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SECOND DIVISION

[G.R. No. 204325. April 18, 2016.]

LYNMAN BACOLOR, JEFFREY R. GALURA, HELEN B.


TORRES, FRITZIE C. VILLEGAS, RAYMOND CANLAS and
ZHEILA C. TORRES, * petitioners, vs. VL MAKABALI
MEMORIAL HOSPITAL, INC., ALEJANDRO S. MAKABALI,
MELCHOR CATAMBING and DAX M.
TIDULA, respondents.

DECISION

DEL CASTILLO, J p:
Rules of procedure must be used to achieve speedy and
efficient administration of justice and not derail it. When strict
application of the rules on verification and non-forum shopping
will result in patent denial of substantial justice, these rules may
be construed liberally. After all, the ends of justice are better
served when cases are determined on the merits, not on mere
technicality. 1
This Petition for Review on Certiorari assails the
Resolution 2 dated July 12, 2012 of the Court of Appeals (CA) in
CA-G.R. SP No. 125333. The CA dismissed the Petition
for Certiorari filed therewith because of the purported defective
Verification/Certificate of Non-Forum Shopping with Undertaking
appended to the Petition; and of petitioners' violation of Section
3, Rule 46 of the Rules of Court. Also challenged is the CA
Resolution 3 dated October 22, 2012 which denied the Motion for
Reconsideration for lack of merit.
Factual Antecedents
The case stemmed from an amended Complaint 4 for illegal
dismissal and money claims filed by Drs. Lynman Bacolor (Dr.
Bacolor), Jeffrey R. Galura (Dr. Galura), Helen B. Torres (Dr.
Helen), Fritzie C. Villegas (Dr. Villegas), Raymond Canlas (Dr.
Canlas), Zheila C. Torres (Dr. Zheila) and Dax Tidula (Dr. Tidula)
against VL Makabali Hospital, Inc. (the Hospital), Alejandro S.
Makabali, its owner and President, and Melchor Catambing
(Catambing), its Emergency Room (ER) Manager. 5
Allegedly, the Hospital engaged Drs. Bacolor; Galura, Villegas
and Canlas as resident physicians assigned in its ER for one year,
commencing October 2000 until October 2001. It engaged Drs.
Helen and Zheila, also as ER resident physicians, starting March
2001 until March 2002, and January 2002 until January 2003,
respectively. Despite the expiration of their contracts, the
Hospital continued to employ Drs. Bacolor, Galura, Villegas,
Canlas, Helen and Zheila (petitioners). 6
Petitioners stated that on May 3, 2006, Catambing and one
Dr. Lopez instructed them to resign, and re-apply to the Hospital
as resident physicians under a one-year fixed term contract. They
further alleged that Catambing and Dr. Lopez later directed them
to sign a waiver and offered them "gratitude" pay of P27,000.00
but they refused to resign; and because of their refusal,
respondents demoted them as assistant physicians in the
Operating Room (OR) of the Hospital. 7
Additionally, petitioners insisted that to compel them to
resign, respondents issued notices to explain to Drs. Bacolor,
Galura, Helen, Villegas and Canlas. In particular, Drs. Bacolor,
Galura and Helen were charged with dishonesty for allegedly
directing patients to secure laboratory examinations outside the
Hospital; while Drs. Villegas and Canlas were charged with
violation of timekeeping procedure and habitual violation of rules
and regulations. 8 CAIHTE
Consequently, petitioners filed a case for constructive illegal
dismissal against respondents. They argued that despite their
complaint, respondents still conducted an administrative
investigation against them. 9 On June 30, 2006, Drs. Bacolor and
Galura received notices of termination from the Hospital. 10
Petitioners contended that they were constructively
dismissed when respondents demoted them as assistant
physicians in the OR of the Hospital. 11 They stated that such
demotion was neither necessary nor temporary, and was
arbitrarily done to force them to resign. They further averred that
Drs. Bacolor and Galura were actually illegally dismissed after they
were given respective notices of termination. 12
On the other hand, Dr. Tidula stated that the Hospital
engaged him as resident physician for a year commencing on
January 1, 2001 to December 31, 2001; the Hospital renewed his
contract for the year 2002 to 2003; and after his contract expired,
the Hospital continued to engage his services. 13
Dr. Tidula likewise alleged that in 2005, several resident
physicians in the Hospital resigned. As a result, the remaining
resident physicians were made to fill in their duties. Allegedly, it
was agreed upon that when a resident doctor was absent, a
reliever would take his place; and the reliever's fee would be
charged against the salary of the absent doctor. Dr. Tidula claimed
that the reliever shall punch in the time card of the absent doctor
for recording, accounting and expediency purposes. 14
Furthermore, Dr. Tidula asserted that in February 2006, Dr.
Amelita Lising (Dr. Lising), who was a resident physician, went on
leave. He averred that being the acting Chief Resident, he
implemented the agreement regarding the designation of
reliever. He stated that the relievers of Dr. Lising were made to
punch in and out her time card to prove that they had taken her
place; and they received salary from that intended for Dr.
Lising. 15
Dr. Tidula narrated that on May 3, 2006, he and his fellow
residents were directed to resign with the promise that they
would be re-engaged under a fixed term of one year. He averred
that Catambing and Dr. Lopez also instructed him and the other
resident physicians to tender their resignation and sign a waiver
in favor of the Hospital. He alleged that they were also offered
P27,000.00 as financial assistance; however, he and the other
resident physicians refused to resign. 16
Additionally, Dr. Tidula alleged that on May 16, 2006, he was
ordered to report exclusively at the OR of the Hospital as assistant
physician; and this demotion was a result of his refusal to resign.
Consequently, he filed a complaint for constructive dismissal
against the Hospital. 17
Later, Catambing gave Dr. Tidula a Notice 18 of dismissal for
violation of timekeeping procedure. Dr. Tidula stated that he
inquired from Catambing why he was not given any notice to
explain. Purportedly, Catambing informed him that a notice to
explain was sent through a private courier. Upon verification, Dr.
Tidula discovered that the notice was delivered to a person
unknown to him. He informed the Hospital about the matter but
the Hospital insisted that he was given the opportunity to explain
and was invited to an investigation, as such, the sanction against
him remains. 19
Dr. Tidula argued that he was illegally dismissed since he did
not receive a notice to explain; and he did not violate any of the
company rules. 20
For their part, respondents asserted that Drs. Tidula, Bacolor
and Galura were validly dismissed. In particular, they alleged that
Dr. Tidula violated timekeeping procedure of the Hospital when
he punched in Dr. Lising's time card on February 2, 6, 10 and 12,
2006. 21 On the other hand, Drs. Bacolor and Galura were found
guilty of referring patients to other clinics for laboratory
examination in February 2006. 22
Moreover, respondents claimed that the Hospital did not
dismiss Drs. Helen, Villegas and Canlas; thus, they should be
dropped from the complaint. They added that Dr. Zheila was
never cited for any infraction but she abandoned her work as she
had been absent since July 2006. 23
Ruling of the Labor Arbiter
On July 23, 2010, the LA rendered a Decision 24 finding
respondents guilty of illegally dismissing petitioners and Dr.
Tidula, as well as ordering respondents to pay them backwages
from the time of their dismissal until finality of the Decision, and
separation pay. The LA also ordered the Hospital to pay
petitioners and Dr. Tidula moral damages of P100,000.00 each
and exemplary damages of P100,000.00 each, and attorney's
fees. DETACa
The Hospital appealed to the National Labor Relations
Commission (NLRC). 25
Ruling of the National Labor Relations Commission
On November 11, 2011, the NLRC reversed and set aside the
LA Decision and dismissed the complaints. 26 It held that there
was no showing that petitioners and Dr. Tidula were demoted,
and that such demotion amounted to constructive dismissal. It
ruled that "it would be difficult to discern the differences between
the duties of a resident and assistant physician, as both
indubitably perform doctor's duties." 27 Also, the NLRC decreed
that Dr. Zheila did not even sign the verification and certificate of
non-forum shopping in this case.
Moreover, the NLRC gave credence to respondents' position
that Drs. Bacolor and Galura were validly dismissed because they
repeatedly referred patients to another clinic for laboratory
examinations. It ruled that such was an act of deceit because the
Hospital offered the same services.
On April 18, 2012, the NLRC denied petitioners and Dr.
Tidula's motion for reconsideration. 28
Aggrieved, petitioners filed a Petition for Certiorari with the
CA ascribing grave abuse of discretion on the part of the NLRC in
giving due course to the appeal despite its alleged lack of appeal
bond; and in reversing the LA Decision.
The Petition was accompanied by three separate
Verifications/Certificates of Non-Forum Shopping signed by Drs.
Galura, Bacolor and Helen. 29 Atty. Carlos Raphael N. Francisco
executed and signed a Verification/Certificate of Non-Forum
Shopping with Undertaking in behalf of Drs. Villegas, Canlas and
Zheila. 30
Ruling of the Court of Appeals
On July 12, 2012, the CA issued the assailed Resolution, the
pertinent portions of which read:
The Petition for Certiorari contains the following
infirmities, hence is DISMISSED:
1. The Verification/Certification of Non-
Forum Shopping With Undertaking attached
to the Petition is executed by Atty. Carlos
Raphael N. Francisco, allegedly [sic] counsel
of record of petitioners Fritzie C. Villegas,
Raymond Canlas and Zeila C. Torres, not by
the three petitioners themselves, in
violation of Rule 7, Section 5 of the Rules of
Court, and the ruling in Far Eastern Shipping
Company v. Court of Appeals, et al.
2. The Petition does not indicate in its title
that Dax Tidula is a party respondent,
although in the portion entitled 'Parties' he
is so named, and does not indicate the
address of Dax Tidula, all in violation of Rule
46, Section 3 of the Rules of Court, in
relation to Rule 65 of the same Rules.
SO ORDERED. 31
On October 22, 2012, the CA denied petitioners' Motion for
Reconsideration. 32
Aggrieved, petitioners filed this Petition raising the following
assignment of errors:
[1] THE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY NOT PROBABLY IN
ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE HONORABLE COURT WHEN THE
COURT OF APPEALS DISMISSED THE PETITION
FOR CERTIORARI OF THE PETITIONERS DESPITE THE
FACT THAT SEVERAL OF THE PETITIONERS HAD
VALIDLY EXECUTED VERIFICATIONS AND
CERTIFICATES OF NON-FORUM SHOPPING WHICH
WERE ATTACHED TO SAID PETITION
FOR CERTIORARI;
[2] THE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY NOT PROBABLY IN
ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE HONORABLE COURT WHEN THE
COURT OF APPEALS DISMISSED THE PETITION
FOR CERTIORARI OF THE PETITIONERS DESPITE THE
FACT THAT THE PETITIONERS HAD SUBSTANTIALLY
COMPLIED WITH THE RULES ON THE EXECUTION
OF A VERIFICATION AND CERTIFICATE OF NON-
FORUM SHOPPING; aDSIHc
[3] THE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY NOT PROBABLY IN
ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE HONORABLE COURT WHEN THE
COURT OF APPEALS DISMISSED THE PETITION
FOR CERTIORARI OF THE PETITIONERS DESPITE THE
FACT THAT THE ONLY KNOWN ADDRESS OF
RESPONDENT TIDULA WAS INCLUDED IN THE
PETITION FOR CERTIORARI AND THAT
RESPONDENT TIDULA, THROUGH HIS COUNSEL,
WAS SERVED WITH A COPY OF SUCH PETITION
FOR CERTIORARI;
[4] THE COURT OF APPEALS SANCTIONED A DEPARTURE
BY THE NLRC IN NLRC CASE NO[.] RAB. III-06-10180-
06 FROM THE ACCEPTED OR USUAL COURSE OF
JUDICIAL PROCEEDINGS AS THE COURT OF
APPEALS ALLOWED THE NLRC TO VIRTUALLY
EXTEND THE PERIOD OF THE RESPONDENT
HOSPITAL TO FILE AN APPEAL FOR ALMOST FOUR
MONTHS FROM THE EXPIRATION OF THE PERIOD
TO FILE SUCH APPEAL;
[5] THE COURT OF APPEALS SANCTIONED A DEPARTURE
BY THE NLRC IN NLRC CASE NO[.] RAB. III-06-10180-
06 FROM THE ACCEPTED OR USUAL COURSE OF
JUDICIAL PROCEEDINGS AS THE COURT OF
APPEALS ALLOWED THE NLRC TO GIVE DUE
COURSE TO AN APPEAL THAT WAS CLEARLY FILED
OUT OF TIME AND TO MODIFY THE DECISION OF
THE LABOR ARBITER THAT WAS ALREADY FINAL
AND EXECUTORY; and
[6] THE COURT OF APPEALS SANCTIONED A DEPARTURE
BY THE NLRC IN NLRC CASE NO[.] RAB. III-06-10180-
06 FROM THE ACCEPTED OR USUAL COURSE OF
JUDICIAL PROCEEDINGS AS THE COURT OF
APPEALS TOLERATED THE GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION COMMITTED BY THE NLRC IN
REVERSING IN TOTO THE DECISION OF THE LABOR
ARBITER DESPITE THE FACT THAT SUCH REVERSAL
IS NOT SUPPORTED BY ANY EVIDENCE ON RECORD
AND BY THE APPLICABLE LAWS. 33
Petitioners argue that the verifications executed by three of
the six petitioners and the verification executed by their counsel
constituted full compliance with the required verification. They
contended that the three petitioners who made their verification
are real parties-in-interest, and their counsel who also verified the
Petition had been in possession of authentic and relevant records
of the case.
Also, petitioners posit that the failure of Drs. Villegas, Canlas
and Zheila to execute a certificate of non-forum shopping should
not have caused the dismissal of the Petition for Certiorari. They
insist that under justifiable circumstances, the signature of one of
the petitioners in the certificate against forum shopping
substantially complies with the rules. They further point out that
all of them share a common interest and invoke a common cause
of action under the same set of facts.
Moreover, petitioners submit that they complied with
Section 3, Rule 46 of the Rules of Court. They contend that they
included Dr. Tidula in the Petition for Certiorari as respondent
because he remains interested in the reversal of the NLRC
Decision and Resolution. They add that from the inception of the
case, all pleadings had been coursed through Dr. Tidula's counsel;
and they are unaware of the address of Dr. Tidula as he never
indicated it in his position paper. Hence, they maintain that it is
fair that in the present proceeding, any pleading intended for Dr.
Tidula be sent to his counsel.
In addition, petitioners state that the non-inclusion of Dr.
Tidula is not a fatal defect but a mere typographical error which
does not prejudice the rights of any party.
Finally, petitioners fault the CA in not finding that the NLRC
committed grave abuse of discretion in giving due course to the
Hospital's appeal despite its failure to post appeal bond within the
period to perfect an appeal. They also maintain that the NLRC
committed grave abuse of discretion in holding that they were not
illegally dismissed by respondents.
The Hospital, on the other hand, asserts that the CA correctly
dismissed the Petition because it was filed by a counsel who had
no authority from petitioners; and that the Certificate against
Forum Shopping attached thereto was fatally defective. It also
declares that the Petition for Certiorari improperly impleaded Dr.
Tidula as respondent. Lastly, it contends that petitioners are not
entitled to money claims.
Our Ruling
The Petition is meritorious.
In Altres v. Empleo, 34 the Court summarized the basic
tenets involving non-compliance with the requirements on, or
filing of defective verification and certificate against forum
shopping, to wit:
1) A distinction must be made between non-
compliance with the requirement on or submission of
defective verification, and non-compliance with the
requirement on or submission of defective certification
against forum shopping.
2) As to verification, non-compliance therewith or a
defect therein does not necessarily render the pleading
fatally defective. The court may order its submission or
correction or act on the pleading if the attending
circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of
justice may be served thereby.
3) Verification is deemed substantially complied with
when one who has ample knowledge to swear to the
truth of the allegations in the complaint or petition
signs the verification, and when matters alleged in the
petition have been made in good faith or are true and
correct.
4) As to certification against forum shopping, non-
compliance therewith or a defect therein, unlike in
verification, is generally not curable by its subsequent
submission or correction thereof, unless there is a need
to relax the Rule on the ground of "substantial
compliance" or presence of "special circumstances or
compelling reasons".
5) The certification against forum shopping must be
signed by all the plaintiffs or petitioners in a case;
otherwise, those who did not sign will be dropped as
parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or
petitioners share a common interest and invoke a
common cause of action or defense, the signature of
only one of them in the certification against forum
shopping substantially complies with the Rule.
6) Finally, the certification against forum shopping
must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable
reasons, the party-pleader is unable to sign, he must
execute a Special Power of Attorney designating his
counsel of record to sign on his behalf. ETHIDa
The CA dismissed the Petition for Certiorari on the ground
that the Verification/Certificate of Non-Forum Shopping executed
by petitioners' counsel on behalf of Drs. Villegas, Canlas and Zheila
violated Section 5, Rule 7 of the Rules of Court. 35
As properly pointed out by the CA, the
Verification/Certificate of Non-Forum Shopping with Undertaking
executed by petitioners' counsel is not valid. As stated in Altres, a
certificate against forum shopping must be signed by the party
and in case his counsel signs the same on his behalf, the counsel
must be armed with a special power of attorney. Since
petitioners' counsel is not shown to have been authorized by Drs.
Villegas, Canlas and Zheila to sign a certificate of non-forum
shopping on their behalf, the execution of said certificate by
counsel violates the foregoing rules.
Nonetheless, the CA failed to consider the concept of
"substantial compliance" to the requirements of verification and
certificate of non-forum shopping, as it has been shown that three
of the six petitioners executed their own verification and
certificate against forum shopping.
The verification of a pleading is a formal and not a
jurisdictional requirement. It is intended to assure that the
allegations in a pleading are true and correct. As such, the court
may order the correction of unverified pleadings, or it may act on
them and waive strict compliance with the rules. 36
The verification requirement is deemed substantially
complied with when a person who has sufficient knowledge to
swear to the truth of the allegations in the complaint or petition
signs the verification; and matters alleged therein have been
made in good faith or are true and correct. Thus, there is
substantial compliance if at least one of the petitioners makes a
proper verifcation. 37
In Ateneo de Naga University v. Manalo, 38 the signature of
one of three petitioners therein was considered substantial
compliance with the verification requirement. The Court held that
Fr. Tabora, the petitioner who signed the verification, has
sufficient knowledge to swear to the truth of the allegations in the
petition filed with the CA; and his signature was ample assurance
that the allegations have been made in good faith or are true and
correct.
In SKM Art Craft Corporation v. Bauca, 39 the Court held that
the verification and certificate against forum shopping signed by
nine out of 23 respondents substantially complied with the
verification requirement since they have common interest and
cause of action. The Court likewise stated that the apparent merit
of the petition and the conflicting findings of the LA and the NLRC
also justified the decision of the CA to resolve the case on the
merits.
In this case, three out of six petitioners signed three separate
verifications appended to the Petition for Certiorari. Their
signatures are sufficient assurance that the allegations in the
Petition were made in good faith, or are true and correct. Thus,
there is substantial compliance with the verification requirement.
On the other hand, as a rule, the certificate against forum
shopping must be signed by all plaintiffs or petitioners; otherwise,
those who did not sign will be dropped as parties to the case.
Under reasonable or justifiable situations, such as when the
plaintiffs or petitioners share a common interest and invoke a
common cause of action or defense, the signature of one of them
in the certificate against forum shopping is considered substantial
compliance with the rules. 40
In Abaria v. National Labor Relations Commission, 41 47 out
of 88 petitioners signed the certificate against forum shopping.
The Court ruled that the petitioning employees shared a common
interest and cause of action when they filed the case for illegal
dismissal. The Court decreed that when petitioners therein
appealed to the CA, they pursued the case as a collective body,
invoking one argument in support of their cause of action, which
is, the illegal dismissal purportedly committed by their employer
when union members resorted to strike due to the employer's
refusal to bargain with officers of the local chapter.
Furthermore, in Torres v. Specialized Packaging
Development Corp., 42 the Court allowed the relaxation of the
rules on submission of certificate against forum shopping. One of
the compelling grounds for the allowance of said certificate
therein where only two of 25 petitioners signed the same was the
"apparent merits of the substantive aspects of the case." It noted
that the varying views of the LA and the NLRC give ample basis for
the necessity of a review on the merits and the outright dismissal
of the petition was prejudicial to the parties' substantive rights.
Here, three of six petitioners signed the certificate of non-
forum shopping. At the least, the CA could have ordered that
those who did not sign it be dropped as parties, but not the
outright dismissal of the Petition.
The Court, nevertheless, holds that there are justifiable
reasons for the relaxation of the rules on the filing of a certificate
of non-forum shopping and that the certificate against forum
shopping signed by three out of six petitioners suffices.
Specifically, petitioners' cause of action revolves on the
same issue, that is, respondents illegally dismissed them under
similar circumstances. They were all resident physicians who were
purportedly 1) re-employed by the Hospital even after the
expiration of their respective one year contracts; 2) forced to
resign and offered to be re-engaged as fixed term employees but
declined; 3) demoted; 4) accused of violations of the Hospital
rules and regulations; and, 5) dismissed.
Moreover, substantial justice dictates that the Petition
for Certiorari be given due course and be resolved on the merits.
This is especially so since the findings of the LA are contrary to
those of the NLRC, 43 particularly on the issues of whether
respondents illegally dismissed petitioners and of whether they
were afforded due process of law.
The requirement of strict compliance with the rules on filing
of certificate against forum shopping highlights the mandatory
character of the submission of such certificate. However, this
mandatory requirement allows substantial compliance provided
that there are justifiable circumstances for the relaxation of the
rules. 44
Furthermore, the CA dismissed the Petition
for Certiorari because it did not indicate in its title that Dr. Tidula
is a party respondent and the Petition did not state Dr. Tidula's
actual address. The CA held that these omissions violate Section
3, 45Rule 46 of the Rules of Court, in relation to Rule 65 thereof.
We do not agree.
Since Dr. Tidula was included as one of the respondents in
the body of the Petition, then the CA could have clarified with
petitioners the non-inclusion of Dr. Tidula in the title and could
have ordered the title rectified. cSEDTC
Likewise, the Court finds that the failure to state the address
of Dr. Tidula is insufficient to cause the dismissal of the Petition.
The lack of address of Dr. Tidula is not a fatal defect as he had
been represented by his counsel in the case. The indication that
the party "could be served with process care of his counsel was
substantial compliance with the Rules." And, when a party has
appeared through counsel, service is to be made upon the
counsel, unless the court expressly orders that it be made upon
the party. 46
In view of the foregoing, a remand of the case to the CA for
proper disposition on the merits is deemed proper.
WHEREFORE, the Petition is GRANTED. The July 12, 2012
and October 22, 2012 Resolutions of the Court of Appeals in CA-
G.R. SP No. 125333 are REVERSED and SET ASIDE. The case
is REMANDED to the Court of Appeals for appropriate disposition.
SO ORDERED.
||| (Bacolor v. VL Makabali Memorial Hospital, Inc., G.R. No.
204325, [April 18, 2016])

