Labor Review Cases

FIRST DIVISION
[G.R. No. 110017. January 2, 1997]
RODOLFO FUENTES, RAINERIO DURON, JULIET VISTAL, ELENA

DELLOMES, LEODEGARIO BALHINON, ROGELIO MALINAO,
LILY BASANEZ, MALIZA ELLO, VILMA NOQUERA, JESSICA
CASTILLO, ROGELIO TABLADILLO, REMELDA VISCAYA,
MELANIA VISCAYA, CELIA LUBRICO, EDITH LLACUNA, ELPIDIO
FERRER, NORBERTO MIRANDA, FERNANDO MIRANDA,
CORDIO DUMAY, LEONARDO DELA VEGA, ISIDRO ALIDO,
AQUINO MACABEHA, LEOPOLDO ABAA, PAULINO ASIS, JR.,
REYNALDO BLANCO, MADILYN FABON, MARCIANA OSOK,
BEBIANO OSOK, FRANCISCO SEMULTA, MARCIA LLAMES,
PRINCIPE DANIEL, MARIA BAYA, NENITA RASONABLY,
SORIANO PENALOSA, JOSE PENALOSA, RODOLFO VILLAR,
REMEGIAS
DEMINGOY, TEODORO
TUGOGON, DIONISIO
APOLINARIO, EDYING DE LA CRUZ, RODOLFO BUTAUAN,
CRISPIN FABON, ARCADIO FABON, NENITA SARDINOLA, ALEX
LICAYAN, MARIO DAL, BADON EDUARDO, FELISA VILLAREL,
EMILY GARAN, ROGELIO GARAN, RODOLFO COLITE,
RODOLFO MENIANO, ROMERO TERRY, ZOILO VALLEJOS,
VIRGINIA BANDERA, BLANDINA LUNA, FLAXIANA CARLON,
CRESENCIO
CARLON,
NOTARTE
LEONARDA,
EFREN
CANTERE, ROWENA CAGUMAY, ALFONSO PARAJES, VIOLETA
MONTECLAR, NESTOR ALLADO, JR., APOLONIO CULATAS,
LANNIE CAPARAS, ANGELICO NUNEZ, JR., NICOLAS CANAL,
HERMOGENA TAGLOCOP, ALEJO BAUMBAD, CARLITO DE LA
PENA, AMANCIO ABOYLO, JERRY PARALES, LYDIA ALLADO,
AGAPITO ODAL, MAGNO BARIOS, FLORENDO MARIANO,
SOLATORIO BONIFACIO, RENE DEMINGOY, FELIMON ADORNO,
VIRGILLO INOCENCIO, RUEL INOCENCIO, AVELINO LUNA,
ALLAN MARCELLANA, FELIX SANCHEZ, AVELINO PANDI, VILLA
SORIO, NOEL LAS PENAS, FRANCISCO GARDO, ROGELIO
CULLABA, GEORGE RAGAR, CARMELITO CABRIADAS,
ANANIAS MELLORIA, ALFONSO ALLADO, MARLINO MARTINEZ,
LINO MARTINEZ, ERNESTO OLARAN, JOHNNY JOSAYAN,
ANECITO SOBIONO, MARGARITO DUMALAGAN, FRANCISCO
CABALES, FELIX ROCERO, PABLITO DAPAR, FRANCISCA
CABALHIN, FORTUNATA BAUMBAD, CARMEN RADAY,
NICOLAS TAMON, REYNALDO CANTORIA, ELMER NAPONE,
ANTONIO
VALLAR,
BERNADITH
TOLOZA,
EMETERIA
FERRER, CLANICA CABALES, CLAUDIO OJUYLAN, ERLINDA
BLANCO, ROSITA DURON, FRANCISCA ADLAWON, CARDINAL
MAGLISANG, JOVEN ASIS, JOSE FLORES, ALICIA FLORES,
JULIETO ADORNO, LORENZO CANINES, ISAAC CELLASAY,
ANDRES INDIABLE, ARSENIO DURON, NARCISA MALASPINA,

ROQUE SUBAAN, GRACE DURON, JAIME BALMORIA, PEDRO
PECASALES, PRIMITORAGAS and GRACE GOMA, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION, 5TH DIVISION,
CAGAYAN DE ORO CITY, AGUSAN PLANTATION INC., AND/OR
CHANG CHEE KONG, respondents.
DECISION
BELLOSILLO, J.:
The State is bound under the Constitution to afford full protection to labor
and when conflicting interests of labor and capital are to be weighed on the
scales of social justice the heavier influence of the latter should be
counterbalanced with the sympathy and compassion the law accords the less
privileged workingman. This is only fair if the worker is to be given the
opportunity and the right to assert and defend his cause not as a subordinate
but as part of management with which he can negotiate on even plane. Thus
labor is not a mere employee of capital but its active and equal partner.
[1]
Petitioners, numbering seventy-five (75) in all, seek to set aside the

decision of respondent National Labor Relations Commission dated 27
November 1992 reversing that of the Labor Arbiter which granted their claims,
for having been rendered with grave abuse of discretion amounting to lack or
excess of jurisdiction.
Petitioners were regular employees of private respondent Agusan
Plantations, Inc., which was engaged in the operation of a palm tree plantation
in Trento, Agusan del Sur, since September 1982. Claiming that it was
suffering business losses which resulted in the decision of the head office in
Singapore to undertake retrenchment measures, private respondent sent
notices of termination to petitioners and the Department of Labor and
Employment (DOLE).
On 31 October 1990 petitioners filed with the DOLE office in Cagayan de
Oro City a complaint for illegal dismissal with prayer for reinstatement,
backwages and damages against private respondent Agusan Plantation, Inc.,
and/or Chang Chee Kong. In their answer respondents denied the allegations
of petitioners and contended that upon receipt of instructions from the head
office in Singapore to implement retrenchment, private respondents
conducted grievance conferences or meetings with petitioners' representative
labor organization, the Association of Trade Unions through its national
president Jorge Alegarbes, its local president and its board of directors.
Private respondents also contended that the 30-day notices of termination
were duly sent to petitioners.
After both parties submitted their position papers articulating their
respective theses, the Labor Arbiter rendered a decision on 27 May 1992 in
favor of petitioners ordering private respondents to pay the former separation
pay equivalent to fifteen (15) days pay for every year of service plus salary
differentials and attorney's fees.
On appeal by respondents to the National Labor Relations Commission,
the decision of the Labor Arbiter was reversed on 27 November 1992.
Petitioners elevated their plight to this Court on a special civil action for
certiorari under Rule 65 of the Rules of Court alleging that respondent NLRC
gravely abused its discretion amounting to lack or excess of jurisdiction in
ruling that petitioners were legally terminated from their employment. They
argued that their dismissal or retrenchment did not comply with the
requirements of Art. 283 of the Labor Code.
We sustain petitioners. The ruling of the Labor Arbiter that there was no
valid retrenchment is correct. Article 283 of the Labor Code clearly states:
Art 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of the title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent losses and in
case of closure or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year.
Under Art. 283 therefore retrenchment may be valid only when the
following requisites are met: (a) it is to prevent losses; (b) written notices were
served on the workers and the Department of Labor and Employment (DOLE)
at least one (1) month before the effective date of retrenchment; and, (c)
separation pay is paid to the affected workers.
The closure of a business establishment is a ground for the termination of
the services of an employee unless the closing is for the purpose of
circumventing pertinent provisions of the Labor Code. But while business
reverses can be a just cause for terminating employees, they must be
sufficiently proved by the employer.
[2]
In the case before us, private respondents merely alleged in their answer
and position paper that after their officials from the head office had visited the
plantation respondent manager Chang Chee Kong received a letter from the
head office directing him to proceed immediately with the termination of
redundant workers and staff, and change the operations to contract system
against direct employment. They also alleged that after five (5) years of
operations, the return of investments of respondent company was meager;
that the coup attempt in August 1987 as well as that of December 1989
aggravated the floundering financial state of respondent company; that the
financial losses due to lack of capital funding resulted in the non-payment of
long-overdue accounts; that the untimely cut in the supply of fertilizers and
manuring materials and equipment parts delayed the payment of salaries and
the implementation of weekly job rotations by the workers. Except for these
allegations, private respondents did not present any other documentary proof
of their alleged losses which could have been easily proven in the financial
statements which unfortunately were not shown.
There is no question that an employer may reduce its work force to
prevent losses. However, these losses must be serious, actual and real.
Otherwise, this ground for termination of employment would be susceptible
to abuse by scheming employers who might be merely feigning losses in their
business ventures in order to ease out employees.
[3]
[4]
Indeed, private respondents failed to prove their claim of business

losses. What they submitted to the Labor Arbiter were mere self-serving
documents and allegations. Private respondents never adduced evidence
which would show clearly the extent of losses they suffered as a result of lack
of capital funding, which failure is fatal to their cause.
As regards the requirement of notices of termination to the employees, it is
undisputed that the Notice of Retrenchment was submitted to the Department
of Labor and Employment on 12 September 1990. The findings of both the
Labor Arbiter and NLRC show that petitioners were terminated on the
following dates in 1990 after they received their notices of termination, to wit:
[5]
Name of Employee
Date of Notice
Termination
of
Effectivity of Termination
1.Noquera, Vilma
22 Sept.
25 Sept.
2.Dumalagan, Margarito
22 Sept.
30 Sept.
3.Osok, Marciano
20 Sept.
30 Sept.
4.Abaa, Leopoldo
01 Sept.
30 Sept.
5.Aboylo, Amancio
01 Sept.
30 Sept.
6.Allado, Nestor Jr.
01 Sept.
30 Sept.
7.Bandera, Verginia
01 Sept.
30 Sept.
8.Basanez, Lily
01 Sept.
30 Sept.
9.Baumbad, Alejo
01 Sept.
30 Sept.
10.Blanco, Myrna
01 Sept.
30 Sept.
11.Blanco, Reynaldo
01 Sept.
30 Sept.
12.Canal, Marieto
01 Sept.
30 Sept.
13.Fabon, Madilyn
01 Sept.
30 Sept.
14.Ferrer, Elpidio
01 Sept.
30 Sept.
15.Meniano, Rodolfo
01 Sept.
30 Sept.
16.Nunez, Angelico
01 Sept.
30 Sept.
17.Osok, Bebiano
01 Sept.
30 Sept.
18.Penaloga, Jose Jr.
01 Sept.
30 Sept.
19.Taglocop, Hermogena
01 Sept.
30 Sept.
20.Allado, Lydio
22 Aug.
30 Sept.
21.Baya, Maria
22 Aug.
30 Sept.
22.Carlon, Flaviana
22 Aug.
30 Sept.
23.Carlon, Cresencio
22 Aug.
30 Sept.
24.Culaba, Rogelio
22 Aug.
30 Sept.
25.Cabriades, Carmelito
22 Aug.
30 Sept.
26.Dellomes, Elma
22 Aug.
30 Sept.
27.Fabon, Arcadio
22 Aug.
30 Sept.
28.Gordo, Francisco
22 Aug.
30 Sept.
29.Inocencio, Virgilio
22 Aug.
30 Sept.
30.Inocencio, Ruel
22 Aug.
30 Sept.
31.Luna, Blandina
22 Aug.
30 Sept.
32.Luna, Avelino
22 Aug.
30 Sept.
33.Lubrico, Celia
22 Aug.
30 Sept.
34.Monteclar, Violeta
22 Aug.
25 Sept.
35.Macabecha, Aquino
22 Aug.
25 Sept.
36.Melloria, Ananian
22 Aug.
25 Sept.
37.Malinao, Rogelio
22 Aug.
25 Sept.
38.Leonarda, Notarte
22 Aug.
25 Sept.
39.Parejas, Jerry
22 Aug.
25 Sept.
40.Parejas, Alfonso
22 Aug.
25 Sept.
41.Sardinola, Alfonso
22 Aug.
25 Sept.
42.Solaterio, Bonifacio
22 Aug.
25 Sept.
Culled from the above data, the termination of petitioners could not have
validly taken effect either on 25 or 30 September 1990. The one-month notice
of retrenchment filed with the DOLE and served on the workers before the
intended date thereof is mandatory. Private respondents failed to comply with
this requisite. The earliest possible date of termination should be 12 October
1990 or one (1) month after notice was sent to DOLE unless the notice of
termination was sent to the workers later than the notice to DOLE on 12
September 1990, in which case, the date of termination should be at least one
(1) month from the date of notice to the workers. Petitioners were terminated
less than a month after notice was sent to DOLE and to each of the workers.
We agree with the conclusion of the Labor Arbiter that the termination of
the services of petitioners was illegal as there was no valid retrenchment.
Respondent NLRC committed grave abuse of discretion in reversing the
findings of the Labor Arbiter and ruling that there was substantial compliance
with the law. This Court firmly holds that measures should be strictly
implemented to ensure that such constitutional mandate on protection to labor
is not rendered meaningless by an erroneous interpretation of applicable laws.
We uphold the monetary award of the Labor Arbiter for: (a) the balance of
the separation pay benefits of petitioners equivalent to fifteen (15) days for
every year of service after finding that reinstatement is no longer feasible
under the circumstances, and (b) the salary differentials for complainants who
were relieved during the pendency of the case before the Labor Arbiter and
full back wages for the rest of the complainants. This is in accord with Art. 279
of the Labor Code as amended by R.A. 6715 under which petitioners who
were unjustly dismissed from work shall be entitled to full back wages
inclusive of allowances and other benefits or their monetary equivalent
computed from the time their compensation was withheld up to the date of this
decision.
WHEREFORE, the Petition is GRANTED. The decision of the Labor
Arbiter of 27 March 1992 granting petitioners their claim for the balance of
their separation pay benefits equivalent to fifteen (15) days for every year of
service, and salary differentials for complainants who were relieved during the
pendency of the case before the Labor Arbiter, and full back wages for the rest
of the complainants is REINSTATED. Consequently, the decision of the
National Labor Relations Commission dated 27 September 1992 is
REVERSED and SET ASIDE.
SO ORDERED.
Padilla, (Chairman), Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.
Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 110518 August 1, 1994

JOSE L. GARCIA, EDUARDO ALAS, NOEL APAYA, RICARDO, MARCOS AVEJERO,
REYNALDO BANTIGUE, ROMEO BORRAS, MARGARITO CABICUELAS,
ROLANDO CAMUA, JOSE DENNIS CASTILLO, DICOROSO CARBO, FELIPE
COSCULLA, EDUARDO DE GUZMAN, SEVILLA DEMLO, DIONALDO TEODOLFO,
ADEMAR DUPINO, JOSE ESCOBAR, REYNALDO FLORES, DELFIN GARCIA,
FEDERICO GATDULA, FELOMINO GUTIERREZ, HILARIO EUGENIO, EUGENIO
ILANO, JR., WILFREDO JALLA, RAMON LASQUITE, CESARIANO LIM, AUGUSTO
LUMBANG, SALVADOR MACARAEG, ERNESTO MARQUEZ, LAURO
MIRAVALLES, FRED ONIA, REYNALDO ORTIZ, LEONIZA PALALIMPA, ALFREDO
ROMEO, LECERIO ROSARIO, ARMANDO SABIDURIA, RONILO SACE,
REGONDOLA SANTOS, ERNESTO SALVATUS, ENRICO SANDOVAL, EUFEMIO
SATURAY, VIRGILIO TINAMISAN, MACARIO VALDEZ, JOSE VILLARICA, SANTOS
VIRAY, FLORENDO LOPEZ, JOSE SEGISMUNDO, DIZON GERONIMO, RUPERTO
CLAVIO, JR., SEFARIN DYTIOCO, FIDEL TAGULAM, and EDITHA R.
JUAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL SERVICE
CORPORATION, respondents.
Samson S. Alcantara for petitioners.
Vidal Corpus & Associates for private respondent.
CRUZ, J.:
The main issue before the Court in this petition for certiorari is the validity of the
retrenchment of the fifty-one petitioners by private respondent National Service
Corporation (NASECO) as upheld by the Labor Arbiter and later by the National Labor
Relations Commission.
NASECO is a government-owned or controlled corporation engaged in providing
manpower services such as security guards, radio operators, janitors and clerks,
principally for the Philippine National Bank.
The petitioners were its employees who were either members of the NASECO
Employees Union (NASECO-EU) or of the Alliance of Concerned Workers of NASECO
(ACW-NASECO). On November 19, 1988, they were among those who staged a strike
and picketed the premises of the PNB.
On November 21, 1988, the PNB filed a complaint for damages with preliminary
injunction against the labor unions with the Regional Trial Court of Manila. It was
docketed as Civil Case No. 88-46938 in Branch 22. On December 5, 1988, the court
granted the application for a preliminary injunction and issued the writ ordering the lifting
of the picket.
NASECO also filed on November 21, 1988, a petition with the National Labor Relations
Commission to declare the strike illegal. This was docketed as NLRC Case No. 00-1104766-88. On February 17, 1989, the NLRC rendered its decision sustaining
NASECO. 1 The union officers who knowingly and actively participated in the strike, as
well as the members of the respondent union who committed illegal acts in the course
of the strike, were deemed to have legally lost their employment status.
The rest of the striking members, including the herein fifty-one petitioners, were ordered
to report for work immediately.
The complaint of the labor union against the PNB for unfair labor practice and illegal
lockout was dismissed on the ground that there was no employer-employee relationship
between the PNB and the labor unions. 2
On March 1, 1989, the petitioners reported for work at the NASECO office but they
could not be given assignments because the PNB had meanwhile contracted with
another company to fill the positions formerly held by the petitioners.
NASECO inquired from the PNB whether or not the petitioners could still be accepted to
their former positions in light of the Service Agreement between NASECO and the PNB
giving the latter the right to reject or replace any and all of NASECO's employees
assigned to it, for inefficiency or other valid reasons.
In reply, the PNB manifested that it was no longer accepting the petitioners back to their
former positions as these were no longer vacant.
NASECO then sought new assignments for the petitioners with its other clients, but the
petitioners insisted on their reassignment to the PNB. In the meantime, starting April 1,
1989, NASECO paid the salaries and other benefits of the petitioners although they
were not actually working. 3
On October 13, 1989, the petitioners received notice of separation from NASECO,
effective thirty days thereafter. The reason given was the financial losses NASECO was
incurring at that time due mainly to the salaries being paid to the employees who could
not be posted despite efforts to place them. 4
Conformably to Art. 283 of the Labor Code, the Department of Labor and Employment
was likewise given a 30-day notice of the intended retrenchment.
The management of NASECO even offered a better separation package equivalent to
three-fourths of the estimated new basic monthly salary for every year of service,
compared to the statutory requirement of only 1/2 month pay for every year of service.
The petitioners refused to acknowledge receipt of the notice and instead, on October
26, 1989, filed with NLRC a complaint against NASECO for unfair labor practice, illegal
dismissal, non-payment of wages and damages. 6
On November 13, 1989, NASECO sent notice to the petitioners that their termination
from the service would take effect not on November 16, 1989, but on November 30,
1989, for humanitarian considerations. The effective date was again extended to
December 15, 1989, and finally to December 31, 1989.
On June 22, 1990, Labor Arbiter Potenciano Canizares Jr. rendered a decision finding
that the petitioners had been "fairly discharged by the respondent (NASECO) in a valid
act of simple retrenchment." 7
On July 11, 1990, the petitioners appealed to the NLRC. On September 11, 1992, they
filed a manifestation that the private respondent had been hiring new personnel, but no
proof was offered to support the charge.
On December 21, 1992, the NLRC issued a resolution affirming the decision of the labor
arbiter. 8 A motion for reconsideration filed by the petitioners on January 15, 1993, was
denied by the NLRC on February 10, 1993. 9
It is now asserted in this petition that the NLRC gravely abused its discretion in holding
that the petitioners were validly dismissed on the ground of retrenchment; that NASECO
is not guilty of unfair labor practice; and that their monetary claims for increases under
Republic Acts 6640 and 6727, as well as for moral and exemplary damages and
attorney's fees, should be denied.
On the first two issues, the petitioners fault the NLRC for completely disregarding the
requisites of a valid retrenchment as laid down in Lopez Sugar Corporation vs.
Federation of Free Workers. 10
The requisites are: 1) the losses expected should be substantial and not merely de
minimis in extent; 2) the substantial losses apprehended must be reasonably imminent;
3) the retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and 4) the alleged losses, if already incurred, and the expected
imminent losses sought to be forestalled, must be proved by sufficient and convincing
evidence.
The petitioners assert that NASECO failed to show with convincing evidence that the
incurred losses, if any, were substantial. The claimed losses were belied by the fact that
NASECO hired new personnel before and after the dismissal of the petitioners.
NASECO also failed to pursue other measures to forestall losses, short of dismissing
the petitioners. It did not follow the "first in, last out" rule that in cases of retrenchment,
employees with long years of service with the company, like the petitioners, should not
be the first to be retrenched. They attribute their dismissal to their participation in the
strike of November 19, 1988. Thus, their dismissal was an act of unfair labor practice for
being discriminatory and violative of their rights to self-organization and to engage in
concerted activities.
We have to disagree.
The losses incurred by NASECO for the year 1989 amounted to P1,457,700.42 and
were adequately proved by it.11 These losses were directly caused by the salaries and
other benefits paid to the petitioners during the period from April 1 to December 31,
1989. The amount of these payments is not insubstantial in light of the economic
difficulties of the country during that year when several coups d' etat adversely affected
the nation's economic growth.
It is also not true that respondent NASECO did not look for other measures to cut back
on its losses. NASECO had in fact tried to place the petitioners with its other clients but
it was the petitioners themselves who refused reassignment.
The particular facts of this case preclude application of the "first in, last out" rule in the
retrenchment of employees. There was no discrimination against the petitioners.
NASECO could not compel the PNB to take the petitioners back to their former
positions in view of its contractual right to reject any employee of NASECO for
inefficiency and other valid reasons. The PNB had already filled the vacated positions of
the petitioners during the strike, to ensure the continued operation of its business.
The monetary claim under RA 6640 and RA 6727 is another matter. RA 6640, which
took effect on December 14, 1987, and RA 6727, which took effect on July 1, 1989,
provide for P10.00 and a P25.00 increases respectively in the minimum wage of
laborers. The NLRC denied this claim on the ground that the petitioners had failed to
include it in their basic complaint. This contention is not acceptable because the claim
was clearly included and prayed for in their position paper.
The Revised Rules of the NLRC provide under Sec. 3, Rule V, that parties should not be
allowed to allege facts not referred to or included in the complaint, or position paper,
affidavits and other documents. This would mean that although not contained in the
complaint, any claim can still be averred in the position paper, as was done by the
petitioners, or in an affidavit or other documents.
We also hold that the increases in the petitioners' minimum wage under RA 6640 and
RA 6720 should be granted since they became effective before the petitioners'
retrenchment. Said increases should be considered in the computation of their
separation pay in accordance with Art. 283 of the Labor Code.
Moral damages are recoverable only where the dismissal of the employee was attended
by bad faith or fraud or constituted an act oppressive to labor or was done in a manner
contrary to morals, good customs or public policy.12 Exemplary damages may be
awarded only if the dismissal was effected in a wanton, oppressive or malevolent
manner.13 None of these grounds has been proven. However, the Court will grant the
claim for attorney's fees in an amount equivalent to 10% of the total amount awarded to
the petitioner as authorized by the Labor Code. 14
The constitutional policy of providing full protection to labor is not intended to oppress or
destroy management. The employer cannot be compelled to retain employees it no
longer needs, to be paid for work unreasonably refused and not actually performed.
NASECO bent over backward and exerted every effort to help the petitioners look for
other work, postponed the effective date of their separation, and offered them a
generous termination pay package. The unflagging commitment of this Court to the
cause of labor will not prevent us from sustaining the employer when it is in the right, as
in this case.
WHEREFORE, the decision of the Labor Arbiter dated June 22, 1990, and the
resolutions of the NLRC dated December 21, 1992, and February 10, 1993, are
AFFIRMED, with the modification that the monetary claim under RA 6640 and RA 6720,
and for attorney's fees, should be and is hereby granted. The award of moral and
exemplary damages is disallowed.
SO ORDERED.
Davide, Jr., Quiason and Kapunan, JJ., concur.
Bellosillo, J., on official leave.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-48926 December 14, 1987
MANUEL SOSITO, petitioner,
vs.
AGUINALDO DEVELOPMENT CORPORATION, respondent.
CRUZ, J.:
We gave due course to this petition and required the parties to file simultaneous
memoranda on the sole question of whether or not the petitioner is entitled to separation
pay under the retrenchment program of the private respondent.
The facts are as follows:
Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging
company, and was in charge of logging importation, with a monthly salary of
P675.00, 1 when he went on indefinite leave with the consent of the company on
January 16, 1976. 2 On July 20, 1976, the private respondent, through its president,
announced a retrenchment program and offered separation pay to employees in the
active service as of June 30, 1976, who would tender their resignations not later than
July 31, 1976. The petitioner decided to accept this offer and so submitted his
resignation on July 29, 1976, "to avail himself of the gratuity benefits"
promised. 3 However, his resignation was not acted upon and he was never given the
separation pay he expected. The petitioner complained to the Department of Labor,
where he was sustained by the labor arbiter. 4 The company was ordered to pay Sosito
the sum of P 4,387.50, representing his salary for six and a half months. On appeal to
the National Labor Relations Commission, this decision was reversed and it was held
that the petitioner was not covered by the retrenchment program. 5 The petitioner then
came to us.
For a better understanding of this case, the memorandum of the private respondent on
its retrenchment program is reproduced in full as follows:
July 20, 1976
Memorandum To: ALL EMPLOYEES
Re: RETRENCHMENT PROGRAM
As you are all aware, the operations of wood-based industries in the
Philippines for the last two (2) years were adversely affected by the
worldwide decline in the demand for and prices of logs and wood
products. Our company was no exception to this general decline in the
market, and has suffered tremendous losses. In 1975 alone, such losses
amounted to nearly P20,000,000.00.
The company has made a general review of its operations and has come
to the unhappy decision of the need to make adjustments in its manpower
strength if it is to survive. This is indeed an unfortunate and painful
decision to make, but it leaves the company no alternative but to reduce
its tremendous and excessive overhead expense in order to prevent an
ultimate closure.
Although the law allows the Company, in a situation such as this, to
drastically reduce it manpower strength without any obligation to pay
separation benefits, we recognize the need to provide our employees
some financial assistance while they are looking for other jobs.
The Company therefore is adopting a retrenchment program whereby
employees who are in the active service as of June 30, 1976 will be paid
separation benefits in an amount equivalent to the employee's one-half
(1/2) month's basic salary multiplied by his/her years of service with the
Company. Employees interested in availing of the separation benefits
offered by the Company must manifest such intention by submitting
written letters of resignation to the Management not later than July 31,
1976. Those whose resignations are accepted shall be informed
accordingly and shall be paid their separation benefits.
After July 31, 1976, this offer of payment of separation benefits will no
longer be available. Thereafter, the Company shall apply for a clearance
to terminate the services of such number of employees as may be
necessary in order to reduce the manpower strength to such desired level
as to prevent further losses.
(SGD.
)
JOSE
G.
RICAF
ORT
Presid
ent
N.B.
For additional information
and/or resignation forms,
please see Mr. Vic Maceda
or Atty. Ben Aritao. 6
It is clear from the memorandum that the offer of separation pay was extended only to
those who were in the active service of the company as of June 30, 1976. It is equally
clear that the petitioner was not eligible for the promised gratuity as he was not actually
working with the company as of the said date. Being on indefinite leave, he was not in
the active service of the private respondent although, if one were to be technical, he
was still in its employ. Even so, during the period of indefinite leave, he was not entitled
to receive any salary or to enjoy any other benefits available to those in the active
service.
It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of
the private respondent. He has insulated himself from the insecurities of the floundering
firm but at the same time would demand the benefits it offers. Being on indefinite leave
from the company, he could seek and try other employment and remain there if he
should find it acceptable; but if not, he could go back to his former work and argue that
he still had the right to return as he was only on leave.
There is no claim that the petitioner was temporarily laid off or forced to go on leave; on
the contrary, the record shows that he voluntarily sought the indefinite leave which the
private respondent granted. It is strange that the company should agree to such an
open-ended arrangement, which is obviously one-sided. The company would not be
free to replace the petitioner but the petitioner would have a right to resume his work as
and when he saw fit.
We note that under the law then in force the private respondent could have validly
reduced its work force because of its financial reverses without the obligation to grant
separation pay. This was permitted under the original Article 272(a), of the Labor
Code, 7 which was in force at the time. To its credit, however, the company voluntarily
offered gratuities to those who would agree to be phased out pursuant to the terms and
conditions of its retrenchment program, in recognition of their loyalty and to tide them
over their own financial difficulties. The Court feels that such compassionate measure
deserves commendation and support but at the same time rules that it should be
available only to those who are qualified therefore. We hold that the petitioner is not one
of them.
While the Constitution is committed to the policy of social justice and the protection of
the working class, it should not be supposed that every labor dispute will be
automatically decided in favor of labor. Management also has its own rights which, as
such, are entitled to respect and enforcement in the interest of simple fair play. Out of its
concern for those with less privileges in life, this Court has inclined more often than not
toward the worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded us to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law
and doctrine.
WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED,
with costs against the petitioner.
SO ORDERED.
Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-53515 February 8, 1989
SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL
CORPORATION, respondents.
Lorenzo F. Miravite for petitioner.
Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GRIO-AQUINO, J.:
This is a petition for review of the Order dated February 28, 1980 of the Minister of
Labor in Labor Case No. AJML-069-79, approving the private respondent's marketing
scheme, known as the "Complementary Distribution System" (CDS) and dismissing the
petitioner labor union's complaint for unfair labor practice.
On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until
January 31, 1981) was entered into by petitioner San Miguel Corporation Sales Force
Union (PTGWO), and the private respondent, San Miguel Corporation, Section 1, of
Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate bargaining unit shall
be entitled to a basic monthly compensation plus commission based on
their respective sales. (p. 6, Annex A; p. 113, Rollo.)
In September 1979, the company introduced a marketing scheme known as the
"Complementary Distribution System" (CDS) whereby its beer products were offered for
sale directly to wholesalers through San Miguel's sales offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice in the
Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to the
existing marketing scheme whereby the Route Salesmen were assigned specific
territories within which to sell their stocks of beer, and wholesalers had to buy beer
products from them, not from the company. It was alleged that the new marketing
scheme violates Section 1, Article IV of the collective bargaining agreement because
the introduction of the CDS would reduce the take-home pay of the salesmen and their
truck helpers for the company would be unfairly competing with them.
The complaint filed by the petitioner against the respondent company raised two issues:
(1) whether the CDS violates the collective bargaining agreement, and (2) whether it is
an indirect way of busting the union.
In its order of February 28, 1980, the Minister of Labor found:
... We see nothing in the record as to suggest that the unilateral action of
the employer in inaugurating the new sales scheme was designed to
discourage union organization or diminish its influence, but rather it is
undisputable that the establishment of such scheme was part of its overall
plan to improve efficiency and economy and at the same time gain profit to
the highest. While it may be admitted that the introduction of new sales
plan somewhat disturbed the present set-up, the change however was too
insignificant as to convince this Office to interpret that the innovation
interferred with the worker's right to self-organization.
Petitioner's conjecture that the new plan will sow dissatisfaction from its
ranks is already a prejudgment of the plan's viability and effectiveness. It
is like saying that the plan will not work out to the workers' [benefit] and
therefore management must adopt a new system of marketing. But what
the petitioner failed to consider is the fact that corollary to the adoption of
the assailed marketing technique is the effort of the company to
compensate whatever loss the workers may suffer because of the new
plan over and above than what has been provided in the collective
bargaining agreement. To us, this is one indication that the action of the
management is devoid of any anti-union hues. (pp. 24-25, Rollo.)
The dispositive part of the Minister's Order reads:
WHEREFORE, premises considered, the notice of strike filed by the
petitioner, San Miguel Brewery Sales Force Union-PTGWO is hereby
dismissed. Management however is hereby ordered to pay an additional
three (3) months back adjustment commissions over and above the
adjusted commission under the complementary distribution system. (p. 26,

