Labor Cases Part 1

G.R. No.
81958 June 30, 1988

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., Petitioner, vs. HON.
FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D.
ACHACOSO, as Administrator of the Philippine Overseas Employment Administration,
Respondents.
Gutierrez & Alo Law Offices for petitioner.
SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm
"engaged principally in the recruitment of Filipino workers, male and female, for overseas
placement," 1challenges the Constitutional validity of Department Order No. 1, Series of 1988, of
the Department of Labor and Employment, in the character of "GUIDELINES GOVERNING
THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. Specifically, the
measure is assailed for "discrimination against males or females;" 2that it "does not apply to all
Filipino workers but only to domestic helpers and females with similar skills;" 3and that it is
violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking
power, police power being legislative, and not executive, in character.chanroblesvirtualawlibrary
chanrobles virtual law library
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution,
providing for worker participation "in policy and decision-making processes affecting their rights
and benefits as may be provided by law." 4Department Order No. 1, it is contended, was passed
in the absence of prior consultations. It is claimed, finally, to be in violation of the Charter's nonimpairment clause, in addition to the "great and irreparable injury" that PASEI members face
should the Order be further enforced.chanroblesvirtualawlibrary chanrobles virtual law library
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and
Administrator of the Philippine Overseas Employment Administration, filed a Comment
informing the Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment
ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria,
and Switzerland. * In submitting the validity of the challenged "guidelines," the Solicitor
General invokes the police power of the Philippine State.chanroblesvirtualawlibrary chanrobles
virtual law library
It is admitted that Department Order No. 1 is in the nature of a police power measure. The only
question is whether or not it is valid under the Constitution.chanroblesvirtualawlibrary
The concept of police power is well-established in this jurisdiction. It has been defined as the
"state authority to enact legislation that may interfere with personal liberty or property in order to
promote the general welfare." 5As defined, it consists of (1) an imposition of restraint upon
liberty or property, (2) in order to foster the common good. It is not capable of an exact definition
but has been, purposely, veiled in general terms to underscore its all-comprehensive
embrace.chanroblesvirtualawlibrary chanrobles virtual law library
"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future
where it could be done, provides enough room for an efficient and flexible response to conditions
and circumstances thus assuring the greatest benefits." 6chanrobles virtual law library
It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
Charter. Along with the taxing power and eminent domain, it is inborn in the very fact of
statehood and sovereignty. It is a fundamental attribute of government that has enabled it to
perform the most vital functions of governance. Marshall, to whom the expression has been
credited, 7refers to it succinctly as the plenary power of the State "to govern its citizens."
8
"The police power of the State ... is a power coextensive with self- protection, and it is not
inaptly termed the "law of overwhelming necessity." It may be said to be that inherent and
plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety,
and welfare of society." 9chanrobles virtual law library
It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in
the conception that men in organizing the state and imposing upon its government limitations to
safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of
citizens to obstruct unreasonably the enactment of such salutary measures calculated to ensure
communal peace, safety, good order, and welfare." 10Significantly, the Bill of Rights itself does
not purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the
greatest of all rights, is not unrestricted license to act according to one's will." 11It is subject to the
far more overriding demands and requirements of the greater number.chanroblesvirtualawlibrary
Notwithstanding its extensive sweep, police power is not without its own limitations. For all its
awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in
that event, it defeats the purpose for which it is exercised, that is, to advance the public good.
Thus, when the power is used to further private interests at the expense of the citizenry, there is a
clear misuse of the power. 12 chanrobles virtual law library
In the light of the foregoing, the petition must be dismissed.chanroblesvirtualawlibrary
As a general rule, official acts enjoy a presumed vahdity. 13In the absence of clear and convincing
evidence to the contrary, the presumption logically stands.chanroblesvirtualawlibrary chanrobles
virtual law library
The petitioner has shown no satisfactory reason why the contested measure should be nullified.
There is no question that Department Order No. 1 applies only to "female contract workers,"
14
but it does not thereby make an undue discrimination between the sexes. It is well-settled that
"equality before the law" under the Constitution 15does not import a perfect Identity of rights
among all men and women. It admits of classifications, provided that (1) such classifications rest
on substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not
confined to existing conditions; and (4) they apply equally to all members of the same class. 16
The Court is satisfied that the classification made-the preference for female workers - rests on
substantial distinctions.chanroblesvirtualawlibrary chanrobles virtual law library
As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our
female labor force abroad, especially domestic servants, amid exploitative working conditions
marked by, in not a few cases, physical and personal abuse. The sordid tales of maltreatment
suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by
testimonies of returning workers, are compelling motives for urgent Government action. As
precisely the caretaker of Constitutional rights, the Court is called upon to protect victims of
exploitation. In fulfilling that duty, the Court sustains the Government's
efforts.chanroblesvirtualawlibrary chanrobles virtual law library
The same, however, cannot be said of our male workers. In the first place, there is no evidence
that, except perhaps for isolated instances, our men abroad have been afflicted with an Identical
predicament. The petitioner has proffered no argument that the Government should act similarly
with respect to male workers. The Court, of course, is not impressing some male chauvinistic
notion that men are superior to women. What the Court is saying is that it was largely a matter of
evidence (that women domestic workers are being ill-treated abroad in massive instances) and
not upon some fanciful or arbitrary yardstick that the Government acted in this case. It is
evidence capable indeed of unquestionable demonstration and evidence this Court accepts. The
Court cannot, however, say the same thing as far as men are concerned. There is simply no
evidence to justify such an inference. Suffice it to state, then, that insofar as classifications are
concerned, this Court is content that distinctions are borne by the evidence. Discrimination in
this case is justified.chanroblesvirtualawlibrary chanrobles virtual law library
As we have furthermore indicated, executive determinations are generally final on the Court.
Under a republican regime, it is the executive branch that enforces policy. For their part, the
courts decide, in the proper cases, whether that policy, or the manner by which it is implemented,
agrees with the Constitution or the laws, but it is not for them to question its wisdom. As a coequal body, the judiciary has great respect for determinations of the Chief Executive or his
subalterns, especially when the legislature itself has specifically given them enough room on
how the law should be effectively enforced. In the case at bar, there is no gainsaying the fact, and
the Court will deal with this at greater length shortly, that Department Order No. 1 implements
the rule-making powers granted by the Labor Code. But what should be noted is the fact that in
spite of such a fiction of finality, the Court is on its own persuaded that prevailing conditions
indeed call for a deployment ban.chanroblesvirtualawlibrary chanrobles virtual law library
There is likewise no doubt that such a classification is germane to the purpose behind the
measure. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the
protection for Filipino female overseas workers" 17 this Court has no quarrel that in the midst of
the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be for
their own good and welfare.chanroblesvirtualawlibrary chanrobles virtual law library
The Order does not narrowly apply to existing conditions. Rather, it is intended to apply
indefinitely so long as those conditions exist. This is clear from the Order itself ("Pending review
of the administrative and legal measures, in the Philippines and in the host countries . . ." 18),
meaning to say that should the authorities arrive at a means impressed with a greater degree of
permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary
malleability, depending on the circumstances of each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. - The Secretary of Labor and Employment (DOLE) may, upon
recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are: chanrobles virtual law library
1. Bilateral agreements or understanding with the Philippines, and/or, chanrobles virtual law
library
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection
of Filipino workers. 19
The Court finds, finally, the impugned guidelines to be applicable to all female domestic
overseas workers. That it does not apply to "all Filipina workers" 20is not an argument for
unconstitutionality. Had the ban been given universal applicability, then it would have been
unreasonable and arbitrary. For obvious reasons, not all of them are similarly circumstanced.
What the Constitution prohibits is the singling out of a select person or group of persons within
an existing class, to the prejudice of such a person or group or resulting in an unfair advantage to
another person or group of persons. To apply the ban, say exclusively to workers deployed by A,
but not to those recruited by B, would obviously clash with the equal protection clause of the
Charter. It would be a classic case of what Chase refers to as a law that "takes property from A
and gives it to B." 21 It would be an unlawful invasion of property rights and freedom of contract
and needless to state, an invalid act. 22(Fernando says: "Where the classification is based on such
distinctions that make a real difference as infancy, sex, and stage of civilization of minority
groups, the better rule, it would seem, is to recognize its validity only if the young, the women,
and the cultural minorities are singled out for favorable treatment. There would be an element of
unreasonableness if on the contrary their status that calls for the law ministering to their needs is
made the basis of discriminatory legislation against them. If such be the case, it would be
difficult to refute the assertion of denial of equal protection." 23In the case at bar, the assailed
Order clearly accords protection to certain women workers, and not the contrary.) chanrobles
virtual law library
It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment.
From scattered provisions of the Order, it is evident that such a total ban has hot been
contemplated. We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of similar
skills defined herein to the following [sic] are authorized under these guidelines and are
exempted from the suspension.
5.1 Hirings by immediate members of the family of Heads of State and Government; chanrobles
virtual law library
5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and
5.3 Hirings by senior officials of the diplomatic corps and duly accredited international
organizations.chanroblesvirtualawlibrary chanrobles virtual law library
5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral labor
agreements or understanding.
xxx xxx xxxchanrobles virtual law library
7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS-Vacationing domestic helpers and/or workers of similar skills shall be allowed to process with
the POEA and leave for worksite only if they are returning to the same employer to finish an
existing or partially served employment contract. Those workers returning to worksite to serve a
new employer shall be covered by the suspension and the provision of these
guidelines.chanroblesvirtualawlibrarychanrobles virtual law library
xxx xxx xxxchanrobles virtual law library
9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may, upon

recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or, chanrobles virtual law
library
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection
of Filipino workers. 24chanrobles virtual law library
xxx xxx xxx
The consequence the deployment ban has on the right to travel does not impair the right. The
right to travel is subject, among other things, to the requirements of "public safety," "as may be
provided by law." 25Department Order No. 1 is a valid implementation of the Labor Code, in
particular, its basic policy to "afford protection to labor," 26 pursuant to the respondent
Department of Labor's rule-making authority vested in it by the Labor Code. 27The petitioner
assumes that it is unreasonable simply because of its impact on the right to travel, but as we have
stated, the right itself is not absolute. The disputed Order is a valid qualification
thereto.chanroblesvirtualawlibrary chanrobles virtual law library
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid
exercise of legislative power. It is true that police power is the domain of the legislature, but it
does not mean that such an authority may not be lawfully delegated. As we have mentioned, the
Labor Code itself vests the Department of Labor and Employment with rulemaking powers in the
enforcement whereof. 28 chanrobles virtual law library
The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and
decision-making processes affecting their rights and benefits" 29is not well-taken. The right
granted by this provision, again, must submit to the demands and necessities of the State's power
of regulation.chanroblesvirtualawlibrary chanrobles virtual law library
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
30
"Protection to labor" does not signify the promotion of employment alone. What concerns the
Constitution more paramountly is that such an employment be above all, decent, just, and
humane. It is bad enough that the country has to send its sons and daughters to strange lands
because it cannot satisfy their employment needs at home. Under these circumstances, the
Government is duty-bound to insure that our toiling expatriates have adequate protection,
personally and economically, while away from home. In this case, the Government has evidence,
an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of such protection,
and as part of its duty, it has precisely ordered an indefinite ban on
deployment.chanroblesvirtualawlibrary chanrobles virtual law library
The Court finds furthermore that the Government has not indiscriminately made use of its
authority. It is not contested that it has in fact removed the prohibition with respect to certain
countries as manifested by the Solicitor General.chanroblesvirtualawlibrary chanrobles virtual
law library
The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the
loftier purposes targetted by the Government. 31Freedom of contract and enterprise, like all other
freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never
been fully accepted as a controlling economic way of life.chanroblesvirtualawlibrary chanrobles
virtual law library
This Court understands the grave implications the questioned Order has on the business of
recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of
Government regulation. The interest of the State is to provide a decent living to its citizens. The
Government has convinced the Court in this case that this is its intent. We do not find the
impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief
prayed for.chanroblesvirtualawlibrary chanrobles virtual law library
WHEREFORE, the petition is DISMISSED. No costs.chanroblesvirtualawlibrary chanrobles
virtual law library
SO ORDERED.
Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Cortes and Grio-Aquino, JJ., concur.chanroblesvirtualawlibrary chanrobles virtual law
library
Gutierrez, Jr. and Medialdea, JJ., are on leave.
G.R. No. 77875. February 4, 1993.]
PHILIPPINE AIRLINES, INC., Petitioner, v. ALBERTO SANTOS, JR., HOUDIEL
MAGADIA, GILBERT ANTONIO, REGINO DURAN, PHILIPPINE AIRLINES
EMPLOYEES ASSOCIATION, and THE NATIONAL LABOR RELATIONS
COMMISSION, Respondents.
Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvenido T. Jamoralin, Jr. and
Paulino D. Ungos, Jr. for Petitioner.
Adolpho M. Guerzon for Private Respondents.
SYLLABUS
1. REMEDIAL LAW; CERTIORARI; SCOPE OF JUDICIAL REVIEW IN LABOR CASES.
Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does
not go so far to evaluate the sufficiency of the evidence upon which the labor officer or office
based his or its determination, but are limited to issues of jurisdiction and grave abuse of
discretion.
2. CONSTITUTIONAL LAW; STATE POLICY TO AFFORD PROTECTION TO LABOR;
REASON AND PURPOSE. It is a fact that the sympathy of the Court is on the side of the
laboring classes, not only because the Constitution imposes such sympathy, but because of the
one-sided relation between labor and capital. The constitutional mandate for the protection of
labor is as explicit as it is demanding. The purpose is to place the workingman on an equal plane
with management with all its power and influence in negotiating for the advancement of
his interests and the defense of his rights. Under the policy of social justice, the law bends over
backward to accommodate the interests of the working class on the humane justification that
those with less privileges in life should have more privileges in law.
3. LABOR LAW; LABOR RELATIONS; INTERPRETATION OF PROVISIONS ON
GRIEVANCE UNDER COLLECTIVE BARGAINING AGREEMENT; GRIEVANCE OF
EMPLOYEES RESOLVED IN THEIR FAVOR; CASE AT BAR. The instant case hinges on
the interpretation of Section 2, Article IV of the PAL-PALEA Collective Bargaining Agreement. .
. . It is not disputed that the grievants knew that division head Reynaldo Abad was then "on
leave" when they filed their grievance which was received by Abads secretary. This knowledge,
however, should not prevent the application of the CBA. . . . Contrary to petitioners submission,
the grievance of employees is not a matter which requires the personal act of Mr. Abad and thus
could not be delegated. Petitioner could at least have assigned an officer-in-charge to look into
the grievance and possibly make his recommendation to Mr. Abad. . . . If the Court were to
follow petitioners line of reasoning, it would be easy for management to delay the resolution of
labor problems, the complaints of the workers in particular, and hide under the cloak of its
officers being "on leave" to avoid being caught by the 5-day deadline under the CBA. If this
should be allowed, the workingmen will suffer great injustice for they will necessarily be at the
mercy of their employer. That could not have been the intendment of the pertinent provision of
the CBA, much less the benevolent policy underlying our labor laws.
DECISION
REGALADO, J.:
The instant petition for certiorari seeks to set aside the decision of the National Labor Relations
Commission (NLRC) in NLRC Case No. 4-1206-85, promulgated on December 11, 1986, 1
containing the following disposition:jgc:chanrobles.com.ph
"WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set aside
and another one entered, declaring the suspension of complainants to be illegal and consequently,
respondent PAL is directed to pay complainants their salaries corresponding to the respective
period(s) of their suspension, and to delete the disciplinary action from complainants service
records." 2
These material facts recited in the basic petition are virtually undisputed and we reproduce the
same hereunder:jgc:chanrobles.com.ph
"1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger Services
Department of petitioner. Their duties and responsibilities, among others, are:chanrob1es virtual
1aw library
Prepares meal orders and checklists, setting up standard equipment in accordance with the
requirements of the type of service for each flight; skiing, binning and inventorying of
Commissary supplies and equipment.
"2. On various occasions, several deductions were made from their salary. The deductions
represented losses of inventoried items charged to them for mishandling of company
properties . . . which respondents resented. Such that on August 21, 1984, individual respondents,
represented by the union, made a formal notice regarding the deductions to petitioner thru Mr.
Reynaldo Abad, Manager for Catering. . . .
"3. As there was no action taken on said representation, private respondents filed a formal
grievance on November 4, 1984 pursuant to the grievance machinery Step 1 of the Collective
Bargaining Agreement between petitioner and the union. . . . The topics which the union wanted
to be discussed in the said grievance were the illegal/questionable salary deductions and
inventory of bonded goods and merchandise being done by catering service personnel which
they believed should not be their duty.chanrobles law library
"4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo Abad,
Manager for Catering, who at the time was on vacation leave. . . .
"5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a letter on
December 5, 1984 addressed to the office of Mr. Abad, who was still on leave at the time, that
inasmuch as no reply was made to their grievance which `was duly received by your secretary
and considering that petitioner had only five days to resolve the grievance as provided for in the
CBA, said grievance as believed by them (private respondents) was deemed resolved in their
favor. . . .
"6. Upon Mr. Abads return on December 7, 1984, he immediately informed the grievants and
scheduled a meeting on December 12, 1984. . . .
"7. Thereafter, the individual respondents refused to conduct inventory works. Alberto Santos, Jr.
did not conduct ramp inventory on December 7, 10 and 12. Gilbert Antonio did not conduct ramp
inventory on December 10. In like manner, Regino Duran and Houdiel Magadia did not conduct
the same on December 10 and 12.
"8. At the grievance meeting which was attended by some union representatives, Mr. Abad
resolved the grievance by denying the petition of individual respondents and adopted the position
that inventory of bonded goods is part of their duty as catering service personnel, and as for the
salary deductions for losses, he rationalized:chanrob1es virtual 1aw library
1. It was only proper that employees are charged for the amount due to mishandling of company
property which resulted to losses. However, loss may be cost price 1/10 selling price.
"9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on January 3,
1985 wrote by an inter-office memorandum addressed to the grievants, individual respondents
herein, for them to explain on (sic) why no disciplinary action should be taken against them for
not conducting ramp inventory. . . .
"10. The directive was complied with . . . . The reason for not conducting ramp inventory was put
forth as:chanrob1es virtual 1aw library
4) Since the grievance step 1 was not decided and no action was done by your office within 5
days from November 21, 1984, per provision of the PAL-PALEA CBA, Art. IV, Sec. 2, the
grievance is deemed resolved in PALEAs favor.
"11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty of
suspension ranging from 7 days to 30 days were (sic) imposed depending on the number of
infractions committed. **
"12. After the penalty of suspension was meted down, PALEA filed another grievance asking for
lifting of, or at least, holding in abeyance the execution of said penalty. The said grievance was
forthwith denied but the penalty of suspension with respect to respondent Santos was modified,
such that his suspension which was originally from January 15, 1985 to 5 April 5, 1985 was
shortened by one month and was lifted on March 5, 1985. The union, however, made a demand
for the reimbursement of the salaries of individual respondents during the period of their
suspension.
"13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal
suspensions. Hence, a complaint for illegal suspension was filed before the Arbitration Branch of
the Commission. . . . Labor Arbiter Ceferina J. Diosana, on March 17, 1986, ruled in favor of
petitioner by dismissing the complaint. . . . 3
Private respondents appealed the decision of the labor arbiter to respondent commission which
rendered the aforequoted decision setting aside the labor arbiters order of dismissal. Petitioners
motion for reconsideration having been denied, it interposed the present petition.
The Court is accordingly called upon to resolve the issue of whether or not public respondent
NLRC acted with grave abuse of discretion amounting to lack of jurisdiction in rendering the
aforementioned decision.cralawnad
Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does
not go so far as to evaluate the sufficiency of the evidence upon which the labor officer or office
based his or its determination, but are limited to issues of jurisdiction and grave abuse of
discretion. 4 It has not been shown that respondent NLRC has unlawfully neglected the
performance of an act which the law specifically enjoins it to perform as a duty or has otherwise
unlawfully excluded petitioner from the exercise of a right to which it is entitled.
The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA
Collective Bargaining Agreement (hereinafter, CBA), to wit:jgc:chanrobles.com.ph
"Section 2 Processing of Grievances.
x
STEP 1 Any employee who believes that he has a justifiable grievance shall take the matter
up with his shop steward. If the shop steward feels there is justification for taking the matter up
with the Company, he shall record the grievance on the grievance form heretofore agree upon by
the parties. Two (2) copies of the grievance form properly filled, accepted, and signed shall then
be presented to and discussed by the shop steward with the division head. The division head shall
answer the grievance within five (5) days from the date of presentation by inserting his decision
on the grievance form, signing an dating same, and returning one copy to the shop steward. If the
division head fails to act within the five (5)-day regl(e)mentary period, the grievance must be
resolved in favor of the aggrieved party. If the division heads decision is not appealed to Step II,
the grievance shall be considered settled on the basis of the decision made, and shall not be
eligible for further appeal." 5 (Emphasis ours.)
Petitioner submits that since the grievance machinery was established for both labor and
management as a vehicle to thresh out whatever problems may arise in the course of their
relationship, every employee is duty bound to present the matter before management and give
the latter an opportunity to impose whatever corrective measure is possible. Under normal
circumstances, an employee should not preempt the resolution of his grievance; rather, he has the
duty to observe the status quo. 6
Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees
have the obligation, just as management has, to settle all labor disputes through friendly
negotiations. Thus, Section 2 of the CBA should not be narrowly interpreted. 7 Before the
prescriptive period of five days begins to run, two concurrent requirements must be met, i.e.,
presentment of the grievance and its discussion between the shop steward and the division head
who in this case is Mr. Abad. Section 2 is not self-executing; the mere filing of the grievance
does not trigger the tolling of the prescriptive period. 8

Petitioner has sorely missed the point.
It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because
the Constitution imposes such sympathy, but because of the one-sided relation between labor and
capital. 9 The constitutional mandate for the protection of labor is as explicit as it is demanding.
The purpose is to place the workingman on an equal plane with management with all its
power and influence in negotiating for the advancement of his interests and the defense of his
rights. 10 Under the policy of social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those with less privileges in life
should have more privileges in law. 11
It is clear that the grievance was filed with Mr. Abads secretary during his absence. 12 Under
Section 2 of the CBA aforequoted, the division head shall act on the grievance within five (5)
days from the date of presentation thereof, otherwise "the grievance must be resolved in favor of
the aggrieved party." It is not disputed that the grievants knew that division head Reynaldo Abad
was then "on leave" when they filed their grievance which was received by Abads secretary. 13
This knowledge, however, should not prevent the application of the CBA.
On this score, respondent NLRC aptly ruled:chanrobles lawlibrary : rednad
". . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the
grievance of complainants within five days from 21 November 1984. Therefore, when Reynaldo
Abad failed to act within the reglementary period, complainants, believing in good faith that the
effect of the CBA had already set in, cannot be blamed if they did not conduct ramp inventory for
the days thereafter. In this regard, respondent PAL argued that Reynaldo Abad was on leave at
the time the grievance was presented. This, however, is of no moment, for it is hard to believe
that everything under Abads authority would have to stand still during his absence from office.
To be sure, it is to be expected that someone has to be left to attend to Abads duties. Of course,
this may be a product of inadvertence on the part of PAL management, but certainly,
complainants should not be made to suffer the consequences." 14
Contrary to petitioners submission, 15 the grievance of employees is not a matter which requires
the personal act of Mr. Abad and thus could not be delegated. Petitioner could at least have
assigned an officer-in-charge to look into the grievance and possibly make his recommendation
to Mr. Abad. It is of no moment that Mr. Abad immediately looked into the grievance upon
returning to work, for it must be remembered that the grievants are workingmen who suffered
salary deductions and who rely so much on their meager income for their daily subsistence and
survival. Besides, it is noteworthy that when these employees first presented their complaint on
August 21, 1984, petitioner failed to act on it. It was only after a formal grievance was filed and
after Mr. Abad returned to work on December 7, 1984 that petitioner decided to turn an ear to
their plaints.
As respondent NLRC has pointed out, Abads failure to act on the matter may have been due to
petitioners inadvertence, 16 but it is clearly too much of an injustice if the employees be made
to bear the dire effects thereof. Much as the latter were willing to discuss their grievance with
their employer, the latter closed the door to this possibility by not assigning someone else to look
into the matter during Abads absence. Thus, private respondents should not be faulted for
believing that the effects of the CBA in their favor had already stepped into the controversy.
If the Court were to follow petitioners line of reasoning, it would be easy for management to
delay the resolution of labor problems, the complaints of the workers in particular, and hide
under the cloak of its officers being "on leave" to avoid being caught by the 5-day deadline under
the CBA. If this should be allowed, the workingmen will suffer great injustice for they will
necessarily be at the mercy of their employer. That could not have been the intendment of the
pertinent provision of the CBA, much less the benevolent policy underlying our labor laws.
ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the
assailed decision of respondent National Labor Relations Commission is AFFIRMED. This
judgment is immediately executory.
SO ORDERED.
Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.
[G.R. No. L-13778. April 29, 1960.]
PHILIPPINE EDUCATION CO., INC., Petitioners, v. UNION OF PHILIPPINE
EDUCATION EMPLOYEES (NLU) and THE COURT OF INDUSTRIAL RELATIONS,
Respondents.
Marcial Esposo for Petitioner.
Eulogio R. Lerum for respondent Union.
Jos B. Bolisay for respondent CIR.
SYLLABUS
1. EMPLOYER AND EMPLOYEE; ACQUITTAL OF EMPLOYEE FROM CRIMINAL
CHARGE OF THEFT; PROPRIETY OF DISMISSAL. The relation of employer and
employee, specially where the employee has access to the employers property in the form of
articles and merchandise for sale, necessarily involves trust and confidence. If said merchandise
are lost and said loss is reasonably attributed to said employee, and he is charged with theft, even
if he is acquitted of the charge on reasonable doubt, when the employer has lost its confidence in
him, it would be highly unfair to require said employer to continue employing him or to reinstate
him, for in that case, the former might find it necessary for its protection to employ another
person to watch and keep an eye on him. In such a case the employee, despite his acquittal is not
entitled to reinstatement to his former position from which he was dismissed.
DECISION
MONTEMAYOR, J.:
The Philippine Education Company, Inc. is appealing the order of the Court of Industrial
Relations, dated February 7, 1958, directing it to reinstate its former employee, Ernesto Carpio,
to his former or equivalent position, without backpay, and from the resolution of the same court
in banc, dated March 22, 1958, denying the companys motion for reconsideration.
Ernesto Carpio and other employees of the company, members of the Union of Philippine
Education Employees (NLU) joined a strike staged on January 16, 1953. After the labor dispute
was settled, the Industrial Court ordered the reinstatement of the strikers, including Carpio. The
company, however, opposed the reinstatement of Carpio for the reason that a criminal complaint
had been filed against him in the Municipal Court of Manila for theft of magazines allegedly
belonging to the company. He was convicted and sentenced to two months and one day of arresto
mayor. On appeal to the Court of First Instance, Carpio was acquitted on the ground of
reasonable doubt.
The question of Carpios reinstatement was heard by the Industrial Court where the parties
submitted as evidence the transcript of the stenographic notes taken during the hearing in the
criminal case before the Court of First Instance of Manila, the exhibits presented in said case, as
well as the decisions of the Municipal Court convicting him, and that of the Court of First
Instance acquitting him, or rather dismissing the case against him on reasonable doubt. After said
hearing, the Industrial Court agreed with the finding of the Court of First Instance that the
offense had not been proven beyond reasonable doubt and held that Carpios acquittal entitled
him to reinstatement, though without backpay.
We have examined the aforementioned evidence, and we are inclined to agree with the Municipal
Court that Carpios guilt had been duly established. At least, the preponderance of evidence was
against his innocence. The question for determination is whether the acquittal of an employee,
specially on the ground of reasonable doubt, in a criminal case for theft involving articles and
merchandise belonging to his employer, entitles said employee to reinstatement.
In the case of National Labor Organization of Employees and Laborers v. Court of Industrial
Relations, 95 Phil., 727; 55 Off. Gaz. (9) 4219, we said:jgc:chanrobles.com.ph
". . . the acquittal of an employee in a criminal case is no bar to the Court of Industrial Relations,
after proper hearing, finding the same employee guilty of facts inimical to the interests of his
employer and justifying loss of confidence in him by said employer, thereby warranting his
dismissal or the refusal of the Company to reinstate him. The reason for this is not difficult to
see. The evidence required by law to establish guilt and to warrant conviction in a criminal case
substantially differs from the evidence necessary to establish responsibility or liability in a civil
or non-criminal case. The difference is in the amount and weight of evidence and also in degree.
In a criminal case, the evidence or proof must be beyond reasonable doubt while in a civil or
non-criminal case it is merely preponderance of evidence. In further support of this principle we
may refer to Art. 29 of the New Civil Code (Rep. Act 386) which provides that when the accused
in a criminal case is acquitted on the ground of reasonable doubt a civil action for damages for
the same act or omission may be instituted where only a preponderance of evidence is necessary
to establish liability. From all this it is clear that the Court of Industrial Relations was justified in
denying the petition of Rivas and Tolentino for reinstatement in the cement company, because of
their illegal possession of hand grenades intended by them for purposes of sabotage in
connection with the strike on March 16, 1952."cralaw virtua1aw library
Then in the case of National Labor Union v. Standard Vacuum Oil Company, 73 Phil., 279, the
City Fiscal refused to prosecute two employees charged with theft for lack of evidence and yet
this Tribunal upheld their dismissal from the employer company on the ground that their
employer had ample reason to distrust them.
The relation of employer and employee, specially where the employee has access to the
employers property in the form of articles and merchandise for sale, necessarily involves trust
and confidence. If said merchandise are lost and said loss is reasonably attributed to said
employee, and he is charged with theft, even if he is acquitted of the charge on reasonable doubt,
when the employer has lost its confidence in him, it would be highly unfair to require said
employer to continue employing him or to reinstate him, for in that case, the former might find it
necessary for its protection to employ another person to watch and keep an eye on him. In the
present case, Carpio was refused reinstatement not because of any union affiliation or activity or
because the company has been guilty of any unfair labor practice. As already stated, Carpio was
convicted in the Municipal Court and although he was acquitted on reasonable doubt in the Court
of First Instance, the company had ample reason to distrust him. Under the circumstances, we
cannot in conscience require the company to reemploy or reinstate him.
In view of the foregoing, the appealed orders of the Industrial Court of February 7, 1958 and
March 22, 1958 are hereby reversed. No costs.
Paras, C.J., Bengzon, Bautista Angelo, Labrador, Barrera and Gutierrez David, JJ., concur.
UPREME COURT
FIRST DIVISION
PACIFIC MILLS, INC.,
Petitioner
,
-versusG.R. No. 78090
July 26, 1991
ZENAIDA ALONZO,
Respondent.
x---------------------------------------------------x
DECISION
NARVASA,
J.
:
From July 30, 1973, Zenaida Alonzo
was employed as a ring frame
operator in the Pacific Mills, Inc.
until September 30, 1982 when she
was discharged by Management.
c
h
a
n
r
o
ble
s
p
u
bli
s
h
i
n
g
c
o
m
p
a
n
y
The record shows that in the early afternoon of September 22, 1982,
Zenaida challenged Company Insp
ector Ernesto Tamondong to a
fight, saying: Putang Ina mo, luma
bas ka, tarantado, kalalaki mong
tao, duwag ka. Ipagugulpi kita sa
labas at kaya kitang ipakaladkad
dito sa loob ng compound palabas
ng gate sa mga kamag-anak ko.
And suiting action to the word,
she thereupon boxed Tamondong in
the stomach. The motive for the a
ssault was Zenaidas resentment at
having been reprimanded, together
with other employees, two days
earlier by Tamondong for wasting ti
me by engaging in idle chatter.

[1]
Tamondong forthwith reported th
e incident to the firms
Administrative Manager
[2]
as well as the Chairman of Barangay
Balombato, Quezon City.
[3]
chanroblespublishingcompany
On September 30, 1982, Zenaida
Alonzo was given a Memorandum
by the companys Executive Vice
President & General Manager
terminating her employment as of
October 1, 1982 on various
grounds: poor work, habitual absences and tardiness, wasting time,
insubordination and gross disr
espect. The service of that
memorandum of dismissal on her was not preceded by any
complaint, hearing or other fo
rmality. These were apparently
considered unnecessary by Management
[4]
in view of the provision in
the Company Rules and Relations (embodied in the Collective
Bargaining Agreement between
the company and the union
representing the employees) that:
Fighting or attempting to infl
ict harm to another employee,
will render (sic) the aggressor to outright dismissal.
It was only at the hearing of the co
mplaint for illegal dismissal (and
non-payment of proportionate 13
th
month pay) instituted by Zenaida
on October 4, 1982 in the NCR Arbi
tration Branch, that evidence was
presented by the company not only of the assault by Zenaida on her
superior but also of many other vi
olations by her of company rules
and regulations, in an attempt to
substantiate the validity of her
dismissal from work.
The Labor Arbiter found that Alonzo
had indeed verbally abused and
struck her superior, Tamondong, and rejected her contention that the
assault was not punishable since it
was not work-connected and was
provoked instigated by Ernesto Tamondong.
[5]
The Arbiter also
declared as fully established
the previous infractions of
complainant, these being a matte
r of record and not denied by
complainant (Zenaida).
The Arbiter was of the view, however
, that Alonzo was entitled to
relief, because (a) the penalty impo
sed was harsh and severe and not
commensurate with the offense, su
spension of three (3) months
(being) the proper, just and reasonab
le penalty; and because (b) the
company had failed to investig
ate complainant before she was
dismissed. The Arbiter thus orde
red Pacific Mills, Inc., Zenaidas
employer:
To reinstate complainant without
loss of seniority rights and to
pay her backwages from January
1, 1983 until fully reinstated,
the period from October 1,
1982 to December 31, 1982
complainant being under suspensi
on without pay (as well as) to
pay complainants 13th month pay in the amount of THREE
HUNDRED FIFTY-ONE PESOS ONLY (P351.00).
Acting on the employers appeal
, the National Labor Relations
Commission rendered judgment on
March 23, 1987, sustaining the
Labor Arbiters findings. It however
limited the award of back wages
to Zenaida only to three (3) years,

in accordance with this Courts
judgment in Feati University Faculty Club (PAFLU) vs. Feati
University, 58 SCRA 396.
[6]
Pacific Mills, Inc. has instituted in
this Court the special civil action of
certiorari
at bar praying for nullifica
tion of the judgment of the
NLRC for having been rendered with grave abuse of discretion.
In the comment thereon,
[7]
required of him by the Court, the Solicitor
General opined that:
Both the Labor Arbiter and the NLRC apparently failed to take
into consideration the fact that
Zenaida Alonzo was dismissed
not because of this isolated act
(of assault against her superior)
but rather because of numerous
and repeated violations of
company rules and regulations. It
was only this last incident
which compelled Pacific Mills, Inc. to finally terminate her
services. It is the totality of
the infractions committed by the
employee which should have been
considered in determining
whether or not there is just cause for her dismissal.
Zenaida Alonzo was caught seve
ral times leaving her place of
work to chat with her co-emp
loyees. This is reprehensible
conduct since, as ring frame oper
ator, she must be at her post
during work hours to prevent th
e occurrence of incidents which
could damage the machine. The company inspector precisely
warned her against doing this. She had also been repeatedly
reprimanded for insubordination
habitual tardiness, wasting
time and not wearing the required
company uniform. In spite of
these infractions the company bore with her services and did
not see fit to dismiss her. Her
assault on the company inspector
was apparently the last straw
which compelled Pacific Mills,
Inc. to terminate her services.
Accordingly, the Solicitor General recommended payment of
separation pay equivalent to thr
ee (3) years backwages but without
reinstatement and of proportionate 13
th
month pay.
For their part, the Chief Leg
al Officer of the NLRC,
[8]
and the private
respondent,
[9]
insist that since the dism
issal of Zenaida Alonzo was
not preceded by any notice of the
charges and a hearing thereon, the
judgment of the NLRC must be sustained.
Decisive of this controversy is th
e judgment of the Court en banc in
Wenphil Corporation vs. NLRC, prom
ulgated on February 8, 1989,
[10]
in which the following policy pronouncements were made:
The Court holds that the policy
of ordering the reinstatement
to the service of an employee wi
thout loss of seniority and the
payment of his wages during the pe
riod of his separation until
his actual reinstatement but
not exceeding three (3) years
without qualification or deduction, when it appears he was not
afforded due process, although hi
s dismissal was found to be for
just and authorized cause in an
appropriate proceeding in the
Ministry of Labor and Employmen
t, should be re-examined. It
will be highly prejudicial to the interests of the employer to
impose on him the services of

an employee who has been shown
to be guilty of the charges th
at warranted his dismissal from
employment. Indeed, it will demora
lize the rank and file if the
undeserving, if not undesirabl
e, remains in the service.
Thus in the present case, wher
e the private respondent, who
appears to be of violent temper, caused trouble during office
hours and even defied his superior
s as they tried to pacify him,
should not be rewarded with r
eemployment and back wages. It
may encourage him to do even
worse and will render a mockery
of the rules of discipline that em
ployees are required to observe.
Under the circumstances, th
e dismissal of the private
respondent for just cause should
be maintained. He has no right
to return to his former employer.
However, the petitioner (employe
r) must nevertheless be held
to account for failure to extend
to private respondent his right
to an investigation before caus
ing his dismissal. The rule is
explicit as above discussed. The
dismissal of an employee must
be for just or authorized cause an
d after due process (Section 1,
Rule XIV, Implementing Regulations of the Labor Code).
Petitioner committed an infraction
of the second requirement.
Thus, it must be imposed a sanc
tion for its failure to give a
formal notice and conduct an in
vestigation as required by law
before dismissing (respondent)
from employment. Considering
the circumstances of this case
petitioner must indemnify the
private respondent the amount

of P1,000.00. The measure of
this award depends on the facts of each case and the gravity of
the omission committed by the employer.
The Court perceives no sufficient caus
e, it has indeed been cited to
none by the respondents, to declin
e to apply the Wenphil doctrine to
the case at bar.
While it is true that Pacific Mills,
Inc. had not complied with the
requirements of due process prior
to removing Zenaida Alonzo from
employment, it is also true that
subsequently, in the proceedings
before the Labor Arbiter in which Ze
naida Alonzo had of course taken
active part, it had succeeded in
satisfactorily proving the commission
by Zenaida of many violations
of company rules and regulations
justifying termination of her empl
oyment. Under the circumstances,
it is clear that, as the Solici
tor General has pointed out, the
continuance in the service of the
latter is patently inimical to her
employers interests and that, ci
ting San Miguel Corporation vs.
NLRC,
[11]
the law, in protecting the righ
ts of the laborer authorizes
neither oppression nor self-destruct
ion of the employer. And it was
oppressive and unjust in the premises
to require reinstatement of the
employee.
WHEREFORE
, the Petition is granted and the challenged Decision
of the respondent Commission dated
March 23, 1987 and that of the
Labor Arbiter thereby affirmed, are
NULLIFIED AND SET

