G.R. No.

198534 July 3, 2013 chance to present her side or be deemed to have

waived her right to be heard.
JENNY F. PECKSON, Petitioner,
vs. In her one-paragraph reply submitted on November
ROBINSONS SUPERMARKET CORPORATION, 27, 2006,8 the petitioner stated that she could not
JODY GADIA, ROENA SARTE, and RUBY accept the position of Provincial Coordinator since
ALEX, Respondents. she saw it as a demotion. As it turned out, however,
on November 9, 2006, the petitioner had already filed
DECISION a complaint for constructive dismissal 9 against RSC,
Sarte, Gadia and Alex (respondents).
REYES, J.:
On November 30, 2006, Sarte issued an instruction
For resolution is the Petition for Review on to the petitioner to report to RSC’s Metroeast Depot
Certiorari1 of the Decision2 dated June 8, 2011 of the to help prepare all shipping manifests for Cagayan de
Court of Appeals (CA) in CA-G.R. SP No. 109604 Oro and Bacolod, but as witnessed by RSC
affirming the Decision3 dated February 25, 2009 of employees Raquel Torrechua and Alex, she did not
the National Labor Relations Commission (NLRC) in obey as instructed.10 Again on December 8, 2006,
NLRC NCR Case No. 00-11-09316-06/NLRC LAC No. Sarte issued a similar instruction, citing the need for
002020-07, which upheld the Dismissal4 by the certain tasks from the petitioner in preparation for
Labor Arbiter (LA) on May 30, 2007 of Jenny F. the coming Christmas holidays, but the petitioner
Peckson's (petitioner) complaint for constructive again refused to heed.11
dismissal.
As culled from the assailed appellate court
Antecedent Facts and Proceedings decision,12 the petitioner argued before the LA that
the true organizational chart of the RSC showed that
the position of Category Buyer was one level above
The petitioner first joined the Robinsons that of the Provincial Coordinator, and that
Supermarket Corporation (RSC) as a Sales Clerk on
moreover, the job description of a Provincial
November 3, 1987. On October 26, 2006, she was
Coordinator was largely clerical and did not require
holding the position of Category Buyer when her to analyze stock levels and order points, or
respondent Roena Sarte (Sarte), RSC’s Assistant source new local and international suppliers, or
Vice-President for Merchandising, reassigned her to monitor stock level per store and recommend items
the position of Provincial Coordinator, effective for replenishment, or negotiate better items and
November 1, 2006. Claiming that her new discounts from suppliers, duties which only a
assignment was a demotion because it was non- Category Buyer could perform. She also claimed that
supervisory and clerical in nature, the petitioner
she was instructed to file a courtesy resignation in
refused to turn over her responsibilities to the new exchange for a separation pay of one-half salary per
Category Buyer, or to accept her new responsibilities year of service.
as Provincial Coordinator. Jody Gadia (Gadia) and
Ruby Alex (Alex) were impleaded because they were
corporate officers of the RSC. The respondents in their position paper denied the
correctness of the organizational chart presented by
the petitioner. They maintained that her transfer was
In a memorandum to the petitioner dated November
not a demotion since the Provincial Coordinator
13, 2006,6 the RSC, through Sarte, demanded an occupied a "Level 5" position like the Category Buyer,
explanation from her within 48 hours for her refusal with the same work conditions, salary and benefits.
to accept her new assignment despite written and But while both positions had no significant disparity
verbal demands. Sarte cited a company rule, in the required skill, experience and aptitude, the
Offenses Subject to Disciplinary Action No. 4.07, position of Category Buyer demanded the traits of
which provided that "[d]isobedience, refusal or failure punctuality, diligence and attentiveness because it is
to do assigned task or to obey superior’s/official’s a frontline position in the day-to-day business
orders/instructions, or to follow established operations of RSC which the petitioner,
procedures or practices without valid reason" would unfortunately, did not possess.
be meted the penalty of suspension.
The respondents also raised the petitioner’s record of
The petitioner ignored the 48-hour deadline to habitual tardiness as far back as 1999, as well as
explain imposed by Sarte. On November 23, 2006, poor performance rating in 2005. In addition to her
Sarte issued her another memorandum,7 reiterating performance rating of "2.8" out of "4.0" in 2005
her demand to explain in writing within 48 hours equivalent to "below expectation," the petitioner was
why she persistently refused to assume her new found to be tardy in June and July 2005, 13 times,
position, and warning her that this could be her final and for the entire 2005, 57 times; that she was
suspended twice in 2006 for 20 instances of well as appropriate recommendations to management
tardiness and absences from July to September 2006 to ensure the faithful implementation of its policies
alone.13 We also note that the petitioner was and programs; that it even exercises influence over
suspended for seven (7) days in September and the Category Buyer in that it includes performing a
October 2005 for deliberately violating a company recommendatory function to guide the Category
policy after she was seen having lunch with a Buyer in making decisions on the right assortment,
company supplier.14 price and quantity of the items, articles or
merchandise to be sold by the store.
In her affidavit,15 respondent Sarte denied that the
reassignment of the petitioner as Provincial The NLRC then reiterated the settled rule that
Coordinator was motivated by a desire to besmirch management may transfer an employee from one
the name of the latter. She asserted that it was made office to another within the business establishment,
in the exercise of management prerogative and sound provided there is no demotion in rank or diminution
discretion, in view of the nsitive position occupied by of salary, benefits, and other privileges, and the
the Category Buyer in RSC’s daily operations, vis-à- action is not motivated by discrimination or bad faith
vis the petitioner’s "below expectation" performance or effected as a form of punishment without
rating and habitual tardiness. sufficient cause. It ruled that the respondents were
able to show that the petitioner’s transfer was not
In dismissing the petitioner’s complaint, the LA in its unreasonable, inconvenient or prejudicial, but was
Decision16 dated May 30, 2007 ruled that job prompted by her failure to meet the demands of
reassignment or classification is a strict prerogative punctuality, diligence, and personal attention of the
of the employer, and that the petitioner cannot refuse position of Category Buyer; that management wanted
her transfer from Category Buyer to Provincial to give the petitioner a chance to improve her work
Coordinator since both positions commanded the ethic, but her obstinate refusal to assume her new
same salary structure, high degree of responsibility position has prejudiced respondent RSC, even while
and impeccable honesty and integrity. Upholding the she continued to receive her salaries and benefits as
employer’s right not to retain an employee in a Provincial Coordinator.
particular position to prevent losses or to promote
profitability, the LA found no showing of any illegal On petition for certiorari to the CA, the petitioner
motive on the part of the respondents in reassigning insisted that her transfer from Category Buyer to
the petitioner. The transfer was dictated by the need Provincial Coordinator was a form of demotion
for punctuality, diligence and attentiveness in the without due process, and that the respondents
position of Category Buyer, which the petitioner unjustifiably depicted her as remiss in her duties,
clearly lacked. Moreover, the LA ruled that her flawed in her character, and unduly obstinate in her
persistent refusal to accept her new position refusal to accept her new post.
amounted to insubordination, entitling the RSC to
dismiss her from employment. In its Decision19 dated June 8, 2011, the CA found
no basis to deviate from the oft-repeated tenet that
A month after the above ruling, or on June 22, 2007, the findings of fact and conclusions of the NLRC
the petitioner tendered her written "forced" when supported by substantial evidence are
resignation,17 wherein she complained that she was generally accorded not only great weight and respect
being subjected to ridicule by clients and co- but even finality, and are thus deemed binding.20
employees alike on account of her floating status
since the time she refused to accept her transfer. She Petition for Review in the Supreme Court
likewise claimed that she was being compelled to
accept the position of Provincial Coordinator without Now on petition for review to this Court, the
due process. petitioner maintains that her lateral transfer from
Category Buyer to Provincial Coordinator was a
On appeal, the NLRC in its Decision18 dated February demotion amounting to constructive dismissal
25, 2009 sustained the findings of the LA. It agreed because her reassignment was not a valid exercise of
that the lateral transfer of the petitioner from management prerogative, but was done in bad faith
Category Buyer to Provincial Coordinator was not a and without due process. She claims that the
demotion amounting to constructive dismissal, since respondents manipulated the facts to show that she
both positions belonged to Job Level 5 and between was tardy; that they even surreptitiously drew up a
them there is no significant disparity in terms of the new organizational chart of the Merchandising
requirements of skill, experience and aptitude. Department of RSC, soon after she filed her
Contrary to the petitioner’s assertion, the NLRC complaint for illegal dismissal, to show that the
found that the position of Provincial Coordinator is position of Provincial Coordinator belonged to Job
not a rank-and-file position but in fact requires the Level 5 as the Category Buyer, and not one level
exercise of discretion and independent judgment, as below; that the company deliberately embarrassed
her when it cut off her email access; that they sent Concerning the transfer of employees, these are the
memoranda to her clients that she was no longer a following jurisprudential guidelines: (a) a transfer is a
Category Buyer, and to the various Robinsons movement from one position to another of equivalent
branches that she was now a Provincial Coordinator, rank, level or salary without break in the service or a
while Milo Padilla (Padilla) was taking over her former lateral movement from one position to another of
position as Category Buyer; that for seven (7) equivalent rank or salary; (b) the employer has the
months, they placed her on floating status and inherent right to transfer or reassign an employee for
subjected her to mockery and ridicule by the legitimate business purposes; (c) a transfer becomes
suppliers and her co-employees; that not only was unlawful where it is motivated by discrimination or
there no justification for her transfer, but the bad faith or is effected as a form of punishment or is
respondents clearly acted in bad faith and with a demotion without sufficient cause; (d) the employer
discrimination, insensibility and disdain to make her must be able to show that the transfer is not
stay with the company intolerable for her. unreasonable, inconvenient, or prejudicial to the
employee.23 (Citations omitted)
Our Ruling
In Philippine Japan Active Carbon Corporation v.
We find no merit in the petition. NLRC,24 it was held that the exercise of
management’s prerogative concerning the employees’
This Court has consistently refused to interfere with work assignments is based on its assessment of the
the exercise by management of its prerogative to qualifications, aptitudes and competence of its
regulate the employees’ work assignments, the employees, and by moving them around in the
working methods and the place and manner of work. various areas of its business operations it can
ascertain where they will function with maximum
benefit to the company.1âwphi1
As we all know, there are various laws imposing all
kinds of burdens and obligations upon the employer
in relation to his employees, and yet as a rule this It is the employer’s prerogative, based on its
Court has always upheld the employer’s prerogative assessment and perception of its employees’
to regulate all aspects of employment relating to the qualifications, aptitudes, and competence, to move
employees’ work assignment, the working methods them around in the various areas of its business
and the place and manner of work. Indeed, labor operations in order to ascertain where they will
laws discourage interference with an employer’s function with maximum benefit to the company. An
judgment in the conduct of his business.21 employee’s right to security of tenure does not give
him such a vested right in his position as would
deprive the company of its prerogative to change his
In Rural Bank of Cantilan, Inc. v. Julve,22 the Court assignment or transfer him where he will be most
had occasion to summarize the general
useful. When his transfer is not unreasonable, nor
jurisprudential guidelines affecting the right of the
inconvenient, nor prejudicial to him, and it does not
employer to regulate employment, including the involve a demotion in rank or a diminution of his
transfer of its employees: salaries, benefits, and other privileges, the employee
may not complain that it amounts to a constructive
Under the doctrine of management prerogative, every dismissal.25
employer has the inherent right to regulate,
according to his own discretion and judgment, all As a privilege inherent in the employer’s right to
aspects of employment, including hiring, work control and manage its enterprise effectively, its
assignments, working methods, the time, place and freedom to conduct its business operations to achieve
manner of work, work supervision, transfer of its purpose cannot be denied.26 We agree with the
employees, lay-off of workers, and discipline, appellate court that the respondents are justified in
dismissal, and recall of employees. The only moving the petitioner to another equivalent position,
limitations to the exercise of this prerogative are which presumably would be less affected by her
those imposed by labor laws and the principles of
habitual tardiness or inconsistent attendance than if
equity and substantial justice. she continued as a Category Buyer, a "frontline
position" in the day-to-day business operations of a
While the law imposes many obligations upon the supermarket such as Robinsons.
employer, nonetheless, it also protects the employer’s
right to expect from its employees not only good If the transfer of an employee is not unreasonable, or
performance, adequate work, and diligence, but also
inconvenient, or prejudicial to him, and it does not
good conduct and loyalty. In fact, the Labor Code
involve a demotion in rank or a diminution of his
does not excuse employees from complying with valid salaries, benefits and other privileges, the employee
company policies and reasonable regulations for their may not complain that it amounts to a constructive
governance and guidance. dismissal.
As we have already noted, the respondents had the grievances and how she ignored the memoranda of
burden of proof that the transfer of the petitioner was Sarte asking her to explain her refusal to accept her
not tantamount to constructive dismissal, which as transfer. All that the petitioner could say was that it
defined in Blue Dairy Corporation v. NLRC,27 is a was a demotion and that her floating status
quitting because continued employment is rendered embarrassed her before the suppliers and her co-
impossible, unreasonable or unlikely, or an offer employees.
involving a demotion in rank and diminution of pay:
The respondents have discharged the burden of proof
The managerial prerogative to transfer personnel that the transfer of the petitioner was not
must be exercised without grave abuse of discretion, tantamount to constructive dismissal.
bearing in mind the basic elements of justice and fair
play. Having the right should not be confused with In Jarcia Machine Shop and Auto Supply, Inc. v.
the manner in which that right is exercised. Thus, it NLRC,32 a machinist who had been employed with
cannot be used as a subterfuge by the employer to the petitioner company for 16 years was reduced to
rid himself of an undesirable worker. In particular, the service job of transporting filling materials after
the employer must be able to show that the transfer he failed to report for work for one (1) day on account
is not unreasonable, inconvenient or prejudicial to of an urgent family matter. This is one instance
the employee; nor does it involve a demotion in rank where the employee’s demotion was rightly held to be
or a diminution of his salaries, privileges and other an unlawful constructive dismissal because the
benefits. Should the employer fail to overcome this employer failed to show substantial proof that the
burden of proof, the employee’s transfer shall be employee’s demotion was for a valid and just cause:
tantamount to constructive dismissal, which has
been defined as a quitting because continued In case of a constructive dismissal, the employer has
employment is rendered impossible, unreasonable or the burden of proving that the transfer and demotion
unlikely; as an offer involving a demotion in rank and of an employee are for valid and legitimate grounds
diminution in pay. Likewise, constructive dismissal such as genuine business necessity. Particularly, for
exists when an act of clear discrimination, a transfer not to be considered a constructive
insensibility or disdain by an employer has become dismissal, the employer must be able to show that
so unbearable to the employee leaving him with no such transfer is not unreasonable, inconvenient, or
option but to forego with his continued employment. prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries,
Thus, as further held in Philippine Japan Active privileges and other benefits. Failure of the employer
Carbon Corporation,28 when the transfer of an to overcome this burden of proof, the employee’s
employee is not unreasonable, or inconvenient, or demotion shall no doubt be tantamount to unlawful
prejudicial to him, and it does not involve a demotion constructive dismissal. x x x.33 (Citation omitted)
in rank or a diminution of his salaries, benefits and
other privileges, the employee may not complain that In the case at bar, we agree with the appellate court
it amounts to a constructive dismissal.29 that there is substantial showing that the transfer of
the petitioner from Category Buyer to Provincial
But like all other rights, there are limits to the Coordinator was not unreasonable, inconvenient, or
exercise of managerial prerogative to transfer prejudicial to her. The petitioner failed to dispute
personnel, and on the employer is laid the burden to that the job classifications of Category Buyer and
show that the same is without grave abuse of Provincial Coordinator are similar, or that they
discretion, bearing in mind the basic elements of command a similar salary structure and
justice and fair play.30 Indeed, management responsibilities. We agree with the NLRC that the
prerogative may not be used as a subterfuge by the Provincial Coordinator’s position does not involve
employer to rid himself of an undesirable worker.31 mere clerical functions but requires the exercise of
discretion from time to time, as well as independent
Interestingly, although the petitioner claims that she judgment, since the Provincial Coordinator gives
was constructively dismissed, yet until the appropriate recommendations to management and
unfavorable decision of the LA on May 30, 2007, for ensures the faithful implementation of policies and
seven (7) months she continued to collect her salary programs of the company. It even has influence over
while also adamantly refusing to heed the order of a Category Buyer because of its recommendatory
Sarte to report to the Metroeast Depot. It was only on function that enables the Category Buyer to make
June 22, 2007, after the LA’s decision, that she filed right decisions on assortment, price and quantity of
her "forced" resignation. Her deliberate and the items to be sold by the store.34
unjustified refusal to assume her new assignment is
a form of neglect of duty, and according to the LA, an We also cannot sustain the petitioner’s claim that
act of insubordination. We saw how the company she was not accorded due process and that the
sought every chance to hear her out on her respondents acted toward her with discrimination,
insensibility, or disdain as to force her to forego her upon the Supreme Court and will not normally be
continued employment. In addition to verbal disturbed.
reminders from Sarte, the petitioner was asked in
writing twice to explain within 48 hours her refusal xxxx
to accept her transfer. In the first, she completely
remained silent, and in the second, she took four (4) As earlier stated, we find no basis for deviating from
days to file a mere one-paragraph reply, wherein she the oft espoused legal tenet that findings of facts and
simply said that she saw the Provincial Coordinator conclusion of the labor arbiter are generally accorded
position as a demotion, hence she could not accept not only great weight and respect but even clothed
it. Worse, she may even be said to have committed with finality and deemed binding on this Court as
insubordination when she refused to turn over her long as they are supported by substantial evidence,
responsibilities to the new Category Buyer, Padilla, without any clear showing that such findings of fact,
and to assume her new responsibilities as Provincial as affirmed by the NLRC, are bereft of substantiation.
Coordinator and report to the Metroeast Depot as More so, when passed upon and upheld by the Com1
directed. This was precisely the reason why the of Appeals, they are binding and conclusive upon us
petitioner was kept on floating status. To her and will not normally be disturbed; x x x.37 (Citations
discredit, her defiance constituted a neglect of duty, omitted)
or an act of insubordination, per the LA.
It is our ruling, that the findings of fact and
Neither can we consider tenable the petitioner’s conclusion of the LA, as affirmed by the NLRC, are
contention that the respondents deliberately held her supported by substantial evidence, as found by the
up to mockery and ridicule when they cut off her CA.
email access, sent memoranda to her clients that she
was no longer a Category Buyer, and to the various
Robinsons branches that she was now a Provincial WHEREFORE, the premises considered, the Decision
Coordinator on floating status and that Padilla was of the Court of Appeals dated June 8, 2011 in CA-
G.R. SP No. 109604 is AFFIRMED.
taking over her position as the new Category Buyer.
It suffices to state that these measures are the logical
steps to take for the petitioner’s unjustified SO ORDERED.
resistance to her transfer, and were not intended to
subject her to public embarrassment.

Judicial review of labor cases does not go beyond the G.R. No. 106370 September 8, 1994
evaluation of the sufficiency of the evidence upon
which labor officials’ findings rest.
PHILIPPINE GEOTHERMAL, INC., petitioner,
vs.
Finally, as reiterated in Acebedo Optical,35 this Court NATIONAL LABOR RELATIONS COMMISSION and
is not a trier of facts, and only errors of law are EDILBERTO M. ALVAREZ, respondents.
generally reviewed in petitions for review on certiorari
criticizing decisions of the CA. Questions of fact are
Romulo, Mabanta, Buenaventura, Sayoc & De Los
not entertained, and in labor cases, this doctrine
Angeles for petitioner.
applies with greater force.
Fidel Angelito I. Arias for private respondent.
Factual questions are for labor tribunals to
resolve.36 Thus:

Judicial Review or labor cases does not go beyond

the evaluation of the sufficiency of the evidence upon PADILLA, J.:
which its labor officials' findings rest. As such, the
findings of facts and conclusion of the NLRC are Petitioner Philippine Geothermal, Incorporated filed
generally accorded not only great weight and respect the present petition for certiorari seeking the
but even clothed with finality and deemed binding on reversal of the decision of public respondent National
this Court as long as they are supported by Labor Relation Commision In NLRC CA No. L-
substantial evidence. This Court finds no basis for 000295-91/RB-IV-1-3583-91 entitled "Edilberto M.
deviating from said doctrine without any clear Alvarez v. Philippine Geothermal, Inc. et al."
showing that the findings of the Labor Arbiter, as
affirmed by the NLRC, are bereft of substantiation. The relevant facts of this case are as follows:
Particularly when passed upon and upheld by the
Court of Appeals, they are binding and conclusive Private respondent Edilberto M. Alvarez was first
employed by petitioner on 2 July 1979. On 31 May
1989, private respondent, who was then occupying On 28 December 1989, Dr. Leagogo, after examining
the position of Steam Test Operator II, injured his Alvarez, certified that the latter's injury had healed
right wrist when a steam-pressured "chicksan swivel completely and that he could thus return to his pre-
joint assembly" exploded while he was checking a injury work.
geothermal well operated by petitioner. As a result,
private respondent's right arm was placed in a On the same day, Alvarez consulted another doctor,
plaster cast and he was confined at the San Pablo Dr. Angela D.V. Garcia, a private physician, who
Doctor's Hospital from 31 May 1989 to 3 June 1989. likewise confirmed that there were "no
contraindications for him (Alvarez) not to attend to
Dr. Oscar M. Brion, the attending physician, his work."
diagnosed private respondent's injuries to be:
On 29 December 1989, based on Dr. Leagogo's
1) Complete fracture/dislocation distal findings, petitioner wrote Alvarez stating:
radius (r);
This is to inform you that based on the
2) Complete fracture styloid process examination performed on December
and dislocation of the ulna; 28, 1989 by your attending physician,
Dr. Liberato Antonio C. Leagogo, Jr.,
3) Right pelvic contusion, which your right wrist fracture is completely
required a recuperation period of healed as stated in the attached
approximately forty-five (45) days. medical certificate. Therefore, you are
advised to go back to your regular
Petitioner thus gave private respondent a fifty (50) duty as an Operator II at the Well
days "work-connected accident" (WCA) leave with pay Testing Section effective immediately.
until 29 July 1989. Petitioner also referred private
respondent's case to Dr. Liberato A.C. Leagogo, Jr. of xxx xxx xxx
the Philippine Orthopedic Institute, at petitioner's
expense. Any absences you may incur in the
future will be subject to our existing
On 26 July 1989, Dr. Leagogo certified that private policy on leaves and absences. . . . 2
respondent was fit to return to work with the
qualification however, that he could only perform Since Alvarez failed to report for work from 2 to 10
light work. Thus, on 31 July 1989, when respondent January 1990, petitioner again wrote him stating:
Alvarez returned to work, he was assigned to
"caliberation of barton recorders", in accordance with . . . it is indicated that your therapy
the doctor's recommendations. has no contraindication for you not to
attend to your work. However, from
On 13 November 1989, Alvarez was again examined that date up to now, January 11, you
by Dr. Leagogo who issued a medical certificate have not reported for work. . . .
which reads: 1
Therefore, as of January 11, 1990, you
This is with regards [sic] the work are considered to be "Absent Without
recommendation for Mr. Bert Alvarez. Official Leave (AWOL) and Without
Pay". This letter serves as a warning
At this point in time, 5 months post- letter per our rules and regulations,
injury, he can be given moderate Unauthorized absences, rule 3, par. i,
working activities, pulling, pushing, page 31.
carrying and turning a 20 lbs.-25 lbs.
weight/force. You are advised to immediately report
for work or further disciplinary action
On the 6th month, he can go back to will be taken. 3
his previous job.
After reading the letter. Alvarez wrote a hand-written
Despite this certification, respondent Alvarez note on petitioner's copy of the letter, stating "Please
continued to absent himself from work and by the wait for my doctor's medical certificate from Dr.
end of 1989 he had used ten (10) days of vacation Relampagos."
leave, eighteen (18) days of sick leave, fifteen (15)
days of WCA leave and four (4) days of emergency On 19 January 1990, Dr. Victoria Pineda, an
leave for the period starting 31 July 1989. orthopedic doctor of the National Orthopedic Hospital
whom Alvarez also consulted issued the following eighteen (18) working days with three (3) days off,
medical certificate: petitioner wrote Alvarez a fourth time stating in part:

Patient has reached a plateau in his This refers to your continued refusal
rehabilitation with limitations of wrist to report back to work following your
motion (r) as regular. Fit for work. 4 recovery from a work-related accident
involving your right wrist last May 31,
On 20 January 1990, Alvarez consulted Dr. 1989. That you have recovered is
Francisco, another orthopedic doctor at the based on the certification of four (4)
Polymedic General Hospital, who recommended a set physicians, including the company-
of laboratory tests to be conducted on Alvarez' right retained orthopedic doctor and three
wrist. (3) other orthopedic specialists whom
you personally chose and consulted.
On 1 February 1990, Dr. Relampagos of the National
Orthopedic Hospital certified Alvarez to be "Fit for xxx xxx xxx
light job." 5
In order not to lose your income, the
On 6 February 1990, Dr. Francisco, who read and company has allowed you to charge all
interpreted the results of the tests undertaken on these unwarranted absences against
Alvarez at the St. Luke's Medical Center, certified your accumulated sick leave credits.
that there is no "hindrance for him (Mr. Alvarez) to do Our records show that as of February
his office work." 6 7, 1990, you have used up all your
remaining sick leaves. We would like
Notwithstanding the above medical findings, to emphasize that from February 8 to
respondent Edilberto M. Alvarez continued to incur 28, all your absences are considered
numerous absences. He did not report for work in unauthorized and without pay. Please
the months of January and February 1990. be reminded that, according to
company rules, employees who go on
unauthorized absences of six (6) or
On 7 February 1990, petitioner addressed its third more days are subject to dismissal.
letter to Alvarez stating:
The company, therefore, believes that
The attached medical certificates from
it has given all the time, help, and
Dr. Garcia, Dr. Pineda, considerations in your case. We go by
Dr. Relampagos, Dr. Francisco, and
the doctor's certifications that you are
Dr. Leagogo all indicate that you are fit
already fit to work.
to work. Based on these medical
certificates, your absences from
January 11 to February 6 1990 (23 In view of the above, we are giving you
working days) will be charged to your a final warning. Should you fail to
sick leave credits. Be advised that report to work on Monday, March 5,
your sick leave credits will be 1990 your employment with the
exhausted on February 8, 1990 company will be terminated. 8
therefore, you will not be paid for
subsequent absences. This fourth warning letter of petitioner was
unheeded. Alvarez failed to report for work; neither
In addition, if you fail to report to work did he inform petitioner of the reason for his
and are unable to present a medical continued absences.
certificate explaining your absences,
you will face disciplinary action. I am As a consequence, petitioner terminated Alvarez,
enclosing the statement of company employment on
policy on absences for your 9 March 1990.
information and would strongly
suggest that you report to work On 19 June 1990, Alvarez filed a complaint for illegal
immediately. 7 dismissal against petitioner with the Regional
Arbitration Branch, Region IV.
Under petitioner's company rules, employees who
incur unauthorized absences of six (6) days or more On 19 December 1990, the labor arbiter dismissed
are subject to dismissal. Thus, when Alvarez failed to the complaint, without prejudice, for failure of the
report for work from 8 to 28 February 1990, a total of
complainant to submit his position paper despite empress us. In C.W. Tan Manufacturing v.
repeated orders from the labor arbiter. NLRC, 11 we held that "the broader interest of justice
and the desired objective of deciding the case on the
On 16 January 1991, private respondent refiled his merits demand that the appeal be given due course."
complaint for illegal dismissal.
On the issue of whether or not Edilberto M. Alvarez
On 6 September 1991 the labor arbiter rendered a was validly dismissed, we rule in the affirmative and
decision holding private respondent's termination consequently the decision of respondent NLRC is set
from employment as valid and justified. aside.

On appeal to the public respondent National Labor Article 282(b) of the Labor Code provides that an
Relations Commission (NLRC), the decision was employer may validly dismiss an employee for gross
reserved and set aside. Petitioner was ordered to and habitual neglect by the employee of his duties. In
reinstate Edilberto M. Alvarez to his former position the present case, it is clear that private respondent
without loss of seniority rights but without was guilty of seriously neglecting his duties.
backwages.
The records establish that as early as 26 July 1989,
A Motion for Reconsideration was denied on 15 May Dr. Leagogo already had certified that Alvarez could
1992. Petitioner then filed the present petition perform light work. On 13 November 1989,
for certiorari, based on two (2) grounds namely: Dr. Leagogo certified that Alvarez could perform
moderate work and it was further certified that by
RESPONDENT COMMISSION ABUSED December 1989, Alvarez could return to his pre-
ITS DISCRETION AND ACTED injury duties. Notwithstanding these certifications,
BEYOND ITS JURISDICTION BY Alvarez continued to incur unexplained absences
ENTERTAINING AN APPEAL THAT until his dismissal on 9 March 1990.
WAS FILED OUT OF TIME
A review of Alvarez' record of attendance shows that
EVEN ON THE MERITS OF THE from August to December 1989, he reported for work
CASE, RESPONDENT COMMISSION only seventy-seven (77) times while he incurred forty-
ABUSED ITS DISCRETION BY seven (47) absences.
FAILING TO APPRECIATE
OVERWHELMING EVIDENCE An employee who earnestly desires to resume his
UNIFORMLY SHOWING THAT THE regular duties after recovering from an injury
TERMINATION OF MR. ALVAREZ WAS undoubtedly will not go through the trouble of
VALID AND JUSTIFIED. 9 getting opinions from five (5) different of getting
opinions from five (5) different physicians before
On the issue of whether or not the appeal from the going back to work after he has been certified to be
decision of the labor arbiter to the NLRC was filed fit to return to his regular duties.
within the ten (10) day reglementary period, it is
undisputed that private respondent received a copy Petitioner has not been shown to be without
of the labor arbiter's decision on 5 September 1991. sympathy or concern for Alvarez. He was given fifty
Alvarez thus had up to 15 September 1991 to perfect (50) days work-connected accident (WCA) leave with
his appeal. Since this last mentioned date was a pay to allow him to recuperate from his injury
Sunday, private respondent had to file his appeal on without loss of earnings. He was allowed to use his
the next business day, 16 September 1991. leave credits and was actually given an additional
fifteen (15) days WCA leave to allow him to consult
Petitioner contends that the appeal was filed only on his doctors and fully recover from his injuries.
20 September 1991. Respondent NLRC however Moreover, petitioner gave Alvarez several warnings to
found that private respondent filed his appeal by report for work, otherwise, he would face disciplinary
registered mail on 16 September 1991, the same day sanctions. In spite of these warnings, Alvarez was
that petitioner's counsel was furnished copies of said absent without official leave (AWOL) for eighteen (18)
appeal. 10 days. Under company policy, of which Alvarez was
made aware, employees who incur without valid
reason six (6) or more absences are subject to
We will not disturb this factual finding of the NLRC.
dismissal.

The contention that even assuming arguendo that Petitioner, in its fourth and last warning letter to
the appeal was filed on time, the appeal fee was paid
Alvarez, was willing to allow him to resume his work
four (4) days late (and, therefore, the appeal to the
in spite of the eighteen (18) days he went on AWOL. It
NLRC should be dismissed) likewise fails to entirely
was made clear, however, that should private G.R. No. 85985 August 13, 1993
respondent still fail to report for work on 5 March
1990, his employment would be terminated. PHILIPPINE AIRLINES, INC. (PAL), petitioner,
vs.
Private respondent failed to report for work on 5 NATIONAL LABOR RELATIONS COMMISSION,
March 1990. Petitioner validly dismissed him not LABOR ARBITER ISABEL P. ORTIGUERRA and
only for violation of company policy but also for PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION
violation of Section 282(c) of the Labor Code (PALEA), respondents.
aforecited.
Solon Garcia for petitioner.
While it is true that compassion and human
consideration should guide the disposition of casses Adolpho M. Guerzon for respondent PALEA.
involving termination of employment since it affects
one's source or means of livelihood, it should not be
overlooked that the benefits accorded to labor do not
include compelling an employer to retain the services
of an employee who has been shown to be a gross MELO, J.:
liability to the employer. The law in protecting the
rights of the employees authorizes neither oppression In the instant petition for certiorari, the Court is
nor self-destruction of the employer. 12 It should be presented the issue of whether or not the formulation
made clear that when the law tilts the scale of justice of a Code of Discipline among employees is a shared
in favor of labor, it is but a recognition of the responsibility of the employer and the employees.
inherent economic inequality between labor and
management. The intent is to balance the scale of On March 15, 1985, the Philippine Airlines, Inc.
justice; to put the two parties on relatively equal (PAL) completely revised its 1966 Code of Discipline.
positions. There may be cases where the The Code was circulated among the employees and
circumstances warrant favoring labor over the was immediately implemented, and some employees
interests of management but never should the scale were forthwith subjected to the disciplinary measures
be so tilted if the result is an injustice to the embodied therein.
employer. Justitia nemini neganda est (Justice is to
be denied to none). Thus, on August 20, 1985, the Philippine Airlines
Employees Association (PALEA) filed a complaint
In Cando v. National Labor Relations before the National Labor Relations Commission
Commission 13 the Court awarded separation pay to (NLRC) for unfair labor practice (Case No. NCR-7-
an employee who was terminated for unuathorized 2051-85) with the following remarks: "ULP with
absences. We believe that separation pay of one-half arbitrary implementation of PAL's Code of Discipline
(1/2) month salary for every year of service is without notice and prior discussion with Union by
adequate in this case. Management" (Rollo, p. 41). In its position paper,
PALEA contended that PAL, by its unilateral
WHEREFORE, the decision of respondent National implementation of the Code, was guilty of unfair
Labor Relations Commision is hereby SET ASIDE and labor practice, specifically Paragraphs E and G of
the decision of the Labor Arbiter is reinstated with Article 249 and Article 253 of the Labor Code. PALEA
the MODIFICATION that petitioner Philippine alleged that copies of the Code had been circulated in
Geothermal, Inc. is ordered to pay private respondent limited numbers; that being penal in nature the Code
Edilberto M. Alvarez separation pay equivalent to must conform with the requirements of sufficient
one-half (1/2) month salary for every year of service publication, and that the Code was arbitrary,
starting from 2 July 1979 until his dismissal on 9 oppressive, and prejudicial to the rights of the
March 1990. employees. It prayed that implementation of the Code
be held in abeyance; that PAL should discuss the
substance of the Code with PALEA; that employees
SO ORDERED.
dismissed under the Code be reinstated and their
cases subjected to further hearing; and that PAL be
declared guilty of unfair labor practice and be
ordered to pay damages (pp. 7-14, Record.)

PAL filed a motion to dismiss the complaint,

asserting its prerogative as an employer to prescibe
rules and regulations regarding employess' conduct
in carrying out their duties and functions, and
alleging that by implementing the Code, it had not
violated the collective bargaining agreement (CBA) or evidence, the labor arbiter considered the case
any provision of the Labor Code. Assailing the submitted for decision. On November 7, 1986, a
complaint as unsupported by evidence, PAL decision was rendered finding no bad faith on the
maintained that Article 253 of the Labor Code cited part of PAL in adopting the Code and ruling that no
by PALEA reffered to the requirements for negotiating unfair labor practice had been committed. However,
a CBA which was inapplicable as indeed the current the arbiter held that PAL was "not totally fault free"
CBA had been negotiated. considering that while the issuance of rules and
regulations governing the conduct of employees is a
In its reply to PAL's position paper, PALEA "legitimate management prerogative" such rules and
maintained that Article 249 (E) of the Labor Code regulations must meet the test of "reasonableness,
was violated when PAL unilaterally implemented the propriety and fairness." She found Section 1 of the
Code, and cited provisions of Articles IV and I of Code aforequoted as "an all embracing and all
Chapter II of the Code as defective for, respectively, encompassing provision that makes punishable any
running counter to the construction of penal laws offense one can think of in the company"; while
and making punishable any offense within PAL's Section 7, likewise quoted above, is "objectionable for
contemplation. These provisions are the following: it violates the rule against double jeopardy thereby
ushering in two or more punishment for the same
Sec. 2. Non-exclusivity. — This Code misdemeanor." (pp. 38-39, Rollo.)
does not contain the entirety of the
rules and regulations of the company. The labor arbiter also found that PAL "failed to prove
Every employee is bound to comply that the new Code was amply circulated." Noting that
with all applicable rules, regulations, PAL's assertion that it had furnished all its
policies, procedures and standards, employees copies of the Code is unsupported by
including standards of quality, documentary evidence, she stated that such "failure"
productivity and behaviour, as issued on the part of PAL resulted in the imposition of
and promulgated by the company penalties on employees who thought all the while
through its duly authorized officials. that the 1966 Code was still being followed. Thus,
Any violations thereof shall be the arbiter concluded that "(t)he phrase ignorance of
punishable with a penalty to be the law excuses no one from compliance . . . finds
determined by the gravity and/or application only after it has been conclusively shown
frequency of the offense. that the law was circulated to all the parties
concerned and efforts to disseminate information
Sec. 7. Cumulative Record. — An regarding the new law have been exerted. (p.
employee's record of offenses shall be 39, Rollo.) She thereupon disposed:
cumulative. The penalty for an offense
shall be determined on the basis of his WHEREFORE, premises considered,
past record of offenses of any nature respondent PAL is hereby ordered as
or the absence thereof. The more follows:
habitual an offender has been, the
greater shall be the penalty for the 1. Furnish all employees with the new
latest offense. Thus, an employee may Code of Discipline;
be dismissed if the number of his past
offenses warrants such penalty in the 2. Reconsider the cases of employees
judgment of management even if each meted with penalties under the New
offense considered separately may not Code of Discipline and remand the
warrant dismissal. Habitual offenders same for further hearing; and
or recidivists have no place in PAL. On
the other hand, due regard shall be 3. Discuss with PALEA the
given to the length of time between objectionable provisions specifically
commission of individual offenses to tackled in the body of the decision.
determine whether the employee's
conduct may indicate occasional
All other claims of the complainant
lapses (which may nevertheless
require sterner disciplinary action) or union (is) [are] hereby, dismissed for
a pattern of incorrigibility. lack of merit.

SO ORDERED. (p. 40, Rollo.)

Labor Arbiter Isabel P. Ortiguerra handling the case
called the parties to a conference but they failed to
appear at the scheduled date. Interpreting such PAL appealed to the NLRC. On August 19, 1988, the
failure as a waiver of the parties' right to present NLRC through Commissioner Encarnacion, with
Presiding Commissioner Bonto-Perez and have resulted in cooperation rather
Commissioner Maglaya concurring, found no than resistance to the Code. In fact,
evidence of unfair labor practice committed by PAL labor-management cooperation is now
and affirmed the dismissal of PALEA's charge. "the thing." (pp. 3-4, NLRC Decision ff.
Nonetheless, the NLRC made the following p. 149, Original Record.)
observations:
Respondent Commission thereupon disposed:
Indeed, failure of management to
discuss the provisions of a WHEREFORE, premises considered,
contemplated code of discipline which we modify the appealed decision in the
shall govern the conduct of its sense that the New Code of Discipline
employees would result in the erosion should be reviewed and discussed
and deterioration of an otherwise with complainant union, particularly
harmonious and smooth relationship the disputed provisions [.] (T)hereafter,
between them as did happen in the respondent is directed to furnish each
instant case. There is no dispute that employee with a copy of the appealed
adoption of rules of conduct or Code of Discipline. The pending cases
discipline is a prerogative of adverted to in the appealed decision if
management and is imperative and still in the arbitral level, should be
essential if an industry, has to survive reconsidered by the respondent
in a competitive world. But labor Philippine Air Lines. Other
climate has progressed, too. In the dispositions of the Labor Arbiter are
Philippine scene, at no time in our sustained.
contemporary history is the need for a
cooperative, supportive and smooth SO ORDERED. (p. 5, NLRC Decision.)
relationship between labor and
management more keenly felt if we are
to survive economically. Management PAL then filed the instant petition
for certiorari charging public respondents with grave
can no longer exclude labor in the
abuse of discretion in: (a) directing PAL "to share its
deliberation and adoption of rules and
regulations that will affect them. management prerogative of formulating a Code of
Discipline"; (b) engaging in quasi-judicial legislation
in ordering PAL to share said prerogative with the
The complainant union in this case union; (c) deciding beyond the issue of unfair labor
has the right to feel isolated in the practice, and (d) requiring PAL to reconsider pending
adoption of the New Code of cases still in the arbitral level (p. 7, Petition; p.
Discipline. The Code of Discipline 8, Rollo.)
involves security of tenure and loss of
employment — a property right! It is
time that management realizes that to As stated above, the Principal issue submitted for
attain effectiveness in its conduct resolution in the instant petition is whether
rules, there should be candidness and management may be compelled to share with the
openness by Management and union or its employees its prerogative of formulating
a code of discipline.
participation by the union,
representing its members. In fact, our
Constitution has recognized the PAL asserts that when it revised its Code on March
principle of "shared responsibility" 15, 1985, there was no law which mandated the
between employers and workers and sharing of responsibility therefor between employer
has likewise recognized the right of and employee.
workers to participate in "policy and
decision-making process affecting Indeed, it was only on March 2, 1989, with the
their rights . . ." The latter provision approval of Republic Act No. 6715, amending Article
was interpreted by the Constitutional 211 of the Labor Code, that the law explicitly
Commissioners to mean participation considered it a State policy "(t)o ensure the
in "management"' (Record of the participation of workers in decision and policy-
Constitutional Commission, Vol. II). making processes affecting the rights, duties and
welfare." However, even in the absence of said clear
In a sense, participation by the union provision of law, the exercise of management
in the adoption of the code if conduct prerogatives was never considered boundless. Thus,
could have accelerated and enhanced in Cruz vs. Medina (177 SCRA 565 [1989]) it was
their feelings of belonging and would
held that management's prerogatives must be contrary, which finding, to say the least is entitled to
without abuse of discretion. great respect.

