labor i i case digest

Appeal

PICOP RESOURCES, INCORPORATED (PRI), v. ANACLETO L. TAÑECA, G.R. No. 160828, August 9, 2010

PICOP RESOURCES, INCORPORATED (PRI), Petitioner,

- versus –

ANACLETO L. TAÑECA, GEREMIAS S. TATO, JAIME N. CAMPOS, MARTINIANO A. MAGAYON, JOSEPH B. BALGOA, MANUEL G. ABUCAY, MOISES M. ALBARAN, MARGARITO G. ALICANTE, JERRY ROMEO T. AVILA, LORENZO D. CANON, RAUL P. DUERO, DANILO Y. ILAN, MANUEL M. MATURAN, JR., LUISITO R. POPERA, CLEMENTINO C. QUIMAN, ROBERTO Q. SILOT, CHARLITO D. SINDAY, REMBERT B. SUZON ALLAN J. TRIMIDAL, and NAMAPRI-SPFL,

Respondents.

G.R. No. 160828

Present:

CARPIO, J., Chairperson,

NACHURA,

PERALTA

ABAD, and

MENDOZA, JJ.

Promulgated:

August 9, 2010

x----------------------------------------------------------------------------------------x

D E C I S I O N

PERALTA, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision[1] dated July 25, 2003 and Resolution[2] dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, setting aside the Resolutions dated October 8, 2001[3] and April 29, 2002[4] of the National Labor Relations Commission in NLRC CA No. M-006309-2001 and reinstating the Decision[5] dated March 16, 2001 of the Labor Arbiter. The facts, as culled from the records, are as follows:

On February 13, 2001, respondents Anacleto Tañeca, Loreto Uriarte, Joseph Balgoa, Jaime Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP Resources, Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of Legal/Labor), Southern Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-

SPFL]) and Atty. Proculo Fuentes, Jr.[6] (in his capacity as National President of SPFL).

Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner PRI.

PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years from May 22, 1995 until May 22, 2000.

The CBA contained the following union security provisions:

Article II- Union Security and Check-Off

Section 6. Maintenance of membership.

6.1 All employees within the appropriate bargaining unit who are members of the UNION at the time of the signing of this AGREEMENT shall, as a condition of continued employment by the COMPANY, maintain their membership in the UNION in good standing during the effectivity of this AGREEMENT.

6.2 Any employee who may hereinafter be employed to occupy a position covered by the bargaining unit shall be advised by the COMPANY that they are required to file an application for membership with the UNION within thirty (30) days from the date his appointment shall have been made regular.

6.3 The COMPANY, upon the written request of the UNION and after compliance with the requirements of the New Labor Code, shall give notice of termination of services of any employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article, but it assumes no obligation to discharge any employee if it has reasonable grounds to believe either that membership in the UNION was not available to the employee on the same terms and conditions generally applicable to other members, or that membership was denied or terminated for reasons other than voluntary resignation or non-payment of regular union dues. Separation under the Section is understood to be for cause, consequently, the dismissed employee is not entitled to separation benefits provided under the New Labor Code and in this AGREEMENT.”[7]

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On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI demanding the termination of employees who allegedly campaigned for, supported and signed the Petition for Certification Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-SPFL considered said act of campaigning for and signing the petition for certification election of FFW as an act of disloyalty and a valid basis for termination for a cause in accordance with its Constitution and By-Laws, and the terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to investigate those union members who signed the Petition for Certification Election of FFW during the existence of their CBA. NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the authorization letters dated March 19, 20 and 21, 2000, which contained the names and signatures of employees.

Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel issued a memorandum addressed to the concerned employees to explain in writing within 72 hours why their employment should not be terminated due to acts of disloyalty as alleged by their Union.

Within the period from May 26 to June 2, 2000, a number of employees who were served “explanation memorandum” submitted their explanation, while some did not.

In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to Atty. Fuentes for evaluation and final disposition in accordance with the CBA.

After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI that the Union found the member's explanations to be unsatisfactory. He reiterated the demand for termination, but only of 46 member-employees, including respondents.

On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46 employees whom NAMAPRIL-SPFL sought to be terminated on the ground of “acts of disloyalty” committed against it when respondents allegedly supported and signed the Petition for Certification Election of FFW before the “freedom period” during the effectivity of the CBA. A Notice dated October 21, 2000 was also served on the Department of Labor and Employment Office (DOLE), Caraga Region.

Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio Trujillo were accused of violating Article 248 (a) and (b) of the Labor Code.

Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or submitted to PRI any union dues and check-off disauthorizations against NAMAPRI-SPFL. They claimed that they continue to remain on record as bona fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation of one’s disloyalty would have been the explicit resignation or withdrawal of membership from the Union accompanied by an advice to management to discontinue union dues and check-off deductions. They insisted that mere affixation of signature on such authorization to file a petition for certification election was not per se an act of disloyalty. They claimed that while it may be true that they signed the said authorization before the start of the freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of the freedom period.

Respondents maintained that their acts of signing the authorization signifying support to the filing of a Petition for Certification Election of FFW was merely prompted by their desire to have a certification election among the rank-and-file employees of PRI with hopes of a CBA negotiation in due time; and not to cause the downfall of NAMAPRI-SPFL.

Furthermore, respondents contended that there was lack of procedural due process. Both the letter dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo addressed to PRI did not mention their names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to investigate union members who supported the Petition for Certification Election of FFW. Respondents claimed that they should have been summoned individually, confronted with the accusation and investigated accordingly and from where the Union may base its findings of disloyalty and, thereafter, recommend to management the termination for causes.

Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it was no longer the bargaining representative of the rank-and-file workers of PRI, because the CBA had already expired on May 22, 2000. Hence, there could be no justification in PRI’s act of dismissing respondents due to acts of disloyalty.

Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the wishes of the Union in discharging them on the ground of disloyalty to the Union amounted to interference with, restraint or coercion of respondents’ exercise of their right to self-organization. The act indirectly required petitioners to support and maintain their membership with NAMAPRI-SPFL as a condition for their continued employment. The acts of NAMAPRI-SPFL, Atty. Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners in the exercise of their rights to self-organization and constituted acts of unfair labor practice.

In a Decision[8] dated March 16, 2001, the Labor Arbiter declared the respondents’ dismissal to be illegal and ordered PRI to reinstate respondents to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages. The dispositive portion of which reads:



WHEREFORE, premises considered, judgment is hereby entered:

1. Declaring complainants’ dismissal illegal; and

2. Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to reinstate complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P420,339.30 as shown in the said Annex “A” plus damages in the amount of P10,000.00 each, or a total of P210,000.00 and attorney’s fees equivalent to 10% of the total monetary award.

SO ORDERED.[9]

PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which reversed the decision of the Labor Arbiter; thus, declaring the dismissal of respondents from employment as legal.

Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of merit.

Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals and sought the nullification of the Resolution of the NLRC dated October 8, 2001 which reversed the Decision dated March 16. 2001 of Labor Arbiter and the Resolution dated April 29, 2002, which denied respondent’s motion for reconsideration.

On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the NLRC and reinstated the Decision dated March 16, 2001 of the Labor Arbiter.

Thus, before this Court, PRI, as

petitioner, raised the following issues:

I

WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO.

II

WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.[10]

We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of assailing the decision of the NLRC. It claimed that assuming that the NLRC erred in its judgment on the legal issues, its error, if any, is not tantamount to abuse of discretion falling within the ambit of Rule 65.

Petitioner is mistaken.

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission.[11] This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts.[12] Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg . 129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals – pursuant to the exercise of its original jurisdiction over Petitions for Certiorari– is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. [13]

We now come to the main issue of whether there was just cause to terminate the employment of respondents.

PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in good faith at the instance of the incumbent union pursuant to the Union Security Clause of the CBA.

Citing Article 253 of the Labor Code,[14] PRI contends that as parties to the CBA, they are enjoined to keep the status quoand continue in full force and effect the terms and conditions of the existing CBA during the 60-day period and/or until a new agreement is reached by the parties.

Petitioner's argument is untenable.

“Union security" is a generic term, which is applied to and comprehends "closed shop," “union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are




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required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.[15]

However, in terminating the employment of an employee by enforcing the union security clause, the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.[16]

As to the first requisite, there is no question that the CBA between PRI and respondents included a union security clause, specifically, a maintenance of membership as stipulated in Sections 6 of Article II, Union Security and Check-Off. Following the same provision, PRI, upon written request from the Union, can indeed terminate the employment of the employee who failed to maintain its good standing as a union member.

Secondly, it is likewise undisputed that NAMAPRI-

SPFL, in two (2) occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate the employment of respondents due to their acts of disloyalty to the Union.

However, as to the third requisite, we find that there

is no sufficient evidence to support the decision of PRI to terminate the employment of the respondents.

PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as provided in their Collective Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the “freedom period,” is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records would show that respondents failed to maintain their membership in good standing in the Union. Respondents did not resign or withdraw their membership from the Union to which they belong. Respondents continued to pay their union dues and never joined the FFW.

Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an “authorization letter to file a petition for certification election” is different from an actual “Petition for Certification Election.” Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000.[17]Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period.[18] This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents’ right to self-organization.

Moreover, PRI anchored their decision to terminate

respondents’ employment on Article 253 of the Labor Code which states that “it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.” It claimed that they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the need to terminate the employment of respondents.

Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening. It reads:

Article 256. Representation issue in organized establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the two highest number of votes:Provided, That the total number of votes for all contending unions is at least fifty per cent (50%) of the number of votes cast.

At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.[19]







Applying the same provision, it can be said that while it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only do so when no petition for certification election was filed. The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative.[20] The provision for status quo is conditioned on the fact that no certification election was filed during the freedom period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them.[21]

In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000.[22] Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case.

Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the status quo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented,[23] or compromised.

Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned.[24]

We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This, however, is not without limitations. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because it affects not only his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their employees, which include the right to labor.[25]

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Moreover, respondents, having been compelled to litigate in order to seek redress for their illegal dismissal, are entitled to the award of attorney’s fees equivalent to 10% of the total monetary award.[26]

WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the Resolution dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, which set aside the Resolutions dated October 8, 2001 and April 29, 2002 of the National Labor Relations Commission in NLRC CA No. M-006309-2001, are AFFIRMED accordingly. Respondents are hereby awarded full backwages and other allowances, without qualifications and diminutions, computed from the time they were illegally dismissed up to the time they are actually reinstated. Let this case be remanded to the Labor Arbiter for proper computation of the full backwages due respondents, in accordance with Article 279 of the Labor Code, as expeditiously as possible.

SO ORDERED.









Conclusiveness of Decision

Philippine Transmarine Carriers, Inc. Vs. John Melchor A. Laurente,G.R. No. 158883. April 19, 2006

PHILIPPINE TRANSMARINE CARRIERS, INC.,

Petitioner,

- versus - JOHN MELCHOR A. LAURENTE, substituted by JUAN A. LAURENTE, JR. and NATIVIDAD A. AQUINO,

Respondents.

G. R. No. 158883Present:

PANGANIBAN, C.J. Chairperson,YNARES-SANTIAGO,AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

Promulgated:

April 19, 2006x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CHICO-NAZARIO, J.:

Assailed in this Petition for Review under Rule 45 of the Rules of Court is the Decision[1] dated 10 January 2003 of the Court of Appeals dismissing petitioner’s Special Civil Action for Certiorari under Rule 65, and the Resolution dated 30 June 2003 denying petitioner’s motion for reconsideration.

The factual and procedural antecedents of the case

are as follows: John Melchor A. Laurente (John Melchor) was

employed as Second Assistant Engineer by petitioner Philippine Transmarine Carriers, Inc. for and in behalf of its principal, Lucky Ocean Marine Corporation, after he underwent a pre-employment medical examination at Physician’s Diagnostic Center, petitioner’s accredited clinic, and was given a clean bill of health. John Melchorsigned a twelve-month contract with a basic monthly salary of US$739.00.

On 20 June 1993, John Melchor embarked the vessel

“Standard Star,” where he was assigned at the engine room. After three months, he complained of dizziness and nausea and requested for his repatriation. On 5 October 1993, he arrived in the Philippines and immediately reported to petitioner, which referred him to a doctor for medical treatment at its expense. John Melchor was diagnosed with hypertension and chronic renal failure classified as disability Grade I. On 7 June 1994, he underwent kidney transplant. He was subsequently paid sickness allowance in the amount

of P78,962.15 covering the period from 6 October 1993 to 2 February 1994.

On 30 March 1995, John Melchor filed a complaint

against petitioner, Pioneer Insurance and Surety Corporation, and Lucky Ocean Marine Corporation for payment of disability benefits on the basis of the amendment to the Philippine Overseas Employment Administration (POEA) Standard Employment Contract increasing the total disability benefit from US$11,000.00 to US$50,000.00 effective 1 March 1994.

Petitioner disputed John Melchor’s claim for disability

benefit alleging that the latter did not disclose his actual medical condition that he had hypertension and kidney trouble during his pre-employment medical examination; that John Melchor was on board the vessel for only a little over three months such that his illness could not have been the result of work; and that although John Melchor was declared totally disabled only on 20 March 1994, his illness occurred on or before 5 October 1993 when he disembarked from the vessel, i.e., prior to the effectivity of the new rate of disability benefits on 1 March 1994.

Labor Arbiter Pedro C. Ramos rendered a decision

ordering petitioner to pay the amount of US$50,000.00, or its peso equivalent, as disability benefit.

Petitioner appealed to the National Labor Relations

Commission (NLRC), which rendered a decision on 31 May 1999 reversing the Labor Arbiter’s decision and reducing the disability benefit to US$11,000.00. However, on a motion for reconsideration filed by respondent, the NLRC reinstated the award of the disability benefit in the amount of US$50,000.00 in a Resolution dated 21 June 2000, which reads:

WHEREFORE, our decision dated

May 31, 1999 is reconsidered. In lieu of US$11,000.00, respondents are hereby directed to jointly and severally pay the complainant his disability benefit of US$50,000.00.[2]

Petitioner’s motion for reconsideration thereof was denied in a Resolution dated 29 December 2000.

On 20 April 2001, petitioner filed a Special Civil

Action for Certiorari under Rule 65. This was dismissed by the Court of Appeals in the assailed Decision dated 10 January 2003, and a motion for reconsideration thereof was denied by the same court in the assailed Resolution dated 30 June 2003. The dispositive portion of the Decision of the Court of Appeals reads:

WHEREFORE, the petition is

DISMISSED for lack of merit.[3]

Hence, this appeal where petitioner raises but one

issue: petitioner claims that the 1 March 1994 amendment to the POEA Standard Employment Contract, which increased the disability benefits of seamen from US$11,000 to US$50,000, should not apply to John Melchor’s claim. John Melchor, on the other hand, claims that he should be entitled to US$60,000 instead of the US$50,000 awarded by the NLRC and the Court of Appeals, citing Appendix 1-A of the schedule of disability allowances in the POEA Standard Employment Contract, which entitles those suffering from impediment Grade 1 to 120% of the maximum rate of US$50,000.

On 30 October 2003, and during the pendency of this

appeal, John Melchor died of pulmonary congestion at 41 years of age.[4] A motion for substitution filed by John Melchor’s parents, Juan A. Laurente, Jr. and Natividad A. Aquino, was granted by this Court on 29 March 2004.[5]

The 31 March 1994


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amendment that increased the disability benefits of seamen should apply to John Melchor’s claim.

The NLRC ruled, and the Court of Appeals agreed, that the 31 March 1994 amendment to the POEA Standard Employment Contract increasing the disability benefits of seamen from US$11,000 to US$50,000 should apply to John Melchor’s claim. This is pursuant to Section 2 of the primary contract between petitioner and John Melchor which provides that “the terms and conditions of the Revised Employment Contract for seafarers governing the employment of all Filipino Seafarers approved by the POEA/DOLE on July 14, 1989 under Memorandum Circular No. 41, series of 1989, and amending circulars relative thereto shall be strictly and faithfully observed.”[6]

The NLRC further ruled:

The employment contract of the complainant was twelve (12) months (June 20, 1993 to June 1994). The illness of the complainant was discovered on May 20, 1994, a date within the twelve-month period of the employment contract and already covered by the effectivityof the new rate of disability benefits under the Revised Employment Contract for seafarers. The revision of the rate of disability benefits under the amended POEA Standard Employment Contract is corrective in nature and favorable to the seafarers. To conform with the prevailing rate, there is a need to adjust the disability benefits awarded to the complainant.[7]

Petitioner contests this ruling, asserting the inapplicability of the 31 March 1994 amendment: (a) because John Melchor’scause of action, if any, arose at a time prior to the effectivity of the amendment; and (b) because the employment contract between John Melchor and petitioner was no longer in force when the said amendment took effect.[8]

Petitioner asserts that John Melchor’s employment

was deemed terminated when he was repatriated upon his request, arriving in the Philippines on 5 October 1993. According to petitioner, the termination was in accordance with Section H of the POEA Standard Employment Contract which states:

SECTION H. TERMINATION OF

EMPLOYMENT. x x x The Master shall have the right to discharge or sign off the seaman at any place abroad in accordance with the terms and conditions of the contract and specifically for any of the following reasons: (a) if the seaman x x x is continuously incapacitated for the duties for which he was employed by reason of illness or injury.[9]

This argument had been raised in the Court of

Appeals, to which the latter ruled: While it is true that private respondent was repatriated on October 5, 1993 upon his request because of his complaints of dizziness and nausea, however, it was only on May 20, 1994, after undergoing complete physical and laboratory examinations, that he was diagnosed to have hypertension and

chronic renal failure and was declared unfit to work due to total permanent disability. In other words, private respondent was not yet considered incapacitated for work when he was repatriated on October 5, 1993.[10]

We rule in favor of John Melchor. Findings of fact of administrative agencies such as

the NLRC are binding when supported by substantial evidence[11]; moreover, they become conclusive when such findings are affirmed by an appellate court.[12] Therefore, the findings of the NLRC, sustained by the Court of Appeals, that the illness of the complainant was discovered only on 20 May 1994,[13] is conclusive to this Court. It was only on 20 May 1994, after undergoing complete physical and laboratory examinations, that John Melchor was diagnosed to have hypertension and chronic renal failure and was declared unfit to work due to total permanent disability. JohnMelchor was not yet considered incapacitated for work when he was repatriated on 5 October 1993. Consequently, the 31 March 1994 amendment should apply to John Melchor’s claim.

