1

G.R. No. 170054 : January 21, 2013

GOYA, INC.,
Petitioner,
v.
GOYA, INC. EMPLOYEES UNION-FFW,
Respondent.
PERALTA, J.
FACTS:
Petitioner Goya Inc. (Goya) hired contractual employees from PESO
Resources Development Corporation (PESO). This prompted Goya, Inc.
Employees Union-FFW (Union) to request for a grievance conference on
the ground that the contractual workers do not belong to the categories of
employees stipulated in their CBA. The Union also argued that hiring
contractual employees is contrary to the union security clause embodied
in the CBA.
When the matter remained unresolved, the grievance was referred to the
NCMB for voluntary arbitration. The Union argued that Goya is guilty of
ULP for gross violation of the CBA. The voluntary arbitrator dismissed the
Unions charge of ULP but Goya was directed to observe and comply with
the CBA. While the Union moved for partial consideration of the VA
decision, Goya immediately filed a petition for review before the Court of
Appeals to set aside the VAs directive to observe and comply with the CBA
commitment pertainin gto the hiring of casual employees. Goya argued
that hiring contractual employees is a valid management prerogative. The
Court of Appeals dismissed the petition.
ISSUE
: Whether the act of hiring contractual employees is a valid exercise of
management prerogative?
HELD
: The petition must fail.
The CA did not commit serious error when it sustained the ruling that the
hiring of contractual employees from PESO was not in keeping with the
intent and spirit of the CBA. In this case, a complete and final adjudication
of the dispute between the parties necessarily called for the resolution of
the related and incidental issue of whether the Company still violated the
CBA but without being guilty of ULP as, needless to state, ULP is
committed only if there is gross violation of the agreement.

We confirm that the VA ruled on a matter that is covered by the sole issue
submitted for voluntary arbitration. Resultantly, the CA did not commit serious
error when it sustained the ruling that the hiring of contractual employees from
PESO was not in keeping with the intent and spirit of the CBA. Indeed, the
opinion of the VA is germane to, or, in the words of the CA, interrelated and
intertwined with, the sole issue submitted for resolution by the parties.
Said case reaffirms the plenary jurisdiction and authority of the voluntary
arbitrator to interpret the CBA and to determine the scope of his/her own
authority. Subject to judicial review, the leeway of authority as well as adequate
prerogative is aimed at accomplishing the rationale of the law on voluntary
arbitration speedy labor justice. In this case, a complete and final adjudication
of the dispute between the parties necessarily called for the resolution of the
related and incidental issue of whether the Company still violated the CBA but
without being guilty of ULP as, needless to state, ULP is committed only if there
is gross violation of the agreement.
Lastly, the Company kept on harping that both the VA and the CA conceded that
its engagement of contractual workers from PESO was a valid exercise of
management prerogative. It is confused.
To emphasize, declaring that a particular act falls within the concept of
management prerogative is significantly different from acknowledging that such
act is a valid exercise thereof
What the VA and the CA correctly ruled was that the Companys act of
contracting out/outsourcing is within the purview of management prerogative.
Both did not say, however, that such act is a valid exercise thereof
Obviously, this is due to the recognition that the CBA provisions agreed upon by
the Company and the Union delimit the free exercise of management prerogative
pertaining to the hiring of contractual employees. Indeed, the VA opined that
the right of the management to outsource parts of its operations is not totally
eliminated but is merely limited by the CBA, while the CA held that [t]his
management prerogative of contracting out services, however, is not without
limitation. x x x [These] categories of employees particularly with respect to
casual employees [serve] as limitation to [the Companys] prerogative to
outsource parts of its operations especially when hiring contractual employees.
A collective bargaining agreement is the law between the parties:
In this case, Section 4, Article I (on categories of employees) of the CBA between
the Company and the Union must be read in conjunction with its Section 1,
Article III (on union security). Both are interconnected and must be given full
force and effect. Also, these provisions are clear and unambiguous. The terms
are explicit and the language of the CBA is not susceptible to any other
interpretation. Hence, the literal meaning should prevail. As repeatedly held, the
exercise of management prerogative is not unlimited; it is subject to the
limitations found in law, collective bargaining agreement or the general
principles of fair play and justice?5 Evidently, this case has one of the
restrictions- the presence of specific CBA provisions unlike in San Miguel
Corporation Employees Union-PTGWO v. Bersamira,26 De Ocampo v. NLRC, 27
Asian Alcohol Corporation v. NLRC, 28 and Serrano v. NLRC29 cited by the

Company. To reiterate, the CBA is the norm of conduct between the parties and
compliance therewith is mandated by the express policy of the law.

2
JONATHAN I. SANG-AN, v EQUATOR KNIGHTS DETECTIVE AND SECURITY AGENCY,
INC.,
G.R. No. 173189 February 13, 2013
Before the Court is the petition for review on certiorari' filed by petitioner
Jonathan I. Sang-an assailing the decision2 dated September 29, 2005 and the
resolution3 dated May 29, 2006 of the Court of Appeals (CA) in CA-G.R. SP. No.
86677. TheCA set aside the decision4 dated December 15, 2003 of the National
Labor Relations Commission (NLRC) and reinstated the decision5 dated July 30,
200 I of Labor Arbiter Geoffrey P. Villahermosa (LA)
The Facts Jonathan was the Assistant Operation Manager of respondent Equator
Knights Detective and Security Agency, Inc. (Equator). He was tasked, among
others, with the duty of assisting in the operations of the security services; he
was also in charge of safekeeping Equators firearms. On April 21, 2001, Equator
discovered that two firearms were missing from its inventory. The investigation
revealed that it was Jonathan who might have been responsible for the loss.6 On
April 24, 2001, Jonathan was temporarily suspended from work pending further
investigation. On May 8, 2001, while Jonathan was under suspension, a security
guard from Equator was apprehended by policemen for violating the Commission
on Elections gun ban rule. The security guard stated in his affidavit7 that the
unlicensed firearm had been issued to him by Jonathan. On May 24, 2001,
Jonathan filed with the NLRC a complaint for illegal suspension with prayer for
reinstatement. 8 In his position paper, however, he treated his case as one for
illegal dismissal and alleged that he had been denied due process when he was
dismissed.9 Equator, on the other hand, argued that Jonathans dismissal was
not illegal but was instead for a just cause under Article 282 of the Labor
Code.10 On July 30, 2001, the LA rendered a decision11 dismissing the
complaint. It declared that no illegal dismissal took place as Jonathans services
were terminated pursuant to a just cause. The LA found that Jonathan was
dismissed due to the two infractions he committed: The basis for the termination
of the complainant was first, when he was suspended when he issued a firearm
[to] a security guard and then replaced it with another one, then took the
respondent[s] firearm with him and since then both firearms were lost. x x x
His second offense which resulted in his being terminated was when he issued an
unlicensed firearm to a Security Guard stationed in one of the business
establishment[s] in Bais City which is a client of the respondents. x x x x
WHEREFORE, in the light of the foregoing, judgment is hereby rendered
DISMISSING this case for lack of legal and factual basis.12 Jonathan appealed the

LAs decision to the NLRC, contending that no charge had been laid against him;
there was no hearing or investigation of any kind; and he was not given any
chance or opportunity to defend himself. The NLRC sustained the findings of the
LA that there had been just cause for his dismissal. However, it found that
Jonathan had been denied his right to due process when he was dismissed. It
held that Equators letter informing him of his temporary suspension until further
notice did not satisfy the requirements of due process for a valid dismissal. Thus,
the NLRC modified the LAs decision and ordered Equator to pay Jonathan
backwages from April 24, 2001 until the date of the NLRCs decision. Equator
moved for reconsideration but the NLRC denied the motion, prompting the filing
of a petition for certiorari under Rule 65 of the Rules of Court with the CA.
Equator argued that the NLRC committed grave abuse of discretion when it found
that Jonathan had been denied procedural due process. The CA reversed the
decision of the NLRC, finding that Equator substantially complied with the
procedural requirements of due process. It found that the letter given to Jonathan
did not mean that he had been dismissed; rather, he was only suspended the
very reason for the case for illegal suspension Jonathan filed before the LA. The
CA found that Jonathan filed his complaint for illegal suspension on May 2, 2001.
During the pendency of the illegal suspension case before the LA, Jonathan
committed another offense on May 8, 2001 when he issued the unlicensed
firearm to Equators security guard. The CA found that Equators June 7, 2001
position paper brought Jonathans second offense before the LA for resolution;
thus, Jonathan was not denied due process. The CA reinstated the LAs decision
dismissing Jonathans complaint. Jonathan filed a motion for reconsideration
which the CA denied. He thereafter filed the present petition.
The Issues Given the parties arguments, the case poses the following issues for
the Courts resolution:
whether Jonathan was validly dismissed. The Courts Ruling We find the petition
partially meritorious.
Jonathan filed a complaint for illegal dismissal Contrary to the findings of the CA,
Jonathan was not merely suspended but was dismissed from the service. While
Jonathan initially filed an action for illegal suspension, the position papers both
parties filed treated the case as one for illegal dismissal. Jonathan alleged in his
position paper that the [r]espondent illegally SUSPENDED (DISMISSED) the x x x
complainant[,] and claimed that his dismissal lacked the required due
process.13 Similarly, Equators position paper states that after the commission of
the second offense on May 8, 2001, [management] made up a decision to
dismiss [Jonathan].14 Even the LA treated the case before him as a case for
illegal dismissal[.]15 In Equators memorandum to this Court, it admitted that
Jonathan was dismissed.16 We also find that Jonathan did not file his complaint
for illegal suspension on May 2, 2001. The records of the case disclose that the
receiving date stamped on the complaint is May 24, 2001. The date relied upon
by the CA, May 2, 2001, was the date when the complaint was subscribed and
sworn to before a notary public.17 Due to the second offense committed by

Jonathan on May 8, 2001, Equator decided to dismiss him. Therefore, when the
LA tried the case, Jonathan had already been dismissed.
Jurisprudence has expounded on the guarantee of due process, requiring the
employer to furnish the employee with two written notices before termination of
employment can be effected: a first written notice that informs the employee of
the particular acts or omissions for which his or her dismissal is sought, and a
second written notice which informs the employee of the employer's decision to
dismiss him. In considering whether the charge in the first notice is sufficient to
warrant dismissal under the second notice, the employer must afford the
employee ample opportunity to be heard. A review of the records shows that
Jonathan was not furnished with any written notice that informed him of the acts
he committed justifying his dismissal from employment. The notice of suspension
given to Jonathan only pertained to the first offense, i.e., the loss of Equators
firearms under Jonathans watch. With respect to his second offense (i.e., the
issuance of an unlicensed firearm to Equators security guard that became the
basis for his dismissal), Jonathan was never given any notice that allowed him to
air his side and to avail of the guaranteed opportunity to be heard. That Equator
brought the second offense before the LA does not serve as notice because by
then, Jonathan had already been dismissed
In order to validly dismiss an employee, the observance of both substantive and
procedural due process by the employer is a condition sine qua non. Procedural
due process requires that the employee be given a notice of the charge against
him, an ample opportunity to be heard, and a . . . ?? notice ot termmat1on.-~
Since Jonathan had been dismissed in violation of his right to procedural due
process but for a just cause, Equator should pay him nominal damages of 1!
30,000.00, in accordance with Agabon v. N LRC 23 The decision of the NLRC,
although final, was brought to the CA on a petition for L:ertiurari and was
eventually twllified for grave abuse of discretion. When the C A ruled on the
case, this Court had abandoned the ruling in Serrano v. NLRC24 in favor of the
Agabon ruling. WHEREFORE, we hereby PARTIALLY GRANT the petition. The
decision dated September 29, 2005 and the resolution dated May 29, 2006 of the
Court of Appeals in CA-G.R. SP. No. 86677 are AFFIRMED with MODIFICATION. The
employer, Equator Knights Detective and Security Agency, Inc., had sut1icient
basis to terminate the employment of Jonathan I. Sang-an whose dismissal is
thus declared to be substantively valid. However, he was denied his right to
procedural due process for lack of the required notice of dismissal. Consequently,
Equator Knights Detective and Security Agency, Inc. is ordered to pay petitioner
Jonathan I. Sang-an 1!30,000.00 as nominal damages for its non-compliance with
procedural due process.
3
HEIRS OF MANUEL H. RIDAD,
V GREGORIO A RAN ETA lJNIVERSITY FOUNDATION
G.R . No. 188659 February 13, 2013

Three cases4 had already been brought up to this Court in a span of 3 decades
all stemming from the Reorganization, Retrenchment and Restructuring (RRR)
Program implemented by respondent Gregorio Araneta University Foundation
(GAUF) way back in 1984. At that time, Cesar Mijares, then President of GAUF,
wrote to then Minister of Labor and Employment Blas F. Ople requesting the
approval of the RRR Program of GAUF. The latter approved the RRR Program with
a reminder that the implementation thereof shall be instituted without prejudice
to whatever benefits may have accrued in favor of the employees concerned.
The RRR Program took effect on 1 January 1984. The Court, in all its decisions in
the GAUF cases, recognized the adoption of the RRR Program on the ground of
serious business losses and financial reverses suffered by GAUF. As just noted,
the instant controversy traces its roots to the same RRR Program adopted by
GAUF in 1984. Petitioners were former officers and employees of GAUF, as below
indicated, with the corresponding dates of hiring and retirement, basic salaries,
and amount of retirement benefits received, to wit:
It appears that petitioners were retrenched in view of the RRR Program but were
re-hired in January 1984. Consequently, GAUF set the reckoning period for the
computation of petitioners retirement benefits to January 1984. Section 374,
Article CVI of GAUFs Manual of Policies provided for a computation of the
retirement benefits.
Petitioners signed individual quitclaims upon receipt of their retirement pay.
Claiming that the computation of their retirement benefits should be reckoned
from the date of their original hiring, petitioners filed a Complaint before the
Labor Arbiter. Petitioners alleged that they were not paid separation benefits
during the implementation of the RRR Program. They likewise sought the
inclusion of their monthly honorarium in the computation of their 13th month
pay. In its position paper, GAUF averred that pursuant to the RRR Program,
petitioners were all separated from employment in 1984 and paid their
separation benefits in the form of off-setting of their outstanding obligations to
GAUF such as tuition fees and the value of the lots in the Gonzales Estate area
owned by GAUF and sold to petitioners. The said settlement was embodied in a
compromise agreement.6 GAUF added that petitioners were re-employed on 1
January 1984, hence this date should be the reckoning point for the purpose of
computing the separation pay.
On 30 September 2002, the Labor Arbiter ruled, thus: WHEREFORE, judgment is
rendered ordering respondent GREGORIO ARANETA FOUNDATION to pay all
Complainants the balance of their retirement/separation benefit as follows:
Manuel H. Ridad P129,784.88 Apolinario G. Bactol P210,757.93 Emerita C.
Gulinao P273,316.12 The award of complainant Lydia Jusay will be computed
the moment she submits proof of her monthly salary. Ten percent of the total
award as attorneys fees Other claims are dismissed for lack of merit.7 The Labor
Arbiters award of retirement pay pertained to the period when petitioners were
originally hired until 31 December 1983 because he found that the records were
bereft of any proof that the petitioners were paid their retirement benefits before
1 January 1984. The Labor Arbiter merely confirmed the existence of GAUFs

receivables from petitioner consisting of tuition fees of the latters dependents

and the value of the lots sold by GAUF to respondents in the following amounts:
The Labor Arbiter ruled that these receivables should be offset against the
retirement benefits due to each employee. The Labor Arbiter also held that the
honoraria received by petitioners are not considered as part of the basic salary
for the computation of the 13th month pay. With respect to the retirement
benefits of petitioners from 1 January 1984 until the effectivity of their retirement
or separation, the Labor Arbiter approved the amount as computed and
submitted by GAUF. Both parties filed their respective appeals. The NLRC noted
that GAUF failed to comply with the compromise agreement which embodied the
settlement of all monetary claims of GAUF employees, including the sale of
parcels of land owned by GAUF. The NLRC added that the titles of said parcels of
land were rescinded by the trial court in a separate litigation. Nevertheless, the
NLRC affirmed the Decision of the Labor Arbiter. GAUF then appealed to the
Court of Appeals. In the assailed 18 December 2008 Decision, the appellate court
resolved to grant the petition of GAUF: WHEREFORE, the petition is GRANTED.
Setting aside the NLRCs August 31, 2004 decision as well as the Labor Arbiters
decision dated September 30, 2002, the Complaint below is DISMISSED for being
devoid of merit.9 The issue that went up to the Court of Appeals is whether or
not the petitioners were paid separation benefits for services rendered for the
period ending in 1984. Notably, the Court of Appeals pointed out that the Labor
Arbiters ruling on retirement benefits of petitioners from 1 January 1984 until
the effectivity of their retirement or separation in 2000s was unassailed, thus,
that aspect of the decision has already attained finality. For the service period
under question, the appellate court upheld the validity of the compromise
agreement. The appellate court emphasized that the Labor Arbiter recognized
the compromise agreement when he offset the value of lots from the retirement
benefits of petitioners. Petitioners now seek the review of the Decision of the
Court of Appeals, submitting the following grounds for our consideration: -ATHE
COURT OF APPEALS HAS DECIDED NOT IN ACCORD WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT WHEN IT RULED THAT PETITIONERS WERE
DEEMED TO HAVE BEEN SEVERED FROM THEIR EMPLOYMENT UPON THE
IMPLEMENTATION OF RRR PROGRAM IN 1984[.]
-BTHE COURT OF APPEALS HAS SERIOUSLY ERRED IN COMPLETELY
DISREGARDING THE FINDINGS OF THE LABOR ARBITER AND THE NATIONAL
LABOR RELATIONS COMMISSION THAT PETITIONERS WERE NOT PAID THEIR
SEPARATION BENEFITS DURING THE EFFECTIVE DATE OF THE RRR PROGRAM[.]
-CTHE COURT OF APPEALS HAS GROSSLY MISCONSTRUED THE DECISION OF THE
LABOR ARBITER AND MADE AN ERRONEOUS CONCLUSION THAT THE
PETITIONERS CLAIMS FOR THEIR RETIREMENT/BENEFITS IN 1984 WERE MADE
SUBJECT OF A COMPROMISE AGREEMENT OR CONTRACT TO SELL.10 There is no
question about the validity of the RRR Program implemented in 1984. Petitioners
however argue that they could not be considered severed from their employment
in 1984 because they were not paid separation benefits during the
implementation of the RRR program. To the contrary, GAUF insists that
petitioners received in full their retirement benefits. Well-settled is the rule that

once the employee has set out with particularity in his complaint, position paper,
affidavits and other documents the labor standard benefits he is entitled to, and
which he alleged that the employer failed to pay him, it becomes the employers
burden to prove that it has paid these money claims. One who pleads payment
has the burden of proving it, and even where the employees must allege nonpayment, the general rule is that the burden rests on the employer to prove
payment, rather than on the employees to prove non-payment.11 The reason for
the rule is that the pertinent personnel files, payrolls, records, remittances, and
other similar documents which will show that overtime, differentials, service
incentive leave, and other claims of the worker have been paid are not in the
possession of the worker but in the custody and absolute control of the
employer.12 In unison, the Labor Arbiter and the NLRC concluded that petitioners
were not paid their separation benefits. The Court of Appeals overturned the
factual findings of these labor tribunals and found that petitioners were duly paid
their retirement benefits. In view of these conflicting findings, we are constrained
to review the facts on record. We underscore the fact that there are supposed to
be two (2) payments in the form of retirement/separation pay made by GAUF to
petitioners first, in 1984 and second, in 2000-2001. The first payment is the
subject of the instant petition. The retirement pay of petitioners in 1984 should
be reckoned from the date of their hiring and computed in accordance with
Section 374, Article CVI of GAUFs Manual of Policies. Moreover, the basic pay of
petitioners should be based on the amount of their last pay in 31 December
1983. The correct computation should be: Retirement/Separation Pay = Basic Pay
(Percentage depending on the years of service) x Years of Service.
The actual amounts given by GAUF were clearly more than the amounts
mandated by law. As to whether these amounts were given to petitioners, GAUF
insisted that they have in fact fully settled these obligations through offsetting of
receivables in accordance with the compromise agreement. While this
agreement bears the seal of judicial approval, the enforcement of this agreement
is another matter. The NLRC uncovered that matters pertaining to settlement in
kind which involved several parcels of lands were not complied with because the
titles to said lands were subject of then ongoing litigation and was later on
rescinded by the trial court. Therefore, these amounts relating to receivables on
parcel of lands cannot be given credit. However, the receivables pertaining to
tuition fees remain uncontested. Petitioners never questioned these amounts
and in fact, they argued before the Labor Arbiter that the tuition fees of their
dependents have been applied to their money claims, such as wage increases,
but which were never paid.13 Thus, these tuition fee receivables can be offset
to the separation pay due to the employees.
It is therefore evident that GAUF had granted petitioners their separation pay in
amounts more than what they are entitled to receive under the law. Thus, there
was full compliance with the RRR Program for the payment of separation pay
The amounts adjudged by the Labor Arbiter were clearly arbitrary. He did not
provide a detailed computation as to how the monetary awards were arrived at.

GAUF was correct in surmising that the amounts were more or less computed on
the basis of their actual and latest salaries in 2000, less the amount of
receivables, which is a clear error.
4
G.R. No. 157086

February 18, 2013

LEPANTO CONSOLIDATED MINING COMPANY, Petitioner,

vs.
THE LEPANTO CAPATAZ UNION, Respondent.
DECISION
BERSAMIN, J.:
Capatazes are not rank-and-file employees because they perform supervisory functions for the management;
hence, they may form their own union that is separate and distinct from the labor organization of rank-and-file
employees.
The CaseLepanto Consolidated Mining Company (Lepanto) assails the Resolution promulgated on December 18, 2002,1
whereby the Court of Appeals (CA) dismissed its petition for certiorari on the ground of its failure to first file a
motion for reconsideration against the decision rendered by the Secretary of the Department of Labor and
Employment (DOLE); and the resolution promulgated on January 31, 2003,2 whereby the CA denied Lepanto's
motion for reconsideration.
Antecedents
As a domestic corporation authorized to engage in large-scale mining, Lepanto operated several mining claims in
Mankayan, Benguet. On May 27, 1998, respondent Lepanto Capataz Union (Union), a labor organization duly
registered with DOLE, filed a petition for consent election with the Industrial Relations Division of the Cordillera
Regional Office (CAR) of DOLE, thereby proposing to represent 139 capatazes of Lepanto.3
In due course, Lepanto opposed the petition,4 contending that the Union was in reality seeking a certification
election, not a consent election, and would be thereby competing with the Lepanto Employees Union (LEU), the
current collective bargaining agent. Lepanto pointed out that the capatazes were already members of LEU, the
exclusive representative of all rank-and-file employees of its Mine Division.
On May 2, 2000, Med-Arbiter Michaela A. Lontoc of DOLE-CAR issued a ruling to the effect that the capatazes
could form a separate bargaining unit due to their not being rank-and-file employees,5 viz:
xxxx
We agree with petitioner that its members perform a function totally different from the rank-and-file employees.
The word capataz is defined in Websters Third International Dictionary, 1986 as "a boss", "foreman" and "an
overseer". The employer did not dispute during the hearing that the capatazes indeed take charge of the
implementation of the job orders by supervising and instructing the miners, mackers and other rank-andfile workers under them, assess and evaluate their performance, make regular reports and recommends
(sic) new systems and procedure of work, as well as guidelines for the discipline of employees. As
testified to by petitioners president, the capatazes are neither rank-and-file nor supervisory and, more or
less, fall in the middle of their rank. In this respect, we can see that indeed the capatazes differ from the
rank-and-file and can by themselves constitute a separate bargaining unit.
While it is claimed by the employer that historically, the capatazes have been considered among the rank-and-file
and that it is only now that they seek a separate bargaining unit such history of affiliation with the rank-and-file
association of LEU cannot totally prevent the capatazes from disaffiliating and organizing themselves separately.
The constitutional right of every worker to self-organization essentially gives him the freedom to join or not to join
an organization of his own choosing.

