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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 116593 September 24, 1997 PULP AND PAPER, INC., petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION AND EPIFANIA ANTONIO, respondents.

PANGANIBAN, J.: In the absence of wage rates specially prescribed for piece-rate workers, how should the separation pay and salary differential of such workers be computed? Statement of the Case This is the main question raised in the instant petition for certiorari, filed under Rule 65 of the Rules of Court, to set aside and annul National Labor Relations Commission's 1 Decision 2 promulgated on September 24, 1993 and Resolution 3 dated December 16, 1993 in NLRC NCR CA No. 004041-92. 4 Public respondent's assailed Decision affirmed in toto Labor Arbiter Eduardo J. Carpio's decision 5 dated October 6, 1992, which disposed thus: 6 IN VIEW OF ALL THE FOREGOING, judgement [sic] is hereby rendered: 1. dismissing the complaint for illegal dismissal for lack of merit; 2. ordering respondent Pulp and Papers Distributors Inc. to pay complainant Efipania (sic) Antonio the sum of P49.088.00 representing her separation pay; and 3. ordering respondent to pay the complainant the sum of P31,149.56 representing the underpayment of wages. 4. dismissing all other issues far lack of merit. The assailed Resolution denied petitioner's motion for reconsideration for lack of merit. The Facts The facts as found by the labor arbiter are as follows: 7 A case of illegal dismissal and underpayment of wages [was] filed by MS. EPIFANIA ANTONIO [private respondent herein] against PULP AND PAPER DISTRIBUTORS INC., [petitioner herein] . . . . In filing the present complaint, complainant in her position paper alleges that she was a regular employee of the . . . corporation having served thereat as Wrapper sometime in September 1975. On November 29, 1991, for unknown reasons, she was advised verbally of her termination and was given a prepared form of Quitclaim and Release which she refused to sign. Instead she brought the present complaint for illegal dismissal. In charging the [herein petitioner] of underpayment of wages, complainant in the same position paper alleges that, rarely during her employment with the respondent she received her salary, a salary which was in accordance with the minimum wage law. She was not paid overtime pay, holiday pay and five-day service incentive leave pay, hence she is claiming for payments thereof by instituting the present case. Respondent on the otherhand [sic] denied having terminated the services of the complainant and alleges

inter alia that starting 1989 the orders from customers became fewer and dwindled to the point that it is no longer practical to maintain the present number of packer/wrappers. Maintaining the same number of packers/wrappers would mean less pay because the work allocation is no longer the same as it was. Such being the case, the respondent has to reduce temporarily the number of packers/wrappers. Complainant was among those who were temporarily laid-off from work. Complainant last worked with the company on June 29, 1991. As regards complainant's allegation that on November 29, 1991, she was forced to sign a quitclaim and release by the respondent, the latter clarified that considering that five months from the time the complainant last worked with the company, the management decided to release the complainant and give her a chance to look for another job in the meantime that no job is available for her with the company. In other words, complainant was given the option and considering that she did not sign the documents referred to as the Quitclaim and Release, the respondent did not insist, and did not terminate the services of the complainant. It was just surprise [sic] to receive the present complaint. In fact, respondent added that the reason why the complainant was called on November 29, 1991 was not to work but to receive her 13th month pay of P636.70 as shown by the voucher she signed (Annex-A, Respondent). As regards the claim of the complainant for underpayment, respondent did not actually denied (sic) the same but give [sic] the reservation that should the same be determined by this Office it is willing to settle the same considering the fact that complainant herein being paid by results, it is not in a proper position to determine whether the complainant was underpaid or not. The Issues Petitioner couched the main issue in this wise: 8 Did the Public Respondent NLRC act correctly in affirming in toto the decision rendered by the labor arbitration branch a quo in NLRC NCR Case no. 00-01-00494-92? While it expressly admits that private respondent is entitled to separation pay, petitioner raises nonetheless the following queries: "(a) Are the factors in determining the amount of separation pay for a 'piece-rate worker' the same as that of a 'time-worker'? (b) Is a worker, who was terminated for lack of work, entitled to separation pay at the rate of one-month's pay for every year of service?" 9 The petition is based on the following "grounds": I Public Respondent NLRC committed grave abuse of discretion and serious reversible error when it affirmed in toto the award of separation pay in favor of private respondent, without bases in fact and in law. II Public Respondent NLRC committed grave abuse of discretion and serious reversible error when it affirmed in toto the award of underpayment in favor of private respondent, without bases in fact and in law. The Public Respondent's Ruling In dismissing the appeal of petitioner, public respondent reasoned:
10

It is true that all the above circumstances cited by the [herein petitioner] are not present in the case at bar, hence, separation pay based on those circumstances is not owing to the [herein private respondent]. However, it is quite obvious that [petitioner] missed the legal and factual basis why separation pay was awarded by the Labor Arbiter. In the first place, the [petitioner] admits that the complainant-appellee was temporarily laid off on June 29, 1991. This means that there was a temporary suspension of employeremployee relationship between the appellant and the appellee. Lay-off is a temporary termination initiated by the employer, but without prejudice to the reinstatement or recall of the workers who have been temporarily separated. The reasons for laying off employees are varied: lack of work, shutdown for repairs, business reverses, and the like. Always, however, there is the expectation that the employees who have been laid off will be recalled or rehired. This situation is governed by Rule I, Section 12, of Book VI of the Implementing Rules and Regulations of the Labor Code, which provides: Sec. 12. Suspension of Relationship. The employer-employee relationship shall be deemed suspended in case of suspension of operation of the business or undertaking of the employer for a period not exceeding six (6) months . . . . From June 29, 1991 up to the time the complainant-appellee filed her complaint on January 21, 1992, there was more than six (6) months that already elapse (sic) and yet, the appellant failed to recall the appellee to let her resume working. If the appellant was not yet in a possession to recall or reinstate the appellee after six (6) months, up to when shall appellant let her keep in waiting. Of course, she cannot be allowed to wait interminably. That is the reason why the law imposes a period of six (6) months within which the resumption of employer-employee relationship must be resumed in temporary lay-offs. Otherwise, any employer can, in the guise of a temporary lay-off, close its doors to an employee for more than six months and their claim that the lay-off has ripened into termination and try to get away from any liability. The award of separation pay is hereby declared in order. On the second issue raised by the (petitioner) on appeal, We are also for the Labor Arbiter's ruling upholding the appellee's right to salary differential in the amount computed. The argument interposed by the [petitioner] based on Art. 101 of the Labor Code, in relation to Rule VII, Section (8), Book III of the Omnibus Implementing Rule and Regulations, will not lie in the case at bar. In the first place, pursuant to the provision of law cited by the [petitioner], all time and motion studies, or any other schemes or devices to determine whether the employees paid by results are being compensated in accordance with the minimum wage requirements, shall only be approved on petition of the interested employer. Thus, it is the fault of the [petitioner] on whose initiative, a time and motion study or any other similar scheme is not yet available in its establishment. The Court's Ruling The appeal is not meritorious. First Issue: Computation of Minimum Wage Petitioner argues that private respondent was a piece-rate worker and not a time-worker. Since private respondent's employment as "(p)acker/(w)rapper" in 1975 until her separation on June 29, 1991, "(h)er salary depended upon the number of 'reams of bond paper' she packed per day." Petitioner contends that private respondent's work "depended upon the number and availability of purchase orders from customers." Petitioner adds that, oftentimes, "packers/wrappers only work three to four hours a day." Thus, her separation pay "must be based on her latest actual compensation per piece or on the minimum wage per piece as determined by Article 101 of the Labor Code, whichever is higher, and not on the daily minimum wage applicable to time-

workers." 11 Compensation of Pieceworkers In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission. To ensure the payment of fair and reasonable wage rates, Article 101 12 of the Labor Code provides that "the Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other nontime work." The same statutory provision also states that the wage rates should be based, preferably, on time and motion studies, or those arrived at in consultation with representatives of workers' and employers' organizations. In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should apply. This is in compliance with Section 8 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A the prevailing wage order at the time of dismissal of private respondent, viz: 13 Sec. 8. Workers Paid by Results. a) All workers paid by results including those who are paid on piece work, takay, pakyaw, or task basis, shall receive not less than the applicable minimum wage rates prescribed under the Order for the normal working hours which shall not exceed eight (8) hours work a day, or a proportion thereof for work of less than the normal working hours. The adjusted minimum wage rates for workers paid by results shall be computed in accordance with the following steps: 1) Amount of increase in AMW x 100 = % increase Previous AMW 2) Existing rate/piece x % increase = increase in rate/piece; 3) Existing rate/piece + increase in rate/piece = adjusted rate/piece. b) The wage rates of workers who are paid by results shall continue to be established in accordance with Art. 101 of the Labor Code, as amended and its implementing regulations. (Emphasis supplied.) On November 29, 1991, private respondent was orally informed of the termination of her employment. Wage Order No. NCR-02, in effect at the time, set the minimum daily wage for non-agricultural workers like private respondent at P118.00. 14 This was the rate used by the labor arbiter in computing the separation pay of private respondent. We cannot find any abuse of discretion, let alone grave abuse, in the order of the labor arbiter which was later affirmed by the NLRC. Moreover, since petitioner employed piece-rate workers, it should have inquired from the secretary of labor about their prescribed specific wage rates. In any event, there being no such prescribed rates, petitioner, after consultation with its workers, should have submitted for the labor secretary's approval time and motion studies as basis for the wage rates of its employees. This responsibility of the employer is clear under Section 8, Rule VII, Book III of the Omnibus Rules Implementing the Labor Code: Sec. 8. Payment by result. (a) On petition of any interested party, or upon its initiative, the Department of Labor shall use all available devices, including the use of time and motion studies and consultations with representatives of employers' and workers' organizations, to determine whether the employees in any industry or enterprise are being compensated in accordance with the minimum wage requirements of this Rule. (b) The basis for the establishment of rates for piece, output or contract work shall be the performance of

an ordinary worker of minimum skill or ability. (c) An ordinary worker of minimum skill or ability is the average worker of the lowest producing group representing 50% of the total number of employees engaged in similar employment in a particular establishment, excluding learners, apprentices and handicapped workers employed therein. (d) Where the output rates established by the employer do not conform with the standards prescribed herein, or with the rates prescribed by the Department of Labor in an appropriate order, the employees shall be entitled to the difference between the amount to which they are entitled to receive under such prescribed standards or rates and that actually paid them by employer. In the present case, petitioner as the employer unquestionably failed to discharge the foregoing responsibility. Petitioner did not submit to the secretary of labor a proposed wage rate based on time and motion studies and reached after consultation with the representatives from both workers' and employers' organization which would have applied to its piece-rate workers. Without those submissions, the labor arbiter had the duty to use the daily minimum wage rate for non-agricultural workers prevailing at the time of private respondent's dismissal, as prescribed by the Regional Tripartite Wages and Productivity Boards. Put differently, petitioner did not take the initiative of proposing an appropriate wage rate for its piece-rate workers. In the absence of such wage rate, the labor arbiter cannot be faulted for applying the prescribed minimum wage rate in the computation of private respondent's separation pay. In fact, it acted and ruled correctly and legally in the premises. It is clear, therefore, that the applicable minimum wage for an eight-hour working day is the basis for the computation of the separation pay of piece-rate workers like private respondent. The computed daily wage should not be reduced on the basis of unsubstantiated claims that her daily working hours were less than eight. Aside from its bare assertion, petitioner presented no clear proof that private respondent's regular working day was less than eight hours. Thus, the labor arbiter correctly used the full amount of P118.00 per day in computing private respondent's separation pay. We agree with the following computation: 15 Considering therefore that complainant had been laid-off for more than six (6) months now, we strongly feel that it is already reasonable for the respondent to pay the complainant her separation pay of one month for every year of service, a fraction of six (6) months to be considered as one whole year. Separation pay should be computed based on her minimum salary as will be determined hereunder. Separation pay 1 month = 16 years P118.00 x 26 x 16 years = P49,088.00 The amount "P118.00" represents the applicable daily minimum wage per Wage Order Nos. NCR-02 and NCR-02-A; "26", the number of working days in a month after excluding the four Sundays which are deemed rest days; "16", the total number of years spent by private respondent in the employ of petitioner. Second Issue: Computation of Separation Pay Petitioner questions not only the basis for computing private respondent's monthly wage; it also contends that private respondent's separation pay should not have been computed at one month's pay for every year of service. Because private respondent should be considered retrenched, the separation pay should be "one month's pay or at least one/half (1/2) month pay for every year of service, whichever is higher, and not one (1) month's pay for every year of service as public respondent had ruled." 16 Petitioner misapprehended the ground relied upon by public respondent for awarding separation pay. In this case, public respondent held that private respondent was constructively dismissed, pursuant to Article 286 of the Labor Code which reads: Art. 286. When employment not deemed terminated. The bonafide suspension of the operation of a