ASIDE
. However, the petitioner is or
dered to pay private respondent
a proportionate part of the 13th
month pay due her, amounting to
P351.00 as well as to indemnify
her in the sum of P1,000.00. No
costs.
c
h
a
n
r
o
ble
s
p
u
bli
s
h
i
n
g
c
o
m
p
a
n
y
SO ORDERED.
c
h
a
n
r
o
ble
s
p
u
bli
s
h
i
n
g
c
o
m
p
a
n
y
Cruz, Gancayco, Grio-Aquino and Medialdea,
JJ.
, concur.
[G.R. No. 78409. September 14, 1989.]
NORBERTO SORIANO, Petitioner, v. OFFSHORE SHIPPING AND MANNING
CORPORATION, KNUT KNUTSEN O.A.S., and NATIONAL LABOR RELATIONS
COMMISSION (Second Division), Respondents.
R.C. Carrera Law Firm for Petitioner.
Elmer V. Pormento for Private Respondents.
SYLLABUS
1. STATUTORY CONSTRUCTION; STATUTE; LITERAL INTERPRETATION REJECTED IF
UNJUST OR WOULD LEAD TO ABSURD RESULTS. It is axiomatic that laws should be
given a reasonable interpretation, not one which defeats the very purpose for which they were
passed. This Court has in many cases involving the construction of statutes always cautioned
against narrowly interpreting a statute as to defeat the purpose of the legislator and stressed that
it is of the essence of judicial duty to construe statutes so as to avoid such a deplorable result (of
injustice or absurdity) and that therefore "a literal interpretation is to be rejected if it would be
unjust or lead to absurd results."cralaw virtua1aw library
2. ID.; ID.; EXCEPTIONS FROM COVERAGE THEREOF STRICTLY CONSTRUED BUT
CONSTRUCTION MUST BE REASONABLE, SENSIBLE AND FAIR; CASE AT BAR. In
the case at bar, both the Labor Arbiter and the National Labor Relations Commission correctly
analyzed the questioned annotations as not constituting an alteration of the original employment
contract but only a clarification thereof which by no stretch of the imagination can be considered
a violation of the above-quoted law. Under similar circumstances, this Court ruled that as a
general proposition, exceptions from the coverage of a statute are strictly construed. But such
construction nevertheless must be at all times reasonable, sensible and fair. Hence, to rule out
from the exemption amendments set forth, although they did not materially change the terms and
conditions of the original letter of credit, was held to be unreasonable and unjust, and not in
accord with the declared purpose of the Margin Law.
3. LABOR AND SOCIAL LEGISLATION; LABOR CODE; ARTICLE 34, PARAGRAPH 1;
PURPOSE IS PROTECTION OF BOTH PARTIES; CASE AT BAR. The purpose of Article
34, paragraph 1 of the Labor Code is clearly the protection of both parties. In the instant case, the
alleged amendment served to clarify what was agreed upon by the parties and approved by the
Department of Labor. To rule otherwise would go beyond the bounds of reason and justice.
4. ID.; ID.; CONSTRUCTION IN FAVOR OF LABOR; A REASONABLE AND FAIR RULE;
DISREGARD OF EMPLOYERS OWN RIGHTS AND INTERESTS SOLELY ON BASIS OF
THAT CONCERN AND SOLICITUDE FOR LABRO, UNJUST AND UNACCEPTABLE.
The rule that there should be concern, sympathy and solicitude for the rights and welfare of the
working class, is meet and proper. That in controversies between a laborer and his master, doubts
reasonably arising from the evidence or in the interpretation of agreements and writings should
be resolved in the formers favor, is not an unreasonable or unfair rule. But to disregard the
employers own rights and interests solely on the basis of that concern and solicitude for labor is
unjust and unacceptable.
5. REMEDIAL LAW; APPEAL FACTUAL FINDINGS OF QUASI-JUDICIAL AGENCIES
LIKE NATIONAL LABOR RELATIONS COMMISSION GENERALLY ACCORDED NOT
ONLY RESPECT BUT AT TIMES EVEN FINALITY IF SUCH FINDINGS ARE SUPPORTED
BY SUBSTANTIAL EVIDENCE. It is well-settled that factual findings of quasi-judicial
agencies like the National Labor Relations Commission which have acquired expertise because
their jurisdiction is confined to specific matters are generally accorded not only respect but at
times even finality if such findings are supported by substantial evidence.
6. STATUTORY CONSTRUCTION; STATUTE; GREAT WEIGHT ACCORDED TO
INTERPRETATION OR CONSTRUCTION BY GOVERNMENT AGENCY CALLED UPON
TO IMPLEMENT SAME. In fact since Madrigal v. Rafferty great weight has been accorded
to the interpretation or construction of a statute by the government agency called upon to
implement the same.
DECISION
FERNAN, C.J.:
This is a petition for certiorari seeking to annul and set aside the decision of public respondent
National Labor Relations Commission affirming the decision of the Philippine Overseas
Employment Administration in POEA Case No. (M)85-12-0953 entitled "Norberto Soriano v.
Offshore Shipping and Manning Corporation and Knut Knutsen O.A.S.", which denied
petitioners claim for salary differential and overtime pay and limited the reimbursement of his
cash bond to P15,000.00 instead of P20,000.00.
In search for better opportunities and higher income, petitioner Norberto Soriano, a licensed
Second Marine Engineer, sought employment and was hired by private respondent Knut Knutsen
O.A.S. through its authorized shipping agent in the Philippines, Offshore Shipping and Manning
Corporation. As evidenced by the Crew Agreement, petitioner was hired to work as Third Marine
Engineer on board "Knut Provider" with a salary of US$800.00 a month on a conduction basis
for a period of fifteen (15) days. He admitted that the term of the contract was extended to six (6)
months by mutual agreement on the promise of the employer to the petitioner that he will be
promoted to Second Engineer. Thus, while it appears that petitioner joined the aforesaid vessel
on July 23, 1985 he signed off on November 27, 1985 due to the alleged failure of private
respondent-employer to fulfill its promise to promote petitioner to the position of Second
Engineer and for the unilateral decision to reduce petitioners basic salary from US$800.00 to
US$560.00. Petitioner was made to shoulder his return airfare to Manila.
In the Philippines, petitioner filed with the Philippine Overseas Employment Administration
(POEA for short), a complaint against private respondent for payment of salary differential,
overtime pay, unpaid salary for November, 1985 and refund of his return airfare and cash bond
allegedly in the amount of P20,000.00 contending therein that private respondent unilaterally
altered the employment contract by reducing his salary of US$800.00 per month to US$560.00,
causing him to request for his repatriation to the Philippines. Although repatriated, he claims that
he failed to receive payment for the following:chanrobles.com : virtual law library
"1. Salary for November which is equivalent to US$800.00;
"2. Leave pay equivalent to his salary for 16.5 days in the sum of US$440.00;
"3. Salary differentials which is equivalent to US$240.00 a month for four (4) months and one
(1) week in the total sum of US$1,020.00;
"4. Fixed overtime pay equivalent to US$240.00 a month for four (4) months and one (1) week
in the sum of US$1,020.00;
"5. Overtime pay for 14 Sundays equivalent to US$484.99;
"6. Repatriation cost of US$945.45;
"7. Petitioners cash bond of P20,000.00." 1
In resolving aforesaid case, the Officer-in-Charge of the Philippine Overseas Employment
Administration or POEA found that petitioner-complainants total monthly emolument is
US$800.00 inclusive of fixed overtime as shown and proved in the Wage Scale submitted to the
Accreditation Department of its Office which would therefore not entitle petitioner to any salary
differential; that the version of complainant that there was in effect contract substitution has no
grain of truth because although the Employment Contract seems to have corrections on it, said
corrections or alterations are in conformity with the Wage Scale duly approved by the POEA;
that the withholding of a certain amount due petitioner was justified to answer for his repatriation
expenses which repatriation was found to have been requested by petitioner himself as shown in
the entry in his Seamans Book; and that petitioner deposited a total amount of P15,000.00 only
instead of P20,000.00 cash bond. 2
Accordingly, respondent POEA ruled as follows:jgc:chanrobles.com.ph
"VIEWED IN THE LIGHT OF THE FOREGOING, respondents are hereby ordered to pay
complainant, jointly and severally within ten (10) days from receipt hereof the amount of
P15,000.00 representing the reimbursement of the cash bond deposited by complainant less
US$285.83 (to be converted to its peso equivalent at the time of actual payment).
"Further, attorneys fees equivalent to 10% of the aforesaid award is assessed against
respondents.
"All other claims are hereby dismissed for lack of merit.
"SO ORDERED." 3
Dissatisfied, both parties appealed the aforementioned decision of the POEA to the National
Labor Relations Commission. Complainant-petitioners appeal was dismissed for lack of merit
while respondents appeal was dismissed for having been filed out of time.
Petitioners motion for reconsideration was likewise denied. Hence this recourse.
Petitioner submits that public respondent committed grave abuse of discretion and/or acted
without or in excess of jurisdiction by disregarding the alteration of the employment contract
made by private Respondent. Petitioner claims that the alteration by private respondent of his
salary and overtime rate which is evidenced by the Crew Agreement 4 and the exit pass 5
constitutes a violation of Article 34 of the Labor Code of the Philippines. 6
On the other hand, public respondent through the Solicitor General, contends that, as explained
by the POEA: "Although the employment contract seems to have corrections, it is in conformity
with the Wage Scale submitted to said office." 7
Apparently, petitioner emphasizes the materiality of the alleged unilateral alteration of the
employment contract as this is proscribed by the Labor Code while public respondent finds the
same to be merely innocuous. We take a closer look at the effects of these alterations upon
petitioners right to demand for salary differential, overtime pay and refund of his return airfare
to Manila.chanrobles virtual lawlibrary
A careful examination of the records shows that there is in fact no alteration made in the Crew
Agreement 8 or in the Exit Pass. 9 As the original data appear, the figures US$800.00 fall under
the column salary, while the word "inclusive" is indicated under the column overtime rate. With
the supposed alterations, the figures US$560.00 were handwritten above the figures US$800.00
while the figures US$240.00 were also written above the word "inclusive."
As clearly explained by respondent NLRC, the correction was made only to specify the salary
and the overtime pay to which petitioner is entitled under the contract. It was a mere breakdown
of the total amount into US$560.00 as basic wage and US$240.00 as overtime pay. Otherwise
stated, with or without the amendments the total emolument that petitioner would receive under
the agreement as approved by the POEA is US$800.00 monthly with wage differentials or
overtime pay included. 10
Moreover, the presence of petitioners signature after said items renders improbable the
possibility that petitioner could have misunderstood the amount of compensation he will be
receiving under the contract. Nor has petitioner advanced any explanation for statements
contrary or inconsistent with what appears in the records. Thus, he claimed: [a] that private
respondent extended the duration of the employment contract indefinitely, 11 but admitted in his
Reply that his employment contract was extended for another six (6) months by agreement
between private respondent and himself: 12 [b] that when petitioner demanded for his overtime
pay, respondents repatriated him 13 which again was discarded in his reply stating that he
himself requested for his voluntary repatriation because of the bad faith and insincerity of private
respondent; 14 [c] that he was required to post a cash bond in the amount of P20,000.00 but it
was found that he deposited only the total amount of P15,000.00; [d] that his salary for
November 1985 was not paid when in truth and in fact it was petitioner who owes private
respondent US$285.83 for cash advances 15 and on November 27, 1985 the final pay slip was
executed and signed; 16 and [e] that he finished his contract when on the contrary, despite
proddings that he continue working until the renewed contract has expired, he adamantly insisted
on his termination.
Verily, it is quite apparent that the whole conflict centers on the failure of respondent company to
give the petitioner the desired promotion which appears to be improbable at the moment because
the M/V Knut Provider continues to be laid off at Limassol for lack of charterers. 17
It is axiomatic that laws should be given a reasonable interpretation, not one which defeats the
very purpose for which they were passed. This Court has in many cases involving the
construction of statutes always cautioned against narrowly interpreting a statute as to defeat the
purpose of the legislator and stressed that it is of the essence of judicial duty to construe statutes
so as to avoid such a deplorable result (of injustice or absurdity) and that therefore "a literal
interpretation is to be rejected if it would be unjust or lead to absurd results." 18
There is no dispute that an alteration of the employment contract without the approval of the
Department of Labor is a serious violation of law.
Specifically, the law provides:jgc:chanrobles.com.ph
"Article 34 paragraph (i) of the Labor Code reads:jgc:chanrobles.com.ph
"Prohibited Practices It shall be unlawful for any individual, entity, licensee, or holder of
authority:chanrob1es virtual 1aw library
x
"(i) To substitute or alter employment contracts approved and verified by the Department of
Labor from the time of actual signing thereof by the parties up to and including the period of
expiration of the same without the approval of the Department of Labor."cralaw virtua1aw
library
In the case at bar, both the Labor Arbiter and the National Labor Relations Commission correctly
analyzed the questioned annotations as not constituting an alteration of the original employment
contract but only a clarification thereof which by no stretch of the imagination can be considered
a violation of the above-quoted law. Under similar circumstances, this Court ruled that as a
general proposition, exceptions from the coverage of a statute are strictly construed. But such
construction nevertheless must be at all times reasonable, sensible and fair. Hence, to rule out
from the exemption amendments set forth, although they did not materially change the terms and
conditions of the original letter of credit, was held to be unreasonable and unjust, and not in
accord with the declared purpose of the Margin Law. 19
The purpose of Article 34, paragraph 1 of the Labor Code is clearly the protection of both
parties. In the instant case, the alleged amendment served to clarify what was agreed upon by the
parties and approved by the Department of Labor. To rule otherwise would go beyond the bounds
of reason and justice.
As recently laid down by this Court, the rule that there should be concern, sympathy and
solicitude for the rights and welfare of the working class, is meet and proper. That in
controversies between a laborer and his master, doubts reasonably arising from the evidence or in
the interpretation of agreements and writings should be resolved in the formers favor, is not an
unreasonable or unfair rule. 20 But to disregard the employers own rights and interests solely on
the basis of that concern and solicitude for labor is unjust and
unacceptable.chanrobles.com:cralaw:red
Finally, it is well-settled that factual findings of quasi-judicial agencies like the National Labor
Relations Commission which have acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but at times even finality if such findings
are supported by substantial evidence. 21
In fact since Madrigal v. Rafferty 22 great weight has been accorded to the interpretation or
construction of a statute by the government agency called upon to implement the same. 23
WHEREFORE, the instant petition is DENIED. The assailed decision of the National Labor
Relations Commission is AFFIRMED in toto.
SO ORDERED.
Gutierrez, Jr., Bidin, and Cortes, JJ., concur.
Feliciano, J., is on leave.
G.R. No. 46727
September 27, 1939
PAMBUSCO EMPLOYEES' UNION, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS, composed to Honorables Francisco
Zulueta, Leopoldo Rovira, and Jose Generoso, and PAMPANGA BUS COMPANY, INC.,
respondents.
Jose Alejandrino for petitioner.
Manuel Escudero for respondent court.
L.D. Lockwood for respondent Pampanga Bus Co., Inc.
LAUREL, J.:
This is a petition for a writ of certiorari to review the decision of the Court of Industrial
Relations promulgated on January 14, 1939, denying the demands of the Pambusco Employees'
Union, Inc.
The following are the pertinent facts which have given occasion to this industrial dispute: On
March 26, 1938, the Pambusco Employees' Union, Inc., addressed a thirteen- point petition to the
management of the Pampanga Bus Co. Upon the failure of the company officials to act upon the
petition, a strike was declared by the workers on April 14, 1938. However, through the timely
mediation of the Department of Labor, a provisional agreement was reached, by virtue of which
the strike was called off, eight demands were granted, and the remaining five were submitted to
the Court of Industrial Relations for settlement. One of these demands, in the language of the
petitioner, is that the respondent Pampanga Bus Co. "pay to all Company drivers affiliated with
the Pambusco Employees' Union, Inc., all the back overtime pay due them under the law." After
trial on the disputed demands, the Court of Industrial Relations decided inter alia that the claim
for back overtime pay could not be allowed.
The pertinent portion of the decision of the respondent Court of Industrial Relations is as
follows:
The evidence is clear that even before the final approval of Act No. 4242 amending Act
No. 4123, the Eight Hour Labor Law, by extending the provisions of the latter to other
class of laborers including drivers of public service vehicles, a petition was addressed by
44 drivers of the company to the Governor-General asking him to veto the bill amending
the law extending it to drivers for the reason stated in their petition (Exhibit 5 and 5-a).
About the 6th day of September, 1935, a petition was again addressed by 97 drivers of
the company to the Commissioner of Labor requesting adjustment of working hours to
permit them to retain their present status with the company as nearly as possible under
the law (Exhibits 4, 4-a, 4-b, 4-c, 4-d and 4-e). This petition was prepared after a meeting
of the employees was held and was drawn with the help of the manager of the respondent
about the last days of August, 1935. In September, 1937, about 347 employees of the
different departments of the company again addresses a petition to the Director of Labor
expressing their satisfaction with the hours they work and the pay they receive for their
labor including the special bonuses and overtime pay they receive for extra work, and
asking, in view thereof, that the law be not applied to them (Exhibits 6, 6-a to 6-g).
After the enactment of Act No. 4242 several transportation companies operating motor
buses filed with Commissioner of Labor petitions for a readjustment of the hours of labor
specified in section 1 of the Act on the basis of maintaining the status quo as to the hours
the drivers were required to be actually on duty in order to enable them to make the
prescribed hours daily that the exigencies of the service required. The petitions were
based on the impracticability of applying the provisions of the law to drivers of public
service vehicles without disrupting the public service and causing pecuniary loss to both
employers and employees alike, and the resulting difficulties on the part of the drivers.
The testimony of Atty. Carlos Alvear on this point in uncontradicted. He testified that in
1935, he was president of the Philippine Motor Association composed of bus operators
operating in the Philippines, of which the respondent is a member. Major Olson, who was
at the time the executive secretary of the association, and himself took up the matter with
the Secretary of the Interior and the Secretary of Labor after the passage of the Act
extending the operation of the Eight Labor Law to drivers. In their conference with the
Commissioner of Labor, they were told to take advantage of the provisions of the law in
which they may apply for the readjustment of the working hours, and in conformity with
that suggestion, the executive secretary of the association filed a formal petition, Exhibit
10, on September 5, 1935. When this was filed the Department of Labor further
suggested that the drivers of each company file and address a petition of similar nature
designating their representatives who will represent them in a conference that the
Commissioner of Labor may call for the purpose. With the filing of the petition, the
conferees were assured by the Under-Secretary of Labor that the enforcement of the Eight
Hour Labor Law in so far as the drivers were concerned, will be held in abeyance until
such time as the meeting or investigations are held. It is not clear as to whether
investigations and hearings were finally made but the evidence indicates that the petition
was never decided and the companies continued its schedule of hours.
Sections 3 and 4 of Act No. 4123 read as follows:
"SEC. 3. The Commissioner of Labor, with the advice of two representatives of the
employers concerned, designated by the latter, and of two representatives of the laborers
concerned, designated by these, shall, at the request of an interested party, decide in each
case whether or not it is proper to increase or decrease the number of hours of labor fixed
in section one of this Act, either because the organization or nature of the work require it,
or because of lack or insufficiency of competent laborers for certain work in a locality, or
because the relieving of the laborers must be done under certain conditions, or by reason
of any other exceptional circumstances or conditions of the work or industry concerned;
but the number of hours of labor shall in no case exceed twelve daily or seventy-two
weekly.
"SEC. 4. Employees or laborers desiring an increase or decrease of the number of hours
of labor shall address an application to this effect to the Commissioner of Labor, stating
their reasons. Upon receipt of an application of this kind, the Commissioner of Labor
shall call a meeting of the employers and laborers of the establishment or industry
concerned, for the designation of advisers as provided in the preceding section hereof.
The Commissioner of Labor or his authorized representative, together with the advisers,
shall make an investigation of the facts, giving special attention, in the first place, to the
human aspect, and in the second place, to the economic aspect of the matter, and he may
for this purpose administer oaths, take affidavits examine witnesses and documents and
issue subpoenas and subpoenas duces tecum. The decision of the Commissioner of Labor
may be reconsidered by him at any time."
It seems clear that the petitions of both employers and employees for the nonenforcement of the Eight Hour Labor Law were made in accordance with these
provisions of the law. Exhibit 9 of the respondent which is a communication addressed by
the Under-Secretary of Labor on September 6, 1935, to the A.L. Ammen Transportation
Company, Inc., defines the attitude taken by the Department of Labor in connection with
those petitions. It advises the company to submit an application under sections 3 and 4 of
Act No. 4123 above-quoted for an increase of working hours of such laborers as may fall
under the amendment and that pending final solution of said application, the Department
of Labor will not make any attempt to enforce said amendment. As has already been
stated it is not clear whether final action or decision has been made on the applications
with respect to the drivers of the respondent; that it is undeniable fact that up to the
outbreak of the dispute, the law was not observed nor enforced in the company; and that
upon mutual agreement arrived at by the parties on April 14, 1938, the company worked
out a schedule beginning May 1, 1938, placing all its employees under an eight-hour
schedule.
In view of the foregoing fact, the court is the opinion that the drivers are not entitled to
the overtime pay demanded for the whole period the law was not observed or enforced in
the company. They are entitled to payment of wages for hours worked in excess of the
legal hours only beginning May 1, 1938.
On January 30, 1939, the petitioner filed a motion for reconsideration which was denied by the
Court of Industrial Relations, sitting in banc, with the following observations:
We have reviewed carefully the evidence on record with regard to the claim for back
overtime pay we find that it amply supports the findings and conclusions set forth in
support of the motion for reconsideration are virtually a repetition of the reasons
advanced in the memorandum of the petitioner filed before the case was decided and
were already discussed and considered in the decision. The evidence permits no other
conclusion than that the employees were not coerced not intimidated by the respondent
on the repeated occasions they signed and presented to the Department of Labor their
petitions for non-enforcement of the Eight Hour Labor Law. The employees were
indubitably aware of certain hardships the enforcement of the law at that time would
bring to them and these prompted their attitude of preferring the continuation of the
schedule of hours observed prior to the enactment of the legislation extending the
benefits of the Eight Hour Labor Law to drivers of motor vehicles in public utility
enterprises. Whatever pecuniary advantage they would have gained by the strict
observance of the law by the company should they be made to work more than eight
hours a day was apparently waived or given up by them in exchange of their personal
convenience and of the additional monthly pay the respondent gave to those employees
who were assigned to routes where the daily working hours exceeded the maximum fixed
by law. The evidence that the company paid additional salaries not only to drivers but
also to its conductors who were assigned to such routes stands uncontradicted and no
attempt even was made by the petitioner to deny it. Without need of passing on the
question as to whether the provisions of the law are mandatory or not, in the light of the
above facts and applying the rules of equity invoked by the union, we are constrained to
hold that the petitioners are not rightly entitled to the payment sought.
In Kapisanan ng mga Manggagawa sa Pantranco vs. Pangasinan Transportation Co. (39 Off.
Gaz., 1217), we have held that, to be entitled to the benefits of section 5 of Act No. 4123,
fulfillment of the mandate of the law is necessary, this being a matter of public interest. Where
both parties, as in this case, we have violated the law, this court must decline to extend the strong
arm of equity, as neither party is entitled to its aid. This is especially true in view of the findings
of fact made by the Court of Industrial Relations which we should not disturb.
We are not, to be sure insensible to the argument that industrial disputes should be decided with
an eye on the welfare of the working class, who, in the inter-play of economic forces, is said to
find itself in the "end of the stick." In the case at bar, however, we find no reason for disturbing
the action taken by the respondent Court of Industrial Relations, which is a special court enjoined
to "act according to justice and equity and substantial merits of the case, without regard to
technicalities or legal forms and shall not be bound by any technical rules of legal evidence but
may inform its mind in such manner as it may deem just and equitable" (sec. 20, Commonwealth
Act No. 103).
The petition is dismissed, without pronouncement regarding costs. So ordered.
Avancea, C.J., Villa-Real, Imperial, Diaz, Concepcion, and Moran, JJ., concur.
G.R. No. 79255 January 20, 1992

UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL
PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GUTIERREZ, JR., J.:

This labor dispute stems from the exclusion of sales personnel from the holiday pay award and
the change of the divisor in the computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling
on its rights and obligations respecting claims of its monthly paid employees for holiday pay in
the light of the Court's decision in Chartered Bank Employees Association v. Ople (138 SCRA
273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the Code,
subject only to the exclusions and limitations specified in Article 82 and such
other legal restrictions as are provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and
(3) deduction from the holiday pay award of overpayment for overtime, night differential,
vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity of
the Labor Code, that their sales personnel are not field personnel and are therefore entitled to
holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot
be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of
the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor
Code. He adjudged, however, that the company's sales personnel are field personnel and, as such,
are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the
divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for
overtime, night differential, vacation and sick leave pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent
Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued
a resolution dated May 25, 1987 remanding the case to the respondent arbitrator on the ground
that it has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article
263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented
by Section 5 of the rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of
the case reasoning that he had no more jurisdiction to continue as arbitrator because he had
resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed
from 251 to 261 days and whether or not the previous use of 251 as divisor resulted in
overpayment for overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of
the Labor Code. The respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field
personnel as "non-agritultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the
field cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported
to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the
sales personnel's working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be
reasonably ascertained. The company has no way of determining whether or not these sales
personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at
4:30 p.m, really spend the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to report
for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the
realm of work in the field as defined in the Code but an exercise of purely
management prerogative of providing administrative control over such personnel.
This does not in any manner provide a reasonable level of determination on the
actual field work of the employees which can be reasonably ascertained. The
theoretical analysis that salesmen and other similarly-situated workers regularly
report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m.,
creating the assumption that their field work is supervised, is surface projection.
Actual field work begins after 8:00 a.m., when the sales personnel follow their
field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report
back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m.
comprises their hours of work in the field, the extent or scope and result of which
are subject to their individual capacity and industry and which "cannot be
determined with reasonable certainty." This is the reason why effective
supervision over field work of salesmen and medical representatives, truck drivers
and merchandisers is practically a physical impossibility. Consequently, they are
excluded from the ten holidays with pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be determined with
reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing
Rules which provides:
Rule IV Holidays with Pay

Sec. 1. Coverage This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied)
While contending that such rule added another element not found in the law (Rollo, p. 13), the
petitioner nevertheless attempted to show that its affected members are not covered by the
abovementioned rule. The petitioner asserts that the company's sales personnel are strictly
supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular
dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not
add another element to the Labor Code definition of field personnel. The clause "whose time and
performance is unsupervised by the employer" did not amplify but merely interpreted and
expounded the clause "whose actual hours of work in the field cannot be determined with
reasonable certainty." The former clause is still within the scope and purview of Article 82 which
defines field personnel. Hence, in deciding whether or not an employee's actual working hours in
the field can be determined with reasonable certainty, query must be made as to whether or not
such employee's time and performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales
personnel's time and performance are supervised. The purpose of this schedule is merely to
ensure that the sales personnel are out of the office not later than 8:00 a.m. and are back in the
office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual hours spent
in field work by an employee through the imposition of sanctions on absenteeism contained in
the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive bonus every
quarter based on their performance is proof that their actual hours of work in the field can be
determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on
sales target; (2) good collection performance; (3) proper compliance with good market hygiene;
(4) good merchandising work; (5) minimal market returns; and (6) proper truck maintenance.
(Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely
because of the difficulty in measuring their actual hours of field work. These employees are
evaluated by the result of their work and not by the actual hours of field work which are hardly
susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court
had occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea Co. v.
Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent. Such a
salesman, to a greater extent, works individually. There are no restrictions
respecting the time he shall work and he can earn as much or as little, within the
range of his ability, as his ambition dictates. In lieu of overtime he ordinarily
receives commissions as extra compensation. He works away from his employer's
place of business, is not subject to the personal supervision of his employer, and
his employer has no way of knowing the number of hours he works per day.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the same
rationale for their exclusion as field personnel from holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the
award of holiday pay, the divisor should be changed from 251 to 261 days to include the
additional 10 holidays and the employees should reimburse the amounts overpaid by Filipro due
to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of ten holidays
certainly adds to or accelerates the basis of conversion and computation by ten
days. With the inclusion of ten holidays as paid days, the divisor is no longer 251
but 261 or 262 if election day is counted. This is indeed an extremely difficult
legal question of interpretation which accounts for what is claimed as falling
within the concept of "solutio indebti."
When the claim of the Union for payment of ten holidays was granted, there was a
consequent need to abandon that 251 divisor. To maintain it would create an
impossible situation where the employees would benefit with additional ten days
with pay but would simultaneously enjoy higher benefits by discarding the same
ten days for purposes of computing overtime and night time services and
considering sick and vacation leave credits. Therefore, reimbursement of such
overpayment with the use of 251 as divisor arises concomitant with the award of
ten holidays with pay. (Rollo, p. 34)
The divisor assumes an important role in determining whether or not holiday pay is already
included in the monthly paid employee's salary and in the computation of his daily rate. This is
the thrust of our pronouncement in Chartered Bank Employees Association v. Ople (supra). In
that case, We held:
It is argued that even without the presumption found in the rules and in the policy
instruction, the company practice indicates that the monthly salaries of the
employees are so computed as to include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered
Bank, in computing overtime compensation for its employees, employs a
"divisor" of 251 days. The 251 working days divisor is the result of subtracting all
Saturdays, Sundays and the ten (10) legal holidays from the total number of
calendar days in a year. If the employees are already paid for all non-working
days, the divisor should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:
monthly rate x 12 months
251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by
respondent Filipro indicates that holiday pay is not yet included in the employee's salary,
otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary increases, is a
constant figure for the purpose of computing overtime and night differential pay and
commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the
same basis for computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a
lower daily rate which is violative of the prohibition on non-diminution of benefits found in
Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261
days, then the dividend, which represents the employee's annual salary, should correspondingly
be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the
employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is
P100.00 After the payment of 10 days' holiday pay, his annual salary already includes holiday
pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still
P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime and
night differential pay and sick and vacation leave benefits, the computation of which are all
based on the daily rate, since the daily rate is still the same before and after the grant of holiday
pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251
days as divisor must fail in light of the Labor Code mandate that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations,
shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the
company was on a 6-day working schedule, the divisor used by the company was 303, indicating
that the 10 holidays were likewise not paid. When Filipro shifted to a 5-day working schebule on
September 1, 1980, it had the chance to rectify its error, if ever there was one but did not do so. It
is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from
November 1, 1974. This ruling was not questioned by the petitioner union as obviously said
decision was favorable to it. Technically, therefore, respondent Nestle should have filed a
separate petition raising the issue of effectivity of the holiday pay award. This Court has ruled
that an appellee who is not an appellant may assign errors in his brief where his purpose is to
maintain the judgment on other grounds, but he cannot seek modification or reversal of the
judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate
Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine Commercial
and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle the issues so
that the execution of the Court's decision in this case may not be needlessly delayed by another
petition, the Court resolved to take up the matter of effectivity of the holiday pay award raised by
Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when
the Chartered Bank decision, promulgated on August 28, 1985, became final and executory, and
not from the date of effectivity of the Labor Code. Although the Court does not entirely agree
with Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663
[1984], hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV, Book
III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor
on February 16, 1976 and April 23, 1976, respectively, and which excluded monthly paid
employees from holiday pay benefits, are null and void. The Court therein reasoned that, in the
guise of clarifying the Labor Code's provisions on holiday pay, the aforementioned implementing
rule and policy instruction amended them by enlarging the scope of their exclusion. The
Chartered Bank case reiterated the above ruling and added the "divisor" test.
However, prior to their being declared null and void, the implementing rule and policy
instruction enjoyed the presumption of validity and hence, Nestle's non-payment of the holiday
benefit up to the promulgation of the IBAA case on October 23, 1984 was in compliance with
these presumably valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court
discussed the effect to be given to a legislative or executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to be
complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have
acted under it and may have changed their positions. What could be more fitting
than that in a subsequent litigation regard be had to what has been done while
such legislative or executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being nullified, its
existence as a fact must be reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the government organ which has the final say on
whether or not a legislative or executive measure is valid, a period of time may
have elapsed before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such
adjudication.
In the language of an American Supreme Court decision: "The actual existence of
a statute, prior to such a determination of [unconstitutionality], is an operative fact
and may have consequences which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in various aspects, with
respect to particular relations, individual and corporate, and particular conduct,
private and official." (Chicot County Drainage Dist. v. Baxter States Bank, 308
US 371, 374 [1940]). This language has been quoted with approval in a resolution
in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor Co.,
Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion
of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21
SCRA 1095 [1967]. (At pp. 434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue
harshness and resulting unfairness must be avoided. It is now almost the end of 1991. To require
various companies to reach back to 1975 now and nullify acts done in good faith is unduly harsh.
1984 is a fairer reckoning period under the facts of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying
on the implicit validity of the implementing rule and policy instruction before this Court nullified
them, and thinking that it was not obliged to give holiday pay benefits to its monthly paid
employees, may have been moved to grant other concessions to its employees, especially in the
collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's
employees are among the highest paid in the industry. With this consideration, it would be unfair
to impose additional burdens on Nestle when the non-payment of the holiday benefits up to 1984
was not in any way attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but
from October 23, 1984, the date of promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be
used in computing holiday pay shall be 251 days. The holiday pay as above directed shall be
computed from October 23, 1984. In all other respects, the order of the respondent arbitrator is
hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Padilla, Bidin, Medialdea, Grio-Aquino,
Regalado, Davide, Jr. and Romero, JJ., concur.
Cruz and Nocon, JJ., took no part.
G.R. Nos. 117442-43 January 11, 1995
FEM'S ELEGANCE LODGING HOUSE, FENITHA SAAVEDRA and IRIES ANTHONY
SAAVEDRA, petitioners,
vs.
The Honorable LEON P. MURILLO, Labor Arbiter, Regional Arbitration Branch, Region
X, National Labor Relations Commission, Cagayan de Oro City, ALFONSO GALLETO,
GEORGE VEDAD, ROLAND PANTONIAL, REYNALDO DELAORAO, FELICISIMO
BAQUILID, CECILIO SAJOL, ANNABEL CASTRO, BENJAMIN CABRERA,
RHONDEL PADERANGA, ZENAIDA GUTIB, AIDA IMBAT and MARIA GRACE

ATUEL, respondents.
RESOLUTION
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of court with temporary
restraining order to reverse and set aside the Order dated September 21, 1994 of the Labor
Arbiter in the NLRC RAB X Cases Nos. 10-04-00232 (-00233)-94.
Petitioner FEM's elegance Lodging House is a business enterprise engaged in providing lodging
accommodations. It is owned by petitioner Fenitha Saavedra and managed by petitioner Iries
Anthony Saavedra. Private respondents are former employees of petitioners whose services were
terminated between March and April, 1994.
Sometime after their dismissal from the employment of petitioners, private respondents
separately filed two cases against petitioners before the National Labor Relations Commission
(NLRC), Regional Arbitration Branch No. X, Cagayan de Oro City, docketed as NLRC RAB X
Cases Nos. 10-04-00232-(0023)-94. Private respondents sought for unpaid benefits such as
minimum wage, overtime pay, rest day pay, holiday pay, full thirteenth-month pay and separation
pay (Rollo, pp. 40-42).
On May 31, 1994, a pre-arbitration conference of the cases took place before the Labor Arbiter.
It was agreed therein: (1) that both labor cases should be consolidated; and (2) that the parties
would file their respective position papers within thirty days from said date or until June 30,
1994, after which the cases would be deemed submitted for resolution (Rollo, p. 14).
On June 29, petitioners filed their position paper. On July 7, they inquired from the NLRC
whether private respondents had filed their position paper. The receiving clerk of the NLRC
confirmed that as of said date private respondents had not yet filed their position paper.
The following events then transpired: on July 8, petitioners filed a Motion to dismiss for failure
of private respondents to file their position paper within the agreed period (Rollo, p. 38); on July
15, private respondents belatedly filed their position paper; on July 18, petitioners filed a Motion
to Expunge [private respondents'] Position Paper from the records of the case (Rollo, p. 45); and
on August 23, the Labor Arbiter issued a notice of clarificatory hearing, which was set for
September 7 (Rollo, p. 47). Prior to the hearing, petitioners filed a Motion to Resolve
[petitioners'] Motion to dismiss and Motion to Expunge [private respondent'] Position Paper
from the Records of the Case (Rollo, p. 48).
On September 21, the Labor Arbiter issued the order denying the motions filed by petitioners. He
held that a fifteen-day delay in filing the position paper was not unreasonable considering that
the substantive rights of litigants should not be sacrificed by technicality. He cited Article 4 of
the Labor Code of the Philippines, which provides that all doubts in the interpretation thereof
shall be resolved in favor of labor. He said that even under Section 15, Rule 5 of the Revised
Rules of Court, a delay in the filing of a position paper is not a ground for a motion to dismiss
under the principle of exclusio unius est excludio alterius (Rollo, pp. 51-52).
Hence, the present petition where petitioners charged the Labor Arbiter with grave abuse of
discretion for issuing the order in contravention of Section 3, Rule V of The New Rules of
Procedure of the NLRC, Said section provides:
Submission of Position Papers/Memorandum. . . . Unless otherwise requested
in writing by both parties, the Labor Arbiter shall direct both parties to submit
simultaneously their position papers/memorandum with the supporting documents
and affidavits within fifteen (15) calendar days from the date of the last
conference, with proof of having furnished each other with copies thereof
(Emphasis supplied).
Petitioners claimed that they were denied due process and that the Labor Arbiter should have
cited private respondents in contempt for their failure to comply with their agreement in the prearbitration conference.
We dismiss the petition for failure of petitioners to exhaust their remedies, particularly in seeking
redress from the NLRC prior to the filing of the instant petition. Article 223 of the Labor code of
the Philippines provides that decisions, awards or orders of the Labor Arbiter are appealable to
the NLRC. Thus, petitioners should have first appealed the questioned order of the Labor Arbiter
to the NLRC, and not to this court. their omission is fatal to their cause.
However, even if the petition was given due course, we see no merit in petitioners' arguments.
The delay of private respondents in the submission of their position paper is a procedural flaw,
and the admission thereof is within the discretion of the Labor Arbiter.
Well-settled is the rule that technical rules of procedure are not binding in labor cases, for
procedural lapses may be disregarded in the interest of substantial justice, particularly where
labor matters are concerned (Ranara v. National Labor Relations commission, 212 SCRA 631
[1992]).
The failure to submit a position paper on time is not on of the grounds for the dismissal of a
complaint in labor cases (The New Rules of procedure of the NLRC, Rule V, Section 15). It
cannot therefore be invoked by petitioners to declare private respondents as non-suited. This
stance is in accord with Article 4 of the Labor Code of the Philippines, which resolves that all
doubts in the interpretation of the law and its implementing rules and regulations shall be
construed in favor of labor. Needless to state, our jurisprudence is rich with decisions adhering to
the State's basic policy of extending protection to Labor where conflicting interests between
labor and management exist (Aquino v. National Labor Relations Commission, 206 SCRA 118
[1992]).
Petitioners cannot claim that they were denied due process inasmuch as they were able to file
their position paper. The proper party to invoke due process would have been private
respondents, had their position paper been expunged from the records for mere technicality.
Since petitioners assert that their defense is meritorious, it is to their best interest that the cases
be resolved on the merits. In this manner, the righteousness of their cause can be vindicated.
IN VIEW OF THE FOREGOING, the Court Resolved to DISMISS the petition for lack of merit.
SO ORDERED.
Davide, Jr., Bellosillo and Kapunan, JJ., concur.
Separate Opinions
PADILLA, J., concurring:

The petition in this case should be dismissed because petitioners did not exhaust their remedies
in the National Labor Relations Commission (NLRC) before coming to this Court.
It is clear from Article 223 of the Labor Code that decisions, awards or orders of the labor arbiter
are appealable to the National Labor Relations Commission. The proper remedy which
petitioners should have taken was to appeal to the NLRC the labor arbiter's order denying their
motion to dismiss and motion to expunge private respondents' position paper. The present
petition is therefore clearly premature, a procedural flaw and should on this score be dismissed.
If this Court were to entertain appeals from orders of labor arbiters, even in the form of a petition
for certiorari for alleged grave abuse of discretion under Rule 65 of the Rules of Court, we will
be opening the flood gates to petitions for certiorari against orders (including interlocutory ones)
of labor arbiters when the clear intent of the law is to subject the decisions, awards and orders of
labor arbiters to review by the NLRC before they are brought to this Court.
Separate Opinions
PADILLA, J., concurring:
The petition in this case should be dismissed because petitioners did not exhaust their remedies
in the National Labor Relations Commission (NLRC) before coming to this Court.
It is clear from Article 223 of the Labor Code that decisions, awards or orders of the labor arbiter
are appealable to the National Labor Relations Commission. The proper remedy which
petitioners should have taken was to appeal to the NLRC the labor arbiter's order denying their
motion to dismiss and motion to expunge private respondents' position paper. The present
petition is therefore clearly premature, a procedural flaw and should on this score be dismissed.
If this Court were to entertain appeals from orders of labor arbiters, even in the form of a petition
for certiorari for alleged grave abuse of discretion under Rule 65 of the Rules of Court, we will
be opening the flood gates to petitions for certiorari against orders (including interlocutory ones)
of labor arbiters when the clear intent of the law is to subject the decisions, awards and orders of
labor arbiters to review by the NLRC before they are brought to this Court.
G.R. No. L-48605 December 14, 1981
DOMNA N. VILLAVERT, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION & GOVERNMENT SERVICE
INSURANCE SYSTEM (Philippine Constabulary), respondents.
FERNANDEZ, J.:
This is a petition to review the decision of the Employees' Compensation Commission in ECC
Case No. 0692, entitled "Domna N. Villavert, appellant versus Government Service Insurance
System (Philippine Constabulary), respondents," affirming the decision of the Government
Service Insurance System denying the claim for death benefits. 1
The petitioner, Domna N. Villavert, is the mother of the late, Marcelino N. Villavert who died of
acute hemorrhagic pancreatitis on December 12, 1975 employed as a Code Verifier in the
Philippine Constabulary. She filed a claim for income benefits for the death of her son under P.D.
No. 626 as amended with the Government Service Insurance System on March 18, 1976. The
said claim was denied by the Government Service Insurance System on the ground that acute
hemorrhagic pancreatitis is not an occupational disease and that the petitioner had failed to show
that there was a causal connection between the fatal ailment of Marcelino N. Villavert and the
nature of his employment.
The petitioner appealed to the Employees' Compensation Commission which affirmed on May
31, 1978 the decision of the respondent, Government Service Insurance System, denying the
claim.
The record shows that in addition to his duties as Code Verifier, Marcelino N. Villavert also
performed the duties of a computer operator and clerk typist. In the morning of December 11,
1975, Marcelino reported as usual to the Constabulary Computer Center at Camp Crame,
Quezon City. He performed his duties not only as code verifier but also handled administrative
functions, computer operation and typing jobs due to shortage of civilian personnel. Although he
was complaining of chest pain and headache late in the afternoon of December 11, 1975, after a
whole day of strenuous activities, Marcelino was still required to render overtime service until
late in the evening of the same day, typing voluminous classified communications, computing
allowances and preparing checks for the salary of Philippine Constabulary and Integrated
National Police personnel throughout the country for distribution on or before December 15,
1975. He went home late at night and due to fatigue, he went to bed as soon as he arrived without
taking his meal. Shortly thereafter, Marcelino was noticed by his mother, the herein petitioner,
gasping for breath, perspiring profusely, and mumbling incoherent words. The petitioner tried to
wake him up and after all efforts to bring him to his senses proved futile, she rushed Marcelino to
the UE Ramon Magsaysay Memorial Hospital where he was pronounced dead at 5:30 o'clock in
the morning of December 12, 1975 without regaining consciousness. The case of death was acute
hemorrhagic pancreatitis.
To support the claim that Marcelino N. Villavert died of acute hemorrhagic pancreatitis as a
result of his duties as a code verifier, computer operator and typist of the Philippine
Constabulary, the petitioner submitted the following certification of Lt. Colonel Felino C.
Pacheco Jr., commanding officer, of the Philippine Constabulary, which reads:
THIS IS TO CERTIFY that MARCELINO N. VILLAVERT, a regular employee
of the Constabulary Computer Center, had been performing the following duty
assignments in this office in addition to his appointment as Coder Verifier before
his death;
a. Computer Operator As computer operator he was subject to excessive heat

and cold;
b. Clerk TypistAs typist he was responsible for typing important
communications not only for the office of the Constabulary Computer Center but
also for other posts, including engagement speeches of the Chief of Constabulary
and other ranking officers of the Command;
c. Due to the shortage of qualified civilian personnel to handle the task, he was
given excessive work responsibilities in the office which could have aggravated
his ailment.
d. That more often he took his meals irregularly late in view of the nature of his
work especially during the preparation of checks for the salary of the Philippine
Constabulary and the National Integrated Police personnel throughout the
country;
e. He used to perform rotation duties, thereby leaving him in sufficient time to
consult the Constabulary Medical Dispensary for routine physical check up about
his health.
f. That subject employee never drinks alcoholic liquor, neither smokes nor
engages on immoral habits during his lifetime.
g. That he died in line of duty after retiring from his night shift.
This certification is being issued in behalf of legal heirs in order to justify their
claim for payment of benefits from the Employees' Compensation to reciprocate
the services rendered by the late Marcelino N. Villavert, a loyal and dedicated
public servant. 2
The foregoing certification of Lt. Col. Felino C. Pacheco, Jr. was corroborated by the affidavit of
Rustico P. Valenzuela, Chief Clerk of the Constabulary Computer Center, which reads:
I, RUSTICO P. VALENZUELA, Master Sergeant, Philippine Constabulary,
Filipino of legal age, married and presently Chief Clerk of the Constabulary
Computer Center, Camp Crame, Quezon City after having been duly sworn to in
accordance to law hereby depose and say:
a. That as Chief Clerk I am responsible to my Commanding Officer about the
accounting, detail, duties, etc. of all military and civilian personnel in the office
and therefore the duties of the late Marcelino N. Villavert are personally known to
me prior to his death;
b. That the late Marcelino N. Villavert although was appointed as Coder Verifier,
still he was instructed to perform extra additional workload due to shortage of
qualified civilian personnel to handle administrative function, he being a graduate
of the Computer Operator and an expert typist which is seldom found among the
qualities of civilian personnel assigned in the Constabulary Computer Center;
c. That the late Marcelino N. Villavert was complaining of chest pain and
headache prior to his death but because of an urgent call to the service, although it
necessitated his rest; he was obliged to go on strenuous duty on the night of
December 11, 1975, typing voluminous classified communications, compute
allowances and prepare checks for the salary of Philippine Constabulary and
Integrated National Police personnel throughout the country for distribution on or
before December 15, 1975, scheduled payday, thereby aggravating his ailment
due to excessive work, disposed to heat and cold, operating computer machine
and over fatigue that caused his sudden death;
d. That the late Marcelino N. Villavert before his death have insufficient time to
consult the Medical Dispensary for routine physical check-up due to the rotation
of his duties and therefore no record of his physical examination could be found
in this Headquarters;
e. That the death of late Marcelino N. Villavert was service connected in view of
the fact that he died while in the performance of his official duties.
Affiant further sayeth none.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of August
1977 at Quezon City.
(SGD) RUSTICO P. VALENZUEL
Affiant
SUBSCRIBED AND SWORN to before me this 22nd day of August 1977 at
Quezon City, Metro Manila. Affiant exhibited his Residence Certificate No. A1183510 issued at Taguig, Metro Manila on January 10, 1977.
(SGD) ENRIQUE C VILLANUEVA JR
1Lt. PC Administrative Officer 3
The Government Service Insurance System and the Employees' Compensation Commission
denied the claim for compensation on the ground that the petitioner did not present evidence that
the illness of Marcelino N. Villavert, acute hemorrhagic pancreatitis, was caused or aggravated
by the nature of his duties as employee of the Philippine Constabulary.
The Employees' Compensation Commission, citing a book on medicine, said:
In medical science, acute hemorrhagic pancreatitis is "acute inflammation with
hemorrhagic necrosis of the pancreas." It occurs most commonly in association
with alcoholism. The onset of the symptoms often occurs during or shortly after
bouts of alcoholic intoxication. It also occurs in association with biliary tract
disease. Occasionally, it occurs as a complication of peptic ulcer, mumps, viral
hepatitis or following the use of drugs such as glucocorticoids, or chlorothiazide.
It is sometimes associated with metabolic disorders such as hyperpidemia and
hyperparathyroidism. It may also be associated with a genetic type of pancreatitis
with onset in childhood. Trauma is a relatively frequent cause of pancreatitis; it
may result from a severe blow to the abdomen, a penetrating injury from a bullet
or knife wound, inadvertent trauma from surgical procedures in the upper
abdomen or rarely, electric shock. Approximately 20% of the patients have no
apparent underlying or predisposing cause. (Principles of Internal Medicine by
Harrison, 7th Edition, pp. 157) 4
However, the Medico Legal Officer of the National Bureau of Investigation stated that the exact
cause of acute hemorrhagic pancreatitis is still unknown despite extensive researches in this
field, although most research data are agreed that physical and mental stresses are strong causal
factors in the development of the disease. 5
From the foregoing facts of record, it is clear that Marcelino N. Villavert died of acute
hemorrhagic pancreatitis which was directly caused or at least aggravated by the duties he
performed as coder verifier, computer operator and clerk typist of the Philippine Constabulary.
There is no evidence at all that Marcelino N. Villavert had a "bout of alcoholic intoxication"
shortly before he died. Neither is there a showing that he used drugs.
It should be noted that Article 4 of the Labor Code of the Philippines, as amended, provides that
"All doubts in the implementation and interpretation of this Code, including its implementing
rules and regulations shall be resolved in favor of labor."
WHEREFORE, the decision of the Employees' Compensation Commission sought to be
reviewed is set aside and judgment is hereby rendered ordering the Government Service
Insurance System to pay the petitioner death benefits in the amount of SIX THOUSAND PESOS
(P6,000.00).
SO ORDERED.
Teehankee (Chairman), Makasiar, Guerrero and Plana, JJ., concur.
Separate Opinions
MELENCIO-HERRERA, J., dissenting.

Section 1 (b), Rule III of the Amended Rules on Employees' Compensation explicitly provides:
SECTION 1.
xxxxxxxxx
(b) For the sickness and the resulting disability or death to be compensable, the
sickness must be the result of an occupational disease annotated under Annex "A"
of these rules with the conditions set therein satisfied; otherwise, proof must be
shown that the risk of contracting the disease is increased by the working
conditions (emphasis supplied).
The cause of death of petitioner's son was acute hemorrhagic pancreatitis. This disease is not one
of those listed, even under the additional listing, as an occupational disease in Annex "A" of the
Amended Rules on Employees Compensation. Neither did petitioner present evidence to prove
that the risk of contracting hemorrhagic pancreatitis was increased by the working conditions
surrounding her son's employment as code verifier, computer operator and typist of the
Philippine Constabulary. For which reasons, the Government Service Insurance System and the
Employees' Compensation Commission denied the claim for compensation.
That physical and mental stresses are strong causal factors in the development of the disease, as
stated by the Medico Legal Officer of the National Bureau of Investigation is not scientifically
confirmed "research data." Medical science still associates the disease with alcoholism, binary
tract disease, the use of drugs, or trauma, among others. In fact, the exact cause is still unknown.
Medical reports indicate that approximately 20% of the patients suffering from that disease have
no apparent underlying or predisposing cause.
The illness of petitioner's son not having been caused nor aggravated by the nature of his duties
as an employee of the Philippine Constabulary, petitioner's claim is not compensable under
explicit provisions of existing laws.
Separate Opinions
MELENCIO-HERRERA, J., dissenting.
Section 1 (b), Rule III of the Amended Rules on Employees' Compensation explicitly provides:
SECTION 1.
xxxxxxxxx
(b) For the sickness and the resulting disability or death to be compensable, the
sickness must be the result of an occupational disease annotated under Annex "A"
of these rules with the conditions set therein satisfied; otherwise, proof must be
shown that the risk of contracting the disease is increased by the working
conditions (emphasis supplied).
The cause of death of petitioner's son was acute hemorrhagic pancreatitis. This disease is not one
of those listed, even under the additional listing, as an occupational disease in Annex "A" of the
Amended Rules on Employees Compensation. Neither did petitioner present evidence to prove
that the risk of contracting hemorrhagic pancreatitis was increased by the working conditions
surrounding her son's employment as code verifier, computer operator and typist of the
Philippine Constabulary. For which reasons, the Government Service Insurance System and the
Employees' Compensation Commission denied the claim for compensation.
That physical and mental stresses are strong causal factors in the development of the disease, as
stated by the Medico Legal Officer of the National Bureau of Investigation is not scientifically
confirmed "research data." Medical science still associates the disease with alcoholism, binary
tract disease, the use of drugs, or trauma, among others. In fact, the exact cause is still unknown.
Medical reports indicate that approximately 20% of the patients suffering from that disease have
no apparent underlying or predisposing cause.
The illness of petitioner's son not having been caused nor aggravated by the nature of his duties
as an employee of the Philippine Constabulary, petitioner's claim is not compensable under
explicit provisions of existing laws.
Footnotes
[G.R. No. 58176. March 23, 1984.]

RUTH JIMENEZ, Petitioner, v. EMPLOYEES COMPENSATION COMMISSION and
GOVERNMENT SERVICE INSURANCE SYSTEM, Respondents.
Isidro Pasana for Petitioner.
The Solicitor General for Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYEES COMPENSATION
COMMISSION; COMPENSABILITY OF ILLNESS; CANCER OF THE LUNGS, A
BORDERLINE CASE REQUIRING STUDY OF CIRCUMSTANCES OF CASE.
Admittedly, cancer of the lungs (bronchogenic carcinoma) is one of those borderline cases where
a study of the circumstances of the case is mandated to fully appreciate whether the nature of the
work of the deceased increased the possibility of contracting such an ailment. WE have ruled in
the case of Dator v. Employees Compensation Commission (111 SCRA 634, L-57416, January
30, 1982) that" (U)ntil now, the cause of cancer is not known." Indeed, the respondent has
provided an opening through which petitioner can pursue and did pursue the possibility that the
deceaseds ailment could have been caused by the working conditions while employed with the
Philippine Constabulary. Respondents maintain that the deceased was a smoker and the logical
conclusion is that the cause of the fatal lung cancer could only be smoking which cannot in any
way be justified as work-connected. However, medical authorities support the conclusion that up
to now, the etiology or cause of cancer of the lungs is still largely unknown.
2. ID.; ID.; ID.; ID.; CONCLUSION OF COMMISSION NOT IN ACCORDANCE WITH
MEDICAL AUTHORITIES AND FACTS ON RECORD. The sweeping conclusion of the
respondent Employees Compensation Commission to the effect that the cause of the
bronchogenic carcinoma of the deceased was due to his being a smoker and not in any manner
connected with his work as a soldier, is not in accordance with medical authorities nor with the
facts on record. No certitude can arise from a position of uncertainty. WE are dealing with
possibilities and medical authorities have given credence to the stand of the petitioner that her
husband developed bronchogenic carcinoma while working as a soldier with the Philippine
Constabulary. The records show that when the deceased enlisted with the Philippine
Constabulary in 1969, he was found to be physically and mentally healthy. A soldiers life is a
hard one. As a soldier assigned to field duty, exposure to the elements, dust and dirt, fatigue and
lack of sleep and rest is a common occurrence. Exposure to chemicals while handling
ammunition and firearms cannot be discounted. WE take note also of the fact that he became the
security of one Dr. Emilio Cordero of Anulung, Cagayan, and he always accompanied the doctor
wherever the latter went (p. 26, rec.). Such assignment invariably involved irregular working
hours, exposure to different working conditions, and body fatigue, not to mention psychological
stress and other similar factors which influenced the evolution of his ailment.
3. ID.; ID.; ID.; ID.; THEORY OF INCREASED RISK. The theory of increased risk is
applicable in the case at bar. In the case of Cristobal v. ECC (103 SCRA, 336-337) where the
Court held that "to establish compensability under the said theory, the claimant must show proof
of work-connection. Impliedly, the degree of proof required is merely substantial evidence,
which means such relevant evidence to support a decision (Ang Tibay v. The Court of Industrial
Relations and National Labor Union, Inc., 69 Phil. 635) or clear and convincing evidence. In this
connection, it must be pointed out that the strict rules of evidence are not applicable in claims for
compensation. Respondents however insist on evidence which would establish direct causal
relation between the disease rectal cancer and the employment of the deceased. Such a strict
requirement which even medical experts cannot support considering the uncertainty of the nature
of the disease would negate the principle of the liberality in the matter of evidence. Apparently,
what the law merely requires is a reasonable work-connection and not a direct causal relation.
This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of
the law as embodied in Article 4 of the new Labor Code which states that all doubts in the
implementation of the provisions of this Code, including its implementing rules and regulations
shall be resolved in favor of labor."cralaw virtua1aw library
4. ID.; ID.; ID.; STRICT RULES ON EVIDENCE NOT APPLICABLE; STATE POLICY OF
LIBERALITY TOWARDS LABOR MUST BE MAINTAINED. In San Valentin v. ECC (118
SCRA 160), the Court held that "In compensation cases, strict rules on evidence are not
applicable. A reasonable work-connection is all that is required or that the risk of contracting the
disease is increased by the working condition." This is in line with the avowed policy of the State
as mandated by the Constitution (Art. II, Sec. 9) and restated in the New Labor Code (Art. 4) to
give maximum aid and protection to labor.
DECISION
MAKASIAR, J.:
This is a petition to review the decision of respondent Employees Compensation Commission
(ECC) dated August 20, 1981 (Annex "A", Decision, pp. 10-12, rec.) in ECC Case No. 1587,
which affirmed the decision of respondent Government Service Insurance System (GSIS),
denying petitioners claim for death benefits under Presidential Decree No. 626, as amended.
The undisputed facts are as follows:chanrob1es virtual 1aw library
Petitioner is the widow of the late Alfredo Jimenez, who joined the government service in June,
1969 as a constable in the Philippine Constabulary (p. 2, rec.)
After rendering service for one year, he was promoted to the rank of constable second class. On
December 16, 1974, he was again promoted to the rank of sergeant (p. 26, rec.)
Sometime in April, 1976, he and his wife boarded a bus from Tuguegarao, Cagayan, to Anulung,
Cagayan. While on their way, Sgt. Jimenez, who was seated on the left side of the bus, fell down
from the bus because of the sudden stop of the vehicle. As a result, he was confined at the
Cagayan Provincial Hospital for about one (1) week, and thereafter, released (comment of
respondent ECC, pp. 25-36, rec.). He was again confined for further treatment from November 7,
1978 to May 16, 1979 at the AFP Medical Center in Quezon City.
While on duty with the 111th PC Company, Tuguegarao, Cagayan, he was assigned as security to
one Dr. Emilio Cordero of Anulung, Cagayan (ECC rec., Proceedings of the PC Regional Board,
June 6, 1980). In compliance with his duty, he always accompanied the doctor wherever the
latter went (p. 26, rec.)chanroblesvirtualawlibrary
On November 7, 1978, the deceased was again confined at the Cagayan Provincial Hospital and
then transferred to the AFP V. Luna Medical Center at Quezon City for further treatment. He
complained of off-and-on back pains, associated with occasional cough and also the swelling of
the right forearm. The doctors found a mass growth on his right forearm, which grew to the size
of 3 by 2 inches, hard and associated with pain, which the doctors diagnosed as "aortic
aneurysm, medrastinal tumor" (p. 27, rec.)
His condition improved somewhat after treatment and he was released on May 16, 1979. He was
advised to have complete rest and to continue medication. He was then given light duty inside
the barracks of their company.
Unfortunately, his ailment continued and became more serious.
On May 12, 1980, he died in his house at Anulung, Cagayan, at about 9:00 oclock in the
evening. He was barely 35 years old at the time of his death.
The cause of death, as found by the doctors, is "bronchogenic carcinoma" which is a malignant
tumor of the lungs.
On June 6, 1980, an administrative hearing was conducted before the PC Regional Board. It was
their official findings that the subject enlisted man "died in line of duty" ; that the deceased was a
PC member of the 111th PC Company at Tuguegarao, Cagayan; that he died due to
"bronchogenic CA" ; and that he "died not as a result of his misconduct and did not violate any
provisions of the Articles of War" (ECC rec., Proceedings of the PC Regional Board, June 6,
1980).
The Board recommended "that all benefits due to or become due subject EP be paid and settled
to his legal heirs" (ECC rec., Proceedings of the PC Regional Board, June 6, 1980). Thus, as per
records of the GSIS, petitioner was paid benefits due to her deceased husband under Republic
Act No. 610 (Comment of respondent ECC, p. 27, rec.)cralawnad
Nevertheless, petitioner filed a claim for death benefits under PD No. 626, as amended with the
respondent GSIS. Said claim was denied by the GSIS on the ground that her husbands death is
not compensable "for the reason that the injury/sickness that caused his death is not due to the
circumstances of the employment or in the performance of the duties and responsibilities of said
employment" (Letter of denial by the GSIS dated July 14, 1980, ECC rec.)
The said decision was affirmed by respondent Employees Compensation Commission in its
decision dated August 21, 1981, stating among others:chanrob1es virtual 1aw library
x
"After an exhausted (sic) study of the evidences (sic) on record and the applicable law on the
case, we conclude that the law has been properly applied by the respondent System. . . .
"Bronchogenic carcinoma, medical authorities disclose, is the most common form of malignancy
in males reaching a peak between the fifth and seventh decades and accounting for one in four
male cancer deaths. The sex incidence is at least 5 to 1, male to female. Extensive statistical
analysis by medical authorities have confirmed the relationship between lung cancer and
cigarette smoking. Other factors that may have potential roles are exposure to ionizing radiation,
exposure to chromates, metallic iron and iron oxides, arsenic, nickel, beryllium and asbestos
(Harrisons Principles of Internal Medicine by Wintrobe, Et Al., 7th Edition, p. 1322).
"Although Presidential Decree No. 626, as amended, was envisioned to give relief to
workingmen, who sustain an injury or contract an ailment in the course of employment and that
to best attain its lofty objective, a liberal interpretation of the law should pervade in its
implementation, this precept, however, may not be invoked as not even a slight causal link
between the development of the ailment and the decedents (sic) duties and working conditions
as a PC sergeant could be deduced from the records of this case. The respondent Systems ruling
that appellants claim does not fall within the beneficiant provisions of Presidential Decree No.
626, as amended, and therefore the same should be denied, is in full harmony with the law and
the facts obtaining herein.
. . ." (Decision, pp. 10-12, rec.)
On September 28, 1981, Petitioner, assisted by counsel, filed the instant petition, the only
pertinent issue being whether or not her husbands death from bronchogenic carcinoma is
compensable under the law.
The petitioner contends that her husbands death is compensable and that respondent
Commission erred in not taking into consideration the uncontroverted circumstance that when
the deceased entered into the Philippine Constabulary, he was found to be physically and
mentally healthy. She farther contends that as a soldier, her husbands work has always been in
the field where exposure to the elements, dust and dirt, fatigue and lack of sleep and rest was the
rule rather than the exception. The nature of work of a soldier being to protect life and property
of citizens, he was subject to call at any time of day or night. Furthermore, he was even assigned
as security to one Emilio Cordero and always accompanied the latter wherever he went. Exposed
to these circumstances for several years, the deceaseds physical constitution began to
deteriorate, which eventually resulted to his death from bronchogenic carcinoma (Petition, pp. 29, rec.)
On the other hand, respondent Commission maintains that while the deceased soldier may have
been exposed to elements of dust and dirt and condition of lack of rest and continued fatigue by
virtue of his duties to protect the life and property of the citizens, such conditions have no causal
relation to his contraction of bronchogenic carcinoma. It is also the opinion of the respondent
that since there is evidence of the deceased to be a smoker, "the late Sgt. Jimenez may have
indulged heavily in smoking and drinking, not merely occasionally. And it has been
demonstrated medically that the more cigarettes a person smokes, the greater the risk of
developing lung cancer" (Memorandum, p. 62, rec.). In short, the respondent alleges that the
deceased was responsible to a large degree for his having contracted bronchogenic carcinoma
that led to his demise.cralawnad
WE find the petitioners claim meritorious.
Primary carcinoma of the lung is the most common fatal cancer and its frequency is increasing
(The Merck Manual, 13th Edition, p. 647). Admittedly, cancer of the lungs (bronchogenic
carcinoma) is one of those borderline cases where a study of the circumstances of the case is
mandated to fully appreciate whether the nature of the work of the deceased increased the
possibility of contracting such an ailment. In the case of Laron v. Workmens Compensation
Commission (73 SCRA 90), WE held, citing Schmidts Attorneys Dictionary of Medicine, 165
Sup. 143; Beerman v. Public Service Coordinated Transport, 191 A 297, 299; Words and Phrases,
6 Permanent Edition 61, "The English word cancer means crab, in the medical sense, it refers
to a malignant, usually fatal, tumor or growth." Findings of fact by the respondent points out that
bronchogenic carcinoma is a malignant tumor of the lungs. WE have ruled in the case of Dator v.
Employees Compensation Commission (111 SCRA 634, L-57416, January 30, 1982) that"
(U)ntil now, the cause of cancer is not known." Indeed, the respondent has provided an opening
through which petitioner can pursue and did pursue the possibility that the deceaseds ailment
could have been caused by the working conditions while employed with the Philippine
Constabulary.
Respondents maintain that the deceased was a smoker and the logical conclusion is that the cause
of the fatal lung cancer could only be smoking which cannot in any way be justified as workconnected. However, medical authorities support the conclusion that up to now, the etiology or
cause of cancer of the lungs is still largely unknown as provided for in the
following:jgc:chanrobles.com.ph
"Although the etiology of cancer in humans cannot yet be explained at the molecular level, it is
clear that genetic composition of the host is important in cancer induction. Related immunologic
factors may predispose the host to a putative carcinogen. There is some evidence that viruses
may play a role in the neoplastic process. In addition, both environmental and therapeutic agents
have been identified of carcinogens" (Harrison, Principles of Internal Medicine, 9th Edition,
1980, p. 1584).
"Considerable attention has been directed to the potential role of air pollution exposure to
ionizing radiation and numerous occupational hazards, including exposure to chromates, metallic
iron and iron oxides, arsenic, nickel, beryllium and asbestos" (Harrison, Ibid, p. 1259).
"The lungs are the site of origin of primary benign and malignant tumors and receive metastases
from many other organs and tissues. Specific causes have not been established but a strong doserelated statistical association exists between cigarette smoking and squamous cell and
undifferentiated small (oat) cell bronchogenic carcinomas. There is suggestive evidence that
prolonged exposure to air pollution promotes lung neoplasms" (The Merck Manual, 13th
Edition, p. 647).
"What emerges from such concepts is the belief that cancers in man do not appear suddenly out
of the blue. . . . Moreover, there need not be a single etiology or pathogenesis. Many influences
may be at work during the evolution of the lesion and many pathways may be involved. Indeed,
the term cancer may embrace a multiplicity of diseases of diverse origins" (Robbins, Pathologic
Basis of Disease, 2nd Edition, 1979, p. 185, Emphasis supplied).
WE cannot deny the fact that the causes of the illness of the deceased are still unknown and may
embrace such diverse origins which even the medical sciences cannot tell with reasonable
certainty. Indeed, scientists attending the World Genetic Congress in New Delhi, India, have
warned that about 25,000 chemicals used around the world could potentially cause cancer, and
Lawrence Fishbein of the U.S. National Center for Toxilogical Research pointed out that humans
were daily exposed to literally hundreds of chemical agents via air, food, medication, both in
their industrial home and environments (Evening Post, December 16, 1983, p. 3, cols. 2-3).
The theory of increased risk is applicable in the instant case. WE had the occasion to interpret the
theory of increased risk in the case of Cristobal v. Employees Compensation Commission (103
SCRA, 336-337, L-49280, February 26, 1981):chanrobles.com.ph : virtual law library
"To establish compensability under the said theory, the claimant must show proof of workconnection. Impliedly, the degree of proof required is merely substantial evidence, which means
such relevant evidence to support a decision (Ang Tibay v. The Court of Industrial Relations
and National Labor Union, Inc., 69 Phil. 635) or clear and convincing evidence. In this
connection, it must be pointed out that the strict rules of evidence are not applicable in claims for
compensation. Respondents however insist on evidence which would establish direct causal
relation between the disease rectal cancer and the employment of the deceased. Such a strict
requirement which even medical experts cannot support considering the uncertainty of the nature
of the disease would negate the principle of the liberality in the matter of evidence, Apparently,
what the law merely requires is a reasonable work-connection and not a direct causal relation.
This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of
the law as embodied in Article 4 of the new Labor Code which states that all doubts in the
implementation of the provisions of this Code, including its implementing rules and regulations
shall be resolved in favor of labor.
". . . As the agents charged by the law to implement the social justice guarantee secured by both
1935 and 1973 Constitutions, respondents should adopt a more liberal attitude in deciding claims
for compensation especially when there is some basis in the facts inferring a work-connection.
This should not be confused with the presumption of compensability and theory of aggravation
under the Workmens Compensation Act. While these doctrines may have been abandoned under
the New Labor Code (the constitutionality of such abrogation may still be challenged), it is
significant that the liberality of the law, in general, still subsists. . . ." (Emphasis supplied)
The sweeping conclusion of the respondent Employees Compensation Commission to the effect
that the cause of the bronchogenic carcinoma of the deceased was due to his being a smoker and
not in any manner connected with his work as a soldier, is not in accordance with medical
authorities nor with the facts on record. No certitude can arise from a position of uncertainty.
WE are dealing with possibilities and medical authorities have given credence to the stand of the
petitioner that her husband developed bronchogenic carcinoma while working as a soldier with
the Philippine Constabulary. The records show that when the deceased enlisted with the
Philippine Constabulary in 1969, he was found to be physically and mentally healthy. A soldiers
life is a hard one. As a soldier assigned to field duty, exposure to the elements, dust and dirt,
fatigue and lack of sleep and rest is a common occurrence. Exposure to chemicals while handling
ammunition and firearms cannot be discounted. WE take note also of the fact that he became the
security of one Dr. Emilio Cordero of Anulung, Cagayan, and he always accompanied the doctor
wherever the latter went (p. 26, rec.). Such assignment invariably involved irregular working
hours, exposure to different working conditions, and body fatigue, not to mention psychological
stress and other similar factors which influenced the evolution of his ailment.
WE held in the case of San Valentin v. Employees Compensation Commission (118 SCRA 160)
that:jgc:chanrobles.com.ph
"x
"In compensation cases. strict rules of evidence are not applicable. A reasonable workconnection is all that is required or that the risk of contracting the disease is increased by the
working conditions."cralaw virtua1aw library
In the case of Dator v. Employees Compensation Commission
(L-57416, January 30, 1982), WE held the death of Wenifreda Dator, a librarian for 15 years,
caused by bronchogenic carcinoma compensable. Being a librarian, "she was exposed to duty
books and other deleterious substances in the library under unsanitary conditions" (Ibid., 632).
WE do not see any reason to depart from the ruling in the said case, considering that a soldiers
duties and environment are more hazardous.
This is in line with the avowed policy of the State as mandated by the Constitution (Article II,
Section 9) and restated in the new Labor Code (Article 4), to give maximum aid and protection
to labor.
WHEREFORE, THE DECISION APPEALED FROM IS HEREBY SET ASIDE AND THE
GOVERNMENT SERVICE INSURANCE SYSTEM IS HEREBY ORDERED.
1. TO PAY THE PETITIONER THE SUM OF TWELVE THOUSAND (P12,000.00) PESOS AS

DEATH BENEFITS;
2. TO REIMBURSE THE PETITIONERs MEDICAL AND HOSPITAL EXPENSES DULY
SUPPORTED BY PROPER RECEIPTS; AND
3. TO PAY THE PETITIONER THE SUM OF ONE THOUSAND TWO HUNDRED
(P1,200.00) PESOS FOR BURIAL EXPENSES.
SO ORDERED.
Concepcion, Jr., Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.
Separate Opinions
AQUINO, J., dissenting:chanrob1es virtual 1aw library
I dissent. Bronchogenic carcinoma was not work-connected. The ECC did not err in denying
death benefits.
G.R. No. L-50999 March 23, 1990
JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,
vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR
ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.
Raul E. Espinosa for petitioners.
Lucas Emmanuel B. Canilao for petitioner A. Manuel.
Atienza, Tabora, Del Rosario & Castillo for private respondent.
MEDIALDEA, J.:
This is a petition for certiorari seeking to modify the decision of the National Labor Relations
Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres,
Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC Case No.
RN- IV-20855-78-T entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M),
Inc., Respondent-Appellee," which dismissed the appeal of petitioners herein and in effect
affirmed the decision of the Labor Arbiter ordering private respondent to pay petitioners
separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.)
for every year of service.
The antecedent facts are as follows:
Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the
Department of Labor (Regional Office No. 4) an application seeking clearance to terminate the
services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to
as petitioners) allegedly on the ground of retrenchment due to financial losses. This application
was seasonably opposed by petitioners alleging that the company is not suffering from any
losses. They alleged further that they are being dismissed because of their membership in the
union. At the last hearing of the case, however, petitioners manifested that they are no longer
contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of
the separation pay due to petitioners. Petitioners, who were in the sales force of Zuellig received
monthly salaries of at least P40,000. In addition, they received commissions for every sale they
made.
The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees
Association, of which petitioners are members, contains the following provision (p. 71, Rollo):
ARTICLE XIV Retirement Gratuity
Section l(a)-Any employee, who is separated from employment due to old age,
sickness, death or permanent lay-off not due to the fault of said employee shall
receive from the company a retirement gratuity in an amount equivalent to one (1)
month's salary per year of service. One month of salary as used in this paragraph
shall be deemed equivalent to the salary at date of retirement; years of service
shall be deemed equivalent to total service credits, a fraction of at least six months
being considered one year, including probationary employment. (Emphasis
supplied)
On the other hand, Article 284 of the Labor Code then prevailing provides:
Art. 284. Reduction of personnel. The termination of employment of any
employee due to the installation of labor saving-devices, redundancy,
retrenchment to prevent losses, and other similar causes, shall entitle the
employee affected thereby to separation pay. In case of termination due to the
installation of labor-saving devices or redundancy, the separation pay shall be
equivalent to one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and other
similar causes, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
(Emphasis supplied)
In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code
provide:
xxx
Sec. 9(b). Where the termination of employment is due to retrechment initiated by
the employer to prevent losses or other similar causes, or where the employee
suffers from a disease and his continued employment is prohibited by law or is
prejudicial to his health or to the health of his co-employees, the employee shall
be entitled to termination pay equivalent at least to his one month salary, or to
one-half month pay for every year of service, whichever is higher, a fraction of at
least six (6) months being considered as one whole year.
xxx
Sec. 10. Basis of termination pay. The computation of the termination pay of
an employee as provided herein shall be based on his latest salary rate, unless the
same was reduced by the employer to defeat the intention of the Code, in which
case the basis of computation shall be the rate before its deduction. (Emphasis
supplied)
On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads
(p. 78, Rollo):
RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby,
ordered to pay the complainants separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service that
they have worked with the company.
SO ORDERED.
The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of
merit.
Hence, the present petition.
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and
Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the
ground that he wants "to abide by the decision appealed from" since he had "received, to his full
and complete satisfaction, his separation pay," resolved to dismiss the petition as to him.
The issue is whether or not earned sales commissions and allowances should be included in the
monthly salary of petitioners for the purpose of computation of their separation pay.
The petition is impressed with merit.
Petitioners' position was that in arriving at the correct and legal amount of separation pay due
them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions
and allowances should be added together. They cited Article 97(f) of the Labor Code which
includes commission as part on one's salary, to wit;
(f) 'Wage' paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee. 'Fair reasonable value'
shall not include any profit to the employer or to any person affiliated with the
employer.
Zuellig argues that if it were really the intention of the Labor Code as well as its implementing
rules to include commission in the computation of separation pay, it could have explicitly said so
in clear and unequivocal terms. Furthermore, in the definition of the term "wage", "commission"
is used only as one of the features or designations attached to the word remuneration or earnings.
Insofar as the issue of whether or not allowances should be included in the monthly salary of
petitioners for the purpose of computation of their separation pay is concerned, this has been
settled in the case of Santos v. NLRC, et al., G.R. No. 76721, September 21, 1987, 154 SCRA
166, where We ruled that "in the computation of backwages and separation pay, account must be
taken not only of the basic salary of petitioner but also of her transportation and emergency
living allowances." This ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510,
October 27, 1987, 155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R.
No. 78524, January 20, 1989.
We shall concern ourselves now with the issue of whether or not earned sales commission should
be included in the monthly salary of petitioner for the purpose of computation of their separation
pay.
Article 97(f) by itself is explicit that commission is included in the definition of the term "wage".
It has been repeatedly declared by the courts that where the law speaks in clear and categorical
language, there is no room for interpretation or construction; there is only room for application
(Cebu Portland Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24
SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A
plain and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor
and tends only to obscurity. How ever, it may be argued that if We correlate Article 97(f) with
Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections
9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this regard, the
Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo):
The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly
be (sic) stated as a general definition. It is 'wage ' in its generic sense. A careful
perusal of the same does not show any indication that commission is part of
salary. We can say that commission by itself may be considered a wage. This is
not something novel for it cannot be gainsaid that certain types of employees like
agents, field personnel and salesmen do not earn any regular daily, weekly or
monthly salaries, but rely mainly on commission earned.
Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the
implementing rules in conjunction with Articles 273 and 274 (sic) of the Code
specifically states that the basis of the termination pay due to one who is sought to
be legally separated from the service is 'his latest salary rates.
x x x.
Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'.
The above terms found in those Articles and the particular Rules were
intentionally used to express the intent of the framers of the law that for purposes
of separation pay they mean to be specifically referring to salary only.
.... Each particular benefit provided in the Code and other Decrees on Labor has
its own pecularities and nuances and should be interpreted in that light. Thus, for
a specific provision, a specific meaning is attached to simplify matters that may
arise there from. The general guidelines in (sic) the formation of specific rules for
particular purpose. Thus, that what should be controlling in matters concerning
termination pay should be the specific provisions of both Book VI of the Code
and the Rules. At any rate, settled is the rule that in matters of conflict between
the general provision of law and that of a particular- or specific provision, the
latter should prevail.
On its part, the NLRC ruled (p. 110, Rollo):
From the aforequoted provisions of the law and the implementing rules, it could
be deduced that wage is used in its generic sense and obviously refers to the basic
wage rate to be ascertained on a time, task, piece or commission basis or other
method of calculating the same. It does not, however, mean that commission,
allowances or analogous income necessarily forms part of the employee's salary
because to do so would lead to anomalies (sic), if not absurd, construction of the
word "salary." For what will prevent the employee from insisting that emergency
living allowance, 13th month pay, overtime, and premium pay, and other fringe
benefits should be added to the computation of their separation pay. This
situation, to our mind, is not the real intent of the Code and its rules.
We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and
Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections
9(b) and 10 of the Implementing Rules, which mention the terms "pay" and "salary", is more
apparent than real. Broadly, the word "salary" means a recompense or consideration made to a
person for his pains or industry in another man's business. Whether it be derived from
"salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered. Indeed, there is eminent authority for
holding that the words "wages" and "salary" are in essence synonymous (Words and Phrases,
Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div.
481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often
used interchangeably with "wage", the etymology of which is the Middle English word "wagen".
Both words generally refer to one and the same meaning, that is, a reward or recompense for
services performed. Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law
Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary" have the same meaning,
and commission is included in the definition of "wage", the logical conclusion, therefore, is, in
the computation of the separation pay of petitioners, their salary base should include also their
earned sales commissions.
The aforequoted provisions are not the only consideration for deciding the petition in favor of the
petitioners.
We agree with the Solicitor General that granting, in gratia argumenti, that the commissions
were in the form of incentives or encouragement, so that the petitioners would be inspired to put
a little more industry on the jobs particularly assigned to them, still these commissions are direct
remuneration services rendered which contributed to the increase of income of Zuellig .
Commission is the recompense, compensation or reward of an agent, salesman, executor,
trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed.,
citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman
and the reason for such type of remuneration for services rendered demonstrate clearly that
commission are part of petitioners' wage or salary. We take judicial notice of the fact that some
salesmen do not receive any basic salary but depend on commissions and allowances or
commissions alone, are part of petitioners' wage or salary. We take judicial notice of the fact that
some salesman do not received any basic salary but depend on commissions and allowances or
commissions alone, although an employer-employee relationship exists. Bearing in mind the
preceeding dicussions, if we adopt the opposite view that commissions, do not form part of wage
or salary, then, in effect, We will be saying that this kind of salesmen do not receive any salary
and therefore, not entitled to separation pay in the event of discharge from employment. Will this
not be absurd? This narrow interpretation is not in accord with the liberal spirit of our labor laws
and considering the purpose of separation pay which is, to alleviate the difficulties which
confront a dismissed employee thrown the the streets to face the harsh necessities of life.
Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that
should be used in computing the separation pay, We held that:
The commissions also claimed by petitioner ('override commission' plus 'net
deposit incentive') are not properly includible in such base figure since such
commissions must be earned by actual market transactions attributable to
petitioner.
Applying this by analogy, since the commissions in the present case were earned by actual
market transactions attributable to petitioners, these should be included in their separation pay. In
the computation thereof, what should be taken into account is the average commissions earned
during their last year of employment.
The final consideration is, in carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that
"all doubts in the implementation and interpretation of the provisions of the Labor Code
including its implementing rules and regulations shall be resolved in favor of labor" (Abella v.
NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al.,
G.R. No. 78763, July 12,1989), and Article 1702 of the Civil Code which provides that "in case
of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer.
ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National
Labor Relations Commission is MODIFIED by including allowances and commissions in the
separation pay of petitioners Jose Songco and Amancio Manuel. The case is remanded to the
Labor Arbiter for the proper computation of said separation pay.
SO ORDERED.
Narvasa (Chairman), Cruz, Gancayco and Grio-Aquino, JJ., concur.
G.R. No. 81077 June 6, 1990
LUIS DE OCAMPO, JR., JOSE RODRIGO, EUGENIO ESQUEJO, VICTORINO
TABERNERO, RIZALO DALIVA, FRANCISCO ACOSTA and 87 others listed in Annex
'A' hereof, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MAKATI DEVELOPMENT
CORPORATION, respondents.
Alfra Beta A. Serquina for petitioners.
Maximo P. Amurao, Jr. for private respondent.
CRUZ, J.:
The petition seeks a reversal of the decision of the respondent NLRC dated June 8, 1984, the
dispositive portion of which reads as follows:
WHEREFORE, the Decision appealed from is hereby MODIFIED as hereinabove
indicated. Consequently, the application for clearance to dismiss the union
officers is granted; the employment status of the individual complainants who
were project employees is also considered severed, not on account of illegality of
the strike but due to the expiration of their employment contracts; and the
respondent is ordered to reinstate, without back wages, the individual
complainants who were regular employees except those who were officers of the
union among them or paid separation pay at their option, equivalent to one
month's pay or one-half month's pay for every year of service, whichever is
greater.
It appears that on September 30, 1980, the services of 65 employees of private respondent
Makati Development Corporation were terminated on the ground of the expiration of their
contracts; that the said employees filed a complaint for illegal dismissal against the MDC on
October 1, 1980; * that on October 8, 1980, as a result of the aforementioned termination, the
Philippine Transport and General Workers Association, of which the complainants were
members, filed a notice of strike on the grounds of union-busting, subcontracting of projects
which could have been assigned to the dismissed employees, and unfair labor practice; that on
October 14, 1980, the PTGWA declared a strike and established picket lines in the perimeter of
the MDC premises; that on November 4, 1980, the MDC filed with the Bureau of Labor
Relations a motion to declare the strike illegal and restrain the workers from continuing the
strike; that on that same day and several days thereafter the MDC filed applications for clearance
to terminate the employment of 90 of the striking workers, whom it had meanwhile preventively
suspended; that of the said workers, 74 were project employees under contract with the MDC
with fixed terms of employment; and that on August 31, 1982, Labor Arbiter Apolinar L. Sevilla
rendered a decision 1 denying the applications for clearance filed by the MDC and directing it to
reinstate the individual complainants with two months back wages each.
This is the decision modified by the NLRC 2 which is now faulted by the petitioners for grave
abuse of discretion. The contention is that the public respondent acted arbitrarily and erroneously
in ruling that: a) the motion for reconsideration was filed out of time; b) the strike was illegal;
and c) the separation of the project employees was justified.
Having considered the issues and the arguments of the parties in their respective pleadings,
including the petitioners' ex parte motion for early resolution of this case, the Court makes the
findings that follow.
On the first issue, we note that the rule on motions for reconsideration of the decision of the
NLRC is now found in Rule X of the Revised Rules of the NLRC, providing thus:
Section 9. Motions for reconsideration Motions for reconsideration of any
order, resolution or decision of the Commission shall not be entertained except
when based on palpable or patent errors, provided that the motion is under oath
and filed within ten (I 0) calendar days from receipt of the order, resolution or
decision, with proof of service that a copy of the same has been furnished, within
the aforesaid reglementary period, the adverse party and provided further, that
only one such motion shall be entertained.
Subject to the provisions of Section 3, Rule IX of these Rules, motions for
reconsideration of an order, resolution or decision of a Division shall be resolved
by the Division of origin.
However, this section was promulgated only on November 5, 1986, and became effective only
on November 29, 1986, after the required publication. 3 It was therefore not yet in force when the
required resolution in the present case was rendered in 1984.
Apparently agreeing that the reglementary period then was fifteen days, the Solicitor General
argues that the petitioner's motion for reconsideration was nevertheless filed late on June 26,
1984, the decision of the NLRC having been rendered on June 7, 1984, or 19 days earlier. 4 This
is not exactly accurate. The fact is Annex "C" of the petition shows that a copy of the decision
was received by the petitioner only on June 13, 1984, and it was from that date that the
reglementary period commenced to run. This means that the motion for reconsideration was filed
on time, only 13 days having elapsed before the deadline.
But this notwithstanding, we must hold that under the law then in force, to wit, PD No. 823 as
amended by PD No. 849, the strike was indeed illegal. In the first place, it was based not on the
ground of unresolved economic issues, which was the only ground allowed at that time, when the
policy was indeed to limit and discourage strikes. Secondly, the strike was declared only after 6
days from the notice of strike and before the lapse of the 30-day period prescribed in the said law
for a cooling-off of the differences between the workers and management and a possible
avoidance of the intended strike. That law clearly provided:
Sec. 1. It is the policy of the state to encourage free trade unionism and free
collective bargaining within the framework of compulsory and voluntary
arbitration. Therefore all forms of strikes, picketing and lockout are hereby strictly
prohibited in vital industries such as in public utilities, including transportation
and communication, companies engaged in the manufacturer processing as well
as in the distribution of fuel gas, gasoline and fuel or lubricating oil, in companies
engaged in the production or processing of essential commodities or products for
export, and in companies engaged in banking of any kind, as well as in hospitals
and in schools and colleges.
However, any legitimate labor union may strike and any employer may lockout in
establishments not covered by General Order No. 5 only on grounds of unresolved
economic issues in collective bargaining, in which case the union or the employer
shall file a notice with the Bureau of Labor Relations at least 30 days before the
intended strike or lockout. (Emphasis supplied)
It is our ruling that the leaders of the illegal strike were correctly punished with dismissal, but
their followers (other than the contract workers) were properly ordered reinstated, considering
their lesser degree of responsibility. The penalty imposed upon the leaders was only proper
because it was they who instigated the strike even if they knew, or should have known, that it
was illegal. It was also fair to rule that the reinstated strikers were not entitled to backpay as they
certainly should not be compensated for services not rendered during the illegal strike. In our
view, this is a reasonable compromise between the demands of the workers and the rights of the
employer.
Coming now to the last question, we stress the rule in Cartagenas v. Romago Electric Co., 5 that
contract workers are not considered regular employees, their services being needed only when
there are projects to be undertaken. 'The rationale of this rule is that if a project has already been
completed, it would be unjust to require the employer to maintain them in the payroll while they
are doing absolutely nothing except waiting until another project is begun, if at all. In effect,
these stand-by workers would be enjoying the status of privileged retainers, collecting payment
for work not done, to be disbursed by the employer from profits not earned. This is not fair by
any standard and can only lead to a coddling of labor at the expense of management.
We believe, however, that this rule is not applicable in the case at bar, and for - good reason. The
record shows that although the contracts of the project workers had indeed expired, the project
itself was still on-going and so continued to require the workers' services for its completion. 6
There is no showing that such services were unsatisfactory to justify their termination. This is not
even alleged by the private respondent. One can therefore only wonder why, in view of these
circumstances, the contract workers were not retained to finish the project they had begun and
were still working on. This had been done in past projects. This arrangement had consistently
been followed before, which accounts for the long years of service many of the workers had with
the MDC.
It is obvious that the real reason for the termination of their services-which, to repeat, were still
needed-was the complaint the project workers had filed and their participation in the strike
against the private respondent. These were the acts that rendered them persona non grata to the
management. Their services were discontinued by the MDC not because of the expiration of their
contracts, which had not prevented their retention or rehiring before as long as the project they
were working on had not yet been completed. The real purpose of the MDC was to retaliate
against the workers, to punish them for their defiance by replacing them with more tractable
employees.
Also noteworthy in this connection is Policy Instruction No. 20 of the Department of Labor,
providing that "project employees are not entitled to separation pay if they are terminated as a
result of the completion of the project or any phase thereof in which they are employed,
regardless of the projects in which they had been employed by a particular construction
company." 7 Affirmatively put, and interpreting it in the most liberal way to favor the working
class, the rule would entitle project employees to separation pay if the projects they are working
on have not yet been completed when their services are terminated. And this should be true even
if their contracts have expired, on the theory that such contracts would have been renewed
anyway because their services were still needed.
Applying this rule, we hold that the project workers in the case at bar, who were separated even
before the completion of the project at the New Alabang Village and not really for the reason that
their contracts had expired, are entitled to separation pay. We make this disposition instead of
ordering their reinstatement as it may be assumed that the said project has been completed by
this time. Considering the workers to have been separated without valid cause, we shall compute
their separation pay at the rate of one month for every year of service of each dismissed
employee, up to the time of the completion of the project. 8 We feel this is the most equitable way
to treat their claim in light of their cavalier dismissal by the private respondent despite their long
period of satisfactory service with it.
It is the policy of the Constitution to afford protection to labor in recognition of its role in the
improvement of our welfare and the strengthening of our democracy. An exploited working class
is a discontented working class. It is a treadmill to progress and a threat to freedom. Knowing
this, we must exert all effort to dignify the lot of the employee, elevating him to the same plane
as his employer, that they may better work together as equal partners in the quest for a better life.
This is a symbiotic relationship we must maintain if such a quest is to succeed.
WHEREFORE, the appealed decision of the NLRC is AFFIRMED but with the modification that
the contract workers are hereby declared to have been illegally separated before the expiration of
the project they were working on and so are entitled to separation pay equivalent to one month
salary for every year of service. No costs.
SO ORDERED.
Narvasa (Chairman), Gancayco and Medialdea, JJ., concur.
Grio-Aquino, J., is on leave.
Footnotes
G.R. No. 76633 October 18, 1988
EASTERN SHIPPING LINES, INC., petitioner,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER
OF LABOR AND EMPLOYMENT, HEARING OFFICER ABDUL BASAR and
KATHLEEN D. SACO, respondents.
Jimenea, Dala & Zaragoza Law Office for petitioner.