The fact that petitioner seeks to represent a separate bargaining unit from the rank-and-file employees
represented by the LEU renders the contract bar rule inapplicable. While the collective bargaining agreement
existing between the LEU and the employer covering the latters rank-andfile employee covers likewise the
capatazes, it was testified to and undisputed by the employer that the capatazes did not anymore participate in
the renegotiation and ratification of the new CBA upon expiration of their old one on 16 November 1998. Their
nonparticipation was apparently due to their formation of the new bargaining unit. Thus, while the instant petition
was filed on 27 May 1998, prior to the freedom period, in the interest of justice and in consonance with the
constitutional right of workers to self-organization, the petition can be deemed to have been filed at the time the
60-day freedom period set in. After all, the petition was still pending and unresolved during this period.
WHEREFORE, the petition is hereby granted and a certification election among the capataz employees of the
Lepanto Consolidated Mining Company is hereby ordered conducted, subject to the usual preelection and
inclusion/exclusion proceedings, with the following choices:
1.Lepanto Capataz Union; and
2.No Union.
The employer is directed to submit to this office within ten (10) days from receipt hereof a copy of the certified list
of its capataz employees and the payroll covering the said bargaining unit for the last three (3) months prior to
the issuance hereof.
SO DECIDED. 6
Lepanto appealed to the DOLE Secretary.7
On July 12, 2000, then DOLE Undersecretary Rosalinda Dimapilis- Baldoz (Baldoz), acting by authority of the
DOLE Secretary, affirmed the ruling of Med-Arbiter Lontoc,8 pertinently stating as follows:
xxxx
The bargaining unit sought to be represented by the appellee are the capataz employees of the appellant. There
is no other labor organization of capatazes within the employer unit except herein appellant. Thus, appellant is an
unorganized establishment in so far as the bargaining unit of capatazes is concerned. In accordance with the last
paragraph of Section 11, Rule XI, Department Order No. 9 which provides that "in a petition filed by a legitimate
labor organization involving an unorganized establishment, the Med-Arbiter shall, pursuant to Article 257 of the
Code, automatically order the conduct of certification election after determining that the petition has complied
with all requirements under Section 1, 2 and 4 of the same rules and that none of the grounds for dismissal
thereof exists", the order for the conduct of a certification election is proper.
Finally, as to the issue of whether the Med-Arbiter exhibited ignorance of the law when she directed the conduct
of a certification election when appellee prays for the conduct of a consent election, let it be stressed that
appellee seeks to be recognized as the sole and exclusive bargaining representative of all capataz employees of
appellant. There are two modes by which this can be achieved, one is by voluntary recognition and two, by
consent or certification election. Voluntary recognition under Rule X, Department Order No. 9 is a mode whereby
the employer voluntarily recognizes the union as the bargaining representative of all the members in the
bargaining unit sought to be represented. Consent and certification election under Rules XI and XII of
Department Order No. 9 is a mode whereby the members of the bargaining unit decide whether they want a
bargaining representative and if so, who they want it to be. The difference between a consent election and a
certification election is that the conduct of a consent election is agreed upon by the parties to the petition while
the conduct of a certification election is ordered by the Med-Arbiter. In this case, the appellant withdrew its
consent and opposed the conduct of the election. Therefore, the petition necessarily becomes one of a petition
for certification election and the Med-Arbiter was correct in granting the same.9
xxxx
In the ensuing certification election held on November 28, 2000, the Union garnered 109 of the 111 total valid
votes cast.10
On the day of the certification election, however, Lepanto presented an opposition/protest.11 Hence, on February
8, 2001, a hearing was held on Lepantos opposition/protest. Although the parties were required in that hearing to

submit their respective position papers, Lepanto later opted not to submit its position paper,12 and contended that
the issues identified during the hearing did not pose any legal issue to be addressed in a position paper.13
On April 26, 2001, Med-Arbiter Florence Marie A. Gacad-Ulep of DOLE-CAR rendered a decision certifying the
Union as the sole and exclusive bargaining agent of all capatazes of Lepanto.14
On May 18, 2001, Lepanto appealed the decision of Med-Arbiter Gacad-Ulep to the DOLE Secretary.
By her Resolution dated September 17, 2002,15 DOLE Secretary Patricia A. Sto. Tomas affirmed the decision
dated April 26, 2001, holding and disposing thus:
Appellant accused Med-Arbiter Ulep of grave abuse of discretion amounting to lack of jurisdiction based on her
failure to resolve appellants motion to modify order to submit position papers and on rendering judgment on the
basis only of appellees position paper.
We deny.
Section 5, Rule XXV of Department Order No. 9, otherwise known as the New Rules Implementing Book V of the
Labor Code, states that "in all proceedings at all levels, incidental motions shall not be given due course, but
shall remain as part of the records for whatever they may be worth when the case is decided on the merits".
Further, the motion to modify order to submit position papers filed by appellant is without merit. Appellant claimed
that the issues over which Med-Arbiter Ulep directed the submission of position papers were: (1) failure to
challenge properly; (2) failure (especially of LEU) to participate actively in the proceedings before the decision
calling for the conduct of certification election; and (3) validity of earlier arguments. According to appellant, the
first issue was for appellee LCU to reply to in its position paper, the second issue was for the LEU and the third
issue for appellant company to explain in their respective position paper. It was the position of appellant company
that unless the parties filed their position paper on each of their respective issues, the other parties cannot
discuss the issues they did not raise in the same position papers and have to await receipt of the others position
paper for their appropriate reply.
Section 9, Rule XI of Department Order No. 9, which is applied with equal force in the disposition of protests on
the conduct of election, states that "the Med-Arbiter shall in the same hearing direct all concerned parties,
including the employer, to simultaneously submit their respective position papers within a non-extendible period
of ten days". The issues as recorded in the minutes of 28 February 2001 hearing before the Med- Arbiter are
clear. The parties, including appellant company were required to submit their respective positions on whether
there was proper challenge of the voters, whether LEU failed to participate in the proceedings, if so, whether it
should be allowed to participate at this belated stage and whether the arguments raised during the pre-election
conferences and in the protests are valid. The parties, including appellant company were apprised of these
issues and they agreed thereto. The minutes of the hearing even contained the statement that "no order will
issue" and that "the parties are informed accordingly". If there is any matter that had to be clarified, appellant
should have clarified the same during the said hearing and refused to file its position paper simultaneously with
LCU and LEU. It appears that appellant did not do so and acquiesced to the filing of its position paper within
fifteen days from the date of said hearing.
Neither is there merit in appellants contention that the Med- Arbiter resolved the protest based solely on appellee
LCUs position paper. Not only did the Med-Arbiter discuss the demerits of appellants motion to modify order to
submit position papers but likewise the demerits of its protest. We do not, however, agree with the Med-Arbiter
that the protest should be dismissed due to appellants failure to challenge the individual voters during the
election. We take note of the minutes of the pre-election conference on 10 November 2000, thus:
"It was also agreed upon (by union and managements legal officer) that all those listed will be allowed to vote
during the certification election subject to challenge by management on ground that none of them belongs to the
bargaining unit". (Underscoring supplied)
It is therefore, not correct to say that there was no proper challenge made by appellant company. The challenge
was already manifested during the pre-election conference, specifying that all listed voters were being challenged
because they do not belong to the bargaining unit of capatazes. Likewise, the formal protest filed by appellant
company on the day of the election showed its protest to the conduct of the election on the grounds that (1) none
of the names submitted and included (with pay bracket 8 and 9) to vote qualifies as capataz under the five-point
characterization made in 02 May 2000 decision calling for the conduct of certification election; (2) the
characterization made in the 02 May 2000 decision pertains to shift bosses who constitutes another union, the
Lepanto Local Staff Union; and (3) the names listed in the voters list are members of another union, the Lepanto

Employees Union. This constitutes proper challenge to the eligibility of all the voters named in the list which
includes all those who cast their votes. The election officer should have not canvassed the ballots and allowed
the Med-Arbiter to first determine their eligibility.
Notwithstanding the premature canvass of the votes, we note that appellant company failed to support its
grounds for challenge with sufficient evidence for us to determine the validity of its claim. No job description of the
challenged voters was submitted by appellant from which we can verify whether the said voters are indeed
disqualified from the alleged five-point characterization made in the 02 May 2000 decision, either before the MedArbiter or on appeal. Neither was the job description of the shift bosses whom appellant company claims pertain
to the alleged five-point characterization submitted for our perusal. The challenge must perforce fail for lack of
evidence.
As to the alleged membership of appellee LCUs member with another union LEU, the issue has been resolved in
the 02 May 200[0] decision of Med-Arbiter Lontoc which we affirmed on 12 July 2000.
WHEREFORE, the appeal is hereby DENIED for lack of merit and the decision of the Med-Arbiter dated 26 April
2001, certifying Lepanto Capataz Union as the sole and exclusive bargaining agent of all capataz workers of
Lepanto Consolidated Mining Company, is AFFIRMED.
SO RESOLVED.16
Ruling of the CA
Still dissatisfied with the result, but without first filing a motion for reconsideration, Lepanto challenged in the CA
the foregoing decision of the DOLE Secretary through a petition for certiorari.
On December 18, 2002, the CA dismissed Lepantos petition for certiorari, stating in its first assailed resolution:
Considering that the petitioner failed to file a prior motion for reconsideration of the Decision of the public
respondent before instituting the present petition as mandated by Section 1 of Rule 65 of the 1997 Rules of Civil
Procedure, as amended, the instant "Petition for Certiorari Under Rule 65 with Prayer for Temporary Restraining
Order and Injunction" is hereby DISMISSED.
Well-settled is the rule that the "filing of a petition for certiorari under Rule 65 without first moving for
reconsideration of the assailed resolution generally warrants the petitions outright dismissal. As we consistently
held in numerous cases, a motion for reconsideration by a concerned party is indispensable for it affords the
NLRC an opportunity to rectify errors or mistakes it might have committed before resort to the courts can be had.
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in the
ordinary course of law against acts of public respondents. Here, the plain and adequate remedy expressly
provided by law was a motion for reconsideration of the impugned resolution, based on palpable or patent errors,
to be made under oath and filed within ten (10) days from receipt of the questioned resolution of the NLRC, a
procedure which is jurisdictional. Further, it should be stressed that without a motion for reconsideration
seasonably filed within the ten-day reglementary period, the questioned order, resolution or decision of NLRC,
becomes final and executory after ten (10) calendar days from receipt thereof." (Association of Trade Unions
(ATU), Rodolfo Monteclaro and Edgar Juesan vs. Hon. Commissioners Oscar N. Abella, Musib N. Buat,
Leon Gonzaga, Jr., Algon Engineering Construction Corp., Alex Gonzales and Editha Yap. 323 SCRA 50).
SO ORDERED.17
Lepanto moved to reconsider the dismissal, but the CA denied its motion for reconsideration through the second
assailed resolution.18
Issues
Hence, this appeal by Lepanto based on the following errors, namely:
I
THE COURT OF APPEALS ERRED IN SUMMARILY DISMISSING THE PETITION FOR CERTIORARI
ON THE GROUND THAT NO PRIOR MOTION FOR RECONSIDERATION WAS FILED. THE

DECISION OF THE SECRETARY BEING FINAL AND EXECUTORY, A MOTION FOR

RECONSIDERATION WAS NOT AN AVAILABLE REMEDY FOR PETITIONER.
II
ON THE MERITS, THE SECRETARY OF LABOR ACTED WITHOUT OR IN EXCESS OF
JURISDICTION, [O]R WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION IN ISSUNG THE DECISION DATED SEPTEMBER 17, 2002, WHEN SHE
DELIBERATELY IGNORED THE FACTS AND RULED IN FAVOR OF THE RESPONDENT UNION,
DESPITE HER OWN FINDING THAT THERE HAD BEEN A PREMATURE CANVASS OF VOTES. 19
Lepanto argues that a motion for reconsideration was not an available remedy due to the decision of the DOLE
Secretary being already classified as final and executory under Section 15, Rule XI, Book V of Omnibus Rules
Implementing the Labor Code, as amended by Department Order No. 9, series of 1997;20 that the Unions petition
for consent election was really a certification election; that the Union failed to give a definite description of the
bargaining unit sought to be represented; and that the capatazes should be considered as rank-and-file
employees.
The issues to be resolved are, firstly, whether a motion for reconsideration was a pre-requisite in the filing of its
petition for certiorari; and, secondly, whether the capatazes could form their own union independently of the rankand-file employees.
Ruling
The petition for review has no merit.
I.
The filing of the motion for reconsideration is a pre-requisite to the filing of a petition for certiorari to
assail the decision of the DOLE Secretary
We hold to be untenable and not well taken Lepantos submissions that: (1) a motion for reconsideration was not
an available remedy from the decision of the DOLE Secretary because of Section 15, Rule XI, Book V of the
Omnibus Rules Implementing the Labor Code, as amended; and (2) the ruling in National Federation of Labor v.
Laguesma21 (recognizing the remedy of certiorari against the decision of the DOLE Secretary to be filed initially in
the CA) actually affirms its position that an immediate recourse to the CA on certiorari is proper even without the
prior filing of a motion for reconsideration.
To start with, the requirement of the timely filing of a motion for reconsideration as a precondition to the filing of a
petition for certiorari accords with the principle of exhausting administrative remedies as a means to afford every
opportunity to the respondent agency to resolve the matter and correct itself if need be.22
And, secondly, the ruling in National Federation of Labor v. Laguesma reiterates St. Martins Funeral Home v.
National Labor Relations Commission,23 where the Court has pronounced that the special civil action of certiorari
is the appropriate remedy from the decision of the National Labor Relations Commission (NLRC) in view of the
lack of any appellate remedy provided by the Labor Code to a party aggrieved by the decision of the NLRC.
Accordingly, any decision, resolution or ruling of the DOLE Secretary from which the Labor Code affords no
remedy to the aggrieved party may be reviewed through a petition for certiorari initiated only in the CA in
deference to the principle of the hierarchy of courts.
Yet, it is also significant to note that National Federation of Labor v. Laguesma also reaffirmed the dictum issued
in St. Martins Funeral Homes v. National Labor Relations Commission to the effect that "the remedy of the
aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent
remedy, and then seasonably avail of the special civil action of certiorari under Rule 65 x x x."24
Indeed, the Court has consistently stressed the importance of the seasonable filing of a motion for
reconsideration prior to filing the certiorari petition. In SMC Quarry 2 Workers Union-February Six Movement
(FSM) Local Chapter No. 1564 v. Titan Megabags Industrial Corporation25 and Manila Pearl Corporation v. Manila
Pearl Independent Workers Union,26 the Court has even warned that a failure to file the motion for
reconsideration would be fatal to the cause of the petitioner.27 Due to its extraordinary nature as a remedy,
certiorari is to be availed of only when there is no appeal, or any plain, speedy or adequate remedy in the
ordinary course of law.28 There is no question that a motion for reconsideration timely filed by Lepanto was an

adequate remedy in the ordinary course of law in view of the possibility of the Secretary of Justice reconsidering
her disposition of the matter, thereby according the relief Lepanto was seeking.
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Under the circumstances, Lepantos failure to timely file a motion for reconsideration prior to filing its petition for
certiorari in the CA rendered the September 17, 2002 resolution of the DOLE Secretary beyond challenge.
II.
Capatazes are not rank-and-file employees; hence, they could form their own union
Anent the second issue, we note that Med-Arbiter Lontoc found in her Decision issued on May 2, 2000 that the
capatazes were performing functions totally different from those performed by the rank-and-file employees, and
that the capatazes were "supervising and instructing the miners, mackers and other rank-and-file workers under
them, assess[ing] and evaluat[ing] their performance, mak[ing] regular reports and recommend[ing] new systems
and procedure of work, as well as guidelines for the discipline of employees."29 Hence, Med-Arbiter Lontoc
concluded, the capatazes "differ[ed] from the rank-and-file and [could] by themselves constitute a separate
bargaining unit."30
Agreeing with Med-Arbiter Lontocs findings, then DOLE Undersecretary Baldoz, acting by authority of the DOLE
Secretary, observed in the resolution dated July 12, 2000, thus:31
The bargaining unit sought to be represented by the appellee are the capataz employees of the appellant. There
is no other labor organization of capatazes within the employer unit except herein appellant. Thus, appellant is an
unorganized establishment in so far as the bargaining unit of capatazes is concerned. In accordance with the last
paragraph of Section 11, Rule XI, Department Order No. 9 which provides that "in a petition filed by a legitimate
labor organization involving an unorganized establishment, the Med-Arbiter shall, pursuant to Article 257 of the
Code, automatically order the conduct of certification election after determining that the petition has complied
with all requirements under Section 1, 2 and 4 of the same rules and that none of the grounds for dismissal
thereof exists", the order for the conduct of a certification election is proper.32
We cannot undo the affirmance by the DOLE Secretary of the correct findings of her subordinates in the DOLE,
an office that was undeniably possessed of the requisite expertise on the matter in issue. In dealing with the
matter, her subordinates in the DOLE fairly and objectively resolved whether the Union could lawfully seek to be
the exclusive representative of the bargaining unit of capatazes in the company. Their factual findings, being
supported by substantial evidence, are hereby accorded great respect and finality. Such findings cannot be made
the subject of our judicial review by petition under Rule 45 of the Rules of Court, because:
x x x [T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court requires that it shall
raise only questions of law. The factual findings by quasi-judicial agencies, such as the Department of Labor and
Employment, when supported by substantial evidence, are entitled to great respect in view of their expertise in
their respective field. Judicial review of labor cases does not go far as to evaluate the sufficiency of evidence on
which the labor officials findings rest. It is not our function to assess and evaluate all over again the evidence,
testimonial and documentary, adduced by the parties to an appeal, particularly where the findings of both the trial
court (here, the DOLE Secretary) and the appellate court on the matter coincide, as in this case at bar. The Rule
limits that function of the Court to review or revision of errors of law and not to a second analysis of the evidence.
Here, petitioners would have us re-calibrate all over again the factual basis and the probative value of the pieces
of evidence submitted by the Company to the DOLE, contrary to the provisions of Rule 45. Thus, absent any
showing of whimsical or capricious exercise of judgment, and unless lack of any basis for the conclusions made
by the appellate court may be amply demonstrated, we may not disturb such factual findings.33
In any event, we affirm that capatazes or foremen are not rank-andfile employees because they are an extension
of the management, and as such they may influence the rank-and-file workers under them to engage in
slowdowns or similar activities detrimental to the policies, interests or business objectives of the employers. 34
WHEREFORE, the Court DENIES the petition for review for lack of merit, and AFFIRMS the resolutions the
Court of Appeals promulgated on December 18, 2002 and January 31, 2003.

5
G.R. No. 175492

February 27, 2013

CARLOS L. OCTAVIO, Petitioner,

vs.
PIDLIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent.
DECISION
DEL CASTILLO, J.:
Every Collective Bargaining Agreement (CBA) shall provide a grievance machinery to which all disputes arising
from its implementation or interpretation will be subjected to compulsory negotiations. This essential feature of a
CBA provides the parties with a simple, inexpensive and expedient system of finding reasonable and acceptable
solutions to disputes and helps in the attainment of a sound and stable industrial peace.
Before us is a Petition for Review on Certiorari1 assailing the August 31, 2006 Decision2 of the Court of Appeals
(CA) in CA-G.R. SP No. 93578, which dismissed petitioner Carlos L. Octavio's (Octavio) Petition for Certiorari3
assailing the September 30, 2005 Resolution4 of the National Labor Relations Commission (NLRC). Said NLRC
Resolution affirmed the August 30, 2004 Decision5 of the Labor Arbiter which dismissed Octavio's Complaint for
payment of salary increases against respondent Philippine Long Distance Company (PLDT). Likewise assailed in
this Petition is the November 15, 2006 Resolution6 which denied Octavios Motion for Reconsideration.7
Factual Antecedents
On May 28, 1999, PLDT and Gabay ng Unyon sa Telekominaksyon ng mga Superbisor (GUTS) entered into a
CBA covering the period January 1, 1999 to December 31, 2001 (CBA of 1999-2001). Article VI, Section I thereof
provides:
Section 1. The COMPANY agrees to grant the following across-theboard salary increase during the three years
covered by this Agreement to all employees covered by the bargaining unit as of the given dates:
Effective January 1, 1999 10% of basic wage or P2,000.00 whichever is higher;
Effective January 1, 2000 11% of basic wage or P2,250.00 whichever is higher;
Effective January 1, 2001 12% of basic wage or P2,500.00 whichever is higher.8
On October 1, 2000, PLDT hired Octavio as Sales System Analyst I on a probationary status. He became a
member of GUTS. When Octavio was regularized on January 1, 2001, he was receiving a monthly basic salary of
P10,000.00. On February 1, 2002, he was promoted to the position of Sales System Analyst 2 and his salary was
increased to P13,730.00.
On May 31, 2002, PLDT and GUTS entered into another CBA covering the period January 1, 2002 to December
31, 2004 (CBA of 2002-2004) which provided for the following salary increases: 8% of basic wage or P2,000.00
whichever is higher for the first year (2002); 10% of basic wage or P2,700.00 whichever is higher for the second
year (2003); and, 10% of basic wage or P2,400.00 whichever is higher for the third year (2004).9
Claiming that he was not given the salary increases of P2,500.00 effective January 1, 2001 and P2,000.00
effective January 1, 2002, Octavio wrote the President of GUTS, Adolfo Fajardo (Fajardo).10 Acting thereon and
on similar grievances from other GUTS members, Fajardo wrote the PLDT Human Resource Head to inform
management of the GUTS members claim for entitlement to the across-the-board salary increases.11
Accordingly, the Grievance Committee convened on October 7, 2002 consisting of representatives from PLDT
and GUTS. The Grievance Committee, however, failed to reach an agreement. In effect, it denied Octavios
demand for salary increases. The Resolution (Committee Resolution), reads as follows:
October 7, 2002
UNION ISSUE :
1. Mr. Carlos L. Octavio, Sales System Analyst I, CCIM-Database, was promoted to
S2 from S1 last February 01, 2002. He claimed that the whole P2,000 (1st yr. GUTSCBA increase) was not given to him.

2. He was hired as a probationary employee on October 01, 2000 and was

regularized on January 01, 2001. He claimed that Management failed to grant him the
GUTS-CBA increase last January 2001.
MANAGEMENT POSITION :
Issue # 1:
A) Promotional Policy: adjustment of basic monthly salary to the minimum salary of
the new position.
B) Mr. Octavios salary at the time of his promotion and before the conclusion of the
GUTS CBA was P10,000.00.
C) Upon the effectivity of his promotion on February 1, 2002, his basic monthly salary
was adjusted to P13,730.00, the minimum salary of the new position.
D) In June 2002, the GUTS-CBA was concluded and Mr. Octavios basic salary was
recomputed to include the P2,000.00 1st year increase retroactive January 2002. The
resulting basic salary was P12,000.00.
E) Applying the above-mentioned policy, Mr. Octavios basic salary was adjusted to
the minimum salary of the new position, which is P13,730.00.
Issue # 2:
All regularized supervisory employees as of January 1 are not entitled to the GUTS CBA increase. However, as
agreed with GUTS in the grievance case of 18 personnel of International & Luzon Core Network Management
Center, probationary employees who were hired outside of PLDT and regularized as supervisors/management
personnel on January 1, 2002 shall be entitled to GUTS CBA. This decision shall be applied prospectively and all
previous similar cases are not covered.
RESOLUTION :
After protracted deliberation of these issues, the committee failed to reach an agreement. Hence, Management
position deemed adopted.
MANAGEMENT

UNION

_______(signed)_______
WILFREDO A. GUADIA

_______(signed)_______
ADOLFO L.FAJARDO

_______(signed)_______
ROSALINDA S. RUIZ

_______(signed)_______
CONFESOR A. ESPIRITU

_______(signed)_______
ALEJANDRO C. FABIAN

_______(signed)_______
CHARLITO A. AREVALO 12

Aggrieved, Octavio filed before the Arbitration Branch of the NLRC a Complaint for payment of said salary
increases.
Ruling of the Labor Arbiter
Octavio claimed entitlement to salary increases per the CBAs of 1999-2001 and 2002-2004. He insisted that
when he was regularized as a supervisory employee on January 1, 2001, he became entitled to receive the
across-the-board increase of P2,500.00 as provided for under the CBA of 1999-2001 which took effect on
January 1, 1999. Then pursuant to the CBA of 2002-2004, he should have received an additional increase of
P2,000.00 apart from the merit increase of P3,730.00 which was given him due to his promotion on February 1,
2002. However, PLDT unilaterally decided to deem as included in the said P3,730.00 the P2,000.00 across-the-

board increase for 2002 as stipulated in the CBA of 2002-2004. This, according to Octavio, amounts to diminution
of benefits. Moreover, Octavio averred that the CBA cannot be the subject of further negotiation as it has the
force of law between the parties. Finally, Octavio claimed that PLDT committed an act of unfair labor practice
because, while it granted the claim for salary increase of 18 supervisory employees who were regularized on
January 1, 2002 and onwards, it discriminated against him by refusing to grant him the same salary increase. He
thus prayed for an additional award of damages and attorneys fees.
PLDT countered that the issues advanced by Octavio had already been resolved by the Union-Management
Grievance Committee when it denied his claims through the Committee Resolution. Moreover, the grant of
across-the board salary increase for those who were regularized starting January 1, 2002 and the exclusion
thereto of those who were regularized on January 1, 2001, do not constitute an act of unfair labor practice as
would result in any discrimination or encourage or discourage membership in a labor organization. In fact, when
the Union-Management Grievance Committee came up with the Committee Resolution, they considered the
same as the most practicable and reasonable solution for both management and union. At any rate, the said
Committee Resolution had already become final and conclusive between the parties for failure of Octavio to
elevate the same to the proper forum. In addition, PLDT claimed that the NLRC has no jurisdiction to hear and
decide Octavios claims.
In a Decision dated August 30, 2004, the Labor Arbiter dismissed the Complaint of Octavio and upheld the
Committee Resolution.
Ruling of the National Labor Relations Commission
Upon Octavios appeal, the NLRC, in its September 30, 2005 Resolution, affirmed the Labor Arbiters Decision. It
upheld the Labor Arbiters finding that Octavios salary had already been adjusted in accordance with the
provisions of the CBA. The NLRC further ruled that it has no jurisdiction to decide the issues presented by
Octavio, as the same involved the interpretation and implementation of the CBA. According to it, Octavio should
have brought his claim before the proper body as provided in the 2002-2004 CBAs provision on grievance
machinery and procedure.
Octavios Motion for Reconsideration was likewise dismissed by the NLRC in its November 21, 2005 Resolution.13
Ruling of the Court of Appeals
Octavio thus filed a Petition for Certiorari14 which the CA found to be without merit. In its August 31, 2006
Decision,15 the CA declared the Committee Resolution to be binding on Octavio, he being a member of GUTS,
and because he failed to question its validity and enforceability.
In his Motion for Reconsideration,16 Octavio disclaimed his alleged failure to question the Committee Resolution
by emphasizing that he filed a Complaint before the NLRC against PLDT. However, the CA denied Octavios
Motion for Reconsideration in its November 15, 2006 Resolution.17
Issues
Hence, Octavio filed this Petition raising the following issues for our consideration:
a. Whether x x x the employer and bargaining representative may amend the provisions of the
collective bargaining agreement without the consent and approval of the employees;
b. If so, whether the said agreement is binding [on] the employees;
c. Whether x x x merit increases may be awarded simultaneously with increases given in the
Collective Bargaining Agreement;
d. Whether x x x damages may be awarded to the employee for violation by the employer of its
commitment under its existing collective bargaining agreement.18
Octavio submits that the CA erred in upholding the Committee Resolution which denied his claim for salary
increases but granted the same request of 18 other similarly situated employees. He likewise asserts that both
PLDT and GUTS had the duty to strictly implement the CBA salary increases; hence, the Committee Resolution,
which effectively resulted in the modification of the CBAs provision on salary increases, is void.

