Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 71813               July 20, 1987

ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners, 

vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION,
ROMEO QUITCO and RICARDO DIONELE, SR., respondents.

PARAS, J.:

This is a petition for review on certiorari of the April 8, 1985 Resolution

of the Ministry of Labor and Employment affirming the July 16, 1982
Decision of the Labor Arbiter, which ruled in favor of granting
separation pay to private respondents.

On June 27, 1960, herein petitioner Rosalina Perez Abella leased a

farm land in Monteverde, Negros Occidental, known as Hacienda
Danao-Ramona, for a period of ten (10) years, renewable, at her
option, for another ten (10) years (Rollo, pp. 16-20).

On August 13, 1970, she opted to extend the lease contract for
another ten (10) years (Ibid, pp. 26-27).

During the existence of the lease, she employed the herein private
respondents. Private respondent Ricardo Dionele, Sr. has been a
regular farm worker since 1949 and he was promoted to Cabo in 1963.
On the other hand, private respondent Romeo Quitco started as a
regular employee in 1968 and was promoted to Cabo in November of
the same year.

Upon the expiration of her leasehold rights, petitioner dismissed

private respondents and turned over the hacienda to the owners
thereof on October 5, 1981, who continued the management,
cultivation and operation of the farm (Rollo, pp. 33; 89).

On November 20, 1981, private respondents filed a complaint against

the petitioner at the Ministry of Labor and Employment, Bacolod City
District Office, for overtime pay, illegal dismissal and reinstatement
with backwages. After the parties had presented their respective
evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July
16, 1982 (Ibid, pp. 29-31), ruled that the dismissal is warranted by
the cessation of business, but granted the private respondents
separation pay. Pertinent portion of the dispositive portion of the
Decision reads:
 In the instant case, the respondent closed its business operation
not by reason of business reverses or losses. Accordingly, the
award of termination pay in complainants' favor is warranted.

WHEREFORE, the respondent is hereby ordered to pay the

complainants separation pay at the rate of half-month salary for
every year of service, a fraction of six (6) months being
considered one (1) year. (Rollo pp. 29-30)

On appeal on August 11, 1982, the National Labor Relations

Commission, in a Resolution dated April 8, 1985 (Ibid, pp. 3940),
affirmed the decision and dismissed the appeal for lack of merit.

On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid,

pp. 41-45), but the same was denied in a Resolution dated June 10,
1985 (Ibid, p. 46). Hence, the present petition (Ibid, pp. 3-8).

The First Division of this Court, in a Resolution dated September 16,

1985, resolved to require the respondents to comment (Ibid, p. 58). In
compliance therewith, private respondents filed their Comment on
October 23, 1985 (Ibid, pp. 53-55); and the Solicitor General on
December 17, 1985 (Ibid, pp. 71-73-B).

On February 19, 1986, petitioner filed her Consolidated Reply to the

Comments of private and public respondents (Ibid, pp. 80-81).

The First Division of this Court, in a Resolution dated March 31, 1986,
resolved to give due course to the petition; and to require the parties
to submit simultaneous memoranda (Ibid., p. 83). In compliance
therewith, the Solicitor General filed his Memorandum on June 18,
1986 (Ibid, pp. 89-94); and petitioner on July 23, 1986 (Ibid, pp. 96-
194).

The petition is devoid of merit.

The sole issue in this case is —

WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO

SEPARATION PAY.

Petitioner claims that since her lease agreement had already expired,
she is not liable for payment of separation pay. Neither could she
reinstate the complainants in the farm as this is a complete cessation
or closure of a business operation, a just cause for employment
termination under Article 272 of the Labor Code.

On the other hand, the legal basis of the Labor Arbiter in granting
separation pay to the private respondents is Batas Pambansa Blg. 130,
amending the Labor Code, Section 15 of which, specifically provides:
 Sec 15 Articles 285 and 284 of the Labor Code are hereby
amended to read as follows:

x x x           x x x          x x x

Art. 284. 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 establisment or undertaking unless
the closing is for the purpose of circumventing the provisions of
this title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before
the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closure 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.1avvphi1

There is no question that Article 284 of the Labor Code as amended by

BP 130 is the law applicable in this case.

Article 272 of the same Code invoked by the petitioner pertains to the
just causes of termination. The Labor Arbiter does not argue the
justification of the termination of employment but applied Article 284
as amended, which provides for the rights of the employees under the
circumstances of termination.

Petitioner then contends that the aforequoted provision violates the

constitutional guarantee against impairment of obligations and
contracts, because when she leased Hacienda Danao-Ramona on June
27, 1960, neither she nor the lessor contemplated the creation of the
obligation to pay separation pay to workers at the end of the lease.

Such contention is untenable.

This issue has been laid to rest in the case of Anucension v. National
Labor Union (80 SCRA 368-369 [1977]) where the Supreme Court
ruled:

It should not be overlooked, however, that the prohibition to

impair the obligation of contracts is not absolute and unqualified.
The prohibition is general, affording a broad outline and requiring
construction to fill in the details. The prohibition is not to read
 with literal exactness like a mathematical formula for it prohibits
unreasonable impairment only. In spite of the constitutional
prohibition the State continues to possess authority to safeguard
the vital interests of its people. Legislation appropriate to
safeguard said interest may modify or abrogate contracts already
in effect. For not only are existing laws read into contracts in
order to fix the obligations as between the parties but the
reservation of essential attributes of sovereign power is also read
into contracts as a postulate of the legal order. All contracts
made with reference to any matter that is subject to regulation
under the police power must be understood as made in reference
to the possible exercise of that power. Otherwise, important and
valuable reforms may be precluded by the simple device of
entering into contracts for the purpose of doing that which
otherwise maybe prohibited. ...

In order to determine whether legislation unconstitutionally

impairs contract of obligations, no unchanging yardstick,
applicable at all times and under all circumstances, by which the
validity of each statute may be measured or determined, has
been fashioned, but every case must be determined upon its own
circumstances. Legislation impairing the obligation of contracts
can be sustained when it is enacted for the promotion of the
general good of the people, and when the means adopted must
be legitimate, i.e. within the scope of the reserved power of the
state construed in harmony with the constitutional limitation of
that power. (Citing Basa vs. Federacion Obrera de la Industria
Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113],
November 19, 1974; 61 SCRA 93,102-113]).

The purpose of Article 284 as amended is obvious-the protection of the

workers whose employment is terminated because of the closure of
establishment and reduction of personnel. Without said law,
employees like private respondents in the case at bar will lose the
benefits to which they are entitled — for the thirty three years of
service in the case of Dionele and fourteen years in the case of Quitco.
Although they were absorbed by the new management of the
hacienda, in the absence of any showing that the latter has assumed
the responsibilities of the former employer, they will be considered as
new employees and the years of service behind them would amount to
nothing.

Moreover, to come under the constitutional prohibition, the law must

effect a change in the rights of the parties with reference to each other
and not with reference to non-parties.

As correctly observed by the Solicitor General, Article 284 as amended

refers to employment benefits to farm hands who were not parties to
petitioner's lease contract with the owner of Hacienda Danao-Ramona.
That contract cannot have the effect of annulling subsequent
legislation designed to protect the interest of the working class.

In any event, it is well-settled that in the implementation and

interpretation of the provisions of the Labor Code and its implementing
regulations, the workingman's welfare should be the primordial and
paramount consideration. (Volshel Labor Union v. Bureau of Labor
Relations, 137 SCRA 43 [1985]). It is the kind of interpretation which
gives meaning and substance to the liberal and compassionate spirit of
the law as provided for in Article 4 of the New Labor Code which states
that "all doubts in the implementation and interpretation of the
provisions of this Code including its implementing rules and regulations
shall be resolved in favor of labor." The policy is to extend the
applicability of the decree to a greater number of employees who can
avail of the benefits under the law, which is in consonance with the
avowed policy of the State to give maximum aid and protection to
labor. (Sarmiento v. Employees Compensation Commission, 144 SCRA
422 [1986] citing Cristobal v. Employees Compensation Commission,
103 SCRA 329; Acosta v. Employees Compensation Commission, 109
SCRA 209).

PREMISES CONSIDERED, the instant petition is hereby DISMISSED

and the July 16, 1982 Decision of the Labor Arbiter and the April 8,
1985 Resolution of the Ministry of Labor and Employment are hereby
AFFIRMED.

SO ORDERED.

Teehankee, C.J., Yap, Fernando, Narvasa, Melencio-Herrera, Gutierrez,

Jr., Cruz, Feliciano, Gancayco, Padilla, Bidin, Sarmiento and Cortes,
JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-48926 December 14, 1987

MANUEL SOSITO, petitioner, 
vs.
AGUINALDO DEVELOPMENT CORPORATION, respondent.

CRUZ, J.:

We gave due course to this petition and required the parties to file
simultaneous memoranda on the sole question of whether or not the
petitioner is entitled to separation pay under the retrenchment
program of the private respondent.

The facts are as follows:

Petitioner Manuel Sosito was employed in 1964 by the private

respondent, a logging company, and was in charge of logging
importation, with a monthly salary of P675.00, 1 when he went on
indefinite leave with the consent of the company on January 16,
1976. 2 On July 20, 1976, the private respondent, through its
president, announced a retrenchment program and offered separation
pay to employees in the active service as of June 30, 1976, who would
tender their resignations not later than July 31, 1976. The petitioner
decided to accept this offer and so submitted his resignation on July
29, 1976, "to avail himself of the gratuity benefits"
3
promised.   However, his resignation was not acted upon and he was
never given the separation pay he expected. The petitioner complained
to the Department of Labor, where he was sustained by the labor
arbiter. 4 The company was ordered to pay Sosito the sum of P
4,387.50, representing his salary for six and a half months. On appeal
to the National Labor Relations Commission, this decision was reversed
and it was held that the petitioner was not covered by the
retrenchment program. 5 The petitioner then came to us.
For a better understanding of this case, the memorandum of the
private respondent on its retrenchment program is reproduced in full
as follows:

July 20, 1976

Memorandum To: ALL EMPLOYEES

Re: RETRENCHMENT PROGRAM

As you are all aware, the operations of wood-based

industries in the Philippines for the last two (2) years were
adversely affected by the worldwide decline in the demand
for and prices of logs and wood products. Our company was
no exception to this general decline in the market, and has
suffered tremendous losses. In 1975 alone, such losses
amounted to nearly P20,000,000.00.

The company has made a general review of its operations

and has come to the unhappy decision of the need to make
adjustments in its manpower strength if it is to survive.
This is indeed an unfortunate and painful decision to make,
but it leaves the company no alternative but to reduce its
tremendous and excessive overhead expense in order to
prevent an ultimate closure.

Although the law allows the Company, in a situation such as

this, to drastically reduce it manpower strength without any
obligation to pay separation benefits, we recognize the need
to provide our employees some financial assistance while
they are looking for other jobs.

The Company therefore is adopting a retrenchment

program whereby employees who are in the active service
as of June 30, 1976 will be paid separation benefits in an
amount equivalent to the employee's one-half (1/2)
month's basic salary multiplied by his/her years of service
with the Company. Employees interested in availing of the
separation benefits offered by the Company must manifest
such intention by submitting written letters of resignation to
the Management not later than July 31, 1976. Those whose
resignations are accepted shall be informed accordingly and
shall be paid their separation benefits.

After July 31, 1976, this offer of payment of separation

benefits will no longer be available. Thereafter, the
Company shall apply for a clearance to terminate the
services of such number of employees as may be necessary
in order to reduce the manpower strength to such desired
level as to prevent further losses.
(SGD.) JOSE G. RICAFORT

President

N.B.

For additional information

and/or resignation forms,

please see Mr. Vic Maceda

or Atty. Ben Aritao. 6

It is clear from the memorandum that the offer of separation pay was
extended only to those who were in the active service of the company
as of June 30, 1976. It is equally clear that the petitioner was not
eligible for the promised gratuity as he was not actually working with
the company as of the said date. Being on indefinite leave, he was not
in the active service of the private respondent although, if one were to
be technical, he was still in its employ. Even so, during the period of
indefinite leave, he was not entitled to receive any salary or to enjoy
any other benefits available to those in the active service.

It seems to us that the petitioner wants to enjoy the best of two

worlds at the expense of the private respondent. He has insulated
himself from the insecurities of the floundering firm but at the same
time would demand the benefits it offers. Being on indefinite leave
from the company, he could seek and try other employment and
remain there if he should find it acceptable; but if not, he could go
back to his former work and argue that he still had the right to return
as he was only on leave.

There is no claim that the petitioner was temporarily laid off or forced
to go on leave; on the contrary, the record shows that he voluntarily
sought the indefinite leave which the private respondent granted. It is
strange that the company should agree to such an open-ended
arrangement, which is obviously one-sided. The company would not be
free to replace the petitioner but the petitioner would have a right to
resume his work as and when he saw fit.

We note that under the law then in force the private respondent could
have validly reduced its work force because of its financial reverses
without the obligation to grant separation pay. This was permitted
under the original Article 272(a), of the Labor Code, 7 which was in
force at the time. To its credit, however, the company voluntarily
offered gratuities to those who would agree to be phased out pursuant
to the terms and conditions of its retrenchment program, in
recognition of their loyalty and to tide them over their own financial
difficulties. The Court feels that such compassionate measure deserves
commendation and support but at the same time rules that it should
be available only to those who are qualified therefore. We hold that
the petitioner is not one of them.

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 own rights which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Out of its
concern for those with less privileges in life, this 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
us to the rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and the applicable law
and doctrine.

WHEREFORE, the petition is DISMISSED and the challenged decision

AFFIRMED, with costs against the petitioner.

SO ORDERED.

Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.