[G.R. No. 199660. July 13, 2015.]

U-BIX CORPORATION and EDILBERTO B.


BRAVO, petitioners, vs. VALERIE ANNE H.
HOLLERO, respondent.

RESOLUTION

DEL CASTILLO, ** J p:
This is a Petition for Review on Certiorari 1 of the Court of
Appeals (CA) Decision 2 dated August 9, 2011 and
Resolution 3 dated December 7, 2011 in CA-G.R. SP No. 117199,
which affirmed the National Labor Relations Commission (NLRC)
Resolution 4 dated June 29, 2010 and Resolution 5 dated
September 27, 2010 denying the appeal of petitioners U-Bix
Corporation and Edilberto B. Bravo (petitioners) from Labor
Arbiter Enrique S. Flores, Jr.'s (Labor Arbiter Flores) Order 6dated
April 16, 2010 approving the recomputation of the monetary
award in favor of respondent Valerie Anne H. Hollero
(respondent) and ordering the issuance of a writ of execution.
Factual Antecedents
Petitioners filed a complaint against respondent for
reimbursement of training costs plus interest, exemplary
damages, attorney's fees and litigation expenses, docketed as
NLRC-NCR-Case No. 00-05-03696-97. On the other hand,
respondent filed against petitioners a complaint for illegal
dismissal, unpaid wages, backwages, moral and exemplary
damages, and attorney's fees, docketed as NLRC-NCR-Case No.
00-08-05988-97. The two complaints were later on consolidated.
In a Decision 7 dated February 8, 1999, the Labor Arbiter
found respondent's dismissal to be valid; she was also ordered to
reimburse the amount spent by petitioners for her training, with
interest at the rate of 12% per annum. 8
On appeal, the NLRC reversed the Labor Arbiter's Decision.
Finding respondent to have been illegally dismissed, it awarded
her backwages from the date of her dismissal up to the date of
the NLRC Decision and separation pay in lieu of reinstatement due
to strained relations. Anent petitioners' complaint for
reimbursement, the NLRC held that the same is one for collection
of sum of money over which it has no jurisdiction. Hence, the
dispositive portion of the NLRC Resolution dated July 12, 1999: 9
WHEREFORE, premises considered, the assailed
decision dated February 8, 1999, is hereby REVERSED
and SET ASIDE and a new one entered as follows:
A. Dismissing the complaint of the [petitioner] U-
BIX CORPORATION, in NLRC NCR Case No. 00-05-
03696-97 for lack of jurisdiction; and
B. Finding the dismissal of [respondent] Valerie
Anne H. Hollero in NLRC NCR Case No. 00-08-05988-97
to be illegal thereby ordering [petitioners] U-BIX
CORPORATION/Edilberto B. Bravo to pay the former
the following:
1. Backwages P520,000.00
2. Separation Pay 60,000.00; and
––––––––––––
TOTAL P580,000.00
===========