business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later that one (1) month from his resumption of operations of his employer or from his relief from the military or civic duty. Petitioner failed to discern that public respondent, in finding that the services of private respondent were terminated, merely adopted by analogy the rule on constructive dismissal. Since private respondent was not reemployed within six (6) months from the "suspension" of her employment, she is deemed to have been constructively dismissed. 17 Otherwise, private respondent will remain in a perpetual "floating status." Because petitioner had not shown by competent evidence any just cause for the dismissal of private respondent, she is entitled to reinstatement 18 or, if this is not feasible, to separation pay equivalent to one (1) month salary for every year of service. Private respondent, however, neither asked for reinstatement 19 nor appealed from the labor arbiter's finding that she was not illegally dismissed; she merely prayed for the grant of her monetary claims. Thus, we sustain the award of separation pay made by public respondent, 20 for employees constructively dismissed are entitled to separation pay. Because she did not ask for more, we cannot give her more. We repeat: she appealed neither the decision of the labor arbiter nor that of the NLRC. Hence, she is not entitled to any affirmative relief. Furthermore, we cannot sustain petitioner's claim that private respondent was retrenched. For retrenchment to be considered a ground for termination, the employer must serve a written notice on the workers and the Department of Labor and Employment at least one month before the intended date thereof. 21 Petitioner did not comply with this requirement. Third Issue: Determination of Salary Differential In light of the foregoing discussion, we must also dismiss petitioner's challenge to the computation of salary differential. As earlier observed, private respondent is entitled to the minimum wage prevailing at the time of the termination of her employment. The same rate of minimum wage, P118.00, should be used in computing her salary differential resulting from petitioner's underpayment of her wages. Thus, the labor arbiter correctly deducted private respondent's actually received wage of P60 a day from the prescribed daily minimum wage of P118.00, and multiplied the difference by 26 working days, and subsequently by 16 years, equivalent to her length of service with petitioner. Thus, the amount of P31,149.56 as salary differential. 22 Petitioner argues that "the work of the private respondent is seasonal, being dependent upon the availability of job-orders" and not "twenty-six (26) days a month." 23 Further, petitioner contends that private respondent herself admitted she was "a piece worker whose work [was] seasonal." 24 Contrary to the assertion of petitioner, neither the assailed Decision nor the pleadings of private respondent show that private respondent's work was seasonal. More important, petitioner utterly failed to substantiate its allegation that private respondent's work was seasonal. We observe that the labor arbiter based the computation of the salary differential on a 26-day month on the presumption that private respondent's work was continuous. In view of the failure of petitioner to support its claim, we must sustain the correctness of this computation. WHEREFORE, premises considered, the petition is DISMISSED and the assailed Decision is AFFIRMED. Costs against petitioner. SO ORDERED Narvasa, C.J., Romero, Melo and Francisco, JJ., concur. Footnotes 1 Second Division composed of Commissioner Rogelio I. Rayala, ponente, and Presiding Commissioner

Edna Bonto-Perez and Commissioner Domingo H. Zapanta, concurring. 2 Rollo, pp. 40-47. 3 Ibid, pp. 54-55. 4 Formerly NLRC NCR 00-01-00494-92. 5 Rollo, pp. 25-29. 6 Ibid., pp. 28-29. 7 Ibid, pp. 25-27. 8 Ibid, pp. 8-9; some of the words in the text are originally in upper case. 9 Ibid, p. 9. 10 Ibid, pp. 44-46. 11 Ibid, pp. 11-13; emphasis omitted. 12 The provision reads: Art. 101. Payment by results. (a) The Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other nontime work, in order to ensure the payment of fair and reasonable wage rates, preferably through time and motion studies or in consultation with representatives of workers' and employers' organizations. 13 Issued in pursuance of Section 5, Rule IV of the National Wages and Productivity Commission Rules of Procedure on Minimum Wage Fixing and took effect per Section 16 of the same Rules on January 8, 1991. 14 Section 4 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A. 15 Labor arbiter's decision, p. 4; rollo, p. 28. 16 Rollo, p. 15. 17 Manipon, Jr. vs. National Labor Relations Commission, 239 SCRA 451, 457, December 27, 1994; People's Security, Inc. vs. NLRC, 226 SCRA 146, 152-153, September 8, 1993; International Hardware, Inc. vs. NLRC, 176 SCRA 256, 261, August 10, 1989. 18 "Article 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 this 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." (As amended by Section 34 of RA 6715). 19 Rollo, pp. 142-145. 20 Toogue vs. National Labor Relations Commission, 238 SCRA 241, 246, November 18, 1994. 21 Article 283, Labor Code. See Catatista vs. NLRC, 247 SCRA 46, August 3, 1995. 22 From the computation of the labor arbiter, the following figures were utilized: Underpayment Average (P60/day) 1/21/89 - 6/30/89 = 5.3 mos. P64.00 (minimum wage [RA 6640] effective December 14, 1987) - P60.00 = P4.00 x 26 x 5.3/ mos. = P551.20 7/1/89 - 10/31/90 = 16.0/mos. P89.00 (minimum wage [RA 6727], effective July 1, 1989) - P60.00 = P29.00 x 26 x 16.0/mos. = P12,064.00 11/1/90 1/7/91 = 2.23/mos. P106.00 (minimum wage-Wage Order No. [NCR-01], effective November 1, 1990) - P60.00 = P46.00 x 26 x 2.23/mos. = P15,773.68 11/23/91 - 11/29/91 = 0.2/mo. P118.00 (minimum wage-Wage Order No. [NCR-02], effective January 8, 1991) - P100.00 = P18.00 x 26 x 0.2/mo. = P 93.60 Total P31,149.56. 23 Rollo, pp. 16-17. 24 Ibid., p. 155.
The Lawphil Project - Arellano Law Foundation

FIRST DIVISION

[G.R. No. 124500. December 4, 1998]


PHILIPPINE SCOUT VETERANS SECURITY AND INVESTIGATION AGENCY, INC., RICARDO BONA and SEVERO SANTIAGO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSI0N and FLORENTINO LAMSEN, respondents. DECISION BELLOSILLO, J.; FLORENTINO LAMSEN was employed as security guard by the Philippine Scout Veterans Security and Investigation Agency, Inc. (PSVSIA). In May 1994 he filed before the Department of Labor a complaint against petitioner PSVSIA, its company manager Severo Santiago, and stockholder Ricardo Bona for illegal deduction and non-payment of overtime pay and service incentive leave pay. A month or so later he amended his cause of action by changing "nonpayment of overtime pay and service incentive leave pay" to "underpayment of wages and overtime pay." In his verified position paper to which he attached statements showing the amounts of overtime pay and night differential pay he received for the period covering January 1991 to March 1994, he alleged that despite his long and continuous service of more than thirty-one (31) years with PSVSIA his compensation still remained below the minimum wage provided by law thus: from 1 January 1991 to 7 January 1991, P69.00/day; from 8 January 1991 to 15 February 1991, P69.00/day; from 16 February 1991 to 15 March 1992, P86.00/day; from 16 March 1992 to 30 November 1993, P106.00/day; from 1 December 1993 to 15 December 1993, P118.00/day; and, from 16 December 1993 to 31 March 1994, P118.00/day.

Initially, petitioners moved to dismiss the complaint on the ground that respondent Lamsen was not an employee of PSVSIA but of its affiliate Abaquin Security and Detective Agency. However, when they subsequently filed their position paper, they changed their theory and asserted that the complaint had no factual basis. In support thereof, they submitted photocopies of a random sampling of Lamsen's payrolls to prove that the said employee had been fully paid his wages and overtime pay in the amounts prescribed by law. On 31 January 1995 Labor Arbiter Eduardo J. Carpio rendered a decision ordering petitioners PSVSIA, Ricardo Bona and Severo Santiago to pay respondent Lamsen the total sum of P100,730.84 representing underpayment of wages and unpaid overtime pay. Petitioners appealed to the National Labor Relations Commission (NLRC) which on 21 November 1995 rendered a decision[1] modifying that of the Labor Arbiter by making the monetary award retroactive to 19 May 1991 instead of 13 March 1991 as ruled by the Labor Arbiter. In seeking relief from this Court, petitioners allege that respondent NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in that after questioning the authenticity of the photocopies of the random samplings of Lamsen's payroll sheets, it denied them the opportunity to present the original copies of the said documents to show that respondent Lamsen was fully paid his salaries and overtime pay; and, it held petitioners Ricardo Bona and Severo Santiago personally and jointly liable as stockholder and officer of PSVSIA, respectively, for the unpaid wages and overtime pay of respondent Lamsen, without sufficient basis therefor. Commenting on the petition, the Office of the Solicitor General (OSG) agreed with petitioners. It observed that if respondent NLRC doubted the veracity of the payroll sheets submitted by petitioners it could simply have ordered them to produce the originals thereof as well as all relevant documents for its proper determination of whether private respondent was truly entitled to additional wages and overtime pay. The OSG also noted that the payroll statements which respondent Lamsen himself submitted together with his position paper showed that he received certain amounts as regular pay, overtime pay and night differential for the

years 1991 to 1994. Hence, he is no longer entitled to the full amount of overtime pay computed by the Labor Arbiter at four (4) hours per day for a period of three (3) years totalling P80,565.44. The award, unless corrected, would result in unjust enrichment of private respondent at the expense of petitioners. We agree with petitioners. Article 221 of the Labor Code provides that in any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling. It is the spirit and intention of the Code that the Commission and its members as well as the Labor Arbiters use all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.[2] Respondent NLRC questioned the authenticity of the photocopies of random samplings of petitioners' payrolls showing that respondent Lamsen was paid the correct amounts due him as salary and overtime pay when it noted that these documents did not contain his binding signatures. Incidentally, in their appeal to the NLRC, petitioners moved for a reinvestigation and/or opportunity to submit the originals of the payroll sheets of respondent Lamsen which contained his signatures to show that he received his monetary benefits. The NLRC denied the motion, in effect depriving petitioners the opportunity to submit additional evidence to overcome its doubts as to the authenticity and due execution of the payroll sheets of respondent Lamsen. On the other hand, it is significant that the Commission was silent on the failure of private respondent to show that the amounts already paid to him as overtime pay were lacking in proportion to the amount of overtime work done, thus resulting in underpayment. Clearly, respondent NLRC committed grave abuse of discretion by strictly applying procedural technicalities in the case before it, in complete disregard of established policy of the Labor Code and jurisprudence. In affirming the doctrine that the Commission and the Labor Arbiters may avail themselves of all reasonable means to speedily ascertain the facts of a controversy,[3] we uphold the power of respondent NLRC to consider even on appeal such other and additional documentary evidence

from the parties if only to support their contentions.[4] This is in accord with the well settled doctrine that rules of procedure and evidence should not be applied in a very rigid and technical sense in labor cases and that technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties.[5] Petitioners must therefore be afforded the opportunity to present the originals of respondent Lamsen's payrolls for a proper determination of the factual issue of whether he was underpaid in terms of wages and overtime pay. We also find that respondent NLRC acted with grave abuse of discretion in holding petitioners Ricardo Bona and Severo Santiago personally and jointly liable with petitioner PSVSIA for the monetary claims of respondent Lamsen, there being no proof that both acted with malice and bad faith against their employee.[6] WHEREFORE, the Petition is GRANTED. The decision of the National Labor Relations Commission is REVERSED and SET ASIDE. This case is remanded to respondent NLRC so that it can, as it should, allow petitioners to submit to it the original documents of the payrolls of respondent Florentino Lamsen for a factual determination of whether there was underpayment of salaries and overtime pay, with the directive that the case be resolved with dispatch. SO ORDERED. Davide, Jr., C.J. (Chairman), Vitug, and Panganiban, JJ., concur. Quisumbing, J., took no part.

[1] Rollo, p. 16. [2] Vallende v. NLRC, G.R. No. 110321, 7 July 1995, 245 SCRA 662.

[3] Imperial Textile v. NLRC, G.R. No. 101527, 19 January 1993, 217 SCRA 237. [4] Bristol Laboratories Employees Association v. NLRC, G.R. No. 87974, 2 July 1990, 187 SCRA 118. [5] Phil. Singapore Ports Corp. v. NLRC, G.R. No. 67035, 29 January 1993, 218 SCRA 77. [6] Seaborne Carriers Corp. v. NLRC, G.R. No. 88795, 4 October 1994, 237 SCRA 343.