Octavio also insists that PLDT is bound to grant him the salary increase of P2,000.00 for the year 2002 on top of
the merit increase given to him by reason of his promotion. It is his stance that merit increases are distinct and
separate from across-the-board salary increases provided for under the CBA.
Our Ruling
The Petition has no merit.
Under Article 26019 of the Labor Code, grievances arising from the interpretation or implementation of the parties
CBA should be resolved in accordance with the grievance procedure embodied therein. It also provides that all
unsettled grievances shall be automatically referred for voluntary arbitration as prescribed in the CBA.
In its Memorandum,20 PLDT set forth the grievance machinery and procedure provided under Article X of the CBA
of 2002-2004, viz:
Section 1. GRIEVANCE MACHINERY - there shall be a Union-Management Grievance Committee composed of
three (3) Union representatives designated by the UNION Board of Directors and three (3) Management
representatives designated by the company President. The committee shall act upon any grievance properly
processed in accordance with the prescribed procedure. The Union representatives to the Committee shall not
lose pay for attending meetings where Management representatives are in attendance.
Section 2. GRIEVANCE PROCEDURE - The parties agree that all disputes between labor and management may
be settled through friendly negotiations; that the parties have the same interest in the continuity of work until all
points in dispute shall have been discussed and settled; that an open conflict in any form involves losses to the
parties; and that therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of these
principles, the parties agree to observe the following grievance procedures.
Step 1. Any employee (or group of employees) who believes that he has a justifiable grievance shall present the
matter initially to his division head, or if the division is involved in the grievance, to the company official next
higher to the division head (the local manager in the provincial exchanges) not later that fifteen (15) days after
the occurrence of the incident giving rise to the grievance. The initial presentation shall be made to the division
head either by the aggrieved party himself or by the Union Steward or by any Executive Officer of the Union who
is not a member of the grievance panel. The initial presentation may be made orally or in writing.
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Step 2. Any party who is not satisfied with the resolution of the grievance at Step 1 may appeal in writing to the
Union-Management Grievance Committee within seven (7) days from the date of receipt of the department
heads decision.
Step 3. If the grievance is not settled either because of deadlock or the failure of the committee to decide
the matter, the grievance shall be transferred to a Board of Arbitrators for the final decision. The Board
shall be composed of three (3) arbitrators, one to be nominated by the Union, another to be nominated by the
Management, and the third to be selected by the management and union nominees. The decision of the board
shall be final and binding both the company and the Union in accordance with law. Expenses of arbitration shall
be divided equally between the Company and the Union.21 (Emphasis supplied)
Indisputably, the present controversy involves the determination of an employees salary increases as provided in
the CBAs. When Octavios claim for salary increases was referred to the Union-Management Grievance
Committee, the clear intention of the parties was to resolve their differences on the proper interpretation and
implementation of the pertinent provisions of the CBAs. And in accordance with the procedure prescribed therein,
the said committee made up of representatives of both the union and the management convened. Unfortunately,
it failed to reach an agreement. Octavios recourse pursuant to the CBA was to elevate his grievance to the Board
of Arbitrators for final decision. Instead, nine months later, Octavio filed a Complaint before the NLRC.
It is settled that "when parties have validly agreed on a procedure for resolving grievances and to submit a
dispute to voluntary arbitration then that procedure should be strictly observed."22 Moreover, we have held time
and again that "before a party is allowed to seek the intervention of the court, it is a precondition that he should
have availed of all the means of administrative processes afforded him. Hence, if a remedy within the
administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity
to decide on a matter that comes within his jurisdiction, then such remedy should be exhausted first before the
courts judicial power can be sought. The premature invocation of the courts judicial intervention is fatal to ones
cause of action."23 "The underlying principle of the rule on exhaustion of administrative remedies rests on the
presumption that when the administrative body, or grievance machinery, is afforded a chance to pass upon the
matter, it will decide the same correctly." 24

By failing to question the Committee Resolution through the proper procedure prescribed in the CBA, that is, by
raising the same before a Board of Arbitrators, Octavio is deemed to have waived his right to question the same.
Clearly, he departed from the grievance procedure mandated in the CBA and denied the Board of Arbitrators the
opportunity to pass upon a matter over which it has jurisdiction. Hence, and as correctly held by the CA,
Octavios failure to assail the validity and enforceability of the Committee Resolution makes the same binding
upon him. On this score alone, Octavios recourse to the labor tribunals below, as well as to the CA, and, finally,
to this Court, must therefore fail.
At any rate, Octavio cannot claim that the Committee Resolution is not valid, binding and conclusive as to him for
being a modification of the CBA in violation of Article 25325 of the Labor Code. It bears to stress that the said
resolution is a product of the grievance procedure outlined in the CBA itself. It was arrived at after the
management and the union through their respective representatives conducted negotiations in accordance with
the CBA. On the other hand, Octavio never assailed the competence of the grievance committee to take
cognizance of his case. Neither did he question the authority or credibility of the union representatives; hence,
the latter are deemed to have properly bargained on his behalf since "unions are the agent of its members for the
purpose of securing just and fair wages and good working conditions."26 In fine, it cannot be gainsaid that the
Committee Resolution is a modification of the CBA. Rather, it only provides for the proper implementation of the
CBA provision respecting salary increases.
Finally, Octavios argument that the denial of his claim for salary increases constitutes a violation of Article 10027
of the Labor Code is devoid of merit. Even assuming that there has been a diminution of benefits on his part,
Article 100 does not prohibit a union from offering and agreeing to reduce wages and benefits of the employees
as the right to free collective bargaining includes the right to suspend it.28 PLDT averred that one of the reasons
why Octavios salary was recomputed as to include in his salary of P13,730.00 the P2,000.00 increase for 2002
is to avoid salary distortion. At this point, it is well to emphasize that bargaining should not be equated to an
"adversarial litigation where rights and obligations are delineated and remedies applied."29 Instead, it covers a
process of finding a reasonable and acceptable solution to stabilize labor-management relations to promote
stable industrial peace.30 Clearly, the Committee Resolution was arrived at after considering the intention of both
PLDT and GUTS to foster industrial peace.
All told, we find no error on the part of the Labor Arbiter, the NLRC and the CA in unanimously upholding the
validity and enforceability of the Grievance Committee Resolution dated October 7, 2002.
WHEREFORE, the petition is DENIED. The August 31, 2006 Decision and November 15, 2006 Resolution of the
Court of Appeals in CA-G.R. SP No. 93578 are AFFIRMED.

6
G.R. No. 171664

March 6, 2013

BANKARD, INC., Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO BUENCONSEJO,BANKARD
EMPLOYEES UNION-AWATU, Respondents.
DECISION
MENDOZA, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to review, reverse and set aside
the October 20, 2005 Decision1 and the February 21, 2006 Resolution2 of the Court of Appeals {CA), in CA-G.R.
SP No. 68303, which affirmed the May 31, 2001 Resolution3 and the September 24, 2001 Order4 of the National
Labor Relations Commission (NLRC) in Certified Cases No. 000-185-00 and 000-191-00.
The Facts
On June 26, 2000, respondent Bankard Employees Union-AWATU (Union) filed before the National Conciliation
and Mediation Board (NCMB) its first Notice of Strike (NOS), docketed as NS-06-225-00,5 alleging commission of
unfair labor practices by petitioner Bankard, Inc. (Bankard), to wit: 1) job contractualization; 2)
outsourcing/contracting-out jobs; 3) manpower rationalizing program; and 4) discrimination.

On July 3, 2000, the initial conference was held where the Union clarified the issues cited in the NOS. On July 5,
2000, the Union held its strike vote balloting where the members voted in favor of a strike. On July 10, 2000,
Bankard asked the Office of the Secretary of Labor to assume jurisdiction over the labor dispute or to certify the
same to the NLRC for compulsory arbitration. On July 12, 2000, Secretary Bienvenido Laguesma (Labor
Secretary) of the Department of Labor and Employment (DOLE) issued the order certifying the labor dispute to
the NLRC.6
On July 25, 2000, the Union declared a CBA bargaining deadlock. The following day, the Union filed its second
NOS, docketed as NS-07-265-00,7 alleging bargaining in bad faith on the part of Bankard. Bankard then again
asked the Office of the Secretary of Labor to assume jurisdiction, which was granted. Thus, the Order, dated
August 9, 2000, certifying the labor dispute to the NLRC, was issued.8
The Union, despite the two certification orders issued by the Labor Secretary enjoining them from conducting a
strike or lockout and from committing any act that would exacerbate the situation, went on strike on August 11,
2000.9
During the conciliatory conferences, the parties failed to amicably settle their dispute. Consequently, they were
asked to submit their respective position papers. Both agreed to the following issues:
1. Whether job contractualization or outsourcing or contracting-out is an unfair labor practice on the part
of the management.
2. Whether there was bad faith on the part of the management when it bargained with the Union.10
As regards the first issue, it was Bankards position that job contractualization or outsourcing or contracting-out of
jobs was a legitimate exercise of management prerogative and did not constitute unfair labor practice. It had to
implement new policies and programs, one of which was the Manpower Rationalization Program (MRP) in
December 1999, to further enhance its efficiency and be more competitive in the credit card industry. The MRP
was an invitation to the employees to tender their voluntary resignation, with entitlement to separation pay
equivalent to at least two (2) months salary for every year of service. Those eligible under the companys
retirement plan would still receive additional pay. Thereafter, majority of the Phone Center and the Service
Fulfilment Division availed of the MRP. Thus, Bankard contracted an independent agency to handle its call center
needs.11
As to the second issue, Bankard denied that there was bad faith on its part in bargaining with the Union. It came
up with counter-offers to the Unions proposals, but the latters demands were far beyond what management
could give. Nonetheless, Bankard continued to negotiate in good faith until the Memorandum of Agreement
(MOA) re-negotiating the provisions of the 1997-2002, Collective Bargaining Agreement (CBA) was entered into
between Bankard and the Union. The CBA was overwhelmingly ratified by the Union members. For said reason,
Bankard contended that the issue of bad faith in bargaining had become moot and academic.12
On the other hand, the Union alleged that contractualization started in Bankard in 1995 in the Records
Communications Management Division, particularly in the mailing unit, which was composed of two (2)
employees and fourteen (14) messengers. They were hired as contractual workers to perform the functions of the
regular employees who had earlier resigned and availed of the MRP.13 According to the Union, there were other
departments in Bankard utilizing messengers to perform work load considered for regular employees, like the
Marketing Department, Voice Authorizational Department, Computer Services Department, and Records
Retention Department. The Union contended that the number of regular employees had been reduced
substantially through the management scheme of freeze-hiring policy on positions vacated by regular employees
on the basis of cost-cutting measures and the introduction of a more drastic formula of streamlining its regular
employees through the MRP.14
With regard to the second issue, the Union averred that Bankards proposals were way below their demands,
showing that the management had no intention of reaching an agreement. It was a scheme calculated to force
the Union to declare a bargaining deadlock.15
On May 31, 2001, the NLRC issued its Resolution16 declaring that the management committed acts considered
as unfair labor practice (ULP) under Article 248(c) of the Labor Code. It ruled that:
The act of management of reducing its number of employees thru application of the Manpower Rationalization
Program and subsequently contracting the same to other contractual employees defeats the purpose or reason
for streamlining the employees. The ultimate effect is to reduce the number of union members and increasing the
number of contractual employees who could never be members of the union for lack of qualification.

Consequently, the union was effectively restrained in their movements as a union on their rights to selforganization. Management had successfully limited and prevented the growth of the Union and the acts are clear
violation of the provisions of the Labor Code and could be considered as Unfair Labor Practice in the light of the
provisions of Article 248 paragraph (c) of the Labor Code.17
The NLRC, however, agreed with Bankard that the issue of bargaining in bad faith was rendered moot and
academic by virtue of the finalization and signing of the CBA between the management and the Union.18
Unsatisfied, both parties filed their respective motions for partial reconsideration. Bankard assailed the NLRC's
finding of acts of ULP on its part. The Union, on the other hand, assailed the NLRC ruling on the issue of bad
faith bargaining.
1wphi1

On September 24, 2001, the NLRC issued the Order19 denying both parties' motions for lack of merit.
On December 28, 2001, Bankard filed a petition for certiorari under Rule 65 with the CA arguing that the NLRC
gravely abused its discretion amounting to lack or excess of jurisdiction when:
1. It issued the Resolution, dated May 31, 2001, particularly in finding that Bankard committed acts of
unfair labor practice; and,
2. It issued the Order dated September 24, 2001 denying Bankard's partial motion for reconsideration.20
The Union filed two (2) comments, dated January 22, 2002, through its NCR Director, Cornelio Santiago, and
another, dated February 6, 2002, through its President, Paulo Buenconsejo, both praying for the dismissal of the
petition and insisting that Bankard's resort to contractualization or outsourcing of contracts constituted ULP. It
further alleged that Bankard committed ULP when it conducted CBA negotiations in bad faith with the Union.
Ruling of the Court of Appeals
The CA dismissed the petition, finding that the NLRC ruling was supported by substantial evidence.
The CA agreed with Bankard that job contracting, outsourcing and/or contracting out of jobs did not per se
constitute ULP, especially when made in good faith and for valid purposes. Despite Bankard's claim of good faith
in resorting to job contractualization for purposes of cost-efficient operations and its non-interference with the
employees' right to self-organization, the CA agreed with the NLRC that Bankard's acts impaired the employees
right to self-organization and should be struck down as illegal and invalid pursuant to Article 248(c)21 of the Labor
Code. The CA thus, ruled in this wise:
We cannot agree more with public respondent. Incontrovertible is the fact that petitioner's acts, particularly its
promotion of the program enticing employees to tender their voluntary resignation in exchange for financial
packages, resulted to a union dramatically reduced in numbers. Coupled with the management's policy of
"freeze-hiring" of regular employees and contracting out jobs to contractual workers, petitioner was able to limit
and prevent the growth of the Union, an act that clearly constituted unfair labor practice.22
In its assailed decision, the CA affirmed the May 31, 2001 Resolution and the September 24, 2001 Order of the
NLRC.
Aggrieved, Bankard filed a motion for reconsideration. The CA subsequently denied it for being a mere repetition
of the grounds previously raised. Hence, the present petition bringing up this lone issue:
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER BANKARD, INC. COMMITTED ACTS OF
UNFAIR LABOR PRACTICE WHEN IT DISMISSED THE PETITION FOR CERTIORARI AND DENIED THE
MOTION FOR RECONSIDERATION FILED BY PETITIONER.23
Ruling of the Court
The Court finds merit in the petition.
Well-settled is the rule that "factual findings of labor officials, who are deemed to have acquired expertise in
matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when
supported by substantial evidence."24 Furthermore, the factual findings of the NLRC, when affirmed by the CA,

are generally conclusive on this Court.25 When the petitioner, however, persuasively alleges that there is
insufficient or insubstantial evidence on record to support the factual findings of the tribunal or court a quo, then
the Court, exceptionally, may review factual issues raised in a petition under Rule 45 in the exercise of its
discretionary appellate jurisdiction.26
This case involves determination of whether or not Bankard committed acts considered as ULP. The underlying
concept of ULP is found in Article 247 of the Labor Code, to wit:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor practices
violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate
interests of both labor and management, including their right to bargain collectively and otherwise deal with each
other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of
healthy and stable labor-management relations. x x x
The Court has ruled that the prohibited acts considered as ULP relate to the workers right to self-organization
and to the observance of a CBA. It refers to "acts that violate the workers right to organize." 27 Without that
element, the acts, even if unfair, are not ULP.28 Thus, an employer may only be held liable for unfair labor practice
if it can be shown that his acts affect in whatever manner the right of his employees to self-organize. 29
In this case, the Union claims that Bankard, in implementing its MRP which eventually reduced the number of
employees, clearly violated Article 248(c) of the Labor Code which states that:
Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following
unfair labor practice:
xxxx
(c) To contract out services or functions being performed by union members when such will interfere with, restrain
or coerce employees in the exercise of their rights to self-organization;
xxxx
Because of said reduction, Bankard subsequently contracted out the jobs held by former employees to other
contractual employees. The Union specifically alleges that there were other departments in Bankard, Inc. which
utilized messengers to perform work load considered for regular employees like the Marketing Department, Voice
Authorizational Department, Computer Services Department, and Records Retention Department.30 As a result,
the number of union members was reduced, and the number of contractual employees, who were never eligible
for union membership for lack of qualification, increased.
The general principle is that the one who makes an allegation has the burden of proving it. While there are
exceptions to this general rule, in ULP cases, the alleging party has the burden of proving the ULP;31 and in order
to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the
claim.32 Such principle finds justification in the fact that ULP is punishable with both civil and/or criminal
sanctions.33
1avvphi1

Aside from the bare allegations of the Union, nothing in the records strongly proves that Bankard intended its
program, the MRP, as a tool to drastically and deliberately reduce union membership. Contrary to the findings
and conclusions of both the NLRC and the CA, there was no proof that the program was meant to encourage the
employees to disassociate themselves from the Union or to restrain them from joining any union or organization.
There was no showing that it was intentionally implemented to stunt the growth of the Union or that Bankard
discriminated, or in any way singled out the union members who had availed of the retirement package under the
MRP. True, the program might have affected the number of union membership because of the employees
voluntary resignation and availment of the package, but it does not necessarily follow that Bankard indeed
purposely sought such result. It must be recalled that the MRP was implemented as a valid cost-cutting measure,
well within the ambit of the so-called management prerogatives. Bankard contracted an independent agency to
meet business exigencies. In the absence of any showing that Bankard was motivated by ill will, bad faith or
malice, or that it was aimed at interfering with its employees right to self-organize, it cannot be said to have
committed an act of unfair labor practice.34
"Substantial evidence is more than a mere scintilla of evidence. It means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other minds equally reasonable might
conceivably opine otherwise."35 Unfortunately, the Union, which had the burden of adducing substantial evidence
to support its allegations of ULP, failed to discharge such burden.36

The employers right to conduct the affairs of its business, according to its own discretion and judgment, is wellrecognized.37 Management has a wide latitude to conduct its own affairs in accordance with the necessities of its
business.38 As the Court once said:
The Court has always respected a company's exercise of its prerogative to devise means to improve its
operations. Thus, we have held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, supervision and transfer of employees,
working methods, time, place and manner of work.
This is so because the law on unfair labor practices is not intended to deprive employers of their fundamental
right to prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and
profitable operation of their business.39
Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof
that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of
judgment by an employer.40Furthermore, bear in mind that ULP is punishable with both civil and/or criminal
sanctions.41 As such, the party so alleging must necessarily prove it by substantial evidence. The Union, as earlier
noted, failed to do this. Bankard merely validly exercised its management prerogative. Not shown to have acted
maliciously or arbitrarily, no act of ULP can be imputed against it.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 68303, dated
October 20, 2005, and its Resolution, dated February 21, 2006, are REVERSED and SET ASIDE. Petitioner
Bankard, Inc. is hereby declared as not having committed any act constituting Unfair Labor Practice under Article
248 of the Labor Code.
SO ORDERED.

7
G.R. No. 180636

March 13, 2013

LORENZO T. TANGGA-AN, * Petitioner,

vs.
PIDLIPPINE TRANSMARINE CARRIERS, INC., UNIVERSE TANKSHIP DELAWARE LLC, and CARLOS C.
SALINAS, Respondents.
DECISION
DEL CASTILLO, J.:
This Court's labor pronouncements must be read and applied with utmost care and caution, taking to mind that in
the very heart of the judicial system, labor cases occupy a special place. More than the State guarantees of
protection of labor and security of tenure, labor disputes involve the fundamental survival of the employees and
their families, who depend -upon the former for all the basic necessities in life.
This Petition for Review on Certiorari1 seeks a modification of the November 30, 2006 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 00806. Also assailed is the November 15, 2007 Resolution3 denying petitioner's
Motion for Reconsideration.
Factual Antecedents
The facts, as found by the CA, are as follows:
This is a case for illegal dismissal with a claim for the payment of salaries corresponding to the unexpired term of
the contract, damages and attorneys fees filed by private respondent Lorenzo T. Tangga-an against the
petitioners Philippine Transmarine Carriers, Inc., Universe Tankship Delaware LLC, and Carlos C. Salinas4 or
herein respondents.
In his position paper, Tangga-an alleged that on January 31, 2002, he entered into an overseas employment
contract with Philippine Transmarine Carriers, Inc. (PTC) for and in behalf of its foreign employer, Universe
Tankship Delaware, LLC. Under the employment contract, he was to be employed for a period of six months as

chief engineer of the vessel the S.S. "Kure". He was to be paid a basic salary of US$5,000.00; vacation leave pay
equivalent to 15 days a months [sic] or US$2,500.00 per month and tonnage bonus in the amount of US$700.00
a month.
On February 11, 2002, Tangga-an was deployed. While performing his assigned task, he noticed that while they
were loading liquid cargo at Cedros, Mexico, the vessel suddenly listed too much at the bow. At that particular
time both the master and the chief mate went on shore leave together, which under maritime standard was
prohibited. To avoid any conflict, he chose to ignore the unbecoming conduct of the senior officers of the vessel.
On or about March 13, 2002, the vessel berthed at a port in Japan to discharge its cargo. Thereafter, it sailed to
the U.S.A. While the vessel was still at sea, the master required Tangga-an and the rest of the Filipino Engineer
Officers to report to his office where they were informed that they would be repatriated on account of the delay in
the cargo discharging in Japan, which was principally a duty belonging to the deck officers. He imputed the delay
to the non-readiness of the turbo generator and the inoperation of the boom, since the turbo generator had been
prepared and synchronized for 3.5 hours or even before the vessel arrived in Japan. Moreover, upon checking
the boom, they found the same [sic] operational. Upon verification, they found out that when the vessel berthed in
Japan, the cargo hold was not immediately opened and the deck officers concerned did not prepare the stock.
Moreover, while cargo discharging was ongoing, both the master and the chief mate again went on shore leave
together at 4:00 in the afternoon and returned to the vessel only after midnight. To save face, they harped on the
Engine Department for their mistake. Tangga-an and the other Engineering Officers were ordered to disembark
from the vessel on April 2, 2002 and thereafter repatriated. Thence, the complaint.
Philippine Transmarine Carriers, Inc., Universe Tankship Delaware LLC, and Carlos C. Salinas on the other hand,
contended that sometime on [sic] March 2002, during a test of the cargo discharging conveyor system, Tanggaan and his assistant engineers failed to start the generator that supplied power to the conveyor. They spent 3
hours trying to start the generator but failed. It was only the third assistant engineer who previously served in the
same vessel who was able to turn on the generator. When the master tried to call the engine room to find out the
problem, Tangga-an did not answer and merely hang [sic] up. The master proceeded to the engine room to find
out the problem by [sic] Tangga-an and his assistant engineers were running around trying to appear busy.
At another time, during a cargo discharging operation requiring the use of a generator system and the conveyor
boom, Tangga-an was nowhere to be found. Apparently, he went on shore leave resulting in a delay of 2 hours
because the machine could not be operated well. Both incidents were recorded in the official logbook. Due to the
delay, protests were filed by the charter [sic].
The master required Tangga-an to submit a written explanation to which he did but blamed the captain and the
chief officer. He failed to explain why he did not personally supervise the operation of the generator system and
the conveyor boom during the cargo discharging operations. His explanation not having been found satisfactory,
respondents decided to terminate Tangga-ans services. Thus, a notice of dismissal was issued against Tanggaan. He arrived in the Philippines on April 4, 2002.5
Tangga-an filed a Complaint6 for illegal dismissal with prayer for payment of salaries for the unexpired portion of
his contract, leave pay, exemplary and moral damages, attorneys fees and interest.
On January 27, 2004, Labor Arbiter Jose G. Gutierrez rendered a Decision7 finding petitioner to have been
illegally dismissed. The Labor Arbiter noted that in petitioners letter to respondent Universe Tankship Delaware,
LLC dated April 1, 20028 he categorically denied any negligence on his part relative to the delay in the discharge
of the cargo while the vessel was berthed in Japan. In view thereof, the Labor Arbiter opined that an investigation
should have been conducted in order to ferret out the truth instead of dismissing petitioner outright.
Consequently, petitioners dismissal was illegal for lack of just cause and for failure to comply with the twin
requirements of notice and hearing.9
As regards petitioners claim for back salaries, the Labor Arbiter found petitioner entitled not to four months which
is equivalent to the unexpired portion of his contract, but only to three months, inclusive of vacation leave pay
and tonnage bonus (or US$8,200 x 3 months = US$24,600) pursuant to Section 10 of Republic Act (RA) No.
8042 or The Migrant Workers and Overseas Filipinos Act of 2005.
Regarding petitioners claim for damages, the same was denied for failure to prove bad faith on the part of the
respondents. However, attorneys fees equivalent to 10% of the total back salaries was awarded because
petitioner was constrained to litigate.
The dispositive portion of the Labor Arbiters Decision, reads:

WHEREFORE, the foregoing premises considered, judgment is hereby rendered finding Tangga-an illegally
dismissed from his employment and directing the respondent Phil. Transmarine Carriers, Inc. to pay Tangga-an
the amount of US$24,600.00 PLUS US$2,460.00 attorneys fees or a total aggregate amount of US Dollars:
TWENTY SEVEN THOUSAND SIXTY (US$27,060.00) or its peso equivalent at the exchange rate prevailing at
the time of payment.
SO ORDERED.10
Ruling of the National Labor Relations Commission
Respondents appealed to the National Labor Relations Commission (NLRC). They claimed that the Labor Arbiter
committed grave abuse of discretion in finding that petitioner was illegally dismissed; in awarding unearned
vacation leave pay and tonnage bonus when the law and jurisprudence limit recovery to the employees basic
salary; and in awarding attorneys fees despite the absence of proof of bad faith on their part.
On August 25, 2004, the NLRC issued its Decision,11 the dispositive portion of which reads:
WHEREFORE, the Decision dated January 27, 2004 of the Labor Arbiter is AFFIRMED.
Respondents-appellants Memorandum of Appeal, dated 23 March 2004 is DISMISSED for lack of merit.
SO ORDERED.12
The NLRC affirmed the finding of illegal dismissal. It held that no notice of hearing was served upon petitioner,
and no hearing whatsoever was conducted on the charges against him. It ruled that respondents could not
dispense with the twin requirements of notice and hearing, which are essential elements of procedural due
process. For this reason, no valid cause for termination has been shown. The NLRC likewise found respondents
guilty of bad faith in illegally dismissing petitioners services.
On the issue covering the award of unearned vacation leave pay and tonnage bonus, the NLRC struck down
respondents arguments and held that in illegal dismissal cases, the employee is entitled to all the salaries,
allowances and other benefits or their monetary equivalents from the time his compensation is withheld from him
until he is actually reinstated, in effect citing Article 27913 of the Labor Code. It held that vacation leave pay and
tonnage bonus are provided in petitioners employment contract, which thus entitles the latter to the same in the
event of illegal dismissal.
Finally, on the issue of attorneys fees, the NLRC held that since respondents were found to be in bad faith for the
illegal dismissal and petitioner was constrained to litigate with counsel, the award of attorneys fees is proper.
Respondents moved for reconsideration which was denied by the NLRC in its March 18, 2005 Resolution.14
Ruling of the Court of Appeals
Respondents went up to the CA by Petition for Certiorari,15 seeking to annul the Decision of the NLRC, raising
essentially the same issues taken up in the NLRC.
On November 30, 2006, the CA rendered the assailed Decision, the dispositive portion of which reads, as
follows:
WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The Decision of public
respondent is MODIFIED in the following manner:
a. Tangga-an is entitled to three (3) months salary representing the unexpired portion of his contract in
the total amount of US$15,000.00 or its peso equivalent at the exchange rate prevailing at the time of
payment;
b. Tangga-ans placement fee should be reimbursed with 12% interest per annum;
c. The award of attorneys fees is deleted.

