license to operate was factory was not dissolved and they were not in turn hired as new employees by
released on May 28, 1990, while BSPA ceased to operate on December 31, 1989. Avon Dale Garments, Inc.
Before, BSPA was retired, BASEC was already existing. It is, therefore, not true
that BASEC is a mere continuity of BSPA. In its decision dated May 14, 1993, the labor arbiter dismissed private
respondents' complaint and held that Avon Dale Shirt Factory and Avon Dale
Second, Felipe Bacani was only one of the five (5) incorporators of BASEC. He Garments, Inc. are not one and the same entity as the former was in fact
owned the least number of shares in BASEC, which included among its dissolved on December 27, 1978, when it filed its Articles of Dissolution with the
incorporators persons who are not members of his family. That his wife Lydia Securities and Exchange Commission. 1
and daughter Alicia were also incorporators of the same company is not
sufficient to warrant the conclusion that they hold their shares in his behalf. Private respondents appealed to the NLRC and the latter reversed the decision
of the labor arbiter after finding that upon dissolution of Avon Dale Shirt
Third, there is no evidence to show that the assets of BSPA were transferred to Factory, Inc., there was no showing that its terminated employees, as creditors
BASEC. If BASEC was a mere continuation of BSPA, all or at least a substantial insofar as their separation pay were concerned, were ever paid. Thus, petitioner
part of the latter's assets should have found their way to BASEC. Avon Dale Garments, Inc., as successor-in-interest, was held liable for private
respondents' unpaid claim. 2
Neither can respondent Alicia Bacani be held liable for BSPA's obligations.
Although she was Executive Directress of BSPA, she was merely an employee of The instant petition is now brought before us by petitioner Avon Dale Garments,
the BSPA, which was a single proprietorship. Inc., anchored on the sole ground that, as a separate and distinct entity, it
should not be held liable for private respondents' separation pay from Avon
Dale Shirt Factory.
Now, the claims of petitioners are actually money claims against the estate of
Felipe Bacani. They must be filed against his estate in accordance with Sec. 5 of
Rule 86 which provides in part: Pending resolution of the instant petition, counsel for private respondents,
instead of filing a comment to the petition, filed a Manifestation indicating that
the parties have already reached an amicable settlement on December 27,
Sec. 5. Claims which must be filed under the notice. If not filed, 1994, wherein private respondents were paid their corresponding separation
barred; exceptions. All claims for money against the decedent, arising from pay, after which, they executed a waiver and quitclaim. 3 It appeared however,
upon verification by the Office of the Solicitor General, that the aforementioned rendered by the Court of Appeals in CA-G.R. SP No. 63405, which declared
compromise agreement was executed between the parties without the herein petitioner Dole Philippines, Inc. as the employer of herein respondents,
knowledge and participation of the NLRC. 4 Medel Esteva and 86 others; found petitioner guilty of illegal dismissal; and
ordered petitioner to reinstate respondents to their former positions and to pay
the latter backwages.
The established rule is that compromise agreements involving labor standard
cases, like the one entered into by the parties herein, must be reduced in
writing and signed in the presence of the Regional Director or his duly The antecedent facts of the case are recounted as follows:
authorized representative. Otherwise, they are not deemed to be duly
executed. 5 For this reason, the compromise agreement submitted by private
Petitioner is a corporation duly organized and existing in accordance with
respondents' counsel cannot be recognized by this court for being improperly
Philippine laws, engaged principally in the production and processing of
executed.
pineapple for the export market.3 Its plantation is located in Polomolok, South
Cotabato.4
Nevertheless, we find the petition to be without merit as the assailed decision is
in complete accord with the law and evidence on record.
Respondents are members of the Cannery Multi-Purpose Cooperative
(CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938,
Petitioner failed to establish that Avon Dale Garments, Inc., is a separate and otherwise known as the Cooperative Code of the Philippines, and duly-
distinct entity from Avon Dale Shirt Factory, absent any showing that there was registered with the Cooperative Development Authority (CDA) on 6 January
indeed an actual closure and cessation of the operations of the latter. The mere 1993.5 Members of CAMPCO live in communities surrounding petitioners
filing of the Articles of Dissolution with the Securities and Exchange Commission, plantation and are relatives of petitioners employees.
without more, is not enough to support the conclusion that actual dissolution of
an entity in fact took place.
On 17 August 1993, petitioner and CAMPCO entered into a Service
Contract.6 The Service Contract referred to petitioner as "the Company," while
On the contrary, the prevailing circumstances in this case indicated that CAMPCO was "the Contractor." Relevant portions thereof read as follows
petitioner company is not distinct from its predecessor Avon Dale Shirt Factory,
but in fact merely continued the operations of the latter under the same
1. That the amount of this contract shall be or shall not exceed TWO HUNDRED
owners, the same business venture, at same address 6, and even continued to
TWENTY THOUSAND ONLY (P220,000.00) PESOS, terms and conditions of
hire the same employees (herein private respondents).
payment shall be on a per job basis as specified in the attached schedule of
rates; the CONTRACTOR shall perform the following services for the COMPANY;
Thus, conformably with established jurisprudence, the two entities cannot be
deemed as separate and distinct where there is a showing that one is merely the
1.1 Assist the COMPANY in its daily operations;
continuation of the other. 7 In fact, even a change in the corporate name does
not make a new corporation, whether effected by a special act or under a
general law, it has no effect on the identity of the corporation, or on its 1.2 Perform odd jobs as may be assigned.
property, rights, or liabilities. 8 Respondent NLRC therefore, did not commit any
grave abuse of discretion in holding that petitioner should likewise include 2. That both parties shall observe the following terms and conditions as
private respondents' employment with Avon Dale Shirt Factory in computing stipulated, to wit:
private respondents' separation pay as petitioner failed to substantiate its claim
that it is a distinct entity.
2.1 CONTRACTOR must carry on an independent legitimate business, and must
comply with all the pertinent laws of the government both local and national;
ACCORDINGLY, the instant petition is hereby DISMISSED.
2.2 CONTRACTOR must provide all hand tools and equipment necessary in the
SO ORDERED. performance of their work.
DOLE PHILIPPINES, INC., Petitioner, However, the COMPANY may allow the use of its fixed equipment as a casual
vs. facility in the performance of the contract;
MEDEL ESTEVA, HENRY SILVA, GILBERT CABILAO, LORENZO GAQUIT, DANIEL
PABLO, EDWIN CAMILO, BENJAMIN SAKILAN, RICHARD PENUELA, ARMANDO
PORRAS, EDUARDO FALDAS, NILO DONDOYANO, MIGUEL DIAZ, ROMEL BAJO, 2.3 CONTRACTOR must comply with the attached scope of work, specifications,
ARTEMIO TENERIFE, EDDIE LINAO, JERRY LIGTAS, SAMUEL RAVAL, WILFREDO and GMP and safety practices of the company;
BLANDO, LORENZO MONTERO, JR., JAIME TESIPAO, GEORGE DERAL, ERNESTO
ISRAEL, JR., AGAPITO ESTOLOGA, JOVITO DAGUIO, ARSENIO LEONCIO, 2.4 CONTRACTOR must undertake the contract work under the following
MARLON BLANDO, JOSE OTELO CASPILLO, ARNOLD LIZADA, JERRY manner:
DEYPALUBOS, STEVEN MADULA, ROGELIO CABULAO, JR., ALVIN COMPOC,
EUGENIO BRITANA, RONNIE GUELOS, EMMANUEL JIMENA, GERMAN JAVA,
JESUS MEJICA, JOEL INVENTADO, DOMINGO JABULGO, RAMIL ENAD, a. on his own account;
RAYMUNDO YAMON, RITCHIE MELENDRES, JACQUEL ORGE, RAMON
BARCELONA, ERWIN ESPIA, NESTOR DELIDELI, JR., ALLAN GANE, ROMEO b. under his own responsibility;
PORRAS, RITCHIE BOCOG, JOSELITO ACEBES, DANNY TORRES, JIMMY
NAVARRO, RALPH PEREZ, SONNY SESE, RONALD RODRIQUES, ROBERTO
c. according to his manner and method, free from the control and direction of
ALLANEC, ERNIE GIGANTANA, NELSON SAMSON, REDANTE DAVILA, EDDIE
the company in all matters connected with the performance of the work except
BUSLIG, ALLAN PINEDA, JESUS BELGERA, VICENTE LABISTE, CARMENCITA
as to the result thereof;
FELISILDA, GEORGE DERLA, RUBEN TORMON, NEIL TAJALE, ORLANDO
ESPENILLA, RITCHEL MANEJAR, JOEL QUINTANA, ERWIN ALDE, JOEL CATALAN,
ELMER TIZON, ALLAN ESPADA, EUGENE BRETANA, RAMIL ENAD, RENE 3. CONTRACTOR must pay the prescribed minimum wage, remit SSS/MEDICARE
INGALLA, STEVEN MADULLA, RANDY REBUTAZO, NEIL BAGATILLA, ARSENIO premiums to proper government agencies, and submit copies of payroll and
LEONCIO, ROLANDO VILLEGAS and JUSLIUS TESIPAO, herein represented by proof of SSS/MEDICARE remittances to the COMPANY;
MEDEL ESTEVA, Authorized Representative,Respondents.
4. This contract shall be for a specific period of Six (6) months from July 1 to
DECISION December 31, 1993; x x x.
CHICO-NAZARIO, J.: Pursuant to the foregoing Service Contract, CAMPCO members rendered
services to petitioner. The number of CAMPCO members that report for work
and the type of service they performed depended on the needs of petitioner at
Before this Court is a Petition for Review on Certiorari under Rule 45 of the
any given time. Although the Service Contract specifically stated that it shall only
revised Rules of Civil Procedure seeking the reversal of the Decision,1 dated 20
be for a period of six months, i.e., from 1 July to 31 December 1993, the parties
May 2002, and the Amended Decision,2 dated 27 November 2003, both
had apparently extended or renewed the same for the succeeding years without
executing another written contract. It was under these circumstances that labor only contracting which is a prohibited activity. The same cooperatives are
respondents came to work for petitioner. therefore ordered to cease and desist from further engaging in such activities.
Investigation by DOLE The three (3) other cooperatives, namely Polomolok Skilled Workers Multi
Purpose Cooperative, Unified Engineering and Manpower Service Multi Purpose
Cooperative and Tibud sa Katibawasan Multi Purpose Cooperative whose
Concomitantly, the Sangguniang Bayan of Polomolok, South Cotabato, passed
activities may not be directly related to the principal business of DOLE
Resolution No. 64, on 5 May 1993, addressed to then Secretary Ma. Nieves R.
Philippines, Inc. are also advised not to engage in labor only contracting with the
Confessor of the Department of Labor and Employment (DOLE), calling her
company.
attention to the worsening working conditions of the petitioners workers and
the organization of contractual workers into several cooperatives to replace the
individual labor-only contractors that used to supply workers to the petitioner. All the six cooperatives involved appealed the afore-quoted Order to the Office
Acting on the said Resolution, the DOLE Regional Office No. XI in Davao City of the DOLE Secretary, raising the sole issue that DOLE Regional Director
organized a Task Force that conducted an investigation into the alleged labor- Director Parel committed serious error of law in directing the cooperatives to
only contracting activities of the cooperatives in Polomolok.7 cease and desist from engaging in labor-only contracting. On 15 September
1994, DOLE Undersecretary Cresencio B. Trajano, by the authority of the DOLE
Secretary, issued an Order11 dismissing the appeal on the basis of the following
On 24 May 1993, the Senior Legal Officer of petitioner wrote a letter addressed
ratiocination
to Director Henry M. Parel of DOLE Regional Office No. XI, supposedly to correct
the misinformation that petitioner was involved in labor-only contracting,
whether with a cooperative or any private contractor. He further stated in the The appeal is devoid of merit.
letter that petitioner was not hiring cooperative members to replace the regular
workers who were separated from service due to redundancy; that the
The Regional Director has jurisdiction to issue a cease and desist order as
cooperatives were formed by the immediate dependents and relatives of the
provided by Art. 106 of the Labor Code, as amended, to wit:
permanent workers of petitioner; that these cooperatives were registered with
the CDA; and that these cooperatives were authorized by their respective
constitutions and by-laws to engage in the job contracting business.8 "Art. 106. Contractor or subcontractor. x x x
The Task Force submitted a report on 3 June 1993 identifying six cooperatives xxxx
that were engaged in labor-only contracting, one of which was CAMPCO. The
DOLE Regional Office No. XI held a conference on 18 August 1993 wherein the The Secretary of Labor may, by appropriate regulations, restrict or prohibit the
representatives of the cooperatives named by the Task Force were given the contracting out of labor to protect the rights of workers established under this
opportunity to explain the nature of their activities in relation to petitioner. Code. In so prohibiting or restricting, he may make appropriate distinctions
Subsequently, the cooperatives were required to submit their position papers between labor only contracting and job contracting as well as differentiations
and other supporting documents, which they did on 30 August 1993. Petitioner within these types of contracting and determine who among the parties
likewise submitted its position paper on 15 September 1993.9 involved shall be considered the employer for purposes of this Code, to prevent
any violation or circumvention of any provision of this Code (Emphasis supplied)
On 19 October 1993, Director Parel of DOLE Regional Office No. XI issued an
Order10 in which he made the following findings There is "labor-only" contracting where the person supplying workers to an
employer does not have substantial capital or investment in the forms of tools,
Records submitted to this Office show that the six (6) aforementioned equipment, machineries, work premises, among others, and the workers
cooperatives are all duly registered with the Cooperative Development recruited and placed by such person are performing activities which are directly
Authority (CDA). These cooperatives were also found engaging in different related to the principal business of the employer. In such cases, the person or
activities with DOLE PHILIPPINES, INC. a company engaged in the production of the intermediary shall be considered merely as an agent of the employer who
pineapple and export of pineapple products. Incidentally, some of these shall be responsible to the workers in the same manner and extent as if the
cooperatives were also found engaging in activities which are directly related to latter were directly employed by him."
the principal business or operations of the company. This is true in the case of
the THREE (3) Cooperatives, namely; Adventurers Multi Purpose Cooperative, in relation to Article 128(b) of the Labor Code, as amended by Republic Act No.
Human Resource Multi Purpose Cooperative and Cannery Multi Purpose 7730, which reads:
Cooperative.
2) The workers recruited and placed by such person are performing activities An order issued by the duly authorized representative of the Secretary of Labor
which are directly related to the principal business or operation of the employer and Employment under this article may be appealed to the latter. In case said
to which workers are habitually employed. order involves a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash bond issued by a reputable bonding company
duly accredited by the Secretary of Labor and Employment in the amount
b) Labor-only contracting as defined herein is hereby prohibited and the person
equivalent to the monetary award in the order appealed from."
acting as contractor shall be considered merely as an agent or intermediary of
the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him." The records reveal that in the course of the inspection of the premises of Dolefil,
it was found out that the activities of the members of the [cooperatives] are
necessary and desirable in the principal business of the former; and that they do
WHEREFORE, premises considered, ADVENTURERS MULTI PURPOSE
not have the necessary investment in the form of tools and equipments. It is
COOPERATIVE, HUMAN RESOURCE MULTI PURPOSE COOPERATIVE and
worthy to note that the cooperatives did not deny that they do not have enough
CANNERY MULTI PURPOSE COOPERATIVE are hereby declared to be engaged in
capital in the form of tools and equipment. Under the circumstances, it could National Labor Relations Commission (NLRC), for illegal dismissal, regularization,
not be denied that the [cooperatives] are considered as labor-only contractors wage differentials, damages and attorneys fees.
in relation to the business operation of DOLEFIL, INC.
In their Position Paper,14 respondents reiterated and expounded on the
Thus, Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor allegations they previously made in their Complaint
Code, provides that:
Sometime in 1993 and 1994, [herein petitioner] Dolefil engaged the services of
"Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply the [herein respondents] through Cannery Multi-purpose Cooperative. A
workers to an employer shall be deemed to be engaged in labor-only cooperative which was organized through the initiative of Dolefil in order to fill
contracting where such person: in the vacuum created as a result of the dismissal of the regular employees of
Dolefil sometime in 1990 to 1993.
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and The [respondents] were assigned at the Industrial Department of respondent
Dolefil. All tools, implements and machineries used in performing their task such
as: can processing attendant, feeder of canned pineapple at pineapple
(2) The workers recruited and placed by such person are performing activities
processing, nata de coco processing attendant, fruit cocktail processing
which are directly related to the principal business or operations of the
attendant, and etc. were provided by Dolefil. The cooperative does not have
employer in which workers are habitually employed.
substantial capital and does not provide the [respondents] with the necessary
tools to effectively perform their assigned task as the same are being provided
(b) Labor-only contracting as defined herein is hereby prohibited and the person by Dolefil.
acting as a contractor shall be considered merely as an agent or intermediary of
the employer who shall be responsible to the workers in the same manner and
The training and instructions received by the [respondents] were provided by
extent as if the latter were directly employed by him.
Dolefil. Before any of the [respondents] will be allowed to work, he has to
undergo and pass the training prescribed by Dolefil. As a matter of fact, the
x x x x" trainers are employees of Dolefil.
Violation of the afore-quoted provision is considered a labor standards violation The [respondents] perform their assigned task inside the premises of Dolefil. At
and thus, within the visitorial and enforcement powers of the Secretary of Labor the job site, they were given specific task and assignment by Dolefils
and Employment (Art. 128). supervisors assigned to supervise the works and efficiency of the complainants.
Just like the regular employees of Dolefil, [respondents] were subjected to the
The Regional Directors authority to issue a cease and desist order emanates same rules and regulations observe [sic] inside company premises and to some
from Rule I, Section 3 of the Rules on Disposition of Labor Standard Cases in the extent the rules applied to the [respondents] by the company through its
Regional Offices, to wit: officers are even stricter.
"Section 3. Authorized representative of the Secretary of Labor and The functions performed by the [respondents] are the same functions
Employment. The Regional Directors shall be the duly authorized discharged by the regular employees of Dolefil. In fact, at the job site, the
representatives of the Secretary of Labor and Employment in the administration [respondents] were mixed with the regular workers of Dolefil. There is no
and enforcement of the labor standards within their respective territorial difference in so far as the job performed by the regular workers of Dolefil and
jurisdiction." that of the [respondents].
The power granted under Article 106 of the Labor Code to the Secretary of Some of the [respondents] were deprived of their employment under the
Labor and Employment to restrict or prohibit the contracting out of labor to scheme of "stay home status" where they were advised to literally stay home
protect the rights of workers established under the Code is delegated to the and wait for further instruction to report anew for work. However, they
Regional Directors by virtue of the above-quoted provision. remained in this condition for more than six months. Hence, they were
constructively or illegally dismissed.
The reason why "labor-only" contracting is prohibited under the Labor Code is
that it encourages circumvention of the provisions of the Labor Code on the Respondents thus argued that they should be considered regular employees of
workers right to security of tenure and to self-organization. petitioner given that: (1) they were performing jobs that were usually necessary
and desirable in the usual business of petitioner; (2) petitioner exercised control
over respondents, not only as to the results, but also as to the manner by which
WHEREFORE, the respondents Appeal is hereby DISMISSED for lack of merit. they performed their assigned tasks; and (3) CAMPCO, a labor-only contractor,
The Order of the Regional Director, Regional Office No. XI, Davao City, is was merely a conduit of petitioner. As regular employees of petitioner,
AFFIRMED. respondents asserted that they were entitled to security of tenure and those
placed on "stay home status" for more than six months had been constructively
After the motion for reconsideration of the foregoing Order was denied, no and illegally dismissed. Respondents further claimed entitlement to wage
further motion was filed by the parties, and the Order, dated 15 September differential, moral damages, and attorneys fees.
1994, of DOLE Undersecretary Trajano became final and executory. A Writ of
Execution12 was issued by DOLE Regional Office No. XI only on 27 July 1999, In their Supplemental Position Paper,15 respondents presented, in support of
years after the issuance of the order subject of the writ. The DOLE Regional their Complaint, the Orders of DOLE Regional Director Parel, dated 19 October
Office No. XI was informed that CAMPCO and two other cooperatives 1993, and DOLE Undersecretary Trajano, dated 15 September 1994, finding that
"continued to operate at DOLE Philippines, Inc. despite the cease and desist CAMPCO was a labor-only contractor and directing CAMPCO to cease and desist
Order" it had issued. It therefore commanded the Sheriff to proceed to the from any further labor-only contracting activities.
premises of CAMPCO and the two other cooperatives and implement its Order
dated 19 October 1993.
Petitioner, in its Position Paper16 filed before the NLRC, denied that respondents
were its employees.
Respondents Complaint before the NLRC
Petitioner further averred that Department Order No. 10, amending the rules
implementing Books III and VI of the Labor Code, as amended, promulgated by i) The contractor or sub-contractor does not have substantial capital or
the DOLE on 30 May 1997, explicitly recognized the arrangement between investment to actually perform the job, work, or service under its own account
petitioner and CAMPCO as permissible contracting and subcontracting, to wit & responsibility, and
Section 6. Permissible contracting and subcontracting. Subject to the ii) The employees recruited, supplied or placed by such contractor or
conditions set forth in Section 3(d) and (e) and Section 5 hereof, the principal subcontractor are performing activities which are directly related to the main
may engage the services of a contractor or subcontractor for the performance business of the principal."
of any of the following;
Verification of the records reveals that per Annexes "J" and "K" of [herein
(a) Works or services temporarily or occasionally needed to meet abnormal petitioner DolePhils] position paper, which are the yearly audited Financial
increase in the demand of products or services, provided that the normal Statement and Balance Sheet of CAMPCO shows [sic] that it has more than
production capacity or regular workforce of the principal cannot reasonably substantial capital or investment in order to qualify as a legitimate job
cope with such demands; contractor.
(b) Works or services temporarily or occasionally needed by the principal for We likewise recognize the validity of the contract entered into and between
undertakings requiring expert or highly technical personnel to improve the CAMPCO and [petitioner] for the former to assists [sic] the latter in its
management or operations of an enterprise; operations and in the performance of odd jobs such as the augmentation of
regular manning particularly during peaks in operation, work back logs,
absenteeism and excessive leave availment of respondents regular employees.
(c) Services temporarily needed for the introduction or promotion of new The rule is well-settled that labor laws discourage interference with an
products, only for the duration of the introductory or promotional period; employers judgment in the conduct of his business. Even as the law is solicitors
[sic] of the welfare of the employees, it must also protect the right of an
(d) Works or services not directly related or not integral to the main business or employer to exercise what are clearly management prerogatives. The free will of
operation of the principal, including casual work, janitorial, security, management to conduct its own business affairs to achieve its purpose cannot
landscaping, and messengerial services, and work not related to manufacturing be denied (Yuco Chemical Industries vs. Ministry of [L]abor, GR No. 75656, May
processes in manufacturing establishments; 28, 1990).
(e) Services involving the public display of manufacturers products which does CAMPCO being engaged in legitimate contracting, cannot therefore declared
not involve the act of selling or issuance of receipts or invoices; [sic] as guilty of labor-only contracting which [herein respondents] want us to
believe.
(f) Specialized works involving the use of some particular, unusual, or peculiar
skills, expertise, tools or equipment the performance of which is beyond the The second issue is likewise answered in the negative. The reason is plain and
competence of the regular workforce or production capacity of the principal; simple[,] section 12 of Department [O]rder No. 10 states:
and
"Section 12. Employee-employer relationship. Except in cases provided for in
(g) Unless a reliever system is in place among the regular workforce, substitute Section 13, 14, 15 & 17, the contractor or subcontractor shall be considered the
services for absent regular employees, provided that the period of service shall employer of the contractual employee for purposes of enforcing the provisions
be coextensive with the period of absence and the same is made clear to the of the Code."
substitute employee at the time of engagement. The phrase "absent regular
employees" includes those who are serving suspensions or other disciplinary The Resolution of NLRC 5th division, promulgated on March 14, 1 1995 [sic]
measures not amounting to termination of employment meted out by the categorically declares:
principal, but excludes those on strike where all the formal requisites for the
legality of the strike have been prima facie complied with based on the records
filed with the National Conciliation and Mediation Board. "Judging from the very nature of the terms and conditions of their hiring, the
Commission finds the complainants to have been engaged to perform
work, although necessary or desirable to the business of respondent
company, for a definite period or what is community called TERM
EMPLOYMENT. It is clear from the evidence and record that the nature of the provisions of the Rules Implementing Articles 106 and 109 of the Labor Code,
business and operation of respondent company has its peaks and valleys and without substantially changing the definition of "labor-only" or "job contracting.
therefore, it is not difficult to discern, inclement weather, or high availment by
regular workers of earned leave credits, additional workers categorized as
Well-settled is the rule that to qualify as an independent job contractor, one has
casuals, or temporary, are needed to meet the exigencies." (Underlining in the
either substantial capital "or" investment in the form of tools, equipment and
original)
machineries necessary to carry out his business (see Virginia Neri, et al. vs.
NLRC, et al., G.R. Nos. 97008-89, July 23, 1993). CAMPCO has admittedly a paid-
The validity of fixed-period employment has been consistently upheld by the up capital of P4,562,470.25 and this is more than enough to qualify it as an
Supreme [C]ourt in a long line of cases, the leading case of which is Brent independent job contractor, as aptly held by the Labor Arbiter.
School, Inc. vs. Zamora & Alegre, GR No. 48494, February 5, 1990. Thus at the
end of the contract the employer-employee relationship is terminated. It
WHEREFORE, the appeal is DISMISSED for lack of merit and the appealed
behooves upon us to rule that herein complainants cannot be declared regular
decision is AFFIRMED.
rank and file employees of the [petitioner] company.
xxxx
The non-rehiring of some of the petitioners who were allegedly put on a
"floating status is an indication that their services were no longer needed. They
[NLRC] held that CAMPCO, being not a real party-in interest in the above-case, attained their "floating status" only after they have finished their contract of
the said ruling is not binding and conclusive upon [petitioner]. This Court, employment, or after the duration of the season that they were employed. The
however, finds the contrary. decision of [petitioner] in not rehiring them means that their services were no
longer needed due to the end of the season for which they were hired. And this
CAMPCO was one of the cooperatives investigated by the Department of Labor Court reiterates that at the time they were deployed to [petitioners] cannery
and Employment, Regional Office No. XI, Davao City, pursuant to Article 128 of division, they knew that the services they have to render or the work they will
the Labor Code. It was one of the appellants before the Secretary of the perform are seasonal in nature and consequently their employment is only for
Department of Labor questioning the decision of the Regional Director of DOLE, the duration of the season.
Regional Office No. XI, Davao City. This Court noted that in the proceedings
therein, and as mentioned in the decision rendered by Undersecretary ACCORDINGLY, in view of the foregoing, the instant petition for certiorari is
Cresencio B. Trajano of the Department of Labor and Employment, Manila, hereby GRANTED DUE COURSE. The decision dated 29 February 2000 and
regarding the cooperatives appeal thereto, the parties therein, including Resolution dated 19 December 2000 rendered by [NLRC] are hereby SET ASIDE.
Cannery Multi-Purpose Cooperative, submitted to the said office their position In place thereof, it is hereby rendered that:
papers and Articles of Cooperatives and Certification of Registrations [sic] on 30
August 1993. This is a clear indicia that CAMPCO participated in the proceedings
1. Cannery Multi-Purpose Cooperative is a labor-only contractor as defined
therein. [NLRC], therefore, committed grave abuse of discretion amounting to
under the Labor Code of the Philippines and its implementing rules and
lack or excess of jurisdiction when it held that CAMPCO was never a party to the
regulations; and that
said case.
xxxx Both petitioner and respondents filed their respective Motions for
Reconsideration of the foregoing Decision, dated 20 May 2002, prompting the
Court of Appeals to promulgate an Amended Decision on 27 November 2003, in
[Petitioners] main contention is based on the decisions rendered by the labor
which it ruled in this wise:
arbiter and [NLRC] which are both anchored on Department Order No. 10 issued
by the Department of Labor and Employment. The said department order
provided for several flexible working relations between a principal, a contractor This court examined again the documentary evidence submitted by the [herein
or subcontractor and the workers recruited by the latter and deployed to the petitioner] and we rule not to disturb our findings in our Decision dated May 20,
former. In the case at bench, [petitioner] posits that the engagement of 2002. It is our opinion that there was no competent evidence submitted that
[petitioner] of the workers deployed by CAMPCO was pursuant to D.O. No. 10, would show that CAMPCO is engaged to perform a specific and special job or
Series of 1997. service which is one of the strong indicators that an entity is an independent
contractor. The articles of cooperation and by-laws of CAMPCO do not show
that it is engaged in performing a specific and special job or service. What is
However, on 8 May 2001, the Department of Labor and Employment issued
clear is that it is a multi-purpose cooperative organized under RA No. 6938,
Department Order No. 3, series of 2001, revoking Department Order No. 10,
nothing more, nothing less.
series of 1997. The said department order took effect on 29 May 2001.