Petitioner’s claim that John Melchor was terminated

on 5 October 1993 goes against the evidence available on record. In addition to the fact that the diagnosis declaring him unfit to work came after said date, John Melchor was also paid sickness allowance on 7 June 1994, covering the period from 6 October 1993 to 2 February 1994. This goes to show that petitioner still recognized John Melchor as an employee even after he returned to the Philippines. Neither was John Melchor given any notice of his termination prior to 20 May 1994, when Philippine labor laws and jurisprudence are ripe with the mandate that notice must be given to employees before their termination even when such termination is for just and authorized causes.[14]

It is also an undeniable fact that, according to the

primary contract between petitioner and John Melchor, all amendments to Memorandum Circular No. 41 shall be strictly and faithfully observed. This provision was apparently inserted to protect the rights of John Melchor, who, despite the possible amendments to the POEA Standard Employment Contract, cannot renegotiate the primary contract terms while he is out of the country. As it is unclear whether such amendments can be held applicable to obligations that have already accrued but have not yet been paid, we are compelled to choose the interpretation that would favor labor. Therefore, even if we consider for the sake of argument that John Melchor was terminated on 5 October 1993 as petitioner claims, this clause still makes the 31 March 1994 amendment applicable. As we held in Marcopper Mining Corporation v. National Labor Relations Commission,[15] contracts relating to employment should be interpreted keeping in sight the avowed policy of the State, enshrined in our Constitution, to accord utmost protection and justice to labor.

John Melchor is entitled to 120% of the maximum rate of US$50,000.

Even earlier, in his comment to petitioner’s appeal

with the Court of Appeals, until presently before this Court, John Melchorhas consistently pointed out that a careful perusal of the Appendix 1-A of the schedule of disability allowances in the POEA Standard Employment Contract would reveal that those suffering from impediment Grade 1 are entitled to 120% of the maximum rate of US$50,000.[16]

There is no question that the chronic renal failure of

John Melchor, which eventually caused his death, is an impediment Grade 1 under the POEA Standard Employment Contract. Petitioner never disputed such fact. John Melchor is therefore entitled to 120% of the US$50,000 maximum amount, or a total of US$60,000. The terms of the POEA













Standard Employment Contract on this point is clear, and thus there is no room for interpretation.

No less than the Constitution requires the State to

afford full protection to labor, whether local or overseas.[17] Pursuant to such mandate, Executive Order No. 247[18] empowered the POEA[19] to secure the best terms and conditions of employment of Filipino contract workers.[20] The POEA, in compliance therewith, prescribed standard employment contracts which provide the minimum terms and conditions of employment for Filipino contract workers. These minimum terms and conditions are deemed read into the parties’ primary contracts, and as such must be complied with in good faith.

WHEREFORE, the petition is DENIED. The Decision

dated 10 January 2003 and the Resolution dated 30 June 2003 of the Court of Appeals are hereby AFFIRMED, with the modification that the award of disability benefit be increased to US$60,000. Costs against petitioner.

SO ORDERED.

Unfair Labor Practice

1. Skippers United Pacific vs. Jerry Maguad,G.R. No. 166363,August 15, 2006

SKIPPERS UNITED PACIFIC, INC., and J.P. SAMARTZSISMARITIME ENTERPRISES CO., S.A.,

Petitioners,

- versus -

JERRY MAGUAD andPORFERIO CEUDADANO,

Respondents.

G.R. No. 166363

Present:

PANGANIBAN, C.J. Chairperson,YNARES-SANTIAGO,AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

Promulgated:

August 15, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari seeking to review and set aside the Decision[1] and Resolution[2] of the Court of Appeals dated 27 July 2004 and 14 December 2004, respectively, in CA-G.R. SP No. 80651, which declared null and void the Resolutions of the National Labor Relations Commission (NLRC) dated 26 May 2003[3] and 8 September 2003.[4]

The antecedent facts of the case are as follows:

Herein petitioners are Skippers United Pacific, Inc., the former manning agency for the vessel MV Hanjin Vancouver, and its foreign principal, J.P. Samartzsis Maritime Enterprises Co., S.A. Herein respondents Jerry Maguad and Porferio Ciudadano were recruited by petitioner Skippers United Pacific, Inc., to work on board the afore-mentioned vessel as 4th Engineer and Bosun, respectively. Respondents lodged a complaint against petitioners before the NLRC. In their Position Paper,[5] they alleged, among other things, that:

Sometime in June 1998, complainants [herein respondents] were contracted by respondent [herein petitioner] Skippers [United Pacific, Inc.], to work on board the vessel MV “Hanjin Vancouver,” as Fitter for a contract period of nine (9) months plus or minus one (1) month pay [by] mutual consent. In a POEA contract of employment,[6] complainant had to work under the following terms and conditions:

JERRY P. MAGUAD

POSITION : 4th Engineer

BASIC MO. SALARY : US$536.00

HOURS OF WORK : 48 hours/week

FIXED OVERTIME : US$160.80

OT AFTER 105/HRS : US$3.22

LEAVE PAY : US$107.20

PORFERIO L. CIUDADANO

POSITION : Bosun


HOURS OF WORK : 48 hours/week

FIXED OVERTIME : US$135.30


http://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20166363.htm#_ftn6










OT AFTER 105/HRS : US$2.71


x x x x

However, [these] contracts were adjusted by respondent Skipper’s representative in the person of their General Manager, Ms. Gloria N. Almodiel, and was further noted by the Owner’s representative Mr. Filippos Karabatsis. The adjustments made were as follows[7]:

JERRY P. MAGUAD


FIXED OVERTIME : US$681.00 (105 hrs)


OVERSEAS ALLOWANCE : US$126.00

OT (AFTER 105/HRS) : US$6.61



FIXED OVERTIME : US$453.00 (105 hrs)


OVERSEAS ALLOWANCE : US$126.00

OT (AFTER 105/HRS) : US$4.40

x x x x

On or about June 14, 1998, complainants joined [their] vessel of assignment at the port of Korea to work thereon in accordance with the aforesaid contract of employment. Thereafter, [they] performed their official functions and duties diligently and efficiently.

However, on July 29, 1998 at the port of Osaka, Japan, [they were] unceremoniously discharged from the aforesaid vessel and immediately repatriated to Manila without being given any notice of the reason for their discharge and without giving [them] an opportunity to be heard. Despite earnest demands, respondents unjustifiably failed and refused to pay complainants’ unexpired portion of [their] contract.[8]

Petitioners, on the other hand, contended that they could not be held liable for illegal dismissal because the respondents were dismissed for cause, that is, for incompetence. The petitioners, in their Position Paper before the NLRC, averred, among other things, that:

On or about 8 June 1998, complainants [herein respondents] Maguad and Ciudadano were both contracted by respondent [herein petitioner] Skippers United Pacific, Inc. (for and in behalf of its principal, J.P. Samartzsis Maritime Enterprises Co. S.A.) to serve as 4thEngineer and Bosun, respectively for the vessel MV “Hanjin Vancouver” for a contract period of nine (9) months plus or minus one (1) month by mutual consent for the following salaries:

JERRY P. MAGUAD


FIXED OVERTIME PAY : US$160.80

OT AFTER 105/HOURS : US$3.22




FIXED OVERTIME PAY : US$135.30

OT AFTER 105/HOURS : US$2.71


On or about 24 June 1998, complainants boarded the vessel MV Hanjin Vancouver; however, less




than one (1) month from their arrival on board said vessel, the vessel’s Master reported both complainants’ incompetence and the Owners in a telex message dated 21 July 1998 informed herein respondent Skippers United Pacific, Inc. of the urgent need to replace both Maguad and Ciudadano for their incompetence and enormous difficulties produced thereof to the work on board.

On or about 29 July 1998, both complainants were repatriated from Pusan, Korea with herein respondent advancing their repatriation costs.[9]

Consequently, upon repatriation, respondents filed a Complaint for Illegal Dismissal on 14 August 1998 before the Arbitration Branch of the NLRC with prayer for payment of salaries for the unexpired portion of their contract, moral and exemplary damages, and attorney’s fees. The Labor Arbiter issued a Decision[10] on 20 September 1999 finding respondents to have been illegally dismissed. The dispositive portion of which reads, thus;

WHEREFORE, premises considered, judgment is hereby rendered declaring that complainants [herein respondents] have indeed been illegally dismissed from their employment. Accordingly, respondents [herein petitioners] are hereby directed to pay [herein respondents] their respective three (3) months’ salaries, as follows:

(a) For Jerry P. Maguad – US$5,808.00

(b) Porferio L. Ciudadano – US$3,990.00

On appeal by petitioners, the NLRC en banc in its Resolution[11] dated 31 May 2001, remanded the case to the Arbitration Branch of origin for immediate further proceedings for failure of the Labor Arbiter to appreciate material evidence such as: (1) the logbook extracts submitted by petitioners to corroborate its defense that respondents were dismissed for incompetence and (2) the confirmation letters presented by the respondents showing that they were signed off to transfer to another vessel due to crew reduction per Administration’s status and Owner’s Orders. Both parties had questioned the authenticity and veracity of the documentary evidence presented by the opposing party.

To conform to the Resolution of the NLRC dated 31 May 2001, the Labor Arbiter conducted further proceedings. The Labor Arbiter rendered a Decision[12] on 13 February 2002 dismissing the respondents for being unfit and incompetent to perform their respective functions, overturning his previous Decision of 20 September 1999. The dispositive portion reads, thus:

WHEREFORE, in the light of the foregoing premises, the above-entitled case is hereby DISMISSED for being devoid of legal merit.

To justify his findings, the Labor Arbiter made the following discussions, thus:

After a careful re-evaluation of the evidence on record, this Office finds that it indeed overlooked the fact that there are pieces of evidence for the respondents other than the telex mentioned in the subject Decision. That contrary to its findings in the questioned Decision dated 20 September 1999 that respondents’ evidence in support of their defense in this case consists solely of an “uncorroborated telex message,” respondents actually have adduced other pertinent evidence such as logbook extracts and the Master’s Statement supporting such logbook entries. Be it emphasized at this juncture that in our jurisdiction, it is settled and recognized that logbook entries constitute prima facie evidence of the facts contained therein and have enjoy the stamp of presumption of regularity.[13]

Aggrieved, it was the respondents’ turn to interpose an appeal before the NLRC en banc. The NLRC rendered a Resolution[14] on 26 May 2003 affirming the afore-quoted findings of the Labor Arbiter, thus:

WHEREFORE, premises considered, the assailed decision is hereby affirmed. Complainant’s appeal is dismissed for lack of merit.

Respondents moved for the reconsideration of the foregoing decision of the NLRC. However, said Motion for Reconsideration was denied through a Resolution[15] issued by the NLRC on 8 September 2003. Consequently, respondents filed a Petition for Certiorari before the Court of Appeals docketed as CA-G.R. SP No. 80651.

The Court of Appeals rendered a Decision[16] on 27 July 2004 granting the petition and declaring null and void the Resolutions of the NLRC dated 26 May 2003 and 8 September 2003, and reinstating the Decision[17] of the Labor Arbiter dated 20 September 1999, to wit:

WHEREFORE, in consideration of the foregoing, the petition for certiorari is perforce granted. Accordingly, the Resolutions of the public respondent NLRC dated 26 May 2003 and 8 September











2003 are hereby declared null and void. Accordingly, the Decision of the Honorable Labor Arbiter dated 20 September 1999 is hereby reinstated.

On 26 August 2004, petitioners filed a Motion for Reconsideration of the 27 July 2004 Decision of the Court of Appeals alleging that Skippers United Pacific, Inc., should not be made liable because: (1) it is no longer the manning agency responsible since Sea Power Shipping Enterprises, Inc., and Evic Human Resources Management, Inc., had executed Affidavits of Assumption of Responsibility, and (2) it has complied with the legal requirements for the dismissal of an employee.

The Court of Appeals denied the Motion for Reconsideration in its Resolution dated 14 December 2004 because the grounds and arguments relied upon by the petitioners were already heard and considered by the Court of Appeals in their Decision promulgated on 27 July 2004.

Hence, this Petition.

Petitioners submit that the Court of Appeals committed a reversible error in rendering its Decision and Resolution dated 27 July 2004 and 14 December 2004, respectively, for they are contrary to law and existing jurisprudence. Hence, petitioners presented before this Court the following issues:

I Whether or not the warning notices given to respondents substantially [complied] with the requirements of the Labor Code in effecting a valid dismissal.

II Whether or not the Court of Appeals may reinstate a Decision of the Labor Arbiter, which the latter himself reversed and considered flawed.[18]

In the Memorandum[19] filed by petitioners, they maintain that there was just and valid cause for the dismissal of the respondents. Thus, petitioners posit that the only issue relevant to the dismissal of the respondents in this Petition is the question on compliance with the two- notice requirement mandated by the Labor Code, as amended.[20]

The petitioners argue that the Court of Appeals seriously erred in not considering the warning notices issued to respondents as substantial compliance with the requirements laid down in the Labor Code, as amended, in effecting a valid dismissal. According to petitioners, such notices were issued days before respondents were signed-off on 29 July 1998, so that ample opportunity was given to the respondents to defend themselves and refute the accusations against them. Thus, petitioners stand firm on their position that the dismissal of the respondents was with cause and

there was compliance with the requirement of due process in effecting a valid dismissal.

Petitioners further claim that it was reversible error on the part of the Court of Appeals to reinstate a Decision of the Labor Arbiter, which the latter himself reversed and considered flawed for his failure to consider other pieces of evidence which were presented by both parties.

In contrast, the respondents raise before this Court the following issues:

I. Whether or not Rule 45 is proper in the instant case.

II. Whether or not the decision of the Court of Appeals is erroneous.

III. Whether or not petitioner Skippers can be exempted from liability by the execution of Affidavits of Assumption of Responsibility executed by Sea Power Shipping Enterprises, Inc. and Evic Human Resources Management, Inc.

IV. Whether or not private respondents Maguad and Ciudadano are entitled to indemnity equivalent to the unexpired portion of their employment contract.[21]

Respondents in their Memorandum[22] aver that petitioners raised questions of facts when they contended that the documents submitted to the Labor Arbiter already constitute the notices required under respondents’ employment contracts, and that these notices served as compliance with due process in effecting a valid dismissal; hence, Rule 45 of the Rules of Court is not the proper mode of appeal before this Court.

They also maintain that their alleged incompetence was not properly proven and their dismissal was tainted with illegality because they were not afforded due process. On this basis, respondents are claiming entitlement to the amount of their salary for the unexpired portion of their employment contract.

Lastly, respondents aver that petitioner Skippers United Pacific, Inc. cannot be exempted from liability despite the execution of the Affidavits of Assumption of Responsibility by Sea Power Shipping Enterprises and Evic Human Resources Management, Inc. because the above-mentioned affidavits are only valid and binding between the principal and the manning agent. It should not affect petitioner Skippers United Pacific,







Inc.’s liability towards the seamen, specifically respondents, because the liabilities of the said petitioner as manning agency is joint and solidary with its principal and respondents’ actual employer, co-petitioner J.P.Samartzsis Maritime Enterprises Co., S.A.

Given the foregoing arguments raised by both parties, this Court identifies the following issues for resolution in the Petition at bar, viz:

I. Can this Court take cognizance of the Petition for Review under Rule 45 of the Rules of Court considering that the petitioners raised issues of facts?

II. Whether the ground of incompetence as a just cause for a valid dismissal has been proven by substantial evidence.

III. Whether the Court of Appeals erred in its findings that there was non-compliance with the two-notice requirement in effecting a valid dismissal as mandated by the Labor Code, as amended.

IV. Whether the respondents are entitled to indemnity equivalent to the unexpired portion of their employment contract.

Although as a rule, only legal issues may be raised in a Petition for Review on Certiorari under Rule 45 of the Rules of Court, the Court is not precluded from delving into and resolving issues of facts,[23] particularly if the findings of the Labor Arbiter are inconsistent with those of the NLRC and the Court of Appeals; if the findings of the NLRC and the appellate court are contrary to the evidence and the record; and in order to give substantial justice to the parties.[24]

In this case, the Labor Arbiter and the NLRC en banc ruled that the respondents were validly dismissed by the petitioners because of incompetence in performing their duties and responsibilities. In effecting such dismissal, the petitioners complied substantially with the two-notice requirement for procedural due process in labor cases. However, the Court of Appeals stated in its27 July 2004 Decision that the respondents’ alleged incompetence if any, was not properly proven, and these remained plain allegations without any proof to substantiate the same. Furthermore, petitioners failed to comply with the two-notice requirement in effecting a valid dismissal. Since there are conflicts in the findings of the Court of Appeals, on one hand, and the Labor Arbiter and the NLRC, on the other, it is incumbent upon this Court to resolve the issues of fact in order to give substantial justice to both parties. Hence, this Court can take cognizance of this Petition.