Footnotes

1 Rollo, p. 13.

2 Ibid.

3 Id., p. 14.

4 Id., pp. 43-45.

5 Id, pp. 62-64.

6 Id., P. 19.

7 "Art. 272. Termination by employer.-An employer may

terminate an employment without a definite period for any
of the following just causes:

"(a) the closing or cessation of operation of the

establishment or enterprise, or where the employer has to
reduce his work force by more than one-half due to serious
business reverses, unless the closing is for the purpose of
circumventing the provisions of this Chapter; ... . "
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY
UNION, (PACIWU) TUCP, respondents.

Jose Mario C. Bunag for petitioner.

The Solicitor General and the Chief Legal Officer, NLRC, for public
respondent.

Zoilo V. de la Cruz for private respondent.

DECISION

REGALADO, J p:

The main issue presented for resolution in this original petition for
certiorari is whether supervisory employees, as defined in Article 212
(m), Book V of the Labor Code, should be considered as officers or
members of the managerial staff under Article 82, Book III of the
same Code, and hence are not entitled to overtime rest day and
holiday pay.

Petitioner National Sugar Refineries Corporation (NASUREFCO), a

corporation which is fully owned and controlled by the Government,
operates three (3) sugar refineries located at Bukidnon, Iloilo and
Batangas. The Batangas refinery was privatized on April 11, 1992
pursuant to Proclamation No. 50. 1 Private respondent union
represents the former supervisors of the NASUREFCO Batangas Sugar
Refinery, namely, the Technical Assistant to the Refinery Operations
Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget
Analyst, General Accountant, Cost Accountant, Sugar Accountant,
Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift
Operations Chemist, Shift Electrical Supervisor, General Services
Supervisor, Instrumentation Supervisor, Community Development
Officer, Employment and Training Supervisor, Assistant Safety and
Security Officer, Head and Personnel Services, Head Nurse, Property
Warehouse Supervisor, Head of Inventory Control Section, Shift
Process Supervisor, Day Maintenance Supervisor and Motorpool
Supervisor.

On June 1, 1988, petitioner implemented a Job Evaluation (JE)

Program affecting all employees, from rank-and-file to department
heads. The JE Program was designed to rationalized the duties and
functions of all positions, reestablish levels of responsibility, and
recognize both wage and operational structures. Jobs were ranked
according to effort, responsibility, training and working conditions and
relative worth of the job. As a result, all positions were re-evaluated,
and all employees including the members of respondent union were
granted salary adjustments and increases in benefits commensurate to
their actual duties and functions.

We glean from the records that for about ten years prior to the JE
Program, the members of respondent union were treated in the same
manner as rank-and file employees. As such, they used to be paid
overtime, rest day and holiday pay pursuant to the provisions of
Articles 87, 93 and 94 of the Labor Code as amended. With the
implementation of the JE Program, the following adjustments were
made: (1) the members of respondent union were re-classified under
levels S-5 to S-8 which are considered managerial staff for purposes of
compensation and benefits; (2) there was an increase in basic pay of
the average of 50% of their basic pay prior to the JE Program, with the
union members now enjoying a wide gap (P1,269.00 per month) in
basic pay compared to the highest paid rank-and-file employee; (3)
longevity pay was increased on top of alignment adjustments; (4) they
were entitled to increased company COLA of P225.00 per month; (5)
there was a grant of P100.00 allowance for rest day/holiday work.

On May 11, 1990, petitioner NASUREFCO recognized herein

respondent union, which was organized pursuant to Republic Act NO.
6715 allowing supervisory employees to form their own unions, as the
bargaining representative of all the supervisory employees at the
NASUREFCO Batangas Sugar Refinery.

Two years after the implementation of the JE Program, specifically on

June 20, 1990, the members of herein respondent union filed a
complainant with the executive labor arbiter for non-payment of
overtime, rest day and holiday pay allegedly in violation of Article 100
of the Labor Code.

On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered

a decision 2 disposing as follows:

"WHEREFORE, premises considered, respondent National Sugar

refineries Corporation is hereby directed to —
1. pay the individual members of complainant union the usual
overtime pay, rest day pay and holiday pay enjoyed by them instead
of the P100.00 special allowance which was implemented on June 11,
1988; and

2. pay the individual members of complainant union the difference in

money value between the P100.00 special allowance and the overtime
pay, rest day pay and holiday pay that they ought to have received
from June 1, 1988.

All other claims are hereby dismissed for lack of merit.

SO ORDERED."

In finding for the members therein respondent union, the labor ruled
that the along span of time during which the benefits were being paid
to the supervisors has accused the payment thereof to ripen into
contractual obligation; at the complainants cannot be estopped from
questioning the validity of the new compensation package despite the
fact that they have been receiving the benefits therefrom, considering
that respondent union was formed only a year after the
implementation of the Job Evaluation Program, hence there was no
way for the individual supervisors to express their collective response
thereto prior to the formation of the union; and the comparative
computations presented by the private respondent union showed that
the P100.00 special allowance given NASUREFCO fell short of what the
supervisors ought to receive had the overtime pay rest day pay and
holiday pay not been discontinued, which arrangement, therefore,
amounted to a diminution of benefits.

On appeal, in a decision promulgated on July 19, 1991 by its Third

Division, respondent National Labor Relations Commission (NLRC)
affirmed the decision of the labor arbiter on the ground that the
members of respondent union are not managerial employees, as
defined under Article 212 (m) of the Labor Code and, therefore, they
are entitled to overtime, rest day and holiday pay. Respondent NLRC
declared that these supervisory employees are merely exercising
recommendatory powers subject to the evaluation, review and final
action by their department heads; their responsibilities do not require
the exercise of discretion and independent judgment; they do not
participate in the formulation of management policies nor in the hiring
or firing of employees; and their main function is to carry out the
ready policies and plans of the corporation. 3 Reconsideration of said
decision was denied in a resolution of public respondent dated August
30, 1991. 4

Hence this petition for certiorari, with petitioner NASUREFCO

asseverating that public respondent commission committed a grave
abuse of discretion in refusing to recognized the fact that the members
of respondent union are members of the managerial staff who are not
entitled to overtime, rest day and holiday pay; and in making
petitioner assume the "double burden" of giving the benefits due to
rank-and-file employees together with those due to supervisors under
the JE Program.

We find creditable merit in the petition and that the extraordinary writ
of certiorari shall accordingly issue.

The primordial issue to be resolved herein is whether the members of

respondent union are entitled to overtime, rest day and holiday pay.
Before this can be resolved, however it must of necessity be
ascertained first whether or not the union members, as supervisory
employees, are to be considered as officers or members of the
managerial staff who are exempt from the coverage of Article 82 of
the Labor Code.

It is not disputed that the members of respondent union are

supervisory employees, as defined employees, as defined under Article
212(m), Book V of the Labor Code on Labor Relations, which reads:

"(m) 'Managerial employee' is one who is vested with powers or

prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharged, assign or discipline
employees. Supervisory employees are those who, in the interest of
the employer effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical in nature
but requires the use of independent judgment. All employees not
falling within any of those above definitions are considered rank-and-
file employees of this Book."

Respondent NLRC, in holding that the union members are entitled to

overtime, rest day and holiday pay, and in ruling that the latter are not
managerial employees, adopted the definition stated in the
aforequoted statutory provision.

Petitioner, however, avers that for purposes of determining whether or

not the members of respondent union are entitled to overtime, rest
day and holiday pay, said employees should be considered as "officers
or members of the managerial staff" as defined under Article 82, Book
III of the Labor Code on "Working Conditions and Rest Periods" and
amplified in Section 2, Rule I, Book III of the Rules to Implement the
Labor Code, to wit:

"Art. 82 Coverage. — The provisions of this title shall apply to

employees in all establishments and undertakings whether for profit or
not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service
of another, and workers who are paid by results as determined by the
Secretary of Labor in Appropriate regulations.
"As used herein, 'managerial employees' refer to those whose primary
duty consists of the management of the establishment in which they
are employed or of a department or subdivision thereof, and to other
officers or members of the managerial staff." (Emphasis supplied.)

xxx xxx xxx

'Sec. 2. Exemption. — The provisions of this rule shall not apply to the
following persons if they qualify for exemption under the condition set
forth herein:

xxx xxx xxx

(b) Managerial employees, if they meet all of the following conditions,

namely:

(1) Their primary duty consists of the management of the

establishment in which they are employed or of a department or
subdivision thereof:

(2) They customarily and regularly direct the work of two or more
employees therein:

(3) They have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to the hiring and
firing and as to the promotion or any other change of status of other
employees are given particular weight.

(c) Officers or members of a managerial staff if they perform the

following duties and responsibilities:

(1) The primary duty consists of the performance of work directly

related to management policies of their employer;

(2) Customarily and regularly exercise discretion and independent

judgment;

(3) (i) Regularly and directly assist a proprietor or a managerial

employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or (ii)
execute under general supervision work along specialized or technical
lines requiring special training, experience, or knowledge; or (iii)
execute under general supervision special assignments and tasks; and

(4) Who do not devote more 20 percent of their hours worked in a

work-week to activities which are not directly and closely related to
the performance of the work described in paragraphs (1), (2), and
above."

It is the submission of petitioner that while the members of

respondent union, as supervisors, may not be occupying managerial
positions, they are clearly officers or members of the managerial staff
because they meet all the conditions prescribed by law and, hence,
they are not entitled to overtime, rest day and supervisory employees
under Article 212 (m) should be made to apply only to the provisions
on Labor Relations, while the right of said employees to the questioned
benefits should be considered in the light of the meaning of a
managerial employee and of the officers or members of the managerial
staff, as contemplated under Article 82 of the Code and Section 2, Rule
I Book III of the implementing rules. In other words, for purposes of
forming and joining unions, certification elections, collective
bargaining, and so forth, the union members are supervisory
employees. In terms of working conditions and rest periods and
entitlement to the questioned benefits, however, they are officers or
members of the managerial staff, hence they are not entitled thereto.

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 own rights which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Out of its
concern for those with less privileges in life, this 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
us to the rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and the applicable law
and doctrine. 5

This is one such case where we are inclined to tip the scales of justice
in favor of the employer.

The question whether a given employee is exempt from the benefits of

the law is a factual one dependent on the circumstances of the
particular case, In determining whether an employee is within the
terms of the statutes, the criterion is the character of the work
performed, rather than the title of the employee's position. 6

Consequently, while generally this Court is not supposed to review the

factual findings of respondent commission, substantial justice and the
peculiar circumstances obtaining herein mandate a deviation from the
rule.

A cursory perusal of the Job Value Contribution Statements 7 of the

union members will readily show that these supervisory employees are
under the direct supervision of their respective department
superintendents and that generally they assist the latter in planning,
organizing, staffing, directing, controlling communicating and in
making decisions in attaining the company's set goals and objectives.
These supervisory employees are likewise responsible for the effective
and efficient operation of their respective departments. More
specifically, their duties and functions include, among others, the
following operations whereby the employee:

1) assists the department superintendent in the following:

a) planning of systems and procedures relative to department

activities;

b) organizing and scheduling of work activities of the department,

which includes employee shifting scheduled and manning complement;

c) decision making by providing relevant information data and other

inputs;

d) attaining the company's set goals and objectives by giving his full
support;

e) selecting the appropriate man to handle the job in the department;

and

f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and

recommends disciplinary action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities

and become more productive;

4) conducts semi-annual performance evaluation of his subordinates

and recommends necessary action for their
development/advancement;

5) represents the superintendent or the department when appointed

and authorized by the former;

6) coordinates and communicates with other inter and intra

department supervisors when necessary;

7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment

performance, quality of service and working conditions;

9) sees to it that safety rules and regulations and procedure and are
implemented and followed by all NASUREFCO employees, recommends
revisions or modifications to said rules when deemed necessary, and
initiates and prepares reports for any observed abnormality within the
refinery;

10) supervises the activities of all personnel under him and goes to it
that instructions to subordinates are properly implemented; and
11) performs other related tasks as may be assigned by his immediate
superior.

From the foregoing, it is apparent that the members of respondent

union discharge duties and responsibilities which ineluctably qualify
them as officers or members of the managerial staff, as defined in
Section 2, Rule I Book III of the aforestated Rules to Implement the
Labor Code, viz.: (1) their primary duty consists of the performance of
work directly related to management policies of their employer; (2)
they customarily and regularly exercise discretion and independent
judgment; (3) they regularly and directly assist the managerial
employee whose primary duty consist of the management of a
department of the establishment in which they are employed (4) they
execute, under general supervision, work along specialized or technical
lines requiring special training, experience, or knowledge; (5) they
execute, under general supervision, special assignments and tasks;
and (6) they do not devote more than 20% of their hours worked in a
work-week to activities which are not directly and clearly related to the
performance of their work hereinbefore described.

Under the facts obtaining in this case, we are constrained to agree

with petitioner that the union members should be considered as
officers and members of the managerial staff and are, therefore,
exempt from the coverage of Article 82. Perforce, they are not entitled
to overtime, rest day and holiday.

The distinction made by respondent NLRC on the basis of whether or

not the union members are managerial employees, to determine the
latter's entitlement to the questioned benefits, is misplaced and
inappropriate. It is admitted that these union members are supervisory
employees and this is one instance where the nomenclatures or titles
of their jobs conform with the nature of their functions. Hence, to
distinguish them from a managerial employee, as defined either under
Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious.
The controversy actually involved here seeks a determination of
whether or not these supervisory employees ought to be considered as
officers or members of the managerial staff. The distinction, therefore,
should have been made along that line and its corresponding
conceptual criteria.

II. We likewise no not subscribe to the finding of the labor arbiter that
the payment of the questioned benefits to the union members has
ripened into a contractual obligation.

A. Prior to the JE Program, the union members, while being

supervisors, received benefits similar to the rank-and-file employees
such as overtime, rest day and holiday pay, simply because they were
treated in the same manner as rank-and-file employees, and their
basic pay was nearly on the same level as those of the latter, aside
from the fact that their specific functions and duties then as
supervisors had not been properly defined and delineated from those
of the rank-and-file. Such fact is apparent from the clarification made
by petitioner in its motion for reconsideration 8 filed with respondent
commission in NLRC Case No. CA No. I-000058, dated August 16,
1991, wherein, it lucidly explained:

"But, complainants no longer occupy the same positions they held

before the JE Program. Those positions formerly classified as
'supervisory' and found after the JE Program to be rank-and-file were
classified correctly and continue to receive overtime, holiday and
restday pay. As to them, the practice subsists.