SUPREME COURT THIRD DIVISION PULP AND PAPER, INC., Petitioner, -versus- G.R. No. 116593 September 24, 1997 NATIONAL LABOR RELATIONS

COMMISSION AND EPIFANIA ANTONIO, Respondents. x---------------------------------------------------x DECISION PANGANIBAN, J.: In the absence of wage rates specially prescribed for piece-rate workers, how should the separation pay and salary differential of such workers be computed?
chanroblespublishingcompany

Statement of the Case This is the main question raised in the instant Petition for Certiorari, filed under Rule 65 of the Rules of Court, to set aside and annul National Labor Relations Commissions[1] Decision[2]

promulgated on September 24, 1993 and Resolution[3] dated December 16, 1993 in NLRC NCR CA No. 004041-92.[4] Public respondents assailed

Decision affirmed in toto Labor Arbiter Eduardo J. Carpios Decision[5] dated October 6, 1992, which disposed thus:[6]
chanroblespublishingcompany

IN VIEW OF ALL THE FOREGOING, judgement [sic] is hereby rendered: 1. dismissing the complaint for illegal dismissal for lack of merit;
chanroblespublishingcompany

2. ordering respondent Pulp and Papers Distributors Inc. to pay complainant Efipania (sic) Antonio the sum of P49,088.00 representing her separation pay; and
chanroblespublishingcompany

3. ordering respondent to pay the complainant the sum of P31,149.56 representing the underpayment of wages. 4. dismissing all other issues for lack of merit. The assailed Resolution denied petitioners
chanroblespublishingcompany

motion

for

reconsideration for lack of merit. The Facts The facts as found by the labor arbiter are as follows:[7] A case of illegal dismissal and underpayment of wages [was] filed by MS. EPIFANIA ANTONIO [private respondent herein] against PULP AND PAPER DISTRIBUTORS INC., [petitioner herein].
chanroblespublishingcompany

In filing the present complaint, complainant in her position paper alleges that she was a regular employee of the corporation having served thereat as Wrapper sometime in September 1975. On November 29, 1991, for unknown reasons, she was advised verbally of her termination and was given a prepared form of Quitclaim and Release which she refused to sign. Instead she brought the present complaint for illegal dismissal.
chanroblespublishingcompany

In charging the [herein petitioner] of underpayment of wages, complainant in the same position paper alleges that, rarely during her

employment with the respondent she received her salary, a salary which was in accordance with the minimum wage law. She was not paid overtime pay, holiday pay and five-day service incentive leave pay, hence she is claiming for payments thereof by instituting the present case.
chanroblespublishingcompany

Respondent on the other hand [sic] denied having terminated the services of the complainant and alleges inter alia that starting 1989 the orders from customers became fewer and dwindled to the point that it is no longer practical to maintain the present number of packers/wrappers. Maintaining the same number of packers/wrappers would mean less pay because the work allocation is no longer the same as it was. Such being the case, the respondent has to reduce temporarily the number of packers/wrappers. Complainant was among those who were temporarily laid-off from work. Complainant last worked with the company on June 29, 1991.
chanroblespublishingcompany

As regards complainants allegation that on November 29, 1991, she was forced to sign a quitclaim and release by the respondent, the latter clarified that considering that five months from the time the complainant last worked with the company, the management decided to release the complainant and give her a chance to look for another job in the meantime that no job is available for her with the company. In other words, complainant was given the option and considering that she did not sign the documents referred to as the Quitclaim and Release, the respondent did not insist, and did not terminate the services of the complainant. It

was just surprise [sic] to receive the present complaint. In fact, respondent added that the reason why the complainant was called on November 29, 1991 was not to work but to receive her 13th month pay of P636.70 as shown by the voucher she signed (Annex-A, Respondent).
chanroblespublishingcompany

As regards the claim of the complainant for underpayment, respondent did not actually denied (sic) the same but give [sic] the reservation that should the same be determined by this Office it is willing to settle the same considering the fact that complainant herein being paid by results, it is not in a proper position to determine whether the complainant was underpaid or not.
chanroblespublishingcompany

The Issues Petitioner couched the main issue in this wise:[8] Did the Public Respondent NLRC act correctly in affirming in toto the decision rendered by the labor arbitration branch a quo in NLRC NCR Case no. 00-01-00494-92?
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While it expressly admits that private respondent is entitled to separation pay, petitioner raises nonetheless the following queries: (a) Are the factors in determining the amount of separation pay for a piece-rate worker the same as that of a time-worker? (b) Is a worker, who was terminated for lack of work, entitled to separation pay at the rate of one-months pay for every year of service?[9] The petition is based on the following grounds:
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I Public Respondent NLRC committed grave abuse of

discretion and serious reversible error when it affirmed in toto the award of separation pay in favor of private respondent, without bases in fact and in law. II Public Respondent NLRC committed grave abuse of
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discretion and serious reversible error when it affirmed in toto the award of underpayment in favor of private respondent, without bases in fact and in law.
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The Public Respondents Ruling In dismissing the appeal of petitioner, public respondent

reasoned:[10] It is true that all the above circumstances cited by the [herein petitioner] are not present in the case at bar, hence, separation pay based on those circumstances is not owing to the [herein private respondent]. However, it is quite obvious that [petitioner] missed the legal and factual basis why separation pay was awarded by the Labor Arbiter. In the first place, the

[petitioner] was a

admits

that

the

complainant-appellee of

was

temporarily laid off on June 29, 1991. This means that there temporary suspension employer-employee relationship between the appellant and the appellee. Lay-off is a temporary termination initiated by the employer, but without prejudice to the reinstatement or recall of the workers who have been temporarily separated. The reasons for laying off employees are varied: lack of work, shutdown for repairs, business reverses, and the like. Always, however, there is the expectation that the employees who have been laid off will be recalled or rehired. This situation is governed by Rule 4, Section 12, of Book VI of the Implementing Rules and Regulations of the Labor Code, which provides:
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Sec. 12. Suspension of Relationship. The employeremployee relationship shall be deemed suspended in case of suspension of operation of the business or undertaking of the employer for a period not exceeding six (6) months.
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From June 29, 1991 up to the time the complainant-appellee filed her complaint on January 21, 1992, there was more than six (6) months that already elapse (sic) and yet, the appellant failed to recall the appellee to let her resume working. If the appellant was not yet in a possession to recall or reinstate the appellee after six (6) months, up to when shall appellant let her keep in waiting. Of course, she cannot be allowed to wait interminably. That is the reason why the law imposes a period of six (6) months within

which the resumption of employer-employee relationship must be resumed in temporary lay-offs. Otherwise, any employer can, in the guise of a temporary lay-off, close its doors to an employee for more than six months and their claim that the lay-off has ripened into termination and try to get away from any liability. The award of separation pay is hereby declared in order. On the second issue raised by the (petitioner) on appeal, We are also for the Labor Arbiters ruling upholding the appellees right to salary differential in the amount computed.
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The argument interposed by the [petitioner] based on Art. 101 of the Labor Code, in relation to Rule VII, Section (8), Book III of the Omnibus Implementing Rule and Regulations, will not lie in the case at bar. In the first place, pursuant to the provision of law cited by the [petitioner], all time and motion studies, or any other schemes or devices to determine whether the employees paid by results are being compensated in accordance with the minimum wage requirements, shall only be approved on petition of the interested employer. Thus, it is the fault of the [petitioner] on whose initiative, a time and motion study or any other similar scheme is not yet available in its establishment. The Courts Ruling The appeal is not meritorious. First Issue: Computation of Minimum Wage Petitioner argues that private respondent was a piece-rate worker and not a time-worker. Since private respondents employment as (p)acker/(w)rapper in 1975 until her separation on June 29, 1991, (h)er salary depended upon the number of reams of bond paper she packed per day. Petitioner contends that private respondents work depended upon the number and availability of purchase orders from customers. Petitioner adds that, oftentimes, packers/wrappers only work three to four hours a day. Thus, her separation pay must be based on her latest actual compensation per piece or on the minimum wage per piece as determined by Article 101 of the Labor Code, whichever is

higher, and not on the daily minimum wage applicable to timeworkers.[11]


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Compensation of Pieceworkers In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission. To ensure the payment of fair and reasonable wage rates, Article 101[12] of the Labor Code provides that the Secretary of Labor shall regulate

the payment of wages by results, including pakyao, piecework and other nontime work. The same statutory provision also states that the wage rates should be based, preferably, on time and motion studies, or those arrived at in consultation with representatives of workers and employers organizations. In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should apply. This is in compliance with Section 8 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A the prevailing wage order at the time of dismissal of private respondent, viz.:[13] SEC. 8. Workers Paid by Results. a) All workers paid by results including those who are paid on piece work, takay, pakyaw, or task basis, shall receive not less than the applicable minimum wage rates prescribed under the Order for the normal working hours which shall not exceed eight (8) hours work a day, or a proportion thereof for work of less than the normal working hours. The adjusted minimum wage rates for workers paid by results shall be computed in accordance with the following steps:
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1) Amount of increase in AMW x 100 -------- = % increase Previous AMW

2) Existing rate/piece x % increase = increase in rate/piece; 3) Existing rate/piece + increase in rate/piece = adjusted rate/piece.
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b) The wage rates of workers who are paid by results shall continue to be established in accordance with Art. 101 of the Labor Code, as amended and its implementing regulations. (Emphasis supplied.)
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On November 29, 1991, private respondent was orally informed of the termination of her employment. Wage Order No. NCR-02, in effect at

the time, set the minimum daily wage for non-agricultural workers like private respondent at P118.00.[14] This was the rate used by the labor arbiter in computing the separation pay of private respondent. We cannot find any abuse of discretion, let alone grave abuse, in the order of the labor arbiter which was later affirmed by the NLRC.
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Moreover, since petitioner employed piece-rate workers, it should have inquired from the secretary of labor about their prescribed specific wage rates. In any event, there being no such prescribed rates, petitioner, after consultation with its workers, should have submitted for the labor secretarys approval time and motion studies as basis for the wage rates of its employees. This responsibility of the employer is clear under Section 8, Rule VII, Book III of the Omnibus Rules Implementing the Labor Code:
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Section 8. Payment by result. (a) On petition of any interested party, or upon its initiative, the Department of Labor shall use all available devices, including the use of time and motion studies and consultations with representatives of employers and workers organizations, to determine whether the employees in any industry or enterprise are being compensated in accordance with the minimum wage requirements of this Rule. (b) The basis for the establishment of rates for piece, output or contract work shall be the performance of an ordinary worker of minimum skill or ability.
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(c) An ordinary worker of minimum skill or ability is the average worker of the lowest producing group representing 50% of the total number of employees engaged in similar employment therein. (d) Where the output rates established by the employer do not conform with the standards prescribed herein, or with the rates prescribed by the Department of Labor in an appropriate order, the employees shall be entitled to the difference between the amount to which they are entitled to receive under such in a particular establishment, excluding learners, apprentices and handicapped workers employed

prescribed standards or rates and that actually paid them by employer.


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In the present case, petitioner as the employer unquestionably failed to discharge the foregoing responsibility. Petitioner did not submit to the secretary of labor a proposed wage rate based on time and motion studies and reached after consultation with the representatives from both workers and employers organization which would have applied to its piece-rate workers. Without those submissions, the labor arbiter had the duty to use the daily minimum wage rate for non-agricultural workers prevailing at the time of private respondents dismissal, as prescribed by the Regional Tripartite Wages and Productivity Boards. Put differently, petitioner did not take the initiative of proposing an appropriate wage rate for its piece-rate workers. In the absence of such wage rate, the labor arbiter cannot be faulted for applying the prescribed minimum wage rate in the computation of private respondents separation pay. In fact, it acted and ruled correctly and legally in the premises.
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It is clear, therefore, that the applicable minimum wage for an eight-hour working day is the basis for the computation of the separation pay of piece-rate workers like private respondent. The computed daily wage should not be reduced on the basis of unsubstantiated claims that her daily working hours were less than eight. Aside from its bare assertion, petitioner presented no clear proof that private respondents regular working day was less than eight hours. Thus, the labor arbiter correctly used the full

amount of P118.00 per day in computing private respondents separation pay. We agree with the following computation:[15]
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Considering therefore that complainant had been laid-off for more than six (6) months now, we strongly feel that it is already reasonable for the respondent to pay the complainant her separation pay of one month for every year of service, a fraction of six (6) months to be considered as one whole year. Separation pay should be computed based on her minimum salary as will be determined hereunder.
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Separation pay 1 month = 16 years

P118.00 x 26 x 16 years = P49,088.00 The amount P118.00 represents the applicable daily minimum wage per Wage Order Nos. NCR-02 and NCR-02-A; 26, the number of working days in a month after excluding the four Sundays which are deemed rest days; 16, the total number of years spent by private respondent in the employ of petitioner.
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Second Issue: Computation of Separation Pay Petitioner questions not only the basis for computing private respondents monthly wage; it also contends that private respondents separation pay should not have been computed at one months pay for every year of service. Because private respondent should be considered retrenched, the separation pay should be one months pay or at least one/half () month pay for every year of service, whichever is higher, and not one (1) months pay for every year of service as public respondent had ruled.[16]
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Petitioner misapprehended the ground relied upon by public respondent for awarding separation pay. In this case, public respondent held that private respondent was constructively dismissed, pursuant to Article 286 of the Labor Code which reads:
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ART. 286. When employment not deemed terminated. The bonafide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer

shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later that one (1) month from his resumption of operations of his employer or from his relief from the military or civic duty. Petitioner failed to discern that public respondent, in finding that the services of private respondent were terminated, merely adopted by analogy the rule on constructive dismissal. Since private respondent was not reemployed within six (6) months from the suspension of her employment, she is deemed to have been constructively dismissed.[17] Otherwise, private respondent will remain in a

perpetual floating status. Because petitioner had not shown by competent evidence any just cause for the dismissal of private respondent, she is entitled to reinstatement[18] or, if this is not feasible, to separation pay equivalent to one (1) month salary for every year of service. Private respondent, however, neither asked for reinstatement[19] nor appealed from the labor arbiters finding that she was not illegally dismissed; she merely prayed for the grant of her monetary claims. Thus, we sustain the award of separation pay made by public respondent,[20] for employees constructively dismissed are entitled to separation pay. Because she did not ask for more, we cannot give her more. We repeat: she appealed neither the decision of the labor arbiter nor that of the NLRC. Hence, she is not entitled to any affirmative relief. Furthermore, we cannot sustain petitioners claim that private respondent was retrenched. For retrenchment to be considered a ground for termination, the employer must serve a written notice on the workers and the Department of Labor and Employment at least one month before the intended date thereof.[21] Petitioner did not comply with this requirement. Third Issue: Determination of Salary Differential In light of the foregoing discussion, we must also dismiss petitioners challenge to the computation of salary differential. As earlier observed, private respondent is entitled to the minimum wage prevailing at the time of the termination of her employment. The same rate of minimum wage, P118.00, should

be used in computing her salary differential resulting from petitioners underpayment of her wages. Thus, the labor arbiter correctly deducted private respondents actually received wage of P60 a day from the prescribed daily minimum wage of P118.00, and multiplied the difference by 26 working days, and subsequently by 16 years, equivalent to her length of service with petitioner. Thus, the amount of P31,149.56 as salary differential.
[22]
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Petitioner argues that the work of the private respondent is seasonal, being dependent upon the availability of job-orders and not twenty-six (26) days a month.[23] Further, petitioner contends that private

respondent herself admitted she was a piece worker whose work [was] seasonal.[24]
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Contrary to the assertion of petitioner, neither the assailed Decision nor the pleadings of private respondent show that private respondents work was seasonal. More important, petitioner utterly failed to substantiate its allegation that private respondents work was seasonal. We observe that the labor arbiter based the computation of the salary differential on a 26day month on the presumption that private respondents work was continuous. In view of the failure of petitioner to support its claim, we must sustain the correctness of this computation.
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WHEREFORE, premises considered, the Petition is DISMISSED and the assailed Decision is AFFIRMED. Costs against petitioner.
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SO ORDERED.