The general rule is that, factual findings of the NLRC, particularly where the NLRC and the Labor Arbiter are in agreement, are deemed binding and conclusive upon the Supreme Court.[25] Such factual findings of labor officials are conclusive and binding when supported by substantial evidence, meaning, that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.[26] Thus, the Supreme Court will not uphold erroneous conclusions of the NLRC as when it finds insufficient or insubstantial evidence on record to support those factual findings. The same holds true when it is perceived that far too much is concluded, inferred, or deduced from the bare or incomplete facts appearing of record.[27]

Accordingly, the rule that the factual findings of the administrative bodies are accorded great weight and respect and even finality by this Court does not apply in the present case because of the apparent conflict in the findings of the administrative bodies and that of the appellate court. This Court therefore finds it necessary to go over the records of the case to determine whether the dismissal of the respondents has been properly proven by substantial evidence.

It must be noted that in termination cases, the burden of proof rests upon the employer to show that the dismissal of the employee is for just cause and failure to do so would mean that the dismissal is not justified. This is in consonance with the guarantee of security of tenure in the Constitution[28] and elaborated in the Labor Code.[29] A dismissed employee is not required to prove his innocence of the charges leveled against him by his employer.[30] The determination of the existence and sufficiency of a just cause must be exercised with fairness and in good faith and after observing due process.[31] Hence, there are two requisites which must be complied with by an employer for a valid dismissal, to wit:

I. the dismissal must be for a just or authorized cause; and,

II. the employee must be afforded due process, i.e., he must be given opportunity to be heard and to defend himself.

The Labor Code, as amended, laid down the just or valid causes in dismissing an employee, thus:

Art. 282. TERMINATION BY EMPLOYER. – An employer may terminate an employment for any of the following causes.

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;











(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.

In the case before this Court, the ground relied upon by the petitioners in dismissing the respondents is incompetence. Although incompetence or inefficiency as a ground for a valid dismissal is not expressly written in Article 282 as one of the just causes in dismissing an employee, this ground is considered as analogous to those enumerated under said article. Additionally, incompetence is a ground specifically provided for in Section H of the Philippine Overseas Employment Administration (POEA) Standard Employment Contract[32] to validly dismiss an erring seaman. Such incompetence or inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results.[33] In proving the alleged incompetence of the respondents, the Labor Arbiter as well as the NLRC, based their findings on the telefax message,[34] logbook extracts, and the Master’s Statement Report.

While going over the records of the case, this Court finds that the logbook extracts presented by the petitioners before the administrative bodies failed to specify the particular acts or omissions of the respondents which apparently displayed their alleged incompetence. Such details are vital in proving whether the respondents are indeed incompetent to perform their assigned duties and responsibilities. While the logbook extracts presented by the petitioners dated 22 July 1998,[35] mentioned that respondent Maguadwas inexperienced because he did not operate E/R Machines satisfactorily, it did not particularly described therein the manner howMaguad operated the machine that would lead to the conclusion that he was inexperienced. With regard to respondent Ciudadano, his alleged incompetence was stated in the logbook extracts dated 24 July 1998,[36] that he was unable to perform safety duties in spite of advices given to him. Again, his alleged incompetence was not specifically stated. Since a logbook contains entries of the daily events in the vessel, it is irregular that the act of the respondents showing their incompetence were not stated therein with particularity. Hence, absent a more detailed narration in the logbook entry of the circumstances surrounding respondents’ alleged incompetence, the same cannot constitute a valid justification for their dismissal.

Additionally, the entries in the logbook stating the alleged incompetence of the respondents are contrary to what was stated in the confirmation letters issued by the captain of the vessel on the same date that the respondents were repatriated to Manila. The said confirmation letters[37] contain statements that the respondents were signed off in order to transfer them to another vessel due to crew reduction. It was not cited in those letters that respondents were signed off because of their incompetence to perform their duties. Ship Captain G. Aravadinos Karlatos duly signed such confirmation letters, which also bear the seal of the vessel M/VHanjin Vancouver.

Moreover, the Master’s Statement Report,[38] presented by the petitioners, to corroborate their claim that the dismissal of the respondents was for just cause i.e., incompetence, was issued 17 days after the respondents were repatriated to Manila and two months after the complaint for illegal dismissal was instituted by the respondents before the NLRC. Consequently, such report can no longer be a fair and accurate assessment of the respondents’ competence as the same was presented only after the complaint was filed. Clearly, its execution was a mere afterthought in order to justify the dismissal of the respondents, which had long been effected before the report was made; hence, such report is a self-serving one.

Accordingly, this Court agrees with the Court of Appeals that it was not proven through substantial evidence that the respondents were dismissed for just cause. The incompetence of the respondents as just cause for their dismissal was not properly proven and the evidence submitted by the petitioners before the administrative bodies are not enough to sustain the dismissal of the respondents. For this reason, this Court is not convinced that the respondents were legally dismissed.

Nonetheless, even if there is a valid ground in dismissing the respondents, the petitioners cannot just dismiss them outright. The petitioners must also comply with the second requisite, which is, to afford the respondents due process.

The second requisite that must be complied with by an employer for a valid dismissal is to afford the erring employee due process. The due process requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter of serious concern since it constitutes a safeguard of the highest order in response to man’s innate sense of justice.[39] The Labor Code does not, of course, require a formal or trial type proceeding before an erring employee may be dismissed. This is especially true in the case of a vessel on the ocean or in a foreign port. The minimum requirement of due process in termination proceedings, which must be complied with even with respect to seamen on board a vessel, consists of notice to the employees intended to be dismissed and the grant to them of an opportunity to present their own side of the alleged offense or misconduct, which led to the management’s decision to terminate.[40] To meet the requirements of due process, the employer must furnish the worker sought to be dismissed with two written notices before termination of employment can be legally effected, i.e., (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice after due hearing which informs the employee of the employers decision to dismiss him.[41]












Now, in the case at bar, this Court is convinced that the petitioners also failed to comply with the second requisite in effecting a valid dismissal, which is to afford the respondents due process. As previously discussed herein, to meet the requirements of due process, it is indispensable upon the employer to furnish the employee sought to be dismissed with two written notices. The warning notices[42] given by the petitioners to the respondents cannot be deemed as substantial compliance with the two-notice requirement as mandated by the Labor Code in effecting a valid dismissal. Those warning notices did not specify in detail the particular acts or omissions committed by the respondents which showed their incompetence. Worse still it did not apprise them that their dismissal was sought. Such notices were stated in a general manner. It was never mentioned therein that the petitioners would dismiss the respondents. Although the petitioners claimed that those notices were given to the respondents days before they were repatriated, the same leaves much to be desired.

The Labor Code requires both notice and hearing; notice alone will not suffice. The requirement of notice is intended to inform the employee concerned of the employer’s intent to dismiss him and the reason for the proposed dismissal. On the other hand, the requirement of hearing affords the employee an opportunity to answer his employer’s charges against him and accordingly to defend himself therefrom before dismissal is effected.[43] In this case, after the warning notices were given to the respondents, the petitioners did not give the respondents an opportunity to present their sides by conducting a hearing as provided for in Section 17 of the POEA Contract.[44] Instead, the petitioners, with breathless speed, ordered the repatriation of the erring employees toManila. Therefore, the second notice, which must be given after hearing to inform the respondents of the petitioners’ decision to dismiss them, was not complied with. In view of that, the Court of Appeals correctly ruled that there was non-compliance with the two-notice requirement in effecting a valid dismissal.

Inasmuch as the respondents were illegally dismissed because the ground relied upon by the petitioners were not substantially proven and there was non-compliance with the two-notice requirement in effecting a valid dismissal, they are entitled to the payment of indemnity. However, this Court does not agree with the findings of the Court of Appeals that the provisions of Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers’ Act of 1995, is the law applicable in computing the amount of indemnity to be paid to the respondents who have been illegally dismissed. The said Section 10 of Republic Act No. 8042 partly provides:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

This Court held in the case of Marsaman Manning Agency, Inc. v. National Labor Relations Commission, [45] thus:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months’ salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the words “for every year of the unexpired term” which follows the words “salaries x x x for three months.” To follow petitioners’ thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect since the law-making body is presumed to know the meaning of the words employed in the statute and to have used them advisedly. Ut res magisvaleat quam pereat.

Furthermore, in the case of Phil. Employ Services and Resources, Inc. v. Paramio,[46] citing the case of Skippers Pacific, Inc. v. Skippers Maritime Service, Ltd.,[47] this Court ruled that an overseas Filipino worker who is illegally terminated should be entitled to his salary equivalent to the unexpired portion of his employment contract if such contract is less than one year.

Having said that, we apply the foregoing principles to the present case. Since the contract period of the respondents is less than one year, more particularly, nine months plus or minus one month by mutual consent; and they were illegally dismissed, then they are entitled to their salaries equivalent to the unexpired portion of their contract, and not just to three months salary.

With respect to the petitioner Skippers United Pacific, Inc.’s claim that it be exempted from liability because it is no longer the manning agency responsible to the respondents since Sea Power Shipping Enterprises, Inc. and Evic Human Resources Management, Inc. had executed Affidavits of Assumption of Responsibility, this Court will not sustain such a claim. In Section 1 of Rule II of the POEA Rules and Regulations, it states that:

Section 1. Requirements for Issuance of License. – Every applicant for license to operate a private employment agency or manning agency shall submit a written application together with the following requirements:

x x x

f. A verified undertaking stating that the applicant:








x x x

(3) Shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract; including but not limited to payment of wages, death and disability compensation and repatriation.

Accordingly, despite the execution of the Affidavits of Assumption of Responsibility by other manning agencies, the petitioner Skippers United Pacific Inc. cannot exempt itself from all the claims and liabilities arising from the implementation of the contract executed between the said petitioner and the respondents. It is very clear from the above-cited provisions of the Rules and Regulations of the POEA that the manning agency shall assume joint and solidary liability with the employer. Joint and solidary liability is meant to assure aggrieved workers of immediate and sufficient payment of what is due them.[48] The reason for this ruling was given by this Court in Catan v. National Labor Relations Commission,[49] which is reproduced in part below:

This must be so, because the obligations covenanted in the recruitment [manning] agreement entered into by and between the local agent and its foreign principal are not coterminus with the term of such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted.

Also, according to Section 10, paragraph 2 of Republic Act No. 8042,[50] the agency which deployed the employees whose employment contract were adjudged illegally terminated, shall be jointly and solidarily liable with the principal for the money claims awarded to the aforesaid employees.[51] Therefore, petitioner Skippers Pacific United, Inc. as the manning agency which hired the respondents is jointly and solidarily liable with its principal and co-petitioner J.P. Samartzsis Maritime Enterprises Co., S.A., for the money claims of the respondents. The Affidavits of Assumption of Responsibility, though valid as between petitioner Skippers United Pacific Inc. and the other two manning agencies, are not enforceable as against the respondents because the latter were not parties to those agreements. The provisions of the POEA Rules and Regulations are clear enough that the manning agreement extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Hence, despite the execution of the aforementioned affidavits, petitioner Skippers United Pacific Inc. cannot exempt itself from the liabilities and responsibilities towards the respondents.

WHEREFORE, premises considered, the instant Petition is DENIED. The Decision and Resolution of the Court of Appeals dated 27 July 2004 and 14 December 2004, respectively, in CA-G.R. SP No. 80651, finding that respondents had been illegally dismissed and that petitioners failed to comply with the two-notice requirement of due process in effecting a valid dismissal, are hereby AFFIRMED with MODIFICATION. The petitioners Skippers United Pacific, Inc. and J.P. Samartzsis Maritime Enterprises Co., S.A. are hereby ORDERED, jointly and severally, to pay respondents Jerry Maguad and Porferio Ciudadano the amount of their salaries corresponding to the unexpired portion of their employment contract. Costs against petitioners.

SO ORDERED.

Strike

MANILA HOTEL EMPLOYEES ASSOCIATION and its members, vs MANILA HOTEL CORPORATION, G.R. No. 154591, March 5, 2007

MANILA HOTEL EMPLOYEES ASSOCIATION and its members, Petitioners,

- versus - MANILA HOTEL CORPORATION, Respondent.

G.R. No. 154591 Present: YNARES-SANTIAGO, J., Chairperson,AUSTRIA-MARTINEZ,CALLEJO, SR.,*

CHICO-NAZARIO, andNACHURA, JJ. Promulgated: March 5, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O N CHICO-NAZARIO, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision,[1]dated 31 October 2001, promulgated by the Court of Appeals, affirming the Decision of the National Labor Relations Commission (NLRC), dated 5 April 2000, declaring that the strike held by the petitioner Manila Hotel Employees Association (MHEA), herein represented by Ferdinand Barles, is illegal. The Court of Appeals, in its assailed Decision, modified the Decision rendered by the NLRC and ruled that both incumbent officers and members of MHEA involved in the illegal strike lost their employment status. On 11 November 1999, the MHEA filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB) in its National Capital Region office against Manila Hotel on the grounds of unfair labor practices.[2] Upon the


http://sc.judiciary.gov.ph/jurisprudence/2007/march2007/154591.htm#_ftn3







petition of Manila Hotel, the Secretary of Labor and Employment (SOLE) certified the labor dispute to the NLRC for compulsory arbitration pursuant to Article 263(g) of the Labor Code on 24 November 1999. Specifically, the Order enjoined any strike or lockout and the parties were ordered to cease and desist from committing any acts that may exacerbate the situation.[3] The parties and their counsels were served copies of the said Order.[4] MHEA filed a Motion for Reconsideration dated 29 November 1999 assailing the validity of said Order. The case was set for mandatory conference on 8 February 2000 before Presiding Commissioner Rogelio I. Rayala. During the conference, the parties were advised of the certification order, which prohibited them from taking any action that would exacerbate the situation. At the instance of the MHEA officers, the hearing of the case was reset to 29 February 2000 due to the absence of the counsel for MHEA.[5]

On 10 February 2000, the MHEA conducted a strike despite the clear terms of the Order issued by the SOLE on 24 November 1999, and despite the repeated reminders thereof.[6] On the same day, Commissioner Rayala called for a mandatory conference.[7]Thereafter, several conferences were conducted by the NLRC, wherein both parties were warned against aggravating the already volatile situation. During its hearing on 8 March 2000, the NLRC sought to have both parties identify the issues and stipulate the facts, despite their reluctance. It also allowed the parties sufficient time to file their position papers, with which both parties failed to comply.[8]

After the strike was conducted, both parties filed various motions and pleadings before the NLRC. Manila Hotel filed a complaint with Prayer for Injunction and/or Temporary Restraining Order on 11 February 2000, alleging that MHEA conducted an illegal strike, blocked all ingress and egress of the hotel premises, harassed and intimidated company officers, non-striking employees, customers and suppliers. In addition, it sought a declaration that the strike was illegal and that, consequently, the striking employees lost their employment.[9]

The NLRC issued an Order dated 11 February 2000 directing the striking workers to return to work immediately and the hotel to accept them back under the same terms and conditions of employment. The NLRC further instructed the parties to submit proof of compliance with the instant order immediately after the lapse of twenty-four hours.[10] The parties, through their counsels, received the said Order before 4:00 pm of the same day. In their Urgent Manifestation and Motion to Set Aside Order dated 14 February 2000, and Motion for Reconsideration dated 11 April 2000, MHEA admitted that a copy of the order was served on the picket lines at 5:00 pm of 11 February 2000.[11]

The NLRC received a copy of the Compliance filed by Manila Hotel on 14 February 2000, manifesting that only six striking employees complied with the return-to-work Order and were reinstated. The other striking employees had openly defied the said Order.[12]

In response to the NLRC’s return-to-work order, dated 11 February 2000, the MHEA filed an Urgent Manifestation and Motion to Set Aside Order on 14 February 2000. It alleged that the Motion for Reconsideration, dated 29 November 1999, questioning the validity of the Order of the SOLE, dated 24 November 1999, which certified the case to the NLCR, was still pending with the SOLE. The said motion had prevented the said Order of the SOLE from becoming final and executory. Thus, it alleged that the NLRC had not acquired jurisdiction over the labor dispute pending the resolution of the Motion for Reconsideration filed before the SOLE.[13] On 17 February 2000, the NLRC denied MHEA’s Urgent Manifestation and Motion to Set Aside Order.[14]

The NLRC also issued another Order on 17 February 2000, ordering MHEA to refrain from putting up a blockade or barricade or any mode of preventing the free ingress to and

egress from the hotel. Parenthetically, it also ordered Manila Hotel to respect the right of the striking workers to peacefully picket in a designated area outside the hotel. [15] Manila Hotel moved for the Reconsideration of the said Order on the ground that the picket, which they were ordered to respect, was an unlawful activity.[16] Pending the resolution of its motion, MHEA filed a Motion to Inhibit, dated 10 March 2000, seeking to inhibit CommissionerRayala,[17] who voluntarily inhibited himself.[18] Likewise, the MHEA, through a Supplemental Motion, dated 22 March 2000, sought the inhibition of all the members of the First Division of the NLRC.[19] Commissioner Veloso also voluntarily inhibited himself. On 31 March 2000, the case was re-raffled to the members of the Second and Third Divisions. The Commissioners thus convened and agreed to resolve the case per curiam. [20]

In the Decision promulgated on 5 April 2000, the NLRC ruled that the 10 February 2000 strike held by MHEA was illegal for its defiance of the return-to-work order. However, it determined that only the union officers were deemed to have lost their employment. It ruled that there was no evidence showing who among the striking employees were actually notified of the return-to-work order, and therefore, such employees have not forfeited their employment. But in view of the antagonism on both sides, the NLRC awarded a severance pay equivalent to one-month salary to the returning union members for every year of service, instead of ordering Manila Hotel to reinstate them.[21] In the dispositive part of the Decision,[22] the NLRC decreed that:

WHEREFORE, premises considered, the strike is declared illegal. Accordingly, the incumbent officers of the union are declared to have forfeited their employment status. Further, no relief may be granted the union with respect to their demands, in view of the absence of a decision thereon by a Voluntary Arbitrator.