The Solicitor General for public respondent.
Dizon Law Office for respondent Kathleen D. Saco.
CRUZ, J.:
The private respondent in this case was awarded the sum of P192,000.00 by the Philippine
Overseas Employment Administration (POEA) for the death of her husband. The decision is
challenged by the petitioner on the principal ground that the POEA had no jurisdiction over the
case as the husband was not an overseas worker.
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in
Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797 and
Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that the
complaint was cognizable not by the POEA but by the Social Security System and should have
been filed against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and
after considering the position papers of the parties ruled in favor of the complainant. The award
consisted of P180,000.00 as death benefits and P12,000.00 for burial expenses.
The petitioner immediately came to this Court, prompting the Solicitor General to move for
dismissal on the ground of non-exhaustion of administrative remedies.
Ordinarily, the decisions of the POEA should first be appealed to the National Labor Relations
Commission, on the theory inter alia that the agency should be given an opportunity to correct
the errors, if any, of its subordinates. This case comes under one of the exceptions, however, as
the questions the petitioner is raising are essentially questions of law. 1 Moreover, the private
respondent himself has not objected to the petitioner's direct resort to this Court, observing that
the usual procedure would delay the disposition of the case to her prejudice.
The Philippine Overseas Employment Administration was created under Executive Order No.
797, promulgated on May 1, 1982, to promote and monitor the overseas employment of Filipinos
and to protect their rights. It replaced the National Seamen Board created earlier under Article 20
of the Labor Code in 1974. Under Section 4(a) of the said executive order, the POEA is vested
with "original and exclusive jurisdiction over all cases, including money claims, involving
employee-employer relations arising out of or by virtue of any law or contract involving Filipino
contract workers, including seamen." These cases, according to the 1985 Rules and Regulations
on Overseas Employment issued by the POEA, include "claims for death, disability and other
benefits" arising out of such employment. 2
The petitioner does not contend that Saco was not its employee or that the claim of his widow is
not compensable. What it does urge is that he was not an overseas worker but a 'domestic
employee and consequently his widow's claim should have been filed with Social Security
System, subject to appeal to the Employees Compensation Commission.
We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseas
employee of the petitioner at the time he met with the fatal accident in Japan in 1985.
Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is
defined as "employment of a worker outside the Philippines, including employment on board
vessels plying international waters, covered by a valid contract. 3 A contract worker is described
as "any person working or who has worked overseas under a valid employment contract and
shall include seamen" 4 or "any person working overseas or who has been employed by another
which may be a local employer, foreign employer, principal or partner under a valid employment
contract and shall include seamen." 5 These definitions clearly apply to Vitaliano Saco for it is
not disputed that he died while under a contract of employment with the petitioner and alongside
the petitioner's vessel, the M/V Eastern Polaris, while berthed in a foreign country. 6
It is worth observing that the petitioner performed at least two acts which constitute implied or
tacit recognition of the nature of Saco's employment at the time of his death in 1985. The first is
its submission of its shipping articles to the POEA for processing, formalization and approval in
the exercise of its regulatory power over overseas employment under Executive Order NO. 797. 7
The second is its payment 8 of the contributions mandated by law and regulations to the Welfare
Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of providing
social and welfare services to Filipino overseas workers."
Significantly, the office administering this fund, in the receipt it prepared for the private
respondent's signature, described the subject of the burial benefits as "overseas contract worker
Vitaliano Saco." 9 While this receipt is certainly not controlling, it does indicate, in the light of
the petitioner's own previous acts, that the petitioner and the Fund to which it had made
contributions considered Saco to be an overseas employee.
The petitioner argues that the deceased employee should be likened to the employees of the
Philippine Air Lines who, although working abroad in its international flights, are not considered
overseas workers. If this be so, the petitioner should not have found it necessary to submit its
shipping articles to the POEA for processing, formalization and approval or to contribute to the
Welfare Fund which is available only to overseas workers. Moreover, the analogy is hardly
appropriate as the employees of the PAL cannot under the definitions given be considered
seamen nor are their appointments coursed through the POEA.
The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by
the POEA pursuant to its Memorandum Circular No. 2, which became effective on February 1,
1984. This circular prescribed a standard contract to be adopted by both foreign and domestic
shipping companies in the hiring of Filipino seamen for overseas employment. A similar contract
had earlier been required by the National Seamen Board and had been sustained in a number of
cases by this Court. 10 The petitioner claims that it had never entered into such a contract with the
deceased Saco, but that is hardly a serious argument. In the first place, it should have done so as
required by the circular, which specifically declared that "all parties to the employment of any
Filipino seamen on board any ocean-going vessel are advised to adopt and use this employment
contract effective 01 February 1984 and to desist from using any other format of employment
contract effective that date." In the second place, even if it had not done so, the provisions of the
said circular are nevertheless deemed written into the contract with Saco as a postulate of the
police power of the State. 11
But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative of the
principle of non-delegation of legislative power. It contends that no authority had been given the
POEA to promulgate the said regulation; and even with such authorization, the regulation
represents an exercise of legislative discretion which, under the principle, is not subject to
delegation.
The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order
No. 797, reading as follows:
... The governing Board of the Administration (POEA), as hereunder provided
shall promulgate the necessary rules and regulations to govern the exercise of the
adjudicatory functions of the Administration (POEA).
Similar authorization had been granted the National Seamen Board, which, as earlier observed,
had itself prescribed a standard shipping contract substantially the same as the format adopted by
the POEA.
The second challenge is more serious as it is true that legislative discretion as to the substantive
contents of the law cannot be delegated. What can be delegated is the discretion to determine
how the law may be enforced, not what the law shall be. The ascertainment of the latter subject is
a prerogative of the legislature. This prerogative cannot be abdicated or surrendered by the
legislature to the delegate. Thus, in Ynot v. Intermediate Apellate Court 12 which annulled
Executive Order No. 626, this Court held:
We also mark, on top of all this, the questionable manner of the disposition of the
confiscated property as prescribed in the questioned executive order. It is there
authorized that the seized property shall be distributed to charitable institutions
and other similar institutions as the Chairman of the National Meat Inspection
Commission may see fit, in the case of carabaos.' (Italics supplied.) The phrase
"may see fit" is an extremely generous and dangerous condition, if condition it is.
It is laden with perilous opportunities for partiality and abuse, and even
corruption. One searches in vain for the usual standard and the reasonable
guidelines, or better still, the limitations that the officers must observe when they
make their distribution. There is none. Their options are apparently boundless.
Who shall be the fortunate beneficiaries of their generosity and by what criteria
shall they be chosen? Only the officers named can supply the answer, they and
they alone may choose the grantee as they see fit, and in their own exclusive
discretion. Definitely, there is here a 'roving commission a wide and sweeping
authority that is not canalized within banks that keep it from overflowing,' in short
a clearly profligate and therefore invalid delegation of legislative powers.
There are two accepted tests to determine whether or not there is a valid delegation of legislative
power, viz, the completeness test and the sufficient standard test. Under the first test, the law
must be complete in all its terms and conditions when it leaves the legislature such that when it
reaches the delegate the only thing he will have to do is enforce it. 13 Under the sufficient
standard test, there must be adequate guidelines or stations in the law to map out the boundaries
of the delegate's authority and prevent the delegation from running riot. 14
Both tests are intended to prevent a total transference of legislative authority to the delegate, who
is not allowed to step into the shoes of the legislature and exercise a power essentially legislative.
The principle of non-delegation of powers is applicable to all the three major powers of the
Government but is especially important in the case of the legislative power because of the many
instances when its delegation is permitted. The occasions are rare when executive or judicial
powers have to be delegated by the authorities to which they legally certain. In the case of the
legislative power, however, such occasions have become more and more frequent, if not
necessary. This had led to the observation that the delegation of legislative power has become the
rule and its non-delegation the exception.
The reason is the increasing complexity of the task of government and the growing inability of
the legislature to cope directly with the myriad problems demanding its attention. The growth of
society has ramified its activities and created peculiar and sophisticated problems that the
legislature cannot be expected reasonably to comprehend. Specialization even in legislation has
become necessary. To many of the problems attendant upon present-day undertakings, the
legislature may not have the competence to provide the required direct and efficacious, not to
say, specific solutions. These solutions may, however, be expected from its delegates, who are
supposed to be experts in the particular fields assigned to them.
The reasons given above for the delegation of legislative powers in general are particularly
applicable to administrative bodies. With the proliferation of specialized activities and their
attendant peculiar problems, the national legislature has found it more and more necessary to
entrust to administrative agencies the authority to issue rules to carry out the general provisions
of the statute. This is called the "power of subordinate legislation."
With this power, administrative bodies may implement the broad policies laid down in a statute
by "filling in' the details which the Congress may not have the opportunity or competence to
provide. This is effected by their promulgation of what are known as supplementary regulations,
such as the implementing rules issued by the Department of Labor on the new Labor Code.
These regulations have the force and effect of law.
Memorandum Circular No. 2 is one such administrative regulation. The model contract
prescribed thereby has been applied in a significant number of the cases without challenge by the
employer. The power of the POEA (and before it the National Seamen Board) in requiring the
model contract is not unlimited as there is a sufficient standard guiding the delegate in the
exercise of the said authority. That standard is discoverable in the executive order itself which, in
creating the Philippine Overseas Employment Administration, mandated it to protect the rights of
overseas Filipino workers to "fair and equitable employment practices."
Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public interest"
in People v. Rosenthal 15 "justice and equity" in Antamok Gold Fields v. CIR 16 "public
convenience and welfare" in Calalang v. Williams 17 and "simplicity, economy and efficiency" in
Cervantes v. Auditor General, 18 to mention only a few cases. In the United States, the "sense and
experience of men" was accepted in Mutual Film Corp. v. Industrial Commission, 19 and
"national security" in Hirabayashi v. United States. 20
It is not denied that the private respondent has been receiving a monthly death benefit pension of
P514.42 since March 1985 and that she was also paid a P1,000.00 funeral benefit by the Social
Security System. In addition, as already observed, she also received a P5,000.00 burial gratuity
from the Welfare Fund for Overseas Workers. These payments will not preclude allowance of the
private respondent's claim against the petitioner because it is specifically reserved in the standard
contract of employment for Filipino seamen under Memorandum Circular No. 2, Series of 1984,
that
Section C. Compensation and Benefits.
1. In case of death of the seamen during the term of his Contract, the employer
shall pay his beneficiaries the amount of:
a. P220,000.00 for master and chief engineers
b. P180,000.00 for other officers, including radio operators and

master electrician
c. P 130,000.00 for ratings.
2. It is understood and agreed that the benefits mentioned above shall be separate
and distinct from, and will be in addition to whatever benefits which the seaman
is entitled to under Philippine laws. ...
3. ...
c. If the remains of the seaman is buried in the Philippines, the
owners shall pay the beneficiaries of the seaman an amount not
exceeding P18,000.00 for burial expenses.
The underscored portion is merely a reiteration of Memorandum Circular No. 22, issued by the
National Seamen Board on July 12,1976, providing an follows:
Income Benefits under this Rule Shall be Considered Additional Benefits.
All compensation benefits under Title II, Book Four of the Labor Code of the
Philippines (Employees Compensation and State Insurance Fund) shall be
granted, in addition to whatever benefits, gratuities or allowances that the seaman
or his beneficiaries may be entitled to under the employment contract approved by
the NSB. If applicable, all benefits under the Social Security Law and the
Philippine Medicare Law shall be enjoyed by the seaman or his beneficiaries in
accordance with such laws.
The above provisions are manifestations of the concern of the State for the working class,
consistently with the social justice policy and the specific provisions in the Constitution for the
protection of the working class and the promotion of its interest.
One last challenge of the petitioner must be dealt with to close t case. Its argument that it has
been denied due process because the same POEA that issued Memorandum Circular No. 2 has
also sustained and applied it is an uninformed criticism of administrative law itself.
Administrative agencies are vested with two basic powers, the quasi-legislative and the quasijudicial. The first enables them to promulgate implementing rules and regulations, and the
second enables them to interpret and apply such regulations. Examples abound: the Bureau of
Internal Revenue adjudicates on its own revenue regulations, the Central Bank on its own
circulars, the Securities and Exchange Commission on its own rules, as so too do the Philippine
Patent Office and the Videogram Regulatory Board and the Civil Aeronautics Administration and
the Department of Natural Resources and so on ad infinitum on their respective administrative
regulations. Such an arrangement has been accepted as a fact of life of modern governments and
cannot be considered violative of due process as long as the cardinal rights laid down by Justice
Laurel in the landmark case of Ang Tibay v. Court of Industrial Relations 21 are observed.
Whatever doubts may still remain regarding the rights of the parties in this case are resolved in
favor of the private respondent, in line with the express mandate of the Labor Code and the
principle that those with less in life should have more in law.
When the conflicting interests of labor and capital are weighed on the scales of social justice, the
heavier influence of the latter must be counter-balanced by the sympathy and compassion the law
must accord the underprivileged worker. This is only fair if he is to be given the opportunity and
the right to assert and defend his cause not as a subordinate but as a peer of management, with
which he can negotiate on even plane. Labor is not a mere employee of capital but its active and
equal partner.
WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary
restraining order dated December 10, 1986 is hereby LIFTED. It is so ordered.
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.
Footnotes
G.R. No. L-21849
December 11, 1967
LOURDES VDA. DE MAGALONA, petitioner,

vs.
THE WORKMEN'S COMPENSATION COMMISSION and THE NATIONAL
SHIPYARD AND STEEL CORPORATION (NASSCO), respondents.
Pablo B. Badong and Associates for petitioner.
P. C. Villavieja and P. E. Villanueva for respondent WCC.
Eduardo S. Rodriguez for respondent NASSCO.
BENGZON, J.P., J.:
Since April 1, 1954, Jorge Magalona worked for NASSCO-Iligan Steel Mills, as batteryman,
then as electrician-helper and finally as pulpit operator with a weekly salary of P26.40, with
hours of work at 7:00 A.M.-12: 00 Noon, 1:00 P.M.-4:00 P.M. As a batteryman, he filled jars of
dry cells with hydrochloric acid inside a room that was always damp because of the sprinkling of
water over the dry cells to prevent the acid from flowing. As electrician-helper, he helped clean
electric motors, rewound coils and did other work in the electric shop. In his last designation as
pulpit operator, he worked in the rolling mill department, which was hot, operated an electric
switch and caught steel bars passing through at a finish line.
On February 16, 1956, Magalona went on sick leave, to last up to March 10, 1956. He was not
able to report for work after his leave expired. On May 1, 1956, he was admitted in Riverside
Hospital, Bacolod City, where he died on May 17, of that year, of duodenal ulcer with partial
obstruction at the pyloric end of the stomach, severe anemia with kidney complications.
On July 25, 1956, his widow, Lourdes Magalona, filed a claim for compensation under the
Workmen's Compensation Act. Respondent company did not controvert the claim. The hearing
officer of the Regional Office, Department of Labor, awarded the widow and her child P2,745.60
as death benefits, P200.00 as burial expenses, P1,645.60 as medical expenses and P135.28 as
attorney's fees. The award was based on the ground that the conditions of work inhalation of
gas fumes, incessant heat, irregular eating habits might have caused duodenal ulcer, in line
with the principle of liberal construction of labor laws in favor of the laborer.
On review before the Workmen's Compensation Commission in Manila, claimant's counsel filed
a "Motion to Dismiss the Appeal or Reply to Petition for Review", alleging, as it did before the
hearing officer, that the case should be dismissed because NASSCO had not filed any written
notice of controversion of the claim. Since medical considerations were involved, Workmen's
Compensation Commissioner Cesareo Perez referred the case to the Evaluation Division of the
Bureau of Workmen's Compensation for a medical opinion. Dr. Elda M. Montemayor, Senior
Compensation Rating Medical Officer therein, in her report dated February 20, 1963 (approved
by the Chief of the Evaluation Division), stated that although the exact cause of duodenal ulcer is
still unknown, the conditions of his work, in the absence of sufficient proof that the deceased
missed or had irregular meals, had no causal relationship with the ailment causing his death.
Without resolving the motion to dismiss, Commissioner Perez reversed the decision of the
hearing officer, absolved NASSCO and ruled that duodenal ulcer is not compensable without any
showing that there was any causal connection between the ulcer and the nature of the work, such
as aggravation of the illness through an accident, over exertion and the like.
After the Commission en banc denied her motion for reconsideration, claimant appealed to Us
by way of certiorari, raising the following questions for determination:
1. Could the NASSCO have legally petitioned for review of the decision of the hearing officer
considering that it had not controverted the claim?
2. Was the admission by Commissioner Perez of the medical opinion of a Senior Compensation
Rating Officer of the Commission proper?
3. Was there need for claimant to show causal connection between the death of the employee and
the nature of his work?
As the hearing officer found, NASSCO failed to controvert the claim. It is NASSCO's position
that granting there was no controversion, the acceptance by the hearing officer of NASSCO's
evidence was tantamount to reinstatement of its right to controvert, citing Section 4 of Rule 14 of
the Rules of the Workmen's Compensation Commission. However, to reinstate one's right to
controvert, the section requires a petition under oath by the employer, specifying the reason for
its failure to controvert.itc-alf In the case at bar, there was no such petition. Mere acceptance by
the hearing officer of the evidence presented did not mean the reinstatement of the right to
controvert. The law itself provides that only the Commissioner may reinstate the right to
controvert. (See Sec. 45, par. 2, Workmen's Compensation Act; Agustin v. WCC, L-19957, Sept.
29, 1964).lawphil.net By failing to present a written controversion of the claim, the employer,
NASSCO, renounced its right to challenge the claim. And this means that all non-jurisdictional
defenses, such as non-compensability of the illness, prescription, etc., are barred.1
Respondent NASSCO, in its answer before Us, alleges that the claim had prescribed, for it
allegedly received notice of the claim for compensation only on July 25, 1962 (p. 64 of the
Record).itc-alf The hearing officer, however, found that the records show the claim to have been
received July 25, 1956 (Record, p. 33). Furthermore, it was the company physician who
diagnosed the employee's illness (pp. 73 of T.s.n., quoted in petition, p. 22 of Record).The wife
testified under oath that she sent a telegram to NASSCO right after the death of her husband and
later filed her claim with its manager. These matters were not touched on by the reviewing
commissioner or the Commission en banc and should stand. The widow's acts after the death of
her husband may be considered as substantial compliance with the required notice of claim for
compensation. In a case, We accepted as substantial compliance with Section 24 of the Act an
oral demand for compensation hardly a month after lay-off, making of little consequence a
subsequent written claim filed much later.2 And besides, as stated, for lack of proper
controversion, the defense of prescription is likewise barred.
With regard to the admissibility of the medical opinion report of Dr. Montemayor, said report
should not have been admitted because while technical rules of procedure need not be followed
by the Commission,3 no evidence should be taken into account where the adverse party was not
given the opportunity to object to its admissibility.4 This is sound especially where on such
admitted report was principally based the decision of reversal.
Based on the medical report, the Workmen's Compensation Commissioner ruled that the claimant
must first establish a causal link between the nature of the employment and the cause of death of
Magalona, before claimant can be compensated. This is a reversible error. The employee had
obviously been sick. His inability to report sack to work when his sick leave expired did not
sever the employer-employee relationship. NASSCO never claimed that it had terminated his
employment. NASSCO claimed that he was "absent without leave" (pp. 36-38 of T.s.n., quoted
in respondent's answer, pp. 68-69 of the Record).lawphil.net It is now unquestionable that once
the illness supervened at the time of the employment there is a rebuttable presumption that such
illness arose out of the employment or was at least aggravated by such employment. The
claimant is relieved from the burden of proving causation once the illness or the injury is shown
to have arisen in the course of employment.5 Thus, the precise medical cause of the illness is not
legally significant, as long as the illness supervened in the course of the employment. The
presumption of causation or aggravation then applies. The function of a presumption is precisely
to dispense with the need for proof. The burden to overthrow the presumption and to disconnect,
by substantial evidence, the injury or sickness from employment, is laid by the statute at the door
of the employer.6 In the case at bar no substantial evidence exists to overcome said presumption.
And, even if the medical report is considered, since the report itself admits that the real cause of
duodenal ulcer is unknown, the presumption established by law would still apply as against a
mere opinion on the non-causal connection between duodenal ulcer and the nature of Magalona's
employment.lawphil.net
WHEREFORE, the appealed resolution of the Workmen's Compensation Commission en banc
and the Commissioner's decision are hereby reversed, and the award of the hearing officer
granting claimant P2,745.60 as death benefits; P200.00 as burial expenses; P1,645.60 as medical
expenses; and P138.25 as attorney's fees, is affirmed. No costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and
Fernando, JJ., concur.
Footnotes
G.R. No. 101279 August 6, 1992
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. RUBEN D. TORRES, as Secretary of the Department of Labor & Employment, and
JOSE N. SARMIENTO, as Administrator of the PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION, respondents.
De Guzman, Meneses & Associates for petitioner.
GRIO-AQUINO, J.:
This petition for prohibition with temporary restraining order was filed by the Philippine
Association of Service Exporters (PASEI, for short), to prohibit and enjoin the Secretary of the
Department of Labor and Employment (DOLE) and the Administrator of the Philippine Overseas
Employment Administration (or POEA) from enforcing and implementing DOLE Department
Order No. 16, Series of 1991 and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991,
temporarily suspending the recruitment by private employment agencies of Filipino domestic
helpers for Hong Kong and vesting in the DOLE, through the facilities of the POEA, the task of
processing and deploying such workers.
PASEI is the largest national organization of private employment and recruitment agencies duly
licensed and authorized by the POEA, to engaged in the business of obtaining overseas
employment for Filipino landbased workers, including domestic helpers.
On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino
housemaids employed in Hong Kong, DOLE Secretary Ruben D. Torres issued Department
Order No. 16, Series of 1991, temporarily suspending the recruitment by private employment
agencies of "Filipino domestic helpers going to Hong Kong" (p. 30, Rollo). The DOLE itself,
through the POEA took over the business of deploying such Hong Kong-bound workers.
In view of the need to establish mechanisms that will enhance the protection for
Filipino domestic helpers going to Hong Kong, the recruitment of the same by
private employment agencies is hereby temporarily suspended effective 1 July
1991. As such, the DOLE through the facilities of the Philippine Overseas
Employment Administration shall take over the processing and deployment of
household workers bound for Hong Kong, subject to guidelines to be issued for
said purpose.
In support of this policy, all DOLE Regional Directors and the Bureau of Local
Employment's regional offices are likewise directed to coordinate with the POEA
in maintaining a manpower pool of prospective domestic helpers to Hong Kong
on a regional basis.
For compliance. (Emphasis ours; p. 30, Rollo.)
Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of
1991, dated July 10, 1991, providing GUIDELINES on the Government processing and
deployment of Filipino domestic helpers to Hong Kong and the accreditation of Hong Kong
recruitment agencies intending to hire Filipino domestic helpers.
Subject: Guidelines on the Temporary Government Processing and Deployment of
Domestic Helpers to Hong Kong.
Pursuant to Department Order No. 16, series of 1991 and in order to
operationalize the temporary government processing and deployment of domestic
helpers (DHs) to Hong Kong resulting from the temporary suspension of
recruitment by private employment agencies for said skill and host market, the
following guidelines and mechanisms shall govern the implementation of said
policy.
I. Creation of a joint POEA-OWWA Household Workers Placement Unit (HWPU)
An ad hoc, one stop Household Workers Placement Unit [or HWPU] under the
supervision of the POEA shall take charge of the various operations involved in
the Hong Kong-DH industry segment:
The HWPU shall have the following functions in coordination with appropriate
units and other entities concerned:
1. Negotiations with and Accreditation of Hong Kong Recruitment Agencies
2. Manpower Pooling
3. Worker Training and Briefing
4. Processing and Deployment
5. Welfare Programs
II. Documentary Requirements and Other Conditions for Accreditation of Hong
Kong Recruitment Agencies or Principals
Recruitment agencies in Hong Kong intending to hire Filipino DHs for their
employers may negotiate with the HWPU in Manila directly or through the
Philippine Labor Attache's Office in Hong Kong.
xxx xxx xxx
X. Interim Arrangement
All contracts stamped in Hong Kong as of June 30 shall continue to be processed
by POEA until 31 July 1991 under the name of the Philippine agencies concerned.
Thereafter, all contracts shall be processed with the HWPU.
Recruitment agencies in Hong Kong shall submit to the Philippine Consulate
General in Hong kong a list of their accepted applicants in their pool within the
last week of July. The last day of acceptance shall be July 31 which shall then be
the basis of HWPU in accepting contracts for processing. After the exhaustion of
their respective pools the only source of applicants will be the POEA manpower
pool.
For strict compliance of all concerned. (pp. 31-35, Rollo.)
On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of
1991, on the processing of employment contracts of domestic workers for Hong Kong.
TO: All Philippine and Hong Kong Agencies engaged in the recruitment of
Domestic helpers for Hong Kong
Further to Memorandum Circular No. 30, series of 1991 pertaining to the

government processing and deployment of domestic helpers (DHs) to Hong
Kong, processing of employment contracts which have been attested by the Hong
Kong Commissioner of Labor up to 30 June 1991 shall be processed by the POEA
Employment Contracts Processing Branch up to 15 August 1991 only.
Effective 16 August 1991, all Hong Kong recruitment agent/s hiring DHs from
the Philippines shall recruit under the new scheme which requires prior
accreditation which the POEA.
Recruitment agencies in Hong Kong may apply for accreditation at the Office of
the Labor Attache, Philippine Consulate General where a POEA team is posted
until 31 August 1991. Thereafter, those who failed to have themselves accredited
in Hong Kong may proceed to the POEA-OWWA Household Workers Placement
Unit in Manila for accreditation before their recruitment and processing of DHs
shall be allowed.
Recruitment agencies in Hong Kong who have some accepted applicants in their
pool after the cut-off period shall submit this list of workers upon accreditation.
Only those DHs in said list will be allowed processing outside of the HWPU
manpower pool.
For strict compliance of all concerned. (Emphasis supplied, p. 36, Rollo.)
On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the
aforementioned DOLE and POEA circulars and to prohibit their implementation for the
following reasons:
1. that the respondents acted with grave abuse of discretion and/or in excess of
their rule-making authority in issuing said circulars;
2. that the assailed DOLE and POEA circulars are contrary to the Constitution, are
unreasonable, unfair and oppressive; and
3. that the requirements of publication and filing with the Office of the National
Administrative Register were not complied with.
There is no merit in the first and second grounds of the petition.
Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate
recruitment and placement activities.
Art. 36. Regulatory Power. The Secretary of Labor shall have the power to
restrict and regulate the recruitment and placement activities of all agencies
within the coverage of this title [Regulation of Recruitment and Placement
Activities] and is hereby authorized to issue orders and promulgate rules and
regulations to carry out the objectives and implement the provisions of this title.
(Emphasis ours.)
On the other hand, the scope of the regulatory authority of the POEA, which was created by
Executive Order No. 797 on May 1, 1982 to take over the functions of the Overseas Employment
Development Board, the National Seamen Board, and the overseas employment functions of the
Bureau of Employment Services, is broad and far-ranging for:
1. Among the functions inherited by the POEA from the defunct Bureau of
Employment Services was the power and duty:
"2. To establish and maintain a registration and/or licensing system
to regulate private sector participation in the recruitment and
placement of workers, locally and overseas, . . ." (Art. 15, Labor
Code, Emphasis supplied). (p. 13, Rollo.)
2. It assumed from the defunct Overseas Employment Development Board the
power and duty:
3. To recruit and place workers for overseas employment of
Filipino contract workers on a government to government
arrangement and in such other sectors as policy may dictate . . .
(Art. 17, Labor Code.) (p. 13, Rollo.)
3. From the National Seamen Board, the POEA took over:
2. To regulate and supervise the activities of agents or
representatives of shipping companies in the hiring of seamen for
overseas employment; and secure the best possible terms of
employment for contract seamen workers and secure compliance
therewith. (Art. 20, Labor Code.)
The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not
unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing
complexity of the modern society" (Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79). More and
more administrative bodies are necessary to help in the regulation of society's ramified activities.
"Specialized in the particular field assigned to them, they can deal with the problems thereof
with more expertise and dispatch than can be expected from the legislature or the courts of
justice" (Ibid.).
It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the
recruitment and deployment of Filipino landbased workers for overseas employment. A careful
reading of the challenged administrative issuances discloses that the same fall within the
"administrative and policing powers expressly or by necessary implication conferred" upon the
respondents (People vs. Maceren, 79 SCRA 450). The power to "restrict and regulate conferred
by Article 36 of the Labor Code involves a grant of police power (City of Naga vs. Court of
Appeals, 24 SCRA 898). To "restrict" means "to confine, limit or stop" (p. 62, Rollo) and
whereas the power to "regulate" means "the power to protect, foster, promote, preserve, and
control with due regard for the interests, first and foremost, of the public, then of the utility and
of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA 218).
The Solicitor General, in his Comment, aptly observed:
. . . Said Administrative Order [i.e., DOLE Administrative Order No. 16] merely
restricted the scope or area of petitioner's business operations by excluding
therefrom recruitment and deployment of domestic helpers for Hong Kong till
after the establishment of the "mechanisms" that will enhance the protection of
Filipino domestic helpers going to Hong Kong. In fine, other than the recruitment
and deployment of Filipino domestic helpers for Hongkong, petitioner may still
deploy other class of Filipino workers either for Hongkong and other countries
and all other classes of Filipino workers for other countries.
Said administrative issuances, intended to curtail, if not to end, rampant violations
of the rule against excessive collections of placement and documentation fees,
travel fees and other charges committed by private employment agencies
recruiting and deploying domestic helpers to Hongkong. [They are reasonable,
valid and justified under the general welfare clause of the Constitution, since the
recruitment and deployment business, as it is conducted today, is affected with
public interest.
xxx xxx xxx
The alleged takeover [of the business of recruiting and placing Filipino domestic
helpers in Hongkong] is merely a remedial measure, and expires after its purpose
shall have been attained. This is evident from the tenor of Administrative Order
No. 16 that recruitment of Filipino domestic helpers going to Hongkong by
private employment agencies are hereby "temporarily suspended effective July 1,
1991."
The alleged takeover is limited in scope, being confined to recruitment of

domestic helpers going to Hongkong only.
xxx xxx xxx
. . . the justification for the takeover of the processing and deploying of domestic
helpers for Hongkong resulting from the restriction of the scope of petitioner's
business is confined solely to the unscrupulous practice of private employment
agencies victimizing applicants for employment as domestic helpers for
Hongkong and not the whole recruitment business in the Philippines. (pp. 62-65,
Rollo.)
The questioned circulars are therefore a valid exercise of the police power as delegated to the
executive branch of Government.
Nevertheless, they are legally invalid, defective and unenforceable for lack of power publication
and filing in the Office of the National Administrative Register as required in Article 2 of the
Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the
Administrative Code of 1987 which provide:
Art. 2. Laws shall take effect after fifteen (15) days following the completion of
their publication in the Official Gazatte, unless it is otherwise provided. . . . (Civil
Code.)
Art. 5. Rules and Regulations. The Department of Labor and other government
agencies charged with the administration and enforcement of this Code or any of
its parts shall promulgate the necessary implementing rules and regulations. Such
rules and regulations shall become effective fifteen (15) days after announcement
of their adoption in newspapers of general circulation. (Emphasis supplied, Labor
Code, as amended.)
Sec. 3. Filing. (1) Every agency shall file with the University of the Philippines
Law Center, three (3) certified copies of every rule adopted by it. Rules in force
on the date of effectivity of this Code which are not filed within three (3) months
shall not thereafter be the basis of any sanction against any party or persons.
(Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987.)
Sec. 4. Effectivity. In addition to other rule-making requirements provided by
law not inconsistent with this Book, each rule shall become effective fifteen (15)
days from the date of filing as above provided unless a different date is fixed by
law, or specified in the rule in cases of imminent danger to public health, safety
and welfare, the existence of which must be expressed in a statement

accompanying the rule. The agency shall take appropriate measures to make
emergency rules known to persons who may be affected by them. (Emphasis
supplied, Chapter 2, Book VII of the Administrative Code of 1987).
Once, more we advert to our ruling in Taada vs. Tuvera, 146 SCRA 446 that:
. . . Administrative rules and regulations must also be published if their purpose is
to enforce or implement existing law pursuant also to a valid delegation. (p. 447.)
Interpretative regulations and those merely internal in nature, that is, regulating
only the personnel of the administrative agency and not the public, need not be
published. Neither is publication required of the so-called letters of instructions
issued by administrative superiors concerning the rules or guidelines to be
followed by their subordinates in the performance of their duties. (p. 448.)
We agree that publication must be in full or it is no publication at all since its
purpose is to inform the public of the content of the laws. (p. 448.)
For lack of proper publication, the administrative circulars in question may not be enforced and
implemented.
WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE Department
Order No. 16, Series of 1991, and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991,
by the public respondents is hereby SUSPENDED pending compliance with the statutory
requirements of publication and filing under the aforementioned laws of the land.
SO ORDERED.
Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Medialdea, Regalado, Davide, Jr.,
Romero, Nocon and Bellosillo, JJ., concur.
G.R. No. L-75038 August 23, 1993
ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD,
BENJAMIN BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID ORO,
NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, and DOMINGO
SAGUIT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and BROAD
STREET TAILORING and/or RODOLFO ZAPANTA, respondents.
Balguma, Macasaet & Associates for petitioners.