SO ORDERED.16
The CA adhered to the finding of illegal dismissal. But on the subject of monetary awards, the CA considered only
petitioners monthly US$5,000.00 basic salary and disregarded his monthly US$2,500.00 vacation leave pay and
US$700.00 tonnage bonus. It likewise held that petitioners "unexpired portion of contract" for which he is entitled
to back salaries should only be three months pursuant to Section 1017 of RA 8042. In addition, petitioner should
be paid back his placement fee with interest at the rate of twelve per cent (12%) per annum.
As to attorneys fees, the CA did not agree with the NLRCs finding that bad faith on the part of respondents was
present to justify the award of attorneys fees. It held that there is nothing from the facts and proceedings to
suggest that respondents acted with dishonesty, moral obliquity or conscious doing of wrong in terminating
petitioners services.
Petitioner filed a Motion for (Partial) Reconsideration,18 which was denied in the assailed November 15, 2007
Resolution. Thus, he filed the instant Petition.
Issues
In this Petition, Tangga-an seeks a modification of the CA Decision and the reinstatement of the monetary awards
as decreed in the Labor Arbiters January 27, 2004 Decision, or in the alternative, the grant of back salaries
equivalent to four months which corresponds to the unexpired portion of the contract, inclusive of vacation leave
pay and tonnage bonus, plus 10% thereof as attorneys fees.19
Petitioner submits the following issues for resolution:
I. Whether x x x the CAs issuance of the writ of certiorari reversing the NLRC decision is in accordance
with law;
II. Whether x x x the indemnity provided in Section 10, R. A. 8042 x x x be limited only to the seafarers
basic monthly salary or x x x include, based on civil law concept of damages as well as Labor Code
concept of backwages, allowances/benefits or their monetary equivalent as a further relief to restore the
seafarers income that was lost by reason of his unlawful dismissal;
III. Whether x x x the indemnity awarded by the CA in petitioners favor consisting only of 3 months
basic salaries conform with the proper interpretation of Section 10 R. A. 8042 and with the ruling in
Skippers Pacific, Inc. v. Mira, et al., G.R. No. 144314, November 21, 2002 and related cases or is
petitioner entitled to at least 4 months salaries being the unexpired portion of his contract; and
IV. Whether x x x the CAs disallowance of the award of attorneys fees, based on the alleged absence
of bad faith on the part of respondent, is in accordance with law or is the attorneys fees awarded by the
NLRC to petitioner, who was forced to litigate to enforce his rights, justified x x x.20
Petitioners Arguments
Petitioner essentially contends that respondents resort to an original Petition for Certiorari in the CA is erroneous
because the issues they raised did not involve questions of jurisdiction but of fact and law. He adds that the CA
Decision went against the factual findings of the labor tribunals which ought to be binding, given their expertise in
matters falling within their jurisdiction.
Petitioner likewise contends that the CA erred in excluding his vacation leave pay and tonnage bonus in the
computation of his back salaries as they form part of his salaries and benefits under his employment contract
with the respondents, a covenant which is deemed to be the law governing their relations. He adds that under
Article 279 of the Labor Code, he is entitled to full backwages inclusive of allowances and other benefits or their
monetary equivalent from the time his compensation was withheld up to the time he is actually reinstated.
Petitioner accuses the CA of misapplying the doctrine laid down in Skippers Pacific, Inc. v. Skippers Maritime
Services, Ltd.21 He points out that the CA wrongly interpreted and applied what the Court said in the case, and
that the pronouncement therein should have benefited him rather than the respondents.
Petitioner would have the Court reinstate the award of attorneys fees, on the argument that the presence of bad
faith is not necessary to justify such award. He maintains that the grant of attorneys fees in labor cases

constitutes an exception to the general requirement that bad faith or malice on the part of the adverse party must
first be proved.
Finally, petitioner prays that this Court reinstate the Labor Arbiters monetary awards in his January 27, 2004
Decision or, in the alternative, to grant him full back salaries equivalent to the unexpired portion of his contract, or
four months, plus 10% thereof as attorneys fees.
Respondents Arguments
In seeking affirmance of the assailed CA issuances, respondents basically submit that the CA committed no
reversible error in excluding petitioners claims for vacation leave pay, tonnage bonus, and attorneys fees. They
support and agree with the CAs reliance upon Skippers Pacific, Inc. v. Skippers Maritime Services, Ltd.,22 and
emphasize that in the absence of bad faith on their part, petitioner may not recover attorneys fees.
Our Ruling
The Court grants the Petition.
There remains no issue regarding illegal dismissal. In spite of the consistent finding below that petitioner was
illegally dismissed, respondents did not take issue, which thus renders all pronouncements on the matter final.
In resolving petitioners monetary claims, the CA utterly misinterpreted the Courts ruling in Skippers Pacific, Inc.
v. Skippers Maritime Services, Ltd.,23 using it to support a view which the latter case precisely ventured to strike
down. In that case, the employee was hired as the vessels Master on a six-months employment contract, but
was able to work for only two months, as he was later on illegally dismissed. The Labor Arbiter, NLRC, and the
CA all took the view that the complaining employee was entitled to his salary for the unexpired portion of his
contract, but limited to only three months pursuant to Section 1024 of RA 8042. The Court did not agree and hence
modified the judgment in said case. It held that, following the wording of Section 10 and its ruling in Marsaman
Manning Agency, Inc. v. National Labor Relations Commission,25 when the illegally dismissed employees
employment contract has a term of less than one year, he/she shall be entitled to recovery of salaries
representing the unexpired portion of his/her employment contract. Indeed, there was nothing even vaguely
confusing in the Courts citation therein of Marsaman:
In Marsaman Manning Agency, Inc. vs. NLRC, involving Section 10 of Republic Act No. 8042, we held:
We cannot subscribe to the view that private respondent is entitled to three (3) months salary only. 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 wording "for
every year of the unexpired term" which follows the wording "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 lawmaking body is presumed to know the
meaning of the words employed in the statute and to have used them advisedly. Ut res magis valeat quam
pereat.
1wphi1

It is not disputed that private respondents employment contract in the instant case was for six (6) months.
Hence, we see no reason to disregard the ruling in Marsaman that private respondent should be paid his salaries
for the unexpired portion of his employment contract.26 (Emphases supplied)
At this juncture, the courts, especially the CA, should be reminded to read and apply this Courts labor
pronouncements with utmost care and caution, taking to mind that in the very heart of the judicial system, labor
cases occupy a special place. More than the State guarantees of protection of labor and security of tenure, labor
disputes involve the fundamental survival of the employees and their families, who depend upon the former for all
the basic necessities in life.
Thus, petitioner must be awarded his salaries corresponding to the unexpired portion of his six-months
employment contract, or equivalent to four months. This includes all his corresponding monthly vacation leave
pay and tonnage bonuses which are expressly provided and guaranteed in his employment contract as part of
his monthly salary and benefit package. These benefits were guaranteed to be paid on a monthly basis, and were
not made contingent. In fact, their monetary equivalent was fixed under the contract: US$2,500.00 for vacation

leave pay and US$700.00 for tonnage bonus each month. Thus, petitioner is entitled to back salaries of
US$32,800 (or US$5,000 + US$2,500 + US$700 = US$8,200 x 4 months). "Article 279 of the Labor Code
mandates that an employees full backwages shall be inclusive of allowances and other benefits or their
monetary equivalent."27 As we have time and again held, "it is the obligation of the employer to pay an illegally
dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits and bonuses
and general increases, to which he would have been normally entitled had he not been dismissed and had not
stopped working."28 This well-defined principle has likewise been lost on the CA in the consideration of the case.
The CA likewise erred in deleting the award of attorneys fees on the ground that bad faith may not readily be
attributed to the respondents given the circumstances. The Courts discussion on the award of attorneys fees in
Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union v. Manila Water Company,
Inc.,29 speaking through Justice Brion, is instructive, viz:
Article 111 of the Labor Code, as amended, governs the grant of attorneys fees in labor cases:
Art. 111. Attorneys fees. (a) In cases of unlawful withholding of wages, the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the
recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered.
Section 8, Rule VIII, Book III of its Implementing Rules also provides, viz.:
Section 8. Attorneys fees. Attorneys fees in any judicial or administrative proceedings for the recovery of
wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the
winning party.
We explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission that there are two
commonly accepted concepts of attorneys fees the ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal services the former
renders; compensation is paid for the cost and/or results of legal services per agreement or as may be assessed.
In its extraordinary concept, attorneys fees are deemed indemnity for damages ordered by the court to be paid
by the losing party to the winning party. The instances when these may be awarded are enumerated in Article
2208 of the Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable not to the
lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as
additional or part of compensation.
We also held in PCL Shipping that Article 111 of the Labor Code, as amended, contemplates the extraordinary
concept of attorneys fees and that Article 111 is an exception to the declared policy of strict construction in the
award of attorneys fees. Although an express finding of facts and law is still necessary to prove the merit of the
award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the
wages. x x x
We similarly so ruled in RTG Construction, Inc. v. Facto and in Ortiz v. San Miguel Corporation. In RTG
Construction, we specifically stated:
'Settled is the rule that in actions for recovery of wages, or where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interests, a monetary award by way of attorney's fees is justifiable under
Article Ill of the Labor Code; Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article 208
of the Civil Code. The award of attorney's fees is proper, and there need not be any showing that the employer
acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages
were not paid accordingly.'
In PCL Shipping, we found the award of attorney's fees due and appropriate since the respondent therein
incurred legal expenses after he was forced to file an action for recovery of his lawful wages and other benefits to
protect his rights. From this perspective and the above precedents, we conclude that the CA erred in ruling that a
finding of the employer's malice or bad faith in withholding wages must precede an award of attorney's fees
under Article Ill of the Labor Code. To reiterate, a plain showing that the lawful wages were not paid without
justification is sufficient.30
In this case, it is already settled that petitioner's employment was illegally terminated. As a result, his wages as
well as allowances were withheld without valid and legal basis. Otherwise stated, he was not paid his lawful
wages without any valid justification. Consequently, he was impelled to litigate to protect his interests. Thus,

pursuant to the above ruling, he is entitled to receive attorneys fees. An award of attorney's fees in petitioners
favor is in order in the amount of US$3, 280 (or US$32, 800 x 10%).
WHEREFORE, the Petition is GRANTED. Petitioner Lorenzo T. Tangga-an is hereby declared ENTITLED to back
salaries for the unexpired portion of his contract, inclusive of vacation leave pay and tonnage bonus which is
equivalent to US$32,800 plus US$3,280 as attorney's fees or a total of US$36,080 or its peso equivalent at the
exchange rate prevailing at the time of payment.
SO ORDERED.

8
G.R. No. 197353

April 1, 2013

ALEXANDER B. BANARES, Petitioner,

vs.
TABACO WOMEN'S TRANSPORT SERVICE1 COOPERATIVE (T A WTRASCO), represented by DIR. RENOL
BARCEBAL, ET AL., Respondents.
DECISION
VELASCO, JR., J.:
In this Petition for Review on Certiorari under Rule 45, Alexander B. Baares assails and seeks the reversal of
the Decision2 dated October 14, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 112542 and its Resolution3
of June 15, 2011 denying petitioner's motion for reconsideration. The CA Decision set aside the July 7, 2009
Decision4 and November 18, 2009 Resolution5 of the National Labor Relations Commission (NLRC) as well as
the April 14, 2008 Order6 of the Labor Arbiter.
The facts are undisputed.
Petitioner was for some time the general manager of Tabaco Women's Transport Service Cooperative (T A
WTRASCO) until its management, on March 6, 2006, terminated his services. On March 7, 2006, before the
Labor Arbiter (LA) in RAB V of the NLRC in Legaspi City, petitioner filed a complaint for illegal dismissal and
payment of monetary claims which was docketed as NLRC RAB V Case No. 03-00092-06.
On August 22, 2006, the LA rendered a Decision7 finding for petitioner, as complainant, with the fallo reading:
WHEREFORE, premises considered, judgment is hereby rendered declaring complainant to have been illegally
dismissed from his employment. Consequently, respondent Tabaco Womens Transport Service Cooperative
(TAWTRASCO) is hereby ordered to immediately reinstate complainant to his former position, without loss of
seniority right and to pay complainant the total amount of ONE HUNDRED NINETEEN THOUSAND SIX
HUNDRED PESOS (P119,600.00), representing the latters backwages and damages, as computed above.
All other claims and/or charges are hereby dismissed for lack of factual and legal basis.
SO ORDERED.
Since TAWTRASCO opted not to appeal, the LA Decision soon became final and executory. In fact,
TAWTRASCO in no time paid petitioner the amount of PhP 119, 600 by way of damages and backwages
corresponding to the period March 6, 2006 to August 22, 2006. But petitioner was not immediately reinstated.
Owing to the strained employer-employee relationship perceived to exist between them, TAWTRASCO offered to
pay petitioner separation pay of PhP 172, 296, but petitioner rejected the offer. Eventually, the two entered into a
Compromise Agreement, in which petitioner waived a portion of his monetary claim, specifically his backwages
for the period from August 23, 2006 to February 5, 2007, and agreed that the amount due shall be payable in
three (3) installments. In turn, TAWTRASCO undertook to reinstate the petitioner effective February 6, 2007.
Accordingly, the LA issued, on February 5, 2007, an Order8 based on the compromise agreement thus executed,
and declared the instant case closed and terminated.
On February 24, 2007, petitioner received a copy of Memorandum Order No. 04,9 Series of 2007, with a copy of
a resolution passed by the Board of Directors (BOD) of TAWTRASCO, requiring him to report at the companys

Virac, Catanduanes terminal. The memorandum order contained an enumeration of petitioners duties and
responsibilities.
A day after, petitioner went to see Oliva Barcebal (Oliva), the BOD Chairman, to decry that the adverted return-towork memorandum and board resolution contravene the NLRC-approved compromise agreement which called
for his reinstatement as general manager without loss of seniority rights. Petitioner would later reiterate his
concerns in a letter10 dated March 12, 2007.
On March 20, 2007, TAWTRASCO served petitioner a copy of Memorandum No. 10,11 Series of 2007 which set
forth his location assignment, as follows: temporarily assigned at the Virac, Catanduanes terminal/office for two
months, after which he is to divide his time between the Virac Terminal and the Araneta Center Bus Terminal
(ACBT), three days (Monday to Wednesday) in Virac and two days (Friday and Saturday) in Cubao, utilizing
Thursday as his travel day in between offices. As ordered, petitioner reported to the Virac terminal which
purportedly needed his attention due to its flagging operations and management problems.
Barely a week into his new assignment, petitioner, thru a memorandum report, proposed the
construction/rehabilitation of the passenger lounge in the Virac terminal, among other improvements. The
proposal came with a request for a monthly lodging accommodation allowance of PhP 1,700 for the duration of
his stay in Virac.
While the management eventually approved the desired construction projects, it denied petitioners plea for cash
lodging allowance. Instead of a straight cash allowance, the company urged petitioner to use the Virac office for
lodging purposes.
Subsequent events saw petitioner requesting and receiving an allocation of PhP 3,000 for his travel,
accommodation, representation and communication allowance subject to liquidation. No replenishment, however,
came after.
On April 12, 2007, Oliva, while conducting, in the company of another director, an ocular inspection of the Virac
terminal, discovered that petitioner had not reported for work since March 31, 2007. Thus, the issuance of a
company memorandum12 asking petitioner to explain his absence.
In response, petitioner addressed a letter-reply13 to management stating the underlying reason for not reporting
and continue reporting for work in his new place of assignment and expressing in detail his grievances against
management. Some excerpts of petitioners letter:
x x x The very reason why I dont go back to Virac Catanduanes x x x is because I realized that in truth my
reinstatement effected by your office which is supposed to be in pursuance to the NLRC decision is nothing but
an artificial, fake, fictitious and a sham kind of return to work order.
I regret to say it so on the following grounds:
1. Our garage/terminal in Virac Catanduanes wherein you would want me to stay is in total disarray and dirty as it
looks until the time that I stayed there and despite having reported that matter to you and despite having
requested by me that the necessary funding for the reconstruction or rebuilding of the necessary facilities we at
least used to have before should be immediately allocated and released and yet you were too slow in granting it;
2. Despite x x x my request for the allocation of the indispensable travel, representation and accommodation
allowances I need to have while staying in Virac because the garage/terminal facilities remains in a messy
condition but still you fail until now to provide it to me x x x;
3. The manner and nature of work you would want me to do while in Virac is utterly a deviation from my original
work and in effect a demotion in rank;
4. The place of work x x x was completely devoid of any office materials and equipments needed in the nature of
my work. To put in details there was no office table and chairs, no filing cabinets for safekeeping of important
documents, no ball-pens, no bond papers etc. x x x There is nothing at all in said place of work for me to say that
there was really an office of the General Manager. As a matter of fact, you know that all my reports being
submitted x x x are made possible by using my own personal computer, my computer printer, my computer inks
and even my own bond papers.

5. Just recently, I found out that there are employees in our company who are under my jurisdiction and x x x that
are being instructed not to follow my lawful orders. This matter needs no further explanation because I have
already reported it and yet you did nothing to correct it.
6. The free place of accommodation I used to have before when staying in Cubao, Quezon City remains nonexistent x x x despite the fact that x x x I need to be [back] also in Cubao to facilitate the restoration of our
transport operation x x x.
In essence, there is an ongoing mockery of the mandate of the NLRC decision that I should be reinstated to my
former position as General Manager without loss of seniority rights. What is truly happening now is the obvious
evidence that you dont want me to work the way I was doing it before and the way as mandated by the by-laws
of our transport cooperative.
In sum, you cannot charge me for abandonment of work because you are in fact causing me an inhumane and
degrading treatment as General Manager and giving an embarrassing kind of work.
Therefore, in view of the foregoing circumstances, may I hereby demand that my salary should be paid
immediately as soon as you receive this letter of mine that explains in full details the logical reasons why I really
cannot go back to my new place of assigned but temporary work x x x.
xxxx
Finally, let me just frankly tell you that I can only go back to Virac Catanduanes when everything I need in my
work as General Manager is sufficiently given to me and when all employees of TAWTRASCO are duly advised
that in effect Im truly back to work and all the employees need to follow my orders. Meantime, as General
Manager I will utilize my time to do some other works x x x.
On April 27, 2007, petitioner filed a complaint against TAWTRASCO for nonpayment of salaries and withholding
of privileges before the LA. Via a Manifestation with application for the issuance of an alias writ of execution,
petitioner prayed that his complaint be deemed withdrawn "for the purpose of not confusing the essence of
consolidation and in order to give way to the smooth proceedings and fast adjudication on the merits."14
By Order of April 14, 2008, the LA effectively issued the desired alias writ of execution, as follows:
Consequently, there being no compliance of the reinstatement aspect of the Decision, petitioner is therefore,
entitled to his reinstatement salaries less the amount he already received, reckoned from date of receipt by
respondent [TAWTRASCO] of the decision on October 11, 2006 to date of this order, subject to further
computation until reinstatement is actually carried out religiously plus monthly allowance of P1,000.00 without
prejudice on the part of the respondent to avail of the remedy available to it under the rules. Hence, the same is
computed as follows:
October 11, 2006 to April 18, 2008 = 18 mos.
Basic + Allowance P19,000.00 x 18 mos. = P342,000.00
LESS:
BPI Check: 2/11/07 P18,000.00
BPI Check: 2/12/07 18,000.00
BPI Check: 3/6/07 18,000.00
BPI Check: 4/6/07 18,000.00
CY 2/13/08 7,500.00
2/27/08 7,500.00 87,000.00
P255,000.00

xxxx
Responsive to all the foregoing, respondent [TAWTRASCO] is hereby ordered to reinstate complainant to his
former position as General Manager, without loss of seniority right and pay petitioner the amount of P255,000.00,
representing the latters reinstatement salaries (after deducting the amount he already received) and monthly
allowance, as computed above.
Respondent is also ordered to show proof of compliance of complainants reinstatement immediately upon
receipt hereof.
SO ORDERED.15
TAWTRASCO appealed to the NLRC which dismissed the appeal per its Decision dated July 7, 2009, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered DISMISSING respondents appeal for lack of merit. The assailed
Order of the Labor Arbiter dated 14 April 2008, is hereby AFFIRMED.
SO ORDERED.
In so ruling, the NLRC held that TAWTRASCO only partially complied with the final and executory August 22,
2006 Decision of the LA, i.e., by paying the PhP 119,000 backwages of petitioner as ordered. The reinstatement
aspect of the LA Decision, however, has yet to be wholly complied with. To the NLRC, the LA acted within his
sound discretion in ordering the authentic and full reinstatement of petitioner and the payment of PhP 255,000 as
reinstatement salaries as computed from October 11, 2006 to April 18, 2008.
The NLRC denied, through its November 18, 2009 Resolution, TAWTRASCOs motion for reconsideration.
TAWTRASCO went to the CA on certiorari. On October 14, 2010, the appellate court rendered the assailed
Decision, the fallo of which reads:
WHEREFORE, the instant petition for certiorari is GRANTED. The assailed Decision and Resolution of the public
respondent National Labor Relations Commission, in NLRC LAC No. 08-002800-08 [NLRC RAB V Case No. 03000092-06], as well as the Order dated 14 April 2008 of the Labor Arbiter are SET ASIDE.
SO ORDERED.
Contrary to the LAs holding, as affirmed by the NLRC, the CA found TAWTRASCO to have fully reinstated
petitioner to his former post. And without expressly declaring so, the unmistakable thrust of the CA disposition
was that petitioner veritably abandoned his work when he stopped reporting to his Virac terminal assignment.
His motion for reconsideration having been denied per the CAs assailed Resolution of June 15, 2011, petitioner
went to this Court. His petition is predicated on the following assignment of errors:
(A)
THE [CA] SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN FAILING TO OBSERVE AND
UPHOLD THE FORMAL AND PROCEDURAL REQUIREMENTS IN THE FILING OF THE PETITION FOR
CERTIORARI UNDER RULE 65.
(B)
THE [CA] SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN IGNORING THE STRICT RULE
ON NON-FORUM SHOPPING AND WHEN DESPITE KNOWLEDGE OF A PRIOR FINAL JUDGMENT
INVOLVING THE SAME AND IDENTICAL ISSUES AND THE SAME AND IDENTICAL PARTIES, THE COURT A
QUO FAILED TO DISMISS OUTRIGHT THE PETITION FOR CERTIORARI IN VIOLATION OF THE DOCTRINE
ON "RES JUDICATA" AND THE PRINCIPLE OF "LITIS PENDENCIA".
(C)

THE [CA] SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN THE COURT A QUO HAS
DECIDED IT IN A WAY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISIONS OF THIS SUPREME
COURT WITH RESPECT TO THE FORMAL APPEARANCES OF COUNSEL.
(D)
THE [CA] SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN THE COURT A QUO HAS
SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS IN
DELVING INTO THE FACTS OF THE CASE.16
The petition is meritorious.
Essentially, the issues raised boil down to: was there a proper and genuine reinstatement of petitioner to his
former position of General Manager of TAWTRASCO without loss of seniority rights and privileges? Subsumed in
this core issue is the question of whether petitioners refusal to report in the Virac terminal in early April 2007
constitutes abandonment, not constructive dismissal.
The parallel finding and conclusion of the LA and the NLRC contradict that of the CA which, as earlier indicated,
categorically resolved the first factual poser in the negative. In light of the divergence between the findings of
facts of the LA and the NLRC, on one hand, and the appellate court, on the other, a review of the records and the
clashing arguments of the parties is in order.17
Reinstatement, as a labor law concept, means the admission of an employee back to work prevailing prior to his
dismissal;18 restoration to a state or position from which one had been removed or separated, which presupposes
that there shall be no demotion in rank and/or diminution of salary, benefits and other privileges; if the position
previously occupied no longer exists, the restoration shall be to a substantially equivalent position in terms of
salary, benefits and other privileges.19 Managements prerogative to transfer an employee from one office or
station to another within the business establishment, however, generally remains unaffected by a reinstatement
order, as long as there is no resulting demotion or diminution of salary and other benefits and/or the action is not
motivated by consideration less than fair or effected as a punishment or to get back at the reinstated employee.20
Guided by the foregoing reasonable albeit exaction norm, the "reinstatement" of petitioner as general manager of
TAWTRASCO, effected by TAWTRASCO pursuant to the February 5, 2007 compromise agreement, was not a
real, bona fide reinstatement in the context of the Labor Code and pertinent decisional law. Consider:
First, TAWTRASCO at the outset, i.e., after the compromise agreement signing, directed petitioner to report to
the Virac terminal with duties and responsibilities not befitting a general manager of a transport company. In fine,
the assignment partook of the nature of a demotion. The aforementioned Memorandum Order No. 04, Series of
2007, in its pertinently part, states and directs:
DUTIES AND RESPONSIBILITIES
1) To supervise all TAWTRASCO bus employees, personnels and including authorized callers for the success of
the terminal operation;
2) To have a record of the in and out of freight loaded on all TAWTRASCO buses, regulate freight charge/s and
minimize problems and complaints regarding the freight/cargoes loaded at these buses;
3) As General Manager to sign on the manifesto or trip records of the buses going out daily at Virac Terminal
attesting his approval except on day-off schedule;
4) To unite, settle differences or disputes between TAWTRASCO key personnels at TAWTRASCO Virac terminal
affecting its management operation particularly x x x;
5) To explore all possibilities and restore the said terminal to its former successful operation;
6) To find solution to all other problems relative to its management operation and to report complaints affecting
transport operations; and
7) To give a written report to the Board of Directors on your accomplishments.

ADDENDUM: On Day-off Schedule

1) Authorized Day-Off Once a week
2) To give Notice three (3) days before regarding vacation leave except on emergency cases.
APPROVED: TAWTRASCO BOARD OF DIRECTORS21
A cursory reading of items (2) and (3) above would readily reveal that petitioner was tasked to discharge menial
duties, such as maintaining a record of the "in" and "out" of freight loaded on all TAWTRASCO buses and signing
the trip records of the buses going out daily. To be sure, these tasks cannot be classified as pertaining to the
office of a general manager, but that of a checker. As may reasonably be expected, petitioner promptly reacted to
this assignment. A day after he received the memorandum in question, or on February 25, 2007, he repaired to
the office of Oliva to personally voice out his misgivings about the set up and why he believed that the above
memorandum contravened their compromise agreement and the February 5, 2007 Order of the LA specifically
providing for his reinstatement as general manager without loss of seniority rights and privileges.
Nevertheless, 15 days after the uneventful personal meeting with Oliva, petitioner addressed a letter to top
management inquiring about his reinstatement and assignment. The BOD Secretary of TAWTRASCO received
this letter on March 13, 2007.
TAWTRASCOs action on petitioners aforementioned letter came, as narrated earlier, in the form of
Memorandum No. 10, Series of 2007, which temporarily assigned him to the Virac terminal for two months. And
after the two-month period, he shall divide his time between the Virac and the ACBT terminals, with Thursday as
his travel day in between offices. Notably, this time, TAWTRASCO explained that its Virac terminal needs
petitioners attention due to its flagging operations and management problems. Thus, petitioner acquiesced and
reported to the Virac terminal of TAWTRASCO.
In a rather unusual turn of events, however, the assailed CA decision made no mention of the foregoing critical
facts despite their being pleaded by petitioner and duly supported by the records, although that court made a
perfunctory reference to the adverted Memorandum Order No. 04.
And second, while Memorandum No. 10 was couched as if TAWTRASCO had in mind the reinstatement of
petitioner to his former position, there cannot be any quibble that TAWTRASCO withheld petitioners customary
boarding house privilege. What is more, TAWTRASCO did not provide him with a formal office space.
As evidence on record abundantly shows, TAWTRASCO was made aware of its shortcomings as employer, but it
opted not to lift a finger to address petitioners reasonable requests for office space and free lodging while
assigned at the Virac terminal. Thus, the stand-off between employer and employee led to petitioner writing on
April 24, 2007 to TAWTRASCO, an explanatory letter explaining his failure to report back to work at the Virac
terminal. We reproduce anew highlights of that letter:
I regret to say it so on the following grounds:
1. Our garage/terminal in Virac Catanduanes wherein you would want me to stay is in total disarray and dirty as it
looks until the time that I stayed there and despite having reported that matter to you and despite having
requested by me that the necessary funding for the reconstruction or rebuilding of the necessary facilities we at
least used to have before should be immediately allocated and released and yet you were too slow in granting it;
2. Despite x x x my request for the allocation of the indispensable travel, representation and accommodation
allowances I need to have while staying in Virac because the garage/terminal facilities remains in a messy
condition but still you fail until now to provide it to me because probably you want me to sleep at night along the
sidewalks x x x;
3. The manner and nature of work you would want me to do while in Virac is utterly a deviation from my original
work and in effect a demotion in rank;
4. The place of work x x x was completely devoid of any office materials and equipments needed in the nature of
my work. To put in details there was no office table and chairs, no filing cabinets for safekeeping of important
documents, no ball-pens, no bond papers etc. x x x There is nothing at all in said place of work for me to say that
there was really an office of the General Manager.