As can be gleaned from the contract that CAMPCO entered into with the
xxxx
[petitioner], the undertaking of CAMPCO is to provide [petitioner] with
workforce by assisting the company in its daily operations and perform odd jobs
Under Department Order No. 3, series of 2001, some contracting and as may be assigned. It is our opinion that CAMPCO merely acted as recruitment
outsourcing arrangements are no longer legitimate modes of employment agency for [petitioner]. CAMPCO by supplying manpower only, clearly
relation. Having revoked Department Order No. 10, series of 1997, [petitioner] conducted itself as labor-only" contractor. As can be gleaned from the service
can no longer support its argument by relying on the revoked department order. contract, the work performed by the [herein respondents] are directly related to
the main business of the [petitioner]. Clearly, the requisites of "labor-only"
Considering that [CAMPCO] is not a job contractor, but one engaged in labor- contracting are present in the case at bench.
only contracting, CAMPCO serves only as an agent of [petitioner] pursuant to
par. (b) of Sec. 9, Rule VIII, Book III of the Implementing Rules and Regulations of In view of the above ruling, we find it unnecessary to discuss whether the Order
the Labor Code, stating, of Undersecretary Trajano finding that CAMPCO is a "labor-only" contractor is a
determining factor or constitutes res judicata in the case at bench. Our findings
xxxx that CAMPCO is a "labor-only" contractor is based on the evidence
presented vis--vis the rulings of the Supreme Court on the matter.
However, the Court cannot declare that [herein respondents] are regular
employees of [petitioner]. x x x Since, the argument that the [petitioner] is the real employer of the
[respondents], the next question that must be answered is what is the nature
of the employment of the petitioners?
xxxx
xxxx
In the case at bench, although [respondents] were engaged to perform activities
which are usually necessary or desirable in the usual business or trade of private
respondent, it is apparent, however, that their services were engaged by The afore-quoted [Article 280 of the Labor Code, as amended] provides for two
[petitioner] only for a definite period. [Petitioners] nature of business and kinds of employment, namely: (1) regular (2) casual. In our Decision, we ruled
that the [respondents] while performing work necessary and desirable to the VIOLATED THE CONSTITUTIONAL PROVISION AGAINST IMPAIRMENT OF
business of the [petitioner] are seasonal employees as their services were CONTRACTS AND DEPRIVED PETITIONER OF THE DUE PROCESS OF THE LAW.
engaged by the [petitioner] for a definite period or only during peak season.
III.
In the most recent case of Hacienda Fatima v. National Federation of
Sugarcane Workers Food and General Trade, the Supreme Court ruled that for
THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN
employees to be excluded from those classified as regular employees, it is not
ACCORD WITH LAW AND JURISPRUDENCE IN GIVING WEIGHT TO THE ORDER
enough that they perform work or services that are seasonal in nature. They
DATED 19 OCTOBER 1993 ISSUED BY THE OFFICE OF SECRETARY OF LABOR,
must have also been employedonly for the duration of one season. It is
WHICH AFFIRMED THE FINDINGS OF THE DOLE REGIONAL OFFICE (REGION XI,
undisputed that the [respondents] services were engaged by the [petitioner]
DAVAO CITY) THAT CAMPCO IS ONE OF THE COOPERATIVES ENGAGED IN
since 1993 and 1994. The instant complaint was filed in 1996 when the
LABOR-ONLY CONTRACTING ACTIVITIES.
[respondents] were placed on floating status. Evidently, [petitioner] employed
the [respondents] for more than one season. Therefore, the general rule on
regular employment is applicable. The herein petitioners who performed their IV.
jobs in the workplace of the [petitioner] every season for several years, are
considered the latters regular employees for having performed works necessary THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN
and desirable to the business of the [petitioner]. The [petitioners] eventual ACCORD WITH LAW AND JURISPRUDENCE IN NOT RULING THAT RESPONDENTS,
refusal to use their serviceseven if they were ready, able and willing to BY ACTIVELY REPRESENTING THEMSELVES AND WARRANTING THAT THEY ARE
perform their usual duties whenever these were availableand hiring other ENGAGED IN LEGITIMATE JOB CONTRACTING, ARE BARRED BY THE EQUITABLE
workers to perform the tasks originally assigned to [respondents] amounted to PRINCIPLE OF ESTOPPEL FROM ASSERTING THAT THEY ARE REGULAR
illegal dismissal of the latter. We thus, correct our earlier ruling that the herein EMPLOYEES OF PETITIONER.
petitioners are seasonal workers. They are regular employees within the
contemplation of Article 280 of the Labor Code and thus cannot be dismissed
except for just or authorized cause. The Labor Code provides that when there is V.
a finding of illegal dismissal, the effect is that the employee dismissed shall be
reinstated to his former position without loss of seniority rights with backwages THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN
from the date of his dismissal up to his actual reinstatement. ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT CAMPCO IS
ENGAGED IN THE PROHIBITED ACT OF "LABOR-ONLY CONTRACTING" DESPITE
This court however, finds no basis for the award of damages and attorneys fees THERE BEING SUBSTANTIAL EVIDENCE TO THE CONTRARY.
in favor of the petitioners.
VI.
WHEREFORE, the Decision dated May 20, 2002 rendered by this Court is
hereby AMENDED as follows: THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT PETITIONER IS THE
1) [Petitioner] DOLE PHILIPPINES is hereby declared the employer of the EMPLOYER OF RESPONDENTS AND THAT PETITIONER IS GUILTY OF ILLEGAL
[respondents]. DISMISSAL.24
2) [Petitioner] DOLE PHILIPPINES is hereby declared guilty of illegal dismissal and This Courts Ruling
ordered to immediately reinstate the [respondents] to their former position
without loss of seniority rights and other benefits, and to pay each of the I
[respondents] backwages from the date of the filing of illegal dismissal on
December 19, 1996 up to actual reinstatement, the same to be computed by the
labor arbiter. Anent the first assignment of error, petitioner argues that judicial review under
Rule 65 of the revised Rules of Civil Procedure is limited only to issues
concerning want or excess or jurisdiction or grave abuse of discretion. The
3) The claims for damages and attorneys fees are hereby denied for lack of special civil action for certiorari is a remedy designed to correct errors of
merit. jurisdiction and not mere errors of judgment. It is the contention of petitioner
that the NLRC properly assumed jurisdiction over the parties and subject matter
No costs.23 of the instant case. The errors assigned by the respondents in their Petition
for Certiorari before the Court of Appeals do not pertain to the jurisdiction of
the NLRC; they are rather errors of judgment supposedly committed by the the
The Petition at Bar NLRC, in its Resolution, dated 29 February 2000, and are thus not the proper
subject of a petition for certiorari. Petitioner also posits that the Petition
Aggrieved by the Decision, dated 20 May 2002, and the Amended Decision, for Certiorari filed by respondents with the Court of Appeals raised questions of
dated 27 November 2003, of the Court of Appeals, petitioner filed the instant fact that would necessitate a review by the appellate court of the evidence
Petition for Review on Certiorari under Rule 45 of the revised Rules of Civil presented by the parties before the Labor Arbiter and the NLRC, and that
Procedure, in which it made the following assignment of errors questions of fact are not a fit subject for a special civil action for certiorari.
I. It has long been settled in the landmark case of St. Martin Funeral Home v.
NLRC,25 that the mode for judicial review over decisions of the NLRC is by a
petition for certiorari under Rule 65 of the revised Rules of Civil Procedure. The
THE COURT OF APPEALS HAS DEPARTED FROM THE USUAL COURSE OF JUDCIAL
different modes of appeal, namely, writ of error (Rule 41), petition for review
PROCEEDINGS WHEN IT MADE ITS OWN FACTUAL FINDINGS AND DISREGARDED
(Rules 42 and 43), and petition for review on certiorari (Rule 45), cannot be
THE UNIFORM AND CONSISTENT FACTUAL FINDINGS OF THE LABOR ARBITER
availed of because there is no provision on appellate review of NLRC decisions in
AND THE NLRC, WHICH MUST BE ACCORDED GREAT WEIGHT, RESPECT AND
the Labor Code, as amended.26 Although the same case recognizes that both the
EVEN FINALITY. IN SO DOING, THE COURT OF APPEALS EXCEEDED ITS
Court of Appeals and the Supreme Court have original jurisdiction over such
AUTHORITY ON CERTIORARI UNDER RULE 65 OF THE RULES OF COURT.
petitions, it has chosen to impose the strict observance of the hierarchy of
courts. Hence, a petition for certiorari of a decision or resolution of the NLRC
II. should first be filed with the Court of Appeals; direct resort to the Supreme
Court shall not be allowed unless the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY
an availment of a remedy within and calling for the exercise by the Supreme
NOT IN ACCORD WITH THE CONSTITUTION, LAW, APPLICABLE RULES AND
Court of its primary jurisdiction.
REGULATIONS AND DECISIONS OF THE SUPREME COURT IN NOT HOLDING
THAT DEPARTMENT ORDER NO. 10, SERIES OF 1997 IS THE APPLICABLE
REGULATION IN THIS CASE. IN GIVING RETROACTIVE APPLICATION The extent of judicial review by certiorari of decisions or resolutions of the
TO DEPARTMENT ORDER NO. 3, SERIES OF 2001, THE COURT OF APPEALS NLRC, as exercised previously by the Supreme Court and, now, by the Court of
Appeals, is described in Zarate v. Olegario,27 thus
The rule is settled that the original and exclusive jurisdiction of this Court to and 2001. The Service Contract between DOLE and CAMPCO was executed on
review a decision of respondent NLRC (or Executive Labor Arbiter as in this case) 17 August 1993. Respondents started working for petitioner sometime in 1993
in a petition for certiorari under Rule 65 does not normally include an inquiry and 1994. While some of them continued to work for petitioner, at least until
into the correctness of its evaluation of the evidence. Errors of judgment, as the filing of the Complaint, others were put on "stay home status" at various
distinguished from errors of jurisdiction, are not within the province of a special times in 1994, 1995, and 1996. Respondents filed their Complaint with the NLRC
civil action for certiorari, which is merely confined to issues of jurisdiction or on 19 December 1996.
grave abuse of discretion. It is thus incumbent upon petitioner to satisfactorily
establish that respondent Commission or executive labor arbiter acted
A basic rule observed in this jurisdiction is that no statute, decree, ordinance,
capriciously and whimsically in total disregard of evidence material to or even
rule or regulation shall be given retrospective effect unless explicitly
decisive of the controversy, in order that the extraordinary writ of certiorari will
stated.29 Since there is no provision at all in the DOLE department orders that
lie. By grave abuse of discretion is meant such capricious and whimsical exercise
expressly allowed their retroactive application, then the general rule should be
of judgment as is equivalent to lack of jurisdiction, and it must be shown that
followed, and the said orders should be applied only prospectively.
the discretion was exercised arbitrarily or despotically. For certiorari to lie, there
must be capricious, arbitrary and whimsical exercise of power, the very
antithesis of the judicial prerogative in accordance with centuries of both civil Which now brings this Court to the question as to what was the prevailing rule
law and common law traditions. on labor-only contracting from 1993 to 1996, the period when the occurrences
subject of the Complaint before the NLRC took place.
The Court of Appeals, therefore, can grant the Petition for Certiorari if it finds
that the NLRC, in its assailed decision or resolution, committed grave abuse of Article 106 of the Labor Code, as amended, permits legitimate job contracting,
discretion by capriciously, whimsically, or arbitrarily disregarding evidence but prohibits labor-only contracting. The said provision reads
which is material or decisive of the controversy; and the Court of Appeals can
not make this determination without looking into the evidence presented by the ART. 106. Contractor or subcontractor. Whenever an employer enters into a
parties. Necessarily, the appellate court can only evaluate the materiality or contract with another person for the performance of the formers work, the
significance of the evidence, which is alleged to have been capriciously, employees of the contractor and of the latters subcontractor, if any, shall be
whimsically, or arbitrarily disregarded by the NLRC, in relation to all other paid in accordance with the provisions of this Code.
evidence on record.
In the event that the contractor or subcontractor fails to pay the wages of his
As this Court elucidated in Garcia v. National Labor Relations Commission28 -- employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
[I]n Ong v. People, we ruled that certiorari can be properly resorted to where extent of the work performed under the contract, in the same manner and
the factual findings complained of are not supported by the evidence on record. extent that he is liable to employees directly employed by him.
Earlier, in Gutib v. Court of Appeals, we emphasized thus:
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the
[I]t has been said that a wide breadth of discretion is granted a court of justice contracting out of labor to protect the rights of workers established under this
in certiorari proceedings. The cases in which certiorari will issue cannot be Code. In so prohibiting or restricting, he may make appropriate distinctions
defined, because to do so would be to destroy its comprehensiveness and between labor-only contracting and job contracting as well as differentiations
usefulness. So wide is the discretion of the court that authority is not wanting to within these types of contracting and determine who among the parties
show that certiorari is more discretionary than either prohibition or mandamus. involved shall be considered the employer for purposes of this Code, to prevent
In the exercise of our superintending control over inferior courts, we are to be any violation or circumvention of any provision of this Code.
guided by all the circumstances of each particular case "as the ends of justice
may require." So it is that the writ will be granted where necessary to prevent a There is "labor-only" contracting where the person supplying workers to an
substantial wrong or to do substantial justice. employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
And in another case of recent vintage, we further held: recruited and placed by such persons are performing activities which are directly
related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall
In the review of an NLRC decision through a special civil action for certiorari,
be responsible to the workers in the same manner and extent as if the latter
resolution is confined only to issues of jurisdiction and grave abuse of discretion
were directly employed by him.
on the part of the labor tribunal. Hence, the Court refrains from reviewing
factual assessments of lower courts and agencies exercising adjudicative
functions, such as the NLRC. Occasionally, however, the Court is constrained to To implement the foregoing provision of the Labor Code, as amended, Sections
delve into factual matters where, as in the instant case, the findings of the NLRC 8 and 9, Rule VIII, Book III of the implementing rules, in force since 1976 and
contradict those of the Labor Arbiter. prior to their amendment by DOLE Department Order No. 10, series of 1997,
provided as follows
In this instance, the Court in the exercise of its equity jurisdiction may look into
the records of the case and re-examine the questioned findings. As a corollary, Sec. 8. Job contracting. There is job contracting permissible under the Code if
this Court is clothed with ample authority to review matters, even if they are not the following conditions are met;
assigned as errors in their appeal, if it finds that their consideration is necessary
to arrive at a just decision of the case. The same principles are now necessarily (1) The contractor carries on an independent business and undertakes the
adhered to and are applied by the Court of Appeals in its expanded jurisdiction contract work on his own account under his own responsibility according to his
over labor cases elevated through a petition for certiorari; thus, we see no error own manner and method, free from the control and direction of his employer or
on its part when it made anew a factual determination of the matters and on principal in all matters connected with the performance of the work except as to
that basis reversed the ruling of the NLRC. the results thereof; and
II (2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are
The second assignment of error delves into the significance and application to necessary in the conduct of his business.
the case at bar of the two department orders issued by DOLE. Department
Order No. 10, series of 1997, amended the implementing rules of Books III and Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply
VI of the Labor Code, as amended. Under this particular DOLE department workers to an employer shall be deemed to be engaged in labor-only
order, the arrangement between petitioner and CAMPCO would qualify as contracting where such person:
permissible contracting. Department Order No. 3, series of 2001, revoked
Department Order No. 10, series of 1997, and reiterated the prohibition on
labor-only contracting. (1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
Attention is called to the fact that the acts complained of by the respondents
occurred well before the issuance of the two DOLE department orders in 1997
(2) The workers recruited and placed by such persons are performing activities Regional Director Parels Order. Upon denial of the Motion for Reconsideration
which are directly related to the principal business or operations of the filed by the cooperatives, and no further appeal taken therefrom, the Order of
employer in which workers are habitually employed. DOLE Undersecretary Trajano, dated 15 September 1994, became final and
executory.
(b) Labor-only contracting as defined herein is hereby prohibited and the person
acting as contractor shall be considered merely as an agent or intermediary of Petitioner avers that the foregoing Orders of the authorized representatives of
the employer who shall be responsible to the workers in the same manner and the DOLE Secretary do not constitute res judicata in the case filed before the
extent as if the latter were directly employed by him. NLRC. This Court, however, believes otherwise and finds that the final and
executory Orders of the DOLE Secretary or his authorized representatives
should bind the NLRC.
(c) For cases not falling under this Article, the Secretary of Labor shall determine
through appropriate orders whether or not the contracting out of labor is
permissible in the light of the circumstances of each case and after considering It is obvious that the visitorial and enforcement power granted to the DOLE
the operating needs of the employer and the rights of the workers involved. In Secretary is in the nature of a quasi-judicial power. Quasi-judicial power has
such case, he may prescribe conditions and restrictions to insure the protection been described by this Court in the following manner
and welfare of the workers.
Quasi-judicial or administrative adjudicatory power on the other hand is the
Since these statutory and regulatory provisions were the ones in force during power of the administrative agency to adjudicate the rights of persons before
the years in question, then it was in consideration of the same that DOLE it. It is the power to hear and determine questions of fact to which the
Regional Director Parel and DOLE Undesrsecretary Trajano issued their Orders legislative policy is to apply and to decide in accordance with the standards
on 19 September 1993 and 15 September 1994, respectively, both finding that laid down by the law itself in enforcing and administering the same law. The
CAMPCO was engaged in labor-only contracting. Petitioner, in its third administrative body exercises its quasi-judicial power when it performs in a
assignment of error, questions the weight that the Court of Appeals gave these judicial manner an act which is essentially of an executive or administrative
orders in its Decision, dated 20 May 2002, and Amended Decision, dated 27 nature, where the power to act in such manner is incidental to or reasonably
November 2003. necessary for the performance of the executive or administrative duty
entrusted to it. In carrying out their quasi-judicial functions the administrative
officers or bodies are required to investigate facts or ascertain the existence of
III
facts, hold hearings, weigh evidence, and draw conclusions from them as basis
for their official action and exercise of discretion in a judicial nature. Since
The Orders of DOLE Regional Director Parel, dated 19 September 1993, and of rights of specific persons are affected it is elementary that in the proper exercise
DOLE Undersecretary Trajano, dated 15 September 1994, were issued pursuant of quasi-judicial power due process must be observed in the conduct of the
to the visitorial and enforcement power conferred by the Labor Code, as proceedings.30 (Emphasis supplied.)
amended, on the DOLE Secretary and his duly authorized representatives, to wit
The DOLE Secretary, under Article 106 of the Labor Code, as amended, exercise
quasi-judicial power, at least, to the extent necessary to determine violations of
ART. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his labor standards provisions of the Code and other labor legislation. He can issue
duly authorized representatives, including labor regulation officers, shall have compliance orders and writs of execution for the enforcement of his orders. As
access to employers records and premises at any time of the day or night evidence of the importance and binding effect of the compliance orders of the
whenever work is being undertaken therein, and the right to copy therefrom, to DOLE Secretary, Article 128 of the Labor Code, as amended, further provides
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
ART. 128. Visitorial and enforcement power.
this Code and of any labor law, wage order or rules and regulations pursuant
thereto.
xxxx
(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, (d) It shall be unlawful for any person or entity to obstruct, impede, delay or
the Secretary of Labor and Employment or his duly authorized representatives otherwise render ineffective the orders of the Secretary of Labor or his duly
shall have the power to issue compliance orders to give effect to the labor authorized representatives issued pursuant to the authority granted under this
standards provisions of this Code and other labor legislation based on the article, and no inferior court or entity shall issue temporary or permanent
findings of labor employment and enforcement officers or industrial safety injunction or restraining order or otherwise assume jurisdiction over any case
engineers made in the course of inspection. The Secretary or his duly authorized involving the enforcement orders issued in accordance with this article.
representatives shall issue writs of execution to the appropriate authority for
the enforcement of their orders, except in cases where the employer contests
The Orders of DOLE Regional Director Parel, dated 19 September 1993, and of
the findings of the labor employment and enforcement officer and raises issues
DOLE Undersecretary Trajano, dated 15 September 1994, consistently found
supported by documentary proofs which were not considered in the course of
that CAMPCO was engaging in labor-only contracting. Such finding
inspection.
constitutes res judicata in the case filed by the respondents with the NLRC.
Section 49(b) enunciates the first concept of res judicata known as "bar by prior
Petitioner cannot put up the excuse of piercing the veil of corporate entity, as
judgment," whereas, Section 49(c) is referred to as "conclusiveness of
this is merely an equitable remedy, and maybe awarded only in cases when the
judgment."
corporate fiction is used to defeat public convenience, justify wrong, protect
fraud or defend crime or where a corporation is a mere alter ego or business
There is "bar by former judgment" when, between the first case where the conduit of a person.
judgment was rendered, and the second case where such judgment is invoked,
there is identity of parties, subject matter and cause of action. When the three
Piercing the veil of corporate entity requires the court to see through the
identities are present, the judgment on the merits rendered in the first
protective shroud which exempts its stockholders from liabilities that ordinarily,
constitutes an absolute bar to the subsequent action. But where between the
they could be subject to, or distinguishes one corporation from a seemingly
first case wherein Judgment is rendered and the second case wherein such
separate one, were it not for the existing corporate fiction. But to do this, the
judgment is invoked, there is only identity of parties but there is no identity of
court must be sure that the corporate fiction was misused, to such an extent
cause of action, the judgment is conclusive in the second case, only as to those
that injustice, fraud, or crime was committed upon another, disregarding, thus,
matters actually and directly controverted and determined, and not as to
his, her, or its rights. It is the corporate entity which the law aims to protect by
matters merely involved therein. This is what is termed "conclusiveness of
this doctrine.
judgment."
This Court also notes that CAMPCO and DOLE still continued with their Service V
Contract despite the explicit cease and desist orders rendered by authorized
DOLE officials. There is no other way to look at it except that CAMPCO and DOLE
As previously discussed, the finding of the duly authorized representatives of
acted in complete defiance and disregard of the visitorial and enforcement
the DOLE Secretary that CAMPCO was a labor-only contractor is already
power of the DOLE Secretary and his authorized representatives under Article
conclusive. This Court cannot deviate from said finding.
128 of the Labor Code, as amended. For the NLRC to ignore the findings of DOLE
Regional Director Parel and DOLE Undersecretary Trajano is an unmistakable
and serious undermining of the DOLE officials authority. This Court, though, still notes that even an independent review of the evidence
on record, in consideration of the proper labor statutes and regulations, would
result in the same conclusion: that CAMPCO was engaged in prohibited activities
IV
of labor-only contracting.
The existence of an independent and permissible contractor relationship is The declaration that CAMPCO is indeed engaged in the prohibited activities of
generally established by the following criteria: whether or not the contractor is labor-only contracting, then consequently, an employer-employee relationship
carrying on an independent business; the nature and extent of the work; the is deemed to exist between petitioner and respondents, since CAMPCO shall be
skill required; the term and duration of the relationship; the right to assign the considered as a mere agent or intermediary of petitioner.
performance of a specified piece of work; the control and supervision of the
work to another; the employer's power with respect to the hiring, firing and
Since respondents are now recognized as employees of petitioner, this Court is
payment of the contractor's workers; the control of the premises; the duty to
tasked to determine the nature of their employment. In consideration of all the
supply the premises tools, appliances, materials and labor; and the mode,
attendant circumstances in this case, this Court concludes that respondents are
manner and terms of payment.35
regular employees of petitioner.
Respondents, as regular employees of petitioner, are entitled to security of Section 1. Upon the effectivity of this Wage Order, all workers and employees in
tenure. They could only be removed based on just and authorized causes as the private sector in the National Capital Region already receiving wages above
provided for in the Labor Code, as amended, and after they are accorded the statutory minimum wage rates up to one hundred and twenty-five pesos
procedural due process. Therefore, petitioners acts of placing some of the (P125.00) per day shall also receive an increase of seventeen pesos (P17.00) per
respondents on "stay home status" and not giving them work assignments for day.
more than six months were already tantamount to constructive and illegal
dismissal.42
ECOP appealed to the National Wages and Productivity Commission. On
November 6, 1990, the Commission promulgated an Order, dismissing the
In summary, this Court finds that CAMPCO was a labor-only contractor and, appeal for lack of merit. On November 14, 1990, the Commission denied
thus, petitioner is the real employer of the respondents, with CAMPCO acting reconsideration.
only as the agent or intermediary of petitioner. Due to the nature of their work
and length of their service, respondents should be considered as regular
The Orders of the Commission (as well as Wage Order No. NCR-01-A) are the
employees of petitioner. Petitioner constructively dismissed a number of the
subject of this petition, in which. ECOP assails the board's grant of an "across-
respondents by placing them on "stay home status" for over six months, and
the-board" wage increase to workers already being paid more than existing
was therefore guilty of illegal dismissal. Petitioner must accord respondents the
minimum wage rates (up to P125. 00 a day) as an alleged excess of authority,
status of regular employees, and reinstate the respondents who it constructively
and alleges that under the Republic Act No. 6727, the boards may only prescribe
and illegally dismissed, to their previous positions, without loss of seniority
"minimum wages," not determine "salary ceilings." ECOP likewise claims that
rights and other benefits, and pay these respondents backwages from the date
Republic Act No. 6727 is meant to promote collective bargaining as the primary
of filing of the Complaint with the NLRC on 19 December 1996 up to actual
mode of settling wages, and in its opinion, the boards can not preempt
reinstatement.
collective bargaining agreements by establishing ceilings. ECOP prays for the
nullification of Wage Order No. NCR 01-A and for the "reinstatement" of Wage
WHEREFORE, in view of the foregoing, the instant Petition is DENIED and the Order No. NCR-01.
Amended Decision, dated 27 November 2003, rendered by the Court of Appeals
in CA-G.R. SP No. 63405 is AFFIRMED.
The Court directed the Solicitor General to comment on behalf of the
Government, and in the Solicitor General's opinion, the Board, in prescribing an
Costs against the petitioner. across-the-board hike did not, in reality, "grant additional or other benefits to
workers and employees, such as the extension of wage increases to employees
and workers already receiving more than minimum wages ..." 6 but rather, fixed
SO ORDERED.
minimum wages according to the "salary-ceiling method."
EMPLOYERS CONFEDERATION OF THE PHILIPPINES, petitioner, ECOP insists, in its reply, that wage is a legislative function, and Republic Act No.
vs. 6727 delegated to the regional boards no more "than the power to grant
NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL minimum wage adjustments" 7 and "in the absence of clear statutory
TRIPARTITE WAGES AND PRODUCTIVITY BOARD-NCR, TRADE UNION authority," 8 the boards may no more than adjust "floor wages." 9
CONGRESS OF THE PHILIPPINES, respondents.
The Solicitor General, in his rejoinder, argues that Republic Act No. 6727 is
Sycip Salazar, Hernandez & Gatmaitan for petitioner. intended to correct "wage distortions" and the salary-ceiling method (of
determining wages) is meant, precisely, to rectify wage distortions. 10
Gilbert P. Lorenzo for private respondent.