"However, those whose duties confirmed them to be supervisory, were

re-evaluated, their duties re-defined and in most cases their
organizational positions re-designated to confirm their superior rank
and duties. Thus, after the JE program, complainants cannot be said to
occupy the same positions." 9

It bears mention that this positional submission was never refuted nor
controverted by respondent union in any of its pleadings filed before
herein public respondent or with this Court. Hence, it can be safely
concluded therefrom that the members of respondent union were paid
the questioned benefits for the reason that, at that time, they were
rightfully entitled thereto. Prior to the JE Program, they could not be
categorically classified as members or officers of the managerial staff
considering that they were then treated merely on the same level as
rank-and-file. Consequently, the payment thereof could not be
construed as constitutive of voluntary employer practice, which cannot
be now be unilaterally withdrawn by petitioner. To be considered as
such, it should have been practiced over a long period of time, and
must be shown to have been consistent and deliberate. 10

The test or rationale of this rule on long practice requires an

indubitable showing that the employer agreed to continue giving the
benefits knowingly fully well that said employees are not covered by
the law requiring payment thereof. 11 In the case at bar, respondent
union failed to sufficiently establish that petitioner has been motivated
or is wont to give these benefits out of pure generosity.

B. It remains undisputed that the implementation of the JE Program,

the members of private respondent union were re-classified under
levels S-5 S-8 which were considered under the program as
managerial staff purposes of compensation and benefits, that they
occupied re-evaluated positions, and that their basic pay was
increased by an average of 50% of their basic salary prior to the JE
Program. In other words, after the JE Program there was an ascent in
position, rank and salary. This in essence is a promotion which is
defined as the advancement from one position to another with an
increase in duties and responsibilities as authorized by law, and
usually accompanied by an increase in salary. 12
Quintessentially, with the promotion of the union members, they are
no longer entitled to the benefits which attach and pertain exclusively
to their positions. Entitlement to the benefits provided for by law
requires prior compliance with the conditions set forth therein. With
the promotion of the members of respondent union, they occupied
positions which no longer met the requirements imposed by law. Their
assumption of these positions removed them from the coverage of the
law, ergo, their exemption therefrom.

As correctly pointed out by petitioner, if the union members really

wanted to continue receiving the benefits which attach to their former
positions, there was nothing to prevent them from refusing to accept
their promotions and their corresponding benefits. As the sating goes
by, they cannot have their cake and eat it too or, as petitioner
suggests, they could not, as a simple matter of law and fairness, get
the best of both worlds at the expense of NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized

exclusive prerogatives of management, provided it is done in good
faith. In the case at bar, private respondent union has miserably failed
to convince this Court that the petitioner acted implementing the JE
Program. There is no showing that the JE Program was intended to
circumvent the law and deprive the members of respondent union of
the benefits they used to receive.

Not so long ago, on this particular score, we had the occasion to hold
that:

". . . it is the prerogative of the management to regulate, according to

its discretion and judgment, all aspects of employment. This flows
from the established rule that labor law does not authorize the
substitution of the judgment of the employer in the conduct of its
business. Such management prerogative may be availed of without
fear of any liability so long as it is exercised in good faith for the
advancement of the employer's interest and not for the purpose of
defeating on circumventing the rights of employees under special laws
or valid agreement and are not exercised in a malicious, harsh,
oppressive, vindictive or wanton manner or out of malice or spite." 13

WHEREFORE, the impugned decision and resolution of respondent

National Labor Relations Commission promulgated on July 19, 1991
and August 30, 1991, respectively, are hereby ANNULLED and SET
ASIDE for having been rendered and adopted with grave abuse of
discretion, and the basic complaint of private respondent union is
DISMISSED.

Narvasa, C . J ., Padilla, Nocon and Campos, Jr., JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-49582 January 7, 1986

CBTC EMPLOYEES UNION, petitioner, 

vs.
THE HONORABLE JACOBO C. CLAVE, Presidential Executive
Assistant, and COMMERCIAL BANK & TRUST COMPANY OF THE
PHILIPPINES, respondents.

Francisco F. Angeles for petitioner.

Pacis, Reyes, De Leon & Cruz Law, Office for respondent CBTC.

Edmundo R. AbigaN, Jr. for respondent Union.

DE LA FUENTE, J.:
Petition for certiorari seeking to annul and set aside the decision of the
respondent Presidential Executive Assistant 1 affirming that of the
Acting Secretary of Labor who reversed the decision of the National
Labor Relations Comission which upheld the Voluntary Arbitrator's
order directing the private respondent bank to pay its monthly paid
employees their "legal holiday pay."

Petitioner Commercial Bank and Trust Company Employees' Union

(Union for short) lodged a complaint with the Regional Office No. IV,
Department of Labor, against private respondent bank (Comtrust) for
non-payment of the holiday pay benefits provided for under Article 95
of the Labor Code in relation to Rule X, Book III of the Rules and
Regulations Implementing the Labor Code.

Failing to arrive at an amicable settlement at conciliation level, the

parties opted to submit their dispute for voluntary arbitration. The
issue presented was: "Whether the permanent employees of the Bank
within the collective bargaining unit paid on a monthly basis are
entitled to holiday pay effective November 1, 1974, pursuant to Article
95 (now Article 94) of the Labor Code, as amended and Rule X (now
Rule IV), Book III of the Rules and Regulations Implementing the
Labor Code. "

In addition, the disputants signed a Submission Agreement stipulating

as final, unappealable and executory the decision of the Arbitrator,
including subsequent issuances for clarificatory and/or relief purposes,
notwithstanding Article 262 of the Labor Code which allow appeal in
certain instances. 2

In the course of the hearing, the Arbitrator apprised the parties of an

interpretative bulletin on "holiday pay" about to be issued by the
Department of Labor. Whereupon, the Union filed a
3
Manifestation   which insofar as relevant stated:

6. That complainant union . . . has manifested its

apprehension on the contents of the said Interpretative
Bulletin in view of a well-nigh irresistible move on the part
of the employers to exclude permanent workers similarly
situated as the employees of Comtrust from the coverage of
the holiday pay benefit despite the express and self-
explanatory provisions of the law, its implementing rules
and opinions thereon . . . .

7. That in the event that said Interpretative Bulletin

regarding holiday pay would be adverse to the present
claim . . . in that it would in effect exclude the said
employees from enjoyment of said benefit, whether wholly
or partially, complainant union respectfully reserves the
right to take such action as may be appropriate to protect
its interests, a question of law being involved. . . . An
 Interpretative Bulletin which was inexistent at the time the
said commitment was made and which may be contrary to
the law itself should not bar the right of the union to claim
for its holiday pay benefits.

On April 22, 1976, the Arbitrator handed down an award on the

dispute. Relevant portions thereof read as follows:

The uncontroverted facts of this case are as follows:

(1) That the complainant Union is the recognized sole and

exclusive collective bargaining representative of all the
permanent rank-and-file employees of the Bank with an
existing Collective Bargaining Agreement covering the
period from July 1, 1974 up to June 30, 1977;

(2) That ... the standard workweek of the Bank generally

consists of five (5) days of eight (8) hours each day
which, . . . said five days are generally from Monday thru
Friday; and, as a rule, Saturdays, Sundays and the regular
holidays are not considered part of the standard workweek.

(3) That, in computing the equivalent daily rate of its

employees covered by the CBA who are paid on a monthly
basis, the following computation is used, as per the
provisions of Section 4, Article VII, of the CBA (Annex "A"):

Daily Rate = Basic Monthly Salary plus CLA x

12 250

Basic Hourly Rate = Daily Rate 8

(4) That the divisor of '250', . . . was arrived at by

subtracting the 52 Sundays, 52 Saturdays, the 10 regular
holidays and December 31 (secured thru bargaining), or a
total of 115 off-days from the 365 days of the year or a
difference of 250 days.

Considering the above uncontroverted facts, the principal

question to be resolved is whether or not the monthly pay
of the covered employees already includes what Article 94
of the Labor Code requires as regular holiday pay benefit in
the amount of his regular daily wage (100% if unworked or
200% if worked) during the regular holidays enumerated
therein, i.e., Article 94(c) of the Labor Code.

In its latest Memorandum, filed on March 26,

1976, the Bank relies heavily on the provisions
of Section 2, Rule IV, Book 111, of the Rules and
Regulations implementing particularly Article 94
 (formerly Article 208) of the Labor Code, which
Section reads as follows:

SECTION 2. Status of employees paid by the month

-Employees who are uniformly paid by the month,
irrespective of the number of' working days therein with a
salary of not less than the statutory or established
minimum wage, shall be presumed to be paid for all days in
the month whether worked or not.

For this purpose, the monthly minimum wage shall not be

less than the statutory minimum wage multiplied by 365
days divided by twelve. (Emphasis supplied).

While admitting that there has virtually been no change

effected by Presidential Decree No. 850, which amended
the Labor Code, other than the re-numbering of the original
Article 208 of said Code to what is now Article 94, the Bank,
however, attaches a great deal of significance in the above-
quoted Rule as to render the question at issue 'moot and
academic'.

On the other hand, the Union maintains, in its own latest

Memorandum, filed also on March 26, 1976, that the legal
presumption established in the above-quoted Rule is merely
a disputable presumption. This contention of the Union is
now supported by a pronouncement categorically to that
effect by no less than the National Labor Relations
Commission (NLRC) in the case of The Chartered Bank
Employees Association vs. The Chartered Bank. NLRC Case
No. (s) RB-IV-1739-75 (RO4-5-3028-75),  which reads, in
part, as follows:

. . . A disputable presumption was sea  in that it

would be presumed the salary of monthly-paid
employees may already include rest days, such
as Saturdays, Sundays, special and legal
holidays, worked or unworked, in effect
connoting that evidence to the contrary may
destroy such a supposed legal
presumption.  Indeed, the Rule merely sets a
presumption. It does not conclusively
presume  that the salary of monthly-paid
employees already includes unworked holidays. .
..

The practice of the Bank of paying its employees

a sum equivalent to Base pay plus Premium on
Saturdays, Sundays and special and legal
holidays, destroys the legal presumption that
 monthly pay is for an days of the month. For if
the monthly pay is payment for all days of the
month, then why should the employee be
paid again for working on such rest days.
(Emphasis supplied)

There is no reason at present not to adopt the above ruling

of the Honorable Comission, especially considering the fact
that this Arbitrator, in asking a query on the nature of the
presumption established by the above Rule, from the
Director of Labor Standards in the PMAP Conference held at
the Makati Hotel on March 13, 1976, was given the
categorical answer that said presumption is merely
disputable. This answer from the Labor Standards Director
is significant inasmuch as it is his office, the Bureau of
Labor Standards, that is reportedly instrumental in the
preparation of the implementing Rules, particularly on Book
III of the Labor Code on Conditions of Employment, to
which group the present Rule under discussion belongs.

So, rather than rendering moot and academic the issue at

hand, as suggested by the Bank, the more logical step to
take is to determine whether or not there is sufficient
evidence to overcome the disputable presumption
established by the Rule.

It is unquestioned, and as provided for in the CBA itself,

that the divisor used in determining the daily rate of the
monthly-paid employees is '250'.

xxx xxx xxx

Against this backdrop, certain relevant and logical

conclusions result, namely:

(A) The Bank maintains that, since its inception or start of

operations in 1954, all monthly-paid employees in the Bank
are paid their monthly salaries without any deduction for
unworked Saturdays, Sundays, legals and special holidays.
On the other hand, it also maitains that, as a matter of fact,
'always conscious of its employee who has to work, on
respondent's rest days of Saturdays and Sundays or on a
legal holiday, an employee who works overtime on any of
said days is paid one addition regular pay for the day plus
50% of said regular pay (Bank's Memorandum, page 3,
filed January 21, 1976). . . .

xxx xxx xxx

On the other hand, there is more reason to believe that, if

the Bank has never made any deduction from its monthly-
paid employees for unworked Saturdays, Sundays, legal
and special holidays, it is because there is really nothing to
deduct properly since the monthly, salary never really
included pay for such unworked days-and which give
credence to the conclusion that the divisor '250' is the
proper one to use in computing the equivalent daily rate of
the monthly-paid employees.

(B) The Bank further maintains that the holiday pay is

intended only for daily-paid workers. In this regard, the
NLRC has this to say , in the same above-quoted Chartered
Bank case:

It is contended that holiday pay is primarily for

daily wage earners. Let us examine the law,
more specifically Article 95 (now Article 94) of
the Labor Code to see whether it supports this
contention. The words used in the Decree are
'every worker', while the framers of the
Implementing Rules preferred the use of the
phrase 'all employees.' Both the decree itself and
the Rules mentioned enumerated the excepted
workers. It is a basic rule of statutory
construction that putting an exception limits
or modifies the enumeration or meaning made in
the law. it is thus easy to see that a mere
reading of the Decree and of the Rules would
show that the monthly-paid employees of the
Bank are not expressly included in the
enumeration of the exception.

Special notice is made of the fact that the

criteria at once readable from the exception
referred to is the nature of the job and the
number of employees involved, and not whether
the employee is a daily-wage earner or a regular
monthly-paid employee.

