Dr. Meris thus filed on September 7, 1992 a complaint against Capitol and Dr.
Clemente for illegal dismissal and
1. Capitol Medical Center vs. Meris
Subject of the present appeal is the Court of Appeals Decision[1] dated February 15, 2002 reversing the NLRC
Resolution[2] dated January 19, 1999 and Labor Arbiter Decision[3] dated April 28, 1998 which both held that the closure
of the Industrial Service Unit of the
Capitol Medical Center, Inc., resulting to the termination of the services of herein respondent Dr. Cesar Meris as Chief
thereof, was valid.
On January 16, 1974, petitioner Capitol Medical Center, Inc. (Capitol) hired Dr. Cesar Meris (Dr. Meris),[4] one of its
stockholders,[5] as in charge of its Industrial Service Unit (ISU) at a monthly salary of P10,270.00.
Until the closure of the ISU on April 30, 1992,[6] Dr. Meris performed dual functions of providing medical services to
Capitols more than 500 employees and health workers as well as to employees and workers of companies having retainer
contracts with it.[7]
On March 31, 1992, Dr. Meris received from Capitols president and chairman of the board, Dr. Thelma Navarette-
Clemente (Dr. Clemente), a notice advising him of the managements decision to close or abolish the ISU and the
consequent termination of his services as Chief thereof, effective April 30, 1992.[8] The notice reads as follows:
March 31, 1992
Dr. Cesar E. Meris
Chief, Industrial Service Unit
Capitol Medical Center
Dear Dr. Meris:
Greetings!
Please be formally advised that the hospital management has decided to abolish CMCs Industrial
Service Unit as of April 30, 1992 in view of the almost extinct demand for direct medical
services by the private and semi-government corporations in providing health care for
their employees. Such a decision was arrived at, after considering the existing trend of
industrial companies allocating their health care requirements to Health Maintenance
Organizations (HMOs) or thru a tripartite arrangement with medical insurance carriers
and designated hospitals.
As a consequence thereof, all positions in the unit will be decommissioned at the same time industrial
services [are] deactivated. In that event, you shall be entitled to return to your private
practice as a consultant staff of the institution and will become eligible to receive your
retirement benefits as a former hospital employee. Miss Jane Telan on the other hand will
be transferred back to Nursing Service for reassignment at the CSR.
We wish to thank you for your long and faithful service to the institution and hope that our
partnership in health care delivery to our people will continue throughout the future. Best regards.
Very truly yours,
(SGD.) DR. THELMA NAVARETTE-CLEMENTE[9] (Emphasis and underscoring supplied)
Dr. Meris, doubting the reason behind the managements decision to close the ISU and believing that the ISU was not in
fact abolished as it continued to operate and offer services to the client companies with Dr. Clemente as its head and
the notice of closure was a mere ploy for his ouster in view of his refusal to retire despite Dr. Clementes previous
prodding for him to do so,[10] sought his reinstatement but it was unheeded.
reinstatement with claims for backwages, moral and exemplary damages, plus attorneys fees.[11]
Finding for Capitol and Dr. Clemente, the Labor Arbiter held that the abolition of the ISU was a valid and lawful exercise
of management prerogatives and there was convincing evidence to show that ISU was being operated at a loss.[12] The
decretal text of the decision reads:
WHEREFORE, judgment is hereby rendered dismissing the complaint. Respondents are however
ordered to pay complainant all sums due him under the hospital retirement plan.
SO ORDERED.[13] (Emphasis supplied)
On appeal by Dr. Meris, the National Labor Relations Commission (NLRC) modified the Labor Arbiters decision. It held
that in the exercise of Capitols management prerogatives, it had the right to close the ISU even if it was not suffering
business losses in light of Article 283 of the Labor Code and jurisprudence.[14]
And the NLRC set aside the Labor Arbiters directive for the payment of retirement benefits to Dr. Meris because he did
not retire. Instead, it ordered the payment of separation pay as provided under Article 283 as he was discharged due to
closure of ISU, to be charged against the retirement fund.[15]
Undaunted, Dr. Meris elevated the case to the Court of Appeals via petition for review[16] which, in the interest
of substantial justice, was treated as one for certiorari.[17]
Discrediting Capitols assertion that the ISU was operating at a loss as the evidence showed a continuous trend of increase
in its revenue for three years immediately preceding Dr. Meriss dismissal on April 30, 1992,[18] and finding that the ISUs
Analysis of Income and Expenses which was prepared long after Dr. Meriss dismissal, hence, not yet available, on or
before April 1992, was tainted with irregular entries, the appellate court held that Capitols evidence failed to meet the
standard of a sufficient and adequate proof of loss necessary to justify the abolition of the ISU.[19]
The appellate court went on to hold that the ISU was not in fact abolished, its operation and management having merely
changed hands from Dr. Meris to Dr. Clemente; and that there was a procedural lapse in terminating the services of Dr.
Meris, no written notice to the Department of Labor and Employment (DOLE) of the ISU abolition having been made,
thereby violating the requirement embodied in Article 283.[20]
The appellate court, concluding that Capitol failed to strictly comply with both procedural and substantive due process,
a condition sine qua non for the validity of a case of termination,[21] held that Dr. Meris was illegally dismissed. It
accordingly reversed the NLRC Resolution and disposed as follows:
IN VIEW OF ALL THE FOREGOING, the assailed resolutions of the NLRC are hereby set aside, and
another one entered
1 declaring illegal the dismissal of petitioner as Chief of the Industrial Service Unit of respondent
Medical Center;
2 ordering respondents to pay petitioner
a) backwages from the date of his separation in April 1992 until this decision has attained finality;
b) separation pay in lieu of reinstatement computed at the rate of one (1) month salary for every
year of service with a fraction of at least six (6) months being considered as one year;
c) other benefits due him or their money equivalent;
d) moral damages in the sum of P50,000.00;
e) exemplary damages in the sum of P50,000.00; and
f) attorneys fees of 10% of the total monetary award payable to petitioner.
1|ALBA - LABREL
 SO ORDERED.[22]
Hence, the present petition for review assigning to the appellate court the following errors:
I and unlimited in scope, the State has the right to determine whether an employers privilege is exercised in a manner
IN OVERTURNING THE FACTUAL FINDINGS AND CONCLUSIONS OF BOTH THE NATIONAL LABOR
RELATIONS COMMISSION (NLRC) AND THE LABOR ARBITER.
II
IN HOLDING, CONTRARY TO THE FINDINGS OF BOTH THE LABOR ARBITER AND THE NATIONAL
LABOR RELATIONS COMMISSION, THAT THE INDUSTRIAL UNIT (ISU) WAS NOT INCURRING
LOSSES AND THAT IT WAS NOT IN FACT ABOLISHED.
III
IN NOT UPHOLDING PETITIONERS MANAGEMENT PREROGATIVE TO ABOLISH THE INDUSTRIAL
SERVICE UNIT (ISU).
IV
IN REQUIRING PETITIONERS TO PAY RESPONDENT BACKWAGES AS WELL AS DAMAGES AND
ATTORNEYS FEES.[23]
Capitol questions the appellate courts deciding of the petition of Dr. Meris on the merits, instead of merely determining
whether the administrative bodies acted with grave abuse of discretion amounting to lack or excess of jurisdiction.
The province of a special civil action for certiorari under Rule 65, no doubt the appropriate mode of review by the Court
of Appeals of the NLRC decision,[24] is limited only to correct errors of jurisdiction or grave abuse of discretion amounting
to lack or excess of jurisdiction.[25] In light of the merits of Dr. Meris claim, however, the relaxation by the appellate
court of procedural technicality to give way to a substantive determination of a case, as this Court has held in several
cases,[26] to subserve the interest of justice, is in order.
Capitol argues that the factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, as
in the present case, should be accorded respect, even finality.[27]
For factual findings of the NLRC which affirm those of the Labor Arbiter to be accorded respect, if not finality, however,
the same must be sufficiently supported by evidence on record.[28] Where there is a showing that such findings are
devoid of support, or that the judgment is based on a misapprehension of facts,[29] the lower tribunals factual findings
will not be upheld.
As will be reflected in the following discussions, this Court finds that the Labor Arbiter and the NLRC overlooked some
material facts decisive of the instant controversy.
Capitol further argues that the appellate courts conclusion that the ISU was not incurring losses is arbitrary as it was
based solely on the supposed increase in revenues of the unit from 1989-1991, without taking into account the Analysis
of Income and Expenses of ISU from July 1, 1990 to July 1, 1991 which shows that the unit operated at a loss; [30] and
that the demand for the services of ISU became almost extinct in view of the affiliation of industrial establishments with
HMOs such as Fortunecare, Maxicare, Health Maintenance, Inc. and Philamcare and of tripartite arrangements with
medical insurance carriers and designated hospitals,[31] and the trend resulted in losses in the operation of the ISU.
Besides, Capitol stresses, the health care needs of the hospital employees had been taken over by other units without
added expense to it;[32] the appellate courts decision is at best an undue interference with, and curtailment of, the
exercise by an employer of its management prerogatives;[33] at the time of the closure of the ISU, Dr. Meris was already
eligible for retirement under the Capitols retirement plan; and the appellate court adverted to the alleged lack of notice
to the DOLE regarding Dr. Meriss dismissal but the latter never raised such issue in his appeal to the NLRC or even in
his petition for review before the Court of Appeals, hence, the latter did not have authority to pass on the matter.[34]
Work is a necessity that has economic significance deserving legal protection. The social justice and protection to labor
provisions in the Constitution dictate so.
Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable
return of capital. This mass of privileges comprises the so-called management prerogatives. Although they may be broad
that complies with the legal requirements and does not offend the protected rights of labor. One of the rights accorded
an employer is the right to close an establishment or undertaking.
The right to close the operation of an establishment or undertaking is explicitly recognized under the Labor Code as one
of the authorized causes in terminating employment of workers, the only limitation being that the closure must not be
for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code.
ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate
the employment of any employee due to the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the Ministry of Labor and mployment at
least one (1) month before the intended date thereof. In case of termination due to the installation
of labor saving devices or redundancy, the worker affected shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case retrenchment to prevent losses and in cases of closures or
cessation of
operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year. (Emphasis and underscoring supplied)
The phrase closures or cessation of operations of establishment or undertaking includes a partial or total closure or
cessation.[35]
x x x Ordinarily, the closing of a warehouse facility and the termination of the services of employees
there assigned is a matter that is left to the determination of the employer in the good faith exercise
of its management prerogatives. The applicable law in such a case is Article 283 of the Labor Code
which permits closure or cessation of operation of an establishment or undertaking not due to
serious business losses or financial reverses, which, in our reading includes both the complete
cessation of operations and the cessation of only part of a companys business. (Emphasis
supplied)
And the phrase closures or cessation x x x not due to serious business losses or financial reverses recognizes the right
of the employer to close or cease his business operations or undertaking even if he is not suffering from serious business
losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding to their
length of service.[36]
It would indeed be stretching the intent and spirit of the law if a court were to unjustly interfere in managements
prerogative to close or cease its business operations just because said business operation or undertaking is not suffering
from any loss.[37] As long as the companys exercise of the same is in good faith to advance its interest and not for
the purpose of defeating or circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld.[38]
Clearly then, the right to close an establishment or undertaking may be justified on grounds other than business
losses but it cannot be an unbridled prerogative to suit the whims of the employer.
The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in
character.[39] And the burden of proving such falls upon the employer.[40]
2|ALBA - LABREL
In the case at bar, Capitol failed to sufficiently prove its good faith in closing the ISU.
From the letter of Dr. Clemente to Dr. Meris, it is gathered that the abolition of the ISU was due to the almost extinct
demand for
direct medical service by the private and semi-government corporations in providing health care for their employees; and
that such extinct demand was brought about by the existing trend of industrial companies allocating their health care
requirements to Health Maintenance Organizations (HMOs) or thru a tripartite arrangement with medical insurance
carriers and designated hospitals.
The termination of the services of Dr. Meris not having been premised on a just or authorized cause, he is entitled to
either reinstatement or separation pay if reinstatement is no longer viable, and to backwages.
Reinstatement, however, is not feasible in case of a strained employer-employee relationship or when the work or
position formerly held by the dismissed employee no longer exists, as in the instant case.[47] Dr. Meris is thus entitled to
payment of separation pay at the rate of one (1) month salary for every year of his employment, with a fraction of at
least six (6) months being considered as one(1) year,[48] and full backwages from the time of his dismissal from April 30,
1992 until the expiration of his term as Chief of ISU or his mandatory retirement, whichever comes first.

The records of the case, however, fail to impress that there was indeed extinct demand for the medical services rendered The award by the appellate court of moral damages,[49] however, cannot be sustained, solely upon the premise that the
by the ISU. The ISUs Annual Report for the fiscal years 1986 to 1991, submitted by Dr. Meris to Dr. Clemente, employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant
and uncontroverted by Capitol, shows the following: the grant of moral damages under the Civil Code, such as that the act of dismissal was attended by bad faith or fraud,
or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and of course, that
Fiscal Year No. of Industrial No of No. of Capitol social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom.[50] Such circumstances, however, do not
Patients Companies Employees obtain in the instant case. More specifically on bad faith, lack of it is mirrored in Dr. Clementes offer to Dr. Meris to be
1986-1987 466 11 1445 a consultant of Capitol, despite the abolition of the ISU.
1987-1988 580 17 1707
1988-1989 676 14 1888 There being no moral damages, the award of exemplary damages does not lie.[51]
1989-1990 571 16 2731
1990-1991 759 18 2320[41] The award for attorneys fees, however, remains.[52]

If there was extinct demand for the ISU medical services as what Capitol and Dr. Clemente purport to convey, why the WHEREFORE, the decision of the Court of Appeals dated February 15, 2002 is
number of client companies of the ISU increased from 11 to 18 from 1986 to 1991, as well as the number of patients hereby AFFIRMED with MODIFICATION. As modified, judgment is hereby rendered ordering Capitol Medical Center,
from both industrial corporations and Capitol employees, they did not explain. Inc. to pay Dr. Cesar Meris separation pay at the rate of One (1) Month salary for every year of his employment, with a
fraction of at least Six (6) Months being considered as One (1) Year, full backwages from the time of his dismissal from
The Analysis of Income and Expenses adduced by Capitol showing that the ISU incurred losses from July 1990 to April 30, 1992 until the expiration of his term as Chief of the ISU or his mandatory retirement, whichever comes first;
February 1992, to wit: other benefits due him or their money equivalent; and attorneys fees.
Costs against petitioners. SO ORDERED.
July 1, 1990 to July 1, 1991 to
June 30, 1991 February 29, 1992

INCOME P16, 772.00 P35, 236.00

TOTAL EXPENSES P225, 583.70 P169,244.34

NET LOSS P(208,811.70) P(134,008.34),[42]

was prepared by its internal auditor Vicenta Fernandez,[43] a relative of Dr. Clemente, and not by an independent external
auditor, hence, not beyond doubt. It is the financial statements audited by independent external auditors which
constitute the normal method of proof of the profit and loss performance of a company.[44]

At all events, the claimed losses are contradicted by the accounting records of Capitol itself which show that ISU had
increasing revenue from 1989 to 1991.

Year In-Patient Out-Patient Total Income

1989 P230,316.38 P 79,477.50 P309,793.88

1990 P278,438.10 P124,256.65 P402,694.75
1991 P305,126.35 P152,920.15 P458,046.50[45]
The foregoing disquisition notwithstanding, as reflected above, the existence of business losses is not required to justify
the closure or cessation of establishment or undertaking as a ground to terminate employment of employees. Even if
the ISU were not incurring losses, its abolition or closure could be justified on other grounds like that proffered by Capitol
extinct demand. Capitol failed, however, to present sufficient and convincing evidence to support such claim of extinct
demand. In fact, the employees of Capitol submitted a petition[46] dated April 21, 1992 addressed to Dr. Clemente
opposing the abolition of the ISU.

The closure of ISU then surfaces to be contrary to the provisions of the Labor Code on termination of employment.

3|ALBA - LABREL

2. Danilo P. Javier vs. FlyAce Corporation
This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision[1] of the
Court of Appeals (CA) and its June 7, 2010 Resolution,[2]in CA-G.R. SP No. 109975, which reversed the May 28, 2009
Decision[3] of the National Labor Relations Commission (NLRC) in the case entitled Bitoy Javier v. Fly Ace/Flordelyn
Castillo,[4] holding that petitioner Bitoy Javier (Javier) was illegally dismissed from employment and ordering Fly Ace
Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor
standard benefits. He alleged that he was an employee of Fly Ace since September 2007, performing various tasks at
the respondents warehouse such as cleaning and arranging the canned items before their delivery to certain locations,
except in instances when he would be ordered to accompany the companys delivery vehicles, as pahinante; that he
reported for work from Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in the afternoon; that during
his employment, he was not issued an identification card and payslips by the company; that on May 6, 2008, he reported
for work but he was no longer allowed to enter the company premises by the security guard upon the instruction of
Ruben Ong (Mr. Ong), his superior;[5] that after several minutes of begging to the guard to allow him to enter, he saw
Ong whom he approached and asked why he was being barred from entering the premises; that Ong replied by
saying, Tanungin mo anak mo; [6] that he then went home and discussed the matter with his family; that he discovered
that Ong had been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City; that Annalyn
tried to talk to Ong and convince him to spare her father from trouble but he refused to accede; that thereafter, Javier
was terminated from his employment without notice; and that he was neither given the opportunity to refute the cause/s
of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was
a stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was subscribed before the
Labor Arbiter (LA).[7]
For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries.
Sometime in December 2007, Javier was contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an
agreed rate of ₱300.00 per trip, which was later increased to ₱325.00 in January 2008. Mr. Ong contracted Javier roughly
5 to 6 times only in a month whenever the vehicle of its contracted hauler, Milmar Hauling Services, was not
available. On April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he was their employee, Fly
Ace insisted that there was no illegal dismissal.[8] Fly Ace submitted a copy of its agreement with Milmar Hauling Services
and copies of acknowledgment receipts evidencing payment to Javier for his contracted services bearing the words, daily
manpower (pakyaw/piece rate pay) and the latters signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to
present proof that he was a regular employee of Fly Ace. He wrote:
Complainant has no employee ID showing his employment with the Respondent nor any
document showing that he received the benefits accorded to regular employees of the Respondents.
His contention that Respondent failed to give him said ID and payslips implies that indeed he was
not a regular employee of Fly Ace considering that complainant was a helper and that Respondent
company has contracted a regular trucking for the delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in the importation and sales
of groceries. Since there is a regular hauler to deliver its products, we give credence to Respondents
claim that complainant was contracted on pakiao basis.
As to the claim for underpayment of salaries, the payroll presented by the Respondents
showing salaries of workers on pakiao basis has evidentiary weight because although the signature
of the complainant appearing thereon are not uniform, they appeared to be his true signature.
xxxx
Hence, as complainant received the rightful salary as shown by the above described
payrolls, Respondents are not liable for salary differentials. [9]
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and
immediately concluded that he was not a regular employee simply because he failed to present proof. It was of the view
that a pakyaw-basis arrangement did not preclude the existence of employer-employee relationship. Payment by result
x x x is a method of compensation and does not define the essence of the relation. It is a mere method of computing
compensation, not a basis for determining the existence or absence of an employer-employee relationship.[10] The NLRC
further averred that it did not follow that a worker was a job contractor and not an employee, just because the work he
was doing was not directly related to the employers trade or business or the work may be considered as extra helper as
in this case; and that the relationship of an employer and an employee was determined by law and the same would
prevail whatever the parties may call it. In this case, the NLRC held that substantial evidence was sufficient basis for
judgment on the existence of the employer-employee relationship. Javier was a regular employee of Fly Ace because
there was reasonable connection between the particular activity performed by the employee (as a pahinante) in relation
to the usual business or trade of the employer (importation, sales and delivery of groceries). He may not be considered
as an independent contractor because he could not exercise any judgment in the delivery of company products. He was
only engaged as a helper.
Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For failing
to present proof of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of Javier who
was likewise entitled to backwages and separation pay in lieu of reinstatement. The NLRC thus ordered:
WHEREFORE, premises considered, complainants appeal is partially GRANTED. The
assailed Decision of the labor arbiter is VACATED and a new one is hereby entered holding
respondent FLY ACE CORPORATION guilty of illegal dismissal and non-payment of 13th month pay.
Consequently, it is hereby ordered to pay complainant DANILO Bitoy JAVIER the following:
1. Backwages -₱45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -₱59,854.16
All other claims are dismissed for lack of merit.SO ORDERED.[11]
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace
and reinstated the dismissal of Javiers complaint as ordered by the LA. The CA exercised its authority to make its own
factual determination anent the issue of the existence of an employer-employee relationship between the
parties.According to the CA:
xxx
In an illegal dismissal case the onus probandi rests on the employer to prove that its
dismissal was for a valid cause. However, before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established. x x x it is incumbent upon private
respondent to prove the employee-employer relationship by substantial evidence.
xxx
It is incumbent upon private respondent to prove, by substantial evidence, that he is an
employee of petitioners, but he failed to discharge his burden. The non-issuance of a company-
issued identification card to private respondent supports petitioners contention that private
respondent was not its employee.[12]
4|ALBA - LABREL
The CA likewise added that Javiers failure to present salary vouchers, payslips, or other pieces of evidence to bolster
his contention, pointed to the inescapable conclusion that he was not an employee of Fly Ace. Further, it found that
Javiers work was not necessary and desirable to the business or trade of the company, as it was only when there were
scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace would contract the services of Javier
as an extra helper. Lastly, the CA declared that the facts alleged by Javier did not pass the control test.
He contracted work outside the company premises; he was not required to observe definite hours of work; he was not
required to report daily; and he was free to accept other work elsewhere as there was no exclusivity of his contracted
service to the company, the same being co-terminous with the trip only.[13] Since no substantial evidence was presented
to establish an employer-employee relationship, the case for illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PETITIONER WAS NOT A REGULAR EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PETITIONER IS NOT ENTITLED TO HIS MONETARY CLAIMS.[14]
The petitioner contends that other than its bare allegations and self-serving affidavits of the other employees,
Fly Ace has nothing to substantiate its claim that Javier was engaged on a pakyaw basis. Assuming that Javier was
indeed hired on a pakyaw basis, it does not preclude his regular employment with the company. Even the
acknowledgment receipts bearing his signature and the confirming receipt of his salaries will not show the true nature
of his employment as they do not reflect the necessary details of the commissioned task. Besides, Javiers tasks
as pahinante are related, necessary and desirable to the line of business by Fly Ace which is engaged in the importation
and sale of grocery items. On days when there were no scheduled deliveries, he worked in petitioners warehouse,
arranging and cleaning the stored cans for delivery to clients.[15] More importantly, Javier was subject to the control and
supervision of the company, as he was made to report to the office from Monday to Saturday, from 7:00 oclock in the
morning until 5:00 oclock in the afternoon. The list of deliverable goods, together with the corresponding clients and
their respective purchases and addresses, would necessarily have been prepared by Fly Ace. Clearly, he was subjected
to compliance with company rules and regulations as regards working hours, delivery schedule and output, and his other
duties in the warehouse.[16]
The petitioner chiefly relied on Chavez v. NLRC,[17] where the Court ruled that payment to a worker on a per
trip basis is not significant because this is merely a method of computing compensation and not a basis for determining
the existence of employer-employee relationship. Javier likewise invokes the rule that, in controversies between a laborer
and his master, x x x doubts reasonably arising from the evidence should be resolved in the formers favour. The policy
is reflected is no less than the Constitution, Labor Code and Civil Code.[18]
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latters failure
to observe substantive and procedural due process. Since his dismissal was not based on any of the causes recognized
by law, and was implemented without notice, Javier is entitled to separation pay and backwages.
In its Comment,[19] Fly Ace insists that there was no substantial evidence to prove employer-employee
relationship. Having a service contract with Milmar Hauling Services for the purpose of transporting and delivering
company products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere per trip basis. Javier,
who was actually a loiterer in the area, only accompanied and assisted the company driver when Milmar could not deliver
or when the exigency of extra deliveries arises for roughly five to six times a month. Before making a delivery, Fly Ace
would turn over to the driver and Javier the delivery vehicle with its loaded company products. With the vehicle and
products in their custody, the driver and Javier would leave the company premises using their own means, method, best
judgment and discretion on how to deliver, time to deliver, where and [when] to start, and manner of delivering the
products.[20]
Fly Ace dismisses Javiers claims of employment as baseless assertions. Aside from his bare allegations, he
presented nothing to substantiate his status as an employee. It is a basic rule of evidence that each party must prove
his affirmative allegation. If he claims a right granted by law, he must prove his claim by competent evidence, relying
on the strength of his own evidence and not upon the weakness of his opponent.[21] Invoking the case of Lopez v.
Bodega City,[22] Fly Ace insists that in an illegal dismissal case, the burden of proof is upon the complainant who claims
to be an employee. It is essential that an employer-employee relationship be proved by substantial evidence. Thus, it
cites:
In an illegal dismissal case, the onus probandi rests on the employer to prove that its
dismissal of an employee was for a valid cause. However, before a case for illegal dismissal can
prosper, an employer-employee relationship must first be established.
Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, which are
unfortunately not supported by proof, documentary or otherwise.[23] Javier simply assumed that he was an employee of
Fly Ace, absent any competent or relevant evidence to support it. He performed his contracted work outside the premises
of the respondent; he was not even required to report to work at regular hours; he was not made to register his time in
and time out every time he was contracted to work; he was not subjected to any disciplinary sanction imposed to other
employees for company violations; he was not issued a company I.D.; he was not accorded the same benefits given to
other employees; he was not registered with the Social Security System (SSS) as petitioners employee; and, he was free
to leave, accept and engage in other means of livelihood as there is no exclusivity of his contracted services with the
petitioner, his services being co-terminus with the trip only. All these lead to the conclusion that petitioner is not an
employee of the respondents.[24]
Moreover, Fly Ace claims that it had no right to control the result, means, manner and methods by which Javier
would perform his work or by which the same is to be accomplished.[25] In other words, Javier and the company driver
were given a free hand as to how they would perform their contracted services and neither were they subjected to
definite hours or condition of work.
Fly Ace likewise claims that Javiers function as a pahinante was not directly related or necessary to its principal
business of importation and sales of groceries. Even without Javier, the business could operate its usual course as it did
not involve the business of inland transportation. Lastly, the acknowledgment receipts bearing Javiers signature and
words pakiao rate, referring to his earned salaries on a per trip basis, have evidentiary weight that the LA correctly
considered in arriving at the conclusion that Javier was not an employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged illegal dismissal is anchored on the existence of an employer-
employee relationship between him and Fly Ace. This is essentially a question of fact. Generally, the Court does not
review errors that raise factual questions. However, when there is conflict among the factual findings of the antecedent
deciding bodies like the LA, the NLRC and the CA, it is proper, in the exercise of Our equity jurisdiction, to review and
re-evaluate the factual issues and to look into the records of the case and re-examine the questioned findings.[26] In
dealing with factual issues in labor cases, substantial evidence that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion is sufficient.[27]
As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as wanting and
deficient. The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of Procedure of the
NLRC[28] allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a
complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and
objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license to
completely discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied. Hence,
when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to determine
which party deserves credence on the basis of evidence received, subject only to the requirement that their decision
must be supported by substantial evidence.[29] Accordingly, the petitioner needs to show by substantial evidence that he
was indeed an employee of the company against which he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese.
It is, therefore, incumbent upon the Court to determine whether the party on whom the burden to prove lies was able
to hurdle the same. No particular form of evidence is required to prove the existence of such employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence, while no particular
5|ALBA - LABREL
form of evidence is required, a finding that such relationship exists must still rest on some substantial evidence. Moreover,
the substantiality of the evidence depends on its quantitative as well as its qualitative aspects.[30]Although substantial
evidence is not a function of quantity but rather of quality, the x x x circumstances of the instant case demand that
something more should have been proffered. Had there been other proofs of employment, such as x x x inclusion in
petitioners payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-employee
relationship.[31]
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such
claim by the requisite quantum of evidence.[32] Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto x x x.[33] Sadly, Javier failed to adduce substantial evidence as basis for the grant of
relief.
In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By
way of evidence on this point, all that Javier presented were his self-serving statements purportedly showing his activities
as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his claim. Hence, the
Court sees no reason to depart from the findings of the CA.
relations. Nor does the fact that the petitioner is not covered by the SSS affect the employer-employee
relationship. However, in determining whether the relationship is that of employer and employee or one of an
independent contractor, each case must be determined on its own facts and all the features of the relationship are to
be considered.[38] Unfortunately for Javier, the attendant facts and circumstances of the instant case do not provide the
Court with sufficient reason to uphold his claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has
its rights which are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for the less
privileged in life, the Court has inclined, more often than not, toward the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.[39]
WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June 7,
2010 Resolution, in CA-G.R. SP No. 109975, are hereby AFFIRMED.
SO ORDERED.

While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in
the company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other proof was
submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in strengthening
Javiers cause. In said document, all Valenzuela attested to was that he would frequently see Javier at the workplace
where the latter was also hired as stevedore.[34]Certainly, in gauging the evidence presented by Javier, the Court cannot
ignore the inescapable conclusion that his mere presence at the workplace falls short in proving employment therein.
The supporting affidavit could have, to an extent, bolstered Javiers claim of being tasked to clean grocery items when
there were no scheduled delivery trips, but no information was offered in this subject simply because the witness had
no personal knowledge of Javiers employment status in the company. Verily, the Court cannot accept Javiers statements,
hook, line and sinker.

The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to
determine the existence of an employer-employee relationship, viz: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. Of these
elements, the most important criterion is whether the employer controls or has reserved the right to control the employee
not only as to the result of the work but also as to the means and methods by which the result is to be accomplished.[35]

In this case, Javier was not able to persuade the Court that the above elements exist in his case. He could not
submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as an
employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javiers allegations
did not establish that his relationship with Fly Ace had the attributes of an employer-employee relationship on the basis
of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an agreement
with a hauling company to undertake the delivery of its goods. It was also baffling to realize that Javier did not dispute
Fly Aces denial of his services exclusivity to the company. In short, all that Javier laid down were bare allegations without
corroborative proof.

Fly Ace does not dispute having contracted Javier and paid him on a per trip rate as a stevedore, albeit on
a pakyaw basis. The Court cannot fail to note that Fly Ace presented documentary proof that Javier was indeed paid on
a pakyaw basis per the acknowledgment receipts admitted as competent evidence by the LA. Unfortunately for Javier,
his mere denial of the signatures affixed therein cannot automatically sway us to ignore the documents because forgery
cannot be presumed and must be proved by clear, positive and convincing evidence and the burden of proof lies on the
party alleging forgery.[36]

Considering the above findings, the Court does not see the necessity to resolve the second issue presented.