All other claims for damages are dismissed for


insufficiency of evidence.
SO ORDERED. 10
Petitioners' Petition for Certiorari before the CA was
dismissed through a Decision 11 dated January 8, 2007. Since
petitioners' motion for reconsideration thereto was likewise
denied by the CA, 12 they elevated the case before this Court.
In a Decision 13 dated October 31, 2008, the Court affirmed
the CA Decision. This became final and executory on March 12,
2009. 14
Subsequently, respondent filed a Motion for Issuance of
Writ of Execution before the Labor Arbiter. 15 In the course of the
pre-execution conferences, petitioners moved for the
recomputation of the monetary award. Acting on the same, Labor
Arbiter Elizabeth C. Avedoso (Labor Arbiter Avedoso) came up
with a re-computed total monetary award of
P3,330,512.82. 16Petitioners opposed this re-computation for
lack of legal basis. 17 Thus, a second re-computation in the
reduced amount of P3,270,512.82 18 was presented to the
parties in a conference held on February 18, 2010. Still, they failed
to reach an agreement.
In the meantime, respondent filed a Supplemental Motion
for Issuance of Writ of Execution 19 to which petitioners filed an
Opposition. 20 ASEcHI
Ruling of the Labor Arbiter
In an Order 21 dated April 16, 2010, Labor Arbiter Flores
found the recomputation of the total award at P3,270,512.82
correct. Hence, he ruled:
Finding the Motion for Issuance of Writ of
Execution to be well taken, the same is hereby
GRANTED.
WHEREFORE, the corresponding Writ of
Execution be issued pursuant to the re-computed
monetary award in the amount of P3,270,512.8[2].
SO ORDERED. 22
Accordingly, Labor Arbiter Flores issued a Writ of
Execution 23 dated April 20, 2010.
Ruling of the National Labor Relations Commission
Petitioners filed before the NLRC a Notice and Memorandum
of Appeal. 24 At the same time, they posted a corresponding
supersedeas bond issued by Mapfre Insular Insurance
Corporation (Mapfre) in the amount of P3,270,512.82.
Subsequently, petitioners also filed an Omnibus Motion to Quash
Writ of Execution and to Lift Order of Garnishment.
In a Resolution 25 dated June 29, 2010, the NLRC denied for
lack of merit petitioners' Appeal and their Omnibus Motion to
Quash Writ of Execution and to Lift Order of Garnishment.
With respect to the appeal, the NLRC held that the
supersedeas bond posted by petitioners has no force and
effect,viz.:
A perusal of the bond, however, revealed that the
Certification of Accreditation and Authority of Jose
Midas P. Marquez, Supreme Court Administrator,
covers an authority to transact surety business in
relation to "CIVIL/SPECIAL PROCEEDINGS CASES
ONLY filed/pending before the Regional Trial Courts of
Caloocan City, City of Manila, Las Piñas City, Makati
City, Marikina City, Mandaluyong City, Muntinlupa City,
Parañaque City, Pasay City, Pasig City and Quezon City
. . . . 26 Clearly, the authority does not include labor
cases filed before the NLRC. Thus, as far as the NLRC is
concerned, the [s]upersedeas bond posted by U-Bix
Corporation has no force and effect.
Assuming only that it is authorized, it failed to
present proof of security deposit or collateral securing
the bond as required by Section 6(c) of Rule 6, NLRC
Rules of Procedure. U-Bix failed to perfect its appeal.
Therefore, the Order appealed from has attained
finality. 27
Anent the Motion to Quash Writ of Execution and to Lift
Order of Garnishment, it held as follows:
As mentioned earlier, the Order approving the
judgment award has become final and executory, thus,
the issuance of the writ of execution is proper. There is
nothing more left to be done except its execution. 28
Hence:
WHEREFORE, premises considered, the Appeal,
Omnibus Motion to Quash Writ of Execution and to Lift
Order of Garnishment filed by U-Bix Corporation and
Edilberto Bravo are DENIED for lack of merit.
SO ORDERED. 29
Petitioners moved for reconsideration which was dismissed
in a Resolution 30 dated September 27, 2010.
Ruling of the Court of Appeals
Thus, petitioners sought recourse from the CA through a
Petition for Certiorari with Prayer for the Issuance of Temporary
Restraining Order and/or Writ of Preliminary Injunction. They
imputed upon the NLRC grave abuse of discretion amounting to
lack or in excess of jurisdiction when it denied their appeal
outright on the ground that the supersedeas bond accompanying
the appeal has no force and effect. They argue that: (1) Mapfre is
a bonding company accredited by this Court and the NLRC; (2)
petitioner Bravo's signature in the indemnity agreement
constitutes his personal guarantee of the supersedeas bond; and
(3) the grounds relied upon in their memorandum of appeal are
meritorious. 31
In a Decision 32 dated August 9, 2011, the CA denied the
Petition. Citing Article 223 33 of the Labor Code and Section
6 34 Rule VI of the New Rules of Procedure of the NLRC, it
emphasized that the filing of a supersedeas bond for the
perfection of an appeal is mandatory and jurisdictional. In this
case, the CA found the supersedeas bond posted by petitioners to
be irregular in view of the Certification of Accreditation and
Authority issued by the Office of the Court Administrator (OCA)
that Mapfre's authority to transact business was limited only to
Civil/Special cases and does not cover labor cases. Besides, the
said court found no meritorious ground to relax the requirement
of posting a supersedeas bond. Thus:
WHEREFORE, in view of the foregoing premises,
the petition filed in this case is hereby DENIED for lack
of merit. The Resolutions issued by the Third Division of
the National Labor Relations Commission dated June
29, 2010 and September 27, 2010 in NLRC NCR Case
No. 00-05-03696-97 is hereby AFFIRMED.
SO ORDERED. 35
As petitioners' Motion for Reconsideration 36 was likewise
denied in a Resolution 37 dated December 7, 2011, they are now
before this Court through this Petition for Review on Certiorari.
Issues
THE COURT OF APPEALS COMMITTED GRAVE
REVERSIBLE ERROR IN AFFIRMING THE NLRC'S
DECISION DISMISSING OUTRIGHT PETITIONERS'
APPEAL ON THE GROUND THAT THE ACCOMPANYING
SUPERSEDEAS BOND WAS INVALID, CONSIDERING
THAT: ITAaHc
A. MAPFRE INSULAR INSURANCE CORPORATION IS
A BONDING COMPANY ACCREDITED BY BOTH
THE NLRC AND THE SUPREME COURT.
B. PETITIONER BRAVO'S SIGNATURE IN THE
INDEMNITY AGREEMENT CONSTITUTES HIS
PERSONAL GUARANTEE OF THE
SUPERSEDEAS BOND.
C. PETITIONERS' MEMORANDUM OF APPEAL IS
IMPRESSED WITH MERIT SUCH THAT A
RESOLUTION OF THE SUBSTANTIAL ISSUES
RAISED THEREIN WAS WARRANTED. 38
Our Ruling
The Petition has no merit.
Perfection of an appeal in the manner
and within the period prescribed by law
is not only mandatory and jurisdictional
and failure to conform to the rules will
render the judgment sought to be
reviewed final and unappealable.
Petitioners argue that the CA erred in concluding that the
supersedeas bond they posted was irregular and therefore has no
force and effect based on the OCA certification that Mapfre's
authority to transact business as a bonding company refers only
to civil and special cases. They call attention to the
Memorandum 39 dated June 8, 2010 issued by the NLRC's Legal
and Enforcement Division for the information and guidance of all
Presiding/Commissioners and Executive/Labor Arbiters regarding
the list of bonding companies accredited by this Court with
respect to criminal and civil cases, which include Mapfre.
Petitioners assert that the NLRC's endorsement of the said list to
all Presiding Commissioners and Executive/Labor Arbiters could
only mean that the bonding companies therein listed can also well
be considered for labor cases.
The Court agrees with petitioners. In the 2013 Guidelines for
Accreditation of Surety Companies 40 of the NLRC, one of the
requirements for the accreditation of a bonding company is the
submission of a valid Certificate of Accreditation and Authority
issued by the OCA. Upon a bonding company's submission of the
same and compliance with the other requirements, the Legal and
Enforcement Division of the NLRC shall furnish all
Presiding/Commissioners and Deputy/Executive Clerks of Court a
copy of the Certificate of Accreditation and Authority and a list of
accredited surety companies and their agents. While the said
guidelines were issued only in 2013, it is logical to conclude that
the Memorandum dated June 8, 2010 was for the same purpose
mentioned, i.e., to furnish all Presiding/Commissioners and
Executive/Labor Arbiters a list of accredited bonding companies.
For one, the said Memorandum was issued by the Legal and
Enforcement Division to all Presiding/Commissioners and
Executive/Labor Arbiters or similar to what is outlined under the
aforementioned guidelines. For another, and as aptly pointed out
by petitioners, there could have been no other plausible reason
for the said issuance but to apprise the concerned labor officials
of the list of bonding companies which they may consider in
transacting business in their respective offices. cSaATC
Nevertheless, the Court still finds that petitioners failed to
comply with the bond requirement in perfecting their appeal.
Article 223 of the Labor Code provides in part:
Article 223. Appeal. — Decisions, awards, or
orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. . .
xxx xxx xxx
In case of a judgment involving a monetary award,
an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary
award in the judgment appealed from. (Emphasis
supplied)
In case of a surety bond, the applicable Section 6, Rule VI of
the 2005 Revised Rules of Procedure of the NLRC requires that the
same should be accompanied by original and certified true copies
of the following:
a) a joint declaration under oath by the employer, his
counsel and the bonding company, attesting that the
bond posted is genuine, and shall be in effect until final
disposition of the case;
b) an indemnity agreement between the employer-
appellant and bonding company;
c) proof of security deposit or collateral securing the bond;
provided, that a check shall not be considered as an
acceptable security;
d) a certificate of authority from the Insurance Commission;
e) certificate of registration from the Securities Exchange
Commission;
f) certificate of authority to transact surety business from
the Office of the President;
g) certificate of accreditation and authority from the
Supreme Court; and
h) notarized board resolution or secretary's certificate from
the bonding company showing its authorized
signatories and their specimen signatures.
Here, petitioners did not submit any proof of security
deposit or collateral securing the bond. They themselves admit
this in their Petition by stating that they no longer attached a
separate document of security deposit or collateral securing the
bond because Mapfre did not find it necessary to require them to
give a security deposit and/or collateral. According to them,
Mapfre finds it sufficient that the Indemnity Agreement attached
to the Memorandum of Appeal was signed by petitioner Bravo,
the president of petitioner U-Bix, in his personal capacity.
The Court, however, cannot accept such flimsy excuse of
petitioners. CHTAIc
It must be noted that right from the start, petitioners were
well represented by counsel who is presumed to know the explicit
requirement under the aforementioned Section 6 that a surety
bond should be accompanied by a proof of security deposit or
collateral. Hence, petitioners cannot reason out that they were
not able to submit the same because Mapfre did not require them
to give such a deposit or collateral. What appears here instead is
that while petitioners seem to be aware of the said requirement,
they risked dispensing with the same and chose to stand by the
alleged word of Mapfre that they need not submit any proof of
security deposit or collateral. It is well to remind petitioners that
parties are not at a liberty to choose which rule of technicality to
comply with or not. To stress, "[t]he requirements for perfecting
an appeal must, as a rule, be strictly followed. Such requirements
are considered indispensable interdictions against needless delay
and are necessary for the orderly discharge of the judicial
business." 41
In the same vein, petitioners are clutching at straws in
impressing upon this Court that petitioner Bravo, in signing the
Indemnity Agreement in his personal capacity, has already bound
himself to be jointly and severally liable with Mapfre for the
monetary award and this has the effect of securing the bond.
Suffice it to say that "[t]he obvious purpose of an appeal bond is
to ensure, during the period of appeal, against any occurrence
that would defeat or diminish recovery by the aggrieved
employees under the judgment if subsequently affirmed." 42 To
the Court's mind, the intention in requiring a security deposit or
collateral to secure the bond, apart from the indemnity
agreement between the employer-appellant and the bonding
company, is to further ensure recovery by the employee of the
judgment award should the same be affirmed, in any and all
eventualities. This is also in keeping with the purpose of the bond
requirement which is to "discourage employers from using the
appeal to delay, or even evade, their obligation to satisfy their
employee's possible just and lawful claims." 43Besides, it is an all-
too familiar rule in statutory construction that when a rule is clear
and unambiguous, interpretation need not be resorted
to. 44 Since Section 6, Rule VI of the 2005 NLRC Rules of
Procedure requires that a surety bond should be accompanied by
both an indemnity agreement and proof of security deposit or
collateral securing the bond, among others, that two must be
presented. The submission of one cannot be considered sufficient
as to dispense with the other. No resort to any interpretation is
necessary, there is only room for application. 45
It is a settled rule that "the perfection of an appeal in the
manner and within the period prescribed by law is, not only
mandatory, but jurisdictional, and failure to conform to the rules
will render the judgment sought to be reviewed final and
unappealable." 46 As can be gleaned from the foregoing,
petitioners failed to perfect their appeal in the manner prescribed
by the rules. Hence and as correctly ruled by the NLRC and
affirmed by the CA, the April 16, 2010 Order of Labor Arbiter
Flores approving the recomputation of the money award and
ordering the issuance of a writ of execution has already attained
finality and this warranted the dismissal of petitioners' appeal
therefrom before the NLRC.
It is worth stating that indeed in several cases, the Court —
relaxed the rigid application of the rules of procedure
to afford the parties the opportunity to fully ventilate
their cases on the merits. This is in line with the time
honored principle that cases should be decided only
after giving all the parties the chance to argue their
causes and defenses. Technicality and procedural
imperfections should thus not serve as bases of
decisions. In that way, the ends of justice would be
better served. For indeed, the general objective of
procedure is to facilitate the application of justice to
the rival claims of contending parties, bearing always in
mind that procedure is not to hinder but to promote
the administration of justice. 47 cHDAIS
It must be emphasized, however, that "the policy of liberal
interpretation is qualified by the requirement that there must be
exceptional circumstances to allow the relaxation of the rules.
Absent exceptional circumstances, [the Court adheres] to the rule
that certain procedural precepts must remain inviolable . . .
." 48 After all, an "appeal is not a constitutional right, but a mere
statutory privilege. Thus, parties who seek to avail themselves of
it must comply with the statutes or rules allowing it." 49 The Court
adheres to the strict interpretation of the rule in this case in the
absence of exceptional circumstance or compelling reason to
depart from the same.
The questioned recomputation of
monetary award is in order.
Petitioners argue that the recomputation of the monetary
award in the sum of P3,270,512.82 is erroneous. In particular,
they assail the computation of backwages from the time of
respondent's dismissal up to the finality of the Court's October 31,
2008 Decision in the illegal dismissal case on March 12, 2009. They
point out that full backwages is computed from the time an
illegally dismissed employee's compensation is withheld up to the
time of his actual reinstatement. And since the July 12, 1999
Decision of the NLRC awarded separation pay in lieu of
reinstatement, petitioners argue that backwages should no
longer accrue beyond the date of the said NLRC Decision. This is
because when the NLRC awarded separation pay in lieu of
reinstatement in its Decision, the employment tie between
petitioners and respondent was already effectively severed.
This Court has already meticulously explained in Bani Rural
Bank, Inc. v. De Guzman 50 that:
The computation of separation pay is based on
the length of the employee's service; and the
computation of backwages is based on the actual
period when the employee was unlawfully prevented
from working.
The basis of computation of backwages
The computation of backwages depends on the
final awards adjudged as a consequence of illegal
dismissal, in that:
First, when reinstatement is ordered, the general
concept under Article 279 of the Labor Code,as
amended, computes the backwages from the time of
dismissal until the employee's reinstatement. The
computation of backwages (and similar benefits
considered part of the backwages) can even continue
beyond the decision of the labor arbiter or NLRC and
ends only when the employee is actually reinstated.
Second, when separation pay is ordered in lieu of
reinstatement (in the event that this aspect of the
case is disputed) or reinstatement is waived by the
employee (in the event that the payment of
separation pay, in lieu, is not disputed), backwages is
computed from the time of dismissal until the finality
of the decision ordering separation pay.
Third, when separation pay is ordered after the
finality of the decision ordering the reinstatement by
reason of a supervening event that makes the award of
reinstatement no longer possible . . . backwages is
computed from the time of dismissal until the finality
of the decision ordering separation pay.
The above computation of backwages, when
separation pay is ordered, has been the Court's
consistent ruling. In Session Delights Ice Cream and
Fast Foods v. Court Appeals Sixth Division, we
explained that the finality of the decision becomes the
reckoning point because in allowing separation pay,
the final decision, effectively declares that the
employment relationship ended so that separation
pay and backwages are to be computed up to that
point.
We may also view the proper computation of
backwages (whether based on reinstatement or an
order of separation pay) in terms of the life of the
employment relationship itself.
When reinstatement is ordered, the employment
relationship continues. Once the illegally dismissed
employee is reinstated, any compensation and benefits
thereafter received stem from the employee's
continued employment. In this instance, backwages
are computed only up until the reinstatement of the
employee since after the reinstatement, the employee
begins to receive compensation from his resumed
employment.
When there is an order of separation pay (in lieu
of reinstatement or when the reinstatement aspect is
waived or subsequently ordered in light of a
supervening event making the award of reinstatement
no longer possible), the employment relationship is
terminated only upon the finality of the decision
ordering the separation pay. The finality of the
decision cuts-off the employment relationship and
represents the final settlement of the rights and
obligations of the parties against each other. Hence,
backwages no longer accumulate upon the finality of
the decision ordering the payment of separation pay
since the employee is no longer entitled to any
compensation from the employer by reason of the
severance of his employment. 51 (Citations omitted;
emphases and underscoring supplied)
Clearly, therefore, respondent is entitled to backwages
computed from the time she was illegally dismissed up to the date
of the finality of the Court's October 31, 2008 Decision in the
illegal dismissal case on March 12, 2009. The Court, thus, funds
the subject recomputation of money award to be in order. ISHCcT
WHEREFORE, premises considered, the Petition is
hereby DENIED. The Decision dated August 9, 2011 and the
Resolution dated December 7, 2011 of the Court of Appeals in CA-
G.R. SP No. 117199 are hereby AFFIRMED.
SO ORDERED.
||| (U-Bix Corp. v. Hollero, G.R. No. 199660 (Resolution), [July 13,
2015])
[G.R. No. 177592. June 9, 2014.]