Rollo.)
The petition has no merit.
Public respondent was correct in holding that the CDS is a valid exercise of
management prerogatives:
Except as limited by special laws, an employer is free to regulate,
according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time,
place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2 SCRA
924; Republic Savings Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V.
Hernandez, Labor Relations Law, 1985 Ed., p. 44.) (Emphasis ours.)
Every business enterprise endeavors to increase its profits. In the process, it may adopt
or devise means designed towards that goal. In Abbott Laboratories vs. NLRC, 154
SCRA 713, We ruled:
... Even as the law is solicitous of the welfare of the employees, it must
also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold them (LVN Pictures Workers vs. LVN, 35 SCRA 147;
Phil. American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634; Phil.
Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to compensate
the members of its sales force who will be adversely affected by the implementation of
the CDS by paying them a so-called "back adjustment commission" to make up for the
commissions they might lose as a result of the CDS proves the company's good faith
and lack of intention to bust their union.
WHEREFORE, the petition for certiorari is dismissed for lack of merit.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 89920 October 18, 1990
UNIVERSITY OF STO. TOMAS, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, UST FACULTY UNION, respondents.
Abad, Leao & Associates for petitioner.
Eduardo J. Mario, Jr. for private respondent.
GUTIERREZ, JR., J.:
May a university, pending resolution by the National Labor Relations Commission

(NLRC) of its labor dispute with its union, comply with a readmission order by granting
substantially equivalent academic assignments, in lieu of actual reinstatement, to
dismissed faculty members?
On June 19, 1989, the University of Sto. Tomas (UST), through its Board of Trustees,
terminated the employment of all sixteen union officers and directors of respondent UST
Faculty Union on the ground that "in publishing or causing to be published in Strike
Bulletin No. 5 dated August 4, 1987, the libelous and defamatory attacks against the
Father Rector, (each of them) has committed the offenses of grave misconduct, serious
disrespect to a superior and conduct unbecoming a faculty member." (Rollo p. 41)
As a result of the dismissal of said employees, some faculty members staged mass
leaves of absence on June 28, 1989 and several days thereafter, disrupting classes in
all levels at the University. (Rollo, pp. 53, 92)
On July 5, 1989, the faculty union filed a complaint for illegal dismissal and unfair labor
practice with the Department of Labor and Employment. (Rollo, p. 42)
On July 7, 1989, the labor arbiter, on a prima facie showing that the termination was
causing a serious labor dispute, certified the matter to the Secretary of Labor and
Employment for a possible suspension of the effects of termination. (Rollo, p. 51)
Secretary Franklin Drilon subsequently issued an order dated July 11, 1989, the
decretal portion of which reads as follows:
WHEREFORE, ABOVE PREMISES CONSIDERED, and in the interest of
industrial peace and pursuant to Section 33 (b) of RA 6715, the effects of
the termination of Ma. Melvyn Alamis, Eduardo Marino, Jr., Urbano
Agalabia, Anthony Cura, Norma Collantes, Fulvio Guerrero, Corinta
Barranco, Porfirio Jose Guico, Lily Matias, Rene Sison, Henedino
Brondial, Myrna Hilario, Ronaldo Asuncion, Nilda Redoblado, Zenaida
Burgos, and Milagros Nino are hereby suspended and management is
likewise ordered to accept them back to work under the same terms and
conditions prevailing prior to their dismissal.
In furtherance of this Order, all faculty members are directed to
immediately report back for work and for management to accept them
back under the same terms and conditions prevailing prior to the strike.
Labor Arbiter Nieves de Castro is hereby directed to proceed with the case
pending before her and to expedite the resolution of the same.
Pending resolution, the parties are directed to cease and desist, from
committing any and all acts that might exacerbate the situation. (Rollo, p.
54)
Petitioner UST filed a motion for reconsideration on July 12, 1989 asking the Secretary
of Labor and Employment to either assume jurisdiction over the present case or certify it
to the National Labor Relations Commission (NLRC) for compulsory arbitration without
suspending the effects of the termination of the 16 dismissed faculty members. (Rollo,
pp. 55-64)
On July 18, 1989, Secretary Drilon, acting on said motion for reconsideration, issued
another order modifying his previous order. The dispositive portion of the new order is
quoted below:
WHEREFORE, ABOVE PREMISES CONSIDERED, the Order dated 11
July 1989 is hereby modified. Accordingly, this Office hereby certifies the
labor dispute to the National Labor Relations Commission for compulsory
arbitration pursuant to Article 263(g) of the Labor Code, as amended by
Section 27 of RA 6715.
In accordance with the above, the University of Santo Tomas is hereby
ordered to readmit all its faculty members, including the sixteen (16) union
officials, under the same terms and conditions prevailing prior to the
present dispute.
The NLRC is hereby instructed to immediately call the parties and
expedite the resolution of the dispute.
The directive to the parties to cease and desist from committing any act
that will aggravate the situation is hereby reiterated. (Rollo, p. 81)
The petitioner filed a motion for clarification dated July 20, 1989 which was
subsequently withdrawn. (Rollo, p. 94)
On July 27, 1989, Secretary Drilon issued another order that contained the following
dispositive portion:
WHEREFORE, ABOVE PREMISES CONSIDERED, the Order dated 18
July 1989 directing the readmission of all faculty members, including the
16 union officials, under the same terms and conditions prevailing prior to
the instant dispute is hereby affirmed.
The NLRC is hereby ordered to immediately call the parties and ensure
the implementation of this Order.
No further motion of this and any nature shall be entertained. (Rollo, p.
103)
The NLRC subsequently caned the parties to a conference on August 11, 1989 before
its Labor Arbiter Romeo Go. (Rollo, p. 9)
On August 14, 1989, the respondent union filed before the NLRC a motion to implement
the orders of the Honorable Secretary of Labor and Employment dated July 11, 18 and
27, 1989 and to cite Atty. Joselito Guianan Chan (the petitioner's in-house counsel) for
contempt. (Rollo, p. 104) The petitioner, on August 25, 1989, filed its opposition to the
private respondent's motion. (Rollo, p. 112)
On September 6, 1989, the NLRC issued a resolution, which is the subject of this
petition for certiorari, set forth below:
Certified Case No. 0531 IN RE: LABOR DISPUTE at the University of
Santo Tomas. Acting on the Motion to Implement the Orders of the
Honorable Secretary of Labor and Employment dated July 11, 18, and 27,
1989 and to cite Joselito Guianan Chan for Contempt dated August 14,
1989 and the Urgent Ex-parte Motion to Implement Certification Orders of
the Honorable Secretary of Labor and Employment dated July 18 and 17,
(Sic) 1989 and the subsequent Manifestation dated September 4, 1989, all
filed by the UST Faculty Union; and considering the Opposition to Union's
Motion to Cite Atty. Joselito Guianan Chan for Contempt and Comments
on its Motion to Implement the Orders of the Honorable Secretary of Labor
and Employment dated July 11, 18 and 27, 1989 filed on August 25, 1989
by UST through its counsel, the Commission, after deliberation, resolved,
to wit:
a) The University is hereby directed to comply and faithfully abide with the
July 11, 18 and 27, 1989 Orders of the Secretary of Labor and
Employment by immediately reinstating or readmitting the following faculty
members under the same terms and conditions prevailing prior to the
present dispute or merely reinstate them in the payroll:
a) Ronaldo Asuncion
b) Lily Matias
c) Nilda Redoblado
d) Zenaida Burgos
e) Eduardo Marino, Jr.
f) Milagros Nino
g) Porfirio Guico
b) To fully reinstate, by giving him additional units or through payroll
reinstatement, Prof. Urbano Agalabia who was assigned only six (6) units;
c) To fully reinstate or reinstate through payroll, Prof. Fulvio Guerrero, who
was assigned only three (3) units;
d) The University is directed to pay the above-mentioned faculty members
full backwages starting from July 13, 1989, the date the faculty members
presented themselves for reinstatement up to the date of actual
reinstatement or payroll reinstatement.
e) The payroll reinstatement of the above-named faculty members is
hereby allowed only up to the end of the First semester 1989; Next
semester, the University is directed to actually reinstate the faculty

members by giving them their normal teaching loads;
f) The University is directed to cease and desist from offering the
aforementioned faculty members substantially equivalent academic
assignments as this is not compliance in good faith with the Orders of the
Secretary of Labor and Employment. (Rollo, pp. 30-31)
Acting on an urgent motion for the issuance of a writ of preliminary injunction and/or
restraining order, the Court resolved to issue a temporary restraining order dated
October 25, 1989 enjoining respondents from enforcing or executing the assailed NLRC
resolution. (Rollo, p. 160)
The petitioner assigns the following errors:
I
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (NLRC) GRAVELY
ABUSED ITS DISCRETION IN A MANNER AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT ISSUED THE ASSAILED RESOLUTION WHICH ORDERS
THE ALTERNATIVE REMEDIES OF ACTUAL REINSTATEMENT OR PAYROLL
REINSTATEMENT OF THE DISMISSED FACULTY MEMBERS.
II
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY
ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT DIRECTED THE UNIVERSITY TO PAY SOME OF THE DISMISSED
FACULTY MEMBERS ASSIGNED TO HANDLE SUBSTANTIALLY EQUIVALENT
ACADEMIC ASSIGNMENTS, 'FULL BACKWAGES STARTING FROM JULY 13, 1989,
THE DATE THE FACULTY MEMBERS PRESENTED THEMSELVES FOR
REINSTATEMENT UP TO THE DATE OF ACTUAL REINSTATEMENT OR PAYROLL
REINSTATEMENT.
III
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNT ING TO LACK OR EXCESS OF
JURISDICTION WHEN IT CONSIDERED AS 'NOT COMPLIANCE IN GOOD FAITH
WITH THE ORDERS OF THE SECRETARY OF LABOR AND EMPLOYMENT' THE
UNIVERSITY'S ACT OF GRANTING TO SOME OF THE DISMISSED FACULTY
MEMBERS, SUBSTANTIALLY EQUIVALENT ACADEMIC ASSIGNMENTS.
IV
THE HONORABLE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT
ARROGATED UPON ITSELF THE EXERCISE OF THE RIGHT AND PREROGATIVES
REPOSED BY LAW TO THE PETITIONER UNIVERSITY IN THE LATTER'S CAPACITY
AS EMPLOYER. (Rollo, pp. 9-10)
We shall deal with the first and third assignment of errors jointly because they are
interrelated.
The petitioner states in its petition that: a) It has already actually reinstated six of the
dismissed faculty members, namely: Professors Alamis, Collantes, Hilario, Barranco,
Brondial and Cura; b) As to Professors Agalabia and Guerrero, whose teaching
assignments were partially taken over by new faculty members, they were given back
their remaining teaching loads (not taken by new faculty members) but were likewise
given substantially equivalent academic assignments corresponding to their teachings
loads already taken over by new faculty members; c) The remaining seven faculty
members, to wit: Professors Asuncion, Marino Jr., Matias, Redoblado, Burgos, Nino and
Guico, were given substantially equivalent academic assignments in lieu of actual
teaching loads because all of their teaching loads originally assigned to them at the start
of the first semester of school year 1989-1990 were already taken over by new faculty
members; d) One dismissed faculty member Rene Sison, had been "absent without
official leave" or AWOL as early as the start of the first semester. (Rollo, pp. 11-12).
The petitioner advances the argument that its grant of substantially equivalent academic
assignments to some of the dismissed faculty members, instead of actual
reinstatement, is well-supported by just and valid reasons. It alleges that actual
reinstatement of the dismissed faculty members whose teaching assignments were
previously taken over by new faculty members is not feasible nor practicable since this
would compel the petitioner university to violate and terminate its contracts with the
faculty members who were assigned to and had actually taken over the courses. The
petitioner submits that it was never the intention of the Secretary of Labor to force it to
break employment contracts considering that those ordered temporarily reinstated could
very well be accommodated with substantially equivalent academic assignments without
loss in rank, pay or privilege. Likewise, it claims that to change the faculty member
when the semester is about to end would seriously impair and prejudice the welfare and
interest of the students because dislocation, confusion and loss in momentum, if not
demoralization, will surely ensue once the change in faculty is effected. (Rollo, pp. 1314)
The petitioner also avers that the faculty members who were given substantially
equivalent academic assignments were told by their respective deans to report to the
Office of Academic Affairs and Research for their academic assignments but the said
faculty members failed to comply with these instructions. (Rollo, p. 118) Thus, the
petitioner postulates, mere payroll reinstatement which would give rise to the obligation
of the University to pay these faculty members, even if the latter are not working, would
squarely run counter to the principle of "No Work, No Pay". (Rollo, p. 15)
The respondent UST Faculty Union, on the other hand, decries that the petitioner is
using the supposed substantially equivalent academic assignments as a vehicle to
embarrass and degrade the union leaders and that the refusal of the petitioner to
comply with the return-to-work order is calculated to deter, impede and discourage the
union leaders from pursuing their union activities. (Rollo, pp. 246, 254)
It also claims that the dismissed faculty members were hired to perform teaching
functions and, indeed, they have rendered dedicated teaching service to the University
students for periods ranging from 12 to 39 years. Hence, they maintain, their
qualifications are fitted for classroom activities and the assignment to them of nonteaching duties, such as (a) book analysis; (b) syllabi-making or revising; (c) test
questions construction; (d) writing of monographs and modules for students' use in
learning "hard to understand" topics on the lectures; (e) designing modules,
transparencies, charts, diagrams for students' use as learning aids; and (f) other related
assignments, is oppressive. (Rollo, pp. 243-244)
In resolving the contentions of both parties, this Court refers to Article 263 (g), first
paragraph, of the Labor Code, as amended by Section 27 of Republic Act No. 6715,
which provides:
(g) When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume jurisdiction
over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the
effect of automatically enjoining the intended or impending strike or
lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or
locked out employees shall immediately return to work and the employer
shall immediately resume operations and readmit all workers under the
same terms and conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the Commission may seek the
assistance of law enforcement agencies to ensure compliance with this
provision as well as with such orders as he may issue to enforce the
same. (Emphasis supplied.)
It was in compliance with the above provision that Secretary Drilon issued his July 18,
1989 order to "readmit all its faculty members, including the sixteen (16) union officials,
under the same terms and conditions prevailing prior to the present dispute." (Rollo, p.
81) And rightly so, since the labor controversy which brought about a temporary
stoppage of classes in a university populated by approximately 40,000 students affected
national interest.
After the petitioner filed a motion for clarification which, however, was subsequently
withdrawn, Secretary Drilon issued another order dated July 27, 1989 affirming his July
18 order and directing the NLRC to immediately call the parties and "ensure the
implementation of this order" (Rollo, p. 103)
The NLRC was thereby charged with the task of implementing a valid return-to-work
order of the Secretary of Labor. As the implementing body, its authority did not include
the power to amend the Secretary's order. Since the Secretary's July 18 order
specifically provided that the dismissed faculty members shall be readmitted under the
same terms and conditions prevailing prior to the present dispute, the NLRC should
have directed the actual reinstatement of the concerned faculty members. It therefore
erred in granting the alternative remedy of payroll reinstatement which, as it turned, only
resulted in confusion. The remedy of payroll reinstatement is nowhere to be found in the
orders of the Secretary of Labor and hence it should not have been imposed by the
public respondent NLRC. There is no showing that the facts called for this type of
alternative remedy.
For the same reason, we rule that the grant of substantially equivalent academic
assignments can not be sustained. Clearly, the giving of substantially equivalent
academic assignments, without actual teaching loads, cannot be considered a
reinstatement under the same terms and conditions prevailing before the strike. Within
the context of Article 263(g), the phrase "under the same terms and conditions"
contemplates actual reinstatement or the return of actual teaching loads to the
dismissed faculty members. There are academic assignments such as the research and
writing of treatises for publication or full-time laboratory work leading to exciting
discoveries which professors yearn for as badges of honor and achievement. The
assignments given to the reinstated faculty members do not fall under such desirable
categories.
Article 263(g) was devised to maintain the status quo between the workers and
management in a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, pending adjudication of the controversy.
This is precisely why the Secretary of Labor, in his July 11, 1989 order, stated that
"Pending resolution, the parties are directed to cease and desist from committing any
and all acts that might exacerbate the situation." (Rollo, p. 54) And in his order of July
18, he decreed that "The directive to the parties to cease and desist from committing
any act that will aggravate the situation is hereby reiterated." (Rollo, p. 81)
The grant of substantially equivalent academic assignments of the nature assigned by
the petitioner would evidently alter the existing status quo since the temporarily
reinstated teachers will not be given their usual teaching loads. In fact, the grant thereof
aggravated the present dispute since the teachers who were assigned substantially
equivalent academic assignments refused to accept and handle what they felt were
degrading or unbecoming assignments, in turn prompting the petitioner University to
withhold their salaries. (Rollo, p. 109)
We therefore hold that the public respondent NLRC did not commit grave abuse of
discretion when it ruled that the petitioner should "cease and desist from offering the
aforementioned faculty members substantially equivalent academic assignments as this
is not compliance in good faith with the order of the Secretary of Labor and
Employment."
It was error for the NLRC to order the alternative remedies of payroll reinstatement or
actual reinstatement. However, the order did not amount to grave abuse of discretion.
Such error is merely an error of judgment which is not correctible by a special civil
action for certiorari. The NLRC was only trying its best to work out a satisfactory ad hoc
solution to a festering and serious problem. In the light of our rulings on the impropriety
of the substantially equivalent academic assignments and the need to defer the
changes of teachers until the end of the first semester, the payroll reinstatement will
actually minimize the petitioners problems in the payment of full backwages.
As to the second assignment of error, the petitioner contends that the NLRC committed
grave abuse of discretion in awarding backwages from July 13, 1989, the date the
faculty members presented themselves for work, up to the date of actual reinstatement,
arguing that the motion for reconsideration seasonably filed by the petitioner had
effectively stayed the Secretary's order dated July 11, 1989.
The petitioner's stand is unmeritorious. A return-to-work order is immediately effective

and executory despite the filing of a motion for reconsideration by the petitioner. As
pointed out by the Court in Philippine Air Lines Employees
Association (PALEA) v. Philippine Air Lines, Inc. (38 SCRA 372 [1971]):
The very nature of a return-to-work order issued in a certified case lends
itself to no other construction. The certification attests to the urgency of
the matter affecting as it does an industry indispensable to the national
interest. The order is issued in the exercise of the court's compulsory
power of arbitration, and therefore must be obeyed until set aside. To say
that its effectivity must wait affirmance in a motion for reconsideration is
not only to emasculate it but indeed to defeat its import, for by then the
deadline fixed for the return-to-work would, in the ordinary course, have
already passed and hence can no longer be affirmed insofar as the time
element is concerned.
Additionally, although the Secretary's order of July 11 was modified by the July 18 order,
the return-to-work portion of the earlier order which states that "the faculty members
should be admitted under the same terms and conditions prevailing prior to the dispute"
was affirmed.
We likewise affirm the NLRC's finding that the dismissed teachers presented
themselves for reinstatement on July 13, 1989 since the factual findings of quasi-judicial
agencies like the NLRC are generally accorded not only respect but even finality if such
findings are supported by substantial evidence. (Mamerto v. Inciong, 118 SCRA 265
[1982]; Baby Bus, Inc. v. Minister of Labor, 158 SCRA 221 [1988]; Packaging Products
Corporation v. National Labor Relations Commission, 152 SCRA 210 [1987]; Talisay
Employees' and Laborers Association (TELA) v. Court of Industrial Relations, 143 SCRA
213 [1986]). There is no showing that such substantial evidence is not present.
The petitioner, however, stresses that since the faculty members who were given
substantially equivalent academic assignments did not perform their assigned tasks,
then they are not entitled to backwages. (Rollo, p. 19) The petitioner is wrong. The
reinstated faculty members' refusal to assume their substantially equivalent academic
assignments does not contravene the Secretary's return-to-work order. They were
merely insisting on being given actual teaching loads, on the return-to-work order being
followed. We find their persistence justified as they are rightfully and legally entitled to
actual reinstatement. Since the petitioner University failed to comply with the Secretary's
order of actual reinstatement, we adjudge that the NLRC's award of backwages until
actual reinstatement is correct.
With respect to the fourth assignment of error, the petitioner expostulates that as
employer, it has the sole and exclusive right and prerogative to determine the nature
and kind of work of its employees and to control and manage its own operations. Thus,
it objects to the NLRC's act of substituting its judgment for that of the petitioner in the
conduct of its affairs and operations. (Rollo, pp. 23-24)
Again, we cannot sustain the petitioner's contention. The hiring, firing, transfer,
demotion and promotion of employees are traditionally Identified as management
prerogatives. However, these are not absolute prerogatives. They are subject to
limitations found in law, a collective bargaining agreement, or general principles of fair

play and justice. (Abbott Laboratories [Phil.] Inc. v. NLRC, 154 SCRA 713 [1987])
Article 263(g) is one such limitation provided by law. To the extent that Art. 263(g) calls
for the admission of all workers under the same terms and conditions prevailing before
the strike, the petitioner University is restricted from exercising its generally unbounded
right to transfer or reassign its employees. The public respondent NLRC is not
substituting its own judgment for that of the petitioner in the conduct of its own affairs
and operations; it is merely complying with the mandate of the law.
The petitioner manifests the fear that if the temporarily reinstated faculty members will
be allowed to handle actual teaching assignments in the classroom, the latter would
take advantage of the situation by making the classroom the forum not for the purpose
of imparting knowledge to the students but for the purpose of assailing and lambasting
the administration. (Rollo, p. 330) There may be a basis for such a fear. We can even
state that such concern is not entirely unfounded nor farfetched. However, such a fear is
speculative and does not warrant a deviation from the principle that the dismissed
faculty members must be actually reinstated pending resolution of the labor dispute.
Unpleasant situations are sometimes aftermaths of bitter labor disputes. It is the
function of Government to fairly apply the law and thereby minimize the dispute's
harmful effects. It is in this light that the return to work order should be viewed and
obeyed.
One thing has not escaped this Court's attention. Professors Alamis, Cura, Collantes,
Barranco, Brondial and Hilario were already reinstated by the petitioner in compliance
with the Secretary's return-to-work order. Knowing this to be a fact, the NLRC, in its
assailed resolution, dealt only with the fate of the remaining faculty members who were
given substantially equivalent academic assignments. The names of the
aforementioned faculty members appear nowhere in the disputed NLRC order.
Inasmuch as these faculty members actually reinstated were not covered by the NLRC
resolution, then it follows that they were likewise not covered by the Court's temporary
restraining order enjoining respondents from enforcing or executing the NLRC
resolution. The effects of the temporary restraining order did not extend to them. Yet,
after the Court issued the temporary restraining order, the petitioner lost no time in
recalling their actual teaching assignments and giving them, together with the rest of the
dismissed faculty members, substantially equivalent academic assignments.
The petitioner's dogmatic insistence in issuing substantially equivalent academic
assignments stems from the fact that the teaching loads of the dismissed professors
have already been assigned to other faculty members. It wants us to accept this remedy
as one resorted to in good faith. And yet, the petitioner's employment of the temporary
restraining order as a pretext to enable it to substitute substantially equivalent academic
assignmentseven for those who were earlier already reinstated to their actual teaching
loads runs counter to the dictates of fair play.
With respect to the private respondent's allegation of union busting by the petitioner, we
do not at this time pass upon this issue. Its determination falls within the competence of
the NLRC, as compulsory arbitrator, before whom the labor dispute is under
consideration. We are merely called upon to decide the propriety of the petitioner
University's grant of substantially equivalent academic assignments pending resolution
of the complaint for unfair labor pratice and illegal dismissal filed by the private
respondent.
Although we pronounce that the dismissed faculty members must be actually reinstated
while the labor dispute is being resolved, we have to take into account the fact that at
this time, the first semester for schoolyear 1990-1991 is about to end. To change the
faculty members around the time of final examinations would adversely affect and
prejudice the students whose welfare and interest we consider to be of primordial
importance and for whom both the University and the faculty union must subordinate
their claims and desires. This Court therefore resolves that the actual reinstatement of
the non-reinstated faculty members, pending resolution of the labor controversy before
the NLRC, may take effect at the start of the second semester of the schoolyear 19901991 but not later. With this arrangement, the petitioner's reasoning that it will be
violating contracts with the faculty members who took over the dismissed professors'
teaching loads becomes moot considering that, as it alleges in its petition, it operates on
a semestral basis.
Under the principle that no appointments can be made to fill items which are not yet
lawfully vacant, the contracts of new professors cannot prevail over the right to
reinstatement of the dismissed personnel. However, we apply equitable principles for
the sake of the students and order actual reinstatement at the start of the second
semester.
WHEREFORE, the petition is hereby DISMISSED. However, the NLRC resolution dated
September 6, 1989 is MODIFIED and the petitioner University of Sto. Tomas is directed
to temporarily reinstate, pending and without prejudice to the outcome of the labor
dispute before the National Labor Relations Commission, the sixteen (16) dismissed
faculty members to their actual teaching assignments, at the start of the second
semester of the schoolyear 1990-1991. Prior to their temporary reinstatement to their
actual teaching loads, the said faculty members shall be entitled to fall wages,
backwages, and other benefits. The Temporary Restraining Order dated October 25,
1989 is hereby LIFTED. SO ORDERED. Fernan, C.J., (Chairman), Bidin and Cortes,
JJ., concur. Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 146650
January 13, 2003
DOLE PHILIPPINES, INC., petitioner,

vs.
PAWIS NG MAKABAYANG OBRERO (PAMAO-NFL), respondent.
CORONA, J.:
Before us is a petition for review filed under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the January 9, 2001 resolution of the Court of Appeals which
denied petitioners motion for reconsideration of its September 22, 2000 decision 1 which
in turn upheld the Order issued by the voluntary arbitrator 2 dated 12 October 1998, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
complainant. Respondent is hereby directed to extend the "free meal" benefit as
provided for in Article XVIII, Section 3 of the collective bargaining agreement to
those employees who have actually performed overtime works even for exactly
three (3) hours only.
SO ORDERED. 3
The core of the present controversy is the interpretation of the provision for "free meals"
under Section 3 of Article XVIII of the 1996-2001 Collective Bargaining Agreement
(CBA) between petitioner Dole Philippines, Inc. and private respondent labor union
PAMAO-NFL. Simply put, how many hours of overtime work must a Dole employee
render to be entitled to the free meal under Section 3 of Article XVIII of the 1996-2001
CBA? Is it when he has rendered (a) exactly, or no less than, three hours of actual
overtime work or (b) more than three hours of actual overtime work?
The antecedents are as follows:
On February 22, 1996, a new five-year Collective Bargaining Agreement for the period
starting February 1996 up to February 2001, was executed by petitioner Dole
Philippines, Inc., and private respondent Pawis Ng Makabayang Obrero-NFL (PAMAONFL). Among the provisions of the new CBA is the disputed section on meal allowance
under Section 3 of Article XVIII on Bonuses and Allowances, which reads:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL
ALLOWANCE of TEN PESOS (P10.00) to all employees who render at least
TWO (2) hours or more of actual overtime work on a workday, and FREE
MEALS, as presently practiced, not exceeding TWENTY FIVE PESOS
(P25.00) after THREE (3) hours of actual overtime work.4
Pursuant to the above provision of the CBA, some departments of Dole reverted to the
previous practice of granting free meals after exactly three hours of actual overtime
work. However, other departments continued the practice of granting free meals only
after more than three hours of overtime work. Thus, private respondent filed a complaint
before the National Conciliation and Mediation Board alleging that petitioner Dole
refused to comply with the provisions of the 1996-2001 CBA because it granted free
meals only to those who rendered overtime work for more than three hours and not to
those who rendered exactly three hours overtime work.
The parties agreed to submit the dispute to voluntary arbitration. Thereafter, the
voluntary arbitrator, deciding in favor of the respondent, issued an order directing
petitioner Dole to extend the "free meal" benefit to those employees who actually did
overtime work even for exactly three hours only.
Petitioner sought a reconsideration of the above order but the same was denied. Hence,
petitioner elevated the matter to the Court of Appeals by way of a petition for review on
certiorari.
On September 22, 2000, the Court of Appeals rendered its decision upholding the
assailed order.
Thus, the instant petition.
Petitioner Dole asserts that the phrase "after three hours of actual overtime work"
should be interpreted to meanafter more than three hours of actual overtime work.
On the other hand, private respondent union and the voluntary arbitrator see it as
meaning after exactly three hours of actual overtime work.
The "meal allowance" provision in the 1996-2001 CBA is not new. It was also in the
1985-1988 CBA and the 1990-1995 CBA. The 1990-1995 CBA provision on meal
allowance was amended by the parties in the 1993-1995 CBA Supplement. The clear
changes in each CBA provision on meal allowance were in the amount of the meal
allowance and free meals, and the use of the words "after" and "after more than" to
qualify the amount of overtime work to be performed by an employee to entitle him to
the free meal.
To arrive at a correct interpretation of the disputed provision of the CBA, a review of the
pertinent section of past CBAs is in order.
The CBA covering the period 21 September 1985 to 20 September 1988 provided:
ALLOWANCE of FOUR (P4.00) PESOS to all employees who render at least
MEALS, as presently practiced, after THREE (3) hours of actual overtime work." 5
The CBA for 14 January 1990 to 13 January 1995 likewise provided:
ALLOWANCE of EIGHT PESOS (P8.00) to all employees who render at least
MEALS, as presently practiced, not exceeding SIXTEEN PESOS (P16.00) after
THREE (3) hoursof actual overtime work."6
The provision above was later amended when the parties renegotiated the economic
provisions of the CBA pursuant to Article 253-A of the Labor Code. Section 3 of Article
XVIII of the 14 January 1993 to 13 January 1995 Supplement to the 1990-1995 CBA
reads:
SUBSIDY of NINE PESOS (P9.00) to all employees who render at least TWO (2)
hours or more of actual overtime work on a workday, and FREE MEALS, as
presently practiced, not exceeding TWENTY ONE PESOS (P21.00) after more
than THREE (3) hours of actual overtime work (Section 3, as amended)." 7
We note that the phrase "more than" was neither in the 1985-1988 CBA nor in the
original 1990-1995 CBA. It was inserted only in the 1993-1995 CBA Supplement. But
said phrase is again absent in Section 3 of Article XVIII of the 1996-2001 CBA, which
reverted to the phrase "after three (3) hours".
Petitioner asserts that the phrase "after three (3) hours of actual overtime work" does
not mean after exactly three hours of actual overtime work; it means after more than
three hours of actual overtime work. Petitioner insists that this has been the
interpretation and practice of Dole for the past thirteen years.
Respondent, on the other hand, maintains that "after three (3) hours of actual overtime
work" simply means after rendering exactly, or no less than, three hours of actual
overtime work.
The Court finds logic in private respondents interpretation.
The omission of the phrase "more than" between "after" and "three hours" in the present
CBA spells a big difference.
No amount of legal semantics can convince the Court that "after more than" means the
same as "after".
Petitioner asserts that the "more than" in the 1993-1995 CBA Supplement was mere
surplusage because, regardless of the absence of said phrase in all the past CBAs, it
had always been the policy of petitioner corporation to give the meal allowance only
after more than 3 hours of overtime work. However, if this were true, why was it included
only in the 1993-1995 CBA Supplement and the parties had to negotiate its deletion in
the 1996-2001 CBA?
Clearly then, the reversion to the wording of previous CBAs can only mean that the
parties intended that free meals be given to employees after exactly, or no less than,
three hours of actual overtime work.
The disputed provision of the CBA is clear and unambiguous. The terms are explicit and
the language of the CBA is not susceptible to any other interpretation. Hence, the literal
meaning of "free meals after three (3) hours of overtime work" shall prevail, which is
simply that an employee shall be entitled to a free meal if he has rendered exactly, or no
less than, three hours of overtime work, not "after more than" or "in excess of" three
hours overtime work.
Petitioner also invokes the well-entrenched principle of management prerogative that
"the power to grant benefits over and beyond the minimum standards of law, or the
Labor Code for that matter, belongs to the employer x x x". According to this principle,
even if the law is solicitous of the welfare of the employees, it must also protect the right
of the employer to exercise what clearly are management prerogatives. 8 Petitioner
claims that, being the employer, it has the right to determine whether it will grant a "free
meal" benefit to its employees and, if so, under what conditions. To see it otherwise
would amount to an impairment of its rights as an employer.
We do not think so.
The exercise of management prerogative is not unlimited. It is subject to the limitations

found in law, a collective bargaining agreement or the general principles of fair play and
justice.9 This situation constitutes one of the limitations. The CBA is the norm of conduct
between petitioner and private respondent and compliance therewith is mandated by
the express policy of the law.10
Petitioner Dole cannot assail the voluntary arbitrators interpretation of the CBA for the
supposed impairment of its management prerogatives just because the same
interpretation is contrary to its own.
WHEREFORE, petition is hereby denied.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.
Feliciano, J., is on leave.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 92009 February 17, 1993