One final note. The Courts decision does not contradict the settled rule that payment by the piece is just a
method of compensation and does not define the essence of the relation.[37] Payment on a piece-rate basis does not
negate regular employment. The term wage is broadly defined in Article 97 of the Labor Code as remuneration or
earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or
commission basis. Payment by the piece is just a method of compensation and does not define the essence of the

6|ALBA - LABREL
 3. Bernard A. Tenazas vs. R. Villegas Taxi Transport
This is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court, assailing the Decision2 dated March
11, 2010 and Resolution3 dated June 28, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 111150, which affirmed
with modification the Decision4 dated June 23, 2009 of the National Labor Relations Commission (NLRC) in NLRC LAC
Case No. 07-002648-08.
The Antecedent Facts
On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. Francisco (Francisco) filed a complaint for illegal dismissal
against R. Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas (Andy) (respondents). At that
time, a similar case had already been filed by Isidro G. Endraca (Endraca) against the same respondents. The two (2)
cases were subsequently consolidated.5
In their position paper,6 Tenazas, Francisco and Endraca (petitioners) alleged that they were hired and dismissed by the
respondents on the following dates:
Name Date of Hiring Date of Dismissal Salary
Bernard A. Tenazas 10/1997 07/03/07 Boundary System
Jaime M. Francisco 04/10/04 06/04/07 Boundary System
Isidro G. Endraca 04/2000 03/06/06 Boundary System7
Relaying the circumstances of his dismissal, Tenazas alleged that on July 1, 2007, the taxi unit assigned to him was
sideswiped by another vehicle, causing a dent on the left fender near the driver seat. The cost of repair for the damage
was estimated at ₱500.00. Upon reporting the incident to the company, he was scolded by respondents Romualdo and
Andy and was told to leave the garage for he is already fired. He was even threatened with physical harm should he
ever be seen in the company’s premises again. Despite the warning, Tenazas reported for work on the following day but
was told that he can no longer drive any of the company’s units as he is already fired.8
Francisco, on the other hand, averred that his dismissal was brought about by the company’s unfounded suspicion that
he was organizing a labor union. He was instantaneously terminated, without the benefit of procedural due process, on
June 4, 2007.9
Endraca, for his part, alleged that his dismissal was instigated by an occasion when he fell short of the required boundary
for his taxi unit. He related that before he was dismissed, he brought his taxi unit to an auto shop for an urgent repair.
He was charged the amount of ₱700.00 for the repair services and the replacement parts. As a result, he was not able
to meet his boundary for the day. Upon returning to the company garage and informing the management of the incident,
his driver’s license was confiscated and was told to settle the deficiency in his boundary first before his license will be
returned to him. He was no longer allowed to drive a taxi unit despite his persistent pleas.10
For their part, the respondents admitted that Tenazas and Endraca were employees of the company, the former being
a regular driver and the latter a spare driver. The respondents, however, denied that Francisco was an employee of the
company or that he was able to drive one of the company’s units at any point in time.11
The respondents further alleged that Tenazas was never terminated by the company. They claimed that on July 3, 2007,
Tenazas went to the company garage to get his taxi unit but was informed that it is due for overhaul because of some
mechanical defects reported by the other driver who takes turns with him in using the same. He was thus advised to
wait for further notice from the company if his unit has already been fixed. On July 8, 2007, however, upon being
informed that his unit is ready for release, Tenazas failed to report back to work for no apparent reason.12
As regards Endraca, the respondents alleged that they hired him as a spare driver in February 2001. They allow him to
drive a taxi unit whenever their regular driver will not be able to report for work. In July 2003, however, Endraca stopped
reporting for work without informing the company of his reason. Subsequently, the respondents learned that a complaint
for illegal dismissal was filed by Endraca against them. They strongly maintained, however, that they could never have
terminated Endraca in March 2006 since he already stopped reporting for work as early as July 2003. Even then, they
expressed willingness to accommodate Endraca should he wish to work as a spare driver for the company again since
he was never really dismissed from employment anyway.13
On May 29, 2008, the petitioners, by registered mail, filed a Motion to Admit Additional Evidence. 14 They alleged that
after diligent efforts, they were able to discover new pieces of evidence that will substantiate the allegations in their
position paper. Attached with the motion are the following: (a) Joint Affidavit of the petitioners; 15 (2) Affidavit of Good
Faith of Aloney Rivera, a co-driver;16 (3) pictures of the petitioners wearing company shirts;17 and (4) Tenazas’
Certification/Record of Social Security System (SSS) contributions.18
The Ruling of the Labor Arbiter
On May 30, 2008, the Labor Arbiter (LA) rendered a Decision,19 which pertinently states, thus:
In the case of complainant Jaime Francisco, respondents categorically denied the existence of an employer-employee
relationship. In this situation, the burden of proof shifts to the complainant to prove the existence of a regular
employment. Complainant Francisco failed to present evidence of regular employment available to all regular employees,
such as an employment contract, company ID, SSS, withholding tax certificates, SSS membership and the like.
In the case of complainant Isidro Endraca, respondents claim that he was only an extra driver who stopped reporting to
queue for available taxi units which he could drive. In fact, respondents offered him in their Position Paper on record,
immediate reinstatement as extra taxi driver which offer he refused.
In case of Bernard Tenazas, he was told to wait while his taxi was under repair but he did not report for work after the
taxi was repaired. Respondents[,] in their Position Paper, on record likewise, offered him immediate reinstatement,
which offer he refused.
We must bear in mind that the complaint herein is one of actual dismissal. But there was no formal investigations, no
show cause memos, suspension memos or termination memos were never issued. Otherwise stated, there is no proof
of overt act of dismissal committed by herein respondents.
We are therefore constrained to rule that there was no illegal dismissal in the case at bar.
The situations contemplated by law for entitlement to separation pay does [sic] not apply.
WHEREFORE, premises considered, instant consolidated complaints are hereby dismissed for lack of merit.
SO ORDERED.20
The Ruling of the NLRC
Unyielding, the petitioners appealed the decision of the LA to the NLRC. Subsequently, on June 23, 2009, the NLRC
rendered a Decision,21 reversing the appealed decision of the LA, holding that the additional pieces of evidence belatedly
submitted by the petitioners sufficed to establish the existence of employer-employee relationship and their illegal
dismissal. It held, thus:
In the challenged decision, the Labor Arbiter found that it cannot be said that the complainants were illegally dismissed,
there being no showing, in the first place, that the respondent [sic] terminated their services. A portion thereof reads:
"We must bear in mind that the complaint herein is one of actual dismissal. But there were no formal investigations, no
show cause memos, suspension memos or termination memos were never issued. Otherwise stated, there is no proof
of overt act of dismissal committed by herein respondents.
We are therefore constrained to rule that there was no illegal dismissal in the case at bar."
Issue: [W]hether or not the complainants were illegally dismissed from employment.
It is possible that the complainants’ Motion to Admit Additional Evidence did not reach the Labor Arbiter’s attention
because he had drafted the challenged decision even before they submitted it, and thereafter, his staff attended only to
clerical matters, and failed to bring the motion in question to his attention. It is now up to this Commission to consider
the complainants’ additional evidence. Anyway, if this Commission must consider evidence submitted for the first time
on appeal (Andaya vs. NLRC, G.R. No. 157371, July 15, 2005), much more so must it consider evidence that was simply
overlooked by the Labor Arbiter.
Among the additional pieces of evidence submitted by the complainants are the following: (1) joint affidavit (records, p.
51-52) of the three (3) complainants; (2) affidavit (records, p. 53) of Aloney Rivera y Aldo; and (3) three (3) pictures
(records, p. 54) referred to by the complainant in their joint affidavit showing them wearing t-shirts bearing the name
and logo of the respondent’s company.
xxxx
WHEREFORE, the decision appealed from is hereby REVERSED. Respondent Rom[u]aldo Villegas doing business under
the name and style Villegas Taxi Transport is hereby ordered to pay the complainants the following (1) full backwages
from the date of their dismissal (July 3, 2007 for Tena[z]as, June 4, 2004 for Francisco, and March 6, 2006 for Endraca[)]
up to the date of the finality of this decision[;] (2) separation pay equivalent to one month for every year of service; and
(3) attorney’s fees equivalent to ten percent (10%) of the total judgment awards.
SO ORDERED.22
On July 24, 2009, the respondents filed a motion for reconsideration but the NLRC denied the same in its
Resolution23 dated September 23, 2009.
The Ruling of the CA
Unperturbed, the respondents filed a petition for certiorari with the CA. On March 11, 2010, the CA rendered a
Decision,24 affirming with modification the Decision dated June 23, 2009 of the NLRC. The CA agreed with the NLRC’s
finding that Tenazas and Endraca were employees of the company, but ruled otherwise in the case of Francisco for
failing to establish his relationship with the company. It also deleted the award of separation pay and ordered for
reinstatement of Tenazas and Endraca. The pertinent portions of the decision read as follows:
7|ALBA - LABREL
At the outset, We declare that respondent Francisco failed to prove that an employer-employee relationship exists
between him and R. Transport. If there is no employer-employee relationship in the first place, the duty of R. Transport
to adhere to the labor standards provisions of the Labor Code with respect to Francisco is questionable.
xxxx
Although substantial evidence is not a function of quantity but rather of quality, the peculiar environmental circumstances
of the instant case demand that something more should have been proffered. Had there been other proofs of
employment, such as Francisco’s inclusion in R.R.
Transport’s payroll, this Court would have affirmed the finding of employer-employee relationship.1âwphi1 The NLRC,
therefore, committed grievous error in ordering R. Transport to answer for Francisco’s claims.
We now tackle R. Transport’s petition with respect to Tenazas and Endraca, who are both admitted to be R. Transport’s
employees. In its petition, R. Transport puts forth the theory that it did not terminate the services of respondents but
that the latter deliberately abandoned their work. We cannot subscribe to this theory.
xxxx
Considering that the complaints for illegal dismissal were filed soon after the alleged dates of dismissal, it cannot be
inferred that respondents Tenazas and Endraca intended to abandon their employment. The complainants for dismissal
are, in themselves, pleas for the continuance of employment. They are incompatible with the allegation of abandonment.
x x x.
For R. Transport’s failure to discharge the burden of proving that the dismissal of respondents Tenazas and Endraca was
for a just cause, We are constrained to uphold the NLRC’s conclusion that their dismissal was not justified and that they
are entitled to back wages. Because they were illegally dismissed, private respondents Tenazas and Endraca are entitled
to reinstatement and back wages x x x.
xxxx
However, R. Transport is correct in its contention that separation pay should not be awarded because reinstatement is
still possible and has been offered. It is well[-]settled that separation pay is granted only in instances where
reinstatement is no longer feasible or appropriate, which is not the case here.
xxxx
WHEREFORE, the Decision of the National Labor Relations Commission dated 23 June 2009, in NLRC LAC Case No. 07-
002648-08, and its Resolution dated 23 September 2009 denying reconsideration thereof are AFFIRMED with
MODIFICATION in that the award of Jaime Francisco’s claims is DELETED. The separation pay granted in favor of Bernard
Tenazas and Isidro Endraca is, likewise, DELETED and their reinstatement is ordered instead.
SO ORDERED.25 (Citations omitted)
On March 19, 2010, the petitioners filed a motion for reconsideration but the same was denied by the CA in its
Resolution26 dated June 28, 2010.
Undeterred, the petitioners filed the instant petition for review on certiorari before this Court on July 15, 2010.
The Ruling of this Court
The petition lacks merit.
Pivotal to the resolution of the instant case is the determination of the existence of employer-employee relationship and
whether there was an illegal dismissal. Remarkably, the LA, NLRC and the CA had varying assessment on the matters at
hand. The LA believed that, with the admission of the respondents, there is no longer any question regarding the status
of both Tenazas and Endraca being employees of the company. However, he ruled that the same conclusion does not
hold with respect to Francisco whom the respondents denied to have ever employed or known. With the respondents’
denial, the burden of proof shifts to Francisco to establish his regular employment. Unfortunately, the LA found that
Francisco failed to present sufficient evidence to prove regular employment such as company ID, SSS membership,
withholding tax certificates or similar articles. Thus, he was not considered an employee of the company. Even then, the
LA held that Tenazas and Endraca could not have been illegally dismissed since there was no overt act of dismissal
committed by the respondents.27
On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners were all employees of the company.
The NLRC premised its conclusion on the additional pieces of evidence belatedly submitted by the petitioners, which it
supposed, have been overlooked by the LA owing to the time when it was received by the said office. It opined that the
said pieces of evidence are sufficient to establish the circumstances of their illegal termination. In particular, it noted
that in the affidavit of the petitioners, there were allegations about the company’s practice of not issuing employment
records and this was not rebutted by the respondents. It underscored that in a situation where doubt exists between
evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee. It
awarded the petitioners with: (1) full backwages from the date of their dismissal up to the finality of the decision; (2)
separation pay equivalent to one month of salary for every year of service; and (3) attorney’s fees.
On petition for certiorari, the CA affirmed with modification the decision of the NLRC, holding that there was indeed an
illegal dismissal on the part of Tenazas and Endraca but not with respect to Francisco who failed to present substantial
evidence, proving that he was an employee of the respondents. The CA likewise dismissed the respondents’ claim that
Tenazas and Endraca abandoned their work, asseverating that immediate filing of a complaint for illegal dismissal and
persistent pleas for continuance of employment are incompatible with abandonment. It also deleted the NLRC’s award
of separation pay and instead ordered that Tenazas and Endraca be reinstated.28
"Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the
Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of
are completely devoid of support from the evidence on record, or the assailed judgment is based on a gross
misapprehension of facts."29 The Court finds that none of the mentioned circumstances is present in this case.
In reviewing the decision of the NLRC, the CA found that no substantial evidence was presented to support the conclusion
that Francisco was an employee of the respondents and accordingly modified the NLRC decision. It stressed that with
the respondents’ denial of employer-employee relationship, it behooved Francisco to present substantial evidence to
prove that he is an employee before any question on the legality of his supposed dismissal becomes appropriate for
discussion. Francisco, however, did not offer evidence to substantiate his claim of employment with the respondents.
Short of the required quantum of proof, the CA correctly ruled that the NLRC’s finding of illegal dismissal and the
monetary awards which necessarily follow such ruling lacked factual and legal basis and must therefore be deleted.
The action of the CA finds support in Anonas Construction and Industrial Supply Corp., et al. v. NLRC, et al.,30where the
Court reiterated:
[J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65, as a general rule, is confined only to
issues of lack or excess of jurisdiction and grave abuse of discretion on the part of the NLRC. The CA does not assess
and weigh the sufficiency of evidence upon which the LA and the NLRC based their conclusions. The issue is limited to
the determination of whether or not the NLRC acted without or in excess of its jurisdiction, or with grave abuse of
discretion in rendering the resolution, except if the findings of the NLRC are not supported by substantial
evidence.31 (Citation omitted and emphasis ours)
It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial proceedings, "the quantum of
proof necessary is substantial evidence, or such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion."32 "[T]he burden of proof rests upon the party who asserts the affirmative of an
issue."33 Corollarily, as Francisco was claiming to be an employee of the respondents, it is incumbent upon him to proffer
evidence to prove the existence of said relationship.
"[I]n determining the presence or absence of an employer-employee relationship, the Court has consistently looked for
the following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the
work is accomplished. The last element, the so-called control test, is the most important element."34
There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence to
prove the relationship may be admitted. Identification cards, cash vouchers, social security registration, appointment
letters or employment contracts, payrolls, organization charts, and personnel lists, serve as evidence of employee
status.35
In this case, however, Francisco failed to present any proof substantial enough to establish his relationship with the
respondents. He failed to present documentary evidence like attendance logbook, payroll, SSS record or any personnel
file that could somehow depict his status as an employee. Anent his claim that he was not issued with employment
records, he could have, at least, produced his social security records which state his contributions, name and address of
his employer, as his co-petitioner Tenazas did. He could have also presented testimonial evidence showing the
respondents’ exercise of control over the means and methods by which he undertakes his work. This is imperative in
light of the respondents’ denial of his employment and the claim of another taxi operator, Emmanuel Villegas (Emmanuel),
that he was his employer. Specifically, in his Affidavit,36 Emmanuel alleged that Francisco was employed as a spare driver
in his taxi garage from January 2006 to December 2006, a fact that the latter failed to deny or question in any of the
pleadings attached to the records of this case. The utter lack of evidence is fatal to Francisco’s case especially in cases
like his present predicament when the law has been very lenient in not requiring any particular form of evidence or
manner of proving the presence of employer-employee relationship.
In Opulencia Ice Plant and Storage v. NLRC,37 this Court emphasized, thus:
No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent
and relevant evidence to prove the relationship may be admitted. For, if only documentary evidence would be required
to show that relationship, no scheming employer would ever be brought before the bar of justice, as no employer would
wish to come out with any trace of the illegality he has authored considering that it should take much weightier proof
to invalidate a written instrument.38
Here, Francisco simply relied on his allegation that he was an employee of the company without any other evidence
supporting his claim. Unfortunately for him, a mere allegation in the position paper is not tantamount to evidence.39Bereft
of any evidence, the CA correctly ruled that Francisco could not be considered an employee of the respondents.
8|ALBA - LABREL
The CA’s order of reinstatement of Tenazas and Endraca, instead of the payment of separation pay, is also well in
accordance with prevailing jurisprudence. In Macasero v. Southern Industrial Gases Philippines,40 the Court reiterated,
thus:
[A]n illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.1âwphi1 The two reliefs
provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled
to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.
The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement.
Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year
of service should be awarded as an alternative. The payment of separation pay is in addition to payment of
backwages.41 (Emphasis supplied)
Clearly, it is only when reinstatement is no longer feasible that the payment of separation pay is ordered in lieu thereof.
For instance, if reinstatement would only exacerbate the tension and strained relations between the parties, or where
the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable
differences, it would be more prudent to order payment of separation pay instead of reinstatement.42
This doctrine of strained relations, however, should not be used recklessly or applied loosely43 nor be based on impression
alone. "It bears to stress that reinstatement is the rule and, for the exception of strained relations to apply, it should be
proved that it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely
affect the efficiency and productivity of the employee concerned."44
Moreover, the existence of strained relations, it must be emphasized, is a question of fact. In Golden Ace Builders v.
Talde,45 the Court underscored:
Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence—substantial
evidence to show that the relationship between the employer and the employee is indeed strained as a necessary
consequence of the judicial controversy.46 (Citations omitted and emphasis ours)
After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of separation pay to the
petitioners. The NLRC decision did not state the facts which demonstrate that reinstatement is no longer a feasible
option that could have justified the alternative relief of granting separation pay instead.
The petitioners themselves likewise overlooked to allege circumstances which may have rendered their reinstatement
unlikely or unwise and even prayed for reinstatement alongside the payment of separation pay in their position paper.47 A
bare claim of strained relations by reason of termination is insufficient to warrant the granting of separation pay. Likewise,
the filing of the complaint by the petitioners does not necessarily translate to strained relations between the parties. As
a rule, no strained relations should arise from a valid and legal act asserting one’s right.48 Although litigation may also
engender a certain degree of hostility, the understandable strain in the parties’ relation would not necessarily rule out
reinstatement which would, otherwise, become the rule rather the exception in illegal dismissal cases. 49 Thus, it was a
prudent call for the CA to delete the award of separation pay and order for reinstatement instead, in accordance with
the general rule stated in Article 27950 of the Labor Code.
Finally, the Court finds the computation of the petitioners' backwages at the rate of ₱800.00 daily reasonable and just
under the circumstances. The said rate is consistent with the ruling of this Court in Hyatt Taxi Services, Inc. v.
Catinoy,51 which dealt with the same matter.
WHEREFORE, in view of the foregoing disquisition, the petition for review on certiorari is DENIED. The Decision dated
March 11, 2010 and Resolution dated June 28, 2010 of the Court of Appeals in CA-G.R. SP No. 111150 are AFFIRMED.
SO ORDERED.

9|ALBA - LABREL
 4. Alilem Credit Cooperative vs. Bandiola case of a married employee who sleeps with or has illicit relations with another married person for in such case, the
employee sullies not only the reputation of his spouse and his family but the reputation as well of the spouse of his
paramour and the latter’s family.21 As opposed to respondent’s claim that the accusation is a mere fabrication of some
This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Alilem Credit Cooperative,
of the directors or cooperative members who were allegedly envious of his growing popularity, the LA gave more
Inc. against respondent Salvador M. Bandiola, Jr. assailing the Court of Appeals (CA) Decision1 dated January 16, 2006
credence to the testimonies of petitioner’s witnesses who were relatives of Thelma and who had no motive to falsely
and Resolution2 dated July 5, 2006 in CAG. R. SP No. 64554.
testify because their family reputation was likewise at a risk of being tarnished.22 The LA, thus, found respondent to
The case stemmed from the following facts:
have been validly dismissed from employment for violation of the cooperative’s Personnel Policy, specifically "the
Respondent was employed by petitioner as bookkeeper. Petitioner's Board of Directors (the Board) received a letter from
commission of acts that bring discredit to the cooperative organization, especially, but not limited to conviction of any
a certain Napoleon Gao-ay (Napoleon) reporting the alleged immoral coaduct and unbecoming behavior of respondent
crime, illicit marital affairs, scandalous acts inimical to established and accepted social mores." The LA also found no
by having an illicit relationship with Napoleon’s sister, Thelma G. Palma (Thelma). This prompted the Board to conduct
violation of respondent’s right to due process as he was given ample opportunity to defend himself from the accusation
a preliminary investigation.3
against him.23
During the preliminary investigation, the Board received the following evidence of respondent’s alleged extramarital
On appeal, the NLRC set aside24 the LA decision and rendered a judgment disposed in this wise:
affair:
WHEREFORE, the appealed Decision of the Executive Labor Arbiter is SET ASIDE. Judgment is hereby rendered:
1. Melanie Gao-ay’s (Melanie) sworn statement declaring that sometime in December 1996, respondent slept
1. declaring respondent Alilem Credit Cooperative, Inc. (ACCI) also known as Alilem Multi-Purpose Cooperative
on the same bed with Thelma in a boarding house in San Fernando, La Union where she (Melanie) and Thelma
(AMPC) guilty of illegal dismissal for the reasons above-discussed;
resided. She personally witnessed the intimacy of respondent and Thelma when they engaged in lovemaking
2. directing the said respondent to pay complainant Salvador Bandiola, Jr. full backwages computed from the
as they slept in one room and openly displayed their affection for each other.4
time of (sic) his wages were withheld until finality of this judgment;
2. Rosita Tegon’s (Rosita) sworn statement that on May 23, 1997, she saw Thelma talk to respondent in
3. directing, on account of strained relationship between the parties, the above-named respondent to pay
petitioner’s office asking him to accompany her in San Fernando, La Union.5
complainant, in lieu of reinstatement, separation pay computed at one (1) month pay for every year of service,
3. Emma Gao-ay Lubrin’s (Emma, Thelma’s sister) interview wherein she admitted that she and her family
a fraction of six (6) months to be computed as one (1) whole year; [and]
confronted Thelma about the alleged extramarital affair which Thelma allegedly admitted.6
4. directing respondent to pay complainant ten (10%) percent attorney’s fees based on the total monetary
4. Napoleon’s interview with the Board wherein he claimed that their family tried to convince Thelma to end
award.
her extramarital affair with respondent but instead of complying, she in fact lived together with respondent.7
SO ORDERED.25
The Board decided to form an Ad Hoc Committee to investigate the charges against respondent yielding the following
The NLRC found petitioner’s Personnel Policy to be of questionable existence and validity because it was
additional evidence:
unnumbered.26 It held that even assuming that respondent had an extra-marital affair with a married woman, the latter
1. Agustina Boteras’ (Agustina) sworn statement that she witnessed a confrontation between Thelma and her
is not his fellow worker in petitioner’s business establishment.27 It, thus, concluded that respondent’s dismissal was not
sister in the latter’s residence concerning the alleged extramarital affair. At that time, respondent’s wife was
founded on any of the just causes for termination of employment under Article 282 of the Labor Code, as amended.28 It,
allegedly present who in fact pleaded Thelma to end her relationship with respondent but she supposedly said
likewise, declared that respondent was not afforded his right to his counsel of choice as his request for postponement
"No way!"8
was not allowed.29 Therefore, the NLRC declared respondent’s dismissal from employment illegal, entitling him to the
2. Milagros Villacorte’s sworn statement that while she was at the Bethany Hospital in San Fernando, La Union
payment of backwages, separation pay, and attorney’s fees.30
where her husband was confined, respondent approached her and asked her to look for Thelma who was then
Petitioner elevated the matter to the CA, but it failed to obtain a favorable decision. The CA found respondent’s dismissal
having her class. When he finally found her, respondent and Thelma met and talked in the hospital premises.9
being founded on the serious misconduct he allegedly committed by carrying an illicit relationship with a married
3. Julienne Marie L. Dalangey’s certification that on August 9 to 10, 1996, respondent attended a seminar on
woman.31 While considering said act a serious misconduct, it refused to consider it sufficient to justify respondent’s
Internal Control and Systems Design I at the Northern Luzon Federation of Cooperatives and Development
dismissal, because it was not done in the performance of his duties as would make him unfit to continue working for
Center (NORLU) Pension House in Baguio City, together with a lady companion whom he introduced as his
petitioner.32 Petitioner’s motion for reconsideration was likewise denied in the assailed July 5, 2006 resolution.
wife. Apparently, the lady was not his wife because at that time, his wife reported for work in the Municipal
Unsatisfied, petitioner now comes before the Court in this petition for review on certiorari insisting on the validity of
Hall of Alilem.10
respondent’s dismissal from employment.
Respondent, on the other hand, denied the accusation against him. He, instead, claimed that the accusation was a result
We find merit in the petition.
of the insecurity felt by some members of the cooperative and of the Board because of his growing popularity owing to
It is undisputed that respondent was dismissed from employment for engaging in extramarital affairs, a ground for
his exemplary record as an employee.11 Thelma executed an affidavit likewise denying the allegations of extra-marital
termination of employment stated in petitioner’s Personnel Policy. This basis of termination was made known to
affair.12
respondent as early as the first communication made by petitioner. In its June 20, 1997 letter, petitioner directed
Meanwhile, on June 7, 1997, the Board received a petition from about fifty members of the cooperative asking the relief
respondent to explain in writing or personal confrontation why he should not be terminated for violation of Section 4.1.4
of respondent due to his illicit affair with Thelma.13
of the Personnel Policy.33 Respondent merely denied the accusation against him34 and did not question the basis of such
In its Summary Investigation Report, the Ad Hoc Committee concluded that respondent was involved in an extra-marital
termination. When the LA was called upon to decide the illegal dismissal case, it ruled in favor of petitioner and upheld
affair with Thelma. On July 10, 1997, the Chairman of the Board sent a letter 14 to respondent informing him of the
the basis of such dismissal which is the cited Personnel Policy.1âwphi1 The NLRC, however, refused to recognize the
existence of a prima facie case against him for "illicit marital affair, an act that brings discredit to the cooperative
existence and validity of petitioner’s Personnel Policy on which the ground for termination was embodied.35
organization and a cause for termination per AMPC (Alilem Multi-Purpose Cooperative) Personnel Policy. Respondent
The existence of the Personnel Policy containing provisions on the grounds for termination of employees was not
was directed to appear and be present at the AMPC office for a hearing. He was likewise advised of his right to be
questioned by respondent. In his position paper, respondent only assailed the effectivity of the policy, as for him as it
assisted by counsel.
was amended on the same date as the letter-complaints against him. In other words, he claimed that the policy was
On the day of the hearing, respondent requested15 for postponement on the ground that his lawyer was not available.
amended in order to include therein the ground for his termination to make sure that he is removed from his position.36
The request was, however, denied and the hearing proceeded as scheduled.
We do not subscribe to such an argument.
In a Memorandum16 dated July 16, 1997, respondent was informed of Board Resolution No. 05, series of
A comparison of petitioner’s old and new Personnel Policies attached by respondent himself to his Position Paper shows
199717embodying the Board’s decision to terminate his services as bookkeeper of petitioner, effective July 31, 1997,
that under the old policy, one of the grounds for termination of an employee is "commission of acts or commission
without any compensation or benefit except the unpaid balance of his regular salary for services actually rendered.18
(sic) of duties that bring discredit to the organization,37" while under the new policy, one of the grounds is the
Aggrieved, respondent filed a Complaint for Illegal Dismissal against petitioner before the Regional Arbitration Branch of
"commission of acts that brings (sic) discredit to the cooperative organization, especially, but not limited
the National Labor Relations Commission (NLRC).19
to, conviction of any crime, illicit marital affairs, scandalous acts inimical to established and accepted
On April 30, 1998, the Labor Arbiter (LA) dismissed20 respondent’s complaint for lack of merit. The LA concluded that
social mores."38 Contrary to respondent’s claim, with the amendment of the Personnel Policy, petitioner did not create
respondent had been or might still be carrying on an affair with a married woman. The LA found it unforgiving in the
10 | A L B A - L A B R E L
a new ground for the termination of employment to make sure that respondent is removed from his position. The quoted
ground under the old policy is similar to that provided for in the new policy. The enumeration containing the specific act
of "illicit marital affairs" is not an additional ground, but an example of an act that brings discredit to the cooperative. It
is merely an interpretation of what petitioner considers as such. It is, thus, clear from the foregoing that engaging in
extra-marital affairs is a ground for termination of employment not only under the new but even under the old Personnel
Policy of petitioner. The effectivity of the policy as to respondent cannot, therefore, be questioned.
To be sure, an employer is free to regulate all aspects of employment.39 It may make reasonable rules and regulations
for the government of its employees which become part of the contract of employment provided they are made known
to the employee.40 In the event of a violation, an employee may be validly terminated from employment on the ground
that an employer cannot rationally be expected to retain the employment of a person whose lack of morals, respect and
loyalty to his employer, regard for his employer’s rules and application of the dignity and responsibility, has so plainly
and completely been bared.41
Applying now the above-discussed ground for termination, we now determine whether respondent was properly
dismissed from employment. In other words, did petitioner adequately prove that respondent indeed engaged in extra-
marital affairs, an act which petitioner considers as would bring discredit to the cooperative?
We answer in the affirmative.
The employer’s evidence consists of sworn statements of either relatives or friends of Thelma and respondent. They
either had direct personal knowledge of the illicit relationship or revealed circumstances indicating the existence of such
relationship. As aptly observed by the LA:
x x x Moreover, the credibility of the persons who bore witness against him can hardly be questioned because some of
these persons are relatives or friends of either [respondent] or his lover. In particular, it is hard to see how Napoleon
Gao-ay, the brother of his lover, Thelma, could have resorted to a lie just to destroy him when the same scandal could
also result in tarnishing the reputation of his own family. The motive of Napoleon in bringing the matter to the attention
of the Board of Directors, after all, was based on ethical grounds – he wanted a stop to the affair because it was a
disgrace to the community.
There is also no reason to doubt the statement of Melanie Gao-ay, the wife of Napoleon, who witnessed the embarrassing
"encounter", to borrow the term she used, between [respondent] and Thelma in her own boarding house.42
While respondent’s act of engaging in extra--marital affairs may be considered personal to him and does not directly
affect the performance of his assigned task as bookkeeper, aside from the fact that the act was specifically provided for
by petitioner’s Personnel Policy as one of the grounds for termination of employment, said act raised concerns to
petitioner as the Board received numerous complaints and petitions from the cooperative members themselves asking
for the removal of respondent because of his immoral conduct.43
The next question is whether procedural due process was observed in the termination of respondent’s services. "Before
the services of an employee can be validly terminated, the employer must furnish him two written notices: (a) a written
notice served on the employee specifying the ground or grounds for termination, and giving the employee reasonable
opportunity to explain his side; and (b) a written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination." 44 The employer must
inform the employee of the charges against him and to hear his defenses. A full adversarial proceeding is not necessary
as the parties may be heard through pleadings, written explanations, position papers, memorandum or oral argument.45
In this case, respondent was adequately afforded the opportunity to defend himself and explain the accusation against
him. Upon receipt of the complaint, petitioner conducted a preliminary investigation and even created an Ad Hoc
Committee to investigate the matter. Respondent was directed to explain either in writing or by a personal confrontation
with the Board why he should not be terminated for engaging in illicit affair.46 Not only did petitioner give him the
opportunity but respondent in fact informed petitioner that he opted to present his side orally47 and did so as promised
when he specifically denied such allegations before the AdHoc Committee.48 Moreover, respondent was also allowed to
peruse the investigation report prepared by the Ad Hoc Committee and was advised that he was entitled to assistance
of counsel.49 Afterwhich, hearing was conducted. It was only after thorough investigation and proper notice and hearing
to respondent that petitioner decided whether to dismiss the former or not. The decision to terminate respondent from
employment was embodied in Board Resolution No. 05, series of 1997 a copy of which was furnished respondent.50 With
this resolution, respondent was adequately notified of petitioner’s decision to remove him from his position. Respondent
cannot now claim that his right to due process was infringed upon.
WHEREFORE, premises considered, the petition is hereby GRANTED. The Court of Appeals Decision dated January
16, 2006 and Resolution dated July 5, 2006 in CA-G.R. SP No. 64554, are SET ASIDE. The Labor Arbiter's Decision
dated April 30, 1998 in NLRC Case No. RAB-1-08-1144-97 (IS) dismissing respondent Salvador M. Bandiola, Jr.'s
complaint against petitioner Alilem Credit Cooperative, Inc., Is REINSTATED.
SO ORDERED.