AVELINO S. ALILIN, TEODORO CALESA, CHARLIE


HINDANG, EUTIQUIO GINDANG, ALLAN SUNGAHID,
MAXIMO LEE, JOSE G. MORATO, REX GABILAN, AND
EUGEMA L. LAURENTE, petitioners, vs. PETRON
CORPORATION, respondent.
DECISION

DEL CASTILLO, J p:
A contractor is presumed to be a labor-only contractor, unless it
proves that it has the substantial capital, investment, tools and the
like. However, where the principal is the one claiming that the
contractor is a legitimate contractor, the burden of proving the
supposed status of the contractor rests on the principal. 1
This Petition for Review on Certiorari 2 assails the Decision 3 dated
May 10, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 01291
which granted the Petition for Certiorari filed therewith, reversed
and set aside the February 18, 2005 Decision 4 and August 24, 2005
Resolution 5 of the National Labor Relations Commission (NLRC) in
NLRC Case No. V-000481-2003 and dismissed the Complaint for
illegal dismissal filed by petitioners Avelino Alilin (Alilin), Teodoro
Calesa (Calesa), Charlie Hindang (Hindang), Eutiquio Gindang
(Gindang), Allan Sungahid (Sungahid), Maximo Lee (Lee), Jose G.
Morato (Morato), Rex Gabilan (Gabilan) and Eugema L. Laurente
(Laurente) against respondent Petron Corporation (Petron). Also
assailed in this Petition is the CA Resolution 6 dated March 30, 2007
which denied petitioners' Motion for Reconsideration 7 and
Supplemental Motion for Reconsideration. 8
Factual Antecedents
Petron is a domestic corporation engaged in the oil business. It owns
several bulk plants in the country for receiving, storing and
distributing its petroleum products.
In 1968, Romualdo D. Gindang Contractor, which was owned and
operated by Romualdo D. Gindang (Romualdo), started recruiting
laborers for fielding to Petron's Mandaue Bulk Plant. When
Romualdo died in 1989, his son Romeo D. Gindang (Romeo), through
Romeo D. Gindang Services (RDG), took over the business and
continued to provide manpower services to Petron. Petitioners were
among those recruited by Romualdo D. Gindang Contractor and RDG
to work in the premises of the said bulk plant, with the
corresponding dates of hiring and work duties, to wit:
Employees Date of Hiring Duties

Eutiquio Gindang 1968 utility/tanker receiver/barge


loader/warehouseman/mixer

Eugema L.
June 1979 telephone operator/order taker
Laureate
Teodoro Calesa August 1, 1981 utility/tanker receiver/barge
loader/sounder/gauger

Rex Gabilan July 1, 1987 warehouseman/forklift driver/


tanker receiver/barge loader

Charlie T. September 18,


utility/tanker receiver/barge
Hindang 1990
loader/sounder/gauger

September 18,
Allan P. Sungahid filler/sealer/painter/tanker
1990
receiver/utility

September 18,
Maximo S. Lee gasul filler/painter/utility
1990
Avelino S. Alilin July 16, 1992 carpenter/driver

Jose Gerry M. cylinder checker/tanker


March 16, 1993
Morato receiver/
grass cutters/janitor/utility
On June 1, 2000, Petron and RDG entered into a Contract for
Services 9 for the period from June 1, 2000 to May 31, 2002,
whereby RDG undertook to provide Petron with janitorial,
maintenance, tanker receiving, packaging and other utility services
in its Mandaue Bulk Plant. This contract was extended on July 31,
2002 and further extended until September 30, 2002. Upon
expiration thereof, no further renewal of the service contract was
done. cSIHCA
Proceedings before the Labor Arbiter
Alleging that they were barred from continuing their services on
October 16, 2002, petitioners Alilin, Calesa, Hindang, Gindang,
Sungahid, Lee, Morato and Gabilan filed a Complaint 10 for illegal
dismissal, underpayment of wages, damages and attorney's fees
against Petron and RDG on November 12, 2002. Petitioner Laurente
filed another Complaint 11 for illegal dismissal, underpayment of
wages, non-payment of overtime pay, holiday pay, premium pay for
holiday, rest day, 13th month pay, service incentive leave pay,
allowances, separation pay, retirement benefits, damages and
attorney's fees against Petron and RDG. The said complaints were
later consolidated.
Petitioners did not deny that RDG hired them and paid their salaries.
They, however, claimed that the latter is a labor-only contractor,
which merely acted as an agent of Petron, their true employer. They
asseverated that their jobs, which are directly related to Petron's
business, entailed them to work inside the premises of Petron using
the required equipment and tools furnished by it and that they were
subject to Petron's supervision. Claiming to be regular employees,
petitioners thus asserted that their dismissal allegedly in view of the
expiration of the service contract between Petron and RDG is illegal.
RDG corroborated petitioners' claim that they are regular employees
of Petron. It alleged that Petron directly supervised their activities;
they performed jobs necessary and desirable to Petron's business;
Petron provided petitioners with supplies, tools and equipment used
in their jobs; and that petitioners' workplace since the start of their
employment was at Petron's bulk plant in Mandaue City. RDG denied
liability over petitioners' claim of illegal dismissal and further argued
that Petron cannot capitalize on the service contract to escape
liability.
Petron, on the other hand, maintained that RDG is an independent
contractor and the real employer of the petitioners. It was RDG
which hired and selected petitioners, paid their salaries and wages,
and directly supervised their work. Attesting to these were two
former employees of RDG and Petron's Mandaue Terminal
Superintendent whose joint affidavit 12 and
affidavit, 13respectively, were submitted by Petron. Anent its
allegation that RDG is an independent contractor, Petron presented
the following documents: (1) RDG's Certificate of Registration issued
by the Department of Labor and Employment (DOLE) on December
27, 2000; 14 (2) RDG's Certificate of Registration of Business Name
issued by the Department of Trade and Industry (DTI) on August 18,
2000; 15 (3) Contractor's Pre-Qualification Statement; 16 (4)
Conflict of Interest Statement signed by Romeo Gindang as manager
of RDG; 17 (5) RDG's Audited Financial Statements for the years
1998 18 1999 19 and 2000; 20 (6) RDG's Mayor's Permit for the
years 2000 21 and 2001; 22 (7) RDG's Certificate of Accreditation
issued by DTI in October 1991; 23 (8) performance bond 24 and
insurance policy 25 posted to insure against liabilities; (9) Social
Security System (SSS) Online Inquiry System Employee Contributions
and Employee Static Information; 26 and, (10) Romeo's
affidavit 27 stating that he had paid the salaries of his employees
assigned to Petron for the period of November 4, 2001 to December
31, 2001. Petron argued that with the expiration of the service
contract it entered with RDG, petitioners' term of employment has
concomitantly ended. And not being the employer, Petron cannot
be held liable for petitioners' claim of illegal dismissal.
In a Decision 28 dated June 12, 2003, the Labor Arbiter ruled that
petitioners are regular employees of Petron. It found that their jobs
were directly related to Petron's business operations; they worked
under the supervision of Petron's foreman and supervisor; and they
were using Petron's tools and equipment in the performance of their
works. The Labor Arbiter also found that Petron merely utilized RDG
in its attempt to hide the existence of employee-employer
relationship between it and petitioners and avoid liability under
labor laws. And there being no showing that petitioners' dismissal
was for just or authorized cause, the Labor Arbiter declared them to
have been illegally dismissed. Petron was thus held solidarily liable
with Romeo for the payment of petitioners' separation pay (in lieu
of reinstatement due to strained relations with Petron) fixed at one
month pay for every year of service and backwages computed on the
basis of the last salary rate at the time of dismissal. The dispositive
portion of the Decision reads: aSACED
WHEREFORE, premises considered, judgment is hereby
rendered ordering the respondents Petron Corporation
and Romeo Gindang to pay the complainants as follows:
1. Teodoro Calesa P136,890.00
2. Eutiquio Gindang P202,800.00
3. Charlie T. Gindang P91,260.00
4. Allan P. Sungahid P91,260.00
5. Jose Gerry Morato P76,050.00
6. Avelino A. Alilin P95,680.00
7. Rex S. Gabilan P106,470.00
8. Maximo S. Lee P91,260.00
Eugema Minao
9. P150,800.00
Laurente
–––––––––––
Total award P1,042,470.00
===========

The other claims are dismissed for lack of merit.