As a matter of fact, you know that all my reports being submitted x x x are made possible by using my own
personal computer, my computer printer, my computer inks and even my own bond papers. x x x x
6. The free place of accommodation I used to have before when staying in Cubao, Quezon City remains nonexistent x x x despite the fact that x x x I need to be [back] also in Cubao to facilitate the restoration of our
transport operation x x x.
Apropos to what petitioner viewed as a demeaning treatment dealt him by TAWTRASCO, the LA had stated the
ensuing observations in his April 14, 2008 Order:
In this case, however, this Branch finds that respondent TAWTRASCO indeed, complied with the reinstatement of
the complainant petitioner Baares, however, the office where he was assigned in Virac, Catanduanes is not in
good and tenantable condition. As shown in complainants Annex "F" which is the photograph of the place, it is
unsafe, dilapidated and in a messy situation. Confronted with this problem, complainant requested fund from
respondent for the rehabilitation of the office. However, this was not favorably acted upon. To further rub salt in an
open wound, respondent appointed a new General Manager effective November 12, 2007 (Annexes "H" and "I",
complainants Memorandum). This conduct on the part of respondent gave complainant the correct impression
that the respondent did not intend to be bound by the compromise agreement, and its non-materialization
negated the very purpose for which it was executed.22
Annex "F," the photograph23 adverted to by the LA, tells it all. Indeed, petitioner could not reasonably be expected
to work in such a messy condition without any office space, office furniture, equipment and supplies. And much
less can petitioner lodge there. TAWTRASCO pointedly told petitioner through the March 26, 2007 letter of Oliva
denying his request for a PhP 1,700 lodging allowance that petitioner could instead use the Virac office for his
accommodation. It must be borne in mindand TAWTRASCO has not controverted the factthat, prior to his
illegal dismissal, petitioner was enjoying PhP 5,000-a-month free lodging privilege while stationed in the Cubao
terminal. Accordingly, this lodging privilege was supposed to continue under the reinstatement package. But as it
turned out, TAWTRASCO discontinued the accommodation when it posted petitioner in Virac.
Under Article 223 of the Labor Code, an employee entitled to reinstatement "shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation x x x."24 Verily, an illegally
dismissed employee is entitled to reinstatement without loss of seniority rights and to other established
employment privileges, and to his full backwages.25 The boarding house privilege being an established perk
accorded to petitioner ought to have been granted him if a real and authentic reinstatement to his former position
as general manager is to be posited.
It cannot be stressed enough that TAWTRASCO withheld petitioners salaries for and after his purported refusal
to report for work at the Virac terminal. The reality, however, is that TAWTRASCO veritably directed petitioner to
work under terms and conditions prejudicial to him, the most hurtful cut being that he was required to work
without a decent office partly performing a checkers job. And this embarrassing work arrangement is what
doubtless triggered the refusal to work, which under the premises appears very much justified.
Generally, employees have a demandable right over existing benefits voluntarily granted to them by their
employers. And if the grant or benefit is founded on an express policy or has, for a considerable period of time,
been given regularly and deliberately, then the grant ripens into a vested right26 which the employer cannot
unilaterally diminish, discontinue or eliminate27 without offending the declared constitutional policy on full
protection to labor.28 So it must be here with respect, at the minimum, to the lodging accommodation which
TAWTRASCO, as found by the NLRC, appears to have regularly extended for free for some time to petitioner.
Contrary to TAWTRASCOs posture and what the CA Decision implied, petitioners refusal, during the period
material, to report for work at the Virac terminal does not, without more, translate to abandonment. For
abandonment to exist, it is essential (1) that the employee must have failed to report for work or must have been
absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the
employer-employee relationship manifested by some overt acts.29 These concurring elements of abandonment
are not present in the instant case.
As reflected above, the reinstatement order has not been faithfully complied with. And varied but justifiable
reasons obtain which made petitioners work at the Virac terminal untenable. To reiterate, there was a lack of a
viable office: no proper office space, no office furniture and equipment, no office supplies. Petitioners request for
immediate remediation of the above unfortunate employment conditions fell on deaf ears. This is not to mention
petitioners board and lodging privilege which he was deprived of without so much as an explanation. Thus, it
could not be said that petitioners absence is without valid or justifiable cause.

But more to the point, petitioner has not manifested, by overt acts, a clear intention to sever his employment with
TAWTRASCO. In fact, after submitting his April 24, 2007 letter-explanation to, but not receiving a reaction one
way or another from, TAWTRASCO, petitioner lost no time in filing a complaint against the former for, inter alia,
nonpayment of salaries and forfeiture of boarding house privilege. Thereafter, via a Manifestation, he sought the
early issuance of an alias writ of execution purposely for the full implementation of the final and executory LA
August 22, 2006 Decision, i.e., for the payment of his salaries and full reinstatement. These twin actions clearly
argue against a finding of abandonment on petitioners part. It is a settled doctrine that the filing of an illegal
dismissal suit is inconsistent with the charge of abandonment, for an employee who takes steps to protest his
dismissal cannot by logic be said to have abandoned his work.30
Given the convergence of events and circumstances above described, the Court can readily declare that
TAWTRASCO admitted petitioner back to work under terms and conditions adversely dissimilar to those
prevailing before his illegal dismissal. Put a bit differently, petitioner was admitted back, but required to work
under conditions crafted to cause unnecessary hardship to or meant to be rejected by him. And to reiterate, these
conditions entailed a demotion in rank and diminution of perks and standard privileges. The shabby and unfair
treatment accorded him or her by the management of TAWTRASCO is definitely not genuine reinstatement to his
former position.
The Court finds, as did the NLRC and the LA, that petitioner was not truly reinstated by TAWTRASCO consistent
with the final and executory August 22, 2006 Decision of the LA and the February 5, 2007 Compromise
Agreement inked by the parties in the presence of the hearing LA. Perforce, the assailed decision and resolution
of the CA must be set aside, and the April 14, 2008 Order of the LA, as effectively affirmed in the July 7, 2009
Decision and November 18, 2009 Resolution of the NLRC, accordingly reinstated.
Supervening events, however, had transpired which inexorably makes the reinstatement infeasible. For one, on
November 12, 2007, TAWTRASCO already appointed a new general manager. Petitioner no less has raised this
fact of appointment. As a matter of settled law, reinstatement and payment of backwages, as the normal
consequences of illegal dismissal, presuppose that the previous position from which the employee has been
removed is still in existence or there is an unfilled position of a nature, more or less, similar to the one previously
occupied by said employee.31
For another, a considerable period of time has elapsed since petitioner last reported to work in early 2007 or
practically a six-year period. And this protracted labor suit have likely engendered animosity and exacerbated
already strained relations between petitioner and his employer.
Reinstatement is no longer viable where, among other things, the relations between the employer and employee
have been so severely strained, that it is not in the best interest of the parties, nor is it advisable or practical to
order reinstatement.32 Under the doctrine of strained relations, payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or viable.33 Indeed,
separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, such as: (1) when
reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities
of the situation; (2) reinstatement is inimical to the employers interest; (3) reinstatement is no longer feasible; (4)
reinstatement does not serve the best interests of the parties involved; (5) the employer is prejudiced by the
workers continued employment; (6) facts that make execution unjust or inequitable have supervened; or (7)
strained relations between the employer and the employee.34
Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every
year of service should be awarded as an alternative.35 In lieu of reinstatement, petitioner is entitled to separation
pay equivalent to one (1) month salary for every year of service reckoned from the time he commenced his
employment with TAWTRASCO until finality of this Decision.
In addition, petitioner is entitled to backwages and other emoluments due him from the time he did not report for
work on March 31, 2007 until the finality of this Decision. Said backwages and emoluments shall earn 12%
interest from finality of this Decision until fully paid. The payment of legal interest becomes a necessary
consequence of the finality of the Courts Decision, because, reckoned from that time, the said decision becomes
a judgment for money which shall earn interest at the rate of 12% per annum.36
In accordance with Art. 11137 of the Labor Code and in line with current jurisprudence,38 petitioner shall be paid
attorneys fees in the amount equivalent to 10% of the monetary award.
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed Decision and Resolution dated
October 14, 2010 and June 15, 2011, respectively, of the CA in CA-G.R. SP No. 112542 are SET ASIDE. The
NLRC July 7, 2009 Decision and November 18, 2009 Resolution as well as the April 14, 2008 Order of the Labor

Arbiter are hereby REINSTATED with MODIFICATION in that the Tabaco Womens Transport Service
Cooperative Is ORDERED to pay petitioner Alexander B. Baares the following:
(1) Backwages and other emoluments due to petitioner from March 31, 2007 when petitioner did not report for
work until finality of this Decision with interest thereon at 12% per annum from finality of this Decision until paid;
(2) Separation pay equivalent to one (1) month salary for every year of service reckoned from the time he started
his employment with TAWTRASCO until the finality of this Decision; and
(3) 10% attorney's fees computed from the total monetary benefits.
The case is REMANDED to the RAB V of the NLRC in Legaspi City for the computation, as expeditiously as
possible, of the monetary awards.
No pronouncement as to costs.
SO ORDERED.

9
G.R. No. 198783

April 15, 2013

ROYAL PLANT WORKERS UNION, Petitioner,

vs.
COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT, Respondent.
DECISION
MENDOZA, J.:
Assailed in this petition is the May 24, 2011 Decision1 and the September 2, 2011 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 05200, entitled Coca-Cola Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant
Workers Union, which nullified and set aside the June 11, 2010 Decision3 of the Voluntary Arbitration Panel
(Arbitration Committee) in a case involving the removal of chairs in the bottling plant of Coca-Cola Bottlers
Philippines, Inc. (CCBPI).
The Factual and Procedural
Antecedents
The factual and procedural antecedents have been accurately recited in the May 24, 2011 CA decision as
follows:
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the manufacture,
sale and distribution of softdrink products. It has several bottling plants all over the country, one of which is
located in Cebu City. Under the employ of each bottling plant are bottling operators. In the case of the plant in
Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are 12-14 bottling operators
who man its Bottling Line 2. All of them are male and they are members of herein respondent Royal Plant
Workers Union (ROPWU).
The bottling operators work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the second shift is from 5 p.m.
up to the time production operations is finished. Thus, the second shift varies and may end beyond eight (8)
hours. However, the bottling operators are compensated with overtime pay if the shift extends beyond eight (8)
hours. For Bottling Line 1, 10 bottling operators work for each shift while 6 to 7 bottling operators work for each
shift for Bottling Line 2.
Each shift has rotations of work time and break time. Prior to September 2008, the rotation is this: after two and a
half (2 ) hours of work, the bottling operators are given a 30-minute break and this goes on until the shift ends.

In September 2008 and up to the present, the rotation has changed and bottling operators are now given a 30minute break after one and one half (1 ) hours of work.
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their request. In 1988, the
bottling operators of then Bottling Line 1 followed suit and asked to be provided also with chairs. Their request
was likewise granted. Sometime in September 2008, the chairs provided for the operators were removed
pursuant to a national directive of petitioner. This directive is in line with the "I Operate, I Maintain, I Clean"
program of petitioner for bottling operators, wherein every bottling operator is given the responsibility to keep the
machinery and equipment assigned to him clean and safe. The program reinforces the task of bottling operators
to constantly move about in the performance of their duties and responsibilities.
With this task of moving constantly to check on the machinery and equipment assigned to him, a bottling operator
does not need a chair anymore, hence, petitioners directive to remove them. Furthermore, CCBPI rationalized
that the removal of the chairs is implemented so that the bottling operators will avoid sleeping, thus, prevent
injuries to their persons. As bottling operators are working with machines which consist of moving parts, it is
imperative that they should not fall asleep as to do so would expose them to hazards and injuries. In addition,
sleeping will hamper the efficient flow of operations as the bottling operators would be unable to perform their
duties competently.
The bottling operators took issue with the removal of the chairs. Through the representation of herein respondent,
they initiated the grievance machinery of the Collective Bargaining Agreement (CBA) in November 2008. Even
after exhausting the remedies contained in the grievance machinery, the parties were still at a deadlock with
petitioner still insisting on the removal of the chairs and respondent still against such measure. As such,
respondent sent a Notice to Arbitrate, dated 16 July 2009, to petitioner stating its position to submit the issue on
the removal of the chairs for arbitration. Nevertheless, before submitting to arbitration the issue, both parties
availed of the conciliation/mediation proceedings before the National Conciliation and Mediation Board (NCMB)
Regional Branch No. VII. They failed to arrive at an amicable settlement.
Thus, the process of arbitration continued and the parties appointed the chairperson and members of the
Arbitration Committee as outlined in the CBA. Petitioner and respondent respectively appointed as members to
the Arbitration Committee Mr. Raul A. Kapuno, Jr. and Mr. Luis Ruiz while they both chose Atty. Alice Morada as
chairperson thereof. They then executed a Submission Agreement which was accepted by the Arbitration
Committee on 01 October 2009. As contained in the Submission Agreement, the sole issue for arbitration is
whether the removal of chairs of the operators assigned at the production/manufacturing line while performing
their duties and responsibilities is valid or not.
Both parties submitted their position papers and other subsequent pleadings in amplification of their respective
stands. Petitioner argued that the removal of the chairs is valid as it is a legitimate exercise of management
prerogative, it does not violate the Labor Code and it does not violate the CBA it contracted with respondent. On
the other hand, respondent espoused the contrary view. It contended that the bottling operators have been
performing their assigned duties satisfactorily with the presence of the chairs; the removal of the chairs
constitutes a violation of the Occupational Health and Safety Standards, the policy of the State to assure the right
of workers to just and humane conditions of work as stated in Article 3 of the Labor Code and the Global
Workplace Rights Policy.
Ruling of the Arbtration Committee
On June 11, 2010, the Arbitration Committee rendered a decision in favor of the Royal Plant Workers Union (the
Union) and against CCBPI, the dispositive portion of which reads, as follows:
Wherefore, the undersigned rules in favor of ROPWU declaring that the removal of the operators chairs is not
valid. CCBPI is hereby ordered to restore the same for the use of the operators as before their removal in 2008. 4
The Arbitration Committee ruled, among others, that the use of chairs by the operators had been a company
practice for 34 years in Bottling Line 2, from 1974 to 2008, and 20 years in Bottling Line 1, from 1988 to 2008;
that the use of the chairs by the operators constituted a company practice favorable to the Union; that it ripened
into a benefit after it had been enjoyed by it; that any benefit being enjoyed by the employees could not be
reduced, diminished, discontinued, or eliminated by the employer in accordance with Article 100 of the Labor
Code, which prohibited the diminution or elimination by the employer of the employees benefit; and that
jurisprudence had not laid down any rule requiring a specific minimum number of years before a benefit would
constitute a voluntary company practice which could not be unilaterally withdrawn by the employer.

The Arbitration Committee further stated that, although the removal of the chairs was done in good faith, CCBPI
failed to present evidence regarding instances of sleeping while on duty. There were no specific details as to the
number of incidents of sleeping on duty, who were involved, when these incidents happened, and what actions
were taken. There was no evidence either of any accident or injury in the many years that the bottling operators
used chairs. To the Arbitration Committee, it was puzzling why it took 34 and 20 years for CCBPI to be so
solicitous of the bottling operators safety that it removed their chairs so that they would not fall asleep and injure
themselves.
Finally, the Arbitration Committee was of the view that, contrary to CCBPIs position, line efficiency was the result
of many factors and it could not be attributed solely to one such as the removal of the chairs.
Not contented with the Arbitration Committees decision, CCBPI filed a petition for review under Rule 43 before
the CA.
Ruling of the CA
On May 24, 2011, the CA rendered a contrasting decision which nullified and set aside the decision of the
Arbitration Committee. The dispositive portion of the CA decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED and the Decision, dated 11 June 2010, of
the Arbitration Committee in AC389-VII-09-10-2009D is NULLIFIED and SET ASIDE. A new one is entered in its
stead SUSTAINING the removal of the chairs of the bottling operators from the manufacturing/production line.5
The CA held, among others, that the removal of the chairs from the manufacturing/production lines by CCBPI is
within the province of management prerogatives; that it was part of its inherent right to control and manage its
enterprise effectively; and that since it was the employers discretion to constantly develop measures or means to
optimize the efficiency of its employees and to keep its machineries and equipment in the best of conditions, it
was only appropriate that it should be given wide latitude in exercising it.
The CA stated that CCBPI complied with the conditions of a valid exercise of a management prerogative when it
decided to remove the chairs used by the bottling operators in the manufacturing/production lines. The removal
of the chairs was solely motivated by the best intentions for both the Union and CCBPI, in line with the "I
Operate, I Maintain, I Clean" program for bottling operators, wherein every bottling operator was given the
responsibility to keep the machinery and equipment assigned to him clean and safe. The program would
reinforce the task of bottling operators to constantly move about in the performance of their duties and
responsibilities. Without the chairs, the bottling operators could efficiently supervise these machineries
operations and maintenance. It would also be beneficial for them because the working time before the break in
each rotation for each shift was substantially reduced from two and a half hours (2 ) to one and a half hours (1
) before the 30-minute break. This scheme was clearly advantageous to the bottling operators as the number of
resting periods was increased. CCBPI had the best intentions in removing the chairs because some bottling
operators had the propensity to fall asleep while on the job and sleeping on the job ran the risk of injury exposure
and removing them reduced the risk.
The CA added that the decision of CCBPI to remove the chairs was not done for the purpose of defeating or
circumventing the rights of its employees under the special laws, the Collective Bargaining Agreement (CBA) or
the general principles of justice and fair play. It opined that the principles of justice and fair play were not violated
because, when the chairs were removed, there was a commensurate reduction of the working time for each
rotation in each shift. The provision of chairs for the bottling operators was never part of the CBAs contracted
between the Union and CCBPI. The chairs were not provided as a benefit because such matter was dependent
upon the exigencies of the work of the bottling operators. As such, CCBPI could withdraw this provision if it was
not necessary in the exigencies of the work, if it was not contributing to the efficiency of the bottling operators or if
it would expose them to some hazards. Lastly, the CA explained that the provision of chairs to the bottling
operators cannot be covered by Article 100 of the Labor Code on elimination or diminution of benefits because
the employees benefits referred to therein mainly involved monetary considerations or privileges converted to
their monetary equivalent.
Disgruntled with the adverse CA decision, the Union has come to this Court praying for its reversal on the
following GROUNDS
I
THAT WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING
THAT A PETITION FOR REVIEW UNDER RULE 43 OF THE RULES OF COURT IS THE PROPER REMEDY

OF CHALLENGING BEFORE SAID COURT THE DECISION OF THE VOLUNTARY ARBITRATOR OR PANEL
OF VOLUNTARY ARBITRATORS UNDER THE LABOR CODE.
II
THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN
NULLIFYING AND SETTING ASIDE THE DECISION OF THE PANEL OF VOLUNTARY ARBITRATORS WHICH
DECLARED AS NOT VALID THE REMOVAL OF THE CHAIRS OF THE OPERATORS IN THE
MANUFACTURING AND/OR PRODUCTION LINE.
In advocacy of its positions, the Union argues that the proper remedy in challenging the decision of the Arbitration
Committee before the CA is a petition for certiorari under Rule 65. The petition for review under Rule 43 resorted
to by CCBPI should have been dismissed for being an improper remedy. The Union points out that the parties
agreed to submit the unresolved grievance involving the removal of chairs to voluntary arbitration pursuant to the
provisions of Article V of the existing CBA. Hence, the assailed decision of the Arbitration Committee is a
judgment or final order issued under the Labor Code of the Philippines. Section 2, Rule 43 of the 1997 Rules of
Civil Procedure, expressly states that the said rule does not cover cases under the Labor Code of the Philippines.
The judgments or final orders of the Voluntary Arbitrator or Panel of Voluntary Arbitrators are governed by the
provisions of Articles 260, 261, 262, 262-A, and 262-B of the Labor Code of the Philippines.
On the substantive aspect, the Union argues that there is no connection between CCBPIs "I Operate, I Maintain,
I Clean" program and the removal of the chairs because the implementation of the program was in 2006 and the
removal of the chairs was done in 2008. The 30-minute break is part of an operators working hours and does not
make any difference. The frequency of the break period is not advantageous to the operators because it cannot
compensate for the time they are made to stand throughout their working time. The bottling operators get tired
and exhausted after their tour of duty even with chairs around. How much more if the chairs are removed?
The Union further claims that management prerogatives are not absolute but subject to certain limitations found
in law, a collective bargaining agreement, or general principles of fair play and justice. The operators have been
performing their assigned duties and responsibilities satisfactorily for thirty (30) years using chairs. There is no
record of poor performance because the operators are sitting all the time. There is no single incident when the
attention of an operator was called for failure to carry out his assigned tasks. CCBPI has not submitted any
evidence to prove that the performance of the operators was poor before the removal of the chairs and that it has
improved after the chairs were removed. The presence of chairs for more than 30 years made the operators
awake and alert as they could relax from time to time. There are sanctions for those caught sleeping while on
duty. Before the removal of the chairs, the efficiency of the operators was much better and there was no recorded
accident. After the removal of the chairs, the efficiency of the operators diminished considerably, resulting in the
drastic decline of line efficiency.
Finally, the Union asserts that the removal of the chairs constitutes violation of the Occupational Health and
Safety Standards, which provide that every company shall keep and maintain its workplace free from hazards
that are likely to cause physical harm to the workers or damage to property. The removal of the chairs constitutes
a violation of the State policy to assure the right of workers to a just and humane condition of work pursuant to
Article 3 of the Labor Code and of CCBPIs Global Workplace Rights Policy. Hence, the unilateral withdrawal,
elimination or removal of the chairs, which have been in existence for more than 30 years, constitutes a violation
of existing practice.
The respondents position
CCBPI reiterates the ruling of the CA that a petition for review under Rule 43 of the Rules of Court was the proper
remedy to question the decision of the Arbitration Committee. It likewise echoes the ruling of the CA that the
removal of the chairs was a legitimate exercise of management prerogative; that it was done not to harm the
bottling operators but for the purpose of optimizing their efficiency and CCBPIs machineries and equipment; and
that the exercise of its management prerogative was done in good faith and not for the purpose of circumventing
the rights of the employees under the special laws, the CBA or the general principles of justice and fair play.
The Courts Ruling
The decision in this case rests on the resolution of two basic questions. First, is an appeal to the CA via a petition
for review under Rule 43 of the 1997 Rules of Civil Procedure a proper remedy to question the decision of the
Arbitration Committee? Second, was the removal of the bottling operators chairs from CCBPIs
production/manufacturing lines a valid exercise of a management prerogative?

The Court sustains the ruling of the CA on both issues.