11 | A L B A - L A B R E L
 5. Price vs. Innodata Phils. also averred that the decisions in Villanueva v. National Labor Relations Commission7 and Servidad v. National Labor
Relations Commission,8 in which the Court already purportedly ruled "that the nature of employment at Innodata
Phils., Inc. is regular,"9 constituted stare decisis to the present case. Petitioners finally argued that they could not be
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision1 dated 25 September
considered project employees considering that their employment was not coterminous with any project or undertaking,
2006 and Resolution2 dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795, which affirmed the
the termination of which was predetermined.
Decision dated 14 December 2001 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 30-03-
On the other hand, respondents explained that INNODATA was engaged in the business of data processing,
01274-2000 finding that petitioners were not illegally dismissed by respondents.
typesetting, indexing, and abstracting for its foreign clients. The bulk of the work was data processing, which involved
The factual antecedents of the case are as follows:
data encoding. Data encoding, or the typing of data into the computer, included pre-encoding, encoding 1 and 2,
Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA) was a domestic corporation engaged in the
editing, proofreading, and scanning. Almost half of the employees of INNODATA did data encoding work, while the
data encoding and data conversion business. It employed encoders, indexers, formatters, programmers,
other half monitored quality control. Due to the wide range of services rendered to its clients, INNODATA was
quality/quantity staff, and others, to maintain its business and accomplish the job orders of its clients. Respondent Leo
constrained to hire new employees for a fixed period of not more than one year. Respondents asserted that petitioners
Rabang was its Human Resources and Development (HRAD) Manager, while respondent Jane Navarette was its Project
were not illegally dismissed, for their employment was terminated due to the expiration of their terms of employment.
Manager. INNODATA had since ceased operations due to business losses in June 2002.
Petitioners’ contracts of employment with INNODATA were for a limited period only, commencing on 6 September
Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were employed as formatters by INNODATA. The
1999 and ending on 16 February 2000.10 Respondents further argued that petitioners were estopped from asserting a
parties executed an employment contract denominated as a "Contract of Employment for a Fixed Period," stipulating
position contrary to the contracts which they had knowingly, voluntarily, and willfully agreed to or entered into. There
that the contract shall be for a period of one year,3 to wit:
being no illegal dismissal, respondents likewise maintained that petitioners were not entitled to reinstatement and
CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD
backwages.
xxxx
On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding petitioners’ complaint for illegal dismissal and
WITNESSETH: That
damages meritorious. The Labor Arbiter held that as formatters, petitioners occupied jobs that were necessary,
WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and in the course thereof and represented
desirable, and indispensable to the data processing and encoding business of INNODATA. By the very nature of their
himself/herself to be fully qualified and skilled for the said position;
work as formatters, petitioners should be considered regular employees of INNODATA, who were entitled to security of
WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is desirous of engaging that the (sic) services
tenure. Thus, their termination for no just or authorized cause was illegal. In the end, the Labor Arbiter decreed:
of the EMPLOYEE for a fixed period;
FOREGOING PREMISES CONSIDERED, judgment is hereby rendered declaring complainants’ dismissal illegal and
NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have mutually agreed as follows:
ordering respondent INNODATA PHILS. INC./INNODATA CORPORATION to reinstate them to their former or
TERM/DURATION
equivalent position without loss of seniority rights and benefits. Respondent company is further ordered to pay
The EMPLOYER hereby employs, engages and hires the EMPLOYEE and the EMPLOYEE hereby accepts such
complainants their full backwages plus ten percent (10%) of the totality thereof as attorney’s fees. The monetary
appointment as FORMATTER effective FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR.
awards due the complainants as of the date of this decision are as follows:
xxxx
A. Backwages
TERMINATION
1. Cherry J. Price
6.1 In the event that EMPLOYER shall discontinue operating its business, this CONTRACT shall also ipso facto
2/17/2000 – 10/17/2000 at 223.50/day
terminate on the last day of the month on which the EMPLOYER ceases operations with the same force and effect as is
P5,811.00/mo/ x 8 mos. P46,488.00
such last day of the month were originally set as the termination date of this Contract. Further should the Company
2. Stephanie Domingo 46,488.00
have no more need for the EMPLOYEE’s services on account of completion of the project, lack of work (sic) business
(same computation)
losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or
3. Lolita Arbilera 46,488.00
overstaffing, this contract maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the
(same computation)
employee.
Total Backwages P139,464.00
6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the completion of the project, this contract shall
B. Attorney’s fees (10% of total award) 13,946.40
automatically terminate.
Total Award P153,410.40
6.3 COMPANY’s Policy on monthly productivity shall also apply to the EMPLOYEE.
Respondent INNODATA appealed the Labor Arbiter’s Decision to the NLRC. The NLRC, in its Decision dated 14
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least
December 2001, reversed the Labor Arbiter’s Decision dated 17 October 2000, and absolved INNODATA of the charge
Fifteen – (15) notice to that effect. Provided, that such pre-termination shall be effective only upon issuance of the
of illegal dismissal.
appropriate clearance in favor of the said EMPLOYEE.
The NLRC found that petitioners were not regular employees, but were fixed-term employees as stipulated in their
6.5 Either of the parties may terminate this Contract by reason of the breach or violation of the terms and conditions
respective contracts of employment. The NLRC applied Brent School, Inc. v. Zamora13 and St. Theresa’s School of
hereof by giving at least Fifteen (15) days written notice. Termination with cause under this paragraph shall be
Novaliches Foundation v. National Labor Relations Commission,14 in which this Court upheld the validity of fixed-term
effective without need of judicial action or approval.4
contracts. The determining factor of such contracts is not the duty of the employee but the day certain agreed upon
During their employment as formatters, petitioners were assigned to handle jobs for various clients of INNODATA,
by the parties for the commencement and termination of the employment relationship. The NLRC observed that the
among which were CAS, Retro, Meridian, Adobe, Netlib, PSM, and Earthweb. Once they finished the job for one client,
petitioners freely and voluntarily entered into the fixed-term employment contracts with INNODATA. Hence,
they were immediately assigned to do a new job for another client.
INNODATA was not guilty of illegal dismissal when it terminated petitioners’ employment upon the expiration of their
On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners informing them of their last day of work.
contracts on 16 February 2000.
The letter reads:
The dispositive portion of the NLRC Decision thus reads:
RE: End of Contract
WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET ASIDE and a new one
Date: February 16, 2000
entered DISMISSING the instant complaint for lack of merit.15
Please be informed that your employment ceases effective at the end of the close of business hours on February 16,
The NLRC denied petitioners’ Motion for Reconsideration in a Resolution dated 28 June 2002.16
2000.5
In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the Court of Appeals, petitioners prayed for
According to INNODATA, petitioners’ employment already ceased due to the end of their contract.
the annulment, reversal, modification, or setting aside of the Decision dated 14 December 2001 and Resolution dated
On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and damages against respondents. Petitioners
28 June 2002 of the NLRC.lawphil.net
claimed that they should be considered regular employees since their positions as formatters were necessary and
desirable to the usual business of INNODATA as an encoding, conversion and data processing company. Petitioners
12 | A L B A - L A B R E L
On 25 September 2006, the Court of Appeals promulgated its Decision sustaining the ruling of the NLRC that
petitioners were not illegally dismissed.
The Court of Appeals ratiocinated that although this Court declared in Villanueva and Servidad that the employees of
INNODATA working as data encoders and abstractors were regular, and not contractual, petitioners admitted entering
into contracts of employment with INNODATA for a term of only one year and for a project called Earthweb. According
to the Court of Appeals, there was no showing that petitioners entered into the fixed-term contracts unknowingly and
involuntarily, or because INNODATA applied force, duress or improper pressure on them. The appellate court also
observed that INNODATA and petitioners dealt with each other on more or less equal terms, with no moral dominance
exercised by the former on latter. Petitioners were therefore bound by the stipulations in their contracts terminating
their employment after the lapse of the fixed term.
The Court of Appeals further expounded that in fixed-term contracts, the stipulated period of employment is governing
and not the nature thereof. Consequently, even though petitioners were performing functions that are necessary or
desirable in the usual business or trade of the employer, petitioners did not become regular employees because their
employment was for a fixed term, which began on 16 February 1999 and was predetermined to end on 16 February
2000.
The appellate court concluded that the periods in petitioners’ contracts of employment were not imposed to preclude
petitioners from acquiring security of tenure; and, applying the ruling of this Court in Brent, declared that petitioners’
fixed-term employment contracts were valid. INNODATA did not commit illegal dismissal for terminating petitioners’
employment upon the expiration of their contracts.
The Court of Appeals adjudged:
WHEREFORE, the instant petition is hereby DENIED and the Resolution dated December 14, 2001 of the National
Labor Relations Commission declaring petitioners were not illegally dismissed is AFFIRMED.17
The petitioners filed a Motion for Reconsideration of the afore-mentioned Decision of the Court of Appeals, which was
denied by the same court in a Resolution dated 15 June 2007.
Petitioners are now before this Court via the present Petition for Review on Certiorari, based on the following
assignment of errors:
I.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND GRAVE ABUSE OF
DISCRETION WHEN IT DID NOT APPLY THE SUPREME COURT RULING IN THE CASE OF NATIVIDAD &
QUEJADA THAT THE NATURE OF EMPLOYMENT OF RESPONDENTS IS REGULAR NOT FIXED, AND AS SO
RULED IN AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS. INC.
II.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN RULING THAT THE
STIPULATION OF CONTRACT IS GOVERNING AND NOT THE NATURE OF EMPLOYMENT AS DEFINED BY
LAW.
III.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD SHOWING THAT THERE IS
CLEAR CIRCUMVENTION OF THE LAW ON SECURITY OF TENURE THROUGH CONTRACT MANIPULATION.18
The issue of whether petitioners were illegally dismissed by respondents is ultimately dependent on the question of
whether petitioners were hired by INNODATA under valid fixed-term employment contracts.
After a painstaking review of the arguments and evidences of the parties, the Court finds merit in the present Petition.
There were no valid fixed-term contracts and petitioners were regular employees of the INNODATA who could not be
dismissed except for just or authorized cause.
The employment status of a person is defined and prescribed by law and not by what the parties say it should
be.19 Equally important to consider is that a contract of employment is impressed with public interest such that labor
contracts must yield to the common good.20 Thus, provisions of applicable statutes are deemed written into the
contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other.21
Regular employment has been defined by Article 280 of the Labor Code, as amended, which reads:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of engagement of the employee or where the work or services
to be performed is seasonal in nature and employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall continue
while such activity exists. (Underscoring ours).
Based on the afore-quoted provision, the following employees are accorded regular status: (1) those who are engaged
to perform activities which are necessary or desirable in the usual business or trade of the employer, regardless of the
length of their employment; and (2) those who were initially hired as casual employees, but have rendered at least
one year of service, whether continuous or broken, with respect to the activity in which they are employed.
Undoubtedly, petitioners belong to the first type of regular employees.
Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered
regular or non-regular is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer.22
In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as formatters. The primary business
of INNODATA is data encoding, and the formatting of the data entered into the computers is an essential part of the
process of data encoding. Formatting organizes the data encoded, making it easier to understand for the clients
and/or the intended end users thereof. Undeniably, the work performed by petitioners was necessary or desirable in
the business or trade of INNODATA.
However, it is also true that while certain forms of employment require the performance of usual or desirable functions
and exceed one year, these do not necessarily result in regular employment under Article 280 of the Labor
Code.23 Under the Civil Code, fixed-term employment contracts are not limited, as they are under the present Labor
Code, to those by nature seasonal or for specific projects with predetermined dates of completion; they also include
those to which the parties by free choice have assigned a specific date of termination.24
The decisive determinant in term employment is the day certain agreed upon by the parties for the commencement
and termination of their employment relationship, a day certain being understood to be that which must necessarily
come, although it may not be known when. Seasonal employment and employment for a particular project are
instances of employment in which a period, where not expressly set down, is necessarily implied.25
Respondents maintain that the contracts of employment entered into by petitioners with INNDOATA were valid fixed-
term employment contracts which were automatically terminated at the expiry of the period stipulated therein, i.e., 16
February 2000.
The Court disagrees.
While this Court has recognized the validity of fixed-term employment contracts, it has consistently held that this is the
exception rather than the general rule. More importantly, a fixed-term employment is valid only under certain
circumstances. In Brent, the very same case invoked by respondents, the Court identified several circumstances
wherein a fixed-term is an essential and natural appurtenance, to wit:
Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific
projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one,
to which, whatever the nature of the engagement, the concept of regular employment with all that it implies does not
appear ever to have been applied, Article 280 of the Labor Code notwithstanding; also appointments to the positions
of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which
are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity without which
no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy Instructions No. 8 of
the Minister of Labor implicitly recognize that certain company officials may be elected for what would amount to fixed
periods, at the expiration of which they would have to stand down, in providing that these officials, "x x may lose their
jobs as president, executive vice-president or vice president, etc. because the stockholders or the board of directors
for one reason or another did not reelect them."26
As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a stern admonition that where, from the
circumstances, it is apparent that the period was imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals, good customs, public order and public
policy.27
After considering petitioners’ contracts in their entirety, as well as the circumstances surrounding petitioners’
employment at INNODATA, the Court is convinced that the terms fixed therein were meant only to circumvent
petitioners’ right to security of tenure and are, therefore, invalid.
The contracts of employment submitted by respondents are highly suspect for not only being ambiguous, but also for
appearing to be tampered with.
Petitioners alleged that their employment contracts with INNODATA became effective 16 February 1999, and the first
day they reported for work was on 17 February 1999. The Certificate of Employment issued by the HRAD Manager of
INNODATA also indicated that petitioners Price and Domingo were employed by INNODATA on 17 February 1999.
13 | A L B A - L A B R E L
However, respondents asserted before the Labor Arbiter that petitioners’ employment contracts were effective only on
6 September 1999. They later on admitted in their Memorandum filed with this Court that petitioners were originally
hired on 16 February 1999 but the project for which they were employed was completed before the expiration of one
year. Petitioners were merely rehired on 6 September 1999 for a new project. While respondents submitted
employment contracts with 6 September 1999 as beginning date of effectivity, it is obvious that in one of them, the
original beginning date of effectivity, 16 February 1999, was merely crossed out and replaced with 6 September 1999.
The copies of the employment contracts submitted by petitioners bore similar alterations.
The Court notes that the attempt to change the beginning date of effectivity of petitioners’ contracts was very crudely
done. The alterations are very obvious, and they have not been initialed by the petitioners to indicate their assent to
the same. If the contracts were truly fixed-term contracts, then a change in the term or period agreed upon is material
and would already constitute a novation of the original contract.
Such modification and denial by respondents as to the real beginning date of petitioners’ employment contracts render
the said contracts ambiguous. The contracts themselves state that they would be effective until 16 February 2000 for
a period of one year. If the contracts took effect only on 6 September 1999, then its period of effectivity would
obviously be less than one year, or for a period of only about five months.
Obviously, respondents wanted to make it appear that petitioners worked for INNODATA for a period of less than one
year. The only reason the Court can discern from such a move on respondents’ part is so that they can preclude
petitioners from acquiring regular status based on their employment for one year. Nonetheless, the Court emphasizes
that it has already found that petitioners should be considered regular employees of INNODATA by the nature of the
work they performed as formatters, which was necessary in the business or trade of INNODATA. Hence, the total
period of their employment becomes irrelevant.
Even assuming that petitioners’ length of employment is material, given respondents’ muddled assertions, this Court
adheres to its pronouncement in Villanueva v. National Labor Relations Commission,28 to the effect that where a
contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed
strictly against the party who prepared it. The Court is, thus, compelled to conclude that petitioners’ contracts of
employment became effective on 16 February 1999, and that they were already working continuously for INNODATA
for a year.
Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends that petitioners were
project employees whose employment ceased at the end of a specific project or undertaking. This contention is
specious and devoid of merit.
In Philex Mining Corp. v. National Labor Relations Commission,29 the Court defined "project employees" as those
workers hired (1) for a specific project or undertaking, and wherein (2) the completion or termination of such project
has been determined at the time of the engagement of the employee.
Scrutinizing petitioners’ employment contracts with INNODATA, however, failed to reveal any mention therein of what
specific project or undertaking petitioners were hired for. Although the contracts made general references to a
"project," such project was neither named nor described at all therein. The conclusion by the Court of Appeals that
petitioners were hired for the Earthweb project is not supported by any evidence on record. The one-year period for
which petitioners were hired was simply fixed in the employment contracts without reference or connection to the
period required for the completion of a project. More importantly, there is also a dearth of evidence that such project
or undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact, petitioners
alleged - and respondents failed to dispute that petitioners did not work on just one project, but continuously worked
for a series of projects for various clients of INNODATA.
In Magcalas v. National Labor Relations Commission,30 the Court struck down a similar claim by the employer therein
that the dismissed employees were fixed-term and project employees. The Court here reiterates the rule that all
doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor of labor. It is a well-entrenched
doctrine that in illegal dismissal cases, the employer has the burden of proof. This burden was not discharged in the
present case.
As a final observation, the Court also takes note of several other provisions in petitioners’ employment contracts that
display utter disregard for their security of tenure. Despite fixing a period or term of employment, i.e., one year,
INNODATA reserved the right to pre-terminate petitioners’ employment under the following circumstances:
6.1 x x x Further should the Company have no more need for the EMPLOYEE’s services on account of completion of
the project, lack of work (sic) business losses, introduction of new production processes and techniques, which will
negate the need for personnel, and/or overstaffing, this contract maybe pre-terminated by the EMPLOYER upon giving
of three (3) days notice to the employee.
xxxx
6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least
Fifteen – (15) [day] notice to that effect. Provided, that such pre-termination shall be effective only upon issuance of
the appropriate clearance in favor of the said EMPLOYEE. (Emphasis ours.)
Pursuant to the afore-quoted provisions, petitioners have no right at all to expect security of tenure, even for the
supposedly one-year period of employment provided in their contracts, because they can still be pre-terminated (1)
upon the completion of an unspecified project; or (2) with or without cause, for as long as they are given a three-day
notice. Such contract provisions are repugnant to the basic tenet in labor law that no employee may be terminated
except for just or authorized cause.
Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure
and free them from the bondage of uncertainty of tenure woven by some employers into their contracts of
employment. This was exactly the purpose of the legislators in drafting Article 280 of the Labor Code – to prevent the
circumvention by unscrupulous employers of the employee’s right to be secure in his tenure by indiscriminately and
completely ruling out all written and oral agreements inconsistent with the concept of regular employment.
In all, respondents’ insistence that it can legally dismiss petitioners on the ground that their term of employment has
expired is untenable. To reiterate, petitioners, being regular employees of INNODATA, are entitled to security of
tenure. In the words of Article 279 of the Labor Code:
ART. 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.
By virtue of the foregoing, an illegally dismissed employee is entitled to reinstatement without loss of seniority rights
and other privileges, with full back wages computed from the time of dismissal up to the time of actual reinstatement.
Considering that reinstatement is no longer possible on the ground that INNODATA had ceased its operations in June
2002 due to business losses, the proper award is separation pay equivalent to one month pay31 for every year of
service, to be computed from the commencement of their employment up to the closure of INNODATA.
The amount of back wages awarded to petitioners must be computed from the time petitioners were illegally
dismissed until the time INNODATA ceased its operations in June 2002.32
Petitioners are further entitled to attorney’s fees equivalent to 10% of the total monetary award herein, for having
been forced to litigate and incur expenses to protect their rights and interests herein.
Finally, unless they have exceeded their authority, corporate officers are, as a general rule, not personally liable for
their official acts, because a corporation, by legal fiction, has a personality separate and distinct from its officers,
stockholders and members. Although as an exception, corporate directors and officers are solidarily held liable with the
corporation, where terminations of employment are done with malice or in bad faith,33 in the absence of evidence that
they acted with malice or bad faith herein, the Court exempts the individual respondents, Leo Rabang and Jane
Navarette, from any personal liability for the illegal dismissal of petitioners.
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Decision dated 25 September 2006 and
Resolution dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795are hereby REVERSED and SET
ASIDE. RespondentInnodata Philippines, Inc./Innodata Corporation is ORDERED to pay petitioners Cherry J. Price,
Stephanie G. Domingo, and Lolita Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one month pay
for every year of service, to be computed from the commencement of their employment up to the date respondent
Innodata Philippines, Inc./Innodata Corporation ceased operations; (b) full backwages, computed from the time
petitioners’ compensation was withheld from them up to the time respondent Innodata Philippines, Inc./Innodata
Corporation ceased operations; and (3) 10% of the total monetary award as attorney’s fees. Costs against respondent
Innodata Philippines, Inc./Innodata Corporation.
SO ORDERED.
14 | A L B A - L A B R E L
 6. BPI vs. BPI Employees Union – Metro Manila
For resolution of this Court is the Petition for Review under Rule 45 of the Revised Rules of Court, dated January 20,
2007, of petitioner Bank of the Philippine Islands (BPI) which seeks to reverse and set aside the Court of Appeals' (CA)
Decision[1] and Resolution,[2] dated June 8, 2006 and November 29, 2006, respectively, in CA-G.R. SP No. 83387.
The antecedent facts follow.
Respondent Bank of the Philippine Islands Employees Union-Metro Manila (BPIEU-MM), a legitimate labor organization
and the sole and exclusive bargaining representative of all the regular rank-and-file employees of petitioner BPI in
Metro Manila and petitioner BPI have an existing Collective Bargaining Agreement (CBA)[3] which took effect on April 1,
2001. The CBA provides for loan benefits and relatively low interest rates. The said provisions state:
Article VIII - Fringe Benefits
xxxx
Section 14. Multi-Purpose Loan, Real Estate Secured Housing Loan and Car Loan. - The Bank agrees to continue and
maintain its present policy and practice, embodied in its Collective Bargaining Agreement with the Union which expired
on 31 March 2001, extending to qualified regular employees the multi-purpose and real estate secured housing loans,
subject to the increased limits and provisions hereinbelow, to wit:
(a) Multi-Purpose Loan not exceeding FORTY THOUSAND PESOS (P40,000.00), payable within the period not
exceeding three (3) years via semi-monthly salary deductions, with interest at the rate of eight percent (8%) per
annum computed on the diminishing balance.
(b) Real Estate-Secured Housing Loan not exceeding FOUR HUNDRED FIFTY THOUSAND " PESOS (P450,000.00),
payable over a period not exceeding fifteen (15) years via semi-monthly salary deductions, with interest at the rate of
nine percent (9%) per annum computed on the diminishing balance.
The rate of interest on real estate secured loans, however, may be reduced to six percent (6%) per annum, subject to
the following conditions:
1. If the loan is accepted for coverage by the Home Insurance and Guaranty Corporation (HIGC).
2. The HIGC premium shall be paid by the borrower.
3. The borrower procures a Mortgage Redemption Insurance coverage from an insurance company selected by the
BANK.
4. The BANK may increase the six percent (6%) interest if the HIGC or the Government imposes new conditions or
restrictions necessitating a higher interest in order to maintain the BANK'S position before such conditions or
restrictions were imposed.
5. Such other terms or conditions imposed or which may be imposed by the HIGC.
6. It is distinctly understood that the rate of interest shall automatically revert to nine percent (9%) per annum upon
cancellation of the HIGC coverage for any cause.
The BANK shall make strong representations with the Bangko Sentral ng Pilipinas for a second upgrade and/or
availment under the Housing Loan Program.
(c) Car Loan. - The BANK shall submit a revised plan for the approval of the Bangko Sentral ng Pilipinas which shall
incorporate a car loan program in its existing Housing Loan Program. The said car loan shall be a sub-limit under the
program such that any availment thereof shall operate to decrease the available housing loan limit. Therefore, the
combined amount of both housing and car loans that may be availed of shall not exceed FOUR HUNDRED FIFTY
THOUSAND PESOS (P450,000.00). This supplemental revision of the loan program shall be subject to the rules and
regulations {e.g., amount of sub-limit, credit ratio, type and age of vehicle, interest rate, etc.) which the BANK may
promulgate, and to the terms of the approval of the Bangko Sentral ng Pilipinas.
The multi-purpose and housing loans stated in the next preceding paragraphs, as well as the car loan which shall be
incorporated in the housing loan program, shall be subject further to the applicable provisions, guidelines and
restrictions set forth in the Central Bank Circular No. 561, as amended by Central Bank Circular No. 689, and to the
rules, regulations and policies of the BANK on such loans insofar as they do not violate the provisions, guidelines and
restrictions set forth in said Central Bank Circular No. 561, as amended.
Section 15. Emergency Loans. - The BANK agrees to increase the amount of emergency loans assistance, upon
approval by the Central Bank of the Philippines, from a maximum amount of Ten Thousand Pesos (PI 0,000.00) to a
maximum amount of Fifteen Thousand Pesos (P15,000.00) to qualified employees intended to cover emergencies
only, i.e., expenses incurred but could not be foreseen such as those arising from natural calamities, emergency
medical treatment and/or hospitalization of an employee and/or his immediate family and other genuine emergency
cases of serious hardship as the BANK may determine. Hospital expenses for caesarian delivery of a female employee
or an employee's wife not covered by the Group Hospitalization Insurance Plan shall qualify for the emergency loan.
Emergency loans shall be playable in twenty-four (24) months via semi-monthly salary deductions and shall be
charged interest at the minimal rate of Seven percent (7%) per annum for the first P10,000.00 and Nine percent (9%)
for the additional P5.000.00 computed on the diminishing balance. The emergency loan assistance program shall be
governed by the rules, regulations and policies of the BANK and such amendments or modifications thereof which the
BANK may issue from time to time.[4]
Thereafter, petitioner issued a "no negative data bank policy"[5] for the implementation/availment of the manpower
loans which the respondent objected to, thus, resulting into labor-management dialogues. Unsatisfied with the result
of those dialogues, respondent brought the matter to the grievance machinery and afterwards, the issue, not having
been resolved, the parties raised it to the Voluntary Arbitrator.
In his decision, the Voluntary Arbitrator found merit in the respondent's cause. Hence, the dispositive portion of the
said decision reads as follows:
WHEREFORE, viewed in the light of the foregoing circumstances, this Arbitrator hereby rules:
1. That the imposition of the NO NEGATIVE DATA BANK as a new condition for the implementation and availment of
the manpower loan benefits by the employees evidently violates the CBA;
2. That all employees who were not allowed or deprived of the manpower loan benefits due to the NO NEGATIVE
DATA BANK POLICY be immediately granted in accordance with their respective loan benefits applied for;
3. That the respondent herein is ordered likewise to pay ten percent (10%) of the total amount of all loans to be
granted to all employees concerned as Attorney's Fees; and
4. That the parties herein are directed to report compliance with the above directives within ten (10) days from receipt
of this ORDER.
SO ORDERED.[6]
Aggrieved, petitioner appealed the case to the CA via Rule 43, but the latter affirmed the decision of the Voluntary
Arbitrator with the modification that the award of attorney's fees be deleted. The dispositive portion states:
WHEREFORE, premises considered, the Voluntary Arbitrator's Decision dated April 5, 2004 is hereby AFFIRMED with
the MODIFICATION that the award of attorney's fees is hereby deleted.
SO ORDERED.[7]
Petitioner filed a motion for reconsideration, but it was denied in a Resolution[8] dated November 29, 2006.
Hence, the present petition.
15 | A L B A - L A B R E L

Petitioner raises the following arguments:
A. The "No NDB policy" is a valid and reasonable requirement that is consistent with sound banking practice and is
meant to inculcate among officers and employees of the petitioner the need for fiscal responsibility and discipline,
especially in an industry where the element of trust is paramount.
B. The "No NDB policy" does not violate the parties' Collective Bargaining Agreement.
C. The "No NDB policy" conforms to existing BSP regulations and circulars, and to safe and sound banking practices.[9]
Respondent, on the other hand, claims that the petition did not comply with Section 4, Rule 45 of the Revised Rules of
Court and must be dismissed outright in accordance with Section 5 of the same rule; that the CA did not commit any
reversible error in the questioned judgment to warrant the exercise of its discretionary appellate jurisdiction; and that
the Voluntary Arbitrator and the CA duly passed upon the same issues raised in the instant petition and their decisions
are based on substantial evidence and are in accordance with law and jurisprudence.[10]
Tn its Reply[11] dated September 21, 2007, petitioner reiterates the issues it presented in its petition. It also argues
that the present petition must not be dismissed based on mere technicality.
It must be remembered that negotiations between an employer and a union transpire before they agree on the terms
and conditions contained in the CBA. If the petitioner, indeed, intended to include a "no negative data bank policy" in
the CBA, it should have presented such proposal to the union during the negotiations. To include such policy after the
effectivity of the CBA is deceptive and goes beyond the original agreement between the contracting parties.
This Court also notes petitioner's argument that the "no negative data bank policy" is intended to exact a high
standard of conduct from its employees. However, the terms and conditions of the CBA must prevail. Petitioner can
propose the inclusion of the said policy upon the expiration of the CBA, during the negotiations for a new CBA, but in
the meantime, it has to honor the provisions of the existing CBA.
Article 1702 of the New Civil Code provides that, in case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living of the laborer. Thus, this Court has ruled that any doubt or
ambiguity in the contract between management and the union members should be resolved in favor of the
latter.[18] Therefore, there is no doubt, in this case, that the welfare of the laborers stands supreme.
WHEREFORE, the Petition for Review under Rule 45 of the Revised Rules of Court, dated January 20, 2007, of
petitioner Bank of the Philippine Islands, is hereby DENIED and the Court of Appeals' Decision and Resolution, dated
June 8, 2006 and November 29, 2006, respectively, are hereby AFFIRMED. SO ORDERED.

Subsequently, the parties submitted their respective memoranda.

Petitioner's arguments are mere rehash of those it raised in the CA. It insists that the rationale behind the use of the
"no negative data bank policy" aims to encourage employees of a banking institution to exercise the highest standards
of conduct, considering the bank's fiduciary relationship with its depositors and clients. It likewise contends that a
scrutiny of the CBA reveals an express conformity to petitioner's prerogative to issue policies that would guide the
parties in the availment of manpower loans under the CBA.

Furthermore, petitioner avers that the subject policy does not only conform to the provisions of the parties' CBA, but it
is also in harmony with the circulars and regulations of the Bangko Sentral ng Pilipinas.

The petition lacks merit.

In a petition for review on certiorari, this Court's jurisdiction is limited to reviewing errors of law in the absence of any
showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous.[13] Firm
is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases.[14] The issues
presented by the petitioner are factual in nature. Nevertheless, the CA committed no error in its questioned decision
and resolution.

A CBA refers to the negotiated contract between a legitimate labor organization and the employer concerning wages,
hours of work and all other terms and conditions of employment in a bargaining unit, including mandatory provisions
for grievances and arbitration machineries.[15] As in all other contracts, there must be clear indications that the parties
reached a meeting of the minds.[16] Therefore, the terms and conditions of a CBA constitute the law between the
parties.[17]

The CBA in this case contains no provision on the "no negative data bank policy" as a prerequisite in the entitlement of
the benefits it set forth for the employees. In fact, a close reading of the CBA would show that the terms and
conditions contained therein relative to the availment of the loans are plain and clear, thus, all they need is the proper
implementation in order to reach their objective. The CA was, therefore, correct when it ruled that, although it can be
said that petitioner is authorized to issue rules and regulations pertinent to the availment and administration of the
loans under the CBA, the additional rules and regulations, however, must not impose new conditions which are not
contemplated in the CBA and should be within the realm of reasonableness. The "no negative data bank policy" is a
new condition which is never contemplated in the CBA and at some points, unreasonable to the employees because it
provides that before an employee or his/her spouse can avail of the loan benefits under the CBA, the said employee or
his/her spouse must not be listed in the negative data bank, or if previously listed therein, must obtain a clearance at
least one year or six months as the case may be, prior to a loan application.

16 | A L B A - L A B R E L
 7. Phil. Journalist Inc. vs. Journal Employees Union In both instances, respondents maintained that they did not commit any act of unfair labor practices; that they did not
commit acts tantamount to interfering, restraining, or coercing employees in the exercise of their right to self-
organization.
The coverage of the term legal dependent as used in a stipulation in a collective bargaining agreement (CBA) granting
Respondents deny liabilities as far as complainants’ monetary claims are concerned. Concerning violations of the
funeral or bereavement benefit to a regular employee for the death of a legal dependent, if the CBA is silent about it, is
provision on wage distortion under Wage Order No. 9, respondents stressed that complainants were not affected since
to be construed as similar to the meaning that contemporaneous social legislations have set. This is because the terms
their salary is way over the minimum wage.
of such social legislations are deemed incorporated in or adopted by the CBA.
With respect to the alleged non-adjustment of longevity pay and burial aid, respondent PJI pointed out that it complies
The decision of the Court of Appeals (CA) under review summarizes the factual and procedural antecedents, as follows:
with the provisions of the CBA and that both complainants have not claimed for the burial aid.
Complainant Judith Pulido alleged that she was hired by respondent as proofreader on 10 January 1991; that she was
Respondents put forward the information that the alleged nonpayment of rest days – every Monday for the past three
receiving a monthly basic salary of P-15,493.66 plus P-155.00 longevity pay plus other benefits provided by law and
(3) years is a matter that is still at issue in NLRC Case No. 02-0402973-93, which case is still pending before this
their Collective Bargaining Agreement; that on 21 February 2003, as union president, she sent two letters to President
Commission.
Gloria Arroyo, regarding their complaint of mismanagement being committed by PIJ executive; that sometime in May
Respondents asserted that the respondents Arturo Dela Cruz, Bobby Capco, Arnold Banares, Ruby Ruiz-Bruno and
2003, the union was furnished with a letter by Secretary Silvestre Afable, Jr. head of Presidential Management Staff
Fundador Soriano should not be held liable on account of complainants’ dismissal as they merely acted as agents of
(PMS), endorsing their letter-complaint to Ombudsman Simeon V. Marcelo; that respondents took offense and started
respondent PJI.1
harassments to complainant union president; that on 30 May 2003, complainant received a letter from respondent
Upon the foregoing backdrop, Labor Arbiter Corazon C. Borbolla rendered her decision on March 29, 2006, disposing
Fundador Soriano, International Edition managing editor, regarding complainant’s attendance record; that complainant
thusly:
submitted her reply to said memo on 02 June 2003; that on 06 June 2003, complainant received a memorandum of
WHEREFORE, foregoing premises considered, judgment is hereby rendered, finding complainant Judith Pulido to have
reprimand; that on 04 July 2003, complainant received another memo from Mr. Soriano, for not wearing her company
been illegally dismissed. As such, she is entitled to reinstatement and backwages from 07 August 2003 up to her actual
ID, which she replied the next day 05 July 2003; that on 04 August 2003, complainant again received a memo regarding
or payroll reinstatement. To date, complainant’s backwages is ₱294,379.54.
complainant’s tardiness; that on 05 August 2003, complainant received another memorandum asking her to explain why
Respondent Philippine Journalist, Inc. is hereby ordered to pay complainant Judith Pulido her backwages from 07 August
she should not be accused of fraud, which she replied to on 07 August 2003; and that on the same day between 3:00
2003 up to her actual or payroll reinstatement and to reinstate her to her former position without loss of seniority right.
to 4:00 P.M., Mr. Ernesto "Estong" San Agustin, a staff of HRD handed her termination paper.
Respondent is further ordered to submit a report to this Office on complainant’s reinstatement ten (10) days from receipt
Complainant added that in her thirteen (13) years with the company and after so many changes in its management and
of this decision.
executives, she had never done anything that will cause them to issue a memorandum against her or her work attitude,
The charge of illegal dismissal by Michael Alfante is hereby dismissed for lack of merit.
more so, reasons to terminate her services; that she got dismissed because she was the Union President who was very
The charge of unfair labor practice is dismissed for lack of basis.
active in defending and pursuing the rights of her union members, and in fighting against the abuses of respondent
SO ORDERED.2
Corporate Officers; and that she got the ire of respondents when the employees filed a complaint against the Corporate
Complainant Michael Alfante (Alfante), joined by his labor organization, Journal Employees Union (JEU), filed a partial
Officers before Malacañang and which was later indorsed to the Office of the Ombudsman.
appeal in the National Labor Relations Commission (NLRC).3
The second complainant Michael L. Alfante alleged that he started to work with respondents as computer technician at
In the meantime, on May 10, 2006, petitioner and Judith Pulido (Pulido), the other complainant, jointly manifested to
Management Information System under manager Neri Torrecampo on 16 May 2000; that on 15 July 2001, he was
the NLRC that the decision of March 29, 2006 had been fully satisfied as to Pulido under the following terms, namely:
regularized receiving a monthly salary of ₱9,070.00 plus other monetary benefits; that sometime in 2001, Rico
(a) she would be reinstated to her former position as editorial staffmember, or an equivalent position, without loss of
Pagkalinawan replaced Torrecampo, which was opposed by complainant and three other co-employees; that
seniority rights, effective May 15, 2006; (b) she would go on maternity leave, and report to work after giving birth; (c)
Pagkalinawan took offense of their objection; that on 22 October 2002, complainant Alfante received a memorandum
she would be entitled to backwages of ₱130,000.00; and (d) she would execute the quitclaim and release on May 11,
from Pagkalinawan regarding his excessive tardiness; that on 10 June 2003, complainant Alfante received a
2006 in favor of petitioner.4 This left Alfante as the remaining complainant.
memorandum from Executive Vice-President Arnold Banares, requiring him to explain his side on the evaluation of his
On January 31, 2007, the NLRC rendered its decision dismissing the partial appeal for lack of merit.
performance submitted by manager Pagkalinawan; that one week after complainant submitted his explanation, he was
JEU and Alfante moved for the reconsideration of the decision, but the NLRC denied their motion on April 24, 2007.
handed his notice of dismissal on the ground of "poor performance"; and that complainant was dismissed effective 28
Thereafter, JEU and Alfante assailed the decision of the NLRC before the CA on certiorari (C.A.-G.R. SP No. 99407).
July 2003.
On February 5, 2010, the CA promulgated its decision in C.A.-G.R. SP No. 99407,7 decreeing:
Complainant Alfante submitted that he was dismissed without just cause.
WHEREFORE, premises considered, the instant petition is PARTLY GRANTED.
Respondents, in their position paper, averred that complainants Pulido and Alfante were dismissed for cause and with
The twin Resolutions dated January 31, 2007 and April 24, 2007, respectively, of the Third Division of the National Labor
due process.
Relations Commission (NLRC), in NLRC NCR CA No. 048785-06 (NLRC NCR Case No. 00-10-11413-04), are MODIFIED
With regard to complainant Pulido, respondents averred that in a memorandum dated 30 May 2003, directed complainant
insofar as the funeral or bereavement aid is concerned, which is hereby GRANTED, but only after submission of conclusive
to explain her habitual tardiness, at least 75 times from January to May of 2003. In a memorandum, dated 06 June 2003,
proofs that the deceased is a parent, either father or mother, of the employees concerned, as well as the death certificate
directed complainant to observe the 3 p.m. rule to avoid grammatical lapses, use of stale stories just to beat the 10:00
to establish the fact of death of the deceased legal dependent.
p.m. deadline. In the same memorandum complainant was given the warning that any repeated violation of the rules
The rest of the findings of fact and law in the assailed Resolutions are hereby AFFIRMED.
shall be dealt with more severely. Once again, in a memorandum, dated 04 August 2003, complainant Pulido was
SO ORDERED.
required to explain why no disciplinary action should be taken against her for habitual tardiness – 18 times out of the
Both parties moved for reconsideration, but the CA denied their respective motions for reconsideration on June 2, 2010.8
23 reporting days during the period from 27 June – 27 July 2003 and on 05 August 2003, complainant was directed to
JEU and Alfante appealed to the Court (G.R. No. 192478) to challenge the CA’s dispositions regarding the legality of: (a)
explain in writing why complainant should not be administratively sanctioned for committing fraud or attempting to
Alfante’s dismissal; (b) the non-compliance with Minimum Wage Order No. 9; and (c) the non-payment of the rest day.9
commit fraud against respondents. Respondents found complainant’s explanations unsatisfactory. On 07 August 2003,
On August 18, 2010, the Court denied due course to the petition in G.R. No. 192478 for failure of petitioners to sufficiently
respondents dismissed complainant Pulido for habitual tardiness, gross insubordination, utter disrespect for superiors,
show that the CA had committed any reversible error to warrant the Court’s exercise of its discretionary appellate
and committing fraud or attempting to commit fraud which led to the respondents’ loss of confidence upon complainant
jurisdiction.10
Pulido.
The Court denied with finality JEU and Alfante’s ensuing motion for reconsideration through the resolution of December
In case of complainant Alfante, respondents averred in defense that complainant was dismissed for "poor performance"
8, 2010.11 The entry of judgment in G.R. No. 192478 issued in due course on February 1, 2011.12
after an evaluation by his superior, and after being forewarned that complainant may be removed if there was no
On its part, petitioner likewise appealed (G.R. No. 192601), seeking the review of the CA’s disposition in the decision of
showing of improvement in his skills and knowledge on current technology.
February 5, 2010 on the granting of the funeral and bereavement aid stipulated in the CBA.