Teresita Gandionco Oledan for private respondents.
NOCON, J.:
A basic factor underlying the exercise of rights and the filing of claims for benefits under the
Labor Code and other presidential issuances or labor legislations is the status and nature of one's
employment. Whether an employer-employee relationship exist and whether such employment is
managerial in character or that of a rank and file employee are primordial considerations before
extending labor benefits. Thus, petitioners in this case seek a definitive ruling on the status and
nature of their employment with Broad Street Tailoring and pray for the nullification of the
resolution dated May 12, 1986 of the National Labor Relations Commissions in NLRC Case No.
RB-IV- 21558-78-T affirming the decision of Labor Arbiter Ernilo V. Pealosa dated May 28,
1979, which held eleven of them as independent contractors and the remaining one as employee
but of managerial rank.
The facts of the case shows that petitioner Elias Villuga was employed as cutter in the tailoring
shop owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring located
at Shaw Boulevard, Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary
of P840.00 and a monthly transportation allowance of P40.00. In addition to his work as cutter,
Villuga was assigned the chore of distributing work to the shop's tailors or sewers when both the
shop's manager and assistant manager would be absent. He saw to it that their work conformed
with the pattern he had prepared and if not, he had them redone, repaired or resewn.
The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount
for every item ironed, repaired or sewn, regardless of the time consumed in accomplishing the
task. Petitioners did not fill up any time record since they did not observe regular or fixed hours
of work. They were allowed to perform their work at home especially when the volume of work,
which depended on the number of job orders, could no longer be coped up with.
From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to
illness. For not properly notifying his employer, he was considered to have abandoned his work.
In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor,
Villuga claimed that he was refused admittance when he reported for work after his absence,
allegedly due to his active participation in the union organized by private respondent's tailors. He
further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on
rest days and holidays, service incentive leave pay and 13th month pay.
Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed that
they were dismissed from their employment because they joined the Philippine Social Security
Labor Union (PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela,
Flora Escobido, Justilita Cabaneg and Domingo Saguit claimed that they stopped working
because private respondents gave them few pieces of work to do after learning of their
membership with PSSLU. All the petitioners laid claims under the different labor standard laws
which private respondent allegedly violated.
On May 28, 1979, Labor Arbiter Ernilo V. Pealosa rendered a decision ordering the dismissal of
the complaint for unfair labor practices, illegal dismissal and other money claims except
petitioner Villuga's claim for 13th month pay for the years 1976, 1977 and 1980. The dispositive
portion of the decision states as follows:
WHEREFORE, premises considered, the respondent Broad Street Tailoring
and/or Rodolfo Zapanta are hereby ordered to pay complainant Elias Villuga the
sum of ONE THOUSAND TWO HUNDRED FORTY-EIGHT PESOS AND
SIXTY-SIX CENTAVOS (P1,248.66) representing his 13th month pay for the
years 1976, 1977 and 1978. His other claims in this case are hereby denied for
lack of merit.
The complaint insofar as the other eleven (11) complainants are concerned should
be, as it is hereby dismissed for want of jurisdiction. 1
On appeal, the National Labor Relations Commission affirmed the questioned decision in a
resolution dated May 12, 1986, the dispositive portion of which states as follows:
WHEREFORE, premises considered, the decision appealed from is, as it is hereby
AFFIRMED, and the appeal dismissed. 2
Presiding Commissioner Guillermo C. Medina merely concurred in the result while
Commissioner Gabriel M. Gatchalian rendered a dissenting opinion which states as follows:
I am for upholding employer-employee relationship as argued by the
complainants before the Labor Arbiter and on appeal. The further fact that the
proposed decision recognizes complainant's status as piece-rate worker all the
more crystallizes employer-employee relationship the benefits prayed for must be
granted. 3
Hence, petitioners filed this instant certiorari case on the following grounds:
1. That the respondent National Labor Relations Commission abused its discretion
when it ruled that petitioner/complainant, Elias Villuga falls within the category
of a managerial employee;
2. . . . when it ruled that the herein petitioners were not dismissed by reason of
their union activities;
3. . . . when it ruled that petitioners Andres Abad, Benjamin Brizuela, Norlito
Ladia, Marcelo Aguilan, David Oro, Nelia Brizuela, Flora Escobido, Justilita
Cabaneg and Domingo Saguit were not employees of private respondents but
were contractors.
4. . . . when it ruled that petitioner Elias Villuga is not entitled to overtime pay and
services for Sundays and Legal Holidays; and
5. . . . when it failed to grant petitioners their respective claims under the
provisions of P.D. Nos. 925, 1123 and 851. 4
Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a member
of a managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary
duty consists of the performance of work directly related to management policies; (2) that he
customarily and regularly exercises discretion and independent judgment in the performance of
his functions; (3) that he regularly and directly assists in the management of the establishment;
and (4) that he does not devote his twenty per cent of his time to work other than those described
above.
Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primary
work or duty is to cut or prepare patterns for items to be sewn, not to lay down or implement any
of the management policies, as there is a manager and an assistant manager who perform said
functions. It is true that in the absence of the manager the assistant manager, he distributes and
assigns work to employees but such duty, though involving discretion, is occasional and not
regular or customary. He had also the authority to order the repair or resewing of defective item
but such authority is part and parcel of his function as cutter to see to it that the items cut are
sewn correctly lest the defective nature of the workmanship be attributed to his "poor cutting."
Elias Villuga does not participate in policy-making. Rather, the functions of his position involve
execution of approved and established policies. In Franklin Baker Company of the Philippines v.
Trajano, 5 it was held that employees who do not participate in policy-making but are given
ready policies to execute and standard practices to observe are not managerial employees. The
test of "supervisory or managerial status" depends on whether a person possesses authority that is
not merely routinary or clerical in nature but one that requires use of independent judgment. In
other words, the functions of the position are not managerial in nature if they only execute
approved and established policies leaving little or no discretion at all whether to implement said
policies or not. 6
Consequently, the exclusion of Villuga from the benefits claimed under Article 87 (overtime pay
and premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95
(service incentive leave pay) of the Labor Code, on the ground that he is a managerial employee
is unwarranted. He is definitely a rank and file employee hired to perform the work of the cutter
and not hired to perform supervisory or managerial functions. The fact that he is uniformly paid
by the month does not exclude him from the benefits of holiday pay as held in the case of
Insular Bank of America Employees Union v. Inciong. 7 He should therefore be paid in addition
to the 13th month pay, his overtime pay, holiday pay, premium pay for holiday and rest day, and
service incentive leave pay.
As to the dismissal of the charge for unfair labor practices of private respondent consisting of
termination of employment of petitioners and acts of discrimination against members of the labor
union, the respondent Commission correctly held the absence of evidence that Mr. Zapanta was
aware of petitioners' alleged union membership on February 22, 1978 as the notice of union
existence in the establishment with proposal for recognition and collective bargaining negotiation
was received by management only an March 3, 1978. Indeed, self-serving allegations without
concrete proof that the private respondent knew of their membership in the union and
accordingly reacted against their membership do not suffice.
Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. For
abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified
refusal of the employee to resume his employment. Mere absence is not sufficient, it must be
accompanied by overt acts unerringly pointing to the fact that the employee simply does not
want to work anymore. 8 At any rate, dismissal of an employee due to his prolonged absence
without leave by reason of illness duly established by the presentation of a medical certificate is
not justified. 9 In the case at bar, however, considering that petitioner Villuga absented himself for
four (4) days without leave and without submitting a medical certificate to support his claim of
illness, the imposition of a sanction is justified, but surely, not dismissal, in the light of the fact
that this is petitioner's first offense. In lieu of reinstatement, petitioner Villuga should be paid
separation pay where reinstatement can no longer be effected in view of the long passage of time
or because of the realities of the situation. 10 But petitioner should not be granted backwages in
addition to reinstatement as the same is not just and equitable under the circumstances
considering that he was not entirely free from blame. 11
As to the other eleven petitioners, there is no clear showing that they were dismissed because the
circumstances surrounding their dismissal were not even alleged. However, we disagree with the
finding of respondent Commission that the eleven petitioners are independent contractors.
For an employer-employee relationship to exist, the following elements are generally considered:
"(1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to control the employee's
conduct." 12
Noting that the herein petitioners were oftentimes allowed to perform their work at home and
were paid wages on a piece-rate basis, the respondent Commission apparently found the second
and fourth elements lacking and ruled that "there is no employer-employee relationship, for it is
clear that respondents are interested only in the result and not in the means and manner and how
the result is obtained."
Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis
is no argument that herein petitioners were not employees. The term "wage" has been broadly
defined in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed
in terms of money whether fixed or ascertained on a time, task, piece or commission
basis. . . ." The facts of this case indicate that payment by the piece is just a method of
compensation and does not define the essence of the
relation. 13 The petitioners were allowed to perform their work at home does not likewise imply
absence of control and supervision. The control test calls merely for the existence of a right to
control the manner of doing the work, not the actual exercise of the right. 14
In determining whether the relationship is that of employer and employee or one of an
independent contractor, "each case must be determined on its own facts and all the features of the
relationship are to be considered." 15 Considering that petitioners who are either sewers,
repairmen or ironer, have been in the employ of private respondent as early as 1972 or at the
latest in 1976, faithfully rendering services which are desirable or necessary for the business of
private respondent, and observing management's approved standards set for their respective lines
of work as well as the customers' specifications, petitioners should be considered employees, not
independent contractors.
Independent contractors are those who exercise independent employment, contracting to do a
piece of work according to their own methods and without being subjected to control of their
employer except as to the result of their work. By the nature of the different phases of work in a
tailoring shop where the customers' specifications must be followed to the letter, it is
inconceivable that the workers therein would not be subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar workers hired in the
tailoring department, although paid weekly wages on piece work basis, are employees not
independent contractors. Accordingly, as regular employees, paid on a piece-rate basis,
petitioners are not entitled to overtime pay, holiday pay, premium pay for holiday/rest day and
service incentive leave pay. Their claim for separation pay should also be defined for lack of
evidence that they were in fact dismissed by private respondent. They should be paid, however,
their 13th month pay under P.D. 851, since they are employees not independent contractors.
WHEREFORE, in view of the foregoing reasons, the assailed decision of respondent National
Labor Relations Commission is hereby MODIFIED by awarding
(a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for holiday and rest
day, service incentive leave pay and separation pay, in addition to his 13th month pay; and
(b) in favor of the rest of the petitioners, their respective 13th month pay.
The case is hereby REMANDED to the National Labor Relations Commission for the
computation of the claims herein-above mentioned.
SO ORDERED.
Narvasa C.J., Padilla, Regalado and Puno, JJ., concur
G.R. No. L-59229 August 22, 1991
HIJOS DE F. ESCAO INC., and PIER 8 ARRASTRE AND STEVEDORING
SERVICES, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL ORGANIZATION OF
WORKINGMEN (NOWM) PSSLU-TUCP and ROLANDO VILLALOBOS, respondents.
Beltran, Beltran & Beltran for petitioners.
Bautista, Santiago & Associates for private respondents.
FELICIANO, J.:p
Petitioners seek to set aside the Decision of the National Labor Relations Commission ("NLRC")
dated 11 November 1981, which affirmed the Decision of the Labor Arbiter dated 28 February
1980.
Private respondent National Organization of Workingmen ("NOWM") PSSLU-TUCP is a labor
organization that counts among its members a majority of the laborers of petitioner Pier 8
Arrastre & Stevedoring Services, Inc. ("PIER 8 A&S") consisting, among others, of stevedores,
dockworkers, sweepers and forklift operators (hereinafter collectively referred to as "the
stevedores"). On 31 July 1978, NOWM PSSLU-TUCP and about 300 stevedores filed with the
then Ministry of Labor and Employment ("MOLE") a complaint 1 for unfair labor practice ULP
and illegal dismissal against PIER 8 A&S.
On 8 September 1978, NOWM PSSLU-TUCP amended its complaint to include the monetary
claims of the stevedores for overtime compensation, legal holiday pay, emergency cost of living
allowance, 13th month pay, night shift differential pay, and the difference between the salaries
they received and that prescribed under the minimum wage law. The complaint was also
amended to implead petitioner Hijos de F. Escao, Inc. (Escao) as respondent before the
MOLE. 2
The MOLE Director in the National Capital Region certified for compulsory arbitration only the
claims for illegal dismissal and ULP Considering that NOWM PSSLU-TUCP wanted to include
as well the other issues it had raised in the amended complaint, it filed a motion for
reconsideration. The motion was denied because money claims, according to the MOLE
Director, should be brought against Escao and PIER 8 A&S in a separate complaint.
On the basis of the position papers submitted by the parties and the annexes attached thereto, the
case was considered submitted for resolution. On 28 February 1980, the Labor Arbiter rendered a
Decision 3 with the following dispositive portion:
WHEREFORE, consonant with the foregoing premises, the respondents Hijos de
F. Escao and Pier 8 Arrastre and Stevedoring Services, Inc. are hereby found
guilty of committing acts of unfair labor practice and are ordered to jointly and
severally reinstate all of the petitioners named in the amended complaint, with
payment of full backwages counted from the time they were illegally dismissed
which was on August 10, 1978 up to March 27, 1979, inclusive, when the
petitioners admitted having received return to work notice from the respondent
but refused to comply in view of the pendency of the present case, based on their
individual rate at the time of their dismissal or on the minimum wage then
prevailing whichever is more beneficial to them.
For purposes of this decision, the Socio-Economic Analyst of this branch is
hereby directed to compute the backwages of the individual petitioners as
mandated herein, and to submit his report within ten 10 days from receipt hereof
which shall form part of this award.
SO ORDERED.
Petitioners appealed to the NLRC which, however, affirmed the Decision of the Labor Arbiter.
The instant Petition for certiorari imputes grave abuse of discretion to the NLRC in upholding
the finding of the Labor Arbiter that the stevedores are employees not only of PIER 8 A&S but
also of Escao. Petitioners also assail that portion of the Decision which directed them to
reinstate the dismissed stevedores with the obligation to pay backwages from 10 August 1978 to
27 March 1979.
In his Decision, the Labor Arbiter took the view that PIER 8 A&S was a labor only contractor
and held that Escao was the principal employer of the stevedores. For that reason, the Labor
Arbiter adjudged the petitioners solidarily liable for payment of backwages to the stevedores as
well as for reinstatement.
While petitioner PIER 8 A&S does not dispute that the stevedores were its employees, petitioner
Escao denies the existence of an employer-employee relationship between it and the stevedores.
Escao therefore contends that liability, if any, should attach only to PIER 8 A&S.
PIER 8 A&S is a corporation providing Arrastre and stevedoring services to vessels docked at
Pier 8 of the Manila North Harbor. Prior to the incorporation of PIER 8 A&S two (2) stevedoring
companies had been servicing vessels docking at Pier 8. One of these was the Manila Integrated
Services, Inc. MISI which was servicing Escao vessels, then berthing at Pier 8. The other was
the San Nicolas Stevedoring and Arrastre Services, Inc. (SNSASI) which was servicing
Compania Maritima vessels. Aside, of course, from MISI and SNSASI there were individual
contractors known as the "cabos" who were operating in Pier 8.
On 11 July 1974, the Philippine Port Authority ("PPA") was created pursuant to the policy of the
State to implement an integrated program of port development for the entire country. 4 Towards
this end, the PPA issued Administrative Order No. 1377 specifically adopting the policy of "one
pier, one Arrastre and/or stevedoring company." MISI and SNSASI merged to form the Pier 8
Arrastre and Stevedoring Services, Inc.
Sometime in June 1978, Escao had transferred berth to Pier 16 with the approval of the PPA.
PIER 8 A&S then started to encounter problems; it found its business severely reduced with only
Compania Maritima vessels to service. Even if it had wanted to continue servicing the vessels of
Escao at Pier 16, that was simply not possible as there was another company exclusively
authorized to handle and render Arrastre and stevedoring services at Pier 16.
Because of its resulting manpower surplus, PIER 8 A&S altered the work schedule of its
stevedores by rotating them. The rotation scheme was resisted by the stevedores, especially those
formerly assigned to service Escao vessels. It appears that the employees formerly belonging to
MISI continued to service Escao vessels in like manner that those employees formerly
belonging to SNSASI continued to service Compania Maritima vessels, although MISI and
SNSASI had already merged to form PIER 8 A&S The affected stevedores boycotted Pier 8
leading to their severance from employment by PIER 8 A&S on 10 August 1978. Their refusal to
work continued even after they were served with a return-to-work order.
The stevedores claim that since they had long been servicing Escao vessels, i.e. from the time
Escao was exclusively serviced by MISI until the time MISI was merged with SNSASI to form
PIER 8 A&S they should also be considered as employees of Escao. Escao disclaimed any
employment relationship with the stevedores. In its Position Paper, Escao alleged that the
stevedores are included in the payroll of PIER 8 A&S and that the SSS and Medicare
contributions of the stevedores are paid by PIER 8 A&S as well.
It is firmly settled that the existence or non-existence of the employer-employee relationship is
commonly to be determined by examination of certain factors or aspects of that relationship.
These include: (a) the manner of selection and engagement of the putative employee; (b) the
mode of payment of wages; (c) the presence or absence of the power of dismissal; and (d) the
presence or absence of a power to control the putative employee's conduct. 5
The Court notes that in finding against PIER 8 A&S and Escao the Labor Arbiter relied solely
on the position paper of the parties. The record of the case is bare of evidence tending to support
such allegations; what is found in the record instead are the self-serving statements from both
parties. It is not clear to the Court from examination of the record which entity paid the salaries
of the stevedores. While the stevedores attached to their amended complaint a list of their daily
wages set forth opposite their individual names under the heading "Hijos de F. Escao Inc.
and/or Pier 8 Arrastre and Stevedoring Services, Inc. 6 apparently to show that they are paid for
their services by either or both of petitioners, they did not submit direct evidence, e.g., copies of
payrolls and remittances to the SSS and Medicare, establishing this fact. Further, the stevedores
failed to substantiate their allegation that the supervisors of Escao had control over them while
discharging their (stevedores') duties. On the contrary, their Position Paper submitted to the
Labor Arbiter disclosed that the supervisors of Escao "merely supervised" them.
The record includes letters written by the National President of NOWM PSSLU-TUC to
which the stevedores belong-relating to collective bargaining and other operating matters, were
all addressed to the management of PIER 8 A&S indicating that they recognized PIER 8 A&S as
their employer. Specifically, in the letter dated 21 May 1977, the stevedores proposed that PIER
8 A&S recognize their union as the sole and exclusive representative of the stevedores for the
purpose of collective bargaining. They also sought to submit for collective bargaining with PIER
8 A&S such other labor standard issues as wage increases, 13th month pay and vacation and sick
leave pay. 7
The stevedores, however, now contend that PIER 8 A&S is not an independent contract but a
labor only contractor. In their Amended Complaint and Position Paper, the stevedores alleged
that:
(1) They perform their duties or work assignments under the close supervision of
supervisors of respondent Hijos de F. Escao Inc.;
(2) The machineries, equipment, tools and other facilities complainants used,
while in the performance of their jobs, are owned by respondent Hijos de F.
Escao, Inc.;
(3) The jobs they were performing from the time they were first employed, until
their dismissals, are principal phases of respondent's operations; and
(4) The so-called Pier 8 Arrastre & Stevedoring Services, Inc. is a mere
middleman; its vital role is purely one of supplying workers to respondent Hijos
de F. Escao, Inc. in short, a mere recruiting agent. Plainly, said contractor can be
categorized as an agent of respondent Hijos de F. Escao, Inc. as it performs
activities directly related to the principal business of said Hijos de F. Escao, Inc.
Although the record does not show that the stevedores had submitted any evidence to fortify
their claim that PIER 8 A&S is a labor only contractor, the Labor Arbiter simply conceded that
claim to be factual. The Labor Arbiter added that the business of PIER 8 A&S is "desirable and
indispensable in the business of Hijos de F. Escao and without [the stevedores], its vessels could
not be operated."
The Court is unable to agree with the conclusion reached by the Labor Arbiter, particularly that
portion where the Labor Arbiter supposed stevedoring to be an indispensable part of the business
of Escao. Escao is a corporation engaged in inter-island shipping business, being the operator
of the Escao Shipping Lines. It was not alleged, nor has it been shown, that Escao or any other
shipping company is also engaged in Arrastre and stevedoring services. Stevedoring is not
ordinarily included in the business of transporting goods, it (stevedoring) being a special kind of
service which involves the loading unloading of cargo on or from a vessel on port. It consists of
the handling of cargo from the hold of the ship to the dock, in case of pier-side unloading, or to a
barge, in case of unloading at sea. The loading on a ship of outgoing cargo is also part of
stevedoring work. 8 Arrastre, upon the other hand, involves the handling of cargo deposited on
the wharf or between the establishment of the consignee or shipper and the ships tackle. 9
Considering that a shipping company is not normally or customarily engaged in stevedoring and
arrastre activities either for itself or other vessels, it contracts with other companies offering
those services. The employees, however, of the stevedoring and/or arrastre company should not
be deemed the employees of the shipping company, in the absence of any showing, that the
arrastre and/or stevedoring company in fact acted as an agent only of the shipping company. No
such showing was made in this case.
We turn next to the stevedores' contention that PIER 8 A&S is guilty of ULP. In this respect, the
Labor Arbiter had found that:
Now comes the issue of unfair labor practice. This Labor Arbiter believes that
respondents are guilty as charged. The unfair labor practice acts of the
respondents started when they came to know that the petitioners have organized
themselves and affiliated with the NOWM Subsequent acts of the respondents like
requiring the petitioners to disaffiliate with the NOWM and affiliate with the
General Maritime Stevedores Union and later on to Independent Workers Union,
requiring them to sign applications for membership therein, they were threatened
and coerced, are all acts of unfair labor practices. Thereafter, the petitioners'
working schedules were rotated when the respondent Hijos de F. Escao
transferred to Pier 16 through the alleged approval of the Philippine Port
Authority and later on the said petitioners were left without work, were all in
furtherance of such unfair labor practice acts. ... 10
Both the Constitution and the Labor Code guarantee to the stevedores a right to self-organization.
It was unlawful for PIER 8 A&S to deprive them of that right by its undue interference. The
Constitution (Article III, Section 7) expressly recognizes the right of employees, whether of the
public or the private sector, to form unions. Article 248 of the Labor Code provides:
Art. 248. Unfair labor practices of employers. It shall be unlawful for an
employer to commit any of the following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to
self- organization;
(b) To require as a condition of employment that a person or an employee shall
not join a labor organization or shall withdraw from one to which he belongs;
(c) To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their rights
to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or
other support to it or its organizations or supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in any
labor organization.
xxx xxx xxx

(Emphasis supplied.)
Not only was PIER 8 A&S guilty of ULP; it was also liable for illegal dismissal. PIER 8 A&S
did not obtain prior clearance from the MOLE before it dismissed the stevedores, as required by
the law then in force which read:
Section 1. Requirement for shutdown or dismissal. No employer may shut
down his establishment or dismiss any of his employees with at least one year of
service during the last two years, whether the service is broken or continuous,
without prior clearance issued therefor in accordance with this Rule. Any
provision in a collective bargaining agreement dispensing with the clearance
requirement shall be null and void.
Section 2. Shutdown or dismissal without clearance. Any shutdown or
dismissal without prior clearance shall be conclusively presumed to be a
termination of employment without a just cause. The Regional Director shall, in
such case, order the immediate reinstatement of the employee and the payment of
his wages from the time of the shutdown or dismissal until the time of
reinstatement. 11
B.P. Blg. 130 amended the Labor Code on 4 September 1981 by abolishing the requirement of
prior clearance from the MOLE but since the dismissal of the stevedores was effected prior to the
promulgation of B.P. Blg. 130, PIER 8 A&S was then bound to comply with the old law. The
Court, interpreting Sections 1 and 2 above quoted, has consistently held that a dismissal without
said clearance shall be conclusively presumed a termination without just cause. 12 The record is
bare of any evidence that could compel the Court to overturn the factual findings of the Labor
Arbiter on this point.
WHEREFORE, considering the absence of an employer-employee relationship between Hijos de
F. Escao, Inc. and private respondents, the Decision of the Labor Arbiter dated 28 February
1980 in NLRC Case No. RB-IV-2326-79 and the Decision of the NLRC dated 11 November
1981 are hereby MODIFIED so that only Pier 8 Arrastre & Stevedoring Services, Inc. shall be
liable for reinstatement and payment of backwages. As so modified, both Decisions are hereby
AFFIRMED. No costs.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.
Footnotes
G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,
vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO,
and SEGUNDINA NOGUERA, respondents-appellees.
SARMIENTO , J.:
The petitioners invoke the provisions on human relations of the Civil Code in this appeal by
certiorari. The facts are beyond dispute:
xxx xxx xxx
On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the
appellees) entered into on Oct. 19, 1960 by and between Mrs. Segundina
Noguera, party of the first part; the Tourist World Service, Inc., represented by
Mr. Eliseo Canilao as party of the second part, and hereinafter referred to as
appellants, the Tourist World Service, Inc. leased the premises belonging to the
party of the first part at Mabini St., Manila for the former-s use as a branch office.
In the said contract the party of the third part held herself solidarily liable with the
party of the part for the prompt payment of the monthly rental agreed on. When
the branch office was opened, the same was run by the herein appellant Una 0.
Sevilla payable to Tourist World Service Inc. by any airline for any fare brought in
on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be
withheld by the Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc.
appears to have been informed that Lina Sevilla was connected with a rival firm,
the Philippine Travel Bureau, and, since the branch office was anyhow losing, the
Tourist World Service considered closing down its office. This was firmed up by
two resolutions of the board of directors of Tourist World Service, Inc. dated Dec.
2, 1961 (Exhibits 12 and 13), the first abolishing the office of the manager and
vice-president of the Tourist World Service, Inc., Ermita Branch, and the
second,authorizing the corporate secretary to receive the properties of the Tourist
World Service then located at the said branch office. It further appears that on Jan.
3, 1962, the contract with the appellees for the use of the Branch Office premises
was terminated and while the effectivity thereof was Jan. 31, 1962, the appellees
no longer used it. As a matter of fact appellants used it since Nov. 1961. Because
of this, and to comply with the mandate of the Tourist World Service, the
corporate secretary Gabino Canilao went over to the branch office, and, finding
the premises locked, and, being unable to contact Lina Sevilla, he padlocked the
premises on June 4, 1962 to protect the interests of the Tourist World Service.
When neither the appellant Lina Sevilla nor any of her employees could enter the
locked premises, a complaint wall filed by the herein appellants against the
appellees with a prayer for the issuance of mandatory preliminary injunction.
Both appellees answered with counterclaims. For apparent lack of interest of the
parties therein, the trial court ordered the dismissal of the case without prejudice.
The appellee Segundina Noguera sought reconsideration of the order dismissing
her counterclaim which the court a quo, in an order dated June 8, 1963, granted
permitting her to present evidence in support of her counterclaim.
On June 17,1963, appellant Lina Sevilla refiled her case against the herein
appellees and after the issues were joined, the reinstated counterclaim of
Segundina Noguera and the new complaint of appellant Lina Sevilla were jointly
heard following which the court a quo ordered both cases dismiss for lack of
merit, on the basis of which was elevated the instant appeal on the following
assignment of errors:
I. THE LOWER COURT ERRED EVEN IN APPRECIATING THE NATURE
OF PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA'S COMPLAINT.
II. THE LOWER COURT ERRED IN HOLDING THAT APPELLANT MRS.
LINA 0. SEVILA'S ARRANGEMENT (WITH APPELLEE TOURIST WORLD
SERVICE, INC.) WAS ONE MERELY OF EMPLOYER-EMPLOYEE
RELATION AND IN FAILING TO HOLD THAT THE SAID ARRANGEMENT
WAS ONE OF JOINT BUSINESS VENTURE.
III. THE LOWER COURT ERRED IN RULING THAT PLAINTIFFAPPELLANT MRS. LINA O. SEVILLA IS ESTOPPED FROM DENYING
THAT SHE WAS A MERE EMPLOYEE OF DEFENDANT-APPELLEE
TOURIST WORLD SERVICE, INC. EVEN AS AGAINST THE LATTER.
IV. THE LOWER COURT ERRED IN NOT HOLDING THAT APPELLEES
HAD NO RIGHT TO EVICT APPELLANT MRS. LINA O. SEVILLA FROM
THE A. MABINI OFFICE BY TAKING THE LAW INTO THEIR OWN
HANDS.
V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL

APPELLEE NOGUERA'S RESPONSIBILITY FOR APPELLANT LINA O.
SEVILLA'S FORCIBLE DISPOSSESSION OF THE A. MABINI PREMISES.
VI. THE LOWER COURT ERRED IN FINDING THAT APPELLANT
APPELLANT MRS. LINA O. SEVILLA SIGNED MERELY AS GUARANTOR
FOR RENTALS.
On the foregoing facts and in the light of the errors asigned the issues to be resolved are:
1. Whether the appellee Tourist World Service unilaterally disco the telephone
line at the branch office on Ermita;
2. Whether or not the padlocking of the office by the Tourist World Service was
actionable or not; and
3. Whether or not the lessee to the office premises belonging to the appellee
Noguera was appellees TWS or TWS and the appellant.
In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was
entered into by and between her and appellee TWS with offices at the Ermita
branch office and that she was not an employee of the TWS to the end that her
relationship with TWS was one of a joint business venture appellant made
declarations showing:
1. Appellant Mrs. Lina 0. Sevilla, a prominent figure and wife of
an eminent eye, ear and nose specialist as well as a imediately
columnist had been in the travel business prior to the establishment
of the joint business venture with appellee Tourist World Service,
Inc. and appellee Eliseo Canilao, her compadre, she being the
godmother of one of his children, with her own clientele, coming
mostly from her own social circle (pp. 3-6 tsn. February 16,1965).
2. Appellant Mrs. Sevilla was signatory to a lease agreement dated
19 October 1960 (Exh. 'A') covering the premises at A. Mabini St.,
she expressly warranting and holding [sic] herself 'solidarily' liable
with appellee Tourist World Service, Inc. for the prompt payment
of the monthly rentals thereof to other appellee Mrs. Noguera (pp.
14-15, tsn. Jan. 18,1964).
3. Appellant Mrs. Sevilla did not receive any salary from appellee
Tourist World Service, Inc., which had its own, separate office
located at the Trade & Commerce Building; nor was she an

employee thereof, having no participation in nor connection with
said business at the Trade & Commerce Building (pp. 16-18 tsn
Id.).
4. Appellant Mrs. Sevilla earned commissions for her own
passengers, her own bookings her own business (and not for any of
the business of appellee Tourist World Service, Inc.) obtained from
the airline companies. She shared the 7% commissions given by
the airline companies giving appellee Tourist World Service, Lic.
3% thereof aid retaining 4% for herself (pp. 18 tsn. Id.)
5. Appellant Mrs. Sevilla likewise shared in the expenses of
maintaining the A. Mabini St. office, paying for the salary of an
office secretary, Miss Obieta, and other sundry expenses, aside
from desicion the office furniture and supplying some of fice
furnishings (pp. 15,18 tsn. April 6,1965), appellee Tourist World
Service, Inc. shouldering the rental and other expenses in
consideration for the 3% split in the co procured by appellant Mrs.
Sevilla (p. 35 tsn Feb. 16,1965).
6. It was the understanding between them that appellant Mrs.
Sevilla would be given the title of branch manager for appearance's
sake only (p. 31 tsn. Id.), appellee Eliseo Canilao admit that it was
just a title for dignity (p. 36 tsn. June 18, 1965- testimony of
appellee Eliseo Canilao pp. 38-39 tsn April 61965-testimony of
corporate secretary Gabino Canilao (pp- 2-5, Appellants' Reply
Brief)
Upon the other hand, appellee TWS contend that the appellant was an employee
of the appellee Tourist World Service, Inc. and as such was designated manager. 1
xxx xxx xxx
The trial court 2 held for the private respondent on the premise that the private respondent, Tourist
World Service, Inc., being the true lessee, it was within its prerogative to terminate the lease and
padlock the premises. 3 It likewise found the petitioner, Lina Sevilla, to be a mere employee of
said Tourist World Service, Inc. and as such, she was bound by the acts of her employer. 4 The
respondent Court of Appeal 5 rendered an affirmance.
The petitioners now claim that the respondent Court, in sustaining the lower court, erred.
Specifically, they state:
I
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED
ITS DISCRETION IN HOLDING THAT "THE PADLOCKING OF THE PREMISES BY
TOURIST WORLD SERVICE INC. WITHOUT THE KNOWLEDGE AND CONSENT OF
THE APPELLANT LINA SEVILLA ... WITHOUT NOTIFYING MRS. LINA O. SEVILLA OR
ANY OF HER EMPLOYEES AND WITHOUT INFORMING COUNSEL FOR THE
APPELLANT (SEVILIA), WHO IMMEDIATELY BEFORE THE PADLOCKING INCIDENT,
WAS IN CONFERENCE WITH THE CORPORATE SECRETARY OF TOURIST WORLD
SERVICE (ADMITTEDLY THE PERSON WHO PADLOCKED THE SAID OFFICE), IN
THEIR ATTEMP AMICABLY SETTLE THE CONTROVERSY BETWEEN THE
APPELLANT (SEVILLA) AND THE TOURIST WORLD SERVICE ... (DID NOT) ENTITLE
THE LATTER TO THE RELIEF OF DAMAGES" (ANNEX "A" PP. 7,8 AND ANNEX "B" P.
2) DECISION AGAINST DUE PROCESS WHICH ADHERES TO THE RULE OF LAW.
II
ITS DISCRETION IN DENYING APPELLANT SEVILLA RELIEF BECAUSE SHE HAD
"OFFERED TO WITHDRAW HER COMP PROVIDED THAT ALL CLAIMS AND
COUNTERCLAIMS LODGED BY BOTH APPELLEES WERE WITHDRAWN." (ANNEX
"A" P. 8)
III
ITS DISCRETION IN DENYING-IN FACT NOT PASSING AND RESOLVING-APPELLANT
SEVILLAS CAUSE OF ACTION FOUNDED ON ARTICLES 19, 20 AND 21 OF THE CIVIL
CODE ON RELATIONS.
IV
ITS DISCRETION IN DENYING APPEAL APPELLANT SEVILLA RELIEF YET NOT
RESOLVING HER CLAIM THAT SHE WAS IN JOINT VENTURE WITH TOURIST WORLD
SERVICE INC. OR AT LEAST ITS AGENT COUPLED WITH AN INTEREST WHICH
COULD NOT BE TERMINATED OR REVOKED UNILATERALLY BY TOURIST WORLD
SERVICE INC. 6
As a preliminary inquiry, the Court is asked to declare the true nature of the relation between
Lina Sevilla and Tourist World Service, Inc. The respondent Court of see fit to rule on the
question, the crucial issue, in its opinion being "whether or not the padlocking of the premises by
the Tourist World Service, Inc. without the knowledge and consent of the appellant Lina Sevilla
entitled the latter to the relief of damages prayed for and whether or not the evidence for the said
appellant supports the contention that the appellee Tourist World Service, Inc. unilaterally and
without the consent of the appellant disconnected the telephone lines of the Ermita branch office
of the appellee Tourist World Service, Inc. 7 Tourist World Service, Inc., insists, on the other
hand, that Lina SEVILLA was a mere employee, being "branch manager" of its Ermita "branch"
office and that inferentially, she had no say on the lease executed with the private respondent,
Segundina Noguera. The petitioners contend, however, that relation between the between parties
was one of joint venture, but concede that "whatever might have been the true relationship
between Sevilla and Tourist World Service," the Rule of Law enjoined Tourist World Service and
Canilao from taking the law into their own hands, 8 in reference to the padlocking now
questioned.
The Court finds the resolution of the issue material, for if, as the private respondent, Tourist
World Service, Inc., maintains, that the relation between the parties was in the character of
employer and employee, the courts would have been without jurisdiction to try the case, labor
disputes being the exclusive domain of the Court of Industrial Relations, later, the Bureau Of
Labor Relations, pursuant to statutes then in force. 9
In this jurisdiction, there has been no uniform test to determine the evidence of an employeremployee relation. In general, we have relied on the so-called right of control test, "where the
person for whom the services are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end." 10 Subsequently, however, we have
considered, in addition to the standard of right-of control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the payrolls, in determining
the existence of an employer-employee relationship. 11
The records will show that the petitioner, Lina Sevilla, was not subject to control by the private
respondent Tourist World Service, Inc., either as to the result of the enterprise or as to the means
used in connection therewith. In the first place, under the contract of lease covering the Tourist
Worlds Ermita office, she had bound herself in solidum as and for rental payments, an
arrangement that would be like claims of a master-servant relationship. True the respondent
Court would later minimize her participation in the lease as one of mere guaranty, 12 that does not
make her an employee of Tourist World, since in any case, a true employee cannot be made to
part with his own money in pursuance of his employer's business, or otherwise, assume any
liability thereof. In that event, the parties must be bound by some other relation, but certainly not
employment.
In the second place, and as found by the Appellate Court, '[w]hen the branch office was opened,
the same was run by the herein appellant Lina O. Sevilla payable to Tourist World Service, Inc.
by any airline for any fare brought in on the effort of Mrs. Lina Sevilla. 13 Under these
circumstances, it cannot be said that Sevilla was under the control of Tourist World Service, Inc.
"as to the means used." Sevilla in pursuing the business, obviously relied on her own gifts and
capabilities.
It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained
4% in commissions from airline bookings, the remaining 3% going to Tourist World. Unlike an
employee then, who earns a fixed salary usually, she earned compensation in fluctuating amounts
depending on her booking successes.
The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist
World's employee. As we said, employment is determined by the right-of-control test and certain
economic parameters. But titles are weak indicators.
In rejecting Tourist World Service, Inc.'s arguments however, we are not, as a consequence,
accepting Lina Sevilla's own, that is, that the parties had embarked on a joint venture or
otherwise, a partnership. And apparently, Sevilla herself did not recognize the existence of such a
relation. In her letter of November 28, 1961, she expressly 'concedes your [Tourist World
Service, Inc.'s] right to stop the operation of your branch office 14 in effect, accepting Tourist
World Service, Inc.'s control over the manner in which the business was run. A joint venture,
including a partnership, presupposes generally a of standing between the joint co-venturers or
partners, in which each party has an equal proprietary interest in the capital or property
contributed 15 and where each party exercises equal rights in the conduct of the business. 16
furthermore, the parties did not hold themselves out as partners, and the building itself was
embellished with the electric sign "Tourist World Service, Inc. 17in lieu of a distinct partnership
name.
It is the Court's considered opinion, that when the petitioner, Lina Sevilla, agreed to (wo)man the
private respondent, Tourist World Service, Inc.'s Ermita office, she must have done so pursuant
to a contract of agency. It is the essence of this contract that the agent renders services "in
representation or on behalf of another. 18 In the case at bar, Sevilla solicited airline fares, but she
did so for and on behalf of her principal, Tourist World Service, Inc. As compensation, she
received 4% of the proceeds in the concept of commissions. And as we said, Sevilla herself
based on her letter of November 28, 1961, pre-assumed her principal's authority as owner of the
business undertaking. We are convinced, considering the circumstances and from the respondent
Court's recital of facts, that the ties had contemplated a principal agent relationship, rather than a
joint managament or a partnership..
But unlike simple grants of a power of attorney, the agency that we hereby declare to be
compatible with the intent of the parties, cannot be revoked at will. The reason is that it is one
coupled with an interest, the agency having been created for mutual interest, of the agent and the
principal. 19 It appears that Lina Sevilla is a bona fide travel agent herself, and as such, she had
acquired an interest in the business entrusted to her. Moreover, she had assumed a personal
obligation for the operation thereof, holding herself solidarily liable for the payment of rentals.
She continued the business, using her own name, after Tourist World had stopped further
operations. Her interest, obviously, is not to the commissions she earned as a result of her
business transactions, but one that extends to the very subject matter of the power of
management delegated to her. It is an agency that, as we said, cannot be revoked at the pleasure
of the principal. Accordingly, the revocation complained of should entitle the petitioner, Lina
Sevilla, to damages.
As we have stated, the respondent Court avoided this issue, confining itself to the telephone
disconnection and padlocking incidents. Anent the disconnection issue, it is the holding of the
Court of Appeals that there is 'no evidence showing that the Tourist World Service, Inc.
disconnected the telephone lines at the branch office. 20 Yet, what cannot be denied is the fact that
Tourist World Service, Inc. did not take pains to have them reconnected. Assuming, therefore,
that it had no hand in the disconnection now complained of, it had clearly condoned it, and as
owner of the telephone lines, it must shoulder responsibility therefor.
The Court of Appeals must likewise be held to be in error with respect to the padlocking
incident. For the fact that Tourist World Service, Inc. was the lessee named in the lease con-tract
did not accord it any authority to terminate that contract without notice to its actual occupant,
and to padlock the premises in such fashion. As this Court has ruled, the petitioner, Lina Sevilla,
had acquired a personal stake in the business itself, and necessarily, in the equipment pertaining
thereto. Furthermore, Sevilla was not a stranger to that contract having been explicitly named
therein as a third party in charge of rental payments (solidarily with Tourist World, Inc.). She
could not be ousted from possession as summarily as one would eject an interloper.
The Court is satisfied that from the chronicle of events, there was indeed some malevolent design
to put the petitioner, Lina Sevilla, in a bad light following disclosures that she had worked for a
rival firm. To be sure, the respondent court speaks of alleged business losses to justify the closure
'21 but there is no clear showing that Tourist World Ermita Branch had in fact sustained such
reverses, let alone, the fact that Sevilla had moonlit for another company. What the evidence
discloses, on the other hand, is that following such an information (that Sevilla was working for
another company), Tourist World's board of directors adopted two resolutions abolishing the
office of 'manager" and authorizing the corporate secretary, the respondent Eliseo Canilao, to
effect the takeover of its branch office properties. On January 3, 1962, the private respondents
ended the lease over the branch office premises, incidentally, without notice to her.
It was only on June 4, 1962, and after office hours significantly, that the Ermita office was
padlocked, personally by the respondent Canilao, on the pretext that it was necessary to Protect
the interests of the Tourist World Service. " 22 It is strange indeed that Tourist World Service, Inc.
did not find such a need when it cancelled the lease five months earlier. While Tourist World
Service, Inc. would not pretend that it sought to locate Sevilla to inform her of the closure, but
surely, it was aware that after office hours, she could not have been anywhere near the premises.
Capping these series of "offensives," it cut the office's telephone lines, paralyzing completely its
business operations, and in the process, depriving Sevilla articipation therein.
This conduct on the part of Tourist World Service, Inc. betrays a sinister effort to punish Sevillsa
it had perceived to be disloyalty on her part. It is offensive, in any event, to elementary norms of
justice and fair play.
We rule therefore, that for its unwarranted revocation of the contract of agency, the private
respondent, Tourist World Service, Inc., should be sentenced to pay damages. Under the Civil
Code, moral damages may be awarded for "breaches of contract where the defendant acted ... in
bad faith. 23
We likewise condemn Tourist World Service, Inc. to pay further damages for the moral injury
done to Lina Sevilla from its brazen conduct subsequent to the cancellation of the power of
attorney granted to her on the authority of Article 21 of the Civil Code, in relation to Article 2219
(10) thereof
ART. 21. Any person who wilfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage. 24
ART. 2219. Moral damages 25 may be recovered in the following and analogous
cases:
xxx xxx xxx
(10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby ordered to respond for the
same damages in a solidary capacity.
Insofar, however, as the private respondent, Segundina Noguera is concerned, no evidence has
been shown that she had connived with Tourist World Service, Inc. in the disconnection and
padlocking incidents. She cannot therefore be held liable as a cotortfeasor.
The Court considers the sums of P25,000.00 as and for moral damages,24 P10,000.00 as
exemplary damages, 25 and P5,000.00 as nominal 26 and/or temperate 27 damages, to be just, fair,
and reasonable under the circumstances.
WHEREFORE, the Decision promulgated on January 23, 1975 as well as the Resolution issued
on July 31, 1975, by the respondent Court of Appeals is hereby REVERSED and SET ASIDE.
The private respondent, Tourist World Service, Inc., and Eliseo Canilao, are ORDERED jointly
and severally to indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as and for moral
damages, the sum of P10,000.00, as and for exemplary damages, and the sum of P5,000.00, as
and for nominal and/or temperate damages.
Costs against said private respondents.
SO ORDERED.
Yap (Chairman), Melencio-Herrera, Paras and Padilla, JJ., concur.
Footnotes
G.R. No. L-16600
December 27, 1961
ILOILO CHINESE COMMERCIAL SCHOOL, petitioner,