The Court is inclined to agree with the Government. In the National Wages and
Productivity Commission's Order of November 6, 1990, the Commission noted
that the determination of wages has generally involved two methods, the "floor-
wage" method and the "salary-ceiling" method. We quote:
SARMIENTO, J.:p
It is the Court's thinking, reached after the Court's own study of the Act, that the The Case
Act is meant to rationalize wages, that is, by having permanent boards to decide
wages rather than leaving wage determination to Congress year after year and
This is the principle used by the Court in resolving this petition
law after law. The Court is not of course saying that the Act is an effort of
for certiorari under Rule 65 of the Rules of Court assailing the Decision 1 dated
Congress to pass the buck, or worse, to abdicate its duty, but simply, to leave
March 8, 1993, promulgated by the NWPC 2 which disposed as follows:
the question of wages to the expertise of experts. As Justice Cruz observed,
"[w]ith the proliferation of specialized activities and their attendant peculiar
WHEREFORE, premises considered, the Decision appealed from is hereby xxx xxx xxx
MODIFIED. The application for exemption of Anakan Lumber Company is hereby
GRANTED for a period of one (1) year retroactive to the date subject Wage
Applicants/appellees aver that they are engaged in logging and integrated wood
Orders took effect until November 21, 1991. The applications for exemption of
processing industry but are distressed due to conditions beyond their control, to
Nasipit Lumber Company and Philippine Wallboard Corporation are hereby
wit: 1) Depressed economic conditions due to worldwide recession; 2) Peace
DENIED for lack of merit, and as such, they are hereby ordered to pay their
and order and other emergency-related problems causing disruption and
covered workers the wage increases under subject Wage Orders retroactive to
suspension of normal logging operations; 3) Imposition of environmental fee for
the date of effectivity of said Wage Orders plus interest of one percent (1%) per
timber production in addition to regular forest charges; 4) Logging moratorium
month.
in Bukidnon; 5) A reduction in the annual allowable volume of cut logs of NALCO
& ALCO by 59%; 6) Highly insufficient raw material supply; 7) Extraordinary
SO ORDERED. increases in the cost of fuel, oil, spare parts, and maintenance; 8) Excessive
labor cost/production ratio that is more or less 47%; and 9) Lumber export ban.
Petitioners also challenge the NWPC's Decision 3 dated November 17, 1993
which denied their motion for reconsideration. On the other hand, oppositor/appellant Unions jointly opposed the application
for exemption on the ground that said companies are not distressed
establishments since their capitalization has not been impaired by 25%. 5
The RTWPB's August 1, 1991 Decision, which the NWPC modified, disposed as
follows:
Citing liquidity problems and business decline in the wood-processing industry,
the RTWPB approved the applicants' joint application for exemption in this wise:
WHEREFORE, all foregoing premises considered, the instant petition for
exemption from compliance with Wage Order Nos. RX-01 and RX-01-A is hereby
approved under and by virtue of criteria No. 2, Section 3 of RTWPB Guidelines 1. The Board considered the arguments presented by petitioners and the
No. 3 on Exemption, dated November 26, 1990, for a period of only one (1) year, oppositors. The Board likewise took note of the financial condition of petitioner
retroactive to the date said Wage Order took effect up to November 21, 1991. firms. One of the affiliates, Anakan Lumber Company, is confirmed to be
suffering from capital impairment by: 14:80% in 1988, 71.35% in 1989 and 100%
in 1990. On the other hand, NALCO had a capital impairment of 6.41%. 13.53%
SO ORDERED. 4
and 17.04% in 1988, 1989 and 1990, respectively, while PWC had no capital
impairment from 1988 to 1990. However, the Board also took note of the fact
The Facts that petitioners are claiming for exemption, not on the strength of capital
impairment, but on the basis of belonging to a distressed industry an
The undisputed facts are narrated by the NWPC as follows: establishment that is engaged in an industry that is distressed due to conditions
beyond its control as may be determined by the Board in consultation with DTI
and NWPC.
On October 20, 1990, the Region X [Tripartite Wages and Productivity] Board
issued Wage Order No. RX-01 which provides as follows:
2. Inquiries made by the Board from the BOI and the DTI confirm that all
petitioner-firms are encountering liquidity problems and extreme difficulty
Sec. 1. Upon the effectivity of this Wage Order, the increase in minimum wage servicing their loan obligations.
rates applicable to workers and employees in the private sector in Northern
Mindanao (Region X) shall be as follows:
3. A perusal of the Provincial Trade and Industry Development Plan for Agusan
del Norte and Butuan City where petitioners are operating their business,
a. The provinces of Agusan del Norte, Bukidnon, Misamis Oriental, and the Cities confirms the existence of a slump in the wood-processing industry due to the
of Butuan, Gingoog, and Cagayan de Oro P13.00/day growing scarcity of [a] large volume of raw materials to feed the various
plywood and lumber mills in the area. A lot of firms have closed and shifted to
b. The provinces of Agusan del Sur, Surigao del Norte and Misamis Occidental, other ventures, the report continued, although the competitive ones are still in
and the Cities of Surigao Oroquieta, Ozamis and Tangub P11.00/day. operation.
c. The province of Camiguin P9.00/day. 4. The Board took note of the fact that most of the circumstances responsible
for the financial straits of petitioners are largely external, over which petitioners
have very little control. The Board feels that as an alternative to closing up their
Subsequently, a supplementary Wage Order No. RX-01-A was issued by the business[es] which could bring untold detriment and dislocation to [their] 4,000
Board on November 6, 1990 which provides as follows: workers and their families, petitioners should be extended assistance and
encouragement to continue operating so that jobs could thereby be
Sec. 1. Upon the effectivity of the original Wage Order RX-01, all workers and preserved during these difficult times. One such way is for the Board to grant
employees in the private sector in Region X already receiving wages above the them a temporary reprieve from compliance with the mandated wage increase
statutory minimum wage rates up to one hundred and twenty pesos (P120.00) specifically W.O. RX-01 and RX-01-A only. 6
per day shall also receive an increase of P13, P11, P9 per day, as provided for
under Wage Order No. RX-01; Dissatisfied with the RTWPB's Decision, the private respondents lodged an
appeal with the NWPC, which affirmed ALCO's application but reversed the
Applicants/appellees Nasipit Lumber Company, Inc. (NALCO), Philippine applications of herein petitioners, NALCO and PWC. The NWPC reasoned:
Wallboard Corporation (PWC), and Anakan Lumber Company (ALCO), claiming
to be separate and distinct from each other but for expediency and practical The Guidelines No. 3 dated November 26, 1990, issued by the herein Board
purposes, jointly filed an application for exemption from the above-mentioned cannot be used as valid basis for granting applicants/appellees application for
Wage Orders as distressed establishments under Guidelines No. 3, issued by the exemption since it did not pass the approval of this Commission.
herein Board on November 26, 1990, specifically Sec. 3(2) thereof which, among
others, provides:
Under the Rules of Procedure on Minimum Wage Fixing dated June 4, 1990,
issued by this Commission pursuant to Republic Act 6727, particularly Section 1
A. For purposes of this Guidelines the following criteria to determine whether of Rule VIII thereof provides that:
the applicant-firm is actually distressed shall be used.
The applicable guidelines on exemption therefore is that one issued by the In the main, the issue boils down to a question of power. Is a guideline issued by
Commission dated February 25, 1991, the pertinent portion of which reads: an RTWPB without the approval of or, worse, contrary to the guidelines
promulgated by the NWPC valid?
Sec. 3. CRITERIA FOR EXEMPTION
The Court's Ruling
xxx xxx xxx
The petition is unmeritorious. The answer to the above question is in the
negative.
2. Distressed Employers/Establishment:
A perusal of the financial documents on record shows that for the year 1990,
The Court is not persuaded.
which is the last full accounting period preceding the applications for
exemption, appellees NALCO, ALCO, and PWC incurred a capital impairment of
1.89%, 28.72%, and 5.03%, respectively. Accordingly, based on the criteria set Power to Prescribe Guidelines
forth above in the NWPC Guidelines on Exemption, only the application for
exemption of ALCO should be approved in view of its capital impairment of
Lodged in the NWPC, Not in the RTWPB
28.72%.
The three great branches and the various administrative agencies of the
We are not unmindful of the fact that during the Board hearing conducted, both
government can exercise only those powers conferred upon them by the
labor and management manifested their desire for a uniform decision to apply
Constitution and the law. 14 It is through the application of this basic
to all three (3) firms. However, we cannot grant the same for want of legal basis
constitutional principle that the Court resolves the instant case.
considering that we are required by the rules to decide on the basis of the merit
of application by an establishment having a legal personality of its own. 7
RA 6727 (the Wage Rationalization Act), amending the Labor Code, created both
the NWPC and the RTWPB and defined their respective powers. Article 121 of
In denying petitioners' motion for reconsideration, public respondent explained:
the Labor Code lists the powers and functions of the NWPC, as follows:
The fact that applicant companies relied in good faith upon Guidelines No. 3
Art. 121. Powers and Functions of the Commission. The Commission shall
issued by the Board a quo, the same is not sufficient reason that they should be
have the following powers and functions:
assessed based on the criteria of said Guidelines considering that it does not
conform to the policies and guidelines relative to wage exemption issued by this
Commission pursuant to Republic Act 6727. Consequently, it has no force and (a) To act as the national consultative and advisory body to the President of the
effect. As such, said Guidelines No. 3 cannot therefore be a source of a right no Philippine[s] and Congress on matters relating to wages, incomes and
matter if one has relied on it in good faith. In like manner that the workers, who productivity;
are similarly affected, cannot be bound thereof.
(b) To formulate policies and guidelines on wages, incomes and productivity
Moreover, even assuming that Guidelines No. 3 conforms to the procedural improvement at the enterprise, industry and national levels;
requirement, still, the same cannot be given effect insofar as it grants
exemption by industry considering that the subject Wage Order mentioned (c) To prescribe rules and guidelines for the determination of appropriate
only distressed establishments as one of those to be exempted thereof. It did minimum wage and productivity measures at the regional, provincial or industry
not mentionexemption by industries. Well-settled is the rule that an levels;
implementing guidelines [sic] cannot expand nor limit the provision of [the] law
it seeks to implement. Otherwise, it shall be considered ultra vires. And,
contrary to applicant companies' claim, this Commission does not approve rules (d) To review regional wage levels set by the Regional Tripartite Wages and
implementing the Wage Orders issued by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed
Productivity Boards. Perforce, it cannot be said that this Commission has guidelines and national development plans;
approved the Rules Implementing Wage Order No[s]. RX-01 and RX-01 A. 8
(e) To undertake studies, researches and surveys necessary for the attainment
Hence, this recourse. 9 of its functions and objectives, and to collect and compile data and periodically
disseminate information on wages and productivity and other related Moreover, Rule VIII, Section 1 of the NWPC's Rules of Procedure on Minimum
information, including, but not limited to, employment, cost-of-living, labor Wage Fixing issued on June 4, 1990 which was prior to the effectivity of
costs, investments and returns; RTWPB Guideline No. 3 requires that an application for exemption from wage
orders should be processed by the RTWPB, subject specifically to the guidelines
issued by the NWPC.
(f) To review plans and programs of the Regional Tripartite Wages and
Productivity Boards to determine whether these are consistent with national
development plans; To allow RTWPB Guideline No. 3 to take effect without the approval of the
NWPC is to arrogate unto RTWPB a power vested in the NWPC by Article 121 of
the Labor Code, as amended by RA 6727. The Court will not countenance this
(g) To exercise technical and administrative supervision over the Regional
naked usurpation of authority. It is a hornbook doctrine that the issuance of an
Tripartite Wages and Productivity Boards;
administrative rule or regulation must be in harmony with the enabling law. If a
discrepancy occurs "between the basic law and an implementing rule or
(h) To call, from time to time, a national tripartite conference of representatives regulation, it is the former that prevails." 19 This is so because the law cannot be
of government, workers and employers for the consideration of measures to broadened by a mere administrative issuance. It is axiomatic that "[a]n
promote wage rationalization and productivity; and administrative agency cannot amend an act of Congress." 20 Article 122 (e) of the
Labor Code cannot be construed to enable the RTWPB to decide applications for
(i) To exercise such powers and functions as may be necessary to implement this exemption on the basis of its own guidelines which were not reviewed an
Act. approved by the NWPC, for the simple reason that a statutory grant of "powers
should not be extended by implication beyond what may be necessary for their
just and reasonable execution. Official powers cannot be merely assumed by
xxx xxx xxx administrative officers, nor can they be created by the courts in the exercise of
their judicial functions." 21
(Emphasis supplied)
There is no basis for petitioners' claim that their vested rights were prejudiced
Article 122 of the Labor Code, on the other hand, prescribes the powers of the by the NWPC's alleged retroactive application of its own rules 22 which were
RTWPB thus: issued on February 25, 1991 and took effect on March 18, 1991. 23 Such claim
cannot stand because Guideline No. 3, as previously discussed and as correctly
concluded by the NWPC, 24 was not valid and, thus, cannot be a source of a right;
Art. 122. Creation of Regional Tripartite Wages and Productivity Boards. much less, a vested one.
The Regional Boards shall have the following powers and functions in their "Distressed Industry" as a Criterion for
respective territorial jurisdiction:
Exemption Void
(a) To develop plans, programs and projects relative to wages, income and
productivity improvement for their respective regions;
The Court wishes to stress that the law does not automatically grant exemption
to all establishments belonging to an industry which is deemed "distressed."
(b) To determine and fix minimum wage rates applicable in their region, Hence, RX-O1, Section 3 (4), must not be construed to automatically include all
provinces or industries therein and to issue the corresponding wage orders, establishments belonging to a distressed industry. The fact that the wording of a
subject to guidelines issued by the Commission; wage order may contain some ambiguity would not help petitioners. Basic is the
rule in statutory construction that all doubts in the implementation and the
(c) To undertake studies, researches, and surveys necessary for the attainment interpretation of the provisions of the Labor Code, as well as its implementing
of their functions, objectives and programs, and to collect and compile data on rules and regulations, must be resolved in favor of labor. 25 By exempting all
wages, incomes, productivity and other related information and periodically establishments belonging to a distressed industry, Guideline No. 3
disseminate the same; surreptitiously and irregularly takes away the mandated increase in the
minimum wage awarded to the affected workers. In so acting, the RTWPB
proceeded against the declared policy of the State, enshrined in the enabling
(d) To coordinate with the other Regional Boards as may be necessary to attain
act, "to rationalize the fixing of minimum wages and to promote productivity-
the policy and intention of this Code.
improvement and gain-sharing measures to ensure a decent standard of living
for the workers and their families; to guarantee the rights of labor to its just
(e) To receive, process and act on applications for exemption from prescribed share in the fruits of production; . . ." 26 Thus, Guideline No. 3 is void not only
wage rates as may be provided by law or any Wage Order; and because it lacks NWPC approval and contains an arbitrarily inserted exemption,
but also because it is inconsistent with the avowed State policies protective of
(f) To exercise such other powers and functions as may be necessary to carry out labor.
their mandate under this Code. (Emphasis supplied)
NWPC Decision Not Arbitrary
The foregoing clearly grants the NWPC, not the RTWPB, the power to "prescribe
the rules and guidelines" for the determination of minimum wage and To justify the exemption of a distressed establishment from effects of wage
productivity measures. While the RTWPB has the power to issue wage orders orders, the NWPC requires the applicant, if a stock corporation like petitioners,
under Article 122 (b) of the Labor Code, such orders are subject to the to prove that its accumulated losses impaired its paid-up capital by at least 25
guidelines prescribed by the NWPC. One of these guidelines is the "Rules on percent in the last full accounting period preceding the application 27 or the
Minimum Wage Fixing," which was issued on June 4, 1990. 15 Rule IV, Section 2 effectivity of the order. 28 In the case at bar, it is undisputed that during the
thereof, allows the RTWPB to issue wage orders exempting enterprises from the relevant accounting period, NALCO, ALCO and PWC sustained capital
coverage of the prescribed minimum wages.16 However, the NWPC has the impairments of 1.89, 28.72, and 5.03 percent, respectively. 29 Clearly, it was only
power not only to prescribe guidelines to govern wage orders, but also to issue ALCO which met the exemption standard. Hence, the NWPC did not commit
exemptions therefrom, as the said rule provides that "[w]henever a wage order grave abuse of discretion in approving the application only of ALCO and in
provides for exemption, applications thereto shall be filed with the appropriate denying those of petitioners. Indeed, the NWPC acted within the ambit of its
Board which shall process the same, subject to guidelines issued by the administrative prerogative when it set guidelines for the exemption of a
Commission." 17 In short, the NWPC lays down the guidelines which the RTWPB distressed establishment. Absent any grave abuse of discretion, NWPC's actions
implements. will not be subject to judicial review. 30 Accordingly, we deem the appealed
Decisions to be consistent with law.
Significantly, the NWPC authorized the RTWPB to issue exemptions from wage
orders, but subject to its review and approval. 18 Since the NWPC never assented WHEREFORE, the petition is hereby DISMISSED. The assailed Decisions are
to Guideline No. 3 of the RTWPB, the said guideline is inoperative and cannot be hereby AFFIRMED. Costs against petitioners.
used by the latter in deciding or acting on petitioners' application for exemption.
SO ORDERED. 1997, petitioner moved for reconsideration to set aside the writ of execution.
On March 5, the DOLE regional sheriff served on petitioner a notice of
garnishment of its account with the Far East Bank and Trust Company. On March
CAGAYAN SUGAR MILLING COMPANY, petitioner,
10, the sheriff seized petitioner's dump truck and scheduled its public sale on
vs.
March 20, 1997.
SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ,
SR., and CARSUMCO EMPLOYEES UNION, respondents.
Hence, this petition, with a prayer for the issuance of a temporary restraining
order (TRO).
On April 3, 1997, this Court issued a TRO enjoining respondents from enforcing
PUNO, J.:
the writ of execution. 4 On July 16, upon petitioner's motion, we amended the
TRO by also enjoining respondents from enforcing the Decision of the Secretary
In this petition for certiorari, petitioner CAGAYAN SUGAR MILLING COMPANY of Labor and conducting further proceedings until further orders from this
(CARSUMCO) impugns the October 8, 1996 Decision of the Secretary of Labor, Court. 5
dismissing its appeal and upholding the Order of Regional Director Ricardo S.
Martinez, Sr. finding petitioner guilty of violating Regional Wage Order No. RO2-
In the case at bar, petitioner contends that:
02.
I
The facts: On November 16, 1993, Regional Wage Order No. RO2-02 1 was
issued by the Regional Tripartite Wage and Productivity Board, Regional Office
No. II of the Department of Labor and Employment (DOLE). It provided, inter WAGE ORDER RO2-02 IS NULL AND VOID FOR HAVING BEEN ISSUED IN
alia, that: VIOLATION OF THE PROCEDURE PROVIDED BY LAW AND IN VIOLATION OF
PETITIONER'S RIGHT TO DUE PROCESS OF LAW.
Sec. 1. Upon effectivity of this Wage Order, the statutory minimum wage rates
applicable to workers and employees in the private sector in Region II shall be II
increased as follows:
WAGE ORDER NO. RO2-02 CLEARLY PROVIDED FOR THE FIXING OF A
xxx xxx xxx STATUTORY MINIMUM WAGE RATE AND NOT AN ACROSS THE BOARD INCREASE
IN WAGES.
1.2 P 14.00 per day . . . Cagayan
III
xxx xxx xxx
THE DECISION OF THE SECRETARY OF LABOR AND EMPLOYMENT IS NULL AND
VOID FOR LACK OF ANY LEGAL BASIS.
On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office
examined the books of petitioner to determine its compliance with the wage
order. They found that petitioner violated the wage order as it did not The petition has merit.
implement an across the board increase in the salary of its employees.
Wage Order No. RO2-02, passed on November 16, 1993, provided for an
At the hearing at the DOLE Regional Office for the alleged violation, petitioner increase in the statutory minimum wage rates for Region II. More than a year
maintained that it complied with Wage Order No. RO2-02 as it paid the later, or on January 6, 1995, the Regional Board passed Wage Order RO2-02-A
mandated increase in the minimum wage. amending the earlier wage order and providing instead for an across the board
increase in wages of employees in Region II, retroactive to the date of effectivity
of Wage Order RO2-02.
In an Order dated December 16, 1994, public respondent Regional Director
Ricardo S. Martinez, Sr. ruled that petitioner violated Wage Order RO2-02 by
failing to implement an across the board increase in the salary of its employees. Petitioner assails the validity of Wage Order RO2-02-A on the ground that it was
He ordered petitioner to pay the deficiency in the salary of its employees in the passed without the required public consultation and newspaper publication.
total amount of P555,133.41. Thus, petitioner claims that public respondent Labor Secretary Quisumbing
abused his discretion in upholding the validity of said wage order.
On January 6, 1995, petitioner appealed to public respondent Labor Secretary
Leonardo A. Quisumbing. On the same date, the Regional Wage Board issued We agree.
Wage Order No. RO2-02-A, 2 amending the earlier wage order, thus:
Article 123 of the Labor Code provides:
Sec. 1. Section 1 of Wage Order No. RO2-02 shall now read as, "Upon effectivity
of this Wage Order, the workers and employees in the private sector in Region 2
Art. 123. Wage Order. Whenever conditions in the region so warrant, the
shall receive an across the board wage increase as follows:
Regional Board shall investigate and study all pertinent facts, and, based on the
standards and criteria herein prescribed, shall proceed to determine whether a
xxx xxx xxx Wage Order should be issued. Any such Wage Order shall take effect after (15)
days from its complete publication in at least one (1) newspaper of general
circulation in the region.
1.2 P14.00 per day . . . Cagayan
In this petition for certiorari, the Metropolitan Bank & Trust Company
Employees Union-ALU-TUCP (MBTCEU) and its president, Antonio V. Balinang, The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05
February 1991, the labor arbiter disregard with the bank's contention that the
increase in its implementation of Republic Act 6727 did not constitute a equitable remedy at bar, for the same would be an across the board increase
distortion because "only 143 employees or 6.8% of the bank's population of a which is not the intention of RA 6727. For that matter, herein complainants
total of 2,108 regular employees" benefited. He stressed that "it is not cannot by right claim for the whole amount of P750.00 a month or P25.00 per
necessary that a big number of wage earners within a company be benefited by day granted to the workers covered by the said law in the sense that they are
the mandatory increase before a wage distortion may be considered to have not covered by the said increase mandated by RA 6727. They are only entitled
taken place," it being enough, he said, that such increase "result(s) in the severe to the relief granted by said law by way of correction of the pay scale in case of
contraction of an intentional quantitative difference in wage between employee distortion in wages by reason thereof.
groups."
Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on
The labor arbiter concluded that since the "intentional quantitative difference" 21 May 1991 by the Regional Tripartite Wages and Productivity Commission for
in wage or salary rates between and among groups of employees is not based correction of pay scale structures in case of wage distortion as in the case at bar
purely on skills or length of service but also on "other logical bases of which is:
differentiation, a P900.00 wage gap intentionally provided in a collective
bargaining agreement as a quantitative difference in wage between those who
Minimum Wage = % x Prescribed = Distortion
WERE regular employees as of January 1, 1989 and those who WERE NOT as of
that date, is definitely a logical basis of differentiation (that) deserves protection
from any distorting statutory wage increase." Otherwise, he added, "a minimum Increased Adjustment
wage statute that seek to uplift the economic condition of labor would itself Actual Salary
destroy the mechanism of collective bargaining which, with perceived stability,
has been labor's constitutional and regular source of wage increase for so long a would be the most equitable and fair under the circumstances obtaining in this
time now." Thus, since the "subjective quantitative difference" between wage case.
rates had been reduced from P900.00 to barely P150.00, correction of the wage
distortion pursuant to Section 4(c) of the Rules Implementing Republic Act 6727
should be made. For this very reason, I register my dissent from the majority opinion and opt for
the modification of the Labor Arbiter's decision as afore-discussed. 4
. . . a wage distortion can arise only in a situation where the salary structure is (p) Wage Distortion means a situation where an increase in prescribed wage
characterized by intentional quantitative differences among employee groups rates results in the elimination or severe contradiction of intentional
determined or fixed on the basis of skills, length of service, or other logical basis quantitative differences in wage or salary rates between and among employee
of differentiation and such differences or distinction are obliterated (In Re: groups in an establishment as to effectively obliterate the distinctions embodied
Labor Dispute at the Bank of the Philippine Islands, NCMB-RB-7-11-096-89, in such wage structure based on skills, length of service, or other logical bases of
Secretary of Labor and Employment, February 18, 1991). differentiation.
As applied in this case, We noted that in the new wage salary structure, the The issue of whether or not a wage distortion exists as a consequence of the
wage gaps between Level 6 and 7 levels 5 and 6, and levels 6 and 7 (sic) were grant of a wage increase to certain employees, we agree, is, by and large, a
maintained. While there is a noticeable decrease in the wage gap between question of fact the determination of which is the statutory function of the
levels 2 and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps NLRC. 7 Judicial review of labor cases, we may add, does not go beyond the
between said levels is not significant as to obliterate or result in severe evaluation of the sufficiency of the evidence upon which the labor official's
contraction of the intentional quantitative differences in salary rates between findings rest. 8 As such, factual findings of the NLRC are generally accorded not
the employees groups. For this reason, the basis requirement for a wage in this only respect but also finality provided that its decision are supported by
case. Moreover, there is nothing in the law which would justify an across-the- substantial evidence and devoid of any taint of unfairness of
board adjustment of P750.00 as ordered by the labor Arbiter. arbitrariness. 9 When, however, the members of the same labor tribunal are not
in accord on those aspects of a case, as in this case, this Court is well cautioned
WHEREFORE, premises considered, the appealed decision is hereby set aside not to be as so conscious in passing upon the sufficiency of the evidence, let
and a new judgment is hereby entered, dismissing the complaint for lack of alone the conclusions derived therefrom.
merit.
In this case, the majority of the members of the NLRC, as well as its dissenting
SO ORDERED. 3 member, agree that there is a wage distortion arising from the bank's
implementation of the P25 wage increase; they do differ, however, on the
extent of the distortion that can warrant the adoption of corrective measures
In her dissent, Presiding Commissioner Edna Bonto-Perez opined:
required by law.
The "intentional quantitative differences" in wage among employees of the In implementation of the law, private respondent Del Monte Philippines, Inc.
bank has been set by the CBA to about P900 per month as of 01 January 1989. It gave a P25.00/day increase to the P54.00/day wages of its temporary
is intentional as it has been arrived at through the collective bargaining process employees or "broilers." Because the regular employees, members of petitioner
to which the parties are thereby concluded. 11 The Solicitor General, in union, who were then receiving P100.80 a day were not granted a similar
recommending the grant of due course to the petition, has correctly increase, they complained to the management of private respondent.
emphasized that the intention of the parties, whether the benefits under a
collective bargaining agreement should be equated with those granted by law or
On February 14, 1990, the parties executed a Memorandum Agreement
not, unless there are compelling reasons otherwise, must prevail and be given
wherein private respondent, "in positive response to the union's
effect. 12
representations and notwithstanding that it has no legal or contractual
obligation," granted the members of petitioner union a P10.00/day wage
In keeping then with the intendment of the law and the agreement of the increase effective January 1, 1990, subject to the latter's right to claim
parties themselves, along with the often repeated rule that all doubts in the P15.00/day as balance, through compulsory arbitration. 2
interpretation and implementation of labor laws should be resolved in favor of
labor, 13 we must approximate an acceptable quantitative difference between
On June 5, 1990, petitioners (Associated Labor Union-TUCP, representing its
and among the CBA agreed work levels. We, however, do not subscribe to the
members, DMPIEU-ALU-TUCP, Local 302 and Geronimo de los Santos) filed a
labor arbiter's exacting prescription in correcting the wage distortion. Like the
complaint against private respondent in the National Labor Relations
majority of the members of the NLRC, we are also of the view that giving the
Commission (NLRC) Regional Arbitration Branch X in Cagayan de Oro City. They
employees an across-the-board increase of P750 may not be conducive to the
alleged that a wage distortion 3had been created by the grant to its temporary
policy of encouraging "employers to grant wage and allowance increases to
employees of a P25.00/day salary increase under Republic Act No. 6727, thereby
their employees higher than the minimum rates of increases prescribed by
reducing to P21.80 from the previous P46.80, the difference in salaries between
statute or administrative regulation," particularly in this case where both
the regular employees (herein petitioners) and the temporary employees.