MASTER IRON LABOR UNION (MILU), WILFREDO ABULENCIA, ROGELIO
CABANA, LOPITO SARANILLA, JESUS MOISES, BASILIO DELA CRUZ, EDGAR
ARANES, ELY BORROMEO, DANIEL BACOLON, MATIAS PAJIMULA, RESTITUTO
PAYABYAB, MELCHOR BOSE, TEOFILO ANTOLIN, ROBERT ASPURIA, JUSTINO
BOTOR, ALFREDO FABROS, AGAPITO TABIOS, BENARDO ALFON, BENIGNO
BARCENA, BERNARDO NAVARRO, MOISES LABRADOR, ERNESTO DELA CRUZ,
EDUARDO ESPIRITU, IGNACIO PAGTAMA, BAYANI PEREZ, SIMPLICIO PUASO,
EDWIN VELARDE, BEATO ABOGADO, DANILO SAN ANTONIO, BERMESI
BORROMEO, and JOSE BORROMEO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MASTER IRON WORKS AND
CONSTRUCTION CORPORATION, respondents.
Banzuela, Flores, Mirrales, Raeses, Sy, Taquio and Associates for petitioners.
Carlos L. Galarrita for private respondent.
MELO, J.:
The petition for certiorari before us seeks to annul and to set aside the decision of the
National Labor Relations Commission (Second Division) dated July 12, 1986 which
affirmed that of Labor Arbiter Fernando V. Cinco declaring illegal the strike staged by
petitioners and terminating the employment of the individual petitioners.
The Master Iron Works Construction Corporation (Corporation for brevity) is a duly
organized corporate entity engaged in steel fabrication and other related business
activities. Sometime in February 1987, the Master Iron Labor Union (MILU) entered into
a collective barganing agreement (CBA) with the Corporation for the three-year period
between December 1, 1986 and November 30, 1989 (Rollo, p. 7). Pertinent provisions
of the CBA state:
Sec. 1. That there shall be no strike and no lockout, stoppage or shutdown
of work, or any other interference with any of the operation of the
COMPANY during the term of this AGREEMENT, unless allowed and
permitted by law.
Sec. 2. Service Allowance The COMPANY agrees to continue the

granting of service allowance of workers assigned to work outside the
company plant, in addition to his daily salary, as follows:
(a) For those assigned to work outside the plant within Metro
Manila, the service allowance shall be P12.00;
(b) For those assigned to work outside Metro Manila, the
service allowance shall be P25.00/day;
(c) The present practice of conveying to and from jobsites of
workers assigned to work outside of the company plant shall
be maintained.
Right after the signing of the CBA, the Corporation subcontracted outside workers to do
the usual jobs done by its regular workers including those done outside of the company
plant. As a result, the regular workers were scheduled by the management to work on a
rotation basis allegedly to prevent financial losses thereby allowing the workers only ten
(10) working days a month (Rollo, p. 8). Thus, MILU requested implementation of the
grievance procedure which had also been agreed upon in the CBA, but the Corporation
ignored the request.
Consequently, on April 8, 1987, MILU filed a notice of strike (Rollo,
p. 54) with the Department of Labor and Employment. Upon the intervention of the
DOLE, through one Atty. Bobot Hernandez, the Corporation and MILU reached an
agreement whereby the Corporation acceded to give back the usual work to its regular
employees who are members of MILU (Rollo, p. 55).
Notwithstanding said agreement, the Corporation continued the practice of hiring
outside workers. When the MILU president, Wilfredo Abulencia, insisted in doing his
regular work of cutting steel bars which was being done by casual workers, a supervisor
reprimanded him, charged him with insubordination and suspended him for three (3)
days (Rollo, pp. 9 & 51-52). Upon the request of MILU, Francisco Jose of the DOLE
called for conciliation conferences. The Corporation, however, insisted that the hiring of
casual workers was a management prerogative. It later ignored subsequent scheduled
conciliation conferences (Rollo, pp. 51-52 & 57-58).
Hence, on July 9, 1987, MILU filed a notice of strike on the following grounds: (a)
violation of CBA; (b) discrimination; (c) unreasonable suspension of union officials; and
(d) unreasonable refusal to entertain grievance (Rollo,
p. 9). On July 24, 1987, MILU staged the strike, maintaining picket lines on the road
leading to the Corporation's plant entrance and premises.
At about 11 o'clock in the morning of July 28, 1987, CAPCOM soldiers, who had been
summoned by the Corporation's counsel, came and arrested the picketers. They were
brought to Camp Karingal and, the following day, to the Caloocan City jail. Charges for
illegal possession of firearms and deadly weapons were lodged against them. Later,
however, those charges were dismissed for failure of the arresting CAPCOM soldiers to
appear at the investigation (Rollo, p. 10). The dispersal of the picketlines by the
CAPCOM also resulted in the temporary lifting of the strike.
On August 4, 1987, the Corporation filed with the NLRC National Capital Region
arbitration branch a petition to declare the strike illegal (Rollo,
p. 40). On September 7, 1987, MILU, with the assistance of the Alyansa ng
Manggagawa sa Valenzuela (AMVA), re-staged the strike. Consequently, the
Corporation filed a petition for injunction before the NLRC which, on September 24,
1987, issued an order directing the workers to remove the barricades and other
obstructions which prevented ingress to and egress from the company premises. The
workers obliged on October 1, 1987 (Rollo, p. 25). On October 22, 1987, through its
president, MILU offered to return to work in a letter which states:
22 Okt. 1987
Mr. Elieze Hao
Master Iron Works & Construction Corp.
790 Bagbagin, Caloocan City
Dear Sir:
Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi,
nagsusuhestiyon o nag-oofer sa inyong pangasiwaan ng aming kahilingan
na bumalik na sa trabaho dahilan din lang sa kalagayan na tuloy tuloy ang
ating pag-uusap para sa ikatitiwasay ng ating relasyon. Gusto naming
manatili ang ating magandang pagtitinginan bilang magkasangga para sa
ika-uunlad ng ating kumpanya. Sana ay unawain niyo kami dahil
kailangan namin ng trabaho.
Guma
galan
g,
(Sgd.)
WILFREDO
ABULENCIA
Pangulo
(Rollo, p. 590)
On October 30, 1987, MILU filed a position paper with counter-complaint before the
NLRC. In said counter-complaint, the workers charged the Corporation with unfair labor
practice for subcontracting work that was normally done by its regular workers thereby
causing the reduction of the latter's workdays; illegal suspension of Abulencia without
any investigation; discrimination for hiring casual workers in violation of the CBA, and
illegal dispersal of the picket lines by CAPCOM agents (Rollo, pp. 26-27).
In due course, a decision dated March 16, 1988 was rendered by Labor Arbiter
Fernando Cinco declaring illegal the strike staged by MILU. The dispositive portion of
the decision reads:
WHEREFORE, in the light of the foregoing premises, judgment is hereby

rendered, as follows:
1. Declaring the strike by the respondents illegal and unlawful;
2. Ordering the cancellation of the registered permit of respondent union
MILU for having committed an illegal strike;
3. Ordering the termination of employment status of the individual
respondents, including the forfeiture of whatever benefits are due them
under the law, for having actively participated in an illegal strike,
namely: Wilfredo Abulencia, President; Rogelio Cabana, VicePresident; Lopito Saranilla, Secretary; Jesus Moises, Treasurer; Basilio
dela Cruz, Auditor; as Members of the Board:Edgar Aranes, Melchor
Bose, Restituto Payabyab, Matias Pajimula, Daniel Bacolon, and Ely
Borromeo, as Members of the Union: Teofilo Antolin, Robert Aspuria,
Justino Botor, Alfredo Fabros, Agapito Tabios, Bernardo Alfon, Benigno
Barcena, Bernardo Navaro, Moises Labrador, Ernesto dela Cruz, Eduardo
Espiritu, Ignacio Pagtama, Bayani Perez, Simplicio Puaso, Edwin Velarde,
Beato Abogado, Danila San Antonio, Bermes Borromeo and Jose
Borromeo.
The respondents as appearing in Annex "A" of the Petition, but not
included as among those whose employment status were not terminated
as above-mentioned, are given priority of reinstatement, without
backwages, in the event petitioner starts its normal operations, or shall be
paid their separation pay according to law.
4. Ordering the respondents to cease and desist from further committing
the illegal acts complained of;
5. Ordering Respondent Union to pay the amount of P10,000.00 to
Petitioner's Counsel as attorney's fees;
6. Ordering the dismissal of the claim for damages for lack of merit; and
7. Ordering the dismissal of the counter-complaint in view of the filing of a
separate complaint by the respondents.
SO ORDERED. (pp. 35-36, Rollo.)
On appeal to the NLRC, MILU and the individual officers and workers named in Labor
Arbiter Cinco's decision alleged that said labor arbiter gravely abused his discretion and
exhibited bias in favor of the Corporation in disallowing their request to cross-examine
the Corporation's witnesses, namely, Corporate Secretary Eleazar Hao, worker Daniel
Ignacio and foreman Marcial Barcelon, who all testified on the manner in which the
strike was staged and on the coercion and intimidation allegedly perpetrated by the
strikers (Rollo,
p. 151).
The Second Division of the NLRC affirmed with modifications the decision of the labor
arbiter. The decision, which was promulgated on July 12, 1989 with Commissioners
Domingo H. Zapanta and Oscar N. Abella concurring and Commissioner Daniel M.
Lucas, Jr. dissenting, disagreed with the labor arbiter on the "summary execution of the
life of Master Iron Labor Union (MILU)" on the grounds that the Corporation did not
specifically pray for the cancellation of MILU's registration and that pursuant to Articles
239 and 240 of the Labor Code, only the Bureau of Labor Relations may cancel MILU's
license or certificate of registration. It also deleted the award of P10,000.00 as
attorney's fees for lack of sufficient basis but it affirmed the labor arbiter with regard to
the declaration of illegality of the strike and the termination of employment of certain
employees and the rest of the dispositive portion of the labor arbiter's decision (Rollo,
pp. 48-49).
In his dissent, Commissioner Lucas stated that he is "for the setting aside of the
decision appealed from, and remanding of the case to the labor arbiter of origin,
considering the respondent's countercharge or complaint for unfair labor practice was
not resolved on the merits" (Rollo, p. 49).
MILU filed a motion for the reconsideration but the same was denied by the NLRC for
lack of merit in its Resolution of August 9, 1989 (Rollo, p. 50). Hence, the instant
petition. 1
Petitioners contend that notwithstanding the non-strike provision in the CBA, the strike
they staged was legal because the reasons therefor are non-economic in nature. They
assert that the NLRC abused its discretion in holding that there was "failure to exhaust
the provision on grievance procedure" in view of the fact that they themselves sought
grievance meetings but the Corporation ignored such requests. They charge the NLRC
with bias in failing to give weight to the fact that the criminal charges against the
individual petitioners were dismissed for failure of the CAPCOM soldiers to testify while
the same individual strikers boldly faced the charges against them. Lastly, they aver that
the NLRC abused its discretion in holding that the workers' offer to return to work was
conditional.
In holding that the strike was illegal, the NLRC relied solely on the no-strike no-lockout
provision of the CBA aforequoted. As this Court has held in Philippine Metal Foundries,
Inc. vs. CIR (90 SCRA 135 [1979]), a no-strike clause in a CBA is applicable only to
economic strikes. Corollarily, if the strike is founded on an unfair labor practice of the
employer, a strike declared by the union cannot be considered a violation of the nostrike clause.
An economic strike is defined as one which is to force wage or other concessions from
the employer which he is not required by law to grant (Consolidated Labor Association
of the Philippines vs. Marsman & Co., Inc., 11 SCRA 589 [1964]). In this case,
petitioners enumerated in their notice of strike the following grounds: violation of the
CBA or the Corporation's practice of subcontracting workers; discrimination; coercion of
employees; unreasonable suspension of union officials, and unreasonable refusal to
entertain grievance.
Private respondent contends that petitioner's clamor for the implementation of Section
2, Article VIII of the CBA on service allowances granted to workers who are assigned
outside the company premises is an economic issue (Rollo, p. 70). On the contrary,
petitioners decry the violation of the CBA, specifically the provision granting them
service allowances. Petitioners are not, therefore, already asking for an economic
benefit not already agreed upon, but are merely asking for the implementation of the
same. They aver that the Corporation's practice of hiring subcontractors to do jobs
outside of the company premises was a way "to dodge paying service allowance to the
workers" (Rollo, pp. 61 & 70).
Much more than an economic issue, the said practice of the Corporation was a blatant
violation of the CBA and unfair labor practice on the part of the employer under
Article 248(i) of the Labor Code. Although the end result, should the Corporation be
required to observe the CBA, may be economic in nature because the workers would
then be given their regular working hours and therefore their just pay, not one of the
said grounds is an economic demand within the meaning of the law on labor strikes.
Professor Perfecto Fernandez, in his book Law on Strikes,Picketing and Lockouts (1981
edition, pp. 144-145), states that an economic strike involves issues relating to
demands for higher wages, higher pension or overtime rates, pensions, profit sharing,
shorter working hours, fewer work days for the same pay, elimination of night work,
lower retirement age, more healthful working conditions, better health services, better
sanitation and more safety appliances. The demands of the petitioners, being covered
by the CBA, are definitely within the power of the Corporation to grant and therefore the
strike was not an economic strike.
The other grounds, i.e., discrimination, unreasonable suspension of union officials and
unreasonable refusal to entertain grievance, had been ventilated before the Labor
Arbiter. They are clearly unfair labor practices as defined in Article 248 of the Labor
Code. 2 The subsequent withdrawal of petitioners' complaint for unfair labor practice
(NLRC-NCR Case No. 00-11-04132-87) which was granted by Labor Arbiter Ceferina
Diosana who also considered the case closed and terminated (Rollo, pp. 97 & 109) may
not, therefore, be considered as having converted their other grievance into economic
demands.
Moreover, petitioners staged the strike only after the Corporation had failed to abide by
the agreement forged between the parties upon the intervention of no less than the
DOLE after the union had complained of the Corporation's unabated subcontracting of
workers who performed the usual work of the regular workers. The Corporation's
insistence that the hiring of casual employees is a management prerogative betrays its
attempt to coat with legality the illicit curtailment of its employees' rights to work under
the terms of the contract of employment and to a fair implementation of the CBA.
While it is true that an employer's exercise of management prerogatives, with or without
reason, does not per seconstitute unjust discrimination, such exercise, if clearly shown
to be in grave abuse of discretion, may be looked into by the courts (National
Federation of Labor Unions vs. NLRC, 202 SCRA 346 [1991]). Indeed, the hiring, firing,
transfer, demotion, and promotion of employees are traditionally identified as
management prerogatives. However, they are not absolute prerogatives. They are
subject to limitations found in law, a collective bargaining agreement, or general
principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758
[1990] citing Abbott Laboratories [Phil.], Inc. vs. NLRC, 154 SCRA 713 [1987]). The
Corporation's assertion that it was exercising a management prerogative in hiring
outside workers being contrary to the contract of employment which, of necessity, states
the expected wages of the workers, as well as the CBA, is therefore untenable.
Private respondent's failure to traverse petitioners' allegations that the NLRC abused its
discretion in holding that the provision on grievance procedure had not been exhausted
clearly sustains such allegation and upholds the petitioners' contention that the
Corporation refused to undergo said procedure. It should be remembered that a
grievance procedure is part of the continuous process of collective bargaining (Republic
Savings Bank. vs. CIR, et al., 21 SCRA 226 [1967]). It is intended to promote a friendly
dialogue between labor and management as a means of maintaining industrial peace.
The Corporation's refusal to heed petitioners' request to undergo the grievance
procedure clearly demonstrated its lack of intent to abide by the terms of the CBA.
Anent the NLRC's finding that Abulencia's offer to return to work is conditional, even a
cursory reading of the letter aforequoted would reveal that no conditions had been set
by petitioners. It is incongruous to consider as a "condition" the statement therein that
the parties would continue talks for a peaceful working relationship ("tuloy tuloy ang
ating pag-uusap sa ikatitiwasay ng ating relasyon"). Conferences form part of the
grievance procedure and their mere mention in Abulencia's letter did not make the same
"conditional".
In the same manner, the following findings of the Labor Arbiter showed the illegal
breakup of the picket lines by the CAPCOM:
d) On 28 July 1987, CAPCOM soldiers, on surveillance mission, arrived at
the picket line of respondents and searches were made on reported
deadly weapons and firearms in the possession of the strikers. Several
bladed weapons and firearms in the possession of the strikers were
confiscated by the CAPCOM soldiers, as a result of which, the
apprehended strikers were brought to Camp Tomas Karingal in Quezon
City for proper investigation and filing of the appropriate criminal charges
against them. The strikers who were charged of illegal possession of
deadly weapon and firearms were: Edgar Aranes, Wilfredo Abulencia,
Ernesto dela Cruz, Beato Abogado, Lopito Saranilla, Restituto Payabyab,
Jose Borromeo and Rogelio Cabana. Criminal informations were filed by
Inquest Fiscal, marked as Exhibits "E", "E-1 to E-8". These strikers were
jailed for sometime until they were ordered release after putting up the
required bail bond. Other strikers were also arrested and brought to Camp
Tomas Karingal, and after proper investigation as to their involvement in
the offense charged, they were released for lack of prima facie evidence.
They were Edwin Velarde, Bayani Perez, Daniel Bacolon, Jesus Moises,
Robert Aspurias and Benigno Barcena.
After the strikers who were arrested were brought to Camp Tomas
Karingal on 28 July 1987, the rest of the strikers removed voluntarily their
human and material barricades which were placed and posted at the road
leading to the premises of the Company. (Rollo, p. 32)
The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported
outbreak of violence, was clearly in violation of the following prohibited activity under
Article 264 of the Labor Code:
(d) No public official or employee, including officers and personnel of the
New Armed Forces of the Philippines or the Integrated National Police, or
armed person, shall bring in, introduce or escort in any manner any
individual who seeks to replace strikers in entering or leaving the premises
of a strike area, or work in place of the strikers. The police force shall
keep out of the picket lines unless actual violence or other criminal acts
occur therein; Provided, That nothing herein shall be interpreted to prevent
any public officer from taking any measure necessary to maintain peace
and order, protect life and property, and/or enforce the law and legal order.
(Emphasis supplied.)
As the Labor Arbiter himself found, no pervasive or widespread coercion or violence
were perpetrated by the petitioners as to warrant the presence of the CAPCOM soldiers
in the picket lines. In this regard, worth quoting is the following excerpt of the decision
in Shell Oil Workers' Union vs. Shell Company of the Philippines, Ltd., 39 SCRA 276
[1971], which was decided by the Court under the old Industrial Peace Act but which
excerpt still holds true:
. . . What is clearly within the law is the concerted activity of cessation of
work in order that . . . employer cease and desist from an unfair labor
practice. That the law recognizes as a right. There is though a disapproval
of the utilization of force to attain such an objective. For implicit in the very
concept of the legal order is the maintenance of peaceful ways. A strike
otherwise valid, if violent in character, may be placed beyond the pale.
Care is to be taken, however, especially where an unfair labor practice is
involved, to avoid stamping it with illegality just because it is tainted with
such acts. To avoid rendering illusory the recognition of the right to strike,
responsibility in such a case should be individual and not collective. A
different conclusion would be called for, of course, if the existence of force
while the strike lasts is pervasive and widespread, consistently and
deliberately resorted to as a matter of policy. It could be reasonably
concluded then that even if justified as to ends, it becomes illegal because
of the means employed. (at p. 292.)
All told, the strike staged by the petitioners was a legal one even though it may have
been called to offset what the strikers believed in good faith to be unfair labor practices
on the part of the employer (Ferrer, et al. vs. Court of Industrial Relations, et al., 17
SCRA 352 [1966]). Verily, such presumption of legality prevails even if the allegations of
unfair labor practices are subsequently found out to be untrue (People's Industrial and
Commercial Employees and Workers Org. [FFW] vs. People's Industrial and
Commercial Corporation, 112 SCRA 440 [1982]). Consonant with these jurisprudential
pronouncements, is Article 263 of the Labor Code which clearly states "the policy of the
State to encourage free trade unionism and free collective bargaining". Paragraph (b) of
the same article guarantees the workers' "right to engage in concerted activities for
purposes of collective bargaining or for their mutual benefit and protection" and
recognizes the "right of legitimate labor organizations to strike and picket and of
employers to lockout" so long as these actions are "consistent with the national interest"
and the grounds therefor do not involve inter-union and intra-union disputes.
The strike being legal, the NLRC gravely abused its discretion in terminating the
employment of the individual petitioners, who, by operation of law, are entitled to
reinstatement with three years backwages. Republic Act No. 6715 which amended Art.
279 of the Labor Code by giving "full backwages inclusive of allowances" to reinstated
employees, took effect fifteen days from the publication of the law on March 21, 1989.
The decision of the Labor Arbiter having been promulgated on March 16, 1988, the law
is not applicable in this case.
WHEREFORE, the questioned decision and resolution of the NLRC as well as the
decision of the Labor Arbiter are hereby SET ASIDE and the individual petitioners are
reinstated to their positions, with three years backwages and without loss of seniority
rights and other privileges. Further, respondent corporation is ordered to desist from
subcontracting work usually performed by its regular workers.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.
Gutierrez, Jr., J., is on leave.

SUPREME COURT
Manila
EN BANC
G.R. No. L-64313 January 17, 1985
NATIONAL HOUSING CORPORATION, petitioner,
vs.
BENJAMIN JUCO AND THE NATIONAL LABOR RELATIONS
COMMISSION, respondents.
Government Corporate Counsel for petitioner.
Amante A. Pimentel for respondents.
GUTIERREZ, JR., J.:

Are employees of the National Housing Corporation (NHC) covered by the Labor Code
or by laws and regulations governing the civil service?
The background facts of this case are stated in the respondent-appellee's brief as
follows:
The records reveal that private respondent (Benjamin C. Juco) was a
project engineer of the National Housing Corporation (NHC) from
November 16, 1970 to May 14, 1975. For having been implicated in a
crime of theft and/or malversation of public funds involving 214 pieces of
scrap G.I. pipes owned by the corporation which was allegedly committed
on March 5, 1975. Juco's services were terminated by (NHC) effective as
of the close of working hours on May 14, 1975. On March 25, 1977 he
filed a complaint for illegal dismissal against petitioner (NHC) with
Regional Office No. 4, Department of Labor (now Ministry of Labor and
Employment) docketed as R04-3-3309-77 (Annex A, Petition). The said
complaint was certified by Regional Branch No. IV of the NLRC for
compulsory arbitration where it was docketed as Case No. RB-IV-1203877 and assigned to Labor Arbiter Ernilo V. Pealosa. The latter conducted
the hearing. By agreement of the parties, the case was submitted for
resolution upon submission of their respective position papers. Private
respondent (Juco) submitted his position paper on July 15, 1977. He
professed innocence of the criminal acts imputed against him contending
"that he was dismissed based on purely fabricated charges purposely to
harass him because he stood as a witness in the theft case filed against
certain high officials of the respondent's establishment" (NHC) and prayed
for 'his immediate reinstatement to his former position in the (NHC) without
loss of seniority rights and the consequent payment of his will back wages
plus all the benefits appertaining thereto. On July 28, 1977, the NHC also
filed its position paper alleging that the Regional Office Branch IV, Manila,
NLRC, "is without authority to entertain the case for lack of jurisdiction,
considering that the NHC is a government owned and controlled
corporation; that even assuming that this case falls within the jurisdiction
of this Office, respondent firm (now petitioner) maintains that respondent
(Juco), now private respondent, was separated from the service for valid
and justified reasons, i.e., for having sold company properties consisting
of 214 pieces of scrap G.I. pipes at a junk shop in Alabang, Muntinlupa,
Metro Manila, and thereafter appropriating the proceeds thereof to his own
benefit."
The pertinent portion of the decision of respondent National Labor Relations
Commission (NLRC) reads:
The fact that in the early case of Fernandez v. Cedro (NLRC Case No.
201165-74, May 19, 1975) the Commission, (Second Division) ruled that
the respondent National Housing Corporation is a government-owned or
controlled corporation does not preclude us from later taking a contrary
stand if by doing so the ends of justice could better be served.
For although adherence to precedents (stare decisis) is a sum formula for
achieving uniformity of action and conducive to the smooth operation of an
office, Idolatrous reverence for precedents which have outlived their
validity and usefulness retards progress and should therefore be avoided.
In fact, even courts do reverse themselves for reasons of justice and
equity. This Commission as an Administrative body performing quasi
judicial function is no exception.
WHEREFORE, in the light of the foregoing, the decision appealed from is
hereby, set aside. In view, however, of the fact that the Labor Arbiter did
not resolve the issue of illegal dismissal we have opted to remand this
case to the Labor Arbiter a quo for resolution of the aforementioned issue.
The NHC is a one hundred percent (100%) government-owned corporation organized in
accordance with Executive Order No. 399, the Uniform Charter of Government
Corporations, dated January 5, 1951. Its shares of stock are owned by 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. Pursuant to Letter of Instruction No. 118, the capital
stock of NHC was increased from P100 million to P250 million with the five government
institutions above mentioned subscribing in equal proportion to the increased capital
stock. The NHC has never had any private stockholders. The government has been the
only stockholder from its creation to the present.
There should no longer be any question at this time that employees of governmentowned or controlled corporations are governed by the civil service law and civil service
rules and regulations.
Section 1, Article XII-B of the Constitution specifically provides:

The Civil Service embraces every branch, agency, subdivision, and
instrumentality of the Government, including every government-owned or
controlled corporation. ...
The 1935 Constitution had a similar provision in its Section 1, Article XI I which stated:
A Civil Service embracing all branches and subdivisions of the
Government shall be provided by law.
The inclusion of "government-owned or controlled corporations" within the embrace of
the civil service shows a deliberate effort of the framers to plug an earlier loophole
which allowed government-owned or controlled corporations to avoid the full
consequences of the an encompassing coverage of the civil service system. The same
explicit intent is shown by the addition of "agency" and "instrumentality" to branches and
subdivisions of the Government. All offices and firms of the government are covered.
The amendments introduced in 1973 are not Idle exercises or a meaningless gestures.
They carry the strong message that t civil service coverage is broad and an- embracing
insofar as employment in the government in any of its governmental or corporate arms
is concerned.
The constitutional provision has been implemented by statute. Presidential Decree No.
807 is unequivocal that personnel of government-owned or controlled corporations
belong to the civil service and are subject to civil service requirements.
It provides:
SEC. 56. Government-owned or Controlled Corporations Personnel. All
permanent personnel of government-owned or controlled corporations
whose positions are now embraced in the civil service shall continue in the
service until they have been given a chance to qualify in an appropriate
examination, but in the meantime, those who do not possess the
appropriate civil service eligibility shag not be promoted until they qualify
in an appropriate civil service examination. Services of temporary
personnel may be terminated any time.
The very Labor Code, P. D. No. 442 as amended, which the respondent NLRC wants to
apply in its entirety to the private respondent provides:
ART. 277. Government employees. 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. Their salaries shall be
standardized by the National Assembly as provided for in the New
Constitution. However, there shall be reduction of existing wages, benefits
and other terms and conditions of employment being enjoyed by them at
the time of the adoption of the Code.
Our decision in Alliance of Government Workers, et al v. Honorable Minister of Labor

and Employment et all. (124 SCRA 1) gives the background of the amendment which
includes government-owned or controlled corporations in the embrace of the civil
service.
We stated:
Records of the 1971 Constitutional Convention show that in the
deliberation held relative to what is now Section 1(1), Article XII-B, supra,
the issue of the inclusion of government-owned or controlled corporations
figured prominently.
The late delegate Roberto S. Oca, a recognized labor leader, vehemently
objected to the inclusion of government-owned or controlled corporations
in the Civil Service. He argued that such inclusion would put asunder the
right of workers in government corporations, recognized in jurisprudence
under the 1935 Constitution, to form and join labor unions for purposes of
collective bargaining with their employers in the same manner as in the
private section (see: records of 1971 Constitutional Convention).
In contrast, other labor experts and delegates to the 1971 Constitutional
Convention enlightened the members of the Committee on Labor on the
divergent situation of government workers under the 1935 Constitution,
and called for its rectification. Thus, in a Position Paper dated November
22, 197 1, submitted to the Committee on Labor, 1971 Constitutional
Convention, then Acting Commissioner of Civil Service Epi Rey
Pangramuyen declared:
It is the stand, therefore, of this Commission that by reason
of the nature of the public employer and the peculiar
character of the public service, it must necessary regard the
right to strike given to unions in private industry as not
applying to public employees and civil service employees. It
has been stated that the Government, in contrast to the
private employer, protects the interests of all people in the
public service, and that accordingly, such conflicting interests
as are present in private labor relations could not exist in the
relations between government and those whom they employ.
Moreover, determination of employment conditions as well
as supervision of the management of the public service is in
the hands of legislative bodies. It is further emphasized that
government agencies in the performance of their duties have
a right to demand undivided allegiance from their workers
and must always maintain a pronounced esprit de corps or
firm discipline among their staff members. It would be highly
incompatible with these requirements of the public service, if
personnel took orders from union leaders or put solidarity
with members of the working class above solidarity with the
Government. This would be inimical to the public interest.
Moreover, it is asserted that public employees by joining

labor unions may be compelled to support objectives which
are political in nature and thus jeopardize the fundamental
principle that the governmental machinery must be impartial
and non-political in the sense of party politics. (See: Records
of 1971 Constitutional Convention).
Similar, Delegate Leandro P. Garcia, expressing for the inclusion of
government-owned or controlled corporations in the Civil Service, argued:
It is meretricious to contend that because Governmentowned or controlled corporations yield profits, their
employees are entitled to better wages and fringe benefits
than employees of Government other than Governmentowned and controlled corporations which are not making
profits. There is no gainsaying the fact that the capital they
use is the people's money. (see: Records of the 1971
Constitutional Convention).
Summarizing the deliberations of the 1971 Constitutional Convention on
the inclusion of Government-owned or controlled corporation Dean
Joaquin G. Bernas, SJ., of the Ateneo de Manila University Professional
School of Law, stated that government-owned corporations came under
attack as g cows of a privileged few enjoying salaries far higher than their
counterparts in the various branches of government, while the capital of
these corporations belongs to the Government and government money is
pumped into them whenever on the brink of disaster, and they should
therefore come under the strict surveillance of the Civil Service System.
(Bernas, The 1973 Philippine Constitution, Notes and Cases, 1974 ed., p.
524).
Applying the pertinent provisions of the Constitution, the Labor Code as amended, and
the Civil Service Decree as amended and the precedent in the Alliance of Government
Workers decision, it is clear that the petitioner National Housing Corporation comes
under the jurisdiction of the Civil Service Commission, not the Ministry of Labor and
Employment.
This becomes more apparent if we consider the fact that the NHC performs
governmental functions and not proprietary ones.
The NHC was organized for the governmental objectives stated in its amended articles
of incorporation as follows:
SECOND: That the purpose for which the corporation is organized is to
assist and carry out the coordinated massive housing program of the
government, principally but not limited to low-cost housing with the
integration cooperation and assistance of all governmental agencies
concerned, through the carrying on of any or all the following activities:
l) The acquisition, development or reclamation of lands for the purpose of
construction and building therein preferably low-cost housing so as to
provide decent and durable dwelling for the greatest number of inhabitants
in the country;
2) The promotion and development of physical social and economic
community growth through the establishment of general physical plans for
urban, suburban and metropolitan areas to be characterized by efficient
land use patterns;
3) The coordination and implementation of all projects of the government
for the establishment of nationwide and massive low cost housing;
4) The undertaking and conducting of research and technical studies of
the development and promotion of construction of houses and buildings of
sound standards of design liability, durability, safety, comfort and size for
improvement of the architectural and engineering designs and utility of
houses and buildings with the utilization of new and/or native materials
economics in material and construction, distribution, assembly and
construction and of applying advanced housing and building technology.
5) Construction and installation in these projects of low-cost housing
privately or cooperatively owned water and sewerage system or waste
disposal facilities, and the formulations of a unified or officially coordinated
urban transportation system as a part of a comprehensive development
plan in these areas.
The petitioner points out that it was established as an instrumentality of the government
to accomplish governmental policies and objectives and extend essential services to the
people. It would be incongruous if employees discharging essentially governmental
functions are not covered by the same law and rules which govern those performing
other governmental functions. If government corporations discharging proprietary
functions now belong to the civil service with more reason should those performing
governmental functions be governed by civil service law.
The respondent NLRC cites a 1976 opinion of the Secretary of Justice which holds that
the phrase "government-owned or controlled corporations" in Section 1, Article XII-B of
the Constitution contemplates only those government-owned or controlled
corporations created by special law. The opinion states that since the Constitution
provides for the organization or regulation of private corporations only by "general law",
expressly excluding government-owned or controlled corporations, it follows that
whenever the Constitution mentions government-owned or controlled corporations, it
must refer to those created by special law. P.D. No. 868 which repeals all charters, laws,
decrees, rules, and provisions exempting any branch, agency, subdivision, or
instrumentality of the government, including government- owned or controlled
corporations from the civil service law and rules is also cited to show that corporations
not governed by special charters or laws are not to be brought within civil service
coverage. The discussions in the Constitutional Convention are also mentioned. It
appears that at the time the Convention discussed government-owned or controlled
corporations, all such corporations were organized only under special laws or charters.
The fact that "private" corporations owned or controlled by the government may be
created by special charter does not mean that such corporations not created by special
law are not covered by the civil service. Nor does the decree repealing all charters and
special laws granting exemption from the civil service law imply that government
corporations not created by special law are exempt from civil service coverage. These
charters and statutes are the only laws granting such exemption and, therefore, they are
the only ones which could be repealed. There was no similar exempting provision in the
general law which called for repeal. And finally, the fact that the Constitutional
Convention discussed only corporations created by special law or charter cannot be an
argument to exclude petitioner NHC from civil service coverage. As stated in the cited
speech delivered during the convention sessions of March 9, 1972, all government
corporations then in existence were organized under special laws or charters. The
convention delegates could not possibly discuss government-owned or controlled
corporations which were still non-existent or about whose existence they were unaware.
Section I of Article XII-B, Constitution uses the word "every" to modify the phrase
"government-owned or controlled corporation."
"Every" means each one of a group, without exception It means all possible and all
taken one by one. Of course, our decision in this case refers to a corporation created as
a government-owned or controlled entity. It does not cover cases involving private firms
taken over by the government in foreclosure or similar proceedings. We reserve
judgment on these latter cases when the appropriate controversy is brought to this
Court.
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 restraints 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 incorporation 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.
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.
SO ORDERED. Fernando, C.J., Teehankee, Makasiar, Aquino, Concepcion, Jr.,
Melencio-Herrera, Plana, Escolin, Relova, De la Fuente and Cuevas, JJ., concur.