SO ORDERED. 29
Proceedings before the National Labor Relations Commission
Petron continued to insist that there is no employer-employee
relationship between it and petitioners. The NLRC, however, was not
convinced. In its Decision 30 of February 18, 2005, the NLRC ruled
that petitioners are Petron's regular employees because they are
performing job assignments which are germane to its main business.
Thus:
WHEREFORE, premises considered, the Decision of the
Labor Arbiter is hereby affirmed. It is understood that
the grant of backwages shall be until finality of the
Decision.
The appeal of respondent Petron Corporation is hereby
DISMISSED for lack of merit.
SO ORDERED. 31
The NLRC also denied Petron's Motion for Reconsideration in its
Resolution 32 of August 24, 2005.
Proceedings before the Court of Appeals
Petron filed a Petition for Certiorari with prayer for the issuance of a
temporary restraining order or writ of injunction before the CA. The
said court resolved to grant the injunction. 33 Hence, a Writ of
Preliminary Injunction 34 to restrain the implementation of the
February 18, 2005 Decision and August 24, 2005 Resolution of the
NLRC was issued on March 3, 2006.
In a Decision 35 dated May 10, 2006, the CA found no employer-
employee relationship between the parties. According to it, the
records of the case do not show that petitioners were directly hired,
selected or employed by Petron; that their wages and other wage
related benefits were paid by the said company; and that Petron
controlled the manner by which they carried out their tasks. On the
other hand, RDG was shown to be responsible for paying petitioners'
wages. In fact, SSS records show that RDG is their employer and
actually the one remitting their contributions thereto. Also, two
former employees of RDG who were likewise assigned in the
Mandaue Bulk Plant confirmed by way of a joint affidavit that it was
Romeo and his brother Alejandre Gindang who supervised their
work, not Petron's foreman or supervisor. This was even
corroborated by the Terminal Superintendent of the Mandaue Bulk
Plant.
The CA also found RDG to be an independent labor contractor with
sufficient capitalization and investment as shown by its financial
statement for year-end 2000. In addition, the works for which RDG
was contracted to provide were menial which were neither directly
related nor sensitive and critical to Petron's principal business. The
CA disposed of the case as follows: TAaCED
WHEREFORE, the Petition is GRANTED. The February 18,
2005 Decision and the August 24, 2005 Resolution of the
Fourth Division of the National Labor Relations
Commission in NLRC Case No. V-000481-2003,
entitled "Teodoro Calesa et al. vs. Petron Corporation
and R.D. Gindang Services", having been rendered with
grave abuse of discretion amounting to excess of
jurisdiction, are hereby REVERSED and SET ASIDE and a
NEW ONE is entered DISMISSING private respondents'
complaint against petitioner. It is so ordered. 36
Petitioners filed a Motion for Reconsideration 37 insisting that
Petron illegally dismissed them; that RDG is a labor-only contractor;
and that they performed jobs which are sensitive to Petron's
business operations. To support these, they attached to their
Supplemental Motion for Reconsideration 38 Affidavits 39 of former
employees of Petron attesting to the fact that their jobs were critical
to Petron's business operations and that they were carried out under
the control of a Petron employee.
Petitioners' motions were, however, denied by the CA in a
Resolution 40 dated March 30, 2007.
Hence, this Petition.
Issue
The primary issue to be resolved in this case is whether RDG is a
legitimate job contractor. Upon such finding hinges the
determination of whether an employer-employee relationship exists
between the parties as to make Petron liable for petitioners'
dismissal.
Our Ruling
The Petition is impressed with merit.
The conflicting findings of the Labor
Arbiter and the NLRC on one hand,
and of the CA on the other, constrains
the Court to review the factual issues
involved in this case.
As a general rule, the Court does not review errors that raise factual
questions. 41 Nonetheless, while it is true that the determination of
whether an employer-employee relationship existed between the
parties basically involves a question of fact, the conflicting findings
of the Labor Arbiter and the NLRC on one hand, and of the CA on the
other, constrains the Court to review and re-evaluate such factual
findings. 42
Labor-only contracting, distinguished
from permissible job contracting.
The prevailing rule on labor-only contracting at the time Petron and
RDG entered into the Contract for Services in June 2000 is DOLE
Department Order No. 10, series of 1997, 43 the pertinent provision
of which reads:
Section 4. . . .
xxx xxx xxx
(f) "Labor-only contracting" prohibited under this Rule
is an arrangement where the contractor or
subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal
and the following elements are present:
(i) The contractor or subcontractor does not have
substantial capital or investment to actually perform the
job, work or service under its own account and
responsibility; and cHSIDa
(ii) The employees recruited, supplied or placed by such
contractor or subcontractor are performing activities
which are directly related to the main business of the
principal.
xxx xxx xxx
Section 6. Permissible contracting or subcontracting. —
Subject to the conditions set forth in Section 3 (d) and
(e) and Section 5 hereof, the principal may engage the
services of a contractor or subcontractor for the
performance of any of the following:
(a) Works or services temporarily or occasionally
needed to meet abnormal increase in the demand of
products or services, provided that the normal
production capacity or regular workforce of the
principal cannot reasonably cope with such demands;
(b) Works or services temporarily or occasionally
needed by the principal for undertakings requiring
expert or highly technical personnel to improve the
management or operations of an enterprise;
(c) Services temporarily needed for the introduction or
promotion of new products, only for the duration of
the introductory or promotional period;
(d) Works or services not directly related or not integral
to the main business or operation of the principal,
including casual work, janitorial, security, landscaping,
and messengerial services, and work not related to
manufacturing processes in manufacturing
establishments;
(e) Services involving the public display of
manufacturers' products which do not involve the act
of selling or issuance of receipts or invoices;
(f) Specialized works involving the use of some
particular, unusual or peculiar skills, expertise, tools or
equipment the performance of which is beyond the
competence of the regular workforce or production
capacity of the principal; and
(g) Unless a reliever system is in place among the
regular workforce, substitute services for absent
regular employees, provided that the period of service
shall be coextensive with the period of absence and the
same is made clear to the substitute employee at the
time of engagement. The phrase "absent regular
employees" includes those who are serving
suspensions or other disciplinary measures not
amounting to termination of employment meted out
by the principal, but excludes those on strike where all
the formal requisites for the legality of the strike have
been prima facie complied with based on the records
filed with the National Conciliation and Mediation
Board.
"Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to farm out with a
contractor or subcontractor the performance of a specific job, work,
or service within a definite or predetermined period, regardless of
whether such job, work or, service is to be performed or completed
within or outside the premises of the principal. Under this
arrangement, the following conditions must be met: (a) the
contractor carries on a distinct and independent business and
undertakes the contract work on his account under his own
responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters
connected with the performance of his work except as to the results
thereof; (b) the contractor has substantial capital or investment; and
(c) the agreement between the principal and contractor or
subcontractor assures the contractual employees' entitlement to all
labor and occupational safety and health standards, free exercise of
the right to self-organization, security of tenure, and social welfare
benefits." 44 Labor-only contracting, on the other hand, is a
prohibited act, defined as "supplying workers to an employer who
does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing
activities which are directly related to the principal business of such
employer." 45 "[I]n distinguishing between prohibited labor-only
contracting and permissible job contracting, the totality of the facts
and the surrounding circumstances of the case shall be
considered." 46
Generally, the contractor is presumed to be a labor-only contractor,
unless such contractor overcomes the burden of proving that it has
the substantial capital, investment, tools and the like. However,
where the principal is the one claiming that the contractor is a
legitimate contractor, as in the present case, said principal has the
burden of proving that supposed status. 47 It is thus incumbent
upon Petron, and not upon petitioners as Petron insists, 48 to prove
that RDG is an independent contractor. TcSHaD
Petron failed to discharge the burden of
proving that RDG is a legitimate
contractor. Hence, the presumption that
RDG is a labor-only contractor stands.
Here, the audited financial statements and other financial
documents of RDG for the years 1999 to 2001 establish that it does
have sufficient working capital to meet the requirements of its
service contract. In fact, the financial evaluation conducted by
Petron of RDG's financial statements for years 1998-2000 showed
RDG to have a maximum financial capability of Php4.807 Million as
of December 1998, 49 and Php1.611 Million as of December
2000. 50 Petron was able to establish RDG's sufficient capitalization
when it entered into the service contract in 2000. The Court stresses
though that this determination of RDG's status as an independent
contractor is only with respect to its financial capability for the
period covered by the financial and other documents presented. In
other words, the evidence adduced merely proves that RDG was
financially qualified as a legitimate contractor but only with respect
to its last service contract with Petron in the year 2000.
As may be recalled, petitioners have rendered work for Petron for a
long period of time even before the service contract was executed
in 2000. The respective dates on which petitioners claim to have
started working for Petron, as well as the fact that they have
rendered continuous service to it until October 16, 2002, when they
were prevented from entering the premises of Petron's Mandaue
Bulk Plant, were not at all disputed by Petron. In fact, Petron even
recognized that some of the petitioners were initially fielded by
Romualdo Gindang, the father of Romeo, through RDG's precursor,
Romualdo D. Gindang Contractor, while the others were provided by
Romeo himself when he took over the business of his father in 1989.
Hence, while Petron was able to establish that RDG was financially
capable as a legitimate contractor at the time of the execution of the
service contract in 2000, it nevertheless failed to establish the
financial capability of RDG at the time when petitioners actually
started to work for Petron in 1968, 1979, 1981, 1987, 1990, 1992
and 1993.
Sections 8 and 9, Rule VIII, Book III 51 of the implementing rules of
the Labor Code, in force since 1976 and prior to DOLE Department
Order No. 10, series of 1997, 52 provide that for job contracting to
be permissible, one of the conditions that has to be met is that the
contractor must have substantial capital or investment. Petron
having failed to show that this condition was met by RDG, it can be
concluded, on this score alone, that RDG is a mere labor-only
contractor. Otherwise stated, the presumption that RDG is a labor-
only contractor stands due to the failure of Petron to discharge the
burden of proving the contrary.
The Court also finds, as will be discussed below, that the works
performed by petitioners were directly related to Petron's business,
another factor which negates Petron's claim that RDG is an
independent contractor.
Petron's power of control over
petitioners exists in this case.
"[A] finding that a contractor is a 'labor-only' contractor is equivalent
to declaring that there is an employer-employee relationship
between the principal and the employees of the supposed
contractor." 53 In this case, the employer-employee relationship
between Petron and petitioners becomes all the more apparent due
to the presence of the power of control on the part of the former
over the latter.
It was held in Orozco v. The Fifth Division of the Hon. Court of
Appeals 54 that:
This Court has constantly adhered to the "four-fold test"
to determine whether there exists an employer-
employee relationship between the parties. The four
elements of an employment relationship are: (a) the
selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the
power to control the employee's conduct. aScIAC
"Of these four elements, it is the power to control
which is the most crucial and most determinative
factor, so important, in fact, that, the other elements
may even be disregarded." (Emphasis supplied)
Hence, the facts that petitioners were hired by Romeo or his father
and that their salaries were paid by them do not detract from the
conclusion that there exists an employer-employee relationship
between the parties due to Petron's power of control over the
petitioners.
One manifestation of the power of control is the power to transfer
employees from one work assignment to another. 55 Here, Petron
could order petitioners to do work outside of their regular
"maintenance/utility" job. Also, petitioners were required to report
for work everyday at the bulk plant, observe an 8:00 a.m. to 5:00
p.m. daily work schedule, and wear proper uniform and safety
helmets as prescribed by the safety and security measures being
implemented within the bulk plant. All these imply control. In an
industry where safety is of paramount concern, control and
supervision over sensitive operations, such as those performed by
the petitioners, are inevitable if not at all necessary. Indeed, Petron
deals with commodities that are highly volatile and flammable
which, if mishandled or not properly attended to, may cause serious
injuries and damage to property and the environment. Naturally,
supervision by Petron is essential in every aspect of its product
handling in order not to compromise the integrity, quality and safety
of the products that it distributes to the consuming public.
Petitioners already attained regular
status as employees of Petron.
Petitioners were given various work assignments such as tanker
receiving, barge loading, sounding, gauging, warehousing, mixing,
painting, carpentry, driving, gasul filling and other utility works.
Petron refers to these work assignments as menial works which
could be performed by any able-bodied individual. The Court finds,
however, that while the jobs performed by petitioners may be
menial and mechanical, they are nevertheless necessary and related
to Petron's business operations. If not for these tasks, Petron's
products will not reach the consumers in their proper state. Indeed,
petitioners' roles were vital inasmuch as they involve the
preparation of the products that Petron will distribute to its
consumers.
Furthermore, while it may be true that any able-bodied individual
can perform the tasks assigned to petitioners, the Court notes the
undisputed fact that for many years, it was the same able-bodied
individuals (petitioners) who performed the tasks for Petron. The
engagement of petitioners for the same works for a long period of
time is a strong indication that such works were indeed necessary to
Petron's business. In view of these, and considering further that
petitioners' length of service entitles them to become regular
employees under the Labor Code, petitioners are deemed by law to
have already attained the status as Petron's regular employees. As
such, Petron could not terminate their services on the pretext that
the service contract it entered with RDG has already lapsed. For one,
and as previously discussed, such regular status had already
attached to them even before the execution of the service contract
in 2000. For another, the same does not constitute a just or
authorized cause for a valid dismissal of regular employees.
In sum, the Court finds that RDG is a labor-only contractor. As such,
it is considered merely as an agent of Petron. Consequently, the
employer-employee relationship which the Court finds to exist in
this case is between petitioners as employees and Petron as their
employer. Petron therefore, being the principal employer and RDG,
being the labor-only contractor, are solidarily liable for petitioners'
illegal dismissal and monetary claims. 56
WHEREFORE, the Petition is GRANTED. The May 10, 2006 Decision
and March 30, 2007 Resolution of the Court of Appeals in CA-G.R. SP
No. 01291 are REVERSED and SET ASIDE. The February 18, 2005
Decision and August 24, 2005 Resolution of the National Labor
Relations Commission in NLRC Case No. V-000481-2003 are
hereby REINSTATED and AFFIRMED.
SO ORDERED.
||| (Alilin v. Petron Corp., G.R. No. 177592, [June 9, 2014])
[G.R. No. 180636. March 13, 2013.]

LORENZO T. TANGGA-AN, * petitioner, vs. PHILIPPINE


TRANSMARINE CARRIERS, INC., UNIVERSE TANKSHIP
DELAWARE LLC, and CARLOS C. SALINAS, respondents.
DECISION

DEL CASTILLO, J p:
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 Certiorari 1 seeks a modification of the
November 30, 2006 Decision 2 of the Court of Appeals (CA) in CA-
G.R. SP No. 00806. Also assailed is the November 15, 2007
Resolution 3 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 attorney's fees filed
by private respondent [Lorenzo T. Tangga-an] against
the petitioners [Philippine Transmarine Carriers, Inc.,
Universe Tankship Delaware LLC, and Carlos C.
Salinas 4 or herein respondents].
In his position paper, [Tangga-an] alleged that on
January 31, 200[2], 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. aDHScI
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 [O]fficers were ordered to disembark from
the vessel on April 2, 2002 and thereafter repatriated.
Thence, the complaint. DITEAc
[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, [Tangga-
an] 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-an's] services. Thus, a notice of
dismissal was issued against [Tangga-an]. He arrived in
the Philippines on April 4, 2002. 5
Tangga-an filed a Complaint 6 for illegal dismissal with prayer for
payment of salaries for the unexpired portion of his contract, leave
pay, exemplary and moral damages, attorney's fees and interest.
On January 27, 2004, Labor Arbiter Jose G. Gutierrez rendered a
Decision 7 finding petitioner to have been illegally dismissed. The
Labor Arbiter noted that in petitioner's letter to respondent
Universe Tankship Delaware, LLC dated April 1, 2002 8 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, petitioner's
dismissal was illegal for lack of just cause and for failure to comply
with the twin requirements of notice and hearing. 9 EcDTIH
As regards petitioner's 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 petitioner's claim for damages, the same was denied for
failure to prove bad faith on the part of the respondents. However,
attorney's fees equivalent to 10% of the total back salaries was
awarded because petitioner was constrained to litigate.
The dispositive portion of the Labor Arbiter's 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 attorney's 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 employee's basic salary;
and in awarding attorney's 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 HSaIDc
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 petitioner's 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 279 13 of
the Labor Code.It held that vacation leave pay and tonnage bonus
are provided in petitioner's employment contract, which thus
entitles the latter to the same in the event of illegal dismissal.
Finally, on the issue of attorney's 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
attorney's 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: cDHCAE
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-an's] placement fee should be reimbursed
with 12% interest per annum;
c. [T]he award of attorney's 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 petitioner's 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 petitioner's "unexpired portion of contract" for which he is
entitled to back salaries should only be three months pursuant to
Section 10 17 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 attorney's fees, the CA did not agree with the NLRC's finding
that bad faith on the part of respondents was present to justify the
award of attorney's 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
petitioner's 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. cEASTa
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 Arbiter's 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 attorney's fees. 19
Petitioner submits the following issues for resolution:
I. Whether . . . the CA's issuance of the writ
of certiorari reversing the NLRC decision is in accordance
with law[;]
II. Whether . . . the indemnity provided in Section 10, R.
A. 8042 . . . be limited only to the seafarer's basic
monthly salary or . . . 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 seafarer's income that was
lost by reason of his unlawful dismissal[;]
III. Whether . . . the indemnity awarded by the CA in
petitioner's 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 . . . the CA's disallowance of the award of
attorney's fees, based on the alleged absence of bad
faith on the part of respondent, is in accordance with law
or is the attorney's fees awarded by the NLRC to
petitioner, who was forced to litigate to enforce his
rights, justified . . .[.] 20
Petitioner's 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. DHCcST
Petitioner would have the Court reinstate the award of attorney's
fees, on the argument that the presence of bad faith is not necessary
to justify such award. He maintains that the grant of attorney's 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 Arbiter's
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 attorney's fees.
Respondents' Arguments
In seeking affirmance of the assailed CA issuances, respondents
basically submit that the CA committed no reversible error in
excluding petitioner's claims for vacation leave pay, tonnage bonus,
and attorney's fees. They support and agree with the CA's 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 attorney's 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 petitioner's monetary claims, the CA utterly
misinterpreted the Court's 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 vessel's 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 10 24 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 employee's
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 Court's citation therein of Marsaman:
In Marsaman Manning Agency, Inc. vs. NLRC, involving
Section 10 of Republic Act No. 8042, we held:
[W]e 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 . . . 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. CTacSE
It is not disputed that private respondent's
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 Court's 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
employee's full backwages shall be inclusive of allowances and other
benefits or their monetary equivalent." 27 As we have time and
again held, "[i]t 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. ADTEaI
The CA likewise erred in deleting the award of attorney's fees on the
ground that bad faith may not readily be attributed to the
respondents given the circumstances. The Court's discussion on the
award of attorney's 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 attorney's fees in labor cases:
'Art. 111. Attorney's fees. — (a) In cases of unlawful
withholding of wages, the culpable party may be
assessed attorney's 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, attorney's
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. Attorney's fees. — Attorney's 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.' IAcDET
We explained in PCL Shipping Philippines, Inc. v. National
Labor Relations Commission that there are two
commonly accepted concepts of attorney's fees — the
ordinary and extraordinary. In its ordinary concept, an
attorney's 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, attorney's 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 attorney's fees and
that Article 111 is an exception to the declared policy of
strict construction in the award of attorney's 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.
...
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 111 of the Labor
Code; Section 8, Rule VIII, Book III of its
Implementing Rules; and paragraph 7, Article 2208
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.' DcTaEH
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 111 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 attorney's fees. An award
of attorney's fees in petitioner's 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.
||| (Tangga-an v. Philippine Transmarine Carriers, Inc., G.R. No.
180636, [March 13, 2013], 706 PHIL 339-354)
[G.R. No. 178699. September 21, 2011.]