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Narvasa, C.J., Romero, Melo and Francisco, JJ., concur.


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[1] Second Division composed of Commissioner Rogelio I. Rayala, ponente, and Presiding Commissioner Edna Bonto-Perez and Commissioner Domingo H. Zapanta, concurring. [2] Rollo, pp. 40-47. [3] Ibid, pp. 54-55.
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[4] Formerly NLRC NCR 00-01-00494-92. [5] Rollo, pp. 25-29. [6] Ibid., pp. 28-29.
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[7] Ibid., pp. 25-27.

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[8] Ibid., pp. 8-9; some of the words in the text are originally in upper case. [9] Ibid., p. 9.
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[10] Ibid., pp. 44-46.

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[11] Ibid., pp. 11-13; underscoring omitted. [12] The provision reads:
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Art. 101. Payment by results. (a) The Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other nontime work, in order to ensure the payment of fair and reasonable wage rates, preferably through time and motion studies or in consultation with representatives of workers and employers organizations.
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[13] Issued in pursuance of Section 5, Rule IV of the National Wages and Productivity Commission Rules of Procedure on Minimum Wage Fixing and took effect per Section 16 of the same Rules on January 8, 1991. [14] Section 4 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02A.
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[15] Labor arbiters decision, p. 4; rollo, p. 28. [16] Rollo, p. 15.


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[17] Manipon, Jr. vs. National Labor Relations Commission, 239 SCRA 451,457, December 27, 1994; Peoples Security, Inc. vs. NLRC, 226 SCRA 146, 152153, September 8, 1993; International Hardware, Inc. vs. NLRC, 176 SCRA 256, 261, August 10, 1989.
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[18] Article 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 this 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. (As amended by Section 34 of RA 6715). [19] Rollo, pp. 142-145.
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[20] Toogue vs. National Labor Relations Commission, 238 SCRA 241, 246, November 18, 1994.
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[21] Article 283, Labor Code. See Catalista vs. NLRC, 247 SCRA 46, August 3, 1995.
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[22] From the computation of the labor arbiter, the following figures were utilized:

Underpayment Average (P60/day) 1/21/89 - 6/30/89 = 5.3 mos. P64.00 (minimum wage [RA 6640] effective December 14, 1987) - P60.00 = P4.00 x 26 x 5.3/mos. = P551.20 7/1/89 - 10/31/90 = 16.0/mos. P89.00 (minimum wage [RA 6727], effective July 1, 1989) P60.00 = P29.00 x 26 x 16.0/mos. = P12,064.00 11/1/90 - 1/7/91 = 2.23/mos. P106.00 (minimum wage-Wage Order No. [NCR-01], effective November 1, 1990) - P60.00 = P46.00 x 26 x 2.23/mos. = P15,773.68
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11/23/91 - 11/29/91 = 0.2/mo.

P118.00 (minimum wage-Wage Order No. [NCR-02], effective January 8, 1991) - P100 00 = P18 00 x 26 x 0.2/mo. = P93.60 Total P31,149.56. [23] Rollo, pp. 16-17. [24] Ibid., p. 155.
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Ok

FIRST DIVISION

[G.R. No. 127529. December 10, 1998]

PEPSI COLA PRODUCTS PHILIPPINES, INC. (Formerly Pepsi Cola Bottling Co.), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and RENE ESTILO, respondents. DECISION
VITUG, J.:

On 08 October 1993, private respondent Rene Estilo sued herein petitioner Pepsi Cola Products Philippines, Inc., before the Regional Arbitration, Branch VI, of public respondent National Labor Relations Commission (NLRC). Estilos complaint charged the beverage firm with illegal dismissal, as well as underpayment of wages, 13 month pay, overtime pay, premium pay for holidays and rest days and commission, and additionally sought to recover moral damages, attorneys fees and, in general, any other benefit that he might be entitled to under the existing collective bargaining agreement, company policies, practices and laws.
th

Executive Labor Arbiter Oscar S. Uy sent notices to the parties of the case to appear before him on 21 December 1993. On the scheduled date, only private respondents counsel showed up before the Labor Arbiter constraining the latter to reset the conference to 15 February 1994. Again, on the new date set, only private respondents lawyer appeared, prompting Labor Arbiter to instead issue, on 01 March 1994, an order directing the parties to submit their position papers; viz:
The parties are hereby directed to submit their position papers together with supporting proof within twenty (20) days from receipt hereof. Thereafter, the above-entitled case is deemed submitted for decision.i[1]

The company, herein petitioner, complied with the foregoing order. Its position paper and supporting evidence controverted the allegations and various claims of private respondent. The latter did not submit any paper. On 10 May 1995, the Labor Arbiter rendered a decision dismissing the complaint of private respondent. Under date of 28 June 1995, private respondent filed with public respondent NLRC a Notice of Appeal with attached appeal Memorandum from the decision of the Labor Arbiter, asseverating that
The Honorable Labor Arbiter acted with grave abuse of discretion in deciding the above case without affording complainant all the available opportunity to be heard and just deciding

the above case on the basis alone of respondent Pepsis position paper.ii[2]

In a resolution, dated 26 September 1996, following petitioners opposition to the appeal, public respondent NLRC, through Commissioner Amorito V. Caete, found the appeal to be impressed with merit; it held:
WHEREFORE, finding the appeal impressed with merit, as discussed above, the Decision appealed from is SET ASIDE and the case be REMANDED to the Labor Arbiter a quo to conduct the necessary proceedings as soon as practicable for the early disposition hereof.iii[3]

In its instant petition before the Court, petitioner Pepsi Cola Products Philippines, Inc., submits
x x x that the Public respondent NLRC had acted with grave abuse of discretion amounting to lack or excess of jurisdiction when, despite the Labor Arbiters and its very own categorical findings that Private respondent had been afforded all and every opportunity of submitting his Position Paper with supporting proof in the suit at bench but had failed to do so, the said Public respondent had nevertheless proceeded to accept Private respondents claim that he had been deprived of due process and/or the opportunity to be heard; and in thereby --, in a manner contrary to the dictates of impartiality, justness and fair play and to the untold prejudice of herein Petitioner -- capriciously and whimsically setting aside (on appeal) the clearly correct, just and valid Decision (Appendix D) of the Arbiter as clearly rendered on the basis of substantial evidence on record following proper observance of due process of law.iv[4]

It does appear from the foregoing recital and the comments of private respondent and the NLRC, as well as the Manifestation and Motion (In Lieu of Comment) filed by the Solicitor General (who took the same position as that of petitioner), that the sole issue before the Court is whether or not private respondent has been denied due process of law by Executive Labor Arbiter Oscar Uy in rendering a decision based only on petitioners position paper. The petition is meritorious, and the NLRC appears to have indeed gravely abused its discretion in reversing the Labor Arbiter. The records easily substantiate the fact that private respondent has been duly accorded an opportunity to submit his position paper in the proceedings before the Regional Arbitration Branch. On the 15th February 1994 hearing, counsel for private respondent was informed that an order would be issued by the Labor Arbiter for the contending parties to submit their respective position papers along with their supporting evidence. In an order, dated 01 March 1994, Labor Arbiter Uy required the parties to formally make the above submission. The Labor Arbiter attested:
Records show that on March 1, 1994, this Commission issued an Order directing the parties to submit their position paper together with supporting proofs within twenty (20) days from receipt with a reminder that thereafter, the case shall be deemed submitted for decision. Up to this writing, only respondent was able to submit their position paper while complainant failed to do so despite their receipt of the said Order on March 9, 1994.v[5]

Public respondent NLRC itself, in its own questioned resolution, confirmed the above finding; it said:
While the records disclose that more, than one (1) year had elapsed from the time the complainants counsel received on May 9, 1994 the Order dated March 1, 1994 directing the parties to submit position papers up to the time of the rendition of the assailed decision on May 10, 1995, complainant had all the opportunity to file his position paper. But he did not.vi[6]

Nevertheless, the NLRC ruled in favor of respondent Estilo citing for its main thesis the case of Maebo vs. NLRC.vii[7] This reliance was unfortunate. In Maebo, both parties had filed their position papers and agreed to consider the case submitted for decision after the submission of their respective memoranda. The Labor Arbiter was held to have thus gravely abused his discretion by admitting, without proof of service to the petitioner-complainant or his counsel, the Supplemental Position Paper and Memorandum of respondent company, and by taking into consideration, as basis for his decision, the facts there alleged and the documents thereto attached. Here, there was no surprise at all despite petitioners apparent failure to furnish private respondent with a copy of its position paper. At all events, a plea of denial of procedural due process, where the defect consists in the failure to furnish an opponent with a copy of a partys position paper, cannot be entertained when he who makes the plea is effectively given the opportunity to be heard in a Memorandum of Appeal. Even if a party has not been heard at the stage of mediation and fact-finding, he still can take that opportunity to present his side when the Memorandum of Appeal is given due course, as it has so given in this instance, by the NLRC.viii[8] Thus, the fundamental rule of due process that mandates notice and an opportunity to be heard has here been amply met.ix[9] Private respondent was the complainant in this case and in him rested the primary burden of proving his claim. He unfortunately failed to discharge that burden. Strangely indeed, in his Memorandum of Appeal to the NLRC, private respondent did not refute the evidence presented by petitioner to the effect that he was not dismissed from work but voluntarily resigned after the management had found him guilty of serious misconduct and dishonesty. WHEREFORE, the questioned resolutions of public respondent NLRC, of 26 September 1996 and 19 December 1996 are ANNULLED and SET ASIDE, and the decision of the Labor Arbiter, dated 10 May 1995, is REINSTATED. No costs. SO ORDERED. Davide, Jr., C.J.,(Chairman), Melo, Panganiban, and Quisumbing, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 131552 February 19, 1999 ARESENIO V. VILLA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION) OCEAN LINK CONTAINER TERMINAL CENTER, BENJAMIN S. TAN and VICTORIA ACORDA, respondents.

PUNO, J.: This is a petition for certiorari to set aside the July 4, 1997 Decision and the September 22, 1997 Resolution public respondent National Labor Relations Commission (First Division) which deleted the awards of reinstatement backwages including attorney's fees made by the Labor arbiter in favor of petitioner Arsenio V. Villa. First, we fastrack the facts which are well established. Private respondent Ocean Link Container Terminal Center Inc., is a private corporation engaged in the warehousing, shipping and delivery of goods. Private respondent Benjamin Chua is its President while private respondent Victoria Acorda is its general manager. Petitioner was absorbed by respondent company from his previous employer when the company was sold to the respondents. Petitioner's services from 1991 up to May 1, 1993 was continued by the respondent company. From May 1, 1993, petitioner served as a checker in the warehouse of respondent company and his latest salary was P135.00 a day. On June 22, 1994, petitioner met an accident while in the course of performing his job. His left hand was pinned down by a crane and resulted in the deformity and total disability of his middle finger. He was given a month of sick leave which he extended for another month as his hand had not completely healed. Later, he discovered that respondent company terminated his services on August 27, 1994. Petitioner filed a complaint for illegal dismissal, underpayment of wages, non-payment of overtime, 13th month pay, differentials, and attorney's fees against the private respondents. In his Position Paper, petitioner alleged: Complainant has to report for work for the respondent company from Monday to Saturday with Sunday being his rest day. His schedule of work was from 8:00 in the morning to 7:00 in the evening from Monday to Friday. On Saturday the schedule of work of the complainant is from 8:00 to 12:00 noon only. From Monday to Friday, he renders of (sic) at least two hours of overtime daily but complainant was not paid such overtime services that he rendered from the respondent company.