17 | A L B A - L A B R E L
In its petition for review, petitioner maintained that under Section 4, Article XIII of the CBA, funeral and bereavement
aid should be granted upon the death of a legal dependent of a regular employee; that consistent with the definition
provided by the Social Security System (SSS), the term legal dependent referred to the spouse and children of a married
regular employee, and to the parents and siblings, 18 years old and below, of a single regular employee;13that the CBA
considered the term dependents to have the same meaning as beneficiaries, as provided in Section 5, Article XIII of the
CBA on the payment of death benefits;14 that its earlier granting of claims for funeral and bereavement aid without
regard to the foregoing definition of the legal dependents of married or single regular employees did not ripen into a
company policy whose unilateral withdrawal would constitute a violation of Article 100 of the Labor Code,15 the law
disallowing the non-diminution of benefits;16 that it had approved only four claims from 1999 to 2003 based on its
mistaken interpretation of the term legal dependents, but later corrected the same in 2000;17 that the grant of funeral
and bereavement aid for the death of an employee’s legal dependent, regardless of the employee’s civil status, did not
occur over a long period of time, was not consistent and deliberate, and was partly due to its mistake in appreciating a
doubtful question of law; and that its denial of subsequent claims did not amount to a violation of the law against the
non-diminution of benefits.18
In their comment,19 JEU and Alfante countered that the CBA was a bilateral contractual agreement that could not be
unilaterally changed by any party during its lifetime; and that the grant of burial benefits had already become a company
practice favorable to the employees, and could not anymore be reduced, diminished, discontinued or eliminated by
petitioner.
Issue
In view of the entry of judgment issued in G.R. No. 192478, JEU and Alfante’s submissions on the illegality of his dismissal,
the non-payment of his rest days, and the violation of Minimum Wage Order No. 9 shall no longer be considered and
passed upon.
The sole remaining issue is whether or not petitioner’s denial of respondents’ claims for funeral and bereavement aid
granted under Section 4, Article XIII of their CBA constituted a diminution of benefits in violation of Article 100 of the
Labor Code.
Ruling
The petition for review lacks merit.
The nature and force of a CBA are delineated in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa
Honda,20 thuswise:
A collective bargaining agreement (or CBA) refers to the negotiated contract between a legitimate labor organization
and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining
unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may
deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus,
where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated
by the express policy of the law.
Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the law between the parties, must be
complied with by them. The literal meaning of the stipulations of the CBA, as with every other contract, control if they
are clear and leave no doubt upon the intention of the contracting parties.22
Here, a conflict has arisen regarding the interpretation of the term legal dependent in connection with the grant of
funeral and bereavement aid to a regular employee under Section 4, Article XIII of the CBA,23 which stipulates as follows:
SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to grant a funeral/bereavement aid in the following
instances:
a. Death of a regular employee in line of duty – ₱50,000
b. Death of a regular employee not in line of duty – ₱40,000
c. Death of legal dependent of a regular employee – ₱15,000. (Emphasis supplied)
Petitioner insists that notwithstanding the silence of the CBA, the term legal dependent should follow the definition of it
under Republic Act (R.A.) No. 8282 (Social Security Law),24 so that in the case of a married regular employee, his or her
legal dependents include only his or her spouse and children, and in the case of a single regular employee, his or her
legal dependents include only his or her parents and siblings, 18 years old and below; and that the term dependents
has the same meaning as beneficiaries as used in Section 5, Article XIII of the CBA.
We cannot agree with petitioner’s insistence.
Social legislations contemporaneous with the execution of the CBA have given a meaning to the term legal dependent.
First of all, Section 8(e) of the Social Security Law provides that a dependent shall be the following, namely: (a) the legal
spouse entitled by law to receive support from the member; (b) the legitimate, legitimated, or legally adopted, and
illegitimate child who is unmarried, not gainfully employed and has not reached 21 of age, or, if over 21 years of age, is
congenitally or while still a minor has been permanently incapacitated and incapable of self-support, physically or
mentally; and (c) the parent who is receiving regular support from the member. Secondly, Section 4(f) of R.A. No. 7875,
as amended by R.A. No. 9241,25 enumerates who are the legal dependents, to wit: (a) the legitimate spouse who is not
a member; (b) the unmarried and unemployed legitimate, legitimated, illegitimate, acknowledged children as appearing
in the birth certificate; legally adopted or step-children below 21 years of age; (c) children who are 21 years old and
order but suffering from congenital disability, either physical or mental, or any disability acquired that renders them
totally dependent on the member of our support; and (d) the parents who are 60 years old or older whose monthly
income is below an amount to be determined by the Philippine Health Insurance Corporation in accordance with the
guiding principles set forth in Article I of R.A. No. 7875. And, thirdly, Section 2(f) of Presidential Decree No. 1146, as
amended by R.A. No. 8291,dependent for support upon the member or pensioner; (b) the legitimate, legitimated, legally
adopted child, including the illegitimate child, who is unmarried, not gainfully employed, not over the age of majority,
or is over the age of majority but incapacitated and incapable of self-support due to a mental or physical defect acquired
prior to age of majority; and (c) the parents dependent upon the member for support.1âwphi1
It is clear from these statutory definitions of dependent that the civil status of the employee as either married or single
is not the controlling consideration in order that a person may qualify as the employee’s legal dependent. What is rather
decidedly controlling is the fact that the spouse, child, or parent is actually dependent for support upon the employee.
Indeed, the Court has adopted this understanding of the term dependent in Social Security System v. De Los
Santos,27 viz:
Social Security System v. Aguas is instructive in determining the extent of the required "dependency" under the SS Law.
In Aguas, the Court ruled that although a husband and wife are obliged to support each other, whether one is actually
dependent for support upon the other cannot be presumed from the fact of marriage alone.
Further, Aguas pointed out that a wife who left her family until her husband died and lived with other men, was not
dependent upon her husband for support, financial or otherwise, during the entire period.
Said the Court:
In a parallel case involving a claim for benefits under the GSIS law, the Court defined a dependent as "one who derives
his or her main support from another. Meaning, relying on, or subject to, someone else for support; not able to exist or
sustain oneself, or to perform anything without the will, power, or aid of someone else." It should be noted that the
GSIS law likewise defines a dependent spouse as "the legitimate spouse dependent for support upon the member or
pensioner." In that case, the Court found it obvious that a wife who abandoned the family for more than 17 years until
her husband died, and lived with other men, was not dependent on her husband for support, financial or otherwise,
during that entire period. Hence, the Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already separated de facto from her husband cannot be said to be
"dependent for support" upon the husband, absent any showing to the contrary. Conversely, if it is proved that the
husband and wife were still living together at the time of his death, it would be safe to presume that she was dependent
on the husband for support, unless it is shown that she is capable of providing for herself.
Considering that existing laws always form part of any contract, and are deemed incorporated in each and every
contract,28 the definition of legal dependents under the aforecited social legislations applies herein in the absence of a
contrary or different definition mutually intended and adopted by the parties in the CBA. Accordingly, the concurrence
of a legitimate spouse does not disqualify a child or a parent of the employee from being a legal dependent provided
substantial evidence is adduced to prove the actual dependency of the child or parent on the support of the employee.
In this regard, the differentiation among the legal dependents is significant only in the event the CBA has prescribed a
hierarchy among them for the granting of a benefit; hence, the use of the terms primary beneficiaries and secondary
beneficiaries for that purpose. But considering that Section 4, Article XIII of the CBA has not included that differentiation,
petitioner had no basis to deny the claim for funeral and bereavement aid of Alfante for the death of his parent whose
death and fact of legal dependency on him could be substantially proved.
Pursuant to Article 100 of the Labor Code, petitioner as the employer could not reduce, diminish, discontinue or eliminate
any benefit and supplement being enjoyed by or granted to its employees. This prohibition against the diminution of
benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to
afford labor full protection.29 The application of the prohibition against the diminution of benefits presupposes that a
company practice, policy or tradition favorable to the employees has been clearly established; and that the payments
made by the employer pursuant to the practice, policy, or tradition have ripened into benefits enjoyed by them.30 To be
considered as a practice, policy or tradition, however, the giving of the benefits should have been done over a long
period of time, and must be shown to have been consistent and deliberate.31 It is relevant to mention that we have not
yet settled on the specific minimum number of years as the length of time sufficient to ripen the practice, policy or
tradition into a benefit that the employer cannot unilaterally withdraw.32
The argument of petitioner that the grant of the funeral and bereavement benefit was not voluntary but resulted from
its mistaken interpretation as to who was considered a legal dependent of a regular employee deserves scant
consideration. To be sure, no doubtful or difficult question of law was involved inasmuch as the several cogent statutes
existing at the time the CBA was entered into already defined who were qualified as the legal dependents of another.
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Moreover, the voluntariness of the grant of the benefit became even manifest from petitioner’s admission that, despite
the memorandum it issued in 200033 in order to "correct" the interpretation of the term legal dependent, it still approved
in 2003 the claims for funeral and bereavement aid of two employees, namely: (a) Cecille Bulacan, for the death of her
father; and (b) Charito Cartel, for the death of her mother, based on its supposedly mistaken interpretation.34
It is further worthy to note that petitioner granted claims for funeral and bereavement aid as early as 1999, then issued
a memorandum in 2000 to correct its erroneous interpretation of legal dependent under Section 4, Article XIII of the
CBA. This notwithstanding, the 2001-2004 CBA35 still contained the same provision granting funeral or bereavement aid
in case of the death of a legal dependent of a regular employee without differentiating the legal dependents according
to the employee's civil status as married or single. The continuity in the grant of the funeral and bereavement aid to
regular employees for the death of their legal dependents has undoubtedly ripened into a company policy. With that,
the denial of Alfante's qualified claim for such benefit pursuant to Section 4, Article XIII of the CBA violated the law
prohibiting the diminution of benefits.
WHEREFORE, the Court AFFIRMS the decision promulgated on February 5, 201 0; and ORDERS petitioner to pay the
costs of suit.
SO ORDERED.
8. NUWHRAIN vs. Phil. Plaza Inc.
We resolve the petition for review on certiorari,1 challenging the January 31, 2007 decision2 and the April 20, 2007
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 93698.
This CA decision reversed the July 4, 2005 decision4 of the National Labor Relations Commission (NLRC) in NLRC NCR
CA No. 031977-02 (NLRC NCR-30-05-02011-01) that in tum, reversed and set aside the April 30, 2002 decision5 of the
Labor Arbiter (LA).
The LA dismissed the complaint for non-payment of service charges filed by petitioner National Union of Workers in
Hotel Restaurant and Allied Industries (NUWHRAIN-APL-IUF), Philippine Plaza Chapter (Union).
The Factual Antecedents
The Union is the collective bargaining agent of the rank-and-file employees of respondent Philippine Plaza Holdings, Inc.
(PPHI).
On November 24, 1998, the PPHI and the Union executed the "Third Rank-and-File Collective Bargaining Agreement as
Amended"6 (CBA). The CBA provided, among others, for the collection, by the PPHI, of a ten percent (10%) service
charge on the saleof food, beverage, transportation, laundry and rooms. The pertinent CBA provisions read:
SECTION 68. COLLECTION. The HOTEL shall continue to collect ten percent (10%) service charge on the sale of food,
beverage, transportation, laundry and rooms except on negotiated contracts and special rates. [Emphasis supplied]
SECTION 69. DISTRIBUTION. The service charge to be distributed shall consist of the following:
Effective Food & Beverage Room, Transportation & valet
1998 95% 100%
1997 95% 100%
The distributable amount will beshared equally by all HOTEL employees, including managerial employees but excluding
expatriates, with three shares to be given to PPHI Staff and three shares to the UNION (one for the national and two
for the local funds) that may be utilized by them for purposes for which the UNION may decide.
These provisions merely reiterated similar provisions found in the PPHIUnion’s earlier collective bargaining agreement
executed on August 29, 1995.7
On February 25, 1999, the Union’s Service Charge Committee informed the Union President, through an audit report
(1st audit report),8 of uncollected service charges for the last quarter of 1998 amounting to ₱2,952,467.61. Specifically,
the audit report referred to the service charges from the following items: (1) "Journal Vouchers;" (2) "Banquet Other
Revenue;" and (3) "Staff and Promo." The Union presented this audit report to the PPHI’s management during the
February 26, 1999 Labor Management Cooperation Meeting (LMCM).9 The PPHI’s management responded that the Hotel
Financial Controller would need to verify the audit report.
Through a letter dated June 9, 1999,10 the PPHI admitted liability for ₱80,063.88 out of the ₱2,952,467.61 thatthe Union
claimed as uncollected service charges. The PPHI denied the rest of the Union’s claims because: (1) they were exempted
from the service charge being revenues from "special promotions" (revenue from the Westin Gold Card sales) or
"negotiated contracts" (alleged revenue from the Maxi-Media contract); (2) the revenues did not belong to the PPHI but
to third-party suppliers; and (3) no revenue was realized from these transactions as they were actually expenses incurred
for the benefit of executives or by way of good-will to clients and government officials.
During the July 12, 1999 LMCM,11 the Union maintained its position on uncollected service charges so that a deadlock
on the issue ensued. The parties agreed to refer the matter to a third party for the solution. They considered two options
– voluntary arbitration or court action – and promised to get back to each other on their chosen option.
In its formal reply (to the PPHI’sJune 9, 1999 letter) dated July 21, 1999 (2nd audit report),12 the Union modified its
claims. It claimed uncollected service charges from: (1) "Journal Vouchers - Westin Gold Revenue and Maxi-Media" (F&B
and Rooms Barter); (2) "Banquet and Other Revenue;" and (3) "Staff and Promo."
On August 10, 2000, the Union’s Service Charge Committee made another service charge audit report for the years 1997,
1998 and 1999 (3rd audit report).13 This 3rd audit report reflected total uncollected service charges of ₱5,566,007.62
from the following entries: (1) "Journal Vouchers;" (2) "Guaranteed No Show;" (3) "Promotions;" and (4) "F & B
Revenue." The Union President presented the 3rd audit report to the PPHI on August 29, 2000.
When the parties failed to reachan agreement, the Union, on May 3, 2001, filed before the LA (Regional Arbitration
Branch of the NLRC) a complaint14 for non-payment of specified service charges. The Union additionally charged the
PPHI with unfair labor practice (ULP) under Article 248 of the Labor Code, i.e., for violation of their collective bargaining
agreement.
In its decision15 dated April 30, 2002, the LA dismissed the Union’s complaint for lack of merit. The LA declared that the
Union failed to show, by law, contract and practice, its entitlement to the payment of service charges from the entries
specified in its audit reports (specified entries/transactions).
The LA pointed out that Section 68 of the CBA explicitly requires, as a precondition for the distribution of service charges
in favor of the covered employees, the collection of the 10% service charge on the "sale of food, beverage, transportation,
laundry and rooms;" at the same time, the provision exempts from its coverage "negotiated contracts" and "special
rates" that the LA deemed as non-revenue generating transactions involving "food, beverage, transportation, laundry
and rooms." The Union failed to prove that the PPHI collected 10% service charges on the specified entries/transactions
that could have triggered the PPHI’s obligation under this provision.
Particularly, the LA pointed out that, first, the only evidence on record that could have formed the basis of the Union’s
claim for service charges was the PPHI’s admission that, as a matter of policy, it has been charging, collecting and
distributing to the covered employees 10% service charge on the fifty percent (50%) of the total selling price of the
"Maxi-Media F & B" and on the "Average House" rate of the "Maxi-Media Rooms." And it did so, notwithstanding the fact
that the "Maxi-Media F & B and Rooms Barter" is a "negotiated contract" and/or "special rate" that Section 68 explicitly
excludes from the service charge coverage.
Second,while the PPHI derived revenues from the sale of the Westin Gold Cards (Westin Gold Revenue), the PPHI did
not and could not have collected a 10% service charge as these transactions could not be considered as sale of food,
beverage, transportation, laundry and rooms that Section 68 contemplates.
Third, the "Staff and Business Promotion and Banquet" entry refers to the expenses incurred by the PPHI’s Marketing
Department and Department Heads and Hotel executives either as part of their perks or the PPHI’s marketing tool/public
relations. These are special rates that are essentially non-revenue generating items.
Fourth, the "Backdrop" entry refers to services undertaken by third parties payment for which were made of course to
them; hence, this entry/transaction could not likewise be considered as sale of services by PPHI for which collection of
the 10% service charge was warranted.
Lastly, the LA equally brushed aside the Union’s claim of ULP declaring that the PPHI was well within its legal and
contractual right to refuse payment of service charges for entries from which it did not collect any service charge pursuant
tothe provision of their CBA.
The NLRC’s ruling
In its decision16 of July 4, 2005, the NLRC reversed the LA’s decision and considered the specified entries/transactions
as "service chargeable." As the PPHI failed to prove that it paid or remitted the required service charges, the NLRC held
the PPHI liable to pay the Union ₱5,566,007.62 representing the claimed uncollected service charges for the years 1997,
1998 and 1999 per the 3rd audit report.
The PHHI went to the CA on a petition for certiorari17 after the NLRC denied its motion for reconsideration.18
The CA’s ruling
The CA granted the PPHI’s petition in its January 31, 2007 decision.19 It affirmed the LA’s decision but ordered the PPHI
to pay the Union the amount of ₱80,063.88 as service charges that it found was due under the circumstances. The CA
declared that no service charges were due from the specified entries/transactions; either these constituted "negotiated
contracts" and "special rates" that Section 68 of the CBA explicitly excludes from the coverage of service charges, or
they were cited bases that the Union failed to sufficiently prove.
19 | A L B A - L A B R E L
The CA pointed out that: one, the "Westin Gold Card Revenues" entry involved the sale, not of food, beverage,
transportation, laundry and rooms, but of a "contractual right" to be charged a lesser rate for the products and services
that the Hotel and the stores within it provide. At any rate, the PPHI charges, collects and distributes to the covered
employees the CBAagreed service charges whenever any Westin Gold Card member purchases food, beverage, etc. Two,
the "Maxi-Media F & B and Rooms and Barter" entry did not involve any sale transaction that Section 68 contemplates.
The CA pointed out that the arrangement20 between the PPHI and Maxi-Media International, Inc. was not one of sale
but an innominate contract of facio ut des, i.e., in exchange for the professional entertainment services provided by
Maxi-Media, the Hotel agreed to give the former ₱2,800,000.00 worth of products and services.The CA added that this
agreement falls under "negotiated contracts" that Section 68 explicitly exempts. Three, the sale of "Gift Certificates"
does not involve the CBA-contemplated "sale of food, beverage, etc." Four, the Union failed to show the source of its
computations for its "Guaranteed No Show" and "F & B Revenue" claims. Five, the "Business Promotions" entry likewise
did not involve any sale; these were part of the PPHI’s business expenses in the form of either signing benefits for the
PPHI’s executives or asmarketing tool used by the PPHI’s marketing personnel to generate goodwill. And six, the Union’s
claims for service charges that the PPHI allegedly collected prior to May 3, 1998 or three years before the Union filed
itscomplaint on May 3, 2001 had already prescribed per Article 291 of the Labor Code.
The Union filed the present petition after the CA denied its motion for Reconsideration21
in the CA’s April 20, 2007 resolution.22
The Petition
The Union argues that the CA clearly misapprehended and misappreciated, with grave abuse of discretion, the facts and
evidence on record. It maintains that the specified entries/transactions are revenue based transactions which, per Section
68 and 69 of the CBA, clearly called for the collection and distribution of a 10% service charge in favor of the covered
employees. Particularly, the Union argues that: (1) the "Westin Gold Cards" serve not only as a discount card but also
as a "pre-paid" card that provide its purchasing members complimentary amenities for which the Hotel employees
rendered services and should, therefore, had been subjected to the 10% service charge; (2) the PPHI failed to prove
that it had paid and distributed to the covered employees the service charge due on the actual discounted sales of food,
beverage, etc., generated by the "Westin Gold Cards;" (3) the Hotel employees likewise rendered services whenever the
Maxi-Media International, Inc. consumed or availed part of the 2,800,000.00 worth of goods and services pursuant to
its agreement with the PPHI; (4) the "Maxi-Media" discounts should be charged to the PPHI as part of its expenses and
not the Union’s share in the service charges; (5) the PPHI has a separate budget for promotions, hence the "Business
Promotions" entry should likewise had been subjected to the 10% service charge; (6) the sale of "Gift Certificates,"
recorded in the PPHI’s "Journal Vouchers" as "other revenue/income," constituted a revenue transaction for which service
charges were due; (7) the PPHI admitted that service charges from "Guaranteed No Show" were due; and (8) it properly
identified through reference numbers the uncollected service charges from "Food and Beverage Revenue."
The Union contends that inrefusing to collect and remit the CBA-mandated service charges that the PPHI insists were
non-revenue transactions falling under "Negotiated Contracts" and/or "Special Rates," the PPHI, in effect, contravened
the employees’ rights to service charges under the law and the CBA. The Union also contends that the term "Negotiated
Contracts" should be applied to "airline contracts" only that they (the Union and the PPHI) intended when they executed
the CBA. It points out that at the time the CBA was executed, the PPHI had an existing agreement with Northwest
Airlines to which the term "Negotiated Contracts" clearly referred to. Further, the Union argues that its claim for unpaid
services charges for the year 1997 and part of 1998 had not yet prescribed. Applying Article 1155 of the Civil Code in
relation toArticle 291 of the Labor Code, the Union points out that the running of the prescriptive period for the filing of
its claim was interrupted when it presented to the PPHI its 1st audit report during the February 26, 1999 LMCMand when
the PPHI admitted the service charges due to the Union inthe PPHI’s June 9, 1999 letter.
The Union additionally argues that the PPHI failed to conform to the generally accepted accounting standards when it
reclassified the revenue items as expense items.
Finally, the Union contends that the PPHI’s refusal, despite repeated demands, to distribute the unremitted service
charges and recognize its right to service charges on the specified entries; the PPHI’s deliberate failure to disclose its
financial transactions and audit reports; and the PPHI’s reclassification of the revenues into expense items constitute
gross violation of the CBA that amounts to whatthe law considers as ULP.
The Case for the Respondent
The PPHI primarily counters, in its comment,23 that the Union’s call for the Court to thoroughly re-examinethe records
violates the Rule 45 proscription against questions of facts.The PPHI points out that Rule 45 of the Rules of Court under
which the petition is filed requires that only questions of law be raised. In addition, the factual findings of the LA that
had been affirmed by the CA deserve not only respect but even finality.
On the petition’s merits, the PPHI argues that the specified entries/transactions for which the Union claims service
charges: (1) were not revenue generating transactions; (2) that did not involve a sale of food, beverage, rooms,
transportation or laundry; and/or (3) were in the nature of negotiated contracts and special rates that Section 68 of the
CBA specifically excepts from the collection of service charges. Correlatively, Article 96 of the Labor Code requires the
collection of service charges as a condition precedent to its distribution or payment. Thus, as no service charges were
collected on the specified entries/transactions that the CBA expressly excepts, the Union’s claim for unpaid service
charges clearly had no basis.
To be precise, the PPHI points out that, first, the sale per se of the "Westin Gold Cards" did not involve a sale of food,
beverage, etc. that Section 68 of the CBA contemplates. The discounted sales of food, beverage, etc. to Westin Gold
Card holders, on the other hand, had already been subjected to service charges inclusive of the discount, i.e., computed
on the gross sales of food, beverage, etc. to the card holders, and which service charges it had already distributed to
the covered employees. Second, its agreement with Maxi-Media involved an exchange or barter transaction, i.e., its food
and Hotel services in exchange for Maxi-Media’s entertainment services that did not generate income. This agreement
likewise falls under "Negotiated Contracts" that Section 68 clearly excepts. And, in any case, it had already collected,
and distributed to the covered employees, the service charges on the food, beverage, etc. that Maxi-Media consumed
based on the monthly average rate of the rooms and on the 50% rate of the price of the consumed food and beverage.
Third, the Union failed to prove its claims for uncollected service charges from "Guaranteed No Show" and "Business
Promotions." Fourth, the "Food and Beverage other Revenue" entry refers to the PPHI’s transactions with external service
providers the payment for whose services could not be considered as the PPHI’s revenue. Fifth, the sale per se of the
"Gift Certificates" also did not involve the Section 68-contemplated sale of food, beverage, etc. and the Union failed to
prove that the presented Gift Certificateshad actually been consumed, i.e., used within the Hotel premises for food,
beverage, etc. And sixth, it had never been its practice to collect service charges on the specified entries/transactions
that could have otherwise resulted in what the Union considers as "partial abolition of service charges" when it refused
to collect service charges from them.
The PPHI also disputes what it considers as the Union’s strained interpretation of the CBA exception of "Negotiated
Contracts" as applicable to airline contracts only. It points out that the clear wordings of Section 68 of the CBA plainly
show the intent to except, in a general and broad sense, "Negotiated Contracts" and "Special Rates" as to include the
"Westin Gold Cards" and "Maxi-Media" barter agreement. The PPHI additionally argues that the CBA’s exception of
"Negotiated Contracts" and "Special Rates" from the collection of service charges does not violate Article 96 of the Labor
Code. It points out that Article 96 merely provides for the minimum percentage distribution, between it (the PPHI) as
the employer and the Hotel’s covered employees, of the collected service charges which their CBA more than satisfied.
It also points out that Article 96 does not prohibit the exception of certain transactions from the coverage and/or
collection of service charges that it (as the employer) and the Union (in behalf of the covered Hotel employees) had
voluntarily and mutually agreed on in their CBA.1âwphi1 And in fact, the Union’s refusal to recognize these clear and
express exceptions constituted a violation of their agreement.
Further, the PPHI maintains that the Union’s claim for the alleged uncollected service charges for the year 1997 and the
early months of 1998 had already prescribed per Article 291 of the Labor Code.
Finally, the PPHI points out that the issue in this case is not whether service charges had been paid. Rather, the clear
issue is whether or not service charges should have been collected (and distributed to the covered employees) for the
specified entries/transactions that the LA and the CA correctly addressed and which the NLRC clearly missed as it
rendered a decision without any factual or legal basis.
The Court's Ruling
We find the petition unmeritorious.
Preliminary considerations: jurisdictional limitations of the Court’s Rule 45 review of the CA’s Rule 65 decision in labor
cases; the Montoya ruling and factual-issue-bar-rule
In a petition for review on certiorari under Rule 45 of the Rules of Court, we review the legal errors that the CA may
have committed in the assailed decision, in contrastwith the review for jurisdictional errors that we undertake in an
original certiorari action. In reviewing the legal correctness of the CA decision in a labor case taken under Rule 65 of the
Rules of Court, we examine the CA decision in the context that it determined the presence or the absence of grave abuse
of discretion in the NLRC decision before it and not on the basis of whether the NLRC decision, on the merits of the case,
was correct. In other words, we proceed from the premise that the CA undertook a Rule 65 review, not a review on
appeal, of the NLRC decision challenged before it. Within this limited scope of our Rule 45 review, the question that we
ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?24
In addition, the Court’s jurisdiction in a Rule 45 petition for review on certiorari is limited to resolving only questions of
law. A question of law arises when the doubt or controversy exists as to what law pertains to a particular set of facts;
and a question of fact arises when the doubt or controversy pertains to the truth or falsity of the alleged facts.25
20 | A L B A - L A B R E L
The present petition essentially raises the question – whether the Union may collect from the PPHI, under the terms of
the CBA, its share of the service charges. This is a clear question of law that falls well within the Court’s power in a Rule
45 petition.
Resolution of this question of law, however, is inextricably linked with the largely factual issue of whether the specified
entries/transactions fall within the generally covered sale of food, beverage, transportation, etc. from which service
charges are due or within the CBA excepted "Negotiated Contracts" and "Special Rates." It also unavoidably requires
resolution of another factual issue, i.e., whether the Union’s claim for service charges collected for the year 1997 and
the early months of 1998 had already prescribed. As questions of fact, they are proscribed by our Rule 45 jurisdiction;
we generally cannot address these factual issues except to the extent necessary to determine whether the CA correctly
found the NLRC in grave abuse of discretion in granting the Union’s claim for service charges from the specified
entries/transactions.
The jurisdictional limitations of our Rule 45 review of the CA’s Rule 65 decision in labor cases constrain us to deny the
present petition for clear lack of legal error in the CA’s decision.Our consideration of the facts taken within this limited
scope of our factual review power, convinces us that grave abuse of discretion attended the NLRC’s decision. At what
point and to what extent the NLRC gravely abusedits discretion is the matter we shall discuss below.
The NLRC’s patently erroneous appreciation of the real issue in the present controversy, along with the facts and the
evidence, amounted to grave abuse of discretion
In granting the Union’s claim, the NLRC simply declared that the PPHI "has not shown any proof that it paid or remitted
what is due to the Union and its members" and concluded that the specified entries/transactions were "service
chargeable." This NLRC conclusion plainly failed to appreciate that it involved only the alleged uncollected service charges
from the specified entries/transactions. The NLRC likewise, in the course of its ruling, did not point to any evidence
supporting its conclusion.
In deciding as it did, the NLRC patently proceeded from the wrong premise, i.e., that the PPHI did not at all distribute
to the Hotel’s covered employees their share in the collected service charges. It likewise erroneously assumed that all
the specified entries/transactions were subject to service charges and that the PPHI collected service charges from them
as its ruling was patently silent on this point. The NLRC also erroneously assumed that each and every transaction that
the PPHI entered into was subject to a service charge.
What the NLRC clearly and conveniently overlooked was the underlying issue of whether service charges are due from
the specified entries/transactions, i.e., whether the specified entries/transactions are covered by the CBA’s general-rule
provisions on the collection of service charges or whether they are excepted because they fall within the excepted
"Negotiated Contracts" and "Special Rates" or simply did not involve a "sale of food, beverage, etc." from which service
charges are due. This understanding of this case’s real issue is an indispensable requisite in the proper resolution of the
controversy and a task that the NLRC, as a tribunal exercising quasi-judicial power, mustperform with circumspection
and utmost diligence. The patent failure led to its manifestly flawed conclusions that were belied by the underlying facts.
By so doing, the NLRC acted outside the clear contemplation of the law.26
Accordingly, we affirm the CA’s decision to be legally correct as it correctly reversed the NLRC decision for grave abuse
of discretion.
Nature of a CBA; rules inthe interpretation of CBA provisions
A collective bargaining agreement, as used in Article 252 (now Article 262) 27 of the Labor Code, is a contract executed
at the request of either the employer or the employees’ exclusive bargaining representative with respect to wages, hours
of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions
under such agreement.28 Jurisprudence settles that a CBA is the law between the contracting parties who are obliged
under the law to comply with its provisions.29
As a contract and the governing law between the parties, the general rules of statutory construction apply in the
interpretation of its provisions. Thus, if the terms of the CBA are plain, clear and leave no doubt on the intention of the
contracting parties, the literal meaning of its stipulations, as they appear on the face of the contract, shall prevail.30 Only
when the words used are ambiguous and doubtful or leading to several interpretations of the parties’ agreement that a
resort to interpretation and construction is called for.31
No service charges were due from the specified entries/transactions; they either fall within the CBA-excepted "Negotiated
Contracts" and "Special Rates" or did not involve "a sale of food, beverage, etc."
The Union anchors its claim for services charges on Sections 68 and 69 of the CBA, in relation with Article96 of the Labor
Code. Section 68 states that the sale of food, beverage, transportation, laundry and rooms are subject to service charge
at the rate often percent (10%). Excepted from the coverage of the 10% service charge are the so-called "negotiated
contracts" and "special rates."
Following the wordings of Section 68 of the CBA, three requisites must be present for the provisions on service charges
to operate: (1) the transaction from which service charge is sought to be collected is a sale; (2) the sale transaction
covers food, beverage, transportation, laundry and rooms; and (3) the sale does not result from negotiated contracts
and/or at special rates.
In plain terms, all transactions involving a "sale of food, beverage, transportation, laundry and rooms" are generally
covered. Excepted from the coverage are, first, non-sale transactions or transactions that do not involve any sale even
though they involve "food, beverage, etc." Second, transactions that involve a sale but do not involve "food, beverage,
etc." And third, transactions involving "negotiated contracts" and "special rates" i.e., a "sale of food, beverage, etc."
resulting from "negotiated contracts" or at "special rates;" non-sale transactions involving "food, beverage, etc." resulting
from "negotiated contracts" and/or "special rates;" and sale transactions, but not involving "food, beverage, etc.,"
resulting from "negotiated contracts" and "special rates." Notably, the CBA does not specifically define the terms
"negotiated contracts" and "special rates." Nonetheless, the CBA likewise does not explicitly limit the use of these terms
to specified transactions. With particular reference to "negotiated contracts," the CBA does not confine its application to
"airline contracts" as argued by the Union. Thus, as correctly declared by the CA, the term "negotiated contracts" should
be read as applying to all types of negotiated contracts and not to "airlines contracts" only. This is in line with the basic
rule of construction that when the terms are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulations shall prevail. A constricted interpretation of this term, i.e., as applicable to "airlines
contracts" only, must be positively shown either by the wordings of the CBA or by sufficient evidence of the parties’
intention to limit its application. The Union completely failed to provide support for its constricted reading of the term
"negotiated contracts," either from the wordings of the CBA or from the evidence.
In reversing the NLRC’s ruling and denying the Union’s claim, the CA found the specified entries/transactions as either
falling under the excepted negotiated contracts and/or special rates or not involving a sale of food, beverage, etc.
Specifically, it considered the entries "Westin Gold
Cards Revenue" and "Maxi Media Barter" to be negotiated contracts or contracts under special rates, and the entries
"Business Promotions" and "Gift Certificates" as contracts that did not involve a sale of food, beverage, etc. The CA also
found no factual and evidentiary basis to support the Union’s claim for service charges on the entries "Guaranteed No
show" and "F & B Revenue."
Our consideration of the records taken under our limited factual review power convinces us that these specified
entries/transactions are indeed not subject to a 10% service charge. We thus see no reason to disturb the CA’s findings
on these points.
The PPHI did not violate Article 96 of the Labor Code when they refused the Union’s claim for service charges on the
specified entries/transactions
Article 96 of the Labor Code provides for the minimum percentage distribution between the employer and the employees
of the collected service charges, and its integration inthe covered employees’ wages in the event the employer terminates
its policy of providing for its collection. It pertinently reads:
Art. 96. Service Charges.
x x x In case the service charge is abolished, the share of the covered employees shall be considered integrated in their
wages.
This last paragraph of Article 96 of the Labor Code presumes the practice of collecting service charges and the employer’s
termination of this practice. When this happens, Article 96 requires the employer to incorporate the amount that the
employees had been receiving as share of the collected service charges into their wages. Incases where no service
charges had previously been collected (as where the employer never had any policy providing for collection of service
charges or had never imposed the collection of service charges on certain specified transactions), Article 96 will not
operate.
In this case, the CA found that the PPHI had not in fact been collecting services charges on the specified
entries/transactions that we pointed out as either falling under "negotiated contracts" and/or "special rates" or did not
involve a "sale of food, beverage, etc." Accordingly, Article 96 of the Labor Code finds no application in this case; the
PPHI did not abolish or terminate the implementation of any company policy providing for the collection of service
charges on specified
entries/transactions that could have otherwise rendered it liable to pay an amount representing the covered employees’
share in the alleged abolished service charges.
The Union’s claim for service charges for the year 1997 and the early months of 1998 could not have yet prescribed at
the time it filed its complaint on May 3, 2001; Article 1155 of the Civil Code applies suppletorily to Article 291 of the
Labor Code
Article 291 (now Article 305)32 of the Labor Code states that "all money claims arising from employer-employee relations
x x x shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall forever be
barred." [Emphasis supplied]
Like other causes of action, the prescriptive period for money claims under Article 291 of the Labor Code is subject to
interruption. And, in the absence of an equivalent Labor Codeprovision for determining whether Article 291’s three-year
21 | A L B A - L A B R E L
prescriptive period may be interrupted, Article 1155 of the Civil Code33 may be applied. Thus, the period of prescription
of money claims under Article 291 is interrupted by: (1) the filing of an action; (2) a written extrajudicial demand by the
creditor; and (3) a written acknowledgment of the debt by the debtor.
In the present petition, the facts indisputably showed that as early as 1998, the Union demanded, via the 1st audit
report, from the PPHI the payment and/or distribution of the alleged uncollected service charges for the year 1997. From
thereon, the parties went through negotiations (LCMC) to settle and reconcile on their respective positions and claims.
Under these facts – the Union’s written extrajudicial demand through its 1st audit report and the successive negotiation
meetings between the Union and the PPHI – the running of the three-year prescriptive period under Article 291 of the
Labor Code could have effectively been interrupted. Consequently, the Union’s claims for the alleged uncollected service
charges for the year 1997 could not have yet prescribed at the time it filed its complaint on May 3, 2001.
This non-barring effect of prescription, notwithstanding (i.e., that the running of the three-year prescriptive period had
effectively been interrupted – by the Union's written extrajudicial demand on the PPHI), the CA, as it affirmed the LA,
still correctly denied the Union's claims for the alleged uncollected and/or undistributed service charges on the specified
entries/transactions for the year 1997 and the early part of 1998. As the CA found and discussed in its decision, and
with which we agree as amply supported by factual and legal bases, the nature of these specified entries/transactions
as either excepted from the collection of service charges or not constituting a "sale of food, beverage, etc.," and the
Union's failure to support its claims by sufficient evidence warranted, without doubt, the denial of the Union's action.
In sum, we find the CA's denial of the Union's claim for service charges from the specified entries/transactions legally
correct and to be well supported by the facts and the law. The CA correctly reversed for grave abuse of discretion the
NLRC's decision.
WHEREFORE, in light of these considerations, we hereby DENY the petition. We AFFIRM the decision dated January 31,
2007 and resolution dated April 20, 2007 of the Court of Appeals in CA-G.R. Sp No. 93698.
SO ORDERED.