Regarding the first issue, the Union insists that the CA erred in ruling that the recourse taken by CCBPI in
appealing the decision of the Arbitration Committee was proper. It argues that the proper remedy in challenging
the decision of the Voluntary Arbitrator before the CA is by filing a petition for certiorari under Rule 65 of the Rules
of Court, not a petition for review under Rule 43.
CCBPI counters that the CA was correct in ruling that the recourse it took in appealing the decision of the
Arbitration Committee to the CA via a petition for review under Rule 43 of the Rules of Court was proper and in
conformity with the rules and prevailing jurisprudence.
A Petition for Review
under Rule 43 is the
proper remedy
CCBPI is correct. This procedural issue being debated upon is not novel. The Court has already ruled in a
number of cases that a decision or award of a voluntary arbitrator is appealable to the CA via a petition for review
under Rule 43. The recent case of Samahan Ng Mga Manggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon.
Voluntary Arbitrator Buenaventura C. Magsalin and Hotel Enterprises of the Philippines6 reiterated the well-settled
doctrine on this issue, to wit:
In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan,7 we repeated the wellsettled rule that a decision or award of a voluntary arbitrator is appealable to the CA via petition for review under
Rule 43. We held that:
"The question on the proper recourse to assail a decision of a voluntary arbitrator has already been settled in
Luzon Development Bank v. Association of Luzon Development Bank Employees, where the Court held that the
decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of
Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95 (now embodied in Rule
43 of the 1997 Rules of Civil Procedure), just like those of the quasi-judicial agencies, boards and commissions
enumerated therein, and consistent with the original purpose to provide a uniform procedure for the appellate
review of adjudications of all quasi-judicial entities.
Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-Olalia v. Court of
Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the Court held that notwithstanding Section 2
of Rule 43, the ruling in Luzon Development Bank still stands. The Court explained, thus:
The provisions may be new to the Rules of Court but it is far from being a new law. Section 2, Rules 42 of the
1997 Rules of Civil Procedure, as presently worded, is nothing more but a reiteration of the exception to the
exclusive appellate jurisdiction of the Court of Appeals, as provided for in Section 9, Batas Pambansa Blg. 129,
as amended by Republic Act No. 7902:
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional
Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and
Exchange Commission, the Employees Compensation Commission and the Civil Service Commission, except
those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor
Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank but, nevertheless, held that the decisions
of voluntary arbitrators issued pursuant to the Labor Code do not come within its ambit x x x."
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as amended, provide:
"SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals
and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Among these agencies are the x x x, and voluntary arbitrators authorized
by law.

xxxx
SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of Appeals within the period and
in the manner therein provided, whether the appeal involves questions of fact, of law, or mixed questions of fact
and law.
SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the award, judgment,
final order or resolution, or from the date of its last publication, if publication is required by law for its effectivity, or
of the denial of petitioners motion for new trial or reconsideration duly filed in accordance with the governing law
of the court or agency a quo. x x x. (Emphasis supplied.)
Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators Resolution denying petitioners motion for
reconsideration, petitioner should have filed with the CA, within the fifteen (15)-day reglementary period, a
petition for review, not a petition for certiorari.
On the second issue, the Union basically claims that the CCBPIs decision to unilaterally remove the operators
chairs from the production/manufacturing lines of its bottling plants is not valid because it violates some
fundamental labor policies. According to the Union, such removal constitutes a violation of the 1) Occupational
Health and Safety Standards which provide that every worker is entitled to be provided by the employer with
appropriate seats, among others; 2) policy of the State to assure the right of workers to a just and humane
condition of work as provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights Policy of CCBPI
which provides for a safe and healthy workplace by maintaining a productive workplace and by minimizing the
risk of accident, injury and exposure to health risks; and 4) diminution of benefits provided in Article 100 of the
Labor Code.9
Opposing the Unions argument, CCBPI mainly contends that the removal of the subject chairs is a valid exercise
of management prerogative. The management decision to remove the subject chairs was made in good faith and
did not intend to defeat or circumvent the rights of the Union under the special laws, the CBA and the general
principles of justice and fair play.
Again, the Court agrees with CCBPI on the matter.
A Valid Exercise of
Management Prerogative
The Court has held that management is free to regulate, according to its own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place, and manner of work,
processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision,
lay-off of workers, and discipline, dismissal and recall of workers. The exercise of management prerogative,
however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor.10
In the present controversy, it cannot be denied that CCBPI removed the operators chairs pursuant to a national
directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform
their duties and responsibilities more efficiently. The chairs were not removed indiscriminately. They were
carefully studied with due regard to the welfare of the members of the Union. The removal of the chairs was
compensated by: a) a reduction of the operating hours of the bottling operators from a two-and-one-half (2 )hour rotation period to a one-and-a-half (1 ) hour rotation period; and b) an increase of the break period from 15
to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid instances
of operators sleeping on the job while in the performance of their duties and responsibilities and because of the
fact that the chairs were not necessary considering that the operators constantly move about while working. In
short, the removal of the chairs was designed to increase work efficiency. Hence, CCBPIs exercise of its
management prerogative was made in good faith without doing any harm to the workers rights.
The fact that there is no proof of any operator sleeping on the job is of no moment. There is no guarantee that
such incident would never happen as sitting on a chair is relaxing. Besides, the operators constantly move about
while doing their job. The ultimate purpose is to promote work efficiency.
No Violation of Labor Laws

The rights of the Union under any labor law were not violated. There is no law that requires employers to provide
chairs for bottling operators. The CA correctly ruled that the Labor Code, specifically Article 13211 thereof, only
requires employers to provide seats for women. No similar requirement is mandated for men or male workers. It
must be stressed that all concerned bottling operators in this case are men.
There was no violation either of the Health, Safety and Social Welfare Benefit provisions under Book IV of the
Labor Code of the Philippines. As shown in the foregoing, the removal of the chairs was compensated by the
reduction of the working hours and increase in the rest period. The directive did not expose the bottling operators
to safety and health hazards.
The Union should not complain too much about standing and moving about for one and one-half (1 ) hours
because studies show that sitting in workplaces for a long time is hazardous to ones health. The report of
VicHealth, Australia,12 disclosed that "prolonged workplace sitting is an emerging public health and occupational
health issue with serious implications for the health of our working population. Importantly, prolonged sitting is a
risk factor for poor health and early death, even among those who meet, or exceed, national13 activity guidelines."
In another report,14 it was written:
Workers needing to spend long periods in a seated position on the job such as taxi drivers, call centre and office
workers, are at risk for injury and a variety of adverse health effects.
The most common injuries occur in the muscles, bones, tendons and ligaments, affecting the neck and lower
back regions. Prolonged sitting:
reduces body movement making muscles more likely to pull, cramp or strain when stretched suddenly, causes
fatigue in the back and neck muscles by slowing the blood supply and puts high tension on the spine, especially
in the low back or neck, and
causes a steady compression on the spinal discs that hinders their nutrition and can contribute to their
premature degeneration.
Sedentary employees may also face a gradual deterioration in health if they do not exercise or do not lead an
otherwise physically active life. The most common health problems that these employees experience are
disorders in blood circulation and injuries affecting their ability to move. Deep Vein Thrombosis (DVT), where a
clot forms in a large vein after prolonged sitting (eg after a long flight) has also been shown to be a risk.
Workers who spend most of their working time seated may also experience other, less specific adverse health
effects. Common effects include decreased fitness, reduced heart and lung efficiency, and digestive problems.
Recent research has identified too much sitting as an important part of the physical activity and health equation,
and suggests we should focus on the harm caused by daily inactivity such as prolonged sitting.
Associate professor David Dunstan leads a team at the Baker IDI in Melbourne which is specifically researching
sitting and physical activity. He has found that people who spend long periods of time seated (more than four
hours per day) were at risk of:
higher blood levels of sugar and fats,
larger waistlines, and
higher risk of metabolic syndrome
regardless of how much moderate to vigorous exercise they had.
In addition, people who interrupted their sitting time more often just by standing or with light activities such as
housework, shopping, and moving about the office had healthier blood sugar and fat levels, and smaller
waistlines than those whose sitting time was not broken up.
Of course, in this case, if the chairs would be returned, no risks would be involved because of the shorter period
of working time. The study was cited just to show that there is a health risk in prolonged sitting.
No Violation of the CBA

The CBA15 between the Union and CCBPI contains no provision whatsoever requiring the management to
provide chairs for the operators in the production/manufacturing line while performing their duties and
responsibilities. On the contrary, Section 2 of Article 1 of the CBA expressly provides as follows:
Article I
SCOPE
SECTION 2. Scope of the Agreement. All the terms and conditions of employment of employees and workers
within the appropriate bargaining unit (as defined in Section 1 hereof) are embodied in this Agreement and the
same shall govern the relationship between the COMPANY and such employees and/or workers. On the other
hand, all such benefits and/or privileges as are not expressly provided for in this Agreement but which are now
being accorded, may in the future be accorded, or might have previously been accorded, to the employees
and/or workers, shall be deemed as purely voluntary acts on the part of the COMPANY in each case, and the
continuance and repetition thereof now or in the future, no matter how long or how often, shall not be construed
as establishing an obligation on the part of the COMPANY. It is however understood that any benefits that are
agreed upon by and between the COMPANY and the UNION in the Labor-Management Committee Meetings
regarding the terms and conditions of employment outside the CBA that have general application to employees
who are similarly situated in a Department or in the Plant shall be implemented. [emphasis and underscoring
supplied]
As can be gleaned from the aforecited provision, the CBA expressly provides that benefits and/or privileges, not
expressly given therein but which are presently being granted by the company and enjoyed by the employees,
shall be considered as purely voluntary acts by the management and that the continuance of such benefits
and/or privileges, no matter how long or how often, shall not be understood as establishing an obligation on the
companys part. Since the matter of the chairs is not expressly stated in the CBA, it is understood that it was a
purely voluntary act on the part of CCBPI and the long practice did not convert it into an obligation or a vested
right in favor of the Union.
No Violation of the general principles
of justice and fair play
The Court completely agrees with the CA ruling that the removal of the chairs did not violate the general
principles of justice and fair play because the bottling operators working time was considerably reduced from two
and a half (2 ) hours to just one and a half (1 ) hours and the break period, when they could sit down, was
increased to 30 minutes between rotations. The bottling operators new work schedule is certainly advantageous
to them because it greatly increases their rest period and significantly decreases their working time. A break time
of thirty (30) minutes after working for only one and a half (1 ) hours is a just and fair work schedule.
No Violation of Article 100
of the Labor Code
The operators chairs cannot be considered as one of the employee benefits covered in Article 10016 of the
Labor Code. In the Courts view, the term "benefits" mentioned in the non-diminution rule refers to monetary
benefits or privileges given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees wage, salary or compensation making them enforceable
obligations.
This Court has already decided several cases regarding the non-diminution rule where the benefits or privileges
involved in those cases mainly concern monetary considerations or privileges with monetary equivalents. Some
of these cases are: Eastern Telecommunication Phils. Inc. v. Eastern Telecoms Employees Union,17 where the
case involves the payment of 14th, 15th and 16th month bonuses; Central Azucarera De Tarlac v. Central
Azucarera De Tarlac Labor Union-NLU,18 regarding the 13th month pay, legal/special holiday pay, night premium
pay and vacation and sick leaves; TSPIC Corp. v. TSPIC Employees Union,19 regarding salary wage increases;
and American Wire and Cable Daily Employees Union vs. American Wire and Cable Company, Inc.,20 involving
service awards with cash incentives, premium pay, Christmas party with incidental benefits and promotional
increase.
In this regard, the Court agrees with the CA when it resolved the matter and wrote:

Let it be stressed that the aforequoted article speaks of non-diminution of supplements and other employee
benefits. Supplements arc privileges given to an employee which constitute as extra remuneration besides his or
her basic ordinary earnings and wages. From this definition, We can only deduce that the other employee
benefits spoken of by Article 100 pertain only to those which are susceptible of monetary considerations. Indeed,
this could only be the most plausible conclusion because the cases tackling Article 100 involve mainly with
monetary considerations or privileges converted to their monetary equivalents.
xxxx
Without a doubt, equating the provision of chairs to the bottling operators Ds something within the ambit of
"benefits'' in the context of Article 100 of the Labor Code is unduly stretching the coverage of the law. The
interpretations of Article 100 of the Labor Code do not show even with the slightest hint that such provision of
chairs for the bottling operators may be sheltered under its mantle.21
Jurisprudence recognizes the exercise of management prerogatives. Labor Jaws also discourage interference
with an employer's judgment in the conduct of its business. For this reason, the Court often declines to interfere
in legitimate business decisions of employers. The law must protect not only the welfare of the employees, but
also the right of the employers.22
WHEREFORE, the petition is DENIED.
SO ORDERED.

10
G.R. No. 177103

June 3, 2013

ORIENTAL SHIPMANAGEMENT CO., INC., ROSENDO C. HERRERA, and BENNET SHIPPING SA LIBERIA,
Petitioners,
vs.
RAINERIO N. NAZAL, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by the petitioners, seeking to nullify the resolutions dated
December 19, 20062 and March 23, 20073 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 97180.
The Antecedents
On November 15, 2000, respondent Rainerio N. Nazal entered into a twelve-month contract of employment4 as
cook with Oriental Shipmanagement Co., Inc. (agency) for its principal, Bennet Shipping SA Liberia (collectively,
petitioners). He was to receive US$500.00 plus other benefits. He had two earlier contracts with the petitioners
from January 25, 1999 to September 14, 1999 and from February 12, 2000 to August 2000.
Nazal boarded the vessel M/V Rover on November 22, 2000 and finished his contract on November 24, 2001.
Allegedly after his arrival in Manila, he reported to one Ding Colorado of the agency about his health condition
and work experience on board M/V Rover. He claimed that the agency referred him to a company-designated
physician who found him to be suffering from high blood pressure and diabetes. He then asked for compensation
and medical assistance, but the agency denied his request. The agency allegedly advised him not to work again.
On May 18, 2002, Nazal consulted Dr. Virginia Nazal, an internal medicine and diabetes specialist, of Clinica
Nazal. Almost a year after, or on May 3, 2003, he underwent a medical examination at Clinica Nazal, which
included a random blood sugar test. His blood sugar registered at 339. On September 8, 2004, more than a year
later, Dr. Nazal certified Nazal to be unfit to work as a seaman.
Claiming that his condition was getting worse, Nazal went to the Philippine Heart Center on September 29, 2004
and underwent medical examination and treatment under the care of Dr. Efren Vicaldo, an internistcardiologist.
Dr. Vicaldo diagnosed Nazals condition as: hypertension, uncontrolled; diabetes mellitus, uncontrolled;
impediment grade X (20.15 %); and unfit to resume work as a seaman in any capacity.5

Thereafter, Nazal demanded permanent total disability compensation from the petitioners, contending that his
ailments developed during his employment with the petitioners and while he was performing his duties. As his
demand went unheeded, he filed the present complaint.
The agency, for itself and for its principal, argued that Nazals claim is barred by laches as it was filed at least two
years and ten (10) months late; even if it were otherwise, it still cannot prosper because of Nazals failure to
submit himself to a post-employment medical examination by a company designated physician within three
working days upon his disembarkation, as mandated by the Philippine Overseas Employment Administration
Standard Employment Contract (POEA-SEC). This resulted, it added, in the forfeiture of his right to claim
disability benefits.
The Compulsory Arbitration Rulings
In his decision6 dated May 25, 2005, Labor Arbiter (LA) Eduardo J.Carpio dismissed the complaint, principally on
the ground that Nazal failed to comply with the mandatory reporting requirement under his standard employment
contract. LA Carpio gave no credence to Nazals claim that he reported to Colorado, as there was no proof
presented in this respect. LA Carpio pointed out that while Nazal might have been complaining about his health
condition while on board the vessel, there was no evidence showing that he reported his ailments to the vessels
authorities.
Nazal appealed from LA Carpios decision. On September 20, 2005, the National Labor Relations Commission
(NLRC) rendered a decision7 in Nazals favor. It set aside LA Carpios ruling and awarded Nazal US$10,075.00
as partial disability benefit, plus 5% attorneys fees. The NLRC declared that contrary to LA Carpios conclusion,
Nazal presented substantial proof that his ailments had been contracted during his employment with the
petitioners. The NLRC relied on Dr. Vicaldos disability rating of Grade X (20.15%) pursuant to the POEA-SEC.
Both parties moved for partial reconsideration. For his part, Nazal pleaded with the NLRC that he be granted
permanent total disability benefits as he would not be able to resume his employment as a seaman anymore. On
the other hand, the agency insisted that laches barred Nazals claim, but in any event, he failed to comply with
the mandatory post-employment reporting requirement under the POEA-SEC.8 Further, it stressed that a higher
degree of proof should have been required by the NLRC because of the badges of suspicion/fraud apparent in
the case. It explained in this regard that Nazal submitted proof that he had taken another overseas employment
after he disembarked from the vessel M/V Rover.
By a resolution dated November 30, 2005,9 the NLRC denied both motions, stressing that they were based on
the same arguments presented to the LA. The agency filed an urgent motion for reconsideration on grounds of
newly-discovered evidence and pending motions/incidents. It argued that the new evidence showed that Nazal
had entered into another overseas contract after his stint with the petitioners for which reason, his disability could
not have been due to his work on board the vessel M/V Rover.
The NLRC denied the motion in its resolution10 of October 31, 2006, declaring as "superfluous and immaterial"
the claimed newly-discovered evidence. It emphasized that Nazals subsequent voyage did not prove that he had
not been sick or that his sickness had not been aggravated by his work on board the vessel M/V Rover.
Thereafter, the agency elevated the case to the CA through a petition for certiorari under Rule 65 of the Rules of
Court.
The CA Decision
The CA dismissed the petition outright for having been filed out of time.11 It pointed out that the assailed NLRC
resolution of October 31, 2006 the subject of the petition is a ruling on the agencys urgent motion for
reconsideration of the NLRC resolution dated November 30, 2005 which, in turn, denied the agencys motion for
reconsideration of the NLRC decision of September 30, 2005. The second motion for reconsideration filed by the
same party, the CA declared, is expressly prohibited by Section 2, Rule 52 of the Rules of Court. The agency
moved for reconsideration, but the CA denied the motion.12
The Petition
The agency now asks the Court to set aside the CA resolutions, contending that the appellate court committed an
error of law and gravely abused its discretion in holding that it filed a prohibited second motion for reconsideration
with the NLRC. It argues that the two motions alluded to dealt with different subject matters; the first one (dated
November 11, 2005) dealt with the merits of the case while the second one (dated March 21, 2006) was based
on newly-discovered evidence.

The NLRC denied the agencys urgent motion for reconsideration in its resolution of October 31, 2006, copy of
which the agency allegedly received on November 15, 2006.13 It maintains that it had until January 10, 2007 to
file the petition for certiorari which it did on time, or on December 11, 2006.
The agency bewails the CAs resort to technicalities to "thwart substantial justice," insisting that it has proven the
merits of its case. It submits that Nazals claim may even be fraudulent considering that he filed it after he
disembarked from the vessel M/V Rover and, subsequently, obtained employment with another vessel and kept
silent about it. It argues that the fact that Nazal was able to secure a subsequent posting shows that he was fit
and able when he left his employment with the petitioners. In any event, it adds that Nazal is disqualified from
claiming disability benefits because of his failure to comply with the mandatory post-employment medical
examination under the POEA-SEC.
The Case for Nazal and Related Incidents
On July 4, 2007, the Court required Nazal to comment on the petition.14 Instead of filing his comment, however,
Nazal petitioned15 the CA to convert his "disability to permanent total disability" (G.R. No. SP No. 104246). This
prompted the petitioners to file a "motion for leave to file manifestation and admission of manifestation"16 in
relation with the petition for conversion. The petitioners submitted a brief chronology of events showing that Nazal
appeared to be "forum shopping" with the filing of the petition with the CA, subsequent to the filing of the present
case. The CA, for its part, promptly dismissed the petition.
By a Resolution dated June 22, 2009,17 the Court granted the petitioners motion and required Nazal to comment.
Nazal submitted his comment on the motion on July 23, 200918 under his own signature. It appeared that he no
longer had legal representation at the time. He informed the Court in this respect that he sought the help of
RODCO Consultancy and Maritime Services Corporation (RODCO) for legal and financial assistance regarding
his claim for disability benefits.
RODCO provided Nazal with a lawyer under contract with the firm for one year in the person of Atty. Oliver C.
Castro. Atty. Castros contract with RODCO expired on February 13, 2005, prompting him to withdraw as Nazals
counsel; RODCO then sent Attys. Constantino Reyes and Rodrigo Ceniza to represent Nazal. They were also
under contract with RODCO and their sevices were terminated as of July 2007, around which time, the partial
disability award to Nazal was enforced,19 as evidenced by a notice of garnishment20 and acknowledgment receipt
by the NLRC of the garnished amount.21
Nazal contends in the same comment that he is entitled not only to partial disability benefits but to permanent
total disability compensation since he had already lost the capacity to earn a living. This is the reason, he tells the
Court, why even without a counsel, he petitioned the CA for the conversion of his disability to permanent total
disability. He submits that his receipt of the amount of P484,046.31, corresponding to the award of partial
disability benefits, does not bar him from demanding what is legally due him and that it cannot be considered as
forum shopping.
In a Resolution dated August 17, 2009,22 the Court noted Nazal's comment on the forum shopping issue. Nazal
died in October 2010,23 without any comment on the petitioners appeal having been filed.
Our Ruling
The procedural issue
We first resolve the procedural issue of whether the CA erred in dismissing the petition for certiorari for having
been filed out of time. Obviously, the appellate court counted the 60-day period for the filing of the petition24 from
March 13, 2006,25 the date the petitioners claimed they received a copy of the NLRC resolution (dated November
30, 2005) denying their partial motion for reconsideration (first motion) and not from November 15, 2006,26 the
day they received the NLRC resolution (dated October 31, 2006) denying their urgent motion for reconsideration
(second motion).
The CA considered the agencys urgent motion for reconsideration as a second motion for reconsideration which
is prohibited under Section 2, Rule 52 of the Rules of Court27 and also under Section 15, Rule VII of the NLRC
Revised Rules of Procedure.28 The agency takes exception to the CA ruling, reiterating its position that the two
motions dealt with two different subject matters, the first motion addressed the merits of the case and the urgent
motion was filed on the ground of newly-discovered evidence. It adds that even the NLRC did not consider the
urgent motion for reconsideration a prohibited pleading.

We find merit in the agencys argument. Technicalities of law and procedure are interpreted very liberally and are
not considered controlling in labor cases. Article 221 of the Labor Code provides that "in any proceeding before
the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not
be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively
and without regard to technicalities of law or procedure, all in the interest of due process."
In keeping with the spirit and intent of the law and in the interest of fairplay, we find it both necessary and
appropriate to review the present labor controversy. For the same reason, we rule out laches as a bar to the filing
of the complaint.
The merits of the case
Contrary to the conclusions of the NLRC and of the CA, we find no substantial evidence supporting the ruling that
the agency and its principal are liable to Nazal by way of temporary or partial total disability benefits. The labor
tribunal and the appellate court grossly misappreciated the facts and even completely disregarded vital pieces of
evidence in resolving the case.
First. Nazal disembarked from the vessel M/V Rover for a "finished contract," not for medical reasons. This
notwithstanding, he claims that immediately after his disembarkation, he reported to Colorado about his health
condition and work experience on board the vessel. He further claimed that Colorado referred him to a companydesignated physician who found him afflicted with high blood pressure and diabetes. Thereupon, he asked for
compensation and medical assistance, but the agency denied his request and allegedly advised him not to work
again.
Except for his bare allegations, nothing on record supports Nazals claim that he contracted his supposed
ailments on board the vessel. As the LA aptly observed, if indeed a company-designated physician examined
Nazal, why did the physician not issue a medical report confirming Nazals supposed ailments? And why did
Nazal not ask for a certification of the physicians findings if he really intended to ask for disability compensation
from the petitioners? Under the standard employment contract, the employer is under obligation to furnish the
seafarer, upon request, a copy of all pertinent medical reports or any records at no cost to the seafarer.29
The absence of a medical report or certification of Nazals ailments and disability only signifies that his postemployment medical examination did not take place as claimed. We thus cannot accept the NLRC reasoning that
the absence of a medical report does not mean that Nazal was not examined by the company-designated
physician as the medical reports are normally in the custody of the manning agency and not with the seaman. In
UST Faculty Union v. University of Santo Tomas,30 the Court declared: "a party alleging a critical fact must
support his allegation with substantial evidence. Any decision based on unsubstantiated allegation cannot stand
as it will offend due process."
Second. While we have ruled out laches as a bar to Nazals claim, the inordinate delay in the institution of the
complaint casts a grave suspicion on Nazals true intentions against the petitioners. It took him two years and 10
months to file the complaint (on September 16, 2004)31 since he disembarked from the vessel M/V Rover on
November 24, 2001. Why it took him that long a time to file the complaint only Nazal can answer, but one thing is
clear: he obtained another employment as a seaman for three months (from March 1, 2004 to June 11, 2004),
long after his employment with the petitioners. He was deployed by manning agent Crossocean Marine Services,
Inc. (Crossocean) on board the vessel Kizomba A FPSO, for the principal Eurest Shrm Far East Pte., Ltd. 32 Nazal
admitted as much when he submitted in evidence before the LA photocopies of the visa section of his passport
showing a departure on March 1, 200433 and an arrival on June 11, 2004.34
1wphi1

If Nazal was able to secure an employment as a seaman with another vessel after his disembarkation in
November 2001, how can there he a case against the petitioners, considering especially the lapse of time when
the case was instituted? How could Nazal be accepted for another ocean-going job if he had not been in good
health? How could he be engaged as a seaman after his employment with the petitioners if he was then already
disabled?
Surely, before he was deployed by Crossocean, he went through a pre-employment medical examination and
was found fit to work and healthy; otherwise, he would not have been hired. Under the circumstances, his
ailments resulting in his claimed disability could only have been contracted or aggravated during his engagement
by his last employer or, at the very least, during the period after his contract of employment with the petitioners
expired. For ignoring this glaring fact, the NLRC committed a grave abuse of discretion; for upholding the NLRC,
the CA committed the same jurisdictional error.

As a final word, it is unfortunate that Nazal died before the case could be resolved, but his death cannot erase
the fact that his claim for disability benefits was brought against the wrong party, nor the reality that his claim
against the petitioners suffered from fatal defects.
WHEREFORE, premises considered, the petition is GRANTED. The assailed resolutions of the Court of Appeals
are SET ASIDE. The complaint is DISMISSED for lack of merit. No costs.
SO ORDERED.

11
G.R. No. 192601

June 3, 2013

PHILIPPINE JOURNALISTS, INC., Petitioner,

vs.
JOURNAL EMPLOYEES UNION (JEU), FOR ITS UNION MEMBER, MICHAEL ALFANTE, Respondents.
DECISION
BERSAMIN, J.:
The coverage of the term legal dependent as used in a stipulation in a collective bargaining agreement (CBA)
granting funeral or bereavement benefit to a regular employee for the death of a legal dependent, if the CBA is
silent about it, is to be construed as similar to the meaning that contemporaneous social legislations have set.
This is because the terms of such social legislations are deemed incorporated in or adopted by the CBA.
The decision of the Court of Appeals (CA) under review summarizes the factual and procedural antecedents, as
follows:
Complainant Judith Pulido alleged that she was hired by respondent as proofreader on 10 January 1991; that
she was receiving a monthly basic salary of P-15,493.66 plus P-155.00 longevity pay plus other benefits provided
by law and their Collective Bargaining Agreement; that on 21 February 2003, as union president, she sent two
letters to President Gloria Arroyo, regarding their complaint of mismanagement being committed by PIJ
executive; that sometime in May 2003, the union was furnished with a letter by Secretary Silvestre Afable, Jr.
head of Presidential Management Staff (PMS), endorsing their letter-complaint to Ombudsman Simeon V.
Marcelo; that respondents took offense and started harassments to complainant union president; that on 30 May
2003, complainant received a letter from respondent Fundador Soriano, International Edition managing editor,
regarding complainants attendance record; that complainant submitted her reply to said memo on 02 June 2003;
that on 06 June 2003, complainant received a memorandum of reprimand; that on 04 July 2003, complainant
received another memo from Mr. Soriano, for not wearing her company ID, which she replied the next day 05
July 2003; that on 04 August 2003, complainant again received a memo regarding complainants tardiness; that
on 05 August 2003, complainant received another memorandum asking her to explain why she should not be
accused of fraud, which she replied to on 07 August 2003; and that on the same day between 3:00 to 4:00 P.M.,
Mr. Ernesto "Estong" San Agustin, a staff of HRD handed her termination paper.
Complainant added that in her thirteen (13) years with the company and after so many changes in its
management and executives, she had never done anything that will cause them to issue a memorandum against
her or her work attitude, more so, reasons to terminate her services; that she got dismissed because she was the
Union President who was very active in defending and pursuing the rights of her union members, and in fighting
against the abuses of respondent Corporate Officers; and that she got the ire of respondents when the
employees filed a complaint against the Corporate Officers before Malacaang and which was later indorsed to
the Office of the Ombudsman.
The second complainant Michael L. Alfante alleged that he started to work with respondents as computer
technician at Management Information System under manager Neri Torrecampo on 16 May 2000; that on 15 July
2001, he was regularized receiving a monthly salary of P9,070.00 plus other monetary benefits; that sometime in
2001, Rico Pagkalinawan replaced Torrecampo, which was opposed by complainant and three other coemployees; that Pagkalinawan took offense of their objection; that on 22 October 2002, complainant Alfante
received a memorandum from Pagkalinawan regarding his excessive tardiness; that on 10 June 2003,
complainant Alfante received a memorandum from Executive Vice-President Arnold Banares, requiring him to

explain his side on the evaluation of his performance submitted by manager Pagkalinawan; that one week after
complainant submitted his explanation, he was handed his notice of dismissal on the ground of "poor
performance"; and that complainant was dismissed effective 28 July 2003.
Complainant Alfante submitted that he was dismissed without just cause.
Respondents, in their position paper, averred that complainants Pulido and Alfante were dismissed for cause and
with due process.
With regard to complainant Pulido, respondents averred that in a memorandum dated 30 May 2003, directed
complainant to explain her habitual tardiness, at least 75 times from January to May of 2003. In a memorandum,
dated 06 June 2003, directed complainant to observe the 3 p.m. rule to avoid grammatical lapses, use of stale
stories just to beat the 10:00 p.m. deadline. In the same memorandum complainant was given the warning that
any repeated violation of the rules shall be dealt with more severely. Once again, in a memorandum, dated 04
August 2003, complainant Pulido was required to explain why no disciplinary action should be taken against her
for habitual tardiness 18 times out of the 23 reporting days during the period from 27 June 27 July 2003 and
on 05 August 2003, complainant was directed to explain in writing why complainant should not be
administratively sanctioned for committing fraud or attempting to commit fraud against respondents.
Respondents found complainants explanations unsatisfactory. On 07 August 2003, respondents dismissed
complainant Pulido for habitual tardiness, gross insubordination, utter disrespect for superiors, and committing
fraud or attempting to commit fraud which led to the respondents loss of confidence upon complainant Pulido.
In case of complainant Alfante, respondents averred in defense that complainant was dismissed for "poor
performance" after an evaluation by his superior, and after being forewarned that complainant may be removed if
there was no showing of improvement in his skills and knowledge on current technology.
In both instances, respondents maintained that they did not commit any act of unfair labor practices; that they did
not commit acts tantamount to interfering, restraining, or coercing employees in the exercise of their right to selforganization.
Respondents deny liabilities as far as complainants monetary claims are concerned. Concerning violations of the
provision on wage distortion under Wage Order No. 9, respondents stressed that complainants were not affected
since their salary is way over the minimum wage.
With respect to the alleged non-adjustment of longevity pay and burial aid, respondent PJI pointed out that it
complies with the provisions of the CBA and that both complainants have not claimed for the burial aid.
Respondents put forward the information that the alleged nonpayment of rest days every Monday for the past
three (3) years is a matter that is still at issue in NLRC Case No. 02-0402973-93, which case is still pending
before this Commission.
Respondents asserted that the respondents Arturo Dela Cruz, Bobby Capco, Arnold Banares, Ruby Ruiz-Bruno
and Fundador Soriano should not be held liable on account of complainants dismissal as they merely acted as
agents of respondent PJI.1
Upon the foregoing backdrop, Labor Arbiter Corazon C. Borbolla rendered her decision on March 29, 2006,
disposing thusly:
WHEREFORE, foregoing premises considered, judgment is hereby rendered, finding complainant Judith Pulido
to have been illegally dismissed. As such, she is entitled to reinstatement and backwages from 07 August 2003
up to her actual or payroll reinstatement. To date, complainants backwages is P294,379.54.
Respondent Philippine Journalist, Inc. is hereby ordered to pay complainant Judith Pulido her backwages from
07 August 2003 up to her actual or payroll reinstatement and to reinstate her to her former position without loss of
seniority right.
Respondent is further ordered to submit a report to this Office on complainants reinstatement ten (10) days from
receipt of this decision.
The charge of illegal dismissal by Michael Alfante is hereby dismissed for lack of merit.
The charge of unfair labor practice is dismissed for lack of basis.