In San Miguel Brewery Sales Force Union (PTGWO) vs. PAL posits the view that by signing the 1989-1991
Ople (170 SCRA 25 [1989]), we upheld the collective bargaining agreement, on June 27, 1990,
company's right to implement a new system of PALEA in effect, recognized PAL's "exclusive right to
distributing its products, but gave the following make and enforce company rules and regulations to
caveat: carry out the functions of
management without having to discuss the same
So long as a company's management with PALEA and much less, obtain the
prerogatives are exercised in good faith latter's conformity thereto" (pp. 11-12, Petitioner's
for the advancement of the employer's Memorandum; pp 180-181, Rollo.) Petitioner's view is
interest and not for the purpose of based on the following provision of the agreement:
defeating or circumventing the rights
of the employees under special laws or The Association recognizes the right of
under valid agreements, this Court the Company to determine matters of
will uphold them. management it policy and Company
(at p. 28.) operations and to direct its manpower.
Management of the Company includes
All this points to the conclusion that the exercise of the right to organize, plan, direct and
managerial prerogatives is not unlimited. It is control operations, to hire, assign
circumscribed by limitations found in law, a employees to work, transfer employees
collective bargaining agreement, or the general from one department, to another, to
principles of fair play and justice (University of Sto. promote, demote, discipline, suspend
Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as or discharge employees for just cause;
enunciated in Abbott Laboratories (Phil.), vs. to lay-off employees for valid and legal
NLRC (154 713 [1987]), it must be duly established causes, to introduce new or improved
that the prerogative being invoked is clearly a methods or facilities or to change
managerial one. existing methods or facilities and the
right to make and enforce Company
A close scrutiny of the objectionable provisions of the rules and regulations to carry out the
Code reveals that they are not purely business- functions of management.
oriented nor do they concern the management aspect
of the business of the company as in the San The exercise by management of its
Miguel case. The provisions of the Code clearly have prerogative shall be done in a just
repercusions on the employee's right to security of reasonable, humane and/or lawful
tenure. The implementation of the provisions may manner.
result in the deprivation of an employee's means of
livelihood which, as correctly pointed out by the Such provision in the collective bargaining agreement
NLRC, is a property right (Callanta, vs Carnation may not be interpreted as cession of employees'
Philippines, Inc., 145 SCRA 268 [1986]). In view of rights to participate in the deliberation of matters
these aspects of the case which border on which may affect their rights and the formulation of
infringement of constitutional rights, we must uphold policies relative thereto. And one such mater is the
the constitutional requirements for the protection of formulation of a code of discipline.
labor and the promotion of social justice, for these
factors, according to Justice Isagani Cruz, tilt "the Indeed, industrial peace cannot be achieved if the
scales of justice when there is doubt, in favor of the employees are denied their just participation in the
worker" (Employees Association of the Philippine discussion of matters affecting their rights. Thus,
American Life Insurance Company vs. NLRC, 199 even before Article 211 of the labor Code (P.D. 442)
SCRA 628 [1991] 635). was amended by Republic Act No. 6715, it was
already declared a policy of the State, "(d) To promote
Verily, a line must be drawn between management the enlightenment of workers concerning their rights
prerogatives regarding business operations per and obligations . . . as employees." This was, of
se and those which affect the rights of the course, amplified by Republic Act No 6715 when it
employees. In treating the latter, management should decreed the "participation of workers in decision and
see to it that its employees are at least properly policy making processes affecting their rights, duties
informed of its decisions or modes action. PAL and welfare." PAL's position that it cannot be saddled
asserts that all its employees have been furnished with the "obligation" of sharing management
copies of the Code. Public respondents found to the prerogatives as during the formulation of the Code,
Republic Act No. 6715 had not yet been enacted
(Petitioner's Memorandum, p. 44; Rollo, p. 212), 2. That defendant, William T. Nolting, is the
cannot thus be sustained. While such "obligation" duly appointed, qualified and acting Auditor
was not yet founded in law when the Code was of the Government of the Philippine Islands.
formulated, the attainment of a harmonious labor-
management relationship and the then already 3. That on June 18, 1920, the Honorable
existing state policy of enlightening workers Charles E. Yeater, then Acting Governor-
concerning their rights as employees demand no less General of the Philippine Islands, cabled the
than the observance of transparency in managerial Secretary of War of the United States, of
moves affecting employees' rights. Washington, D. C., as follows:

Petitioner's assertion that it needed the Appointed as early as possible after

implementation of a new Code of Discipline June 30th, 1920, John Deering and
considering the nature of its business cannot be Robert S. Clemons each to position
overemphasized. In fact, its being a local monopoly in mechanical and electrical engineer,
the business demands the most stringent of effective the date of departure from
measures to attain safe travel for its patrons. residence, under special contracts to
Nonetheless, whatever disciplinary measures are expire December 31st, 1921. Straight
adopted cannot be properly implemented in the salary $4,000 per annum, with
absence of full cooperation of the employees. Such transportation from residence to the
cooperation cannot be attained if the employees are Philippine Islands and return, without
restive on account, of their being left out in the civil service privileges. Advance
determination of cardinal and fundamental matters transportation and request them to
affecting their employment. sail first available vessel.

WHEREFORE, the petition is DISMISSED and the 4. That in accordance with the authority
questioned decision AFFIRMED. No special contained in the said cablegram, above cited,
pronouncement is made as to costs. the Secretary of War, through the Bureau of
Insular Affairs, employed plaintiff on behalf of
SO ORDERED. the Government of the Philippine Islands, and
under date of August 6, 1920, wrote plaintiff,
G.R. No. L-17959 January 24, 1922 confirming the agreement entered into, as
follows:
ROBERT S. CLEMONS, petitioner,
vs. WAR DEPARTMENT
WILLIAM T. NOLTING, as Auditor of the BUREAU OF INSULAR
Government of the Philippine Islands, respondent. AFFAIRS

Fisher & DeWitt for Petitioner. WASHINGTON, August 6,

Acting Attorney-General Tuason for respondent. 1920.

JOHNSON, J.: Major, R. S. CLEMONS,

Air Photo Detachment,
This is an original action commenced in the Supreme Tucson, Arizona.
Court for the writ of mandamus. Its purposes to
compel the respondent "to countersign or cause to be Sir: In accordance with specific
countersigned the original warrant, a copy of which authority contained in a
is set forth in paragraph 10 of the complaint, and to cablegram from the Governor-
deliver the same to the plaintiff so that he may General of the Philippine
present it to the Treasurer of the Philippine Islands Islands, dated June 18, 1920,
and receive payment thereon in the sum of P73.33, you are hereby provisionally
an amount which is alleged to be due him by the appointed to the position of
Government of the Philippine Islands." electrical and mechanical
engineer in the Philippine
The cause was submitted to the court upon the Bureau of Public Works, under
following stipulated as facts: special contract to expire
December 31, 1921, at a
straight salary of $4,000 per
1. That plaintiff is a citizen of the United
annum. This appointment is
States, temporarily residing in the city of
effective as of date of departure
Manila, Philippine Islands.
 from your residence. You will Public Works of the Government of the
be furnished transportation Philippine Islands tendered plaintiff a warrant
from your place of residence in on the Treasurer of the Philippine Islands in
the United States to the the sum of P666.66, Philippine currency, in
Philippine Islands and return full payment of his salary for the month of
upon the completion of the January, 1921.
contract period, but you will
not be entitled to civil service 8. That plaintiff declined to accept the said
privileges of leaves, etc. Upon sum in full discharge of his January, 1921,
your arrival in Manila you salary, but insisted that under his contract
should report at the office of with the Philippine Government he was and is
the Director of Public Works. entitled to receive each month as
compensation for his services the sum of
Kindly acknowledge your $333.33 in United States currency, or a sum
acceptance of this appointment in Philippine currency sufficient to enable him
by signing the inclosed copy to purchase the sum of $333.33 in United
hereof and returning it to this States currency at the rates of exchange
bureau at once. prevailing on the date of each payment, and
demanded that he be paid an additional sum
We are unable at this time to of P73.33, which, with the sum of P666.66,
give you definite information would be the equivalent at the then prevailing
concerning the date of the official rates of exchange of the sum of
vessel on which we will be able $333.33, United States currency.
to secure accommodations for
you, but you will be advised by 9. That the said chief accountant of the
wire as soon as a reservation is Bureau of Public Works, notwithstanding
obtainable. plaintiff's demand, declined and refused to
issue plaintiff a warrant for the payment of
Very respectfully, his January, 1921, salary in any sum in
excess of the sum of P666.66, whereupon
CHAS. C. WALCUTT, JR., plaintiff accepted the said sum of P666.66,
Assistant to Chief of Bureau. under protest, and as constituting only a
partial payment of his salary for the said
month of January, 1921. That plaintiff
Incl.: Copy of this letter. insistently continued his demands upon the
chief accountant of the Bureau of Public
5. That plaintiff received the letter set forth in Works for a warrant on the Treasurer of the
the paragraph next preceding, at Tucson, Philippine Islands for the payment of the sum
Arizona, and immediately replied in writing, of P73.33 to complete the payment of
accepting employment by the Philippine plaintiff's salary for January, 1921,
Government under the terms of the said whereupon the said chief accountant, on
letter, and promptly sailed for Manila and August 8, 1921, upon such demand, issued
entered upon and is still engaged in the in favor of plaintiff a warrant on the Treasurer
discharge of his duties in Bureau of Public of the Philippine Islands in words and figures
Works of the Insular Government of the as follows, to wit:
Philippine Islands under the terms of the said
contract.
No. 833906.
6. That on the 1st day of February, 1921, at THE GOVERNMENT OF THE PHILIPPINE ISL
the rates of exchange then prevailing as fixed TO ROBERT S. CLEMONS, C/o Design. Division, B. P
by the Insular Government of the Philippine "Date, Aug. 8, 1921. Dr.
Islands, the equivalent of $333.33, United "Appropriation, Bureau of Public Works. P73
States currency, in Philippine currency was
Aug. 8, 1921. For premium on P666.66 Dr.
P739.99, and no sum of money in Philippine
Jan.salary of Maj. Robert S.
currency less than P739.99 would at that
Clemons at the rate of 11% to
time purchase $333.33 in United States
cover the difference between
currency.
dollars and Philippine currency.

7. That on or about the 1st day of February, 5-E-g Job

73.
1921, the chief accountant of the Bureau of 14594 C-4
 of
73.33 P
u
bl
I certify that the foregoing account is correct,
ic
just and payable in accordance with law and
W
regulations.
or
k
R. REINOSO, s.
Chief Accountant,
Bureau of Public Works/dp. .........................................
"D. For the Insular Auditor.
Treasury Warrant.
No. 833906.

For premium on P666.66

THE GOVERNMENT OF THE PHILIPPINE
Jan. salary at the rate of 11%
ISLANDS.
to cover the diff. between dollars
Issued under sec. 616,
and Phil. currency.
Adm. Code.

10. That plaintiff caused the said warrant, a copy of

To the TREASURER OF THE PHILIPPINE
which is set forth in the paragraph next preceding, to
ISLANDS:
be presented to the defendant herein, William T.
Nolting, for audit by him in his official capacity as
MANILA, P. I., August 8, 1921. Auditor of the Philippine Government, in accordance
with the laws and regulations governing the auditing
Pay to Robert S. Clemons --- or order the sum department of the Philippine Government; but the
of seventy-three and 33/100 ---- said defendant refused and still refuses to audit the
pesos (P73.33). said warrant or to countersign the same, upon the
ground that notwithstanding the terms of plaintiff's
Payable from the appropriation for Bureau of contract with the Philippine Government, his salary
Public Works. is payable in Philippine currency at the rate of two
pesos for each dollar in United States currency due
Countersigned: plaintiff regardless of the real value of such pesos or
Not valid unless countersigned, the rate at which they may be exchangeable into
United States currency.
R.
R 11. That unless the defendant countersigns or
EI causes to be countersigned the said warrant,
N hereinabove mentioned, the same will not be paid by
O the Treasurer of the Philippine Islands, and plaintiff
S will be unable to collect and receive the said sum of
O P73.33 from the Philippine Government, although
, the necessary funds for the payment thereof are
C available in the hands of the Insular Treasurer and
hi may be disbursed upon the presentation of the
ef warrant above set forth, when countersigned by the
A defendant.
cc
o The only question presented under said stipulated
u facts is, may the Government of the Philippine
nt Islands, when it enters into a contract with an officer
a or employee under a promise to pay his salary in
nt "dollars," pay such salary in Philippine currency at
, the rate of two one if the officer or employee insists
B that his salary should be paid in the terms (specie) of
ur his contract? From the stipulated facts it is seen that
e the Government promised to pay to the petitioner his
a salary in "dollars;" that the contract was made in the
u United States; that the Government offered to pay the
petitioner in "Philippine currency" at the rate of two and private, in the Philippine Islands; that the silver
to one; that at the time the payment in question was Philippine peso, authorized by this Act, shall be legal
offered, Philippine currency was at a discount; that tender in the Philippine Islands for all debts, public
two pesos in Philippine currency was not equivalent and private, unless otherwise specifically provided by
to one "dollar" and the petitioner insisted that his contract." Later, by an Act of the Philippine
salary should be paid in "dollars" or their equivalent Legislature (section 1771 of Act No. 2657) it was
value. provided that "the Philippine silver peso shall be a
legal tender for all debts, public and private, unless
The petitioner in his first proposition contends that otherwise specially provided by contract." That
"the use of the dollar sign '$' in a written contract provision of Act No. 2657 was carried forward and
executed in the United States, signifies dollars in the made section 1613 of Act No. 2711 as above quoted,
United States money." That proposition is admitted without change. The unit of value fixed by the said
by the respondent. The respondent admits that the Act of Congress for the Philippine Islands was again
dollar sign, as found in the contract, stands for fixed by section 1770 of Act No. 2657, which was
dollars in money of the United States. Both the carried forward and made section 1612 of Act No.
petitioner and the respondent admit that the mark 2711. The unit of monetary value in the Philippine
used to denote dollar has obtained general currency Islands, as defined by the Act of Congress of March
and conveys the idea of dollars as definitely as the 2, 1903, was carried forward and adopted by the
word "dollars" itself; hence it is not a valid objection Philippine Legislature in the said Acts Nos. 2657,
to a judgment when the amount thereof is expressed 2711, and 2776. Act No. 2776, however, omitted the
only in figures, preceded by the dollar mark before phrase which was found in the former legislation
the word "dollars" written in the judgment. "unless otherwise specially provided by contract." The
(Kelley vs. Sullivan, 201 Mass., 34; purpose of the omission of that phrase does not
Devenney vs. Devenney, 70 Ohio St., 96; United clearly appear.
States vs. Van Auken, 96 U.S., 366, 368.)
All of the legislation both by Congress and by the
The petitioner further contends that a contract for Philippine Legislature, prior to Act No. 2776. limited
the payment of money, expressed in terms of the the legal tender character of the "silver peso" to the
United States dollars, made in the United States, to payment of debts, public and private, when the
be performed in the Philippine Islands, can be contract did not otherwise provide. Did the omission
discharged only by the payment of the required of that provision in Act No. 2776 make the tender of
amount in United States money or in Philippine the Philippine silver peso, at the rate provided for in
pesos of an equivalent commercial value. defining the unit of value, a legal tender for the
payment of debts, public and private, when the
The respondent contends that under the laws in force contract expressly provided for payment of other
in the Philippine Islands a debt of the Government, specie? Could the Legislature of the Philippine
payable in "dollars," may be paid in Philippine Islands or even Congress alter or change the
currency at the rate of two to one even though the obligation of the contract as the Jones Act of August
debt grew out of a special contract which provided 29, 1916, prohibit absolutely the Legislature of the
that the same should be paid in "dollars." Philippine Islands from adopting any legislation
which would impair the "obligations of contracts."
The right of the legislative department of the state to
It is true that the Legislature of the Philippine Islands
adopt legislation changing or altering the obligation
has provided, by section 1613 of Act No. 2711, as of contract has been answered in the negative so
amended by Act No. 2776, that "the Philippine silver many times that it scarcely merits the citation of
pesos and the gold coins of the United States, at the authorities now in its support. (Casanovas vs. Hord,
rate of one dollar for two pesos, shall be legal tender 8 Phil., 125; Trustees of Dartmouth
in the Philippine Islands for all debts, public and College vs. Woodward, 4 Wheaton [U.S.], 518;
private" . . . . To arrive at a better understanding of
McGee vs. Mathis, 4 Wallace, 143.)
the purposes of the section just quoted, it might be
well to trace the history of the legislation on the
question of the legal tender character of Philippine It is the utmost importance to note that neither in
currency. As early as March 2, 1903, the Congress of the cited Act of Congress nor in section 1613 of the
the United States adopted an act establishing a unit Administrative Code, as amended, is any attempt
of value for the money currency of the Philippine made to determine the ratio at which debts,
Islands. Said Act provided, among other things, "that expressed in terms of United States money and
the unit of value in the Philippine Islands shall be the payable in the Philippine Islands, may be discharged
gold peso, consisting of twelve and nine-tenths grains by the tender and payment of Philippine silver pesos.
of gold, nine-tenths fine, etc.; and the gold coins of Both the Act of Congress and section 1613 of the
the United States at the rate of one dollar for two Administrative Code provide that debts due
pesos . . . shall be legal tender for all debts, public in Philippine silver pesos may be discharged by the
payment of "gold coins of the United States at the First. To exchange on demand at the Insular
rate of one dollar for two pesos," but Treasury in Manila for Philippine currency
the converse proposition is nowhere to be found in offered in sums of not less than ten thousand
the law. The reason for this is very plain. Congress by pesos, or United States currency offered in
its own act had so limited the maximum value of the sums of not less than five thousand dollars,
gold peso that in no event could it be drafts on the gold-standard fund deposited in
worth more than half a United States gold dollar; but the United States or elsewhere to the credit of
Congress had not itself undertaken to maintain the the Insular Treasury, charging for the same a
parity of the Philippine peso at the theoretical ratio of premium of three-quarters of one per centum
two for one. Congress did not provide for the for demand drafts and of one and one-eighth
establishment of a gold standard fund, or prescribe per centum for telegraphic transfers, and it is
any other method by which the artificial parity further made the duty of the Insular Treasure
between the Philippine silver peso and United States to direct the depositories of the funds of the
money should be maintained. It Philippine Government in the United States to
merely authorized the Government of the Philippine sell on demand, in sums of not less than ten
Islands to ". . . adopt such measures as it may deem thousand pesos, exchange against the gold-
proper, not inconsistent with said Act of July 1st, standard fund in the Philippine Islands,
1902, to maintain the value of the silver Philippine charging for the same a premium of three-
peso at the rate of one gold peso . . . ." quarters of one per centum for demand drafts
and of one and one-eight per centum for
The "measures" which were adopted by the Philippine telegraphic transfers, rendering accounts
Government for the purpose of maintaining the parity therefor to the Insular Treasurer and Insular
of the silver peso with the theoretical gold peso and Auditor. But the premium charge for drafts
United States currency, were embodied in Act No. and telegraphic transfers in this paragraph
938 of the Philippine Commission, adopted October mentioned may be temporarily increased or
10th, 1903, the purpose of which was stated by the decreased by order issued by the Secretary of
late Governor Ide, then Secretary of Finance and Finance and Justice should the conditions at
Justice of the Philippine Government, in his official any time existing, in his judgment, require
report for the year 1903, as follows: such action. . . .

The theory of the Act of Congress referred to It will be noted that the possibility that the peso
and of the gold-standard act passed by the might not be kept at all times at par was
Commission is substantially that a gold- contemplated from the beginning. The last paragraph
standard circulating medium may be of the quoted section of Act No. 938 of the Philippine
maintained at a parity with gold without any Commission required the Insular Treasurer to sell
large use of a gold currency by the aid of the gold drafts on the United States in exchange for
means provided for maintaining the parity Philippine currency at a nominal charge of three-
between the two currencies. The essential fourths of one per cent; but provided that this
elements of the system are based upon the premium charge might be "temporarily increased or
maintenance of a reasonable gold-standard decreased by order issued by the Secretary of
fund, the rigid restriction of the amount of Finance and Justice should the conditions at any
new coinage so as to meet only the demand of time existing, in his judgment, require such action."
commerce, the retirement of a sufficient
amount of such coinage whenever it shall This provision has been carried through successive
become apparent that there is more in enactments into section 1621 of the Administrative
circulation than the demands of commerce Code, which, as amended first by Act No. 2776 and
require, the issuance of more of the new again by Act No. 2939, now provides as follows:
currency whenever it becomes apparent that
there is a shortage of such currency in For the purpose of maintaining the parity of
circulation, and the furnishing of reasonable the Philippine silver peso with the Philippine
facilities for the conversion of gold coin or gold peso, and of keeping the currency equal
other money of the United States into in volume only to the demands of trade, the
Philippine currency, or the reverse, as the Insular Treasurer is hereby authorized and
demands of commerce may require. . . . directed —