In lieu of an order for the Hotel and members of the union to maintain their respective status previous to the strike, Manila Hotel, Inc. is hereby ORDERED to pay the returning union members, as an alternative relief to continued employment, severance compensation in an amount equivalent to one (1) month salary for every year of service, a fraction thereof, being considered as one whole year. No entitlement to backwages is however decreed, pursuant to the no-work-no-pay principle in strike cases.

Both parties filed their respective Motions for Reconsideration. Manila Hotel filed a Motion for Partial Reconsideration which sought the deletion of the award of severance compensation to the union members who participated in the illegal strike.[23] MHEA, on the other hand, sought the reversal of the Decision on the ground that the NLRC had no jurisdiction over the case and that they were deprived of due process.[24] The NLRC denied both motions in a Resolution dated 17 May 2000.[25]

On 6 July 2000, Manila Hotel filed a Petition for Certiorari under Rule 65 before the Court of Appeals to assail the Decision dated 5 April 2000, and the Resolution dated 17 May 2000, both issued by the NLRC.[26] In a Decision[27] dated 31 October 2001, the Court of Appeals granted the petition, to wit:

WHEREFORE, finding merit in the petition, the same is GRANTED. The assailed Decision is MODIFIED in that both the incumbent officers and members of the Union involved in the illegal strike are



























declared to have lost their employment status. The award of severance compensation to the striking members of the union is consequently DELETED.

On 26 November 2001, MHEA filed a Motion for Reconsideration, which the Court of Appeals denied in a Resolution, dated1 August 2002.[28]

MHEA filed a petition for review on certiorari before this Court questioning the assailed decision of the Court of Appeals dated 31 October 2000. Thereafter, the Court ordered MHEA to submit proof that the Chairman/President of MHEA, FernandoBarles, had been duly authorized to sign the verification of the petition and certification of forum shopping.[29] In compliance thereof, MHEA submitted eight (8) special powers of attorney (SPAs) executed by 138 union members authorizing Atty. PotencianoFlores and Ferdinand Barles to represent them in the case Manila Hotel Employees Association v. NLRC, CA-G.R. S.P No. 59601.[30] Manila Hotel sought the dismissal of the present petition on the ground that petitioner Ferdinand Barles was not authorized to file it. Manila Hotel alleged that Barles was no longer the Chairman of MHEA and attached a certification[31] dated 5 March 2003 of the union Secretary General, stating that Eduardo M. Saplan was the Chairman of the union, and that he succeeded AntonioDumpit who held the position of Chairman from 5 July 2000 to 19 December 2002. It further alleged that the SPAs attached to the Compliance authorizing Barles and Potenciano to represent the union pertained to a different case, and not the present case.[32] MHEA, however, insisted that it was the same case since it involved the same parties, facts, and issues.[33]

In the present petition, MHEA raises the following issues[34]:

IWITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE RESPONDENT COMMISSION HAD ACTED WITH GRAVE ABUSE OF DISCRETION AND THEY HAD COMMITED REVERSIBLE ERRORS IN THEIR QUESTIONED DECISIONS AND RESOLUTIONS WHEN, OBVIOUSLY, BY LAW AND SETTLED JURISPRUDENCE, THE INDIVIDUAL PETITIONERS, WHO ARE MERE ORDINARY MEMBERS OF THE UNION, ARE ENTITLED TO BE REINSTATED BACK (sic) TO WORK WITHOUT LOSS OF SENIORITY OR OTHER EMPLOYEES’ RIGHTS AND BENEFITS AND WITH FULL BACKWAGES FROM DATE OF DISMISSAL UNTIL ACTUAL REINSTATEMENT.

IIWITH DUE RESPECT, THE COURT BELOW AND THE RESPONDENT COMMISSION HAD COMMITTED REVERSIBLE ERROR IN APPLYING THE DOCTRINE OF STRAINED RELATIONSHIP IN THE CASE AT BAR.

This petition is devoid of merit.

Before discussing the substantial issues of this case, this Court takes notice of a serious procedural flaw. Ferdinand Barles is not authorized to sign the verification and certification of non-forum shopping in the present case. The General Membership Resolution, dated 23 December 1998, affirmed that he was appointed as the Chairman of MHEA, in place of Gonzalo Irabon.[35] Nevertheless, Barles failed to refute the facts that were ascertained by the certification of the secretary-general of MHEA: that at the time this petition was filed – on 26 September 2002, and even at the time the petition was filed before the Court of Appeals by Manila Hotel - on 10 July 2000, Ferdinand Barles was no longer the Chairman of MHEA. The

certification clearly stated that Antonio Dumpit was the union Chairman from 5 July 2000 to 19 December 2000, and that he was succeeded by Eduardo Saplan. Moreover, the SPAs that were submitted to the Court in order to prove that Barles was authorized to sign the verification and certification of non-forum shopping in this case failed to establish that crucial fact. The SPAs had in fact authorized Barles to represent the 138 members who signed the SPA to represent them in a different case, Manila Hotel Employees Association v. National Labor Relations Commission, CA-G.R. S.P No. 59601, which was raised on appeal before the Supreme Court under G.R. No. 144879. The MHEA’s assertion that there were the same parties and issues involved in the two cases is self-defeating, not only because these are clearly two distinct cases, but because such will likewise violate the rule against non-forum shopping.

The provisions of Supreme Court Circular Nos. 28-91

and 04-94 require a Certification of Non-Forum Shopping in any initiatory pleading filed before the Supreme Court and the Court of Appeals. In the case of Teoville Homeowner’s Association v. Ferreira,[36] the Court emphatically underscored the need to show to the satisfaction of the Court that the person signing the verification and certification against non-forum shopping had been specifically authorized to do so. In other similar cases,[37] it has been ruled that it is the party-pleader, and not the counsel, who must execute the certificate against forum shopping. The rationale for the rule is that the counsel may be unaware of any similar actions pending with other courts on the same matter. In this case, Ferdinand Barles was no longer an officer of the union at the time this petition was filed, and therefore was no longer privy to the cases that may have been filed by MHEA. Absent the specific authorization from the MHEA members that he sought to represent, any statement he may make cannot bind the MHEA herein named. For the foregoing reasons alone, this petition should be dismissed.

Aside from its procedural defects, the petition is also

substantially infirm. MHEA members seek their reinstatement after participating in an illegal strike, that is, a strike that was conducted after receiving an Order of assumption[38] by the SOLE certifying the dispute to the NLRC for compulsory arbitration. Worse still, the strikers failed to comply with the 11 February 2000return-to-work Order, issued by the NLRC, despite receipt thereof. The law explicitly prohibits such acts.

ART. 263. STRIKES, PICKETING, AND LOCKOUTS x x x x (g) When, in his opinion there exists a

labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of the assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well













as with such orders as he may issue to enforce the same.

ART. 264. PROHIBITED ACTIVITIES (a) x x x x

No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout.

More to the point, the Court has consistently ruled in a long line of cases spanning several decades that once the SOLE assumes jurisdiction over a labor dispute, such jurisdiction should not be interfered with by the application of the coercive processes of a strike or lockout. Defiance of the assumption order or a return-to work order by a striking employee, whether a union officer or a member, is an illegal act and, therefore, a valid ground for loss of employment status.[39]

The assumption of jurisdiction by the SOLE over labor

disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest is in the nature of a police power measure.[40] In this case, the SOLE sufficiently justified the assumption order, thus:

The Hotel is engaged in the hotel and restaurant business and one of the de luxe hotels operating in Metro Manila catering mostly to foreign tourist groups and businessmen. It serves as venue for local and international conventions and conferences. The Hotel provides employment to more than 700 employees as well as conducts business with entities dependent on its continued operation. It also provides substantial contribution to the government coffers in the form of foreign exchange earnings and tax payments. Undoubtedly, a work stoppage thereat will adversely affect the Hotel, its employees, the industry, and the economy as a whole.

At this critical time when efforts of

the present administration are seriously focused on preserving the economic gains achieved and ensuring that existing jobs are maintained, it is the utmost concern of this Office to avoid work disruption that might result to the firm’s closure particularly so when an alternative mechanism obtains to resolve the parties’ differences.[41]

The allegation[42] that the strikers relied on their honest belief that the filing of a Motion for Reconsideration of the Order, issued by the SOLE on 24 November 1999, entitled them to participate in a strike, cannot be sustained. In the case of St.Scholastica’s College v. Torres,[43] the Court reiterated the rule that a return-to-work order is immediately executorynotwithstanding the filing of a motion for reconsideration. It must be strictly complied with even during the pendency of any petition questioning its validity. Citing the case Philippine Airlines Employees’ Association v. Philippine Airlines, Inc.,[44] it accounted for the rationale of this rule, as thus:

The very nature of a return-to-work order issued in a certified case lends itself to no other construction. The certification attests to the urgency of the matter, affecting as it does an industry indispensable to the

national interest. The order is issued in the exercise of the court’s compulsory power of arbitration, and therefore must be obeyed until set aside. To say that its [return-to-work order] effectivitymust await affirmance on a motion for reconsideration is not only to emasculate it but indeed to defeat its import, for by then the deadline fixed for the return to work would, in the ordinary course, have already passed and hence can no longer be affirmed insofar as the time element it concerned.

Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker must return to his job together with his co-workers so the operations of the company can be resumed and it can continue serving the public and promoting its interest.[45] This extraordinary authority given to the Secretary of Labor is aimed at arriving at a peaceful and speedy solution to labor disputes, without jeopardizing national interests. Regardless therefore of their motives, or the validity of their claims, the striking workers must cease and/or desist from any and all acts that tend to, or undermine this authority of the Secretary of Labor, once an assumption and/or certification order is issued. They cannot, for instance, ignore return-to-work orders, citing unfair labor practices on the part of the company, to justify their action.[46]

MHEA claims that the Court should consider as a mitigating circumstance the fact that they held the strike three months after filing their notice of strike. Such detail is irrelevant. What is crucial is that they were apprised of the assumption order of the SOLE wherein they were enjoined from carrying out a strike. They were again reminded to refrain from conducting a strike during the mandatory conference on 8 February 2000. Pending the proceedings for compulsory arbitration and for no apparent reason, they staged the strike two days later and refused to obey the return-to-work order issued on 11 February 2000. In the case of Grand Boulevard Hotel v. Genuine Labor Organization of Workers in Hotel, Restaurant and Allied Industries (GLOWHRAIN),[47] the Court cautioned against the unreasonable and indiscriminate exercise of the right to strike:

[T]he decision to wield the weapon of strike must therefore rest on a rational basis, free from emotionalism, unswayed by the tempers and tantrums of a few hotheads, and firmly focused on the legitimate interest of the union which should not however be antithetical to the public welfare. In every strike staged by a union, the general peace and progress of society and public welfare are involved. x x x. MHEA alleges that the union members were not

served a copy of the assumption order issued by SOLE.[48] Such allegation is absurd considering that MHEA repeatedly alluded in its Motion for Reconsideration dated 29 November 1999 to the assumption order, which they now deny having received. The records also state that petitioners and their counsels received a copy of the order on 24 November 1999 and 26 November 1999, respectively. On 8 February 2000, two days before the strike was undertaken, MHEA officers had attended a mandatory conference before the NLRC wherein they were advised not to take any action to exacerbate the situation. They had even moved for the postponement of the hearing to 29 February 2000 due to the absence of their counsel. It is only too obvious that MHEA conducted the 10 February 2000 strike knowing fully that an assumption order had been issued.

They, likewise, imply that they were not served a copy of the return-to-work order.[49] Such allegation loses credence because MHEA, in its Urgent Manifestation and













Motion to Set Aside Order dated 14 February 2000, and Motion for Reconsideration dated 11 April 2000, admitted that a copy of the return-to-work order was served on the picket lines. Records show that their counsel was likewise served a copy thereof during the 11 February 2000 conference and that he refused to acknowledge receipt.[50] During the 16 February 2000 conference, MHEA’s counsel stated that the reason that some of the strikers were unable to return to work was the fact that the picket lines were violently dispersed a few hours after the twenty-four hour period expired.[51] This implies that during the twenty-four hour period that they were allowed to be fully reinstated, they failed to report to work. MHEA cannot lean on the doctrine in the case of PNOC Dockyard and Engineering Corporation v. National Labor Relations Commission.[52] The Court, in the aforecited case, ruled that there was no valid service of the certification order which prohibited any strike or lockout since the said order was served on the guard on duty instead of the president of the union who was authorized to receive the same. As a result, the strike undertaken after the issuance of the said order was considered legal, hence cannot effectively terminate the employment of workers who joined the strike. In the present case, not only were the union officers apprised of the order, a copy of the same was served on the picket lines. MHEA, likewise, assails the Decision of the NLRC for having been determined without conducting any preliminary hearingsnor requiring the submission of position papers.[53] Again, the records belie these statements. During the mandatory conference held on 8 March 2000, the parties had in fact identified the issues and made stipulations of facts.[54] During the same hearing, the Presiding Commissioner required both parties to file their position papers.[55] The parties, however, failed to present evidence or file the position papers after they had been given ample opportunity to do so. MHEA propounds the theory[56] that both parties had acted in pari delicto and, therefore, the dismissal of its members who participated in the illegal strike, was unwarranted, citing as its precedents Philippine Airlines Inc. v. Brillantes[57] and PhilippinesInterfashion Inc. v. National Labor Relations Commission.[58] In both cases, the undisputed finding that the employer was guilty of an illegal lockout while the union conducted an illegal strike, caused the Court to order the reinstatement of the employees who participated in the illegal strike. In Philippine Airlines Inc. v. Brillantes,[59] the Court emphasized the unequivocal rule that participating in a strike undertaken in defiance of the order of the SOLE results in the loss of employment status. It only made an exception of the said case because the records clearly established that the employer, Philippine Airlines, Inc., terminated the employment of 183 union officers and members, in violation of the order issued by the SOLE.[60] In Philippines Interfashion Inc. v. National Labor Relations Commission, the return-to-work order was not issued pursuant to an assumption or certification order.[61] More importantly, the employees complied with the return-to-work order and reported back for work within one day after receiving the same. Despite such compliance, the employer refused to reinstate 114 employees, and, thus, such refusal on the part of the employer amounted to an illegal lockout.[62]

In the present case, nothing in the records shows that Manila Hotel was guilty of an illegal lockout. It readmitted the six (6) employees who complied with the return-to-work order. MHEA made a vague reference to striking employees who complied with the return-to-work order, but were nevertheless refused re-admittance by Manila Hotel.[63] However, they failed to even identify these employees. There is no allegation that MHEA filed any case for illegal lock-out against Manila Hotel. What is clearly shown by the records is that the strike or picketing was still being conducted on 28 February 2000, way after the 24-hour deadline set by the NLRC.[64] Thus, it is obvious that applying the in pari delicto doctrine pronounced in Philippine Airlines Inc. v. Brillantes[65]and Philippines Interfashion Inc. v. National

Labor Relations Commission[66] to this case would be improper and without basis. It would not be amiss to reiterate the Court’s pronouncement in the case Reliance Surety & Insurance Co., Inc. v. National Labor Relations Commission[67]:

As a general rule, the sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes sympathy but because of the one-sided relation between labor and capital. The Court must take care, however, that in the contest between labor and capital, the results achieved are fair and in conformity with the rules. x x x. IN VIEW OF THE FOREGOING, the instant Petition

is DENIED. This Court AFFIRMS the assailed Decision of the Court of Appeals, promulgated on 31 October 2001, declaring the strike conducted by the MHEA on 10 February 1999 as illegal and, thus, resulting in the loss of employment status of the union officers and members who participated in the said strike. No costs.

SO ORDERED.

Probationary Employee; Probationary Employment for Academic Personnel; Security of Tenure of Probationary Employees

1. MAGIS YOUNG ACHIEVERS’ LEARNING CENTER and MRS. VIOLETA T. CARIÑO v. ADELAIDA . MANALO, G.R. No. 178835, February 13, 2009

MAGIS YOUNG ACHIEVERS’LEARNING CENTER andMRS. VIOLETA T. CARIÑO,

Petitioners,

- versus - ADELAIDA P. MANALO,

Respondent.

G.R. No. 178835 Present: YNARES-SANTIAGO, Chairperson,AUSTRIA-MARTINEZ,CHICO-NAZARIO,NACHURA, andPERALTA, Promulgated: February 13, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the Decision dated January 31, 2007 and of the Resolution dated June 29, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 93917 entitled Magis Young Achievers’ Learning Center and Violeta T. Cariño v. National Labor Relations Commission, 3rd Division, Quezon City, and Adelaida P. Manalo.

The pertinent facts are as follows: On April 18, 2002, respondent Adelaida P. Manalo

was hired as a teacher and acting principal of petitioner Magis Young Achievers’ Learning Center with a monthly salary of P15,000.00.




















It appears on record that respondent, on March 29, 2003, wrote a letter of resignation addressed to Violeta T. Cariño, directress of petitioner, which reads:

Dear Madame:

I am tendering my irrevocable

resignation effective April 1, 2003 due to personal and family reasons.

I would like to express my thanks

and gratitude for the opportunity, trust and confidence given to me as an Acting Principal in your prestigious school.

God bless and more power to you.