22 | A L B A - L A B R E L
 9. MMPSEU vs. Mitsubishi Motors Phils Corp. paid ₱288.40,16 after deducting from the total medical expenses the amount paid by MEDICard and the ₱316.90 discount
given by the hospital.
Claiming that under the CBA, they are entitled to hospital benefits amounting to ₱27,427.10, ₱6,769.35 and ₱8,123.80,
The Collective Bargaining Agreement (CBA) of the parties in this case provides that the company shoulder the
respectively, which should not be reduced by the amounts paid by MEDICard and by Prosper, Calida, Oabel and Martin
hospitalization expenses of the dependents of covered employees subject to certain limitations and restrictions.
asked for reimbursement from MMPC. However, MMPC denied the claims contending that double insurance would result
Accordingly, covered employees pay part of the hospitalization insurance premium through monthly salary deduction
if the said employees would receive from the company the full amount of hospitalization expenses despite having already
while the company, upon hospitalization of the covered employees' dependents, shall pay the hospitalization expenses
received payment of portions thereof from other health insurance providers.
incurred for the same. The conflict arose when a portion of the hospitalization expenses of the covered employees'
This prompted the MMPSEU President to write the MMPC President17 demanding full payment of the hospitalization
dependents were paid/shouldered by the dependent's own health insurance. While the company refused to pay the
benefits. Alleging discrimination against MMPSEU union members, she pointed out that full reimbursement was given in
portion of the hospital expenses already shouldered by the dependents' own health insurance, the union insists that the
a similar claim filed by Luisito Cruz (Cruz), a member of the Hourly Union. In a letter-reply,18 MMPC, through its Vice-
covered employees are entitled to the whole and undiminished amount of said hospital expenses.
President for Industrial Relations Division, clarified that the claims of the said MMPSEU members have already been paid
By this Petition for Review on Certiorari,1 petitioner Mitsubishi Motors Philippines Salaried Employees Union (MMPSEU)
on the basis of official receipts submitted. It also denied the charge of discrimination and explained that the case of Cruz
assails the March 31, 2006 Decision2 and December 5, 2006 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No.
involved an entirely different matter since it concerned the admissibility of certified true copies of documents for
75630, which reversed and set aside the Voluntary Arbitrator’s December 3, 2002 Decision4 and declared respondent
reimbursement purposes, which case had been settled through voluntary arbitration.
Mitsubishi Motors Philippines Corporation (MMPC) to be under no legal obligation to pay its covered employees’
On August 28, 2000, MMPSEU referred the dispute to the National Conciliation and Mediation Board and requested for
dependents’ hospitalization expenses which were already shouldered by other health insurance companies.
preventive mediation.19
Factual Antecedents
Proceedings before the Voluntary Arbitrator
The parties’ CBA5 covering the period August 1, 1996 to July 31, 1999 provides for the hospitalization insurance benefits
On October 3, 2000, the case was referred to Voluntary Arbitrator Rolando Capocyan for resolution of the issue involving
for the covered dependents, thus:
the interpretation of the subject CBA provision.20
SECTION 4. DEPENDENTS’ GROUP HOSPITALIZATION INSURANCE – The COMPANY shall obtain group hospitalization
MMPSEU alleged that there is nothing in the CBA which prohibits an employee from obtaining other insurance or declares
insurance coverage or assume under a self-insurance basis hospitalization for the dependents of regular employees up
that medical expenses can be reimbursed only upon presentation of original official receipts. It stressed that the
to a maximum amount of forty thousand pesos (₱40,000.00) per confinement subject to the following:
hospitalization benefits should be computed based on the formula indicated in the CBA without deducting the benefits
a. The room and board must not exceed three hundred pesos (₱300.00) per day up to a maximum of thirty-
derived from other insurance providers. Besides, if reduction is permitted, MMPC would be unjustly benefited from the
one (31) days. Similarly, Doctor’s Call fees must not exceed three hundred pesos (₱300.00) per day for a
monthly premium contributed by the employees through salary deduction. MMPSEU added that its members had
maximum of thirty-one (31) days. Any excess of this amount shall be borne by the employee.
legitimate claims under the CBA and that any doubt as to any of its provisions should be resolved in favor of its members.
b. Confinement must be in a hospital designated by the COMPANY. For this purpose, the COMPANY shall
Moreover, any ambiguity should be resolved in favor of labor.21
designate hospitals in different convenient places to be availed of by the dependents of employees. In cases
On the other hand, MMPC argued that the reimbursement of the entire amounts being claimed by the covered employees,
of emergency where the dependent is confined without the recommendation of the company doctor or in a
including those already paid by other insurance companies, would constitute double indemnity or double insurance,
hospital not designated by the COMPANY, the COMPANY shall look into the circumstances of such confinement
which is circumscribed under the Insurance Code. Moreover, a contract of insurance is a contract of indemnity and the
and arrange for the payment of the amount to the extent of the hospitalization benefit.
employees cannot be allowed to profit from their dependents’ loss.22
c. The limitations and restrictions listed in Annex "B" must be observed.
Meanwhile, the parties separately sought for a legal opinion from the Insurance Commission relative to the issue at hand.
d. Payment shall be direct to the hospital and doctor and must be covered by actual billings.
In its letter23 to the Insurance Commission, MMPC requested for confirmation of its position that the covered employees
Each employee shall pay one hundred pesos (₱100.00) per month through salary deduction as his share in the payment
cannot claim insurance benefits for a loss that had already been covered or paid by another insurance company. However,
of the insurance premium for the above coverage with the balance of the premium to be paid by the COMPANY. If the
the Office of the Insurance Commission opted not to render an opinion on the matter as the same may become the
COMPANY is self-insured the one hundred pesos (₱100.00) per employee monthly contribution shall be given to the
subject of a formal complaint before it.24 On the other hand, when queried by MMPSEU,25the Insurance Commission,
COMPANY which shall shoulder the expenses subject to the above level of benefits and subject to the same limitations
through Atty. Richard David C. Funk II (Atty. Funk) of the Claims Adjudication Division, rendered an opinion contained
and restrictions provided for in Annex "B" hereof.
in a letter,26 viz:
The hospitalization expenses must be covered by actual hospital and doctor’s bills and any amount in excess of the
Ms. Cecilia L. ParasPresident
above mentioned level of benefits will be for the account of the employee.
Mitsubishi Motors Phils.
For purposes of this provision, eligible dependents are the covered employees’ natural parents, legal spouse and
[Salaried] Employees Union
legitimate or legally adopted or step children who are unmarried, unemployed who have not attained twenty-one (21)
Ortigas Avenue Extension,
years of age and wholly dependent upon the employee for support.
Cainta, Rizal
This provision applies only in cases of actual confinement in the hospital for at least six (6) hours.
Madam:
Maternity cases are not covered by this section but will be under the next succeeding section on maternity benefits.6
We acknowledge receipt of your letter which, to our impression, basically poses the question of whether or not recovery
When the CBA expired on July 31, 1999, the parties executed another CBA7 effective August 1, 1999 to July 31, 2002
of medical expenses from a Health Maintenance Organization bars recovery of the same reimbursable amount of medical
incorporating the same provisions on dependents’ hospitalization insurance benefits but in the increased amount of
expenses under a contract of health or medical insurance.
₱50,000.00. The room and board expenses, as well as the doctor’s call fees, were also increased to ₱375.00.
We wish to opine that in cases of claims for reimbursement of medical expenses where there are two contracts providing
On separate occasions, three members of MMPSEU, namely, Ernesto Calida (Calida), Hermie Juan Oabel (Oabel) and
benefits to that effect, recovery may be had on both simultaneously. In the absence of an Other Insurance provision in
Jocelyn Martin (Martin), filed claims for reimbursement of hospitalization expenses of their dependents.
these coverages, the courts have uniformly held that an insured is entitled to receive the insurance benefits without
MMPC paid only a portion of their hospitalization insurance claims, not the full amount. In the case of Calida, his wife,
regard to the amount of total benefits provided by other insurance. (INSURANCE LAW, A Guide to Fundamental Principles,
Lanie, was confined at Sto. Tomas University Hospital from September 4 to 9, 1998 due to Thyroidectomy. The medical
Legal Doctrines, and Commercial Practices; Robert E. Keeton, Alau I. Widiss, p. 261). The result is consistent with the
expenses incurred totalled ₱29,967.10. Of this amount, ₱9,000.00 representing professional fees was paid by MEDICard
public policy underlying the collateral source rule – that is, x x x the courts have usually concluded that the liability of a
Philippines, Inc. (MEDICard) which provides health maintenance to Lanie.8 MMPC only paid ₱12,148.63.9 It did not pay
health or accident insurer is not reduced by other possible sources of indemnification or compensation. (ibid).
the ₱9,000.00 already paid by MEDICard and the ₱6,278.47 not covered by official receipts. It refused to give to Calida
Very truly yours,
the difference between the amount of medical expenses of ₱27,427.10 10 which he claimed to be entitled to under the
RICHARD DAVID C. FUNK II
CBA and the ₱12,148.63 which MMPC directly paid to the hospital.
Officer-in-Charge
In the case of Martin, his father, Jose, was admitted at The Medical City from March 26 to 27, 2000 due to Acid Peptic
Claims Adjudication Division
Disease and incurred medical expenses amounting to ₱9,101.30.14 MEDICard paid ₱8,496.00.15Consequently, MMPC only
23 | A L B A - L A B R E L
(SGD.)
Attorney IV
On December 3, 2002, the Voluntary Arbitrator rendered a Decision27 finding MMPC liable to pay or reimburse the amount
of hospitalization expenses already paid by other health insurance companies. The Voluntary Arbitrator held that the
employees may demand simultaneous payment from both the CBA and their dependents’ separate health insurance
without resulting to double insurance, since separate premiums were paid for each contract. He also noted that the CBA
does not prohibit reimbursement in case there are other health insurers.
Proceedings before the Court of Appeals
MMPC filed a Petition for Review with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction28 before the CA. It claimed that the Voluntary Arbitrator committed grave abuse of discretion in not finding
that recovery under both insurance policies constitutes double insurance as both had the same subject matter, interest
insured and risk or peril insured against; in relying solely on the unauthorized legal opinion of Atty. Funk; and in not
finding that the employees will be benefited twice for the same loss. In its Comment,29 MMPSEU countered that MMPC
will unjustly enrich itself and profit from the monthly premiums paid if full reimbursement is not made.
On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that despite the lack of a provision which bars
recovery in case of payment by other insurers, the wordings of the subject provision of the CBA showed that the parties
intended to make MMPC liable only for expenses actually incurred by an employee’s qualified dependent. In particular,
the provision stipulates that payment should be made directly to the hospital and that the claim should be supported by
actual hospital and doctor’s bills. These mean that the employees shall only be paid amounts not covered by other health
insurance and is more in keeping with the principle of indemnity in insurance contracts. Besides, a contrary interpretation
would "allow unscrupulous employees to unduly profit from the x x x benefits" and shall "open the floodgates to
questionable claims x x x."30
The dispositive portion of the CA Decision31 reads:
WHEREFORE, the instant petition is GRANTED. The decision of the voluntary arbitrator dated December 3, 2002 is
REVERSED and SET ASIDE and judgment is rendered declaring that under Art. XI, Sec. 4 of the Collective Bargaining
Agreement between petitioner and respondent effective August 1, 1999 to July 31, 2002, the former’s obligation to
reimburse the Union members for the hospitalization expenses incurred by their dependents is exclusive of those paid
by the Union members to the hospital.
SO ORDERED.32
In its Motion for Reconsideration,33 MMPSEU pointed out that the alleged oppression that may be committed by abusive
employees is a mere possibility whereas the resulting losses to the employees are real. MMPSEU cited Samsel v. Allstate
Insurance Co.,34 wherein the Arizona Supreme Court explicitly ruled that an insured may recover from separate health
insurance providers, regardless of whether one of them has already paid the medical expenses incurred. On the other
hand, MMPC argued in its Comment35 that the cited foreign case involves a different set of facts.
The CA, in its Resolution36 dated December 5, 2006, denied MMPSEU’s motion.
Hence, this Petition.
Issues
MMPSEU presented the following grounds in support of its Petition:
A.
THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT REVERSED THE DECISION DATED 03 [DECEMBER] 2002 OF THE
VOLUNTARY ARBITRATOR BELOW WHEN THE SAME WAS SUPPORTED BY SUBSTANTIAL EVIDENCE, INCLUDING THE
OPINION OF THE INSURANCE COMMISSION THAT RECOVERY FROM BOTH THE CBA AND SEPARATE HEALTH CARDS
IS NOT PROHIBITED IN THE ABSENCE OF ANY SPECIFIC PROVISION IN THE CBA.
B.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN OVERTURNING THE DECISION OF THE VOLUNTARY
ARBITRATOR WITHOUT EVEN GIVING ANY LEGAL OR JUSTIFIABLE BASIS FOR SUCH REVERSAL.
C.
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN REFUSING TO CONSIDER OR EVEN MENTION ANYTHING
ABOUT THE AMERICAN AUTHORITIES CITED IN THE RECORDS THAT DO NOT PROHIBIT, BUT IN FACT ALLOW,
RECOVERY FROM TWO SEPARATE HEALTH PLANS.
D.
THE COURT OF APPEALS GRAVELY ERRED IN GIVING MORE IMPORTANCE TO A POSSIBLE, HENCE MERELY
SPECULATIVE, ABUSE BY EMPLOYEES OF THE BENEFITS IF DOUBLE RECOVERY WERE ALLOWED INSTEAD OF THE
REAL INJURY TO THE EMPLOYEES WHO ARE PAYING FOR THE CBA HOSPITALIZATION BENEFITS THROUGH MONTHLY
SALARY DEDUCTIONS BUT WHO MAY NOT BE ABLE TO AVAIL OF THE SAME IF THEY OR THEIR DEPENDENTS HAVE
OTHER HEALTH INSURANCE.37
MMPSEU avers that the Decision of the Voluntary Arbitrator deserves utmost respect and finality because it is supported
by substantial evidence and is in accordance with the opinion rendered by the Insurance Commission, an agency
equipped with vast knowledge concerning insurance contracts. It maintains that under the CBA, member-employees are
entitled to full reimbursement of medical expenses incurred by their dependents regardless of any amounts paid by the
latter’s health insurance provider. Otherwise, non-recovery will constitute unjust enrichment on the part of MMPC. It
avers that recovery from both the CBA and other insurance companies is allowed under their CBA and not prohibited by
law nor by jurisprudence.
Our Ruling
The Petition has no merit.
Atty.Funk erred in applying the collateral source rule.
The Voluntary Arbitrator based his ruling on the opinion of Atty. Funk that the employees may recover benefits from
different insurance providers without regard to the amount of benefits paid by each. According to him, this view is
consistent with the theory of the collateral source rule.
As part of American personal injury law, the collateral source rule was originally applied to tort cases wherein the
defendant is prevented from benefiting from the plaintiff’s receipt of money from other sources.38 Under this rule, if an
injured person receives compensation for his injuries from a source wholly independent of the tortfeasor, the payment
should not be deducted from the damages which he would otherwise collect from the tortfeasor.39 In a recent
Decision40 by the Illinois Supreme Court, the rule has been described as "an established exception to the general rule
that damages in negligence actions must be compensatory." The Court went on to explain that although the rule appears
to allow a double recovery, the collateral source will have a lien or subrogation right to prevent such a double
recovery.41 In Mitchell v. Haldar,42 the collateral source rule was rationalized by the Supreme Court of Delaware:
The collateral source rule is ‘predicated on the theory that a tortfeasor has no interest in, and therefore no right to
benefit from monies received by the injured person from sources unconnected with the defendant’. According to the
collateral source rule, ‘a tortfeasor has no right to any mitigation of damages because of payments or compensation
received by the injured person from an independent source.’ The rationale for the collateral source rule is based upon
the quasi-punitive nature of tort law liability. It has been explained as follows:
The collateral source rule is designed to strike a balance between two competing principles of tort law: (1) a plaintiff is
entitled to compensation sufficient to make him whole, but no more; and (2) a defendant is liable for all damages that
proximately result from his wrong. A plaintiff who receives a double recovery for a single tort enjoys a windfall; a
defendant who escapes, in whole or in part, liability for his wrong enjoys a windfall. Because the law must sanction one
windfall and deny the other, it favors the victim of the wrong rather than the wrongdoer.
Thus, the tortfeasor is required to bear the cost for the full value of his or her negligent conduct even if it results in a
windfall for the innocent plaintiff. (Citations omitted)
As seen, the collateral source rule applies in order to place the responsibility for losses on the party causing them.43Its
application is justified so that "'the wrongdoer should not benefit from the expenditures made by the injured party or
take advantage of contracts or other relations that may exist between the injured party and third persons." 44Thus, it
finds no application to cases involving no-fault insurances under which the insured is indemnified for losses by insurance
companies, regardless of who was at fault in the incident generating the losses.45 Here, it is clear that MMPC is a no-
fault insurer. Hence, it cannot be obliged to pay the hospitalization expenses of the dependents of its employees which
had already been paid by separate health insurance providers of said dependents.
The Voluntary Arbitrator therefore erred in adopting Atty. Funk’s view that the covered employees are entitled to full
payment of the hospital expenses incurred by their dependents, including the amounts already paid by other health
insurance companies based on the theory of collateral source rule.
The conditions set forth in the CBA provision indicate an intention to limit MMPC’s liability only to actual expenses incurred
by the employees’ dependents, that is, excluding the amounts paid by dependents’ other health insurance providers.
The Voluntary Arbitrator ruled that the CBA has no express provision barring claims for hospitalization expenses already
paid by other insurers. Hence, the covered employees can recover from both. The CA did not agree, saying that the
conditions set forth in the CBA implied an intention of the parties to limit MMPC’s liability only to the extent of the
expenses actually incurred by their dependents which excludes the amounts shouldered by other health insurance
companies.
We agree with the CA. The condition that payment should be direct to the hospital and doctor implies that MMPC is only
liable to pay medical expenses actually shouldered by the employees’ dependents. It follows that MMPC’s liability is
limited, that is, it does not include the amounts paid by other health insurance providers. This condition is obviously
intended to thwart not only fraudulent claims but also double claims for the same loss of the dependents of covered
employees.
It is well to note at this point that the CBA constitutes a contract between the parties and as such, it should be strictly
construed for the purpose of limiting the amount of the employer’s liability.46 The terms of the subject provision are clear
24 | A L B A - L A B R E L
and provide no room for any other interpretation. As there is no ambiguity, the terms must be taken in their plain,
ordinary and popular sense.47 Consequently, MMPSEU cannot rely on the rule that a contract of insurance is to be liberally
construed in favor of the insured. Neither can it rely on the theory that any doubt must be resolved in favor of labor.
Samsel v. Allstate Insurance Co. is noton all fours with the case at bar.
MMPSEU cannot rely on Samsel v. Allstate Insurance Co. where the Supreme Court of Arizona allowed the insured to
enjoy medical benefits under an automobile policy insurance despite being able to also recover from a separate health
insurer. In that case, the Allstate automobile policy does not contain any clause restricting medical payment coverage
to expenses actually paid by the insured nor does it specifically provide for reduction of medical payments benefits by a
coordination of benefits.48 However, in the case before us, the dependents’ group hospitalization insurance provision in
the CBA specifically contains a condition which limits MMPC’s liability only up to the extent of the expenses that should
be paid by the covered employee’s dependent to the hospital and doctor. This is evident from the portion which states
that "payment by MMPC shall be direct to the hospital and doctor."49 In contrast, the Allstate automobile policy expressly
gives Allstate the authority to pay directly to the insured person or on the latter’s behalf all reasonable expenses actually
incurred. Therefore, reliance on Samsel is unavailing because the facts therein are different and not decisive of the
issues in the present case.
To allow reimbursement of amounts paid under other insurance policies shall constitute double recovery which is not
sanctioned by law.
MMPSEU insists that MMPC is also liable for the amounts covered under other insurance policies; otherwise, MMPC will
unjustly profit from the premiums the employees contribute through monthly salary deductions.
This contention is unmeritorious.
To constitute unjust enrichment, it must be shown that a party was unjustly enriched in the sense that the term unjustly
could mean illegally or unlawfully.50 A claim for unjust enrichment fails when the person who will benefit has a valid
claim to such benefit.51
The CBA has provided for MMPC’s limited liability which extends only up to the amount to be paid to the hospital and
doctor by the employees’ dependents, excluding those paid by other insurers. Consequently, the covered employees will
not receive more than what is due them; neither is MMPC under any obligation to give more than what is due under the
CBA.
Moreover, since the subject CBA provision is an insurance contract, the rights and obligations of the parties must be
determined in accordance with the general principles of insurance law.52 Being in the nature of a non-life insurance
contract and essentially a contract of indemnity, the CBA provision obligates MMPC to indemnify the covered employees’
medical expenses incurred by their dependents but only up to the extent of the expenses actually incurred.53 This is
consistent with the principle of indemnity which proscribes the insured from recovering greater than the loss.54 Indeed,
to profit from a loss will lead to unjust enrichment and therefore should not be countenanced. As aptly ruled by the CA,
to grant the claims of MMPSEU will permit possible abuse by employees.
WHEREFORE, the Petition is DENIED. The Decision dated March 31, 2006 and Resolution dated December 5, 2006 of
the Court of Appeals in CA-G.R. SP No. 75630, are AFFIRMED.
SO ORDERED.