SUPREME COURT
Manila
EN BANC
G.R. No. 167614
March 24, 2009
ANTONIO M. SERRANO, Petitioner,

vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO.,
INC., Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and communities
out of poverty. Their earnings have built houses, provided health care, equipped schools
and planted the seeds of businesses. They have woven together the world by
transmitting ideas and knowledge from country to country. They have provided the
dynamic human link between cultures, societies and economies. Yet, only recently have
we begun to understand not only how much international migration impacts
development, but how smart public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph
of Section 10, Republic Act (R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without
just, valid or authorized cause as defined by law or contract, the workers shall be
entitled to the full reimbursement of his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is
less.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired
portion of their employment contract "or for three months for every year of the unexpired
term, whichever is less" (subject clause). Petitioner claims that the last clause violates
the OFWs' constitutional rights in that it impairs the terms of their contract, deprives
them of equal protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the
December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA),
which applied the subject clause, entreating this Court to declare the subject clause
unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)approved Contract of Employment with the following terms and conditions:
Duration of contract
12 months
Position
Chief Officer
Basic monthly salary
US$1,400.00
Hours of work
48.0 hours per week
Overtime
US$700.00 per month
Vacation leave with pay
7.00 days per month5
On March 19, 1998, the date of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second Officer with a monthly
salary of US$1,000.00, upon the assurance and representation of respondents that he
would be made Chief Officer by the end of April 1998.6
Respondents did not deliver on their promise to make petitioner Chief Officer.7 Hence,
petitioner refused to stay on as Second Officer and was repatriated to the Philippines on
May 26, 1998.8
Petitioner's employment contract was for a period of 12 months or from March 19, 1998
up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served
only two (2) months and seven (7) days of his contract, leaving an unexpired portion of
nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint 9 against respondents for
constructive dismissal and for payment of his money claims in the total amount of
US$26,442.73, broken down as follows:
May US$ 413.90
27/3
1,
199
8 (5
days
)
incl.
Lea
ve
pay
Jun 2,590.00
e
01/3
0,
199
8
July 2,590.00
01/3
1,
199
8
Aug 2,590.00
ust
01/3
1,
199
8
Sept 2,590.00
.
01/3
0,
199
8
Oct. 2,590.00
01/3
1,
199
8
Nov. 2,590.00
01/3
0,
199
8
Dec. 2,590.00
01/3
1,
199
8
Jan. 2,590.00
01/3
1,
199
9
Feb. 2,590.00
01/2
8,
199
9
Mar. 1,640.00
1/19
,
199
9
(19
days
)
incl.
leav
e
pay
------------------------------------------------------------------------------25,382.23
Amo
unt
adju
sted
to
chief
mat
e's
sala
ry
(Mar 1,060.5010
ch
19/3
1,
199
8 to
April
1/30
,
199
8) +
--------------------------------------------------------------------------------------------TOT US$ 26,442.7311
AL
CLA
IM
as well as moral and exemplary damages and attorney's fees.
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of
petitioner illegal and awarding him monetary benefits, to wit:
WHEREFORE, premises considered, judgment is hereby rendered declaring that
the dismissal of the complainant (petitioner) by the respondents in the aboveentitled case was illegal and the respondents are hereby ordered to pay the
complainant [petitioner], jointly and severally, in Philippine Currency, based on
the rate of exchange prevailing at the time of payment, the amount of EIGHT
THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00),
representing the complainants salary for three (3) months of the unexpired
portion of the aforesaid contract of employment.1avvphi1
The respondents are likewise ordered to pay the complainant [petitioner], jointly
and severally, in Philippine Currency, based on the rate of exchange prevailing at
the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$
45.00),12 representing the complainants claim for a salary differential. In addition,
the respondents are hereby ordered to pay the complainant, jointly and severally,
in Philippine Currency, at the exchange rate prevailing at the time of payment,
the complainants (petitioner's) claim for attorneys fees equivalent to ten percent
(10%) of the total amount awarded to the aforesaid employee under this
Decision.
The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
computation on the salary period of three months only -- rather than the entire
unexpired portion of nine months and 23 days of petitioner's employment
contract - applying the subject clause. However, the LA applied the salary rate of
US$2,590.00, consisting of petitioner's "[b]asic salary, US$1,400.00/month +
US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay =
US$2,590.00/compensation per month."14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to

question the finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in Triple Integrated Services, Inc. v. National
Labor Relations Commission17 that in case of illegal dismissal, OFWs are entitled
to their salaries for the unexpired portion of their contracts.18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are
hereby ordered to pay complainant, jointly and severally, in Philippine currency,
at the prevailing rate of exchange at the time of payment the following:
1. Three (3) months salary
$1,400 x 3
US$4,200.00
2. Salary differential
45.00
US$4,245.00
3. 10% Attorneys fees
424.50
TOTAL
US$4,669.50
The other findings are affirmed.

SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner
by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A.
No. 8042 "does not provide for the award of overtime pay, which should be proven to
have been actually performed, and for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional
challenge against the subject clause. 24 After initially dismissing the petition on a
technicality, the CA eventually gave due course to it, as directed by this Court in its
Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as
G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the
reduction of the applicable salary rate; however, the CA skirted the constitutional issue
raised by petitioner.25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his
cause to this Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in
accord with applicable decision of the Supreme Court involving similar issue of granting
unto the migrant worker back wages equal to the unexpired portion of his contract of
employment instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely
applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted that
the Court of Appeals gravely erred in law when it failed to discharge its judicial duty to
decide questions of substance not theretofore determined by the Honorable Supreme
Court, particularly, the constitutional issues raised by the petitioner on the
constitutionality of said law, which unreasonably, unfairly and arbitrarily limits payment
of the award for back wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No.
8042, the Court of Appeals gravely erred in law in excluding from petitioners award the
overtime pay and vacation pay provided in his contract since under the contract they
form part of his salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is
already old and sickly, and he intends to make use of the monetary award for his
medical treatment and medication.29 Required to comment, counsel for petitioner filed a
motion, urging the court to allow partial execution of the undisputed monetary award
and, at the same time, praying that the constitutional question be resolved. 30
Considering that the parties have filed their respective memoranda, the Court now takes
up the full merit of the petition mindful of the extreme importance of the constitutional
question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was
illegal is not disputed. Likewise not disputed is the salary differential of US$45.00
awarded to petitioner in all three fora. What remains disputed is only the computation of
the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
petitioner at the monthly rate of US$1,400.00 covering the period of three months out of
the unexpired portion of nine months and 23 days of his employment contract or a total
of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition
to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23
more or a total of US$25,382.23, equivalent to his salaries for the entire nine months
and 23 days left of his employment contract, computed at the monthly rate of
US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs
the freedom of OFWs to negotiate for and stipulate in their overseas employment
contracts a determinate employment period and a fixed salary package. 32 It also
impinges on the equal protection clause, for it treats OFWs differently from local Filipino
workers (local workers) by putting a cap on the amount of lump-sum salary to which
OFWs are entitled in case of illegal dismissal, while setting no limit to the same
monetary award for local workers when their dismissal is declared illegal; that the
disparate treatment is not reasonable as there is no substantial distinction between the
two groups;33 and that it defeats Section 18,34 Article II of the Constitution which
guarantees the protection of the rights and welfare of all Filipino workers, whether
deployed locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not
in line with existing jurisprudence on the issue of money claims of illegally dismissed
OFWs. Though there are conflicting rulings on this, petitioner urges the Court to sort
them out for the guidance of affected OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042
serves no other purpose but to benefit local placement agencies. He marks the
statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the
court or if the foreign employer reneges on its obligation. Hence, placement agencies
that are in good faith and which fulfill their obligations are unnecessarily penalized for
the acts of the foreign employer. To protect them and to promote their continued helpful
contribution in deploying Filipino migrant workers, liability for money claims was
reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the
subject clause sacrifices the well-being of OFWs. Not only that, the provision makes
foreign employers better off than local employers because in cases involving the illegal
dismissal of employees, foreign employers are liable for salaries covering a maximum of
only three months of the unexpired employment contract while local employers are
liable for the full lump-sum salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of
backwages they have to give their employees they have illegally dismissed, following
well-entrenched and unequivocal jurisprudence on the matter. On the other hand,
foreign employers will only be limited to giving the illegally dismissed migrant workers
the maximum of three (3) months unpaid salaries notwithstanding the unexpired term of
the contract that can be more than three (3) months. 38
Lastly, petitioner claims that the subject clause violates the due process clause, for it
deprives him of the salaries and other emoluments he is entitled to under his fixedperiod employment contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue
should not be entertained, for this was belatedly interposed by petitioner in his appeal
before the CA, and not at the earliest opportunity, which was when he filed an appeal
before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15,
1995, its provisions could not have impaired petitioner's 1998 employment contract.
Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are
deemed part of the minimum terms of petitioner's employment, especially on the matter
of money claims, as this was not stipulated upon by the parties. 42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the
nature of their employment, such that their rights to monetary benefits must necessarily
be treated differently. The OSG enumerates the essential elements that distinguish
OFWs from local workers: first, while local workers perform their jobs within Philippine
territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our
courts to acquire jurisdiction, or against whom it is almost impossible to enforce
judgment; and second, as held in Coyoca v. National Labor Relations Commission 43 and
Millares v. National Labor Relations Commission,44 OFWs are contractual employees

who can never acquire regular employment status, unlike local workers who are or can
become regular employees. Hence, the OSG posits that there are rights and privileges
exclusive to local workers, but not available to OFWs; that these peculiarities make for a
reasonable and valid basis for the differentiated treatment under the subject clause of
the money claims of OFWs who are illegally dismissed. Thus, the provision does not
violate the equal protection clause nor Section 18, Article II of the Constitution. 45
Lastly, the OSG defends the rationale behind the subject clause as a police power
measure adopted to mitigate the solidary liability of placement agencies for this
"redounds to the benefit of the migrant workers whose welfare the government seeks to
promote. The survival of legitimate placement agencies helps [assure] the government
that migrant workers are properly deployed and are employed under decent and
humane conditions."46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its
co-equals, such as the Congress, it does so only when these conditions obtain: (1) that
there is an actual case or controversy involving a conflict of rights susceptible of judicial
determination;47 (2) that the constitutional question is raised by a proper party 48 and at
the earliest opportunity;49 and (3) that the constitutional question is the very lis mota of
the case,50otherwise the Court will dismiss the case or decide the same on some other
ground.51
Without a doubt, there exists in this case an actual controversy directly involving
petitioner who is personally aggrieved that the labor tribunals and the CA computed his
monetary award based on the salary period of three months only as provided under the
subject clause.
The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity entails the
interposition of the issue in the pleadings before acompetent court, such that, if the
issue is not raised in the pleadings before that competent court, it cannot be considered
at the trial and, if not considered in the trial, it cannot be considered on
appeal.52 Records disclose that the issue on the constitutionality of the subject clause
was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial
Reconsideration with said labor tribunal,53 and reiterated in his Petition
forCertiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised
because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial
function its function in the present case is limited to determining questions of fact to
which the legislative policy of R.A. No. 8042 is to be applied and to resolving such
questions in accordance with the standards laid down by the law itself; 55 thus, its
foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the
validity of its provisions. The CA, on the other hand, is vested with the power of judicial
review or the power to declare unconstitutional a law or a provision thereof, such as the
subject clause.56Petitioner's interposition of the constitutional issue before the CA was
undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in
its decision.
The third condition that the constitutional issue be critical to the resolution of the case
likewise obtains because the monetary claim of petitioner to his lump-sum salary for the
entire unexpired portion of his 12-month employment contract, and not just for a period
of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject
clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his
contract on the term of his employment and the fixed salary package he will receive 57 is
not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation,58and cannot affect acts or contracts already perfected;59 however,
as to laws already in existence, their provisions are read into contracts and deemed a
part thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in
application to laws about to be enacted that would in any way derogate from existing
acts or contracts by enlarging, abridging or in any manner changing the intention of the
parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the
execution of the employment contract between petitioner and respondents in 1998.
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired
the employment contract of the parties. Rather, when the parties executed their 1998
employment contract, they were deemed to have incorporated into it all the provisions of
R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be
declared unconstitutional on the ground that it impinges on the impairment clause, for
the law was enacted in the exercise of the police power of the State to regulate a
business, profession or calling, particularly the recruitment and deployment of OFWs,
with the noble end in view of ensuring respect for the dignity and well-being of OFWs
wherever they may be employed.61 Police power legislations adopted by the State to
promote the health, morals, peace, education, good order, safety, and general welfare
of the people are generally applicable not only to future contracts but even to those
already in existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to promote public welfare. 62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor
shall any person be denied the equal protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor
sector, without distinction as to place of deployment, full protection of their rights and
welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally
enjoyed by workers of similar category, while all monetary obligations should be borne
by them in equal degree; none should be denied the protection of the laws which is
enjoyed by, or spared the burden imposed on, others in like circumstances. 65
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation; however, to be
valid, the classification must comply with these requirements: 1) it is based on
substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to
existing conditions only; and 4) it applies equally to all members of the class. 66
There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which the
challenged classification needs only be shown to be rationally related to serving a
legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state
interest and that the classification is at least substantially related to serving that
interest;68 and c) strict judicial scrutiny69 in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right 70 or operates to the
peculiar disadvantage of a suspect class71 is presumed unconstitutional, and the burden
is upon the government to prove that the classification is necessary to achieve
a compelling state interest and that it is theleast restrictive means to protect such
interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications73 based on race74 or gender75 but not when the classification is drawn
along income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko Sentral ng Pilipinas, 77 the constitutionality of a
provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial
institution (GFI), was challenged for maintaining its rank-and-file employees under the
Salary Standardization Law (SSL), even when the rank-and-file employees of other
GFIs had been exempted from the SSL by their respective charters. Finding that the
disputed provision contained a suspect classification based on salary grade, the Court
deliberately employed the standard of strict judicial scrutiny in its review of the
constitutionality of said provision. More significantly, it was in this case that the Court
revealed the broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its policies
should be accorded recognition and respect by the courts of justice except when they
run afoul of the Constitution. The deference stops where the classification violates a
fundamental right, or prejudices persons accorded special protection by the
Constitution. When these violations arise, this Court must discharge its primary role as
the vanguard of constitutional guaranties, and require a stricter and more exacting
adherence to constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the
Constitution requires a stricter judicial scrutiny finds no support in American or English
jurisprudence. Nevertheless, these foreign decisions and authorities are not per se
controlling in this jurisdiction. At best, they are persuasive and have been used to
support many of our decisions. We should not place undue and fawning reliance upon
them and regard them as indispensable mental crutches without which we cannot come
to our own decisions through the employment of our own endowments. We live in a
different ambience and must decide our own problems in the light of our own interests
and needs, and of our qualities and even idiosyncrasies as a people, and always with
our own concept of law and justice. Our laws must be construed in accordance with the
intention of our own lawmakers and such intent may be deduced from the language of
each law and the context of other local legislation related thereto. More importantly, they
must be construed to serve our own public interest which is the be-all and the end-all of
all our laws. And it need not be stressed that our public interest is distinct and different
from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The
Preamble proclaims "equality" as an ideal precisely in protest against crushing
inequities in Philippine society. The command to promote social justice in Article II,
Section 10, in "all phases of national development," further explicitated in Article XIII,
are clear commands to the State to take affirmative action in the direction of greater
equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal support
for a more vigorous state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic
rights to marginalized groups of society, including labor. 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 privilege in life should have more in law.
And the obligation to afford protection to labor is incumbent not only on the legislative
and executive branches but also on the judiciary to translate this pledge into a living
reality. Social justice calls for the humanization of laws and the equalization of social
and economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding
questions of constitutionality, recognizing the broad discretion given to Congress in
exercising its legislative power. Judicial scrutiny would be based on the "rational basis"
test, and the legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right,
or the perpetuation of prejudice against persons favored by the Constitution with
special protection, judicial scrutiny ought to be more strict. A weak and watered
down view would call for the abdication of this Courts solemn duty to strike down any
law repugnant to the Constitution and the rights it enshrines. This is true whether the
actor committing the unconstitutional act is a private person or the government itself or
one of its instrumentalities. Oppressive acts will be struck down regardless of the
character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or
officer-employee status. It is akin to a distinction based on economic class and status,
with the higher grades as recipients of a benefit specifically withheld from the lower
grades. Officers of the BSP now receive higher compensation packages that are
competitive with the industry, while the poorer, low-salaried employees are limited to the
rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-file
employees are paid the strictly regimented rates of the SSL while employees higher in
rank - possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to stay.
Considering that majority, if not all, the rank-and-file employees consist of people whose
status and rank in life are less and limited, especially in terms of job marketability, it is
they - and not the officers - who have the real economic and financial need for the
adjustment . This is in accord with the policy of the Constitution "to free the people from
poverty, provide adequate social services, extend to them a decent standard of living,
and improve the quality of life for all." Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by this Court before it can pass
muster. (Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in the
present case also employs the standard of strict judicial scrutiny, for it perceives in the
subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs
with employment contracts ofone year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis--vis OFWs with
employment contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National
Labor Relations Commission79 (Second Division, 1999) that the Court laid down the
following rules on the application of the periods prescribed under Section 10(5) of R.A.
No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to
award an illegally dismissed overseas contract worker, i.e., whether his salaries
for the unexpired portion of his employment contract or three (3) months salary
for every year of the unexpired term, whichever is less, comes into play only
when the employment contract concerned has a term of at least one (1) year or
more. This is evident from the words "for every year of the unexpired term" which
follows the words "salaries x x x for three months." To follow petitioners thinking
that private respondent is entitled to three (3) months salary only simply because it is
the lesser amount is to completely disregard and overlook some words used in the
statute while giving effect to some. This is contrary to the well-established rule in legal
hermeneutics that in interpreting a statute, care should be taken that every part or word
thereof be given effect since the law-making body is presumed to know the meaning of
the words employed in the statue and to have used them advisedly. Ut res magis valeat
quam pereat.80 (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month
contract, but was awarded his salaries for the remaining 8 months and 6 days of his
contract.
Prior to Marsaman, however, there were two cases in which the Court made conflicting
rulings on Section 10(5). One was Asian Center for Career and Employment System
and Services v. National Labor Relations Commission(Second Division, October

1998),81 which involved an OFW who was awarded a two-year employment contract,but
was dismissed after working for one year and two months. The LA declared his
dismissal illegal and awarded him SR13,600.00 as lump-sum salary covering eight
months, the unexpired portion of his contract. On appeal, the Court reduced the award
to SR3,600.00 equivalent to his three months salary, this being the lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment
without just, valid or authorized cause is entitled to his salary for the unexpired portion
of his employment contract or for three (3) months for every year of the unexpired term,
whichever is less.
In the case at bar, the unexpired portion of private respondents employment contract is
eight (8) months. Private respondent should therefore be paid his basic salary
corresponding to three (3) months or a total of SR3,600. 82
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
Commission (Third Division, December 1998),83 which involved an OFW (therein
respondent Erlinda Osdana) who was originally granted a 12-month contract, which was
deemed renewed for another 12 months. After serving for one year and seven-and-ahalf months, respondent Osdana was illegally dismissed, and the Court awarded her
salaries for the entire unexpired portion of four and one-half months of her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following
cases:
Case Title
Contract Period Unexpire

Period
of
d Period
Service
Period
Applied in
the
Computation
of the
Monetary
Award
Skippers v.
Maguad84
6
months
2
months
4 months
4 months
Bahia
Shipping v.
Reynaldo
Chua 85
9
months
8
months
4 months
4 months
Centennial
Transmarine
v. dela Cruz
l86
9
months
4
months
5 months
5 months
Talidano v.
Falcon87
12
months
3
months
9 months
3 months
Univan v.
CA88
12
months
3
months
9 months
3 months
Oriental v.
CA89
12
months
more 10 months
than 2
months
3 months
PCL v.
12
more
more or
3 months
NLRC90
months
than 2
months
Olarte v.
Nayona91
12
months
21 days 11 months
and 9
days
3 months
JSS
v.Ferrer92
12
months
16 days 11 months
and 24
days
3 months
less 9
months
Pentagon v. 12
Adelantar93 months
9
months
and 7
days
2 months
and 23
days
2 months and
23 days
Phil. Employ
v. Paramio,
et al.94
12
months
10
months
2 months
Unexpired
portion
Flourish
Maritime v.
Almanzor 95
2 years
26 days 23 months 6 months or 3