SO ORDERED.2
Complainant Michael Alfante (Alfante), joined by his labor organization, Journal Employees Union (JEU), filed a
partial appeal in the National Labor Relations Commission (NLRC).3
In the meantime, on May 10, 2006, petitioner and Judith Pulido (Pulido), the other complainant, jointly manifested
to the NLRC that the decision of March 29, 2006 had been fully satisfied as to Pulido under the following terms,
namely: (a) she would be reinstated to her former position as editorial staffmember, or an equivalent position,
without loss of seniority rights, effective May 15, 2006; (b) she would go on maternity leave, and report to work
after giving birth; (c) she would be entitled to backwages of P130,000.00; and (d) she would execute the
quitclaim and release on May 11, 2006 in favor of petitioner.4 This left Alfante as the remaining complainant.
On January 31, 2007, the NLRC rendered its decision dismissing the partial appeal for lack of merit.
JEU and Alfante moved for the reconsideration of the decision, but the NLRC denied their motion on April 24,
2007.
Thereafter, JEU and Alfante assailed the decision of the NLRC before the CA on certiorari (C.A.-G.R. SP No.
99407).
On February 5, 2010, the CA promulgated its decision in C.A.-G.R. SP No. 99407,7 decreeing:
WHEREFORE, premises considered, the instant petition is PARTLY GRANTED.
The twin Resolutions dated January 31, 2007 and April 24, 2007, respectively, of the Third Division of the
National Labor Relations Commission (NLRC), in NLRC NCR CA No. 048785-06 (NLRC NCR Case No. 00-1011413-04), are MODIFIED insofar as the funeral or bereavement aid is concerned, which is hereby GRANTED,
but only after submission of conclusive proofs that the deceased is a parent, either father or mother, of the
employees concerned, as well as the death certificate to establish the fact of death of the deceased legal
dependent.
The rest of the findings of fact and law in the assailed Resolutions are hereby AFFIRMED.
SO ORDERED.
Both parties moved for reconsideration, but the CA denied their respective motions for reconsideration on June 2,
2010.8
JEU and Alfante appealed to the Court (G.R. No. 192478) to challenge the CAs dispositions regarding the
legality of: (a) Alfantes dismissal; (b) the non-compliance with Minimum Wage Order No. 9; and (c) the nonpayment of the rest day.9
On August 18, 2010, the Court denied due course to the petition in G.R. No. 192478 for failure of petitioners to
sufficiently show that the CA had committed any reversible error to warrant the Courts exercise of its
discretionary appellate jurisdiction.10
The Court denied with finality JEU and Alfantes ensuing motion for reconsideration through the resolution of
December 8, 2010.11 The entry of judgment in G.R. No. 192478 issued in due course on February 1, 2011.12
On its part, petitioner likewise appealed (G.R. No. 192601), seeking the review of the CAs disposition in the
decision of February 5, 2010 on the granting of the funeral and bereavement aid stipulated in the CBA.
In its petition for review, petitioner maintained that under Section 4, Article XIII of the CBA, funeral and
bereavement aid should be granted upon the death of a legal dependent of a regular employee; that consistent
with the definition provided by the Social Security System (SSS), the term legal dependent referred to the spouse
and children of a married regular employee, and to the parents and siblings, 18 years old and below, of a single
regular employee;13 that the CBA considered the term dependents to have the same meaning as beneficiaries, as
provided in Section 5, Article XIII of the CBA on the payment of death benefits;14 that its earlier granting of claims
for funeral and bereavement aid without regard to the foregoing definition of the legal dependents of married or
single regular employees did not ripen into a company policy whose unilateral withdrawal would constitute a
violation of Article 100 of the Labor Code,15 the law disallowing the non-diminution of benefits;16 that it had

approved only four claims from 1999 to 2003 based on its mistaken interpretation of the term legal dependents,
but later corrected the same in 2000;17 that the grant of funeral and bereavement aid for the death of an
employees legal dependent, regardless of the employees civil status, did not occur over a long period of time,
was not consistent and deliberate, and was partly due to its mistake in appreciating a doubtful question of law;
and that its denial of subsequent claims did not amount to a violation of the law against the non-diminution of
benefits.18
In their comment,19 JEU and Alfante countered that the CBA was a bilateral contractual agreement that could not
be unilaterally changed by any party during its lifetime; and that the grant of burial benefits had already become a
company practice favorable to the employees, and could not anymore be reduced, diminished, discontinued or
eliminated by petitioner.
Issue
In view of the entry of judgment issued in G.R. No. 192478, JEU and Alfantes submissions on the illegality of his
dismissal, the non-payment of his rest days, and the violation of Minimum Wage Order No. 9 shall no longer be
considered and passed upon.
The sole remaining issue is whether or not petitioners denial of respondents claims for funeral and bereavement
aid granted under Section 4, Article XIII of their CBA constituted a diminution of benefits in violation of Article 100
of the Labor Code.
Ruling
The petition for review lacks merit.
The nature and force of a CBA are delineated in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa
Honda,20 thuswise:
A collective bargaining agreement (or CBA) refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good
customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law
between the parties and compliance therewith is mandated by the express policy of the law.
Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the law between the parties, must
be complied with by them. The literal meaning of the stipulations of the CBA, as with every other contract, control
if they are clear and leave no doubt upon the intention of the contracting parties.22
Here, a conflict has arisen regarding the interpretation of the term legal dependent in connection with the grant of
funeral and bereavement aid to a regular employee under Section 4, Article XIII of the CBA,23 which stipulates as
follows:
SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to grant a funeral/bereavement aid in the
following instances:
a. Death of a regular employee in line of duty P50,000
b. Death of a regular employee not in line of duty P40,000
c. Death of legal dependent of a regular employee P15,000. (Emphasis supplied)
Petitioner insists that notwithstanding the silence of the CBA, the term legal dependent should follow the
definition of it under Republic Act (R.A.) No. 8282 (Social Security Law),24 so that in the case of a married regular
employee, his or her legal dependents include only his or her spouse and children, and in the case of a single
regular employee, his or her legal dependents include only his or her parents and siblings, 18 years old and
below; and that the term dependents has the same meaning as beneficiaries as used in Section 5, Article XIII of
the CBA.
We cannot agree with petitioners insistence.

Social legislations contemporaneous with the execution of the CBA have given a meaning to the term legal
dependent. First of all, Section 8(e) of the Social Security Law provides that a dependent shall be the following,
namely: (a) the legal spouse entitled by law to receive support from the member; (b) the legitimate, legitimated,
or legally adopted, and illegitimate child who is unmarried, not gainfully employed and has not reached 21 of age,
or, if over 21 years of age, is congenitally or while still a minor has been permanently incapacitated and incapable
of self-support, physically or mentally; and (c) the parent who is receiving regular support from the member.
Secondly, Section 4(f) of R.A. No. 7875, as amended by R.A. No. 9241,25 enumerates who are the legal
dependents, to wit: (a) the legitimate spouse who is not a member; (b) the unmarried and unemployed legitimate,
legitimated, illegitimate, acknowledged children as appearing in the birth certificate; legally adopted or stepchildren below 21 years of age; (c) children who are 21 years old and order but suffering from congenital
disability, either physical or mental, or any disability acquired that renders them totally dependent on the member
of our support; and (d) the parents who are 60 years old or older whose monthly income is below an amount to
be determined by the Philippine Health Insurance Corporation in accordance with the guiding principles set forth
in Article I of R.A. No. 7875. And, thirdly, Section 2(f) of Presidential Decree No. 1146, as amended by R.A. No.
8291,dependent for support upon the member or pensioner; (b) the legitimate, legitimated, legally adopted child,
including the illegitimate child, who is unmarried, not gainfully employed, not over the age of majority, or is over
the age of majority but incapacitated and incapable of self-support due to a mental or physical defect acquired
prior to age of majority; and (c) the parents dependent upon the member for support.
1wphi1

It is clear from these statutory definitions of dependent that the civil status of the employee as either married or
single is not the controlling consideration in order that a person may qualify as the employees legal dependent.
What is rather decidedly controlling is the fact that the spouse, child, or parent is actually dependent for support
upon the employee. Indeed, the Court has adopted this understanding of the term dependent in Social Security
System v. De Los Santos,27 viz:
Social Security System v. Aguas is instructive in determining the extent of the required "dependency" under the
SS Law. In Aguas, the Court ruled that although a husband and wife are obliged to support each other, whether
one is actually dependent for support upon the other cannot be presumed from the fact of marriage alone.
Further, Aguas pointed out that a wife who left her family until her husband died and lived with other men, was
not dependent upon her husband for support, financial or otherwise, during the entire period.
Said the Court:
In a parallel case involving a claim for benefits under the GSIS law, the Court defined a dependent as "one who
derives his or her main support from another. Meaning, relying on, or subject to, someone else for support; not
able to exist or sustain oneself, or to perform anything without the will, power, or aid of someone else." It should
be noted that the GSIS law likewise defines a dependent spouse as "the legitimate spouse dependent for support
upon the member or pensioner." In that case, the Court found it obvious that a wife who abandoned the family for
more than 17 years until her husband died, and lived with other men, was not dependent on her husband for
support, financial or otherwise, during that entire period. Hence, the Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already separated de facto from her husband cannot be said to
be "dependent for support" upon the husband, absent any showing to the contrary. Conversely, if it is proved that
the husband and wife were still living together at the time of his death, it would be safe to presume that she was
dependent on the husband for support, unless it is shown that she is capable of providing for herself.
Considering that existing laws always form part of any contract, and are deemed incorporated in each and every
contract,28 the definition of legal dependents under the aforecited social legislations applies herein in the absence
of a contrary or different definition mutually intended and adopted by the parties in the CBA. Accordingly, the
concurrence of a legitimate spouse does not disqualify a child or a parent of the employee from being a legal
dependent provided substantial evidence is adduced to prove the actual dependency of the child or parent on the
support of the employee.
In this regard, the differentiation among the legal dependents is significant only in the event the CBA has
prescribed a hierarchy among them for the granting of a benefit; hence, the use of the terms primary
beneficiaries and secondary beneficiaries for that purpose. But considering that Section 4, Article XIII of the CBA
has not included that differentiation, petitioner had no basis to deny the claim for funeral and bereavement aid of
Alfante for the death of his parent whose death and fact of legal dependency on him could be substantially
proved.
Pursuant to Article 100 of the Labor Code, petitioner as the employer could not reduce, diminish, discontinue or
eliminate any benefit and supplement being enjoyed by or granted to its employees. This prohibition against the
diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote

their welfare and to afford labor full protection.29 The application of the prohibition against the diminution of
benefits presupposes that a company practice, policy or tradition favorable to the employees has been clearly
established; and that the payments made by the employer pursuant to the practice, policy, or tradition have
ripened into benefits enjoyed by them.30 To be considered as a practice, policy or tradition, however, the giving of
the benefits should have been done over a long period of time, and must be shown to have been consistent and
deliberate.31 It is relevant to mention that we have not yet settled on the specific minimum number of years as the
length of time sufficient to ripen the practice, policy or tradition into a benefit that the employer cannot unilaterally
withdraw.32
The argument of petitioner that the grant of the funeral and bereavement benefit was not voluntary but resulted
from its mistaken interpretation as to who was considered a legal dependent of a regular employee deserves
scant consideration. To be sure, no doubtful or difficult question of law was involved inasmuch as the several
cogent statutes existing at the time the CBA was entered into already defined who were qualified as the legal
dependents of another. Moreover, the voluntariness of the grant of the benefit became even manifest from
petitioners admission that, despite the memorandum it issued in 200033 in order to "correct" the interpretation of
the term legal dependent, it still approved in 2003 the claims for funeral and bereavement aid of two employees,
namely: (a) Cecille Bulacan, for the death of her father; and (b) Charito Cartel, for the death of her mother, based
on its supposedly mistaken interpretation.34
It is further worthy to note that petitioner granted claims for funeral and bereavement aid as early as 1999, then
issued a memorandum in 2000 to correct its erroneous interpretation of legal dependent under Section 4, Article
XIII of the CBA. This notwithstanding, the 2001-2004 CBA35 still contained the same provision granting funeral or
bereavement aid in case of the death of a legal dependent of a regular employee without differentiating the legal
dependents according to the employee's civil status as married or single. The continuity in the grant of the funeral
and bereavement aid to regular employees for the death of their legal dependents has undoubtedly ripened into a
company policy. With that, the denial of Alfante's qualified claim for such benefit pursuant to Section 4, Article XIII
of the CBA violated the law prohibiting the diminution of benefits.
WHEREFORE, the Court AFFIRMS the decision promulgated on February 5, 201 0; and ORDERS petitioner to
pay the costs of suit.
SO ORDERED.

12
G.R. No. 200094

June 10, 2013

BENIGNO M. VIGILLA, ALFONSO M. BONGOT, ROBERTO CALLESA, LINDA C. CALLO, NILO B. CAMARA,
ADELIA T. CAMARA, ADOLFO G. PINON, JOHN A. FERNANDEZ, FEDERICO A. CALLO, MAXIMA P.
ARELLANO, JULITO B. COST ALES, SAMSON F. BACHAR, EDWIN P. DAMO, RENA TO E. FERNANDEZ,
GENARO F.CALLO, JIMMY C. ALETA, and EUGENIO SALINAS, Petitioners,
vs.
PHILIPPINE COLLEGE OFCRIMINOLOGY INC. and/or GREGORY ALAN F. BAUTISTA, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 16, 2011
Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 120225, which affirmed the February 11, 2011
Resolution2 and the April 28, 20113 Resolution of the National Labor Relations Commission (NLRC). The two
NLRC resolutions affirmed with modifications the July 30, 2010 Decision4 of the Labor Arbiter (LA) finding that (a)
Metropolitan Building Services, Inc. (MBMSI) was a labor-only contractor; (b) respondent Philippine College of
Criminology Inc. (PCCr) was the petitioners real principal employer; and (c) PCCr acted in bad faith in dismissing
the petitioners. The NLRC, however, declared that the claims of the petitioners were settled amicably because of
the releases, waivers and quitclaims they had executed.
The Antecedents
PCCr is a non-stock educational institution, while the petitioners were janitors, janitresses and supervisor in the
Maintenance Department of PCCr under the supervision and control of Atty. Florante A. Seril (Atty. Seril), PCCrs
Senior Vice President for Administration. The petitioners, however, were made to understand, upon application

with respondent school, that they were under MBMSI, a corporation engaged in providing janitorial services to
clients. Atty. Seril is also the President and General Manager of MBMSI.
Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had been revoked as of July
2, 2003. On March 16, 2009, PCCr, through its President, respondent Gregory Alan F. Bautista (Bautista), citing
the revocation, terminated the schools relationship with MBMSI, resulting in the dismissal of the employees or
maintenance personnel under MBMSI, except Alfonso Bongot (Bongot) who was retired.
In September, 2009, the dismissed employees, led by their supervisor, Benigno Vigilla (Vigilla), filed their
respective complaints for illegal dismissal, reinstatement, back wages, separation pay (for Bongot),
underpayment of salaries, overtime pay, holiday pay, service incentive leave, and 13th month pay against
MBMSI, Atty. Seril, PCCr, and Bautista.
In their complaints, they alleged that it was the school, not MBMSI, which was their real employer because (a)
MBMSIs certification had been revoked; (b) PCCr had direct control over MBMSIs operations; (c) there was no
contract between MBMSI and PCCr; and (d) the selection and hiring of employees were undertaken by PCCr.
On the other hand, PCCr and Bautista contended that (a) PCCr could not have illegally dismissed the
complainants because it was not their direct employer; (b) MBMSI was the one who had complete and direct
control over the complainants; and (c) PCCr had a contractual agreement with MBMSI, thus, making the latter
their direct employer.
On September 11, 2009, PCCr submitted several documents before LA Ronaldo Hernandez, including releases,
waivers and quitclaims in favor of MBMSI executed by the complainants to prove that they were employees of
MBMSI and not PCCr.5 The said documents appeared to have been notarized by one Atty. Ramil Gabao. A
portion of the releases, waivers and quitclaims uniformly reads:
For and in consideration of the total amount of ______________, as and by way of separation pay due to the
closure of the Company brought about by serious financial losses, receipt of the total amount is hereby
acknowledged, I _______________, x x x forever release and discharge x x x METROPOLITAN BUILDING
MAINTENANCE SERVICES, INC., of and from any and all claims, demands, causes of actions, damages, costs,
expenses, attorneys fees, and obligations of any nature whatsoever, known or unknown, in law or in equity,
which the undersigned has, or may hereafter have against the METROPOLITAN BUILDING MAINTENANCE
SERVICES, INC., whether administrative, civil or criminal, and whether or not arising out of or in relation to my
employment with the above company or third persons.6
Ruling of the Labor Arbiter
After due proceedings, the LA handed down his decision, finding that (a) PCCr was the real principal employer of
the complainants ; (b) MBMSI was a mere adjunct or alter ego/labor-only contractor; (c) the complainants were
regular employees of PCCr; and (d) PCCr/Bautista were in bad faith in dismissing the complainants.
The LA ordered the respondents (a) to reinstate petitioners except Bongot who was deemed separated/retired;
(b) to pay their full back wages from the date of their illegal dismissal until actual reinstatement (totaling
P2,963,584.25); (c) to pay Bongots separation or retirement pay benefit under the Labor Code (amounting to
P254,010.00); (d) to pay their 3-year Service Incentive Leave Pay (P4,245.60 each) except Vigilla (P5,141.40);
(e) to pay all the petitioners moral and exemplary damages in the combined amount of P150,000.00; and finally
(f) to pay 10% of the total computable award as Attorneys Fees.
The LA explained that PCCr was actually the one which exercised control over the means and methods of the
work of the petitioners, thru Atty. Seril, who was acting, throughout the time in his capacity as Senior Vice
President for Administration of PCCr, not in any way or time as the supposed employer/general manager or
president of MBMSI.
Despite the presentation by the respondents of the releases, waivers and quitclaims executed by petitioners in
favor of MBMSI, the LA did not touch on the validity and authenticity of the same. Neither did he discuss the
effects of such releases, waivers and quitclaims on petitioners claims.
Ruling of the NLRC

Not satisfied, the respondents filed an appeal before the NLRC. In its Resolution, dated February 11, 2011, the
NLRC affirmed the LAs findings. Nevertheless, the respondents were excused from their liability by virtue of the
releases, waivers and quitclaims executed by the petitioners. Specifically, the NLRC pointed out:
As Respondent MBMSI and Atty. Seril, together are found to be labor only contractor, they are solidarily liable
with Respondent PCCr and Gregory Alan F. Bautista for the valid claims of Complainants pursuant to Article 109
of the Labor Code on the solidary liability of the employer and indirect employer. This liability, however, is
effectively expunged by the acts of the 17 Complainants of executing Release, Waiver, and Quitclaims (pp. 170184, Records) in favor of Respondent MBMSI. The liability being joined, the release of one redounds to the
benefit of the others, pursuant to Art. 1217 of the Civil Code, which provides that "Payment made by one of the
solidary debtors extinguishes the obligation. x x x."7
In their motion for reconsideration, petitioners attached as annexes their affidavits denying that they had signed
the releases, waivers, and quitclaims. They prayed for the reinstatement in toto of the July 30, 2010 Decision of
the LA.8 MBMSI/Atty. Seril also filed a motion for reconsideration9 questioning the declaration of the NLRC that he
was solidarily liable with PCCr.
On April 28, 2011, NLRC modified its February 11, 2011 Resolution by affirming the July 30, 2010 Decision10 of
the LA only in so far as complainants Ernesto B. Ayento and Eduardo B. Salonga were concerned. As for the
other 17 complainants, the NLRC ruled that their awards had been superseded by their respective releases,
waivers and quitclaims.
The seventeen (17) complainants filed with the CA a petition for certiorari under Rule 65 faulting the NLRC with
grave abuse of discretion for absolving the respondents from their liability by virtue of their respective releases,
waivers and quitclaims.
Ruling of the Court of Appeals
On September 16, 2011, the CA denied the petition and affirmed the two Resolutions of the NLRC, dated
February 11, 2011 and April 28, 2011. The CA pointed out that based on the principle of solidary liability and
Article 121711 of the New Civil Code, petitioners respective releases, waivers and quitclaims in favor of MBMSI
and Atty. Seril redounded to the benefit of the respondents. The CA also upheld the factual findings of the NLRC
as to the authenticity and due execution of the individual releases, waivers and quitclaims because of the failure
of petitioners to substantiate their claim of forgery and to overcome the presumption of regularity of a notarized
document. Petitioners motion for reconsideration was likewise denied by the CA in its January 4, 2012
Resolution.
Hence, this petition under Rule 45 challenging the CA Decision anchored on the following
GROUNDS
The Hon. Court of Appeals COMMITTED REVERSIBLE ERRORS when:
A. IT CONSIDERED RESPONDENT METROPOLITAN BUILDING MAINTENANCE SERVICES, INC.S
LIABILITY AS SOLIDARY TO RESPONDENT PHILIPPINE COLLEGE OF CRIMINOLOGY, INC., WHEN
IN FACT THERE IS NO LEGAL BASIS TO THAT EFFECT.
B. IT DID NOT AFFIRM THE DECISION OF THE HON. LABOR ARBITER, DATED JULY 30, 2010, AS
TO 17 PETITIONERS IN THIS CASE, DISREGARDING THE CORPORATION LAW AND
JURISPRUDENCE OF THE HON. SUPREME COURT IN SO FAR AS QUITLCLAIMS, RELEASE AND
WAIVERS ARE CONCERNED IN LABOR CASES.
C. IT AFFIRMED THE DECISION OF THE HON. NATIONAL LABOR RELATIONS COMMISSION,
THAT THE 17 COMPLAINANTS HAVE SETTLED THEIR CLAIMS BY VIRTUE OF ALLEGED
RELEASES, WAIVERS AND QUITCLAIMS SIGNED BY THE COMPLAINANTS IN FAVOR OF
METROPOLITAN BUILDING MAINTENANCE, INC.
D. IT DID NOT TAKE INTO CONSIDERATION SUBSTANTIAL EVIDENCE OF
PETITIONERS/COMPLAINANTS DISPUTING THE ALLEGED WAIVERS, RELEASES AND
QUITCLAIMS, INCLUDING THE ALLEGED NOTARIZATION THEREOF.12
The petition fails.