25 | A L B A - L A B R E L
 10. Best Wear Garments vs. De Lemo be stressed that complainants were paid on a piece rate basis, which simply means that the more output, they
produced the more earnings they will have. In other words, the earning is dependent upon complainants.
We find more credible respondents’ assertion that complainants’ transfer was a valid exercise of management
This is a petition for review on certiorari under Rule 45 assailing the Decision1 dated February 24, 2009 and
prerogative. Respondent company points out that it is engaged in the business of garments manufacturing as a sub-
Resolution2 dated February 10, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 102002. TheCA reversed the
contractor. That, the kind of work it performs is dependent into with its client which specifies the work it
Decision3 dated August 28, 2007 of the National Labor Relations Commission (NLRC) and reinstated the September 5,
has to perform. And, that corollary thereto, the work to be performed by its employees will depend on the
2005 Decision 4 of the Labor Arbiter.
work specifications in the contract. Thus, if complainants have been assigned to different operations, it
Petitioner Best Wear Garments is a sole proprietorship represented by its General Manager Alex Sitosta. Respondents
was pursuant to the requirements of its contracts. x x x.
Cecile M. Ocubillo and Adelaida B. De Lemos were hired as sewers on piece-rate basis by petitioners on October 27,
In furtherance of their defense that complainants were not dismissed, either actual or constructive in August 2003,
1993 andJuly 12, 1994, respectively.
respondents allege that complainants continued to report for work until February 2004 for complainant De Lemos and
On May 20, 2004, De Lemos filed a complaint5 for illegal dismissal with prayer for backwages and other accrued
August 2004 for complainant Ocubillo. We lend credence to this allegation of respondents because it remains
benefits, separation pay, service incentive leave pay and attorney’s fees. A similar complaint6 was filed by Ocubillo on
unrebutted by complainants.
June 10, 2004. Both alleged in their position paper that in August 2003, Sitosta arbitrarily transferred them to other
It is to be noted that it was only [on] May 20, 2004 and June 10, 2004 that the instant consolidated cases
areas of operation of petitioner’s garments company, which they said amounted to constructive dismissal as it resulted
were filed by complainant De Lemos and Ocubillo, respectively. It may not be amiss to state that the date of filing
in less earnings for them.
jibe with respondents’ allegation that sometime in February and March 2004, complainants intimated their intention to
De Lemos claimed that after two months in her new assignment, she was able to adjust but Sitosta again transferred
resign and demanded for payment of separation pay but was not favorably acted upon by management.
her to a "different operation where she could not earn [as] much as before because by-products require long period of
Be that as it may, considering that complainants were not dismissed by respondents, they should be ordered to report
time to finish." She averred that the reason for her transfer was her refusal "to render [overtime work] up to 7:00
back to work without backwages and for the respondents to accept them.
p.m." Her request to be returned to her previous assignment was rejected and she was "constrained not to report for
WHEREFORE, premises considered, the Decision dated September 5, 2005 is hereby SET ASIDE and a new one
work as Sitosta had become indifferent to her since said transfer of operation." She further alleged that her last salary
entered dismissing complainants’ charge of illegal dismissal for lack of merit. However, there being no dismissal,
was withheld by petitioner company.7
complainants Adelaida B. De Lemos and Cecile M. Ocubillo are hereby directed to report back to work without
On her part, Ocubillo alleged that her transfer was precipitated by her having "incurred excessive absences since
backwages within ten (10) days from receipt of this Resolution and for the respondent Company to accept them under
2001." Her absences were due to the fact that her father became very sick since 2001 until his untimely demise on
the same terms and conditions at the time of their employment.
November 9, 2003; aside from this, she herself became very sickly. She claimed that from September to October 2003,
SO ORDERED.10 (Italics in the original; emphasis supplied)
Sitosta assigned her to different machines "whichever is available" and that "there were times, she could not earn for
Respondents filed a motion for reconsideration which the NLRC denied. Thus, they elevated the case to the CA alleging
a day because there was no available machine to work for [sic]." Sitosta also allegedly required her to render overtime
grave abuse of discretion on the part of the NLRC.
work up to 7:00 p.m. which she refused "because she was only paid up to 6:25 p.m."8
By Decision dated February 24, 2009, the CA granted the petition for certiorari, reversed the ruling of the NLRC and
Petitioners denied having terminated the employment of respondents who supposedly committed numerous absences
reinstated the Labor Arbiter’s decision with modification that the service incentive leave pay shall be excluded in the
without leave (AWOL). They claimed that sometime in February 2004, De Lemos informed Sitosta that due to personal
computation of the monetary award. The CA found no valid and legitimate business reason for the transfer order
problem, she intends to resign from the company. She then demanded the payment of separation pay. In March 2004,
which entailed the reduction of respondents’ earnings. Because respondents’ plea to be returned to their former posts
Ocubillo likewise intimated her intention to resign and demanded separation pay. Sitosta explained to both De Lemos
was not heeded by petitioners, no other conclusion "is discernible from the attendant circumstances except the fact
and Ocubillo that the company had no existing policy on granting separation pay, and hence he could not act on their
that [respondents’] transfer was unreasonable, inconvenient and prejudicial to them which [is] tantamount to a
request. De Lemos never reported back to work since March 2004, while Ocubillo failed to report for work from
constructive dismissal."11 Moreover, the unauthorized absences of respondents did not warrant a finding of
October 2004 to the present.
abandonment in view of the length of their service with petitioner company and the difficulty in finding similar
As to the allegation of respondents that the reason for their transfer was their refusal to render overtime work until
employment. The CA further invoked the rule that an employee who forthwith takes steps to protest his layoff cannot
7:00 p.m., petitioners asserted that respondents are piece-rate workers and hence they are not paid according to the
by any logic be said to have abandoned his work.
number of hours worked.
Petitioners filed a motion for partial reconsideration which was denied by the CA.
On September 5, 2005, Labor Arbiter Arden S. Anni rendered a Decision granting respondents’ claims, as follows:
Hence, this petition alleging that the CA has glaringly overlooked and clearly erred in its findings of fact and in
WHEREFORE, ALL THE FOREGOING CONSIDERED, judgment is rendered, as follows:
applying the law on constructive dismissal.
1. Declaring that complainants were constructively, nay, illegally dismissed from employment;
At the outset, it must bestated that the main issue in this case involves a question of fact. It is an established rule that
2. Ordering respondents to pay each of the complainants SEPARATION PAY equivalent to one-month salary
the jurisdiction of the Supreme Court in cases brought before it from the CA via Rule 45 of the 1997 Rules of Civil
for every year of service, a fraction of at least six (6) months being considered as one (1) whole year;
Procedure is generally limited to reviewing errors of law. This Court is not a trier of facts. In the exercise of its power
3. Ordering respondents to pay each of the complainants BACKWAGES computed from the time of their
of review, the findings of fact of the CA are conclusive and binding and consequently, it is not our function to analyze
dismissal up to the finality of this decision.
or weigh evidence all over again.12
For this purpose, both parties are directed to submit their respective computations of the total amount awarded for
There are, however, recognized exceptions13 to this rule such as when there is a divergence between the findings of
approval by this office.
facts of the NLRC and that of the CA.14 In this case, the CA’s findings are contrary to those of the NLRC. There is,
All other claims are dismissed for lack of merit.
therefore, a need to review the records to determine which of them should be preferred as more conformable to
SO ORDERED.9
evidentiary facts.15
Labor Arbiter Anni ruled that since respondents neither resigned nor abandoned their jobs, the ambiguities in the
The right of employees to security of tenure does not give them vested rights to their positions to the extent of
circumstances surrounding their dismissal are resolved in favor of the workers. It was emphasized that respondents
depriving management of its prerogative to change their assignments or to transfer them. Thus, an employer may
could no longer be deemed terminated for reason of AWOL because this prerogative should have been exercised
transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or
before the dismissals have been effected. Moreover, it would have been illogical for respondents to resign and then file
diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad
a complaint for illegal dismissal.
faith, or effected as a form of punishment or demotion without sufficient cause.16
Petitioners appealed to the NLRC which reversed the Labor Arbiter’s decision and dismissed respondents’ complaints.
In Blue Dairy Corporation v. NLRC,17 we held that:
The NLRC found no basis for the charge of constructive dismissal, thus:
x x x. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing
Complainants’ alleged demotion is vague. They simply allege that by reason of their transfer in August 2003, they did
in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which
not earn as much as they earned in their previous assignments. They failed to state how much they earned before and
that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable
after their transfer, if only to determine whether or not there was indeed a diminution in their earnings. Further, it is to
26 | A L B A - L A B R E L
worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or
prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other
benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to
constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible,
unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise, constructive
dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable
to the employee leaving him with no option but to forego with his continued employment.18
With the foregoing as guidepost, we hold that the CA erred in reversing the NLRC’s ruling that respondents were not
constructively dismissed.
Being piece-rate workers assigned to individual sewing machines, respondents’ earnings depended on the quality and
quantity of finished products. That their work output might have been affected by the change in their specific work
assignments does not necessarily implythat any resultingreduction in payis tantamount to constructive dismissal.
Workers under piece-rate employment have no fixed salaries and their compensation is computed on the basis of
accomplished tasks. As admitted by respondent De Lemos, some garments or by-products took a longer time to finish
so they could not earn as much as before. Also,the type of sewing jobs available would depend on the specifications
made by the clients of petitioner company. Under these circumstances, it cannot be said that the transfer was
unreasonable, inconvenient or prejudicial to the respondents. Such deployment of sewers to work on different types of
garments as dictated by present business necessity is within the ambit of management prerogative which, in the
absence of bad faith, ill motive or discrimination, should not be interfered with by the courts.
The records are bereft of any showing of clear discrimination, insensibility or disdain on the part of petitioners in
transferring respondents to perform a different type of sewing job.It is unfair to charge petitioners with constructive
dismissal simply because the respondents insist that their transfer to a new work assignment was against their will. We
have long stated that "the objection to the transfer being grounded on solely upon the personal inconvenience or
hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of
transfer."19 That respondents eventually discontinued reporting for work after their plea to be returned to their former
work assignment was their personal decision, for which the petitioners should not be held liable particularly as the
latter did not, in fact, dismiss them.
Indeed, there was no evidence that respondents were dismissed from employment.1âwphi1 In fact, petitioners
expressed willingness to accept them back to work. There being no termination of employment by the employer, the
award of backwages cannot be sustained. It is well settled that backwages may be granted only when there is a
finding of illegal dismissal.20 In cases where there is no evidence of dismissal, the remedy is reinstatement but without
backwages.21
The constitutional policy of providing full protection to labor is not intended to oppress or destroy management.22While
the Constitution is committed to the policy of social justice and the protection of the working class, it should not be
supposed that every labor dispute will be automatically decided in favor of labor. Management also has its rights which
are entitled to respect and enforcement in the interest of simple fair play.23 Thus, where management prerogative to
transfer employees is validly exercised, as in this case, courts will decline to interfere.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated February 24, 2009 and
Resolution dated February 10, 2010 of the Court of Appeals in CA-G.R. SP No. 102002 are SET ASIDE. The Decision
dated August 28, 2007 of the National Labor Relations Commission is hereby REINSTATED and UPHELD.
No pronouncement as to costs.
SO ORDERED.

27 | A L B A - L A B R E L
 11. Toyota Motor Phils. Workers vs. NLRC
In the instant petition under Rule 45 subject of G.R. Nos. 158786 and 158789, Toyota Motor Philippines Corporation
Workers Association (Union) and its dismissed officers and members seek to set aside the February 27, 2003
Decision[1] of the Court of Appeals (CA) in CA-G.R. SP Nos. 67100 and 67561, which affirmed the August 9, 2001
Decision[2] and September 14, 2001 Resolution[3] of the National Labor Relations Commission (NLRC), declaring illegal
the strikes staged by the Union and upholding the dismissal of the 227 Union officers and members.
On the other hand, in the related cases docketed as G.R. Nos. 158798-99, Toyota Motor Philippines Corporation (Toyota)
prays for the recall of the award of severance compensation to the 227 dismissed employees, which was granted under
the June 20, 2003 CA Resolution[4] in CA-G.R. SP Nos. 67100 and 67561.
In view of the fact that the parties are petitioner/s and respondent/s and vice-versa in the four (4) interrelated cases,
they will be referred to as simply the Union and Toyotahereafter.
The Facts
The Union is a legitimate labor organization duly registered with the Department of Labor and Employment (DOLE) and
is the sole and exclusive bargaining agent of all Toyotarank and file employees.[5]
Toyota, on the other hand, is a domestic corporation engaged in the assembly and sale of vehicles and
parts.[6] It is a Board of Investments (BOI) participant in the Car Development Program and the Commercial Vehicle
Development Program. It is likewise a BOI-preferred non-pioneer export trader of automotive parts and is under the
Special Economic Zone Act of 1995. It is one of the largest motor vehicle manufacturers in the country employing around
1,400 workers for its plants in Bicutan and Sta. Rosa, Laguna.It is claimed that its assets amount to PhP 5.525 billion,
with net sales of PhP 14.646 billion and provisions for income tax of PhP 120.9 million.
On February 14, 1999, the Union filed a petition for certification election among the Toyota rank and file employees with
the National Conciliation and Mediation Board (NCMB), which was docketed as Case No. NCR-OD-M-9902-001. Med-
Arbiter Ma. Zosima C. Lameyra denied the petition, but, on appeal, the DOLE Secretary granted the Unions prayer, and,
through the June 25, 1999 Order, directed the immediate holding of the certification election.[7]
After Toyotas plea for reconsideration was denied, the certification election was conducted. Med-Arbiter Lameyras May
12, 2000 Order certified the Union as the sole and exclusive bargaining agent of all the Toyota rank and file
employees. Toyota challenged said Order via an appeal to the DOLE Secretary.[8]
In the meantime, the Union submitted its Collective Bargaining Agreement (CBA) proposals to Toyota, but the latter
refused to negotiate in view of its pending appeal. Consequently, the Union filed a notice of strike on January 16,
2001 with the NCMB, docketed as NCMB-NCR-NS-01-011-01, based on Toyotas refusal to bargain. On February 5, 2001,
the NCMB-NCR converted the notice of strike into a preventive mediation case on the ground that the issue of whether
or not the Union is the exclusive bargaining agent of all Toyota rank and file employees was still unresolved by the DOLE
Secretary.
In connection with Toyotas appeal, Toyota and the Union were required to attend a hearing on February 21, 2001 before
the Bureau of Labor Relations (BLR) in relation to the exclusion of the votes of alleged supervisory employees from the
votes cast during the certification election. The February 21, 2001 hearing was cancelled and reset to February 22,
2001. On February 21, 2001, 135 Union officers and members failed to render the required overtime work, and instead
marched to and staged a picket in front of the BLR office in Intramuros, Manila.[9] The Union, in a letter of the same
date, also requested that its members be allowed to be absent on February 22, 2001 to attend the hearing and instead
work on their next scheduled rest day. This request however was denied by Toyota.
Despite denial of the Unions request, more than 200 employees staged mass actions on February 22 and 23, 2001 in
front of the BLR and the DOLE offices, to protest the partisan and anti-union stance of Toyota. Due to the deliberate
absence of a considerable number of employees on February 22 to 23, 2001, Toyota experienced acute lack of
manpower in its manufacturing and production lines, and was unable to meet its production goals resulting in huge
losses of PhP 53,849,991.
Soon thereafter, on February 27, 2001, Toyota sent individual letters to some 360 employees requiring them to explain
within 24 hours why they should not be dismissed for their obstinate defiance of the companys directive to render
overtime work on February 21, 2001, for their failure to report for work on February 22 and 23, 2001, and for their
participation in the concerted actions which severely disrupted and paralyzed the plants operations.[10] These letters
specifically cited Section D, paragraph 6 of the Companys Code of Conduct, to wit:
Inciting or participating in riots, disorders, alleged strikes, or concerted actions detrimental to
[Toyotas] interest.
1st offense dismissal.[11]
Meanwhile, a February 27, 2001 Manifesto was circulated by the Union which urged its members to participate in a
strike/picket and to abandon their posts, the pertinent portion of which reads, as follows:
YANIG sa kanyang komportableng upuan ang management ng TOYOTA. And dating takot,
kimi, at mahiyaing manggagawa ay walang takot na nagmartsa at nagprotesta laban sa
desperadong pagtatangkang baguhin ang desisyon ng DOLE na pabor sa UNYON. Sa tatlong araw
na protesta, mahigit sa tatlong daang manggagawa ang lumahok.
xxxx
HANDA na tayong lumabas anumang oras kung patuloy na ipagkakait
ng management ang CBA. Oo maari tayong masaktan sa welga. Oo, maari tayong
magutom sa piketlayn.Subalit may pagkakaiba ba ito sa unti-unting pagpatay sa atin sa loob ng
12 taong makabaling likod ng pagtatrabaho? Ilang taon na lang ay magkakabutas na ang ating mga
baga sa mga alipato at usok ng welding. Ilang taon na lang ay marupok na ang ating mga buto sa
kabubuhat. Kung dumating na ang panahong ito at wala pa tayong CBA, paano na? Hahayaan ba
nating ang kumpanya lang ang makinabang sa yamang likha ng higit sa isang dekadang pagpapagal
natin?
HUWAG BIBITIW SA NASIMULANG TAGUMPAY!
PAIGTINGIN ANG PAKIKIBAKA PARA SA ISANG MAKATARUNGANG CBA!
HIGIT PANG PATATAGIN ANG PAGKAKAISA NG MGA MANGGAGAWA SA TOYOTA![12] (Emphasis
supplied.)
On the next day, the Union filed with the NCMB another notice of strike docketed as NCMB-NCR-NS-02-061-
01 for union busting amounting to unfair labor practice.
On March 1, 2001, the Union nonetheless submitted an explanation in compliance with the February 27,
2001 notices sent by Toyota to the erring employees. The Union members explained that their refusal to work on their
scheduled work time for two consecutive days was simply an exercise of their constitutional right to peaceably assemble
and to petition the government for redress of grievances. It further argued that the demonstrations staged by the
employees on February 22 and 23, 2001 could not be classified as an illegal strike or picket, and that Toyota had already
condoned the alleged acts when it accepted back the subject employees.[13]
Consequently, on March 2 and 5, 2001, Toyota issued two (2) memoranda to the concerned employees to clarify whether
or not they are adopting the March 1, 2001 Unions explanation as their own. The employees were also required to attend
an investigative interview,[14] but they refused to do so.
On March 16, 2001, Toyota terminated the employment of 227 employees[15] for participation in concerted actions in
violation of its Code of Conduct and for misconduct under Article 282 of the Labor Code. The notice of termination reads:
After a careful evaluation of the evidence on hand, and a thorough assessment of your
explanation, TMP has concluded that there are overwhelming reasons to terminate your services
based on Article 282 of the Labor Code and TMPs Code of Conduct.
28 | A L B A - L A B R E L
 Your repeated absences without permission on February 22 to 23, 2001 to participate in
a concerted action against TMP constitute abandonment of work and/or very serious misconduct
under Article 282 of the Labor Code.
The degree of your offense is aggravated by the following circumstances:
1. You expressed to management that you will adopt the unions letter dated March 1,
2001, as your own explanation to the charges contained in the Due Process Form
dated February 27, 2001. It is evident from such explanation that you did not come to
work because you deliberately participated together with other Team Members in a plan
to engage in concerted actions detrimental to TMPs interest. As a result of your
participation in the widespread abandonment of work by Team Members from February
22 to 23, 2001, TMP suffered substantial damage.
It is significant that the absences you incurred in order to attend the clarificatory hearing
conducted by the Bureau of Labor Relations were unnecessary because the union was
amply represented in the said hearings by its counsel and certain members who sought
and were granted leave for the purpose. Your reason for being absent is, therefore, not
acceptable; and
2. Your participation in the organized work boycott by Team Members on February 22
and 23 led to work disruptions that prevented the Company from meeting its production
targets, resulting [in] foregone sales of more than eighty (80) vehicles, mostly new-model
Revos, valued at more than Fifty Million Pesos (50,000,000.00).
The foregoing is also a violation of TMPs Code of Conduct (Section D, Paragraph 6) to wit:
Inciting or participating in riots, disorders, illegal strikes or concerted actions detrimental
to TMPs interest.
Based on the above, TMP Management is left with no other recourse but to terminate
your employment effective upon your receipt thereof.
[Sgd.]
JOSE MARIA ALIGADA
Deputy Division Manager[16]
In reaction to the dismissal of its union members and officers, the Union went on strike on March 17,
2001. Subsequently, from March 28, 2001 to April 12, 2001, the Union intensified its strike by barricading the gates
of Toyotas Bicutan and Sta. Rosa plants. The strikers prevented workers who reported for work from entering the plants.
In his Affidavit, Mr. Eduardo Nicolas III, Security Department Head, stated that:
3. On March 17, 2001, members of the Toyota Motor Philippines Corporation Workers
Association (TMPCWA), in response to the dismissal of some two hundred twenty seven (227)
leaders and members of TMPCWA and without observing the requirements mandated by the Labor
Code, refused to report for work and picketed TMPC premises from 8:00 a.m. to 5:00 p.m.The
strikers badmouthed people coming in and hurled invectives such as bakeru at Japanese officers of
the company. The strikers likewise pounded the officers vehicle as they tried to enter the premises
of the company.
4. On March 28, 2001, the strikers intensified their picketing and barricaded the gates of
TMPCs Bicutan and Sta. Rosa plants, thus, blocking the free ingress/egress to and from the premises.
Shuttle buses and cars containing TMPC employees, suppliers, dealers, customers and other people
having business with the company, were prevented by the strikers from entering the plants.
5. As a standard operating procedure, I instructed my men to take photographs and video
footages of those who participated in the strike. Seen on video footages taken on various dates
actively participating in the strike were union officers Emilio C. Completo, Alexander Esteva, Joey
Javellonar and Lorenzo Caraqueo.
6. Based on the pictures, among those identified to have participated in the March 28,
2001 strike were Grant Robert Toral, John Posadas, Alex Sierra, Allan John Malabanan, Abel Bersos,
Ernesto Bonavente, Ariel Garcia, Pablito Adaya, Feliciano Mercado, Charlie Oliveria, Philip Roxas,
June Lamberte, Manjolito Puno, Baldwin San Pablo, Joseph Naguit, Federico Torres, Larry Gerola,
Roderick Bayani, Allan Oclarino, Reynaldo Cuevas, Jorge Polutan, Arman Ercillo, Jimmy Hembra,
Albert Mariquit, Ramil Gecale, Jimmy Palisoc, Normandy Castalone, Joey Llanera, Greg Castro,
Felicisimo Escrimadora, Rodolfo Bay, Ramon Clemente, Dante Baclino, Allan Palomares, Arturo
Murillo and Robert Gonzales. Attached hereto as Annexes 1 to 18 are the pictures taken on March
28, 2001 at the Bicutan and Sta. Rosa plants.
7. From March 29 to 31, 2001, the strikers continued to barricade the entrances to TMPCs
two (2) plants. Once again, the strikers hurled nasty remarks and prevented employees aboard
shuttle buses from entering the plants. Among the strikers were Christopher Saldivar, Basilio Laqui,
Sabas Bernabise, Federico Torres, Freddie Olit, Josel Agosto, Arthur Parilla, Richard Calalang, Ariel
Garcia, Edgar Hilaga, Charlie Oliveria, Ferdinand Jaen, Wilfredo Tagle, Alejandro Imperial, Manjolito
Puno, Delmar Espadilla, Domingo Javier, Apollo Violeta and Elvis Tabinao.[17]
On March 29, 2001, Toyota filed a petition for injunction with a prayer for the issuance of a temporary restraining order
(TRO) with the NLRC, which was docketed as NLRC NCR Case No. INJ-0001054-01. It sought free ingress to and egress
from its Bicutan and Sta. Rosa manufacturing plants. Acting on said petition, the NLRC, on April 5, 2001, issued a TRO
against the Union, ordering its leaders and members as well as its sympathizers to remove their barricades and all forms
of obstruction to ensure free ingress to and egress from the companys premises. In addition, the NLRC rejected
the Unions motion to dismiss based on lack of jurisdiction.[18]
Meanwhile, Toyota filed a petition to declare the strike illegal with the NLRC arbitration branch, which was docketed as
NLRC NCR (South) Case No. 30-04-01775-01, and prayed that the erring Union officers, directors, and members be
dismissed.[19]
On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor dispute and issued an Order[20] certifying the
labor dispute to the NLRC. In said Order, the DOLE Secretary directed all striking workers to return to work at their
regular shifts by April 16, 2001. On the other hand, it ordered Toyota to accept the returning employees under the same
terms and conditions obtaining prior to the strike or at its option, put them under payroll reinstatement. The parties
were also enjoined from committing acts that may worsen the situation.
The Union ended the strike on April 12, 2001. The union members and officers tried to return to work on April 16,
2001 but were told that Toyota opted for payroll-reinstatement authorized by the Order of the DOLE Secretary.
In the meantime, the Union filed a motion for reconsideration of the DOLE Secretarys April 10, 2001 certification Order,
which, however, was denied by the DOLE Secretary in her May 25, 2001 Resolution. Consequently, a petition for certiorari
was filed before the CA, which was docketed as CA-G.R. SP No. 64998.
In the intervening time, the NLRC, in compliance with the April 10, 2001 Order of the DOLE Secretary, docketed the
case as Certified Case No. 000203-01.
Meanwhile, on May 23, 2001, at around 12:00 nn., despite the issuance of the DOLE Secretarys certification Order,
several payroll-reinstated members of the Union staged a protest rally in front of Toyotas Bicutan Plant bearing placards
and streamers in defiance of the April 10, 2001 Order.
Then, on May 28, 2001, around forty-four (44) Union members staged another protest action in front of the
Bicutan Plant. At the same time, some twenty-nine (29) payroll-reinstated employees picketed in front of the Santa Rosa
Plants main entrance, and were later joined by other Union members.
29 | A L B A - L A B R E L
On June 5, 2001, notwithstanding the certification Order, the Union filed another notice of strike, which was docketed
as NCMB-NCR-NS-06-150-01. On June 18, 2001, the DOLE Secretary directed the second notice of strike to be subsumed
in the April 10, 2001 certification Order.
In the meantime, the NLRC, in Certified Case No. 000203-01, ordered both parties to submit their respective position
papers on June 8, 2001. The union, however, requested for abeyance of the proceedings considering that there is a
pending petition for certiorari with the CA assailing the validity of the DOLE Secretarys Assumption of Jurisdiction Order.
Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating its previous order for both parties to submit their
respective position papers on or before June 2, 2001. The same Order also denied the Unions verbal motion to defer
hearing on the certified cases.
On June 27, 2001, the Union filed a Motion for Reconsideration of the NLRCs June 19, 2001 Order, praying
for the deferment of the submission of position papers until its petition for certiorari is resolved by the CA.
On June 29, 2001, only Toyota submitted its position paper. On July 11, 2001, the NLRC again ordered
the Union to submit its position paper by July 19, 2001, with a warning that upon failure for it to do so, the case shall
be considered submitted for decision.
Meanwhile, on July 17, 2001, the CA dismissed the Unions petition for certiorari in CA-G.R. SP No. 64998,
assailing the DOLE Secretarys April 10, 2001 Order.
Notwithstanding repeated orders to file its position paper, the Union still failed to submit its position paper on July 19,
2001. Consequently, the NLRC issued an Order directing the Union to submit its position paper on the scheduled August
3, 2001 hearing; otherwise, the case shall be deemed submitted for resolution based on the evidence on record.
During the August 3, 2001 hearing, the Union, despite several accommodations, still failed to submit its position
paper. Later that day, the Union claimed it filed its position paper by registered mail.
Subsequently, the NLRC, in its August 9, 2001 Decision, declared the strikes staged by the Union on February 21 to 23,
2001 and May 23 and 28, 2001 as illegal. The decretal portion reads:
WHEREFORE, premises considered, it is hereby ordered:
(1) Declaring the strikes staged by the Union to be illegal.
(2) Declared [sic] that the dismissal of the 227 who participated in the illegal strike
on February 21-23, 2001 is legal.
(3) However, the Company is ordered to pay the 227 Union members, who participated in the illegal
strike severance compensation in an amount equivalent to one month salary for every year of service,
as an alternative relief to continued employment.
(4) Declared [sic] that the following Union officers and directors to have forfeited their employment
status for having led the illegal strikes on February 21-23, 2001 and May 23 and 28, 2001: Ed Cubelo,
Maximino Cruz, Jr., Ricky Chavez, Joselito Hugo, Virgilio Colandog, Rommel Digma, Federico
Torres, Emilio Completo, Alexander Esteva, Joey Javellonar, Lorenzo Caraqueo,
Roderick Nieres, Antonio Borsigue, Bayani Manguil, Jr., and Mayo Mata.[21]
SO ORDERED.[22]
The NLRC considered the mass actions staged on February 21 to 23, 2001 illegal as the Union failed to comply with the
procedural requirements of a valid strike under Art. 263 of the Labor Code.
After the DOLE Secretary assumed jurisdiction over the Toyota dispute on April 10, 2001, the Union again staged strikes
on May 23 and 28, 2001. The NLRC found the strikes illegal as they violated Art. 264 of the Labor Code which proscribes
any strike or lockout after jurisdiction is assumed over the dispute by the President or the DOLE Secretary.
The NLRC held that both parties must have maintained the status quo after the DOLE Secretary issued the
assumption/certification Order, and ruled that the Union did not respect the DOLE Secretarys directive.
Accordingly, both Toyota and the Union filed Motions for Reconsideration, which the NLRC denied in
its September 14, 2001 Resolution.[23] Consequently, both parties questioned the August 9, 2001 Decision[24] and
September 14, 2001 Resolution of the NLRC in separate petitions for certiorari filed with the CA, which were
docketed as CA-G.R. SP Nos. 67100 and 67561, respectively. The CA then consolidated the petitions.
In its February 27, 2003 Decision,[25] the CA ruled that the Unions petition is defective in form for its
failure to append a proper verification and certificate of non-forum shopping, given that, out of the 227 petitioners,
only 159 signed the verification and certificate of non-forum shopping. Despite the flaw, the CA proceeded to
resolve the petitions on the merits and affirmed the assailed NLRC Decision and Resolution with a modification,
however, of deleting the award of severance compensation to the dismissed Union members.
In justifying the recall of the severance compensation, the CA considered the participation in illegal strikes
as serious misconduct. It defined serious misconduct as a transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. It cited Panay Electric Company, Inc. v. NLRC,[26] where we revoked the grant of separation benefits to
employees who lawfully participated in an illegal strike based on Art. 264 of the Labor Code, which states that any
union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his employment status.[27]
However, in its June 20, 2003 Resolution,[28] the CA modified its February 27, 2003 Decision by
reinstating severance compensation to the dismissed employees based on social justice.
The Issues
Petitioner Union now comes to this Court and raises the following issues for our consideration:
I. Whether the mere participation of ordinary employees in an illegal strike is enough
reason to warrant their dismissal.
II. Whether the Union officers and members act of holding the protest rallies in front of
the BLR office and the Office of the Secretary of Labor and Employment on February 22
and 23, 2001 should be held as illegal strikes. In relation hereto, whether the protests
committed on May 23 and 28, 2001, should be held as illegal strikes. Lastly, whether
the Union violated the Assumption of Jurisdiction Order issued by the Secretary of Labor
and Employment.
III. Whether the dismissal of 227 Union officers and members constitutes unfair labor
practice.
IV. Whether the CA erred in affirming the Decision of the NLRC which excluded the Unions
Position Paper which the Union filed by mail. In the same vein, whether the Unions right
to due process was violated when the NLRC excluded their Position Paper.
V. Whether the CA erred in dismissing the Unions Petition for Certiorari.
Toyota, on the other hand, presents this sole issue for our determination:
I. Whether the Court of Appeals erred in issuing its Resolution dated June 20, 2003,
partially modifying its Decision dated February 27, 2003, and awarding severance
compensation to the dismissed Union members.
30 | A L B A - L A B R E L
In sum, two main issues are brought to the fore:
(1) Whether the mass actions committed by the Union on different occasions are illegal strikes; and
(2) Whether separation pay should be awarded to the Union members who participated in the illegal
strikes.
The Courts Ruling
The Union contends that the NLRC violated its right to due process when it disregarded its position paper in
deciding Toyotas petition to declare the strike illegal.
We rule otherwise.
It is entirely the Unions fault that its position paper was not considered by the NLRC. Records readily reveal that
the NLRC was even too generous in affording due process to the Union. It issued no less than three (3) orders for
the parties to submit its position papers, which the Union ignored until the last minute. No sufficient justification
was offered why the Union belatedly filed its position paper. In Datu Eduardo Ampo v. The Hon. Court of Appeals,
it was explained that a party cannot complain of deprivation of due process if he was afforded an opportunity to
participate in the proceedings but failed to do so. If he does not avail himself of the chance to be heard, then it is
deemed waived or forfeited without violating the constitutional guarantee.[29] Thus, there was no violation of
the Unions right to due process on the part of the NLRC.
On a procedural aspect, the Union faults the CA for treating its petition as an unsigned pleading and posits that the
verification signed by 159 out of the 227 petitioners has already substantially complied with and satisfied the
requirements under Secs. 4 and 5 of Rule 7 of the Rules of Court.
The Unions proposition is partly correct.
Sec. 4 of Rule 7 of the Rules of Court states:
Sec. 4. Verification.Except when otherwise specifically required by law or rule, pleadings need not
be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations
therein are true and correct of his personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification based on information and belief or
upon knowledge, information and belief, or lacks a proper verification, shall be treated as an
unsigned pleading.
The verification requirement is significant, as it is intended to secure an assurance that the allegations in the
pleading are true and correct and not the product of the imagination or a matter of speculation.[30] This requirement
is simply a condition affecting the form of pleadings, and noncompliance with the requirement does not necessarily
render it fatally defective. Indeed, verification is only a formal and not a jurisdictional requirement.[31]
In this case, the problem is not the absence but the adequacy of the Unions verification, since only 159 out of the
227 petitioners executed the verification. Undeniably, the petition meets the requirement on the verification with
respect to the 159 petitioners who executed the verification, attesting that they have sufficient knowledge of the
truth and correctness of the allegations of the petition. However, their signatures cannot be considered as
verification of the petition by the other 68 named petitioners unless the latter gave written authorization to the 159
petitioners to sign the verification on their behalf. Thus, in Loquias v. Office of the Ombudsman, we ruled that the
petition satisfies the formal requirements only with regard to the petitioner who signed the petition but not his co-
petitioner who did not sign nor authorize the other petitioner to sign it on his behalf. [32] The proper ruling in this
situation is to consider the petition as compliant with the formal requirements with respect to the parties who
signed it and, therefore, can be given due course only with regard to them. The other petitioners who did not sign
the verification and certificate against forum shopping cannot be recognized as petitioners have no legal standing
before the Court. The petition should be dismissed outright with respect to the non-conforming petitioners.
In the case at bench, however, the CA, in the exercise of sound discretion, did not strictly apply the ruling
in Loquias and instead proceeded to decide the case on the merits.
The alleged protest rallies in front of the offices of BLR and DOLE Secretary and at the Toyota plants
constituted illegal strikes
When is a strike illegal?
Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz:
(1) [when it] is contrary to a specific prohibition of law, such as strike by employees
performing governmental functions; or
(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code
on the requisites of a valid strike]; or
(3) [when it] is declared for an unlawful purpose, such as inducing the employer to
commit an unfair labor practice against non-union employees; or
(4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread
terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or
(5) [when it] is declared in violation of an existing injunction[, such as injunction,
prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code];
or
(6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive
arbitration clause.[33]
Petitioner Union contends that the protests or rallies conducted on February 21 and 23, 2001 are not
within the ambit of strikes as defined in the Labor Code, since they were legitimate exercises of their right to
peaceably assemble and petition the government for redress of grievances. Mainly relying on the doctrine laid down
in the case of Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Inc.,[34] it argues
that the protest was not directed at Toyota but towards the Government (DOLE and BLR). It explains that the
protest is not a strike as contemplated in the Labor Code. The Union points out that in Philippine Blooming Mills
Employees Organization, the mass action staged in Malacaang to petition the Chief Executive against the abusive
behavior of some police officers was a proper exercise of the employees right to speak out and to peaceably gather
and ask government for redress of their grievances.
The Unions position fails to convince us.
While the facts in Philippine Blooming Mills Employees Organization are similar in some respects to that
of the present case, the Union fails to realize one major difference: there was no labor dispute in Philippine
Blooming Mills Employees Organization. In the present case, there was an on-going labor dispute arising
from Toyotas refusal to recognize and negotiate with the Union, which was the subject of the notice of strike filed
by the Union on January 16, 2001. Thus, the Unions reliance on Phililippine Blooming Mills Employees
Organization is misplaced, as it cannot be considered a precedent to the case at bar.
A strike means any temporary stoppage of work by the concerted action of employees as a result of an
industrial or labor dispute. A labor dispute, in turn, includes any controversy or matter concerning terms or
conditions of employment or the association or representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the
proximate relation of the employer and the employee.[35]
31 | A L B A - L A B R E L