and 4
months for
days
each year of
contract
Athenna
Manpower
v. Villanos 96
1 year,
10
months
and 28
days
1
month
1 year, 9
months
and 28
days
6 months or 3
months for
each year of
contract
As the foregoing matrix readily shows, the subject clause classifies OFWs into two
categories. The first category includes OFWs with fixed-period employment contracts of
less than one year; in case of illegal dismissal, they are entitled to their salaries for the
entire unexpired portion of their contract. The second category consists of OFWs with
fixed-period employment contracts of one year or more; in case of illegal dismissal, they
are entitled to monetary award equivalent to only 3 months of the unexpired portion of
their contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers,
the respondent OFW worked for only 2 months out of his 6-month contract, but was
awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs
in Oriental and PCL who had also worked for about 2 months out of their 12-month
contracts were awarded their salaries for only 3 months of the unexpired portion of their
contracts. Even the OFWs involved in Talidano and Univan who had worked for a longer
period of 3 months out of their 12-month contracts before being illegally dismissed were
awarded their salaries for only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A
with an employment contract of 10 months at a monthly salary rate of US$1,000.00 and
a hypothetical OFW-B with an employment contract of 15 months with the same
monthly salary rate of US$1,000.00. Both commenced work on the same day and under
the same employer, and were illegally dismissed after one month of work. Under the
subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the
remaining 9 months of his contract, whereas OFW-B will be entitled to only
US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of his
contract, instead of US$14,000.00 for the unexpired portion of 14 months of his
contract, as the US$3,000.00 is the lesser amount.
The disparity becomes more aggravating when the Court takes into account
jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14,
1995,97 illegally dismissed OFWs, no matter how long the period of their employment
contracts, were entitled to their salaries for the entire unexpired portions of their
contracts. The matrix below speaks for itself:
Case Title
Contrac
t Period
Period Unexpire
of
d Period
Service
Period
Applied in
the
Computation
of the
Monetary
Award
ATCI v. CA,
et al.98
2 years
2
month
s
22 months
22 months
Phil.
Integrated v.
NLRC99
2 years
7 days
23 months
and 23
days
23 months
and 23 days
JGB v.
NLC100
2 years
9
15 months
months
15 months
Agoy v.
NLRC101
2 years
2
22 months
months
22 months
EDI v.
NLRC, et
al.102
2 years
5
19 months
months
19 months
Barros v.
NLRC, et
al.103
12
months
4
months
8 months
8 months
Philippine
Transmarine
v. Carilla104
12
months
6
months
and 22
days
5 months
and 18
days
5 months and
18 days
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform
rule of computation: their basic salaries multiplied by the entire unexpired portion of
their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
computation of the money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category whose contracts have
an unexpired portion of one year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their salaries for 3 months or
for the unexpired portion thereof, whichever is less, but all the while sparing the other
category from such prejudice, simply because the latter's unexpired contracts fall short
of one year.
Among OFWs With Employment Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court
now has misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the
unexpired term, whichever is less" contains the qualifying phrases "every year" and
"unexpired term." By its ordinary meaning, the word "term" means a limited or definite
extent of time.105 Corollarily, that "every year" is but part of an "unexpired term" is
significant in many ways: first, the unexpired term must be at least one year, for if it
were any shorter, there would be no occasion for such unexpired term to be measured
by every year; and second, the original term must be more than one year, for otherwise,
whatever would be the unexpired term thereof will not reach even a year. Consequently,
the more decisive factor in the determination of when the subject clause "for three (3)
months forevery year of the unexpired term, whichever is less" shall apply is not the
length of the original contract period as held in Marsaman,106 but the length of the
unexpired portion of the contract period -- the subject clause applies in cases when the
unexpired portion of the contract period is at least one year, which arithmetically
requires that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their salaries
for the entire unexpired portion thereof, while those who are illegally dismissed with one
year or more remaining in their contracts shall be covered by the subject clause, and
their monetary benefits limited to their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the subject
clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed
on the 12th month, and OFW-D, on the 13th month. Considering that there is at least 12
months remaining in the contract period of OFW-C, the subject clause applies to the
computation of the latter's monetary benefits. Thus, OFW-C will be entitled, not to
US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the
contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months
out of the 12-month unexpired term of the contract. On the other hand, OFW-D is
spared from the effects of the subject clause, for there are only 11 months left in the
latter's contract period. Thus, OFW-D will be entitled to US$11,000.00, which is
equivalent to his/her total salaries for the entire 11-month unexpired portion.
OFWs vis--vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the
monetary awards of illegally dismissed OFWs was in place. This uniform system was
applicable even to local workers with fixed-term employment. 107
The earliest rule prescribing a uniform system of computation was actually Article 299 of
the Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and
employees should have been made of a fixed period, none of the contracting parties,
without the consent of the other, may withdraw from the fulfillment of said contract until
the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage
suffered, with the exception of the provisions contained in the following articles.
In Reyes v. The Compaia Maritima,109 the Court applied the foregoing provision to
determine the liability of a shipping company for the illegal discharge of its managers
prior to the expiration of their fixed-term employment. The Court therein held the
shipping company liable for the salaries of its managers for the remainder of their fixedterm employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code
of Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent
should be for a definite period or voyage, they cannot be discharged until the fulfillment
of their contracts, except for reasons of insubordination in serious matters, robbery,
theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice
or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
which the Court held the shipping company liable for the salaries and subsistence
allowance of its illegally dismissed employees for the entire unexpired portion of their
employment contracts.
While Article 605 has remained good law up to the present, 111 Article 299 of the Code of
Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain
time and for a certain work cannot leave or be dismissed without sufficient cause,
before the fulfillment of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586
as a conjunctive "and" so as to apply the provision to local workers who are employed
for a time certain although for no particular skill. This interpretation of Article 1586 was
reiterated in Garcia Palomar v. Hotel de France Company.113 And in both Lemoine and
Palomar, the Court adopted the general principle that in actions for wrongful discharge
founded on Article 1586, local workers are entitled to recover damages to the extent of
the amount stipulated to be paid to them by the terms of their contract. On the
computation of the amount of such damages, the Court in Aldaz v. Gay 114 held:
The doctrine is well-established in American jurisprudence, and nothing has been
brought to our attention to the contrary under Spanish jurisprudence, that when an
employee is wrongfully discharged it is his duty to seek other employment of the same
kind in the same community, for the purpose of reducing the damages resulting from
such wrongful discharge. However, while this is the general rule, the burden of showing
that he failed to make an effort to secure other employment of a like nature, and that
other employment of a like nature was obtainable, is upon the defendant. When an
employee is wrongfully discharged under a contract of employment his prima facie
damage is the amount which he would be entitled to had he continued in such
employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs.
Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.) 115 (Emphasis
supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2
(Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book
IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil
Code do not expressly provide for the remedies available to a fixed-term worker who is
illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v.
Rich,117 the Court carried over the principles on the payment of damages underlying
Article 1586 of the Civil Code of 1889 and applied the same to a case involving the
illegal discharge of a local worker whose fixed-period employment contract was entered
into in 1952, when the new Civil Code was already in effect. 118
More significantly, the same principles were applied to cases involving overseas Filipino
workers whose fixed-term employment contracts were illegally terminated, such as in
First Asian Trans & Shipping Agency, Inc. v. Ople,119involving seafarers who were
illegally discharged. In Teknika Skills and Trade Services, Inc. v. National Labor
Relations Commission,120 an OFW who was illegally dismissed prior to the expiration of
her fixed-period employment contract as a baby sitter, was awarded salaries
corresponding to the unexpired portion of her contract. The Court arrived at the same
ruling in Anderson v. National Labor Relations Commission, 121 which involved a foreman
hired in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally
dismissed after only nine months on the job -- the Court awarded him salaries
corresponding to 15 months, the unexpired portion of his contract. In Asia World
Recruitment, Inc. v. National Labor Relations Commission, 122 a Filipino working as a
security officer in 1989 in Angola was awarded his salaries for the remaining period of
his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co.,
Inc. v. National Labor Relations Commission,123 an OFW whose 12-month contract was
illegally cut short in the second month was declared entitled to his salaries for the
remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment
who were illegally discharged were treated alike in terms of the computation of their
money claims: they were uniformly entitled to their salaries for the entire unexpired
portions of their contracts. But with the enactment of R.A. No. 8042, specifically the
adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of
one year or more in their employment contract have since been differently treated in
that their money claims are subject to a 3-month cap, whereas no such limitation is
imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in
that, in the computation of the monetary benefits of fixed-term employees who
are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an
unexpired portion of one year or more in their contracts, but none on the claims
of other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar
disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive
means.
What constitutes compelling state interest is measured by the scale of rights and
powers arrayed in the Constitution and calibrated by history.124 It is akin to the
paramount interest of the state125 for which some individual liberties must give way, such
as the public interest in safeguarding health or maintaining medical standards, 126 or in
maintaining access to information on matters of public concern. 127
In the present case, the Court dug deep into the records but found no compelling state
interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect
the employment of Filipino seafarers overseas x x x. By limiting the liability to three
months [sic], Filipino seafarers have better chance of getting hired by foreign
employers." The limitation also protects the interest of local placement agencies, which
otherwise may be made to shoulder millions of pesos in "termination pay." 128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the
court or if the foreign employer reneges on its obligation. Hence, placement agencies
that are in good faith and which fulfill their obligations are unnecessarily penalized for
the acts of the foreign employer. To protect them and to promote their continued helpful
contribution in deploying Filipino migrant workers, liability for money are reduced under
Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies helps
[assure] the government that migrant workers are properly deployed and are employed
under decent and humane conditions. 129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of
its perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego
in sponsorship of House Bill No. 14314 (HB 14314), from which the law
originated;130 but the speech makes no reference to the underlying reason for the
adoption of the subject clause. That is only natural for none of the 29 provisions in HB
14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money
claims, to wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of the complaint, the claim arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
employment including claims for actual, moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims
under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims
exclusive of damages under this Section shall not be less than fifty percent (50%) of
such money claims: Provided, That any installment payments, if applicable, to satisfy
any such compromise or voluntary settlement shall not be more than two (2) months.
Any compromise/voluntary agreement in violation of this paragraph shall be null and
void.
Non-compliance with the mandatory period for resolutions of cases provided under this
Section shall subject the responsible officials to any or all of the following penalties:
(1) The salary of any such official who fails to render his decision or resolution
within the prescribed period shall be, or caused to be, withheld until the said
official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public
office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any
liability which any such official may have incurred under other existing laws or rules and
regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the
computation of money claims.
A rule on the computation of money claims containing the subject clause was inserted
and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court
examined the rationale of the subject clause in the transcripts of the "Bicameral
Conference Committee (Conference Committee) Meetings on the Magna Carta on
OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)."
However, the Court finds no discernible state interest, let alone a compelling one, that is
sought to be protected or advanced by the adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against
OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect
the employment of OFWs by mitigating the solidary liability of placement agencies, such
callous and cavalier rationale will have to be rejected. There can never be a justification
for any form of government action that alleviates the burden of one sector, but imposes
the same burden on another sector, especially when the favored sector is composed of
private businesses such as placement agencies, while the disadvantaged sector is
composed of OFWs whose protection no less than the Constitution commands. The
idea that private business interest can be elevated to the level of a compelling state
interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in
place that can be employed to achieve that purpose without infringing on the
constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of
Land-Based Overseas Workers, dated February 4, 2002, imposes administrative
disciplinary measures on erring foreign employers who default on their contractual
obligations to migrant workers and/or their Philippine agents. These disciplinary
measures range from temporary disqualification to preventive suspension. The POEA
Rules and Regulations Governing the Recruitment and Employment of Seafarers, dated
May 23, 2003, contains similar administrative disciplinary measures against erring
foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of
aiding local placement agencies in enforcing the solidary liability of their foreign
principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative
of the right of petitioner and other OFWs to equal protection.1avvphi1
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause
directly violates state policy on labor under Section 3, 131Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing, 132 there
are some which this Court has declared not judicially enforceable, Article XIII being
one,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v.
National Labor Relations Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be
deemed as self-executing in the sense that these are automatically acknowledged and
observed without need for any enabling legislation. However, to declare that the
constitutional provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed, would be impractical,
if not unrealistic. The espousal of such view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees of "full protection to labor" and "security of
tenure", when examined in isolation, are facially unqualified, and the broadest
interpretation possible suggests a blanket shield in favor of labor against any form of
removal regardless of circumstance. This interpretation implies an unimpeachable right
to continued employment-a utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is still needed to define the
parameters of these guaranteed rights to ensure the protection and promotion, not only
the rights of the labor sector, but of the employers' as well. Without specific and
pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to
approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a
positive enforceable right to stave off the dismissal of an employee for just cause
owing to the failure to serve proper notice or hearing. As manifested by several framers
of the 1987 Constitution, the provisions on social justice require legislative enactments
for their enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable
rights, for the violation of which the questioned clause may be declared unconstitutional.
It may unwittingly risk opening the floodgates of litigation to every worker or union over
every conceivable violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working
class any actual enforceable right, but merely clothes it with the status of a sector for
whom the Constitution urges protection through executive or legislative action
and judicial recognition. Its utility is best limited to being an impetus not just for the
executive and legislative departments, but for the judiciary as well, to protect the welfare
of the working class. And it was in fact consistent with that constitutional agenda that
the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc.
v. Bangko Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice
Reynato S. Puno, formulated the judicial precept that when the challenge to a statute is
premised on the perpetuation of prejudice against persons favored by the Constitution
with special protection -- such as the working class or a section thereof -- the Court may
recognize the existence of a suspect classification and subject the same to strict judicial
scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny
formulated in Central Bank Employee Association exaggerate the significance of
Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII in
conjunction with the equal protection clause. Article XIII, by itself, without the application
of the equal protection clause, has no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates
petitioner's right to substantive due process, for it deprives him of property, consisting of
monetary benefits, without any existing valid governmental purpose. 136
The argument of the Solicitor General, that the actual purpose of the subject clause of
limiting the entitlement of OFWs to their three-month salary in case of illegal dismissal,
is to give them a better chance of getting hired by foreign employers. This is plain
speculation. As earlier discussed, there is nothing in the text of the law or the records of
the deliberations leading to its enactment or the pleadings of respondent that would
indicate that there is an existing governmental purpose for the subject clause, or even
just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it
is for that precise reason that the clause violates not just petitioner's right to equal
protection, but also her right to substantive due process under Section 1, 137 Article III of
the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the
entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis
in the computation of his monetary award, because these are fixed benefits that have
been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For
seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the basic
wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is
compensation for all work "performed" in excess of the regular eight hours, and holiday
pay is compensation for any work "performed" on designated rest days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of
overtime and holiday pay in the computation of petitioner's monetary award, unless
there is evidence that he performed work during those periods. As the Court held
in Centennial Transmarine, Inc. v. Dela Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of
our ruling in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was
actually performed are conditions to be satisfied before a seaman could be entitled to
overtime pay which should be computed on the basis of 30% of the basic monthly
salary. In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the
contract is unwarranted since the same is given during the actual service of the
seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months
for every year of the unexpired term, whichever is less" in the 5th paragraph of Section
10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the December
8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to
the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his
employment contract consisting of nine months and 23 days computed at the rate of
US$1,400.00 per month.
No costs.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice

SUPREME COURT
Manila
SPECIAL FIRST DIVISION
G.R. No. 110524
July 29, 2002
DOUGLAS MILLARES and ROGELIO LAGDA, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME
AGENCY, INC. and ESSO INTERNATIONAL SHIPPING CO., LTD. respondents.
RESOLUTION
KAPUNAN, J.:
On March 14, 2000, the Court promulgated its decision in the above-entitled case, ruling
in favor of the petitioners. The dispositive portion reads, as follows:
WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993,
of the National Labor Relations Commission is hereby REVERSED and SET
ASIDE and a new judgment is hereby rendered ordering the private respondents
to:
(1) Reinstate petitioners Millares and Lagda to their former positions without loss
of seniority rights, and to pay full backwages computed from the time of illegal
dismissal to the time of actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners Millares and
Lagda separation pay equivalent to one month's salary for every year of service;
and,
(3) Jointly and severally pay petitioners One Hundred Percent (100%) of their
total credited contributions as provided under the Consecutive Enlistment
Incentive Plan.
SO ORDERED.1
A motion for reconsideration was consequently filed 2 by the private respondents to
which petitioners filed an Opposition thereto. 3
In a Minute Resolution dated June 28, 2000, the Court resolved to deny the motion for
reconsideration with finality.4
Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME) filed a
Motion for Leave to Intervene and to Admit a Motion for Reconsideration in Intervention.
Private respondents, meanwhile, also filed a Motion for Leave to File a Second Motion
for Reconsideration of our decision.
In both motions, the private respondents and FAME respectively pray in the main that
the Court reconsider its ruling that "Filipino seafarers are considered regular employees
within the context of Article 280 of the Labor Code." They claim that the decision may
establish a precedent that will adversely affect the maritime industry.
The Court resolved to set the case for oral arguments to enable the parties to present
their sides.
To recall, the facts of the case are, as follows:
Petitioner Douglas Millares was employed by private respondent ESSO
International Shipping Company LTD. (Esso International, for brevity) through its
local manning agency, private respondent Trans-Global Maritime Agency, Inc.
(Trans-Global, for brevity) on November 16, 1968 as a machinist. In 1975, he
was promoted as Chief Engineer which position he occupied until he opted to
retire in 1989. He was then receiving a monthly salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a leave of absence for the
period July 9 to August 7, 1989. In a letter dated June 14, 1989, Michael J.
Estaniel, President of private respondent Trans-Global, approved the request for
leave of absence. On June 21, 1989, petitioner Millares wrote G.S. Hanly,
Operations Manager of Exxon International Co., (now Esso International) through
Michael J. Estaniel, informing him of his intention to avail of the optional
retirement plan under the Consecutive Enlistment Incentive Plan (CEIP)
considering that he had already rendered more than twenty (20) years of
continuous service. On July 13, 1989 respondent Esso International, through
W.J. Vrints, Employee Relations Manager, denied petitioner Millares' request for
optional retirement on the following grounds, to wit: (1) he was employed on a
contractual basis; (2) his contract of enlistment (COE) did not provide for
retirement before the age of sixty (60) years; and (3) he did not comply with the
requirement for claiming benefits under the CEIP, i.e., to submit a written advice
to the company of his intention to terminate his employment within thirty (30)
days from his last disembarkation date.
On August 9, 1989, petitioner Millares requested for an extension of his leave of
absence from August 9 to 24, 1989. On August 19, 1989, Roy C. Palomar,
Crewing Manager, Ship Group A, Trans-global, wrote petitioner Millares advising
him that respondent Esso International "has corrected the deficiency in its
manpower requirement specifically in the Chief Engineer rank by promoting a
First Assistant Engineer to this position as a result of (his) previous leave of
absence which expired last August 8, 1989. The adjustment in said rank was
required in order to meet manpower schedules as a result of (his) inability."
On September 26, 1989, respondent Esso International, through H. Regenboog,
Personnel Administrator, advised petitioner Millares that in view of his absence
without leave, which is equivalent to abandonment of his position, he had been
dropped from the roster of crew members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by private respondent Esso
International as wiper/oiler in June 1969. He was promoted as Chief Engineer in
1980, a position he continued to occupy until his last COE expired on April 10,
1989. He was then receiving a monthly salary of US$1,939.00.
On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19,
1989 up to the whole month of August 1989. On June 14, 1989, respondent
Trans-Global's President, Michael J. Estaniel, approved petitioner Lagda's leave
of absence from June 22, 1989 to July 20, 1989 and advised him to report for reassignment on July 21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations
Manager of respondent Esso International, through respondent Trans-Global's
President Michael J. Estaniel, informing him of his intention to avail of the
optional early retirement plan in view of his twenty (20) years continuous service
in the complaint.
On July 13, 1989, respondent Trans-global denied petitioner Lagda's request for
availment of the optional early retirement scheme on the same grounds upon
which petitioner Millares request was denied.
On August 3, 1989, he requested for an extension of his leave of absence up to
August 26, 1989 and the same was approved. However, on September 27, 1989,
respondent Esso International, through H. Regenboog, Personnel Administrator,
advised petitioner Lagda that in view of his "unavailability for contractual sea
service," he had been dropped from the roster of crew members effective
September 1, 1989.
On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit,
docketed as POEA (M) 89-10-9671, for illegal dismissal and non-payment of
employee benefits against private respondents Esso International and TransGlobal, before the POEA.5
On July 17, 1991, the POEA rendered a decision dismissing the complaint for lack of
merit.
On appeal to the NLRC, the decision of the POEA was affirmed on June 1, 1993 with
the following disquisition:
The first issue must be decided in the negative. Complainants-appellants, as
seamen and overseas contract workers are not covered by the term "regular
employment" as defined under Article 280 of the Labor Code. The POEA, which
is tasked with protecting the rights of the Filipino workers for overseas
employment to fair and equitable recruitment and employment practices and to
ensure their welfare, prescribes a standard employment contract for seamen on
board ocean-going vessels for a fixed period but in no case to exceed twelve (12)
months (Part 1, Sec. C). This POEA policy appears to be in consonance with the
international maritime practice. Moreover, the Supreme Court in Brent School,
Inc. vs. Zamora, 181 SCRA 702, had held that a fixed term is essential and
natural appurtenance of overseas employment contracts to which the concept of
regular employment with all that it implies is not applicable, Article 280 of the
Labor Code notwithstanding. There is, therefore, no reason to disturb the POEA
Administrator's finding that complainants-appellants were hired on a contractual
basis and for a definite period. Their employment is thus governed by the
contracts they sign each time they are re-hired and is terminated at the expiration
of the contract period.6
Undaunted, the petitioners elevated their case to this Court 7 and successfully obtained
the favorable action, which is now vehemently being assailed.
At the hearing on November 15, 2000, the Court defined the issues for resolution in this
case, namely:
I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE
EMPLOYMENTS ARE TERMINATED EVERYTIME THEIR CONTRACTS OF
EMPLOYMENT EXPIRE?
II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES, WERE
THEY DISMISSED WITHOUT JUST CAUSE SO AS TO BE ENTITLED TO
REINSTATEMENT AND BACKWAGES, INCLUDING PAYMENT OF 100% OF
THEIR TOTAL CREDITED CONTRIBUTIONS TO THE CONSECUTIVE
ENLISTMENT INCENTIVE PLAN (CEIP)?
III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT FOR
SEAFARERS ON BOARD FOREIGN VESSELS (SEC. C., DURATION OF
CONTRACT) PRECLUDE THE ATTAINMENT BY SEAMEN OF THE STATUS
OF REGULAR EMPLOYEES?
IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524 CONTRAVENE
INTERNATIONAL MARITIME LAW, ALLEGEDLY PART OF THE LAW OF THE
LAND UNDER SECTION 2, ARTICLE II OF THE CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A
DEPARTURE FROM ITS RULING INCOYOCA VS. NLRC (G.R. NO. 113658,
March 31, 1995)?8
In answer to the private respondents' Second Motion for Reconsideration and to
FAME's Motion for Reconsideration in Intervention, petitioners maintain that they are
regular employees as found by the Court in the March 14, 2000 Decision. Considering
that petitioners performed activities which are usually necessary or desirable in the
usual business or trade of private respondents, they should be considered as regular
employees pursuant to Article 280, Par. 1 of the Labor Code.9 Other justifications for this
ruling include the fact that petitioners have rendered over twenty (20) years of service,
as admitted by the private respondents;10 that they were recipients of Merit Pay which is
an express acknowledgment by the private respondents that petitioners are regular and
not just contractual employees;11 that petitioners were registered under the Social
Security System (SSS).
The petitioners further state that the case of Coyoca v. NLRC12 which the private
respondents invoke is not applicable to the case at bar as the factual milieu in that case
is not the same. Furthermore, private respondents' fear that our judicial pronouncement
will spell the death of the manning industry is far from real. Instead, with the valuable
contribution of the manning industry to our economy, these seafarers are supposed to
be considered as "Heroes of the Republic" whose rights must be protected. 13 Finally, the
first motion for reconsideration has already been denied with finality by this Court and it
is about time that the Court should write finis to this case.
The private respondents, on the other hand, contend that: (a) the ruling holding
petitioners as regular employees was not in accord with the decision in Coyoca v.
NLRC, 243 SCRA 190; (b) Art. 280 is not applicable as what applies is the POEA Rules
and Regulations Governing Overseas Employment; (c) seafarers are not regular
employees based on international maritime practice; (d) grave consequences would
result on the future of seafarers and manning agencies if the ruling is not reconsidered;
(e) there was no dismissal committed; (f) a dismissed seafarer is not entitled to back
wages and reinstatement, that being not allowed under the POEA rules and the Migrant
Workers Act; and, (g) petitioners are not entitled to claim the total amount credited to
their account under the CEIP.14
Meanwhile, Intervenor Filipino Association of Mariners Employment (FAME) avers that
our decision, if not reconsidered, will have negative consequences in the employment of
Filipino Seafarers overseas which, in turn, might lead to the demise of the manning
industry in the Philippines. As intervenor FAME puts it:
xxx
7.1 Foreign principals will start looking for alternative sources for seafarers to
man their ships. AS reported by the BIMCO/ISF study, "there is an expectancy
that there will be an increasing demand for (and supply of) Chinese seafarers,
with some commentators suggesting that this may be a long-term alternative to
the Philippines." Moreover, "the political changes within the former Eastern Bloc
have made new sources of supply available to the international market."
Intervenor's recent survey among its members shows that 50 Philippine manning
companies had already lost some 6,300 slots to other Asian, East Europe and
Chinese competition for the last two years;
7.2 The Philippine stands to lose an annual foreign income estimated at U.S.
DOLLARS TWO HUNDRED SEVENTY FOUR MILLION FIVE HUNDRED
FORTY NINE THOUSAND (US$ 274,549,000.00) from the manning industry and
another US DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION SEVEN
HUNDRED SIX THOUSAND (US$ 4,650,760,000.00) from the land-based sector
if seafarers and equally situated land-based contract workers will be declared
regular employees;
7.3 Some 195,917 (as of 1998) deployed overseas Filipino seafarers will be
rendered jobless should we lose the market;
7.4 Some 360 manning agencies (as of 30 June 2000) whose principals may no
longer be doing business with them will close their shops;
7.5 The contribution to the Overseas Worker's Welfare Administration by the

sector, which is USD 25.00 per contract and translates to US DOLLARS FOUR
MILLION (US$ 4,000,000.00)annually, will be drastically reduced. This is not to
mention the processing fees paid to POEA, Philippine Regulatory Commission
(PRC), Department of Foreign Affairs (DFA) and Maritime Industry Authority
(MARINA) for the documentation of these seafarers;
7.6 Worst, some 195,917 (as of 1998) families will suffer socially and
economically, as their breadwinners will be rendered jobless; and
7.7 It will considerably slow down the government's program of employment
generation, considering that, as expected foreign employers will now avoid hiring
Filipino overseas contract workers as they will become regular employees with all
its concomitant effects.15
Significantly, the Office of the Solicitor General, in a departure from its original position
in this case, has now taken the opposite view. It has expressed its apprehension in
sustaining our decision and has called for a re-examination of our ruling. 16
Considering all the arguments presented by the private respondents, the Intervenor
FAME and the OSG, we agree that there is a need to reconsider our position with
respect to the status of seafarers which we considered as regular employees under
Article 280 of the Labor Code. We, therefore, partially grant the second motion for
reconsideration.
In Brent School Inc. v. Zamora,17 the Supreme Court stated that Article 280 of the Labor
Code does not apply to overseas employment.
In the light of the foregoing description of the development of the provisions of
the Labor Code bearing on term or fixed-period employment that the question
posed in the opening paragraph of this opinion should now be addressed. Is it
then the legislative intention to outlaw stipulations in employment contracts laying
down a definite period therefor? Are such stipulations in essence contrary to
public policy and should not on this account be accorded legitimacy?
On the other hand, there is the gradual and progressive elimination of references
to term or fixed-period employment in the Labor Code, and the specific statement
of the rule that:
Regular and Casual Employment The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer
except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or
service to be employee is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph; provided that, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and
continues to recognize, the validity and propriety of contracts and obligations with
a fixed or definite period, and imposes no restraints on the freedom of the parties
to fix the duration of a contract, whatever its object, be it specific, goods or
services, except the general admonition against stipulations contrary to law,
morals, good customs, public order or public policy. Under the Civil code,
therefore, and as a general proposition, fixed-term employment contracts are not
limited, as they are under the present Labor Code, to those by natural seasonal
or for specific projects with predetermined dates of completion; they also include
those to which the parties by free choice have assigned a specific date of
termination.
Some familiar examples may be cited of employment contract which may
be neither for seasonal work nor for specific projects, but to which a fixed
term is an essential and natural appurtenance: overseas employment
contracts, for one, to which, whatever the nature of the engagement, the
concept of regular employment with all that it implies does not appear ever
to have been applied.Article 280 of the Labor Code notwithstanding also
appointments to the positions of dean, assistant dean, college secretary,
principal, and other administrative offices in educational institutions, which are by
practice or tradition rotated among the faculty members, and where fixed terms
are a necessity without which no reasonable rotation would be possible.
Similarly, despite the provisions of Article 280, Policy Instructions. No. 8 of the
Minister of Labor implicitly recognize that certain company officials may be
elected for what would amount to fix periods, at the expiration of which they
would have to stand down, in providing that these officials, xxx may lose their
jobs as president, executive vice-president or vice-president, etc. because the
stockholders or the board of directors for one reason or another did not reelect
them.
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down or
disregard as contrary to public policy, morals, etc. But where no such intent to
circumvent the law is shown, or stated otherwise, where the reason for the law
does not exists, e.g., where it is indeed the employee himself who insists upon a
period or where the nature of the engagement is such that, without being
seasonal or for a specific project, a definite date of termination is a sine qua non,
would an agreement fixing a period be essentially evil or illicit, therefore
anathema? Would such an agreement come within the scope of Article 280
which admittedly was enacted "to prevent the circumvention of the right of the
employee to be secured in xxx his employment
As it is evident from even only the three examples already given that Article 280
of the Labor Code, under a narrow and literal interpretation, not only fails to
exhaust the gamut of employment contracts to which the lack of a fixed period
would be an anomaly, but would also appear to restrict, without reasonable
distinctions, the right of an employee to freely stipulate within his employer the
duration of his engagement, it logically follows that such a literal interpretation
should be eschewed or avoided. The law must be given a reasonable
interpretation, to preclude absurdity in its application. Outlawing the whole
concept of term employment and subverting to boot the principle of freedom of
contract to remedy the evil of employer's using it as a means to prevent their
employees from obtaining security of tenure is like cutting off the nose to spite
the face or, more relevantly, curing a headache by lopping of the head.
It is a salutary principle in statutory construction that there exists a valid

presumption that undesirable consequences were never intended by a
legislative measure, and that a construction of which the statute is fairly
susceptible is favored, which will avoid all objectionable, mischievous,
indefensible, wrongful, evil, and injurious consequences."
Nothing is better settled than that courts are not to give words a meaning
which would lead to absurd or unreasonable consequences. That is a
principle that goes back to In re Allen decided on October 27, 1902, where
it was held that a literal interpretation is to be rejected if it would be unjust
or lead to absurd results. That is a strong argument against its adoption.
The words of Justice Laurel are particularly apt. Thus: "the appellants
would lead to an absurdity is another argument for rejecting it."
xxx We have, here, then a case where the true intent of the law is clear
that calls for the application of the cardinal rule of statutory construction
that such intent of spirit must prevail over the letter thereof, for whatever is
within the spirit of a statute is within the statute, since adherence to the
letter would result in absurdity, injustice and contradictions and would
defeat the plain and vital purpose of the statute.
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor code clearly
appears to have been, as already observed, to prevent circumvention of the
employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has
singled out; agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than those explicitly
stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects
and apt to lead to absurd and unintended consequences.
Again, in Pablo Coyoca v. NLRC,18 the Court also held that a seafarer is not a regular
employee and is not entitled to separation pay. His employment is governed by the
POEA Standard Employment Contract for Filipino Seamen.
x x x. In this connection, it is important to note that neither does the POEA
standard employment contract for Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations
Governing Overseas Employment and the said Rules do not provide for
separation or termination pay. What is embodied in petitioner's contract is the
payment of compensation arising from permanent partial disability during the
period of employment. We find that private respondent complied with the terms of
contract when it paid petitioner P42,315.00 which, in our opinion, is a reasonable
amount, as compensation for his illness.
Lastly, petitioner claims that he eventually became a regular employee of private
respondent and thus falls within the purview of Articles 284 and 95 of the Labor
Code. In support of this contention, petitioner cites the case of Worth Shipping
Service, Inc., et al. v. NLRC, et al., wherein we held that the crew members of the
shipping company had attained regular status and thus, were entitled to
separation pay. However, the facts of said case differ from the present. In Worth,
we held that the principal and agent had "operational control and management"
over the MV Orient Carrier and thus, were the actual employers of their crew
members.
From the foregoing cases, it is clear that seafarers are considered contractual
employees. They can not be considered as regular employees under Article 280 of the
Labor Code. Their employment is governed by the contracts they sign everytime they
are rehired and their employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time. They fall under the
exception of Article 280 whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
engagement of the employee or where the work or services to be performed is seasonal
in nature and the employment is for the duration of the season.19 We need not depart
from the rulings of the Court in the two aforementioned cases which indeed
constitute stare decisis with respect to the employment status of seafarers.
Petitioners insist that they should be considered regular employees, since they have
rendered services which are usually necessary and desirable to the business of their
employer, and that they have rendered more than twenty(20) years of service. While
this may be true, the Brent case has, however, held that there are certain forms of
employment which also require the performance of usual and desirable functions and
which exceed one year but do not necessarily attain regular employment status under
Article 280.20 Overseas workers including seafarers fall under this type of employment
which are governed by the mutual agreements of the parties.
In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are
governed by the Rules and Regulations of the POEA. The Standard Employment
Contract governing the employment of All Filipino seamen on Board Ocean-Going
Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract
of seamen shall be for a fixed period. And in no case should the contract of seamen be
longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to exceed 12
months and shall be stated in the Crew Contract. Any extension of the Contract
period shall be subject to the mutual consent of the parties.
Moreover, it is an accepted maritime industry practice that employment of seafarers are
for a fixed period only. Constrained by the nature of their employment which is quite
peculiar and unique in itself, it is for the mutual interest of both the seafarer and the
employer why the employment status must be contractual only or for a certain period of
time. Seafarers spend most of their time at sea and understandably, they can not stay
for a long and an indefinite period of time at sea. 21 Limited access to shore society
during the employment will have an adverse impact on the seafarer. The national,
cultural and lingual diversity among the crew during the COE is a reality that
necessitates the limitation of its period. 22
Petitioners make much of the fact that they have been continually re-hired or their
contracts renewed before the contracts expired (which has admittedly been going on for
twenty (20) years). By such circumstance they claim to have acquired regular status
with all the rights and benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was

dictated by practical considerations that experienced crew members are more preferred.
Petitioners were only given priority or preference because of their experience and
qualifications but this does not detract the fact that herein petitioners are contractual
employees. They can not be considered regular employees. We quote with favor the
explanation of the NLRC in this wise:
xxx The reference to "permanent" and "probationary" masters and employees in
these papers is a misnomer and does not alter the fact that the contracts for
enlistment between complainants-appellants and respondent-appellee Esso
International were for a definite periods of time, ranging from 8 to 12 months.
Although the use of the terms "permanent" and "probationary" is unfortunate,
what is really meant is "eligible for-re-hire". This is the only logical conclusion
possible because the parties cannot and should not violate POEA's requirement
that a contract of enlistment shall be for a limited period only; not exceeding
twelve (12)months.23
From all the foregoing, we hereby state that petitioners are not considered regular or
permanent employees under Article 280 of the Labor Code. Petitioners' employment
have automatically ceased upon the expiration of their contracts of enlistment (COE).
Since there was no dismissal to speak of, it follows that petitioners are not entitled to
reinstatement or payment of separation pay or backwages, as provided by law.
With respect to the benefits under the Consecutive Enlistment Incentive Plan (CEIP),
we hold that the petitioners are still entitled to receive 100% of the total amount credited
to him under the CEIP. Considering that we have declared that petitioners are
contractual employees, their compensation and benefits are covered by the contracts
they signed and the CEIP is part and parcel of the contract.
The CEIP was formulated to entice seamen to stay long in the company. As the name
implies, the program serves as an incentive for the employees to renew their contracts
with the same company for as long as their services were needed. For those who
remained loyal to them, they were duly rewarded with this additional remuneration
under the CEIP, if eligible. While this is an act of benevolence on the part of the
employer, it can not, however, be denied that this is part of the benefits accorded to the
employees for services rendered. Such right to the benefits is vested upon them upon
their eligibility to the program.
The CEIP provides that an employee becomes covered under the Plan when he
completes thirty-six (36) months or an equivalent of three (3) years of credited service
with respect to employment after June 30, 1973.24 Upon eligibility, an amount shall be
credited to his account as it provides, among others:
III. Distribution of Benefits
A. Retirement, Death and Disability
When the employment of an employee terminates because of his retirement,
death or permanent and total disability, a percentage of the total amount credited
to his account will be distributed to him (or his eligible survivor(s) in accordance
with the following:
Reason for Termination
Percentage
a) Attainment of mandatory
retirement age of 60.
100%
b) Permanent and total disability,

while under contract, that is not
due to accident or misconduct.
100%
c) Permanent and total disability,

while under contract, that is due to
accident, and not due to
misconduct.
100%
xxx
B. Voluntary Termination
When an employee voluntary terminates his employment with at least 36 months
of credited service without any misconduct on his part, 18 percent of the total
amount credited to his account, plus an additional of one percent for each
month (up to a maximum of 164 months of credited service in excess of 36, will
be distributed to him provided (1) the employee has completed his last Contract
of Enlistment and (2) employee advises the company in writing, within 30 days,
from his last disembarkation date, of his intention to terminate his employment.
(To advise the Company in writing means that the original letter must be sent to
the Company's agent in the Philippines, a copy sent to the Company in New
York).
xxx
C. Other Terminations
When the employment of an employee is terminated by the Company for a
reason other than one in A and B above, without any misconduct on his part, a
percentage of the total amount credited to his account will be distributed to him in
accordance with the following.
Credited Service
Percentage
36 months
50%
48 "
75%
60 "
100%
When the employment of an employee is terminated due to his poorperformance, misconduct, unavailability, etc., or if employee is not offered re-
engagement for similar reasons, no distribution of any portion of employee's

account will ever be made to him (or his eligible survivor[s]).
It must be recalled that on June 21, 1989, Millares wrote a letter to his employer
informing his intention to avail of the optional retirement plan under the CEIP
considering that he has rendered more than twenty (20) years of continuous service.
Lagda, likewise, manifested the same intention in a letter dated June 26, 1989. Private
respondent, however, denied their requests for benefits under the CEIP since: (1) the
contract of enlistment (COE) did not provide for retirement before 60 years of age; and
that (2) petitioners failed to submit a written notice of their intention to terminate their
employment within thirty (30) days from the last disembarkation date pursuant to the
provision on Voluntary Termination of the CEIP. Petitioners were eventually dropped
from the roster of crew members and on grounds of "abandonment" and "unavailability
for contractual sea service", respectively, they were disqualified from receiving any
benefits under the CEIP.25
In our March 14, 2000 Decision, we, however, found that petitioners Millares and Lagda
were not guilty of "abandonment" or "unavailability for contractual sea service," as we
have stated:
The absence of petitioners was justified by the fact that they secured the
approval of private respondents to take a leave of absence after the termination
of their last contracts of enlistment. Subsequently, petitioners sought for
extensions of their respective leaves of absence. Granting arguendo that their
subsequent requests for extensions were not approved, it cannot be said that
petitioners were unavailable or had abandoned their work when they failed to
report back for assignment as they were still questioning the denial of private
respondents of their desire to avail of the optional early retirement policy, which
they believed in good faith to exist.26
Neither can we consider petitioners guilty of poor performance or misconduct since they
were recipients of Merit Pay Awards for their exemplary performances in the company.
Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989 (for Lagda)
which private respondent considered as belated written notices of termination, we find
such assertion specious. Notwithstanding, we could conveniently consider the
petitioners eligible under Section III-B of the CEIP (Voluntary Termination), but this
would, however, award them only a measly amount of benefits which to our mind, the
petitioners do not rightfully deserve under the facts and circumstances of the case. As
the CEIP provides:
III. Distribution of Benefits
xxx
E. Distribution of Accounts
When an employee terminates under conditions that would qualify for a
distribution of more than one specified in A, B or C above, the largest single
amount, only, will be distributed.
Since petitioners' termination of employment under the CEIP do not fall under Section
III-A (Retirement, Death and Disability) or Section III-B (Voluntary Termination), nor
could they be they be considered under the second paragraph of Section III-C, as
earlier discussed; it follows that their termination falls under the first paragraph of
Section III-C for which they are entitled to 100% of the total amount credited to their
accounts. The private respondents can not now renege on their commitment under the
CEIP to reward deserving and loyal employees as the petitioners in this case.
In taking cognizance of private respondent's Second Motion for Reconsideration, the
Court hereby suspends the rules to make them comformable to law and justice and to
subserve an overriding public interest.
IN VIEW OF THE FOREGOING, the Court Resolved to Partially GRANT Private
Respondent's Second Motion for Reconsideration and Intervenor FAMES' Motion for
Reconsideration in Intervention. The Decision of the National Labor Relations
Commission dated June 1, 1993 is hereby REINSTATED with MODIFICATION. The
Private Respondents, Trans-Global Maritime Agency, Inc. and Esso International
Shipping Co., Ltd. are hereby jointly and severally ORDERED to pay petitioners One
Hundred Percent (100%) of their total credited contributions as provided under the
Consecutive Enlistment Incentive Plan(CEIP).
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago, JJ., concur.
Austria-Martinez, J., no part. Did not participate in the Decision.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-79436-50 January 17, 1990