vs.
LEONORA FABRIGAR and THE WORKMEN'S COMPENSATION COMMISSION,
respondents.
Luis G. Hofilea for petitioner.
J. T. de Leon for respondents.
PAREDES, J.:
As a result of the death of Santiago Fabrigar, on June 28, 1956, his heirs in the person of Leonora
Fabrigar (common-law wife) and their children, filed a claim for compensation with the
Workmen's Compensation Commission, Case No. 1085, W.C.C., entitled "Leonora Fabrigar, et
al., Claimants, vs. Iloilo Chinese Commercial School, Respondent." In this claim, it was alleged
that the cause of death was " pulmonary tuberculosis contracted during and as a result of his
employment as janitor." The Hearing Officer of the WCC denied the claim and dismissed the
case, finding that the claimant failed to prove the casual effect of employment and death; nothing
was shown that the disease was contracted in line of duty; that whatever evidence claimant
presented about the cause of death was only a mere suggestion that progressively developed from
tuberculosis with heart trouble to a sudden fatal turn, ending up for the cause of "beriberi adult"
at the time of death, as per certification of Sanitary Inspector Dr. P. E. Labitoria, of Dao, Capiz
(Exhibits C & 4).
The heirs of Santiago Fabrigar appealed the decision with the Workmen's Compensation
Commission which, on November 12, 1959, rendered judgment reversing the decision of its
Hearing Officer, making the following findings of facts:
That Santiago Fabrigar had been employed from 1947 to March 12, 1956, as a janitor-messenger
of the respondent Iloilo Chinese Commercial School, his work consisting of sweeping and
scrubbing the floors, cleaning the classrooms and the school premises, and other janitorial
chores; on March 11, 1956, preparatory to graduation day, he carried desks and chairs from the
classrooms to the auditorium, set the curtains and worked harder and faster than usual; that
although he felt shortness of breath and did not feel very well that day, he continued working at
the request of the overseer of respondent, that on the following day he reported for work, but on
March 13, he spat blood and stopped working; that from April 29, 1956 to May 15, 1956, he was
under treatment by Dr. Quirico Villareal "for far advanced pulmonary tuberculosis and for heart
disease"; and that previous to said treatment, he was attended by Dr. Jaranilla for pulmonary
tuberculosis. The Commission concluded that the short period of intervention between his last
day of work (March 13, 1956) when he spat blood and his death on June 28, 1956, due to
pulmonary tuberculosis, indicated that he had been suffering from such disease even during the
time he was employed by the respondent and considering the strenuous work he performed, his
employment as janitor aggravated his pre-existing illness; that although here is a discrepancy
between the cause of death "beriberi adult," as appearing in the death Certificate and the
testimony of Dr. Villareal, the latter deserves more credence, because the information (cause of
death) was given by the sanitary inspector who did not, in any way, examine the deceased before
or after his death. The Commission, therefore, ordered the respondent Chinese Commercial
School, Inc., in said case
1. To pay to the claimant, for and in behalf of her minor children by the deceased,
namely, Carlito, Gloria, Rosita and Ernesto, all surnamed Fabrigar, the amount of TWO
THOUSAND FOUR HUNDRED NINETY SIX and 00/00 Pesos (P2,496.00) as Death
benefits; and
2. To pay to the Commission the amount of P25.00 as fees pursuant to Section 55 of Act
3428, as amended.
The above decision is now before Us for Review on a Writ of Certiorari, after the motion for
reconsideration had been denied, petitioner alleging that the Commission erred:
1. In disregarding completely the evidentiary value of the death certificate of the

attending physician which was presented as evidence by both claimants and respondent
(Exhibits C & 4) to prove the cause of death;
2. In finding that the cause of death of said Santiago Fabrigar was tuberculosis and was
contracted during and as a result of the nature of his employment;
3. In holding that the herein petitioner was the employer of the deceased Santiago
Fabrigar; and
4. In not holding that the herein petitioner is exempt from the scope of the Workmen's
Compensation Law.lawphil.net
Petitioner contends that the preponderance of evidence on the matters involved in this case,
militates in its favor. Considering the doctrine that the Commission, like the Court of Industrial
Relations, is bound not by the rule of preponderance of evidence as in ordinary civil cases, but
by the rule of substantial evidence (Ang Tibay vs. CIR, 69 Phil. 635; Phil. Newspaper Guild vs.
Evening News, 47 Off. Gaz. No. 12, p. 6188; Secs. 43 & 46 Rep. Act No. 772, W.C. Act),
petitioner's pretension is without merit. Substantial evidence supports the decision of the
Commission. While seemingly there exists an inconsistency in the cause of death, as appearing
in the death certificate by Dr. Labitoria and in Dr. Villareal's diagnosis, it is a fact found by the
Commission, that the Sanitary Inspector did not examine the deceased before and after his death.
"Undoubtedly," says the Commission, "the information that he died of beriberi adult, as
appearing in the death certificate was given because it appears that the deceased had also edema
of the extremities (swollen legs)." The evidence of record sustains the following findings of the
Commission, is Fabrigar's cause of death to wit
The short period of time intervening between his last day of work (March 13, 1956) when
he spat blood and his death June 28, 1956 due to pulmonary tuberculosis indicates that he
had been suffering from the disease even during the time that he was employed by the
respondent. Considering the strenuous work that he performed while in the service of the
respondents and the unusually long hours of work he rendered (6:00 p.m. to 1:30 p.m.
and from 2:00 p.m. to 6:00 p.m. or 7:00 p.m.) beyond the normal and legal working
hours, we find that his employment aggravated his pre-existing illness and brought about
his death. Moreover, our conclusion finds support in the fact that immediately preceding
his last day of work with the respondent, he had an unusually hard day lifting desks and
other furnitures and assisting in the preparations for the graduation exercises of the
school. Considering also his complaints during that day (March 11), among which was
"shortness of breath", we may also say that his work affected an already existing heart
ailment.
We find no plausible reason for altering or disturbing the above factual findings of the
Commission, in the present appeal by certiorari.
It is claimed that actually the deceased was not an employee of the petitioner, but by the Iloilo
Chinese Chamber of Commerce which was the one that furnished the janitor service in the
premises of its buildings, including the part thereof occupied by the petitioner; that the Chamber
of Commerce paid the salaries of janitors, including the deceased; that the petitioner could not
afford to pay rentals of its premises and janitor due to limited finances depended largely on funds
raised among its Board of Directors, the Chinese Chamber of Commerce and Chinese nationals
who helped the school. In other words, it is pretended that the deceased was not an employee of
the school but of the Chinese Chamber of Commerce which should be the one responsible for the
compensation of the deceased. On one hand, according to the Commission, there is substantial
proof to the effect that Fabrigar was employed by and rendered service for the petitioner and was
an employee within the purview of the Workmen's Compensation Law. On the other hand, the
most important test of employer-employee relation is the power to control the employee's
conduct. The records disclose that the person in charge (encargado) of the respondent school
supervised the deceased in his work and had control over the manner he performed the same.
It is finally contended that petitioner is an institution devoted solely for learning and is not an
industry within the meaning of the Workmen's Compensation Law. Consequently, it is argued, it
is exempt from the scope of the same law. Considering that this factual question has not been
properly put in issue before the Commission, it may not now be entertained in this appeal for the
first time (Atlantic Gulf, etc. vs. CIR, et al., L-16992, Dec. 23, 1961, citing International Oil
Factory Union v. Hon. Martinez, et al., L-15560, Dec. 31, 1960). The decision of the
Commission does not show that the matter was taken up. We are at a loss to state whether the
issue was raised in the motion for reconsideration filed with the Commission, because the said
motion is not found in the record before us. And the resolution to the motion for reconsideration
does not touch this question.
IN VIEW HEREOF, the appeal interposed by the petitioner is dismissed, and the decision
appealed from is affirmed, with costs against the herein petitioner.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon and De
Leon, JJ., concur.
Padilla, J., took no part.
G.R. No. 114787 June 2, 1995
MAM REALTY DEVELOPMENT CORPORATION and MANUEL CENTENO,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and CELSO B. BALBASTRO

respondents.
VITUG, J.:
A prime focus in the instant petition is the question of when to hold a director or officer of a
corporation solidarily obligated with the latter for a corporate liability.
The case originated from a complaint filed with the Labor Arbiter by private respondent Celso B.
Balbastro against herein petitioners, MAM Realty Development Corporation ("MAM") and its
Vice President Manuel P. Centeno, for wage differentials, "ECOLA," overtime pay, incentive
leave pay, 13th month pay (for the years 1988 and 1989), holiday pay and rest day pay. Balbastro
alleged that he was employed by MAM as a pump operator in 1982 and had since performed
such work at its Rancho Estate, Marikina, Metro Manila. He earned a basic monthly salary of
P1,590.00 for seven days of work a week that started from 6:00 a.m. to up until 6:00 p.m. daily.
MAM countered that Balbastro had previously been employed by Francisco Cacho and Co., Inc.,
the developer of Rancho Estates. Sometime in May 1982, his services were contracted by MAM
for the operation of the Rancho Estates' water pump. He was engaged, however, not as an
employee, but as a service contractor, at an agreed fee of P1,590.00 a month. Similar
arrangements were likewise entered into by MAM with one Rodolfo Mercado and with a
security guard of Rancho Estates III Homeowners' Association. Under the agreement, Balbastro
was merely made to open and close on a daily basis the water supply system of the different
phases of the subdivision in accordance with its water rationing scheme. He worked for only a
maximum period of three hours a day, and he made use of his free time by offering plumbing
services to the residents of the subdivision. He was not at all subject to the control or supervision
of MAM for, in fact, his work could so also be done either by Mercado or by the security guard.
On 23 May 1990, prior to the filing of the complaint, MAM executed a Deed of Transfer, 1
effective 01 July 1990, in favor of the Rancho Estates Phase III Homeowners Association, Inc.,
conveying to the latter all its rights and interests over the water system in the subdivision.
In a decision, dated 23 December 1991, the Labor Arbiter dismissed the complaint for lack of
merit.
On appeal to it, respondent National Labor Relations Commission ("NLRC") rendered judgment
(a) setting aside the questioned decision of the Labor Arbiter and (b) referring the case, pursuant
to Article 218(c) of the Labor Code, to Arbiter Cristeta D. Tamayo for further hearing and
submission of a report within 20 days from receipt of the Order. 2 On 21 March 1994, respondent
Commissioner, after considering the report of Labor Arbiter Tamayo, ordered:
WHEREFORE, the respondents are hereby directed to pay jointly and severally
complainant the sum of P86,641.05 as above-computed. 3
The instant petition asseverates that respondent NLRC gravely abused its discretion,
amounting to lack or excess of jurisdiction, (1) in finding that an employer-employee
relationship existed between petitioners and private respondent and (2) in holding
petitioners jointly and severally liable for the money claims awarded to private
respondent.
Once again, the matter of ascertaining the existence of an employer-employee relationship is
raised. Repeatedly, we have said that this factual issue is determined by:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the employee with respect to the result of the
work to be done and to the means and methods by which the work is to be
accomplished.
We see no grave abuse of discretion on the part of NLRC in finding a full satisfaction, in
the case at bench, of the criteria to establish that employer-employee relationship. The
power of control, the most important feature of that relationship and, here, a point of
controversy, refers merely to the existence of the power and not to the actual exercise
thereof. It is not essential for the employer to actually supervise the performance of
duties of the employee; it is enough that the former has a right to wield the power. 4 It is
hard to accede to the contention of petitioners that private respondent should be
considered totally free from such control merely because the work could equally and
easily be done either by Mercado or by the subdivision's security guard. Not without any
significance is that private respondent's employment with MAM has been registered by
petitioners with the Social Security System. 5
It would seem that the money claims awarded to private respondent were computed from 06
March 1988 to 06 March 1991, 6 the latter being the date of the filing of the complaint. The
NLRC might have missed the transfer by MAM of the water system to the Homeowners
Association on 01 July 1990, a matter that would appear not to be in dispute. Accordingly, the
period for the computation of the money claims should only be for the period from 06 March
1988 to 01 July 1990 (when petitioner corporation could be deemed to have ceased from the
activity for which private respondent was employed), and petitioner corporation should, instead,
be made liable for the employee's separation pay equivalent to one-half (1/2) month pay for
every year of
service. 7 While the transfer was allegedly due to MAM's financial constraints, unfortunately for
petitioner corporation, however, it failed to sufficiently establish that its business losses or
financial reverses were serious enough that possibly can warrant an exemption under the law. 8
We agree with petitioners, however, that the NLRC erred in holding Centeno jointly and
severally liable with MAM. A corporation, being a juridical entity, may act only through its
directors, officers and employees. Obligations incurred by them, acting as such corporate agents,
are not theirs but the direct accountabilities of the corporation they represent. True, solidary
liabilities may at times be incurred but only when exceptional circumstances warrant such as,
generally, in the following cases: 9
1. When directors and trustees or, in appropriate cases, the officers of a
corporation
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the
corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the
corporation, its stockholders or members, and other persons. 10
2. When a director or officer has consented to the issuance of watered stocks or
who, having knowledge thereof, did not forthwith file with the corporate secretary
his written objection thereto. 11
3. When a director, trustee or officer has contractually agreed or stipulated to hold
himself personally and solidarily liable with the Corporation. 12
4 When a director, trustee or officer is made, by specific provision of law,
personally liable for his corporate action. 13
In labor cases, for instance, the Court has held corporate directors and officers solidarily
liable with the corporation for the termination of employment of employees done with
malice or in bad faith. 14
In the case at Bench, there is nothing substantial on record that can justify, prescinding from the
foregoing, petitioner Centeno's solidary liability with the corporation.
An extra note. Private respondent avers that the questioned decision, having already become
final and executory, could no longer be reviewed by this Court. The petition before us has been
filed under Rule 65 of the Rules of Court, there being no appeal, or any other plain, speedy and
adequate remedy in the ordinary course of law from decisions of the National Labor Relations
Commission; it is a relief that is open so long as it is availed of within a reasonable time.
WHEREFORE, the order of 21 March 1994 is MODIFIED. The case is REMANDED to the
NLRC for a re-computation of private respondent's monetary awards, which, conformably with
this opinion, shall be paid solely by petitioner MAM Realty Development Corporation. No
special pronouncement on costs.
SO ORDERED.
Feliciano, Romero, Melo and Francisco, JJ., concur.
Footnotes
G.R. No. 84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.
Tirol & Tirol for petitioner.
Enojas, Defensor & Teodosio Cabado Law Offices for private respondent.
NARVASA, J.:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and
Melecio T. Basiao entered into a contract 1 by which:
1. Basiao was "authorized to solicit within the Philippines applications for
insurance policies and annuities in accordance with the existing rules and
regulations" of the Company;
2. he would receive "compensation, in the form of commissions ... as provided in
the Schedule of Commissions" of the contract to "constitute a part of the
consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as
all its circulars ... and those which may from time to time be promulgated by
it, ..." were made part of said contract.
The contract also contained, among others, provisions governing the relations of the parties, the
duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement,
viz.:
RELATION WITH THE COMPANY. The Agent shall be free to exercise his own
judgment as to time, place and means of soliciting insurance. Nothing herein
contained shall therefore be construed to create the relationship of employee and
employer between the Agent and the Company. However, the Agent shall observe
and conform to all rules and regulations which the Company may from time to
time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from
giving, directly or indirectly, rebates in any form, or from making any
misrepresentation or over-selling, and, in general, from doing or committing acts
prohibited in the Agent's Manual and in circulars of the Office of the Insurance
Commissioner.
TERMINATION. The Company may terminate the contract at will, without any
previous notice to the Agent, for or on account of ... (explicitly specified
causes). ...
Either party may terminate this contract by giving to the other notice in writing to
that effect. It shall become ipso facto cancelled if the Insurance Commissioner
should revoke a Certificate of Authority previously issued or should the Agent fail
to renew his existing Certificate of Authority upon its expiration. The Agent shall
not have any right to any commission on renewal of premiums that may be paid
after the termination of this agreement for any cause whatsoever, except when the
termination is due to disability or death in line of service. As to commission
corresponding to any balance of the first year's premiums remaining unpaid at the
termination of this agreement, the Agent shall be entitled to it if the balance of the
first year premium is paid, less actual cost of collection, unless the termination is
due to a violation of this contract, involving criminal liability or breach of trust.
ASSIGNMENT. No Assignment of the Agency herein created or of commissions
or other compensations shall be valid without the prior consent in writing of the
Company. ...
Some four years later, in April 1972, the parties entered into another contract an Agency
Manager's Contract and to implement his end of it Basiao organized an agency or office to
which he gave the name M. Basiao and Associates, while concurrently fulfilling his
commitments under the first contract with the Company. 2
In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a
reconsideration, Basiao sued the Company in a civil action and this, he was later to claim,
prompted the latter to terminate also his engagement under the first contract and to stop payment
of his commissions starting April 1, 1980. 3
Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its
president. Without contesting the termination of the first contract, the complaint sought to
recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed
the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's
employee, but an independent contractor and that the Company had no obligation to him for
unpaid commissions under the terms and conditions of his contract. 5
The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the
underwriting agreement had established an employer-employee relationship between him and the
Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said
official's decision directed payment of his unpaid commissions "... equivalent to the balance of
the first year's premium remaining unpaid, at the time of his termination, of all the insurance
policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees. 6
This decision was, on appeal by the Company, affirmed by the National Labor Relations
Commission. 7 Hence, the present petition for certiorari and prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the
Company's employee by virtue of the contract invoked by him, thereby placing his claim for
unpaid commissions within the original and exclusive jurisdiction of the Labor Arbiter under the
provisions of Section 217 of the Labor Code, 8 or, contrarily, as the Company would have it, that
under said contract Basiao's status was that of an independent contractor whose claim was thus
cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an ordinary civil
action.
The Company's thesis, that no employer-employee relation in the legal and generally accepted
sense existed between it and Basiao, is drawn from the terms of the contract they had entered
into, which, either expressly or by necessary implication, made Basiao the master of his own
time and selling methods, left to his judgment the time, place and means of soliciting insurance,
set no accomplishment quotas and compensated him on the basis of results obtained. He was not
bound to observe any schedule of working hours or report to any regular station; he could seek
and work on his prospects anywhere and at anytime he chose to, and was free to adopt the selling
methods he deemed most effective.
Without denying that the above were indeed the expressed implicit conditions of Basiao's
contract with the Company, the respondents contend that they do not constitute the decisive
determinant of the nature of his engagement, invoking precedents to the effect that the critical
feature distinguishing the status of an employee from that of an independent contractor is
control, that is, whether or not the party who engages the services of another has the power to
control the latter's conduct in rendering such services. Pursuing the argument, the respondents
draw attention to the provisions of Basiao's contract obliging him to "... observe and conform to
all rules and regulations which the Company may from time to time prescribe ...," as well as to
the fact that the Company prescribed the qualifications of applicants for insurance, processed
their applications and determined the amounts of insurance cover to be issued as indicative of the
control, which made Basiao, in legal contemplation, an employee of the Company. 9
It is true that the "control test" expressed in the following pronouncement of the Court in the
1956 case of Viana vs. Alejo Al-Lagadan 10
... In determining the existence of employer-employee relationship, the following
elements are generally considered, namely: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employees' conduct although the latter is the most
important element (35 Am. Jur. 445). ...
has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without question a
valid test of the character of a contract or agreement to render service. It should, however, be
obvious that not every form of control that the hiring party reserves to himself over the conduct
of the party hired in relation to the services rendered may be accorded the effect of establishing
an employer-employee relationship between them in the legal or technical sense of the term. A
line must be drawn somewhere, if the recognized distinction between an employee and an
individual contractor is not to vanish altogether. Realistically, it would be a rare contract of
service that gives untrammelled freedom to the party hired and eschews any intervention
whatsoever in his performance of the engagement.
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the result and the means
used to achieve it. The distinction acquires particular relevance in the case of an enterprise
affected with public interest, as is the business of insurance, and is on that account subject to
regulation by the State with respect, not only to the relations between insurer and insured but
also to the internal affairs of the insurance company. 12 Rules and regulations governing the
conduct of the business are provided for in the Insurance Code and enforced by the Insurance
Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set
of rules to guide its commission agents in selling its policies that they may not run afoul of the
law and what it requires or prohibits. Of such a character are the rules which prescribe the
qualifications of persons who may be insured, subject insurance applications to processing and
approval by the Company, and also reserve to the Company the determination of the premiums to
be paid and the schedules of payment. None of these really invades the agent's contractual
prerogative to adopt his own selling methods or to sell insurance at his own time and
convenience, hence cannot justifiably be said to establish an employer-employee relationship
between him and the company.
There is no dearth of authority holding persons similarly placed as respondent Basiao to be
independent contractors, instead of employees of the parties for whom they worked. In Mafinco
Trading Corporation vs. Ople, 13 the Court ruled that a person engaged to sell soft drinks for
another, using a truck supplied by the latter, but with the right to employ his own workers, sell
according to his own methods subject only to prearranged routes, observing no working hours
fixed by the other party and obliged to secure his own licenses and defray his own selling
expenses, all in consideration of a peddler's discount given by the other party for at least 250
cases of soft drinks sold daily, was not an employee but an independent contractor.
In Investment Planning Corporation of the Philippines us. Social Security System 14 a case almost
on all fours with the present one, this Court held that there was no employer-employee
relationship between a commission agent and an investment company, but that the former was an
independent contractor where said agent and others similarly placed were: (a) paid compensation
in the form of commissions based on percentages of their sales, any balance of commissions
earned being payable to their legal representatives in the event of death or registration; (b)
required to put up performance bonds; (c) subject to a set of rules and regulations governing the
performance of their duties under the agreement with the company and termination of their
services for certain causes; (d) not required to report for work at any time, nor to devote their
time exclusively to working for the company nor to submit a record of their activities, and who,
finally, shouldered their own selling and transportation expenses.
More recently, in Sara vs. NLRC, 15 it was held that one who had been engaged by a rice miller to
buy and sell rice and palay without compensation except a certain percentage of what he was
able to buy or sell, did work at his own pleasure without any supervision or control on the part of
his principal and relied on his own resources in the performance of his work, was a plain
commission agent, an independent contractor and not an employee.
The respondents limit themselves to pointing out that Basiao's contract with the Company bound
him to observe and conform to such rules and regulations as the latter might from time to time
prescribe. No showing has been made that any such rules or regulations were in fact
promulgated, much less that any rules existed or were issued which effectively controlled or
restricted his choice of methods or the methods themselves of selling insurance. Absent
such showing, the Court will not speculate that any exceptions or qualifications were imposed on
the express provision of the contract leaving Basiao "... free to exercise his own judgment as to
the time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with
the Company for twenty-five years. Whatever this is meant to imply, the obvious reply would be
that what is germane here is Basiao's status under the contract of July 2, 1968, not the length of
his relationship with the Company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee
of the petitioner, but a commission agent, an independent contractor whose claim for unpaid
commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in
taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the
respondent NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary and
premature to consider Basiao's claim for commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set
aside, and that complaint of private respondent Melecio T. Basiao in RAB Case No. VI-0010-83
is dismissed. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.
Footnotes
G.R. No. 24314 September 28, 1970
MANILA HOTEL COMPANY, petitioner,
vs.
PINES HOTEL EMPLOYEES ASSOCIATION and COURT OF INDUSTRIAL
RELATIONS.
Tomas P. Matic, Jr. for petitioner.
Gregorio E. Fajardo for respondent Association.
CASTRO, J.:
Petition for review of the Resolution of the Court of Industrial Relations (CIR) dated February
24, 1965, affirming its Order of December 22, 1964 which directs the petitioner Manila Hotel
Company (MHC) to deposit with the said court the amount of P8,795.62 representing the
differential pay of eight (8) of the petitioner's employees, pursuant to the provisions of Republic
Act 1880, otherwise known as the 40-Hour Week Law. 1
On July 22, 1963 the respondent Pines Hotel Employees Association (PHEA) applied to the CIR
for an order that would require the petitioner herein to pay PHEA members in the petitioner's
employ the benefits due them under R.A. 1880, from July 1, 1957 to the date of the filing of the
petition with the CIR. The particular portion of R.A. 1880 invoked reads as follows:
SEC. 562. Legal Hours of Labor Minimum Requirement.
xxx xxx xxx
Such hours, except for schools, courts, hospitals and health clinics or where the
exigencies of the service so require, shall be as prescribed in the Civil Service
Rules ... but shall be eight (8) hours a day, for five (5) days a week or a total of
forty (40) hours a week, exclusive of time for lunch: Provided, That any employee
or laborer now in the employment of the government who shall suffer a reduction
of his weekly or daily wage or compensation because of a reduction of the
number of days or hours of labor in a week, as provided by this section, subject to
the minimum daily or hourly wage or compensation or pay per piece already fixed
under R.A. 602, shall be given an automatic increase in his daily or hourly wage
or compensation or in the rate per piece, whose amount in a week or a day or per
piece shall be equal to the diminution which his daily or hourly or per piece wage
or compensation shall suffer on account of the reduction of days or labor to five
days a week: And provided, further, That salaries of employees received on
monthly basis shall not suffer any admunition on account of the reduction of the
number of days of labor a week."
In opposition, the MHC replied that the demand of the PHEA had already been settled under the
terms of an agreement, entitled "Settlement of Grievance," which the parties entered into on
February 9, 1962 as a supplement to their "Collective Bargaining Agreement" dated November 6,
1961. The pertinent portion of this agreement recites:
(a) As understood herein, "regular extras" referred to under this grievance, shall
refer to workers who rendered continuous service for six (6) months or more;
(b) Regular extras who were in the service of the Pines Hotel on July 1, 1957,
shall be given automatic salary increases in accordance with R.A. 1880, otherwise
known as 40-Hour-5 Days A Week Law, as implemented by Presidential
Executive Order No. 251, series of 1957;
(c) Regular extras taken in the service after July 1, 1957 are not included in this
settlement.
On November 22, 1963 the CIR directed its examiner to see through the books of MHC and
verify compliance with R.A. 1880 and the agreement of the parties.
On March 23, 1964 the examiner submitted his report covering the period from July 1, 1957 to
December 31, 1963. This report disclosed that eight employees of the MHC were still being paid
the same wages they used to receive before July 1, 1957. The total amount due them, according
to his computation, is P8,795.62, broken down as follows:
1. Adrineda Fortunato P 979.72
2. Enriquez, Jose 883.50
3. Niniwat Ananayo 1,460.70
4. Lopez, Daniel 797.70
5. Natividad, Bernabe 1,622.40
6. Nidoy, Ponciano 1,092.80
7. Tabbang, William 1,158.50
8. Evangelista, Federico 800.30
P8,795.62
The MHC, however, interposed an objection with reference to the coverage of the examiner's
report, contending that the employees referred to therein are not entitled under the terms of the
"Settlement of Grievance" to any automatic salary increases because to qualify thereunder an
employee must have been in its service for at least six (6) months prior to July 1, 1957. The
above-mentioned employees did not meet this requirement of the agreement, according to the
MHC. The PHEA however, countered that this 6-month period refers to the time prior to
February 9, 1962, the date of the execution of the "Settlement of Grievance," and not to the time
prior to July 1, 1957.
On December 22, 1964, after due hearing, the CIR promulgated the disputed order, the pertinent
portions of which read as follows:
A reading of the above agreement convinces this Court that the regular extras who
were already in the service before July 1, 1957 and who had been receiving wages
based on 48 hours a week are entitled to the benefits of Republic Act 1880 in that
the same salary they are receiving for the 48 hour-service before the law took
effect should be their wages for the 40 hours a week service, after the effectivity
of the law on July 1, 1957 and therefore any service rendered over the 40 hours a
week, after effectivity of the law, represents extra hours of work and respondent
should pay the corresponding differential in pay to the employees concerned. The
6 months service referred to in the agreement applies only to extra employees
who were taken in after July 1, 1957, otherwise they cannot even be considered as
"regular extras" but they are not entitled to the benefits of R.A. 1880 because this
law applies only to the employees who were already in the service on July 1,
1957. There is no requirement in the law, and even the contract does not require,
that the continuous service for 6 months should apply to those who were already
in the service on July 1, 1957 before they can be entitled to the provision of the
law. Hence, the Court is of the opinion, and so holds, that the 8 employees named
in the Report of the Examiner should be paid the corresponding amount due each
of them, by the respondent company, as differential in pay representing extra
hours of service, or hours of work than 40 hours a week of service, required under
Republic Act 1880.
On January 9, 1965 the MHC moved for reconsideration, reiterating its interpretation of the
"Settlement of Grievance," and further arguing that: (1) the PHEA has validly waived the
benefits of the 40-Hour Week Law when it agreed that only those who have rendered six months'
service shall be given automatic salary increases; and (2) the CIR has no jurisdiction over the
subject-matter of the petition because it involves merely the implementation of a contract
between the parties. This motion was denied by the CIR in banc on February 24, 1965.
Hence, the present recourse.
1. The jurisdiction of the CIR to entertain the petition of the PHEA should be upheld. The
question of benefits arising under R.A. 1880 has become closely intertwined with union interest.
This is explicitly recognized by the MHC itself which entered into an agreement with the PHEA
precisely on this particular matter. Thus, when the PHEA averred non-compliance by the MHC
with the statute, against the MHC's claim of full compliance by virtue of an agreement entered
into by it with the PHEA to carry out the mandate of the Forty-Hour Week Law, the CIR was
inescapably presented with the issue of whether or not there was compliance with the law and the
contract between the parties. An issue of this nature is undoubtedly within the competence of the
CIR to take cognizance of, considering the likelihood that its investigation may disclose that the
employer was, in effect, committing an unfair labor practice. Under Section 5(a) of R.A. 875,
otherwise known as the Industrial Peace Act, the machinery established to prevent the occurrence
of unfair labor practices is the CIR. The petition filed by PHEA presented, in our opinion, all the
aspects of an unfair labor practice case arising from the conflict in the interpretation of the
agreement between the PHEA and the MHC.
Another cogent reason why we uphold the jurisdiction of the CIR is that R.A. 1880 closely
resembles and partakes of the nature of Commonwealth Act 444, otherwise known as the EightHour Labor Law. Both statutes limit the number of hours of labor, and R.A. 1880 does suggest,
in a manner intimately akin to C.A. 444, that work in excess of 40 hours a week or 8 hours a day
will give rise to a right to overtime pay. Indeed, in both policy and purpose, the two enactments
are indistinguishable. In recognizing the jurisdiction of the CIR in the case at bar, therefore, we
are merely reiterating our adherence to the principle (enunciated by this Court in a number of
cases involving claims for overtime pay under C.A. 444) that where there is an employeremployee relationship, a claim arising out of or in connection with employment under the EightHour Labor Law is within the jurisdictional competence of the CIR. 2
2. The MHC contends that its obligation under the disputed order of the CIR represents arrears
which the PHEA in behalf of its members, must be deemed to have waived when it entered on
February 9, 1962 into the "Settlement of Grievance" with the MHC. This contention is palpably
devoid of merit.
R.A. 1880 was enacted for the benefit of the laboring masses of our society. Thus, it not only
limits the hours of labor per day and per week, but as well provides that automatic salary
increases shall be enjoyed by those who, as a result of the operation of the law, stood to suffer a
reduction in pay because of the reduction of the number of hours of work. These strictures are
clearly mandatory for the employer, and understandably so, for Congress fully appreciates the
unhappy and disadvantageous bargaining status of the employees who would naturally be
reluctant or even apprehensive in asserting a claim which may cause them the loss of their
livelihood. It is this Court's solemn duty to apply the full import and intendment of the law.
ACCORDINGLY, the Order dated December 22, 1964 and the Resolution dated February 24,
1965 of the CIR are affirmed, at petitioner's cost.
Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.
Concepcion, C.J., is on leave.
Zaldivar, J., took no part.
# Footnotes
.R. No. L-21465
March 31, 1966
INDUSTRIAL-COMMERCIAL-AGRICULTURAL WORKERS' ORGANIZATION