BPI EMPLOYEES UNION-METRO MANILA and ZENAIDA


UY, petitioners, vs. BANK OF THE PHILIPPINE
ISLANDS,respondent.

[G.R. No. 178735. September 21, 2011.]

BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. BPI


EMPLOYEES UNION-METRO MANILA and ZENAIDA
UY,respondents.

DECISION

DEL CASTILLO, J p:
The base figure in computing the award of back wages to an
illegally dismissed employee is the employee's basic salary plus
regular allowances and benefits received at the time of dismissal,
unqualified by any wage and benefit increases granted in the
interim. 1 ITADaE
By these consolidated Petitions for Review
on Certiorari, 2 the Bank of the Philippine Islands (BPI), BPI
Employees Union-Metro Manila (the Union) and Zenaida Uy (Uy)
seek modification of the Court of Appeals' (CA) Amended
Decision 3dated July 4, 2007 in CA-G.R. SP No. 92631. Said
Amended Decision computed Uy's back wages and other
monetary awards pursuant to the final and executory
Decision 4 dated March 31, 2005 of this Court in G.R. No. 137863
based on her salary rate at the time of her dismissal and
disregarded the salary increases granted in the interim as well as
other benefits which were not proven to have been granted at the
time of Uy's dismissal from the service.
Factual Antecedents
On December 14, 1995, Uy's services as a bank teller in BPI's
Escolta Branch was terminated on grounds of gross
disrespect/discourtesy towards an officer, insubordination and
absence without leave. Uy, together with the Union, thus filed a
case for illegal dismissal.
On December 31, 1997, the Voluntary Arbitrator 5 rendered
a Decision 6 finding Uy's dismissal as illegal and ordering BPI to
immediately reinstate Uy and to pay her full back wages, including
all her other benefits under the Collective Bargaining Agreement
(CBA) and attorney's fees. 7
On October 28, 1998, the CA affirmed with modification the
Decision of the Voluntary Arbitrator. Instead of reinstatement,
the CA ordered BPI to pay Uy her separation pay. Further, instead
of full back wages, the CA fixed Uy's back wages to three years. 8
The case eventually reached this Court when both parties
separately filed petitions for review on certiorari. While BPI's
petition which was docketed as G.R. No. 137856 was denied for
failure to comply with the requirements of a valid certification of
non-forum shopping, 9 Uy's and the Union's petition which was
docketed as G.R. No. 137863 was given due course.
On March 31, 2005, the Court rendered its Decision 10 in
G.R. No. 137863, the dispositive portion of which reads:
WHEREFORE, the instant petition is GRANTED. The
assailed 28 October 1998 Decision and 8 March 1999
Resolution of the Court of Appeals are
hereby MODIFIED as follows: 1) respondent BPI
is DIRECTED to pay petitioner Uy backwages from the
time of her illegal dismissal until her actual
reinstatement; and 2) respondent BPI is ORDERED to
reinstate petitioner Uy to her former position, or to a
substantially equivalent one, without loss of seniority
right and other benefits attendant to the position.
SO ORDERED. 11
Ruling of the Voluntary Arbitrator
After the Decision in G.R. No. 137863 became final and
executory, Uy and the Union filed with the Office of the Voluntary
Arbitrator a Motion for the Issuance of a Writ of Execution. 12
In Uy's computation, she based the amount of her back
wages on the current wage level and included all the increases in
wages and benefits under the CBA that were granted during the
entire period of her illegal dismissal. These include the following:
Cost of Living Allowance (COLA), Financial Assistance, Quarterly
Bonus, CBA Signing Bonus, Uniform Allowance, Medicine
Allowance, Dental Care, Medical and Doctor's Allowance, Teller's
Functional Allowance, Vacation Leave, Sick Leave, Holiday Pay,
Anniversary Bonus, Burial Assistance and Omega watch. 13
BPI disputed Uy's/Union's computation arguing that it
contains items which are not included in the term "back wages"
and that no proof was presented to show that Uy was receiving
all the listed items therein before her termination. It claimed that
the basis for the computation of back wages should be the
employee's wage rate at the time of dismissal. 14
In an Order dated December 6, 2005, 15 the Voluntary
Arbitrator agreed with Uy's/Union's contention that full back
wages should include all wage and benefit increases, including
new benefits granted during the period of dismissal. The
Voluntary Arbitrator opined that this Court's March 31, 2005
Decision in G.R. No. 137863 reinstated his December 31, 1997
Decision which ordered the payment of full back wages computed
from the time of dismissal until actual reinstatement including all
benefits under the CBA. Nonetheless, the Voluntary Arbitrator
excluded the claims for uniform allowance, anniversary bonus
and Omega watch for want of basis for their grant. ADaSET
The Voluntary Arbitrator thus granted the motion for
issuance of writ of execution and computed Uy's back wages in
the total amount of P3,897,197.89 as follows:
Basic Monthly Salary (BMS) P2,062,087.50
Cost of Living Allowance 56,100.00
Financial Assistance 39,000.00
Total Quarterly Bonuses 693,820.00
CBA Signing Bonus 32,500.00
Medicine Allowance 58,400.00
Dental Care 14,120.00
Medical and Doctor's Allowance 58,400.00
Teller's Functional Allowance 25,500.00
Vacation Leave 187,085.50
Sick Leave 187,085.50
Holiday Pay 128,808.65
Attorney's Fee 354,290.72
––––––––––––
Grand Total P3,897,197.89 16
==========