EASTERN ASSURANCE & SURETY CORPORATION, petitioner,
vs.
SECRETARY OF LABOR, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, ELVIRA VENTURA, ESTER TRANGUILLAN, et al., respondents.
Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente for petitioner.
NARVASA, J.:
In connection with the application with the Philippine Overseas Employment
Administration (POEA) of J & B Manpower Specialist, Inc. for a license to engage in
business as a recruitment agency, a surety bond was filed on January 2, 1985 by the
applicant and the Eastern Assurance and Surety Corporation, herein petitioner, in virtue
of which they both held themselves
. . . firmly bound unto (said) Philippine Overseas Employment
Administration, Ministry of Labor in the penal sum of PESOS ONE
HUNDRED FIFTY THOUSAND ONLY . . . (Pl50,000.00) for the payment
of which will and truly to be made, . . . (they bound themselves, their)
heirs, executors, administrators, successors and assigns, jointly and
severally . .
The bond stipulated that:
a) it was "conditioned upon the true and faithful performance and observance of the . . .
principal (J & B Manpower Specialist, Inc.) of its duties and obligations in accordance
with all the rules and regulations promulgated by the Ministry of Labor Philippine
Overseas Employment Administration and with the terms and conditions stipulated in
the License;
b) the liability of the . . . Surety (petitioner) shall in no case exceed the sum of PESOS
ONE HUNDRED FIFTY THOUSAND (P150,000.00) ONLY, PHILIPPINE CURRENCY; 1
c) notice to the Principal is also a notice to the Surety; and
d) LIABILITY of the surety . . . shall expire on JANUARY 02, 1986 and this bond shall be
automatically cancelled ten (10) days after its expiration and the surety shall not be
liable for any claim not discovered and presented to it in writing within said period of . . .
from expiration and the obligee hereby expressly waives the rights to file any court
action against the Surety after termination of said period of . . . . above cited. 2
As narrated by respondent Secretary of Labor, the facts are as follows:
From June 1983 to December 1985 . . . thirty three (33) . . . (persons)

applied for overseas employment with . . . (J & B). In consideration of
promised deployment, complainants paid respondent various amounts for
various fees. Most of' the receipts issued were sighed by Mrs. Baby
Bundalian, Executive Vice-President of . . . (J & B).
Because of non-deployment . . . (the applicants) filed separate complaints
with the Licensing and Regulation Office of POEA against . . . (J & B) for
violation of Articles 32 and 34 (a) of the Labor Code between the months
of April to October 1985.
Despite summons/notices of hearing,, . . . (J & B) failed to file Answer nor
appear in the hearings conducted.
In its separate Answer, . . . EASCO essentially disclaimed liability on the
ground that the claims were not expressly covered by the bond, that
POEA had no jurisdiction to order forfeiture of the bond, that some of the
claims were paid beyond or prior to the period of effectivity of the bond.
On September 8, 1986, the POEA Administrator issued the Order in favor
of complainants ruling thus:
After careful evaluation, we find that the receipts and
testimonies of complainants, in the absence of controverting
evidence substantially establish that respondent charged
and collected fees from them in amounts exceeding what is
prescribed by this Administration. Complainants' nondeployment strongly indicates that there was no employment
obtained for them. Hence, violation of Articles 32 and 34 (a)
of the Labor Code, as amended, is established against
respondent. The claims of complainants having arose
(arisen) out of acts of the principal covered under the surety
(bond), the respondent surety is equally liable therefor.
Except for complainants Ramos, Samson, de Leon and Rizada, whose
claims were transacted prior to the effectivity of the bond, . . . EASCO was
declared jointly and severally liable with . . . (J & B) to twenty-nine (29)
complainants.
(The dispositive portion of the POEA Administrator's Order also contained
the following statement and direction, viz.:
Respondent was suspended on May 23, 1985, June 26,
1985 and January 17, 1986 all for illegal exaction.
Considering its track record of illegal exaction activities and
considering further the gross violation of recruitment rules
and regulations established against it in the instant cases,
and the expiration of its license on February 15, 1985, it is
hereby forever banned from participation in the overseas
employment program. It is ordered to cease and desist from
further engaging in recruitment activities otherwise it shall be
prosecuted for illegal recruitment.')
(J & B filed a motion for reconsideration). On December 19, 1986, the then
deputy Minister of Labor and Employment denied the . . . Motion for
Reconsideration for lack of merit and affirmed the findings in the Order of
the POEA Administrator finding no reversible error therein.
On appeal by EASCO J & B having as aforestated taken no part in the proceeding
despite due service of summons the judgment was modified by the Secretary of
Labor, by Order dated July 1, 1987, disposing as follows: 4
WHEREFORE, in view of the foregoing, the Resolution of the then Deputy
Minister of Labor dated December 19, 1986 affirming the Order of the
POEA Administrator dated September 8, 1986 is hereby MODIFIED.
Respondent J & B Manpower Specialist is directed to refund all thirty-three
(33) complainants as listed in the Order of September 8, 1986 in the
amounts listed thereto with the modification that complainants Lucena
Cabasal and Felix Rivero are both entitled only to P15,980 and not
P15,980 each. Respondent Eastern Assurance and Surety Corporation is
hereby found jointly and severally liable with respondent J & B Manpower
Specialist to refund nineteen (19) complainants in the modified amounts . .
. (particularly specified).
The other findings in the Order of the POEA Administrator dated
September 8, 1986 affirmed in the Resolution of the then Deputy Minister .
. . are also hereby AFFIRMED. This Order is FINAL. No further Motion for
Reconsideration hereof shall be entertained.
It is noteworthy that EASCO's liability for the refund, jointly and severally with its
principal, was limited to 19 named complainants (in contrast to verdicts of the POEA
and the Deputy Minister which both ordered payment to no less than 33 complainants)
and was correspondingly reduced from P308,751.75 and US $ 400.00 5 to the
aggregate amount of P 140,817.75. 6
The special civil action of certiorari at bar was thereafter instituted by EASCO 7 praying
for the nullification of the POEA Administrator's Order of September 8, 1986, the
Resolution of the Deputy Minister of Labor of' December 19, 1986, and the Order of the
Secretary of Labor of July 1, 1987, It theorizes that:
1) the POEA had no jurisdiction over the claims for refund filed by nonemployees;
2) neither did the Secretary of Labor have jurisdiction of the claims;
3) assuming they had jurisdiction, both the POEA and Secretary of Labor
also committed legal errors and acted with grave abuse of discretion when
they ruled that petitioner is liable on the claims.
EASCO contends that the POEA had no "adjudicatory jurisdiction" over the monetary
claims in question because the same "did not arise from employer-employee relations."
Invoked in support of the argument is Section 4 (a) of EO 797 providing in
8
part that the POEA has
. . . original and exclusive jurisdiction over all cases, including money

claims, involving employer-employee relations arising out of or by virtue of
any law or contract involving Filipino workers for overseas employment
including seamen . . .
The complaints are however for violation of Articles 32 and 34 a) of the Labor
Code. Article 32 and paragraph (a) of Article 34 read as follows:
Art. 32. Fees to be paid by workers.Any person applying with a private
fee-charging employment agency for employment assistance shall not be
charged any fee until he has obtained employment through its efforts or
has actually commenced employment. Such fee shall be always covered
with the approved receipt clearly showing the amount paid. The Secretary
of Labor shall promulgate a schedule of allowable fees.
Art. 34. Prohibited practices.It shall be unlawful for any individual, entity,
licensee, or holder of authority:
a) To charge or accept, directly or indirectly, any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary of
Labor, or to make a worker pay any amount greater than actually received
by him as a loan or advance; . . .
The penalties of suspension and cancellation of license or authority are prescribed for
violations of the above quoted provisions, among others. And the Secretary of Labor
has the power under Section 35 of the law to apply these sanctions, as well as the
authority, conferred by Section 36, not only, to "restrict and regulate the recruitment and
placement activities of all agencies," but also to "promulgate rules and regulations to
carry out the objectives and implement the provisions" governing said activities.
Pursuant to this rule-making power thus granted, the Secretary of Labor gave the
POEA 9 "on its own initiative or upon filing of a complaint or report or upon request for
investigation by any aggrieved person, . . . (authority to) conduct the necessary
proceedings for the suspension or cancellation of the license or authority of any agency
or entity" for certain enumerated offenses including
1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or
services, or any fee or bond in excess of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and other relevant laws,
rules and regulations. 10
The Administrator was also given the power to "order the dismissal of the case or
the suspension of the license or authority of the respondent agency or contractor
or recommend to the Minister the cancellation thereof." 11
Implicit in these powers is the award of appropriate relief to the victims of the offenses
committed by the respondent agency or contractor, specially the refund or
reimbursement of such fees as may have been fraudulently or otherwise illegally
collected, or such money, goods or services imposed and accepted in excess of what is
licitly prescribed. It would be illogical and absurd to limit the sanction on an offending
recruitment agency or contractor to suspension or cancellation of its license, without the
concomitant obligation to repair the injury caused to its victims. It would result either in
rewarding unlawful acts, as it would leave the victims without recourse, or in compelling
the latter to litigate in another forum, giving rise to that multiplicity of actions or
proceedings which the law abhors.
Even more untenable is EASCO's next argument that the recruiter and its victims are
in pari delicto the former for having required payment, and the latter for having
voluntarily paid, "prohibited recruitment fees" and therefore, said victims are barred
from obtaining relief. The sophistical, if not callous, character of the argument is evident
upon the most cursory reading thereof; it merits no consideration whatever.
The Court is intrigued by EASCO's reiteration of its argument that it should not be held
liable for claims which accrued prior to or after the effectivity of its bond, considering
that the respondent Secretary had conceded the validity of part of said argument, at
least. The Secretary ruled that EASCO's "contention that it should not be held liable for
claims/payments made to respondent agency before the effectivity of the surety bond
on January 2, 1985 is well taken." According to the Secretary: 12
. . . A close examination of the records reveal(s) that respondent EASCO
is not jointly and severally liable with respondent agency to refund
complainants Lucena Cabasal, Felix Rivero, Romulo del Rosario, Rogelio
Banzuela, Josefina Ogatis, Francisco Sorato, Sonny Quiazon, Josefina
Dictado, Mario del Guzman and Rogelio Mercado (10 in all). These
complainants paid respondent agency in 1984, or before the effectivity of
the bond on January 2, 1985 as evidence by the reciept and their
testimonies.
The related argument, that it is also not liable for claims filed after the expiry (on
January 2, 1986) of the period stipulated in the surety bond for the filing of claims
against the bond, must however be rejected, as the Secretary did. The Court discerns
no grave abuse of discretion in the Secretary's statement of his reasons for doing so, to
wit:
. . . While it may be true that respondent EASCO received notice of their
claims after the ten (10) day expiration period from cancellation or after
January 12, 1986 as provided in the surety bond, records show that . . .
EASCO's principal, respondent agency, was notified/ summoned prior to
the expiration period or before January 12, 1986. Respondent agency
received summons on July 24, 1985 with respect to claims of
complainants Penarroyo, dela Cruz and Canti. It also received summons
on November 26, 1985 with respect to Giovanni Garbillons' claim.
Respondent agency was likewise considered constructively notified of the
claims of complainants Calayag, Danuco Domingo and Campena on
October 6, 1985. In this connection, it may be stressed that the surety
bond provides that notice to the principal is notice to the surety. Besides, it
has been held that the contract of a compensated surety like respondent
EASCO is to be interpreted liberally in the interest of the promises and
beneficiaries rather than strictly in favor of the surety (Acoustics Inc. v.
American Surety, 74 Nev-6, 320 P2d. 626, 74 Am. Jur. 2d).
So, too, EASCO's claim that it had not been properly served with summons as regards
a few of the complaints must be rejected, the issue being factual, and the Court having
been cited to no grave error invalidating the respondent Secretary's conclusion that
summons had indeed been duly served.
Finally, EASCO's half-hearted argument that its liability should be limited to the
maximum amount set in its surety bond, i.e., P150,000.00, is palpably without merit,
since the aggregate liability imposed on it, P140,817.75, supra, does not in fact exceed
that limit.
WHEREFORE, the petition is DISMISSED for lack of merit, and this decision is declared
to be immediately executory. Costs against petitioner.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 73887 December 21, 1989
GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner,
vs.
HONORATO JUDICO and NATIONAL LABOR RELATIONS
COMMISSION, respondents.
G.A. Fortun and Associates for petitioner.
Corsino B. Soco for private respondent.
PARAS J.:
Before us is a Petition for certiorari to review the decision of the National Labor
Relations Commission (NLRC, for brevity) dated September 9, 1985 reversing the
decision of Labor Arbiter Vito J. Minoria, dated June 9, 1983, by 1) ordering petitioner
insurance company, Great Pacific Life Assurance Corporation (Grepalife, for brevity) to
recognize private respondent Honorato Judico, as its regular employee as defined
under Art. 281 of the Labor Code and 2) remanding the case to its origin for the
determination of private respondent Judico's money claims.
The records of the case show that Honorato Judico filed a complaint for illegal dismissal
against Grepalife, a duly organized insurance firm, before the NLRC Regional
Arbitration Branch No. VII, Cebu City on August 27, 1982. Said complaint prayed for
award of money claims consisting of separation pay, unpaid salary and 13th month pay,
refund of cash bond, moral and exemplary damages and attorney's fees.
Both parties appealed to the NLRC when a decision was rendered by the Labor Arbiter
dismissing the complaint on the ground that the employer-employee relations did not
exist between the parties but ordered Grepalife to pay complainant the sum of Pl,000.00
by reason of Christian Charity.
On appeal, said decision was reversed by the NLRC ruling that complainant is a regular
employee as defined under Art. 281 of the Labor Code and declaring the appeal of
Grepalife questioning the legality of the payment of Pl,000.00 to complainant moot and
academic. Nevertheless, for the purpose of revoking the supersedeas bond of said
company it ruled that the Labor Arbiter erred in awarding Pl,000.00 to complainant in the
absence of any legal or factual basis to support its payment.
Petitioner company moved to reconsider, which was denied, hence this petition for
review raising four legal issues to wit:
I. Whether the relationship between insurance agents and their principal,
the insurance company, is that of agent and principal to be governed by
the Insurance Code and the Civil Code provisions on agency, or one of
employer-employee, to be governed by the Labor Code.
II. Whether insurance agents are entitled to the employee benefits
prescribed by the Labor Code.
III. Whether the public respondent NLRC has jurisdiction to take
cognizance of a controversy between insurance agent and the insurance
company, arising from their agency relations.
IV. Whether the public respondent acted correctly in setting aside the
decision of Labor Arbiter Vito J. Minoria and in ordering the case
remanded to said Labor Arbiter for further proceedings.(p. 159, Rollo)
The crux of these issues boil down to the question of whether or not employeremployee relationship existed between petitioner and private respondent.
Petitioner admits that on June 9, 1976, private respondent Judico entered into an
agreement of agency with petitioner Grepalife to become a debit agent attached to the
industrial life agency in Cebu City. Petitioner defines a debit agent as "an insurance
agent selling/servicing industrial life plans and policy holders. Industrial life plans are
those whose premiums are payable either daily, weekly or monthly and which are
collectible by the debit agents at the home or any place designated by the policy holder"
(p. 156, Rollo). Such admission is in line with the findings of public respondent that as
such debit agent, private respondent Judico had definite work assignments including but
not limited to collection of premiums from policy holders and selling insurance to
prospective clients. Public respondent NLRC also found out that complainant was
initially paid P 200. 00 as allowance for thirteen (13) weeks regardless of production and
later a certain percentage denominated as sales reserve of his total collections but not
lesser than P 200.00. Sometime in September 1981, complainant was promoted to the
position of Zone Supervisor and was given additional (supervisor's) allowance fixed at
P110.00 per week. During the third week of November 1981, he was reverted to his
former position as debit agent but, for unknown reasons, not paid so-called weekly
sales reserve of at least P 200.00. Finally on June 28, 1982, complainant was
dismissed by way of termination of his agency contract.
Petitioner assails the findings of the NLRC that private respondent is an employee of
the former. Petitioner argues that Judico's compensation was not based on any fixed
number of hours he was required to devote to the service of petitioner company but
rather it was the production or result of his efforts or his work that was being
compensated and that the so-called allowance for the first thirteen weeks that Judico
worked as debit agent, cannot be construed as salary but as a subsidy or a way of
assistance for transportation and meal expenses of a new debit agent during the initial
period of his training which was fixed for thirteen (13) weeks. Stated otherwise,
petitioner contends that Judico's compensation, in the form of commissions and
bonuses, was based on actual production, (insurance plans sold and premium
collections).
Said contentions of petitioner are strongly rejected by private respondent. He maintains
that he received a definite amount as his Wage known as "sales reserve" the failure to
maintain the same would bring him back to a beginner's employment with a fixed weekly
wage of P 200.00 regardless of production. He was assigned a definite place in the
office to work on when he is not in the field; and in addition to canvassing and making
regular reports, he was burdened with the job of collection and to make regular weekly
report thereto for which an anemic performance would mean dismissal. He earned out
of his faithful and productive service, a promotion to Zone Supervisor with additional
supervisor's allowance, (a definite or fixed amount of P110.00) that he was dismissed
primarily because of anemic performance and not because of the termination of the
contract of agency substantiate the fact that he was indeed an employee of the
petitioner and not an insurance agent in the ordinary meaning of the term.
That private respondent Judico was an agent of the petitioner is unquestionable. But, as
We have held in Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance
company may have two classes of agents who sell its insurance policies: (1) salaried
employees who keep definite hours and work under the control and supervision of the
company; and (2) registered representatives who work on commission basis. The
agents who belong to the second category are not required to report for work at
anytime, they do not have to devote their time exclusively to or work solely for the
company since the time and the effort they spend in their work depend entirely upon
their own will and initiative; they are not required to account for their time nor submit a
report of their activities; they shoulder their own selling expenses as well as
transportation; and they are paid their commission based on a certain percentage of
their sales. One salient point in the determination of employer-employee relationship
which cannot be easily ignored is the fact that the compensation that these agents on
commission received is not paid by the insurance company but by the investor (or the
person insured). After determining the commission earned by an agent on his sales the
agent directly deducts it from the amount he received from the investor or the person
insured and turns over to the insurance company the amount invested after such
deduction is made. The test therefore is whether the "employer" controls or has
reserved the right to control the "employee" not only as to the result of the work to be
done but also as to the means and methods by which the same is to be accomplished.
Applying the aforementioned test to the case at bar, We can readily see that the
element of control by the petitioner on Judico was very much present. The record shows
that petitioner Judico received a definite minimum amount per week as his wage known
as "sales reserve" wherein the failure to maintain the same would bring him back to a
beginner's employment with a fixed weekly wage of P 200.00 for thirteen weeks
regardless of production. He was assigned a definite place in the office to work on when
he is not in the field; and in addition to his canvassing work he was burdened with the
job of collection. In both cases he was required to make regular report to the company
regarding these duties, and for which an anemic performance would mean a dismissal.
Conversely faithful and productive service earned him a promotion to Zone Supervisor
with additional supervisor's allowance, a definite amount of P110.00 aside from the
regular P 200.00 weekly "allowance". Furthermore, his contract of services with
petitioner is not for a piece of work nor for a definite period.
On the other hand, an ordinary commission insurance agent works at his own volition or
at his own leisure without fear of dismissal from the company and short of committing
acts detrimental to the business interest of the company or against the latter, whether
he produces or not is of no moment as his salary is based on his production, his anemic
performance or even dead result does not become a ground for dismissal. Whereas, in
private respondent's case, the undisputed facts show that he was controlled by
petitioner insurance company not only as to the kind of work; the amount of results, the
kind of performance but also the power of dismissal. Undoubtedly, private respondent,
by nature of his position and work, had been a regular employee of petitioner and is
therefore entitled to the protection of the law and could not just be terminated without
valid and justifiable cause.
Premises considered, the appealed decision is hereby AFFIRMED in toto.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ ., concur.
SUPREME COURT
Manila
FIRST DIVISION
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.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-72654-61 January 22, 1990

ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME
BARBIN, NICANOR FRANCISCO, PHILIP CERVANTES and ELEUTERIO
BARBIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING
ENTERPRISES and/or ARSENIO DE GUZMAN, respondents.
J.C. Espinas & Associates for petitioners.
Tomas A. Reyes for private respondent.
FERNAN, C.J.:
The issue to be resolved in the instant case is whether or not the fishermen-crew
members of the trawl fishing vessel 7/B Sandyman II are employees of its owneroperator, De Guzman Fishing Enterprises, and if so, whether or not they were illegally
dismissed from their employment.
Records show that the petitioners were the fishermen-crew members of 7/B Sandyman
II, one of several fishing vessels owned and operated by private respondent De
Guzman Fishing Enterprises which is primarily engaged in the fishing business with port
and office at Camaligan, Camarines Sur. Petitioners rendered service aboard said
fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot;
Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin,
master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio
Barbin, fishermen.
For services rendered in the conduct of private respondent's regular business of "trawl"
fishing, petitioners were paid on percentage commission basis in cash by one Mrs. Pilar
de Guzman, cashier of private respondent. As agreed upon, they received thirteen
percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds
exceeded the cost of crude oil consumed during the fishing trip, otherwise, they
received ten percent (10%) of the total proceeds of the sale. The patron/pilot, chief
engineer and master fisherman received a minimum income of P350.00 per week while
the assistant engineer, second fisherman, and fisherman-winchman received a
minimum income of P260.00 per week. 1
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge
de Guzman, president of private respondent, to proceed to the police station at
Camaligan, Camarines Sur, for investigation on the report that they sold some of their
fish-catch at midsea to the prejudice of private respondent. Petitioners denied the
charge claiming that the same was a countermove to their having formed a labor union
and becoming members of Defender of Industrial Agricultural Labor Organizations and
General Workers Union (DIALOGWU) on September 3, 1983.
During the investigation, no witnesses were presented to prove the charge against
petitioners, and no criminal charges were formally filed against them. Notwithstanding,
private respondent refused to allow petitioners to return to the fishing vessel to resume
their work on the same day, September 11, 1983.
On September 22, 1983, petitioners individually filed their complaints for illegal
dismissal and non-payment of 13th month pay, emergency cost of living allowance and
service incentive pay, with the then Ministry (now Department) of Labor and
Employment, Regional Arbitration Branch No. V, Legaspi City, Albay, docketed as Cases
Nos. 1449-83 to 1456-83. 2 They uniformly contended that they were arbitrarily
dismissed without being given ample time to look for a new job.
On October 24, 1983, private respondent, thru its operations manager, Conrado S. de
Guzman, submitted its position paper denying the employer-employee relationship
between private respondent and petitioners on the theory that private respondent and
petitioners were engaged in a joint venture. 3
After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the
case for joint hearing furnishing the parties with notice and summons. On December 27,
1983, after two (2) previously scheduled joint hearings were postponed due to the
absence of private respondent, one of the petitioners herein, Alipio Ruga, the
pilot/captain of the 7/B Sandyman II, testified, among others, on the manner the fishing
operations were conducted, mode of payment of compensation for services rendered by
the fishermen-crew members, and the circumstances leading to their dismissal. 4
On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S.
Coralde rendered a joint decision 5 dismissing all the complaints of petitioners on a
finding that a "joint fishing venture" and not one of employer-employee relationship
existed between private respondent and petitioners.
From the adverse decision against them, petitioners appealed to the National Labor
Relations Commission.
On May 30, 1985, the National Labor Relations Commission promulgated its
resolution 6 affirming the decision of the labor arbiter that a "joint fishing venture"
relationship existed between private respondent and petitioners.
Hence, the instant petition.
Petitioners assail the ruling of the public respondent NLRC that what exists between
private respondent and petitioners is a joint venture arrangement and not an employeremployee relationship. To stress that there is an employer-employee relationship
between them and private respondent, petitioners invite attention to the following: that
they were directly hired by private respondent through its general manager, Arsenio de
Guzman, and its operations manager, Conrado de Guzman; that, except for Laurente
Bautu, they had been employed by private respondent from 8 to 15 years in various
capacities; that private respondent, through its operations manager, supervised and
controlled the conduct of their fishing operations as to the fixing of the schedule of the
fishing trips, the direction of the fishing vessel, the volume or number of tubes of the
fish-catch the time to return to the fishing port, which were communicated to the
patron/pilot by radio (single side band); that they were not allowed to join other outfits
even the other vessels owned by private respondent without the permission of the
operations manager; that they were compensated on percentage commission basis of
the gross sales of the fish-catch which were delivered to them in cash by private
respondent's cashier, Mrs. Pilar de Guzman; and that they have to follow company
policies, rules and regulations imposed on them by private respondent.
Disputing the finding of public respondent that a "joint fishing venture" exists between
private respondent and petitioners, petitioners claim that public respondent exceeded its
jurisdiction and/or abused its discretion when it added facts not contained in the records
when it stated that the pilot-crew members do not receive compensation from the boatowners except their share in the catch produced by their own efforts; that public
respondent ignored the evidence of petitioners that private respondent controlled the
fishing operations; that public respondent did not take into account established
jurisprudence that the relationship between the fishing boat operators and their crew is
one of direct employer and employee.
Aside from seeking the dismissal of the petition on the ground that the decision of the
labor arbiter is now final and executory for failure of petitioners to file their appeal with
the NLRC within 10 calendar days from receipt of said decision pursuant to the doctrine
laid down in Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, 115 SCRA 347
(1982), the Solicitor General claims that the ruling of public respondent that a "joint
fishing venture" exists between private respondent and petitioners rests on the
resolution of the Social Security System (SSS) in a 1968 case, Case No. 708 (De
Guzman Fishing Enterprises vs. SSS), exempting De Guzman Fishing Enterprises,
private respondent herein, from compulsory coverage of the SSS on the ground that
there is no employer-employee relations between the boat-owner and the fishermencrew members following the doctrine laid down inPajarillo vs. SSS, 17 SCRA 1014
(1966). In applying to the case at bar the doctrine in Pajarillo vs. SSS, supra, that there
is no employer-employee relationship between the boat-owner and the pilot and crew
members when the boat-owner supplies the boat and equipment while the pilot and
crew members contribute the corresponding labor and the parties get specific shares in
the catch for their respective contribution to the venture, the Solicitor General pointed
out that the boat-owners in the Pajarillo case, as in the case at bar, did not control the
conduct of the fishing operations and the pilot and crew members shared in the catch.
We rule in favor of petitioners.
Fundamental considerations of substantial justice persuade Us to decide the instant
case on the merits rather than to dismiss it on a mere technicality. In so doing, we
exercise the prerogative accorded to this Court enunciated in Firestone Filipinas
Employees Association, et al. vs. Firestone Tire and Rubber Co. of the Philippines, Inc.,
61 SCRA 340 (1974), thus "the well-settled doctrine is 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."
Circumstances peculiar to some extent to fishermen-crew members of a fishing vessel
regularly engaged in trawl fishing, as in the case of petitioners herein, who spend one
(1) whole week or more 7 in the open sea performing their job to earn a living to support
their families, convince Us to adopt a more liberal attitude in applying to petitioners the
10-calendar day rule in the filing of appeals with the NLRC from the decision of the labor
arbiter.
Records reveal that petitioners were informed of the labor arbiter's decision of March
31, 1984 only on July 3,1984 by their non-lawyer representative during the arbitration
proceedings, Jose Dialogo who received the decision eight (8) days earlier, or on June
25, 1984. As adverted to earlier, the circumstances peculiar to petitioners' occupation as
fishermen-crew members, who during the pendency of the case understandably have to
earn a living by seeking employment elsewhere, impress upon Us that in the ordinary
course of events, the information as to the adverse decision against them would not
reach them within such time frame as would allow them to faithfully abide by the 10calendar day appeal period. This peculiar circumstance and the fact that their
representative is a non-lawyer provide equitable justification to conclude that there is
substantial compliance with the ten-calendar day rule of filing of appeals with the NLRC
when petitioners filed on July 10, 1984, or seven (7) days after receipt of the decision,
their appeal with the NLRC through registered mail.
We have consistently ruled that in determining the existence of an employer-employee