The procedure relied upon to accomplish the purpose (a) To exchange on demand at the Insular
of maintaining the party as stated in Act No. 938 was Treasury in Manila for Philippine currency
the creation in the Insular Treasury of a "gold offered in sums of not less than ten thousand
standard fund," which, as provided by section 7 of pesos or United States currency offered in
the Act, was to be used as follows: sums of not less than five thousand dollars,
 drafts on the currency reserve fund deposited are now matters of history. Under existing
in the United States or elsewhere to the credit conditions, to compel a creditor to whom a debt in
of the Insular Treasury, charging for the same United States currency is owing, to accept two
a premium of three-quarters of one per Philippine paper pesos in satisfaction of every gold
centum for demand drafts and of one and dollar of that debt is nothing short of a discount,
one-eighth per centum for telegraphic and pro tanto a partial repudiation of a legal
transfers, and it is further made the duty of obligation.
the Insular Treasurer to direct the
depositories of the funds of the Philippine In the opinion of the Acting Attorney-General, of
Government in the United States to sell on which mentioned has been made, it is said, in
demand, in sums of not less than ten referring to the cited section of the Administrative
thousand pesos, exchange against the Code, as amended:
currency reserve fund in the Philippine
Islands, charging or paying for the same a This Act established two kinds of lawful
premium of three-quarters of one per centum money with which debts may be
for demand drafts and of one and one-eighth paid: pesos and dollars. An ordinary debtor
per centum for telegraphic transfers, is at liberty to pay his debt with either.
rendering accounts therefor to the Insular
Treasurer and Insular Auditor. But the
premium rate for drafts and telegraphic This statement is undoubtedly correct; but the fact
transfers in this paragraph mentioned may be that a debtor may at his option discharge his debt
either in dollars or in pesos is by no means
temporarily increased or decreased by order
equivalent to the statement that he may at his option
issued by the Secretary of Finance should the
conditions at any time existing, in his pay one dollar or two pesos. The contention is that he
may at his option pay one dollar in the United States
judgment, require such action, and the
gold coin or as many Philippine pesos as at the
Governor-General, upon recommendation of
prevailing rate of exchange are the equivalent in
the Secretary of Finance, may suspend for
such time as he sees fit, the sale of exchange value of one dollar.
to any individual, firm, company, or
corporation, or he may require before selling While the respondent contends, under the laws in
any exchange, such proofs and affidavits as force in the Philippine Islands, that a debt of the
he deems sufficient that such exchange is Government payable in dollars may be paid in
needed in legitimate Philippine business and Philippine currency at the rate of two to one, he
could not have been legitimately supplied by overlooks the fact that section 1613 makes the
proceeds of Philippine exports. . . . Philippine silver peso and the gold coins of the
United States at the rate of one dollar for two pesos,
As the maintenance of the parity of the Philippine a legal tender in the Philippine Islands for all debts,
silver peso depends wholly upon the ability and public and private, and not the Philippine paper
willingness of the Philippine Government to accept its peso. If the Government can discharge a contract,
payable in dollars, by tendering Philippine paper
own money in payment for drafts payable in gold
dollars in the United States, and as pesos, then merchants and others who contract
debts payable expressly in dollars may also discharge
the normal nominal rate of exchange intended to
their debts in a like manner. If such doctrine should
maintain and establish that parity has not
been fixed by Congress or the Philippine be announced, then no manufacturer or person
Legislature, but may be increased at any time by would take the risk of contracting obligations here for
order of the Secretary of Finance of the Philippine future payments. They would insist in every instance
Government, whenever existing conditions, in his upon cash transactions. They would not run the risk
judgment, require such action, it is obvious that it of future fluctuations in the value of the paper peso.
That would immediately produce an impossible
must have been evident from the very inception of
our present system of currency that while the condition in commercial and business circles in the
Philippine peso could never be worth more than the Philippine Islands.
United States gold dollar, it might be worth very
much less. That no doubt is the reason why It is a well-known fact that the Government has not
Congress, while providing that debts due here in been willing to accept the Philippine paper peso at
pesos might be discharged by the payment of gold the rate of two to one for gold or dollars. Does it not
coin of the United States, at the rate of one seem at least strange that it should insist that its
dollar for two pesos, did not provide that a debt, due creditors must be satisfied with such a settlement of
here in United States gold dollars, might be paid in its debt?
Philippine pesos at the rate of two pesos for one
dollar. The breakdown of the gold reserve fund, and The issue is precisely the same as it would be had
the consequent depreciation of the Philippine peso, the Philippine Government executed a bond in the
United States, in terms of the United States "dollars," provides expressly that "payments of debts
payable in Manila, but without an express stipulation of money shall be made in the specie stipulated and,
that it should be paid in gold dollars or in any should it not be possible to deliver such specie, in
particular kind of the United States money. If the silver or gold coin legally current in Spain." Article
Government may pay plaintiff in depreciated pesos at 1754 of the Civil Code provides that the obligations of
the nominal instead of the real par of exchange, then persons who borrow money shall be governed by the
it might pay its dollar bond in the same way. If the provisions of said article 1170 of the same Code.
Government can do this, then Manila merchants can (Serrales vs. Esbri, 200 U. S., 103; City of San
pay their dollar drafts in depreciated pesos at the Juan vs. St. John's Gas Co., 195 U. S., 510.)
nominal par, regardless of their real value; American
seamen may have their dollar pay in this port in Contracts are made for things, not names or sounds,
forty-cent pesos; the United States may pay its and the obligation of the contract arises from its
soldiers stationed here in the cheap money, and terms and the means which the law affords for its
effect a considerable saving at their expense. This, of enforcement. Under the Civil Code the contract
course, would be repudiation, in part, of a just debt; constitutes the law of the parties unless it violates
but if repudiation is permissible as to the debt of the some provision of law or public policy. The parties
Insular Government to this plaintiff, then it is themselves make the law by which they shall be
permissible, legally at least, to all other debtors, and governed, and it is the business of the courts to see
must be endured, at least as to existing debts by all that the parties to a legal contract comply with its
other creditors. terms. A law which changes the terms of a legal
contract between parties, either in the time or mode
We submit that the mere statement of the results of performance, or imposes new conditions, or
which must flow from the recognition of the principle dispenses with those expressed, or authorizes for its
contended for by the respondent, and involved in a satisfaction something different from that provided in
denial of the plaintiff's claim, is sufficient to refute its terms, is law which impairs the obligation of a
every argument which may be advanced to support contract and is therefore null and void. An
it. Plaintiff, and the hundreds of teachers and other interference with the terms of a legal contract by
employees of the Insular Government affected by the legislation is unwarranted and illegal. A contract is
depreciation of the Philippine paper peso, are not fulfilled by the delivery of one thing which is
merely asking for fair treatment, for an honest different from the thing the contract provides for.
compliance on the part of the Government with its Words in contracts are to be given the meaning
part of the agreement. We do not doubt that, as a which they were understood to have by the parties at
matter of fact, the defendant herein and every the time of the making of the contract. There cannot
responsible official of the Philippine Government exist in this jurisdiction one law for debtors and
recognizes the justice of the plaintiff's contention, another law for creditors. The genius, the nature,
and that the necessity for this rule has arisen from and the spirit of our Government amount to a
an apprehension lest their natural tendency to do prohibition of such acts of legislation, and the
what they know to be right and fair may constitute a general principles of law and reason forbid them.
technical violation of the law.
The Legislature may enjoin, permit, forbid, and
The contention on the part of the respondent that the punish; it may declare new crimes and establish
Philippine paper peso is a legal tender for the rules of conduct for all its citizens in future cases; it
payment of a contract debt, when some other specie may command what is right and forbid what is
has not been provided, is not tenable for the reason wrong, but it cannot change innocence into guilt and
that it violates the terms of the express contracts punish innocence as a crime, or violate the rights of
an antecedent lawful private contract or the right of
A contract to pay a certain sum in money, without private property. (Calder vs. Bul, 3 Dallas, 388.)
any stipulation as to the kind of money in which it
shall be paid, may always be satisfied by payment of The fundamental maxims of a free government seem
that sum in any currency which is lawful money at to require that the rights of personal liberty and
the place and time at which payment is to be made. private property should be held sacred, and that
That is the general rule, under both the common and includes contractual rights. (Wilkinson vs. Leland, 2
the civil law. But when the contract stipulates the Peters, 657.)
specie or kind or character of money for the
performance of the contract, it must be satisfied in It would be ruinous to the commercial interests of
the medium of payment mentioned in the contract. the Philippine Islands to declare that the payment of
debts of money could be made in other specie than
That doctrine is established and affirmed by the law that stipulated in the contract.
in force in the Philippine Islands. The Civil Code, still
in force in the Philippine Islands, by article 1170,
For all of the foregoing facts and the law, we are fully period of classes. She was not required
persuaded that the remedy prayed for should be, and to report for work for the entire
is hereby, granted. And it is hereby ordered and Christmas and summer vacations.
decreed that the writ of mandamus be issued to the However, on March 10, 1976,
defendant herein, commanding him to countersign, respondent's director, Fr. Enrique
or cause to the countersigned the original of the Gonzales, requested her to shorten her
warrant set forth in paragraph 9 of the complaint, summer vacation, from two weeks
and to deliver the same to the plaintiff so that he may after the last day of classes to two
present it to the Treasurer of the Philippine Islands weeks before the first day of classes of
and receive payment of said sum of P73.33 due him the next school year. Petitioner
as averred in the complaint; and without any finding acceded to the request (Rec. p. 246).
as to costs. So ordered
Sometime in April 1980, Fr. Gonzales
required petitioner to report during
that summer to help in the library. In
a letter dated April 11, 1980,
G.R. No. 75093 February 23, 1990
petitioner contested the order, stating
that it will necessitate a change in the
DELIA R. SIBAL, petitioner, terms and conditions of her
vs. employment and that library work is
NOTRE DAME OF GREATER MANILA, NATIONAL alien to her profession as nurse (Rec.
LABOR RELATIONS COMMISSION, respondents. p. 45). Fr. Gonzales relented.

Semproniano S. Ochoco for petitioner. In November 1980, Fr. Gonzales was

replaced by Fr. Pablo Garcia, an
Williard B. Riano for private respondent. American, as new director. Fr. Garcia
required petitioner to report for work
during the summer before the
beginning of school year 1981-1982.
PARAS, J.: Petitioner informed him that her
contract does not require her to report
for work during the summer vacation.
In this petition for certiorari, petitioner Delia R. Sibal
Fr. Garcia promised to verify her
prays for the reversal of the decision dated April 11,
allegation. However, he failed to inform
1986 of public respondent National Labor Relations
petitioner of his findings. Thus, in
Commission which affirmed the decision of the Labor
order that her failure to report for
Arbiter dated October 8, 1982 awarding to petitioner
work may not be misinterpreted,
separation pay but denied her claim (1) for
petitioner filed leaves of absence
compensation for teaching Health subject to 19
extending from April 1, 1981 to June
sections; (2) for moral damages; and (3) negating the
14, 1981 (Rec. pp. 223-225). Petitioner
existence of unfair labor practice. The within petition
failed to receive her vacation pay.
further seeks the reinstatement of petitioner to her
former position as school nurse in respondent school
without loss of seniority rights with fun backwages During school year 1981-1982,
from the date of her illegal dismissal up to the time of petitioner was assigned to teach
actual reinstatement; and finally, seeks the health subjects to 900 students
desistance of private respondent Notre Dame of spread out in nineteen (19) sections of
Greater Manila from further committing unfair labor the entire high school department.
practice. This situation came about because the
two (2) teachers of the health subjects
had left the school. Petitioner,
The prefatory facts and proceedings as aptly summed
however, was not given compensation
up by the Solicitor General and which stand
for teaching, notwithstanding the fact
undisputed are:
that other teachers were duly
compensated for extra work done.
Petitioner Delia R. Sibal was employed During that school year petitioner
as school nurse by private respondent tried to arrange for a meeting with Fr.
Notre Dame of Greater Manila starting Garcia regarding her vacation pay, but
January 1973. Prior to school year to no avail because Fr. Garcia was
1976-1977, she was compensated on always busy. In October 1981, Fr.
a 12-month basis, although she Garcia suffered a heart attack which
worked only during the ten-month
necessitated his hospitalization. In for teaching health subjects; and (3)
December 1981, petitioner received deficiency in the 13th month pay for
her 13th month pay which was 1981 (Annexes A, B, petition).
computed on the basis of a 10-month Summons was served on respondent
period only. school on the opening day of classes
on June 14, 1982 (Rec. p. 19). That
On April 5, 1982, Fr. Garcia again very day when petitioner reported for
required petitioner to work during that work, respondent school served
summer to update all the clinical petitioner her letter of termination
records of the students (Rec. p. 242). effective immediately and it also
In a letter dated April 7, 1982, submitted a copy of the termination
petitioner objected to the order by paper to the Ministry of Labor and
reiterating that her contract does not Employment (MOLE) (Rec. pp. 218-
require her to report for work during 219). The following day, petitioner filed
summer. In addition, she reminded Fr. an amended complaint, adding two
Garcia that she had not received any more charges: illegal dismissal and
compensation for teaching health unfair labor practice (Annex C, D,
subjects the past school year (Rec. p. petition). For the next four to five
6). On the same day, Fr. Garcia replied weeks, more than 20 teachers and
in a letter to the effect that it was personnel, backed up by the Faculty
imperative for her to report for work Association of respondent school,
during the summer because it is the pressed for the ouster of Fr. Garcia
best time to update the clinical with the Ministry of Education,
records when no students could Culture, and Sports (MECS) by virtue
disturb her. Also, petitioner was not of PD 176 and the following charges:
entitled to extra compensation for oppressive behavior, arrogance,
teaching because teaching was contempt for Filipinos in general and
allegedly part of her regular working Filipino teachers in particular;
program as a school nurse (Rec. p. unfairness in dealing with personnel;
221). dictatorial conduct; and use of abusive
language (See Annexes A to F of Annex
On April 14, 1982, petitioner, apart F, petition). Fr. Garcia was eventually
from reiterating her objection to the replaced on September 8, 1983.
order, called the attention of Fr.
Garcia to the school's failure to pay In the meantime, respondent school
her salary for the summer of 1981 and filed its position paper on June 29,
of the deficiency in her 13th month 1982, while petitioner filed hers on
pay for that year (Rec. p. 8). The July 1, 1982 (Rec. pp. 22, 210). In the
following day, Fr. Garcia adamantly hearing of July 13, 1982, petitioner
refused to consider petitioner's directed clarificatory questions to Miss
demands and threatened to take Cristina Sison, corporate secretary of
drastic measures against her if she respondent school (Rec. pp. 57-141).
remains obstinate in her refusal to On July 27, 1982, respondent filed its
follow his order to report for work that memorandum, while petitioner filed
summer (Rec. p. 243). This letter was hers on August 2, 1982 (Rec. pp. 142,
followed the next day by a 162).
memorandum to the same effect (Rec.
p. 244). In a letter dated April 19, On October 8, 1982, the Labor Arbiter
1982, petitioner, for the fourth time, rendered a decision. Petitioner filed a
informed Fr. Garcia that her contract memorandum of partial appeal on
does not require her to report for work November 11, 1982 (Annex F, petition).
during summer, and she does not Respondent filed opposition to the
intend to do so that summer of 1982 appeal on January 5, 1983. On
(Rec. p. 241). January 18, 1983, petitioner filed
reply to the opposition. In an urgent
Failing to receive the compensation ex parte manifestation dated
demanded, May 10, 1982, petitioner September 20, 1983, petitioner
filed a complaint for non-payment of informed the NLRC that Fr. Pablo
the following; (1) vacation pay for four Garcia had been replaced by Fr. Jose
(4) summer months; (2) compensation Arong, a Filipino, as new director
 effective September 8, 1983 (Annex 1. The relationship between petitioner
G, petition). On April 11, 1986, public and respondent school had come to
respondent NLRC rendered the the point that reinstatement of
questioned decision which affirmed petitioner would cause undue burden
the decision of the Labor Arbiter. on both parties. It would affect
(Rollo, pp. 131-136). petitioner's performance of her duties
as school nurse and private
Petitioner thus resorted to this petition which she respondent's business.
filed on July 15, 1986.
2. Teaching health subjects is allied to
Petitioner and both the Solicitor General and public petitioner's job as school nurse,
respondent NLRC have narrowed down the issues for particularly so when the same is done
resolution to the following: within the official eight (8) working
hour schedule.
1. Whether or not the award of
separation pay instead of 3. Petitioner failed to prove her
reinstatement is the proper remedy membership in a union. There was no
under the circumstances; union among the employees of the
school in which case the instances
2. Whether or not petitioner is entitled where unfair labor practice may be
to compensation for teaching health committed, with the exception of one
subjects; and instance, and predicated on the
existence of a union, would not apply.
Private respondent has not been found
3. Whether or not unfair labor practice
guilty of unfair labor practice and it,
existed which would entitle petitioner therefore, follows that she is not
to moral damages. entitled to moral damages.

For the affirmative resolution of the aforestated

This Court finds merit in the petition.
issues, petitioner alleges the following:
The Labor Arbiter herself had found that the
1. Respondent NLRC failed to give full
termination of petitioner was not supported by any
respect to the constitutional mandate
just cause or reason. Yet, she erroneously ordered
on security of tenure when the separation pay instead of reinstatement with
majority decision affirmed the decision
backwages based on the alleged reason that
of the Labor Arbiter separating and, in petitioner's working relations with the former
effect, dismissing petitioner on the director, Father Garcia, had become so strained and
basis of her perception that petitioner deteriorated that it became impossible for them to
and the director could no longer work work harmoniously again. And the NLRC affirmed
harmoniously. The award of such finding which is untrue and merely speculative.
separation pay would defeat and
render nugatory the Constitutional
guaranty of security of tenure. It should be noted that the alleged conflict between
the petitioner and the director was strictly official in
nature, the cause of which was the violation of the
2. Petitioner is entitled to terms of employment by the latter. Petitioner's
compensation relative to her teaching assertion of her right to unpaid salaries and bonus
job which is distinct and separate differential was not motivated by any personal
from her duties as school nurse. consideration. Rather, she simply claimed benefits
which, under the law, she was entitled to and legally
3. Petitioner was, from the very start, due her. In her act of asserting these money claims,
subjected to harassment and petitioner observed utmost tact, courtesy and civility
fabricated charges. She had suffered so as not to unduly offend the sensibilities of the
and continues to suffer from the time director by waiting for his frill recovery from his
of her dismissal on June 14, 1982 up illness before sending her formal letter of demand;
to the present. She must be entitled to and only after the school refused to satisfy her money
an award of moral damages. claims did she file the formal complaint with the
proper NLRC branch. Ironically, however, the director
Public respondent NLRC, however, submits the gave her a downright shabby treatment by
following: terminating her services without prior notice and
without first filing a case against her wherein she
could have defended herself . The school did not even The respondent NLRC erred is sustaining the Labor
give credit to her more than nine (9) years of Arbiter's ruling that petitioner is not entitled to
continuous service. Petitioner's termination was a compensation for teaching health subjects allegedly
blatant disregard of due process and Constitutional because petitioner taught during her regular working
guarantee of protection to labor. hours; the subject Health is allied to her profession
as nurse; and she and respondent school had no
Thus, in the case of Callanta v. Carnation Philippines, clear understanding regarding extra compensation.
Inc. (145 SCRA 268), this Court held that one's
employment, profession, trade or calling is a The Solicitor General who normally and expectedly
"property right", and the wrongful interference speaks for the NLRC has ably refuted the position
therewith is an actionable wrong. The right is taken by the latter. The Court thus finds valid and
considered to be property within the protection of a decisive the following submission of the Solicitor
constitutional guaranty of due process of law. General:

Significantly, about a month after petitioner's It is submitted, however, that

termination on June 14, 1982, more than twenty petitioner is entitled to compensation
teachers and personnel of respondent school, backed for teaching health subjects. Although
by the Faculty Association, petitioned for the ouster the subject taught is Health and allied
of Director Fr. Garcia for serious charges under P.D. to her profession, and is taught during
176. Consequently, Fr. Garcia was replaced on regular working hours, petitioner's
September 8, 1983. Clearly, therefore, when the teaching the subject in the classroom
assailed NLRC decision was rendered on April 11, and her administering to the health
1986, the alleged "strained relations" or "irritant needs of students in the clinic involve
factors" which the Labor Arbiter capitalized on had two different and distinct jobs. They
been totally eliminated. Respondent NLRC obviously cannot be equated with each other for
failed to consider this and thus perpetuated the error they refer to different functions.
committed by the Labor Arbiter in her prior decision. Teaching requires preparation of
The eventual replacement of Fr. Garcia all the more lesson plans, examinations and
confirmed the discriminatory and oppressive grades, while clinical work entails
treatment which he gave petitioner. preparation of clinical records and
treating illnesses of students in
The dissenting NLRC Commissioner aptly observed school. There can be no doubt that
thus: teaching health subjects is extra work
for petitioner, and therefore
Moreover, it should be emphasized, necessitates extra compensation. After
that no strained relations should arise all it has been the practice of the
from a valid and legal act of asserting school to pay extra compensation to
ones right, such as in the instant case, teachers who were given extra load
for otherwise, an employee who shall even during regular working hours
assert his/ her right could be easily (Annex G of Annex F, Petition). The
separated from the service by merely fact that respondent school failed to
paying his/her separation pay on the produce the records of those teachers
pretext that his/her relationship with prove that they were paid for extra
his/her employer had already become work. Hence, petitioner should
strained. likewise be paid compensation. (pp.
138-139, Rollo)
To Our mind, strained relations in
order that it may justify the award of It must be noted that petitioner has established that
separation pay in lieu of reinstatement in several precedents, non-teaching personnel of
with backwages, should be such, that respondent school who were made to handle teaching
they are so compelling and so serious jobs were actually paid actual compensation.
in character, that the continued Besides, justice and equity demand that since the
employment of an employee is so principle of equal work has long been observed in
obnoxious to the person or business of this jurisdiction, then it should follow that an extra
the employer, and that the pay for extra work should also be applied.
continuation of such employment has
become inconsistent with peace and Significantly, this Court has enunciated in the care
tranquility which is an Ideal of University of Pangasinan Faculty Union v.
atmosphere in every workplace. (pp. University of Pangasinan (127 SCRA 691) that
98-99, Rollo) semestral breaks may be considered as "hours
worked" under the Rules implementing the Labor In arguing for petitioner's entitlement to moral
Code and that regular professors and teachers are damages, the Solicitor General has aptly summed up
entitled to ECOLA during the semestral breaks, their her plight. The Solicitor General has submitted this
"absence" from work not being of their own will. valid justification for the award of moral damages
under Art. 1701 of the Labor Code:
The records show that when summons with attached
complaint of petitioner for money claims was served Petitioner had been the subject of
on respondent school on June 14, 1982, said discrimination for over a year before
respondent, on the very day, gave petitioner her she was ultimately dismissed. When
walking papers. Respondent did not waste any time she justifiably refused to obey the
in dismissing her in brazen violation of these order to report for work for two
provisions of the Labor Code, as amended: summers, she was not given her
vacation pay for both occasions.
Art. 118 of the Labor Code provides: Unlike her, the doctor and dentist who
worked in the same clinic, were not
Retaliatory measures. — It shall be required to report during summer and
unlawful for an employer to refuse to were given their respective vacation
pay or reduce the wages and pay. Again, petitioner, unlike the
benefits, discharges or in any manner teachers who accepted extra load, was
discriminate against any employee who not given extra compensation when
has filed any complaint or instituted she taught health subjects to 900
any proceeding under this Title or has students for one year. By withholding
testified or is about to testify in such such compensation, respondent
proceedings. (Emphasis supplied) school stood to gain at the expense of
petitioner, the amount of the salary
which it could have paid to two (2)
Thus, too, Art. 249 (f) provides: health teachers. Petitioner's 13th
month pay was likewise underpaid
Art. 249. Unfair tabor practice of because the basis for computation was
employers. — It shall be unlawful for only ten months, and not one year as
an employer to commit any of the in the case of other regular office
following unfair labor practice. personnel. Finally, petitioner's travails
culminated in her unceremonious
xxx xxx xxx termination without due process at
the beginning of the school year on
xxx xxx xxx June 14, 1982, by the service of her
termination paper antedated June 11,
(f) to dismiss, discharge, or otherwise 1982. Termination without due
prejudice or discriminate against an process is specifically prohibited by
employee for having given or being Rule XIV Section 1 under Section 8 of
about to give testimony under this the Rules Implementing BP Blg. 130:
Code,
Security of tenure and
xxx xxx xxx due process. — No
worker shall be
dismissed except for a
For the aforestated violations, respondent becomes
just or authorized cause
liable under Arts. 289 and 290 of the same Code.
provided by law and
after due process.
This Court has, time and again, condemned illegal
termination of services of employees. In Remerco
The series of discriminatory and
Garments Manufacturing v. Minister of Labor and
oppressive acts of respondent school
Employment (135 SCRA 167), it declared that while
against petitioner invariably makes
it is true that it is the sole prerogative of the
respondent liable for moral damages
management to dismiss or lay-off an employee, the
under Art. 1701, which prohibits acts
exercise of such a prerogative, however, must be
of capital or labor against each other,
made without abuse of discretion, for what is at
and Art. 21 on human relations in
stake is not only private respondent's position
relation to Art. 2219 No. 10 and Art.
(petitioner in this case) but also his means of
2220, all of the Civil Code (Philippine
livelihood.
 Refining Co., Inc. v. Garcia, 18 SCRA WHEREFORE, premises considered, We find
107). (Rollo, pp. 140-141) the termination of the complainants illegal.
Accordingly, respondent is hereby ordered to
WHEREFORE, the appealed decision of respondent pay them their backwages up to November
NLRC is hereby SET ASIDE. Private respondent is 29, 1999 in the sum of:
hereby ordered to REINSTATE petitioner to her
former position without loss of seniority rights and 1. Jenny M. Agabon - P56, 231.93
with backwages for three (3) years from the time of
her illegal dismissal; to pay her the regular extra 2. Virgilio C. Agabon - 56, 231.93
compensation relative to her teaching health
subjects; and to pay her moral damages, the amount and, in lieu of reinstatement to pay them their
of which shall be determined by respondent NLRC. separation pay of one (1) month for every year
Let this case be remanded to the NLRC for the proper of service from date of hiring up to November
implementation of this decision. 29, 1999.