There is no reason at all to digress from the above-quoted

observation of the Honorable Commission for purposes of
the present case.

xxx xxx xxx

Finally, inasmuch as Article 94 of the Labor Code is one of

its so-called self-executing provisions, conjointly with its
corresponding implementing Rules, it is to be taken to have
taken effect, as of November 1, 1974, as per Section I (1),
Rule IV, Book III , of the Implementing Rules.
 WHEREAS, all the above premises considered, this
Arbitrator rules that:

(1) All the monthly-paid employees of the Bank herein

represented by the Union and as governed by their
Collective Bargaining Agreement, are entitled to the holiday
pay benefits as provided for in Article 94 of the labor Code
and as implemented by Rule IV, Book III, of the
corresponding implementing Rules, except for any day or
any longer period designated by lawor holding a general
election or referendum;

(2) Paragraph (1) hereof means that any covered employee

who does not work on any of the regular holidays
enumerated in Article 94 (c) of the Labor Code, except that
which is designated for election or referendum purposes, is
still entitled to receive an amount equivalent to his regular
daily wage in addition to his monthly salary. If he work on
any of the regular holidays, other than that which is
designated for election or referendum purposes, he is
entitled to twice, his regular daily wage in addition to his
monthly salary. The 50% premium pay provided for in the
CBA for working on a rest day (which has been interpreted
by the parties to include the holidays) shall be deemed
already included in the 200% he receives for working on a
regular holiday. With respect to the day or any longer
period designated by law for holding a general election or
referendum, if the employee does not work on such day or
period he shall no longer be entitled to receive any
additional amount other than his monthly salary which is
deemed to include already his regular daily wage for such
day or period. If he works on such day or period, he shall
be entitled to an amount equivalent to his regular daily
wage (100%) for that day or period in addition to his
monthly salary. The 50% premium pay provided for in the
CBA for working on that day or period shall be deemed
already included in the additional 100% he receives for
working on such day or period; and

(3) The Bank is hereby ordered to pay all the above

employees in accordance with the above paragraphs (1)
and (2), retroactive from November 1, 1974.

SO ORDERED.

April 22, 1976, Manila, Philippines. 4

The next day, on April 23, 1976, the Department of Labor released
Policy Instructions No. 9, hereinbelow quoted:
 The Rules implementing PD 850 have clarified the policy in
the implementation of the ten (10) paid legal holidays.
Before PD 850, the number of working days a year in a firm
was considered important in determining entitlement to the
benefit. Thus, where an employee was working for at least
313 days, he was considered definitely already paid. If he
was working for less than 313, there was no certainty
whether the ten (10) paid legal holidays were already paid
to him or not.

The ten (10) paid legal holidays law, to start with, is

intended to benefit principally daily employees. In the case
of monthly, only those whose monthly salary did not yet
include payment for the ten (10) paid legal holidays are
entitled to the benefit.

Under the rules implementing PD 850, this policy has been

fully clarified to eliminate controversies on the entitlement
of monthly paid employees. The new determining rule is
this: If the monthly paid employee is receiving not less than
P 240, the maximum monthly minimum wage, and his
monthly pay is uniform from January to December, he is
presumed to be already paid the ten (10) paid legal
holidays. However, if deductions are made from his monthly
salary on account of holidays in months where they occur,
then he is still entitled to the ten (10) paid legal holidays.

These new interpretations must be uniformly and

consistently upheld.

This issuance shall take effect immediately.

After receipt of a copy of the award, private respondent filed a motion

for reconsideration, followed by a supplement thereto. Said motion for
reconsideration was denied. A copy of the order of denial was received
by private respondent on July 8, 1976.

Said private respondent interposed an appeal to the National Labor

Relations Commission (NLRC), contending that the Arbitrator
demonstrated gross incompetence and/or grave abuse of discretion
when he entirely premised the award on the Chartered Bank case and
failed to apply Policy Instructions No. 9. This appeal was dismissed on
August 16, 1976, by the NLRC because it was filed way beyond the
ten-day period for perfecting an appeal and because it contravened the
agreement that the award shall be final and unappealable.

Private respondent then appealed to the Secretary of Labor. On June

30, 1977, the Acting Secretary of Labor reversed the NLRC decision
and ruled that the appeal was filed on time and that a review of the
case was inevitable as the money claim exceeded
P100,000.00. 5 Regarding the timeliness of the appeal, it was pointed
out that the labor Department had on several occasions treated a
motion for reconsideration (here, filed before the Arbitrator) as an
appeal to the proper appellate body in consonance with the spirit of
the Labor Code to afford the parties a just, expeditious and
inexpensive disposition of their claims, liberated from the strict
technical rules obtaining in the ordinary courts.

Anent the issue whether or not the agreement barred the appeal, it
was noted that the Manifestation, supra, "is not of slight significance
because it has in fact abrogated complainant's commitment to abide
with the decision of the Voluntary Arbitrator without any reservation"
and amounted to a "virtual repudiation of the agreement vesting
finality" 6 on the arbitrator's disposition.

And on the principal issue of holiday pay, the Acting Secretary, guided
by Policy Instructions No. 9, applied the same retrospectively,  among
other things.

In due time, the Union appealed to the Office of the President. In

affirming the assailed decision, Presidential Executive Assistant Jacobo
C. Clave relied heavily on the Manifestation and Policy Instructions No.
9.

Hence, this petition.

On January 10, 1981, petitioner filed a motion to substitute the Bank

of the Philippine Islands as private respondent, as a consequence of
the Articles of Merger executed by said bank and Commercial Bank &
Trust Co. which inter alia designated the former as the surviving
corporate entity. Said motion was granted by the Court.

We find the petitioner impressed with merit.

In excluding the union members of herein petitioner from the benefits

of the holiday pay law, public respondent predicated his ruling on
Section 2, Rule IV, Book III of the Rules to implement Article 94 of the
labor Code promulgated by the then Secretary of labor and Policy
Instructions No. 9.

In Insular Bank of Asia and America Employees' Union (IBAAEU) vs.

Inciong, 7 this Court's Second Division, speaking through former
Justice Makasiar, expressed the view and declared that the
aforementioned section and interpretative bulletin are null and void,
having been promulgated by the then Secretary of Labor in excess of
his rule-making authority. It was pointed out, inter alia,  that in the
guise of clarifying the provisions on holiday pay, said rule and policy
instructions in effect amended the law by enlarging the scope of the
exclusions. We further stated that the then Secretary of Labor went as
far as to categorically state that the benefit is principally intended for
daily paid employees whereas the law clearly states that every worker
shall be paid their regular holiday pay-which is incompatible with the
mandatory directive, in Article 4 of the Labor Code, that "all doubts in
the implementation and interpretation of the provisions of Labor Code,
including its implementing rules and regulations, shall be resolved in
favor of labor." Thus, there was no basis at all to deprive the union
members of their right to holiday pay.

In the more recent case of The Chartered Bank Employees Association

vs. Hon. Ople,  8 this Court in an en bancdecision had the occasion to
reiterate the above-stated pronouncement. We added:

The questioned Section 2, Rule IV, Book III of the

Integrated Rules and the Secretary's Policy Instruction No.
9 add another excluded group, namely, 'employees who are
uniformly paid by the month'. While the additional exclusion
is only in the form of a presumption that all monthly paid
employees have already been paid holiday pay, it
constitutes a taking away or a deprivation which must be in
the law if it is to be valid. An administrative interpretation
which diminishes the benefits of labor more than what the
statute delimits or withholds is obviously ultra vires.

In view of the foregoing, the challenged decision of public respondent

has no leg to stand on as it was premised principally on the same
Section 2, Rule IV, Book III of the Implementing Rules and Policy
Instructions No. 9. This being the decisive issue to be resolved, We
find no necessity to pass upon the other issues raised, such as the
effects of the Union's Manifestation and the propriety of applying Policy
Instructions No. 9 retroactively to the instant case.

WHEREFORE, the questioned decisions of the respondent Presidential

Executive Assistant and the Acting Secretary of labor are hereby set
aside, and the award of the Arbitrator reinstated. Costs against the
private respondent.

IT IS SO ORDERED.

Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., and Patajo, JJ.,

concur.

Melencio-Herrera, J., took no part.

Footnotes

1 dated Dec. 8, 1978, Annex "J" , pp. 73-78, Rollo.

2 However, voluntary arbitration awards or decisions on

money claims involving an amount exceeding P100,000 or
forty percent (40%) of the paid-up capital of the
 respondent employer, whichever is lower, may be appealed
to the National Labor Relations Commission on any of the
following grounds: (a) Abuse of discretion; and (b) Gross
incompetence.

3 pp. 50-51, Rollo.

4 pp. 53-61, Rollo.

5 the Socio-Economic Analyst of the Department having

reported that the money, value of the holiday pay
amounted to P432,122.88.

6 p. 69, Rollo.

7 G.R. No. 52415, 132 SCRA 663.

8 G.R. No. L-44717, August 28, 1985

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 78763 July 12,1989

MANILA ELECTRIC COMPANY, petitioner, 

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, and
APOLINARIO M. SIGNO, respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

Dominador Maglalang for private respondent.

MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court
seeking the annulment of the resolution of the respondent National
Labor Relations Commission dated March 12, 1987 (p. 28, Rollo) in
NLRC Case No. NCR-8-3808-83, entitled, "Apolinario M. Signo,
Complainant, versus Manila Electric Company, Respondents", affirming
the decision of the Labor Arbiter which ordered the reinstatement of
private respondent herein, Apolinario Signo, to his former position
without backwages.

The antecedent facts are as follows:

Private respondent Signo was employed in petitioner company as

supervisor-leadman since January 1963 up to the time when his
services were terminated on May 18, 1983.

In 1981, a certain Fernando de Lara filed an application with the

petitioner company for electrical services at his residence at
Peñafrancia Subdivision, Marcos Highway, Antipolo, Rizal. Private
respondent Signo facilitated the processing of the said application as
well as the required documentation for said application at the
Municipality of Antipolo, Rizal. In consideration thereof, private
respondent received from Fernando de Lara the amount of P7,000.00.
Signo thereafter filed the application for electric services with the
Power Sales Division of the company.

It was established that the area where the residence of de Lara was
located is not yet within the serviceable point of Meralco, because the
place was beyond the 30-meter distance from the nearest existing
Meralco facilities. In order to expedite the electrical connections at de
Lara's residence, certain employees of the company, including
respondent Signo, made it appear in the application that the sari-sari
store at the corner of Marcos Highway, an entrance to the subdivision,
is applicant de Lara's establishment, which, in reality is not owned by
the latter.

As a result of this scheme, the electrical connections to de Lara's

residence were installed and made possible. However, due to the fault
of the Power Sales Division of petitioner company, Fernando de Lara
was not billed for more than a year.

Petitioner company conducted an investigation of the matter and found

respondent Signo responsible for the said irregularities in the
installation. Thus, the services of the latter were terminated on May
18, 1983.

On August 10 1983, respondent Signo filed a complaint for illegal

dismissal, unpaid wages, and separation pay.
After the parties had submitted their position papers, the Labor Arbiter
rendered a decision (p. 79, Rollo) on April 29, 1985, which
stated, inter alia:

Verily, complainant's act of inducing the Meralco employees

to effectuate the installation on Engr. de Lara's residence
prejudiced the respondent, and therefore, complainant
himself had indeed became a participant in the
transactions, although not directly, which turned out to be
illegal, not to mention that some of the materials used
therein belongs to Meralco, some of which were inferior
quality. . . .

While complainant may deny the violation, he cannot do

away with company's Code on Employee Discipline, more
particularly Section 7, par. 8 and Section 6, par. 24 thereof
However, as admitted by the respondent, the infraction of
the above cited Code is punishable by reprimand to
dismissal."

... . And in this case, while considering that complainant

indeed committed the above-cited infractions of company
Code of Employee Discipline, We shall also consider his
records of uninterrupted twenty (20) years of service
coupled with two (2) commendations for honesty. Likewise,
We shall take note that subject offense is his first, and
therefore, to impose the extreme penalty of dismissal is
certainly too drastic. A penalty short of dismissal is more in
keeping with justice, and adherence to compassionate
society.

WHEREFORE, respondent Meralco is hereby directed to

reinstate complainant Apolinario M. Signo to his former
position as Supervisor Leadman without backwages,
considering that he is not at all faultless. He is however,
here warned, that commission of similar offense in the
future, shall be dealt with more severely.

SO ORDERED.

Both parties appealed from the decision to the respondent

Commission. On March 12, 1987, the respondent Commission
dismissed both appeals for lack of merit and affirmed in toto the
decision of the Labor Arbiter.

On June 23, 1987, the instant petition was filed with the petitioner
contending that the respondent Commission committed grave abuse of
discretion in affirming the decision of the Labor Arbiter. A temporary
restraining order was issued by this Court on August 3, 1987,
enjoining the respondents from enforcing the questioned resolution of
the respondent Commission.

The issue to resolve in the instant case is whether or not respondent

Signo should be dismissed from petitioner company on grounds of
serious misconduct and loss of trust and confidence.

Petitioner contends that respondent Signo violated Sections 6 and 7 of

the company's Code on Employee Discipline, which provide:

Section 6, Par. 24—Encouraging, inducing or threatening

another employee to perform an act constituting a violation
of this Code or of company work, rules or an offense in
connection with the official duties of the latter, or allowing
himself to be persuaded, induced or influenced to commit
such offense.

Penalty—Reprimand to dismissal, depending upon the

gravity of the offense.

Section 7, Par. 8—Soliciting or receiving money, gift, share,

percentage or benefits from any person, personally or
through the mediation of another, to perform an act
prejudicial to the Company.

Penalty—Dismissal. (pp. 13-14, Rollo)

Petitioner further argues that the acts of private respondent

constituted breach of trust and caused the petitioner company
economic losses resulting from the unbilled electric consumption of de
Lara; that in view thereof, the dismissal of private respondent Signo is
proper considering the circumstances of the case.

The power to dismiss is the normal prerogative of the employer. An

employer, generally, can dismiss or lay-off an employee for just and
authorized causes enumerated under Articles 282 and 283 of the Labor
Code. However, the right of an employer to freely discharge his
employees is subject to regulation by the State, basically in the
exercise of its paramount police power. This is so because the
preservation of the lives of the citizens is a basic duty of the State,
more vital than the preservation of corporate profits (Euro-Linea, Phil.
Inc. v. NLRC, G.R. No. 75782, December 1, 1987,156 SCRA 78).