Sincerely yours,

(Signed)Mrs. ADELAIDA P. MANALO[1]

On March 31, 2003, respondent received a letter of termination from petitioner, viz.:

Dear Mrs. Manalo: Greetings of Peace! The Board of Trustees of the Cariño Group of Companies, particularly that of Magis Young Achievers’ Learning Center convened, deliberated and came up with a Board Resolution that will strictly impose all means possible to come up with a cost-cutting scheme. Part of that scheme is a systematic reorganization which will entail streamlining of human resources. As agreed upon by the Board of Directors, the position of PRINCIPAL will be abolished next school year. Therefore, we regret to inform you that we can no longer renew your contract, which will expire on March 31, 2003. Thus, thank you for the input you have given to Magis during your term of office as Acting Principal. The function of the said position shall be delegated to other staff members in the organization. Hoping for your understanding on this matter and we pray for your future endeavors. Very truly yours,

(Signed)Mrs. Violeta T. CariñoSchool Directress Noted by: (Signed)Mr. Severo CariñoPresident[2]

On April 4, 2003, respondent instituted against petitioner a Complaint[3] for illegal dismissal and non-payment of 13th month pay, with a prayer for reinstatement, award of full backwages and moral and exemplary damages. In her position paper,[4] respondent claimed that her termination violated the provisions of her employment contract, and that the alleged abolition of the position of Principal was not among the grounds for termination by an employer under Article 282[5] of the Labor Code. She further

asserted that petitioner infringed Article 283[6] of the Labor Code, as the required 30-day notice to the Department of Labor and Employment (DOLE) and to her as the employee, and the payment of her separation pay were not complied with. She also claimed that she was terminated from service for the alleged expiration of her employment, but that her contract did not provide for a fixed term or period. She likewise prayed for the payment of her 13th month pay under Presidential Decree (PD) No. 851. Petitioner, in its position paper,[7] countered that respondent was legally terminated because the one-year probationary period, from April 1, 2002 to March 3, 2003, had already lapsed and she failed to meet the criteria set by the school pursuant to the Manual of Regulation for Private Schools, adopted by the then Department of Education, Culture and Sports (DECS), paragraph 75 of which provides that:

(75) Full-time teachers who have rendered three years of satisfactory service shall be considered permanent.

On December 3, 2003, Labor Arbiter (LA) Renell Joseph R. dela Cruz rendered a Decision[8] dismissing the complaint for illegal dismissal, including the other claims of respondent, for lack of merit, except that it ordered the payment of her 13th month pay in the amount of P3,750.00. The LA ratiocinated in this wise:

It is our considered opinion [that] complainant was not dismissed, much less, illegally. On the contrary, she resigned. It is hard for us to imagine complainant would accede to sign a resignation letter as a precondition to her hiring considering her educational background. Thus, in the absence of any circumstance tending to show she was probably coerced her resignation must be upheld. x x x x x x The agreement (Annex “1” to Respondent’s [petitioner’s] Position Paper; Annex “A” to Complainant’s Position Paper) by its very nature and terms is a contract of employment with a period (from 01 April 2002 to 31 March 2003, Annex ‘1’ to Respondent’s Position Paper). Complainant’s observation that the space reserved for the duration and effectivity of the contract was left blank (Annex ‘A’ to Complainant’s [respondent’s] Position Paper) to our mind is plain oversight. Read in its entirety, it is a standard contract which by its very terms and conditions speaks of a definite period of employment. The parties could have not thought otherwise. The notification requirement in the contract in case of “termination before the expiration of the period” confirms it. x x x On appeal, on October 28, 2005, the National Labor

Relations Commission (NLRC), Third Division,[9] in its Decision[10]dated October 28, 2005, reversed the Arbiter’s judgment. Petitioner was ordered to reinstate respondent as a teacher, who shall be credited with one-year service of probationary employment, and to pay her the amounts of P3,750.00 and P325,000.00 representing her 13th month pay and backwages, respectively. Petitioner’s motion for reconsideration was denied in the NLRC’s Resolution[11]dated January 31, 2006. Imputing grave abuse of discretion on the part of the NLRC, petitioner went up to the CA via a petition for certiorari. The CA, in its Decision dated January 31, 2007, affirmed the NLRC decision and dismissed the petition. It


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likewise denied petitioner’s motion for reconsideration in the Resolution dated June 29, 2007. Hence, this petition anchored on the following grounds—

I. THE COURT OF APPEALS ERRED WHEN IT CONCLUDED THAT THE RESIGNATION OF RESPONDENT MANALO DID NOT BECOME EFFECTIVE DUE TO ALLEGED LACK OF ACCEPTANCE; II. THE COURT OF APPEALS ERRED WHEN IT RULED THAT RESPONDENT MANALO IS A PERMANENT EMPLOYEE; III. THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE CONTRACT OF EMPLOYMENT BETWEEN PETITIONER AND RESPONDENT DID NOT STIPULATE A PERIOD.[12]

Before going to the core issues of the controversy, we would like to restate basic legal principles governing employment of secondary school teachers in private schools, specifically, on the matter of probationary employment. A probationary employee or probationer is one who is on trial for an employer, during which the latter determines whether or not he is qualified for permanent employment. The probationary employment is intended to afford the employer an opportunity to observe the fitness of a probationary employee while at work, and to ascertain whether he will become an efficient and productive employee. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other hand, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment. Thus, the word probationary, as used to describe the period of employment, implies the purpose of the term or period, not its length.[13] Indeed, the employer has the right, or is at liberty, to choose who will be hired and who will be declined. As a component of this right to select his employees, the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently.[14]

But the law regulates the exercise of this prerogative

to fix the period of probationary employment. While there is no statutory cap on the minimum term of probation, the law sets a maximum “trial period” during which the employer may test the fitness and efficiency of the employee.

The general rule on the maximum allowable period of probationary employment is found in Article 281 of the Labor Code, which states:

Art. 281. Probationary

Employment. – Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

This upper limit on the term of probationary employment, however, does not apply to all classes of occupations.

For “academic personnel” in private schools, colleges and universities, probationary employment is governed by Section 92 of the 1992 Manual of Regulations for Private Schools[15] (Manual), which reads:

Section 92. Probationary

Period. – Subject in all instances to compliance with the Department and school requirements, the probationary period for academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis.[16]

This was supplemented by DOLE-DECS-CHED-TESDA Order No. 1 dated February 7, 1996, which provides that the probationary period for academic personnel shall not be more than three (3) consecutive school years of satisfactory service for those in the elementary and secondary levels.[17] By this supplement, it is made clear that the period of probation for academic personnel shall be counted in terms of “school years,” and not “calendar years.”[18] Then, Section 4.m(4)[c] of the Manual delineates the coverage of Section 92, by defining the term “academic personnel” to include:

(A)ll school personnel who are formally engaged in actual teaching service or in research assignments, either on full-time or part-time basis; as well as those who possess certain prescribed academic functions directly supportive of teaching, such as registrars, librarians, guidance counselors, researchers, and other similar persons. They include school officials responsible for academic matters, and may include other school officials.[19]

The reason for this disparate treatment was

explained many years ago in Escudero v. Office of the President of the Philippines,[20] where the Court declared:

However, the six-month probationary period prescribed by the Secretary of Labor is merely the general rule. x x x It is, thus, clear that the Labor Code authorizes different probationary periods, according to the requirements of the particular job. For private school teachers, the period of probation is governed by the 1970 Manual of Regulations for Private Schools x x x.[21]

The probationary period of three years for private school teachers was, in fact, confirmed earlier in Labajo v. Alejandro,[22] viz.:

The three (3)-year period of service mentioned in paragraph 75 (of the Manual of Regulations for Private Schools) is of course the maximum period or upper limit, so to speak, of probationary employment allowed in the case of private school teachers. This necessarily implies that a regular or permanent employment status may, under certain conditions, be attained in less than three (3) years. By and large, however, whether or not one has indeed attained permanent status in one’s













employment, before the passage of three (3) years, is a matter of proof. Over the years, even with the enactment of a new

Labor Code and the revision of the Manual, the rule has not changed. Thus, for academic personnel in private elementary and secondary schools, it is only after one has satisfactorily completed the probationary period of three (3) school years and is rehired that he acquires full tenure as a regular or permanent employee. In this regard, Section 93 of the Manual pertinently provides: Sec. 93. Regular or Permanent Status.

- Those who have served the probationary period shall be made regular or permanent. Full-time teachers who have satisfactorily completed their probationary period shall be considered regular or permanent.

Accordingly, as held in Escudero, no vested right to a permanent appointment shall accrue until the employee has completed the prerequisite three-year period necessary for the acquisition of a permanent status. Of course, the mere rendition of service for three consecutive years does not automatically ripen into a permanent appointment. It is also necessary that the employee be a full-time teacher, and that the services he rendered are satisfactory.[23]

The common practice is for the employer and the teacher to enter into a contract, effective for one school year. At the end of the school year, the employer has the option not to renew the contract, particularly considering the teacher’s performance. If the contract is not renewed, the employment relationship terminates. If the contract is renewed, usually for another school year, the probationary employment continues. Again, at the end of that period, the parties may opt to renew or not to renew the contract. If renewed, this second renewal of the contract for another school year would then be the last year – since it would be the third school year – of probationary employment. At the end of this third year, the employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met the reasonable standards of competence and efficiency set by the employer. For the entire duration of this three-year period, the teacher remains under probation. Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure and compel the employer to renew his employment contract.[24] It is when the yearly contract is renewed for the third time that Section 93 of the Manual becomes operative, and the teacher then is entitled to regular or permanent employment status.

It is important that the contract of probationary employment specify the period or term of its effectivity. The failure to stipulate its precise duration could lead to the inference that the contract is binding for the full three-year probationary period.[25]

All this does not mean that academic personnel cannot acquire permanent employment status earlier than after the lapse of three years. The period of probation may be reduced if the employer, convinced of the fitness and efficiency of a probationary employee, voluntarily extends a permanent appointment even before the three-year period ends. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, the law does not preclude the employer from terminating the probationary employment on justifiable ground;[26] or, a shorter probationary period may be incorporated in a collective bargaining agreement.[27] But absent any circumstances which unmistakably show that an abbreviated probationary period has been agreed upon, the three-year probationary term governs.

Be that as it may, teachers on probationary employment enjoy security of tenure. In Biboso v. Victorias Milling Co., Inc.,[28]we made the following pronouncement: This is, by no means, to assert that the

security of tenure protection of the Constitution does not apply to probationary employees. x x x During such period, they could remain in their positions and any circumvention of their rights, in accordance with the statutory scheme, is subject to inquiry and thereafter correction by the Department of Labor.

The ruling in Biboso simply signifies that probationary employees enjoy security of tenure during the term of their probationary employment. As such, they cannot be removed except for cause as provided by law, or if at the end of every yearly contract during the three-year period, the employee does not meet the reasonable standards set by the employer at the time of engagement. But this guarantee of security of tenure applies only during the period of probation. Once that period expires, the constitutional protection can no longer be invoked.[29]

All these principles notwithstanding, we do not discount the validity of fixed-term employment where – the fixed period of employment was agreed

upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter.[30]

It does not necessarily follow that where the duties of the employees consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities.[31] Thus, in St. Theresa’s School of Novaliches Foundation v. NLRC,[32] we held that a contractual stipulation providing for a fixed term of nine (9) months, not being contrary to law, morals, good customs, public order and public policy, is valid, binding and must be respected, as it is the contract of employment that governs the relationship of the parties. Now, to the issues in the case at bench. There should be no question that the employment of the respondent, as teacher, in petitioner school on April 18, 2002 is probationary in character, consistent with standard practice in private schools. In light of our disquisition above, we cannot subscribe to the proposition that the respondent has acquired regular or permanent tenure as teacher. She had rendered service as such only from April 18, 2002 until March 31, 2003. She has not completed the requisite three-year period of probationary employment, as provided in the Manual. She cannot, by right, claim permanent status. There should also be no doubt that respondent’s appointment as Acting Principal is merely temporary, or one that is good until another appointment is made to take its place.[33] An “acting” appointment is essentially a temporary appointment, revocable at will. The undisturbed unanimity of cases shows that one who holds a temporary appointment has no fixed tenure of office; his employment can be terminated any time at the pleasure of the appointing power without need to show that it is for cause.[34] Further, in La Salette of Santiago v. NLRC,[35] we acknowledged the customary arrangement in private schools to rotate administrative positions, e.g., Dean or Principal, among employees, without















the employee so appointed attaining security of tenure with respect to these positions. We are also inclined to agree with the CA that the resignation of the respondent[36] is not valid, not only because there was no express acceptance thereof by the employer, but because there is a cloud of doubt as to the voluntariness of respondent’s resignation. Resignation is the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and that he has no other choice but to dissociate himself from employment.[37] Voluntary resignation is made with the intention of relinquishing an office, accompanied by the act of abandonment.[38] It is the acceptance of an employee’s resignation that renders it operative.[39]

Furthermore, well-entrenched is the rule that resignation is inconsistent with the filing of a complaint for illegal dismissal.[40] To be valid, the resignation must be unconditional, with the intent to operate as such; there must be a clear intention to relinquish the position.[41] In this case, respondent actively pursued her illegal dismissal case against petitioner, such that she cannot be said to have voluntarily resigned from her job. What is truly contentious is whether the probationary appointment of the respondent on April 18, 2002 was for a fixed period of one (1) year, or without a fixed term, inasmuch as the parties presented different versions of the employment agreement. As articulated by the CA:

In plain language, We are confronted with two (2) copies of an agreement, one with a negative period and one provided for a one (1) year period for its effectivity. Ironically, none among the parties offered corroborative evidence as to which of the two (2) discrepancies is the correct one that must be given effect. x x x.[42]

The CA resolved the impassé in this wise: Under this circumstance, We can only apply

Article 1702 of the Civil Code which provides that, in case of doubt, all labor contracts shall be construed in favor of the laborer. Then, too, settled is the rule that any ambiguity in a contract whose terms are susceptible of different interpretations must be read against the party who drafted it. In the case at bar, the drafter of the contract is herein petitioners and must, therefore, be read against their contention.[43]

We agree with the CA.

In this case, there truly existed a doubt as to which version of the employment agreement should be given weight. In respondent’s copy, the period of effectivity of the agreement remained blank. On the other hand, petitioner’s copy provided for a one-year period, surprisingly from April 1, 2002 to March 31, 2003, even though the pleadings submitted by both parties indicated that respondent was hired on April 18, 2002. What is noticeable even more is that the handwriting indicating the one-year period in petitioner’s copy is different from the handwriting that filled up the other needed information in the same agreement.[44]

Thus, following Article 1702 of the Civil Code that all

doubts regarding labor contracts should be construed in favor of labor, then it should be respondent’s copy which did not provide for an express period which should be upheld, especially when there are circumstances that render the version of petitioner suspect. This is in line with the State

policy of affording protection to labor, such that the lowly laborer, who is usually at the mercy of the employer, must look up to the law to place him on equal footing with his employer.[45]

In addition, the employment agreement may be

likened into a contract of adhesion considering that it is petitioner who insists that there existed an express period of one year from April 1, 2002 to March 31, 2003, using as proof its own copy of the agreement. While contracts of adhesion are valid and binding, in cases of doubt which will cause a great imbalance of rights against one of the parties, the contract shall be construed against the party who drafted the same. Hence, in this case, where the very employment of respondent is at stake, the doubt as to the period of employment must be construed in her favor.

The other issue to resolve is whether respondent, even as a probationary employee, was illegally dismissed. We rule in the affirmative. As above discussed, probationary employees enjoy security of tenure during the term of their probationary employment such that they may only be terminated for cause as provided for by law, or if at the end of the probationary period, the employee failed to meet the reasonable standards set by the employer at the time of the employee’s engagement. Undeniably, respondent was hired as a probationary teacher and, as such, it was incumbent upon petitioner to show by competent evidence that she did not meet the standards set by the school. This requirement, petitioner failed to discharge. To note, the termination of respondent was effected by that letter stating that she was being relieved from employment because the school authorities allegedly decided, as a cost-cutting measure, that the position of “Principal” was to be abolished. Nowhere in that letter was respondent informed that her performance as a school teacher was less than satisfactory. Thus, in light of our ruling of Espiritu Santo Parochial School v. NLRC[46] that, in the absence of an express period of probation for private school teachers, the three-year probationary period provided by the Manual of Regulations for Private Schools must apply likewise to the case of respondent. In other words, absent any concrete and competent proof that her performance as a teacher was unsatisfactory from her hiring on April 18, 2002 up to March 31, 2003, respondent is entitled to continue her three-year period of probationary period, such that from March 31, 2003, her probationary employment is deemed renewed for the following two school years.[47]

Finally, we rule on the propriety of the monetary awards. Petitioner, as employer, is entitled to decide whether to extend respondent a permanent status by renewing her contract beyond the three-year period. Given the acrimony between the parties which must have been generated by this controversy, it can be said unequivocally that petitioner had opted not to extend respondent’s employment beyond this period. Therefore, the award of backwages as a consequence of the finding of illegal dismissal in favor of respondent should be confined to the three-year probationary period. Computing her monthly salary ofP15,000.00 for the next two school years (P15,000.00 x 10 months x 2), respondent already having received her full salaries for the year 2002-2003, she is entitled to a total amount of P300,000.00.[48] Moreover, respondent is also entitled to receive her 13thmonth pay correspondent to the said two school years, computed as yearly salary, divided by 12 months in a year, multiplied by 2, corresponding to the school years 2003-2004 and 2004-2005, or P150,000.00 / 12 months x 2 = P25,000.00. Thus, the NLRC was correct in awarding respondent the amount of P325,000.00 as backwages, inclusive of 13th month pay for the school years 2003-2004 and 2004-2005, and the amount of P3,750.00 as pro-rated 13th month pay. WHEREFORE, the petition is DENIED. The assailed Decision dated January 31, 2007 and the Resolution dated June 29, 2007 of the Court of Appeals are AFFIRMED.















SO ORDERED.


Abandonment

1. PAL, Inc. vs. Enrique Ligan, G.R. No. 146408, February 29, 2008)

PHILIPPINE AIRLINES, INC., Petitioner,

- versus -

ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARISUSA, JEFFREY LLENES, ROQUE PILAPIL, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERIE ALEGRES, BENEDICTO AUXTERO, EDUARDO MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL, Respondents.