SO ORDERED. Respondent is further ordered to pay the

complainants their holiday pay and service
incentive leave pay for the years 1996, 1997
and 1998 as well as their premium pay for
G.R. No. 158693 November 17, 2004 holidays and rest days and Virgilio Agabon's
13th month pay differential amounting to
TWO THOUSAND ONE HUNDRED FIFTY
JENNY M. AGABON and VIRGILIO C.
(P2,150.00) Pesos, or the aggregate amount of
AGABON, petitioners,
ONE HUNDRED TWENTY ONE THOUSAND
vs.
SIX HUNDRED SEVENTY EIGHT & 93/100
NATIONAL LABOR RELATIONS COMMISSION
(P121,678.93) Pesos for Jenny Agabon, and
(NLRC), RIVIERA HOME IMPROVEMENTS, INC.
ONE HUNDRED TWENTY THREE THOUSAND
and VICENTE ANGELES, respondents.
EIGHT HUNDRED TWENTY EIGHT & 93/100
(P123,828.93) Pesos for Virgilio Agabon, as
per attached computation of Julieta C.
Nicolas, OIC, Research and Computation
Unit, NCR.
DECISION
SO ORDERED.4

On appeal, the NLRC reversed the Labor Arbiter

because it found that the petitioners had abandoned
YNARES-SANTIAGO, J.: their work, and were not entitled to backwages and
separation pay. The other money claims awarded by
This petition for review seeks to reverse the the Labor Arbiter were also denied for lack of
decision1 of the Court of Appeals dated January 23, evidence.5
2003, in CA-G.R. SP No. 63017, modifying the
decision of National Labor Relations Commission Upon denial of their motion for reconsideration,
(NLRC) in NLRC-NCR Case No. 023442-00. petitioners filed a petition for certiorari with the
Court of Appeals.
Private respondent Riviera Home Improvements, Inc.
is engaged in the business of selling and installing The Court of Appeals in turn ruled that the dismissal
ornamental and construction materials. It employed of the petitioners was not illegal because they had
petitioners Virgilio Agabon and Jenny Agabon as abandoned their employment but ordered the
gypsum board and cornice installers on January 2, payment of money claims. The dispositive portion of
19922 until February 23, 1999 when they were the decision reads:
dismissed for abandonment of work.
WHEREFORE, the decision of the National
Petitioners then filed a complaint for illegal dismissal Labor Relations Commission is REVERSED
and payment of money claims3 and on December 28, only insofar as it dismissed petitioner's money
1999, the Labor Arbiter rendered a decision declaring claims. Private respondents are ordered to
the dismissals illegal and ordered private respondent pay petitioners holiday pay for four (4) regular
to pay the monetary claims. The dispositive portion of holidays in 1996, 1997, and 1998, as well as
the decision states: their service incentive leave pay for said
 years, and to pay the balance of petitioner employee of the lawful orders of his employer or the
Virgilio Agabon's 13th month pay for 1998 in latter's representative in connection with the
the amount of P2,150.00. employee's work; (b) gross and habitual neglect by
the employee of his duties; (c) fraud or willful breach
SO ORDERED.6 by the employee of the trust reposed in him by his
employer or his duly authorized representative; (d)
Hence, this petition for review on the sole issue of commission of a crime or offense by the employee
whether petitioners were illegally dismissed.7 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
Petitioners assert that they were dismissed because
foregoing.
the private respondent refused to give them
assignments unless they agreed to work on
a "pakyaw" basis when they reported for duty on Abandonment is the deliberate and unjustified
February 23, 1999. They did not agree on this refusal of an employee to resume his
arrangement because it would mean losing benefits employment.14 It is a form of neglect of duty, hence, a
as Social Security System (SSS) members. Petitioners just cause for termination of employment by the
also claim that private respondent did not comply employer.15 For a valid finding of abandonment, these
with the twin requirements of notice and hearing.8 two factors should be present: (1) the failure to report
for work or absence without valid or justifiable
reason; and (2) a clear intention to sever employer-
Private respondent, on the other hand, maintained
employee relationship, with the second as the more
that petitioners were not dismissed but had determinative factor which is manifested by overt
abandoned their work.9 In fact, private respondent acts from which it may be deduced that the
sent two letters to the last known addresses of the employees has no more intention to work. The intent
petitioners advising them to report for work. Private to discontinue the employment must be shown by
respondent's manager even talked to petitioner clear proof that it was deliberate and unjustified.16
Virgilio Agabon by telephone sometime in June 1999
to tell him about the new assignment at Pacific Plaza
Towers involving 40,000 square meters of cornice In February 1999, petitioners were frequently absent
installation work. However, petitioners did not report having subcontracted for an installation work for
for work because they had subcontracted to perform another company. Subcontracting for another
installation work for another company. Petitioners company clearly showed the intention to sever the
also demanded for an increase in their wage to employer-employee relationship with private
P280.00 per day. When this was not granted, respondent. This was not the first time they did this.
petitioners stopped reporting for work and filed the In January 1996, they did not report for work
illegal dismissal case.10 because they were working for another company.
Private respondent at that time warned petitioners
that they would be dismissed if this happened again.
It is well-settled that findings of fact of quasi-judicial Petitioners disregarded the warning and exhibited a
agencies like the NLRC are accorded not only respect clear intention to sever their employer-employee
but even finality if the findings are supported by relationship. The record of an employee is a relevant
substantial evidence. This is especially so when such consideration in determining the penalty that should
findings were affirmed by the Court of be meted out to him.17
Appeals.11 However, if the factual findings of the
NLRC and the Labor Arbiter are conflicting, as in this
case, the reviewing court may delve into the records In Sandoval Shipyard v. Clave,18 we held that an
and examine for itself the questioned findings.12 employee who deliberately absented from work
without leave or permission from his employer, for
the purpose of looking for a job elsewhere, is
Accordingly, the Court of Appeals, after a careful considered to have abandoned his job. We should
review of the facts, ruled that petitioners' dismissal apply that rule with more reason here where
was for a just cause. They had abandoned their
petitioners were absent because they were already
employment and were already working for another working in another company.
employer.
The law imposes many obligations on the employer
To dismiss an employee, the law requires not only such as providing just compensation to workers,
the existence of a just and valid cause but also observance of the procedural requirements of notice
enjoins the employer to give the employee the
and hearing in the termination of employment. On
opportunity to be heard and to defend
the other hand, the law also recognizes the right of
himself.13 Article 282 of the Labor Code enumerates the employer to expect from its workers not only good
the just causes for termination by the employer: (a) performance, adequate work and diligence, but also
serious misconduct or willful disobedience by the good conduct19 and loyalty. The employer may not be
compelled to continue to employ such persons whose opportunity to be heard if requested by the employee
continuance in the service will patently be inimical to before terminating the employment: a notice
his interests.20 specifying the grounds for which dismissal is sought
a hearing or an opportunity to be heard and after
After establishing that the terminations were for a hearing or opportunity to be heard, a notice of the
just and valid cause, we now determine if the decision to dismiss; and (2) if the dismissal is based
procedures for dismissal were observed. on authorized causes under Articles 283 and 284,
the employer must give the employee and the
The procedure for terminating an employee is found Department of Labor and Employment written
in Book VI, Rule I, Section 2(d) of the Omnibus Rules notices 30 days prior to the effectivity of his
Implementing the Labor Code: separation.

Standards of due process: requirements of From the foregoing rules four possible situations may
notice. – In all cases of termination of be derived: (1) the dismissal is for a just cause under
employment, the following standards of due Article 282 of the Labor Code, for an authorized
process shall be substantially observed: cause under Article 283, or for health reasons under
Article 284, and due process was observed; (2) the
dismissal is without just or authorized cause but due
I. For termination of employment based on process was observed; (3) the dismissal is without
just causes as defined in Article 282 of the just or authorized cause and there was no due
Code:
process; and (4) the dismissal is for just or
authorized cause but due process was not observed.
(a) A written notice served on the employee
specifying the ground or grounds for
In the first situation, the dismissal is undoubtedly
termination, and giving to said employee
valid and the employer will not suffer any liability.
reasonable opportunity within which to
explain his side;
In the second and third situations where the
dismissals are illegal, Article 279 mandates that the
(b) A hearing or conference during which the
employee is entitled to reinstatement without loss of
employee concerned, with the assistance of seniority rights and other privileges and full
counsel if the employee so desires, is given backwages, inclusive of allowances, and other
opportunity to respond to the charge, present benefits or their monetary equivalent computed from
his evidence or rebut the evidence presented the time the compensation was not paid up to the
against him; and time of actual reinstatement.

(c) A written notice of termination served on In the fourth situation, the dismissal should be
the employee indicating that upon due upheld. While the procedural infirmity cannot be
consideration of all the circumstances, cured, it should not invalidate the dismissal.
grounds have been established to justify his However, the employer should be held liable for non-
termination. compliance with the procedural requirements of due
process.
In case of termination, the foregoing notices
shall be served on the employee's last known The present case squarely falls under the fourth
address. situation. The dismissal should be upheld because it
was established that the petitioners abandoned their
Dismissals based on just causes contemplate acts or jobs to work for another company. Private
omissions attributable to the employee while respondent, however, did not follow the notice
dismissals based on authorized causes involve requirements and instead argued that sending
grounds under the Labor Code which allow the notices to the last known addresses would have been
employer to terminate employees. A termination for useless because they did not reside there anymore.
an authorized cause requires payment of separation Unfortunately for the private respondent, this is not a
pay. When the termination of employment is declared valid excuse because the law mandates the twin
illegal, reinstatement and full backwages are notice requirements to the employee's last known
mandated under Article 279. If reinstatement is no address.21 Thus, it should be held liable for non-
longer possible where the dismissal was unjust, compliance with the procedural requirements of due
separation pay may be granted. process.

Procedurally, (1) if the dismissal is based on a just A review and re-examination of the relevant legal
cause under Article 282, the employer must give the principles is appropriate and timely to clarify the
employee two written notices and a hearing or various rulings on employment termination in the
light of Serrano v. National Labor Relations The rationale for the re-examination of
Commission.22 the Wenphil doctrine in Serrano was the significant
number of cases involving dismissals without
Prior to 1989, the rule was that a dismissal or requisite notices. We concluded that the imposition
termination is illegal if the employee was not given of penalty by way of damages for violation of the
any notice. In the 1989 case of Wenphil Corp. v. notice requirement was not serving as a deterrent.
National Labor Relations Commission,23 we reversed Hence, we now required payment of full backwages
this long-standing rule and held that the dismissed from the time of dismissal until the time the Court
employee, although not given any notice and hearing, finds the dismissal was for a just or authorized
was not entitled to reinstatement and backwages cause.
because the dismissal was for grave misconduct and
insubordination, a just ground for termination under Serrano was confronting the practice of employers to
Article 282. The employee had a violent temper and "dismiss now and pay later" by imposing full
caused trouble during office hours, defying superiors backwages.
who tried to pacify him. We concluded that
reinstating the employee and awarding backwages We believe, however, that the ruling in Serrano did
"may encourage him to do even worse and will render not consider the full meaning of Article 279 of the
a mockery of the rules of discipline that employees Labor Code which states:
are required to observe."24 We further held that:
ART. 279. Security of Tenure. – In cases of
Under the circumstances, the dismissal of the regular employment, the employer shall not
private respondent for just cause should be terminate the services of an employee except
maintained. He has no right to return to his for a just cause or when authorized by this
former employment. Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement
However, the petitioner must nevertheless be without loss of seniority rights and other
held to account for failure to extend to private privileges and to his full backwages, inclusive
respondent his right to an investigation before of allowances, and to his other benefits or
causing his dismissal. The rule is explicit as their monetary equivalent computed from the
above discussed. The dismissal of an time his compensation was withheld from him
employee must be for just or authorized cause up to the time of his actual reinstatement.
and after due process. Petitioner committed
an infraction of the second requirement. This means that the termination is illegal only if it is
Thus, it must be imposed a sanction for its not for any of the justified or authorized causes
failure to give a formal notice and conduct an provided by law. Payment of backwages and other
investigation as required by law before benefits, including reinstatement, is justified only if
dismissing petitioner from employment. the employee was unjustly dismissed.
Considering the circumstances of this case
petitioner must indemnify the private The fact that the Serrano ruling can cause unfairness
respondent the amount of P1,000.00. The and injustice which elicited strong dissent has
measure of this award depends on the facts of prompted us to revisit the doctrine.
each case and the gravity of the omission
committed by the employer.25
To be sure, the Due Process Clause in Article III,
Section 1 of the Constitution embodies a system of
The rule thus evolved: where the employer had a rights based on moral principles so deeply imbedded
valid reason to dismiss an employee but did not in the traditions and feelings of our people as to be
follow the due process requirement, the dismissal deemed fundamental to a civilized society as
may be upheld but the employer will be penalized to conceived by our entire history. Due process is that
pay an indemnity to the employee. This became which comports with the deepest notions of what is
known as the Wenphil or Belated Due Process Rule. fair and right and just.26 It is a constitutional
restraint on the legislative as well as on the executive
On January 27, 2000, in Serrano, the rule on the and judicial powers of the government provided by
extent of the sanction was changed. We held that the the Bill of Rights.
violation by the employer of the notice requirement in
termination for just or authorized causes was not a Due process under the Labor Code,
denial of due process that will nullify the like Constitutional due process, has two aspects:
termination. However, the dismissal is ineffectual substantive, i.e., the valid and authorized causes of
and the employer must pay full backwages from the employment termination under the Labor Code; and
time of termination until it is judicially declared that procedural, i.e., the manner of dismissal. Procedural
the dismissal was for a just or authorized cause.
due process requirements for dismissal are found in apply the res ipsa loquitur rule and award, in
the Implementing Rules of P.D. 442, as amended, lieu of separation pay, nominal damages to
otherwise known as the Labor Code of the Philippines the employee. x x x.31
in Book VI, Rule I, Sec. 2, as amended by
Department Order Nos. 9 and 10.27 Breaches of After carefully analyzing the consequences of the
these due process requirements violate the Labor divergent doctrines in the law on employment
Code. Therefore statutory due process should be termination, we believe that in cases involving
differentiated from failure to comply dismissals for cause but without observance of the
with constitutional due process. twin requirements of notice and hearing, the better
rule is to abandon the Serrano doctrine and to
Constitutional due process protects the individual follow Wenphil by holding that the dismissal was for
from the government and assures him of his rights in just cause but imposing sanctions on the employer.
criminal, civil or administrative proceedings; Such sanctions, however, must be stiffer than that
while statutory due process found in the Labor Code imposed in Wenphil. By doing so, this Court would be
and Implementing Rules protects employees from able to achieve a fair result by dispensing justice not
being unjustly terminated without just cause after just to employees, but to employers as well.
notice and hearing.
The unfairness of declaring illegal or ineffectual
In Sebuguero v. National Labor Relations dismissals for valid or authorized causes but not
Commission,28 the dismissal was for a just and valid complying with statutory due process may have far-
cause but the employee was not accorded due reaching consequences.
process. The dismissal was upheld by the Court but
the employer was sanctioned. The sanction should be This would encourage frivolous suits, where even the
in the nature of indemnification or penalty, and most notorious violators of company policy are
depends on the facts of each case and the gravity of rewarded by invoking due process. This also creates
the omission committed by the employer. absurd situations where there is a just or authorized
cause for dismissal but a procedural infirmity
In Nath v. National Labor Relations Commission,29 it invalidates the termination. Let us take for example a
was ruled that even if the employee was not given case where the employee is caught stealing or
due process, the failure did not operate to eradicate threatens the lives of his co-employees or has become
the just causes for dismissal. The dismissal being for a criminal, who has fled and cannot be found, or
just cause, albeit without due process, did not entitle where serious business losses demand that
the employee to reinstatement, backwages, damages operations be ceased in less than a month.
and attorney's fees. Invalidating the dismissal would not serve public
interest. It could also discourage investments that
Mr. Justice Jose C. Vitug, in his separate opinion can generate employment in the local economy.
in MGG Marine Services, Inc. v. National Labor
Relations Commission,30 which opinion he reiterated The constitutional policy to provide full protection to
in Serrano, stated: labor is not meant to be a sword to oppress
employers. The commitment of this Court to the
C. Where there is just cause for dismissal but cause of labor does not prevent us from sustaining
due process has not been properly observed the employer when it is in the right, as in this
by an employer, it would not be right to order case.32 Certainly, an employer should not be
either the reinstatement of the dismissed compelled to pay employees for work not actually
employee or the payment of backwages to performed and in fact abandoned.
him. In failing, however, to comply with the
procedure prescribed by law in terminating The employer should not be compelled to continue
the services of the employee, the employer employing a person who is admittedly guilty of
must be deemed to have opted or, in any misfeasance or malfeasance and whose continued
case, should be made liable, for the payment employment is patently inimical to the employer. The
of separation pay. It might be pointed out that law protecting the rights of the laborer authorizes
the notice to be given and the hearing to be neither oppression nor self-destruction of the
conducted generally constitute the two-part employer.33
due process requirement of law to be
accorded to the employee by the employer. It must be stressed that in the present case, the
Nevertheless, peculiar circumstances might petitioners committed a grave offense, i.e.,
obtain in certain situations where to abandonment, which, if the requirements of due
undertake the above steps would be no more process were complied with, would undoubtedly
than a useless formality and where, result in a valid dismissal.
accordingly, it would not be imprudent to
An employee who is clearly guilty of conduct violative "dismiss now, pay later," which we sought to deter in
of Article 282 should not be protected by the Social the Serrano ruling. The sanction should be in the
Justice Clause of the Constitution. Social justice, as nature of indemnification or penalty and should
the term suggests, should be used only to correct an depend on the facts of each case, taking into special
injustice. As the eminent Justice Jose P. Laurel consideration the gravity of the due process violation
observed, social justice must be founded on the of the employer.
recognition of the necessity of interdependence
among diverse units of a society and of the protection Under the Civil Code, nominal damages is
that should be equally and evenly extended to all adjudicated in order that a right of the plaintiff,
groups as a combined force in our social and which has been violated or invaded by the defendant,
economic life, consistent with the fundamental and may be vindicated or recognized, and not for the
paramount objective of the state of promoting the purpose of indemnifying the plaintiff for any loss
health, comfort, and quiet of all persons, and of suffered by him.37
bringing about "the greatest good to the greatest
number."34 As enunciated by this Court in Viernes v. National
Labor Relations Commissions,38 an employer is liable
This is not to say that the Court was wrong when it to pay indemnity in the form of nominal damages to
ruled the way it did in Wenphil, Serrano and related an employee who has been dismissed if, in effecting
cases. Social justice is not based on rigid formulas such dismissal, the employer fails to comply with the
set in stone. It has to allow for changing times and requirements of due process. The Court, after
circumstances. considering the circumstances therein, fixed the
indemnity at P2,590.50, which was equivalent to the
Justice Isagani Cruz strongly asserts the need to employee's one month salary. This indemnity is
apply a balanced approach to labor-management intended not to penalize the employer but to
relations and dispense justice with an even hand in vindicate or recognize the employee's right to
every case: statutory due process which was violated by the
employer.39
We have repeatedly stressed that social
justice – or any justice for that matter – is for The violation of the petitioners' right to statutory due
the deserving, whether he be a millionaire in process by the private respondent warrants the
his mansion or a pauper in his hovel. It is payment of indemnity in the form of nominal
true that, in case of reasonable doubt, we are damages. The amount of such damages is addressed
to tilt the balance in favor of the poor to to the sound discretion of the court, taking into
whom the Constitution fittingly extends its account the relevant circumstances.40 Considering
sympathy and compassion. But never is it the prevailing circumstances in the case at bar, we
justified to give preference to the poor simply deem it proper to fix it at P30,000.00. We believe this
because they are poor, or reject the rich form of damages would serve to deter employers from
simply because they are rich, for justice must future violations of the statutory due process rights
always be served for the poor and the rich of employees. At the very least, it provides a
alike, according to the mandate of the law.35 vindication or recognition of this fundamental right
granted to the latter under the Labor Code and its
Justice in every case should only be for the deserving Implementing Rules.
party. It should not be presumed that every case of
illegal dismissal would automatically be decided in Private respondent claims that the Court of Appeals
favor of labor, as management has rights that should erred in holding that it failed to pay petitioners'
be fully respected and enforced by this Court. As holiday pay, service incentive leave pay and 13th
interdependent and indispensable partners in nation- month pay.
building, labor and management need each other to
foster productivity and economic growth; hence, the We are not persuaded.
need to weigh and balance the rights and welfare of
both the employee and employer. We affirm the ruling of the appellate court on
petitioners' money claims. Private respondent is
Where the dismissal is for a just cause, as in the liable for petitioners' holiday pay, service incentive
instant case, the lack of statutory due process should leave pay and 13th month pay without deductions.
not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify As a general rule, one who pleads payment has the
the employee for the violation of his statutory rights, burden of proving it. Even where the employee must
as ruled in Reta v. National Labor Relations allege non-payment, the general rule is that the
Commission.36 The indemnity to be imposed should burden rests on the employer to prove payment,
be stiffer to discourage the abhorrent practice of
rather than on the employee to prove non-payment. that petitioner Virgilio Agabon included the same as
The reason for the rule is that the pertinent one of his money claims against private respondent.
personnel files, payrolls, records, remittances and
other similar documents – which will show that The Court of Appeals properly reinstated the
overtime, differentials, service incentive leave and monetary claims awarded by the Labor Arbiter
other claims of workers have been paid – are not in ordering the private respondent to pay each of the
the possession of the worker but in the custody and petitioners holiday pay for four regular holidays from
absolute control of the employer.41 1996 to 1998, in the amount of P6,520.00, service
incentive leave pay for the same period in the amount
In the case at bar, if private respondent indeed paid of P3,255.00 and the balance of Virgilio Agabon's
petitioners' holiday pay and service incentive leave thirteenth month pay for 1998 in the amount of
pay, it could have easily presented documentary P2,150.00.
proofs of such monetary benefits to disprove the
claims of the petitioners. But it did not, except with WHEREFORE, in view of the foregoing, the petition
respect to the 13th month pay wherein it presented is DENIED. The decision of the Court of Appeals
cash vouchers showing payments of the benefit in dated January 23, 2003, in CA-G.R. SP No. 63017,
the years disputed.42 Allegations by private finding that petitioners' Jenny and Virgilio Agabon
respondent that it does not operate during holidays abandoned their work, and ordering private
and that it allows its employees 10 days leave with respondent to pay each of the petitioners holiday pay
pay, other than being self-serving, do not constitute for four regular holidays from 1996 to 1998, in the
proof of payment. Consequently, it failed to discharge amount of P6,520.00, service incentive leave pay for
the onus probandi thereby making it liable for such the same period in the amount of P3,255.00 and the
claims to the petitioners. balance of Virgilio Agabon's thirteenth month pay for
1998 in the amount of P2,150.00 is AFFIRMED with
Anent the deduction of SSS loan and the value of the the MODIFICATION that private respondent Riviera
shoes from petitioner Virgilio Agabon's 13th month Home Improvements, Inc. is further ORDERED to
pay, we find the same to be unauthorized. The pay each of the petitioners the amount of P30,000.00
evident intention of Presidential Decree No. 851 is to as nominal damages for non-compliance with
grant an additional income in the form of the 13th statutory due process.
month pay to employees not already receiving the
same43 so as "to further protect the level of real wages No costs.
from the ravages of world-wide inflation."44 Clearly, as
additional income, the 13th month pay is included in
the definition of wage under Article 97(f) of the Labor
Code, to wit:
G.R. No. L-23331-32 December 27, 1969
(f) "Wage" paid to any employee shall mean
the remuneration or earnings, however HEIRS OF TEODOLO M. CRUZ, (represented by
designated, capable of being expressed in ARSENIA, FREDESWINDA, TEODOLO, JR.,
terms of money whether fixed or ascertained ERLINDA, EDGARDO and MYRNA, all surnamed
on a time, task, piece , or commission basis, CRUZ), MARY CONCEPCION and EDGARDO
or other method of calculating the same, CRUZ, petitioners,
which is payable by an employer to an vs.
employee under a written or unwritten COURT OF INDUSTRIAL RELATIONS, SANTIAGO
contract of employment for work done or to be RICE MILL and KING HONG AND
done, or for services rendered or to be COMPANY, respondents.
rendered and includes the fair and reasonable
value, as determined by the Secretary of Mary Concepcion and Eduardo P. Cruz for petitioners.
Labor, of board, lodging, or other facilities Tolentino and Garcia and D. R. Cruz for respondents.
customarily furnished by the employer to the
employee…"