There is no question that herein respondent Signo is guilty of breach of

trust and violation of company rules, the penalty for which ranges
from reprimand to dismissal depending on the gravity of the offense.
However, as earlier stated, the respondent Commission and the Labor
Arbiter found that dismissal should not be meted to respondent Signo
considering his twenty (20) years of service in the employ of
petitioner, without any previous derogatory record, in addition to the
fact that petitioner company had awarded him in the past, two (2)
commendations for honesty. If ever the petitioner suffered losses
resulting from the unlisted electric consumption of de Lara, this was
found to be the fault of petitioner's Power Sales Division.

We find no reason to disturb these findings. Well-established is the

principle that findings of administrative agencies which have acquired
expertise because their jurisdiction is confined to specific matters are
generally accorded not only respect but even finality. Judicial review
by this Court on labor cases does not go so far as to evaluate the
sufficiency of the evidence upon which the proper labor officer or office
based his or its determination but is limited to issues of jurisdiction or
grave abuse of discretion (Special Events and Central Shipping Office
Workers Union v. San Miguel Corporation, G.R. Nos. L-51002-06, May
30,1983,122 SCRA 557).

This Court has held time and again, in a number of decisions, that
notwithstanding the existence of a valid cause for dismissal, such as
breach of trust by an employee, nevertheless, dismissal should not be
imposed, as it is too severe a penalty if the latter has been employed
for a considerable length of time in the service of his employer.
(Itogon-Suyoc Mines, Inc. v. NLRC, et al., G.R. No. L- 54280,
September 30,1982,117 SCRA 523; Meracap v. International Ceramics
Manufacturing Co., Inc., et al., G.R. Nos. L-48235-36, July 30,1979,
92 SCRA 412; Sampang v. Inciong, G.R. No. 50992, June 19,1985,137
SCRA 56; De Leon v. NLRC, G.R. No. L-52056, October 30,1980, 100
SCRA 691; Philippine Airlines, Inc. v. PALEA, G.R. No. L-24626, June
28, 1974, 57 SCRA 489).

In a similar case, this Court ruled:

As repeatedly been held by this Court, an employer cannot

legally be compelled to continue with the employment of a
person who admittedly was guilty of breach of trust towards
his employer and whose continuance in the service of the
latter is patently inimical to its interest. The law in
protecting the rights of the laborers, authorized neither
oppression nor self- destruction of the employer.

However, taking into account private respondent's 'twenty-

three (23) years of service which undisputedly is
unblemished by any previous derogatory record' as found
by the respondent Commission itself, and since he has been
 under preventive suspension during the pendency of this
case, in the absence of a showing that the continued
employment of private respondent would result in
petitioner's oppression or self-destruction, We are of the
considered view that his dismissal is a drastic
punishment. ... .

xxx xxx xxx

The ends of social and compassionate justice would

therefore be served if private respondent is reinstated but
without backwages in view of petitioner's obvious good
faith. (Itogon- Suyoc Mines, Inc. v. NLRC, et al., 11 7 SCRA
528)

Further, in carrying out and interpreting the Labor Code's provisions

and its implementing regulations, the workingman's welfare should be
the primordial and paramount consideration. This kind of interpretation
gives meaning and substance to the liberal and compassionate spirit of
the law as provided for in Article 4 of the New Labor Code which states
that "all doubts in the implementation and interpretation of the
provisions of the Labor Code including its implementing rules and
regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R.
No. 71812, July 30,1987,152 SCRA 140).

In view of the foregoing, reinstatement of respondent Signo is proper

in the instant case, but without the award of backwages, considering
the good faith of the employer in dismissing the respondent.

ACCORDINGLY, premises considered, the petition is hereby

DISMISSED and the assailed decision of the National Labor Relations
Commission dated March 12, 1987 is AFFIRMED. The temporary
restraining order issued on August 3, 1987 is lifted.

SO ORDERED.

Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.

G.R. No. 143258            August 15, 2003

PHILIPPINE AIRLINES, INC., petitioner,

vs.
JOSELITO PASCUA, ROBERT ABION, IRENEO ACOSTA, GARY
NEPOMUCENO, JASON PALAD, CEFERINO de la CRUZ, JOEL
SALGADO, WILFREDO RIVERA, ALEXANDER ANORE, FERNANDO
BACCAY, EDILBERTO FAUNE, REYMAR KALAW, GARY G.
MARASIGAN, RODOLFO ODO, JONATHAN RENGO, ARTHUR
APOSTOL, EDUARDO BALICASAN, MATHIAS GLEAN,
ALINORMAN HARANGOTE, CRISANTO CASTILLO, REX MARION
CUERPO, EDGARDO del PRADO, RICARDO HERNANDEZ, PEDRO
MERCADO JR., CESAR PAYOYO, RONALDO QUEROL, MAURELIO
SIERRA, MANUEL VILLELA, LOUISEN FELIPE, LOBENEDICTO
TIMBREZA, ANTONIO CABUG, ELISEO ESPIRITU, ARNEL
BAUTISTA, ANTHONY ROBLES, DENNIS ARANDIA, CHARLIE
BALUBAL, RHODERIC BITAS, ORLANDO CANDA, CHARLIE de la
CRUZ, RIQUESENDO de la FUENTE, RENO DUQUE, JONATHAN
FEBRE, ALVIN RIBERTA, NATHANIEL MALABAS, JUANITO
SERUMA, FREDERICH de ASIS, ROMMEL ESTRADA, SYDFREY
EVARISTO, ERICSON INTAL, FERDINAND GALANG, RUBEN
PEROLINA, ROBERT McBURNEY, ENRIQUE SORIANO, ALVIN
MANALAYSAY, NEMESIO MAALA, RAUL NEPOMUCENO, SAMUEL
REYES, ERWIN MINA, MANUEL REYES, REYNALDO ORAPA,
TEODORICO PADELIO, RANDY PIMENTEL, WILLIAM
PATRIMONIO, JOEL RAMOS, OLEGARIO REYES, RAUL OCULTO,
ROGELIO OLQUINDO, and LARRY VILLAFLOR. respondents.

QUISUMBING, J.:

For review is the decision dated January 26, 2000 1 of the Court of
Appeals and its May 23, 20002 resolution in CA-G.R. SP No. 50351.
The appellate court dismissed the petition for certiorari filed by
petitioner to challenge the NLRC decision dated January 23, 1998, 3 in
NLRC NCR CA No. 010598-96, and likewise denied their motion for
reconsideration.

The antecedent facts, as summarized by the Court of Appeals and

borne by the records, are as follows:

In April, August, and September of 1992, PAL hired private

respondents as station attendants on a four or six-hour work-shift a
day at five to six days a week.

The primary duty of private respondents who were assigned to PAL’s

Air services Department and ASD/CARGO was to load cargo to
departing, and unload cargo from arriving PAL international flights as
well as flights of Cathay Pacific, Northwest Airlines and Thai Airlines
with which PAL had service contract[s].

On certain occasions, PAL compelled private respondents to work

overtime because of urgent necessity. The contracts with private
respondents were extended twice, the last of which appears to have
been for an indefinite period.

On February 3, 1994, private respondent Joselito Pascua, in his and on

behalf of other 79 part-time station attendants, filed with the
Department of Labor and Employment a complaint for:

(1) Regularization

(2) Underpayment of wages

(3) Overtime pay

(4) Thirteenth month pay

(5) Service incentive leave pay

(6) Full time of eight hours employment

 (7) Recovery of benefits due to regular employees

(8) Night differential pay

(9) Moral damages and

(10) Attorney’s fees,

which was docketed as NLRC NCR Case No. 00-02-00953-94.

During the pendency of the case, PAL President Jose Antonio Garcia
and PAL Chairman & Corporate Executive Officer Carlos G. Dominguez
converted the employment status of private respondents from
temporary part-time to regular part-time.

On February 24, 1995, private respondents dropped their money claim

then pending before the Office of Executive Labor Arbiter Guanio, thus
leaving for consideration their complaint for "regularization" -
conversion of their employment status from part-time to regular
(working on an 8-hour shift).

Finding private respondents’ remaining cause of action was rendered

"moot and academic" by their supervening regularization and denying
their prayer that their status as regular employees be given retroactive
effect to "six months after their stint as temporary contractual
employees," the Executive Labor Arbiter dismissed private
respondents’ complaint.

On appeal, the NLRC, finding for private respondents, declared them

as regular employees of PAL with an eight-hour work-shift. The
pertinent portions of the NLRC decision reads:

… Respondent admits that complainants have been performing

functions that are considered necessary or desirable in the usual
business of PAL. There is no clear showing, however, that
complainants’ employment had been fixed for a particular project
or undertaking the completion or termination of which has been
determined at the time of their engagement. Neither is there a
clear showing that the work or services which they performed,
was seasonal in nature and their employment for the duration of
the season. Complainants were simply hired as part-time
employees at the ASD and at the ASD/CARGO … to do ramp
services.1âwphi1

Complainants can therefore be considered as casual employees

for a definite period during the first year of their employment
and, thereafter, as regular employees of respondents by
operation of law. As such, they should be entitled to the
compensation and other benefits provided in the Collective
Bargaining Agreement for regular employees from or day after
one year [of] service. Having been paid less than what they
 should receive, complainants are therefore, entitled to the
differentials.4

Petitioner promptly filed a motion for reconsideration of the NLRC

decision, which was denied in an order dated October 12, 1998.
Consequently, petitioner filed with the Court of Appeals a special civil
action for certiorari to annul the NLRC decision. On January 26, 2000,
the Court of Appeals dismissed the said petition and by resolution
issued on May 23, 2000, denied petitioner’s motion for
reconsideration.

Hence, this appeal by certiorari where petitioner assigns the following

errors:

-I-

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE

NLRC DECISION WHICH RULED ON THE MERITS OF THE
COMPLAINT, DESPITE THE FACT THAT THE CAUSE OF ACTION
HAS ALREADY BECOME MOOT AND ACADEMIC WHEN THE
PETITIONER ACCORDED REGULAR STATUS TO THE
RESPONDENTS DURING THE ARBITRATION PROCEEDINGS.

- II -

EVEN IF WE ASSUME FOR THE SAKE OF ARGUMENT THAT THE

COMPLAINT HAS NOT BEEN RENDERED MOOT AND ACADEMIC,
STILL THE HONORABLE COURT OF APPEALS ERRED IN
UPHOLDING THE DECISION OF THE NLRC WHICH COMPELLED
THE PETITIONER TO CHANGE THE RESPONDENTS’ EMPLOYMENT
STATUS FROM PART-TIME TO FULL-TIME.5

Two principal issues need resolution: (1) Did petitioner’s act of

converting respondents’ status from temporary to regular employees
render the original complaint for "regularization" moot and academic?
(2) Did the appellate court err when it upheld the decision of the NLRC
to accord respondents regular full-time employment although
petitioner, in the exercise of its management prerogative, requires
only part-time services?

Petitioner contends that the NLRC could not change respondents’

status from part-time to full-time employment because respondents
merely prayed in their original complaint for regular status as opposed
to temporary or casual employment. Respondents’ temporary part-
time status was already converted by petitioner to regular part-time
status at the arbitration level, to put an end to the controversy. That
being the case, the labor arbiter ordered the dismissal of the complaint
for having become moot and academic, because the relief sought was
already granted even prior to the termination of the dispute. Clearly,
says petitioner, respondents’ cause of action for regularization had
been extinguished when petitioner accorded the respondents regular
status.6 It was grave abuse as well as error for the NLRC to touch the
merits of an issue in effect already mooted at the arbiter’s level,
according to petitioner.

On the second issue, petitioner argues that the NLRC could not lawfully
impose the change of employment status of respondents from part-
time to full-time employees.7 It has no authority or power to do so.
According to petitioner, management of its business is a matter that
falls within the exclusive domain of the employer. As such, only the
employer, and no one else, should determine the number of
employees to be hired, the type of employees to be engaged, and the
qualifications of each and every employee. The employer could engage
part-time employees if its operational needs require such part-time
employees. The NLRC should not substitute its judgment for that of
the employer in this regard, says petitioner.8

Respondents, in their comment, aver that the conversion of their

employment status from part-time temporary to part-time regular did
not render inutile their original complaint, as in fact they have
consistently asked for full-timeregularization. According to
respondents, in their pleadings they repeatedly sought not only
regularization but in fact they also asked entitlement to benefits of
regular full-time employees. Further, respondents claim that since
petitioner needs the services of private respondents for eight (8) hours
or more a day, it is with evident bad faith that petitioner continues to
categorize them as mere "part-timers" rather than full-timers so the
company could avoid payment of corresponding benefits due to
respondents.9

On the first issue that the original complaint was rendered moot and
academic by the subsequent regularization of respondents while the
action was pending before the labor arbiter, we find that the
petitioner’s assertion is not entirely true nor accurate. Petitioner insists
that all respondents sought was the conversion of their temporary
employment status to regular employment, without asking for a
change from part-time to full time status. This claim, however, is
belied by the very complaint initially filed with the labor arbiter. As
stated by the OSG in its comment to the petition filed with the Court of
Appeals, which we now quote aptly:

However, a thorough scrutiny of the appeal reveals that despite

its lack of preciseness, private respondents were, in fact,
ultimately assailing their part-time status, not just the retroactive
date of their regularization as part-time employees. They
contradicted the Labor Arbiter’s perception that hiring of part-
time employees was justified by the peculiar nature of airport
operations. Besides, even petitioner understood the heart of the
appeal when it observed in their Answer to Appeal that "[a]ll that
they wanted is to be converted to full time status."
 The pleadings filed by private respondents consistently show that
they wanted to become regular full-time employees, not only
regular part-time employees. Although they repeatedly said
"regular employees," not specifying whether it should be regular
part-time or regular full-time, their intention should be read from
the entirety of all their pleadings. Private respondents have
consistently alleged that despite their part-time status, they
actually work more than 8 hours daily. Private respondent
Joselito Pascua confirmed this when he testified on November 24,
1995 (TSN, November 24, 1995, pp. 35-36). Ultimately, they
want to be entitled to the many collective bargaining agreement
(CBA) benefits which would be possible only if they were regular
full-time employees since regular part-time employees are
covered by the Personnel Policies and Procedures Manual, the
relevant portion of which was introduced only for the first time in
this Court. While regular part-time employees have their own
package of benefits, it is safe to infer that the benefits under the
CBA are better, being a result of negotiation, than those provided
under the Personnel Policies and Procedures Manual which are
unilaterally handed down by petitioner.10

An issue becomes moot and academic when it ceases to present a

justiciable controversy, so that a declaration on the issue would be of
no practical use or value. In that situation, there is no actual
substantial relief to which respondents would be entitled and which
would be negated by the dismissal of their original complaint. 11 Here, it
is readily apparent that the dismissal of the original complaint by the
labor arbiter would negate the substantial relief to which respondents
would have been entitled. They seek regular full-time employment and
this claim is fully set forth in the original complaint. They specifically
prayed for entitlement to benefits due to a regular full-time employee
with seniority rights.12 The mere regularization of respondents would
still not entitle them to all benefits under the CBA, which regular full-
time employees enjoy. In fact, regular part-time employees are
covered by the benefits under Personnel Policies and Procedures
Manual, not the CBA. The dismissal then of the complaint by the labor
arbiter is reversible error, and the NLRC still acted within its power and
authority as a quasi-judicial agency in finding that respondents
deserve more than just being regular employees but must be regular
full-time employees.