The grounds cited by the petitioners boil down to this basic issue: whether or not their claims against the
respondents were amicably settled by virtue of the releases, waivers and quitclaims which they had executed in
favor of MBMSI.
In resolving this case, the Court must consider three (3) important sub-issues, to wit:
(a) whether or not petitioners executed the said releases, waivers and quitclaims;
(b) whether or not a dissolved corporation can enter into an agreement such as releases, waivers and
quitclaims beyond the 3-year winding up period under Section 122 of the Corporation Code; and
(c) whether or not a labor-only contractor is solidarily liable with the employer.
The Releases, Waivers and
Quitclaims are Valid
Petitioners vehemently deny having executed any release, waiver or quitclaim in favor of MBMSI. They insist that
PCCr forged the documents just to evade their legal obligations to them, alleging that the contents of the
documents were written by one person, whom they identified as Reynaldo Chavez, an employee of PCCr, whose
handwriting they were familiar with.13
To begin with, their posture was just an afterthought. Petitioners had several opportunities to question the
authenticity of the said documents but did not do so. The records disclose that during the proceedings before the
LA, PCCr submitted several documents, including the subject releases, waivers and quitclaims executed on
September 11, 2009 in favor of MBMSI,14 but petitioners never put their genuineness and due execution at issue.
These were brought up again by the respondents in their Memorandum of Appeal,15 but again petitioners did not
bother to dispute them.
It was only after the NLRCs declaration in its February 11, 2011 Resolution that the claims of petitioners had
been settled amicably by virtue of the releases, waivers and quitclaims, that petitioners, in their motion for
reconsideration,16 denied having executed any of these instruments. This passiveness and inconsistency of
petitioners will not pass the scrutiny of this Court.
At any rate, it is quite apparent that this petition raises questions of fact inasmuch as this Court is being asked to
revisit and assess anew the factual findings of the CA and the NLRC regarding the validity, authenticity and due
execution of the subject releases, waivers and quitclaims.
Well-settled is the rule that this Court is not a trier of facts and this doctrine applies with greater force in labor
cases. Questions of fact are for the labor tribunals to resolve.17 Only errors of law are generally reviewed in
petitions for review on certiorari criticizing decisions of the CA. Moreover, findings of fact of quasi-judicial bodies
like the NLRC, as affirmed by the CA, are generally conclusive on this Court.18 Hence, as correctly declared by
the CA, the following NLRC factual findings are binding and conclusive on this Court:
We noted that the individual quitclaims, waivers and releases executed by the complainants showing that they
received their separation pay from MBMSI were duly notarized by a Notary Public. Such notarization gives prima
facie evidence of their due execution. Further, said releases, waivers, and quitclaims were not refuted nor
disputed by complainants herein, thus, we have no recourse but to uphold their due execution.19
Even if the Court relaxes the foregoing rule, there is still no reason to reverse the factual findings of the NLRC
and the CA. What is on record is only the self-serving allegation of petitioners that the releases, waivers and
quitclaims were mere forgeries. Petitioners failed to substantiate this allegation. As correctly found by the CA:
"petitioners have not offered concrete proof to substantiate their claim of forgery. Allegations are not evidence."20
On the contrary, the records confirm that petitioners were really paid their separation pay and had executed
releases, waivers and quitclaims in return. In his motion for reconsideration of the February 11, 2011 Resolution
of the NLRC, Atty. Seril, President and General Manager of MBMSI, stated that the amount of 2,000,000.00
"was coursed by PCCr to me, to be handed to the complainants, through its employee, Rey Chavez."21
Petitioners requested the Court to take a look at such releases, waivers and quitclaims, particularly their contents
and the handwriting, but they failed to attach to the records copies of the said documents which they claimed to
have been forged. The petition is dismissible on this ground alone. The Rules of Court require the petition to be
accompanied by such material portions of the record as would support the petition.22 Failure to comply with the

requirements regarding "the contents of and the documents which should accompany the petition" is a ground for
the dismissal of the appeal.23
Moreover, mere unsubstantiated allegations of lack of voluntariness in executing the documents will not suffice to
overcome the presumption of authenticity and due execution of a duly notarized document. As correctly held by
the NLRC, "such notarization gives prima facie evidence of their due execution."24
Petitioners contend that the alleged notarization of the releases, waivers and quitclaims by one Atty. Ramil Gabao
did not take place, because there were no records of such documents in the Notary Section of Manila. Thus, the
prima facie evidence thereof has been disputed.
The Court is not moved. Respondents should not be penalized for the failure of the notary public to submit his
Notarial Report. In Destreza v. Rinoza-Plazo,25 this Court stated that "the notarized deed of sale should be
admitted as evidence despite the failure of the Notary Public in submitting his notarial report to the notarial
section of the RTC Manila." The Court expounded:
It is the swearing of a person before the Notary Public and the latters act of signing and affixing his seal on the
deed that is material and not the submission of the notarial report. Parties who appear before a notary public to
have their documents notarized should not be expected to follow up on the submission of the notarial reports.
They should not be made to suffer the consequences of the negligence of the Notary Public in following the
procedures prescribed by the Notarial Law.26
It would have been different if the notary public was not a lawyer or was not commissioned as such. In this
regard, however, petitioners offered no proof.
On the Revocation of MBMSIs
Certificate of Incorporation
Petitioners further argue that MBMSI had no legal personality to incur civil liabilities as it did not exist as a
corporation on account of the fact that its Certificate of Incorporation had been revoked on July 2, 2003.
Petitioners ask this Court to exempt MBMSI from its liabilities because it is no longer existing as a corporation.
The Court cannot accommodate the prayer of petitioners.
The executed releases, waivers and quitclaims are valid and binding notwithstanding the revocation of MBMSIs
Certificate of Incorporation. The revocation does not result in the termination of its liabilities. Section 12227 of the
Corporation Code provides for a three-year winding up period for a corporation whose charter is annulled by
forfeiture or otherwise to continue as a body corporate for the purpose, among others, of settling and closing its
affairs.
Even if said documents were executed in 2009, six (6) years after MBMSIs dissolution in 2003, the same are still
valid and binding upon the parties and the dissolution will not terminate the liabilities incurred by the dissolved
corporation pursuant to Sections 122 and 14528 of the Corporation Code. In the case of Premiere Development
Bank v. Flores,29 the Court held that a corporation is allowed to settle and close its affairs even after the winding
up period of three (3) years. The Court wrote:
As early as 1939, this Court held that, although the time during which the corporation, through its own officers,
may conduct the liquidation of its assets and sue and be sued as a corporation is limited to three years from the
time the period of dissolution commences, there is no time limit within which the trustees must complete a
liquidation placed in their hands. What is provided in Section 122 of the Corporation Code is that the conveyance
to the trustees must be made within the three-year period. But it may be found impossible to complete the work
of liquidation within the three-year period or to reduce disputed claims to judgment. The trustees to whom the
corporate assets have been conveyed pursuant to the authority of Section 122 may sue and be sued as such in
all matters connected with the liquidation.
Furthermore, Section 145 of the Corporation Code clearly provides that "no right or remedy in favor of or against
any corporation, its stockholders, members, directors, trustees, or officers, nor any liability incurred by any such
corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the
subsequent dissolution of said corporation." Even if no trustee is appointed or designated during the three-year
period of the liquidation of the corporation, the Court has held that the board of directors may be permitted to
complete the corporate liquidation by continuing as "trustees" by legal implication.30 [Emphases supplied; citations
omitted]

A Labor-only Contractor is Solidarily

Liable with the Employer
The issue of whether there is solidary liability between the labor-only contractor and the employer is crucial in this
case. If a labor-only contractor is solidarily liable with the employer, then the releases, waivers and quitclaims in
favor of MBMSI will redound to the benefit of PCCr. On the other hand, if a labor-only contractor is not solidarily
liable with the employer, the latter being directly liable, then the releases, waivers and quitclaims in favor of
MBMSI will not extinguish the liability of PCCr.
On this point, petitioners argue that there is no solidary liability to speak of in case of an existence of a labor-only
contractor. Petitioners contend that under Article 10631 of the Labor Code, a labor-only contractors liability is not
solidary as it is the employer who should be directly responsible to the supplied worker. They argue that Article
10932 of the Labor Code (solidary liability of employer/indirect employer and contractor/subcontractor) and Article
1217 of the New Civil Code (extinguishment of solidary obligation) do not apply in this case. Hence, the said
releases, waivers and quitclaims which they purportedly issued in favor of MBMSI and Atty. Seril do not
automatically release respondents from their liability.
Again, the Court disagrees.
The NLRC and the CA correctly ruled that the releases, waivers and quitclaims executed by petitioners in favor of
MBMSI redounded to the benefit of PCCr pursuant to Article 1217 of the New Civil Code. The reason is that
MBMSI is solidarily liable with the respondents for the valid claims of petitioners pursuant to Article 109 of the
Labor Code.
As correctly pointed out by the respondents, the basis of the solidary liability of the principal with those engaged
in labor-only contracting is the last paragraph of Article 106 of the Labor Code, which in part provides: "In such
cases labor-only contracting, the person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by
him."
Section 19 of Department Order No. 18-02 issued by the Department of Labor and Employment (DOLE), which
was still in effect at the time of the promulgation of the subject decision and resolution, interprets Article 106 of
the Labor Code in this wise:
Section 19. Solidary liability. The principal shall be deemed as the direct employer of the contractual employees
and therefore, solidarily liable with the contractor or subcontractor for whatever monetary claims the contractual
employees may have against the former in the case of violations as provided for in Sections 5 (LaborOnly
contracting), 6 (Prohibitions), 8 (Rights of Contractual Employees) and 16 (Delisting) of these Rules. In addition,
the principal shall also be solidarily liable in case the contract between the principal and contractor or
subcontractor is preterminated for reasons not attributable to the fault of the contractor or subcontractor.
[Emphases supplied].
The DOLE recognized anew this solidary liability of the principal employer and the labor-only contractor when it
issued Department Order No. 18-A, series of 2011, which is the latest set of rules implementing Articles 106-109
of the Labor Code. Section 27 thereof reads:
Section 27. Effects of finding of labor-only contracting and/or violation of Sections 7, 8 or 9 of the Rules. A finding
by competent authority of labor-only contracting shall render the principal jointly and severally liable with the
contractor to the latters employees, in the same manner and extent that the principal is liable to employees
directly hired by him/her, as provided in Article 106 of the Labor Code, as amended.
A finding of commission of any of the prohibited activities in Section 7, or violation of either Sections 8 or 9
hereof, shall render the principal the direct employer of the employees of the contractor or subcontractor,
pursuant to Article 109 of the Labor Code, as amended. (Emphasis supplied.)
These legislative rules and regulations designed to implement a primary legislation have the force and effect of
law. A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is
within the statutory authority granted by the legislature.33
Jurisprudence is also replete with pronouncements that a job-only contractor is solidarily liable with the employer.
One of these is the case of Philippine Bank of Communications v. NLRC34 where this Court explained the legal
effects of a job-only contracting, to wit:

Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a
contract with a contractor for the performance of work for the employer, does not thereby create an employeremployees relationship between himself and the employees of the contractor. Thus, the employees of the
contractor remain the contractor's employees and his alone. Nonetheless when a contractor fails to pay the
wages of his employees in accordance with the Labor Code, the employer who contracted out the job to the
contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of
the work performed under the contract" as such employer were the employer of the contractor's employees. The
law itself, in other words, establishes an employer-employee relationship between the employer and the job
contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to
them.
A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e "the person or
intermediary" - is considered "merely as an agent of the employer." The employer is made by the statute
responsible to the employees of the "labor only" contractor as if such employees had been directly employed by
the employer. Thus, where "labor-only" contracting exists in a given case, the statute itself implies or establishes
an employer-employee relationship between the employer (the owner of the project) and the employees of the
"labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to prevent
any violation or circumvention of any provision of this Code." The law in effect holds both the employer and the
"laboronly" contractor responsible to the latter's employees for the more effective safeguarding of the employees'
rights under the Labor Code.35 [Emphasis supplied].
The case of San Miguel Corporation v. MAERC Integrated Services, Inc.36 also recognized this solidary liability
between a labor-only contractor and the employer. In the said case, this Court gave the distinctions between
solidary liability in legitimate job contracting and in labor-only contracting, to wit:
In legitimate job contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to
ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with
the job contractor only for the payment of the employees' wages whenever the contractor fails to pay the same.
Other than that, the principal employer is not responsible for any claim made by the employees.
On the other hand, in labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent
of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer. The principal employer therefore becomes
solidarily liable with the labor-only contractor for all the rightful claims of the employees. 37 [Emphases supplied;
Citations omitted]
Recently, this Court reiterated this solidary liability of labor-only contractor in the case of 7K Corporation v.
NLRC38 where it was ruled that the principal employer is solidarily liable with the labor-only contractor for the
rightful claims of the employees.
Conclusion
Considering that MBMSI, as the labor-only contractor, is solidarily liable with the respondents, as the principal
employer, then the NLRC and the CA correctly held that the respondents solidary liability was already expunged
by virtue of the releases, waivers and quitclaims executed by each of the petitioners in favor of MBMSI pursuant
to Article 1217 of the Civil Code which provides that "payment made by one of the solidary debtors extinguishes
the obligation."
This Court has constantly applied the Civil Code provisions on solidary liability, specifically Articles 1217 and
1222,39 to labor cases. In Varorient Shipping Co., Inc. v. NLRC,40 this Court held:
The POEA Rules holds her, as a corporate officer, solidarily liable with the local licensed manning agency. Her
liability is inseparable from those of Varorient and Lagoa. If anyone of them is held liable then all of them would
be liable for the same obligation. Each of the solidary debtors, insofar as the creditor/s is/are concerned, is the
debtor of the entire amount; it is only with respect to his co-debtors that he/she is liable to the extent of his/her
share in the obligation. Such being the case, the Civil Code allows each solidary debtor, in actions filed by the
creditor/s, to avail himself of all defenses which are derived from the nature of the obligation and of those which
are personal to him, or pertaining to his share [citing Section 1222 of the Civil Code]. He may also avail of those
defenses personally belonging to his co-debtors, but only to the extent of their share in the debt. Thus, Varorient
may set up all the defenses pertaining to Colarina and Lagoa; whereas Colarina and Lagoa are liable only to the
extent to which Varorient may be found liable by the court.
1wphi1

xxxx
If Varorient were to be found liable and made to pay pursuant thereto, the entire obligation would already be
extinguished [citing Article 1217 of the Civil Code] even if no attempt was made to enforce the judgment against
Colarina. Because there existed a common cause of action against the three solidary obligors, as the acts and
omissions imputed against them are one and the same, an ultimate finding that Varorient was not liable would,
under these circumstances, logically imply a similar exoneration from liability for Colarina and Lagoa, whether or
not they interposed any defense.41 [Emphases supplied]
In light of these conclusions, the Court holds that the releases, waivers and quitclaims executed by petitioners in
favor of MBMSI redounded to the respondents' benefit. The liabilities of the respondents to petitioners are now
deemed extinguished. The Court cannot allow petitioners to reap the benefits given to them by MBMSI in
exchange for the releases, waivers and quitclaims and, again, claim the same benefits from PCCr.
While it is the duty of the courts to prevent the exploitation of employees, it also behooves the courts to protect
the sanctity of contracts that do not contravene the law.42 The law in protecting the rights of the laborer authorizes
neither oppression nor self-destruction of the employer. While the Constitution is committed to the policy of social
justice and the protection of the working class, 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,
the 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 the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and applicable law and doctrine.43
WHEREFORE, the petition is DENIED.
SO ORDERED.

13
G.R. No. 202791

June 10, 2013

PHILIPPINE TRANSMARINE CARRIERS, INC., Petitioner,

vs.
LEANDRO LEGASPI, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the January 5, 2012
Resolution1 and July 20, 2012 Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 116686, which denied
the petitioners motion to amend the dispositive portion of the June 29, 2011 CA Decision.
The Factual and Procedural Antecedents
Respondent Leandro Legaspi (respondent) was employed as Utility Pastry on board the vessel "Azamara
Journey" under the employment of petitioner Philippine Transmarine Carriers, Inc. (petitioner). Respondents
employment was covered by a Collective Bargaining Agreement (CBA) wherein it was agreed that the company
shall pay a maximum disability compensation of up to US$60,000.00 only.
While on board the vessel, respondent suffered "Cardiac Arrest S/P ICD Insertation." He was checked by the
ships doctor and was prescribed medications. On November 14, 2008, respondent was repatriated to receive
further medical treatment and examination. On May 23, 2009, the company designated physician assessed his
condition to be Disability Grade 2.
Not satisfied, respondent filed a complaint for full and permanent disability compensation against petitioner
before the Labor Arbiter (LA).

The Labor Arbiters Ruling

In its January 25, 2010 Decision,3 the LA ruled in favor of respondent, the dispositive portion of which reads:
WHEREFORE, respondents (now petitioner) are hereby ordered to pay complainant jointly and severally, the
following:
1. US$80,000.00 or its peso equivalent at the time of payment as permanent disability compensation;
2. US$1,320.00 or its peso equivalent as sick wages;
3. Attorneys fees equivalent to 10% of the total award.
SO ORDERED.
Notably, the LA awarded US$80,000.00 based on the ITF Cruise Ship Model Agreement for Catering Personnel,
not on the CBA.
Not satisfied, petitioner appealed the LA decision before the National Labor Relations Commission (NLRC).
The NLRCs Ruling
In its May 28, 2010 Decision, the NLRC affirmed the decision of the LA. Petitioner timely filed its motion for
reconsideration but it was denied by the NLRC in its July 30, 2010 Resolution. On September 5, 2010, the NLRC
issued the Entry of Judgment stating that its resolution affirming the LA decision had become final and executory.
On October 22, 2010, during the hearing on the motion for execution before the NLRC, petitioner agreed to pay
respondent US$81,320.00. The terms and conditions of said payment were embodied in the Receipt of Judgment
Award with Undertaking,4 wherein respondent acknowledged receipt of the said amount and undertook to return it
to petitioner in the event the latters petition for certiorari would be granted, without prejudice to respondents right
to appeal. It was also agreed upon that the remaining balance would be given on the next scheduled conference.
Pertinent portions of the said undertaking provide:
xxxx
3. That counsel (of the petitioner) manifested their willingness to tender the judgment award without
prejudice to the respondents (now petitioner) right to file a Petition for Certiorari and provided,
complainant (now respondent) undertakes to return the full amount without need of demand or a
separate action in the event that the Petition for Certiorari is granted;
4. That complainants counsel was amenable to the arrangement and accepted the offer. NOW
THEREFORE complainant and his counsel hereby acknowledge RECEIPT of the sum of EIGHTY-ONE
THOUSAND THREE HUNDRED TWENTY AND 0/100 (US$81,320.00) covered by CITIBANK CHECK
with No. 1000001161 dated October 21, 2010 payable to the order of LEANDRO V. LEGASPI and
UNDERTAKES to RETURN the entire amount to respondent PHILIPPINE TRANSMARINE CARRIERS,
INC. in the event that the Petition for Certiorari is granted without prejudice to complainants right to
appeal. Such undertaking shall be ENFORCEABLE by mere motion before this Honorable office without
need of separate action.5 [Emphasis and underscoring supplied]
On November 8, 2010, petitioner timely filed a petition for certiorari with the CA.6
In the meantime, on March 2, 2011, the LA issued a writ of execution which noted petitioners payment of the
amount of US$81,320.00. On March 16, 2011, in compliance with the said writ, petitioner tendered to the NLRC
Cashier the additional amounts of US$8,132.00 as attorneys fees and P3,042.95 as execution fee. In its Order,
dated March 31, 2011, the LA ordered the release of the aforementioned amounts to respondent.
The CAs Ruling
Unaware of a) the September 5, 2010 entry of judgment of the NLRC, b) the October 22, 2010 payment of
US$81,320.00, and c) the writ of execution issued by the LA, the CA rendered its Decision, dated June 29, 2011.
The CA partially granted the petition for certiorari and modified the assailed resolutions of the NLRC, awarding

only US$60,000.00 pursuant to the CBA between Celebrity Cruise Lines and Federazione Italianaa Transporti
CISL.
Petitioner then filed its Manifestation with Motion to Amend the Dispositive Portion, submitting to the CA the writ
of execution issued by the LA in support of its motion. Petitioner contended that since it had already paid the total
amount of US$89,452.00, it was entitled to the return of the excess payment in the amount of US$29,452.00.
In its assailed January 5, 2012 Resolution, the CA denied the motion and ruled that the petition should have been
dismissed for being moot and academic not only because the assailed decision of the NLRC had become final
and executory on September 5, 2010, but also because the said judgment had been satisfied on October 22,
2010, even before the filing of the petition for certiorari on November 8, 2010. In so ruling, the CA cited the
pronouncement in Career Philippines Ship Management v. Geronimo Madjus7 where it was stated that the
satisfaction of the monetary award rendered the petition for certiorari moot.
Petitioner filed a motion for reconsideration but it was denied by the CA in its assailed July 20, 2012 Resolution.
Hence, this petition.
ISSUES
I. WHETHER THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR OF LAW IN
RULING THAT PETITIONER IS ESTOPPED IN COLLECTING THE EXCESS PAYMENT IT MADE TO
THE RESPONDENT NOTWITHSTANDING THE RECEIPT OF JUDGMENT AWARD SIGNED BY THE
RESPONDENT
II. WHETHER THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN
INVOKING THE RULING OF CAREER V. MADJUS
Petitioner argues that it clearly filed its petition for certiorari within the 60-day reglementary period and, thus, the
NLRC resolutions could not have attained finality. Citing Delima v. Gois,8 petitioner avers that the NLRC cannot
declare that a decision has become final and executory because the period to file the petition has not yet expired.
Petitioner, thus, contends that the finality of the NLRC judgment did not render the petition moot and academic
because such is null and void ab initio.
Petitioner also argues that the Receipt of the Judgment Award with Undertaking, which was never refuted by
respondent, clearly stated that the payment of the judgment award was without prejudice to its right to file a
petition for certiorari with the CA. Petitioner asserts that the case relied upon by the CA, Career Philippines, is not
applicable as it is not on all fours with this case. Instead, it asserts that the applicable case should be Leonis
Navigation Co., Inc. v. Villamater,9 where it was held that the satisfaction of the monetary award by the employer
does not render the petition for certiorari moot before the CA.
On the other hand, respondent reiterates the CA ruling, asserting that the voluntary satisfaction by petitioner of
the full judgment award rendered the case moot, and insists that it was a clear indication that it had already been
persuaded by the judiciousness and merits of the award for disability compensation. He also avers that this
petition is merely pro-forma as it is a reiteration of petitioners previous issues and arguments already resolved by
the CA.
The Courts Ruling
Petition for Certiorari, Not Moot
Section 14, Rule VII of the 2011 NLRC Rules of Procedure provides that decisions, resolutions or orders of the
NLRC shall become final and executory after ten (10) calendar days from receipt thereof by the parties, and entry
of judgment shall be made upon the expiration of the said period.10 In St. Martin Funeral Home v. NLRC,11
however, it was ruled that judicial review of decisions of the NLRC may be sought via a petition for certiorari
before the CA under Rule 65 of the Rules of Court; and under Section 4 thereof, petitioners are allowed sixty (60)
days from notice of the assailed order or resolution within which to file the petition. Hence, in cases where a
petition for certiorari is filed after the expiration of the 10-day period under the 2011 NLRC Rules of Procedure but
within the 60-day period under Rule 65 of the Rules of Court, the CA can grant the petition and modify, nullify and
reverse a decision or resolution of the NLRC.

Accordingly, in this case, although the petition for certiorari was not filed within the 10-day period, petitioner timely
filed it before the CA within the 60-day reglementary period under Rule 65. It has, thus, been held that the CAs
review of the decisions or resolutions of the NLRC under Rule 65, particularly those which have already been
executed, does not affect their statutory finality, considering that Section 4,12 Rule XI of the 2011 NLRC Rules of
Procedure, provides that a petition for certiorari filed with the CA shall not stay the execution of the assailed
decision unless a restraining order is issued. In Leonis Navigation, it was further written:
The CA, therefore, could grant the petition for certiorari if it finds that the NLRC, in its assailed decision or
resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding evidence
that is material to or decisive of the controversy; and it cannot make this determination without looking into the
evidence of the parties. Necessarily, the appellate court can only evaluate the materiality or significance of the
evidence, which is alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in
relation to all other evidence on record.13 Notably, if the CA grants the petition and nullifies the decision or
resolution of the NLRC on the ground of grave abuse of discretion amounting to excess or lack of jurisdiction, the
decision or resolution of the NLRC is, in contemplation of law, null and void ab initio; hence, the decision or
resolution never became final and executory.14
Career Philippines not applicable
In Career Philippines, believing that the execution of the LA Decision was imminent after its petition for injunctive
relief was denied, the employer filed before the LA a pleading embodying a conditional satisfaction of judgment
before the CA and, accordingly, paid the employee the monetary award in the LA decision. In the said pleading,
the employer stated that the conditional satisfaction of the judgment award was without prejudice to its pending
appeal before the CA and that it was being made only to prevent the imminent execution.15
The CA later dismissed the employers petition for being moot and academic, noting that the decision of the LA
had attained finality with the satisfaction of the judgment award. This Court affirmed the ruling of the CA,
interpreting the "conditional settlement" to be tantamount to an amicable settlement of the case resulting in the
mootness of the petition for certiorari, considering (i) that the employee could no longer pursue other claims,16
and (ii) that the employer could not have been compelled to immediately pay because it had filed an appeal bond
to ensure payment to the employee.
Stated differently, the Court ruled against the employer because the conditional satisfaction of judgment signed
by the parties was highly prejudicial to the employee. The agreement stated that the payment of the monetary
award was without prejudice to the right of the employer to file a petition for certiorari and appeal, while the
employee agreed that she would no longer file any complaint or prosecute any suit of action against the employer
after receiving the payment.
In contrast, in Leonis Navigation, after the NLRC resolution awarding disability benefits became final and
executory, the employer paid the monetary award to the employee. The CA dismissed the employers petition for
certiorari, ruling that the final and executory decisions or resolutions of the NLRC rendered appeals to superior
courts moot and academic. This Court disagreed with the CA and held that final and executed decisions of the
NLRC did not prevent the CA from reviewing the same under Rule 65 of the Rules of Court. It was further ruled
that the employee was estopped from claiming that the case was closed and terminated, considering that the
employees Acknowledgment Receipt stated that such was without prejudice to the final outcome of the petition
for certiorari pending before the CA.
In the present case, the Receipt of the Judgment Award with Undertaking was fair to both the employer and the
employee. As in Leonis Navigation, the said agreement stipulated that respondent should return the amount to
petitioner if the petition for certiorari would be granted but without prejudice to respondents right to appeal. The
agreement, thus, provided available remedies to both parties.
It is clear that petitioner paid respondent subject to the terms and conditions stated in the Receipt of the
Judgment Award with Undertaking.17 Both parties signed the agreement. Respondent neither refuted the
agreement nor claimed that he was forced to sign it against his will.
Therefore, the petition for certiorari was not rendered moot despite petitioners satisfaction of the judgment
award, as the respondent had obliged himself to return the payment if the petition would be granted.
Return of Excess Payment
As the agreement was voluntarily entered into and represented a reasonable settlement, it is binding on the
parties and may not later be disowned simply because of a change of mind.18 Respondent agreed to the

stipulation that he would return the amount paid to him in the event that the petition for certiorari would be
granted. Since the petition was indeed granted by the CA, albeit partially, respondent must comply with the
condition to return the excess amount.
The Court finds that the Receipt of the Judgment Award with Undertaking was a fair and binding agreement. It
was executed by the parties subject to outcome of the petition. To allow now respondent to retain the excess
money judgment would amount to his unjust enrichment to the prejudice of petitioner.
Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for property or
benefits received under circumstances that give rise to legal or equitable obligation to account for them. To be
entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not
itself a theory of reconveyance. Rather, it is a prerequisite for the enforcement of the doctrine of restitution.19
There is unjust enrichment when:
1. A person is unjustly benefited; and
2. Such benefit is derived at the expense of or with damages to another.20
In the case at bench, petitioner paid respondent US$81,320.00 in the pre-execution conference plus attorneys
fees of US$8,132.00 pursuant to the writ of execution. The June 29, 2011 CA Decision, however, modified the
final resolution of the NLRC and awarded only US$60,000.00 to respondent. If allowed to return the excess, the
respondent would have been unjustly benefited to the prejudice and expense of petitioner.
1wphi1

Petitioner's claim of excess payment is further buttressed by, and in line with, Section 14, Rule XI of the 20 II
NLRC Rules of Procedure which provides:
EFFECT OF REVERSAL OF EXECUTED JUDGMENT. Where the executed judgment is totally or partially
reversed or annulled by the Court of Appeals or the Supreme Court, the Labor Arbiter shall, on motion, issue
such orders of restitution of the executed award, except wages paid during reinstatement pending appeal.
[Emphases supplied]
Although the Court has, more often than not, been inclined towards the plight of the workers and has upheld their
cause in their conflicts with the employers, such inclination has not blinded it to the rule that justice is in every
case for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine.21
WHEREFORE, the petition is GRANTED. The Court of Appeals Resolutions, dated January 5, 2012 and July 20,
2012, are hereby REVERSED and SET ASIDE. Respondent Leandro Legaspi is ORDERED to return the excess
amount of payment in the sum of
US$29,452.00 to petitioner Philippine Transmarine Carriers, Inc. The amount shall earn interest at the rate of
12o/o per annum from the finality of this judgment.
SO ORDERED.

14