Republic Act 6727 and the CBA allow a credit for voluntary compliance. As the
Court, through Associate Justice Florentino Feliciano, also pointed out in Apex
Mining Company, Inc. v. NLRC: 14 On November 27, 1990, the Labor Arbiter, Noel Augusto S. Miranda, dismissed
the complaint for lack of merit. He found no wage distortion in view of a series
of salary increases which respondent had granted to petitioners
. . . . (T)o compel employers simply to add on legislated increases in salaries or
vis-a-vis the temporary employees, as shown by the following table:
allowances without regard to what is already being paid, would be to penalize
employers who grant their workers more than the statutorily prescribed
minimum rates of increases. Clearly, this would be counter-productive so far as Pay of Union Pay of Temporary Difference
securing the interests of labor is concerned. . . . Members Employees
We find the formula suggested then by Commissioner Bonto-Perez, which has A. Prior to July 1, 1989 P100.80/day P54.00/day P46.80
also been the standard considered by the regional Tripartite Wages and
Productivity Commission for the correction of pay scale structures in cases of B. Effective July 1, 1989 P100.80/day P79.00/day P21.80 (Under R.A. No. 6727
wage distortion, 15 to well be the appropriate measure to balance the respective giving P25.00/day
contentions of the parties in this instance. We also view it as being just and increase to the tempo-
equitable. rary employees)
WHEREFORE, finding merit in the instant petition for certiorari, the same is C. Effective Sept. 1, 1989 P115.80/day P79.00/day P36.80
GRANTED DUE PROCESS, the questioned NLRC decision is hereby SET ASIDE and (Under CBA giving
the decision of the labor arbiter is REINSTATED subject to the MODIFICATION P15.00/day increase to
that the wage distortion in question be corrected in accordance with the the union members)
formula expressed in the dissenting opinion of Presiding Commissioner Edna
Bonto-Perez. This decision is immediately executory.
D. Effective Jan. 1, 1990 P125.80/day P79.00/day P46.80
(Under Agreement on
SO ORDERED. Feb. 14, 1990 giving
P10.00/day increase
ASSOCIATED LABOR UNIONS-TUCP representing its members, DMPIEU-ALU- to the union members)
TUCP, LOCAL 302 and/or GERONIMO DE LOS SANTOS, petitioners,
vs. E. Effective Sept. 1, 1990 P140.80/day P79.00/day P61.80
THE HON. NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), ATTY. (Under CBA giving
NOEL AUGUSTO S. MAGBANUA in his capacity as Labor Arbiter, and DEL P15.00/day increase
MONTE PHILIPPINES, INC., respondents. to the union members)
Seno, Mendoza & Associates for petitioners. On appeal the NLRC affirmed the Labor Arbiter's findings and denied petitioners'
motion for reconsideration. Hence this petition.
Nuevas & Nuevas Law Offices for private respondent.
Petitioners contend that the increases mandated by the parties' Collective
Bargaining Agreement and the voluntary agreement dated February 14, 1990
should not be considered as having corrected the wage distortion, since
employee benefits derived from law are exclusive, distinct, and separate from
MENDOZA, J.:
those obtained through negotiation and agreement.
This is a special civil action of certiorari to set aside the decision and resolution
The contention has no merit.
dated June 22, 1992 and September 14, 1992 respectively of the National Labor
Relations Commission (Fifth Division). 1
Art. 124 of the Labor Code, as amended by Republic Act No. 6727, expressly
provides that where the application of any prescribed wage increase by virtue of
The antecedent facts are as follows:
a law or wage order issued by any Regional Board results in distortions of the
wage structure within an establishment, the employer and the union shall
On July 1, 1989, Republic Act No. 6727, otherwise known as the Wage negotiate to correct the distortions. The law recognizes, therefore, the validity
Rationalization Act, took effect, granting a P25.00/day increase in the statutory of negotiated wage increases to correct wage distortions. The legislative intent
is to encourage the parties to seek solution to the problem of wage distortions
through voluntary negotiation or arbitration, rather than strikes, lockouts, or Apex, in compliance with Wage Order No. 5, accordingly increased the daily
other concerted activities of the employees or management. 4 Recognition and ECOLA of its workers by P3.00 only (from P9.00 to P12.00), or P2.00 less than
validation of wage increases given by employers either unilaterally or as a result the legislated ECOLA increase of P5.00 (which would have increased the total
of collective bargaining negotiations for the purpose of correcting wage daily ECOLA from P9.00 to P14.00). Petitioner Apex added that the integration
distortions are in keeping with the public policy of encouraging employers to of P2.00 allowance into the basic salary provided for in the CBA had been
grant wage and allowance increases to their employees which are higher than conformed to by Vicente Arniego, National President of Sandigan, and that in
the minimum rates of increases prescribed by statute or administrative any event, Wage Order No. 5 had itself authorized such integration. Since
regulation. 5 As this Court stated in Apex Mining, Inc. v. NLRC: 6 petitioner Apex had integrated P2.00 (out of the P5.00) ECOLA provided for in
Wage Order No. 5, when Apex complied with the additional ECOLA increase
mandated by Wage Order No. 6, the resulting figure for the total or cumulative
To compel employers simply to add on legislated increases in salary or
ECOLA paid by Apex appeared to be only P15.00, until one took into account the
allowances without regard to what is already paid, would be to penalize
P2.00 (out of the P5.00 ECOLA increase mandated by Wage Order No. 5)
employers who grant their workers more than the statutorily prescribed
integrated into the employees' basic salary. Finally, petitioner Apex explained, it
minimum rates of increases. Clearly, this would be counterproductive so far as
had granted members of Sandigan an additional P2.00 effective 29 March 1985
securing the interest of labor is concerned.
not as an admission that it had previously failed to pay something legally due,
but only as a measure to diffuse the tense atmosphere between management
Thus in Cardona v. NLRC, 7 it was held that there was no wage distortion where and the union created by the misunderstanding over the ostensible (as
the employer made salary adjustments in terms of restructing of benefits and distinguished from the real) total increase paid by petitioner Apex to its
allowances and there was an increase pursuant to the CBA. employees.
There is thus, to use the language of the law, no "effective obliterat[ion of] the In a decision dated 19 May 1987, the Labor Arbiter held that the wage increase
distinction embodied in [private respondent's] wage structure based on skills, given in accordance with the CBA could not be credited as compliance with
length of service, or other logical basis of differentiation" in this case. For it is increases mandated in the Wage Orders, and ordered petitioner Apex to pay
undisputed that the difference in wages between petitioners and the temporary respondent Sandigan the claimed ECOLA differential of P2.00 for the period
employees is now even greater than it used to be prior to the grant of the from 1 November 1984 until 28 March 1985.
P25.00/day increase to the latter pay pursuant to Republic Act No. 6727.
On appeal, the National Labor Relations Commission ("NLRC") affirmed the
Finally, whether or not a wage distortion exists by reason of the grant of a wage Labor Arbiter's ruling.
increase to certain employees is essentially a question of fact. In this case, the
findings of the Labor Arbiter, affirmed by the NLRC, that no wage distortion
There is no dispute that petitioner Apex, as the Labor Arbiter had found out, had
exists being based on substantial evidence, are entitled to respect and finality. 8
paid a P2.00 wage increase effective on 1 February 1984. There is also no
question that Apex raised the ECOLA of its workers by P3.00 starting on the
WHEREFORE, the petition is DISMISSED. effectivity date of Wage Order No. 6 on November 1984. The question to be
resolved is whether or not Apex complied with the increases mandated by Wage
SO ORDERED. Orders Nos. 5 and 6. Resolution of this issue in turn hinges on the question of
whether or not the P2.00 per day increase in basic salary effective starting on 1
February 1984 granted by petitioner Apex pursuant to the CBA, was lawfully
APEX MINING COMPANY, INC., petitioner, credited towards compliance with increases in ECOLA required under Wage
vs. Orders Nos. 5 and 6.
NATIONAL LABOR RELATIONS COMMISSION and SANDIGAN NG
MANGGAGAWANG PILIPINO, represented by RANULFO PEDRERA,
President, respondents. 1. The P2.00 increase integrated in the basic salary of Apex's, employees,
effective on and after 1 February 1984, was concededly given under the
provisions of the CBA. Section 4 of Article VI of the CBA provided as follows:
Gerardo C. Olaguer for petitioner.
It is understood that the grant of these general increases shall be as part of any
Antonio Billiones, Sr. and Antonio Jolejole for private respondent. increase in basic pay and/or allowance that may hereafter be decreed or
imposed by law.
Both Wage Order No. 5 and Wage Order No. 6 expressly allowed the crediting of
FELICIANO, J.: increases in wages or allowances granted under collective bargaining
agreements towards compliance with increases in ECOLA requirements
prescribed by those Wage Orders. Section 7 o f Wage Order No. 5 provided as
Respondent Sandigan ng Manggagawang Pilipino ("Sandigan") filed before the follows:
Labor Arbiter a claim for Emergency Cost of Living Allowance ("ECOLA")
differential against petitioner Apex Mining Company, Inc. ("Apex") alleging that
Apex had paid its employees in its Maco, Davao del Norte operations, between All increases in wages and/or allowances granted by employers between
1 November 1954 until 28 March 1985, an aggregate cumulative daily ECOLA of February 1, 1984 and the effectivity of this order [16 June 1984] shall be credited
only P15.00 which was P2.00 below the cumulative minimum ECOLA of P17.00 as compliance with the minimum wage and allowance adjustments prescribed
(for non-agricultural workers) established under Wage Order No. 6; and that herein . . .
petitioner had belatedly granted the additional P2.00 starting on 29 March 1985
only. Such increases shall not include anniversary wage increases provided in
collective bargaining agreements unless the agreements expressly provide
Apex denied having failed to comply with Wage Order No. 6, contending that it otherwise.
had, by previous agreement, incorporated the alleged P2.00 deficiency into the
basic salary of its employees. In turn, Sandigan denies that such an agreement xxx xxx xxx
had been made, but conceded that a P2.00 increase in basic salary had been
made by Apex, in compliance with a provision of the Collective Bargaining
Agreement ("CBA") then in force between Apex andSandigan, and not in (Emphasis and brackets supplied)
fulfillment of Apex's obligation under Wage Order No. 6. Sandigan pointed out
that Wage Order No. 6 had taken effect on 1 November 1984, several months Section 4 of Wage Order No. 6 had very similar language:
after the P2.00 had been integrated by Apex into the basic salary of its
employees.
All increases in wages and/or allowances granted by employers between June
17, 1984 and the effectivity of this order [November 1, 1984] shall be credited as
In a supplemental memorandum, Apex reiterated that the daily salary increase compliance with the minimum wage and allowance adjustments prescribed
of P2.00 provided for in the then current CBA, to take effect on 1 February 1984, herein, provided that where the increases are less than the applicable amount
had been subsequently credited as partial compliance with the P5.00 increment provided in this order, the employer shall pay the difference. Such increases
mandated by Wage Order No. 5 (which took effect on 16 June 1984). Thus,
shall not include anniversary wage increases provided in collective bargaining the second anniversary date (1 February 1986). In other words, the two (2)
agreements unless the agreements expressly provide otherwise. increases of 1.50 each, one being effective on 1 February 1985 and the second
effective on 1 February 1986, were precisely the non-creditable "anniversary
wage increases." Even if it be assumed, however, that the 1 February 1984
This Section shall not apply to merit wage increases and those resulting from the
P2.00 increase were regarded (improperly) as an "anniversary wage increase"
regularization or promotion of employees. (Emphasis and brackets supplied)
still that P2.00 increase would be creditable towards the statutorily mandated
increases. For Wage Orders Nos. 5 and 6 themselves allowed crediting of
It is important to note that the creditability provisions in Wage Orders Nos. 5 "anniversary wage increases" stipulated in a CBA towards statutory
and 6 (as well as the parallel provisions in Wage Orders Nos. 2, 3 and 4) are increases, if the CBA itself (as here) expressly allowed such crediting. Section 4,
grounded in an important public policy. That public policy may be seen to be Article VI of the CBA, quoted earlier, authorized the crediting of "general
the encouragement of employers to grant wage and allowance increases to their increases" towards statutorily mandated increases in basic pay or allowance. At
employees higher than the minimum rates of increases prescribed by statute or the same time, Section 3 of Article VI of the CBA, quoted above, described the
administrative regulation. To obliterate the creditability provisions in the Wage two (2) anniversary wage increases of P1.50 each, and the one-time P2.00
Orders through interpretation or otherwise, and to compel employers simply to increase, as each constituting a "general increase."
add on legislated increases in salaries or allowances without regard to what is
already being paid, would be to penalize employers who grant their workers
4. What petitioner Apex did may perhaps be most economically presented in the
more than the statutorily prescribed minimum rates of increases. Clearly, this
following tabular form:
would be counter-productive so far as securing the interests of labor is
concerned. The creditability provisions in the Wage Orders prevent the
penalizing of employers who are industry leaders and who do not wait for ECOLA Increases Statutorily Mandated
statutorily prescribed increases in salary or allowances and pay their workers by Wage Orders Nos. 4, 5, and 6
more than what the law or regulations require. (For non-agricultural workers outside
Metro Manila)
2. Sandigan, however, argues that to consider the P2.00 increase in basic salary
effective 1 February 1984 provided by the CBA as compliance with the Wage Mandatory Cumulated Apparent Actual Actual
requirements of Wage Orders Nos. 5 and 6, would be to violate Article 100 of Order Increase Increase Cumulated Cumulated Differential
the Labor Code as well as Section 6 of the Rules Implementing Wage Order No. No. (P0.00) (0.00) Increase 2 Increase 3 (0.00)
6. These provisions read, respectively: (P0.00) (P0.00)
c) One Peso and Fifty Centavos (P1.50) general increase per day effective on the 5. Lastly, Sandigan invokes Filipino Pipe Workers Union (NLU) v. Batario,
second anniversary date of this Agreement (February 1, 1986). 1 (Emphasis Jr., 5 where the Court, through its Third Division, made the broad statement that
supplied) statutory wage increases are to be considered separate from increases granted
through the medium of CBAs.
The instant Petition for Certiorari was filed on 14 July 1994 accompanied by a
prayer for issuance of a temporary restraining order to enjoin public
FELICIANO, J.: respondents from enforcing their award.
In this Petition for Certiorari, petitioner Metro Transit Organization, Inc. On 31 August 1994, the Court, after an oral hearing, issued a Resolution
("Metro") asks us to set aside the Decision and Resolution of the National Labor encouraging petitioner Metro and private respondent SEAM to vigorously and
Relations Commission ("NLRC") dated 30 March and 22 June 1994 respectively earnestly exercise their best efforts to reach an amicable and mutually
in NLRC-NCR-CA No. 000042-92 ordering it to pay its supervisory employees acceptable settlement of their claims and counterclaims. In the meantime, the
amounts representing (i) a demanded wage increase based on company practice disputants were to maintain thestatus quo, in particular, private respondent
and (ii) a correction or adjustment of an underpayment of an annual wage SEAM and public respondent NLRC were to refrain from seeking and granting,
increase granted in the collective bargaining agreement (CBA) between Metro respectively, the issuance of a writ of execution in respect of the decision of the
and herein private respondent Supervisory Employees Association Metro NLRC.
("SEAM").
On 29 and 30 September 1994, petitioner Metro and private respondent SEAM
Petitioner Metro is the operator and manager of the Light Railway Transit respectively informed the Court that their efforts amicably to settle their
System in Metro Manila. It employs close to 1,000 rank-and-file and over 200 dispute had failed. Cognizant of (a) the huge disparity between the financial
supervisory employees. Private respondent SEAM is a union composed of capability of Metro and the amount awarded to SEAM, 3 (b) the essential public
supervisory employees of petitioner Metro. In May 1989, SEAM was certified as services being rendered by the parties and (c) in the interest of avoiding any
the sole bargaining unit for the supervisory employees of Metro. disruption of these basic services, the Court reiterated its Order of 31 August
1994 enjoining respondents SEAM and the NLRC from seeking and granting a
writ of execution until further orders from this Court.
On 1 December 1989, the first collective bargaining agreement between
petitioner Metro and private respondent SEAM took effect. 1 Prior to December
The principal issues, to the mind of the Court, are: (a) whether or not a wage employee for his industry and loyalty which contributed to the success of the
distortion existed in respect of the salaries of the rank-and-file and supervisory employer's business and made possible the realization of profits. It is something
employees of petitioner Metro; and (b) assuming a wage distortion existed, given in addition to what is ordinarily received by or strictly due to the
whether or not it has been corrected by petitioner Metro in accordance with recipient. 7
law. 4
The general rule is that a bonus is a gratuity or an act of liberality which the
Private respondent SEAM vigorously asserts that an already existing wage recipient has no right to demand as a matter of right. 8 A bonus, however, is a
distortion in respect of the salaries of rank-and-file and supervisory employees demandable or enforceable obligation when it is made part of the wage or
was aggravated when Metro, on 17 April 1989, paid its rank-and-file employees salary or compensation of the employee. 9 Whether or not a bonus forms part of
their CBA-stipulated P500.00 increase but did not grant a corresponding wages depends upon the circumstances and conditions for its payment. If it is
increase (and a premium) to its supervisory employees. Furthermore, the additional compensation which the employer promised and agreed to give
advance by Metro of the P600.00 on 17 April 1990 only "artificially" reduced the without any conditions imposed for its payment, such as success of business or
existing distortion. The advance was, according to SEAM, extended merely to greater production or output, then it is part of the wage.But if it is paid only if
give the appearance of a reduction of the existing distortion in pay between the profits are realized or if a certain level of productivity is achieved, it can not be
rank-and-file and supervisory employees. On 1 December 1990, when considered part of the wage. Where it is not payable to all but only to some
supervisory employees were paid the balance of P400.00 the distortion existing employees and only when their labor becomes more efficient or more
prior to 17 April 1990 was reinstated. Finally, SEAM claims, on top of the salary productive, it is only an inducement for efficiency, a prize therefor, not a part of
increases granted to supervisory employees by their CBA, they should be paid the wage. 10
the increase corresponding to the P500.00 increase given rank-and-file
employees not only for 1989 but also onwards.
In the case at bar, the increase of P550.00 sought by private respondent SEAM
was neither an inducement nor was it contingent on (a) the success of the
Upon the other hand, petitioner Metro firmly maintains that its practice of business of petitioner Metro; or (b) the increased production or work output of
giving higher increases to supervisory employees whenever rank-and-file the company or (c) the realization of profits. The demand for this increase was
employees were given increases, should not be regarded as compulsory. The based on a company practice, admitted by Metro, of granting a salary increase
grant of a corresponding increase to supervisory employees is a prerogative or (and a premium) to supervisory employees whenever rank-and-file employees
discretionary act of generosity by management considering there is no law or were granted a salary increase. That those increases were precisely designed to
company policy mandating it. Moreover, SEAM is estopped, Metro asserts, from correct or minimize the wage distortion effects of increases given to rank-and-
claiming such an increase. Despite its awareness of the P500.00 increase paid to file employees (under their CBA or under Wage Orders), highlights the fact that
rank-and-file employees (pursuant to their CBA) on 17 April 1989, SEAM did not those increases were part of the wage structure of supervisory employees. The
negotiate in SEAM's own CBA for the retroactive payment or pushing forward demanded increase therefore is not a bonus that is generally not demandable as
the effectivity date of its first increase of P800.00 to 17 April 1989. Finally, the a matter of right. The demanded increase, in this instance, is an enforceable
demanded P550.00 wage increase should be deemed, according to Metro, obligation so far as the supervisory employees of Metro are concerned.
included in the P800.00 salary increase paid supervisory employees on 1
December 1989.
We conclude that the supervisory employees, who then (i.e., on 17 April 1989)
had, unlike the rank-and-file employees, no CBA governing the terms and
In respect of the issue of underpayment, petitioner Metro denies that it conditions of their employment, had the right to rely on the company practice
underpaid its supervisory employees. Metro maintains (a) that the first increase of unilaterally correcting the wage distortion effects of a salary increase given to
of P800.00 effective 1 December 1989 as provided in its CBA with SEAM is the rank-and-file employees, by giving the supervisory employees a
higher than the P500.00 increase paid its rank-and-file employees; (b) that corresponding salary increase plus a premium. For reasons, however, shortly to
assuming arguendo a distortion in pay still existed, the same was corrected be stated in the disposition of the second issue, we hold that the P550.00
when the majority of the supervisory employees, in a referendum, voted to increase is demandable by SEAM only in respect of the period beginning 17 April
accept the advance payment of P600.00 out of the scheduled CBA increase of 1989 and ending on 30 November 1989.
P1,000.00 effective 1 December 1990; (c) it was actually SEAM who had
proposed the advance payment of P600.00 from their scheduled second year
It is true enough that, in the present case, the wage distortion to be corrected
increase of P1,000.00; (d) SEAM had further agreed that, come 1 December
by the award of P550.00 increase for supervisory employees beginning 17 April
1990, only the balance of P400.00 would have to be paid to supervisory
1989, was due to the time gap between the effectivity date (17 April 1989) of
employees; and (e) payment by Metro of the balance of P400.00 on 1 December
the increase of P500.00 per month given to rank-and-file employees under their
1990 was merely its compliance with the scheduled second year increase
CBA and the effectivity date (1 December 1989) of the P800.00 increase given to
aligned with Metro's subsequent agreement with SEAM to advance the
supervisory employees under their own CBA. It is also true that had the P800.00
effectivity date of the first P600.00.
increase to supervisory employees been made retroactive to 17 April 1989 by an
appropriate synchronizing provision in the Metro-SEAM CBA, no wage distortion
In its Comment, the Office of the Solicitor General argues, rather cursorily, that would have arisen. The fact, however, remains that Metro and SEAM did not
public respondent NLRC did not commit any grave abuse of discretion and that agree upon such remedy in their CBA and that the CBA increase given to rank-
its findings of fact must be accorded respect and finality. and-file employees did produce a distortion effect by obliterating or drastically
reducing the previous gap between the salary rates of rank-and-file and
supervisory employees. The point to be stressed is that considering the prior
I
practice of petitioner Metro, its supervisory employees had the right to expect
rectification of that distortion.
In respect of the issue of existence of a wage distortion, the Court finds and so
holds that a wage distortion did occur when the salaries of rank-and-file
II
employees were increased by P500.00 per month on 17 April 1989 as stipulated
in their CBA and no corresponding increase was paid to the supervisory
employees. This fact was admitted by Atty. Virgilio C. Abejo, counsel for We turn to the issue of whether the wage distortion referred to above was
petitioner Metro, during the oral hearing and Metro is bound by that effectively rectified by petitioner Metro in accordance with law.
admission. 5
This issue arises because, as already noted, the NLRC in its 30 March 1994
In addition, Atty. Abejo explained that his client, as a matter of practice, granted Decision decreed that Metro shall pay the "P550.00 per month wage increase
its supervisory employees a salary increase (and a premium) whenever it paid its effective April 17, 1989 and onwards" and similarly ordered the payment of
rank-and-file employees a salary increase. 6 P600.00 per month which it found to have been underpaid "effective December
1, 1990 and onwards."
The defense of management prerogative or discretion invoked by petitioner
Metro in asserting that it is not obligated to grant supervisory employees a It is helpful to recall the general principles laid down in National Federation of
salary increase whenever rank-and-file employee are granted an increase is, in Labor v. National Labor Relations Commission, 11 where the Court discussed at
this case, unavailing. some length the relatively obscure concept of wage distortion. Those principles
may be summarily stated in the following manner:
Basically, Metro's argument is that such increase was merely a bonus given to
supervisory employees. A "bonus" is an amount granted and paid to an
(a) The concept of wage distortion assumes an existing grouping
CBA or classification
Effectivity Wage Increase Wage Increase Gap
of employees which establishes distinctions among such employees on some
Increase
relevant or legitimate basis. This classification is reflected Date
in a deferring wage Rank and File Supervisory (PHP)
rate for each of the existing classes of employees. Employees Employees
(PHP) (PHP)
(b) Wage distortions have often been the result of government-decreed
increases in minimum wages. There are, Year I
however, 4/17/89
other causes of wage 550.00 12 550.00 50
distortions, like the merger of two (2) companies (with differing classifications of
12/1/89 - 0.00 800.00 850
employees and different wage rates) where the surviving company absorbs all
the employees of the dissolved corporation. Year
(InII the present
4/17/90Metro case, as 600.00 13 600.00 850
already noted, the wage distortion arose because the effectivity dates of wage
12/1/90 - 0.00 400.00 1250
increases given to each of the two (2) classes of employees (rank-and-file and
supervisory) had not been synchronized in their
Yearrespective
III CBAs.)
4/17/91 750.00 550.00 500
12/1/91 - 0.00 1,000.00 1500
(c) Should a wage distortion exist, there is no legal requirement that, in the
rectification of that distortion by re-adjustment of the wage rates of the
differing classes of employees, the gap which had previously or historically
existed be restored in precisely the same amount. In other words, correction of
a wage distortion may be done by re-establishing a substantial orsignificant gap We consider the difference of P1,500.00 per month a significant differential that
(as distinguished from the historical gap) between the wage rates of the clearly distinguishes, on the basis of pay scales, a rank-and-file employee from a
differing classes of employees. supervisory employee.
(d) The re-establishment of a significant difference in wage rates may be the Applying the above increases to the actual salaries being received by rank-and-
result of resort to grievance procedures or collective bargaining negotiations. file and supervisory employees of Metro, we find that indeed the distortion
caused by the CBA-stipulated wage increase granted rank-and-file employees on
In the present case, the Court must confront the task of determining whether 17 April 1989 was rectified by 1 December 1991.
the CBA forged by Metro and SEAM had, along with the award of P550.00 per
month from 17 April 1989 to 1 December 1989, referred to in Part I above, The record before us does not include the actual amounts of the rank-and-file
adequately corrected the wage distortion. and supervisory employees' salaries. In its position paper before the NCMB,
however, private respondent SEAM stated:
After careful examination of the provisions of the CBA between Metro and
SEAM, in particular the provisions relating to anniversary salary increases every The highest salary of some rank-and-file employees at present (before adding
1 December beginning 1989 to 1991, we believe and so hold that together with the CBA increase) is P4,790.00 which is higher that some supervisors with [a]
the increase of P550.00 referred to in Part I above, those provisions will have salary of P3,980.00. 14
adequately rectified the wage distortion which arose in respect of rank-and-file
and supervisory employees.
Taking the above SEAM figures and adding to them the respective CBA-
stipulated increases to the salary of thehighest paid rank-and-file employee and
The CBA of supervisory employees granted them an aggregate monthly increase to the lowest paid supervisory employee, plus the P550.00 in wage already held
of P2,800.00 over three (3) years: due to all supervisory employees as of 17 April 1989, we find that the salary of
the lowest paid supervisory employee was, by 1 December 1991, P690.00 more
Table I than the salary of the highest paid rank-and-file employee:
Table III
We turn to the related issue of whether the first year salary increase of P800.00 pointed out, lasted only from 17 April 1989 up to 30 November 1989, since the
per month given to supervisory employees under their CBA covered or took the following day, 1 December 1989, the CBA of Metro and SEAM went into effect.
place of the P550.00 increase we ruled is due them in Part I (supra) by virtue of
the previous unilateral practice of Metro.
Similarly, we believe that the NLRC committed a grave abuse of discretion in
requiring Metro to pay the sum of P600.00 per month from 1 December
Metro maintains that the P800.00 monthly salary increase paid to supervisory 1990 and onwards, i.e., forever after. It will be recalled that Metro, upon
employees starting on 1 December 1989, should be deemed to cover or include request of SEAM, had agreed that of the P1,000.00 monthly increase originally
the P550.00 in wage increase demanded by SEAM and held by us to be due to scheduled to be effective under the CBA on 1 December 1990, P600.00 would
SEAM from 17 April 1989 to 1 December 1989. In other words, Metro argues take effect instead on 17 April 1990. Metro agreed to do so precisely to remedy
that the wage distortion should be regarded as cured by the CBA-mandated the distortion that would otherwise have resulted (see Tables III and IV, supra)
increase of P800.00 starting 1 December 1989. and so, starting 17 April 1990, supervisory employees received a monthly
increase of P600.00; and starting 1 December 1990, they started receiving an
additional P400.00 or the total stipulated CBA increase of P1,000.00 per month.