We now come to the second issue, which touches on the valid exercise
of management prerogative. According to petitioner, NLRC encroached
upon this exclusive sphere of managerial decision, when it ruled that
respondents should be made regular full-time employees instead of
regular part-time employees, and the appellate court thereby erred in
sustaining the NLRC. This contention does not quite ring true, much
less persuade us. It must be borne in mind that the exercise of
management prerogative is not absolute. While it may be conceded
that management is in the best position to know its operational needs,
the exercise of management prerogative cannot be utilized to
circumvent the law and public policy on labor and social justice. That
prerogative accorded management could not defeat the very purpose
for which our labor laws exist: to balance the conflicting interests of
labor and management, not to tilt the scale in favor of one over the
other, but to guaranty that labor and management stand on equal
footing when bargaining in good faith with each other. By its very
nature, encompassing as it could be, management prerogative must
be exercised always with the principles of fair play at heart and justice
in mind.

Records show that respondents were first hired to work for a period of
one year. Notwithstanding the fact that respondents perform duties
that are usually necessary or desirable in the usual trade or business
of petitioner, respondents were considered temporary employees as
their engagement was fixed for a specific period. However, equally
borne by the records, is the fact that respondents’ employment was
extended for more than two years. Evidently, there was a continued
and repeated necessity for their services, which puts to naught the
contention that respondents, beyond the one-year period, still
continued to be temporary part-time employees. Article 280 of the
Labor Code13 provides 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 actually exists.

The NLRC decision now assailed is one based on substantial evidence,

which is that amount of relevant evidence that a reasonable mind
might accept as adequate to justify a conclusion. 14 It bears stressing
that findings of fact of quasi-judicial agencies like the NLRC which have
acquired expertise in the specific matters entrusted to their jurisdiction
are accorded by this Court not only respect but even finality if they are
supported by substantial evidence.15 Here we find no compelling
reason to go against the factual findings of the NLRC. The parties had
ample opportunity to present below the necessary evidence and
arguments in furtherance of their causes, and it is presumed that the
quasi-judicial body rendered its decision taking into consideration the
evidence and arguments thus presented. Such being the case, it is
likewise presumed that the official duty of the NLRC to render its
decision was regularly performed.16 Petitioner has not shown any
compelling justification to warrant reversal of the NLRC findings.
Absent any showing of patent error, or that the NLRC failed to consider
a fact of substance that if considered would warrant a different result,
we yield to the factual conclusions of that quasi-judicial agency. More
so, when as here, these NLRC conclusions are affirmed by the
appellate court.

It is basic to the point of being elementary that nomenclatures

assigned to a contract shall be disregarded if it is apparent that the
attendant circumstances do not support their use or designation. The
same is true with greater force concerning contracts of employment,
imbued as they are with public interest. Although respondents were
initially hired as part-time employees for one year, thereafter the over-
all circumstances with respect to duties assigned to them, number of
hours they were permitted to work including over-time, and the
extension of employment beyond two years can only lead to one
conclusion: that they should be declared full-time employees. Thus,
not without sufficient and substantial reasons, the claim of
management prerogative by petitioner ought to be struck down for
being contrary to law and policy, fair play and good faith.

In sum, we are in agreement with the Court of Appeals that the NLRC
did not commit grave abuse of discretion simply because it overturned
the labor arbiter’s decision. Grave abuse of discretion is committed
when the judgment is rendered in a capricious, whimsical, arbitrary or
despotic manner. An abuse of discretion does not necessarily follow
just because there is a reversal by the NLRC of the decision of the
labor arbiter. Neither does variance in the evidentiary assessment by
the NLRC and by the labor arbiter warrant as a matter of course
another full review of the facts. The NLRC’s decision, so long as it is
not bereft of evidentiary support from the records, deserves respect
from the Court.17

WHEREFORE, the petition is DENIED for lack of merit. The decision

dated January 26, 2000 of the Court of Appeals and its resolution
dated May 23, 2000, in CA-G.R. SP No. 50351 are AFFIRMED. Costs
against petitioner.

SO ORDERED.

Bellosillo, Austria-Martinez, and Tinga, JJ., concur.

Callejo, Sr., J., on leave.

Footnotes
1
 Rollo, pp. 27-33.
2
 Id.  at 143-144.
3
 Id.  at 86-99.
4
 Id.  at 29-31.
5
 Id.  at 12.
6
 Id.  at 14.
 7
 Id.  at 15.
8
 Id.  at 17-18.
9
 Id.  at 148-149.
10
 CA Rollo, pp. 140-141.
11
 See Gancho-on v. Secretary of Labor and Employment, 337
Phil. 654, 658 (1997).
12
 CA Rollo, p. 53.
13
 ART. 280. Regular and Casual Employment. – The provisions of
written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season. x x x.
14
 Revised Rules of Criminal Procedure, Rule 133, SEC.
5. Substantial evidence.
15
 Reno Foods, Inc. v. National Labor Relations Commission, G.R.
No. 116462, 18 October 1995, 249 SCRA 379, 385.
16
 Revised Rules of Criminal Procedure, Rule 131, SEC. 3 (m).
17
 Jamer v. NLRC, 344 Phil. 181, 196 (1997).

FIRST DIVISION

[G.R. No. 154448. August 15, 2003]