G.R. No. 146408 Present: CARPIO, J.,CARPIO MORALES,CORONA,TINGA, andVELASCO, JR., Promulgated: April 30, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - x

R E S O L U T I O N

CARPIO MORALES, J.: Before the Court are petitioner’s Motion for Reconsideration and respondents’ Motion for Clarification and/or Reconsideration of the Court’s February 29, 2008 Decision in light of incidents bearing on the present case which were not brought to light by them before the Court promulgated said Decision.

The Decision of the Court affirmed with modification the appellate court’s September 29, 2000 Decision and directed petitioner Philippine Airlines, Inc. to:

(a) accept respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARESUSA, JEFFREY LLENOS, ROQUE PILAPIL, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERRIE ALEGRES, EDUARDO MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL as its regular employees in their same or substantially equivalent positions, and pay the wages and benefits due them as regular employees plus salary differentialcorresponding to the difference between the wages and benefits given them and those granted to petitioner’s other regular employees of the same rank; and

(b) pay respondent BENEDICTO AUXTERO salary differential; backwages from the time of his dismissal until the finality of this decision; and separation pay, in lieu of reinstatement, equivalent to one (1) month pay for every year of service until the finality of this decision. There being no data from which this

Court may determine the monetary liabilities of petitioner, the case is REMANDED to the Labor Arbiter solely for that purpose.

SO ORDERED.[1]

Synergy Services Corporation (Synergy) having been found to be a labor-only contractor, respondents were consequently declared as petitioner’s regular employees who are entitled to the salaries, allowances, and other employment benefits under the pertinent Collective Bargaining Agreement. Petitioner prays for a reconsideration of the Decision, maintaining its position that respondents were employed by Synergy, and to “reinstate” respondents as regular employees is iniquitous since it would be compelled to employ personnel more than what its operations require. It adds that the Court should declare that reinstatement is no longer an appropriate relief in view of the long period of time that had elapsed. For their part, respondents, deducing from the Decision that their termination was found to be illegal, posit that the portion of the Decision ordering petitioner to “accept” them should also mean to “reinstate” them with backwages.[2] Respondents additionally pray for the award to them of attorney’s fees, albeit they admit that they failed to raise it as an issue. Both parties point out that the Court’s Decision “presupposes” or “was based on the erroneous assumption” that respondents are still in the actual employ of petitioner.

Respondents disclose that except for those who have either died, accepted settlement earlier, or declared as employee of Synergy, the remaining respondents have all been terminated in the guise of retrenchment. Joining such account, petitioner reveals that 13 out of the 25 respondents filed an illegal dismissal case, which is pending before the appellate court stationed at Cebu City as CA-G.R. SP No. 00922.[3]

Respondents add that the appellate court, by

Resolution of April 22, 2008, held the illegal dismissal case in abeyance until after this Court rules on the present case.[4] Petitioner also urges the Court to examine the cases of respondents Roque Pilapil (Pilapil) and Benedicto Auxtero (Auxtero) in light of the following information, viz: Pilapil entered petitioner’s pool of regular employees on September 1, 1991[5] but was later terminated for submitting falsified academic credentials. Pilapil’s complaint for illegal dismissal was dismissed by the labor arbiter, whose decision was reinstated with modification by the appellate court by Decision of March 7, 2001 in CA-G.R. SP No. 50578. On Pilapil’s appeal, this Court, by Resolution of September 19, 2001 in G.R. No. 147853, declared the case terminated when Pilapil failed to file his intended petition.

Given its information in the immediately foregoing paragraph, petitioner claims that it already complied with the judgment awarding separation pay representing financial assistance to Pilapil on September 23, 2003, during the pendency of the present case.[6] Respondents do not dispute petitioner’s information.[7]


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Petitioner also informs the Court that Auxtero already secured a favorable judgment from this Court in G.R. No. 158710 which effectively affirmed the appellate court’s Decision of February 26, 2003 in CA-G.R. SP No. 50480.[8] It appears from the “Joint Declaration of Satisfaction Of Judgment”[9] with “Release and Quitclaim and Waiver,”[10] both dated November 29, 2007, that petitioner already satisfied the judgment rendered in said G.R. No. 158710 in favor of Auxtero in the amount of P1.3 Million, and that Auxtero had waived reinstatement. Respondents essentially corroborate this information of petitioner.[11]

In light of these recent manifestations-informations of the parties, the Court finds that a modification of the Decision is in order, the claims with respect to Pilapil and Auxtero having been deemed extinguished even before the promulgation of the Decision. That Pilapil was a regular employee yields to the final finding of a valid dismissal in the supervening case involving his own misconduct, while Auxtero’s attempt at forum-shopping should not be countenanced. IN ALL OTHER RESPECTS, the Court finds no sufficient reason to deviate from its Decision, but proceeds, nonetheless, to clarify a few points. While this Court’s Decision ruled on the regular status of respondents, it must be deemed to be without prejudice to the resolution of the issue of illegal dismissal in the proper case. The Decision thus expressly stated:

Finally, it must be stressed that respondents, having been declared to be regular employees of petitioner, Synergy being a mere agent of the latter, had acquired security of tenure. As such, they could only be dismissed by petitioner, the real employer, on the basis of just or authorized cause, and with observance of procedural due process.[12] (Underscoring supplied)

Notably, subject of the Decision was respondents’ complaints[13] for regularization and under-/non-payment of benefits. The Court did not and could not take cognizance of the validity of the eventual dismissal of respondents because the matter of just or authorized cause is beyond the issues of the case. That is why the Court did not order reinstatement for such relief presupposes a finding of illegal dismissal[14] in the proper case which, as the parties now manifest, pends before the appellate court. Respecting petitioner’s allegation of financial woes that led to the June 30, 1998 lay-off of respondents, as the Court held in its Decision, petitioner failed to establish such economic losses which rendered impossible the compliance with the order to accept respondent as regular employees. Thus the Decision reads:

Other than its bare allegations, petitioner presented nothing to substantiate its impossibility of compliance. In fact, petitioner waived this defense by failing to raise it in its Memorandum filed on June 14, 1999 before the Court of Appeals. x x x[15] (Underscoring supplied)

Petitioner, for the first time, revealed the matter of termination and the allegation of financial woes in its Motion for Reconsideration of October 10, 2000 before the appellate court,[16] not by way of defense to a charge of illegal dismissal but to manifest that supervening events have rendered it impossible for petitioner to comply with the order to accept respondents as regular employees.[17] Moreover, the issue of economic losses as a ground for dismissing respondents is factual in nature, hence, it may be determined in the proper case.

All told, the pending illegal dismissal case in CA-G.R. SP No. 00922 may now take its course. The Court’s finding that respondents are regular employees of petitioner neither frustrates nor preempts the appellate court’s proceedings in resolving the issue of retrenchment as an authorized cause for termination. If an authorized cause for dismissal is later found to exist, petitioner would still have to pay respondents their corresponding benefits and salary differential up to June 30, 1998. Otherwise, if there is a finding of illegal dismissal, an order for reinstatement with full backwages does not conflict with the Court’s declaration of the regular employee status of respondents. As to the belated plea of respondents for attorney’s fees, suffice it to state that parties who have not appealed cannot obtain from the appellate court any affirmative reliefs other than those granted, if any, in the decision of the lower tribunal.[18] Since respondents did not file a motion for reconsideration of the appellate court’s decision, much less appeal therefrom, they can advance only such arguments as may be necessary to defeat petitioner’s claims or to uphold the appealed decision, and cannot ask for a modification of the judgment in their favor in order to obtain other positive reliefs.[19]

WHEREFORE, the Decision of February 29, 2008 is, in light of the foregoing discussions, MODIFIED. As MODIFIED, the dispositive portion of the Decision reads:

WHEREFORE, the Court of Appeals

Decision of September 29, 2000 is AFFIRMED with MODIFICATION.

Petitioner PHILIPPINE AIRLINES,

INC., is ORDERED to recognize respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARISUSA, JEFFREY LLENES, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERIE ALEGRES, EDUARDO MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL as its regular employees in their same or substantially equivalent positions, and pay the wages and benefits due them as regular employees plus salary differential corresponding to the difference between the wages and benefits given them and those granted to petitioner’s other regular employees of the same or substantially equivalent rank, up to June 30, 1998, without prejudice to the resolution of the illegal dismissal case.

There being no data from which this

Court may determine the monetary liabilities of petitioner, the case isREMANDED to the Labor Arbiter solely for that purpose.

SO ORDERED.

GULF AIR, JASSIM HINDRI ABDULLAH and RESTY AREVALO v. NATIONAL LABOR RELATIONS COMMISSION and ROBERTO J.C. REYES, G.R. No. 159687, April 24, 2009

GULF AIR, JASSIM HINDRI G.R. No. 159687ABDULLAH and RESTY AREVALO, Present:














Petitioners, YNARES-SANTIAGO, J., Chairperson, - versus - AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, andNATIONAL LABOR RELATIONS PERALTA, JJ.COMMISSION and ROBERTO J.C. REYES, Promulgated: Respondents. April 24, 2009x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - x

D E C I S I O N AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] dated April 23, 2003 of the Court of Appeals (CA) which modified the Decision[2] dated April 26, 1999 of the National Labor Relations Commission (NLRC); and the August 6, 2003 CA Resolution[3] denying the motion for reconsideration.

The relevant facts are of record. Roberto J.C. Reyes (Reyes) had been employed with Gulf Air as Airport Manager for around ten years when he was dismissed onOctober 10, 1992 for serious misconduct and breach of trust and confidence[4] arising from the following incidents: In an office memorandum dated June 29, 1992, Aquel Yousip Ishaq (Ishaq) of the Gulf Air Revenue Department instructed Reyes to investigate the acceptance without prior authorization of an Astro Airline ticket on FOC [free of charge] basis for travel from MNL-BAH on GF 155 on June 10, 1992, in violation of Gulf Air's Manual of Authority which provides that “no FOC tickets of other airline (OAL) should be honored for travel on GF without obtaining proper authority.” Astro Airline has no interline agreement with Gulf Air.[5]

In reply,[6] Reyes clarified that he ordered the acceptance of the free ticket from Astro Airline to accommodate Philippine Civil Aeronautics Board Executive Director Silvestre Pascual[7] (Pascual) who had requested Gulf Air to assist Mr. Andy Queroz (Queroz), a Filipino consultant in the Middle East, during the latter's stay in Manila.[8]

On October 1, 1992, Gulf Air Area Manager-Philippines, Jassim Hindri Abdulla (Abdulla) required Reyes to explain in writing why he should not be dismissed for dishonesty, serious misconduct and willful breach of the trust and confidence reposed in him by Gulf Air in view of the following results of the investigation into the matter:

1. That [Reyes] had authorized free hotel

accommodation for an overnight stay at Philippine Village Hotel in favor of MR. A. QUEROZ on 08 May 1992 as per Meal Accommodation Transport Order No. 376677.

2. That subject passenger did not travel on

Northwest Flight NO. 003/08 May 1992 to connect on GF155, and even if he did, the hotel accommodation should be the responsibility of delivering carrier which in this case is Northwest.

3. That the passenger traveled on GF155/10

May 1992 and not GF155/10 June 1992 as reported by [Reyes].

4. That the passenger was accepted using an

Astro Airlines FREE TICKET not because of an oversight on the part of the GHA check-in staff but upon [Reyes'] direct instructions.

5. That [Reyes] did not conduct an investigation but rather had previous knowledge of the case. Thus, his reply to Revenue Department did not correct the actual departure date.

6. That based on the foregoing, it is clear that

this is an accommodation on [Reyes'] part to provide free hotel and free travel to MR. QUEROZ at the expense of the Company and afterwards deliberately tried to cover it up.[9]

Pending submission of his explanation, Reyes was placed

under preventive suspension.[10]

In his explanation letter, Reyes insisted that he acted “within the bounds of authority [he] believed he had in accommodating the request of [Pascual] to ASSIST AND ACCOMMODATE Mr. Andy Queroz x x x.”[11]

Not satisfied with Reyes' explanation, Gulf Air terminated his employment.[12]

Reyes filed with the Labor Arbiter (LA) a complaint against Gulf Air, Abdulla and Gulf Air Area Financial Controller Resty Arevalo (hereinafter referred to as Gulf Air), alleging that he did not betray the trust and confidence of his employer when he granted certain privileges to Queroz upon the request of Pascual; rather, he acted in the exercise of his public relations duties as Airport Manager and in furtherance of Gulf Air’s business interest.[13]

In their position paper, Gulf Air disclosed that Reyes was previously issued a stern warning for failing to coordinate closely with higher management;[14] and that in the incident which led to his dismissal, Reyes again failed to coordinate with higher management when he extended certain privileges to Queroz without seeking prior authorization as required under company policies.[15] Gulf Air further claimed that Reyes' conduct was tainted with malice for he attempted to cover it up by filing a Memorandum dated July 17, 1992[16] in which he denied knowledge of the incident.[17] Reyes contested the authenticity of the July 17, 1992 Memorandum cited by Gulf Air.[18] He obtained Questioned Document Report No. 338-598[19] issued on May 29, 1998 by the National Bureau of Investigation which states that, in comparison with the standard signature of Reyes, the signature appearing on the questioned document was not the same. In a Decision dated August 7, 1998, the LA declared that Reyes was validly dismissed for he had no authority to extend privileges to Queroz. The LA doubted that Reyes accommodated Queroz upon the request of Pascual, the latter not having been presented to attest to such claim.[20] The LA made no finding on whether Reyes attempted to cover up the incident. Reyes appealed[21] to the NLRC which, in a Decision dated April 26, 1999, reversed the LA decision, thus:

Wherefore, in view thereof, the assailed decision is hereby Reversed and Set Aside and new one entered finding the dismissal of complainant illegal. Consequently, respondents are ordered to pay complainant's separation pay at the rate of one (1) month salary for every year of service. Aside from this, backwages reckoned from the time of dismissal up to the promulgation of this judgment is also recoverable. Likewise, the awards of P300,000.00 and P200,000.00 representing moral and exemplary damages, respectively, are proper because of the whimsical dismissal of complainant.























Ten percent of the total monetary award shall likewise be proper representing attorney's fees. SO ORDERED.[22]

The NLRC held that based on Reyes' job description,[23] he was authorized to extend privileges to Queroz in order to maintain Gulf Air's public relations. At one time, Reyes accommodated a certain Mr. Sheikh M. Alkhalifa (Alkhalifa) and his entourage by providing them passage through Gulf Air even when said passengers were holding “Cathay Pacific (CX) free of charge (FOC or ID 90 [90% discount)] tickets which were non-endorseable to Gulf Airline or any other airlines and which were also non-refundable.” Gulf Air did not rebuke or reprobate Reyes for such action; hence, there is no reason for it to suddenly reverse its policy and dismiss Reyes for extending the same treatment to Queroz. If in the meantime Gulf Air had changed its policy by requiring Reyes to obtain prior authorization from the Area Manager, then evidence of the policy change should have been presented. As it were, Gulf Air failed to prove the existence of such requirement; what it established was only a previous warning issued to Reyes in 1989, but which was hardly relevant to the present case, because said warning pertained to the handling of accounting documents.[24]

Gulf Air filed a Motion for Reconsideration but the NLRC denied the same.[25]

Upon Petition for Review on Certiorari[26] filed by Gulf Air, the CA rendered the decision assailed herein, the dispositive portion of which reads:

WHEREFORE, the instant petition is PARTIALLY GRANTED. The questioned decision is hereby MODIFIED, to the effect that the awards of moral and exemplary damages and attorney's fees are hereby DELETED. The same is hereby AFFIRMED in all other respects. SO ORDERED.[27]

The CA denied Gulf Air's motion for partial reconsideration.[28]

Hence, the present petition by Gulf Air on the following grounds:

The Honorable Court of Appeals grossly erred in that -

I.

Contrary to its findings that there is allegedly no evidence on record that would show that an accommodation in Gulf Air Flights is exclusive to an airline which has an interline agreement with Gulf Air, the following undisputed evidence and admission of private respondent himself, to wit:

(a) Petitioner company's Finance Manual Volume III and Appendix XXVII (Annexes A and B of Petitioners' Memorandum and Annexes A and B of Petitioners' Reply to Private Respondent's Motion for Reconsideration filed with public respondent NLRC)(b) Admission of private respondent himself on cross-examination

Established beyond doubt that only

documents like free tickets of airlines with interline agreements with petitioner company are accepted in the latter's flights and subjected to the approval of the Area Manager.

II.

There is no evidence on record, except for the self-serving claim of private respondent, that would show that private respondent previously granted a similar accommodation on his own. On the other hand, unrebutted evidence on record clearly established that on matter of requests for accommodation of free passage, the prior approval of the Area Manager (private respondent's superior) is required as private respondent may only recommend.

III. Contrary to the manifestly erroneous finding of the Honorable Court of Appeals, the matter subject of the present case is not private respondent's first offense that his actions were not tolerated as he had already been previously issued a warning regarding several irregularities pertaining to the grant of Meal Accommodation Transport Order (MATO); lack of exercise of proper judgment on operational decision and close liaison with the Area Manager, as evidenced by the Memo addressed to him dated May 17, 1989 (Annex E to the Petition for Certiorari).

IV. Private respondent who was occupying a managerial position as Airport Manager does not deserve any degree of sympathy in that despite his long years of service, the previous written warning given to him regarding the use of MATO and the clear rules on interline agreement of which he is fully aware, he willfully breached the trust and confidence demanded of his position.

V. As managerial employee, private respondent is subject to a stricter standard than that applicable to rank and file employees in that a slight breach of trust reposed in him or the mere existence of a basis for believing that he has breached the trust of his employer is sufficient to dismiss him for loss of trust and confidence.