At the time that he was terminated from the respondent company, his basic pay was only P135.00 which was below the minimum basic pay which was pegged already at P145.00 upon the effectivity of Wage Order NCR No. 03 . . . on April 1, 1994. Prior this rate, the basic pay of the complainant was also below the minimum basic pay as provided for by the former Wage codes. He usually gets his salary every 15th of the month or he was paid his salarytwice per month. In answer, respondent company alleged: . . . respondent started to engage in it present business of CY-CFS services only on May 01, 1993 and that complainant was employed by the respondents only on May 01, 1993, as temporary employee and legally terminated on August 29, 1994. . . . hence, no employer-employee relationship existed between the complainant and the respondents herein when complainant allegedly rendered overtime work; xxx xxx xxx Complainant's claim for underpayment of wages is anchored on WO-NCR-03 which mandated the payment of P10.00 effective April 01, 1994. That respondents are engaged in the operation of container yard container freight station (CY-CFS) business. The 90% to 95% of its income is derived from its CFS services operation. That without its CFS services, respondent corporation cannot viably operate. That sometime in (sic) March 06, 1994, Customs Commissioner Parayno issued Customs Memorandum Order (CMO) 6-94. That CMO 6-94 bans the CFS operations of off-dock warehouses effective immediately . . . That aside from the fact that CMO 6-94 was abruptly and hastily implemented, the same . . . was grossly prejudicial and detrimental to CY-CFS operators. . . . That respondent corporation was adversely affected by the implementation of CMO-6-94. That since respondent corporation is only on its 10th month operation, it cannot viably continue operating while CMO 6-94 remains effective unless drastic and radical remedial measures are undertaken. The least drastic and radical remedial measure that the respondent corporation can unilaterally undertake was to retrench 75% of its employees and the worst is outright closing shop. However, cognizant of the seriousness of the problem and predicament of the respondent corporation, the employees themselves acted to help save the corporation from closing shop. The employees suggested that instead of retrenching employees, the employees shall go on voluntary leave on rotation basis and that employees agreed that the payment of the P10.00 mandated by WO-NCR-03 be

temporarily suspended. These remedial measures were observed while CMO 6-94 remains effective. In fact, some employees reported for work without pay even if it is supposed to be their turn to be on voluntary leave. In its Comment to petitioner's Position Paper, respondent company alleged: . . . complainant applied for employment as messenger/collector of respondent corporation only on April 16, 1993; that complainant was admitted by respondent corporation as temporary employee on May 01, 1993; . . . complainant received his appointment as permanent employee on January 25, 1994 effective January 1, 1994; . . . complainant was terminated for cause or violation of company rules and regulations . . . On September 29, 1995, Labor Arbiter Pablo C. Espiritu decided in favor of the petitioner. We quote the rationale of the Decision, viz: xxx xxx xxx There being no due process of law and coupled without an existing cause for his dismissal, complainant is entitled to full backwages from the time of his dismissal till complainant is reinstated to his former position as warehouse checker. Regarding complainant's monetary claims, this Arbitration Branch finds that complainant cannot hold Respondent liable for non-payment of labor standard benefits which accrued prior to the acquisition of the business by the Respondents. When complainant was absorbed in Respondent corporation the later did not also absorbed (sic) the liabilities of the defunct corporation. In any event, complainant is merely entitled to his monetary claims from May 1, 1993 till his dismissal. The fact that he was receiving only P135.00/day at the time of his dismissal shows that he was underpaid in his wages in the amount of P100/day counted from the effectivity of NCR-Wage Order 03 which took effect on April 1, 1994. Respondents for their part failed to adduce evidence that complainant has been paid the Minimum Wage of P145.00/day. In fact they even admitted that they entered into an agreement with the employees that the implementation of Wage Order 03 be deferred until such time that the company can cope up with effects of Customs Memorandum Order No. 6-94. Although there maybe a covenant between the parties for the deferment of the implementation of the said Wage Order, complainant is still entitled to receive his wage differentials because any agreement contrary to law is null and void. Hence, complainant is entitled to receive underpayment of wages from April 1, 1994 to August 17, 1994. Likewise, he is entitled to receive 13month pay differentials for the years covering May 1, 1993 to August 17,

1994 considering that Respondent failed to adduce evidence that complainant was paid his 13th-month pay. For reasons earlier discussed, complainant's claims for 2 hours overtime which accrued prior to the acquisition of the corporation by the Respondents, the later cannot be held liable since there was no employer-employee relationship between the complainant and respondents at that time. Hence, for lack of basis his overtime pay cannot be granted. However, considering that complainant was forced to employ the services of counsel in order to prosecute his claims against his employer and assisted him in the preparation of pleadings and incurred expenses for his appearance in this proceedings, complainant is entitled to receive reasonable attorney's fees. WHEREFORE, premises considered, judgment is hereby rendered finding Respondent corporation guilty of illegal dismissal and concomitantly Respondent, Ocean Link Container Terminal Center, Inc., is hereby ordered to pay complainant full backwages in the amount of P43,355.00 from the time of his dismissal till reinstatement (computed till promulgation only). Respondent is also ordered to reinstate complainant to his former position as warehouse checker without loss of seniority rights, privileges and benefits. The order of reinstatement is final and executory. Respondent corporation is further ordered to pay complainant wage differentials under Wage Order NCR 03 in the total amount of P1,180.00 and 13th-month pay differentials in the amount of P3,372.25. Respondent corporation is further ordered to pay complainant attorney's fees based on 10% of the total judgment award in the amount of P4,790.72. All other claims of the complainant are disallowed for lack of merit. SO ORDERED. Respondent company appealed to the public respondent NLRC. It invoked the following grounds: ASSIGNMENT OF ERRORS 1 THE HONORABLE ARBITER ERRED IN FINDING THAT COMPLAINANT WAS DISMISSED ON AUGUST 17, 1994; 2 THE HONORABLE LABOR ARBITER ERRED IN NOT FINDING THAT COMPLAINANT WAS DISMISSED FOR CAUSE BY THE RESPONDENT CORPORATION IN (SIC) AUGUST 29, 1994; 3 THE HONORABLE LABOR ARBITER ERRED IN FINDING THAT THE RESPONDENT CORPORATION FAILED TO COMPLY WITH THE MANDATORY

REQUIREMENTS OF NOTICE AND HEARING BEFORE ORDERING THE DISMISSAL OF COMPLAINANT; and 4 THE HONORABLE LABOR ARBITER ERRED IN FINDING RESPONDENT CORPORATION LIABLE TO PAY BACKWAGES; WAGE DIFFERENTIALS UNDER WAGE ORDER NCR 03; 13TH-MONTH PAY DIFFERENTIAL AND ATTORNEY'S FEES. In its Memorandum of Appeal, respondent company argued: The assigned errors raised herein being interrelated to each other and/or necessarily connected to one another, the same are hereby jointly argued and discussed. The complaint alleged that while still on a sick leave, his employment with the respondent company was terminated on AUGUST 27, 1994 (page 4, Position Paper For the Complainant). On the other hand, Respondents alleged that complainant's employment was legally terminated on AUGUST 29, 1994 (page 1, Position Paper of respondents). Surprisingly, the Appealed Decision, with all due respect, ruled and declared that complainant was suddenly dismissed by the respondents on August 17, 1994 by way of alleged Memorandum dated 17 August 1994 wherein the respondent corporation's security guard was ordered not to allow the complainant to enter the company premises (page 5, Appealed Decision). Further the Appealed Decision ruled and declared, that, in terminating complainant's employment, the Respondent Corporation failed to comply with the mandatory requirements of notice and hearing (page 5, Appealed Decision). Respondent Corporation respectfully submits that the findings in the Appealed Decision that complainant was suddenly dismissed on August 17, 1994 has no basis in fact. Necessarily, the findings in the Appealed Decision that Respondent Corporation failed to comply with the mandatory requirements of notice and hearing when Respondent Corporation allegedly ordered the dismissal of complainant on August 17, 1994 has no basis in fact. The truth of the matter is, on August 25, 1994 complainant was required to explain in writing why his services should not be terminated for repeated and open violations of the Company Code of Conduct (Annex "2"). That complainant refused to receive the Memorandum (Annex "2") and complainant did not bother to explain, as directed in the Memorandum (Annex "2") why his services should not be terminated. That, in view of the failure and/or refusal of the complainant to explain his position/side in writing, the Respondent Corporation was left with no other alternative but to terminate for cause the employment of the complainant effective August 29, 1994 (Annex "3").

The date of termination of complainant's employment is very significant because if complainant's employment was indeed terminated on August 17, 1994 as ruled and declared in the Appealed Decision, then the Appealed Decision is not in error in its findings of facts and the Decision would have been in order. However, contrary to the findings in the Appealed Decision, complainant's employment was terminated for cause on August 29, 1994 and upon due notice. Since the monetary award in favor of the complainant was anchored on the wrongful and baseless findings that complainant's employment was terminated on August 17, 1994 without notice and hearing, necessarily the monetary award has also no basis in fact and in law. That with respect to the award for the 13th-month pay differential, complainant himself in one of the hearings admitted to have received said 13th month pay. As aforestated, public respondent NLRC modified the Decision of the Labor Arbiter by deleting the awards of reinstatement and backwages including attorney's fees. It ratiocinated, viz: An evaluative review of the case as borne out by the record reveals that the cause for complainant's dismissal was due to repeated violation of company rules. The case of Batangas Transportation Co. vs. Bagong Pagkakaisa ng mga Employees and Laborers of the BT Co., No. L-1706, March 10, 1949, is instructive, thus: "Success of industries and public service is the foundation upon which just wages may be paid. There can be no success without efficiency. There cannot be efficiency without discipline. Consequently, when employees and laborers violate the rule of discipline, they jeopardize not only the interest of the employer but also their own. In violating the rules of discipline, they aim at killing the hen that lays the golden egg. Laborers who trample down the rules set for an efficient service are in effect parties to a conspiracy, not only against capital but also against labor. The highest interest of society and of the individuals demand that we should insist in requiring everybody to do his duty. That demand is addressed not only to employer but also to employees." The pernicious effects of gambling cannot be gainsaid. Such form of vice is contagious and destructive to man's life. Thus, the rules of the respondent prohibiting the same is morally rooted. The object of which is to save degeneration of moral values and prevents its evil effect from spreading among its employees. Necessarily, complainant's repeated violation of such rule resulted in willful disobedience of company policy which justify his dismissal (Gold City Integrated Part Services vs. NLRC, 189 SCRA 811). IN GTE Corporation vs. Sanchez, 197 SCRA 452 it was held that deliberate disregard or disobedience of rule and defiance of management

authority by the employee cannot be countenanced, until and after the rules or orders imposed by the employer are declared to be illegal and violation improper by competent authority. Even the refusal of complainant to explain in writing why he should not be terminated for violation of the respondent's code of conduct, relative to the gambling incident on August 25, 1994, comes within the prohibition of the foregoing doctrinal pronouncement. Said observation finds support in the case of Northern Motors Inc. vs. NLRC, G.R. No. L-10022, January 31, 1958 when the Supreme Court stamped its approval on the dismissal of an employee for willful violation of rules and regulations of the company designed for the safety of the laborers themselves. (See also Soco vs. Mercantile Corporation, G.R. 53364-65, March 16, 1987). The case of Patricio Dimalanta vs. Secretary of Labor, G.R. 83854, May 24, 1989, is even more in point. In said case, the Supreme Court considered serious misconduct within the purview of Article 282 of the Labor Code, the act of gambling within the company premises being prohibited and penalized with dismissal by the company rules. This is exactly what happened in this particular case. To condone such conduct will erode the discipline that an employer would uniformly apply so that it can expect compliance to the same rules and regulations by its other employees. (Soco vs. Mercantile Corporation, supra). Consequently, the observation earlier mentioned that complainant's dismissal was for a just and valid cause, makes the awards of reinstatement and full backwages unwarranted. With respect to the other monetary awards however, the record is bereft of evidence that could serve as a basis for the denial of such entitlements. To that extent, we find the Arbiter's findings to be in order. Thus, guided by the decisional rules found in the case of Union of Filipino Workers (UFW) vs. NLRC, et, al., G.R. No. 98111, April 7, 1993, and Delfin Palagpag vs. NLRC, G.R. No. 96646, February 8, 1993, said finding being supported by substantial evidence must not be disturbed, (See also Reyes vs. Phil. Duplicators, Inc., and NLRC, L-J 4996, November 17, 1981). Wherefore, in view thereof, the appealed decision is hereby modified deleting the awards of reinstatement and backwages including attorney's fees. In all other respects, the assailed decisions is affirmed. SO ORDERED. Petitioner filed a Motion for Reconsideration where among others, he contended: With due respect also to the Honorable National Labor Relations Commission (First Division) there was no mention about this alleged gambling of the complainant either in the Position Paper of the Respondents or in the Respondent's Comment to Complainant's Position Paper. It was