We note that the CBA of Metro and SEAM did not contain any provision
stipulating that the P550.00 monthly increase would be credited against the
P800.00 increase. There was no crediting provision apparently because the Again, for the same reasons set out earlier, we consider that these additional
P550.00 monthly increase had not been provided for in the CBA with SEAM. payments of P600.00 per month to supervisory employees from 17 April 1990
Even so, we agree with petitioner Metro's position. The issue of whether up to 1 December 1990 should be deemed included in the P1,000.00 monthly
increases in wages essential for correcting wage distortions may be credited increase effective from 1 December 1990 and onwards. Compelling Metro to
against CBA-mandated increases, is not an issue of first impression. In National pay, starting 1 December 1990, not only the P1,000.00 per month increase
Federation of Labor v. National Labor Relations Commission, 21 the Court stipulated in the CBA but also an additional P600.00 per month, amounts to
rejected the argument of the NLRC that wage increases resulting from collective allowing unjust enrichment of supervisory employees at the expense of their
bargaining negotiations should not be regarded as constituting compliance with employer Metro.
the direction to correct wage distortions arising from the effectivity of Wage
Orders. In National Federation of Labor, the Court, after quoting the following
Finally, the Court is aware of the existence of a job evaluation study prepared by
excerpt from Apex Mining Company, Inc. v. National Labor Relations
Resources Consultants International, aimed at re-examining the wage structure
Commission 22
of rank-and-file and supervisory employees of Metro. 25The decision we
promulgate today is without prejudice to higher wages which rank-and-file and
It is important to note that the creditability provisions of Wage Orders Nos. 5 supervisory employees may be receiving by virtue of implementation of such
and 6 (as well as the parallel provisions in Wage Orders Nos. 2, 3 and 4) are report.
grounded in an important public policy. The public policy may be seen to be
the encouragement of employers to grant wage and allowance increases to their
ACCORDINGLY, for all the foregoing, the Petition for Certiorari is hereby
employees higher than the minimum rates of increases prescribed by statute or
GRANTED DUE COURSE, and the Decision and Resolution of the NLRC dated 30
administrative regulation. To obliterate the creditability provisions in Wage
March and 22 June 1994, respectively, in NLRC-NCR-CA No. 000042-92 are
Orders through interpretation or otherwise, and to compel employers simply to
hereby SET ASIDE. In place thereof, another Decision is hereby RENDERED
add legislated increases in salaries or allowances without regard to what is
requiring petitioner Metro Transit Organization, Inc. to pay to each of its
already being paid, would be to penalize employers who grant their workers
supervisory employees the amount of Five Hundred Fifty Pesos (P550.00) for
more than the statutorily prescribed minimum rates of increases. Clearly, this
each month or fraction of a month, embraced within the period from 17 April
would be counter-productive so far as securing the interests of labor is
1989 to 1 December 1989, plus legal interest (six percent [6%] per annum)
concerned. The creditability provisions in the Wage Orders prevent the
thereon computed from the various dates in 1989 when such amount should
penalizing of employers who are industry leaders and who do not wait for
have been paid during the aforementioned period. This Decision shall be
statutorily prescribed increases in salary or allowances and pay their workers
without prejudice to any increase of wages already being enjoyed by
more than what the law or regulations require. 23 (Emphasis partly in the original
supervisory employees at the time of promulgation hereof.
and partly supplied)
No pronouncement as to costs.
said:
SO ORDERED.
We believe that the same public policy requires recognition and validation, as it
were, of wage increases given by employers either unilaterally or as a result of
collective bargaining negotiations, in the effort to correct wage COCOFED (Kalamansig) and/or CRISPIN ROSETE, petitioner,
distortions. 24 (Emphasis supplied) vs.
HON. CRESENCIANO B. TRAJANO, Undersecretary of the Department of Labor
and Employment and HON. MELENCIO Q. BALANAG, Director IV, DOLE,
In the instant case, the CBA-stipulated increase of P800.00 a month was
Regional XII, Cotabato City, respondents.
intended as the countervailing increase for supervisory employees, the rank-
and-file employees having already received their own increase approximately
eight (8) months earlier. In other words, the wage distortion in the present case RESOLUTION
arose not because of a government-decreed increase in minimum wages or
because Metro simply refused to treat its supervisory employees, differently
from its rank-and-file workers, but rather because of a failure to synchronize the
CBA-stipulated increases for rank-and-file and for supervisory employees.
Moreover, as more than once pointed out above, the P800.00 monthly increase ROMERO, J.:
given to supervisory employees should be taken in conjunction with the P550.00
month increase already awarded to supervisory employees under Part I above. Philippine Coconut Producers Federation operates petitioner COCOFED
When these are taken together, the wage distortion which occurred on 17 April (Kalamansig), a coconut plantation utilized as a demonstration farm for
1989 was completely and permanently corrected. There isno legal basis for replanting and/or training area for coconut farmers, located in Kalamansig,
requiring Metro to pay not only the P800.00 month increase, but also, on top Sultan Kudarat.
thereof, the P550.00 monthly increase to supervisory employees, after 1
December 1989 and forever after.
On November 15, 1988, a complaint inspection was conducted by the
Department of Labor and Employment, Region XII, Cotabato City in response to
From the foregoing, we conclude that beginning 1 December 1989, by the grant complaints filed by two of petitioner's employees, Alex Edicto and Delia
of the award of P550.00 to supervisory employees in Part I (supra) and by the Pahuwayan. The inspection revealed that petitioner was guilty of underpayment
operation of the Metro-SEAM CBA, the wage distortion which occurred on 17 of wages, emergency cost of living allowance (ECOLA) and 13th month pay.
April 1989 had been corrected. By 1 December 1991, a substantial gap or Accordingly, notice of inspection results were issued: requiring petitioner to
differential had been re-established between the salaries of the rank-and-file effect restitution or correction within five (5) days from notice.
and supervisory employees of petitioner Metro. It was, therefore, grievous
abuse of discretion for the NLRC to disregard such rectification and to rule that
petitioner Metro was liable to its supervisory employees for P550.00 monthly Summary investigations were conducted. During one of these hearings,
increase beyond 1 December 1989 and "onwards." That distortion, as already petitioner offered to increase the complainants wages to P45.00 per day but the
latter refused. Hence, the parties agreed to submit their respective position individual or collective agreement or employer practice or policy. (Oceanic
papers and other documents necessary for the resolution of the case. Phamacal Employees Union v. Hon. A. Inciong, G.R. No. L-50568, November 7,
1979)
Petitioner submitted its position paper claiming that it should be classified as an
establishment with less than 30 employees and with a paid-up capital of Lastly, we find that respondent's claim that it falls within the category of
P500,000.00 or less as evidenced by the assessment of the municipal treasurer. establishments with paid-up capital of P500,000.00 remains a bare allegation
Moreover, complainants worked for less than eight hours, a minimum of four without a scintilla of evidence to stand on. Obviously, the same is bereft of
and maximum of six. Hence, petitioner was justified in paying an amount less merit.
than the statutory minimum wage.
WHEREFORE, the appeal filed by the respondent is hereby DENIED for lack of
Complainants manifested that since 1984, they were not receiving the statutory merit. The Orders of the Director, Regional Office No. XII, dated June 29, 1990
minimum wage. They also averred that petitioner should not be categorized as and March 22, 1990 are AFFIRMED. 6
an establishment with paid-up capital of P50,000.00 or less inasmuch as it
erroneously based its claim on the value of its declared real property and not its
Hence, this petition.
paid-up capital.
On May 13, 1991, the Court issued a Temporary Restraining Order enjoining
On November 13, 1989, petitioner filed a motion to conduct a time and motion
respondents from implementing the Order dated April 15, 1981, March 22,
study to determine the fair and reasonable wage rates to be paid to
1990, and June 29, 1990, and June 29, 1990 in RO XII Case No. SK-C1-02088-06.
complainants.
The Court further required petitioner to file a bond in the amount of
P10,000.00. 7
On March 22, 1990, Director Melencio Q. Balanag of the DOLE Regional Office in
Cotabato City, issued a Compliance Order 1 ruling:
Petitioner alleges that public respondents committed grave abuse of discretion
in not categorizing it as an establishment with less than 30 employees and with
On the manifestation made by the respondent that workers were paid by results a paid up capital of P500,000.00 or less and in not finding that complainants are
and the former has complied with the minimum wage, we have noticed in the piece rate workers or paid by results.
payrolls for the period January 1985 to February 1988 submitted by the former
during summary investigation that said workers were not paid all the time on a
We find no grave abuse of discretion on the part of public respondent.
piece rate basis during paydays for three (3) years. Further, they showed that
the latter were paid on a weekly basis through a weekly payroll prepared
indicating therein the workers paid by results, the daily paid workers and a Petitioner alleges that it is an establishment with less than 30 employees. and a
monthly paid worker. It is noteworthy to mention that the respondent has no paid-up Capital of P500,000.00 or less. There is no question that it employs only
permanent mode of payment to all its workers as evidenced by the payrolls and twenty-one employees. Petitioner argues that to have a paid-up capital of
other documents submitted during the hearing. This is contradictory to their P500,000.00, it should have a subscribed capital of at least P2,000,000.00 and
allegations that they are paying their workers on a piece rate basis since 1985. authorized capital stock of P8,000,000.00. Petitioners total capital asset based
Moreover, said documents confirmed the manifestation by the counsel of on an assessment from the Municipal Treasurer of Kalamansig and the receipts
complainants that the workers paid on a daily and monthly basis are receiving of payment of its realty taxes is only P1,365,430.00. If categorized as such,
below the statutory minimum wage. petitioner should pay the following wages:
Petitioner filed a motion for reconsideration claiming that serious errors were Per W.O. No. 6
committed in the findings of fact which would cause it grave and irreparable Effective
damage or injury. This was denied for lack of merit in an Order 3 dated June 29, 1 Nov. 1 May 1 Oct.
1990 which, in part, said: 1984 1987 1987
. . . A three (3) year actual payrolls from March 1985 to February 1989 showing b. Agriculture
the daily actual payment made by the respondent to involved workers are Plantation 32.00 38.50 44.00 8
substantial evidence against the mere memorandum issued by the respondents
on the matter. Further, such payrolls submitted by respondents are not mere
summaries of daily efforts of workers but these are daily records showing We are unable to agree with petitioner's submission. As correctly pointed out by
workers actual daily rate. 4 the Office of the Solicitor General:
On July 30, 1990, petitioner appealed to the Secretary of Labor and The allegation of petitioner that it has capital assets of P1,365,430.00 to support
Employment. This was denied in the Order 5dated April 15, 1991 of public its position that it has a paid-up capitalization of less than P500,000.00 is totally
respondent Undersecretary Cresenciano B. Trajano, holding that: without basis. It is a basic accounting principle that the assets of a corporation
do not necessarily reflect its capitalization. In fact, in times of financial difficulty,
the assets of a corporation may be completely dissipated although its paid-up
On the basis of the payrolls submitted by the respondent, we find that Regional capitalization may remain intact. The best evidence of its paid-up capitalization
Director was correct in ruling that the complainants are daily paid workers. would be its articles of incorporation together with the Treasurer's Affidavit
While respondent claims the in 1985 these workers were paid on piece rate which petitioner seems to have conveniently overlooked. Consequently,
basis still the payrolls show that from March 1985 to February 1989, the respondent Undersecretary correctly found said claim to be "a bare allegation
complainants were paid on a daily basis. Granting that these workers were without a scintilla of evidence to stand on." 9
indeed converted to piece-rate workers, said conversion is an outright violation
of the Labor Code. An employer cannot unilaterally decrease the salary being
given to the employees pursuant to Art. 100 of the Labor Code. What it has Petitioner likewise alleges that its employees are paid by result or are; piece rate
voluntarily given cannot be unilaterally withdrawn. Besides, the implementing workers who work for less than eight hours, that is, a minimum of four and a
rules are explicit to the effect that nothinzg therein shall justify an employer maximum of six. Thus, they should be paid a proportionate amount of the
from withdrawing or reducing benefits or supplements provided in existing applicable statutory minimum wage, thus: 10
Effective On December 28, 1987, the hearing officer submitted his report and
1 Nov. 1 May 1 Oct. 1 Jan. recommended for the payment to the union's members amounting to an
1984 1987 1987 1988 aggregate sum of P16,200,877.47.
For 4 hours 16.00 17.50 19.35 22.00 On January 20, 1988, the Office a quo formally issued subpoena duces
For 6 hours 24.00 26.26 28.92 33.00 11 tecum, requiring the presentation by the respondent of its employees' payrolls
and vouchers covering the period from February 16, 1982 to December 31,
1985. This, the respondent ignored. In lieu thereof, it filed a second Motion to
Petitioner would have us overturn the factual finding of public respondents that
Dismiss alleging that on July 24, 1986, the parties entered into a compromise
its employees are daily paid workers. This we are unable to do for the payrolls
agreement whereby they agreed that all cases filed against and by respondent
submitted by it support the latters' position. Findings of administrative agencies
would be dropped and/or dismissed, including the above entitled case; that
which have acquired expertise because their jurisdiction is confined to specific
pursuant to and by virtue of the compromise agreement, cases filed against the
matters are generally accorded not only respect but finality. 12 Moreover, there
Aboitiz Shipping Corporation and its officers were dropped and/or withdrawn
is absolutely nothing in the records which show that petitioner's employees
and/or dismissed; and that similarly, cases filed by Aboitiz Shipping Corporation
worked for less than eight hours. Finally, there would have been no need for
and its officers against the union and its officers were dropped, withdrawn
petitioner to make an offer increasing the wage to P45.00 per day if
and/or dismissed.
complainants were indeed piece rate workers, as it claimed and if their wages
were not underpaid, as found by public respondents.
In the subsequent hearing of February 16, 1988 however, the parties agreed
that on March 4, 1988, the respondent shall submit to the Office a quo the
WHEREFORE, the petition is DISMISSED and the Temporary Restraining Order
required payrolls/vouchers for wages and salaries covering the period from
issued on May 13, 1991 is LIFTED.
February 16, 1982 to December 31, 1985. On that date, the respondent again
failed to make good its commitment. Nevertheless, it agreed to submit the
SO ORDERED. payrolls of its Manila-based employees for the period from January 1982 to
December 1982. Together with the submission of the photocopies of the
ABOITIZ SHIPPING CORPORATION, petitioner, payrolls of the Manila-based employees, the respondent also filed a
vs. Manifestation of Compliance stating that the following should be taken into
HON. DIONISIO C. DELA SERNA, IN HIS CAPACITY AS UNDERSECRETARY OF consideration:
LABOR AND EMPLOYMENT; HON. LUNA C. PIEZAS IN HIS CAPACITY AS
DIRECTOR, NATIONAL CAPITAL REGION, DEPARTMENT OF LABOR AND Annex 1. Which is a BWF/ISM Form No. 5 an advance notice dated October 1987
EMPLOYMENT; and, ABOITIZ SHIPPING EMPLOYEES issued by the DOLE Regional Office No. 7 notifying respondent of their intent to
ASSOCIATION, respondents. check payrolls etc. . . .
Alejandro B. Cinco for petitioner. Annex 2. Which is the notice of inspection results no. 05598 dated October 23,
Rogelio B. De Guzman for private respondent. 1987 stating that the respondent (company-wide payrolls, etc.) has no violation
insofar as wages, salaries, etc. are concerned as well as the benefits. Its
indicated in the CBA. . . .
Annex 3. Which is the certification of the ASEA Union President based in Cebu
PADILLA, J.: City and the Union Vice President that company records inspected coveting the
period 1984-1987 were true correct and in order, and in compliance with the
Labor and Standard Laws;
The principal issue in this special civil action for certiorari is whether the
respondent Regional Director, National Capital Region, Department of Labor and
Employment (Regional Director, for short) correctly assumed jurisdiction over Annex 4. Which is the existing CBA between the respondent and complainant
the money claims filed with him by the complainants (members of herein ASEA employees Union;
private respondent).
Annex 5. Which is the letter of Bureau of Working Conditions dated July 17,
Assailed specifically in this petition is the Order dated 9 February 1989 of the 1987 signed by Director Augusto Sanchez sustaining and validating respondent's
respondent Undersecretary of Labor and Employment affirming the Order dated use of 314 as divisor in the computation of wages and COLA for land based
13 October 1988 of the Regional Director, ordering petitioner company to pay employees of respondent.
the seven hundred seventeen (717) complainants a total amount of
P1,350,828.00., or P1,884.00 each, representing underpayment of an allowance Again, on July 5, 1988, the respondent filed a supplemental Motion to Dismiss,
of P2.00 per day, reckoned from 16 February 1982 to 15 February 1985. questioning this time the jurisdiction of the Office a quo. The motion alleged
that ". . . considering the complaint involves money claims, the original and
The facts of the case, as found by respondent Undersecretary, are as follows: exclusive jurisdiction rests not before the Honorable Director but before the
labor Arbiter . . ."
Series of hearings were conducted whereby the Office a quo repeatedly directed Subsequently, respondent Regional Director issued the now assailed Order
the respondent to present and submit all its pertinent papers/employment dated 13 October 1988, the dispositive portion of which reads:
records covered by the investigation. However, on several occasions, the
respondent failed to appear. Likewise, despite repeated notices, the respondent WHEREFORE, premises considered, the Aboitiz Shipping Corporation is hereby
failed to present any of the documents due for inspection evidencing correct Ordered to pay the herein listed complainants the total amount of ONE MILLION
payments of salaries and allowances. THREE HUNDRED FIFTY THOUSAND EIGHT HUNDRED TWENTY EIGHT and 00/100
PESOS (P1,350,828.00.) representing underpayment of daily allowance of TWO
(P2.00) PESOS per day reckoned from 16 February 1982 to 15 February 1985.
FURTHER, the Aboitiz Shipping Corporation is hereby Ordered to pay each and (5) Cases arising from any violation of Article 264 of this Code, including
every one of its employees the deficiency in allowance of two (P2.00) PESOS per questions involving the legality of strikes and lockouts; and
day from 16 February 1985 onward until this Order is fully complied with.2
(6) Except claims for employees compensation, social security, medicare and
On appeal to the Office of the Secretary of Labor and Employment, in which maternity benefits, all other claims arising from employer-employee relations,
petitioner questioned, among others, the jurisdiction of respondent Regional including those of persons in domestic or household service, involving an
Director over the instant claims, respondent Undersecretary issued the Order amount exceeding five thousand pesos (P5,000.00) whether or not accompanies
dated 9 February 1989 dismissing petitioner's appeal and affirming the Order with a claim for reinstatement.
dated 13 October 1988 of the respondent Director. The motion for
reconsideration of the order dated 9 February 1989 having been denied by
(b) The Commission shall have exclusive appellate jurisdiction over all cases
respondent Undersecretary in the Order dated 2 June 1989, petitioner
decided by Labor Arbiters.
interposed this present petition.
Article 129. Recovery of wages, simple money claims and other benefits. Upon Under the foregoing provisions of Articles 129 and 217 of the Labor Code, as
complaint of any interested party, the Regional Director of the Department of amended, the Regional Director is empowered, through summary proceeding
Labor and Employment or any of the duly authorized hearing officers of the and after due notice, to hear and decide cases involving recovery of wages and
Department is empowered, through summary proceeding and other monetary other monetary claims and benefits, including legal interest, provided the
claims and benefits, including legal interest, owing to an employee or person following requisites are present, 5 to wit:
employed in domestic or household service or househelper under this Code,
arising from employer-employee relations:Provided, that such complaint does
1) the claim is presented by an employee or person employed in domestic or
not include a claim for reinstatement: Provided, further That the aggregate
household service, or househelper;
money claims of each employee of househelper do not exceed five thousand
pesos (P5,000.00). The Regional Director hearing officer shall decide to resolve
the complaint within thirty (30) calendar days from the date of the filing of the 2) the claim arises from employer-employee relations;
same. Any sum thus recovered on behalf of any employee or househelper
pursuant to this Article shall be held in a special deposit account, and shall be 3) the claimant does not seek reinstatement; and
paid, on order of the Secretary of Labor and Employment or the Regional
Director directly to the employee or househelper concerned. Any such sum not
paid to the employee or househelper, because he cannot be located after 4) the aggregate money claim of each employee or househelper does not
diligent and reasonable effort to locate him within a period of three (3) years, exceed P5,000.00 (Art. 129, Labor Code, as amended by R.A. 6715).
shall be held as a special fund of the Department of Labor and Employment to
be used exclusively for the amelioration and benefit of workers. In the absence of any of the requisites above enumerated, it is the Labor Arbiter
who shall have exclusive original jurisdiction over claims arising from employer-
Any decision or resolution of the Regional Director or hearing officer pursuant to employee relations, except claims for employees' compensation, social security,
this provision may be appealed on the same grounds provided in Article 223 of medicare and maternity benefits, all these pursuant to Article 217 of the Labor
this Code, within five (5) calendar days from receipt of a copy of said decision or Code, particularly paragraph six (6) thereof.
resolution, to the National Labor Relations Commission which shall resolve the
appeal within ten (10) calendar days from the submission of the last pleading This power of the Regional Directors qualified under R.A. 6715 is recognized in
required or allowed under its rules. the modificatory resolution dated 9 November 1989 in said Briad Agro vs. Dela
Cerna which modified the earlier decision therein dated 29 June 1989.6
The Secretary of Labor and Employment or his duly authorized representative
may supervise the payment of unpaid wages and other monetary claims and In view of the enactment of R.A. 6715, and the modificatory resolution in
benefits, including legal interest, found owing to any employee or househelper the Briad Agro case, the ruling inZambales Base Metals, Inc. vs. Minister of
under this Code. Labor, supra, is no longer applicable.
xxx xxx xxx In the case at bar, it is noted that in the Order dated 13 October 1988 of the
Regional Director, the latter foundeach of the seven hundred seventeen (717)
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as complainants entitled to a uniform amount of P1,884.00. (Rollo, pp. 11 7-131,).
otherwise provided under this Code, the Labor Arbiters shall have original and All the other requisites for the exercise of the power of the Regional Director
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after under Article 129 of the Labor Code, as amended by R.A. 6715, are present. It
the submission of the case by the parties for decision without extension, even in follows that the respondent Regional Director properly took cognizance of the
the absence of stenographic notes, the following cases involving all workers, claims, subject of this petition.
whether agricultural or non-agricultural:
To the petitioner's contention that it was denied due process of law as it was
(1) Unfair labor practice cases; not afforded time and opportunity to present its evidence, the records show
that on several occasions despite due notice, petitioner failed to either appear
at the scheduled hearings, or to present its employees' payrolls and vouchers
(2) Termination disputes; for wages and salaries, particularly, those covering the period from 16 February
1982 to 31 December 1985. Therefore, petitioner was not denied due process of
(3) If accompanied with a claim for reinstatement, those cases that workers may law.
file involving wages, rates of pay, hours of work and other terms and conditions
of employment; We also do not agree with the petitioner's allegation that it was improper for
the respondent Regional Director to order in the questioned Order dated 13
(4) Claims for actual, moral, exemplary and other forms of damages arising from October 1988, compliance with P.D. 1678 7 as the issue on the said decree was
the employer-employee relations; never raised by private respondent in its complaint filed before the Regional
Director. While it may be true that P.D. 1678 is not one of the laws where non- Finally, petitioner Avers: that the award of P1,350,828.00. is without factual and
compliance therewith was complained of, still, the Regional Director correctly legal basis; that petitioner did not commit any labor standards violation
acted in ordering petitioner to comply therewith, as he (Regional Director) has pursuant to the DOLE inspection results and the union certification to that
such power under his visitorial and enforcement authority provided under effect; and that 291 of the 717 complainants are non-employees of petitioner,
Article 128(a) of the Labor Code, which provides: and that the other 136 of the said 717 commenced employment only after
February 1982. hence, not entitled to receive money awards. The foregoing
contentions being evidentiary in nature, we have to respect the factual findings
Art. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his
of public respondents regarding the above-cited petitioner's averments, the
duly authorized representatives, including labor regulation officers, shall have
long-settled rule being that factual findings of labor officials are, generally,
access to employers' records and premises at any time of the day or night
conclusive and binding on this Court when supported by substantial evidence. 12
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 WHEREFORE, the assailed Order dated 9 February 1989 of the respondent
this Code and of any labor law, wage order or rules and regulations issued Undersecretary of Labor and Employment affirming the Order dated 13 October
pursuant thereto. 1988 of the Regional Director is hereby AFFIRMED, with the modification that
Mr. Elizardo Manuel shall be excluded from the list of complainants at bar who
are entitled to money awards of P1,884.00. each. Petition is DISMISSED.
Petitioner also claims that the complaint filed against it should have been
dismissed outright, considering the compromise agreement dated 24 July 1986,
which purportedly contains the agreement of the parties therein to dismiss the SO ORDERED.
cases filed by one against the other. 8
BROKENSHIRE MEMORIAL HOSPITAL, INC., petitioner,
We find no merit in said contention, in the light of the Regional Director's vs.
finding that the said agreement can not bind the complainant-union vis-a-vis the THE HONORABLE MINISTER OF LABOR & EMPLOYMENT AND BROKENSHIRE
instant claims, for the reason that it was entered into by one Mr. Elizardo MEMORIAL HOSPITAL EMPLOYEES AND WORKER'S UNION-FFW Represented
Manuel 9 in his personal capacity, one Luis M. Moro, Jr. representing Aboitiz by EDUARDO A. AFUAN, respondents.
Shipping Corporation, and Atty. Luis D. Flores in his capacity as legal counsel of
ASEA-CLO, 10 which finding is supported by the records of the case before us.
Renato B. Pagatpatan for petitioner.
Such records show that the compromise agreement primarily binds only the said
Mr. Manuel, and that, therefore, it has nothing to do with the rest of the other
complainant-union members.1wphi1 The said agreement 11reads:
This Agreement, entered into by and among Mr. ELIZARDO MANUEL in his This petition for review by certiorari seeks the annulment or modification of the
personal capacity, LUIS M. MORO, JR. representing Aboitiz Shipping Corporation Order of public respondent Minister of Labor dated December 9, 1985 in a case
and Atty. LUIS D. FLORES in his capacity as Legal Counsel of ASEA-CLO. for non-compliance with Wage Order Nos. 5 and 6 docketed as ROXI-LSED Case
No. 14-85 which 1) denied petitioner's Motion for Reconsideration dated
February 3, 1986 and 2) affirmed the Order of Regional Director Eugenio I.
Based on a compromise agreement Mr. Elizardo Manuel is requesting Aboitiz
Sagmit, Jr., Regional Office No. XI Davao City, dated April 12, 1985, the
Shipping Corporation for payment of P70,000.00 in full settlement of all
dispositive portion of which reads as follows:
monetary claims for back wages and benefits he has, including the settlement
decided by the NLRC which presently is under appeal.
WHEREFORE, premises considered, respondent Brokenshire Memorial Hospital,
Incorporated is hereby ordered to pay the above-named workers, through this
For and in consideration of the above stated amount Mr. Elizardo Manuel and
Office, within fifteen (15) days from receipt hereof, the total sum of TWO
Aboitiz Shipping Corporation mutually agree that:
HUNDRED EIGHTY- FOUR THOUSAND SIX HUNDRED TWENTY FIVE (P284,625.00)
PESOS representing their living allowance under Wage Order No. 5 covering the
Mr. Elizardo Manuel is deemed resigned from Aboitiz Shipping Corporation period from October 16, 1984 to February 28, 1985 and under Wage Order No.
upon payment of the above stated amount; 6 effective November 1, 1984 to February 28, 1985. Respondent is further
ordered to pay the employees who are likewise entitled to the claims here
presented, but whose names were inadvertently omitted in the list and
xxx xxx xxx
computation. (Rollo, p. 7)
RA 6715 amended Art. 129 and Art. 217 of the Labor Code, to read as follows:
1) That the Regional Office of the Ministry of Labor did not acquire jurisdiction
over it for want of allegation that it has the capacity to be sued and
ART. 129. Recovery of wages, simple money claims and other benefits.Upon
complaint of any interested party, the Regional Director of the Department of
2) That Wage Order Nos. 5 and 6 are non-constitutional and therefore void.