(ICAWO), petitioner-appellant,
vs.
COURT OF INDUSTRIAL RELATIONS, CENTRAL AZUCARERA DE PILAR and/or
ANTONIO BELZARENA as Manager, CENTRAL AZUCARERA DE PILAR ALLIED
WORKERS ASSOCIATION (CAPAWA), respondents-appellees.
A. Velez for the petitioner.
Tirol and Tirol for the respondent.
REYES, J.B.L., J.:
Appeal from a decision of the Court of Industrial Relations (Case No.
44-ULP-Iloilo) dismissing charges for unfair labor practice.
On 9 February 1956, the petitioner, Industrial-Commercial-Agricultural Workers' Organization
(hereinafter referred to as the "ICAWO"), declared a strike against the respondent Central
Azucarera de Pilar. The strike was amicably settled the following day, and among the provisions
of the "Amicable Settlement" (Exhibit "C") reads:
That the company shall not discriminate against any worker and the same treatment shall
be accorded to workers (ICAWO affiliates) who declared a strike or not. A petition for
Certification Election will be filed by the ICAWO in view of the other labor union,
CAPAWA, with whom the company has an existing collective bargaining contract, a
union which is considered by the ICAWO as a company union.
The CAPAWA therein referred to is the herein respondent Central Azucarera de Pilar Allied
Workers Association and the collective bargaining contract, likewise therein referred to, entered
into in 1955, provided:
The EMPLOYER agrees that in hiring unskilled employees and laborers, the members of
the WORKERS ASSOCIATION should be given preference and the management should
notify accordingly the WORKERS ASSOCIATION of any vacancy existing in all
Departments. New employees and laborers hired who are members of the WORKERS
ASSOCIATION will be on TEMPORARY STATUS and the EMPLOYER agrees that
before they will be considered regular employees and laborers they have to become
members of the CENTRAL AZUCARERA DE PILAR ALLIED WORKERS'
ASSOCIATION within thirty (30) days from the date of employment and if they refuse to
affiliate with the said labor organization within this time they will be immediately
dismissed by the EMPLOYER;
Among the strikers were 101 seasonal workers, some of whom have worked as such for the
company since pre-war years.
On the opening of the milling season for the year 1956-1957, the respondent company refused to
re-admit these 101 seasonal workers of the ICAWO on the ground that it was precluded by the
closed-shop clause in its collective bargaining agreement with the CAPAWA. Thus, on 8 May
1958, the ICAWO filed an unfair labor practice charge against the company. The Court of
Industrial Relations, in its decision dated 27 November 1961, ordered the reinstatement, with
back wages, of these laborers; but on a motion for reconsideration, the said court, en banc,
reversed the said decision in its resolution dated 13 August 1962.
Not satisfied with the reversal, the ICAWO filed the present petition for certiorari to review the
industrial court's resolution.
The arguments gravitate around the status of the seasonal workers, the petitioner contending that
they are regular and old employees and, as such, they should have been re-hired at the start, in
the month of October, of each milling season, which usually lasts 5 months. The respondents, on
the other hand, urge that these laborers are new, their employment terminating at the end of each
milling season and, therefore, could not be re-admitted without the company violating the
closed-shop agreement with the CAPAWA.1wph1.t
In an almost identical case, involving practically the same parties, G.R. No. L-17422, 28
February 1962, the Court interpreted the closed shop agreement, jam quot, as referring "to future
or new employees or laborers". This interpretation, however, does not resolve the present issue
because it does not classify the seasonal workers one way or the other. A direct precedent,
however, exists in the case of Manila Hotel Company vs. Court of Industrial Relations, et al., L18873, 30 September 1963, wherein this Court, alluding to certain employees in the Pines Hotel
in Baguio, stated:
x x x x Their status is that of regular seasonal employees who are called to work from
time to time, mostly during summer season. The nature of their relationship with the hotel
is such that during off season they are temporarily laid off but during summer season they
are reemployed, or when their services may be needed. They are not strictly speaking
separated from the service but are merely considered as on leave of absence without pay
until they are re-employed. Their employment relationship is never severed but only
suspended. As such, these, employees can be considered as in the regular employment of
the hotel.
The respondent company, however, relies upon the case of Hind Sugar Company vs. Court of
Industrial Relations, et al., L-13364, 26 July 1960. This citation cannot be considered
authoritative in the present case because the Hind case did not actually rule on the temporary
character of the employment of seasonal workers; instead, it affirmed their reinstatement, which
the labor court had ordered under Section 10 of the Industrial Peace Act as a solution to a strike,
without regard to the permanent or seasonal nature of the employment of the strikers. Definitely,
the Hind case did not deal with seasonal employees that had been recalled to work year after year
during the milling season, thereby creating a reasonable expectation of continued employment;
and for this reason, the Manila Hotel case (supra) sets a rule more in accord with justice and
equity under the conditions shown by the record now before us.
Our conclusion is that petitioners, even if seasonal workers, were not "new workers" within the
scope of the closed shop contract between the sugar central and the CAPAWA union; hence their
discharge was illegal.
In filing the unfair labor practice complaint on 8 May 1958, the petitioner union, under the
circumstances, did not incur laches, because there was no work for these seasonal workers during
the off-season, from March to October. Moreover, the seat of the prosecutor's office was in Cebu,
not in Panay, and a certification election had intervened to absorb the attention of the
complainants.
For the foregoing reasons, the resolution under review is hereby set aside, and the court of origin
is directed to order the reinstatement of the 101 seasonal workers to their former positions in the
respondent sugar milling company.
With regard to the petitioners' claim for backpay, this matter should be threshed out in the court
below where the parties must be given opportunity to submit evidence to prove or disprove the
employer's good faith as well as the amounts that petitioners have earned or should have earned
during their wrongful lay off, such amounts being deductible from the backpay due to petitioners
(National Labor Union vs. Zip Venetian Blind Co., L-15827, 31 May 1961; Aboitiz & Co. vs.
C.I.R., L-8418, 29 Nov. 1962).
Let the records be returned to the Court of Industrial Relations for further proceedings, in
consonance with this opinion. So ordered.
Bengzon, C.J., Concepcion, Barrera, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez,
JJ., concur.
Dizon, J., is on leave.
RESOLUTION
August 23, 1966

REYES, J.B.L., J.:
Respondents Central Azucarera de Pilar and its manager have asked this Court to reconsider and
reverse its decision of March 31, 1966. They insist that the seasonal character of the milling
activities of the respondent Central each year necessarily implies that the employment of
petitioners ceases after each milling season.
We do not find this position tenable. The cessation of the Central's milling activities at the end of
the season is certainly not permanent or definitive; it is a foreseeable suspension of work, and
both Central and laborers have reason to expect that such activities will be resumed, as they are
in fact resumed, when sugar cane ripe for milling is again available. There is, therefore, merely a
temporary cessation of the manufacturing process due to passing shortage of raw material that by
itself alone is not sufficient, in the absence of other justified reasons, to sever the employment or
labor relationship between the parties, since the shortage is not permanent. The proof of this
assertion is the undenied fact that many of the petitioner members of the ICAWO Union have
been laboring for the Central, and reengaged for many seasons without interruption. Nor does the
Central interrupt completely its operations in the interval between milling seasons; the office and
sales force are maintained, precisely because operations are to be later resumed.
That during the temporary layoff the laborers are considered free to seek other employment is
natural, since the laborers are not being paid yet must find means of support. A period during
which the Central is forced to suspend or cease operation for a time (whether by reason of lack of
cane or by some accident to its machinery) should not mean starvation for the employees and
their families. Of course, the stopping of the milling at the end of each season, and before the
next sugar crop is ready, being regular and foreseen by both parties to the labor relation, no
compensation is expected nor demanded during the seasonal layoff.
Neither does the fact that the laborers assent to their medical examination at the beginning of
each milling season indicate that a new labor contract is being entered into, in the absence of
stipulation to such effect. Said examination is in the interest not only of the Central but also of
the labor force itself and is a mere precautionary measure.
The seasonal stoppage of work does not, therefore, negate the reasonable expectation of the
laborers to be subsequently allowed to resume work unless there be other justifiable reasons for
acting otherwise. We note again that in the Hind case (Hind Sugar Go. vs. C.I.R., L-13364, July
26, 1960) the pronouncement of the Industrial Court that reemployment of the seasonal laborers
was discretionary in the employer was not in issue before this Court. All that was declared
therein was that the Company should not be compelled to pay for work not done as it would be
inconsistent with the C.I.R.'s own pronouncement, the legal correctness of which was not being
contested. In Manila Hotel Co. vs. C.I.R., L-18873, September 30, 1963, on the contrary, it was
squarely ruled that the employment of the seasonal laborers is not severed, but only suspended,
during the seasonal layoff.
In remanding the case to the Court of Industrial Relations for determination whether the Central
acted in good faith and the employees should be declared entitled to backpay, and the amount
due the latter, this Court took into account that these are matters dependent upon circumstances
that the C.I.R. had not previously inquired into, and particularly the requirement of the Industrial
Peace Act (Republic Act 875) in its section 5(c), that where a person is found engaging in any
unfair labor practice, the Industrial Court, besides issuing a cease and desist order, must.
take such affirmative action as will effectuate the policies of this Act,
a rule that implies exercise of judgment and discretion by the Industrial Court, based on facts and
considerations not now brought to our attention.
Wherefore, the motion for reconsideration is denied.
Concepcion, Barrera, Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ.,
concur.
Regala, J., is on leave.
G.R. No. L-30592 February 25, 1982
PHILIPPINE FISHING BOAT OFFICERS AND ENGINEERS UNION, SAMAHAN NG
MANGDARAGAT SA FILIPINAS, FRANCISCO VISAYAS AND AMBROCIO
BERGADO, petitioners,
vs.
COURT OF INDUSTRIAL RELATIONS, SAN DIEGO FISHERY ENTERPRISES, INC.,
BARTOLOME A. SAN DIEGO AND ANATOLIO LLIDO, respondents.
TEEHANKEE, J.:
In this petition for review by certiorari, petitioners seek the reversal of the decision of the now
defunct Court of Industrial Relations dismissing their complaint of unfair labor practices against
respondents San Diego Fishery Enterprises, Inc., Bartolome A. San Diego and Anatolio Llido.
Petitioners Francisco Visayas and Ambrocio Bergado, who were dismissed by respondent
corporation likewise pray that they be granted backwages from the date of their dismissal on
May 9, 1958.
Respondent San Diego Fishery Enterprises, Inc. is a domestic corporation engaged in deep-sea
fishing and respondents Bartolome A. San Diego and Anatolio Llido are the manager and an
employee thereof while petitioners Philippine Fishing Boat Officers and Engineers Union and
Samahan ng Mangdaragat sa Filipinas are duly registered labor unions. Petitioners Francisco
Visayas and Ambrocio Bergado were the President and Treasurer, respectively, of the first named
union. The Philippine Fishing Boat Officers and Engineers Union is composed of officers and
engineers, while Samahan ng Mangdaragat sa Filipinas is composed of crew members, in the
employ of respondent corporation.
On charges instituted by herein petitioners, the prosecution staff of respondent court, after
conducting a preliminary investigation filed a complaint for unfair labor practices against herein
respondents. The complaint shows that petitioners unions sent letters of demands and proposals
to respondent corporation on May 6, 1958 and June 12, 1958 but respondent corporation failed to
answer the said letters within the reglementary period as provided for in Section 14 of Republic
Act No. 875 and also refused to talk with representatives of petitioners- unions. It also appears
that on May 9, 1958, respondent corporation, through its manager Bartolome A. San Diego
dismissed petitioners Visayas and Bergado because of their union activities and their refusal to
resign from the Philippine Fishing Boat Officers and Engineers Union and join the union being
organized by respondents San Diego and Llido. Consequently, on or about June 24, 1958,
petitioners unions declared a strike.
In their answer, respondents denied all the substantial allegations of the complaint and
maintained that complainants do not constitute representative groups for collective bargaining
purposes and therefore the strike declared by the employees was not legal. Respondents likewise
denied that petitioners Visayas and Bergado were employees of the corporation.
What transpired during the hearing of the case can well be seen from the appealed decision.
Petitioners introduced evidence that Visayas and Bergado had continuously been employed by
respondent San Diego Fishery Enterprises, Inc. since April 1952 and September 1956,
respectively. In the course of their employment, they joined the Philippine Fishing Boat Officers
and Engineers Union and were duly elected, respectively, as its vice-president and treasurer. On
May 6. 1958 and June 12, 1958, petitioners-unions sent letters of demand to respondent
corporation which remained unanswered inspite of the lapse of the reglementary period provided
in Section 14, Republic Act 8 5. Sometime thereafter, respondent San Diego, with the
cooperation and assistance of Llido started gathering information on the employees' affiliations
with the two complaining unions. This was heightened when on May 8 and 9, 1958 respondent
San Diego allegedly called into his office petitioners Visayas and Bergado and interrogated,
coerced and required them to resign from their union and to cooperate with the company by
joining the union being organized by respondents San Diego and Llido. When they refused to
heed the demands of the management, Visayas and Bergado were dismissed. As an offshoot of
their dismissal, the two unions staged a strike and threw, picketlines in the premises of the
respondent corporation.
Respondent corporation in turn tried to establish its defense that there is no employer-employee
relationship between petitioners Visayas and Bergado and the company in view of the peculiar
feature of the fishing industry i.e., the regular dry docking of fishing vessels to make them
seaworthy; the repairs that must be made from time to time or the delay in the trips because of
scarcity of ice. Respondents alleged that the contract of employment invariably lasts only for the
duration of each fishing trip and terminates on the return of the vessel to its home port; and that
the moment the crew members disembark, they are no longer considered employees of the
company.
Since the record indicated that individual petitioners were not on board any of the company's
fishing vessels at the time of their dismissal, respondent court ruled in its decision of October 3,
1968 that there existed no employer-employee relationship between the parties and therefore
respondents could not be held liable for unfair labor practices.
Petitioners timely filed a motion for reconsideration of the decision but respondent court, in an
en banc resolution found the motion to be without merit, besides the fact that the arguments of
petitioners' counsel were 'not duly verified." Hence, this appeal by certiorari, which the Court
finds to be meritorious.
It is settled that tenure of employment is not considered as the test of employment. All that is
required is hiring. 1 For it not the continuity of employment that renders the employer
responsible, but whether the work of the laborer is part of the regular business or occupation of
the employer. 2 In the case at bar, the employer-employee relationship is merely suspended
during the time the vessels are dry docked or undergoing repairs or being loaded with the
necessary provisions for the next fishing trip. All these activities form part of the regular
operation of the company's fishing business. Thus, in the analogous case of Manila Hotel Co. vs.
CIR, 3 the Court held that:
Where the nature of the employees' relationship with the hotel is such that during
off season they are temporarily laid off and during summer season they are
reemployed, or their services may be needed, their status is that of regular
seasonal employees. They are not strictly speaking separated from the service but
are merely on leave of absence without pay until they are reemployed. Their
employment relationship is never severed but merely suspended As such these
employees can be considered as in the regular employment of the hotel .
The temporary suspension of the business due to some foreseeable events, say, the scarcity of ice
for the fishing trips or when the fishing vessels cannot go out to sea due to repairs or strong
typhoons does not sever the employer-employee relationship between the parties. Under similar
circumstances, the Court likewise held in Industrial Commercial-Agricultural Worker's
Organization vs. CIR, 4 that:
... The cessation of the Central's milling activities at the end of the season is
certainly not permanent or definitive; it is a foreseeable suspension of work, and
both Central and laborers reason to expect that such activities will be resumed, as
they are in fact resumed, when sugar cane ripe for milling is available. There is,
therefore, merely a temporary cessation of the manufacturing process due to
passing shortage of raw materials that by itself alone, is not sufficient, in the
absence of other justified reasons, to sever the employment or labor relationship
between the parties, since the shortage is not permanent. The proof of this
assertion is the undenied fact that many of the petitioner members of the ICAWO
Union have been laboring for the Central, and reengaged for many seasons
without interruption. Nor does the Central interrupt completely its operations in
the interval between milling seasons; the office and sales force are maintained,
precisely because operations are to be later resumed.
That during the temporary layoff the laborers are considered free to seek other
employment is natural, since the laborers are not being paid, yet must find means
of support. A period during which the Central is forced to suspend or cease
operation for a time (whether by reason of lack of cane or by some accident to its
machinery) should not mean starvation for employees and their families. Of
course, the stopping of the milling at the end of the season, and before the next
sugar crop is ready, being regular and foreseen by both parties to the labor
relation, no compensation is expected nor demanded during the seasonal layoff.
The Court holds, therefore, that the employer- employee relationship existed between the parties
notwithstanding evidence to the fact that petitioners Visayas and Bergado, even during the time
that they worked with respondent company alternated their employment on different vessels
when they were not assigned on the company's vessels. For, as was stressed in the above-quoted
case of Industrial-Commercial-Agricultural Workers Organization vs. CIR, "that during the
temporary layoff the laborers are considered free to seek other employment is natural, since the
laborers are not being paid, yet must find means of support" and such temporary cessation of
operations "should not mean starvation for employees and their families." The fact that on the
date of the individuals petitioners dismissal on May 9, 1958, they were not on board any of the
company's fishing vessels does not exonerate respondents from the charge of unjust dismissal.
It was shown that at the time of the dismissal of said petitioners Visayas and Bergado, respondent
San Diego was not the general manager of the corporation. The power to hire and dismiss
employees was then exercised by Enrique Diaz, who approved or disapproved contracts of
employment as acting general manager of respondent corporation. Respondent court ruled that
even assuming that respondents San Diego and Llido coerced the officers and engineers
regarding their union affiliations under threat of dismissal, no evidence existed to warrant a
conclusion that San Diego was acting for and in behalf of respondent firm as an employer.
Respondent court thus ruled that since respondent San Diego was not, at the time of petitioners'
dismissal, the general manager and president of respondent corporation but merely a stockholder,
he had no power to hire and dismiss employees and any act imputed to him, even if assumed to
be true, could not bind the corporation. Whatever be the case, the Court has found the dismissal
of petitioners to be unjustified, and it is not San Diego nor Diaz who are herein held personally
liable but respondent corporation itself as the employer.
Moreover, respondent corporation is undeniably a family corporation and Bartolome A. San
Diego is one of the incorporators and directors. In Emilio Cano Enterprises, Inc. vs. CIR, 5 the
Court ruled that where the incorporators and directors belong to a single family, the corporation
and its members can be considered as one in order to avoid its being used as an instrument to
commit injustice, and held that
A judgment of unfair labor practice rendered against two individuals in their
capacity as officials of the corporation may be made against the property of said
corporation, notwithstanding the fact that the corporation was not a partv to the
unfair labor practice charged, it appearing that the corporation is a closed family
corporation where the incorporators and directors belong to a single family. This
is an instance where the corporation and its members can be considered, and to
hold such entity liable for the acts of its members is not to ignore the legal fiction
but merely to give meaning to the principle that such fiction cannot be invoked if
it is used as a shield to further an end subversive of justice.
The fact that the hiring and dismissal of employees was exercised by Enrique Diaz, the acting
general manager of respondent corporation, does not alter the employer-employee relationship
between the parties and mean that he personally was the employer. It is obvious that respondent
corporation is the statutory employer of petitioners. 6 The intervention of Enrique Diaz, in this
case, was merely that of an agent or intermediary between the owner of the fishing boat and the
members of its crew. In short, Diaz was merely the person charged by respondent corporation to
recruit its officers and crew members to work on its vessels in pursuance of its regular fishing
business. 7
The Court finds as totally unjustifiable respondent court's dismissal of petitioners' motion for
reconsideration on the flimsy ground that the arguments filed by their new counsel were not duly
verified." Such defect was merely formal and did not affect the validity and efficacy of the
pleading and the arguments submitted. The most respondent court could have done was to
require such formal verification. 8 The Rules of Court (Rule 1, Sec. 2) prescribe a general
directive that procedural rules be liberallv construed or interpreted in order to promote their
objective and to assist the parties in obtaining just, speedy and inexpensive determination of their
cases. 9 As stated by the now Chief Justice in Firestone Filipinas Employees Association, et al.
vs. Firestone Tire and Rubber Co. of the Philippines, et al. 10 it is "the well-settled doctrine that in
labor cases before this Tribunal, no undue sympathy is to be accorded to any claim of a
procedural misstep, the Idea being that its power be exercised according to justice and equity and
substantial merits of the controversy. We find that "respondents committed unfair labor practices
in their refusal to answer the proposals of the petitioners-unions and to bargain with them,
coupled with the unlawful dismissal of petitioners Francisco Visayas and Ambrocio Bergado.
Accordingly, the decision under review is set aside and respondent San Diego Fishery
Enterprises, Inc. is ordered to cease and desist from further commission of such acts, and to pay
petitioners Francisco Visayas and Ambrocio Bergado backwages for a period of five (5) years
without qualification and deduction, computed on the basis of their average yearly earnings at
the time of their unlawful dismissal on May 9, 1958. 11 This decision is immediately executory.
With costs against respondent company. SO ORDERED.
Guerrero, Makasiar, Fernandez, Melencio-Herrera and Plana, JJ., concur.
Footnotes
G.R. No. 98107 August 18, 1997
BENJAMIN C. JUCO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL HOUSING
CORPORATION, respondents.
HERMOSISIMA, JR., J.:

This is a petition for certiorari to set aside the Decision of the National Labor Relations
Commission (NLRC) dated March 14, 1991, which reversed the Decision dated May 21, 1990 of
Labor Arbiter Manuel R Caday, on the ground of lack of jurisdiction.
Petitioner Benjamin C. Juco was hired as a project engineer of respondent National Housing
Corporation (NHC) from November 16, 1970 to May 14, 1975. On May 14, 1975, he was
separated from the service for having been implicated in a crime of theft and/or malversation of
public funds.
On March 25, 1977, petitioner filed a complaint for illegal dismissal against the NHC with the
Department of Labor.
On September 17, 1977, the Labor Arbiter rendered a decision dismissing the complaint on the
ground that the NLRC had no jurisdiction over the case. 1
Petitioner then elevated the case to the NLRC which rendered a decision on December 28, 1982,
reversing the decision of the Labor Arbiter. 2
Dissatisfied with the decision of the NLRC, respondent NHC appealed before this Court and on
January 17, 1985, we rendered a decision, the dispositive portion thereof reads as follows:
WHEREFORE, the petition is hereby GRANTED. The questioned decision of the
respondent National Labor Relations Commission is SET ASIDE. The decision of
the Labor Arbiter dismissing the case before it for lack of jurisdiction is
REINSTATED. 3
On January 6, 1989, petitioner filed with the Civil Service Commission a complaint for illegal
dismissal, with preliminary mandatory injunction. 4
On February 6, 1989, respondent NHC moved for the dismissal of the complaint on the ground
that the Civil Service Commission has no jurisdiction over the case. 5
On April 11, 1989, the Civil Service Commission issued an order dismissing the complaint for
lack of jurisdiction. It ratiocinated that:
The Board finds the comment and/or motion to dismiss meritorious. It was not
disputed that NHC is a government corporation without an original charter but
organized/created under the Corporation Code.
Article IX, Section 2 (1) of the 1987 Constitution provides:
The civil service embraces all branches, subdivisions,
instrumentalities and agencies of the Government, including
government owned and controlled corporations with original
charters. (emphasis supplied)
From the aforequoted constitutional provision, it is clear that respondent NHC is
not within the scope of the civil service and is therefore beyond the jurisdiction of
this Board. Moreover, it is pertinent to state that the 1987 Constitution was
ratified and became effective on February 2, 1987.
WHEREFORE, for lack of jurisdiction, the instant complaint is hereby dismissed.

6
On April 28, 1989, petitioner filed with respondent NLRC a complaint for illegal dismissal with
preliminary mandatory injunction against respondent NHC. 7
On May 21, 1990, respondent NLRC thru Labor Arbiter Manuel R. Caday ruled that petitioner
was illegally dismissed from his employment by respondent as there was evidence in the record
that the criminal case against him was purely fabricated, prompting the trial court to dismiss the
charges against him. Hence, he concluded that the dismissal was illegal as it was devoid of basis,
legal or factual.
He further ruled that the complaint is not barred by prescription considering that the period from
which to reckon the reglementary period of four years should be from the date of the receipt of
the decision of the Civil Service Commission promulgated on April 11, 1989. He also
ratiocinated that:
It appears . . . complainant filed the complaint for illegal dismissal with the Civil
Service Commission on January 6, 1989 and the same was dismissed on April 11,
1989 after which on April 28, 1989, this case was filed by the complainant. Prior
to that, this case was ruled upon by the Supreme Court on January 17, 1985 which
enjoined the complainant to go to the Civil Service Commission which in fact,
complainant did. Under the circumstances, there is merit on the contention that
the running of the reglementary period of four (4) years was suspended with the
filing of the complaint with the said Commission. Verily, it was not the fault of the
respondent for failing to file the complaint as alleged by the respondent but due
to, in the words of the complainant, a "legal knot" that has to be untangled. 8
Thereafter, the Labor Arbiter rendered a decision, the dispositive portion of which reads:
Premises considered, judgment is hereby rendered declaring the dismissal of the
complainant as illegal and ordering the respondent to immediately reinstate him to
his former position without loss of seniority rights with full back wages inclusive
of allowance and to his other benefits or equivalent computed from the time it is
withheld from him when he was dismissed on March 27, 1977, until actually
reinstated. 9
On June 1, 1990, respondent NHC filed its appeal before the NLRC and on March 14, 1991, the
NLRC promulgated a decision which reversed the decision of Labor Arbiter Manuel R. Caday on
the ground of lack of jurisdiction. 10
The primordial issue that confronts us is whether or not public respondent committed grave
abuse of discretion in holding that petitioner is not governed by the Labor Code.
Under the laws then in force, employees of government-owned and/or controlled corporations
were governed by the Civil Service Law and not by the Labor Code. Hence,
Article 277 of the Labor Code (PD 442) then provided:
The terms and conditions of employment of all government employees, including
employees of government-owned and controlled corporations shall be governed
by the Civil Service Law, rules and regulations . . . .
The 1973 Constitution, Article II-B, Section 1(1), on the other hand provided:
The Civil Service embraces every branch, agency, subdivision and instrumentality
of the government, including government-owned or controlled corporations.
Although we had earlier ruled in National Housing Corporation v.
Juco, 11 that employees of government-owned and/or controlled corporations, whether created by
special law or formed as subsidiaries under the general Corporation Law, are governed by the
Civil Service Law and not by the Labor Code, this ruling has been supplanted by the 1987
Constitution. Thus, the said Constitution now provides:
The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government owned or controlled
corporations with original charter. (Article IX-B, Section 2[1])
In National Service Corporation (NASECO) v. National Labor Relations Commission, 12 we had
the occasion to apply the present Constitution in deciding whether or not the employees of
NASECO are covered by the Civil Service Law or the Labor Code notwithstanding that the case
arose at the time when the 1973 Constitution was still in effect. We ruled that the NLRC has
jurisdiction over the employees of NASECO on the ground that it is the 1987 Constitution that
governs because it is the Constitution in place at the time of the decision. Furthermore, we ruled
that the new phrase "with original charter" means that government-owned and controlled
corporations refer to corporations chartered by special law as distinguished from corporations
organized under the Corporation Code. Thus, NASECO which had been organized under the
general incorporation statute and a subsidiary of the National Investment Development
Corporation, which in turn was a subsidiary of the Philippine National Bank, is exluded from the
purview of the Civil Service Commission.
We see no cogent reason to depart from the ruling in the aforesaid case.
In the case at bench, the National Housing Corporation is a government owned corporation
organized in 1959 in accordance with Executive Order No. 399, otherwise known as the Uniform
Charter of Government Corporation, dated January 1, 1959. Its shares of stock are and have been
one hundred percent (100%) owned by the Government from its incorporation under Act 1459,
the former corporation law. The government entities that own its shares of stock are the
Government Service Insurance System, the Social Security System, the Development Bank of
the Philippines, the National Investment and Development Corporation and the People's
Homesite and Housing Corporation. 13 Considering the fact that the NHA had been incorporated
under Act 1459, the former corporation law, it is but correct to say that it is a government-owned
or controlled corporation whose employees are subject to the provisions of the Labor Code. This
observation is reiterated in the recent case of Trade Union of the Philippines and Allied Services
(TUPAS) v. National Housing
Corporation, 14 where we held that the NHA is now within the jurisdiction of the Department of
Labor and Employment, it being a government-owned and/or controlled corporation without an
original charter. Furthermore, we also held that the workers or employees of the NHC (now
NHA) undoubtedly have the right to form unions or employee's organization and that there is no
impediment to the holding of a certification election among them as they are covered by the
Labor Code.
Thus, the NLRC erred in dismissing petitioner's complaint for lack of jurisdiction because the
rule now is that the Civil Service now covers only government-owned or controlled corporations
with original charters. 15 Having been incorporated under the Corporation Law, its relations with
its personnel are governed by the Labor Code and come under the jurisdiction of the National
Labor Relations Commission.
One final point. Petitioners have been tossed from one forum to another for a simple illegal
dismissal case. It is but apt that we put an end to his dilemna in the interest of justice.
WHEREFORE, the decision of the NLRC in NLRC NCR-04-02036089 dated March 14, 1991 is
hereby REVERSED and the Decision of the Labor Arbiter dated May 21, 1990 is
REINSTATED.
SO ORDERED.
Padilla, Bellosillo, Vitug and Kapunan, JJ., concur.
Footnotes
G.R. No. L-69870 November 29, 1988
NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ,

petitioners,
vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS
COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND
EUGENIA C. CREDO, respondents.
G.R. No. 70295 November 29,1988
EUGENIA C. CREDO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES
CORPORATION AND ARTURO L. PEREZ, respondents.
The Chief Legal Counsel for respondents NASECO and Arturo L. Perez.
Melchor R. Flores for petitioner Eugenia C. Credo.
PADILLA, J.:
Consolidated special civil actions for certiorari seeking to review the decision * of the Third
Division, National Labor Relations Commission in Case No. 11-4944-83 dated 28 November
1984 and its resolution dated 16 January 1985 denying motions for reconsideration of said
decision.
Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic
corporation which provides security guards as well as messengerial, janitorial and other similar
manpower services to the Philippine National Bank (PNB) and its agencies. She was first
employed with NASECO as a lady guard on 18 July 1975. Through the years, she was promoted
to Clerk Typist, then Personnel Clerk until she became Chief of Property and Records, on 10
March 1980. 1
Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren,
Manager of Finance and Special Project and Evaluation Department of NASECO, stemming
from her non-compliance with Lloren's memorandum, dated 11 October 1983, regarding certain
entry procedures in the company's Statement of Billings Adjustment. Said charges alleged that
Credo "did not comply with Lloren's instructions to place some corrections/additional remarks in
the Statement of Billings Adjustment; and when [Credo] was called by Lloren to his office to
explain further the said instructions, [Credo] showed resentment and behaved in a scandalous
manner by shouting and uttering remarks of disrespect in the presence of her co-employees." 2
On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager
of NASECO, to explain her side before Perez and NASECO's Committee on Personnel Affairs in
connection with the administrative charges filed against her. After said meeting, on the same
date, Credo was placed on "Forced Leave" status for 1 5 days, effective 8 November 1983. 3
Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint,
docketed as Case No. 114944-83, with the Arbitration Branch, National Capital Region, Ministry
of Labor and Employment, Manila, against NASECO for placing her on forced leave, without
due process. 4
Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee on
Personnel Affairs deliberated and evaluated a number of past acts of misconduct or infractions
attributed to her. 5 As a result of this deliberation, said committee resolved:
1. That, respondent [Credo] committed the following offenses in the Code of
Discipline, viz:
OFFENSE vs. Company Interest & Policies
No. 3 Any discourteous act to customer, officer and employee of client
company or officer of the Corporation.
OFFENSE vs. Public Moral
No. 7 Exhibit marked discourtesy in the course of official duties or use of
profane or insulting language to any superior officer.
OFFENSE vs. Authority
No. 3 Failure to comply with any lawful order or any instructions of a superior
officer.
2. That, Management has already given due consideration to respondent's [Credo]
scandalous actuations for several times in the past. Records also show that she
was reprimanded for some offense and did not question it. Management at this
juncture, has already met its maximum tolerance point so it has decided to put an
end to respondent's [Credo] being an undesirable employee. 6
The committee recommended Credo's termination, with forfeiture of benefits. 7
On 1 December 1983, Credo was called age to the office of Perez to be informed that she was
being charged with certain offenses. Notably, these offenses were those which NASECO's
Committee on Personnel Affairs already resolved, on 22 November 1983 to have been

committed by Credo.
In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo was
made to explain her side in connection with the charges filed against her; however, due to her
failure to do so, 8 she was handed a Notice of Termination, dated 24 November 1983, and made
effective 1 December 1983. 9 Hence, on 6 December 1983, Credo filed a supplemental complaint
for illegal dismissal in Case No. 11-4944-83, alleging absence of just or authorized cause for her
dismissal and lack of opportunity to be heard. 10
After both parties had submitted their respective position papers, affidavits and other
documentary evidence in support of their claims and defenses, on 9 May 1984, the labor arbiter
rendered a decision: 1) dismissing Credo's complaint, and 2) directing NASECO to pay Credo
separation pay equivalent to one half month's pay for every year of service. 11
Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on
28 November 1984, rendered a decision: 1) directing NASECO to reinstate Credo to her former
position, or substantially equivalent position, with six (6) months' backwages and without loss of
seniority rights and other privileges appertaining thereto, and 2) dismissing Credo's claim for
attorney's fees, moral and exemplary damages. As a consequence, both parties filed their
respective motions for reconsideration, 12 which the NLRC denied in a resolution of 16 January
1985. 13
Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as grave
abuse of discretion the dispositive portion of the 28 November 1984 decision which ordered
Credo's reinstatement with backwages. 14 Petitioners contend that in arriving at said questioned
order, the NLRC acted with grave abuse of discretion in finding that: 1) petitioners violated the
requirements mandated by law on termination, 2) petitioners failed in the burden of proving that
the termination of Credo was for a valid or authorized cause, 3) the alleged infractions
committed by Credo were not proven or, even if proved, could be considered to have been
condoned by petitioners, and 4) the termination of Credo was not for a valid or authorized cause.
15
On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretion
the dispositive portion of the 28 November 1984 decision which dismissed her claim for
attorney's fees, moral and exemplary damages and limited her right to backwages to only six (6)
months. 16
As guidelines for employers in the exercise of their power to dismiss employees for just causes,
the law provides that:
Section 2. Notice of dismissal. Any employer who seeks to dismiss a worker

shall furnish him a written notice stating the particular acts or omission
constituting the grounds for his dismissal.
xxx xxx xxx
Section 5. Answer and Hearing. The worker may answer the allegations stated
against him in the notice of dismissal within a reasonable period from receipt of
such notice. The employer shall afford the worker ample opportunity to be heard
and to defend himself with the assistance of his representative, if he so desires.
Section 6. Decision to dismiss. The employer shall immediately notify a
worker in writing of a decision to dismiss him stating clearly the reasons therefor.
17
These guidelines mandate that the employer furnish an employee sought to be dismissed two (2)
written notices of dismissal before a termination of employment can be legally effected. These
are the notice which apprises the employee of the particular acts or omissions for which his
dismissal is sought and the subsequent notice which informs the employee of the employer's
decision to dismiss him.
Likewise, a reading of the guidelines in consonance with the express provisions of law on
protection to labor 18 (which encompasses the right to security of tenure) and the broader dictates
of procedural due process necessarily mandate that notice of the employer's decision to dismiss
an employee, with reasons therefor, can only be issued after the employer has afforded the
employee concerned ample opportunity to be heard and to defend himself.
In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal.
Although she was apprised and "given the chance to explain her side" of the charges filed against
her, this chance was given so perfunctorily, thus rendering illusory Credo's right to security of
tenure. That Credo was not given ample opportunity to be heard and to defend herself is evident
from the fact that the compliance with the injunction to apprise her of the charges filed against
her and to afford her a chance to prepare for her defense was dispensed in only a day. This is not
effective compliance with the legal requirements aforementioned.
The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss
her) was dated 24 November 1983 and made effective 1 December 1983 shows that NASECO
was already bent on terminating her services when she was informed on 1 December 1983 of the
charges against her, and that any hearing which NASECO thought of affording her after 24
November 1983 would merely be pro forma or an exercise in futility.
Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry procedures
in the company's Statement of Billings Adjustment did not warrant the severe penalty of
dismissal of the NLRC correctly held that:
... on the charge of gross discourtesy, the CPA found in its Report, dated 22
November 1983 that, "In the process of her testimony/explanations she again
exhibited a conduct unbecoming in front of NASECO Officers and argued to Mr.
S. S. Lloren in a sarcastic and discourteous manner, notwithstanding, the fact that
she was inside the office of the Acctg. General Manager." Let it be noted,
however, that the Report did not even describe how the so called "conduct
unbecoming" or "discourteous manner" was done by complainant. Anent the
"sarcastic" argument of complainant, the purported transcript 19 of the meeting
held on 7 November 1983 does not indicate any sarcasm on the part of
complainant. At the most, complainant may have sounded insistent or emphatic
about her work being more complete than the work of Ms. de Castro, yet, the
complaining officer signed the work of Ms. de Castro and did not sign hers.
As to the charge of insubordination, it may be conceded, albeit unclear, that
complainant failed to place same corrections/additional remarks in the Statement
of Billings Adjustments as instructed. However, under the circumstances
obtaining, where complainant strongly felt that she was being discriminated
against by her superior in relation to other employees, we are of the considered
view and so hold, that a reprimand would have sufficed for the infraction, but
certainly not termination from services. 20
As this Court has ruled:
... where a penalty less punitive would suffice, whatever missteps may be
committed by labor ought not to be visited with a consequence so severe. It is not
only because of the law's concern for the working man. There is, in addition, his
family to consider. Unemployment brings untold hardships and sorrows on those
dependent on the wage-earner. 21
Of course, in justifying Credo's termination of employment, NASECO claims as additional
lawful causes for dismissal Credo's previous and repeated acts of insubordination, discourtesy
and sarcasm towards her superior officers, alleged to have been committed from 1980 to July
1983. 22
If such acts of misconduct were indeed committed by Credo, they are deemed to have been
condoned by NASECO. For instance, sometime in 1980, when Credo allegedly "reacted in a
scandalous manner and raised her voice" in a discussion with NASECO's Acting head of the
Personnel Administration 23 no disciplinary measure was taken or meted against her. Nor was she
even reprimanded when she allegedly talked 'in a shouting or yelling manner" with the Acting
Manager of NASECO's Building Maintenance and Services Department in 1980 24 or when she
allegedly "shouted" at NASECO's Corporate Auditor "in front of his subordinates displaying
arrogance and unruly behavior" in 1980, or when she allegedly shouted at NASECO's Internal
Control Consultant in 1981. 25 But then, in sharp contrast to NASECO's penchant for ignoring
the aforesaid acts of misconduct, when Credo committed frequent tardiness in August and
September 1983, she was reprimanded. 26
Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven,
NASECO's condonation thereof is gleaned from the fact that on 4 October 1983, Credo was
given a salary adjustment for having performed in the job "at least [satisfactorily]" 27 and she was
then rated "Very Satisfactory" 28as regards job performance, particularly in terms of quality of
work, quantity of work, dependability, cooperation, resourcefulness and attendance.
Considering that the acts or omissions for which Credo's employment was sought to be legally
terminated were insufficiently proved, as to justify dismissal, reinstatement is proper. For "absent
the reason which gave rise to [the employee's] separation from employment, there is no intention
on the part of the employer to dismiss the employee concerned." 29 And, as a result of having
been wrongfully dismissed, Credo is entitled to three (3) years of backwages without deduction
and qualification. 30
However, while Credo's dismissal was effected without procedural fairness, an award of
exemplary damages in her favor can only be justified if her dismissal was effected in a wanton,
fraudulent, oppressive or malevolent manner. 31 A judicious examination of the record manifests
no such conduct on the part of management. However, in view of the attendant circumstances in
the case, i.e., lack of due process in effecting her dismissal, it is reasonable to award her moral
damages. And, for having been compelled to litigate because of the unlawful actuations of
NASECO, a reasonable award for attorney's fees in her favor is in order.
In NASECO's comment 32 in G.R. No. 70295, it is belatedly argued that the NLRC has no
jurisdiction to order Credo's reinstatement. NASECO claims that, as a government corporation
(by virtue of its being a subsidiary of the National Investment and Development Corporation
(NIDC), a subsidiary wholly owned by the Philippine National Bank (PNB), which in turn is a
government owned corporation), the terms and conditions of employment of its employees are
governed by the Civil Service Law, rules and regulations. In support of this argument, NASECO
cites National Housing Corporation vs. JUCO, 33 where this Court held that "There should no
longer be any question at this time that employees of government-owned or controlled
corporations are governed by the civil service law and civil service rifles and regulations."
It would appear that, in the interest of justice, the holding in said case should not be given
retroactive effect, that is, to cases that arose before its promulgation on 17 January 1985. To do
otherwise would be oppressive to Credo and other employees similarly situated, because under
the same 1973 Constitution ,but prior to the ruling in National Housing Corporation vs. Juco,
this Court had recognized the applicability of the Labor Code to, and the authority of the NLRC
to exercise jurisdiction over, disputes involving terms and conditions of employment in
government owned or controlled corporations, among them, the National Service Corporation
(NASECO).<re||an1w> 34
Furthermore, in the matter of coverage by the civil service of government-owned or controlled
corporations, the 1987 Constitution starkly varies from the 1973 Constitution, upon which
National Housing Corporation vs. Juco is based. Under the 1973 Constitution, it was provided
that:
The civil service embraces every branch, agency, subdivision, and instrumentality
of the Government, including every government-owned or controlled corporation.
... 35
On the other hand, the 1987 Constitution provides that:
agencies of the Government, including government-owned or controlled
corporations with original charter. 36 (Emphasis supplied)
Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in
the National Housing . Corporation case in the following manner
The infirmity of the respondents' position lies in its permitting a circumvention or
emasculation of Section 1, Article XII-B of the constitution. It would be possible
for a regular ministry of government to create a host of subsidiary corporations
under the Corporation Code funded by a willing legislature. A government-owned
corporation could create several subsidiary corporations. These subsidiary
corporations would enjoy the best of two worlds. Their officials and employees
would be privileged individuals, free from the strict accountability required by the
Civil Service Decree and the regulations of the Commission on Audit. Their
incomes would not be subject to the competitive restrains of the open market nor
to the terms and conditions of civil service employment. Conceivably, all
government-owned or controlled corporations could be created, no longer by
special charters, but through incorporations under the general law. The
Constitutional amendment including such corporations in the embrace of the civil
service would cease to have application. Certainly, such a situation cannot be

allowed to exist. 37
appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil
Service embraces government-owned or controlled corporations with original charter; and,
therefore, by clear implication, the Civil Service does not include government-owned or
controlled corporations which are organized as subsidiaries of government-owned or controlled
corporations under the general corporation law.
The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional
intent and meaning in the use of the phrase "with original charter." Thus
THE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo
is recognized.
MR. ROMULO. I beg the indulgence of the Committee. I was
reading the wrong provision.
I refer to Section 1, subparagraph I which reads:
The Civil Service embraces all branches, subdivisions, instrumentalities, and
agencies of the government, including government-owned or controlled
corporations.
My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the
Commissioner please state his previous question?
MR. ROMULO. The phrase on line 4 of Section 1, subparagraph
1, under the Civil Service Commission, says: "including
government-owned or controlled corporations.' Does that include a
corporation, like the Philippine Airlines which is governmentowned or controlled?
MR. FOZ. I would like to throw a question to the Commissioner. Is
the Philippine Airlines controlled by the government in the sense
that the majority of stocks are owned by the government?
MR. ROMULO. It is owned by the GSIS. So, this is what we
might call a tertiary corporation. The GSIS is owned by the
government. Would this be covered because the provision says
"including government-owned or controlled corporations."
MR. FOZ. The Philippine Airlines was established as a private

corporation. Later on, the government, through the GSIS, acquired
the controlling stocks. Is that not the correct situation?
MR. ROMULO. That is true as Commissioner Ople is about to
explain. There was apparently a Supreme Court decision that
destroyed that distinction between a government-owned
corporation created under the Corporation Law and a governmentowned corporation created by its own charter.
MR. FOZ. Yes, we recall the Supreme Court decision in the case of
NHA vs. Juco to the effect that all government corporations
irrespective of the manner of creation, whether by special charter
or by the private Corporation Law, are deemed to be covered by
the civil service because of the wide-embracing definition made in
this section of the existing 1973 Constitution. But we recall the
response to the question of Commissioner Ople that our
intendment in this provision is just to give a general description of
the civil service. We are not here to make any declaration as to
whether employees of government-owned or controlled
corporations are barred from the operation of laws, such as the
Labor Code of the Philippines.
MR. ROMULO. Yes.
MR. OPLE. May I be recognized, Mr. Presiding Officer, since my
name has been mentioned by both sides.
MR. ROMULO. I yield part of my time.
THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is
recognized.
MR. OPLE. In connection with the coverage of the Civil Service
Law in Section 1 (1), may I volunteer some information that may
be helpful both to the interpellator and to the Committee.
Following the proclamation of martial law on September 21, 1972,
this issue of the coverage of the Labor Code of the Philippines and
of the Civil Service Law almost immediately arose. I am, in
particular, referring to the period following the coming into force
and effect of the Constitution of 1973, where the Article on the
Civil Service was supposed to take immediate force and effect. In

the case of LUZTEVECO, there was a strike at the time. This was
a government-controlled and government-owned corporation. I
think it was owned by the PNOC with just the minuscule private
shares left. So, the Secretary of Justice at that time, Secretary Abad
Santos, and myself sat down, and the result of that meeting was an
opinion of the Secretary of Justice which 9 became binding
immediately on the government that government corporations with
original charters, such as the GSIS, were covered by the Civil
Service Law and corporations spun off from the GSIS, which we
called second generation corporations functioning as private
subsidiaries, were covered by the Labor Code. Samples of such
second generation corporations were the Philippine Airlines, the
Manila
Hotel and the Hyatt. And that demarcation worked very well. In fact, all of these
companies I have mentioned as examples, except for the Manila Hotel, had
collective bargaining agreements. In the Philippine Airlines, there were, in fact,
three collective bargaining agreements; one, for the ground people or the PALIA
one, for the flight attendants or the PASAC and one for the pilots of the ALPAC
How then could a corporation like that be covered by the Civil Service law? But,
as the Chairman of the Committee pointed out, the Supreme Court decision in the
case of NHA vs. Juco unrobed the whole thing. Accordingly, the Philippine
Airlines, the Manila Hotel and the Hyatt are now considered under that decision
covered by the Civil Service Law. I also recall that in the emergency meeting of
the Cabinet convened for this purpose at the initiative of the Chairman of the
Reorganization Commission, Armand Fabella, they agreed to allow the CBA's to
lapse before applying the full force and effect of the Supreme Court decision. So,
we were in the awkward situation when the new government took over. I can
agree with Commissioner Romulo when he said that this is a problem which I am
not exactly sure we should address in the deliberations on the Civil Service Law
or whether we should be content with what the Chairman said that Section 1 (1)
of the Article on the Civil Service is just a general description of the coverage of
the Civil Service and no more.
Thank you, Mr. Presiding Officer.
MR. ROMULO. Mr. Presiding Officer, for the moment, I would be
satisfied if the Committee puts on records that it is not their intent
by this provision and the phrase "including government-owned or
controlled corporations" to cover such companies as the Philippine