only on appeal that the issue of alleged gambling of the complainant was raised. In various Decision (sic) of the Supreme Court, it has been held that the finding of facts of the Labor Arbiter who conducted the actual trial and hearing of the case wherein the parties usually were required to the (sic) present have greater weight than the findings of the Honorable National Labor Relations Commission, with due respect, who determine (sic) the fact of the particular case on the various pleadings of the opposing parties. Since the issue of gambling was raised only by the respondents when the appeal was made, it should not have been given any weight at all in the determination of the case by the Honorable National Labor Relations Commission. In its Resolution of September 22, 1997, the public respondent denied petitioner's Motion for Reconsideration. In this petition for certiorari, petitioner contends: I. THE HONORABLE PUBLIC RESPONDENT COMMISSION (FIRST DIVISION) COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT MODIFIED THE DECISION OF HONORABLE LABOR ARBITER PABLO ESPIRITU JR. DATED SEPTEMBER 29, 1995 DECLARING THE DISMISSAL OF THE COMPLAINT VALID AND LEGAL AND DELETING AWARDS OF BACKWAGES, REINSTATEMENT AND ATTORNEY'S FEES IN TOTAL DISREGARD OF THE FINDING OF THE HONORABLE LABOR ARBITER. II. THE HONORABLE PUBLIC RESPONDENT (FIRST DIVISION) ERRED IN DISMISSING THE MOTION FOR RECONSIDERATION ON ITS DECISION PROMULGATED ON JULY 4, 1997 WITH SUCH DENIAL AMOUNTING TO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION. We find merit in the appeal. The key issues are: (1) whether the public respondent NLRC gravely abused its discretion when it admitted Annex "2" attached to respondent company's Memorandum of Appeal to prove that petitioner was dismissed for cause and with due process, which evidence was not presented by the private respondent before the Labor Arbiter; and (2) assuming that the said evidence was properly admitted, whether it proved that petitioner was legally dismissed. On the first issue, we hold that public respondent NLRC gravely abused its discretion when it admitted Annex "2" of respondent company's Memorandum of Appeal. Annex "2" purportedly shows that on August 25, 1994, petitioner was required to explain in writing why his services should not be terminated for "repeated and open violations of our Company Code of Conduct, the most recent of which was the gambling incident this afternoon, 25 August 1994." It is true that our ruling case law is that proceedings in quasi-judicial agencies like the NLRC should not be strictly governed by technical rules of procedure. This case law is in accord with Article 221 of the Labor Code which provides:

Art. 221. Technical rules not binding and prior resort to amicable settlement. In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. In any proceeding before the Commission or any Labor Arbiter, the parties may be represented by legal counsel but it shall be the duty of the Chairman, any Presiding Commissioner or Commissioner or any Labor Arbiter to exercise complete control of the proceedings at all stages. xxx xxx xxx A close examination of the aforequoted provision will show that its purpose is to avoid denial of due process. It allows the relaxation of our rules of procedure if their strict enforcement will bring about failure of justice. It does not, however, sanction the reasonless violation of our procedural rules which were promulgated precisely to achieve order in the dispensation of justice. In the case at bar, private respondent cannot claim that it would be denied due process if its Annex "2" is not allowed admission. The records will show that the primary issue before the Labor Arbiter was whether or not the petitioner was legally dismissed. To meet this issue, all that private respondent needed to do was to attach this Annex "2" to its Comment to the Position Paper of the petitioner where it already alleged that petitioner ". . . was terminated for cause or violation of company rules and regulations." Private respondent chose not to substantiate this allegation. All the while, the proof of the allegation, Annex "2", was in its Possession and it offers no excuse for its nonsubmission to the Labor Arbiter. Private respondent does not have any right to present evidence at any stage of the proceedings as it may wish. To recognize that absolute right is to recognize caprice and to promote disorder. Private respondent company should demonstrate due diligence in the exercise of its rights before it can demand due process. Due process cannot be accorded to a negligent litigant if it will result in injustice to the other litigant who has been diligent in observing the rules of litigation. There is another reason why the public respondent acted unfairly when it admitted Annex "2". The records do not indubitably show whether the public respondent NLRC gave the petitioner a clear chance to rebut Annex "2". That was the least that should have been done by the public respondent NLRC considering the lateness of the submission of Annex "2," considering further that it alleged a very critical fact, and considering finally that it concerns a worker whose right to social justice is an immutable polestar in our Constitution. The end result of the act of the public respondent is a Decision characterized by an imbalance of rights over due process was given to the private respondent employer and under due process to the petitioner employee with the latter losing his most valuable right as a worker, the right to security of tenure. On the second issue, we hold that even if Annex "2" was properly admitted by the public respondent, still it did not prove that petitioner was legally dismissed. At best, Annex "2," is a cipher as an evidence. It speaks of "repeated and open violations of our Company Code of Conduct" and yet does not specify these violations. It speaks of a "gambling incident," yet it does not even tell the kind of gambling done by petitioner. Indeed, in its Comment to the Petition at bar, private respondent confessed its lack of knowledge when it stated "although respondents failed to make mention of the particular gambling activity engaged in by petitioner, we venture to take a guess that this may

probably involve either cards or mental games like chess." 1 Petitioner's end of employment cannot depend on a guessing game. IN VIEW WHEREOF, the petition is GRANTED. The assailed decision and resolution of public respondent are hereby set aside, and the decision of the labor arbiter is reinstated, subject to the modification that backwages are to be computed from the time petitioner was dismissed up to his reinstatement. Cost against private respondents. SO ORDERED. Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur. Footnotes 1 Records, p. 87.

The Lawphil Project - Arellano Law Foundation

i[1] ii[2]

Rollo, p. 23. Rollo, p. 64. Rollo, p. 70. Rollo, pp. 7-8. Rollo, p. 49. Rollo, p. 68. 229 SCRA 240.

iii[3] iv[4] v[5] vi[6] vii[7] viii

See Artex Development Co. vs. NLRC, 187 SCRA 611. Rubenecia vs. Civil Service Commission, 244 SCRA 640.

ix[9]