relationship, the elements that are generally considered are the following (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
means and methods by which the work is to be accomplished. 8 The employment
relation arises from contract of hire, express or implied. 9 In the absence of hiring, no
actual employer-employee relation could exist.
From the four (4) elements mentioned, We have generally relied on the so-called rightof-control test 10 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. The test calls merely for the existence of the right to control the manner of
doing the work, not the actual exercise of the right. 11
The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for
the ruling that a "joint fishing venture" existed between private respondent and
petitioners is not applicable in the instant case. There is neither light of control nor
actual exercise of such right on the part of the boat-owners in the Pajarillo case, where
the Court found that the pilots therein are not under the order of the boat-owners as
regards their employment; that they go out to sea not upon directions of the boatowners, but upon their own volition as to when, how long and where to go fishing; that
the boat-owners do not in any way control the crew-members with whom the former
have no relationship whatsoever; that they simply join every trip for which the pilots
allow them, without any reference to the owners of the vessel; and that they only share
in their own catch produced by their own efforts.
The aforementioned circumstances obtaining in Pajarillo case do not exist in the instant
case. The conduct of the fishing operations was undisputably shown by the testimony of
Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under the control and supervision
of private respondent's operations manager. Matters dealing on the fixing of the
schedule of the fishing trip and the time to return to the fishing port were shown to be
the prerogative of private respondent. 12 While performing the fishing operations,
petitioners received instructions via a single-side band radio from private respondent's
operations manager who called the patron/pilot in the morning. They are told to report
their activities, their position, and the number of tubes of fish-catch in one day. 13 Clearly
thus, the conduct of the fishing operations was monitored by private respondent thru the
patron/pilot of 7/B Sandyman II who is responsible for disseminating the instructions to
the crew members.
The conclusion of public respondent that there had been no change in the situation of
the parties since 1968 when De Guzman Fishing Enterprises, private respondent
herein, obtained a favorable judgment in Case No. 708 exempting it from compulsory
coverage of the SSS law is not supported by evidence on record. It was erroneous for
public respondent to apply the factual situation of the parties in the 1968 case to the
instant case in the light of the changes in the conditions of employment agreed upon by
the private respondent and petitioners as discussed earlier.
Records show that in the instant case, as distinguished from the Pajarillo case where
the crew members are under no obligation to remain in the outfit for any definite period
as one can be the crew member of an outfit for one day and be the member of the crew
of another vessel the next day, the herein petitioners, on the other hand, were directly
hired by private respondent, through its general manager, Arsenio de Guzman, and its
operations manager, Conrado de Guzman and have been under the employ of private
respondent for a period of 8-15 years in various capacities, except for Laurente Bautu
who was hired on August 3, 1983 as assistant engineer. Petitioner Alipio Ruga was
hired on September 29, 1974 as patron/captain of the fishing vessel; Eladio Calderon
started as a mechanic on April 16, 1968 until he was promoted as chief engineer of the
fishing vessel; Jose Parma was employed on September 29, 1974 as assistant
engineer; Jaime Barbin started as a pilot of the motor boat until he was transferred as a
master fisherman to the fishing vessel 7/B Sandyman II; Philip Cervantes was hired as
winchman on August 1, 1972 while Eleuterio Barbin was hired as winchman on April 15,
1976.
While tenure or length of employment is not considered as the test of employment,
nevertheless the hiring of petitioners to perform work which is necessary or desirable in
the usual business or trade of private respondent for a period of 8-15 years since 1968
qualify them as regular employees within the meaning of Article 281 of the Labor Code
as they were indeed engaged to perform activities usually necessary or desirable in the
usual fishing business or occupation of private respondent. 14
Aside from performing activities usually necessary and desirable in the business of
private respondent, it must be noted that petitioners received compensation on a
percentage commission based on the gross sale of the fish-catch i.e. 13% of the
proceeds of the sale if the total proceeds exceeded the cost of the crude oil consumed
during the fishing trip, otherwise only 10% of the proceeds of the sale. Such
compensation falls within the scope and meaning of the term "wage" as defined under
Article 97(f) of the Labor Code, thus:
(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
included 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. . . .
The claim of private respondent, which was given credence by public respondent, that
petitioners get paid in the form of share in the fish-catch which the patron/pilot as head
of the team distributes to his crew members in accordance with their own
understanding 15 is not supported by recorded evidence. Except that such claim appears
as an allegation in private respondent's position paper, there is nothing in the records
showing such a sharing scheme as preferred by private respondent.
Furthermore, the fact that on mere suspicion based on the reports that petitioners
allegedly sold their fish-catch at midsea without the knowledge and consent of private
respondent, petitioners were unjustifiably not allowed to board the fishing vessel on
September 11, 1983 to resume their activities without giving them the opportunity to air
their side on the accusation against them unmistakably reveals the disciplinary power
exercised by private respondent over them and the corresponding sanction imposed in
case of violation of any of its rules and regulations. The virtual dismissal of petitioners
from their employment was characterized by undue haste when less extreme measures
consistent with the requirements of due process should have been first exhausted. In
that sense, the dismissal of petitioners was tainted with illegality.
Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of
private respondent virtually resulting in their dismissal evidently contradicts private
respondent's theory of "joint fishing venture" between the parties herein. A joint venture,
including partnership, presupposes generally a parity of standingbetween the joint coventurers or partners, in which each party has an equal proprietary interest in the capital
or property contributed 16 and where each party exercises equal lights in the conduct of
the business. 17 It would be inconsistent with the principle of parity of standing between
the joint co-venturers as regards the conduct of business, if private respondent would
outrightly exclude petitioners from the conduct of the business without first resorting to
other measures consistent with the nature of a joint venture undertaking, Instead of
arbitrary unilateral action, private respondent should have discussed with an open mind
the advantages and disadvantages of petitioners' action with its joint co-venturers if
indeed there is a "joint fishing venture" between the parties. But this was not done in the
instant case. Petitioners were arbitrarily dismissed notwithstanding that no criminal
complaints were filed against them. The lame excuse of private respondent that the
non-filing of the criminal complaints against petitioners was for humanitarian reasons
will not help its cause either.
We have examined the jurisprudence on the matter and find the same to be supportive
of petitioners' stand. InNegre vs. WCC 135 SCRA 653 (1985), we held that fishermen
crew members who were recruited by one master fisherman locally known as "maestro"
in charge of recruiting others to complete the crew members are considered employees,
not industrial partners, of the boat-owners. In an earlier case of Abong vs. WCC, 54
SCRA 379 (1973) where petitioner therein, Dr. Agustin Abong, owner of the fishing boat,
claimed that he was not the employer of the fishermen crew members because of an
alleged partnership agreement between him, as financier, and Simplicio Panganiban, as
his team leader in charge of recruiting said fishermen to work for him, we affirmed the
finding of the WCC that there existed an employer-employee relationship between the
boat-owner and the fishermen crew members not only because they worked for and in
the interest of the business of the boat-owner but also because they were subject to the
control, supervision and dismissal of the boat-owner, thru its agent, Simplicio
Panganiban, the alleged "partner" of Dr. Abong; that while these fishermen crew
members were paid in kind, or by "pakiao basis" still that fact did not alter the character
of their relationship with Dr. Abong as employees of the latter.
In Philippine Fishing Boat Officers and Engineers Union vs. Court of Industrial
Relations, 112 SCRA 159 (1982), we held that the employer-employee relationship
between the crew members and the owners of the fishing vessels engaged in deep sea
fishing is merely suspended during the time the vessels are drydocked or undergoing
repairs or being loaded with the necessary provisions for the next fishing trip. The said
ruling is premised on the principle that all these activities i.e., drydock, repairs, loading
of necessary provisions, form part of the regular operation of the company fishing
business.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned

resolution of the National Labor Relations Commission dated May 30,1985 is hereby
REVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to
their former positions or any equivalent positions with 3-year backwages and other
monetary benefits under the law. No pronouncement as to costs.
SO ORDERED.
Gutierrez, Jr., Bidin and Corts, JJ., concur.
Feliciano, J., concurs in the result.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 121605
February 2, 2000
PAZ MARTIN JO and CESAR JO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and PETER MEJILA, respondents.
QUISUMBING, J.:
This petition for certiorari seeks to set aside the Decision1 of National Labor Relations
Commission (Fifth Division) promulgated on November 21, 1994, and its Resolution
dated June 7, 1995, which denied petitioners' motion for reconsideration.
Private respondent Peter Mejila worked as barber on a piece rate basis at Dina's Barber
Shop. In 1970, the owner, Dina Tan, sold the barbershop to petitioners Paz Martin Jo
and Cesar Jo. All the employees, including private respondent, were absorbed by the
new owners. The name of the barbershop was changed to Windfield Barber Shop.
The owners and the barbers shared in the earnings of the barber shop. The barbers got
two-thirds (2/3) of the fee paid for every haircut or shaving job done, while one-third
(1/3) went to the owners of the shop.
In 1977, petitioners designated private respondent as caretaker of the shop because the
former caretaker became physically unfit. Private respondent's duties as caretaker, in
addition to his being a barber, were: (1) to report to the owners of the barbershop
whenever the airconditioning units malfunctioned and/or whenever water or electric
power supply was interrupted, (2) to call the laundry woman to wash dirty linen; (3) to
recommend applicants for interview and hiring; (4) to attend to other needs of the shop.
For this additional job, he was given an honorarium equivalent to one-third (1/3) of the
net income of the shop.1wphi1.nt
When the building occupied by the shop was demolished in 1986, the barbershop
closed. But soon a place nearby was rented by petitioners and the barbershop resumed
operations as Cesar's Palace Barbershop and Massage Clinic. In this new location,
private respondent continued to be a barber and caretaker, but with a fixed monthly
honorarium as caretaker, to wit: from February 1986 to 1990 P700; from February
1990 to March 1991 P800; and from July 1992 P1,300.
In November 1992, private respondent had an altercation with his co-barber, Jorge
Tinoy. The bickerings, characterized by constant exchange of personal insults during
working hours, became serious so that private respondent reported the matter to Atty.
Allan Macaraya of the labor department. The labor official immediately summoned
private respondent and petitioners to a conference. Upon investigation, it was found out
that the dispute was not between private respondent and petitioners; rather, it was
between the former and his fellow barber. Accordingly, Atty. Macaraya directed
petitioners' counsel, Atty. Prudencio Abragan, to thresh out the problem.
During the mediation meeting held at Atty. Abragan's office a new twist was added.
Despite the assurance that he was not being driven out as caretaker-barber, private
respondent demanded payment for several thousand pesos as his separation pay and
other monetary benefits. In order to give the parties enough time to cool off, Atty.
Abragan set another conference but private respondent did not appear in such meeting
anymore.
Meanwhile, private respondent continued reporting for work at the barbershop. But, on
January 2, 1993, he turned over the duplicate keys of the shop to the cashier and took
away all his belongings therefrom. On January 8, 1993, he began working as a regular
barber at the newly opened Goldilocks Barbershop also in Iligan City.
On January 12, 1993, private respondent filed a complaint 2 for illegal dismissal with
prayer for payment of separation pay, other monetary benefits, attorney's fees and
damages. Significantly, the complaint did not seek reinstatement as a positive relief.
In a Decision dated June 15, 1993, the Labor Arbiter found that private respondent was
an employee of petitioners, and that private respondent was not dismissed but had left
his job voluntarily because of his misunderstanding with his co-worker.3 The Labor
Arbiter dismissed the complaint, but ordered petitioners to pay private respondent his
13th month pay and attorney's fees.
Both parties appealed to the NLRC. In a Decision dated November 21, 1994, it set
aside the labor arbiter's judgment. The NLRC sustained the labor arbiter's finding as to
the existence of employer-employee relationship between petitioners and private
respondent, but it ruled that private respondent was illegally dismissed. Hence, the
petitioners were ordered to reinstate private respondent and pay the latter's backwages,
13th month pay, separation pay and attorney's fees, thus:
For failure of respondents to observe due process before dismissing the
complainant, We rule and hold that he was illegally terminated. Consequently, he
should be reinstated and paid his backwages starting from January 1, 1993 up ,
the time of his reinstatement and payment of separation pay, should
reinstatement not be feasible on account of a strained employer-employee
relationship.
As complainant's income was mixed, (commission and caretaker), he becomes
entitled to 13th month pay only in his capacity as caretaker at the last rate pay
given to him.
With respect to separation pay, even workers paid on commission are given
separation pay as they are considered employees of the company. Complainant
should be adjudged entitled to separation pay reckoned from 1970 up to the time
he was dismissed on December 31, 1992 at one-half month pay of his earnings
as a barbers; and as a caretaker the same should be reckoned from 1977 up to
December 31, 1992.
As complainant has been assisted by counsel not only in the preparation of the
complaint, position paper but in hearings before the Labor Arbiter a
quo attorney's fees equivalent to 10% of the money awards should likewise be
paid to complainant.
WHEREFORE, the decision appealed from is Vacated and Set Aside and a new
one entered in accordance with the above-findings and awards.
SO ORDERED.4
Its motion for reconsideration having been denied in a Resolution dated June 7, 1995,
petitioners filed the instant petition.
The issues for resolution are as follows:
1. Whether or not there exists an employee-employee relationship between
petitioners and private respondent.
2. Whether or not private respondent was dismissed from or had abandoned his
employment.
Petitioners contend that public respondent gravely erred in declaring that private
respondent was their employee. They claim that private respondent was their "partner in
trade" whose compensation was based on a sharing arrangement per haircut or shaving
job done. They argue that private respondent's task as caretaker could be considered
an employment because the chores are very minimal.
At the outset, we reiterate the doctrine that the existence of an employer-employee
relationship is ultimately a question of fact and that the findings thereon by the labor
arbiter and the NLRC shall be accorded not only respect but even finality when
supported by ample evidence.5
In determining the existence of an employer-employee relationship, the following
elements are considered: (1) the selection and engagement of the workers; (2) power of
dismissal; (3) the payment of wages by whatever means; and (4) the power to control
the worker's conduct, with the latter assuming primacy in the overall consideration. The
power of control refers to the existence of the power and not necessarily 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 employer has the right to
wield that power.6
Absent a clear showing that petitioners and private respondent had intended to pursue
a relationship of industrial partnership, we entertain no doubt that private respondent
was employed by petitioners as caretaker-barber. Initially, petitioners, as new owners of
the barbershop, hired private respondent as barber by absorbing the latter in their
employ. Undoubtedly, the services performed by private respondent as barber is related
to, and in the pursuit of the principal business activity of petitioners. Later on, petitioners
tapped private respondent to serve concurrently as caretaker of the shop. Certainly,
petitioners had the power to dismiss private respondent being the ones who engaged
the services of the latter. In fact, private respondent sued petitioners for illegal dismissal,
albeit contested by the latter. As a caretaker, private respondent was paid by petitioners
wages in the form of honorarium, originally, at the rate of one-third (1/3) of the shop's
net income but subsequently pegged at a fixed amount per month. As a barber, private
respondent earned two-thirds (2/3) of the fee paid per haircut or shaving job done.
Furthermore, the following facts indubitably reveal that petitioners controlled private
respondent's work performance, in that: (1) private respondent had to inform petitioners
of the things needed in the shop; (2) he could only recommend the hiring of barbers and
masseuses, with petitioners having the final decision; (3) he had to be at the shop at
9:00 a.m. and could leave only at 9:00 p.m. because he was the one who opened and
closed it, being the one entrusted with the key.7 These duties were complied with by the
private respondent upon instructions of petitioners. Moreover, such task was far from
being negligible as claimed by petitioners. On the contrary, it was crucial to the business
operation of petitioners as shown in the preceding discussion. Hence, there was enough
basis to declare private respondent an employee of petitioners. Accordingly, there is no
cogent reason to disturb the findings of the labor arbiter and NLRC on the existence of
employer-employee relationship between herein private parties.
With regard to the second issue, jurisprudence has laid out the rules and valid ground
for termination of employment. To constitute abandonment, there must be concurrence
of the intention to abandon and some overt acts from which it may be inferred that the
employee concerned has no more interest in working. 8 In other words, there must be a
clear, deliberate and unjustified refusal to resume employment and a clear intention to
sever the employer-employee relationship on the part of the employee. 9
In the case at bar, the labor arbiter was convinced that private respondent was not
dismissed but left his work on his own volition because he could no longer bear the
incessant squabbles with his co-worker. Nevertheless, public respondent did not give
credence to petitioners' claim that private respondent abandoned his job. On this score,
public respondent gravely erred as hereunder discussed.
At the outset, we must stress that where the findings of the NLRC contradict those of
the labor arbiter, the Court, in the exercise of its equity jurisdiction, may look into the
records of the case and reexamine the questioned findings. 10
In this case, the following circumstances clearly manifest private respondent's intention
to sever his ties with petitioners. First, private respondent even bragged to his coworkers his plan to quit his job at Cesar's Palace Barbershop and Massage Clinic as
borne out by the affidavit executed by his former co-workers. 11 Second, he surrendered
the shop's keys and took away all his things from the shop. Third, he did not report
anymore to the shop without giving any valid and justifiable reason for his
absence. Fourth, he immediately sought a regular employment in another barbershop,
despite previous assurance that he could remain in petitioners' employ. Fifth, he filed a
complaint for illegal dismissal without praying for reinstatement.
Moreover, public respondent's assertion that the institution of the complaint for illegal
dismissal manifests private respondent's lack of intention to abandon his job 12 is
untenable. The rule that abandonment of work is inconsistent with the filing of a
complainant for illegal dismissal is not applicable in this case. Such rule applies where
the complainant seeks reinstatement as a relief. Corollarily, it has no application where
the complainant does not pray for reinstatement and just asks for separation pay
instead13 as in the present case. It goes without saying that the prayer for separation
pay, being the alternative remedy to reinstatement, 14 contradicts private respondent's

stance. That he was illegally dismissed is belied by his own pleadings as well as
contemporaneous conduct.
We are, therefore, constrained to agree with the findings of the Labor Arbiter that private
respondent left his job voluntarily for reasons not attributable to petitioners. It was error
and grave abuse of discretion for the NLRC to hold petitioners liable for illegal dismissal
of private respondent.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of
public respondent NLRC are reversed and set aside. The decision of the Labor Arbiter
dated June 15, 1993, is hereby reinstated. No costs.
SO ORDERED.1wphi1.nt
Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 147816
May 9, 2003
EFREN P. PAGUIO, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES
CORPORATION, ROBINA Y. GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E.
ARAGON, FREDERICK D. GO and ALDA IGLESIA,respondents.
VITUG, J.:
On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time,
into an agreement with petitioner Efren P. Paguio, appointing the latter to be an account
executive of the firm.1 Again, petitioner was to solicit advertisements for "The Manila
Times," a newspaper of general circulation, published by respondent company.
Petitioner, for his efforts, was to receive compensation consisting of a 15% commission
on direct advertisements less withholding tax and a 10% commission on agency
advertisements based on gross revenues less agency commission and the
corresponding withholding tax. The commissions, released every fifteen days of each
month, were to be given to petitioner only after the clients would have paid for the
advertisements. Apart from commissions, petitioner was also entitled to a monthly
allowance of P2,000.00 as long as he met the P30,000.00-monthly quota. Basically, the
contentious points raised by the parties had something to do with the following
stipulations of the agreement; viz:
"12. You are not an employee of the Metromedia Times Corporation nor does the
company have any obligations towards anyone you may employ, nor any
responsibility for your operating expenses or for any liability you may incur. The
only rights and obligations between us are those set forth in this agreement. This
agreement cannot be amended or modified in any way except with the duly
authorized consent in writing of both parties.
"13. Either party may terminate this agreement at any time by giving written
notice to the other, thirty (30) days prior to effectivity of termination." 2
On 15 August 1992, barely two months after the renewal of his contract,
petitioner received the following notice from respondent firm "Dear Mr. Paguio,
"Please be advised of our decision to terminate your services as Account
Executive of Manila Times effective September 30, 1992.
"This is in accordance with our contract signed last July 1, 1992." 3
Apart from vague allegations of misconduct on which he was not given the opportunity
to defend himself, i.e., pirating clients from his co-executives and failing to produce
results, no definite cause for petitioner's termination was given. Aggrieved, petitioner
filed a case before the labor arbiter, asking that his dismissal be declared unlawful and
that his reinstatement, with entitlement to backwages without loss of seniority rights, be
ordered. Petitioner also prayed that respondent company officials be held accountable
for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00
exemplary damages.
In their defense, respondent Metromedia Times Corporation asserted that it did not
enter into any agreement with petitioner outside of the contract of services under
Articles 1642 and 1644 of the Civil Code of the Philippines. 4Asserting their right to
terminate the contract with petitioner, respondents pointed to the last provision thereof
stating that both parties could opt to end the contract provided that either party would
serve, thirty days prior to the intended date of termination, the corresponding notice to
the other.
The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter
ordered respondent Metromedia Times Corporation and its officers to reinstate
petitioner to his former position, without loss of seniority rights, and to pay him his
commissions and other remuneration accruing from the date of dismissal on 15 August
1992 up until his reinstatement. He likewise adjudged that Liberato I. Gomez, general
manager of respondent corporation, be held liable to petitioner for moral damages in the
amount of P20,000.00.
On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the
labor arbiter and declared the contractual relationship between the parties as being for a
fixed-term employment. The NLRC declared a fixed-term employment to be lawful as
long as "it was agreed upon knowingly and voluntarily by the parties, without any force,
duress or improper pressure being brought to bear upon the worker and absent any
other circumstances vitiating his consent."5 The finding of the NLRC was primarily
hinged on the assumption that petitioner, on account of his educated stature, having
indeed personally prepared his pleadings without the aid of counsel, was an unlikely
victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular
employee, the NLRC held: "The decisive determinant would not be the activities that the
employee (was) called upon to perform but rather, the day certain agreed upon by the
parties for the commencement and termination of their employment relationship, a day
certain being understood to be that which (would) necessarily come, although it (might)
not be known when."6
Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in
toto the findings of the commission. In his petition for review on certiorari, petitioner
raised the following issues for resolution:
"WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE
RESPONDENT'S COMPANY IS FOR A FIXED PERIOD.
"WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.
"WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND

MORAL DAMAGES."7
The crux of the matter would entail the determination of the nature of contractual
relationship between petitioner and respondent company - was it or was it not one of
regular employment?
A "regular employment," whether it is one or not, is aptly gauged from the concurrence,
or the non-concurrence, of the following factors - 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 the
power to control the conduct of the putative employee or the power to control the
employee with respect to the means or methods by which his work is to be
accomplished.8 The "control test" assumes primacy in the overall consideration. Under
this test, an employment relation obtains where work is performed or services are
rendered under the control and supervision of the party contracting for the service, not
only as to the result of the work but also as to the manner and details of the
performance desired.9
An indicum of regular employment, rightly taken into account by the labor arbiter, was
the reservation by respondent Metromedia Times Corporation not only of the right to
control the results to be achieved but likewise the manner and the means used in
reaching that end.10 Metromedia Times Corporation exercised such control by requiring
petitioner, among other things, to submit a daily sales activity report and also a monthly
sales report as well. Various solicitation letters would indeed show that Robina
Gokongwei, company president, Alda Iglesia, the advertising manager, and Frederick
Go, the advertising director, directed and monitored the sales activities of petitioner.
The Labor Code, in Article 280 thereof, provides:
"ART. 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
"An employment shall be deemed to be casual if it is not covered by the
proceeding paragraph: Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists."
Thus defined, a regular employee is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as against those
which are undertaken for a specific project or are seasonal. Even in these latter cases,
where such person has rendered at least one year of service, regardless of the nature
of the activity performed or of whether it is continuous or intermittent, the employment is

considered regular as long as the activity exists, it not being indispensable that he be
first issued a regular appointment or be formally declared as such before acquiring a
regular status.11
That petitioner performed activities which were necessary and desirable to the business
of the employer, and that the same went on for more than a year, could hardly be
denied. Petitioner was an account executive in soliciting advertisements, clearly
necessary and desirable, for the survival and continued operation of the business of
respondent corporation. Robina Gokongwei, its President, herself admitted that the
income generated from paid advertisements was the lifeblood of the newspaper's
existence. Implicitly, respondent corporation recognized petitioner's invaluable
contribution to the business when it renewed, not just once but five times, its contract
with petitioner.
Respondent company cannot seek refuge under the terms of the agreement it has
entered into with petitioner. The law, in defining their contractual relationship, does so,
not necessarily or exclusively upon the terms of their written or oral contract, but also on
the basis of the nature of the work petitioner has been called upon to perform. 12 The law
affords protection to an employee, and it will not countenance any attempt to subvert its
spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized
to deprive the employee of his security of tenure. 13 The sheer inequality that
characterizes employer-employee relations, where the scales generally tip against the
employee, often scarcely provides him real and better options.
The real question that should thus be posed is whether or not petitioner has been justly
dismissed from service. A lawful dismissal must meet both substantive and procedural
requirements; in fine, the dismissal must be for a just or authorized cause and must
comply with the rudimentary due process of notice and hearing. It is not shown that
respondent company has fully bothered itself with either of these requirements in
terminating the services of petitioner. The notice of termination recites no valid or just
cause for the dismissal of petitioner nor does it appear that he has been given an
opportunity to be heard in his defense.
The evidence, however, found by the appellate court is wanting that would indicate bad
faith or malice on the part of respondents, particularly by respondent Liberato I. Gomez,
and the award of moral damages must thus be deleted.
WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals
in C.A. G.R. SP No. 527773 and that of the National Labor Relations Commission are
hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to
the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which
award is deleted.
SO ORDERED.
Davide, Jr., C.J., Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 72409 December 29, 1986
MAMERTO S. BESA, doing business under the name and style of BESA'S
CUSTOMBUILT SHOES,petitioner,
vs.
THE HONORABLE CRESENCIANO B. TRAJANO, DIRECTOR OF THE BUREAU OF
LABOR RELATIONS, MINISTRY OF LABOR AND EMPLOYMENT, AND KAISAHAN

NG MANGGAGAWANG PILIPINO (KAMPIL-KATIPUNAN), respondents.
De Asis and Hernando Law Office for petitioner.
Estebal M. Mendoza for private respondent.
PARAS, J.:
This petition questions the decision of the Director of the Bureau of Labor Relations in
BLR Case No. A-8-165-85, which affirmed the appealed order of the Med-Arbiter, Labor
Relations Division, NCR in NCR-LRD-M-1-044-85, a certification election case. More
specifically, petitioner seeks the resolution of the question as to whether or not an
employer-employee relationship exists between herein petitioner and the seventeen
(17) shoeshiners-members of the respondent union, who, if the relationship does exist,
should be entitled to the rights, privileges and benefits of an employee as provided in
the Labor Code.
Sometime in January, 1985, private respondent Kaisahan ng Mangagawang Pilipino
KAMPIL for short) a legitimate labor union duly registered with the Ministry of Labor and
Employment (MOLE, for short), filed a Petition for Certification Election, docketed as
NCR-LRD-M-1-044-85 in the National Labor Relations Division of the National Capital
Region. Petitioner opposed it alleging that
1. There is no employer-employee relationship between Besa's and the
petitioners-signatories to the petition;
2. The subject of the present petition had previously been decided by the defunct
Court of Industrial Relations, and is therefore barred under the principle of res
judicata;
3. The petition fails to comply with the mandatory formal requirements under Sec.
2, Book V, of the Omnibus Rules Implementing the Labor Code; and
4. This Hon. Commission has no jurisdiction over the subject matter and parties
to the petition.
Acting on the Petition, the Opposition thereto, and the Reply to the Opposition, the MedArbiter on June 27, 1985, issued an order declaring that there was an employeremployee relationship between the parties and directed that an election be conducted.
Petitioner appealed the order to the Director of BLR citing among others the following
reasons
1. That the subject of the present petition has previously been decided by the
defunct Court of Industrial Relations, and is therefore barred under the principle
of res judicata (CIR Case Nos. 2783, 2751 and 2949 ULP December 21, 1965);
2. That on May 28, 1985, Director Severo Pucan of the Ministry of Labor and
Employment, in dismissing the case for underpayment of commissions and nonpayment of ECOLA, filed by the shoeshiners against Besas Custombuilt Shoes,
for lack of jurisdiction petition, declared that there was no employer-employee
relationship between the shoeshiners and petitioner Besas (Order in NCRLSED1-020-85);
Director Pucan's findings were based on a letter-opinion of the Director of the
Bureau of Working Conditions of the MOLE (Annex "B-2", Petition for Certiorari).
The legal ground therein cited was res judicata.
xxx xxx xxx
Appeal was dismissed by the Director of BLR as contained in his decision dated Sept.
27, 1985 upholding the finding of the Med-Arbiter that supervisors were appointed to
oversee the bootblacks' performance. It declared that such is a finding of fact that is
entitled to respect and that res judicata does not he as the parties and the causes of
action in the certification election case are different from the parties and causes of
action in CIR Cases Nos. 2783-ULP 2751-ULP and 2949 ULP
Thus the Petition of the Union (KAMPIL) before the Med-Arbiter for the holding of the
certification election was granted. While the pre-election conference was in progress,
petitioner herein BESAS filed with Us with petition for certiorari with Prohibition and
simultaneously filed with the Med-Arbiter a motion to suspend the pre-election
conference. The petition filed before Us was dismissed for lack of merit but was
reconsidered upon Motion of petitioner. In its Motion for Reconsideration, petitioner
raised the following grounds:
I
THE INSTANT PETITION PRESENTS QUESTIONS OF LAW AND SUBSTANCE
TO MERIT THE CONSIDERATION OF THIS HONORABLE COURT.
II
THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR WAS NOT
SUPPORTED BY SUBSTANTIAL EVIDENCE AND THE SAME IS PURELY
BASED ON SPECULATIONS, SURMISES AND CONJECTURES.
III
THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR IS
CONTRARY TO LAW AND APPLICABLE DECI SIONS OF THE SUPREME
COURT ON THE MATTER.
IV
THE PETITION FOR CERTIFICATION ELECTION FILED BY RESPONDENT
UNION WITH THE MINISTRY OF LABOR AND EMPLOYMENT FAILED TO
COMPLY WITH THE MANDATORY REQUIREMENTS UNDER ARTICLE 258 OF
THE LABOR CODE, AS AMENDED, AND ITS IMPLEMENTING RULES.
V
THE RESPONDENT DIRECTOR ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DECIDING THAT
THERE EXISTS AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE
PETITIONER AND THE SHOESHINER-MEMBERS OF THE RESPONDENT
UNION,
VI
THE RESPONDENT DIRECTOR ACTED WITHOUT JURISDICTION IN TAKING
COGNIZANCE OF THE BASIC PETITION CONSIDERING THAT THE SUBJECT
MATTER AND THE PARTIES THEREOF HAVE BEEN DECIDED BY THE
DEFUNCT COURT OF INDUSTRIAL RELATIONS AND IS THEREFORE
BABRED BY THE PRINCIPLE OF RES ADJUDICATA.
The main thrust of the instant petition is the question of employer-employee relationship
between petitioner BESAS and 17 of the members of the herein respondent Union who
are designated as shoeshiners. During the certification election held on Nov. 26, 1985 at
BESAS of the 53 eligible voters, 49 cast their votes. 33 voted for the union while 16
voted for no union. Among the 33 voters who opted for a union 17 persons are
shoeshiners while 16 persons are non-shoeshiners.
The question of employer-employee relationship became a primodial consideration in
resolving whether or not the subject shoeshiners have the juridical personality and
standing to present a petition for certification election as well as to vote i therein. It is the
position of petitioner that if the shoeshiners are not considered as employees of Besa's
the basic petition for certification election must necessarily be dismissed for failure to
comply with the mandatory requirements of the Labor Code, as amended, that at least
thirty (30%) percent of the employees must support the petition for certification election
and that in order to be certified as the sole and exclusive bargaining agent, the union
must be obtained a majority of the valid votes cast by eligible voters. In the instant case,
if the 17 shoeshiners are declared ineligible and their votes are consequently nullified
the result of the certification election would be 16 "Yes" votes (33 minus 17) and 16 "No"
votes, which is a tie. Since the respondent union did not obtain a clear majority for the
"Yes" votes as required under Rule IV Sec. 8(f) of the Omnibus Rules of the Labor
Code, it necessarily follows that the respondent union cannot be certified as the sole
and exclusive bargaining agent of the workers of Besa's.
The present petition merits Our consideration. The records of the case reveal that an
employer-employee relationship does not exist between the 17 shoeshiners and
petitioner.
Be it noted that the defunct CIR in dismissing the cases for unfair labor practice filed by
the shoeshiners against herein petitioner BESA declared in its Decision dated
December 21, 1965 that:
The shoe shiner is distinct from a piece worker because while the latter is paid
for work accomplished, he does not, however, contribute anything to the capital
of the employer other than his service. It is the employer of the piece worker who
pays his wages, while the shoe shiner in this instance is paid directly by his
customer. The piece worker is paid for work accomplished without regard or
concern to the profit as derived by his employer, but in the case of the shoe
shiners, the proceeds derived from the trade are always divided share and share
alike with respondent BESA. The shoe shiner can take his share of the proceeds
everyday if he wanted to or weekly as is the practice of qqqBesas The employer
of the piece worker supervises and controls his work, but in the case of the shoe
shiner, respondent BESA does not exercise any degree of control or supervision
over their person and their work. All these are not obtaining in the case of a piece
worker as he is in fact an employee in contemplation of law, distinct from the
shoe shiner in this instance who, in relation to respondent MAMERTO B. BESA,
is a partner in the trade. Consequently, employer-employee relationship between
members of the Petitioning union and respondent MAMERTO B. BESA being
absent the latter could not be held guilty of the unfair tabor practice acts imputed
against him. (p. 6, Annex "B1 " of said Decision).<re||an1w>
Then too on Dec. 27, 1983, then Director Augusto Sanchez of the Bureau of Working
Conditions, MOLE, in response to a letter of petitioner relative to the implementation of
wage Order No. 2 which provided for an increase both in minimum wage and cost of
living allowance, opined as follows:
Entitlement of the minimum requirements of the law particularly on wages and
allowances presupposes the existence of employer-employee relationship which
is determined by the concurrence of the following conditions:
1. right to hire
2. payment of wages
3. right to fire; and
4. control and supervision
The most important condition to be considered is the exercise of control and
supervision over the employees, per our conversation, the persons concerned
under your query are the shoe shiners and based on the decision rendered by
Associate Judge Emiliano Tabigne of the defunct Court of Industrial Relations,
these shoe shiners are not employees of the company, but are partners instead.
This is due to the fact that the owner/manager does not exercise control and
supervision over the shoe shiners. That the shiners have their own customers
from whom they charge the fee and divide the proceeds equally with the owner,
which make the owner categorized them as on purely commission basis. The
attendant circumstances clearly show that there is no employer-employee
relationship existing, and such the owner/manager is not by law, under obligation
to extend to those on purely commission basis the benefit of Wage Order No. 2.
However, the law does not preclude the employer in giving such benefit to all its
employees including those which may not be covered by the mandate of the law.
(Letter dated December 27, 1985 addressed to petitioner Annex B-2, Petition)
The Office of the Solicitor General as counsel for public respondent agrees that in the
present case, no employer-employee relationship exists.
The Supreme Court in the Rosario Brothers case ruled that;