from which an employer is prohibited under Article

11345 of the same Code from making any deductions G.R. No. L-23361-62 December 27, 1969
without the employee's knowledge and consent. In
the instant case, private respondent failed to show
LYDIA BULOS, PACIENCIA BATOON, NATIVIDAD
that the deduction of the SSS loan and the value of
V. MALGAPO, FAUSTINO ABEDOZA, CARMELITA
the shoes from petitioner Virgilio Agabon's 13th
AGGASID, LYDIA ALBINO, JUANITO ANDRES,
month pay was authorized by the latter. The lack of
LEONILA ANDRES, AIDA BATOON, CORNELIO
authority to deduct is further bolstered by the fact
BANGOT, PABLO BAUTISTA, CONSOLACION
GALAD, AVELINA CADUAS, ELENA DE LA CRUZ, majority of the union board "under circumstances of
VICTORIANO DE LA CRUZ, LEOCADIO DASALLA, fraud, deceit, mispresentation and/or concealment,
VIRGINIA DASALLA, FLORA S. DUCAY, especially where a member of the Court has actively
CRESENCIA EVIDENCIO, CATALINO GIMENEZ, used his official and personal influence to effect the
DIONISIA GUILLERMO, ARSENIA LABASAN, settlement which is manifestly unjust to laborers
FRANCISCO LAPLANO, DIONISIO LABASAN, who by reason of their financial disadvantages in a
MAURICIA LAZATIN, LORETA MACAPAGAL, conflict with their employers need all the aid of the
IGNACIA LUNA, FELICITA MANGADAP, Court for their protection, consonant with law,
FELICIDAD MARIANO, JULIAN MELCHOR, justice and equity."2
RICARDO MELCHOR, ANITA MENDOZA, ALBERTO
MIGUEL, FERNANDO NAVALTA, PEDRO NOOL, The factual background goes as far back as June 21,
JUANITA ORANI, NEMESIA SOLA, VERONICA 1952, when the Santiago Labor Union, composed of
SOLA, CECILIA SOLIVEN, MANUEL SAGABAIN, workers of the Santiago Rice Mill, a business
FILEMON SAGABAIN, ANICETA RESPONSO, enterprise engaged in the buying and milling of palay
FELICIANO RICO, PETRONILA RIVERA, at Santiago, Isabela, and owned operated by King
ROSALINA TULAWAN and MARIA Hong Co., filed before the respondent Court of
VILLANUEVA, petitioners, Industrial Relations Cases Nos. 709-V and V-1
vs. hereof, a petition for overtime pay, premium pay for
THE COURT OF INDUSTRIAL RELATIONS, night, Sunday and holiday work, and for
HONORABLE EMILIANO TABIGNE, HONORABLE reinstatement of workers illegally laid off. As of then,
AMANDO BUGAYONG, HONORABLE ANSBERTO the total sum claimed by the workers, as itemized in
PAREDES, ASSOCIATE JUDGES, COURT OF their amended petition of September 2, 1952 —
INDUSTRIAL RELATIONS; SANTIAGO RICE MILL; P100,816.36 for overtime pay, P19,350.00 for
KING HONG CO., INC.; SANTIAGO LABOR UNION premium pay and P3,360.00 for differential pay
alias MAGAT LABOR UNION, respondents. under the Minimum Wage Law — amounted to
P123,526.36.3
Emilio D. Castellanes for petitioners.
Dioscoro P. Avanceña for respondent Santiago Labor As recorded in this Court's decision of August 31,
Union. 1962 in Santiago Rice Mill, et al. vs. Santiago Labor
Union,4 which affirmed the Court of Industrial
TEEHANKEE, J.: Relations judgment in favor of the workers, "on
September 19, 1958, after a protracted hearing
These cases are separate appeals filed by respective during which scores of witnesses and voluminous
petitioners from respondent Court's Orders of exhibits were presented, the court, thru Judge
November 8, 1963 and March 9, 1964 approving by a Emiliano G. Tabigne, rendered decision dismissing
split 3 to 1 vote the settlement for P100,000.00 of the the petition of the union for lack of merit and want of
estimated P423,756.74 — judgment liability of jurisdiction; but, upon a motion for reconsideration,
respondent firm in favor of the claimants-members of the Court of Industrial en banc, by a split decision of
the Santiago labor Union, executed on November 8, 3-2 vote, issued a resolution reversing the decision of
1963 between respondent firm and the labor union the trial judge. The dispositive part of said resolution
as represented by a majority of its board of directors. reads:
The appeals are jointly resolved in this decision.
"WHEREFORE, the respondents are hereby
Petitioners in Cases L-23331-32 are the retained ordered to pay the overtime claim of both
lawyers of the Santiago Labor Union who question male and female claimants herein computed
respondent Court's approval of respondent firm's at their basic pay for each period in question;
settlement of the union members' judgment claims the legal premium for night, Sunday and
with the union board of directors, without their holiday work or services rendered by the male
knowledge and consent, notwithstanding their duly claimants herein computed also on the
recorded attorneys' lien, and over the objection of a proven basic wage or salary at the time in
board member that the union board had no authority question; to pay the overtime claim of their
to compromise or quit-claim the judgment rights of drivers computed on their respective monthly
the union members.1 salaries; to pay the differentials due each of
the women claimants on their wages from
Petitioners in Cases L-23361-62 are forty-nine (49) August 4, 1951 at the rate of P2.00 daily and
claimants-members of the Santiago Labor Union who P3.000 daily from August 4, 1952; and to
assail respondent Court's approval of the questioned reinstate the claimants both male and female,
settlement, without their authority as the real parties who have testified and proved their having
in interest, and who denounce the settlement as been illegally laid-off, with the right of
unconscionable and having been entered into by the respondents to deduct from the back wages
 due each claimant any amount earned during Respondent firm disputes such a figure as
the period of the illegal dismissal." "completely gratuitous and without basis in fact."7

The worker's decade of travail was not yet to be at an A general opposition to the Chief Examiner's Report
end, however, despite this Court's affirmance of the was filed by respondent firm. Judge Emiliano G.
judgment for the workers. After the remand of the Tabigne, as the trial judge, supra, ordered a hearing
records for enforcement by respondent Court, and thereon on December 22, 1962, as a condition
the corresponding examination of books, said Court's precedent to execution of the judgment. Such Report
Chief Examiner filed his Partial Report of December was submitted for resolution and approval at the
14, 1962, wherein the judgment award in favor of the hearing of December 22, 1962, but the records before
workers was determined and computed, as follows: us fail to show that the trial judge ever acted on or
approved the Report.
For back wages from January 1, 1953 to April 30, 1962
Before and after the submittal of the Chief
all the 35 employees and laborers (26 workers, 6
borers and 3 drivers) who testified in court, per Examiner's Report of December 14, 1962, the union
pressed for execution of the final judgment in favor of
positive part of the judgment, "before deducting the
its claimants-members. It filed, furthermore, on
mounts earned during the period of the back wages by
December 20, 1962, an Urgent Motion for
ch claimant and before deduction of amounts
Preliminary Attachment, in view of the disposition by
rresponding to the back wages of claimants who died
respondent firm of its trucks and automotive
ore April 30, 1962" at P6,380.00 for each of the 32
equipment and by virtue of the fact admitted by
rkers and P28,000.00 for each of the 3 drivers P288,160.00
respondent firm that it had stopped operations
For overtime and premium pay from January 1, 1948 preparatory to liquidation, by reason of the alien
December 31, 1952 of some 104 workers, in varying nationality of most of its stockholders, under the
mounts.5 provisions of Republic Act No. 3018 nationalizing the
125,216.74
rice and corn industry. In another motion of
For minimum wage differentials of P2.00 daily from December 4, 1962, the union had asked that the
ptember 10, 1951 to December 31, 1951 of 60 women Court at least order respondent firm to put up a
rkers bond of P500,000.00 to answer for the payment of
10,380.00
the judgment or to deposit said amount in Court.
OTAL P423,756.74
Petitioners assert that these motions were left
hanging until the union filed a mandamus petition
Petitioners claim, furthermore, that "in this with this Court,8 after which the trial judge issued
computation, however, the filed examiners did not and released on April 15, 1963 his Order dated
include the claims of seventy (70) other laborers March 30, 1963. In this Order, the trial Judge,
whose total claims (for back wages), at the rate of recognizing that "petitioner (union) and its members
P6,300.00 each, would be P441,000.00. Therefore, concerned should be extended the necessary
the correct grand total amount due the laborers protection of their rights" ordered respondent firm,
would be P864,756.74."6 within 10 days from its finality, to deposit in Court
the sum of one hundred thousand (P100,000.00)
The Chief Examiner's Report showed respondent pesos and to file a surety bond of equal amount, "to
firm's total assets as at October 31, 1962 to be guarantee the payment of whatever amount (a) due
P191.151.08 (cash account of P148,411.20, fixed petitioner (union) and its members concerned after
assets of buildings, machinery & equipment, corn this Court shall have finally decided the obligation of
mill, etc. with a book value of P40,073.75 and herein respondents under the judgment." This Order
deferred charges of P2,666.14), and its net worth to was affirmed by respondent court en banc, in its
be in the same amount of P191,151.08, (capital stock Resolution denying respondent firm's motion for
paid up of P232,000.00 less deficit of P40,848.92). reconsideration thereof.
the Report further stated that in January, 1962 and
on August 9, 1962, respondent firm sold its trucks, Respondent sought a review by this Court of the said
jeep and one car, with a net book value of P2,628.71 Order and Resolution requiring it to deposit
for P27,000.00 or a net gain of P24,371.29. P100,000.00 and to file a surety bond of equal
Petitioners claim that the book value of respondent amount to guarantee payment of its judgment
firm's fixed assets is only one-sixth of their actual obligation in Santiago Rice Mill et al. vs. Santiago
market value of P240.442.50, and that its total
Labor Union, etc., docketed as Cases G.R. Nos. L-
leviable assets therefore amounted to close to
21758-59 of this Court. this Court, in its Resolution
P390,000.00, without taking into account the huge
of September 20, 1963, dismissed for lack of merit
income potential of its rice mill operations. respondent's petition for review, and the dismissal
became final on October 24, 1963.
Earlier, June 25, 1963, pursuant to the request of amount of P110,000.00 which was deposited with the
the parties, who had advised the trial judge that they Court's disbursing officer "immediately upon the
would meet at the premises of respondent firm at signing of the settlement which will be prepared by
Santiago, Isabela, to take up direct negotiations for the respondent firm through its counsel." The
the possible settlement of the judgment, a team of complete transcript of the conference, as reproduced
employees of the Court had been sent to help in the by respondent in its brief, follows:
negotiations. the transcript of the negotiations
records that respondent had then offered the Union COURT:
the maximum amount of P110,000.00 in full
settlement of its obligations to the members- The parties have solicited the
claimants of the Union under the judgment, but that intervention of the court for the
the union rejected the offer and counter-offered the settlement of this case. They have
minimum amount of P200,000.00. decided to settle it amicably with the
condition that the management will
The Union meanwhile filed to no avail a series of pay ONE HUNDRED TEN THOUSAND
urgent motions on May 8, July 1, August 29 and PESOS (P110,000.00) cash, and that
September 6, 1963 for approval of the Chief the said amount will be deposited with
Examiner's Partial Report of December 14, 1962 and the Disbursing Officer of the Court
for enforcement, through a writ of execution or immediately upon the signing of the
contempt proceedings, of the Order of March 30, settlement which will be prepared by
1963 requiring firm to deposit a total of P200,000 in the respondent firm through its
cash and bond to guarantee payment of the counsel. Now, Mr. Maylem, make your
judgment. Upon the finality of this Court's Resolution manifestation on record.
dismissing respondent's petition for a review of said
Order of March 30, 1963, the union again filed on MR. MAYLEM:
October 29, 1963 still another Urgent Motion,
advising the trial judge of this Court's action rejecting
respondent's appeal and invoking the Court's As per unanimous decision of the
present members of the board
ministerial duty of enforcing its said Order — in vain
composing of nine, the three are not
again, as shall presently be seen.
members of the board, present before
this Honorable Court to date, (sic) they
The trial judge took no action on this latest Urgent have agreed to accept the proffer of
Motion of the Union, wherein it emphasized that ONE HUNDRED TEN THOUSAND
respondent, with this Court's action rejecting its PESOS (P110,000.00) as full
appeal, no longer had any excuse for refusing its settlement of their claims in Cases
appeal, no longer had any excuse for refusing to Nos. 709-V and 709-V (1).
comply with the deposit Order. Instead, an
unscheduled conference was called and held on
October 31, 1963 in the chambers of the trial judge, ATTY. GARCIA:
and attended by representatives of respondent firm,
including their counsels of record, on one hand and In behalf of the respondent and the
Segundino S. Maylem, president of the union and management of the said respondent
eight directors of the union, on the other. Four of and also in behalf of Mr. Pino, who is
these nine union representatives, including the union the attorney-in-fact of the respondent
president himself, had no claims of rewards whatever corporation, with full power to enter
under the judgment. Said union officials were not into this settlement, we wish to
assisted by counsel, as petitioner Mary Concepcion, manifest and uniform this Honorable
counsel of record of the union, was not present, not Court that the acceptance of the
having been notified of the conference. proffer of P110,000.00 in full
settlement of the claims of petitioners
At this conference of October 31, 1963, respondent is with the full agreement of the said
firm made again the same offer to settle and respondent. We are disposed to
quitclaim the judgment in favor of the union deposit the amount of P110,000.00 on
members for the same amount of P110,000.00, or about Friday, November 8, 1963,
which offer had already been rejected by the union at and said deposit to be made with the
the earlier conference held on June 25, 1963 at Disbursing Officer of this Court and
said deposit to be in certified checks of
Santiago, Isabela, supra. But this time, as appears
from the transcript of the conference, respondent and a local bank and which is actually
equivalent to cash. In line further with
the directors of the union decided to settle the case
the suggestion of the Honorable
amicably with the payment by the firm of the same
Judge, we ware willing to assume the
 payment of the deposit fee upon our representatives of the respondents were
depositing the said amount of insisting on their offer of a definite sum of
P110,000.00. There is a previous P110,000.00;
understanding which was not made of
record as to the fact that to enable the 4. That in the course of the conference, no
members of the board of directors of mention at all was made of the entry of
the petitioner union to come back to judgment in G.R. Nos. L-21758-59, Supreme
Manila next week to enable them to Court of the Philippines, entitled "Santiago Rice
sign the settlement papers, we have Mill, et al. vs. Santiago Labor Union, etc." on
agreed to advance the sum of TWO October 24, 1963, thereby becoming final and
HUNDRED PESOS (P200.00) to the executory; that the aforesaid entry of
petitioner for the account of said judgment reads as follows:
settlement and which will be used by
the said petitioners in their travelling "After a consideration of the allegation
expenses between Manila and of the petition filed in cases
Santiago, going and coming. L-21758 and L-21759 (Santiago rice
Mill, etc. vs. Santiago Labor Union, et
COURT: al.) for review of the order and
resolution of the Court of Industrial
Noted. Relations referred to therein, the
COURT RESOLVED to dismiss the
MR. MAYLEM: petition for lack of merit."

We request the Court that Mrs. Mary 5. That by the terms of the afore-cited entry of
Concepcion should be presented judgment, the Respondent's, in effect, are
during the signing of the agreement on ordered to deposit the sum of P100,000 in
or about November 8, 1963, at 2:30 cash, Philippine Currency and similar amount
P.M. P100,000 in surety bond, pursuant to the order
of this Honorable court of March 30, 1963,
COURT: which was affirmed in the abovecited Supreme
Court resolutions;
NOTED.9
6. That as a consequence of the ignorance of
the Board of Directors of Petitioner of this
As against the official transcript of the proceedings of
entry, then present, they tentatively agreed to
the conference above reproduced, petitioner
the offer of P110,000.00 of Respondents, until
Natividad Magalpo, a director of the union, together November 8, 1963 when the final conference
with petitioners Lydia Bulos and Paciencia Batoon,
before this Honorable Court will be held;
both union members-claimants, filed on November 5,
1963, through their present counsel, who duly
entered their appearance, their verified 7. That movants consented to come to Manila
"Manifestation and Objection with Ex-Parte Urgent on the understanding that the conference was
Motion", relating what transpired at the conference, to be held with the Attorney-in-fact of the
charging the union president, Maylem, with bad faith petitioner, the "CREAM, INC.," formerly,
in that he never previously advised the union Credit Research and Intelligence, its exclusive
representatives that the conference of October 31, authorized representative for the evaluation,
1963 was to discuss a compromise settlement nor adjustment and liquidation of its claim
that this court's resolution dismissing respondent's against Respondent, that they were very
appeal from the trial judge's Order dated March 30, much taken back in having been taken to the
1963 requiring respondent to deposit P200,000.00 in Court of Industrial Relations on October 31,
cash and surety bond had already become final, and 1963 by the President of the Petitioner, Mr.
asking the trial judge to shelve the proposed Segundino S. Maylem; that even while they
settlement until respondent firm shall have complied were already inside the building, they were
with the said deposit order. The pertinent portions of informed that the purpose was to talk about a
said Objection and Urgent Motion read: compromise settlements with respondent's
representatives; as a result of these
circumstances, your movants although present,
3. That during the conference, the matter of were not able to register their objections to the
amicably settling the case was discussed; proceedings; that immediately after the
petitioners representatives pressed for at least aforesaid conference, the herein movants came
P150,000.00 as a fair amount and the
to know of the entry of judgment in the effect, they will only get fourteen percent, (14%)
Supreme Court, infra; (sic) approximately, or one-seventh of the amounts
as computed by the Chief Examiner of this
8. That the herein Movant's register and Honorable Court;
manifest their objections to the proceeding held
and to the tentative agreement manifested by xxx xxx xxx
the Board of Directors of the Santiago Labor
Union then present, on the following grounds: WHEREFORE, it is respectfully prayed that:

a) That the Board of Directors did not a) Respondent be required to deposit the sum
have any express authority of the of P100,000.00 in cash, Philippine Currency,
members of the Santiago Labor Union and P100,000.00 in surety bond, pursuant to
to enter into any compromise for the the entry of judgment in G.R. Nos. L-21758-
sum of P110,000.00; on the contrary, 59;
the latest authority granted its
Attorney-in-fact, the "CREAM, INC." b) That these movants be afforded
was for the sum of P150,000.00 which opportunity by this Honorable Court to be
authority was given only, very heard regarding the surety bond to be
recently: submitted by the Respondent, before approval
thereof;
b) That the proceedings on October 31,
1963 was tainted by apparent bad c) The tentative settlement be shelved;
faith on the part of the President of the
Petitioner, Mr. Segundino s. Maylem, in
d) The further action on any settlement or
that there never was a time before the
compromise be held in abeyance to await
conference when he intimated or
otherwise made known to the movants, compliance by the Respondent of the entry of
judgment in G.R. Nos. L-21758-59;
that a conference would be held before
Judge Emiliano Tabigne. The only
reason for the trip to Manila was the e) Hearings on the Report of the Chief
conference with "CREAM, Inc." Examiner be resumed immediately and
officials; without interruption in view of the provisions
of Republic Act 3108, until final termination
c) That the effect of the entry of as soon as possible long before December 31,
1963,10
judgment in G.R. Nos.
L-21758-59, infra, was not explained to
the members of the Board of Petitioner There petitioners further filed on the same date,
at any time, much less made known, November 4, 1963 an urgent Ex parte Motion for the
although it was later ascertained that issuance of a writ of execution for the enforcement of
President Segundino s. Maylem all the the deposit order against respondent firm, and asked
time, BEFORE THE CONFERENCE, the trial judge to act on their two urgent motions
knew of the existence of the upon receipt thereof.
order; what was emphasized was the
claim of the Respondents that they are Both urgent motions were totally ignored by both the
unable to pay more than P110,000.00; trial judge as well as by the respondent firm, despite
(emphasis supplied.) due notice on the latter. The request of the union
president, Maylem, at the October 31, 1963
d) That the amount of P110,000.00 is conference that the trial judge have the union
unconscionable, considering that the counsel present during the proposed signing of the
total claims of the members of the settlement agreement set for November 8, 1963, as
Petitioner, is more than P400,000, not expressly noted by the trial judge, was likewise
to mention that all the time the ignored. Notwithstanding that notice of the
negotiations were being made the conference set for November 8, 1963 at 2:30 p.m. was
Supreme Court's final order makes served on November 5, 1963 on the union counsel,
mandatory Respondent's deposit of petitioner Mary Concepcion, the scheduled
P100,000, cas in Philippine Currency conference was never held.
and P100,000 in surety bond.
Unexplained, Maylem, the union president and nine
9. That Movant's vehemently disagree to any other members of the union's board of directors (out
settlement as tentatively agreed upon, for, in of 13 board members) even before the scheduled
hour of the conference of November 8, 1963 at 2:30 "Settlement" and prayed respondent Court en banc to
p.m. had earlier executed a "Settlement" on said reinstate the judgment against respondent and to
date, without the knowledge, advice, and conformity enforce the deposit order dated March 30, 1963.
of the union counsel, with respondent firm's
attorney-in- fact, who was duly assisted by Petitioners Magalpo, Bulos and Batoon, likewise
respondent's two counsels, who likewise executed the moved respondent Court en banc to reconsider and
"Settlement." In this "Settlement", the said union set aside the trial judge's approval of the
officials claiming to act "with the authorization of the "Settlement", in disregard of their objection and
Board of Directors and its members, "in pending motions of November 5, 1963 to shelve the
consideration of the sum of P110,000.00, or one- proposed settlement and to enforce the deposit
fourth of the estimated P423,756.74-judgment Order. On December 26, 1963, they were joined in
liability of respondent firm, as computed in the their plea for reconsideration by forty-seven other
respondent Court's Chief Examiner's Partial Report of union members-claimants, Co-petitioners at bar.
December 14, 1962, "waived and quitclaimed . . . any
and all claims it (the union) may have against the Respondent, on the other hand, filed its opposition to
respondent as well as the claim of each and every one the motions for reconsideration, questioning the
of the members of the said petitioner union against the personality and interest of petitioners-movants
respondent firm." The union further "warranted" in Magalpo and her 2 other co-movants and asserting
said "Settlement" "that aside from the petitioner that they were bound by the "Settlement" entered
(union) itself and the members thereof, there are no into by their union's board of directors. It alleged that
other persons who have any interest over the it had deposited with respondent Court the sum of
judgment debt and that if it should happen that P110,000.00 stipulated in the "Settlement" on the
other persons shall make a claim against the same day of its approval by the trial judge. It filed
respondent and/or said judgment debt, that the with respondent Court on November 21, 1963 a letter
respondent, nevertheless, shall no longer be liable of ratification dated November 10, 1963 addressed to
therefor."11 the trial judge and purportedly signed by some 79
union members-claimants confirming and accepting
The "Settlement" was immediately submitted to the the settlement executed by the union board.
trial judge who forthwith on the same day, November Petitioners in their brief list 21 of these signatures as
8, 1963, issued his Order, approving the same, and questionable, asserting that they are at variance with
entered into respondent Court's records at 1:45 p.m. other corresponding signatures in the Payroll dated
of the same day, as follows: November 8, 1963 submitted to respondent Court on
November 21, 1963, such that "either one or the
Considering that the bases of the above other signature is a forgery." Respondent counters
quoted settlement is well founded and that there is "absolutely no truth to the claim" and
justified and not contrary to law, morals that the signers of the ratification letter "have all
and/or public policy, approval of the same is, received their individual shares of the P110,000.00
therefore, in order. settlement paid by respondent company and this in
itself is a ratification on their part of said settlement."
WHEREFORE, the Court hereby approves the Nothing appears in the record, however, as to
settlement of the parties in these cases; and whether and in what manner the respondent Court
shall as between the parties to the same be determined the authenticity of the signatures.
deemed to be a decision and/or award in Respondent further filed on December 18, 1963 a
these matters therein treated in the aforesaid motion for reconsideration of the trial judge's Order
settlement; and upon acknowledgment of the approving payment of P33,000.00 to the petitioners-
sum of money in the said settlement, these attorneys by way of attorneys' fees.
cases shall be deemed closed and terminated.
On August 1, 1964, and August 4, 1964, after
Petitioners-lawyers Mary Concepcion, et al. upon petitioners had filed on November 29, December 2
learning of the "Settlement" and respondent's deposit and 17, 1963 and January 16, 1964 various urgent
with the Court of the sum of P110,000.00 in motions to set for hearing and for resolution, they
pursuance thereof filed in the afternoon of November were served with copies of respondent Court's en
8, 1963 a motion for withdrawal of the sum of banc Resolution dated March 9, 1964, penned by the
P33,000.00 equivalent to their 30% contingent fee, trial judge, "finding no sufficient justifications to set
without prejudice to such action as they may take for aside, disturb or modify the Order issued in these
enforcing their lien to its full extent. The trial judge cases on November 8 and 9, 1963" and denying all
granted such motion in its Order of November 9, three motions for reconsideration. Judges Amando C.
1963. In due course, said petitioners moved for Bugayong and Ansberto F. Paredes concurred under
reconsideration and setting aside of the trial judge's date of July 29, 1964 with the Resolution, while
Order of November 8, 1963 approving the Judge Arsenio Martinez took no part. No statement of
the material allegations of, and issues raised in, the d) That the records of the respondent labor
pertinent pleadings set out in detail hereinabove nor union disclose that the members of the union
reasons for the conclusion of insufficient justification have unanimously acted, in their individual
reached by the majority resolution are given therein. capacities to proceed with the prosecution
and collection of whatever sums they might
Then Presiding Judge Jose S. Bautista dissented. yet be entitled to collect, in order to show
"Taking into account the precipitate approval of unequivocally that the negotiation made by
settlement over the objection of some union members former President Segundino S. Maylem and his
concerned and without hearing them, on the strength board of directors was unauthorized, and to
simply of the manifestation of the petitioner's Board spotlight the betrayal of the members of the
of Directors that it had authority to compromise Union by said Segundino S. Maylem and his
when previously said union members concerned had board of directors of the former union
already manifested in Annex "E" (Exhibit "G", at bar) incumbency;
that there was no such authority," he voted "that the
case be restored to the status quo as of October 30, 6. That fundamentally, there is no contentious issue
1963, but the payment already made to the union between the petitioners and respondent labor union;
members be considered as partial payments on if at all, the only distinction is between the
account, subject to final liquidation and adjustment; personality of the real parties in interest, the union
that an order of execution of the judgment in cases members who have initiated and instituted this
Nos. G.R. L-21758 and L-21759 of the Supreme petition as against the limited and formal personality
Court be issued (upholding the Order of March 30, of the respondent labor union to represent them
1963 for deposit of P200,000.00 in cash and surety when so authorized by their collective will."12
bond) be issued and that the Hearing Officer shall
resume the hearing of the Examiner's Report. The core question is whether this Court can give its
sanction to respondent Court's majority resolution
Hence, the appeals of petitioners. upholding the trial judge's approval of the union
board's settlement for P110,000.00 of the estimated
The Santiago Labor Union, impleaded as party P423,766.74-judgment liability of respondent firm in
respondent in Cases L-23361-62, filed its Answer on favor of the individual union members, over the
September 24, 1964, "putting its weight behind the timely opposition formally filed by three members
prayers of the petitioners." The Answer reveals that (later joined by forty-seven other members) expressly
the union members, feeling betrayed, had calling attention to the union board's bad faith in the
disauthorized and removed from office Maylem, the premises and lack of any express authority to enter
union president and his board of directors who had into the settlement, and without giving the union the
executed the "Settlement" with respondent firm and opportunity of being heard and assisted by counsel
disclaimed the documents of ratification that they and notwithstanding the fact that respondent firm,
had signed at the behest of Maylem. The union which had sufficient cash and fixed assets, was
averred in its Answer that: under legal compulsion by virtue of respondent
court's own final order to deposit P100,000.00 in
a) The real parties in interest in Cases 709-V cash and another P100,000.00 in surety bond to
and 709 V(1), CIR, are the members of guarantee payment of the union members' judgment
respondent Labor Union; claims?