SUPREME COURT THIRD DIVISION BATONG BUHAY GOLD MINES, INC., Petitioner, -versus- G.R. No. 86963 August 6, 1999 HONORABLE DIONISIO DELA SERNA IN HIS CAPACITY AS THE UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, ELSIE ROSALINDA TY, ANTONIO MENDELEBAR, MA. CONCEPCION Q. REYES, AND THE OTHER COMPLAINANTS[*] IN CASE NO. NCR-LSED-CI-2047-87; MFT CORPORATION AND SALTER HOLDINGS PTY., LTD., Respondents. x----------------------------------------------------x RESOLUTION PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court with a Prayer for Preliminary Injunction and or Restraining Order brought by Batong Buhay Gold Mines, Inc. (BBGMI for brevity) to annul three orders issued by respondent Undersecretary Dionisio dela Serna of the Department of Labor and Employment, dated September 16, 1988, December 14, 1988 and February 13, 1989, respectively. The Order of September 16, 1988 stated the facts as follows: . on 5 February 1987, Elsie Rosalinda B. Ty, Antonia L. Mendelebar, Ma. Concepcion O. Reyes and 1,247 others filed a complaint against Batong Buhay Gold Mines, Inc. for: (1) Nonpayment of their basic pay and allowances for the period of 6 July 1983 to 5 July 1984, inclusive, under Wage Order No. 2; (2) Nonpayment of their basic pay and allowances for the period 16 June 1984 to 5 October 1986, inclusive under Wage Order No. 5; (3) Non-payment of their salaries for the period 16 March 1986 to the present; (4) Non-payment of their 13th month pay for 1985, 1986 and 1987; (5) Non-payment of their vacation and sick leave, and the compensatory leaves of mine site employees; and (6) Non-payment of the salaries of employees who were placed on forced leaves since November 1985 to the present, if this is not feasible, the affected employees be awarded corresponding separation pay. On 9 February 1987, the Regional Director set the case for hearing on 17 February 1987. On 17 February 1987, the respondent moved for the resetting of the case to 2 March 1987. On 27 February 1987, the complainants filed a Motion for the issuance of an inspection authority. Xxx On 13 July 1987, the Labor Standards and Welfare Officers submitted their report with the following recommendations: WHEREFORE, premises considered, this case is hereby submitted with the recommendation that an Order of Compliance be issued directing respondent Batong Buhay Gold Mines Inc. to pay complainants Elsie Rosalinda Ty, et al. FOUR MILLION EIGHT HUNDRED EIGHTEEN THOUSAND SEVEN HUNDRED FORTY-SIX PESOS AND FORTY CENTAVOS (P4,818,746.40) by way of unpaid salaries of workers from March 16, 1987 to present, unpaid and ECOLA differentials under Wage Order Nos. 2 and 5 unpaid 13th months pay for
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1985 and 1986, and unpaid (sic) vacation/sick/compensatory leave benefits. On 31 July 1987, the Regional Director[1] adopted the recommendation of the LSWOs and issued an order directing the respondent to pay the complainants the sum of P4,818,746.40 representing their unpaid 13th month pay for 1985 and 1986, wage and ECOLA differentials under wage order Nos. 2 and 5, unpaid salaries from 16 March 1986 to present and vacation/sick leave benefits for 1984, 1985 and 1986. On 19 August 1987, the complainants filed an ex-parte motion for the issuance of a writ of execution and appointment of special sheriff. Xxx On 21 August 1987, the Regional Director issued an Order directing the respondent to put up a cash or surety bond otherwise a writ of execution will be issued. Xxx When the respondent failed to post a cash/surety bond, and upon motion for the issuance of a writ of execution by the complainants, the Regional Director, on 14 September 1987 issued a writ of execution appointing Mr. John Espiridion C. Ramos as Special Sheriff and directing him to do the following: You are to collect the above-stated amount from the respondent and deposit the same with Cashier of this Office for appropriate disposition to herein complainants under the supervision of the office of the Director. Otherwise, you are to execute this writ by attaching the goods and chattels of the respondent not exempt from execution or in case of insufficiency thereof against the real or immovable property of the respondent. The Special Sheriff proceeded to execute the appealed Order on 17 September 1987 and seized three (3) units of Peterbuilt trucks and then sold the same by public auction. Various materials and motor vehicles were also seized on different dates and sold at public auction by said sheriff. Xxx On 11 December 1987, the respondent finally posted a supersedeas bond which prompted this Office to issue an Order dated 26 January 1988, restraining the complainants and sheriff Ramos from enforcing the writ of execution.[2]
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BBGMI appealed the Order dated July 31, 1987 of Regional Director Luna C. Piezas to respondent Undersecretary Dionisio de la Serna, contending that the Regional Director had no jurisdiction over the case. On September 16, 1988, the public respondent issued the first challenged Order upholding the jurisdiction of the Regional Director and annulling all the auction sales conducted by Special Sheriff John Ramos. The decretal portion of the said Order ruled: WHEREFORE, the Order dated 31 July 1987 of the Regional Director, National Capital Region, is hereby AFFIRMED. Accordingly, the writ of execution dated 14 September 1987 issued in connection thereto is hereby declared VALID. However, the public auction sales conducted by special sheriff John Ramos pursuant to the writ of execution dated 14 September 1987 on 24 September 2, 20, 23, and 29 October 1987 are all hereby declared NULL AND VOID. Furthermore, the personal properties sold and the proceeds thereof which have been turned over to the complainants thru their legal counsel are hereby ordered returned to the custody of the respondent and the buyers respectively. SO ORDERED.[3] On October 13, 1988, a Motion for Reconsideration of the aforesaid order was presented by the complainants in Case No. NCR-LSED-CI2047-87 but the same was denied. On November 7, 1988, a Motion for Intervention was filed by MFT Corporation, inviting attention to a Deed of Sale executed in its favor by Fidel Bermudez, the highest bidder in the auction sale conducted on October 29, 1987. On December 2, 1988, another Motion for Intervention was filed, this time by Salter Holdings Pty., Ltd., claiming that MFT Corporation assigned its rights over the subject properties in favor of movant as evidenced by a Sales Agreement between MFT Corp. and Salter Holdings Pty., Ltd. The two Motions for Intervention were granted in the second questioned order dated December 14, 1988, directing the exclusion from annulment of the properties sold at the October 29, 1987 auction sale and claimed by the intervenors, including one cluster of junk mining machineries, equipment and supplies, and disposing thus: WHEREFORE, in view of the foregoing, the motions for reconsideration filed by intervenors MFT and Salter are hereby granted. Correspondingly, this Offices Order dated 16
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September 1988 is hereby modified to exclude from annulment the one lot of junk mining machineries, equipment and supplies as-is-where-is sold by Sheriff John C. Ramos in the auction sale of 29 October 1987. X x x Motions for Reconsideration were interposed by Batong Buhay Gold Mining, Inc. and the respondent employees but to no avail. The same were likewise denied in the third assailed Order dated February 13, 1989. Hence, the petition under scrutiny, ascribing grave abuse of discretion amounting to lack or excess of jurisdiction to the public respondent in issuing the three Orders under attack. The questioned Orders aforementioned have given rise to the issues: (1) whether the Regional Director has jurisdiction over the complaint filed by the employees of BBGMI; and (2) whether or not the auction sales conducted by the said Special Sheriff are valid. Anent the first issue, an affirmative ruling is indicated. The Regional Director has jurisdiction over the BBGMI employees who are the complainants in Case Number NCR-LSED-CI-2047-87. The subject labor standards case of the petition arose from the visitorial and enforcement powers by the Regional Director of Department of Labor and Employment (DOLE). Labor standards refers to the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety and health standards.[4] Labor standards cases are governed by Article 128(b) of the Labor Code. The pivot of inquiry here is whether the Regional Director has jurisdiction over subject labor standards case. As can be gleaned from the records on hand, subject labor standards case was filed on February 5, 1987 at which time Article 128 (b) read as follows:[5] Art. 128 (b) Visitorial and enforcement powers (b) The Minister of Labor or his duly authorized representative shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor
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regulations officers and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the ordinary course of inspection. Petitioner theorizes that the Regional Director is without jurisdiction over subject case, placing reliance on the ruling in Zambales Base Inc. vs. Minister of Labor[6] and Oreshoot Mining Company vs. Arellano.[7] Respondent Undersecretary Dionisio C. Dela Serna, on the other hand, upheld the jurisdiction of Regional Director Luna C. Piezas by relying on E.O. 111, to quote: Considering therefore that there still exists an employeremployee relationship between the parties; that the case involves violations of the labor standard provisions of the labor code; that the issues therein could be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection; and, if only to give meaning and not render nugatory and meaningless the visitorial and enforcement powers of the Secretary of Labor and Employment as provided by Article 128(b) of the Labor Code, as amended by Section 2 of Executive Order No. 111 which states: The provisions of article 217 of this code to the contrary notwithstanding and in cases where the relationship of employer-employee still exists, the Minister of Labor and Employment or his duly authorized representative shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provision of this Code based on the findings of the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulations officers and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the ordinary course of inspection. We agree with the complainants that the regional office a quo has jurisdiction to hear and decide the instant labor standard case. X x x[8] The Court agrees with the public respondent. In the case of Maternity Childrens Hospital vs. Secretary of Labor (174 SCRA 632), the Court in upholding the jurisdiction of the Regional Director over the complaint on underpayment of wages and ECOLAs filed on May 23, 1986, by the
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employees of Maternity Childrens Hospital, held: This is a labor standards case and is governed by Art. 128(b) of the Labor Code, as amended by E.O. 111. Xxx Prior to the promulgation of E.O. 111 on December 24, 1986, the Regional Directors authority over money claims was unclear. The complaint in the present case was filed on May 23, 1986 when E.O. 111 was not yet in effect. We believe, however, that even in the absence of E.O. 111, Regional Directors already had enforcement powers over money claims, effective under P.D. 850, issued on December 16, 1975, which transferred labor standards cases from the arbitration system to the enforcement system. In the aforecited case, the Court in reinforcing its conclusion that Regional Director has jurisdiction over labor standards cases, treated E.O. 111 as a curative statute, ruling as follows: E.O. No. 111 was issued on December 24, 1986 or three(3) months after the promulgation of the Secretary of Labors decision upholding private respondents salary differentials and ECOLAs on September 24, 1986. The amendment of the visitorial and enforcement powers of the Regional Director (Article 128(b)) by said E.O. 111 reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to empower the Regional Directors to resolve uncontested money claims in cases where an employer-employee relationship still exists. This intention must be given weight and entitled to great respect. As held in Progressive Workers Union, et al. vs. F.P. Aguas, et al. G.R. No. 59711-12, May 29, 1985, 150 SCRA 429: . The interpretation by officers of laws which are entrusted to their administration is entitled to great respect. We see no reason to detract from this rudimentary rule in administrative law, particularly when later events have proved said interpretation to be in accord with the legislative intent. The proceedings before the Regional Director must, perforce be upheld on the basis of Article 128(b) as amended by E.O. No. 111, dated December 24, 1986, this executive order to be considered in the nature of a curative statute with retrospective application. (Progressive Workers Union, et al. vs. Hon. Aguas, et al. (Supra); M. Garcia vs. Judge A. Martinez, et al. G.R. No. L-47629, May 28,1979, 90 SCRA 331).
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With regard to the petitioners reliance on the cases of Zambales Base, Inc. vs. Minister of Labor (supra) and Oreshoot Mining Company vs. Arellano, (supra), this is misplaced. In the case of Zambales Base, Inc., the court has already ruled that: in view of the promulgation of Executive Order No. 111, Zambales Base Metals vs. Minister of Labor is no longer good law. (Emphasis supplied) Executive Order No. 111 is in the character of a curative law, that is to say, it was intended to remedy a defect that, in the opinion of the Legislature (the incumbent Chief Executive in this case, in the exercise of her lawmaking powers under the Freedom Constitution) had attached to the provision under the amendment. X x x[9] The case of Oreshoot Mining Corporation, on the other hand, involved money claims of illegally dismissed employees. As the employeremployee relationship has already ceased and reinstatement is sought, jurisdiction necessarily falls under the Labor Arbiter. Petitioner should not have used this to support its theory as this petition involves labor standards cases and not monetary claims of illegally dismissed employees. The Court would have ruled differently had the petitioner shown that subject labor standards case is within the purview of the exception clause in Article 128 (b) of the Labor Code. Said provision requires the concurrence of the following elements in order to divest the Regional Director or his representatives of jurisdiction, to wit: (a) that the petitioner (employer) contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. [10] Nowhere in the records does it appear that the petitioner alleged any of the aforestated grounds. In fact, in its Motion for Reconsideration of the Order of the Regional Director dated August 20, 1987, the grounds which petitioner raised were the following: 1. This Honorable Office has no jurisdiction to hear this case and its Order of 31 October 1987 is therefore null and void; 2. Batong Buhay Gold Mines, Inc. is erroneously impleaded as the sole party respondent, the complaint should have been directed also against the Asset Privatization Trust. In the other pleadings filed by petitioner in NCR-LSED-C1-2047-87, such as the Urgent Omnibus Motion to declare void the Writ of Execution for lack of jurisdiction and the Oppositions it filed on the
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Motions for Intervention questioning the legal personality of the intervenors, questions as to the amounts complained of by the employees or absence of violation of labor standards laws were never raised. Raising lack of jurisdiction in a Motion to Dismiss is not the contest contemplated by the exception clause under Article 128(b) of the Labor Code which would take the case out of the jurisdiction of the Regional Director and bring it before the Labor Arbiter. The only instance when there was a semblance of raising the aforestated grounds, was when they filed an Appeal Memorandum dated January 14, 1988, before the respondent undersecretary. In the said Appeal Memorandum, petitioner comes up with the defense that the Regional Director was without jurisdiction, as employer-employee relationship was absent, since petitioner had ceased doing business since 1985. Records indicate that the Labor Standards and Welfare Officers, pursuant to Complaint Inspection Authority No. CI-2-047-87, were not allowed to look into records, vouchers and other related documents. The officers of the petitioner alleged that the company is presently under receivership of the Development Bank of the Philippines.[11] In lieu of this, the Regional Director had ordered that a summary investigation be conducted.[12] Despite proper notices, the petitioner refused to appear before the Regional Director. To give it another chance, an order to file its position paper was issued to substantiate its defenses. Notwithstanding all these opportunities to be heard, petitioner chose not to avail of such. As held in the case of M. Ramirez Industries vs. Sec. of Labor and Employment, (266 SCRA 111): Under Art. 128(a) of the Labor Code, the Secretary of Labor or his duly authorized representatives, such as the Regional Directors, has visitorial powers which authorize him to inspect the records and premises of an employer at any time of the day or night whenever work is being undertaken therein, to question any employee and investigate any fact, condition or matter, and to determine violations of labor laws, wage orders or rules and regulations. If the employer refuses to attend the inspection or conference or to submit any record, such as payrolls and daily time records, he will be deemed to have waived his right to present evidence. (Emphasis supplied) Petitioners refusal to allow the Labor Standards and Welfare Officers to conduct inspection in the premises of their head office in Makati and the failure to file their position paper is equivalent to a waiver of
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its right to contest the claims of the employees. This Court had occasion to hold there is no violation of due process where the Regional Director merely required the submission of position papers and resolved the case summarily thereafter.[13] Furthermore, the issuance of the compliance order was well within the jurisdiction of the Regional Director, as Section 14 of the Rules on the Disposition of Labor Standards Cases provides: SECTION 14. Failure to Appear. Where the employer or the complainant fails or refuses to appear during the investigation, despite proper notice, for two (2) consecutive hearings without justifiable reasons, the hearing officer may recommend to the Regional Director the issuance of a compliance order based on the evidence at hand or an order of dismissal of the complaint as the case may be. (Emphasis supplied) It bears stressing that this petition involves a labor standards case and it is in keeping with the law that the worker need not litigate to get what legally belongs to him, for the whole enforcement machinery of the Department of Labor exists to insure its expeditious delivery to him free of charge.[14] Thus, their claim of closure for business, among other things, are factual issues which cannot be brought here for the first time. As petitioner refused to participate in the proceedings below where it could have ventilated the appropriate defenses, to do so in this petition is unavailing. The reason for this is that factual issues are not proper subjects of a special civil action for certiorari to the Supreme Court.[15] It is therefore abundantly clear that at the time of the filing of the claims of petitioners employees, the Regional Director was already exercising visitorial and enforcement powers. Regional Directors visitorial and enforcement powers under Art. 128 (b) has undergone series of amendments which the Court feels to be worth mentioning. Confusion was engendered by the promulgation of the decision in the case of Servandos Inc. vs. Secretary of Labor and Employment and the Regional Director, Region VI, Department of Labor and Employment.[16] In the said case, the Regional Director took cognizance of the labor standards cases of the employees of Servandos Inc., but this Court held that: In the case of Briad Agro Development Corporation vs. Dela Cerna and Camus Engineering Corp. vs. Sec. Of labor applying E.O. 111 the Court recognized the concurrent jurisdiction of the
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Secretary of labor (or Regional Directors) and the labor Arbiters to pass on employees money claims, including those cases which the labor Arbiters had previously exercised jurisdiction. However, in a subsequent modificatory resolution in the Briad Agro Case, dated 9 November 1989, the Court modified its original decision in view of the enactment of RA 6715, and upheld the power of the Regional Directors to adjudicate money claims subject to the conditions set forth in Section 2 of said law (RA 6715). The power then of the Regional Director (under the present state of law) to adjudicate employees money claims is subject to the concurrence of all the requisites provided under Sec. 2 of RA 6715, to wit: (a) the claim is represented by an employer or person employed in domestic or household service, or househelper; (b) the claim arises from employer-employee relationship; (c) the claimant does not seek reinstatement; and (d) the aggregate money claim of each employee or househelper does not exceed P5,000. x x x[17] The Servando ruling, in effect, expanded the jurisdictional limitation provided for by RA 6715 as to include labor standards cases under Article 128 (b) and no longer limited to ordinary monetary claims under Article 129. In fact, in the Motion for Reconsideration[18] presented by the private respondents in the Servando case, the court applied more squarely the P5,000 limit to the visitorial and enforcement power of the Regional Director, to wit: To construe the visitorial power of the Secretary of Labor to order and enforce compliance with labor laws as including the power to hear and decide cases involving employees claims for wages, arising from employer-employee relations, even if the amount of said claims exceed P5,000 for each employee, would, in our considered opinion, emasculate and render meaningless, if not useless, the provisions of Art. 217 (a) and (6) and Article 129 of the Labor Code which, as above-pointed out, confer exclusive jurisdiction on the Labor Arbiter to hear and decide such employees claims, regardless of amount, can be heard and determined by the Secretary of Labor under his visitorial power. This does not, however, appear to be the legislative intent. But prevailing law and jurisprudence rendered the Servando ruling inapplicable. In the recent case of Francisco Guico, Jr. versus The
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Honorable Secretary of Labor & Employment Leonardo A. Quisumbing, GR # 131750, promulgated on November 16, 1998, this Court upheld the jurisdiction of the Regional Director notwithstanding the fact that the amounts awarded exceeded P5,000. Republic Act 7730, the law governing the visitorial and enforcement powers of the Labor Secretary and his representatives reads: Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representative shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. X x x (Emphasis supplied) The present law, RA 7730, can be considered a curative statute to reinforce the conclusion that the Regional Director has jurisdiction over the present labor standards case. Well-settled is the rule that jurisdiction over the subject matter is determined by the law in force when the action was commenced, unless a subsequent statute provides for its retroactive application, as when it is a curative legislation.[19] Curative statutes are intended to supply defects, abridge superfluities in existing laws and curb certain evils. They are intended to enable persons to carry into effect that which they have designed and intended, but has failed of expected legal consequence by reason of some statutory disability or irregularity in their own action. They make valid that which, before the enactment of the statute, was invalid. [20] In arriving at this conclusion, the case of Briad Agro Development vs. De la Cerna[21] comes to the fore. In the said case, RA 6715 was held to be a curative statute. There, the Court ruled that RA 6715 is deemed a curative statute and should be applied to pending cases. The rationale of the ruling of the Court was that prior to RA 6715, Article 217 as amended by E.O. 111, created a scenario where the
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Labor Arbiter and the Regional Director of DOLE had overlapping jurisdiction over money claims. Such a situation was viewed as a defect in the law so that when RA 6715 was passed, it was treated or interpreted by the Court as a rectification of the infirmity of the law, and therefore curative in nature, with retroactive application. Parenthetically, the same rationale applies in treating RA 7730 as a curative statute. Explicit in its title[22] is the legislative intent to rectify the error brought about by this Courts ruling that RA 6715 covers even labor standards cases where the amounts to be awarded by the Regional Director exceed P5,000 as provided for under RA 6715. Congressional records relative to Republic Act 7730 reveal that, this bill seeks to do away with the jurisdictional limitations imposed thru said ruling (referring to Servando) and to finally settle any lingering doubts on the visitorial and enforcement powers of the Secretary of Labor and Employment.[23] All the foregoing studiedly considered, the ineluctable conclusion is that the application of RA 7730 to the case under consideration is proper. Thus, it is decisively clear that the public respondent did not act with grave abuse of discretion in issuing the Order dated September 16, 1988. The second issue for resolution is the validity of the auction sales conducted by Special Sheriff Ramos. It bears stressing that the writ of execution issued by the Regional Director led to the several auction sales conducted on September 24, 1987, October 2, 1987, October 23, 1987, October 29, 1987 and October 30, 1987. In the first Order of public respondent, the five (5) auction sales were declared null and void. As the public respondent put it, the scandalously low price for which the personal properties of the respondent were sold leads us to no other recourse but to invalidate the auction sales conducted by the special sheriff.[24] In the September 16, 1988 Order[25] of public respondent, the personal properties and corresponding prices for which they were sold were as follows: Personal properties sold on September 24, 1987: 1. One (1) unit peterbuilt truck Model 1978 with Engine No. 6A4102-65, Chassis No. 139155-P not running condition. 2. One (1) unit 1978 Model peterbuilt truck with Engine No. 6467-8040, Chassis No. 6A410235, truck with Engine No. (Truck 4) not running condition.
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3. One (1) unit 1978 Model peterbuilt truck with Engine No. 6A410319, Chassis No. 139163-P Truck No. 4 not running condition. Proceeds of Sale P178,000.00 Personal Properties Sold on October 2, 1987: 1. One (1) unit peterbuilt truck model 1978, with Engine No. 6A410347, Chassis No. 1391539-P. 2. One (1) unit peterbuilt truck Model 1978 with Engine No. 6A410325, Chassis No. 139149. 3. One (1) unit payloader (caterpillar with Engine No. (not visible) 966. 4. One (1) unit Forklift; one (1) unit crowler crane, Engine No. (not visible); and one (1) Lot of scrap irons impounded inside the Batong Buhay Compound, Calanan, Kalinga Apayao. 5. One (1) unit panel Isuzu with Engine No. 821 POF200207, Plate No. PBV 386. Proceeds of Sale P228,750.00 Personal Properties Sold on October 23, 1987: 1. One (1) Unit Toyota Land Cruiser, with Engine No. BO4466340, Chassis No. 81400500227, Plate No. BAT 353, burned, damage not running condition, type of body jeep motor not visible. 2. Two (2) units peterbuilts, damaged, burned motor Nos. (not visible) and Chassis Nos. not visible. 3. One (1) Unit Layland, burned, damaged and Motor No. not visible. 4. Two (units) air compressor, burned, damaged and one (1) generator. 5. One (1) Unit Loader Michigan 50, damaged and burned, and 6. One (1) rock crasher, damaged, burned, scrap iron junk. Proceeds of Sale P98,000.00 Properties sold on October 29, 1987: 1. One (1) lot of scrap construction materials 2. One (1) lot of scrap mining machineries equipments and supplies. 3. One (1) lot of junk machineries, equipments and supplies. Proceeds of Sale P1,699,999.99 Personal Properties Sold on October 20, 1987[*] 1. One (1) lot of scrap construction materials
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2. One (1) lot of scrap mining machineries, equipments and supplies Proceeds of Sale P2,185,000.00 Total Proceeds Sale P4,389,749.99 to satisfy the judgment award in the amount of P4,818,746.00. As a general rule, findings of fact and conclusion of law arrived at by quasi-judicial agencies are not to be disturbed absent any showing of grave abuse of discretion tainting the same. But in the case under scrutiny, there was grave abuse of discretion when the public respondent, without any evidentiary support, adjudged such prices as scandalously low. He merely relied on the self-serving assertion by the petitioner that the value of the auctioned properties was more than the price bid. Obviously, this ratiocination did not suffice to set aside the auction sales. The presumption of regularity in the performance of official function is applicable here. Conformably, any party alleging irregularity vitiating auction sales must come forward with clear and convincing proof. Furthermore, it is a well-settled principle that: Mere inadequacy of price is not, of itself sufficient ground to set aside an execution sale where the sale is regular, proper and legal in other respects, the parties stand on an equal footing, there are no confidential relation between them, there is no element of fraud, unfairness, or oppression, and there is no misconduct, accident, mistake or surprise connected with, and tending to cause, the inadequacy.[26] Consequently, in declaring the nullity of the subject auction sales on the ground of inadequacy of price, the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction. But, this is not to declare the questioned auction sales as valid. The same are null and void since on the properties of petitioner involved was constituted a mortgage between petitioner and the Development Bank of the Philippines, as shown by the: (a) Deed of Mortgage dated December 28,1973; (b) Joint Mortgage (Amending Deed of Mortgage) dated August 25, 1975; (c) Amendment to Joint Mortgage dated October 18, 1976. (d) Confirmation of Mortgage dated March 27,1979; and (e) Additional Joint First Mortgage dated March 31, 1981.[27] The aforementioned documents were executed between the petitioner and Development Bank of the Philippines (DBP) even prior to the filing of the complaint of petitioners employees. The properties having
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been mortgaged to DBP, the applicable law is Section 14 of Executive Order No. 81, dated 3 December 1986, otherwise known as the The 1986 Revised Charter of the Development Bank of the Philippines, which exempts the properties of petitioner mortgaged to DBP from attachment or execution sales. Section 14 of E.O. 81, reads: SECTION 14. Exemption from Attachment. The provisions of any law to the contrary notwithstanding, securities on loans and/or other accommodations granted by the Bank or its predecessor-in-interest shall not be subject to attachment, execution or any other court process, nor shall they be included in the property of insolvent persons or institutions, unless all debts and obligations of the Bank or its predecessor-in-interest, penalties, collection of expenses, and other charges, subject to the provisions of paragraph (e) of Sec. 9 of this Charter. In fact, a letter dated January 31, 1990 of Jose C. Sison, Associate Executive Trustee of the Asset Privatization Trust, to the Office of the Clerk of Court of the Supreme Court, certified that the petitioner is covered by Proclamation No. 50 issued on December 8, 1986 by President Corazon C. Aquino. Quoted hereunder are the pertinent portions of the said letter:[28] RE: BBGMI vs. Hon. dela Serna, GR No. 86963 Supreme Court Certiorari SIR: Xxx . all the assets (real and personal/chattel) of Batong Buhay Gold Mines, Inc. (BBGMI) have been transferred and entrusted to the Asset Privatization Trust (APT) by virtue of Proclamation No. 50 dated December 8, 1986 of her Excellency, President Corazon C. Aquino. All the said assets of BBGMI are covered by real and chattel mortgages executed in favor of the Philippine National Bank (PNB), the Development Bank of the Philippines (DBP) and the National Investment and Development Corporation (NIDC). Xxx Section 14, Executive Order No. 81: Xxx Pursuant to the above-quoted provision of law, you are hereby warned that all the assets (real and personal /chattel) of BBGMI are exempted from writs of execution, attachment, or any other lien or court processes. The Government, through APT, shall initiate any administrative measures and remedies against you
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for any violation of the vested rights of PNB, DBP and APT. Xxx (SGD.) JOSE C. SISON The exemption referred to in the aforecited letter is one of the circumstances contemplated by Rule 39 of the Revised Rules of Court, to wit: SECTION 13. Property exempt from execution. Except as otherwise expressly provided by law, the following properties, and no other, shall be exempt from execution: xxx (m) Properties specially exempted by law. X x x Private respondents contend that even if subject properties were mortgaged to DBP (now under Asset Privatization Trust), Article 110[29] of the Labor Code, as amended by RA 6715, applies just the same. According to them, the said provision of law grants preference to money claims of workers over and above all credits of the petitioner. This contention is untenable. In the case of DBP vs. NLRC,[30] the Supreme Court held that the workers preference regarding wages and other monetary claims under Article 110 of the Labor Code, as amended, contemplates bankruptcy or liquidation proceedings of the employers business. What is more, it does not disregard the preferential lien of mortgagees considered as preferred credits under the provisions of the New Civil Code on the classification, concurrence and preference of credits. We now come to the issue with respect to the second Order, dated December 14, 1988, which declared as valid the auction sale conducted on October 29, 1987 by Special Sheriff John Ramos. Public respondent had no authority to validate the said auction sale on the ground that the intervenors, MFT Corporation and Salter Holdings Pty., Ltd., as purchasers for value, acquired legal title over subject properties. It is well to remember that the said properties were transferred to the intervenors, when Fidel Bermudez, the highest bidder at the auction sale, sold the properties to MFT Corporation which, in turn, sold the same properties to Salter Holdings Pty., Ltd. Public respondent opined that the contract of sale between the intervenors and the highest bidder should be respected as these sales took place during the interregnum after the auction sale was conducted on October 29, 1987 and before the issuance of the first disputed Order declaring all
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the auction sales null and void. On this issue, the Court rules otherwise. As regards personal properties, the general rule is that title, like a stream, cannot rise higher than its source. 31 Consequently, a seller without title cannot transfer a title better than what he holds. MFT Corporation and Salter Holdings Pty., Ltd. trace their title from Fidel Bermudez, who was the highest bidder of a void auction sale over properties exempt from execution. Such being the case, the subsequent sale made by him (Fidel Bermudez) is incapable of vesting title or ownership in the vendee. The Order dated December 14, 1988, declaring the October 29, 1987 auction sale as valid, was issued with grave abuse of discretion amounting to lack or excess of jurisdiction. WHEREFORE, the petition is hereby GRANTED, insofar as the Order dated December 14, 1988 of Undersecretary Dionisio dela Serna is concerned, which Order is SET ASIDE. The Order of September 16, 1988, upholding the jurisdiction of the Regional Director, is AFFIRMED. No pronouncement as to costs. SO ORDERED. Melo, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.
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[*] Attachment Q, Rollo, pp. 175-191. [1] Rollo, p. 67, penned by Regional Director Luna C. Piezas. [2] Rollo, pp. 192-198. Attachment R. Order of Usec Dionisio dela Serna dated September 16, 1988. [3] Rollo, p. 203. [4] Section 7, Rule 1, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September 16, 1987. [5] PD 850 as amended by PD 1691, latter became effective May 1, 1980. [6] 146 SCRA 51. [7] 156 SCRA 498. [8] Rollo, pp. 199-200. [9] Briad Agro Development Corporation vs. Dionisio dela Serna, 174 SCRA 524. [10] SSK Parts Corporation vs. Camas, 181 SCRA 675. [11] Rollo, page 65. [12] Section 11. Hearing. Where no proof of compliance is submitted by the employer after seven (7) calendar days from receipt of the inspection results, the Regional Director shall summon the employer and the complainants to a summary investigation. In regular routine inspection cases however, such investigation shall be conducted where no complete field investigation can be made for reasons attributable to the fault of the employer or his representatives, such as those but not limited to instances when the field inspectors are denied access to the premises, employment records, or workers of the employer. (Rules on the Disposition of Labor Standards Cases)
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[13] Villadolid vs. Inciong, 121 SCRA 205. [14] MOLE Policy Instructions No. 7.