VI. The Honorable Court of Appeals grossly erred in awarding separation pay and backwages to private respondent who had willfully breached the trust and confidence reposed in him as a managerial employee by his acts of gross dishonesty.[29]

The petition is partly meritorious. The petition hinges on the question of whether Reyes

(respondent) committed willful breach of trust when he accepted the Astro Airline ticket of Queroz and granted him a MATO without prior authorization from his superiors in petitioner Gulf Air. This is undoubtedly a question of fact the determination of which entails an evaluation of the evidence on record of the scope of the authority of respondent as Airport Manager and the nature of the privileges he granted to Queroz. As a general rule, purely factual questions are not passed upon in petitions for review under Rule 45, for this Court does not try facts but merely relies on the expert findings of labor tribunals whose statutory function is to determine the facts. In the present case, however, in view of the conflicting factual findings of the LA on the one hand and the NLRC and the CA on the other, the Court is constrained toresolve the factual question at hand.[30]

Petitioners attribute to respondent two separate acts of breach of trust: one is the acceptance of the FOC Astro Airlines ticket of Queroz; and the other is the grant of MATO to Queroz. For either of these acts to constitute a valid cause for the dismissal of respondent, there must be substantial evidence that he committed said acts intentionally, knowingly, and purposely, without justifiable excuse, to flout Gulf Air’s policy regarding acceptance of tickets issued by other airlines and prior warning against the arbitrary issuance of a MATO, to











the prejudice of its business interest and in betrayal of its trust and confidence.[31]

In contrast to the findings of the LA, the concurrent view of

the CA and the NLRC is that petitioners failed to prove the existence of a company policy prohibiting respondent from directly granting to Queroz travel and accommodation privileges; they instead found that the established company practice is that respondent may grant such privileges without need of prior authorization.[32]

Gulf Air maintains, however, that they presented sufficient

evidence of company policies violated by respondent, specifically petitionerGulf Air's Finance Manual and its May 17. 1989 Memorandum warning respondent against the arbitrary issuance of a MATO, which documentary evidence have greater probative value than the bare allegation of respondent that he was allowed to directly grant travel privileges to a passenger named Alkhalifa.[33]

Indeed, the records reveal that while respondent has public

relations duties, the exercise thereof is subject to company policy. Based on his Job Description as Airport Manager in Manila,

respondent has the duty to: 11. ensure GF standard are offered to VIP/CIP and

other government officials; x x x x 13. ensure that GF relations (with) different

government entities at the airport is maintained.

x x x x 19. coordinate with different Philippine

government entities at NAIA.[34]

It cannot be doubted that respondent’s public relations

duties include entertaining requests of officials of government agencies for travel on board Gulf Air. In one incident cited by petitioners themselves, respondent interceded for a certain Deputy Collector Antonio Bautista (Bautista) of the “Customs and Immigration Department” to obtain free passage on board a Gulf Air flight to Singapore and Sydney; and acting upon the recommendation of respondent, herein co-petitioner Abdulla granted discounted passage to said government official.[35] The acceptance of the Astro Airline ticket of Queroz was likewise respondent’s promotion of Gulf Air's public relations with Pascual of the Civil Aeronautics Board. While the LA had doubted that it was Pascual who requested passage for Queroz, this fact was eventually established through the testimony of petitioner Arevalo that Pascual had offered to reimburse petitioner Gulf Air for the costs of the travel and hotel accommodation of Queroz.[36]

However, the authority of respondent to promote public relations by accommodating requests of officials of government agencies for free or discounted passage on board petitioner Gulf Air is subject to limitations.

In the same incident involving the discounted passage of Bautista, respondent admitted[37] that he first made a recommendation to petitioner Abdulla for the grant of the request,[38] and it was only when petitioner Abdulla issued a Reduced Rate Travel & Cargo Authorization that he (respondent) allowed the discounted passage of Bautista.[39] The significance of this documentary evidence is clear: the authority of respondent to grant passage to officials of government agencies as a form of public relations promotion is circumscribed by company policy.

Gulf Air claims that when it comes to acceptance for passage of persons holding tickets issued by other airlines, the company policy is provided in Gulf Air Finance Manual, to wit:

2.16.2 Interline Carriers and Airlines Acting as Gulf Air’s CSAs x x x x

2.16.3 Gulf Air has interline agreements with many airlines of the world. The list of these airlines is distributed by Marketing Division – Pricing and Interline Affairs (Appendix XXVII). The documents of only these airlines are accepted by Gulf Air and reversely Gulf Air documents are drawn only on these airlines, for international purposes. Therefore, before accepting documents of an airline with whom Gulf Air has no interline agreement, authority is obtained from Marketing Department under advice to Revenue Department.[40] (Emphasis added)

Astro Airlines is not among the airlines with whom petitioner

Gulf Air has an interline agreement; hence, under the foregoing manual, acceptance of Astro Airlines tickets requires prior authorization from Gulf Air Marketing Department and notice to the Revenue Department. Nothing in the Manual provides for exemption from this requirement.

Photocopy of the foregoing manual was presented by

petitioner before the NLRC[41] and the CA.[42] Respondent objected to its admissibility on the ground that it is a mere photocopy and the contents thereof were not testified to during the proceedings.[43] However, as cited by petitioners, respondent virtually acknowledged the existence of a company policy on interline agreements in relation to the processing of requests by government officials for free passage, to wit:

ATTY. VILLANUEVA:Q: Now, what is the procedure when a

government official make a request to you in particular for a free of charge ticket?

MR. REYES:A: We request him to write a letter to Gulf

Air of his request to issue free ticket. ATTY. VILLANUEVA:Q: Supposed this was addressed to you,

what do you do first? MR. REYES:A: The request was forwarded to Area

Manager's Office and sent back to Ticket Office for ticket issuance.

ATTY. VILLANUEVA:Q: At the time you accommodated

this, not a Gulf Air ticket, an Astro Airlines free of charge ticket was there a list or listing of airlines in our office, Gulf Air Office, which have an interline agreement with Gulf Air?

MR. REYES:A: Yes. ATTY. VILLANUEVA:Q: Now, a request by a Government official

or by a guest dignitary, to say, was addressed to you, would you know if that request was later approved or disapproved, would you know that?

A: In most cases it is always approved, based on the strength of my recommendation.[44] (Emphasis added)

Moreover, that a mere photocopy of the manual was presented does not make said evidence any less significant. Labor proceedings are non-litigious in nature; hence, the technicalities of law and procedure and the rules obtaining in courts of law do not strictly
















apply. Rather, the hearing officer is given much leeway to ascertain for himself the facts of the case.[45]

However, on the matter of the issuance of a MATO, the May

17, 1989 Memorandum of petitioner Gulf Air to respondent does not specify the pertinent company policy. It merely invites respondent's attention to “several irregularities regarding MATO” without filling out the details.[46] It leaves much to surmises and speculations.

In sum, while it is established that respondent's public

relations duties include the accommodation of requests by government officials such as Pascual of the Civic Aeronautics Board, in the exercise thereof, respondent must comply with the requirement under petitioner Gulf Air's manual that in accepting tickets issued by airlines that have no interline agreement with Gulf Air, prior authorization must be obtained from the Marketing Department, with notice to the Revenue Department. Without question, respondent did not comply with this requirement when he ordered the acceptance of the Astro Airlines ticket of Queroz. However, there is no evidence that respondent violated any company policy when he issued a MATO to Queroz.

The question that follows then is whether the violation

committed by respondent amounts to willful breach of trust. As Airport Manager, respondent occupies a position of such

extreme sensitivity that the existence of some basis or reasonable ground for his involvement in any irregularity is enough to destroy the trust and confidence which petitioner Gulf Air had reposed in him.[47] However, it is settled that for breach of trust to constitute a valid cause for dismissal, the same must be willful. Ordinary breach of trust will not suffice.[48]

To establish that respondent willfully betrayed Gulf Air's trust

and confidence by intentionally and knowingly disobeying its manual on interline agreements, Gulf Air cited a July 17, 1992 Memorandum in which respondent allegedly attempted to cover up the incident involving Queroz.[49] But then, respondent obtained evidence, consisting of NBI Questioned Document Report No. 338-598,[50] that said Memorandum did not emanate from him. Unfortunately, this matter was not threshed out in any of the fora below. Neither did Gulf Air dispute said findings of the NBI. In effect, there is no evidence that respondent acted with malice in committing the violation of his employer's policies.

Thus, the CA and the NLRC correctly observed that the worst

that respondent committed was an inadvertent infraction. For that, the extreme penalty of dismissal imposed on him by petitioners was grossly disproportionate. Taking into account the managerial position he held and the prior warning issued to him for failing to communicate with his superiors, the penalty commensurate to the violation he committed should be suspension for three months.[51] The period of his suspension is to be deducted from the period for which he is entitled to backwages as awarded by the NLRC and affirmed by the CA.

WHEREFORE, the petition is PARTLY GRANTED. The

April 23, 2003 Decision and August 6, 2003 Resolution of the Court of Appeals are MODIFIED to the effect that instead of dismissal from service, respondent Roberto J.C. Reyes is deemed SUSPENDED for three months, to be deducted from the total amount of backwages awarded to him by the National Labor Relations Commission, as modified by the Court of Appeals.

No costs. SO ORDERED.

Retirement Pay Law (R. A. No. 7641)

Alberto Oxales vs. United Laboratories, Inc., G.R. No. 152991, July 21, 2008

ALBERTO P. OXALES, G.R. No. 152991 Petitioner, Present: YNARES-SANTIAGO, J.,

, - versus - QUISUMBING*

AUSTRIA-MARTINEZ,

AZCUNA,** and

REYES, JJ. Promulgated:UNITED LABORATORIES, INC., Respondent. July 21, 2008 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N REYES, R.T., J.:

HOW should a private company retirement plan for employees be implemented vis-à-vis The Retirement Pay Law (Republic Act No. 7641)? Papaano ipapatupad ang isang plano ng pribadong kompanya para sa pagreretiro ng mga empleyado sa harap ng Batas ng Pagbabayad sa Pagreretiro (Batas Republika Blg. 7641)? We address the concern in this appeal by certiorari of the Decision[1] of the Court of Appeals (CA) affirming the Resolution[2] and Decision[3] of the Labor Arbiter and the National Labor Relations Commission (NLRC), respectively, dismissing petitioner Alberto P. Oxales’ complaint for additional retirement benefits, recovery of the cash equivalent of his unused sick leaves, damages, and attorney’s fees, against respondent United Laboratories, Inc. (UNILAB).

The Facts

Sometime in 1959, UNILAB established the United Retirement Plan (URP).[4] The plan is a comprehensive retirement program aimed at providing for retirement, resignation, disability, and death benefits of its members. An employee of UNILAB becomes a member of the URP upon his regularization in the company. The URP mandates the compulsory retirement of any member-employee who reaches the age of 60.

Both UNILAB and the employee contribute to the URP. On one hand, UNILAB provides for the account of the employee an actuarially-determined amount to Trust Fund A. On the other hand, the employee chips in 2½% of his monthly salary to Trust Fund B. Upon retirement, the employee gets both amounts standing in his name in Trust Fund A and Trust Fund B.

As retirement benefits, the employee receives (1) from Trust Fund A a lump sum of 1½ month’s pay per year of service “based on the member’s last or terminal basic monthly salary,”[5] and (2) whatever the employee has contributed to Trust Fund B, together with the income minus any losses incurred. The URP excludes commissions, overtime, bonuses, or extra compensations in the computation of the basic salary for purposes of retirement.


http://sc.judiciary.gov.ph/jurisprudence/2008/july2008/152991.htm#_ftn7














Oxales joined UNILAB on September 1, 1968. He was compulsorily retired by UNILAB when he reached his 60th birthday on September 7, 1994, after having rendered service of twenty-five (25) years, eleven (11) months, and six (6) days. He was then Director of Manufacturing Services Group.

In computing the retirement benefits of Oxales based on the 1½ months for every year of service under the URP, UNILAB took into account only his basic monthly salary. It did not include as part of the salary base the permanent and regular bonuses, reasonable value of food allowances, 1/12 of the 13th month pay, and the cash equivalent of service incentive leave.

Thus, Oxales received from Trust Fund A P1,599,179.00, instead of P4,260,255.70. He also received P176,313.06, instead ofP456,039.20 as cash equivalent of his unused sick leaves. Lastly, he received P397,738.33 from his contributions to Trust Fund B. In sum, Oxales received the total amount of P 2,173,230.39 as his retirement benefits.

On August 21, 1997, Oxales wrote UNILAB, claiming that he should have been paid P1,775,907.23 more in retirement pay and unused leave credits. He insisted that his bonuses, allowances and 13th month pay should have been factored in the computation of his retirement benefits.[6]

On September 9, 1997, UNILAB wrote[7] back and

reminded Oxales about the provision of the URP excluding any commissions, overtime, bonuses or extra compensations in the computation of the basic salary of the retiring employee.

Disgruntled, Oxales filed a complaint with the Labor Arbiter for (1) the correct computation of his retirement benefits, (2) recovery of the cash equivalent of his unused sick leaves, (3) damages, and (4) attorney’s fees. He argued that in the computation of his retirement benefits, UNILAB should have included in his basic pay the following, to wit: (a) cash equivalent of not more than five (5) days service incentive leave; (b) 1/12th of 13th month pay; and (c) all other benefits he has been receiving.

Efforts were exerted for a possible amicable settlement. As this proved futile, the parties were required to submit their respective pleadings and position papers.

Labor Arbiter, NLRC and CA Dispositions

On June 30, 1998, Labor Arbiter Romulus A. Protasio rendered a decision dismissing the complaint, thus:

WHEREFORE, premises considered, judgment is hereby rendered dismissing the instant complaint for lack of merit.

SO ORDERED.[8]

The Labor Arbiter held that the URP clearly excludes commission, overtime, bonuses, or other extra compensation. Hence, the benefits asked by Oxales to be included in the computation of his retirement benefits should be excluded.[9]

The Arbiter also held that the inclusion of the fringe benefits claimed by Oxales would put UNILAB in violation of the terms and conditions set forth by the Bureau of Internal Revenue (BIR) when it approved the URP as a tax-qualified plan. More, any overpayment of benefits would adversely affect the actuarial soundness of the plan. It would also expose the trustees of the URP to liabilities and prejudice the other employees. Worse, the BIR might even withdraw the tax exemption granted to the URP.[10] Lastly, the Labor Arbiter opined that the URP precludes the application of the provisions of R.A. No. 7641.[11]

Oxales appealed to the NLRC. On February 8, 1999, the NLRC affirmed the decision of the Labor Arbiter, disposing as follows:

WHEREFORE, in view thereof, the instant appeal is hereby dismissed for lack of merit and the appealed decision is ordered affirmed.

SO ORDERED.[12]

The NLRC ruled that the interpretation by Oxales of

R.A. No. 7641 is selective. He only culled the provisions that are beneficial to him, putting in grave doubt the sincerity of his motives. For instance, he claims that the value of the food benefits and other allowances should be included in his monthly salary as multiplicand to the number of his years of service with UNILAB. At the same time, however, he does not intend to reduce the 1½ month salary as multiplier under the URP to ½ under R.A. No. 7641.[13]

The NLRC agreed with the Labor Arbiter that the provisions of R.A. No. 7641 do not apply in view of the URP. The NLRC also took into account the fact that the benefits granted to Oxales by virtue of the URP was even higher than what R.A. No. 7641 requires.[14]

His motion for reconsideration having been denied, Oxales filed with the CA a petition for certiorari under Rule 65.