In Bangalisan v. Court of Appeals, it was explained that [t]he fact that the conventional term strike was not used
by the striking employees to describe their common course of action is inconsequential, since the substance of the
situation and not its appearance, will be deemed controlling.[36] The term strike has been elucidated to encompass
not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy, or
sabotage plant equipment and facilities, and similar activities.[37]
Applying pertinent legal provisions and jurisprudence, we rule that the protest actions undertaken by the Union
officials and members on February 21 to 23, 2001 are not valid and proper exercises of their right to assemble and
ask government for redress of their complaints, but are illegal strikes in breach of the Labor Code. The Unions
position is weakened by the lack of permit from the City of Manila to hold rallies. Shrouded as demonstrations, they
were in reality temporary stoppages of work perpetrated through the concerted action of the employees who
deliberately failed to report for work on the convenient excuse that they will hold a rally at the BLR and DOLE
offices in Intramuros, Manila, on February 21 to 23, 2001. The purported reason for these protest actions was to
safeguard their rights against any abuse which the med-arbiter may commit against their cause. However,
the Union failed to advance convincing proof that the med-arbiter was biased against them. The acts of the med-
arbiter in the performance of his duties are presumed regular. Sans ample evidence to the contrary, the Union was
unable to justify the February 2001 mass actions. What comes to the fore is that the decision not to work for two
days was designed and calculated to cripple the manufacturing arm of Toyota. It becomes obvious that the real
and ultimate goal of the Union is to coerce Toyota to finally acknowledge the Union as the sole bargaining agent
of the company. This is not a legal and valid exercise of the right of assembly and to demand redress of grievance.
We sustain the CAs affirmance of the NLRCs finding that the protest rallies staged on February 21 to 23,
2001 were actually illegal strikes. The illegality of the Unions mass actions was succinctly elaborated by the labor
tribunal, thus:
We have stated in our questioned decision that such mass actions staged before the
Bureau of Labor Relations on February 21-23, 2001 by the union officers and members fall squarely
within the definition of a strike (Article 212 (o), Labor Code). These concerted actions resulted in
the temporary stoppage of work causing the latter substantial losses. Thus, without the
requirements for a valid strike having been complied with, we were constrained to consider the
strike staged on such dates as illegal and all employees who participated in the concerted actions
to have consequently lost their employment status.
If we are going to stamp a color of legality on the two (2) [day-] walk
out/strike of respondents without filing a notice of strike, in effect we are giving license
to all the unions in the country to paralyze the operations of their companies/employers
every time they wish to hold a demonstration in front of any government agency. While
we recognize the right of every person or a group to peaceably assemble and petition the
government for redress of grievances, the exercise of such right is governed by existing laws, rules
and regulations.
Although the respondent union admittedly made earnest representations with the
company to hold a mass protest before the BLR, together with their officers and members, the
denial of the request by the management should have been heeded and ended their insistence to
hold the planned mass demonstration. Verily, the violation of the company rule cannot be dismissed
as mere absences of two days as being suggested by the union [are but] concerted actions
detrimental to Petitioner Toyotas interest.[38] (Emphasis supplied.)
It is obvious that the February 21 to 23, 2001 concerted actions were undertaken without satisfying the
prerequisites for a valid strike under Art. 263 of the Labor Code.The Union failed to comply with the following
requirements: (1) a notice of strike filed with the DOLE 30 days before the intended date of strike, or 15 days in
case of unfair labor practice;[39] (2) strike vote approved by a majority of the total union membership in the
bargaining unit concerned obtained by secret ballot in a meeting called for that purpose; and (3) notice given to
the DOLE of the results of the voting at least seven days before the intended strike. These requirements are
mandatory and the failure of a union to comply with them renders the strike illegal.[40] The evident intention of the
law in requiring the strike notice and the strike-vote report is to reasonably regulate the right to strike, which is
essential to the attainment of legitimate policy objectives embodied in the law.[41] As they failed to conform to the
law, the strikes on February 21, 22, and 23, 2001 were illegal.
Moreover, the aforementioned February 2001 strikes are in blatant violation of Sec. D, par. 6 of Toyotas
Code of Conduct which prohibits inciting or participating in riots, disorders, alleged strikes or concerted actions
detrimental to [Toyotas] interest. The penalty for the offense is dismissal. The Union and its members are bound
by the company rules, and the February 2001 mass actions and deliberate refusal to render regular and overtime
work on said days violated these rules. In sum, the February 2001 strikes and walk-outs were illegal as these were
in violation of specific requirements of the Labor Code and a company rule against illegal strikes or concerted
actions.
With respect to the strikes committed from March 17 to April 12, 2001, those were initially legal as the
legal requirements were met. However, on March 28 to April 12, 2001, the Union barricaded the gates of the
Bicutan and Sta. Rosa plants and blocked the free ingress to and egress from the company
premises. Toyota employees, customers, and other people having business with the company were intimidated and
were refused entry to the plants. As earlier explained, these strikes were illegal because unlawful means were
employed. The acts of the Union officers and members are in palpable violation of Art. 264(e), which proscribes
acts of violence, coercion, or intimidation, or which obstruct the free ingress to and egress from the company
premises. Undeniably, the strikes from March 28 to April 12, 2001 were illegal.
Petitioner Union also posits that strikes were not committed on May 23 and 28, 2001. The Union asserts
that the rallies held on May 23 and 28, 2001 could not be considered strikes, as the participants were the dismissed
employees who were on payroll reinstatement. It concludes that there was no work stoppage.
This contention has no basis.
It is clear that once the DOLE Secretary assumes jurisdiction over the labor dispute and certifies the case
for compulsory arbitration with the NLRC, the parties have to revert to the status quo ante (the state of things as
it was before). The intended normalcy of operations is apparent from the fallo of the April 10, 2001 Order of then
DOLE Secretary Patricia A. Sto. Tomas, which reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby CERTIFIES the labor
dispute at Toyota Motors Philippines Corporation to the [NLRC] pursuant to Article 263 (g) of the
Labor Code, as amended. This Certification covers the current labor cases filed in relation with the
Toyota strike, particularly, the Petition for Injunction filed with the National Labor Relations
Commission entitled Toyota Motor Philippines Corporation vs. Toyota Motor Philippines Corporation
Workers Association (TMPCWA), Ed Cubelo, et al., NLRC Injunction Case No. 3401054-01; Toyota
Motor Philippines Corporation vs. Toyota Motor Philippines Corporation Workers Association, et al. ,
NLRC NCR Case No. 3004-01775-01, and such other labor cases that the parties may file relating to
the strike and its effects while this Certification is in effect.
As provided under Article 2634(g) of the Labor Code, all striking workers are directed to
return to work at their regular shifts by April 16, 2001; the Company is in turn directed to accept
them back to work under the same terms and conditions obtaining prior to the work stoppage,
subject to the option of the company to merely reinstate a worker or workers in the payroll in light
of the negative emotions that the strike has generated and the need to prevent the further
deterioration of the relationship between the company and its workers.
Further, the parties are hereby ordered to cease and desist from committing any
act that might lead to the worsening of an already deteriorated situation.[42] (Emphasis
supplied.)
It is explicit from this directive that the Union and its members shall refrain from engaging in any activity
that might exacerbate the tense labor situation in Toyota, which certainly includes concerted actions.
32 | A L B A - L A B R E L
 This was not heeded by the Union and the individual respondents who staged illegal concerted actions
on May 23 and 28, 2001 in contravention of the Order of the DOLE Secretary that no acts should be undertaken by
them to aggravate the already deteriorated situation.
While it may be conceded that there was no work disruption in the two Toyota plants, the fact still
remains that the Union and its members picketed and performed concerted actions in front of the Company
premises. This is a patent violation of the assumption of jurisdiction and certification Order of the DOLE Secretary,
which ordered the parties to cease and desist from committing any act that might lead to the worsening of an
already deteriorated situation. While there are no work stoppages, the pickets and concerted actions outside the
plants have a demoralizing and even chilling effect on the workers inside the plants and can be considered as veiled
threats of possible trouble to the workers when they go out of the company premises after work and of impending
disruption of operations to company officials and even to customers in the days to come. The pictures presented
by Toyota undoubtedly show that the company officials and employees are being intimidated and threatened by
the strikers. In short, the Union, by its mass actions, has inflamed an already volatile situation, which was explicitly
proscribed by the DOLE Secretarys Order. We do not find any compelling reason to reverse the NLRC findings that
the pickets on May 23 and 28, 2001 were unlawful strikes.
From the foregoing discussion, we rule that the February 21 to 23, 2001 concerted actions, the March
17 to April 12, 2001 strikes, and the May 23 and 28, 2001 mass actions were illegal strikes.
Union officers are liable for unlawful strikes or illegal acts during a strike
Art. 264 (a) of the Labor Code provides:
ART. 264. PROHIBITED ACTIVITIES
(a) x x x
Any worker whose employment has been terminated as a consequence of an unlawful lockout shall
be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an
illegal strike and any worker or union officer who knowingly participates in the commission of illegal
acts during a strike may be declared to have lost his employment status: Provided, That mere
participation of a worker in a lawful strike shall not constitute sufficient ground for termination of
his employment, even if a replacement had been hired by the employer during such lawful strike.
Art. 264(a) sanctions the dismissal of a union officer who knowingly participates in an illegal strike or
who knowingly participates in the commission of illegal acts during a lawful strike.
It is clear that the responsibility of union officials is greater than that of the members. They are tasked
with the duty to lead and guide the membership in decision making on union activities in accordance with the law,
government rules and regulations, and established labor practices. The leaders are expected to recommend actions
that are arrived at with circumspection and contemplation, and always keep paramount the best interests of the
members and union within the bounds of law. If the implementation of an illegal strike is recommended, then they
would mislead and deceive the membership and the supreme penalty of dismissal is appropriate. On the other hand,
if the strike is legal at the beginning and the officials commit illegal acts during the duration of the strike, then they
cannot evade personal and individual liability for said acts.
The Union officials were in clear breach of Art. 264(a) when they knowingly participated in the illegal
strikes held from February 21 to 23, 2001, from March 17 to April 12, 2001, and on May 23 and 28, 2001. We
uphold the findings of fact of the NLRC on the involvement of said union officials in the unlawful concerted actions
as affirmed by the CA, thus:
As regards to the Union officers and directors, there is overwhelming justification to declare their
termination from service. Having instigated the Union members to stage and carry out all illegal
strikes from February 21-23, 2001, and May 23 and 28, 2001, the following Union officers are hereby
terminated for cause pursuant to Article 264(a) of the Labor Code: Ed Cubelo, Maximino Cruz, Jr.,
Ricky Chavez, Joselito Hugo, Virgilio Colandog, Rommel Digma, Federico Torres, Emilio Completo,
Alexander Esteva, Joey Javellonar, Lorenzo Caraqueo, Roderick Nieres, Antonio Borsigue, Bayani
Manguil, Jr., and Mayo Mata.[43]
The rule is well entrenched in this jurisdiction that factual findings of the labor tribunal, when affirmed
by the appellate court, are generally accorded great respect, even finality.[44]
Likewise, we are not duty-bound to delve into the accuracy of the factual findings of the NLRC in the
absence of clear showing that these were arbitrary and bereft of any rational basis.[45] In the case at bench, the
Union failed to convince us that the NLRC findings that the Union officials instigated, led, and knowingly participated
in the series of illegal strikes are not reinforced by substantial evidence. Verily, said findings have to be maintained
and upheld. We reiterate, as a reminder to labor leaders, the rule that [u]nion officers are duty bound to guide
their members to respect the law.[46] Contrarily, if the officers urge the members to violate the law and defy the
duly constituted authorities, their dismissal from the service is a just penalty or sanction for their unlawful acts.[47]
Members liability depends on participation in illegal acts
Art. 264(a) of the Labor Code provides that a member is liable when he knowingly participates in an illegal act
during a strike. While the provision is silent on whether the strike is legal or illegal, we find that the same is
irrelevant. As long as the members commit illegal acts, in a legal or illegal strike, then they can be
terminated.[48] However, when union members merely participate in an illegal strike without committing any illegal
act, are they liable?
This was squarely answered in Gold City Integrated Port Service, Inc. v. NLRC,[49] where it was held that
an ordinary striking worker cannot be terminated for mere participation in an illegal strike. This was an affirmation
of the rulings in Bacus v. Ople[50] and Progressive Workers Union v. Aguas,[51] where it was held that though the
strike is illegal, the ordinary member who merely participates in the strike should not be meted loss of employment
on the considerations of compassion and good faith and in view of the security of tenure provisions under the
Constitution. In Esso Philippines, Inc. v. Malayang Manggagawa sa Esso (MME), it was explained that a member is
not responsible for the unions illegal strike even if he voted for the holding of a strike which became illegal.[52]
Noted labor law expert, Professor Cesario A. Azucena, Jr., traced the history relating to the liability of a
union member in an illegal strike, starting with the rule of vicarious liability, thus:
Under [the rule of vicarious liability], mere membership in a labor union serves as basis
of liability for acts of individuals, or for a labor activity, done on behalf of the union. The union
member is made liable on the theory that all the members are engaged in a general conspiracy, and
the unlawful acts of the particular members are viewed as necessary incidents of the conspiracy. It
has been said that in the absence of statute providing otherwise, the rule of vicarious liability applies.
Even the Industrial Peace Act, however, which was in effect from 1953 to 1974, did not
adopt the vicarious liability concept. It expressly provided that:
No officer or member of any association or organization, and no association or
organization participating or interested in a labor dispute shall be held responsible or liable
for the unlawful acts of individual officers, members, or agents, except upon proof of
actual participation in, or actual authorization of, such acts or of ratifying of such acts
after actual knowledge thereof.
Replacing the Industrial Peace Act, the Labor Code has not adopted the vicarious liability
rule.[53]
Thus, the rule on vicarious liability of a union member was abandoned and it is only when a striking
worker knowingly participates in the commission of illegal acts during a strike that he will be penalized with dismissal.
33 | A L B A - L A B R E L
 Now, what are considered illegal acts under Art. 264(a)?
No precise meaning was given to the phrase illegal acts. It may encompass a number of acts that violate
existing labor or criminal laws, such as the following:
(1) Violation of Art. 264(e) of the Labor Code which provides that [n]o person engaged in picketing shall
commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employers
premises for lawful purposes, or obstruct public thoroughfares;
(2) Commission of crimes and other unlawful acts in carrying out the strike;[54] and
(3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or NLRC in connection
with the assumption of jurisdiction/certification Order under Art. 263(g) of the Labor Code.
As earlier explained, this enumeration is not exclusive and it may cover other breaches of existing laws.
In the cases at bench, the individual respondents participated in several mass actions, viz:
(1) The rallies held at the DOLE and BLR offices on February 21, 22, and 23, 2001;
(2) The strikes held on March 17 to April 12, 2001; and
(3) The rallies and picketing on May 23 and 28, 2001 in front of the Toyota Bicutan and Sta. Rosa plants.
Did they commit illegal acts during the illegal strikes on February 21 to 23, 2001, from March 17 to April
12, 2001, and on May 23 and 28, 2001?
The answer is in the affirmative.
As we have ruled that the strikes by the Union on the three different occasions were illegal, we now
proceed to determine the individual liabilities of the affected union members for acts committed during these
forbidden concerted actions.
Our ruling in Association of Independent Unions in the Philippines v. NLRC lays down the rule on the
liability of the union members:
Decisive on the matter is the pertinent provisions of Article 264 ( a) of the Labor Code that: [x x x]
any worker [x x x] who knowingly participates in the commission of illegal acts during a strike may
be declared to have lost his employment status. [x x x] It can be gleaned unerringly from the
aforecited provision of law in point, however, that an ordinary striking employee can not be
terminated for mere participation in an illegal strike. There must be proof that he committed
illegal acts during the strike and the striker who participated in the commission of illegal
act[s] must be identified. But proof beyond reasonable doubt is not required.
Substantial evidence available under the circumstances, which may justify the
imposition of the penalty of dismissal, may suffice.
In the landmark case of Ang Tibay vs. CIR, the court ruled Not only must there be some
evidence to support a finding or conclusion, but the evidence must be substantial. Substantial
evidence is more than a mere scintilla. It means such relevant evidence that a
reasonable mind might accept as sufficient to support a conclusion.[55] (Emphasis
supplied.)
Thus, it is necessary for the company to adduce proof on the participation of the striking employee in
the commission of illegal acts during the strikes.
After a scrutiny of the records, we find that the 227 employees indeed joined the February 21, 22, and
23, 2001 rallies and refused to render overtime work or report for work. These rallies, as we earlier ruled, are in
reality illegal strikes, as the procedural requirements for strikes under Art. 263 were not complied with. Worse, said
strikes were in violation of the company rule prohibiting acts in citing or participating in riots, disorders, alleged
strikes or concerted action detrimental to Toyotas interest.
With respect to the February 21, 22, and 23, 2001 concerted actions, Toyota submitted the list of
employees who did not render overtime work on February 21, 2001 and who did not report for work on February
22 and 23, 2001 as shown by Annex I of Toyotas Position Paper in NLRC Certified Case No. 000203-01 entitled In
Re: Labor Dispute at Toyota Motor Philippines Corp. The employees who participated in the illegal concerted actions
were as follows:
1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio; 4. Alarana, Edwin; 5. Alejo, Alex; 6. Alfonso,
Erwin; 7. Apolinario, Dennis; 8. Apostol, Melvin; 9. Arceta, Romel; 10. Arellano, Ruel; 11. Ariate,
Abraham; 12. Arollado, Daniel; 13. Arriola, Dominador; 14. Atun, Lester; 15. Bala, Rizalino; 16.
Baluyut, Rolando; 17. Banzuela, Tirso Jr.; 18. Bayani, Roderick; 19. Benabise, Sabas Jr.; 20. Berces,
Abel; 21. Bering, Benny; 22. Birondo, Alberto; 23. Blanco, Melchor; 24. Bolanos, Dexter; 25. Bolocon,
Jerry; 26. Borebor, Rurel; 27. Borromeo, Jubert; 28. Borsigue, Antonio; 29. Bulan, Elmer; 30. Busano,
Freddie; 31. Bustillo, Ernesto Jr.; 32. Caalim, Alexander; 33. Cabahug, Nelson; 34. Cabatay, Jessie;
35. Cabezas, Marcelo; 36. Calalang, Richard; 37. Candelario, Roque Jr.; 38. Capate, Leo Nelson; 39.
Carandang, Resty; 40. Caraqueo, Lorenzo; 41. Caringal, Dennis; 42. Casaba, Gienell; 43. Catapusan,
Christopher; 44. Catral, Rico; 45. Cecilio, Felipe; 46. Cinense, Joey; 47. Cometa, Julius; 48. Completo,
Emilio; 49. Consignado, Randy; 50. Coral, Jay Antonio; 51. Correa, Claudio Jr.; 52. Cuevas,
Reynaldo; 53. Dacalcap, Albert; 54. Dakay, Ryan; 55. Dalanon, Herbert; 56. Dalisay, Rene; 57. David,
Benigno Jr.; 58. De Guzman, Joey; 59. Dela Cruz, Basilio; 60. Dela Cruz, Ferdinand; 61. Dela Torre,
Heremo; 62. De Leon, Leonardo; 63. Delos Santos, Rogelio; 64. De Ocampo, Joselito; 65. De Silva,
Leodegario; 66. Del Mundo, Alex; 67. Del Rio, Rey; 68. Dela Ysla, Alex; 69. Dia, Frank Manuel; 70.
Dimayuga, Antonio; 71. Dingcong, Jessiah; 72. Dumalag, Jasper; 73. Duyag, Aldrin; 74. Ercillo,
Armando; 75. Espadilla, Delmar; 76. Espejo, Lionel; 77. Espeloa, Dennis; 78. Esteva, Alexander; 79.
Estole, Francisco; 80. Fajardo, George; 81. Fajilagutan, Jason; 82. Fajura, John; 83. Franco,
Melencio; 84. Franco, Nikko; 85. Fulgar, Dexter; 86. Fulo, Dante; 87. Gado, Eduardo; 88. Galang,
Erwin; 89. Gamit, Rodel; 90. Garces, Robin; 91. Garcia, Ariel; 92. Gaspi, Ronald; 93. Gavarra,
Angelo; 94. Gerola, Genaro Jr.; 95. Gerola, Larry; 96. Gohilde, Michael; 97. Gojar, Regino; 98. Gojar,
Reynaldo; 99. Gonzales, Roberto; 100. Gutierrez, Bernabe; 101. Hilaga, Edgar; 102. Hilanga,
Melchor; 103. Hondrada, Eugene Jay; 104. Imperial, Alejandro; 105. Jaen, Ferdinand; 106. Jalea,
Philip; 107. Javillonar, Joey; 108. Julve, Frederick; 109. Lalisan, Victorio; 110. Landicho, Danny; 111.
Laqui, Basilio; 112. Lavide, Edgar; 113. Lazaro, Orlando; 114. Legaspi, Noel; 115. Lising, Reynaldo
Jr.; 116. Llanera, Joey; 117. Lomboy, Alberto; 118. Lopez, Geronimo; 119. Lozada, Jude Jonobell;
120. Lucido, Johny; 121. Macalindong, Rommel; 122. Madrazo, Nixon; 123. Magbalita, Valentin;
124. Magistrado, Rogelio Jr.; 125. Magnaye, Philip John; 126. Malabanan, Allan John; 127. Malabrigo,
Angelito; 128. Malaluan, Rolando Jr.; 129. Malate, Leoncio Jr.; 130. Maleon, Paulino; 131. Manaig,
Roger; 132. Manalang, Joseph Patrick; 133. Manalo, Manuel Jr.; 134. Manaog, Jonamar; 135.
Manaog, Melchor; 136. Mandolado, Melvin; 137. Maneclang, Jovito; 138. Manego, Ruel; 139.
Manguil, Bayani Jr.; 140. Manigbas, June; 141. Manjares, Alfred; 142. Manzanilla, Edwin; 143.
Marasigan, Carlito; 144. Marcial, Nilo; 145. Mariano, Rommel; 146. Mata, Mayo; 147. Mendoza,
Bobit; 148. Mendoza, Roberto; 149. Milan, Joseph; 150. Miranda, Eduardo; 151. Miranda, Luis; 152.
Montero, Ericson; 153. Montero, Marlaw; 154. Montes, Ruel; 155. Morales, Dennis; 156. Natividad,
Kenneth; 157. Nava, Ronaldo; 158. Nevalga, Alexander; 159. Nicanor, Edwin; 160. Nierves,
Roderick; 161. Nunez, Alex; 162. Nunez, Lolito; 163. Obe, Victor; 164. Oclarino, Alfonso; 165. Ojenal,
Leo; 166. Olit, Freddie; 167. Oliver, Rex; 168. Oliveria, Charlie; 169. Operana, Danny; 170. Oriana,
Allan; 171. Ormilla, Larry; 172. Ortiz, Felimon; 173. Paniterce, Alvin; 174. Parallag, Gerald; 175.
Pecayo, Edwin; 176. Pena, Erwin; 177. Penamante, Jowald; 178. Piamonte, Melvin; 179. Piamonte,
Rogelio; 180. Platon, Cornelio; 181. Polutan, Jorge; 182. Posada, John; 183. Puno, Manjolito; 184.
Ramos, Eddie; 185. Reyes, Rolando; 186. Roxas, Philip; 187. Sales, Paul Arthur; 188. Sallan, David
Jr.; 189. Salvador, Bernardo; 190. Sampang, Alejandro; 191. San Pablo, Baldwin; 192. Sangalang,
Jeffrey; 193. Santiago, Eric; 194. Santos, Raymond; 195. Sapin, Al Jose; 196. Saquilabon, Bernabe;
197. Serrano, Ariel; 198. Sierra, Alex; 199. Simborio, Romualdo; 200. Sulit, Lauro; 201. Tabirao,
34 | A L B A - L A B R E L
 Elvisanto; 202. Tablizo, Edwin; 203. Taclan, Petronio; 204. Tagala, Rommel; 205. Tagle, Wilfredo
Jr.; 206. Tecson Alexander; 207. Templo, Christopher; 208. Tenorio, Roderick; 209. Tolentino,
Rodel; 210. Tolentino, Rommel; 211. Tolentino, Romulo Jr.; 212. Tomas, Rolando; 213. Topaz,
Arturo Sr.; 214. Toral, Grant Robert; 215. Torres, Dennis; 216. Torres, Federico; 217. Trazona, Jose
Rommel; 218. Tulio, Emmanuel; 219. Umiten, Nestor Jr.; 220. Vargas, Joseph; 221. Vergara, Allan;
222. Vergara, Esdwin; 223. Violeta, Apollo Sr.; 224. Vistal, Alex; 225. Yangyon, Michael Teddy; 226.
Zaldevar, Christopher; and 227. Zamora, Dominador Jr.
Toyotas Position Paper containing the list of striking workers was attested to as true and correct under
oath by Mr. Jose Ma. Aligada, First Vice President of the Group Administration Division of Toyota. Mr. Emerito
Dumaraos, Assistant Department Manager of the Production Department of Toyota, likewise submitted a June 29,
2001 Affidavit[56] confirming the low attendance of employees on February 21, 22, and 23, 2001, which resulted
from the intentional absences of the aforelisted striking workers. The Union, on the other hand, did not
refute Toyotas categorical assertions on the participation of said workers in the mass actions and their deliberate
refusal to perform their assigned work on February 21, 22, and 23, 2001. More importantly, it did not deny the fact
of absence of the employees on those days from the Toyota manufacturing plants and their deliberate refusal to
render work. Their admission that they participated in the February 21 to 23, 2001 mass actions necessarily means
they were absent from their work on those days.
Anent the March 28 to April 12, 2001 strikes, evidence is ample to show commission of illegal acts like
acts of coercion or intimidation and obstructing free ingress to or egress from the company premises. Mr. Eduardo
Nicolas III, Toyotas Security Chief, attested in his affidavit that the strikers badmouthed people coming in and
shouted invectives such as bakeru at Japanese officers of the company. The strikers even pounded the vehicles
of Toyota officials. More importantly, they prevented the ingress of Toyotaemployees, customers, suppliers, and
other persons who wanted to transact business with the company. These were patent violations of Art. 264(e) of
the Labor Code, and may even constitute crimes under the Revised Penal Code such as threats or coercion among
others.
On March 28, 2001, the following have committed illegal actsblocking the ingress to or egress from the
two (2) Toyota plants and preventing the ingress of Toyotaemployees on board the company shuttle at the Bicutan
and Sta. Rosa Plants, viz:
1. Grant Robert Toral; 2. John Posadas; 3. Alex Sierra; 4. Allan John Malabanan; 5. Abel Berces; 6.
Ariel Garcia; 7. Charlie Oliveria; 8. Manjolito Puno; 9. Baldwin San Pablo; 10. Federico Torres; 11.
Larry Gerola; 12. Roderick Bayani; 13. Allan Oclarino; 14. Reynaldo Cuevas; 15. George Polutan; 16.
Arman Ercillo; 17. Joey Llanera; and 18. Roberto Gonzales
Photographs were submitted by Toyota marked as Annexes 1 through 18 of its Position Paper, vividly
showing the participation of the aforelisted employees in illegal acts.[57]
To further aggravate the situation, a number of union members committed illegal acts (blocking the
ingress to and egress from the plant) during the strike staged on March 29, 2001 at the Toyota plant in Bicutan, to
wit:
1. Basilio Laqui; 2. Sabas Benabise; 3. Federico Torres; 4. Freddie Olit; and 5. Joel Agosto
Pictures marked as Annexes 21 to 22 of Toyotas Position Paper reveal the illegal acts committed by the
aforelisted workers.[58]
On the next day, March 30, 2001, several employees again committed illegal acts (blocking ingress to
and egress from the plant) during the strike at the Bicutan plant, to wit:
1. Ariel Garcia; 2. Edgar Hilaga; 3. Charlie Oliveria; 4. Ferdinand Jaen; 5. Wilfredo Tagle; 6.
Alejandro Imperial; 7. Manjolito Puno; 8. Delmar Espadilla; 9. Apollo Violeta; and 10. Elvis Tabirao
Pictures marked as Annexes 25 to 26 and 28 of Toyotas Position Paper show the participation of these
workers in unlawful acts.[59]
On April 5, 2001, seven (7) Toyota employees were identified to have committed illegal acts (blocking
ingress to and egress from the plant) during the strike held at the Bicutan plant, to wit:
1. Raymund Santos; 2. Elvis Tabirao; 3. Joseph Vargas; 4. Bernardo Salvador; 5. Antonio Dimayuga;
6. Rurel Borebor; and 7. Alberto Lomboy
The participations of the strikers in illegal acts are manifest in the pictures marked as Annexes 32 and 33
of Toyotas Position Paper.[60]
On April 6, 2001, only Rogelio Piamonte was identified to have committed illegal acts (blocking ingress
to and egress from the Toyota plant) during the strike at the Toyota Santa Rosa plant.[61] Then, on April 9, 2001,
Alvin Paniterce, Dennis Apolinario, and Eduardo Miranda[62] were identified to have committed illegal acts (blocking
ingress to and egress from the Toyota plant) during the strike at the Toyota Santa Rosa plant and were validly
dismissed by Toyota.
Lastly, the strikers, though on payroll reinstatement, staged protest rallies on May 23, 2001 and May 28,
2001 in front of the Bicutan and Sta. Rosa plants. These workers acts in joining and participating in the May 23 and
28, 2001 rallies or pickets were patent violations of the April 10, 2001 assumption of jurisdiction/certification Order
issued by the DOLE Secretary, which proscribed the commission of acts that might lead to the worsening of an
already deteriorated situation. Art. 263(g) is clear that strikers who violate the assumption/certification Order may
suffer dismissal from work. This was the situation in the May 23 and 28, 2001 pickets and concerted actions, with
the following employees who committed illegal acts:
a. Strikers who joined the illegal pickets on May 23, 2001 were (1) Dennis Apolinario; (2) Abel Berces;
(3) Benny Bering; (4) Dexter Bolaos; (5) Freddie Busano; (6) Ernesto Bustillo, Jr.; (7) Randy Consignado; (8)
Herbert Dalanon; (9) Leodegario De Silva; (10) Alexander Esteva; (11) Jason Fajilagutan; (12) Nikko Franco; (13)
Genaro Gerola, Jr.; (14) Michael Gohilde; (15) Rogelio Magistrado; (16) Rolando Malaluan, Jr.; (17) Leoncio Malate,
Jr.; (18) Edwin Manzanilla; (19) Nila Marcial; (20) Roderick Nierves; (21) Larry Ormilla; (22) Filemon Ortiz; (23)
Cornelio Platon; (24) Alejandro Sampang; (25) Eric Santiago; (26) Romualdo Simborio; (27) Lauro Sulit; and (28)
Rommel Tagala.
Pictures show the illegal acts (participation in pickets/strikes despite the issuance of a return-to-work
order) committed by the aforelisted strikers.[63]
b. Strikers who participated in the May 28, 2001 were (1) Joel Agosto; (2) Alex Alejo; (3) Erwin Alfonso;
(4) Dennis Apolinario; (5) Melvin Apostol; (6) Rommel Arceta; (7) Lester Atun; (8) Abel Berces; (9) Benny Bering;
(10) Dexter Bolanos; (11) Marcelo Cabezas; (12) Nelson Leo Capate; (13) Lorenzo Caraqueo; (14) Christopher
Catapusan; (15) Ricky Chavez; (16) Virgilio Colandog; (17) Claudio Correa; (18) Ed Cubelo; (19) Reynaldo Cuevas;
(20) Rene Dalisay; (21) Benigno David, Jr.; (22) Alex Del Mundo; (23) Basilio Dela Cruz; (24) Roel Digma; (25)
Aldrin Duyag; (26) Armando Ercillo; (27) Delmar Espadilla; (28) Alexander Esteva; (29) Nikko Franco; (30) Dexter
Fulgar; (31) Dante Fulo; (32) Eduardo Gado; (33) Michael Gohilde; (34) Eugene Jay Hondrada II; (35) Joey
Javillonar; (36) Basilio Laqui; (37) Alberto Lomboy; (38) Geronimo Lopez; (39) Rommel Macalindog; (40) Nixon
Madrazo; (41) Valentin Magbalita; (42) Allan Jon Malabanan; (43) Jonamar Manaog; (44) Bayani Manguil; (45)
June Manigbas; (46) Alfred Manjares; (47) Edwin Manzanilla; (48) Mayo Mata; (49) Leo Ojenal; (50) Allan Oriana;
(51) Rogelio Piamonte; (52) George Polutan; (53) Eric Santiago; (54) Bernabe Saquilabon; (55) Alex Sierra; (56)
Romualdo Simborio; (57) Lauro Sulit; (58) Elvisanto Tabirao; (59) Edwin Tablizo; (60) Emmanuel Tulio; (61) Nestor
Umiten; (62) Joseph Vargas; (63) Edwin Vergara; and (64) Michael Teddy Yangyon.
35 | A L B A - L A B R E L
 Toyota presented photographs which show said employees conducting mass pickets and concerted
actions.[64]
Anent the grant of severance compensation to legally dismissed union members, Toyota assails the turn-
around by the CA in granting separation pay in its June 20, 2003 Resolution after initially denying it in its February
27, 2003 Decision. The company asseverates that based on the CA finding that the illegal acts of said union
members constitute gross misconduct, not to mention the huge losses it suffered, then the grant of separation pay
was not proper.
The general rule is that when just causes for terminating the services of an employee under Art. 282 of
the Labor Code exist, the employee is not entitled to separation pay.The apparent reason behind the forfeiture of
the right to termination pay is that lawbreakers should not benefit from their illegal acts. The dismissed employee,
however, is entitled to whatever rights, benefits and privileges [s/he] may have under the applicable individual or
collective bargaining agreement with the employer or voluntary employer policy or practice[65] or under the Labor
Code and other existing laws. This means that the employee, despite the dismissal for a valid cause, retains the
right to receive from the employer benefits provided by law, like accrued service incentive leaves. With respect to
benefits granted by the CBA provisions and voluntary management policy or practice, the entitlement of the
dismissed employees to the benefits depends on the stipulations of the CBA or the company rules and policies.
As in any rule, there are exceptions. One exception where separation pay is given even though an
employee is validly dismissed is when the court finds justification in applying the principle of social justice well
entrenched in the 1987 Constitution. In Phil. Long Distance Telephone Co. (PLDT) v. NLRC, the Court elucidated
why social justice can validate the grant of separation pay, thus:
The reason is that our Constitution is replete with positive commands for the promotion of social
justice, and particularly the protection of the rights of the workers. The enhancement of their welfare
is one of the primary concerns of the present charter. In fact, instead of confining itself to the
general commitment to the cause of labor in Article II on the Declaration of Principles of State
Policies, the new Constitution contains a separate article devoted to the promotion of social justice
and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital role
of labor, hand in hand with management, in the advancement of the national economy and the
welfare of the people in general. The categorical mandates in the Constitution for the improvement
of the lot of the workers are more than sufficient basis to justify the award of separation pay in
proper cases even if the dismissal be for cause.[66]
In the same case, the Court laid down the rule that severance compensation shall be allowed only when
the cause of the dismissal is other than serious misconduct or that which reflects adversely on the employees moral
character. The Court succinctly discussed the propriety of the grant of separation pay in this wise:
We hold that henceforth separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is,
for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to give the dismissed employee
separation pay, or financial assistance, or whatever other name it is called, on the ground of social
justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that the punishment
is his dismissal only and that the separation pay has nothing to do with the wrong he has
committed. Of course it has. Indeed, if the employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense
in his next employment because he thinks he can expect a like leniency if he is again found out. This
kind of misplaced compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it
is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment
of the guilty. Those who invoke social justice may do so only if their hands are clean and their
motives blameless and not simply because they happen to be poor. This great policy of our
Constitution is not meant for the protection of those who have proved they are not worthy of it, like
the workers who have tainted the cause of labor with the blemishes of their own character.[67]
Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay based
on social justiceserious misconduct (which is the first ground for dismissal under Art. 282) or acts that reflect on
the moral character of the employee. What is unclear is whether the ruling likewise precludes the grant of separation
pay when the employee is validly terminated from work on grounds laid down in Art. 282 of the Labor Code other
than serious misconduct.
A recall of recent cases decided bearing on the issue reveals that when the termination is legally justified
on any of the grounds under Art. 282, separation pay was not allowed. In Ha Yuan Restaurant v. NLRC,[68] we
deleted the award of separation pay to an employee who, while unprovoked, hit her co-workers face, causing
injuries, which then resulted in a series of fights and scuffles between them. We viewed her act as serious
misconduct which did not warrant the award of separation pay. In House of Sara Lee v. Rey,[69] this Court deleted
the award of separation pay to a branch supervisor who regularly, without authorization, extended the payment
deadlines of the companys sales agents. Since the cause for the supervisors dismissal involved her integrity (which
can be considered as breach of trust), she was not worthy of compassion as to deserve separation pay based on
her length of service. In Gustilo v. Wyeth Phils., Inc.,[70] this Court found no exceptional circumstance to warrant
the grant of financial assistance to an employee who repeatedly violated the companys disciplinary rules and
regulations and whose employment was thus terminated for gross and habitual neglect of his duties. In the doctrinal
case of San Miguel v. Lao,[71] this Court reversed and set aside the ruling of the CA granting retirement benefits or
separation pay to an employee who was dismissed for willful breach of trust and confidence by causing the delivery
of raw materials, which are needed for its glass production plant, to its competitor. While a review of the case
reports does not reveal a case involving a termination by reason of the commission of a crime against the employer
or his/her family which dealt with the issue of separation pay, it would be adding insult to injury if the employer
would still be compelled to shell out money to the offender after the harm done.
In all of the foregoing situations, the Court declined to grant termination pay because the causes for
dismissal recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by willful or
wrongful intent or they reflected adversely on the moral character of the employees. We therefore find that in
addition to serious misconduct, in dismissals based on other grounds under Art. 282 like willful disobedience, gross
and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or
his family, separation pay should not be conceded to the dismissed employee.
In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts may
opt to grant separation pay anchored on social justice in consideration of the length of service of the employee,
the amount involved, whether the act is the first offense, the performance of the employee and the like, using the
guideposts enunciated in PLDT on the propriety of the award of separation pay.
In the case at bench, are the 227 striking employees entitled to separation pay?
In the instant case, the CA concluded that the illegal strikes committed by the Union members constituted
serious misconduct.[72]
The CA ratiocinated in this manner:
Neither can social justice justify the award to them of severance compensation
or any other form of financial assistance. x x x
36 | A L B A - L A B R E L
 xxxx
Considering that the dismissal of the employees was due to their participation
in the illegal strikes as well as violation of the Code of Conduct of the company, the
same constitutes serious misconduct. A serious misconduct is a transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. In fact, in Panay Electric Company, Inc.
v. NLRC, the Supreme Court nullified the grant of separation benefits to employees who unlawfully
participated in an illegal strike in light of Article 264, Title VIII, Book V of the Labor Code, that, any
union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost
his employment status.
The constitutional guarantee on social justice is not intended only for the poor
but for the rich as well. It is a policy of fairness to both labor and
management.[73] (Emphasis supplied.)
In disposing of the Unions plea for reconsideration of its February 27, 2003 Decision, the CA however
performed a volte-face by reinstating the award of separation pay.
The CAs grant of separation pay is an erroneous departure from our ruling in Phil. Long Distance
Telephone Co. v. NLRC that serious misconduct forecloses the award of separation pay. Secondly, the advertence
to the alleged honest belief on the part of the 227 employees that Toyota committed a breach of the duty to bargain
collectively and an abuse of valid exercise of management prerogative has not been substantiated by the evidence
extant on record. There can be no good faith in intentionally incurring absences in a collective fashion from work
on February 22 and 23, 2001 just to attend the DOLE hearings. The Unions strategy was plainly to cripple the
operations and bring Toyota to its knees by inflicting substantial financial damage to the latter to compel union
recognition. The Union officials and members are supposed to know through common sense that huge losses would
befall the company by the abandonment of their regular work. It was not disputed that Toyota lost more than PhP
50 million because of the willful desertion of company operations in February 2001 by the dismissed union
members. In addition, further damage was experienced by Toyota when the Union again resorted to illegal strikes
from March 28 to April 12, 2001, when the gates of Toyota were blocked and barricaded, and the company officials,
employees, and customers were intimidated and harassed.Moreover, they were fully aware of the company rule on
prohibition against concerted action inimical to the interests of the company and hence, their resort to mass actions
on several occasions in clear violation of the company regulation cannot be excused nor justified. Lastly, they
blatantly violated the assumption/certification Order of the DOLE Secretary, exhibiting their lack of obeisance to
the rule of law. These acts indeed constituted serious misconduct.
A painstaking review of case law renders obtuse the Unions claim for separation pay. In a slew of cases,
this Court refrained from awarding separation pay or financial assistance to union officers and members who were
separated from service due to their participation in or commission of illegal acts during strikes. In the recent case
of Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA) ,[74] this Court upheld the
dismissal of union officers who participated and openly defied the return-to-work order issued by the DOLE
Secretary. No separation pay or financial assistance was granted. In Sukhothai Cuisine and Restaurant v. Court of
Appeals,[75] this Court declared that the union officers who participated in and the union members who committed
illegal acts during the illegal strike have lost their employment status. In this case, the strike was held illegal because
it violated agreements providing for arbitration. Again, there was no award of separation pay nor financial
assistance. In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union,[76] the strike
was declared illegal because the means employed was illegal. We upheld the validity of dismissing union members
who committed illegal acts during the strike, but again, without awarding separation pay or financial assistance to
the erring employees. In Samahang Manggagawa sa Sulpicio Lines, Inc. v. Sulpicio Lines,[77] this Court upheld the
dismissal of union officers who participated in an illegal strike sans any award of separation pay. Earlier, in Grand
Boulevard Hotel v. Genuine Labor Organization of Workers in Hotel, Restaurant and Allied Industries,[78] we affirmed
the dismissal of the Unions officers who participated in an illegal strike without awarding separation pay, despite
the NLRCs declaration urging the company to give financial assistance to the dismissed employees.[79] In Interphil
Laboratories Union-FFW, et al. v. Interphil Laboratories, Inc.,[80] this Court affirmed the dismissal of the union
officers who led the concerted action in refusing to render overtime work and causing work slowdowns. However,
no separation pay or financial assistance was allowed. In CCBPI Postmix Workers Union v. NLRC,[81] this Court
affirmed the dismissal of union officers who participated in the strike and the union members who committed illegal
acts while on strike, without awarding them separation pay or financial assistance. In 1996, in Allied Banking
Corporation v. NLRC,[82] this Court affirmed the dismissal of Union officers and members, who staged a strike despite
the DOLE Secretarys issuance of a return to work order but did not award separation pay. In the earlier but more
relevant case of Chua v. NLRC,[83] this Court deleted the NLRCs award of separation benefits to an employee who
participated in an unlawful and violent strike, which strike resulted in multiple deaths and extensive property
damage. In Chua, we viewed the infractions committed by the union officers and members as a serious misconduct
which resulted in the deletion of the award of separation pay in conformance to the ruling in PLDT. Based on
existing jurisprudence, the award of separation pay to the Union officials and members in the instant petitions
cannot be sustained.
One last point to considerit is high time that employer and employee cease to view each other as
adversaries and instead recognize that theirs is a symbiotic relationship, wherein they must rely on each other to
ensure the success of the business. When they consider only their own self-interests, and when they act only with
their own benefit in mind, both parties suffer from short-sightedness, failing to realize that they both have a stake
in the business. The employer wants the business to succeed, considering the investment that has been made. The
employee in turn, also wants the business to succeed, as continued employment means a living, and the chance to
better ones lot in life. It is clear then that they both have the same goal, even if the benefit that results may be
greater for one party than the other. If this becomes a source of conflict, there are various, more amicable means
of settling disputes and of balancing interests that do not add fuel to the fire, and instead open avenues for
understanding and cooperation between the employer and the employee. Even though strikes and lockouts have
been recognized as effective bargaining tools, it is an antiquated notion that they are truly beneficial, as they only
provide short-term solutions by forcing concessions from one party; but staging such strikes would damage the
working relationship between employers and employees, thus endangering the business that they both want to
succeed. The more progressive and truly effective means of dispute resolution lies in mediation, conciliation, and
arbitration, which do not increase tension but instead provide relief from them. In the end, an atmosphere of trust
and understanding has much more to offer a business relationship than the traditional enmity that has long divided
the employer and the employee.
WHEREFORE, the petitions in G.R. Nos. 158786 and 158789 are DENIED while those in G.R. Nos.
158798-99 are GRANTED.
The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and 67561 restoring the grant of severance
compensation is ANNULLED and SET ASIDE.
The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and 67561, which affirmed the August 9,
2001 Decision of the NLRC but deleted the grant of severance compensation, is REINSTATED and AFFIRMED.
No costs.
SO ORDERED.
37 | A L B A - L A B R E L
 12. Tirazona vs. PET INC.
Before Us is a Motion for Leave to File [a] Second Motion for Reconsideration,[1] with the Second Motion for
Reconsideration incorporated therein, where petitioner Ma. Wenelita Tirazona (Tirazona) seeks the reconsideration of
the Resolution[2] of this Court dated 23 June 2008. Said Resolution denied for lack of merit petitioners previous Motion
for Reconsideration,[3] which sought the reversal of our Decision[4] dated 14 March 2008 or, in the alternative,
modification thereof by awarding her separation pay and retirement benefits under existing laws.
In our 14 March 2008 Decision, we subscribed to the factual findings of the National Labor Relations
Commission (NLRC) and the Court of Appeals that Tirazona, being the Administrative Manager of Philippine EDS Techno-
Service, Inc. (PET), was a managerial employee who held a position of trust and confidence; that after PET
officers/directors called her attention to her improper handling of a situation involving a rank-and-file employee, she
claimed that she was denied due process for which she demanded P2,000,000.00 indemnity from PET and its
officers/directors; that she admitted to reading a confidential letter addressed to PET officers/directors containing the
legal opinion of the counsel of PET regarding her case; and that she was validly terminated from her employment on
the ground that she willfully breached the trust and confidence reposed in her by her employer. In the end, we concluded
that:
Tirazona, in this case, has given PET more than enough reasons to distrust her. The
arrogance and hostility she has shown towards the company and her stubborn, uncompromising
stance in almost all instances justify the companys termination of her employment. Moreover,
Tirazonas reading of what was supposed to be a confidential letter between the counsel and
directors of the PET, even if it concerns her, only further supports her employers view that she
cannot be trusted. In fine, the Court cannot fault the actions of PET in dismissing petitioner.[5]
Hence, the fallo of our 14 March 2008 Decision reads:
WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of
merit and the Decision of the Court of Appeals dated 24 May 2005 is hereby AFFIRMED.Costs
against the petitioner.[6]
On 29 April 2008, Tirazona moved for reconsideration[7] of our afore-mentioned Decision. She argued therein
that the Court failed to consider the length of her service to PET in affirming her termination from employment. She
prayed that her dismissal be declared illegal. Alternatively, should the Court uphold the legality of her dismissal, Tirazona
pleaded that she be awarded separation pay and retirement benefits, out of humanitarian considerations.
In our Resolution[8] dated 23 June 2008, we denied Tirazonas Motion for Reconsideration, as the same did not
present any substantial arguments that would warrant a modification of our previous ruling. We thus decreed:
ACCORDINGLY, the Court resolves to DENY the motion for reconsideration
with FINALITY for lack of merit.
On 21 August 2008, Tirazona filed the instant Motion for Leave to File [a] Second Motion for Reconsideration,
with the Second Motion for Reconsideration incorporated therein, raising essentially the same arguments and prayers
contained in her first Motion for Reconsideration.
The Court thereafter required PET to comment on the above motion. On 19 November 2008, PET filed its
Comment/Opposition,[9] to which Tirazona filed her Reply[10]on 8 December 2008.
After thoroughly scrutinizing the averments of the present Motion, the Court unhesitatingly declares the same
to be completely unmeritorious.
Section 2, Rule 52 of the Rules of Court explicitly decrees that no second motion for reconsideration of a
judgment or final resolution by the same party shall be entertained. Accordingly, a second motion for
reconsideration is a prohibited pleading, which shall not be allowed, except for extraordinarily persuasive reasons
and only after an express leave shall have first been obtained.[11] In this case, we fail to find any such extraordinarily
persuasive reason to allow Tirazonas Second Motion for Reconsideration.
As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article
282[12] of the Labor Code is not entitled to separation pay.[13]In Sy v. Metropolitan Bank & Trust Company,[14] we declared
that only unjustly dismissed employees are entitled to retirement benefits and other privileges including
reinstatement and backwages.
Although by way of exception, the grant of separation pay or some other financial assistance may be allowed
to an employee dismissed for just causes on the basis of equity,[15] in Philippine Long Distance Telephone Company v.
National Labor Relations Commission,[16] we set the limits for such a grant and gave the following ratio for the same:
[S]eparation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character. x x x.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that the
punishment is his dismissal only and that the separation pay has nothing to do with the wrong he
has committed. Of course it has. Indeed, if the employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense
in his next employment because he thinks he can expect a like leniency if he is again found out. This
kind of misplaced compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it
is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be [a] refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so only if their hands are clean
and their motives blameless and not simply because they happen to be poor. This great policy of
our Constitution is not meant for the protection of those who have proved they are not worthy of
it, like the workers who have tainted the cause of labor with the blemishes of their own character.
(Emphasis ours.)
In accordance with the above pronouncements, Tirazona is not entitled to the award of separation pay.
Contrary to her exaggerated claims, Tirazona was not just gracelessly expelled or simply terminated from
the company on 22 April 2002. She was found to have violated the trust and confidence reposed in her by her
employer when she arrogantly and unreasonably demanded from PET and its officers/directors the exorbitant
amount of P2,000,000.00 in damages, coupled with a threat of a lawsuit if the same was not promptly paid within
five days. This unwarranted imposition on PET and its officers/directors was made after the company sent Tirazona
a letter, finding her handling of the situation involving a rank-and-file employee to be less than ideal, and merely
reminding her to be more circumspect when dealing with the more delicate concerns of their employees. To
aggravate the situation, Tirazona adamantly and continually refused to cooperate with PETs investigation of her
case and to provide an adequate explanation for her actions.
Verily, the actions of Tirazona reflected an obdurate character that is arrogant, uncompromising, and
hostile. By immediately and unreasonably adopting an adverse stance against PET, she sought to impose her will on the
company and placed her own interests above those of her employer. Her motive for her actions was rendered even more
questionable by her exorbitant and arbitrary demand for P2,000,000.00 payable within five days from demand. Her
attitude towards her employer was clearly inconsistent with her position of trust and confidence. Her poor character
became even more evident when she read what was supposed to be a confidential letter of the legal counsel of PET to
PET officers/directors expressing his legal opinion on Tirazonas administrative case. PET was, therefore, fully justified in
terminating Tirazonas employment for loss of trust and confidence.
38 | A L B A - L A B R E L
 Tirazona also failed to persuade us to consider in her favor her length of service to PET.
In the Motion for Reconsideration filed on 29 April 2008 and in the instant motion, Tirazona prays for this
Court to grant her separation and other retirement benefits, should we uphold the legality of her dismissal. She anchors
her claim on the fact that she had allegedly been in the employ of PET for twenty-six (26) years and that the Court must
give due consideration to the length of her service to the company.[17] However, in her Reply to the Comment/Opposition
to the instant motion filed by PET, Tirazona retracted the above allegation and stated that the claim of twenty-six (26)
years of employment with PET was an error committed through inadvertence. She then averred that the length of her
employment with PET should indeed be counted from July 1999, which up to the present time will result in a period of
eight (8) years, more or less.
We find that the above statement is still inaccurate. As this Court ruled in our Decision dated 14 March 2008,
Tirazona was validly terminated from her employment on 22 April 2002. Therefore, counting from the time when
Tirazona was employed by PET on 19 July 1999 up to the time when she was dismissed, she had only rendered a little
more than two (2) years and nine (9) months of service to PET.
Finally, the cases cited by Tirazona hardly support her cause.
In Soco v. Mercantile Corporation of Davao[18] and Firestone Tire and Rubber Company of the Philippines v.
Lariosa,[19] separation pay was granted to the dismissed employees, as they were mere rank-and-file employees who did
not have any previous derogatory record with their companies and in equitable regard for their long years of service
spanning more than ten (10) years.
In Farrol v. Court of Appeals,[20] separation pay was awarded because the penalty of dismissal was held to be
harsh and disproportionate to the offense committed and the dismissed employee had been at the service of the company
for twenty four (24) years.
for Reconsideration incorporated therein is NOTED WITHOUT ACTION in view of the denial of the former.
SO ORDERED.
In Negros Navigation Co. Inc. v. National Labor Relations Commission,[21] separation pay was awarded to the
employee dismissed, as it was the employer itself that prayed for the award of the same, in lieu of the employees
reinstatement.
Lastly, in Philippine Commercial International Bank v. Abad,[22] separation pay was ordered granted to a dismissed
managerial employee because there was an express finding that the violation of the bank policies was not perpetrated
for the employees self-interest, nor did the employee exhibit any lack of moral depravity. The employee had also been
in the service of the company for twenty-five (25) years.
Obviously, Tirazonas reliance upon the above-cited cases is misleading, as the circumstances therein are
markedly different from those in the case at bar.
In sum, we hold that the award of separation pay or any other kind of financial assistance to Tirazona, under
the guise of compassionate justice, is not warranted in this case. To hold otherwise would only cause a disturbance of
the sound jurisprudence on the matter and a perversion of the noble dictates of social justice.
While the Court commiserates with the plight of Tirazona, who has recently manifested[23] that she has since
been suffering from her poor health condition, the Court cannot grant her plea for the award of financial benefits based
solely on this unfortunate circumstance. For all its conceded merit, equity is available only in the absence of law and not
as its replacement. Equity as an exceptional extenuating circumstance does not favor, nor may it be used to reward, the
indolent[24] or the wrongdoer, for that matter.This Court will not allow a party, in the guise of equity, to benefit from its
own fault.[25]
WHEREFORE, the Motion for Leave to File [a] Second Motion for Reconsideration is hereby DENIED for lack
of merit and the Second Motion
39 | A L B A - L A B R E L
 13. Reynaldo Moya vs. First Solid Rubber Industries