Labor and Employment or any of the duly authorized hearing officers of the
Significantly petitioner never averred any counterclaim in its Answer.
Department is empowered, through summary proceeding and after due notice,
to hear and decide any matter involving the recovery of wages and other
After the complainants had filed their reply, petitioner filed a Motion for the monetary claims and benefits, including legal interest, owing to an employee or
Certification of the case to the National Labor Relations Commission for a full- person employed in domestic or household service or househelper under this
blown hearing on the matter, including the counterclaim interposed that the code, arising from employer-employee relations, Provided, That such complaint
complainants had unpaid obligations with the Hospital which might be offset does not include a claim for reinstatement; Provided, further, That the
with the latter's alleged obligation to the former. aggregate money claims of each employee or househelper do not exceed five
thousand pesos (P5,000.00). The Regional Director or hearing officer shall
Issues having been joined, the Regional Director rendered a decision on April 12, decide or resolve the complaint within thirty (30) calendar days from the date of
1985 in favor of the complainants (private respondents herein) declaring that the filing of the same . . .
petitioner (respondent therein) is estopped from questioning the acquisition of
jurisdiction because its appearance in the hearing is in itself submission to Any decision or resolution of the Regional Director or hearing officer pursuant to
jurisdiction and that this case is merely a continuance of a previous case where this provision may be appealed on the same grounds provided in Article 223 of
the hospital already willingly paid its obligations to the workers on orders of the this Code, within five (5) calendar days from 11 receipt of a copy of said decision
Regional Office. On the matter of the constitutionality of the Wage Order Nos. 5 or resolution, to the National Labor Relations Commission which shall resolve
and 6, the Regional Director declared that only the court can declare a law or the appeal within ten (10) calendar days from the submission of the last
order unconstitutional and until so declared by the court, the Office of the pleading required or allowed under its rules.
Regional Director is duly bound to enforce the law or order.
ART. 217. Jurisdiction of Labor Arbiters and the Commission. Except as
Aggrieved, petitioner appealed to the Office of the Minister of Labor, which otherwise provided under this code, the Labor Arbiters shall have original and
dismissed the appeal for lack of merit. A motion for reconsideration was exclusive jurisdiction to hear and decide, within thirty (30) calendar days after
likewise denied by said Office, giving rise to the instant petition reiterating the the submission of the case by the parties for decision without extension, even in
issues earlier mentioned. the absence of steno graphic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
The crucial issue We are tasked to resolve is whether or not the Regional
Director has jurisdiction over money claims of workers concurrent with the (1) Unfair labor practice cases;
Labor Arbiter.
(2) Termination disputes;
It is worthy of note that the instant case was deliberated upon by this Court at
the same time that Briad Agro Development Corporation v. de la Cerna, G.R. No.
(3) If accompanied with a claim of reinstatement, those cases that workers may
82805 and L.M. Camus Engineering Corporation v. Hon. Secretary of Labor, et al.
file involving wages, rates of pay, hours of work and other terms and conditions
G.R. No. 83225, promulgated on June 29,1989 and Maternity Children's Hospital
of employment;
vs. Hon. Secretary of Labor, et al., G.R. No. 78909, promulgated 30 June 1989,
where deliberated upon; for all three (3) cases raised the same issue of
jurisdiction of the Regional Director of the Department of Labor to pass upon (4) Claims for actual, moral, exemplary and other forms of damages arising from
money claims of employees. Hence, we will be referring to these cases, most the employer-employee relation;
especially the case of Briad Agro which, as will be seen later, was reconsidered
by the court.
(5) Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
Contrary to the claim of petitioners that the original and exclusive jurisdiction
over said money claims is properly lodged in the Labor Arbiter (relying on the
(6) Except claims for employees compensation, social security, medicare and
case of Zambales Base Metals Inc. v. Minister of Labor, 146 SCRA 50) and the
maternity benefits, all other claims arising from employer-employee relations,
Regional Director has no jurisdiction over workers' money claims, the Court in
including those of persons in domestic or household service, involving an
the three (3) cases above-mentioned ruled that in view of the promulgation of
amount not exceeding five thousand pesos (P5,000.00), whether or not
Executive Order No. 111, the ruling in the earlier case of Zambales Base Metals
accompanied with a claim for reinstatement.
is already abandoned. In accordance with the rulings in Briad Agro, L.M. Camus,
and Maternity Children's Hospital, the Regional Director exercises concurrent
jurisdiction with the Labor Arbiter over money claims. Thus, It will be observed that what in fact conferred upon Regional Directors and
other hearing officers of the Department of Labor (aside from the Labor
Arbiters) adjudicative powers, i.e., the power to try and decide, or hear and
. . . . Executive Order No. 111 is in the character of a curative law, that is to say,
determine any claim brought before them for recovery of wages, simple money
it was intended to remedy a defect that, in the opinion of the legislative (the
claims, and other benefits, is Republic Act 6715, provided that the following
incumbent Chief Executive in this case, in the exercise of her lawmaking power
requisites concur, to wit:
under the Freedom Constitution) had attached to the provision subject of the
amendment. This is clear from the proviso: "The provisions of Article 217 to the
contrary notwithstanding . . ." Plainly, the amendment was meant to make both 1) The claim is presented by an employee or person employed in domestic or
the Secretary of Labor (or the various Regional Directors) and the Labor Arbiter household service, or househelper under the code;
share jurisdiction. (Briad Agro Dev. Corp. v. Sec. of Labor, supra).
2) The claimant, no longer being employed, does not seek reinstatement; and
Under the present rules, a Regional Director exercises both visitorial and
enforcement power over labor standards cases, and is therefore empowered to
3) The aggregate money claim of the employee or househelper does not exceed Viewed in the light of RA 6715 and read in consonance with the case of Briad
five thousand pesos (P5,000.00). Agro Development Corp., as reconsidered, We hold that the instant case falls
under the exclusive original jurisdiction of the Labor Arbiter RA 6715 is in the
nature of a curative statute. Curative statutes have long been considered valid
In the absence of any of the three (3) requisites, the Labor Arbiters have
in our jurisdiction, as long as they do not affect vested rights. In this case, We do
exclusive original jurisdiction over all claims arising from employer-employee
not see any vested right that will be impaired by the application of RA 6715.
relations, other than claims for employee's compensation, social security,
Inasmuch as petitioner had already paid the claims of private respondents in the
medicare and maternity benefits.
amount of P163,047.50 pursuant to the decision rendered in the first complaint,
the only claim that should be deliberated upon by the Labor Arbiter should be
We hereby adopt the view taken by Mr. Justice Andres Narvasa in his Separate limited to the second amount given by the Regional Director in the second
Opinion in the case of Briad Agro Dev. Corp., as reconsidered, a portion of which complaint together with the proposal to offset the obligations.
reads:
WHEREFORE, the assailed decision of the Regional Director dated April 12, 1985,
In the resolution, therefore, of any question of jurisdiction over a money claim is SET ASIDE. The case is REFERRED, if the respondents are so minded, to the
arising from employer-employee relations, the first inquiry should be into Labor Arbiter for proper proceedings.
whether the employment relation does indeed still exist between the claimant
and the respondent.
SO ORDERED.
If the relation no longer exists, and the claimant does not seek reinstatement,
ODIN SECURITY AGENCY, petitioner,
the case is cognizable by the Labor Arbiter, not by the Regional Director. On the
vs.
other hand, if the employment relation still exists, or reinstatement is sought,
HON. DIONISIO C. DE LA SERNA, in his capacity as Undersecretary, Department
the next inquiry should be into the amount involved.
of Labor and Employment, HON. LUNA C. PIEZAS, in his capacity as Regional
Director (DOLE), National Capital Region and SERGIO APILADO, MAMERTO
If the amount involved does not exceed P5,000.00, the Regional Director GENER, ARMANDO YUMUL, HERMINIGILDO BARGAS, MARCIANO BOLOCON,
undeniably has jurisdiction. But even if the amount of the claim exceeds WILLIAM ADAMI, ANTONIO PUBLICO, LEOPOLDO SAAVEDRA, WARLITO ILAGA,
P5,000.00, the claim is not on that account necessary removed from the JOVANY SERATO, DANIEL MINGLANA, JOSE MIRANDA, JR., ANASTACIO
Regional Director's competence. In respect thereof, he may still exercise the SANTILLAN, ROLANDO FERNANDEZ, NICANOR FEREAS, FRANCISCO VERZOSA,
visitorial and enforcement powers vested in him by Article 128 of the Labor PLARIDEL ELORIA, APSIN PAGAYAO, JAIME DORADO, GUILLERMO ELLARES,
Code, as amended, supra; that is to say, he may still direct his labor regulations ARTURO FACTOR, DANIEL FERUISH, CRISOSTOMO FONSECA, JERRY GA,
officers or industrial safety engineers to inspect the employer's premises and FRANCISCO GUINSATAO, SIXTO LIPER, ALLAN MANALLA, GEORGE ORQUESTA,
examine his records; and if the officers should find that there have been WILFREDO QUIROZ, BENJAMIN UY, EDWIN ORDONA and DEMETRIO
violations of labor standards provisions, the Regional Director may, after due TORRES, respondents.
notice and hearing, order compliance by the employer therewith and issue a
writ of execution to the appropriate authority for the enforcement thereof.
Ramon Encarnacion and Honesto D. Noche for petitioner.
However, this power may not, to repeat, be exercised by him where the
employer contests the labor regulation officers' findings and raises issues which
cannot be resolved without considering evidentiary matters not verifiable in the Luis Sementilla, Jr. for private respondents.
normal course of inspection. In such an event, the case will have to be referred
to the corresponding Labor Arbiter for adjudication, since it falls within the
latter's exclusive original jurisdiction.
GRIO-AQUINO, J.:
Anent the other issue involved in the instant case, petitioner's contention that
the constitutionality of Wage Order Nos. 5 and 6 should be passed upon by the
National Labor Relations Commission, lacks merit. The Supreme Court is vested This petition for certiorari and prohibition with prayer for a restraining order
by the Constitution with the power to ultimately declare a law unconstitutional. and/or preliminary injunction seeks to annul and set aside the order dated
Without such declaration, the assailed legislation remains operative and can be March 20, 1987, issued by public respondent Luna C. Piezas in his capacity as the
the source of rights and duties especially so in the case at bar when petitioner Regional Director, National Capital Region, Department of Labor and
complied with Wage Order No. 5 by paying the claimants the total amount of Employment, and the orders dated March 23, 1988 and March 13, 1989, issued
P163,047.50, representing the latter's minimum wage increases up to October by public respondent Dionisio C. De la Serna as Undersecretary of the
16, 1984, instead of questioning immediately at that stage before paying the Department of Labor and Employment, and to enjoin the public respondents
amount due, the validity of the order on grounds of constitutionality. The and the Department of Labor and Employment (DOLE) from executing said
Regional Director is plainly ,without the authority to declare an order or law orders.
unconstitutional and his duty is merely to enforce the law which stands valid,
unless otherwise declared by this Tribunal to be unconstitutional. On our part, On July 8, 1986, a complaint was filed by Sergio Apilado and fifty-five (55) others
We hereby declare the assailed Wage Orders as constitutional, there being no charging the petitioner Odin Security Agency (hereafter "OSA"), underpayment
provision of the 1973 Constitution (or even of both the Freedom Constitution of wages, illegal deductions, non-payment of night shift differential, overtime
and the 1987 Constitution) violated by said Wage Orders, which Orders are pay, premium pay for holiday work, rest days and Sundays, service incentive
without doubt for the benefit of labor. leaves, vacation and sick leaves, and 13th-month pay. When conciliation efforts
failed, the parties were required to submit their position papers.
Based on the foregoing considerations, it is our shared view that the findings of
the labor regulations officers may not be deemed uncontested as to bring the Private respondents alleged in their position paper that their latest monthly
case at bar within the competence of the Regional Director, as duly authorized salary was P1,600; that from this amount, petitioner deducted P100 as
representative of the Secretary of Labor, pursuant to Article 128 of the Labor administrative cost and P20 as bond; that they were not paid their premium pay
Code, as amended. Considering further that the aggregate claims involve an and overtime pay for working on the eleven (11) legal holidays per year; and,
amount in excess of P5,000.00, We find it more appropriate that the issue of that since private respondents were relieved or constructively dismissed, they
petitioner hospital's liability therefor, including the proposal of petitioner that must also be paid backwages.
the obligation of private respondents to the former in the aggregate amount of
P507,237.57 be used to offset its obligations to them, be ventilated and
resolved, not in a summary proceeding before the Regional Director under Petitioner, on the other hand, contended that on July 21, 1986, some 48
Article 128 of the Labor Code, as amended, but in accordance With the more security guards threatened mass action against it. Alarmed by a possible
formal and extensive proceeding before the Labor Arbiter. Nevertheless, it abandonment of post by the guards and mindful of its contractual obligations to
should be emphasized that the amount of the employer's liability is not quite a its clients/principals, petitioner relieved and re-assigned the complaining guards
factor in determining the jurisdiction of the Regional Director. However, the to other posts in Metro Manila. Those relieved were ordered to report to the
power to order compliance with labor standards provisions may not be agency's main office for reassignment. Only few complied, so those who failed
exercised where the employer contends or questions the findings of the labor to comply were placed on "AWOL" status. Petitioner claimed it complied with
regulation officers and raises issues which cannot be determined without taking the Labor Code provisions, and in support thereof, it submitted the "Quitclaim
into account evidentiary matters not verifiable in the normal course of and Waiver" of thirty-four (34) complainants. It further alleged that
inspection, as in the case at bar. complainants who rendered over-time work as shown by their time sheets were
paid accordingly; that service incentive leaves not availed of, night shift WHEREFORE, the Order dated March 20, 1987 is hereby affirmed subject to the
differential, rest days, and holidays were paid in cash. following modifications, to wit:
On November 18, 1986, petitioner filed an ex parte manifestation alleging that 1. The complaints of the sixteen (16) complainants above set forth are hereby
nineteen (19) complainants had withdrawn their complaints. reinstated and their names added to those listed by the Regional Director in his
Order;
On January 1, 1987, petitioner again filed a supplemental ex parte manifestation
alleging that Luis San Francisco also withdrew his complaint. 2. The monetary awards is [sic] hereby extended to three years from the time of
the filing of the instant complaint without any qualification; and
Earlier, on October 21, 1986, seventeen (17) complainants repudiated their
quitclaim and waiver. They alleged that management pressured them to sign 3. Respondent is hereby directed to reinstate all the above active complainants
documents which they were not allowed to read and that if such waiver existed, to their former positions without loss of seniority rights plus backwages from
they did not have any intention of waiving their rights under the law. the time of their relief from work until their actual reinstatement. (p. 69, Rollo.)
Petitioner in its reply argued that complainants were estopped from denying The sixteen (16) complainants mentioned in the body of the decision are:
their quitclaims on the ground of equity; that being high school graduates,
complainants fully understood the document they signed; and that
1. Pagayo, Apsin
complainant's allegation of coercion or threat was a mere afterthought.
2. Dorado, Jaime
Later, six (6) of the seventeen (17) complainants who repudiated their
quitclaims again executed quitclaims and waivers.
3. Ellares, Guillermo
On March 20, 1987, public respondent Luna C. Piezas issued an order, the
dispositive portion of which reads: 4. Factor, Arturo
11. Jose Miranda, Jr. 1,989.05 Petitioner filed a motion for reconsideration.
12. Anastacio Santillan 1,989.05 On March 13, 1989, public respondent Undersecretary modified his order of
March 23, 1988 as follows:
13. Rolando Fernandez 1,989.05
WHEREFORE, the Order of this Office dated 23 March 1988 is hereby modified
14. Nicanor Fereras 1,776.95 to read as follows, to wit:
15. Francisco Verzosa 1,015.40 1. The complaint of the fifteen (15) complainants above set forth are hereby
reinstated and their names added to those listed by the Regional Director in his
order;
16. Plaridel Eloria 253.95
2. The monetary awards is [sic] hereby limited to the past three years from the
within 15 days from receipt hereof. (p. 51, Rollo.)
time of the filing of the complaint without any qualification subject to
computation at the Regional Office. (p. 105, Rollo.)
The complaining guards filed a motion for reconsideration which was treated as
an appeal by respondent Undersecretary Dionisio C. De la Serna.
The reason for the reduction to fifteen (15) of the original list of sixteen (16)
complainants was because the Undersecretary found that Joseph Pardeno was
On March 23, 1988, the Undersecretary affirmed the order of the Regional never relieved from his post but continued to work for petitioner.
Director with modifications. The dispositive portion of his order reads as
follows:
In this petition for certiorari, the petitioner alleges: labor standards (Art. 128[b], Labor Code). Only later did the guards ask for
backwages on account of their alleged constructive dismissal (p. 32, Rollo). Once
vested, that jurisdiction continued until the entire controversy was decided (Lee
1. that it was deprived of due process of law, both substantive and procedural;
vs. MTC, 145 SCRA 408; Abadilla vs. Ramos, 156 SCRA 92; and Pucan vs.
Bengzon, 155 SCRA 692).
2. that the Order dated March 20, 1987 is contrary to law and that respondent
Luna C. Piezas acted with grave abuse of discretion amounting to lack or excess
The jurisdiction of public respondents over the complaints is clear from a
of jurisdiction; and
reading of Article 128(b) of the Labor Code, as amended by Executive Order No.
111, thus:
3. that the Orders dated March 23, 1988 and March 13, 1989, affirming and
modifying the Order dated March 20, 1987 are contrary to law and that
(b) The provisions of Article 217 of this Code to the contrary notwithstanding
respondent Dionisio C. De la Serna acted with grave abuse of discretion
and in cases where the relationship of employer-employee still exists, the
amounting to lack or excess of jurisdiction.
Minister of Labor and Employment or his duly authorized representatives shall
have the power to order and administer, after due notice and hearing,
On April 17, 1989, as prayed for in the petition, the Court issued a temporary compliance with the labor standards provisions of this Code and other labor
restraining order upon a bond of P50,000 enjoining the respondents from legislation based on the findings of labor regulation officers or industrial safety
enforcing or executing the orders dated March 20, 1987, March 23, 1988 and engineers made in the course of inspection, and to issue writs of execution to
March 13, 1989 of the Department of Labor and Employment. the appropriate authority for the enforcement of their orders, except in cases
where the employer contests the findings of the labor regulation officer and
The petition has no merit. raises issues which cannot be resolved without considering evidentiary matters
that are not verifiable in the normal course of inspection.
The petitioner was not denied due process for several hearings were in fact
conducted by the hearing officer of the Regional Office of the DOLE and the In Briad Agro Development Corp. vs. Hon. Dionisio De la Serna, G.R. No. 82805,
parties submitted position papers upon which the Regional Director based his June 29, 1989, we clarified the amendment when we ruled, thus:
decision in the case. There is abundant jurisprudence to the effect that the
requirements of due process are satisfied when the parties are given an To recapitulate under EO 111, the Regional Directors, in representation of the
opportunity to submit position papers (Coca-Cola Bottlers, Phil., Inc. vs. NLRC, Secretary of Labor and notwithstanding the grant of exclusive original
G.R. No. 78787, December 18, 1989; Asiaworld Publishing House vs. Ople, 152 jurisdiction to Labor Arbiters by Article 217 of the Labor Code, as amended
SCRA 224; Manila Doctors Hospital vs. NLRC, 135 SCRA 262). What the have power to hear cases involving violations of labor standards provisions of
fundamental law abhors is not the absence of previous notice but rather the the Labor Code or other legislation discovered in the course of normal
absolute lack of opportunity to be heard (Antipolo Realty Corp. vs. National inspection, and order compliance therewith, provided that:
Housing Authority, 153 SCRA 399). There is no denial of due process where a
party is given an opportunity to be heard and present his case (Ong, Sr. vs. Parel,
l) the alleged violations of the employer involve persons who are still his
156 SCRA 768; Adamson & Adamson, Inc. vs. Amores, 152 SCRA 237). Since
employees, i.e., not dismissed, and
petitioner herein participated in the hearings, submitted a position paper, and
filed a motion for reconsideration of the March 23, 1988 decision of the Labor
Undersecretary, it was not denied due process. 2) the employer does not contest the findings of the labor regulations officer or
raise issues which cannot be resolved without considering evidentiary matters
that are not verifiable in the normal course of inspection (p. 9, Concurring
The petitioner is estopped from questioning the alleged lack of jurisdiction of
Opinion, J. Narvasa.)
the Regional Director over the private respondents' claims. Petitioner submitted
to the jurisdiction of the Regional Director by taking part in the hearings before
him and by submitting a position paper. When the Regional Director issued his The ruling in Briad Agro was reiterated in Maternity Children's Hospital vs.
March 20, 1987 order requiring petitioner to pay the private respondents the Secretary of Labor, G.R. No. 78909, June 30, 1989:
benefits they were claiming, petitioner was silent. Only the private respondents
filed a motion for reconsideration. It was only after the Undersecretary modified
... Under the present rules, a Regional Director exercises both visitorial and
the order of the Regional Director on March 23, 1988 that the petitioner moved
enforcement power over labor standards cases, and is therefore empowered to
for reconsideration and questioned the jurisdiction of the public respondents to
adjudicate money claims, provided there still exists an employer-employee
hear and decide the case. The principle of jurisdiction by estoppel bars it from
relationship, and the findings of the regional office is not contested by the
doing this. In Tijam vs. Sibonghanoy, 23 SCRA 29, 35-36, we held:
employer concerned. (p. 5, Decision.)
It has been held that a party can not invoke the jurisdiction of a court to secure
WHEREFORE, the petition is dismissed and the orders dated March 23, 1988 and
affirmative relief against his opponent and, after obtaining or failing to obtain
March 13, 1989 of the Undersecretary of Labor are hereby affirmed. The
such relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or.
temporary restraining order earlier issued by this Court is lifted. No costs.
694, 86 A.L.R. 79). In the case just cited, by way of explaining the rules, it was
further said that the question whether the court had jurisdiction either of the
subject-matter of the action or of the parties was not important in such cases SO ORDERED
because the party is barred from such conduct not because the judgment or
order of the court is valid and conclusive as an adjudication, but for the reason ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner,
that such a practice can not be tolerated obviously for reasons of public vs.
policy. NATIONAL LABOR RELATIONS COMMISSION (First Division), HON. CARMEN
TALUSAN and SAN MIGUEL CORPORATION, respondents.
Furthermore, it has also been held that after voluntarily submitting a cause and
encountering an adverse decision on the merits, it is too late for the loser to Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for petitioner.
question the jurisdiction or power of the court (Pease vs. Rathbunjones, etc., Jardeleza Law Offices for private respondents.
243 U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127,
35 L. Ed. 659). And in Littleton vs. Burgess, 16 Wyo, 58, the Court said that it is
not right for a party who has affirmed and invoked the jurisdiction of a court in a
particular matter to secure an affirmative relief, to afterwards deny that same
jurisdiction to escape a penalty.
NARVASA, J.:
Sibonghanoy was reiterated in Crisostomo vs. C.A., 32 SCRA 54; Libudan vs. Gil,
45 SCRA 17; Capilitan vs. De la Cruz, 55 SCRA 706; and PNB vs. IAC, 143 SCRA The controversy at bar had its origin in the "wage distortions" affecting the
299. employees of respondent San Miguel Corporation allegedly caused by Republic
Act No. 6727, otherwise known as the Wage Rationalization Act.
The fact is, the Regional Director and the Undersecretary did have jurisdiction
over the private respondents' complaint which was originally for violation of
Upon the effectivity of the Act on June 5, 1989, the union known as "Ilaw at Thereafter, on October 18, 1989, SMC filed with the Arbitration Branch of the
Buklod Ng Manggagawa (IBM)" said to represent 4,500 employees of San National Labor Relations Commission a complaint against the Union and its
Miguel Corporation, more or less, "working at the various plants, offices, and members "to declare the strike or slowdown illegal" and to terminate the
warehouses located at the National Capital Region" presented to the employment of the union officers and shop stewards. The complaint was
company a "demand" for correction of the "significant distortion in . . . (the docketed as NLRC-NCR Case No. 00-10-04917.7
workers') wages." In that "demand," the Union explicitly invoked Section 4 (d) of
RA 6727 which reads as follows:
Then on December 8, 1989, on the claim that its action in the Arbitration Branch
had as yet "yielded no relief," SMC filed another complaint against the Union
xxx xxx xxx and members thereof, this time directly with the National labor Relations
Commission, "to enjoin and restrain illegal slowdown and for damages, with
prayer for the issuance of a cease-and-desist and temporary restraining
(d) . . .
order.8 Before acting on the application for restraining order, the NLRC's First
Division first directed SMC to present evidence in support of the application
Where the application of the increases in the wage rates under this Section before a commissioner, Labor Arbiter Carmen Talusan. On December 19, 1989,
results in distortions as defined under existing laws in the wage structure within said First Division promulgated a Resolution on the basis of "the allegations of
an establishment and gives rise to a dispute therein, such dispute shall first be the petitioner (SMC) and the evidence adduced ex parte in support of their
settled voluntarily between the parties and in the event of a deadlock, the same petition." The Resolution
shall be finally resolved through compulsory arbitration by the regional
branches of the National Labor Relations Commission (NLRC) having jurisdiction
1) authorized the issuance of "a Temporary Restraining Order for a period of
over the workplace.
twenty (20) days . . upon . . a cash or surety bond in the amount of P50,000.00 .
. . DIRECTING the respondents to CEASE and DESIST from further committing the
It shall be mandatory for the NLRC to conduct continuous hearings and decide acts complained about particularly their not complying with the work schedule
any dispute arising under this Section within twenty (20) calendar days from the established and implemented by the company through the years or at the least
time said dispute is formally submitted to it for arbitration. The pendency of a since 1984, which schedule appears to have been adhered to by the
dispute arising from a wage distortion shall not in any way delay the respondents until October 16, 1989 . . .;
applicability of the increase in the wage rates prescribed under this Section.
2) set the incident on injunction for hearing before Labor Arbiter Carmen
But the Union claims that "demand was ignored:1 Talusan on 27 December 1989 . . .
The . . . COMPANY ignored said demand by offering a measly across-the-board The Labor Arbiter accordingly scheduled the incident for hearing on various
wage increase of P7.00 per day, per employee, as against the proposal of the dates: December 27 and 29,1989, January 8, 11, 16, and 19, 1990. The first two
UNION of P25.00 per day, per employee. Later, the UNION reduced its proposal settings were cancelled on account of the unavailability of the Union's counsel.
to P15.00 per day, per employee by way of amicable settlement. The hearing on January 8, 1990 was postponed also at the instance of said
counsel who declared that the Union refused to recognize the NLRC's
When the . . . COMPANY rejected the reduced proposal of the UNION the jurisdiction. The hearings set on January 11, 16 and 19, 1990 were taken up with
members thereof, on their own accord, refused to render overtime services, the cross-examination of SMC's witness on the basis of his affidavit and
most especially at the Beer Bottling Plants at Polo, starting October 16, 1989. supplemental affidavits. The Union thereafter asked the Hearing Officer to
schedule other hearings. SMC objected. The Hearing Officer announced she
would submit a report to the Commission relative to the extension of the
In this connection, the workers involved issues a joint notice reading as follows:2 temporary restraining order of December 9, 1989, supra, prayed for by SMC.