A Writ of Execution 17 and a Notice of Garnishment 18 were


subsequently issued.
Ruling of the Court of Appeals
Imputing grave abuse of discretion on the part of the
Voluntary Arbitrator, BPI filed with the CA a Petition
for Certiorari with urgent Motion for the Issuance of a Temporary
Restraining Order (TRO) and/or Writ of Preliminary
Injunction. 19 BPI alleged that the Voluntary Arbitrator's
erroneous computation of back wages amended and varied the
terms of the March 31, 2005 final and executory Decision in G.R.
No. 137863.
Specifically, it averred that the Voluntary Arbitrator erred in
computing back wages based on the current rate and in including
the wage increases or benefits given in the interim as well as
attorney's fees. BPI further argued that there was no basis for the
award of teller's functional allowance, cash conversion of
vacation and sick leaves and dental care allowance.
In their Comment, 20 Uy and the Union alleged that BPI's
remedy is not a certiorari petition under Rule 65 of the Rules of
Court but an appeal from judgments, final orders and resolutions
of voluntary arbitrators under Rule 43 of the Rules of Court. They
also contended that BPI's petition is wanting in substance.
Meanwhile, the CA issued a TRO 21 restraining the
implementation of the December 6, 2005 Order of the Voluntary
Arbitrator and the corresponding Writ of Execution issued on
December 12, 2005. Upon receipt of the TRO, Uy and the Union
filed an Urgent Motion for Clarification 22 on whether the TRO
encompasses even the implementation of the reinstatement
aspect of the March 31, 2005 Decision of this Court in G.R. No.
137863.
The CA initially rendered a Decision 23 on May 24, 2006. In
said Decision, the CA held that BPI's resort to certiorari was
proper and that the award of CBA benefits and attorney's fees has
legal basis. The CA however found that the Voluntary Arbitrator
erroneously computed Uy's back wages based on the current rate.
The CA also deleted the award of dental allowance since it was
granted in 2002 or more than six years after Uy's dismissal.
Both parties thereafter filed their respective motions for
reconsideration. Consequently, on July 4, 2007, the CA issued the
herein assailed Amended Decision.
In its Amended Decision, the CA upheld the propriety of BPI's
resort to certiorari. It also ruled that this Court's March 31, 2005
Decision in G.R. No. 137863 did not reinstate the December 31,
1997 Decision of the Voluntary Arbitrator awarding full back
wages including CBA benefits. The CA ruled that the computation
of Uy's full back wages, as defined under Republic Act No. 6715,
should be based on the basic salary at the time of her dismissal
plus the regular allowances that she had been receiving likewise
at the time of her dismissal. It held that any increase in the basic
salary occurring after Uy's dismissal as well as all benefits given
after said dismissal should not be awarded to her in consonance
with settled jurisprudence on the matter. Accordingly, the CA
pronounced that Uy's basic salary, which amounted to P10,895.00
at the time of her dismissal on December 14, 1995, is to be used
as the base figure in computing her back wages, exclusive of any
increases and/or modifications. As Uy's entitlement to COLA,
quarterly bonus and financial assistance are not disputed, the CA
retained their award provided that, again, the base figure for the
computation of these benefits should be the rate then prevailing
at the time of Uy's dismissal. SCADIT
The CA deleted the award of CBA signing bonus, medicine
allowance, medical and doctor's allowance and dental care
allowance for lack of sufficient proof that these benefits were
already being received and enjoyed by Uy at the time of her
dismissal. However, it held that the teller's functional allowance
should rightfully be given to Uy as a regular bank teller as well as
the holiday pay and monetary equivalent of vacation and sick
leave benefits. As for the attorney's fees, the CA ruled that Uy's
right over the same has already been resolved and has attained
finality when it was neither assailed nor raised as an issue after
the Voluntary Arbitrator awarded it in favor of Uy.
Finally, the CA likewise ruled that Uy's reinstatement was
effectively restrained by the TRO issued by it. Pertinent portions
of the CA's Amended Decision read:
All told, We find Petitioner's Motion for Reconsideration
to be partly meritorious and so hold that Private
Respondent Uy is entitled to the following sums to be
included in the computation:
1. Basic Monthly Salary, COLA and Quarterly Bonus,
with P10,895.00 as the base figure, computed
from the time of her dismissal up to her actual
reinstatement;
2. Teller's Functional Allowance, based on the rate
at the time of her dismissal;
3. Monetary Equivalent of Vacation and Sick
Leaves, and Holiday Pay, based on the rate at
the time of her dismissal;
4. Attorney's Fees, which is 10% of the total
amount of the award.
Anent the Private Respondent's Urgent Motion for
Clarification, Private Respondent asked whether the TRO
issued by this Court on January 3, 2006 restrained the
reinstatement of Private Respondent Uy.
We answer in the affirmative.
The wordings of the Resolution ordering the issuance of
a temporary restraining order are clear. The TRO was
issued to restrain the implementation and/or
enforcement of the Public Respondent's Order dated
December 6, 200[5] and the Writ of Execution, dated
December 12, 200[5]. Considering that said Order and
the ensuing Writ are for the reinstatement of Private
Respondent Uy, hence, the TRO, indeed, effectively
restrained Uy's reinstatement.
WHEREFORE, Private Respondents' Motion for Partial
Reconsideration is DENIED and Petitioner's Motion for
Partial Reconsideration is GRANTED IN PART. The
Decision of this Court promulgated on May 24, 2006 is
hereby amended, and the Public Respondent Voluntary
Arbitrator is ordered to recompute the amount of
backwages due to Private Respondent Uy consistent
with the foregoing ruling.
SO ORDERED. 24
From the foregoing Amended Decision, both parties
separately filed petitions before this Court. Uy's and the Union's
petition is docketed as G.R. No 178699, and that of BPI is docketed
as G.R. No. 178735. The Court resolved to consolidate both
petitions in a Resolution dated September 3, 2007. 25
Issues
G.R. No. 178699
Uy and the Union argue that the CA effectively amended the
final Decision in G.R. No. 137863. They allege that the issues
raised in G.R. No. 137863 were confined only to the propriety of
the CA's award of back wages for a fixed period of three years as
well as the order for the payment of separation pay in lieu of
reinstatement. Hence, the Voluntary Arbitrator's award of CBA
benefits as components of Uy's back wages and the attorney's
fees, which were not raised as issues in G.R. No. 137863, should
no longer be disturbed.
Uy and the Union likewise assail the CA's order restraining
Uy's reinstatement despite the finality of this Court's Decision
ordering such reinstatement. They also fault the CA in not
dismissing BPI's petition for being an improper mode of appeal.
Finally, Uy and the Union assert that a twelve percent (12%)
interest per annum should be imposed on the total amount due
to Uy, computed from the finality of the Decision of this Court in
G.R. No. 137863 until full compliance thereof by BPI.
G.R. No. 178735
On the other hand, BPI alleges that Uy's/Union's petition
should be dismissed for lack of proof of service of the petition on
the lower court concerned as required by the Rules of Court. BPI
also argues that the CA erred in including the teller's functional
allowance and the vacation and sick leave cash equivalent in the
computation of Uy's backwages. Also, BPI questions the propriety
of the award of attorney's fees.
Our Ruling
The March 31, 2005 Decision of this Court in G.R. No. 137863 did
not reinstate the December 31, 1997 Decision of the Voluntary
Arbitrator which ordered the payment of full back wages including
all benefits under the CBA.
We agree with the CA's finding that the March 31, 2005
Decision of this Court in G.R. No. 137863 did not in anyway
reinstate the Voluntary Arbitrator's December 31, 1997 Decision
regarding the award of CBA benefits. ATEHDc
To recall, after Uy and the Union filed the case for illegal
dismissal, the Voluntary Arbitrator rendered his Decision 26 on
December 31, 1997, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered declaring the dismissal of complainant Zenaida
Uy as illegal and ordering the respondent Bank of the
Philippine Islands to immediately reinstate her to her
position as bank teller of the Escolta Branch without loss
of seniority rights and with full backwages computed
from the time she was dismissed on December 14, 1995
until she is actually reinstated in the service, and
including all her other benefits which are benefits under
their Collective Bargaining Agreement (CBA).
For reasonable attorney's fees, respondent is also
ordered to pay complainant the equivalent of 10% of the
recoverable award in this case.
SO ORDERED. 27
On appeal, the CA, in its October 28, 1998
Decision, 28 affirmed with modification the Decision of the
Voluntary Arbitrator. Instead of full back wages, the CA limited
the award to three years. Also, in lieu of reinstatement, the CA
ordered BPI to pay separation pay, thus:
WHEREFORE, the judgment appealed from
is AFFIRMED with the MODIFICATION that instead of
reinstatement, the petitioner Bank of the Philippine
Islands is DIRECTED to pay Uy back salaries not
exceeding three (3) years and separation pay of one
month for every year of service. The said judgment
is AFFIRMED in all other respects.
SO ORDERED. 29
As already discussed, both parties appealed to this Court.
However, BPI's petition was dismissed outright for failure to
comply with the requirements for a valid certification of non-
forum shopping. Uy's and the Union's petition docketed as G.R.
No. 137863, on the other hand, was given due course. On March
31, 2005, the Court rendered its Decision disposing thus:
WHEREFORE, the instant petition is GRANTED. The
assailed 28 October 1998 Decision and 8 March 1999
Resolution of the Court of Appeals are
hereby MODIFIED as follows: 1) respondent BPI
is DIRECTED to pay petitioner Uy backwages from the
time of her illegal dismissal until her actual
reinstatement; and 2) respondent BPI is ORDERED to
reinstate petitioner Uy to her former position, or to a
substantially equivalent one, without loss of seniority
right and other benefits attendant to the position.
SO ORDERED. 30
From the foregoing, it is clear that Uy's and the Union's
contention that the March 31, 2005 Decision of this Court in G.R.
No. 137863 in effect reinstated the December 31, 1997 Decision
of the Voluntary Arbitrator awarding full back wages including the
CBA benefits, is without basis. What is clear is that the March 31,
2005 Decision modified the October 28, 1998 Decision of the CA
by awarding full back wages instead of limiting the award to a
period of three years. This interpretation is further bolstered by
the Court's discussion in the main body of March 31, 2005
Decision as to the meaning of "full back wages" in view of the
passage of Republic Act No. 6715 31 on March 21, 1989 which
amended Article 279 of the Labor Code,as follows:
ART. 279. Security of Tenure. — In cases of regular
employment, the employer shall not terminate the
services of an employee except for a just cause or when
authorized by the Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent
computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.
(Italics supplied)
Jurisprudence dictates that such award of back wages is
without qualifications and deductions, 32 that is, "unqualified by
any wage increases or other benefits that may have been received
by co-workers who were not dismissed." 33 It is likewise settled
that the base figure to be used in the computation of back wages
is pegged at the wage rate at the time of the employee's dismissal
unqualified by deductions, increases and/or modifications. 34
We thus fully agree with the observation of the CA in its
Amended Decision that the back wages as discussed in the March
31, 2005 Decision in G.R. No. 137863 did not include salary
increases and CBA benefits, viz.:
There is no ambiguity or omission in the dispositive
portion of the SC decision but Public Respondent
erroneously concluded that said SC decision effectively
reinstated Public Respondent's December 31, 1997
Decision. There is a need to read the findings and
conclusions reached by the Supreme Court in the subject
decision to understand what was finally adjudicated.
In the dispositive portion of Its Decision of March 31,
2005, the Supreme Court expressly awarded Uy full
backwages from the time of her dismissal up to the time
of her actual reinstatement. The full backwages, as
referred to in the body of the decision pertains to
"backwages" as defined in Republic Act No. 6715. Under
said law, and as provided in numerous jurisprudence,
"full backwages" means backwages without any
deduction or qualification, including benefits or their
monetary equivalent the employee is enjoying at the
time of his dismissal. HDIATS
Clearly, it is the intention of the Supreme Court to grant
unto Private Respondent Uy full backwages as defined
under RA 6715. Consequently, any benefit or allowance
over and above that allowed and provided by said law is
deemed excluded under said SC Decision. The CBA
benefits awarded by Public Respondent is not within the
benefits under RA 6715. Said benefits are not to be
included in the backwages. . . . 35
The CA correctly deleted the
award of CBA benefits.
Thus, we find that the CA properly disregarded the salary
increases and correctly computed Uy's back wages based on the
salary rate at the time of Uy's dismissal plus the regular
allowances that she had been receiving likewise at the time of her
dismissal. 36 The CA also correctly deleted the signing bonus,
medicine allowance, medical and doctor's allowance and dental
care allowance, as they were all not proven to have been granted
to Uy at the time of her dismissal from service.
The award of attorney's fees is proper.
We likewise affirm the CA's award of attorney's fees. The
issue on its grant has already been threshed out and settled with
finality when the parties failed to question it on appeal. As aptly
held by the CA in its Amended Decision:
Based on the evidence, We find Uy to be entitled to
Attorney's fees. True, the SC Decision did not include the
award of attorney's fees; however, after the Public
Respondent awarded said attorney's fees in favor of
Private Respondent Uy, said award was neither assailed
nor raised as an issue before the Court of Appeals and
the Supreme Court. Hence, the March 31, 2005 Decision
of the Supreme Court and the Court of Appeals' Decision
as modified no longer mention said award.
Consequently, as the right of Uy to attorney's fees has
already been resolved and had attained finality,
Petitioner cannot now question its inclusion to the
computation of awards given to Private Respondent Uy
during the execution proceedings. 37
The issue concerning the CA's temporary restraining order which
covered the reinstatement aspect of this Court's final decision has
been rendered moot by Uy's subsequent reinstatement in BPI's
payroll on August 1, 2006.
While we agree with Uy's/Union's postulation that it was
improper for the CA to restrain the implementation of the
reinstatement aspect of this Court's final and executory Decision
considering that BPI's appeal with the CA only questioned the
propriety of the Voluntary Arbitrator's computation of back
wages, suffice it to say that this particular issue has already been
rendered moot by Uy's reinstatement. As manifested by BPI in its
Comment, 38 Uy, with her acquiescence, was reinstated in BPI's
payroll on August 1, 2006. Notably, this fact was not at all
disputed or denied by Uy in any of her pleadings.
BPI's resort to certiorari under Rule 65 of the Rules of Court is
proper.
Section 1, Rule 41 of the Rules of Court explicitly provides
that no appeal may be taken from an order of execution, the
remedy of an aggrieved party being an appropriate special civil
action under Rule 65 of the Rules of Court. Thus, BPI correctly
availed of the remedy of certiorari under Rule 65 of the Rules of
Court when it assailed the December 6, 2005 order of execution
of the Voluntary Arbitrator.
A legal interest at 12% per annum
should be imposed upon the monetary awards granted in favor of
Uy commencing from the finality of this Court's March 31, 2005
Decision until full satisfaction thereof.
Pursuant to our ruling in Eastern Shipping Lines, Inc. v. Court
of Appeals, 39 the legal interest of 12% per annum shall be
imposed upon the monetary award granted in favor of Uy, from
the time this Court's March 31, 2005 Decision became final and
executory until full satisfaction thereof, for the delay caused. This
natural consequence of a final judgment is not defeated
notwithstanding the fact that the parties were at variance in the
computation of what is due to Uy under the judgment. 40
The CA was properly served with a copy of Uy's/Union's petition in
compliance with the Rules of Court.
BPI's allegation that Uy's/Union's petition in G.R.
No. 178699 should be dismissed outright for failure to furnish the
lower court concerned of their petition is without basis. Records
disclose that Uy's/Union's petition was accompanied with an
affidavit of service with the corresponding registry
receipt 41 showing that the CA was duly provided with a copy of
the petition.
Uy is entitled to teller's functional allowance but not to vacation
and sick leave cash conversion.
BPI contends that at the time of Uy's dismissal, she was no
longer functioning as a teller but as a low-counter staff and as
such, Uy is not anymore entitled to the teller's functional
allowance pursuant to company policy. Furthermore, BPI argues
that Uy is neither entitled to the monetary conversion of vacation
and sick leaves for failure to prove that she is entitled to these
benefits at the time of her dismissal.
We rule that Uy is entitled to the teller's functional
allowance since Uy's function as a teller at the time of her
dismissal was factually established and was never impugned by
the parties during the proceedings held in the main case. Besides,
BPI did not present any evidence to substantiate its allegation that
Uy was assigned as a low-counter staff at the time of her
dismissal. It is a hornbook rule that he who alleges must
prove. 42 Neither was there any proof on record which could
support this bare allegation.
As to the vacation and sick leave cash conversion benefit, we
disagree with the CA's pronouncement that entitlement to the
same should not be necessarily proved. It is to be noted that this
privilege is not statutory or mandatory in character but only
voluntarily granted. 43 As such, the existence of this benefit as
well as the employee's entitlement thereto cannot be presumed
but should be proved by the employee. 44 The records, however,
failed to prove that Uy was receiving this benefit at the time of
her dismissal on December 14, 1995. The CBA covering the period
April 1, 2001 to March 31, 2006, which was presented by the
parties does not at all prove that vacation and sick leave credits,
as well as the privilege of converting the same into cash, were
granted before the CBA's effectivity in 2001. We thus hold that Uy
failed to prove that she is entitled to such benefit as a matter of
right. ICHcaD
WHEREFORE, the petitions in G.R. Nos. 178699 and 178735
are both PARTIALLY GRANTED. The Amended Decision dated July
4, 2007 of the Court of Appeals in CA-G.R. SP No. 92631 is
hereby AFFIRMED with MODIFICATIONS. The back wages of
Zenaida Uy should be computed as follows:
1. Basic Monthly Salary, Cost of Living Allowance, Financial
Assistance and Quarterly Bonus, with P10,895.00 as the base
figure which is her salary rate at the time of her dismissal,
computed from the time of her dismissal on December 14, 1995
up to her reinstatement on August 1, 2006;
2. Teller's Functional Allowance, based on the rate at the
time of her dismissal;
3. Holiday Pay, based on the rate at the time of her dismissal;
4. Attorney's Fees, which is 10% of the total amount of the
award; and
5. Interest at 12% per annum on the total amount of the
awards commencing from the finality of the Decision in G.R. No.
137863 until full payment thereof.
6. The award for the monetary conversion of vacation and
sick leave is deleted.
The Voluntary Arbitrator is hereby ORDERED TO
RECOMPUTE the amounts due to Zenaida Uy in accordance with
the above disposition.
SO ORDERED.
||| (BPI Employees Union-Metro Manila v. Bank of the Philippine
Islands, G.R. No. 178699, 178735, [September 21, 2011], 673 PHIL
599-617)
[G.R. No. 166570. December 18, 2009.]

EFREN M. HERRERA and ESTHER C. GALVEZ, for and on


their behalf and on behalf of OTHER SEPARATED,
UNREHIRED and RETIRED EMPLOYEES OF THE
NATIONAL POWER
CORPORATION, petitioners,vs.NATIONAL POWER
CORPORATION, THE DEPARTMENT OF BUDGET AND
MANAGEMENT and THE OFFICE OF THE SOLICITOR
GENERAL, respondents.