DR. PEDRITO F. REYES, petitioner, vs. COURT OF APPEALS, PHIL.
MALAY POULTRY BREEDERS, INC. and LEONG HUP POULTRY
FARM SDN, BHD., Mr. Francis T.N. Lau, President and Chairman
of the Board and Mr. Chor Tee Lim, Director, respondents.
DECISION
YNARES-SANTIAGO, J.:
 Assailed in this petition for review under Rule 45 of the Revised
Rules of Court are the January 28, 2002 [1] and July 22,
2002[2] Resolutions[3] of the Court of Appeals in CA-G.R. SP No. 67431,
which dismissed the petition for certiorari filed by petitioner for failure
to attach to the petition the duplicate original or certified true copy of
the Labor Arbiters decision as well as the relevant pleadings.
The facts show that on August 24, 1989, respondent Leong Hup
Poultry Farms SDN. BHD (Leung Hup) of Malaysia, thru its Managing
Director Francis T. Lau, appointed petitioner Pedrito F. Reyes as
Technical/Sales Manager with a net salary of US$4,500.00 a
month. His duties consisted of selling parent stock day-old chicks and
providing technical assistance to clients of the company in Malaysia
and other Asian countries.[4] Sometime in 1992, the company formed
Philippine Malay Poultry Breeders, Inc., (Philmalay) in the
Philippines. Petitioner was appointed General Manager thereof with a
monthly salary of US$5,500.00.
In 1996-1997, respondents suffered losses which caused them to
reduce production and retrench employees in Philmalay. On June 30,
1997, petitioner gave verbal notice to respondent Francis T. Lau that
he will serve as General Manager of Philmalay until December 31,
1997 only.[5] In a letter dated January 12, 1998, petitioner confirmed
his verbal notice of resignation and requested that he be given the
same benefits granted to retrenched and resigned employees of the
company, consisting of separation pay equivalent to 1 month salary for
every year of service and the monetary equivalent of his sick leave
and vacation leave. He likewise requested for the following:
1. payment of underpaid salary for the period December 1989 December
31, 1997 together with the additional one month salary payable in
December of every year which was paid at the rate of P26.00 instead
of the floating rate;
2. brand new car (Galant Super Saloon) or its equivalent;
3. life insurance policy in the amount of US$100,000.00 from December
1, 1989 to December 31, 1997, or the premiums due thereon;
4. office rentals at the rate of US$300.00 or its peso equivalent for the
use of his residence as office of Philmalay for the period December 1,
1989 to July 1996; and
5. retention of the services of the law firm Quasha Ancheta Pena and
Nolasco Law Firm, which was hired by respondents to defend him in
the illegal recruitment case filed against him in connection with his
employment with respondents.[6]
In a letter dated January 19, 1998, respondent Philmalay
retrenched petitioner effective January 20, 1998 and promised to pay
him separation benefits pursuant to the provisions of the Labor Code.
[7]
 He was, however, offered a separation pay equivalent to four
months only, or the total amount of P578,600.00 (P144,650 x 4). The
offer was not accepted by petitioner and efforts to settle the impasse
proved futile.
Petitioner filed with the Arbitration Branch of the National Labor
Relations Commission a complaint [8] for underpayment of wages and
non-payment of separation pay, sick leave, vacation leave and other
benefits against respondents.
On December 22, 1999, the Labor Arbiter rendered a decision [9] in
favor of petitioner, the dispositive portion of which reads:
PREMISES CONSIDERED, judgment is hereby rendered in favor of the
complainant and against the respondents, as follows:
1. To order respondents to pay jointly and severally the complainant,
the following:
(a) Unpaid salary from January 1, 1998 to January 19, 1998, the same
to be computed in the following manner:
19 = days % 31 days of January 98
= 0.613 month x US$5,500.00
= US$3,370.00
(b) Underpayment of salary, the same to be computed at net
US$5,500.00 or its peso-equivalent from July 1, 1997 to December 31,
1997, together with the additional one (1) salary payable every year,
the same to be paid at the rate of P26.30 instead of the following rate
computed as follows:
July 1997 - P27.66 P1.36 - P7, 480.00
August 1997 - 29.33 3.02 - 16, 665.00
September - 32.39 - 6.09 - 33, 495.00
October 1997 - 34.46 - 8.16 - 44, 880.00
November 1997 - 34.51 - 8.21 - 45, 155.00
December 1997 - 37.17 - 10.57- 59, 785.00
P207,460.00
(c) 13th month pay for December 1997 computed as follows: December
1997 P37.17 P10.57 P59,785.00.
2. To order respondents to pay jointly and severally the complainant
the following:
(a) Unused vacation and sick leaves from December 01, 1989 to
December 31, 1997 based on the same salary, to be computed as
follows:
i) Vacation Leave Fifteen (15) days for every year of services x 9 years
= 135 days
135 days % 26 working days a month
= 5.2 months
= US$28,600.00
ii) Sick Leave Fifteen (15) Days for every [year] of service x 9 years =
135 days
135 days % 26 working days a month
= 5.2 months x US$5,500.00 / month
= US$28,600.00
3) To order respondents to pay jointly and severally the complainant
his separation pay equivalent to one (1) month pay for very year of
service at the rate of US $5,500.00 or its peso equivalent from
December 1, 1989 to January 19, 1998, computed as follows:
9 years x US$5,500.00 = US$49,500.00
4) To order respondents to pay jointly and severally the complainants
other claims and benefits:
a) A brand new car (Galant super saloon) or its equivalent in the sum
of P945,100.00;
b) Office rentals for the use of his residence situated at No. 38 Don
Wilfredo St., Don Enrique Heights Diliman, Quezon City, [from] 01
December 1989 to July 1996 at the rate of US$300.00 or its peso
equivalent to US$23,700.00;
c) Life insurance policy for US$100,000.00 from December 1, 1989 to
December 31, 1997, or if the same was not secured the premiums due
thereon for the above period, the same to be computed as follows:
US$2,736.50 x 9 years = US$24,628.50
d) The services of the Law firm of Quasha Ancheta Pea and Nolasco be
continued to be retained by the two (2) companies to represent
complainant in the illegal recruitment case before the Regional Trial
Court of Quezon City, Branch 96, docketed as Crim. Case No. Q-93-
46421, entitled People of the Philippines vs. Dr. Antonio B. Mangahas,
et al., filed against him in connection with his employment by Leong
Hup, or in default thereof to pay the attorneys fees of the new counsel,
that may be hired by the complainant to defend him in the said case
estimated in the sum of P200,000.00, more or less;
5) To order the respondents to pay jointly and severally the
complainant moral damages in the sum of P2.5 million and exemplary
damages of P2.5 million;
6) To order the respondents to pay jointly and severally the
complainant in the sum equivalent to ten percent (10%) of the total
claim as and for attorneys fees.
7) Respondents counterclaims are hereby dismissed for lack of merit.
SO ORDERED.[10]
On appeal by respondents to the National Labor Relations
Commission (NLRC), the Decision of the Labor Arbiter was modified by
deleting the awards of (1) US$3,370.00 representing unpaid salary for
the period January 1, 1998 to January 19, 1998; (2) US$28,600.00 as
vacation leave; (3) brand new car or its equivalent in the sum of
P945,100.00; (4) US$23,700.00 as office rentals for the period of
December 1, 1989 to July 1996; (5) US$100,000.00 life insurance
policy or the equivalent premium in the amount of US$24,628.50; (6)
P2.5 million as moral damages; and (7) P2.5 million as exemplary
damages. The NLRC likewise reduced the amount of petitioners
separation pay to US$44,400.00 after adjusting its computation based
on the length of service of petitioner which it lowered from 9 years to
8 years; and by limiting the basis of the 10% attorneys fees to the
total of the awards of underpayment of salary (P207,460.00),
13th month pay differential (P59,785.00) and cash equivalent of sick
leave (US$28,600.00) only, and excluding therefrom the award of
separation pay in the amount of US$44,400.00. The decretal portion of
the said decision[11] states:
WHEREORE, premises considered, the Decision dated December 22,
1999 is hereby MODIFIED as follows:
Respondents are hereby ordered to pay jointly and severally the
complainant, the following:
(a) underpayment of salary as computed in the appealed Decision in
the amount of P207, 460.00;
(b) 13th month pay differential as computed in the appealed Decision in
the amount of P59,785.00;
(c) monetary equivalent of complainants sick leave as computed in the
appealed Decision in the amount of US$28,600.00;
(d) separation pay in the amount of US$44,000.00 as earlier computed
in this Decision;
(e) attorneys fees equivalent to ten (10%) percent of the total award
based on the awards representing underpayment of salary, 13 th month
pay, [and] cash equivalent of sick leave.
Respondents are likewise directed to provide legal counsel to
complainant as defendant in Criminal Case No. Q-93-46421.
The awards of unpaid wages from June 1-19, 1998, vacation leave in
the amount of US$28,600, P945,000 for car, US23,700.00, for office
rentals, life insurance policy in the amount of US$100,000.00 and
moral and exemplary damages in the amount of 2.5 million pesos are
hereby DELETED on grounds above-discussed.
SO ORDERED.[12]
Petitioner filed a motion for reconsideration, however, the same
was denied.[13] Undaunted, petitioner filed a petition for certiorari with
the Court of Appeals, which was dismissed on January 28, 2002 for
failure to attach to the petition the following: (1) complainants
(petitioner) Position Paper filed before the Labor Arbiter; (2) Decision
dated 22 December 1992 penned by Labor Arbiter Ariel Cadiente
Santos; and (3) Memorandum of Appeal filed by the petitioner. [14]
On February 21, 2002, petitioner filed a motion for reconsideration,
attaching thereto a copy of the Labor Arbiters decision and the
pleadings he failed to attach to the petition. The Court of Appeals,
however, denied petitioners motion for reconsideration. Hence, the
instant petition based on the following grounds:
1. COURT OF APPEALS COMMITTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF
JURISDICTION, IN ISSUING THE QUESTIONED RESOLUTION
DISMISSING THE PETITION FOR CERTIORARI BASED ON
TECHNICALITIES, THAT PETITIONER FAILED TO COMPLY WITH SEC. 1,
 RULE 65, RULES OF CIVIL PROCEDURE FOR FAILURE TO ATTACH
THREE (3) DOCUMENTS CONSISTING OF:
Complainants (petitioner) Position Paper filed before the labor arbiter;
Decision dated 22 December 1999 penned by Labor Arbiter Ariel
Cadiente Santos; and
Memorandum of Appeal filed by the petitioner.
WHICH RESPONDENT COURT OF APPEALS CONSIDERED AS MATERIAL
PORTIONS OF THE RECORD DESPITE THE FACT THAT THE SUBJECT
DOCUMENTS SOUGHT TO BE PRODUCED HAVE ACTUALLY BEEN
REPRODUCED OR SUBSTANTIALLY COVERED BY THE QUESTIONED
JUDGMENT, ORDER OR RESOLUTION FILED/SUBMITTED BEFORE IT.
2. COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION
IN DISMISSING THE PETITION, AND IN DENYING THE MOTION FOR
RECONSIDERATION THEREOF ON THE GROUND THAT THERE IS NO
COGENT REASON FOR IT TO OVERTURN ITS DISMISSAL, DESPITE
CLEAR AND CONVINCING EVIDENCE, EXTANT ON THE RECORDS
SHOWING THAT THE NATIONAL LABOR RELATIONS COMMISSIONS
(NLRC) DECISION AND RESOLUTION WERE FLAWED, A PALPABLE OR
PATENT ERROR, WHICH MAY BE SUMMARIZED, TO WIT:
(A) IN DECLARING THAT PETITIONER HAD RESIGNED FROM HIS
EMPLOYMENT, AND NOT RETRENCHED OR TERMINATED DESPITE A
DOCUMENTARY EVIDENCE EXTANT ON THE RECORD ISSUED BY
PRIVATE RESPONDENTS DATED JANUARY 19, 1998 GIVING FORMAL
NOTICE TO YOU (PETITIONER) OF YOUR TERMINATION DUE TO
RETRENCHMENT EFFECTIVE JANUARY 20, 1998.
(B) IN HOLDING AGAIN, AND DENYING PETITIONERS VALID CLAIMS
DESPITE DOCUMENTARY EVIDENCE OR THE EXISTENCE OF A
CONTRACT OF EMPLOYMENT STATING THAT:
(1) EMPLOYEES (INCLUDING PETITIONER AS GENERAL MANAGER)
AS A MATTER OF COMPANY POLICY AND/OR PRACTICE) WHO ARE
RETRENCHED ARE ENTITLED TO INCENTIVES INCLUDING 15-DAYS
VACATION LEAVE AND 15-DAYS SICK LEAVE WITH PAY; A FACT
ADMITTED NO LESS BY PRIVATE RESPONDENTS OWN WITNESS, MS.
MA. ROWENA LOPEZ (FORMER PERSONNEL MANAGER OR PHILMALAY)
WHO EXECUTED AN AFFIDAVIT ADMITTING THE SAME.
(2) PETITIONERS ENTITLEMENT AS PER CONTRACT TO A BRAND
NEW CAR (OR AT LEAST TO THE CASH EQUIVALENT THEREOF);
$100,000.00 LIFE INSURANCE POLICY (OR IN DEFAULT THEREOF AT
LEAST TO THE PREMIUMS THEREIN), AND OFFICE RENTALS FOR THE
USE OF THE PETITIONERS PRIVATE RESIDENCE AS OFFICE OF
RESPONDENTS.
(3) PETITIONER IS ENTITLED, TO MORAL AND EXEMPLARY
DAMAGES DUE TO PRIVATE RESPONDENTS ACTS OF BAD FAITH IN
REQUIRING PETITIONER TO EXECUTE A LETTER OF RESIGNATION,
WHEN IN FACT HE WAS ADMITTEDLY TERMINATED THRU
RETRENCHMENT, AND ITS REFUSAL TO PAY HIM HIS VALID CLAIMS,
DESPITE HIS CONTRACT OF EMPLOYMENT, COMPANY POLICY, AND
LETTER OF TERMINATION ISSUED BY PRIVATE RESPONDENTS.
(4) PETITIONERS ENTITLEMENT TO 10% OF THE TOTAL AMOUNT
OF THE AWARD OF ATTORNEYS FEES AS PROVIDED FOR BY LAW AND
AS PER PETITIONERS CONTRACT WITH COUNSEL, AND NOT ONLY
10% OF THE TOTAL AWARD REPRESENTING UNDER PAYMENT OF
SALARY, 13TH MONTH PAY, AND CASH EQUIVALENT OF SICK LEAVE
AND IN ORDERING PRIVATE RESPONDENT TO PROVIDE LEGAL
COUNSEL TO PETITIONER IN CRIM. CASE NO. Q-93-46421, WHEN THE
SUBJECT CASE HAD ALREADY BEEN DISMISSED AT THE EXPENSE OF
PETITIONER WHO HAD PREVIOUSLY HIRED HIS OWN COUNSEL OF
CHOICE FOR THE PURPOSE.
The issues for resolution are: (1) whether or not the Court of
Appeals erred in dismissing the petition; and (2) whether or not the
decision of the Labor Arbiter should be reinstated.
The allowance of the petition on the ground of substantial
compliance with the Rules is not a novel occurrence in our
jurisdiction. As consistently held by the Court, rules of procedure
should not be applied in a very technical sense, for they are adopted
to help secure, not override, substantial justice. [15] In Ramos v. Court
of Appeals,[16] the Court of Appeals dismissed a petition for review of
the decision of the Regional Trial Court because the petitioner failed to
attach to the petition a certified true copy of the Metropolitan Trial
Courts decision in addition to the certified true copy of the assailed
decision of the RTC. Holding that the Court of Appeals should have
given due course to the petition considering that petitioner
subsequently submitted a certified true copy of the decision of the
MeTC, we held:
Petitioner is right that the MeTCs decision cannot be considered a
disputed decision. The phrase is the equivalent of ruling, order or
decision appealed from in Rule 32, 2 of the 1964 Rules made
applicable to appeals from decisions of the then Courts of First
Instance to the Court of Appeals by R.A. No. 296, as amended by R.A.
No. 5433. Since petitioner was not appealing from the decision of the
MeTC in her favor, she was not required to attach a certified true copy
but only a true or plain copy of the aforesaid decision of the MeTC. The
reason is that inclusion of the decision is part of the requirement to
attach to the petition for review other material portion of the record as
would support the allegations of the petition. Indeed, petitioner
referred to the MeTC decision in many parts of her petition for review
in the Court of Appeals for support of her theory.
Nonetheless, the Court of Appeals should have reconsidered its
dismissal of petitioners appeal after petitioner submitted a certified
true copy of the MeTCs decision.It was clear from the petition for
review that the RTC incurred serious errors in awarding damages to
private respondents which were made without evidence to support the
award and without any explanation[17]
In Jaro v. Court of Appeals,[18] we applied the rule on substantial
compliance because the petitioner amended his defective petition and
attached thereto the relevant annexes certified according to the
rules. Thus
There is ample jurisprudence holding that the subsequent and
substantial compliance of an appellant may call for the relaxation of
the rules of procedure. In Cusi-Hernandez vs. Diaz and Piglas-Kamao
vs. National Labor Relations Commission, we ruled that the
subsequent submission of the missing documents with the motion for
reconsideration amounts to substantial compliance. The reasons
behind the failure of the petitioners in these two cases to comply with
the required attachments were no longer scrutinized. What we found
noteworthy in each case was the fact that the petitioners therein
substantially complied with the formal requirements [19]
The same leniency should be applied to the instant case considering
that petitioner subsequently submitted with his motion for
reconsideration the certified true copy of the Labor Arbiters decision,
the complainants position paper and the respondents memorandum of
appeal. Clearly, petitioner had demonstrated willingness to comply
with the requirements set by the rules. If we are to apply the rules of
procedure in a very rigid and technical sense, as the Court of Appeals
did in this case, the ends of justice would be defeated.
The pleadings and documents filed extensively discussed the issues
raised by the parties. Such being the case, there is sufficient basis to
resolve the instant controversy.[20] Labor laws mandate the speedy
disposition of cases, with the least attention to technicalities but
without sacrificing the fundamental requisites of due process.
[21]
 Remanding the case to the Court of Appeals will only frustrate
speedy justice and, in any event, would be a futile exercise, as in all
probability the case would end up with this Court. [22] We shall thus rule
on the substantial claims of the parties.
Was the termination of petitioners employment caused by
retrenchment or by voluntary resignation?
The Court finds that petitioners dismissal from service was due to
retrenchment. This is evident from the termination letter sent by
Philmalay to petitioner, to wit
We regret to inform you that in view of the prevailing market
conditions and the continuous losses being incurred by the company,
the management has decided to cut down on expenses and prevent
further losses through retrenchment of some of our personnel effective
January 19, 1998.
In compliance with the requirement of the law, this will serve as a
formal notice to you of your termination due to retrenchment effective
January 20, 1998. To provide you with sufficient time to seek
alternative employment, you need not report for work (unless
otherwise requested) starting January 20, 1998.Notwithstanding the
above mentioned affectivity date, you may come down to the office
and receive your separation benefits pursuant to the Labor Code[23]
While it is true that petitioner tendered his resignation letter to
respondents requesting that he be given the same benefits granted by
the company to resigned/retrenched employees, there is no showing
that respondents accepted his resignation. Acceptance of a resignation
tendered by an employee is necessary to make the resignation
effective.[24] No such acceptance, however, was shown in the instant
case. What appears in the record is a letter terminating the services of
petitioner due to retrenchment effective January 20, 1998. Verily, said
letter should be interpreted as a non-acceptance of petitioners
resignation effective December 31, 1997. As correctly pointed out by
the Labor Arbiter, if respondents considered petitioner resigned as of
December 31, 1997, then there would be no need to retrench him.
The length of service of petitioner, which the NLRC correctly
reduced to 8 years, as well as the solidary liability of respondent
corporations are no longer assailed here. Whether petitioner is
considered resigned on December 31, 1997 or retrenched on January
20, 1998, his length of employment reckoned from August 24, 1989
would still be 8 years. Moreover, respondents did not appeal from the
decision of the NLRC and in fact sought its affirmance in their
Opposition to the motion for reconsideration [25] and Comment to the
motion for reconsideration[26] filed before the NLRC and the Court of
Appeals, respectively. So also, petitioner is estopped from claiming
that he was illegally dismissed and that his retrenchment was without
basis. His request for benefits granted to retrenched employees during
such time when respondent was in the process of retrenching its
employees is tantamount to a recognition of the existence of a valid
cause for retrenchment. What remains to be resolved by the Court is
the validity of the NLRCs deletion/modification of the awards of (1)
unpaid salary; (2) vacation leave; (3) car and insurance
policy/premiums; (4) moral and exemplary damages; (5)
reimbursement for expenses for legal services; (6) rental payment;
and (7) attorneys fees.
As regards the award of unpaid salary, the NLRC was correct in
holding that petitioner is not entitled to compensation from January 1,
1998 to January 19, 1998, because he was not able to prove that he
rendered services during said period. In the same vein, there is no
basis in awarding moral and exemplary damages, inasmuch as
respondents were not shown to have acted in bad faith in initially
refusing to award separation pay equivalent to 1 month salary for
every year of service. Respondents even offered to pay petitioner
separation pay, albeit in an amount not acceptable to petitioner. Moral
damages are recoverable only where the act complained of is tainted
by bad faith or fraud, or where it is oppressive to labor, and done in a
manner contrary to morals, good customs, or public policy. Exemplary
damages may be awarded only if the act was done in a wanton,
oppressive, or malevolent manner. [27] None of these circumstances
exist in the present case.
The NLRC also correctly ruled that the car and insurance benefits
are granted only during the course of employment; hence, they should
not be part of petitioners separation package. Likewise, petitioners
claim for payment of rental for the use of his house as office of
Philmalay should be denied for having been ventilated in the wrong
forum. Not all money claims that may be asserted by an employee
against his employer are within the jurisdiction of the NLRC. Money
claims of workers which fall within the jurisdiction of Labor Arbiters are
those which arise out of employer-employee relationship. Obviously,
the demand for rental payment is not a labor dispute; rather, it is
based on contractual relations independent of employer-employee
relationship. Hence, the jurisdiction thereon is with the regular courts.
[28]