A basic factor underlying the exercise of rights under the Labor Code is the
status of employment. It is important in the determination of who shall be
included in a proposed bargaining unit because it is sine qua non. The
fundamental and essential condition that a bargaining unit be composed of
employees. Failure to establish this juridical relationship between the union
members and the employer affects the legality of the union itself. It means the
ineligibility of the union members to present a petition for certification election as
well as to vote therein.
Existence of employer-employee relationship is determined by the following
elements, namely, a] selection and engagement of the employee; b] payment of
wages; c] powers of dismissal; and d] power to control the employee's conduct
although the latter is the most important element (Rosario Brothers Inc, vs. Ople,
131 SCRA 72, 1984)
WHEREFORE, judgment is hereby rendered giving due course to the Petition and
declaring VOID the decision of the Director of the Bureau of Labor Relations dated
September 27, 1985. The Petition in BLR Case No. A-8-165-85 (NCR-LRD-M1-044-85)
is therefore hereby DISMISSED.
SO ORDERED.
Feria (Chairman), Fernan, Alampay, Gutierrez, Jr., JJ., concur.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 118892 March 11, 1998

FILIPINAS BROADCASTING NETWORK, INC.,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SIMEON MAPA
JR., respondents.
PANGANIBAN, J.:
As a rule, factual findings of the NLRC are binding on this Court. However, when
the findings of the NLRC and the labor arbiter are contradictory, this Court may
review questions of fact. Where the evidence clearly shows the absence of an
employer-employee relationship, a claim for unpaid wages, thirteenth month pay,
holiday and rest pay and other employment benefits must necessarily fail.
The Case
Before us is a petition for certiorari assailing the April 29, 1994 Decision of the
National Labor Relations Commission, 1 in Case No. 05-08-00348-92, entitled
"Simeon M. Mapa Jr., v. DZRC Radio Station." The dispositive portion of the
challenged Decision reads:
WHEREFORE, premises considered, the appealed decision is set
aside, and a new judgement is entered, declaring that complainant is
an employee of respondent and is entitled to his claims for the
payment of his services from March 11, 1990 to January 16, 1992. 2
Petitioner also impugns the November 9, 1994 Resolution 3 of the NLRC denying
the motion for reconsideration.
The October 13, 1993 decision of the labor arbiter, 4 which the NLRC reversed and
set aside, disposed as follows:
This Arbitration Branch, based on the facts and circumstances
established by the parties in this case is inclined to believe that
complainant Simeon M. Mapa, Jr., had not been an employee of the
respondent DZRC Radio Station before February 16, 1992. 5 He was
but a volunteer reporter when accommodated to air his report on the
respondent radio station as his application for employment with the
respondent as field reporter had not been accepted yet or approved
before February, 1992. There was no employer-employee relations
that existed between the complainant and the respondent since
March 11, 1990 until February 16, 1992. The complainant is not
entitled to his claim for any salaries, premium pay for holiday and
rest day, holiday pay and 13th month pay against the respondent
DZRC Radio Station/Salvio Fortuno.
WHEREFORE, in the light of the foregoing premises, judgment is

hereby rendered dismissing the complaint in this case for lack of
merit. 6
The Facts
Version of Private Respondent
Petitioner and private respondent submitted different versions of the facts. The
facts as viewed by private respondent are as follows: 7
The complainant (herein private respondent) began to work for the
respondent as a radio reporter starting March 11, 1990. On May 14,
1990, upon being informed by then respondent's Station Manager,
Mr. Plaridel Brocales, that complainant's employment with
respondent is being blocked by Ms. Brenda Bayona of DZGB,
complainant's previous employer, the said complainant took a leave
of absence. In the first week of June, 1990, the respondent thru Mr.
Antonio Llarena, then an employee of the respondent, asked the
complainant to return to work even as he was assured that his
salaries will be paid to him already. Thus, the complainant continued
to work for the respondent since then. On September 5, 1991, again
the complainant took a leave of absence because of his desperation
over the failure of respondent to make good its promise of payment
of salaries. He was reinstated on January 16, 1992 and resigned on
February 27, 1992 when he decided to run for an elective office in the
town of Daraga, Albay. Unfortunately, the respondent paid salary to
the complainant only for the period from January 16, 1992 up to
February 27, 1992. Respondent did not pay the complainant for all
the services rendered by the latter from March 11, 1990 up to January
16, 1992.
As may be gleaned from its memorandum, 8 petitioner's version of the facts is as
follows:
1. On or before April 1990, Mapa was dismissed from his employment
with PBN-DZGB Legaspi. At this time, Mapa filed a case for illegal
dismissal against PBN-DZGB Legaspi docketed as RAV V Case No.
05-04-00120-90 entitled "Simeon Mapa, Jr. v. People's Broadcasting
Network-DZGB Legaspi, Jorge Bayona and Arturo Osia";
2. On or about May 1990, Mapa sought employment from DZRC as a
radio reporter. However, DZRC required of private respondent the
submission of a clearance from his former employer. Otherwise, his
application would not be acted upon;
3. On May 14, 1990, Mapa was informed by DZRC's then station
manager, Mr. Plaridel "Larry" Brocales, that his application for
employment was "being blocked by Ms. Brenda Bayona of DZGB,
Mapa's former employer." This fact is supported by Mapa's position
paper before the Honorable Labor Arbiter . . . ;
4. Taking pity on Mapa and pending the issuance of the clearance

from PBN-DZGB Legaspi, Mr. Larry Brocales granted the request of
Mapa to be accommodated only as a volunteer reporter of DZRC on a
part-time basis. As a volunteer reporter, Mapa was not to be paid
wages as an employee of DZRC but he was permitted to find
sponsors whose business establishments will be advertised every
time he goes on the air. Most importantly, Mapa's only work
consisted of occasional newsbits or on-the-spot reporting of
incidents or newsworthy occurrences, which was very seldom.
5. Mapa's friends, who were also in the same situation as he was,
declared in an affidavit dated June 10, 1993 that:
WE, ALLAN ALMARIO and ELMER ANONUEVO, of legal age, single,
with postal address at Washington Drive, Legaspi City, under oath,
depose and state:
1. We personally know Simeon "Jun" Mapa, a former volunteer
reporter at DZRC just like us;
2. As volunteer reporters we know that we will not receive any salary
or allowance from DZRC because our work was purely voluntary;
3. As incentive for us, the management of DZRC allowed us to get
our own sponsors whose business establishment we mention[ed]
every after field report was made by us;
4. The management did not require or oblige us to render a report.
We were on our own. We ma[d]e or render[ed] a report as we [saw]
fit;
5. During our stint as volunteer reporters we had several sponsors
each who paid us P300.00 per month (each).
xxx xxx xxx
6. Having no radio gadgets to begin with, DZRC loaned Mapa the
necessary equipment such as handheld radios and reporting
gadgets. Mapa was to do occasional reporting only, i.e., a few
minutes each day at an irregular time period at Mapa's own
convenience. Mapa advertised his sponsors and pocketed the
payment of these sponsors for his advertising services. In addition,
DZRC had no control over the manner by [sic] which he was to make
his reports. Nor were the said reports subject to editing by DZRC;
7. In an Affidavit dated June 10, 1993 executed by one of Mapa's
sponsors, the same reads as follows:
I, CARLITO V. BAYLON, of legal age, married, resident of Dona Maria
Subdivision, Daraga, Albay, under oath, depose and state:
1. I am a lawyer by profession. At the same time, I am owner of

"Kusina ni Manoy" a restaurant situated in Daraga, Albay;
2. I personally know Simeon "Jun" Mapa. Sometime in May, 1990 he
went to me and asked if I could be one of his sponsors because he
was accommodated by DZRC as volunteer reporter. He explained to
me that, he will not be receiving any salary from DZRC[;] hence, he
was soliciting my support;
3. Taking pity on him, I agreed to be one of his sponsors. The
condition was, I will have to pay him P300.00/month. In exchange
thereto, he will have to mention the name of my restaurant every time
he renders a report on the air;
4. My sponsorship lasted for about (5) months after which I
discontinued it when I rarely heard Jun Mapa in DZRC program.
xxx xxx xxx
8. On November 7, 1990, in his testimony against his former
employer, Mapa declared under oath, to wit:
ATTY. LOBRIGO:
On paragraph 14 of the same affidavit it states and I quote: 13.
Having been left with an empty stomach, I was compelled to apply
for employment with another radio station. On March 11, 1990, I
applied for employment with DZRC. Unfortunately, my application
would not yet be acted [upon] favorably because of the malicious
and oppressive imputations to me by my former employer.
My question is what is now the status of your employment with
DZRC?
WITNESS:
I am at present on a volunteer status because my former employer at
DZGB did not give me clearance and I am required to submit that
clearance to DZRC. (Emphasis supplied).
See p. 2 of Position Paper of DZRC before the Labor Arbiter and pp.
4-5 of the Transcript of Stenographer Notes dated November 7, 1990,
attached and marked as Annex "F" and Annex "F-1 ", Petition
for Certiorari;
9. It cannot be overstressed that Mapa's application for employment
could not have been acted upon because of the lack of the prerequisite clearance.
10. Lacking in sponsors, Mapa soon failed to provide petitioner with
newsbits, finding it unprofitable to continue since he had no
available sources of funding. Sometime in September 1991, Mapa

quit his part-time endeavor with DZRC, as attested to by the Office of
Supervisor/Traffic Manager Ignacio Casi in an Affidavit dated June
10, 1992, to wit:
1. I am the Office Supervisor/Traffic Manager of DZRC-AM;
2. Sometime in May, 1990 Simeon "Jun" Mapa went to my office
inside our radio station. He asked me if he could be accommodated
as Radio Reporter of DZRC, as he was dismissed from DZGB. I
referred him to Larry Brocales, our Station Manager then;
3. Larry Brocales told Jun Mapa that he cannot be accommodated
because he has no clearance from DZGB. Jun Mapa, almost teary
eyed, pleaded to Larry Brocales that he be accommodated as
volunteer reporter, that is, he will not receive any salary but that he
intimated that he be allowed to look for sponsors whose business
establishment, for a fee, will have to be mentioned after every report
is made. Larry Brocales took pity on Jun Mapa and accommodated
him;
4. Jun Mapa, just like the other volunteer reporters, was not obliged
to render field reports, at a particular time and in a particular
program. They render report as they wish or see fit;
5. The management (DZRC) does not collect anything from the
sponsors of Jun Mapa. They (sponsors) pay directly to him;.
6. Being the Office Supervisor, I know for a fact that Jun Mapa
seldom renders report on the air. He has no assigned program either.
He was on and off the air, so to speak;
7. Finally, some time in September, 1991, Jun Mapa told me that he is
quitting already because his sponsors were no longer paying him of
his monthly contract with them. (Emphasis supplied).
(See Annex "G", Petition for Certiorari);
11. Subsequently, Mapa sent a letter dated October 7, 1991 to Ms. Diana C.
Gozum, General Manager of petitioner FBN. In the said letter, Mapa wrote and
admitted that:
I am [sic] Mr. Simeon Mapa, Jr. respectfully request your good office
to reconsider my previous application submitted last March 1990 as
a reporter of DZRC AM.
May I inform you that since the submission of such application I
worked until September 6, 1991 for free of services [sic]. Hoping that
I'll be given the chance to be recognized as a regular reporter.
With this, I respectfully wish to follow up my application for

recognition.
May I also inform you that the case I have with my previous job with
the other company has commenced.
Attached herewith is my resume.
I am once again submitting myself for an interview with your office at
a time convenient to you.
Thank you.
(See Annex "H", Petition for Certiorari);
12. Reacting to the letter mentioned in the immediately preceding
paragraph, DZRC favorably acted upon the application of Mapa and
accepted him as a radio reporter on January 16, 1992;
13. On February 27, 1992, Mapa resigned as a radio reporter in order
to run for an elective office in the May 1992 elections and was paid
all his salaries and benefits for the period of his employment
commencing from January 16, 1992 until February 27, 1992;
14. Having no work to do and no employment in sight, Mapa filed a
complaint against FBN-DZRC on August 1992, claiming the payment
of salaries, premium pay, holiday pay as well as 13th month pay for
the period 28 February 1990 until January 16, 1992;
On October 13, 1993, Labor Arbiter Emeterio Ranola dismissed the complaint for
lack of merit, finding that no employer-employee relationship existed between
Mapa and DZRC during the period March 11, 1990 to February 16, 1992. 9
Findings of the NLRC
In holding that there was an employer-employee relationship, the NLRC set aside
the labor arbiter's findings:
In his appeal, complainant insists that there was an employeremployee relationship between him and the respondent. In support
of his contention, he cites the payroll for February 16 to 29, 1992, the
ID card issued to him as employee and regular reporter by the
respondent: [sic] the program schedules of DZRC showing the
regular program of the station indicating his name: [sic] the affidavit
of Antonio Llarena, program supervisor of DZRC, stating that he
[was] a regular reporter under his supervision and the list of
reporting gadgets issued to regular reporter.
The existence of employer employee relationship is determined by
the following elements, namely: 1) selection and engagement of the
employee; 2) the payment of wages; 3) the power of dismissal; and 4)
the power to control employees' conduct although the latter is the

most important element. (Rosario Brothers, Inc. vs. Ople, 131 SCRA
72)
Considering the totality of the evidence adduced by the parties, we
are of the opinion that the complainant is a regular reporter of the
respondent. Firstly, the work of the complainant is being supervised
by the program supervisor of the respondent; secondly, the
complainant uses the reporting gadgets of the respondent. Thirdly,
he has no reporting gadgets of his own; Fourthly, the program
schedule is prepared by the respondent; and Lastly, he was paid
salary for the period from February 16 to 29, 1992 and covered under
the Social Security System. There is no showing in the record that
his work from February 16, 1992 was different from his work before
said period. 10
The NLRC subsequently denied petitioner's motion for reconsideration
November 9, 1994. 12 Hence, this petition. 13
11
on
Issue
Petitioner alleges that Public Respondent NLRC committed grave abuse of
discretion as follows: 14
I
. . . in declaring Mapa as an employee of petitioner before January
16, 1992. The test of an employer-employee relationship was
erroneously applied to the facts of this case.
II
. . . in disregarding significant facts which clearly and convincingly
show that the private respondent was not an employee of the
petitioner before 16 January 1992.
In the main, the issue in this case is whether private respondent was an employee
of petitioner for the period March 11, 1990 to January 15, 1992.
The Court's Ruling
The petition is meritorious.
Main Issue:
Private Respondent Was Not an Employee
During the Period in Controversy
As a rule, the NLRC's findings are accorded great respect, even finality, by this
Court. This rule, however, is not without qualification. This Court held Jimenez
v. NLRC 15:
The review of labor cases elevated to us on certiorari is confined to
questions of jurisdiction or grave abuse of discretion. 16 As a rule,
this Court does not review supposed errors in the decision of the
NLRC which raise factual issues, because factual findings of
agencies exercising quasi-judicial functions are accorded not only
respect but even finality, aside from the consideration that the Court
is essentially not a trier of facts. However, in the case at bar, a review
of the records thereof with an assessment of the facts is necessary
since the factual findings of the NLRC and the labor arbiter are at
odds with each other. 17
In the present case, a review of the factual findings of the public respondent is in
order, for said findings differ from those of the labor arbiter. 18 Worse, the facts
alleged by the private respondent and relied upon by the public respondent do
not prove an employer-employee relationship. 19 In this light, we will review and
overrule the findings of the NLRC.
The following are generally considered in the determination of the existence of an
employer-employee relationship: (1) the manner of selection and engagement, (2)
the payment of wages, (3) the presence or absence of the power of dismissal, and
(4) the presence or absence of the power of control; of these four, the last one is
the most important. 20
Engagement and Payment of Wages
Let us consider the circumstances of the private respondent's engagement in
DZRC before January 16, 1992. Petitioner did not act on his application for
employment as a radio reporter because private respondent admittedly failed to
present a clearance from his former employer. Nevertheless, private respondent
"volunteered" his services, knowing that he would not be paid wages, and that he
had to rely on financial sponsorships of business establishments that would be
advertised in his reports. In other words, private respondent willingly acted as a
volunteer reporter, fully cognizant that he was not an employee and that he would
not receive any compensation directly from the petitioner, but only from his own
advertising sponsors.
The nature of private respondent's engagement is evident from the affidavit of
Allan Almario and Elmer Anonuevo who served under identical circumstances.
The two affirmed the following:
1. We personally know Simeon "Jun" Mapa, a volunteer reporter at
DZRC just like us;
2. As volunteer reporters we know [sic] that we will not receive any
salary or allowance from DZRC because our work was purely
voluntary;
3. As incentive for us, the management of DZRC allowed us to get

our own sponsors whose business establishments we mention every
after [sic] field report was made by us;
xxx xxx xxx
4. During our stint as volunteer reporters we had several sponsors
each who paid us P300.00 per month. 21
The above statement is corroborated by Carlito Baylon, one of private
respondent's advertising sponsors. In his affidavit dated June 10, 1993, he
averred:
2. I personally know Simeon "Jun" Mapa.
Sometime in May, 1990 he went to me and asked if I could be one of
his sponsors because he was accommodated by DZRC as volunteer
reporter. He explained to me that, he will not be receiving any salary
from DZRC[,] hence, he was soliciting my support;
3. Taking pity on him, I agreed to be one of his sponsors. The
condition was, I will have to pay him P300.00/month. In exchange
thereto, he will have to mention the name of my restaurant everytime
he renders a report on the air;
4. My sponsorship lasted for about five (5) months after which I
discontinued it when I rarely heard Jun Mapa in DZRC program.
22
Indeed, private respondent himself admitted that he worked under the said
circumstances. The bio-data sheet signed by Mapa himself, in which he
acknowledged that he was not an employee, states in part:
Work experiences:
DWGW Reporter/Newscaster 1970-1980
DZGB Reporter 1983-1990
DZRC Reporter 1990-1991
for free not recognized due to no appointment. 23 (Emphasis
supplied.)
In his letter dated October 7, 1991, which he sent to the general manager of
Filipinas Broadcasting Network (owner of DZRC), Mapa again acknowledged in
the following words that he was not an employee:
I am [sic] Mr. Simeon Mapa, Jr. respectfully request your good office
to reconsider my previous application submitted last March 1990 as
a reporter of DZRC AM.
May I inform you that since the submission of such application I

worked until September 6, 1991 for free of services [sic]. Hoping that
I'll be given the chance to be recognized as a regular reporter.
With this, I respectfully wish to follow up my application for
recognition. [Emphasis supplied.]
There is no indication that these two admissions were made under duress.
Indeed, private respondent himself did not dispute their voluntariness or veracity.
It is clear that he rendered services knowing that he was not an employee. Aware
that he would not be paid wages, he described himself as a "volunteer reporter"
who was, as evident from his letter, hoping for "the chance to be recognized as a
regular reporter." In fact, petitioner acted favorably on this letter and accepted his
application as an employee effective on January 16, 1992.
Power of Dismissal
Likewise, the evidence on record shows that petitioner did not exercise the power
to dismiss private respondent during the period in question. In September 1991,
Private Respondent Mapa ceased acting as a volunteer reporter, not because he
was fired, but because he stopped sending his reports. Ignacio Casi, Office
Supervisor of DZRC, declared in his affidavit that Mapa told him that "he [was]
quitting already because his sponsors were no longer paying him of [sic] his
monthly contract with them." Mapa did not controvert this statement. In fact, his
aforesaid letter of October 17, 1991 expressed his hope of being "given the
chance to be recognized as a regular reporter." Private respondent's attitude in
said letter is inconsistent with the notion that he had been dismissed.
Mapa Was Not Subject
to Control of Petitioner
The most crucial test the control test demonstrates all too clearly the
absence of an employer-employee relationship. No one at the DZRC had the
power to regulate or control private respondents' activities or inputs. Unlike the
regular reporters, he was not subject to any supervision by petitioner or its
officials. Regular reporters "are required by the petitioner to adhere to a program
schedule which delineates the time when they are to render their reports, as well
as the topic to be reported upon. The substance of their reports are [sic]
oftentimes screened by the station prior to [their] actual airing. In contrast,
volunteer reporters are never given such a program schedule but are merely
advised to inform the station of the reports they would make from time to time." 24
Indeed, DZRC, the petitioner's radio station, exercised no editorial rights over his
reports. He had no fixed day or time for making his reports; in fact, he was not
required to report anything at all. Whether he would air anything depended
entirely on him and his convenience.
The absence of petitioner's control over private respondent is manifest from the
sworn statement of the traffic manager of petitioner, Ignacio Casi, who deposed
in part:
xxx xxx xxx

4. Jun Mapa, just like the other volunteer reporters, was not obliged
to render field reports, at a particular time and in a particular
program. They render report as they wish or see fit;
5. The management (DZRC) does not collect anything from the
sponsors of Jun Mapa. They (sponsors) pay directly to him;
6. Being the Office Supervisor, I Know for a fact that Jun Mapa
seldom renders report on the air. He has no assigned program
either. He was on and off the air, so to speak;
7. Finally, some time in September, 1991, Jun Mapa told me that he is
quitting already because his sponsors were no longer paying him of
his monthly contract with them.
In Encyclopedia Britannica (Philippines) Inc., v. NLRC, 25 we reiterated that there
could be no employer-employee relationship where "the element of control is
absent; where a person who works for another does so more or less at his own
pleasure and is not subject to definite hours or conditions of work[;] and in turn
is compensated according to the result of his efforts and not the, amount thereof,
we should not find that the relationship of employer-employee exists." In the
present case, private respondent worked at his "own pleasure and [was] not
subject to definite hours or conditions of work."
"Evidence" Found by NLRC Not Applicable
In its two-page 26 holding that there was an employer-employee relationship, the
NLRC relied on the following:
(1) the payroll for February 16 to 29, 1992,
(2) the ID card issued to him as employee and regular reporter by the
respondent,
(3) the program schedules of DZRC showing the regular program of
the station indicating his name:
(4) the affidavit of Antonio Llarena, program supervisor of DZRC,
stating that he [was] under his supervision, and
(5) the list of reporting gadgets issued to regular reporter.
Other than the items enumerated above, no other document was considered by
the NLRC. In other words, its conclusion was based solely on these alleged
pieces of evidence. It dearly committed grave abuse of discretion in its factual
findings, because all the above documents relate to the period January 16, 1992
to February 28, 1992 and not to the period March 11, 1990 to January 15, 1992
which are the inclusive dates in controversy.
The payroll 27 from February 16, 1992 to February 27, 1992 does not demonstrate
that private respondent was an employee prior to said period. Lest it be forgotten,
the question in this case pertains to the status of private respondent from March
11, 1990 to January 15, 1992. The said payroll may prove that private respondent
was an employee during said days in February 1992, but not for the period which
is the subject of the present controversy.
Furthermore, neither the identification cards nor the SSS number printed at the
back thereof indicate the date of issuance. Likewise, the SSS number does not
show that he was a member during the period in controversy; much less, that he
became so by reason of his employment with petitioner.
Similarly inapplicable is the program schedule 28 which allegedly showed the
regular program of the station and indicated the name of private respondent as
an employee. The document is a mere photocopy of a typewritten schedule.
There is absolutely no indicium of its authenticity. Moreover, it is undated; hence,
it does not indicate whether such schedule pertained to the period in dispute, that
is, March 11, 1990 to January 15, 1992. Worse, the heading thereof was entitled
"Radio DZRC Programming Proposal. [emphasis supplied]" A proposal is "put
forth merely for consideration and acceptance." 29 It cannot, by itself, prove that
such program was implemented and that private respondent acted as an
employee of petitioner.
Neither does the list of returned gadgets support the conclusion of the NLRC. It
must be stressed that such gadgets were essential to enable the private
respondent to access the specific radio frequency and facilities of the radio
station. Being exclusive properties of the radio station, such, gadgets could not
have been purchased, as they were not commercially available. In any event, the
list of returned gadgets was dated February 27, 1992 again, a date not in
controversy. Such document, by itself, does not prove that private respondent
was an employee from March 20, 1990 to January 15, 1992.
The affidavit of Antonio Llarena 30, an employee of DZRC, stating that the private
respondent was under his supervision, is vague, even misleading; it declared
merely that Llarena was "in charge" of said respondent. Such language could not
be construed to mean that he exercised supervision and control over private
respondent.
Indubitably the NLRC based its findings of employer-employee relationship from
the circumstances attendant when the private respondent was already a regular
employee. Uncontroverted is the statement that the private respondent was a
regular employee from January 16, 1992 to February 28, 1992, for which period he
received all employee benefits. But such period, it must be stressed again, is not
covered by private respondent's complaint.
In sum, the evidence, which Public Respondent NLRC, relies upon, does not
justify the reversal of the labor arbiter's ruling which, in turn, we find amply
supported by the records. Clearly, private respondent was not an employee
during the period in question.
WHEREFORE, the petition is hereby GRANTED and the assailed Decision and
Resolution are hereby SET ASIDE. The Order of the Labor Arbiter dated October
13, 1993 dismissing the case for lack of merit is hereby REINSTATED. No costs.
SO ORDERED.
David, Jr., Bellosillo, Vitug and Quisumbing, JJ., concur.

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FIRST DIVISION

[G.R. No. 110017. January 2, 1997]

RODOLFO FUENTES, RAINERIO DURON, JULIET VISTAL, ELENA

ANDRES INDIABLE, ARSENIO DURON, NARCISA MALASPINA,

Petitioners, numbering seventy-five (75) in all, seek to set aside the

Indeed, private respondents failed to prove their claim of business

6.Allado, Nestor Jr.

18.Penaloga, Jose Jr.

Republic of the Philippines

G.R. No. 110518 August 1, 1994

Republic of the Philippines

adjusted commission under the complementary distribution system. (p. 26,

Republic of the Philippines

GUTIERREZ, JR., J.:

May a university, pending resolution by the National Labor Relations Commission

semester, the University is directed to actually reinstate the faculty

The petitioner's stand is unmeritorious. A return-to-work order is immediately effective

limitations found in law, a collective bargaining agreement, or general principles of fair

January 13, 2003

DOLE PHILIPPINES, INC., petitioner,

The exercise of management prerogative is not unlimited. It is subject to the limitations

Republic of the Philippines

G.R. No. 92009 February 17, 1993

Sec. 2. Service Allowance The COMPANY agrees to continue the

WHEREFORE, in the light of the foregoing premises, judgment is hereby

Republic of the Philippines

GUTIERREZ, JR., J.:

Section 1, Article XII-B of the Constitution specifically provides:

Our decision in Alliance of Government Workers, et al v. Honorable Minister of Labor

Moreover, it is asserted that public employees by joining

Republic of the Philippines

March 24, 2009

ANTONIO M. SERRANO, Petitioner,

Basic monthly salary

48.0 hours per week

US$700.00 per month

Vacation leave with pay

7.00 days per month5

Respondents appealed15 to the National Labor Relations Commission (NLRC) to

3. 10% Attorneys fees

The other findings are affirmed.

Millares v. National Labor Relations Commission,44 OFWs are contractual employees

and Services v. National Labor Relations Commission(Second Division, October

Contract Period Unexpire

26 days 23 months 6 months or 3

Republic of the Philippines

July 29, 2002

DOUGLAS MILLARES and ROGELIO LAGDA, petitioners,

7.5 The contribution to the Overseas Worker's Welfare Administration by the

It is a salutary principle in statutory construction that there exists a valid

Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was

Reason for Termination

b) Permanent and total disability,

c) Permanent and total disability,

engagement for similar reasons, no distribution of any portion of employee's

Republic of the Philippines

G.R. No. L-79436-50 January 17, 1990

From June 1983 to December 1985 . . . thirty three (33) . . . (persons)

. . . original and exclusive jurisdiction over all cases, including money

Republic of the Philippines

termination of this agreement, the Agent shall be entitled to it if the

Commissioner. It is, therefore, usual and expected for an insurance company to

Republic of the Philippines

G.R. No. L-72654-61 January 22, 1990