Here the matter rested until February 14, 1990, when the Union filed the
SAMA-SAMANG PAHAYAG: KAMING ARAWANG MANGGAGAWA NG POLO petition which commenced the special civil action of certiorari and prohibition
BREWERY PAWANG KASAPI NG ILAW AT BUKLOD NG MANGGAGAWA (IBM) AY at bar.9
NAGKAISANG NAGPASYA NA IPATUPAD MUNA ANG EIGHT HOURS WORK SHIFT
PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT ANG In its petition, the Union asserted that:
TAMANG WAGE DISTORTION.
1) the "central issue . . is the application of the Eight-Hour Labor Law . . . (i.e.)
The Union's position (set out in the petition subsequently filed in this (m)ay an employer force an employee to work everyday beyond eight hours a
Court, infra) was that the workers' refuse "to work beyond eight (8) hours day?
everyday starting October 16, 1989" as a legitimate means of compelling SMC to
correct "the distortion in their wages brought about by the implementation of
the said laws (R.A. 6640 and R.A. 6727) to newly-hired employees.3 That 2) although the work schedule adopted by SMC with built-in automatic
decision to observe the "eight hours work shift" was implemented on October overtime,10 "tremendously increased its production of beer at lesser cost," SMC
16, 1989 by "some 800 daily-paid workers at the Polo Plant's production line (of had been paying its workers "wages far below the productivity per employee,"
San Miguel Corporation [hereafter, simply SMC]) joined by others at statistical and turning a deaf ear to the Union's demands for wage increases;
quality control and warehouse, all members of . . . IBM . . . " 4There ensued
thereby a change in the work schedule which had been observed by daily-paid 3) the NLRC had issued the temporary restraining order of December 19, 1989
workers at the Polo Plant for the past five (5) years, i.e., "ten (10) hours for the "with indecent haste, based on ex parte evidence of SMC and such an order had
first shift and ten (10) to fourteen (14) hours for the second shift, from Mondays the effect of "forcing the workers to work beyond eight (8) hours a day,
to Fridays . . ; (and on) Saturdays, . . eight (8) hours for both shifts" a work everyday!!
schedule which, SMC says, the workers had "welcomed, and encouraged"
because the automatic overtime built into the schedule "gave them a steady
4) the members of the NLRC had no authority to act as Commissioners because
source of extra-income," and pursuant to which it (SMC) "planned its production
their appointments had not been confirmed by the Commission on
targets and budgets.5
Appointment; and
Section 1. Any and all disputes, disagreements and controversies of any kind
Among the rights guaranteed to employees by the Labor Code is that of
between the COMPANY and the UNION and/or the workers involving or relating
engaging in concerted activities in order to attain their legitimate objectives.
to wages, hours of work, conditions of employment and/or employer-employee
Article 263 of the Labor Code, as amended, declares that in line with "the policy
relations arising during the effectivity of this Agreement or any renewal thereof,
of the State to encourage free trade unionism and free collective bargaining, . .
shall be settled by arbitration in accordance with the procedure set out in this
(w)orkers shall have the right to engage in concerted activities for purposes of
Article. No dispute, disagreement or controversy which may be submitted to the
collective bargaining or for their mutual benefit and protection." A similar right
grievance procedure in Article IX shall be presented for arbitration unless all the
to engage in concerted activities for mutual benefit and protection is tacitly and
steps of the grievance procedure are exhausted (Article V Arbitration).
traditionally recognized in respect of employers.
Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage
The more common of these concerted activities as far as employees are
or slowdown of work, boycotts, secondary boycotts, refusal to handle any
concerned are: strikes the temporary stoppage of work as a result of an
merchandise, picketing, sit-down strikes of any kind, sympathetic or general
industrial or labor dispute; picketing the marching to and fro at the
strikes, or any other interference with any of the operations of the COMPANY
employer's premises, usually accompanied by the display of placards and other
during the terms of this agreement (Article VI).
signs making known the facts involved in a labor dispute; and boycotts the
concerted refusal to patronize an employer's goods or services and to persuade
others to a like refusal. On the other hand, the counterpart activity that The Union was thus prohibited to declare and hold a strike or otherwise engage
management may licitly undertake is the lockout the temporary refusal to in non-peaceful concerted activities for the settlement of its controversy with
furnish work on account of a labor dispute, In this connection, the same Article SMC in respect of wage distortions, or for that matter; any other issue "involving
263 provides that the "right of legitimate labor organizations to strike and picket or relating to wages, hours of work, conditions of employment and/or
and of employer to lockout, consistent with the national interest, shall continue employer-employee relations." The partial strike or concerted refusal by the
to be recognized and respected." The legality of these activities is usually Union members to follow the five-year-old work schedule which they had
dependent on the legality of the purposes sought to be attained and the means therefore been observing, resorted to as a means of coercing correction of
employed therefor. "wage distortions," was therefore forbidden by law and contract and, on this
account, illegal.
It goes without saying that these joint or coordinated activities may be
forbidden or restricted by law or contract. In the particular instance of Awareness by the Union of the proscribed character of its members' collective
"distortions of the wage structure within an establishment" resulting from "the activities, is clearly connoted by its attempt to justify those activities as a means
application of any prescribed wage increase by virtue of a law or wage order," of protesting and obtaining redress against said members working overtime
Section 3 of Republic Act No. 6727 prescribes a specific, detailed and every day from Monday to Friday (on an average of 12 hours), and every
comprehensive procedure for the correction thereof, thereby implicitly Saturday (on 8 hour shifts),15rather than as a measure to bring about
excluding strikes or lockouts or other concerted activities as modes of rectification of the wage distortions caused by RA 6727 which was the real
settlement of the issue. The provision11 states that cause of its differences with SMC. By concealing the real cause of their dispute
with management (alleged failure of correction of wage distortion), and trying
to make it appear that the controversy involved application of the eight-hour
. . . the employer and the union shall negotiate to correct the distort-ions. Any
labor law, they obviously hoped to remove their case from the operation of the
dispute arising from wage distortions shall be resolved through the grievance
rules implementing RA 6727 that "Any issue involving wage distortion shall not
procedure under their collective bargaining agreementand, if it remains
be a ground for a strike/lockout." The stratagem cannot succeed.
unresolved, through voluntary arbitration. Unless otherwise agreed by the
parties in writing, such dispute shall be decided by the voluntary arbitrator or
In the first place, that it was indeed the wage distortion issue that principally any labor dispute which, if not restrained or performed forthwith, may cause
motivated the Union's partial or limited strike is clear from the facts, The work grave or irreparable damage to any party or render ineffectual any decision in
schedule (with "built-in overtime") had not been forced upon the workers; it favor of such party . . ."
had been agreed upon between SMC and its workers at the Polo Plant and
indeed, had been religiously followed with mutually beneficial results for the
As a rule such restraining orders or injunctions do not issue ex parte, but only
past five (5) years. Hence, it could not be considered a matter of such great
after compliance with the following requisites, to wit:
prejudice to the workers as to give rise to a controversy between them and
management. Furthermore, the workers never asked, nor were there ever any
negotiations at their instance, for a change in that work schedule prior to the a) a hearing held "after due and personal notice thereof has been served, in
strike. What really bothered them, and was in fact the subject of talks between such manner as the Commission shall direct, to all known persons against whom
their representatives and management, was the "wage distortion" question, a relief is sought, and also to the Chief Executive and other public officials of the
fact made even more apparent by the joint notice circulated by them prior to province or city within which the unlawful acts have been threatened or
the strike, i.e., that they would adopt the eight-hour work shift in the meantime committed charged with the duty to protect complainant's property;"
pending correction by management of the wage distortion (IPATUPAD MUNA
ANG EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI b) reception at the hearing of "testimony of witnesses, with opportunity for
IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE DISTORTION). cross-examination, in support of the allegations of a complaint made under
oath," as well as "testimony in opposition thereto, if offered . . .;
In the second place, even if there were no such legal prohibition, and even
assuming the controversy really did not involve the wage distortions caused by c) a finding of fact by the Commission, to the effect:
RA 6727, the concerted activity in question would still be illicit because contrary
to the workers' explicit contractual commitment "that there shall be no strikes,
walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal (1) That prohibited or unlawful acts have been threatened and will be
to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic committed and will be continued unless restrained, but no injunction or
or general strikes, or any other interference with any of the operations of the temporary restraining order shall be issued on account of any threat, prohibited
COMPANY during the term of . . . (their collective bargaining) agreement.16 or unlawful act, except against the person or persons, association or
organization making the threat or committing the prohibited or unlawful act or
actually authorizing or ratifying the same after actual knowledge thereof;
What has just been said makes unnecessary resolution of SMC's argument that
the workers' concerted refusal to adhere to the work schedule in force for the
last several years, is a slowdown, an inherently illegal activity essentially illegal (2) That substantial and irreparable injury to complainant's property will follow;
even in the absence of a no-strike clause in a collective bargaining contract, or
statute or rule. The Court is in substantial agreement with the petitioner's (3) That as to each item of relief to be granted, greater injury will be inflicted
concept of a slowdown as a "strike on the installment plan;" as a wilfull upon complainant by the denial of relief than will be inflicted upon defendants
reduction in the rate of work by concerted action of workers for the purpose of by the granting of relief;
restricting the output of the employer, in relation to a labor dispute; as an
activity by which workers, without a complete stoppage of work, retard
production or their performance of duties and functions to compel management (4) That complainant has no adequate remedy at law; and
to grant their demands.17 The Court also agrees that such a slowdown is
generally condemned as inherently illicit and unjustifiable, because while the (5) That the public officers charged with the duty to protect complainant's
employees "continue to work and remain at their positions and accept the property are unable or unwilling to furnish adequate protection.
wages paid to them," they at the same time "select what part of their allotted
tasks they care to perform of their own volition or refuse openly or secretly, to
However, a temporary restraining order may be issued ex parte under the
the employer's damage, to do other work;" in other words, they "work on their
following conditions:
own terms.18 But whether or not the workers' activity in question their
concerted adoption of a different work schedule than that prescribed by
management and adhered to for several years constitutes a slowdown need a) the complainant "shall also allege that, unless a temporary restraining order
not, as already stated, be gone into. Suffice it to say that activity is contrary to shall be issued without notice, a substantial and irreparable injury to
the law, RA 6727, and the parties' collective bargaining agreement. complainant's property will be unavoidable;
The Union's claim that the restraining order is void because issued by b) there is "testimony under oath, sufficient, if sustained, to justify the
Commissioners whose appointments had not been duly confirmed by the Commission in issuing a temporary injunction upon hearing after notice;"
Commission on Appointments should be as it is hereby given short shift, for, as
the Solicitor General points out, it is an admitted fact that the members of the c) the "complainant shall first file an undertaking with adequate security in an
respondent Commission were actually appointed by the President of the amount to be fixed by the Commission sufficient to recompense those enjoined
Philippines on November 18, 1989; there is no evidence whatever in support of for any loss, expense or damage caused by the improvident or erroneous
the Union's bare allegation that the appointments of said members had not issuance of such order or injunction, including all reasonable costs, together
been confirmed; and the familiar presumption of regularity in appointment and with a reasonable attorney's fee, and expense of defense against the order or
in performance of official duty exists in their favor.19 against the granting of any injunctive relief sought in the same proceeding and
subsequently denied by the Commission;" and
Also untenable is the Union's other argument that the respondent NLRC Division
had no jurisdiction to issue the temporary restraining order or otherwise grant d) the "temporary restraining order shall be effective for no longer than twenty
the preliminary injunction prayed for by SMC and that, even assuming the (20) days and shall become void at the expiration of said twenty (20) days.
contrary, the restraining order had been improperly issued. The Court finds that
the respondent Commission had acted entirely in accord with applicable
provisions of the Labor Code. The reception of evidence "for the application of a writ of injunction may be
delegated by the Commission to any of its Labor Arbiters who shall conduct such
hearings in such places as he may determine to be accessible to the parties and
Article 254 of the Code provides that "No temporary or permanent injunction or their witnesses and shall submit thereafter his recommendation to the
restraining order in any case involving or growing out of labor disputes shall be Commission."
issued by any court or other entity, except as otherwise provided in Articles 218
and 264 . . ." Article 264 lists down specific "prohibited activities" which may be
forbidden or stopped by a restraining order or injunction. Article 218 inter The record reveals that the Commission exercised the power directly and plainly
alia enumerates the powers of the National Labor Relations Commission and granted to it by sub-paragraph (e) Article 217 in relation to Article 254 of the
lays down the conditions under which a restraining order or preliminary Code, and that it faithfully observed the procedure and complied with the
injunction may issue, and the procedure to be followed in issuing the same. conditions for the exercise of that power prescribed in said sub-paragraph (e) It
acted on SMC's application for immediate issuance of a temporary restraining
order ex parte on the ground that substantial and irreparable injury to its
Among the powers expressly conferred on the Commission by Article 218 is the property would transpire before the matter could be heard on notice; it,
power to "enjoin or restrain any actual or threatened commission of any or all however, first direct SMC Labor Arbiter Carmen Talusan to receive SMC's
prohibited or unlawful acts or to require the performance of a particular act in testimonial evidence in support of the application and thereafter submit her
recommendation thereon; it found SMC's evidence adequate and issued the In her reply letter dated January 17, 1992, private respondent stated that she
temporary restraining order upon bond.1wphi1 No irregularity may thus be was not aware of PT&T's policy regarding married women at the time, and that
imputed to the respondent Commission in the issuance of that order. all along she had not deliberately hidden her true civil status. 5Petitioner
nonetheless remained unconvinced by her explanations. Private respondent was
dismissed from the company effective January 29, 1992, 6 which she readily
In any event, the temporary restraining order had a lifetime of only twenty (20)
contested by initiating a complaint for illegal dismissal, coupled with a claim for
days and became void ipso facto at the expired ration of that period.
non-payment of cost of living allowances (COLA), before the Regional
Arbitration Branch of the National Labor Relations Commission in Baguio City.
In view of the foregoing factual and legal considerations, all irresistibly leading
to the basic conclusion that the concerted acts of the members of petitioner
At the preliminary conference conducted in connection therewith, private
Union in question are violative of the law and their formal agreement with the
respondent volunteered the information, and this was incorporated in the
employer, the latter's submittal, in its counter-petition that there was, in the
stipulation of facts between the parties, that she had failed to remit the amount
premises, a "legal duty and obligation" on the part of the respondent
of P2,380.75 of her collections. She then executed a promissory note for that
Commission "to enjoin the unlawful and prohibited acts and omissions of
amount in favor of petitioner 7. All of these took place in a formal proceeding
petitioner IBM and the workers complained of,20 a proposition with which, it
and with the agreement of the parties and/or their counsel.
must be said, the Office of the Solicitor General concurs, asserting that the
"failure of the respondent commission to resolve the application for a writ of
injunction is an abuse of discretion especially in the light of the fact that the On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a
restraining order it earlier issued had already expired"21 must perforce be decision declaring that private respondent, who had already gained the status of
conceded. a regular employee, was illegally dismissed by petitioner. Her reinstatement,
plus payment of the corresponding back wages and COLA, was correspondingly
ordered, the labor arbiter being of the firmly expressed view that the ground
WHEREFORE, the petition is DENIED, the counter-petition is GRANTED, and the
relied upon by petitioner in dismissing private respondent was clearly
case is REMANDED to the respondent Commission (First Division) with
insufficient, and that it was apparent that she had been discriminated against on
instructions to immediately take such action thereon as is indicated by and is
account of her having contracted marriage in violation of company rules.
otherwise in accord with, the findings and conclusions herein set forth. Costs
against petitioner.
On appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiter and, in its decision dated April 29, 1994, it
IT IS SO ORDERED.
ruled that private respondent had indeed been the subject of an unjust and
unlawful discrimination by her employer, PT & T. However, the decision of the
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner, labor arbiter was modified with the qualification that Grace de Guzman
vs. deserved to be suspended for three months in view of the dishonest nature of
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE her acts which should not be condoned. In all other respects, the NLRC affirmed
GUZMAN, respondents. the decision of the labor arbiter, including the order for the reinstatement of
private respondent in her employment with PT & T.
Verily, private respondent's act of concealing the true nature of her status from
As an employee who had therefore gained regular status, and as she had been
PT & T could not be properly characterized as willful or in bad faith as she was
dismissed without just cause, she is entitled to reinstatement without loss of
moved to act the way she did mainly because she wanted to retain a permanent
seniority rights and other privileges and to full back wages, inclusive of
job in a stable company. In other words, she was practically forced by that very
allowances and other benefits or their monetary equivalent. 30 However, as she
same illegal company policy into misrepresenting her civil status for fear of
had undeniably committed an act of dishonesty in concealing her status, albeit
being disqualified from work. While loss of confidence is a just cause for
under the compulsion of an unlawful imposition of petitioner, the three-month
suspension imposed by respondent NLRC must be upheld to obviate the Moreover, we cannot agree to the respondent's proposition that termination
impression or inference that such act should be condoned. It would be unfair to from employment of flight attendants on account of marriage is a fair and
the employer if she were to return to its fold without any sanction whatsoever reasonable standard designed for their own health, safety, protection and
for her act which was not totally justified. Thus, her entitlement to back wages, welfare, as no basis has been laid therefor. Actually, respondent claims that its
which shall be computed from the time her compensation was withheld up to concern is not so much against the continued employment of the flight
the time of her actual reinstatement, shall be reduced by deducting therefrom attendant merely by reason of marriage as observed by the Secretary of Labor,
the amount corresponding to her three months suspension. but rather on the consequence of marriage-pregnancy. Respondent discussed at
length in the instant appeal the supposed ill effects of pregnancy on flight
attendants in the course of their employment. We feel that this needs no
4. The government, to repeat, abhors any stipulation or policy in the nature of
further discussion as it had been adequately explained by the Secretary of Labor
that adopted by petitioner PT & T. The Labor Code state, in no uncertain terms,
in his decision of May 2, 1976.
as follows:
It is logical to presume that, in the absence of said standards or regulations 5. Petitioner's policy is not only in derogation of the provisions of Article 136 of
which are as yet to be established, the policy of respondent against marriage is the Labor Code on the right of a woman to be free from any kind of stipulation
patently illegal. This finds support in Section 9 of the New Constitution, which against marriage in connection with her employment, but it likewise assaults
provides: good morals and public policy, tending as it does to deprive a woman of the
freedom to choose her status, a privilege that by all accounts inheres in the
Sec. 9. The State shall afford protection to labor, promote full employment and individual as an intangible and inalienable right. 38 Hence, while it is true that the
equality in employment, ensure equal work opportunities regardless of sex, parties to a contract may establish any agreements, terms, and conditions that
race, or creed, and regulate the relations between workers and employees. The they may deem convenient, the same should not be contrary to law, morals,
State shall assure the rights of workers to self-organization, collective good customs, public order, or public policy. 39 Carried to its logical
bargaining, security of tenure, and just and humane conditions of work . . . . consequences, it may even be said that petitioner's policy against legitimate
marital bonds would encourage illicit or common-law relations and subvert the On March 11, 1988, private respondent filed a request for assistance with the
sacrament of marriage. Department of Labor and Employment. After the parties submitted their
position papers as required by the labor arbiter assigned to the case on August
24, 1988 the latter rendered a decision, the dispositive part of which reads as
Parenthetically, the Civil Code provisions on the contract of labor state that the
follows:
relations between the parties, that is, of capital and labor, are not merely
contractual, impressed as they are with so much public interest that the same
should yield to the common good. 40 It goes on to intone that neither capital nor WHEREFORE, Conformably With The Foregoing, judgment is hereby rendered
labor should visit acts of oppression against the other, nor impair the interest or ordering the respondent, Apex Mining Company, Inc., Masara, Davao del Norte,
convenience of the public. 41 In the final reckoning, the danger of just such a to pay the complainant, to wit:
policy against marriage followed by petitioner PT & T is that it strikes at the very
essence, ideals and purpose of marriage as an inviolable social institution and,
1 Salary
ultimately, of the family as the foundation of the nation. 42 That it must be
effectively interdicted here in all its indirect, disguised or dissembled forms as
discriminatory conduct derogatory of the laws of the land is not only in order Differential P16,289.20
but imperatively required.
2. Emergency Living
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and
Telephone Company is hereby DISMISSED for lack of merit, with double costs Allowance 12,430.00
against petitioner.
Differential 1,322.32
(Gualberto vs Marinduque is a Court of Appeals Case and cannot be found in
the net, the discussion regarding this case can be found in PT&T vs NLRC)
4. Separation Pay
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining
& Industrial Corporation[34] considered as void a policy of the same nature. In (One-month for
said case, respondent, in dismissing from the service the complainant, invoked a
policy of the firm to consider female employees in the project it was every year of
undertaking as separated the moment they get married due to lack of facilities
for married women. Respondent further claimed that complainant was service [1973-19881) 25,119.30
employed in the project with an oral understanding that her services would be
terminated when she gets married.Branding the policy of the employer as an or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND
example of discriminatory chauvinism tantamount to denying equal 42/100 (P55,161.42).
employment opportunities to women simply on account of their sex, the
appellate court struck down said employer policy as unlawful in view of its SO ORDERED.1
repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution.
Not satisfied therewith, petitioner appealed to the public respondent National
Labor Relations Commission (NLRC), wherein in due course a decision was
APEX MINING COMPANY, INC., petitioner,
rendered by the Fifth Division thereof on July 20, 1989 dismissing the appeal for
vs.
lack of merit and affirming the appealed decision. A motion for reconsideration
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA
thereof was denied in a resolution of the NLRC dated June 29, 1990.
CANDIDO, respondents.
Hence, the herein petition for review by certiorari, which appopriately should be
Bernabe B. Alabastro for petitioner.
a special civil action for certiorari, and which in the interest of justice, is hereby
Angel Fernandez for private respondent.
treated as such.2 The main thrust of the petition is that private respondent
should be treated as a mere househelper or domestic servant and not as a
regular employee of petitioner.
SO ORDERED.
Petitioner also contends that public respondent's reliance on Villarama v. NLRC
and Golden Donuts 7 was misplaced. He draws attention to victim Divina
CARLOS C. LIBRES, petitioner, Gonzaga's immediate filing of her letter of resignation in the Villarama case as
vs. opposed to the one-year delay of Capiral in filing her complaint against him. He
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL STEEL CORPORATION, now surmises that the filing of the case against him was merely an afterthought
OSMUNDO G. WAGA, JR., ANTONIE D. SEVA, PETER J. LOQUILLANO, and not borne out of a valid complaint, hence, the Villarama case should have
SATURNINO P. MEJORADA and ISIDRO F. HYNSON, JR., respondent. no bearing on the instant case.
Petitioner Carlos G. Libres, an electrical engineer, was holding a managerial As regards his assertion that he was not afforded due process, petitioner would
position with National Steel Corporation (NSC) as Assistant Manager. On 3 point to his demand for personal confrontation which was brushed aside by the
August 1993 he received a Notice of Investigation from Assistant Vice president MEC. He argues strongly that in rejecting his plea, the MEC clearly denied him
Isidro F. Hynson Jr., his immediate superior, requesting him to submit a written an opportunity to be heard and present his side.
explanation relative to the charge of sexual harassment made by Susan D.
Capiral, Hynson's secretary, allegedly committed by Libres sometime in May The issues raised in this petition require this Court to delve into the findings of
1992, and subsequently to answer clarificatory questions on the matter. The fact by the public respondent. We have ruled in a litany of cases that resort to
notice also warned him that failure to file his written explanation would be judicial review of the decisions of the NLRC under Rule 65 of the Rules of Court
construed as a waiver of his right to be heard. On 14 August 1993 petitioner is confined only to issues of want or excess of jurisdiction and grave abuse of
submitted his written explanation denying the accusation against him and discretion on the part of the tribunal rending them. It does not include an
offering to submit himself for clarificatory interrogation. inquiry on the correctness of the evaluation of evidence, which served as basis
for the labor official in determining his conclusion. Findings of fact of
Subsequently, Hynson Jr. conducted an internal investigation to which Libres administrative officers are generally given finality. 8 Nonetheless, the Court shall
and Capiral were invited to ventilate their respective sides of the issue. They discuss the matter if only to emphasize that the contentions of petitioner are
readily responded. Thereafter, Hynson Jr. submitted his report to the definitely without merit.
Management Evaluation Committee (MEC).
Petitioner assails the failure of the NLRC to strictly apply RA No. 7877 to the
The MEC, after deliberation concluded that the charges against petitioner instant case. We note however that petitioner never raised the applicability of
constituted a violation of Item 2, Table V, of the Plant's Rules and the law in his appeal to the NLRC nor in his motion for reconsideration. Issues or
Regulations. 1 It opined that "touching a female subordinate's hand and arguments must chiefly be raised before the court or agency concerned so as to
shoulder, caressing her nape and telling other people that Capiral was the one allow it to pass upon and correct its mistakes without the intervention of a
who hugged and kissed or that she responded to the sexual advances are higher court. Having failed to indicate his effort along this line, petitioner cannot
unauthorized acts that damaged her honor". 2 Referring to the Manual of the now belatedly raise its application in this petition.
Philippine Daily Inquirer in defining sexual harassment, 3 the MEC finally
concluded that petitioner's acts clearly constituted sexual harassment as Republic Act No. 7877 was not yet in effect at the time of the occurrence of the
charged and recommended petitioner's suspension for thirty (30) days without act complained of. It was still being deliberated upon in Congress when
pay. petitioner's case was decided by the Labor Arbiter. As a rule, laws shall have no
retroactive effect unless otherwise provided, or except in a criminal case when This is an administrative complaint for sexual harassment against respondent
their application will favor the accused. 9 Hence, the Labor Arbiter have to rely Judge Osmundo Villanueva of the Fourth Municipal Circuit Trial Court,
on the MEC report and the common connotation of sexual harassment as it is Bagumbayan-Esperanza, Sultan Kudarat.
generally as understood by the public. Faced with the same predicament, the
NLRC had to agree with the Labor Arbiter. In so doing, the NLRC did not commit
Complainant Lucita E. Biboso, 33, claimed that at around 11 oclock in the
any abuse of discretion in affirming the decision of the Labor Arbiter.
morning of August 20, 1996, she went to see respondent at the MCTC in
Esperanza, Sultan Kudarat to "follow up" her case (Civil Case No. 71).
Petitioner next trains his gun on the reliance by the NLRC on Villarama and Complainant made the following account of how she was allegedly molested by
claims it was erroneous. We rule otherwise and hold that it was both fitting and respondent:
appropriate since it singularly addressed the issue of a managerial employee
committing sexual harassment on a subordinate. The disparity in the periods of
. . . [Judge Osmundo M. Villanueva] invited me to get inside his chamber for
filing the complaints in the two (2) cases did not in any way reduce this case into
personal conference. When we were already inside his office, he locked the
insignificance. On the contrary, it even invited the attention of the Court to
room. To my surprise he immediately embraced and kissed me, hugged me and
focus on sexual harassment as a just and valid cause for termination. Whereas
hurriedly removed my blouse he took advantage of caressing my breasts and
petitioner Libres was only meted a 30-day suspension by the NLRC, Villarama in
began unzipping my pants. Shocked and helpless during that time, I cried and
the other case was penalized with termination. As Mr. Justice Puno elucidated,
cried and cannot resist from his sexual advances . . . being weak against [his]
"As a managerial employee, petitioner is bound by more exacting work ethics.
male strength. So what I did was to evade his sexual advances and immediately
He failed to live up to his higher standard of responsibility when he succumbed
run outside of his chamber and went home.1
to his moral perversity. And when such moral perversity is perpetrated against
his subordinate, he provides a justifiable ground for his dismissal for lack of trust
and confidence. It is the right, nay, the duty of every employer to protect its Complainant said that she was again molested by respondent on September 4,
employees from oversexed superiors." 10 Public respondent therefore is correct 1996 inside the latters chamber in Esperanza, Sultan Kudarat. According to
in its observation that the Labor Arbiter was in fact lenient in his application of complainant, she went to see respondent because he allegedly told her that she
the law and jurisprudence for which petitioner must be grateful and not gripe had to sign some papers in "connection with the issuance of a warrant of
against. arrest."2
Petitioner further claims that the delay in instituting the complaint shows that it In his Answer3 to the complaint, respondent denied having made any sexual
was only an afterthought. We disagree. As pointed out by the Solicitor General, advances against complainant at any time. He claimed that complainant and her
it could be expected since Libres was Capiral's immediate superior. Fear of father-in-law, Cipriano Biboso, trumped up charges against him because he had
retaliation and backlash, not to forget the social humiliation and embarrassment dismissed two cases (Civil Case No. 71 entitled "Lucita Biboso v. Haide4 Navarra"
that victims of this human frailty usually suffer, are all realities that Capiral had and Criminal Case No. 1662-B entitled "Cipriano Biboso v. Heide Navarra") filed
to contend with. Moreover, the delay did not detract from the truth derived by complainant and her father-in-law. He contended that he could not have
from the facts. Petitioner Libres never questioned the veracity of Capiral's sexually molested complainant on August 20, 1996 in Esperanza because he was
allegations. In fact his narration even corroborated the latter's assertion in in Lebak, Sultan Kudarat from August 19-23, 1996, discharging his duties as
several material points. He only raised issue on the complaint's protracted filing. Acting Presiding Judge of the First Municipal Circuit Trial Court for Lebak-
Kalamansig, Sultan Kudarat.