In a decision promulgated on April 12, 2002, the CA dismissed the petition. The CA ruled that the petition of Oxales calls for a review of the factual findings of the Labor Arbiter as affirmed by the NLRC. It is not the normal function of the CA in a special civil action for certiorari to inquire into the correctness of the evaluation of the evidence by the Labor Arbiter. Its authority is confined only to issues of jurisdiction or grave abuse of discretion.[15]

Just like the Labor Arbiter and the NLRC, the CA also

held that R.A. No. 7641 is applicable only in the absence of a retirement plan or agreement providing for the retirement benefits of employees in an establishment.[16]

Finally, the CA denied the claim of Oxales to moral

and exemplary damages. According to the appellate court, he failed to prove the presence of bad faith or fraud on the part of UNILAB. His mere allegations of having suffered sleepless nights, serious anxiety, and mental anguish are not enough. No premium should be placed on the right to litigate.[17]

Left with no other option, Oxales filed the present recourse under Rule 45 of the 1997 Rules of Civil Procedure.[18]

Issues

In his Memorandum,[19] Oxales raises the following issues for Our disposition, to wit:

1. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT ACCORDING TO PREVAILING JURISPRUDENCE, SUCH ERRORS IN THE COMPUTATION OF RETIREMENT BENEFITS OF PETITIONER SHOULD BE CORRECTED IN A SPECIAL ACTION FOR CERTIORARI ;

2. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN INCORRECTLY INTERPRETING THE URP TO EXCLUDE SEVERAL REMUNERATIONS FROM THE SAID SALARY BASE;
















3. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETIONIN TOTALLY IGNORING THE ISSUE AND IN NOT FINDING THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN INCORRECTLY INTERPRETING THE URP TO EXCLUDE PERMANENT AND REGULAR ALLOWANCES FROM THE SALARY BASE FOR COMPUTING RETIREMENT BENEFITS OF PETITIONER; 4. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN INCORRECTLY INTERPRETING THE URP TO EXCLUDE PERMANENT AND REGULAR REMUNERATIONS MISLABELED AS BONUSES FROM THE SALARY BASE FOR COMPUTING THE RETIREMENT BENEFITS OF THE PETITIONER; 5. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN INCORRECTLY INTERPRETING THE URP TO EXCLUDE ONE TWELFTH (1/12th) OF THE STATUTORY THIRTEENTH MONTH PAY FROM THE SALARY BASE FOR COMPUTING RETIREMENT BENEFITS; 6. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN THE INTERPRETATION OF R.A. NO. 7641 WHEN IT CONCLUDED THAT THE SAID LAW IS APPLICABLE ONLY IN THE ABSENCE OF RETIREMENT PLAN OR AGREEMENT PROVIDING FOR THE RETIREMENT BENEFITS OF EMPLOYEES IN AN ESTABLISHMENT; 7. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT THE DEFINITION OF “SALARY” UNDER THE IMPLEMENTING RULES OF R.A. NO. 7641 SHOULD BE INTERPRETED TO INCLUDE THE PERMANENT AND REGULAR REMUNERATIONS OF PETITIONER IN THE SALARY BASE FOR COMPUTING RETIREMENT BENEFITS; 8. WHETHER OR NOT THE LABOR ARBITER, THE NLRC, AND COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN IGNORING AND NOT RESOLVING THE ISSUES REGARDING PETITIONER’S UNPAID CASH EQUIVALENT OF THE UNUSED SICK LEAVE CREDITS;

9. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING THAT THE NLRC GRAVELY ABUSED ITS DISCRETION IN ITS FAILURE TO PROPERLY INTERPRET THE URP IN DETERMINING THE EMPLOYMENT PERIOD OF PETITIONER FOR THE PURPOSE OF COMPUTING RETIREMENT BENEFITS;

10. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN NOT REINSTATING THE MEDICAL RETIREMENT BENEFITS OF PETITIONER; 11. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN TOTALLY AND ARBITRARILY IGNORING THE ISSUE AND IN NOT FINDING THAT THE NLRC COMMITTED

GRAVE ABUSE OF DISCRETION IN RENDERING A DECISION IN VIOLATION OF THE CONSTITUTIONAL REQUIREMENTS WHICH IN EFFECT DENIED PETITIONER’S RIGHT TO DUE PROCESS; 12. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN LIKEWISE RENDERING A DECISION IN VIOLATION OF THE CONSTITUTIONAL REQUIREMENT THAT DECISIONS SHOULD EXPRESS CLEARLY AND DISTINCTLY THE FACTS OF THE CASE AND THE LAW ON WHICH IT IS BASED; 13. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT GRANTING MORAL AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES TO PETITIONER; 14. WHETHER OR NOT THE SUPREME COURT SHOULD GRANT PETITIONER UNPAID RETIREMENT PAY, UNPAID CASH EQUIVALENT OF UNUSED LEAVE CREDITS, REINSTATEMENT OF MEDICAL BENEFITS, MORAL AND EXEMPLARY DAMAGES, AND ATTORNEY’S FEES.[20] (Underscoring supplied)

The issues posed by Oxales may be compressed as

follows: first, whether in the computation of his retirement and sick leave benefits, UNILAB should have factored such benefits like bonuses, cash and meal allowances, rice rations, service incentive leaves, and 1/12 of the 13th month pay; second, whether R.A. No. 7641 is applicable for purposes of computing his retirement benefits; andthird, whether UNILAB is liable for moral damages, exemplary damages, and attorney’s fees.

Our Ruling The clear language of the URP should be respected.

A retirement plan in a company partakes the nature of a contract, with the employer and the employee as the contracting parties. It creates a contractual obligation in which the promise to pay retirement benefits is made in consideration of the continued faithful service of the employee for the requisite period.[21]

The employer and the employee may establish such

stipulations, clauses, terms, and conditions as they may deem convenient.[22] In Allgeyer v. Louisiana,[23] New York Life Ins. Co. v. Dodge,[24] Coppage v. Kansas,[25] Adair v. United States,[26]Lochner v. New York,[27] and Muller v. Oregon,[28] the United States Supreme Court held that the right to contract about one’s affair is part and parcel of the liberty of the individual which is protected by the “due process of law” clause of the Constitution.

The obligations arising from the agreement between the employer and the employee have the force of law between them and should be complied with in good faith.[29] However, though the employer and the employee are given the widest latitude possible in the crafting of their












contract, such right is not absolute. There is no such thing as absolute freedom of contract. A limitation is provided for by the law itself. Their stipulations, clauses, terms, and conditions should not be contrary to law, morals, good customs, public order, or public policy.[30] Indeed, the law respects the freedom to contract but, at the same time, is very zealous in protecting the contracting parties and the public in general. So much so that the contracting parties need not incorporate the existing laws in their contract, as the law is deemed written in every contract. Quando abest, proviso parties, adest proviso legis. When the provision of the party is lacking, the provision of the law supplies it. Kung may kulang na kondisyon sa isang kasunduan, ang batas ang magdaragdag dito.

Viewed from the foregoing, We rule that Oxales is not entitled to the additional retirement benefits he is asking. The URP is very clear: “basic monthly salary” for purposes of computing the retirement pay is “the basic monthly salary, or if daily[,] means the basic rate of pay converted to basic monthly salary of the employee excluding any commissions, overtime, bonuses, or extra compensations.”[31] Inclusio unius est exclusio alterius. The inclusion of one is the exclusion of others. Ang pagsama ng isa, pagpwera naman sa iba.

The URP is not contrary to law, morals, good customs, public order, or public policy to merit its nullification. We, thus, sustain it. At first blush, the URP seems to be disadvantageous to the retiring employee because of the exclusion ofcommissions, overtime, bonuses, or extra compensations in the computation of the basic monthly salary. However, a close reading of its provisions would reveal otherwise. We quote with approval the explanation of the NLRC in this regard, viz.:

x x x the United Retirement Plan of the respondent [Unilab] has a one and one- half months salary for every year of service as the basis of entitlement. Under the new law, only one-half month of the retiree’s salary inclusive however, of not more than five (5) days of service incentive leave and one-twelfth (1/12) of the 13th month pay are used as the bases in the retirement benefits computation.

Mathematically speaking therefore,

complainant’s [Oxales] benefits received amounting to P 1,599,179.00 under Trust Fund A together with the cash equivalent of his unused leaves which has an amount of P 176,313.06 and his contribution in the Trust Fund B amounting to P 397,738.33 are way above the entitlement he could have received under Republic Act 7641, otherwise known as the New Retirement Law.[32] (Underscoring supplied)

Both law[33] and jurisprudence[34] mandate that if the

terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control. Thus, if the terms of a writing are plain and unambiguous, there is no room for construction, since the only purpose of judicial construction is to remove doubt and uncertainty.[35] Only where the language of a contract is ambiguous and uncertain that a court may, under well-established rules of construction, interfere to reach a proper construction and make certain that which in itself is uncertain.[36] Where the language of a contract is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids.[37]

R.A. No. 7641 does not apply in view of the URP which gives to the retiring employee more than what the law requires; the supporting cases cited by Oxales are off-tangent.

R.A. No. 7641, otherwise known as “The Retirement Pay Law,” only applies in a situation where (1) there is no collective bargaining agreement or other applicable employment contract providing for retirement benefits for an employee; or (2) there is a collective bargaining agreement or other applicable employment contract providing for retirement benefits for an employee, but it isbelow the requirements set for by law. The reason for the first situation is to prevent the absurd situation where an employee, who is otherwise deserving, is denied retirement benefits by the nefarious scheme of employers in not providing for retirement benefits for their employees. The reason for the second situation is expressed in the latin maxim pacta privata juri publico derogare non possunt. Private contracts cannot derogate from the public law. Ang kasunduang pribado ay hindi makasisira sa batas publiko. Five (5) reasons support this conclusion.

First, a plain reading of the Retirement Pay Law. R.A. No. 7641 originated from the House of Representatives as House Bill 317 which was later consolidated with Senate Bill 132. It was approved on December 9, 1992 and took effect on January 7, 1993.[38] Amending Article 287 of the Labor Code, it provides as follows:

Art. 287. Retirement. – Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the

employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, that an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan

or agreement providing for retirement benefits of employees in the establishment , an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for

broader inclusions, the term ‘one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. (Underscoring supplied)

Second, the legislative history of the Retirement Pay Law. It may be recalled that R.A. No. 7641 traces back its history in the case of Llora Motors, Inc. v. Drilon.[39] In this case, the Court held that the then Article 287 of the Labor Code[40] and its Implementing Rules[41] may not be the source of an employee’s entitlement to retirement pay absent the presence of a collective bargaining agreement or voluntary company policy that provides for retirement benefits for the employee.[42]

Third, the legislative intent of the Retirement Pay

Law. A reading of the explanatory note of Representative Alberto S. Veloso would show why Congress sought to pass the Retirement Pay Law: many employers refuse or neglect















to adopt a retirement plan for their employees because of the absence of any legal compulsion for them to do so, thus:

When the Labor Code came into effect in 1974, retirement pay had, as a matter of course, been granted to employees in the private sector when they reach the age of sixty (60) years. This had practically been the rule observed by employers in the country pursuant to the rules and regulations issued by the then Minister of Labor and Employment to implement the provisions of the Labor Code, more particularly, where there is no provision for the same in the collective bargaining agreement or retirement plan of the establishment.

At present, however, such benefit

of retirement pay is no longer available where there is no collective agreement thereon or any retirement plan at all. This is so because, in a decision of the Supreme Court ( Llora Motors vs. Drilon and NLRC, et al. , G.R. No. 82895, November 7, 1989), it was held that the grant of such benefit under the rules implementing the Labor Code is not supported by any express provision of the Labor Code itself. In short, there is no specific statutory basis for the grant of retirement benefits for employees in the private sector reaching the age of 60 years.

Since the time of such nullification

by the Supreme Court of said implementing rules on retirement pay for private sector employees, many employers simply refuse or neglect to adopt any retirement plan for their workers, obviously emboldened by the thought that, after said ruling, there is no longer any legal compulsion to grant such retirement benefits. In our continuous quest to promote social justice, unfair situations like this, productive of grievance or irritants in the labor-management relations, must immediately be corrected or remedied by legislation. (Underscoring supplied)

Fourth, the title of the Retirement Pay Law. The

complete title of R.A. No. 7641 is “An Act Amending Article 287 of Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines, By Providing for Retirement Pay to Qualified Private Sector in the Absence of Any Retirement Plan in the Establishment.” Res ipsa loquitur. The thing speaks for itself. Isang bagay na nangungusap na sa kanyang sarili. Fifth, jurisprudence. In Oro Enterprises, Inc. v. National Labor Relations Commission,[43] the Court held that R.A. No. 7641 “is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that – absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer – can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor.”[44]

In Pantranco North Express, Inc. v. National Labor

Relations Commission,[45] the Court held that Article 287 of the Labor Code “makes clear the intention and spirit of the law to give employers and employees a free hand to determine and agree upon the terms and conditions of retirement,”[46] and that the law “presumes that employees know what they want and what is good for them absent any showing that fraud or intimidation was employed to secure their consent thereto.”[47]

Lastly, in Brion v. South Philippine Union Mission of

the Seventh Day Adventist Church,[48] the Court ruled that a reading of Article 287 of the Labor Code would reveal that the

“employer and employee are free to stipulate on retirement benefits, as long as these do not fall below floor limits provided by law.”[49]

We are aware of the several cases cited by Oxales to support his claim that the computation of his retirement benefits should not have been limited to the basic monthly salary as defined by the URP. However, these cases negate, rather than support, his claim. In Villena v. National Labor Relations Commission,[50] the “compulsory retirement” of Villena was, in fact, an illegal dismissal in disguise. Thus, the Court ordered the Batangas, Laguna, Tayabas Bus Co. to pay Villena “his full backwages, allowances, and other benefits for a period of three (3) years after his illegal dismissal on April 24, 1987, until he reached the compulsory retirement age plus his retirement benefits equivalent to his gross monthly pay, allowances and other benefits for every year of service up to age sixty (60), which is the normal retirement age for him.”[51]

The distinction between Villena with the instant case

is readily apparent. The Court used the regular compensation of Villena in computing his retirement benefits because the provision of the CBA for rank-and-file employees is inapplicable to him, being a managerial employee. The Villena case was also decided before the passage of R.A. No. 7641.

In Planters Products, Inc. v. National Labor Relations Commission,[52] the petitioning employees were given termination benefits based on their basic salary. However, Planters Products, Inc. had integrated the allowances of its remaining employees into their basic salary. Thus, it was the basic salary that increased. Also, it was the basic salary as increased (not the basic salary and allowances) which still formed the basis for the computation of the termination benefits of the remaining employees of the company. The Court held that fairness demanded that the terminated employees receive the same treatment.[53] Clearly, such situation is absent here.

In Manuel L. Quezon University v. National Labor Relations Commission,[54] the issue raised was whether respondents are entitled to the retirement benefits provided for under R.A. No. 7641, even if petitioner has an existing valid retirement plan. The Court held that the coverage of the law “applies to establishments with existing collective bargaining or other agreements or voluntary retirement plans whose benefits are less than those prescribed under the proviso in question.”[55]

Admittedly, this Court held in the case of Songco v.

National Labor Relations Commission[56] that not only the basic salary but also the “allowances” (like transportation and emergency living allowances) and “earned sales commissions” should be taken into consideration in computing the backwages and separation pay of the employee. However, a closer examination of the case would show that the CBA[57] between Zuellig and F.E. Zuellig Employees Association, in which Songco was a member, did not contain an explicit definition of what salary is. Neither was there any inclusions or exclusions in the determination of the salary of the employee. Here, the URP has an explicit provision excluding any commissions, overtime, bonuses, or extra compensations for purposes of computing the basic salary of a retiring employee. Too, the Songco case was decided before the passage of R.A. No. 7641. Clearly then, R.A. No. 7641 does not apply because the URP grants to the retiring employee more than what the law gives. Under the URP, the employee receives a lump sum of 1½ pay per year of service, compared to the minimum ½ month salary for every year of service set forth by R.A. No. 7641.

















Oxales is trying to have the best of both worlds. He wants to have his cake and eat it too: the 1½ months formula under the URP, and the inclusion of the value of food benefits and other allowances he was entitled to as employee of UNILAB with his monthly salary as the multiplicand of his number of years in the service. This he should not be permitted to do, lest a grave injustice is caused to UNILAB, and its past and future retirees.

We agree with the NLRC observation on this score:

As an illustration, Complainant claims that his monthly salary as the multiplicand of his number of years in the service should include the value of the food benefits and other allowances he was entitled while in the employ of respondent. However, he did not even, by implication, intend to reduce the 1½ month salary as multiplier under the URP to ½ under the law he invoked. This is a sign of covetousness, unfair both to the employer and those employees who have earlier retired under said plan.[58]

Oxales is not entitled to the reinstatement of his medical benefits, which are not part of the URP. Corollarily, he is not also entitled to moral damages, exemplary damages, and attorney’s fees. Oxales claims that UNILAB unilaterally revoked his medical benefits, causing him humiliation and anxiety. This, he argues, entitles him to moral damages, exemplary damages, plus attorney’s fees. We cannot agree. The records bear out that after Oxales retired from UNILAB, he chose to join a rival company, Lloyds Laboratories, Inc. As UNILAB correctly puts it, “[i]f any employer can legally and validly do the supreme act of dismissing a disloyal employee for having joined or sympathized with a rival company, with more reason may it do the lesser act of merely discontinuing a benefit unilaterally given to an already-retired employee.”[59] As a retired employee, Oxales may not claim a vested right on these medical benefits. A careful examination of the URP would show that medical benefits are not included in the URP.

Indeed, while there is nothing wrong in the act of Oxales in joining a rival company after his retirement, justice and fair play would dictate that by doing so, he cannot now legally demand the continuance of his medical benefits from UNILAB. To rule otherwise would result in an absurd situation where Oxales would continue to receive medical benefits from UNILAB while working in a rival company. We note that these medical benefits are merely unilaterally given by UNILAB to its retired employees. We are not unaware of this Court’s pronouncement in Brion v. South Philippine Union Mission of the Seventh Day Adventist Church.[60] However, Oxales’ plight differs from Brion because the URP does not expressly cover medical benefits to retirees. In contrast, the retired employee in Brion had acquired a vested right to the withheld benefits.

The claim of Oxales to moral damages, exemplary damages, and attorney’s fees must also be denied for want of basis in law or jurisprudence. On this score, We echo the pronouncement of the Court in Audion v. Electric Co., Inc. v. National Labor Relations Commission,[61] to wit:

Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. The person claiming moral damages must prove

the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Invariably, such action must be shown to have been willfully done in bad faith or with ill motive, and bad faith or ill motive under the law cannot be presumed but must be established with clear and convincing evidence. Private respondent predicated his claim for such damages on his own allegations of sleeplessnights and mental anguish, without establishing bad faith, fraud or ill motive as legal basis therefor.

Private respondent not being

entitled to award of moral damages, an award of exemplary damages is likewise baseless. Where the award of moral and exemplary damages is eliminated, so must the award for attorney’s fees be deleted. Private respondent has not shown that he is entitled thereto pursuant to Art. 2208 of the Civil Code.[62] (Citations omitted)

Here, there was no dismissal, as Oxales was retired by UNILAB by virtue of the URP. He was also paid his complete retirement benefits. Epilogue

It is not disputed that Oxales has worked tirelessly for UNILAB. For one thing, he has spent a considerable amount of years with the company. For another, he has contributed much to its growth and expansion. However, even as We empathize with him in his time of great need, it behooves Us to interpret the law according to what it mandates. We reiterate the time-honored principle that the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. While the Constitution is committed to the policy of social justice and the protection of the working class, management also has its own rights, which are entitled to respect and enforcement in the interest of fair play. Out of its concern for those with less privilege in life, this Court has inclined more often than not toward the employee and upheld his cause with his conflicts with the employer. Such favorable treatment, however, has not blinded the Court to rule that justice is in every case for the deserving. Justice should be dispensed in the light of the established facts and applicable law and doctrine.[63]

WHEREFORE, the appealed Decision

is AFFIRMED. No costs.

SO ORDERED.








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