b) The records of the respondent labor union The question answers itself. The precipitate approval
do not show any grant by the members to the of the purported settlement under the circumstances
former incumbency of any previous authority to goes against the grain of fundamental considerations
negotiate the claim or subsequent ratification of justice, equity and due process.
of the settlement for P110,000.00 for it is
unthinkable and ridiculous for the real 1. To begin with, petitioners were not accorded due
parties in interest to give away gratuitously process of law, when, for reasons unexplained in the
what had been awarded to them in a final record, the conference set for November 8, 1963 at
judgment, for a much lesser amount than 2:30 p.m. to take up formally the proposed
that of the award; settlement was cancelled and never held. (supra, pp.
8-9) Notice thereof had been served on the union
c) The members are unanimous in the counsel, in accordance with the express request of
assertion that the documents they signed at the union president, as expressly noted by the trial
the behest of former President Segundino S. judge. Yet, such notice was deliberately disregarded
Maylem were represented and understood to and the union was deprived of the assistance of its
be but an authority to collect a part of the court counsel.13 Instead, the settlement as unilaterally
award to the members; drafted by respondent's counsel (supra, p. 7) was
executed ahead of the scheduled hour of the the report of respondent court's examiner showed
conference that turned out to be a non-conference, that respondent firm had sufficient assets, (supra, p.
by the union president with nine other members of 5), and considering that their partial judgment credit,
the union's board of directors, without the as estimated by respondent court's examiner,
knowledge, advice and conformity of the union amounted to more than P400,000.00.
counsel, while respondent was duly assisted by its
two counsels. By 1:45 p.m. of the same day, the 3. The trial judge's rush approval of the settlement
settlement had been approved by the trial judge as disregarded the grave adverse consequences thereof
"not contrary to law, morals and public policy." to the union members. The settlement, as prepared
Similarly, petitioners Magalpo, a board member by respondent's counsel, provided for a union
herself and her co-petitioners Bulos and Batoon were warranty that aside from the union itself and the
not accorded an opportunity for a fair hearing on members thereof, "there are no other persons who
their grave charges against the union leadership and have any interests over the judgment debt and that if
their urgent motions to shelve the proposed it should happen that other persons shall make a
settlement and to enforce the final order of claim against the respondent and/or said judgment
respondent court requiring respondent firm to debt, that the respondent, nevertheless, shall no
deposit P200,000.00 in cash and surety bond for longer be liable therefor." Such warranty was against
satisfaction of the union members' judgment, as said the very facts of record, which showed that as early
motions were totally ignored by the trial judge and as June 21, 1963, petitioners-counsels in Cases L-
not touched upon at all in his Order rashly approving 23331-32 had duly recorded their attorneys' lien of
the settlement. "30 % of whatever amount may finally be awarded in
favor of the petitioner." Thus, technically, since the
2. The lack of due deliberation and caution in the award in favor of the union members amounted to
trial judge's instant approval of the settlement is seen more than P400,000.00, the settlement for
from the stipulations therein that the union thereby P110,000.00 would conceivably just about cover the
waived and quitclaimed any and all claims which it 30% attorneys' fees payable to the petitioners-
may have against the respondent, as well as the counsels under the contract, if they were so minded
claim of each and every one of the members of the to enforce it and bad faith on the union's part were
union against respondent, when precisely the shown, with the union members left holding an
authority of the union board members to enter into empty bag.14 Such onerous terms of the settlement
any such compromise or settlement was under could not then properly be approved by the trial
express challenge by petitioner Magalpo, a board judge as "not contrary to law, morals and public
member herself in her Objection and Urgent Motion policy."
to shelve the settlement filed on November 5, 1963,
which the trial judge completely disregarded. 4. All these underscore the failure of due process
Petitioner Magalpo further made serious charges that when petitioners were deprived of the formal
Maylem, the union president, had misled the board conference on the proposed settlement scheduled for
members into attending the unscheduled conference November 8, 1963 and of their right to be assisted by
held on October 31, 1963 before the trial judge, and the union counsel as expressly requested, so that a
had deliberately concealed from them the fact of fair hearing could be accorded petitioners and an
entry on October 24, 1963 of the Order of this Court opportunity afforded them to air their serious
in G.R. Nos. L-21758-59 upholding the P200,000.00 charges of bad faith and lack of authority against the
deposit Order of respondent court and the effect union leadership. Certainly, all these serious
thereof of making mandatory upon the trial judge, in questions and charges made by petitioners could
accordance with the terms of his own order, the have been threshed out and verified, if the formal
issuance of a writ for execution or enforcement to conference scheduled for November 8, 1963 had been
compel respondent to so deposit P100,000.00 in cash held with the presence of union counsel, considering
and an equal amount in surety bond to guarantee that the latter likewise had a right to be heard, since
satisfaction of the union members' judgment against they had duly made of record their attorneys' lien
respondent. In point of facts, the union's own Urgent upon the judgment.15 Respondent, in its brief,
Motion of October 29, 1963, emphasizing that asserts that it vividly remembers that the trial judge
respondent no longer had any excuse for not repeatedly made mention of the P200,000.00 deposit
complying with the deposit order, as well as order during the unscheduled conference of October
petitioner Magalpo, et al.'s Urgent ex parte motion of 31, 1963 and "even explained the matter to the
November 4, 1963 to the same effect were pending members of the board in their native dialect." But the
before the trial judge, unresolved and unacted upon. transcript of the conference reproduced above (supra,
Petitioners Magalpo, et al. had reason therefore, to pp. 7-9) does not bear out this assertion. The
assail the proposed settlement for P110,000.00 as transcript is obviously deficient and does not reflect
unconscionable, when at the very least the union the actual discussions and proceedings. This is to be
members could be assured of P200,000.00 under the deplored, for in a matter of such great importance,
deposit order to satisfy their judgment credit, while
especially where the union officials were unassisted respondent." Forty-seven other union members-
by counsel in an unscheduled conference, care claimants joined petitioner Magalpo in their
should be taken by the trial judge that the denunciation of the union board's unauthorized
proceedings are faithfully recorded. Thus, although action, and in their plea for reconsideration with
the transcript again fails to make any mention of it, respondent court. Forty-nine union members-
respondent, in its brief, in effect provides support for claimants entitled to the bulk of the judgment award
petitioners' plaint against the unscheduled have filed this appeal from the adverse rulings of the
conference and precipitate approval of the settlement Court below. These union members have repudiated
behind the back of union counsel, when it states that the former union president, Maylem and his board of
"the presiding judge tried to help the parties reach a directors, for having betrayed the union members,
settlement by stressing to the union that there was and the new union leadership, in its Answer filed
no sense in demanding more than P110,000.00 from with the Court, has joined petitioners in their prayer
the respondent if that was all it could afford, and for redress, categorically asserting that the union
that any more delay in the execution of its award to records do not show any grant by the members to the
the union members might lead to their getting much former union board under Maylem to "negotiate the
less than the P110,000.00 already being offered by claim or subsequent ratification of the settlement for
respondents," and "while it is true that the presiding P110,000.00" which is "unthinkable and ridiculous."
judge took an active part in helping the parties reach (supra, p. 15) Under such circumstances, the letter of
such settlement, it was only in line with the policy of ratification of the settlement purportedly signed by
the law encouraging settlement of cases even after some 79 members, many of whose signatures
final judgment."16 The obvious fallacy of this thereon are denounced as forgeries and which
untenable posture assumed by the trial judge, of ratification was not authenticated in the proceedings
course, is that with this Court having upheld his below and has been expressly disowned by
P200,000.00 deposit order, it made every sense to petitioners herein, cannot be given any legal
enforce execution of said order, which it was significance or effect.
practically his ministerial duty to do so, to assure the
union members of recovery of their judgment credit 6. When it is further taken into consideration that
at the very least to the extent of P200,000.00, as the the judgment award, as affirmed by this Court's
trial judge had expressly recognized therein that decision of August 31, 1962,17 was for
"petitioner (union) and its members concerned should the payment of overtime, premium and differential
be extended the necessary protection of their rights." pay to the individual union members as claimants
Any further delay in the execution of the judgment and for the reinstatement of the individual union
award in favor of the union members could readily be members who testified and proved their having been
obviated, if the trial judge would but expedite the illegally laid-off, which represent a personal material
hearings for approval of the Court examiner's Report interest directly in favor of the individual union
which had been filed and left pending since members, as against the lack of material interest on
December 14, 1962. As correctly contended by the part of the union as such, the union's lack of
petitioners, he could have placed the union authority to execute the settlement, in the absence of
members, unassisted as they were by counsel, on an express or specific authorization by the union
equal footing in negotiating with respondent by a members, becomes patent. The authority of the
mere stroke of his pen by ordering the enforcement of union as such, to execute a settlement of the
his final P200,000.00 deposit order, as to which judgment award in favor of the individual union
there no longer existed any obstacle. We find the members, cannot be presumed but must be
forcing through of the settlement, under such expressly granted.
circumstances, arbitrary, unfair and unconscionable.
7. Recently, in the analogous case of La Campana
5. Another vital reason for striking down the Food Products, Inc. etc. Employees Ass'n vs. Court of
settlement is the lack of any express or specific Industrial Relations, et al.,18 this Court ruled upon
authority of the president and majority of the union the merits of the union's appeal, and set aside the
board of directors to execute the same and scale Industrial Court's questioned orders which would
down the estimated P423,756.74-judgment liability reopen its previous judgment finding the employer
of respondent firm in favor of the individual union guilty of unfair labor practice and ordering the
members to P110,000.00. On the contrary, petitioner reinstatement of, and payment of back wages from
board member Magalpo timely challenged the December 4, 1963 to, twenty-one (21) union
authority of the union board to execute any such members. In handing down its decision, this Court
settlement, expressly informing the trial judge that disregarded the petitioner union's motion to dismiss
the union had specifically appointed an entity in the appeal, filed through new counsel while the case
Manila, the "CREAM, Inc.", formerly Credit Research was pending decision, alleging that the union's
and Intelligence, as its attorney-in-fact and "exclusive legislative council had adopted a resolution relieving
authorized representative for the evaluation, the former union counsel of his services and
adjustment and liquidation of its claim against
authorizing the dismissal of the case, on the premise body in reality has not so great a material
that such dismissal "would serve the best interests of interest in the controversy as would prejudice
both parties who are now in the process of it in the event of dismissal. It is the twenty-
formulating a collective bargaining agreement in their one (21) members for whose benefit the ULP
earnest desire to establish industrial peace and case was prosecuted who stand to take
promote the economic well-being of all the parties tremendous losses. Nor is the argument that
concerned." For this Court ruled that the union's loss union and employer are now in the process of
of interest in the case was no ground for dismissing formulating a collective bargaining agreement
the case, since "the labor union as a body in reality of any consequence. That would not be
has not so great a material interest in the controversy affected by the decision we now render as an
as would prejudice it in the event of dismissal. It is the aftermath of the ULP case. Unless of course
twenty-one (21) members for whose benefit the ULP such a dismissal is a quid pro quo before the
case was prosecuted who stand to take tremendous parties could sit around the bargaining table.
losses" and suffer injustice. Upholding the individual Which surely enough is not to the 'best
union members in their stand of vindicating their interests' of the laborers.
rights acquired under the final judgment as against
the union's legislative council's resolution to dismiss And, as we examine the record, we observe
the case, this Court, speaking through Mr. Justice none of the members of the legislative council
Sanchez, thus held: — who adopted the resolution relied upon in the
motion to dismiss is personally affected by
We now come to the motion to dismiss filed in the decision rendered by the CIR in Case
this Court on March 10, 1969 by new counsel 3985-ULP. That decision, it will be recalled,
for petitioner. In that motion, we read the directs private respondents herein not only to
averment that the petitioning union, "after reinstate the twenty-one (21) union members
careful and serious consideration of their without loss of seniority and other benefits
Petition, taken in the light of recent and privileges but also to pay their respective
developments affecting their relationship with backwages from December 4, 1963, date of
the respondent-company, have decided that filing of the charge, basis of the complaint,
they have lost interest in the further until actual reinstatement. It is easy enough
prosecution of their claims"; that the union's to perceive the injustice which may be visited
legislative council, on February 5, 1969, upon these twenty-one (21) union members if
adopted a resolution authorizing the new the petition herein were to be dismissed. For
counsel to file a motion dismissing this case; then, a new trial will be had, with the
that the former counsel who directed this consequent trouble, expense, anxiety and
case before this Court, Atty. Eulogio R. another long delay before they could enjoy the
Lerum, had been relieved of his services in a fruits of their victory which they
letter of the union dated January 13, 1969; have legally and definitely won only after a
and that "the dismissal of this instant case long and protracted legal battle. At any rate, it
would serve the best interests of both parties is better on balance that we foreclose a
who are now in the process of formulating a flanking movement which could destroy
collective bargaining agreement in their rather than uphold the rights — to
earnest desire to establish industrial peace reinstatement and monetary award — of
and promote the economic well-being of all individual laborers acquired under the final
parties concerned." This drew a reply from judgment.
Atty. Eulogio R. Lerum that "while he admits
that he had received termination notice from 8. Just as this Court has stricken down unjust
the alleged officers of the abovenamed union, exploitation of laborers by oppressive employers, so
he had not been disauthorized by the will it strike down their unfair treatment by their own
complainants who had retained him to appear unworthy leaders. The Constitution enjoins the State
in their behalf" and that "said complainants to afford protection to labor.19 Fair dealing is equally
are against the dismissal of their case for the demanded of unions as well as of employers in their
reason that they want to vindicate their rights dealings with employees. The union has been evolved
and it is against public policy to settle an as an organization of collective strength for the
unfair labor practice by amicable settlement protection of labor against the unjust exactions of
(Sec. 5 [a], Rep. Act 875)." capital, but equally important is the requirement of
fair dealing between the union and its members,
While it may be true that the labor union which is fiduciary in nature, and arises out of two
itself has lost interest in the case, we do not factors: "one is the degree of dependence of the
believe that such should give ground for the individual employee on the union organization; the
dismissal of this case. The labor union as a other, a corollary of the first, is the comprehensive
power vested in the union with respect to the 9. The cases of Jesalva, et al. vs.
individual."20 The union may be considered but the Bautista,21 and Diomela, et al. vs. Court of Industrial
agent of its members for the purpose of securing for Relations,22 cited by respondent, clearly have no
them fair and just wages and good working application in the present case. In Jesalva, seventeen
conditions and is subject to the obligation of giving cases in different stages of hearing or execution
the members as its principals all information relevant before the Industrial Court were settled by a
to union and labor matters entrusted to it. As already compromise agreement, and this Court held that the
discussed above, the union leadership in the case at three petitioners who questioned the settlement were
bar was recreant in its duty towards the union "bound by the actions of the Union, that is to say, a
members in apparently having failed to disclose to majority of the members of the union." There was no
the union members the full situation of their question there that the union had acted with the
judgment credit against respondent, to wit, that they authority of the union membership. No deceit or
were in the advantageous position of being able to concealment or misrepresentation tainted the
require enforcement of the respondent court's settlement. Neither was the amount of the settlement
P200,000.00-deposit order, and in presuming that it denounced as unconscionable. The employer there,
had authority to waive and quitclaim the estimated Premiere Productions, Inc., agreed to pay the amount
P423,756.74-judgment credit of the union members of P200,000.00 which appeared to be a reasonable
for the unconscionable amount of P110,000.00, settlement as against the judgment credit of the
which had already been previously rejected by the union workers, and further agreed to lease to the
workers. Respondent firm could not claim that it union its equipment and facilities for the Union to
dealt in good faith with the union officials, for it produce two moving pictures, apparently to cover the
hastily executed the purported settlement other wage claims of the union workers which were
notwithstanding the serious charges of bad faith still pending trial and resolution. In Diomela, the
against the union leadership, and the non-holding of labor-management disputes were settled amicably
the scheduled conference where the union leaders, at with the unfair labor practice charge against the
their express request, could be duly assisted by employer, Squibb and Sons, (Phil.) being withdrawn,
union counsel. It is noteworthy that respondent upon motion signed by the union president and the
never filed with the court below any denial or three employees against whom the acts of unfair
responsive pleading traversing the factual allegations labor practice charged in the complaint had been
in petitioner Magalpo's Manifestation and Objection allegedly committed, to which motion the Court's
charging that at the unscheduled conference of prosecutor gave his conformity, and with the
October 31, 1963, the proposed settlement was in employer, which had secured a permanent writ of
effect railroaded with the fact of the finality of the injunction restraining the strikers who had
P200,000.00-deposit order not having been disclosed apparently declared an illegal strike, against the
to the union representatives. Such failure on the part commission of acts of violence, threats and
of respondent constitutes an implied admission of intimidation, agreeing to pay three months
the material averments. Respondent's justification separation pay to each striking employee. There was
now that it did not file any responsive pleading or no question, therefore, of the authority of the union
denial because Magalpo and her co-petitioners had president to withdraw the unfair labor practice
no personality to file their pleadings as they were not charge, as the three employees directly affected had
parties to the cases in the lower court is of no avail, co-signed the withdrawal motion with him. The
for they were actually the awardees and beneficiaries subsequent move of Diomela and 23 co-petitioners to
under the judgment against respondent and the disauthorize the union and its counsel of record, was
union was but their agent. Deplorable also is the by their own pleading overruled by the majority of the
failure of the trial judge to defer precipitate action on union membership. The other acts of unfair labor
approval of the settlement until the union could be practice sought to be filed by Diomela and his
afforded the opportunity of a hearing thereon duly companions were there ruled out as splitting a cause
assisted by counsel, and failure later of the majority of action and harassing the employer with
of respondent court in the reconsideration subsequent charges, based upon acts committed
proceedings, as well, to look seriously into the grave during the same period of time and which should
charges of bad faith and deception against the union have been included in the charges first preferred.
officials and their lack of authority to execute the What should be borne in mind is that the interests of
settlement. All of these charges were just swept the individual worker can be better protected on the
under the rug, and summarily dismissed, without whole by a strong union aware of its moral and legal
even being mentioned, in the unreasoned en obligations to represent the rank and file faithfully
banc Resolution, finding arbitrarily as against the and secure for them the best wages and working
facts herein collated by this Court from the pertinent terms and conditions in the process of collective
pleadings and annexes furnished it, "no sufficient bargaining. As has been aptly pointed out, the will of
justification to set aside, disturb or modify" the the majority must prevail over that of the minority in
questioned approval of the settlement. . the process, for "under the philosophy of collective
responsibility, an employer who bargains in good
faith should be entitled to rely upon the promises against respondent to the extent of such dividends
and agreements of the union representatives with respectively paid to and received by them. Similarly,
whom he must deal under the compulsion of law and any outstanding unpaid subscriptions or balances of
contract. The collective bargaining process should be subscriptions to the firm's capital stock, estimated at
carried on between parties who can mutually respect P20,000.00,25 shall be subject to garnishment and
and rely upon the authority of each other."23 Where, execution in satisfaction of the judgment. As to the
however, collective bargaining process is not contingent 30% attorneys' fees of petitioners-lawyers,
involved, and what is at stake are back wages already the Court deems it proper at this stage, to direct in
earned by the individual workers by way of overtime, the exercise of its authority to control the amount of
premium and differential pay, and final judgment has such fees, that petitioners-lawyers may collect their
been rendered in their favor, the present case, the stipulated contingent 30% attorneys' fees to the
real parties in interest with direct material interest, extent that additional amounts may be realized on
as against the union which has only served as a the union workers' judgment up to the sum of
vehicle for collective action to enforce their just P150,000.00, including the initial payment of
claims, are the individual workers P110,000.00, (on which they have already collected
themselves.24 Authority of the union to waive or their corresponding fee), such that any further
quitclaim all or part of the judgment award in favor amounts collected beyond said sum of P150,000.00
of the individual workers cannot be lightly presumed shall no longer be subject to said contingent fee.
but must be expressly granted, and the employer, as
judgment debtor, must deal in all good faith with the WHEREFORE, the respondent Court's Orders of
union as the agent of the individual workers. The November 8, 1963 and March 9, 1964 are hereby
Court in turn should certainly verify and assure itself declared null and void and set aside. The respondent
of the fact and extent of the authority of the union court is directed to proceed immediately with the
leadership to execute any compromise or settlement execution of the judgment rendered by it against
of the judgment on behalf of the individual workers respondent firm in Cases Nos. 709-V and V-1 as
who are the real judgment creditors. affirmed by this Court's decision of August 31,
1962,26 in accordance with the directives set forth in
We therefore sustain the minority opinion of then the next preceding paragraph, which is incorporated
Presiding Judge Bautista of respondent Court that by reference as an integral portion of the dispositive
the settlement was precipitately approved without part of this decision. With costs against private
verification of the union board's authority to execute respondent in both cases herein decided.
the compromise settlement, and find that there was
no such authority. The said settlement is therefore
set aside and the cases below are restored to
the status quo, as of October 30, 1963, with the
G.R. No. L-44717 August 28, 1985
payments already made to the union members to be
considered as partial payments on account, subject
to final liquidation and adjustment. It is directed that THE CHARTERED BANK EMPLOYEES
an order for the enforcement of the P200,000.00- ASSOCIATION, petitioner,
deposit order dated March 30, 1963 issued in the vs.
cases below, and upheld in Cases G.R. Nos. L-21758- HON. BLAS F. OPLE, in his capacity as the
59 of this Court dismissing the respondent's petition Incumbent Secretary of Labor, and THE
for review, be forthwith issued, and that hearings on CHARTERED BANK, respondents.
the Chief Examiner's Report of December 14, 1962
be resumed immediately and without interruption so
that the amounts due under the judgment to the
individual union members may be finally determined GUTIERREZ, JR., J.:
without further delay. It is unfortunate that pending
these proceedings, no application for preliminary This is a petition for certiorari seeking to annul the
injunction restraining respondent firm from decision of the respondent Secretary, now Minister of
disposing of its assets was made, since as stated Labor which denied the petitioner's claim for holiday
above, (supra, p. 5) respondent had stopped pay and its claim for premium and overtime pay
operations in 1962 preparatory to liquidation, by differentials. The petitioner claims that the
virtue of the provisions of Republic Act No. 3018 respondent Minister of Labor acted contrary to law
nationalizing the rice and corn industry. The and jurisprudence and with grave abuse of discretion
respondent firm's stockholders are, however, charged in promulgating Sec. 2, Rule IV, Book III of the
with notice of the firm's liability by virtue of the Integrated Rules and in issuing Policy Instruction No.
pendency of these appeals, and should any 9, both referring to holidays with pay.
liquidating dividends have been distributed and paid
to them in the meantime, they shall stand liable for
the satisfaction of the union workers' judgment
On May 20, 1975, the Chartered Bank Employees used was 303 days and this was when
Association, in representation of its monthly paid the respondent bank was still
employees/members, instituted a complaint with the operating on a 6-day work week basis.
Regional Office No. IV, Department of Labor, now However, for purposes of computing
Ministry of Labor and Employment (MOLE) against deductions corresponding to absences
private respondent Chartered Bank, for the payment without pay the divisor used is 365
of ten (10) unworked legal holidays, as well as for days.
premium and overtime differentials for worked legal
holidays from November 1, 1974. 4. All regular monthly paid employees
of respondent bank are receiving
The memorandum for the respondents summarizes salaries way beyond the statutory or
the admitted and/or undisputed facts as follows: minimum rates and are among the
highest paid employees in the banking
l. The work force of respondent bank industry.
consists of 149 regular employees, all
of whom are paid by the month; 5. The salaries of respondent bank's
monthly paid employees suffer no
2. Under their existing collective deduction for holidays occurring
bargaining agreement, (Art. VII within the month.
thereof) said monthly paid employees
are paid for overtime work as follows: On the bases of the foregoing facts, both the
arbitrator and the National Labor Relations
Section l. The basic work week for all Commission (NLRC) ruled in favor of the petitioners
employees excepting security guards ordering the respondent bank to pay its monthly paid
who by virtue of the nature of their employees, holiday pay for the ten (10) legal holidays
work are required to be at their posts effective November 1, 1974 and to pay premium or
for 365 days per year, shall be forty overtime pay differentials to all employees who
(40) hours based on five (5) eight (8) rendered work during said legal holidays. On appeal,
hours days, Monday to Friday. the Minister of Labor set aside the decision of the
NLRC and dismissed the petitioner's claim for lack of
Section 2. Time and a quarter hourly merit basing its decision on Section 2, Rule IV, Book
rate shall be paid for authorized work Ill of the Integrated Rules and Policy Instruction No.
performed in excess of eight (8) hours 9, which respectively provide:
from Monday through Friday and for
any hour of work performed on Sec. 2. Status of employees paid by
Saturdays subject to Section 5 hereof. the month. Employees who are
uniformly paid by the month,
Section 3. Time and a half hourly rate irrespective of the number of working
shall be paid for authorized work days therein, with a salary of not less
performed on Sundays, legal and than the statutory or established
special holidays. minimum wage shall be presumed to
be paid for all days in the month
whether worked or not.
xxx xxx xxx
POLICY INSTRUCTION NO. 9
xxx xxx xxx
TO: All Regional Directors
Section 5. The provisions of Section I
above notwithstanding the BANK may
revert to the six (6) days work week, to SUBJECT: PAID LEGAL HOLIDAYS
include Saturday for a four (4) hour
day, in the event the Central Bank The rules implementing PD 850 have
should require commercial banks to clarified the policy in the
open for business on Saturday. implementation of the ten (10) paid
legal holidays. Before PD 850, the
3. In computing overtime pay and number of working days a year in a
premium pay for work done during firm was considered important in
regular holidays, the divisor used in determining entitlement to the benefit.
arriving at the daily rate of pay is 251 Thus, where an employee was working
days although formerly the divisor for at least 313 days, he was
 considered definitely already paid. If of the Integrated Rules
he was working for less than 313, and Policy Instruction
there was no certainty whether the ten No. 9 abovestated to
(10) paid legal holidays were already private respondent's
paid to him or not. monthly-paid
employees.
The ten (10) paid legal holidays law, to
start with, is intended to benefit Third Error
principally daily employees. In the
case of monthly, only those whose Whether or not the
monthly salary did not yet include respondent Secretary of
payment for the ten (10) paid legal Labor, in not giving due
holidays are entitled to the benefit. credence to the
respondent bank's
Under the rules implementing PD 850, practice of paying its
this policy has been fully clarified to employees base pay of
eliminate controversies on the 100% and premium pay
entitlement of monthly paid of 50% for work done
employees. The new determining rule during legal holidays,
is this: 'If the monthly paid employee acted contrary to law
is receiving not less than P240, the and abused his
maximum monthly minimum wage, discretion in denying
and his monthly pay is uniform from the claim of petitioners
January to December, he is presumed for unworked holidays
to be already paid the ten (10) paid and premium and
legal holidays. However, if deductions overtime pay
are made from his monthly salary on differentials for worked
account of holidays in months where holidays.
they occur, then he is still entitled to
the ten (10) paid legal holidays. The petitioner contends that the respondent Minister
of Labor gravely abused his discretion in
These new interpretations must be promulgating Section 2, Rule IV, Book III of the
uniformly and consistently upheld. Integrated Rules and Policy Instruction No. 9 as
guidelines for the implementation of Articles 82 and
This issuance shall take effect 94 of the Labor Code and in applying said guidelines
immediately. to this case. It maintains that while it is true that the
respondent Minister has the authority in the
The issues are presented in the form of the following performance of his duty to promulgate rules and
assignments of errors: regulations to implement, construe and clarify the
Labor Code, such power is limited by provisions of
the statute sought to be implemented, construed or
First Error clarified. According to the petitioner, the so-called
"guidelines" promulgated by the respondent Minister
Whether or not the totally contravened and violated the Code by
Secretary of Labor erred excluding the employees/members of the petitioner
and acted contrary to from the benefits of the holiday pay, when the Code
law in promulgating itself did not provide for their expanding the Code's
Sec. 2, Rule IV, Book III clear and concise conclusion and notwithstanding
of the Integrated Rules the Code's clear and concise phraseology defining
and Policy Instruction those employees who are covered and those who are
No. 9. excluded from the benefits of holiday pay.

Second Error On the other hand, the private respondent contends

that the questioned guidelines did not deprive the
Whether or not the petitioner's members of the benefits of holiday pay
respondent Secretary of but merely classified those monthly paid employees
Labor abused his whose monthly salary already includes holiday pay
discretion and acted and those whose do not, and that the guidelines did
contrary to law in not deprive the employees of holiday pay. It states
applying Sec. 2, Rule IV that the question to be clarified is whether or not the
monthly salaries of the petitioner's members already We further ruled:
includes holiday pay. Thus, the guidelines were
promulgated to avoid confusion or misconstruction While it is true that the
in the application of Articles 82 and 94 of the Labor contemporaneous construction placed
Code but not to violate them. Respondent explains upon a statute by executive officers
that the rationale behind the promulgation of the whose duty is to enforce it should be
questioned guidelines is to benefit the daily paid given great weight by the courts, still if
workers who, unlike monthly-paid employees, suffer such construction is so erroneous, as
deductions in their salaries for not working on in the instant case, the same must be
holidays. Hence, the Holiday Pay Law was enacted declared as null and void. It is the role
precisely to countervail the disparity between daily of the Judiciary to refine and, when
paid workers and monthly-paid employees. necessary correct constitutional
(and/or statutory) interpretation, in
The decision in Insular Bank of Asia and America the context of the interactions of the
Employees' Union (IBAAEU) v. Inciong (132 SCRA three branches of the government,
663) resolved a similar issue. Significantly, the almost always in situations where
petitioner in that case was also a union of bank some agency of the State has engaged
employees. We ruled that Section 2, Rule IV, Book III in action that stems ultimately from
of the Integrated Rules and Policy Instruction No. 9, some legitimate area of governmental
are contrary to the provisions of the Labor Code and, power (The Supreme Court in Modern
therefore, invalid This Court stated: Role, C.B. Swisher 1958, p. 36).

It is elementary in the rules of xxx xxx xxx

statutory construction that when the
language of the law is clear and In view of the foregoing, Section 2,
unequivocal the law must be taken to Rule IV, Book III of the Rules to
mean exactly what it says. In the case implement the Labor Code and Policy
at bar, the provisions of the Labor Instruction No. 9 issued by the then
Code on the entitlement to the benefits Secretary of Labor must be declared
of holiday pay are clear and explicit it null and void. Accordinglyl public
provides for both the coverage of and respondent Deputy Minister of Labor
exclusion from the benefit. In Policy Amado G. Inciong had no basis at all
Instruction No. 9, the then Secretary to deny the members of petitioner
of Labor went as far as to categorically union their regular holiday pay as
state that the benefit is principally directed by the Labor Code.
intended for daily paid employees,
when the law clearly states that every Since the private respondent premises its action on
worker shall be paid their regular the invalidated rule and policy instruction, it is clear
holiday pay. This is flagrant violation that the employees belonging to the petitioner
of the mandatory directive of Article 4 association are entitled to the payment of ten (10)
of the Labor Code, which states that legal holidays under Articles 82 and 94 of the Labor
'All doubts in the implementation and Code, aside from their monthly salary. They are not
interpretation of the provisions of this among those excluded by law from the benefits of
Code, including its implementing rules such holiday pay.
and regulations, shall be resolved in
favor of labor.' Moreover, it shall
Presidential Decree No. 850 states who are excluded
always be presumed that the
from the holiday provisions of that law. It states:
legislature intended to enact a valid
and permanent statute which would
have the most beneficial effect that its ART. 82. Coverage. The provision of
language permits (Orlosky v. Hasken, this Title shall apply to employees in
155 A. 112) all establishments and undertakings,
whether for profit or not, but not to
government employees, managerial
Obviously, the Secretary (Minister) of
Labor had exceeded his statutory employees, field personnel members of
authority granted by Article 5 of the the family of the employer who are
Labor Code authorizing him to dependent on him for support, domestic
promulgate the necessary helpers, persons in the personal service
of another, and workers who are paid
implementing rules and regulations.
by results as determined by the
 Secretary of Labor in appropriate should be paid only premium pay but not both base
regulations. (Emphasis supplied). pay and premium pay.

The questioned Section 2, Rule IV, Book III of the The contention of the respondent that 100% base pay
Integrated Rules and the Secretary's Policy and 50% premium pay for work actually rendered on
Instruction No. 9 add another excluded group, holidays is given in addition to monthly salaries only
namely, "employees who are uniformly paid by the because the collective bargaining agreement so
month." While the additional exclusion is only in the provides is itself an argument in favor of the
form of a presumption that all monthly paid petitioner stand. It shows that the Collective
employees have already been paid holiday pay, it Bargaining Agreement already contemplated a divisor
constitutes a taking away or a deprivation which of 251 days for holiday pay computations before the
must be in the law if it is to be valid. An questioned presumption in the Integrated Rules and
administrative interpretation which diminishes the the Policy Instruction was formulated. There is
benefits of labor more than what the statute delimits furthermore a similarity between overtime pay, which
or withholds is obviously ultra vires. is computed on the basis of 251 working days a year,
and holiday pay, which should be similarly treated
It is argued that even without the presumption found notwithstanding the public respondents' issuances.
in the rules and in the policy instruction, the In both cases overtime work and holiday work- the
company practice indicates that the monthly salaries employee works when he is supposed to be resting.
of the employees are so computed as to include the In the absence of an express provision of the CBA or
holiday pay provided by law. The petitioner contends the law to the contrary, the computation should be
otherwise. similarly handled.

One strong argument in favor of the petitioner's We are not unmindful of the fact that the
stand is the fact that the Chartered Bank, in respondent's employees are among the highest paid
computing overtime compensation for its employees, in the industry. It is not the intent of this Court to
employs a "divisor" of 251 days. The 251 working impose any undue burdens on an employer which is
days divisor is the result of subtracting all already doing its best for its personnel. we have to
Saturdays, Sundays and the ten (10) legal holidays resolve the labor dispute in the light of the parties'
from the total number of calendar days in a year. If own collective bargaining agreement and the benefits
the employees are already paid for all non-working given by law to all workers. When the law provides
days, the divisor should be 365 and not 251. benefits for "employees in all establishments and
undertakings, whether for profit or not" and lists
The situation is muddled somewhat by the fact that, specifically the employees not entitled to those
in computing the employees' absences from work, the benefits, the administrative agency implementing
respondent bank uses 365 as divisor. Any slight that law cannot exclude certain employees from its
doubts, however, must be resolved in favor of the coverage simply because they are paid by the month
workers. This is in keeping with the constitutional or because they are already highly paid. The remedy
mandate of promoting social justice and affording lies in a clear redrafting of the collective bargaining
protection to labor (Sections 6 and 9, Article II, agreement with a statement that monthly pay already
Constitution). The Labor Code, as amended, itself includes holiday pay or an amendment of the law to
provides: that effect but not an administrative rule or a policy
instruction.
ART. 4. Construction in favor of labor.
All doubts in the implementation and WHEREFORE, the September 7, 1976 order of the
interpretation of the provisions of this public respondent is hereby REVERSED and SET
Code, including its implementing rules ASIDE. The March 24, 1976 decision of the National
and regulations, shall be resolved in Labor Relations Commission which affirmed the
favor of labor. October 30, 1975 resolution of the Labor Arbiter but
deleted interest payments is REINSTATED.
Any remaining doubts which may arise from the
conflicting or different divisors used in the SO ORDERED
computation of overtime pay and employees'
absences are resolved by the manner in which work
actually rendered on holidays is paid. Thus,
whenever monthly paid employees work on a holiday,
they are given an additional 100% base pay on top of
a premium pay of 50%. If the employees' monthly pay
already includes their salaries for holidays, they