On the question of due process, we find that the requirements thereof were
sufficiently complied with. Due process as a constitutional precept does not To support his alibi, respondent submitted several documents, namely: copies
always and in all situations require a trial type proceeding. Due process is of the transcript of stenographic notes, dated August 20, 1996, of the
satisfied when a person is notified of the charge against him and given an preliminary investigation of complainant in Criminal Case No. 2033-L, conducted
opportunity to explain or defend himself. The essence of due process is simply in Lebak (Exh. 8); the complaints in Criminal Case Nos. 2033-L and 2034-L, both
to be heard, or as applied to administrative proceedings, an opportunity to entitled "People v. Eric Camporedondo and Christopher Camporedondo,"
explain one's side, or an opportunity to seek a reconsideration of the action or received and notarized by him on August 20, 1996, also in Lebak (Exhs. 10 and
ruling complained of. 11 It is undeniable that petitioner was given a Notice of 11); the itinerary of his travels and the corresponding disbursement voucher
Investigation informing him of the charge of sexual harassment as well as prepared by the Clerk of Court of the MCTC of Lebak-Kalamansig showing that
advising him to submit a written explanation regarding the matter; that he he was in Lebak from August 19-23, 1996 (Exhs. 5 and 6); and a certification,
submitted his written explanation to his superior, Isidro F. Hyson Jr.; that dated May 25, 1998, by the Clerk of Court of the MCTC of Lebak-Kalamansig
Hynson Jr. further allowed him to air his grievance in a private session; and, that stating therein that respondent judge was in Lebak from August 19-23, 1996
upon release of the suspension order made by the MEC petitioner requested its (Exh. 7). As to the second incident of sexual harassment which allegedly took
reconsideration but was denied. From the foregoing it can be gleaned that place on September 4, 1996, respondent stated that such could not have been
petitioner was given more than adequate opportunity to explain his side and air committed as there was no session in Esperanza on that date.
his grievances.
The case was referred to the Executive Judge of the Regional Trial Court, Isulan,
The personal confrontation with the MEC officers, which he requested, was not Sultan Kudarat for investigation, report, and recommendation. During the
necessary. The parties had already exhaustively presented their claims and investigation, complainant and her sister-in-law, Lorna Biboso, testified, while
defenses in different fora. As stated in Howevers Savings and Loan Association respondent, in addition to himself, presented as his witnesses SPO4 Rogelio
v. NLRC,litigants may be heard through pleadings, written explanations, position Venus, Romeo Chiva, process server of MCTC, Bagumbayan-Esperanza, and
papers, memoranda or oral arguments. 12 Petitioner has been afforded all of the Virginia Dumaguing, Clerk of Court, MCTC, Lebak-Kalamansig.
above means to air his side. Due process was therefore properly observed.
In his report, dated February 5, 2001, Executive Judge German M. Malcampo
WHEREFORE, the petition is DISMISSED, no grave abuse of discretion having found complainants claim of sexual harassment to be unsubstantiated due to
been committed by public respondent National Labor Relations Commission in material inconsistencies between complainants affidavit-complaint and her
upholding the suspension of petitioner Carlos G. Libres as justified and in testimony during the investigation of the case. Nevertheless, in view of his
accordance with due process. Consequently, its decision of 28 August 1995 as finding that respondent gave assistance to complainants father-in-law in filing a
well as its resolution of 31 October 1995 is AFFIRMED.1wphi1.nt case in his sala, Judge Malcampo recommended that respondent be
reprimanded and ordered to pay a fine in the amount of P20,000.00.
SO ORDERED.
The recommendation is well taken. Indeed, the evidence presented during the
investigation of the case fails to show that respondent sexually harassed
LUCITA E. BIBOSO, complainant,
complainant. Contrary to her statement in her affidavit-complaint that
vs.
respondent judge sexually molested her on August 20, 1996 inside his chamber
JUDGE OSMUNDO M. VILLANUEVA, Presiding Judge of the Fourth Municipal
in Esperanza, Sultan Kudarat, complainant testified during the investigation of
Circuit Trial Court, Bagumbayan-Esperanza, Sultan Kudarat
this case that their meeting actually took place on August 27, 1996 in the
Province, respondent.
courthouse in Bagumbayan, Sultan Kudarat, during which respondent merely
shook her hand, thus:
MENDOZA, J.:
ATTY. JABIDO, JR.
[Counsel for complainant] Q From that point, Mrs. Biboso, did anything else happen?
Q Mrs. Biboso, your complaint is for sexual harassment allegedly committed A No more, sir.
upon you by respondent Judge Osmundo Villanueva. To begin with, when did
this incident of sexual harassment occur?
Q So, what did you do after that?
A August 27.
A I went out.
Q What year?
....
A 1996, sir.
[ATTY. CORDERO]
Q Can you demonstrate to us, you yourself as Judge Villanueva and myself A That is not true. I have not molested her.
to take your place?
Q What is the truth?
ATTY. JABIDO:
A On September 4, she came in the office and asked me about the filing of
Your Honor, the witness is demonstrating that with her right hand, she held my that case of estafa against Navarra.
left hand with her four (4) fingers pressing my palm and the thumb on the upper
part of my hand. Q Meaning, she was legally consulting the court or seeking advice on that
proposed criminal case that was filed?
....
A She asked me on what to do.
Q Did anything else happen after that?
Q Who was interested in the filing of the estafa case?
A I went back to my chair and sat down.
A She was the one together with the father-in-law.
....
Q What was your advice on September 4, 1996, on that consultation? Q When the aforesaid criminal complaint was presented to you for filing,
who were the persons who delivered or filed the same in your court at
Esperanza?
A I told her that it is the father-in-law who should be the one to file the
complaint.
A Mr. Cipriano Biboso was there, Lucita Biboso and together with SPO4
Rogelio Venus, the PNP member of Bagumbayan.7
Q Did she do that?
Q And what was the conversation between you and her father-in-law?
ATTY. CORDERO:
A Well, if that property is registered [in his name], he should be the party to
Q Now, you mentioned of having been again molested by Judge Villanueva
file the case and he told me that although that land belongs to his daughter-in-
on September 4, 1996. What day was September 4, 1996?
law, he is still the registered owner.
A Wednesday, sir.
Q As you said it was rather Lucita Biboso [who] claims the land but the title
is not registered in her name so you advised her that it was her father-in-law
who should do the filing? Q And at what time did you arrive at the court on September 4, 1996?
Q And that was the reason why she appeared on the following day, Q By the way, why were you there on that particular day on September 4,
September 5, 1996, together with her father-in-law, Cipriano Biboso? 1996?
A They appeared in Court and they requested that I will help them execute A We will file [a complaint for] estafa, sir.
the affidavit so that they will not be investigated anymore.
Q Against whom?
Q That was September 5, 1996?
A Heidi Navarra.
A Yes, sir.
Q Who was filing the estafa case?
Q Was the affidavit prepared?
A My father-in-law.
A Yes.
....
Q Who prepared the affidavit?
Q When you went there on September 4, 1996, was the estafa case already
A I dictated it to my clerk. filed?
Q That was duly signed by the complainant? A Not yet, sir. It was filed on September 5.
Q And it was you who ratified the document? Respondents testimony was likewise corroborated by SPO4 Rogelio Venus of
the Philippine National Police, Bagumbayan, Sultan Kudarat, who testified:
A Yes, sir.
[ATTY. CORDERO]
Q After the execution of the said affidavit, did you advice them further on
what to do? Q On September 5, 1996, can you recall whether Lucita Biboso and her
father-in-law went to your police station at Bagumbayan?
A Well, after Cipriano Biboso signed the document, I adviced them [to] . . .
just give this document to the PNP Bagumbayan for the proper filing of the A Yes, sir.
criminal complaint.
Q What time was that?
Q With the complaint of Cipriano Biboso, was a criminal complaint finally
prepared?
A That was 3:00 oclock in the afternoon, sir.
A Yes.
Q Do you know what was the purpose of both of them in going to the police
station of Bagumbayan?
Q When?
A They wanted to file a case against Haydee Navarra.
A I think, the document will show that it is stated September.
.... Q In connection with the criminal complaint?
Q Did any one of them present a document to support the filing of [an] Q Did you receive that warrant of arrest?
estafa case?
A After the filing, I received a copy of the warrant of arrest.9
A They were bringing with them an affidavit to support the criminal
complaint.
Complainants behavior during the actual filing of the case on September 6,
1996, as observed by SPO4 Rogelio Venus, belies her allegation that she had
Q You have seen that affidavit? been subjected to sexual abuse by respondent two days before, thus:
Q Whose affidavit was that? Q You entered the chamber of the MCTC Judge Villanueva in the Municipal
Court of Esperanza, Sultan Kudarat?
A Affidavit of Cipriano Biboso.
A Yes, your Honor.
....
....
Q Now, based on this affidavit, did the police station prepare the criminal
complaint? Q How long did you stay inside the chamber of the Judge?
A During that time, sir, considering that it [was] already late in the A If I remember it right, 20 minutes.
afternoon, we adviced them to go back the following day.
Q Who was talking with the Judge as soon as you entered his chamber?
....
A We were four (4) in the office, Your Honor. The complainant is talking
Q Now, on the next day, you said that they were adviced to come back. with the Judge.
That was already September 6, 1996. Did they come back to the PNP station [of]
Bagumbayan?
Q To whom are you referring?
A Yes, sir.
A The complainant Mr. Biboso and his companion, his daughter-in-law
Lucita Biboso.
Q And what did you do with the prepared criminal complaint?
Q You were just [listening]?
A I was instructed by our Chief of Police to go with them [to] Esperanza to
file the case.
A Yes, Your Honor.
A Yes, sir. Q On your way out of the courthouse in Esperanza, Sultan Kudarat, what if
any did the complainant, Cipriano Biboso, tell you considering that you were
now in possession of the warrant of arrest?
Q Was the Judge present that time when you arrived thereat?
Q How about his daughter-in-law, Lucita Biboso, what did she tell you if
Q And you presented that criminal complaint?
any?
A Yes, sir.
A The same, sir, [to serve] the warrant of arrest.
....
Q Did you notice [the] action [on] their faces that they were happy because
of the issuance of a warrant of arrest against the accused, Haydee Navarra?
Q Was there a warrant of arrest issued on that same day?
A Yes, sir.
A Of course, sir, naturally they were happy because we are holding the "That sometime on or about 01 December 1995, in Cagayan de Oro City, and
warrant of arrest and then they told me to facilitate the immediate arrest of the within the jurisdiction of this Honorable Court pursuant to the provisions of RA
accused. 7975, the accused, a public officer, being then the City Health Officer of Cagayan
de Oro City with salary grade 26 but a high ranking official by express provision
of RA 7975, committing the offense in relation to his official functions and taking
....
advantage of his position, did there and then, willfully, unlawfully and criminally,
demand, solicit, request sexual favors from Ms. Juliet Q. Yee, a young 22 year-
Q Since you were with Cipriano Biboso and Lucita Biboso, did not Lucita old woman, single and fresh graduate in Bachelor of Science in Nursing who was
Biboso tell you of anything in connection with this case and in connection with seeking employment in the office of the accused, namely: by demanding from
the respondent Judge? Ms. Yee that she should, expose her body and allow her private parts to be
mashed and stimulated by the accused, which sexual favor was made as a
A None, Your Honor. condition for the employment of Ms. Yee in the Family Program of the Office of
the accused, thus constituting sexual harassment."1
Q Did she not tell you that a day or two earlier, she was allegedly harassed
or molested by the respondent Judge? Upon his arraignment, petitioner pled not guilty to the offense charged; hence,
trial proceeded.
A None, sir.
Juliet Q. Yee, then a 22-year old fresh graduate of nursing, averred that on 28
November 1995 her father accompanied her to the office of petitioner at the
Q Are you very sure of that? City Health Office to seek employment. Juliets father and petitioner were
childhood friends. Juliet was informed by the doctor that the City Health Office
A Yes, Your Honor.10 had just then filled up the vacant positions for nurses but that he would still see
if he might be able to help her.
Complainant thus failed to prove her charges against respondent. The
inconsistencies between her testimony and complaint-affidavit, in contrast to The following day, 29 November 1995, Juliet and her father returned to the City
the credible testimonial and documentary evidence presented by respondent, Health Office, and they were informed by petitioner that a medical group from
put in serious doubt the veracity of her claims. Indeed, it appears, as respondent Texas, U.S.A., was coming to town in December to look into putting up a clinic in
judge claims, that this case was filed to punish him for having dismissed the Lapasan, Cagayan de Oro, where she might be considered. On 01 December
cases filed by complainant and her father-in-law, especially as the filing of this 1995, around nine oclock in the morning, she and her father went back to the
case came on the heels of the dismissal of the latter. There could no other office of petitioner. The latter informed her that there was a vacancy in a family
reason for complainant to turn against respondent when the latter had planning project for the city and that, if she were interested, he could interview
previously helped complainant in her legal problems to the extent of preparing her for the job. Petitioner then started putting up to her a number of questions.
her father-in-laws complaint-affidavit for estafa against Navarra and even When asked at one point whether or not she already had a boyfriend, she said
issuing a writ of execution in one case (Civil Case No. 71) and a warrant of arrest "no." Petitioner suggested that perhaps if her father were not around, she could
in another (Criminal Case No. 1662-B). Furthermore, it took complainant more afford to be honest in her answers to the doctor. The father, taking the cue,
than a year after the commission of the alleged sexual harassment on decided to leave. Petitioner then inquired whether she was still a virgin,
September 4, 1996 to file the instant administrative complaint. Even explaining to her his theory on the various aspects of virginity. He
complainant's explanation as to why she executed her affidavit-complaint only "hypothetically" asked whether she would tell her family or friends if a male
on October 16, 1997 was conflicting. She initially stated that she was only able friend happened to intimately touch her. Petitioner later offered her the job
to execute her complaint-affidavit for this case on said late date because rumors where she would be the subject of a "research" program. She was requested to
had spread by that time that she was respondents lover (kabit).11 During her be back after lunch.
cross-examination, however, she stated that she had to defer the execution of
her complaint because she had to wait for her husband to come back from Before proceeding to petitioners office that afternoon, Juliet dropped by at the
Manila.12 nearby church to seek divine guidance as she felt so "confused." When she got
to the office, petitioner made several telephone calls to some hospitals to
The foregoing notwithstanding, as found by the investigating judge, respondent inquire whether there was any available opening for her. Not finding any,
should be held liable for his conduct in relation to Criminal Case No. 1662-B. petitioner again offered her a job in the family planning research undertaking.
Respondent acted as a lawyer for complainant and her father-in-law when he She expressed hesitation if a physical examination would include "hugging" her
drafted complainants affidavit which became the basis of a complaint for estafa but petitioner assured her that he was only kidding about it. Petitioner then
filed against Heidi Navarra. By acting as counsel for complainant and the latters invited her to go bowling. Petitioner told her to meet him at Borja Street so that
father-in-law in a case filed in his court, respondent compromised his neutrality people would not see them on board the same car together. Soon, at the
and independence. How could he then be expected to decide with objectivity designated place, a white car driven by petitioner stopped. She got in. Petitioner
and fairness the cases in which he has acted as a lawyer for the plaintiff or held her pulse and told her not to be scared. After dropping by at his house to
complainant? Respondents misconduct in this case is further compounded by put on his bowling attire, petitioner got back to the car.
the fact that he rendered the legal services in question using government
facilities during office hours. While driving, petitioner casually asked her if she already took her bath, and she
said she was so in a hurry that she did not find time for it. Petitioner then
WHEREFORE, respondent Judge Osmundo M. Villanueva, Fourth Municipal inquired whether she had varicose veins, and she said "no." Petitioner told her
Circuit Trial Court, Bagumbayan-Esperanza, Sultan Kudarat, is found GUILTY of to raise her foot and lower her pants so that he might confirm it. She felt
misconduct and is hereby ORDERED to pay a FINE in the amount of P20,000.00 assured that it was all part of the research. Petitioner still pushed her pants
with warning that commission of similar and other misconduct will be dealt with down to her knees and held her thigh. He put his hands inside her panty until he
more severely. reached her pubic hair. Surprised, she exclaimed "hala ka!" and instinctively
pulled her pants up. Petitioner then touched her abdomen with his right hand
saying words of endearment and letting the back of his palm touch her
SO ORDERED. forehead. He told her to raise her shirt to check whether she had nodes or
lumps. She hesitated for a while but, eventually, raised it up to her navel.
DR. RICO S. JACUTIN, petitioner, Petitioner then fondled her breast. Shocked at what petitioner did, she lowered
vs. her shirt and embraced her bag to cover herself, telling him angrily that she was
PEOPLE OF THE PHILIPPINES, respondent. through with the research. He begged her not to tell anybody about what had
just happened. Before she alighted from the car, petitioner urged her to
reconsider her decision to quit. He then handed over to her P300.00 for her
VITUG, J.:
expenses.
A week later, Juliet told her sister about the incident. On 16 December 1995, she Petitioner was the City Health Officer of Cagayan de Oro City, a position he held
attempted to slash her wrist with a fastener right after relating the incident to when complainant, a newly graduated nurse, saw him to enlist his help in her
her mother. Noticing that Juliet was suffering from some psychological problem, desire to gain employment. He did try to show an interest in her plight, her
the family referred her to Dr. Merlita Adaza for counseling. Dr. Adaza would father being a boyhood friend, but finding no opening suitable for her in his
later testify that Juliet, together with her sister, came to see her on 21 office, he asked her about accepting a job in a family planning research project.
December 1995, and that Juliet appeared to be emotionally disturbed, blaming It all started from there; the Sandiganbayan recited the rest of the story:
herself for being so stupid as to allow Dr. Jacutin to molest her. Dr. Adaza
concluded that Juliets frustration was due to post trauma stress.
"x x x. Succeeding in convincing the complainant that her physical examination
would be a part of a research, accused asked complainant if she would agree
Petitioner contradicted the testimony of Juliet Yee. He claimed that on 28 that her private parts (bolts) would be seen. Accused assured her that with her
November 1995 he had a couple of people who went to see him in his office, cooperation in the research, she would gain knowledge from it. As complainant
among them, Juliet and her father, Pat. Justin Yee, who was a boyhood friend. looked upon the accused with utmost reverence, respect, and paternal
When it was their turn to talk to petitioner, Pat. Yee introduced his daughter guidance, she agreed to undergo the physical examination. At this juncture,
Juliet who expressed her wish to join the City Health Office. Petitioner replied accused abruptly stopped the interview and told the complainant to go home
that there was no vacancy in his office, adding that only the City Mayor really and be back at 2:00 oclock in the afternoon of the same day, December 1, 1995.
had the power to appoint city personnel. On 01 December 1995, the afternoon Complainant returned at 2:00 oclock in the afternoon, but did not proceed
when the alleged incident happened, he was in a meeting with the Committee immediately to the office of the accused, as she dropped by a nearby church to
on Awards in the Office of the City Mayor. On 04 December 1995, when Juliet ask divine guidance, as she was confused and at a loss on how to resolve her
said she went to his office to return the P300.00, he did not report to the office present predicament. At 3:00 oclock in the afternoon, she went back to the
for he was scheduled to leave for Davao at 2:35 p.m. to attend a hearing before office of the accused. And once inside, accused called up a certain Madonna,
the Office of the Ombudsman for Mindanao. He submitted in evidence a inquiring if there was a vacancy, but he was told that she would only accept a
photocopy of his plane ticket. He asserted that the complaint for sexual registered nurse. Complainant was about to leave the office of the accused
harassment, as well as all the other cases filed against him by Vivian Yu, Iryn when the latter prevailed upon her to stay because he would call one more
Salcedo, Mellie Villanueva and Pamela Rodis, were but forms of political hospital. In her presence, a call was made. But again accused told her that there
harassment directed at him. was no vacancy. As all efforts to look for a job in other hospitals failed, accused
renewed the offer to the complainant to be a part of the research in the Family
Planning Program where there would be physical examination. Thereafter,
The Sandiganbayan, through its Fourth Division, rendered its decision, dated 05
accused motioned his two (2) secretaries to go out of the room. Upon moving
November 1999, penned by Mr. Justice Rodolfo G. Palattao, finding the accused,
closer to the complainant, accused asked her if she would agree to the offer.
Dr. Rico Jacutin, guilty of the crime of Sexual Harassment under Republic Act No.
Complainant told him she would not agree because the research included
7877. The Sandiganbayan concluded:
hugging. He then assured her that he was just kidding and that a pre-schooler
and high schooler have already been subjected to such examination. With
"WHEREFORE, judgment is hereby rendered, convicting the accused RICO assurance given, complainant changed her mind and agreed to the research, for
JACUTIN Y SALCEDO of the crime of Sexual Harassment, defined and punished she is now convinced that she would be of help to the research and would gain
under R.A. No. 7877, particularly Secs. 3 and 7 of the same Act, properly known knowledge from it. At this point, accused asked her if she was a tomboy, she
as the Anti-Sexual Harassment Act of 1995, and is hereby sentenced to suffer answered in the negative. He then instructed her to go with him but he would
the penalty of imprisonment of six (6) months and to pay a fine of Twenty first play bowling, and later proceed with the research (physical examination).
Thousand (P20,000.00) Pesos, with subsidiary imprisonment in case of On the understanding of the complainant that they will proceed to the clinic
insolvency. Accused is further ordered to indemnify the offended party in the where the research will be conducted, she agreed to go with the accused. But
amount of Three Hundred Thousand (P300,000.00) Pesos, by way of moral accused instructed her to proceed to Borja St. where she will just wait for him,
damages; Two Hundred Thousand (P200,000.00) Pesos, by way of Exemplary as it was not good for people to see them riding in a car together. She walked
damages and to pay the cost of suit."2 from the office of the accused and proceeded to Borja St. as instructed. And
after a while, a white car arrived. The door was opened to her and she was
In the instant recourse, it is contended that - instructed by the accused to come inside. Inside the car, he called her attention
why she was in a pensive mood. She retorted she was not. As they were seated
side by side, the accused held her pulse and told her not to be scared. He
"I. Petitioner cannot be convicted of the crime of sexual harassment in view of informed her that he would go home for a while to put on his bowling attire.
the inapplicability of Republic Act No. 7877 to the case at bar. After a short while, he came back inside the car and asked her if she has taken a
bath. She explained that she was not able to do so because she left the house
"II. Petitioner [has been] denied x x x his constitutional right to due process of hurriedly. Still while inside the car, accused directed her to raise her foot so he
law and presumption of innocence on account of the insufficiency of the could see whether she has varicose veins on her legs. Thinking that it was part of
prosecution evidence to sustain his conviction."3 the research, she did as instructed. He told her to raise it higher, but she
protested. He then instructed her to lower her pants instead. She did lower her
pants, exposing half of her legs. But then the accused pushed it forward down to
The above contentions of petitioner are not meritorious. Section 3 of Republic her knees and grabbed her legs. He told her to raise her shirt. Feeling as if she
Act 7877 provides: had lost control of the situation, she raised her shirt as instructed. Shocked, she
exclaimed, hala ka! because he tried to insert his hand into her panty. Accused
"SEC. 3. Work, Education or Training-related Sexual Harassment Defined. then held her abdomen, saying, you are like my daughter, Day! (Visayan word
Work, education or training-related sexual harassment is committed by an of endearment), and let the back of his palm touch her forehead, indicating the
employer, employee, manager, supervisor, agent of the employer, teacher, traditional way of making the young respect their elders. He again told her to
instructor, professor, coach, trainor, or any other person who, having authority, raise her shirt. Feeling embarrassed and uncomfortable, yet unsure whether she
influence or moral ascendancy over another in a work or training or education was entertaining malice, she raised her shirt up to her breast. He then fondled
environment, demands, requests or otherwise requires any sexual favor from her breast. Reacting, she impulsively lower her shirt and embraced her bar while
the other, regardless of whether the demand, request or requirement for silently asking God what was happening to her and asking the courage to resist
submission is accepted by the object of said Act. accuseds physical advances. After a short while, she asked him if there could be
a right place for physical examination where there would be many doctors. He
just exclaimed, so you like that there are many doctors! Then he asked her if
"(a) In a work-related or employment environment, sexual harassment is
she has tooth decay. Thinking that he was planning to kiss her, she answered
committed when:
that she has lots of decayed teeth. He advised her then to have them treated.
Finally, she informed him that she would not continue with the research. The
"(1) The sexual favor is made as a condition in the hiring or in the employment, accused retorted that complainant was entertaining malice and reminded her of
re-employment or continued employment of said individual, or in granting said what she earlier agreed; that she would not tell anybody about what happened.
individual favorable compensation, terms, conditions, promotions, or privileges; He then promised to give her P15,000.00 so that she could take the
or the refusal to grant the sexual favor results in limiting, segregating or examination. She was about to open the door of the car when he suddenly
classifying the employee which in any way would discriminate, deprive or grabbed her thigh, but this time, complainant instantly parried his hand with her
bag."4
While the City Mayor had the exclusive prerogative in appointing city personnel,
it should stand to reason, nevertheless, that a recommendation from petitioner
in the appointment of personnel in the municipal health office could carry good
weight. Indeed, petitioner himself would appear to have conveyed, by his words
and actions, an impression that he could facilitate Juliets employment. Indeed,
petitioner would not have been able to take undue liberalities on the person of
Juliet had it not been for his high position in the City Health Office of Cagayan de
Oro City. The findings of the Sandiganbayan were bolstered by the testimony of
Vivian Yu, petitioners secretary between 1979 to 1994, of Iryn Lago Salcedo,
Public Health Nurse II, and of Farah Dongallo y Alkuino, a city health nurse, all of
whom were said to have likewise been victims of perverse behavior by
petitioner.
"There are some observations which the Court would like to point out on the
evidence adduced by the defense, particularly in the Minutes of the meeting of
the Awards Committee, as testified to by witness Myrna Maagad on September
8, 1998.
"Second, why was Myrna Maagad in possession of the attendance logbook and
how was she able to personally bring the same in court when she testified on
September 8, 1998, when in fact, she admitted during her testimony that she
retired from the government service on December 1, 1997? Surely, Myrna
Maagad could not still be the custodian of the logbook when she testified.
"And finally, in the logbook, under the sub-heading, Others Present, the
attendance of those who attended was individually handwritten by the persons
concerned who wrote and signed their names. But in the case of Dr. Tiro and Dr.
Rico Jacutin, their names were handwritten by clerk Sylvia Tan-Nerry, not by Dr.
Tiro and Dr. Jacutin. However, Myrna Maagad testified that the logbook was
passed around to attending individuals inside the conference room."5
Most importantly, the Supreme Court is not a trier of facts, and the factual
findings of the Sandiganbayan must be respected by, if not indeed conclusive
upon, the tribunal,6 no cogent reasons having been sufficiently shown to now
hold otherwise. The assessment on the credibility of witnesses is a matter best
left to the trial court because of its unique position of being able to observe that
elusive and incommunicable evidence on the deportment of witnesses at the
stand, an opportunity that is denied the appellate court.7
SO ORDERED.