Since respondents did not appeal from the decision of the NLRC, it
is presumed that they are satisfied with the adjudications therein,
including the order of NLRC directing them to provide legal services to
petitioner in the illegal recruitment case filed against the latter while
he was still employed by respondents. This is in accord with the
doctrine that a party who has not appealed cannot obtain from the
appellate court any affirmative relief other than the ones granted in
the appealed decision.[29] Nonetheless, respondents cannot be ordered
to reimburse the amount of P200,000.00 for the legal services of the
law firm allegedly hired by petitioner because he failed to establish
that he indeed hired the services of a law firm and that he spent
P200,000.00 as a consequence thereof.
Petitioner is, however, entitled to the award of vacation leave as
part of respondents retrenchment incentives. In granting sick leave
but deleting vacation leave benefits, the NLRC based its ruling on the
affidavit of one Ms. Rowena Lopez, a former personnel of
Philmalay, viz:
3. That based on company policy and/or practice the rank-and-file
employees are entitled to 15-days vacation leave and 15-days sick
leaves. However, the vacation leave must be availed of within the year
or applied to the remaining period of employment for those who
resigned or go on terminal leave. In case of sick leaves all unused sick
leaves are also commutable to cash;
4. That employees who were retrenched are entitled to the following
incentives:
(a) One (1) month additional leave with pay effective after their
last day of employment to enable them to look for a new job;
 (b) Plus one (1) month separation pay for every year of service;
and
(c) 15-days vacation leave and 15-days sick leave with pay as
stated in paragraph 3 hereof.[30]
The foregoing expressly states that a retrenched employee is
entitled to 15-day vacation leave. Paragraph 4 is the retrenchment
package granted to retrenched employees, whereas paragraph 3 refers
to the feasibility of commutation of unused sick and vacation
leaves. Except for the sentence entitling employees to vacation and
sick leaves, the last 2 sentences in paragraph 3 have nothing to do
with the retrenchment benefits in paragraph 4.Note that the 15-day
vacation and sick leave with pay in paragraph 4(c) are not qualified by
the word unused. The 15-day vacation and sick leaves are granted to
retrenched employees as part of the retrenchment benefits regardless
of whether or not they have unused sick and vacation leaves at the
time of the retrenchment. Moreover, the applicability of the said
provisions to petitioner was not disputed by respondents. They even
invoked the same in manifesting conformity to the deletion by the
NLRC of the award of 15-day vacation leave for every year of
service. At any rate, any ambiguity therein must be resolved strictly
against the respondents, who drafted these provisions.[31] Hence,
petitioner is entitled not only to 15 days sick leave but also to 15 days
vacation leave with pay
The Labor Arbiters computation of petitioners 15-day sick leave pay
must be modified. The NLRC, which affirmed the Labor Arbiters
decision, reduced petitioners number of years of service from 9 to 8
years but it did not make the corresponding adjustment in the
determination of petitioners sick leave pay which used 9 years as the
basis in the computation thereof. Accordingly, the awards of 15-day
sick leave and 15-day vacation leave for every year of service must be
computed using 8 years as its basis.
Finally, the award of attorneys fees must also be
modified. In Traders Royal Bank Employees Union-Independent v.
National Labor Relations Commission,[32] it was held that there are two
commonly accepted concepts of attorney's fees, the so-called ordinary
and extraordinary. In its ordinary concept, an attorneys fee is the
reasonable compensation paid to a lawyer by his client for the legal
services he has rendered to the latter. The basis of this compensation
is the fact of his employment by and his agreement with the client. In
its extraordinary concept, attorneys fees are deemed indemnity for
damages ordered by the court to be paid by the losing party in a
litigation. The instances where these may be awarded are those
enumerated in Article 2208 of the Civil Code, specifically par. 7 thereof
which pertains to actions for recovery of wages, and is payable not to
the lawyer but to the client, unless they have agreed that the award
shall pertain to the lawyer as additional compensation or as part
thereof. The extraordinary concept of attorneys fees is the one
contemplated in Article 111 of the Labor Code, which provides:
Art. 111. Attorneys fees. (a) In cases of unlawful withholding of
wages, the culpable party may be assessed attorneys fees equivalent
to ten percent of the amount of wages recovered
The afore-quoted Article 111 is an exception to the declared policy
of strict construction in the awarding of attorneys fees. Although an
express finding of facts and law is still necessary to prove the merit of
the award, there need not be any showing that the employer acted
maliciously or in bad faith when it withheld the wages. There need only
be a showing that the lawful wages were not paid accordingly, as in
this case.[33]
In carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the employees welfare should be the
primordial and paramount consideration. This kind of interpretation
gives meaning and substance to the liberal and compassionate spirit of
the law as provided in Article 4 of the Labor Code which states that
[a]ll doubts in the implementation and interpretation of the provisions
of [the Labor] Code including its implementing rules and regulations,
shall be resolved in favor of labor, and Article 1702 of the Civil Code
which provides that [i]n case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living for
the laborer.[34]
In the case at bar, what was withheld from petitioner was not only
his salary, vacation and sick leave pay, and 13 th month pay
differential, but also his separation pay. Hence, pursuant to current
jurisprudence, separation pay must be included in the basis for the
computation of attorneys fees.Petitioner is entitled to attorneys fees
equivalent to 10% of his total monetary award. [35]
WHEREFORE, in view of all the foregoing, the instant petition is
GRANTED. The assailed Resolutions dated January 28, 2002 and July
22, 2002 of the Court of Appeals in CA-G.R. SP No. 67431, are
REVERSED and SET ASIDE. The Decision of the National Labor
Relations Commission in NLRC NCR CA 023679-2000, is MODIFIED. In
addition to the awards of underpayment of salary, 13 th month pay
differential, sick leave pay and separation pay, respondents are
ordered to pay petitioner vacation leave pay and 10% attorneys fees,
the basis of which shall be the total monetary award. Petitioners
vacation leave and sick leave pay shall be computed on the basis of his
8 years of service with respondents. For this purpose, the case is
ordered REMANDED to the Labor Arbiter for the computation of the
amounts due petitioner.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna,
JJ., concur.
[1]
 Rollo, p. 42.
[2]
 Rollo, p. 124.
[3]
 Penned by Associate Justice Andres B. Reyes and concurred in by
Associate Justices Conrado M. Vasquez, Jr. and Amelita G. Tolentino.
[4]
 Employment Contract, Rollo, p. 73.
[5]
 Letter of petitioner to Philmalay and Leong Hup, Rollo, p. 76.
[6]
 Id.
[7]
 Rollo, p. 72.
[8]
 Docketed as NLRC NCR Case No. 00-06-04519-98.
[9]
 Penned by Labor Arbiter Ariel Cadiente Santos.
[10]
 Rollo, pp. 141-145.
[11]
 Penned by Presiding Commissioner Lourdes C. Javier and concurred in by
Commissioners Ireneo B. Bernardo and Tito F. Genilo.
[12]
 Rollo, pp. 211-213.
[13]
 Resolution dated September 28, 2001, Rollo, p. 221.
[14]
 See Rollo, p. 42. Under Article 223 of the Labor Code, on appeal of the
decision of the Labor Arbiter to the NLRC, the appellant shall furnish a
copy of the memorandum of appeal to the other party who shall file an
answer not later than 10 calendar days from receipt thereof. The Court
of Appeals must be referring to the Respondents Memorandum of
Appeal, as it was the latter who appealed to the NLRC questioning the
decision of the Labor Arbiter. At any rate, said Memorandum of Appeal
filed by respondents was already submitted by petitioner together with
his motion for reconsideration.
[15]
 Piglas-Kamao v. National Labor Relations Commission, G.R. No. 138556 ,
9 May 2001, 357 SCRA 640, 648-649, citing Pacific Life Assurance
Corp. v. Sison, 359 Phil. 333 (1998); Paraaque Kings
Enterprises v. Court of Appeals, 335 Phil. 1184 (1997); Empire
Insurance Company v. National Labor Relations Commission, 355 Phil.
694 (1998); Peoples Security v. National Labor Relations Commission,
G.R. No. 96451, 8 September 1993, 226 SCRA 146; Soriano v. Court
of Appeals, G.R. No. 100525, 25 May 1993, 222 SCRA 545.
[16]
 341 Phil. 157 (1997).
[17]
 Id., p. 163.
[18]
 G.R. No. 127536, 19 February 2002, citing Cusi-Hernandez v. Diaz, G.R.
No. 140436, 18 July 2000, 336 SCRA 113; Piglas-Kamao v. National
Labor Relations Commission, supra.
[19]
 Id.
[20]
 Baylon v. Fact-Finding Intelligence Bureau, G.R. No. 150870, 11
December 2002.
[21]
 Caurdanetaan Piece Workers Union v. Undersecretary Laguesma, G.R.
No. 113542, 24 February 1998, 286 SCRA 401, 432, citing
Domasig v. National Labor Relations Commission, 330 Phil. 518
(1996); Sigma Personnel Services v. National Labor Relations
Commission, G.R. No. 108284, 30 June 1993, 224 SCRA 181;
Cagampan, et al. v. National Labor Relations Commission, G.R. Nos.
85122-24, 22 March 1991, 195 SCRA 533 (1991).
[22]
 Fernandez v. National Labor Relations Commission, G.R. No. 105892 , 28
January 1998, 285 SCRA 149, 170.
[23]
 Rollo, p. 72.
[24]
 Indophil Acrylic MFG Corporation v. National Labor Relations
Commission, G.R. No. 96488, 27 September 1993, 226 SCRA 723.
[25]
 Rollo, p. 117.
[26]
 Rollo, p. 102.
[27]
 Permex, Inc. v. National Labor Relations Commission, 380 Phil. 79, 88
(2000), citing Consolidated Rural Bank (Cagayan Valley),
Inc. v. National Labor Relations Commission , 301 SCRA 223, 235
(1999); Garcia v. National Labor Relations Commission, G.R. No.
110518, 1 August 1994, 234 SCRA 632.
[28]
 San Miguel Corporation v. National Labor Relations Commission, G.R. No.
L-80774, 3 May 1988, 161 SCRA 719, 724 and 727.
[29]
 Filflex Industrial & Manufacturing Corporation v. National Labor Relations
Commission, G.R. No. 115395, 12 February 1998, 286 SCRA 245, 256,
citing SMI Fish Industries v.National Labor Relations Commission, G.R.
Nos. 96952-56, 2 September 1992, 213 SCRA 444;
Caliguia v. National Labor Relations Commission, 332 Phil. 128 (1996);
Teodoro v. Court of Appeals, 328 Phil. 116 (1996); Spouses
Carrion v. Court of Appeals, 329 Phil. 698 (1996).
[30]
 Petition, Rollo, p. 31.
[31]
 Villanueva v. NLRC, G.R. No. 127448, 10 September 1998, 295 SCRA
326, 333, citing BPI Credit Corporation v. Court of Appeals, G.R. No.
96755, 4 December 1991, 204 SCRA 601; Philippine Integrated Labor
Assistance Corp. v. National Labor Relations Commission, 332 Phil.
458 (1996).
[32]
 336 Phil. 705, 712 (1997), citing Pineda E.L., Legal and Judicial Ethics,
1994 ed., 220.
[33]
 CMP Federal Security Agency, Inc. v. National Labor Relations
Commission, 367 Phil. 304, 310 (1999), citing Valiant Machinery and
Metal Corp. v. National Labor Relations Commission, 322 Phil. 407
(1996).
[34]
 Songco v. National Labor Relations Commission, G.R. Nos. 50999-51000,
23 March 1990, 183 SCRA 611, 619, citing Abella v. National Labor
Relations Commission, G.R. No. 71812, 30 July 1987, 152 SCRA 140;
Manila Electric Company v. National Labor Relations Commission., G.R.
No. 78763, 12 July 1989, 175 SCRA 277.
[35]
 Permex, Inc. v. National Labor Relations Commission, 380 Phil. 79, 88
(2000); Abasolo v. National Labor Relations Commission, G.R. No.
118475, 29 November 2000, 346 SCRA 293, 307; KAMS,
International, Inc. v. National Labor Relations Commission, 373 Phil.
950, 961 (1999); Gonzales v. National Labor Relations Commission,
372 Phil. 39, 46 (1999); Consolidated Rural Bank (Cagayan
Valley) v. National Labor Relations Commission, G.R. No. 123810 , 20
January 1999, 361 SCRA 172, 185; Surima v.National Labor Relations
Commission, 353 Phil. 461, 472 (1998); Damasco v. National Labor
Relations Commission, G.R. No. 115755, 4 December 2000, 346 SCRA
714 (2000); Yu v. National Labor Relations Commission, G.R. No.
97212, 30 June 1993, 224 SCRA 75.