[15] [16] [17] [18] [19] [20]

Philippine Long Distance Company vs. NLRC, 190 SCRA 717. 184 SCRA 664. 184 SCRA 664; 198 SCRA 156. 198 SCRA 156. Atlas Fertilizer Corporation vs. Navarro, April 30, 1987. Agpalo, Ruben. Statutory Construction. Citing the cases of Del Castillo vs. SEC, 96 Phil 119; Santos vs. Duata, 14 SCRA 1041; DBP vs. CA, 96 SCRA 342. [21] 179 SCRA 270. [22] Entitled AN ACT FURTHER STRENGTHENING THE VISITORIAL AND ENFORCEMENT POWERS OF THE SECRETARY OF LABOR AND EMPLOYMENT, AMENDING FOR THE PURPOSE ARTICLE 128 OF PD 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, approved by the President on June 2, 1994. [23] The records of the House of Representatives showed that Congressman Alberto S. Veloso and Eriberto V. Loreto sponsored RA 7730. [24] Rollo, p. 203. [25] Rollo, pp. 200-202. [*] This was a typographical error as admitted by the public respondent and should have read Oct. 30, 1987. As can be seen from the records, there was no auction sale conducted by the Special Sheriff dated Oct. 20, 1987. [26] Francisco, The Revised Rules of Court in the Philippines, supra, page 755. [27] Rollo, pp. 478-508. [28] Rollo, pp. 451-452. [29] Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of an employers business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of government and other creditors may be paid. [30] 183 SCRA 328. [31] Tolentino, Arturo M. CIVIL CODE OF THE PHILIPPINES, Vol. V, page 65, citing National Bank vs. Wisconsin, C.R. Co., 44 Minn, 224, 46 N.W. 342, 9 L. R. A., 20 Am. St. Rep 566.
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