Before the Court is a Petition for Review on Certiorari1 from the Decision2 of the Special Third Division of the Court of
Appeals in CA-G.R. SP No. 99500 dated 30 April 2008, modifying the Decision of the National Labor Relations
Commission (NLRC) by deleting the award of separation pay in favor of Reynaldo Hayan Moya (Moya). The
dispositive portion of the assailed decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED. The Resolutions dated January 31, 2007 and
April 24, 2007 of the National Labor Relations Commission in NLRC NCR CA No. 048653-06 (NLRC NCR Case No. 00-
11-12626 2004) affirming the Decision dated February 28, 2006 of the Labor Arbiter Pablo C. Espiritu, Jr. is
MODIFIED by deleting the award for separation pay in favor of private respondent Reynaldo Hayan Moya.3ww
The facts as gathered by this Court follow:
On 25 January 2005, Moya filed before the NLRC-National Capital Region a complaint for illegal dismissal against
First Solid Rubber Industries, Inc. (First Solid) and its President Edward Lee Sumulong. In his complaint-
affidavit,4Moya alleged that:
1. Sometime in May 1993, he was hired by the company First Solid, a business engaged in manufacturing
of tires and rubbers, as a machine operator;
2. Through years of dedication to his job, he was promoted as head of the Tire Curing Department of the
company;
3. On October 15, 2004, he reported an incident about an under curing of tires within his department
which led to the damage of five tires;
4. The company conducted an investigation of the incident and he was later required to explain;
5. In his explanation, he stated that the damage was caused by machine failure and the incident was
without any fault of the operator;
6. Despite his explanation of what transpired, he was terminated by the company through a letter dated
November 9, 2004.
From the foregoing, he prayed that payment of backwages, separation pay, moral damages and exemplary damages
be adjudged in his favor due to the illegal dismissal he suffered from the company.
Moya, through his Reply,5 added that his termination fell short of any of the just causes of serious misconduct, gross
and habitual neglect of duties and willful breach of trust. He pointed out that the company failed to prove that his
act fell within the purview of improper or wrong misconduct, and that a single act of negligence as compared to
eleven (11) years of service of good record with the company will not justify his dismissal.
First Solid, in its Position Paper,6 Reply7 and Memorandum,8 admitted that Moya was a former employee of the
company and was holding the position of Officer-in-Charge of the Tire Curing Department until his valid dismissal.
However, it denied that it illegally dismissed Moya and maintained that his severance from the company was due to
a valid exercise of management prerogative.9 The company insisted on its right to validly dismiss an employee in
good faith if it has a reasonable ground to believe that its employee is responsible of misconduct, and the nature of
his participation therein renders him absolutely unworthy of the trust and confidence demanded by his position.10
Opposing the story of Moya, the company countered that Moya, who was exercising supervision and control over the
employees as a department head, failed to exercise the diligence required of him to see to it that the machine
operator, Melandro Autor, properly operated the machine. This act is considered as a gross and habitual neglect of
duty which caused actual losses to the company.11
During the initial investigation, Moya, in his Explanation Letter12 dated 15 October 2004, insisted that the cause of
the damage of five (5) tires was due to premature hauling of the tires below curing time. Unsatisfied with the
explanation, the company sent Moya a Letter13 dated 26 October 2004 stating that he failed to explain what really
transpired in the under curing of tires. The company informed Moya that the damage was caused by the operator’s
unlawful setting of the timer from manual to automatic without Moya’s permission. To make the matter worse, Moya
failed to disclose the real situation that the operator was at fault.
Moya was given twenty-four (24) hours to defend himself and explain the matter. In response, Moya admitted in a
letter dated 29 October 2004 his mistake of not disclosing the true incident and explained that he found it more
considerate to just let the operator be suspended and be fined for the damage committed. He denied any willful
intention to conceal the truth or cover up the mistake of his employee. Finally, he asked for the company’s
forgiveness for the fault he had committed.14 In a letter dated 3 November 2004, Moya reiterated his plea for
forgiveness and asked for another chance to continue his employment with the company.15
Procedural due process, through issuance of twin notices, was also complied with by the company. Moya was
informed of the charges against him through a memorandum16 indicating his violation and was given an opportunity
40 | A L B A - L A B R E L
to answer or rebut the charges. After giving his explanation through several letters to the company, a notice was
sent informing him of the management’s decision of his dismissal and termination from services on9 November 2004
based on serious misconduct, gross and habitual neglect of duty and willful breach of trust reposed upon him by the
company.17
On 28 February 2006, Labor Arbiter Pablo C. Espiritu, Jr. rendered a judgment18 finding sufficient and valid grounds
to dismiss Moya for concealing and lying to First Solid about the factual circumstances leading to the damage of five
(5) tires on 15 October 2004. However, it ruled that the dismissal from service of the complainant was too harsh as
a penalty since it was a first offense and there was no willful and malicious intention on his part to cause damage.
The dispositive portion reads:
WHEREFORE, judgment is hereby rendered ordering Respondents First Solid Rubber Industrial, Inc. and Edward Lee
Sumulong to jointly and severally pay complainant separation pay in lieu of reinstatement the amount of ₱63,
654.00.
All other claims whether monetary or otherwise are hereby DISMISSED for lack of merit.19
In justifying his decision, the Labor Arbiter explained that the length of time during which the complainant was
deprived of employment was sufficient penalty for the act he had committed against the company. As a result, his
reinstatement without backwages to his former position was in order. However, since the employment was already
strained and Moya was no longer seeking to be reinstated, he decided that it was for the best interest of both
parties to award instead a separation pay of one (1) month salary for every year of credited service less the total of
cash advances of the complainant amounting to ₱19,000.00.20
Not in total accord with the outcome of the decision, First Solid filed its partial appeal before the NLRC on 13 April
2006. The company assailed as error on the part of the Labor Arbiter the grant of separation pay in favor of Moya
despite the finding that there was a just cause for the employee’s dismissal from service. It was submitted that the
complainant’s length of service to the company cannot be invoked to justify the award. It was argued that Moya was
dismissed for just causes; hence, to award separation pay would be tantamount to giving a prize for disloyalty and
breach of trust.21
On 31 January 2007, the NLRC affirmed the Decision of the Labor Arbiter in its entirety.22
The NLRC affirmed the finding of the Labor Arbiter that a separation pay should be given to Moya in lieu of
reinstatement citing primarily his length of service and years of contribution to the profitable business operation of
the company. It also noted that this transgression was the first mistake of Moya in the performance of his functions.
Finally, it cited as justification the Court’s ruling in St. Michael’s Institute v. Santos,23 wherein the Court held that
"even when an employee is found to have transgressed the employer’s rules, in the actual imposition of penalties
upon the erring employee, due consideration must still be given to his length of service and the number of violations
committed during his employment."24
In its Motion for Reconsideration,25 First Solid insisted that length of service cannot mitigate breach of trust which is
penalized with dismissal.
On 24 April 2007, the NLRC denied the motion of First Solid as it found no compelling justification to overturn its
findings.26
In its Petition for Certiorari before the Court of Appeals, the company reiterated its previous arguments that
separation pay cannot be awarded to validly dismissed employees and that length of service was not a ground to
reduce the penalty of dismissal due to breach of trust.27
In his Comment28 and Memorandum,29 Moya capitalized on the pronouncement of the Labor Arbiter that his alleged
infraction does not merit a penalty of dismissal from service given his length of service to the company as well as
the failure of the company to prove that he acted maliciously and with the intention to cause damage.
First Solid, in its Reply30 and Memorandum,31 argued that Moya, being a supervisor, the company reposed on him its
trust and confidence. He was expected to remain loyal and trustworthy and promote the best interest of the
company. His act of concealing, by making a fraudulent report to the company regarding the transgression of the
machine operator under him, is a valid basis for dismissal based on breach of trust and confidence. The company
further contended that the award of separation pay made by the labor tribunals was contrary to law and
jurisprudence.
In its Decision,32 the Court of Appeals ruled in favor of the company and reversed the decisions of the labor
tribunals. The dispositive portions reads:
WHEREFORE, premises considered, the petition is GRANTED. The Resolutions dated January 31, 2007 and April 24,
2007 of the National Labor Relations Commission in NLRC NCR CA No. 048653-06(NLRC NCR Case No. 00-11-12626-
2004) affirming the Decision dated February 28, 2006 of the Labor Arbiter Pablo C. Espiritu, Jr. is MODIFIED by
deleting the award for separation pay in favor of private respondent Reynaldo Hayan Moya.33
The appellate court ruled that an employee found to be guilty of serious misconduct or other acts reflecting his
moral character is not entitled to separation pay. Moya who held a supervisory position as the Head of the Curing
Department breached the trust reposed upon him when he did not disclose what was actually done by the machine
operator which eventually caused the damage. It was only when the company discovered that the report was not in
accordance with what really transpired that Moya admitted its mistake. In sum, the appellate court agreed that First
Solid presented substantial proof to consider Moya as dishonest and disloyal to the company.
It took the position that instead of being a basis for the award of separation pay, Moya’s length of service should
have been taken against him. The reason for his dismissal was his lack of integrity and loyalty to the company
reflecting upon his moral character.
The appellate court emphasized that while the law is considerate to the welfare of the employees whenever there is
a labor conflict, it also protects the right of an employer to exercise its management prerogative in good faith.
The Court’s Ruling
That there is a valid ground for the dismissal of Moya based on breach and loss of trust and confidence is no longer
at issue. The Labor Arbiter, NLRC and the appellate court were unanimous in their rulings on this matter. The
remaining question is whether or not petitioner employee is entitled to separation pay based on his length of service.
Petitioner is not entitled to separation pay. Payment of separation pay cannot be justified by his length of service.
It must be stressed that Moya was not an ordinary rank-and-file employee. He was holding a supervisory rank being
an Officer-in-Charge of the Tire Curing Department. The position, naturally one of trust, required of him abiding
honesty as compared to ordinary rank-and-file employees. When he made a false report attributing the damage of
five tires to machine failure, he breached the trust and confidence reposed upon him by the company.
In a number of cases,34 this Court put emphasis on the right of an employer to exercise its management prerogative
in dealing with its company’s affairs including its right to dismiss its erring employees. We recognized the right of the
employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working
methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and
discipline, and dismissal and recall of workers.35 It is a general principle of labor law to discourage interference with
an employer’s judgment in the conduct of his business. As already noted, even as the law is solicitous of the welfare
of the employees, it also recognizes employer’s exercise of management prerogatives. As long as the company’s
exercise of judgment is in good faith to advance its interest and not for the purpose of defeating or circumventing
the rights of employees under the laws or valid agreements, such exercise will be upheld.36
Following the ruling in The Coca-Cola Export Corporation v. Gacayan,37 the employers have a right to impose a
penalty of dismissal on employees by reason of loss of trust and confidence. More so, in the case of supervisors or
personnel occupying positions of responsibility, does loss of trust justify termination. Loss of confidence as a just
cause for termination of employment is premised on the fact that an employee concerned holds a position of trust
and confidence. This situation holds where a person is entrusted with confidence on delicate matters, such as the
custody, handling, or care and protection of the employer’s property. But, in order to constitute a just cause for
dismissal, the act complained of must be "work-related" such as would show the employee concerned to be unfit to
continue working for the employer.38
The foregoing as viewpoint, the right of First Solid to handle its own affairs in managing its business must be
respected. The clear consequence is the denial of the grant of separation pay in favor of Moya.
As pronounced in the recent case of Unilever Philippines, Inc., v. Rivera,39 an employee who has been dismissed for
any of the just causes enumerated under Article 28240 of the Labor Code, including breach of trust, is not entitled to
separation pay.41 This is further bolstered by Section 7,Rule I, Book VI of the Omnibus Rules Implementing the
Labor Code which provides that:
Sec. 7. Termination of employment by employer. — The just causes for terminating the services of an employee
shall be those provided in Article 282 of the Code. The separation from work of an employee for a just cause does
not entitle him to the termination pay provided in the Code, without prejudice, however, to whatever rights, benefits
and privileges he may have under the applicable individual or collective agreement with the employer or voluntary
employer policy or practice.1âwphi1
However, this Court also provides exceptions to the rule based on "social justice" or on "equitable grounds" following
the ruling in Philippine Long Distance Telephone Co. v. NLRC,42 stating that separation pay shall be allowed as a
measure of social justice only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow
worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social justice.43
The PLDT case further elucidates why an erring employee could not benefit under the cloak of social justice in the
award of separation pay, we quote:
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the
41 | A L B A - L A B R E L
poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment
to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their
motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant
for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause
of labor with the blemishes of their own character.44
Moya’s dismissal is based on one of the grounds under Art. 282 of the Labor Code which is willful breach by the
employee of the trust reposed in him by his employer. Also, he is outside the protective mantle of the principle of
social justice as his act of concealing the truth from the company is clear disloyalty to the company which has long
employed him.1âwphi1
Indeed, as found below, Moya’s length of service should be taken against him. The pronouncement in Reno Foods,
Inc. v. Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan45 is instructive on the matter:
x x x Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an
employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If
an employer had treated his employee well, has accorded him fairness and adequate compensation as determined
by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty.
Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair
employer.46(Emphasis supplied).
WHEREFORE, we DENY the petition for review on certiorari. The Decision dated 30 April 2008 and Resolution dated
1 August 2008 of the Special Third Division of the Court of Appeals in CA-G.R. SP No. 99500 are hereby AFFIRMED.

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