DECISION

DEL CASTILLO, J p:
The question at the heart of this case is whether petitioners,
former employees of the National Power Corporation (NPC) who
were separated from service due to the government's initiative of
restructuring the electric power industry, are entitled to their
retirement benefits in addition to the separation pay granted by
law.
Absent explicit statutory authority, we cannot provide
our imprimatur to the grant of separation pay and retirement
benefits from one single act of involuntary separation from the
service, lest there be duplication of purpose and depletion of
government resources. Within the context of government
reorganization, separation pay and retirement benefits arising
from the same cause, are in consideration of the same services
and granted for the same purpose. Whether denominated as
separation pay or retirement benefits, these financial benefits
reward government service and provide monetary assistance to
employees involuntarily separated due to bona
fide reorganization.
This is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court on a pure question of law against the
Decision 1 dated December 23, 2004 rendered by the Regional
Trial Court (RTC), Branch 101, Quezon City in SCA No. Q-03-50681
(for Declaratory Relief) entitled National Power Corporation v.
Napocor Employees and Workers Union (NEWU),NAPOCOR
Employees Consolidated Union (NECU),NPC Executive Officers
Association, Inc. (NPC-EXA),Esther Galvez and Efren Herrera, for
and on their behalf and in behalf of other separated, unrehired,
and retired employees of the National Power Corporation, the
Department of Budget and Management (DBM),the Office of the
Solicitor General (OSG),the Civil Service Commission (CSC) and the
Commission on Audit (COA). Said Decision ruled that the
petitioners are not entitled to receive retirement benefits
under Commonwealth Act No. 186 (CA No. 186), 2 as amended,
over and above the separation benefits they received
under Republic Act (RA) No. 9136, 3 otherwise known as
the Electric Power Industry Reform Act of 2001 (EPIRA). CAaDTH
Legal and factual background
RA No. 9136 was enacted on June 8, 2001 to provide a
framework for the restructuring of the electric power industry,
including the privatization of NPC's assets and liabilities. 4 One
necessary consequence of the reorganization was the
displacement of employees from the Department of Energy, the
Energy Regulatory Board, the National Electrification
Administration and the NPC. To soften the blow from the
severance of employment, Congress provided in Section 63 of
the EPIRA, for a separation package superior than those provided
under existing laws, as follows:
SEC. 63. Separation Benefits of Officials and Employees
of Affected Agencies. — National government
employees displaced or separated from the service as a
result of the restructuring of the [electric power]
industry and privatization of NPC assets pursuant to this
Act, shall be entitled to either a separation pay and
other benefits in accordance with existing laws, rules or
regulations or be entitled to avail of the privileges
provided under a separation plan which shall be one
and one-half month salary for every year of service in
the government:Provided, however, That those who
avail of such privilege shall start their government
service anew if absorbed by any government-owned
successor company. In no case shall there be any
diminution of benefits under the separation plan until
the full implementation of the restructuring and
privatization. ...(Emphasis supplied)
The implementing rules of the EPIRA, approved by the Joint
Congressional Power Commission on February 27, 2002, 5further
expounded on the separation benefits, viz.:
RULE 33. Separation Benefits. —
Section 1. General Statement on Coverage.—
This Rule shall apply to all employees in the National
Government service as of June 26, 2001 regardless of
position, designation or status, who are displaced or
separated from the service as a result of the
restructuring of the electric [power] industry and
privatization of NPC assets: Provided, however, That the
coverage for casual or contractual employees shall be
limited to those whose appointments were approved or
attested [to] by the Civil Service Commission (CSC).
Section 2. Scope of Application. —
This Rule shall apply to affected personnel of DOE, ERB,
NEA and NPC.
Section 3. Separation and Other Benefits.—
(a) The separation benefit shall consist of either a
separation pay and other benefits granted in
accordance with existing laws, rules and regulations or
a separation plan equivalent to one and one half (1-
1/2) months' salary for every year of service in the
government, whichever is higher;Provided, That the
separated or displaced employee has rendered at least
one (1) year of service at the time of effectivity of the
Act. ScaHDT
xxx xxx xxx
(e) For this purpose, "Salary",as a rule, refers to the basic
pay including the thirteenth (13th) month pay received
by an employee pursuant to his appointment, excluding
per diems, bonuses, overtime pay, honoraria,
allowances and any other emoluments received in
addition to the basic pay under existing laws.
(f) Likewise, "Separation" or "Displacement" refers to
the severance of employment of any official or
employee, who is neither qualified under existing laws,
rules and regulations nor has opted to retire under
existing laws,as a result of the Restructuring of the
electric power industry or Privatization of NPC assets
pursuant to the Act. (Emphasis supplied)
On February 28, 2003, all NPC employees, including the
petitioners, were separated from the service. As a result, all the
employees who held permanent positions at the NPC as of June
26, 2001 opted for and were paid the corresponding separation
pay equivalent to one and a half months' salary per year of
service. Nonetheless, in addition to the separation package
mandated by the EPIRA, a number of NPC employees also claimed
retirement benefits under CA No. 186, 6 as amended by RA No.
660 7 and RA No. 1616. 8 Under these laws, government
employees who have rendered at least 20 years of service are
entitled to a gratuity equivalent to one month's salary for every
year of service for the first 20 years, one and a half months' salary
for every year of service over 20 but below 30 years, and two
months' salary for every year of service in excess of 30 years. 9
The NPC, on the other hand, took the position that the grant
of retirement benefits to displaced employees in addition to
separation pay was inconsistent with the constitutional
proscription on the grant of a double gratuity. Unable to amicably
resolve this matter with its former employees, the NPC filed on
September 18, 2003, a Petition for Declaratory Relief 10against
several parties, 11 including the petitioners, before the RTC of
Quezon City, to obtain confirmation that RA No. 9136did not
specifically authorize NPC to grant retirement benefits in addition
to separation pay. 12 The case was docketed as SCA No. Q-03-
50681 and raffled to Branch 101 of said court.
After submission of the respondents' respective Answers
and Comments, 13 the parties agreed that the court a quo would
resolve the case based on the arguments raised in their
memoranda 14 since only a question of law was involved. 15 In
due course, the court a quo rendered the assailed Decision,
finding that employees who received the separation benefit
under RA No. 9136 are no longer entitled to retirement benefits:
The aforementioned law speaks of two (2) options for
the employee to choose from, that is: (1) to receive
separation pay and other benefits in accordance with
existing laws, rules, and regulations or (2) to avail of the
privileges provided under a separation plan (under R.A.
9136), which shall be one and one half months' salary for
every year of service in the government. CHEDAc
Under Section 3(f) of Rule 33 of the Implementing Rules
and Regulations of R.A. 9136, "separation or
displacement refers to the severance of employment of
any official or employee, who is neither qualified under
existing laws, rules, and regulations nor has opted to
retire under existing laws as a result of the Restructuring
of the electric power industry or Privatization of NPC
assets pursuant to the act". Thus, it is clear that the
receipt of benefits under the EPIRA law, by employees
who opted to retire under such law bars the receipt of
retirement benefits under R.A. 1616.
Moreover, Section 8 of Article IX-B of the 1987
Constitution prohibits the grant of both separation pay
and retirement benefits. . . .
xxx xxx xxx
In said constitutional provision, it is ...clear that
additional or indirect compensation is barred by law and
only [allowed] when so specifically authorized by law.
Furthermore, on the Private Respondents' contention
that the second paragraph should be applied in their
[case],the same will not hold water. This is so because
"retirement benefits" [are] not synonymous to pension
or gratuities as contemplated by law.
R.A. 9136 did not clearly and unequivocally authorize
the payment of additional benefits to Private
Respondents as the benefits referred to in such law
should not be interpreted to include retirement benefits
in addition to their separation pay. Separation from
service due to [the] restructuring of the [electric] power
industry should not be interpreted to mean "retirement"
as both are different in every respect. The law
specifically defines the meaning of "separation" by
virtue of the restructuring. ...
xxx xxx xxx
Thus, the Respondent-Employees are not entitled to
receive retirement benefits under Republic Act No.
1616 over and above the separation benefits they
received under Republic Act No. 9136. 16
Petitioners sought recourse from the assailed Decision
directly before this court on a pure question of law. The
Department of Budget and Management (DBM) submitted its
Comment on June 30, 2005, 17 while the NPC, through the Office
of the Solicitor General, filed its Comment on August 23,
2005. 18 Petitioners then filed their Consolidated Reply by
registered mail on November 18, 2005. 19 After the parties filed
their respective memoranda, 20 the case was submitted for
decision.
Petitioners' arguments
Before us, petitioners argue that:
1) The EPIRA does not bar the application of CA No. 186,
as amended. Petitioners are therefore entitled to
their retirement pay in addition to separation pay.
2) Petitioners have vested rights over their retirement
benefits.
3) The payment of both retirement pay and separation
pay does not constitute double compensation, as
theConstitution provides that "pensions or
gratuities shall not be considered as additional,
double or indirect compensation". TEDaAc
Respondents' arguments
Respondents NPC and the DBM, on the other hand, maintain
that:
1) Section 63 of RA No. 9136 and Section 3, Rule 33 of its
Implementing Rules and Regulations do not
authorize the grant of retirement benefits in
addition to the separation pay already received.
Rather, Section 63 requires separated employees
to choose between a separation plan under existing
laws or the separation package under the EPIRA.
2) The grant of both separation pay and retirement
benefit amounts to double gratuity in direct
contravention of the Constitution.
3) No law authorizes the payment of both separation pay
and retirement benefits to petitioners.
Issue
The sole issue in this case is whether or not NPC employees who
were separated from the service because of the reorganization of
the electric power industry and who received their separation pay
under RA No. 9136 are still entitled to receive retirement benefits
under CA No. 186, as amended.
Our Ruling
We deny the petition and affirm the court a quo's Decision
dated December 23, 2004 in SCA No. Q-03-50681.
Absent clear and unequivocal statutory authority, the grant of
both separation pay and retirement benefits violates the
constitutional proscription on additional compensation.
Section 8 of Article IX (B) of the Constitution provides that
"[n]o elective or appointive public officer or employee shall
receive additional, double, or indirect compensation, unless
specifically authorized by law". In prior decisions, we have ruled
that there must be a clear and unequivocal statutory provision to
justify the grant of both separation pay and retirement benefits
to an employee. 21 Here, absent an express provision of law, the
grant of both separation and retirement benefits would amount
to double compensation from one single act of separation from
employment.
Petitioners claim that Section 9 of RA No. 6656 22 amounts
to sufficient statutory basis for the grant of both retirement
benefits and separation pay. Section 9 provides:
...Unless also separated for cause, all officers and
employees, who have been separated pursuant to
reorganization shall, if entitled thereto, be paid
the appropriate separation pay and retirement and
other benefits under existing laws within ninety (90)
days from the date of the effectivity of their separation
or from the date of the receipt of the resolution of their
appeals as the case may be. Provided, That application
for clearance has been filed and no action thereon has
been made by the corresponding department or agency.
Those who are not entitled to said benefits shall be paid
a separation gratuity in the amount equivalent to one (1)
month salary for every year of service. Such separation
pay and retirement benefits shall have priority of
payment out of the savings of the department or agency
concerned. (Emphasis supplied) ADCIca
Unfortunately for the petitioners, their interpretation has
little legal precedent. The CSC has previously ruled that
employees similarly situated to petitioners herein were not
entitled to both separation pay and retirement benefits; instead,
the concerned employee must either avail of the separation
benefit or opt to retire if qualified under existing laws. In CSC
Resolution No. 021112, 23 the CSC interpreted the phrase
"separation pay and retirement" in RA No. 6656 as follows:
...While the aforequoted provision of law used the
conjunctive "and" between the words "separation pay"
and "retirement",this does not mean that both benefits
shall be given to an affected employee. This
interpretation is supported by the phrase "if entitled
thereto" found before the phrase "be paid the
appropriate separation pay and retirement and other
benefits under existing laws".Thus, payment of both
separation and retirement benefits is not absolute.
Also, in CSC Resolution No. 00-1957, 24 the CSC declared:
The aforequoted provision of law says: 'separation pay
and retirement and other benefits under existing
laws'.Be it noted that the conjunctive 'and' is used
between 'separation pay and retirement',which in its
elementary sense would mean that they are to be taken
jointly. (Ruperto G. Martin, Statutory Construction, sixth
edition, p. 88) Obviously, therefore, 'separation pay and
retirement' refer to only one benefit, of which an
employee affected by the reorganization, if entitled
thereto, must be paid plus other benefits under existing
laws, i.e., terminal leave pay, etc.
Further, in Cajiuat v. Mathay, 25 we found that in the
absence of express provisions to the contrary, gratuity laws
should be construed against the grant of double compensation.
Cajiuat involved employees of the Rice and Corn Administration
who exercised their option to retire under CA No. 186 and
received the appropriate retirement benefits. Subsequently, the
Rice and Corn Administration was abolished by Presidential
Decree No. 4. 26 Said Decree also provided for the payment of a
gratuity in Section 26, paragraph 3:
Permanent officials and employees of the Rice and Corn
Administration who cannot be absorbed by the
Administration, or who cannot transfer or to be
transferred to other agencies, or who prefer to retire, if
qualified for retirement, or to be laid off, shall be given
gratuity equivalent to one month salary for every year of
service but in no case more than twenty-four months
salary, in addition to all other benefits to which they are
entitled under existing laws and regulations. ...
On the basis of this provision, the retired employees of the
Rice and Corn Administration claimed that they were entitled to
the separation gratuity, over and above the retirement benefits
already received. We disagreed and held that:
. . . [t]here must be a provision, clear and unequivocal,
to justify a double pension. The general language
employed in paragraph 3, Section 26 of Presidential
Decree No. 4 fails to meet that test. All that it states is
that permanent employees of the Rice and Corn
Administration who are retirable are entitled to gratuity
equivalent to one month salary for every year of service
but in no case more than twenty four months salary in
addition to other benefits to which they are entitled
under existing laws and regulations. To grant double
gratuity is unwarranted. No reliance can be placed [on]
the use of the term "other benefits" found in the
paragraph relied upon. As clearly stated in the
memorandum of the Solicitor General, they refer to
"those receivable by a retiree under the general
retirement laws", like the refund of contributions to the
retirement fund and the money value of the
accumulated vacation and sick leaves of said official
employee. The clause "in addition to all other benefits to
which they are entitled under existing laws and
regulations" was inserted to insure the payment to the
retiree of the refund of the contributions to the
retirement fund and the money value of the
accumulated vacation and sick leaves of said official or
employee. 27 aTHASC
Nothing in the EPIRA justifies the grant of both the separation
package and retirement benefits.
The EPIRA, a legislative enactment dealing specifically with
the privatization of the electric power industry, provides:
SEC. 63. Separation Benefits of Officials and Employees
of Affected Agencies. — National government
employees displaced or separated from the service as a
result of the restructuring of the [electric power]
industry and privatization of NPC assets pursuant to this
Act, shall be entitled to either a separation pay and
other benefits in accordance with existing laws, rules or
regulations or be entitled to avail of the privileges
provided under a separation plan which shall be one
and one-half month[s'] salary for every year of service
in the government:Provided, however, That those who
avail of such privilege shall start their government
service anew if absorbed by any government-owned
successor company. In no case shall there be any
diminution of benefits under the separation plan until
the full implementation of the restructuring and
privatization. ...(Emphasis supplied)
A careful reading of Section 63 of the EPIRA affirms that said
law did not authorize the grant of both separation pay and
retirement benefits. Indeed, the option granted was either to "a
separation pay and other benefits in accordance with existing
laws, rules and regulations" or to "a separation plan which shall
be one and one-half months' salary for every year of service in the
government". The options were alternative, not cumulative.
Having chosen the separation plan, they cannot now claim
additional retirement benefits under CA No. 186.
This position finds further support in Section 3 (f), Rule 33
of RA No. 9136's Implementing Rules and Regulations, which
provides:
(f) likewise, "separation" or "displacement" refers to the
severance of employment of any official or employee,
who is neither qualified under existing laws, rules and
regulations nor has opted to retire under existing laws,
as a result of the restructuring of the electric power
industry or privatization of NPC assets pursuant to the
act.
As worded, Rule 33, Section 3 (f) of the Implementing Rules
and Regulations of RA No. 9136 precludes the receipt of both
separation and retirement benefits. A separated or displaced
employee, as defined by the implementing rules, does not include
one who is qualified or has opted to retire under existing laws.
Consequently, a separated employee must choose between
retirement under applicable laws or separation pay under
the EPIRA.
Within the context of reorganization, petitioners cannot claim a
vested right over their retirement benefits.
Petitioners claim that having religiously paid their premiums,
they have vested rights to their retirement gratuities which may
not be revoked or impaired. However, petitioners fail to consider
that under the retirement laws that they themselves invoke,
separation from the service, whether voluntary or involuntary, is
a distinct compensable event from retirement. 28 Nothing in said
laws permits an employee to claim both separation pay and
retirement benefits in the event of separation from the service
due to reorganization. acHCSD
Thus, absent an express provision of law to the contrary,
separation due to reorganization gives rise to two possible
scenarios: first, when the separated employee is not yet entitled
to retirement benefits, second, when the employee is qualified to
retire. In the first case, the employee's separation pay shall be
computed based on the period of service rendered in the
government prior to the reorganization. In the second case,
where an employee is qualified to retire, he or she may opt to
claim separation or retirement benefits.
Contradistinction with Laraño v. Commission on Audit
We are, of course, aware that in Laraño v. Commission on
Audit 29 we held that employees, who were separated from the
service because of the reorganization of the Metropolitan
Waterworks and Sewerage System (MWSS) and Local Waterworks
and Utilities Administration (LWUA) pursuant to RA No. 8041,
were entitled to both a separation package and retirement
benefits. 30
In Laraño, however, the Early Retirement Incentive Plan
submitted to and approved by then President Fidel V. Ramos
explicitly provided for a separation package that would be
given over and above the existing retirement benefits.Therein
lies the fundamental difference. Hence, unlike in this case, there
was specific authority for the grant of both separation pay and
retirement benefits.
WHEREFORE,the petition is DENIED. The Decision dated
December 23, 2004 of the Regional Trial Court of Quezon City,
Branch 101 in SCA No. Q-03-50681 holding that petitioners are
not entitled to receive retirement benefits under Commonwealth
Act No. 186, as amended is AFFIRMED with MODIFICATION that
petitioners are entitled to a refund of their contributions to the
retirement fund, and the monetary value of any accumulated
vacation and sick leaves.
SO ORDERED.
||| (Herrera v. National Power Corp., G.R. No. 166570, [December
18, 2009], 623 PHIL 383-415)