Airlines.
MR. FOZ. Personally, that is my view. As a matter of fact, when
this draft was made, my proposal was really to eliminate, to drop
from the provision, the phrase "including government- owned or
controlled corporations."
MR. ROMULO. Would the Committee indicate that is the intent of
this provision?
MR. MONSOD. Mr. Presiding Officer, I do not think the
Committee can make such a statement in the face of an absolute
exclusion of government-owned or controlled corporations.
However, this does not preclude the Civil Service Law to prescribe
different rules and procedures, including emoluments for
employees of proprietary corporations, taking into consideration
the nature of their operations. So, it is a general coverage but it
does not preclude a distinction of the rules between the two types
of enterprises.
MR. FOZ. In other words, it is something that should be left to the
legislature to decide. As I said before, this is just a general
description and we are not making any declaration whatsoever.
MR. MONSOD. Perhaps if Commissioner Romulo would like a
definitive understanding of the coverage and the Gentleman wants
to exclude government-owned or controlled corporations like
Philippine Airlines, then the recourse is to offer an amendment as
to the coverage, if the Commissioner does not accept the
explanation that there could be a distinction of the rules, including
salaries and emoluments.
MR. ROMULO. So as not to delay the proceedings, I will reserve
my right to submit such an amendment.
xxx xxx xxx
THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is
recognized.
MR. ROMULO. On page 2, line 5, I suggest the following

amendment after "corporations": Add a comma (,) and the phrase
EXCEPT THOSE EXERCISING PROPRIETARY FUNCTIONS.
THE PRESIDING OFFICER (Mr. Trenas). What does the
Committee say?
SUSPENSION OF SESSION
MR. MONSOD. May we have a suspension of the session?
THE PRESIDING OFFICER (Mr. Trenas). The session is
suspended.
It was 7:16 p.m.
RESUMPTION OF SESSION
At 7:21 p.m., the session was resumed.
THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.
Commissioner Romulo is recognized.
MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed
amendment to now read as follows: "including government-owned or controlled
corporations WITH ORIGINAL CHARTERS." The purpose of this amendment is
to indicate that government corporations such as the GSIS and SSS, which have
original charters, fall within the ambit of the civil service. However, corporations
which are subsidiaries of these chartered agencies such as the Philippine Airlines,
Manila Hotel and Hyatt are excluded from the coverage of the civil service.
THE PRESIDING OFFICER (Mr. Trenas). What does the
Committee say?
MR. FOZ. Just one question, Mr. Presiding Officer. By the term
"original charters," what exactly do we mean?
MR. ROMULO. We mean that they were created by law, by an act
of Congress, or by special law.
MR. FOZ. And not under the general corporation law.
MR. ROMULO. That is correct. Mr. Presiding Officer.

MR. FOZ. With that understanding and clarification, the
Committee accepts the amendment.
MR. NATIVIDAD. Mr. Presiding officer, so those created by the
general corporation law are out.
MR. ROMULO. That is correct: 38
On the premise that it is the 1987 Constitution that governs the instant case because it is the
Constitution in place at the time of decision thereof, the NLRC has jurisdiction to accord relief to
the parties. As an admitted subsidiary of the NIDC, in turn a subsidiary of the PNB, the
NASECO is a government-owned or controlled corporation without original charter.
Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurring opinion
in Gomez vs. Government Insurance Board (L-602, March 31, 1947, 44 O.G. No. 8, pp. 2687,
2694; also published in 78 Phil. 221) on the effectivity of the principle of social justice embodied
in the 1935 Constitution, said:
Certainly, this principle of social justice in our Constitution as generously
conceived and so tersely phrased, was not included in the fundamental law as a
mere popular gesture. It was meant to (be) a vital, articulate, compelling principle
of public policy. It should be observed in the interpretation not only of future
legislation, but also of all laws already existing on November 15, 1935. It was
intended to change the spirit of our laws, present and future. Thus, all the laws
which on the great historic event when the Commonwealth of the Philippines was
born, were susceptible of two interpretations strict or liberal, against or in favor of
social justice, now have to be construed broadly in order to promote and achieve
social justice. This may seem novel to our friends, the advocates of legalism but it
is the only way to give life and significance to the above-quoted principle of the
Constitution. If it was not designed to apply to these existing laws, then it would
be necessary to wait for generations until all our codes and all our statutes shall
have been completely charred by removing every provision inimical to social
justice, before the policy of social justice can become really effective. That would
be an absurd conclusion. It is more reasonable to hold that this constitutional
principle applies to all legislation in force on November 15, 1935, and all laws
thereafter passed.
WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED
with modifications. Petitioners in G.R. No. 69870, who are the private respondents in G.R. No.
70295, are ordered to: 1) reinstate Eugenia C. Credo to her former position at the time of her
termination, or if such reinstatement is not possible, to place her in a substantially equivalent
position, with three (3) years backwages, from 1 December 1983, without qualification or
deduction, and without loss of seniority rights and other privileges appertaining thereto, and 2)
pay Eugenia C. Credo P5,000.00 for moral damages and P5,000.00 for attorney's fees.
If reinstatement in any event is no longer possible because of supervening events, petitioners in
G.R. No. 69870, who are the private respondents in G.R. No. 70295 are ordered to pay Eugenia
C. Credo, in addition to her backwages and damages as above described, separation pay
equivalent to one-half month's salary for every year of service, to be computed on her monthly
salary at the time of her termination on 1 December 1983.
SO ORDERED.
Fernan, C.J., Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, GrioAquino, Medialdea and Regalado, JJ., concur.
Narvasa, J., is on leave.
Gutierrez, Jr., J., in the result.
Separate Opinions
CRUZ, J., concurring:

While concurring with Mr. Justice Padilla's well-researched ponencia, I have to express once
again my disappointment over still another avoidable ambiguity in the 1987 Constitution.
It is clear now from the debates of the Constitutional Commission that the government-owned or
controlled corporations included in the Civil Service are those with legislative charters. Excluded
are its subsidiaries organized under the Corporation Code.
If that was the intention, the logical thing, I should imagine, would have been to simply say so.
This would have avoided the suggestion that there are corporations with duplicate charters as
distinguished from those with original charters.
All charters are original regardless of source unless they are amended. That is the acceptable
distinction. Under the provision, however, the charter is still and always original even if amended
as long it was granted by the legislature.
It would have been clearer, I think, to say "including government owned or controlled
corporations with legislative charters." Why this thought did not occur to the Constitutional
Commission places one again in needless puzzlement.
Separate Opinions
CRUZ, J., concurring:
While concurring with Mr. Justice Padilla's well-researched ponencia, I have to express once
again my disappointment over still another avoidable ambiguity in the 1987 Constitution.
It is clear now from the debates of the Constitutional Commission that the government-owned or
controlled corporations included in the Civil Service are those with legislative charters. Excluded
are its subsidiaries organized under the Corporation Code.
If that was the intention, the logical thing, I should imagine, would have been to simply say so.
This would have avoided the suggestion that there are corporations with duplicate charters as
distinguished from those with original charters.
All charters are original regardless of source unless they are amended. That is the acceptable
distinction. Under the provision, however, the charter is still and always original even if amended
as long it was granted by the legislature.
It would have been clearer, I think, to say "including government owned or controlled
corporations with legislative charters." Why this thought did not occur to the Constitutional
Commission places one again in needless puzzlement.
Footnotes
G.R. No. 100947 May 31, 1993
PNOC ENERGY DEVELOPMENT CORPORATION and MARCELINO TONGCO,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MANUEL S. PINEDA,

respondents.
Alikpala, Gomez & Associates Law Office for petitioners.
Filomeno A. Zieta for private respondent.
NARVASA, C.J.:
The applicability to private respondent Manuel S. Pineda of Section 66 of the Election Code is
what is chiefly involved in the case at bar. Said section reads as follows:
Sec. 66. Candidates holding appointive office or position. Any person holding a
public appointive office or position, including active members of the Armed
Forces of the Philippines, and officers and employees in government-owned or
controlled corporations, shall be considered ipso facto resigned from his office
upon the filing of his certificate of candidacy.
Manuel S. Pineda was employed with the Philippine National Oil Co.-Energy Development
Corp. (PNOC-EDC), as subsidiary of the Philippine National Oil Co., from September 17, 1981,
when he was hired as clerk, to January 26, 1989, when his employment was terminated. The
events leading to his dismissal from his job are not disputed.
In November, 1987, while holding the position of Geothermal Construction Secretary,
Engineering and Construction Department, at Tongonan Geothermal Project, Ormoc City, Pineda
decided to run for councilor of the Municipality of Kananga, Leyte, in the local elections
scheduled in January, 1988, and filed the corresponding certificate of candidacy for the position.
Objection to Pineda's being a candidate while retaining his job in the PNOC-EDC was shortly
thereafter registered by Mayor Arturo Cornejos of Kananga, Leyte. The mayor communicated
with the PNOC-EDC thru Engr. Ernesto Patanao, Resident Manager, Tongonan Geothermal
Project to express the view that Pineda could not actively participate in politics unless he
officially resigned from PNOC-EDC. 1 Nothing seems to have resulted from this protest.
The local elections in Leyte, scheduled for January, 1988, were reset to and held on February 1,
1988. Pineda was among the official candidates voted for, and eventually proclaimed elected to,
the office of councilor. Some vacillation appears to have been evinced by Pineda at about this
time. On February 8, 1988, he wrote to the COMELEC Chairman, expressing his desire to
withdraw from the political contest on account of what he considered to be election irregularities;
2
and on March 19, 1988, he wrote to the Secretary of Justice seeking legal opinion on the
question, among others, of whether or not he was "considered automatically resigned upon . . .
filing of . . . (his) certificate of candidacy," and whether or not, in case he was elected, he could
"remain appointed to any corporate offspring of a government-owned or controlled corporation."
3
Nevertheless, Pineda took his oath of office in June, 1988 as councilor-elect of the Municipality
of Kananga, Leyte. 4 And despite so qualifying as councilor, and assuming his duties as such, he
continued working for PNOC-EDC as the latter's Geothermal Construction Secretary,
Engineering and Construction Department, at Tongonan Geothermal Project, Ormoc City.
On June 7, 1988, Marcelino M. Tongco, Department Manager of the Engineering and
Construction Department, PNOC-EDC, addressed an inquiry to the latter's Legal Department
regarding the status of Manuel S. Pineda as employee in view of his candidacy for the office of
municipal councilor. 5 In response, the Legal Department rendered an opinion to the effect that
Manuel S. Pineda should be considered ipso facto resigned upon the filing of his Certificate of
Candidacy in November, 1987, in accordance with Section 66 of the Omnibus Election Code. 6
Pineda appealed the PNOC-EDC Legal Department's ruling to N.C. Vasquez, the Vice-President
of PNOC-EDC, on July 14, 1988. In his letter of appeal, 7 he invoked a "court ruling in the case
of Caagusan and Donato vs. PNOC-Exploration Corp. . . . (to the effect that) while the
government-owned or controlled corporations are covered by the Civil Service Law (as is taken
to mean in Sec. 66 of the Omnibus Election Code of 1985) (sic), the subsidiaries or corporate
offsprings are not." In the same letter he declared his wish to continue resign from his position as
councilor/member of the Sangguniang Bayan.
He also wrote a letter dated October 1, 1988 to the Department of Local Government inquiring
about the status of his employment with PNOC-EDC in relation to his election as member of the
Sangguniang Bayan. He was advised by DLG Undersecretary Jacinto T. Rubillo, Jr., by letter
dated March 31, 1989, that there was no legal impediment to his continuing in his employment
with PNOC-EDC while holding at the same time the elective position of municipal councilor.
Cited as basis by Undersecretary Rubillo was Section 2(1) Article IX-B of the 1987 Constitution
and this Court's ruling in NASECO vs. NLRC, 168 SCRA 122. Undersecretary Rubillo went on to
say that Pineda could receive his per diems as municipal councilor as well as the corresponding
representation and transportation allowance [RATA] "provided the PNOC-EDC charter does not
provide otherwise and public shall not be prejudiced." 8
The PNOC-EDC did not, however, share the Undersecretary's views. On January 26, 1989, the
PNOC-EDC, through Marcelino Tongco (Manager, Engineering and Construction Department),
notified Manuel S. Pineda in writing (1) that after having given him "ample time" to make some
major adjustments before . . . separation from the company," his employment was being
terminated pursuant to Section 66 of the Omnibus Election Code, effective upon receipt of
notice, and (2) that he was entitled to "proper compensation" for the services rendered by him
from the time he filed his certificate of candidacy until his actual separation from the service. 9
On October 16, 1989, Pineda lodged a complaint for illegal dismissal in the Regional Arbitration
Branch No. VIII, NLRC, Tacloban City. Impleaded as respondents were the PNOC-EDC and the
Manager of its Engineering and Construction Department, Marcelino M. Tongco. 10
After due proceedings, Labor Arbiter Araceli H. Maraya, to whom the case was assigned,
rendered a decision on December 28, 1990, 11 declaring Manuel S. Pineda's dismissal from the
service illegal, and ordering his reinstatement to his former position without loss of seniority
rights and payment of full back wages corresponding to the period from his illegal dismissal up
to the time of actual reinstatement. The Arbiter pointed out that the ruling relied upon by PNOCEDC to justify Pineda's dismissal from the service, i.e., NHA v. Juco, 12 had already been
abandoned; and that "as early as November 29, 1988," the governing principle laid down by case
law in light of Section 2 (1), Article IX-B of the 1987 Constitution 13 has been that
government-owned or controlled corporations incorporated under the Corporation Code, the
general law as distinguished from those created by special charter are not deemed to be
within the coverage of the Civil Service Law, and consequently their employees, like those of the
PNOC-EDC, are subject to the provisions of the Labor Code rather than the Civil Service Law. 14
The PNOC-EDC filed an appeal with the National Labor Relations Commission. The latter
dismissed the appeal for lack of merit in a decision dated April 24, 1991. 15 PNOC-EDC sought
reconsideration; 16 its motion was denied by the Commission in a Resolution dated June 21, 1991.
17
It is this decision of April 24, 1991 and the Resolution of June 21, 1991 that the PNOC-EDC
seeks to be annulled and set aside in the special civil action for certiorari at bar. It contends that
the respondent Commission gravely abused its discretion:
1) when it ruled that Manuel S. Pineda was not covered by the Civil Service Rules
when he filed his candidacy for the 1988 local government elections in November
1987;
2) when it ruled that Pineda was not covered by the Omnibus Election Code at the
time he filed his certificate of candidacy for the 1988 local elections;
3) when it ruled that Pineda was illegally dismissed despite the fact that he was
considered automatically resigned pursuant to Section 66 of the Omnibus Election
Code; and
4) when it ruled that Pineda could occupy a local government position and be
simultaneously employed in a government-owned or controlled corporation, a
situation patently violative of the constitutional prohibition on additional
compensation.
Acting on the petition, this Court issued a temporary restraining order enjoining the respondent
NLRC from implementing or enforcing its decision and resolution dated April 24, 1991 and June
21, 1991, respectively.
In the comment required of him by the Court, the Solicitor General expressed agreement with the
respondent Commission's holding that Manuel Pineda had indeed been illegally separated from
his employment in the PNOC-EDC; in other words, that his running for public office and his
election thereto had no effect on his employment with the PNOC-EDC, a corporation not
embraced within the Civil Service.
Petitioner PNOC-EDC argues that at the time that Pineda filed his certificate of candidacy for
municipal councilor in November, 1987, the case law "applicable as far as coverage of
government-owned or controlled corporations are concerned . . . ( was to the following effect): 18
As correctly pointed out by the Solicitor General, the issue of jurisdiction had
been resolved in a string of cases starting with the National Housing Authority vs.
Juco (134 SCRA 172) followed by Metropolitan Waterworks and Sewerage
System vs. Hernandez (143 SCRA 602) and the comparatively recent case of
Quimpo vs. Sandiganbayan (G.R. No. 72553, Dec. 2, 1986) in which this Court
squarely ruled that PNOC subsidiaries, whether or not originally created as
government-owned or controlled corporations are governed by the Civil Service
Law.
This doctrine, petitioner further argues, was not "automatically reversed" by the 1987
Constitution because not "amended or repealed by the Supreme Court or the Congress;" 19 and
this Court's decision in November, 1988, in National Service Corporation vs. NLRC, supra 20
abandoning the Juco ruling "cannot be given retroactive effect . . . (in view of ) the timehonored principle . . . that laws (judicial decisions included) shall have no retroactive effect,
unless the contrary is provided (Articles 4 and 8 of the New Civil Code of the Philippines)."
Section 2 (1), Article IX of the 1987 Constitution provides as follows:
agencies of the Government, including government-owned or controlled
corporations with original charters.
Implicit in the provision is that government-owned or controlled corporations without original
charters i.e., organized under the general law, the Corporation Code are not comprehended
within the Civil Service Law. So has this Court construed the provision. 21
In National Service Corporation (NASECO), et al. v. NLRC, et al., etc., 22 decided on November
29, 1988, it was ruled that the 1987 Constitution "starkly varies" from the 1973 charter upon
which the Juco doctrine rested in that unlike the latter, the present constitution qualifies the
term, "government-owned or controlled corporations," by the phrase, "with original charter;"
hence, the clear implication is that the Civil Service no longer includes government-owned or
controlled corporations without original charters, i.e., those organized under the general
corporation law. 23 NASECO further ruled that the Juco ruling should not apply retroactively,
considering that prior to its promulgation on January 17, 1985, this Court had expressly
recognized the applicability of the Labor Code to government-owned or controlled corporations.
24
Lumanta, et al. v. NLRC, et al., 25 decided on February 8, 1989, made the same pronouncement:
that Juco had been superseded by the 1987 Constitution for implicit in the language of Section 2
(1), Article IX thereof, is the proposition that government-owned or controlled corporations
without original charter do not fall under the Civil Service Law but under the Labor Code.
And in PNOC-EDC v. Leogardo, etc., et al., 26 promulgated on July 5, 1989, this Court ruled that
conformably with the apparent intendment of the NASECO case, supra, since the PNOC-EDC, a
government-owned or controlled company had been incorporated under the general Corporation
Law, its employees are subject to the provisions of the Labor Code.
It is thus clear that the Juco doctrine prevailing at the time of the effectivity of the fundamental
charter in 1987 i.e., that government-owned or controlled corporations were part of the Civil
Service and its employees subject to Civil Service laws and regulations, 27 regardless of the
manner of the mode of their organization or incorporation is no longer good law, being at
"stark variance," to paraphrase NASECO, with the 1987 Constitution. In other words, and
contrary to the petitioner's view, as of the effectivity of the 1987 Constitution, governmentowned or controlled corporations without original charters, or, as Mr. Justice Cruz insists in his
concurring opinion in NASECO v. NLRC, 28 a legislative charter (i.e., those organized under the
Corporation Code), ceased to pertain to the Civil Service and its employees could no longer be
considered as subject to Civil Service Laws, rules or regulations.
The basic question is whether an employee in a government-owned or controlled corporations
without an original charter (and therefore not covered by Civil Service Law) nevertheless falls
within the scope of Section 66 of the Omnibus Election Code, viz.:
Sec. 66. Candidates holding appointive office or position. Any person holding a
public appointive office or position, including active members of the Armed
Forces of the Philippines, and officers and employees in government-owned or
controlled corporations, shall be considered ipso facto resigned from his office
upon the filing of his certificate of candidacy.
When the Congress of the Philippines reviewed the Omnibus Election Code of 1985, in
connection with its deliberations on and subsequent enactment of related and repealing
legislation i.e., Republic Acts Numbered 7166: "An Act Providing for Synchronized National
and Local Elections and for Electoral Reforms, Authorizing Appropriations Therefor, and for
Other Purposes" (effective November 26, 1991), 6646: "An Act Introducing Additional Reforms
in the Electoral System and for Other Purposes" (effective January 5, 1988) and 6636: "An Act
Resetting the Local Elections, etc., (effective November 6, 1987), it was no doubt aware that in
light of Section 2 (1), Article IX of the 1987 Constitution: (a) government-owned or controlled
corporations were of two (2) categories those with original charters, and those organized
under the general law and (b) employees of these corporations were of two (2) kinds those
covered by the Civil Service Law, rules and regulations because employed in corporations
having original charters, and those not subject to Civil Service Law but to the Labor Code
because employed in said corporations organized under the general law, or the Corporation Code.
Yet Congress made no effort to distinguish between these two classes of government-owned or
controlled corporations or their employees in the Omnibus Election Code or subsequent related
statutes, particularly as regards the rule that any employee "in government-owned or controlled
corporations, shall be considered ipso facto resigned from his office upon the filing of his
certificate of candidacy." 29
Be this as it may, it seems obvious to the Court that a government-owned or controlled
corporation does not lose its character as such because not possessed of an original charter but
organized under the general law. If a corporation's capital stock is owned by the Government, or
it is operated and managed by officers charged with the mission of fulfilling the public objectives
for which it has been organized, it is a government-owned or controlled corporation even if
organized under the Corporation Code and not under a special statute; and employees thereof,
even if not covered by the Civil Service but by the Labor Code, are nonetheless "employees in
government-owned or controlled corporations," and come within the letter of Section 66 of the
Omnibus Election Code, declaring them "ipso facto resigned from . . . office upon the filing of . .
. (their) certificate of candidacy."
What all this imports is that Section 66 of the Omnibus Election Code applies to officers and
employees in government-owned or controlled corporations, even those organized under the
general laws on incorporation and therefore not having an original or legislative charter, and
even if they do not fall under the Civil Service Law but under the Labor Code. In other words,
Section 66 constitutes just cause for termination of employment in addition to those set forth in
the Labor Code, as amended.
The conclusions here reached make unnecessary discussion and resolution of the other issues
raised in this case.
WHEREFORE, the petition is GRANTED; the decision of public respondent National Labor
Relations Commission dated April 24, 1991 and its Resolution dated June 21, 1991 are
NULLIFIED AND SET ASIDE; and the complaint of Manuel S. Pineda is DISMISSED. No
costs.
SO ORDERED.
Padilla, Regalado and Nocon, JJ., concur.
G.R. No. L-58494 July 5, 1989
PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT
CORPORATION, petitioner,
vs.
HON. VICENTE T. LEOGARDO, DEPUTY MINISTER OF LABOR AND VICENTE D.
ELLELINA, respondents.
MELENCIO-HERRERA, J.:
Through this Petition for Certiorari, Philippine National Oil Company-Energy Development
Corporation (PNOC-EDC) seeks to declare null and void, for lack of jurisdiction, the Order of
public respondent, the Deputy Minister of Labor, sustaining his jurisdiction over the instant
controversy.
Petitioner PNOC-EDC is a subsidiary of the Philippine National Oil Company (PNOC). On 20
January 1978, it filed with the Ministry of Labor and Employment, Regional Office No. VII,
Cebu City (MOLE), a clearance application to dismiss/ terminate the services of private
respondent, Vicente D. Ellelina, a contractual employee.
The application for clearance was premised on Ellelina's alleged commission of a crime (Alarm
or Public Scandal) during a Christmas party on 19 December 1977 at petitioner's camp in Uling,
Cebu, when, because of the refusal of the raffle committee to give him the prize corresponding to
his lost winning ticket, he tried to grab the armalite rifle of the PC Officer outside the building
despite the warning shots fired by the latter.
Clearance to dismiss was initially granted by MOLE but was subsequently revoked and
petitioner was ordered to reinstate Ellelina to his former position, without loss of seniority rights,
and with backwages from I February 1978 up to his actual reinstatement.
Petitioner appealed to the Minister of Labor who, acting through public respondent, affirmed, on
14 August 1981, the appealed Order. Hence, this Petition predicated substantially on the
following grounds:
1. Under Article 277 of the Labor Code, the Ministry of Labor and Employment has no
jurisdiction over petitioner because it is a government-owned or controlled corporation;
2. Ellelina's dismissal is valid and just because it is based upon the commission of a crime.
On the other hand, public respondent contends:
(a) While the petitioner is a subsidiary of the PNOC, it is still covered by the Labor Code and,
therefore, within the jurisdiction of the Ministry of Labor inasmuch as petitioner was organized
as a private corporation under the Corporation Law and registered with the Securities and
Exchange Commission;
(b) Petitioner is estopped from assailing the Labor Department's jurisdiction, having subjected
itself to the latter when it filed the application for clearance to terminate Ellelina's services; and
(c) Dismissal is too harsh a penalty.
The issues that confront us, therefore, are (1) whether or not public respondent committed grave
abuse of discretion in holding that petitioner is governed by the Labor Code; and (2) whether or
not Ellelina's dismissal was justified.
Under the laws then in force, employees of government-owned and/or controlled corporations
were governed by the Civil Service Law and not by the Labor Code. Thus, Article 277 of the
Labor Code (PD 442) then provided:
The terms and conditions of employment of all government employees, including employees of
government- owned and controlled corporations shall be governed by the Civil Service Law,
rules and regulations ... .
In turn, the 1973 Constitution provided:
The Civil Service embraces every branch, agency, subdivision and instrumentality of the
government, including government-owned or controlled corporations.
In National Housing Corporation vs. Juco (L-64313, January 17, 1985, 134 SCRA 172), we laid
down the doctrine that employees of government-owned and/or controlled corporations, whether
created by special law or formed as subsidiaries under the general Corporation Law, are
governed by the Civil Service Law and not by the Labor Code.
However, the above doctrine has been supplanted by the present Constitution, which provides:
The Civil Service embraces all branches, subdivisions, instrumentalities and agencies of the
Government, including government-owned or controlled corporations with original charters.
(Article IX-B, Section 2 [1])
Thus, under the present state of the law, the test in determining whether a government-owned or
controlled corporation is subject to the Civil Service Law is the manner of its creation such that
government corporations created by special charter are subject to its provisions while those
incorporated under the general Corporation Law are not within its coverage.
In NASECO vs. NLRC (G.R. No. 69870, November 29,1988), we had occasion to apply the
present Constitution in deciding whether or not the employees of NASECO (a subsidiary of the
NIDC, which is in turn a subsidiary wholly-owned by the PNB, a government-owned
corporation) are covered by the Civil Service Law or the Labor Code notwithstanding that the
case arose at the time when the 1973 Constitution was still in effect. We held that the NLRC has
jurisdiction over the employees of NASECO "on the premise that it is the 1987 Constitution that
governs because it is the Constitution in place at the time of decision;" and that being a
corporation without an original charter, the employees of NASECO are subject to the provisions
of the Labor Code.
We see no reason to depart from the ruling in the aforesaid case.
We hold, therefore, that the PNOC-EDC having been incorporated under the general Corporation
Law, is a government-owned or controlled corporation whose employees are subject to the
provisions of the Labor Code. This is apparently the intendment in the NASECO case
notwithstanding the fact that the NASECO therein was a subsidiary of the PNB, a governmentowned corporation.
In so far as Ellelina is concerned, we hold that the reinstatement ordered by public respondent,
without loss of seniority rights, is proper. However, consistent with the rulings of the Court,
backwages should be limited to three years from 1 February 1978. The dismissal ordered by
petitioner was a bit too harsh considering the nature of the act which he had committed and that
it was his first offense.
WHEREFORE, the Petition is DISMISSED, and the judgment of respondent public official is
hereby AFFIRMED. No costs.
SO ORDERED.
Paras, Padilla, Sarmiento and Regalado, JJ., concur.
G.R. No. 87676 December 20, 1989

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL PARKS
DEVELOPMENT COMMITTEE, petitioner,
vs.
THE HON. COURT OF APPEALS and THE NATIONAL PARKS DEVELOPMENT
SUPERVISORY ASSOCIATION & THEIR MEMBERS, respondents.
Bienvenido D. Comia for respondents.
GRIO-AQUINO, J.:
The Regional Trial Court of Manila, Branch III, dismissed for lack of jurisdiction, the petitioner's
complaint in Civil Case No. 88- 44048 praying for a declaration of illegality of the strike of the
private respondents and to restrain the same. The Court of Appeals denied the petitioner's
petition for certiorari, hence, this petition for review.
The key issue in this case is whether the petitioner, National Parks Development Committee
(NPDC), is a government agency, or a private corporation, for on this issue depends the right of
its employees to strike.
This issue came about because although the NPDC was originally created in 1963 under
Executive Order No. 30, as the Executive Committee for the development of the Quezon
Memorial, Luneta and other national parks, and later renamed as the National Parks
Development Committee under Executive Order No. 68, on September 21, 1967, it was
registered in the Securities and Exchange Commission (SEC) as a non-stock and non-profit
corporation, known as "The National Parks Development Committee, Inc."
However, in August, 1987, the NPDC was ordered by the SEC to show cause why its Certificate
of Registration should not be suspended for: (a) failure to submit the General Information Sheet
from 1981 to 1987; (b) failure to submit its Financial Statements from 1981 to 1986; (c) failure
to register its Corporate Books; and (d) failure to operate for a continuous period of at least five
(5) years since September 27, 1967.
On August 18, 1987, the NPDC Chairman, Amado Lansang, Jr., informed SEC that his Office
had no objection to the suspension, cancellation, or revocation of the Certificate of Registration
of NPDC.
By virtue of Executive Order No. 120 dated January 30, 1989, the NPDC was attached to the
Ministry (later Department) of Tourism and provided with a separate budget subject to audit by
the Commission on Audit.
On September 10, 1987, the Civil Service Commission notified NPDC that pursuant to
Executive Order No. 120, all appointments and other personnel actions shall be submitted
through the Commission.
Meanwhile, the Rizal Park Supervisory Employees Association, consisting of employees holding
supervisory positions in the different areas of the parks, was organized and it affiliated with the
Trade Union of the Philippines and Allied Services (TUPAS) under Certificate No. 1206.
On June 15, 1987, two collective bargaining agreements were entered into between NPDC and
NPDCEA (TUPAS local Chapter No. 967) and NPDC and NPDCSA (TUPAS Chapter No.
1206), for a period of two years or until June 30, 1989.
On March 20, 1988, these unions staged a stake at the Rizal Park, Fort Santiago, Paco Park, and
Pook ni Mariang Makiling at Los Banos, Laguna, alleging unfair labor practices by NPDC.
On March 21, 1988, NPDC filed in the Regional Trial Court in Manila, Branch III, a complaint
against the union to declare the strike illegal and to restrain it on the ground that the strikers,
being government employees, have no right to strike although they may form a union.
On March 24, 1988, the lower court dismissed the complaint and lifted the restraining order for
lack of jurisdiction. It held that the case "properly falls under the jurisdiction of the Department
of Labor," because "there exists an employer-employee relationship" between NPDC and the
strikers, and "that the acts complained of in the complaint, and which plaintiff seeks to enjoin in
this action, fall under paragraph 5 of Article 217 of the Labor Code, ..., in relation to Art. 265 of
the same Code, hence, jurisdiction over said acts does not belong to this Court but to the Labor
Arbiters of the Department of Labor." (p. 142, Rollo.).
Petitioner went to the Court of Appeals on certiorari (CA-G.R. SP No. 14204). On March 31,
1989, the Court of appeals affirmed the order of the trial court, hence, this petition for review.
The petitioner alleges that the Court of Appeals erred:
1) in not holding that the NPDC employees are covered by the Civil Service Law;
and
2) in ruling that petitioner's labor dispute with its employees is cognizable by the
Department of Labor.
We have considered the petition filed by the Solicitor General on behalf of NPDC and the
comments thereto and are persuaded that it is meritorious.
In Jesus P. Perlas, Jr. vs. People of the Philippines, G.R. Nos. 84637-39, August 2, 1989, we
ruled that the NPDC is an agency of the government, not a government-owned or controlled
corporation, hence, the Sandiganbayan had jurisdiction over its acting director who committed
estafa. We held thus:
The National Parks Development Committee was created originally as an

Executive Committee on January 14,1963, for the development of the Quezon
Memorial, Luneta and other national parks (Executive Order No. 30). It was later
designated as the National Parks Development Committee (NPDC) on February
7, 1974 (E.O. No. 69). On January 9, 1966, Mrs. Imelda R. Marcos and Teodoro
F. Valencia were designated Chairman and Vice- Chairman respectively (E.O. No.
3). Despite an attempt to transfer it to the Bureau of Forest Development,
Department of Natural Resources, on December 1, 1975 (Letter of
Implementation No. 39, issued pursuant to PD No. 830, dated November 27,
1975), the NPDC has remained under the Office of the President (E.O. No. 709,
dated July 27, 1981).
Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular
government agency under the Office of the President and allotments for its
maintenance and operating expenses were issued direct to NPDC (Exh. 10-A
Perlas, Item No. 2, 3). (Italics ours.)
Since NPDC is a government agency, its employees are covered by civil service rules and
regulations (Sec. 2, Article IX, 1987 Constitution). Its employees are civil service employees
(Sec. 14, Executive Order No. 180).
While NPDC employees are allowed under the 1987 Constitution to organize and join unions of
their choice, there is as yet no law permitting them to strike. In case of a labor dispute between
the employees and the government, Section 15 of Executive Order No. 180 dated June 1, 1987
provides that the Public Sector Labor- Management Council, not the Department of Labor and
Employment, shall hear the dispute. Clearly, the Court of Appeals and the lower court erred in
holding that the labor dispute between the NPDC and the members of the NPDSA is cognizable
by the Department of Labor and Employment.
WHEREFORE, the petition for review is granted. The decision of the Court of Appeals in CAG.R. SP No. 14204 is hereby set aside. The private respondents' complaint should be filed in the
Public Sector Labor-Management Council as provided in Section 15 of Executive Order No. 180.
Costs against the private respondents.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.
The Lawphil Project - Arellano Law Foundation
.

Labor Cases Part 1

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Labor Cases Part 1

Hochgeladen von

Copyright:

Verfügbare Formate

G.R. No.

81958 June 30, 1988

9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may, upon

does not trigger the tolling of the prescriptive period. 8

me by engaging in idle chatter.

to Zenaida only to three (3) years,

impose on him the services of

private respondent the amount

NULLIFIED AND SET

September 27, 1939

PAMBUSCO EMPLOYEES' UNION, INC., petitioner,

G.R. No. 79255 January 20, 1992

GUTIERREZ, JR., J.:

Rule IV Holidays with Pay

RHONDEL PADERANGA, ZENAIDA GUTIB, AIDA IMBAT and MARIA GRACE

PADILLA, J., concurring:

a. Computer Operator As computer operator he was subject to excessive heat

MELENCIO-HERRERA, J., dissenting.

[G.R. No. 58176. March 23, 1984.]

1. TO PAY THE PETITIONER THE SUM OF TWELVE THOUSAND (P12,000.00) PESOS AS

Jimenea, Dala & Zaragoza Law Office for petitioner.

b. P180,000.00 for other officers, including radio operators and

December 11, 1967

LOURDES VDA. DE MAGALONA, petitioner,

Further to Memorandum Circular No. 30, series of 1991 pertaining to the

The alleged takeover is limited in scope, being confined to recruitment of

and welfare, the existence of which must be expressed in a statement

Balguma, Macasaet & Associates for petitioners.

xxx xxx xxx

V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL

located at the Trade & Commerce Building; nor was she an

December 27, 1961

ILOILO CHINESE COMMERCIAL SCHOOL, petitioner,

1. In disregarding completely the evidentiary value of the death certificate of the

NATIONAL LABOR RELATIONS COMMISSION and CELSO B. BALBASTRO

Gregorio E. Fajardo for respondent Association.

.R. No. L-21465

March 31, 1966

INDUSTRIAL-COMMERCIAL-AGRICULTURAL WORKERS' ORGANIZATION

August 23, 1966

HERMOSISIMA, JR., J.:

WHEREFORE, for lack of jurisdiction, the instant complaint is hereby dismissed.

NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ,

Committee on Personnel Affairs already resolved, on 22 November 1983 to have been

Section 2. Notice of dismissal. Any employer who seeks to dismiss a worker

service would cease to have application. Certainly, such a situation cannot be

MR. FOZ. The Philippine Airlines was established as a private

Civil Service was supposed to take immediate force and effect. In

controlled corporations" to cover such companies as the Philippine

MR. ROMULO. On page 2, line 5, I suggest the following

MR. ROMULO. That is correct. Mr. Presiding Officer.

CRUZ, J., concurring:

NATIONAL LABOR RELATIONS COMMISSION and MANUEL S. PINEDA,

G.R. No. 87676 December 20, 1989

The National Parks Development Committee was created originally as an

Das könnte Ihnen auch gefallen